Esterad Investment Company (BSC) ratings affirmed

Esterad Investment Company BSC (Esterad) is a focused investment company pursuing a strategy to enhance and maintain robust returns through diversification of the asset base and revenue streams. Despite the decline in net profit in 2006, Esterad's returns remained very strong reflecting good levels of profitability. Against overvalued and volatile market conditions within the GCC and broader MENA region, Esterad eliminated exposure to a number of stock markets such as Saudi Arabia, Qatar and UAE in 2006 and increased the managed fund portfolio and exposures to emerging Asian economies. This strategy paid off insulating the Company from the sharp correction that ensued in the regional markets. Some asset concentration is apparent, mainly to the GCC market, but this largely reflects the Company's chosen investment strategy. Although the asset base remains comparatively small, the very little borrowing and other liabilities in relation to total capital has produced a strong and underleveraged balance sheet. Total equity funded a substantial three-fourths of the balance sheet at end 2006.

Esterad has built a good track record since adopting its current business model in 2003. Management is capable and clear business strategies are in place aimed at sustaining the Company's strong performance.