Future Kid to become an integrated entertainment & educational company

The move will require raising the current capital from KD100,000 to KD 8.7million.

Mr. Omar M. El-Quqa, Executive Vice President at Global, said that Global is the lead manager of the capital increase of Future Kid Entertainment and Real Estate Company KSCC (Future Kid) through a fresh issue of 86 million shares at 157.5 Fils per share.

He added that the proceeds will be used to acquire the legal entity owning all the existing assets of Future Kid Family Entertainment Centers and fund the expansion plans of the Company, including the opening of new entertainment and educational outlets.

Through its acquisition of Future Kid Family Entertainment Centers, one of the most well-known kids entertainment brands targeting the 2-12 years old segment and a key name in the major malls of Kuwait, "The Company will be one of the leading entertainment providers in Kuwait" he said. The company will also acquire the Future Kid brand name that is a registered brand name in Kuwait.

The Future Kid outlets offer coin-operated arcades and small-scale fun fair rides since 1992. Future Kid is also expanding its nurseries offering and looking into opening further nurseries in residential areas of Kuwait. Currently, the Company owns a nursery in Keifan.

Mr. El-Quqa has added that upon the successful completion of the capital increase, Future Kid will run outlets in 12 locations (17,500sqm of prime commercial space), and is looking to continue its successful track record by opening several large locations within the next two years.

Currently, Future Kid Family Entertainment Centers are available in Khalijia Complex, Kuwait Magic Mall, Muthanna Complex, Souk Al Salmiya, and other leading commercial malls and leisure parks in Kuwait.

Future Kid will be using some of the cash proceeds to open play halls at "Trade Center" and the Governate of Al Ahmadi, in addition to expanding existing operations in Souk Salmiya and Farwaniya's Arbeed Plaza.

Global EVP explained that through its acquisition of Future Kid for Toys and Games Co. WLL, the Company has also acquired the franchise rights for Dave and Buster's in Kuwait, a world-renowned arcade center for older teens.

The Company is planning to open several Dave and Buster's outlets in Kuwait within the next several years and expand its targeted age segment to older teens and young adults. Dave and Buster's is listed on the New York Stock Exchange.

Mr. El-Quqa has added that the demand for entertainment services has been increasing for several reasons. The most important market drivers in the industry are the lack of major entertainment outlets for preteens and teens, a very high income per capita, an interesting demographic profile skewed to those under twenty years old, and the development of new commercial centers.

He further added that entertainment facilities, such as Future Kid, offer commercial centers differentiation from other malls and the means to target family-oriented clientele. Through successful brand positioning and presence in major malls in Kuwait, Future Kid has become very successful in positioning itself as an anchor store, attracting both the children and their parents for regular visits.

On the other hand, Mr. El-Quqa explained that, with this capital increase and company structure transformation, Future Kid plans to position itself for listing as early as next year upon satisfying all Kuwait Stock Exchange requirements. He affirmed that the current owners of Future Kid aim to retain 40% of the company, post the capital increase.

He expected the Internal Rate of Return for the Company to be 20%, calculated at an initial outflow of almost KD13 million; the return on average equity is projected to increase from 7.9% in 2005 to 13.4% by 2009, and the return on average assets is expected to increase from 7.3% in 2005 to 12.4% by 2009.

He also expects the company to continue its profitability and pay 8 fils in 2005 as cash dividends and to increase it to 17 fils by 2009, resulting into expected dividend yield for 2005 and 2006 of around 5.5%, increasing to 10.13% in 2007 and ending at 10.76% for both 2008 and 2009.

Mr. El-Quqa concluded by saying that Global is interested in working with one of the most successful entrepreneurs in Kuwait.

"An investment in Future Kid is an exciting opportunity to invest in a successfully-operated company with high quality cash flows and an expected exit in 2006. Global is expecting a quick close for the subscription given the market interest in investing in non-traditional entertainment companies," he said.