Agility would like to announce that it has acquired through its portfolio under Bayan Investment Company a 62% (51,021,614 shares) of United Projects for Aviation Services Company “UPAC” a Kuwaiti Listed Company, with a value of KD 26 million through the public auction held on 3rd of June 2012. Payment and transfers procedures will be completed by June 4th 2012 to finalize the deal.

UPAC provides a range of services from aviation, ground handling, facility management and others.
 Agility undertakes after the completion of the deal to follow Kuwait’s Capital Markets Authority Law no 7 for year 2010, its bylaws and instruction no 1 for year 2012 related to Mergers and Acquisitions. According to KSE and CMA requirements, Agility will give the remaining shareholders of UPAC a purchase offer to buy their shares at a price of 320 fils set by Agility based on the average market price for the previous 6 months. ​

With reference to the above subject, please note that Agility’s AGM for the year ending 31st December 2011, was held on the 31st of May 2012 and approved all the articles of the Agenda including a 30% cash dividends (30 fils for every share) for shareholders who are registered on the shareholders’ record on the date of the AGM.

The minutes of the meeting will be sent once we receive it from the Ministry of Commerce.​

With regards to the KSE announcement dated 13 April 2010 , Agility is pleased with the decision of the U.S. Department of Justice (DoJ) to seek voluntary dismissal of the superseding indictment against its affiliate Agility DGS Logistics Services Company K.S.C.C.. This is the second time DoJ has sought to dismiss an indictment it brought against an Agility affiliate, the other being Agility DGS Holdings Inc. announced back in 2 April 2011.

It’s truly unfortunate that our hard-working employees have had to operate under this cloud for more than two years. We have maintained from the beginning that we did nothing wrong and the indictments were the result of an effort by the government to gain tactical advantage in this case.

Agility continues to believe that DoJ has criminalized what is, at most, a civil dispute relating to interpretation of certain provisions of the Prime Vendor food contact. The case is in pre-trial litigation in a U.S. District Court in Atlanta. Agility welcomes the opportunity to bring the relevant facts to light before an impartial jury.” ​

Please be informed that the board of directors have met on the 15th of May 2012 and approved the financial results for period ending 31/3/2012 according to the following:

  1. Current Period:
3 months ending

31/3/2012

3 months ending

31/3/2011

Net Profit (Loss) (KD) 7,083,000 7,704,000
Earning per Share (fils) 7.06 7.65
Total Current Assets (KD) 513,763,000 596,319,000
Total Assets(KD) 1,410,191,000 1,484,757,000
Total Current Liabilities(KD) 424,368,000 477,783,000
Total Liabilities(KD) 498,304,000 560,844,000
Total Equity attributed to holders of the parent company(KD) 900,489,000 918,885,000
Total Shareholders’ Equity(KD) 911,887,000 923,913,000

– Total Revenue from related parties reached 1,063,000 Kuwaiti Dinar

– Total Expenses with related parties reached 226,000 Kuwaiti Dinar

  1. Details of the Qualificat​ion and Emphasis of Matter expressed in the auditors report

Basis of Qualified Opinion

As further discussed in Note 12(c) to the interim condensed consolidated financial information, during the year ended 31 December 2006, a performance guarantee amounting to KD 10.1 million was called by a counterparty in relation to non performance of obligations under a contract operated by a subsidiary of the Parent Company and encashed during the year ended 31 December 2007. The amount was not expensed in the consolidated financial statements in respect of the year ended 31 December 2006, which in our opinion, is not in accordance with International Financial Reporting Standards. We have qualified our audit opinions and review conclusions in this regard on the consolidated financial statements since 31 December 2006. In 2009, the expert department of the Ministry of Justice issued a report on this matter which stated that the verdict should be issued in favour of the subsidiary in respect of most of the issues arising from the case. Pending final court ruling on this matter, in our opinion, other current assets should be decreased by KD 10.1 million and retained earnings attributable to the equity holders of the Parent Company should be decreased by KD 6.1 million and non-controlling interests should be decreased by KD 4.0 million.

Qualified Conclusion

Based on our review, except for the effect of the matter described in the preceding paragraph, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial information is not prepared, in all material respects, in accordance with IAS 34.

Emphasis of Matter

We draw attention to:

(i) Note 2 to the interim condensed consolidated financial information which describes that the Parent Company was indicted by a federal grand jury in the United States of America (“US”) on multiple counts of False Claims Act Violations. Furthermore, the United States Department of Justice also joined a civil qui tam lawsuit against the Parent Company under the False Claims Act. The indictment also includes certain subsidiaries of the Parent Company which were included in the indictment by the United States Department of Justice. The Department of Justice is claiming substantial damages for alleged violations in both the criminal and civil proceedings. The Group Companies (including the Parent Company) are suspended from bidding for new contracts with the US Government pending the outcome of the cases. The Group is also engaged in settlement discussions with the US Department of Justice. The ultimate outcome of these matters cannot presently be determined, and therefore no provision has been made in the interim condensed consolidated financial information; and

(ii) Notes 12(a) and 12(b) to the interim condensed consolidated financial information which describe the contingencies relating to the investigation into the freight forwarding business and termination of lease agreements.

Our conclusion is not further qualified in respect of the matters set out above.​

Agility, formerly known as Public Warehousing Company K.S.C., has filed a claim against the Defense Logistics Agency- Troop Support (“DLA”)at the Armed Services Board of Contract Appeals alleging that United States government officials employed by DLA and the Department of Justice (“DOJ”) conspired and acted in concert to intentionally deprive Agility of its rights under the Second Prime Vendor Contact (“PV2 Contract”), breaching the Contract’s express and implied terms, and violating regulatory duties.

Agility seeks a total of approximately $225 million comprising $158.9 million, plus interest, it is owed in performance based distribution fees (additional profit) under the PV2 Contract. The claim is in addition to damages it has sought in other claims related to transportation delays and unpaid interest on invoices that were paid late. The PV2 Contract obligated Defense Supply Center Philadelphia (“DSCP”), DLA’s predecessor agency, to fairly and objectively evaluate Agility’s performance of the Contract periodically. Agility earned additional distribution fees based on superior performance if two factors were met: 1) it received a “would definitely award” rating in DSCP’s objective evaluation; and 2) it met specified “fill rates” (that is, the percentage of orders Agility filled successfully). Agility always achieved the fill rate required.

DSCP’s original, objective evaluation of Agility stated that the contracting officer “definitely would award to [Agility] today given that I had a choice.” DOJ, which had been investigating Agility based on a false claims complaint filed under seal by a disgruntled former business associate of Agility, Kamal Sultan, asked DSCP to downgrade this recommendation, apparently concerned that a positive, objective evaluation would call into question DOJ’s already lengthy investigation of Agility. A senior DSCP official rejected DOJ’s request to downgrade, stating ‘”no” on changing the recommendation. This is CPARs – let’s not pick and choose the parts we like and dislike. We’re going to lose 2 [Contracting Officers] if this continues.”

In the face of DOJ’s interference, another senior DSCP official stated: “We are very concerned about the pressures being put on the [Contracting Officers] and the impact on their ability to continue to do their day to day job. Remember guys, please, this is one of the largest, if not the largest, and complex contracts within all of DLA. There is no and has never been a blue print for this program: getting commercial food products on a massive scale to combat units in a killing zone. The SPV program never ever did this before and yet over $1.5 BILLION in annual sales and very high customer satisfaction.”

DOJ persisted, increasing the pressure on DSCP to change its positive evaluation. THE DSCP contracting officer, in response to DOJ’s escalating pressure, explained: “While it is certainly not my intent to negatively impact an on-going investigation, the original report was written in good faith…While I am partially willing to add the above statement to the CPAR evaluation, it doesn’t quite feel right. I personally believe that people and corporations are innocent until proven guilty.” Despite the contracting officer’s comments and DSCP’s resistance, continued unyielding pressure and interference from senior government officials on DSCP became too great. DOJ prevailed, and the recommendation ultimately was downgraded.

Had DOJ officials and others not interfered with Agility’s contractual rights, and had the contracting officers fulfilled their independent contractual and regulatory duties, DSCP would have issued evaluations entitling Agility to nearly $158.9 million in additional distribution fee payments. These distribution fees were earned as a result of Agility’s spectacular, near-flawless performance, achieving near-perfect fill rates “getting commercial food products on a massive scale to combat units in a killing zone.”​ ​

Agility would like to announce that its 100% owned subsidiary, Agility Spain, has won a 3 years contract to transport 420 wagons from Spain to Kazakhstan for Talgo, a leading Spanish manufacturer of railway wagon and components.

This contract reflects Agility’s understanding of fast moving economies and helps the company to bring experience and know-how to industries such as engineering, energy, mining and heavy equipment supply.

Please note that the contract value is less than 5% of Company’s Capital thus it is not material according to the Disclosure Rule of the Stock Exchanges. ​

Please be informed that the board of directors has met on Thursday the 29th of March 2012 and approved the financial results for the year ending 31/12/2011 according to the following:

  1. Year End Results:
Year Ending 31/12/2011

(Current Period)

Year Ending 31/12/2010

(Previous Period)

Net Profit (KD) 27,043,000 25,108,000
Earning per Share (fils) 26.94 24.92
Total Current Assets (KD) 506,115,000 604,991,000
Total Assets (KD) 1,402,423,000 1,494,598,000
Total Current Liabilities (KD) 425,695,000 458,060,000
Total Liabilities (KD) 503,331,000 572,731,000
Total Shareholders’ Equity (KD) 899,092,000 921,867,000

– Total Revenue from related parties reached 1,019,000 Kuwaiti Dinar

– Total Expenses with related parties reached 92,000 Kuwaiti Dinar

  1. Proposed Distribution

The Board of Directors has proposed the below distribution for the year ending 31/12/ 2011, knowing that this recommendation is subject to the approval of the Annual General Assembly and other competent authorities.

Cash Dividends 30 % of the par value 30 Fils per share
  1. Source of distribution

Annual and retained earnings

  1. Details of the Qualification and Emphasis of Matter expressed in the auditors report

Basis of Qualified Opinion

As further discussed in Note 31 (d) to the consolidated financial statements, during the year ended 31 December 2006, a performance guarantee amounting to KD 10.1 million was called by a counterparty in relation to non performance of obligations under a contract operated by a subsidiary of the Parent Company and encashed during the year ended 31 December 2007. The amount was not expensed in the consolidated financial statements in respect of the year ended 31 December 2006, which in our opinion, is not in accordance with International Financial Reporting Standards. We have qualified our audit opinions in this regard on the consolidated financial statements since 31 December 2006. In 2009, the expert department of the Ministry of Justice issued a report on this matter which stated that the verdict should be issued in favour of the subsidiary in respect of most of the issues arising from the case. Pending final court ruling on this matter, in our opinion, other current assets should be decreased by KD 10.1 million and retained earnings attributable to the equity holders of the Parent Company should be decreased by KD 6.1 million and non-controlling interests should be decreased by KD 4.0 million.

Qualified Opinion

In our opinion, except for the effect of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2011 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.

Emphasis of Matter

We draw attention to:

(i) Note 2 to the consolidated financial statements which describes that the Parent Company was indicted by a federal grand jury in the United States of America (“US”) on multiple counts of False Claims Act Violations. Furthermore, the United States Department of Justice also joined a civil qui tam lawsuit against the Parent Company under the False Claims Act. The indictment also includes certain subsidiaries of the Parent Company which were included in the indictment by the United States Department of Justice. The Department of Justice is claiming substantial damages for alleged violations in both the criminal and civil proceedings. The Group Companies (including the Parent Company) are suspended from bidding for new contracts with the US Government pending the outcome of the lawsuit.. Prolonged suspension will have a material impact on the Group’s government related business. The Group is engaged in settlement discussions with the US Department of Justice. The ultimate outcome of the matters set out above cannot presently be determined, and therefore no provision has been made in the consolidated financial statements; and

(ii) Notes 31(a) and 31(b) to the consolidated financial statements which describe the contingencies relating to the investigation into the freight forwarding business and termination of lease agreements.

Our opinion is not qualified in respect of the matters set out above.​

Agility confirms that two of its subsidiaries have received a final decision from the European Commission (“Commission”) in connection with its investigation into the air freight forwarding industry. The Commission’s decision imposes a fine of €2.296 million on Agility’s UK subsidiary and a fine of €2.662 million on Agility’s Hong Kong subsidiary. Agility is carefully reviewing the Commission’s decision.

In October 2007, Agility’s UK subsidiary (involved in the freight forwarding business) along with other major players in the freight forwarding industry received requests for information from the Commission (the EU competition authority) in connection with an industry-wide investigation into the setting of surcharges and fees. Agility has cooperated fully with the Commission during the course of the investigation since it was launched in October 2007 and attaches great importance to ensuring full compliance by its business operations with all applicable competition laws.

As scheduled, Agility (PWC) and its wholly owned subsidiary Agility DGS Logistics KSCc filed several initial motions on Tuesday with the U.S. District Court in Atlanta in the case involving the Prime Vendor food-supply contracts. The motions included requests for dismissal of the case on the grounds that the Justice Department has failed to identify any fraudulent act by the two companies and on the grounds that the Justice Department has engaged in misconduct.

The court has set a March 12 status hearing in the case. ​

Agility has been involved in a legal dispute over the Prime Vendor food-supply contracts it held from 2003 to 2010. We anticipate developments in the case this month and wanted to make sure you were aware of them.

It is expected that Agility and the U.S. Justice Department will appear in court on January 13, 2012 where Agility will file its initial motions with the U.S. District Court in Atlanta, Georgia. These filings are important. They represent Agility’s first opportunity to challenge the allegations made by the U.S. Justice Department.
We also expect that on January 24, 2012 Agility and the U.S. Justice Department will appear in court in Atlanta for a previously scheduled hearing to assess the status of the case. At that hearing, the magistrate judge is expected to set future hearing dates and filing deadlines.
Agility believes the Justice Department has criminalized what is, at most, a civil contract dispute. In performance of the Prime Vendor contracts, Agility was open, transparent and accountable to the U.S. government, which approved its prices, suppliers and business practices for seven years. Agility, as it has stated for two years, is open to a resolution of the case, but its focus is now on bringing facts to light in court. ​​