Growth Presentation May, 2013 E 1 Disclaimer This presentation - - PowerPoint PPT Presentation

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Investor Presentation

May, 2013

Going for

Growth

E

2

Disclaimer

This presentation is not an offer or invitation to subscribe to or purchase any securities. No warranty is given as to the accuracy or completeness of the information in this presentation. You must make your own independent investigation and appraisal of the business and financial condition of KIPCO Nothing in this presentation shall form the basis of any contract or commitment whatsoever. This presentation is furnished to you solely for your information. You may not reproduce it to redistribute to any other person. This presentation contains forward-looking statements. These statements may be identified by such words as "may", "plans", "expects", "believes" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions. Various factors could cause future results, performance or events to differ materially from those described in these statements. No

• bligation is assumed to update any forward-looking statements

By participating in this presentation or by accepting any copy of the slides presented, you agree to be bound by the forgoing limitations.

3

Index

Bloomberg Ticker: KPROJ KK Reuters Ticker: KPRO.KW

Executive Summary

4

A diversified company with deep regional expertise and roots

# As of 31 Dec, 2012 * As on May 15, 2013

We are Sectors Track record Valuation* Operating holding company with an AuM of US$31 bn# Primarily financial services and media Majority owned by ruling family

• f Kuwait

21 years of continuous profitability, 11 years of continuous dividends Credit ratings: S&P: BBB- Moody’s:Baa3 P/BV of 1.1x. Attractive NAV Listed on Kuwait Stock Exchange with a market cap of US$2.2 bn* A transparent company with an experienced management team

Gateway to MENA with superior access to opportunities

Geography Middle East and North Africa

5

Our presence by geographies & sectors

• 1. Based on total reported segmental revenues and assuming consolidation of GIC as a subsidiary
• 2. Based on segmental reporting revenues of US$ 703 mn (Before inter group eliminations) and including GIC’s & OSN’s revenue of US$ 85mn & 110 mn.
• 3. Based on segmental reporting assets of US$ 29.9 bn (Before inter group eliminations) and GIC & OSN’s assets of US$ 1.1bn & 1.6 bn respectively

Geography Major Sectors

Commercial banking Asset management & investment banking Insurance Media Real Estate Industrial Others Revenues1 (2012)

• Kuwait

KSA UAE Bahrain Lebanon Egypt Tunisia Algeria Jordan

• 6%

49% 5% 4% 6% 11% 13% 4%

Revenues2 (Q1’13)

20% 7% 16% 12% 41% 0% 8%

Assets3 (Q1’13)

3% 7% 5% 4% 73% 0%

Attractive presence in high growth economies and promising sectors

• Others
• 4%

Iraq

• 2%

6 69 139 35 139 96 91 1997 2012 2002 2012

Adjusted Share Price (US cents) Cumulative Dividend (US cents)

Total Shareholders’ Return (Share Price Return and Dividend Yield) Growth Last 15 years

Note: Data adjusted for stock dividend

Last 10 years

206 199 36 249 39 244 1997 2012 2002 2012

Book Value Per Share Growth (in US cents) Last 15 years Last 10 years

Note: Assuming no dividend was paid

Track record of generating attractive returns

7 1.0 0.7 0.3 0.1 0.1 0.1 (0.1) (0.6) 1.6 1.6 1.4 0.5 0.1 0.1 0.1 0.0 0.8 Burgan Bank OSN United Gulf Bank Gulf Insurance Company United Real Estate Company United Industries Company Net other Assets Net Debt NAV KIPCO Share Price in US$ BVPS (US$) Market Cap Share Control Premium (Note 1) 1. Control Premium has been assumed at 50% to the respective market prices to reflect the value of significant stakes in these entities. 2. OSN has been taken at fair value (~US$ 1.5 bn) used for Joint venture accounting in audited financials of KIPCO (notes 9 & 22 of annual financial statements for year ending 2009), further to merger of Orbit and Showtime in August 2009. Other components of the NAV are at book value as of March 31, 2013. 3. Operating expenses of US$0.03 per share adjusted with net other assets ; prices are as of May 15, 2013

Net asset value

NAV Computation (US$ per Share)

Note 2

Attractive valuation for investors

47% 455 fils 405 fils 667 fils

Note 3

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Q1 2013 Snapshot

Growth (YoY)

Revenues (US$ m)

197 110 8 85 47 98 31% 27% (10)% 11% 48%* 19% Burgan Bank OSN KAMCO# GIC URC SADAFCO^

Overall growth is in line with Shafafiyah forum guidance

*Calculated excluding non recurring income on sale of Vardun resulting in gain of US$74 mn in Q1’12 ^ Represents Q4’ numbers; as SADAFCO follows March ending #Management fee is growing steadily; effect of cyclicality in income from financial services (advisory business)

9

Index

Strategy

10

Strategic roadmap

Target ROE: 20% MENA Balanced Portfolio Team Approach Being first in the region

Building Businesses

Regional Outlook Investing in engines

• f growth

Diversified revenue streams Strong managerial expertise Thought leadership

Investment in companies with sustainable and predictable cashflows

11

Controlling or majority stakes

Notes: 1. Effective Stakes given are as of March 31, 2013 2. Market Capitalisation as of May 15, 2013 (Source: KAMCO Research) 3. Stake in KAMCO is held through UGB 4. GIC has 10 board members – 4 from KIPCO , 3 from Fairfax and 3 independent directors 5. OSN has 7 board members – 2 each from KIPCO and Mawarid and 3 independent directors

* Capital Intelligence

Solid & well managed portfolio of fast growing and attractive industries

Business Segments Main Entities Commercial Banking Asset Management & Investment Banking (AMIB) Insurance Media Real Estate KIPCO Effective Stakes1 60.2% 96.1% 82.5%3 44.8% 60.4% Board Representation 6 of 9 6 of 6 6 of 6 4 of 104 2 of 75 Market Cap (US$ mn)2 3,347 418 116 366 Unlisted Credit Ratings S&P: BBB+/A2 Moody’s: A3/ P2 CI*: BBB CI*: BBB- S&P: A- AM Best: A- Unrated 64.8% 4 of 7 490 CI*: BBB-

12

Active management

1995 Net Interest Margin 1.3% 1998 Book Value US$ 193M 1995 By GPW #3 of 5 1996 Sub. Base 2000 AUM US$ 0.7Bn Q1’13 Net Interest Margin 2.8% Q1’13 Book Value US$ 463M 2012 By GPW #1 of 32 Q1’ 13 Sub. Base^ 782K Q1’13 AUM US$ 8.9Bn

▪ Transformed from a local player to regional player ▪ Hired new management in 2010/11 to execute on regional strategy ▪ Focused on growth with prudent loan underwriting

Key businesses – progress indicators

Business Then Now

Active Management – KIPCO Support & Action

▪ Incubated pan-MENA commercial banking network ▪ Equipped to assess / develop opportunities identified by KIPCO ▪ Refining strategy to add more value to financial services sector ▪ Transformed from a local player to regional player ▪ Gained market leadership in 3 key geographies ▪ Partnered with Fairfax to strengthen operations and enhance growth ▪ Merged with Orbit in 2009 to create leading pay TV operator in MENA ▪ Gained access to premium content and rolled out anti-piracy initiatives ▪ Focused on subscriber acquisition ▪ Spun-off AM/IB division to separate client funds from KIPCO funds ▪ Full range of asset management & investment advisory services in Kuwait ▪ Streamlined operation in 2012 to focus on core business

^ Represents subscriber base post merger

Number of success stories demonstrating consistent track record of value creation

13

Index

Performance Update

14

 Net profit of US$6 mn  Cost base rationalization continues − Total expenses reduced by 15%  27% growth in revenues; 30% growth in subscriber base  EBITDA margin reached 25%  2nd quarter of continuous net profit  Revenue grew by 11% & net profits grew by 2% driven by − 16% growth in net premium earned − 12% growth in investment income

Q1 2013: Operating performance continues to be strong

 31% growth in operating income; 10% growth in pre tax profits

 NPA reduced to 5.6% (2012: 7%)  Aggregate provision coverage increased to 141% ( 2012: 117%)

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6.0 1.7 0.7 0.1 0.0 8.4 7.2 1.8 0.9 0.1 0.0 1.8 11.8 BB JKB AGB BOB TIB BBT^ BB Group Q1'12 Q1'13

Burgan Bank

327 298 349 79 82 260 283 327 70 115 2.8% 2.6% 2.6% 2.6% 2.5% 2010 2011 2012 Q1'12 Q1'13 Kuwait Regional NIM%

Operating Income

US$ million 550 587

Asset Quality

7.3% 10.5% 7.0% 5.6%

72% 49% 58% 73% 2010 2011 2012 Q1'13 NPA to Gross Credit Facilities Provision Coverage NPA coverage (aggregate of collateral)

111% %

581

108% 117%

^ BBT represents Burgan Bank Turkey (Eurobank Tekfen acquired by Burgan bank and renamed) 17 180 198 62 55 255 120 143 22 26 272 299 340 83 80 2010 2011 2012 Q1'12 Q1'13 Provisions charge to P&L

Net Profit & Provisions

US$ million

Loan Growth

US$ billion

21% 6% 32% 40%

197 7.1 2.1 0.7 0.6 0.2 10.7 8.1 2.2 1.0 0.9 0.3 1.6 13.9 BB JKB AGB BOB TIB BBT^ BB Group Q1'12 Q1'13

Deposit Growth

US$ billion

14% 3% 41% 31%

Growth in loan Growth in Deposit

19%

Ex BBT 350 310 226 292 263 317 465 417 613 627 691 710 2010 2011 2012 Q1'13 Specific General US$ million

Total Provision

16%

Ex BBT

141%

150

16

28% 34% 35% 54% 38% 23% 35% 34% 50% 35% 90% AGB JKB BoB TIB Average BBT^ Q1'12 Q1'13 4.5% 3.7% 2.2% 1.2% 2.9% 3.8% 4.0% 1.7% 0.9% 2.6% 4.5% AGB JKB BoB TIB Average BBT^ Q1'12 Q1'13

Burgan Bank: Regional operations

1.1 3.2 0.7 0.5 5.4 1.4 3.3 1.1 0.5 6.3 2.6 AGB JKB BoB TIB Total BBT^ Q1'12 Q1'13

Net Interest Margin Cost to Income Total Assets Operating Profit Net Profit

US$ billion Percentage Percentage 20 23 4 1 49 27 25 7 2 61 3 AGB JKB BoB TIB Total BBT^ Q1'12 Q1'13 US$ million 11 3 2 1 17 17 6 3 (1) 25 (3) AGB JKB BoB TIB Total BBT^ Q1'12 Q1'13 US$ million 5.4% 1.4% 2.1%

• 0.92%

2.0%

• 0.6%

37.3% 9.2% 12.4%

• 4.7%

13.6%

• 3.9%

AGB JKB BoB TIB Average BBT^ ROAA ROAE

Returns (Q1’2013)

Percentage ^ BBT represents Burgan Bank Turkey (Eurobank Tekfen acquired by Burgan bank and renamed)

17

Burgan Bank: NPA- cyclical & not structural

208 256 173 193 171 121 122 90 110 11.0% 11.8% 6.3% 6.0% 6.1% 4.1% 3.5% 1.7% 1.4% 9.5% 7.3% 10.5% 7.0% 5.6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1'13 NPA NPA Ratio 112 129 139 168 139 140 146 148 354 637 613 627 691 710 54% 50% 80% 87% 81% 116% 119% 165% 321% 57% 72% 49% 58% 73% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1'13 Provisions Provision Coverage %

 As at end of Q1’13, the combined coverage of non performing assets (NPA) is 141%  NPA Ratio declined from 7.0% in 2012 to 5.6% in Q1’13  ~60% provisions in general category as on March’13  Prudent approach to credit cycle − Loan Loss Reserves (against Loans and Advances to Customers) created during 2008-09 higher than those created during 2000-01 cycle

NPA (US$ million) NPA Ratio (Percentage) Provisions (US$ million) Note: Figures are based on re-stated financials as per Annual Report NPA Coverage (Percentage)

NPA Trend Provisions Trend

1,116 850 1,287

90% 111% 108%

NPA coverage (aggregate

• f collateral)

%

1,193

117%

971

141%

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OSN

Million MENA Region Latin America UK India US Population 419 579 63 1,223 314 Households 63 NA 26 225 132 TV Households 54 120 25 135 116 Pay TV 2 37 14 112 102 TV HHs /HHs (%) 85% NA 94% 60% 88% Pay TV/ TV HHs (%) 4% 30% 54% 83% 88%

Notes: 1. Population excludes Palestine, Somalia, & Chad 2. Source: IMF WEO Database April’13, KIPCO research in 2012, OSN research in 2012, KIPCO research

Low Pay TV penetration in MENA region indicates huge market potential MENA1 TV Overview

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37 33 30 33 48 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13

OSN (Cont’d)

KSA 25% UAE 31% Kuwait 10% Bahrain 4% Egypt 9% Others 21%

17% 17% 17% 16% 17% Q1'12 Q2'12 Q3'12 Q4'12 Q1'13

Thousand

Net Adds

Thousand

Subscribers 601 672 702 734 782 Q1'12 Q2'12* Q3'12 Q4'12 Q1'13 Subscribers by country (March 2013) Churn

Quarterly Revenue run rate of US$110 mn

* includes reclassification of erstwhile wholesale distribution into subscriber base amounting 38k in Apr’12. This is not included in net additions chart

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United Gulf Bank

Investment Income 109 54 29 4 3 2010 2011 2012 Q1'12 Q1'13

US$ million

39 1 11 9 6 29 24 13 2 1 68 26 25 12 7 2010 2011 2012 Q1'12 Q1'13

US$ million

Net Profit & Provisions

Provisions Charge to P&L

Revenue 163 109 93 32 22 2010 2011 2012 Q1'12 Q1'13 AUM & Capitalisation

US$ million US$ billion

8.0 7.5 8.0 8.1 2010 2011 2012 Q1'13 23.9% 19.5% 18.2% 23.2% CAR

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30 35 31 9 6 2010 2011 2012 Q1'12 Q1'13

US$ million

Net Underwriting Income

US$ million

Gross & Net Premium Written

Gulf Insurance Company

211 239 262 86 97 426 476 517 140 150 2010 2011 2012 Q1'12 Q1'13

Net Premium Written Gross Premium Written

Combined Ratio

70% 67% 75% 67% 75% 19% 21% 17% 24% 20% 2010 2011 2012 Q1'12 Q1'13 Loss Ratio Expense Ratio Combined Ratio

89% 89% 95% 92%

27 25 33 8 8 2010 2011 2012 Q1'12 Q1'13

US$ million

Net Profit

12.7% 10.9% 10.7% 12.7%

Return on Equity Net Profit

90% 12.3%

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Total Revenue

85 124 197 32 47 2010 2011 2012 Q1'12 Q1'13

Net Profit

20 36 80 (20) 7 2010 2011 2012 Q1'12 Q1'13

Operating Profit

35 70 114 (11) 16 2010 2011 2012 Q1'12 Q1'13

US$ million

Total Assets & Return on Equity

1,294 1,855 1,959 1,954 2010 2011 2012 Q1'13

US$ million

United Real Estate Company (URC)

US$ million US$ million

2.9% 5.1% 10.7% 3.8%

Return on Equity Total Assets

Represents non recurring income on sale of Vardun resulting in gain of US$74 mn) 105 74 63 74 53 74

23

51% 30% 11% 4%4%

Egypt (Sharem Al-Shaikh land, Egypt land, & Uroba Land) Qatar (Entertaintment & Energy City) Dubai (Meydan land) Jordan (Areej land) Syria (Sahnayia Land & Darkhabiya)

Total Assets

48% 15% 23% 0% 7% 2% 5%

Investment properties Land for development Projects under construction* Fixed assets (PPE) Investments in associated companies Cash Others

Projects Under Construction Investment Properties

Total : US$ 935 million Total Assets US$ 1,954 million

URC: Balance Sheet (Break-up) as of March 31 2013

* Includes Raouche which is reported under inventory in the financials Total Assets US$ 458 million

Land for development

Total : US$ 289 million

33% 22% 19% 6% 4% 3% 3% 2% 8%

KIPCO Tower - Kuwait Marina World - Kuwait Fairmount - Egypt Shaheed Tower - Kuwait City Tower - Kuwait Marina Plaza - Kuwait Bahmdoun - Lebanon Marina Hotel - Kuwait Others

35% 21% 17% 14% 6% 4% 3% 0%

Salalah Mall - Oman Abdali Mall - Jordan Raouche* - Lebanon Aswar - Egypt Abdali Mall Land - Jordan Shuwaimiya Project - Oman Salalah Al Reef

1 1 3 2 2 3

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KIPCO Consolidated: Financial performance

1,451 1,249 1,576 431 510 2010 2011 2012 Q1'12 Q1'13 160 107 111 30 30 2010 2011 2012 Q1'12 Q1'13

Net Income Revenues

US$ million US$ million

20.1 20.8 25.6 25.7 2010 2011 2012 Q1'13

Consolidated Assets

US$ billion

25 2-4 years, 55.0% > 4 years, 45.0%

KIPCO has cash & bank balance of US$616 mn with no debt maturities till Jan’16 − The current cash balance covers all debt

• bligations due till Sep’ 2016(2.2x

coverage) Placements are with investment grade rated domestic institutions Placements are of short duration and are typically rolled over on a monthly basis Liquidity Debt Type

MTN 70% Bonds 20% Term Loan 10% 2.9 yrs 4.6 yrs 4.8 yrs Before 2020 bond issue 31-Dec-10 31-Mar-13

Enhanced Debt Maturity Profile Debt Maturity

Total Debt: US$ 1.4 billion Total Debt: US$ 1.4 billion

Proactive liability management ensuring longer maturity profile

KIPCO Parent debt profile: As at 31 March 2013

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Index

Conclusion

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Why KIPCO?

Well positioned to deliver 20% return in medium term

Outstanding track record

Pan MENA Player

Compelling strategy Experienced management team Strong liquidity Transparent Supportive primary shareholder

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Index

Annexure 1 : Portfolio Companies

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Recent Highlights

Burgan Bank (BB): Overview

Kuwait based commercial bank with a regional presence in nine countries Offers a wide range of corporate, retail and treasury products through a network

• f over 217

branches and over 277 ATMs  Operating profit grew by 12% to US$ 105 mn in Q1’13  Shareholder’s Equity grew by 4% to US$1.8 bn in Q1’13 from US$1.7 bn in 2012  CAR of 18.6%, amongst the highest in the industry

> > >

KIPCO Group Holds 60.2% stake, while KIPCO directly holds 43.0% stake (as on March 31, 2013) Listed on the Kuwait Stock Exchange with a market cap of US$3,347 mn as of May 15, 2013 BBB+ rating from S&P and A3 rating from Moody’s First and only ISO certified Bank in GCC to achieve certification for all its banking operations

> > >

Overview

A regional player with a presence in growth markets

>

2nd largest conventional bank in Kuwait in terms of assets (total assets of US$21.4 bn as of March 31, 2013)

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OSN: Overview

 30% annualized growth in subscriber base over March’12 to reach 782k in March’13 − Churn reduced to 17% as of March’13 after platform closure from 54% in Dec’10 − Continuous positive EBITDA since Apr’11  OSN now carries 108 channels including 34 HD channels (highest in the region)  Exclusive Western & Arabic Content − Exclusive contracts with all 8 major Hollywood studios  Recently launched 5 new Arabic channels and exclusive Filipino content  Technology leadership continues with OSN play and internet enabled OSN Plus HD

> > >

Largest digital satellite premium Pay TV operator in MENA region Licensed to operate across 24 countries in MENA including KSA, UAE, Kuwait, Egypt, Bahrain, Qatar and Jordan as focus markets Showtime and Orbit merged w.e.f . Aug 1, 2009 to form Panther Media Group Limited (PMGL) Market leading technology includes integrated DVR & subscription VOD KIPCO Group holds 60.4% stake in the merged entity (as on March 31, 2013)

> >

Recent Highlights

OSN is the flagship media company of KIPCO Group

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United Gulf Bank (UGB): Overview

Offers asset management, investment banking, brokerage and advisory services  Strong Basel II capital adequacy ratio of 24% as on March 31, 2013  Assets Under Management

• f US$ 8.1 bn as on March 31, 2013

 Cost base rationalization in process to improve efficiency in operations; total expenses reduced by ~ 15% to US$6 mn in Q1’13

> > >

Asset management and investment banking (AMIB) business KIPCO Group Holds 96.1% Stake, while KIPCO directly holds 87.0% stake (as on March 31, 2013) Listed on the Bahrain Stock Exchanges with a market cap of US$418 mn as of May 15, 2013 Credit rating of BBB from Capital Intelligence

> >

Focused on growing the financial services network across the MENA region

Recent Highlights

33

Gulf Insurance Company (GIC): Overview

 Net profit grew by 2% to US$8 mn in Q1’13  Composition

• f GPW

 Geographical : 52% Kuwait & 48% Non-Kuwait  Line of business: 52% Life & Medical ; 48% Non-Life (4% Marine, 13% Property,19% Motor,6% Engineering and 7% General)

> >

Multi-line insurance provider with presence across the 9 MENA countries through subsidiaries KIPCO Group Holds 44.8% Stake, while KIPCO directly holds 39.6% stake (as on March 31, 2013) Listed on the Kuwait Stock Exchange with a market cap of US$366 mn as of May 15, 2013 Provides coverage in the areas of marine, aviation, property, engineering, casualty, life and health insurance, with a wide range of conventional and takaful insurance solutions and micro finance insurance in Egypt Market leadership positions in Bahrain (by GPW), Jordan (by GPW) and Egypt (by Technical profit) among the private sector A- Rating from S&P

> > > > >

Market leader in Kuwait (by GPW and Direct premiums) for eleven consecutive years

Gulf Insurance Company is ranked 8th among the Private sector players in the MENA region in terms of GPW

Overview

>

Operates through a network

• f 50 branches across

the region

Recent Highlights

34

United Real Estate Company (URC): Overview

Sizeable portfolio of good quality properties; Large unencumbered asset base

> >

KIPCO Group holds 64.8% consolidated stake, while KIPCO directly holds 36.3% stake (as on March 31, 2013) Listed on the Kuwait Stock Exchange with a market cap of US$490 mn as of May 15, 2013

>

URC is devoted to excellence in securing and managing the best prospect developments, providing the best quality services and allegiance to entrusted clients

>

Leading integrated real estate company with presence in Kuwait & MENA

Overview

Major real estate player in Kuwait, ranked first in real estate sector on KSE (revenues basis)

>

Recent Highlights

 Excluding gain on sale of assets in Lebanon, net profits (recurring) grew 1.4x to US$7 mn in Q1’2013  Over the next few years, targets to develop projects spread over Oman, Jordan, Lebanon and Egypt in various segments including residential, office hospitality and commercial Stable rental income; Rental income growth prospects supported by newly completed KIPCO Tower and upcoming Salalah Gardens Mall

>

35

Major Real Estate Properties Developed & Operated by URC

1979: Acquired Fairmont Hotel, Egypt 1994: Developed Al Khour Resort, Kuwait as BOT 1997: Developed Saleh Shehab, Kuwait as BOT 1999: Developed Al Shaheed Tower, Kuwait 1999: Developed Marina Hotel, Kuwait as BOT 2001: Acquired City Tower, Kuwait 2003: Acquired Bhamdoun Hotel, Lebanon 2003: Acquired Marina Plaza, Kuwait 2005: Developed Marina World, Kuwait as BOT 2012: Developed KIPCO Tower, Kuwait

36

United Industries Company (UIC): Overview

Major investments are Saudia Dairy and Foodstuff Company (SADAFCO) and Al Qurain Petrochemical Industries Company (QPIC)  Net profits grew 37% from US$9 mn in Q1’2012 to US$13 mn in Q1’2013

• Due to 22% growth in income from associates
• Due to decline in operating expenses and finance cost

>

Listed on the Kuwait Stock Exchange in 1997, it has market cap of US$215 mn as of May 15, 2013 KIPCO Group holds 72.2% consolidated stake, while KIPCO directly holds 69.6% stake (as on March 31, 2013)

> >

UIC aims to be a leading regional investment house with specialized activities in the Industrial sector

>

Established in 1979, UIC invests in the industrial sector in Kuwait and the region

Overview

Recent Highlights

37 34 29 32 93 109 2010 2011 2012 Q1'12 Q1'13 18 26 29 10 12 2010 2011 2012 Q1'12 Q1'13

Income from Associates Total Income

14 4 12 9 13 2010 2011 2012 Q1'12 Q1'13

Net Profit

US$ million

633 632 599 830 2010 2011 2012 Q1'13

Total Assets

US$ million

United Industries Company: Financial performance

US$ million US$ million Note: Due to adoption of IFRS 10. SADAFCO is now consolidated with UIC, resulting in prior period number becoming incomparable (which was earlier accounted for as associates )

38

Saudi Dairy & Foodstuff Company (SADAFCO): Overview

Leading dairy and foodstuff company having operations across the MENA region

> >

Listed on the Saudi Stock Exchange with a market cap of US$628 mn as of May 15, 2013 Current product portfolio includes milk powder, flavored milk, snacks, juices, ketchup, butter, breakfast cream, cheese products and fries Operates through two manufacturing facilities located in Jeddah, with distribution network across GCC KIPCO Group through UIC is the largest shareholder of SADAFCO, with 40.1% stake (as on March 31, 2013)

> > >

SADAFCO is focused to be the leading dairy & foodstuff company in GCC by providing quality products to its customers

>

Established in 1976 as a pioneering venture in dairy sector, with commencement

• f production in UHT

Milk plant in Jeddah in 1977

Overview

>

Highest market share in UHT milk, tomato paste and co-market leader in ice cream in Saudi Arabia and also has a growing presence in the snacks market

39 178 194 209 226 2009/10 2010/11 2011/12 2011/13

Total Revenue

273 302 356 413 2009/10 2010/11 2011/12 2012/13

Total Assets Net Profit

US$ million

Total Shareholder’s Equity

257 286 292 294 2009/10 2010/11 2011/12 2012/13

US$ million

Saudi Dairy & Foodstuff Company: Financial performance^

US$ million US$ million *Net Profit for 2009/10 is exceptionally high due to extraordinary gain from sale of Saudi New Zealand Milk Products Company(SNZMP) ^Financial year ended on 31 March % of Net Sales

54 34 40 44 2009/10* 2010/11 2011/12 2012/13

20% 11% 11% 11%

40

Qurain Petrochemicals Industries Co. (QPIC): Overview

>

Listed on the Kuwait Stock Exchange, with a market cap of US$800 mn as of May 15, 2013 From the time of establishment, QPIC’s capital was committed to four petrochemical investments in Kuwait i.e. EQUATE, The Kuwait Olefins Company (TKOC), The Kuwait Aromatics Company (KARO) & The Kuwait Styrene Company (TKSC) KIPCO Group through UIC holds 18.6% stake as on Dec 31, 2012

> > >

QPIC aims to become a leading company in the energy and petrochemical sectors through direct investments/ JVs/ alliances as well as through the creation of new, innovative investment opportunities in the petrochemical and related sectors

Established as a holding company focusing on investment opportunities in petrochemicals, oil & gas and energy related sectors

Overview

41

Total Income

30 (3) 130 91 2009 2010 2011/12 2012/13

Total Assets

25 (7) 116 79 2009 2010 2011/12 2012/13

Net Profit

US$ million

Total Shareholder’s Equity

672 678 899 1,021 2009 2010 2011/12 2012/13

US$ million

Qurain Petrochemicals Industries Co: Financial performance

US$ million US$ million

628 672 887 997 2009 2010 2011/12 2012/13

On June 27, 2012, The company has changed its financial year end from 31 December to 31 March.

42

Index

Annexure 2 : Executive Management

43

KIPCO: Executive management

KIPCO Board of Directors is actively involved in overseeing the management and strategy of the Company under the Chairmanship of Sheikh Hamad Sabah Al Ahmad Al Sabah

 Joined KIPCO in 1990; Board and committee member of American University of Kuwait, MIT  BSc from MIT and MBA from Harvard University  Joined KIPCO Board in 1990  Recipient of Arab Bankers Association of North America Achievement Award (2005)  Joined KIPCO in 1988  Recipient of the MENA Private Sector CFO of the Year Award (2008)  Joined KIPCO in 2001, previously worked at Anderson & Co.  Graduate of Lebanese American University, Holds CPA and CMA

Faisal Hamad Al Ayyar Vice Chairman Pinak Maitra Group CFO Mazen Hawwa Group Senior Vice President Samer Subhi Khanachet Group COO

 Joined KIPCO in 2006, previously held leadership positions for Cable & Wireless and Bell Canada  B.LL from Laval, LL.M Osgoode, M.Litt. Oxford

Robert Drolet Senior Vice President

 Joined KIPCO Group in 1997; appointed as KIPCO’s Banking CEO in 2010  Graduate in Accounting from Kuwait University and Diploma in Banking Studies, Kuwait

Masaud Hayat CEO - Banking

 Joined KIPCO in 2006, previously worked at KPMG  Holds a CPA, CISA, CIA and B.Sc. in Accounting

Mohsen Ali Husain Group Chief Internal Auditor

 Joined KIPCO Group in 1993  Associate Member of the ICA in England and graduate of Hull University

Iqbal Mohamed President

 Joined KIPCO in 2007, previously a senior consultant at Hill & Knowlton  Over 25 years of experience in public relations  M.Sc. from Edinburgh University, Scotland

Robert Hipkins Group Communication Director

 Joined KIPCO in 2007, previously Head Asset & Liability Management for HBoS Corporate in Edinburgh, Scotland  Fellow of ICA, CFA and member of ACT

Declan Sawey Group Treasurer

 Joined KIPCO in 1995, previously with Burgan Bank Treasury  MBA in 1986 from USI University

Adel Al Waqayan Treasurer

 Joined KIPCO in 2012, previously Head of Human Resources at the Kuwait Foreign Trading Contracting Investment Company (KFTCIC). He is on the Board of the American Management Association International in New York.

Khaled Al Sharrad Group Chief Human Resource & Admin. Officer

 Joined KIPCO in 1992 and became in charge of KIPCO’s Investment Division from 1996 to 1999  BSc in Accounting from Kuwait University

Tariq Abdulsalam CEO - Investment

 Joined KIPCO Group in 2013, previously Senior Vice President in Pictet & Cie.  Over 30 years of experience in global and regional banking

Osama Al Ghoussein SVP - Banking

44

Index

Annexure 3 : Key Companies

45

KIPCO Group companies

Burgan Bank is one of Kuwait’s leading commercial

• banks. Burgan has 23 branches in Kuwait and one of

the biggest ATM networks in the country. Burgan is one

• f the MENA region’s fastest growing banks and has

controlling stakes in Gulf Bank Algeria, Jordan Kuwait Bank and the Bank of Baghdad. Burgan is listed on the Kuwait Stock Exchange. www.burgan.com United Gulf Bank (UGB) is KIPCO’s investment banking

• peration

based in Bahrain. Offering a range

• f

commercial and investment banking and asset management services, the bank also manages a diversified portfolio of investments in private equity funds, private equities, structured products, trading portfolios and provides a range of treasury activities. UGB is listed

• n

the Bahrain and Kuwait Stock Exchanges. www.ugbbah.com

Rabih Soukarieh

Acting CEO UGB The Gulf Insurance Company (GIC) is the leading insurance company in Kuwait and has become one of the MENA region’s biggest insurance networks with

• perating companies in Saudi Arabia, Jordan, Lebanon,

Syria, Egypt and Bahrain. GIC offers a full range of products including life, motor, accident and medical

• insurance. The company is listed on the Kuwait Stock

Exchange. www.gulfins.com.kw

Khaled Al Hassan

MD & CEO GIC OSN is the leading pay-TV operator in the MENA region. The company is a result of the merger between Showtime and Orbit which was completed in 2009. The company

• ffers

85 channels providing the latest premium entertainment including the latest Hollywood movies and series, international sports and Arabic content. www.osnetwork.com

David Butorac

CEO OSN KAMCO is KIPCO’s asset management and fund management company. Its business includes brokerage services, tailored portfolio management, forward trading and local and international fund management. KAMCO also provides corporate finance advisory services, mergers and acquisition services, IPOs, private placements, debt issuance and investment research and evaluation. KAMCO is listed

• n

the Kuwait Stock Exchange. www.kamconline.com

Faisal Sarkhou

Acting CEO KAMCO The United Real Estate Company (URC) is KIPCO’s real estate development company. URC is currently developing properties in Kuwait, Oman, Egypt, Qatar, Jordan, Syria, the UAE and Lebanon. These properties include residential, commercial, leisure and retail

• projects. The company is listed on the Kuwait Stock

Exchange. www.urconline.com

Mohammad Al Saqqaf

CEO URC

Eduardo Eguren

CEO Burgan Bank

46

KIPCO Group companies (cont’d)

The United Industries Company (UIC) is KIPCO’s industrial holding company. UIC has holdings in a variety

• f

industrial sectors including stakes in SADAFCO – one of the leading food manufacturers in Saudi Arabia – and the Qurain Petrochemical Industries

• Company. UIC is listed on the Kuwait Stock Exchange.

www.uickw.com

Sheikh Sabah Mohammad Abdulaziz Al Sabah

Chairman UIC United Gulf Management is KIPCO’s subsidiary in the United States. The company – based in Boston - is responsible for identifying strategic resources to support KIPCO’s financial services, real estate and media

• perations.

www.kipco.com

Iqbal Mohamed

President UGM Pulsar Knowledge Centre is KIPCO’s consulting company based in India. PKC offers services and solutions in business advisory, financial research and analysis. It also provides KIPCO Group Companies and external clients with website design and management services www.pulsarkc.com

Narendra Baliga

Head, COO PKC

United Gulf Management, Boston, USA

The Kuwait Hotels Company (KHC) is KIPCO’s hotel and hospitality services company. KHC is the holding company for Safir International Hotels – one of the region’s premier hotel companies with a total of 15 hotels throughout the Middle East and North Africa.. KHC is listed on the Kuwait Stock Exchange. www.khc.com.kw

Fawzi Al Musallam

CEO KHC The Qurain Petrochemicals Industries Company (QPIC) is one of the leading private investors in petrochemical projects both inside and

• utside

Kuwait. QPIC has invested in the projects such as the expansion of Kuwait’s ethylene and benzene production plants. The company is listed on the Kuwait Stock Exchange. www.qpic-kw.com

Sadoun Al Ali

CEO QPIC The Saudi Dairy and Foodstuff Company (SADAFCO) is

• ne of the most profitable companies in the United

Industries Company’s investment portfolio. SADAFCO was established in 1976 and is a leader in the region’s dairy and foodstuff industry producing almost 700 million items every year. The company is listed on the Saudi Stock Exchange www.sadafco.com

Waltherus Matthijs

CEO SADAFCO

47

Index

Annexure 4 : Per Share Return

48 12 14 9 9 2008 2009 2010 2012

KIPCO: Per share return

9 7 7 7

5.2% 4.6% 6.6% 5.1%

2009^ 2010^ 2011^ 2012^

DPS Dividend Yield

EPS Book Value DPS ROE

Cents per share Cents per share Cents per share

* An additional 10% stock dividend was also paid ^ An additional 5% stock dividend was paid in 2009, 2010, 2011 and 2012

169 165 161 147 2009 2010 2011 2012 Per cent 6.7% 8.0% 5.2% 5.7% 2009 2010 2011 2012

49

Index

Annexure 5 : Trends

50

KIPCO: Net asset value (NAV)

NAV/Share Position*

* Control Premium has been assumed at 50% to the respective market prices to reflect the value of significant stakes in these entities. OSN (Panther) has been taken at fair value used for Joint venture accounting in audited financials of KIPCO (note 9 of Annual financial statements for year ending 2009), further to merger of Orbit and Showtime in August 2009. Other components of the NAV are at book value.. Note: At the CMP (as on May 15, 2013), KIPCO’s NAV is US$2.3 per share vis a vis the market price of US$1.6 per share (refer slide 7 for details)

As at March 2013 end, KIPCO’s NAV was US$2.2 per share vis-à-vis the market price of US$1.6per share and the book value of US$1.4 per share

US$

86% 82% 69% 40% 136% 111% 126% 150% 128% 147% 129% 101% 78% 72% 79% 40% (5%) 13% 6% (7%) 51% 3% 15% 27% 23% 46% 51% 36% 34% 13% 11% (10%) (100)% (50)% 0% 50% 100% 150% 200%

• 1

2 3 4 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 NAV per share Market Price Book Value per share NAV (higher/ (lower) ) to Stock Price BV (higher/ (lower) ) to Stock Price

51

Ownership

Total Shares as of March 31, 2013: 1,403.4mn

Shareholding Profile: March 2013

 Major shareholders

• f

KIPCO are members of ruling family of Kuwait  They hold their ownership interest in KIPCO through an investment vehicle Al Futtooh Holding Company K.S.C. (AFH)

Primary Shareholder (AFH) 45.2% Investment Funds 4.1% Investment Companies & other Institutions 40.7% HNIs 3.2% Retail Investors 4.3% Treasury Shares 2.5%

52

KIPCO Group: Market data

Entity P/B P/E Market Cap (US$ mn)1

2012 Current2 2012 Current2 2012 Current2

KIPCO 0.9 1.1 17.3 20.4 1,823 2,233 Burgan Bank 1.7 2.0 14.7 17.2 2,863 3,347 UGB 0.9 0.9 NM 37.9 504 418 GIC 1.3 1.4 11.1 11.3 340 366 UIC 0.5 0.6 16.9 18.4 170 215 URC 0.7 0.7 6.9 6.2 499 490

Note: 1. Market Cap for 2012 and the current number converted at 0.28425 2. P/B, P/E and Market Cap as of May 15, 2013 Source: KAMCO Research

53

Index

Annexure 6: About the region

54

1,354 1,223 503 419 314 198 142 128 63 China India EU MENA US Brazil Russia Japan UK

MENA Region: Poised for strong economic growth

 Favourable demography − Young and growing population ▪ 4th largest population (after China, India and EU) − Relatively nascent markets − High purchasing power (GCC) and high volume (Non GCC) ▪ 49% of world’s oil reserves and 14% of world’s natural gas reserves  Favourable business climate − Competitive labour cost structure − Local labour force gaining expertise − Opportunity to build businesses − Limited impact of political crisis − Ranked ahead of Latin America & Caribbean, South Asia & Sub- Saharan Africa by IFC in terms “ ease of “ doing business  Low level of regulation − Low taxes and absence of anti-trust laws  Currently low level of competition − Supply side creates value − Under-penetration across the full financial services spectrum  Small but consistently growing non-oil economy

Population (million) #1 #2 #3 #4 #5 #11 #12 #25 Source: WEO Database, IMF, April 2013. MENA defined above is as per IMF definition of MENA

Market Characteristics

8.4% 6.5% 4.1% 3.9% 3.6% 3.0% 2.2% 1.3% 1.3% China India MENA Brazil Russia US UK EU Japan #7 7.7% 3.3% 1.6% 1.4% 1.3%

• 3.0%
• 3.1%
• 3.8%
• 4.3%

MENA China Japan Russia EU Brazil US UK India

4th Largest Population in the World (2012E) Real GDP Growth (2012-17E) Current Account Balance as a % of GDP (2012-17E)

Lebanon Q atar Syria Iraq Saudi A rabia Y emen O man Kuwait Bahrain Egypt A lgeria T unisia M orocco Libya U A E Jordan GC C Non GC C

55

GCC Region: Well positioned to deliver growth

49,922 46,716 36,941 36,266 32,021 17,709 11,875 9,162 3,830 US GCC UK Japan EU Russia Brazil China India 258 68 154 331 355 2008 2009 2010 2011 2012E 734 762 792 827 863 901 5.6% 3.8% 4.0% 4.4% 4.3% 4.5% 0% 1% 2% 3% 4% 5% 6%

2012 2013 2014 2015 2016 2017 GCC Real GDP (US$ billion) GCC Real GDP growth (%) Source: WEO Database, IMF, April 2013

Accumulated current account surplus of

• ver 1.1 trillion US Dollars since 2008

….All contribute to strong growth fundamentals in the GCC….

(In US$)

….One of the highest per capita income, 41% of world’s proven oil reserves along with robust and growing non-oil sector activity …

US$ billion

Current Account Surplus Real GDP and GDP Growth

US$ billion

GDP / Capita, PPP (2012E)

56

60 45 52 62 69 40.4% 42.2% 43.1% 38.5% 39.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

• 20

40 60 2008 2009 2010 2011 2012E Government spending (US$ bn)* As % of GDP

Kuwait: Oil wealth to fuel non oil growth

73 85 40 45 2012 2017 2012 2017

 Real GDP and GDP per capita forecast to grow at a CAGR

• f

3.1% and 2.3% respectively over the next 5 years − Oil revenues along with boost in non oil activity to fuel growth  Steady Fiscal Surpluses and Strong Current Account Balance − Current account balance averaged around 38% of nominal GDP between 2008 to 2012 − US$78 bn current account balance for 2012E  Increased Government spending as Kuwait Development Plan materializes − US$108 bn approved by Parliament − 4 Year Plan − Equivalent to 18% of GDP p.a. for 5 years

GDP Growth (%) Strong Current Account Balance Government Spending as % of GDP

60 28 38 71 78 40.9% 26.7% 31.9% 44.0% 45.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 42% 44% 46% 48%

2008 2009 2010 2011 2012E Current Account Balance (US$ billion) % of GDP (%) Real GDP (US$ billion) GDP per capita (US$’000) Source: WEO Database, IMF, April 2013

57

Kuwait development plan update

11.4 6.6

FY2010/11

Actual Spent Unused

Development Plan (In US$ Bn)

Allocated US$18 bn

10.8 8.2

FY2011/12

Airport Expansion Plan: To increase capacity from 6mn to 13mn passengers p.a. by 2016; Cost US$6 bn Kuwait City Metro System: To build a network of 171 km with ~75 stations; Cost US$7 bn − In Feb’12, the Partnerships Technical Bureau (PTB) signed off on a feasibility study for the metro project − In March‟12, PTB invited contractors to express interest to develop rolling stock systems Kuwait Hospital Development: To renovate/expand existing and construct of 5 new; Cost~US$5 bn Boubyan Island Port development: To build a sea port with 16 berths costing around US$1.1 bn 37.5 Km long Sh. Jaber bridge contract signed on November 14, 2012: US$2.6 bn Key Projects under the plan Government pledged bank guarantee for funding Formation of Mini-Cabinet to monitor the plan PPPs model to finance large scale projects Kuwait Municipality collaborations with stakeholders Government Policy Initiatives

Allocated US$19 bn

KD31 bn (US$108 bn) 4 year plan starting FY 2010/11 The government recently announced that US$5.4 bn will be allocated for development spending under the Kuwait Development Plan 2013-14. The FY2013/14 allocation, which represents about 11.0% of GDP, will focus on infrastructure development in the power and water sectors as well as upgrading Kuwait’s land, maritime, air transport networks, energy, health and education service. What has happened so far?

58

Kuwait development plan overview

 Purpose: − Upgrade infrastructure − Diversify non oil revenue − Create employment − Develop private sector

36% 29% 35%

• Govt. Non Oil
• Govt. Oil

Private 6% 31% 29% 16% 18% Health & Education Infrastructure Oil Others Trade/Industries 35% 65% Private (Equity & debt) Govt.

By Sectors By Industries By Sources of Funds

Examples of some key projects underway: US$ million Infrastructure – Port - Upgrade Boubyan Harbor 2,800 Infrastructure – Electricity - Construction of Al- Subiya power station 2,650 Healthcare – Kuwait Health Assurance Company 1,200 Infrastructure - Roads - Jahra Street project 925 Infrastructure – Water - Mina Abdullah’s water reservoir project 415

KIPCO group banking & insurance focus 224 259 260 141 Implement- ation Final Approval

• Prelim. &

Design Approval Not Started

Total Number of Projects: ~884

Source: KDP Semi-annual report, Markaz

 Overview − US$108 bn 4 year plan − FY 2010/11 – Approved US$18 bn comprising 884 projects − FY 2011/12 – Approved US$18.7 bn comprising 1,240* projects  The details of FY 2010/11 :

* Out of 1240, 270 are new projects while the remaining are continuation of existing projects. US$18.7bn represents cost of new projects and additional cost on rolled over projects from last year

59

Index

Annexure 7: Market opportunity

60

^Source: Central Bank Reports *Insurance Premium per capita; ** Total Insurance Premium as a % of GDP

Banking Assets/GDP (%)^ Loans / GDP (%)^

475 421 326 258 182 126 110 108 90 86 71 67 63 140 126 101 77 76 67 64 55 53 45 40 27 10

Market Opportunity: BB & GIC

Note: As on 31st Dec., 2011 Note: As on 31st Dec., 2011

Insurance Density *(2011) Insurance Penetration** (2011)

Source: World Insurance 2011 Report by Swiss RE Sigma. (In US$)

286 177 21 425 99 287 1,886 3,815 661

Kuwait Saudi Arabia Egypt Bahrain Jordan Lebanon Europe North America World

1% 1% 1% 2% 2% 3% 7% 8% 7%

Kuwait Saudi Arabia Egypt Bahrain Jordan Lebanon Europe North America World

61

*Insurance Premium per capita; ** Total Insurance Premium as a % of GDP

Market Opportunity: GIC & UGB

AMIB MENA Market Size

US$ billion Source: Company research 1.2 2.3 2.6 0.7 1.5 1.4 1.0 2.1 2.2 0.4 0.6 0.8 2010E 2014E 2015E Brokerage Asset Mgmt Investment Banking Private Equity

CAGR (2010-15) 14.1% 17.7% 14.1% 17.1%

Middle East Wealth and HNI Population

1.4 1.7 1.4 1.5 1.7 1.7 1.9 8% 21%

• 18%

7% 13% 0%

• 3

• 1

• 1
• 1

2006 2007 2008 2009 2010 2011 2013E

Middle East Wealth Growth Rate (YoY)

US$ billion 0.3 0.4 0.4 0.4 0.4 0.5

HNI P opulation (in mn)

Source: World Wealth Report 2009 and 2012, Capgemini Merrill Lynch

3.3 6.5 7.0

62

Index

Annexure 8: 2012 Highlights

63

Key highlights of 2012

 Commercial banking- Loan growth of 27% (excluding inorganics)  Pay TV- Subscriber and revenue growth of 30%  Insurance – Net premiums growth of 10%  AMIB – Recurring revenue growth of 17%  Acquisition of Eurobank Tekfen (Turkey) and Fim Bank (Malta)1 by Burgan Bank  Entered Iraq and UAE insurance markets  Completed 4 year local currency bond of KD80 mn in Jan 2012  Extended 2015 maturity of KD 40 mn bilateral loan to 2018 − No debt maturity before next 3 years − Extended maturity profile from 4.8 to 5.1 years  Strong financial flexibility with cash balance of US$636 mn  Raised cash by selling non core assets and repaid debt totalling US$401 mn  Reduced operating & finance cost  Strengthened balance sheets and created visibility on recurring revenue 1. Existing businesses performing strongly 3. Streamlined operations 4. KIPCO parent liability management 2. Acquired growth businesses at attractive valuations

1. Malta acquisition expected to be completed in 2013

64

✓ 27% loan growth (without Turkey acquisition) ✓ 17% growth in operating profits ✓ NPAs declined to 7.0% (2011: 10.5%) ✓ 33% revenue growth ✓ 30% subscriber growth ✓ 5x EBITDA growth

Core Companies: 2012 Report card

✓ 10% net premiums growth ✓ Rating upgraded to A- by S&P ✓ 30% net profit growth

65

✓ Reduced balance sheet size from KD498 to KD345 mn ✓ Deleveraged by KD113 mn ✓ Despite all above net profit higher than 2011 ✓ Net profits grew by 123% ✓ KIPCO tower completed ➢ 81% office space occupancy

Core Companies: 2012 Report card..cont’d

✓ Sadafco1 – 16% sales growth; 11% net profit growth ➢ Sales and profit doubled during 2007-2012 ✓ Deleveraged by KD7 mn; G&A reduced by 33% ✓ Qurain1 – KD19 mn profit

1. Sadafco and QPIC numbers represents TTM ending Dec’12