Board of Directors' Reports: 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001

Dear Shareholder,
Following a rocky 2008, 2009 also proved to be very difficult for global and local economies. Loan defaults in the GCC and volatility in stock and credit markets, internationally and across our region, were indicative of the fragility of the global and regional economies.

We anticipate that 2010 will be a year of ‘highs and lows’ as the global, regional and local economies continue to deal with the consequences of the credit crisis. But we remain cautiously optimistic that the general economic situation will improve and expect the year to end on a high note - especially in Kuwait, as the effects of the government’s stimulus package begin to be felt.

However, the main negative factor in an improving economic climate in our region is the widespread lack of financial transparency and good corporate governance which has dented investor confidence. Kuwait, in particular, whose economy is otherwise cash rich, has yet to confront problems within some key sectors.

In stark contrast, KIPCO has built an unrivalled position as a leader in transparency and governance which is built upon our strong financial foundation. This is reflected in the high level of confidence the global financial community has in your company and the maintenance of our credit ratings against a backdrop of general downgrades. During the year, we maintained our position as the region’s premier private holding company and the world’s leading credit ratings agencies kept our ratings unchanged - a testament to our financial strength.

A further measure of this confidence was the near seven times oversubscription of our November bond issue. The deal was viewed as a sign that, despite current market conditions, international investors have an appetite for a share in our success. As with all listed companies, investor confidence is a key element in the creation of shareholder value. It bodes well for KIPCO that even in times like these, investors place such faith in our business strategy and financial soundness.

Our executive management team deserves respect for building and maintaining our financial strength and reputation. We are widely acknowledged as a company with the foresight to remain cautious when necessary and the ability to act quickly when appropriate. Indeed, it was the caution we demonstrated and the preparations we made in 2008 that have allowed us to weather the storm that has afflicted so many companies in the past year. It is clear that KIPCO stands out from the crowd and we can be justifiably proud of our leadership position.

We are delighted to report that despite these difficult conditions, we came very close to the profit target we set for 2009. Our net profit of KD46.3 million (US$ 161.4 million) is a 92 per cent increase on the previous year. The company’s total revenues for the year increased 5.9 per cent to KD 466.3 million (US$ 1.63 billion) compared to revenues of KD 440.3 million (US$ 1.6 billion) in 2008. Your company’s total consolidated assets also increased 2.7 per cent in the year to KD 5.34 billion (US$ 18.6 billion) from KD 5.2 billion (US$ 18.8 billion).

2009 was KIPCO’s eighteenth consecutive year of profitability and we are proposing to pay shareholders a cash dividend of 25 fils (25 per cent) and a 5 per cent stock dividend, subject to approval by our General Assembly. We believe this dividend represents a balance of shareholder expectations against the need to maintain our financial strength and liquidity.

The outlook for the global economy during 2010 remains uncertain and this is likely to affect global growth for the foreseeable future.

For the Kuwaiti economy, 2009 was a very challenging year with delays in government decisions hindering economic growth. However, the outlook for the coming year appears much better with the country moving in a more positive direction. The recently announced KD 30.8 billion (US$ 108 billion) four year development plan – which will create a stimulus equivalent to 94 per cent of Kuwait’s annual GDP over the next four years - is likely to provide many business opportunities for the country’s financial, industrial and service sectors.

Our congratulations go to our Vice Chairman, Mr Faisal Al Ayyar, for the award he received at the Kuwait Financial Forum in November for his contribution to the investment sector in Kuwait and his successes in the global financial market. Beyond his on-going contribution to KIPCO’s success, Mr Al Ayyar has played a significant role in the development of Kuwait’s business sector and so this award is just recognition for all that he has done.

We would like to thank His Highness, the Amir of the State of Kuwait, Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, His Highness, the Crown Prince Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah and His Highness, the Prime Minister Sheikh Nasser Al-Mohammad Al-Ahmad Al-Sabah for their continuing support and guidance.

We would also like to thank you, our shareholder, for the support and trust you have placed in your Board of Directors and management team during the last 12 months. We are certain you will also join us in thanking the employees of KIPCO and our operating companies for all their hard work during 2009.

Above all, Mr Al Ayyar and his management team deserve our thanks for the results they achieved during 2009 and the success they have achieved despite the hard times we continue to experience.

May God continue to grant us success and prosperity.