Board of Directors' Reports: 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001

Dear Shareholder,
2008 came to an end with some of the worst economic conditions in local and international markets since the 1930s. The year ahead looks set to be equally difficult and market conditions could worsen before they improve.

Your company’s 2008 results reflect these difficult times, but also demonstrate the underlying strength of our business and the investment we have made over the years in building solid foundations of experienced management, financial soundness and cost control.

Despite the current turmoil, KIPCO delivered a net profit in 2008 of KD 24.1 million (US$ 87.3 million). The company’s total revenues for the year increased by 5.7 per cent to KD 440.3 million (US$ 1.6 billion) compared to the normalized 2007 revenues of KD 416.6 million (US$ 1.5 billion). Your company’s total consolidated assets also increased 20.9 per cent in the year to KD 5.2 billion (US$ 18.8 billion) from KD 4.3 billion (US$ 15.8 billion).

2008 was KIPCO’s seventeenth consecutive year of profitability and we are proposing to pay shareholders a dividend of 40 fils subject to approval by our General Assembly. We believe this dividend represents a balance of our shareholder’s expectations with the need to maintain strength and liquidity.

The impact on your company of the financial crisis and subsequent recession within parts of the global economy has been considerably reduced by strict financial discipline and focused management. The best example of this is your company’s proactive liability management and the ‘club deal’ loan facility KIPCO negotiated with a group of leading banks in mid 2008. The facility extended KIPCO’s debt maturity, reduced its cost of funds and allowed repayment in November of capital market bonds totaling KD 85.5 million (US$310 million). By refinancing our maturing debt well ahead of time and ahead of worsening debt market conditions, KIPCO is now in a much better position to see out this difficult period.

The repayment of loans also highlighted KIPCO’s prudent financial strategy to local and international financial audiences – a strategy that has served us well over the years and will continue to do so in the future.

We are proud that your company continues to be the highest-rated private corporate in the region. This enviable position has been built by maintaining our financial discipline, building the quality of our investment portfolio, adopting international best practices in corporate governance and creating an on-going dialogue with investors and partners. It is a position we intend to uphold and your company will do whatever necessary to continue as a leader of Kuwait’s business community.

For the coming year, we are very confident that KIPCO’s management team has the ability, experience and resources to steer your company through these difficult times. Indeed, the combination of vast experience and broad expertise contained within KIPCO’s senior management – over 450 years between them of managing companies through good times and bad – gives us confidence they will lead your company through this current uncertainty.

Although we had our fair share of disappointments in 2008, we believe KIPCO’s strong balance sheet, regional focus and management track record will enable the company to move forward and continue its development.

The fundamentals of the Kuwaiti economy are strong, based on huge oil and financial reserves. However, the credit crisis has affected some sectors more than others – such as investment and real estate. Nevertheless, we believe Kuwait has the resources to withstand the worst of this global downturn. The economy was certainly helped by timely measures taken by the Central Bank of Kuwait during the year which included limiting real estate development loans available from local banks and the level of debt available to private borrowers.

While we may see more local casualties of the financial crisis during 2009, we believe that overall, Kuwait’s economy will recover, subject to the right combination of regulatory discipline, sound fiscal policies and appropriate and timely government interventions.

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 our 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 2008.

Above all, Mr Al Ayyar and his management team deserve our thanks for the results they achieved during 2008 and the way they have prepared your company for the difficult times ahead.

May God continue to grant us success and prosperity.