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“Across the region, major public sector infrastructure projects and enormous private sector developments have kept economies booming. Record advances in the region’s stock markets are evidence of the breadth and depth of investor and consumer confidence. This has enabled our existing businesses to attain ‘across-the-board’ revenue growth and has also generated many excellent new business opportunities.”

This has been a year of substantial economic growth in our region. Continued high oil prices, consumer and business optimism and excess liquidity have fueled both private and government spending. Across the region, major public sector infrastructure projects and enormous private sector developments have kept economies booming. Record advances in the region’s stock markets are evidence of the breadth and depth of investor and consumer confidence. This has enabled our existing businesses to attain ‘across-the-board’ revenue growth and has also generated many excellent new business opportunities. As you read these financial statements you will see that the Group has taken full advantage of these opportunities to produce an excellent set of results, producing record profitability and performances.

These performances are increasingly being recognised by an ever-widening circle of observers. The enthusiasm with which top tier banks from all around the world have greeted our intention to launch an issue in the international bonds market is an example of this. Another example has been the overwhelming response from individual investors eager to participate in listings of companies. This has led to a substantial oversubscription for shares. The rigorous analyses of companies by high profile ratings agencies and the ‘investment grade’ ratings we have achieved, also clearly demonstrates that the KIPCO Group is an outstanding success story.

One indicator in particular has given me great pleasure this year. In 2005, the Arab Bankers of North America chose to acknowledge the outstanding leadership of the Chief Executive Officer of your company, Mr Faisal Al-Ayyar, by naming him their ‘Banker of the Year’. This is a prestigious award and is a fitting recognition of his achievements within the region’s banking sector - from Algeria to Iraq, from Jordan to Bahrain, Mr Al-Ayyar has been instrumental in building banks that offer top quality services and transparent corporate governance, while maintaining excellent rates of return on capital invested. This international recognition of Mr Al-Ayyar’s achievements is therefore well deserved and we add our congratulations to him.

In Mr Al-Ayyar’s report and financial statements that follow, you will find further evidence of the tremendous results the Group has achieved in 2005, but we would like to take this opportunity to add our comments on them. We are pleased by the extent to which these results reflect sound underlying business models, and sustainable, dynamic income streams. It is always good to benefit from one-off gains and opportunities, and the current economic environment has definitely helped to generate some of the gains in our results this year. However, the most impressive growth has been in recurring business areas.

Our banks have done an excellent job in growing their revenues, and compounded this by not only maintaining, but improving their margins. Added to this, the startling improvement in provisions has delivered an enviable ‘bottom line’. The other financial services sector companies have also done more than their fair share - both the insurance and asset management businesses continue to outperform expectations, in their range of services, market share and net profits.

The technology, media and telecoms sector is another source of pride for the Group. That Wataniya has delivered such a strong profit in the year despite expanding into two new territories and making substantial investment in pace-setting new equipment is truly remarkable. It suggests excellent results for the years ahead as the expansion and investment begin to add their own returns to the income streams. The growth in subscriber base and profitability of Wataniya are no less present in Showtime, and we confidently expect that investors will recognize its market leadership performance and almost limitless future potential when the company comes to market.

We are convinced that the outlook for your company is excellent. There are no signs that the positive economic environment in which we find ourselves is likely to end any time soon and opportunities for further growth are likely to continue. Our businesses are vigorous and healthy with intrinsically profitable business models. They are concentrated in key areas of the region’s future economy, and, because of their increasingly regional reach are becoming less and less influenced by adverse conditions that arise from time to time in any one country or economy in the region. We believe the 2005 results for our Group are outstanding; however, such is our degree of optimism for the Group’s outlook it is our belief that when we look back on 2005 in a few years time, it will be just the start of even better results to come.

It is also our sad duty on behalf of the Board, Management and staff of the KIPCO Group to express our deepest condolences on the recent death of the late Amir His Highness Sheikh Jaber Al-Ahmad Al-Jaber Al-Sabah, to the Al-Sabah family, the Government and the people of Kuwait.

At the same time, the KIPCO Group is immensely appreciative of the role of His Highness Sheikh Saad Al-Abdullah Al-Salem Al-Sabah as the Amiri Father of the nation, praying to Almighty God to support him with all His mercy.

Furthermore, the Group would like to congratulate His Highness Sheikh Sabah Al- Ahmad Al-Jaber Al-Sabah, H.H. Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah and H.H. Sheikh Nasser Al-Mohammad Al-Ahmad Al-Sabah on their assumption of their illustrious capacities of Amir, Crown Prince and Prime Minister respectively. All concerned with the KIPCO Group will be proud to respond to their future guidance and look up to them as examples of personal and tireless dedication to the future development of the State of Kuwait and the enhancement of the prosperity of its people.

We would also like to thank you, the Shareholders, once more for your trust in the management of your Group and to acknowledge with gratitude, the debt the Group owes to its staff for their sustained hard work, commitment and enthusiasm.

May God continue to grant us success and prosperity.