Going for Investor Growth Presentation November, 2013 E 1
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 obligation 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. 2
Index Executive Summary Bloomberg Ticker: KPROJ KK Reuters Ticker: KPRO.KW 3
A diversified company with deep regional expertise and roots Operating holding company with an AuM of US$31 bn Middle East and North Africa Primarily financial services and media 21 years of continuous profitability, 11 years of continuous dividends P/BV of 1.5x. Attractive NAV A transparent Listed on Kuwait Majority owned by Credit ratings: company with an Stock Exchange ruling family of S&P: BBB- experienced with a market cap Kuwait Moody’s:Baa3 management team of US$3.0 bn* Gateway to MENA with superior access to opportunities * As on November 14, 2013 4
Our presence by geographies & sectors Major Sectors Asset Geography management Commercial Revenues 1 Media Insurance Real Estate Industrial Others banking & investment (2012) banking ● ● ● ● ● ● ● 49% Kuwait ● ● ● ● 4% UAE ● ● ● ● 6% Bahrain ● ● ● 5% KSA ● ● ● ● 13% Jordan ● ● 6% Algeria ● ● ● 1% Tunisia ● ● ● ● 6% Egypt ● ● ● ● 4% Lebanon ● ● ● 2% Iraq ● ● ● ● ● ● 4% Others Revenues 2 42% 18% 7% 11% 6% 15% 1% (9M’13) Assets 3 74% 5% 7% 3% 6% 3% 1% (9M’13) Attractive presence in high growth economies and promising sectors 1. Based on total reported segmental revenues and assuming consolidation of GIG as a subsidiary 2. Based on segmental reporting revenues of US$ 2,260 mn (Before inter group eliminations) & consolidating 100% revenue of GI G & OSN 3. Based on segmental reporting assets of US$ 33.2 bn (Before inter group eliminations) and consolidating 100% assets of GIG & OSN 5 Note: Exchange rate of KD/ USD of 0.2828 has been used in the presentation for financial numbers
Track record of generating attractive returns Total Shareholders’ Return (Share Price Return and Dividend Yield) Growth Last 15 years Last 10 years 235 230 96 91 69 139 139 35 1997 2012 2002 2012 Adjusted Share Price (US cents) Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) Last 15 years Last 10 years 244 249 39 36 1997 2012 2002 2012 Note: Assuming no dividend was paid 6
Net asset value NAV Computation (US$ per Share) 680 610 405 fils fils fils 0.1 0.1 0.0 0.1 0.1 0.1 0.1 0.1 (0.6) 12% 0.3 0.8 0.7 0.5 2.2 1.6 1.4 0.9 Burgan OSN United Gulf United United Net other Net Debt NAV KIPCO BVPS Bank Gulf Bank Insurance Real Industries Assets Share (US$) Company Estate Company Price in Company US$ Market Cap Share Control Premium (Note 1) Note 2 Note 3 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 Sep 30, 2013. 3.Operating expenses of US$0.03 per share adjusted with net other assets ; prices are as of November 14, 2013 7
Index Strategy 8
Strategic roadmap Regional MENA Outlook Investing in engines of Target growth ROE: 20% Diversified Building Revenue Balanced streams Portfolio Businesses Strong managerial expertise Team Thought Approach leadership Being first in the region Investment in companies with sustainable and predictable cashflows 9
Controlling or majority stakes Main Entities KIPCO Effective 60.3% 60.4% 96.7% 83.0% 3 44.8% 65.8% Stakes 1 Board 6 of 9 2 of 7 5 6 of 6 6 of 6 4 of 10 4 4 of 7 Representation Market Cap 3,151 Unlisted 469 125 363 495 (US$ mn) 2 S&P: S&P: A- BBB+/A2 Credit Unrated CI*: BBB CI*: BBB- AM Best: CI*: BBB- Moody’s: Ratings A- A3/ P2 Commercial Asset Management & Media Insurance Real Estate Banking Investment Banking (AMIB) Solid & well managed portfolio of fast growing and attractive industries Notes: 1.Effective Stakes given are as of Sept 30, 2013 2.Market Capitalisation as of November 14, 2013 (Source: KAMCO Research) 3.Stake in KAMCO is held through UGB 4.GIG 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 10 * Capital Intelligence
Active management Key businesses – progress indicators Businesses Parameters Then Now Active Management – KIPCO Support & Action 1995 9M’13 Net ▪ Transformed from a local player to regional player ▪ Hired new management in 2010/11 to execute on regional 1.3% 1.3% Interest 2.8% strategy Margin ▪ Focused on growth with prudent loan underwriting 1996 9M’13 ▪ Acquired Pehla in Aug’13 ▪ Merged with Orbit in 2009 to create leading pay TV Sub. operator in MENA _ 858K^ Base ▪ Gained access to premium content and rolled out anti- piracy initiatives ▪ Focused on subscriber acquisition 1998 H1’13 ▪ Incubated pan-MENA commercial banking network 193 Mn ▪ Equipped to assess / develop opportunities identified by Book 459 Mn KIPCO Value ▪ Refining strategy to add more value to financial services sector 1995 9M’13 ▪ Transformed from a local player to regional player 3 1 # 3 # 1 Rank# ▪ Gained market leadership in 3 key geographies (by GPW ) ▪ Partnered with Fairfax to strengthen operations and of 5 of 32 enhance growth 2000 H1’13 ▪ Spun-off AM/IB division to separate client funds from US$ US$ KIPCO funds AUM 0 . 7 1 0 . 2 Bn ▪ Full range of asset management & investment advisory services in Kuwait Bn ▪ Streamlined operation in 2012 to focus on core business Number of success stories demonstrating consistent track record of value creation 11 ^ Represents subscriber base post merger of Showtime & Orbit # Represents rank in Kuwait
Index Performance Update 12
9M 2013: Operating performance continues to be strong 117% 7% 2012 2012 35% 21% 5% 161% 24% 22% 25% growth in growth in NPA Aggregate growth in growth in EBITDA operating operating reduced to provision revenues subscriber margin income profits coverage base increased to Total expenses 13% 5% 15% 21% Net profit reduced by 23% growth in growth in growth in growth in US$10 mn revenues net profit net investment premium income earned Cost base rationalization continues 13
Burgan Bank Loan Growth Deposit Growth Asset Quality NPA Coverage with collateral US$ billion US$ billion NPA Coverage without collateral 27% 6% 21% 16% 111% 108% 117% 161% 72% 49% 58% 101% 10.5% 12.0 12.6 9.8 15.2 7.3% 7.0% 13.8 8.0 7.6 11.8 9.9 4.7% 9.1 2010 2011 2012 9M'13 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 Deposit NPA to Gross Credit Facilities Loan Growth Ex BBT^ Growth Ex BBT^ Operating Income Net Profit & Provisions Total Provision US$ million US$ million US$ million 2.8% 2.8% 2.6% 2.6% 2.6% 843 691 676 662 340 581 627 587 613 299 292 272 252 283 491 327 571 355 143 260 263 120 317 465 237 88 230 255 349 198 307 298 180 350 164 310 254 271 226 327 17 62 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'13 Specific General Kuwait Regional NIM% Provisions charge to P&L Solid Performance with strict focus on asset quality ^ BBT represents Burgan Bank Turkey (Eurobank Tekfen acquired by Burgan bank and renamed) 14
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