table of contents Highlights 2008 2 chairman’s statement 4 about eK Holding 6 our Portfolio 10 fertilizers: Investing in Growth 14 energy Gas & Power: Investing in solutions 18 energy oil: Investing in Potential 22 Manufacturing: Investing in Quality 28 Information technology: Investing in Innovation 32 Insurance: Investing in the future 36 our Values 38 executive board 42 board of Directors 44 Management team 48 financial statements 50 2 egypt Kuwait Holding company Annual Report 2008 Annual Report 2008 egypt Kuwait Holding company 1 HIGHlIGHTS 2008: Measured Success Total Assets Revenues Annual Profit Year Year 2002 231.7 2002 21.6 Year 231.7 413.2 437.6 491.0 528 977.5 1,679.00 2003 413.2 21.6 102.1 128.4 117.1 110 236.2 369.3 2003 102.1 1998 5.2 2004 437.6 2004 128.4 5.2 12.1 14.5 16 17.4 20.3 29.0 55.3 56.2 108 119.6 2005 491.0 2005 117.1 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 1999 12.1 2008 2006 528.02008 2006 109.7 2007 977.5 2007 236.2 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 14.5 2008 1,679.0 2008 369.3 0 300 600 900 1,200 1,500 1,800 0 50 100 150 200 250 300 350 400 Total (in USD millions) Total (in USD millions) 2001 16.0 Net Profit Net Worth 2002 17.4 Year Year 2002 17.4 2002 151.9 17.4 20.3 29.0 55.3 56 107.8 119.6 2003 20.3 151.9 156.1 174.8 219.4 275 534.5 568.5 2003 156.1 2003 20.3 2004 29.0 2004 174.8 2005 55.3 2005 219.4 2004 29.0 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 2008 2006 200856.2 2006 275.4 2007 107.8 2007 534.5 2005 55.3 2008 119.6 2008 568.5 0 20 40 60 80 100 120 140 0 100 200 300 400 500 600 2006 56.2 Profit (in USD millions) Worth (in USD millions) 2007 107.8 Return on Equity Dividends Year Year 2002 11.48% 2002 10.0% 2008 11.5 13.0 16.6 25.2 20 20.2 21.0 2003 0.0 13.00%5.0 5.0 10.0 0 10.0 0.0 2003 5.0% 10.0% 119.6 10 10 10 5 15 10 12.5 2004 16.60% 2004 5.0% 10.0% 0 22 44 66 88 110 132 2005 25.19% 2005 10.0% 5.0% Value (in USD millions) 2002 2003 2004 2005 2006 2007 Untitled 1 2008 2006 20.39% 2006 15.0% Total Accumulated Profit: 2007 20.16% 2007 10.0% 10.0% 2008 21.00% 2008 12.5% $ 453,400,000 0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% Rates Rates Stock Cash 2 3 cHaIrMan’s stateMent: steady value in a volatile climate Dear Shareholders, As EK Holding enters into its second decade of While the first half of 2008 was largely characterized operation, we cannot help but be proud of the by positive economic conditions, the second half remarkable milestones that we have achieved. By of the year saw global markets decline sharply. applying the strategy and vision that our founders Despite these more complex conditions, EK Holding carefully crafted in 1997 we have continued to has produced positive results, which can be deliver value to all our stakeholders. attributed to the remarkable insight, exceptional talent and steadfast determination of the investment The company was created over a decade ago to and management teams. The company achieved participate in the economic liberalization of the USD 369,306,570 in consolidated earnings delivering Middle East. By investing in strategic sectors where a significant 56.3% growth rate over last year’s the MENA region has a clear competitive advantage earnings. In the past ten years the company achieved we were able to position ourselves as an integral USD 453,400,000 as accumulated profits. In addition, part of the success story that led to the region’s the market penetration strategy has strengthened the economic boom. leading position in various markets, all of which offer long-term growth opportunities. Today our flagship companies continue to deliver robust profits and double-digit growth despite There is no doubt that 2009 will be a challenging volatile market conditions. year but we are confident that the strength of our portfolio will help us navigate our way through these This past year has been extraordinary. Our strategic turbulent times. EK Holding has always believed in investment in the burgeoning petrochemicals staying ahead of the game. Our investments have sector has begun to mature. Alexandria Fertilizers been chosen carefully in a region where there is still toDay our flaGship Company (AlexFert) is now one of EK Holding’s plenty of room for growth; we think that the nature leading revenue generators as it expands its of those investments will be a strong mitigating exports to the United States & Europe. EK Holding factor during times of economic uncertainty. The companIes contInue is currently exploring new opportunities in the year ahead will see us focus on nurturing our petrochemicals sector and is in the advanced stages current portfolio while opportunistically seeking to DelIVer robust of finalizing new ventures in high-growth emerging out new deals that fit within our existing lines of markets such as Algeria and Sudan. business. ProfIts anD Double- Our two energy companies, Tri-Ocean Energy and Finally, I would like to thank our management NATGAS are both expanding operations and are well team and staff for their hard work and continued digit GrowtH Despite on their way to becoming major regional players in commitment to the company. Their loyalty and both the upstream and downstream oil and gas dedication was acknowledged during a special sectors. Tri-Ocean Energy continued its expansion event, which was held this year to commemorate VolatIle MarKet into the Sudan and entered into a partnership with our ten-year anniversary. It is my belief that with Beach Petroleum. NATGAS affiliate Kahraba, one of the efforts of all our stakeholders across the region conDItIons. the few private sector power generation companies we will continue to build on our strengths and in the region, is capturing new market share as achieve another prosperous year. large industrial and real estate projects go online. The ongoing liberalization of markets in the Middle Nasser M. Al-Kharafi East will create even more growth opportunities for Chairman of the Board fully-integrated energy players like NATGAS and Tri-Ocean. 4 egypt Kuwait Holding company Annual Report 2008 Annual Report 2008 egypt Kuwait Holding company 5 STARTInG wItH a CLEAR VIsIon: about eK Holding “GooD GoVernance, Knowledge anD exPerIence wItH tHe busIness environMent In tHe region HaVe always been important asPects of tHe way we oPerate.” nasser M. al-KHarafI ChaIrMan of tHe boarD Egypt Kuwait Holding Company (EK Holding) was include several prominent institutional investors EK Holding’s investment strategy focuses Algeria established in 1997 by leading Kuwaiti and Egyptian and individual Kuwaiti and Egyptian financiers on the creation of subsidiary companies Libya businessmen and institutions who had the vision to along with over 15,000 retail investors. in high-growth sectors where the MENA establish a new company that would become a key region has a strong competitive advantage. Egypt participant in the economic liberalization efforts The key to success for EK Holding has been its The Egypt-based holding company has a that were being undertaken by reform-minded continued ability to create value. For over a decade particular interest in frontier markets with Sudan governments throughout the Middle East and North the company has been partnering with experienced high barriers to entry and tremendous Africa (MENA) region. industry leaders, and carefully analyzing all growth potential. These mineral and Kuwait its investment decisions for optimal returns to resource rich regions are perfectly With an authorized capital of USD 500 million and a shareholders. positioned to act as the manufacturing United Arab Emirates subscribed and paid-up capital of USD 191 million, hubs of the future. EK Holding has become one of the largest and fastest Qatar growing companies in the Middle East. The company While most of EK Holding’s investments has a diversified portfolio of investments in the originate in Egypt, many of the company’s Oman fertilizers, energy, manufacturing, insurance and subsidiaries are structured in a way that information technology sectors. Its shareholders will enable them to expand regionally within a couple of years from their start of operation. 6 egypt Kuwait Holding company Annual Report 2008 Annual Report 2008 egypt Kuwait Holding company 7 creatInG Value: about eK Holding Hands-On Investments In the ten years since its establishment, EK Holding has completed some of the most complex transactions in the region. The company generally acquires majority stakes and takes management control in all of its investments. Highly qualified investment officers source transactions and identify opportunities within EK Holding’s various lines of business. Transactions are then submitted to a dedicated investment committee for approval. This stringent mode of operations maximizes the rate of successful transactions and ultimately creates more shareholder value. One of the fundamental elements of the company’s success is the long-standing recognition that the closing of an acquisition is only the beginning of the process of creating value.