Dear shareholder,

The last twelve months have presented many challenges, forcing the world to focus resources to fight against the COVID-19 virus and its economic impact. Uncertainty prevailed, as the global effects of the pandemic unfolded during the year.

In Kuwait, the Government enforced some of the most stringent measures in the region, in an effort to protect people’s safety. These necessary actions had an impact on the country’s economy, making the call for economic reforms even more urgent.

At KIPCO, we have become adept at navigating through volatile political and economic circumstances over the years. Our portfolio diversification strategy has proven to be effective, and we constantly assess our internal practices to ensure that we are able to make positive achievements across the different businesses sectors in which we operate.

At last year’s Shafafiyah Investors’ Forum, we said that we would remain cautious as we monitored the business impact of the COVID-19 pandemic on our companies’ performance. In 2020, our net profit came to KD 6.5 million (US$ 21.4 million), compared to a loss of KD 39 million (US$ 128.6 million) in 2019. The company’s 2019 financials were restated due to a change in the classification of OSN after an increase in ownership.

KIPCO’s total revenue for the year came to KD 753 million (US$ 2.5 billion) compared to KD 698 million (US$ 2.3 billion) in 2019. Subject to approval by our General Assembly, we are proposing to pay shareholders a cash dividend of 5 fils (5%) per share, as well as the Board of Directors’ remuneration of KD 220,000 and Executive Management remuneration of KD 3.484 million. It is worthy to note that the regulatory authorities have registered no penalties against the company.

An important business highlight for KIPCO in 2020 was the increase of our share in OSN from 60.5% to 87.6%. This came through an increase in the pay-tv company’s capital.

During the year, KIPCO repaid a US$ 500 million (KD 153.9 million) bond under its EMTN program. The repayment also included an additional US$ 23.4 million (KD 7.1 million) in interest. With the next bond repayment due in March 2023, KIPCO was left with no maturing debts for three years.

As part of the steps taken to combat the COVID-19 pandemic, the Kuwaiti government established a national donation fund to support these efforts. KIPCO and its Group companies made a KD 2.5 million (US$ 8.2 million) donation as a show of our commitment to help curb the spread of the virus.

In 2020, Burgan Bank issued US$ 500 million (KD 151.6 million) Subordinated Tier 2 Capital Securities in the international debt market. The bond, four times oversubscribed, has an 11-year tenure and an option for redemption after six years, making it the first bond of its kind with such term structure in the GCC.

Late in the year, Gulf Insurance Group signed an agreement with AXA to acquire its insurance operations in the Gulf region. Once the deal, worth US$ 474.7 million (KD 144 million), receives the go-ahead from regulatory authorities in the different GCC countries, GIG will become one of the region’s largest insurers. GIG has also invited its existing shareholders to participate in a capital increase representing 7.6% of the existing issued share capital.

Over the last twelve months, we were able to continue to make progress in the turnaround of OSN’s operations. This is thanks to several factors, including strengthening the management team, business streamlining and expanding our OTT reach and the exclusive content it provides to viewers in the region.

Our real estate arm, United Real Estate, continued its construction of Hessah Towers, the residential 40-floor twin-towers in Hessah Al Mubarak District. In 2020, URC also received excavation permits for Byout Hessah, another residential component in the district, and work is now underway.

Our investment arm began the year with the launch of its new identity, Kamco Invest. The company then proceeded with implementing its plan for the streamlining of operations and organizational restructure following the merger with Global, creating a stronger and more resilient investment entity.

The vaccination campaign across Kuwait started just before the end of 2020, bringing hope that economic circumstances will slowly improve. In the meantime, our Group companies continue to provide quality services to their customers in the safest manner.

Sadly in 2020, Kuwait and the world lost a wise and visionary leader, the Late Amir of Kuwait, His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah. Known for his deep diplomatic skills and his support for all humanitarian efforts across the world, the Late Sheikh Sabah launched the ‘New Kuwait 2035’ vision. As we mourn this grave loss, we look to the new leadership of Kuwait for guidance.

This year we also lost Sheikh Nasser Sabah Al-Ahmad Al-Sabah, a founder, major investor and guiding light in the development of the company. He was also the driving force behind the Silk City project and the development of Kuwait’s islands. He worked to realize the dreams of Kuwaitis for a more sustainable future and a diversified economy, and will be fondly remembered. Our sincere condolences go out to his family.

We thank His Highness the Amir of the State of Kuwait, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, His Highness the Crown Prince, Sheikh Mishaal Al-Ahmad Al-Jaber Al-Sabah, and His Highness the Prime Minister, Sheikh Sabah Al-Khalid Al-Hamad Al-Sabah, for their continued support and guidance. We would like to thank you, our shareholders, for the support and trust you have placed in your Board of Directors and management during the last 12 months. We would also like to thank all the employees of KIPCO and its operating companies for the contribution they made during the year.

On behalf of our shareholders, we thank the management for the results they achieved during 2020. May God continue to grant us success and prosperity.