Egypt Kuwait Holding Company 10

Egypt Kuwait Holding Company

10year

journey

WHAT COMES TO MIND WHEN YOU THINK OF A “JOURNEY”? FOR SOME, THE ESSENCE OF A JOURNEY IS REACHING THE DESTINATION, FOR OTHERS IT IS THE OUTCOME UPON REACHING THIS DESTINATION, BUT FOR A FEW, THE ESSENCE OF A JOURNEY IS THE JOURNEY ITSELF. THERE ARE MANY PATHS TO TAKE, BUT ONLY ONE JOURNEY TO ENDURE. THIS IS WHEN A JOURNEY ITSELF BECOMES A PROCESS. So, how can we enSure a long laSting journey ?

Annual Report 2007

Fig. 1

ten years ago, we started out with a clear vision, strengthened by the vital human and financial resources to position eK holding for growth.

carving out potential in new ventures; whether through startups, acquisitions or partnerships.

Fig. 2

yet, we never stop navigating to explore new opportunities. we utilize our capabilities to perfect our path and see the big picture, while buildinga track record that ensures value-creation.

Fig. 3

whatever the challenge, we are creatingtransformation stories –whenever our investmentforesight and potentialintersect.

Fig. 4

and we always ask, what does it take to build?

Fig. 5

You cannot build Fig. 6 without first going through Fig. 1 to 5.

likewise, Fig. 6

our business models are a process of shaping potential and building a winning business strategy – it’s an enduring combination that led to 10 years of continuous growth.

challenging expectations to sail into new horizons, with synchronized efforts we steer our machine forward, moving beyond boundaries. we’re in it for the long journey not the short. we see through turbulence, discovering the value that others might have overlooked. and by relying on our synchronized efforts, we know what it takes to build a tight ship, and we are running it more and more efficiently and effectively, creating value along the way to all our stakeholders.

our sails are set in motion.

this year we continued to build on our diversity, expanding into new ventures and making acquisitions that will support a balanced growth strategy.

Venturing into uncharted business areas...

Sprea Misr and Plastichem In 2007, EK Holding acquired Sprea Misr and its subsidiary Plastichem, whose core operations focus on the resin and plastics business. These two acquisitions are a significant step towards further diversifying the current EK Holding business portfolio. Sprea Misr and Plastichem focus on producing formaldehyde, form urea, as well as producing derivative moulding compounds and glues. These acquisitions will help EK Holding create synergies as a result of the two companies’ experienced management teams, diversified product-base and increasing local market shares. The two acquisitions are expected to add lucrative returns, and are forecasted to witness high growth rates in the short and medium term futures.

EK Holding is keen to constantly diversify its product portfolio, increase output and enhance each product line to maximize performance.

Building Material Industry Company (BMIC) 10% owned by EK Holding, “BMIC” is a EGP1.57 billion promising green field project that focuses on facing the growing demand on cement. The new company will have a EGP 100 million authorized capital, and will commence operation within the next 26 months. Recently BMIC via EK Holding was able to win a cement production license worth EGP 22 million, and will use it to construct a new factory in Assuit, whose production will top 1.5 million tons annually.

14

Déjà vu?

1998 – first investment in the gas sector; 2002 – first investment in the glass sector; 2003 – first investment in the fertilizers sector; 2006 – first investment in the oil sector...

a history of meeting challenges.

we’ve used the same insight to expand our ability to create value through capitalizing on egypt’s resources with ambitious export strategies focusing on long-term growth, not short-term gains.

16 17

Setting a new baseline for

growth

this year has been marked by recordgrowth, the greatest we have seen so far.

$329,200,Total Accumulated Profit:

1998 $5.2 million

1999 $12.1 million

2000 $14.5 million

2001 $16 million

2002 $17.4 million

2003 $20.3 million

2004 $28.2 million

2005 $55.3 million

2006 $56.2 million

2007 $104 million

20

there’s no finish line

our digits will never stop growing,

,000US$ 329.2 million

23

total aSSetS

974.2 Million

2007

2004 436.4 Million

2003 413.2Million

2002 231.7 Million

2006 528Million

2005 517.9Million

uS$

reVenueS

2007

2004 127.7 Million

2003 102.1Million

2002 21.6 Million

2005 117.1Million

2006 109.7Million 236.2 Million

uS$

26

netProFitS

2007

2004 28.2 Million

2003 20.3Million

2002 17.4 Million

2005 55.3Million


uS$

29

networth

2007

2004 173.6 Million

2003 156.1Million

2002 151.9 Million

2005 219.4Million


uS$

31

returnon eQuity

2007

2005

2004 16.2%

2003 13.0%

2002 11.5%

25.2%

19.6%20.4%2006

DiViDenDS

2007

2004

2003

2002 10%

2005 15%

2006 15% 20%15%

15%

85%Net Profits Growth

chairman’s Statement

nasser M. al-Kharafi chairman of the Board

Dear Shareholders,

2007 was a record-breaking year for our company in terms of financial and operational performance. And I am pleased to announce that the growth strategy which we adopted since we started in 1997 has delivered; and continues to deliver; value to our stakeholders.

We realize that good governance and an understanding of the impact our businesses have on the region have always been key factors in determining how we operate. It is telling, therefore, that our flagship companies continue to deliver record-breaking profits in what experts describe as a volatile market – a truly remarkable achievement.

Throughout 2007 all of EKH subsidiaries have been met with remarkable success in their respective markets. In the fertilizers industry, Alexandria Fer--tilizers Company (AlexFert) has commenced its operations in June 2006 and is exporting to the US and EU markets with considerable success through--out the year. Meanwhile, Tri-Ocean Energy has become a regional player in the oil sector; focusing on producing and developing oil fields, as well as providing oil-related services such as drilling and crude shipping, while NATGAS has been expanding its operations to encompass the entire region; positioning itself as a fully-integrated natural gas player in the Arab world. These are exciting times for EK Holding as we continue to maintain our position as industry leaders in respective fields.

Our financial results for 2007 reflect the value of past investments and EK Holding’s consistent business growth strategy. We achieved US$ 104 million in consolidated earnings delivering a remarkable 85% growth rate over last year’s earning. In addition, our market penetration strategy has strengthened our leading position in various markets, all of which offer long-term growth opportunities.

We will continue to move forwards in 2008, strengthened by our ever increasing returns from current investments, and our commitment to con--tinuously invest in new technologies, products and businesses. In the end, I thank our management team and staff for their hard work and continued commitment to the company. It is my belief that through the efforts of all our stakeholders across the region that we have been able to navigate our way through this complex and ever-changing environment to achieve the excel--lent results that you will see in this report. EK Holding’s portfolio remains in excellent form and, as we look ahead to the coming year, I am confident that we will continue to explore new opportunities, build on our strengths, expand our portfolio and create value for all our shareholders and partners in all our existing and future investments and ventures.

Nasser M. Al-KharafiChairman of the Board

38 39

Board of Directors

Mr. nasser M. al-Kharafi CHAIRMAN

Mr. Bassam yusuf al-ghanim VICE CHAIRMAN

Mr. Moataz al-alfiCHIEF ExECUTIVE OFFICER

Mr. nasser M. al-Kharafi President: Mohamed Abdelmohsen Al-Kharafi and Sons Co. Chairman: Kuwait Food Company (Americana) and Utilities Development Company - Kuwait. Member of the Board of Directors: Dar Al Qabas Press Printing and Publishing Company, The National Bank of Kuwait S.A.K., Sheikh Sabah Al-Salem Al-Sabah Foundation, Refreshment Trading Company. Managing Director: Aluminum Industries Company W.L.L

Mr. Bassam yusuf al-ghanim President: Al-Ghanim Industries Group. Chairman and CEO: the Gulf Bank in Kuwait. Vice President: Yusuf Al-Ghanim and Sons W.L.L. Member of the Board of Directors: Al Amana Investment Co.

Mr. Moataz al-alfi Chairman: Globe Telecom, Heinz–Egypt, Tri-Ocean Energy. Vice Chairman and Managing Director: Cairo Poultry Company. Vice Chairman: Future Generation Foundation. Member of the Board of Trustees: the American University in Cairo, and Akhbar Al Yom Academy. Member of the Board of Directors of the Social Fund for Development. Member of Egypt-US Business Council.

40 41

Sheikha Dr. Souaad Mohamed al-Sabah

Mr. ayman laz Mr. abdel Mohsen al-Fares

Mr. loay jassim al-Kharafi

Mr. galal al-Zorba Mr. assad al-Banwan

Poet, writer on economic is--

sues. Chairman: Action Con--

sultancy Bureau. Fellow, St.

Catherine College – Oxford

– UK. Visiting Fellow, Surrey

University – UK. Researchee

er: interested in human rights,

women’s rights, social services

for children worldwide. Foundee

ing Member: Executive Com--

mittee for Human Rights Orga--

nization in the Middle East.

Financial Consultant. President

and Founding Partner, ASKA

Financial Consultants. Member

of the Board of Directors of the

Egyptian Center for Economic

Studies and a number of lead--

ing Egyptian companies. Memee

ber of the Board of Trustees of

the Egyptian General Authority

for Investments.

Chairman and Managing Direcee

tor: Kuwait Lebanon Holding

Company-Lebanon. Member

of the Board of Directors: Zain,

Telecommunications and Con--

sultancy Information Group.

President: Loay Jassim Al-

Kharafi Law Office. Chairman:

Emak Marsa Alam for Tourist

Development and Urban In--

vestment - Egypt, Kuwait Pipe

Industries and Oil Services –

Kuwait, International Pipe In--

dustry Co. – Egypt. Vice Presiee

dent, Mohamed Abdelmohsen

Al-Kharafi and Sons Co. Memee

ber of the Board, Kuwait Food

Company (Americana). Memee

ber, Kuwaiti Bar Association

Founder and CEO, Nile Cloth--

ing Company. Chairman, In--

ternational Trading Company

- USA, Egypt Exporters As--

sociation, Egypt-US Busi--

ness Council. Chairman of the

Board of Directors of Federa--

tion Egyptian Industries. Vice

Chairman, Egyptian Center for

Economic Studies

Chairman, Zain. CEO, Nation--

al Investments Company. Vice

Chairman, Gulf Cables and

Electrical Industries Company,

Telecommunications and Con--

sultancy Information Group.

Member of the Board of Direcee

tors of Globe Telecom, Arab In--

ternational Insurance Company.

Board of Directors

42 43

Mr. Saad al-Saad Mr. Marzouk al-ghanim Mr. hussein al-Kharafi Mr. Mohamed al ansary

Mr. aladdin Saba Mr. Sobhy el Sehrawy

Chairman and CEO, National

Industries Group. Member of

the Board of Directors of Gulf

Cables and Electrical Industries

Company, the High Council for

Planning. Former Secretary

General, Kuwait University.

Chairman, Boubyan Petro--

chemical Company, Kuwait

Sports Club. Vice Chairman, Ali

Thanyan Al-Ghanim and Sons

Group. CEO, Al-Ghanim and

Sons Automotive Company.

Member of the Board of Direcee

tors of National Gas Company

- Egypt, Jebail Chemical Indus--

tries - Saudi Arabia, Quality Net

Company - Kuwait, Globe Tele--

com-Egypt, Investment House-

Kuwait. Member of the Kuwaiti

National Assembly

CEO, Khalid Ali Al-Kharafi and

Sons Co. Chairman, Kuwaiti

Industries Union. Vice Chairee

man, National Pharmaceutical

Company - Kuwait. Member

of the Board of Directors of

Kuwait and Middle East Com--

pany for Financial Investments,

National Real Estate Company,

Agility – Kuwait.

CEO, Tri Ocean Energy. Board

Member, Egyptian Tanker Com--

pany (ETC); previously regional

manager for Central Asia, Africa

and Middle East, Shell Trading

& Shipping Company, project

manager for Sakhalin-II off-

shore platforms and site GM for

offshore EPC in London. Interee

national Career with Shell Group,

specialized in General Manage--

ment, Talent-Capacity Building

and Business Development. A

Harvard Business School and

University of Massachusetts-

Amherst alumni, with interests in

socio-economic development.

Founder and Chairman, Beltone

Financial. Co-founder, Hermes

Financial. Member of the Board

of Directors, The Cairo and Al--

exandria Stock Exchange, Na--

tional Bank of Egypt. Founding

Member: The Egyptian Invest--

ment Management Association,

The Egyptian Capital Markets

Association.

Senior Vice President, Egypt

Kuwait Holding Company.

Vice Chairman and Managing

Director, Bawabet Al Kuwait

Holding Company. Member

of the Board of Directors, Al--

exandria Fertilizers Company,

Egyptian Glass Company,

Delta Insurance Company, Tri-

Ocean Energy.

Board of Directors

eng. Sanaa el Banna

Project Director of “Midor

Suez Oil Refinery Project”, with

background of having occupied

posts of Chairperson and CEO

of the Egyptian Petrochemicals

Holding Co. Vice Chairman,

The Egyptian General Petro--

leum Corporation for Planning

and Projects. First Under Secee

retary, The Ministry of Petro--

leum. Member of the Board,

Midor Alexandria, Sumed,

Enppi, Egyptian Electricity

Holding Co., Anrpc. Member,

The World Energy Council, The

Egyptian Parliament, The Arab

Parliament, The Arab Parlia--

ment Union.

44 45

executive Management

Mr. Sherif ibrahimASSOCIATE

our real assets... a revitalized management team

Mr. Moataz al-alfiCHIEF ExECUTIVE OFFICER

Mr. ayman lazADVISOR TO THE CEO

Mr. Sobhy el SehrawySENIOR VICE PRESIDENT

Ms. Sahar FarahatCHIEF FINANCIAL OFFICER

Mr. ahmed el BassiounyVICE PRESIDENT

Mr. hisham SamahaASSOCIATE

Mr. alaa el BannaASSOCIATE

46 47

to build the big picture, we need a well balanced and diversified portfolio; a portfolio supported by energy resources, a fertile environment, manufacturing assets and clear communication, tightly knitted with the kind of insurance that will allow us to continue to prevail.

48

FertilizerseK holding is monetizing egypt’s natural gas resources and adding value to the economy by expanding exports and creating jobs in the nitrogenous fertilizers sector.

Bawabet Al Kuwait (BKH)

BKH is a Kuwaiti joint stock company established in May

2004 with a paid-in capital of KD 50 million, with EKH the

single largest shareholder with 41.67% capital ownership.

Other shareholders include leading Kuwaiti companies

and prominent individual investors. Capitalizing on the

abundant natural gas reserves, skilled labor force and

strategic location, BKH is set to become a major investor

in the booming fertilizer and petrochemicals industries in

Egypt under EKH management. BKH currently has interests

in Alexandria Fertilizers Company and Tri-Ocean Energy.

Alexandria Fertilizers Company (AlexFert)

AlexFert, of which Bawabet El Kuwait owns a 60% stake, is

a free zone company established in July 2003 in Alexandria,

with an authorized capital of US$ 500 million and paid-in

capital of US$ 248.7 million, AlexFert is a green field project

established in partnership with Egypt’s leading nitrogenous

fertilizers producer, Abu Qir Fertilizers, with a production

capacity of 635,000 tons of granular urea per annum

exclusively designated for export with easy access to the

ports of Abu Qir, Dekheila and Damietta. The company

commenced commercial production in June 2006 and is

currently exporting its products to US and EU markets.

50

energy – gas & Powerour partnership with Shell – one of the world’s leading oil and gas companies – has provided us with world-class technology and raised quality, health, safety and environment standards to international levels. Such a partnership has ensured eK holding is inline with government policies to increase natural gas usage and provide affordable clean fuel.

National Gas Company (NATGAS)

Holding a stake of 51.95%, Shell Gas B.V. joined EK

Holding in NATGAS, a privately owned joint stock company

that was awarded 20-year concession rights to design,

finance, construct, operate and maintain a gas transmis--

sion and distribution network in Egypt’s major cities. During

2004 GAIL (India) Limited has acquired 15% of NATGAS,

adding to the value added partners of NATGAS and forming

a stronger base.

Kahraba

Kahraba delivers state-of-the-art natural gas-based electric

and thermal energy solutions to industrial and commercial

clients in the region. With an authorized capital of EGP 100

million, the company has been constructing and operating

electric and thermal power stations since 2004.

Gas Chill

Gas Chill provides world-class cooling and heating solu--

tions using the latest Japanese and European technologies.

Predominantly relying on natural gas as the main fuel, the

company delivers new and revolutionary environmentally

friendly cooling and heating techniques for the Egyptian

and regional markets.

Fayoum Gas Company (FGC)

FGC has 20-year concession rights to design, finance,

construct, operate and maintain a gas transmission and

distribution network in the governorate of Fayoum, Egypt.

In May 2003, EK Holding joined Shell Gas B.V. by acquiring

27% of the share capital of FGC, then in 2007 EK raised its

stake in FGC to 74%. The company’s vision is to become

a preferred employer and partner in the gas distribution

industry and to participate in the sustainable development

of the governorate of Fayoum.

Shell Compressed Natural Gas Egypt (SCNGE)

SCNGE was incorporated in 2002 to compete within the

fast-growing Egyptian market of 2.5 million vehicle owners,

with taxis as the primary target market for natural gas for

vehicles. In August 2003, EK Holding joined Shell Gas B.V.

by acquiring 27% of SCNGE share capital. An Egyptian

joint stock company majority owned by Shell Gas B.V.,

SCNGE is continuing with its plan to build a retail network

of natural gas filling stations.

52

energy – oilBacked by an experienced top quality management team and its shareholders’ strengths, tri-ocean energy is positioning itself to be the Mena region’s first vertically integrated private energy company.

Tri-Ocean Energy

TOE has an authorized capital of US$ 1 billion, with an issued

capital of US$ 300 million. The Shareholding Structure

comprises: a) International Financial Investments Company

(IFIC, a subsidiary 99.9% owned by Egypt Kuwait Holding

Company, S.A.E. 73%, b) Bawabet Al Kuwait Holding

Company, S.A.K. 10%, and c) Commercial International

Bank, S.A.E. & Others 17%. For more information, please

visit www.triocenaenergy.com.

Exploration & Production

The first success story is the recent oil discovery in the

Gulf of Suez in the jointly 50/50 owned concession in North

Shadwan (NS) region, with British Petroleum (“BP”) as the

operator. This discovery is the first/largest in the south--

eastern area of the Gulf of Suez in over ten years. The well

penetrated 68 meters of oil bearing sandstones in the highly

productive Nubia formation (API 37deg.). The current proven

and probable reserves in the concession are approximately

40 million barrels.

TOE is currently focusing on exploration/production loca--

tions in Africa. Tri-Ocean Exploration & Production (TOEP),

has signed a Sale & Purchase Agreement to acquire interest

in large producing concessions in East Africa. Meanwhile,

other opportunities are being evaluated for potential invest--

ment in the MENA region.

Crude & Products Shipping

Tri-Ocean Marine (TOM); a 100% owned subsidiary of TOE;

entered into a Joint Venture (JV) with Heidmar; a leading inter--

national company and a 100% owned subsidiary of Morgan

Stanley. The JV was inaugurated in January 2007, it sets the

framework for an expanding relationship which matches the

experience of Heidmar and the investment and expansion

plans of TOE. The JV currently operates two Aframax ships in

the international market, with several other ships due to enter

into operation in 2008, 2009 and 2010.

Carbon Emissions Trading

Tri-Ocean is capitalizing on the natural advantage that EK

Holding is enjoying in the field of the Clean Development

Mechanism (CDM) which is part of the UN’s Kyoto climate

change protocol. Tri-Ocean will help EK and others reduce the

CO2 emissions produced; thus protecting the environment

while securing an additional income through the financial

incentives granted by the CDM mechanism.

Egyptian Tanker Company

In 2006, EK Holding established the Egyptian Tanker Company

(ETC) with an issued capital of US$ 50 million, in cooperation

with the Egyptian General Petroleum Corporation (EGPC),

the Middle East Tankage and Pipelines Company (MIDTAP),

Petroleum Maritime Services (PMS), the National Navigation

Company, the National Bank of Egypt and Banque Misr. EK

Holding has a 30% stake in the issued capital.

The company will also transport Liquefied Natural Gas

(LNG) through Egyptian and international ports, and provide

maritime agency services and all servicing activities comple--

menting and connected to the business.

54

Manufacturingcapitalizing on the promising market of glass manufacturing, eK holding is driving change in egc to enable it to emerge as a regional leader, raising quality and efficiency to international levels.

Building Material Industry Company (BMIC)

Building Material Industry Company “BMIC” is a cement

green field project established in 2007 with an authorized

capital of EGP 100 million. The Company recently formed

a consortium of high net worth investors, which were able

to secure BMIC an EGP 22 million license to construct a

cement plant in Assuit governorate, whose annual produc--

tion capacity will top 1.5 million tons annually. Worth noting,

EK Holding has a 10% stake in BMIC.

In addition, BMIC has signed contracts with world lead--

ers in proprietary supplying technologies, equipment and

engineering/design services as well securing the services of

a specialized technical team to supervise its projects. The

project will have an estimated investment cost of EGP 1.57

billion, and is expected to commence operations within the

coming 26 months.

Sprea Misr and Plastichem

With an eye on expanding its product portfolio, EK Holding

has acquired 100% of Sprea and its subsidiary Plastichem.

Operating in the resins and plastics business, the two

companies focus on producing formaldehyde, form urea,

as well as producing derivative moulding compounds and

glues. The two companies also have highly experienced

management teams, diversified product-base and annu--

ally increasing market share. And with a paid-in capital of

EGP 61 million and an authorized capital of EGP 100 million

for Sprea, while Plastichem has a paid in capital of EGP 30

million with an authorized capital of EGP 300 million, EK

Holding is set to gain lucrative returns as a result of these

two acquisitions.

Egyptian Glass Company (EGC)

Holding a majority stake of 61%, EK Holding partners with

Guardian Industries Corp. in the largest glass-making factory

in North Africa. With raw materials that are cost-effective,

abundant and locally sourced, the venture promises healthy

returns with future growth potential. EK Holding seeks to

optimize performance, increase output, and develop product

lines benchmarked to international specifications. EK Holding

seeks and assesses opportunities with Guardian to expand

within this growing sector and introduce new products that

will set new standards for the Egyptian glass industry.

International Pipe Industry Company (IPIC)

IPIC, in which EK Holding owns a 25% stake, began wide-

scale production of seamless steel pipes for use in ground

and offshore oil and gas pipeline projects. Manufacturing

commenced in state-of-the-art facilities in Port Said’s free

zone. IPIC has paid-in capital of US$ 40 million with a total

investment of US$ 85 million. Owning a 35% stake in IPIC,

Kuwait Pipe Industries and Oil Services Company (KPIOSC);

a recognized regional producer of oil pipes, affords indispens--

able industry know-how and experience. The other sharehold--

ers, each with a 10% stake are Enppi, Petrojet, Gasco and the

National Organization for Military Production.

56

information technologya fully owned subsidiary of eK holding, globe telecom company (gt) is set to lead the egyptian information technology and telecommunications market, which holds enormous potential. through a carefully planned series of steps, gt signed representation agreements with intergraph corporation, nortel networks and Psion/teklogix.

Globe Telecom Company (GT)

GT’s agreement with Intergraph has enhanced its position

in the information technology and software development

sectors. And by developing Intergraph’s various solutions

(GIS, mapping and PDS) GT reached a higher level of accu--

racy in maps and data, applications, and turnkey solution

including satellite image acquisitions and processing.

Through utilizing these highly accurate maps and data, GT

has created highly advanced automated vehicle tracking,

fleet management, and fleet navigation solutions.

Nortel networks

Using Nortel Networks’ superior products, GT contributed

to the advancement of telephone penetration in Egypt by

supplying switch capacities in several areas.

PsionTeklogix

Using Psion/Teklogix’s latest technology in barcode and

warehouse management systems, GT played a major role

in the automation of both Port Sokhna and Port Said by

supplying, implementing and integrating the ports’ wireless

networks. GT also implemented multiple systems for vari--

ous warehouses, including those of the military.

58

Dic works tirelessly to take advantage of egypt’s emerging insurance sector, with vast potential for future growth.

Delta Insurance Company (DIC)

The liberalization of the insurance sector in Egypt has

opened up potential revenue sources in the areas of life

insurance and private pensions. DIC is a medium-sized

insurance

private sector insurer, of which EK Holding is the largest

shareholder with a 23% stake, operating in both general and

life insurance policies.

60

Financial StatementsAuditor’s Report 63

consolidated Balance Sheet 64

consolidated income Statement 66

consolidated Statement of cash Flows 68

consolidated Statement of changes in equity 70

We have audited the consolidated financial statements of “Egypt Kuwait Holding Compa--ny” (An Egyptian Joint Stock Company sub--ject to the provisions of Investment Incentives & Guarantees Law) represented in the con--solidated balance sheet as at 31 December 2007 and the related consolidated statements of income, changes in equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibil--ity is to issue a report on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Egyptian Standards on Auditing and appli--cable Egyptian laws. Those standards re--quire that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence support--ing the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statements presentation. We have obtained the information and explanations, which we

auditor’s report

deemed necessary for our audit. We believe that our audit provides a reasonable basis for our opinion. The balance of provisions in the consolidated balance sheet includes an amount of US$ 8.7 million without having a present obligation, a matter which led to overstatement of liabilities and understatement of equity by the same amount. We have previously issued a qualified opinion on auditing the consolidated financial statements for the year ended 31 December 2006 for the same reason.

In our opinion, except for the effect of the preceding paragraph on the consolidated fi--nancial statements, the consolidated financial statements referred to above together with the notes attached thereto present fairly in all material respects, the consolidated financial position of the Company as at 31 December 2007 and the consolidated results of its op--erations and cash flows for the financial year then ended in accordance with Egyptian Ac--counting Standards and in compliance with relevant Egyptian laws and regulations.

KPMG Hazem HassanCairo, 2 March 2008

To the Shareholders of Egypt Kuwait Holding Company

62 63

31/12/2007uS$

31/12/2006uS$

long - terM aSSetS

Investments in associates 230 675 876 158 863 586

Available for sale investments 127 169 059 15 328 255

Investments in unconsolidated subsidiaries 222 456 -

Egyptian General Petroleum Corporation 17 840 972 27 608 140

Development assets 31 046 616 -

Fixed assets (net) 104 322 182 59 366 881

Projects under construction 23 720 491 14 615 363

Goodwill 71 998 323 29 044 990

Other intangible assets (net) 8 797 596 8 871 212

total long - term assets 615 793 571 313 698 427

current aSSetS

Cash at banks & on hand 70 950 581 61 479 200

Investments in treasury bills 10 366 262 3 793 085

Held for trading investments 153 335 822 90 577 793

Trade & notes receivable 22 544 787 7 933 552


Debtors & other debit balances 28 717 312 8 532 980

Inventories 28 075 581 11 203 050

Work in progress 15 112 934 6 264 831

total current assets 358 364 296 214 317 734

current liaBilitieS

Provisions 19 281 451 23 664 502

Bank overdraft 42 606 767 13 610 246

Short term loan installments & bank facilities 77 594 284 13 622 941

Suppliers & subcontractors 8 299 873 1 497 000


Dividends payable 549 224 461 493

Creditors & other credit balances 76 673 421 39 877 306

total current liabilities 231 014 341 99 199 853

working capital 127 349 955 115 117 881

total investments 743 143 526 428 816 308

31/12/2007uS$

31/12/2006uS$

These investments are financed as follows:

equity

Issued & fully paid up capital 173 407 981 145 530 000

Legal reserve 82 079 013 7 556 507

General reserve 8 380 462 8 380 462

Fair value reserve 77 824 757 8 233 493

Retained earnings 80 333 833 48 102 017

Net profit for the year 104 028 456 56 178 623

Cumulative translation adjustments 4 466 128 1 468 059

total equity attributable to the company 530 520 630 275 449 161

Minority interest 63 634 123 46 464 674

total equity 594 154 753 321 913 835

long-terM liaBilitieS

Long - term loans & bank facilities 131 570 215 104 719 746

Other long-term liabilities 12 420 325 -

Deferred tax liabilities 4 998 233 2 182 727

total long-term liabilities 148 988 773 106 902 473

total equity and long - term liabilities 743 143 526 428 816 308

egypt Kuwait holding company(an egyptian joint Stock company)consolidated Balance SheetAs at December 31, 2007

CHIEF FINANCIAL OFFICER

Sahar Hassan Farahat

ExECUTIVE DIRECTOR

Ayman Ibrahim Laz

MANAGING DIRECTOR

Moataz Adel Al-Alfi

CHAIRMAN

Nasser Mohamed Al- Kharafi

64 65

egypt Kuwait holding company(an egyptian joint Stock company)consolidated income Statement For the financial year ended December 31, 2007

2007uS$

2006uS$

oPerating reVenueS

Net gain / losses on sale of available for sale investments 13 660 195 4 221 188

Net gain / losses on sale of held for trading investments 5 499 561 2 186 309

Investment income from held for trading investments 3 900 269 2 575 191

Investment income from available for sale investments 258 589 191 191

Share of profit of associates 56 066 369 16 431 674

Unrealized gain on held for trading investments portfolio 2 604 223 22 405 079

Gas supplies activity revenues 54 529 741 19 862 193

Communication & geographic maps activity revenues 459 722 642 803

Agencies activity revenues 5 930 477 2 143 804

Glass activity revenues 48 380 190 38 939 448

Chemicals & plastic activity revenues 44 484 225 -

Cooling technology by natural gas activity revenues 125 805 -

Investment income from treasury bills 313 507 83 271

total operating revenues 236 212 873 109 682 151

LeSS:

Gas supplies activity costs 30 396 010 5 853 946

Glass activity costs 23 835 880 21 885 439

Communication & geographic maps activity costs 371 309 486 522

Agencies activity costs 5 173 655 1 796 204

Drilling activity costs 303 039 229 046

Chemicals & plastic activity costs 30 208 141 -

Cooling technology by natural gas activity costs 119 346 -

Glass activity’s selling & distribution expenses 1 343 444 1 350 702

Chemicals & plastic activity’s selling & distribution expenses 1 952 524 -

Interest and financing expenses 16 942 289 11 280 887

General & administrative expenses 12 633 536 8 485 295

Remunerations and transportation allowances of board of directors 233 523 169 109

Provisions other than depreciation 2 554 580 1 209 032

Reversal of impairment loss of debtors & other debit balances ( 106 755) (1 716 620)

Fixed assets depreciation & other intangible assets amortization 642 058 425 605

Operating profit 109 610 294 58 226 984

2007uS$

2006uS$

other incoMe (exPenSeS)

Net foreign exchange differences ( 54 709) ( 160 378)

Provisions no longer required 7 966 631 5 226 067

Interest income 4 491 450 2 016 501

Gain on sale of fixed assets 64 868 71 510

Negative goodwill 89 274 -

Other income 236 691 2 697 193

Net profit before income tax 122 404 499 68 077 877

Current income tax expense (2 520 928) (1 681 670)

Deferred income tax expense (1 285 466) ( 829 735)


Attributable to:

Equity holders of the Company 104 028 456 56 178 623

Minority interest 14 569 649 9 387 849


earnings per share (uS cent / Share) 15.28 9.64

66 67

egypt Kuwait holding company(an egyptian joint Stock company)consolidated Statement of cash FlowsFor the financial year ended December 31, 2007

2007uS$

2006uS$

caSh FlowS FroM oPerating actiVitieS

Net profit for the year before income tax 122 404 499 68 077 877

aDjuStMentS to reconcile net ProFit to net caSh FlowS FroM oPerating

actiVitieS FroM grouP actiVity

Fixed assets depreciation & other long-term intangible assets amortization 11 465 061 8 924 687

Gain on sale of available for sale investments (13 660 195) (4 221 188)

Share of profits of associates (56 066 369) (16 431 674)

Unrealized gain on held for trading investments portfolio (2 604 223) (22 405 079)

Accrued interest & financing expenses 16 942 289 11 280 887

Gain on sale of fixed assets ( 64 868) ( 71 510)

Provisions no longer required (7 966 631) (5 226 067)

Provisions other than depreciation 2 554 580 1 209 032

Reversal of impairment loss of debtors & other debit balances ( 106 755) (1 716 620)

Foreign exchange differences 412 435 -

Operating profit before changes in assets & liabilities used in operating activities 73 309 823 39 420 345

Change in held for trading investments (121 226 449) 41 038 561

Change in trade & notes receivable (7 314 902) 3 497 795

Change in debtors & other debit balances (16 829 263) ( 354 592)

Change in inventories (10 387 048) (1 191 472)

Change in work in progress (8 848 103) (4 758 811)

Change in suppliers & subcontractors 4 615 555 233 621

Change in creditors & other credit balances 17 032 824 2 495 984

Change in Egyptian General Petroleum Corporation 3 924 034 ( 44 598)

Change in blocked deposits 1 666 785 (1 798 138)

Provisions used ( 958 479) ( 527 362)

Interest & financing expenses paid (15 871 797) (11 822 665)

net cash (used in) available from operating activities (80 887 020) 66 188 668

caSh FlowS FroM inVeSting actiVitieS

Payments for purchase of fixed assets & projects under construction (26 144 055) (15 835 925)

Payments for exploration & development assets (24 408 084) -

Proceeds from sale of fixed assets 68 148 106 774

Proceeds from investment expenditure on behalf of EGPC 10 949 187 20 716 659

2007uS$

2006uS$

Payment for acquisition of subsidiaries , net of cash acquired (70 331 885) -

Minority interest 2 582 250 921 025

Proceeds from sale of available for sale investments 71 479 240 154 404 990

Payments for purchase of available for sale investments (53 294 598) (120 173 913)

Payments for acquisition of investments in associates (12 407 436) (26 740 919)

Payments for acquisition of investments in unconsolidated subsidiaries ( 222 456) -

Proceeds from loans due from associates - 1 411 149

Dividends from associates 14 380 390 954 989

net cash (used in) available from investing activities (87 349 299) 15 764 829

caSh FlowS FroM Financing actiVitieS

Proceeds from increase in share capital & share premium 100 360 730 -

Repayments of long-term loans & bank facilities (31 921 723) (22 408 054)

Proceeds from long-term loans & bank facilities 66 507 926 -

Proceeds from short-term loans 67 757 711 -

Repayments of short-term loans (24 800 000) -

Proceeds from bank overdraft 34 031 940 12 170 216

Repayments of bank overdraft (8 585 259) (22 711 743)

Repayments of long-term liabilities (sales tax) ( 195 593) ( 25 895)

Dividends paid (21 819 319) (6 700 324)

Net cash available from (used in) financing activities 181 336 413 (39 675 800)

Cumulative translation adjustments 1 061 409 ( 553 328)

Net change in cash and cash equivalents during the year 14 161 503 41 724 369

Cash and cash equivalents as at January 1, 2007 62 088 164 20 363 795

Cash and cash equivalents as at December 31, 2007 76 249 667 62 088 164

68 69

egypt Kuwait holding company(an egyptian joint Stock company)consolidated Statement of changes in equityFor the financial year ended December 31, 2007

Share capital uS$

legal reserve uS$

general reserve uS$

Fair value reserve

uS$

cumulative translation

adjustments uS$

retained earnings

uS$

Net profit for the year

uS$

equity attributable to equity holders

of the company uS$

Minority interest

uS$total equity

uS$

Balance as at January 1, 2006 132 300 000 5 866 274 8 380 462 - 3 112 269 14 451 574 55 262 821 219 373 400 36 155 800 255 529 200

Effect of change in accounting policy - - - 14 103 040 - - - 14 103 040 - 14 103 040

Balance at January 1, 2006 , restated 132 300 000 5 866 274 8 380 462 14 103 040 3 112 269 14 451 574 55 262 821 233 476 440 36 155 800 269 632 240

Transferred to legal reserve - 1 690 233 - - - - (1 690 233) - - -

Net change in fair value of available for sale investments - - - (5 869 547) - - - (5 869 547) - (5 869 547)

Dividends distribution - - - - - - (6 692 145) (6 692 145) - (6 692 145)

Stock dividends distribution 13 230 000 - - - - - (13 230 000) - - -

Transferred to retained earnings - - - - - 33 650 443 (33 650 443) - - -

Minority interest - - - - - - - - 921 025 921 025

Cumulative translation adjustments - - - - (1 644 210) - - (1 644 210) - (1 644 210)

Net profit for year 2006 - - - - - - 56 178 623 56 178 623 9 387 849 65 566 472

Balance as at December 31, 2006 145 530 000 7 556 507 8 380 462 8 233 493 1 468 059 48 102 017 56 178 623 275 449 161 46 464 674 321 913 835

Share capital increase 27 877 981 - - - - - - 27 877 981 - 27 877 981

Share premium - 72 482 749 - - - - - 72 482 749 - 72 482 749

Transferred to legal reserve - 2 039 757 - - - - (2 039 757) - - -

Net change in fair value of available for sale investments - - - 69 591 264 - - - 69 591 264 - 69 591 264

Dividends distribution - - - - - - (21 907 050) (21 907 050) - (21 907 050)

Transferred to retained earnings - - - - - 32 231 816 (32 231 816) - - -

Minority interest - - - - - - - - 2 599 800 2 599 800

Cumulative translation adjustments - - - - 2 998 069 - - 2 998 069 - 2 998 069

Net profit for the year - - - - - - 104 028 456 104 028 456 14 569 649 118 598 105

Balance as at December 31, 2007 173 407 981 82 079 013 8 380 462 77 824 757 4 466 128 80 333 833 104 028 456 530 520 630 63 634 123 594 154 753

70 71

i) coMMon StocK inForMation

Stock trading Symbol

EKHO.CA

EKHK.KW

Stock exchange listings

The Cairo and Alexandria Stock Ex--

change is the principle market for EK

Holding common stock, which is also

listed on the Kuwait Stock Exchange.

Shareholders

As of March 2008, there were approxi--

mately 15,000 shareholders on record.

Dividends Policy

Dividends are usually declared before the

end of March of each year and paid with--

in 30 days of the date of declaration.

cash Dividends Declared

March-end Market Price

return on investment

EK Holding was formed in June 1997 as

an Egyptian Joint Stock Company. As--

suming reinvestment of dividends, an

investment in our shares of US$ 1,000

made in 1997 was worth approximately

US$ 45,913 in March 2008, this perform--

ance represents 34.6% compounded

rate of return per annum. Past perform--

ance is not necessarily indicative of fu--

ture return on investment in EK Holding

common shares.

ii) ShareholDerS inForMation

annual Meeting

The shareholders’ meeting is conducted

before the end of March of each year as

announced in two major newspapers in

Egypt and Kuwait.

Stock administration

Registered shareholders with inquiries

regarding share holdings should address

communications concerning statements,

dividend payments, address changes

and other administrative matters to:

Stock Performance

The closing price, adjusted for share

splits and stock dividends, for a com--

mon share of EK Holding on the Cairo

and Alexandria Stock Exchange as re--

ported by Reuters.

* 10% cash & 5% stocks** 5% cash & 10% stocks*** 10% cash & 10% stocks

03

15%

06

15%

04

15%*

05

15%**

07

20%

***Percentage of Capital

Misr Clearing Settlement and Depository

Company Headquarters

4, Talaat Harb Street, Cairo, Egypt.

Tel: +202 2578-8109 / 2578-8048

Fax: +202 2578-8117

Cairo Branch

70, El Gomhouria Street, Cairo, Egypt.

Tel: +202 2597-1581

Fax: +202 2597-1523

Alexandria Branch

4, Ibn El Sayegh Street from El Horreya

Street, Alexandria, Egypt.

Tel: +203 484-9902 / 484-0355

Fax: +203 487-5838

or Kuwait Clearing Company S.A.K.

Tel: +965 299-2711

Fax: +965 240-1857

P.O. Box 22077 Safaat 13081, Kuwait

or Shareholders Relations Department

EK Holding Company

Tel: +202 3336-3300

Fax: +202 3335-8989

14, Hassan Mohamed El Razzaz Street,

Agouza, Giza, Egypt.

e-mail: [email protected]

Financial and other information

Financial results, corporate news and

other Company information are available

at Kuwait, Cairo & Alexandria stock ex--

changes, and on EK Holding’s website:

www.ekholding.com

independent auditors

KPMG Hazem Hassan

Public Accountants and Consultants

KPMG Building, Pyramids Heights

Office Park, KM 22 Cairo/Alex Road

Postal Code: 12111 Pyramids

Giza, Cairo, Egypt

Tel: +202 3539-2233 / 3539-2277

Fax: +202 3539-2303

Share Price In US$

with ten years of phenominal growth and achievement behind us,

eK holding’s future journey can only be more successful.

0.00.51.01.52.02.53.03.54.0

Mar

ch 0

2

Mar

ch 0

3

Mar

ch 0

4

Mar

ch 0

5

Mar

ch 0

6

Mar

ch 0

7

Mar

ch 0

8

4.5

7372

Documents

Egypt Kuwait Holding Company 10