NIG Prospectus - London Stock Exchange

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Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:19 pm – mac5 – 3776 Section 07 : 3776 Section 07NICBM manufactures building materials and concrete pipes for infrastructure uses. NICBM alsoproduces plastic pipes and fittings and extracts rocks from its quarries. Production is carried out intwo groups of factories in Kuwait. These are the Mina Abdullah Port factory complex and theSulaibiya factory complex.The Mina Abdullah Port factory complex contains the following main facilities:• Autoclaved aerated concrete block (AAC) factory (also known as Gas aerated concreteblocks);• Sand lime bricks factory;• PVC factory;• Quarry (located nearby at Al Ahmedi area);• Lime factory;• Plaster and wall covering and cladding factory;• High density polyethylene (HDPE) factory;• Polypropylene factory; and• Paint factory.The Sulaibiya factory complex contains the following main facilities:• Ready mix factory;• Tiles and curbstones factory;• Concrete pipes factory;• Interlock tiles factory; and• Sand washing station.In August 2006, NICBM announced its plans to construct a KD 20 million porcelain and ceramicfactory in the Mina Abdullah Port factory complex. The factory is expected to be operational by theend of 2007 and will have a production capacity of 10 million square metres of porcelain andceramics per annum. The production of the new factory is principally intended for export,particularly to Europe and the US.NICBM’s customer base consists of large construction companies (including Governmentappointed contractors on Government projects), wholesalers and private individuals. Limited salesare also made directly to the Government.In 2006, approximately 70 per cent. of NICBM’s sales were made to private sector companies inKuwait, approximately 23 per cent. to Government entities in Kuwait and the balance wasexported. Of the private sector sales in Kuwait, approximately 47 per cent. were made to largeconstruction companies, approximately 22 per cent. were made to wholesalers and the balancewere made to individuals.72
Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:19 pm – mac5 – 3776 Section 07 : 3776 Section 07The following table sets out some key figures for NICBM as at and for the years ended 31December 2006, 2005 and 2004:200611112005111120041111(KD million)Total Assets ............................................................................ 125.9 65.3 40.1Total Liabilities ........................................................................ 37.8 20.2 7.6Total Shareholders’ Equity ...................................................... 88.1 45.1 32.6Sales ........................................................................................ 30.1 31.1 26.5Gross Profit.............................................................................. 10.0 11.1 8.8Net Earnings ............................................................................ 9.8 12.3 7.9StrategyNICBM’s strategy is to maintain its existing dominant position in Kuwait’s building materials sectorand to establish a substantial presence in other GCC countries. Management is committed tomaintaining sufficient manufacturing capacity against the risk that investment returns maydiminish in the future.NICBM’s growth strategy in its core business has three components:• Horizontal growth – investing in new factories to serve the local market with new productlines. Examples include a current study on the feasibility of ceramics and porcelainproduction and on steel billets production.• Vertical growth – increasing capacity in existing product lines to meet local demand inKuwait and regional demand in the GCC region. Examples include the recent expansion incapacity for gas aerated concrete blocks and small diameter high density polyethylene.Reducing industrial costs by increasing in house production of specialised products is partof this strategy.• Regional growth – increasing capacity in other growing markets. The recent expansionalongside a local partner in Riyadh and in Jeddah, Saudi Arabia of autoclaved aeratedconcrete blocks and slabs and also in a plant in the UAE serve as examples of this strategyin operation.NICBM also intends to engage in real estate development as a means of distributing its buildingmaterials that is additional to its existing channels. NIG does not intend that real estatedevelopment will be entered into to generate a purely financial return, other than the impendingredevelopment of the current NIG head office site which is due to be completed in August 2007.Corporate StructureThe principal shareholder in NICBM is NIG with a 51 per cent. shareholding. NIG appoints threemembers of the five member board of directors and the general assembly elects the remainingtwo members, with each director serving a term of three years. Once established, the board ofdirectors decides upon the appointment of the chairman, vice chairman and the managing director(the chairman is also appointed as managing director). The current chairman was reappointed fora further three-year term on 6 March 2005. The chairman of the board of directors is also themanaging director. The general manager is responsible for the day-to-day management of NICBMthrough a team of executive managers.The remaining shares are owned by various private sector individuals, none with a shareholdinggreater than five per cent. NICBM’s shares are traded on the “industrial” section of the KSE.NICBM is therefore regulated as a listed company by the KSE.73
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NIG Prospectus - London Stock Exchange

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