NIG Prospectus - London Stock Exchange

Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:19 pm – mac5 – 3776 Section 07 : 3776 Section 07Financial investments may be accounted for as available for sale investments or as investments atfair value through the statement of income. Investments at fair value through the statement ofincome are initially recognised at cost, being the fair value of the consideration given excludingtransaction costs. These investments are either “held for trading” or designated as investmentsat fair value through the statement of income when acquired. Held for trading investments areacquired principally for the purpose of selling or repurchasing them in the near term or are a partof a portfolio of identified financial instruments that are managed together and for which there isevidence of a recent actual pattern of short term profit taking. After initial recognition, investmentsat fair value through statement of income are re-measured at fair value and changes in fair valueare recognised in the consolidated statement of income.Available for sale investments are those investments that are designated as available for sale orare not classified as another type of investment. NIG’s policy is that unrealised changes in the fairvalue of available for sale investments are booked in shareholders’ equity as cumulative changesin fair value until realised, when the realised gain (or loss) is booked in the profit and loss account.Strategic InvestmentsNIG’s principal strategic investments are:Kuwait Cement Company (KCC)In 1968 NIG acquired a 22 per cent. stake in KCC, a company listed on the KSE, and the largestcement company in Kuwait. KCC’s production plant was commissioned in 1972 with an initialgrinding capacity of approximately 300,000 tonnes per annum, which has since increased to 2million tonnes per annum. KCC has embarked on a reverse integration project to produce clinkerwith a production capacity equivalent to 1.8 million tonnes per annum at a cost of US$142 million,which is now operational. The objective of the clinker is to harness the natural resources availablefor clinker production in Kuwait and reduce dependency on raw material imports.Mabanee Company SAK (Mabanee)In 1994, NIG acquired 100 per cent. of Mabanee’s shares from the Kuwait Investment Authoritywith a view to participating in the construction and contract management sector. Pursuant to theacquisition, Mabanee’s capital was increased to KD 30 million. In 2005, NIG sold 51.5 per cent. ofits holding through a rights issue and new management was put in place to steer Mabaneetowards more value added activities in real estate development.In 2004 and 2005, NIG sold 36.6 per cent. of the shares in Mabanee, leaving it with a holding of17 per cent. The aggregate profit realised on the sale was approximately KD 73 million.Kuwait Rocks Company (KRC)In 1996, NIG acquired 38 per cent. of KRC, which is one of the leading Kuwaiti companies dealingin the import and sale of gravel and rocks. KRC has been successful in marketing Gabro gravel androcks in Kuwait, and has concluded several long term contracts to supply governmental projects,particularly those related to building roads.Industrial Bank of Kuwait (IBK)In 1973, NIG acquired a 4.5 per cent. stake in the Industrial Bank of Kuwait (IBK). IBK wasestablished in 1973 with the primary goal of promoting industrial development in Kuwait byinitiating projects and investments in promising sectors, financing new and existing projects inKuwait and the Gulf region (especially where Kuwaiti interests are involved) and bringing newtechnology to Kuwait.79