Arzan Financial for Financing and Investment KPSC : Transcript of the Analysts Conference

Ahmed El-Shazly

Good afternoon, everyone, and welcome to Arzan Financial Group’s Q1 2026 results conference call. This is Ahmet El-Shazly from EFG Hermes and it’s a pleasure to have with us on the call today from Arzan’s management Mr Mohammed Farid, CFO, and Mr Fawaz Al Munaya, Marketing and PR Manager and Head of Investor Relations. I will now hand the call over to Mr Fawaz to start with the presentation, thank you.

Fawaz Almunaya

Thank you, Ahmad. Welcome everyone.

As you know, this is Arzan Financial Group financial analyst conference for Q1 of 2026, and I hope that the presentation that you will see today will helps you as analysts. So, we’ll start our session with the financial analysts’ presentation by Mr. Mohammed Farid.

Mohammed Farid

Dear Esteemed Financial Analysts,

Good afternoon, and welcome to the presentation of the financial results for the first quarter ended 31 March 2026. Your valued presence today reflects the importance of transparency and comprehensive financial disclosure, which represent key pillars of our institutional approach and our ongoing commitment toward our shareholders and stakeholders.

Before we begin, I would like to highlight that all financial information related to the first quarter of 2026, including the interim consolidated financial information and the independent auditor’s review report, is available on the website of AFG, in addition to the portal of Boursa Kuwait , as part of our commitment to ensuring transparent and easy access to information.

First Slide: Important Notice

The interim condensed consolidated financial information for the period ended 31 March 2025 has been restated following the completion of the purchase price allocation related to the investment in associates in accordance with International Financial Reporting Standard (IFRS 3).

Accordingly, the Group’s share of results from associates increased by KD

7,757,896. In addition, the basic and diluted earnings per share for the three-month period ended 31 March 2025, which previously amounted to 7.622 fils

and 7.610 fils respectively, were recalculated after reflecting the retrospective adjustments.

In this presentation, we have included the comparative figures for the first quarter ended 31 March 2025 before the adjustment, as previously issued during last year, in order to provide a clearer picture of the Group’s financial position and actual performance prior to applying the adjustments to the comparative figures, thereby allowing for a more accurate comparison with the financial position and performance for the period ended 31 March 2026.

Next Slide: Key Financial Indicators

The following table and charts present a summary of the Group’s key financial indicators for the first quarter of 2026 compared to the corresponding period of 2025.

Key Income Statement Results:

1. Net Profit:

   The Group achieved a record net profit of KD 7.7 million during the first quarter of 2026, representing an increase of 12% compared to the first quarter of 2025, reflecting the efficiency of operational performance and the soundness of the strategic decisions implemented.

2. Basic Earnings Per Share (EPS):

   Basic earnings per share increased to 8.02 fils compared to 7.622 fils during the corresponding period of the previous year, achieving a growth of 5%, which confirms the Group’s continued commitment to enhancing shareholder value and delivering sustainable returns.

3. Total Comprehensive Income:

Total comprehensive income declined by 155% compared to the first quarter of 2025, impacted by fluctuations in the fair value of certain listed investments and financial markets as a result of geopolitical tensions in the region, while the Group continues to manage risks and capitalize on investment opportunities efficiently and flexibly.

Overview of Financial Position:

1. Total Assets:

   Total assets increased by 17% year-on-year to reach KD 365 million, supported by the growth of strategic investments and the Group’s continued implementation of effective policies aimed at enhancing asset value and diversifying revenue streams.

2. Total Liabilities:

   Total liabilities amounted to KD 87 million, representing an increase of 43% compared to the corresponding period of the previous year, within the framework of prudent financial management and a financing structure aimed at supporting growth while maintaining the Group’s strong financial position.

3. Total Equity Attributable to Owners of the Parent Company:

Equity attributable to owners of the parent company increased by 13% to reach KD 214 million, reflecting the strength of the Group’s capital base and its commitment to achieving financial sustainability and enhancing long-term shareholder value.

Key Financial Ratios and Indicators:

1. Return on Assets (ROA) and Return on Equity (ROE):

   Return on assets reached 2%, while return on equity reached 3.60%,

   reflecting the Group’s efficiency in utilizing its assets and capital to generate

   sustainable returns and enhance financial performance.

2. Leverage Ratio:

   The leverage ratio stood at 0.2:1, reflecting a conservative level of financial risk and confirming the strength of the Group’s financial position and the efficiency of its management of its capital structure.

3. Quick Ratio:

The quick ratio stood at 1.1:1, and despite the slight decline compared to the corresponding period of the previous year, it remains at strong levels,

confirming the Group’s ability to meet its short-term obligations and maintain comfortable liquidity levels.

Next Slide: Financial Performance

The following charts illustrate the development of the performance attributable to the shareholders of the parent company during the first quarter of 2026 compared to the past four years, reflecting continued growth and strengthened financial performance of the Group.

1. Net Profit:

   Net profit recorded a growth of 12% compared to the corresponding period of the previous year due to the increase in operating revenues, reflecting the stability of profitability and the sustainability of the Group’s operational performance.

2. Earnings Per Share:

Basic earnings per share recorded a growth of 5% compared to the corresponding period of the previous year due to the increase in the period’s net profit, despite the increase in the number of shares resulting from the bonus share distribution, which confirms the Group’s continued commitment to enhancing shareholder value and delivering sustainable returns.

Next Slide: Financial Position

The following charts illustrate the key balance sheet items of the Group as at

31 March 2026, compared to the previous four years, reflecting the development of the financial position and continued growth across various key indicators.

1. Total Assets:

   Total assets achieved significant growth of 17% on a year-on-year basis, supported by the expansion of investments and diversification of investment portfolios, enhancing asset quality and sustainable growth.

2. Total Liabilities:

Total liabilities increased by 43% compared to the corresponding period of the previous year, mainly due to the increase in Murabaha financing within the framework of prudent financing management supporting expansion and growth plans.

3. Shareholders’ Equity:

Shareholders’ equity increased by 13%, driven by the capital increase, growth in reserves, and retained earnings, reflecting the strength of the capital base and the Group’s continued enhancement of shareholders’ rights.

Next Slide: Key Financial Ratios

The following charts illustrate the Group’s key financial ratios and indicators as at 31 March 2026, compared to the previous four years, reflecting the development of financial performance and the efficiency of resource and capital management.

1. Return on Assets (ROA) and Return on Equity (ROE):

   Return on assets recorded a growth of 3% compared to the first quarter of 2025, while return on equity maintained the same level despite the increase in shareholders’ equity, reflecting the Group’s continued achievement of stable levels of operational efficiency and financial returns.

2. Leverage Ratio:

   The leverage ratio increased by 29% compared to the corresponding period of the previous year, within the framework of conservative and effective capital structure management that supports growth plans while maintaining a strong financial position.

3. Quick Ratio:

The quick ratio declined by 17% compared to the corresponding period; however, it remains within healthy liquidity levels, confirming the Group’s ability to efficiently meet its short-term obligations.

Next Slide: Book Value and Market Value

The following charts illustrate the development of the Group’s book value per share and market value as at 31 March 2026 compared to the previous four years, reflecting the continuous growth in the Company’s value and enhanced investor confidence.

1. Book Value Per Share:

   The book value per share reached 223 fils, achieving a growth of 1% compared to the first quarter of 2025, while maintaining its value despite the increase in the number of shares resulting from the bonus share distribution, reflecting the strength of the financial position and the continued growth in shareholders’ equity.

2. Market Value Per Share:

   The Group’s share price increased to 324 fils, representing an increase of 12% compared to the corresponding period of the previous year, despite the increase in the number of shares resulting from the bonus share distribution, reflecting investors’ confidence in the Group’s performance and future growth prospects.

3. Price-to-Book Ratio (P/B Ratio):

   The price-to-book ratio reached 1.454x, representing an increase of 10%, indicating an improvement in the market valuation of the Group and enhancing the attractiveness of the share to investors.

4. Market Capitalization:

The Group’s market capitalization increased to KD 311 million, recording a significant growth of 24% compared to the first quarter of 2025 despite the increase in the number of shares resulting from the bonus share distribution, reflecting the positive performance of the share and market confidence in the Group’s strategy and financial performance.

Next Slide: Revenue Sources and Expenses

The following charts illustrate the main sources of revenue and the expense structure of the Group during the first quarter of 2026, reflecting the diversification of income sources and the efficiency of managing operational and financing costs.

Revenue Sources:

• Results from associates represented the primary source of revenue at 87%, reflecting the strength of the Group’s strategic investments and their contribution to profitability.

• Dividend income contributed 5% of total revenues, supporting the diversification of income sources.

• Installment sales and interest income contributed 9%, supported by

  the continuation of the Group’s financing and operational activities.

• Contract revenues also contributed 6% of total revenues as part of

  the diversification of the Group’s operating activities.

  Expense Distribution:

• Employee costs accounted for 39% of total expenses, reflecting the

  Group’s investment in talent and human resources.

• General and administrative expenses represented 27%, within the framework of continuous monitoring of operating expenses and enhancing operational efficiency.

• Financing costs accounted for 31% of total expenses as a result of financing expansions supporting the Group’s investment and operational activities.

Next Slide: Geographic Distribution of Assets

AFG maintains a geographically diversified asset portfolio extending across several key regional and global markets, including Kuwait, the Kingdom of Saudi Arabia, the United Arab Emirates, Jordan, Lebanon, Egypt, Switzerland, the Netherlands, Norway, Germany, the United Kingdom, the United States of America, and the Cayman Islands.

strategic investing, portfolio-building, human capital, investor base expansion and the CSR, which is our corporate social responsibilities.

Mr Ahmed, if there are any enquiries or questions from your side, please go ahead. We are ready for the Q&As.

Ahmed El-Shazly

Thank you. Mr. Fawaz & Mr. Mohammed for the presentation

You can use the Q&A box for any questions , We will pause for a minute to give a chance for everyone to send questions , I think we don’t have any questions for today, so we will end the session at this point.

Thanks everyone & have a good day.

Mohammed Farid

Thank you.

Fawaz Al Munaya

Thank you.

CONTENT

PAGE

Important Notice

5

FINANCIAL HIGHLIGHTS

6-12

OUR STRATEGY AND FUTURE

13-16

Q & A

18

APPENDIX

19-21

Saudi Arabia

United Arab Emirates

Jordan

Lebanon

Egypt

Bahrain

Australia

United States

United Kingdom

Norway

Germany

Netherlands

Attributable to:

Owners of the Parent Company

7,704,558

Non-controlling interests

15,693

Net Profit for the period

7,720,251

6,908,135

(526,741)

6,381,394

7.190

7.180

Basic earnings per share attributable to the owners of the Parent Company (Fils)

8.019

Diluted earnings per share attributable to the owners of the Parent Company (Fils)

8.014

Q1-2026

KWD

Income

Income from instalment credit debtors Revenue from contracts with customers Realised profit from instalment sales

Gain on disposal of properties held for trading Rental income

Interest income

Change in fair value of financial assets at fair value through profit or loss Share of results of associates

Dividend income

Foreign currency exchange (loss)/ gain Other income

(Provision)/ reversal of provision for credit losses of restricted cash and cash equivalents

66,044

587,397

826,230

56,784

214,493

130,812

(1,213,447)

9,812,959

568,915

26,240

215,302

1,034

Total Income

11,292,763

Expenses and other charges

Staff costs

(1,188,041)

General and administrative expenses

(803,011)

Finance costs

(937,977)

Depreciation

(49,625)

Provision for doubtful debts – net

(41,594)

Provision for doubtful debts – net

(187,476)

Total Expenses

(3,207,724)

Q1-2025

KWD

55,710

521,626

584,268

56,934

162,475

511,615

934,200

5,873,691

448,035

(14,699)

57,462

(1,631)

9,189,686

(1,021,962)

(633,666)

(677,592)

(46,680)

(22,115)

(297,912)

(2,699,927)

Change

%

%19

%13

%41

(%0)

%32

(%74)

(%230)

%67

%27

(%279)

%275

(%163)

%23

%16

%27

%38

%6

%88

(%37)

%19

Profit for the period before provisions for contribution to Kuwait Foundation for the

Advancement of Sciences (KFAS), National Labour Support Tax (NLST) and Zakat

8,085,039

Provision for KFAS

(52,270)

Provision for NLST

(238,192)

Provision for Zakat

(74,326)

Profit for the period

7,720,251

6,489,759

%25

(5,616)

%831

(95,120)

%150

(7,629)

%874

6,381,394

%21

‌APPENDIX 2:

Q1,2026 CONSOLIDATION COMPREHENSIVE INCOME

Q1-2026 Q1-2025

Attributable to Attributable to

parent co. NCI Total Consolidated parent co. NCI Total Consolidated

PROFIT for the period 7,704,558 15,693 7,720,251 6,908,135 (526,741) 6,381,394

Other comprehensive income ( loss ) for the period:

(Icludes change in fair value of FVOCI investments, share of OCI from (17,309,275) (14,453,177) (31,762,452) 10,439,068 7,475,105 17,914,173

Associates and foreign currency translation reserve)

Total comprehensive income ( loss ) (9,604,717) (14,437,484) (24,042,201) 17,347,203 6,948,364 24,295,567

Q1-2025

KWD

3,735,649

391,481

752,890

26,039,295

10,844,508

1,905,751

158,010,266

96,796,777

1,613,513

1,288,080

8,801,185

1,890,178

312,069,573

10,315,764

2,996,000

45,343,726

1,976,685

60,632,175

86,422,279

9,355,213

(243,811)

2,341,230

4,144,801

2,987,967

169,295

(6,274,243)

47,360,681

43,370,322

189,633,734

61,803,664

251,437,398

312,069,573

Change *

%

%132

(%56)

%30

%0

%49

(%2)

(%4)

%56

%12

(%5)

(%57)

(%9)

%17

%48

%167

%35

%11

%43

%5

%0

%36

%4

%59

%82

%7

%4

(%19)

%57

%13

%4

%11

%17