Saudi Arabia Business Optimism Index – Q1 2010

1. Saudi Arabia Business Optimism Index – Q1 2010 Presented by Dun & BradstreetNational Commercial Bank

2. Business Optimism Index • The D&B Business Optimism Index is recognized world over as an indicator which ascertains the pulse of the business community • Provides insight into the short-term outlook of business units on sales, profit growth, investment, etc. • Provides analysis of major trends, outlook and issues concerning the business units

3. Survey • Sample of business units representing Saudi Arabia’s economy was selected • 500 business owners and senior executives across business units were surveyed • Survey conducted during December 2009 for the 1st quarter of 2010 • Respondents are asked questions about their expectations on relevant business parameters • Survey also captures respondent feedback on current business conditions

4. Composite Business Optimism Index • The Composite Business Optimism Index is calculated separately for the hydrocarbon and non hydrocarbon sector • Weights are assigned to each of the parameters and the base period is chosen as 2009 to calculate the index • For the non hydrocarbon sector, the Composite Index captures the aggregate behavior of the six individual parameters • For the hydrocarbon sector, the Index takes into account the aggregate behavior of the three individual parameters

5. World Economic Outlook Real GDP Growth Q3 2009 (y/y) Manufacturing PMI December 2009 • Global economic recovery led by emerging markets such as India and China • US economy expanded while Euro zone & UK posted negative growth, if at a lesser annual rate of decline • Global Manufacturing PMI indicates renewed expansion across all major economies

6. Saudi Arabia’s GDP growth for 2009 is estimated at 0.15%; growth for 2010 is projected at 4% The non-oil sector grew at 3% during 2009; aided by government stimulus Strong oil prices will provide further growth impetus to the country Saudi Arabia GDP Source: Ministry of Finance Source: OPEC

7. Business Optimism Indices: Q1 2010 • The composite index for the non-hydrocarbon sector is at 144.7, up from 95.6 in the previous quarter • The composite index for hydrocarbon sector stands at 79.1 as compared to 41.4 in Q409

8. Business Optimism Indices Trends : Non Hydrocarbon Sector

9. Manufacturing Sector GDP Manufacturing Sector Global Manufacturing Purchasing Managers’ Index 12.1% Source: J P Morgan • Global manufacturing activity expands further, December reading at 44-month high • In Saudi Arabia, the Manufacturing sector has shown further signs of progress with all six parameters registering improvement in Q1 2010 • A full 78% of the firms anticipate a rise in volume of sales

10. Construction Sector Construction Sector GDP Residential construction outlook 2008-13 Compound annual growth (%) 6.9% • Global construction sector currently driven by infrastructure spending as commercial property undergoes correction • Construction sector in Saudi Arabia is highly optimistic for Q1 2010; especially for sales and new orders • A majority (60%) of the construction firms expect to increase their employee count

11. Trade & hospitality Sector GDP Trade, restaurants and hotels 8.3% • Global trade & hospitality sector is expected to pick up in 2010, but recovery will be slow as consumers confidence still remains weak • Saudi Arabia’s retail and wholesale trade, restaurants and hotels sector optimism improves further with 80% expecting higher sales • A full 80% of respondents expect to earn higher profits in Q1

12. Transport & Communications Sector Global transport & communications sector expected to witness gradual recovery in 2010 Business optimism across Saudi Arabia exceptionally high with regards to sales, orders and profits, indicating robust demand More than three fourths of firms in this sector expect sales to pick up in Q1 GDP Transport, Storage & Communications Sector 6.6%

13. Finance, Insurance, Real Estate & Business Services Sector GDP Finance, Real Estate & Business Services Global Services Purchasing Managers' Index 12.5% • The Global Services PMI recovery has leveled out following extended recovery • Business sentiments in Saudi Arabia’s professional services sector are strong and improving • Nearly three out of four firms (74%) expect higher sales; similar number expects higher profits

14. Business Optimism Indices Trends : Hydrocarbon Sector GDP Level of Selling Prices OPEC Monthly Price Basket 26.9% Net Profits Number of Employees

15. Other Key Highlights • Input costs cited as a key concern for many businesses in Saudi Arabia • 35% of the respondents expect borrowing conditions to improve, only 3% expect a deterioration • A considerable 46% of the business units plan to invest in business expansion amid initial signs of global economic revival • 69% of companies in the hydrocarbon sector are facing project delays

16. Conclusion • Business outlook in Saudi Arabia has improved significantly since Q4 2009 partly helped by buoyant oil prices • All five non-hydrocarbon sectors have posted upbeat optimism levels across all six parameters • 78% of respondents expect higher sales volume in Q1 2010, indicating demand has picked up for Saudi goods and services • Improving liquidity in the international financial markets has lifted optimism levels in the finance & business services sector • Strong oil prices drives optimism in the hydrocarbon sector

17. THANK YOU