Half year results 2010

Sorouh Real Estate PJSC (“the Company” or “Sorouh”), the Abu Dhabi-based real estate developer (ADX: SOROUH), today announced its half year results for the period ended 30 June 2010.

• AED 1bn of investment in future income-generating projects in first half 2010
• AED 2.35bn facilities secured to fund further construction
• Improved quality of recurring income through growth of property investment portfolio

Results highlights

 Revenues for the half year 2010 were AED 621m (H1 2009: AED 1,314 m). Net profit for the half year 2010 was AED 152m (H1 2009: AED 281m) reflecting the sale of one plot on Shams Abu Dhabi, recognition of income from 41 units at Golf Gardens and rental income from Sorouh’s property investment portfolio. Earnings per share for the period were 6 fils per share (H1 2009: 10 fils per share).

 Revenues for the second quarter 2010 were AED 190m (Q2 2009: AED 978m). Net profit for the second quarter 2010 was AED 20m (Q2 2009: AED 151m) and was mainly attributable to rental income from the investment portfolio. We continue to prudently build our provisions, adding a further AED 50m in H1 2010 (H1 2009: AED 24m).

 During the period, Sorouh continued to focus on the delivery of core future income-generating projects. The Company invested more than AED 1bn in its infrastructure, development and investment properties, principally Gate Towers, Sun and Sky Towers, alrayyana, Watani, Sorouh’s mall in Al Ain and Sorouh’s tower at Danat Abu Dhabi.

 Net assets as at the end of the first half 2010 were AED 6.3bn (YE 2009: AED 6.1bn).

 The recent signing of a AED 2.35bn four-year finance facility has resulted in almost AED2bn of free incremental cash and facilities being available to Sorouh. These funds will be used to finance the construction of Shams Gate and other developments in Abu Dhabi. Fully drawn, gearing will be 37%. By extending the debt maturity profile, Sorouh has significantly strengthened its liquidity position and avoids having to refinance in 2011-2012 when a significant amount of company debt maturities are expected.

 Operational highlights

 Sorouh continues to make good progress across its development portfolio.

Shams Abu Dhabi

• The Sun and Sky Towers are physically completed and over 400 apartments have now undergone pre-handover inspections with the owners. Sorouh is currently finalising all relevant approvals with the authorities for the completion of the towers and will start the formal handover to owners as soon these approvals have been obtained.
• Infrastructure around the Sun and Sky Towers is complete with the power, gas, water, district cooling, telecommunications and sanitation utilities in place to service the buildings.
• During the first half of the year, Sorouh launched the Why Rent? promotion on Sun Tower. The sales offer, which has the best mortgage rate in the market of 4.99% for both new and existing owners, has been very well received with over 3,000 sales leads generated to date.
• Sorouh also launched Abu Dhabi’s first lease-to-own offering for the commercial office property in its Sky Tower. Business owners can lease space and convert 75% of their lease payments into a down-payment if they wish to purchase the office space.
• The Gate Towers - the four towers that form part of Shams Gate - are progressing on schedule. Towers 1, 2 and 3 have risen to levels 36, 32 and 27 respectively. The Gate Towers are due for completion in 2012.
• The wider Shams Abu Dhabi is starting to take shape with ten sub developers working on developments.
• Meanwhile infrastructure on Shams Abu Dhabi is in an advanced stage of completion, and will be completed by the end of the Q3 2010, with canals, pedestrian bridges, dredging and reclamation works and sea wall, roads, utilities, temporary sewage and synthetic natural gas plant being completed.

• The network for district cooling has been completed for sectors 1 to 6 and chillers are ready to supply chilled water.

alghadeer

• alghadeer is progressing into the construction phase in line with its scheduled completion date in 2012. In March, Sorouh awarded the main infrastructure contract to Nael & Bin Harmal Hydroexport Est, which has already commenced work on approximately 10km of roads and all associated utility networks, including power; water; wastewater; irrigation; surface water drainage; telecommunications; gas and street lighting. The building designs have been finalised, with the building tender floated last month and the construction contract to be awarded in Q3 2010.

alrayyana

• Construction of alrayyana is proceeding well with several of the 33 buildings in the development having topped out and over 200 building floor slabs poured, out of a total of 292. The development is scheduled for completion at the end of the first half of 2011. alrayyana, located closely to Abu Dhabi International Airport, the new Capital District and the highway to Dubai, will offer residents a variety of accommodation options.

Abubaker Seddiq Al Khouri, Managing Director, Sorouh, commented:

 “We continue to make good progress in the construction of our developments. The nature of real estate development is such that it can generate uneven quarterly revenues. Volatility in revenues will reduce over time as we see the amount of earnings from our growing investment property portfolio continue to rise from leased residential, commercial and retail units in Sun & Sky and residential apartments at alrayyana and our tower at Danat Abu Dhabi.

 “Our new financing facility significantly strengthens our liquidity position, leaving the business well funded to advance our major developments in Abu Dhabi. Our cash position will be further improved as we deliver Sun & Sky in coming months. The continued demand for high quality property in Abu Dhabi gives us confidence that we are well positioned to deliver long-term shareholder value.”