sorouh First Quarter Results 2010

29 April, 2010

Sorouh Real Estate PJSC , the Abu Dhabi-based real estate developer (ADX: SOROUH), today announced its first quarter results for the period ended 31 March 2010.

Results highlights

Revenues for the first quarter 2010 were AED 430.7m (Q4 2009: AED 438.1m / Q1 2009: AED 335.6m). Net profit for the first quarter 2010 was AED 131.6m (Q4 2009 AED 28.1m / Q1 2009 AED 130.4m).

The first quarter profit derived mainly from the sale of one plot on Shams Abu Dhabi; recognition of income from 30 units at Golf Gardens; and lease income from Sorouh’s investment portfolio.

Earnings per share for the period were 5 fils per share (Q1 2009: 5 fils per share).

The Company maintains a strong balance sheet with net assets as at the end of the first quarter 2010 of AED 6.2bn (FY 2009: AED 6.1bn).

The Company has low gearing and maintains AED 2.0bn (FY 2009: AED 2.8bn) of cash on its balance sheet. Total bank borrowings are AED 134.9m, representing a debt-to-equity ratio of 2.2%. This excludes the outstanding amounts of the asset-backed Sukuk (issued in the third quarter of 2008), which is a non-recourse facility.

Operational highlights

All Sorouh’s Abu Dhabi developments remain on track with the focus being on maintaining delivery schedules:

• Sorouh continues to grow its revenues from recurring income which currently derives from the fully leased developments of Sas al Nakhl, Khalidiya Village and Al Oyoun. The contribution of Sorouh’s investment portfolio to gross profit is expected to double in the short to medium term, as further rental income is derived from the retail podium on Shams Abu Dhabi, retained units in Sun and Sky Towers, Sorouh’s Tower at Danet Abu Dhabi, the Mall in Al Ain, and alrayyana.

• Construction of alrayyana has started, with the development scheduled for completion in the third quarter of 2011. alrayyana, in the vicinity of Golf Gardens, will comprise 1,537 one, two and three bedroom apartments. Sorouh is already in discussions with large businesses interested in long-term corporate leases for quality staff accommodation.

• Shams Abu Dhabi is making good progress:

• The Sun and Sky Towers are nearing completion and handover is scheduled to start mid-2010. Infrastructure on the surrounding land has been completed. Over 70% of the retail podium is now pre-leased to a broad spectrum of quality retail brands.
• During the quarter, Sorouh launched the Why Rent? promotion on the Sun Tower, targeting long-term Abu Dhabi residents, and offering them an unparalleled opportunity to own a luxury apartment in the Capital for the first time, from as little as AED 6,500 per month in mortgage payments. 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 500 sales leads generated so far.
• 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 24, 19 and 15 respectively. The Arc is above ground and the basement is complete. The Gate Towers are due for completion in 2012.
• Ten sub-developers have commenced construction on their plots on Shams Abu Dhabi. Sorouh continues to work closely with other sub-developers to help them with their developments.

• alghadeer is progressing into the construction phase in line with its scheduled completion 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.

• Sorouh recently signed an agreement with the Abu Dhabi Urban Planning Council (UPC) to develop Watani, a significant master-planned community for Emirati families. Work on the project has already commenced: the project comprises 1,370 four and five bedroom villas; 40 mid-to-low-rise apartment buildings housing units of varying sizes; as well as various civic and social facilities and amenities. Watani, which is due for completion by the end of 2012, is part of Sorouh's commitment to Plan Abu Dhabi 2030 and its strategy to form partnerships with the Abu Dhabi Government to support the Emirate’s growth targets. The total project value is AED 5.4bn.

Abubaker Al Khouri, Managing Director, Sorouh, commented:

“We are pleased to report a new land sale on Shams Abu Dhabi. We expect significant revenues to come through as we recognise income from the handover of units in Sun, Sky and Tala Towers during this year.

“Our earnings profile will also benefit from the new Watani contract, which diversifies and stabilises our income stream. We are very honoured to be one of the Government’s trusted partners, chosen to build a significant amount of quality housing for UAE Nationals to meet the shortfall in supply over the coming years.

“In addition, we continue to improve the quality of our earnings through increased rental income, which will be further enhanced in the next two years.

“The economic fundamentals for Abu Dhabi remain extremely strong and Sorouh remains well-positioned to support the development of the Emirate and deliver long-term shareholder value.”