Depa 2008 results in line with expectations with strong revenue and profit growth

Financial Highlights:

- Net revenues up 38.9% at Dhs1972.3m (2007: Dhs1419.8m) with strong financial performance in line with market expectations driven by landmark projects wins.

- Net profit after minority interests up 39.9% at Dhs224.5m (2007: Dhs160.5m) prior to adjusting for additional contingencies due to the market climate.

- Increased allocation of project contingencies by Dhs30m representing an increase of 250% over the conservative average figure allocated annually to projects. Accordingly, once provisions have been accounted for, net profit growth is 21.2%.

- Over Dhs 3.7bn in contracted backlog as of December 31st 2008.

- Since period end, Depa has received orders for 17 projects coming from Morocco, Egypt, Saudi Arabia and the UAE.

- Strong net cash position of Dhs343.3m.

- Dividends will be 35% of net profits, resulting in a one time payment of Dhs0.11 per share.

Strategic Highlights:

- Depa's strategy of increasingly focusing on counter-cyclical industries, such as refurbishment and infrastructural work, with less dependence on hospitality, has been a major contributor to revenue and backlog growth.

- Strategy of diversifying revenue away from the UAE has reduced risk of overreliance. Mena contract income was Dhs343.1m (2007: Dhs225.3m) and Rest of World contract income Dhs141.5m (2007 Dhs37.1m).

- Depa has continued to be selective over projects it works on and the clients for which it works. Choosing to stick with reputable international companies has reduced, to a very low level, project and client concentration risk.

- Operational changes such as business streamlining, investment in new technologies, and subcontracting less work, has strengthened Depa's position during these difficult economic times.

Commenting on these strong results, Mr. Mohannad Sweid, CEO of Depa, said:

"Revenues and profits have continued to be strong and in line with our expectations for 2008. Given the current economic climate, we are proud of these results as they show the strength of the business we have built. We feel we are well placed to continue to generate significant earnings from our established key markets as well as developing new opportunities from diversified geographies and industries."

Strategic Initiatives and Outlook:

- Focus on Counter-Cyclical Industries

- Infrastructure. The UAE and Dubai Governments have recently reasserted their commitments to completing infrastructure developments. Depa saw an opportunity here and has recently increased involvement in this type of work, such as the fitting out of 13 Dubai Metro stations. This has proved to be very successful, exceeding all expectations, to such an extent that Depa has decided to aggressively grow its new joint-venture, Linder-Depa, which focuses solely on infrastructure and hospital fit outs. In 2008, Depa completed AED176m in infrastructure contracts, compared to AED60m in the previous year.

- Refurbishments. Depa has recently signed and completed significant amounts of refurbishment work, such as the extensive renovation of the Al Bustan Rotana. Depa also expects several more hotels coming to them with refurbishment requests in the very near future, as hotel groups see this as more cost-efficient capital expenditure and the market size in this niche increases. Since January 1 2009, Depa has signed refurbishment contracts to the value of AED200m, indicating the extent to which Depa sees potential in this market.

- Geographical Diversification

- Reducing reliance on the UAE market. Depa sees potential slowdown in some markets and continued growth in others. Accordingly, and based on the sudden shift in expectations from different markets, Depa will be re-evaluating the areas in which they are expanding their businesses, and may be consolidating business units to reflect this shift in growth expectations. 2008 saw 73% of the profits come from the UAE, compared to 79% in 2007. One of Depa's main goals for the near future is to generate approximately 40% of their revenues from outside of the UAE by 2010.

- Entering new markets as planned. 2008 saw its joint venture, Depa Design Studio, successfully win two prestigious contracts in Singapore; the Marina Bay Sands Integrated Resort and an entertainment venue at Resorts World, an all encompassing holiday resort on the popular island of Sentosa.

- Increased holding in Jordan Wood Industries Company (JWICO). Depa is now in control of 36.4%, up by 22%, of the Jordan-based wood manufacturing specialist. This is also part of clear vertical integration strategy of acquiring manufacturing and procurement businesses, and also works towards achieving the Company's goals of being less reliant on the UAE market.

- Operations

- Streamline the business. Depa has taken the opportunity provided by the shift in the global economic climate to operationally streamline the business using annual performance reviews to determine staffing and training needs and requirements. Ultimately, experiencing an added increase in productivity and efficiency.

- Investment in technology and information systems. In 2008, Depa began the implementation of an Enterprise Resource Planning system, which is expected to be completed and fully implemented in early 2010. This will allow an increase in economies of scale, improve control in differing geographical territories and will further enhance Depa's risk-management procedures.

- Subcontracting approximately 80% of project values and workforce on a project. As a result, the company has a very flexible workforce and manufacturing base. An economic slow-down would therefore result in subcontracting out a lower proportion of work, and completing a higher portion using in-house resources. This ensures that Depa's capacity usage and productivity remain high and that they are in a strong position regardless of market turns.