Sorouh Real Estate announces its half year results for the period ended 30 June 2009

Results highlights

Revenues for the half year 2009 were Dhs1,314m (2008: Dhs1,693m).

Net profit for the half year 2009 was Dhs281m (Dhs977m). Earnings per share for the period were 11 fils per share (H2 2008: 42 fils per share).

Revenues for the 2nd quarter 2009 were Dhs978m (Q1 2009: Dhs335.6m / Q2 2008: Dhs1,069m).

Net profit for the 2nd quarter 2009 was Dhs151m representing a 16% increase on 1st quarter 2009 (Dhs130.4m) but a decrease against 2nd quarter 2008 (Dhs616m). Earnings per share for the period were 6 fils per share (Q2 2008: 27 fils per share). Value of Sorouh's land bank is not reflective of its intrinsic value.

These results are in line with the previous guidance given at the Q1 2009 results and reflect the Company's strategy to focus on cash conservation along with prudent management of operating costs.

The Company maintains a strong balance sheet with net assets as at the end of the 2nd quarter 2009 of Dhs5.9bn (Q1 2009: Dhs5.7bn). Notably the business has seen strong growth of 63% in its investment properties to Dhs1.4bn.

The Company retains Dhs4.9bn of cash on its balance sheet. Total bank borrowings are Dhs150m, representing a debt to equity ratio of 2.53%, this excludes the outstanding amounts of the asset-backed Sukuk Certificates issued in the 3rd quarter 2008 which is a non-recourse facility.

Customer Focus

During the 2nd quarter, Sorouh announced a new customer initiative for The Gate Towers. This includes a price reduction and assisting qualified customers to find suitable financing for their property purchases. This initiative follows the success of the Investment Optimisation Plan announced earlier this year for customers of Alghadeer, the mixed-use community conveniently situated between Abu Dhabi and Dubai.

Developments Update

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

- Golf Gardens 1 is largely complete with villas starting to be handed over from 1 July 2009
- Sun Tower and Sky Tower, at the entrance to SHAMS Abu Dhabi on Al Reem Island have both topped out 100 days ahead of schedule and are scheduled to be handed over during the first half of 2010.
- The Gate Towers enabling work has been completed and construction has started for the foundations
- Alghadeer is progressing to the construction phase following the completion of the final mock-up villas and completion of the site offices and enabling works
- Work on Golf Gardens II, a residential rental community district adjacent to GG I has started

2009 Outlook

Sorouh expects to see gradual quarter on quarter improvement, as the Company starts to realise unit sales with the handover of Golf Gardens 1 in the third quarter and steady recurring income from the rental developments of Sas Al Nakhl, Khalidiya Village and Al Oyoun Village.

Mounir D. Haidar, CEO of Sorouh commented:

"We are pleased to report results in-line with previous guidance of quarter on quarter earnings improvement. We are moving forward with our strategy to pass on cost savings to our customers and helping our customers through different schemes including; price reduction, payment re-schedule, consolidation and customized mortgage financing Despite the tough economic environment, long term demand remains promising and we are actively managing the Company's cash position. This, combined with the ongoing investment in Abu Dhabi's infrastructure, makes us well-placed to capitalise on our strong position when the markets recover."