Depa Limited net profits up 65% for H1 2009

Financial performance

- Contract income up 49% at Dhs1,107.6m (H1 2008: Dhs741.1m) .
- Profit margin increased to 8.3% (H1 2008: 7.5%) after minority interest.
- On target to achieve approximately 30% revenue and profit growth for full year 2009.

Backlog / LOUs

- Current backlog now stands at a total of 190 projects.
- Backlog reached Dhs2.6bn (H1 2008: Dhs2.5bn).
- No client or contract accounts for more than 8% of the current backlog.
- Backlog consists entirely of projects that are already at the advanced construction stage. Being at the end of the development chain, Depa typically moves on site to finish the building for occupation and hence, at a stage where the project is extremely unlikely to be cancelled.

Diversification strategy

In line with its strategy, Depa continues to diversify revenues by adding market niches and geographies to reduce reliance on Dubai and the hospitality sector. Increasing focus on countercyclical industries such as infrastructure.
- Huge growth in infrastructure with Lindner Depa's net profit up to Dhs 35.6m (H1 2008: Dhs1.5m) and revenues reaching Dhs212.8m (H1 2008: Dhs23.2m). Depa is on track to complete fit out works for Dubai Metro's red line stations.
- Singapore: moved into profit with net profit reaching Dhs4.4m and revenues reached Dhs54.3m
- Abu Dhabi: significant increase in net profits to Dhs16.2m (H1 2008: Dhs0.2m). Revenues reached Dhs97.0m (H1 2008: Dhs21.0m)
- Saudi Arabia: moved into profit with net profit reaching Dhs3.7m (H1 2008: loss of Dhs0.4m) and revenues of Dhs20.2m (H1 2008: Dhs4.8m)

Since period end, Depa entered another new market; Angola, through an initial Dhs9.2m contract.

Reducing seasonality

- Traditionally, interior contracting is a highly seasonal business with a substantial portion of contract income being recognised in the second half of the year as the end of the fiscal year is usually used as contract deadline by clients. In line with its previously stated aim, Depa has successfully reduced this cyclicality realising 43% of revenues in the first half of 2009 compared to 37% in the same period last year and 31% vs. 25% of profits respectively.

Commenting on the results Mr Mohannad Sweid, CEO of Depa, said:

"Depa's strong performance in terms of revenue and profit growth is driven by prestigious contract wins across target markets and our backlog has increased significantly compared to the same period last year. We have been highly successful in reducing the seasonality of the business as we promised by securing early payments to safeguard our revenue streams. We continue to diversify revenues away from Dubai and the hospitality sector and focus on infrastructure which is countercyclical. Depa is very much on track to reach its target of approximately 30% profit and revenue growth for the full year."