Depa issues trading statement

Depa has continued to perform well across the sixteen countries in which it operates. The Company confirms that in 2009, it traded in line with market expectations and guidance and has achieved circa 36% revenue growth and circa 24% net profit growth for the full year (after tax and prior to adjusting for a maximum of up to Dhs7.5m (%2.04m) impairments).

Revenues stood at approximately Dhs2.7bn ($735.7m ) (vs 2008: Dhs1.97bn ($536.8m)) and profits reached Dhs241m ($65.7m) (vs 2008: Dhs194.5m (Dhs53.0m)), both after adjustments for additional contingencies. As of 31 December 2009, the Company's backlog was Dhs2.1bn ($572m) (vs 31 December 2008: Dhs2.7bn ($736m)).

Although Depa achieved strong performance in 2009, it was not immune to the global economic downturn, which impacted the emerging markets in which Depa operates, in particular the hospitality sector.

Mr Mohannad Sweid, Chief Executive Officer, Depa Limited said: '2009 was an extremely challenging and difficult year worldwide. Despite this, we have managed to maintain our strong performance, as we anticipated the downturn ahead of time and prepared well for it by managing our cost base efficiently and diversifying our revenues geographically and by sector. Although we are seeing signs of recovery, we believe that 2010 will also be extremely tough and we are further streamlining our business to strengthen our ability to cope with difficult market conditions and further diversifying our revenue base as we have been doing over the last decade.'

Looking ahead, despite these challenging markets, Depa is expecting revenue and profit levels in 2010 to be similar to those of 2009. There are still prestigious contracts to work on and Depa continues to win these due to its clear market leading position and unparalleled experience in hotel fit-outs in the UAE and worldwide. In 2009, Depa won contracts to fit out the Dubai Palm Royal Mirage, Conrad Hotel in Dubai and the Ghurair Hotel in Deira, Dubai.

In line with its long term growth strategy, Depa has continued to diversify revenues by geography and sector in order to reduce reliance on any one country or sector. In August 2009, Depa entered Angola and Jordan and strengthened its South East Asian operations. In 2009, Depa also saw particularly strong growth in Asia, where its joint venture Depa Design Studio has been involved in high profile projects, including the Marina Bay Sands Resort, Sentosa Island, and the refurbishment of the Meritus Mandarin hotel. The Company sees continued success in its Asia operations for the coming few years.

The Abu Dhabi market has a rapidly growing hospitality sector and continues to grow as a proportion of overall revenues. In November 2009, Depa handed over five hotels on Yas Island, Abu Dhabi, ahead of the inaugural Formula 1 Grand Prix. In the rest of the region, Depa has strengthened its operations in Saudi Arabia and Qatar in anticipation of strong growth ahead.

Depa also continues to focus on the infrastructure sector which is countercyclical in a downturn as governments, especially those in emerging economies, continue to invest in their country's development. In December, Depa's joint venture, Lindner Depa Interiors was awarded a second Dubai Metro contract worth $245m ($66.76m) for the fit-out of 11 Green Line stations. This is the joint venture's second Metro contract win and Depa is currently in the process of completing the handover of the 13 Red Line stations, a number of which it already handed over ahead of the formal launch of the Metro in September. Last year, Depa also completed the fit-out of the Emaar Medical Centre in Dubai Mall, the largest out-patient complex in the region.

As with the infrastructure sector, refurbishment is also a countercyclical industry and as such, Depa is closely looking at opportunities to expand its presence in this area. In December, Depa won a refurbishment contract for three hospitals in Doha, Qatar, another key target market, with a total value of $67m ($18.4m).

Depa continues to have a healthy contracted backlog which stood at Dhs2.1bn ($572m) as of 31 December 2009 (vs 31 December 2008: Dhs2.7bn ($736m)) and includes over one hundred projects, of which the top 37 account for 91% of the backlog. The United Arab Emirates accounts for 55.2% of this overall figure. Depa has no project or client accounting for more than 11% of current backlog.

It is important to note that given the current market climate and in order to maintain the Company's conservative approach to estimates and expectations, Depa has continued to implement high levels of risk management measures. As a result, the management has, like last year, decided to increase the allocation of project contingencies over and above the norm for such events to Dhs30m (Dhs8.17m). In 2008, Depa also took a cautious approach to the anticipated downturn and took contingencies of Dhs30m ($8.17m). However, only approximately Dhs20m ($5.45m) was used for projects during the year, now bringing the total amount available for contingencies to Dhs40m ($10.9m) for ongoing projects due to be completed in 2010 on a revenue accounting basis of percentage of completion. Additionally, Depa has taken approximately Dhs34m ($9.1m) this year in provisions of doubtful debt due to the current global economic climate.

Prior to contingency, impairment and additional provision adjustments, net profits stood at Dhs305m ($83.1m) at a 30% growth over 2008's Dhs234m ($63.8m) figures. These contingencies are not allocated or related to any risk other than the current market. This is an increase of circa 1.0% over and above the conservative average allocated annually to the projects. Thereafter, the net profits have been reduced, resulting in recognised growth of 24% for net profits for the fiscal year 2009, after the additional contingencies and impairments have been accounted for.

Closing the year, the Company maintained a strong cash position of Dhs548.7m ($149.5m) (vs 2008: Dhs738.7m ($201.3m)) and total debt (short and long term) on the balance sheet reached Dhs212.6m ($57.9m) (vs 2008: Dhs395.4m ($107.7m)), leaving Depa in a positive net cash position of approximately Dhs336.0m ($91.6m) (vs 2008: Dhs343.3m ($93.6m)) as of the year end. The Company is continuing its acquisition and investment strategy as planned and pursuing strategic expansion opportunities this year.

Finally, Depa is working closely with the NASDAQ Dubai in its efforts to merge with the DFM in order to improve liquidity for all issuers on the exchange.