Sorouh concludes another profitable year

Proposes 5 fils per share dividend for the full year

Completes over 1,700 units in 2011

Delivers 918 units to buyers as successful handover of Sun and Sky nears completion

Adds over 300 leases to rental portfolio, strengthening quality of earnings
FINANCIAL REVIEW

Year-End Results

Revenues for the full year were AED3.8bn (FY 2010: AED1.2bn), driven by the handover of Sun and Sky, which generated AED2.2bn, construction income from national housing projects, revenue from subsidiary companies, a significant land transaction and rental income from investment properties. This mix of revenue contributors has helped strengthen the earnings profile of the business and create a more sustainable business for the future.

During the year Sorouh continued to build its recurring income streams. New leases signed over the course of the year provide an annualised lease value of nearly AED50m. The leasing portfolio now includes residential and commercial units from Sun and Sky, Al Murjan, Abu Dhabi Aviation, Sas al Nakhl, Khalidiya Village and Al Oyoun Village. In total, this portfolio accounts for almost 1200 units, an increase of 40% over last year. In 2010, we announced our goal of trebling recurring income in the next three years to over AED500m per annum. We are well on our way to achieving this goal, which will significantly strengthen Sorouh’s quality and predictability of earnings. From 2012, further rental income will be generated from units at al rayyana, BOUTIK Shams and BOUTIK Al Ain. At al rayyana, Sorouh signed a 30-year residential lease agreement with Défense Conseil International (DCI) Group, a French government-related company, for 287 units, representing approximately 20% of the development.

The results from subsidiaries Pivot, our construction and general contracting company, Khidmah, our management services company, and associate company Galaxy, our building materials supplier, demonstrate that our decision to invest in a more vertically integrated model is bearing fruit. Pivot delivered strong profit, and both Khidmah and Galaxy became profitable within two years of inception. All three companies show good potential for future profit growth.

During the course of the year, the Company continued its policy of reviewing its asset values to ensure that they are not held above their fair value and obtaining professional valuations of its Investment Properties and material Development Work in Progress. As a result, impairment of goodwill and fair value losses totalling AED194m were taken (FY2010: AED212m).

Net profit for the full year, after provisions and impairments, was AED383.3m (FY 2010: AED16.2m).

The Company maintains a strong balance sheet with net assets at the end of 2011 amounting to AED6.6bn and cash of AED1.8bn (FY 2010: AED6.1bn and AED1.3bn of cash). Total bank borrowings are AED 2.7bn, representing a debt-to-equity ratio of 42%.

On the strength of these results, the Board of Directors have recommended a full year cash dividend of 5 fils per share, which is subject to shareholder approval at the AGM.

Fourth Quarter Results

Revenues for the fourth quarter were AED1.2bn (Q4 2010: AED 197m), principally driven by revenues from Sun and Sky, recurring rental income, construction income from national housing projects and revenues from subsidiary companies. In addition, in December, Sorouh sold the site for Gate Phase 2, in Shams Abu Dhabi. In partial payment, Sorouh took back from the investor a Marina plot on Shams Abu Dhabi previously sold andthe investor has agreed to progress building the final Gate Tower and Arc in accordance with Sorouh’s master-development plan. This swap arrangement has a net positive revenue impact of AED211m.

After provisions, impairments and non-recurring income, the net profit for the quarter amounted to AED98.1m (2010 Q4: net loss of AED198.6m).

OPERATIONAL REVIEW FOR 2011

Shams Abu Dhabi

The commercial handover of Sky Tower began in early March and over 90% of sold commercial units have been handed over. Commercial tenants have commenced their fit-out works and the first commercial tenants have moved into the property, including the Austrian Embassy and Agthia Group.

Handover of residential units at Sun & Sky Towers started at the beginning of May and over 95% of those sold had been handed over by the year end. There is a growing community now forming with over 700 families living in Sun and Sky Towers.

Sales and leasing of unsold residential and commercial inventory is progressing well with over 170 new sale and lease agreements being executed in the full year 2011.

In June, Sorouh launched Abu Dhabi’s first ‘Rent to Own’ offer. The offer enables tenants of Sun Tower to have the right to own their apartment after three years of renting and convert 90% of their rent into equity. This initiative is receiving a significant amount of interest, resulting in 30% of the available stock on offer in Sun Tower being taken up by Rent-to-Own tenants.

Sorouh has completed the infrastructure on Shams Abu Dhabi, with 12 sub-developer plots under construction.

The Gate Towers, a cluster of residential towers that form part of Shams Gate, the gateway to Shams Abu Dhabi, are advancing rapidly. At present, structural work is being carried out on the last two levels which will then house the penthouse bridge structure.

In December 2011, Sorouh sold three commercial floors, comprising 64,298 square feet, at Sky Tower, to an Abu Dhabi government entity.

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