Dividend increased 18% to AED 0.13 per share, subject to AGM approval
Dubai , 31 March 2010 – Depa Limited (ticker DEPA) (‘Depa’ or ‘the Company’), one of the world’s leading interior contractors, today reports its full year audited results for the period ended 31 December 2009. The Company has seen strong growth in revenues and profits, in line with expectations and in the face of a challenging economic environment.
In 2010, Depa is pleased to be anticipating flat growth in profits and revenues despite the challenging economic climate that it expects to continue throughout the year. Depa’s market position, track record and diversification ensure that it will continue to perform well and provide clients, employees, and shareholders with a solid year, and the potential for significant growth in future years.
Financial Highlights
§ Net revenues up 36% at AED 2.7 billion (2008: AED 2 billion) with significant contributions coming from Abu Dhabi, Asian operations, and infra structure operations.
§ Net profit up 23% at AED 240 million (2008: AED 194.5 million) prior to adjusting impairment losses on acquisitions.
§ Given the Company’s strong financial performance, the Board has recommended an 18% increase in exceptional dividend to AED 0.13 per share (2008: AED 0.11 per share), subject to AGM approval.
§ Cautious approach taken by increasing allocation of project contingencies over and above the norm for such events to AED 30 million. This, in conjunction with 2008’s unused contingencies (AED 10 million) brings the total amount available for contingencies to AED 40 million.
§ Over AED 2.1 billion in contracted backlog as of 31 December 2009.
§ Depa’s backlog includes over 100 projects, of which the top 37 account for 91% of the backlog.
Strategic Highlights
§ Depa has continued its strategy of diversifying revenues both geographically and by market segment, with the current focus on counter-cyclical industries such as refurbishment and infrastructure performing well as the Company recently won prestigious contracts for the interior fit out of infrastructure and hospital projects.
§ Depa has continued an active geographic diversification strategy to reduce reliance on any one market – only 55.2% of Depa’s 2009 backlog comprised of UAE projects. The Company also increased its presence in high growth markets, such as Abu Dhabi and Saudi Arabia, and grew its South East Asian operations.
§ Depa Design Studio in Singapore is now the fastest growing business, which saw 2721% revenue growth from AED 9 million in 2008 to AED 266 million in 2009.
§ Depa has continued to be selective about 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. Depa has no project or client accounting for more than 11% of current backlog.
Commenting on these strong results, Mr. Mohannad Sweid , CEO of Depa , said:
“I am extremely pleased to report another year of significant growth for our Company. Despite the difficulties brought about by a once in a generation downturn, Depa’s revenues increased by 36% in 2009, which verifies our diversification and growth strategies. As the Company enters 2010, we look forward to another year of strong revenues and earnings, albeit with flat growth when compared with 2009.
“The vision of the Company, over the many years it has been in operation, has not changed and remains focused on providing consistent, high quality, interior solutions to select clients around the world. As a business, we continue to diversify our operations, by geography and sector, and actively pursue horizontal and vertical acquisitions.”
Strategic Initiatives and Outlook
Focus on Counter-Cyclical Industries
§ Infrastructure. Depa firmly believes that infrastructure and healthcare are countercyclical sectors and that regional governments are committed to carrying out these projects despite the downturn in order to improve their economies. During the past six years alone, GCC governments awarded AED 2.6 trillion worth of infrastructure projects and these projects are currently being executed in an aggressive manner.
Overall, Depa completed AED 577 million in infrastructure contracts compared to AED 105 million in the previous year, including the complete fit out of 13 Dubai Metro stations. The Company expects the 2010 revenues from infrastructure works to be as significant as in 2009.
Geographical Diversification
§ New Markets. Depa has continued to diversity revenues by growing the business geographically. In August 2009, it entered the Angolan market through an initial contract of AED 25 million to supply the FF&E for all 202 guest rooms and the fit out of public areas of the Talatona Convention Centre Hotel in Luanda, Angola.
§ Abu Dhabi . Abu Dhabi continues to be a key target market and in 2009 Depa experienced growth of 182% in revenues from Abu Dhabi projects compared with 2008. The Abu Dhabi market has a rapidly growing hospitality sector and continues to grow as a proportion of overall revenues, increasing its contribution to total revenues from 5.1% in 2008 to 14% in 2009. Looking forward, Depa expects this market to begin maturing in 2010, but to continue contributing significantly to its top and bottom line earnings.
§ Asia . Depa has experienced substantial growth in Asia through its joint venture Depa Design Studio, which completed three projects this year, and achieved a rise in revenues from AED 9.4 million to AED 266.3 million. Depa expects to enter additional South East Asian markets in the coming few years and believes that the interior contracting market in this geographical area is poised for growth.
Operations
§ Employee development . The Company has focused on the development of its employees and overall Company productivity. As such, Depa has been improving its information systems, management committees, and communication platforms to enhance efficiency within the Company. The impact of these improvements is yet to be fully realized. However, the Company has already witnessed a strong growth of 31% in profit per employee this last year, making Depa one of the most efficient companies in the industry.
Outlook
§ Vertical and horizontal integration . Depa continues to pursue its long-term strategy of vertical and horizontal integration and will continue to acquire and invest in companies strategically related to its own. Recently, and after the year end, Depa acquired Carrara Mid East Industrial Co. LLC, one of the region’s first, and the market’s leading producer and installer of high quality stone . Depa will also continue to set up joint ventures with reputable partners within its markets where opportunities present themselves.
§ Looking to 2010/2011. Although 2009 was a challenging year for the market and the Company, it was nevertheless a year of continued growth. Depa believes that 2010 will also be challenging and the Company will, as a result, be focusing on developing its internal capabilities, information management systems and employee training which will strengthen the core business and ensure the Business is well-positioned for growth in 2011 and 2012.
§ Geographic. The Company’s near-term growth lies in the GCC markets, in which Depa is well-positioned for the next few years; its medium-term growth lies in South-East Asia; and its long-term growth lies in Africa. T he Company has historically entered two new geographical markets a year and plans to continue to do so, with a particular emphasis on Asia.
§ Market segment. Depa believes that the hospitality sector will continue to be a significant portion of revenues as refurbishment work begins to play a role in the industry, and as high-end, new-build projects continue to develop. However, the Company also expects infrastructure to become an increasingly important portion of its revenues as government projects near completion.
For the full version of the annual report and the audited financial statements, please visit the NASDAQ Dubai or Depa Limited websites.
For further inquiries, please contact:
Depa Limited
Noor Sweid
Managing Director, Strategy
Tel: +971 4 224 3800
noor.sweid@depa.com
Brunswick Gulf Ltd
Rupert Young / Azadeh Varzi
ryoung@brunswickgroup.com / avarzi@brunswickgroup.com
Tel: + 971 4 365 8260
Depa Limited is a leading interior contracting company in the Middle East, North Africa and Southeast Asia regions. Operating principally in the luxury fit-out industry, its main areas of business cover 5 star hotels, high-end residential properties, retail outlets, yachts, as well as public sector amenities such as hospitals and airports. Depa is listed on the NASDAQ Dubai (ticker DEPA) and has Global Depositary Receipts on the regulated market for listed securities of the London Stock Exchange plc (ticker DEPA and DEPS).
The range of business activities performed by Depa comprises:
· Interior contracting : which focuses on luxury interior fit-out services, which include installation and finishing of floors, walls, ceilings, fixed joinery, panelling, wood-works, doors and frames;
· Manufacturing : which comprises a network of factories and joineries which produce customized furniture, fixtures and equipment (FF&E);
· Procurement : which involves the procurement of supplies and materials from third parties to support and complement Depa's interior contracting and manufacturing operations as well as third party procurement contracts for specific FF&E projects.
By integrating these services into a single package, Depa provides clients with comprehensive and customized interior contracting solutions.
With more than 9,000 employees worldwide, the company operates through an integrated network of subsidiaries, affiliates and representative offices located in the UAE, Saudi Arabia, Qatar, Egypt, Jordan, Syria, Libya, Morocco, India, Malaysia, Thailand, China, Singapore, UK, the Netherlands, and the United States. Through this network, Depa has successfully executed large and complex projects in over 16 countries including the Burj Al Arab Hotel (Dubai), Emirates Palace (Abu Dhabi), the Museum of Islamic Art (Doha), Four Seasons Hotels (Sharm El Sheikh & Mumbai) and Mazagan Resort (Casablanca).
