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Arabtec Holding (ARTC.DU)

April 18, 2007

Country: UAE Exchange: Dubai Financial Market Sector: Construction Local Ticker: ARTC Reuters Code: ARTC.DU Investment Opinion: OVERWEIGHT Last traded Price: AED 4.73 Fair Value: AED 5.65 Products & Services: Investing in construction and contracting sectors through establishing, managing, acquiring and owning shares in other contracting companies in the UAE.

Current Price (AED) YTD Stock Performance % Shares (Millions) Market Cap (AED Million) Adj. EPS Adj. BVPS Adj. Dividend, 2006 (AED) 52-week High (AED) Source: Dubai Financial Market 0.36 1.31 0.13 5.01 P/E P/B Dividend Yield (%) 52-week Low (AED)

4.73 2.60 598 2,828.54 13.14 3.61 2.75 2.75

Share Price Movement Arabtec Holding (ARTC) is construction company in construction sector. a leading the UAE

ARTC's backbone, Arabtec Construction, has had an impressive track-record of constructing some of the most prestigious projects in the UAE. The company presently has an impressive pipeline of projects, proposed to be developed by some of the leading property developers in the country. The current uptrend in the prices of all construction-related commodities could adversely impact the company's profit margins. ARTC's results for the first nine months of 2006 came in slightly on the lower side in terms of revenue. We revise our price target of AED 3.78 to a 12-month price target of AED 5.65 and give the stock of Arabtec an OVERWEIGHT recommendation.

Call us on +973 17549485 or email us at [email protected]

Background

ARTC - a leader in the UAE construction market. Arabtec Holding PJSC (ARTC) traces its roots to the Arab Technical Construction Company (ATCC) that was established as a Joint Stock Company to facilitate investment in the construction sector, through the acquisition of stakes in existing companies in the UAE. Within a month of establishment, it came out with a public issue, selling 55% of its shares. Subsequently, in January 2005, ATCC hit the jackpot by acquiring Arabtec Construction LLC, a leading construction company in the UAE, for a total consideration of AED 400 million. In May 2006, the company re-branded itself as Arabtec Holding and listed on the Dubai Financial Market. Today, Arabtec is a leading construction company in the highly dynamic and competitive UAE construction market. It is one of the biggest construction companies in the Middle East, primarily engaged in the construction of high-rise towers, buildings, and residential villas. In addition, it executes various related services through its three wholly-owned subsidiaries ­ Arabtec Construction, AustrianArabian Ready Mix Concrete, and Arabtec Precast, all based in Dubai, the UAE. While Austrian-Arabian RMC is involved in the manufacture and transportation of ready mix concrete products, Arabtec Precast specializes in pre-cast buildings and contracting. Arabtec Construction, however, is the backbone of ARTC. The subsidiary contributed 97.4% to the holding company's revenue and almost an identical share to its profit in 2005. Following ARTC's successful villa works in May 2001, Emaar, the UAE's leading private real estate developer, awarded the company a contract for the construction of 108 luxury villas. Since then, the relationship that has been forged between the two parties has proved to be a major achievement for Arabtec. The latter is now positioned as Emaar's main contractor for a majority of its villa-based projects. Figures suggest ARTC has executed approximately 1,749 villas for Emaar over the past few years. ARTC's wholly-owned subsidiary, Arabtec Construction, has an impressive track-record of constructing several of the most prestigious projects in the UAE. Some of these projects include the renovation and expansion of Dubai Airport's Terminal I; the construction of the 21st Century Tower, the world's tallest residential building on Sheikh Zayed Road, Dubai; several phases of Emaar's Emirates Living project; the Abu Dhabi Conference Palace; the new Abu Dhabi Investment Authority (ADIA) headquarters; the Fairmont Hotel; the Emirates Triple Bay Hanger & Engineering Facility; the Sharjah Art Gallery; interior designs for Burj Al-Arab; and a number of palaces for the ruling family in Abu Dhabi. A majority of these are considered landmarks in the UAE. The company was recently awarded a contract to build the prestigious Burj Dubai, slated to be the tallest building in the world. For 2006, ARTC recorded a net profit of AED 216.91 million, an increase of 30.78% over the previous year. EPS stood at AED 0.42 as against AED 0.32. For the year, the company declared a cash dividend of 15% and a 15% bonus issue.

A fruitful relationship with Emaar.

Builder of some of the most prestigious projects in the UAE.

Strong 2006 performance.

Board of Directors

Chaired by Sheikh Butti Bin Maktoum Bin Juma Al Maktoum Sheikh Butti Bin Maktoum Bin Juma Al Maktoum is the Chairman and Mr. Hussein Jassim Al Nuwais is the Vice Chairman of the Board of Directors of Arabtec Holding. The day-to-day management of the Group is conducted by Mr. Riad Burhan Kamal, the Managing Director of the company. Mr. Kamal, a founding shareholder, has extensive experience in the contracting business. He has overseen, since 1975, the development of several construction projects in Dubai and Abu Dhabi, many of which are considered landmarks in the U.A.E.

The rest of the board consists of the following members: Name Anis Abdullah Al Jallaf Sheikh Sultan Bin Saqer Al Qassimi Shames Ali Khalfan Al Dhahry Sheikh Nawaf Bin Naser Al Thani Arif Naqvi Thomas Patrick Barry Anis Abdullah Al Jallaf Designation Director Director Director Director Director Director Director

Major Shareholders and Affiliates

Founders hold 45% shares. In August 2004, Arabtec sold 55% of its shares through an IPO that was oversubscribed 74 times. The company's founders hold the remaining 45%, of which Abraaj Capital is the second largest external shareholder. The largest single individual share at 19% is held by Mr. Riad Burhan Kamal, who is the company's Managing Director. The other major shareholders of the company are as under:

Shareholding Structure

66%

19%

Riad Burhan Kamal Abraaj Capital Sheikh Butti Bin Juma Al Maktoum Others

10% 5%

Source: Zawya Website ARTC, in turn enjoys holdings in a number of companies that operate across various construction sector activities. Its major subsidiary remains Arabtec Construction Company, one of the oldest and largest construction companies in the UAE, operational for over 30 years. The company's other subsidiaries and affiliates are as under: SUBSIDIARIES/AFFILIATES Arabtec Construction Company Arabtec Precast Austrian Arabian Ready Mix Concrete Arab Engineering Services Arabtec Construction Mauritius Emirates Falcon Electomechanical Company Arabtec Construction Company House of Equipment COUNTRY U.A.E. U.A.E. U.A.E. U.A.E. Pakistan U.A.E. Qatar U.A.E. % SHARE 100.00% 100.00% 100.00% 100.00% 60.00% 55.00% 49.00% 33.33%

Industry Scenario

UAE - a rapidly developing and diversified economy. The UAE's economic growth over the last decade has been commendable, marked by rapid development in the non-oil sector, making it one of the most diversified economies in the region. The crux of the successful diversification lies in numerous market-friendly, outwardly-oriented development strategies, including a competitive zero-tax business environment, open trade policies with largely unrestricted capital flows, an extremely well-developed physical infrastructure, a skilled labour market, and a high rate of technological progress. The construction sector boom in the UAE started in the late 1970s in response primarily to a massive population growth, approximating 210% over the period between 1968 and 1975. During the preliminary phase, focus was chiefly on infrastructure - ranging from the building of roads and bridges, to water and electricity projects funded by the government as it recycled petrodollars. Subsequently, in the 1990s, a directional shift was witnessed. While the earlier construction activity had centered on developing the infrastructure for the economy, the second phase of the boom involved mega iconic projects that added further zest to the diversification of the economy, especially the non-oil sector. Currently, the concentration is chiefly on tourism/hotels, commercial offices, retail shopping areas, and residences. Consequently, the effect of this is impacting all related sectors, viz. manufacturing, trade, and the labour market. The present boom is a testimony of investor confidence in the country's economy, as these investments involve long payback periods. The UAE is not alone in this construction boom. The upsurge in construction encompasses not only the entire GCC but also the whole world ­ though the boom in the UAE does seem exceptional. The rapid increase in construction demand has constrained supply for construction materials, labour, and contractors, with shortages and rising prices reported all over the GCC. The current construction boom is led more by the private sector than public sector companies as used to be the case earlier, when major construction projects were commissioned by various municipalities, port/airport authorities, electricity & water works, among others. According to a recent UN conference on Trade and Development, the GCC states attracted USD 1.8 billion (about AED 6.61 billion) in foreign development investment in 2003; USD 480 million (about AED 1.7 billion) of this flowed into the UAE. This was believed to have increased significantly in 2004 and 2005 due to the opportunities in the region, the relaxation of trade barriers and the improved governance being implemented by the Dubai International Financial Centre (DIFC). The high level of activity has also led to a reported shortage of contracting companies. Consequently, several new domestic construction companies as well as companies from abroad (notably China) have emerged. In the current scenario of iconic construction projects that demand a high quality, many of the top international construction contracting companies are represented. However, domestic construction contracting companies, which were once active mostly in the small to medium size sector, have emerged at the forefront of this boom. The UAE is the biggest spender on construction in the region accounting for USD 294 billion worth of projects, beating Oman, Bahrain, and Qatar combined. This compares with USD 201 billion worth of projects in Saudi Arabia and USD 211 billion in Kuwait. According to some analysts, the construction sector in the UAE has grown at an average rate of 11% a year over the past decade. This highlights the fact that planned construction is the focus of the Emirates, particularly Dubai. Large property developers such as Nakheel, Emaar, Dubai Properties, and Dubai International Properties have announced projects worth USD 26 billion (about AED 95.49 billion), while Dubai Municipality, Dewa and the Department of Civil Aviation are planning projects estimated to cost another USD 20 billion (about AED 73.46 billion).

Construction boom developing the non-oil sector.

Private sector driving the boom.

Entry of new construction companies.

UAE construction sector growing at a CAGR of 11% over the last decade.

UAE: Break-up of Investment Projects (August 2006)

350 300 In USD billions 250 200 150 100 50 0

Civil Gas Industrial Oil Petrochem Power Water

Source: Global Research A highly fragmented construction sector dominated by local players The UAE construction sector is highly fragmented. According to the Dubai Chamber of Commerce and Industry (DCCI) statistics, the estimated number of contractors operating in the market is around 5,938 companies in Dubai alone. The extent of fragmentation can be gauged by the fact that over 96% of these companies employ less than 250 employees; over 75% employ less than 20 each. The market is dominated by local players, with advantages of local expertise and the ability to employ a large labor force. The UAE has a young, ever-growing population, implying massive housing requirements for sometime to come, while oil revenues continue to drive the construction boom in both the public and private sectors.

Demand for Housing Units across the Emirates (2006-07)

Umm Al Quwain Fujairah Ajman Ras Al Khaima Sharjah Dubai Abu Dhabi 0 20000 40000 60000 80000 100000 120000

Number of housing units

Source: Global Research The strong upward trend in construction activity witnessed in the UAE in 2004 and 2005 is expected to continue in the near-term due to expectations of sustained high oil prices and abundant liquidity. This liquidity is likely to continue to be directed toward the development of massive real estate and infrastructure projects. In addition, the UAE's strong population growth will require massive real estate and infrastructure investments. Projects worth an estimated USD 312 billion are said to be at various stages of development at present.

High liquidity to fuel construction growth.

Dubai markets approach maturity; others just picking-up.

However, a general slowdown in real estate activity due to an anticipated correction in the Dubai property market could adversely impact the fortunes of the construction companies, going forward. The anxiety is heightened after the Dubai Rent Committee announced a freeze on rents on some properties, while allowing only a 7% increase on others. This might also delay the launch of some of the proposed projects in the UAE. At present, the construction sector is at different stages of maturity in the different emirates of UAE. While the Dubai market could be approaching its peak, the Abu Dhabi and Ras Al Khaimah markets have just about started picking up. Thus, the pipeline of projects lined-up should indeed see continued buzz in the construction market in the UAE in the near to medium-term.

Asset Structure

The asset structure of ARTC is dominated by current assets that comprise 69% of total assets. This consists mostly of trade receivables, to be realized from construction contracts. For the year 2006, trade & other receivables accounted for 74.33% of total current assets. Of the non-current assets, fixed assets constituted 57.4%. ARTC's acquisitions contributed to intangibles and goodwill, which accounted for 3.85% and 3.81% of total assets in the form of brand value. Intangible assets, arising from the take-over of Arabtec Construction and Austrian-Arabian Ready Mix Concrete amounted to AED 89.83 million, while goodwill from the above two transactions recorded AED 88.90 million.

Current assets dominate assets structure.

Intangibles and goodwill contributed 10%.

Asset Structure as on 31 December, 2006

14.39% 7.65% 4.54% 51.29%

4.32% 17.81%

Trade & Other Receivables Cash & Cash Equivalents Intangible Assets & Goodwill

Property, Plant & Equipment Retentions Receivable Others

Source: Arabtec's Financial Statements

Capital Structure

Steep Increase in equity. Arabtec's share capital comprises of 520 million equity shares of AED 1 each. For the year 2006, ARTC's total equity increased 41.14% to AED 810.07 million from KWD 573.96 million in 2005. Out of the total equity, AED 26.40 million belonged to minority interest holders. At the end of 2006, the company's share capital grew to AED 520 million from AED 400 million as a result of a 30% bonus issue. Further, the company declared a 15% bonus issue for the year 2006, which augmented Arabtec's capital to AED 598 million.

Growth of Arabtec's Equity

900 Figures in AED Millions 800 700 600 500 400 300 200 100 2005 Share capital Retained earnings 2006 Total Equity

Source: Arabtec's Financial Statements

Recent Performance

ARTC's results for 2006 came in slightly on the lower side in terms of revenue but ahead of expectations in terms of profit margins. Revenues grew to AED 2.81 billion, net profit margin widened to 7.79% and net profit jumped to AED 216.91 million. The company's return on equity fell marginally to 27.68%, while basic EPS increased to AED 0.42. Contract revenue represented 94.67% of the total revenue contributing AED 2.66 billion. Meanwhile, the bulk of the balance came from the company's drainage division, which reported revenues of AED 78.66 million in 2006, equivalent to 2.80% of the aggregate. Interestingly, the company was able to reduce the finance cost considerably, which stood at just AED 1.21 million as against AED 5.83 million a year ago. During the third quarter of 2006, Emaar Properties awarded Arabtec a contract to build 940 villas for the Mohamed Bin Rashid Housing Program and 324 villas in the Arabian Ranches residential community, both in Dubai. The value of the 30-month contract, which includes associated infrastructure work, is AED 1.5 billion. The impact of the new contract will be visible only in 2007. Arabtec was also awarded an infrastructure contract with a total value of AED 280 million during the quarter. Moreover, the company was short-listed for several mega projects including the Mall of Arabia (Dubai) and the Golf Gardens Residential Community (Abu Dhabi), with contract awards expected soon. The year 2005 was the first full year of operations for Arabtec Holding (ARTC). The company released its consolidated financial statements for the entire period since the commencement of business on September 20, 2004 till the end of December 2005, in April 2006. The company's 2005 results beat its own expectations. Arabtec recorded AED 2.57 billion in revenues and a profit of AED 165.86 million, representing net profit margin of 6.46% and return on equity of 28.90%. Basic EPS for the period stood at AED 0.32. This robust performance was primarily on account of its subsidiary Arabtec Construction's spectacular results. Arabtec Construction's net profit witnessed an increase of 125% to reach AED 152 million, while its revenues grew 112%. Contract revenue represented 97.40% of the total revenue contributing AED 2.50 billion. Meanwhile, in 2005, the bulk of the balance stemmed from the company's drainage division, which reported revenues amounting to AED 50.23 million, equivalent to 1.96% of the aggregate.

2006 revenues- slightly on the lower side.

ARTC selected for several mega projects.

2005 results surpassed expectations.

Arabtec Construction ­ the primary architect.

Snapshot of Arabtec's Performance

3000 Figures in AED Millions 2500 2000 1500 15.00% 1000 500 0 2006 Revenues Net Profit 15M2005 NPM (%) ROE (%) 10.00% 5.00% 0.00% 35.00% 30.00% 25.00% 20.00%

Source: Arabtec's Financial Statements Arabtec has a project backlog of more than AED 3 billion, along with new contracts valued at more than 2 billion. With the company's bursting bag of contracts and the blistering construction boom in the UAE, ARTC seems well set on the path to high-rise success.

ARTC well set.

New Projects and Strategy

In April 2007, Arabtec and Max Bogl Joint Venture signed two contracts with Dubai Sports City) to build two stadia at a total value of AED 830 million. The work will include the designing and construction of a 60,000 seat Multipurpose Outdoor Stadium, and the construction of a 10,000 seat Multipurpose Indoor Stadium at Dubai Sports City. These contracts bring the total value of Arabtec/Max Bogl Joint Venture Contracts to AED 1.35 billion. These projects represent a landmark in Arabtec's portfolio of projects and indicate the diversification of Arabtec's activities to include nonresidential projects. In January 2007, Arabtec completed the acquisition of 55% share in Emirates Falcon Electromechanical Co (EFECO). EFECO is specialized in electromechanical, air-conditioning and building services contracting. The decision to acquire a major share in EFECO is inline with Arabtec's strategic plan to diversify income and scope of operations. Although, Arabtec's activities are presently focused in Dubai, it has long term plans to capitalize on other regional investment opportunities. Management has indicated its intention to explore opportunities in Oman, Qatar, and Iraq. In line with this inclination, Arabtec acquired a 20% stake in Jordan-based Steel Building Company in early 2006. In a further move towards geographic diversification, Arabtec Holding and AMN Mauritius (a sister company of Abraaj Capital) signed a joint venture agreement to set up Arabtec Construction Mauritius in Pakistan with a shareholding of 60% and 40%, respectively. The first project awarded to Arabtec Pakistan in March 2007, is the Karachi Financial Towers, valued at over AED 500 million. The towers will comprise of two 37 floor buildings, which when completed, will be the tallest structures in Karachi While ARTC is taking advantage of favorable local industry conditions, in the long-term, it will have to diversify to maintain its high growth trajectory. Over the last year-and-a-half, the company has been extending its competencies across the construction chain, while remaining focused on the core activity of the group. As a result of its sustained efforts, today the company has a presence in civil construction, ready mix concrete products, and pre-cast buildings and contracting segments. The diversified portfolio has strengthened its position in the exciting construction market in Dubai and the other Emirates.

Plans to expand beyond Dubai.

Expanding across the entire construction chain.

Foot-prints in Qatar.

Further, in a bid to leverage the high-potential Qatari market, Arabtec has announced plans to set up two companies in construction and ready mix in Qatar. One of the new companies, Arabtec Qatar, is a 50-50 joint venture between Arabtec and the local Nasser Bin Khaled Al Thani Contracting Company. The venture is well placed to win a large construction contract for a new residential and commercial development on the drawing board in Doha called Waab City, which will cover more than 1.2 million square meters. The estimated value of the construction is pegged at AED 4.5 billion, of which Arabtec would record 50% on its books, should it win. Business possibilities in the lucrative Saudi construction market are also under its radar. Positives · The company currently has an impressive pipeline of projects, at various stages of development, implying visible growth of revenues going forward. ARTC is also looking at geographic diversification to reduce business concentration risk especially in Qatar and Saudi Arabia, in the near-medium term. The highly fragmented UAE construction provides a good opportunity for acquisitions. The company is expected to generate healthy levels of cash, which could make such acquisitions financially viable. ARTC works with some of the major property developers in the country, thereby ensuring timely receipt of outstanding payments.

·

·

·

Negatives

· Any slow-down in the economic growth and/or decline in liquidity levels could hit the ongoing regional construction activity and the revenues of the company. The current uptrend in the prices of all construction-related commodities, such as steel, aluminum, cement, could adversely affect the company's profit margins. A general slowdown in real estate activity due to an anticipated correction in the Dubai property market may pressurize the fortunes of the company by delaying the launch of some of its proposed projects.

·

·

Valuation: Discounted Cash Flows

As inputs for our valuation, we have used the unlevered industry Beta for emerging markets' building and construction companies of 1.09. We have derived the equity premium by adding the historical premium of US equities over the risk-free rate and with a country premium. We estimate a country premium of 0.90% using Moody's long-term country rating (Aa3 for UAE) and estimating a default spread for that rating, based upon the difference in yields for traded country bonds. As a proxy for the risk-free rate of interest, we have taken the yield on 10-year US treasury notes as the proxy for the risk-free rate of interest. At the time of this report, the 10-year US treasury had a yield of 4.69 %. Based on the inputs and the Capital Asset Pricing Model we arrive at a Cost of Equity of 11.02%. Arabtec does not have any long-term debt on its balance sheet. Therefore, the Weighted Average Cost of Capital is 11.02 %.

Cost of Equity is 11.02%

Investment Opinion

We expect that contract awards in Dubai, especially work for leading UAE developer Emaar, will continue to drive ARTC's growth in the short- and medium-term. In addition to the company's strong relationship with Emaar, its solid market presence, and its experience in constructing residential projects should allow it to continue to grow at double-digit rates for the foreseeable future. In our view, contract awards outside Dubai will drive ARTC's long-term growth. Although, as of yet, the company has no experience outside Dubai, recent developments indicate it will soon move in this direction. We believe that by bidding for projects in Abu Dhabi and establishing a subsidiary in Qatar, the company is lowering its risk and paving the way for higher long-term growth. Furthermore, ARTC's partnership with Emaar, which is operating in several international markets, may open the door to projects outside its core market. We revise our target value per share for Arabtec upwards by 49.47% to AED 5.65 from AED 3.78. The stock exhibits a 19.45% potential upside from its most recent closing price. Therefore, we upgrade our short-term investment recommendation from NEUTRAL to OVERWEIGHT and reiterate our long-term investment opinion of OVERWEIGHT. The upward revision in both our forecasts and investment recommendation comes on the back of a strong pipeline of big ticket and prestigious projects that should support a healthy and sustainable growth in the company's revenues and profits in the near- to medium-term. Overall, the total quantum of projects currently with ARTC, both on stand-alone basis as well as in alliances/consortia with other contractors, at various stages of bidding/construction, is estimated at over USD 6.5 billion. This pipeline of projects is expected to drive the revenues of the company. Going forward, the company also seems open to pursuing Mergers & Acquisitions as a growth strategy. Thus, ARTC seems well on its way to becoming a regional construction giant. The stock price fell to a 12-month low of AED 2.75 on 22 May 2006, before reaching a 52 week peak of AED 5.01 on 30 October 2006. We view the fall to such low levels to be unjustified and see a significant potential upside to the stock price from current levels.

Fair Value: AED 5.65 Investment Opinion: OVERWEIGHT

Condensed Projections (AED '000)

2007E Revenues Operating Profit Net Profit Total assets Basic EPS (AED) 3,371,568 280,582 292,767 2,802,083 0.49 2008E 4,045,882 317,096 330,866 3,306,457 0.55 2009E 4,855,058 400,542 417,936 3,802,426 0.70

FINANCIAL STATEMENTS BALANCE SHEET

As on

AED Assets Current assets Cash and cash equivalents Other financial assets Trade and other receivables Due from related parties Inventories Other current assets Total current assets Non-current assets Available for sale investments Intangible assets Goodwill Retentions receivable ­ non-current portion Other non-current assets Property, plant and equipment Total non-current assets Total Assets 13,705,473 89,828,097 88,896,366 105,957,186 9,523,556 415,948,933 723,859,611 2,335,068,789 11,659,723 101,040,097 88,896,366 128,629,676 13,140,145 331,484,165 674,850,172 1,889,772,715 17.55% -11.10% 0.00% -17.63% -27.52% 25.48% 7.26% 23.56% 100,981,696 27,987,391 1,197,541,471 24,982,583 215,105,833 44,610,204 1,611,209,178 93,907,569 27,825,420 936,194,657 29,576,492 95,405,616 32,012,789 1,214,922,543 7.53% 0.58% 27.92% -15.53% 125.46% 39.35% 32.62% 31 Dec `06 31 Dec `05 %Chg

Liabilities and Shareholders' Equity Current liabilities Bank Borrowings Trade and other payables Due to related parties Total current liabilities Non-current liabilities Bank Borrowings Provision for employees' end of service indemnity Retentions payable ­ non-current portion Total non-current liabilities Total Liabilities Capital and reserves Share capital Statutory reserve Fair value adjustment reserve Retained earnings Equity attributable to equity holders of the parent Minority Interest Total Equity Total Liabilities and Shareholders' Equity 520,000,000 38,276,226 909,887 224,486,032 783,672,145 26,397,526 810,069,671 2,335,068,789 400,000,000 16,585,671 8,100,140 149,271,039 573,956,850 573,956,850 1,889,772,715 41.14% 23.56% 30.00% 130.78% -88.77% 50.39% 36.54% 763,261 47,758,972 85,223,674 133,745,907 1,524,999,118 32,041,556 57,080,473 89,122,029 1,315,815,865 49.05% 49.30% 50.07% 15.90% 156,795,947 1,226,412,910 8,044,354 1,391,253,211 1,217,627,383 9,066,453 1,226,693,836 0.72% -11.27% 13.41%

INCOME STATEMENT For the period ended

AED 31 Dec' 06 20 Sep, 2004 to 31 Dec' 05 %Chg

Revenue Direct costs Gross profit Other operating income Selling, General and administrative expenses Profit from operations Other Income Changes in fair value of non-current retentions Finance (costs)/income Net profit for the period Attributable to: Equity holders of parent Minority interest Basic earnings per share (AED)

2,809,640,076 -2,452,622,007 357,018,069 26,197,666 -175,902,895 207,312,840 13,688,954 -962,053 -1,211,403 218,828,338

2,565,510,644 -2,333,341,612 232,169,032 12,438,901 -100,866,245 143,741,688 29,501,622 -1,558,007 -5,828,593 165,856,710

9.52% 5.11% 53.78% 110.61% 74.39% 44.23% -53.60% -38.25% -79.22% 31.94%

216,905,548 1,922,790 218,828,338 0.42

165,856,710 165,856,710 0.32

30.78% 31.94% 31.25%

KEY RATIOS

31 Dec' 06 Operating Profit Margin Net Profit Margin Return on assets Return on equity Basic Earnings per share ( AED) Current Ratio 7.38% 7.79% 9.37% 27.01% 0.42 1.16 20 Sep, 2004 to 31 Dec' 05 5.60% 6.46% 8.78% 28.90% 0.32 0.99

OPINION RATINGS:

The stock is expected to perform better than the market index; investors may give the stock more weight in their portfolio, than its weight in the overall market The stock is expected to perform in tandem with the market index; investors may give the stock the same weight in their portfolio as in the overall market. The Stock is not expected to perform in line with the market index; investors may give the stock less weight in their portfolio than its weight in the overall market.

OVERWEIGHT

NEUTRAL

UNDERWEIGHT

Call us on +973 17549495 or email us at [email protected]

DISCLAIMER: All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of publication, but we make no representation as to its accuracy or completeness. All information is for the private use of the person to whom it is provided without any liability whatsoever on the part of TAIB Securities WLL, any associated company or the employees thereof. Nothing contained herein should be construed as an offer to buy or sell or a solicitation of an offer to buy or sell. The value of any investment may fall as well as rise. Past performance is no guide to the future. The rate of exchange between currencies may cause the value of the investment to increase or diminish. Consequently, investors may not get back the full value of their original investment

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