Q1 2010 Trading UpdateMay 20 ,2010
Depa Limited (ticker DEPA) (‘Depa’ or ‘the Company’), one of the world’s leading interior contracting companies, today issues the following update for the first quarter ended 31 March 2010.
Depa remains cautiously optimistic towards 2010 given the challenging economic environment. The Company has seen revenue and profit levels consistent with previous management guidance of flat growth for the full year. Depa is also experiencing increased cyclicality towards H2 earnings as new projects started in early 2010 are beginning to generate revenues. Depa continues to add to its backlog, which now stands at AED 2.3 billion, up from AED 2.1 billion at the end of FY09.
Commenting on the results, Mr. Mohannad Sweid, CEO of Depa, said:
“While Depa continues to be trading satisfactorily, as anticipated, 2010 continues to be a tough year for our industry. Economies in which we operate are still unpredictable and we are just starting to see signs of market recovery beginning to emerge. However, we are still expecting revenues and profits within a similar range to those of 2009, although cyclicality will likely weigh revenues and earnings heavily towards the second half.”
The company’s longstanding diversification strategy, in terms of geography and market sector, has proved to be the key to Depa’s strong trading throughout the wider downturn of the past two years. As such, the Company will continue to work towards reducing its dependence on the UAE and the hospitality sector.
The Company continues to target and actively increase its presence in high growth markets such as Abu Dhabi and Saudi Arabia, and is growing its South East Asian operations. In 2009, Depa Design Studio (‘DDS’) in Singapore was the Company’s fastest growing business unit. At the beginning of 2010, Depa began the incorporation process for DDS in Thailand and Malaysia and has started to open offices in both countries.
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 2010, Depa won prestigious contracts in this area including the fit out of the new Abu Dhabi Stock Exchange on Sowwah Island and general medical facilities in Qatar. As with the infrastructure sector, refurbishment is also a countercyclical industry and as such, is a target market for Depa. In January 2010, Depa won a contract to refurbish a large, well-known five star hotel in Singapore.
Depa continues to successfully pursue its horizontal and vertical expansion strategy and, in March, wholly acquired Carrara Mid East Industrial Co. LLC, one of the market’s leading producers and installers of high quality stone. Carrara’s operations include three state of the art facilities located in the UAE which serve the Middle East and India. Carrara plans to expand internationally to service clients in growing markets including Saudi Arabia.
Depa would like to clarify that the number of shares purchased over the course of the Share Purchase Programme initiated 27 November 2008 (18,890,851) includes 400,000 shares purchased in December 2009 which was not previously disclosed.
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ABOUT DEPA LIMITED
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).