Emaar Properties (EMAAR.

DFM)

Country: United Arab Emirates

Current Market Price (AED)

12.15

Exchange: Dubai Financial Market

YTD Stock Performance %

-18.5%

Outstanding Shares (In million)

Sector: Construction & Real Estate; Service

Local Ticker: EMAAR
Reuters Code: EMAAR.DFM
Investment Opinion: OVERWEIGHT
Last traded Price: AED 12.15 (as on March 12,
2008)
Fair Value: AED 18.27

6,091.24

Market Cap (AED Million)

74,008.55

EPS (AED)

1.08

P/E

11.26

BVPS (AED)

6.00

P/B

2.03

DPS (AED)

0.20

Dividend Yield (%)

52-week High (AED)

15.85

Source: Dubai Financial Market, Zawya.com

Products & Services: Real estate investment,

development and property management; health
care; education; leisure; retail; hospitality; Financial
services.
Share Price Movement
EMAAR vs. DFM

Established in Dubai in 1997, Emaar

Properties (Emaar) is a powerful global
brand name involved in real estate
development.

The countrys plan to spend over USD 1

trillion on leisure projects provides huge
opportunity for real estate developers.

Emaars two-pronged strategy geographic

and business segmentation will further
enhance its revenue growth.

On February 12, 2008, the company

proposed a 20% cash dividend for the year
2007.

Over supply of property units in Dubai is

expected to continue until 2010; this may
negatively impacting the companys top-line.

Offsetting Emaars growth drivers against

risk factors, we raise our 12-month price
target to AED 18.27 from AED 16.60, while
reiterating
our
OVERWEIGHT
recommendation on the stock.

52-week Low (AED)

Call us on +973 17549485 or email us at research@taib.com

1.6
9.75

Background
Among the worlds largest
real estate companies.

Forays into various sectors.

Established on June 23, 1997 as a public joint stock company, Emaar Properties is one of the worlds
largest real estate companies. The company is primarily engaged in property investment and
development, property management services, education, healthcare, retail and hospitality, as well as
investment in financial service providers. Driven by its Vision 2010 to become one of the most
valuable companies in the world, Emaar is formulating a new course of growth with a two-pronged
strategy - geographical expansion and business segmentation. It has established operations in 17
markets to date. Listed on the Dubai Financial Market on March 26, 2000, Emaar is also a part of the
Dow Jones Arabia Titans Index and S&P IFCG Extended Frontier 150 Index. The company is now
looking to list shares worth USD 40 billion on the London Stock Exchange.
Emaar has strengthened its product sale competencies, market reach and best practices through
strategic acquisitions and joint ventures. In 2006, it acquired John Laing Homes, America's second
largest privately held home builder, and Hamptons International, UK's premier realtor and property
management consultant. It also formed a joint venture with the US-based Turner International to
strengthen execution capabilities. In addition, it continues to diversify its presence into other sectors
such as education, healthcare and hospitality. It acquired Singapore-based Raffles Campus, a premier
education provider through its subsidiary Emaar Education. Emaar teamed up with Giorgio Armani and
Accor Hotels to strengthen its presence in hospitality and will launch ten luxury Armani Hotels &
Resorts world-wide and 100 Formula 1 budget hotels in India. Further, in October 2007, it entered into
a joint venture with Tatweer's Bawadi to develop a USD 16 billion (AED 60 billion) project as part of
Bawadi's massive hospitality development in Dubai land. In the same month, Emaar agreed to build
four residential and leisure projects around Algiers worth USD 20 billion.
Between 2001 and December 31, 2007, Emaar has handed over 21,000 residential units to
customers. As of August 31, 2007, the companys land bank comprised 504.9 million square meters
including the joint venture with Bawadi, but excluding Algeria. On July 10, 2007, Moody's Investors
Service assigned Emaar a long-term foreign currency rating of 'A3', a long-term local currency rating of
'A3', with a Stable outlook. Standard & Poors assigned it an A-.

A number of corporate
laurels.

On March 5, 2008, Emaar won the Mohammed Bin Rashid Al Maktoum Business Award (MRM
Award), launched by the Dubai Chamber of Commerce & Industry in the Real Estate Development
category. The MRM Real Estate Business Development Award recognized Emaar's outstanding
achievements in project management and execution, adherence to delivery schedules, and working in
association with government authorities for infrastructure development. Further, it was chosen as the
Property Company of the Year' for the second consecutive year in 2007 at the Arabian Business
Property Awards. It also won the Dubai Quality Award; the ISO 14001:2004 certification for its
environment management processes; and the ISO 9001:2000 certification for quality management. It
was also ranked in the Top 10 of Standard & Poor's (S&P's) IFCG Extended Frontier 150 Index for
frontier equity markets covering constituents from 26 countries.
For the year 2007, Emaar recorded a net profit of AED 6.58 billion compared to AED 6.37 billion in the
previous year up 3.2%. Consequently, basic earnings per share (EPS) increased to AED 1.08 from
AED 1.05.

Board of Directors
Emaars Board of Directors comprises eight members. H.E. Mohamed Ali Alabbar is the Chairman and
of the company and Mr. Hussain Al Qemzi is the Vice Chairman. The rest of the board members are:
Name
Chaired by H.E. Mohamed
Ali Alabbar.

Designation

Mr. Ahmad Jamal Jawa

Director

Mr. Salem Rashed Al Mohannadi

Director

Mr. Mohammed Ibrahim Al Shaibani

Director

Dr. Lowai Mohamed Belhoul

Director

Mr. Majid Saif Al Ghurair

Director

Mr. Ahmed Thani Al Matrooshi

Director

Major Shareholders and Affiliates

A publicly held company.

Emaar is primarily a publicly held company with the majority stake of 68% held by the public. The
balance 32% stake is with the Investment Corporation of Dubai. Foreign ownership is restricted to
49% of the share capital and is open to both GCC as well as foreign investors.

Shareholding Pattern

32%

68%

Investment Corporation of Dubai

Public

Emaar, in turn enjoys holdings in a number of companies that operate across various sectors. These
are:
SUBSIDIARIES / ASSOCIATES / AFFILIATES

COUNTRY

% SHARE

Arabian Ranches

UAE

100.00%

Emaar Dubai

UAE

100.00%

Emaar Education

UAE

100.00%

Emaar Healthcare Group

UAE

100.00%

Emaar Hospitality Group

UAE

100.00%

Emaar Hotels and Resorts

UAE

100.00%

Emaar International

UAE

100.00%

Emaar International Jordan

Jordan

100.00%

Emaar Investment Holding

UAE

100.00%

Emaar Malls Group

UAE

100.00%

Egypt

100.00%

Morocco

100.00%

Emaar Syria

Syria

100.00%

Emaar Towers

UAE

100.00%

Emirates Living

UAE

100.00%

Hamptons International Holding

United Kingdom

100.00%

WL Homes [John Laing Homes]

United States

100.00%

Emaar Misr for Development Company

Emaar Morocco Offshore

The Industry Scenario

Real Estate - the

centerpiece of UAEs
economy.

The UAEs real estate sector has become the centerpiece of the economy, driven by rising
population, huge inflows of expatriates, and legal and financial deregulations by the government.
According to the Ministry of Economy, the country posted real growth at 16% in 2007 over 9.4% in
2006, with gross domestic product (GDP) reaching AED 698 billion. The non-oil sector accounted for
65% of the total GDP, while oil contributed 35% in 2007. The economy is anticipated to grow by a
further 6.6% this year. Simultaneously, a recent study, conducted by the Research Unit at Mashreq
Bank, in conjunction with the Macroeconomic Research Centre, projected the countrys population to
hit 6.88 million in 2011, as compared to 5.19 million in 2007. Dubai alone is anticipated to attract over
50% of the new expatriates.
During 2007, the real estate sector contributed 8% to the countrys GDP with an investment of AED
25.8 billion. In addition, AED 23.1 billion (16% of total investment) was pumped into the development
of infrastructure, including airport expansions, internal and external road networks, bridge and tunnel
constructions and communications. According to the Ministry, real estate and construction are
anticipated to be the key drivers of economic growth in 2008 as well. The sectors are predicted to
grow by 24.4% and 21.6% respectively by 2010, thereby together contributing 23% to the countrys
economy in comparison with 16% in 2006.

Plans to invest USD 1

trillion on leisure projects.

Dubai is the largest spender on leisure projects in the Middle East, followed by Saudi Arabia and Abu
Dhabi. Real estate projects in Dubai are anticipated to reach USD 310 billion over the next decade,
out of which USD 230 billion will be in the property sector. Across the region, more than USD 1 trillion
is being pumped into the leisure sector. This forms a substantial proportion of the total investments of
USD 3.63 trillion in tourism and transport in the region, encompassing hotels, aviation developments,
cruise lines and supporting infrastructure. Several mega projects that are either planned or are
already under way in Dubai include the Dubai Waterfront, Burj Dubai, Hydropolis, Old Town, Madinat
Al Arab, and the Dubai Marina. However, a shortage of skilled labour is posing a threat to the sector
as 160 projects stand delayed.

Dubai Population and Tourists/Visitors

16
14
12

in millions

Oversupply - the sectors

bane.

As of now, oversupply of completed units is the biggest risk in the UAE. It is estimated that this
problem will continue through 2010 in Dubai and beyond 2010 in Abu Dhabi. Assuming that the UAE
maintains its existing currency peg for the next 12 months, research firm Al Mal Capital anticipates
rental yield to decline over the next four years on the back of real estate price appreciation. Currently,
the average rental yield in the UAE stands at 7.7%, which is higher than that of countries with similar
income levels. By the end of 2008, the average price of residential property is expected to increase to
AED 1,800 per square foot from AED 1,400 in 2007. Price appreciation is anticipated to be around
28% in 2008. However, it is forecast to slow down to 17% in 2009, as more supply is delivered.

10
8
6
4
2
0
1999

2006
Hotel Guests

2010
Population

Positive government
policies.

Inflation in the UAE is surging on the back of rising house rents and pricey imports, as the currency is
pegged to the US dollar. It hit a 19-year high of 9.3% in 2006 and accelerated to 10.9% in 2007. In an
effort to curb inflation, Dubai and Abu Dhabi reacted by capping rent increases to 5% from 7%. In
addition, the ministry has set an inflation target of 5% in 2008. In order to control rising costs for
building materials, on March 13, 2008, Dubai lifted customs duties on cement and steel. Taking the
battle against inflation to the next stage, on March 10, 2008, the government set up a task force to
study the possibility of de-pegging the countrys currency from dollar.
Currently, the UAE has no unified property law governing foreign ownership of real estate. Each
emirate has developed its own approach ranging from Fujairah, which does not allow foreign
ownership of property, to Dubai, where foreign ownership of freehold interests in real property is
allowed. According to the Dubai Property Law, non-nationals and companies are allowed to own only
a free hold property or leasehold right over real property for a period of 10 to 99 years. Further, with
the exception of certain public joint stock companies, which are listed on the DFM, a company with
foreign shareholders is not considered as a UAE national for the purposes of owning property.
Peer Analysis (as on 9M 2007)
In AED 000

Emaar
Properties

Union
Properties

Deyaar
Development

Aldar
Properties

Revenue

12,537,184

2,024,106

214,923

146,837

Net profit

4,838,957

471,743

198,834

1,413,000

Total Assets

53,015,808

9,891,760

8,062,492

19,084,032

Total Equity

34,148,390

5,019,450

5,976,834

4,558,839

0.79

0.17

0.03

0.82

ROA

9.1%

4.8%

2.5%

7.4%

ROE

14.2%

9.4%

3.3%

31.0%

EPS

Asset Structure

Total assets surged 31.4%.

At the end of 2007, Emaars total assets climbed 31.4% to AED 54.79 billion from AED 41.69 billion in
2006, on account of significant growth in development properties, and property, plant & equipment.
Development properties soared 45.6% to AED 16.19 billion from AED 11.12, thereby accounting for
29.6% of total assets. During the year, the company transferred a plot of land worth AED 1.88 billion at
Al Lusaily (UAE) to development properties from investment properties. Consequently, investment
properties declined 19.2% to AED 5.64 billion.
Capitalizing on high real estate demand, Emaar started the construction of several buildings as
investment properties in anticipation of future demand. This investment, included under capital work in
progress, amounted to AED 4.16 billion as against AED 2.37 billion, out of which AED 57.83 million
was capitalized as cost of borrowings for the construction of these assets. Consequently, property,
plant & equipment surged 77.6% to AED 7.43 billion from AED 4.18 billion. Simultaneously, Emaars
investment in the Emaar MGF Land Limited (India) drove its investment in associates to AED 9.11
billion compared to AED 6.59 billion last year.

Assets Structure of Emaar

8.6%

21.3%

10.3%

16.6%

29.6%
13.6%

Bank balances and cash

Investment properties

Development properties

Property, plant and equipment

Investment in associates

Other assets

Further in 2007, Emaars cash & bank balance more than doubled to AED 4.73 billion from AED 2.33
billion. Out of the total cash & bank balance, fixed deposits maturing after three months registered an
over nine-fold growth to AED 2.59 billion. This indicates that the company is parking its cash in the
form of interest earning fixed deposits which carry interest rate between 5.35% and 5.80% as against
5.60% and 5.75% in 2006. For the year, trade receivables increased 54.5% to AED 0.93 billion from
AED 0.60 billion. Among the geographic segments, assets allocated to the domestic segment
comprised 55.9% of total assets as against 44.1% apportioned to the others.

Capital Structure

Shareholders equity up
AED 36.54 billion.

For the year 2007, Emaars total equity increased by 21.8% to AED 37.19 billion from AED 30.54
billion in 2006. Of this, AED 0.65 billion belonged to minority interest holders, representing a 15.2%
growth over last year. The companys reserve grew 12.4% to AED 16.49 billion, while retained
earnings climbed 51% to AED 13.95 billion. The company came out with a 100% right issue in 2005.
During 2007, 15.69 million shares were issued to those shareholders who had opted for the additional
shares at a premium of AED 4 per share. These shareholders were given the option of paying for the
rights in installments up to a maximum of four. Sharing the rewards of its performance among
shareholders, on February 02, 2008, Emaar proposed to distribute 20% cash dividends for the year
2007.

Capital Structure of Emaar

in AED billions

20.00
15.00
10.00
5.00
0.00
Share capital

Reserves
2007

Retained earnings
2006

Recent Performance

Recent Performance of Emaar

20.00
in AED billions

Net profit grew 3.2% in

2007.

For 2007, Emaars net profit grew 3.2% to AED 6.58 billion from AED 6.37 billion, mainly driven by a
growth in revenues. This resulted in earnings per share of AED 1.08 as against AED 1.05 in the earlier
year. However, net profit margin declined to 37.4% from 45.5% on account of a 51.3% increase in
selling & general administration expenses. Meanwhile, both return on equity (ROE) and return on
assets (ROA) declined to 18% and 12% as against 21.3% and 15.3%, respectively, in 2006.

25.0%
20.0%

15.00

15.0%
10.00
10.0%
5.00

5.0%

0.00

0.0%
2007
Revenue

2006
Net profit

ROA

ROE

Changing gears from land

sale to condominiums.

During the year, revenue surged 25.4% to AED 17.57 billion from AED 14.01 billion in 2006. The
increase in revenue can be mainly attributed to the sale of condominiums, which climbed 69.3% to
AED 8.67 billion, thereby accounting for 49.4% as compared to 36.6% of total revenues in the earlier
year. During the second half of 2007, Emaar announced its intention to cease land sales on account
of increased property development. Consequently, sale of land tumbled 50.7% to AED 1.50 billion. In
addition, cost of revenues climbed 51.2% to AED 10.64 billion, as a result of which gross profit margin
declined to 39.4% from 49.7%. However, we believe, Emaars strategy is a step in the right direction
as this would enhance the companys profits in the long-term.

in AED billions

Segmental break-up of Revenues

10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Sale of
condominiums

Sale of villas

Sale of plots of
land

2007

Others
2006

For the year 2007, Emaars share of profits from associated companies registered an over three-fold
growth to AED 0.40 billion from AED 0.13 billion. The company paid taxes amounting to AED 14.45
million as against AED 47.07 million, in relation to the groups operation in the USA and the UK. The
decline in taxes can be mainly attributed to the reduction in the tax rate to 0.2% from 0.7% in 2006.
Emaars Sales Status
Sales Status (2007)
Emaar - the Economic City (Saudi
Arabia)
Jeddah Gate (Saudi Arabia)
Uptown Cairo and Marassi (Egypt)

Units Released (2007)

Units Sold (2007)

540

433

190

91

1,367

925

The Eight Gate (Syria)

196

67

Tinja (Morocco)

129

112

Tuscan Valley (Turkey)

160

65

Emaar MGF (India)

1,309

763

Total

3,891

2,456

New Projects and Strategy

A plethora of projects
across the globe.

In line with its international expansion strategy, Emaar is strengthening its presence across the world
through acquisitions and ventures in prestigious projects, and substantial holdings in successful
companies. On March 5, 2008, the company announced that it had entered a 50:50 joint venture with
Cham Holding Company (Syria) to launch a new company - Emaar Cham - for the development of
mix-use projects. The new company will have a capital of USD 100 million. In the same month, the
company announced investment in a mega Kuwaiti project under the build, operate, transfer system probably the Bubiyan Island project. On February 27, 2008, Emaar signed an agreement with Sham
Holding Company to establish a joint project under the name Emaar-Sham Co. with a capital of USD
100 million. The new company will develop a number of housing compounds in several Syrian cities
and launch several projects to organize the randomly-built areas in Damascus and the countryside.
Earlier, on February 16, 2008, Emaar Turkey acquired 73,571 square meters of prime land in Istanbul
for USD 400 million from Toprak Holding (Turkey). However, in February, Emaar MGF Land, a joint
venture between Emaar and MGF Development of India, had to withdraw its USD1.64 billion IPO on
account of under subscription.

Variegated interests from

sports marketing

to water management.

On January 21, 2008, the company's subsidiary, Emaar Education, entered into a partnership with
Stryx Sports Marketing SAE to establish the FCBEscola Dubai Soccer Academy, which will be run by
coaches from FC Barcelona Football Club. In the same month, another subsidiary, Emaar Malls
Group, forged a strategic alliance with SEGA Corporation (Japan) to develop and operate indoor
theme parks in the company's malls across the Middle East and North Africa. Further, Emaar IGO
issued a Letter of Acceptance to the joint venture between Arabtec Holding and Arabian Construction
Company for a contract worth AED 152 million to carry out construction works on the Eighth Gate
Development project (Syria) over a period of 20 months. Again in January, Emaar Middle East
awarded contracts to two companies - Al Taafuf and the Saudi Building and Development
Management Company - for the development of the water, waste management, drainage and electric
supply infrastructure, and walk-ways throughout its Jeddah Gate project in Saudi Arabia.
On December 11, 2007, Emaar entered into a joint venture with United Utilities (UK) to establish a new
company, Emaar Utilities, to manage water resources and environmental affairs for the latters projects
in Dubai. In the same month, Emaar Healthcare Group announced that it is in the process of initiating
partnerships to construct 100 hospitals and 500 health centers. The new project is expected to
generate revenues of USD 5 billion over the next 10 years. Again in December, Emaar Industries
acquired a 52% stake in Caparol LLC, which plans to invest AED 400 million in acquiring majority
stakes in up to four companies in the MENA region in the fields of oil and gas, healthcare, and
construction by the end of 2008. Caparol also plans to construct a paint production factory that will
double its current capacity to 15,000 - 20,000 tons p.a. The plant is expected to start production within
18 months. Simultaneously, Emaar-MGF, its Indian venture, entered into an MoU with Dubai
Aerospace Enterprise (DAE) to tap the burgeoning airport up-gradation market in India. The firm plans
to invest more than USD 12 billion in India over the next four to five years. In October 2007, Emaar
announced its intention to build four residential and leisure projects around Algiers worth USD 20
billion. It is also considering boosting its investment in the country to USD 30 billion.
On March 8, 2008, Emaar announced that it will open a limited sale of commercial space in Downtown
Burj Dubai and Dubai Marina from March 10. In the same month, it also opened sales of a limited
collection of unique villas and townhomes, located in the established neighborhoods of the Arabian
Ranches and The Lakes, and the up-and-coming Umm Al Quwain Marina. Concurrently, it sold a
limited collection of luxury waterfront serviced apartments at the 38-storey Dubai Marina Mall Hotel &
Serviced Residences, and boutique offices at Marina Plaza.

Strategies toward Vision

2010.

In line with its Vision 2010, Emaar aims to be the worlds most valuable company in the next couple
of years. The company intends to cover projects worth AED 154 billion (USD 42 billion) over the next
four years, of which international projects will account for AED 115 billion. Further, it plans to expand
its education and health care operations into the Middle East and the Indian sub continent regions. In
addition, it aims to earn 60% - 70% of revenue from international operations and to generate 15% of
net profits (2% in 2007) from hotels and malls by 2010. The company is targeting a minimum Internal
Rate of Return (IRR) of 15% on non-property development projects.

Positives

Emaar Properties is a powerful brand name, with a size and scale of operations that allow it
to undertake giant projects.

Its expansion and diversification into key markets and sectors helps the company to grab
prestigious projects and capture all-around growth.

The countrys massive investment in the real estate sector provides abundant opportunity for
real estate developers.

Negatives

Emaar is exposed to execution risks, which may result in delays and cancellations.

The governments plan to de-peg the currency from dollar could raise the companys finance
cost.

Valuation: Discounted Cash Flows

Cost of Equity: 10.89%

WACC: 10.05%

We have used the Discounted Cash Flow (DCF) method to determine our fair value estimate. As
inputs for our valuation, we have used the unlevered industry Beta for emerging markets Real
estate development of 1.27. We have derived the equity premium by adding the historical premium
of US equities over the risk-free rate and the country premium. We estimate a country premium of
0.90% using Moodys 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 bond
had a yield of 3.510%.
Based on the inputs and the Capital Asset Pricing Model, we arrive at a Cost of Equity of 10.89%.
Considering the long-term debts of Emaar, we arrive at the Weighted Average Cost of Capital
(WACC) of 10.05%.

Investment Opinion

Fair Value: AED 18.27

Investment Opinion:
OVERWEIGHT

Powered by its Vision 2010, Emaar has developed a new growth strategy through a dual process
of geographical expansion and diversifying business segmentation. Consequently, the company is
developing new competencies in retail, hospitality, education, healthcare and finance. It is extending
its expertise to international markets as well, by replicating the successful business model it has
used in Dubai. Currently, the company has operations in 17 markets. With this, the company plans
to cover projects worth AED 154 billion (USD 42 billion) over the next four years, of which AED 115
billion will account for international projects. In addition, it aims to earn 60% - 70% of its revenue
from international operations and to generate 15% of net profits (2% in 2007) from hotels and malls
by 2010. Further, the countrys massive investment worth USD 1 trillion on leisure projects provides
abundant opportunity for the company to enhance its revenue base.
However, Emaar operates in key US markets that have been directly affected by the sub prime
market weakness, which in turn had an impact on its financials in 2007. In addition, it is exposed to
project execution risk which could result in delays and cancellations. Further, the UAE governments
plan to de-peg the countrys currency from the dollar could raise Emaars finance cost. However, the
companys strategy of business diversification, coupled with its past record of successful project
execution skills, would help it to maintain its strong track record in the coming years.
In 2007, Emaars stock gained 22.1% versus the DFMs rise of 43.7%. From the beginning of 2008,
the stock has lost 18.5% as against a dip of 1.9% in DFM. Considering the above factors, we revise
our Fair Value per share upwards by 10.1% to AED 18.27 from AED 16.60 (as on May 01, 2007).
The stock exhibits a 50.4% potential upside from its closing price of AED 12.15 (as on March 12,
2008). Therefore, we reiterate our earlier OVERWEIGHT investment opinion on Emaars stock.

Condensed Projections
(in AED 000)

2008E

2009E

2010E

Total assets

62,461,598

70,581,605

80,463,030

Revenue

21,711,314

27,081,250

33,606,789

Net profit

7,956,054

10,596,230

12,151,098

1.31

1.74

1.99

EPS (AED)

FINANCIAL STATEMENTS
BALANCE SHEET
As on
In AED '000

31 Dec 07

31 Dec 06

%Chg

4,726,616

2,329,278

102.9%

928,476

600,925

54.5%

2,705,232

2,089,211

29.5%

1,469,200

-100.0%

16,194,020

11,121,425

45.6%

4,560,642

2,516,992

81.2%

537,829

851,847

-36.9%

Investment in associates

9,107,297

6,594,214

38.1%

Property, plant and equipment

7,433,222

4,184,559

77.6%

Investment properties

5,635,573

6,970,508

-19.2%

Goodwill

2,961,968

2,961,968

0.0%

54,790,875

41,690,127

31.4%

Trade and other payables

8,825,902

6,265,438

40.9%

Interest bearing loans and borrowings

7,703,753

3,992,210

93.0%

Retentions payable

1,054,560

875,827

20.4%

Assets
Bank balances and cash
Trade receivables
Other receivables, deposits and prepayments
Deposits from share capital of Emaar MGF
Development properties
Securities
Loans to associates

LIABILITIES AND EQUITY

LIABILITIES

Provision for employees' end-of-service benefits

18,394

11,992

53.4%

17,602,609

11,145,467

57.9%

6,091,239

6,075,553

-1,446

-2,927

-50.6%

Reserves

16,494,778

14,669,084

12.4%

Retained earnings

13,951,469

9,237,022

51.0%

36,536,040

29,978,732

21.9%

EQUITY
Equity attributable to equity holders of the parent Company
Share capital
Employees' performance share program

0.3%

Minority interest

652,226

565,928

15.2%

TOTAL EQUITY

37,188,266

30,544,660

21.8%

TOTAL LIABILITIES AND EQUITY

54,790,875

41,690,127

31.4%

INCOME STATEMENT
For the period ended
In AED '000

31 Dec 07

31 Dec 06

%Chg

Revenue

17,565,895

14,005,502

25.4%

Cost of Revenue

-10,640,230

-7,039,372

51.2%

GROSS PROFIT

6,925,665

6,966,130

-0.6%

952,383

383,480

148.4%

4,854

-100.0%

Other operating income

Gain on disposal of interest in subsidiary
Selling, general & administrative expenses

-2,118,590

-1,400,432

51.3%

Other operating expenses

-536,913

-207,048

159.3%

Finance cost

-153,895

-92,886

65.7%

395,916

367,259

7.8%

Finance income
Other income

683,899

253,340

170.0%

Share of results from associated companies

402,347

128,110

214.1%

6,550,812

6,402,807

-14,454

-47,068

6,536,358

6,355,739

2.8%

6,575,314

6,371,147

3.2%

PROFIT BEFORE TAX

Income tax expense
PROFIT FOR THE YEAR

2.3%
-69.3%

Attributable to:
Equity holders of the Parent
Minority interest

No. of Outstanding Shares (000)

-38,956

-15,408

6,536,358

6,355,739

6,091,239

6,075,553

1.08

1.05

EPS (AED)

KEY RATIOS
31 Dec 07

31 Dec 06

Net profit margin

37.4%

45.5%

Shareholders Equity to Total Assets Ratio

66.7%

71.9%

Total Debt/Asset ratio

14.1%

9.6%

Asset turnover ratio (times)

0.36

0.38

EPS (AED)

1.08

1.05

ROE

18.0%

21.3%

ROA

12.0%

15.3%

152.8%
2.8%

2.9%

OPINION RATINGS:

OVERWEIGHT

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

NEUTRAL

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.

UNDERWEIGHT

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.

Call us on +973 17549495 or email us at research@taib.com

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