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NREC reports 2014 Revenue from Operations of KD19.4 million up 9.9% y-o-y

14 - April - 2015

NREC announces its Full Year 2014 results:
• Revenue from Operations up by 9.9% to KD 19.4 million
• Gross Profit up by 124.4% to KD 6.2 million
• Operating Profit up by 15.3% to KD 7.9 million
• Net Profit of KD 11 million
• EPS of 12.27 fils (post non cash impairment loss)
• Total Assets increased by KD 20.9 million to KD 553 million
• Shareholders’ Equity increased by KD 13.3 million to KD 199.9 million
• Completed corporate debt restructuring
Commenting on the results and performance, Mr. Sam Sidiqi, CEO of NREC said:
“I am pleased to report that our overall operational performance has improved during 2014. Our Egyptian subsidiary experienced strong financial growth driven by the sale of 385 units and in Kuwait our rental revenues grew by 11% compared to last year. However, despite achieving strong operational performance during 2014, our Libyan joint venture was negatively impacted by the challenging local environment. As a result, management has chosen to take a non-cash impairment charge translating in a reduction of the Group’s profit by KWD 7.4 million. Management continues to focus on its core development properties as well as to capitalize on the strong rental portfolio.”
• NREC’s real estate portfolio represents a number of high profile developments across the MENA region with a particular focus on Egypt, UAE, Jordan, Kuwait and Iraq.

• In Egypt, NREC continues to perform strongly with sales at its Grand Heights development growing at over 56% to EGP 1.3 billion in 2014. The number of units sold during the year was 385 taking the total units sold to date to 687. Grand Heights, a residential community development project outside of Cairo with over 3.8 million m 2 of land, is 79% owned by NREC and is expected to have over 1,450 family homes by 2022. Recognized revenue of EGP 185.2 million in 2014 represents a robust growth of 34% over 2013. Egypt’s strong economic recovery and high pent up demand is expected to drive sales growth in the coming year. The handover of the Grand Heights Phase I units will start during 2015.

• Development plans for Reem Mall in Abu Dhabi are rapidly moving forward in line with management’s expectations. Reem Mall, a super-regional mall with over 260,000 m2 GFA, will be a significant milestone in NREC’s regional growth. NREC has initiated the main contractor selection process and has shortlisted a set of best in class contractors.

• Kuwait rental income recorded an 11% growth over 2013 which is considered a strong performance considering the oversupply of office space in the market.

• In Jordan, NREC experienced strong revenue (17%) and net profit (41%) annual growth from rental properties. It is expected to capitalize on the increasing need of businesses for warehouses, factory buildings and serviced land in the coming year. NREC’s Jordanian subsidiary is planning to distribute dividends for a second year in a row.

• NREC’s investment in Libya continues to face headwinds due to the ongoing regional challenges. The joint venture experienced strong operational profits during 2014 of KD 4.6 million. However, management has taken a conservative approach and provided for a marked to market impairment loss. This has been included in the joint venture investment loss of KD 5.3 million.

• In September 2014, NREC successfully completed a KD 154.4 million debt restructuring. The previous loan facility consisted of a KD 88.4 million short term loan and a KD 66.0 million medium term loan. With the completion of the restructuring, the new loan facility now consists of a KD 14.4 million short-term loan and overdraft facility and a KD 140 million long term loan to be repaid in seven years.

“Going forward, we expect our operations in Egypt to outperform with the handover of our Grand Heights project during 2015. This should result in a significant improvement in our financial performance and increased contribution to operating profits.
Our strong recurring rental cash flow coupled with increasing revenue recognition at the key development projects is expected to drive growth and enhance shareholder returns in the coming year.”