Press Release

For immediate release: Dubai- 10 June 2011
Al Mazaya Holding is continuing to make strides in its plan to complete and deliver all its current real estate projects despite challenges related to both the real estate markets and investors, and the company has commenced operating its income generating projects, according to Mr Rashid Al Nafisi, Chairman of Al Mazaya Holding. Al Nafisi was speaking at the company’s General Assembly meeting, which was held at the Clover Centre in Mazaya Tower, Al Jabriya District, yesterday morning, in the presence of 83.32 percent of the board’s members. The balance sheet and final accounts for the fiscal year ended 31 December 2010, which were approved during the meeting, showed that in 2010, Al Mazaya was able to redirect its assets and achieve liquidity of more than KD11 million through its exit from Seven Zone commercial project, a joint venture between an individual investor and Al Mazaya, which designed, developed and carried out the entire project. According to Al Nafisi, the company helped fill the gap in Kuwait’s building materials sector through this project by providing integrated services ranging from parking spaces to the region’s largest facility for building and construction materials, offices, showrooms and storehouses under one roof. Al Mazaya has trademarked the project, which it aims to launch in other countries in the region. “The revenues generated by this sale will be used to fund the company’s expansion plans over the next few years,” he said. Financial report Speaking of Al Mazaya’s financial reports for 2010, Al Nafisi said the company achieved operating revenues of KD18.646.240, including operating profits of KD4,475,217 and other revenues of KD6,080,388. The company had to take provisions totalling KD14,931,517, which resulted in a total loss of KD8,609,811 after deducting other expenses. “Due to the ongoing difficulties in most of the regional markets, including Dubai, where a large part of our real estate projects are based, Al Mazaya had to carry over provisions, on which the company will relay in the coming years,” he added. Al Nafisi said that due to the company’s 2010 operational results, as well as local and regional economic challenges, the Board of Directors has recommended not distributing any dividends for the year ended 31 December 2010. A year of major challenges According to Al Nafisi, 2010 was a year of major market-related challenges for Al Mazaya Holding, both internal and external, and yet the company was able deliver on the promises it made in 2009. “The company did not put any of its projects in Kuwait or Dubai on hold, rather completing most of these projects and commencing delivery, as well as managing to lease a large portion of its revenue-generating projects, despite the fact that a large number of buyers defaulted or delayed payment of their instalments, which placed an additional burden on the company. Al Mazaya managed to find solutions to these challenges by concluding a number of deals and restructuring certain plans in the interest of the company and its shareholders.” Cutting costs Al Nafisi added that 2010 witnessed Al Mazaya’s successful acquisition of 93 percent of First Dubai Real Estate Development Company, a Kuwaiti shareholding company listed on the Kuwait Stock Exchange with paid-up capital of KD100 million, and over KD107 million total assets, including Sky Gardens, the state-of-the-art residential landmark located in the heart of the Dubai International Financial Centre (DIFC) with a stunning view of the Burj Khalifa. He went on to explain that Al Mazaya previously sold 60 percent of the project and invested the remaining 40 percent through offering residential apartments for lease: “The acquisition of First Dubai has helped us to reduce administrative expenses through merging various departments at the two companies, and this is expected to lead to an increase in operating revenues and profits by the end of next year”. He said that Al Mazaya managed to cut costs in 2010 by 35 percent compared to 2009. This was achieved by forming committees from the Board of Directors, one to follow up on the company’s financial and real estate investments, one for internal auditing to ensure that cash flow was in compliance with the approved budget, and a third for personnel affairs. Projects completion and operation Speaking about the company’s projects, Al Nafisi said, “Al Mazaya has made significant progress in its Clover Clinic medical project – the company’s first investment in the healthcare sector – which has been completed and is 70 percent leased. The project name will be registered as a trademark and replicated in other GCC countries. Al Mazaya has also completed construction of its two towers in Kuwait Business City and recently secured power supply to the project. The towers will be offered for lease, despite current market challenges, which include oversupply and reduced rent rates, and I am confident that Al Mazaya’s excellent product and wise management will be critical in distinguishing this project from other commercial projects”. Regarding the company’s plan to operate mega income-generating projects in KSA and Dubai, Al Nafisi said Al Mazaya expects annual revenues to start coming in from the first quarter of 2011, with the completion of five such income-generating projects. “In KSA, Al Mazaya is currently offering its three Al Ma’thar office towers in Riyadh for lease. One has already been fully leased, and the other two towers are still being offered. In Dubai, the company was able to deliver the Villa residential project, situated in Dubailand, to clients. The project is comprised of more than 500 villas, and work is underway to deliver the final phase. Business Avenue, which comprises three office towers in Jumeirah Lakes, has also been completed and delivered to clients, and we are on track to complete and deliver residential units at the multi-building, middle-income Q-Point development in Liwan,” Al Nafisi said. New strategy Al Nafisi explained that Al Mazaya has adopted a new strategy that aims to benefit from the growth plan launched by Kuwait Government by opening the door for new initiatives, entering into development projects and tendering for projects for the Kuwait Investment Authority. He said that the company has qualified to tender for building the Health Insurance Hospitals project, which includes three hospitals and 15 clinics that will provide healthcare services for nationals and expatriates in Kuwait. This will help Al Mazaya secure an optimistic future plan, establish its position as a leading real estate developer, and ensure good revenues for shareholders for a minimum period of ten years. Al Nafisi added that Al Mazaya has reintroduced its Neira Financial Centre and Yammar Heritage Village development initiatives in Kuwait, and is studying investment plans to enter the Qatari and KSA markets, in line with the latest development plans in these markets. New CEO Al Nafisi also introduced Al Mazaya’s new CEO, Eng. Naif Al Awadi, who was promoted from CEO of the company’s Dubai Operations, to which he had been appointed by the Board of Directors, following his proven success in Dubai, where he was able to reduce administrative expenses by over 45 percent and secure the liquidity necessary to carry out projects on schedule and within budget. Eng. Al Awadi has over 17 years’ experience in feasibility studies, contracting, real estate development and project management on the local and international levels and held a number of senior positions before joining Al Mazaya. General Assembly Al Mazaya Holding’s General Assembly approved all the items on the agenda, including the proposal submitted by the Board of Directors to not distribute any dividends for the fiscal year ended 31 December 2010. Other items that were approved included a number of agreements, the reduction of the balance of the voluntary reserve, and the renewal of the mandate authorising the Board of Directors to sell and buy up to ten percent of the company’s shares in accordance with Act No. 132 of 1986 and Executive Decree No. 15 of 1987 issued by the Minister of Trade and Industry.