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Over USD 10 Million are PADICO Holding’s Profits in 1st Quarter 2010
Munib Masri: Excellent Results Promise Further Profits for PADICO Holding
Hulileh: New Investment Projects in Vital Economic Sectors throughout 2010

Ramallah, 1 May 2010: Palestine Development and Investment Ltd. (PADICO Holding) announced that the consolidated net profit of the first quarter (1Q) of 2010 amounted to USD 10.66 million.

Describing them as excellent, Mr. Munib R. Masri, Board Chairman of PADICO Holding, stated that these results are an indicator of the Company’s recovery over the past period. Mr. Masri said that 1Q 2010 promises profits that will outweigh those accrued in 2009 in light of the good results achieved by several subsidiaries and affiliates of PADICO Holding, which have also witnessed developing operations and growing profits.

Mr. Masri asserted that PADICO Holding’s 1Q 2010 results reflect the prudent policy implemented by the Board of Directors as well as the approach initiated by the Executive Management in mid 2008. Accordingly, PADICO Group’s investments have been restructured, efforts focused on the operational processes of the subsidiaries and affiliates, and investments in portfolios were reduced to approximately 3% of PADICO Holding’s total assets, thereby significantly minimizing the risks and negative impacts of the prevalent financial crisis.

Over the upcoming phase, Mr. Masri declared that PADICO Holding will finalise the implementation of the restructuring plan in order to focus investments into specialised companies, reduce administrative expenses, and upscale performance of these companies with the intention of maximising profits. Meantime, Mr. Masri confirmed that PADICO Holding will continue to take firm and informed steps towards realising its clear investment strategy. PADICO Holding will also look for rewarding investment opportunities, which will contribute to promoting the Palestinian national economy.

Mr. Samir Hulileh, CEO of PADICO Holding, affirmed that the Company’s growing profits and general financial indicators foreshadow more profits to be made over the upcoming period. In this context, PADICO Holding is about to invest in new, vital projects in various economic sectors.

Mr. Hulileh elaborated that the restructuring and merger plan, restructuring risks, as well as recent PADICO Holding’s policy of reliance on profits accrued by operational activity, in place of securities and investment portfolios, have all significantly contributed to accomplishing these results over Q1 2010.

The results of this policy are reflected in the significant rise of PADICO Holding’s revenues from operational activities. Compared to USD 6.09 million in Q1 2009, operating revenues of its subsidiaries rose to USD 10.17 million in Q1 2010 – an increase of 67%. At the same time, PADICO Holding’s share of its affiliates profits jumped from USD 8.31 million in Q1 2009 to USD 10.21 million, or 23%, in Q1 2010. These results clearly indicate a tangible progress in the performance of PADICO Holding’s subsidiary and affiliate companies over Q1 2010.

Trends over the Upcoming Stage
In the next phase, Mr. Hulileh assured that PADICO Holding will create new and diversified sources of income by finalising the investments restructuring process in the tourism, real estate, industry and finance sectors, as well as treading into new investments, which will upsize prospective profits. PADICO Holding will also continue to implement respective projects and look for new investment opportunities in the city of Jerusalem.

In addition, Mr. Hulileh emphasised that PADICO Holding will continue to work towards promoting and regulating partnership with the public and private sectors, local government units and joint service councils. Accordingly, PADICO Holding will take part in development investment projects that seek to upgrade the quality of public service delivery, reduce public service costs, and create a safe environment, which will invigorate the business sector. Combined, these projects will build a robust, independent national economy that contributes to bringing about a real development that upscale citizens’ livelihoods.

He also mentioned that PADICO Holding will pay more attention to investment in financial portfolios in the Palestinian market in order to consolidate trust and confidence and support market liquidity. This year, PADICO Holding will discuss with relevant bodies the prospect of issuing corporate bonds under a conducive legal, investment enabling environment to help finalise this process.

According to Mr. Hulileh, PADICO Holding’s future plan also introduces a significant control over expenses, thereby promoting the Company’s profitability over 2010 and beyond, enhancing its performance, and strengthening its financial position.

Investments in New Sectors
Mr. Hulileh announced that PADICO Holding has started to implement the plan approved by the Board of Directors for investment in vital sectors, namely infrastructure, tourism, solid waste treatment, water and wastewater management, electricity generation, and agriculture. In reference of the practical steps initiated to materialise this plan, PADICO Holding has recently signed a memorandum of understanding (MoU) with the Palestinian National Authority (PNA) and other investors on an initial public offering for incorporating an electricity generation company in the northern West Bank with a preliminary output of 200 megawatts. With an initial capital of USD 120 million and with a total cost of USD 300 million, this pioneering, strategic enterprise will be the first electricity generation project to be launched in the West Bank. As a significant step towards an independent Palestinian energy sector, the project will provide competitive energy sources at a lower cost.

With respect to solid waste treatment and water and wastewater management, Mr. Hulileh explained that PADICO Holding incorporated the Palestinian Solid Waste Recycling Company (TADWEER) [Arabic of recycling] as the first Palestinian company that specialises in processing, sorting and utilising solid waste, ensuring both conservation of the environment and provision of essential production inputs. The new corporation will be responsible for managing and supervising a project on solid waste recycling and compost production in the eastern area of the city of Nablus. The plant will recycle and use 75%, or approximately 150 tonnes, of solid wastes procured by the Nablus Municipality on a daily basis. In line with its expansion plan, TADWEER also intends to enter as a partner in the Solid Waste Management Project in the Zahrat al Finjan sanitary fill in Jenin.

Mr. Hulileh also stated that PADICO Holding signed an MoU with the Jenin Municipality for the construction of a wastewater treatment plant for irrigation and agricultural purposes. Having effectively contributed to creating numerous work opportunities in the area, the project will help develop the agricultural sector by providing new water sources in the area of Jenin. Though housing a vast area of farmland, Jenin suffers from a scarce water supply. Additionally, the project will help reduce contamination of groundwater and attrition of natural water sources by producing treated irrigation water, which will replace fresh water – the most precious natural resource Palestine owns.

The CEO of PADICO Holding announced that Al Mashreq Real Estate Co., a subsidiary of PADICO Holding, signed an MoU with the Al Quds University to construct a student hostel and service compound on campus. It is planned that the foundation stone be laid in the weeks to come. Additionally, preparations are underway to sign a cooperation agreement with Birzeit University for the construction of a commercial complex. Currently, preparations are also in place to lay the foundation stone for the Businessmen Club project in the city of Ramallah. The event will be announced over the upcoming weeks as well.

In relation to investment in Jerusalem, Mr. Hulileh said that PADICO Holding inaugurated the Al Hamra Palace in 2009. Presently, the Company is implementing a project on the restoration of St. George Hotel as well as a large housing project in the village of Beit Safafa. Furthermore, PADICO Holding will continue to explore feasible investment opportunities in the city of Jerusalem.

In the field of agricultural investments, Mr. Hulileh said that PADICO Holding is currently working with other partners to incorporate the Palestine Palms Company for Agricultural Investment. To be launched in the area of the Jordan Valley in the Jericho governorate, the enterprise will invest in an agricultural project for the production of the finest Medjool palm dates in line with the relevant, most advanced international standards. The total cost of the project amounts to USD 10 million.

Financial Statements
In relation to consolidated financial statements, the consolidated net profit of 1Q 2010 reached USD 10.66 million compared to USD 12.85 million in 1Q 2009 – a drop of 17%. It should be noted that 1Q 2009 profits entailed a total of USD 6.15 million of non-recurring revenues resulting from the combination of Palestine Real Estate Investment Co. (PRICO). For comparison purposes, profits achieved through operational activities significantly improved by 59% in 1Q 2010.

Additionally, PADICO Holding made profits by the re -evaluation of financial assets and currency differences. Amounting to USD 3.38 million, these were registered on consolidated statement of comprehensive income. These profits resulted from the re-evaluation of financial assets listed under “other comprehensive income” in line with International Financial Reporting Standard (IFRS) 9, which PADICO Holding has adopted in 2009. Thereby, the total comprehensive income of 1Q 2010 was approximately USD 14.5 million.

Reported profits reflected on total equity at the end of 1Q 2010. Total equity rose from USD 429.71 million in late 2009 to 444.19 in 1Q 2010 – a rise of USD 14.5 million, or 4%. In contrast, liabilities decreased from USD 190.5 million in late 2009 to USD 178.79 million; that is a drop of USD 11.7 million, or 6%. This is mainly because bank loans and facilities decreased by a total sum of USD 15.6 million – from USD 165.8 million in late 2009 to USD 150.2 by the end of 1Q 2010. Accordingly, PADICO Holding’s debts dropped from 39% to 34% over the reporting period.

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