July - September 2006 Beirut back city to center life the city center resists, overcomes ... ... and comes back to life Beirut city center started the quarter with a program of interesting cultural events and a heightened vibrancy due to the presence of a large number of visitors at the outset of the summer tourist season. The city center reacted with great shock to the attacks on Lebanon. The tourists fled and the Lebanese had no heart for fun or leisure. Shops, restaurants, cafés and art galleries were deserted and closed for most of the war period. All scheduled activities were canceled. However, the national revolt against the war gave rise to demonstrations and to artistic expressions of the war horrors. Most of the offices were closed, except for public institutions, banks and the media. But Solidere maintained a certain level of operations and provided needed help to the community. 1 24 5 Art exhibitions Newcomers Solidere assistance Incentive measures Planet Discovery Other venues Retail Institutional to displaced people to city center tenants exhibition hall Aida Cherfane gallery Deeb since 1930, men’s tailoring Consulate of East Timor Solidere provided 15 prefab Solidere measures 50 Anos del taller de grabado, New collective exhibition, Diamanti jewelry men’s and women’s showers Following a meeting between Joan Barbara engravings, July 1 – September 30. Fly roof restaurant Opening soon and personal, linen washing chairman Nasser Chammaa June 30 – July 22. Junaid perfumes Côté Park restaurant Bariq jewelry and cleaning utensils and and the Beirut city center Just Cavalli boutique Lebanon A-Z , children’s book, Choukrallah Fattouh paintings, Nabil Chehab jewelry detergent to war-displaced traders’ association, the board Matt I; II ladies fashion pictures of Lebanese village scenes from Lebanese Eliva Gioelli, jewelry, watches families staying in Beirut of directors agreed to exempt Pal Zileri men’s boutique and family life by Tatiana villages, July 1-31. Foch Terminus cafe schools and parks, all outside tenants of retail units in Que bar Sabbagh, July and August. Jeweled Watches International the city center. The Company Solidere properties from the On/Off Rytta couture Hassan Maktabi & Sons carpets also organized the cleaning rentals due for the months of No-made urban prototypes, Shawarmazz Quartier des Arts July 1 – August 31. Rotana café of the Sanayeh park. July and August, subject to full Special watches 6 settlement of all their dues as Alwane Beirut Municipality at end June. Collection of Lebanese, Arab Amina Adada paintings, Un Business and services and European talents, moment avec la nature et le Municipality measures September 1 – November 1. Accor, hotel reservation The Beirut municipal council patrimoine libanais, July 3-11. Etalon, veterinary services 1 Aida Cherfane collective extended the period for paying Ceramic Lounge works exhibition. Maarad Street Galaxy travel agent municipal taxes without a Contemporary ceramic studio Hayat Karanouh photographs R E Monitor real estate 2 Joan Barbara exhibition. penalty to the end of the year, and café. from the book, La passion du 78 3 War photo exhibition in as a measure to revive and Chawki Chamoun football, until July 9. Nejmeh Square. support the city center. experimental studio gallery Tamaris - Patchi roof Private collection July 1-31. George Bassil paintings, 3 Epreuve d’Artiste July 6-13. Artistic expression New collective exhibition, of war horrors July - August. Freedom and Life Rochane A symbolic 10-meter tall tree New collective exhibition, was erected near Martyrs’ July - August. Life in the city center is back to Square. It is decorated with normal after a forced closure of 34 days of war. objects collected from the Al fresco dining or a downtown bite rubble of buildings destroyed Souk El Tayeb Shops, galleries, restaurants 4 White. by Isaeli air strikes on Beirut’s 5 Shawarmazz. After a period of absence, Souk and cafés are open again with 6 Fly. southern suburbs. El Tayeb has returned to Saifi customers gradually returning to their favorite places. Home and fashion design Air war against children Village. With luck and will, the 7 Roche-Bobois. Photographs of the war 40 farmers are reconvening With the advent of the holy 8 Milia M. horrors, depicting injured and each Saturday morning with month of Ramadan, city center maimed children, were their organic crops and healthy retail outlets are attracting as displayed around the Nejmeh prepared food attracting a usual a wider Lebanese and clock tower. regular clientele. Arab clientele. 2 3 business & financial news Balance Sheet June 30,2006 Dec. 31,2005 Statement of Income June 30, 2006 June 30, 2005 Financial Highlights June 30, 2006 June 30, 2005 US$ US$ US$ US$ Consolidated Financial Statements ASSETS Revenues from land and real estate sales 149,742,675 70,051,961 SUMMARY OF OPERATIONS 6-month period ending June 30, 2006 Cash and banks 113,210,290 111,535,548 Revenue from rented properties 9,774,473 10,821,479 (in million US$) Prepayments and other debit balances 28,937,061 25,771,367 Cost of land and real estate sales (64,619,406) (34,939,611) Revenues from land sales 149.7 70.0 Accounts and notes receivable, net 345,038,835 272,820,638 Charges on rented properties (3,147,835) (3,855,450) Backlog of land sales 1,086.3 190.0 Investments in securities 9,559,024 9,579,440 Gain on sale of investment properties - 31,244 Revenues from rented properties 9.8 10.0 Inventory of land and projects in progress 1,475,787,975 1,527,484,124 Other income 57,773 - Investment properties, net 152,272,365 153,757,985 Net revenues from operations 91,807,680 42,109,623 Fixed assets, net 25,716,206 26,206,813 FINANCIAL RATIOS (%) General and administrative expenses (7,055,340) (6,010,516) Average yield on liquid assets 4.88 2.45 Total Assets 2,150,521,756 2,127,155,915 Depreciation (793,021) (588,304) Debt to equity 2.10 10.51 Provision for doubtful receivables & write-offs - (173,363) Solidere published its unaudited consolidated LIABILITIES Impairment loss on inventory of land financial statements for the six-month period ending Bank overdrafts 15,258,933 10,020,182 and projects in progress (1,104,791) - June 30, 2006. Accounts payable and other liabilities 66,091,370 73,312,685 Interest income 12,281,359 6,951,290 Dividends payable 99,772,012 10,266,707 Interest expense (4,465,123) (9,011,715) The results achieved during the first six months of Deferred revenues and other credit balances 172,924,717 55,099,426 Provision for unusual contributions - (1,010,000) the year do not reflect the land sales deals that are Deferred credits - 3,900,000 Net income for the period before income tax 90,670,764 32,267,015 expected to be recognized during the whole year. Loans from banks and financial institutions 37,073,469 129,399,059 Accrued income tax (12,865,729) (4,220,485) Lebanese financial markets witnessed an unfavorable mood during the third quarter, in view of the Israeli In this regard, the total income generated from the Total Liabilities 391,120,501 281,998,059 Net income for the period 77,805,035 28,046,530 assault on the country that lasted for about a month, land sales operations relative to development between July and August. Solidere shares were severely projects amounted to US$150 million during the first SHAREHOLDERS’ EQUITY Basic/diluted earnings per share 0.4882 0.1784 hit, along with all other issues listed on the Beirut Stock half of 2006. These revenues are the result of a large Issued capital at par value US$10 per share: Exchange. Market participants opted to cash in on some number of land sales contracts signed during 2005 100,000,000 class (A) shares 1,000,000,000 1,000,000,000 of their profits, waiting for the end of hostilities to figure and part of other land sales contracts signed during 65,000,000 class (B) shares 650,000,000 650,000,000 out the effects on the Lebanese economy as a whole. the first quarter of 2006. 1,650,000,000 1,650,000,000 Beirut Stock Exchange took exceptional measures to Legal reserve 46,717,354 46,717,354 Share performance during the 3rd quarter weather the prevailing situation, including the closing of As of June 30, 2006, the Company’s backlog of Retained earnings 90,736,571 87,892,299 trading activity between July 17 and August 1. previously signed land sales contracts amounted to Cumulative change in fair value of interest Share A - Daily Closing Prices around US$1.09 billion, most of which are expected to rate swap agreement - (861,982) Around beginning August, pressures on the Lebanese be recognized within the next two years. Volume Cumulative change in fair value of financial markets lessened, despite the ascending of military activity in the south of the country. Contributing available-for-sale securities (338,835) (233,180) 681,175 Surplus on sale of treasury shares 11,587,772 2,508,180 $23.0 480,000 factors included financial engineering tools adopted by Net income for the period/ year 77,805,035 97,675,378 the Central Bank, full coordination between monetary $21.0 360,000 Less: Treasury shares (117,106,642) (38,540,193) authorities and the banking sector, commercial banks’ Dividend distribution strictness in dealing with the financial markets, and $19.0 240,000 economic support from countries like Saudi Arabia and Total Shareholders' Equity 1,759,401,255 1,845,157,856 e Solidere implemented this quarter the resolution c i r Kuwait.