Beruflich Dokumente
Kultur Dokumente
ANNUAL
08
REPORT
The Lebanese Company for the Development and Reconstruction of Beirut Central District
THE
MASTER
PLAN
PREWAR SHORELINE
RESTORED BUILDING
ARCHEOLOGICAL SITE
UTILITIES
04
CONSOLIDATED
FINANCIAL
HIGHLIGHTS
07 08
SUMMARY OF OPERATIONS IN US$ MILLION
06
Gross land sales 256.6 288.5
Gross rental income 21.7 20.8
General and administrative expenses 19.3 18.1
Net income 182.7 224.2
Sales backlog 605.5 914.1
FINANCIAL RATIOS IN %
The year 2008 witnessed dramatic As land bank, we seek to enhance land
CHAIRMANS developments on the local, regional
and global scenes, which had important
values throughout the Project, rather than to
maximize profit on a specific development.
repercussions on Solidere. In Lebanon, a We are not involved in real estate
MESSAGE turning point occurred by midyear. The
resolution of the political situation and end
development on a retail scale and are very
selective in land sales, targeting developers
of the sit-in led to renewed hope. with serious plans, not speculators. Our risk
is minimized by favoring block sales to
master developers with strong
in the last six months, and ongoing sales, accounts and notes receivable of
US$1,027 billion at year end, include
the regional real estate Having completed land
negotiations for additional sales are
expected to be finalized in the coming US$296 million from realized sales, with the development industry. reclamation and preparation of
the New Waterfront District,
few months. biggest part of maturities at various dates Solidere is initating the design of
during the next five years. The balance of infrastructure, hardscaping and
The sustained demand comes as no US$731 million represent the reserve of The Company does not suffer from any toxic landscaping of open areas, in order to make
surprise, even in the regional and signed land sales not yet recognized in the debt, unlike many regional developers. Having possible the start of real estate development
international economic context. As city Companys income statement, but expected no debt, we will not be under any pressure in the area within the next two years.
maker, we pride ourselves that we always to be so during the coming three years after from any bank for deleveraging or refinancing.
take the necessary actions to create, completing all necessary criteria for their We have also always sought to keep a As far as our real estate activity, we have
preserve and enhance value in Beirut city recognition. comparatively high level of liquidity, and in fact pursued implementation of Beirut Souks
center. Our development activities, based on hope to maintain a fixed percentage of assets with a view to complete the South Souks
careful master planning, have enhanced a The cash position of the Company at the end liquid for the life of the company. Thanks to and officially launch the project during the
site with inherent assets, and where land is of 2008 amounted to around US$292 million. high liquidity with no debt, we expect to fully last quarter of 2009. Many of the 250 retail
in limited supply, through high-quality Solidere has always maintained a high level weather the financial crisis. shops are progressively completing their
infrastructure, landscaping, upkeep and of liquidity to ensure financing most of its preparations for their gradual opening
services. As far as architecture and real development projects and other operations. The creation and preservation of value starting the summer. Visitors will be invited
On the regional and international level,
despite the exacerbation of the world estate, we are providing in the city center Medium- and long-term indebtedness was extends to maximizing Company profits to stroll along streets, some covered and
financial and economic crisis in the products that are suitable for end-users reduced to around US$2 million, and through innovative real estate projects, some open, shop to their hearts content,
second half of 2008, with its serious and investors. outstanding short-term bank facilities, quality development and property stop and rest in landscaped squares, or
repercussions on regional markets,
Beirut city center has maintained its needed for effective cash management, management services, and new business enjoy restaurants with special character.
position as an investors destination. amounted to US$177 million. that ensure growing revenue streams.
Solidere Annual Report 2008
In reconstructing Beirut
city center, Solidere has
built on the intrinsic
qualities of this
exceptional geographic
and historic site and
greatly enhanced it
through sound urban
planning and design,
new infrastructure and
fine landscaped public
space, making it a
choice location for living
12 13 and working, as well as
a cultural, tourist,
leisure and shopping
destination.
Solidere Annual Report 2008
Beirut city center enjoys a prime location in Phase One 1994 2004 This phase saw
THE MASTER PLAN SOLIDERE
BEIRUT the heart of Lebanons capital. Sloping down
towards the waterfront, the site commands
Phase One, completed projects: traditional city center
infrastructure, original landfill treatment; detailed sector
planning; landscaping and private underground parking design
the completion of: infrastructure in the
traditional city center and the treated part of
fine views of the sea with a surrounding Drawing on the sites natural assets and the original landfill; detailed sector planning Solidere was initially capitalized with
CITY landscape of mountains and hills. It is easily
accessible from all parts of Beirut, including
rich heritage, the Master Plan is a carefully
formulated, detailed, coordinated and
and execution; historic core; banking district, Starco and
Lazariya commercial centers; northern Wadi Abou Jamil,
Zokak El Blatt and Saifi neighborhoods redevelopment;
of existing and new development areas;
landscaping and private underground
US$1.82 billion: US$1.17 billion as
contributions in kind of property right
port and airport. Major roads converge on it phased action plan for the traditional city Beirut Souks design and underground construction. parking design and execution; historic core holders, and US$650 million as cash
CENTER from its east, south and west, and line its
1.5 km seafront to the north.
center and its modern extension on the
waterfront.
restoration; renovation of the banking
district, Starco and Lazariya commercial
subscriptions following an oversubscribed
initial offering. After the retirement in 1997
Phase Two, completed projects: the New Waterfront District
Continuously inhabited for more The plan subdivides Beirut city land reclamation, and master planning; infrastructure and centers; northern Wadi Abou Jamil, of 17,000,129 shares representing
than 5,000 years, the site bears the marks center into ten sectors, each with its own landscaping design and implementation; developing the Zokak El Blatt and Saifi neighborhoods recuperated properties, its capital now
The fruit of an ambitious of eleven civilizations, ranging from the character. Some are previous city eastern marina. Other developments include the South and redevelopment; Beirut Souks design and stands at US$1.65 billion.
Canaanite to the Ottoman. Beiruts maritime neighborhoods brought back to life; others underground construction. Solideres duration was extended
urban regeneration venture North Souks, Beirut Waterfront Development, Marina Towers,
and trading legacy dates back to the are defined by topography or by new Beirut Tower, Platinum Tower and projects on the Martyrs New construction included by decree 13909 of 2005 from 25 to 35 years,
and waterfront development, Phoenicians. Its Roman law school was boundaries created in the urban fabric.
Square Axis.
Solideres UN House, Saifi Village, embassy starting from May 10, 1994, the date of its
a fine city center has emerged the most prominent in the Empire. Its urban The plan involves the recovery of the public compound, Rue de France multiuse registration at the Commercial Register.
character and architectural style were domain, with the installation of a complete complex; Bank Audi, Medgulf and Bankers The Company has established
in Beirut, accommodating formed during the Ottoman period and infrastructure. It also provides an urban Association headquarters, Monroe hotel, a solid base for central Beirut prosperity
a broad, sustainable mix of the French mandate, when it became design framework for restoration and new Al-Bourj and Atrium office buildings, the through high value-added land development
the seat of public institutions. construction. Consulting Clinics, Block 24 and Park View action, competitive real estate projects and
facilities with a target floor Independent Lebanon grew into The plan reflects the site Realty residential buildings. property management services. Real estate
space of 4.69 million sq m a booming service economy, thanks to its topography and natural features, protects Still ongoing real estate projects projects are implemented directly, in joint
inherent assets, educated population and views of the sea and mountains and creates involved predominantly residential clusters venture with partners, and through or in
liberal political and economic system. Beirut public spaces, including gardens, squares, in Saifi and Wadi Abou Jamil, residential liaison with other developers. Solidere offers
was a lively, modern, cosmopolitan city, belvederes, promenades and trails. and hotel towers facing Beirut Marina and developers services ranging from real estate
its city center a focus for regional trade, Recognizing the citys heritage, it also the waterside city park. and architectural concepts to complete
business, finance and tourism. Growth was unearths layers of its history. It preserves Completed on the waterfront development packages.
thwarted at the onset of hostilities in 1975. surviving buildings and townscape features were: marine works, defense structure, sea As supervisory body and lead
With the return to peace and and re-establishes the urban fabric and promenades and Beirut Marina; with major developer, the Company controls the pace,
stability, Lebanons economy re-emerged in neighborhood structures. It ensures the advances in land treatment and reclamation. components and quality of development.
the 1990s, sustained by a national recovery harmonious integration of old and new, Solidere outsources construction to focus
and development program. Massive public combining tradition with innovation, control Phase Two 2005 2030 Phase Two will on its core competencies: managing real
investment was coupled with macro- with creativity in architectural expression. complete the urban fabric in the traditional estate project development, marketing
economic policies designed to stimulate With the prime objective of creating a vibrant city center by developing Beirut Souks, development land, marketing and servicing
private local and foreign investment. While city center, it accommodates a broad mix finalizing Saifi and Wadi Abou Jamil urban rental properties. The Company provides
14 Beirut city center benefited from this of land uses, business, public, residential, 15 villages and establishing prime new areas in management and operation services to
favorable environment, its entire hotel, leisure and cultural. the Serail corridor, Hotel District, Ghalghoul public utilities, infrastructure, marinas, car
regeneration is being achieved without The project covers some 191 ha sector and Martyrs Square Axis. Its focus on parks and landscaped open areas.
recourse to public funds. In 2005, the country (472 acres) of land: 118 ha (292 acres) as the high-density zones will intensify the thrust In 2007, after amending its
suffered a great loss with the assassination traditional city center and a 73-ha (180-acre) towards making Beirut city center a favored bylaws, Solidere expanded the scope of its
of former prime minister Rafic Hariri. extension reclaimed from the sea. Close to location to global businesses, financial and activities beyond Beirut city center. The
Mr. Hariri was the godfather of national 98 ha (242 acres) will consist of public space, other specialized services and institutions, as Company established for that purpose
recovery. To him were owed the vision and of which 59 ha (146 acres) in roads and 39 ha well as a prime residential area, tourist Solidere International Limited, which was
inspiration for the rebirth of Beirut. In 2006, (96 acres) in landscaped open spaces. destination and cultural hub. incorporated in DIFC, Dubai. Several urban
the country suffered from war and invasion, Allocated for development are In the New Waterfront District, and waterfront projects were identified in the
followed by political problems. The easing 93 ha (230 acres), including 22 ha (54 acres) this phase has seen the completion of land Middle East and around the Mediterranean
of some local issues later led to a revival of of retained, public or religious property. reclamation. It also involves finalizing master Basin, and subsidiary companies were
Beirut city center, as Solidere successfully Built-up area (BUA) guidelines are indicated planning; infrastructure and landscaping established for their development. Services
pursued its efforts to make it a sought-after in the table below. design and implementation; developing the provided in 2008 to Solidere International, its
environment of the highest quality. eastern marina; coordinating with the port projects and subsidiaries include: master
authority over the development of the first planning, urban design, infrastructure,
basin; and launching real estate projects landscaping and real estate design; project
with a distinct architectural style. development; legal and corporate
FLOOR SPACE SQ M % Ongoing real estate development structuring; financial engineering;
includes the South and North Souks; Beirut implementation; marketing and sales.
Residential 2,335,000 49.8 Waterfront Development and projects on the
Offices 1,300,000 27.7 Martyrs Square Axis; The Landmark and
Mixed-use 400,000 8.5 other gateway towers on the southern edge
Hotels 295,000 6.3 of the city center; northeast gateway towers
Government / Cultural 178,000 3.8 marking the point where the coastal highway
Retail 150,000 3.2 terminates in the city center. Completed
Religious 32,000 0.7
projects include the South Souks, Marina
Maximum Total 4,690,000 100.0
Towers, Beirut Tower, Platinum Tower
and other.
Solidere Annual Report 2008
Solidere prepares development sites for fast access to airport, port, east, west and Public lighting was installed throughout,
EXISTING investors wishing to develop real estate
properties in central Beirut. Its activities in
MASTER PLANNING
central Beirut. Avenues cut across the city
center from north to south. Park Avenue
with necessary meters, low-voltage cabling,
lighting fixtures and feeder pillars. Tunnels
this respect involve town planning, parceling The initial Master Plan was amended several links the traditional city center to the Hotel were equipped with lighting, and provided
CITY and urban management, site preparation,
archeological investigation, implementation
times in the light of more detailed urban
studies and sector plans. The latest Master
and Waterfront districts. New local streets
were created in Wadi Abou Jamil. The
with stand-by generators, control and safety
systems. Civil works were implemented for
of infrastructure, landscaping, hardscaping Plan updates regarding the existing city Martyrs Square Axis links Damascus road telecommunications networks, with duct
CENTER and street furniture. The reconstitution of
the public domain and the laying of
center were issued in Council of Ministers
decrees in 2006.
to three major east-west boulevards:
Weygand, Zeitouneh and Port streets, the
banks for low current networks, cable TV
and telephone services.
infrastructure and utility networks, The Master Plan regulates and latter widened and extended towards Trieste
completed in the existing city center, controls project developments through Street. With its western segment operational
In reconstructing Beirut city will extend to the New Waterfront District. policies and general regulations aiming and connecting directly to the citywide
As per its agreement with the Council for at achieving the main objectives of the corniche system, the city center corniche is
center, Solidere has built on Development and Reconstruction (CDR), to skirt the New Waterfront District alongside
BROADBAND NETWORK
development and reconstruction of the city
the intrinsic qualities of this ratified in Decree 5665 of 1994, Solidere center. Several amendments to the Master a broad, terraced, pedestrian esplanade.
Solidere obtained in 1998 a build-and-
exceptional geographic and implements these works on behalf of Plan were approved in the past years, to Among the Master Plan
operate license for broadband distribution of
the State in return for an allocation respond to more detailed urban and traffic amendments of 2006 are two major road
historic site and greatly of 29 ha of development land in the studies, new archeological discoveries, improvements. One is the road linking the
a converged IP network including high speed
internet, internet protocol TV (IPTV), video on
enhanced it through sound New Waterfront District. necessities related to the distribution of north of Martyrs Square to Trieste Street.
demand, video conferencing, data center
areas between public domain and private Michel Macary (France), in coordination with
urban planning and design, sector, and other reasons related to specific Dar Al-Handasah and Solidere, completed
facilities and virtual private networking (VPN)
for corporate clients. The Company signed in
new infrastructure and fine developments and to land swaps between the concept design for the crossing from
2006 an agreement with Orange, a member
the State and Solidere. Byblos Street, which includes bridging part
landscaped public space, of the ancient Tell area in order to preserve
of the France Tlcom group, for the
Another amendment to the
making it a choice location building and operation of a fully IP network,
Master Plan awaits Council of Ministers' archeology. The other is an improvement of
using advanced telecom technology based on
for living and working, as well approval after being approved by the the George Haddad - Fouad Chehab junction,
a fiber-optic backbone with dual connection
Municipal Council and the Higher Council for creating grade separation at the intersection.
as a cultural, tourist, leisure Urbanism in 2007. This amendment clarifies The two projects, including the tunnel
to each building in Beirut city center.
Solidere Broadband Network deployment
and shopping destination and confirms the interpretation of several design, await CDR committing funds for the
was completed by end March 2007, allowing
issues mentioned in the earlier amendments project and entrusting Solidere with its
the provision of services to start in
and approved in decree 5714 of 2001, in the implementation.
September 2007.
light of the new National Building Code of Created by Solidere, Bechara
Solidere, under its unified
2005, the progress of works and other Al Mouhandess is a pedestrian street east
communication network, is now able to
archeological issues. of Maarad, along restaurants and cafs
provide data (internet) and video (TV),
Still outstanding are which use half of its six-meter width for
16 amendments to decree 5714 of 2001
17 outside seating. Solidere also completed its
operated and monitored from the network
operation center (NOC) that is hosting its
proposed by Solidere to resolve continuation to Amir Assaf mosque and
data center, call center (IPCC) and other
contradictions between the Master Plan along the St George Greek-Orthodox and
equipment and servers for the different
general regulations and the Building Code St Elie Greek-Catholic cathedrals. The whole
services. Beirut city center is thus being
of 2005, issues relating to archeology and promenade overlooks Hadiqat As-Samah.
transformed into a 24-hour IT zone capable
relationship to the Directorate General of The city center water supply
of attracting multinational companies and
Antiquities (DGA), and some property swaps network consists of 30 km for drinking water
other residents who will benefit from the
with the State that have not been finalized to and 38 km for irrigation. The water disposal
provision of multimedia and broadband
this date. system comprises a sewage pumping
communication services.
station, 28-km sewage piping and 26-km
In addition to the internet and
storm water drainage.
VPN services provided at the completion of
Solidere implemented civil works,
the network, Solidere Broadband Network
INFRASTRUCTURE including culverts, relating to power supply,
launched in March 2008 its IPTV service for
and installed the 66 and 220 KV power
Beirut city center residents. This pioneer
cables, a 220 KV link between the Beirut pine
Solidere has completed and delivered to the project in the area offers greater value to
forest station and the city center, and a
State most of the main works relating to customers by providing seamless delivery
240 MW substation transforming high-
infrastructure and roads in the existing city of high-quality video, the most promising
tension power transmitted by Electricit du
center. The Company is pursuing studies and avenues for value-added services. Data
Liban into medium voltage; local
implementation for secondary infrastructure, center deployment was completed and the
transformers in turn convert it to low voltage
public space and gardens along with the delivery of web hosting, application hosting,
electricity for domestic use. Most areas of
progress of real estate development in exchange, storage and back-up services is
the existing city center were equipped with
various city center areas. soon to start.
duct banks for its medium voltage cables,
Beirut city center has a 3.6-km with work proceeding in Bachoura and to
ring road, 8.4 km of primary roads, 16.6 km follow in north Saifi.
of secondary, tertiary and pedestrian streets.
Expansions to the prewar grid accommodate
traffic and facilitate land parceling for real
estate development. Three major axes form
the ring road system: George Haddad Street
to the east; the widened Fakhreddine Street
to the west; Fouad Chehab Avenue to the
south, with a bridge doubled in capacity and
new interchange and underpasses providing
Solidere Annual Report 2008
The Council of Ministers had instructed CDR Since 2006, the Municipality has been
PARKING FACLITIES
in 2005 to undertake the design and subcontracting the operation and
construction of the Riad El Solh underground maintenance of handed over works, under
Among underground public parking facilities car park, also under public property, in Solideres supervision. The storm water
provided by Solidere, the Beirut Souks car coordination with Solidere. The Landmark network is maintained by the Municipality,
park will have a final capacity of 2,900 spaces, project developer is offering to execute the with Solidere doing quality control on
excluding additional parking planned under car park in a BOT basis in coordination with the work done by the contractors and
Khan Antoun Bey Square in the North Souks the Beirut Municipality. subcontractors. Solidere intervenes in
with a capacity of 400 spaces. Pending completion of sufficient resolving sewage pumping station problems
Serving the Foch-Allenby area, space underground, several vacant lots in the case of emergencies, and will continue
are the four-level Weygand Street car park, assigned for temporary surface parking to do so until such time the Beirut
providing 108 spaces topped by a garden, provide up to 4,800 car spaces servicing up Administration (Mohafazat) assigns an
and the 320-space Solidere car park below to 11,000 customers per day, including operation and maintenance team of its own.
Harbor Square on block 93. regular subscribers representing tenants Solidere continually upgrades its
Two car parks under public and residents of the city center. They include site logistics services: cleaning, pest control,
property in Martyrs Square and near the three car parks in the eastern section of the safety, security and traffic management.
Grand Serail, initially tendered out as BOT New Waterfront District with a free shuttle In a city center image improvement program,
projects by the Council for Development and service to the existing city center. undertaken in collaboration with
Reconstruction (CDR), based on designs by With surface parking gradually participating property owners and users,
CDRs consultant Dar Al-Handasah (DAR), moving to new locations to make room for Solidere is implementing the following
have not yet been implemented. The winning development in the existing city center, services, to supplement those provided
team of the Martyrs Square axis additional space will be provided in the New by the Municipality: surveillance security;
international urban design competition Waterfront District. door-to-door waste collection; street and
integrated a concept design for the sidewalk washing and street furniture
underground parking structure within the cleaning; pest control; maintenance of
landscape scheme for the square. Requested open spaces, trees and planters; and
ajustments of DARs original design to meet OPERATION AND MAINTENANCE street decorations during holidays.
the Greak team scheme requirements, Solidere is installing a traffic
include incorporating the Petit Srail control system that, in addition to phasing
Solidere operates and maintains the
remains into the design and preserving them traffic lights, monitors drivers violating speed
completed infrastructure and reconstituted
from the parking entrance. Solidere limits. Control panels and cameras have
public domain until their delivery to the
submitted the Greek teams plans to CDR for been installed at two intersections so far,
State. These services cover tunnels and
re-launching the project on a BOT basis. with others to follow.
underpasses, roads and sidewalks; street
The Company is also installing a
furniture, traffic lights and street lighting;
CCTV surveillance system to cover all
20 utility ducts and manholes, sewage pumping
sectors in the city center. The first and
station and network, storm water networks;
second phases of the system, covering Foch-
irrigation station and network, trees and
Allenby, Saifi, Zokak El Blatt, Bachoura, Wadi
landscaped open spaces.
Abou Jamil, Beirut Souks and Beirut Marina
As per Law 117 of 1991 and the
areas, have been completed. A new ANPR
agreement with the State, ratified in decree
system (automatic number plate recognition
5665 of 1994, infrastructure and the public
system) is under study for all access points
domain are to be delivered upon completion to
in and out of Beirut city center.
CDR, representing the State. All the works
have been delivered to the public authorities.
They include infrastructure networks, roads,
tunnels, sidewalks, street furniture, signage
and lighting. Electricity networks were
delivered everywhere except for north Saifi,
Bachoura and Trablous Street. However,
Solidere remains in charge of the irrigation
network, street trees and open spaces.
Solidere documents damages
occurring in Beirut city center, including those
due to car accidents or vandalism acts. The
Company sends reports to the Municipality to
that effect, with lists of needed repairs,
mentioning whether the damages result from
accidents or from wear and tear and offering
to execute repairs at cost.
M I R
M A J of the circuit, trail medallion, signage, preserved. Close by is the location of the
I D
A R S
L A N information panels and tourist map of future City History Museum and the
A V E
N U E archeological sites and historic buildings. historically significant Martyrs Square area,
T
An approximately two-kilometer-length considered as the grand access to the city
S
winding passage through the city center, center, and its historical and cultural heart.
S T
D A O U K
E the Trail offers many stops of interest. The Trail will continue along
W.KOR TAS ST
K
Signage in three languages will explain Weygand Street to the restored Al Omari
U
36 each area and surrounding buildings of mosque, where excavation work has revealed
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retain the ancient street grid and Ottoman century earthquake. From there, it goes to
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access gates, and incorporate several Nejmeh Square which houses parliament,
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restored Mamluk Zawiyat Ibn Iraq and Greek-Catholic cathedrals, the Nouriya
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F
S
M A B B A 01 ANCIENT TELL 02 CANAANITE GATE 03 PHOENICIAN GLACIS 04 PHOENICIAN MARTYRS STEPS 21 GRAND THEATRE 22 RIAD AL SOLH SQUARE 23 ROMAN BATHS
O N S D E
R A
L E S
U O U C H A R S
A
A R GLACIS / HELENESTIC TOWER 05 PETIT SERAIL 06 MARTYRS SQUARE 07 AMIR ASSAF 24 GRAND SERAIL 25 OTTOMAN CLOCK TOWER 26 CDR BUILDING FORMER MILITARY
D S T S
B E C H A
T MOSQUE 08 MUNICIPALITY OF BEIRUT 09 AL OMARI MOSQUE 10 AL NOURIA CHAPEL OTTOMAN HOSPITAL 27 ST LOUIS CAPUCHIN CHURCH 28 AMIR MUNZER MOSQUE
M
C
H 11 HADIQAT AS-SAMAH 12 CARDO MAXIMUS 13 ST GEORGE GREEK-ORTHODOX 29 ZAWIYAT IBN IRAQ 30 BYZANTINE MOSAICS AND SHOPS 31 BAB IDRISS 32 MEDIEVAL
E
A
H CATHEDRAL 14 ST ELIE GREEK-CATHOLIC CATHEDRAL 15 ETOILE SQUARE MOAT 33 SOUK TAWILA 34 INTABLI FOUNTAIN 35 PHOENICO-PERSIAN QUARTER
A
B
D
16 PARLIAMENT BUILDING 17 ROMAN FORUM 18 POST OFFICE BUILDING 36 MAJIDIYA MOSQUE 37 IMAM ABOU BAKER AL SIDDIQ MOSQUE 38 CANAANITE TEMPLE
A
V 19 ST GEORGE MARONITE CATHEDRAL 20 CARDO CROSSING DECUMANUS / 40 39 CASTLE SQUARE 40 CRUSADER CASTLE 41 PHOENICO-PERSIAN GATE COMPLEX
E
N
U E
Solidere Annual Report 2008
28
01 MEDIEVAL MOAT 02 PHOENICO-PERSIAN QUARTER 03 OLD SEASHORE OTTOMAN WALL top Roman Baths archeological site
04 ANCIENT TELL, CANAANITE GATE AND PHOENICIAN GLACIS 05 PETIT SERAIL 06 HADIQAT opposite top archeological sites in Beirut city center
AS-SAMAH 07 ROMAN BATHS 08 ROMAN HYPPODROME opposite bottom ancient Tell archeological site
Solidere Annual Report 2008
Destined to be a prime, active, multiuse The road network was designed to Planned as an exemplar of modern
MASTER PLANNING
NEW district with extensive green areas and
distinctive architecture, the New Waterfront
accommodate an urban Formula One Grand
Prix circuit. This received FIAs preliminary
development, Sector D is a multiuse district
with a wide range of commerce and retail
District commands fine views of the sea, with The New Waterfront District consists of technical approval in 2002. The track is to services, office, tourist and hotel space,
WATERFRONT hills and mountains across the bay to the
northeast. As an urban destination, the
Sectors A and D. Sector A comprises the
waterside park, corniche, land, quays and
run clockwise along 4.8 km with the starting
grid on the coastal corniche. Where
convention centers, exhibition and cultural
facilities, together with extensive residential
district comprises the termination and breakwater around Beirut Marina. Sector D necessary, particularly at bends and development. It also includes a major part
DISTRICT climax of Beiruts citywide seaside drive, the
corniche. When completed, it will contain a
comprises the development blocks and
public domain extending north of the Souks
chicanes and over-runs, construction works
are to dismantle sidewalks, widen
of the Formula One track. The provisions
relating to development on Beirut Marina are
city waterside park, two marinas, quayside District to reach the corniche promenade, carriageways and install safety barriers and also applicable on the eastern marina.
The New Waterfront District is taking promenades and 29 ha of development land. and east of the waterside park, to reach the debris fences prior to the race event. On the Development lots should have the
shape as Solidere proceeds with its master Altogether some 73 ha of Beirut port first basin and the planned 40-m wide upper corniche promenade and following specified minimum areas: 750 sq m
planning and land development, with a view reclaimed land are enclosed within a eastern marina. In response to investors elsewhere around the circuit, temporary subject to encompassing an 18 x 18 m
to delivering the sites to investors by 2011. terraced sea defense system designed to early declarations of interest, Solidere has stands are to be installed to accommodate square, in sub-sectors Da, Dc and Dd;
The district has already elicited strong withstand centennial storms. Its unique engaged since 2001 in a serious planning spectators. 1,500 sq m subject to encompassing a
investor interest, and land sales totaling to caisson structure is limited in height to exercise for Sectors A and D, continually In Sector A, leisure, sporting and 25 x 25 m square, in sub-sectors Db and De.
date 198,735 sq m BUA herald its real estate 5.5 m above sea level to protect sea views improving this planning and seeking approval tourist activities predominate. Decree 15803 Two streetwall controls are applied and view
development planned to reach an aggregate from deep within the citys historic core. The from the public authorities for its proposals of 2005 lists an outdoor amphitheater in corridors are created to preserve sea and
1.7 million sq m BUA. sea defenses provide harbor enclosures for regarding the district, together with related the waterside park; infrastructure and mountain views. SW5 requires a 3 m setback
the two marinas. general and special regulations of the BCD installations for Formula One racing; at the 36 m height. SW6 is similar to SW5
Beirut Marina is edged by a Master Plan. buildings for the yacht club and related with the additional requirement of a 5.5-m
public town quay, designed to house The current Waterfront District services, hotels, tourism, exhibition centers, high arcade on the street frontage. Building
waterside restaurants and shops, alongside master plan, ratified in Council of Ministers sports courts, restaurants and cafs. The heights and envelope controls ensure a
a yacht club and apartments. A pedestrian decree 15803 of 2005, was based on the 2001 Beirut Marina yacht club building was careful distribution of floor space. The
bridge will link it to the Hotel District. planning study by a consortium of US firms: subject to a maximum height of 11 m above majority of development is at medium
Providing an uninterrupted 3.5-km extension Skidmore Owings & Merrill (SOM) for urban corniche level. This stipulation was amended density (40 or 52 m height), with a limited
of the Beirut shoreline, the marina, harbor design, Sasaki for landscaping and Parsons in Council of Ministers decree 16546 of number of high-rise sites (90, 120 and
quaysides and corniche promenades will Brinckerhoff for transport planning. March 9, 2006, which increased the yacht 160 m height) planned in distinctive locations
provide more than four times the area of The plan aims at turning the new club maximum height to 13 m. No and landmark buildings framing spectacular
seafront public space currently available waterfront into the destination and climax of permanent construction is allowed on the views to the sea and mountains. The road
in the Beirut peninsula. Beiruts citywide corniche. Upon completion marina quays and breakwater, apart from widening and addition of new roads in the
of the Beirut Marina town quays, corniche infrastructure or buildings relating to port sector plan result in larger areas dedicated
promenade, eastern marina quayside and management, such as customs, immigration, to public domain. The total built-up area
Beirut port first basin promenade, the city petrol station or car parks. Restaurants and remains unchanged, with no increase in
center will provide an uninterrupted shops built as temporary structures along development areas allocated to Solidere.
32 extension of the Beirut shoreline. The 33 the town quay are not to exceed the height
terraced corniche promenade, over 1.3-km of the corniche promenade above.
(0.8-mile) long, with a width varying between
45 and 110 m, will be a socially active
pedestrian arena, with views to the sea,
Jounieh bay and Mount Sannine.
Solidere Annual Report 2008
BEIRUT MARINA
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Solidere Annual Report 2008
The restoration of Beirut city center has Beirut historic core has a rich heritage
RESTORATION confirmed the sustainability of traditional
districts and heritage buildings and their
of religious, public, institutional and
commercial buildings. Widely recognized as
RESTORATION PROCESS
great potential for creating value, once they a conservation showpiece, this vieille ville,
are adapted to the needs of contemporary with its modern amenities behind beautifully In the Master Plan, 265 buildings and
life and business. renovated faades, has witnessed a high 27 public or religious buildings were retained
demand for a broad range of office, retail, for preservation. These were carefully
cultural and recreational uses. The restored in accordance with a set of rules
peripheral neighborhoods of Saifi, Wadi Abou established by Solidere, in cooperation with
Jamil and Zokak El Blatt, have re-emerged urban planning authorities, and involving
as urban villages. sector plans and restoration guidelines.
Restoration briefs established
for the retained buildings were based on
architectural and photogrammetric surveys,
damage assessment and historical research
on original designs and materials. The briefs
provide guidelines for articulating the design
and restoration strategy to be adopted in
each individual case, and are stricter for
those buildings deemed of heritage or
architectural value. Projects go through
preliminary design approval, restoration
permit issuance, mobilization of site works,
faade and material sample approval, site
inspection and finally occupancy permit
procedure. Solidere has a dedicated team to
monitor implementation.
Stone repair was important in the
Foch-Allenby and Nejmeh-Maarad areas,
notable for their faithful reconstitution of
elaborate faades and their high quality stone
masonry. City center restoration combines
authenticity with a progressive outlook.
Buildings are rejuvenated through the use of
skylight atria, roof gardens or glazed roofs.
Interiors are fitted with modern equipment
for functionality, comfort and efficiency. In
residential neighborhoods, this is allied with
sensitivity to the Mediterranean typology. In
office buildings, open plan design allows
optimal and flexible use of floor area.
Restored buildings are maintained on a
regular basis. To that effect, owners provide
the Beirut Municipality with a signed
commitment to undertake general cleaning
and faade maintenance every five years.
Solidere took the lead in the
restoration process, undertaking showcase
work in its properties and closely monitoring
other parties' projects.
Solidere Annual Report 2008
Of the 37 built lots retained in Solideres Nineteen places of worship attest to the
portfolio, including five co-owned buildings, spiritual value of central Beirut. Solidere
33 buildings were the object of restoration has assisted in the gradual restoration of
by the Company, and four were restored by 18 of them, with 15 now in use and drawing
third parties, respectively co-owners and increasing numbers of people. The new
leaseholder, with lot 164 Saifi and lot 1042 Mohamad Al Amin mosque took on a
Mina El Hosn completed, lots 1261 and 996 profound meaning when the late PM Rafic
Mina El Hosn on hold due to legal issues. Hariri was laid to rest near it. Restoration
In addition, Solidere undertook the of the Synagogue in Wadi Abou Jamil is
restoration of two lots on behalf of the Islamic expected to take place shortly under the
Wakfs, with lot 141 Marfaa completed and lot guidance of the appointed architect,
1353 Marfaa under renovation. (Refer to Pierre Rihane.
Recuperated Buildings.)
By year end, 27 buildings had
been restored by Solidere: 13 residential
buildings in Saifi, Wadi Abou Jamil and
Zokak El Blatt; and 14 for office use with
retail at street level in the Maarad and
Foch-Allenby areas, which include six
buildings serving as Company premises.
As at end 2008, the company had 173
lease agreements for space in its restored
buildings: 40 in commercial and 133 in
residential properties, resulting in the
occupation of around 16,961 sq m of
commercial and 24,529 sq m of
residential space.
Restoration is proceeding in
six Solidere built lots, with three at the
construction stage, one under permitting
at Beirut Municipality, and two on hold for
legal problems.
48 Lot 670 Zokak El Blatt, designed
by Fouad Menem as a residential building
with at street level a space that could be used
for hospitality activities, is under construction,
having obtained building permit for its four
floors. Parking spaces for the building
residents are provided in adjacent lot 1144, a
six-story infill building with 128 car spaces on
six basement levels. Lot 1261 Mina El Hosn,
designed by R & K Consultants to offer
1,858 sq m of residential space, is on hold
due to cadastral plan boundary issues.
Lot 800 Mina El Hosn involves two old
Levantine houses with an infill building. The
restored part was completed and the infill
is under construction. Its completion is
scheduled for mid 2011. Lot 891 Bachoura,
Grand Thtre, the subject of real estate
development involving restoration and infill
building, is under study at Beirut Municipality
for permit approval. Meanwhile, it is also
under study for a possible redesign.
(See Real Estate Strategy.)
left lot 1261 Mina El Hosn restored residential building, R & K Consultants
opposite lot 1138 Marfaa restored office building, Maurice Bonfils
BEIRUT
SOUKS
OPENING
SOON
BEIRUT
SOUKS
Eagerly awaited as the crowning of the
existing city center, Beirut Souks are opening
soon, re-emerging as a lively shopping,
hospitality and entertainment center, a
magnet and exciting experience
for residents and visitors. The commercial
space is interspersed among landscaped THE CONCEPT
pedestrian areas.
As they follow the pre-Roman
ancient street grid, the Souks integrate Re-structuring a city precinct, not designing
archeological features and gardens, a shopping center
consecrating the historic value of the area
while using the state-of-the-art technology Designed in five separate commissions by
of modern commercial centers. international and Lebanese architects, Beirut
Visitors can stroll along the Souks offer 163,010 sq m of floor space
souks, some covered with skylights and a interspersed among 17,307 sq m of
natural aeration system, such as Tawila, landscaped pedestrian areas.
Jamil and Arwam, others open to the sky, The architects include two
such as Ayyas, Bustros and Sayyour, and Pritzker Prize architects, Rafael Moneo
enjoy shopping and entertainment in a wide (Spain) and Zaha Hadid (UK-Iraq), and such
variety of shops, restaurants and cafs. other prestigious names as Samir Khairallah
The opening in the last quarter & Partners, Kevin Dash (UK), Rafik Khoury
of 2009 of the South Souks is a major step and Partners, Valode et Pistre (France),
in completing the urban fabric and critical Annabel Karim Kassar, Olivier Vidal (France)
mass in Beirut city center. It is also a and Dimitri Alatzas Asociados (Spain).
consecration of the capital and its center Their brief was to restructure
as a regional and global retail destination. a city precinct, not to design a shopping
One of the most important 55 center. Whilst retail would be a major
commercial centers in Lebanon and the component of the project, it would not be
region, Beirut Souks are to constitute the THE SITE the only component.
heart of economic and tourist activity in Because they draw their
central Beirut, contributing to put it on the inspiration from the urban relationships and
Here we have not only a beautiful setting but historical layers of the site, the new Souks
world map as a major regional center for
also an incredible historical past and a offer a unique experience that is quite
shopping, work and entertainment.
remarkable location at the crossroads of different from that of a typical commercial
itineraries that have been used all the time. mall. Beirut Souks are an open bazaar,
affording modern shopping and leisure
Geographically located in the heart of the opportunities while preserving the intricate
capital, Beirut Souks are at a close distance relationships of urban market spaces with
from the historic core, Hotel District and the city.
New Waterfront, with direct links to the port, In terms of Solidere, Beirut Souks
airport and metropolitan transportation are a design signature. Preserving
network. They are surrounded by up-market the historic tradition that marks the market
office, residential and hospitality areas and district, the new Souks revive the mood and
enjoy easy car and pedestrian access. atmosphere of the old Souks and are fair to
Historically, the development this heritage, providing a contemporary
derives its name, identity, urban plan and reinterpretation and commentary of that
architectural character from the site of the tradition. With this unique approach, Solidere
old Souks on which it is built. is in fact bringing back the traditional Souks
Beirut Souks draw their into the fabric of the modern city. As the
inspiration from the urban relationships and South Souks are about to open, one can
historical layers of the site. As they follow begin to grasp this powerful idea, and to
the ancient street grid implanted since pre- appreciate the sensitivity and strategy of
Roman times, and integrate archeological its designers.
features and historical squares and
monuments, the new Souks consecrate the
historic value of the place.
The project reshapes the oldest
retail precinct in the world, bringing back
people to a place they did visit and enjoy for
left Souk Tawila corbels and shop fronts
top right Souk Jamil corbels and bronze musharrabiyas the last three millennia.
bottom right Souk Jamil skylights
Solidere Annual Report 2008
MONEOS SOUKS
73
Solidere Annual Report 2008
Solidere continues to develop real estate The project is undertaken by Beirut requirement, the Beirut Marina and its BWD conducted negotiations with Houri
REAL projects within its strategy to create a vibrant
city center and also with the objective to
Waterfront Development s.a.l. (BWD), a 50-
50 joint venture between Solidere and Stow
waterside restaurants will eventually be
linked to the Hotel District pedestrian
regarding upper floor construction. After
obtaining the relevant building permits,
secure a regular income stream from this Waterfront Development s.a.l. (Stow). BWD corridor by footbridge across the corniche. construction started in May 2009 and the soft
ESTATE successful activity. In addition to Beirut
Souks, the Company is pursuing ongoing real
was capitalized with Solidere contributing
in kind 20,000 sq m BUA on 22,341 sq m Design The design submitted by Holl in
opening is expected to be completed by early
2011. Nabil Dada was entrusted with the
estate projects, including the Beirut of land, and Stow contributing in cash August 2004 was gradually amended interior design. In addition to the yacht club,
STRATEGY Waterfront Development, reviving some that
had been put on hold due to the 2006 war
US$31.6 million.
The facilities include a town quay
following BWD and Solidere comments.
The project is integrated into the city center
lot 1456 accommodates 53 one-, two- and
three-bedroom furnished and serviced
and its political aftermath, and launching of waterside restaurants, cafs and shops, through direct access to the corniche apartments, of which 11 apartments are to be
new projects that span a variety of land uses. and a yacht club with apartments on upper promenade to the north, waterside city park retained by BWD and operated by a third-party
Starting with its Saifi Village, floors. In addition, a harbormaster, customs to the east, and a pedestrian bridge over the operator. The other apartments will be sold.
Wadi Abou Jamil and Zokak El Blatt projects, and immigration building will be erected on corniche to the south providing access to the
Solidere created a booming residential public domain.The project is expected to be town quay restaurants and shops. Landscape Quayside restaurants strip The quayside
market in Beirut city center, which now gradually inaugurated starting spring 2011. designs were developed for the entry plaza, restaurant strip on the southern side of the
extends to residential clusters, mid- and the quayside and the extension of the development, on lot 1455, comprises
high-rise buildings in all new development Concept Located around Beirut Marina in the corniche sidewalk above, creating open-air 26 restaurants and shops totaling 6,000 sq m
sectors of the city center. The Company is heart of the city center, the site for the terraces in the form of a stone beach over of floor area. Stretching along Beirut Marina,
continuing this activity by developing more Beirut Waterfront Development extends the the restaurants and shops. from the sites western limit to the main
residential projects. existing corniche along the seashore into building on the east, the one-floor
Having successfully put on the a series of overlapping platforms. The Apartment building and yacht club On the construction remains below sea corniche
market institutional and business office corniche is inflated to create an 'urban northeastern side of the development, level, with the roofs forming a continuation
buildings, Solidere is launching important beach', with levels subtly articulated to on lot 1456, is the main building totaling of the corniche.
office developments to cater for major provide outdoor spaces with public areas 14,000 sq m of floor area, accommodating The shoring permit was obtained
international companies, which it considers for artwork. yacht club, together with furnished and in May 2008. DMR (US), with a Turkish
Beirut is now able to attract. The concept takes shape from serviced apartments over four floors plus contractor, won the tender for enabling
Finally, with Beirut becoming a strata and layers in forking vectors. Like the three basements. and ground stabilization works which
favorable visitor destination, Solidere is ancient beach that was once the site, the The design-and-build tender were completed in April 2009. The building
embarking in tourist and hospitality projects planar lapping waves of the sea, inspires for underground structural work and permit is currently being sought from the
with special character. striated spaces in horizontal layers, as construction of the basement floors, was Municipality. BWD have tendered the
distinct from vertical objects. The horizontal won by the Houri - Profond joint venture, superstructure works and are in the process
and the planar become a geometric force based on the design endorsed by Soltanche of reviewing the bids. Completion of the
shaping the new harbor spaces. Bachy group (France). Profond were in development is targeted for early 2011.
Developer Beirut Waterfront Development s.a.l.,
50-50 joint venture between Solidere and BEIRUT WATERFRONT The form allows the separate charge of the shoring diaphragm wall, piling BWD had commissioned
Stow Waterfront Development s.a.l. DEVELOPMENT levels to define the organization of public and dewatering; Houri of excavations and restaurant consultant Ulysses (France)
Design architect Steven Holl Architects (US) and private spaces including apartments, construction of slabs and columns. A fast to conduct a market study to select an
Associate Architect Nabil Gholam Architecture yacht club, public facilities, harbormaster, track approach was adopted, using up down optimal type and size mix for the quayside
Site Master Plan Sector D, lots 1455 and In Sector D, immediately adjacent to the
restaurants, and specialty stores. The construction based on a technology specific restaurants, as well as establish a typical
1456 Mina El Hosn marina, Beirut Waterfront Development is
syncopated rhythm of platforms is achieved to underground construction below sea level, rental agreement.
Land area 22,341 sq m under construction on 22,341 sq m of private
Land use Residential, hospitality by constructing the overall curve of the which may be applied throughout the
land, to offer facilities totaling 20,000 sq m
and commercial corniche in five angles relating to five waterfront district. The works were Phasing issues The lot 1455 quayside
of floor area. The development, together
Program Furnished apartments, yacht club, reflecting pools. Due to variations in height completed in March 2009. As per their restaurants strip will be finished ahead of
restaurants, outdoor public spaces with site with the public space around the marina,
along the corniche, the platform levels and contract, Houri - Profond should continue the apartment yacht club building on lot
specific art installations, specialty stores, was designed by Steven Holl Architects (US),
pools vary slightly in height allowing quiet, the dewatering for the next six months after 1456, and is to be delivered upon completion
harbormaster, public facilities with Nabil Gholam Architecture and Planning
gravity-fed fountains to connect each pool underground structural work completion, of the parking currently being built by
Total floor area 20,000 sqm as associate architect.
Status Under construction level. In accordance with Master Plan and until the beginning of superstructure Solidere near the Beirut Waterfront
construction. Development project. This underground
public 500-car parking will primarily serve
the marina. It is very crucial to finish the
parking before delivery of the lot. The
pedestrian bridge linking Beirut Marina to
the Hotel District has been postponed.
Solidere Annual Report 2008
Amir Amine Street Syria Street Amir Bachir Street Alexi Boutros Street Amir Amine Street
Solidere Annual Report 2008
SAIFI
top Foch Residence, residential development, lot 1466 Marfaa, Batimat Architects
Fochville residential development, lot 1497 Marfaa, R & K Consultants
Radium office building, lot 114 Marfaa, R & K Consultants
Banque du Crdit Libanais residential building, lot 108 Marfaa, Erga Group
right Saifi Village Two, residential development, lot 146 Saifi, Nabil Gholam
opposite Le Gray hotel, lot1489 Marfaa, Kevin Dash and Hani Murad
Solidere Annual Report 2008
lot 1337 Mina El Hosn, offers 7,150 sq m, Maha Nasrallah on lot 1371, offers 5,280 sq m Under study at Beirut Municipality are a
NEAR THE BEIRUT SOUKS WADI ABOU JAMIL
distributed over 12 floors, 12 flats; Luna One, distributed around an internal courtyard over residential development, a private residence
designed by Diyar Consultants on lot 1331, three buildings of seven floors each, 19 flats; and a hotel. Al Karmah Real Estate on
The Hilton Hotel, designed by Butec and has 2,723 sq m distributed over seven floors, In Wadi Abou Jamil, cadastral zone Mina the works were delayed because of the lot 808, designed by R & K Consultants offers
Atelier des Architectes Associs on lot 129 10 flats. El Hosn, seven residential buildings, three Roman Hippodrome archeological remains 1,464 sq m distributed over five floors, seven
Mina El Hosn, has been completed to offer Under study at Beirut Municipality private residences and two office buildings found on the site; Stow Wadi, designed by flats. The private residence on lot 1375,
11,137 sq m of floor space distributed over is the Park Palace residential building, are under construction. Porphyrios Associates and Nabih Sinno designed by Charles Hadifeh, offers
eight floors, 200 rooms and suites, with designed by Fouad Menem on lot 1339 Mina Mira Immobilire on lot 1478, on lot 1407, offers seven apartments 1,660 sq m of floor space. Designed by Ziad
retail on ground floor. Also completed, El Hosn, with 12,790 sq m distributed over designed by Erga Group offers 3,624 sq m and two duplexes totaling 3,750 sq m over Akl in collaboration with Philippe Starck
Smiramis mixed-use development on lot 10 floors, 24 flats. distributed over six floors, three apartments seven floors. (France) on lots 834 and 1410, the Royal
1458 Marfaa, designed by Robert Adam (UK) Three residential developments and one duplex; Phoenix building, designed by Khaireddine private residence Hotel and Resorts boutique hotel with 77
with Fouad Hanna and Fadlallah Dagher, are under design. Media Fan, designed by Porphyrios Associates (UK-Greece) and Samir on lot 771, designed and restored by Pierre rooms and 50 suites offers a floor space
offers 7,750 sq m distributed over eight Joe Geitani on lot 1347, with 6,351 sq m of Khairallah & Partners on lot 1440, offers El Khoury Architect, has 2,073 sq m of floor of 16,805 sq m, distributed over 12 buildings
floors, 11 flats. floor space; Avenue Venture, designed by 4,117 sq m distributed over seven floors: six space; the private residence on lot 911, of two, three or four floors.
Two buildings are under LAB Architecture and Associates (Australia) apartments and one duplex; Wadi Hills on lot designed by Abdel Wahed Al Wakeel (UK- Still under design are a bank
restoration. The Makassed Association office and Batimat on lot 1450, with 7,300 sq m; 1388, designed by Agence dArchitecture Egypt) and ARC Group, offers 1,595 sq m headquarters, an office building and a
building on lot 448 Marfaa, being restored as and Block 42 development, designed by Antoine Bechu (France) and Nabih Sinno, of floor space; and the private residence residential building. Al Mawared Bank
per Wissam Jabr design, has 3,682 sq m Victor Legorreta (Mexico) and Fadlallah offers 22,000 sq m distributed around an on lot 855, designed by Nabil Gholam with headquarters is designed by Zaha Hadid
distributed over seven floors. Medawar- Dagher on lot 1495 Marfaa, with 13,493 sq m internal garden over seven buildings of six 1,250 sq m of floor space. (UK-Iraq) and Raed Abillama on lot 1383,
Merheb retail building on lot 16 Marfaa, of floor space. floors each, 68 flats; Wadi Gardens, designed Greenline Real Estate, designed to offer 8,080 sq m of floor space. Luna
being restored as per Pierre Neema design, by Dar al Omran (Jordan) and Hani Murad on by Batimat Architects on lot 1393, offers Company on lot 1394 is designed by A
has 415 sq m distributed over two floors. lot 1392, has 25,769 sq m distributed around 2,750 sq m distributed over seven floors: two Practice to offer 4,084 sq m of floor space.
Three residential buildings are an internal garden over six buildings of eight for retail, three for offices and a duplex on Wadi Mansions, on lot 1442, designed by
left to right Hilton Hotel, lot 129 Mina El Hosn, under construction, Mina Two mixed-use floors each, 68 flats; Mina El Hosn 1466 the top two floors. Cedar House and Pine Porphyrios Associates and Nabih Sinno,
Butec and Atelier des Architectes Associs
building, designed by Kevin Dash and R & K residential development, designed by Fouad House on lot 1133 was redesigned by offer 4,200 sq m of floor space.
Medgulf office buildings, lots 1348 and 1349 Mina El Hosn,
Nachaat Owaida Consultant on lot 2, offers 14,000 sq m Menem on lot 1466, offers 1,788 sq m Youssef Haidar to offer 2,750 sq m
Berytus Parks office building, lot 1344 Mina El Hosn, distributed over seven floors, 15 flats; distributed over five floors, two duplexes and distributed over three floors.
Pierre El Khoury Architects 45 Park Avenue, designed by Laceco on a penthouse; The Courtyard, designed by
Also under construction are an international
ZOKAK EL BLATT
hotel and an office building: the Grand Hyatt
Hotel on lot 111, designed by Michael Graves
Under restoration are two private residences and Dar Al-Handasah, with 32,122 sq m
and an office building: the Doghmosh, distributed over 17 floors, 443 rooms and
designed by Zahi Cardahi on lot 122, has suites in total with retail on ground floor;
1,336 sq m of floor space; Les Gradins, Stratum residential and furnished apartment
designed by Ziad Akl on lot 73, has 734 sq m building, designed by R & K Consultants on
of floor space; Diwan Al Mouhasabat office lot 1364 with 11,200 sq m over 10 floors,
building, designed by Fares Hajj on lot 647, 71 flats.
has 6,921 sq m of floor space. Two office buildings and three
The Pavilions residential residential developments are under study at
complex, designed by R & K Consultants on Beirut Municipality. Mika Real Estate office
lot 1128 and offering 10,312 sq m of floor buildings, designed by Joe Geitani on lots
space, is under construction. It combines a 1363 and 1487, respectively offer 10,831 and
three-floor private villa on Rue de France 8,866 sq m of floor space distributed over 10
with a nine-floor modern infill on Rue de floors. Cibico residential building, designed
lArme, consisting of 23 units: by Joe Geitani on lot 1488, offers 4,333 sq m
16 apartments, five duplexes and two distributed over 11 floors, 14 flats. Initially
triplexes. developed by Dubai Islamic Bank, DIB Tower
Two residential developments are and Town Tower were respectively designed
under design, Primtre Rue de France, by Michael Graves (US) and Ayman Senyora
designed by Abdel Wahed Al Wakeel on lot on lots 1399 and 1494 to offer 26,700 sq m
59, with a 4,200 sq m of floor space; and City and 26,500 sq m distributed over 25 floors,
Hill designed by Youssef Haidar on lot 1137, 49 flats. The new developer who acquired the
with 3,090 sq m of floor space. company intends to redesign the project and
to that effect has launched a limited
architecture competition among Stirk and
Partners (Richard Rogers, UK), Herzog & de
HOTEL DISTRICT Meuron (Switzerland) and Raphael Violi
Associates (Uruguay).
Still under design are one hotel
At the city center northwest gateway, Mina
and four residential developments with the
El Hosn cadastral zone, two towers
following floor areas: Rotana Hotel on lot
overlooking Beirut Marina were completed.
1369, designed by Architecture Studio
The Marina Tower complex, designed by Kohn
(France) and Erga Group, 21,155 sq m, the
Pedersen Fox Associates (US) and Dar Al-
hotel is to include 150 rooms and suites with
Handasah on lot 1354, includes Marina Tower,
50 furnished apartments; Trust Construction
with 27,343 sq m over 26 floors, 47 flats
on lot 1358, designed by Bolles and Wilson
ranging in area from 400 to 500 sq m; Marina
(Germany) and Arc Group, 17,800 sq m;
Gardens, with 8,427 sq m over 10 floors,
La Residence by Ivana Trump on lot 1396,
25 flats ranging from 300 to 350 sq m; and
designed by Valode et Pistre (France),
Marina Courts, with 9,079 sq m over 10 floors,
26,000 sq m; 1397 Mina El Hosn on lot 1397,
41 flats ranging from 100 to 250 sq m. Beirut
designed by Sir Norman Foster and Partners
Tower, designed by Wimberley Allison Tong &
(UK), 56,000 sq m; Avenue Venture on lot
Goo (US) and Samir Khairallah & Partners on
1450, designed by LAB Architecture and
lot 1401, has 42,458 sq m over 27 floors, 63
Associates (Australia) and Elie-Pierre
apartments, four duplexes, two penthouses.
Sabbagh Architects, 7,300 sq m.
An international hotel and four
high-rise luxury residential developments are
under construction. The Four Seasons Hotel,
designed by Dar Al-Handasah on lot 1418,
offers 27,761 sq m distributed over 25 floors,
234 rooms and suites in total with areas
ranging from 85 to 250 sq m. Platinum
Tower, designed by Ricardo Bofill (Spain) and
Nabil Gholam on lot 1421, offers 53,887 sq m
distributed over 34 floors, 70 flats; The Dana
of CCC, designed by Kevin Dash and
Al Salam Architects on lot 1353, offers
13,856 sq m distributed over 10 floors,
15 flats; Bay Tower on lot 1422, designed
by Wimberley Allison Tong & Goo (US)
and Samir Khairallah & Partners, offers
34,760 sq m distributed over 30 floors,
92 flats; Capital Plaza residential building
on lot 1464, designed by Machado & Silvetti
Associates and Nabil Azar, offers 14,102 sq m opposite Park View Realty residential development, lot 1355 Mina El Hosn,
distributed over 12 floors, 36 flats. Pierre El Khoury Architects
Solidere Annual Report 2008
CORPORATE FUNDING
MANAGEMENT
SYSTEMS AND
STUDIES
possibly include a more direct control of Land development strategy The consultancy
MANAGEMENT INFORMATION URBAN AND STRATEGIC STUDIES
temporary uses, likely to be a significant proposal has been refined and finalized, for
SYSTEMS
component of activity in the New Waterfront Laceco to undertake the design of modern
District for the next 5-10 years. These are infrastructure networks for the New
In 2008, Solidere successfully finished the Land use strategy A core concept behind the likely to be incubators and testing grounds Waterfront District. Work will start as soon
pilot project in its newly implemented original Beirut city center Master Plan was to for new uses that may in time emerge as as the new Decree has been issued for
Document Management System, and have no land use or zoning plan, but to permanent components of the city center. Sectors A and D.
proceeded with its implementation in the replace this with regulatory policies that
various divisions and departments. An encourage mixed use. The intention was to Transportation strategy The need for Project definition and initiation With
Enterprise Project Management solution was allow the multiple choices of developers to implementing a public transport strategy has international real estate and marketing
introduced with the help of Microsoft, to create a mixed-use city center, replicating been brought into focus in the detailed consultants Jones Lang LaSalle undertaking
track resource utilization and project costing the natural city-making process of 100 years design of the Martyrs Square corridor. As market research and development advisories
102 across multiple projects. The Solidere Portal, or morethe product of thousands of 103 required in their project brief, the Greek for the office and serviced apartment
an intranet base, was being tested in order individual market choicesin a period of less consultant team included transport projects in Sector B, Solideres Developer
to keep Company staff well informed with than 20 years. To succeed, this concept planners, and the scheme design features a Design Briefs were prepared and issued to
corporate news and policies. depends on skilled developers operating in dedicated public transport right-of-way on selected architects for these projects.
The Human Capital Management their specialized markets, taking a long term the west side of Martyrs Square continuing A concept design competition has been
module was initiated within the Companys view and working within a well defined southwards through the Beirut Gate launched for the Grand Thtre boutique
ERP system, and bases are being set for a development process. In recent years a new development. Increases in density and hotel and spa. Design competition briefs,
new Business Intelligence solution that will type of developer has emerged, treating real employment uses in the New Waterfront massing studies, detailed architectural
be a powerful tool in Managements hands. estate development primarily as a short term District confirmed the necessity for mass programs and Developers Design Briefs
The Geographic Information System was financial operation and bringing together a transit in the near future. In particular, it have also been prepared for new residential
upgraded and enhanced to accommodate consortium of cash investors. This has will not be possible to service the new projects in Zokak El Blatt and the western
Solideres specific urban requirements. necessitated a more proactive approach on concentration of employment in the special end of Wadi Abou Jamil.
A continuous update of hardware, land use by Solidere, with the objective of business district without tram, light rail or
software and networking equipment aims at ensuring adherence to the core objective of bus rapid transit into the city center and
ensuring that Solidere enjoys the latest in a sustainable and balanced mix of uses. connecting onward to a Beirut-wide network.
information technology. Solidere has recently decided to Solidere is currently negotiating with the
strengthen its real estate team and move UK consultants ARUP and local transport
back into development, following the long consultants SITRAM, the carrying out of such
implementation process of the Souks, Saifi a study, long programmed for Beirut city
Village, the embassy compound and other center within its city-wide context.
projects in Phase One of Beirut city center
development. Solidere is currently engaged
in market studies and concept designs for
some eight new projects in the residential,
serviced apartment, hotel and office sectors.
A new objective for Solidere is to create the
market and control the supply and quality of
new development in specific sectors. These
include office, conference and exhibition,
hotel, serviced apartments and certain
categories of residential space. A new land
use strategy is being put in place to allow
Solidere to control the supply and quality of
product in these key new markets. It will
INDEPENDENT AUDITORS REPORT
To the shareholders
The Lebanese Company for the Development
and Reconstruction of Beirut Central District sal
Beirut - Lebanon
Auditors Responsibility
105 Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of The Lebanese Company for the Development and Reconstruction of
Beirut Central District sal and its Subsidiaries (the Group) as of December 31, 2008, and of its
consolidated financial performance and its cash flows for the year then ended in accordance
with International Financial Reporting Standards
Beirut, Lebanon
March 18, 2009 Deloitte & Touche Ernst & Young
Solidere Annual Report 2008
CONSOLIDATED DECEMBER 31, 2008 2007 CONSOLIDATED DECEMBER 31, 2008 2007
BALANCE SHEET NOTES US$ US$ INCOME STATEMENT NOTES US$ US$
Assets Revenues from land and real estate sales 256,635,633 288,467,975
Cash and banks balances 07 291,703,019 327,847,633 Revenues from rented properties 21,670,899 20,775,368
Prepayments and other debit balances 08 34,803,021 34,449,004 Revenues from rendered services 24 7,426,645 2,953,325
Accounts and notes receivables, net 09 296,401,913 318,734,724 Cost of land and real estate sales (62,422,633) (114,089,596)
Investments in securities 10 5,901,300 10,063,020 Charges on rented properties 25 (8,345,604) (7,070,296)
Inventory of land and projects in progress 11 1,274,486,606 1,404,710,655 Cost of rendered services 26 (6,712,741) (4,405,412)
Investment properties, net 12 216,787,077 150,349,040 Loss on sale of investment properties (2,108,123) (824,099)
Investment in an associate 13 296,444,933 287,458,659 Net revenues from operations 206,144,076 185,807,265
Fixed assets, net 14 37,304,608 35,641,877 Share result from an associate (1,798,576) 68,030,929
Total Assets 2,453,832,477 2,569,254,612 General and administrative expenses 27 (19,351,682) (18,086,723)
Depreciation of fixed assets 14 (4,512,679) (1,494,267)
Liabilities Write-back of provision/(provision) against
Bank overdrafts and short term facilities 15 176,996,835 181,186,491 land and real estate development cost 11 9,604,171 (7,882,327)
Accounts payable and other liabilities 16 95,310,680 99,357,927 Write-off of land and real estate development cost 11 (8,036,672) -
Dividends payable 17 62,989,562 46,212,797 Other taxes 16 (3,739,823) (670,059)
Deferred revenue and other credit balances 18 256,523,727 233,147,452 Provision for doubtful receivables 09 - (314,962)
Deferred credits under structured contracts 19 - 170,280,000 Other income 28 832,032 202,516
Loans from banks and financial institutions 20 2,347,054 7,041,163 Interest income 29 55,496,110 40,151,525
Total Liabilities 594,167,858 737,225,830 Interest expense (20,309,559) (15,885,954)
Profit before tax 214,327,398 249,857,943
Shareholders Equity Income tax expense 16 (31,608,453) (25,666,091)
Issued capital at par value US$10 per share: 21
100,000,000 clase (A) shares 1,000,000,000 1,000,000,000 Profit for the year 182,718,945 224,191,852
65,000,000 clase (B) shares 650,000,000 650,000,000
1,650,000,000 1,650,000,000 Basic/diluted earnings per share 30 1.1781 1.4450
Legal reserve 22 94,067,105 75,543,036
Retained earnings 272,280,032 263,175,988
Cumulative changes in fair value of available for
sale securities 10 185,130 147,492
Surplus on sales of treasury shares 11,653,751 11,653,751
Less: Treasury shares 23 (168,521,399) (168,491,485)
106 Total Equity 1,859,664,619 1,832,028,782
107
the accompanying notes form an integral part of these consolidated financial statements the accompanying notes form an integral part of these consolidated financial statements
Solidere Annual Report 2008
(5,827,682)
(155,093,702)
(29,914)
(155,090,832)
1,832,028,782
182,718,945
1,768,649,582
224,191,852
224,300,584
182,756,583
1,859,664,619
108,732
37,638
CASH FLOW STATEMENT NOTES US$ US$
Total
US$
Cash flows from operating activities
Profit for the year before income tax 214,331,284 249,857,943
Adjustments to reconcile income to net cash
provided by operating activities:
Depreciation 31 7,788,218 4,340,875
Surplus on Sale
-
-
-
11,653,751
11,653,751
-
-
-
-
-
-
-
-
11,653,751
Loss on sale of investment properties 12 2,108,123 824,099
of Treasury
Gain on sale of securities (645,911) -
Shares
US$
(Gain)/loss on sale of fixed assets (14,651) 120,882
Provision for doubtful receivables 09 - 314,962
Provision for contingencies and other charges 16(d) 1,499,712 2,876,491
Share result from an associate 13 1,798,576 (68,030,929)
Interest income 29 (54,522,764) (40,151,525)
Cumulative Changes in
Interest expense 31 20,506,797 16,524,567
Available-for-sale
147,492
-
-
38,760
-
108,732
108,732
-
-
37,638
37,638
185,130
Fair Value of
Securities
Changes in working capital
US$
Prepayments and other debit balances 08(b) 14,820,105 3,234,418
Accounts and notes receivable 31 21,292,223 29,829,496
Inventory of land and projects in progress 31 46,691,451 35,649,881
Accounts payable and other liabilities 31 (17,925,716) (3,160,065)
Deferred revenues and other credit balances 08(b) 23,376,275 64,841,659
Interest received 45,018,642 30,721,497
(15,607,206)
(155,093,702)
(18,524,069)
(155,090,832)
182,718,945
-
263,175,988
209,685,044
224,191,852
224,191,852
182,718,945
-
-
272,280,032
Income tax paid (33,403,422) (21,156,116)
Earnings
Retained
US$
Net cash provided by operating activities 292,718,942 306,638,135
(5,827,682)
(168,491,485)
(29,914)
(162,663,803)
(168,521,399)
-
-
-
-
-
-
-
-
-
Acquisition of investment properties 12 (340,604) (378,731)
Treasury
Shares
US$
Proceeds from sale of fixed assets 53,100 250,001
108 Proceeds from sale of investment properties 12 8,454,923 7,697,283
109
Proceeds from sale of securities 4,851,911 -
Investment in an associate 13 (10,784,850) (219,427,730)
Net cash provided by/(used in) investing activities 2,791,394 (199,165,272)
15,607,206
-
75,543,036
18,524,069
-
59,935,830
-
-
-
-
-
94,067,105
the accompanying notes form an integral part of these consolidated financial statements
Reserve
Bank loans (settlement) (4,694,109) (20,021,537)
Legal
US$
Dividends paid 17 (130,559,521) (132,003,932)
Deferred credits under structured contracts 19 (170,280,000) 170,280,000
Treasury shares (57,914) (5,981,322)
Interest paid (19,768,148) (12,490,622)
Net cash used in financing activities (325,359,692) (217,413)
1,650,000,000
-
-
1,650,000,000
-
-
-
-
-
-
-
1,650,000,000
Net change in cash and cash equivalents (29,849,356) 107,255,450
Capital
Share
Cash and cash equivalents - Beginning of the year 139,475,670 32,220,220
US$
Cash and cash equivalents - End of the year 31 109,626,314 139,475,670
Dividends Note 17
the accompanying notes form an integral part of these consolidated financial statements
Solidere Annual Report 2008
All intra-Group balances, transactions, D. Accounts and Notes Receivable All regular way purchases and sales of reference to the current market value of
income and expenses and profits and losses Accounts and notes receivable which are financial assets are recognised on the trade another instrument, which is substantially
resulting from intra-Group transactions are originated by the Group are stated at date, which is the date that the Group the same, discounted cash flow analysis and
eliminated in full. amortized cost less any amount written off commits to purchase the asset. Regular way other pricing models.
and provisions for impairment. An purchases or sales are purchases or sales of
Group entities comprise the following: assessment is made at each balance sheet financial assets that require delivery of Derecognition
date to determine whether there is objective assets within the period generally
evidence that accounts or notes receivable established by regulation or convention in Financial assets
COMPANY OWNERSHIP SHARE DATE OF ESTABLISHMENT may be impaired. If such evidence exists, the the marketplace. A financial asset (or where applicable, a part
estimated recoverable amount of that asset of a financial asset or part of a group of
Beirut Water Front Development sal is determined and any impairment loss, Held-to-Maturity Securities similar financial assets) is derecognized
(Joint Venture) (Proportionate consolidation) 50 April 2004 based on the net present value of future Held-to-maturity securities, which have fixed where:
Beirut Real Estate Management and Services sal
anticipated cash flows discounted at original or determinable payments and which are
(Joint Venture), (Proportionate consolidation) 45 September 2005
effective interest rates, is included in the intended to be held to maturity, are The rights to receive cash flows from the
Solidere Management Services sal 100 June 2006
Solidere Management Services (Offshore) sal 100 March 2007
income statement. subsequently measured at amortized cost, asset have expired, or
Solidere International Holding sal 100 May 2007 less provision for impairment in value. This The Group has transferred its rights to
The carrying amount of the asset is adjusted cost is computed as the amount initially receive cash flows from the asset, or has
through the use of an allowance account. recognized minus principal repayments, plus assumed an obligation to pay the received
The significant accounting policies adopted or minus the cumulative amortization using cash flow in full without material delay to a
are set here below: E. Financial Instruments the effective interest method of any third party under a pass through
Financial assets and financial liabilities are difference between the initially recognized arrangement, and
A. Basis of Presentation recognized on the Group balance sheet when amount and the maturity amount. Amortized Either (a) the Group has transferred
In view of the long term nature and the Group becomes a party to the cost is calculated by taking into account any substantially all the risks and rewards of the
particulars of the Groups operations, the contractual provisions of the instrument. discount or premium on acquisition. asset, or (b) the Group has neither
consolidated financial statements are transferred nor retained substantially all the
presented on the basis that the operations When a financial instrument gives rise to a Impairment loss on such investments is risks and rewards of the asset, but has
have realization and liquidation periods contractual obligation on the part of the recognized in the income statement. transferred control of the asset.
spread over the duration of the Group and Group to deliver cash or another financial
which are subject to market conditions and asset or to exchange another financial Loans and Receivables When the Group has transferred its rights to
other factors commonly associated with instrument under conditions that are Loans and receivables are non-derivative receive cash flows from an asset and has
development projects; as such, the balance potentially unfavorable, it is classified as a financial assets with fixed or determinable neither transferred nor retained
sheet is shown as unclassified without financial liability. The instrument is an equity payments that are not quoted in an active substantially all the risks and rewards of the
distinction between current and long-term instrument if, and only if, both conditions (a) market. After initial measurement, loans asset nor transferred control of the asset,
112 components. and (b) below are met: 113 and receivables are carried at amortized cost the asset is derecognized to the extent of the
using the effective interest method less any Groups continuing involvement in the asset.
B. Foreign Currencies (a) The instrument includes no contractual allowance for impairment. Gains and losses Continuing involvement that takes the form
The functional and presentation currency is obligation to deliver cash or another financial are recognized in profit and or loss when the of a guarantee over the transferred asset is
the U.S. Dollars, in accordance with the asset to another entity; or to exchange loans and receivables are derecognized or measured at the lower of the original
applicable law, which reflects the economic financial assets or financial liabilities with impaired as well as through the amortization carrying amount of the asset and the
substance of the underlying events and another entity under conditions that are process. maximum amount of consideration that the
circumstances of the Group. Transactions potentially unfavorable to the issuer. Group could be required to repay.
denominated in other currencies are Available-for-Sale Securities
translated into U.S. Dollars at the exchange (b) If the instrument will or may be settled Available-for-sale securities are those non- When continuing involvement takes the form
rates prevailing at the dates of the from the Groups own equity instruments; it derivative financial assets that are of a written and/or purchased option
transactions. Monetary assets and liabilities is a non-derivative that includes no designated as available-for-sale or are not (including a cash settled option or similar
stated in currencies other than the U.S. contractual obligation for the Group to classified in any other category. After initial provision) on the transferred asset, the extent
Dollar are translated at the rates of exchange deliver a variable number of its own equity recognition available-for-sale financial of the Groups continuing involvement is the
prevailing at the end of the year. The instruments; or a derivative that will be assets are measured at fair value with gains amount of the transferred asset that the
resulting exchange gain or loss which is not settled only by the Group exchanging a fixed or losses being recognized net of deferred Group may repurchase, except that in the
material is reflected in the income statement. amount of cash or another financial asset for tax as a separate component of equity until case of a written put option (including a cash
a fixed number of its own equity instruments. the investment is derecognized or until the settled option or similar provision) on an
C. Impairment and Uncollectibility of investment is determined to be impaired at asset measured at fair value, the extent of the
Financial Assets Financial assets within the scope of IAS 39 are which time the cumulative gain or loss Groups continuing involvement is limited to
An assessment is made at each balance classified as financial assets at fair value previously reported in equity is included in the lower of the fair value of the transferred
sheet date to determine whether there is through profit or loss, loans and receivables, the consolidated income statement. asset and the option exercise price.
objective evidence that a financial asset or held-to-maturity investments or available-for-
group of financial assets may be impaired. If sale financial assets, as appropriate. When Fair Value Financial liabilities
such evidence exists, the estimated financial assets are recognized initially, they The fair value of investments that are A financial liability is derecognized when the
recoverable amount of that asset and any are measured at fair value, plus, in the case of actively traded in organized financial obligation under the liability is discharged or
impairment loss are determined based on investments not at fair value through profit or markets is determined by reference to cancelled or expires. Where an existing
the present value of expected future cash loss, directly attributable transaction costs. quoted market bid prices at the close of financial liability is replaced by another from
flows. Impairment losses are recognized in business on the balance sheet date. For the same lender on substantially different
the income statement. The Group determines the classification of investments where there is no active market, terms, or the terms of an existing liability are
its financial assets on initial recognition and, fair value is determined using valuation substantially modified, such an exchange or
where allowed and appropriate, re-evaluates techniques. Such techniques include using modification is treated as a derecognition of
this designation at each financial year end. recent arms length market transactions, the original liability and the recognition of a
Solidere Annual Report 2008
new liability and the difference in the Transfers are made from investment over the estimated useful lives of the assets Gains on sale of treasury shares are
respective carrying amount is recognized in properties when, and only when, there is a based on the following annual rates: recorded under a reserve account in equity.
profit or loss. change in use, evidenced by commencement Losses in excess of previously recognized
of owner occupation or commencement of Buildings 2% gains are charged to retained earnings.
Offsetting development with a view to sell. Marina 2%
Financial assets and financial liabilities are Furniture and fixtures 9% M. Revenue Recognition
only offset and the net amount is reported in H. Interest in Joint Ventures Freehold improvements 9% Revenue on land and real estate sales
the balance sheet when there is a legally The Group has interests in joint ventures. A Plant 10% transactions is recognized on the basis of
enforceable right to set-off the recognized joint venture is a contractual arrangement Machines and equipment 14%-20% the full accrual method as and when the
amounts and the Group intends to either whereby two or more parties undertake an following conditions are met:
settle on a net basis, or to realize the asset economic activity that is subject to joint Expenditure incurred to replace a
and the liability simultaneously. control. The Group recognizes its share in component of an item of fixed assets that is A sale is consummated and contracts are
joint ventures by using the proportionate accounted for separately is capitalized and signed.
F. Inventory of Land and Projects in Progress consolidation method. the carrying amount of the component that is The buyers initial (in principle over 25% of
Inventory of land and projects in progress replaced is written off. Other subsequent sales price) and continuing investments are
are stated at the lower of cost and estimated Investments in joint ventures are accounted expenditure is capitalized only when it adequate to demonstrate a commitment to
net realizable value. Costs include appraisal for in the standalone financial statements increases future economic benefits of the pay for the property.
values of real estate plots constituting the using historical cost net of any impairment related item of fixed assets. All other The Groups receivable is not subject to
contributions in kind to capital (A shares), in loss. Impairment loss is recognized in the expenditure is recognized in the income future subordination.
addition to capitalized costs. Capitalized income statement. statement as the expense is incurred. The Group has transferred to the buyer the
costs comprise the following: usual risks and rewards of ownership in a
Project direct costs and overheads related The Group consolidates its share in assets, K. Impairment transaction that is in substance a sale and
to the properties development, construction liabilities, revenues and expenses with At each balance sheet date, the carrying the Group does not have a substantial
and project management as a whole, as well related captions in the consolidated financial amounts of tangible assets (investment continuing involvement with the property.
as acquisition, zoning, and eviction costs. statements. properties and fixed assets) are reviewed to
Indirect costs, such as overheads, which determine whether there is any indication If any of the above conditions is not met, the
were partially allocated to inventory of land Financial statements of joint ventures are that these assets have suffered an initial payments received from buyers are
and projects in progress. prepared for the same fiscal year, using the impairment loss. If any such indication recorded under deferred revenues and other
same accounting policies. exists, the recoverable amount of the asset credit balances. Amounts are released to
G. Investment Properties is estimated in order to determine the extent revenue as and when the above conditions
Investment properties which represent When the Group contributes or sells assets of the impairment loss, if any. are fulfilled.
properties held to earn rent and/or for to the joint venture, any portion of gain or
capital appreciation are measured initially at loss from the transaction is recognized Recoverable amount is defined as the higher Financial assets (including treasury shares)
114 cost and subsequent to initial recognition are based on the substance of the transaction. 115 of: received in return for the sale of land and
stated at their cost less accumulated When the Group sells assets to the joint Fair value that reflects market conditions at real estate are valued at fair market value.
depreciation and any impairment in value. venture, the Group does not recognize its the balance sheet date less cost to sell, if any.
share of the profits from the transaction Value in use assessed as the present value Rental income from operating leases is
Depreciation is computed using the straight- until the joint venture resells the assets to of estimated future cash flows expected to recognized on a straight-line basis over the
line method over the estimated useful lives an independent party. arise from the continuing use of the asset term of the relevant lease.
of the properties, excluding the cost of land, and from its disposal at the end of its useful
based on the following annual rates: The joint venture is proportionately life, only for applicable assets with cash Interest income is recognized as interest
consolidated until the date on which the generation units, as applicable. accrues using the effective interest method,
Buildings 2% Group ceases to have joint control over the by reference to the principal outstanding and
Furniture, fixtures, joint venture. Where an impairment loss subsequently the applicable interest rate.
equipment and other assets 9%-15% reverses, the carrying amount of the asset is
I. Investments in Associates increased to the revised estimate of its Revenue from rendering of services is
The carrying amount includes the cost of The Groups investments in associates are recoverable amount, but so that the increased recognized when the outcome of the
replacing part of an existing investment accounted for under the equity method of carrying amount does not exceed the carrying transaction can be estimated reliably, by
property at the time that cost is incurred if accounting. These are entities over which the amount that would have been determined had reference to the stage of completion of the
the recognition criteria are met. Other Group exercises significant influence and no impairment loss been recognized for the transaction at the balance sheet date.
subsequent expenditure is capitalized only which are neither subsidiaries nor joint asset in prior years. A reversal of an
when it increases future economic benefits of ventures. impairment loss is recognized immediately in N. Cost of Sales
the related item of investment properties. All profit or loss, unless the relevant asset is Cost of properties sold is determined on the
other expenditure is recognized in the income Under the equity method of accounting, the carried at a revalued amount, in which case basis of the built up area (BUA) - permitted
statement as the expense is incurred. interest in the associate is carried in the the reversal of the impairment loss is treated right to build in square meters - on the sold
balance sheet at cost as adjusted for post as a revaluation increase. plots based on the terms of the sales
Transfers are made to investment properties acquisition changes in the Groups share of agreements. The cost of one square meter of
when, and only when, there is a change in the net assets of the associate, less any The impairment loss is recognized in the BUA is arrived at by dividing, total estimated
use, evidenced by the end of owner impairment in the value of the individual income statement. cost of the land development project over
occupation, commencement of an operating investment. total available BUA after deduction of the
lease to another party or completion of L. Treasury Shares BUA relating to recuperated properties and
construction or development. J. Fixed Assets Own equity instruments which are reacquired those relating to the religious and public
Fixed assets are stated at cost net of (treasury shares) are deducted from equity. administrations.
accumulated depreciation and any No gain or loss is recognized in profit or loss
impairment in value. Depreciation is on the purchase, sale, issue or cancellation
computed using the straight-line method of the Groups own equity instruments.
Solidere Annual Report 2008
O. Deferred Credits under Structured Derivatives are carried as assets when the Deferred income tax assets are recognized for V. Employees End-of-Service Benefits
Contracts fair value is positive and as liabilities when all deductible temporary differences and carry- The Group provides end-of-service benefits
Treasury shares sold where the buyer has the fair value is negative. forward of unused tax assets and unused tax to its employees. The entitlement to these
the option to put back to the Group the losses to the extent that it is probable that benefits is based upon the employees final
shares at a predetermined price and the Fair values are generally obtained by taxable profit will be available against which salary and length of service, subject to the
Group has the option to buy back these reference to quoted market prices, the deductible temporary differences and the completion of a minimum service period. The
shares at the same price, are treated as discounted cash flow models and pricing carry-forward of unused tax assets and unused expected costs of these benefits are accrued
deferred credits under structured contracts. models as appropriate. tax losses can be utilized. over the period of employment.
The difference between the original sales
proceeds and option strike price is treated Cash flow hedges are a hedge of the The carrying amount of deferred income tax
as interest which is accrued using the exposure to variability in cash flows that is assets is reviewed at each balance sheet
effective interest rate method. attributable to a particular risk associated date and reduced to the extent that it is no
P. Borrowing Costs
with a recognized asset or liability or a highly
probable forecast transaction and could
longer probable that sufficient taxable profit
will be available to allow all or part of the
04 CRITICAL ACCOUNTING
JUDGMENTS AND USE
OF ESTIMATES
Borrowing costs directly attributable to the affect profit or loss. deferred income tax asset to be utilized.
acquisition, construction or production of In the application of the accounting policies
qualifying assets, which are assets that The effective portion of the gain or loss on Taxes payable on unrealized revenues are described in Note 03 above, management is
necessarily take a substantial period of time the hedging instrument is recognized directly deferred until the revenue is realized. required to make judgments, estimates and
to be ready for their intended use, are added in equity, while the ineffective portion is assumptions about the carrying amounts of
to the cost of those assets, until such time recognized in profit or loss. Current tax and deferred tax relating to assets and liabilities that are not readily
that the assets are substantially ready for items that are credited or charged directly to apparent from other sources. The estimates
their intended use. Amounts taken to equity are transferred to equity are recognized directly in equity. and associated assumptions are based on
the income statement when the hedged historical experience and other factors that
All other borrowing costs are reflected in the transaction affects profit or loss, such as Value added tax (VAT) are considered to be relevant. Actual results
income statement in the period in which they when hedged financial income or financial Revenues, expenses and assets are may differ from these estimates.
are incurred. expense is recognized or when a forecast recognized net of the amount of VAT except:
sale or purchase occurs. Where the hedged The estimates and underlying assumptions
Q. Bank Borrowings item is the cost of a non-financial asset or Where the VAT incurred on a purchase of are reviewed on an ongoing basis. Revisions
Interest-bearing bank loans and overdrafts liability, the amounts taken to equity are assets or services is not recoverable from to accounting estimates are recognized in
are initially measured at the fair value of the transferred to the initial carrying amount of the taxation authority, in which case the VAT the period in which the estimate is revised if
consideration received, less directly the non-financial asset or liability. is recognized as part of the cost of the revision affects only that period, or in the
attributable costs and are subsequently acquisition of the asset or as part of the period of the revision and future periods if
measured at amortized cost, using the T. Taxation expense item as applicable; and the revision affects both current and future
116 effective interest rate method. Any difference 117 Receivables and payables that are stated periods.
between the proceeds (net of transaction Current Tax with the amount of VAT included.
costs) and the settlement or redemption of Income tax is determined and provided for in The most significant estimate made by the
borrowings is recognized in profit or loss accordance with the Lebanese tax laws. The net amount of VAT recoverable from, or Group is the determination of the aggregate
over the term of the borrowings through the Income tax expense is calculated based on the payable to, the taxation authority is included cost of the Beirut Central District Project.
amortization process, using the effective taxable profit for the year. Taxable profit differs as part of receivables or payables in the
interest rate method. The fair value of from net profit as reported in the income balance sheet. Impairment of Accounts and Notes
borrowings for disclosure purposes is statement because it excludes items of income Receivable
estimated by discounting the future or expense that are taxable or deductible in U. Provisions An estimate of the collectible amount of
contractual cash flows at the current market future years and it further excludes items that Provisions are recognized when the Group accounts and notes receivable is made when
interest rate that is available to the Group for are never taxable or deductible. The has a present obligation (legal or collection of the full amount is no longer
similar financial instruments. Companys liability for current tax is calculated constructive) as a result of a past event, it is probable. For individually significant
using tax rates enacted at the balance sheet probable that an outflow of resources amounts, this estimation is performed on an
R. Trade and other payables date. Provision for income tax is reflected in embodying economic benefits will be individual basis. Amounts which are not
Trade and other payables are initially the balance sheet net of taxes previously required to settle the obligation and a individually significant, but which are past
measured at fair value. Due to their short- settled in the form of withholding tax. reliable estimate can be made of the amount due, are assessed collectively and a provision
term nature, the carrying amount of trade of the obligation. is set up according to the length of time past
and other payables approximates their fair Rental income is subject to the built property due, based on historical recovery rates.
values as of December 31, 2008 and 2007. tax in accordance with the Lebanese tax law. The amount recognized as a provision is the
Average maturity dates of trade payables best estimate of the consideration required At the balance sheet date, accounts and
range between 30-90 days. Short duration Deferred tax to settle the present obligation at the notes receivable amounted to US$29,581,896
payables with no stated interest rate are Deferred income tax is provided, using the balance sheet date, taking into account the and US$292,850,322 respectively, and the
measured at original invoice amount unless liability method, on all temporary differences risks and uncertainties surrounding the provision for doubtful debts amounted to
the effect of imputing interest is significant. at the balance sheet date between the tax obligation. Where a provision is measured US$451,320 as of the balance sheet date.
bases of assets and liabilities and their using the cash flows estimated to settle the Any difference between the amounts actually
S. Derivative Financial Instruments carrying amounts. present obligation, its carrying amount is the collected in future periods and the amounts
Derivative financial instruments are initially present value of these cash flows. expected will be recognized in the income
recognized at fair value on the date on which Deferred income tax assets and liabilities statement.
a derivative contract is entered into and are are measured at the tax rates that are
subsequently remeasured at fair value. expected to apply to the period when the
asset is realized or the liability is settled,
based on laws that have been enacted at the
balance sheet date.
Solidere Annual Report 2008
Assets
2008
US$
2007
US$
calculating depreciation. The estimate is Cash and bank balances 8,682,897 11,435,184
determined after considering the expected The Group has interest in joint ventures as Prepayments and other debit balances 66,098 257,593
usage of the assets or physical wear and follows: Inventory of land and projects in progress 14,046,207 10,850,050
tear. Management reviews the residual value Fixed assets, net 129,140 70,503
and useful lives annually and future (a) The Group entered into a joint venture 22,924,342 22,613,330
depreciation charge would be adjusted agreement on February 11, 2004, with Stow Liabilities:
where the management believes the useful Waterfront sal (Holding) to establish Beirut Accounts payable and other liabilities 6,541,328 3,980,398
lives differ from previous estimates. Waterfront Development sal with a 50% 6,541,328 3,980,398
stake in the joint ventures total capital
Impairment of Available For-Sale Equity amounting to US$19,900. During the year
Investments 2006, the capital of the joint venture was Income and Expenses
The Group determines that available for sale increased to US$12,819,900 without
changing the Groups share in the capital. 2008 2007
equity investments are impaired when there
The main activity of the joint venture is to US$ US$
has been a significant or prolonged decline
in the fair value below its cost. This develop, operate, manage, exploit and sell
Revenues from consulting services 231,260 482,544
determination requires judgment. In making real estate properties in the Marina area in
General and administrative expenses (383,867) (275,492)
this judgment the Group evaluates among Beirut Central District.
Depreciation (16,399) (14,468)
other factors, the normal volatility in share Interest income 279,209 656,582
price. In addition, the Group considers As per the terms of the agreement, on Interest expense (19,875) (429,668)
impairment to be appropriate when there is December 31, 2005, the Group sold Income for the year before income tax 90,328 419,498
evidence of deterioration in the financial properties with an aggregate cost of Income tax (35,737) (60,382)
health of the investee, industry and sector US$10,100,000 from properties held for Income for the year 54,591 359,116
performance, changes in technology, and development and sale, to the joint venture
operational and financing cash flows. for a total consideration of US$31,600,000.
The other venturer contributed in cash an
amount of US$31,600,000 to the joint
venture. 06 SEGMENT
REPORTING
07 CASH AND
BANK BALANCES
DECEMBER 31, 2008
US$
2007
US$
(c) Deferred tax assets caption consists of
the following:
Cash on hand 88,252 85,026
Current accounts 7,921,544 11,064,074
DECEMBER 31, 2008 2007
Short term deposits 278,613,353 309,513,061
US$ US$
286,623,149 320,662,161
Pledged term deposits 5,079,870 7,185,472
Deferred tax assets on unrealized profits from
291,703,019 327,847,633
sales to a joint venture Note 05 (a) 1,612,500 1,612,500
Deferred tax assets on cost of land sold Note 16 (c) 843,298 664,620
2,455,798 2,277,120
08 PREPAYMENTS
AND OTHER DEBIT BALANCES
DECEMBER 31, 2008
US$
2007
US$
arbitration in a dispute with one of the
Companys contractors, which was resolved
during 2008 as explained under Note 33 (j).
Advance payments to contractors (a) 5,113,251 8,880,279
Advances to employees 2,485,084 2,006,704
Accrued interest income (b) 9,504,122 9,430,026
Prepaid expenses 2,365,089 2,278,275
Deferred tax assets (c)
Due from related parties (d)
2,455,798
5,864,520
2,277,120
3,808,163 09 ACCOUNTS AND NOTES
RECEIVABLE, NET
DECEMBER 31, 2008
US$
2007
US$
Other debit balances (e) 7,015,157 5,768,437
34,803,021 34,449,004 Notes receivable 292,850,322 289,075,956
Accounts receivable 29,581,896 68,961,930
Receivables from tenants 6,919,018 6,539,940
Interest receivable on discounted notes - 801,730
(a) Advance payments to contractors include
Less: Unearned interest (32,498,003) (46,193,512)
an amount of US$3,407,026 as of December
Less: Provision for problematic receivables (451,320) (451,320)
31, 2008 (US$7,030,531 as of December 31,
296,401,913 318,734,724
2007) relating to a contractor involved in the
execution of the Aswaq Beirut project.
The Groups credit risk exposure is spread
over 93 counter-parties; 6 customers
constitute 70% of the total exposure and 87
customers constitute the remaining 30% as
of December 31, 2008 (as of December 31,
2007, 118 counter-parties; 6 customers
constitute 54% of the total exposure and 102
customers constitute the remaining 46%).
Solidere Annual Report 2008
(194,000)
1,595,500
3,550,000
4,951,500
4,938,000
2,250,000
2,688,000
9,889,500
173,520
10,063,020
2007
from sales carry the following maturities:
Net Value
The change in fair market value of the available-for-sale securities is recorded under Cumulative changes in fair value of available-for-sale securities in equity net of deferred tax liability in
US$
DECEMBER 31, 2008 2007
US$ US$
right of set-off
Leverage with
1,400,000
1,450,000
2,194,000
5,044,000
750,000
5,794,000
750,000
-
Overdue 5,155,255 66,860,055
US$
2008 - 95,993,211
2009 121,950,534 61,247,873
2010 65,793,795 36,640,650
2011 48,386,473 27,863,562
2012 28,392,499 -
Book Value
2,995,500
5,000,000
2,000,000
9,995,500
2,688,000
5,688,000
15,683,500
3,000,000
2013 and above 22,701,161 -
US$
292,850,322 289,075,956
2008
2,928,000
-
2,928,000
2,905,000
2,905,000
5,833,000
-
Fair Value
US$
DECEMBER 31, 2008 2007
US$ US$
the amount of US$32,670 as of December 31, 2008 (net of deferred tax liability in the amount of US$26,028 as of December 31, 2007).
Doubtful balances 470,605 470,605
Past due but not impaired:
<30 days - 1,209,669
2,995,500
2,995,500
2,688,000
5,683,500
217,800
5,901,300
-
2,688,000
Net Value
30-60 days - 1,584,752
US$
>120 days 5,155,255 64,065,634
5,155,255 66,860,055
right of set-off
292,850,322 289,075,956
Leverage with
-
-
-
-
-
US$
The average yield on accounts and notes
receivable is mainly dependant on the Libor
rate and was 7% as of December 31, 2008
122 123
1 The Group has a put option to sell back the notes to the issuer at 100% provided certain conditions are met.
(5.87% as of December 31, 2007).
Book Value
2,995,500
-
2,995,500
2,688,000
2,688,000
5,683,500
-
The movement in the provision for
US$
problematic receivables during the year was
as follows:
2008 2007
3ML + 0.75%
1YL + 0.75%
3ML + 0.5%
3ML + 0.5%
3ML + 0.5%
on Leverage
US$ US$
Interest
Balance at the beginning of the year 451,320 351,320
Additions - 314,962
Write-offs - (214,962)
Balance at the end of the year 451,320 451,320
Coupon Rate
Conditional
6.10
6.00
6.5
5.60
6.20
Unimpaired receivables are expected, on the
%
basis of past experience to be fully
recoverable.
Maturity Date
16/03/2015
23/2/2014
26/3/2008
29/3/2012
25/04/2016
right of set-off and the Group intends to
10 INVESTMENT
SECURITIES
settle them on a net basis at maturity.
Coupon rates depend on certain conditions
being satisfied which vary depending on the
Investment securities
part of the price was financed by a loan from
Available-for-sale
DECEMBER 31
Held-to-Maturity
on Asian Indices
and the financial liabilities resulting from follows:
Accrual Note
these transactions are offset and the net
amount is reported in the balance sheet
since the Group has a legally enforceable
Solidere Annual Report 2008
Write-off of land and real estate Investment properties include rented and US$1,529,611 and related depreciation in the
development cost in the income statement available for rent properties. These represent amount of US$194,009 from investment
consist of the following: mainly a property leased out to the Ministry properties to fixed assets.
of Foreign Affairs and Emigrants, for use by
an international agency. It also includes The fair value of the investment properties is
DECEMBER 31, 2008 2007 residential complexes, an embassy complex, estimated by management at around
US$ US$ and other restored buildings. US$605million based on current market
prices (US$320million as of December 31,
Provision for impairment (b) 5,535,809 - During the year ended December 31, 2008, 2007). There has been no valuation of these
Write-off of costs incurred (b) 2,500,863 - the Group sold property having an aggregate
properties by an independent valuer.
8,036,672 - net book value of US$9,262,563 for total
proceeds of US$8,454,923 which resulted in a
Depreciation for investment properties in the
loss of US$807,640 recorded under Loss on
amount of US$3,275,539 for the year 2008
sale of investment properties in the income
statement (net book value of US$8,521,382, (US$2,740,934 for the year 2007) is recorded
12 INVESTMENT
PROPERTIES, NET
Balance as at
December 31
2007 Additions Transfers
Disposals
and Sales
Balance as at
December 31
2008
total proceeds of US$7,697,283 and loss of
US$824,099 for the year ended December 31,
under Charges on rented properties
caption in the income statement (Note 25).
US$ US$ US$ US$ US$ 2007). Also during 2008, the Group booked an
impairment loss on investment properties
due to additional costs incurred that will not
Cost
be recovered in future periods amounting to
Land 42,090,628 - 16,759,535 (2,435,892) 56,414,271
US$1,300,483 recorded under Loss on sale
Buildings 124,281,478 301,246 63,638,342 (8,563,754) 179,657,312
of investment properties.
Other assets 4,585,459 39,358 (655,868) - 3,968,949
170,957,565 340,604 79,742,009 (10,999,646) 240,040,532
Accumulated During the year ended December 31, 2008,
Depreciation the Group transferred US$80,744,285 from
Buildings 17,644,192 3,110,665 5,000 (436,600) 20,323,257 real estate development projects to
Other assets 2,964,333 164,874 (199,009) - 2,930,198 investment properties (US$10,580,812 for the
20,608,525 3,275,539 (194,009) (436,600) 23,253,455 year ended December 31, 2007).
Net Book Value 150,349,040 216,787,077
During the year ended December 31, 2008,
the Group transferred US$527,335 from fixed
assets to investment properties.
126 Balance as at Balance as at 127 During the year ended December 31, 2008,
December 31 Disposals December 31
the Group transferred cost in the amount of
2006 Additions Transfers and Sales 2007
US$ US$ US$ US$ US$
Cost
Land 42,001,922 - 2,194,225 (2,105,519) 42,090,628
Buildings 122,702,684 300,443 8,386,587 (7,108,236) 124,281,478
Other assets 4,507,171 78,288 - - 4,585,459
169,211,777 378,731 10,580,812 (9,213,755) 170,957,565
Accumulated
Depreciation
Buildings 15,911,771 2,424,794 - (692,373) 17,644,192
Other assets 2,648,193 316,140 - - 2,964,333
18,559,964 2,740,934 - (692,373) 20,608,525
Net Book Value 150,651,813 150,349,040
Solidere Annual Report 2008
13 INVESTMENT IN
AN ASSOCIATE 14 FIXED
ASSETS, NET
Details of the Groups associate are Fixed assets are composed of the following:
as follows:
Balance as at Balance as at
2008 2007 December 31, Disposals December 31
Country of Ownership Groups Share Groups Share 2007 Additions Transfers and Sales 2008
Incorporation Interest Cost of Equity Cost of Equity US$ US$ US$ US$ US$
% US$ US$ US$ US$
Cost
Solidere International Limited UAE 38.18 298,243,509 296,444,933 219,427,730 287,458,659 Land 5,080,192 - - - 5,080,192
Buildings 11,725,529 113,358 638,532 - 12,477,419
Marina 6,934,100 - 932,624 - 7,866,724
Summarized financial information in respect Furniture and fixtures 2,547,704 134,688 3,680 - 2,686,072
of the Groups associate is set out below: Freehold improvements 3,614,458 183,578 125,936 - 3,923,972
Plant - - - - -
Machines and equipment 24,530,020 2,153,473 2,926,295 (194,245) 29,415,543
DECEMBER 31, 2008 2007 Prefabricated Office - 40,425 - - 40,425
US$ US$ 54,432,003 2,625,522 4,627,067 (194,245) 61,490,347
During the first half of the year 2007, On June 7, 2007, the Group directly
128 Solidere established Solidere International subscribed into the capital of Solidere 129
Holdings sal (SIH) which in turn established International Limited for an amount of Balance as at Balance as at
Solidere International Limited (SI) in the US$3,000,060 representing a 0.4286% equity December 31, Disposals December 31
2006 Additions Transfers and Sales 2007
Dubai International Financial Center (DIFC) stake.
US$ US$ US$ US$ US$
with an initial capital of US$50,000. The main
activity of SI is to promote, invest in, develop, During 2008, the Group increased its direct
market and manage, as well as provide ownership in Solidere International Limited Cost
consulting services with respect to real to 38.18% by acquiring 66,849 shares for an Land 5,080,192 - - - 5,080,192
estate projects outside the Beirut Central amount of US$10,784,850, thus increasing Buildings 11,507,802 217,727 - - 11,725,529
the carrying amount of the investment from Marina 6,934,100 - - - 6,934,100
District area of Lebanon.
Furniture and fixtures 2,396,602 151,102 - - 2,547,704
US$287million to US$298million as at
Freehold improvements 3,332,025 282,433 - -
In the same year, SIH raised additional funds December 31, 2008.
3,614,458
for SI through a private placement. Plant 1,853,266 - - (1,853,266) -
Machines and equipment 12,543,972 3,982,325 8,003,723 - 24,530,020
As a result of the private placement SIs 43,647,959 4,633,587 8,003,723 (1,853,266) 54,432,003
share capital and share premium amounted
to US$700,050,000 out of which SIH settled Accumulated
US$219,427,060 against an ownership Depreciation
percentage of 37.19%. Buildings 1,785,510 208,533 - - 1,994,043
Marina 374,110 138,682 - - 512,792
Furniture and fixtures 1,938,764 215,504 - - 2,154,268
The private placement memorandum and
Freehold improvements 2,090,482 312,980 - - 2,403,462
other signed agreements between Solidere Plant 1,297,058 185,326 - (1,482,384) -
and SI stipulate that Solidere and Solidere Machines and equipment 10,046,552 1,679,009 - - 11,725,561
Management Services sal will transfer to SI 17,532,476 2,740,034 - (1,482,384) 18,790,126
all the projects that they currently have
outside the Lebanese territories. In addition, Net Book Value 26,115,483 35,641,877
Solidere will grant SI the right to use the
Solidere brand name through a license
agreement and a none compete right.
Solidere Annual Report 2008
Bank overdrafts 4,523,728 1,290,555 (c) Taxes payable consist of the following:
Short term facilities 172,473,107 179,895,936
176,996,835 181,186,491 DECEMBER 31, 2008 2007
US$ US$
On August 2, 2007, the Group signed two July 5, 2008, the Group renewed this facility Accrued income tax 30,997,135 25,652,763
credit facility agreements with a local bank with the same bank. The new facility is VAT Payable 21,369 22,232
for US$75million and US$35million. These subject to an interest rate of three-month Taxes withheld 752,984 1,437,522
facilities are subject to an interest rate of one Libor plus 1.5% but not less than 4.5%. The Property tax payable 2,112,855 2,067,931
year Libor plus 1.7% and one year Libor plus covenants of the agreements stipulate that VAT additional tax assessment 670,059 670,059
1.5% respectively. These facilities matured on the Group maintain a maximum debt to Tax review assessment 3,750,990 -
August 3, 2008. The covenants of the equity ratio and banks loans, overdraft, and 38,305,392 29,850,507
agreements stipulated that the Group facilities to equity ratio of 2:1 and 4:1
maintain a maximum debt to equity ratio of respectively. In addition, the Group should
1:4 and a minimum equity balance of maintain receivables including loans, lease
US$1billion. This facility was renewed in 2008. contracts and notes receivables free from
any liens in the minimum amount of
On June 18, 2007, the Company signed a US$75million.
US$40million one year credit facility with a
local bank. This facility was subject to an On June 22, 2007, the Group signed a
interest rate of three-month Libor plus 1.25% US$50million one year credit facility with a
but not less than 6%. The covenants of the local bank. This facility was subject to an
agreements stipulate that the Group maintain interest rate that varies between one month
a maximum debt to equity ratio of 1:4 and a Libor plus 1.75% and three-month Libor plus
minimum equity balance of US$1billion. On 1.25%.
Solidere Annual Report 2008
Income Tax
The applicable tax rate in Lebanon is 15%
according to the Lebanese tax laws.
17 DIVIDENDS
PAYABLE General Assembly
Date
Dividend
per Share Declared
Settled up to
December 31
2008
December 31
2008
Payable
2007
Payable
US$ US$ US$ US$ US$
The accrued income tax for the years 2008
and 2007 was estimated as follows:
2008 2007 June 29, 1996 0.20 30,918,413 29,188,749 1,729,664 1,816,808
US$ US$ June 30, 1997 0.25 40,367,172 37,309,656 3,057,516 3,177,015
June 29, 1998 0.25 39,351,753 35,693,765 3,657,988 3,793,403
Profit before tax 214,327,398 249,857,943 June 23, 2003 Stock dividend - 244,404 21,861 27,485
Less: income/(losses) of subsidiaries 796,923 (68,028,316)
June 12, 2006 0.6 94,831,106 87,983,253 6,847,853 10,803,149
Add: Non deductible provisions and charges 9,228,266 4,806,251
June 22, 2007 1.00 155,093,702 140,436,728 14,656,974 26,594,937
Less: Non taxable revenues (13,193,954) (13,954,898)
July 15, 2008 1.00 155,090,832 122,073,126 33,017,706 -
Taxable income 211,158,633 172,680,980
62,989,562 46,212,797
Applicable tax rate 15% 15%
Accrued income tax 31,673,795 25,902,147
Add: Income tax provision subsidiaries 113,336 95,904
Total accrued income tax 31,787,131 25,998,051 The General Assembly held on July 15, 2008
Less: Tax on interest previously settled (789,996) (345,288) decided to distribute dividends on the basis
Accrued income tax payable 30,997,135 25,652,763 of US$1 per share. Accordingly, the Group
recorded dividends payable in the amount of
Total accrued income tax 31,787,131 25,998,051 US$147.3million net of distribution tax in the
Less: Deferred tax assets Note 08(c) (178,678) (331,960) amount of US$7.75million. An amount of
Income tax expense 31,608,453 25,666,091 approximately US$122million was settled up
to December 31, 2008.
During 2008, the Companys accounts for the Municipality Tax The General Assembly held on June 22, 2007
years 2004 to 2006 were reviewed by the tax During 2008, the Group accrued for decided to distribute dividends on the basis
authorities which resulted in additional tax additional municipality tax liability for of US$1 per share. Accordingly, the Group
liability in the amount of US$3.7million. An previous years in the amount of recorded dividends payable in the amount of
amount of US$1.4million was charged to the US$2,326,425 recorded under Other taxes. US$147.3million net of distribution tax in the
income statement for the year ended amount of US$7.75million. An amount of
December 31, 2008 and recorded under VAT approximately US$140million was settled up
to December 31, 2008 (US$128million up to
Other taxes, and the balance was During 2007, the Companys VAT
132 transferred from provisions setup in previous declarations for the years 2003 and 2004 133 December 31, 2007).
years. The Group settled these taxes in 2009. were subject to review and final assessment
The outstanding balance of unpaid dividends
by the tax authorities. As a result of this
relates mostly to unclaimed dividends and
The tax returns for the years 2007 and 2008 review, an additional tax liability in the dividends pertaining to undelivered class (A)
are still subject to examination and final tax amount of US$670,059 was accrued for and shares.
assessment by the tax authorities. Any charged to the income statement under
additional tax liability is subject to the results Other taxes.
of this review.
Property Tax
Property tax payable in the amount of
US$2.11million as at December 31, 2008 is
18 DEFERRED REVENUES AND
OTHER CREDIT BALANCES
DECEMBER 31
(d) The movement of provision for end-of- Cash down payments and commitments on
service indemnity and other charges is as sale contracts include balances aggregating
follows: to approximately US$226million that relate
to 10 sale contracts with an aggregate
potential gross sales value of US$579million
2008 2007 as of December 31, 2008 (US$211million
US$ US$
relating to 13 sale contracts with an
aggregate potential gross sale value of
Balance at the beginning of the year 6,890,576 4,463,259
US$826.5million as of December 31, 2007).
Additions 1,499,712 2,876,491
Settlements (351,029) (449,174)
Deferred rental revenue and related deposits
Balance at the end of the year 8,039,259 6,890,576
represent down payments on lease and
rental agreements and reservation deposits
for the rental of real estate properties.
Solidere Annual Report 2008
The Company (seller) exercised the option to In July 2001, a complementary loan
19 DEFERRED CREDITS UNDER
STRUCTURED CONTRACTS
buy back the shares during the specified
period and therefore the Group retained the
agreement in the amount of US$10million
was signed with a resident foreign bank. The
21 CAPITAL
above mentioned shares. As a result, the total amount of the loan was withdrawn up to Capital consists of 165,000,000 shares of
Deferred credits under structured contracts group settled the liability in the amount of December 31, 2004. This loan shall be paid US$10 par value, authorized and fully paid
represented contracts executed with banks US$74,992,000, previously received and in 10 equal semi-annual installments and divided in accordance with Law 117/91
and involving put and call options on related accrued interest payable in the starting October 25, 2004 and ending April into the following:
treasury shares which are classified as amount of US$5,188,400. 27, 2009. An installment of US$2million was
interest bearing liabilities. made during 2008 in addition to settlements Class A, amounting to 100,000,000 shares
(b) The Group sold on September 7, 2007 to aggregating to US$7million from 2004 till represented contribution in kind of
(a) The Group sold on September 7, 2007 to a local bank, 5,540,000 shares (3,290,000 A 2007 and thus the balance of the loan properties in the BCD, based on the
a local bank, 4,360,000 shares (2,585,000 A shares and 2,250,000 B shares) from decreased to US$1million as of December resolutions of the High Appraisal Committee.
shares and 1,775,000 B shares) from treasury shares with a sale back option to 31, 2008. The loan is subject to an annual All Class A shares were deemed to have
treasury shares with a sale back option to the bank and a buy back option to the group interest rate of 3 months Libor plus 1%. The been issued and outstanding since the
the bank and a buy back option to the group for a total consideration of US$95,288,000 at Group shall maintain a pledged fund of not establishment of the Group.
for a total consideration of US$74,992,000 at US$17.2 per share. The sale back and buy less than 102% of all outstanding principal Class B, amounting to 65,000,000 shares
US$17.2 per share. The sale back and buy back option can be exercised at a strike price and interest amounts, and should maintain a represented capital subscription in cash and
back option can be exercised at a strike price of US$18.39 per share in the period starting debt to equity ratio not exceeding 25% and are all issued and fully paid at the
of US$18.39 per share in the period starting on March 10, 2008 and ending on September total tangible net assets should not be less establishment of the Group.
on March 10, 2008 and ending on September 10, 2008. The settlement is to be paid at the than US$1billion free from any liens
10, 2008. The settlement is to be paid at the latest on September 10, 2008, subject to including permitted liens. Class A and Class B shares have the
latest on September 10, 2008, subject to certain conditions specified in the contract. same rights and obligations.
certain conditions specified in the contract. The strike price represents the selling price Loan Guaranteed by Export - Import Bank
The strike price represents the selling price plus accumulated interest. of the United States As of December 31, 2008, the Group had
plus accumulated interest. In July 2001, the Group signed an Export 14,445,252 A shares listed on the London
The Company (seller) exercised the option to Financing Credit Agreement for the amount Stock Exchange in the form of Global
buy back the shares during the specified of US$14.71million to support the purchase Depository Receipts (GDR) (14,476,898 A
period and therefore the group retained the of engineering and construction services and shares as of December 31, 2007).
above mentioned shares. As a result, the equipment from the United States for the
group settled the liability in the amount of waste treatment project. This loan is
US$95,288,000, previously received and guaranteed by the Export-Import Bank of the
related accrued interest payable in the
amount of US$6,592,600.
United States and is financed by a resident
foreign bank. An amount of US$13.47million 22 LEGAL
RESERVE
134 135 had been drawn up to December 31, 2004.
During 2008, interest in the amount of Subsequent to that date, the Group made no In conformity with the Companys articles of
US$8,175,885 was charged and recorded withdrawals. This loan shall be paid by 10 incorporation and the Lebanese Code of
under Interest expense in the income equal successive semi-annual installments, Commerce, 10% of the annual net income is
statement. the first of which shall be due and payable required to be transferred to legal reserve
on October 25, 2004. An installment of until this reserve equals one third of capital.
US$2.7million was made during 2008 in This reserve is not available for dividend
addition to installments amounting to distribution.
US$9.45million from 2004 till 2007 and thus
20 LOANS FROM BANKS AND
FINANCIAL INSTITUTIONS
DECEMBER 31 2008
US$
2007
US$ the balance of the loan decreased to
US$1.34million as at December 31, 2008.
Local bank loan 1,000,000 3,000,000 This loan is subject to an interest rate of
Loan guaranteed by Export - Import
of the United States 1,347,054 4,041,163
0.25% per annum above Libor. According to
the contract terms, an irrevocable stand-by
23 TREASURY
SHARES
24 REVENUES FROM
RENDERED SERVICES
DECEMBER 31 2008
US$
2007
US$ 30 BASIC/DILUTED EARNINGS
PER SHARE
26 COST OF
SERVICES RENDERED
DECEMBER 31 2008
US$
2007
US$
(a) Non-cash transactions in the operating
and investing activities related to the
proceeds from recuperated properties are
Cost of services rendered to a related party 6,406,693 4,319,285 detailed as follows:
Cost of services rendered to clients 1,925 86,127
DECEMBER 31 2008 2007
Broad Band Network cost of services rendered 1,500,004 - US$ US$
7,908,622 4,405,412 Non-cash transfer of shares against
recuperated properties - (153,640)
Decrease in receivables from recuperated properties - (63,368)
- (217,008)
DECEMBER 31 2008 2007
27 GENERAL AND
ADMINISTRATIVE EXPENSES US$ US$
(b) Depreciation was applied as follows:
136 Salaries, benefits and related charges 13,879,041 12,787,089 137
Board of directors remuneration 144,000 144,000 DECEMBER 31 2008 2007
Administrative expenses 5,328,641 5,155,634 US$ US$
19,351,682 18,086,723
Depreciation of fixed assets - Note 14 5,349,366 2,740,034
The Group reallocated salaries, benefits and Depreciation of investment properties - Note 12 3,275,539 2,740,934
related charges and administrative expenses Less: Depreciation allocated to inventory of land
amounting to US$3.3million to construction and projects in progress and other debit
cost during the year ended December 31, balances Note 11 (836,687) (1,140,093)
2008 (US$2.8million during the year ended Depreciation charge for the year 7,788,218 4,340,875
December 31, 2007). During 2008, the Group
increased the salaries of its employees in
accordance with Decree 500 dated October (c) Interest expense consists of the following:
24, 2008.
DECEMBER 31 2008 2007
US$ US$
(d) Non-cash transactions in operating and (f) Non-cash transactions in investing The Group incurred various expenses on plus interest. This balance represents
investing activities include transfers from activities include the effect of change in fair behalf of its related parties whose total payments previously made by the CDR in
inventory of land and projects in progress to value of available-for-sale securities in the balances due amounted to US$5,864,520 as connection with the appraisal of the
investment properties in the amount of amount of US$217,800 offset against of December 31, 2008 (US$3,808,163 as of properties in the BCD area and other tender
US$80,744,285 for the year ended December Cumulative change in fair value of December 31, 2007). documents. No provision was set up against
31, 2008 (US$10,580,812 for the year ended available-for-sale securities and Accounts this claim since, on the basis of the advice
December 31, 2007). payable and other liabilities in the amount Aswaq Management and Services LLC received from the Groups legal advisor, the
of US$185,130 and US$32,670, respectively, provided consultancy services to Beirut Real directors are of the opinion that this claim is
(e) Non-cash transactions in operating and for the year ended December 31, 2008 Estate Management and Services sal not based on sound legal grounds.
investing activities include transfers from (US$173,520 offset against Cumulative (BREMS) for the amount of US$27,344 for
inventory of land and projects in progress to change in fair value of available-for-sale the year ended December 31, 2007. The Group has submitted to the CDR
fixed assets in the amount of US$2,400,043 securities and Accounts payable and other claims aggregating US$13.6million
for the year ended December 31, 2008 liabilities in the amount of US$147,492 and During 2008, the Group charged Solidere representing mainly change orders to
(US$8,003,723 for the year ended December US$26,028, respectively for the year ended International Limited, an associate, infrastructure works in the traditional BCD
31, 2007). December 31, 2007). administrative expenses amounting to which were incurred by the Group on behalf
US$5,863,908 (US$2,262,480 for the year of the Government. These claims were
(g) During the year ended December 31, 2007), in addition to an amount of US$81,319 neither approved nor confirmed by the
2008, the Group transferred US$1,224,748 (US$322,470 for the year 2007) representing concerned party nor recorded as receivables
from real estate development projects to payments on its behalf. in the accompanying financial statements.
fixed assets.
Total benefits paid to executives and (e) The Group is a defendant in various legal
(h) During the year ended December 31, members of the Board of Directors proceedings and has litigations pending
2008, the Group transferred US$1,529,611 (including salary, bonus and others), before the courts and faces several claims
and its related depreciation in the amount of included within General and administrative raised by contractors. On the basis of advice
US$194,009 from investment properties to expenses, for the year ended December 31, received from the external legal counsel and
fixed assets. 2008 amounted to US$2,924,476 the Groups technical department, the
(US$2,865,545 for the year ended December directors are of the opinion that any negative
(i) During the year ended December 31, 31, 2007). outcome thereof, if any, would not have a
2008, the Group transferred US$527,335 material adverse effect on the financial
from fixed assets to investment properties. Income arising and expenses incurred from condition of the Group.
the Groups transactions with other related
(j) Cash and cash equivalents comprise of parties, other than those disclosed in the (f) On June 7, 1997, the Group signed an
the following: financial statements, do not form a exchange agreement with the Lebanese
138 139 significant portion of the Groups operations. Government. By virtue of this agreement, the
Group acquired additional built up area of
DECEMBER 31 2008 2007
approximately 58,000m and 556,340 Class A
US$ US$
shares in exchange for approximately
15,000m and the payment of US$38.7million
Cash
Current accounts
88,252
7,921,544
85,026
11,064,074
33 COMMITMENTS AND
CONTINGENCIES to restore governmental buildings.
Short term deposits 278,613,353 US$25million has already been paid and
309,513,061 (a) An agreement between the Company and accounted for and the balance of
Bank overdrafts (176,996,835) (181,186,491) the Council for Development and US$13.8million continues to be included
109,626,314 139,475,670
Reconstruction (CDR) was promulgated under accounts payable. According to the
through Decree No. 5665 dated September terms of the agreement, the Group
21, 1994, duly approved by the Council of undertook to build a governmental building
Ministers. By virtue of this agreement, the and to conclude ten finance leases over
Bank overdraft and short term facilities Company was granted 291,800m of the seven years for certain buildings belonging
32 RELATED PARTY
TRANSACTIONS
include US$110,453,028 as of December 31,
2008 (US$110,668,330 as of December 31,
reclaimed land surface (totaling 608,000
sqm) against the execution by the Company
to the Lebanese Government. In 1999, the
government canceled the exchange and
2007) representing short term facilities with of the sea landfill and infrastructure works. finance lease agreement. The
These represent transactions with related a local bank who is a significant but minority implementation and the effect of
parties, i.e. significant shareholders, shareholder of the Group. (b) The total projected cost for completion of cancellation is not yet determined and has
directors and senior management of the the BCD project has been estimated by not been reflected in the accompanying
Group, and companies of which they are Certain directors are members of the boards management to be approximately financial statements.
principal owners and entities controlled, of directors of banks with whom the Group US$2billion. This amount is used as a base
jointly controlled or significantly influenced has various banking activities. for the determination of cost of sales. (g) In prior periods, the Group submitted to
by such parties. Pricing policies and terms of the Ministry of Culture and Higher Education
these transactions are approved by the General and administrative expenses include (c) Commitments for contracted works not claims totaling US$17.7millions representing
Groups management. legal fees in the amount of US$120,000 for executed as of December 31, 2008 amounted compensation for delays that resulted from
the year ended December 31, 2008 related to to approximately US$46.5million excavation works. These claims were not yet
Cash and bank balances include one of the firms legal counselors who is (US$88.5million as of December 31, 2007). approved nor confirmed by the concerned
US$54,009,732 as of December 31, 2008 also a member in the Companys board of authorities nor recorded as receivables in
(US$162,113,039 as of December 31, 2007) directors (US$120,000 for the year ended (d) A lawsuit was raised in 1999 against the the accompanying financial statements.
representing current bank accounts with a December 31, 2007). Group by the CDR claiming reimbursement
local bank who is a significant but minority of an amount of LL5.4billion (US$3.6million)
shareholder of the Group.
Solidere Annual Report 2008
(h) The Group has as a stand-by letter of On June 21, 2004, the contractor requested The Group monitors capital on the basis of
credit in the amount of US$3,566,993 to be arbitration in a second case against the the debt-to-capital ratio (gearing ratio). The
gradually decreased starting June 2007 to Group to confirm the right to extend the gearing ratio as at December 31, 2008 and
reach US$3,035,622 in June 2011. This projects execution period and increase the 2007 was as follows:
instrument is issued in guarantee of the cost of works. The total claims by the
US$14.7million US Export Import Bank of the contractor in this arbitration amounted to DECEMBER 31 2008 2007
United States facility whose outstanding US$32million representing the increase in US$ US$
balance amounted to US$1.35million as of the cost of works, other unpaid amounts and
Total consolidated liabilities 594,167,858 737,225,830
December 31, 2008 (US$4.04million as of amounts the contractor alleged to have been
Less: Cash and bank balances (291,703,019) (327,847,633)
December 31, 2007). Throughout its life, this illegally withdrawn by the Group from the
Total debt 302,464,839 409,378,197
stand-by letter of credit shall be fully performance bond mentioned above.
covered by a cash collateral (Note 07). Total equity 1,859,664,619 1,832,028,785
During 2005 and early 2006, both the Group Gearing ratio 16% 22%
(i) For the purpose of enhancing and and the contractor filed counter arbitrations
improving land value in Zokak Al Blat area against each other that were still pending as
and to settle the recuperation of a lot in that at December 31, 2007.
area, the Group signed in 2002 an agreement
with the Armenian Orthodox prelacy to
demolish the building on the recuperated lot
On January 30, 2008, the parties exchanged
post-hearing written pleadings summarizing
35 RISK
MANAGEMENT
37 APPROVAL OF FINANCIAL
STATEMENTS
BOARD OF
DIRECTORS
Sarkis Demerjian
Abdulhafiz Mansour
Sami Nahas
Joseph Asseily
Fouad el Khazen
Vice Chairmen
Nabil Boustani
Maher Beydoun
General Manager
Mounir Douaidy
Maher Daouk
SHAREHOLDERS
BOARD OF DIRECTORS
GENERAL MANAGEMENT
Chairman and General Manager
General Manager
Financial Treasury Corporate Legal Administration Sales Marketing Urban Tendering Hospitality Broadband Corporate Public Property Infrastructure Operations Real Estate
Accounting and Financial Finance and Business Management Contracting Management Network Reporting and Relations and Administration and Site Maintenance Development
Control Development and Systems Publications Communication Logistics and Technical
Procurement Services
IT/IS General Treasury Financial Legal Human Land Urban Tendering for Research Reporting Promotion Contract Infrastructure Real Estate Restoration
(MIS) Accounting and Cash Analysis Counsel Resources Sales Design Infrastructure and Editorial and Advertising Administration Execution and Operations and
Management and Modeling Activities Maintenance Maintenance
Corporate Taxation Stock Business Contract General Real Estate Town Tendering for Creative Artwork Media Recuperation Landscape CCTV New
Systems Management Planning Structuring and Services Leasing Planning Construction and Production Relations Execution and Surveillance Developments
Management Projects Maintenance Network
Investor Financial Budget Corporate International Beirut Development Procurement Website Events Public Car Parking Beirut Third-Party
Relations Statements Control Funding Projects Support Souks Control of Services Development and Activities Services Facilities Marina Developments
and Supplies
Risk Audit Financial Financial Business Property International International Property Site Logistics Technical Support
Management Relations Reporting Markets Development Control Projects Projects Management Support Services
Reporting and Communication Services
Publications
International Landscaping Relations
Projects Support and Public with Public
Space Design Authorities
International Property
Projects Support Fiscal
Management