Aldar Properties net profit up 13% to Dh2.56b

Aldar Properties, the Abu Dhabi-based real estate developer, on Monday reported Dh2.56 billion in net profit for 2015, marking a 13 per cent increase over the Dh2.27 billion reported in 2014.

The results put net profit for the fourth quarter of 2015 alone at Dh749.9 million — up 4.4 per cent from the Dh718 million reported over the same period in 2014.

Revenues for the full year reached Dh4.58 billion, falling 30 per cent from the Dh6.55 billion recorded in 2014.

Aldar proposed a cash dividend of 10 fils per share — up from 9 fils per share in 2014.

Full-year gross profit from recurring revenues rose 49 per cent to Dh1.5 billion in 2015 supported by the stabilisation of key assets like Yas Mall.

Talal Al Dhiyebi, Aldar’s chief development officer, told Gulf News by email that despite seeing “a slowdown in the broader market over the last three months”, the company continued to see demand for residential property.

“We’re conscious of market conditions and will price accordingly. We are confident that demand will remain strong for high quality products, which we are focusing on,” he said.

Al Dhiyebi added that Aldar was looking at a launch cycle of around 1,500 residential units a year.

Meanwhile, analysts said the performance was “satisfactory” as core earnings were largely in line with market consensus.

Vijay Harpalani, fund manager at Al Mal Capital, pointed to the improved balance sheet position along with the reduction in leverage and strong operating cash flows.

“Higher proportion of recurring revenues, strong balance sheet, and cash flow profile should support 2016 performance. However, given uncertain macroeconomic environment and escalation in geopolitical risks, investors are shying away from assigning premium valuations even to quality stocks,” he said.

Harpalani added that amid the negative sentiment dominating equity markets, risk-taking was not rewarded. Hence, corporate announcements including financial results may not have much impact on trade activity.

On Monday, Aldar’s share prices were down 0.84 per cent on the Abu Dhabi Securities Exchange (ADX) to reach Dh2.36. The shares were the mostly actively traded on ADX in terms of trade value.

Commenting on falling revenue, Harpalani pointed that Aldar had recently adopted the IFRS 15 revenue recognition policy.

“I think comparing 2015 revenue with the previous year is not appropriate due to material change in revenue recognition policy in 2015. Revenue from property development business in 2014 was recorded as per completed contract basis, while, in 2015, when IFRS 15 was applied, revenue bookings happened on percentage completion basis,” he said.

Debt financing

According to Aldar’s results statement, debt stood at Dh6 billion at the end of 2015 — down from Dh9.1 billion at the end of 2014, in line with the company’s policy for debt to be between 35-40 per cent of investment value.

Greg Fewer, Aldar’s chief financial officer, said the company’s debt payments conclude the deleveraging cycle that Aldar has been in for the last several years.

“We will be actively looking at extending the duration of that Dh6 billion by monitoring both bank and bond markets for refinancing opportunities. To be clear, though, that categorically does not mean we will restructure any of our existing bonds,” he told Gulf News.

Fewer told news agencies in a conference call that Aldar is talking to banks on extending maturities on debt, which in addition to a $750-million sukuk issue includes loans maturing in the next three years.

Asked about a recent fire at one of Aldar’s projects in Kazakhstan, Fewer told Reuters that the company is unlikely to see any financial impact from the fire as it is not the owner of the development but a contractor.

 Source: Sarah Diaa, Staff Reporter,


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