Aldar Properties yesterday reported an 18 per cent annual increase in net profit for the second quarter.
The company attributed the rise to higher recurring revenues from its retained portfolio, as well as higher development margins and lower finance costs.
The Abu Dhabi-listed developer made a net profit of Dh601 million, compared with Dh509m in the same period last year. This is despite revenue halving in the period to Dh1.1 billion from Dh2.2bn in the second quarter of last year as fewer completed properties were handed over. Profit for the six months to June 30 increased by 21 per cent to Dh1.2bn, although revenue was 42 per cent lower at Dh2.3bn.
Aldar’s chief financial officer Greg Fewer said that the 2014 revenue figure was much higher because it handed over 3,500 units to customers during that period – mainly at The Gate Towers at Shams Abu Dhabi and the Al Rayanna development near Abu Dhabi Golf Club.
“We recognised 100 per cent of the profit for those at the end of the second quarter of 2014 and in the adjacent quarters,” said Mr Fewer. “We’re in a different cycle now and a different accounting regime.”
The company recently adopted the IFRS 15 accounting standard. This allows it to recognise revenue from customers who purchase an off-plan property over the lifespan of its construction as opposed to a lump sum once clients take possession.
The company said that gross profit margins were up 60 per cent as a result of growth in recurring revenues, driven by the leasing of more than 3,000 units at Gate Towers and Al Rayana and income from Yas Mall, which opened last November.
Of the 4,800 residential units it has in its leasing portfolio, 98 per cent were occupied at the end of June. Of its 184,000 square metre office portfolio, 91 per cent had also been taken up.
Aldar said it had generated Dh1.2bn in cash from the sale of land plots and from government income, which has helped it to cut a further Dh1.1bn off a debt pile that now stands at Dh7.1bn – down from Dh13.7bn 18 months ago.
Mr Fewer said that Aldar is "very, very comfortable with our debt levels". He added: "We have scheduled amortizations due in the fall and in December, but I wouldn't expect any large-scale movements."
During the first six months of the year, Aldar achieved new sales of Dh1.9bn – Dh1bn of which came from land plots at its Nareel Island project. Two main construction contracts were awarded for the Anseem and Hadeel projects, but Aldar did not say which contractors had been appointed.
Harshjit Oza, the assistant director of research at Naeem Brokerage, said that Aldar’s results were ahead of expectations. He said that the firm’s profitability had been boosted by land sales and Government payments – it was paid Dh2.5bn of money owed to it by the Government during the first half of this year.
“In terms of the market, all of the GCC countries are facing challenges due to the commercial environment caused by the decline in oil prices, but we haven’t seen that in the results of real estate companies. This shows that there is still genuine demand.”
mfahy@thenational.ae
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