Dubai: Dubai Holding Commercial Operations Group (DHCOG) reported revenue of Dh9.5 billion for the year ended December 31, 2009 compared to Dh13.2 billion in the same period the previous year.
DHCOG recorded a net loss of Dh23.56 billion for 2009 including Dh22.5 billion in impairment charges compared to a net profit of Dh10 billion in 2008.
"The decline in revenues and operating profits is mainly attributed to a decrease in land sales due to the significant reduction in market demand and delays in project handovers; such projects include parts of the Business Bay — Executive Towers project and The Villa Phase I among others," said Ahmad Bin Byat, Chief Executive of Dubai Holding in a statement to Nasdaq Dubai.
DHCOG's total assets were down to Dh124.5 billion last year compared to Dh171.4 billion in 2008 due to the significant decline in the real estate market. As a result, the company took impairment charges, and shareholders' equity was reduced to Dh14.6 billion last year against Dh37.1 billion in the previous year.
Dubai Holding annual report 2009 (pdf)
"Impairment charges recorded were in accordance with International Financial Reporting Standards (IFRS), reflecting our conservative view of the real estate market," said Bin Byat.
Consolidation
DHCOG carried out a major re-alignment of its business during 2009, including the consolidation of its real estate businesses, Sama Dubai, Tatweer Dubai and Dubai Properties Group. In 2009, DPG deferred hand-over of some projects.
In addition, challenging market conditions have driven the decision to conservatively take impairment charges on its real estate portfolio.
However, most of the firm's remaining projects will commence delivery in 2010, a statement said, and "this will reflect positively in the financials".
The company said it has undertaken a rigorous internal re-alignment of various subsidiaries and the outlook is bright.
"As a result of the measures we took in 2009, DHCOG is well placed to meet its financial obligations in 2010. There is no need to restructure outstanding debt as discussions are taking place with banks to roll over our existing facilities at commercial terms," Bin Byat said. The company expects the real estate market to continue to face challenges in 2010 and 2011.
"The impairment was pretty huge. This has wiped out almost 20 per cent of the group's asset value," said Saud Masoud, an analyst with UBS.
"I see a very challenging outlook for the property sector. What you have here is more oversupply, less demand and banks' reluctance to lend."
In the hospitality segment, Jumeirah Group was less impacted due its strong brand, high-end appeal and higher value proposition. In 2009, Jumeirah Group's traditionally strong occupancy rates fell only slightly.
Tecom Investments' business parks maintained strong growth and profitability. The business parks achieved strong occupancy rates, the statement said.
Sukuk reinstated
Following the announcement of its annual results yesterday, the Dubai Holding Commercial Operations MTN (Sukuk) was officially reinstated to the official list of traded securities on Nasdaq Dubai.
The exchange said on its website the suspension of the sukuk will be lifted with immediate effect and the instrument will be reinstated to the official list.
