Dubai: Aldar Properties has pulled off another strong set of profit numbers, with net profits of Dh620 million in the first three months of the year, up 36 per cent on comparable period last year. Gross profit margins were up a robust 47 per cent in the latest reporting period, up on the 20 per cent in the first quarter of 2014.
But revenues came in lower, at Dh1.38 billion from the Dh1.72 billion for the first three months of last year.
“Our balance sheet continues to go from strength to strength and we remain committed to our debt strategy,” said Mohammad Al Mubarak, CEO.
According to a senior official, all of the operating segments turned in strong performances, with the first full quarter of trading at Yas Mall adding heft to the financials.
“It will take a full 12 months for the Yas Mall [revenue stream] to stabilise,” said Greg Fewer, Chief Financial Officer at Aldar. “As of now, 75 per cent of the area has become operational and more will start taking up their spaces by July/August.” (As of the first quarter, 320 outlets were open at the Mall.) Gross profit from recurring revenues were up 61 per cent to Dh368 million on a year-on-year basis. The cash position was Dh5.2 billion as of March end.
Meanwhile, the developer confirmed gains were also made on the cost side. It paid off Dh1 billion in January, following the “receipt of a scheduled payment from Abu Dhabi Government”, the statement said. The gross debt has been reduced to Dh8.2 billion, from Dh9.2 billion as of December 31, 2014.
“We have managed to keep the cost base down — in the first quarter of 2014, we had Dh11.1 billion in debt and more to the point, it cost us 5 per cent on an annualised basis to hold that,” said Fewer. “But we have gone through a strategic refinancing post-merger (with Sorouh), after we convinced the banks and credit rating agencies of the combined entity’s strengths. We were helped by gaining five notches in the ratings [in the last 24 months], and those processes have helped with the refinancing.
Launch pipeline
“[In the 12-month period up to end the first quarter of 2015], we had a 26 per cent reduction in our debt levels, and a 59 per cent reduction in our financing costs [brought about by the refinancing].”
The plan is to pay off another Dh400 million this year and the guidelines are to knock off a substantial portion of the rest next year. Fewer said there were no specific plans to bring forward any of the repayments schedule. (The debt target by 2016 is Dh6 billion.) The launch pipeline continues to be robust, with Aldar being the only developer in Abu Dhabi to maintain a succession of these in recent quarters. Of late, it has also been getting into selling plots in a big way.
“It’s a deliberate process and where possible, will bring in sub-developers to add value to the destinations we are creating,” said Fewer. “With a land bank as large as ours, we could have continued with the programme of launching, selling and building projects on our own. But having sub-developers does help immensely in the destination building process.”
In the first quarter, 168 units were handed over to their owners. It booked new sales of Dh1.2 billion during the same period, following the launch of Nareel Island and Al Merief.
