Profit rises 50% for Dubai’s Damac Properties

Damac Properties reported a net profit of Dh1.4 billion for the second quarter of 2015 on the back of revenues of Dh2.3bn.

The company said that a comparison to last year’s figures was not possible as it had listed on the Dubai Financial Market only in January this year. But if figures for its former London-listed subsidiary Damac Real Estate Development (Dred) are used, they equate to a 52 per cent increase in net profit and a 14 per cent rise in revenues.

Damac said it would pay an interim dividend of 10 per cent cash and 10 per cent bonus shares.

During the first six months of the year, it achieved a net profit of Dh2.7bn, 57 per cent higher than the Dred figure for last year, while turnover was 30 per cent higher at Dh4.7bn.

As well as the change in its parent entity, Damac also adopted the new IFRS 15 accounting standards, which allow it to recognise revenues from portions of off-plan sales before the buildings are completed.

Mohammad Kamal, research director at the Dubai-based investment bank Arqaam Capital, said the IFRS 15 standards had contributed to the growth reported in these new figures.

“When you sanitise for IFRS, then quarter-on-quarter hand-overs have slowed down and land sales have also dropped off a little bit,” he said.

Property sales fell to Dh2.3bn for the second quarter, compared to Dh2.8bn in the first quarter. Despite this, the firm continues to achieve strong margins, particularly on development properties, he added.

The chief financial officer Adil Taqi said the second-quarter results included much more of the traditionally quieter Ramadan period than 2014, but that it had since experienced a strong month in July and a good start to the second half of the year.

He said new sales should hit about Dh10bn for the year, a dip from the Dh11.5bn it achieved last year when it had an “exceptional” first quarter.

Despite this, he said the company was pleased with its results.

“The market has told us that it likes what it saw,” Mr Taqi said, referring to a 15 per cent increase in its share price to Dh3.68 by the end of the day.

“We have sold well, we have delivered well and we continue to be optimistic about the future. We are confident about the prospects for 2015.”

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