Dubai Holding Commercial Operations Group (DHCOG), which owns Dubai Properties Group, TECOM Investments and Jumeirah Group, has announced its audited financial results for the full year ended December 31, 2009.
Total revenue: AED 9.5 billion
Assets valued at AED 124.5 billion
Net loss (excluding impairments): AED 1.0 billion
Impairment charges: AED 22.5 billion
EBITDA (excluding impairments) AED 1.0 billion
Realignment of business including consolidation of real estate companies Sama Dubai LLC, Tatweer Dubai LLC into Dubai Properties Group
DHCOG's total revenue reached AED 9.5 billion for the year ended 31 December 2009, a 28% decrease from AED 13.2 billion in 2008. DHCOG's total assets contracted to AED 124.5 billion, from AED 171.4 billion in 2008. DHCOG recorded a net loss (excluding impairments) of AED 1.0 billion for the year ended 31 December 2009, compared to an AED 17.4 billion net profit in 2008. Impairment charges on the Statement of Income for the year ended 2009 stood at AED 22.5 billion as compared to AED 7.6 billion in 2008. Impairment charges recorded were, in accordance with International Financial Reporting Standards, reflecting our conservative view on the real estate market.
The decline in revenues and operating profits reflect the decrease in land sales due to the significant reduction in demand within the real estate market and the re-phased handovers of projects. Nevertheless, a number of major projects were delivered by Dubai Properties Group in 2009, including the first phase of The Villa and Shorooq. Most of the remaining projects will commence delivery during 2010 and this will reflect positively in the financials.
In 2009, the global hospitality industry faced challenges due to recessionary forces driving occupancy and Revenue Per Available Room (RevPar) levels down. 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 amid the economic downturn to 73.4 per cent across its portfolio. The Group finished 2009 in a commendable financial position with robust performance in net profit.
Despite the challenging market conditions in 2009, TECOM Investments' business parks maintained strong growth and profitability as a result of its unique market position. Although the commercial real-estate market in Dubai experienced a price correction, unlike its competitors, TECOM Investments did not respond by significantly dropping its lease rates. The business parks achieved a strong occupancy rates in its business parks, driving strong sustainable revenue.
Ahmad Bin Byat, Chief Executive Officer, Dubai Holding said: "We have carried out sound strategic measures in 2009, in the form of business re-alignment and financial initiatives, which place us in a strong position to capitalize on opportunities during the recovery phase.
"After taking substantive measures to address cash preservation and optimization of working capital, we are a stronger, leaner and more robust organization that is ready to capitalize on future growth opportunities. Our ability to adapt quickly and effectively to changes in the global economic environment, and to re-focus our efforts and strategies, gives me great confidence for the years ahead".
DHCOG carried out a major re-alignment of its business during 2009, including the consolidation of its real estate businesses, Sama Dubai LLC, Tatweer Dubai LLC and Dubai Properties Group, which enabled the Group to be more efficient and resilient to external global market shocks.
"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.
During 2010 it is expected that the real estate market will stabilize and then steadily recover from 2011 onwards. By 2012, Dubai Properties Group expects to complete and hand over approximately 21,000 units. The Group has a large strategic land bank for future developments and is well placed, therefore, to take advantage of market opportunities as the recovery gathers pace.
In spite of the economic downturn, Jumeirah Group is making excellent progress on its global expansion with 32 signed management agreements, 20 hotels under construction and expectations that at least ten of these will open during the next 18 months. Recently Jumeirah Group reaffirmed its growth strategy of having 60 hotels under agreement, in development or open by 2012.
TECOM Investments' Business Parks are well positioned to take advantage of the emerging opportunities due to their diversified customer base, competitive pricing and improved operational efficiency. Telecom sector has proven resilient to the economic downturn and all of the investments by TECOM Investment's telecom subsidiary, Emirates International Telecom (EIT), are expected to continue to perform strongly, delivering both revenue and net income growth.
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