04 August, 2015
Aldar Properties CEO, Mohammed Al Mubarak commented:
"Aldar had a strong second quarter driven by the continued growth and stabilisation of our recurring revenue asset portfolio. This has resulted in an improvement in the underlying quality of earnings.
We remain on track to meet our target level of debt and have paid off a further AED 1.1 billion during the quarter. Positive interest in our new developments - Nareel, Al Merief and Meera - demonstrates that we are bringing the right products to market at the right time.
Our strategy remains unchanged. We continue to grow our recurring revenues, strengthen our balance sheet and monetise our land bank through implementing a clear and well defined development plan".
Net profit up 18% to AED 601 million from AED 509 million due to the continued growth in recurring revenues, higher development margins and lower finance costs.
Gross profit from recurring revenue assets grew 60% in Q2 2015 to AED 340 million from AED 213 million driven by the contribution of the fully leased and occupied residential portfolio at The Gate Towers and al rayyana; and revenues from Yas Mall.
Strong cash flow generation following collection of AED 1.2 billion government and land plot receivables.
Gross debt reduced by AED 1.1 billion to AED 7.1 billion, down from AED 8.2 billion as at 31 March 2015.
Operational and development highlights
AED 1.9bn of sales generated in H1 2015 following the launches of Nareel Island Phase I & Phase II, Al Merief and Meera Phase I.
340 units now trading at the fully leased Yas Mall; anchor tenant House of Fraser opened in June 2015.
Main construction contracts awarded at Ansam and Hadeel; both projects progressing well.
Abu Dhabi, 3 August 2015 : Aldar Properties PJSC, Abu Dhabi's leading listed property development, investment and management company, today announced net profit up 18% to AED 601 million (Q2 2014: AED 509 million). This was a result of the growth in recurring revenues, higher development margins and lower finance costs following significant refinancing and deleveraging efforts over the last 24 months.
Revenues for the second quarter 2015 were AED 1,106 million compared to AED 2,194 million in the second quarter 2014. Q2 2015 gross profit margin was 45%, up from 15% in the second quarter of 2014. Development revenues were AED 318 million during the quarter.
Nareel sales have now reached AED 1.0 billion following the successful Phase II launch.
In June 2015, Aldar launched Meera, a residential development on Shams Abu Dhabi, Al Reem Island. Meera, a mid-market product, features two 26-storey towers overlooking a landscaped park, with one, two and three-bedroom apartments. Meera Phase I sales are complete with 150 units sold.
Recurring revenue asset performance
The expanded recurring revenue asset base which includes retail, residential, office and hotel assets grew significantly quarter-on-quarter. This was driven by the growth in the residential portfolio, following the leasing of over 3,000 units at The Gate Towers and al rayyana as well as the trading progress at Yas Mall. The recurring revenue assets include:
4,800 unit strong residential portfolio achieved occupancy of 98% as at 30 June 2015.
Total retail GLA of 470,000 sqm across 27 retail destinations.
Yas Mall, Aldar's flagship retail development, fully leased and as of the period end with currently 340 stores trading.
Occupancy increased to 91% leased across the 184,000 GLA office portfolio.
H1 2015 occupancy across the hotel portfolio at 81%, in line with H1 2014.
During the quarter Aldar repaid a further AED 1.1 billion of loans from excess cash in the business, reducing gross debt further to AED 7.1 billion.
Aldar's cash position marginally increased to AED 5.3 billion of cash as at the end of the second quarter 2015 following the receipt of AED 1.2 billion in government infrastructure receivables, offset by the debt repayments mentioned above.
Early adoption of IFRS 15
In July 2015, Aldar announced that it had made the decision to adopt IFRS 15 revenue recognition accounting policy early, ahead of mandatory adoption from 1 January 2018. IFRS 15 will be adopted effective from 1 January 2015.
The most significant impact from IFRS 15 adoption relates to how Aldar recognizes revenue for off-plan development projects, which will now be predominantly accounted for over-time, in line with the contract terms.