Aldar Properties net profit up 18% to Dh601m

Aldar Properties PJSC , Abu Dhabi's leading listed property development, investment and management company, yesterday announced net profit up 18% to Dh 601 million (Q2 2014: Dh 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.

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 Dh 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,' he said.

'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."

Revenues for the second quarter 2015 were Dh 1,106 million compared to Dh 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 Dh 318 million during the quarter.

Development update Nareel sales have now reached Dh 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: Residential 4,800 unit strong residential portfolio achieved occupancy of 98% as at 30 June 2015.

Retail 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.

Offices Occupancy increased to 91% leased across the 184,000 GLA office portfolio.

Hotels H1 2015 occupancy across the hotel portfolio at 81%, in line with H1 2014.

Financial strength During the quarter Aldar repaid a further Dh 1.1 billion of loans from excess cash in the business, reducing gross debt further to Dh 7.1 billion.

Aldar 's cash position marginally increased to Dh 5.3 billion of cash as at the end of the second quarter 2015 following the receipt of Dh 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 recognises revenue for off-plan development projects, which will now be predominantly accounted for over-time, in line with the contract terms.