Dubai Holding's main unit reported a 61-per cent rise in yearly profits on Wednesday thanks to lower impairment charges and the disposal of non-core assets which helped offset a decline in revenues.

Dubai Holding Commercial Operations Group (DHCOG), part of the Dubai ruler's personal business empire, posted a net profit of Dh204 million ($55.53 million) in 2011, an increase of 60 per cent compared to Dh127 million last year.

DHCOG, which comprises four business subsidiaries: Jumeirah Group, Dubai Properties Group, Tecom Investments  and Emirates International Telecommunications, said its recurring revenues increased by 7 per cent to Dh6 billion, while total revenues stood at Dh8.8 billion.

Total assets of the group stood at Dh97.4 billion, while total debt decreased by Dh1.24 billion and debt-to-asset ratio improved to 0.13, and debt-to-equity ratio also improved to 0.93.

Ahmad Bin Byat, chief executive officer of Dubai Holding, said: “The positive results of 2011 demonstrate DHCOG’s resilience and strong business fundamentals across the portfolio. Despite continued challenging economic conditions globally, 2011 proved to be a good year for DHCOG. The deleveraging of our debt commitments has been one of the highlights of 2011 and will continue to be our priority in the years to come.”

“Our recurring and sustainable revenues improved by 7 per cent in 2011. Total revenues for the year amounted to Dh8.8 billion, of which Dh6 billion were recurring revenues. In line with our strategy of strengthening the recurring income streams, properties and land sales represented only 31.6 per cent of our total revenue in 2011, compared to 58.1 per cent in 2010.”

“The Group is well positioned, with long-term recurring revenues and a diverse portfolio of income-generating assets, to build on the healthy performance of our underlying businesses.  We have a robust balance sheet, which provides us with the flexibility to support our businesses in delivering strong performance and revenues,” Bin Byat added.

Assets, liabilities and debt

DHCOG’s total assets stood at Dh97.4 billion. Current liabilities decreased from Dh31.2 billion in 2010 to Dh26.6 billion in 2011, down 15 per cent due to a decline in trade payables, customer advances and contractor liabilities. DHCOG concluded the year with a strong cash balance of Dh2.3 billion, an increase of 50.5 per cent compared to Dh1.5 billion in 2010.

DHCOG deleveraged its debt commitments, by paying down the CHF 250 million bonds in July 2011 through cash generated from operations and from sales of non-core assets.

It further paid down $500 million bonds which matured in February 2012. Repayment of the bonds, along with consistent and strong operating performance, triggered positive rating actions by Fitch Ratings and Moody’s Investors Service, both of which placed DHCOG on a stable outlook in February 2012.

Bin Byat added: “The company has robust hotel management, telecommunications, free zone and property businesses that contribute a healthy cash flow. DHCOG is committed to meeting its financial obligations as and when they fall due.”

“The outlook for DHCOG and its subsidiaries remains promising on the back of stabilising economic conditions,” Bin Byat noted.

“DHCOG has made considerable strides to improve its balance sheet and reduce its debt position.  We look ahead into 2012 with great optimism about the medium- and long-term outlook for our businesses as we continue to drive operational efficiencies to deliver even stronger operating performance,” he concluded. – TradeArabia News Service & Reuters