Sorouh posts 39% drop in Q4 net profit

Sorouh Real Estate, the Abu Dhabi-based real estate developer, on Thursday announced net profit for the fourth quarter of AED28.1m, a drop of 39 percent on the same period in 2008, after the company decided to increase provisions following a review of assets.

Revenues for the fourth quarter were AED438m, compared to AED532m for Q4 2008, principally driven by the sale of land into a new joint venture company and recurring rental income, the company said in a statement.

Abubaker Al Khouri, managing director, said the company had performed "credibly" during 2009, adding that the company was approaching this year with "cautious optimism".

Sorouh said it continued to focus on improving the quality of its earnings in 2009 by increasing the amount of recurring income from leasing and rental properties.

It added that "due to recent market events and current economic conditions", Sorouh undertook a comprehensive review of all its assets in Q4 "to ensure that values are accurately and prudently reported".

As a result of this review, the company said it had decided to increase provisions by AED242m.

Revenues for the full year were AED3.1bn, down from AED3.7bn the previous year.

Net profit for the full year, after provisions, was AED495m, compared to AED1.8bn for 2008.

The company added that over the course of the year, it had cut operating and sales and marketing expenses by 41 percent. to AED 233m (FY 2008: AED 394m) on a like-for-like basis.

It said its net assets as at the end of 2009 totalled AED6.1bn while total bank borrowings were AED132m, representing a debt-to-equity ratio of 2 percent. Sorouh said all its Abu Dhabi developments "remain on track" with the focus being on maintaining delivery schedules with the Sun Tower and Sky Tower, at the entrance to Shams Abu Dhabi on Al Reem Island, set to be delivered in mid-2010.

Abubaker Al Khouri, managing director, Sorouh, said: “For Sorouh, 2009 was a year of refocusing the business to reflect prevailing market conditions.

In this context we have delivered a credible performance. We have concentrated on prudent cost management, our customers and keeping to delivery schedules on our existing developments."

He added: "We are approaching 2010 with cautious optimism, continuing our emphasis on increasing recurring income; cost control; cash collections and focusing our resources on key projects and delivery targets.

"Abu Dhabi continues to see a shortage of residential real estate and we will continue to play a strategic role in bringing quality property to the market to meet that demand.”