Emaar Properties shareholders this evening voted to accept a 20% cash dividend, amid angry scenes at the company’s ninth annual general meeting (AGM).
The reluctant acceptance of the dividend – which some analysts had previously estimated would be as high as 65% – came as Emaar chairman Mohamed Alabbar dismissed some members of the argumentative crowd as ‘schoolchildren’.
Despite the objections, 68% of shareholders voted to take the dividend in cash rather than have it deferred until next year.
“The board of directors has recommended a 20 per cent cash dividend,” Alabbar said at the meeting in Dubai. “We are not building a company for today or tomorrow, we are building a company for the future.”
Emaar would not distribute bonus shares, Alabbar said. “To give bonus shares is not acceptable.”
Earlier at the meeting, shareholders reacted angrily to the proposal, asking Alabbar to increase the dividend. One pointed at Alabbar and yelled “you’re punishing us”.
“The largest segment of people investing in Emaar is small investors,” one shareholder told Alabbar at the meeting. “You should take them into account and give us more.”
The dividend announcement was important because Gulf Arab investors, their confidence battered by a crash last year, are punishing stocks of companies that fail to meet their dividend expectations. Emaar’s silence on dividends in the weeks after its fourth profit report weighed on its stock.
Emaar paid a cash dividend of 40 fils per share in 2005. Last month, investors quoted by Reuters estimated that the latest dividend would range between 50 and 65 per cent.
However, Amro Diab at the EFG-Hermes Brokerage in Dubai told ArabianBusiness.com earlier today that he did not expect the dividend payment to be impressive.
“I personally don’t think it’ll be much – I doubt they’ll pay a big cash dividend,” he correctly predicted.
“Investors [have not been] very comfortable with Emaar not announcing dividends,” he added.
The AGM, which was scheduled to begin at 5pm, began an hour later and was, according to ArabianBusiness.com reporters, ‘very busy’. It ended at around 9.20pm.
Other announcements at the meeting included the allocation of $2.9 billion for projects in 2007 in the UAE and abroad.
Alabbar said that $2.49 billion would be spent on domestic projects while the rest would be allocated to developments in markets including Syria, Pakistan, and India.
It was not immediately clear if those were in addition to the value of projects announced earlier.
The Dubai property giant said it plans to acquire one business a year in its worldwide expansion plans. It is keen on India, where it expects growth in the real estate sector to soar over the next eight years.
Alabbar said that he expects revenue from Emaar’s international operations to be seen within 2-3 years, but refused to comment on when other projects may be completed.
The total value of Emaar’s land at the end of 2006 was $18.44 billion, up 125% from 2005, according to an Emaar presentation at the meeting.
In the UAE itself, the company has a land bank of 16.78 million square metres.
The company’s current auditor, Ernst & Young, was present at the meeting and has been reappointed for 2007.
Emaar made a net profit of 6.371 billion dirhams ($1.74 billion) in 2006, up 35% from the previous year.
The company recently transferred 10% of its profit to general reserves and will not be distributed to shareholders, according to a statement made by Emaar last month.
Shares in Emaar Properties, the largest Arab property developer by market value, closed at AED12.70 today, down 0.78% ahead of this afternoon’s expected dividend announcement.
Emaar shares are down 5.6% since January 29th, when Emaar posted a 65% jump in fourth-quarter net profit. Emaar’s share price tumbled 47.3% in 2006 as Dubai’s stock market index fell 44.4%, the second-worst performer in the Gulf Arab region.
When asked by a shareholder why – if the company is expanding at such a rate – Alabbar’s ‘promise’ that the share price would not dip below AED25 has been broken, Alabbar said that “I would never give guarantees on [the] share price”.
Another investor urged Alabbar to buy back shares in the market to buoy the company’s shares. “If you want us to accept the 20 per cent this is suicide for the shares in the market,” he said. “It would be better if you don’t give a dividend and buy back shares.”
Emaar won approval in July to buy back 10% of its shares but the company has not said when it would begin a buyback.
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