Sorough Real Estate sees net and revenue slashed
Firm says higher provisions hit profits despite construction progress
Sorough Real Estate, the Abu Dhabi-listed developer, posted a net profit for 2010 that was less than a tenth of the previous year as land sales and construction income were tempered by higher impairment costs and provisions.
The builder of the Shams Abu Dhabi said after-tax gains fell to AED 16.2 million, down from AED 495 million the previous year.
Revenues for the year stood at AED 1.2 billion, driven by and sales on Shams Abu Dhabi, the delivery of units in Golf Gardens and income from house building, rents and the company’s subsidiaries. But this was sharply down from the AED 3.1 billion revenue from the previous year.
The five-year-old developer is behind a number of projects on Abu Dhabi’s islands, and last year invested AED 2 billion in work in progress Shams Abu Dhabi, alrayyana, the Gate Towers on Reem Island, Sorouh Tower at Danet Abu Dhabi and Sorouh’s Mall in Al Ain, according to the company’s annual financial statement.
Revenues for the fourth quarter fell by more than half - from AED 438 million in Q4 2009 to AED 214 million in 2010 - driven by rental income from Sas Al Nakhl among other developments.
The infrastructure for Shams Abu Dhabi, its coastal development is now complete, including all major roads and bridges. District cooling services are being supplied to the Sun and Sky Towers, with ten plots under construction by sub-developers.
Net assets stood at AED 6.1 billion at the end of 2010, just shy of the AED 6.2 billion at the same point in the previous year, though net cash fell by more than half, from AED 2.8 billion to AED 1.3 billion. This position had been boosted earlier in the year by an AED 2.7 billion four-year loan to fund the construction of Shams Gate, among other developments.
The company embarked on a strict cost-cutting programme to boost its balance sheet, according to Abubaker Seddiq Al Khouri, managing director.
“The company has achieved over 90% of the strategy it outlined in 2009 by focusing on our core developments in Abu Dhabi, minimising our risk by improving efficiency and productivity, securing funding and developing our recurring income portfolio, which is expected to more than treble its contribution to revenues in the next three years,” he said in a statement.
The company would hand-over 1,500 units this year, starting with the Sun and Sky towers. The company’s shares closed down 3.65% yesterday to AED 1.32. They have fallen 20% since the start of 2011.