Amlak posts net group profit of AED87.4 million in H1

Dubai / WAM

Amlak Finance PJSC on Monday announced its financial results for the half year ended 30th June, 2016, recording a net group profit of AED87.4 million in H1 2016, compared to AED14.6 million for the same period last year.
The H1 results were supported by strong revenue growth in Q1 generated from one-off sale of land plots. The results were also impacted by increased provisioning in Q2 caused by a number of customer accounts becoming delinquent as well as a general fall in real estate prices against mortgage assets giving rise to a reported net loss of AED35.5 million in the second quarter of 2016.
Amlak’s total revenue reached AED465 million in H1 2016 compared to AED214 million in H1 last year. The strong revenue performance was driven by income generated from the real estate investment business as the company registered AED134 million from the partial sale of land projects in Q1, and AED19.6 million in Q2, totalling AED153.7 million in the first half of 2016.
Revenue from financing business activity fell 29 percent in H1 2016 to AED104.6 million from AED147.4 million for the same period last year due to a further decrease in the real estate financing portfolio. Rental and other income and share of results from associates improved by 5 percent to AED49 million compared to the same period last year.
Operating costs remained the same as last year at AED68 million, and distribution to financiers improved by 12 percent, falling to AED64.7 million, as result of further repayments of the financers’ facilities during the period.
The company recorded a total impairment charge of AED29.7 million recognised from non-performing accounts in H1 2016. The second quarter charge amounted to AED24 million adding to the first quarter charge of AED5 million. In comparison, last year the company recorded a net reversal of provisions in the first half year of 2015 to AED34 million.
Quarterly amortisation of an initial fair value gain recognised earlier fell to AED57.6 million in H1 2016 from AED79.9 million for the same period last year as the financers facilities continue to be repaid.
Total assets stood at just under AED6.8 billion in H1 2016 representing a 2 percent decrease from the same period last year. On the back of net retained profits, shareholders equity improved to AED1.63 billion from AED1.58 billion at the end of December 2015.
Commenting on the results Arif Alharmi, Managing Director of Amlak said, “Our overall H1 profitability remains strong. We reported strong results in Q1, however the second quarter’s operating performance was impacted by the higher than anticipated provisioning in Q2. We follow and strictly abide with a prudent provisioning policy to reduce balance sheet risk and enhance financial reporting transparency to the highest levels.”
“Experience shows that our collection efforts, processes and procedures, in addition to our innovative products offerings, help our delinquent customers return to a regular status, resulting in a significant part of the provisions to ultimately reverse helping to bolster our P&L performance. I am also pleased with our income generation from the Nad Al Hamar land project,” he said.
“Additionally, despite a marked slowdown in the real estate market particularly during the summer season, the project remains buoyant and we anticipate making further sales and recording additional income in the remaining part of 2016,” Alharmi remarked.
“Our long term focus will firmly remain on growing our balance sheet and income from property financing which is a core business activity. We will also continue to enhance operational efficiency, risk management procedures and customer service. We will also remain committed pursuing new sources of funding as a key priority in our strategic plan,” he added.