Damac Properties, which reported on Tuesday its third quarterly profit slump in a row, plans to cut its overall debt by about $500m in three years as the Dubai developer embarks on liability management exercise.
"Our principle objective over the next two-to-three years - I would like to bring [the debt] sub $1 billion dollars. We will be paying down circa of $500m," Adil Taqi, the group chief financial officer of Damac told The National in a phone interview on Tuesday. "What we are managing is the net liability base."
The company currently has roughly $1.45 billion (5.32bn) of debt on its balance sheet, which consists of about $180m in bilateral loans from commercial banks and the remaining accounts for funds raised either through private placements or capital market deals.
A payment of $270m is due in April next year and some of its commercial debt matures in 2018 and beyond. Damac may choose to refinance some of the smaller banking loans, “just to keep the relationship alive” but all the maturities have been well provided for and the company's “cash flows are very well covered”, Mr Taqi noted.
Damac, which owns and operates the only Trump branded Golf resort in the Middle East, has $2bn in cash, of which $350 is unrestricted to be used for any suitable purpose. The company does not have a “cash flow challenge”, is well capitalised and has a good liquidity position, Mr Taqi added.
Egyptian investment bank EFG Hermes earlier this year said that operational and financial challenges are expected to put pressure on Damac in 2018. Cash flow issues at the company are likely to push the dividends lower and the company may have to raise debt to meet Dh2.2bn in repayment obligations over the next 24 months, the investment bank said.
Mr Taqi said Damac in April paid about $250m in dividends, which was lower than the $400m recommended by the board in January, however, it was lowered because “we felt the market will get tougher”.
“We would not have given anything [in dividend] if we felt there were cash flow challenges,” he explained.
Damac on Tuesday said second-quarter net profit plunged 46 per cent as the cost of sales surged. The company’s income in the three months ending June 30 fell to Dh378.2 million from a year earlier, below the average Dh450.7m estimate of analysts polled by Bloomberg.
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Read More:
Damac first quarter profit plummets 45% amid rising sales cost
Damac to experience 'cash flow pressure' in 2018, says EFG Hermes
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The cost of sales during the quarter rose 62 per cent to Dh1.16bn from Dh705m reported at the end of the same period last year. Damac recorded revenue of Dh1.79bn, slightly above analysts' estimates of Dh1.77bn.
Quarterly income decline is the third in a row for the company, which in May, reported a 45 per cent slump in first-quarter net profit, also on mounting cost of sales. In February, Damac reported a 47 per cent decline in fourth quarter net profit and a 25 per cent drop in its full-year 2017 net income to Dh2.76bn.
The company, which is on track to deliver a record 4,000 units by end of this year, expects the earnings to follow the first half trend in the remainder of the 2018.
“We are planning for second [half] similar to [that of] the first half,” he said.
To compensate for the lower profitability, Damac is mulling ways to lower costs that include everything from salaries to the company’s market expenses.
“Obviously you would want your money to work harder. We look at different costs individually and see how could we do this better,” he said. “We were making a billion dollars in profitability and we were incurring [that] level of cost. We can’t continue when our revenue line [has] halved and our profitability [has] halved, and leave the cost untouched.”
Kill%20
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
COMPANY%20PROFILE%20
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Company%20profile
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Brief scores:
Toss: Northern Warriors, elected to field first
Bengal Tigers 130-1 (10 ov)
Roy 60 not out, Rutherford 47 not out
Northern Warriors 94-7 (10 ov)
Simmons 44; Yamin 4-4
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Day 2, Dubai Test: At a glance
Moment of the day Pakistan’s effort in the field had hints of shambles about it. The wheels were officially off when Wahab Riaz lost his run up and aborted the delivery four times in a row. He re-measured his run, jogged in for two practice goes. Then, when he was finally ready to go, he bailed out again. It was a total cringefest.
Stat of the day – 139.5 Yasir Shah has bowled 139.5 overs in three innings so far in this Test series. Judged by his returns, the workload has not withered him. He has 14 wickets so far, and became history’s first spinner to take five-wickets in an innings in five consecutive Tests. Not bad for someone whose fitness was in question before the series.
The verdict Stranger things have happened, but it is going to take something extraordinary for Pakistan to keep their undefeated record in Test series in the UAE in tact from this position. At least Shan Masood and Sami Aslam have made a positive start to the salvage effort.
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
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The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
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Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
Company%20Profile
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Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Company%20Profile
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Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Visit Abu Dhabi culinary team's top Emirati restaurants in Abu Dhabi
Yadoo’s House Restaurant & Cafe
For the karak and Yoodo's house platter with includes eggs, balaleet, khamir and chebab bread.
Golden Dallah
For the cappuccino, luqaimat and aseeda.
Al Mrzab Restaurant
For the shrimp murabian and Kuwaiti options including Kuwaiti machboos with kebab and spicy sauce.
Al Derwaza
For the fish hubul, regag bread, biryani and special seafood soup.
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
Company%20Profile
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
SPECS
Engine: 4-litre V8 twin-turbo
Power: 630hp
Torque: 850Nm
Transmission: 8-speed Tiptronic automatic
Price: From Dh599,000
On sale: Now
