Wednesday, Apr 25, 2012

--AED282.4 million gain from asset sales

--Paying down debt to be a priority in years ahead, says CEO

--Revenue drop and AED2.4 billion impairment weigh

(Adds details and management comment.)

By Asa Fitch

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Dubai Holding Commercial Operations Group, a conglomerate with interests in free zones, hospitality and real estate, registered a 44% on year rise in full-year 2011 net profit to 324.3 million U.A.E. dirhams ($88.4 million) as it sold assets and paid down debt.

DHCOG, a division of Dubai Holding, got a profit boost from a AED282.4 million gain on the disposal of stakes in associates during the year, according to financial statements posted on the Nasdaq Dubai website. Last year, DHCOG effectively reduced its stake in Axiom Telecom, a mobile phone and electronics retailer, to 26% from 40%, the statements said. It also sold its 30% stake in Morocco's Al Manar Development Company.

The company also slashed debt last year and into the beginning of this year, paying off 250 million Swiss francs of bonds last July and an additional $500 million of bonds in February. It had AED12.8 billion of total debt at the end of last year.

"The deleveraging of our debt commitments has been one of the highlights of 2011 and will continue to be our priority in the years to come," Ahmad Bin Byat, DHCOG's chief executive, said in a letter accompanying the results, adding that the company's strategy involved building recurring revenue streams, improving operating efficiency and generating higher returns for its shareholder.

"In 2012 and beyond, DHCOG will continue to be actively engaged with the market to meet its contractor liabilities, repay its upcoming bond maturities, and reduce its exposure to non-core assets," the company said in a statement. Dubai Properties Group, DHCOG's main real estate arm, reduced liabilities to contractors by AED1.4 billion in 2011, it said.

DHCOG owns TECOM, a free zones company, and Jumeirah Group, the hospitality firm that manages the Burj Al Arab hotel, among a large portfolio of other holdings.

Total assets fell to AED97.38 billion at the end of 2011 from AED105.9 billion a year before, according to DHCOG's financial statements.

While net profit rose, revenues declined to AED8.83 billion last year from AED13.47 billion in 2010. It also took a AED2.4 billion impairment charge, which it said related mainly to real estate assets and some of its telecommunications holdings.

DHCOG is wholly owned by Dubai Holding, the personal investment vehicle of Sheikh Mohammed Bin Rashid Al Maktoum, the Ruler of Dubai.

Dubai Group, another Dubai Holding subsidiary, is in talks with banks to restructure $10 billion of debt. DHCOG is not involved in that deal, and is considered to be on sounder financial footing. Moody's Investors Service upgraded its outlook on DHCOG from negative to stable this year after the company repaid its $500 million of bonds with its own resources.

-By Asa Fitch, Dow Jones Newswires, +971 4 446-1685, asa.fitch@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

25-04-12 1400GMT