‘Other Income’ came to rescue, and helped post profit
DUBAI: The ‘other income’ came to the rescue of Emaar Properties during the second quarter of the financial year 2020 by helping the property major finish the quarter with a profit of AED1.154 billion against AED1.815 billion for the comparable period a year earlier.
Emaar Property’s core operations failed to generate any profit during the three months ending June 30, 2020 (Q2), but instead closed the quarter with a loss before tax of AED1.256 billion.
In fact, the ‘other income’ to the tune of AED2.280 billion generated by the company during the period literally saved face for the property major, which otherwise would have packed up the quarter with a loss, a phenomenon that Emaar has rarely or never witnessed in its history.
Despite this, the market has hailed the performance of the ‘game-changer’ company for being able to keep its head above water in an unprecedented troubled time like this.
An analysis of the three core commercial segments of the company during the quarter under review reveals that while the Real Estate segment generated AED529.908 million in profit before tax and impairments during the quarter, the impairments/write-downs at AED663.586 million have dwarfed the earnings.
Coming to the Leasing, Retail and Related activities, the segment has ended up with a loss of AED76.695 million, which was further accentuated by the impairments/write-downs to the tune of AED404.030 million further worsening the bottom line.
Hospitality was the worst performing segment as expected during the quarter having closed the period with a loss before tax of AED117.779 million even before factoring in the impairments/write-downs to the tune of AED146.920 million.
The ‘other income’ during the quarter was mainly contributed by the AED2.197 billion that has come from the sale of 80 per cent ownership interest in Downtown DCP LLC to National Central Cooling Company (NCCC).
On March 2020, the group entered into a sale and purchase agreement (SPA) with National Central Cooling Company (NCCC) to transfer its 80 per cent ownership interest in Downtown DCP LLC.
“On April 5, 2020, all the conditions were satisfactorily completed and accordingly, the Group has recognised a gain of AED2.197 billion as ‘other income’ in the interim condensed consolidated income statement,” the note to the financials explained .