Operations group looks fit to bounce back from losses

Now we know why it took so long. Dubai Holding Commercial Operations Group's financial statement for last year, published yesterday after a month's delay, ran to 88 pages, of which 78 were notes explaining the figures.

Now we know why it took so long. Dubai Holding Commercial Operations Group's (DHCOG) financial statement for last year, published yesterday after a month's delay, ran to 88 pages, of which 78 were notes explaining the figures. PricewaterhouseCoopers, the accountants who signed them off, needed 23 pages just to explain the accounting policies for this most complex of corporate entities.

But the company took the news on the chin. A loss of Dh23.56 billion (US$6.41bn) included Dh22.5bn of write-downs on property losses. Revenues and total asset value declined, borrowings rose and shareholders' equity was hit. Property was inevitably at the crux of the matter. DHCOG was relatively upbeat about the state of the market, suggesting completed units would start to be delivered this year and would reach 21,000 in 18 months' time. By then a steady stream of rental and sales revenue would be coming through.

Both Jumeirah and TECOM did pretty well in tough times. Jumeirah, the hotels and hospitality group, kept occupancy at almost 74 per cent, which many global competitors would envy, even if it was bought at the cost of some revenue per room. TECOM resisted the pressure to drop rents in its media and internet free zones. Borrowings were confirmed at $4.13bn. There is no need for a radical restructuring here. The financial creditors see cash flow and asset backing, and will accept the rollover of debts starting next month.

The overall picture for Dubai Holding, the parent company, is beginning to clear. Last week, Dubai International Capital came out with about $2.6bn of liabilities, now we see DHCOG with another $4.13bn. There must be another $5bn or so of debt between the parent company and another offshoot, Dubai Investment Group. @Email:[e-mail]