>Emaar Properties (SICO RESEARCH)

Emaar Properties announced their preliminary 2008 financial results on February 12, 2009. The major highlights of the press release are discussed below, however, we await the detailed financials and investor presentation for further clarity.

* Loss of AED1.77bn in 4Q08 – The last quarter of 2008 was unpleasant for Emaar Properties. The company not only reported worsening operational performance, but also announced a significant impairment of goodwill (AED1.77bn) as well as inventory write downs (AED0.92bn) on account of its US subsidairy during 4Q08. Overall, Emaar Properties posted a loss of AED1.77bn in 4Q08 compared to a profit of AED1.74bn during 4Q07. Similarly during the full year 2008, net profits declined by 54% (YoY) and reached AED3.06bn (AED0.50/share) compared to AED6.58bn (AED1.08/share) during 2007.

* Write down of development properties – Emaar wrote down AED1.1bn worth of properties relating to its US based subsidairy WL Homes during 2008, of which AED0.92bn was crystallised in 4Q08. There have been no signs of improvement in business conditions in USA, while reports of lay-offs at the subsidairy have been in the news. Various news items such as the company’s plans to review operations, shutting down of some offices and the discontinuation of development work on an existing project in Colorado have appeared in the media which the company is yet to come out with any clarification.

* Impairment of goodwill adds insults to injury – Goodwill impairment amounting to AED2.5bn (AED0.4/share), in relation to the acquisition of John Laing Homes in the US, was booked in 2008 - out of which AED1.8bn was impaired during 4Q08. Emaar had acquired WL Homes for AED4.02bn, including a goodwill of AED2.52bn, which now has been fully impaired in 2008.

To see full report: EMAAR