Dubai Financial Market's first quarter net profit reaches AED563 million

DFM Company recorded a net profit for the period of AED563 million, including AED 468 million generated by the Initial Public Offering's (IPO) profits, and AED 95 million representing the net profits from activities for the first quarter of 2007.

Shareholders' equity rose to AED 8.526 billion, a 7 per cent increase compared to the company's capital of AED 8 billion.

Essa Kazim, Chairman of Dubai Financial Market, said:

"DFM Company recorded strong results despite the drop in the value of trading during the first quarter of 2007 as result of the current conditions of all regional markets. The management intends to maintain good profit levels through depending on the best approach to invest DFM Company's liquid funds. This has also been reflected in the balance sheet, showing total funds that were invested in accordance with Sharia. These funds reached AED 2.761 billion, comprising AED 2.171 billion as part of the traded assets (short-term investments) and AED 530 million representing medium and long-term investments."

He noted: "The IPO profits totaling AED 468 million were reflected in the income statement. In addition, net revenue generated from issuing shares, which reached AED31.8 million, was also shown as part of the ownership equity. This confirms the right of the existing shareholders in taking part of that profit, which also shows the Dubai Government's commitment when it offered DFM Company's shares to public."

The balance sheet also showed intangible assets totaling AED 5.8 billion. Kazim explained: "Intangible assets represent the value of rights granted to the company, such as Dubai Government's exclusive right to DFM to operate as the only stock market in Dubai. These rights also include the right of using the DFM name and brand."

Kazim concluded: "In accordance with international financial reporting standards, DFM has a grace period of 12 months to identify the fair value for each of these mentioned rights. Currently, measures are being taken to appoint a specialized consultant to evaluate the value of these rights. As part of its precautionary procedures, the management has initially accrued the amortizations of intangible assets by AED 26.8 million for the first quarter. This amount was also taken into consideration when calculating the net profits for the period."