Dubai Financial Market's first half net profit reaches AED748 million

DFM Company recorded a net profit for the period of AED748 million, including AED468 million generated by the Initial Public Offering's (IPO) profits, and AED280 million representing the net profits from operating activities for the first half of 2007. The net profits from operating activities for the second quarter of 2007 reached AED185 million as compared to AED95 millions for the first quarter of 2007, a 95 per cent increase in net profits from operating activities.

Shareholders' equity rose to AED8.750 billion, a 9.4 per cent increase compared to the company's capital of AED8 billion.

Essa Kazim, Chairman of Dubai Financial Market, said: "DFM Company recorded strong results during the second quarter as results of the increase in value of trading during the second quarter which reached AED83 billions compared to AED43 billion for the first quarter of 2007."

"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 AED3 billion, comprising AED2.170 billion as part of the traded assets (short-term investments) and AED830 million representing medium and long-term investments. These funds achieved profits totaling AED116 million for the first half of 2007," he added.

He noted: "The IPO profits totaling AED468 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 AED5.8 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 AED26.8 million for each quarter totaling AED53.6 millions for the first half. This amount was also taken into consideration when calculating the net profits for the period."