Damac Properties: RNOA,RNNOA performance drops return on equity

The company’s average return on equity declined from 39.98 to 28.39 percent, due to the drop in  return on net operating assets(RNOA) from 66.85 to 35.59 percent by the impacts of drop in Net operating profit margin(NOPM) and Net operating assets turnover(NOAT) as well. The other side of the equation i.e. Return on net non-operating assets(RNNOA), showed an improvement from (26.87) to (7.20) percent, however, the positive spread reduced the return on equity with the negative FLEV, some of the share holders’ equity is invested in financial assets and such financial assets earned less than operating assets , then ROE is lower than RNOA.
The company`s Net operating profit margin(NOPM) that measures the efficiency of profitability declined from 52.22 to 44.45 percent in the last TTM, as a result of the decrease in Net operating profit after-tax(NOPAT) with regard to the versus period. Thus, for each dirham of sales the company earns declined to about AED 0.44  after all operating expenses and tax.
On the other hand, Net operating assets turnover (NOAT) which measures the efficiency of productivity of the company`s net operating assets, dropped from 128.01 to 80.06 percent by the end of June 2017 due to the noticeable growth in Net operating assets(NOA) as compared to that one in revenues against the versus period. The result means that, for each dirham of net operating assets, the company yields about AED  0.80  of sales rather than AED 1.28 in the equivalent period.

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