Amlak Finance capital base shrinks to just AED558 mn

Loss trail continues; 9M loss at AED239 mn

DUBAI/November 10-2020: The leading Islamic real estate financier, Amlak Finance, has raised the spectre of the company losing its entire equity capital in not-so-long future if things don’t improve significantly for the company soon.

Already, the accumulated losses of Amlak, at AED2 billion, have reached 133 per cent of its share capital of AED1.5 billion as of September 30, 2020. The accumulated losses a year ago were to the tune of AED1.78 billion.

As of September 30, the company is left with just AED558.71 million capital, compared with AED808.72 million, nine months ago.

Loss trail continues

Amlak has recorded a loss of AED238.93 million for the nine months ending September 30, 2020 compared with a much smaller loss of AED40.68 million for the same period last year.

The company’s three month loss was AED161.10 million for the period ending September 30, 2020 as against a loss of AED45.04 million for the comparable three months in the earlier year.

Assets down

The total assets of the company with nine subsidiaries – seven in the UAE and two in Egypt, have also declined by 12.80 per cent, from AED5.31 billion to AED4.63 billion, in a matter of nine months since December 30, 2019.

The company has explained that the accumulated losses are mainly due to fair value loss on investment properties recorded in 2014.

During the period from 2009 to 2013, the group held certain investment properties amounting to AED2.94 billion, which have been carried at cost since acquisition.

These investment properties were fair valued as at December 31, 2014, and a fair value loss on these properties of AED1.76 billion was recorded during 2014.

The company said that since 2014, the company has been implementing the restructuring, which allowed for the resumption of normal business activity that enabled successful repayment of 48 per cent of Amlak’s total debt over a period of 4 years under the 12 years restructuring plan.

Restructuring plan

Since 2014, the company has been implementing the restructuring, which allowed for the resumption of normal business activity that enabled successful repayment of 48 per cent of Amlak’s total debt over a period of 4 years under the 12 years restructuring plan.

In January 2019, the company announced entering into renegotiations with its financiers on the restructuring terms agreed in 2014 and subsequently revised in 2016. In June 2020, the company succeeded in obtaining the signature of all the financiers on the agreement that governs the new terms of its debt restructuring.

Revenues

Amlak’s revenues for the first 9 months of 2020, excluding unrealised fair value gain/(loss) related to investment properties, stood at AED250 million as of September 30, 2020, compared with AED190 million in the same period of 2019.

Revenues from financing business activities stood at AED125 million in the first 9 months of 2020, which are slightly lower compared with AED128 in the same period of 2019.

The group recorded an impairment charge of AED159 million on Islamic financing assets compared with AED74 million for the same period in 2019; “this increase in impairment can largely be attributed to the impact of COVID-19,” said the company.

The company sold 30 per cent of its stake in an associate in Saudi Arabia through an Initial Public Offering (IPO) and recorded a subsequent gain of AED7 million.

Debt settlement

Amlak said the company successfully concluded a debt settlement auction during the quarter and recorded a net gain of AED60 million in income statement and a gain of AED17 million in statement of changes in equity.

In the month of June 2020, Amlak succeeded in obtaining the signatures of all the financiers on the agreement that governs the new terms of its debt restructuring and since has initiated its compliance.

“The new terms of the agreement allow more flexibility to adapt to current market conditions and allow the company to further develop its business to achieve growth in its balance sheet,” the company statement added.

 

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