By CL Jose
Accumulated losses at AED1.75 bn account for 30.26 pc of share capital
DUBAI/February 21-2021: Deyaar Development, the Dubai-based property developer, majority owned by Dubai Islamic Bank (DIB), has dropped the plan for capital reduction even as the accumulated losses have further grown by 14.5 per cent from the past year’s level to more than AED1.75 billion.
The company had decided to trim the capital last year when its accumulated losses were at AED1.53 billion. As the financial year 2020 closed with a net loss of AED217 million, the accumulated losses have grown to AED1.75 billion, which is 30.26 per cent of the share capital of the company as on December 31, 2020.
“The board after the review and approval of the financial statements including the losses due to provisions for impairment on assets, mainly caused due to the pandemic and current economic environment, decided to recommend if required to the shareholders in the forthcoming AGM (on April 04) ‘not to’ proceed with the capital reduction,” a statement from the company said.
Assets below share capital
The continued poor performance and the consequentially growing accumulated losses have landed the company in an awkward situation where not only its net worth, but the assets too have fallen below the size of the share capital of the company.
While the total equity (net worth) of the company as of December end, 2020, was at AED4.31 billion and the total assets at AED5.59 billion, the share capital of the company is AED5.78 billion.
The company explained that the main reasons for the accumulated losses are the provisions for impairment of assets due to the real estate market situation in Dubai recorded in 2010.
“In addition, in 2018, the company applied the International Financial Reporting Standard 9 (IFRS 9), which resulted in provisions for certain assets amounting to AED661 million, which were recorded in the opening balance of accumulated losses as on January 1, 2018,” the company explained.
Furthermore, in the year ended December 31, 2020, the company has incurred loss of AED216.9 mainly due to impairment and fair value loss adjustments in hospitality assets as a result of Covid 19 pandemic.
Deyaar said it will continue to launch quality projects and is also keen to diversify its sources of income through property and facilities management services.
Deyaar had last year announced that it would proceed with capital restructuring plans, having gained the necessary approvals from its shareholders and the Securities and Commodities Authority (SCA).
Announcing the capital reduction plan last year, Saeed Al Qatami, CEO of Deyaar, had said that the capital restructuring would enable Deyaar to write off all accumulated losses stemming largely from more than a decade ago.