Deyaar profit falls 95% under new accounting rule

Dubai: Deyaar Development PJSC on Tuesday reported a 95 per cent decline in net profits to Dh30 million last year, down from Dh654.7 million in 2008, as per a new accounting policy adopted by the company.

"Despite extremely challenging conditions globally, which have impacted the performance of the real economy worldwide and the property sector in particular, Deyaar continues to focus on its unique consolidation strategy, which has led to a reduced level of defaults and a higher paid-up value for each of the company's sold and consolidated units," a company statement said.

Deyaar said it has adopted a revenue recognition policy based on the recommendations of the International Accounting Standard Board relating to the International Financial Reporting Interpretations Committee (IFRIC) 15 Agreements for the Construction of Real Estate, to recognise revenue based on the completed contract method.

In the case of the completed contract method of revenue recognition, the revenue and related profit for a project sold are recognised when the project is handed over to customers.

Gross revenues

The company's gross revenues for the 12 months ended December 31, 2009, stood at Dh1.83 billion, compared to Dh1.38 billion in 2008 (restated as per IFRIC 15). The reported gross revenues of the company for 2008 (as per the percentage of completion methodology) was Dh2.95 billion.

"Deyaar's total net profit before impairments and provisions and including pre-IPO profits was Dh337 million. Of this, Dh207 million was profits attributable to the pre-IPO period and Dh100 million was for provisions and impairments," the statement said.

"After the above adjustments, the company's residual net profit for 2009 stands at Dh30 million. The net income reported for 2008 (following the percentage of completion methodology) was Dh1.104 billion."

The total equity of the company stands at Dh6.75 billion as of December 31, 2009.