Dubai: Deyaar has confirmed accumulated losses of Dh1.5 billion, brought on by provisions made for “asset impairments”. These were brought on by the dire situation in Dubai real estate market in 2010.
Also, in 2018, the company applied IFRS (International Financial reporting Standard) 9, which also led to provisions for certain assets, totaling Dh661 million. (This were recorded in the opening balance of accumulated losses from January 1, 2018.)
For 2019, the developer had revenues of Dh603.7 million, a a relatively marginal decline from the Dh643.7 million a year before. Net profit came to Dh71.5 million.
The Board of Directors, on February 11, have discussed a capital restructuring and "recommended reduction of the capital to offset the accumulated losses of Dh1.53 billion after obtaining the necessary approvals".
This it plans to by using the "legal reserves and cancellation of number of shares to write off the accumulated losses," Deyaar said in a statement issued to Dubai Financial Market.
Focus on new revenue lines
To get over the losses, the company plans to go big on hospitality, as well as property and facilities management services. These would help generate recurring revenues, and a strategy now followed by all of the leading developers in the UAE.
It has three projects in the hospitality sector (with a combined 1,000 keys), "which will contribute to increasing revenues in the coming years," Deyaar said in a statement. "In previous years, the company worked on completing all existing projects and launch new projects that have seen high selling rates in addition to strengthening the portfolio of assets."
According to Saeed Al Qatami, CEO, “2019 saw several strong achievements in our portfolio – not least of which is the completion and handover of Afnan, the first district in our Midtown master-development, with handover of Dania district in progress. In 2020, we are planning to move forward with the development of Midtown project and launch new districts with the handover of Bella Rose project by the end of the year.”
Located in Dubai Production City, the development offers over 2,000 units, ranging from studios through to three-bedroom apartments.