The shareholders of Dubai developer Deyaar have approved the board of directors’ proposal to write off the accumulated losses through the company’s legal reserve and cancellation of shares equal to the remaining losses.
The shareholders have approved it through a special resolution.
“The accumulated losses amounting Dh1.7 billion [$462.8 million] as of 31 December 2021 will be written off using the legal reserve amounting Dh303.4m and cancellation of shares equal the remaining accumulated losses amounting Dh1.4bn”, the company said in a statement on Thursday to the Dubai Financial Market, where bill shares are traded.
Deyaar, which is majority owned by the UAE’s biggest Sharia-compliant lender Dubai Islamic Bank, will reduce the capital by Dh1.4bn to Dh4.38bn, the company said.
The proposed date to carry out the reduction is June 6, subject to the completion of the procedures and approvals from the relevant authorities as per the applicable rules and regulations.
By carrying out this resolution, the company will write off all accumulated losses in the company's financial statements without affecting its financial position.
It will increase “company's attractiveness to investors and the possibility of obtaining funds for its future projects, which will reflect positively on the share price in the Dubai Financial Market”, Deyaar said in a statement.
It will take into consideration the shareholders with small holdings, so that the reduction of the capital does not result in denying any shareholder of his shareholding in the company.
The company swung to full-year profit last year as revenue jumped on new project launches amid continuing recovery in the UAE’s property market.
Net profit for the 12-month period to the end of December jumped to Dh51m, compared with a net loss of about Dh217m in 2020. Revenue for the reporting period rose 22 per cent year-on-year to Dh505m.
The property market in the UAE, the second-biggest Arab economy, has made a strong recovery from the pandemic-induced slowdown amid business and social reforms and government stimulus measures to support the economy.
The value of property deals in Dubai more than doubled last year and broke a 12-year record in terms of real estate sales transactions, buoyed by demand in the secondary real estate market as the UAE economy continued to rebound.