The company said in its statement that the main reasons for these accumulated losses are:
A fair value loss related to investment properties recorded during the 2017 financial year. A fair value loss related to the investment properties recorded during the 2021 financial year. A loss on the disposal of an associated company of 250 million AED recorded during the 2020 financial year. Losses and impairment of financial instruments at fair value through profit or loss for an amount of 337 million dirhams. Sale of assets to related parties resulting in losses of AED62 million for the year 2020 and AED45.5 million in 2021. Provisions of AED90.5 million for advance payments to contractors in 2021 .
To address the accumulated losses, Union Properties said it would take the following actions:
Submit a recovery plan and communicate it to the Securities, Commodities and Market Authority for an accumulated loss management plan. Development of an action plan which includes the closure of existing projects and the refocusing of the company on its core business in order to win new projects. Develop continuous efforts to acquire more projects in the UAE, in addition to ongoing projects. Improve productivity and overall operational efficiency. Debt restructuring to reduce financing costs. Recovery of unpaid contributions (in particular through legal and arbitration proceedings). Continuous reduction of operating costs. Development of a large land reserve. Develop assets with recurring cash flows. Strong concentration on the group’s operating subsidiaries. Focus on cash-generating activities.
The company posted net profits during the first quarter of this year amounting to $3.35 million, compared to losses for the same period last year amounting to $3.4 million.
Revenue from customer contracts amounted to MAD 122.1 million during the period, up 16% compared to the same period last year, thanks to the improved performance of the group’s subsidiaries and the positive dynamics of the real estate market in the United Arab Emirates.
The company was able to reduce administrative and general expenses by 21% on an annual basis, to $4.5 million in the first quarter of 2023.
Group operating profit rose 335% to $5.4 million in the first quarter of the year year-on-year.
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