Major turnaround at Middle East’s biggest gold jewellery retailer.
By Shane McGinley
Damas International, the largest gold jewellery retailer in the Middle East, reported a six-month profit on Tuesday, a major turnaround from a year of losses and controversy.
For the six months ending September 30, Damas reported a net profit of AED4.24m ($1.15m), a major turnaround from the same period in 2009, when the retailer posted a loss of AED713.3m ($194.21m).
Damas chief executive Anan Fakhreddin said: “Today we mark a new beginning at this century-old firm, which remains the leading jewellery retailer in the Middle East."
The Dubai-based retailer also announced that is has extended a standstill agreement with the majority of its lenders until December 31 as it restructures debts of about $872m.
“Negotiations with the banks have progressed positively and are nearing finalisation and the agreement of the steering committee to the standstill extension shows the confidence that the bank lenders have in a successful restructuring of the company,” Damas said in a statement posted on the Nasdaq Dubai Website.
“Today’s announcement demonstrates Damas has put the past behind it. The company’s fundamentals are robust, and we are looking to the future with renewed optimism and great confidence," Fakhreddin added.
The return to profit follows a controversial year for the Dubai jeweller, which is one of the biggest in the region and has more than 400 stores around the world.
Damas, which was founded in 1907, is attempting to recover $165m lost in “unauthorised transactions” from its founders, the Abdullah Brothers.
It was reprimanded by Dubai’s regulator in March, which ordered the firm to dismiss the board and pay fines for failing to exercise proper governance. However, the brothers are still involved in the enterprise and, three months after they were dismissed by regulators, Damas appointed them as senior advisers.
In October, Damas said it agreed with three Abdullah brothers, Tawhid, Tawfique and Tamjid, owe the company a total of $167.2m in cash and gold.
The amount includes $69.6m worth of gold that the three brothers had withdrawn from the company, the company said in a statement on Nasdaq Dubai’s website.
In the statement, Damas said: "The price of gold has been fixed after evaluation of several factors including the price of gold prevailing at the time of withdrawal and certain benchmark transactions that have taken place in the records of Damas thereafter."
In March, Dubai’s regulator said the brothers owed the company cash plus the value of 1.94 tonnes of gold.