Amlak 2023 FY net profit plunges 45.6% to $70.53mln

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Amlak Finance has seen its 2023 full-year (FY) net profit fall steeply by 45.6% to AED259 million ($70.53 million) compared to FY 2022 net of AED476 million.

Amlak’s revenue for the year 2023 decreased by 18% to AED452 million as compared to AED552 million during the previous year. Revenues from financing business activities for the year 2023 declined by 3% as compared to 2022 and stood at AED122 million in 2023 (FY22: AED127 million).

The company’s debt settlement arrangements, through cash remained successful during the year, enabling seven financiers to fully settle their exposure during the year ended December 31, 2023. The company recorded a net gain of AED174 million (2022: AED349 million) on debt settlement arrangements and was able to reduce its debt burden by AED531 million (including Mudaraba instrument of AED118 million).

Operating costs rise

Amlak has commenced negotiations with the remaining financiers in order to exit from the Common Terms Agreement for restructuring which are at an advanced level to agree on the conditions. Amlak’s operating costs for the year increased by 41% to AED149 million, compared to AED106 million last year mainly due to a one-off expense related to the commencement of negotiations with financiers to exit the Common Terms Agreement.

The company also continued to efficiently manage its obligations, including repayment of AED103 million to financiers. To date, Amlak has settled 83% of its Islamic deposit liabilities including Mudaraba Instrument relating to financiers. As a result of debt settlement arrangements and repayments, the profit distribution to financiers decreased by 15% and stood at AED61 million for 2023 as compared to AED71 million for 2022.

In the region, Amlak’s investment in Egypt witnessed the devaluation of the Egyptian Pound against AED which impacted the group’s financial position. In KSA, the investment yielded an income of AED7 million.

Ali Ibrahim Mohammed, Chairman of Amlak Finance PJSC, said: “2023 was a transformational year for Amlak Finance as we executed our forward thinking and innovative new business strategy, our aim is to continually set new standards of excellence in the real estate sector, thereby strengthening our market position.

Power of innovation

“This year, we remain focused on seizing all opportunities and continue to progress towards achieving our long-term objectives. This relentless pursuit of growth and excellence is grounded in our belief in the power of innovation to create sustainable value for our stakeholders.”

Arif Albastaki, CEO of Amlak Finance PJSC, said: “In the current difficult situation, we have once again demonstrated the strength and vision of Amlak as we have reached an advanced stage in agreeing on the terms with our financiers to exit the current Common Term Agreement, enabling us to transition to our new business model. The overall Amlak financial position remains strong with total assets of AED3.2 billion. We have fully settled seven financiers through debt settlement arrangements having exposure of AED531 million and reported a net profit of AED259 million, which was in-line with our expectations.

“We are now in a strong position with the right team in place to move the business forward and to target future growth. 2024 will be another year of change but the completion of the successful conclusion of our negotiations with our financiers puts Amlak in a strong position and we maintain a positive outlook.”