Abu Dhabi-based Eshraq Investments has announced a net profit of AED 14.35 million ($3.9 million) for the Q1 2022. Its accumulated losses reached AED 1.025 billion ($279 million) down from AED 1.039 billion as of 31 December 2021.

The company also confirmed that it had approved a capital reduction of AED 1.039 billion at the end of April to absorb all losses.

Its net profits for Q1 2022 were up 40 percent year-on-year, the company said in a press release issued to Abu Dhabi Securities Exchange (ADX), alongside financial results today (Friday).

Revenue from commercial operations was AED 11.5 million, up from AED 5.3 million in Q1 of 2021.

“The results are on a standalone basis and do not include the impact of Eshraq’s proposed acquisition of Goldilocks fund,” it said.

In its detailed analysis of accumulated losses, the company said it started accumulating losses in 2014, mainly due to the loss on cancellation of sales in 2014, and losses on fair valuation of investment properties under development from 2014 to 2021, except for 2017.

“An impairment of AED 504 million was booked in 2016 to accurately reflect the then prevailing valuation,” the statement said. 

“This was proposed by the new board to reverse the aggressive accounting treatments used prior to 2016.”

After the capital reduction, the capital will be AED 1.4 billion distributed over 1,426,820,957 shares of a nominal value of AED 1 per share, the company said.

Eshraq also said there had been an “overwhelming shareholder vote” in favour of acquisition of the Goldilocks Fund, at its AGM last month.  

(Writing by Imogen Lillywhite; editing by Seban Scaria)