Saudi Arabia-based mall owner and operator Arabian Centres Co. said on Thursday its board of directors has approved the use of the fair value model or the re-evaluation method to re-assess the value of its properties and investments.

The revaluation is expected to add 10 billion riyals ($2.67 billion) to the company's net assets of 16 billion riyals (recorded at cost model) effective Q3-2023 (ending 31 December 2022), the company said in a Tadawul bourse filing.

The adoption of the new accounting policy would not generate any internal cash flow, the company added.

The shift to this accounting standard will boost ACC’s financial position, including improving leverage ratios and by increasing shareholder equity and retained earnings balance by approximately 10 billion riyals. This would increase the book value per share from approximately 12 riyals to around 34 riyals.

ACC’s shares closed slightly higher at 19.52 riyals on Wednesday.

The company decided to adopt this model according to the IAS 40 accounting standard, after the CMA allowed listed companies to use it for the financial periods starting 2022 onwards, it added.   

ACC, whose financial reporting year ends in March, reported a 11 percent dip in net profit for FY2022 to 433.8 million riyals, impacted mainly by higher costs, rise in depreciation expenses and a drop in other income.

(Reporting by Brinda Darasha; editing by Seban Scaria)