Dubai-based Union Properties (UPP) returned to a profit of AED 30 million ($8.2 million) in 2022. However, the developer will present a recovery plan to the UAE’s stock market regulator as accumulated losses reached 67.73% of capital ratio.
The company revealed a full year profit after a loss of AED 966.7 million in 2021.
Revenue in 2022 was AED 419.2 million, up from AED 398.7 million in 2021.
UPP said it had made substantial progress with its efficiency strategy including merging three of its existing business units - EDACOM Owners Management Association, Uptown Mirdif Mall, and Al Etihad Cold Store - into one single entity, EDACOM Asset Management.
“As a result, administrative and general expenses declined 39% year-on-year to AED 80.5 million in 2022. Operating profit for the year increased significantly to AED 10.2 million compared to a loss of AED 34.1 million in the previous year,” the developer said in a press statement.
The company’s detailed analysis of accumulated losses, issued to Dubai Financial Market (DFM), revealed a series of measures in place to address losses, including presenting a recovery plan to the Securities and Commodities Authority (SCA), improving operational efficiency and restructuring outstanding debt.
A director’s report at the start of its 2022 financial statement said the group’s accumulated losses had reached AED 2.901 billion from issued capital of AED 4.29 billion, meaning it is required to call a general assembly meeting to vote on whether to dissolve the company under UAE Federal companies law.
“The group’s management team is committed in implementing a thorough cost rationalisation plan reducing its operating costs and overheads along with a change in management program which will create impact on entity’s business model, financial structure, and management team, to address challenges in order to increase value of the company for shareholders,” the report said.
It added that the group may encounter claims or lawsuits with counterparties and/or third parties due to what it referred to as “malpractices from previous management”, which could significantly affect business performance.
(Writing by Imogen Lillywhite; editing by Seban Scaria)