Damas, a leading retail jeweller in the Middle East, said it made a full-year net loss of Dh1.91 billion ($520 million), after provisions and non-recurring charges of Dh1.9 billion. The company also saw a 31 per cent drop in its revenues.

Before the expenses and impairments, the company made a net profit of Dh9.7 million for the period ending March 31, it said in a statement.

The Dubai-based jeweller said in July it had extended to September 30 a standstill agreement with lenders on $872 million in debt, after banks approved the extension.

Announcing the results, Damas said its annual revenues fell 31 per cent to Dh3.3 billion ($898.5 million) compared to the previous period last year.

During the same period, the company had reported a full year net loss of Dh1.91 billion, "primarily due to the conservative and prudent approach adopted by the company," said Damas chief executive officer Anan Fakhreddin.

"For similar reasons, gross profits declined by 33 per cent compared to the previous period, standing at Dh565 million for the 12 months ending March 31, 2010."

He pointed out that the company’s full year financial results included provisions and non-recurring charges totalling Dh1.92 billion.

"In making these provisions, Damas is recognising the challenges of the past 12 months while ensuring that the company’s efforts are focused on recovering outstanding receivables held by counterparties in an orderly manner, building a stable platform for future growth," he remarked.

“Founded more than a century ago as a family-run firm, Damas has now instutionalised best practice management practices, and is also currently carrying out a wide range of corporate governance enhancements.”

“In line with those international standards, today’s announcement makes clear the healthy performance of the core business of Damas, while also reflecting our prudent approach to provisioning,” he added.

New board

As a demonstration of the company’s commitment to its corporatisation, Damas earlier this year appointed a new Board of Directors, comprising independent members who are leaders in their respective fields, the statement said.

The Board and management are focused on ensuring the sustainability of the company’s long-term business model, while also keen to ensure that Damas remains an employer of choice through the introduction of best practice human resources initiatives.

As a consequence of the global crisis impact, lower consumer confidence and higher gold prices, Damas witnessed a decline in total sales volumes during the period.

On the future plans, Fakhreddin said "Damas continues to move forward with its financial restructuring demonstrating the confidence of our bank lenders in the strength of the company’s underlying business model." 

The company, he said, was also preparing for the implementation of operational restructuring, which will allow the company to sustain growth trajectory despite current challenging conditions.

"The business outlook of Damas is strong," he added.-Reuters and TradeArabia News Service