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Wed 1 Dec 2010 10:55 AM

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Damas returns to profit in last six months

Dubai-based jewellery retailer made a profit of $1.15m, a turnaround from a loss of $194.21m last year

Damas returns to profit in last six months
For the six months ending September 30, Damas reported a net profit of $1.15m, a major turnaround from the same period in 2009, when the retailer posted a loss of $194.21m. (ITP Images)

Dubai-based
Damas International, the largest gold jewellery retailer in the Middle East,
reported a six month profit on Tuesday, a major turnaround from a year of
losses and controversy.

For
the six months ending September 30, Damas reported a net profit of AED4.24m
($1.15m), a major turnaround from the same period in 2009, when the retailer
posted a loss of AED713.3m ($194.21m).

“Today,
we mark a new beginning at this century-old firm, which remains the leading
jewellery retailer in the Middle East," Anan Fakhreddin, CEO of Damas
International said in a statement.

The
Dubai retailer also announced that is has extended a standstill agreement with
the majority of its lenders until December 31 as it restructures debts of
around $872m.

“Negotiations
with the banks have progressed positively and are nearing finalisation and the
agreement of the steering committee to the standstill extension shows the
confidence that the bank lenders have in a successful restructuring of the
company,” Damas said in a statement posted on the Nasdaq Dubai Website.

“Today's
announcement demonstrates Damas has put the past behind it. The company's
fundamentals are robust, and we are looking to the future with renewed optimism
and great confidence," Fakhreddin added.

The
return to profit follows a controversial year for the Dubai jeweler, which is
one of the biggest in the region and has over than 400 stores around the world.

The
Dubai-based company, which was founded in 1907, is attempting to recover $165m
lost in “unauthorised transactions” from its founders, the Abdullah Brothers.

It
was reprimanded by Dubai’s regulator in March, which ordered the firm to
dismiss the board and pay fines for failing to exercise proper governance.
However, the brothers are still involved in the enterprise and, three months
after they were dismissed by regulators, Damas appointed them as senior
advisers.

In
October, Damas said it agreed with three Abdullah brothers, Tawhid, Tawfique
and Tamjid, owe the company a total of $167.2m in cash and gold.

The
amount includes $69.6m worth of gold that the three brothers had withdrawn from
the company, the company said in a statement on Nasdaq Dubai's website.

In
the statement, Damas said: "The price of gold has been fixed after
evaluation of several factors including the price of gold prevailing at the
time of withdrawal and certain benchmark transactions that have taken place in
the records of Damas thereafter."

In
March, Dubai's regulator said the brothers owed the company cash plus the value
of 1.94 tonnes of gold.

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