Ithmaar Holding B.S.C. Takes Bold Steps to Address Accumulated Losses
Ithmaar Holding B.S.C., a company registered in the United Arab Emirates and listed on the Bahrain Bourse and Dubai Financial Market, has announced significant measures to tackle its accumulated losses, which have now exceeded 110% of its paid-up capital.
Summary
Ithmaar Holding B.S.C. has accumulated losses amounting to 110% of its paid-up capital. The losses stem from non-core investments and economic impacts such as the financial crisis and COVID-19. The company is currently undertaking various initiatives, including asset sales and restructuring plans, to improve its financial standing.
Ithmaar Holding B.S.C., a prominent investment firm regulated by the Central Bank of Bahrain and listed on both the Bahrain Bourse and Dubai Financial Market, has recently disclosed its Q2 2024 financial statements. The company has reported accumulated losses amounting to USD 834.67 million, which is 110% of its paid-up capital. This alarming figure has prompted the Board of Directors to take decisive action to address the financial challenges.
The accumulated losses are not a recent phenomenon. They began to surface prominently in December 2016, representing 68.8% of the paid-up capital at that time. These losses were primarily due to impairment provisions resulting from non-core investments affected by the financial crises. In 2018, the early adoption of FAS30 (the AAOIFI equivalent of IFRS9) led to additional impairment provisions, pushing the accumulated losses to 98% of the paid-up capital.
The economic impact of the COVID-19 pandemic further exacerbated the situation in 2020, with accumulated losses increasing by $87.5 million. However, 2021 saw a slight reprieve as the accumulated losses decreased by $35.0 million due to net income attributable to shareholders. Unfortunately, this positive trend did not continue, and the accumulated losses increased by $29.9 million in 2022 and by $9.3 million in 2023, mainly due to net losses attributable to shareholders.
In 2024, Ithmaar Holding managed to reduce its accumulated losses by $3.4 million, thanks to net profits attributable to shareholders. Despite this slight improvement, the company still faces significant financial challenges. The Board of Directors is actively working on various initiatives to improve the company's capital and strengthen its consolidated equity.
One of the primary strategies under consideration is an asset sale and/or restructuring plan. The Board believes that these measures will help improve the company's financial standing and address the accumulated losses effectively. While these initiatives are promising, the road to financial stability is long and fraught with challenges.
Given the current financial situation, investors should carefully consider their options. While the company's efforts to address the accumulated losses are commendable, the high level of accumulated losses relative to the paid-up capital is a cause for concern. Potential investors should closely monitor the company's progress in implementing its asset sale and restructuring plans before making any investment decisions.
In conclusion, Ithmaar Holding B.S.C. is taking bold steps to address its financial challenges. The success of these initiatives will be crucial in determining the company's future financial health. Investors are advised to exercise caution and stay informed about the company's progress in executing its plans.
Source
Summary
This document has been prepared in accordance with the disclosure requirements of the SCA Board of Directors’ Decision No. (32/R.M.) of 2019, concerning procedures for companies listed on the market with accumulated losses amounting to 20% or more of their paid-up capital. Companies must comply with the decision's provisions when accumulated losses reach 50% or more of their paid-up capital. Date: 13 August 2024 Listed Company: Ithmaar Holding B.S.C. Financial Period: Q2 2024 Value of Accumulated Losses: USD 834.67 million Accumulated Losses to Paid-Up Capital Ratio: 110% The accumulated losses before reorganization were 68.8% in December 2016, mainly due to impairment provisions from non-core investments resulting from financial crises. In 2018, early adoption of FAS30 (AAOIFI equivalent of IFRS9) led to additional impairment provisions, increasing the accumulated losses percentage to 98%. In 2020, accumulated losses rose by $87.5 million due to the economic impact of Covid-19. In 2021, losses decreased by $35.0 million due to net income attributable to shareholders. In 2022, losses increased by $29.9 million due to net losses attributable to shareholders. In 2023, losses increased by $9.3 million for the same reason. In 2024, losses decreased by $3.4 million due to net profit attributable to shareholders. The Board of Directors is currently working on various initiatives to address the accumulated losses, including an asset sale and/or restructuring plan to improve capital and strengthen the company’s consolidated equity.
