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Damas, the jeweller, has posted profits of Dh26.5 million for the first six months of the year. Satish Kumar / The National
Damas, the jeweller, has posted profits of Dh26.5 million for the first six months of the year. Satish Kumar / The National

Golden profits for Damas jewellers

Damas, the jeweller, has posted profits of Dh26.5 million for the first six months of the year.

Soaring gold prices have helped Damas, one of the region's largest jewellers, to achieve profits more than six times higher than the same period last year.

Net profits for Damas reached Dh26.5 million (US$7.2m) between April and the end of September compared with Dh4.2 million during the same six months last year.

Revenues from gold bullion and jewellery increased to more than Dh1.79 billion from Dh1.38bn from last year, the figures posted on Nasdaq Dubai showed. Revenues from diamond pearl jewellery were also up on the same period last year.

The revenue was used to service loans and operating expenses. The company is striving to turn around the business after being forced to restructure after $165m of unauthorised transactions were uncovered in 2009. The company's chief executive resigned soon after the scandal broke.

Sales volumes have fallen compared with the same period last year, sources at the company said, but as the gold price increased dramatically, revenues had grown.

Gold prices have surged this year because investors considered it to be a "haven" investment.

The price of gold has risen 22 per cent to $1,680 per ounce in the past year, nearly touching US$1,900 in the past few months.

Damas said it "has not recognised any allowance against consignment and receivable exposures", meaning unpaid bills. These receivables accounted for a Dh15.4m allowance in the same period last year.

Damas is focusing on key markets in the Middle East, particularly Saudi Arabia.

In April, the group acquired an additional 49 per cent stake in Damas Saudi Arabia, bringing its total shareholding up to 98 per cent. The jeweller has nearly 300 stores and a history dating back more than 100 years. The company went public in 2008 and was listed on the Nasdaq Dubai. It was discovered the three Abdullah brothers - Tawhid, Tawfiq and Tamjid - who owned the company before it went public - continued to treat it as a private business, syphoning off funds for personal investments.

An investigation found they improperly withdrew Dh365m of cash and almost two tonnes of gold.

The three brothers have been given three years to repay their debts.

The amount owed to the group currently stands at Dh612m, Damas said in its latest earnings report.

In May, Damas repaid Dh200m of loans to banks and successfully completed a Dh3bn debt restructuring process in which it is to repay Dh1.1bn of loans over three years and receive working capital of Dh1.9bn.



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