Marka, a Dubai-based retailer and owner of a group of restaurants, narrowed its second quarter loss on after the cost of sales and expenses fell as the company continues to restructure its business.
Net loss for the three-month period ending June 30 came down to Dh12 million from Dh126m reported for the same period in 2017, Marka said in a regulatory filing to the Dubai Financial Market. Cost of sales fell 40 per cent year-on-year to Dh10.8m, while expenses for the period shrunk by 75 per cent to Dh11m. The second-quarter revenue also declined 22 per cent to Dh19.9m, it added.
The results "reflect the progress the company is making on its restructuring program - in light of the challenges over the past two years," Khaled Bin Kalban, chairman of Marka, said. "The efforts of the Marka management team have put the company in a stronger position ahead of the capital restructuring that has been proposed for later this year."
Marka, which has failed to make a profit since listing on the Dubai stock exchange in 2014, had initiated restructuring of its business in last year. The company, in April, proposed a capital reduction through cancellation of shares to reduce accumulated losses of more than Dh450m. It also proposed raising issued share capital up to Dh250m through the issuance of new shares.
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Indicators of Marka's financial position in the first six months of the year show uncertainty around the company's ability to continue operating, according to Marka auditors, PricewaterhouseCoopers note in the bourse filing. The group’s current liabilities exceeded its current assets by Dh32 million as its six-month profit dropped to Dh20m from a loss of Dh154m a year earlier.
These factors "indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern," according to the PwC note. Marka had a cash shortage that resulted in interest and principal in loans of Dh8.1m and Dh134.5m, respectively with two of its banks remaining unpaid as at 30 June 2018, it said.
"The Group has restructured some of its borrowings and is currently undergoing negotiations for the remaining facilities," the statement said.
The introduction of value-added tax since January this year, which has affected consumer spending in the UAE, and the rapid growth of e-commerce in the country are the major headwinds for the retailer sector in the UAE.
“The focus of Marka’s team is on building a lean, agile and profitable business supported by a performance-driven culture, "Benoit Lamonerie, group chief executive of Marka, said. "We continue to be committed to the healthy recovery and growth of the company and delivering shareholder value in the near future.”
