Dubai: After reporting a whopping combined losses of Dh5 billion, the Dubai-based engineering firm Drake & Scull International has some reason for cheer.
For 2019, it reported revenues of Dh681 million and turned in net profits of Dh262 million. Other income generated Dh133 million plus, significantly higher over 2018.
“The team has worked tirelessly for the past year to tackle the real challenges of dealing with the huge losses recorded in 2018, and the burden left by the previous management,” said Shafiq Abdelhamid, Chairman.
It was mid last year that the company confirmed the true nature of its losses, with the tally at Dh5 billion plus, and initiated legal action against the former management, including the erstwhile founder.
A mid-year shocker
The findings were submitted to the authorities in Abu Dhabi, and an independent audit was conducted. An update on the legal status has not been revealed.
But the Drake & Scull management said it’s making progress with its lender banks to come up with some workable solution on paying off the debts and make it a sustainable operation.
“The financial restructuring is progressing with the lead banks,” the chairman said. “And we have made real efforts to reach out to all the trade creditors ahead of finalizing the restructuring proposal which will need the continued support of all stakeholders.
“Once the restructuring is complete it will position DSI so as to be able to regain its position as profitable international MEP contractor."
Effecting a turnaround
The company had Dh681 million as 2019 revenues, but the size of its project book will also give it a confidence booster. The backlog remains at Dh625 million, which includes Dh309 million from joint ventures and “strong operations in the UAE, Germany, Algeria, Kuwait and Iraq.” (Through its restructuring, DSI had exited multiple joint ventures, created by the earlier management.)
“Our objective in 2019 was to re-focus the company on its core business activities of MEP contracting, water and energy and oil and gas,” the chairman added.
And simultaneously “strengthening our balance-sheet/financial position by implementing the pillars of the restructuring strategy as approved by shareholders by reducing operational costs and closely monitoring our projects.
“Operational productivity and efficiency will also be a key factor in maintaining DSI’s competitive edge, and we will continue to actively work on winning new projects while working on completing existing ones.
“We will continue to engage with all our stakeholders, including regulators, financial lenders, trade creditors and employees to ensure that Drake & Scull emerges from the last few years of difficulties as a strong UAE company."
• Gross profit came to Dh8 million in 2019 against a loss of Dh952 million in 2018.
• Profit from continued operations turned in Dh234 million in 2019 compared to a loss of Dh4.93 billion.
• Total negative equity improved from Dh4.74 billion in 2018 to Dh3.98 billion in 2019.