Dubai: The engineering firm Drake & Scull International has injected some cheer into a troubled corporate landscape by reporting Dh199 million in net profit for the first-half of 2020. The company is trying to rewire itself through an extensive financial restructuring and is in negotiations with its lender banks.
Most importantly, profit from continued operations were Dh200 million, of which Dh7 million was gross profit. That compares to a loss of Dh832 million for the same period in 2019.
The profit gains could have come from disposing the stake in Drake & Scull International (Qatar), for which there is a claimed gain of Dh354 million.
Dh4.33billionThe size of Drake & Scull International's liabilities as of end June, 2020
"We have reached advanced stages in the negotiations with the key banks ahead of finalizing the framework and details of the financial reorganization with the support of the Financial Reorganization Committee, the Board of Directors and our advisors," said Munir Mansour, CEO. "As we have announced in September, DSI initiated a formal process to allow all affected creditors to register their claims with the Expert appointed by the Financial Reorganization Committee (FRC).
"The FRC appointed expert is administering the process of registering and verifying the creditor claims before submitting an official report to the FRC. We shall disclose the results of the report as soon as it has been completed and subsequently approved by the FRC in the near future.”
Auditor raises a concern
Meanwhile, the DSI auditor EY has issued a statement along with the first-half report, questioning the gains from the Qatar subsidiary sell-off. "We were not provided with financial information for the period up to the date of disposal and, accordingly, were unable to perform sufficient appropriate review procedures with regards to the fair value of the investment and gain on disposal included in the interim condensed consolidated income statement for the period ended 30 June 2020.
"Furthermore, the sale and purchase agreement entered into with the buyer is signed subsequent to the period ended 30 June 2020 and, accordingly, the transaction should have not been recorded in these interim condensed consolidated financial statements. Consequently, profit for the six months period ended 30 June 2020 is overstated and net liabilities as of the reporting period date are understated by Dh354 million."