Dubai:Drake & Scull International, the engineering company, will focus on closing out existing projects as part of its turnaround strategy – and exit from a situation where it is carrying more than Dh5 billion in accumulated losses.
The second part involves a refocus on “core business activities” to win new projects.
Drake & Scull International recently issued its 2019 financials, where it recorded a profit, helped by one-off gains. But it would have taken a lot of heart from even those numbers after the horror story of 2018 and first-half 2019, when it revealed that it’s accumulated losses were all of Dh5 billion plus.
In a statement to DFM, the company said that it will continue negotiations with banks and creditors to reach a settlement on repayment of dues. Market sources say that they were expecting some sort of deal finalization at the start of year.
“But the fact that DSI did well operationally in 2019 would give some relief to lenders,” said a source. “It’s in the interest of all to arrive at some workable solution.”
The company reported gross profits of Dh8 million in 2019 compared to a loss of Dh952 million a year earlier. And profit from continued operations added Dh234 million to the 2019 tally compared to a year-ago Dh4.93 billion.
467.7%Drake & Scull International's accumulated losses-to-capital ratio
A legacy of losses
Drake & Scull, in the statement, said that it will continue to pursue legal cases filed against previous management. This is another area where lenders and other interested parties hope DSI will have some progress to report on in the coming weeks.
The current management had repeatedly pointed the fingers at the earlier one over misstating the extent of losses suffered by the company, and taking DSI into some high risk exposures overseas.
“As a result of poor performance on legacy projects, costs to hand over projects went far beyond budgets, whereby several bonds were liquidated [and] increasing the accumulated losses,” the statement added.