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DUBAI / Emirates Business
Drake & Scull International PJSC (DSI) announced its preliminary un-audited financial results for the fiscal year 2015 ended December 31. In the midst of a prolonged slowdown in the regional construction sector, DSI continued to execute its projects on schedule and reported revenue of AED 1.4 billion in Q4 2015 compared to AED 1.1 billion reported for the same period last year.
DSI normalised its profitability following the Q3 2015 one-off provisions and reported a net profit of AED 14.7 million in Q4 2015 as compared to AED 3.8 million reported during the same period last year.
The group’s results for the fiscal year 2015 were affected by the unprecedented measures undertaken in Q3 2015 in response to the challenging market conditions, leading to the adoption of a conservative approach towards the company’s financial position in relation to its exposure on certain projects in key markets.
The impact of these measures was felt in the top line and bottom line performance for fiscal 2015. DSI’s profitability for the year was impacted by the AED984 million one-off provisions undertaken in Q3 2015 related to ongoing arbitration and legal cases in the UAE and KSA in addition to revenue and gross profit adjustments for uncertified variations orders and disputed extensions of time claims, accrued certified work and other general provisions across several major projects in the GCC.
As a result, the company reported AED4.23 billion in revenue for FY 2015 compared to AED4.76 billion reported in FY 2014. The net loss for the period was AED936.7 million compared to a net profit of AED101 million reported for fiscal 2014.
DSI’s order backlog reached AED11.86 billion as on December 31, 2015 and the total value of project awards secured in FY 2015 stood at AED3 billion. The UAE and the Engineering business accounted for 70 percent and 82 percent of total project awards respectively, reflecting the company’s strategic and ongoing focus on its home market and core engineering business.
The company will continue to pursue its outstanding receivables and claims and expects a number of provisions to be reversed in the future.
The company has also initiated a cost-cutting programme to improve operational efficiency and reduce its SG&A. DSI is also committed to improving its working capital, reducing debt levels, improving its capital structure and boosting liquidity.
Despite the current challenging market conditions, the underlying long term growth outlook for the regional industry presents promising opportunities for DSI, particularly in the UAE.
The company reiterated its commitment to the process of fiscal consolidation, discipline and austerity in light of the
prevailing macro-economic environment in the region.
DSI retains its optimism about the prospects for its Engineering business which is expected to remain the key growth driver for DSI with an additional promising potential for growth in the rail sector in 2016.