Depa reports Dh103m first-half loss

The interiors company says it lost more than Dh100 million (US$27.2m) in the first half of the year, linking the loss to expenses relating to work done on the Burj Khalifa.

The interiors company Depa says it lost more than Dh100 million (US$27.2m) in the first half of the year, linking the loss to expenses relating to work done on the Burj Khalifa. Depa is in negotiations to finalise an amount it will claim. The company, based in Dubai, yesterday reported a loss of Dh103.6m for the first six months of the year, compared with a profit of Dh92m in the same period last year.

Depa said its claim was not against Emaar Properties, the master developer of the Burj Khalifa, but would not disclose the name of the entity involved, citing legal constraints. And a statement from Emaar said the developer had "no direct contractual obligations with Depa nor has any claim been filed against Emaar". Depa said Emaar had settled its bills with the company. "To date Emaar has paid every bill that we have submitted to them," said Noor Sweid, the managing director of strategy at Depa.

She said the claim against the unnamed company was "because the building was two years delayed and so for those two years we incurred expenses. As far as we're concerned, once our contract expired two years ago, what you submit thereafter isn't seen as a bill; it's seen as a claim." A claim was normally submitted on completion of a project, Ms Sweid said. "The kind of expenses we're talking about are predominantly overheads, the expenses of running a site - having your engineers there, having your architects there, having absolutely everybody on the site. For two years, that costs a lot of money."

She said the final size of Depa's claim was still under negotiation. "Given that we're still there, we're still doing some snagging [fine tuning] for the apartments, it's a changing claim for every month." Alterations to the interior design and the fact that one of the companies working on the project went bankrupt were the main reasons for the delay to the Burj Khalifa, Ms Sweid said. "The main delay was because the company that was doing the curtain wall - that's all the gloss on the outside - went bankrupt. That delayed absolutely everybody," she said.

Ms Sweid said she had no doubt that Depa's claim would be settled. "It's just a matter of when." Depa asserted that despite the unpaid claim, the company remained healthy and was expecting growth for next year as it continued to focus on geographical and sector diversification. Its recent project wins include a Dh104m fit-out contract for the International Petroleum Investment Company headquarters in Abu Dhabi and a Dh220m fit-out of a five-star hotel in Angola.

The company said were it not for the outstanding claim, "net profits (excluding the charge and including net provisions) would stand at Dh81m for [the first half] 2010, indicating a flat position compared to the same period last year". Depa said it was continuing to increase the share of revenues and projects from outside of Dubai, particularly from Singapore and Abu Dhabi. It said its revenues from its Abu Dhabi operations were up 51 per cent to Dh195.3m from the first half of last year.

The company added that it had won significant projects in Malaysia, Saudi Arabia, Qatar and China.