Dubai-based contractor Drake & Scull said its financial restructuring is "progressing" and it is engaging with trade creditors about plans to reshape the business after achieving a turnaround in the fortunes of its continuing operations.
The company recorded a net profit from continuing operations of Dh262 million in 2019, compared to a loss of Dh4.9 billion a year earlier, it said in a statement. This was despite a 15 per cent fall in revenue to Dh681m.
"The team at DSI 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. The financial restructuring is progressing with the lead banks, and we have made real efforts to reach out to all the trade creditors ahead of finalising 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 a profitable international MEP [mechanical, electrical and plumbing] contractor," the company's chairman Shafiq Abdelhamid said.
Drake & Scull has endured several years of losses after a fall in oil prices in 2014 led to a decline in new projects and the company struggled to recoup receivables owed to it.
Private equity firm Tabarak Investment became a strategic shareholder in 2017, injecting Dh500m as part of a previous financial restructuring that saw Dh1.7bn worth of shares cancelled in a bid to extinguish losses, but problems continued to mount.
The company subsequently blamed former management for the scale of its mounting losses, which led to its shares being suspended from the Dubai Financial Market in November 2018. Drake & Scull also filed criminal complaints against former vice-chairman Khadloun Tabari, which led to fraud and embezzlement charges being instigated. Mr Tabari has denied all charges against him and said he is the victim of a smear campaign by the company.
Financial results for 2019 filed on the Dubai Financial Market show a loss to equity holders of Dh81.9m, compared to a loss of Dh4.5bn in the prior year. The company's negative equity position improved, though, with liabilities outweighing assets by Dh4bn at the end of last year, from Dh4.7bn a year earlier.
Drake & Scull's backlog remained stable at Dh625m and the company said it would "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," Mr Abdelhamid said.