Depa announces strong growth

The Dubai-based global interior contractor, expects to lift profits and revenues by up to 35 per cent this year.

A fountain is seen at the entrance at the Burj Al Arab hotel in Dubai July 14, 2008. The Burj al Arab is one of the world's most expensive hotels and a landmark of Dubai's coastline. REUTERS/Jumana El Heloueh (UNITED ARAB EMIRATES)
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Depa, the Dubai-based global interior contractor, expects to lift profits and revenues by up to 35 per cent this year after additional provisions for projects reduced strong earnings last year. Profits for 2008 rose by between 20 per cent and 22 per cent, according to the company, which has furnished some of the world's most high-profile hotels, including the Burj Al Arab.

Depa, which made an initial public offering in April on the NASDAQ Dubai Exchange, said it had received orders for 17 projects worth Dh1.05 billion (US$286 million), in the first quarter of this year from Morocco, Egypt, Saudi Arabia and the UAE. Earlier this month, Depa won a Dh129m contract for the fit-out of hotel rooms and furnished apartments in the Palazzo Versace Hotel in Dubai. The project is due for completion in April next year.

"The company is expecting revenue and profit growth of between 30 per cent and 35 per cent in 2009... and continued growth in 2010," it said in a statement. Looking ahead, Depa said it had continued to "successfully negotiate letters of understanding and secured several significant works in the last quarter of 2008 and since the beginning of 2009." It had selected the projects based on their "certainty of being completed; often as a result of their iconic nature". The majority of the new projects were outside the UAE, it added.

Depa said its revenue for last year grew by 37 per cent and its profit before provisions by 40 per cent, without giving figures. The new projects come on top of an order book of projects worth Dh2.7bn, as of Dec 31 last year. This backlog of work includes contracts on Emaar's Burj Dubai, the world's tallest tower, and Dubai Metro. Depa took between Dh30m and Dh33m in provisions for ongoing projects to be completed this year. "The increase in allocation of project contingencies over and above the ordinary provisions for such events reduced net profits, resulting in recognised growth of 20 per cent to 22 per cent for net profits for the fiscal year 2008," it wrote. It said it decided to boost its "level of cautiousness and risk management around existing projects and clients' payments ? given the current market climate".

Depa had net cash of about Dh352.2m at the end of last year. Its share price has fallen by more than 23 per cent this year. Its shares rose 2.56 per cent and closed at US$0.40 yesterday. Depa said it would publish full results on March 30.