Dubai-based Drake & Scull International (DSI) has confirmed its plans to stop work on existing projects and acquire new ones as it reported accumulated losses of $1.3 billion.
The construction giant also revealed that its restructuring plan has “progressed considerably” and that negotiations with banks and creditors are still ongoing.
In a bourse filing to the Dubai Financial Market (DFM) that was published on Tuesday, the company stated that the value of its accumulated losses as of September 30, 2020 has reached 4.875 billion UAE dirhams ($1.3 billion), equivalent to 455.6 percent of its capital.
“The losses are mainly a product of significant provisioning of… work in progress and contract receivables in legacy projects in Oman, India and UAE. These receivables and work in progress were kept on the balance sheet despite audit qualification since 2016 on the recoverability of these receivables,” the firm said.
“As a result of poor performance on legacy projects, costs to hand over projects went far beyond budgets whereby several bonds were liquidated, increasing the accumulated losses,” it added.
The engineering firm has been dealing with losses for years, although it turned a net profit of $54 million for the first half of 2020.
In its latest detailed analysis of accumulated losses, the Dubai-based contractor said its restructuring plan has advanced considerably.
It said it has developed a business plan that includes “focusing on closing out existing projects and re-focusing the company on its core business activities in order to win new projects”.
It also intends to acquire more projects in the UAE or abroad, in addition to the ongoing operations in Tunisia, Kuwait, Iraq, Algeria and Germany, as well as improve overall “operational productivity and efficiency”.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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