15 February 2016
Muscat: Al Hassan Engineering's board has decided to take a series of new steps, including sale of land, efforts to recover additional cost and recapitalisation of Abu Dhabi subsidiary, to improve its financial position and strengthen balance sheet.
In order to offset Al Hassan Engineering's loss, the company and the major shareholders are expected to enter into a sale and purchase agreement for a vacant land in Ghala for OMR3.2 million. This is subject to the approval of shareholders at an annual general meeting.
This land was vacated in 2015 by shifting the fabrication, plant workshop and stores to a new improved facility in Nizwa.
This agreement is expected to be approved in the annual general meeting, which will give the company a cash inflow of OMR3.2 million and one-time non-operational profit of OMR2.7 million in the first quarter of 2016.
All efforts are also taken to recover additional costs from clients,including involvement of third party/legal dispute resolution process.
Al Hassan Engineering has a very strong market reputation for over three decades for completing all projects undertaken successfully and presently employs over 4,000 people in Oman .It has a confirmed order book of OMR96 million by end-December 2015 and expects revenue in 2016 to be at par with 2015 despite the market environment.
In January, 2016 Stephen Scott, chief executive officer, relinquished his position and Dr Shawqi Hamdan Sajwani has taken over as the new chief executive officer.
Dr Sajwani has over three decades of experience, starting with General Motors in USA, Dubai Aluminum and Dubai Holding as Group Director Business Excellence. Since 2009 he has practiced consultancy in business management.
Adil Darwish Yousef Al Lawati a Mechanical Engineer from USA, has also joined the company as General Manager-Projects. He is an Omani national and has over two decades of extensive and diverse work experience in the oil and gas business in organisations like PDO and Tebodin.
Significant changes led by the new CEO are underway to restructure the company, improve asset /manpower utilisation and reduce costs all across the company, which can be expected to make it lean and efficient for the future challenges.
The company has recorded the highest ever turnover of OMR107 million and is highest-ever both in Oman and the United Arab Emirates in 2015.The growth in revenue has been at 40 per cent over that in 2014.Reasons for loss
Though the turnover has grown, a loss of OMR2.7 million has been incurred in 2015 arising mainly from the financial performance of two ongoing projects in Oman based on the forecasted costs to complete, which has been accounted as per the requirements of the International Financial Reporting Standards.
Zauliyah Gas plant EPC project for Petroleum Development Omanis being executed by Al Hassan TR LLC JV. Since the duration for completion has been extended, there have been changes to envisaged scope and consequently higher costs. The underlying cause for extended time being delays in engineering and supply of equipment from international vendors, which have been beyond the control span of the company, despite making significant additional efforts to mitigate the same.Daelim Petrofac
There was also a significant increase in the cost of Sohar refinery project for Daelim Petrofac due to variations from original scope/measurement issues,the recovery of which is being pursued with client.
The financial requirements of the Abu Dhabi LLC subsidiary, which has had a good growth, are presently supported by the parent company in Oman. It is expected that in 2016 a re-capitalisation of this LLC company may be carried out,subject to selection of a new shareholder and all approvals .This will increase the share capital and bring in the cash required for independent operations.
© Times of Oman 2016