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Dubai-based contractor Drake & Scull International (DSI) has blamed the 4.5 billion United Arab Emirates dirhams ($1.2 billion) loss to shareholders revealed in its recently filed accounts for 2018 on a “deliberate and conscious decision” by previous management running the company from 2009-16 to defer declarations of losses.
In a press statement published on the Dubai Financial Market, the company, whose shares have been suspended since November last year, said the losses that it deems should have been declared “include impaired receivables, impairment of overstated goodwill and losses from discontinued operations from different countries”.
In the statement, the company also said that a capital restructuring embarked upon in 2017, which saw 1.7 billion dirhams of prior losses extinguished ahead of a 500 million dirham cash injection from Tabarak Investment, was based on a report containing “false information of backlog value, misrepresented projects' profitability and percentage of completion”.
It also said the report “omitted material information, including the number and status of overwhelming legal cases against the company, and concealing the true liquidity needs of the company which far exceeded the 500 million dirhams injected by the strategic shareholder”.
It added that 15 legal complaints filed to the Federal Public Prosecutor of the UAE detailing “offenses by members of the previous management during their tenure between 2009 – 2017” were still under review.
The 4.5 billion dirham loss declared by DSI for 2018 includes impairments of around 2.97 billion dirhams and a write-down of around 815 million in goodwill. (Read more here).
Notes to the company's accounts filed last week show that two of the company's subsidiaries in Oman and India were placed into liquidation, and the company said that it “administratively and operationally lost control over its subsidiary in Qatar”. Accounts show a 387.6 million dirham loss declared on the subsidiary in 2018, which it said “may be closed under restructuring plan”.
In the statement filed on Tuesday, DSI said the 2018 results, 2including the impairment of goodwill is part of its commitment to transparency, responsibility and governance” and was in line with a restructuring plan announced in November. (Read more here).
Former company executives contacted by Zawya were not immediately available for comment.
(Writing by Michael Fahy; Editing by Anoop Menon)
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