Construction

Drake & Scull losses narrow before return to trading

May 9, 2024, 11:35 AM

Investors at the Dubai Financial Market. Drake & Scull was suspended from trading in 2018

Stock exchange comeback due this year
Revenue rises by more than 50%
Cash raised from shareholder IPO

Dubai contractor Drake & Scull International has trimmed its losses in the first quarter of this year as it nears the end of a drawn-out capital restructuring process.

The Dubai-based utilities and infrastructure engineering company said in a press release accompanying disclosures to the Dubai Financial Market (DFM) that revenue jumped 55 percent year on year to AED31 million in the first three months of 2024.

Drake & Scull should resume trading on the Dubai stock exchange later this month following a five-year suspension.

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The halt by the DFM came after the company disclosed losses exceeding 75 percent of its capital in November 2018.

Following a heated legal battle that almost resulted in the contractor being liquidated, creditors and shareholders approved a restructuring plan last April and a court formally cleared it in November.

The plan included the write-off of 90 percent of debts while the remaining 10 percent would be funnelled into a sukuk, or sharia-compliant bond.

“We are glad to announce that the restructuring process is expected to be completed soon,” Fadi Baraki, the company’s chief financial officer, said in a statement to the press.

Baraki noted that an IPO subscription exclusive to Drake & Scull’s existing shareholders launched on April 25 and is expected to close May 10.

“We have full trust in all our existing shareholders to subscribe in the new capital raise. The new funds will be utilised in improving the efficiency and effectiveness of the working capital necessary to win new profitable projects in the UAE and overseas,” Baraki said.

According to the press release, net losses dropped from AED119 million in the first quarter of 2023 to AED46 million in the first quarter of 2024.

Drake & Scull appears to attribute the latter primarily to “the net financing cost of AED39 million that will be reversed back in the accounting books” after the restructuring is completed.

In March Dubai-based Mazars took issue with the company’s numbers in a report that claimed its auditors were “unable to obtain direct bank confirmations for certain bank balances, bank borrowings, provision for bank liabilities of subsidiaries and commitments and contingencies”.

Drake & Scull separately said in the press release that its backlog rose from AED435 million to AED589 million in the first three months of 2024, primarily thanks to Drake & Scull’s overseas work.

A company subsidiary was awarded work worth $50 million last week to design and build a water treatment plant in Saudi Arabia’s eastern province.