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DSI claims bumper revenues to come before it resumes trading

DSI's project include the Louvre Abu Dhabi. Its backlog is reported to be worth AED638 million Alamy via Reuters
DSI's projects include the Louvre Abu Dhabi. Its backlog is reported to be worth AED638 million
  • DSI expects 10-fold revenue rise
  • Return to trading imminent
  • Share price down to AED0.25

Dubai’s Drake & Scull International is forecasting a more than tenfold increase in revenues between this year and the end of 2029 as the troubled contractor prepares to return to trading on Dubai Financial Market.

Trading in the utilities and infrastructure engineering company’s shares came to a halt in November 2018 when DSI disclosed losses exceeding 75 percent of its capital.

The resumption on Wednesday will mark the next step on a restructuring journey for the company.

Shares will be priced at AED0.25, down from the AED0.37 price when they last traded. 

A bourse filing on Monday said DSI has a project backlog estimated to be worth AED638 million ($173 million), which is to be completed from this year through to 2028.

“It is important to highlight that the operations are being depleted due to the inability to win new projects as well as the significant liabilities on its books,” the bourse statement said.

Nevertheless, the company is projecting revenues of AED315 million this year and for that to hit more than AED3 billion by the end of 2029. It is due to relaunch operations in the third quarter.

Gross profit is also expected to rise sharply, from AED16 million this year to AED384 million in five years’ time.

Ebitda is forecast to turn round from a AED69 million deficit this year to AED184 million in the black over the same time period.

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

A fresh issuance of shares raised AED454 million. Under the recovery plan, 90 percent of debts were written off, which achieved a capital gain of AED3.4 billion. The remaining 10 percent raised AED365 million through a mandatory convertible sukuk.

Reversing accrued interest expenses and provisions for legal cases is believed to have saved in the region of AED414 million.

The statement said this would be reflected in the company’s Q2 financial results, leading to an overall equity improvement of around AED4.6 billion.

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