Drake & Scull announces positive note after return to markets

Unsplash/Agnieszka Kowalczyk

• Mid-year net profit of $8.17m
• Resumed DFM trading two months ago
• Losses down to $12m

Construction company Drake & Scull International has reported mid-year net profit of AED 30 million ($8.17 million) two months after it resumed trading on the Dubai Financial Market following a scandal-plagued, six-year suspension.

Engineer and chairman of the board of directors Shafiq Abdelhamid said in a statement that he was “pleased” with Drake & Scull International’s (DSI’s) “return to profitability” so soon after exiting a drawn-out and challenging overhaul.  

“In addition the company was suffering from catastrophic financial, legal and operational conditions inside and outside the UAE,” Abdelhamid said.

---

---

At one point, DSI racked up losses of AED5.5 billion ($1.5 billion), which nearly led to its bankruptcy, he noted.

When including write-offs of debt and other liabilities worth AED4.1 billion ($1.1 billion) under its approved restructuring plan DSI’s mid-year net profit was AED3.76 billion ($1 billion).

Last April creditors and shareholder approved the restructuring plan, which would write off 90 percent of debts and turn the remaining 10 percent into a sukuk, or sharia-compliant bond. A court formally cleared the plan in November.

• Drake & Scull opens nominations for new board
• Global legal saga continues for Dubai entrepreneur
• DSI claims bumper revenues to come before it resumes trading

By the end of the first quarter of this year and ahead of its return to DFM, DSI reported declining losses, down to AED46 million ($12 million) from AED119 million ($32.4 million). 

According to a press release DSI’s equity moved from a deficit of AED4.4 billion ($1.2 billion) at the end of last year to a surplus of AED180 million ($49 million) six months later.

Bahrain’s SICO Bank analysts wrote in a research note that the results looked like “a turnaround for the contractor at the expense of creditors”. 

“While the stock may outperform in the near term given the turnaround and write off of the liabilities, it will be interesting to see if the banks will again lend to the contractor after taking such a big hit from its previous exposure.”