Depa 2017 profit surges on recovery of long term receivables
Company's full year net income climbed almost 200% to Dh135.6
Depa, the Dubai-based interiors contractor that fitted out the world’s tallest building Burj Khalifa, recorded an almost 200 per cent jump in full-year 2017 net income as it managed to recover long-outstanding receivables.
Net profit for the 12-month period ending December 31 surged to Dh135.6 million from Dh52m reported in 2016, the company said in a regulatory filing to Nasdaq Dubai, where its shares are traded. The company managed a Dh27.5m net reversal of allowances for doubtful debts last year and reduced its trade receivable balance, it said.
“The group-wide focus on cash collection resulted in several major long-outstanding receivables being collected,” Hamish Tyrwhitt, Depa’s group chief executive said. “The collection of the few remaining long-outstanding receivables will continue to be pursued in 2018.”.
Contractors in the Arabian Gulf region have struggled in the last two years after the GCC governments cut spending amid softer economic conditions in the wake of the oil price slump. Cash flow was the biggest challenge faced by construction companies as payments for the completed jobs were delayed, forcing them in turn to withhold payments to subcontractors such as Depa.
The company said while it has made significant progress in 2017 in collecting outstanding receivables, structural issues affecting some of the main contractors in the Middle East remain.
Depa generated revenue of Dh1.8 billion in 2017, an increase of 4 per cent over a year earlier. The backlog of projects at the end of last year declined by 7 per cent to Dh1.79bn, however, the company said the project pipeline remains strong and it is pursuing further deals in various markets including the Middle East, Europe and Asia.
Dubai’s Expo 2020, global superyacht orders, and growth in the Depa’s core markets provide strong tailwinds for the company to grow its backlog with attractive, profitable projects, it said.
“The group’s focus is less on the past and more on the future: delivering existing projects for our clients and winning new quality projects," Mr Tyrwhitt said.
Depa, which finished a strategic review of its business, is investing in organic growth, while “continuously assessing acquisition opportunities against its strategic and financial objectives,” he noted.
The company, which reported more than fourfold rise in net income for the first nine months of last year on the back of its restructuring plan, said it is now focused on the next phase of its strategy of delivering consistent top and bottom line growth, and cash-backed profit.
Updated: March 1, 2018 11:56 AM