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Abu Dhabi, UAEMonday 25 June 2018

Depa H1 profit soars after a turnaround in UAE units

Legacy resolutions and restructuring helped the contractor boost profit

Depa's chief executive Hamish Trywhitt said the outlook for the company "remains the most positive it has been for some time." Delores Johnson / The National .
Depa's chief executive Hamish Trywhitt said the outlook for the company "remains the most positive it has been for some time." Delores Johnson / The National .

Depa said its first half profits more than quadrupled as the company carried on with its restructuring programme related to legacy issues that have plagued the interior designer since 2012.

The Dubai company’s profits in the first six months of the year rose to Dh113.3 million from Dh19.4m in the year earlier period, Depa reportedon Sunday.

“The group’s success is a result of sound operational performance combined with management’s resolution of a number of legacy items,” said group chief executive Hamish Tyrwhitt.

The fit-out contractor began to restructure last year creating four key business units overseen by Depa: Depa Interiors and Deco based in the UAE, Singapore’s Design Studio and Vedder in Germany.

Company branches inside the UAE that cater to high-end retail and commercial interior designing, have struggled as a result of lower oil prices and problems collecting outstanding payments, according to Majd Dola, senior analyst at Abu Dhabi’s Al Ramz Capital.

Both Depa Interiors and Deco faced downward pressure since 2014, however last year began to feel some reprieve.

“Now, we’re looking at positive numbers this year,” Mr Dola said.

“The turnaround in Depa Interiors is a major catalyst for the company due to its size of contribution to sales and profitability.”

Legacy issues, or outstanding payments from clients, has plagued the company since 2012, squeezing margins and leaving Depa with negative equity. The company said that the “disputed amounts relating to a contract cancelled by a customer in 2012 were amicably settled” out of court.

Revenue increased 8 per cent to Dh834.6m while Mr Dola said that cash flow remained robust.

In addition, Depa said that it delivered shareholders a 25 to 50 per cent payout ratio from the net profit after minority interest.

This was 2.5 fils per share for the half year, but Al Ramz expects this to move up to 5 to 6 fils.

The share price for the Nasdaq Dubai-listed company closed up 4 per cent to 39 US cents in Dubai

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An exchange switch to Dubai Financial Market (DFM) is being considered by the company, according to some analysts.

Nasdaq Dubai trades in US dollars, which may be off-putting to local investors as it adds another layer to the trading process.

By switching from Nasdaq to DFM, the company would create more liquidity and allow investors to trade in the dirham which will boost trading activities, Mr Dola said.

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Read more:

Depa weighs up unit sales in review as CEO considers new acquisitions

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