UPDATE: chairman and board member resign amid investigation
Drake & Scull International, the Dubai-based contractor undergoing a restructuring amid years of losses, is under investigation by UAE regulator the Emirates Securities & Commodities Authority, it confirmed in a stock exchange filing on Monday.
The ESCA has set up an audit committee to examine DSI’s financial statements, as the construction firm continues to report widening losses and a string of senior management exits.
Last month, the company fired its chief executive Tawfiq Abu Soud – who was appointed to the post in January – as well as chief financial officer Khaled Jarrar and chief legal officer Mohamed Ghanem. DSI was suspended from trading on the Dubai Financial Market, where its stocks are listed, last November.
“Reference the announcement by the Emirates Securities & Commodities Authority [that it has formed] an audit committee to investigate Drake & Scull and examine its financial statements, the management welcomes this decision and reaffirms its continued commitment to fully cooperate in this regard and any matter that benefits the company and its shareholders,” DSI’s bourse filing on Monday said.
DSI posted a net loss of Dh4.5 billion for 218, widening from Dh1.18bn in 2017. It attributed the loss mainly to “allowance against expected credit losses ... and impairment of goodwill”.
Full-year revenue declined 70 per cent year-on-year to Dh798 million. Earlier in April the board received approval from shareholders to sell some of the company’s assets as it tries to narrow losses amid its ongoing restructure.
In its statement this week, DSI thanked the ESCA for its efforts and support for the restructuring plan it began this year, after appointing advisors last November. “Furthermore, a committee with banks has been formed to look into the company’s obligations and find solutions that support the continuity of operations and portfolio of investments,” it said.
The statement added that DSI was committed to transparency, responsibility and governance in line with the objectives of its restructuring plan.
Last year, DSI appointed Tussbridge Advisory as financial advisor, and law firms Allen & Overy and Al Tamimi & Company as legal advisors, to oversee the development of a new business plan.
The business fell on hard times amid a softer property and construction sector in its core UAE market, on the back of a three-year oil price slump that began in 2014.
