Wednesday, December 13

Contract delays will hit Depa’s profits

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By BFN News | 11:02 AM | Wednesday 29 February, 2012

Depa, one of the world’s leading interior contracting companies, says revenues for 2011 are expected to be in line with the previous year, slightly down on prior market guidance. Despite this, gross profits are likely to be higher than 2010 due to timely and efficient project execution and at a margin level similar to 2009. Net profits will be impacted by higher than normal G&A costs due to the retention of a larger number of staff to strengthen the company’s Middle East business in anticipation of major contracts coming on stream, which took longer to sign, and therefore start, than expected. Net profit will also be hit by further amortisation of intangibles at Design Studio and depreciation and amortization of the recently installed ERP system. Over the course of last year Depa signed a number of major new projects including its largest ever contract for the 27 lounges at Doha’s new international airport. It also continues to have a strong pipeline of contract letters of intent and is close to signing contracts in Saudi Arabia and in Singapore for significant new projects. The company has continued its diversification strategy winning an increasing amount of business outside the UAE with major projects in Azerbaijan, India, Malaysia, Morocco, Qatar, Saudi Arabia and Singapore. In addition, Depa increased the proportion of work from government related infrastructure work including airports and medical centres. As part of its vertical integration strategy, Design Studio opened its new factory in China in September to support its manufacturing requirements. Its balance sheet remains strong and, as in previous years, the company saw strong cash collection in the final months of 2011 and consequently an improvement in receivables.

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