Depa Limited
Headline : Depa Corrected Trading Statement
* This announcement supersedes the earlier trading statement made to CANDI on 17 February 2009. The previous announcement states the correct cash position of approximately AED352.2million, but the conversion to dollars, is incorrect and is USD96m not (USD70m) as of the year end.
Dubai, 17 February 2009 – Depa Limited (ticker DEPA) (‘Depa’ or ‘the Company’), one of the world’s largest interior contractors, today issues the following update ahead of the announcement of its full year audited results, expected to be published on 30 March 2009. The date reflects the time needed to consolidate 26 companies for the first time as a public reporting entity.
Depa operates across sixteen countries and is performing well. The Company confirms that it is trading in line with market expectations and has achieved circa 37% revenue growth and circa 40% net profit growth for the year ended 31 December 2008. Given the current market climate and as the Company has historically been conservative with estimates and expectations, implementing high levels of risk management measures, the management has decided to increase the level of cautiousness and risk management around existing projects and clients’ payments. Accordingly, the management has decided to increase the allocation of project contingencies over and above the ordinary provisions for such events by between AED30-33 million (USD8.17 million) for projects that are ongoing and are to be completed in 2009 on a revenue accounting basis of percentage of completion. These contingencies are not allocated or related to any risk other than the current market. This is an increase of 250% over and above the conservative average allocated annually to the projects. Accordingly, the net profits have been reduced, resulting in recognized growth of 20-22% for net profits for the fiscal year 2008, after the additional contingencies have been accounted for.
Going forward, the Company is expecting revenue and profit growth of between 30 – 35% in 2009 (excluding the above AED30 million contingencies) and continued growth in 2010. To this effect, Depa has received orders for 17 projects to the value of AED1.05 billion (USD286 million) in the first quarter of 2009 between Morocco, Egypt, Saudi Arabia and the UAE. This includes prestigious works such as the fit-out of Palazzo Versace Hotel in Dubai and the refurbishment of the Minister Office of Defense and Aviation in Saudi Arabia and Depa has begun immediate work on these projects. This is in addition to the backlog of AED2.7 billion (USD736m) as of December 31st, 2008, which includes, but is not limited to; Burj Dubai, Dubai Metro, Mazagan Resort in Morocco and Marina Bay Sands Resort in Singapore. As always, the strong contracted backlog of projects encompasses only those projects where Depa is on site, and currently totals AED3.75 billion (USD1.02 b).
Being at the end of the development chain, Depa typically moves on site to finish a building as a last stage before occupation and hence, at a stage where the project is extremely unlikely to be postponed or cancelled.
Additionally, the business continues to successfully negotiate Letters of Understanding and has secured several significant works in the last quarter of 2008 and since the beginning of 2009. Although these are at a less advanced stage, they have been carefully selected due to their certainty of being completed; often as a result of their iconic nature. The majority of these are outside the UAE and those within the UAE are within the infrastructure sector and are expected to contribute positively to revenues during 2009.
Depa continues to be selective over the projects it works on and the clients for which it works. Depa’s clients are typically reputable international companies such as Obayashi Corporation on the Dubai Metro project (JV) and Samsung on Burj Dubai (JV). Importantly, Depa has a very low level of project and client concentration risk, as no project or client accounts for more than 8% of current backlog.
The Company maintained a strong cash position of AED726 million (USD198 million) and total debt on the balance sheet reached AED373.8 million (USD102 million), leaving Depa in a net cash position of approximately AED352.2million (USD96m) as of the year end.
In line with its strategy, Depa continues to diversify revenues and reduce dependence on the UAE market and the hospitality industry and focus on counter-cyclical sectors such as infrastructure and refurbishment. In 2008, Depa completed AED176million (USD48m) in infrastructure contracts in 2008 compared to AED60million (USD16m) in the previous year, including the complete fit out work of 13 Dubai Metro stations, and expects the 2009 growth in infrastructure works to be as significant as prior year’s growth. The Company recently completed the refurbishment of the Bustan Rotana Hotel, on which it did the interior fit out twelve years ago, and is currently engaged in refurbishment projects in Saudi Arabia and in Egypt. Since 1 January 2009, Depa has signed refurbishment contracts to the value of AED200 million (USD54.5m), indicating a significant rise in the volume and size of the refurbishment market. The Company also continues to hold discussions with hotels which are considering refurbishment plans and expects a significant number of these to contribute positively to revenues in 2010 and 2011.
Depa has also made strong progress on its entry into new markets. 2008 saw its joint venture Depa Design Studio successfully win two prestigious contracts in Singapore; the Marina Bay Sands Integrated Resort and an entertainment venue at Resorts World, an integrated holiday resort on the popular island of Sentosa. In line with the firm’s strategy of vertically integrating manufacturing and procurement, we increased our positions in Design Studio in Singapore and in Jordan Wood Industries in Jordan. We also continued our horizontal expansion strategy and acquired Vedder, a German yacht fit-out company. These acquisitions continue to strengthen the Company’s core manufacturing support and establish its position internationally and in new markets niches.
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For further inquiries, please contact:
Depa Limited
Noor Sweid
Managing Director, Strategy
Tel: +971 4 224 3800
noor.sweid@depa.com
Brunswick Gulf Ltd
Rupert Young / Azadeh Varzi
ryoung@brunswickgroup.com / avarzi@brunswickgroup.com
Tel: + 971 4 365 8260
About Depa Limited
Depa Limited is a leading interior contracting company in the Middle East, North Africa and Southeast Asia regions. Operating principally in the luxury fit-out industry, its main areas of business cover 5 star hotels, high-end residential properties, retail outlets, yachts, as well as public sector amenities such as hospitals and airports. Depa is listed on the NASDAQ Dubai (ticker DEPA) and has Global Depositary Receipts on the regulated market for listed securities of the London Stock Exchange plc (ticker DEPA and DEPS).
The range of business activities performed by Depa comprises:
•Interior contracting: which focuses on luxury interior fit-out services, which include installation and finishing of floors, walls, ceilings, fixed joinery, panelling, wood-works, doors and frames;
•Manufacturing: which comprises a network of factories and joineries which produce customized furniture, fixtures and equipment (FF&E);
•Procurement: which involves the procurement of supplies and materials from third parties to support and complement Depa's interior contracting and manufacturing operations as well as third party procurement contracts for specific FF&E projects.
By integrating these services into a single package, Depa provides clients with comprehensive and customized interior contracting solutions.
With more than 8,000 employees worldwide, the company operates through an integrated network of subsidiaries, affiliates and representative offices located in the UAE, Saudi Arabia, Qatar, Egypt, Jordan, Syria, Libya, Morocco, India, Malaysia, Thailand, China, Singapore, UK, the Netherlands, and the United States. Through this network, Depa has successfully executed large and complex projects in over 16 countries including the Burj Al Arab Hotel (Dubai), Emirates Palace (Abu Dhabi), the Museum of Islamic Art (Doha), Four Seasons Hotels (Sharm El Sheikh & Mumbai) and Mazagan Resort (Casablanca).
