Depa Limited (ticker DEPA) (‘Depa’ or the ‘Company’), one of world’s leading interior contracting companies, today issues its full year audited results for the year ended 31 December 2011.
Financial Highlights
• Net revenues of AED 1.7bn (2010: AED 1.8bn)
• Increase in contract profit to AED 288.5m (16.6% of revenue), more than double FY 2010 AED 114m (including Burj Khalifa claim)
• No goodwill impairment; amortisation of AED 44.5m in part due to AED 22m full year amortisation of intangible assets of Design Studio
• Net profit of AED 51.9m (2010: AED -205.7m). Profit impacted by higher G&A costs and provision following Arcapita’s bankruptcy filing
• Cash position remains healthy; net cash down to AED 70m (2010: AED 119m) on two major capital investments – new head office in Dubai and Design Studio factory in China
• Backlog at record level of AED 3.8bn (2010: AED 2.2bn)
Mr Mohannad Sweid, Chief Executive Officer, Depa Limited said:
“Our strategy of executing luxury interiors around the world anchored the business through the more difficult years. This has helped us end 2011 in a stronger position than a year ago and marks 2011 as a turnaround year in which our revenues stabilised, our gross profit margins returned to historical norms and our backlog grew significantly. With Depa’s backlog at a record high, the Company is poised for growth in the coming years across the many geographies in which we operate.”
Highlights
Overall, 2011 was a difficult year in which to operate across the globe, with Depa’s operations being impacted by the global economic environment regardless of which country in which the Company was based. As the macro-economic situation in the region remained uncertain in 2011, the Company found many of its projects being 'held' for a while and project works starting many months after originally intended. As a result, revenues for the year were impacted by these delays and the Company closed the year with revenues of AED 1,736 million compared with AED 1,814 million in 2010. Furthermore, as anticipated projects were expected to start in the short-term, Depa experienced the associated G&A costs for the entire year, rather than in solely the project operating period.
Diversification
The Company continues to pursue a diversified client and project base and is currently operating in twenty countries around the world. Revenue in Asia increased to AED 225 million up from AED 214 million in 2010. The Company operates in four countries in Asia: Singapore, Malaysia, Thailand and India and has been executing a range of projects including new works such as W Hotel and the Fraser Suite-Singapore. Depa also established a factory and showroom in China, under the control of Design Studio, which will complement its manufacturing capability. This will also exploit an untapped interior contracting market niche of ‘fitting out’ apartments, which are handed over as shell units by the developer to the home-owner.
Depa saw the wider GCC account for a larger proportion of the backlog with an increase from 48% in 2010 to 53% in 2011. This included the signing of the New Doha International Airport and the King Abdullah Petroleum Studies & Research Centre contract. In addition the Company continues to operate in high-growth markets such as Angola and Azerbaijan. Projects such as the InterContinental Hotel in Angola and the Baku Flame Tower in Azerbaijan have presented the Company with further opportunities to explore these new markets and execute interesting projects.
The Company has witnessed increased diversification of project work over the last few years, specifically in the infrastructure segment, where it has been increasingly active on projects such as the Dubai Metro, the Dubai Airport, the New Doha International Airport and the Mumbai International Airport. Depa continues to expect this market segment to provide a significant portion of the backlog in 2012.
Backlog: record numbers
Depa ended 2011 with a record backlog value of AED 3.8 billion. This has been driven by government-funded GCC construction projects. During the year Depa was appointed to fit-out 27 lounges at the New Doha International Airport, the biggest contract in its history at AED 929 million. Without this contract, Depa would have still witnessed a record-high backlog of approximately AED 3 billion.
The Company is currently eyeing future opportunities from large infrastructure work in the GCC and South Asia, medical centres in the MENA region and hospitality work across its core GCC, Asia and Africa markets. Although Depa does not expect to replenish the backlog at the same rate at which it will be executing it, the market does provide ample opportunity for further work.
Operations: consolidation and streamlining
2011 saw further streamlining over and above that which begun in 2010. After acquiring Mivan's stake in Depa’s joint venture, Mivan Depa, the business unit was merged into the Group's global operations. This allows Depa to use the specialist ‘theming’ knowledge that we had acquired through the seven years of this JV across a wider number of different business units and countries.
In addition, and in an effort to consolidate operations and extract different synergies from both manufacturing and contracting divisions, Depa has integrated Pino Meroni's operations into Depa Industrial Group, one of our manufacturing-focused facilities.
Finally, Depa has established Design Studio China and has launched a showroom and manufacturing entity in Guangdong, China to in-source manufacturing capacity to meet client demand as well as service the fit-out requirements of individual home-owners.
Depa expects to continue streamlining in 2012 to ensure maximum efficiency and productivity across the Group.
Reporting and Guidance
Going forward, the Company has decided to implement quarterly financial reporting in line with international best practice. The Company believes that this will help the investment community understand Depa’s business cycle better. In addition, given the current market environment Depa will be reducing market guidance until markets become more predictable.
For the full version of the annual report and the audited financial statements, please visit the NASDAQ Dubai or Depa Limited websites.
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For further inquiries, please contact:
Depa Limited
Noor Sweid
Managing Director, Strategy
strategy@depa.com
Tel: +971 4 224 3800
Brunswick Gulf
Rupert Young / Jade Mamarbachi
depa@brunswickgroup.com
Tel: + 971 4 446 6270
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 luxury hotels, infrastructure and public sector amenities such as hospitals and airports, high-end residential properties, retail outlets, as well as yachts. 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:
By integrating these services into a single package, Depa provides clients with comprehensive and customized interior contracting solutions.
With more than 9,000 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 (El Jadida).
For more information, please refer to the corporate website: www.depa.com
