Depa reviews business units as it returns to profit

Fit-out contractor Depa has begun a “strategic review” of the businesses it owns as it returns to the black.

The company, which reported a turnaround in its fortunes on Sunday, reversing a Dh272.7 million loss in 2015 into a Dh52m profit in 2016, has said that a review of all of its businesses and assets is taking place “with a view to maximising shareholder value creation and returns on equity”.

The company attributed the turnaround in its net profit figure to a growth in its margins. Although turnover only grew by 5 per cent to Dh1.73 billion (2015: Dh1.64bn), its gross margin more than doubled to 19 per cent of sales, meaning gross profit grew to Dh324.1m, up from Dh152.7m a year earlier.

Writing in Depa’s annual report filed on Nasdaq Dubai, the chief executive, Hamish Tyrwhitt, said that the group “will assess its holdings in each of its assets and determine the most appropriate course of action”.

He said that the company plans to invest mainly in organic growth but was also “continually assessing inorganic or acquisitive opportunities against its strategic and financial objectives”.

The company’s chairman, Ibrahim Belselah, said that Depa had a “transformative” year in 2016, having undergone a change in strategy embarked upon under Mr Tyrwhitt, who joined the firm in April last year.

He set up a strategic management arm of the company in Business Bay but has left operational decisions to be taken within the individual business units.

The company said that all of its businesses had performed well last year, most notably its “core” businesses that includes Dubai-based Depa Interiors and Deco Interiors, Singapore-based Design Studio, and German luxury fit-out specialist Vedder.

Mr Tyrwhitt also said that the company had made “strong progress” in resolving legacy issues, including the collection of long-term debts.

He said that solving the remainder of these “continues to be a key area of focus”.

“With the momentum that has been built to date, the resolution of many of these items is expected over the course of 2017,” he said.

Depa is looking to strengthen its balance sheet by gaining permission to offset some of its existing share premium account to wipe out historic losses, but has said that it will introduce a dividend policy starting from next year of paying out 25 to 50 per cent of annual earnings to shareholders.

“The board recognises the importance of dividends as a form of shareholder value creation,” said Mr Tyrwhitt.

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