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Construction delays, increased costs weigh on Arabtec in H1

Construction major Arabtec Holding's net loss of for the first-half of 2020 widened to Dh794 million against Dh58 million for the same period last year, hit by delays in construction and an increase in cost for some major projects.
It also blamed tight liquidity, a recession in real estate, and a lack of mega project awards for the increase in net loss and provisions and a decrease in cash-flow.
Its revenues plunged to Dh3 billion against Dh4.2 billion, while per share loss reached Dh0.526 from Dh0.04 during the comparative period. Its total assets also shrank from Dh10.25 billion at the end of December 31, 2019 to Dh9.78 billion at the end of June 30, 2020.
The Dubai-listed company's shares slumped nearly five per cent to Dh0.917 per share on Sunday, becoming the worst-performing stock of the day.
The group has net liabilities of Dh1.74 billion as of June 30, 2020. Its losses exceeded 50 per cent of its issued share capital, hence, it requires to call a general meeting of the shareholders to vote on either dissolving the company or to continue its activity with an appropriate restructuring plan within 30 days. The group has secured financing facilities amounting to Dh1.395 billion.
In order to address accumulated losses, the company said it will focus on handing over all legacy projects due to completion in short-term, pursue all legal and commercial entitlements to secure and recover the group's contractual rights. It said the group's restructuring to continue, including consolidation and transformation to reduce operating costs. It will also dispose off non-core assets to enhance group's liquidity.
Its board will call Extraordinary General Assembly meeting to discuss and determine the future options for the group. The group is negotiating and will soon engage with an advisory firm to assist management in a capital and debt restructuring exercise, it said in a statement issued on Sunday.
waheedabbas@khaleejtimes.com