DUBAI: Arabtec Holding PJSC, a leading contractor for social and economic infrastructure, announces its financial results for 12 months ended 31st December 2019. Arabtec reported a net loss to parent of AED 774 million in 2019, which was attributable to the construction business (Arabtec Construction).

Other core businesses including Target (Industrial), Arabtec Engineering Services (Infrastructure) and EFECO (MEP) traded profitably and remain well-positioned within their respective sectors.

The full year loss is primarily attributable to:

• Tight liquidity in the real estate and construction sector.
• Slowing real estate sector has resulted in limited new awards.
• Settlement and recoverability of claims
• Loss from investment in an associate company.

Arabtec continues to make good progress on handing over key projects. Since Q3, Arabtec Construction has handed over six legacy projects and is confident that it will hand over additional nine legacy projects by the end of 2020. This will significantly reduce the Group’s risk around costs and will allowing Arabtec to fully focus on pursuing its contractual entitlements with clients.

Arabtec Construction is taking a selective approach to geography, clients and contract terms and will focus on its core strengths such as villas where it is well recognised for delivering quality and value.

Arabtec Group through its subsidiary Target is a leading local EPC contactor in the Oil & Gas sector working for key clients. Target is well-positioned to continue to grow its revenue and backlog through a strong pipeline of opportunities in the UAE and KSA.

Consistent with Group’s strategy Arabtec is focusing more on the infrastructure sector through its subsidiary Arabtec Engineering Services, a leading local infrastructure and utility contractor which is well positioned to take advantage of future growth opportunities in UAE including roads, bridges, sewerage, water and irrigation networks.

The key assumptions included in the Group’s forecast cash flows over the going concern period are: the Group’s ability secure adequate financial support, obtaining covenant waivers on its existing financing facilities and closing out ongoing, completed and legacy projects in accordance with forecast cash flows.

The Group continued to reduce debt in 2019 and is working closely with key lenders to align its debt with its business needs. The Group continues to right-size its workforce, reducing manpower and support functions in line with the operational requirements of the business, reducing cost and improving productivity and efficiency for the Group.

Consistent with conditions being experienced across the industry, the uncertainty due to turmoil in the oil and gas market further worsened by the impact of COVID-19 may materially affect the assumptions made in preparing these financials statements, particularly the timing of financing, new contract awards and ability to meet project milestones. At the date of approval of these financial statements, projects continue to operate and have been moderately affected by lockdown and social distancing measures in the UAE and Middle East so far.

If the pandemic increases in magnitude and duration, the continuation of these circumstances could result in an even broader economic downturn, which could have a negative impact on the Group’s financial results. Notwithstanding the measures implemented by the Group to prevent and/or detect the virus, the variety of possible outcomes related to the course of the pandemic and its adverse impact on the regional and global economy represents a material uncertainty.