Depa Limited issues trading update for Q3

The Company signed Dhs1.6bn of new contracts boosting its backlog by 70% to a record high of Dhs3.9bn from Dhs2.3bn, as of 30 June 2011.

Whilst this stream of new business vindicates Depa's diversification strategy in recent years, it will take time to flow through to revenue and profits. This means that 2011 financials will remain close to forecast which was revised at the half year stage with increased income coming through in 2012's numbers.

The Dhs929m contract - Depa's largest contract ever signed - is for the complete fit-out of the 27 lounges at Doha's new international airport. Lindner Depa, the Company's joint-venture, which specialises in infrastructure projects, will undertake the one year contract with immediate effect.

Commenting on the period, Mr. Mohannad Sweid, CEO of Depa, said: "We are encouraged by the amount and diversity of new business signed during the quarter, a direct reward for pursuing our core strategy of diversification combined with more stringent project selection. Despite European economic concerns and political uncertainty across many Arab countries, government spending, especially in the Gulf, continues to drive our backlog to its highest level ever and favourably positions the Company for the coming months giving us strong visibility on future revenue."

Commenting on the Doha International Airport contract, Nadim Akhrass, Managing Director, Operations, Depa said: "This very significant contract; the largest we have ever won, is in line with our strategy of increasing the proportion of revenue from major government-funded infrastructure projects. Our deal momentum in this sector has been strong and follows on from our recent Dhs109m contract for interior work at the new international terminal at Mumbai International Airport. This new contract also comes hard on the heels of the Dhs375m project we recently announced, for work on the architectural finishes at the King Abdullah Petroleum Studies & Research Centre in Riyadh, Saudi Arabia."

The Company also entered the Qatar hospitality market through a major contract for both the interior fit-out and supply of furniture, fixtures and equipment (FF&E) of all 324 guest rooms and public areas of the Ramada Plaza, Doha. The contract is valued at Dhs52m and is to be completed by October 2012.

Design Studio, Depa's Singapore and Exchange-listed subsidiary, recently reported its half year results with a 25% revenue increase and 30% jump in net profit; a strong order book of $150m, as of 10 August 2011, and a strong balance sheet of $36m in cash. Malaysia, in particular, is proving a strong source of new growth and work is on-going at the Grand Hyatt Hotel and Lanson Palace in Kuala Lumpur as well as on a number of smaller projects.

Depa's new factory in Guangzhou Province, China is on track to start production imminently. It will support Design Studio's manufacturing requirement helping Depa cater to the growing Chinese domestic demand for high-end interiors.

Finally, in Europe and the UK, Depa has won significant FF&E projects for private residences in both Central Paris and Central London