11/05/2022 - 14:40

DRA hit amid delays, contract issues

11/05/2022 - 14:40

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Contractor DRA Global says its revenue may drop by as much as 25 per cent this year after contract losses and project delays.

DRA hit amid delays, contract issues
DRA Global has worked on infrastructure and mining projects. Photo: Attila Csaszar

Contractor DRA Global says its revenue may drop by as much as 25 per cent this year after contract losses and project delays.

The business told markets today it forecast revenue of between $900 million and $1 billion for the financial year, down from $1.2 billion in 2021.

DRA said it would need to make an impairment of up to $15 million, and underlying EBIT excluding the impairment would be between $15 million and $25 million.

That compared to EBIT last year of $57 million.

Costs had lifted, productivity has fallen and DRA was making losses on fixed price contracts, the company told the ASX.

Some contracts had been terminated and DRA said it will be exiting fixed price construction work in some markets.

That would lead to lower revenue but improved long term earnings and profitability, the company said.

DRA was also in a contract dispute over a completed project, the announcement said.

Management would undertake a review of the business and target costs.

Shares in DRA were down 3.7 per cent to $2.59 at the time of writing.

It comes a day after the Takeovers Panel issued a media release which declared unacceptable circumstances in the aftermath of a leadership change.

Former chief executive Andrew Naude left the helm of the business on March 11, after a week-long break from trading.

That followed a move by senior managers who met to plan operational changes, including to the chief executive and the chair.

Between them, they held 11.3 per cent of the company’s shares, the Takeovers Panel said.

Some shareholders signed undertakings to the four managers that they would support resolutions to remove the chair and chief executive.

But the panel found the four had been working together for the purposes of a takeover and had not declared their aggregate voting power, with pledged supporters, had exceeded the level needed for declaration.

The panel said it was still considering the application in relation to orders.

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