DRA warns of falling revenue, launches optimisation review
PERTH (miningweekly.com) – ASX- and JSE-listed DRA Global has flagged lower revenue and earnings for the 2022 financial year, with the board resolving not to declare a special dividend for 2021 and deciding instead to launch an optimisation review.
The mining services group on Wednesday told shareholders that revenue for the 2022 financial year is expected to range between A$900-million and A$1-billion, compared with the A$1.2-billion reported last year, while underlying earnings before interest and taxes are expected to range between A$15-million and A$25-million, compared with the A$56.5-million reported last year.
DRA is anticipating a non-cash impairment of between A$10-million and A$15-million for the financial year, relating to certain operations in its APAC business.
The company told shareholders that the key drivers affecting the revenue expectations included an increase in anticipated losses in residual fixed-price construction work, the likely under-recovery of material contract assets, project delays and a recent arbitration ruling around issues with Liqhobong Mining Development Company.
While DRA was awarded A$160 405 in the arbitration proceedings, Liqhobong was awarded A$2.85-million.
Meanwhile, DRA also reiterated expectations that the company’s US Energy Operations business would be negatively affected in 2022, as the activities were dependent on a tax credit scheme that expired at the end of December 2021. All such activities ceased in January and are not anticipated to restart during 2022.
Higher-than-expected costs and lower productivity year-to-date have contributed to a deterioration in performance and further losses on residual fixed-price construction contracts. A range of mitigating actions have been taken or are underway, including the termination of some loss-making contracts during the first quarter of 2022, DRA said.
However, some of the contracts remain active and further losses are anticipated prior to completion.
DRA told shareholders that the company is now undertaking a review of its business portfolio, operating model and cost structure, in order to optimise shareholder value.
The Australian Takeovers Panel is currently considering orders against DRA, after this week declaring unacceptable circumstances around the actions of certain DRA management and board members.
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