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Mon 15 Mar 2010 08:29 PM

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Dubai's Drake plans 7% cash dividend, expansion

Contractor also planning to start operations in Egypt and Oman this year.

Dubai contractor Drake & Scull International plans a 7 percent cash dividend for 2009 and has approved the acquisition of a firm in Qatar as it expands further to weather a downturn at home, an executive said.

Drake - which specialises in mechanical, engineering and plumbing (MEP) businesses and listed on the Dubai bourse a year ago - is also planning to start operations in Egypt and Oman this year, Zeina Tabari, the firm's chief corporate affairs officer, told Reuters in an interview.

On Monday, she said: "The board will recommend to shareholders a dividend payment of 7 percent ... we believe it's a good time to distribute to shareholders."

She added: "The board has gone ahead and approved the start up of operations in Oman and Egypt and approved the acquisition of the company in Qatar."

She also said that details of the acquisition would likely be announced in the next 10 days.

Drake has been rapidly expanding operations outside Dubai, where house prices plunged some 60 percent since their peaks in 2008, and billions of dollars worth of projects have been put on hold or cancelled.

Tabari told Reuters in February the firm has $136 million to spend on acquisitions in 2010, including a firm in Qatar and two in Saudi Arabia.

The Qatar acquisition will be an MEP business while the two in Saudi Arabia will be an MEP and a civil construction firm, she said.

Gulf Technical Construction Company, a subsidiary of DSI, was awarded two contracts worth a total of $131.8 million by Damac Properties in Dubai, Drake said earlier in March.

Drake's projects include luxury hotels such as the Shangri La Qaryat Al Beri in Abu Dhabi.

The company won seven contracts worth a total of $544.5 million in the Gulf Arab region, Sudan and Thailand in 2009, bringing its order backlog to $898.5 million.

Drake's shares closed 1.1 percent lower at $0.24 a share in earlier trading, underperforming Dubai's bourse which fell 1.4 percent.

Drake made a lower-than-expected net profit of $11.1 million in the fourth quarter, according to Reuters calculations, after its net profit for the year rose 32 percent.

Deutsche Bank in Febrary cut Drake's share price target to $0.29 from $0.35, citing a faster than expected decline in the Dubai construction sector and disappointment with the fourth-quarter profit. (Reuters)

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