DSI Announces its un-audited Preliminary Financial Results for 2016

Drake & Scull International PJSC (" DSI" or the "Company"), a regional engineering and services leader, reported today, its preliminary un-audited monetary results for the fiscal year finished December 31st 2016.

Financial

Against the backdrop of the considerable liquidity challenges in the regional construction industry, the Groups' outcomes for the fiscal year 2016 were impacted by significant income reversals, earnings changes, cost overruns, and financial investment impairments, emanating largely from a number of disputed legacy tasks in the construction business in the KSA.

The earnings and gross earnings changes mirrored in the fiscal year are against uncertified variant orders and claims, challenged extensions of time insurance claims, and accrued uncertified job throughout key tasks primarily in the civil market.

The modifications weakened the earnings target of the company for the year and impacted the success of the group. As a result, the company reported AED 3.2 billion in revenue for FY 2016, compared with AED 4.2 billion reported for FY 2015. The net loss for the period was AED 787 million, compared to a bottom line of AED 939 million reported for fiscal 2015.

In the last quarter of the 2016, the company carried out a lot of the earnings reversals and profit adjustments as arrangements with key distressed clients on several projects attracted to closure.

DSI's Q4 2016 income was AED 540 million and the bottom line through was AED 490 million.

DSI's ongoing order stockpile reached AED 8.1 billion since December, 31st 2016 and the total value of project awards safeguarded in FY 2016 stood at AED 815 million. The UAE and the Engineering business accounted for 23% and 72% of the backlog, respectively, showing the company's strategic and continuous focus on its house market and core engineering business.

Operational

DSI's new management announced the preliminary actions of the company's turn-around plan with the consultation of PWC in Q4 2016.

Key components of the turn-around strategy include capital raising, de-risking the business, divestments of non-performing/ distressed subsidiaries, disposal and money making of non-core possessions, cost-cutting measures, deleveraging and capitalization of profitable business sectors (Engineering) to achieve a quick renovation in financial performance, and supporting the company in regards to appropriate levels of productivity, solvency, liquidity, and cash flow.

Wael Allan, Chief Executive Officer, Drake & Scull International PJSC, commented:
" Today, we are announcing the preliminary steps to maintain and reverse our business. The funding decrease is a crucial milestone in our recapitalization program and is a tactical transfer to improve the annual report and the resources structure."

" I am pleased to see that Tabarak Financial investment has made a commitment to our business. This is clear proof that DSI has solid foundation and confirms our strategy of being the leading MEP contractor in the region."

" Tabarak Investment will certainly include wonderful assistance to the new administration team and will help the company on a variety of financial and operational efforts. The fresh funding will be set aside to pursue our growth strategies in the MEP sector and to shore-up our functioning capital."

" Currently we could see a clear path onward that is helpful to all our stakeholders. Our employees and clients ought to really feel assured that their future and tasks are our utmost priority."

" The recapitalization program is crucial to the success of our turn-around strategy and we are positive that the proposed actions will certainly guide the company's trip to recuperation & sustainable growth."

" I would like to reiterate that we are devoting our initiatives to reclaim business momentum and to restore our management setting in the regional Engineering field. Our focus has changed to developing a clear course of lasting growth, owned mainly by our core MEP business."

" Our purpose is to restore our concentrate on our clients with focus on operational excellence and selective bidding process. We are qualified for key possibilities in the region and our company believe that we are well-positioned to conclude on several of these potential customers in the MEP section during the first half of the year."

" Whilst we remain to be impacted by different heritage issues, we are positive that our operations and economic position will progressively enhance as 2017 unfolds."