Mr. Majed Saif Al Ghurair

Dear Valued Shareholders,


Throughout 2016, DSI contented with various economic challenges that impacted the regional construction sector and the operating and financial performance of the Group. The fiscal year was a transitional year for DSI as we embarked on a mission to rebalance our portfolio and pivot back to our home market - the UAE. Our strategic decision to scale back on our global geographical reach is imperative to the continuity of our business. We have made several backlog adjustments to mitigate the risks emanating from non-performing markets particularly, the KSA. Our focus has shifted back to our roots, where we intend to recapitalise on our strong legacy, experience and favourable market condition in the MEP sector.


Looking at the Group’s performance in context of the regional slowdown and liquidity challenges in the construction industry, it is evident that our ability to execute some of our projects and to maintain our working capital was significantly subdued.


The rising systemic risk across our key markets in the GCC affected the way we do business and had several implications on our profitability and capital structure.




Overall, economic growth worldwide in 2016 was the lowest since the global financial crisis. The past fiscal year was a highly challenging period not only for our organization and our service markets but also for the whole global economy leading to a virtual standstill in 2016, with the World Bank confirming yet another difficult year of slow international trade, low-key investments, and policy swings. Even economic giant, China, had to deal with an estimated GDP growth lower than 7%, which is expected to slide further in the coming months after expanding it to 14% a decade ago.


On the other hand, emerging markets and developing economies (EMDEs), grew by approximately 3.4% in 2016 and are expected to achieve 4.2% growth this year. Activity in the MENA region, in particular, ended on a high note with the aggregate GDP picking up to 2.9% year-on-year for the last quarter. Overall, the region achieved 2.9% growth for 2016 compared to 2.6% in 2015. The UAE remained one of the region’s bright spots, with its PMI recently hitting a 17-month high in February, 2017.


In 2017, the MENA region’s economic growth will continue to be tempered by lower crude production and divergent fiscal policies. The latter will continue to impact construction spending in the region and will be the main catalyst for contractors to adopt a more cautious and conservative approach to their business models. Nonetheless, there are a few pockets of high optimism such as the UAE, which is actively preparing to host the 2020 World Expo and is currently engaged in several major projects. The domestic construction sector is expected to achieve 4% growth in 2017 and remains to be a solid and sustainable market for DSI.


In summary, throughout 2016, DSI had to balance the contrast between muted regional and global growth and the UAE’s sustained market optimism. After conducting a thorough assessment of our organizational and financial structures and international operations, we came to a clear conclusion that it is time to revisit and revitalize our connections in the UAE, our primary market, and refocus on our core MEP activities, while we divest our non-core businesses and exit high-risk geographies.


Rather than aiming directly for growth, we are currently restructuring the organization and implementing a turnaround strategy to ensure that we have the right resources, processes and plans in place to activate and sustain growth. Our immediate goals are to streamline our business, bolster liquidity, optimize governance and transparency, and secure high-potential projects.


As always, we will ensure that all our stakeholders – from our empowered workforce of over 20,000 dedicated individuals to our valued shareholders – benefit from our year-long strategy.


We will continue to invest in our people and train them with the latest technology and innovations to retain our competitive edge in the MEP market and will remain committed to generate value in the DSI brand.


DSI’s success has always been anchored on the support of its clients, partners and shareholders, and so we ask for your patience and understanding as we realign our organization for recovery, sustainable growth and success in 2017.