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CONTENTS

2013 was a year of continued growth for DSI with major milestonesachieved in the Middle East , North Africa, LEVANT , Europe and India.

The companys backlog is at an all time high of AED 12 billionrepresenting a 32 % year on year increase.


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COMPANY PROFILE

Chairman Message .............................................................................................................0

CEO Message ........................................................................................................................0

Board of Directors ...............................................................................................................0

Facts and Figures .................................................................................................................0

Risk Management and Corporate Governance ........... ............ ............ ............ .......0

Corporate Social Responsibility ......................................................................................0

Our People .............................................................................................................................0

Financial Review ...................................................................................................................0

FINANCIALS

Directors Report ..................................................................................................................0Auditors Report ...................................................................................................................0

Financial Statements ..........................................................................................................0


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002 Annual Repor

Dear Valued Shareholders,

As I begin to gather my thoughts to address you onceagain and review our progress and the state of our industryworldwide, I realize that 2013 has been a remarkableyear with many rewarding moments, as well as somechallenges. DSI continues to admirably uphold its 130 yearlegacy of excellence with a bold and visionary spirit. Thatsame sense of determination and entrepreneurship which

led two gentlemen with an unstoppable dream to createDrake & Scull so many decades ago is still inherent in theway we do business which has grown to new heights,spanning the globe with over 25,000 employees in 12countries and more than 700 quality projects deliveredaround the world.

2013 showed an improvement in global economicconditions as a result, short-term risks within the businesshave significantly been reduced. Even though the worldseconomy continues to better itself, the pace is somewhatslow. Dubais historic win of the EXPO 2020 is a validation ofthe UAEs investment in critical infrastructure, with the DubaiTourism & Commercial Marketing estimating $8.8 Billionexpenditure on new developments required for Dubai to be

ready to host the Expo, at Destination Dubai 2020.

Construction projects worth $70 billion were completedin the GCC in 2013 and according to a recent studyconducted by Ventures ME the market is expected to seea growth of 17.4 percent in 2014, with new projects valuedat approximately $82.2 billion to be awarded in the GCCalone. Saudi Arabia and the UAE remain firmly in the topspots as the regions two biggest markets, dominating inmost sectors, while Qatar is leading the way in educationand healthcare projects. The transportation sectorexperienced a surge in new project awards, particularly inthe Rail sector where major projects worth $250 Billion

have been earmarked for the next decade across the UAE,Qatar, KSA, and Kuwait, according to a Terrapin study.

Overall sentiments across the region are more positiveand developments are once again moving forward. Thereis indeed still a lot of speculation as to whether or not wewill witness yet another potential boom and bust; howeverthe greater overall outlook is that 2014 is expected tobring in a significant increase in momentum with more

market activity. Financial strains and adjustments withinthe European Community and in the United States haveslightly subsided, but they have not disappeared. Whilecurrent global financial conditions have begun to stabilise,cash flow consistency and delayed payments continue tobe obstacles, although in this regard, the situation is betterthan last year. Global liquidity has increased and there isa larger appetite for risk among investors which has led toasset prices moving upwards while capital flows have risenin emerging economies.

In this highly competitive business, it is our innovation andforward-thinking approach that enables us to successfullyadapt to the constantly changing global market. Throughits drive and dedication, DSI continues to meet clientdemands and deliver excellence while remaining at theforefront of the industry.

DSI has continued to excel as an industry leading,integrated services provider offering our clients anextensive range of superior end to end solutions. Our solidperformance is an indicator of our unwavering commitmentto excellence and innovation as we continue to build ourglobal presence and extend our reach. The levels of successthat we are able to achieve due to this approach is clearlyseen in the number of projects awarded in 2013 whichtotaled AED 7.5 billion - up from AED 5.4 billion in 2012.2013 saw DSI achieve its highest revenue and backlog

CHAIRMANS

MESSAGE

DSI has grownto new heightsacross the globewith over 25000employees in 12countries andmore than 700quality projects.

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to date. Our earnings per share is up 74% and we aredefinitely seeing more stability within the construction se

We have established and consolidated our positions inand emerging markets such as India, Algeria, Jordan anIraq which all show a great deal of potential and presenseveral new opportunities in the future. These marketsare a gateway to an increased and stronger backlog witpotential for realising higher margins although currentlygreater part of our backlog is generated in KSA. This is wour presence in Saudi Arabia, is crucial to our continued

growth as the majority of our revenue is emerging fromthis market. In addition to Saudi Arabia, our developmin Abu Dhabi, Dubai and Qatar are steadily progressingand are also a vital part of our future revenue stream. Ostrong presence in these three markets, and in most mcountries in the MENA, Asia and Europe has proven tobe highly beneficial for our continuous growth, while alpresenting us with new opportunities and further succein each sector.

Our ability to deliver quality projects, in remote locationsat good margins is and will be our priority and positionsas a preferred business partner and a leading contractothe region. We will continue to increase our portfolio, an

invest in cutting edge technology in order to expand ouglobal presence by venturing into new markets and creamore opportunities for development across every segmof our business.

We do not reach our goals and simply stop there! Wekeep on aiming higher and moving forward. We willcontinue to enhance the companys structure, expandour offerings, win new business and seek out new marand opportunities for growth which increase profitabilitand maximise shareholder value.

In closing, I would like to thank everyone at Drake & Scfor their passion, dedication and drive. Every individualin this company has something to contribute, and oursuccess is a direct result of everyones hard work. We thour shareholders for their unyielding support and of coour highly esteemed clients. We look forward to continsuccess and prosperity in the year ahead.

Majid Al Ghurair, ChairmanDrake & Scull International PJSC (DSI)


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02Dear Valued Shareholders,

The end of 2013 brought back a great deal of renewedfaith and positivity into our industry. Business continuesto pick up momentum in key markets such as the UAEand Qatar, which is g reatly due to the outstanding Expo2020 win in Dubai and the Qatar 2020 World Cupsteadily moving forward.

As the markets improve, we still anticipate seeing somechallenges in margins and profitability in the near term.

However the cash flow situation, which was uneasy in2012, has significantly improved.

Sentiments are positive throughout the industry anddevelopers have started paying on time, which is alsoan improvement. This clearly signifies the renewedsense of eagerness and readiness among developers toclose outstanding debts and begin moving forward withnew and fresh ideas.

Although regional competition has become ratherfierce with the increased influx of European and Asiancompanies into the GCC; we continue to expandour footprint in newer strategic regions while alsoconsolidating our position as industry leaders in our

existing markets by offering a one stop shop package.Our expertise in the region, ISO certification andhigh tech engineering technology and modern BIMdesign capabilities have given us an edge overour competitors.

Our skilled and highly motivated people are a drivingforce in the success of our organization and we allremain focused on our shared vision for furtherexpansion and operational excellence. We are confidentthat the achievements we have seen in 2013 will be

just as strong in the year ahead and DSI will continueto play a pivotal and leading role within the industry.The

investments we made over the last two years are nowmaterializing to create a future of exceptional integratedengineering services with tremendous opportunities forDSI across all sectors in 2014.

At the end of 2013, we managed to sustain positivemomentum in our project wins as total project awardsreached AED 7.5 billion in MENA, South Asia andEurope taking the backlog to a record high of AED 12billion. Our performance demonstrated solid resultsacross all markets. Net profit for the fiscal year closed

at AED 182 million and revenues at AED 4.9 billionrepresenting a year on year increase of 58 % and47 % respectively.

Operational excellence was the key highlight of the yearacross all our business streams and markets resultingin an increase of 58% in our operating profit comparedto 2012.

Our eng

ineering and general contracting businessesremain the key contributors to our revenue stream andRail and Oil & Gas will continue to consolidate theirpresence in the GCC, North Africa and Levant.

Improved collections and advanced payments on major

projects boosted our net operating cash flow to AED165 million. Our working capital was also significantlyimproved as we aimed at reducing receivables daysand improving our cash conversion cycle to maintainliquidity and to deliver on our growing backlog. Wecontinue to focus on cost reduction, return on capitaland liquidity to drive sustainable performance across allour markets. We will also remain selective in the newconstruction projects we undertake in order to minimizerisk and preserve capital.

Today, the collaborative capabilities of our Engineeringservices (MEP and Water and Power), General

Operationalexcellence wasthe key highlight

of the year acrossall our businessstreams andmarkets resultingin an increaseof 58% in ouroperating profitcomparedto 2012.

CHIEF EXECUTIVESMESSAGE

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Bank, ITCC and KAPSARC and we are very optimisticabout our prospects in this promising new segment

Our German Water and Waste Treatment subsidiaryPassavant Energy & Environment continues to improits market share in Eastern Europe and MENA markThe companys patented technologies will providepotable water access to millions of people while alshelping to recycle industrial waste water back intoagriculture. Passavants pioneering work on the SaidWaste to energy Plant (Lebanon) leads the introduc

of Waste to Energy to the region, by breaking downover 300 tons of mechanical waste daily, into 5MWof electricity and 43,000 tons of organic fertilisers,and irrigation water which are fed back into Lebanoenergy grid and agriculture respectively.

Finally, with the right management in place andenhanced operations, efficiency is at an all-time highData is being collected and analyzed more thoroughand innovative strategies are in place to heighteninfrastructure development, human resources and ogeographical reach. Our prime objective is to not onwin business but to ensure that we plan, execute andeliver quality projects. It is our People, Passion andInnovation which enables us to achieve excellence. am more confident than ever that the accomplishmwe have seen in 2013 will be just as strong in the yahead and Drake & Scull International PJSC (DSI) wcontinue to play a pivotal and leading role within theindustry and remain a formidable competitor in thesever-evolving markets.

I would like to thank every member of our Drake &Scull family for their endless support, hard work anddedication. We have overcome several challenges asuccessfully navigated our way through obstacles thlay within our course. The outlook for 2014 is positand I am optimistic that DSI will continue to increasshareholder value, generate more opportunities for

business growth and enjoy even further success ah

Contracting, Oil and Gas, Rail and Infrastructuredevelopment continue to deliver strong performancequality work on project sites. Armed with a multiculturalworkforce, inherent financial strength and solid regionalexperience, we remain positive about the outlook of ourregion as we are capable to differentiate ourselves in

our markets and in turn reduce competition and realizeimproved margins.

We have productively expanded our services portfoliothrough investments in technology and personnel,which we expect to be significantly fruitful in the nearfuture. Our rail business recently won their first projectand we are extremely confident that the rail businesswill continue to excel and receive even more businessas this sector gains traction in the region. Our strategicalliance with Huawei gives us a considerable advantagein offering our services to the rapidly growing DataCenters segment with ongoing projects for Al Rajhi

Khaldoun Tabari, Vice Chairman and CEODrake & Scull International PJSC (DSI)


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BOARD OF

DIRECTORS

03

MAJID SAIFAL GHURAIR

CHAIRMAN

Mr. Majid Saif Al Ghurair isthe Chairman of Drake & ScullInternational PJSC. Mr. Al Ghurairholds the title of CEO of AlGhurair Private Company as wellas Managing Director of Gulf

Extrusions Co. and Arabian CanIndustry and is the President ofBurjuman Centre LLC and ReefMall. He was also a key memberin the formation of the MiddleEast Council of Shopping Centresand currently holds the positionof Chairman of the Council, aswell as of the Dubai ShoppingMalls Group.

KHALDOUNTABARI

VICE CHAIRMAN AND CEO

Mr. Khaldoun Rashid Tabari isthe Vice Chairman and CEO ofDrake & Scull International (DSI)PJSC. Mr. Tabari also serves as aboard member for DEPA, EMCORFacilities Services Group (ME),

Walltech; Cedar Mills, JordanFleet Leasing Company; FirstQatar Real Estate and EnergyCentral in Bahrain.

TALAL JASSIMAL BAHAR

BOARD MEMBER

Mr. Talal Al-Bahar is anindependent board member anda member of the RemunerationsCommittee of DSI PJSC.Mr. Al-Bahar has served invarious positions, starting off as

Chairman and Managing Directorof Kuwait Invest Holding Company,Chairman of International FinancialAdvisors, Vice Chairman and CEOof IFA Hotels and Resorts, andis affiliated with Raimon LandPLC, United Investments PortugalCommercial Real Estate Co., KuwaitInvest Holding Company.

YUSUFAL-NOWAIS

BOARD MEMBER

Mr. Yusuf Al Nowais is anindependent Board Member ofDSI PJSC, and the Chairman of theAudit committee. He is currentlythe Chairman and ManagingDirector of Arab Development

as well as the Chairman, ViceChairman and Member of theBoard of several other governmentand private institutions includingAbu Dhabi Holding, Al Rayan RealEstate, Technical Metal Industries(TMI), Al Maabar, Rotana Hotels &Real Estate Investment Company.He is also an Honourary Memberof the Al Ain Sports Club.


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JAMAL SAEEDSALEH AL-NUAIMI

BOARD MEMBER

Mr. Jamal SaeedSaleh Al-Nuaimi is anindependent boardmember and a memberof the Audit Committeeand the Chairman of the

Remuneration Committeeof DSI PJSC. Mr. Al-Nuaimialso serves as a boardmember for several othercompanies includingthe Abu Dhabi TawteenCouncil, Al Jazeera CapitalSports Club and SirajIslamic Financing.

SALEHMURADWEIJ

BOARD MEMBER

Mr. Saleh Muradweij is anExecutive Board Memberof DSI PJSC. With over20 years of professionalexperience throughout theGCC and the Levant, Mr.

Muradweij has worked ina number of managerialpositions in consulting,project management,operations and contractingand is currently theManaging Director of Drake& Scull Construction (DSC).

TAWFIQABU SOUD

BOARD MEMBER

Mr. Tawfiq Abu Soudis an Executive BoardMember of DSI PJSC withover 25 years experiencein the oil, gas and MEPcontracting field. He was

previously responsibleof the MEP operationswith Jordan-based MancoContracting WLL andis currently ManagingDirector of Drake & ScullEngineering (DSE).

IVOR MARKGOLDSMITH

BOARD MEMBER

Mr. Ivor Mark Goldsmitis an Independent BoaMember and a membeof the Audit Committeeof DSI PJSC. For over 4years, he has been an

engineering constructioindustry professionalinthe UK and overseasincluding in consultanas prime contractor; inmajor project designand build; technologysolutions; and long-termfacilities management aoutsourcing.

KHALAF SULTANAL-DAHERI

BOARD MEMBER

Mr. Khalaf Sultan Al-Daheri is an independentboard member and amember of both theAudit and RemunerationCommittees of DSI PJSC.

He is also Chairman ofa number of financialinstitutions including AlWathba Company forCentral Services (AWCCS)and Abu Dhabi NationalIslamic Finance (ADNIF),and the Board memberof Abu Dhabi Investmentcompany and Masraf AlRayan.


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INCREASE IN PROFIT

FACTS AND

FIGURES

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32%

NOTE:Please not that all facts and figures are in UAE

INCREASE IN PROJECT AWARD INCREASE IN BACKLO

3321.3

2012 2012 20122013 2013 2013

115

4867.8

182

REVENUE COMPARISIONIn AED Billions as on 31st December 2013

BACKLOG COMPARISIONBY BUSINESS STREAMas on 31st december 2013

BACKLOG COMPARISION

BY GEOGRAPHYas on 31st december 2013

DSE

CIVIL

OIL & GAS

RAIL

PR

KSA

DUBAI

ABU DHABI

KUWAIT

EGYPT

QATAR

ALGERIA

IRAQ

JORDAN

OTHERS

PROFIT COMPARISIONIn AED Mill ions as on 31st December 2013

BACKLOG COMPARISIONIn AED billions as on 31st december 2013

12

9.2

2012

2012

2013

2013

39%1000

2000

3000

4000

5000 13

11

9

7

5

3

1

45.20% 42.20%

43.90% 50.50%

7%

2%

3.80%

5.20%

6.60

%

5.80% 7.80%

0.20%

2.40%

6.90%

8.70%

4.60%

8.50%

4.40%

4.50

%

5.70%

2.80%

5.50%

10.5

0%

14.30%

42.30%45.80%

5.80%

6.90%


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RISK MANAGEMENT

AND CORPORATEGOVERNANCEThe Executive Committee, chaired by the Chairman andcomprising of the CEO, Executive Directors and key officers,develops strategies and policies for recommendation tothe board. The Remuneration Committee, comprised ofindependent non-executive board members and, whenneeded, the Head of HR, considers matters relating toexecutive reward, including policy for executive directors

and senior managers remuneration and their annualremuneration awards. The committee also approveschanges to incentive and benefits plans for senior managersand reviews strategic HR issues including employeeretention, motivation and commitment, and successionplanning for senior managers.

The Audit Committee, comprised of independent non-executive board members, appoints external auditors andoversees and monitors their work. It also assesses internalaudits and compliance, reviews financialstatements andfinancial reporting systems and monitors compliance withthe Companys Code of Conduct.

In order to effectively manage the risks present in thecontracting and construction industries, DSI develops andimplements a strategic series of robust and interlockingmanagement systems. These consist of a clear andtransparent system of corporate governance along with aset of structures that measure and manage risk. The risksthat we face are very diverse in nature and must therefore

be carefully assessed from every angle in order to efficientlycalculate and predict outcomes. These may include projectrisks through to area and regional risks which may manifestthemselves at the business stream and corporate levels.

CORPORATE GOVERNANCERisk management is an essential practice in our business.Having the right corporate governance enables DSI to alignits interests and procedures with the vision of its uppermanagement, practice accountability and monitor corporateactions and progress. Primary risk management is overseenby our board, which has independent directors and threespecialist committees: Executive, Remuneration and Audit.

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connects all vital operations and business processescentrally. This centralization has helped DSI achieve z

downtime and high levels of data security, which hashelped considerably in reducing the companys overarisk exposure. We are currently in the process of gettiour IT mechanisms certified to be compliant with ISO27001 standards.

CONTINUOUSLY ASSESSING RISK ANDOUR RISK APPETITERisk is inherent in all business. What determines if the riworth it and how to successfully navigate these risks cofrom our ability to manage risk. This is, in many ways, akey determinant of our profitability. There are various wato measure the risk appetite of a company. We use asoftware application called Risk Explorer, which surveysenior executive attitudes, consolidates the results andprovides us with a continuously updated snapshot of ourisk management capabilities. This informed measuremof our capabilities allows management to quickly assesscapabilities and stress areas.

Prior to entering any market, acquiring new businesses undertaking any new ventures, rigorous due diligence isundertaken. Risks are graded under a traffic light systemand compiled in a risk register, which allows the activemonitoring and management of all risks. Although wecannot eliminate all risks associated with our work, we cindeed effectively manage it and take the right measurereduce it thus creating more opportunities for growth ansuccessful ventures.

MANAGING RECEIVABLES RISKOur operations are conducted using a monthly valuatiand billing cycle. All of our businesses are run on aprojectbased business model. Each project is governby the standard terms and conditions of the contract.These terms highlight the payment procedure, alwaysbased on a monthly valuation, certification and paymecycle, subject to the normal payment days in the projecountry of location, and the specific requirements of thproject. These monthly certification and billing processare closely monitored by the Financial Controller, FinanManager or Chief Accountant of each business.They thensure that payments are made on time. Receivables

risk is managed in accordance with the AccountsReceivable Policy and through direct relationships withconsultants, the engineer or project manager working behalf of the client and the clients management teamIf necessary, non-payment issues may be referred to thBoard for further action. The stringent implementationof this process has made a marked difference to ourrevenue stream. In 2013, we saw our recievable daysreduce from 175 days (at the end of 2012) to 123 daat the end of 2013, which is a reduction of nearly 30%which is a commendable achievement by our industrystandards. This has also brought down our risk exposuand improved our cash flow.

MANAGEMENT SYSTEMSEvery project is devised with careful planning. An

essential part of any given strategy is to assess thepotential risks involved, and to determine if it is feasibleand beneficial to move forward once the risks areexamined and weighed. Within the management wehave the Risk Management Committee comprised ofthe Chief Commercial Officer, Chief Financial Officer,Corporate Finance Director and at least one Area GeneralManager or Business Stream Director from each BusinessStream. This committee identifies exposures, manages aRisk Control Programme and the Risk Financing Strategy.It also oversees credit, market l iquidity, operational,legal and other risks, within a framework of prudent andeffective business controls and processes.The committeerecommends risk philosophy and tolerance for board

approval, defines the companys risk appetite andreviews risk management processes. All business unitsand projects must apply risk management techniquesand their compliance is monitored by the RiskManagement Committee. The metrics are based upona standard format which shows risk exposure beforeapplication of control measures and the measurablebenefits of control and mitigation measures. Themeasures are based upon a five by five matrix wherebythe vertical axis measures impact and severity of riskgraded and rated 1- 5. Also the horizontal axis measureslikelihood and probability also rated 1 5.

The resultant aggregate risk value results in a value whichis tracked and shown on a heat map as a green, yellow

or red rated risk. All risks are then reviewed again aftermitigation. The results are presented to our risk registrar andtested against a specially designed traffic light system for ago or no go decision on projects. Each project/market/clientgets evaluated prior to DSI committing to a project in orderto minimise risks and increase positive outcomes.

CONTINUOUS AUDITINGIn 2011, DSI established its own Internal Audit Officemanned by a Director and supported by 4 staff members.Its primary role is to continuously audit all internaldepartments including their Quality Health Safety andEnvironment performance. These risk policies andstandards are applied through a clearly documented

internal audit system that ensures that all departments andproject sites are closely monitored and their operationsconform to companypolicies and procedures, internationalstandards, local laws and regulations and contractualagreements. Formal internal audits are conducted twicea year. We also bring in external auditors for QHSE andfinancial auditing to ensure compliance to internationalstandards and global best practices.

We invested considerable time and capital to executea sophisticated large scale Oracle J.D. Edwards ERPimplementation programme across all its businesses.We also developed a robust, modern Data Centre which

We saw ourrecievable daysreduce from 175days (at the endof 2012) to 123days at the endof 2013, whichis a reduction ofnearly 30%.


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CORPORATESOCIALRESPONSIBILITY

06

As a responsible, environmentally-friendly global citizen,Drake & Scull remains actively involved in numerous CSRactivities. We aim to be a role model for our industry andto be a positive influence in the communities where wework. We maintain a consistent relationship with localuniversities in order to recruit the right talent and providea host of exciting internship opportunities for studentsin every sector. We work hard to keep green practices inplace both on and off site and keep energy consumptionto a minimum with our LEED projects. We have a stringen

and award-winning QHSE policy in place which weexecute without compromise to ensure the safety andwellbeing of our employees.

In 2011, DSI established the Drake & Scull Foundationwhich is responsible for the initiation, funding andorganisation of programmes dedicated to improving thelives of under privileged sections of society. The Drake &Scull Foundation is an imperative part of our commitmentto empowering people to achieve their dreams. Thefoundation supports several causes from around the worldand offers both financial and moral assistance to variouscharities and societies in the region.


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The foundation develops public service campaigns thatreach out and help communities in need of healthcare,education, housing and nutrition across the region. Thecore focus of the foundation is to Give Back and makea real difference in our communities by providing basicneeds like food, clothing, education and medical assistancefor disadvantaged people in the Middle East, Asia andAfrica. We established the foundation so that DSI mayeffectively align our business operations with social values

that promote socially responsible business practices whichcontribute to the enhancement of the overall welfare of thesurrounding communities where we operate. In addition,the Drake & Scull Foundation partnered with the WelfareAssociation to support the Mustqabali Foundation. TheMustaqbali Foundation aims to empower the children ofwar through education so that they have an opportunity tolive a positive and fulfilling life. This programme strives tosecure childrens futures by supporting their educational,psychosocial, health and career development needs untilthey reach adulthood.

Social divides are a growing challenge in the world welive in and we hope that through the specialised efforts of

the foundation that DSI can ultimately set the course forcontinuous and collaborative efforts by regional companiesto address these obstacles and do their part to help buildsafe and healthy environments for future generations.We aspire to be an international leader not only in ourfield, but in our active efforts to encourage and foster realchange across the globe. Corporate Social Responsibility is afundamental part of DSIs culture and its core values.

DSI upholds its promise to be a sustainable, sociallyresponsible organisation through its operations each day.The company remains committed to delivering the highestlevels of excellence to clients, shareholders, employees andto society.

We conduct business with good governance and ethics, andprovide products and services that meet the ever evolvingexpectations of our clients and business partners, we recruitand retain quality employees, provide meaningful support inour communities and do our best to improve the social andenvironmental impacts of our business practices and thoseof our suppliers and subcontractors.

In 2013, our commitment to maintaining the highest levelsof quality, health, safety, environment and welfare standardsenabled us to complete more than 213 million safe man hours on our projects.

To improve transparency, accountability and equity, we hcorporate governance policies and guidelines that defininterrelationships between the management levels of thcompany and authorities in compliance with the directioand requirements of Emirates Securities & CommoditieAuthority (ESCA), Dubai Financial Market (DFM) and

Commercial Companies Law Federal Law No (8).

Drake & Scull is the proud recipient of the highest rankincorporate governance certificate from ESCA and was alslisted as one of the top 50 firms by Forbes Middle East.Corporate Governance Framework covers shareholders,the Board of Directors and Executive Management. TheBoard of Directors is accountable to shareholders and sto ensure that our business objectives are aligned withshareholder expectations. The executive level implementhe corporate strategy and manages day-to-day affairsaccording to the business plan approved by the Board.

SUSTAINABILITY

DSI is strongly committed to providing the best possiblesolutions for our shareholders, stakeholders, society, andthe environment. Our sustainability philosophy is a logicevolution of our lean quality initiatives, which are focuseon eliminating waste and redundancy. Our objective is tregularly find ways in which we can improve our greenpractices, such as:

Purchasing green products from our suppliers

Reducing waste and recycle and reuse materialswhenever possible

Reducing our electrical energy consumption

Designing distribution routes to minimise total fuelconsumption

Encouraging carpooling and responsible business trav

Repairing rather than discard whenever it is possible

Capturing recycling data reports and cost savingsdocumentation

Targeting and enforcing zero paper documentmanagement tools

Our commitmentto maintainingthe highestlevels of quality,

health, safety,environment andwelfare standardsenabled us tocomplete morethan 213 millionsafe man hourson our projects.


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07

OURPEOPLEPEOPLEOur people are the main driving force behind ourbusiness. We recognise the importance of investing inour people, as it means to invest in the future successof our company. We are committed to providinga highly stimulating, safe and dynamic workingenvironment that encourages individual growth andoverall development. Our carefully devised successionplan outlines corporate expectations and fostersemployee improvement and advancement across allsegments. The progression of our people is directlyaligned with the enhancement and expansion of ourcompany and is always a key area of focus.

We are dedicated to empowering our staff and creatingopportunities for them to heighten their skills andknowledge. Our strategic HR policy is centered onequality. We aim to recruit and employ more womenand to establish a truly unique and diverse workforce.Our main objective is to increase productivity whilemaintaining a healthy and engaging professionalatmosphere. We recognize the importance of nurturingand honing local talent in our markets, and it is part ofour standard recruitment policy to maximize the hiringof nationals in our offices and sites. We continue touphold our commitment to Saudization and Emiratizationinitiatives as we have met all local regulations in regards

to the employment of nationals. We strive to retainemployees from our host nations in order to ensure thatthey play an integral role in our companys success.

INNOVATIONThrough our innovation, we continue to pursue originalideas, new technologies, superior methods and a uniqueapproach to business. Our cutting-edge techniquesand sharp attention to detail enable us to work quickly,efficiently and safely. We are always improving ourstandards in order to ensure maximum benefits for ourstakeholders. It is our innovative and forward-thinkingtactics that keep us at the forefront of the industry.

PASSIONWe have a real passion for what we do. We firmly believethat true success is not attainable without the right heartand dedication. We embrace and ignite passion in everysegment of our business. We remain passionate aboutimproving our standards, enhancing our skills, customersatisfaction and every aspect of our managementprocess. We are a success because the people of Drake& Scull are passionate about driving this organisationforward and getting the job done right.

DSI is an Equal Employment Opportunity employer anddoes not discriminate towards any employer/employee

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We recognize theimportanceof investing inour people, asit means to investin the futuresuccess of ourcompany.


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based on race, colour, religion, sex, nationality, age,marital status, disability or any other basis.DSI has astrong commitment to equal opportunity in the workthat exists with the company which is a competitiveadvantage in the marketplace. DSI is committed totreating all employees fairly, without regards to anycharacteristics that have no bearing in job performance.

SUCCESSION PLANNING/TRAININGDSI implements a very thorough succession planningpolicy in order to ensure that the appropriate measuresare taken to have a skilled, professional, highly-qualifiedand capable team in place at every level. This policyalso encourages and supports individual employee

growth and development as well as positive overallperformance results. We want our staff to be driven andhave the tools they need to reach their full potential.Our dedicated succession plan enables the right trainingand ensures that employees receive the proper trainingas they grow with the company. Employee morale andmotivation is a main priority for us and it is a key factorin achieving success.

ESOPTo ensure that the interests of all individuals workingwith Drake & Scull are aligned with those of shareholderwho have introduced an Employee Stock Option Plan

Annual Report

(ESOP). An ESOP is powerful retention, organisationaland motivational tool which allows us to ensure thateveryone involved from shareholders through project

managers, have the same aims and goals.

LEARNING AND DEVELOPMENTDrake & Scull is continuously evolving. We stay aheadby developing a truly innovative and technologicallyadvanced approach to our work. We firmly believe thateach new generation has something distinctive to offer.The power of a fresh and youthful mind is limitlessand as part of our commitment to nurturing regionaltalent, we offer several rewarding, and highly stimulatinginternships where students can gain hands on experienceand receive insight from pioneering industry experts andvisionaries who are the best in their field.


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08

FINANCIALREVIEWWith our heightened revenues and our backlog securelyat an all-time high, we continued to solidify ourpresence in the region. DSI operations in the LEVANTregion progressed with strong growth from our generalcontracting, engineering, oil & gas and rail divisions.

Our civil work has made substantial advancementsand is currently the largest contributor to our revenuestream. Our solid and reliable track record for deliveringlarge scale, landmark projects will keep us firmly set asan industry frontrunner. The successful completion andhandover of the AED 3 billion King Abdullah PetroleumStudies and Research Center (KAPSARC) marks a major

milestone in our history.Drake & Scull Rail managed to achieve tremendousprogress and was awarded their first contract in themiddle in 2013. We expect that the rail and oil & gasbusiness will grow even further in the years ahead whilesignificantly adding to the companys overall revenues.

QUARTERLY BREAKDOWNIn the first quarter of 2013 DSI won the followingEngineering-MEP projects: The Musheireb DowntownDoha Project Phase 1C Substructure & Superstructurein Qatar valued at AED 304 million and in the same

sector

, we also won the Asset Enhancement SchemeStage 1 Construction of Deep Trunk from MPS 14 toMPS8 in Abu Dhabi worth AED 81.5 million.

Q1 also had many successes in the Civil Engineeringfield with a major win in KSA with the KAUST PerimeterSecurity System valued at AED 450 million. Additionalwins in KSA included the Al Rajhi Cash Center AED 22million, the Al Rajhi Operations Center AED 167 millionand the Al Rajhi Data Center worth AED 98 million.

In the second and strongest quarter, noteworthyaccomplishments were plentiful. In the Engineering-MEPsector there was a vast variety of project wins whichincluded a Private Residential project in Qatar worth AED180 million, the Maliha Hospital for GHQ UAE ArmedForces in Sharjah worth AED 138.5 million, the MeccaGovernment Complex in KSA at AED 265 million, theAbu Dhabi Airport South Air field Development worth AED91.2 million, the Monnet CHS Cross Country ConveyingSystem in India worth AED 205 million, the prominentSt. Regis Hotel in Jordan for AED 158 million and KingFahad Medical City in KSA worth AED 261 million.

The growth continued in Q2 with Civil Engineering.These project wins included Maliha Hospital for GHQ.

Our performancein fiscal 2013demonstratedsolid results. Netprofit for the fiscalyear closed at AED182 million andrevenues at AED 4.billion an increase

of 58 % and 47 %respectively overfiscal 2012. Earningper Share (EPS)Stood at AED 0.073in comparison toAED 0.042 recordein 2012.

Annual Repor


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UAE Armed Forces in Sharjah worth AED 137 millionITCC Auxiliary Works in KSA at AED 180 million, JeddLamar Towers AED 170 million in KSA and in Jordan,Saraya Aqaba at AED 766 million.

In the third quarter, our success continued with theEngineering-MEP win of the internationally acclaimedLouvre Museum in Abu Dhabi worth AED 211 millionOther extremely noteworthy Engineering MEP winsincluded the Fairmont Hotel in Abu Dhabi AED 233million, the Presidential Palace in Abu Dhabi AED 25million and in Dubai, Habtoor City AED 200 million.In addition, during this quarter we were given the CivEngineering project of Emiral Phases 2 and 3 in Alge

worth AED 640 million.

Developments continued to move ahead well intothe fourth quarter. By Q4, even more contracts wereunderway and we saw more expansion as far asproject locations in Q4 as well. Our wins for PassavanRoediger spanned the globe with a CL 2 Extension aModernization of Waste Water Treatment Plant CityCampina and Plopeni in Romania valued at AED 72.9million, another CL 2 Extension and Modernization oWaste Water Treatment Plant City Campina and Plopein Turkey worth AED 79.6 million, Stage 2 Jabal Al AsWWTP in Egypt for AED 179 million and in Q4 theEngineering-MEP contracts were the Mall of Qatar AE

355 million and the New Cuffe Parade Mumbai in Inwith a total value of AED 59 million.

CONTINUED GROWTH IN ORDER BOOKThe total value of new projects acquired during 2013amounted to AED 7.5 billion, compared to AED 5.4billion for the same timeframe in 2012. Our Total NeProfit presently stands at AED182 million which is a58% increase on year on year growth.

The companys backlog is at an all time high of AED billion representing a 32 % year on year increase.


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018 Annual Repor

FINANCIALS09


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DIRECTORS REPORT AND CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

Directors report .....................................................................................................................020

Independent auditors report ...........................................................................................021

Consolidated balance sheet .............................................................................................022

Consolidated income statement ....................................................................................024Consolidated statement of comprehensive income ..............................................025

Consolidated statement of changes in equity ..........................................................026

Consolidated statement of cash flows .........................................................................028

Notes to the consolidated financial statements .......................................................030


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020 Annual Repor

DIRECTORSREPORT

Dear Shareholders,

The Board of Directors of Drake & Scull International PJSC (DSI) or(the Company) and its Subsidiaries (the Group) have the pleasurein presenting their consolidated financial statements for the yearended 31 December 2013.

PRINCIPAL ACTIVITIESDuring the year ended 31 December 2013 DSI was preliminaryengaged in engineering, integrated design and construction disciplinesof Mechanical, Electrical and Plumbing (MEP), Civil Contracting, Waterand Power Infrastructure and Oil and Gas Infrastructure.

FINANCIAL RESULTSFor the year ended 31 December 2013, DSI earned revenuesamounting to AED 4,879 million and the profit for the year amountedto AED 182 million. The Earnings per share was AED 0.073 forthe year.

We continue to deliver good financial results and a healthy statementof financial position. We are satisfied with our strong earningsperformance for the full year across our operating segments and lookforward to continued improvements in our key markets in 2014. Ourcommitment to growth and returns continues to improve value forour shareholders.

Majid Al Ghurair, ChairmanDrake & Scull International PJSC (DSI)

DSI has been consistently achieving positive results and we havecontinued this trend in 2013. DSI has a strong project portfolio andmanaged to achieve a substantial increase in its Order backlog acrossthe region. DSI has announced total project awards of AED 7.5 billionin 2013 in comparison to AED 5.4 billion awarded in 2012. The totalOrder Backlog reached a record high of AED 12 billion representinga year on year increase of 32%, giving us substantial leverage tosupport the Companys development and expansion plan for 2014.

DSI has successfully met number of targets and objectives that wereset at the beginning of the financial year mainly through expandingthe business streamlines and services and increasing the companysgeographical reach. With a successful year behind us, DSI has positiveoutlook for 2014 as well.

AUDITORSPricewaterhouseCoopers were appointed as external auditorsof the Group for the year ended 31 December 2013.PricewaterhouseCoopers are eligible for reappointment as auditors for2014 and have expressed their willingness to continue in office.

On behalf of board of directors31 March 2014P O Box 65794Dubai, United Arab Emirates


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INDEPENDENT AUDITORS REPOTO THE SHAREHOLDERS OF DRAKE AND SCULL INTERNATIONAL PJ

EMPHASIS OF MATTERWe draw attention to Note 8 to these consolidated financialstatements, which describes the uncertainty related to the outcomthe arbitrations with certain customers. Our opinion is not qualifierespect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENFurther, as required by the UAE Federal Law No. (8) of 1984, asamended, in respect of the Company, we report that:

i. we have obtained all the information we considered necessarythe purposes of our audit;

ii. the financial statements comply, in all material respects, with thapplicable provisions of the UAE Federal Law No. (8) of 1984,amended, and the Articles of Association of the Company;

iii. the Company has maintained proper books of account and hacarried out physical verification of inventories in accordance witproperly established procedures;

iv. the financial information included in the Directors report isconsistent with the books of account of the Company; and

v. nothing has come to our attention which causes us to believe the Company has breached any of the applicable provisions ofUAE Federal Law No. (8) of 1984, as amended, or of its Articleof Association which would materially affect its activities or itsfinancial position as at 31 December 2013.

PricewaterhouseCoopers31 March, 2014

Amin H NasserRegistered Auditor Number 307Dubai, United Arab Emirates

PricewaterhouseCoopersEmaar Square, Building 4, Level 8PO Box 11987, Dubai, United Arab EmiratesT: +971 (0)4 304 3100F: +971 (0)4 330 4100www.pwc.com/middle-east

W Hunt, AH Nasser, P Suddaby and JE Fakhoury are registeredas practising auditors with the UAE Ministry of Economy

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTSWe have audited the accompanying consolidated financial statementsof Drake and Scull International PJSC (the Company) and itssubsidiaries (together, the Group), which comprise the consolidatedbalance sheet as at 31 December 2013 and the consolidatedstatements of income, comprehensive income, changes in equityand cash flows for the year then ended, and a summary of significantaccounting policies and other explanatory notes.

MANAGEMENTS RESPONSIBILITY FOR THE CONSOLIDATEDFINANCIAL STATEMENTSManagement is responsible for the preparation and fair presentationof these consolidated financial statements in accordance withInternational Financial Reporting Standards, and for such internalcontrol as management determines is necessary to enable thepreparation of consolidated financial statements that are free frommaterial misstatement, whether due to fraud or error.

AUDITORS RESPONSIBILITYOur responsibility is to express an opinion on these consolidatedfinancial statements based on our audit. We conducted our auditin accordance with International Standards on Auditing. Thosestandards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the consolidated financialstatements. The procedures selected depend on the auditors

judgement, including the assessment of the risks of materialmisstatement of the consolidated financial statements, whetherdue to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entitys preparation andfair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectivenessof the entitys internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness

of accounting estimates made by management, as well as evaluatingthe overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

OPINIONIn our opinion, the accompanying consolidated financial statementspresent fairly, in all material respects, the financial position of theGroup as at 31 December 2013, and its financial performance and itscash flows for the year then ended in accordance with InternationalFinancial Reporting Standards.


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022 Annual Repor

The notes on pages 30 to 62 are an integral part of these consolidated financial statements.

022 Annual Repor

CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER

Note 2013AED000 2012AED000

ASSETSNON-CURRENT ASSETS

Property and equipment 6 510,680 504,200

Intangible assets 7 1,098,469 1,136,219

Investment property 10 29,376 -

Investment accounted for using the equity method 32 93,249 -

Deferred income tax assets 9 5,646 17,630

Available-for-sale financial assets 11 75,159 2,384

Trade and other receivables 8 212,503 174,415

2,025,082 1,834,848

CURRENT ASSETS

Inventories 15 30,259 26,510

Development properties 14 19,111 64,830

Trade and other receivables 8 4,256,323 3,741,861

Due from related parties 23 268,628 25,990

Financial assets at fair value through profit or loss 12 4,678 4,821

Cash and bank balances 16 558,217 730,700

5,137,216 4,594,712

TOTAL ASSETS 7,162,298 6,429,560

EQUITY AND LIABILITIESEQUITY ATTRIBUTABLE TO OWNERSOF THE PARENT

Share capital 17 2,285,047 2,285,047

Share premium 17 3,026 -

Treasury shares 17 - (28,622)

Statutory reserve 18 93,722 79,219

Other reserve 19 24,543 24,543

Retained earnings 515,801 363,835

Foreign currency translation reserve (15,685) (8,346)

2,906,454 2,715,676

Non-controlling interests 68,372 53,106

TOTAL EQUITY 2,974,826 2,768,782


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The notes on pages 30 to 62 are an integral part of these consolidated financial statem

Annual Report

CONSOLIDATED BALANCE SHEAS AT 31 DECEMB

Note 2013AED000 20AED0

LIABILITIESNON-CURRENT LIABILITIES

Bank borrowings 20 48,878 119,

Derivative financial instruments 13 - 21,

Deferred income tax liabilities 9 2,414 8,

Employees end of service benefits 22 110,234 84,

161,526 234,5

CURRENT LIABILITIES

Trade and other payables 21 2,938,909 2,205,

Bank borrowings 20 1,067,592 1,209,

Due to related parties 23 19,445 11,

4,025,946 3,426,2

TOTAL LIABILITIES 4,187,472 3,660,7

TOTAL EQUITY AND LIABILITIES 7,162,298 6,429,5

The consolidated financial statements wereapproved for issue by the Board of Directors on

31 March 2014 and signed on its behalf by:

Chairman Chief Executive Officer


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024 Annual Repor


Note 2013AED000 2012AED000

Contract revenue 5 4,879,189 3,321,268

Contract costs 26 (4,382,296) (2,938,354)

GROSS PROFIT 496,893 382,914

Other income 25 20,658 12,123

General and administrative expenses 28 (328,581) (265,293)

Other losses - net 29 (3,070) (11,977)

OPERATING PROFIT 185,900 117,767

Finance income 24 23,147 33,687

Finance costs 24 (36,032) (17,078)

FINANCE (COSTS)/INCOME NET 24 (12,885) 16,609

Share of profit from investment accounted for using the equity method 32 64,043

PROFIT FOR THE YEAR BEFORE TAX 237,058 134,376

Income tax expense 30 (55,323) (19,333)

PROFIT FOR THE YEAR 181,735 115,043

PROFIT ATTRIBUTABLE TO:

- Owners of the Parent 166,469 94,293

- Non-controlling interests 15,266 20,750

181,735 115,043

EARNINGS PER SHARE

- Basic and diluted (AED) 33 0.073 0.042

CONSOLIDATED INCOME STATEMENTYEAR ENDED 31 DECEMBER


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2013AED000 20AED0

PROFIT FOR THE YEAR 181,735 115,0

OTHER COMPREHENSIVE INCOMEITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS

-

ITEMS THAT MAY BE SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS

Foreign currency translation (7,339) 4

OTHER COMPREHENSIVE (LOSS)/ INCOME FOR THE YEAR (7,339) 4

Total comprehensive income for the year 174,396 115,

ATTRIBUTABLE TO:

- Owners of the Parent 159,130 94

- Non-controlling interests 15,266 20

174,396 115,

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMYEAR ENDED 31 DECEMB


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026 Annual Repor


CONSOLIDATED STATEMENTOF CHANGES IN EQUITY

Sharecapital

AED000

Treasuryshares

AED000

SharepremiumAED000

Statutoryreserve

AED000

BALANCE AT 1 JANUARY 2012 2,177,778 (28,622) - 73,75

PROFIT FOR THE YEAR - - -

Other comprehensive income for the year - - -

Total comprehensive income for the year - - -

Transaction with owners

Dividends (Note 34) - - -

Bonus shares issued to shareholders (Note 34) 107,269 - -

Non-controlling interests contribution to subsidiarys capital - - -

Total transaction with owners 107,269 - -

Transfer from retained earnings to statutory reserve - - - 5,46

BALANCE AT 31 DECEMBER 2012 2,285,047 (28,622) - 79,21

Sharecapital

AED000

Treasuryshares

AED000

SharepremiumAED000

Statutoryreserve

AED000

BALANCE AT 1 JANUARY 2013 2,285,047 (28,622) - 79,21

PROFIT FOR THE YEAR - - -

Other comprehensive income for the year - - -

Total comprehensive income for the year - - -

Transaction with owners

Re-issue of treasury shares (Note 17) - 28,622 3,026

Total transaction with owners - 28,622 3,026

Transfer from retained earnings to statutory reserve - - - 14,50

BALANCE AT 31 DECEMBER 2013 2,285,047 - 3,026 93,722


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CONSOLIDATED STATEMEOF CHANGES IN EQUI

Otherreserve

AED000

RetainedearningsAED000

Foreign currencytranslation

reserveAED000

TotalAED000

Non-controllinginterestsAED000

TotAED00

24,543 446,639 (8,778) 2,685,313 32,244 2,717,5

- 94,293 - 94,293 20,750 115,0

- - 432 432 - 4

- 94,293 432 94,725 20,750 115,4

- (171,631) - (171,631) - (171,63

- - - 107,269 - 107,2

- - - - 112 1

- (171,631) - (64,362) 112 (64,25

- -5,466 - - -

24,543 363,835 (8,346) 2,715,676 53,106 2,768,7

Otherreserve

AED000

RetainedearningsAED000

Foreign currencytranslationreserve

AED000Total

AED000

Non-controllinginterestsAED000

TotAED00

24,543 363,835 (8,346) 2,715,676 53,106 2,768,7

- 166,469 - 166,469 15,266 181,7

- - (7,339) (7,339) - (7,33

- 166,469 (7,339) 159,130 15,266 174,3

- - - 31,648 - 31,6

- - - 31,648 - 31,6

- (14,503) - - -

24,543 515,801 (15,685) 2,906,454 68,372 2,974,8


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028 Annual Repor


CONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED 31 DECEMBER

Note 2013AED000 2012AED000

OPERATING ACTIVITIESProfit for the year before tax 237,058 134,376

Adjustments for:

Share of profits of investment accounted for using the equity method 32 (64,043) -

Depreciation 6 47,388 42,567

Amortisation of intangible assets 7 37,750 37,750

Provision for employees end of service benefits 22 41,665 29,537

Management fee expense 28 - 14,800

Gain on sale of available-for-sale financial assets 11 - (8,815)

Gain on sale of held-to-maturity investments - (4,450)

Loss on sale of development properties 29 5,160 -

Impairment (reversal)/loss on available-for-sale financial assets 11 (727) 3,583

Fair value loss on financial assets at fair value through profit or loss 29 143 -

Fair value gain on settlement of share swaps 29 (5,583) -

Fair value loss on interest rate swaps 29 4,050 21,174

Loss on settlement of equity warrants 29 27 485

Finance income 24 (23,147) (33,687)

Finance costs 24 36,032 17,078

Gain on disposal of property and equipment 25 (982) (1,218)

Provision for impairment on trade receivables and retentions - net 28 22,509 12,081

Operating cash flows before payment of employees end of service

benefits, income tax and changes in working capital337,300 265,261

Employees end of service benefits paid 22 (16,100) (14,171)

Income tax paid (49,760) (19,596)

Changes in working capital

Inventories (3,749) (347)

Development properties (1,306) (13,898)

Trade and other receivables before provisions and excluding interestreceivable and loans and advances

(578,182) (741,122)

Due from related parties (242,638) (524)

Trade and other payables excluding income tax, interest and group

management fee payable732,064 107,741

Derivative financial instruments (20,153) -

Due to related parties 7,746 (31,395)

Net cash generated from/(used in) operating activities 165,222 (448,051)

BALANCE CARRIED FORWARD 165,222 (448,051)


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CONSOLIDATED STATEMENT OF CASH FLOWYEAR ENDED 31 DECEMB

Note 2013AED000 20AED0

BALANCE BROUGHT FORWARD 165,222 (448,0

INVESTING ACTIVITIESPurchase of property and equipment 6 (86,733) (124,6

Proceeds from disposal of property and equipment 32,229 2,

Investment accounted for using the equity method 32 (29,206)

(Purchase of)/proceeds from sale of available-for-sale investments 11 (72,048) 271,

Loans and advances 8 9,683 51,Interest received 15,083 33,

NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES

(130,992) 234,2

FINANCING ACTIVITIESTerm deposits under lien 16 (68,608) 219,

Dividends paid - (64,3

Proceeds from re-issue of treasury shares 17 31,648

Net proceeds from trust receipts and other borrowings 277,477 336,

Proceeds from term loans 20 24,350 604,

Payment of term loans 20 (577,659) (462,6

Non-controlling interests contribution to subsidiarys capital -

Interest paid (21,856) (16,6

NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES

(334,648) 617,2

Net (decrease)/increase in cash and cash equivalents (300,418) 403,

Net foreign currency translation difference (4,217)

Movement in restricted cash 444,867 (444,8

Cash and cash equivalents, at the beginning of the year 182,034 223,

CASH AND CASH EQUIVALENTS,AT THE END OF THE YEAR

16 322,266 182,0


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030 Annual Repor

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2013

1GENERAL INFORMATION

Drake and Scull International PJSC (the Company or the Parent Company) was incorporated on 16 November 2008 and was registered on 21January 2009 as a Public Joint Stock Company in accordance with the UAE Federal Law No. 8 of 1984, (as amended). The Company is listed onDubai Financial Market.

The Companys registered office is PO Box 65794, Dubai, United Arab Emirates.

The principal activities of the Company and its subsidiaries (together, the Group) are carrying out contracting work relating to the constructionindustry, such as electrical, plumbing, air conditioning and sanitation work in the Middle East, Europe, Asia and North Africa region.

The Company has either directly or indirectly the following major subsidiaries:

Major Subsidiaries Principal activities Shareholding %Country of

incorporation

2013 2012

Drake & Scull International LLC (Abu Dhabi) Contracting work relating to the construction industry 100 100 UAE

Gulf Technical Construction Company LLC Mechanical, electrical and civil construction work 100 80 UAE

Drake & Scull Water and Power LLCDeveloping waste water, water and sludge treatment

plants100 100 UAE

Drake & Scull International for Electrical Contracting

WLL

Electrical contracting and repairing work relating to the

construction industry75 75 Kuwait

Drake & Scull International (Qatar) WLL Contracting work relating to the construction industry 100 100 Qatar

Passavant Engineering Limited Holding company 100 100 British Virgin Island

Passavant Roediger GmbH and its subsidiaries (a

subsidiary of Passavant Engineering Limited)

Developing waste water, water and sludge treatment

plants100 100 Germany

Drake & Scull International WLL Contracting work relating to the construction industry 65 65 Saudi Arabia

International Center for Contracting Co. Ltd Contracting work relating to the construction industry 100 100 Saudi Arabia

Drake & Scull Construction Company LLC Contracting work relating to the construction industry 94 94 Saudi Arabia

Drake & Scull International for Contracting SAE Contracting work relating to the construction industry 100 100 Egypt

Drake & Scull Water & Energy India Private LimitedDeveloping waste water, water and sludge treatment

plants100 100 India

Drake & Scull International LLC (Oman) Contracting work relating to the construction industry 51 51 Oman

The Group, through Gulf Technical Construction Company LLC, also has a 50% interest in Ranya Test Joint Venture, a joint arrangement with RanyaGeneral Contracting Company LLC under a joint arrangement agreement dated 12 August 2005. This is classified as joint operation in theseconsolidated financial statements.

The Group, through Drake & Scull International for Contracting SAE, also has a 50% interest in a joint venture with Hassan Allam Sons (Misr SonsDevelopment S.A.E) under a joint arrangement agreement dated 21 July 2011. This is classified as joint operation in these consolidated financialstatements.

The Group, through Drake & Scull Water & Power LLC, also has a 50% interest in a joint venture with Afghan Electrical Power Corporation under a jointarrangement agreement dated 27 September 2011. This is classified as joint operation in these consolidated financial statements.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMEN


The Group, through Drake & Scull Construction Company LLC, alsohas a 50% interest in a joint venture with Consolidated ContractorsGroup S.A.L (Offshore) (CCC) under a joint arrangement agreementdated 27 September 2011. This is classified as joint operation in theseconsolidated financial statements.

The Group, through Drake & Scull Construction Company LLC Saudi Arabia, also has a 50% interest in a joint venture with SaudiArabia Construction Co (SACC DSC JV) under a joint arrangementagreement dated 15 October 2012. This is classified as joint operationin these consolidated financial statements.

The Group, through Drake & Scull Construction LLC, also has a 90%interest in a joint venture with John Sisk and Sons Construction LLC,(SISK-DSC-SMH-Joint Venture) under a joint arrangement agreementdated 25 November 2012. This is classified as joint operation in theseconsolidated financial statements.

Drake and Scull International PJSC, has a 50% interest in a joint venturewith SICIM S.p.A under joint arrangement agreement dated 11 January2013. This is classified as joint operation in these consolidated financialstatements.

Drake and Scull International PJSC, also has a 51% interest in a jointventure with Al Habtoor Specon LLC (DSI-HLS Joint Venture) under a

joint arrangement agreement dated 17 April 2013. This is classified asjoint operation in these consolidated financial statements.

Drake & Scull Engineering LLC, also has a 49% interest in a jointventure with Al Habtoor Specon LLC (HLS-DSE Joint Venture) under a

joint arrangement agreement dated 1 May 2013. This is classified asjoint operation in these consolidated financial statements.

The Group, through Drake & Scull (Cayman Islands) No. 3 Limited, alsohas a 50% interest in a joint venture with Omniyat Properties TwentySeven Limited (DSO Development Limited) under a joint arrangementagreement dated 6 November 2012. This is classified as joint venturein these consolidated financial statements.

2SUMMARY OF SIGNIFICANTACCOUNTING POLICIES

The principal accounting policies applied in the preparationof these consolidated financial statements are set outbelow. These policies have been consistently applied toall the years presented, unless otherwise stated.

2.1.1BASIS OF PREPARATIONThe consolidated financial statements of the Group have beenprepared in accordance with International Financial ReportingStandards (IFRS) and IFRS Interpretations Committee (IFRS IC)applicable to companies reporting under IFRS. The consolidatedfinancial statements have been prepared under the historical costconvention, except as disclosed in the accounting policies below.

The preparation of consolidated financial statements in conformitywith IFRS requires the use of certain critical accounting estimates.It also requires management to exercise its judgement inthe process of applying the Groups accounting policies. Theareas involving a higher degree of judgement or complexity, orareas where assumptions and estimates are significant to theconsolidated financial statements are disclosed in Note 4.

2.1.2CHANGES IN ACCOUNTING POLICY AND DISCLOSURES(a) New and amended standards adopted by the GroupThe following standards have been adopted by the Groupfor the financial year beginning on 1 January 2013:

Amendment to IAS 1, Financial statement presentation, regardother comprehensive income (effective from 1 July 2012);

Amendment to IAS 19, Employee benefits regardingelimination of the corridor approach and calculatingfinance costs on a net funding basis (effective from1 January 2013). The impact of amendment is notmaterial to these consolidated financial statements;

IAS 27 (revised 2011), Separate financialstatements (effective from 1 January 2013);

IAS 28 (revised 2011), Associates and jointventures (effective from 1 January 2013);

Amendment to IFRS 7, Financial instruments: Disclosures, onasset and liabil ity offsetting (effective from 1 January 2013);

IFRS 10, Consolidated financial statements(effective from 1 January 2013);

IFRS 11, Joint arrangements (effective from 1 January 2013); IFRS 12, Disclosures of interests in other entities

(effective from 1 January 2013); and IFRS 13, Fair value measurement (effective from 1 January 20


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032 Annual Repor



(b) New standards and interpretation not yet adoptedA number of new standards and amendments to standardsand interpretations are effective for annual periods beginningafter 1 January 2013, and have not been applied in preparingthese consolidated financial statements. None of these isexpected to have a significant effect on the consolidated financialstatements of the Group, except the following set out below:

IAS 32 (amendment), Financial instruments:Presentation, (effective from 1 January 2014);

Amendments to IFRS 10, 12 and IAS 27 on consolidationfor investment entities (effective from 1 January 2014);

Amendment to IAS 36, Impairment of assets on recoverableamount disclosures (effective from 1 January 2014);

Financial Instruments: Recognition and MeasurementAmendment to IAS 39 Novation of derivatives(effective from 1 January 2014); and

IFRS 9, Financial instruments, As part of the Limited Amendmentsto IFRS 9 project, the International Accounting Standards Board(IASB) tentatively decided at the July 2013 board meeting to deferthe mandatory effective date of IFRS 9. The IASB agreed that themandatory effective date should no longer be annual periodsbeginning on or after 1 January 2015 but rather be left openpending the finalisation of the impairment and classification andmeasurement requirements. The Group is yet to assess IFRS 9sfull impact.

There are no other IFRSs or IFRIC interpretations that are notyet effective that would be expected to have a material impacton the Group.

2.2CONSOLIDATION(a) SubsidiariesSubsidiaries are all entities (including structured entities) overwhich the Group has control. The Group controls an entity whenthe Group is exposed to, or has rights to, variable returns fromits involvement with the entity and has the ability to affect thosereturns through its power over the entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to theGroup. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method of accounting to account

for business combinations. The consideration transferred for theacquisition of a subsidiary is the fair value of the assets transferred,the liabilities incurred to the former owners of the acquiree andthe equity interests issued by the Group. The considerationtransferred includes the fair value of any asset or liability resultingfrom a contingent consideration arrangement. Identifiable assetsacquired and liabilities and contingent liabilities assumed in abusiness combination are measured initially at their fair values atthe acquisition date. The Group recognises any non-controllinginterest in the acquiree on an acquisition-by-acquisition basis,either at fair value or at the non-controlling interests proportionateshare of the recognised amounts of acquirees identifiable netassets. Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred, the amount of anynon-controlling interest in the acquiree and the acquisition-datefair value of any previous equity interest in the acquiree over thefair value of the identifiable net assets acquired is recorded asgoodwill. If the total of consideration transferred, non-controllinginterest recognised and previously held interest measured is lessthan the fair value of the net assets of the subsidiary acquiredin the case of a bargain purchase, the difference is recogniseddirectly in the consolidated income statement (Note 2.6).

If the business combination is achieved in stages, theacquisition date carrying value of the acquirers previouslyheld equity interest in the acquiree is re-measured to fairvalue at the acquisition date; any gains or losses arising fromsuch re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the group isrecognised at fair value at the acquisition date. Subsequent changes tothe fair value of the contingent consideration that is deemed to be anasset or liability is recognised in accordance with IAS 39 either in profior loss or as a change to other comprehensive income. Contingentconsideration that is classified as equity is not re-measured, andits subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains ontransactions between Group companies are eliminated. Unrealised lossesare also eliminated. When necessary amounts reported by subsidiarieshave been adjusted to conform with the Groups accounting policies.

Transactions with non-controlling interests that do not result inloss of control are accounted for as equity transactions thatis, as transactions with the owners in their capacity as owners.The difference between fair value of any consideration paid andthe relevant share acquired of the carrying value of net assets ofthe subsidiary is recorded in equity. Gains or losses on disposalsto non-controlling interests are also recorded in equity.

(b) Joint venturesThe Group has applied IFRS 11 to all joint arrangements as of 1January 2013. Under IFRS 11 investments in joint arrangementsare classified as either joint operations or joint ventures dependingon the contractual rights and obligations of each investor. TheGroup has assessed the nature of its joint arrangements and

determined them to be both joint ventures and joint operations. Jointventures are accounted for using the equity method whereas jointoperations are consolidated on a proportional line by line basis.

Under the equity method of accounting, interests in joint venturesare initially recognised at cost and adjusted thereafter to recognisethe Groups share of the post-acquisition profits or losses andmovements in other comprehensive income. When the Groups shareof losses in a joint venture equals or exceeds its interests in the jointventures (which includes any long-term interests that, in substance,form part of the Groups net investment in the joint ventures), theGroup does not recognise further losses, unless it has incurredobligations or made payments on behalf of the joint ventures.


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2.3SEGMENT REPORTINGOperating segments are reported in a manner consistent with the internalreporting provided to the Chief Operating decision-maker. The ChiefOperating decision-maker, who is responsible for allocating resources andassessing performance of the operating segments, has been identifiedas the executive management that makes strategic decisions. The ChiefOperating decision-maker of the Group is the Executive Management.

2.4FOREIGN CURRENCY TRANSLATION(a) Functional and presentation currencyItems included in the financial statements of each of the Groupsentities are measured using the currency of the primary economicenvironment in which the entity operates (the functional currency).The consolidated financial statements are presented in United ArabEmirates Dirhams (AED), which is the Groups presentation currency.

(b) Transactions and balancesForeign currency transactions are translated into the functionalcurrency using the exchange rates prevailing at the dates of thetransactions or valuation where items are re-measured. Foreignexchange gains and losses resulting from the settlement ofsuch transactions and from the translation at year-end exchangerates of monetary assets and liabilities denominated in foreigncurrencies are recognised in the consolidated income statement.

Foreign exchange gains and losses that relate to borrowings andcash and cash equivalents are presented in the consolidated incomestatement within finance income or costs. All other foreign exchangegains and losses are presented in the consolidated income statement.

Translation differences on non-monetary financial assets and liabilitiessuch as equities held at fair value through profit or loss are recognisedin profit or loss as part of the fair value gain or loss. Translationdifferences on non-monetary financial assets, such as equities classifiedas available for sale, are included in other comprehensive income.

(c) Group entitiesThe results and financial position of all the Group entities (noneof which has the currency of a hyper-inflationary economy)that have a functional currency different from the presentationcurrency are translated into the presentation currency as follows:

i. assets and liabilities for each balance sheet presented aretranslated at the closing rate at the date of that balance sheet;

ii. income and expenses for each income statement are translatedat average exchange rates (unless this average is not a reasonableapproximation of the cumulative effect of the rates prevailing onthe transaction dates, in which case income and expenses aretranslated at the rate on the dates of the transactions); and

iii. all resulting exchange differences are recognisedin other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition ofa foreign entity are treated as assets and liabilities of the foreignentity and translated at the closing rate. Exchange differencesarising are recognised in other comprehensive income.

2.5PROPERTY AND EQUIPMENTProperty and equipment are stated at historical cost less depreciatioHistorical cost includes expenditure that is directly attributableto the acquisition of the items. Cost may also include transfersfrom equity of any gains/losses on qualifying cash flow hedgesof foreign currency purchases of property and equipment.

Subsequent costs are included in the assets carrying amount orrecognised as a separate asset, as appropriate, only when it is probathat future economic benefits associated with the item will flow tothe Group and the cost of the item can be measured reliably. Thecarrying amount of the replaced part is derecognised. All other repaand maintenance costs are charged to the consolidated incomestatement during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated ostraight-line method, at rates calculated to allocate the cost of assets ltheir estimated residual value over their expected useful lives as follow

Type of assets Ye

Buildings 5 to 10 y

Machinery 2 to 5 y

Furniture, fixtures and office equipment 2 to 5 y

Motor vehicles 3 to 5 y

The assets residual values and useful lives are reviewed, andadjusted if appropriate, at the end of each reporting period.

Capital work-in-progress is stated at cost. When commissioned, capwork-in-progress is transferred to property and equipment or intangassets and depreciated or amortised in accordance with Group poli

An assets carrying amount is written down immediately to itsrecoverable amount if the assets carrying amount is greaterthan its estimated recoverable amount (Note 2.7).

Gains and losses on disposals are determined bycomparing the proceeds with the carrying amount and arerecognised within the consolidated income statement.

Specific borrowing costs directly attributable to the constructionof qualifying assets, which are assets that necessarily take asubstantial period of time to get ready for their intended use orsale, are added to the cost of those assets, until such time asthe assets are substantially ready for their intended use or sale.All other borrowing costs are recognised in the consolidatedincome statement in the period in which they are incurred.


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2.6INTANGIBLE ASSETS(a) GoodwillGoodwill arises on the acquisition of subsidiaries and representsthe excess of the consideration transferred over the ParentCompanys interest in net fair value of the net identifiableassets, liabilities and contingent liabilities of the acquiree andthe fair value of the non-controlling interest in the acquiree.

For the purpose of impairment testing, goodwill acquired in abusiness combination is allocated to each of the Cash GeneratingUnits (CGUs), or Groups of CGUs, that is expected to benefit fromthe synergies of the combination. Each unit or Group of units towhich the goodwill is allocated represents the lowest level within theentity at which the goodwill is monitored for internal managementpurposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or morefrequently if events or changes in circumstances indicate a potentialimpairment. The carrying value of goodwill is compared to therecoverable amount, which is the higher of value in use and thefair value less costs of disposal. Any impairment is recognisedimmediately as an expense and is not subsequently reversed.

(b) Trade namesTrade names are shown at historical cost. Trade namesacquired in a business combination are recognised at fairvalue at the acquisition date. Trade names have infinite livesand are not amortised due to the minimal cost of renewal.

(c) Customer relationshipsAcquired contractual customer relationships are initially recognisedat fair value at the time of acquisition and subsequentlycarried at cost less accumulated amortisation. The contractualcustomer relationships have a finite useful life. Amortisationis calculated using the straight-line method to allocate thecost of customer relationships over i ts estimated useful lifeof 10 years, which is the estimated period of benefit.

(d) Orders backlogAcquired orders backlog is arrived at by calculating the presentvalue of the expected future economic benefits to arise fromthose orders after deducting the contributory asset charge.

Subsequently, orders backlog is carried at cost less accumulatedamortisation. Amortisation is calculated using the straight-linemethod to allocate the cost of orders backlog over its estimateduseful life of 4 years, which is the estimated period of benefit.

2.7IMPAIRMENT OF NON-FINANCIAL ASSETSAssets that have an indefinite useful life for example, goodwill orintangible assets not ready to use are not subject to amortisationand are tested annually for impairment. Assets that are subject toamortisation/depreciation are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying

amount may not be recoverable. An impairment loss is recognisedfor the amount by which the assets carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of anassets fair value less costs to sell and value in use. For the purposesof assessing impairment, assets are grouped at the lowest levels forwhich there are largely independent cash inflows (cash-generatingunits). Prior impairments of non-financial assets (other thangoodwill) are reviewed for possible reversal at each reporting date.

2.8FINANCIAL ASSETS

2.8.1CLASSIFICATIONThe Group classifies its financial assets in the following categories:at fair value through profit or loss, loans and receivables, available-for-sale and held-to-maturity. The classification depends on thepurpose for which the financial assets were acquired. Managementdetermines the classification of its financial assets at initial recognition

(a) Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss are financialassets held for trading. A financial asset is classified in this categoryif acquired principally for the purpose of selling in the short term.Assets in this category are classified as current assets if expected to besettled within 12 months, otherwise they are classified as non-current

(b) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. Theyare included in current assets, except for maturities greater than 12months after the end of the reporting period. These are classified asnon-current assets. The Groups loans and receivables comprise tradeand other receivables, due from related parties, and cash and cashequivalents in the balance sheet (Notes 8, 23 and 16 respectively).

(c) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that areeither designated in this category or not classified in any of theother categories. They are included in non-current assets unlessthe investment matures or management intends to disposeof it within 12 months of the end of the reporting period.

(d) Held-to-maturityHeld-to-maturity financial assets are non-derivative financial assetswith fixed or determinable payments and fixed maturities that theGroups management has the positive intention and ability to holdto maturity. If the Group were to sell other than an insignificantamount of held-to-maturity financial assets, the whole category wouldbe tainted and reclassified as available for sale. Held-to-maturityfinancial assets are included in non-current assets, except for thosewith maturities less than 12 months from the end of the reportingperiod, which are classified as current assets. The Group assessesat each balance sheet date where there is objective evidencethat a financial asset or group of financial assets is impaired.


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2.8.2RECOGNITION AND MEASUREMENTRegular purchases and sales of financial assets are recognisedon the trade-date the date on which the Group commits topurchase o

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