Introduction
The Board of Directors is pleased to present this 4th Report on the operational and financial performance of Gulf International Services, the largest service group in Qatar, with interests in a broad cross-section of industries, ranging from insurance, reinsurance, fund management, onshore and offshore drilling, helicopter transportation, and aviation repair and maintenance. Financial Results Revenue
Group revenue for the twelve months ended December 31, 2011 was QR 1.5 billion, representing a marginal decrease of QR 16.6 million, or 1.1%, over the same period last year, and a QR 61.1 million, or 4.3%, positive variance versus the 2011 budget.
The group's insurance subsidiary registered record full year premiums and net commission income of QR 550.3 million, a resolute QR 69.8 million, or 14.5%, improvement on 2010. The primary drivers for the year-on-year performance were growth in the sums insured and premium inflation in the core Energy business, and the ongoing success of the Medical line's market expansion plan. Net commission income, consisting of management fees and reinsurance commissions, increased by QR 4.0 million, or 11.9%, over 2010. The creditable overall performance resulted in full year results robustly exceeding budgeted expectations, by QR 118.3 million, or 27.4%.
Aviation segmental revenue totalled QR 443.0 million, marginally down on 2010 by QR 5.0 million, or 1.1%, as robust growth in the Qatar-based lines of business was offset by reduced earnings in the MENA region. Domestic business lines, primarily comprising of Oil & Gas services, the helicopter emergency medical service and ad hoc VIP services, added QR 17.0 million on the same period last year primarily due to the benefit of an increased number of helicopters in operation this year versus 2010, i.e. 40 versus 37 helicopters. In total, the segment reported a marginally negative variance against budget of QR 3.0 million, or 0.7%.
Revenue in the Drilling segment closed the year at QR 478.6 million. Despite the return to 100% utilisation at the end of the first quarter of 2011, revenue nevertheless declined year-on-year by QR 80.8 million, or 14.4%, because of a combination of factors including the ongoing maintenance lay-off of the Al-Doha rig, delays experienced in two rigs commencing work in the first quarter of 2011, and an average 15.1% drop in offshore day rates across all rigs on new and renegotiated contracts.
Net ProfitNet profit for the year was QR 282.9 million, a year-on-year decline of QR 156.3 million, or 35.6%. This reduction can be primarily attributed to reduced profitability in the Drilling segment, reduced finance income and a combination of several one-off factors. Drilling net profit declined for the same reasons as the headline revenue. The one-off factors impacting the group's year-on-year performance include increased IBNR provisioning in the Insurance segment, impairment charges on the group's AFS investments and the Insurance subsidiary's share of the loss on the winding up of its real estate joint venture. These one-off factors totalled up to almost QR 100 million, and accounted for over 60% of the reduced year-on-year profitability.Financial Position, Cash Flows And Financial Measures
The group's total assets increased year-on-year by a robust QR 0.4 billion, or 9.1%, closing at QR 4.6 billion, due mainly to debt-funded advanced payments made for a number of drilling and aviation asset purchases, and cash flows from operations. Despite significant loan repayments, total loans and borrowings increased on the 2010 close by QR 91.3 million, or 10.6%, to close the year at QR 949.0 million. The group also reported strong closing cash positions of QR 1.1 billion, an increase on 2010 of QR 319.6 million, or 38.7%.
Dividend DistributionThe Board of Directors is pleased to recommend a total annual dividend distribution for the year ended December 31, 2011 of QR 175.8 million, equivalent to a payout of QR 1.30 per share and representing 13.0% of the nominal value, and 10% bonus shares.Conclusion
The Board of Directors expresses its gratitude to His Highness Sheikh Hamad Bin Khalifa Al-Thani, the Emir of the State of Qatar, for his wise guidance and strategic vision, and to His Highness Sheikh Tamim Bin Hamad Al-Thani, the Heir Apparent. Our gratitude is also extended to the Chairman and Managing Director, H.E. Dr. Mohamed Bin Saleh Al-Sada, for his vision and leadership, and to the senior management of the subsidiaries and joint venture for their hard work, commitment and dedication.
Press Release 2012
