Doha: Gulf International Services (GIS) scored excellent growth in its first year of operations and intends to accelerate it with more focus on organic gorwth as well as growth through acquisitions and mergers, GIS' General Coordinator Ahmed Ibrahim Al Mannai said in an interview. Following is the excerpts from the interview.
How do you view your overall performance in 2009?
The financial year 2009 is the first full year of operation for GIS group since it was formed in February 2008. I am proud to highlight the significant financial and operational achievements made by the company in 2009. In term of financial performance: Revenue of QR1.6bn, exceeded the budget QR0.1bn and 31.2 percent higher than 2008. Net profit of QR565m, which is QR124m above budget and an improvement of 35.4 percent on 2008. Net profit margin improved to 36 percent from 35.1 percent in 2008 and on budgeted net profit margin of 31.1 percent.
Financial position improved with net asset growing by QR0.4 bn to QR2.1bn, mainly due to acquisition of three new helicopters; Group's indebtedness measured by gearing improved to 29.5 percent.
Cash balance reached an impressive QR716.8m, an increase of QR128.1m.
In terms of operations, we have made a number of achievements: All rigs remained on contract throughout 2009 and rig utilisation remained high.
Unscheduled maintenance or downtime during the year did not have any material impact on helicopter operations.
In the insurance segment, we continued to expand our AXA medical business. In the aviation segment, we expanded the operations by acquiring three new helicopters, aggressive overseas marketing and increased market penetration in Libya.
Could you please provide a brief about your next five year's business plan?
We understand the importance of expansion plans for GIS to continue its excellent financial and operational performance. Our strategy is to focus both on organic growth as well as growth through acquisition and mergers.
All the group companies developed resilient business plans that will support our intended growth: In the insurance segment, a number of strategies of strategies are looked at to protect and grow the medical insurance line, where Al Koot enjoys a 70 percent market share at present. This share is expected to increase to 80 percent in 2010. In the non-medical insurance, Al Koot is expected to benefit from QP's current construction activities, notably Qafco VI (construction due in 2011) and QP/Exxon Mobil Petrochemical Project (2012).
In the drilling segment, GDI is considering a number of strategies to expand its business. These include: Participation as the Master Contractor in the QP Barge and Paint Project; Acquisition of a Land Rig in support of QP's onshore operations; and Participation in 4 joint-ventures.
GDI is expected to spend circa QR1.5bn (GIS share of approximately QR1bn) in capital expenditure primarily towards the planned joint ventures. Approximately 55 percent of this new capital expenditure will be funded by debt.
In the helicopter transportation segment, GHC will continue to expand its presence in Qatar, Libya, Iran, Yemen, Algeria, Turkey and India. To support this expansion, GHC will acquire five more helicopters in 2010, increasing the fleet to 38 helicopters. GHC will also step into new services such as Hoist/ winch to include rescue services.
At the GIS level, GIS is actively considering expanding into new business interests into different areas. A number of possible new business opportunities have been identified and currently they are under evaluation.
GIS's Earnings per Share for 2009 was a healthy QR4.18 per share where as you have declared a dividend of only QR1.70 per share. Can you please comment on this?
In deciding our dividends, we have considered a number of factors such as our future profitability, cash flow generation, capital expenditure requirements, repayment of debt obligation, historical dividend patterns and market expectations.
As stated in the previous question, we have a number of expansion plans both in terms of organic expansions and expansions through acquisition and mergers. GIS need to preserve funding for these expansion activities. As you are aware GIS has already used debt as a major source of funding for its expansion, the board of directors is of the opinion that cash should be retained to maintain an adequate balance between debt and equity.
Could you comment on your expectations for 2010
GIS had a great 2009 with all segments performing better than 2008. Al Koot expanded its medical insurance business while GHC expanded its operations with acquisition of 3 new helicopters. On the other hand all of GDI's rigs were on contract in 2009 whereas other operators found difficult to keep all their rigs on contract. The relationship between QP & GDI was a key factor for GDI's ability to keep all of its rigs on contract.
2010 is expected to be a moderate year for GDI with volatile oil prices. With supply of rigs exceeding demand, GDI will find it difficult to attract the same daily rate it enjoyed in 2009 and keep all of its rigs on contract.
We expect Al Koot and GHC to continue their good performance of 2009 in 2010 as well.
What you consider your core competencies/ strengths?
GIS has a number of strengths both at the corporate level and at the subsidiaries levels.
GIS is a QP promoted company and QP exercise control over GIS through 1 special share. GIS's this relationship with QP gives GIS a number of benefits. GIS's subsidiaries and the joint venture acts as captive service providers for QP and this captive role assures the group companies of assured revenues;
The board of directors of GIS consist of high caliber individuals including, H E Abdullah bin Hamad Al Attiyah who is our Chairman and the Managing Director. All members of the board of directors possess the required experience to run such a large service segment organisation.
© The Peninsula 2010
