Revenue surges to record high, profits grow by over 70%
DOHA, QATAR - Gulf International Services ("GIS" or "the group"; QE: GISS), the largest service group in Qatar, with interests in a broad cross-section of industries, ranging from insurance, re-insurance, fund management, onshore and offshore drilling, accommodation barge, helicopter transportation and catering services, announced its results for the nine months ended September 30, 2012 with revenue of QR 1,488.5 million and net profit of QR 318.2 million.
In a statement to the Qatar Exchange, Mr. Ebrahim Al-Mannai, Chief Coordinator, Gulf International Services, declared: "The excellent third quarter results were a continuation of the group's strong first half performance. In this quarter, the group recorded its highest ever quarterly revenue (QR 601.6 million), and its strongest quarterly net profit in over two years (QR 121.8 million). The third quarter was also noteworthy as it was marked by the launch of new aviation services and it was the first full quarter since the acquisition of Amwaj Catering Services Limited.
"Year-to-date, revenue improved versus the same period of 2011 by over 38.3% as the group registered its best revenue for a nine-month period (QR 1.5 billion). Net profit similarly impressed, improving year-on-year by an exceptional 70% with all segments contributing positively."
The group's revenue for the first nine months ending September 30, 2012 was QR 1,488.5 million, representing a significant increase of QR 412.1 million, or 38.3%, on the same period of last year, while the third quarter recorded revenue of QR 601.6 million, an increase of QR 116.2 million, or 23.9%, compared to the second quarter.
The group's insurance subsidiary registered its highest ever revenue for the first nine months of the year, with premiums and net commission income of QR 439.5 million, a commendable QR 52.1 million, or 13.4%, improvement on the same period of 2011. The main factors for the year-to-date performance were significant growth in sums insured and premium inflation in the core Energy business, and the continued success of the subsidiary's medical insurance scheme.
"The medical insurance line of business has been a cornerstone of the Insurance segment's strong quarterly results and impressive growth over the last few years," stated Mr. Al-Mannai. "Since 2009, quarterly medical premiums have grown on average by almost 6%, which was significantly greater than the segment, and contributed more to the growth in quarterly revenue than the larger Energy segment. And, year-to-date, some 13,000 members have been added to the scheme."
Aviation segmental revenue for the first nine months of the year was QR 369.8 million, representing an increase of QR 37.3 million, or 11.2%, on the same period of 2011, due to a number of factors. Most important of these was a general increase in flying hours, the commencement of new operations within the GCC, the launch of the flight simulator and pilot training facility in Doha in the second quarter of 2012, and the resumption of normal operations in Libya. Other services provided in Qatar, mostly the helicopter emergency medical services and ad-hoc services, were marginally down by QR 0.3 million on the same period of last year.
"Despite dipping marginally from the second quarter high, aviation revenue in the third quarter of 2012 was otherwise still at its highest level since the group's incorporation, benefitting from the larger fleet, daily rate inflation, and improved political stability in Libya," remarked Mr. Al-Mannai.
The group's share of revenue from the Drilling segment closed the period ending September 30, 2012 at QR 455.2 million, a notable year-on-year increase of QR 98.6 million, or 27.7%, due to a higher number of rig operating days and the commencement of operations of the accommodation barge. During the prior year, four of GDI's offshore rigs lost operational days due to planned maintenance activities and / or time spent transitioning between contracts, whereas in 2012 all of these rigs were on contract with minimal planned maintenance activities. And, by the end of January 2012, the new accommodation barge, Al-Zikreet, commenced operations and year-to-date has contributed QR 36.7 million to group revenue.
"Quarterly rig revenue was the highest since the beginning of 2010, and was buoyed by high asset utilisation, a low number of non-earning days and the deployment of the Zikreet accommodation barge," commented Mr. Al-Mannai. "The group was also pleased with the contract extension recently agreed with Occidental Petroleum of Qatar Limited for the Al-Wajba rig, which will see that rig remain under contract for at least another two years."
The third quarter of 2012 represented the first full quarter since the inclusion of Amwaj Catering Services Limited QSC, and the company contributed QR 224.1 million to group revenue. The company's main business lines, viz. industrial catering services, corporate hospitality and VIP catering services, made up circa 75% of revenue, with the remainder attributable to manpower services related to the engagement of 2,900 workers distributed over 30 projects within Qatar.
Net ProfitNet profit for the first nine months of the year was QR 318.2 million, representing a year-on-year increase of QR 131.2 million, or 70.1%, while profit for the third quarter improved by QR 17.3 million, or 16.6%, to close at QR 121.8 million. The year-on-year improvement was driven by improved results in all segments, and the addition of Amwaj since June 1, 2012.
"Profits have rebounded markedly since 2011, improving by over 70%," noted Mr. Al-Mannai. "All segments registered strong growth in comparison to the same period of 2011, with noteworthy contributions coming from the Insurance and Drilling segments, which recorded year-on-year gains of QR 51.2 million and QR 42.8 million respectively. The year-to-date results also benefitted from the addition of Amwaj, which contributed QR 13.3 million in the period from its acquisition to date."
Profit in the Insurance segment significantly improved due to a number of factors, including growth in net premiums, improved margins, higher management fees from Qatar Petroleum's group life fund, gains from structured and fixed income instruments (QR 16.1 million), and weak 2011 comparatives. The year-on-year positive profit variance in the Drilling segment can be largely attributed to stable drilling operations in 2012, in contrast to the early part of 2011 where the business was disrupted by extended contractual start-up delays (139 days) resulting in the incurring of significant unrecoverable overheads that dampened margins. Profits in the Aviation segment, the major contributor to group earnings, increased by QR 23.8 million to reach QR 140.9 million. This year-on-year performance was aided by strong headline growth, improved available for sale investment closing values (AFS impairment for 2011: -QR 4.1 million), and weak prior year comparatives.
Financial Position, Cash Flow and Financial MeasuresThe group's total assets increased compared to the December 31, 2011 closing balance by QR 1.6 billion, or 33.9%, to close the nine months to September 30, 2012 at QR 6.2 billion. The increase was mainly due to the debt-financed acquisition of Amwaj Catering Services Limited QSC for QR 497.2 million, and advanced payments for the construction of two offshore drilling rigs (QR 282 million). The third quarter cash realisation ratio[1] remained strong, while year-to-date free cash flows1 were negative (Q3 2012: QR 662 million), due to the advanced payments and acquisition of Amwaj. Net debt1 closed the third quarter strongly positive due to the new borrowings, while the group's debt to equity ratio1 declined marginally to just below 70% due to loan repayments.
Government discussions regarding the insurance industry in QatarWithin the framework of the group's commitment to fulfilling its responsibilities as a listed company, and in particular to the disclosure obligations of the Qatar Exchange, the Chairman and Managing Director of Gulf International Services, H.E. Dr. Mohammed bin Saleh Al-Sada, informed the Qatar Exchange that the company's wholly owned subsidiary, Al Koot Insurance and Reinsurance, was invited by the Government of the State of Qatar to participate in wide-ranging discussions reviewing the insurance industry in Qatar that may result in significant changes to the ownership and / or operations of the subsidiary. Further details will be provided in due course.
Extraordinary General Assembly MeetingThe Board of Directors approved the calling of an Extraordinary General Assembly to be held at 6:00 p.m. on Sunday November 4th, 2012 to amend various clauses of the Articles of Association. Shareholders on the company's shareholder register on the close of trading on November 1, 2012 will be entitled to attend and vote, and proxy forms are available on the group's website.
Conclusion"The Board of Directors and management are extremely positive at the prospect of Gulf International Services being a pioneer in the provision of services to the oil and gas sector in Qatar and the Middle East," concluded Mr. Al-Mannai. "With strong fundamentals and ambitious investment plans, we are confident of the bright future awaiting our shareholders".
For more information about this press release, email gis@qp.com.qa or visit www.gis.com.qa
[1] See page 7 for a definition of cash realisation ratio, free cash flows, net debt and debt to equity ratio.
© Press Release 2012
