- Highest first quarter revenue and net profit on record
- Revenue closed at QR 616.7 million - an increase of 12%
- Net profit up almost 40% to QR 188.6 million
- Drilling segment main profit growth driver
- Share purchase agreement signed to confirm GIS will assume 100% ownership of GDI from May 1, 2014
- Gulf Helicopters to expand its fleet
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 financial results for the three months ended March 31, 2014 with revenue of QR 0.6 billion and net profit of QR 0.2 billion.
In a statement to the Qatar Exchange, H.E. Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry, Chairman and Managing Director of Gulf International Services, stated, “The group closed the first quarter with its highest-ever first quarter results: revenue of QR 616.7 million and net profit of QR 188.6 million, increases of 11.6% and 38.9 % on the prior year respectively. These record results can be mainly attributed to the ambitious growth plans in all segments, and most notably the group’s drilling joint venture, Gulf Drilling International.”
In comments regarding developments in the first quarter of 2014, Mr. Ebrahim Al-Mannai, Chief Coordinator, Gulf International Services, stated, “GIS signed a share purchase agreement on March 31, 2014 with Japan Drilling Company Limited to acquire JDC’s 30% shareholding in Gulf Drilling International with effect from May 1, 2014. Pursuant to the terms of the SPA, GIS shall own all of JDC’s shares in GDI, making GDI a wholly-owned subsidiary of GIS. In March, GDI and JDC also signed a Letter of Intent that provides for the exchange of further technical cooperation between the two companies and the promotion of mutually beneficial business opportunities. Lastly, GIS is in the final stages of obtaining an 8-year bilateral loan agreement with local banks to finance the purchase of JDC’s 30% stake.
And, with regards expected developments during the remainder of 2014, Mr. Al-Mannai elaborated, “Additional growth is envisaged with three assets expected to be placed into operation during the year. The first, a conventional jack-up rig called Msheireb, was acquired in January of 2014 and is currently being refurbished in Ras Laffan before being utilised by Occidental Petroleum upon its expected delivery to them in the second quarter. The second is a new accommodation lift-boat, Rumailah, which is currently under construction in Abu Dhabi and will be utilised by Maersk Oil Qatar upon its expected delivery to them in the second quarter. The third asset is a high specification jack-up rig, Dukhan, which is currently under construction in Singapore and will be utilised by Qatar Petroleum upon its expected delivery to them in the fourth quarter.”
He further stated, “With the acquisition of the 30% stake in GDI and the additional three assets commissioning this year, Gulf International Services shareholders will surely benefit positively in the coming periods.”
“Gulf Helicopters recently placed firm orders for 15 AW-189 helicopters - AgustaWestland’s latest generation aircraft,” continued Mr. Al-Mannai. “Subject to prevailing market conditions, it is expected that 11 aircraft will be deployed in the next 5 years to bring the total count to 54, with the first 2 helicopters expected to be delivered in the second quarter of 2014.”
Group revenue for the three months ended March 31, 2014 was QR 616.7 million, representing a significant increase of QR 64.1 million, or 11.6% over the same period last year, and a moderate QR 9.4 million improvement on the last quarter of 2013.
Revenue in the Drilling segment closed the first quarter of 2014 at QR 261.6 million, a remarkable year-on-year increase of QR 88.5 million, or 51.1%. This performance was driven largely by the offshore sector, which contributed QR 196.1 to total revenue, with the deployment of the Al-Jassra and Leshat offshore rigs in the second and fourth quarters of 2013 respectively, and a minor revision to three rolled-over contracts for Al-Doha, Al-Zubarah and Al-Rayyan during 2013. Quarter-on-quarter, revenue was down by QR 30.4 million principally due to the booking in the previous quarter of a one-off mobilisation fee for the deployment of the Leshat offshore rig.
Aviation segmental revenue for the first quarter increased by a moderate QR 3.8 million, or 2.5%, to total QR 153.0 million, as an increase in the number of helicopters in the fleet (2014, Q1: 44 helicopters versus 2013, Q1: 40 helicopters) and the success of GHC’s proactive business development strategy which resulted in operations in a number of new territories, were partially mitigated by the end of its long-term relationship with the National Health Authority for providing a helicopter emergency medical service. This service was primarily provided by Gulf Helicopters as part of its corporate social responsibility, as the financial benefit was very limited: historically, the service contributed less than 1% of group revenue. Compared to the previous quarter, revenue decreased by QR 2.3 million due to the expiration of the HEMS contract.
The group’s insurance subsidiary registered gross insurance revenue for the period ended March 31, 2014 of QR 191.6 million, a resolute QR 29.7 million, or 18.4%, improvement on the same period of 2013. The main contributor to this growth was the medical line of business, as an additional 7,500 members joined the Al Koot Global Care Medical Insurance Scheme versus the first quarter of 2013. The medical line of business has grown by an annual average of circa 20% per year since 2009, and now contributes 45% of Al Koot’s annual revenue. Results in the core Energy line showed a noteworthy growth of 2.8%, in line with Qatar Petroleum’s reduced capital expenditure activity. Results were also up on the last quarter of 2013, by QR 2.3 million, or 1.2%, mainly due to the growth in the medical business.
Amwaj Catering Services Limited contributed QR 272.1 million to group revenue, representing the largest segment at 44.1% of group revenue. Compared to last year, the segment improved by QR 30.6 million, or 12.7%, due to the expansion of the core industrial catering and manpower contracting services to almost 100 projects throughout Qatar. On a quarterly basis, Amwaj’s performance was similar to the last three months of 2013 with a positive QR 8.7 million, or 3.3%, variance, mainly attributed to the delivery of shut-down related services in the plants of our clients.
Commenting on the group’s net profit Mr. Al-Mannai said, “Net profit for the quarter closed at QR 188.6 million, a significant year-on-year increase of QR 52.8 million, or 38.9%. This year-on-year improvement was driven by the ambitious growth plans across all segments, especially in the Drilling segment.”
The favorable year-on-year positive net profit variance in the Drilling segment of QR 33.6 million, or 82.4%, was driven primarily by the commencement of Al-Jassra and Leshat operations, and higher daily rates received for the three extended offshore rig contracts. Aviation segment earnings increased in line with the muted revenue growth, as the subsidiary registered a modest QR 2.2 million net profit improvement to reach QR 56.2 million. Profit in the Insurance segment reached QR 32.0 million, an increase of QR 3.1 million, or 10.7%, as an increase in major insurance claims were largely offset by the release of deferred revenue and strong gains on the company’s investment portfolio. Net profit in the Catering segment was QR 32.5 million, up by QR 13.5 million, or 73.8%, as the subsidiary improved margins due to reduced operating costs and the commencement of shut-down related services in the plants of our clients.
Significant Financial Reporting Change
In accordance with IFRS 10 Consolidated Financial Statements and with effect from the acquisition date of the entire shareholding of Gulf International Services’ co-joint venturer in Gulf Drilling International, Gulf Drilling International will become a wholly-owned subsidiary of Gulf International Services and will accordingly be fully consolidated on a line-by-line basis.
In conclusion, H.E. Dr. Mohammed Bin Saleh Al-Sada said, “Gulf International Services showed significantly improved results during the year. I am confident, that with the company’s strong fundamentals and exciting and ambitious capital investment plans, the company will continue to grow and meet shareholders’ expectations.”