• Highest annual revenue and net profit on record.
• Revenue of QR 3.9 billion - up 69.7% versus 2013.
• Net profit of QR 1.4 billion - an increase of 108.4% compared to 2013.
• Drilling profit up QR 440.6 million following the buy-out of GDI’s overseas drilling partner, deployment of new drilling assets, and negotiation of favorable new contracts / contract extensions.
• Gulf Helicopters adds six helicopters to its fleet, expanding it to 50 helicopters.
• Insurance revenue grows to QR 735.5 million - versus QR 707.0 million in 2013.
• AMWAJ adds new catering contracts, net profit grows by more than 90%.
• Board proposed cash dividend of QR 5.50 per share, equivalent to a 72.5% payout ratio.

DOHA, QATAR - Gulf International Services (“GIS” or “the group”; QE: GISS), the largest services 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 period ended December 31, 2014 with revenue of QR 3.9 billion and net profit of QR 1.4 billion.

Financial Results
Revenue
Group revenue for the twelve months ended December 31, 2014 was QR 3.9 billion, representing a significant increase of QR 1.6 billion, or 69.7%, over the same period last year; however, on a like-for-like basis, management reporting revenue - assuming proportionate consolidation - was QR 4.3 billion, an increase of QR 1.0 billion, or 32.4%, versus the same period of 2013.

The group’s share in revenue from Gulf Drilling International Company in 2014 was QR 1.8 billion, a significant increase over 2013 of QR 0.9 billion, or 100.0%. This performance was driven largely by the offshore sector, which contributed over 80% of total revenue, with the deployment of Al-Jassra and Leshat offshore rigs in the second and fourth quarters of 2013 respectively, Msheireb and Dukhan offshore rigs in the second and fourth quarters of 2014 respectively, and a new accommodation lift-boat, Rumailah, in the third quarter of 2014.  The group also benefitted, in the third quarter of 2014, from favorable contract extensions for the onshore drilling rigs, GDI-1, GDI-2, GDI-3 and GDI-4.

Aviation segmental revenue for the twelve months increased by a moderate QR 25.7 million, or 4.2%, to total QR 644.2 million.  The benefit of delivery of four AW-189 and two AW-139 super medium helicopters during the year, which increased the aviation fleet to 50 (2013: 44 helicopters), and the success of GHC’s proactive business development strategy that 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 the provision of a helicopter emergency medical service.

The group’s insurance subsidiary registered gross insurance revenue for the financial year ended December 31, 2014 of QR 735.5 million, a commendable QR 28.5 million, or 4.0%, improvement on the same period of 2013.  The main contributor to this growth was the medical line of business which reported a year-on-year increase of 17.6% and now constitutes approximately 42% of Al Koot’s annual revenue.  Results in the core Energy line shrunk by a minimal 3.5%, in line with a softening of global insurance rates.

AMWAJ Catering Services Limited contributed QR 1.1 billion to group revenue, and now represents the second largest revenue segment.  Compared to last year, the company grew by QR 118.6 million, or 12.1%, due to the expansion of core industrial catering,and camp management services.

Net Profit
Net profit for the year closed at QR 1.4 billion, a significant year-on-year increase of QR 0.7 billion, or 108.3%.  This year-on-year improvement was driven by the ambitious growth plans across all segments, especially in the Drilling segment, and a gross one-off non-cash accounting adjustment for QR 0.3 billion.  This accounting adjustment was necessary to effect the gain on bargain purchase following the acquisition by GIS of the 30% shareholding of Japan Drilling Company in GDI on May 1, 2014, and has no cash flow implications.  The accounting adjustment also required a revaluation of the drilling rigs and related equipment of GDI.

The favorable year-on-year positive net profit variance in the Drilling segment of QR 440.6 million, or 179.1%, was driven primarily by the additional profit attributable to the buy-out of the interest held by its overseas drilling partner, the commencement of Al-Jassra, Leshat, Msheireb, Dukhan and Rumailah operations, and to higher daily rates received for the extension of four onshore rig contracts in the third quarter of 2014.  For the 8-month period from the buy-out to date, the additional shareholding in GDI has added QR 0.2 billion of incremental net profit to the group, and compares favourably to the QR 0.6 billion purchase consideration paid. This incremental profit represents an annual return on investment of circa 50% and allow GIS to recover its investment in almost two years.

Aviation segment earnings for the year ended December 31, 2014 were impacted by operating cost increases, as the subsidiary registered a modest QR 6.8 million reduction in year-on-year net profit to close at QR 231.1 million.

Profit in the Insurance segment for the financial year reached QR 162.4 million, a moderate increase of QR 8.4 million, or 5.5%, as strong Medical revenue growth and gains on the company’s investment portfolio were partially offset by increased major insurance claims.

Net profit in the Catering segment for 2014 was QR 118.9 million, up by QR 56.4 million, or 90.2%, as the subsidiary benefitted from its business expansion strategy, improved margins due to reduced operating costs and the provision of shut-down related services in the plants of clients.

Proposed Dividend Distribution
For the period from the initial public offering in February 2008 to date, the group’s shareholders have received accumulated cash dividends of QR 1.3 billion, which is equivalent to circa QR 6.80 per share, with an average payout ratio of approximately 45%.  In addition, shareholders have received a total of approximately 63 million additional shares through two bonus issuances .

The Board of Directors wish to express their gratitude to the group’s shareholders, and ensure they continue to benefit from the group’s progressive business development program.  In this regard, the Board of Directors in their meeting held on January 7, 2015 proposed a total annual dividend distribution for the year ended December 31, 2014 of QR 1.0 billion, equivalent to a payout of QR 5.50 per share, and representing 72.5% of the group’s net profit.  This total dividend distribution equates to an increase of 243.7% versus the previous year’s dividend distribution, and is almost equal to the accumulated distributions of all previous years.

Conclusion
The group is well-positioned to confront the upcoming economic uncertainty due to the long-term stability built into the group’s services contracts.  In the drilling segment, daily rates charged by the group’s drilling subsidiary to its customers are fixed for the entire contract duration, and are therefore not impacted by fluctuations in oil prices.  Moreover, all existing contracts were signed before the recent significant drop in oil prices, with the majority of contracts and daily rates expected to only be progressively renegotiated between 2017 and 2021.  Similarly, in the aviation segment, the majority of contracts are for a period of between one and three years.  The fees are also structured with a significant element of fixed monthly charges, thereby minimising the possible impact of changes in demand and flying hours.  And, the insurance and catering segments are not expected to be impacted by oil price fluctuations in the short- to medium-term.

GIS is confident in each of the group companies’ resilient fundamentals and robust business development plans, and that the group will continue to achieve its full operational potential.