Doha: Gulf International Service (GIS) will continue to focus on achieving cost efficiency across all its segments, said Sheikh Khalid bin Khalifa Al Thani, Chairman of the Board of Directors, Gulf International Services (GIS). Addressing the Annual General Assembly meeting held yesterday, he said that GIS group companies will continue their efforts in maintaining their market share.
“Our strategy going forward will continue to emphasize on achieving cost efficiency across all its segments and will continue to implement new measures, which could further transform operations, via creating an additional layer of defense to an already lean organization,” said Sheikh Khalid bin Khalifa Al Thani. “Going forward, our group companies will continue their efforts in maintaining their market share, while looking ahead to improve asset utilization, and building a resilient future to create long term shareholder value,” he added.
Sheikh Khalid bin Khalifa Al Thani said that relentless efforts are being placed to achieve an efficient and effective debt structure for the Group, which is a key ingredient of our corporate strategy. These plans are currently under process and would bring additional layer of financial sustainability to the Group, with opportunities to expand our footprints, and consequently improve our competitive positioning. He said that since the start of 2021, oil and gas industry showed positive signs of recovery with constructive macroeconomic drivers. Post-pandemic recovery for the Group remained uneven, with aviation and insurance segments continue to demonstrate persistent improved set of results, while the drilling segment remained under pressure until first half of the year.
He added that, however, with the latest strategic realizations, the drilling segment has started to show signs of recovery. Within the catering segment, macroeconomic tailwinds were not immediately felt as the segment continue to remain impacted with depressed margins due to industry specific COVID-linked restrictions.
“We have achieved successful deployment of all the rigs under Gulfdrill JV’s fleet. Going forward, with Gulfdrill JV becoming fully operational, it is expected to bring additional revenue streams for the segment and improved operational cash flows to the Group,” he added.
The Extraordinary General Assembly Meeting approved an amendment to increase the non-Qatari ownership limit in the Company’s share capital from 49 percent to 100 percent, ensuring that all relevant requirements are fully met.
Addressing the shareholders, Mohammed Jaber Al Sulaiti, Manager Privatized Companies Affairs Dept., QatarEnergy said that at Group level, 3 percent growth in Group’s revenue was attributed to a growth in segmental revenue from insurance, aviation and drilling segments, which was offset by a negative growth in revenue from catering segment. Overall growth in Group’s revenues led to an increase in net earnings which increased by 117 percent. Moreover, absence of impairment provisions booked during last year, positively impacted current year’s profitability compared to last year.
“The current levels of debt have a significant impact on the Group’s net earnings, as finance cost is one of the key cost ingredients and especially limits the drilling segment, considering major amount of Group’s debt relates to the drilling segment. The effect of finance cost is so large that a substantial part of the free cash flows generated each year is used to pay interest and to meet the obligations in relation to the credit facilities, which ultimately affects our bottom line cash position and hence leads to our inability to payout dividends,” he said.
He added that currently various scenarios and options are being considered and evaluated that would allow management, as well as all the other stakeholders, to apprehend better certainty with a stable view of the market in relation to Group’s debt profile and repayment ability.
“We hope that we will be able to achieve our targeted direction in relation the funding strategy, which could lead to an optimum funding levels with an efficient and effective interest cover for the Group which could unlock future growth opportunities, and could translate into realizable shareholder value creation, while offering greater confidence and sustainability in turbulent times,” he added.
Talking about the segmental performance, he said drilling segment, the recovery in the oil and gas industry coupled with ease of restrictions amid COVID-19 outbreak started to realize mainly from the second-half of the year, as day-rates for the off-shore segment improved from last year’s depressed rates. Furthermore, most of the previously suspended on-shore rigs were redeployed, during the year. Also, with GulfDrill JV becoming fully operational since mid of this year, has improved the business dynamics of the segment.
In aviation business, the recovery in the oil and gas industry led to an increased demand for the off-shore aviation services worldwide, which in turn contributed to higher flying hours within both, the domestic and international operations, and led to an improved financial performance for the year. Moreover, successful renewal of contracts in the international business reassured segment’s position in the international markets, while MRO business also recorded a positive growth.
In the insurance segment, the segment managed to build up its strong performance, achieved throughout the period by further expanding both the medical and general lines of businesses, where successful renewal of major contracts and additional coverage for major contracts within the energy line of business were main highlights.
