By Pratap John/Chief Business Reporter
Qatar’s largest services group Gulf International Services expects to further invest QR1.9bn in capital expenditure over the next five years, GIS chairman Sheikh Khaled bin Khalifa al-Thani has said.
Since 2008, GIS has accounted for a total Capex of QR4.3bn, Sheikh Khaled said while addressing the company shareholders at the company’s eighth Annual General Assembly at the La Cigale last night.
“These investments are expected to generate additional revenue. I believe it will further strengthen the group’s competitive position as the premier service provider in the region,” Sheikh Khaled said.
“Despite the current muted economic environment, GIS is embarking on a selective capital expenditure programme together with suitable business development opportunities. GIS believes that continued investment in operating assets are essential to remain competitive in business and will continue to invest when the right opportunity becomes available,” he said.
GIS has significant investments in national and international oil and gas industry, including well support services, offshore and onshore drilling services, helicopter maintenance and transportation services, insurance and reinsurance services.
Currently, GIS has an asset base in excess of QR11.2bn. It acts as a holding company that owns and controls stakes in the following companies: Al Koot Insurance and Reinsurance Company, Gulf Drilling International, Gulf Helicopters Company and Amwaj Catering Services.
Sheikh Khaled said with cost reduction becoming top most priority of all entities across the world due to the current economic situation, GIS has acknowledged that the best way to compete is by “providing the world-class services at the lowest possible cost.”
Therefore, he said, the group has already embarked on a number of initiatives to identify opportunities where costs could be minimised and utilisation of the assets optimised. The initiatives include the strategic assessment of the business operations within the group companies, re-assessment of capex, opex, people, processes and financing needs so that value can be delivered to GIS customers’ through optimising and rationalising the company costs and operations.
GIS’ insurance subsidiary Al-Koot recently received A- rating from credit rating agency Standard & Poor’s, which will be a major strength when it negotiate rates with reinsurers and lenders, enabling Al-Koot to “remain competitive” in the reinsurance market without the support of QP.
He pointed out that 2015 was expected to be “challenging for a number of reasons”, including the “consequences” of QP’s procurement mechanism and its impact on some group companies coupled with “unfavourable” economic environment driven by a significant fall in the crude oil prices.
Consequently, the group companies within GIS had to inculcate new thinking, new way of working to stay ahead of uncertain economic environment and the competition while maintaining the costs at the lowest.
The board of directors had earlier recommended a dividend distribution for the year ended December 2015, equivalent to a payout of QR1 per share and representing 23.2% of the group’s net profit.
For the period from the initial public offering in February 2008 to 2014, the group’s shareholders have received accumulated cash dividends of QR2.3bn, which is equivalent to circa QR12.3 per share, with an average payout ratio of approximately 58%.
Shareholders have also received a total of 63mn additional shares through three bonus issuances.
Acknowledging the indirect impact of oil price plunge on GIS and QP’s decision to part away with the single source procurement, GIS recorded “commendable” results for the financial year 2015 with a revenue of QR4.2bn and net profit of QR801.4mn.
GIS managing director Ebrahim Ahmad al-Mannai and other directors were also present at the AGM.
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