Post on 20-Mar-2016
description
MARITIME INDUSTRIAL SERVICES CO. LTD. INC. (MIS)
Corporate Office 24th Floor, Media One Office, Dubai Media City Tel. +971 4 446 2857 Fax +971 4 449 4043 P.O. Box 11791, Dubai, United Arab Emirates www.miscoltd.com
Sharjah Yard Office Tel. +9716 528 5345 Fax +9716 528 5820 P.O. Box 4596, Sharjah, United Arab Emirates
Authorized Fully Paid up Capital USD 92,547,500 ISIN: PAP644621073
Thursday, 11 November 2010
MIS reports $24.2 million net income for 9 months 2010, 17% ahead of last year; net borrowings cut to $14.2 million and set to fall further after MEJU settlement becomes effective on 2nd November.
MIS Co. Ltd. Inc. (OSE: MIS) presents its results for the 3rd Quarter 2010, operating and financial highlights of which are as follows:
Revenue from traditional works in the 3rd Quarter was 42% up on last year and 17% on the previous quarter, but with only two jack-up rigs in production this quarter (v. five last year) total revenue of $88.3 million was 17% down on last year and 10% on the previous quarter.
Margins remained higher than last year, but a little lower than in the 2nd Quarter as a result of a higher concentration of income from Refurb. The fall in revenue left 3rd Quarter gross profit 6% lower than last year and 16% down on the previous quarter, but savings in overhead and lower interest costs added to net income, which at $7.9 million was just 7% lower than in the 2nd Quarter and $7.7 million up on the same period last year (which included a $10 million provision against the company’s investment in MEJU).
As predicted net borrowings were cut in the quarter by $35.6 million, from $49.8 million to $14.2 million.
The MEJU settlement agreement became effective on November 2nd (see below) and as a result work has restarted on Hull 106 under a new contract and net borrowings have been further reduced by the receipt of a $30 million initial payment.
FINANCIAL PERFORMANCE
Consolidated financial statements for the 3rd Quarter 2010 are attached; set out below is a summary of key financial data:
US$ Millions Q2 2010 Q3 2010 Q3 2009 9 Months 2010
9 Months 2009
Revenue New-Build 55.2 38.0 70.4 144.1 270.8 Traditional Works 42.9 50.3 35.5 134.7 114.8Total Revenue 98.1 88.3 105.9 278.8 385.6Gross Profit (before depreciation) 20.2 17.0 18.0 56.1 57.6EBITDA 10.9 9.9 12.8 31.3 39.7Depreciation & Amortisation 2.4 2.4 2.4 7.2 7.3EBIT 8.5 7.5 10.4 24.1 32.4Net Income 8.5 7.9 0.2 24.2 20.8Margin on revenue (%) Gross Profit 20.6% 19.3% 17.0% 20.1% 14.9%EBITDA 11.1% 11.2% 12.1% 11.2% 10.3%Net Profit 8.7% 8.9% 0.2% 8.7% 5.4%
Work remained suspended on Hulls 106 and 108, but profitability was maintained during the period, despite the reduction in turnover. Interest income marginally exceeded interest costs in the 3rd Quarter - net interest costs amounted to $0.5 million in the previous quarter and to $0.7 million in Q2 2009.
CASHFLOW AND BORROWINGS
US$ Millions 9 months 2010
9 months 2009
Net operating cash flow 36.5 49.2Investing activities 2.9 15.8Financing activities -64.7 -32.9Net (decrease)/ increase in cash & cash equivalents -25.3 32.1
Net operating cashflow was boosted in the 3rd Quarter by a final payment of $36.7 million in respect of Hull 107. Even larger working capital reductions in the same period last year resulted from the receipt of significant milestone payments on Hulls 105 (on handover) and 110.
Cashflow from investing activities reflects restrained capital expenditure in the period ($4.4 million - primarily equipment for our Sunbelt operations - compared with $8.0 million for the same period last year), balanced by the release of lien deposits following the clearance of bank obligations in respect of Hull 107. The 2009 figure included proceeds from the sale of an investment ($7.0 million) and a release of similar deposits in respect of Hulls 104 and 105.
Bank borrowings (net of cash) have been cut by $39.8 million so far this year and at 30th September 2010 amounted to $14.2 million.
MEJU1
The company resolved its differences with MEJU by means of a settlement agreement signed in May 2010. This agreement became effective on 2nd November 2010 and as a result:
Both parties have withdrawn all claims and counterclaims under the previous agreements relating to Hulls 106 and 108 and the arbitration and any related legal action has formally ceased.
The construction of Hull 106 has recommenced under a new contract with MEJU for a total price of $160 million.
$30 million has been received (in November 2010) by MIS in cash, with the balance to be settled as follows:
• $100.5 million already received from MEJU as an advance payment on Hulls 106 and 108, will be reassigned wholly to Hull 106.
• The balance will be paid on delivery, or, at MEJU’s option and subject to interest and an arrangement fee, by no later than 30th June 20112.
MEJU has transferred to MIS unencumbered beneficial and legal title in Hull 108, which MIS will complete for its own account. Construction is expected to restart in the 1st Quarter of 2011.
1 MIS had contracts for the construction of Hulls 106 and 108 with respectively Mosvold Middle East Jackup I Limited and Mosvold Middle East Jackup II Limited, collectively referred to here as MEJU, in which MIS also has an indirect shareholding of 8.7%. 2 The rig will remain in MIS’ possession until all sums due under the new contract are paid.
Related assets included in our balance sheet at 30 September, 2010 amounted to US$ 136 million, made up of accounts receivable of US$ 117 million and due from customers of US$ 19 million. As a result of the settlement agreement, MIS expects to secure a full recovery of these amounts. MIS has fully provided against its investment in MEJU (formerly valued at cost of $10 million).
BACKLOG
(US$ Millions): Traditional
WorksNew Build Total
At 1 January 2010 60.1 311.1 371.2Additions/Awards 9 months 2010 157.3 5.5 162.8Recognised 9 months 2010 -134.7 -144.1 -278.8As at 30 September 2010 82.7 172.5 255.2
As expected backlog has continued to reduce in the absence of further New Build contract awards, but has grown during the year in a number of our traditional value streams, including Fabrication, Refurb and Tech Services.
PROSPECTS AND MARKET OUTLOOK
In the remaining quarter of 2010 MIS expects to continue the profitable trend established in the first nine months of the year, to achieve delivery and acceptance of a fourth drilling rig and to see a further improvement in its balance sheet and in the quality of its assets (partly as a result of the MEJU settlement becoming effective). Our priority in the next few months is the reinforcement of our backlog. Our view of the energy market is that there are signs of improvement, which offer us opportunities in both New Build and in the traditional value streams. One area of focus highlighted in our last quarterly report was the potential expansion of our EPC capability, “probably through an acquisition”. In September we announced an agreement to acquire Litwin PEL LLC, an Abu Dhabi-based EPC and Engineering Services company catering to the Middle East and Africa Oil and Gas sector. We expect to complete that acquisition before the end of the year and believe that this will significantly improve our prospects of winning EPC projects in the UAE and the wider region.
That acquisition and the launch in September of MIS Production Services, which adds gas compression and oilfield chemicals to our portfolio of businesses, will help MIS to maintain its unique ability to offer comprehensive solutions to its clients in the energy sector.
Investor Relations:
As the public holiday of Eid al Adha falls between 14th and 20th November and MIS offices will be closed, MIS is posting its Q3 financial results today, ahead of the originally scheduled date of Wednesday 17th November. For more information, please contact Group CFO, Andrew R J Calvert - Andrew.Calvert@mis.ae or Rana Said, Director Corporate Communications - Rana.Said@mis.ae ,who will reply at the earliest opportunity on their return to the office.
REVE
NUE BY
VALUE STRE
AM9MONTH
S2009
9 MONTH
S 2009
Sunb
eltTech Services
3%
Fabrication
10%
EPC
5%
Sunb
elt
5%
Refurb
7%
New
Build
70%
10/11/20
10MIS Q3RE
SULTS 2010
1
REVE
NUE BY
VALUE STRE
AM9MONTH
S2010
9 MONTH
S 2010
Sunb
elt
Tech Services Fa
brication
15%
6%4%
15%
EPC
13%
Refurb
10%
New
Build
52%
10%
52%
10/11/20
10MIS Q3RE
SULTS 2010
2
PROFIT BY
VALUE STRE
AM
9MONTH
S2009
9 MONTH
S 2009
Fabrication
Tech
Services
9%Fabrication
22%
Sunb
elt
17%
New
Build
18%
EPC
17%
Refurb
17%
10/11/20
10MIS Q3RE
SULTS 2010
3
PROFIT BY
VALUE STRE
AM
9MONTH
S2010
9 MONTH
S 2010
Fabrication
Tech Services
Fabrication
20%
Sunb
elt
14%
New
Build
Sunb
elt
18%
23%
EPC
Refurb
4%
21%
10/11/20
10MIS Q3RE
SULTS 2010
4
4%