UAE: MIS Group Posts Strong Q4 2010 Results

 

MIS reports record profits, margin improvements at every level and net income of $35.7 million versus $29.0 million in 2009.

MIS Co. Ltd. Inc reports a further quarter of robust operating profits, with results for the 4th Quarter 2010, operating and financial highlights of which are as follows:

* Revenue for the full year 2010 at $385.4 million was $92.3 million (19%) lower than in 2009, with the suspension for most of the year of work on Hulls 106 and 108. Against the previous quarter, however, it was up 21% (16% higher than the same period last year), as Hull 106 came back into production following the MEJU settlement.

* Net income for the year at $35.7 million was $6.7 million (23%) higher than in 2009, reflecting significant productivity and profitability gains in New Build, partially offset by a provision for potential losses in Refurb. Net income of $11.4 million in the 4th quarter was 39% higher than in the same period last year and 44% higher than in the previous quarter.

* MIS reduced its borrowings (net of cash) during the year from $54.0 million to $11.5 million.

* MIS is recommending a dividend of 15 US cents per share, subject to shareholder approval at the AGM in April 2011.

Improved New Build margins left gross profit 6% ahead of last year, despite the lower revenue, 46% ahead of the previous quarter and 32% ahead of Q4 2009. A major Refurb project that we expected to complete in 2010 has extended into 2011 with a consequent increase in costs, some of which are the subject of unagreed claims – as a result Refurb has recorded a loss in the year, some or all of which may be recoverable in 2011. Net income benefited from a dramatic reduction in net interest costs – the charge for the year amounted to $1.6 million compared with $4.9 million in 2009; in the 4th Quarter net interest costs amounted to $0.2 million (versus zero in the previous quarter and $0.9 million in Q4 2009). EBITDA for the year 2010 was $4.3 million lower than in 2009, principally as a result of legal costs relating to the MEJU arbitration and settlement, the absence of 2009’s hedging gains and overheads increased by new venture start-up costs , but 49% ahead of the previous quarter and 38% ahead of the 4th Quarter in 2009.

Higher net income, further rig deliveries (Hulls 107 and 109) and the settlement with MEJU enabled MIS to reduce its working capital during the year, boosting operating cashflow by $127.9 million.

MIS’ ownership of Hull 108 accounts for $106 million of the benefit, reflecting its transfer from working capital to fixed assets. Investing activities include the mirror image of the Hull 108 transfer, the acquisition of Litwin PEL ($10.6 million) and capital expenditure of $4.8 million (reduced from $10.1 million in 2009), balanced by dividends from associates and the release of lien deposits following the clearance of bank obligations in respect of Hull 107. The positive contribution from investing activities in 2009 resulted from a higher level of lien deposit releases relating to Hulls 104 and 105 ($14.8 million) and proceeds from the sale of an investment ($7.0 million).

Bank borrowings (net of cash) at 31st December amounted to $11.5 million, $42.5 million less than a year ago.

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Source:MIS, February  7, 2011;