Annual Report 2010
His Majesty Sultan Qaboos bin Said
Renaissance Services SAOG Safe; Efficient; Green; Local A design is a plan, similar to a drawing or blueprint, which carries with it an intention. The Renaissance Services business model was conceived with the intention of continuous growth during natural economic cycles of peaks and troughs of industry – but it proved to be a resilient design during the most challenging economic recession too. Complex designs carry a lot of information. The technical drawings featured in this year’s annual report put side by side with the company’s annual disclosure reports reflects the group’s capability to deliver increasingly sophisticated projects with the Renaissance standard of excellence. Executing complex projects requires an experienced team, practical tools and systems, and effective communication channels. Renaissance has all these attributes. Technical drawings also expose the structure’s core foundations and allow a capable builder to analyse the structure’s true potential. The Renaissance fundamentals for future growth are clearly explained in the subsequent pages. Across all our groups and in all our endeavours, the 12 Renaissance Values are the yardstick by which we measure success.
Board of Directors
4-5
Financial Highlights
2010 Highlights
Chairman’s Report
6-7
8-9
10-17
CEO’s Report
Auditors’ Report on Corporate Governance
Report on Corporate Governance
18-43
44
45-51
Auditors’ Report on Financial Statements
Financial Statements
Management Team
52
53-101
102-103
Renaissance Services SAOG
P.O Box 1676, P.C 114, Muttrah, Sultanate of Oman Tel: +968 24796636, Fax: +968 24796639
www.renaissance-oman.com
Colin Rutherford Director
Rishi Ajit Khimji Director
Sunder George Director
Ali bin Hassan Sulaiman Director
Board of Directors
Samir J. Fancy Chairman
HH Sayyid Tarik bin Shabib bin Taimur Director
Yashwant C. Desai Director
Financial Highlights
700.0 600.0
US$Million 643.1
608.5
140.0
658.3
126.7
120.0
500.0
100.0
400.0
80.0
300.0
60.0 173.2 158.8
200.0
US$Million
200.6
194.0 160.4
184.7
100.0
105.4
97.2 86.5
100.7 84.9
83.9 74.1
68
40.0 20.0
0
0 2008
2009
Revenue
Gross Profit
2010
Earnings Before Tax Interest Depreciation & Amortisation
2008
Profit from Operations
2009
2010
Profit Before Tax
Profit After Tax (Before Minority)
Summary Financial Information 2007 2008 2009 2010 Rial Million 199.2 234.3 247.6 253.4
2007
2008 2009 US$ Million
2010
REVENUE
517.4
608.5
643.1
658.3
141.4
173.2
194.0
200.6
71.6
97.2
105.4
126.7
111.9
158.8
160.4
184.7
54.4
66.7
74.7
77.2
GROSS PROFIT
27.6
37.4
40.6
48.8
PROFIT FROM OPERATIONS
43.1
61.1
61.8
71.1
EARNINGS BEFORE TAX, INTEREST, DEPRECIATION AND AMORTISATION
22.3
33.3
32.7
38.8
PROFIT BEFORE TAX
58.0
86.5
84.9
100.7
17.3
26.2
28.5
32.3
PROFIT AFTER TAX (BEFORE MINORITY)
45.0
68.0
74.1
83.9
148.6 223.5 282.7 391.6
NET FIXED ASSETS
386.0
580.4
734.4
1,017.0
109.4 138.7 168.4 195.8
TOTAL EQUITY
284.1
360.2
437.4
508.7
98.0 150.3 188.6 284.8
TERM LOANS
254.7
390.3
489.8
739.8
0.103 0.089 0.094 0.103
BASIC EARNINGS PER SHARE (in Rial)
0.267
0.232
0.244
0.268
0.025 0.025 0.012 0.012
DIVIDEND PER SHARE (in Rial)
0.065
0.065
0.031
0.031
Note:1. Basic earnings and dividend per share have been adjusted for changes made in share capital in subsequent years. 2. All figures converted @ 1US$ = 0.385 Rial
6
Renaissance Services SAOG & its Subsidiary Companies
2.00
Ratio
1.87 1.68
1.80
1.66 1.47
1.60 1.40 1.20
1.10
1.14
25.00
21.12
18.57
20.00 15.00
1.00 0.80
Ratio
12.44
17.73
10.08
10.00
8.80
0.60 0.40
5.00
0.20 0.00
0 2008
Gearing
2009
2010
2008
2009
2010
Return on Capital Employed (%)
Total Liabilities/Net Worth
Return on Average Equity (%)
Significant Ratios 2007
2008
2009
2010
1.10
1.07
1.22
1.06
0.9
1.10
1.14
1.47
TOTAL LIABILITIES/NET WORTH
1.52
1.68
1.66
1.87
INTEREST COVER
5.10
4.30
5.17
4.75
RETURN ON CAPITAL EMPLOYED (%)
10.94
12.44
10.08
8.80
RETURN ON AVERAGE EQUITY (%)
17.24
21.12
18.57
17.73
CURRENT RATIO GEARING
Renaissance Services SAOG
& its Subsidiary Companies
7
2010 Highlights FEB
JAN Topaz Engineering completes berth extension project CSR
Renaissance sponsors Nabil al Busaidy on his successful expedition to climb Mount Vinson, Antarctica
Renaissance announces record preliminary results; total revenue touches Rial 248m (US$ 644.8m)
CSR
Renaissance sponsors the “Dream your Biggest Dream” competition Oman Sail’s Renaissance team finishes in 5th place in the prestigious French tour
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Renaissance Services SAOG & its Subsidiary Companies
Renaissance participates in BankMuscat investor conference for Oman’s top 15 performing companies CSR
Renaissance participates in Earth Hour
MAY
APR Topaz Marine deploys Caspian Protector to Azerbaijan in support of a 10-year, Rial 86.5m (US$ 225m) contract with oil major, BP
MAR
JUN
Renaissance signs agreement with Microsoft Oman to upgrade all company software Renaissance discloses Q1 results, 10% growth in net profit CSR
Renaissance finalises its largest donation to date, Rial 250,000 to the education and training of 45 Omani instructors for the Association of Early Intervention for Children with Special Needs
Topaz Engineering wins US$ 45m Engineering, Procurement and Construction (EPC) contract with Gulf Petrochem
JUL
Topaz Marine acquires Topaz Commander, an 84-metre MPSV, under contract with ADAMS Offshore Middle East Oil & Gas magazine features Topaz Marine and Topaz Engineering
AUG Renaissance secures the largest single facility received by the Company, a Rial 38.5m (US$ 100m) term funding with local partners Bank Dhofar, BankMuscat and NBO Renaissance half year results show steady growth, strong fundamentals CSR
Renaissance sponsors over 60 Omani youths participating in Oman Sail’s Summer Sailing School programme
SEP Topaz Engineering delivers gigantic offshore oil & gas project The example of producing a 12,500 Ton steel structure in ADYARD Abu Dhabi for Norway is testament to the company’s growing market share and reputation as a premier EPC contractor for the region CSR
Renaissance launches Road Safety Awareness campaign
OCT Topaz Engineering awarded US$ 100m EPC contract to construct an oil storage terminal in Fujairah for client, GPS Chemoil CSR
Renaissance supports 120 Omani boys and girls from the Sultanate’s various public schools on Outward Bound Oman – Tahaddi programme
NOV Renaissance enters into JV for Contract Services forming Renaissance Facilities Management Services, Abu Dhabi Contract Services Group is appointed Master Caterer for Muscat Asian Beach Games 2010; serves over 15,000 meals a day Renaissance issues the company's largest single funding offer and first mezzanine financing offer which is fully subscribed by Omani investors
DEC
Contract Services Group expands in UAE with acquisition of Al Wasita Emirates for Services & Catering Renaissance is named a Star Performer of 2010 on the MSM30 with its share price climbing 45.9 % as the year draws to an end
Renaissance Services SAOG
& its Subsidiary Companies
9
Chairman’s Report
10
Renaissance Services SAOG & its Subsidiary Companies
On behalf of the Board of Directors, it gives me great pleasure to present to you the audited consolidated accounts for Renaissance Services SAOG for the twelve-month period ending 31 December 2010. We are reporting record results for the 10th consecutive year, in spite of the enduring effects of the global economic recession. We also present a bold new initiative for your approval, to publicly list our Marine and Engineering business on the London Stock Exchange. This move will bring transformational change to the Company, ensuring potential for growth, access to capital and potential value recognition.
A resilient business model Renaissance’s 2010 results demonstrate again the resilience of our business model and our ability to perform under the most challenging economic conditions. These results confirm once again that we are committed to a long-term vision of being recognised as a world class, internationally competitive, globally renowned, oilfield services company. We believe this requires delivering oilfield services safely, with no harm to people or the environment; exceeding customer expectations profitably; investing with discipline; improving operational efficiency for our clients and ourselves; leading markets where we operate; applying fiscal prudence; growing in a sustainable manner; increasing shareholder value; and improving the economic well-being and quality of life of all our stakeholders.
Renaissance Services SAOG
& its Subsidiary Companies
11
Chairman’s Report
Record Financial Performance 2010
2009
Rial Million
US$ Million
Rial Million
US$ Million
253.4
658.3
247.6
643.1
EBITDA
71.1
184.7
61.8
160.4
Operating Profit
48.8
126.7
40.6
105.4
Net Profit
32.3*
83.9
28.5
74.1
Revenue
Note: *The current year profit includes a net gain of Rial 0.65 million from the disposal of assets, compared with a net gain of Rial 5.97 million in 2009.
In comparison with the same period last year, revenue has increased by more than Rial 5.8 million (US$ 15 million); profit from operations has increased by 20.2%; EBITDA has increased by 15.0%; and net profit has increased by 13.3%. The operating margins have improved from 16.4% in the previous year to 19.2% in the current year. As part of the Company’s continuous pursuit of excellence in its accounting and disclosure practices, the Company has changed the useful life of its vessels from 25 years to 30 years based on its own evaluation and with reference to the related industry practices. The Company has also begun charging direct costs related to vessels mobilisation income to its 2010 income statement, whereas earlier those expenses were capitalised as part of vessels costs. These changes together resulted in an additional charge of Rial 197K in the 2010 income statement.
Business segments outperform the economic cycle The global economic downturn of the past two years has proven to be stubbornly prolonged through 2010 in some sectors and markets in which we operate. In spite of this, our businesses continue to match or outperform in their respective peer groups, and overall the Company has again delivered all-time record results.
12
We believe that there are varying patterns to economic crises affecting each business segment, even though the overall sequence is the same: The immediate impact of downturn is sudden and harsh but there is a delay mechanism to the deepest trough in a negative cycle; and the recovery is slower than the cascade in. Our businesses have not been immune to this and we may take positive heart from the manner in which our businesses have collectively sustained growth through the worst of the arid economic landscape. This success has not been universal in comparative peer groups. The Marine business experienced its deepest downturn in the last six months of 2009 and the first six months of 2010. In short-term contracts in the spot market, we saw a reduction in vessel utilisation and pressure on rates. This affected us principally in the MENA region, while our Caspian operations were largely insulated by longer-term fixed price contracts that proved to be cost-effective for clients and price-effective for us in difficult times. Overall, the business sustained performance and grew through a combination of the technical relevance and efficiency of a young fleet; a dogged persistence in building new vessels; the trust and support of long-term clients; and outstanding performance by our people. The Engineering business has faced the toughest market conditions throughout 2010 and this has constrained its financial contribution for the year. This should not hide the underlying success of the busines which during the year, delivered a US$ 85 million Mobile Offshore Production Unit for deployment in the North Sea. The UAE-based boatbuilding business realised a turnaround from its loss-making impact in 2009; and the year finished on a high for the fabrication business with the award of a US$ 100 million EPC contract for an Oil Storage Terminal in Fujairah. The order backlog currently is in a better condition than at the start of 2010 and also the E&P spending in the oil and gas industry is visibly increasing.
The Contract Services business exceeded performance expectations in difficult market conditions. This was in spite of a 10-month delay to plans for entry in the UAE market, which occurred successfully at the end of the year with the formation of a new Joint Venture, a business acquisition and new contract gains. Here in Oman, two new oilfield accommodation projects were finished on time and in cost at the beginning of the year, but it has taken over one year for the client to meet commitments to fully occupy the new state-of-the-art facilities. To compensate for these delays, the Company has moved swiftly to secure new contracts and efficiencies to exceed growth targets. This included demonstrating international competence and capability as Master Caterer for the 2nd Asian Beach Games held in Muscat.
Investment for growth in the Oil & Gas sector Whatever the economic cycle, Renaissance continues to look beyond the current business environment and focus on long-term business success and long-term growth in shareholder value. We will continue to pursue opportunities to ensure our businesses remain well-positioned to deliver market-leading
performance at the top and bottom of the business cycle. Global demand for energy continues to increase, particularly in the growing super economies of China and India. The world needs greater energy efficiency, new sources of energy, and the continued safe and efficient development of hydrocarbon resources. For this reason, Renaissance continues to invest for the long-term in the oil and gas industry, based on the belief that economic growth will return. In 2010, our capital expenditure investment in new assets was Rial 142.3 million (US$ 370 million) as the first phase of a three-year (2010-2012) US$ 1.36 billion investment programme. At the same time we invested a further US$ 100 million equity funding and arranged US$ 104 million mezzanine funding facility in the Company’s Marine and Engineering subsidiary, and US$ 15 million equity funding in the Contract Services business in 2010. With immediate growth plans well-resourced, we have now turned our attention to the next phase of opportunity that can secure and achieve positive change.
Renaissance Services SAOG
& Its Subsidiary Companies
13
Chairman’s Report
Moving to the next level Rationale for potential London listing of Topaz Business (“Topaz”) Since 2005, Renaissance’s stewardship of Topaz as a 100% subsidiary has overseen a period of sustained and unprecedented growth of the business. In 2005, the year of the acquisition, Topaz’s revenues were Rial 52.8 million (US$ 137 million) and profit after tax was Rial 3.4 million (US$ 9 million). By 2010, revenues have risen to Rial 156.8 million (US$ 408 million) and profit after tax to Rial 27.1 million (US$ 70 million). The Offshore Support Vessel (OSV) fleet has grown to 100 vessels owned, operated or managed (including 10 vessels under construction/contract for delivery) and the vessels owned by Topaz had an average age of 6.5 years as at 31 December 2010. The Engineering business has expanded and modernised with significant facilities and EPC capabilities strategically located on both the Arabian Gulf and Indian Ocean seaboards. The established client base includes a range of International Oil Companies. We aim to ensure best practice HSE, Quality, Compliance, Financial Control and Management Information Systems are in place. Topaz has strong market positions in the Caspian region and key MENA markets. Most important of all, Topaz has in place an independent, professional management team of the highest caliber; with the knowledge, skill and experience to realise Topaz’s potential and ambitions.
“ The potential London listing of Topaz would be another transformational change for our business. ”
And that potential is significant: Immediately, in the significant offshore oilfields of Topaz’s existing markets in MENA and the Caspian; and increasingly, as opportunity allows, by following future oil into new markets. Topaz has proven itself able to deliver international expertise and standards whilst embracing and developing local content needs under the operating mantra of Safe, Efficient and Local. It is an approach that is increasingly in demand from IOCs (International Oil Companies) in partnership with local NOCs (National Oil Companies). Some new growth markets, such as Brazil and some West African countries, offer similar opportunities for a leading marine and engineering services provider like Topaz that understands the imperative to achieve meaningful local content in terms of local workforce development, opportunities for local investment and ownership participation, and optimising the use of relevant local goods and services. In my annual and quarterly statements over the past year, I have written about our work with international advisors to consider optimum means of raising new capital to sustain our growth programme.
14
Renaissance Services SAOG & its Subsidiary Companies
Renaissance now believes a listing of Topaz on the London Stock Exchange offers the most effective way to optimise future growth opportunities and increase shareholder value. Full details of this proposal will be presented to you in the Information Document circulated for your consideration and approval at the Annual General Meeting. I would like to highlight some of the key points here. We believe that independence as a public company can foster innovation and growth through transformational change and strengthening of:
« Corporate Governance – direct scrutiny of the Board of Directors of Topaz Listco and its committees by investors, analysts and FTSE stakeholders. « Human Resources – enhanced motivation
through independent listed status, talent retention and new talent attraction, market benchmarking, and increased entrepreneurialism.
« Finance – funding for growth, new investors for a
more focused business. Potential value realisation through a market that has scale and specialised sector knowledge. Renaissance’s stature shall be enhanced as an MSM listed company that is the principal shareholder of a company listed in London with the attributes to become a FTSE 250 company (subject to confirmation by FTSE). For Renaissance Shareholders the true value of Renaissance’s holding in Topaz shall be recognised through the scrutiny of a robust and independent IPO process and continued market performance. Renaissance’s 100% shareholding in Topaz has been an ideal platform to deliver maximum shareholder value and develop Topaz into what it is today. Going forward, we believe a Renaissance majority shareholding in Topaz Listco shall deliver greater value to Renaissance’s Shareholders than the status quo of the 100% shareholding in Topaz. London offers access to capital, international oilfield services peer group understanding and benchmarking, and, we believe, consequent value recognition – which may deliver increased value to Renaissance Shareholders as a result of Renaissance’s role as majority shareholder in the Listed Company of the Topaz Business. I also wish to draw your attention to our efforts to create a listed company with highest standards in terms of compliance and good governance. We believe this approach gives the IPO the best possible chance for success, and sets a foundation for the Topaz Listco to operate as a model public company in the tradition of its parent, Renaissance.
Following a competitive and qualitative process for selection, we have put together a coalition of international advisors and professionals to assist us with the listing. This has provided guidance for the Board in helping it to reach its decision to recommend a London listing. An Information Document will be circulated for Shareholder approval at the AGM that seeks to empower the Board to agree timing for an IPO and a valuation to be arrived at through a Bookbuilding process. Bookbuilding is a method used to determine the share price of an offering, based on demand. It is an interactive mechanism by which prospective institutional investors relay indications of demand and price preference to bookrunners. Bookbuilding is used extensively in international capital markets when pricing an IPO. The Board is requesting Shareholders consent to proceed, with the authority to decide on timing for any final decision to proceed with the listing; and to decide what the Board considers to be an acceptable valuation to arrive at the best price and final offer price on behalf of Shareholders, without being required to revert to the Shareholders. Subject to an acceptable valuation, the intention is to offer Topaz Listco shares in a primary offering to raise approximately US$ 500 million to be retained in Topaz Listco. Renaissance will consider divesting some of its current holdings in Topaz Listco shares in a secondary offering. The exact size of the secondary offering will be determined by the Renaissance Board near the date of the IPO’s pricing and is intended to provide an adequate level of free float of Topaz Listco shares. The resultant Renaissance shareholding in Topaz Listco is expected to be above 51%. Industry and market experts have advised that investors in the IPO would gain reassurance from the continued presence of the founding company as a large shareholder and that investors will wish to see a continuation of the leadership and entrepreneurship that brought Topaz to where it stands today. The Renaissance Board has therefore asked me to serve as Chairman of Topaz Listco. The relationship between Renaissance and Topaz Listco will be governed by a formal Relationship Agreement. On the one hand, this agreement aims to protect the rights of Renaissance as the largest shareholder; whilst on the other hand it also aims to protect the independence of the Topaz Listco Board of Directors and Management to serve the interests of all of its shareholders. The Renaissance Board has
assigned two representatives to serve on Topaz Listco Board of Directors: myself, Samir J. Fancy, to serve as Non-Executive Chairman; and Renaissance CEO, Stephen R. Thomas, to serve as Non-Executive Director. This ensures high-level representation for Renaissance Shareholders on the new Topaz Board, whilst ensuring Topaz Listco benefits from the continuing knowledge, direction and expertise of those in Renaissance most closely associated with the Topaz Business’ success to date. In MSM-listed companies, Executives may not serve as Board members; whereas the opposite is normal practice for FTSE companies. In this regard, Fazel A. Fazelbhoy, who will be Topaz Listco’s CEO and Richard Howes, who will be Topaz Listco’s CFO are nominated to serve as Executive Directors. The two Renaissance non-executive appointees and the two executive directors are classed as Non-Independent Directors. We believe investors shall be further reassured if Topaz Listco’s Board of Directors is balanced by an equal number of four Independent Non-Executive Directors (INED), one of whom shall be designated Senior Independent Director (SID). We have already selected three of the four INED appointees. These are people of high standing, reputation and recognition in the UK investor community, who we believe will bring a wealth of experience in Corporate Governance, as well as Financial and Industry expertise.
“I ask you to consider not simply what we are accumulating at this moment in time, but rather to appreciate what we are becoming.”
With the unanimous support of the Renaissance Board; a world class coalition of advisors; Renaissance’s commitment to continuity and shareholding; a strong Topaz management team; and a strong Topaz Listco Board of Directors; we believe the IPO to list Topaz in London has an excellent chance of succeeding in the best interests of Renaissance Shareholders and the new investors. On this basis, I commend the proposal in the Information Document for your consideration and approval. Precise timing for an IPO to proceed will need careful consideration in light of the geopolitical developments in the North African Arab States and elsewhere in the Middle East. Topaz operations are based primarily in the economies in the Caspian and Gulf regions that we believe to be stable, and our operating businesses have not been affected by recent events. However, we must take heed of market sentiment. In the near future, we hope to announce a timetable for the IPO, once Topaz advises us of its readiness to proceed. Renaissance Services SAOG
& its Subsidiary Companies
15
Chairman’s Report
Looking ahead – What’s next? If the IPO proceeds, we must recognise that Topaz Listco shall be our largest current investment and we shall play an active role in the direction and progress of the company through our representation on Topaz Listco’s Board of Directors and the results of Topaz Listco will be important to Renaissance and Renaissance’s Shareholders going forward. We believe that the London listing will assist Topaz Listco in financing its capital expenditure plans. In recent years, we have utilised strong cash-flows generated from our Contract Services business to support the more asset and capital intensive businesses. This has not prevented the Contract Services business from continuing on its own growth trajectory. It is the dominant market leader in our home market of Oman, has good market positions in diverse high and low-risk markets of Angola, Norway, Iraq and Afghanistan, and it has made a very positive entry into the UAE market this year. The business may be viewed in two parts – highly cash-generative pure short-term services contracts; and highly profitable long-term build-own-operate, turnkey facilities establishment and turnkey facilities management contracts. The time is right to turn more attention to investing for growth in both these aspects of the Contract Services business and we shall advise you of our developing plans as the year unfolds. What is clear is that our Contract Services business benchmarks exceedingly well in comparative key performance criteria with far larger global market leaders in its industry. That suggests a very solid starting point for raising our growth ambitions for this business.
Dividends – Returning cash to Shareholders Our dividend policy is unchanged, based on the proposition that cash is returned in the form of higher dividend payouts when there are no credible value-creating opportunities to invest in the business. Our ongoing growth plans require reinvestment of profits in the business to create substantially higher value for our Shareholders. It should be noted that regulation does not allow the Company to declare an extra dividend against a contingent event. I would therefore direct Shareholders to carefully view our proposed ‘use of proceeds’ within the Information Document when it is circulated. For our Shareholders, our performance in 2010 has again allowed us to return value to them. Over the past five years, we have distributed a total of Rial 32.6 million (US$ 84.8 million) to our Shareholders in a combination of Rial 17.3 million (US$ 44.9 million) cash dividend and Rial 15.4 million (US$ 40 million) stock dividend. For 2010, we propose a cash dividend of 12% of the paid up capital which equates to Rial 3.4 million (US$ 8.8 million).
16
Renaissance Services SAOG & its Subsidiary Companies
Renaissance In 2010, Renaissance joined the nation in celebrating the 40th Anniversary of the reign of His Majesty Sultan Qaboos bin Said - The 40th Anniversary of Oman’s modern renaissance. Our company is a child of Oman’s renaissance. 2011 marks the 15th Anniversary of the formation of Renaissance Services SAOG as a public company. The potential London listing of Topaz would be another transformational change for our business. At the start of the global economic crisis, I wrote to you that we shall not waste this crisis – we have not. We emerge with our reputation sustained and enhanced, and the value of Topaz is expected to be recognised in a market where scrutiny is forensic and unforgiving. It says much for the good governance of Renaissance and the regulatory framework here in Oman. For the IPO transaction itself, I ask you to entrust the Board to pick the optimal time and be assured we shall only agree an appropriate value that is fair to Renaissance Shareholders and to the new investors. I ask you to consider not simply what we are accumulating at this moment in time, but rather to appreciate what we are becoming. This is a seminal moment – another renaissance.
Samir J. Fancy Chairman
Renaissance Services SAOG
& its Subsidiary Companies
17
18
Renaissance Services SAOG & Its Subsidiary Companies
Chief Executive’s Report Renaissance Services SAOG (Renaissance) is an Omani multinational company listed on the Muscat Securities Market (MSM30) in the Sultanate of Oman. Renaissance’s core operations are focused on providing safe, efficient and quality services to energy leaders predominantly in the oil & gas industry. Renaissance currently employs over 11,000 people, operates in over 16 countries and has a proven track record of delivering outstanding growth. 2010 revenues were in excess of US$ 0.65 billion. Renaissance’s core businesses are structured in three principle segments: Marine, Engineering and Contract Services. Renaissance also owns other smaller businesses in education and training, and media communications. 2010 has been a tough, eventful, positive year for Renaissance. Key performance indicators for safety, competitive benchmarking, shareholder value and financial performance are all trending in the right direction: Another record year. Market conditions have improved. For the Marine sector, the recovery from the global recession has progressed exactly in line with our predictions: Pressure on utilisation in the first half of 2010, followed by significant improvement in the second half of the year. Our 2010 predictions for the Engineering sector were over-optimistic: Recovery in E&P spending in the industry was lower than we expected. Economic outlook and market conditions for all businesses is more positive for 2011. Engineering started 2011 with a healthy backlog of US$ 200 million, which should ensure improved contribution, particularly in the second half of the year.
The Company has overcome the challenges of recession. We benefit from the diversity of our businesses and markets. We benefit from the talent, energy and commitment of our people – whom we believe to be the best team in the field, bar none. We benefit from the continued trust and support of our clients and customers. The decision to continue investing for growth throughout the downturn strengthens performance potential in each succeeding year. We have not built this enterprise for this recession or any given period of boom or bust. We have built it for enduring value. We are building it to last. The 2010 performance gives an impression of calm and inevitable progress. The reality behind the success was a far more frenetic affair. The pressures of the sluggish economic landscape were met head-on with remarkable efforts and initiatives across all the businesses. For this we thank the family of people who make up this great group of ours. They continue to show the care and ability to exceed customer expectations safely, efficiently and profitably.
Safety
Chief Executive’s Report Health, Safety and Environment (HSE) Policy Renaissance companies shall:
Not cause harm to people Protect the health and safety of employees, contractors, suppliers, customers and all those affected by our work Protect the environment, minimise wastage and pollution, and continuously improve the efficient use of energy and resources Provide a safe and healthy workplace for employees
In order to achieve this, Renaissance companies shall:
Comply fully with the laws of host countries Comply fully with the HSE regulations, standards and procedures of clients and customers Where appropriate, apply more stringent standards and procedures than those laid down by law or contractual obligations
Renaissance companies shall pursue this Policy through:
Visible leadership and commitment Clear policy and objectives; effective organisation and responsibilities; sufficient manpower and resources with effective competence assurance; robust risk assessment and hazards and effects management; careful planning; best practice standards, procedures and document control; diligent implementation, monitoring, audit and management review Honest reporting of accidents and robust investigation, review and learning for prevention Training, motivation and communication Commitment, involvement and contribution of all employees
In doing so, Renaissance companies shall be guided by the principles that:
HSE forms an integral part of the company’s values and is as important as other prime business objectives All accidents, injuries and incidents are unacceptable and can be prevented HSE is a line management responsibility Every individual is responsible for his or her own health and safety and for the health and safety of colleagues and all others affected by his or her work Work shall not be started unless essential safety measures are in place. Every individual is empowered to stop work if essential safety measures are not in place Competent supervision is the key to improve and maintain safety performance and achieve Goal Zero: No harm to people or the environment
Stephen R. Thomas OBE CEO
20
Safety Performance Safety performance is the primary measure of the efficiency, effectiveness and quality of our work. How we care for the safety and well-being of our people, and all those affected by our work is the ultimate measure of our business ethics.
Total Man-hours Worked Number of Fatalities Number of Lost Time Incidents (LTI) Lost Time Incident Frequency (LTIF) Road Traffic Accidents (RTA) Total Kilometres Driven
2009 40,081,537 1 13 0.349 21 14,572,605
2010 39,012,550 0 17 0.435 9 12,245,630
Change -1,068,987 -1 4 0.086 -12 -2,326,975
Safety milestones and awards achieved during 2010 Marine: Exceptional HSE record with zero LTI in Topaz Marine in 2009 and 2010 Topaz Marine MENA receives RoSPA's Silver Award and Maersk Oil Qatar's Shaheen Award
Engineering: 7 million LTI Free man-hours clocked during the MOPU Project construction 3.6 million LTI Free man-hours towards GTX-Cogeneration Power Plant Extension Project OHSAS 18001 and ISO 14001 accreditation achieved Safety Audit conducted by ABS at the beginning of 2010
Contract Services: RS PAC Fahud - 3 years LTI Free RS PAC Nimr - 10 years LTI Free RS PAC Qarn Alam - 2 years LTI Free PDO Road Safety Team awarded various employees at PAC Qarn Alam, PAC/PDO Bahja and PDO Marmul the SHUKRAN AWARD for Excellence in Defensive Driving Successful LTI Free operation as Master Caterer of 2nd Muscat Asian Beach Games 2010
Financial Performance
Chief Executive’s Report 300
Rial Million
250 200
Financial Performance Rial Million Revenue Net Profit Total equity
2006 142.9 14.3 91.8
150
2007 199.2 17.3 109.0
2008 234.3 26.2 138.7
2009 247.6 28.5 168.4
2010 253.4 32.3 195.8
100 50 0 2006
2007
2008
2009
2010
2008
2009
2010
Revenue
200
Rial Million
40
150
30
100
20
50
10
0
Rial Million
0 2006
2007
2008
2009
2010
Total equity
2006
2007
Net Profit
Business Segment Performance Segment Revenue and Profit % MCG 2%
ETG 2%
Marine 37%
MCG 1%
ETG 1%
CSG 24%
CSG 33%
ENG 6% ENG 26%
Marine 68%
2010 Revenue 22
Renaissance Services SAOG & its Subsidiary Companies
Profit from Operations
Growing each Core Segment 2006-2010 Segment Revenue Rial Million 100 90 80 70 60 50 40 30 20 10 0
Segment Profit from Operation Rial Million
96 93 84
62
78
83
65
53
53
32
30 25
66
63
58
35
35
95
24
20
37
15
32
10
13 8 8 9 9
15 12 8
5
3
5
4
3
0
CSG
Marine
ENG
CSG
Marine
ENG
Delivering Consistent Growth to Shareholders 0.12 0.1
0.089
0.08 0.06
0.052
0.094
0.103
0.8 0.6
0.062
0.472
0.494
0.539
2006
2007
2008
0.553
2009
0.644
0.4
0.04
0.2
0.02 0
0
2006
2007
2008
2009
2010
Earnings Per Share: Doubled on higher capital base
2010
Net Assets Per Share: Higher assets against each unit of equity
Dividend Track Record Our dividend policy remains unchanged based on the proposition that cash is returned to shareholders in the form of higher dividend payouts when there are no credible value-creating opportunities to invest in the business.
Cash dividend Stock dividend Total dividend
2006 % Rial’000 15 3,041 10 2,027 25 5,068
2007 % Rial’000 15 3,344 10 2,229 25 5,573
2008 % Rial’000 10 2,453 15 3,679 25 6,132
2009 2010 % Rial’000 % Rial’000 12 3,385 12 3,385 12 3,385 12 3,385
Renaissance Services SAOG
& its Subsidiary Companies
23
Business Segments
Chief Executive’s Report Activities Operates a modern and diversified fleet of 100 vessels primarily located within the current core markets of the Caspian and MENA. (100 vessels includes owned, operated or managed vessels including 10 vessels under construction/contract for delivery as at 31 December 2010).
Profile Average fleet age of 6.5 years (for owned vessels as at 31 December 2010) vs. global average of 13.0 years [Source: ODS Petrodata, as per ODSP Marinebase database] Long-term existing relationships with leading International Oil Companies Balanced mixture of long-term and spot market contracts enables company to combine a high degree of earnings visibility with the opportunity to take advantage of short-term volatility in day rates Resilient business model with EBITDA CAGR of above 18% over the period 2008–10 despite difficult economic conditions Additional opportunities for growth have been identified within the MENA and Caspian regions as well as Brazil and West Africa
Subsidiary company and business units: Topaz Energy & Marine Ltd., Jebel Ali Free Zone, UAE Topaz Marine MENA Topaz Marine Kazakhstan Topaz Marine Azerbaijan Topaz Marine Turkmenistan
Azerbaijan (under construction)
Industry Outlook Topaz Marine is currently one of the leading global OSV companies Type
Number at 31 Vessels under December construction/ 2010 contract for delivery
AHTS/AHTSV
32
4
36
PSV/MPSV
17
2
19
ERRV
3
0
3
Crew Boat
7
2
9
Specialised Barges
23
2
25
Other
8
0
8
Sub-Total Owned Vessels
81
10
91
Sub-Total Non-Owned
9
0
9
Total
90
10
100
8
3
Total Fleet 31 Dec 2010
Vessel Distribution by Geography
Turkmenistan
MENA
Azerbaijan
32
14
Kazakhstan (under construction)
2
MENA (under construction)
Kazakhstan
5
36
Other ERRV
3%
Vessel Distribution by Type
8%
Crew boats
9%
AHTS/AHTSV
36% Specialised barges
25%
Key highlights in 2010
PSV/MPSV
19%
Topaz Marine MENA named Shipping Company of the Year by maritime organisations Seatrade and Energy Award and Shipowner/Operator Award from Lloyd’s List Delivery of ‘Caspian Protector’ - vessel deployed in Azerbaijan in support of a 10-year US$ 225 million BP contract won in 2008 Expansion in Turkmenistan Purchased two vessels in Brazil Acquisition of the Multi-Purpose Support Vessels (MPSV) Topaz Commander and Topaz Captain
Marine
The Marine business out-performed tough conditions on all fronts: Every fleet has made an important contribution both in MENA and the Caspian. The long-term permanent contracts of the Caspian underwrote stability of performance, and for the shorter-term contracts, the MENA fleet seized the improving conditions of the second half of the year to maximum effect. The Kazakhstan fleet was scheduled to make its first meaningful contribution in 2010 and the business exceeded that plan extremely well. The Azerbaijan fleet is expanding again with important new contracts won; and the new-market entry into Turkmenistan secured further growth. Late in the year, the acquisition of two new vessels operating in the offshore oilfields of Brazil is the first success in a long-planned new-market entry strategy. The core strategy for the Topaz Marine fleet remains unchanged: to increase the size and reduce the age profile of the Offshore Support Vessel (OSV) fleet. This strategy supports the growth potential in existing markets; and complements and strengthens the new-market strategy to follow future oil. Twenty-one new vessels joined the fleet in 2010, but the fleet size consolidated at 100 vessels at the end of the year (including vessels under construction/contract for delivery), with the ending of the 10-vessel ice breaking emergency evacuation vessel contract in
Marine Revenue Operating profit
People (nos.)
Rial Million 2010 2009 93.2 95.5 35.2 31.6 2010 1,193
US$ Million 2010 2009 242.1 248.1 91.4 82.1 2009 1,045
Kazakhstan and the returning of another six aging leased vessels to the respective leasers. Other aging vessels under pure operating contracts in the company’s alliance with KMNF in Azerbaijan were also returned to the owner. The outcome is that the fleet now comprises of predominantly owned assets; either wholly owned or owned under JV partnerships in selected vessels. These JVs boost local content participation in ownership, while Topaz wholly owns the operating companies serving International Oil Company contracts. The effect of the strategy is clear to see: Today the Topaz Marine OSV fleet is one of the youngest fleets servicing offshore oil and gas fields.
25
Business Segments
Chief Executive’s Report Engineering Revenue Operating profit
People (nos.)
Rial Million 2010 2009 65.6 77.6 3.1 4.3 2010 3,289
US$ Million 2010 2009 170.4 201.6 8.1 11.2 2009 4,211
Activities
Providing engineering solutions in fabrication & construction, maintenance services, marine repair, and ship building.
Profile Regional provider of engineering services to the energy and marine industry with over 35 years of experience operating in MENA and more recently in the Caspian Capable of large scale and highly complex projects Serves customers across the oil and gas, shipping and industrial sectors from operational bases in Dubai, Fujairah, Abu Dhabi, Oman, Qatar, Kazakhstan and Azerbaijan Key focus on maintaining high HSE standards through focus on risk management and improving and streamlining project execution Backlog of US$ 200m as of 31 December 2010, with the majority attributable to the Fabrication and Construction business unit
Subsidiary company and business units: Topaz Energy & Marine Ltd., Jebel Ali Free Zone, UAE Topaz Fabrication & Construction
Topaz Maintenance Services
Topaz Marine Repair
Topaz Ship Building
Key highlights in 2010 After experiencing a significant drop in new contract awards in the Engineering division with the recessionary impacts in 2009, the businesses have picked up new contracts amounting to over US$ 146m in 2010 with concentration in EPC works The Engineering division has demonstrated a seismic shift in its capacity to deliver projects with increasing complexity this year. The successful completion and delivery of the deck structure of a ‘Mobile Offshore Production Unit and storage’ (MOPUstor), a US$ 85m* project, that was constructed with over 7m LTI free man-hours, won accolades and was awarded a MEED Quality Award for Gulf Cooperation Council (GCC) top engineering projects in the oil and gas industry in 2010. (*including close out variation orders) Boat Yard MOBY established in Bautino, Kazakhstan Awarded an ADMA-OPCO (ADNOC Group Company) contract for engineering and fabrication of deck extensions for solar panel non-telemetry towers in US and ZK fields US$ 100m EPC contract for Phase IV Oil Storage Terminal awarded to TFC by GPS Chemoil Awarded a US$ 45m Gulf Petrochem EPC (Engineering, Procurement and Construction) contract Successful completion of VHFL Phase 5 - Marine Extension project Start of construction of Topaz Zenith, a high speed 36-crew boat based on wave piercing bow technology
Engineering The Engineering business has made significant progress in 2010 in building a winning team and developing a portfolio of services that will benefit from the growing oil & gas opportunities of this second decade of the 21st century. Our 2010 predictions for the Engineering sector were over-optimistic: Recovery in E&P spending in the industry was lower than we expected. A fallow field enriches the soil for future growth. Short-term economic adversity presented a good opportunity for long-term restructuring. New talent has joined the team. The erstwhile collection of diverse engineering, repair, fabrication and maintenance businesses has been streamlined into the cohesive Topaz Engineering brand. All good businesses synergistically organised to form a great business. Put simply, Topaz Engineering builds and repairs things for the oil & gas industry, and builds and repairs things for the marine industry. This is complementary to the Topaz Marine business and together the businesses represent a unique service offering in the Oilfield Services sector.
Many specific successes sum up the progress of Topaz Engineering in 2010: Successful delivery of the US$ 85 million project to build the deck structure of a Mobile Offshore Production Unit (MOPU) for the North Sea; the profitable turnaround of the Ship building business; achieving OHSAS 18001 and ISO 14001 accreditation; winning the US$ 100 million EPC contract award for Phase IV Oil Storage Terminal for GPS in Fujairah. These successes are symptomatic of the growing scale and ability of the engineering business. The company has a highly professional team of people. The company’s facilities are strategically placed on the waterfront of both the Arabian Gulf and Indian Ocean seaboards. Investment in the company’s yards has put in place relevant assets in safe and modern workplace facilities. The asset infrastructure of the oil & gas industry needs replacing and modernising, repairing and maintaining to go after the more difficult hydrocarbon reserves. More and more assets are needed to be built in developing infrastructure for offshore fields. Large onshore fields, such as Iraq, need to be completely modernised. We believe this suggests a positive long-term prognosis for the Engineering business.
27
Business Segments
Contract Services Group Activities
The Contract Services Group (CSG) delivers turnkey facilities management, facilities establishment, contract catering, operations and maintenance services.
CSG Revenue Operating profit
People (nos.)
Rial Million 2010 2009 84.2 64.9 12.6 9.1 2010 6,544
US$ Million 2010 2009 218.7 168.6 32.7 23.6 2009 5,701
Profile A leading facilities management and facilities establishment, catering, and operations and maintenance services company in the Middle East, and with operations in Angola and Norway Over 25 years of experience serving long-term relationships and diverse clients within the Oil & Gas, Energy Services, Healthcare, Education, Military, Commerce & Industry, Ports & Marine sectors Outstanding HSE and commitment to quality record with proven contract retention and contract re-tender gain records
Key highlights in 2010
68 million meals served in 2010 Entered Afghanistan Entered United Arab Emirates forming a new JV (Renaissance Facilities Management Services LLC) Acquired Al Wasita Emirates LLC to accelerate UAE growth Awarded prestigious Master Caterer contract for the Muscat Asian Beach Games 2010
Award winning local workforce development programme
Contract Services Group: Investing in facilities and infrastructure
197,000
Growing Oman’s PAC Capacity (Permanent Accommodation for Contractors)
164,000
PAC
Year opened
Extension in year/No. of rooms
Total No. of Rooms
Nimr
2000
2008-112 2009-82 2010-40
530
Fahud
2000
2008-112 2010-112
640
Qarn Alam
2002
2005-100 2006-50 2008-112
725
Marmul
2010
728
Bahja
2010
448
123,000 118,000
2008
2009
2010
Meals Served Per Day
28
Renaissance Services SAOG & its Subsidiary Companies
2011
Chief Executive’s Report Subsidiary companies and divisions: Tawoos Industrial Services Company LLC Rusail Catering & Cleaning Services LLC Renaissance Services – PAC Division Renaissance Services – Overseas Division Renaissance General Services LLC, Iraq Renaissance Contract Services AS, Norway Renaissance Contratos e Servicios Angola LDA Renaissance Contract Services Afghanistan LLC Renaissance Facilities Management Services LLC, Abu Dhabi Al Wasita Emirates for Services & Catering LLC, Abu Dhabi Renaissance Catering Services LLC, Dubai Renaissance Contract Services Qatar WLL
Contract Services Group The Contract Services Group (CSG) once again exceeded its plans in spite of some serious challenges. Two new Permanent Accommodation for Contractors (PAC) facilities opened on time and in cost early in the year; but the occupancy build-up projected by the client was delayed. At the same time the company withdrew from a planned major project in Abu Dhabi. These setbacks impacted planned revenue, but the company responded quickly with new initiatives. By the end of the year the company had entered the UAE market through three major successes: Forming a new JV (Renaissance Facilities Management Services LLC); securing the important strategic acquisition of Al Wasita Emirates LLC; and winning new contracts through competitive tender. These new contract successes in UAE were complemented by further contract gains in Afghanistan, Angola, and Oman. The company also introduced a new world-class competence in major event catering after winning and successfully performing the role of Master Caterer for the Muscat Asian Beach Games in Mussannah, Oman. The 2010 performance of the Contract Services Group has demonstrated the scale and flexibility of the enterprise. The business outperforms global competitors in all key financial measures. It has a track record for long-term retention of contracts with a portfolio of
happy local and international clients. As a highly cash-generative business CSG has long been a source of funds for investment in building up the asset-intensive companies within the group. However, with the Marine and Engineering businesses now self-sufficient, CSG is turning its attention to an accelerated growth drive for its own asset-based Facilities Establishment and Facilities Management business, as well as its pure services Contract Catering, and Operations and Maintenance services.
Segment
Activities
Catering
Oil & Gas sector, Universities, Schools, Hospitals, Military & Guards, Commerce & Industry
Facilities Management
Facilities Management & Facilities Establishment – Build, Own, Operate: Camps, Dining Facilities (DFACs) and Life Support Accommodation (LSA), Permanent Accommodation for Contractors (PACs)
O&M
Operations & Maintenance
Support Services
Cleaning, Laundry, Accommodation Services Leisure Services Property & Estate Services Event Management
Renaissance Services SAOG
& its Subsidiary Companies
29
Business Segments
Chief Executive’s Report Other Businesses:
Media Communications and Education & Training Education & Training
Media Communications
People (nos.)
2010 147
2009 145
2009 193
Media Communications
Education & Training
Key highlights in 2010
Key highlights in 2010
Launched new event platforms in ‘Oman Green Awards’ and ‘Doha Green Building and Sustainability Conference’
NTI completed 25 years of its operations in Muscat, and achieved record financial performance in 2010, including its highest level of Omanisation
Consulting for marketing communications support including advertising, digital and web media, events, public relations, direct contact and brand activation. Publishing business and general interest magazines and country books in English and Arabic. Representing international print titles for advertising and publication sales.
Awarded major contract by PDO for all publishing and design services Retained Shell Oman Marketing advertising contract for the third successive time with the relationship now in its 9th year Winning and managing the entire web development and social media engagement for ‘Tour de Oman’ organised by Muscat Municipality Production of first contract publishing assignment in producing ‘Ports of Oman’ coffee table book for Ministry of Transport
30
People (nos.)
2010 182
Renaissance Services SAOG & its Subsidiary Companies
Providing people solutions in HSE, Technical, Hospitality, Retail, IT and Administration training, with expertise in developing indigenous workforces in developing countries. Providing services to Oil & Gas, Energy Services, Construction, Hospitality, Tourism and Retail sectors.
NTI was awarded a major contract from Petroleum Development Oman under the Technician Omanisation Programme NHI achieved highest revenues from private sector funding in 2010 and retained ISO accreditation and EDEXCEL centre status
Subsidiary companies and divisions: Media Communications United Media Services LLC United Press and Publishing LLC Oryx Advertising Co. WLL (Qatar) Education & Training National Training Institute LLC
Other Businesses
The smaller non-core businesses engaged in training and media communications continue to play a vital role in providing in-house services to the group while conducting successful external businesses. The National Hospitality Institute (NHI) had a difficult lossmaking year due to a hiatus in government spending on training. Both National Training Institute (NTI) and United Media Services (UMS) produced market leading profitable performances. These businesses are small in size within the group but they have debt-free balance sheets and are highly successful in their respective fields of activity.
NTI Qatar WLL HSE Training Division (HSE) Technical Training Division (TTD) Commercial Training Division (CTD) Sohar Training Centre (STC) National Hospitality Institute SAOG Nakshatra Hospitality India Gulf Chef School Food Safety Division Hotel Management School Gulf Travel School Beauty Therapy Division Renaissance Services SAOG
& its Subsidiary Companies
31
Geographic Spread and Market Share
Chief Executive’s Report Geographic Spread and Market Share A key element in the company’s success is not just the diversity of our services but also the range of the geographic spread and market share of our operations.
Key Geographies
32
Renaissance Services SAOG & Its Subsidiary Companies
Sultanate of Oman
Kuwait
Afghanistan
Norway
Angola
Qatar
Azerbaijan
Saudi Arabia
Cyprus
Singapore
India
Turkmenistan
Iraq
United Arab Emirates
Kazakhstan
United Kingdom
Market Share Topaz Marine Market Share in Core Regions 55%
51% 24% 5%
Azerbaijan
Kazakhstan
Turkmenistan
MENA
Topaz Engineering Among Top 25 premier EPC firms working in the Middle East’s upstream energy business Source: Oil & Gas Middle East 2010
Contract Services Group Market Share 67% 46% 18%
10% Oman
Iraq
Norway
Angola
10%
5%
Afghanistan
UAE
Other Businesses 100%
60%
60%
60% 30%
HSE
TTS
STC
NTI – Oman, across divisions
CTD
NHI NHI – Oman
Renaissance Services SAOG
& Its Subsidiary Companies
33
modus operandi
Chief Executive’s Report Renaissance modus operandi How does Renaissance go about its business? Renaissance is committed to provide safe, reliable, affordable services in a responsible manner that enables economic progress and improves the economic well-being and quality of life of all stakeholders. This is the operating agenda that drives Renaissance businesses:
Operational excellence: Safely and reliably providing quality services Driving growth: Anticipating, understanding and satisfying customer needs profitably Best practice systems and processes: Maximising resources and asset value; deploying state-of-the-art technology; prudent control; quality systems Empowering people: Giving people the freedom and resources to succeed in flat, efficient organisation structures; developing the next generation of leaders for our business Good governance: Integrity, transparency, responsibility and accountability to protect the interests of all stakeholders Corporate social responsibility: Improving energy efficiency and minimising environmental impacts; providing meaningful employment to indigenous workforces; developing and assisting people and communities where we operate What does it take to drive this operating agenda forward each year? It requires an understanding of the long-term nature of our businesses It requires a consistent, systematic business model with the flexibility to adapt to changing business conditions It requires a commitment to invest in and develop people, innovative technology, and projects that grow shareholder value It requires a company of leaders with unwavering commitment to integrity, operational excellence and community development It requires belief. Belief in our people and all our stakeholders; belief in our businesses and the integrity of our assets
How does Renaissance align itself with the best in the oil & gas industry?
Renaissance: Safe; Efficient; Green; Local Continuous improvement of HSE Continuous upgrading and renewal of assets and infrastructure Serious commitment to local content in every host nation Training and development of local workforce Using local services and goods that meet quality criteria Aligning with good local partners Ensuring local community benefit and social responsibility initiatives Drive efficiency and lower cost base Sharing our clients’ own concern to drive down the unit cost of production Programmes to measure and reduce our own energy usage Conservation initiatives Efficiency or cost reduction programmes for clients
34
Renaissance Services SAOG & Its Subsidiary Companies
Renaissance people Delivering outstanding performance requires exceptional people. Renaissance is thriving on the skill, hard work, ingenuity and enterprise of talented people from around the world who are the heart and soul of all our businesses. Renaissance people continue to demonstrate leadership at every level of the business and continue to deliver and enhance the aspirations of the company.
Aligned with the best in Oil & Gas How does Renaissance align itself with the best in the oil & gas industry?
SAFE No harm to people
EFFICIENT Cost-effective quality services
GREEN No harm to the environment
LOCAL Serious about local content
Renaissance Values PEOPLE HEALTH, SAFETY & ENVIRONMENT (HSE) INTEGRITY REWARD EFFICIENCY & PRODUCTIVITY CUSTOMERS GROWTH MERIT SOCIAL RESPONSIBILITY TRANSPARENCY QUALITY PROFIT
modus operandi
Chief Executive’s Report Renaissance Customers
At Renaissance we strive to exceed customer expectations safely, efficiently and profitably. We have a blue-chip customer base in every market that we serve and our portfolio includes many of the world leader producers, operators and service contractors of the oil & gas industry, as well as governments and leading institutions.
Eni
KCO
MB Petroleum Services LLC
36
Renaissance Services SAOG & its Subsidiary Companies
MINISTRY OF HEALTH
Quality processes and systems All our businesses remain committed to best practice systems and processes and throughout the group we have benefitted from independent accreditation of how we go about our business. The coverage and protection of the ISO loop has been an important factor in our international competitiveness.
Accreditations held within the group 7RSD] 0DULQH
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Renaissance Services SAOG
& Its its Subsidiary Companies
25 37
modus operandi
Chief Executive’s Report Corporate Social Responsibility Renaissance is committed to being a good corporate citizen through protecting our employees and all those affected by our work, supporting local communities, and safeguarding the environment in which we operate. Part of this is our commitment to National Content that extends our CSR commitment to all the host nations where we operate. We strive to promote economic development by employing and training local workforces, using local suppliers of goods and services, and investing in CSR initiatives to support local development and good causes.
Renaissance group companies are also engaged in large-scale CSR programmes that help to realise a better standard of living for the communities they serve. This year, Topaz Energy and Marine continued its contribution to the Mission to Seafarers’ Flying Angel project which allows mariners at sea some much needed communication and recreation facilities aboard its vessel. As per the approval accorded by the AGM held on 28 March 2010, Renaissance shareholders approved a CSR budget of Rial 285,000/- for the year 2010. During 2010, total donations amounted to Rial 278,797/- where the balance amount of Rial 6,203/has been carried forward as a provision for CSR contributions for subsequent years.
Environment 2%
Sports 30%
! Community 7% Health 5%
The Renaissance CSR programme must be genuine, not just generous. The CSR programme gives us purpose. We want to make a meaningful positive difference in people’s lives.
Education 56%
Corporate Social Responsibility (CSR) Policy Renaissance shall: Improve and assist the communities in which we serve and the countries and markets in which we operate Provide training and employment opportunities to local workforces Provide opportunity to help people to improve themselves and make a valid contribution to society Improve the economic well-being and quality of life in local communities where we operate Protect the environment, minimise wastage and pollution, and continuously improve the efficient use of energy and resources
In order to achieve this, Renaissance shall: Act in accordance with the Code of Corporate Governance set out in the Capital Market Authority for companies listed on the Muscat Securities Market Review all proposals submitted for consideration and respond to each proposal with integrity Support the proposals which genuinely meet the objectives stated in the CSR Policy
Measure the value of its support and transparently report its CSR initiatives and disclosure of the company’s yearly donations at the time of the Annual General Meeting Allocate 1% of the prior year net profit for CSR initiatives in the current year
Renaissance shall pursue this Policy through:
CATEGORY EDUCATION HEALTH COMMUNITY ENVIRONMENT SPORT TOTAL
2010 DONATIONS (Rials) 155,740 15,000 18,907 5,900 83,250 278,797
EDUCATION British Scholarships for Oman (BSO)
25,500
Outward Bound Oman / Tahaddi
24,000
Afghanistan School Project - Providing an extension for a girls and boys school in Jalalabad, Afghanistan
Association of Early Intervention - Diploma programme 85,000 Caledonian College
2,000
BizPro 2010
12,500
HEALTH International Association for Handicapped Divers UNICEF
1,500 13,500
COMMUNITY Charity Event - Thin Red Line Ball
1,500
Charity Event - British School
600
Charity Event - Black and White Sudoko/Autism Charity Event
3,000
Charity Event - Women's Guild in Oman
2,000
Charity Event - Green Sapphire Ball – Raising funds for
Actively developing the Company’s CSR framework Clear communication of the CSR Policy with all our stakeholders: Shareholders, partners, customers, suppliers and the wider community
the Association of Early Intervention
In doing so, Renaissance companies shall be guided by the principles that: CSR forms an integral part of the Company’s values and Company culture; we must not reap where we have not sown We will maintain the highest standards of integrity
6,740
5,000
Maryam Palm Book - A 40th Anniversary initiative that marks HM’s directive to plant 1 million palm trees
6,000
Toastmasters - Public speaking non-profit organisation
327
Ramadan Charity Pack
480
ENVIRONMENT Al-Phaw Oasis - Paper Recycling Programme
1,500
Environmental Society of Oman
4,400
SPORT Oman Sail
Stephen R. Thomas OBE CEO
75,000
Oman Cricket Club
750
Muscat Rugby Club
2,500
Muna Shanfari - Attempt to climb Mount Aconcagua
5,000
Renaissance Services SAOG
& Its Subsidiary Companies
39
Outlook
Chief Executive’s Report Outlook Topaz IPO For much of the year the corporate offices of both Renaissance and its 100% subsidiary Topaz have been working with international advisors on various options to raise new capital for the next phase of development for Topaz. These options finally closed down to an intention to list Topaz Business on the London Stock Exchange (FTSE) in 2011 whenever market conditions allow. This initiative has progressed under the project codename of Project Michelangelo, under the strategic direction of the Renaissance Board and the leadership of the Renaissance Chairman in his Executive Chairman assignment at Topaz. Why Michelangelo? He was a Renaissance man who encouraged and exhorted all to “aim high”. Details of the proposed IPO are expanded upon in the Chairman’s Statement and laid out in full in the Information Document for shareholders.
Here, there are only three comments to be added: First is to thank all those involved in this major assignment, especially the Topaz management team and their professional advisors. Second is to reinforce the point that the proposed IPO shall be another landmark moment in our history. It shows the scale of our ambition. It recognizes that Topaz has the scale and resources to be an independent public company in its own right; and it underlines our continued commitment to Topaz in our role as controlling shareholder. Third, we are committed to a premium listing, where compliance is recognized as ‘gold’ standard. In a ‘comply or explain’ framework, we seek to comply.
Managing Risk After a decade of uninterrupted growth it is no surprise to Renaissance stakeholders that we enter 2011 with further growth ambitions for the years ahead. It is therefore appropriate each year that we report to you our consideration of the risks that may challenge our plans and our progress. The geo-political landscape is changing across much of the North African Arab world and there is a clamour for political reform elsewhere in the Middle East. These events have had no direct impact on the conduct of our operations or the performance of our business. The only non-operational impact has been volatility of share prices across the region. Our Company, its subsidiaries and its operations are either based outside the Middle East (in the Caspian, the North Sea, South-East Asia, West Africa and elsewhere); or are within the Middle East, in those countries that are recognised as the most stable in the region, and already on a progressive development path. Even where political change occurs, the industry fundamentals remain solid. One factor that arises from global demand for energy is upward pressure on oil price. The ideal for our Company is that oil price should be high enough to
ensure that the oil & gas industry and oil-based economies prosper, but not so high that it creates global inflationary pressure that might stymie global economic recovery. Political uncertainty in the Maghreb countries has pushed oil price higher at the start of the year. OPEC has the capacity to stabilise supply in a manner that may keep oil price at an optimum level. Visibility suggests that oil price will nonetheless remain at a sustainable higher level for the year ahead. If that is the case, this has a positive effect on our business. We have a proven resilient business model that withstands periods of low oil price, but we flourish at higher oil price levels. There is a risk that regional instability may create market conditions and market sentiment that causes us to delay the Topaz listing. We believe investors shall recognise the diversity and resilience of the Topaz business model that insulates impact from the current turmoil. Nonetheless, in the event of delay, we have the flexibility to adapt and ensure continued progress until conditions are right for the IPO. The company remains alert to other perennial risk factors such as currency exchange risk, collection of receivables, and operational and industry risks. We are able to provide assurance that every effort is made to minimise and mitigate such risks.
Renaissance Services SAOG
& Its Subsidiary Companies
41
Outlook
Chief Executive’s Report Global Oil and Gas Demand Scenarios (MMbpd) MMbpd
140 mand
High de
120
Additional required global production of 42-51 MMbpd expected by 2020 and 66-85 MMbpd by 2030
d Base case deman nd Low dema
100
Potential gap
80 Expected decline
60 40 20
Existing production 2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
2012E
2010
2008
2004
2002
2000
0
Source: IEA World Energy Outlook
Long-term Oil Price Expectations US$/bbl 160 140 120
Forward Curve
Long-term expectations of US$80-100/bbl
100 80
Equity Research Median Forecast
60 40 20
Source: IEA World Energy Outlook
42
Renaissance Services SAOG & its Subsidiary Companies
2014E
2013E
2012E
2011E
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Forecasted Oil Production in 2015 Oil production in 2015
33 mbpd
100
5.5 mbpd
3.7 mbpd
21%
80 Growing demand for offshore production and OSV
3.1 mbpd
51%
89%
92%
60 79%
40 49%
20 11%
0
MENA
W.Africa
Offshore
8%
Caspian
Brazil
Onshore
Source: ODS-Petrodata
Looking ahead After the Topaz listing Renaissance will be a responsible majority shareholder seeking to act in the best interests of all Topaz shareholders, through Renaissance representation on the Topaz Board. What is best for Topaz shall ultimately be best for Renaissance. The Topaz growth story shall be energised by the capital raised in the primary offering, and continued Topaz success shall directly impact Renaissance success. Renaissance will be a majority shareholder of a FTSE listed company. We shall be enhanced by that experience and that responsibility. We shall also remain the 100% shareholder of a world-class internationally competitive Contract Services business that we believe has the competence and capacity to grow exponentially. Our principle growth focus of the last five years has concentrated
principally on the Marine business. We now plan to give similar focus to Contract Services. With our safe, efficient, green and local, customer-centric business model, we seek to sustain and grow our leadership positions in current markets and light up new markets that would welcome the quality and competitiveness we bring.
Stephen R. Thomas OBE CEO
Renaissance Services SAOG
& its Subsidiary Companies
43
Notes to the Consolidated Financial Statement for the year ended 31 December 2010
Report On Corporate Governance Corporate governance is an internal system encompassing policies, processes and people, which serves the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity, accountability and integrity. Sound corporate governance is not only about structure and clarity in management and areas of responsibility, but it also encourages good transparency so that shareholders can understand and monitor the development of the company. The Board and the Management of Renaissance Services SAOG (“the Company”) are committed to adopt the best practices of corporate governance that promotes ethical standards and individual integrity. The Company will continue to focus on its resources, strengths and strategies for creating, safeguarding and enhancing the Shareholders’ value while at the same time protecting the interests of its stakeholders. This report describes how the Principles of Corporate Governance and the provisions of the Code of Corporate Governance, set out in the Capital Market Authority’s (CMA) Code of Corporate Governance for companies listed on the Muscat Securities Market (MSM), and the Provisions for Disclosure stipulated in the Executive Regulations of the Capital Market Law, are adhered to by the Company. The Company believes that the Code prescribes a minimum framework for governance of a business. The Company’s philosophy is to develop this minimum framework and institutionalise its principles as an ingredient of its corporate culture. This will lay the foundation for further development of a model of governance with superior governance practices, which are vital for growing a successful business. The Company recognises that transparency, disclosure, financial controls and accountability are the pillars of any good system of corporate governance. In recognition of the Company’s excellent and exemplary model of corporate governance, the Company has been awarded a Corporate Governance Excellence Award for the year 2010 in the Services Sector, in the contest organised by Oman Centre for Corporate Governance of the CMA. In accordance with the provision for disclosure stipulated in the Executive Regulation of the Capital Market Law, KPMG has issued a separate Factual Findings Report on the Company’s Corporate Governance Report for the year ended 31st December 2010.
According to the Company’s governance paradigm the Management assumes accountability to the Board, and the Board assumes accountability to the Shareholders. The Board’s role is to be an active participant and a decisionmaker in fostering the overall success of the Company by enhancing Shareholder value, selecting & evaluating the top management team, approving & overseeing the corporate strategy and Management’s business plan and acting as a resource for Management in matters of planning and policy. The Board monitors corporate performance against the strategic and business plans, and evaluates on a regular basis whether those plans pay off in terms of operating result. In order that it can effectively discharge its governance responsibilities, the Board ensures that the majority of Board members are Non-Executive, at least one third of Directors are Independent and that the majority of committees formed by the Board consist of independent Directors. Furthermore, the Board accesses Independent legal and expert advice of professionals who also assist the Management. The Board also encourages active participation and decision-making on the part of Shareholders in General Meeting proceedings. The Board maintains a positive and ethical work environment that is conducive to attracting, retaining and motivating a diverse group of top quality employees at all levels. The Board through the Compensation Committee reviews and decides the parameters for assessment and compensation of key personnel. The Board ensures ethical behaviour and compliance with all laws and regulations, and has developed a Code of Ethics that promotes values among its employees. The Company’s Manuals of Procedures (internal regulations) cover a wide range of functions including, but not limited to, Corporate Information & Disclosure Policy, Rules for Related Party Transactions, Procurement Manual and Financial Authority Manual, IT Policies Manual and HR Manual.
2. Board of Directors During 2010, the Board consisted of seven Directors. All the Directors are Non-Executive and Independent. Six Directors on the Board are Shareholders/ representatives of Shareholders and only one Director is a Non-Shareholder Director.
1. Company’s Philosophy The Company upholds a governance philosophy that aims at enhancing long-term Shareholder value while at the same time adheres to the laws and observes the ethical standards of the business environment within which it operates.
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45
Report On Corporate Governance 2.1/3 The Composition and Category of Directors, Attendance of Board Meetings
Category
No. of Board Meetings held during last year
No. of Board Meetings attended
Whether attended last AGM
Chairman
Independent Non-Executive Shareholder
4
4
No
Ali bin Hassan Sulaiman
Deputy Chairman
Independent Non-Executive Shareholder
4
4
Yes
3
HH Sayyid Tarik bin Shabib bin Taimur
Director
Independent Non-Executive Shareholder
4
3
Yes
4
Sunder George
Director
Independent Non-Executive Non-Shareholder
4
4
Yes
5
Yeshwant C. Desai
Director
4
4
Yes
6
Rishi Khimji
Director
4
3
Yes
7
Colin Rutherford
Director
4
4
No
Sr. No
Name of Director
Position
1
Samir J. Fancy
2
Independent Non-Executive Representative of Shareholder Independent Non-Executive Representative of Shareholder Independent Non-Executive Representative of Shareholder
2.2 Statement of the Names & Profiles of Directors and Top Management The Renaissance Board brings together core competencies of Directors with vision, strategic insight, and industry knowledge, who provide direction to the Executive Management. Samir J. Fancy – Chairman Mr. Samir J. Fancy is the Chairman of the Board of Directors since 1996. He has held senior positions and undertaken leading roles such as:
46
Founder and Vice Chairman of Tawoos Group since 1983, and Chairman of Tawoos Group since 2005. Chairman of Topaz Energy & Marine SAOG since foundation and up to its acquisition by the Company in May 2005. Director of Vision Insurance Co. SAOC up to December 2010. Chairman of Amani Financial Services SAOC since 1997. Executive Chairman of Topaz Energy & Marine Ltd. Director of National Hospitality Institute SAOG.
Renaissance Services SAOG & its Subsidiary Companies
Ali bin Hassan Sulaiman – Deputy Chairman Mr. Ali bin Hassan Sulaiman is a member of the Board of Directors of the Company since 1996 and is Deputy Chairman since March 2010. He is a founder of Ali and Abdul Karim Group and Director of the following companies:
Director of Topaz Energy & Marine SAOG for several years up to its acquisition by the Company in May 2005. Director of Majan Glass Manufacturing Co SAOG. Director of National Hospitality Institute SAOG. Director of Topaz Energy & Marine Ltd.
HH Sayyid Tarik bin Shabib bin Taimur – Director HH Sayyid Tarik bin Shabib bin Taimur is a member of the Board of Directors of the Company since 1996. Other positions held by him include the following:
Founder and Director of Tawoos Group. Chairman of Marina Bander Al Rowdha SAOG for six years until its takeover by the Government of the Sultanate of Oman in April 2003. Chairman of National Hospitality Institute SAOG since 1995. Director of Topaz Energy & Marine Ltd.
Sunder George – Director Mr. Sunder George is a member of the Board of Directors of the Company since 2001. He has extensive experience in Banking & Finance and has held senior executive positions in Oman and abroad, including the following
Deputy Chief Executive of BankMuscat SAOG. Director of Topaz Energy & Marine Ltd.
Yeshwant C. Desai – Director Mr. Yeshwant C. Desai is a member of the Board of Directors of the Company since 2001 and is a Chairman of the Audit Committee. He has had a successful career and extensive experience in Banking & Finance and has held senior executive positions in Oman and abroad, which include:
Ex-CEO of BankMuscat SAOG. Director of Topaz Energy & Marine SAOG for several years up to its acquisition by the Company in May 2005. Director of Topaz Energy & Marine Ltd.
Rishi Khimji – Director Mr. Rishi Khimji is a member of the Board of Directors of the Company since 2004. He is also a Director of the following companies:
Director of Ajit Khimji Group of Companies. Director of Mumtaz International Services LLC. Director of Asha Enterprises LLC. Director of Topaz Energy & Marine Ltd.
Colin Rutherford – Director Mr. Colin Rutherford is a member of the Board of Directors since 2005 and has formerly Chaired BUE Marine Holdings prior to its acquisition by the Renaissance Group. He has vast experience of public and private companies having served on many Boards around the world. He is a Chartered Accountant and a former Corporate Financier and currently holds the following positions within his diverse portfolio: Chairman of Midas Capital plc. Chairman of Brookgate Limited. He holds further positions in global fund management, retail, specialist building products and technology. He is also a Director of Topaz Energy & Marine Ltd. Stephen R. Thomas OBE – Chief Executive Officer Mr. Stephen R. Thomas joined Tawoos Group as General Manager of Tawoos Industrial Services Co LLC in 1988. He took over as Chief Executive Officer of Renaissance Services SAOG in 1998. He has held senior positions in the Group including the following positions:
Director of National Hospitality Institute SAOG. Founder and former Chairman of Oman Society for Petroleum Services (“OPAL”). Director of Topaz Energy & Marine Ltd.
2.4 Membership of Other Boards/Board Committees (SAOG Companies in Oman)
Number of other Boards in which Director
Number of other Boards Committees in which Member
Sr. No
Name of Director
1
Samir J. Fancy
1
1
2
Ali bin Hassan Sulaiman
2
2
3
HH Sayyid Tarik bin Shabib bin Taimur
1
1
4
Sunder George
-
-
5
Yeshwant C. Desai
-
-
6
Rishi Khimji
-
-
7
Colin Rutherford
-
-
2.5 Number & Dates of Meetings of the Board of Directors The Board held four meetings during 2010 on the following dates: January 13, 2010 – February 28, 2010 – May 12, 2010 – September 5, 2010
3. Audit Committee & Other Sub-committees Audit Committee The Audit Committee is a sub-committee of the Board comprising of three Directors, majority of whom have to be Independent Directors.
Director of Renaissance Hospitality Services SAOG since foundation and until its merger with Renaissance Services SAOG in April 2002.
Renaissance Services SAOG
& its Subsidiary Companies
47
Report On Corporate Governance 3.1 Brief Description & Terms of Reference
3.2 Composition of Audit Committee and Attendance of Meetings
The functions of the Audit Committee are as follows:
Recommend to the Board the Statutory Auditors in the context of their independence, fee and terms of engagement for approval by the Shareholders.
Review the audit plan and results of the audit and whether Statutory Auditors have full access to all relevant documents.
Oversee the adequacy of internal control systems and Internal Audit Reports. with
Sr. Name No
Position
Meetings held during the year
Meetings attended during the year
1
Yeshwant C. Desai
Chairman 4
3
2
Ali bin Hassan Sulaiman
Member
4
4
3
Sunder George
Member
4
4
Review any non-compliance requirements prescribed by CMA.
Oversee the Company’s financial reporting process and the disclosure of its financial information to ensure accuracy, sufficiency and credibility of the financial statements.
Ensure that proper system is in place for adoption of appropriate accounting policies and principles leading to fairness in financial statements.
Review annual and quarterly financial statements and recommend to the Board.
3.3 The Compensation Committee
Serve as a channel of communication between Statutory & Internal Auditors and the Board.
Review risk management policies.
Review proposed specific related party transactions for making appropriate recommendations to the Board.
The Compensation Committee was formed as a Board Committee to lay down and update the parameters for assessment and compensation of key personnel, undertake their performance assessment and report to the Board on the compensation and personnel policies. The Committee, which consists of the following Directors held one meeting during 2010:
Make recommendations to the Board for entering into small value transactions with related party without securing prior approval of Audit Committee and the Board.
48
Oversee the Internal Audit function in general and with particular reference to reviewing the scope of Internal Audit Plan for the year, reports of internal auditors pertaining to critical areas, efficacy of internal auditing and whether the internal auditors have full access to relevant documents.
In 2010 the Audit Committee of the Company was comprised of the three Non-Executive Independent Directors as members. The following table shows the composition of the Audit Committee and the attendance of its meetings.
disclosure
Accord prior approval to the Statutory Auditors to provide non-audit services, in accordance with CMA Circular E/12/2009.
Renaissance Services SAOG & its Subsidiary Companies
During its meetings the Audit Committee discussed and approved the annual Internal Audit Plan. The Committee reviewed and recommended to the Board the audited and quarterly accounts and the related party transactions. The Committee had recommended the appointment of the Statutory Auditors for the year 2010. The Committee also looked at certain specific areas of the Company’s operations and reported on these to the Board.
Sr. Name No
Position
Meetings held during the year
Meetings attended during the year
1
Yeshwant C. Desai
Chairman 1
1
2
Colin Rutherford
Member
1
1
4. Process of Nomination of the 5. Remuneration Matters Directors In nominating and screening candidates to fill a casual vacancy, the Board seeks candidates with the skills and capacity to provide strategic insight and direction, encourage innovation, conceptualise key trends and evaluate strategic decisions. The Board focuses on professionalism, integrity, accountability, performance standards, leadership skills, professional business judgment, financial literacy, and industry knowledge as core competencies of the candidates. While nominating competent candidates, the Board ensures that the Shareholders retain the power of electing any candidate, irrespective of his candidature being recommended by the Board or otherwise and that any Shareholder has the full right of nominating himself.
Sr. Name of Director No.
Position
As per the approval accorded by the AGM held on 28 March 2010, the Chairman is paid Rial 1,000/- for attending Board Meetings and other Directors are paid Rial 500/- as sitting fees per meeting. Sitting fees of Rial 750/- are paid to Committees’ Chairmen and sitting fees of Rial 650/- are paid to Committees’ members. The remuneration, sitting fees and travelling expenses relating to the attending of the meetings paid to the Chairman and Directors for 2010 are as follows:
Sitting Fees Paid for Board & Subcommittees’ Meetings for 2010 (Rial)
Remuneration Proposed for 2010 (Rial)
Travelling Expenses in 2010 (Rial)
1
Samir J. Fancy
Chairman
4,000/-
56,784/-
1,209/-
2
Ali bin Hassan Sulaiman
Deputy Chairman
4,600/-
19,195/-
-
3
HH Sayyid Tarik bin Shabib bin Taimur
Director
1,500/-
28,391/-
-
4
Sunder George
Director
4,600/-
19,195/-
-
5
Yeshwant C. Desai
Director
5,000/-
24,195/-
2,958 /-
6
Rishi Khimji
Director
1,500/-
14,195/-
-
7
Colin Rutherford
Director
2,650/-
14,195/-
8,056 /-
23,850/-
176,150 /-
12,223/-
TOTAL
For the financial year 2010, it is proposed to pay a Directors’ remuneration of Rial 176,150/-, while the remuneration paid during 2010 for the financial year 2009 amounted to Rial 173,850/-. Total remuneration paid to the top five senior executives of the Company (including its subsidiaries) during the year was Rial 2,000,248/-. This includes salary and benefits paid in cash, monetary value of all benefits calculated
as per Company rules and a variable amount based on performance as recommended by the Compensation Committee of the Board. Majority of the top five officers of the Company have been with the Company for a long time and the employment contracts are usually entered into for an initial period of two years which are automatically renewed unless terminated in accordance with the terms mentioned therein. The notice
Renaissance Services SAOG
& its Subsidiary Companies
49
Report On Corporate Governance 8.1 High/Low share prices during each month of 2010 (Source of statistics: MSM)
Month
High (Rial) Low (Rial)
6. Details of Non-Compliance by the Company
7. Means of Communication 7.1 The Company has been sending financial results and material information to the MSM Website via the MSM Electronic Transmission System. The Company has also been publishing annual audited & quarterly un-audited financial results and material information in the English and Arabic newspapers. The annual audited accounts and Chairman’s Report are despatched to all Shareholders by mail, as required by law.
1.200
50
Renaissance Services SAOG & its Subsidiary Companies
0.756
February 2010
0.846
0.770
March 2010
0.826
0.785
April 2010
0.830
0.791
May 2010
0.820
0.669
June 2010
0.750
0.660
July 2010
0.785
0.730
August 2010
0.791
0.760
September 2010
0.858
0.760
October 2010
0.927
0.830
November 2010
0.982
0.894
December 2010
1.125
0.981
RS Closing price
MSM Index
10000 9000
1.000
8000
0.900 7000
0.800
6000
0.700
5000
0.600
1.200 1.100
Share Price in Rial
7.4 The CEO’s Report, provided in the Annual Report, includes the Management Discussion and Analysis of the year’s performance.
0.810
1.100
7.2 The financial results and information on the Company are posted at: www.renaissance-oman.com 7.3 Meetings are held with analysts and members of the financial press in line with internal guidelines of disclosure.
January 2010
8.2 Renaissance Share Price movement in comparison to the MSM Index and MSM Services Index
Share Price in Rial
There were no penalties or strictures imposed on the Company by the MSM/CMA or any statutory authority for the last three years. There are no areas in which the Company is not compliant with the Code of Corporate Governance.
High/Low share price movement
RS Closing price
MSM Services & Insurance Index
5400 4650
1.000 3900 0.900 0.800
MSM Index
The Company has a Senior Management Incentive Plan (SMIP). Under the plan the Company has created an overseas-based trust structure under the name of Renaissance Services SMIP Limited, and uses trustees from an independent professional firm to oversee and administer the employees’ long-term benefit scheme independently from the Company. The scheme is a rolling programme that allows a part of the Company’s senior management bonus payments every year to be paid into the independent trust and the underlying structure. The proceeds are invested by the trustees in the shares of the Company through the MSM. The shares are directly released to the employees by the trustees proportionately over a period of three years. The structure and the operation mechanism ensure independency and transparency so that the employees are fully aware of the management and liquidity of their longterm employment benefits.
8. Stock Market Data
3150
0.700
2400
0.600
1650
MSM Services Index
period for termination of employment contracts for all the key personnel is two months and the gratuity is computed and paid in accordance with the applicable Labour Laws.
8.3 Distribution of Shareholding as on 31 December 2010 (Source of Statistics: Muscat Clearing & Depository Co.)
Sr. Category No.
1 2 3 4 5 6
7
Less than 100,000 shares 100,000 – 200,000 shares 200,001 – 500,000 shares 500,001 – 2,700,000 shares 1% - .99% of share capital 2% - 6% of share capital 10% of share capital & above Total
No. of No. of Share- shares holders
% Shareholding
4717
19,242,490
6.82%
56
8,097,957
2.87%
51
15,869,969
5.63%
47
54,761,134 19.41%
8
32,759,054 11.61%
10 108,825,823 38.58%
1
42,538,025 15.08%
4890 282,094,452
100%
As per Article 9 (para b) of the Code of Corporate Governance pertaining to the rotation of external auditors, KPMG have completed three years as Statutory Auditors of the Company by the end of 2010, and therefore, are eligible for re-appointment as Statutory Auditors of the Company.
10. Audit Fees Paid to the Auditors During the year 2010, aggregate professional fees in the amount of Rial 522,100/- were rendered by KPMG Oman and other KPMG offices in respect of the services provided (Rial 218,373/- for audit, Rial 279,727/- for tax and Rial 24,000/- for other services).
11. Confirmation by the Board of Directors The Board of Directors confirms its accountability for the preparation of the financial statements in accordance with the applicable standards and rules.
The Board of Directors confirms that it has reviewed the efficiency and adequacy of the Internal Control Systems of the Company. The Board is pleased to inform the Shareholders that adequate and efficient internal controls are in place and that they are in full compliance with the Internal Rules & Regulations. The Board of Directors also confirms that there are no material things that affect the continuation of the Company and its ability to continue its operations during the next financial year.
8.4 The Company does not have any outstanding GDRs/ ADRs/ Warrants or any convertible instruments.
9. Professional Profile of the Statutory Auditors
Chairman
Director
The Shareholders of the Company have appointed KPMG as the auditors for the year 2010. KPMG is one of the leading accounting firms in Oman. The Oman practice of KPMG, which forms part of KPMG Lower Gulf, was established in 1974 and employs more than 130 people, including three partners, six directors and 17 managers. KPMG Lower Gulf (UAE and Oman), is a member of the KPMG network of independent firms affiliated with KPMG International Co-operative. The KPMG network operates in 146 countries and employs 140,000 people worldwide. KPMG in Oman is accredited by the Capital Market Authority (CMA) to audit joint stock companies (SAOGs).
Renaissance Services SAOG
& its Subsidiary Companies
51
Notes to the Consolidated Financial Statement for the year ended 31 December 2010
52 52
Renaissance Services SAOG & its Subsidiary Companies
Consolidated Statement of Comprehensive Income for the year ended 31 December 2010
2010 RO’000
2009 RO’000
Revenue
253,429
247,590
Operating expenses
(176,209)
(172,907)
Gross profit
77,220
74,683
Administrative expenses
(28,457)
(34,106)
Profit from operations
48,763
40,577
Notes
Net finance costs
20
(10,338)
(7,845)
Share of profit from associate companies
7
368
-
3
(7)
(13)
(34)
38,783
32,691
Net gain/(loss) on investments Amortisation of intangible assets
5
Net profit before income tax Income tax expenses
19
(6,501)
(4,181)
Net profit for the year
20
32,282
28,510
Other comprehensive income/(loss) Foreign currency translation differences Effective portion of changes in fair value of cash flow hedges
5 (143)
31 (88)
Other comprehensive loss for the year
(138)
(57)
Total comprehensive income for the year
32,144
28,453
Net profit attributable to: Shareholders of the Parent Company Non-controlling interest
27,648 4,634
25,085 3,425
Net profit for the year
32,282
28,510
Total comprehensive income attributable to: Shareholders of the Parent Company Non-controlling interest
27,510 4,634
25,028 3,425
Total comprehensive income for the year
32,144
28,453
Basic and diluted earnings per share (RO)
21
0.103
0.094
Dividend per share: Cash dividend (RO)
22
0.012
0.012
The attached notes 1 to 32 form an integral part of these financial statements. The Parent Company statement of comprehensive income is presented as a separate schedule attached to the financial statements. The report of the Auditors is set forth on page 52.
Renaissance Services SAOG
& its Subsidiary Companies
53 53
Consolidated Statement of Financial Position as at 31 December 2010
2010 RO’000
2009 RO’000
391,555 38,855 1,734 448
282,749 34,023 1,366 1,229
432,592
319,367
15 13,270 93,779 22,437
12 11,042 86,826 30,692
129,501
128,572
62,422 3,485 56,308
64,760 3,520 38,494
122,215
106,774
7,286
21,798
228,508 9,871 5,667
150,090 17,835 4,823
Total non-current liabilities
244,046
172,748
Net assets
195,832
168,417
28,209 19,496 (1,704) 10,577 3,385 112,479 (231) 107
28,209 19,496 (1,704) 10,440 3,385 88,176 (88) 102
Non-controlling interest
172,318 23,514
149,720 20,401
Total equity
195,832
168,417
0.644
0.553
Non-current assets Property, plant and equipment Intangible assets Investments Deferred tax asset
Notes 4 5 7 19
Total non-current assets Current assets Trading investments Inventories and work in progress Trade and other receivables Cash and bank balances
9 10 11
Total current assets Current liabilities Trade and other payables Bank borrowings Term loans and leases
12 11 & 13 14
Total current liabilities Net current assets Non-current liabilities Term loans and leases Non-current payables and advances Staff terminal benefits
Equity Share capital Share premium Treasury shares Legal reserve Proposed distribution Retained earnings Hedging reserve Exchange reserve
Net assets per share (RO)
14 15 16
17 17 17 17 22 17 17
18
The financial statements were authorised for issue in accordance with a resolution of the Directors on 27 February 2011.
Chairman
Director
The attached notes 1 to 32 form an integral part of these financial statements. The Parent Company statement of financial position is presented as a separate schedule attached to the financial statements. The report of the Auditors is set forth on page 52.
54 54
Renaissance Services SAOG & its Subsidiary Companies
Consolidated Statement of Cash Flows for the year ended 31 December 2010
2010 RO’000
2009 RO’000
252,547 (195,126)
242,833 (186,567)
Cash generated from operations Net finance costs Income tax paid
57,422 (10,522) (6,273)
56,266 (7,613) (2,663)
Cash flows from operating activities
40,626
45,990
INVESTING ACTIVITIES Acquisition of property, plant and equipment Acquisition of intangible assets Proceeds from sale of investments Acquisition of a subsidiary Dividend received
(134,355) (149) (5,964) 176
(71,797) 1,051 136
Cash used in investing activities
(140,292)
(70,610)
FINANCING ACTIVITIES Net receipt of term loans Net movement in related party balances Cash dividends paid Funds (paid to) / introduced by minority interests
96,232 120 (3,385) (1,521)
38,301 141 (2,453) 3,595
Cash flows from financing activities
91,446
39,584
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year
(8,220) 27,172
14,964 12,208
18,952
27,172
22,437 (3,485)
30,692 (3,520)
18,952
27,172
OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees
Cash and cash equivalents at the end of the year
Notes
11
Cash and cash equivalents comprise the following: Cash and bank balances Bank borrowings
The attached notes 1 to 32 form an integral part of these financial statements. The Parent Company statement of financial position is presented as a separate schedule attached to the financial statements. The report of the Auditors is set forth on page 52.
Renaissance Services SAOG
& its Subsidiary Companies
55 55
Consolidated Statement of changes in Equity for the year ended 31 December 2010
Attributable to Shareholders of the Parent Company Share Share Treasury Legal capital premium shares reserve RO’000 RO’000 RO’000 RO’000 24,530
20,723
(1,704)
9,087
-
-
-
-
-
-
-
-
-
-
-
-
Transactions with owners, directly recorded in equity: Dividend paid and bonus shares issued Proposed dividend Income from treasury shares Transfers to legal reserve Movement related to investments in subsidiaries
3,679 -
(1,227) -
-
1,353 -
Transactions with owners, directly recorded in equity
3,679
(1,227)
-
1,353
28,209
19,496
(1,704)
10,440
1 January 2009 Total comprehensive income for the year: Net profit for the year Other comprehensive income: Changes in fair value of cash flow hedge Foreign currency translation differences Total comprehensive income for the year
31 December 2009
Attributable to Shareholders of the Parent Company Share Share Treasury Legal capital premium shares reserve RO’000 RO’000 RO’000 RO’000 1 January 2010
28,209
19,496
(1,704)
10,440
-
-
-
-
-
-
-
-
Foreign currency translation differences
-
-
-
-
Total comprehensive income for the year
-
-
-
-
Transactions with owners, directly recorded in equity: Dividend paid Proposed dividend Income from treasury shares Transfers to legal reserve Movement related to investments in subsidiaries
-
-
-
137 -
Transactions with owners, directly recorded in equity
-
-
-
137
28,209
19,496
(1,704)
10,577
Total comprehensive income for the year : Net profit for the year Other comprehensive income: Changes in fair value of cash flow hedge
31 December 2010
The attached notes 1 to 32 form an integral part of these financial statements. The Parent Company statement of financial position is presented as a separate schedule attached to the financial statements. The report of the Auditors is set forth on page 52.
56 56
Renaissance Services SAOG & its Subsidiary Companies
Proposed distribution RO’000
Retained earnings RO’000
Hedging reserves RO’000
Exchange reserves RO’000
Total RO’000
Non-controlling interest RO’000
Total RO’000
6,132
66,474
-
71
125,313
13,381
138,694
-
25,085
-
-
25,085
3,425
28,510
-
-
(88) -
31
(88) 31
-
(88) 31
-
25,085
(88)
31
25,028
3,425
28,453
(6,132) 3,385 -
(3,385) 128 (126) -
-
-
(2,453) 128 -
3,595
(2,453) 128 3,595
(2,747)
(3,383)
-
-
(2,325)
3,595
1,270
3,385
88,176
(88)
102
148,016
20,401
168,417
Proposed distribution RO’000
Retained earnings RO’000
Hedging reserves RO’000
Exchange reserves RO’000
Total RO’000
Non-controlling interest RO’000
Total RO’000
3,385
88,176
(88)
102
148,016
20,401
168,417
-
27,648
-
-
27,648
4,634
32,282
-
-
(143)
-
(143)
-
(143)
-
-
-
5
5
-
5
-
27,648
(143)
5
27,510
4,634
32,144
(3,385) 3,385 -
(3,385) 177 (137) -
-
-
(3,385) 177 -
(1,521)
(3,385) 177 (1,521)
-
(3,345)
-
-
(3,208)
(1,521)
(4,729)
3,385
112,479
(231)
107
172,318
23,514
195,832
Renaissance Services SAOG
& its Subsidiary Companies
57 57
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
1
LEGAL STATUS AND PRINCIPAL ACTIVITIES Renaissance Services SAOG (the “Parent Company”) is incorporated in the Sultanate of Oman as a public joint stock company. The business activities of Renaissance Services SAOG and its subsidiary companies (together referred to as the “Group”) include investments in companies and properties, providing solutions in offshore support vessel fleet, ship building, purchase and sales of vessels, a float ship repair, fabrication and maintenance for the oil & gas and energy services sectors, a leading turnkey contract services provider providing facilities management, facilities establishment, contract catering, operations and maintenance services, provision of training services, media publishing, advertising and distribution, manufacturing, general trading and related activities.
2
SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and applicable requirements of the Commercial Companies Law of 1974 and the minimum disclosure requirements of the Capital Market Authority (CMA). These financial statements have been prepared in Rial Omani (“RO”) rounded to the nearest thousand. The consolidated financial statements are prepared under the historical cost convention modified to include the measurement at fair value of the following assets: -
Held for trading investments; Available for sale investments; and Derivative financial instruments.
Basis of consolidation
Subsidiaries Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Special purpose entities (“SPEs”) are consolidated if, based on the evaluation of the substance of the relationship of the entity with the Group and the SPEs risks and rewards, the Group concludes that it controls the SPEs. The financial statements of the subsidiaries are prepared for the same reporting year as the Parent Company, using consistent accounting policies. Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounting basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate.
58 58
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Basis of consolidation (continued) Investments in jointly controlled entities Investments in the jointly controlled entities are accounted for under the proportionate consolidation method whereby the Group accounts for its share of the assets and liabilities, income and expenses in the jointly controlled entity. Jointly controlled operations Where the Group participates in jointly controlled operations as defined in International Accounting Standard 31 the Group accounts only for its own share of assets and liabilities, income and expenditure. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group’s interest in the entity, against the investment in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Accounting for business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The Group measures goodwill at the acquisition date as: -
the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Non-controlling interests Non controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented in the statement of comprehensive income and within equity in the consolidated statement of financial position, separately from parent shareholders’ equity. Acquisitions of minority interests are accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired is recognised as goodwill.
Renaissance Services SAOG
& its Subsidiary Companies
59 59
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition Marine charter Revenue comprises operating lease rent from charter of marine vessels, mobilization income, revenue from provision of on-board accommodation, catering services and sale of fuel and other consumables. Lease rent income is recognised on a straight line basis over the period of the lease. Revenue from provision of on-board accommodation and catering services is recognised over the period of hire of such accommodation while revenue from sale of fuel and other consumables is recognised when delivered. Income generated from the mobilization or demobilization of the vessel to or from the location of charter under the vessel charter agreement is recognized when the mobilization or demobilization service has been rendered. Ship building, ship repair and oil and gas engineering services Revenue comprises amounts derived from ship repair, provision of mechanical, electrical and instrumentation services, fabrication and maintenance services, turbocharger services and marine boiler repairs. Revenue is recognised under the percentage of completion method and is stated net of discounts and allowances. Where the outcome of a contract can be assessed with reasonable certainty, a prudent estimate of attributable profit is recognised in the income statement. Full provision is immediately made for all known or expected losses on individual contracts, when such losses are foreseen. Revenue arising from contract variations and claims is not accounted for unless it is probable that the customer will approve the variations/claims and the amount of revenue arising from the variations/claims can be measured reliably. Goods sold and services rendered Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer i.e. delivery of goods, acceptance by the customer and the amount of revenue can be measured reliably. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction in the accounting period in which the services are rendered and the right to receive the consideration is established. No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due, associated costs or the possible return of goods. Long-term contracts As soon as the outcome of a long-term contract can be estimated reliably, contract revenue and expenses are recognised in the income statement in proportion to the stage of completion of the contract. An expected loss on a contract is recognised immediately in the income statement. No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due, associated costs or the possible return of goods. Maintenance contracts Income from maintenance contracts is recognised in the income statement on a straight line basis evenly over the term of the contract.
60 60
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition (continued) Commission income Commission income is recognised when the amount is notified to the Group entities by the principal. Investment income and gain or loss on disposals On disposal of an investment, the resultant gain or loss between the net disposal proceeds and the carrying amount is recognised in the income statement. Dividend income Dividend income is recognised in the income statement on the date that the dividend is declared. Sale of vessels Revenue from sale of vessels is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the vessel and the amount of revenue can be measured reliably. Interest Interest revenue is recognised as the interest accrues. Others Sale of operating assets and other miscellaneous income like insurance claims, provision write back and other income are shown as part of revenue and recognised when the right to receive is established. Property, plant and equipment Owned assets Items of property, plant and equipment are stated at cost or revalued amounts less accumulated depreciation and impairment losses, if any. Subsequent to initial recognition or certain assets are carried at revalued amount, being their fair value at the date of the revaluation less any subsequent accumulated depreciation. The revaluation of these assets is carried out at regular intervals on an open-market basis to ensure that the carrying amount does not differ materially from the fair value. Surplus arising on revaluation is recorded in other comprehensive income and presented in the revaluation reserve in equity. Subsequent expenditure Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including major inspection and overhaul expenditure is capitalised. Other subsequent expenditure is capitalised only when it increases the future economic benefits embodied in property, plant and equipment. All other expenditure is recognised in the income statement as an expense as incurred.
Renaissance Services SAOG
& its Subsidiary Companies
61 61
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Property, plant and equipment (continued) Depreciation Depreciation is charged to the income statement on a straight line basis over the estimated useful lives of items of property, plant and equipment. The estimated useful lives are as follows: Years Buildings and improvements Furniture and fixtures Plant, machinery and office equipment Marine vessels revalued (from the date of latest revaluation) Marine vessels acquired Expenditure on marine vessel dry docking (included as a component of marine vessels) Jetty and land development Floating dock Motor vehicles
5 - 25 3-5 1 - 15 10 15 - 30 3 25 25 3
Freehold land is not depreciated. The cost of certain assets used on specific contracts is depreciated to estimated residual value over the period of the respective contract, including extensions if any. Vessels that are no longer being chartered and are held for sale are transferred to inventories at their carrying value. Capital work-in-progress Capital work-in-progress is stated at cost and comprises all costs directly attributable to bringing the assets under construction ready for their intended use. Capital work-in-progress is transferred to property, plant and equipment at cost on completion. Dry docking costs The expenditure incurred on vessel dry docking, a component of property, plant and equipment, is amortised over the period from the date of dry docking, to the date on which the management estimates that the next dry docking is due. Vessel refurbishment costs Leased assets Costs incurred in advance of charter to refurbish vessels under long term charter agreements are capitalised within property, plant and equipment in line with the use of the refurbished vessel. Where there is an obligation to incur future restoration costs under charter agreements which would not meet the criteria for capitalisation within property, plant and equipment, the costs are accrued over the period to the next vessel re-fit to match the use of the vessel and the period over which the economic benefits of its use are realised. Owned assets Cost incurred to refurbish owned assets are capitalised within property, plant and equipment and then depreciated over the shorter of the estimated economic life of the related refurbishment or the remaining life of the vessel.
62 62
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Goodwill Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets and liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated: • •
represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and is not larger than a segment based on the Group’s operating segment format determined in accordance with IFRS 8 Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cashgenerating units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset. Computer software costs represent expenditure incurred on implementing an ERP solution for the Group. Amortisation is charged on a straight line basis over a period of five years, from the date of completion.
Renaissance Services SAOG
& its Subsidiary Companies
63 63
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Investments Held for trading investments are stated at fair value, with any resultant gain or loss recognised in the income statement. Other investments held by the Group are classified as being available for sale and are stated at fair value. Unrealised gains and losses on remeasurement to fair value are reported in other comprehensive income and presented as fair value reserve in equity until the investment is derecognised or the investment is determined to be impaired. Upon impairment any loss, or upon derecognition any gain or loss, previously reported as “cumulative changes in fair value” within equity is included in the income statement for the period. Inventories and work-in-progress Inventories are valued at the lower of cost and net realisable value. Cost is determined applying the first-in, firstout and the weighted average methods and includes all costs incurred in acquiring and bringing them to their present location and condition. Net realisable value signifies the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. Work-in-progress in the case of short-term contracts is stated at the invoice value of goods and services supplied less amounts received or receivable. In the case of long-term contracts, work-in-progress is stated at cost, which includes direct costs and all attributable overheads, plus profit recognised to date less a provision for foreseeable losses, uncertainty and progress billings. Cost includes all expenditure related to specific contracts and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity. Trade and other receivables Trade and other receivables are stated at cost less impairment losses, if any. Treasury shares Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any gain or loss or income related to these shares are directly transferred to retained earnings and shown in the statement of changes in equity. Cash and cash equivalents Cash and cash equivalents comprise cash at hand, bank balances and short-term deposits with an original maturity of three months or less. Bank borrowings that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.
64 64
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Interest bearing borrowings Interest bearing borrowings are recognised initially at the fair value of the consideration received less directly attributable transaction costs. Subsequent to initial recognition interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis. Provisions A provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefit will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liabilities. Dividends Dividends are recognised as a liability in the period in which they are declared. Leases Group as a lessee Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the income statement. Capitalised leased assets are depreciated over the estimated useful life of the asset or the lease term, whichever is less. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the income statement on a straightline basis over the lease term. Group as a lessor Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as lease rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Renaissance Services SAOG
& its Subsidiary Companies
65 65
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES ((continued) Employee benefits Contributions to a defined contribution retirement plan for Omani employees, in accordance with the Oman Social Insurance Scheme, are recognised as an expense in the income statement as incurred. The Group provides end of service benefits to its expatriate employees. The entitlement to these benefits is based upon the employees’ salary and length of service, subject to completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. For non Omani companies the end of service benefits are provided as per the respective regulations in their country. Retirement benefit costs Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme. Directors’ remuneration The Board of Directors’ remuneration of the Parent Company is accrued within the limits specified by the Capital Market Authority and the requirements of the Commercial Companies Law of the Sultanate of Oman. Term loans Term loans are carried on the statement of financial position at the fair value of the consideration received less directly attributable transaction costs. Installments due within one year are shown as a current liability. Interest expense is accrued on a time-proportion basis with unpaid amounts included in accounts payable and accruals. Net finance costs Net finance costs comprise interest payable on borrowings calculated using the effective interest rate method and interest received on funds invested. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Financing costs are recognised as an expense in the income statement in the period in which they are incurred. Borrowing costs, net of interest income, which are directly attributable to the acquisition of items of property, plant and equipment are capitalised as the cost of property, plant and equipment. Borrowing costs incurred beyond the construction period are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.
66 66
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Segment reporting An operating segment is the component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that relate to transaction with any of the Group’s other components, whose operating results are reviewed regularly by the Group CEO (being the chief operating decision maker) to make decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is available. Income tax Income tax is provided for in accordance with the fiscal regulations of the country in which the Group operates. Income tax on the profit or loss for the year comprises current and deferred taxation. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in the equity or other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts use for taxation purposes. The amount of deferred tax provided is based on the expected manner of realistic settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the unused tax losses and credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Foreign currency transactions Transactions denominated in foreign currencies are translated to Rial Omani at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to Rial Omani at foreign exchange rates prevailing on that date. Foreign exchange differences arising on conversion are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into Rial Omani at the foreign exchange rates ruling at the dates the values were determined.
Renaissance Services SAOG
& its Subsidiary Companies
67 67
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Rial Omani at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Rial Omani at exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income and are reflected in the exchange reserve in equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the exchange reserve is transferred to income statement as part of the profit or loss on disposal. Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented within the equity in the translation reserve. Impairment Financial assets A financial asset is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy. The Group considers evidence of impairment of financial assets at both a specific asset and collective level. All individually significant financial assets are assessed for specific impairment. All individually significant financial assets found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Financial assets that are not individually significant are collectively assessed for impairment by grouping together financial assets with similar risk characteristics. In assessing collective impairment the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in the income statement and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement.
68 68
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment (continued) Non-financial assets (other than goodwill) The carrying amounts of the Group’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. The recoverable amount of an asset or its cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Derivatives Derivatives are stated at fair value. (Level 2) For the purposes of hedge accounting, hedges are classified into two categories: (a) fair value hedges which hedge the exposure to changes in the fair value of a recognised asset or liability; and (b) cash flow hedges which hedge exposure to variability in cash flows of a recognised asset or liability or a highly probable transaction. In relation to effective fair value hedges any gain or loss from remeasuring the hedging instrument to fair value, as well as related changes in fair value of the item being hedged, are recognised immediately in the income statement. In relation to effective cash flow hedges, the gain or loss on the hedging instrument is recognised initially in equity and either transferred to the other comprehensive income in the period in which the hedged transaction impacts the statement of comprehensive income, or included as part of the cost of the related asset or liability For hedges which do not qualify for hedge accounting, any gains or losses arising from changes in the fair value of the hedging instrument are taken directly to the income statement for the year. Fair value hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. For fair value hedges of financial instruments with fixed maturities any adjustment arising from hedge accounting is amortised over the remaining term to maturity. For cash flow hedges, any cumulative gain or loss on the hedging instrument recognised in equity remains in equity until the hedged transaction occurs. If the hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement.
Renaissance Services SAOG
& its Subsidiary Companies
69 69
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES ((continued) New standards and interpretation not yet effective A number of new standards, amendment to the standards and interpretations are not yet effective for the year ended 31 December 2010, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except for IFRS 9 Financial Instruments, which become mandatory for the Group’s 2013 consolidated financial statements and could change the classification and measurement of financial assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined. Fair values For investments traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the statement of financial position date. (Level 1) For unquoted investments, a reasonable estimate of the fair value is determined by reference to the market value of a similar investment or is based on the expected discounted cash flows. Fair value cannot be reliably measured for certain unquoted foreign investments. Such investments are measured at cost. (Level 3) The fair value of interest-bearing items is estimated based on discounted cash flows using market interest rates for items with similar terms and risk characteristics. (Level 3) Judgements In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect in the amounts recognised in the financial statements: Classification of investments Management decides on acquisition of an investment whether it should be classified as held to maturity, held for trading, carried at fair value through profit and loss account, or available for sale. The Group classifies investments as trading if they are acquired primarily for the purpose of making a short term profit by the dealers. Classification of investments as fair value through profit and loss account depends on how management monitor the performance of these investments. When they are not classified as held for trading but have readily available reliable fair values and the changes in fair values are reported as part of income statement in the management accounts, they are classified as fair value through profit and loss. All other investments are classified as available for sale.
70 70
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
2
SIGNIFICANT ACCOUNTING POLICIES (continued) Estimates and assumptions The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.
3
ACQUISITION OF SUBSIDIARY On 1 July 2010 the Group obtained control of Al Wasita Emirates Catering Services LLC (“Al Wasita Emirates”) by acquiring 100 percent of the shares and voting interests in the company. Al Wasita Emirates is engaged in catering and related contract service activities. In the six months to 31 December 2010, Al Wasita Emirates contributed revenue of RO 3,339,000 and net profit of RO 573,000 to the Group’s result. If the acquisition had occurred on 1 January 2010, management estimates that consolidated revenue would have been RO 256,837,000 and consolidated net profit for the year would have been RO 32,592,000. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquistion of would have been the same if the acquisition had occurred on 1 January 2010. The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date: Identifiable assets acquired and liabilities assumed RO’000 Furniture and equipment Current assets Cash and cash equivalents Current liabilities
365 2,584 29 (1,681)
Fair value of identifiable net assets Total consideration transferred
1,297 5,993
Goodwill
4,696
Renaissance Services SAOG
& its Subsidiary Companies
71 71
72 72
Renaissance Services SAOG
& its Subsidiary Companies
4
26,637
62,715 26,827
31 December 2010
Net carrying amount 31 December 2010
31 December 2009
195,561
291,997
64,193
13,270 (2,075)
-
2 4,135 (13)
-
-
Charge for the year Disposals
Acquisitions through business combination
52,998
356,190
70,349 40,463 (3,181)
22,513
89,352
31 December 2010
Depreciation 1 January 2010 Adjustment on deconsolidation of a subsidiary
10,344 32,157 (1,221)
8
Acquisitions through business combination
Additions Transfers Disposals
-
(1,276) -
248,559
RO’000
RO’000 49,340
Marine vessels
Freehold land and buildings
Cost or valuation 1 January 2010 Adjustment on deconsolidation of a subsidiary
PROPERTY, PLANT AND EQUIPMENT
for the year ended 31 December 2010
1,551
1,407
648
144 -
-
-
504
2,055
-
-
-
2,055
RO’000
Jetty and dock
Notes to the Consolidated Financial Statements
12,165
13,140
21,257
3,681 (300)
96
-
17,780
34,397
5,256 24 (539)
422
(711)
29,945
RO’000
Machinery and equipment
684
860
2,087
467 (248)
-
(1)
1,869
2,947
665 (261)
-
(10)
2,553
RO’000
399
557
1,708
261 (16)
10
-
1,453
2,265
399 (29)
43
-
1,852
RO’000
Motor Furniture vehicles and fixtures
45,562
20,879
-
-
-
-
-
20,879
49,311 (72,644) (808)
-
(542)
45,562
RO’000
Capital work in progress
Total
282,749
391,555
116,530
21,958 (2,652)
108
(1)
97,117
508,085
136,324 (6,039)
473
(2,539)
379,866
RO’000
Renaissance Services SAOG
& its Subsidiary Companies
73 73
4
45,062 4,179 99 49,340
18,569 3,944 22,513
26,827 26,493
31 December 2009
Depreciation 1 January 2009 Charge for the year On disposals
31 December 2009
Net carrying amount 31 December 2009
31 December 2008
167,701
195,561
52,998
43,554 13,222 (3,778)
248,559
211,255 10,532 35,055 (8,283)
RO’000
RO’000
Cost or valuation 1 January 2009 Additions Transfers Disposals
Marine vessels
Freehold land and buildings
PROPERTY, PLANT AND EQUIPMENT (continued)
for the year ended 31 December 2010
1,759
1,551
504
852 211 (559)
2,055
2,611 834 (1,390)
RO’000
Jetty and dock
Notes to the Consolidated Financial Statements
10,939
12,165
17,780
14,804 3,174 (198)
29,945
25,743 3,032 1,414 (244)
RO’000
Machinery and equipment
759
684
1,869
1,603 395 (129)
2,553
2,362 346 (155)
RO’000
446
399
1,453
1,250 241 (38)
1,852
1,696 195 (39)
RO’000
Motor Furniture vehicles and fixtures
15,360
45,562
-
-
45,562
15,360 67,075 (36,568) (305)
RO’000
Capital work in progress
223,457
282,749
97,117
80,632 21,187 (4,702)
379,866
304,089 86,193 (10,416)
RO’000
Total
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
4
PROPERTY, PLANT AND EQUIPMENT (continued) Most of the assets including vessels, plant and equipment, buildings and other assets are pledged against bank loans and bank borrowings. During the year, the Group has reviewed the useful life and residual values of its marine vessels and has revised the useful life of certain vessels from 25 years to 30 years, and reassessed their residual values. The revisions have been treated as a change in accounting estimate under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” and applied prospectively. Had there been no change in the useful life and residual values of marine vessels, the depreciation charge for the current year would have been higher by RO 1,719,000 and profit for the year would have been lower by the same amount. Capital work in progress includes progress payments for the construction of new vessels and workshop facilities for marine repair and fabrication and construction. Advances or deposits paid for construction or acquisition of assets are classified as advances to suppliers and contractors, and the amount will be transferred to capital work in progress after the commencement of construction. During the year 2010, the Group has capitalised borrowing cost amounting to RO 2,074,000 (2009: RO 1,948,000). The depreciation charge has been allocated in the income statement as follows: 2010 RO’000
2009 RO’000
20,251 1,707
19,700 1,487
21,958
21,187
Goodwill
2010 RO’000
2009 RO’000
Initial goodwill Additions (note 3)
39,960 4,696
39,960 -
31 December
44,656
39,960
Amortisation and impairment 1 January
5,968
5,968
31 December
5,968
5,968
38,688
33,992
Operating expenses Administrative expenses
5
INTANGIBLE ASSETS
Net carrying amount at 31 December
74 74
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
5
INTANGIBLE ASSETS (continued) Goodwill represents the excess of the cost of acquiring shares in certain subsidiaries companies over the aggregate fair value of their net assets. The carrying amount of goodwill at 31 December allocated to each of the cash-generating units: Goodwill
2010 RO’000
2009 RO’000
Topaz Energy and Marine Group Tawoos Industrial Services Company LLC Al Wasita Emirates Catering Services LLC (note 3) Norsk Offshore Catering AS Others (UMS, NTI and NHI)
29,079 1,900 4,696 1,007 2,006
29,079 1,900 1,007 2,006
38,688
33,992
The recoverable amount of each cash-generating unit is determined based on a value in use calculation, using cash flow projections based on financial budgets approved by senior management. The key assumptions of the value in use calculations are those regarding discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates that reflect current market assessments of the time value of money and the risks specific to each cash-generating unit. The growth rates are based on management estimates having regard to industry growth rates. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Sensitivity to changes in assumptions: With regard to the assessment of value in use of the cash generating units, management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount. For the year ended 31 December 2010, there have been no events or changes in circumstances to indicate that the carrying values of goodwill of the above cash-generating units may be impaired. Computer software
2010 RO’000
2009 RO’000
1 January Acquisition through business combination Amortisation
31 149 (13)
65 (34)
Net carrying amount at 31 December
167
31
38,855
34,023
Total intangible assets
Renaissance Services SAOG
& its Subsidiary Companies
75 75
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
6
SUBSIDIARIES AND ASSOCIATES The Group and Parent Company investments in Subsidiary and Associate companies are as follows: Ownership interest (%) 2010
2009
100 100 100 100 46 100
100 100 100 100 46 -
Subsidiary Companies Topaz Energy and Marine Limited (“TOPAZ”) (incorporated in UAE) Tawoos Industrial Services Company LLC (“TISCO”) United Media Services Company LLC (“UMS”) National Training Institute LLC (“NTI”) National Hospitality Institute SAOG (“NH”) Renaissance Energy Limited (“REL”)
In 2010 Renaissance Services SAOG has incorporated a new subsidiary, Renaissance Energy Limited (“REL”) in Jebel Ali Free Zone Authority, Dubai, to raise funding from regional and international banks and to hold its overseas investments. Associate Companies Dubai Wire FZE (“DW”) (incorporated in the UAE)
20
20
100 100 100
100 100 -
The Group’s subsidiaries have investments in the following subsidiaries: Subsidiary Companies of TOPAZ Nico Middle East Limited (incorporated in Bermuda) Topaz Holding Limited (incorporated in the UAE) Topaz Energy and Marine Services DMCC (incorporated in the UAE)
Nico Middle East Limited has a subsidiary BUE Marine Ltd, incorporated in UK, which operates through its subsidiaries and engaged principally in charter of marine vessels and vessel management. Topaz Energy and Marine Services DMCC is a wholly owned subsidiary of Topaz Energy and Marine Limited, incorporated in 2010. It has been formed with the purpose of owning an office accommodation for the group in Dubai Multi Commodities Centre (Free Zone) and providing administrative services to group companies. Topaz owns 50% of the shareholding in Mangistau Oblast Boat Yard LLP (“MOBY”), an entity incorporated in Kazakhstan. In the previous year when the facilities of MOBY were under construction, it was being entirely managed by the Group and hence treated as a subsidiary in the consolidated financial statements of Topaz. However, since the commencement of operations in the current year, the Group has re-examined the matter, and having acknowledged that the other partners in MOBY have become more participative in the management and decisions are now being made jointly, has dealt with MOBY as a jointly controlled entity (refer note 8). Subsidiary Companies of TISCO Rusail Catering and Cleaning Services LLC (“RCCS”) Supraco Limited (incorporated in Cyprus) Renaissance Contract Services International LLC (“RCSI”) Al Wasita Catering Services LLC (“Al Wasita”)
76 76
Renaissance Services SAOG & its Subsidiary Companies
100 100 100 100
100 100 100 -
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
6
SUBSIDIARIES AND ASSOCIATES (continued) Al Wasita is wholly owned subsidiary of TISCO which was formed during 2010 to acquire the shares in Al Wasita Emirates Catering Services LLC, a company incorporated in the UAE, which is engaged in the supply of catering services (refer note 3). Supraco Limited through its subsidiaries in Norway provides contract catering services. RCSI through its subsidiaries in Angola, UAE and Qatar provide, catering and allied services in the respective countries. RCSI subsidiaries in Iraq, Dubai and Abu Dhabi, UAE are dormant as at 31 December 2010. Subsidiary Companies of UMS Ownership interest (%) 2010
2009
United Press and Publishing Company LLC (“UPP”) Oryx Advertising Company WLL (incorporated in Qatar)
100 49
100 49
Subsidiary Company of NHI Nakshatra Hospitality India Private Limited (incorporated in India)
100
100
Subsidiary Company of NTI National Training Institute Qatar WLL (incorporated in Qatar)
100
100
2010 RO’000
2009 RO’000
1,343 391
975 391
1,734
1,366
Except as otherwise stated, the companies are incorporated in Oman. 7
INVESTMENTS
Non-current investments Investment in associates companies Available for sale investments
Investment in associates As at 31 December 2010, the Group has an associate Dubai Wire FZE. The increase in carrying amount relates to the Group’s share in DW’s profits. Available for sale investments Available for sale investments represents investments in Global Fasteners Limited (incorporated in the Isle of Man), Fund for Development of Youth Projects SAOC and Industrial Management Technology and Contracting LLC.
Renaissance Services SAOG
& its Subsidiary Companies
77 77
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
8
INVESTMENTS IN JOINTLY CONTROLLED ENTITIES The Group’s share of income, expenses, assets and liabilities in the jointly controlled entities at 31 December are set out below: 2010 RO’000
2009 RO’000
Current assets Current liabilities Non-current assets Non-current liabilities
9,293 (6,530) 8,167 (6,430)
6,282 (2,366) 4,193 (2,769)
Net assets
4,500
5,340
10,029 (8,858) (1,493) (373) 9 (39)
5,917 (3,828) (1,001) (166) 1 (15)
(725)
908
2010 %
2009 %
50 51 50 50
50 51 50 50
Revenue Cost of sales Administrative expenses Finance cost Finance income Other income Tax Net (loss) / profit for the year Investments in jointly controlled entities are in:
Nico Dososan Babcock (previously known as Nico Mitsui Babcock) DMS Jaya Marine WLL Jaya DMS Marine Pte Ltd. Mangistau Oblast Boat LLP (refer note 6)
The above entities are incorporated in the UAE, Qatar, Singapore and Kazakhstan, respectively. 9
INVENTORIES AND WORK IN PROGRESS
Stock and consumables – net Work in progress
78 78
Renaissance Services SAOG & its Subsidiary Companies
2010 RO’000
2009 RO’000
7,981 5,289
6,096 4,946
13,270
11,042
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
10 TRADE AND OTHER RECEIVABLES
Trade receivables - net Prepayments and other receivables Advances to suppliers and contractors Amounts due from related parties (note 23)
2010 RO’000
2009 RO’000
59,897 20,598 11,914 1,370
57,460 15,365 13,224 777
93,779
86,826
As at 31 December 2010, trade receivables of RO 3,725,000 (2009: RO 3,902,000) were impaired. Movements in the allowance for impairment of receivables were as follows: 2010 RO’000
2009 RO’000
At 1 January Charge for the year Amounts written off Unused amounts reversed
3,902 533 (263) (447)
2,587 1,450 (125) (10)
At 31 December
3,725
3,902
As at 31 December, the ageing of unimpaired trade receivables is as follows: Past due but not impaired Neither past due nor Total impaired RO’000 RO’000
< 30 days RO’000
30 – 60 days RO’000
60 – 90 days RO’000
90 – 120 days RO’000
>120 days RO’000
2010
59,897
43,261
6,500
2,858
2,393
1,576
3,309
2009
57,460
35,057
14,727
2,070
1,492
1,861
2,253
Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Group to obtain collateral over receivables and the vast majority are, therefore, unsecured.
Renaissance Services SAOG
& its Subsidiary Companies
79 79
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
11 CASH AND CASH EQUIVALENTS
Cash and bank balances Bank borrowings (note 13)
2010 RO’000
2009 RO’000
22,437 (3,485)
30,692 (3,520)
18,952
27,172
Included in cash and bank balances are fixed and call deposits of RO 5,217,000 (2009: RO 10,364,000) maintained with commercial banks. These are denominated mainly in Rial Omani, US Dollar, UAE Dirhams and Qatari Rial and are short term in nature. 12 TRADE AND OTHER PAYABLES
Trade payables Accrued expenses and other payables Income tax payable Amounts due to related parties (note 23)
2010 RO’000
2009 RO’000
22,792 33,507 5,050 1,073
20,167 38,703 5,529 361
62,422
64,760
13 BANK BORROWINGS Certain of the Group’s bank borrowings are secured by a registered first mortgage over Group’s certain assets, guarantees and assignment of receivables. Bank borrowings carries interest rates ranging from 3% to 9.5% per annum (2009: 6% to 9% per annum). 14 TERM LOANS AND LEASES Term loans 31 December 2010 Parent Company – term loans Parent Company - subordinated loan Subsidiary Companies
31 December 2009 Parent Company Subsidiary Companies
80 80
Renaissance Services SAOG & its Subsidiary Companies
Total RO’000
1 year or less RO’000
2-5 Years More than 5 years RO’000 RO’000
110,399 20,000 154,417
27,026 29,282
66,504 10,000 103,362
16,869 10,000 21,773
284,816
56,308
179,866
48,642
Total RO’000
1 year or less RO’000
2-5 Years RO’000
More than 5 years RO’000
60,375 126,986
15,790 22,494
34,460 95,051
10,125 9,441
187,361
38,284
129,511
19,566
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
14 TERM LOANS AND LEASES (continued) Included in term loans from bank are the following: Term loans in Parent Company Term loans in Parent Company amounting to RO 110,399,000 (2009: RO 60,375,000) are secured by charge over certain assets, investment rights on leasehold land, assignment of certain project receivables, assignment of insurance interests in certain contract assets and guarantees. Subordinated loan in Parent Company In 2010 the Parent Company has raised a subordinated loan of RO 40,000,000 through an issue of subordinated loan notes, which is secured by a second charge over the assets of the Parent Company and its subsidiaries. The loan has been raised by the Parent Company for funding its subsidiary company, TOPAZ for meeting the financing requirements of the expansion plans in Topaz’s marine and engineering businesses. The first drawdown of RO 20,000,000 of the loan was made on 6 December 2010. The second drawdown of RO 20,000,000 will be made by 28 February 2011. The tenure of the loan is 7 years with repayment of four annual installments of RO 10,000,000 with effect from November 2014. Pursuant to the subordinated loan agreement, the Parent Company is required to restrict dividends, raise additional capital and create a subordinated reserve by transferring an amount equal to 1/7th of the outstanding aggregate amount of loan notes out of annual profit after tax of the company from 31 December 2011. The subordinated loan carries a fixed interest rate of 8.5% per annum. Term loans in Subsidiaries Term loans relate only to Topaz. The term loans, amounting to RO 154,417,000 are secured by a first preferred mortgage over certain assets of the subsidiaries, the assignment of marine vessel insurance policies, the assignment of the marine vessel charter lease income. The equipment finance loan is secured against plant and machinery acquired with the proceeds of the loan. The property loan is secured by first preferred mortgage over the underlying property. The borrowing arrangements include undertakings to comply with various covenants like senior interest cover, current ratio, debt to EBITDA ratio, gearing ratio, total assets to net worth ratio and equity ratio including an undertaking to maintain a minimum net worth of TOPAZ which, at no time, shall be less than RO 86,500,000 (2009: RO 62,000,000). Term loans carry interest rates ranging from 4.5% to 9.5% per annum (2009: 4.5% to 7.5% per annum). Leases 2010 RO’000
2009 RO’000
Total lease payments outstanding as at 31 December Less: Due within a year (disclosed as current liability)
-
1,223 (210)
Long term lease obligations (note 24 c)
-
1,013
Renaissance Services SAOG
& its Subsidiary Companies
81 81
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
14 TERM LOANS AND LEASES (continued) Term loans and leases are disclosed in the statement of financial position as: 2010 RO’000
2009 RO’000
228,508 -
149,077 1,013
228,508
150,090
56,308 -
38,284 210
56,308
38,494
2010 RO’000
2009 RO’000
2,093 5,431 2,347
732 5,506 11,597
9,871
17,835
2010 RO’000
2009 RO’000
Movements in the liability recognized in the statement of financial position are as follows: 1 January Addition on acquisition of a subsidiary Accrued during the year Payments during the year
4,823 64 1,897 (1,117)
4,151 1,278 (606)
31 December
5,667
4,823
Non-current liabilities: Term loans Finance leases Current liabilities: Term loans Finance leases
15 NON-CURRENT PAYABLE AND ADVANCES
Deferred income Income tax payable Other payables and advances
16 STAFF TERMINAL BENEFITS
Significant amount of terminal benefits as at 31 December 2010 is comprised of end of service obligations of Topaz (2010: RO 3,520,000; 2009: RO 2,981,000). Principal actuarial assumptions for Topaz at the reporting date are:
• •
• •
82 82
Normal retirement age : 60-65 years Mortality, withdrawal and retirement: 5% turnover rate. Due to the nature of the benefit, which is a lump sum payable on exit due to any cause, a combined single decrement rate has been used for maturity, withdrawal and retirement. Discount rate: 5.25% per annum Salary increases: 3% - 5% per annum
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
16 STAFF TERMINAL BENEFITS (continued) The pension scheme of one of Group’s subsidiary covers a total of 543 employees (2009: 477 employees). The pension scheme gives the right to defined future benefits, which are mainly dependent on number of years worked, salary level at time of retirement and the amount of payment from the national insurance fund. The obligations are covered through an insurance company. The calculated pension obligations are based on actuarial valuation. The actuarial valuations are based on assumptions of demographical factors normally used within the insurance industry. 17 CAPITAL AND RESERVES Share capital The authorised share capital of the Parent Company comprises 400,000,000 ordinary shares of RO 0.100 each (2009: 400,000,000 of RO 0.100 each). At 31 December 2010, the issued and fully paid up share capital comprised 282,094,452 ordinary shares of RO 0.100 each (2009: 282,094,452 of RO 0.100 each). Details of shareholders, who own 10% or more of the Parent Company’s share capital, are as follows: 2010 Number of shares ‘000 Tawoos LLC
42,538
% 15.08
2009 Number of shares ‘000 42,538
% 15.08
Legal reserve The Omani Commercial Companies Law of 1974 requires that 10% of an entity’s net profit be transferred to a non-distributable legal reserve until the amount of legal reserve becomes equal to one-third of the entity’s issued share capital. The legal reserve is not available for distribution. Legal reserve also includes transfer relating to non Oman registered subsidiary companies as per the respective regulations in their country of incorporation. The Group utilises the share premium for transfers to legal reserve. Treasury shares These are shares held by certain subsidiaries in the Parent Company at the cost of RO 1,703,826 (2009: RO 1,703,826). Dividend received on these treasury shares have been directly transferred to retained earnings and shown as movement in the statement of changes in equity. At 31 December 2010, the subsidiaries held 14,554,586 shares (2009: 14,554,586) in the Parent Company. The market value of these shares at 31 December 2010 was approximately RO 16,130,000 (2009: RO 11,130,000). Treasury shares are pledged against a bank loan. Share premium The Group utilises the share premium for issuing bonus shares and transfers to legal reserve. No such transfers took place during 2010.
Renaissance Services SAOG
& its Subsidiary Companies
83 83
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
17 CAPITAL AND RESERVES (continued) Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. Exchange reserve The exchange reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. 18 NET ASSETS PER SHARE Net assets per share is calculated by dividing the net assets at the year end attributable to the shareholders of the Parent Company by the number of shares outstanding as follows: Net assets Net assets (RO ‘000) Minority interest (RO ‘000)
2010
2009
195,832 (23,514)
168,417 (20,401)
Net assets attributable to the Shareholders of the Parent Company (RO ‘000) Number of shares Number of shares at 1 January (‘000) Bonus shares issued (‘000)
172,318
148,016
282,094 -
245,299 36,795
Treasury shares (refer note 17) (‘000)
282,094 (14,555)
282,094 (14,555)
Number of shares at 31 December (‘000)
267,539
267,539
0.644
0.553
Net assets per share (RO) 19 INCOME TAX
The expense relates to tax payable on the profits earned by the Group, as adjusted in accordance with the taxation laws and regulations of various countries in which the Group operates. 2010 RO’000
2009 RO’000
Charge for the year
6,501
4,181
Current liability Non-current liability
5,050 5,431
5,529 5,506
10,481
11,035
1,229 (781)
1,239 (10)
448
1,229
Deferred tax asset At 1 January Debited to income statement At 31 December
84 84
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
19 INCOME TAX (continued) The deferred tax balance at 31 December 2010 comprises capital allowances in excess of depreciation charge of RO 322,000 (2009: RO 1,115,000) and short term timing differences of RO 125,000 (2009: RO 88,000). The Parent Company and its Oman incorporated subsidiaries are subject to income tax at the rate of 12% of taxable income in excess of RO 30,000 in accordance with the income tax law of the Sultanate of Oman. The Parent Company’s assessments for the tax years 2005 to 2009 have not been finalised with the Secretariat General for Taxation at the Ministry of Finance (the ‘Department’). The Parent Company has filed appeals to the Tax Committee and the Courts against certain decisions of the Department on disallowances made by the Department in the assessments. The main issues under the appeals are taxation of overseas income, taxation of overseas dividend, double taxation of management fees paid by the subsidiaries to the parent company and disallowances relating to interest and some specific expenses. The Parent Company has established provisions at 31 December 2010 against the potential tax liabilities which might arise in this regard. As required under the tax laws, the Parent Company has paid the tax dues and are continuing to appeal to the higher authorities on some of the disallowances made by the Department in assessments. 20 NET PROFIT FOR THE YEAR Net profit for the year is stated after charging:
2010 RO’000
2009 RO’000
Staff costs
82,896
78,408
Net finance costs Net interest expense Reversal for derivative used for hedging (refer note 25)
10,522 (184)
8,247 (402)
10,338
7,845
21 BASIC AND DILUTED EARNINGS PER SHARE Basic and diluted earnings per share is calculated by dividing the net profits for the year attributable to the shareholders of the Parent Company by the weighted average number of shares as follows: 2010
2009
27,648
25,085
Number of shares at 1 January (‘000) Less: weighted average number of treasury shares (‘000)
282,094 (14,555)
282,094 (14,555)
Weighted average number of shares (‘000)
267,539
267,539
Basic and diluted earnings per share (RO)
0.103
0.094
Net profit for the year attributable to the Shareholders of the Parent Company (RO‘000) Weighted average number of shares
Renaissance Services SAOG
& its Subsidiary Companies
85 85
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
22 DIVIDEND PER SHARE 2010
2009
3,385
3,385
282,094
282,094
Distribution per share (RO)
0.012
0.012
Cash dividend (RO ‘000)
3,385
3,385
-
-
3,385
3,385
Total distribution for the Shareholders (RO ‘000) Number of shares outstanding at 31 December (‘000)
Bonus shares, at par (RO ‘000)
The dividend proposed by the Board of Directors is subject to the approval of shareholders at the Annual General Meeting (AGM) of the Company on 28 March 2011. Dividend for the year 2009 was approved by the Shareholders at the AGM held on 28 March 2010. As required by CMA regulation, unclaimed dividends of previous years have been deposited with the CMA Investors’ Trust Fund. There were no unclaimed dividends for 2010. 23 RELATED PARTY TRANSACTIONS The Group has entered into transactions with entities over which certain Directors are able to exercise significant influence. In the ordinary course of business, such related parties provide goods, services and funding to the Group. The Group also provides goods, services and funding to the related parties. The Board of Directors believes that the terms of purchases, sales, provision of services and funding arrangements are comparable with those that could be obtained from unrelated third parties. The value of significant related party transactions during the year was as follows: 2010 RO’000
2009 RO’000
408
941
14
328
Expenses Services received and purchases
285
1,071
Directors’ remuneration and sitting fees Remuneration Sitting fees
176 24
174 26
Income Service rendered and sales Advances due from related parties Net advances
Remuneration and sitting fees above relate only to the Parent Company.
86 86
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
23 RELATED PARTY TRANSACTIONS (continued) Out of above related party transactions, the following are the details of transactions entered into with the related parties holding 10% or more interest in the Parent Company:
Service rendered and sales
2010 RO’000
2009 RO’000
20
20
2010 RO’000
2009 RO’000
1,737 263
1,631 26
2,000
1,657
Compensation of key management personnel The remuneration of key management personnel during the year are as follows:
Short-term benefits Employees’ end of service benefits
Topaz Energy and Marine Limited has paid RO 270,900 as remuneration to its Executive Chairman who is also the Chairman of the Parent Company. Amounts due from and due to related parties have been disclosed in notes 10 and 12 respectively. Outstanding balances at the year-end arise in the normal course of business. For the year ended 31 December 2010, the Group has not recorded any impairment of amounts owed by related parties (2009: Nil). 24 COMMITMENTS AND CONTINGENT LIABILITIES 2010 RO’000
2009 RO’000
Commitments Letters of credit Capital expenditure commitments
4,737 39,297
893 67,223
Contingent liabilities Letters of guarantee
46,595
28,627
1,987
-
Bills discounted – receivables Litigation
In the previous year, one of the Group’s customers cancelled contracts for building two marine vessels. The Group is of the view that the cancellation is a breach of contract and a case has been filed in the UK courts, challenging the cancellation. The matter is presently subject to litigation in the High Court in London, and likely to be heard during the first quarter of 2011. The Management believes that, it is unlikely that the Group will incur losses as a consequence of this breach of contract.
Renaissance Services SAOG
& its Subsidiary Companies
87 87
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
24 COMMITMENTS AND CONTINGENT LIABILITIES (continued) After the balance sheet date TOPAZ has received three monetary claims from a customer in its marine business amounting approximately RO 3,239,000 (US$ 8,400,000) for reimbursement of withholding taxes, alleged tax savings, and off hire claims that the customer believes it is entitled to receive from TOPAZ. TOPAZ has also received four procedural claims relating to contract compliance from the same customer. These claims pertain to the financial years 2008 and 2009; TOPAZ management believes that the claims have arisen due to an incorrect interpretation of the relevant contract terms by the customer, and is in the process of seeking legal advice on the matter. 25 LEASES a)
Operating leases - receivable
The Group leases its marine vessels under operating leases. The leases typically run for a period between 3 months to 10 years and are renewable for similar periods after the expiry date. The lease rental is usually renewed to reflect market rentals. Future minimum lease rentals receivable under non-cancellable operating leases are as follows as of 31 December: 2010 2009 RO’000 RO’000 Within one year Between one and five years More than five years
b)
64,507 126,070 52,044
58,898 132,415 54,430
242,621
245,743
Operating leases - payable
The Group has future minimum lease payments under operating leases for marine vessels with payments as follows:
Within one year Between one and five years More than five years
c)
2010 RO’000
2009 RO’000
8,493 23,855 14,468
6,946 6,537 4,530
46,816
18,013
Finance lease commitments
The Group has entered into finance lease commitments with rentals payable as follows: Present value of minimum lease payments 2010 2009 RO’000 RO’000
88 88
Within one year After one year but not more than five years More than five years
-
210 362 651
Total minimum lease payments
-
1,223
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
26 DERIVATIVE FINANCIAL INSTRUMENTS The table below shows the positive and negative fair values of derivative financial instruments, which are equivalent to the market values, together with the notional amounts analysed by the term to maturity. The notional amount is the amount of a derivative’s underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at year end and are neither indicative of the market risk nor credit risk. 31 December 2010: Notional amounts by term to maturity Positive Negative Notional fair fair amount value value Total RO’000 RO’000 RO’000 Interest rate swaps
Within 1 year RO’000
Over 1 year to 5 years RO’000
Over 5 years RO’000
-
2,903
70,562
5,726
57,394
7,442
-
2,903
70,562
5,726
57,394
7,442
Within 1 year RO’000
Over 1 year to 5 years RO’000
Over 5 years RO’000
31 December 2009: Notional amounts by term to maturity Positive Negative Notional fair fair amount value value Total RO’000 RO’000 RO’000 Interest rate swaps Forward foreign exchange contracts
-
2,870
45,335
1,093
44,242
-
-
74
17,346
17,346
-
-
-
2,944
62,681
18,439
44,242
-
The term loan facilities of the Group bear interest at US LIBOR plus applicable margins. In accordance with the financing documents, the Group has fixed the rate of interest through Interest Rate Swap Agreements (“IRS”) amounting to approximately RO 21,150,000 (2009: RO 21,150,000) at a fixed interest rate of 3.95% (2009: 3.95%) per annum excluding margin, RO 4,120,000 (2009: RO 5,760,000) at a fixed margin of 4.89% (2009: 4.89%) per annum excluding margin, RO 19,230,000 (2009: RO 19,230,000) at the rate of 2% (2009: 2%) per annum excluding margin, and an amount of RO 3,230,000 (2009: RO 3,850,000) at the rate of 3.25% (2009: 3.25%) per annum excluding margin and an amount of RO 22,810,000 (2009: nil) at the rate of 1.97% (2009: nil) per annum excluding margin. At 31 December 2010, the US LIBOR was approximately 0.46% (31 December 2009: 0.43%) per annum, whereas the Group has fixed interest at 3.95%, 4.89%, 2%, 3.25% and 1.97% per annum (2009: 3.95%, 4.89%, 2% and 3.25% per annum). Accordingly, the gaps between US LIBOR and fixed rate under IRS was approximately 3.49%, 4.43%, 1.54%, 2.79% and 1.51% (2009: 3.52%, 4.46%, 1.57% and 2.82%) per annum.
Renaissance Services SAOG
& its Subsidiary Companies
89 89
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
26 DERIVATIVE FINANCIAL INSTRUMENTS (continued) Based on the interest rates gaps, over the life of the IRS, the indicative losses were assessed at approximately RO 2,900,000 (2009: RO 2,900,000) by the counter parties to IRS. In case the Group terminates the IRS at 31 December 2010, it may incur losses to the extent of approximately RO 2,900,000 (2009: RO 2,860,000). Consequently, in order to comply with International Accounting Standard 39 “Financial Instruments: Recognition and Measurement” fair value of the hedge instruments’ indicative losses in the amount of approximately RO 2,900,000 (2009: RO 2,860,000) has been recorded under accounts payables and accruals and the impact for the year amounting to RO 180,000 (2009: RO 510,000) has been recorded under finance costs and RO 140,000 (2009: RO 90,000) has been recognized in the hedging reserve. Similarly, an amount of RO nil (2009: RO 70,000) has been recorded under accounts payable and accruals in respect of forward foreign exchange contracts and the net impact for the year amounting to RO nil (2009: RO 100,000) has been recorded under finance costs (refer note 19). The Parent Company has entered into USD LIBOR callable accruals swaps as an interest cost reduction strategy. The accruals range is between 0% to 7% (2009: 0% to 7%) per annum. Any gains or loss related to these swaps are recognised as finance cost.
27 OPERATING SEGMENTS The Group has three reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s CEO reviews internal management reports on a regular basis. The following summary describes the operations in each of the Group’s reportable segments: Engineering services: includes ship repair, ship building and fabrication and maintenance services for the oil and gas industry. Marine services: includes vessel chartering to oil and gas off shore companies. Contract services: includes facilities management, facilities establishment, contract catering and operations and maintenance services. Other operations include the provision of training services, media publishing, advertising and distribution, manufacturing, general trading, investments and related activities. Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Group’s CEO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm’s length basis.
90 90
Renaissance Services SAOG & its Subsidiary Companies
Renaissance Services SAOG
& its Subsidiary Companies
91 91
77,591 (463)
65,554 (353)
External revenue
56,735
Reportable segment assets
Reportable segment liabilities
33,800
2,819
2,732
Reportable segment profit after income tax
Capital expenditure
(3,143)
Depreciation and amortisation
(9,005)
93,226
(1,705)
94,931
(7,000)
95,500
-
95,500
22,331 22,639
9,540
(4,412)
(1,473)
84,213
(174)
84,387
45,064
39,521 220,849 150,352
9,762 119,566
71,500
12,741
58,288 373,054 277,366 117,576
3,625
(2,452) (13,558) (13,427)
(313)
(11,822)
Less: Inter-segment revenue
Net finance (cost)/income
77,904
77,376
Total revenues
45,875
30,955
91,881
7,017
(4,536)
(574)
64,909
(126)
65,035
Engineering services Marine services Contract services 2010 2010 2010 2009 2009 2009 RO’000 RO’000 RO’000 RO’000 RO’000 RO’000
Information about reportable segments:
27 OPERATING SEGMENTS (continued)
for the year ended 31 December 2010
Notes to the Consolidated Financial Statement
66,251
2,146
50,017
1,341
(858)
493
13,987
(95)
14,083
58,880
412
39,091
(3,992)
(551)
(210)
10,093
(211)
10,304
Others 2010 2009 RO’000 RO’000
(13,796)
(650)
(10,338)
(7,845)
(779) 32,283
28,510
(255) (21,971) (21,221)
402
(503) 253,429 247,590
-
(503) 267,225 248,240
Total 2010 2009 RO’000 RO’000
- 136,797
86,193 (26,140) (15,106) 366,260 279,522
(475)
(35,290) (18,687) 562,092 447,939
(3,661)
-
-
(3,552)
-
(3,552)
Adjustments 2010 2009 RO’000 RO’000
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
27 OPERATING SEGMENTS (continued) Geographical segments: Revenue as based on the geographical location of the business activities is as follows:
Oman Middle East and North Africa (excluding Oman) Caspian Others
2010 RO’000
2009 RO’000
56,075 85,201 70,174 41,979
42,943 135,665 51,553 17,429
253,429
247,590
28 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT Financial instruments carried on the statement of financial position comprise investments, trade receivables, amount due from related parties, cash in hand and at bank, term loans, bank borrowings, trade and other payables and amount due to related parties. The Group has exposure to the following risks from its use of financial instruments: (i) Credit risk (ii) Liquidity risk (iii) Market risk This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the receivables from customers and investments.
92 92
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
28 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the statement of financial position date was:
Investments Trade receivables Amount due from related parties Cash and bank balances
2010 RO’000
2009 RO’000
1,749 59,897 1,370 22,437
1,378 57,460 777 30,692
85,453
90,307
The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are generally performed on all customers requiring credit over specified amounts. The Group does not require collateral in respect of financial assets. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. With respect to credit risk arising from the other financial assets of the Group, including cash and cash equivalents, and derivative instruments with positive values, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group limits its liquidity risk by ensuring that bank facilities are available. Short term loans and overdraft are, on average, utilized for period of 90 days to bridge the gap between collections of receivables and settlement of payables during the month. The contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements at statement of financial position date is as below: 31 December 2010
Carrying Contractual amount cash flows RO’000 RO’000
Upto 1 year RO’000
1 year to 5 years RO’000
More than 5 years RO’000
Term loans and leases Bank borrowings Trade and other payables
284,816 3,485 57,372
333,262 3,485 57,372
68,866 3,485 57,372
210,515 -
53,881 -
345,673
394,119
129,723
210,515
53,881
Renaissance Services SAOG
& its Subsidiary Companies
93 93
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
28 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) Liquidity risk (continued) 31 December 2009
Carrying amount RO’000
Contractual cash flows RO’000
Upto 1 year RO’000
1 year to 5 years RO’000
More than 5 years RO’000
Term loans and leases Bank borrowings Trade and other payables
188,584 3,520 87,418
213,477 3,520 87,418
41,952 3,520 64,760
144,218 22,658
27,307 -
279,522
304,415
110,232
166,876
27,307
Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. The Group also enters into derivative transactions, primarily interest rate swaps and forward currency contracts. The purpose is to manage the interest rate and currency risks arising from the Group’s operations and its sources of finance. Currency risk Trade accounts payable include amount due in foreign currencies, mainly US Dollars, Euros, Pounds Sterling, UAE Dirham and Norwegian Krone. The table below indicates the Group’s foreign currency exposure at 31 December, as a result of its monetary assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the RO currency rate against the foreign currencies, with all other variables held constant, on the profit or loss (due to the fair value of currency sensitive monetary assets and liabilities). Effect on profit before tax Increase/decrease in respective Currency rate to the RO‘000 2010 Euro (EUR) Azerbaijan Manat (MNT) Kazakhstan Tenge (KZT) UK Pound (GBP) Norwegian Krone (NOK) Japanese Yen (JPY) Singapore Dollars (SGD)
94 94
Renaissance Services SAOG & its Subsidiary Companies
+5%
-5%
23 18 12 6 38 3 16
(23) (18) (12) (6) (38) (3) (16)
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
28 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) Currency risk (continued) Effect on profit before tax Increase/decrease in respective Currency rate to the RO‘000 2009
+5%
-5%
Euro (EUR) Azerbaijan Manat (MNT) Kazakhstan Tenge (KZT) UK Pound (GBP) Norwegian Krone (NOK)
(39) (15) (30) (14) (32)
39 15 30 14 32
The Group is also exposed to foreign exchange risk on sales, purchases, receivables and payables arising primarily from GCC currencies and US Dollar exposures which are pegged to the Omani Rial. Interest rate risk The Group’s borrowings are on fixed as well as floating interest rate basis. The Group is exposed to interest rate risk due to fluctuation in the market interest rate of floating interest rate borrowings. The following table demonstrates the sensitivity of the statement of comprehensive income to reasonably possible changes in interest rates, with all other variables held constant. The sensitivity of the profit or loss is the effect of the assumed changes in interest rates on the Group’s profit for the year, based on the floating rate financial assets and financial liabilities held at 31 December 2010. Increase/decrease in basis points
Effect on profit for the year RO’000
2010 Borrowings converted to Rial Omani Borrowings converted to Rial Omani
+15 -10
(234) 156
2009 Borrowings converted to Rial Omani Borrowings converted to Rial Omani
+15 -10
(216) 144
Other market price risk Equity price risk arises from available-for-sale equity securities. Management of the Group monitors the mix of debt and equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the Board of Directors. Capital management The Group’s policy is to maintain an optimum capital base to maintain investor, creditor and market confidence to sustain future growth of business as well as return on capital.
Renaissance Services SAOG
& its Subsidiary Companies
95 95
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
29 FAIR VALUE OF FINANCIAL INSTRUMENTS Certain of the Group’s accounting policies and disclosures require the determination of fair value, for nonfinancial assets. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset. Derivatives The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and counterparty when appropriate. Financial instruments comprise financial assets and financial liabilities. The fair value of derivatives is set out in note 26. The fair values of other financial instruments are not materially different from their carrying values. Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 1 RO’000
Level 2 RO’000
Level 3 RO’000
Total RO’000
31 December 2010 Investments Derivative financial instruments
15 -
(2,903)
391 -
406 (2,903)
31 December 2009 Investments Derivative financial instruments
12 -
(2,944)
391 -
403 (2,944)
30 KEY SOURCES OF ESTIMATION UNCERTAINTY Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The net carrying amount of goodwill at 31 December 2010 was RO 38,688,000 (2009: RO 33,992,000). Impairment of vessels The Group determines whether its vessels are impaired when there are indicators of impairment as defined in IAS 36. This requires an estimation of the value in use of the cash-generating unit which is the vessel owning and chartering segment. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from this cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying value of the vessels as at 31 December 2010 was RO 292,000,000 (2009: RO 196,000,000).
96 96
Renaissance Services SAOG & its Subsidiary Companies
Notes to the Consolidated Financial Statements for the year ended 31 December 2010
30 KEY SOURCES OF ESTIMATION UNCERTAINTY (continued) Impairment of accounts receivable An estimate of the collectible amount of trade accounts receivable is made when collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates. At the statement of financial position date, gross trade accounts receivable were RO 63,622,000 (2009: RO 61,362,000) and the provision for doubtful debts was RO 3,725,000 (2009: RO 3,902,000). Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the income statement. Impairment of inventories Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree of ageing or obsolescence, based on historical selling prices. At the statement of financial position date, gross inventories were RO 8,596,000 (2009: RO 6,675,000) with provisions for old and obsolete inventories of RO 615,000 (2009: RO 579,000). Any difference between the amounts actually realised in future periods and the amounts expected will be recognised in the income statement. Useful lives of property, plant and equipment The useful lives, residual values and methods of depreciation of property, plant and equipment is reviewed, and adjusted if appropriate, at each financial year end. In the review process, the Group takes guidance from recent acquisitions, as well as market and industry trends. Provision for tax The Group reviews the provision for tax on a regular basis. In determining the provision for tax, laws of particular jurisdictions (where applicable entity is registered) are taken into account. The management considers the provision for tax to be a reasonable estimate of potential tax liability after considering the applicable laws and past experience. Effectiveness of hedge relationship At the inception of the hedge, the management documents the hedging strategy and performs hedge effectiveness testing to assess whether the hedge is effective. This exercise is performed at each reporting date to assess whether the hedge will remain effective throughout the term of the hedging instrument. As at the reporting date the cumulative fair value of the interest rate swap was RO 2,903,000 (2009: RO 2,944,000). Accounting for investments The Group reviews its investment in entities to assess whether the Group has control, joint control or significant influence over the investee. This includes consideration of the level of shareholding held by the Group in the investee as well as other factors such as representation on the Board of Directors of the investee, terms of any agreement with the other shareholders etc. Based on the above assessment the Group decides whether the investee needs to be consolidated, proportionately consolidated or equity accounted in accordance with the accounting policy of the Group (also refer note 2). 31 SUBSEQUENT EVENTS Subsequent to the reporting date, Topaz has established a new wholly owned subsidiary Topaz Energy and Marine plc, UK, with the objective of listing Topaz in the London Stock Market and raising equity capital from the public markets. Topaz is in the process of seeking approvals from the various stake holders and the UK Listing Authority. The proceeds from the capital raised will be used to finance the future growth plans of Topaz. Renaissance may also divest some of its current holdings in Topaz, which will be determined by Renaissance Board at the IPO date and is intended to provide adequate free float of new publicly listed company in UK. 32 COMPARATIVE FIGURES Certain comparative figures for the previous year have been reclassified, where necessary, in order to conform to the current yearâ&#x20AC;&#x2122;s presentation. Renaissance Services SAOG
& its Subsidiary Companies
97 97
Statement of Comprehensive Income (Parent Company) for the year ended 31 December 2010
2010 ROâ&#x20AC;&#x2122;000
2009 ROâ&#x20AC;&#x2122;000
Revenue
29,969
24,449
Operating expenses
(22,698)
(18,048)
Gross profit
7,271
6,401
Other income
6,772
2,615
Administrative expenses
(3,347)
(2,588)
Net finance costs
(3,796)
(2,122)
Profit before income tax
6,900
4,306
Income tax expense
(1,450)
(1,406)
Net profit for the year
5,450
2,900
Total comprehensive income for the year
5,450
2,900
Basic and diluted earnings per share (RO)
0.019
0.010
0.012
0.012
Dividend per share: Cash dividend (RO)
98 98
Renaissance Services SAOG & its Subsidiary Companies
Statement of Financial Position (Parent Company) as at 31 December 2010
Non-current assets Property, plant and equipment Investments Sub-ordinated loan to a subsidiary
2010 ROâ&#x20AC;&#x2122;000
2009 ROâ&#x20AC;&#x2122;000
59,681 140,238 20,000
51,926 101,734 -
Total non-current assets
219,919
153,660
Current assets Inventories Trade and other receivables Cash and bank balances
831 35,812 5,563
890 24,458 8,853
Total current assets
42,206
34,201
Current liabilities Trade and other payables Bank borrowings Term loans
9,842 2,796 27,026
10,094 482 15,790
Total current liabilities
39,664
26,366
2,542
7,835
83,373 20,000 6,220 7,214 572
44,585 13,228 665
Total non-current liabilities
117,379
58,478
Net assets
105,082
103,017
28,209 19,496 9,404 3,385 44,588
28,209 19,496 9,404 3,385 42,523
105,082
103,017
0.373
0.365
Net current assets Non-current liabilities Term loans Sub-ordinated loan Non-current payables and advances Amount due to a subsidiary Staff terminal benefits
Equity Share capital Share premium Legal reserve Proposed distribution Retained earnings Total equity Net assets per share (RO)
Renaissance Services SAOG
& its Subsidiary Companies
99 99
Statement of Cash Flows (Parent Company) for the year ended 31 December 2010
OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees
2010 ROâ&#x20AC;&#x2122;000
2009 ROâ&#x20AC;&#x2122;000
32,014 (20,856)
22,650 (16,006)
Cash generated from operations Net finance costs Income tax paid
11,158 (3,796) (2,341)
6,644 (2,122) (431)
5,021
4,091
INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Investments Dividend received
(19,181) 44 (38,504) 6,399
(19,771) (5,775) 2,477
Cash used in investing activities
(51,242)
(23,069)
FINANCING ACTIVITIES Net receipts of term loans Net movement in related parties Dividend paid
70,024 (26,022) (3,385)
24,654 2,347 (2,453)
Cash flows from financing activities
40,617
24,548
Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year
(5,604) 8,371
5,570 2,801
Cash and cash equivalents at the end of the year
2,767
8,371
5,563 (2,796)
8,853 (482)
2,767
8,371
Cash flows from operating activities
Cash and cash equivalents comprise the following: Cash and bank balances Bank borrowings
100 100 Renaissance Services SAOG & its Subsidiary Companies
Statement of Changes in Equity (Parent Company) for the year ended 31 December 2010
Share capital RO’000
Share premium RO’000
Legal reserve RO’000
Proposed distribution
RO’000
Retained earnings RO’000
Total RO’000
24,530
20,723
8,177
6,132
43,008
102,570
Total comprehensive income for the year: Net profit for the year
-
-
-
-
2,900
2,900
Total comprehensive income for the year
-
-
-
-
2,900
2,900
1 January 2009
Transactions with owners, directly recorded in equity: Dividend paid and bonus shares issued Proposed dividend Transfer to legal reserve
3,679 -
(1,227)
1,227
(6,132) 3,385 -
(3,385) -
(2,453) -
3,679
(1,227)
1,227
(2,747)
(3,385)
(2,453)
28,209
19,496
9,404
3,385
42,523
103,017
Share capital RO’000
Share premium RO’000
Legal reserve RO’000
Proposed distribution RO’000
Retained earnings RO’000
Total RO’000
28,209
19,496
9,404
3,385
42,523
103,017
Total comprehensive income for the year: Net profit for the year
-
-
-
-
5,450
5,450
Total comprehensive income for the year
-
-
-
-
5,450
5,450
Transactions with owners, directly recorded in equity: Dividend paid Proposed dividend Transfer to legal reserve
-
-
-
(3,385) -
(3,385) -
-
-
-
(3,385)
(3,385)
28,209
19,496
44,588
105,082
Transactions with owners, directly recorded in equity 31 December 2009
1 January 2010
Transactions with owners, directly recorded in equity 31 December 2010
9,404
(3,385) 3,385 3,385
Renaissance Services SAOG
& its Subsidiary Companies
101 101
Management Team Corporate Office
Stephen R. Thomas Chief Executive Officer
Vishal Goenka
Chief Financial Officer
Hilal Al Esry
General Manager GLD
Parul Burman
Group Chief Internal Auditor
Saad Abdullah Ali Company Secretary
Contract Services Group
Ananda Fernando
Adil Bahwan
Chief Executive Officer CSG
Chief Development Officer
Joaquim Dâ&#x20AC;&#x2122;Costa
Peter James
Chief Operating Officer
QA/HSE Advisor
Dean Chapman
Ingvar Varhaug
Ayman al Humoud
Baqar Haider
Operations Manager RSOD Iraq
GM NOC Norway
Business Development Manager, RS CSG Facilities Development Manager
Viveg Sellathuraie Finance Manager
Prakash Bhat
Procurement & Logistics Manager
Karim Sheikh
Saalim Gaima
Chief Financial Officer
Chief Support Services Officer
Raed T.C. Yaghnam
Basel T.C. Yaghnam
Al Wasita Emirates & Services LLC
Al Wasita Emirates & Services LLC
Chief Executive Officer
Joseph Ghanoun
Chief Operating Officer
Chris Marjoribanks
GM RCS Angola
Country Manager RSOD Afghanistan
Kamran Raza
Ahmed Shirhan
Construction Manager
Costing Manager
IQGOE’G ≥`` ` ` ` ` ` ` jô`` ` ` ` ` ` ` a Marine & Engineering Group
Fazel A. Fazelbhoy
Richard Howes
Chief Executive Officer Topaz MEG
Chief Financial Officer
Bill Bayliss
Arindam Ray
Chief Operating Officer Topaz Engineering GM Mergers & Acquisitions
Richard Ayling
GM Topaz Marine Kazakhstan
Tom Bower
GM Topaz Ship Building
Jay Daga
GM Finance Topaz Engineering
Paul Bundy
GM Topaz Marine Azerbaijan
Tony McKay
GM Topaz Fabrication & Construction
Pramod Balakrishnan Finance Director
Leon Mendonsa
GM Human Resources
Tomasz Maszka
GM Topaz Marine Turkmenistan
John McFadyen
GM Topaz Marine Repair
Roy Donaldson
Chief Operating Officer Topaz Marine
Ron Clark
GM Topaz Marine MENA
Jagdeep Makkar
GM Finance Topaz Marine
Bob Worton
GM Topaz Maintenance Services
Media Communication Group
Sandeep Sehgal
Chief Executive Officer MCG
Education & Training Group
Lawrence Alva
Chief Executive Officer, NTI
Robert Maclean Principal, NHI
Selected Corporate Adverts published in 2010
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