leading facilities management company in oman |...

Celebrating 40 Years of the Reign of His Majesty Sultan Qaboos bin Said

Aligned with the best inOil & Gas: Safe; Efficient; Green; Local

Renaissance Services

– Omani multinational, Oil & Gas service provider

* M a r i n e * E n g i n e e r i n g * C o n t r a c t S e r v i c e s

One of the best ways we can get the most from the energy we have is to

focus it. That is why our businesses are aligned with the very best in the oil

& gas industry, to provide the best performance possible for our customers

and drive our growth ambitions. Our Marine Support Vessel (OSV) fleet is

crossing 100 vessels this year. Our Engineering businesses are delivering

larger and more complex projects than ever before. Our Contract Services

life-support infrastructure facilities and services are expanding in local

and overseas markets. Driving efficiency, continuous HSE improvement,

commitment to the employment of local workforces and the development

of our assets are some of the responsibilities we take on as a leading

service provider to the energy industry.

4 ANNUALREPORT 2009

Renaissance Services SAOGP.O. Box 1676, P.C. 114, Muttrah,Sultanate of Oman.Tel:+968 24796636Fax: +968 24796639

www.renaissance-oman.com

ContentsBOARD OF DIRECTORS 6-7

FINANCIAL HIGHLIGHTS 8-9

2009 HIGHLIGHTS 10-11

CHAIRMAN’S REPORT 12-19

CEO’S REPORT 20-41

AUDITORS’ REPORT ON CORPORATE GOVERNANCE 42

REPORT ON CORPORATE GOVERNANCE 43-48

AUDITORS’ REPORT ON FINANCIAL STATEMENTS 49

FINANCIAL STATEMENTS 50-97

MANAGEMENT TEAM 98-99

5& ITS SUBSIDIARY COMPANIES

Colin RutherfordDirector

Rishi Ajit KhimjiDirector

Sunder GeorgeDirector

Board of Directors

Samir J. FancyChairman

HH Sayyid Tarik bin Shabibbin Taimur

Director

Yashwant C. DesaiDirector

Ali bin Hassan SulaimanDirector

100.0

200.0

300.0

400.0

500.0

600.0

800.0

700.0

20072008

2009 .0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

20072008

2009

Revenue Gross ProfitEarnings Before Tax, Interest,

Depreciation & Amortisation

Profit from

Operations

Profit

Before Tax

Profit After Tax

(Before Minority)

US

$ M

illio

n

US

$ M

illio

n

517.4

71.6

97.2

86.5

68.0

105.4

84.9

74.1

58.0

45.0

141.4

608.5

111.9

173.2 158.8

194.0 160.4

643.1

Financial Highlights

Summary Financial Information

2007 2008 2009 2007 2008 2009

Rial Million US$ Million

199.2 234.3 247.6 Revenue 517.4 608.5 643.1

54.4 66.7 74.7 Gross Profit 141.4 173.2 194.0

27.6 37.4 40.6 Profit From Operations 71.6 97.2 105.4

43.1 61.1 61.8 Earnings Before Tax, Interest, Depreciation and Amortisation 111.9 158.8 160.4

22.3 33.3 32.7 Profit Before Tax 58.0 86.5 84.9

17.3 26.2 28.5 Profit After Tax (Before Minority) 45.0 68.0 74.1

148.6 223.5 282.7 Net Fixed Assets 386.0 580.4 734.4

109.4 138.7 168.4 Total Equity 284.1 360.2 437.4

98.0 150.3 188.6 Term Loans 254.7 390.3 489.8

0.071 0.103 0.094 Basic Earnings Per Share (Rial) 0.184 0.267 0.244

0.025 0.025 0.012 Dividend Per Share (Rial) 0.065 0.065 0.031

Note:-

1. Basic earnings per share have been adjusted for changes made in share capital in subsequent years.

2. All figures converted @ 1US$ = 0.385 Rial

8 ANNUALREPORT 2009

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

20072008

2009

5%

10%

15%

20%

25%

20072008

2009

Gearing Total Liabilities/Net Worth Return on Capital Employed (%) Return on Average Equity (%)

Rat

io

Rat

io

1.52

1.68 1.66

0.90

17.24

10.94

21.12

10.08

18.57

12.44

1.10

1.14

Significant Ratios

2007 2008 2009

Current Ratio 1.10 1.09 1.20

Gearing 0.90 1.10 1.14

Total Liabilities/Net Worth 1.52 1.68 1.66

Interest Cover 5.10 4.30 5.17

Return On Capital Employed (%) 10.94 12.44 10.08

Return On Average Equity (%) 17.24 21.12 18.57


11 Jan Renaissance’s marine subsidiary secures US$ 42m contract with TOTAL E&P, Qatar

Topaz subsidiary DMS signs with TOTAL E&P for two vessels to support the drilling

programmes of TOTAL offshore Qatar.

07 Feb Renaissance’s engineering subsidiary delivers the 17.2 metre crew boat ‘DNV Express 18’

15 Feb Renaissance announces record preliminary results

Unaudited reports for the year ending 2008 are disclosed to the Central Market Authority of

Rial 234 million, US$ 0.6b in revenue.

03 Mar Renaissance subsidiary NTI announces BizPro Awards 2009

15 Mar Renaissance subsidiary deploys second Miclyn Express crew boat

24 Mar Renaissance Contract Services 20-year Service Awards

TISCO rewarded its longest serving employees for 20 years of dedicated service and

contribution to a growth that began with 80 employees and reaches 5,264 persons

presently.

29 Mar Renaissance’s Topaz raises US$ 23 million for vessel finance

Topaz Energy and Marine successfully raises US$ 23m to finance the acquisition of the

US$ 38m ‘Caspian Server’ Platform Supply Vessel. The loan is financed by DVB Bank of

Germany.

30 Mar Renaissance hosts Annual General Meeting of Shareholders

06 Apr Renaissance subsidiary completes US$ 17 million LNG Module

Topaz Engineering completes construction of an LNG Loading module in a US$ 17m

contract. Over 500,000 man-hours are completed with no LTI.

12 Apr Renaissance Services appoints Investec Trust to administer SMIP

Renaissance appoints an independent trust to administer its ongoing company Senior

Management Incentive Plan.

10 May Renaissance is named an Oman Sail sponsor of the Renaissance racing catamaran

12 May Renaissance Services reports strong growth in unaudited Q1 results

Renaissance reports Q1 investments of more than Rial 28m (US$ 73m) in the building

programmes for its OSV fleet and in the construction of PAC’s.

14 May Renaissance’s subsidiary CEO of Topaz wins Maritime Personality of the Year award

18 May Financial Times names Renaissance Services “an oil field services provider shielded from

the downturn”

25 May Renaissance backs Early Intervention teacher training programme in its second year CSR

commitment

28 May Renaissance subsidiaries TISCO and NTI awarded by the Ministry of Manpower among best

companies for Omanisation

Jan

- M

arch

Ap

ril -

Jun

e

Unaudited reports for the year ending 2008 are disclosed to the Central Market Authority of

TISCO rewarded its longest serving employees for 20 years of dedicated service and

contribution to a growth that began with 80 employees and reaches 5,264 persons

Topaz Energy and Marine successfully raises US$ 23m to finance the acquisition of the

US$ 38m ‘Caspian Server’ Platform Supply Vessel. The loan is financed by DVB Bank of

Topaz Engineering completes construction of an LNG Loading module in a US$ 17m

Renaissance appoints an independent trust to administer its ongoing company Senior

Renaissance reports Q1 investments of more than Rial 28m (US$ 73m) in the building

programmes for its OSV fleet and in the construction of PAC’s.

Management Incentive Plan.

contract. Over 500,000 man-hours are completed with no LTI.

presently.

Rial 234 million, US$ 0.6b in revenue.

programmes of TOTAL offs

10 ANNUALREPORT 2009

30 May Renaissance retains 6th position in Oman’s Top 20 largest corporations in Oman Economic

Review Top 20 list

31 May Renaissance subsidiary wins US$ 100m contract from Agip KCO

Topaz’s BUE Kazakhstan secures a US$ 100m, 10-year contract with Agip KCO to custom-

build, own and operate six specialised barges in the Kashagan oil field.

03 Jun Renaissance’s engineering subsidiary achieves milestone in project for Vopak Horizon

08 Jun Renaissance’s engineering subsidiary delivers 30 metre crew boat

10 Jun Renaissance’s COO of Topaz Marine is appointed Chairman for IMCA’s regional branch

14 Jun Renaissance’s Contract Services Group wins US$ 12m contract in Angola

28 Jul Renaissance Services sponsors graduating nurses from the Sultan Qaboos University on

work placement internships

02 Aug Renaissance subsidiary signs US$ 18.8m long-term facility with Noor Islamic Bank,

Bank of Baroda and Bank of India

10 Aug Renaissance Services announces H1 results; reports further growth

Year-on-year profit from operations increases by 10.1% to Rial 17.4m, US$ 45.2m.

01 Sep Renaissance’s engineering subsidiary awarded EPC Construction Contract by Port of Fujairah

Topaz Engineering wins million-dollar contract to construct topside facilities for the port’s Oil

Terminal 2 on a lump-sum turnkey, EPC basis.

06 Sep Renaissance PAC Nimr achieves safety milestone: 9 years LTI free

15 Sep Renaissance Services becomes first lead partner in Tahaddi-Outward Bound Oman

13 Oct Renaissance subsidiary Topaz takes double honors at regional Seatrade Awards

25 Oct Renaissance’s marine subsidiary wins strategic Turkmenistan contract

BUE Turkmenistan, a group company of Topaz Energy and Marine, wins a spot contract

valued at Rial 5.4m, US$ 14m, operating seven marine vessels in the Carigali field, offshore

Turkmenistan.

29 Oct Renaissance subsidiary makes contribution to Road Safety

16 Nov Renaissance Services announces Q3 results with positive growth in revenue and operating

profit

18 Nov Renaissance signs term loan facilities of Rial 9m, US$ 23.5m, with Bank Sohar and

BankMuscat

16 Dec Renaissance’s engineering subsidiary awarded nine-month EPC contract by Fujairah

Refinery Company

21 Dec Renaissance subsidiary Topaz secures long-term US$ 42m financing from Standard

Chartered Bank, Dubai

27 Dec Renaissance subsidiary signs MOA for US$ 29.5m vessel sale

Oct

- D

ecJu

l - S

ept

Topaz’s BUE Kazakhstan secures a US$ 100m, 10-year contract with Agip KCO to custom-

build, own and operate six specialised barges in the Kashagan oil field.

Year-on-year profit from operations increases by 10.1% to Rial 17.4m, US$ 45.2m.

Topaz Engineering wins million-dollar contract to construct topside facilities for the port’s Oil

BUE Turkmenistan, a group company of Topaz Energy and Marine, wins a spot contract

valued at Rial 5.4m, US$ 14m, operating seven marine vessels in the Carigali field, offshore

Turkmenistan.

Terminal 2 on a lump-sum turnkey, EPC basis.

11

Chairman’s Report

The Renaissance business model is straightforward and founded upon taking

a long-term perspective in a vital competitive global

services industry.

On behalf of the Board of Directors, it gives me great pleasure

to present to you the audited accounts for Renaissance

Services SAOG for the twelve-month period ending 31

December 2009.

In 2009, the strength, stability and resilience of the

Renaissance business model have been proven in the fire

of the worst global financial and economic crisis in living

memory. We achieved record results for the ninth consecutive


year, delivering Rial 247 million (US$ 643 million) revenue and

Rial 28.5 million (US$ 74 million) net profit. Renaissance has

not been built to alter its course in any given boom or bust

economic cycle. It has been built for long-term sustainable

growth year-on-year. An economic downturn may temper

the scale of results in any given year, just as an upturn may

enhance results; but neither cycle can negatively influence

the underlying strength and sustainability of our growth path.

2009 performance has proved this point once and for all. In

a year where many businesses have down-sized or corrected

course to counter the effects of recession, Renaissance has,

of course, applied prudent management of cash-flow and

counter-party risk; but at the same time, we have continued

our programme of disciplined investment in the business to

deliver long-term stability and sustainable growth. We have

built a platform of assets that continues to assure outstanding

shareholder value.

A business model for all seasonsThe Renaissance business model is straightforward and

founded upon taking a long-term perspective in a vital

competitive global services industry: We are focused

primarily on providing safe, quality services to the oil &

gas industry. These services are focused primarily on the

most stable development and operational phases of the oil

& gas industry cycle. The safety, quality and standards of

the oil & gas sector make our services relevant and flexible

for application in other sectors including government,

commerce, industry and defence. Our core businesses in

Marine, Engineering and Contract Services are all responsibly

independent enterprises holding market-leading positions in

their chosen markets; yet are effectively interdependent in

their primary oil & gas sector focus. The diversity of these

businesses provides complementary immunity from the full

impact of boom and bust cycles in their respective industries.

We operate in geographies and markets that harbour more

than 50% of the world’s known oil & gas reserves, where the

future for both hydrocarbon and alternative energy resources

is long-term. We have a careful balance between long-term

stable contracts with secure returns and more volatile short-

term higher-return contracts. We have a careful balance

between high-risk high-reward markets and lower-risk more-

competitive markets. We have a careful balance between

long-term stable asset-based businesses and pure services

businesses that generate significant cash flows to fuel and

accelerate the investment in long-term value assets. In this

recession, this business model was tested in fire and was

not found wanting. This may be seen in the 2009 financial

performance:

Another record financial performance 2009 2008

Rial Million US$ Million Rial Million US$ Million

Revenue 247.6 643.1 234.3 608.5

EBITDA 61.8 160.4 61.1* 158.8*

Operating Profit 40.6 105.4 37.4 97.2

Net Profit 28.5 74.1 26.2* 68.0*

*The 2008 Net Profit of Rial 26.2 million includes a net capital gain of

Rial 4.8 million (US$ 12.5 million) arising from the divestment of the

Group’s technology businesses in the first quarter of 2008 (Ex capital

gain Rial 21.4 million). 2008 EBITDA of Rial 61.1 million also includes

Rial 6 million capital gain from the divestment (Ex capital gain Rial 55.1

million).


The company sees scale of potential for further

disciplined investments of Rial 522 million

(US$ 1.36 billion) over the next three years.

In comparison with the same period last year, revenue has

increased by more than Rial 13 million (US$ 34.5 million);

profit from operations has increased by 8.4%; EBITDA

without capital gain has increased by 12.2%; and net profit

without capital gain has increased by 33.2%. The operating

margins have improved from 15.9% in the previous period to

16.4% in the current period.

The company’s aged assets are replaced as a matter of

ongoing operational routine, and this programme has also

contributed to the current year’s improved performance.

Against Rial 843 thousand (US$ 2.19 million) in 2008, the

current year results include net income of Rial 5.97 million

(US$ 15.5 million) from the disposal of aged operating

assets, primarily vessels. The current year results also

include absorption of the early year losses and development

costs of approximately Rial 4.9 million (US$ 12.7 million)

related to our nascent boat-building business, which is now

fully operational and entering 2010 with a healthy order book

position.

Embedded value in a strong balance sheetIn 2009, the company invested a total of Rial 86.2 million

(US$ 224 million) in new assets. In the Marine business,

the balance of acquisition of new vessels and disposal of

old tonnage increased the net size of the Offshore Support

Vessel (OSV) Fleet from 97 to 103 vessels, and reduced the

age profile of the fleet to 7 years, down from 10 years in the

preceding year. In the Engineering business new investment

included the opening of the Al Hayl Engineering yard in

Fujairah. In Contract Services, construction has continued

on two new Permanent Accommodation for Contractors

(PAC) facilities for Oman’s oilfields, which are due to open

in early 2010. The company now has over US$ 1 billion of


assets on the balance sheet (Rial 447.9 million; US$ 1.16

billion). The modernity of the new investments and the value

gains from the disposal of aging assets, demonstrate real

embedded value. The strong balance sheet also carries Rial

30.7 million (US$ 79.8 million) in cash. The company stands

on a solid platform of stability with the assets, the businesses

and the potential to deliver sustained and enduring economic

growth.

Continued investment for growthThe company sees scale of potential for further disciplined

investments of Rial 522 million (US$ 1.36 billion) over the

next three years; although precise capital expenditure will be

determined on the merit of each opportunity as it materialises.

The current programme, on this scale, can be managed with a

mix of existing cash-flows and required borrowings, meeting

all financial commitments and covenants with financial

institutions and maintaining prudent ratios on the balance

sheet. However, we shall need to raise additional Tier I or Tier

II capital to support any major acquisitions or advancement

of our planned investment to accelerate our ambitious global

growth agenda. In this regard, work is already underway with

international industry advisors and financial institutions to

consider the best possible options and solutions available to

us. The interest of global finance and investment institutions

bears testament to the faith placed in our progress and our

plans.

Dividend – 12 % Cash dividendOur dividend policy is 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 substantial higher value for

our shareholders. Even with our extensive investment plan,

I am pleased to advise that the Board is recommending a

cash dividend of 12% in comparison to 10% cash dividend

last year. The higher cash dividend means that we are

returning Rial 3.4 million (US$ 8.84 million) to shareholders,

up from Rial 2.5 million (US$ 6.5 million) last year. We are

not recommending stock dividend this year, in comparison

to 15% last year, as we feel the existing capital base is at

an optimal level to generate higher cash dividends going

forward. The capital base of the Group may be expanded

when raising new Tier I capital to support the investment

programme of the Group.

Streamlined organization structureOne of the major achievements of 2009 is the completion of

the organisation restructure and re-branding of the Marine &

Engineering Group subsidiary, Topaz into Topaz Marine and

Topaz Engineering. The new structure is focused on superior

customer service, greater operational efficiency and growth.

Our commitment to deploying the best team in the field

has seen a number of promotions and reassignments of

the outstanding leaders in all three core businesses, as

well as the attraction of excellent new leaders to match the

expansion in size and geographical spread of the group. We

have also commissioned an independent study of Executive

Remuneration by the Hay Group to ensure we have the

optimum remuneration structure to attract, maintain and

foster the best management team possible and encourage

its development. We want Renaissance to have competitive

fixed remuneration packages that benchmark well with

the industry, and flexible variable reward schemes that are

amongst the best-in-market to world-class standard. These

rewards include deferred share ownership to encourage

retention and commitment to long-term shareholder value.

Today, Renaissance has the scale and scalability to be a

multi-billion dollar enterprise; and each of the three core

businesses of Marine, Engineering and Contract Services has

the competence and potential to multiply in size exponentially

in their own right. While Renaissance continues to build scale,

the company benefits from the diversity of its three principal

businesses within a single primary oil & gas focus. Following


Every day, people throughout Renaissance are focused on delivering

safe, efficient services that strive to exceed customer

expectations profitably.

the restructure, we have three clearly defined enterprises in

Marine, Engineering and Contract Services that continue to

thrive together as a complementary collective; but where

each is prepared and independently structured to stand

alone, if and when, at an optimum time and opportunity, it

is in the best interest of Renaissance shareholders that they

should do so.

Strengthening competitive positionEvery day, people throughout Renaissance are focused

on delivering safe, efficient services that strive to exceed

customer expectations profitably. This approach to delivering

operational excellence combined with prudent best practice

finance and business controls, and a disciplined approach to

marketing, competitive tendering and investment decisions,

combine to strengthen the competitive position of all the

businesses year-on-year. 2009 is no exception.

Each of the businesses has market-leading positions in

established markets and growing marketshare > 10%

in new markets. In markets where the company is well

established, the Marine business dominates in Azerbaijan

with > 90% of the marketshare and in Kazakhstan with

> 55%, and has already built a share of > 10% in the

significant Qatar market, entered last year. The Marine

business made a strategic breakthrough into Turkmenistan

in 2009 and already has a > 20% market share. The

Engineering business has a significant presence in UAE, with

a dominant position in Fujairah in particular, but it measures

marketshare by its entire opportunity catchment area of

the Gulf and Caspian regions where it has an estimated

single-digit % share with excellent headroom for growth.

The Contract Services business has a dominant 65% market

share in its home market of Oman and a leading 45% market

share in the smaller offshore services market in Norway.

In terms of reliance on major clients or suppliers the Group’s

operations are spread across a broad range of blue chip

clients and geographies. However there is specific client

reliance in some individual markets: The Azerbaijan OSV

business is 95% reliant on BP contracts, which is the nature of

that single-producer market. In Kazakhstan, 66% of business

is with Agip KCO and 22% with Saipem. In Turkmenistan,

100% is with MMHE. The Engineering business is spread

widely between a full range of clients, with no major reliance

on a single client. For Contract Services, 75% of its Norway

business is with Maersk and in Iraq > 90% is with KBR. In

Oman, 26% of business is with PDO and its contractors and

some 24% with government-related contracts. These high-

reliance ratios in specific markets are directly linked to the oil

& gas domination of those clients in those particular markets

and in all cases our competitive position is strong.

Government mattersAs an international enterprise Renaissance’s businesses are

affected by decisions of governments and major international

institutions in the markets where we serve. In Turkmenistan,

the decision to allow foreign flag vessels to operate for a

transition period before converting to national flag vessels has

enabled our entry to that market. In Abu Dhabi, government

plans to dredge the Mussafah channel to 9 metres and

create a new deep draught access channel will significantly

enhance the competitive potential and capability of the

Engineering business waterfront fabrication yards at Adyard

and Liwa. In Iraq, the government award of concession areas

to international oil & gas producers opens up new competitive

opportunities, particularly for the Engineering and Contract

Services businesses.

In our home market of Oman the government has introduced

a new Tax Law, which clarifies that Oman is adopting the


Chairman’s Report

principle of global taxation effective 1 January 2010. This

means that the company is now taxed at 12% on all foreign

earnings and dividends. Renaissance is affected as an Omani

enterprise that is structured to accrue and consolidate the

benefits of all its international endeavours into the parent

listed company on the Muscat Securities Market, for the

benefit of all its shareholders.

Renaissance generates > 80% of its business activity from

operations abroad, but at almost 20% of our revenue today,

our home market of Oman remains a vital and growing part

of our opportunity platform. Renaissance is a willing taxpayer.

As a successful Omani enterprise we are pleased to pay our

meaningful contribution to the public exchequer to sustain

public expenditure that meets the needs of the country and

spurs growth. There are many other positive measures within

the new law that are beneficial for the Oman economy: The

reduction of taxes for foreign branches; the uniform tax rates

for all categories of taxpayers; tax credits to avoid double

taxation; and beneficial measures to control anti-avoidance.

The new Tax Law has brought clarity. There have been

varied interpretations of tax on overseas income in the past,

when the law was less clear. We shall therefore pursue

confirmation that income and dividends generated abroad

prior to 1 January 2010 will not be subject to tax, now that

the date of implementation is clear in the new law. We shall

also be working closely with the authorities to ensure the

legal structure of Renaissance’s businesses abroad are all

eligible for tax credits to avoid double taxation in markets

where corporate tax is > 12%. We shall be requesting

uncomplicated recognition of the line of ownership in the

best interests of Omani competitiveness abroad.

Corporate Social ResponsibilityRenaissance believes in reward and through its endeavours

seeks to improve the economic well-being and quality of

life of all its stakeholders: employees and their families;

customers; shareholders; suppliers and contractors; and the

communities in which the company serves.

The Renaissance Corporate Social Responsibility (CSR)

programme seeks to help people in physical or economic

difficulty to fulfill their potential. It seeks to help local

communities become economically viable and self-sufficient.

It seeks to promote local employment and showcase local

talent in the arts or sport. We also seek to minimise the

environmental impact of our business activity and a range of

new initiatives has been taken to promote the Group’s ‘Green

Agenda’. This outlook gives Renaissance people a clear

sense of purpose in running a successful business.

At the corporate level the company has invested 1% of

2008 earnings in CSR programmes with a total investment

of > Rial 260 thousand (US$ 676 thousand) in a range of


initiatives to support, amongst others, the Association of Early

Intervention for Children with Special Needs, the Oman Sail

project, Outward Bound / Tahaddi, British Scholarships for

Oman, and an internship abroad programme for graduating

nurses from Sultan Qaboos University Hospital. We have also

made an array of donations to various charities in our home

markets and contributions to humanitarian disaster relief

abroad. At a time of global recession it is as important as

ever that we continue with similar initiatives in 2010 and we

shall be seeking shareholder approval to assign 1% of 2009

earnings for CSR expenditure in 2010.

Looking to the futureIn my report to you last year we faced the toughest global

recession in modern times and I promised you that we would

not waste this crisis. The 2009 performance demonstrates

that, operationally, we managed the enormous immediate

challenges of the crisis in a manner that we could still deliver

growth, while the world economy contracted. The continued

support of financial institutions to participate in our 2009

investment programme, in spite of the most severe credit

crunch, reflects the spirit of true partnership that we share with

our bankers in Oman, UAE and abroad. It is also testament to

the prudence and integrity of our financial management and

controls; the security and bankability of our contracts; and

the confidence in our disciplined approach to investment.

In 2009, while many corporations down-sized our human

resources grew from > 10,000 to > 11,000 people – at

the same time generating more income per capita in each

of the businesses. The organisation restructure is built for

the permanent future, not for the temporary recession. Our

constant endeavour to consider and research merger and

acquisition opportunities has been as active as ever, although

no specific transaction has met our criteria for active interest,

the process alone is a constant investment in experience and

knowledge for our team.

In our current investment programme we have 13 vessels

under construction in shipyards around the world: 6 vessels

for the MENA region, including 4 AHTS (Anchor handling

tug) vessels for the Saudi market; 5 barges for Agip KCO in

Kazakhstan with 2 to be deployed in 2010 and 3 in 2011;

and 1 AHTS and 1 ERRV (Emergency response vessel) for

new 10-year contracts for BP in Azerbaijan. Along with the 2

Contract Services PAC projects completing construction, 10

of these new vessels shall have a positive economic impact

on our growth in 2010.

While there is growing evidence of the world pulling out of

recession, we choose to be cautious and enter 2010 with

the same tightness of discipline in managing our cash-

flows and our third-party risk. There is often a time-lag of

effect from over-capacity in various business sectors and

higher unemployment, particularly in the major developed

economies. In this regard we continue to benefit from the

diversity of our business portfolio. In 2009, our Engineering

business was impacted negatively, but growth in the Marine

and Contract Services businesses sustained us. In 2010,

Engineering is coming back strongly, but we do anticipate

continued and increasing pressure on utilisation and margins

in the spot market of the Marine business in the MENA

market for at least the first half of the year. The difference,

looking at 2010, from when we looked ahead to 2009, is that

the scale of confidence is greater. Last year, we felt we could

still deliver growth in spite of the recession and we did. This

year, we are poised to deliver growth over the year in spite

of some continuing impacts of the recession to which we

remain ever-vigilant and alert.

For the longer term, it is clear that we have a business that is succeeding and growing in spite of adversity in the economic environment. It is equally clear that this business has competence, stability and momentum. Because of this, Renaissance stands on the threshold of enormous potential on an even greater scale than all that has been achieved to date. We pride ourselves that Renaissance has been a pioneer of many firsts in our market. We do not seek to be innovative and different simply for the sake of it – indeed our disciplined approach to investment and financial control is as conservative as could be. But I can assure you, we shall be seeking out the best possible way to capture this potential for the enduring benefit of all our stakeholders.


Chairman’s Report

A word of thanksI would like to place on record my thanks to all our

stakeholders: To our customers for their patronage, support

and belief in our services; to my fellow Board Members for

their wisdom, direction and governance; to our bankers,

legal advisors, auditors and other professional advisors for

their partnership and belief in our journey; to our contractors

and suppliers for their service and efficiency in aligning

with our business ethos; to the communities in which we

serve for their positive participation in our programmes

and their welcome of us as their neighbours; and to all our

shareholders for their continued belief and support. I am sure

all of our stakeholders will join me in thanking our people for

their outstanding performance in delivering the 2009 results

and building our platform for further success ahead.

In this year, two of our business leaders were recognized for

major achievements of their own. Our Group CEO, Stephen

Thomas, received an OBE (Officer of the Most Excellent Order

of the British Empire) in Her Majesty The Queen’s New Year’s

UK Honours List for services to the community and business.

The CEO of Topaz Energy and Marine, Fazel Fazelbhoy, was

voted the region’s Maritime Personality of the Year. These

recognitions serve as a source of great inspiration and pride

for one and all at Renaissance.

This year we shall celebrate the 40th anniversary of the

accession of His Majesty Sultan Qaboos bin Said. His wise

leadership has brought stability, progress, prosperity and

opportunity to our home market of Oman. Under his leadership,

the outstanding achievements of Oman as a modern

progressive economy founded on a rich heritage and culture,

have provided the platform for a company like Renaissance

to form, grow and prosper as a world-class internationally-

competitive enterprise. Thanks to the achievements to date,

there is enormous opportunity ahead for Oman. There is

enormous opportunity ahead for Renaissance.

Samir J. FancyChairman

Renaissance stands on the threshold of

enormous potential on an even greater scale than all that has been achieved

to date.

19

Chief Executive’s Report

Renaissance Services SAOG (Renaissance) is an Omani multinational company listed on the Muscat Securities Market (MSM) in the Sultanate of Oman. The company’s primary focus is on providing safe, efficient and quality services to the oil & gas industry. Renaissance owns and operates a combined Offshore Support Vessel (OSV) fleet of 100+ vessels; has engineering business in oil & gas fabrication, ship building and ship repair; and is a leading turnkey contract services provider of facilities management, facilities establishment, contract catering, operations and maintenance services. The company also owns other smaller businesses in education and training, and media communications.

Renaissance currently employs over 11,000 people operating in over 16 countries.


It is a great privilege for me to provide the management

analysis and discussion of the progress of Renaissance in

2009. The company delivered a resilient performance in

stringent economic times. This provides the stability needed

to continue the calm and resolute implementation of a long-

term growth agenda while dealing effectively with short-term

challenges.

Safety performanceSafety 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.

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, minimize 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

CEO


2008 2009 Change

Total Manhours worked

36,905,857 40,081,537 +3,175,680

Number of Fatalities

0 1 +1

Number of Lost Time Incidents (LTI)

25 13 -12

Lost Time Incident Frequency (LTIF)

0.68 0.349 -0.331

Road Traffic Accidents (RTA)

28 21 -7

Total Kilometers Driven

14,181,383 14,572,605 +391,222

The 2009 safety performance has been achieved against an

increase in the volume of activity and the scale of exposure to

risk across the Group. No accident is acceptable, but we are

encouraged by the reduction in LTIs and the 48% reduction

in LTIF. We commend our management and employees

who have worked hard to achieve this more positive trend.

However, these improvements are marred by a fatality and

in accepting my ultimate responsibility for the safety of our

people I wish to honour the memory of our fallen colleague

in this report.

Luis Camacho Almirez was a 41-year old mechanic working

for the Marine Repair division of Topaz Engineering on a

contract assignment in the Bahamas. Luis died on 2 June

2009 from the impact of a blow to the back of his head

from a broken stay bolt, which sheared off while using a high

pressure hydraulic power pack and jack. Luis was wearing

the mandatory PPE of Hard Hat, Safety Shoes and Safety

Glasses but this was insufficient to save him from the lapse

in risk assessment of the task and the equipment. Luis is

sadly missed by his family, friends and work colleagues. The

best tribute we can pay to Luis and his bereaved family is

to learn from this incident to prevent the same or similar

accident occurring again.

The most serious injury incident this year was in fact not

recordable as an LTI as it occurred off duty away from

the workplace. Percy Kumar is a 53-year old Stores Clerk

working for Renaissance Contract Services Group in Iraq. On

31 December 2009, Percy received shrapnel to the head,

face and back from a mortar attack on one of the company’s

camp facilities in Baghdad. Percy spent considerable time

in ICU and is slowly being restored to health. This incident

reminds us that, beyond the hazards of our workplaces, the

company also operates in dangerous environments. This was

the closest the company has come to a fatality in Iraq and

reminds us to continuously improve the safety and security

of the workplace and living space of employees wherever

they may be. We wish Percy a continued recovery to good

health.


Financial performance

Rial Millions 2005 2006 2007 2008 2009

Revenue 106.4 142.9 199.2 234.3 247.6

Net Profit 13.9 14.3 17.3 26.2 28.5

Total equity 82.2 91.8 109.4 138.7 168.4

The 2009 financial performance has been achieved

against a background of a global credit and financial crisis,

unprecedented in the lifetime of our business. Against this

background the growth in revenue and profit display a

genuine resilience in the company’s business model based

on long-standing service relationships aligned with blue-chip

These tragic setbacks should not blind us to the many

milestones, awards, highlights and successes that have

underwritten the overall progress in safety performance. Topaz

Marine Azerbaijan and Topaz Marine MENA both achieved

LTI-free years – both truly outstanding performances. There

are also less high-profile but equally important achievements:

For example the Contract Services Group has supervised

and mentored a Local Community waste management

sub-contractor in its Oman oilfield from a company with no

HSE management system at all three years ago, to achieve

a full year without LTI in 2009. There are also memorable

individual and team achievements to celebrate: For example,

the master, officers and crew of IBSV Tulpar received

commendations from Agip KCO in Kazakhstan for rescuing

a man from the Caspian Sea when a helicopter rescue had

been thwarted. These achievements show us what can be

done and inspire us to strive for similar outcomes across all

our operations. They confirm our absolute belief that Goal

Zero is possible: No harm to people or the environment.

Safety Milestones

Some of the safety milestones and awards achieved

during 2009:

Marine GroupTopaz Marine MENA wins the Lloyd’s List Middle East & •

Subcontinent 2009 Awards for ‘Safety at Sea’ and the

Seatrade Middle East and Indian Subcontinent Awards

2009 ‘Workboat’ award

Topaz Marine Kazakhstan, 2 Million and 3 Million man- •

hours LTI free for Agip KCO

Topaz Marine Azerbaijan, 2.2 Million man-hours LTI •

free for BP

Topaz Marine MENA, 1.5 Million man-hours LTI free•

Engineering GroupGold Winner of EHS Dubai award in Ports and Maritime •

category

Topaz Fabrication & Construction, 5 Million man-hours •

LTI free for SBM

Contract Services GroupIntegrated Services PDO South – 1 year LTI Free for •

PDO

RS PAC Fahud - 2 years LTI Free•

RS PAC Nimr - 9 years LTI Free •

RS PAC Qarn Alam - 1 years LTI Free•

2.5 Million man-hours LTI free on construction of RS •

PAC Marmul B

2 Million man-hours LTI free on construction of RS PAC •

Bahja

2005 20062008

20072009

Net Profit

5

0

10

15

20

25

30

35

Rial Millions

50

0

100

150

200

250

300

350

2005 20062008

20072009

Revenue

Rial Millions

2005 20062008

20072009

Total Equity

25

0

50

75

100

125

150

200

175

Rial Millions


customers with a solid mix of long and short-term contracts.

That is not to say that these record revenue and profit figures

have not been affected by the recession. The Engineering

business has seen a downturn and even the Marine and

Contract Services businesses that delivered improved

results would do even better in different global economic

circumstances. Nevertheless, operating margins have grown

from 15.9% to 16.4%. Growth in EBITDA to Rial 62 million

(US$ 160 million) is positive, considering 2008 EBITDA

included Rial 6 million (US$ 15.6 million) capital gain from

the divestment of the Group’s non-core Technology business.

Gearing ratio has been maintained at 1.14, well within

banking covenants and consistent with industry standards

for a high-investment growth phase. The company’s equity

and reserves have risen to Rial 168 million (US$ 437

million), showing a solid capital structure in place to sustain

long-term value. ROE, net of capital gain, continues to rise,

reaching 18.6% in 2009. Through a disciplined investment

programme, net fixed assets on the balance sheet have

reached Rial 283 million (US$ 735 million).

The Marine business now represents nearly 39% of the

Group’s revenue, with Engineering approximately one

third and Contract Services approximately one quarter. All

three businesses shall continue to grow significantly but

by the nature of the sector and our planned investment

programme, the Marine business will continue to increase

its dominant presence on the balance sheet. The 2009 profit

% is somewhat skewed: While the Marine business usually

makes some gain on disposal of old assets in its OSV fleet

renewal programme, this year the gain was Rial 5.2 million

(US$ 13.5 million) up from Rial 834 thousand (US$ 2.2

million) in the previous year. At the same time Engineering

revenue and profit was down on the prior year during the

recession, while also absorbing one-off losses of Rial 4.9

million (US$ 12.7 million) in the development phase of the

Boat Building business. A more balanced contribution of

profit may be expected under more normal circumstances.

Dividend track record2005 2006 2007 2008 2009

% Rial’000 % Rial’000 % Rial’000 % Rial’000 % Rial’000

Cash dividend 25 5,068 15 3,041 15 3,344 10 2,453 12 3,385

Stock dividend 62.5 7,415 10 2,027 10 2,229 15 3,679 - -

Total dividend 87.5 12,483 25 5,068 25 5,573 25 6,132 12 3,385

2009 Revenue

Marine39%

31%

26%

2%

2%

Engineering

CSG

MCG

ETG

Marine

Engineering

CSG

MCG

ETG

Profit from Operations

69.4%

9.5%

20.0%

1.0%

0.1%

Optimal mix of

capital intensive

and pure services

based business

Segment

Revenue and

Operating Profit %


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. Even in the

midst of a significant investment programme that is securing

sustainable growth for the company we are still able to deliver

an increased cash dividend of 12% to our shareholders whilst

retaining the bulk of cash for new investment.

There is no stock dividend this year as the capital base only

needs to increase now in the event of an injection of any new

capital, required for the investment programme. This allows

a base for increased cash dividend going forward.

Business segment performanceAll businesses have been affected adversely by the recession,

however, in spite of this, the Marine and Contract Services

groups have delivered growth of revenue and profit. The

Engineering business has been most adversely affected but

is recovering strongly in 2010. Similarly, in the smaller non-

core enterprises, the Media business has delivered growth

in a tough year, while the Training business has seen a

downturn.

Managing the effects of recession has included a greater

focus on counter-party risk and stricter management of

receivables and cash-flows. However, there has also been

considerable investment of time and energy in sustaining the

company’s long-term strategy for sustainable growth. This

has included a major organisation restructure and re-branding

in Topaz Energy & Marine to create Topaz Marine and Topaz

Engineering. This streamlined structure is customer-centric,

more efficient and built for growth. The Topaz CEO and

management team deserve great credit for conceiving and

implementing these changes in such challenging times.

Delivering outstanding performance requires exceptional people.


Marine Group

Marine Group Rial Million US$ Million

2009 2008 2009 2008

Revenue 95.5 75.2 248.1 195.3

Operating profit 31.6 24.2 82.1 62.9

2009 2008

People (nos) 1,040 1,045

ActivitiesOffshore Support Vessel Fleet primarily servicing offshore oil

& gas installations.

With 100+ vessels and a low average age that competes

with the world’s top five offshore service providers, the

Marine operations have had the fastest growing success. The

business units are segmented geographically and support

major offshore projects in their respective regions, which

account for over 50% of the world’s proven offshore reserves.

The vast majority of the division’s revenue is from secure,

medium to long-term contracts with major oil heavyweights.

3% of the fleet is deployed in support of hydrocarbon

exploration, 77% in support of field development and 20%

in support of oil & gas production. The fleet includes anchor-

handling vessels, platform supply vessels, survey vessels,

specialised barges and ice-breakers among others.

Business SegmentsOffshore Support Vessel Fleet

Subsidiary company and divisions:

Topaz Energy & Marine Ltd., Dubai

Topaz Marine MENA•

Topaz Marine Kazakhstan•

Topaz Marine Azerbaijan•

The nature of the long-term contracts for the fleet deployed

in the Caspian Sea has proved to be a key factor in the

stability of the business in 2009. The additional strategic

breakthrough into Turkmenistan with a 7 vessel contract has

been an important highlight in the year. The fact that the fleet

operates primarily in the offshore oilfields of the Arabian Gulf

and the Caspian Sea has also been crucial, as these oilfields

have remained fully operational. In the MENA region, the

fleet has seen some pressure on utilisation and rates, with

approximately 6 to 7 vessels adversely affected at any given

time; and we expect this pressure to continue for at least

the first half of 2010. Even with this continued pressure, the

underlying growth trajectory will continue with the positive

progress and deployment of investments already made.

During the year, the company was awarded a long-term US$

100 million contract for an additional 5 ice class barges for

Agip KCO in Kazakhstan.

Type Azerbaijan Kazakhstan MENA Turkmenistan Total

AHTS 4 3 18 3 28

Barge - 23 - 2 25

PSV 6 - 8 - 14

ERRV 3 10 - - 13

Others** - 5 3 - 8

Crew Boat - 5 1 1 7

Tugs - 3 - 1 4

MSV - - 2 - 2

Ice-breaker - 2 - - 2

Total 13 51 32 7 103

*Includes owned and managed vessels and vessels under construction.

**Others include Cable Lay, Flotels and Survey Vessels.

OSV fleet summaryOSV continues to offer growth opportunities

Balance of short and long-term contracts; operations primarily focused on the development and production phases of the oil & gas extraction cycle.


Engineering Group

Engineering Group Rial Million US$ Million

2009 2008 2009 2008

Revenue 77.6 88.0 201.6 228.6


2009 2008

People (nos) 4,211 4,892

ActivitiesProviding engineering solutions in fabrication & construction,

marine repair, maintenance and ship building.

The Engineering businesses have established capabilities

and excellent results for onshore and offshore fabrication

to a diverse portfolio of clients primarily in the oil & gas,

marine and defence industries. The company has invested

in new facilities which have enabled the division to focus

on more specialised fabrication work. Its newest division in

ship building is teamed with some of the world’s foremost

designers and has made a name for itself regionally for

quality and innovation.

Business SegmentsFabrication & Construction

Ship Building

Marine Repair

Maintenance

Subsidiary company and divisions:Topaz Energy & Marine Ltd., Dubai

Topaz Fabrication & Construction•

Topaz Ship Building•

Topaz Marine Repair•

Topaz Maintenance•



The downturn in revenue in the Engineering businesses

arises from capital expenditure deferment in the oil & gas

sector at a time of oil & gas price volatility. With the oil price

more stable the prognosis for 2010 already looks very good.

In addition the nascent Boat Building business incurred net

losses of Rial 4.9 million (US$ 12.7 million) in 2009 that

shall not recur in 2010. The business is now well set with

full facilities and streamlined processes and a positive order

book. The certification of a new 600 Ton travel-lift has also

increased capacity potential for the business. During the year

a new 200,000 sqm engineering facility was opened at Al

Hayl in Fujairah. Even while volumes were lower the business

still delivered major project successes, including delivery of

a second LNG Loading Module by Adyard in Abu Dhabi to a

blue-chip customer at Ras Laffen. The Engineering business

is well placed for superior performance in 2010 with clear

evidence of increased E&P spend by oil & gas producers at

the start of the year.

The company delivered a resilient

performance in stringent economic

times.


Renaissance is committed to being a good

corporate citizen.

Contract Services GroupContract Services Group Rial Million US$ Million

2009 2008 2009 2008

Revenue 64.9 61.9 168.6 160.8


ActivitiesThe Contract Services Group has served the company’s home

market of Oman for over 20 years, and has now successfully

exported the Renaissance standard for excellence abroad,

winning major international contracts in competition with

world-class global competitors.

Providing turnkey solutions for Catering, Cleaning, Laundry,

Accommodation, Operations & Maintenance (O&M), Leisure,

Property, Estate Services, Facilities Management and

Facilities Establishment (Build, Own, Operate); including

rapid deployment capabilities in emergencies for harsh,

remote or beleaguered environments. Serving Oil & Gas,

Energy Services, Healthcare, Education, Military, Commerce

& Industry, Ports & Marine sectors.

Service segmentsCatering – Oil & Gas sector, Universities, Schools, Hospitals, •

Military, Commerce & Industry

Facilities Management & Facilities Establishment – •

Build, Own, Operate: Camps, Dining Facilities (DAFCs)

and Life Support Accommodation (LSA), Permanent

Accommodation for Contractors (PACs)

Cleaning, Laundry, Accommodation Services•

Operations & Maintenance (O&M)•

Leisure Services•

Property & Estate Services•


Tawoos Industrial Services LLC (TISCO)•

Rusail Catering & Cleaning Services LLC•

Renaissance Services PAC Division•

Renaissance Services Overseas Division•

Renaissance Contract Services AS (RS-NOC) - Norway•

Renaissance Contratos e Servicios Angola LDA•

Renaissance Contracts Services Qatar WLL •

The Contract Services business has had an excellent year

in spite of the recession through a combination of contract

retentions, rate revisions and new contract gains in the

company’s major home market of Oman, as well as in

Angola, Iraq and Norway. At the same time efficiencies have

been achieved with new procurement systems and assets.

Contract Services has transformed itself as a business over

the years from an erstwhile catering and support services

contractor to a turnkey facilities management enterprise with

a combination of long-term and short-term contracts. The

long-term contracts include 3 Permanent Accommodation

for Contractors (PAC) facilities in Oman’s oilfields. One of the

highlights of 2009 has been the progress of construction of 2

new PAC facilities for on-time, in-cost delivery in early 2010

to guarantee new growth for the year.

2009 2008

People (nos) 5,701 5,323


Other Businesses

Media CommunicationActivitiesConsulting 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.

Media Communication 2009 2008

People (nos) 168 162


United Media Services LLC•

United Press and Publishing LLC •

Oryx Advertising Co. WLL (Qatar)•

Education & TrainingActivitiesProviding 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.

Education & Training 2009 2008

People (nos) 193 138


National Training Institute LLC•

National Hospitality Institute SAOG•

Nakshatra Hospitality India•

New Horizons Computer Learning Centres•

While the company’s non-core smaller businesses in Media

and Training do not have a material impact on the company’s

financial performance each makes a very valid contribution

to internal services within the group, whilst being market

leaders and successful enterprises in their respective fields.

Both businesses are debt-free with good balance sheets

and each could be divested at an optimum time. In 2009

Training has experienced a recession-led downturn, and

while recession has seriously affected media spends the

Media business has delivered a remarkable improved result

for the year. The Training business continues to support many

of the group’s training needs, while in the Media business,

Renaissance benefits from the creativity and professionalism

of our branding and imaging, our media campaigns, and our

transparent public reporting.


Accreditations held within the group

Topaz Marine

MENA

ISO 9001 : 2008

Topaz Marine

Kazakhstan

ISO 9001 : 2000

Topaz Marine

Azerbaijan

ISO 9001 : 2000

Topaz

Fabrication &

Construction

ISO 9001 : 2008

ISO 14001 - Ongoing

ISO 18001 - Ongoing

Topaz Marine

Repair

ISO 9001: 2008

ISO 14001: 2004

OHSAS 18001: 2007

RMRS Liferaft servicing)

CSG ISO 9001 : 2008

Hazard Analysis Critical Control Point

(HACCP)

Centre Charter Certificate –

Chartered Institute of Environmental

Health London UK

ISO 9002

ISO 9001 : 2000

Other

businesses

ISO 9000 : 2008

ROSPA Membership

International Consortium for Certified

Knowledge Experts (ICCKE)

Pearson VUE – Only center for GMAT

exams in Oman

HR Compliance Verification

Certificate (OPAL)

IOSH

NEBOSH

National Safety Council, USA

Microsoft Gold Certified Partner for

Learning Solutions

Oracle Approved Education

Center (OAEC)

ACCA – Gold Certified Tuition Provider

ISO 9000 : 2001

IiP – Investor in People

ITEC

City & Guilds

CIEH

Quality processes and systemsAll 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 resilience to

economic downturn.


Geographic spread

Another key element in the company’s resilience in a global recession is not just the diversity of our services but also the range of the

geographic spread and market share of our operations.

2009 Revenuegenerated in…

Geographies and Market Share

Marine

Azerbaijan – 80%

Kazakhstan – 40%

Turkmenistan – 20%

Qatar – 10%

Saudi Arabia

Abu Dhabi

CSG

Oman – 65%

Norway – 28%

Angola – 18%

Middle East

Other

Oman

Qatar

India

Engineering

Abu Dhabi

Caspian

MENA

Oman

Worldwide

20%

80%

Our International OfficesAngola• Azerbaijan•

Cyprus• India•

Iraq• Jordan•

Kazakhstan• Kuwait•

Norway• United Kingdom•

Qatar• Saudi Arabia•

Singapore• Sultanate of Oman•

Turkmenistan• United Arab Emirates•

Investing for growthWe continue to expend resources on a considerable amount

of merger and acquisition (M&A) activity each year. This

year’s activity may or may not bear immediate fruit, but even

in the case of unconcluded M&A initiatives, the investment in

understanding opportunities for expansion and the lessons of

due diligence are invaluable to our growth-oriented outlook

going forward. While there is no immediate acquisition target

in view, there are possibilities of both vessels and businesses

under consideration as possible targets for acquisition in

2010.

Our existing investment programmes ensure growth for

2010. In 2009, the net size of the OSV fleet increased by

7 vessels and these shall now have a full operating year. A

further 9 vessels are under construction for delivery in mid to

late 2010. Two new PAC facilities are nearing completion for

the Contract Services Group. The Engineering business now

has the boat building division in competitive shape and the

new Al Hayl engineering facility in place for a full operational

year. While the company has invested in new facilities and

infrastructure for Engineering and Contract Services the

principal focus for investment has been the strategy to

increase the size and reduce the age profile of the OSV fleet.

This strategy has paid off during the recession with oil & gas

producers and operators favouring modern high specification

tonnage to meet the high standards the industry demands.

These are the vessels that have stayed on the water during

the recession.


Younger fleet with expanded capabilities

Offshore Support Vessel Fleet crosses 100 mark in 2009Investing to reduce the age profile and increase the size of the OSV fleet

OSV Fleet analysis

When Renaissance acquired Topaz in 2004 the business owned 11

vessels with an average age of 19 years. Today the fleet is over 100

vessels with an average age of 7.6 years. In the last 3 years alone

Renaissance has invested US$ 700 million in expansion and new

assets. Over the next 3 years we envisage an investment programme

that is double that size amounting to US$ 1.4 billion. If the investment

is gradual we are able to sustain the programme from internal cash-

flows and headroom for borrowing in the balance sheet, while

maintaining covenants and gearing ratios. However, if acquisition of

assets or enterprises accelerates the investment programme, then

we shall need to raise new capital to achieve our ambitions. Work is

already underway to consider all options for raising capital. Targets

for acquisition shall need to meet our key criteria in terms of younger

age-profile of vessels that can be deployed in offshore oilfields with

long-term growth potential.

Our investment strategy has sustained our growth record even

through global economic crisis and it now provides us with a platform

to create further exponential economic growth for our enterprise as

we seek to use our scale and scalability to deploy our competences,

knowledge and experience on an even bigger stage.

20

0

40

60

80

100

120

140

2004 2005 2006 2007 2008 2009

11

5760

62

96

103

1918 15

14 11 7.6

Number of Vessels Average Age


Renaissance peopleDelivering 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. During 2009, excellent

new leadership talent has joined our teams in the

new Marine and Engineering organisations. Existing

leaders in the corporate offices of both Renaissance

and Topaz and in the Contract Services business have

been promoted or reassigned in structures built for

delivering outstanding customer service, efficiency

of operations and accelerated growth.

At the outset of the global economic crisis the company

had taken the precaution to impose a pay-freeze for

2008/2009. However, in order to attract and retain

the best team in the field for each of our businesses,

we have commissioned an independent study of

executive remuneration in the Topaz businesses by

the Hay Group. From its findings we have recalibrated

executive remuneration from the end of the year, so

that from 2010 fixed remuneration will now be at

or above the market and industry median, while

variable rewards for performance are amongst the

best in the region. Variable rewards are paid in a mix

of cash and shares, with payments deferred over 3

years. At the unskilled and semi-skilled workforce

level, the Contract Services Group has recalibrated

remuneration policy to provide increased reward and

recognition for long service.

Renaissance people continue to demonstrate

leadership at every level of the business and

continue to deliver and enhance the aspirations of

the company.

Renaissance CustomersAt Renaissance we strive to exceed customer

expectations safely, efficiently and profitably. 2009

has been a challenging year for every organisation. We

have a blue-chip customer base in every market that

we serve and our portfolio includes many of the world’s

leading producers, operators and service contractors

of the oil & gas industry, as well as governments and

leading institutions. In these difficult times we have

made every effort to find efficient solutions for our

customers, maintaining the standards they demand

and require, but containing their costs. We want to

thank our customers for standing by us too, during

this period. We value the trust they have placed in us

and we remain as committed as ever to aligning with

them to provide solutions that help our customers

achieve their objectives.

Some of our CustomersIN ALPHABETICAL ORDER

MINISTRY OF HEALTH

MB Petroleum Services LLC

Eni KCO



A company of leaders with unwavering

commitment to integrity, operational excellence

and community development.

Renaissance modus operandiHow 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.

37

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•

Our Values At Renaissance we value:

People•

Health, Safety & Environment (HSE)•

Integrity•

Reward•

Efficiency & Productivity•

Customers•

Growth•

Merit•

Social Responsibility•

Transparency•

Quality•

Profit•

As a direct consequence of our values-driven management

credo, Renaissance will continue to deliver good performance

to our shareholders even in this challenging economic

environment. This means we can look forward to 2010 with

confidence, but the ongoing uncertain and unpredictable

nature of the global economic climate also requires that we

look forward to 2010 with caution.


Mitigating risksThe principal perceived risks for Renaissance at this time

are:

Sensitivity to low oil price•

Re-negotiation of contracts

Cancellation of future projects

Raising finance•

Availability of financing

Higher cost of financing

Receivables•

Late payments

Default

Capacity utilisation in the Engineering businesses•

Pressure on utilisation and rates in the spot market of the •

MENA based fleet

Inflation•

There is also a detailed statement on risk contained in Note

27 of the external auditor’s report. That disclosure gives

a detailed specific account of credit risk, liquidity risk and

market risk.

The Renaissance business model is resilient to oil price •

fluctuation

Renaissance has predominantly long-term contracts

with blue-chip clients in stable markets

Renaissance is well positioned in the Middle East and

Caspian markets, sitting on > 50% of the world’s

hydrocarbon reserves

Renaissance provides services to the development and

production phases of the oil capex cycle, which is least

susceptible to downturns in oil price

Financing for major current growth requirements are in •

place

Renaissance is able to demonstrate a capital structure

appropriate for current conditions

Financing arrangements secured since the credit

crunch have been agreed at affordable rates over the

long-term

Renaissance has a wide-range of diversified funding

sources over the long-term, comprising a mix of solid

local and international banks

Renaissance has strong and dependable cash flows

The businesses are focused on Receivables Management •

and counter-party risk

Major clients are blue-chip oil & gas producers and

stable governments

Renaissance businesses continue to operate at high •

capacity

Since the crisis no long-term contract rates have been

revised downwards

The company has not been affected by any project

cancellations

There has been reduced visibility in the order book for

the Engineering businesses during 2009, but we see an

increase in E&P spending in 2010

We expect continued pressure on utuilisation and rates

in the MENA market for at least the first half of 2010, with

some 6/7 vessels under-utilised; but this is mitigated by

the fleet on long-term contracts and utilisation of new

assets that have joined the fleet in 2009

Renaissance has inflation-linked clauses in many major •

contracts

We do not under-estimate the scale and depth of the global

economic crisis. However, we are alert to its risks and its

opportunities; and we believe in the resilience of our business

model.

Corporate Social Responsibility (CSR)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.



Corporate Social Responsibility EthosProtecting our people and all those affected by our work

Protecting the environment, minimising energy usage and

mitigating environmental impact of our work

Supporting local communities

Employing and training local workforces

Using local suppliers of goods and services

CSR initiatives to support local development and good

causes

The social aspect of our CSR ethos is focused in these key

areas:

Helping those less fortunate than ourselves to lead fulfilling •

lives

Providing opportunity to help people to improve themselves •

and make a valid contribution to society

Improving the economic well-being and quality of life in •

local communities where we operate

Supporting good causes in the community•

Showcasing local talent and helping people fulfill their •

potential

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.


We look to the future with ever-growing confidence andever-increasing

ambition.

Examples of CSR Initiatives in 2009

Green Sapphire Ball - Al Noor Association for the Blind

– Rial 5,000

Bait Muzna Gallery - exhibition by Hassan Meer

– Rial 1,000

Association of Early Intervention for Children with Special

Needs – Rial 85,000

International Association of Handicapped Divers

– Rial 1,500

British Scholarships for Oman – Rial 450

Oman Sail Academy Business Club – Rial 60,000

UNICEF – Rial 1,500

Sultan Qaboos University - College of Medicine & Health

Sciences – Rial 65,000

Outward Bound Oman / Tahaddi – Rial 12,000

Women’s Guild in Oman - National Association for

Cancer Awareness – Rial 2,000

Muscat Rugby Football Centre – Rial 2,500

Creative Learning Center – Rial 1,000

BizPro Young Achievers Award Winners – Rial 5,000

Nabil al Busaidy’s Antarctic Expedition – Rial 15,000

Renaissance group companies are also engaged in

large-scale CSR programmes that help to realize a better

standard of living for the communities they serve. This

year, Topaz Energy and Marine absorbed a full year’s

operation cost for the Mission to Seafarers’ Flying Angel

project which allows mariners at sea some much needed

communication and recreation facilities aboard its vessel.

The Contract Services Group developed a series of Life

Saving signs of international highway quality to reinforce

Road Safety at the five PACs which it owns and operates

for PDO in Oman’s oilfields.

Looking aheadSolid growth performance in the toughest of economic

circumstances has proved the resilience of the Renaissance

business model. The streamlining of the organization into

three prime businesses – Marine, Engineering, Contract

Services – with a primary oil & gas focus, has brought clarity of

direction and purpose. The scale and scalability of these three

businesses, either individually or collectively, offers significant

immediate potential. The success of the disciplined approach

to investment so far, and the planned investment programme

of US$ 1.4 billion over the next 3 years demonstrate calm

and prudent confidence in the business and show the scale

of ambition. Work is already underway to consider all options

for accelerating the growth plan, and to consider all options

for raising capital to fuel the growth plan. Renaissance is on

an inexorable growth path – the question is now a matter of

timing and degree. What is clear is that Renaissance has the

stability, the competence, the governance, the prudence, the

customer relationships and the confidence to maximize the

opportunities that lie ahead. Above all, Renaissance has the

people. The leadership skills of people in every business, in

every market, at every level of what we do, allow us to look to

the future with ever-growing confidence and ever-increasing

ambition. In the immediate years ahead, we are confident

Renaissance will see another transformational paradigm

shift in scale and performance.

Stephen R. Thomas OBEChief Executive Officer



43 to 48


The Board ensures ethical behaviour and compliance with all laws and

regulations.

Report on Corporate GovernanceCorporate 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 relates

to good transparency so that shareholders can understand

and monitor the development of the Company.

The Board and 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 creation and

safeguarding of shareholders’ value and at the same time

protect 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 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

31 December 2009.

1. Company’s PhilosophyThe 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.

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 decision-

maker in fostering the overall success of the Company by

enhancing Shareholder value, selecting & evaluating the top

management team, approving & overseeing the corporate

strategy & 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. 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.

2. Board of DirectorsDuring 2009 the Board consisted of 7 Directors. All the

Directors are Non-Executive and Independent. Six Directors

on the Board are Shareholder/ representative of Shareholder

and only one Director is a Non-Shareholder Director.


2.1/3 The Composition and Category of Directors, Attendance of Board Meetings

Sl.

NoName of Director Position Category

No. of Board

meetings held

during last year

No. of Board

meetings

attended

Whether

attended

last AGM

1 Samir J. Fancy Chairman Independent Non-Executive

Shareholder

4 3 Yes

2 HH Sayyid Tarik bin Shabib

bin TaimurDirector Independent Non-Executive

Shareholder

4 4 Yes

3 Ali bin Hassan Sulaiman Director Independent Non-Executive

Shareholder

4 4 Yes

4 Sunder George Director Independent Non-Executive

Non-Shareholder

4 3 Yes

5 Yeshwant C. Desai Director Independent Non-Executive

Representative of Shareholder

4 4 Yes

6 Rishi Khimji Director Independent Non-Executive


4 4 No

7 Colin Rutherford Director Independent Non-Executive


4 4 No

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 undertook

leading roles such as:

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.

Chairman of Amani Financial Services SAOC since 1997. •

Executive Chairman of Topaz Energy & Marine Ltd.•

Director of National Hospitality Institute SAOG.•

Director of Vision Insurance Co SAOC.•

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. •

Ali bin Hassan Sulaiman - Director

Mr. Ali bin Hassan Sulaiman is a member of the Board of

Directors of the Company since 1996. He is a founder of

Ali and Abdul Karim Group and a 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. •



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 & abroad, including the following:

Deputy Chief Executive of BankMuscat SAOG.•

Director of Halcyon Capital SAOC.•



Report on Corporate Governance

Yeshwant C. Desai - Director

Mr. Yeshwant C. Desai is a member of the Board of Directors

of the Company since 2001 and Chairman of the Audit

Committee. He has had a successful career and extensive

experience in Banking & Finance and held senior executive

positions in Oman & 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.•


Colin Rutherford - Director

Mr. Colin Rutherford has been a member of the Board of

Directors since 2005 having formerly chaired BUE Marine

Holdings prior to its acquisition by 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 former corporate financier and currently

holds the following positions within his diverse portfolio:

Chairman of Midas Capital PLC.•

Chairman of Brookgate Ltd.•

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 – Chief Executive Officer

Mr. Stephen R. Thomas joined Tawoos Group as General

Manager of Tawoos Industrial Service 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 Renaissance Hospitality Services SAOG since •

foundation and until its merger with Renaissance Services

SAOG in April 2002.


Founder and former Chairman of Oman Society for •

Petroleum Services (OPAL).


Mr. Stephen Thomas has been recently awarded an OBE

(Officer of the Most Excellent Order of the British Empire) by

Her Majesty Queen Elizabeth II for “services to business and

services to the community in Oman over the last 22 years”.

2.4 Membership of Other Boards/ Board Committees

(SAOG Companies in Oman

Sr.

No

Name of

Director

Number

of other

Boards

in which

Director

Number of

other Boards

Committees

in which

Member

1 Samir J. Fancy 1 1

2 HH Sayyid Tarik

bin Shabib bin

Taimur

1 1

3 Ali bin Hassan

Sulaiman

2 2

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 2009 on the following

dates:

January 13, 2009•

February 22, 2009•

June 10, 2009•

October 8, 2009•

3. Audit Committee & Other Subcommittees Audit Committee

The Audit Committee is a sub-committee of the Board

comprising of three Directors, majority of whom have to be

independent directors.

3.1 Brief Description & Terms of Reference

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 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.

Oversee the adequacy of internal control systems and •

Internal Audit Reports.

Review any non-compliance with disclosure requirements •

prescribed by CMA.

Oversee the Company’s financial reporting process and •

the disclosure of its financial information to ensure the

accuracy, sufficiency and credibility of the financial

statements.

Ensure that proper system is in place for adoption of •

appropriate accounting polices and principles leading to

fairness in financial statements.

Review annual and quarterly financial statements and •

recommend to the Board.

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.

Make recommendations to the Board for entering into small •

value transactions with related party without securing prior

approval of Audit Committee & the Board.

Accord prior approval to the Statutory Auditors to provide •

non-audit services, in accordance with CMA Circular

E/12/2009.

3.2 Composition of Audit Committee and Attendance

of Meetings

In 2009, 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.

Sl.

NoName Position

Meetings

held

during

the year

Meetings

attended

during

the year

1Yeshwant C.

DesaiChairman 5 5

2Ali bin Hassan

SulaimanMember 5 5

3 Sunder George Member 5 5

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 2009. The Committee also

looked at certain specific areas of the Company’s operations

and reported on these to the Board.

3.3 The Compensation Committee

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 & personnel polices. The Committee,

which consists of the following Directors held one meeting

during 2009:

Sl.

NoName Position

Meetings

held

during

the year

Meetings

attended

during

the year

1Yeshwant C.

DesaiChairman 1 1

2 Colin Rutherford Member 1 1

4. Process of Nomination of the DirectorsIn nominating and screening candidates to fill a casual

vacancy, the Board seeks candidates with the skills and

capacity to provide strategic insight & 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.

5. Remuneration MattersAs per the approval accorded by the AGM held on 29 March

2009, 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 attending of the meetings

paid to the Chairman & Directors for 2009 are as follows:


Sl.

No.Name of Director Position

Sitting Fees Paid for

Board & Sub-committees’

Meetings for 2009 (Rial)

Remuneration

(Proposed for

2009) (Rial)

Travelling

Expenses

(Rial)

1 Samir J. Fancy Chairman 3,000/- 55,947/- 610/-

2 HH Sayyid Tarik bin Shabib bin Taimur Director 2,000/- 27,973/- -

3 Ali bin Hassan Sulaiman Director 5,250/- 18,986/- -

4 Sunder George Director 4,750/- 18,986/- -

5 Yeshwant C. Desai Director 6,500/- 23,986/- 2,864 /-

6 Rishi Khimji Director 2,000/- 13,986/- -

7 Colin Rutherford Director 2,650/- 13,986/- 5,253 /-

TOTAL 26,150/- 173,850 /- 8,727/-

For the financial year 2009, it is proposed to pay a Directors’

remuneration of Rial 173,850/-, while the remuneration

paid during 2009 for the financial year 2008 amounted to

Rial 175,750/-.

Total remuneration paid to the top five senior executives of

the Company (including its subsidiaries) during the year was

Rial 1,657,164/-. 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 5 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 2

years which are automatically renewed unless terminated

in accordance with the terms mentioned therein. The notice

period for termination of employment contracts for all the

key personnel is 2 months and the gratuity is computed and

paid in accordance with the applicable Labour Laws.

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 3 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 long-term employment benefits.

6. Details of non-Compliance by the Company There were no penalties or strictures imposed on the

Company by MSM/CMA or any statutory authority for the last

three years. There are no areas in which the Company is still

not compliant with the Code of Corporate Governance.

7. Means of Communication 7.1 The Company has been sending financial results and

material information to 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 &

Chairman’s Report are despatched to all shareholders

by mail, as required by law.

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.

7.4 The CEO’s Report, provided in the Annual Report,

includes the Management Discussion & Analysis of the

year’s performance.

8. Stock Market Data8.1 High/ Low share prices during each month of

2009:(Source of statistics: MSM)

MonthHigh/Low share price movement

High (Rial) Low (Rial)

January 2009 0.686 0.360

February 2009 0.463 0.380

March 2009 0.482 0.372

April 2009 0.611 0.424

May 2009 0.664 0.570

June 2009 0.684 0.625

July 2009 0.719 0.570

August 2009 0.708 0.635

September 2009 0.680 0.650

October 2009 0.758 0.670

November 2009 0.718 0.660

December 2009 0.770 0.650

Report on Corporate Governance


1435

1685

1935

2185

2435

2685

2935

3185

0.300

0.400

0.500

0.600

0.700

0.800

MS

M S

ervi

ces

Inde

x

RS Closing Price MSM Services & Insurance Index

Sha

re P

rice

in R

ial

Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec3350

3850

4350

4850

5350

5850

6350

6850

MSM

Ind

ex

RS Closing price MSM Index

Sha

re P

rice

in R

ial

Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec

0.300

0.400

0.500

0.600

0.700

0.800

Sl. No. Category Number of Shareholders No of shares % Shareholding

1 Less than 100,000 shares 5024 18,112,218 6.42%

2 100,000 – 200,000 shares 58 7,871,858 2.79%

3 200,001 – 500,000 shares 59 17,682,124 6.27%

4 500,001 – 2,700,000 shares 42 48,949,925 17.35%

5 1 % - 1.99% of share capital 10 40,036,032 14.19%

6 2 % - 6% of share capital 10 106,904,270 37.90%

7 10% of share capital & above 1 42,538,025 15.08%

Total 5204 282,094,452 100%

8.4 The Company does not have any outstanding GDRs/

ADRs/ Warrants or any convertible instruments.

9. Professional Profile of the Statutory AuditorsThe shareholders of the Company have appointed KPMG as

the auditors for the year 2009. KPMG is one of the leading

accounting firms in Oman. The Oman practice of KPMG, which

forms parts of KPMG Lower Gulf, was established in 1974 and

currently has a compliment of professional staff in excess of

130, including 3 partners, 4 directors and 21 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 144 countries and employs 137,000 people worldwide,

KPMG in Oman is accredited by the Capital Market Authority

(CMA) to audit joint stock companies (SAOG’s).

As per Article 9 (para b) of the Code of Corporate Governance

pertaining to the rotation of external auditors, KPMG have

completed two years as Statutory Auditors of the Company

by the end of 2009, and therefore, are eligible for re-

appointment as Statutory Auditors of the Company.

10 Audit Fees paid to the AuditorsDuring the year 2009, Rial 311,364 was charged by external

auditors against the services rendered by them to the

organisation (Rial 199,690/- for audit and Rial 111,675/- for

other services, mainly tax services).

11. Confirmation by the Board of DirectorsThe 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.

–––––––––––––––– ––––––––––––––––

Chairman Director

8.2 Renaissance Share Price movement in comparison to the MSM Index and MSM Services Index

8.3 Distribution of Shareholding as on 31 December 2009

(Source of Statistics: Muscat Depository & Securities Registration Co SAOC)


Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2009

2009 2008

Notes Rial’000 Rial’000

Revenue 247,590 234,260

Operating expenses (172,907) (167,567)

Gross profit 74,683 66,693

Administrative expenses (34,106) (29,276)

Profit from operations 40,577 37,417

Net finance costs 19 (7,845) (10,103)

Net (loss) / gain on sale of investments 19 (7) 6,290

Share of loss from associate companies 6 - (202)

Amortisation of intangible assets 4 (34) (83)

Profit before income tax 32,691 33,319

Income tax expenses 18 (4,181) (7,122)

Profit for the year 19 28,510 26,197

Other comprehensive incomeForeign currency translation differences 31 247

Effective portion of changes in fair value of cash-flow hedges (88) -

Other comprehensive (loss) / income for the year (57) 247

Total comprehensive income for the year 28,453 26,444

Profit attributable to:Shareholders of the Parent Company 25,085 23,894

Non-controlling interest 3,425 2,303

Profit for the year 28,510 26,197

Total comprehensive income attributable to:Shareholders of the Parent Company 25,028 24,141

Non-controlling interest 3,425 2,303


Basic and diluted earnings per share (Rial) 20 0.094 0.089

Dividend per share: Cash dividend (Rial) 0.012 0.010

Stock dividend (Rial) - 0.015

21 0.012 0.025

The attached notes 1 to 30 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 49.


Consolidated Statement of Financial Positionas at 31 December 2009

2009 2008

Notes Rial’000 Rial’000Non-current assetsProperty, plant and equipment 3 282,749 223,457Intangible assets 4 34,023 34,057Investments 6 1,366 2,424Deferred tax asset 18 1,229 1,239

Total non-current assets 319,367 261,177Current assetsTrading investments 12 12Inventories and work-in-progress 8 11,042 9,915Trade and other receivables 9 86,826 86,047Cash and bank balances 10 30,692 15,011

Total current assets 128,572 110,985

Current liabilitiesTrade and other payables 11 64,760 68,002Bank borrowings 12 3,520 2,803Term loans and leases 13 38,494 31,336

Total current liabilities 106,774 102,141

Net current assets 21,798 8,844

Non-current liabilitiesTerm loans and leases 13 150,090 118,945Non-current payables and advances 14 17,835 8,231Staff terminal benefits 15 4,823 4,151

Total non-current liabilities 172,748 131,327

Net assets 168,417 138,694

EquityShare capital 16 28,209 24,530Share premium 16 19,496 20,723Treasury shares 16 (1,704) (1,704)Legal reserve 16 10,440 9,087Proposed distribution 21 3,385 6,132Retained earnings 88,176 66,474Hedging reserve 16 (88) -Exchange reserves 102 71

148,016 125,313Non controlling interest 20,401 13,381

Total equity 168,417 138,694

Net assets per share (Rial) 17 0.553 0.539

The financial statements were authorised for issue in accordance with a resolution of the Directors on 28 February 2010.

Chairman DirectorThe attached notes 1 to 30 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.


Director


2009 2008

Notes Rial’000 Rial’000OPERATING ACTIVITIESCash receipts from customers 242,833 212,960

Cash paid to suppliers and employees (186,567) (170,002)

Cash generated from operations 56,266 42,958

Net finance costs (7,613) (7,390)

Income tax paid (2,663) (5,302)

Cash flows from operating activities 45,990 30,266

INVESTING ACTIVITIESAcquisition of property, plant and equipment (71,797) (60,742)

Proceeds from sale of property, plant and equipment - 1,176

Investment in jointly controlled entity - (847)

Proceeds from sale of investments 1,051 15,911

Acquisition of subsidiary (net of cash acquired) - (44,289)

Dividend received 136 176

Cash used in investing activities (70,610) (88,615)

FINANCING ACTIVITIESNet receipt of term loans 38,301 53,184

Net movement in related party balances 141 (748)

Cash dividends paid (2,453) (3,345)

Funds introduced by minority interests 3,595 6,271

Cash flows from financing activities 39,584 55,362

Net increase / (decrease) in cash and cash equivalents 14,964 (2,987)

Cash and cash equivalents at the beginning of the year 12,208 15,195

Cash and cash equivalents at the end of the year 10 27,172 12,208

The attached notes 1 to 30 form an integral part of these financial statements.

The Parent Company statement of cash flows is presented as a separate schedule attached to the financial statements.


Consolidated Statement of Cash Flowsfor the year ended 31 December 2009


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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.

Changes in accounting policies

Overview

Effective 1 January 2009 the Group has changed its accounting policies in the following areas: • Determination and presentation of operating segments

• Presentation of financial statements

Determination and presentation of operating segments

As of 1 January 2009 the Group determines and presents operating segments based on the information that internally is

provided to the Group’s Chief Executive Officer (“CEO”), who is the Group’s chief operating decision maker. The change in

accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously operating segments were determined and

presented in accordance with IAS 14 Segment Reporting. The new accounting policy in respect of operating segment disclosure

is as follows:

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’s CEO to make decisions about resources allocated to the segment and

assess its performance, and for which discrete financial information is available. Segment results that are reported to the

Group’s CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Comparative segment information has been represented in conformity with the transitional requirement. Since the change in

accounting policy impacts presentation and disclosure aspects, there is no impact in earnings per share.

Notes to the Consolidated Financial Statementsfor the year ended 31 December 2009


2 SIGNIFICANT ACCOUNTING POLICIES (continued)

Presentation of financial statements

The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result,

the Group presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in the equity are

presented in the statement of comprehensive income.

Comparative information has been represented in conformity with the revised standard. Since the change in accounting policy only impacts

presentation aspects, there is no impact in earnings per share.

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.

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.




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.

Revenue recognition

Marine charter

Revenue comprises operating lease rent from charter of marine vessels, 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.

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.

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.




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 recognised in the income statement when the significant risks and rewards of ownership have

been transferred to the buyer.

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.




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 5 - 25

Furniture and fixtures 3 - 5

Plant, machinery and office equipment 1 - 15

Marine vessels revalued (from the date of latest revaluation) 10

Marine vessels acquired 15 - 25

Expenditure on marine vessel dry docking (included as a component of marine vessels) 3

Jetty and land development 25

Floating dock 25

Motor vehicles 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.




Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination

over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. 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 cash-generating 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.

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, first-out 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.

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 recognised as an expense in the income statement on a straight line 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.

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.

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 statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the statement of financial position liability method, providing for 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 statement of financial position 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.




Ijarah-fil-Thimma

Ijara-fil-Thimma is an agreement whereby the Group as a lessee, leases the asset from banks and financial institutions for a

specified rental over a specific period. The duration of the lease, as well as the basis for rental, are set and agreed in advance.

The risks and benefits incidental to ownership of the leased item are transferred to the Group. The Group capitalises the leased

item at the inception of the lease at the fair value of the leased property or, if lower, at the present value of minimum lease

payments. Lease payments are apportioned between the finance charges and reduction of the lease.

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 statement of financial position date are

retranslated to Rial Omani at foreign exchange rates prevailing on the statement of financial position 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.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated

to RO at exchange rates at the reporting date. The income and expenses of foreign operations are translated to RO 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. 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 judgement 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.




Impairment (continued)

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.

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

recognized if the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are

recognized 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.




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 2009, and have not been applied in preparing these consolidated financial statements. The amendments, which

become mandatory for the Group’s 2010 consolidated financial statements, is not expected to have a significant impact on the

consolidated financial statements.

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.

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 recognised in

the period in which the estimate is revised and in any future periods affected.



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3 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.

Certain marine vessels at a carrying value of RO 19.83 million (2008: RO 20.84 million) are subject to commercial agreements

with a third party whereby that third party has a call option to purchase each of the relevant vessels owned by the Group at a

price related to the US dollar borrowing remaining outstanding against those vessels. The Group has not been notified of any

intention to exercise such a call option and consequently the call option and associated implications are not reflected in these

financial statements.

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 2009, the Group has capitalised borrowing cost amounting to RO 1,948,000 (2008: RO 900,000).

The depreciation charge has been allocated in the income statement as follows:

2009 2008

RO’000 RO’000

Operating expenses 19,700 16,471

Administrative expenses 1,487 1,152

21,187 17,623

4 INTANGIBLE ASSETS 2009 2008

Goodwillp RO’000 RO’000

Initial goodwill 39,960 41,497

Additions - 2,997

Disposal of a subsidiary - (4,534)

31 December 39,960 39,960

Amortisation and impairment

1 January 5,968 7,356

Disposals - (1,388)

31 December 5,968 5,968

Net carrying amount at 31 December 33,992 33,992



4 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 2009 2008

RO’000 RO’000

Topaz Energy and Marine Group 29,079 29,079

Tawoos Industrial Services Company LLC 1,900 1,900

Norsk Offshore Catering AS 1,007 1,007

Others (UMS, NTI and NHI) 2,006 2,006

33,992 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 2009, 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 2009 2008

RO’000 RO’000

1 January 65 106

Addition on acquisition of subsidiary - 42

Amortisation (34) (83)

Net carrying amount at 31 December 31 65

Total intangible assets 34,023 34,057



5 SUBSIDIARIES AND ASSOCIATES

The Group and Parent Company investments in Subsidiary and Associate companies are as follows:

Ownership interest (%)

2009 2008

Subsidiary Companies

Topaz Energy and Marine Limited (“TOPAZ”) (incorporated in UAE) 100 100

Tawoos Industrial Services Company LLC (“TISCO”) 100 100

United Media Services Company LLC (“UMS”) 100 100

National Training Institute LLC (“NTI”) 100 100

National Hospitality Institute SAOG (“NHI”) 46 46

Associate Companies

Dubai Wire FZE (“DW”) (incorporated in the UAE) 20 20

Darium Thai Offshore Limited (incorporated in Thailand) - 49

The Group’s subsidiaries have investments in the following subsidiaries:

Subsidiary Companies of TOPAZ

Nico Middle East Limited (incorporated in Bermuda) 100 100

Topaz Holding Limited (incorporated in the UAE) 100 100

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.

In 2008 the Group acquired 49% interest in Doha Marine Service WLL (“DMS”), an entity incorporated in the state of Qatar. In

addition to 49% ownership interest in DMS, the Group has a beneficial interest in remaining 51% equity in DMS. Accordingly

the Group also has power to govern the financial and operating policies of DMS, and therefore, DMS has been dealt as a wholly

owned subsidiary in these consolidated financial statements. DMS is operating as sub subsidiary under Nico Middle East

Limited.

Subsidiary Companies of TISCO

Rusail Catering and Cleaning Services LLC (“RCCS”) 100 100

Supraco Limited (incorporated in Cyprus) 100 100

Renaissance Contract Services International LLC (“RCSI”) 100 100

Supraco Limited through its subsidiaries in Norway and Angola provides contract catering services.Subsidiary Companies of UMS

United Press and Publishing Company LLC (“UPP”) 100 100

Oryx Advertising Company WLL (incorporated in Qatar) 49 49

Subsidiary Company of NTI

National Training Institute Qatar WLL (incorporated in Qatar on 11 May 2009) 100 -

Subsidiary Company of NHI

Nakshatra Hospitality India Private Limited (incorporated in India on 6 February 2009) 100 -

Except as otherwise stated, the companies are incorporated in Oman.



6 INVESTMENTS

2009 2008

RO’000 RO’000

Non-current investments

Investment in associates companies 975 1,186

Available for sale investments 391 391

Investment in jointly controlled entity - 847

1,366 2,424

Investment in associates

During 2009, Darium Thai Offshore Limited, an associate was dissolved (note 19). At 31 December 2009, the Group has an

associate Dubai Wire FZE.

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.

7 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:

2009 2008

RO’000 RO’000

Current assets 6,282 4,767

Current liabilities (2,366) (2,624)

Non-current assets 4,193 4,127

Non-current liabilities (2,769) (1,838)

Net assets 5,340 4,432

Revenue 5,917 5,300

Cost of sales (3,828) (3,437)

Administrative expenses (1,001) (709)

Finance cost (166) (83)

Finance income 1 45

Tax (15) (49)

Net profit for the year 908 1,067



7 INVESTMENTS IN JOINTLY CONTROLLED ENTITIES (continued)

Investments in jointly controlled entities are in:

2009 2008

% %

Nico Dososan Babcock (previously known as Nico Mitsui Babcock) 50 50

DMS Jaya Marine WLL 51 51

Jaya DMS Marine Pte Ltd. 50 50

The above entities are incorporated in the UAE, Qatar and Singapore.

8 INVENTORIES AND WORK-IN-PROGRESS

2009 2008

RO’000 RO’000

Stock and consumables – net 6,096 4,792

Work-in-progress for long-term contracts 4,946 5,123

11,042 9,915

9 TRADE AND OTHER RECEIVABLES

2009 2008

RO’000 RO’000

Trade receivables, net 57,460 52,766

Prepayments and other receivables 15,365 15,965

Advances to suppliers and contractors 13,224 16,281

Amounts due from related parties (note 22) 777 1,035

86,826 86,047

As at 31 December 2009, trade receivables of RO 3,902,000 (2008: RO 2,587,000) were impaired. Movements in the allowance

for impairment of receivables were as follows:

2009 2008

RO’000 RO’000

At 1 January 2,587 4,666

Charge for the year 1,450 1,190

Amounts written off (125) (2,789)

Unused amounts reversed (10) (37)

Adjustment relating to subsidiary disposed off - (443)

At 31 December 3,902 2,587



9 TRADE AND OTHER RECEIVABLES (continued)

As at 31 December, the ageing of unimpaired trade receivables is as follows:

Past due but not impaired

Total

RO’000

Neither past

due nor

impaired

RO’000

< 30 days

RO’000

30 – 60

days

RO’000

60 – 90

day

RO’000

90 – 120

day

RO’000

>120 days

RO’000

2009 57,460 35,057 14,727 2,070 1,492 1,861 2,253

2008 52,766 34,983 7,699 3,763 2,070 2,383 1,868

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.

10 CASH AND CASH EQUIVALENTS

2009 2008

RO’000 RO’000

Cash and bank balances 30,692 15,011

Bank borrowings (note 12) (3,520) (2,803)

27,172 12,208

Included in cash and bank balances are fixed and call deposits of RO 10,364,000 (2008: RO 6,022,000) maintained with

commercial banks. These are denominated mainly in Rial Omani, US Dollar, UAE Dirhams and Qatari Rial, are short term in

nature.

11 TRADE AND OTHER PAYABLES

2009 2008

RO’000 RO’000

Trade payables 20,167 22,896

Accrued expenses and other payables 38,703 36,822

Income tax payable 5,529 7,806

Amounts due to related parties (note 22) 361 478

64,760 68,002

12 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 6% to 8% per annum (2008: 6% to 7% per

annum).



13 TERM LOANS AND LEASES

Term loans 1 year 2 -5 More than

31 December 2009 Total or less years 5 years

RO’000 RO’000 RO’000 RO’000

Parent company 60,375 15,790 34,460 10,125

Subsidiary companies 126,986 22,494 95,051 9,441

187,361 38,284 129,511 19,566

1 year 2 -5 More than

31 December 2008 Total or less Years 5 years

RO’000 RO’000 RO’000 RO’000

Parent company 35,719 7,827 26,758 1,134

Subsidiary companies 114,462 23,408 78,152 12,902

150,181 31,235 104,910 14,036

Included in term loans from bank are the following:

Term loans in Parent Company

Term loans in Parent Company amounting to RO 60,374,000 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.

Term loans in Subsidiaries

Term loans in TOPAZ amounting to RO 126,987,000 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 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 62 million.

Term loans in subsidiaries include financing under Ijarah-fil-Thimma which represent funds advanced to the Group by a bank

under an Islamic financing scheme. Total amount of such financing is RO 13,483,000 (2008: RO 6,996,000) out of which

RO 1,740,000 (2008: RO 2,079,000) is classified as current portion.

Term loans carries interest rates ranging from 4.5% to 7.5% per annum (2008: 5% to 6% per annum).



13 TERM LOANS AND LEASES (continued)

Leases

2009 2008

RO’000 RO’000

Total lease payments outstanding as at 31 December 1,223 101

Less: Due within a year (disclosed as current liability) (210) (101)

Long term lease obligations (note 24 c) 1,013 -

Term loans and leases are disclosed in the statement of financial position as:

2009 2008

RO’000 RO’000

Non-current liabilities:

Term loans 149,077 118,945

Finance leases 1,013 -

150,090 118,945

Current liabilities:

Term loans 38,284 31,235

Finance leases 210 101

38,494 31,336

14 NON-CURRENT PAYABLE AND ADVANCES

2009 2008

RO’000 RO’000

Deferred income 732 1,117

Income tax payable 5,506 1,721

Other payables and advances 11,597 5,393

17,835 8,231

for the year ended 31 December 2009


15 STAFF TERMINAL BENEFITS

Defined contribution plan

2009 2008

RO’000 RO’000

Movements in the liability recognized in the statement of financial

position are as follows:

1 January 4,151 3,647

Accrued during the year 1,278 1,438

Payments during the year (606) (594)

Adjustments on sale of a subsidiary - (340)

31 December 4,823 4,151

15 STAFF TERMINAL BENEFITS

Defined benefit plan

The pension scheme of one of Group’s subsidiary covers a total of 477 employees (2008: 369 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.

16 CAPITAL AND RESERVES

Share capital

The authorised share capital of the Parent Company comprises 400,000,000 ordinary shares of RO 0.100 each (2008 :

400,000,000 of RO 0.100 each). At 31 December 2009, the issued and fully paid up share capital comprised 282,094,452

ordinary shares of RO 0.100 each (2008: 245,299,524 of RO 0.100 each). During 2009, the share capital increased by

RO 3,679,493 due to the issue of 36,794,928 bonus shares.

Details of shareholders, who own 10% or more of the Parent Company’s share capital, are as follows:

2009 2009 2008 2008

Number of

shares

‘000

% Number of

shares

‘000

%

Tawoos LLC 42,538 15.08 36,989 15.08



16 CAPITAL AND RESERVES (continued)

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 (2008: 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 2009, the subsidiaries held 14,554,586 shares (2008: 12,656,163) in the

Parent Company. The market value of these shares at 31 December 2009 was approximately RO 11.13 million (2008: RO 7.85

million). Treasury shares are pledged against a bank loan.

Share premium

The Group utilises the share premium for issuing bonus shares. In 2008 an amount of RO 3,679,492 is utlised to issue the

bonus shares.

16 CAPITAL AND RESERVES

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.

17 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:

2009 2008

RO’000 RO’000Net assets

Net assets 168,417 138,694

Minority interest (20,401) (13,381)

Net assets attributable to the shareholders of the Parent Company 148,016 125,313

Number of shares

Number of shares at 1 January 245,299 223,000

Bonus shares issued 36,795 22,299

282,094 245,299

Treasury shares (refer note 16) (14,555) (12,656)

Number of shares at 31 December 267,539 232,643

Net assets per share (RO) 0.553 0.539



18 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.

2009 2008

RO’000 RO’000

Charge for the year 4,181 7,122

Current liability 5,529 7,806

Non-current liability 5,506 1,721

11,035 9,527

Deferred tax assetOpening as on 1 January 1,239 1,675

(Debited) credited to income statement (10) (436)

At 31 December 1,229 1,239

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 2008 have not been finalised with the Secretariat General for

Taxation at the Ministry of Finance (the ‘Department’).

The Parent Company and some of its Omani incorporated subsidiaries have filed objections and further appeals against certain

decisions of the Department on disallowances made by the Department in the assessments. The Company has established

provisions at 31 December 2009 against the potential tax liabilities which might arise in this regard. As required under the tax

laws, the Company and its subsidiaries have paid the tax dues and are continuing to appeal to the higher authorities on some of

the disallowances made by the Department in assessments.

19 NET PROFIT FOR THE YEAR

Net profit for the year is stated after charging:

2009 2008

RO’000 RO’000

Staff costs 78,408 69,277

Net finance costs

Net interest expense 8,247 7,390

(Reversal) / provision for derivative used for hedging (refer note 25) (402) 2,713

7,845 10,103



19 NET PROFIT FOR THE YEAR (continued)

Net gain on sale of investment

Subsidiary

With effect from 1 January 2008 the Group sold 98.75% equity in its subsidiary Industrial Management Technology and

Contracting LLC (“IMTAC”) and its subsidiaries and recognised a net gain before tax on disposal of RO 6,028,000 for the year

2008.

Associate

The Group had an interest of 49% in Darium Thai Offshore Limited (DTOL), a company incorporated in Thailand. In 2007, the

shareholders of DTOL resolved to dissolve the company and the dissolution was registered with the Ministry of Commerce

on 24 August 2007. On 29 December 2009, the dissolution of DTOL was completed and the Group received an amount of

RO205,000. A loss of RO 7,000, being difference between the proceeds on dissolution of investment and the carrying amount

of investment at the effective date of sale, has been recognised in the consolidated statement of comprehensive income. DTOL

was involved in the charter of marine vessels, provision of on-board accommodation and catering services and sale of fuel and

other consumables.

20 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:

2009 2008

Net profit for the year attributable to the shareholders

of the Parent Company (RO‘000) 25,085 23,894

Weighted average number of shares (‘000)

Number of shares at 1 January (‘000) 2 82,094 282,094

Less: weighted average treasury shares (‘000) (14,555) (14,555)

Weighted average number of shares (‘000) 267,539 267,539

Basic and diluted earnings per share (RO) 0.094 0.089



21 DIVIDEND PER SHARE

2009 2008

Total distribution for the Shareholders (RO‘000) 3,385 6,132

Number of shares outstanding at 31 December (‘000) 282,094 245,299

Distribution per share (RO) 0.012 0.025

Cash dividend (RO‘000) 3,385 2,453

Bonus shares, at par (RO‘000) - 3,679

3,385 6,132

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 2010. Dividend for the year 2008 was approved by the shareholders at the AGM held on 29 March

2009.

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 2009.

22 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:

2009 2008

RO’000 RO’000

Income

Service rendered and sales 941 4,188

Advances due from related parties

Net advances 328 775

Expenses

Services received and purchases 1,071 542

Directors’ remuneration and sitting fees

Remuneration 174 176

Sitting fees 26 24

Remuneration and sitting fees above relate only to the Parent Company.

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 20 22



22 RELATED PARTY TRANSACTIONS

Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows:

2009 2008

RO’000 RO’000

Short-term benefits 1,631 1,354

Employees’ end of service benefits 26 49

1,657 1,403

Topaz Energy and Marine Limited has paid RO 202,788 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 9 and 11 respectively.

Outstanding balances at the year-end arise in the normal course of business. For the year ended 31 December 2009, the Group

has not recorded any impairment of amounts owed by related parties (2008: Nil).

23 COMMITMENTS AND CONTINGENT LIABILITIES

2009 2008

RO’000 RO’000

Commitments

Letters of credit 893 1,026

Capital expenditure commitments 67,223 60,781

Contingent liabilities

Letters of guarantee 28,627 20,068

Bills discounted – receivables - 3,069

Litigation

During the year, one of the Group’s customers has 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 English courts, challenging the cancellation.

The Management believes that, it is unlikely that the Group will incur losses as a consequence of this breach of contract. The

Group has recognised revenue in the amount of RO 7.5 million in respect of this contract and established provision for costs of

modification including foreseeable losses in the income statement.

for the year ended 31 December 2009


24 LEASES

a) Operating leases - receivable

The Group leases its marine vessels under operating leases. The leases typically run for a period of ten 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:

2009 2008

RO’000 RO’000

Within one year 58,898 54,087

Between one and five years 132,415 110,685

More than five years 54,430 58,256

245,743 223,028

b) Operating leases - payable

The Group has future minimum lease payments under operating leases for marine vessels with payments as follows:

2009 2008

RO’000 RO’000

Within one year 6,946 6,582

Between one and five years 6,537 6,428

More than five years 4,530 5,913

18,013 18,923

c) Finance lease commitments

The Group has entered into finance lease commitments with rentals payable as follows:

Present value of minimum lease payments

2009 2008

RO’000 RO’000

Within one year 210 101

After one year but not more than five years 362 -

More than five years 651 -

Total minimum lease payments 1,223 101



25 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 2009: Notional amounts by term to maturity Positive Negative Notional Over 1 fair fair amount Within 1 year to value value Total year 5 years RO’000 RO’000 RO’000 RO’000 RO’000

Interest rate swaps - 2,870 45,335 1,093 44,242

Forward foreign

exchange contracts - 74 17,346 17,346 - _________ _________ _________ _________ _________ _________

- 2,944 62,681 18,439 44,242 ========== ========== ========== ========== ==========

31 December 2008:

Notional amounts by term to maturity

Positive Negative Notional Over 1

fair fair amount Within 1 year to

value value Total year 5 years

RO’000 RO’000 RO’000 RO’000 RO’000

Interest rate swaps - 3,190 44,251 1,595 42,656

Forward foreign

exchange contracts 83 54 15,244 15,244 - _________ _________ _________ _________ _________ _________

83 3,244 59,495 16,839 42,656 ========== ========== ========== ========== ==========

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 21.15 million at a fixed interest rate of 3.95% per annum excluding margin, RO 4.23 million at a fixed rate of 4.89% per

annum excluding margin, RO 19.23 million at the rate of 2% per annum excluding margin, and an amount of RO 3.85 million

at the rate of 3.25% per annum excluding margin. At 31 December 2009, the US LIBOR was approximately 0.43% per annum,

whereas the Group has fixed interest at 3.95%, 4.89%, 2% and 3.25% per annum. Accordingly, the gaps between US LIBOR

and fixed rate under IRS were approximately 3.52%, 4.46%, 1.57% and 2.82% per annum.



25 DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Based on the interest rates gaps, over the life of the IRS, the indicative losses were assessed at approximately RO 2.86 million

(2008: RO 3.29 million) by the counter parties to IRS. In case the Group terminates the IRS at 31 December 2009, it may incur

losses to the extent of approximately RO 2.86 million (2008: RO 3.29 million). 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 2.86 million (2008: RO 3.29 million) has been recorded under accounts payables and

accruals and the impact for the year amounting to RO 0.51 million (2008: RO 2.82 million) has been recorded under finance

costs and RO 88,000 (2008: Nil) has been recognized in the hedging reserve. Similarly, an amount of RO 0.07 million (2008:

RO 0.03 million) 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 0.10 million (2008: RO 0.10 million) 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% per annum. Any gains or loss related to these swaps are recognised as finance cost.

26 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.



26

OP

ER

AT

ING

SE

GM

EN

TS

(co

ntin

ued

)

In

form

atio

n ab

out

repo

rtab

le s

egm

ents

:

Eng

inee

ring

se

rvic

esM

arin

e se

rvic

esC

ont

ract

se

rvic

esO

ther

sA

dju

stm

ents

Tota

l

20

092008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

R

O’0

00R

O’0

00

RO

’000

RO

’000

RO

’000

RO

’000

RO

’000

RO

’000

RO

’000

RO

’000

RO

’000

RO

’000

Tota

l rev

enue

s77,9

04

88,8

39

95,5

00

75,2

27

65,0

35

62,0

78

10,3

04

9,9

05

(503)

(576)

248,2

40

235,4

73

Less

: Int

er-s

egm

ent

reve

nue

(313)

(860)

--

(126)

(171)

(211)

(182)

--

(650)

(1,2

13)

Exte

rnal

rev

enue

77,5

91

87,9

79

95,5

00

75,2

27

64,9

09

61,9

07

10,0

93

9,7

23

(503)

(576)

247,5

90

234,2

60

Net

fina

nce

cost

(463)

(279)

(7,0

00)

(6,0

38)

(574)

(938)

(210)

(134)

402

(2,7

14)

(7,8

45)

(10,1

03)

Dep

reci

atio

n an

d am

ortis

atio

n (2

,452)

(1,9

63)

(13,4

27)

(10,7

64)

(4,5

36)

(4,2

29)

(551)

(529)

(255)

(221)

(21,2

21)

(17,7

06)

Rep

orta

ble

segm

ent

profi

t af

ter

inco

me

tax

3,6

25

7,0

56

22,6

39

15,0

16

7,0

17

6,6

31

(3,9

92)

655

(779)

(3

,161)

28,5

10

26,1

97

Rep

orta

ble

segm

ent

asse

ts5

8,2

88

60,5

27

277,3

66

235,0

33

91,8

81

62,1

80

39,0

91

39,8

79

(18,6

87)

(25,4

57)

447,9

39

372,1

62

Cap

ital e

xpen

ditu

re9,7

62

5,0

28

45,0

64

85,1

68

30,9

55

5,3

41

412

538

--

86,1

93

96,0

75

Rep

orta

ble

segm

ent

liabi

litie

s39,5

21

38,8

91

150,3

52

155,2

23

45,8

75

21,3

68

58,8

80

41,1

57

(15,1

06)

(23,1

71)

279,5

22

233,4

68

for t

he y

ear e

nded

31

Dece

mbe

r 200

9


26 OPERATING SEGMENTS (continued)

Geographical segments:

Revenue as based on the geographical location of the business activities is as follows:

2009 2008

RO’000 RO’000

Oman 42,943 39,650

Middle East and North Africa (excluding Oman) 135,665 132,931

Caspian 51,553 46,834

Others 17,429 14,845

247,590 234,260

27 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, amount due to related parties

and employee terminal benefits.

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.



27 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

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.

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:

2009 2008

RO’000 RO’000

Investments 1,378 2,436

Trade receivables 57,460 52,766

Advances to suppliers and contractors 13,224 16,281

Amount due from related parties 777 1,035


103,531 87,529

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.




Liquidity risk (continued)

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 2009 Carrying amountRO’000

Contractual cash flows

RO’000

Upto 1 year

RO’000

1 year to 5 yearsRO’000

More than 5 yearsRO’000

Term loans and leases 188,584 213,477 41,952 144,218 27,307

Bank borrowings 3,520 3,520 3,520 - -

Trade and other payables 87,418 87,418 64,760 22,658 -

279,522 304,415 110,232 166,876 27,307

31 December 2008 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 150,281 169,615 33,558 100,882 35,175

Bank borrowings 2,803 2,803 2,803 - -

Trade and other payables 80,384 80,384 68,002 12,382 -

233,468 252,802 104,363 113,264 35,175

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).




Market risk (continued)

Currency risk (continued)Effect on profit before tax

Increase/decrease in respective

Currency rate to the RO ‘000

2009 +5% -5%

Euro (EUR) (39) 39

Azerbaijan Manat (MNT) (15) 15

Kazakhstan Tenge (KZT) (30) 30

UK Pound (GBP) (14) 14

Norwegian Krone (NOK) (32) 32

2008

Euro (EUR) (31) 31

Azerbaijan Manat (MNT) (35) 35

Kazakhstan Tenge (KZT) (11) 11

UK Pound (GBP) (14) 14

Norwegian Krone (NOK) (38) 38

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 2009.

Increase/decrease

in basis points

Effect on profit

for the year

RO’000

2009Borrowings converted to Rial Omani +15 (216)Borrowings converted to Rial Omani -10 144

2008

Borrowings converted to Rial Omani +15 (387)

Borrowings converted to Rial Omani -10 373




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.

28 FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of all financial assets and liabilities are not significantly different from their carrying amounts.

29 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 2009 was RO 33,992,000 (2008:

RO 33,992,000).

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 61,362,000 (2008: RO 55,353,000)

and the provision for doubtful debts was RO 3,902,000 (2008: RO 2,587,000). 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 6,675,000 (2008: RO 5,344,000) with provisions for old

and obsolete inventories of RO 579,000 (2008: RO 552,000). Any difference between the amounts actually realised in future

periods and the amounts expected will be recognised in the income statement.

30 COMPARATIVE FIGURES

The comparative figures for the previous year have been reclassified, where necessary, in order to conform to the current year’s

presentation.



2009 2008

RO’000 RO’000

Revenue 24,449 25,178

Operating expenses (18,048) (17,518)

Gross profit 6,401 7,660

Other income 2,615 9,673

Administrative expenses (2,588) (2,590)

Net financing costs (2,122) (1,856)

Gain on sale of investments - 8,961

Profit before income tax 4,306 21,848

Income tax expense (1,406) (3,309)

Net profit for the year 2,900 18,539


Basic and diluted earnings per share (RO) 0.010 0.066

Dividend per share:

Cash dividend (RO) 0.012 0.010

Stock dividend (RO) - 0.015

0.012 0.025

Schedule to the Consolidated Financial StatementsStatement of Comprehensive Income (Parent Company)for the year ended 31 December 2009


2009 2008

RO’000 RO’000Non-current assetsProperty, plant and equipment 51,926 25,425

Investments 101,734 95,958

Total non-current assets 153,660 121,383

Current assetsInventories 890 837

Trade and other receivables 24,458 29,484


Total current assets 34,201 33,495

Current liabilitiesTrade and other payables 10,094 13,949

Bank borrowings 482 373

Term loans 15,790 7,828

Total current liabilities 26,366 22,150

Net current assets 7,835 11,345

Non-current liabilitiesTerm loans 44,585 27,893

Non-current payables and advances 13,228 1,721

Staff terminal benefits 665 544

Total non-current liabilities 58,478 30,158

Net assets 103,017 102,570

EquityShare capital 28,209 24,530

Share premium 19,496 20,723

Legal reserve 9,404 8,177

Proposed distribution 3,385 6,132

Retained earnings 42,523 43,008

Total equity 103,017 102,570

Net assets per share (RO) 0.365 0.418

Schedule to the Consolidated Financial StatementsStatement of Financial Position (Parent Company)as at 31 December 2009


2009 2008

RO’000 RO’000

OPERATING ACTIVITIESCash receipts from customers 22,650 25,337

Cash paid to suppliers and employees (16,006) (14,687)

Cash generated from operations 6,644 10,650

Net financing costs (2,122) (1,856)

Income tax paid (431) (899)

Cash flows from operating activities 4,091 7,895

INVESTING ACTIVITIESAcquisition of property, plant and equipment (19,771) (8,631)

Proceeds from sale of investments - 14,239

Investments (5,775) (23,538)

Dividend received 2,477 9,173

Cash used in investing activities (23,069) (8,757)

FINANCING ACTIVITIESNet receipts of term loans 24,654 9,411

Net movement in related parties 2,347 (3,656)

Dividend paid (2,453) (3,345)

Cash flows from financing activities 24,548 2,410

Net increase in cash and cash equivalents 5,570 1,548

Cash and cash equivalents at the beginning of the year 2,801 1,253

Cash and cash equivalents at the end of the year 8,371 2,801

Schedule to the Consolidated Financial StatementsStatement of Cash Flows (Parent Company)for the year ended 31 December 2009


Share

cap

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Pro

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RO

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RO

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the y

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--

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18,5

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Div

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2,2

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--

(5,5

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ivid

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--

-2,4

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--

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--

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Move

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stm

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ub

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--

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2008

24,5

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20

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009


Sharecapital

Sharepremium

RO’000 RO’000

1 January 2009 24,530 20,723

Total comprehensive income for the year :

Net profit for the year - -

Total comprehensive income for the year - -

Transactions with owners, directly recorded in equity:

Dividend paid and bonus shares issued 3,679 -

Proposed dividend - -

Transfer to legal reserve - (1,227)

Transactions with owners, directly recorded in equity3,679 (1,227)

Balance at 31 December 2009 28,209 19,496

Schedule to the Consolidated Financial StatementsStatement of Changes in Equity (Parent Company)for the year ended 31 December 2009


LegalReserve

Proposed distribution

Retainedearnings Total

RO’000 RO’000 RO’000 RO’000

8,177 6,132 43,008 102,570

- - 2,900 2,900

- - 2,900 2,900

- (6,132) - (2,453)

- 3,385 (3,385) -

1,227 - - -

1,227 (2,747) (3,385) (2,453)

9,404 3,385 42,523 103,017


Management Team

Corporate Office

Contract Services Group

Stephen R. Thomas

Chief Executive Officer

Ananda Fernando


CSG

Joaquim D’Costa

Chief Operating Officer

Baqar Haider

Facilities Development Manager

Graham Sanderson

Operations Manager

RSOD Iraq

Kamran Raza

Construction Manager

Adil Bahwan

Chief Development

Officer

Peter James

QA/HSE Advisor

Chris Marjoribanks

Country Manager

RSOD Afghanistan

Prakash Bhat

Procurement &

Logistics Manager

Karim Sheikh

Chief Financial Officer

Saalim Gaima

Chief Support

Services Officer

Ingvar Varhaug

GM NOC Norway

Ahmed Shirhan

Costing Manager

Joseph Ghanoun

GM RCS Angola

Viveg Sellathuraie

Finance Manager

Vishal Goenka


Hilal Al Esry

General Manager GLD

Parul Burman

Group Chief Internal Auditor

Saad Abdullah Ali

Company Secretary

Ayman Al Humoud

Country Manager

RS Abu Dhabi

ANNUALREPORT 2009

Marine & Engineering Group

Media Communication Group Education & Training Group

Fazel Fazelbhoy


Topaz MEG

Bill Bayliss


Topaz Engineering

Roy Donaldson


Topaz Marine

Sandeep Sehgal


MCG

Lawrence Alva

General Manager, NTI

Robert Maclean

Principal, NHI

Pramod Balakrishnan


Topaz MEG

Leon Mendonsa

GM Human

Resources

Tom Bower

GM Topaz

Ship Building

Suresh Sebastian

GM Topaz Fabrication

and Construction

John McFadyen

GM Topaz

Marine Repair

Jay Daga

GM Finance

Topaz Engineering

Ron Clark

GM Topaz Marine

MENA

Richard Ayling

GM Topaz Marine

Kazakhstan

Arindam Ray

GM Mergers

& Acquisitions

Paul Bundy

GM Topaz Marine

Azerbaijan

Tomasz Maszka

GM Topaz Marine

Turkmenistan

Jagdeep Makkar

GM Finance Topaz

Marine

& ITS SUBSIDIARY COMPANIES

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