We are in as strong a position as we could be to sustainand grow our businesses, as the markets we serve go through a crisis of supply and demand patterns created by unpredictable geo-political factors.
Context matters to all businesses and the oil price that affects so much of our work continues to defy expert attempts to understand what the future will hold. One expert might predict $20 per barrel by the end of this year, while another sees $75 per barrel as possible.
Today's business response is therefore to realise that we service markets in a new normality of much lower oil prices than experienced in the recent past. We are finding innovative ways to reduce costs for our clients and ourselves, while maintaining the same high qualities of performance, safety, efficiency and sustainability that people expect from the Renaissance group.
Our bottom line has been under pressure in 2015 and we expect 2016 to be tough too, but our EBITDA has held up well, indicating strong operational performance and healthy cash-flows despite the market downturn. Our overall loss for the year is down to an unprecedented level of one-off, non-cash charges, although market comparisons for both our businesses show they are holding up extremely well. This is a source of encouragement for us and our investors.CEO
Our long-term contracts in stable OSV geographies give us confidence in the security of our business. A lot of our competitors in the OSV space are finding the market pressures too tough to wait out, but we are in a position to do so: we can afford to take the strategic view.
Our plan is therefore to continue consolidating Topaz's key competitive edge of a youthful and efficient fleet, serving blue-chip clients, in long-term stable contracts, with an excellent reputation for safety, efficiency and performance.
60% of our fleet is seeing near 100% utilisation due to strong performance in the Caspian, MENA and subsea markets. Our West Africa performance has meant that we took the decision to relocate some assets and we will maintain a smaller fleet in this region until the market recovers.
Our refinancing last year yielded a significant reduction in finance costs and our debt covenants are comfortable with good headroom. For a healthy company like Topaz, the tough OSV market conditions may offer up some bargain opportunities and we have the capacity on our balance sheet to pursue the right kinds of further investment, if and when they arise.
In May 2015, Topaz added a new newly-built Emergency Response and Recovery Vessel to the fleet, the Topaz Responder. This is a 300-berth capacity ship, with fully-equipped medical treatment and recovery facilities, firefighting capability and two 15-man fast rapid deployment craft that can be launched within 60 seconds.
The Responder, was primarily designed to provide safety support for offshore oil and gas producers, but in December it began operating as a search and rescue vessel in the Aegean Sea. Contracted by not-for-profit organisation Migrant Offshore Aid Station (MOAS), the Responder is playing a crucial role scouring the often treacherous waters of the relatively short (10 – 14 nautical miles) crossing, acting as MOAS' 'mothership' in its Aegean Sea Mission.
As a search and rescue boat, the Responder patrols the sea ready to respond to urgent calls from the Greek Coast guard patrols. Once on the scene, the Responder can accommodate up to 300 passengers and address any urgent medical needs in the on-board hospital on the way to bringing its passengers back safely to shore.
As reported in recent years, Topaz continues to operate as an independent entity, with a distinct management and governance structure. Topaz produces its own Annual Report, which is available through their website: www.topazworld.com
This year, we have developed the core business of Renaissance in three key ways: construction of a significant major asset at Duqm to expand our accommodation business volumes, developing new business capacities within Renaissance, and developing our Integrated Facilities Management position.
Despite reductions in occupancy in the Renaissance Villages and other oilfield contracts, our Oman business has grown because we won sizeable contracts with major oilfield clients and others.
Our international business has come under pressure. Our contract services in Norway have performed well under the circumstances: the total number of rigs operating in the North Sea has fallen from 50 to 34 and the number of rigs we service has gone from 16 to 12. Performance here was further tempered by foreign
exchange rate pressure but the business remains healthy and profitable. We have discontinued our operations in Angola. Our expansion programme into the UAE and other GCC markets has not yet secured its breakthrough and the losses here are effectively the costs of our continuing business development initiative.
Renaissance has a strong background in building, owning and operating permanently placed accommodation facilities, which provide exceptional standards of living for remote workforces at costs that compete with much lower standard temporary worker accommodation. One key to this success is our highly developed and bestquality suite of facilities services: from catering to laundry to maintenance to pest control and more. The point is, we have developed an excellent reputation for mobilising contracts that can serve any of the non-core activities of a business operating at scale.
The advantage to our clients is that we can now create strategic outsourcing solutions that mean we can guarantee to improve the standards of service they are receiving and save them money. Unlike many IFM providers, who act as a focal point for subcontracting, we can deliver the services ourselves. This makes for better coordination and means we can avoid the 'margins-onmargins' you get with multiple sub-contracts.
Taking new service areas to scale
Our IFM capability is a key area to focus on for growth and our success in securing the BP Khazzan facilities service contract shows that we are highly competitive in this market.
We have also sought to expand our capability, looking at the opportunities presented to bid for waste management contracts in Oman's regions. This is an excellent opportunity to leverage our existing experience of waste collection and achieve a new scale of operation in this business area. The key to success here was finding the right international partner to bring their expertise on board of delivering civic waste management services at scale. Following an extensive search, we have entered into an agreement with Ferrovial of Spain, a leading international Waste Management expert, and together we will be bidding for new contracts.
This year we divested our UAE Marine Engineering business, which was the final step in our strategic commitment to focus on our two core businesses. We have also stopped our contract services operations in Angola, where the oil price crisis has created difficulties in collection of receivables. The result of these two actions is a one-off loss.
The immediate challenge for 2016 will be to secure sufficient occupancy when we open our Duqm facility in July. It is also imperative that we achieve an early breakthrough in our developing UAE business. The key risk continues to be the low oil price, which could bring further reductions in occupancy at our Renaissance Villages in the oilfields. However, government commitment to the development of Duqm as a key diversification for Oman's economy gives us confidence that we will secure the requisite occupancy in the medium to long term. At macro level, we operate in regions where government revenue and break-even points are exposed to those oil price fluctuations, so we must be prepared to respond to changes in economic policies. These situations present many opportunities to a company such as ours, as we offer a key component of the solution: improving or rationalising standards and saving costs.
For all the challenges we expect from 2016, our future is positive: the advent of our state-of-the-art facility in Renaissance Village Duqm and our continuing evolution in facilities management provides us with a platform to expand and diversify our services, sectors and geographies. Integrated Facilities Management has become the global default solution for businesses who want to do more with less, saving companies and governments around the world over 1 trillion USD so far. Simplicity is key in facilities management: in Renaissance, our clients find a strategic partnership that creates a single outsourcing solution for all their facilities and services, giving them more time to focus on their core business.
Renaissance offers to improve the standards and reduce the costs of the facilities and services our clients use. Our operations are the best in class and our fully integrated solutions mean our clients can avoid the costs and complications of engaging multi-layered sub-contracts. That is why our clients continue to trust the Renaissance guarantee: to do more with less.
Stephen R Thomas
In May, we welcomed His Excellency Salim bin Nasser bin Said Al Aufi, Undersecretary, Ministry of Oil & Gas, to inaugurate our pilot Solar Project at our Fahud accommodation facility. This is a pioneering energy efficiency project, using a solar cell structure to provide shade to our parking area. The solar generation provides much of the power required by the facility and brings a considerable environmental benefit – the equivalent of not driving 4.5 million kilometres.
Renaissance has also been exploring the efficiencies of greener solutions to waste management, introducing a system for composting food waste instead of sending it to landfill. Our company attended the Global Green Awards in Berlin, Germany to accept an award for this initiative, which will lower our overall carbon footprint by 45%.
This year, we have seen how the economic challenges have exacted a tension on sustainability commitments. We have sought to understand this from our stakeholders view by inviting them to give us feedback on their priorities and their views on the Renaissance priorities too.
Our Sustainability Report contains an account of this feedback exercise, as well as detailed information on our own sustainability activity this year.
In 2015 our Board is proposing no dividend, as it is important to maintain the cash position of the company through this period of uncertainty in oil markets.
The Renaissance Dividend Policy is based on the proposition that cash is returned to Shareholders in the form of higher dividend pay-outs when there are no credible value creating opportunities to invest in the business.
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