M&A

7 March, 2010

Renaissance net profit rises

MUSCAT| Renaissance Services has achieved revenues RO248 million ($643 million) in 2009, up from RO234 million in 2008, while net profit after tax is at RO28.5 million ($74 million), up from RO26.2 million in the preceding year.

Not including the net capital gain of RO4.8 million from the divestment of the group's technology businesses in 2008, net profit has increased by 33.2 per cent, the company said in a press release.

Last week, Renaissance Board of Directors recommended a cash dividend of 12 per cent in comparison to 10 per cent last year, which would return RO3.4 million ($8.84 million) to shareholders, up from RO2.5 million ($ 6.5 million) last year. The board did not recommend stock dividend this year, in comparison to 15 per cent last year, on the position that the company's existing capital base is at an optimal level to generate higher cash dividends going forward.

Chairman Samir J Fancy said, "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."During the year, the oil and gas services provider invested RO86.2 million ($224 million) in new assets in its marine, engineering and contract service businesses, and closed out the year with a strong balance sheet including assets of RO447.9 million ($1.16 billion) and carried RO30.7 million ($79.8 million) in cash. Renaissance also undertook stress tests during the year to ensure that its funding programme was not at risk of defaulting.

The company has also managed to grow its number of employees from 10,000 to over 11,000 people while generating more income per capita, which is reflected in an 8.4 per cent increase in operating profit and better operating margins.

In 2009 Renaissance announced a breakthrough into the Turkmenistan market for its Marine business, and also grew its marine offshore support vessel fleet to over 100 vessels by ordering six new vessels. The contract services and engineering businesses also generated positive headlines during the year, whereby engineering inaugurated two new state of the art facilities, and contract services nearly completed the construction of its two new permanent accommodation facilities (PACs) for client PDO.

The company sees potential for further disciplined investments of RO522 million ($1.36 billion) over the next three years, which prospectively include major acquisitions or an acceleration of its ambitious global growth agenda. "Our 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," said Fancy.

"Our 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," he said. Fancy added, "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."

Source: Times of Oman