Dubai: Topaz Energy and Marine (“Topaz”), a leading offshore support vessel and marine logistics company, today announces its results for the six months ended 30 June 2019 (“the period”).

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H1 2019 Results Highlights
Company growth progresses with increased utilisation and average day rates
• H1 2019 revenue increased to US$235m, up 56% compared to H1 2018 (US$151m);
EBITDA increased by 83% to US$141m in H1 2019 against H1 2018 (US$77m).
• Average day rate increased 16% to US$17,361, as compared to US$14,965 in H1
2018.
• Significantly enhanced profitability across operating regions reporting consolidated
profits after tax (before exceptional items) for the fifth consecutive quarter.
• Topaz Solutions contributed towards company growth with EBITDA of US$87m and
a resilient EBITDA margin of 87%.
• Core fleet utilisation increased to 89% in Q2 2019 (H1 2019: 87%) due to improvements in our home markets in the Caspian and MENA regions.
• A fire onboard a customer’s pipe laying barge in Azerbaijan in May is impacting the demand for Topaz’s project vessels in the near term, with vessel demand being delayed. Robust financial performance driving balance sheet deleveraging
• High growth in EBITDA led to NIBD/EBITDA improvement to 2.84 at the end of the
quarter.
• The company continues to be fully compliant with all financial covenants, with necessary headroom.
• Contract backlog of US$1.5bn provides revenue visibility.
Proven health and safety track record
• Topaz’s commitment to health and safety continues with the company’s Lifesaving 2
Rules now aligned with the International Oil & Gas Producers (IOGP) program.
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René Kofod-Olsen, Chief Executive Officer, Topaz Energy and Marine said:
“It has been a challenging time for the entire offshore industry, where cost leadership and differentiation have been major beacons, and so in early July, we announced DP World’s acquisition of Topaz Energy & Marine. The acquisition concludes our journey to deliver th right solution for our current shareholders, combined with a strong future capital structure for the company, creating the necessary liquidity to provide Topaz with a sustainable future and supporting our objective of increasing our presence in the global logistics and maritime
services industry.

DP World has been heavily investing in companies within the marine logistics sector that have strong outlooks across revenue and backlog along with long-standing, blue-chip customer relationships. The deal combines two strong companies, allowing for increased investment both in the fleet and in technology and innovation, to the benefit of current and future stakeholders.

We have worked closely with DP World leading up to this deal and believe that not only will the increased scale allow the business to drive efficiencies and earnings growth, the merged entities will also bring complementary advantages in terms of backlog, customer base and geographic focus. A few years ago, we plotted the course to change the marine logistics sector – and the transaction provides us with a real opportunity to deliver even
further on exactly that.

DP World recognises the success we have achieved and wants us to continue to deliver that going forward. Testament to this success, are our results for the first half of 2019, where we continued to perform above market and delivered yet another robust set of results with a 56% increase in revenue to US$235m and an 83% increase in EBITDA to US$141m compared to US$77m in H1 2018.

Our market-leading utilisation rates continued to increase to 87%, driven by our Solutions business, the predicted redeployment of our project vessels in Azerbaijan, and the stability of our MENA and subsea fleet.”

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Revenue for the six-month period was US$235m, an increase of 56% compared to US$151m in H1 2018. This increase was mainly the result of (i) increased revenue from Solutions of US$67m (ii) deployment of four new vessels in the MENA region, the impact of which was US$9m and (iii) increased utilisation in the Africa fleet generating US$10m in revenue. However, this increase was partially offset by (i) loss of revenue of US$5m in Africa as two vessels were unavailable for hire (due to a past dispute which has since been resolved), and one vessel being unavailable for use due to technical reasons and (ii) lower revenue from MENA vessels working on the spot market (US$2m).

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EBITDA increased by US$64m (83%) to US$141m during H1 2019, due to (i) increased EBITDA from Solutions of US$68m and (ii) the deployment of four new vessels in the MENA region, the impact of which was US$4m. However, this increase was partially offset by (i) loss of EBITDA of US$5m in Africa as two vessels were unavailable for hire (due to a past dispute which has since been resolved) and one vessel was unavailable due to technical reasons and (ii) lower EBITDA from MENA vessels working in the spot market (US$3).

Administrative expenses:
Administrative expenses increased to US$25m compared to US$16m in the same period in H1 2018, as a direct consequence of the increase in our Solutions business, along with one-off project related costs.

Finance costs:
Finance costs in the period stood at US$39m, US$7m higher than the same period last year, due to an accounting impact under IFRS 15.

Income tax expenses:
Income tax expenses increased by US$4m to US$13m from US$9m in the same period last year due to increased revenue.

Cash flow
Cash generation as a percentage of EBITDA for H1 2019 was 85% (H1 2018: 78%). The table below illustrates the cash flow for the reporting period:

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The increase in working capital was driven by higher revenue during the period but increased at a significantly lower rate than revenue and EBITDA (working capital increased 24% in H1 2019 compared to the same period in 2018, while revenue increased 56% and EBITDA 83%). DSO decreased by 25% in Q2 2019 compared to the same period in 2018.
The outflow on advance offset for Solutions represents the repayment of pre-mobilisation advances on acquired vessels. Interest payments included US$17m bond coupon payments. Investing activities include US$94m towards expansion CAPEX for our brand new subsea vessels, delivered from the yard in January 2019, and US$11m towards drydocking and upgrade CAPEX. Financing activities include drawdown on the facility linked to the subsea vessels of US$83.3m, a draw-down of US$27.5m from the RCF facility and
senior secured debt repayment of US$15m.
Unutilised banking lines as at 30th June 2019 include an RCF of US$12.5m expiring in April 2020.

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Capitalisation
The following table sets out the consolidated cash, total indebtedness, shareholders’ funds, total capitalisation and net debt at the end of the last five quarters.

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About Topaz Energy and Marine
Topaz Energy and Marine is a leading international offshore support vessel company providing logistics support and marine solutions to the global energy industry with primary focus on the Caspian Sea, the Middle East, West Africa and global subsea operations.
Headquartered in Dubai, Topaz Energy and Marine operates an existing fleet of about 120 offshore support vessels with an average age of approximately nine years. Topaz Energy and Marine is a subsidiary of Renaissance, a publicly traded company listed on the Muscat Securities Market in Oman. In addition, Affirma Capital (Standard Chartered Private Equity) holds a minority position in the company. On 01 July 2019 the owners of Topaz announced the sale of the company to DP World. The transaction is subject to customary
completion conditions and regulatory approvals and is expected to close in the second half of 2019.
www.topazworld.com 

For further information, please contact:
Investor Relations:
Morten Wedel Jorgensen
Head of Strategy & Corporate Planning
Tel: +971 4 440 47 00
Email: ir.topaz@topazworld.com 
Media Contacts:
FTI Consulting
Email: topaz@fticonsulting.com 
Dubai: Aashti Bawa
Tel: +971 4 437 2100
London: Sara Powell
Tel: +44 (0)203 727 1000

© Press Release 2019

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