e h l ar 2012 - listed companyezion.listedcompany.com/misc/ar2012.pdf · 12 13 e h l ar 2012 e h l...

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Ezion Holdings Limited AR 2012

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A N D F I N A N C I A L CO N T E N TS

C O N T E N T S

T H E DAW N :EZ I O N ’S L I F T B OATS I N A S I A PAC I F I C ,

M I D D L E E A ST A N D W E ST A F R I CA

EZ I O N W I L L CO N T I N U E TO F O CU S O N I N V E ST M E N T I N S E RV I C E R I G S TO M E E T T H E ST R O N G D E M A N D F R O M I TS CU STO M E RS I N

T H E O I L A N D GA S I N D U ST RY

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Ezion Holdings Limited AR 2012 Ezion Holdings Limited AR 2012

Ezion Holdings Limited (“Ezion”) and together with its subsidiaries the (“Group”) has 2 main business divisions that specialises in the development, ownership and chartering of strategic offshore assets and the provision of offshore marine logistics and support services to the offshore oil and gas industries.

The Group is the owner of one of the largest and most sophisticated class of Multi-Purpose Self Propelled Jack-up Rigs (“Liftboats”) in the world and one of the first to promote the usage of Liftboats in Asia & Middle East. Ezion’s Liftboats are used mainly for well-servicing, commissioning, maintenance and decommissioning of offshore platforms.

The Group is also the owner of a fleet of vessels, consisting of tugs, ballastable barges, offshore support vessel and self-propelled barge that are used in the provision of offshore marine logistics and support services to the offshore oil and gas industries. The Group’s fleet of ballastable barges, one of the largest in the region, has

been specially reinforced and modified to carry the prefabricated modules in the construction of LNG extraction facilities and jackets for the offshore oil and gas industries.

The Group’s operating companies also offers a range of services to include marine consulting related to the development & construction and marine logistic solutions for marine offshore facilities. Branch offices in Korea, The United States of America and Australia provide logistics, supercargo, engineering and freight forwarding to complement existing operations.

C O r p O r aT E p r O f i l E

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L E A D I N G E D G E : EZ I O N ’S CA PA B I L I T I E S I N L N G R E L AT E D P R OJ EC TS

L EV E RAG I N G O N I TS T RAC K R ECO R D, E X P E R I E N C E A N D E X I ST I N G B U S I N E S S

I N F RA ST R U C T U R E , EZ I O N W I L L CO N T I N U E TO P U RS U E B U S I N E S S O P P O RT U N I T I E S

TO S U P P O RT L N G R E L AT E D P R OJ EC TS I N AU ST RA L I A A N D I TS V I C I N I T I E S

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f i N a N C i a l H i G H l i G H T S

f i N a N C i a l H i G H l i G H T S

24,06457,007

117,091

106,951

R EV E N U EU S $ ’ M I L L I O N S

2008 2009 2010 2011 2012

6,22513,260

40,202

58,117

N E T P R O F I TU S $ ’ M I L L I O N S

2008 2009 2010 2011 2012

93,648137,507

209,922

268,333

S H A R E H O L D E RS’ F U N DU S $ ’ M I L L I O N S

2008 2009 2010 2011 2012

0.971.95

5.64

8.14

E A R N I N G S P E R S H A R EU S C E N TS/S H A R E

2008 2009 2010 2011 2012

14.54 19.2729.43

37.60

N E T A S S E T VA LU EU S C E N TS/S H A R E

2008 2009 2010 2011 2012

2012 2011 2010 2009 2008

US$’000 US$’000 US$’000 US$’000 US$’000

Revenue 158,669 106,951 117,091 57,007 24,064

Profit Before Tax 82,768 61,010 43,178 14,006 6,362

Net Profit 78,841 58,117 40,202 13,260 6,225

Key Financial Position Indicators

Shareholders’ Fund 552,849 268,333 209,922 137,507 93,648

Total Assets 1,198,005 470,374 397,261 282,358 165,996

Total Liabilities 645,156 202,041 187,339 144,851 72,348

Performance Indicators

Earnings Per Share (cents/share) 9.54 8.14 5.64 1.95 0.97

Net Asset Value(cents/share) 60.76 37.60 29.43 19.27 14.54

Financial Ratios

ROE (%) 19.2 24.3 23.1 11.5 6.9

ROA (%) 9.45 13.4 11.8 5.9 4.4

Current Ratio (times) 1.72 1.56 1.58 1.53 1.42

Net Gearing (times) 0.76 0.35 0.26 0.65 0.27

158,669 78,841

552,849 9.54

60.76

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l E T T E r T OS H a r E H O l D E r S

WA R M G R E E T I N G S ,

On behalf of the Board of Directors, we are pleased to present to you the annual report for Ezion Holdings Limited for the financial year ended 31 December 2012 (“FY2012”).

We experienced a flurry of activities throughout FY2012. Combining both the Liftboats and Service Rigs (collectively called “Service Rigs”) division and the LNG Field Development Support Services division, a total of 14 new projects totaling more than USD 1 billion were secured during the year. During the same period, building and refurbishment for 5 of the Service Rigs were successfully completed and deployed in different parts of the world that include the waters in South East Asia, Alaska of the United States of America, Central America and the North Sea for long term work. New projects rolled out in FY2012 also include the QCLNG project in Queensland Australia. As a result, our revenue grew about 48% to USD 158.7 million and the net profit also increased by about 36% to USD 78.8 million.

Growth was managed with emphasis on our cash flow and balance sheet. We generated about USD 93.7 million of operating cash flow during the year. Two capital market exercises, one in February, which we strengthened the

equity base by about USD 75 million through an ordinary share private placement and the other in September, which bolstered our shareholders’ fund by about USD 100 million with a perpetual securities offering. The shareholders’ fund grew by 106% to USD 552.8 million in FY2012.

We have also established additional strategic partnerships in FY2012. A joint venture was formed in November with Kim Seng Holdings Pte Ltd to undertake the project providing two Service Rigs to a national oil major in Central America. We also entered into a collaboration in November with Mr Tan Boy Tee, the former founder of Labroy Marine Limited through a strategic share placement exercise, to engage him as an ad hoc adviser for our Service Rigs and marine related projects. In December, we were also privileged to have entered into a strategic relationship with EDB Investment Pte Ltd (“EDBI”), the corporate investment arm of Singapore’s Economic Development Board through a private share placement exercise. This tie up allows us to leverage on EDBI’s extensive network of resources and vast experience. We believe these new friendships will help to further expand our business in the vibrant offshore Oil and Gas industry.

From left:Mr Lee Kian SooChairman

Mr Chew Thiam KengChief Executive Officer

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l E T T E r T OS H a r E H O l D E r S

For 2013, more of our Service Rigs are expected to be completed and deployed. We also expect contributions from the commencement of both the APLNG and GLNG projects in Australia. In addition, we believe the current aging offshore production platforms and the high number of marginal wells that require servicing in the world will continue to drive support and demand for the Group’s Service Rigs. On the other hand, major LNG projects that are coming online in Australia will also provide more opportunities for us. We will continue to leverage on our track record, our geographically diversified operations and our enhanced business infrastructure to meet these strong demands.

In view of the above and that we have the opportunities to generate better return for the cash, we intend to reinvest the profits generated. Nevertheless, we have recommended a final tax-exempt dividend of SGD 0.001 per ordinary share, pending approval at the forthcoming Annual General Meeting.

We give all the honor and glory to God. We praise Him and humbly thank Him for His continuous blessings and favors. We are grateful to our fellow directors for their advice, guidance and time and to all our colleagues for their dedication and hard work. We must also thank our bankers, business associates and partners for their invaluable support. We thank you for keeping faith in us and rest assured that you are always in our mind and we continue to work hard for you.

Grace and peace be with you in abundance.

M R L E E K I A N S O O

Chairman

M R C H EW T H I A M K E N G

Chief Executive Officer

B O a r D O fD r Wa N G K a i Y U E NI N D E P E N D E N T N O N - E X ECU T I V E D I R EC TO R

Dr Wang Kai Yuen is an Independent Non-Executive Director appointed on 28 July 2000. He currently also serves as the Chairman of the Audit Committee and is a member of both the Remuneration and Nominating Committees. Dr Wang sits on the Board of Superbowl Holdings Ltd, Xpress Holdings Ltd, COSCO Corporation (Singapore) Limited, Hiap Hoe Ltd, ComfortDelGro Corporation Limited, CAO (Singapore) Corporation Ltd, Matex International Ltd, HLH Corp, EOC Ltd and A-Sonic Aerospace Ltd. Dr Wang retired from Fuji Xerox Singapore Software Centre in December 2009 as the Centre Manager. Dr Wang served as a Member of Parliament for the Bukit Timah Constituency from December 1984 till April 2006. He was the Chairman of Feedback unit from 2002 till his retirement from politics. Dr Wang graduated from the National University of Singapore with a Bachelor in Engineering (First Class Honours in Electrical and Electronics). He also holds a Master of Science in Electrical Engineering and a PhD in Engineering from Stanford University. He received a Friend of Labour Award in 1988 for his contributions to the Singapore labour movement.

M r l i M T H E a N E EI N D E P E N D E N T N O N - E X ECU T I V E D I R EC TO R

Mr Lim Thean Ee is an Independent Non-Executive Director appointed on 28 July 2000. He has been appointed the Chairman of the Remuneration Committee with effect from 18 July 2008 and is a member of both the Audit and Nominating Committees. He serves as the Managing Director of Coastal Navigation Pte Ltd and Chairman of Masindo Marine Pte Ltd with more than 35 years of experience in Shipbuilding and Ship Repairing Industry. He is an Associate Member of Society of Naval Architects and Marine Engineers, USA since year 1974 and is also the Chairman of Telok Blangah Citizens’ Consultative Committee and Chairman of Depot Estate Businesses Association.

M r Ta N W O O N H U MI N D E P E N D E N T N O N - E X ECU T I V E D I R EC TO R

Tan Woon Hum is our Independent Director and was appointed as Director on 21 March 2007. He is currently a partner of Shook Lin & Bok LLP, a Singapore law firm and has been with the firm since December 2003. Mr Tan graduated from the National University of Singapore with a Bachelor of Law Degree in 1995 and was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 1996. He obtained his MBA (Finance) from the University of Leicester in 1999. He has been in private legal practice since 1996 and he specialises in trust, asset and wealth management. He advises on the establishment of traditional and alternative funds including licences and exemptions, as well as the establishment and initial public offering (IPO) of REITs (having been involved in almost all the listed S-REITs and most of the S-REITs IPOs). He also advises on trusts, family trusts, family offices, wealth protection and succession matters. He is a frequent speaker at public conferences held in Singapore and Hong Kong on funds, regulatory, REITs and other legal issues. Mr Tan is also an independent director of AP Oil International Limited, Yong Xin International Holdings Ltd and UTI International (Singapore) Private Limited.

M r l E E K i a N S O O N O N - E X ECU T I V E C H A I R M A N A N D N O N - E X ECU T I V E D I R EC TO R

Appointed the Non-Executive Chairman and Non-Executive Director since 1 June 2007, Mr Lee Kian Soo is also the founder of the Ezra Group of Companies (“Ezra”) with 30 years of experience in the shipping and offshore support service industry. Prior to founding Ezra, Mr Lee has worked in various established companies which include Jurong Shipyard, Sembawang Shipyard and Offshore Supply Association. Mr Lee has been responsible for the strategic planning, business development and marketing of Ezra since its inception in 1992.

M r C H E W T H i a M K E N GC H I E F E X ECU T I V E O F F I C E R A N D E X ECU T I V E D I R EC TO R

Mr Chew Thiam Keng was appointed the Executive Director on 1st March 2007, and was appointed as the Chief Executive Officer on 1st June in the same year. Mr Chew is responsible for the Group’s operations in strategic planning, corporate management and business development. Before joining the Group, Mr Chew was the Managing Director/CEO of KS Energy Services Limited for about 5 years and was the Executive Director of Kian Ann Engineering Limited between 1996 and November 2001. Before that, Mr Chew was with the Development Bank of Singapore Limited for nine years working in the areas of banking such as corporate finance and retail banking. Mr Chew holds a Master Degree in Business Administration from the University of Hull and a Bachelor Degree (Honours) in Mechanical Engineering from the National University of Singapore.

C a p Ta i N l a r r Y G l E N N J O H N S O NC H I E F O P E RAT I N G O F F I C E R A N D E X ECU T I V E D I R EC TO R

Captain Larry Glenn Johnson was appointed an Executive Director cum Chief Operating Officer of the Group since 13 February 2008. He is responsible for the day to day operations of the Group. He is a seasoned Marine Professional with over 35 years of experience in the maritime industry and holds a valid USCG Masters License with 22 years of management experience, which include 14 years of P&L responsibilities. Captain Johnson has worked on numerous projects in varying capacities on behalf of ExxonMobil, Chevron, Aker Kvaerner, Conoco Phillips, Batelle, KBR, Clough, Technip, CBI and Bechtel. In 2009 he successfully established the tug and barge business for the Group’s Joint Venture for Gorgon in Australia. Before joining the Ezion Group, Captain Johnson worked at Foss Maritime Company for 24 years, with his last position as the Director International Operations and later retiring as Senior Vice President of America Transport with responsibilities for operations in the Gulf of Mexico, Asia, Africa, Australia and the Middle East.

D i r E C T O r S

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K E YE X E C U T i V E S

M r l E E K O N M E N G ( p E T E r )D E P U T Y C H I E F O P E RAT I N G O F F I C E R

Mr Lee Kon Meng, Peter joined the Company in May 2010 and is responsible for developing and nurturing new businesses and overseeing the group fleet operations. He holds a Master Mariner Class 1 certification with 13 years in the merchant navy and over 20 years in the offshore industry related management experience. Before joining the Group, Mr Lee served as a Director of POSH Semco Pte Ltd, specialising in turnkey major transportation and FPSO towage, installation projects in the offshore oil and gas industry and salvage.

M r p O H l E O N G C H i N G ( D aV i D )C H I E F CO M M E R C I A L O F F I C E R

Mr Poh Leong Ching, David is responsible for the marketing of the Group’s entire fleet of vessels which includes tugs, ballastable vessels, offshore support vessels and multi-purpose self-propelled jack-ups (“Liftboats”). Under his credentials are over 16 years of experience in the sales and operations of vessels and cranes. Mr Poh was the Marketing Manager of Tiong Woon Marine Pte Ltd and Tat Hong Holdings Group before joining the Group.

M r C H E a H B O O N p i NC H I E F F I N A N C I A L O F F I C E R

Mr Cheah Boon Pin is responsible for all accounting, financial and taxation matters. He joined the Group in June 2007 bringing with him over 15 years of experience in auditing and commercial accounting. Before joining the Company, Mr Cheah had served in financial management positions in 2 Singapore Exchange Main Board listed companies. He holds an ACCA accounting qualification and is a member of the Institute of Certified Public Accounting.

M r p E T E r C O l i N B r E U E rD I R EC TO R , S U P P LY BA S E D I V I S I O N

Mr Peter Breuer joined the Group in October 2010 and is responsible in operating and managing the Supply Bases for Group’s Marine Supply Base Business. He has extensive international management experience in the maritime, shipping, stevedoring, terminal operations, freight, transport and logistics industries, predominantly in start up and restructuring project management positions. Before joining the Group, Mr Breuer had served as a Director of Cargo Management at Offshore Marine Services and also as the General Director of SP-SSA International Container Services.

M r M a r K O r T E G aL EGA L CO U N S E L

Mr Mark Ortega joined the Group in February 2011 and heads the Legal Department which oversees all legal aspects of the Group’s operations. Mr Ortega obtained his law degree from the University of London and brings with him 16 years of experience in maritime law including 10 years as a practising lawyer. Prior to joining the Group, Mr Ortega was a Partner at Allen and Gledhill, one of Singapore’s top law firms, as well as Legal Counsel to Pacific Carriers Limited.

M r D E r r i C K C H i N GS E N I O R M A N AG E R – CO M M E R C I A L

Mr Derrick Ching joined the Group in March 2008 and is responsible for marketing of the Group’s fleet of Jack-ups and vessels. Mr Ching has more than 10 years of experience in the oil and gas industry and has successfully completed several upgrading and refurbishment of offshore drilling rigs. On top of that, he is also experienced in heavy lift accommodation barges, seismic vessels and pipe layers.

M r a l a N C H O N GG R O U P CO R P O RAT E F I N A N C E M A N AG E R

Mr Alan Chong joined the Group in February 2007 and is responsible for the debt and equity raising activities as well as the investor relations of the Group. Mr. Chong is also in charge of the insurance requirements of the vessels and Service Rigs owned by the Group. He holds a Bachelor of Business (Honours) degree in Banking and Finance from the Nanyang Technological University, Singapore and has more than 8 years of experience in the offshore oil and gas industry whereby he started his career as a management trainee in a Singapore Exchange Main Board listed company.

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O p E r aT i O N Sr E V i E W

F I N A N C I A L H I G H L I G H TS

The Group revenue for FY2012 increased by 48% to USD 158.7 million and Net Profit increased by 36% to USD 78.8 million. This was mainly due to the chartering contribution from the deployment of additional units of the Group's multi-purpose self-propelled Jack-up Rig ("Liftboat") and Jack-up Rig (collectively called "Service Rigs"); and the higher contribution from the offshore logistic support vessels services with the commencement of the QCLNG project.

Cost of sales and servicing for FY2012 increased by 70% to USD 87.9 million as compared to FY2011. The higher cost of sales and servicing was attributable mainly to the following:

i) higher operating cost from Liftboat operations in the Java Sea;

ii) the higher charter cost of third party vessels in support of the LNG projects in Australia;

iii) the higher charter cost from the sale and lease back of one of the Liftboats; and

iv) the start-up and preparation cost for deployment of new vessels.

The Group's gross profit for FY2012 improved

by USD 15.4 million (28%) to USD 70.7 million as compared to FY2011.

The higher administrative expenses for FY2012 corresponded to the increased business activities as well as increase in the staff strength, which is in line with the increased business volume. The decrease in other operating expenses for FY2012 were mainly due to decrease in net impairment losses on receivables as compared to FY2011.

Finance income for FY2012 increased as compared to FY2011 due to increased interest income from bank deposits and interest income from loans to joint ventures. Increased in finance expenses for FY2012 as compared to FY2011 was due mainly to the accrued interest in relation to the issuance of S$ 100 million notes under the Multicurrency Debt Issuance Programme.

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O p E r aT i O N Sr E V i E W

The shares of joint ventures’ results, net of tax for FY2012 increased to USD 16.9 million or 78% as compared to FY2011, contributed by increased operations of the Group’s joint ventures operating in Australia and chartering of service rigs.

Charter income derived from Singapore flagged vessels are exempted from tax under Section 13A of the Income Tax Act of Singapore. FY2012 income tax expense of USD 3.9 million relates to the corporate tax expense and withholding tax expense incurred by vessels operating in certain overseas waters.

B U S I N E S S S EG M E N TS

Revenue according to business segments for FY2012 consist of revenue from Service Rigs and revenue from offshore logistic support services which amounted to approximately USD 92.0 million or 58% and USD 66.7 million or

42.0% respectively. The increased in revenue from Service Rigs and offshore logistic support services for FY2012 as compared to FY2011 amounted to 119% and 3% respectively. Therefore, the revenue mix for service rigs segment and offshore logistic support services segment for FY2012 was 58% and 42% (FY2011: 39% and 61%) respectively.

G EO G RA P H I CA L S EG M E N TS

Our revenue contributions based on geographical segments for FY2012 were adequately diversified, reducing geographical market risk. In FY2012, revenue contributed by Singapore, Australia and Far East and ASEAN countries amounted to approximately USD 37.4 million or 24%, USD 46.2 million or 29% and USD 59.6 million or 38%, respectively, of total revenue.

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C O r p O r aT E S T r U C T U r E

E Z i O N H O l D i N G S l i M i T E D

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C O r p O r aT Ei N f O r M aT i O NB OA R D O F D I R EC TO RS

Lee Kian SooChew Thiam KengCaptain Larry Glenn Johnson Dr Wang Kai YuenLim Thean EeTan Woon Hum

AU D I T CO M M I T T E E

Dr Wang Kai Yuen – Chairman Lim Thean EeTan Woon Hum

R E M U N E RAT I O N CO M M I T T E E

Lim Thean Ee – Chairman Dr Wang Kai YuenTan Woon Hum

N O M I N AT I N G CO M M I T T E E

Tan Woon Hum – Chairman Dr Wang Kai YuenLim Thean Ee

R EG I ST E R E D A D D R E S S

15 Hoe Chiang Road #12-05 Tower Fifteen Singapore 089316Telephone 65 6309 0555 Facsimile 65 6222 7848 Website: www.ezionholdings.com Email: [email protected]

P R I N C I P L E BA N K E RS

Oversea-Chinese Banking Corporation Limited65 Chulia StreetOCBC CentreSingapore 049513

DBS Bank Ltd12 Marina BoulevardDBS Asia Central @ MBFC Tower 3Singapore 018982

Malayan Banking Bhd 2 Battery RoadMaybank TowerSingapore 049907

United Overseas Bank Limited80 Raffles PlaceUOB PlazaSingapore 048624

AU D I TO RS

KPMG LLPPartner-in-charge:Koh Wei Peng(Appointed since financial year ended 31 December 2012)16 Raffles Quay #22-00Hong Leong Building Singapore 048581

S H A R E R EG I ST RA R

M&C Services Private Limited 112 Robinson Road #05-01Singapore 008902

CO M PA N Y S EC R E TA R I E S

Lim Ka Bee Cheah Boon Pin

2 6CO R P O RAT E

G OV E R N A N C E R E P O RT

3 5D I R EC TO RS’ R E P O RT

4 1STAT E M E N T BY D I R EC TO RS

4 2I N D E P E N D E N T AU D I TO RS’

R E P O RT

4 4STAT E M E N T O F F I N A N C I A L

P OS I T I O N

4 6CO N S O L I DAT E D I N CO M E

STAT E M E N T

4 7CO N S O L I DAT E D STAT E M E N T

O F CO M P R E H E N S I V E I N CO M E

4 8CO N S O L I DAT E D STAT E M E N T O F

C H A N G E S I N Eq U I T Y

5 0CO N S O L I DAT E D STAT E M E N T O F

CA S H F LOWS

5 2N OT E S TO F I N A N C I A L

STAT E M E N TS

1 1 3S H A R E H O L D E RS’ I N F O R M AT I O N

1 1 5N OT I C E O F A N N UA L G E N E RA L

M E E T I N G

1 1 9N OT I C E O F B O O KS C LOS U R E

P R OXY F O R M

C O r p O r aT E G O V E r N a N C E & f i N a N C i a l C O N T E N T S


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The Board of Directors and Management of Ezion Holdings Limited (“Ezion” or the “Company”) are committed to continually enhancing shareholder value by maintaining high standards of corporate governance, business integrity and professionalism in all its activities

This Report sets out the corporate governance processes of the Company with specific reference to the principles of the Code of Corporate Governance 2005 (the “Code”).

BOARD MATTERSPRIncIPlE 1 BOARD’S cOnDucT OF ITS AFFAIRSPRIncIPlE 2 BOARD cOMPOSITIOn AnD GuIDAncE

The Board currently comprises the following members:

(i) Mr Lee Kian Soo Non-Executive Chairman

(ii) Mr Chew Thiam Keng Executive Director and Chief Executive Officer

(iii) Captain Larry Glenn Johnson Executive Director and Chief Operating Officer

(iv) Dr Wang Kai Yuen Independent Director

(v) Mr Lim Thean Ee Independent Director

(vi) Mr Tan Woon Hum Independent Director

The Board oversees the business of Company and assumes responsibility for the overall strategic plans, key operational initiatives, major investment and funding proposals, financial performance reviews and corporate governance practices. The Board provides the direction and goals for the management and monitors the performance of these goals to enhance the shareholders’ value. The Company has in place financial authorization and approval limits for operating and capital expenditure, procurement of goods and services, acquisitions and disposal of investments and treasury transactions. Within these guidelines, the Board approves transactions above certain thresholds. The Board also approves the financial results for release to the Singapore Exchange Securities Trading Limited (“SGX-ST”)

To assist the Board to effectively discharge its oversight duties and functions, the Board has delegated certain duties to various Board committees. These committees, namely the Audit Committee (“AC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”) functions within clearly defined terms of reference and operating procedures, which are reviewed by the Board, where necessary. The Board also closely monitors the effectiveness of each committee.

The Board is scheduled to meet at least four times a year and where necessary, hold additional meetings to address significant issues that may arise. Important matters concerning the Group are also put to the Board for its decision by way of written resolutions. The Company’s Articles of Association provides for meetings to be held via telephone conference.

C O r p O r aT E G O V E r N a N C E r E p O r T


The number of Board and Board Committee meetings held during the year ended 31 December 2012 as well as the attendance of each Board member at these meetings are disclosed below:

Type of Meetings Board Audit CommitteeNominating Committee

Remuneration Committee

Total No. Held 4 4 1 1

Name of Director and Attendance

Lee Kian Soo 3 N.A. N.A. N.A.

Chew Thiam Keng 4 N.A. N.A. N.A.

Larry Glenn Johnson 3 N.A. N.A. N.A.

Dr Wang Kai Yuen 4 4 1 1

Lim Thean Ee 4 4 1 1

Tan Woon Hum 4 4 1 1

N.A.: Not Applicable

The size and composition of the Board are reviewed from time to time by the Nominating Committee, which strives to ensure that the size of the Board is conducive to effective discussions and decision-making and that the Board has an appropriate balance of independent directors.

The majority of our directors are non-executive and independent directors. The Nominating Committee reviews the independence of each director based on the guidelines set out in the Code on an annual basis.

As a group, the Directors bring with them a broad range of industry knowledge, expertise and experience in areas such as finance, legal, business and management. The diversity of the directors’ experience allows for the useful exchange of ideas and view as well as provide for effective decision-making. Key information on the Board members is set out on pages 14 & 15 of this Annual Report.

The Board considers the present size appropriate for the current nature and scope of the Group’s operations.

PRIncIPlE 3 chAIRMAn AnD chIEF ExEcuTIvE OFFIcE

There is a clear separation of the roles and responsibilities of the Chairman and the Chief Executive Officer (CEO). This is to ensure appropriate balance of power and authority, accountability and decision-making.

Mr Lee Kian Soo, who is the Non-Executive Chairman, and Mr Chew Thiam Keng, the CEO of the Company are not related to each other. The CEO is responsible for the day-to-day management of the affairs of the Company and the Group. He plays a leading role in developing and expanding the businesses of the Group and ensures that the Board is kept updated and informed of the Group’s business.

The Chairman’s duties include:

1) scheduling meetings and leading the Board to ensure its effectiveness and approves the agenda of Board meetings in consultation with the CEO;

2) ensures that Board members are provided with accurate and timely information;


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3) promote a culture of openness and debate within the Board; and

4) ensure high standards of corporate governance and ensure effective communication with shareholders.

PRIncIPlE 4 BOARD MEMBERShIP

nOMInATInG cOMMITTEEThe Nominating Committee (“NC”) comprises three Directors, all of whom, including the Chairman are independent. The NC members are:

Mr Tan Woon Hum (Chairman)Dr Wang Kai Yuen Mr Lim Thean Ee

The NC’s duties include the following:

• reviewandassessallcandidatesfordirectorshipsbeforemakingrecommendationtotheBoardforappointment of directors;

• reviewand recommend to theBoard the retirement and re-electionofdirectors in accordancewith the Company’s Articles of Association at each Annual General Meeting (“AGM”);

• reviewtheindependenceofdirectorsannually;

• reviewthecompositionoftheBoardannuallytoensurethattheBoardhasappropriatebalanceofindependent directors and to ensure an appropriate balance of expertise, skills, attributes and ability among the directors;

• evaluatetheperformanceandeffectivenessoftheBoardasawhole.

The NC reviews and assesses candidates for directorship before making recommendations to the Board. In recommending new directors to the Board, the NC takes into consideration the skills and experience and the current composition of the Board, and strives to ensure that the Board has an appropriate balance of independent directors as well as directors with the right profile of expertise, skills, attributes and ability.

In evaluating a director’s contribution and performance for the purposes of re-nomination, the NC takes into consideration a variety of factors such as attendance, preparedness, participation and candour. The NC makes recommendation for new directors; and retirement and re-election of directors.

The Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. The Company’s Articles of Association provides that one third of the Board, or the number nearest to one third is to retire by rotation at every AGM. In addition, the Company’s Articles of Association also provides that newly appointed Directors are required to submit themselves for re-nomination and re-election at the next AGM of the Company.

PRIncIPlE 5 BOARD PERFORMAncE

The NC has established a formal assessment process to assess the effectiveness of the Board as a whole. The performance criteria for Board evaluation are based on financial and non-financial indicators such as an evaluation of the size and composition of the board, the Board’s access to information, board processes, strategy and planning, risk management, accountability, board performance in relation to discharging its principal functions, communication with senior management and standards of conduct of the directors.

The Board and Management have strived to ensure that directors appointed to the Board possess the experience, knowledge and skills critical to the Group’s business to enable the Board to make sound and well-considered decisions.

PRIncIPlE 6 AccESS TO InFORMATIOn

The Board members are provided with adequate and timely information prior to Board meetings and on an ongoing basis. The Board has separate and independent access to the Group’s senior management and the advice and services of the Company Secretaries who are responsible to the Board for ensuring board procedures are followed and the relevant statutory rules and regulations are complied with. Under the Articles of Association of the Company, the decision to appoint or remove the Company Secretaries can only be taken by the board as a whole. At least one of the Company Secretaries will be present at board meetings.

The Board may also take independent professional advice as and when necessary to enable it to discharge its responsibilities effectively at the expense of the Company. The Board is updated on the regulations of the SGX-ST, Companies Act, corporate governance policies and other statutory requirements.

REMunERATIOn MATTERSPRIncIPlE 7 PROcEDuRES FOR DEvElOPInG REMunERATIOn POlIcIES

PRIncIPlE 8 lEvEl AnD MIx OF REMunERATIOn

PRIncIPlE 9 DISclOSuRE OF REMunERATIOn

The Remuneration Committee (“RC”) comprises three Directors, all of whom including the Chairman are independent. The RC members are as follows:

Mr Lim Thean Ee (Chairman)Dr Wang Kai Yuen Mr Tan Woon Hum

The duties of the RC include the following:

• reviewandrecommendtotheBoardanappropriateandcompetitiveframeworkofremunerationforthe Directors and key executives of the Group;

• recommendtotheBoardspecificremunerationpackagesforeachExecutiveDirector,takingintoaccount factors including remuneration packages of Executive Directors in comparable industries as well as the performance of the Company and that of the Executive Directors;

• reviewandmakerecommendationonthefeesofIndependentNon-ExecutiveDirectorsforapprovalbythe Board;


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• ensuretheremunerationpoliciesandsystemsoftheGroupsupporttheGroup’sobjectivesandstrategies;and

• administrationoftheEzionEmployeeSharePlanandtheEzionEmployeeOptionScheme.

The remuneration package adopted for each of the Executive Directors is as per the service contract entered into between the respective Directors and the Company. The RC will review and recommend the specific remuneration package for each Executive Director upon recruitment. Thereafter, the RC reviews subsequent increments, bonuses and allowances where these payments are discretionary. No Director or member of the RC is involved in deciding his own remuneration.

Non-Executive Directors do not have any service contracts with the Company. Save for Directors’ fees, Non-Executive Directors do not receive any remuneration from the Company.

Directors’ fees are set in accordance with a remuneration framework comprising basic fees and additional fees for serving on any of the committees. Directors’ fees are subject to approval of shareholders of the Company as a lump sum payment at the AGM of the Company.

REMunERATIOn OF DIREcTORS

Remuneration Band and Name of Directors

Fees %

Salary & CPF %

Bonus & CPF %

Other Benefits

%Total

%

S$500,000 and above

Chew Thiam Keng – 29 70 1 100

Larry Glenn Johnson – 36 58 6 100

Below S$250,000

Lee Kian Soo 100 – – – 100

Dr Wang Kai Yuen 100 – – – 100

Lim Thean Ee 100 – – – 100

Tan Woon Hum 100 – – – 100

REMunERATIOn OF KEy ExEcuTIvES

To maintain confidentiality of staff remuneration matters and for competitive reason, the names of key executives of the Group are not disclosed in this annual report. The following shows the annual remuneration of the top 7 key executives of the Group for the financial year under review:

(a) Four key executives received total remuneration of more than S$400,000 each

(b) Three key executives received total remuneration of less than S$250,000 each

For the financial year ended 31 December 2012, there were no immediate family members of the director or the CEO under the employment of the Group whose remuneration exceeds S$150,000.

PRIncIPlE 10 AccOunTABIlITy

The Company keeps the shareholders updated on the Group’s financial performance, positions and prospects through quarterly and full-year financial results via announcements to the SGX-ST and annual financial reports. The Company also issues announcements on material developments in the Group’s business on an on-going and timely basis.

Management provides the Board with the relevant information such as management accounts on the performance of the Group on a timely and on going basis in order that the Board may effectively discharge its duties.

AuDITPRIncIPlE 11 AuDIT cOMMITTEE

The Audit Committee (“AC”) comprises three Directors, all of whom including the Chairman are independent. The AC members are:

Dr Wang Kai Yuen (Chairman)Mr Lim Thean Ee Mr Tan Woon Hum

The AC performs the following functions:

a) review with the external auditors, their audit plan, evaluation of the financial controls, audit reports and any matters which the external auditors wish to discuss ;

b) review with the internal auditors, their audit plan, the adequacy of the internal audit procedures and their evaluation of the effectiveness of the overall internal control systems, including financial, operational and compliance controls and risk management;

c) review the quarterly and annual financial statements, including announcements to shareholders and the SGX-ST prior to submission to the Board so as to ensure the integrity of the Company’s financial statements;

d) review any significant findings and recommendations of the external and internal auditors and related management response and assistance given by the management to auditors;

e) review interested person transactions to ensure that the review procedures approved by the shareholders are adhered to; and

f) conduct annual review of the independence and objectivity of the external auditors, including the volume of non- audit services provided by the external auditors, to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination.

The AC has full access to and receives full co-operation from Management, and has full discretion to invite members of Management to attend its meetings and has been given reasonable resources to enable it to discharge its functions. The external auditors have direct and unrestricted access to the AC, which is empowered to conduct or authorise investigations into any matters within its terms of reference.


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The AC has reviewed the overall scope of the external audits and the assistance given by the Company’s officers to the auditors. It met with the Company’s external auditors to discuss the results of their respective examinations and their evaluation of the Company’s system of internal accounting controls. The AC has also met with the auditors, without the presence of management.

The AC has reviewed the quarterly and annual financial statements of the Company and the Group for the financial year ended 31 December 2012 as well as the independent auditors’ report thereon. The AC has also reviewed interested person transactions of the Group in the financial year.

PRIncIPlE 12 RISK MAnAGEMEnT AnD InTERnAl cOnTROl

To facilitate the governance of risks and monitoring the effectiveness of internal controls, the Group had in FY2012 put in place a formal Enterprise Risk Management Framework. The Group’s risk management and internal controls system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The controls are to provide reasonable, but not absolute, assurance to safeguard shareholders’ investments and the Group’s assets.

The AC and the Board of Directors reviews the effectiveness of the key internal controls, including financial, operational and compliance controls, and risk management on an on-going basis. There are formal procedures in place for the external and internal auditors to report independently their findings and recommendations to the AC.

In line with the Code, the AC have incorporated a “whistle blowing policy” into the Company’s internal control procedures to provide a channel for staff to raise in good faith and in confidence, without fear of reprisals, concerns about possible improprieties in financial reporting or other matters. The objective of such a policy is to ensure independent investigation of such matters and for appropriate follow-up action.

The AC has conducted an annual review of all non-audit services by the auditors to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the auditors.

Based on the internal controls established and maintained by the Group, work performed by the internal and external auditors, and reviews performed by management, various Board Committees and the Board, the Audit Committee and the Board are of the opinion that the Group’s internal controls, addressing financial, operational and compliance risk, are adequate as at 31 December 2012.

The system of internal controls and risk management established by the Group provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that can be reasonably foreseen as it strives to achieve its business objectives. However, the Board also notes that no system of internal controls and risk management can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, losses, fraud or other irregularities.

PRIncIPlE 13 InTERnAl AuDIT

The Company has outsourced its internal audit function to Yang Lee & Associates, a professional service firm. The internal auditors report directly to the AC and make recommendations on their findings. The Group’s external auditors also contribute an independent perspective on the internal control systems arising from their audit and annually report their findings to the AC.

cOMMunIcATIOn WITh ShAREhOlDERSPRIncIPlE 14 cOMMunIcATIOn WITh ShAREhOlDERS

PRIncIPlE 15 GREATER ShAREhOlDER PARTIcIPATIOn

The Company believes in engaging in regular, effective and fair communication with shareholders and is committed to conveying pertinent information to shareholders on a timely basis. All material and price sensitive information as well as information on the Company’s new initiatives are publicly released via SGXNET on a timely basis. In addition, the Company also responds to enquiries from investors, analysts, fund managers and the press.

At the general meetings of the Company, shareholders are given the opportunity to express their views and ask questions regarding the Company and the Group. The Articles of Association of the Company allow shareholders to appoint one or two proxies to attend and vote in their stead.

Each item of special business included in the notice of the general meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting. The Chairman of the Audit, Remuneration and Nominating Committees are normally available at the meeting to answer those questions relating to the work of these committees. The external auditors are also present to assist the Directors in addressing any relevant queries by shareholders.

DEAlInGS In SEcuRITIESThe Company has adopted an internal code with regards to dealings in securities to provide guidance for its directors and officers.

The Company’s code provides that Directors and employees are prohibited from dealing in the securities of the Company whilst in possession of unpublished material price-sensitive information and during the period commencing two weeks before the quarterly results announcement and one month before the full year results announcement and ending on the date of the announcements of the relevant results.

Directors and executive officers are also required to observe insider trading laws at all times even when dealing in securities within the permitted trading period. In addition, the Directors and executive officers are expected not to deal in the Company’s securities for short-term considerations.

InTERESTED PERSOn TRAnSAcTIOnS (“IPTs”) POlIcyThe Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the Company’s interested persons transactions with Ezra Holdings Limited, its subsidiaries and associated companies, which are covered by a Shareholders’ Mandate renewed at the Annual General Meeting of the Company held on 26 April 2012 (“Shareholders’ Mandate”).

The AC reviews the Shareholders’ Mandate at regular intervals, and is satisfied that the review procedures for IPTs and the reviews to be made periodically by the AC in relation thereto are adequate to ensure that the IPTs will be transacted on normal terms and will not be prejudicial to the interests of the Company and its minority shareholders.


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D i r E C T O r S ’ r E p O r T


InTERESTED PERSOn TRAnSAcTIOnS FOR Fy2012

Name of Interested Person

Aggregate value of all interested person transactions during the

financial year under review (excluding transactions less

than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all interested person transactions conducted during the financial year under

review under shareholders’ mandate pursuant to Rule 920

(excluding transactions less than $100,000)

US$’000 US$’000

(A) Purchases

Emas Offshore Pte Ltd

Saigon Offshore Fabrication

And Engineering Ltd

Jit Sun Investments Pte Ltd

-

-

397

94

352 -

(B) Sales

Emas Offshore Pte Ltd - 11,571

Fodemas Pte Ltd - 16,470

MATERIAl cOnTRAcTSThere were no material contracts entered into by the Company and its subsidiaries involving the interests of its CEO, Directors or Controlling Shareholders.

uSE OF PROcEEDS

Proceeds Description on use of proceeds As at 15 March 2013

Net proceeds of approximately S$51.30 million from issue of redeemable exchangeable preference shares (“REPS”) by the subsidiary of the Company, Ezion Offshore Logistic Hub Pte. Ltd.

Acquisition of offshore and marine assets

General working capital of the marine supply business of the subsidiary

Amount yet to be utilised

S$17.40 million

S$2.2 million

S$31.70 million

Net proceeds of approximately S$94.60 million from placement of 110,000,000 ordinary shares in share capital of the Company

Acquisition of offshore and marine assets S$94.60 million


Acquisition of offshore and marine assets S$12.535 million


Amount yet to be utilised S$18.90 million


Amount yet to be utilised S$93.50 million

We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2012.

DIREcTORSThe directors in office at the date of this report are as follows:Lee Kian SooChew Thiam KengCaptain Larry Glenn JohnsonDr Wang Kai YuenLim Thean EeTan Woon Hum

DIREcTORS’ InTERESTSAccording to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the “Act”), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows:

Direct Deemed

Name of director and corporation in which interests are held

Holdings at beginningof the year

Holdings at end

of the year

Holdings at beginningof the year

Holdings at end

of the year

The Company

Dr Wang Kai Yuen 150,000 150,000 – –

Lim Thean Ee 1,200,000 1,200,000 – –

Chew Thiam Keng 30,010,000 16,020,000 142,000,000 142,000,000

Lee Kian Soo – – 100,000,000 40,000,000

By virtue of Section 7 of the Act, Chew Thiam Keng, is deemed to have interests in the subsidiaries of the Company, which are wholly-owned, at the beginning and at the end of the financial year.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year.

There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2013.


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Except as disclosed under the “Share Options” Section of this report, neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

During the financial year, the Company and its related corporations have in the normal course of business entered into transactions with companies including a joint venture in which a director of the Company has financial interest. Such transactions comprised charter of vessels and lease of office carried out on normal commercial terms as set out in note 30 to the financial statements. The director has neither received nor become entitled to receive any benefit arising out of these transactions other than those to which he is ordinarily entitled to as shareholder of these companies.

Except for the transactions disclosed in the preceding paragraph and short-term employee benefits as disclosed in note 30 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has substantial financial interest.

ShARE OPTIOnSDIREcTOR OPTIOn AnD ExEcuTIvE OPTIOn AGREEMEnTS

The grant of share options to Captain Larry Glenn Johnson under the Director Option Agreement (“Agreement”) and to 2 key executives under the Executive Option Agreements was approved by its members at an Extraordinary General Meeting held on 23 November 2009 (the “Vesting Reference Date”).

Other information regarding the above share options granted is set out below:

• TheexercisepriceofeachoptionisfixedatSingaporeDollar(“S$”)0.45.

• Theshareoptionsshallbeexercised,inwholeorinpart,inaccordancewiththefollowingschedulefrom23 November 2010 to 23 November 2014:

i. 25% of the share options shall vest 12 months after the Vesting Reference Date; and

ii. 25% of the share options shall vest on each anniversary of the Vesting Reference Date thereafter.

• Alloptionsaresettledbyphysicaldeliveryofshares.

• Theoptionsgrantedexpireafter5yearsoruponcessationoftheemploymentofCaptainLarryGlennJohnson or the 2 key executives.

At the end of the financial year, details of the options granted under Agreement and Executive Option Agreements on the unissued ordinary shares of the Company are as follows:

Date of grant of options

Exercise price per

share

Options outstanding

at 1 January 2012

‘000

Options exercised

‘000

Options forfeited

‘000

Options outstanding

at 31 December

2012 ‘000

Number of option holders at 31

December 2012

Exercise period

23/11/2009 S$0.45 4,000 – – 4,000 1

01/11/2010 to

23/11/2014

Two key executives have ceased to be employees of the Group on 4 October 2010 and 31 March 2011 respectively. Accordingly, the share options granted to them under the Executive Option Agreement had been forfeited. The remaining outstanding share options under the Executive Option Agreement at 31 December 2012 relate to share options granted to Captain Larry Glenn Johnson. There are no share options forfeited, cancelled or exercised by Captain Larry Glenn Johnson during the year.

EzIOn EMPlOyEE ShARE OPTIOn SchEME

The Ezion Employee Share Option Scheme (the “Scheme”) was approved and adopted by its members at an Extraordinary General Meeting held on 23 November 2009. The Scheme is administered by the Company’s Remuneration Committee, comprising three directors, Lim Thean Ee, Dr Wang Kai Yuen and Tan Woon Hum.

Other information regarding the Scheme is set out below:

Option granted on 11 October 2011 (“Grant Date 1”)

• TheexercisepriceofeachoptionisfixedatS$0.414.

• Theshareoptionshallbeexercised,inwholeorinpart,inaccordancewiththefollowingschedulefrom11 October 2012 to 11 October 2021:

i. 20% of the options shall vest after the end of first anniversary of Grant Date 1;

ii. 50% of the options shall vest after 31 March 2013; and

iii. 30% of the options shall vest after 31 March 2014.


• Theoptionsgrantedexpireafter10yearsoruponcessationoftheemploymentofemployees.


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Option granted on 7 June 2012 (“Grant Date 2”)


• Theshareoptionshallbeexercised,inwholeorinpart,inaccordancewiththefollowingschedulefrom7June 2013 to 7 June 2022:


ii. 30% of the options shall vest after the end of second anniversary of Grant Date 2; and

iii. 40% of the options shall vest after the end of third anniversary of Grant Date 2.



At the end of the financial year, details of the options granted under the Scheme on unissued ordinary shares of the Company are as follows:

Dates ofgrant ofoptions

Exerciseprices per

share

Options outstanding at 1 January

2012‘000

Optionsgranted

‘000

Optionsforfeited

‘000Options

exercised

Optionsoutstanding

at 31 December

2012‘000

Numberof optionholders at 31

December 2012

Exercise periods

11/10/2011 S$0.414 8,085 – (15) (1,033) 7,037 34 11/10/2012 to 11/10/2021

7/6/2012 S$0.74 – 5,555 (655) – 4,900 50 7/6/2013 to 7/6/2022

8,085 5,555 (670) (1,033) 11,937

Details of options granted to the directors of the Company are as follows:

Name of director

Options grantedfor financialyear ended

31 December2012

Aggregateoptions

granted sincecommencement

of Scheme to31 December

2012

Aggregateoptions

cancelled sincecommencement

of Scheme to31 December

2012

Aggregateoptions

outstandingas at

31 December2012

Chew Thiam Keng 700,000 * 2,800,000 (700,000) 2,100,000

Lee Kian Soo 100,000 100,000 – 100,000

Captain Larry Glenn Johnson 700,000 2,800,000 (700,000) 2,100,000

Lim Thean Ee 100,000 200,000 – 200,000

Tan Woon Hum 100,000 200,000 – 200,000

Dr Wang Kai Yuen 100,000 200,000 – 200,000

1,800,000 6,300,000 (1,400,000) 4,900,000

* subject to approval of shareholders at a general meeting to be convened

Except for the above, there are no other share options forfeited, expired, cancelled or exercised since commencement of Scheme to 31 December 2012.

ShARE OPTIOn GRAnTED TO A DIREcTOR OF A SuBSIDIARy

On 22 March 2009, the Company granted an option to a director of a subsidiary to purchase 30% interest in the subsidiary from the Company upon satisfaction of certain conditions.

On 4 October 2010, the director of a subsidiary ceased to be an employee of the Group. Accordingly, the share option granted to him has been forfeited in 2010.

EMPlOyEE ShARE PlAn

The Employee Share Plan (the “Plan”) was approved and adopted by members of the Company at the Extraordinary General Meeting held on 20 April 2008. The Plan is administered by a committee comprising the directors of the Company. In 2009, 230,000 treasury shares had been awarded to certain employees pursuant to the Plan. No treasury shares had been awarded to employees under the Plan in 2012, 2011 and 2010.

AuDIT cOMMITTEE

The members of the Audit Committee during the year and at the date of this report are:

Dr Wang Kai Yuen (Chairman and independent director)

Lim Thean Ee (Independent director)

Tan Woon Hum (Independent director)

The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code of Corporate Governance.

The Audit Committee has held 4 meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.

The Audit Committee also reviewed the following:

• assistanceprovidedbytheCompany’sofficerstotheexternalandinternalauditors;

• quarterlyfinancialinformationandannualfinancialstatementsoftheGroupandtheCompanypriortotheir submission to the directors of the Company for adoption and approval; and

• interestedpersontransactions(asdefinedinChapter9oftheSGXListingManual).

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.


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S TaT E M E N T B Y D i r E C T O r S


The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

In appointing our auditors for the Company and its subsidiaries, we have complied with Rules 712 and 715 of the SGX Listing Manual.

AuDITORSThe auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

________________________________

chEW ThIAM KEnG

Director

________________________________

cAPTAIn lARRy GlEnn JOhnSOn

Director

20 March 2013

In our opinion:

(a) the financial statements set out on pages 44 to 112 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

________________________________

chEW ThIAM KEnG

Director

________________________________

cAPTAIn lARRy GlEnn JOhnSOn

Director

20 March 2013


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i N D E p E N D E N T a U D i T O r S ’ r E p O r T

i N D E p E N D E N T a U D i T O r S ’ r E p O r T

Members of the Company

EzIOn hOlDInGS lIMITED

REPORT On ThE FInAncIAl STATEMEnTS

We have audited the accompanying financial statements of Ezion Holdings Limited (the “Company”) and its subsidiaries (the “Group”), which comprise the statements of financial position of the Group and the Company as at 31 December 2012, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 44 to 112.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results, changes in equity and cash flows of the Group for the year ended on that date.

REPORT On OThER lEGAl AnD REGulATORy REquIREMEnTS

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMG llP

Public Accountants and Certified Public Accountants

SInGAPORE

20 March 2013


4 4 4 5

S TaT E M E N T O f f i N a N C i a l p O S i T i O N

As at 31 December 2012

S TaT E M E N T O f f i N a N C i a l p O S i T i O N As at 31 December 2012

Note

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

non-current assets

Plant and equipment 4 793,717 270,804 765 538

Subsidiaries 5 – – 486,984 157,127

Joint ventures 6 122,494 71,352 65,351 37,667

Associate 7 4,852 – 4,852 –

Other investment 8 – – – –

Other assets 9 4,217 852 1,963 1,907

925,280 343,008 559,915 197,239

current assets

Trade receivables 10 57,451 32,164 8,434 2,587

Other assets 9 77,720 32,047 8,554 9,021

Assets held for sale 11 2,643 – – –

Cash and cash equivalents 12 134,911 63,155 74,206 22,431

272,725 127,366 91,194 34,039

Total assets 1,198,005 470,374 651,109 231,278

Note

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Equity attributable to owners of the company

Share capital 13 260,499 124,209 260,499 124,209

Perpetual securities 14 97,678 – 97,678 –

Redeemable exchangeable preference shares 15 11,126 39,817 – –

Reserves 16 (9,841) (11,688) (108) (108)

Retained earnings 193,387 115,995 68,898 38,606

Total equity 552,849 268,333 426,967 162,707

non-current liabilities

Other payables 17 12,084 2,000 12,010 13,630

Notes payable 18 79,957 – 79,957 –

Financial liabilities 19 394,973 118,206 63,316 21,425

487,014 120,206 155,283 35,055

current liabilities

Trade payables 20 33,400 25,503 303 998

Other payables 17 40,688 12,457 48,652 22,541

Financial liabilities 19 77,489 39,480 16,249 6,892

Provision for tax 6,565 4,395 3,655 3,085

158,142 81,835 68,859 33,516

Total liabilities 645,156 202,041 224,142 68,571

Total equity and liabilities 1,198,005 470,374 651,109 231,278

The accompanying notes form an integral part of these financial statements The accompanying notes form an integral part of these financial statements


4 6 4 7

C O N S O l i D aT E D S TaT E M E N T O f C O M p r E H E N S i V E i N C O M E

Year ended 31 December 2012

C O N S O l i D aT E D i N C O M E S TaT E M E N TYear ended 31 December 2012

Note2012

US$’0002011

US$’000

Revenue 22 158,669 106,951

Cost of sales (87,936) (51,649)

Gross profit 70,733 55,302

Other income 17,092 12,183

Administrative expenses (12,462) (9,496)

Other expenses (4,802) (5,800)

Results from operating activities 70,561 52,189

Finance income 3,090 2,041

Finance costs (7,779) (2,722)

net finance costs 23 (4,689) (681)

Share of results of joint ventures, net of tax 16,896 9,502

Profit before income tax 24 82,768 61,010

Income tax expense 25 (3,927) (2,893)

Profit for the year 78,841 58,117

Profit attributable to:

Owners of the Company 78,841 58,117


Earnings per share

Basic earnings per share (cents) 26 9.54 8.14

Diluted earnings per share (cents) 26 9.12 7.32

2012US$’000

2011US$’000


Other comprehensive income

Foreign currency translation differences relating to financial statements of foreign operations 1,862 (519)

Exchange differences on monetary items forming part of net investment in foreign operations 1,260 24

Other comprehensive income for the year, net of tax 3,122 (495)

Total comprehensive income for the year 81,963 57,622

Total comprehensive income attributable to:

Owners of the Company 81,963 57,622

Total comprehensive income for the year 81,963 57,622



4 8 49

C O N S O l i D aT E D S TaT E M E N T O f C H a N G E S i N E Q U i T Y


C O N S O l i D aT E D S TaT E M E N T O f C H a N G E S i N E Q U i T YYear ended 31 December 2012

Note

Share capital

US$’000

Redeemable exchangeable

preferenceshares

US$’000

Treasury shares

US$’000

Foreign currency

translation reserveUS$’000

Statutory reserveUS$’000

Retained earningsUS$’000

Totalequity

US$’000

Group

At 1 January 2011 124,115 39,817 (102) (11,085) (6) 57,183 209,922

Total comprehensive income for the year

Profit for the year – – – – – 58,117 58,117


Foreign currency translation differences relating to financial statements of foreign operations – – – (519) – – (519)

Exchange differences on monetary items forming part of net investment in foreign operations – – – 24 – – 24

Total comprehensive income for the year – – – (495) – 58,117 57,622

Transactions with owners of the company, recognised directly in equity

contributions by and distributions to owners of the company

Share options exercised 13 94 – – – – – 94

Dividends paid 16 – – – – – (582) (582)

Share-based payment transactions 21 – – – – – 1,277 1,277

Total contributions by and distributions to owners 94 – – – – 695 789

At 31 December 2011 124,209 39,817 (102) (11,580) (6) 115,995 268,333

Note

Share capital

US$’000

PerpetualsecuritiesUS$’000

Redeemable exchangeable

preferenceshares

US$’000

Treasury shares

US$’000

Foreign currency

translation reserveUS$’000

Statutory reserveUS$’000

Retained earningsUS$’000

Totalequity

US$’000

Group

At 1 January 2012 124,209 – 39,817 (102) (11,580) (6) 115,995 268,333

Total comprehensive income for the year

Profit for the year – – – – – – 78,841 78,841


Foreign currency translation differences relating to financial statements of foreign operations – – – – 1,862 – – 1,862

Exchange differences on monetary items forming part of net investment in foreign operations – – – – 1,260 – – 1,260

Total comprehensive income for the year – – – – 3,122 – 78,841 81,963

Transactions with owners of the company, recognised directly in equity

contributions by and distributions to owners of the company

Issue of shares 105,975 – – – – – – 105,975

Issue of perpetual securities 14 – 97,678 – – – – – 97,678

Accrued perpetual securities distributions – – – – – – (2,381) (2,381)

Conversion of redeemable preference shares 29,966 – (28,691) – (1,275) – – –

Share options exercised 13 349 – – – – – – 349

Dividends paid 16 – – – – – – (688) (688)

Share-based payment transactions 21 – – – – – – 1,620 1,620

Total contributions by and distributions to owners 136,290 97,678 (28,691) – (1,275) – (1,449) 202,553

At 31 December 2012 260,499 97,678 11,126 (102) (9,733) (6) 193,387 552,849



5 0 5 1

C O N S O l i D aT E D S TaT E M E N T O f C a S H f l O W S


C O N S O l i D aT E D S TaT E M E N T O f C a S H f l O W SYear ended 31 December 2012

2012US$’000

2011US$’000

cash flows from operating activities


Adjustments for:

Income tax expense 3,927 2,893

Depreciation expense 16,585 9,788

Loss/(Gain) on disposal of:

- assets held for sale – (10,800)

- plant and equipment 382 (40)

- subsidiary (13,792) –

Income from financial guarantee income provided to joint ventures (1,957) (746)

Finance income (3,090) (2,041)

Finance costs 7,779 2,722

Net impairment loss on:

- plant and equipment 103 255

- trade receivables 482 3,512

Equity-settled share-based payment transactions 1,620 1,277

Share of results of joint ventures (16,896) (9,502)

Reversal of provision for unutilised leave – (43)

Operating profit before changes in working capital 73,984 55,392

changes in working capital:

Trade receivables and other assets (21,685) (7,824)

Trade and other payables 43,125 (11,697)

cash generated from operating activities 95,424 35,871

Income taxes paid (1,681) (1,370)

net cash from operating activities 93,743 34,501

2012US$’000

2011US$’000

cash flows from investing activities

Advance payments for purchase of plant and equipment (58,751) (6,502)

Interest received 648 2,034

Investment in joint ventures (23,978) (15,057)

Proceeds from disposal of assets held for sale – 78,905

Proceeds from disposal of plant and equipment 7,009 8,257

Proceeds from disposal of subsidiary, net of cash disposed of (note 27) 23,230 –

Purchase of assets held for sale – (12,901)

Purchase of plant and equipment (604,598) (125,529)

Dividends received 1,548 539

net cash used in investing activities (654,892) (70,254)

cash flows from financing activities

Interest paid (6,711) (2,712)

Net proceeds from issuance of perpetual securities 97,678 –

Net proceeds from issuance of notes 76,604 –

Net proceeds from issuance of ordinary shares 101,123 –

Net proceeds from exercise of share options 349 94

Dividends paid (688) (582)

Proceeds from borrowings 442,367 101,074

Repayment of borrowings (83,155) (74,540)

Release of deposits pledged 3,677 2,316

net cash from financing activities 631,244 25,650

net increase/(decrease) in cash and cash equivalents 70,095 (10,103)

Cash and cash equivalents at 1 January 58,064 68,134

Effect of exchange rate fluctuations on cash held 5,338 33

cash and cash equivalents at 31 December (note 12) 133,497 58,064



5 2 5 3

N O T E S T O T H E f i N a N C i a l S TaT E M E N T S


The financial statements were authorised for issue by the Board of Directors on 20 March 2013.

1 DOMIcIlE AnD AcTIvITIESEzion Holdings Limited (the “Company”) is incorporated in Singapore. The address of the Company’s registered office is 15 Hoe Chiang Road, #12-05 Tower Fifteen, Singapore 089316.

The financial statements of the Company as at and for the year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interests in associate and joint ventures.

The principal activities of the Company are those of an investment holding company and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in note 5 to the financial statements.

2 BASIS OF PREPARATIOn(A) STATEMEnT OF cOMPlIAncE

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

(B) BASIS OF MEASuREMEnT

The financial statements have been prepared on the historical cost basis except as otherwise disclosed in the accounting policies set out in note 3.

(c) FuncTIOnAl AnD PRESEnTATIOn cuRREncy

These financial statements are presented in United States dollars (“US$”), which is the Company’s functional currency. All financial information presented in United States dollars has been rounded to the nearest thousand, unless otherwise stated.

(D) uSE OF ESTIMATES AnD JuDGEMEnTS

The preparation of financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, 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 estimates are revised and in any future periods affected.

2 BASIS OF PREPARATIOn (cOnT’D)

(D) uSE OF ESTIMATES AnD JuDGEMEnTS (cOnT’D)

Judgement made by management in the application of FRSs, and accounting policies that have the most significant effect on the amounts recognised in the financial statements and that have a significant risk of resulting in a material adjustment within the next financial year are discussed in note 31.

3 SIGnIFIcAnT AccOunTInG POlIcIESThe accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities.

(A) BASIS OF cOnSOlIDATIOn

(i) Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

(iii) loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.


5 4 5 5



3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(A) BASIS OF cOnSOlIDATIOn (cOnT’D)

(iv) Investment in associates and joint ventures

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies of these entities. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Investments in associates and joint ventures are accounted for using the equity method and are recognised initially at cost. The cost of the investments includes transaction costs.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity accounted investees, after adjustments to align the accounting policies of the equity accounted investee with those of the Group, from the date that significant influence joint control commences until the date that significant influence or joint control ceases.

When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(v) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(vi) Accounting for subsidiaries, associate and joint ventures

Investments in subsidiaries, associate and joint ventures are stated in the Company’s statement of financial position at cost less accumulated impairment losses.

(B) FOREIGn cuRREncy

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(B) FOREIGn cuRREncy (cOnT’D)

(i) Foreign currency transactions (cont’d)

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for the differences arising on the retranslation of available-for-sale equity instruments and retranslation of monetary items that are in substance form part of the Group’s net investment in foreign operations (see (iii) below).

(ii) Foreign operations

The assets and liabilities of foreign operations are translated to US$ at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to US$ at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation. These are recognised in other comprehensive income, and are presented in the translation reserve in equity.

(iii) net investment in foreign operations

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in a foreign operation are recognised in the Company’s profit or loss. Such exchange differences are reclassified to other comprehensive income in the consolidated financial statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to profit or loss as an adjustment to the profit or loss arising on disposal.

(c) PlAnT AnD EquIPMEnT

(i) Recognition and measurement

Items of plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset.


5 6 5 7



3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(c) PlAnT AnD EquIPMEnT (cOnT’D)

(i) Recognition and measurement (cont’d)

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment.

The gain or loss on disposal of an item of plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of plant and equipment, and is recognised in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of plant and equipment are recognised in profit or loss as incurred.

Costs incurred on subsequent dry-docking of vessels are capitalised and depreciated over the shorter of period to next estimated dry-docking and five years. When significant dry-docking costs are incurred prior to the expiry of the depreciation period, the remaining costs of the previous dry-docking are written off in the month of the next dry-docking.

(iii) DepreciationDepreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

Depreciation is recognised from the date that property, plant and equipment are completed and ready for use.

The estimated useful lives for the current and comparative years are as follows:

Vessels 8 – 25 yearsAssets on board the vessels 3 – 10 yearsDry-docking expenditure 5 yearsRig and other oil and gas related assets 10 – 15 yearsRenovation, furniture, fittings and office equipment 2 yearsMotor vehicles 5 – 7 years

Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate.

No depreciation is provided on vessels under construction.

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(D) FInAncIAl InSTRuMEnTS

(i) non-derivative financial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group classifies non-derivative financial assets into the following categories: loans and receivables and available-for-sale financial assets.

loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents, trade receivables and other assets.

cash and cash equivalents

Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of cash flows, pledged deposits are excluded from cash and cash equivalents.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3(g)(i)) and foreign currency differences on available-for-sale equity instruments (see note 3(b)(i)), are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

Available-for-sale financial assets comprise equity securities.


5 8 59

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(D) FInAncIAl InSTRuMEnTS (cOnT’D)

(ii) non-derivative financial liabilities

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method.

Other financial liabilities comprise loans and borrowings, notes payables and trade and other payables.

(iii) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Perpetual securities

The perpetual securities do not have a maturity date and distributions may be deferred at the sole discretion of the Company. Accordingly, the Company is not considered to have a contractual obligation to make principal repayments or distributions in respect of the perpetual securities issue. These perpetual securities are presented within equity and distributions are debited from equity. Transaction costs that are directly attributable to the issue of the perpetual securities are deducted against the proceeds from the issue.

Preference share capital

Preference share capital is classified as equity if it is non-redeemable, or redeemable only at the Company’s option.

Preference share capital is classified as a financial liability if it is redeemable on a specific date or at the option of the shareholders.



3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(D) FInAncIAl InSTRuMEnTS (cOnT’D)

(iv) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own share account. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in non-distributable capital reserve.

(v) Intra-group financial guarantees

Financial guarantees are financial instruments issued by the Group that require the issuer to make specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised if they were accounted for as contingent liabilities. When financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantees is transferred to profit or loss.

(vi) Derivative financial instruments

Derivatives are recognised initially at fair value; attributable transaction are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised immediately in profit or loss.

Other non-trading derivatives comprise share options in an associate.

(E) lEASES

(i) When entities within the Group are lessees of a finance lease

Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their estimated useful lives. Lease payments are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the arrangement is not in the legal form of a lease.


6 0 61



3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(E) lEASES (cOnT’D)

(ii) When entities within the Group are lessees of an operating lease

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

(iii) When entities within the Group are lessors of a finance lease

When entities within the Group are lessor of the finance lease, the amounts due under the leases, after deduction of unearned charges, are included in “Finance lease receivables” as appropriate. The difference between the gross receivable and present value of the receivable is recognised as unearned interest. Interest receivable is recognised over the periods of the leases so as to give a constant rate of return on the net investment in the leases.

(iv) When entities within the Group are lessors of an operating lease

Where the Group leases out assets under operating leases, the leased assets are included in statement of financial position according to their nature and, where applicable, are depreciated in accordance with Group’s depreciation policies. Revenue arising from operating leases is recognised in accordance with the Group’s revenue recognition policies.

(F) InTER-cOMPAny lOAnS

In the Company’s financial statements, inter-company loans to subsidiaries are stated at fair value at inception. The difference between the fair value and the loan amount at inception is recognised as additional investments in subsidiaries in the Company’s financial statements. Subsequently, these loans are measured at amortised cost using the effective interest rate method. The unwinding of the difference is recognised as interest income in profit or loss over the expected repayment period.

Inter-company loans, where settlement is neither planned nor likely to occur in the foreseeable future, are in substance, part of the holding company’s net investment in the entities and are stated at cost less accumulated impairment losses.

Such balances are eliminated in full in the Group’s consolidated financial statements.

(G) IMPAIRMEnT

(i) non-derivative financial assets

A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period 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.

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(G) IMPAIRMEnT (cOnT’D)

(i) non-derivative financial assets (cont’d)

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, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Group considers a decline of 20% to be significant and a period of 9 months to be prolonged.

loans and receivables

The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

In assessing collective impairment, the Group uses historical trends of the probability of default, the 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.

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 profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed. The amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.


62 6 3



3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(G) IMPAIRMEnT (cOnT’D)

(ii) non-financial assetsThe 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. For goodwill, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (“CGU”) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU 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 the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually 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 CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, 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.

(h) nOn-cuRREnT ASSETS hElD FOR SAlE

Non-current assets that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets are remeasured in accordance with the Group’s accounting policies. Thereafter, the assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Plant and equipment once classified as held for sale are not depreciated.

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(I) EMPlOyEE BEnEFITS

(i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligations to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(iii) Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

(J) PROvISIOnS

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. 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 the risks specific to the liability.


6 4 6 5



3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(K) REvEnuE REcOGnITIOn

(i) chartering and offshore support services

Revenue from chartering and offshore support services relates to chartering of vessels and is recognised in profit or loss on a straight-line basis over the respective term of the charter, net of trade discounts.

(ii) Rendering of marine services

Revenue from rendering of marine services is recognised when the related services have been rendered.

(iii) Sale of goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.

(iv) Management services fees

Management services fees are recognised when the related services are rendered.

(v) Dividend income

Dividend income is recognised in profit or loss when the shareholders’ right to receive payment is established.

(l) FInAncE IncOME AnD cOSTS

Finance income comprises interest income on bank deposits and finance leases. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings are recognised in profit or loss.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(M) IncOME TAx ExPEnSE

Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous periods.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary differences on the initial recognition of assets or liabilities in a transaction that affects neither accounting nor taxable profit or loss.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of the existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.


6 6 67

3 SIGnIFIcAnT AccOunTInG POlIcIES (cOnT’D)(n) EARnInGS PER ShARE

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise redeemable exchangeable preference shares and share options granted to employees.

(O) SEGMEnT REPORTInG

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s key management to make decisions about resources to be 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 key management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses and tax liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire plant and equipment.

(P) nEW STAnDARDS AnD InTERPRETATIOnS nOT ADOPTED

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2012, and have not been applied in preparing these financial statements.

The Group is currently assessing the impact of the new standards on the financial statements.



4 PlAnT AnD EquIPMEnT

Group

Vessels under

constructionUS$’000

VesselsUS$’000

Assets on board the

vesselsUS$’000

Dry-docking expenditure

US$’000

Rig and other

oil and gas related assets

US$’000

Renovation, furniture,

fittings and office

equipmentUS$’000

Motor vehiclesUS$’000

Total US$’000

cost

At 1 January 2011 18,304 142,808 2,653 1,125 5,953 610 642 172,095

Additions 88,141 49,482 76 315 – 106 115 138,235

Disposals – (9,949) – – – – – (9,949)

Reclassification (59,762) 59,762 – – – – – –

Translation differences on consolidation 1 – – – 2 – – 3

At 31 December 2011 46,684 242,103 2,729 1,440 5,955 716 757 300,384

Additions 378,827 174,096 105 – 62,119 682 26 615,855

Disposals – (8,410) – (130) – – – (8,540)

Divestment of subsidiary (note 27) (537) (60,181) (67) – – (12) – (60,797)

Reclassification to finance lease receivables (note 9) – (7,941) (2) – – – – (7,943)

Reclassification to asset held for sale – – – – (4,531) – – (4,531)

Reclassification (73,387) 73,387 – – – – – –

Translation differences on consolidation – 2 – – 9 1 1 13

At 31 December 2012 351,587 413,056 2,765 1,310 63,552 1,387 784 834,441

Accumulated depreciation and impairment losses

At 1 January 2011 – 18,527 1,005 151 1,042 397 146 21,268

Depreciation charge for the year – 8,410 283 288 599 111 97 9,788

Disposals – (1,732) – – – – – (1,732)

Impairment losses – 255 – – – – – 255

Translation differences on consolidation – – – – (4) 5 – 1

At 31 December 2011 – 25,460 1,288 439 1,637 513 243 29,580

Depreciation charge for the year – 12,722 18 268 3,266 196 115 16,585

Disposals – (1,063) – (87) – – – (1,150)

Divestment of subsidiary (note 27) – (993) – – – – – (993)

Reclassification to finance lease receivables (note 9) – (1,511) (3) – – – – (1,514)

Reclassification to asset held for sale – – – – (1,888) – – (1,888)

Impairment losses – 103 – – – – – 103

Translation differences on consolidation – – – – 1 – – 1

At 31 December 2012 – 34,718 1,303 620 3,016 709 358 40,724


6 8 69



4 PlAnT AnD EquIPMEnT (cOnT’D)

Group

Vessels under

constructionUS$’000

VesselsUS$’000

Assets on board the

vesselsUS$’000

Dry-docking expenditure

US$’000

Rig and other

oil and gas related assets

US$’000

Renovation, furniture,

fittings and office

equipmentUS$’000


Total US$’000

carrying amounts

At 1 January 2011 18,304 124,281 1,648 974 4,911 213 496 150,827

At 31 December 2011 46,684 216,643 1,441 1,001 4,318 203 514 270,804

At 31 December 2012 351,587 378,338 1,462 690 60,536 678 426 793,717

During the financial year, the Group acquired plant and equipment with an aggregate cost of approximately US$615,872,000 (2011: US$138,235,000) of which approximately US$11,257,000 (2011: US$12,706,000) was paid in advance to the suppliers in the previous year.

Renovation, furniture, fittings

and office equipment

US$’000


Total US$’000

company

cost

At 1 January 2011 600 641 1,241

Additions 27 – 27

At 31 December 2011 627 641 1,268

Additions 463 – 463

At 31 December 2012 1,090 641 1,731

4 PlAnT AnD EquIPMEnT (cOnT’D)

Renovation, furniture, fittings

and office equipment

US$’000


Total US$’000

Accumulated depreciation and impairment losses

At 1 January 2011 394 146 540

Depreciation charge for the year 93 97 190

At 31 December 2011 487 243 730

Depreciation charge for the year 140 96 236

At 31 December 2012 627 339 966

carrying amounts

At 1 January 2011 206 495 701

At 31 December 2011 140 398 538

At 31 December 2012 463 302 765

IMPAIRMEnT lOSS

During the year ended 31 December 2012, the Group recognised an impairment loss of approximately US$103,000 (2011: US$255,000) with respect to certain vessels.

SEcuRITy

The vessels and rigs are pledged to secure the term loan facilities granted by financial institutions (note 19).

The depreciation charge of the Group is recognised in the following line items of profit or loss:

Group

2012US$’000

2011US$’000

Cost of sales 16,274 9,580

Administrative expenses 311 208

16,585 9,788


70 7 1



5 SuBSIDIARIES

Company

2012US$’000

2011US$’000

Equity investments, at cost 84,622 28,307

Impairment losses (155) (155)

84,467 28,152

Loans to subsidiaries 402,517 128,975

486,984 157,127

The loans to subsidiaries are interest-free, except for amounts of US$16,515,000 (2011: US$15,149,000) which bear interest from 5% to 8% per annum. The loans to subsidiaries are unsecured and settlement is neither planned nor likely to occur in the foreseeable future. As the amounts are, in substance, a part of the Company’s net investments in the subsidiaries, they are stated at cost.

Details of the subsidiaries are as follows:

Name of subsidiary Principal activitiesCountry of

incorporation2012

%2011

%

Teras Transporter Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Teras Transporter 2 Pte Ltd 1

Ship owner and provision of ship chartering services

Singapore 100 100

Teras Genesis Pte Ltd 1

(formerly known as Teras

Centurion Pte Ltd)

Shipping agent and provision of ship chartering services, ship management services and engineering works

Singapore 100 100

Teras Offshore Pte Ltd 1 Shipping agent and provision of ship chartering services, ship management services and engineering works

Singapore 100 100

Teras 281 Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Teras Oranda Pte Ltd 1

(formerly known as Teras 331 Pte Ltd)


Singapore 100 100


Singapore 100 100


Singapore 100 100

5 SuBSIDIARIES (cOnT’D)


incorporation2012

%2011

%


Singapore 100 100


Singapore 100 100


Singapore 100 100

Teras Conquest 2 Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100


Singapore 100 100


Singapore – 100


Singapore 100 100


Singapore 100 100

Teras Atlantic Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Teras Pacific Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Teras Progress Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Meridian Maritime Pte Ltd 1


Singapore 100 100

Teras Wallaby Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Teras Pegasus Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100


Singapore 100 –

Teras Pneuma Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 –

Atlantic Esbjerg Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 –


72 73





incorporation2012

%2011

%

Atlantic Amsterdam Pte Ltd 1


Singapore 100 –

Atlantic London Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 –

Atlantic Tiburon 1 Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 –


Singapore 100 –


Singapore 100 –

Ezion Maritime Pte Ltd 1 Ship owner and provision of ship chartering services

Singapore 100 100

Ezion Investments Pte Ltd 1 and its subsidiaries:

Investment holding Singapore 100 100

Ezion Exerter Limited 4 Ship owner, provision of ship chartering services and cargo transportation

Mauritius 100 –

OMSA Ningaui Pte Ltd 1,6 Ship owner and provision of ship chartering services

Singapore 100 50

Teras Oranda Limited 2 Ship owner, provision of ship chartering services and cargo transportation

British Virgin Islands

100 –

Victory Drilling 4 Ship owner, provision of ship chartering services and cargo transportation

Mauritius 100 –

Ezion Offshore Logistics Hub Pte Ltd 1 and its subsidiaries:

Investment holding Singapore 100 100

Ezion Offshore Logistics Hub (Exmouth) Pty Ltd 3

Marine supply base Australia 100 100

Ezion Offshore Logistics Hub (Tiwi) Pty Ltd 3

Marine supply base Australia 100 100



incorporation2012

%2011

%

Teras Australia Pty Ltd 3 Ship owner and provision of ship chartering services

Australia 100 100

Teras Oilfield Support Ltd 2

Rig and other related equipment owner and provision of rig chartering and related services


100 100

Teras Cargo Logistics Ltd 2 Ship owner, provision of ship chartering services and cargo transportation


100 100

Teras Harta Maritime Ltd 2 Ship owner and provision of ship chartering services

Bahamas 100 100

1 Audited by KPMG LLP.2 Not required to be audited in accordance with the law of the country of incorporation.3 Audited by RSM Bird Cameron, Australia. 4 In the process of appointing auditors.5 In April 2012, the Group completed the divestment of the entire share capital of Teras Conquest 4 Pte Ltd to third parties (note 27).6 In May 2012, the Group completed the acquisition of 50% share capital of OMSA Ningaui Pte Ltd from its joint venture partner. The

acquisition did not have a material impact on the financial statements.

6 JOInT vEnTuRES

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Investment in joint ventures 80,173 43,796 37,943 21,870

Loans to joint ventures 42,321 27,556 27,408 15,797

122,494 71,352 65,351 37,667

The loans to joint ventures are interest-free, except for amounts of US$14,913,000 (2011: US$2,702,000) which bear interest from 6% to 8% per annum. The loans to joint ventures are unsecured and settlement is neither planned nor likely to occur in the foreseeable future. As the amounts are, in substance, a part of the Company’s net investments in the joint ventures, they are stated at cost.


74 75



6 JOInT vEnTuRES

Details of joint ventures are as follows:

Name of joint ventures

Equity held by the Group

Country of incorporation

2012%

2011%

Eminent Offshore Logistics Pte Ltd 1, 4 and its subsidiaries:

Singapore 50 50

Eminent 237 Pte Ltd 1 Singapore 50 50







Offshore Marine Services Alliance Pty Ltd 2 Australia 33.3 33.3

Teras Conquest 1 Pte Ltd 1 Singapore 49 49

EG Marine Pte Ltd 1 Singapore 50 50

Teras BBC Houston (BVI) Limited 3 British Virgin Islands

50 50

Kenai Offshore Ventures, LLC 3 United States of America

50 50

Terasea Pte Ltd 1 Singapore 50 50

Atlantic Labrador Pte Ltd 1 Singapore 50 50

Strategic Offshore Limited 5 Malta 50 –

1 Audited by KPMG LLP.2 Audited by Deloitte Touche Tohmatsu, Australia.3 Not required to be audited in accordance with the law of the country of incorporation.4 A director of the Company has indirect financial interests in the joint venture.5 In the process of appointing auditors.

6 JOInT vEnTuRES (cOnT’D)Summary financial information for joint ventures, adjusted for the percentage ownership held by the Group, is as follows:

2012US$’000

2011US$’000

Assets and liabilities

Current assets 54,355 31,404

Non-current assets 155,149 122,655

Total assets 209,504 154,059

Current liabilities 60,500 33,603

Non-current liabilities 98,130 87,228

Total liabilities 158,630 120,831

Results

Revenue 124,674 92,530

Expenses (107,778) (83,028)

Profit after taxation 16,896 9,502

In 2012, the Group received dividends of US$1,548,000 (2011: US$539,000) from joint ventures.

The share of capital commitments of joint ventures as at 31 December 2012 is US$331,966,000 (2011: US$34,200,000). There were no other capital commitments and contingent liabilities as at 31 December 2012 and 31 December 2011.

7 ASSOcIATE

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Investment in associate 4,852 – 4,852 –

During the year, the Group subscribed 3,200,000,000 new ordinary shares in the capital of YHM Group Limited, at an issue price of S$0.0018 per share. The consideration for the subscription shares were satisfied by the allotment and issuance of the shares of the Company at an issue price of S$1.2454 per share.

Details of the associate are as follows:

Name of associate Country of incorporation

Equity held by the Group

2012 2011

YHM Group Limited Singapore 44.1 % –


76 7 7



8 OThER InvESTMEnT

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Available for sale financial asset – equity securities 21 21 21 21

Impairment loss (21) (21) (21) (21)

– – – –

9 OThER ASSETS

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

non-current

Non-trade amounts due from a subsidiary – – 1,963 1,907

Prepayments 3,348 852 – –

Finance lease receivables 869 – – –

4,217 852 1,963 1,907

current

Advances to suppliers 61,480 15,244 2 14

Deposits to suppliers 4,191 2,059 131 84

Deferred expenditure 1,012 1,077 – –

Finance lease receivables 2,871 3,973 – –

Prepayments 1,654 858 22 20

Non-trade amounts due from:

- subsidiaries – – 1,426 3,151

- joint ventures – 30 1,528 474

Interest receivables 706 59 3,129 1,579

Other receivables 5,806 8,747 2,316 3,699

77,720 32,047 8,554 9,021

Total 81,937 32,899 10,517 10,928

The non-trade amounts due from a subsidiary amounting to US$479,000 (2011: US$2,169,000) are unsecured, interest-free and repayable by 2015 (2011: 2015). The remaining outstanding balances due from subsidiaries and joint ventures are unsecured, interest-free and repayable on demand.

There is no allowance for doubtful debts arising from outstanding non-trade balances with related parties.

9 OThER ASSETS (cOnT’D)Future minimum lease receipts under finance leases together with the present value of the net minimum lease receipts for the Group are as follows:

Total future minimum lease

receiptsUS$’000

Unearned interestUS$’000

Present value

US$’000

At 31 December 2012

Within 1 year 2,871 – 2,871

After 1 year but within 5 years 869 – 869

3,740 – 3,740

At 31 December 2011

Within 1 year 4,173 (200) 3,973

The weighted average effective interest rate for finance lease receivables is zero percent (2011: 8.37%) per annum.

10 TRADE REcEIvABlES

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Trade receivables – third parties 58,661 34,324 28 –

Impairment losses (5,716) (5,362) – –

Net trade receivables – third parties 52,945 28,962 28 –

Trade amounts due from:

- affiliates 2,872 1,532 – –

- joint ventures 1,762 1,670 – 98

- subsidiaries – – 8,406 2,489

4,634 3,202 8,406 2,587

Impairment losses (128) – – –

4,506 3,202 8,406 2,587

Total trade receivables 57,451 32,164 8,434 2,587

An affiliate is a company in which a director of the Company has financial interest.

Outstanding balances with affiliates, joint ventures and subsidiaries are unsecured and not past due.

As at 31 December 2012, the Group has made an allowance for doubtful debt of US$128,000 (2011: nil) on balance due from an affiliate.


78 79

10 TRADE REcEIvABlES (cOnT’D)The Group’s primary exposure to credit risk relating to trade receivables arising mainly from the chartering income by the subsidiaries. These customers are internationally dispersed, and are engaged in a wide spectrum of offshore activities. Management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s trade receivables.

The maximum exposure to credit risk for trade receivables at the reporting date (by type of customer) was:

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Government related and multi-national entities 50,592 23,042 – –

Small-medium enterprises 6,859 9,122 – –

57,451 32,164 – –

IMPAIRMEnT lOSSES

The ageing of trade receivables due from third parties at the reporting date was:

2012 2011

GrossUS$’000

Impairment losses

US$’000Gross

US$’000

Impairment losses

US$’000

Group

Not past due or less than 60 days overdue 26,954 – 14,600 –

Past due 61 – 120 days 5,236 – 3,956 –

Past due more than 120 days 26,471 (5,716) 15,768 (5,362)

58,661 (5,716) 34,324 (5,362)

The change in impairment loss in respect of trade receivables due from third parties during the year was as follows:

Group

2012US$’000

2011US$’000

At 1 January 5,362 1,850

Impairment loss 400 3,546

Amount reversed (46) (34)

At 31 December 5,716 5,362

Based on historical default rates, the Group believes that no additional impairment allowance is necessary in respect of trade receivables not past due or past due up to 120 days, except for those identified as impaired by the Group. These receivables are mainly arising from customers that have a good record with the Group.



11 ASSETS hElD FOR SAlEIn 2012, the Group entered into a Memorandum of Agreement to sell a land rig to a third party. Accordingly, the carrying amount of the land rig was presented as asset held for sale. The sale is expected to be completed in first quarter of 2013.

In 2010, the Group entered into a Memorandum of Agreement to sell a self-propelled jack-up rig to a third party. Accordingly, the carrying amount of the self-propelled jack-up rig was presented as asset held for sale. The sale was completed in first quarter of 2011.

12 cASh AnD cASh EquIvAlEnTS

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Cash at bank and in hand 118,975 46,607 58,271 7,038

Fixed deposits 15,936 16,548 15,935 15,393

Cash and cash equivalents 134,911 63,155 74,206 22,431

Deposits pledged (1,414) (5,091) – –

Cash and cash equivalents in the consolidated statement of cash flows 133,497 58,064 74,206 22,431

The interest rates for cash at bank and fixed deposits for the Group and the Company ranges between 0.08% to 5.20% (2011: 0.08% to 5.60%) per annum, receivable from daily to quarterly basis.

The deposits were pledged as security to obtain credit facilities (note 19).

13 ShARE cAPITAl

Group and Company

2012No. of shares

’000

2011No. of shares

’000

At 1 January 714,228 713,978

Shares issued during the year 138,894 –

Conversion of redeemable preference shares 56,306 –

Exercise of share options 1,033 250

At 31 December 910,461 714,228

All shares rank equally with regard to the Company’s residual assets. All issued shares are fully paid with no par value.

ISSuAncE OF ORDInARy ShARES

On 8 March 2012, the Company issued 110,000,000 shares at US$0.69 (equivalent to S$0.88) per share amounting to US$76,825,000 (equivalent to S$96,800,000), net of transaction costs of US$1,306,000 (equivalent to S$1,646,000).


8 0 81

13 ShARE cAPITAl (cOnT’D)ISSuAncE OF ORDInARy ShARES (cOnT’D)

On 22 November 2012, the Company issued 10,000,000 shares at US$1.04 (equivalent to S$1.2635) per share amounting to US$10,356,000 (equivalent to S$12,635,000), net of transaction costs of US$37,000 (equivalent to S$45,000). All issued shares are fully paid.

On 20 December 2012, the Company issued 4,625,020 shares at US$1.021 (equivalent to S$1.2454) per share amounting to US$4,716,000 (equivalent to S$5,760,000). The issuance of shares is for the acquisition of YHM Group Limited shares amounting to US$4,716,000 (equivalent to S$5,760,000), net of transaction costs of US$136,000 (equivalent to S$167,000).

On 31 December 2012, the Company issued 14,269,620 shares at US$1.090 (equivalent to S$1.3315) per share amounting to US$15,556,000 (equivalent to S$19,000,000), net of transaction costs of US$36,000 (equivalent to S$44,000). All issued shares are fully paid.

In November 2012, 1,032,500 shares were issued under the Company’s Employee Share Option Scheme, at an exercise price of US$0.338 (equivalent to S$0.414) per share, amounting to US$349,000 (equivalent to S$427,000).

During the year, 37,100,000 redeemable exchangeable preference shares in a subsidiary were exchanged by holders of the redeemable exchangeable preference shares at the exchange price of US$0.5400 (equivalent to S$0.6589), persuance. As a result, 56,306,000 new ordinary shares amounting to US$29,966,000 (equivalent to S$37,100,000) were issued.

cAPITAl MAnAGEMEnT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may issue new shares, buy back issued shares, obtain new borrowings or reduce its borrowings.

The Group monitors capital based on gearing ratio. The gearing ratio is calculated as net debt divided by total equity. Net debt is calculated as financial liabilities and notes payable less cash and cash equivalents. Total equity includes equity attributable to owners of the Company, redeemable exchangeable preference shares, reserves and retained earnings.

Group

2012US$’000

2012US$’000

Financial liabilities 472,462 157,686

Notes payables 79,957 –

Less: Cash and cash equivalents (134,911) (63,155)

Net debt 417,508 94,531

Total equity 552,849 268,333

Gearing ratio (times) 0.76 0.35



13 ShARE cAPITAl (cOnT’D)cAPITAl MAnAGEMEnT (cOnT’D)

There were no changes in the Group’s approach to capital management during the year.

The vessels-owning companies are required to have a minimum share capital of US$40,846 (equivalent to S$50,000) as required by the Maritime and Port Authority of Singapore.

Except for the above, the Company and its subsidiaries are not subject to externally imposed capital requirements.

14 PERPETuAl SEcuRITIESDuring the financial year, the Company issued perpetual securities with a nominal amount of S$125,000,000 (equivalent to US$99,713,000) under its existing Multi-currency Debt Issuance Programme. The securities are perpetual, subordinated and the distribution of 7.8% per annum may be deferred at the sole discretion of the Company. These perpetual securities are classified as equity instruments and recorded in equity in the consolidated statement of financial position. Transaction costs incurred in connection with the issuance of perpetual securities amounted to US$2,035,000. As at 31 December 2012, the Group has accrued perpetual securities distribution of US$2,381,000.

15 REDEEMABlE ExchAnGEABlE PREFEREncE ShARES

Group

2012US$’000

2011US$’000

At 1 January 39,817 39,817

Conversion of redeemable exchangeable preference shares (“REPS”) (28,691) –

At 31 December 11,126 39,817

In 2010, 53,000,000 REPS were issued by a subsidiary of the Company at an issue price of US$0.77 (equivalent to S$1) per share. All issued shares are fully paid. The main terms and conditions of the agreement are as follows:

(a) The REPS are convertible into certain number of ordinary shares in the share capital of the Company based on the exchange price of S$0.6589 (“Exchange Price”). The conversion ratio will be subject to the usual anti-dilution adjustments.

(b) The holders of REPS shall have the right to convert:

(i) the first 35% of their holdings of the REPS into ordinary shares of the Company (“Exchange Shares”) at the Exchange Price at any time beginning from the first anniversary of the date of issuance of REPS (“Issue Date”) and up to the fourth anniversary of the Issue Date (“Maturity Date”);

(ii) the next 35% of their holdings of REPS into Exchange Shares at the Exchange Price at any time beginning from the second anniversary of the Issue Date and up to the Maturity Date; and

(iii) the remaining 30% of their holdings of REPS into Exchange Shares at the Exchange Price from the third anniversary of the Issue Date and up to the Maturity Date.


8 2 8 3



15 REDEEMABlE ExchAnGEABlE PREFEREncE ShARES (cOnT’D)(c) Each holder of REPS shall have the right to exchange all of its holdings of REPS into Exchange Shares

upon the occurrence of any of the following events prior to the Maturity Date:

(i) a merger or consolidation of the subsidiary with or into another entity (except a merger or consolidation in which the Company continues to hold at least 50% of the voting power of the capital of the surviving or acquiring entity);

(ii) a change in control in which in excess of 50% of the outstanding voting power of the subsidiary is transferred; or

(iii) a voluntary liquidation, major corporate restructuring, or sale or disposal of all or substantially all of the assets of the subsidiary.

Such number of Exchange Shares is to be determined in accordance with the exchange formula.

(d) Within five business days immediately after the Maturity Date, the subsidiary has the option to redeem such number of REPS not exchanged into Exchange Shares (“Redemption Shares”) at or prior to the Maturity Date at S$1.45 for each Redemption Share (“Redemption Price”).

Upon the subsidiary’s exercise of its option to redeem the Redemption Shares, the Company shall unconditionally and irrevocably guarantee the payment of all moneys payable by the subsidiary to the holders of REPS.

In the event that the subsidiary does not exercise its option to redeem in part or in whole the Redemption Shares, such Redemption Shares shall be exchanged as soon as practicable into such number of Exchange Shares to be determined by the redemption exchange formula. The holders of REPS do not have the right to redeem the REPS for cash.

In 2012, 37,100,000 redeemable exchangeable preference shares in a subsidiary were exchanged by the holders for shares in the Company at the exchange price of US$0.5400 (equivalent to S$0.6589) per share. As a result, a total of 56,306,000 new shares amounting to US$29,966,000 (equivalent to S$37,100,000), were issued by the Company.

16 RESERvES

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Treasury shares (102) (102) (102) (102)

Foreign currency translation reserve (9,733) (11,580) – –

Statutory reserve (6) (6) (6) (6)

(9,841) (11,688) (108) (108)

16 RESERvES (cOnT’D)TREASuRy ShARES

Treasury shares comprise the cost of the Company’s shares held by the Group. As at 31 December 2012, the Group held 570,000 (2011: 570,000) of the Company’s shares.

FOREIGn cuRREncy TRAnSlATIOn RESERvE

The foreign currency translation reserve comprises:

(a) foreign exchange differences arising from the translation of the financial statements of subsidiaries whose functional currencies are different from the functional currency of the Company;

(b) the exchange differences on monetary items which form part of the Group’s net investment in foreign operations, provided certain conditions are met.

STATuTORy RESERvE

The statutory reserve comprises the difference between the fair value and the cost of treasury shares issued to certain employees pursuant to the Employee Share Plan (see Note 21(d)).

DIvIDEnDS

Subject to the approval by the shareholders at the next Annual General Meeting, the directors have proposed a final (one-tier) dividend of 0.10 Singapore cents (2011: 0.10 Singapore cents) per share, amounting to a net dividend of US$743,000 (equivalent to S$910,000) (2011: US$549,000, equivalent to S$714,000) in respect of the financial year ended 31 December 2012 based on the share capital as at that date. The proposed dividend has not been included as a liability in the financial statements.

17 OThER PAyABlES

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

non-current

Other payables 10,084 – – –

Deposits from a supplier 2,000 2,000 – –

Non-trade amounts due to subsidiaries – – 12,010 13,630

12,084 2,000 12,010 13,630


8 4 8 5



17 OThER PAyABlES (cOnT’D)

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

current

Payables to other suppliers 1,837 1,292 1,500 –

Downpayments and advances from customers 17,743 6,321 3,010 1,239

Non-trade amounts due to:

- joint ventures 163 26 262 298

- subsidiaries – – 34,235 15,491

Accrued interest payable 1,178 110 2,854 7

Accrued expenses 7,281 3,957 6,030 3,802

Employee benefits 69 69 69 69

Other payables 12,417 682 692 1,635

40,688 12,457 48,652 22,541

Total 52,772 14,457 60,662 36,171

Non-current non-trade amounts due to subsidiaries are unsecured, interest-free and repayable in 2014 (2011: repayable in 2013).

Current non-trade amounts due to subsidiaries and joint ventures are unsecured, interest-free and repayable on demand.

18 nOTES PAyABlE

Maturity

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

SGD100 million notes payable(1)

May 2015 79,957 – 79,957 –

(1) The notes bear fixed interest rate of 5.25% (2011: nil) per annum payable semi-annually, with fair value of US$90,242,000 (2011: nil) based on quoted market prices (see note 19).

The above notes are listed on the Main Board of the Singapore Exchange Securities Trading Limited and the full carrying amount of the notes payable is classified as non-current.

19 FInAncIAl lIABIlITIES

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

non-current

Secured bank loans 385,806 115,277 – 1,907

Unsecured bank loans – 697 – 697

Finance lease liabilities 217 271 217 271

Financial guarantees 8,950 1,961 63,099 18,550

394,973 118,206 63,316 21,425

current

Secured bank loans 75,015 36,279 – 763

Unsecured bank loans 740 2,546 740 1,976

Finance lease liabilities 70 66 70 66

Financial guarantees 1,664 589 15,439 4,087

77,489 39,480 16,249 6,892

Total financial liabilities 472,462 157,686 79,565 28,317

SEcuRED BAnK lOAnS

All the bank loans were secured by corporate guarantees from the Company, first legal charge on the Group’s vessels, legal assignment of the rental proceeds from the Group’s vessels, assignment of insurances in respect of vessels in bank’s favour and all monies standing to the credit of the Group’s receiving operating account in respect of the vessels maintained by the Group with the bank.

The bank loans are secured on vessels and rigs with a carrying amount of US$755,671,000 (2011: US$148,885,000).

TERMS AnD DEBT REPAyMEnT SchEDulE

Terms and conditions of outstanding loans and borrowings are as follows:

Nominalinterest rate

%

Year ofmaturity

Carrying amount

2012US$’000

2011US$’000

Group

US$ secured floating rate loans 1.45 2013 - 2021 460,821 151,556

S$ unsecured fixed rate loans 5.00 2013 740 2,268

US$ unsecured floating rate loans 2.00 - 2.60 2015 – 975

S$ finance lease liabilities 2.20 - 2.80 2017 287 337

461,848 155,136


8 6 87



19 FInAncIAl lIABIlITIES (cOnT’D)TERMS AnD DEBT REPAyMEnT SchEDulE (cOnT’D)

Nominalinterest rate

%

Year ofmaturity

Carrying amount

2012US$’000

2011US$’000

company

US$ secured floating rate loans 1.75 - 2.35 2012 - 2015 – 2,670

S$ unsecured fixed rate loans 5.00 2013 740 1,698

US$ unsecured floating rate loans 2.00 - 2.60 2015 – 975

S$ finance lease liabilities 2.20 - 2.80 2017 287 337

1,027 5,680

FInAncE lEASE lIABIlITIES

Finance lease liabilities are payable as follows:

2012 2011

PrincipalUS$’000

InterestUS$’000

Future minimum

lease paymentsUS$’000

PrincipalUS$’000

InterestUS$’000

Future minimum

lease paymentsUS$’000

Group and company

Within 1 year 70 6 76 66 11 77

After 1 year but within 5 years 217 8 225 260 41 301

After 5 years – – – 11 3 14

Total 287 14 301 337 55 392

The following are the expected contractual undiscounted cash outflows of financial liabilities, including interest payments and excluding the impact of netting agreements:

Carrying amountUS$’000

Cash flows

Contractual cash flowsUS$’000

Within 1 year

US$’000

Within 2 to 5 years

US$’000

After 5 years

US$’000

Group

2012

non-derivative financial liabilities

Secured bank loans 460,821 (495,679) (134,943) (340,297) (20,439)

Unsecured bank loans 740 (754) (754) – –

Notes payables 79,957 (90,242) (4,256) (85,986) –

Finance lease liabilities 287 (301) (76) (225) –

Trade payables 33,400 (33,400) (33,400) – –

Other payables(1) 35,029 (35,029) (22,945) (12,084) –

610,234 (655,405) (196,374) (438,592) (20,439)

19 FInAncIAl lIABIlITIES (cOnT’D)FInAncE lEASE lIABIlITIES (cOnT’D)

Carrying amountUS$’000

Cash flows

Contractual cash flowsUS$’000

Within 1 year

US$’000

Within 2 to 5 years

US$’000

After 5 years

US$’000

Group

2011


Secured bank loans 151,556 (163,600) (42,257) (109,193) (12,150)

Unsecured bank loans 3,243 (3,347) (2,637) (710) –

Finance lease liabilities 337 (392) (77) (301) (14)

Trade payables 25,503 (25,503) (25,503) – –

Other payables(1) 8,136 (8,136) (6,136) (2,000) –

188,775 (200,978) (76,610) (112,204) (12,164)

company

2012


Unsecured bank loans 740 (754) (754) – –

Notes payables 79,957 (90,242) (4,256) (85,986) –

Finance lease liabilities 287 (296) (76) (220) –

Trade payables 303 (303) (303) – –

Other payables(1) 57,652 (57,652) (45,642) (12,010) –

138,939 (149,247) (51,031) (98,216) –

2011


Secured bank loans 2,670 (2,784) (818) (1,966) –

Unsecured bank loans 2,673 (2,771) (2,061) (710) –

Finance lease liabilities 337 (392) (77) (301) (14)

Trade payables 998 (998) (998) – –

Other payables(1) 34,932 (34,932) (21,302) (13,630) –

41,610 (41,877) (25,256) (16,607) (14)

(1) Excludes down payments and advances from customers.


8 8 89



20 TRADE PAyABlES

Group Company

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Trade payables 33,009 23,300 303 998

Trade amounts due to:

- joint ventures 168 1,447 – –

- affiliates 223 756 – –

33,400 25,503 303 998

Outstanding balances with joint ventures and affiliates are unsecured.

21 ShARE-BASED PAyMEnTSAt 31 December 2012, the Group has the following share-based payment arrangements:

(A) DIREcTOR OPTIOn AGREEMEnT AnD ExEcuTIvE OPTIOn AGREEMEnTS (EquITy-SETTlED)

On 23 November 2009 (“Vesting Reference Date”), the Group granted share options to a director and 2 key executives pursuant to the Director Option Agreement and the Executive Option Agreements respectively.

Other information regarding the above share options granted is set out below:


• Theshareoptionsshallbeexercised,inwholeorinpart,inaccordancewiththefollowingschedulefrom 23 November 2010 to 23 November 2014:

i. 25% of the share options shall vest 12 months after the grant; and

ii. 25% of the share options shall vest on each anniversary of the Vesting Reference Date thereafter.


• Theoptionsgrantedexpireafter5yearsoruponcessationoftheemploymentofthedirectororthe 2 key executives.

21 ShARE-BASED PAyMEnTS (cOnT’D)At the end of the financial year, details of the options granted under Director Option Agreement and Executive Option Agreements on the unissued ordinary shares of the Company are as follows:

Date of grant of options

Exercise price per

share


2012‘000

Options exercised

‘000

Options forfeited

‘000

Options outstanding

at 31 December

2012‘000

Number of option holders at 31

December 2012

Exercise period

23/11/2009 S$0.45 4,000 – – 4,000 1

23/11/2010 to

23/11/2014

Two key executives have ceased to be employees of the Group on 4 October 2010 and 31 March 2011 respectively. Accordingly, the share options granted to them under the Executive Option Agreement had been forfeited.

Except for the above, there are no other share options forfeited or exercised during the financial year ended 31 December 2012.

FAIR vAluE OF ShARE OPTIOnS AnD ASSuMPTIOnS

The grant-date fair value of share options granted was measured based on the Black-Scholes option-pricing model formula as the grant-date fair value of services performed by the director and key executives cannot be measured reliably. Expected volatility is estimated by considering historic average share price volatility. The inputs used in the measurement of the fair values at grant date of the share-based payment plan are as follows:

Tranche A Tranche B Tranche C Tranche D

Fair value at grant date (S$) 0.42 0.52 0.57 0.61

Share price at grant date (S$) 0.77 0.77 0.77 0.77

Exercise price (S$) 0.45 0.45 0.45 0.45

Expected volatility 95% 109% 107% 107%

Option life 5 years 5 years 5 years 5 years

Expected dividends (Singapore cents) 0.15 0.15 0.15 0.15

Risk-free interest rate 0.50% 0.65% 0.82% 1.15%

There is no market condition associated with the share option grants.

(B) EzIOn EMPlOyEE ShARE OPTIOn SchEME (EquITy-SETTlED)

The Ezion Employee Share Option Scheme (the “Scheme”) was approved and adopted by its members at an Extraordinary General Meeting held on 23 November 2009. The Scheme is administered by the Company’s Remuneration Committee. All Directors and Employees of the Group shall be eligible to participate in the Scheme.


9 0 9 1



21 ShARE-BASED PAyMEnTS (cOnT’D)(B) EzIOn EMPlOyEE ShARE OPTIOn SchEME (EquITy-SETTlED) (cOnT’D)

Other information regarding the Scheme is set out below:

OPTIOn GRAnTED On 11 OcTOBER 2011 (“GRAnT DATE 1”)


• Theshareoptionshallbeexercised,inwholeorinpart,inaccordancewiththefollowingschedulefrom 11 October 2012 to 11 October 2021:


ii. 50% of the options shall vest after 31 March 2013; and

iii. 30% of the options shall vest after 31 March 2014.



• Theoptionsinclude1,400,000shareoptionsgrantedtoeachoftheexecutivedirectors,ChewThiam Keng and Captain Larry Glenn Johnson; and 100,000 share options granted to each of the non-executive directors, Lim Thean Ee, Tan Woon Hum and Dr. Wang Kai Yuen.

OPTIOn GRAnTED On 7 JunE 2012 (“GRAnT DATE 2”)


• Theshareoptionshallbeexercised,inwholeorinpart,inaccordancewiththefollowingschedulefrom 7 June 2013 to 7 June 2022:


ii. 30% of the options shall vest after the end of second anniversary of Grant Date 2; and

iii. 40% of the options shall vest after the end of third anniversary of Grant Date 2.



• The options include 700,000 share options granted to each of the executive directors, ChewThiam Keng and Captain Larry Glenn Johnson; and 100,000 share options granted to each of the directors, Lim Thean Ee, Tan Woon Hum, Dr. Wang Kai Yuen and Mr Lee Kian Soo.

21 ShARE-BASED PAyMEnTS (cOnT’D)OPTIOn GRAnTED On 7 JunE 2012 (“GRAnT DATE 2”) (cOnT’D)

At the end of the financial year, details of the options granted under the Scheme on unissued ordinary shares of the Company are as follows:

Dates ofgrant ofoptions

Exerciseprices per

share


2012‘000

Optionsgranted

‘000

Optionsforfeited

‘000

Options exercised

‘000

Optionsoutstanding

at 31 December

2012‘000

Numberof optionholders at 31

December 2012

Exercise periods

11/10/2011 S$0.414 8,085 – (15) (1,033) 7,037 34

11/10/2012 to

11/10/2021

7/6/2012 S$0.74 – 5,555 (655) – 4,900 507/6/2013 to

7/6/2022

8,085 5,555 (670) (1,033) 11,937

FAIR vAluE OF ShARE OPTIOnS AnD ASSuMPTIOnS

The grant-date fair value of share options granted was measured based on the Black-Scholes option-pricing model formula as the fair value of services performed by employees and directors cannot be measured reliably. Expected volatility is estimated by considering historic average share price volatility. Option lives are based on the assumption that each tranche of share options will be exercised once the vesting period is over.

OPTIOnS GRAnTED AT 11 OcTOBER 2011

At 11 October 2011

Tranche A Tranche B Tranche C

Fair value (S$) 0.077 0.091 0.159

Share price (S$) 0.45 0.45 0.45

Exercise price (S$) 0.414 0.414 0.414

Expected volatility 32% 33% 52%

Expected dividends (Singapore cents) –* –* –*

Risk-free interest rate 0.20% 0.21% 0.35%

* - denotes less than 0.01 Singapore cents

OPTIOnS GRAnTED AT 7 JunE 2012

At 7 June 2012

Tranche A Tranche B Tranche C

Fair value (S$) 0.16 0.174 0.224

Share price (S$) 0.78 0.78 0.78

Exercise price (S$) 0.74 0.74 0.74

Expected volatility 46.11% 35.88% 39.13%

Expected dividends (Singapore cents) –* –* –*

Risk-free interest rate 0.25% 0.23% 0.33%

* - denotes less than 0.01 Singapore cents

There is no market condition associated with the share option grants.


9 2 93



21 ShARE-BASED PAyMEnTS (cOnT’D)(c) ShARE OPTIOn GRAnTED TO DIREcTOR OF SuBSIDIARy (EquITy-SETTlED)

On 22 March 2009, the Company granted an option to a director of a subsidiary to purchase 30% interest in the subsidiary from the Company upon satisfaction of certain conditions.

Fair value of share option and assumptions

The grant-date fair value of the option is measured based on the projected net tangible assets of the Subsidiary Group as at the expected vesting date.

On 4 October 2010, the director of a subsidiary ceased to be an employee of the Group. Accordingly, the share option granted to him had been forfeited in 2010.

(D) EMPlOyEE ShARE PlAn (EquITy-SETTlED)

The Employee Share Plan (the “Plan”) was approved and adopted by members of the Company at the Extraordinary General Meeting held on 29 April 2008. The Plan is administered by a committee comprising the directors of the Company.

In 2009, 230,000 treasury shares have been awarded to certain employees pursuant to the Plan. No treasury shares had been awarded to employees under the Plan in 2012, 2011 and 2010.

DISclOSuRE OF ShARE-BASED PAyMEnTS ARRAnGEMEnTS

The number and weighted average exercise prices of share options are as follows:

Weighted average exercise price per share

2012S$

Number of options

2012’000

Weighted average exercise price per share

2011S$

Number of options

2011’000

Outstanding at 1 January 0.43 12,085 0.56 8,865

Granted during the year 0.74 5,555 0.48 12,795

Exercised during the year 0.41 (1,033) 0.45 (250)

Cancelled during the year – – 0.62 (9,325)

Outstanding at 31 December 0.53 16,607 0.43 12,085

Exercisable at 31 December 0.44 3,593 0.45 2,000

The options outstanding at 31 December 2012 have an exercise price in the range of S$0.41 to S$0.74 (2011: S$0.414 to S$0.45) and the weighted average contractual life of 6.7 years (2011: 7.5 years).

21 ShARE-BASED PAyMEnTS (cOnT’D)EMPlOyEE ExPEnSES

Group

2012US$’000

2011US$’000

Director Option Agreement and Executive Option Agreements 267 58

Ezion Employee Share Option Scheme 1,353 1,219

Total expense recognised as employee costs 1,620 1,277

22 REvEnuE

Group

2012US$’000

2011US$’000

Offshore logistic support vessels’ charter income 66,674 64,952

Liftboats and rigs’ charter income 91,995 41,999

Total revenue 158,669 106,951

23 nET FInAncE cOSTS

Group

2012US$’000

2011US$’000

Finance lease income 204 393

Interest income:

- banks 368 678

- related corporations 2,518 957

Others – 13

Finance income 3,090 2,041

Interest expense:

- other banks (5,179) (2,722)

- notes payable (2,600) –

Finance costs (7,779) (2,722)

Net finance costs recognised in profit or loss (4,689) (681)


94 95



24 PROFIT BEFORE IncOME TAxThe following items have been included in arriving at profit before income tax:

Note

Group

2012US$’000

2011US$’000

Foreign exchange loss 216 11


- assets held for sale 11 – (10,800)

- plant and equipment 382 (40)

- subsidiary 27 (13,792) –

Impairment losses on:

- plant and equipment 103 255

- trade receivables 482 3,512

Audit fees 219 207

Non-audit fees paid to auditors of the Company 14 14

Operating lease expense 35,692 21,446

Staff costs 9,535 6,708

Contributions to defined contribution plans, included in staff costs 408 283

Equity-settled share-based payment transactions, included in staff costs 1,620 1,277

Staff costs include key management personnel compensation as disclosed in note 30.

25 IncOME TAx ExPEnSE

Group

2012US$’000

2011US$’000

current tax expense

Current year 1,278 1,020

Under/(over) provision in respect of prior years 377 (76)

Foreign tax suffered 2,272 1,949

3,927 2,893

Reconciliation of effective tax rate

Profit before income tax 82,768 61,010

Share of results of joint ventures (net of tax) (16,896) (9,502)

Profit before income tax excluding share of results of joint ventures 65,872 51,508

25 IncOME TAx ExPEnSE (cOnT’D)

Group

2012US$’000

2011US$’000

Tax calculated using Singapore tax rate of 17% (2011: 17%) 11,198 8,756

Income not subject to tax (3,347) (1,866)

Net tax exempt income under Section 13A of Income Tax Act (9,935) (8,043)

Non-deductible expenses 3,319 2,131

Foreign tax suffered 2,272 1,949

Under/(over) provision in respect of prior years 377 (76)

Others 43 42

3,927 2,893

For the financial year ended 31 December 2012 and 2011, the effective applicable tax rate is lower than 17% as no provision is made for taxation for certain income in view of the exempt profits earned by the Group under Section 13A of the Income Tax Act during the year.

26 EARnInGS PER ShAREBASIc EARnInGS PER ShARE

The calculation of basic earnings per share for the year ended 31 December 2012 was based on the profit attributable to ordinary shareholders of approximately US$78,841,000 (2011: US$58,117,000) and a weighted average number of ordinary shares outstanding of approximately 826,398,000 (2011: 713,599,000), calculated as follows:

Group

2012US$’000

2011US$’000

Profit attributable to ordinary shareholders 78,841 58,117

WEIGhTED AvERAGE nuMBER OF ORDInARy ShARES

2012’000

2011’000

Issued ordinary shares at 1 January 713,599 713,408

Effect of issue of new ordinary shares 98,932 –

Effect of conversion of redeemable exchangeable preference shares 13,698 –

Effect of exercise of options 169 191

Weighted average number of ordinary shares at 31 December 826,398 713,599


96 9 7



26 EARnInGS PER ShARE (cOnT’D)DIluTED EARnInGS PER ShARE

The calculation of diluted earnings per share for the year ended 31 December 2012 was based on the profit attributable to ordinary shareholders of US$78,841,000 (2011: US$58,117,000) and a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares of 864,788,000 (2011: 794,036,000), calculated as follows:

Group

2012US$’000

2011US$’000

Profit attributable to ordinary shareholders (diluted) 78,841 58,117

WEIGhTED AvERAGE nuMBER OF ORDInARy ShARES (DIluTED)

2012’000

2011’000

Issued ordinary shares at 1 January 713,599 713,408

Effect of issue of new ordinary shares 112,630 –

Effect of share options in issue 14,259 –

Effect of exercise of options 169 191

Effect of issue of redeemable exchangeable preference shares 24,131 80,437

Weighted average number of ordinary shares at 31 December 864,788 794,036

In 2011, the 4,000,000 share options granted under the Director Option Agreement, Executive Option Agreements and Ezion Employee Share Option Scheme were not included in the computation of diluted earnings per share as the share options were anti-dilutive.

The average market value of the Company’s shares for purposes of calculating dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.

27 DIvESTMEnT OF SuBSIDIARyOn 2 April 2012, the Group divested 100% of its interest in Teras Conquest 4 Pte Ltd for a consideration of approximately US$25,000,000. Transaction costs attributable to the disposal amounts to US$1,772,000.

The subsidiary previously earned a net profit of US$1,351,000 for the period from 1 January 2012 to the date of divestment.

Effective interest disposed%

Teras Conquest 4 Pte Ltd 100

27 DIvESTMEnT OF SuBSIDIARy (cOnT’D)The effects of the disposal of interests in the subsidiary is set out below:

Note2012

US$’000

Property, plant and equipment 4 59,804

Trade and other receivables 1,418

Cash and cash equivalents 8

Secured bank loan (52,500)

Trade and other payables (360)

Net identifiable assets 8,370

Realisation of foreign currency translation reserve 1,076

Gain on disposal 24 13,792

Sale consideration 23,238

Net cash and cash equivalents disposed (8)

Net cash inflow 23,230

28 OPERATInG SEGMEnTSThe Group has two 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 key management reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

(a) Offshore logistic support vessels’ services: engaged in the owning, chartering and management of oil and gas related offshore logistics support vessels.

(b) Liftboats and jack-up rigs’ services: engaged in the owning, chartering and management of oil and gas related liftboats and jack-up rigs.

The accounting policies of the reportable segments are the same as described in note 3(O).

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 key management. 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.


98 9 9

28 OPERATInG SEGMEnTS (cOnT’D)BuSInESS SEGMEnTS

Offshore logistic support vessels’

servicesUS$’000

Liftboats and jack-up rigs’ services

US$’000

Total operationsUS$’000

year ended 31 December 2012

External revenue 66,674 91,995 158,669

Inter-segment revenue 40,812 19,749 60,561

Total revenue for reportable segments 107,486 111,744 219,230

Elimination of inter-segment revenue (60,561)

Consolidated revenue 158,669

Reportable segment results from operating activities 16,153 46,769 62,922

Other income 141 16,951 17,092

Share of results of joint ventures, net of tax 6,753 10,143 16,896

Finance income 1,293 1,797 3,090

Finance expense (1,736) (6,043) (7,779)

Unallocated expenses (9,453)

Profit before income tax 82,768

Income tax expense (3,927)

Profit for the year 78,841

Reportable segment assets 339,480 649,052 988,532

Investment in joint ventures 47,913 74,581 122,494

Unallocated assets 86,979

Total assets 1,198,005

Reportable segment liabilities 274,152 349,694 623,846

Unallocated liabilities 21,310

Total liabilities 645,156

Capital expenditure 126,355 489,037 615,392

Unallocated capital expenditure 463

Total capital expenditure 615,855

Other material non-cash items:

Depreciation 8,123 8,226 16,349

Unallocated depreciation 236

Total depreciation 16,585


- subsidiary – (13,792) (13,792)

- plant and equipment 382 – 382

Impairment loss on:


- trade receivables 482 – 482



28 OPERATInG SEGMEnTS (cOnT’D)BuSInESS SEGMEnTS (cOnT’D)

Offshore logistic support vessels’

servicesUS$’000

Liftboats and jack-up rigs’ services

US$’000

Total operationsUS$’000

year ended 31 December 2011

External revenue 64,952 41,999 106,951

Inter-segment revenue 12,150 1,160 13,310

Total revenue for reportable segments 77,102 43,159 120,261

Elimination of inter-segment revenue (13,310)

Consolidated revenue 106,951

Reportable segment results from operating activities 24,101 25,798 49,899

Other income 886 11,297 12,183

Share of results of joint ventures, net of tax 5,671 3,831 9,502

Finance income 2,041 – 2,041

Finance expense (1,096) (1,626) (2,722)

Unallocated expenses (9,893)

Profit before income tax 61,010

Income tax expense (2,893)

Profit for the year 58,117

Reportable segment assets 195,028 175,532 370,560

Investment in joint ventures 38,427 30,292 68,719

Unallocated assets 31,095

Total assets 470,374

Reportable segment liabilities 85,942 103,622 189,564

Unallocated liabilities 12,477

Total liabilities 202,041

Capital expenditure 49,704 88,503 138,207

Unallocated capital expenditure 28

Total capital expenditure 138,235

Other material non-cash items:

Depreciation 6,119 3,479 9,598

Unallocated depreciation 190

Total depreciation 9,788

Gain on disposal of:

- assets held for sale – 10,800 10,800


Impairment loss on:


- trade receivables 3,512 – 3,512


100 101

28 OPERATInG SEGMEnTS (cOnT’D)GEOGRAPhIcAl SEGMEnTS

The businesses of the Group are operated in five principal geographical areas, namely, Singapore, Australia, Mauritius, Far East and ASEAN countries. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

Singapore Australia MauritiusFar East and

ASEAN countries Other countriesTotal

operations

2012US$’000

2011US$’000

2012US$’000

2011US$’000

2012US$’000

2011US$’000

2012US$’000

2011US$’000

2012US$’000

2011US$’000

2012US$’000

2011US$’000

Revenue 37,379 29,029 46,298 38,488 – – 59,597 37,305 15,395 2,129 158,669 106,951

Non-current assets(1) 685,912 255,099 1,385 1,383 53,182 – – – 53,238 14,322 793,717 270,804

(1) Non-current assets presented consist of plant and equipment

MAJOR cuSTOMERS

During the financial year ended 31 December 2012, the Group had four (2011: three) customers in the Group’s offshore support vessels’ services and liftboats and rigs’ services segments that individually contributed 10% or more of the Group’s total revenue. Revenue from these customers amounted to US$86,262,000 (2011: US$49,834,000) of the Group’s total revenue.

29 cOMMITMEnTS(A) cAPITAl cOMMITMEnT

Group

2012US$’000

2011US$’000

Contracted but not provided for 484,171 145,068



29 cOMMITMEnTS (cOnT’D)

(B) OPERATInG lEASE ExPEnSE cOMMITMEnTS (AS lESSEE)

At the reporting date, the Group have commitments for future minimum lease payments under non-cancellable operating leases as follows:

Group

2012US$’000

2011US$’000

Within 1 year 30,817 23,572

After 1 year but within 5 years 47,531 3,837

78,348 27,409

Operating lease expense commitments at the reporting date represents rentals payable by the Group for its vessel charters and office space. The leases from vessel charter and office rental are for a period ranging from 1 to 3 years from 1 January 2013 to 31 December 2015 (2011: 1 January 2012 to 31 December 2014).

Included in the above future minimum lease payments under non-cancellable operating leases are amounts payable to the Group’s joint ventures and an affiliate within 1 year and after 1 year but within

5 years of US$13,777,000 (2011: US$12,853,000) and US$441,000 (2011: US$747,000) respectively.

(c) OPERATInG lEASE IncOME cOMMITMEnTS (AS lESSOR)

The Group charters out its vessels. At the reporting date, the total future minimum lease receivables under non-cancellable operating lease rentals are as follows:

Group

2012US$’000

2011US$’000

Within 1 year 358,996 96,534

After 1 year but within 5 years 654,050 78,960

1,013,046 175,494

Operating lease income commitments represents rentals receivable from customer on the Group’s vessels charter. The lease terms are negotiated on fixed terms till expiry of the lease.


102 103

29 cOMMITMEnTS (cOnT’D)(D) FInAncE lEASE IncOME cOMMITMEnTS (AS lESSOR)

At the reporting date, the total future minimum lease income receivables under non-cancellable finance lease rentals are as follows:

Group

2012US$’000

2011US$’000

Within 1 year – 200

After 1 year but within 5 years – –

– 200

Finance lease income represents rentals receivable from customer on the Group’s vessel charter. The lease term is negotiated on fixed terms till expiry of the lease.

30 RElATED PARTIESFor the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to

common control or common significant influence. Related parties may be individuals or other entities.

Other than disclosed elsewhere in the financial statements, the transactions with related parties are as follows:

KEy MAnAGEMEnT PERSOnnEl cOMPEnSATIOn

Key management personnel compensation comprised:

Group

2012US$’000

2011US$’000

Short-term employee benefits 4,558 3,194

Share-based payments 1,291 1,161



30 RElATED PARTIES (cOnT’D)

OThER RElATED PARTy TRAnSAcTIOnS

Group

2012US$’000

2011US$’000

Transactions with companies in which a director has financial interest

Offshore logistic support vessels, liftboats and rigs’ services revenue received and receivable 28,041 20,475

Offshore logistic support vessels, liftboats and rigs’ services costs paid and payable 491 2,372

Rental expense paid and payable 352 364

Transactions with joint ventures

Interest income received and receivable 2,012 695

Offshore logistic support vessels, liftboats and rigs’ services revenue received and receivable 30,840 32,693

Offshore logistic support vessels, liftboats and rigs’ services costs paid and payable 14,438 14,134

Management fee income from joint ventures 277 534

Recharge of expenses to a joint venture 185 120

31 AccOunTInG ESTIMATES AnD JuDGEMEnTSEstimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in condition and assumptions are factors to be considered when reviewing the financial statements. The accounting policies are set forth in note 3. The Group believes the following critical accounting policies involve the most significant judgements and estimates used in the preparation of the financial statements.

uSEFul lIvES AnD DEPREcIATIOn OF vESSElS AnD vESSEl cOMPOnEnT cOSTS

The cost of the Group’s vessels is depreciated on a straight-line basis over the vessels’ useful lives. Management estimates the economic useful life of the Group’s vessels to be 8 to 25 years based on their age and condition, with a new vessel estimated to have a useful life of a maximum of 25 years. This is a common life expectancy applied in the shipping industry. Changes in the expected level of use of the assets and market factors could impact the economic useful lives of the vessels, therefore future depreciation charges could be revised.


104 105



31 AccOunTInG ESTIMATES AnD JuDGEMEnTS (cOnT’D)The residual values of the vessels are based on the amount that the vessels are expected to fetch as scrap metal upon decommissioning of the vessels. Metal prices are subject to volatile market conditions over time. Future changes in these prices could impact the estimates of residual value used in calculating depreciation expense.

The Group estimates the useful life of its vessel component costs by reference to the average historical periods between two dry-dockings of vessels of similar age, and expected usage of the vessel until its next dry-docking.

Any changes in the economic useful lives of the vessels and the vessel component costs would impact the depreciation charges and consequently affect the Group’s results.

IMPAIRMEnT OF PlAnT AnD EquIPMEnT

The Group assesses the impairment of plant and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important that could trigger an impairment review include the following:

• Extendedperiodsofidletime;

• Inabilitytocontractspecificassetsorgroupsofassets;and

• Significantnegativeindustryoreconomictrends.

The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the Group’s accounting estimates in relation to plant and equipment affect the amounts reported in the financial statements, especially the estimates of the expected useful economic lives and the carrying values of those assets. If business conditions were different, or if different assumptions were used in the application of this and other accounting estimates, it is likely that materially different amounts could be reported in the Group’s financial statements.

For the purposes of impairment assessment of vessels, each vessel is a separate CGU. A total of 40 (2011: 26) CGUs have been identified. Management assessed the recoverable amounts of the vessels based on their value in use.

The recoverable amounts of 3 (2011: 2) CGUs with carrying value of US$12,349,000 (2011: US$61,162,000) were determined based on valuation reports issued by independent professional valuers.

31 AccOunTInG ESTIMATES AnD JuDGEMEnTS (cOnT’D)IMPAIRMEnT OF PlAnT AnD EquIPMEnT (cOnT’D)

The recoverable amounts of the CGUs with carrying value of US$20,440,000 (2011: US$142,376,000) were based on value in use calculations based on the following key assumptions:

• Cashflowswereprojectedbasedonpastexperience,actualoperatingresultsandthefinancialbudgetsapproved by management for 20 years or the remaining useful life, whichever that is shorter.

• Charterrateswereincludedbasedonactualcontractualratesorlatestavailablemarketrates.Charterrates are expected to decrease by approximately 20% throughout the projections;

• Pre-taxdiscountratesof9.57%(2011:9.60%)wereappliedindeterminingtherecoverableamountsofthe CGUs. The discount rates were estimated based on the Group’s average weighted average cost of capital; and

• Minimalnetresidualvalueswereusedinthecashflowcomputation.

Based on the above assessments, management determined that no impairment to the vessels is considered necessary, other than the impairment loss of US$103,000 (2011: US$255,000) recognised on certain vessels (note 4).

IMPAIRMEnT OF TRADE REcEIvABlES

Trade receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful receivables is the Group’s best estimate of the amount of probable credit losses in the Group’s existing trade receivables.

Management uses judgement to determine the allowance for doubtful receivables which are supported by historical write-off, credit history of the customers and repayment records. The Group reviews its allowance for doubtful receivables monthly. Balances which are past due for more than 120 days are reviewed individually for collectability. Accounts balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Actual results could differ from estimates.


106 107



32 FInAncIAl RISK MAnAGEMEnTOvERvIEW

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

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 Group’s principal financial instruments comprise cash and cash equivalents and bank loans. The main purpose of these financial instruments is to finance the Group’s operations. The other financial instruments such as trade and other payables are directly from its operations.

cREDIT RISK

The Group’s maximum exposure to credit risk are carrying amounts of amounts due from joint ventures, other assets, trade receivables, and cash and cash equivalents.

The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Therefore, the Group does not expect to incur material credit losses. Cash and cash equivalents are placed with regulated financial institutions. Hence, minimal credit risk exists with respect to these assets.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

The allowance account in respect of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset.

The Group’s top four (2011: five) most significant customers account for 72% (2011: 57%) of trade receivables due from third parties at 31 December 2012.

32 FInAncIAl RISK MAnAGEMEnT (cOnT’D)FInAncIAl GuARAnTEES

The credit risk represents the loss that would be recognised upon a default by the parties to which the guarantees were given on behalf of. To mitigate these risks, management continually monitors the risks and has established processes including performing credit evaluations of the parties it is providing the guarantee on behalf of. Guarantees are only given to its subsidiaries and joint ventures.

Financial guarantees provided by the Company to its subsidiaries are eliminated in preparing the consolidated financial statements. Estimates of the Company’s obligations arising from financial guarantee contracts may be affected by future events, which cannot be predicted with any certainty. The assumptions may well vary from actual experience so that the actual liability may vary considerably from the best estimates.

Financial guarantees comprise guarantees granted by the Company to banks in respect of banking facilities amounting to US$492,288,000 (2011: US$291,034,000).

lIquIDITy RISK

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

As at 31 December 2012, the Group has undrawn banking facilities amounting to US$317,890,000 (2011: US$71,800,000).

MARKET RISK

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange 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.

InTEREST RATE RISK

The Group’s interest rate exposure relates primarily to its long-term debt obligations as they are subject to fluctuating interest rates that reset according to market rates change. Surplus funds are placed in fixed deposits accounts with regulated banks that interest rate varies according to market rates.


108 109



32 FInAncIAl RISK MAnAGEMEnT (cOnT’D)Sensitivity analysis

For the variable rate financial assets and liabilities, a change of 100 basis point (“bp”) in interest rate at the reporting date would increase/(decrease) profit or loss by the pre-tax amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Profit or loss

100 bpIncreaseUS$’000

100 bpdecreaseUS$’000

Group

31 December 2012

Interest-bearing loans (4,608) 4,608

Fixed deposits 159 (159)

31 December 2011

Interest-bearing loans (1,525) 1,525

Fixed deposits 165 (165)

FOREIGn cuRREncy RISK

The Group has exposures to foreign currency risks as a result of its operations in several countries. The currencies giving rise to this risk are primarily US dollar, Singapore dollar, Australian dollar and Euro.

In respect of other monetary assets and liabilities held in currencies other than the functional currencies of respective entities, the Group ensures that the net exposure is kept to an acceptable level by buying currencies at spot rates, where necessary, to address short term imbalances.

The Group’s and the Company’s exposures to foreign currencies are as follows:

US dollarUS$’000

Singapore dollar

US$’000

Australian dollar

US$’000Euro

US$’000Others

US$’000Total

US$’000

Group

31 December 2012

Loans to joint ventures – – – – – –

Trade receivables and other assets 1,177 2,434 1,991 13 113 5,728

Cash and cash equivalents 727 76,049 1,876 3,565 3 82,220

Trade and other payables (152) (12,534) (84) (658) (99) (13,527)

Financial liabilities – (1,028) – (2,543) – (3,571)

Notes payable – (79,957) – – – (79,957)

1,752 (15,036) 3,783 377 17 (9,107)

32 FInAncIAl RISK MAnAGEMEnT (cOnT’D)FOREIGn cuRREncy RISK (cOnT’D)

US dollarUS$’000

Singapore dollar

US$’000

Australian dollar

US$’000Euro

US$’000Others

US$’000Total

US$’000

Group

31 December 2011

Loans to joint ventures – – 2,633 – – 2,633

Trade receivables and other assets 296 9,410 – 2,220 562 12,488

Cash and cash equivalents 50 17,489 7,727 – 2 25,268

Trade and other payables (354) (8,864) (22) (1,795) (24) (11,059)

Financial liabilities – (2,605) – (1,304) – (3,909)

(8) 15,430 10,338 (879) 540 25,421

Singapore dollar

US$’000

Australian dollar

US$’000Euro

US$’000Total

US$’000

company

31 December 2012

Loans to subsidiaries 2,356 472 – 2,828

Loans to joint ventures – – 3,071 3,071

Trade receivables and other assets 1,829 1,222 – 3,051

Cash and cash equivalents 73,812 271 – 74,083

Trade and other payables (25,962) (17) – (25,979)

Financial liabilities (1,028) – (2,543) (3,571)

Notes payables (79,957) – – (79,957)

(28,950) 1,948 528 (26,474)

31 December 2011

Loans to subsidiaries 88,810 – – 88,810

Loans to joint ventures – 2,633 – 2,633

Trade receivables and other assets 2,164 – – 2,164

Cash and cash equivalents 15,653 105 – 15,758

Trade and other payables (19,681) (176) – (19,857)

Financial liabilities (3,645) (72) (2,608) (6,325)

83,301 2,490 (2,608) 83,183


110 1 1 1



32 FInAncIAl RISK MAnAGEMEnT (cOnT’D)FOREIGn cuRREncy RISK (cOnT’D)

Exposure to currency risk - Sensitivity analysis

The following table indicates the approximate change in the Group’s profit before tax and equity in response to a 10% change in the foreign exchange rates to which the Group has significant exposure at the reporting date. The sensitivity analysis includes balances between group entities where the denomination of the balances is in a currency other than the functional currencies of the lender or the borrower.

A 10% strengthening of US dollar (2011: US dollar) against the following currencies at the reporting date would increase/(decrease) equity and profit or loss by the pre-tax amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Group Company

EquityUS$’000

Profit or lossUS$’000

EquityUS$’000

Profit or lossUS$’000

31 December 2012

US dollar – (175) – –

Singapore dollar – 1,504 – 2,895

Australian dollar – (378) – (195)

Euro – (37) – (53)

Others – (2) – –

31 December 2011

Singapore dollar – (1,543) – (8,330)

Australian dollar – (1,035) – (249)

Euro – 88 – 261

Others – (54) – –

A 10% weakening of US dollar (2011: US dollar) against the above currencies would have had the equal but opposite effect on the above currencies to the pre-tax amounts shown above, on the basis that all other variables remain constant.

FAIR vAluES vERSuS cARRyInG AMOunTS

Non-derivative financial assets and liabilities

The carrying amounts of the Group and the Company’s financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2012 and 2011.

Derivatives

The financial instruments that are recorded in the Level 3 category comprise unquoted share options in an associate. At 31 December 2012, the fair value approximates the cost of S$1. The fair value of the unquoted share option in associate is measured using valuation techniques that incorporate assumptions that are not evidenced by prices from observable current market transactions. Instead, they are based on “unobservable” inputs reflecting management’s “own assumptions” about the way assets would be priced.

32 FInAncIAl RISK MAnAGEMEnT (cOnT’D)FInAncIAl InSTRuMEnTS By cATEGORy

Set out below is a comparison by category of carrying amounts of all the Group and Company’s financial instruments that are carried in the financial statements:

Note

Loans and

receivablesUS$’000

Liabilities at amortised

costUS$’000

Group

31 December 2012

Assets

Other assets(1) 9 15,455

Trade receivables 10 57,451 –

Cash and cash equivalents 12 134,911 –

liabilities

Other payables(2) 17 – (35,029)

Trade payables 20 – (33,400)

Financial liabilities 19 – (472,462)

Notes payable 18 – (79,957)

31 December 2011

Assets

Other assets(1) 9 15,945 –



liabilities


Trade payables 20 – (25,503)


company

31 December 2012

Assets




liabilities


Trade payables 20 – (303)


Notes payable 18 – (79,957)


112 113

32 FInAncIAl RISK MAnAGEMEnT (cOnT’D)FInAncIAl InSTRuMEnTS By cATEGORy (cOnT’D)

Note

Loansand

receivablesUS$’000

Liabilitiesat amortised

costUS$’000

company

31 December 2011

Assets




liabilities


Trade payables 20 – (998)

Financial liabilities 19 – (28,317)(1) Excludes advances to suppliers and prepayments.

(2) Excludes downpayments and advances from customers.

33 SuBSEquEnT EvEnTSPlAcEMEnT OF ShARES

On 28 February 2013, the Board of Directors of the Company announced that the Company proposes to issue 50,000,000 New Shares at an issue price of S$1.895 per ordinary shares (the “Issue Price”) in conjunction with DBS Bank Ltd. (the “New Issuance”). The Issue Price represents a discount of approximately 4.9% to the weighted average price of S$1.9925 for trades done in respect of the Shares on the SGX-ST for the full market day of 27 February 2013.

The New Shares,when delivered, shall be free from any and all charges, claims, securities, pledges, liens, equities or other encumbrances, and shall rank pari passu with and shall carry all rights similar to the existing Shares in issue prior to the date of delivery.

The Subscription Shares represent approximately 5.5% of the existing issued and paid-up share capital (excluding treasury shares) of the Company (the “Share Capital”) as at 28 February 2013, and represent approximately 5.2% of the enlarged Share Capital after the Subscription. The Subscription, which increased the existing Share Capital from 909,918,603 Shares to 959,918,603 Shares, was completed on 15 March 2013. The net proceeds would be used to finance the acquisition of a liftboat to be deployed to support the oil and gas activities of a South East Asia-based national oil company.

DIvESTMEnT OF A SuBSIDIARy

On 1 March 2013, the Company entered into a sales and purchase agreement with Offshore Marine Services Pty Ltd and PB Sea Tow Holdings (BVI) Limited in relation with the divestment of 33 1/3% effective interest in Offshore Marine Services Alliance Pty Ltd, a jointly-owned company incorporated and operating in Australia, for a sales consideration of A$35.0 million (approximately US$36.1 million).

S H a r E H O l D E r S ’ i N f O r M aT i O N

As at 15 March 2013


GEnERAl InFORMATIOn On ShARE cAPITAl

Total no. of issued shares : 959,918,603 (excluding treasury shares)Class of shares : Ordinary shareVoting rights : One vote per share (no vote for treasury shares)Number of treasury shares : 570,000 Percentage of treasury shares : 0.06% based on total number of issued shares

DISTRIBuTIOn OF ShAREhOlDInGS

Range of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 7 0.20 1,318 0.00

1,000 - 10,000 2,283 67.19 12,811,186 1.33

10,001 - 1,000,000 1,068 31.43 57,880,401 6.03

1,000,001 and above 40 1.18 889,795,698 92.64

3,398 100.00 960,488,603 100.00

TOP 20 ShAREhOlDERS

No. Name of Shareholder No. of Shares % **

1 Citibank Nominees Singapore Pte Ltd 142,761,360 14.87

2 Chan Fooi Peng 142,000,000 14.79

3 HSBC (Singapore) Nominees Pte Ltd 115,978,037 12.08

4 DBS Nominees Pte Ltd 98,098,705 10.22

5 DBSN Services Pte Ltd 96,255,838 10.03

6 Ezra Holdings Limited 40,000,000 4.17

7 United Overseas Bank Nominees Pte Ltd 33,009,000 3.44

8 BNP Paribas Securities Services 30,374,000 3.16

9 Raffles Nominees (Pte) Ltd 25,135,584 2.62

10 OCBC Securities Private Ltd 17,817,000 1.86

11 Chew Thiam Keng 16,020,000 1.67

12 EDB Investments Pte Ltd 14,269,620 1.49

13 Chow Joo Ming 13,300,000 1.39

14 DB Nominees (S) Pte Ltd 9,491,533 0.99

15 Nylect Holdings Pte Ltd 8,208,000 0.86

16 Tan Kim Seng 7,700,000 0.80

17 Evia Growth Opportunities II Ltd 7,284,869 0.76

18 Merrill Lynch (S) Pte Ltd 7,240,350 0.75

19 Phillip Ventures Enterprise Fund 3 Ltd 5,457,708 0.57

20 Phillip Ventures Enterprise Fund 2 Ltd 5,456,708 0.57

835,858,312 87.09

** The percentage of issued ordinary shares is calculated based on the number of issued ordinary shares of the company as at 15 March 2013, excluding 570,000 ordinary shares held as treasury shares as at that date.


114 115

N O T i C E O f a N N U a l G E N E r a l M E E T i N G

S H a r E H O l D E r S ’ i N f O r M aT i O N As at 15 March 2013

SuBSTAnTIAl ShAREhOlDERSAs per Register of Substantial Shareholders:

Direct Interest % Deemed Interest %

Chan Fooi Peng 1 142,000,000 14.79 16,020,000 1.67

Chew Thiam Keng 2 16,020,000 1.67 142,000,000 14.79

Franklin Resources Inc 3 - - 69,249,000 7.21

Templeton Worldwide, Inc. 4 - - 54,874,655 5.72

Templeton International, Inc. 5 - - 63,446,655 6.61

Franklin Templeton Capital Holdings Private Limited 6 - - 63,446,655 6.61

Franklin Templeton Asia Holdings Private Limited 7 - - 63,446,655 6.61

Franklin Templeton Investments (Asia) Limited 8 - - 63,446,655 6.61

Havenport Asset Management Pte. Ltd. 9 - - 55,352,000 5.76

Tern Yuh Sheng Joseph 10 - - 55,352,000 5.76

Tan Keng Sin Patrick 11 500,000 0.05 55,352,000 5.76

Notes:

1. By virtue of Shares held directly by Madam Chan Fooi Peng’s spouse, Mr Chew Thiam Keng, she is deemed to be interested in the Shares held by Mr Chew Thiam Keng.

2. By virtue of Shares held directly by Mr Chew Thiam Keng’s spouse, Madam Chan Fooi Peng, he is deemed to be interested in the Shares held by Madam Chan Fooi Peng.

3. Shares are held by funds and managed accounts that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc.4. Shares are held by funds and managed accounts that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc.

Templeton Worldwide, Inc. is a wholly-owned subsidiary of Franklin Resources, Inc.5. Shares are held by funds and managed accounts that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc.

Templeton International, Inc. is a wholly-owned subsidiary of Templeton Worldwide, Inc., which is a wholly-owned subsidiary of Franklin Resources, Inc.

6. Shares are held by funds and managed accounts that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc. Franklin Templeton Capital Holdings Private Limited is a wholly-owned subsidiary of Templeton International, Inc., which is a wholly-owned subsidiary of Templeton Worldwide, Inc., which is a wholly-owned subsidiary of Franklin Resources, Inc.

7. Shares are held by funds and managed accounts that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc. Franklin Templeton Asia Holdings Private Limited is a wholly-owned subsidiary of Franklin Templeton Capital Holdings Private Limited, which is a wholly-owned subsidiary of Templeton International, Inc., which is a wholly-owned subsidiary of Templeton Worldwide, Inc., which is a wholly-owned subsidiary of Franklin Resources, Inc.

8. Shares are held by funds and managed accounts that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc. Franklin Templeton Investments (Asia) Limited is a wholly-owned subsidiary of Franklin Templeton Asia Holdings Private Limited, which is a wholly-owned subsidiary of Franklin Templeton Capital Holdings Private Limited, which is a wholly-owned subsidiary of Templeton International, Inc., which is a wholly-owned subsidiary of Templeton Worldwide, Inc., which is a wholly-owned subsidiary of Franklin Resources, Inc.

9. New investment management mandates taken on by Havenport Asset Management Pte. Ltd. resulting in Havenport Asset Management Pte. Ltd having a deemed interest in the shares of the Company held in aggregate by such mandates and existing investment management mandates. The deemed interests are held through Citibank Nominees Singapore Pte Ltd, DBSN Services Pte Ltd, DBS Nominees Pte Ltd, HSBC (Singapore) Nominees Private Limited and United Overseas Bank Nominees (Private Limited).

10. Tern Yuh Sheng Joseph holds more than 20% of the total number of issued shares in Havenport Asset Management Pte. Ltd. As such, he is deemed to have an interest in the shares of the Company held in aggregate by the mandates managed by Havenport Asset Management Pte. Ltd.

11. Tan Keng Sin Patrick holds more than 20% of the total number of issued shares in Havenport Asset Management Pte. Ltd. As such, he is deemed to have an interest in the shares of the Company held in aggregate by the mandates managed by Havenport Asset Management Pte. Ltd.

12. The percentage of shareholdings is computed based on the issued and paid-up share capital of the Company comprising 959,918,603 shares (excluding Treasury Shares) as at 15 March 2013.

PERcEnTAGE OF ShAREhOlDInG hElD In PuBlIc’S hAnDSBased on information made available to the Company as at 15 March 2013, approximately 66.14% of the Company’s shares (excluding treasury shares) was held in the hands of the public, and accordingly, Rule 723 of the SGX-ST Listing Manual is complied with.

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ezion Holdings Limited (“the Company”) will be held at No. 87 Science Park Drive, Science Hub, Portsdown Room Level 1, Singapore Science Park I, Singapore 118260 on Thursday, 25 April 2013 at 10.00 a.m. for the following purposes:

AS ORDInARy BuSInESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31 December 2012 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final dividend of S$0.001 per share tax exempt (one-tier) for the year ended 31 December 2012. (Resolution 2)

3. To re-elect the following Directors of the Company retiring pursuant to Article 107 of the Articles of Association of the Company:

Dr Wang Kai Yuen (See Explanatory Note (i)) (Resolution 3)

Mr Lim Thean Ee (See Explanatory Note (ii)) (Resolution 4)

4. To approve the payment of Directors’ fees of S$187,784 for the year ended 31 December 2012. (Resolution 5)

5. To re-appoint KPMG LLP as the Auditor of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 6)

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

AS SPEcIAl BuSInESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:

7. Authority to issue shares in the capital of the company

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company be hereby authorised and empowered to:

(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and


116 117



(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force,

provided that:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:

(a) new shares arising from the conversion or exercise of any convertible securities;

(b) new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this Resolution, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual; and

(c) any subsequent bonus issue, consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and

(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.

(See Explanatory Note (iii)) (Resolution 7)

8. Authority to issue shares under the Ezion Employee Share Plan

That the Directors of the Company be hereby authorised to offer and grant awards (“Awards”) in accordance with the provisions of the Ezion Employee Share Plan (the “Plan”) and to allot and issue or deliver from time to time such number of fully-paid shares as may be required to be issued or delivered pursuant to the vesting of the Awards under the Plan, provided that:-

(i) the aggregate number of shares to be issued pursuant to the Plan shall not exceed three point-five per cent (3.5%) of the total issued share capital of the Company as at 31 March 2008; and

(ii) the aggregate number of shares to be issued pursuant to the Plan, when added to the number of shares issued and issuable in respect of such Awards and other shares issued and/or issuable under other share-based incentive schemes of the Company, shall not exceed fifteen per cent (15%) of the total number of the issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.

(See Explanatory Note (iv)) (Resolution 8)

9. Authority to issue shares under the Ezion Employee Share Option Scheme

That the Directors of the Company be hereby authorised and empowered to offer and grant options in accordance with the rules of the Ezion Employee Share Option Scheme (“the Scheme”) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Scheme, when added to the number of shares issued and issuable in respect of such Scheme and other shares issued and/or issuable under other share-based incentive schemes of the Company, shall not exceed fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.

(See Explanatory Note (v)) (Resolution 9)

By Order of the Board

Lim Ka BeeSecretarySingapore, 10 April 2013

ExPlAnATORy nOTES:

(i) Dr Wang Kai Yuen will, upon re-election as a Director of the Company, remain as Chairman of the Audit Committee, member of the Nominating Committee, member of the Remuneration Committee and will be considered independent.

(ii) Mr Lim Thean Ee will, upon re-election as a Director of the Company, remain as Chairman of the Remuneration Committee, member of the Audit Committee, member of the Nominating Committee and will be considered independent.


118 119


(iii) Ordinary Resolution 7 in item 7 above, if passed, will empower the Directors of the Company, effective until the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible into shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders.

For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.

(iv) Resolution 8 is to authorise the Directors to offer and grant Awards under the Plan and to allot and issue shares pursuant to the vesting of Awards under the Plan, provided that the number of shares issued and issuable in respect of such Awards:-

(a) shall not exceed three point-five per cent (3.5%) of the total issued share capital of the Company as at 31 March 2008; and

(b) the aggregate number of shares to be issued pursuant to the Plan, when added to the number of shares issued and issuable in respect of such Awards and other shares issued and/or issuable under other share-based incentive schemes of the Company, shall not exceed fifteen per cent (15%) of the issued shares of the Company from time to time.

Based on the issued share capital of the Company as at 31 March 2008, the total number of shares, which may be issued or issuable in respect of such Awards, is 22,539,230 shares.

(v) Resolution 9, if passed, will empower the Directors of the Company, effective until the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in aggregate, when added to the number of shares issued and issuable in respect of such Awards and other shares issued and/or issuable under other share-based incentive schemes of the Company, fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

nOTES:

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 15 Hoe Chiang Road, #12-05 Tower Fifteen Singapore 089316 not less than forty-eight (48) hours before the time appointed for holding the Meeting.

N O T i C E O f B O O K S C l O S U r E

NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members Of Ezion Holdings Limited (the “Company”) will be closed on 3 May 2013 for the preparation of dividend warrants of a first and final dividend of S$0.001 per share tax exempt (one-tier) (the “Final Dividend”).

Duly completed registrable transfers in respect of ordinary shares in the capital of the Company together with all relevant documents of title received by the Company’s Share Registrar, M&C Services Private Limited, 112 Robinson Road, #05-01 Singapore 068902 up to the close of business at 5.00 p.m. on 2 May 2013 will be registered to determine shareholders’ entitlements to the Final Dividend, subject to the approval of the shareholders of the Company to the Final Dividend at the Annual General Meeting to be held on 25 April 2013.

Subject as aforesaid, shareholders whose Securities Accounts with The Central Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 p.m. on 2 May 2013 will be entitled to the Final Dividend.

Payment of the Final Dividend, if approved by the members at the Annual General Meeting to be held on 25 April 2013 will be made on 16 May 2013.

By Order of the Board

Lim Ka BeeSecretarySingapore,10 April 2013


121120 This page has been intentionally left blank This page has been intentionally left blank


122

p r O X Y f O r M(Please see notes overleaf before completing this Form)

EzIOn hOlDInGS lIMITED(cOMPAny REGISTRATIOn nO. 199904364E) (Incorporated in the Republic of Singapore)

I/We ______________________________________________(Name)________________________(NRIC/Passport no) of

____________________________________________________________________________________________(Address)

being a member/members of Ezion Holdings Limited (the “Company”), hereby appoint:

Name NRIC / Passport Number

Address Proportion of shareholdings

No of Shares %

and/or (delete as appropriate)

Name NRIC / Passport Number

Address Proportion of shareholdings

No of Shares %

or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held at No. 87 Science Park Drive, Science Hub, Portsdown Room Level 1, Singapore Science Park I, Singapore 118260 on Thursday, 25 April 2013 at 10.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)

No. Resolutions relating to: For Against

1 Directors’ Report and Audited Accounts for the year ended 31 December 2012

2 Payment of first & final dividend

3 Re-election of Dr Wang Kai Yuen as a Director

4 Re-election of Mr Lim Thean Ee as a Director

5 Approval of Directors’ fees amounting to S$187,784

6 Re-appointment of KPMG LLP as Auditors

7 Authority to issue new shares

8 Authority to issue shares under the Ezion Employee Share Plan

9 Authority to issue shares under the Ezion Employee Share Option Scheme

Dated this ______________ day of ______________ 2013

_____________________________________________

Signature of Shareholder(s)or, Common Seal of Corporate Shareholder

* Delete where applicable

IMPORTAnT:

1. For investors who have used their CPF monies to buy Ezion Holdings Limited’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

Total Number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

This page has been intentionally left blank

125

nOTES :

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 15 Hoe Chiang Road, #12-05 Tower Fifteen Singapore 089316 not less than forty-eight (48) hours before the time appointed for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

GEnERAl:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

The Company Secretary

EzIOn hOlDInGS lIMITED15 Hoe Chiang Road

Tower Fifteen#12-05

Singapore 089316

AFFIX

POSTAGE

STAMP

126


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