ABOUT US - listed companyiconoffshore.listedcompany.com/newsroom/Annual_Report_of...Bakau Tinggi,...

NOTES TO THEFINANCIAL STATEMENTS(CONTINUED)

OUR VISIONMISSION

To be the preferred global offshoremarine service provider for the oil

and gas industry.

We are committed to creatingvalue for our customers,employees and stakeholdersby employing a fleet of modernvessels; upholding the higheststandard of Health, Safety andEnvironmental practices; as well as ensuring thecontinuous development of ourgreatest asset – our PEOPLE.

NOTES TO THEFINANCIAL STATEMENTS

(CONTINUED)ABOUT US


INTEGRITY ANDMUTUAL RESPECT

COMMITTED TOCREATING VALUE

OPERATE ASONE - TEAMWORK

NAVIGATE THEEXTRA MILE

ICON

VALUES

WE HOPE TO ACHIEVE OUR VISION ANDMISSION BY UPHOLDING THESE TENETS

OF OUR CORE VALUES:


(CONTINUED)

CONTENTSOUR BUSINESS

2 Corporate Information4 Corporate Structure6 Type of Vessels

OUR STRATEGY & PERFORMANCE REVIEW

10 Chairman’s Statement14 Management Discussion and Analysis21 Financial Highlight22 Operational Highlight23 Share Price Performance24 List of Awards25 Calendar of Significant Events

SUSTAINABILITY STATEMENT

HOW WE ARE GOVERNED

40 Directors’ Profile48 Senior Management Team51 Audit and Risk Management Committee Report55 Corporate Governance Overview Statement72 Statement on Risk Management and Internal Control76 Statement of Directors’ Responsibility

FINANCIAL STATEMENTS

OTHER INFORMATION

168 List of Vessels169 List of Property170 Analysis of Shareholdings174 Notice of Annual General Meeting Proxy Form

RATIONALE :

STRATEGIC RESILIENCE

We have risen to the occasion in order to triumph over ourchallenges. Our strategic planning and strong spirit haveensured our continued advancement.

Technical drawings of our key assets adorn the cover as atribute to our strength and status as an industry leader. Inthe background, the square grid symbolises ourprofessionalism and efficiency.

2PAGE ICON OFFSHORE BERHAD ( 984830-D )

CORPORATEINFORMATION

BOARD OF DIRECTORS

Raja Tan Sri Dato’ Seri Arshad binRaja Tun UdaChairman and Non-IndependentNon-Executive Director

Amir Hamzah bin Azizan*Managing Director andNon-Independent Executive Director

Syed Yasir Arafat bin Syed Abd KadirNon-IndependentNon-Executive Director

Datuk Wira Azhar bin Abdul HamidSenior IndependentNon-Executive Director

Edwanee Cheah bin AbdullahIndependent Non-Executive Director

Madeline Lee May MingIndependent Non-Executive Director

Datuk Abdullah bin AhmadIndependent Non-Executive Director

Farina binti Farikhullah KhanIndependent Non-Executive Director

Datuk Abdullah bin KarimIndependent Non-Executive Director

EXECUTIVE COMMITTEE

Syed Yasir Arafat bin Syed Abd KadirChairman

Amir Hamzah bin Azizan*

Captain Hassan bin Ali

Lim Fu Yen

AUDIT AND RISK MANAGEMENTCOMMITTEE

Datuk Wira Azhar bin Abdul HamidChairman

Syed Yasir Arafat bin Syed Abd Kadir

Farina binti Farikhullah Khan**

Datuk Abdullah bin Karim**

Edwanee Cheah bin Abdullah***

NOMINATION AND REMUNERATIONCOMMITTEE#

Edwanee Cheah bin AbdullahChairman

Madeline Lee May Ming


Datuk Abdullah bin Ahmad**

EMPLOYEES’ SHARE SCHEMECOMMITTEE

Edwanee Cheah bin AbdullahChairman

Madeline Lee May Ming


COMPANY SECRETARIES

Chua Siew Chuan(MAICSA No. 0777689)

Chin Mun Yee(MAICSA No. 7019243)

Note:

* Resigned with effect from 30 November 2017** Appointed with effect from 25 August 2017*** Ceased with effect from 25 August 2017# The Nomination Committee and Remuneration Committee was merged on 25 August 2017

3PAGEANNUAL REPORT 2017

CORPORATEINFORMATION

REGISTERED OFFICE

Level 7,Menara Milenium,Jalan Damanlela,Pusat Bandar Damansara,Damansara Heights,50490 Kuala Lumpur,Wilayah PersekutuanTel. No. : 603 2084 9000Fax No. : 603 2094 9940

HEAD/MANAGEMENT OFFICE

Level 12A, East Wing,The Icon,No. 1, Jalan 1/68F,Off Jalan Tun Razak,50400 Kuala Lumpur,Wilayah PersekutuanTel. No. : 603 2180 6300Fax No. : 603 2165 1086Email : [email protected]

KEMAMAN OFFICE

Lot 13837, Jalan Penghiburan,Bakau Tinggi,24000 Kemaman, Terengganu.Tel. No. : 609 8502 740Fax No. : 609 8502 744Email : [email protected]

LABUAN OFFICE

Lot 49, O&G Sec Lazenda Warehouse (Type B),Jalan Rancha-Rancha,87000 Labuan F.T.Tel. No. : 6087 410 387Fax No. : 6087 410 424Email : [email protected]

AUDITORS

PricewaterhouseCoopers PLT(LLP0014401-LCA & AF 1146)Level 10, 1 Sentral,Jalan Rakyat, Kuala Lumpur Sentral,50706, Kuala Lumpur, Wilayah PersekutuanTel. No. : 603 2173 1188 Fax No. : 603 2173 1288

PRINCIPAL BANKERS

Affin Bank BerhadAmBank (M) BerhadAmInvestment Bank BerhadBank Islam Brunei Darussalam BerhadBank Pembangunan Malaysia BerhadMalayan Banking BerhadOCBC Bank (Malaysia) BerhadRHB Bank BerhadStandard Chartered Saadiq Berhad

SHARE REGISTRAR

Symphony Share Registrars Sdn. Bhd.Level 6, Symphony House,Pusat Dagangan Dana 1,Jalan PJU 1A/46,47301 Petaling Jaya,Selangor Darul Ehsan.Tel. No. : 603 7849 0777Fax No. : 603 7841 8151 / 8152

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad(Main Market)

Listed since: 25 June 2014Sector: Trading/ServicesStock name : ICONStock code : 5255

Icon Bahtera (B) Sdn. Bhd.*


CORPORATESTRUCTURE

100%ICON FLEET SDN. BHD.Vessel holding company

ICON OFFSHORE BERHAD(Holding Company)

100%ICON OFFSHORE GROUP SDN. BHD.Licence holder*#

Icon Maritime TrainingCentre Sdn. Bhd.

Omni Marine Sdn. Bhd.

Omni Power Sdn. Bhd.

Omni Triton Sdn. Bhd.

Omni Ventures Sdn.Bhd.

Icon Andra (L) Inc.

Icon Aliza (L) Inc.

Icon Astrid (L) Inc.

Icon Azra (L) Inc.

Icon Biru 1 (L) Inc.

Icon Biru 2 (L) Inc.

Icon Corridor (L) Inc.

Icon Dahan 1 (L) Inc.

Icon Dahan 2 (L) Inc.

51%ICON-FOB Holdings (L) Inc.

100%ICON-FOB 1 (L) Inc.


CORPORATESTRUCTURE

100%ICON SHIP MANAGEMENT SDN. BHD.Ship management company

* Icon Fleet Sdn. Bhd. holds 51,000 ordinary shares and 2,889,000 redeemable preference shares in IconBahtera (B) Sdn. Bhd. whilst Zell Transportation Sdn. Bhd. holds 49,000 ordinary shares and 3,011,000redeemable preference shares.

# Holder of the Petroliam Nasional Berhad Licence.

Icon Dawai (L) Inc.

Icon Explorer (L) Inc.

Icon Gaya (L) Inc.

Icon Huma (L) Inc.

Icon Ikhlas (L) Inc.

Icon Kayra (L) Inc.

Icon Lotus (L) Inc.

Icon Ocean (L) Inc.

Icon Piai 1 (L) Inc.

Icon Piai 2 (L) Inc.

Icon Pinang 1 (L) Inc.




Icon Pioneer (L) Inc.

Icon Puteri 1 (L) Inc.

Icon Puteri 2 (L) Inc.

Icon Samudera (L) Inc.

Icon Sari (L) Inc.

Icon Sophia (L) Inc.

Icon Tigris (L) Inc.

Icon Waja (L) Inc.

Icon Zara (L) Inc.

Omni Emery (L) Inc.

Omni Flotilla (L) Inc.

Omni Marissa (L) Inc.

Omni Offshore (L) Inc.

Omni Stella (L) Inc.

Omni Victory (L) Inc.

100%


TYPEOF VESSELS

Bollard Pull

50 tonnesEngine

3,600 BHPClear Deck Space

230 m2

TANJUNG GAYA

Utility vessel is much smaller version of SSV butwithout cargo tanks for drilling fluids or cement. UVprimarily operate in shallow water and are typicallyused to transport deck cargo, fuel, fresh water, foodprovisions and personnel.

AHTAnchor Handling

Tug Vessel

Bollard Pull

40-70 tonnesEngine

3,200-5,152 BHPClear Deck Space

150-240 m2

OMNI AKIRA OMNI EMERY 1

OMNI ANTEIA

These vessels are used to support offshore oil rigs,platforms and other installations and to tow mobilestructures and position their mooring anchors in orderto ensure their anchors are placed in a proper position.Our AHTs have a bollard pull that ranges from 40tonnes to 70 tonnes and horsepower engines rangingfrom 3,200 to 5,152 Brake Horse Power (“BHP”).

The defining characteristics of AHTs are their enginepower, measured in BHP and the size of their winchesin terms of line pull and wire storage capacity. AHTsalso possess aft decks which are utilised during anchorhandling and towing operations and for the carriage ofdeck cargo. The stern of the vessel is open to the sea,with a stern roller fitted to enable the vessel to recoverand deploy anchors, while maintaining a clear area forthe vessel’s work wire.

AHTs are also capable of performing a variety offunctions in harsher weather conditions compared totraditional vessels. AHTs are capable of providinglong range towage services when floating platformsneed to be mobilised to other fields, countries orrepair yards. Deep water AHTs also provide supportfor construction work in transporting and carrying outprojects for mobilisation of structures for floatovers,or launching or installation, positioning, hook-up andcommissioning work.

AHTSAnchor Handling

Tug & Supply Vessel

Bollard Pull

60-126 tonnesEngine

5,150-10,800 BHPClear Deck Space

330-530 m2

ICON ATIQAH ICON AZRA

ICON IKHLAS ICON LOTUS

ICON SAMUDERA ICON SOPHIA

ICON MARISSA OMNI GAGAH*

OMNI ZARA OMNI PERKASA

OMNI STELLA OMNI TIGRIS

OMNI VICTORY TANJUNG BIRU 1

TANJUNG BIRU 2 TANJUNG DAHAN 1

TANJUNG DAHAN 2 TANJUNG DAWAI

TANJUNG HUMA TANJUNG PUTERI 1

TANJUNG PUTERI 2 TANJUNG SARI

Our AHTSs are suited for “in-field support” as thevessels have space and deadweight capacity for thecarriage of drilling mud, cement, base oil, drill water,and other supplies. The stern of the vessel is fittedwith a stern roller to enable the vessel to recover anddeploy anchors, while maintaining a clear area forthe vessel’s work wire. From time to time, when notperforming anchor handling and towing services, ourAHTSs also function as SSVs and are also able toserve as safety standby rescue and fire-fightingvessels for oil spill response and recovery efforts.

* Disposed in January 2018

UVUtility Vessel


TYPEOF VESSELS

SSVStraight Supply

Vessel

Length

60 MeterEngine


403 m2

PSVPlatform Support

Vessel

Deadweight

3,500 tonnesEngine (Diesel Electric)


750 m2

TANJUNG PIAI 1 TANJUNG PIAI 2

Our PSVs are capable of working in deep waterconditions and serves various types of drilling rigsand platforms, including drill ships, fixed platforms,Floating Production Storage and Offloading (“FPSO”)and semi-submersible rigs. Our PSV is equippedwith a Dynamic Positioning (“DP”) Class 2 system,enabling it to accurately manoeuvre and operate inadverse weather conditions. Our PSV is the firstMalaysian built diesel electric PSV and has a 750m2main deck cargo area. It can accommodate up to 60personnel, including marine crew. PSVs aredesigned to deliver large quantities of cargo tooffshore drilling and production sites. They alsoprovide logistical support during offshoreconstruction work. PSVs are designed for optimumcapacity, and are distinguished by their (i)deadweight; (ii) available deck area for thetransportation of cargo such as pipes, equipmentand spares; and (iii) below-deck capacity for thestorage of drilling fluid, mud and cement used in thedrilling process and tank storage for water and fueloil.

AWBAccommodation

Workboat

Pedestal Crane

50-65 tonnesAccommodation

200 menClear Deck Space

800 m2

ICON ALIZA ICON KAYRA

ICON VALIANT

Our AWBs are equipped with DP2 positioning systemwith four point mooring capabilities. These vesselshave a large deck area, used for the carriage ofauxiliary equipment, spools, containers, and othercargoes. The main crane capacity ranges from 50tonnes to 65 tonnes. Meanwhile, the maximumaccommodation capacity is 200 pax includingmarine crew.



(CONTINUED)


CHAIRMAN’S STATEMENT

DEAR SHAREHOLDERS,

On behalf of the Board of Directors (“Board”), I herebypresent the annual report and audited financialstatements of Icon Offshore Berhad (“ICON or “theGroup” or “the Company”) for the financial year ended31 December 2017 (“FYE2017”).

– RAJA TAN SRI DATO’ SERI ARSHAD BIN RAJA TUN UDA, Chairman –



In ICON’s Annual Report 2016, we hadreported on the ongoing discussions andpossible merger of ICON and UMW Oil &Gas Corporation (“UMWOG”). Themerger would have created one of thelargest integrated offshore serviceproviders in the upstream oil rig andoffshore support vessel market segment,locally and regionally. However, due to anumber of issues which parties wereunable to bridge, the exercise wasmutually and amicably aborted.

In November 2016, Organization ofPetroleum Exporting Countries (“OPEC”)and non-OPEC members agree to cutcrude oil production output by 1.8 millionbarrels per day to hasten the imbalanceexisting in the market and to bring pricestability to the market. The sustainedcompliance by OPEC and non-OPECmembers on the cut in crude oilproduction and the annual increase indemand for crude oil have had a positiveimpact on the price of crude oil whichrose to the USD50 per barrel range inearly 2017. Due to the positive effect onthe price of crude oil, OPEC furtherextended the accord throughout 2017and this has caused the price of crude oilto rise to above USD60 per barrel inOctober 2017 and in early 2018 the pricewas hovering in the mid USD60’s perbarrel.

With the increase in crude oil price,upstream activities have progressivelyincreased in the second half of the yearand this has had a cascading effectacross the industry value chain.

However, the longer term and full effectsof the recovery were largely unfelt due tooil and gas majors and national oilcompanies continuing to adopt acautious approach in awarding newcontracts. Furthermore, with the OSVsegment being at the lower end of theupstream value chain, the trickle-downeffect of uptake in drilling and explorationactivities took a while to set in. Thoughvessel utilisation rates had improved,charter rates continued to come underpressure as large number of bidders

competed for a limited number ofcontracts.

Against this backdrop, ICON remainsteadfast and committed to continueimplementing its strategic roadmap toweather the storm, which among othersincludes capital and cost restructuring,cash flow preservation and improve fleetutilisation through competitive bidding.These measures taken during thepreceding financial year have bolsteredthe fundamentals and sustainability of theGroup to operate within a low oil priceenvironment. With the recovery in crudeoil prices, the Group will be able tocapitalise on the scenario to turn aroundits business performance.

FINANCIAL PERFORMANCE

During the financial year, Group revenuedecreased to RM204.6 million fromRM226.9 million in the previous FYE2016.The decrease is largely due to lowercharter hire rate even though the fleetutilisation had increased from 52% inFYE2016 to 56% in FYE2017.

On the back of reduced revenue,adjusted EBITDA also declined toRM83.2 million compared to RM88.3million in FYE2016. However the Grouprecorded a lower Loss After Tax (“LAT”)of RM55.8 million compared to RM146.7million in FYE2016, mostly due to thereduced impairment.

Cost optimisation initiative undertaken byICON has translated to better results inits Cost of Sales and AdministrativeExpenses. Cost of Sales dropped fromRM163.5 million for FYE2016 to RM157.9million for FYE2017 and AdministrativeExpenses dropped from RM41.8 millionin FYE2016 to RM28.8 million inFYE2017.

Cost of Salesdropped fromRM163.5 millionfor FYE2016 toRM157.9 millionfor FYE2017 andAdministrativeExpenses droppedfrom RM41.8million in FYE2016to RM28.8 millionin FYE2017.

COST OF SALESRM157.9mil



OUTLOOK & PROSPECTS

Crude oil prices have touched theUSD70 per barrel mark before settling toa more modest but still encouraging mid-USD60’s per barrel as of March 2018. Asper PETRONAS Activity Outlook (“PAO”)2018-2020 which was released inDecember 2017, their activity outlook isbased on crude oil price hoveringbetween USD50-USD60 per barrel. Withthe current crude oil price hovering andsustaining at the mid-USD60’s per barrel,we hope it would spur PETRONAS andother Petroleum ArrangementContractors (“PACs”) to revive theirupstream investment and activities,leading to the increase in the number ofprojects and requirements for OSVs.

However, we remain cautious andprudent going forward. Geo-politicalevents, breaches and non-compliance ofthe agreed quota by OPEC and non-OPEC members on the oil production cutand resurgence in US shale oilproduction may impact the current oilprice recovery.

Domestically, the local oil and gas sectoris expected to continue to be challengingdue to the lack of long term contractsincluding the delay in the award for theIntegrated Logistics Control Tower(“ILCT”) tender by PETRONAS.

ICON will also continue to seekconsolidation opportunities to make itstronger and a sustainable entity moving forward. Consolidation will allow ICON toposition itself better in the oil and gasvalue chain.

Health, Safety and Environment (“HSE”),which has always been a proud hallmarkfor the Group will continue to bemonitored and emphasised as webelieve in protecting the well-being of ourassets, the environment and our people.

Going forward, aside from improving ourbusiness and financial operations, we willcontinue to emphasise on sustainability.Sustainability is key in ensuring the long-term prospects of ICON, which will makeus a better company with a more positiveEconomic, Environmental and Social(“EES”) footprint and also a company thatis attractive to investors, customers andalso to strengthen our brand amongstakeholders. Ultimately, sustainabilitycreates long-term value that will translateinto better business and operationalperformance.

In view of the changes to the MalaysianCode of Corporate Governance(“Principles”), the Board will continue tomake every effort to increase itscompliance with the Practices asstipulated in the Principles.

Sustainability is key in ensuring the long-term prospects of ICON, which will makeus a better company with a more positiveEconomic, Environmental and Social(“EES”) footprint

LOSS AFTER TAX (“LAT”)RM55.8mil

MARKET CAPITALISATIONRM270.8mil



ACKNOWLEDGEMENTS

On behalf of the Board, I wish to conveymy thanks to the former ManagingDirector, Amir Hamzah bin Azizan, whoresigned on 30 November 2017, for hiscontributions in managing the Groupduring this challenging period. For this,we express our appreciation to him.

We also take the opportunity to welcomeCaptain Hassan bin Ali as ICON’s actingChief Executive Officer, whose operationalknowledge and experience will continue tosteer the Group forward. Assisted by anexperienced management team, theBoard has full confidence in hisstewardship of the Group.

I wish to thank the Management andemployees of ICON for their contributionsin 2017. Without a doubt, theirdedication, patience and tireless effortsduring the difficult years including thefinancial year under review have beeninstrumental for the safe operations andsustainability of the Group.

We received notification from DatukAbdullah bin Ahmad of his intention notto seek re-election and will thereforeretire at the conclusion of the SixthAnnual General Meeting. On behalf of theBoard, I would like to express ourgratitude to him for his valuablecontribution to the Company during thethree years he served on the Board.

I have benefitted from the shared wisdomof my colleagues on the Board andwould like to thank them for their wisecounsel.

Finally, my sincere thank you to ourshareholders, customers, vendors andfinanciers, for their confidence in ICONduring the financial year.

Raja Tan Sri Dato’ Seri Arshad binRaja Tun UdaChairman12 April 2018


MANAGEMENT DISCUSSION& ANALYSIS

KNOWN TRENDS & EVENTS

The challenges faced by the oil and gas industry, including the OSV segment inFYE2016 continued into FYE2017. Depressed charter rates, oversupply of OSVsand lack of long term contracts persisted throughout the financial year.

However, the initiative taken by the OPEC and non-OPEC members in November2016 to cut crude oil production output by 1.8 million barrels per day has had apositive impact on the price of crude oil. The sustained compliance and commitmentto the production cut by OPEC and non-OPEC members coupled with the increasedglobal oil demand, led to a reduction in stockpile and inventories, ultimately pushingup the price of global crude oil. The price of crude oil rose to above USD50 perbarrel in early 2017 and in May 2017 OPEC further extended the accord. In October2017 the price of crude oil steadily rose to USD60 per barrel and as of March 2018the price was hovering around mid USD60’s per barrel. This was a welcomedimprovement compared to the 13-year record lows of USD28 per barrel in 2016.

Domestically, there was an increase inupstream activities and higher demandfor OSV from the second half of thefinancial year onwards. However theserequirements were mainly for spot andshort term charters. Charter rates alsoremained depressed due to anoversupply of OSV and with a largenumber of OSV owners bidding for alimited number of contracts, the charterrate are expected to remain depressedfor some time. As per PAO 2018-2020,PETRONAS will remain cautious onlonger term activities and investment untilthey are certain that the price of crude oilis sustainable for increased activities. Toexacerbate matters, being at the lowerend of the upstream value chain, thetrickle-down effect of uptake in drillingand exploration activities may take awhile before its impact is known.

For FYE2017, ICON remained steadfastand followed through on its FYE2016initiatives and short term strategies toride out the downturn. Strategiesincluded measures such as optimisingoperational cost, conserving cash flowand increasing the utilisation of its fleetthrough competitive bidding for

contracts. The amicably aborted mergerbetween ICON and UMW Oil & GasCorporation (“UMWOG”) did not dampenbut rather encouraged ICON to continueto seek other suitable consolidationopportunities.

The local oil and gas sector is expectedto continue to be challenging due to thedelayed award of the PETRONASIntegrated Logistic Control Tower(“ILCT”) contract for long term OSVrequirement. The ILCT is meant as areplacement to the PETRONAS 5-yearBase Fleet contract effective fromJanuary 2013 to December 2017.However this has somehow beenmitigated as the Base Fleet contractshave been extended further, in tandemwith the delay of the ILCT contract award.

ICON’s continuous efforts in FYE2017,which focused on optimising its assets -People, Process and Equipment (“PPE”),has improved ICON’s quality of service,reliability of its fleet and operationalexcellence in Health, Safety andEnvironment (“HSE”) performance. Themeasures implemented had enabledICON to weather the market downturn

and at the same time place ICON on abetter footing to capitalise on theimpending market recovery.

OVERVIEW OF GROUP BUSINESSAND OPERATIONS

ICON is one of the largest OSV providersin Malaysia and Southeast Asia in termsof number of vessels. As at 31 December2017, the Group has 35 vesselsconsisting of 25 AHTS and AHT vessels,four SSV vessels, two PSV vessels, threeAWB vessels and one UV vessel.

OSVs play a vital role in the growth anddevelopment of the oil and gas industry.Our fleet of vessels are suitably fitted withequipment and machinery to provide awide range of logistical support servicesacross the entire offshore oil and gas lifecycle. Each vessel type has its specificpurpose to support exploration,development, production anddecommissioning activities.



Identificationof Potential

• Geological & geophysical mapping & modeling via seismic surveys• Analysis & interpretation of geological data to identify the potential of hydrocarbon bearing formations

Exploration& Appraisal

• Wildcat wells drilling to assess potential of basin• Appraisal wells across the potential of any discovery made during the exploration phase• Flow rates assessment

FieldDevelopment

• Development scenario screening• Pre-FEED & FEED studies• Detailed engineering• Fabrication & procurement• Offshore construction, installation, hookup & commissioning

Operation &Maintenance

• Inspection, repair & maintenance• Enhanced oil recovery• Brownfield development & injection wells• Work over of existing wells

Abandonment

• The decommissioning of end-of-field infrastructure• Re-use / recycle / dispose

Type of OSVsdeployed

AHTAHTSAWBPSVSSV

AHTAHTSAWBPSVSSVTugs

AHTAHTSAWBPSVSSVTugs

AHTAHTSAWB

UPSTREAM OIL & GAS VALUE CHAIN

KEY OPERATIONAL HIGHLIGHTS

The Group is helmed by a highly qualified management team with vast experience in the marine and oil and gas sector.

GROUP OBJECTIVES & STRATEGIES

Given the present external environment, the Group’s primary strategies are:

• To reduce overall operational costs via short and long-term measures for efficiency.

• To continue focusing on cash management, asset / vessel optimisation and capital expenditure deferment.

• To leverage on the Group’s inherent competitive edge as one of the largest OSV providers to secure a better spread of short-term (quick win) and long-term contracts respectively towards boosting immediate revenue and the Group’s order bookpipeline.

• Given the opportunity, to pursue horizontal and vertical integration across the Group’s value chain towards enhancing itscapabilities and becoming a comprehensive solutions provider to the oil and gas majors.

• To expand and build up on the existing regional market presence, especially in Brunei.

Breakdown by Domestic and International Business

The Group has an established businesspresence in both local and overseasmarkets. For FYE2017, about 69% of theGroup’s business activities stemmedfrom local operations with the balance31% coming from overseas, i.e. Bruneiand Thailand.

The Group continues to actively seekexpansion opportunities for both localand overseas business segments.

FYE2017RM204.6mil

FYE2016RM226.9mil

Indicators 2017 2016 2015

Vessel Utilisation rates 56% 52% 60%Order book RM254.8 mil RM510.3 mil RM686.0 milNumber of employees 113 116 165Manhours without LTI (as at financial year-end) 4.1 mil 0.3 mil 13.0 mil


Overseas Revenue Malaysia Revenue

20162017

37%

31%

20162017

63%

69%


FINANCIAL RESULTS

Revenue & Earnings

For FYE2017, the Group’s revenue decreased by 9.8% to RM204.6 million despite improved vessel utilisation rates of 56%compared to 52% in FYE2016. The lower revenue was largely due to the depressed and lower charter hire rates.

With the revenue reduced, adjusted EBITDA declined to RM83.2 million compared to RM88.3 million in FYE2016. However the Grouprecorded a lower Loss After Tax (“LAT”) of RM55.8 million as compared to RM146.7 million, mostly due to the reduced impairment.

In FYE2017, Cost of Sales and Administrative Expenses registered a marked decline of 3%, and 31% respectively. Our efforts tooptimise costs, right sizing the Group to make it leaner and more competitive and agile to market demands are delivering tangibleresults and we will continue to pursue such activities going forward. These activities include better fuel consumption monitoring,the laying-up of under-utilised vessels, reduced payroll costs and various other measures.

Capital Structure & Capital Resources

In FYE2016, the Group had successfully deferred a large portion of capital expenditure (“Capex”) and this deferment alsoextended throughout FYE2017. This includes suspending the construction of two vessels with a final decision to be made goingforward into 2018, pending market conditions and contracts secured.

In this respect and to ensure the Company’s sustainability and ability to continue as a going concern, ICON had received approvalon 29 March 2018 from a regulatory agency under the purview of Bank Negara Malaysia for the Group’s application for assistanceto mediate and work out a feasible debt resolution with the relevant Malaysian banks under a prescribed arrangement. Thearrangement entails a structured mechanism for debt resolution to strengthen the balance sheet and ensure that the debts postrestructuring are at a sustainable level. The restructuring exercise, once completed, will put the Company in a much strongerfooting to move forward and compete in the market.


FINANCIAL INDICATORS 2017 2016 2015RM’000

Revenue 204,625 226,915 266,566

Loss before interest and tax (9,326) (109,624) (326,565)

Finance costs (42,476) (40,200) (36,996)

Loss after Tax (55,847) (146,699) (363,288)

Shareholders’ equity 517,457 572,259 718,828

Total assets 1,310,673 1,381,918 1,520,760

Borrowings 684,151 712,225 723,017

Net debt / equity ratio 1.23 1.14 0.87

Loss per share (sen) (5.28) (12.98) (30.93)

Net assets per share (RM) 0.44 0.49 0.61

Market capitalisation (as at financial year end) 270,753 429,673 506,190


2017 2016 RM’000 RM’000

Total Assets 1,310,673 1,381,918Total Equity 517,457 572,259Total Debt 684,151 712,225Cash and cash equivalents 22,338 39,495

2017 2016 Summary RM‘000 RM‘000

Net cash generated from operating activities 67,469 99,716Net cash used in investing activities (14,756) (86,257)Net cash used in financing activities (69,775) (57,235)Net decrease in cash balance (17,157) (43,614)Cash and bank balances 47,758 58,720Cash and cash equivalents at the beginning of the year 39,495 83,109Cash and cash equivalents at the end of the year 22,338 39,495

Internal Group Strategies in Responseto Market Environment

The Group responded pro-actively to drivevessel utilisation rates via competitivebidding. As at 31 December 2017, theGroup’s total value of contracts stood atRM254.8 million.

As before, the strategy was to seek ahealthy balance between “quick wins”with smaller margins but fasterturnaround periods; and that of longer-term contracts with larger earningpotential but longer gestation periods.

Internally, the Group continue to focus onoptimising the core assets of manpower,vessels, customer and vendor relationshipswhile strengthening its excellent HSE trackrecord. For FYE2017, the Group achieved4.1 million manhours without any Loss TimeIncident (“LTI”).

Contracts Secured & Order Book

The Group secured several contractsduring FYE2017 which contributedpositively to the earnings and net assetsof ICON group for the year under review.

These include the three-year umbrellacontract from Petronas Carigali Sdn Bhd(“PCSB”) for the provision of spot chartermarine vessels services. The contract isfor a period of five years, effective 15March 2017 with a two-year extensionoption period.

ICON was also awarded a RM8 millionPSV charter contract by HalliburtonEnergy Service (M) Sdn Bhd on April2017.

On 26 May 2017, The Group secured aRM5.4 million AHTS charter contract fora 10-month period jointly awarded bySarawak Shell Berhad and Sabah ShellPetroleum Company Limited.

In June 2017, ICON secured anadditional AHTS charter with PCPPOperating Company Sdn. Bhd. The 166-day charter that comes with a 30-dayextension option and is valued at RM3.4million is to support PCPP’s plug andabandonment programme at blockSK305 in Sarawak.

As for long-term contracts, the Groupsecured a three year AWB charter hirefrom Zell Transportation Sdn. Bhd. (whichwas awarded a long-term charter byBrunei based SPHI Marine Sdn. Bhd.).The contract has a value of RM72 millionwith a two-year extension option to benegotiated on a yearly basis.

With this, the Group’s order book nowstands at RM254.8 million as at 31December 2017, of which, about 49% orRM124.3 million is for a firm period. Thebulk of the order book consists of localcontracts. All contracts will contributepositively to the Group’s earnings andnet assets for the upcoming financialyear and beyond.


ORDER BOOK STATUS

Firm Option

49% 51%

Order book replenished to

RM254.8mil


Cash Management

The Group generated RM67.5 millioncash from operating activities and cashoutflow of RM14.8 million for investingactivities.

The Group net cash outflow for financingactivities was RM69.8 million as of 31December 2017. The Group cash andcash equivalents stood at RM22.3million.

VESSEL MANAGEMENT

Two vessels with low utilisation and duefor drydocking were laid-up to reducecost. In ensuring a high-level ofoperational readiness and vessel’availability, maintenance and repairworks were carried out during the year inaccordance to ICON’s plannedmaintenance system (“PMS”). Closemonitoring on compliance to the PMS byour Technical team ensured no vesselexceeded more than 5% of its plannedand scheduled jobs.

We continue to implement our fuelmonitoring and management system onvessels, which ensured vessels areoperated economically and inaccordance to the agreed optimum fuelconsumption for each vessel.

On a separate note, we also have anenbloc drydocking arrangement with amajor Malaysian shipyard. The Groupwas able to benefit from economies ofscale as well as to enable a better cashflow planning due to the favourablepayment scheme.

PEOPLE MANAGEMENT AND DEVELOPMENT INITIATIVES

Throughout the year, ICON continued tofocus on talent retention, developmentand succession planning as part of itsinternal strategy to ensure businesssustainability. Given the present acuteshortage of suitable talent across theoffshore marine industry, we havecontinued to emphasise talentmanagement as being pivotal to theGroup’s long-term success.

More details of our talent initiatives areprovided in the Sustainability Statementof this Annual Report.

We continue to maintain good workingrelationship with Akademi Laut Malaysia(“ALAM”) and other maritime andeducation training (“MET”) institutions

towards developing and ensuringavailability of an adequate pool ofseafarers to meet current and futureICON seafarers needs.

ANTICIPATED OR KNOWN RISKS

The Group remains cognisant of its riskfactors which include any potentialvolatility in crude oil prices, which mayimpact demand for OSVs and depressedvessel charter rates. Accordingly, theGroup continues to hedge itself betweenlong-term charter contracts with fixedrates and shorter ones that provide quickrevenue recognition and cash flow.

In the same vein, the Group will activelyseek opportunities to diversify across thesupply chain to provide related supportservices such as subsea, maintenanceand repair and offshore installation andconstruction. This would be achieved viajoint venture partnerships or outrightmergers or acquisitions via suitable parties.

We continue to invest in developing theGroup’s talent through variousprogrammes, fully aware that manpowerremains a critical risk area for all OSVoperators. There is a lack of qualifiedpersonnel in Malaysia for both onshoreand offshore personnel, with the latterfacing an acute shortage particularly forthe top four shipboard positions. Ourmajor shareholder, has been verysupportive of our talent trainingprogramme for FYE2017 and the samesupport and commitment has beenextended into FYE2018.

OUTLOOK FOR 2018

Global stockpiles continue to drop sincethe beginning of the year as demandsteadily outstrips supply. According to theInternational Energy Agency, demandgrowth for 2018 is expected to grow by1.4 mb/d with total demand projected toreach the 100 mb/d level in 4Q2018.Drilling activity has increased across keymarkets - locally and abroad.

Increased US shale gas production andgeo-political events in the Middle-East,East Asia and trade wars are fewexamples of events that may derail thecurrent rise of crude oil prices and affecton the supply and demand of globalcrude oil.

The continued quota discipline by OPECand non-OPEC countries also instilsconfidence that crude oil prices willremain stable, if not, increase in 2018.Certainly, the agreement by Saudi Arabiaand Russia to co-chair a monitoringcommittee to assess adherence toproduction targets as well as to continuelimiting output through the end of 2018further reinforces positive sentiment.

In Malaysia, the government hasmapped out various policies andincentives to spur the growth of the oiland gas sector, given its importance asa national key result area under theEconomic Transformation Programme(“ETP”). The sector is targeted to delivera 5% annual growth until 2020.


TOTAL ASSETRM1.3bil

ADJUSTED EBITDARM83.2mil


We are hopeful that the optimism, felt in themarket will see PETRONAS and other oiland gas players stepping up theirinvestment in the upstream sector whichwill translate into stronger demand forservices including the OSV sector.However, conditions will remainchallenging. Due to the long value chainof the industry, the multiplier effect will takea while to set in for OSV players. Oil andgas will continue to come under pressurefrom Renewable Energy (“RE”) with moreenergy companies looking into the latter.

The on-going rationalisation of the entiresupport services industry is another factorthat must be considered. In the long-term,consolidation is good for the localindustry. This is the inevitable reality withPETRONAS also indicating their supportfor consolidation to create a smaller, butmore competitive and efficient supportservices industry. However, this wouldmean that all players must be at theircompetitive best to ride out the toughoperating conditions ahead.

FORWARD LOOKING STATEMENT

In charting the best course forward,ICON held an Away Day in October2017. The purpose of this exercise wasfor the Board and Senior Management tooutline key strategic issues to chart thestrategic direction of the Company goingforward within a five year timeframe.

At this session, the participantsdeliberated on and challenged theGroup’s aspirations and goals.

These encompassed external andinternal business factors, material issues,the impact of rising technological trends,growing competition, socio-economicand political issues.

Essentially, the Group’s approach is tocontinue bidding competitively forcontracts both locally and abroad. Wewill continue to refine our business modelto derive further cost effectiveness andefficiency. The past few years presented



the Group with opportunities to pursueinternal improvements, to strengthen itsbusiness fundamentals and emerge as astronger and more resilient company.

We remain on the look-out for viableopportunities that will allow us to expandour footprint across the value chain,either vertically or horizontally. Beyondexpanding the Group’s revenue base,horizontal integration will strengthenICON’s capability to deliver acomprehensive solution and providesynergy to oil and gas players. This willenable ICON to bid more competitivelyfor contracts. Vertical integration willfurther entrench our presence locally andregionally, and will give us competitiveadvantages.

Management will continue to considerother corporate activities to increasestakeholder value, taking intoconsideration the size and strength ofICON’s balance sheet.

While we are supportive of initiativestaken by our national oil company, weremain hopeful that PETRONAS will playan active role in this process byprioritising local OSV players over foreigncompanies. This is essential given theimportance of the value chain towardssupporting national aspirations in makingMalaysia a regional oil and gas hub by2020.

DIVIDEND POLICY

The Group’s ability to pay out dividendsis based on its profitability and its long-term strategic plans for cashconservation as well as to drive futuregrowth plans. Given the Group’s financialperformance, no dividend was declaredby the Board for FYE2017.

REVENUE(RM MILLION)

ADJUSTED EBITDA*(RM MILLION)

ADJUSTED LAT/PAT*(RM MILLION)

NET GEARING RATIO(%)

TOTAL ASSETS(RM MILLION)

EQUITY ATTRIBUTABLE TO SHAREHOLDERS(RM MILLION)

’14’15

318.9

’16

226.9

266.6

’17

204.6

’14’15’16’17

128.1

184.8

88.3

83.2

’15 ’14

90.7

26.0

’16’17

(11.2)(21.4)

’17 ’16

1,781.7

’15

1,520.8

’14

1,381.91,310.7

’17 ’16

0.6

’15

0.9

’14

1.11.2

’17 ’16 ’15 ’14

1,080.6

718.8

572.3517.5


FINANCIALHIGHLIGHT

* LAT - Loss After Taxation* EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortisation* Adjusted EBITDA and Adjusted LAT/PAT excludes exceptional items mainly impairment of vessels of RM34.4 million (2016: RM135.5 million, 2015: RM195.4

million) and impairment of goodwill: NIL (2016: NIL, 2015: RM180.6 million)

HSE STATISTICS

4.1mil Manhours without LTI

FLEET UTILISATION RATE


OPERATIONALHIGHLIGHT

ORDER BOOK REVENUE

Chartered/on-hired period

56%

Planned maintainanceprogramme andscheduled drydocking

21%

Available for charter/Temporary shutdowns/lay-ups

23%

56%Fleet Utilisation Ratein FYE2017

Firm

Option

51%49%

RM254.8mil

Total order book as at31 December 2017

Overseas Revenue

Malaysia Revenue

RM204.6milFYE2017:

RM226.9milFYE2016:

37%31%

63%69%

2017 20162017 2016

Share Performance (RM) 2017 2016 2015

Year high 0.48 0.42 0.87 Year low 0.21 0.30 0.27

Year close 0.23 0.37 0.43

Market Capitalisation 270,752,573 429,672,562 506,189,593

* Based on daily last traded price


SHARE PRICEPERFORMANCE

Jan DecNovOctSeptAugJulJunMayAprMarFeb

3 JAN 2017 > 29 DEC 2017

0.00

0.10

0.20

0.30

0.60

0.50

0.40

LIST OF 2017 AWARDS

TechnipFMC & Baker Hughes from June2017 to July 2017 “Project execution wassuccessful and completed on schedulewithout any accidents”

Awarded to : Icon AlizaFrom : PETRONAS Carigali Sdn. Bhd. (“PCSB”)

HSE Award 2016 - SILVER AWARD(Category C: 20,000 - 100,000 workhours)

Awarded to : Icon Offshore BerhadFrom : Carigali-PTTEPI Operating Company Sdn. Bhd. (“CPOC”)

Best Performing Vessel - Q1/2017

Awarded to : Icon KayraFrom : Brunei Shell Petroleum Company Sendirian Berhad

In recognition of excellent performance withregards to the dedication and commitmentto excellent HSE achievement onboard forahead of schedule project

Awarded to : Icon AlizaFrom : Sapura Offshore Sdn. Bhd. (“SOSB”)

PCPP’s Achievement of 500k ManhoursWithout LTI for SK305 Abandonment Project”- and performing Good Efforts & commitmentsToward Zero LTI for the year 2017”

Awarded to : Icon Offshore Group Sdn. Bhd.From : PCPP Operating Company Sdn. Bhd.


LIST OFAWARDS

Best Performing Contractor 2017 Safe &Reliable Logistic Services Provided toBrunei Shell Petroleum Company Sdn. Bhd. Awarded to : Icon Ship Management Sdn. Bhd.From : Brunei Shell Petroleum Company Sendirian Berhad

In recognition of excellent performance andcommitment to excellent HSE achievementwithout LTI for completing the project aheadon schedule. PROVISION OF F12JT-APIPELINE PRE COMMISSIONING SERVICESFOR PCSB, F12 FIELD, BINTULU, SARAWAKfrom 8 May 2017 until 23 May 2017

Awarded to : Icon AlizaFrom : Sapura Offshore Sdn. Bhd. (“SOSB”)

In recognition of excellent performance andcontribution in the SK FIELD WIDESHUTDOWN from 6 September 2017 to 15September 2017.

Awarded to : Icon AlizaFrom : Murphy Sarawak Oil Co., LTD

Provision of Brownfield Major ModificationWork of Bardegg 2 and Baronia EORDevelopment Project with ExcellentLeadership & Teamwork

Awarded to : Icon AlizaFrom : Dayang Enterprise Sdn. Bhd.


CALENDAR OFSIGNIFICANT EVENTS

CSR with Mercy Malaysia

Handing over of donation to Mercy Malaysia for flood victims

JULY

Hari Raya Decoration Competition /Celebration

Staff from HQ, KL held their first Hari Rayacelebration internally to foster closerworking relationship and instill the spirit ofcamaderie

SEPTEMBER

Career Talk

ICON held two “Career Talks” in Kemaman (SMK Kijal and SMKAyer Puteh)

DECEMBEROCTOBER

BOD Away Day

The Board Members had their away day to discuss strategy onmoving forward

AUGUST

Career Talk

ICON visited three schools in Labuan (SMK Labuan, SMK TamanPerumahan Bedaun, Kolej Vokasional Labuan) to hold “CareerTalks” in the oil and gas industry

MAY

Annual General Meeting 2016

ICON held its 5th Annual General Meetingon 24 May 2017

JUNE

Majlis Berbuka Puasa

Orphans and underprivileged children fromPertubuhan Asnaf Al Barakh Malaysia(Ampang) broke fast with ICON staff.

ICON Kemaman Base held their “Majlisberbuka puasa” with clients



(CONTINUED)

Given our business exposure and operations which are primarily aligned to the oil and gas industry, theGroup has always maintained a heightened sense of vigilance, compliance and disclosure with regards tosustainability, particularly in the areas most material to ICON. These include but are not limited to HSE,talent management, staff welfare, vessel management, business and operational risks, as well as impacton the community. The Group remains focused and steadfast in ensuring a sustainable business operationthat creates long-term shared values for stakeholders.

With the regulator’s push for greater sustainability disclosure, the Group presents its inaugural SustainabilityStatement (“Statement”), which provides a narrative of its efforts in creating shared values in 2017.


SUSTAINABILITYSTATEMENT

Sustainability is an integral component insupporting ICON’s growth and progress. Since itsinception, sustainability has been championedfrom within as a conscious corporate decisionrather than a reactionary response to externaldevelopments.

STATEMENT SCOPE & BOUNDARY

ICON’s Statement provides disclosure on the Group’s most pertinent projects, initiatives and activities; and that of its subsidiariesand joint venture companies. Excluded is the Group’s value chain of third party contractors, suppliers and vendors.

Going forward, the Group believes that it is in a position to help cultivate greater sustainability consciousness among its businesspartners and with that, will explore the possibility to cascade its sustainability policies, culture and best practices to its valuechain partners.

REPORTING PERIOD 1 January 2017 to 31 December 2017

REPORTING CYCLE Annually

PRINCIPLE GUIDELINES Bursa Securities’ Main Market Listing Requirement Practice Note 9 Article 6.

GOVERNANCE

Sustainability is given due consideration across all levels of the Group’s hierarchy which includes the Board and SeniorManagement Level, and it is then cascaded across the organisation.

The Group’s governance is guided by the following internal policies. It is also guided by the mandated HSE and other industryrequirements of the oil and gas industry.

• Group Corporate Values• Board Charter• Code of Ethics,for which we have three:

i. Employee Code of Ethicsii. Directors Code of Ethicsiii. IT Code of Ethics

• Whistleblower Policy• Risk Management Policy• Corporate Disclosure Policies and Procedures• HSE Policy

In October 2017, ICON held a Board Away Day meeting that was attended by the Chairman, board of directors and seniormanagement of ICON. Aside from business issues, the meeting included discussion on sustainability related matters that wereof material importance to ICON.

Based on the internal insights derived from this exercise, Management was able to further refine their materiality identificationefforts across all EES pillars.

The Group also continued to engage with stakeholders as part of its overall sustainability strategy.

STAKEHOLDER ENGAGEMENT

During the financial year, ICON continued to engage with its various stakeholders through a wide range of communicationchannels and mediums. The engagements were either part of the natural obligatory communications with shareholders i.e.circulars announcing the annual general meeting, publication of quarterly financial results.; or as an additional effort by the Groupto solicit feedback from stakeholders to enrich its sustainability perspective.





Listed below is a comprehensive list of stakeholder engagement activities undertaken in 2017:

Stakeholder Group Engagement Approach Frequency

Customers Meetings Regular Email Regular Client/Commercial/Service Manager/Operation teams Regular

Employees Town Halls Regular Newsletters Regular Engagement Events Regular

Shareholders, Investors & Analysts Annual Report Annually Annual General Meeting Annually Financial Reports and Analyst Briefings Quarterly Media Releases Periodic Shareholder Updates Regular Investor Relations Page (Website) Regular

Government & Regulators Meetings & Visits Regular Reports Periodic Participation in Government & Regulatory events Ad-hoc Feedback on Consultation Papers Regular

Community & General Public CSR Activities/ Events Periodic

MATERIALITY MATRIX

Having engaged with multiple key stakeholders and drawing from our own internal insights and perspectives, the Group wasable to identify its materiality matters. The rest of this Statement provides an account of the Management’s approach in managingeach of these identified materiality matters and the progress achieved as well as the key learning points for the year.

MATERIALITY MATTERS

Crude Oil Prices

The Group is heavily dependent on upstream activity within the oil and gas sector, particularly the awarding of exploration andproduction (“E&P”) contracts. Demand for such projects is naturally influenced by the price of crude oil.

Given the recovery of crude oil prices in 2017; averaging around USD55 per barrel, the Group’s risk factor has been to a certainextent, mitigated. However, given that global or local macro-economic developments may lead to fluctuations in crude oil prices,the Group has restructured its business model to ensure sustainable operations amidst a “new norm” crude oil price environment.

The various efforts undertaken over the past three years have augured well, positioning the Group to sustain its operation withinthe current market environment. These efforts include continued reduction of capital and operational expenditures, enhancingoperational synergy between its subsidiaries, expanding strategic partnerships and seeking new opportunities to improve itscompetitiveness.



Vessels Fuel Management

The Group continues to practice prudence in managing its key operational costs that include vessels fuel management. In 2017,such efforts have resulted in savings for ICON.

Among the various improvement measures put in place were implementation of a remote fuel monitoring system for vesselactivities, weather and vessel movement. This is in addition to having a dedicated team monitoring and conducting a monthlyanalysis on the vessels fuel consumption and performance. These measures were supplemented by organising multiple trainingand engagement sessions with ship crew to promote greater awareness and action on fuel management.

Going forward, we will maintain the hard-earned fuel management efficiencies we have achieved. We will continue to implementall effective measures while ensuring more rigorous monitoring so that meaningful data is available to track our performanceaccordingly.

HSE Track Record

ICON continues to place emphasis on strengthening its HSE proven track record.

0

0 / 1

0

0 / 5 / 0

10 / 158

15 / 42 / 39 / 94 / 15,944ROVING / WALKABOUT INSPECTION / MANAGEMENT VISIT

/ UAUC (OFFICE) / UAUC (VESSEL)

NM (Near Miss) - VSL REPORT / FROM UAUC

FIRE / PROPERTYDAMAGED@LOSS / SPILL

FA (First Aid)

RWI / MTIRestricted Workday Injury/ Medical Treatment Injury

LTI

4.1millionManhours Without LTI

396Free LTI Days

HSE STATISTICS FOR 2017

2017 1Q 2Q 3Q 4Q YTD TARGET

REPORTED INJURIOUS INCIDENTS

LTI - - - - - 0

RWI - - - - - 0

MTI - - 1 - 1 0

FAC - - - - - 0

REPORTED NON-INJURIOUS INCIDENTS

FIRE - - - - - 0

PD / LOSS 3 1 - 1 5 0

HCR - - 1 - - 0

NM 1 3 2 4 10 -

OTHERS

UAUC (VESSEL) 2,633 3,091 5,344 4,876 15,944 1/DAY/ VSL

UAUC(OFFICE) 9 27 34 24 94

NEAR MISS FROM UCUA 86 28 31 13 158

ROVING 2 1 7 5 15

WB/I 9 6 10 17 42

MGMT VISIT 14 8 11 6 39 1/QTR

Manhours (Offshore & Shore) 956,880 979,568 927,304 886,344 3,750,096

LTIF 0.00 0.00 0.00 0.00 0.00 0.00

TRICF 0.00 0.00 0.34 0.26 0.26

ICON received several letters of commendation as well as awards from oil and gas majors as follows: (Refer to page 24 for details)

Year Description Awarded to From

TechnipFMC & Baker Hughes. June-July 2017 “Project Icon Aliza PETRONAS Carigali execution was successful and completed on schedule without any Sdn. Bhd. (“PCSB”) accidents” HSE Award 2016 - SILVER AWARD Icon Offshore Carigali-PTTEPI (Category C: 20,000 - 100,000 workhours) Berhad Operating Company Sdn. Bhd. (“CPOC”) In recognition of excellent performance with regards to the dedication Icon Aliza Sapura Offshore and commitment to excellent HSE achievement on-board for ahead Sdn. Bhd. (“SOSB”) of schedule project

Best Performing Vessel - Q1/2017 Icon Kayra Brunei Shell Petroleum Company Sendirian Berhad

Best Performing Contractor 2017 Icon Ship Brunei Shell 2017 Safe & Reliable Logistic Services Provided to Brunei Shell Management Petroleum Company Petroleum Company Sdn. Bhd. Sdn. Bhd. Sendirian Berhad

“PCPP’s Achievement of 500k Manhours Without LTI for SK305 Icon Offshore PCPP Operating Abandonment Project” - and for performing Good Efforts & Group Sdn. Bhd. Company Sdn. Bhd. commitments Toward Zero LTI for the year 2017”

Provision of Brownfield Major Modification Work of Bardegg Icon Aliza Dayang Enterprise 2 and Baronia EOR Development Project with Excellent Leadership Sdn. Bhd. & Teamwork

In recognition of excellent performance and commitment to excellent Icon Aliza Sapura Offshore HSE achievement without LTI for completing the project ahead on Sdn. Bhd. (“SOSB”) schedule.

In recognition of excellent performance and contribution in the SK FIELD Icon Aliza Murphy Sarawak Oil WIDE SHUTDOWN from 6 September 2017 to 15 September 2017. Co., LTD

The marine sector of the oil and gas industry is a high risk sector and it is ICON’s goal that all staff, especially our marine crew,return home safely to their families after each tour of duty. However, safety is everyone’s responsibility and can only be achievedif all involved play their part.

We have enforced upon our crews the need to pay greater attention to both the Permit to Work system and Lock Out Tag Out(“LOTO”) system we have implemented onboard vessels. They must also strictly enforce with no exceptions, the rule for fasteningcargo securely prior to vessels departing from port or from an offshore location.

We have conducted Management Visits to the vessels throughout the year. We believe that HSE is an issue that is critical acrossour supply chain and all parties, including contractors, suppliers and vendors must share a similar mindset and commitment asICON towards HSE. Hence, we continue to reach out in conveying this commitment across our supply chain.

In addition to these, we have implemented more vigilant and continuous vessel roving by qualified shore-based personnel.

Remaining ever vigilant and continuing to be proactive, ICON continues to initiate various HSE programmes and initiatives. Amongthose held in 2017 were Unsafe Act and Unsafe Condition (“UAUC”), whereby all vessels were required to provide submissionswith effect to the aforementioned. Special focus was placed on improving cargo securing practices onboard fleet vessels, whichis a key HSE concern for ICON as well as for many OSV operators.





The Group also initiated quarterly HSE campaigns as follows:

Campaign Details

Q1 SMS Compliance Emphasising on the importance of Near Miss reporting by vessels. The objective is to learn from mistakes and share experiences and lessons learnt with others. This is supported via a simple Near Miss reporting procedure in poster form and a SOP-APP1-NM1-Near Miss report form.

Q2 Hygiene awareness & inspection Encouraging crew to maintain a clean vessel and workplace environment by adopting various onboard measures to ensure the vessel maintains a high level of cleanliness at all times. Cleanliness is also linked to improved efficiency and effectiveness within limited work space as well as a more hygienic and safer environment.

Q3 Health Campaign Emphasising on recognition of common cold symptoms, the spread of the illness and preventive measures.

Q4 Monsoon & Stop Work Emphasising on the do’s and don’ts given the annual North East monsoon season as well as the role of Masters’ overriding authority regarding Stop Work orders.

Also highlighted are the requirements for cargo securing prior to departure of vessels from port; and the need to implement clear deck practices and other precautions whenever vessel is moored at the anchorage.

Efforts were also aimed at the vessels’ masters on the importance of observing proper Stop Work implementation onboard,especially during adverse weather or when faced with potential unsafe situations onboard.

One key initiative was to organise engagement and debriefing sessions where crew members could share their lessons learntand insights with each other. One of these was the Officers Forum which saw 55 participants coming together to share theirknowledge and discuss their experiences towards improving safety aspects of operations as well as undertaking plannedmaintenance onboard.

One key initiative wasto organise engagementand debriefing sessionswhere crew memberscould share theirlessons learnt andinsights with each other

This method is different from the typical top-down push of HSE culture and practices and by getting peers to share; has led togreater buy-in. In 2017, sessions were held for Masters and Chief Engineers in particular.

During the year, 39 top management visits were held whereby senior level managers would physically board and inspect vesselsand meet with crews to get a first-hand experience of “on-ground” conditions. The scope of such visits is not confined solely toHSE factors but also on vessels’ cleanliness, hygiene, PPE facilities and general conditions. The visits also provide a platform formarine crew to interact with the senior management team from the office.

In 2017, the Group organised 39 such visits to vessels as listed below:

No Date of Vessel Location Visitor: Shore-base Inspection Manager

1 20/01/2017 Tanjung Pinang 3 Kemaman • Captain Syed Irfan • Captain Isham Ishak2 21/01/2017 Tanjung Pinang 1 Kemaman • Captain Syed Irfan • Captain Isham Ishak3 25/01/2017 Omni Akira Kemaman • Captain Syed Irfan4 26/01/2017 Tanjung Pinang 1 Kemaman • Captain Syed Irfan • Azman Abd Razak5 30/01/2017 Tanjung Gaya Tok Bali • Captain Syed Irfan6 08/02/2017 Omni Emery Kemaman • Captain Hasrul Nizam7 09/02/2017 Tanjung Pinang 3 Kemaman • Captain Hasrul Nizam8 14/02/2017 Tanjung Pinang 3 Kemaman • Azman Abd Razak9 28/02/2017 Omni Emery 1 Kemaman • Azman Abd Razak10 28/02/2017 Tanjung Piai 1 Kemaman • Azman Abd Razak11 01/03/2017 Tanjung Pinang 1 Kemaman • Azman Abd Razak12 08/03/2017 Tanjung Pinang 4 Labuan • Mohd Fazurin Abidin13 20/03/2017 Omni Victory Kemaman • Azman Abd Razak14 26/03/2017 Icon Samudera Kemaman • Azman Abd Razak15 04/04/2017 Omni Akira Kemaman • Azman Abd Razak16 05/04/2017 Tanjung Puteri 1 Kemaman • Azman Abd Razak17 06/04/2017 Omni Marissa Kemaman • Azman Abd Razak18 12/04/2017 Tanjung Biru 1 Labuan • Mohd Fazurin Abidin19 17/04/2017 Tanjung Pinang 1 Kemaman • Captain Hassan Ali20 27/04/2017 Tanjung Piai 2 Labuan • Mohd Fazurin Abidin21 28/04/2017 Tanjung Dahan 1 Port Kelang • Captain Syed Irfan22 08/06/2017 Omni Tigris Labuan • Mohd Fazurin Abidin23 04/07/2017 Tanjung Pinang 1 Kemaman • Azman Abd Razak • Captain Syed Irfan24 05/07/2017 Icon Sophia Kemaman • Azman Abd Razak25 05/07/2017 Omni Akira Kemaman • Azman Abd Razak26 12/07/2017 Tanjung Huma Labuan • Mohd Fazurin Abidin27 27/07/2017 Tanjung Piai 1 Kemaman • Azman Abd Razak28 27/07/2017 Tanjung Piai 2 Labuan • Mohd Fazurin Abidin29 28/07/2017 Omni Tigris Labuan • Mohd Fazurin Abidin30 30/07/2017 Tanjung Pinang 1 Kemaman • Captain Hassan Ali • Captain Zukernain31 12/09/2017 Tanjung Sari Bintulu • Mohd Fazurin Abidin32 13/09/2017 Icon Azra Labuan • Captain Zukernain33 28/09/2017 Omni Victory Kemaman • Rahman Jaya34 10/10/2017 Tanjung Pinang 2 Kemaman • Azman Abd Razak35 17/10/2017 Tanjung Pinang 1 Kemaman • Azman Abd Razak36 27/10/2017 Tanjung Gaya Tok Bali • Azman Abd Razak37 03/11/2017 Tanjung Piai 2 Kota Kinabalu • Mohd Fazurin Abidin38 25/11/2017 Tanjung Pinang 1 Kemaman • Azman Abd Razak39 30/12/2017 Tanjung Gaya Tok Bali • Captain Syed Irfan



Talent Management & Development

The industry continues to face an acuteshortage of talent and rely on the opentalent pool. ICON has put in placevarious programmes and is proud toshare that it has achieved anencouraging measure of success in thisarea. This is also in line with complyingto PETRONAS’ requirements for vesselsto be manned by 100% local crew.

The Group has increased its trainingbudget in 2017 by 13% to RM2.1 million(2016: 1.9 million). Despite thechallenging operating conditions, ICONcontinues to prioritise the development ofits people. As in previous years, emphasiswas placed on training and developmentactivities for marine crew that make upalmost 83% of our total workforce.

We also continue to maintain strongrelationship with various Maritime Educationand Training (“MET”) Institutions. Amongour initiatives in 2017 were:

• Providing On-Job-Training for 23cadets as part of a collaboration withMET institutions. Under thiscollaboration, ICON provided thecadets, aged 20-21, an opportunity togain first-hand practical skills and

training. The best performing cadetswill be offered employment with ICON.Six of the cadets are now serving asofficers onboard ICON’s vessels.

• Providing eight trainees with DPOperator training to produceadequate numbers of competentand qualified DP Operators to manICON DP equipped vessels. This isone of the key positions where talentis needed across the Malaysianmaritime industry. Currently, thereare five qualified DP trainees servingICON’s fleet.

• Once again collaborating with MET,ICON selected four candidates toundergo the APS. Upon completionof their combined courses,candidates shall serve as seniorofficers onboard ICON’s vessels.

In addition, ICON has organised trainingand professional developmentprogrammes, courses or events. One ofthese was the Emergency ManagementTraining (“EMT”) session conducted byexternal consultant using the principles ofthe Incident Command System for theICON Offshore Shore Based EmergencyResponse Team (“SERT”). The session washeld over the period of 16-17 May 2017.



23cadets undergone On-Job-Training

4trainees attendedAdvance Post SeaProgramme (“APS”)

8trainees attendedDynamic Positioning(“DP”) Operator training

TRAINING BUDGETIN 2017RM2.1mil

Other notable training initiatives were firstaid training conducted at ICON’sheadquarters in April 2017.

In 2017, the total number of trainingmanhours was approximately 2,200hours with an average of 40 hours foreach employee.

Minimising Carbon Footprint of Vessels

In 2017, all 35 ICON vessels compliedwith the latest MARPOL Regulation onSEEMP. The SEEMP is an operationalmeasure that establishes a mechanismto improve the energy efficiency of a shipin a cost-effective manner. The SEEMPalso provides an approach for shippingcompanies to manage ship and fleetefficiency performance over time using,for example, the Energy EfficiencyOperational Indicator (“EEOI”) as amonitoring tool.

The guidelines for the development of theSEEMP for new and existing shipsincorporates best practices for fuelefficient ship operation, as well asguidelines for voluntary use of the EEOI.

The EEOI enables operators to measurethe fuel efficiency of a ship in operationand to gauge the effect of any changes inoperation, e.g. improved voyageplanning, more frequent propeller

cleaning, or introduction of technicalmeasures such as waste heat recoverysystems or a new propeller. The SEEMPencourages the ship owner and operatorat each stage of the plan to consider newtechnologies and practices when seekingto optimise the performance of a ship.

Leadership Bench

The Group has a robust succession planin place, with many of its seniormanagement and management staffhaving risen through the ranks to assumeleadership positions in ICON.

The Group continues to prioritise internalhires in the nurturing of its next echelonof leaders. However, if required, ICON isnot averse to considering external hiresif there is no suitable internal candidateor talent.

Gender and Age Diversity

As an equal opportunity employer, ICONcontinues to seek ways to recruit morewomen into its organisation and this isreflected at the highest levels of theGroup. In 2017, the Board has twofemale directors, both sitting asIndependent, Non-Executive Directorsand will continue to improve its genderratio as and when necessary.

Similarly, we continue to create an equalopportunity environment whilst ensuringa healthy balance of young and seniorstaff to provide a strong blend of youthfulvigour and new ideas with proven,industry experience.



35ICON vessels compliedwith the latest MARPOLRegulation on ShipEnergy EfficiencyManagement Plan(“SEEMP”) to minimisecarbon footprint.

Community Relations

As an organisation that emphasisesCorporate Social Responsibility (“CSR”)with the goal of creating game-changing,positive impacts for stakeholders, CSR isa means to reflect our commitmenttowards building a better tomorrow forvarious segments of society.

Our approach to CSR consists ofcompany driven, strategic programmesto leave a lasting impact as well as one-off initiatives, which are mostlychampioned by employees. In 2017, theGroup contributed to Mercy Malaysia toalleviate the suffering of flood victims inKemaman, Terengganu as well as inPenang.

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