annual report, accounts & sustainability developments
Transcript of annual report, accounts & sustainability developments
annual report, accounts
& sustainability developments
2009
www.kentz.com providing specialist services worldwide
For more information about Kentz, please refer to our website
www.kentz.com
Evolution Securities Ltd (NOMAD and Broker)
100 Wood Street, London EC2V 7AN
Tel: +44 (0)20 7071 4300
Rob Collins
Chris Sim
Kentz Investor Relations Team
Kentz Corporation Limited
Gurtnafleur, Clonmel, Co. Tipperary, Ireland
Tel: +353 52 6139806
Elizabeth Rous
Catríona Nugent
innovat ion & excel lence
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Kentz Annual R
eport, A
ccounts & Sustainability
Developments
2009
2 Kentz Annual Report
3financial highlights
4corporate development andoperational highlights
6chairman’s statement
8chief executive officer’s report
12board of directors
14corporate governance
16key executives and organisation
20outlook, our markets and sector focus
36our HSE performance
42world reach 2009
44some of our 2009 and ongoing projects
48our people
52policies and systems
54corporate and social responsibility
59financial review 2009 andconsolidated financial statements
106shareholder information
107notice of annual general meeting
109glossary
110worldwide offices
Kentz Group is a specialist solutions provider operating principally
within the oil and gas services sectors with over 10,000 staff
worldwide. We deliver our solutions through a wide range of
engineering and construction services using our global network of
offices. We are currently delivering projects in 26 countries with a
strong presence throughout the Middle East and several other oil
and gas developing regions. At Kentz we bring a global reach to our
clients and partners worldwide with consistent performance in
safety, systems applications and fast-track project delivery.
who are we
over 10,000 employees
26 countries
total order backlog ofUS$1,497.4m
as of December 2009
3
* Excluding JV operations** Before flotation costs of $4.695m in 2008.
revenuein US$ millions
704.7 +9.5%Revenue in 2009increased by 9.5% toUS$704.7m (2008:US$643.4m) *
2008 2009
profit before tax marginsin percent
6.3 6.3 6.3%Profit before taxmargin wasmaintained at6.3%, in line with2008 **
2008 2009
gross cashin US$ millions
154.5
180.3 +16.7%Gross cash balance atthe end of 2009increased by 16.7% toUS$180.3m (2008:US$154.5m)
2008 2009
earnings per sharein US$ cents
25.0926.46 +5.5%
EPS (basic) 26.46US$ cents up 5.5%(2008: 25.09**US$cents). EPS (diluted) 26.35US$ cents up 5.0%(2008: n/a)
2008 2009
backlogin US$ millions
1,003.8
1,497.4 +49.2%Backlog at the end of2009 increased by49.2% toUS$1,497.4m (2008:US$1,003.8m)
2008 2009
profit before taxin US$ millions
40.744.5 +9.2%
Profit before tax in 2009increased by 9.2% toUS$44.5m (2008:US$40.7m) **
2008 2009
643.4
financial highlights
4 Kentz Annual Report
• Successfully completed re-organisation of the Group into three Global Business Units(“GBUs”); Specialist EPC, Construction and Technical Support Services
• Kentz’s Australian operations entered 2010 with a backlog of over US$376m, primarilylinked to a number of mega liquefied natural gas (“LNG”) projects going ahead
• Scope of work grown on both the Sakhalin 1 and 2 developments together with theCompany’s Russian joint venture partners. Kentz’s volume of total work is forecast toexceed US$150m, which includes services for the Sakhalin 1 third phase Arkun Dagi
• Further involvement in the main process and utility areas for the mega Shell Pearl gas toliquids (“GTL”) project in Qatar where Kentz’s volume of total work is forecast to exceedUS$400m
corporate development andoperational highlights
• Continued participation on the Medupi Project in South Africa, a 4,800MW powerstation for Eskom
• Successful completion of the Saudi Aramco Khurais Construction Project in SaudiArabia and the Rio Tinto Ilmenite Project in Madagascar, valued in excess of US$60mand approximately US$80m, respectively
• Continued participation on several Sipchem projects in Saudi Arabia includingcommencement of engineering and procurement services for the new Acetyls PolishingPlant with a total value of approximately US$150m
• Continued participation on the Gautrain Infrastructure Project in South Africa withcommissioning in time for the 2010 FIFA World Cup
Aerial view of Woodside’s Pluto LNG Project, Western Australia
corporate developments and operational highlights 5
Despite a reduction in worldwide energy demand in 2009, we are
convinced that in both the immediate and long-term future, the
energy demands, particularly of new emerging economies, will fuel
our industry and the continued growth of Kentz.
6 Kentz Annual Report
chairman’s statement 7
In 2009, the world economy came close to collapse, brought on by a global crisis in the international
financial markets. Whilst the current signs point to the beginnings of a global upturn, there remain a
number of hurdles to overcome before we can safely predict a full recovery.
The precipitous drop in energy prices at the end of 2008 continued into early 2009 and was followed
by a steady rise, sufficient enough to stimulate new growth in our clients’ investments. Within this
environment we are pleased to report that Kentz continued its growth in sales and earnings, marking
its performance as a stand-out in the international engineering and construction industry. As we
entered 2010, Kentz’s backlog stood at a record US$1,497.4m, a 49.2% increase over 2008.
The Board congratulates our Chief Executive, Hugh O’Donnell, and his management team in
navigating the Company through this difficult year whilst maintaining the steady and continuous
growth of Kentz. The core strategy of focusing on our blue-chip client base and providing consistent,
high-quality value-added services has served the Company very well, and continues to do so.
We have successfully utilised our strong balance sheet to invest in Kentz’s future, despite the past
year’s economic outlook. An example of this was the investment in personnel and management
made in the Australian market. Kentz has been operating in Australia for a number of years, but after
assessing the opportunities for new LNG projects, we were able to allocate additional human
resources to this market. This has resulted in large and diverse awards in our Construction and
Specialist EPC business units, and today we are a strong force in Australia ready to leverage our
presence to participate in the current and future commodity-based project investments by our
blue-chip clients.
Our largest and most important market continues to be the Middle East; and although we witnessed
some delay in the award of certain projects at the start of 2009, the second half was very buoyant.
New opportunities for our Specialist EPC business unit are emerging in Kuwait, Oman, and Syria. In
addition, the increased political stability in Iraq and the return of many of our core clients to the
country offers the potential for new opportunities and geographic expansion for Kentz in the Middle
East. Africa proved to be a strong market for Kentz in 2009 with all three GBUs exceeding their sales
targets. Although new investments in the oil and gas sector have been delayed, the growth in power
and metals and mining projects underpinned our 2009 sales performance. We foresee a return to
higher levels of energy investments in Africa, particularly in the coal to liquid and refining sectors of
the market.
Despite a reduction in worldwide energy demand in 2009, we are convinced that in both the
immediate and long-term future, the energy demands, particularly of new emerging economies, will
fuel our industry and the continued growth of Kentz. The International Energy Agency predicts that
by the year 2030 energy demand will have grown by 50%, with half of the total coming from fossil
fuel sources not yet developed. The Board continues to support our investment strategy of enlarging
Kentz’s presence in the upstream oil and gas services market in order to take full advantage of this
demand.
The Board is confident that the Company has the correct vision and strategy, coupled with an
outstanding management team, to enable us to bring value to our employees, to the communities in
which Kentz operates, and to our shareholders.
Tan Sri Mohd Razali Abdul Rahman
Chairman
chairman’s statement
The core strategy of
focusing on our
blue-chip client
base and providing
consistent, high-
quality, value-added
services has served
the Company very
well, and continues
to do so.
The management team believes the Company’s outlook is very positive. Oil prices have remained stable in the US$70-US$85/barrel range and many OECD and non-OECD countries arenow moving out of recession, providing a positive long-term viewfor oil and gas demand.
8 Kentz Annual Report
chief executive officer’s report 9
It has been another successful year for Kentz, with a strong performance across all business unitsand some significant new contract awards. Despite the ongoing challenges in the global economy,revenue increased 9.5% to US$704.7m, profit before tax increased 9.2% to US$44.5m and our profitbefore tax margin was maintained at 6.3%, in line with 2008.
Backlog has increased further to US$1,564.8m at the end of January 2010, up from US$1,003.8mat the end of December 2008 and US$1,100.9m at 30 June 2009. During 2009 the total order intaketo backlog was US$1,039.4m, with a strong performance in the second half as new orders andnatural growth from existing projects increased by 44.1% (H1 US$425.8m and H2 US$613.6m) overthe first half of 2009. The Group’s cash position remains very strong. Gross cash at the end of 2009was US$180.3m, up 16.7% from US$154.5m at the end of 2008. Net cash* at the end of December2009 was approximately US$168.3m, up from US$152.5m at December 2008. US$134.1m of thisis Kentz’s own cash, with the majority of the balance being customer prepayments on contracts.
The total dividend payment for 2009 will be 6.0 US$ cents per share. The final dividend payment of4.0 US$ cents per share represents two-thirds of the total payment for 2009 and is scheduled to bepaid in June 2010.
Kentz’s pipeline of prospects is currently in excess of US$2.95bn (December 2008: US$2.15bn) andcontinues to grow. In assessing prospects, in which bids have a period of up to six months beforebeing awarded, Kentz focuses on projects that have a high probability of proceeding and where ithas the greatest chance of success.
Kentz is currently involved in some of the largest and most prestigious projects in the world: theGorgon LNG Project in Australia; the Shell Pearl GTL in Qatar; the development of the Jubail IIinfrastructure in Saudi Arabia; the Sakhalin 1 and 2 developments in Far East Russia; and the4800MW Eskom Medupi Power Station in South Africa.
Projects in remote global locations are those where Kentz’s experience can add real value to clients.The re-organisation of the Group into three Global Business Units, completed during the second halfof 2009, has allowed us to leverage our well-established regional hubs to support work in remotelocations, with the potential for greater profitability.
Each of the GBUs – Specialist Engineering, Procurement and Construction; Construction; andTechnical Support Services – has benefited from increased exposure across the extended Kentzglobal network. The internal re-organisation has provided a number of additional strategic prospectsfor the Company and has helped unlock latent synergy that exists within Kentz’s business areas,which has been reflected in the growth of the backlog and prospects. The most significant growthin backlog was seen in the Specialist EPC business unit: from US$316m at December 2008 to overUS$837m at December 2009.
While the Middle East remains the most significant area of revenue generation for Kentz, accountingfor 63% of the overall revenue in 2009, we have seen significant growth in other regions. The globaloil and gas landscape for project development changed significantly during 2008 and 2009, andKentz is well positioned to service new opportunities as many of our core clients are involved indeveloping these major projects.
In particular, Australia has emerged as the world LNG liquefaction hub, following Qatar’s decision toput on hold further north field gas developments. Iraq is also set to become the largest developer ofupstream onshore oil and gas projects with several major IOCs signing up to new service contractswith the Iraq Oil Ministry. Brazil’s pre-salt reserve finds will set a new wave of FPSO projects in bothBrazil and in several fabrication centres around the world. Developments by US IOCs on large-scaleAlaskan gas projects to support domestic US energy demands look set to open up a new market ofprojects in this area, and Saudi Arabia is developing a number of downstream oil and gas projectsin joint venture with IOCs to service domestic, regional and Asian demands.
During 2009 the belief that the oil majors would continue to invest in oil and gas processing capacityfor future demand, in order to keep oil prices from “over-boiling”, has proven to be true. Capitalinvestments from the major IOCs continued at significant levels throughout 2009 and are likely to
chief executive officer’s report
Kentz is currently
involved in some of
the largest and
most prestigious
projects in the
world: in Australia,
Qatar, Saudi Arabia,
Far East Russia and
South Africa.
* Net cash represents gross cash less bank overdraft, bank borrowings and finance lease obligations.
10 Kentz Annual Report
remain buoyant for the foreseeable future. Economic growth, witnessed during the latter half of 2009 indeveloping economies, supports the current outlook that world demand for oil and gas will continue to grow.
The volatile global economic conditions during 2009 had some impact on our industry, but Kentz’s clientshave continued to finance a significant number of developments in the areas in which we operate. Therecent trend for IOCs to invest in locations where hydrocarbon extraction costs are marginally higher, butaccess and ownership risk are lower, has worked to Kentz’s advantage and many clients are taking astrategic long-term view of future developments in order to grow reserves, resulting in additional projectopportunities. Kentz continues to gain access to an expanded diversity of sectors, through a solid portfolioof projects and competencies across upstream oil and gas, downstream petrochemical, metals and mining,power and infrastructure. Kentz works with a well established base of blue-chip clients, consisting ofinternational oil, national oil and natural resource companies, along with leading engineering and projectmanagement companies.
Central to Kentz’s operations is the health and safety of our employees. During 2009 the workforceremained at an average of approximately 10,500 employees worldwide and we delivered over 34 millionman-hours of work on projects in 26 countries. The Total Recordable Incident Rate (TRIR) for the Groupwas 0.17. We maintain an appropriate mix of contract and permanent employees to provide a flexibleapproach to our fixed cost base.
Effective risk management remains a governing principle for the management executive. In the currentoperating environment, there are fluctuations in a number of the variables that make up our costs, and
chief executive officer’s report 11
ensuring these are addressed at bidding stage is of paramount importance. Kentz maintains its strict focuson risk management through regular bid proposal and ongoing project reviews.
The management team believes the Company’s outlook is very positive. Oil prices have remained stable inthe US$70-US$85/barrel range and many OECD and non-OECD countries are now moving out ofrecession, providing a positive long-term view for oil and gas demand.
We are confident that the expected long-term increase in demand for oil will drive the expansion of both theonshore and offshore oil and gas markets, and there are also several large downstream oil and gasdevelopments being planned. This view is further supported by the capital expenditure plans of many of ourcore clients, which remain intact.
Kentz is focused on identifying and assessing potential strategic investment opportunities in our sector,whether in the form of a joint venture, an investment or an acquisition. We maintain a prudent approach toany such transaction in order to ensure that any strategic investment will be value enhancing for ourshareholders.
Given the diversity of the sectors in which we are involved and our strong track record of operating acrossthe world, we feel well positioned to capitalise on the opportunities available to Kentz in the years ahead.
Hugh O’Donnell
Chief Executive Officer
Aerial view of LNG Berth 6 Project, Ras Laffan Industrial City, Qatar
Edward Anthony Power
Chief Financial Officer, aged 55
Ed Power, an Irish national, was appointed to theBoard on 31 January 2008, having previouslybeen appointed to the Board of Management asGroup Finance Director in 2002. Prior to that, heserved as Group Financial Controller of KentzGroup since 1995 and as Group FinancialAccountant since 1990. Before joining Kentz in1990 he worked with US-owned multinationalssuch as Measurex and Hasbro in Ireland, the US,Germany and Spain. Ed is a graduate ofWaterford Institute of Technology and is anassociate member of the Chartered Institute ofManagement Accountants.
12 Kentz Annual Report
Tan Sri Mohd Razali Abdul Rahman
Non-Executive Chairman, aged 62
A Malaysian, Tan Sri Razali was appointed to theBoard with effect from 6 May 1994. He holds aBachelor’s degree in Commerce from theUniversity of Newcastle, Australia and a Master’sdegree in Financial Management from theUniversity of Queensland, Australia, and is a fellowof the Australian Society of Certified PublicAccountants. Tan Sri Razali is currently theExecutive Chairman of Peremba (Malaysia) SdnBhd. He is also the Chairman of Saujana ResortSdn Bhd and Focal Aims Holdings Berhad; thelatter is a company listed on the Bursa Malaysia.
Hugh James John O’Donnell
Chief Executive Officer, aged 44
Hugh O’Donnell, an Irish national, joined Kentz in1991. He was appointed to the Board ofManagement of Kentz in August 1997 and to theBoard of Directors with effect from 1 January2001. He undertook a Bachelor of Engineering(Mechanical Engineering) degree at the Universityof Limerick, Ireland, from 1984 to 1987 and aMasters Course in Administration (Business) fromSurrey University in the UK from 1997 to 1999and a Doctorate in Management with theUniversity of Southern Cross, Australia, between1999 and 2002. Hugh is a Professional Engineerregistered with the Board of Engineers, SouthAfrica.
board of directors
board of directors 13
Hans Joachim Kraus*
Non-Executive Director, aged 72
An American, Hans acts as an advisor to Kentz managementin the area of safety, health and environment in addition to hisrole on the Board. He holds a Bachelor’s degree in MechanicalEngineering from the University of Wyoming. Hans has over 40years experience with Chevron Corporation, and has workedin various management positions in engineering, construction,operations, management and consulting and executivemanagement. Key executive positions during his tenure withChevron included Vice President of Projects, Project Directorsand General Manager/Co-ordinator of downstream projectsworldwide.
David Michael Beldotti*
Non-Executive Director, aged 68
An American, David Beldotti was appointed to the Board witheffect from 5 February 2003. David’s experience in the EPCprocess business spans over 40 years with direct involvementin over 100 projects ranging in size from small engineeringstudies to multi-billion US dollar projects. Over the years Davidhas worked in over 30 different countries in all continentsexcept Antarctica. The senior positions he has held during histenure in the industry include, President of BadgerEurope/Africa, CEO McConnell Dowell, and President ofLummus Americas/East Asia.
Hassan Abas
Non-Executive Director, aged 56
A Malaysian, Hassan Abas was appointed to the Board witheffect from 6 May 1994. He holds a Bachelor of Arts (Honours)from the University of Lancaster and is a member of theInstitute of Chartered Accountants, England & Wales. He isalso a member of the Malaysian Institute of Accountants.Hassan is currently the Deputy Chairman of Peremba(Malaysia) Sdn Bhd. He serves on the boards of the followingpublic companies – Jardine Cycle & Carriage Ltd (Singapore)and MCL Land Ltd (Singapore). He also sits on the board ofseveral private companies.
Brendan Lyons*
Non-Executive Director, aged 62
Brendan Lyons, an Irish national, holds a Bachelor ofEngineering (Chemical) from University College Dublin.Brendan also holds a Master’s degree in Public Administrationfrom the same university. Brendan was appointed to the Boardon 31 January 2008. Brendan has had a long career with theDepartment of Foreign Affairs of Ireland and is well placed toadvise the Company on numerous political and culturalmatters. Senior posts held with the Department of ForeignAffairs include Ambassador of Ireland in Riyadh, KualaLumpur, Singapore and Hanoi. He is currently President ofPenang Medical College in Malaysia.
* Independent Non-Executive Director
The holding company of the Kentz Group, Kentz Corporation Limited (the “Company”), is
incorporated in Jersey. Whilst there is no formal corporate governance code applicable in
Jersey, the Directors recognise the value of the principles of good governance and the
Company follows the recommendations on corporate governance for AIM companies
issued by the Quoted Companies Alliance (QCA).
The BoardThe Board of Directors of the Company is responsible to shareholders for the leadership
of all aspects of the business. The Board comprises seven members – three independent
Non-Executive Directors, each contributing individual experience from diverse
backgrounds. In addition there are two Non-Executive Directors who have served on the
Board since 1994. They provide focus and alignment and have many years of experience
on the boards of publicly-traded companies. Finally, the two Executive Directors are
responsible for the implementation of all Board decisions and oversee the management
of the Group on a day-to-day basis.
All members of the Board are required to stand for election by shareholders at the annual
general meeting following their appointment by the Board and thereafter for re-election on
a three-year rotational basis, which assists in ensuring planned and progressive refreshing
of the Board.
Role of the BoardThe Company has adopted a schedule of matters reserved for consideration by the whole
Board, including, for example: approval of the Group’s long-term objectives and
commercial strategy; approval of the annual operating and capital expenditure budgets of
the Group (and any material changes thereto); changes relating to the Group’s structure;
major changes to the Group’s corporate structure, approval of the Group’s annual report
and accounts; approval of the dividend policy; major capital projects; changes to the
structure, size and composition of the Board; determination of the remuneration for the
Directors, the Company Secretary and executive management; division of responsibilities
between the Chairman, the Chief Executive and other executives of the Board; and the
making of political donations or political expenditure.
The Board is also responsible for ensuring maintenance of sound systems of internal
control and risk management and the Directors confirm that they continually review the
effectiveness of the system of internal control, covering all material controls including
financial, operational and compliance controls and risk management. The Company has
established a Risk Review Committee, reporting to the Board and consisting of David
Beldotti as Chairman, Hugh O’Donnell, Ed Power and Adrian Griffin (the Company’s
Commercial, Contracts and Risk Officer). This Committee meets at least four times a year
to review the process for identifying the principal business risks facing the Group, the
methods of managing these risks, the controls that are in place to contain them and the
procedures to monitor them. The Committee also makes recommendations for
consideration by the Board of any actions it deems necessary to better protect the
interests of the Company.
Above: Salma Ghazali, MalaysianPA to Regional Business ManagerKentz employee for 15 yearsKentz world presence: Kuala Lumpur, Malaysia
corporate governance14 Kentz Annual Report
Sub-committeesIn early 2008, the Company established an Audit Committee, a Nomination
Committee and a Remuneration Committee, each with formally delegated duties and
responsibilities.
Audit CommitteeThe Company’s Audit Committee comprises David Beldotti as the Chairman, Hans
Kraus and Hassan Abas. The Audit Committee meets at least three times a year at
appropriate times in the reporting and audit cycle and otherwise as required. The
Chief Financial Officer and the Group Internal Auditor normally attend meetings of the
Committee and the Chief Executive Officer attends as necessary. The external
auditors are invited to attend meetings of the Audit Committee on a regular basis.
The terms of reference for the Audit Committee include the following responsibilities:
� Monitoring the integrity of the reported financial performance of the Group,
including its preliminary results announcement, annual report and interim report;
� Reviewing the effectiveness of the Group’s internal financial controls;
� Monitoring and reviewing the effectiveness of the Group’s internal auditor;
� Making recommendations to the Board on the appointment and removal of the
external auditors;
� Monitoring the objectivity and independence of the external auditors.
Nomination CommitteeThe Company’s Nomination Committee comprises Tan Sri Mohd Razali Abdul
Rahman as the Chairman, Brendan Lyons and David Beldotti. The Nomination
Committee meets at least twice a year and at such other times required by the
Chairman of the Committee. The Nomination Committee is responsible for identifying
and nominating, for the approval of the Board, candidates to fill Board vacancies. The
terms of reference for the Nomination Committee provide that it will give full
consideration to succession planning and regularly review the structure, size and
composition of the Board.
Remuneration CommitteeThe Company’s Remuneration Committee comprises Brendan Lyons as the
Chairman, Hans Kraus and David Beldotti. The Remuneration Committee meets at
least twice a year and at such other times required by the Chairman of the
Committee. The Remuneration Committee is responsible for monitoring the level and
structure of remuneration for senior management. The terms of reference for the
Remuneration Committee provide that it will determine and agree with the Board the
framework or broad policy for the remuneration of the Company’s executive
management and fix the remuneration for all Executive Directors, the Chairman and
the Company Secretary. The remuneration of Non-Executive Directors is a matter for
the executive members of the Board. No Director may be involved in any decisions
as to their own remuneration.
corporate governance 15
Aviva Stadium, Dublin, Ireland
Gautrain 1, Gautrain Rapid Rail Link TunnelVentilation Package, South Africa
132KV Switching Terminal prior to extensionsof bays, Karratha, Western Australia
key executives and organisation16 Kentz Annual Report
Above: Jemar Timajo, FilipinoProject Controls EngineerKentz employee for 8 yearsKentz world presence: Perth, Western Australia
In 2009, the re-organisation of the Group into three Global Business Units (GBUs) which
include Specialist EPC, Construction and Technical Support Services was successfully
rolled out across the Group. This new organisation has unlocked the latent synergy that
exists within Kentz’s business areas, and facilitates the sharing of business unit expertise
and resources across the world. Projects in remote global locations are where Kentz’s skill
set can add real value to clients. The re-organisation of the Company into three GBUs has
laid the foundation for continued growth, with each business unit increasing in geographic
reach, and sales increasing through new awards, during 2009.
The Management Executive Committee (MEC)
Hugh O’Donnell Chief Executive Officer
Hugh O’Donnel joined Kentz in 1991. He wasappointed to the Board of Management of Kentz inAugust 1997 and to the Board of Directors witheffect from 1 January 2001. He was appointed ChiefExecutive Officer in late 2000.
James MooreChief Operating Officer Specialist EPC Business Unit
James Moore joined the Kentz Group in November1993 upon returning to Europe from South Africawhere he had served as a Project Manager withSasol for thirteen years. Since joining Kentz he hasacted in several different senior management rolesacross the fields of engineering and projectmanagement and has served in Ireland, Britain,Thailand, Malaysia and Qatar.
Eoin HurleyChief Operating Officer Construction Business Unit
Eoin Hurley joined the Kentz Group in 1986. Eoin’scareer in engineering and construction spans 25years, having participated on a wide variety ofprojects in Europe, the Middle East andpredominately in Sub Saharan Africa across manysectors of the industry. He spent much of this timeon site and also in operational and generalmanagement roles, including most recently theManaging Director of the Southern African Region.
Mike MurphyChief Operating Officer Technical Support ServicesUnit
Mike Murphy joined the Kentz Group in 1987. Mikehas worked in project management anddevelopment capacities on major projects acrossthe Benelux, Southern Africa and Middle East andhas also served as Business Development Managerin both the South East Asian and the Caribbeanregions of the Group.
key executives and organisation 17
The Management Executive Committee (MEC) was formed in April 2008. The MEC meets
six times annually. Its main focus and responsibilities are:
� Overseeing the Safety Leadership Charter
� Carrying out risk reviews on all level 4 projects throughout the Group
� Reviewing Group financials, annual budgets and forecasts
� Ensuring appropriate guidance is given to analysts
� Planning news/project announcements
� Reviewing Group backlog position across the Group
The MEC provides strategic guidance and perspective over and above the day-to-day
operations of the business.
Ed PowerChief Financial Officer
Ed Power joined the Kentz Group in 1990. He wasappointed Chief Financial Officer in 2002. He hasserved as Group Financial Controller of Kentz Groupsince 1995 and as Group Financial Accountantsince 1990.
Rory O’DonnellGroup Development Officer
Rory O’Donnell joined Kentz in 1995. Rory startedhis career with Shannon Aerospace in Ireland wherehe worked closely with the Kentz Group toundertake one of the largest aircraft maintenancefacilities in Europe. He then relocated to SouthernAfrica with the Kentz Group. Since joining Kentz hehas served in several managerial roles in SouthAfrica and the Middle East.
Eamonn O’HanlonGroup Projects Services Officer
Eamonn O’Hanlon joined Kentz in September 1982.Eamonn has held a number of senior positions in theMiddle East (Iraq, UAE, Saudi Arabia) and wasappointed Chief Operating Officer in 2002. InJanuary 2007 he was appointed Middle EastRegional Director based in Bahrain. In July 2009, hewas appointed Group Projects Services Officer withresponsibility for Procurement, IT, Project Controls,HSE, Quality Assurance and HR.
Adrian GriffinGroup Commercial, Contract & Risk Officer
Adrian Griffin joined Kentz in 1991 and has servedthe Group in Ireland, the UK, Europe, SouthernAfrica, South East Asia and Australia. His experienceincludes commercial and contract managementroles on major projects in the oil & gas, mining &minerals, pulp & paper, power generation andinfrastructure sectors.
18 Kentz Annual Report
Above: Kuldip Singh, Canadian citizenCountry Finance ManagerKentz employee for 6 yearsKentz world presence: Calgary, Canada
In order to foster future growth and development of the Group and to take into account
the new GBU structure, a new Board of Management was formed in 2009. This consists
of new and fresh management talent from across various disciplines throughout the
Group. Each new member was chosen for their blend of experience, energy and drive in
their specialist area. The main objective of the Board of Management is to support the
Group’s objective of becoming “a specialist service provider of choice”. It meets four
times annually and reports directly to the MEC.
The primary objectives of the Board of Management are:
� To implement the Safety Leadership Charter
� To oversee the implementation of strategic projects
� To share business development networks and strategies
� To support the development of future leaders
� To review HR requirements across the Group
� To review overall business and operational performance
� To promote senior management communication
Board of ManagementNeil O’Mullane
Group Senior Projects Director and Chairman of the Board of Management
Chris Warlow
Business Unit Manager, Construction, Middle East Region
Michael Naughton
Group Financial Manager
Keith Barry
Regional Development/Country Director, Southern Africa
Bob Greaney
Senior Project Director
James Cassin
Head of Group QA/QC and HSE
James Clarke
Group Strategic Development Manager
Kevin Moroney
Technical Support Services Operations/Business Manager
KP Raman
Regional Finance Director, Middle East
Takis Karallis
Head of Group HR
Terry Henebrey
Technical Support Services Business Unit Manager, Africa
Sean Lucey
Corporate Finance Manager – Special Projects, joins the Board of Management with
effect from April 2010
Right: Kentz Shutdown Team with Petro SA Platform Personnel,Petro SA First Area Platform Shutdown, Mossel Bay,
South Africa
key executives and organisation 19
20 Kentz Annual Report
OutlookDespite the volatility in world markets during 2008 and 2009, Kentz has reported a solid
performance and remains well positioned to continue to deliver strong growth in the
coming year. Sales for 2009 have increased by 9.5% and we have achieved another
record backlog, up 49.2% year-on-year, providing a strong basis to continue to perform.
The re-organisation of the Company into three GBUs has also laid the foundation for
continued growth, with each business unit increasing in geographic reach and sales
through new awards, during the period.
At the end of January 2010 the backlog stood in excess of US$1,564.8m, the largest in
the Company’s history, and the pipeline of target prospects was in excess of US$2.95bn.
Our strategy of focusing on oil and gas, petrochemicals and energy projects in developing
regions has been highly successful, and we continue to build on the strong foundations
in our core markets. In addition, we have seen a significant increase in our metals and
mining business in Southern Africa and Australia, which we expect to continue in the long
term.
Kentz is encouraged by the fact that a large number of International Oil Companies
(“IOCs”) and National Oil Companies (“NOCs”) have maintained their exploration and
production capital spending during 2009. Whilst capital expenditure plans for these
companies vary considerably for 2010, we are seeing positive capital investment
sentiments for upstream exploration and production projects from important Kentz
clients, such as Shell, ExxonMobil, Chevron, Qatar Petroleum, Abu Dhabi National Oil
Company and Saudi Aramco.
Oil prices have remained reasonably stable over the past six months, between US$70 and
US$85 per barrel. This provided the catalyst for some delayed projects to gain
momentum and subsequently move into project execution. We remain comparatively
insulated against the fluctuation in oil prices as our key regional market for oil production
services, the Middle East, has production costs that are amongst the lowest in the world.
The development of the Pacific Rim as a major LNG liquefaction centre gained strength
during 2009. Kentz has been awarded significant LNG projects in this area and we expect
investment to continue. Kentz’s strength is in its ability to provide engineering,
procurement and construction services to remote and logistically challenging projects,
and is therefore well placed to service this demand. Our GBUs are enabling us to fully
service our clients’ needs in these areas, as seen by the recent award of contracts
for approximately US$107m on the Pluto LNG Project and US$251m on the
Gorgon LNG Project.
Power and infrastructure projects also gained momentum in 2009 and our work in this
sector, in Southern Africa and the Middle East, has been particularly successful. We
expect to increase revenues in this area during 2010 and beyond.
With the award of new specialist EPC contracts, we have continued to expand our
services in brown field projects, plant upgrades and expansion developments. The award
of the Storex Control System Upgrade Project consists of the replacement of existing
process control systems and associated electrical and instrumentation devices for Abu
Dhabi Gas Liquefaction Company Ltd (“ADGAS”), an Abu Dhabi National Oil Company
(“ADNOC”) Group company, on Das Island, United Arab Emirates.
Above: Vicky Cronjie, South AfricanExecutive Assistant/Travel Co-ordinatorKentz employee for 11 yearsKentz world presence: Durban, South Africa
outlook, our markets and sector focus
Sales for 2009 have
increased by 9.5% and
we have achieved
another record backlog,
up 49.2% year-on-year,
providing a strong basis
to continue to perform.
Kentz’s maintenance and shutdown services group has been successful across all
our regional operations. A good example of this is the recent award for the shutdown
services and operations support contract with Exxon Neftegas Ltd, within the
Sakhalin 1 Development Project. This contract includes all personnel, permits,
equipment, transportation and front-end execution planning, as well as the
management of contractor and subcontractor resources for the shutdown during
2010. A number of our clients have also indicated that they are assessing
opportunities for “de-bottlenecking” plants as well as increasing the product quality,
productivity and capacity on existing installations, which will create further
opportunities for Kentz.
The central oil processing facilities in Yemen is representative of Kentz’s strategy for
providing complete oil production facilities, both early and permanent, in marginal
field developments. This specialist EPC contract for the 30,000 barrels per day (bpd)
facility will hopefully be the first of many similar type projects for Kentz on a global
basis.
Economic drivers
• Oil prices have remained stable at US$70-US$85 per barrel. Many OECD and non-
OECD countries are now moving out of recession, providing a positive long-term
view for oil and gas demand. This view is further supported by the capital
expenditure plans of many of Kentz’s core clients, which remain intact.
• Global demand for oil is on track for year-on-year growth, the first time since the
second quarter of 2008. The International Energy Agency (IEA) stated in February
2010 that oil demand is expected to rise from 84.9 million barrels per day (mpbd)
in 2009 to 86.5mbpd in 2010, with growth entirely in non-OECD countries. By
2030 this is forecast to reach 105mbpd. Of this, non-OECD countries will account
for 93% of the increase in global demand between 2007 and 2030, driven largely
by China and India, with fossil fuels accounting for 77% of the increase in the world
primary energy demand.
• The IEA predicts that an energy supply infrastructure investment of US$26,000bn,
or over US$1,100bn per year by 2030, is needed. This figure includes
US$13,600bn in power projects, US$6,300bn in oil projects (80% of which will be
targeted at exploration and development), and US$5,500bn in gas orientated
projects (61% of which will be targeted at exploration and development). Over half
of this energy investment worldwide is needed in non-OECD countries, where
demand and production are projected to increase at the quickest rate. These are
all key industries for Kentz.
Regional factors
• The Middle East Economic Digest (MEED) noted in January 2010 that it expects
contract awards in the oil, gas and petrochemicals industry in the Middle East to
reach US$97.9bn in 2010 and US$212.6bn between 2010 and 2012. Revenues
from the Middle East region made up 63.2% of total Kentz revenues in 2009.
Middle East backlog as of the end of January 2010 was US$676.2m
• Kentz estimates that over US$170bn of capital expenditure on LNG type projects
could take place in Australasia following the LNG new project development shift
from the Middle East to Australasia and, with a current backlog of project orders in
Australia totalling US$368.5m, Kentz is already ideally positioned to benefit from
this. Kentz is also seeing a significant expansion in projects in Sub Saharan Africa
and at the end of January 2010 had a backlog of US$444.9m for projects in this
region.
outlook, our markets and sector focus 21
Qatargas II Management Camp, Qatar
View of two-reactor structure, MIBK Plant Sasol I,Sasolburg, South Africa
Petrotrin Alky Acid Project, Trinidad
22 Kentz Annual Report
OverviewKentz is a fully integrated services solution provider delivering specialist EPC solutions,
construction, and technical support services for projects involving oil and gas upstream
developments (both offshore and onshore), LNG, gas to liquid (GTL), refining,
petrochemicals, power, metals and mining and infrastructure. Our core clients include
international oil companies, national oil companies and leading engineering and project
management companies.
Our global workforce, which averaged approximately 10,500 during 2009, completed
over 34 million man-hours of work on projects with a Total Recordable Incident Rate
(TRIR) of 0.17.
Above: Mohammed Yousuf Noor, Indian Human Resources ManagerKentz employee for 26 yearsKentz world presence: Al-Khobar, Saudi Arabia
Our global workforce,
which averaged
approximately 10,500
during 2009, completed
over 34 million man-
hours of work on
projects with a Total
Recordable Incident
Rate (TRIR) of 0.17.
Aerial view of Spinfex Village on BHP Billiton’s Rapid Growth Project 5 (RGP5),
Yandi, Pilbara region of Western Australia
outlook, our markets and sector focus 23
New InitiativesThe successful transition of the Group to Global Business Units during 2009 has
allowed Kentz to offer Specialist EPC, multi-discipline Construction Services and
Technical Support Services across all our regions using regional centres of excellence
to support new projects and clients.
Separately, the development resources of our teams in Canada, the USA, Caribbean
and South America have been pooled to improve efficiency and information-sharing
across projects and targets in the Americas.
We continue to target turnkey onshore oil and gas early and interim production
systems, providing cost effective solutions to oil and gas process plants as well as all
balance of plant services in the upstream oil and gas market. We are presently
providing a 30,000-bpd central process facility in Yemen and targeting additional
marginal field developments.
24 Kentz Annual Report
Global Business Units
In 2009, Specialist EPC revenue was US$166.0m (2008: US$184.5m), Construction
services was US$348.1m (2008: US$279.2m); and Technical Support Services was
US$190.5m (2008: US$179.7m). Recent project award values range from: US$50m to
US$210m for Specialist EPC; US$30m to US$260m for Construction; and US$3m to
US$50m for Technical Support Services projects.
Our main aim is to be recognised across the globe as the preferred specialist solutions
provider for all of our clients, and we have continued to see strong demand for Kentz’s
services across our GBUs.
As a general rule, our specialist EPC contracts are fixed price, lump sum and are often
competitively bid; construction contracts are based on a re-measurable work unit rate;
and our technical support services are usually on a fully reimbursable basis. Our lump sum
fixed price contracts are required to meet specified criteria and undergo risk assessment
by the Risk Review Committee prior to submission.
Above: Lucky Makofane, Northern SothoStoremanKentz employee for 20 yearsKentz world presence: Midrand, South Africa
*Engineering, Procurement and Construction ** Total Systems Integration *** Front-end Engineering and Design
Specialist EPC * Construction Technical SupportServices
Onshore Modular ProductionFacilities
Turnkey Temporary Facilities
Turnkey Utilities and Offsite Facilities
Turnkey Port Facilities
Small Capital Project Solutions
Controls & Automation (TSI**)
Telecommunications Systems
Power Projects & Services
Site-wide Construction Solutions
Structural, Mechanical & Piping
Electrical & Instrumentation
Pre-EPC award (FEED***)
Integrated Project Management
Commissioning
Maintenance & Turnaround
Offshore Services
Specialist EPC Construction Technical SupportServices Services
Project Management • •
Engineering •
Design •
Procurement •
Construction • •
Commissioning • • •
Gross Margin Range Medium Medium Higher
Recent Project ValueRanges US$m (approx.) 50 – 210 30 – 260 5 – 50
Lump Sum •
Unit Rate •
Reimbursable •
Specialist Engineering, Procurement and Construction(EPC)
The Group has seen considerable benefits from the newly formed global Specialist EPC
business unit, resulting in a record backlog for the business line of US$837.3m as of the
end of December 2009. Middle Eastern and African regions have continued to experience
sustained growth in backlog and this has been supported by two large EPC contract
awards in the Australasian region. There continues to be strong demand for onshore oil
and gas process facilities and infrastructure in these particular regions. EPC revenues in
2009 were US$166.0m, down from US$184.5m in 2008 due to some delays in the award
of new projects in the latter half of 2008. However, there have been a number of new large
EPC contracts awarded that have increased our EPC backlog by over 165% since that
time.
Kentz has continued to develop a strong presence in Australia, with a number of new
contract awards. Chevron Australia Pty Ltd awarded Kentz, in a joint venture with Decmil
and Thiess (TDKJV), an AUD$500m contract for the Gorgon LNG Project Construction
Village on Barrow Island. The accommodation facility is expected to accommodate 3,300
construction workers. All materials for the project will be shipped to the remote island via
landing craft transport from Dampier in the northwest of Australia. The Gorgon Project is
a joint venture between the Australian subsidiaries of Chevron (Operator), ExxonMobil and
Shell, to develop the Greater Gorgon gas fields, located 130-200km off the northwest
coast of Western Australia. The Greater Gorgon gas fields contain resources of about 40
trillion cubic feet of gas, and are Australia’s largest-known gas resource.
outlook, our markets and sector focus 25
Gorgon LNG Project site, Barrow Island, Western Australia
SPECIALIST EPC
The Group has seen
considerable benefits from
the newly formed global
Specialist EPC business
unit, resulting in a record
backlog for the business
line of US$837.3m as of the
end of December 2009.
26 Kentz Annual Report
A second contract award by Chevron Australia Pty Ltd for the Gorgon Project is the EPC
telecommunications package, awarded to Kentz, through its Australian arm Kentz (Pty)
Ltd. Owing to the remoteness of the project site, the AUD$150m contract calls for the use
of state-of-the-art telecommunications technology, including converged IP networks for
multiple data streams, satellite data communications, navigational aids including radar
and vessel tracking, meteorological and oceanographic systems, site-wide WAN/LAN
with network management, central fire and security monitoring, and data transmission on
both fibre optics and microwave.
In Qatar, Kentz continues to be involved in the prestigious Shell Pearl GTL Project
including a number of Specialist EPC, Construction and Technical Support Service
packages in excess of US$400m. During 2010, the main focus will be on delivering the
commissioning support of utilities packages and enabling the commencement of critically
important process utilities, a precursor to plant-wide systems completion. During 2009
more than 2,800 specialist personnel were working on the project. Kentz also has a
general services contract to support project completion activities.
Engineering and procurement has commenced on the EPC US$85m Ras Laffan Refinery
Port Project for Qatar Gas. This contract will include full site development of the main fuel
truck distribution point for the Laffan Refinery Tank Farm, and the installation of the
interconnecting pipelines between the tank farm, loading facility and the Ras Laffan jetty.
Kentz has also recently been awarded an EPC contract to replace two existing glycol
regeneration trains at Qatar Petroleum’s Fahahil Stripping Plant in Dukhan, Qatar.
EPC activities continue on the Sidra Project, where Kentz is carrying out a US$208m
contract for the design, supply and delivery of the main electrical systems on the Qatar
Foundation and Qatar Petroleum-supported Sidra Medical and Research Centre.
Separately, work has commenced on the Qatargas Operating Company’s phase six LNG
storage and loading facility in Ras Laffan Industrial City, which is located on the northeast
coast of Qatar. Kentz is providing electrical, instrumentation and telecommunications
services.
In Abu Dhabi, engineering and procurement has commenced on the US$30m Storex
Control System Upgrade project for ADGAS on Das Island, which will run for three years.
The project consists of the replacement of the existing control system and associated
electrical and instrumentation devices. Process units include ADGAS LNG, LPG, Sulphur
Storage and Jetty Loading facilities, which will then be integrated into the existing systems
of the three LNG/LPG processing facilities.
Capital spending on some of the large oil and gas projects in Saudi Arabia was delayed
during late 2008 and early 2009. However, some of the delayed projects at export
refineries in Jubail and Yanbu are now proceeding, with a final investment decision for
Yanbu expected in 2010. Saudi Aramco also continues to move ahead in a joint venture
with Dow to upgrade and integrate the existing Rastanura refinery with a large-scale
petrochemical complex through a projected spend of US$26bn. In addition, Saudi
Aramco has a clean fuels programme to upgrade its existing refineries to meet US and
European emission standards in future years and Kentz is well positioned to participate in
these upcoming mega-projects. Our track record in Saudi Arabia over the last 33 years
coupled with Saudi Aramco’s stated intention to increase both onshore and offshore oil
and gas production suggests this is an area set for growth.
Above: Joel Peter D’sa, IndianAdministration ManagerKentz employee for 15 yearsKentz world presence: Doha, Qatar
In 2009, Specialist EPC
revenue was US$166.0m.
Recent project award
values range from:
US$50m to US$210m
for Specialist EPC.
Engineering and procurement has also commenced on the US$10m Isopentane unit
for Petrokemya.
We continue to remain focused on the development of important infrastructure with
the Royal Commission for Jubail and Yanbu, including the provision of engineering,
consultancy, procurement and on-site construction support services for the
development of approximately 2,000 hectares of land to the west of Jubail 2.
In 2009 Kentz was awarded an additional five year contract on Jubail 2. This
development of approximately 1,000 hectares of land will require 850,000 man-hours
of engineering and consultancy services. The scope of work will include engineering
studies and assessments for urban planning; the design site development for
Mutrafiah, Jalmudah, and Regga; and infrastructure projects, including landscaping,
schools, universities, sports facilities, community buildings, clinics and power
systems. When completed, Jubail Industrial City will be the largest of its kind in the
world. Future scopes of work under discussion with the Royal Commission include
security systems for the complete industrial area, and the development of a railway
system from the new industrial area to the port.
Kentz continues to provide EPC services to Sipchem, one of the largest, fully-
integrated, petrochemical companies in the Middle East, owned and operated by the
private sector. Kentz is executing EPC projects for the product pipelines, port
expansion and some buildings on the new major Acetyls complex. The Acetyls
complex consists of an Acetic Acid, Vinyl Acetate Monomer and a Carbon Monoxide
plant. Kentz is also contracted to provide EPC services on several smaller upgrade
projects in the region.
In Yemen, the award of the US$146m contract for Kentz’s EPC services on the
onshore 30,000-bpd oil production facility follows the formation of Kentz Global Oil
and Gas Process Systems Ltd., a joint venture with GPS Inc. This project is a
significant step forward in upstream onshore oil and gas production facilities business
for Kentz.
In South Africa, design work has continued on the Gautrain Tunnel Ventilation
systems and an additional EPC contract for the tunnel control systems.
Our newly-signed engineering and construction agreement with Sasol is also getting
off to a strong start with the award of a number of small EPC packages.
In Ireland, we continue to provide specialist EPC services to the healthcare sector as
well as the Aviva Sports Stadium, where we are providing construction management
and installation for the electrical systems and EPC services for the
telecommunications systems. This is expected to be completed during 2010.
In Canada, our work on the oil sands Kearl project has now grown to an expected
value of US$25m, and will include additional engineering and procurement services
for the plant-wide telecommunications activities.
outlook, our markets and sector focus 27
Installation of process column on MIBK Project,Sasolburg, South Africa
Aerial view of Abu Dhabi National Gas Liquefaction Company(ADGAS) Project, Das Island, UAE
Construction Services Kentz manages and executes multi-discipline construction projects, including
construction and site management, field engineering and procurement, HSE and testing
for our clients. We also specialise in the provision of commissioning and start-up services
in conjunction with, or independent of, project construction activities. The Group’s
workforce has wide experience in the commissioning and start-up of large and often
complex plant facilities in remote locations.
The construction business unit performed particularly well during 2009 with 24.7%
growth in revenues to US$348.1m (2008: US$279.2m). Project activity across sectors
such as oil and gas, metals and mining and power sectors remains strong for Kentz,
evidenced by the volume in both natural growth and new awards during 2009. We have
also continued to supply significant construction services on industrial related projects to
Fluor, Technip and Linde in Qatar. The construction business unit had a backlog of
US$529.4m as of the end of December 2009
In Saudi Arabia, Kentz’s participation in the Aramco Khurais Project was primarily focused
on supporting the completion of the plant-wide electrical, controls and automation
systems to support start-up. This gas processing plant and water injection facility has a
capacity of 1.2mbpd of high-quality Arabian light crude for Saudi Arabia’s export facility.
The Khurais programme will also increase the capacity of the Qurayyah seawater injection
system by 4.5mbpd of treated water for injection at Khurais and South Ghawar fields.
In Qatar, construction has started on Qatar Gas’s new LNG Berth 6 loading facility where
Kentz is providing instrumentation, electrical and telecommunications services.
28 Kentz Annual Report
Above: Anastasia Gaus, RussianHR Logistic Co-ordinatorKentz employee for 2.5 yearsKentz world presence: Yuzhno-Sakhalinsk, Russia
CONSTRUCTIONSERVICES
The Construction business
unit performed
particularly well during
2009 with 24.7% growth in
revenues to US$348.1m
(2008: US$279.2m).
The Construction business
unit had a backlog of
US$529.4m as of the end
of December 2009.
Unit 6 ACC support steelwork,Medupi Project, South Africa
outlook, our markets and sector focus 29
In the UAE, we continue to be involved with a number of major EPC contractors. We are
currently completing the construction and installation services for Bechtel on the GASCO
OGDIII gas development programme. This is designed to produce 125,000bpd of
condensate and 12,000 tonnes per day (tpd) of NLGs, including about 3,200tpd of
ethane. It will also recycle an equal volume of produced gas into a reservoir via a high
pressure gas injection system.
In Sub Saharan Africa, Kentz has started construction on the Moatize Coal Project in
Mozambique, worth approximately US$69m. The project is being developed by Vale.
Kentz will undertake the structural (steel), mechanical, electrical, instrumentation and
piping erection work for the coal processing plant. A number of additional coal projects
are being planned in the region. Kentz has been active in Mozambique for over 10 years,
and we are well placed to secure future contracts in this region.
Elsewhere in Sub Saharan Africa, Kentz is supporting the maintenance and operation
phase for the Kenmare Resources Moma Mineral Sands Project in Mozambique, a
700,000 tonnes titanium minerals facility. In Madagascar, we continue to provide
maintenance services on the Rio Tinto Mineral Sands QMM Ilmenite Titanium Dioxide
Project, which has initial production of 750,000 tonnes of IImenite per annum.
In South Africa alone there is estimated to be over US$98bn of infrastructure projects
taking place over the next three years that Kentz is ideally positioned to support. In 2008
Kentz was awarded the Medupi power contract worth in excess of US$250m. Medupi is
a greenfield 6 x 800MW coal fired power station that forms part of a US$12bn investment
programme by the South African Power Supply and Utility Group Eskom, which will span
30 Kentz Annual Report
over six years. Our contract is with GEA Energy, the German technology house, which
has responsibility for the turnkey delivery of the overall air cooled condensing system for
Medupi. Kentz’s scope of work includes the procurement, detailing, shop fabrication and
installation of approximately 36,000 tonnes of steel structure and plate work, 40,000
tonnes of mechanical equipment and 1,800 tonnes of piping over a four and half year
period.
In Australia, Kentz, together with its Australian joint venture partner Thiess Pty Ltd
(Thiess), has also been awarded an US$77m contract for electrical and instrumentation
installation services on Woodside’s Pluto LNG Project. Separately, Kentz has been
awarded the site wide specialist instrumentation contract bringing the combined value of
work secured to date on the project to in excess of US$107m.
From January 2010, following an agreement with Thiess, Kentz has now taken over
management control of the joint venture company, although its shareholding remains the
same. The joint venture company has changed its name to Kentz E&C Pty Ltd.
In the Caribbean, we are mobilised on three new construction projects for the Petrotrin
Refinery in Trinidad & Tobago. Kentz is providing construction services to the
Isomerisation Project, and two contracts on the Acid Alkylation Project – part of the
Gasoline Optimisation Programme. The isomerisation unit will produce isomerate, which
improves the octane rating of light gasoline, thus enabling Petrotrin to increase supplies
to premium markets.
Above: Joe Cassin, IrishGroup Projects Controls ManagerKentz employee for 25 yearsKentz world presence: Juffair, Bahrain
Qatalum Smelter, Mesaieed, Qatar
outlook, our markets and sector focus 31
Technical Support ServicesThe Technical Support Services business unit performed well during 2009 with growth of
6.0% in revenues to US$190.5m (2008: US$179.7m). We have seen demand for
technical services at remote-based projects and continued growth on projects where
Kentz is also executing either specialist EPC or construction services. The Technical
Support Services business unit backlog was US$130.7m as of the end of December
2009.
Kentz works in the early stages of project development at the front-end engineering and
design phase (FEED) before EPC works commence. Kentz performs specific FEED study
programmes and has teams of specialist personnel engaged with the client delivering
validation and budgeting. Once the project receives approval, a team then typically works
as part of an integrated project management group, providing specialist services and
systems to support the management of the project.
Kentz also provides maintenance, shutdown and turnaround management services for
clients on an international basis, as well as commissioning services for the upstream
(offshore and onshore), refining, petrochemicals, metals and mining industries.
We have recently been awarded a number of Technical Support Service contracts with
core clients for commissioning services on re-gasification facilities and early production
systems. Many LNG developments are expected to come on stream during 2010,
including projects in Russia (Sakhalin), Qatar, Indonesia and Europe; all of which will
provide opportunities for Kentz to utilise our significant commissioning and start-up
expertise.
A significant award for Kentz in 2009 has been a five-year Global Framework Continuing
Engineering Service Agreement with ExxonMobil Global Services company. The
framework agreement covers the provision of engineering, design and technical support
services to ExxonMobil projects around the world.
In Sakhalin, both Sakhalin 1 and 2 developments are going through extended phases that
are being developed under their original license agreements. On Sakhalin 1, Kentz is
working on Exxon Neftegas’s second (Odoptu) and third (Arkutun-Dagi and Chayvo
expansion) phase developments. We have now started providing support and
construction services on the Chayvo Expansion Project following a recent award and
some preliminary engineering support services on Arkutun-Dagi. We are also providing
technical support and construction services, including commissioning and project
management personnel, to Sakhalin Energy (SEIC) on the Sakhalin 2 facilities.
Kentz was also awarded a US$25m shutdown services and operations support contract
with Exxon Neftegas Ltd, within the Sakhalin 1 Development Project, through its Russian
joint venture operating Company Kentz DEM LLC. The contract includes the provision of
all personnel, permits, equipment, transportation and front-end execution planning, as
well as the management of contractor and subcontractor resources. The shutdown is
scheduled to take place during the third quarter of this year.
In South Africa, we continue to provide construction and maintenance, shutdown and
turnaround services to Sasol facilities, including Natref, Engen, Hosef Fibres and Petro
SA. Kentz has been a constant presence on these projects since 2002. Several
shutdowns are in the planning phase for Engen and a number of Sasol plants.
In Indonesia, we are providing commissioning and start-up support personnel for the
20,000-bpd Cepu early production facility.
TECHNICAL SUPPORTSERVICES
The Technical Support
Services business unit
performed well during
2009 with growth of 6.0%
in revenues to US$190.5m
(2008: US$179.7m).
The Technical Support
Services business unit
backlog was US$130.7m
as of the end of December
2009.
32 Kentz Annual Report
In Kuwait, Kentz has a five-year PMC support services contract, which includes the
provision of engineering and consultancy resources and services to manage national oil
and gas projects.
Kentz is also providing completion and commissioning services for the Equate II
Petrochemicals Complex to support plant transition from construction through
completions and to start-up and production.
In Qatar, Kentz has been awarded a five-year contract to provide engineering support
services for Qatar Petroleum’s offshore operations for plant change requests and
engineering studies. The scope of the project includes all engineering disciplines inclusive
of process, mechanical, piping, structural, pipeline, electrical and instrumentation.
In Europe, Kentz provided commissioning support services for the LNG re-gasification
facilities at South Hook LNG in the UK and for Adriatic LNG, Italy. In Norway, during 2009,
we continued to support Aker Kvaerner offshore modular barge works for the Kashagan
Project in Kazakhstan.
Revenue by Business UnitBased on FY 2008 Based on FY 2009
US$643.4m US$704.7m
Geographical ReviewOver the past reporting period, we have increased our project execution capacity in our
core markets, especially in the Middle East, Australia and Southern Africa. In the Middle
East revenues have increased to US$445.6m (2008: US$406.0), making up 63.2% of
Group revenues. In Southern Africa, our revenues have increased to US$158.6m (2008:
US$131.1m) making up 22.5% of Group revenues. We have expanded our footprint and
we are in the process of delivering projects with core clients in three new countries – Italy,
Indonesia and Yemen.
Kentz is now established and operating in 26 countries worldwide, including the Middle
East, Southern Africa, Australia, Far East Russia, the Caribbean, South East Asia, the
USA, Canada and Europe.
The Middle East has been our strongest growth area and is still showing signs of
significant future expansion. New projects are being developed by both national and
international oil companies, especially in the UAE and Saudi Arabia for oil and gas
production and refining industries.
Above: Mary McGrath, IrishSenior Recruitment OfficerKentz employee for 31 yearsKentz world presence: Clonmel, Ireland
Over the past reportingperiod, we have increasedour project executioncapacity in our coremarkets, especially in theMiddle East, Australia andSouthern Africa. In theMiddle East revenueshave increased toUS$445.6m (2008:US$406.0), making up63.2% of Group revenues.
29% �Specialist EPC
�Construction
�Technical Support
Services
43%
28% 24%
49%
27%
outlook, our markets and sector focus 33
Elsewhere, developments in the Caribbean remain small, but existing projects allow us to
maintain a presence there. Our activities in this region support the potential to develop in
new areas such as Brazil, where we have now mobilised a small office as we focus on oil
and gas production for both the onshore and offshore developments. Petrobras has
announced its 2009 to 2013 business investment plan of US$174.4bn, which includes
US$165.4bn for upstream development, refining, gas, energy and petrochemicals
projects.
Sector Review During 2009, 82.9% of our revenue was derived from oil, gas and petrochemicals projects
(2008: 82.7%), 6.5% from our power operations, (2008: 0.7%), 2.4% from our metals and
mining operations, (2008: 11.1%) and 8.2% from other businesses including
governmental, infrastructure and sporting arenas (2008: 5.5%). In addition, we have a
joint venture business with Thiess in Australia, Kentz E&C Pty Ltd, for which the majority
of the work is for mining, minerals and metals clients. Our share of revenue accounted for
an additional US$36.2m during the period.
Revenue by IndustryBased on FY 2008 Based on FY 2009
US$643.4m US$704.7m
During 2009, 82.9% of ourrevenue was derived fromoil, gas and petrochemicalsprojects (2008: 82.7%) 6.5%from our power operations,(2008: 0.7%), 2.4% from ourmetals and miningoperations (2008: 11.1%)and 8.2% from otherbusinesses includinggovernmental,infrastructure and sportingarenas (2008: 5.5%).
Revenue by Region and Business Unit
53%
30%
8%
7%
2%
51%11%
1%
32%
�Oil & Gas
�Petrochemical
�Mining & Metals
�Power
�Other
5%
34 Kentz Annual Report
Client ReviewKentz continues to maintain a good balance and mix of clients with 48.2% of revenues in
2009 coming from end-user international and national oil companies (2008: 48.0%).
These clients include Shell, Exxon Mobil, Chevron, Sasol, BP, Saudi Aramco, Kuwait Oil
Company, Sipchem, Qatar Petroleum, Gasco, Adnoc and KNPC. A further 45.1% of
revenues came from leading engineering and project management companies (2008:
52.0%), such as Fluor, Foster Wheeler, Linde, GEA, Snamprogetti, Udhe and Bechtel, and
the remaining 6.7% from other sources. Key clients in the mining and metals sector
include Mittal Steel, Rio Tinto, Kenmare Resources, Xstrata and Anglo Coal.
Backlog and Revenue VisibilityBacklog is defined as the future work load on our books for the EPC, Construction and
Technical Support Services GBUs, comprising current contracts not yet completed and
new orders received. Backlog is not an audited measure and other companies may
calculate the measure differently.
The Group’s backlog of work as of 31 December 2009 was US$1,497.4m, up 49.2%
from US$1,003.8m as of 31 December 2008. We anticipate approximately US$661m of
the backlog will fall into 2010, an increase of US$141m compared to the backlog at 31
December 2008 for execution in 2009. The remaining US$836m will fall into 2011 and
beyond, which is an increase of US$352m.
During 2009 our total order intake to backlog was US$1,039.4m. The second half of 2009
was highly successful, with new orders and natural growth from existing projects
increasing by 44% (H1 US$425.8m and H2 US$613.6m) over the first half of 2009. An
important part of Kentz’s success has been its ability not just to win new business, but to
achieve growth from its existing contracts. Approximately US$206.7m of new orders were
generated from current contracts during 2009, most of which converts to backlog for
2010. The EBIT and PBT margin expectations for 2009 from this backlog are expected
to be generally in line with the margins we delivered in 2009.
Above: Mark Preston, AustralianProject ManagerKentz employee for 4 yearsKentz world presence: Queensland, Australia
The Group’s backlog ofwork as of 31 December2009 was US$1,497.4m,up 49.2% fromUS$1,003.8m as of 31 December 2008.
As of 31 December 2009,Kentz’s pipeline for newwork is valued in excessof US$2.91bn.
Backlog and Prospects by Global Business Unitat 31 December 2009
46%28%
3%
23%
Backlog by Region
� Middle East
� Africa
� Arctic
� ACE
SBM Calm Buoy Project, Adgra Dos Reas, Brazil
Walkway in “Galleria” town centre, King Abdullah University ofScience and Technology, Thuwal, Saudi Arabia
Indeni Refinery after replacement,Ndola, South Africa
outlook, our markets and sector focus 35
All business units have entered 2010 with significant backlog. Of the backlog at 31
December 2009, 55.9% came from EPC projects (31 December 2008: 31.5%),
35.4% came from Construction projects (31 December 2008: 51.5%) and 8.7%
came from Technical Support Services (31 December 2008: 17.0%).
However, it is important to note that our projection of future work stretches beyond
our backlog. At any given time we typically have a number of additional letters of
intent and new orders that are waiting to be converted to contracts. The combined
value of these currently sits in excess of US$43m.
Across all our regions we have a number of prospective projects that are under
development in bidding and proposals. As of December 2009, Kentz’s pipeline for
new work is valued in excess of US$2.91bn. 47.2% of these prospects are EPC
projects, 38.5% are Construction projects and 14.3% are Technical Support Services
projects. In addition to the above, we are also involved in a number of strategic
prospects that are being developed by our clients and are in pre-investment stage.
Overall our visibility of future work has several layers, and this gives us confidence for
the future.
Growth Strategy Including Acquisitions and BusinessOpportunitiesWe continually monitor trends within our industry and evaluate their potential impact
on our regions and sectors. Our understanding of the ever-changing industrial
environment means that we are able to enhance and improve the services that we
offer to our clients on an ongoing basis.
We are building on the success of our GBU roll-out to challenge the new
opportunities within the oil and gas production facilities; from marginal and captive
onshore and offshore field developments across Africa, through to extensive major
field developments such as those in Brazil and Iraq.
Our GBUs have also enhanced the continued expansion within our core regions
through the removal of regional operational bottlenecks. This will provide expansion
opportunities within many of our operation centres, including Saudi Arabia and
Canada.
Whilst the Americas have in the past been a minor revenue centre for the Group, we
will create a new regional development focus during 2010 to take maximum
advantage of our new global operations.
We still plan to complete an acquisition in the near term within the upstream oil and
gas industry. We are in discussions with potential targets, and our priority is finding
an entity that will provide a good strategic investment as well as creating value for our
shareholders.
We will continue to evaluate further joint venture and alliance opportunities with other
industry participants where we perceive such partnerships can reduce and diversify
risks, provide greater cost efficiency, increase the number of opportunities that can
be pursued, and capitalise on the client relationships of each party.
36 Kentz Annual Report
our HSE performance
Above: Arrol Millette, TrinidadianSupervisorKentz employee for 7 yearsKentz world presence: Trinidad, West Indies
95% of projects completed without LTI
79% of projects completed without
recordable incident
50%reduction in first aid cases
816average number of attendees at
HSE training programmes during
2009
66%increase in reporting of
near-misses
62%of management inspections
completed by members of the
Management Executive
Committee
Health and safety remains at the heart of everything we do at Kentz. We believe all
employees, whether on site in Far East Russia or in the planning office in Doha, should
have a safe and orderly working environment. The only way to achieve this is to instil the
highest held Group standards in every individual working for Kentz.
Kentz continues to designate time and resources to refining our values, disseminating
them across the Group, training personnel on the process and procedures, implementing
management checks and inspections, and making our safety statistics available for all to
review in order to empower people to take safety seriously in every area of their
working life.
During 2009, Kentz completed 34.8 million man-hours of work with a Total Recordable
Incident Rate (TRIR) of 0.17, a measure of the rate of recordable workplace injuries,
normalised per 100 workers per year. Our target is always to achieve an incident-free
working environment, but this remains an industry-leading TRIR, marginally up from 0.12
in 2008.
In 2009, Kentz worked on 121 projects without a recordable incident; defined as a fatality,
lost time accident, restricted injury duty and/or a medical case. This equates to 79% of
our projects being incident and injury free.
The measure of Lost Time Incidents (LTIs) does not include medical cases, of which there
were 18 at Kentz during 2009, the equivalent of 95% of our projects proceeding during
the period without a lost time incident.
In August 2009, the project team at the OGD III Project in the United Arab Emirates
completed over eight million man-hours over three years without a recordable incident, a
major achievement and a credit to their teamwork. The HSE leadership shown on this
project is characteristic of the leadership culture that has evolved within Kentz over the
past number of years. Elsewhere in Qatar we also completed over seven million man-
hours on the Pearl GTL E&I Services Project at Ras Laffan Industrial City without a lost
time accident.
During 2009 we completed the roll-out of Kentz’s Best Practices DVD. This DVD seeks to
outline the best practices that are being used on Kentz’s projects around the world and
link these back to our “9 habits of highly effective HSE leaders”. The DVD provides a
valuable tool to supervision and management teams on our projects to ensure an
incident- and injury-free site.
our HSE performance 37
Kentz 9 Habits of Highly Effective HSELeaders
Accept & Embrace Our HSE VisionEmbrace, believe, walk, talk and consistently demonstratecommitment to achieve our HSE vision.
Put Health & Safety First
Continuously reinforce the primary core value of Health &Safety so that this value takes priority in our businessobjectives.
Take Personal Responsibility and beAccountable
Ensure active participation throughout our organisation andthose of our partners and subcontractors at all levels, sothat personal responsibility and accountability for HSE isthe creed, and encourage all our people to “Be yourBrother’s Keeper”.
Express and Foster Genuine Care
Remember that everyone involved in our business is anindividual, with a name, a family and a future, and take careof them accordingly. Foster a culture of mutual carethroughout our organisation and those of our partners andsubcontractors.
Be CredibleBe honest, dependable and consistent, admitting mistakeswhen they occur and asking for ideas for improvement.Continuously demonstrate knowledge and awareness ofHSE standards.
Communicate Often and EffectivelyUnderstand, appreciate and continuously promote HSEleadership responsibilities, policies and procedures throughall means possible. Continuously ask others what they arethinking, and listen to and respect concerns raised byothers.
Give RecognitionVisibly acknowledge and express appreciation for goodHSE behaviour, and implement, fund and participate inrecognition programmes.
Provide Resources & TrainingRealise your training goals and needs, and strive to providethe best possible resources and facilities along withstructured craft & HSE training.
Adopt a Systematic ApproachEstablish a balanced score card of relevant andconstructive leading and trailing indicators to benchmark,measure and trend HSE performance. Constantlychallenge the effectiveness and relevance of the HSEsystems, procedures and programmes for continuousimprovement.
Senior Management InspectionsDuring the year, members of our Management
Executive Committee completed over 36 field
inspections on projects around the world. The field
inspections include an in-depth discussion with the
project managers about the HSE culture on the
project and aimed to consider the commitment and
credibility of the project management team, and the
rewards and recognition programmes being
implemented on site. In addition to these discussions,
there is a 77-point inspection guide for the site
walkabout.
The main objective of the inspections is to ensure
management continue to adopt the “9 habits of highly
effective HSE leaders” and implement these into their
everyday working practices.
The chart below displays the countries in which senior
management inspections have taken place (figure 1).
Figure 1: Countries of Inspections
Ireland
Saudi Arabia
Abu Dhabi
Qatar
South Africa
Russia
Italy
Thailand
Australia
38 Kentz Annual Report
Above: James Clarke, BritishGroup Strategic Development ManagerKentz employee for 18 yearsKentz world presence: Houston, Texas, USA
Back 2 Basics (B2B) ProgrammeIn 2009 we offered over 95 HSE training courses on our projects, covering topics such as
general inductions, site orientation, leadership behaviours, fire safety and working at
heights. The majority of these courses are provided in-house with our resident training
officers. However, at our Medupi Project in South Africa, for example, we employed
external training consultants to run our “working at heights” course due to the nature of
the risks involved.
Within the B2B programme there, we have 16 Life Critical Activities (LCA) training
programmes which, depending on the scope of the project, are mandatory on all projects.
During the year we trained over 3,000 employees in electrical safety and trained over 350
drivers in defensive driving techniques.
Our Children, Our FutureThis year’s theme for our annual HSE calendar competition was “Safety in the Home”.
The idea behind the theme is to encourage employees to transfer HSE practices from the
project to the home and pass them on to future generations The competition is open to
all employees, their children, nieces, nephews and grandchildren.
This year’s HSE Calendar cover winner was Neil Ivan M Mabansag from Qatar, shown here with Bill Nucom, HSE Country Manager, Qatar, and James Cassin, Group QA/HSE Manager
Some of the lucky winners’ submissions from the many Kentz offices around the world
Kentz Pearl GTL Team, Qatar
our HSE performance 39
SOCKSOne of our initiatives for 2009 was the development and implementation of the Safety
Observation Card System of Kentz (SOCKS) programme. The SOCKS programme is a
behaviour-based safety programme, observing the behaviour of our workforce in relation
to use and maintenance of personal protective equipment (PPE), working postures, use
of tools, supervision interaction and competence to perform a task safely. Since the
programme started in February 2009 the percentage of our employees observed working
within these guidelines safely has improved from 96% in March to 99% in December.
Figure 2 depicts the percentages observed working safely on a monthly basis and figure
3 depicts the number observed working unsafely.
The results from the observations are reviewed monthly by the Management Executive
Committee. Any unsafe behaviour identified is followed by corrective action and
implemented through the toolbox talks and revised training programmes and rolled out to
all our projects.
The charts below highlight the use and condition of various types of personal protective
equipment (PPE). Figure 4 shows the overall percentage of people using their PPE
correctly and also maintaining the PPE properly. Other areas observed are the
supervision, work posture, training, tools and equipment.
Figure 3Figure 4: Personal Protective Equipment (PPE) – Safeand Unsafe percentages, month by month
Figure 5: Presence and Communication of Supervision– Safe and Unsafe percentages, month by month
Figure 6: Work Postures – Safe and Unsafepercentages, month by month
Figure 7: Training – Safe and Unsafe percentages,month by month
Figure 8: Tools/Equipment – Safe and Unsafepercentages, month by month
Figure 2
40 Kentz Annual Report
Above: Jacob Mogano, South African, ZuluBoiler Maker SupervisorKentz employee for 27 yearsKentz world presence: SAS Reactor Project, South Africa
Balanced Score CardIn 2009, the HSE department identified the critical success factors (CSFs) that contribute
to the overall goal and vision of the Company. The corporate Balanced Score Card (BSC)
was developed and has identified the following three CSFs; safe workplace, senior
management inspections and B2B training. In determining a safe workplace, we use the
following sub measures: performance HSE indice (PHSEI), near-miss reporting,
implementation of the SOCKS programme, regional and country manager bi-monthly
inspections, the monthly health campaign and head office environmental programmes.
We increased our overall reporting of near-miss incidents by 66% compared to 2008. The
increase in near-miss reporting allows us to further improve the working environment for
all our employees.
During the year each country developed and implemented a health campaign on a
monthly basis. The campaign focused on general health issues and also health issues
that may arise from construction work. As part of these monthly health campaigns, we
also rolled out our H1N1 virus awareness and isolation programme. The awareness
programme is based on the advice and guidance issued by the World Health Organisation
and local health ministries in Kentz’s countries of operation. Some of the other campaigns
focused on malaria control, the heart and food safety.
Every office and project within Kentz conducts an environmental impact assessment and
based on this, Group environmental objectives are established.
The results for our overall HSE BSC are shown below.
Some of the Kentz employees who worked on the OGD III Project, Abu Dhabi
A Year in NumbersThe number of man-hours worked by Kentz and our subcontractors was 34,879,673.
Kentz executed over 32 million of these man-hours using our own workforce.
The average score of our Performance HSE Indices for 2009 throughout all our projects
and offices was 96%.
Average number of attendees in HSE training course was 816.
Safety Leadership AwardThis year the CEO Safety Leadership Award was presented to Garry Ford, Project
Manager on the Pearl GTL (E&I Services) Project in Qatar. The project is currently still in
progress and at the end of 2009 had completed over seven million hours without a lost
time accident. Garry has worked for Kentz on projects in Trinidad, Russia-Sakhalinsk
and Qatar.
Notices & Breaches and Prosecutions Kentz received NO statutory notices and/or NO prosecutions related to HSE in 2009.
our HSE performance 41
Moma Mineral Sands Project Team, Mozambique
Hugh O’Donnell presents Garry Ford with CEO SafetyLeadership Award
Rob Fietz, HSE Co-ordinator, pictured at SafetyCabinet, Thiess Kentz Office, Perth, Australia
Saudi Kayan Safety Team, Saudi Arabia
42 Kentz Annual Report
world reach 2009
Suncor Voyageur Oil SandsTechnical support services to client’s project team, Alberta, CanadaImperial Oil, Kearl Lake Oil SandsConstruction execution planning for utilities,Alberta, CanadaImperial Oil, Kearl Lake Oil SandsEngineering and procurement for site-widetelecommunication systems, Alberta, Canada
Aviva StadiumProvision of EPC services for stadium systems andelectrical services at new world-class 50,000-seatstadium, Dublin, IrelandWaterford Regional Hospital Design, procurement and construction of specialistelectrical and telecommunications systems, Waterford,IrelandFÁSMaintenance services, Waterford and Wexford, IrelandGalway Clinic Accommodation Wing and Day Care CentreElectrical and IT/communication scope for theaccommodation wing and day care extension at theGalway Clinic, Galway, IrelandEricsson - Comms 3 Optimisation ProjectCivil, mechanical and electrical works on data centreupgrade for Ericsson in Athlone, Ireland
Fluor Kuwait, PMCFive-year project management support services contract for Fluor Kuwait at the Kuwait Oil Company, KuwaitKuwait Paraxalene Production Company (KPPC)Supply of engineering support staff to KPPC on theAromatics Complex as part of the de-bottlenecking andproduction enhancement team at Shuaiba, KuwaitKuwait National Petroleum Co. (KNPC) Consultancy services to KNPC is in relation to performanceand the reliability study of medium voltage switchgear at theMina Al-Ahmadi Refinery, KuwaitSunkyong Engineering & Construction Company (SKEC)Supply of instrumentation testing and commissioning teamsto SKEC, for the completion, testing and commissioning ofthe New Gathering Centre 24 Project, at Kuwait OilCompany, Kuwait
Rio Tinto – (QIT) Mineral Sands Project General construction services, Madagascar
Kenmare Resources – Moma Sands Project General construction services, MozambiqueVale – Moatize Coal Preparation Plant (CPP) Project Steel erection, mechanical, electrical and instrumentationinstallation, including materials handling, piping supply andfabrication, Tete, Mozambique
Kashagan Project, Kazakhstan Specialist commissioning services to Aker Solutions, Egursund, Norway
Petro SA Fire damage restoration, Mossel Bay, South AfricaComplete E&C removal and reinstatement, with sub-contractor management andco-ordination (scaffolding, piping, structural steel, mechanical, painting, insulation,fire proofing, civils, grit blasting, HP cleaning etc.)Hulamin 210 ExpansionEPCM for the complete electrical & instrumentation excluding installation,Pietermaritzburg, South AfricaSasol Secunda, 4th Landlord ProjectFull structural steel, mechanical, electrical, instrumentation and piping for 4th trainlandlord at Sasol Secunda for Engineering House, Foster Wheeler, South AfricaRichards Bay Minerals Tails Treatment Plant Supply and installation of a belt conveyor system on the Richard’s Bay MineralsTailings Treatment plant, Richards Bay, South Africa Natref Refinery Mechanical & piping shutdown of hydro-cracker, hydrogen and sulphur units atinland crude refinery, Sasolburg, South AfricaSasol Various mechanical shutdowns completed in the refinery, cat-cracker and syntholunits of the western and eastern factories, Secunda, South Africa
Engen Refinery Multiple mechanical, electrical, instrumentation and piping shutdowns in the Merox,FCC, sulphur recovery and alkylation units of the crude refinery at Engen in Durban,South AfricaPetroSAMechanical, electrical, instrumentation and piping shutdowns with the refining,reforming and FA platform of the LNG facility located in Mossel Bay, South Africa.HosafMechanical, electrical, instrumentation and piping de-bottlenecking, expansionproject and shutdown at Hosaf chemical facility located in Durban, South AfricaGautrain Light Passenger Railway Complete EPC on the mechanical tunnel ventilation system and the STMS & SAMScontrol systems, Gauteng, South Africa. Medupi Power Station Supply, manufacture and construction of the six direct air-cooled condensers andassociated equipment on the new Medupi Power Station for GEA Lephalale, SouthAfrica Goedegevonden GGV Stackers for Xstrata CoalComplete EPC and start-up on a turnkey basis Ogies, South Africa
Atlantic LNG Co. of Trinidad and TobagoE&I construction and commissioning services, Point Fortin, Trinidad and TobagoPetroleum Company of Trinidad & Tobago Ltd (Petrotrin) Gasoline OptimisationProgramme, NHT/CCR ProjectE&I construction and pre-commissioning services, Point-a-Pierre Refinery, Trinidadand TobagoPetroleum Company of Trinidad & Tobago Ltd.(Petrotrin) Gasoline OptimisationProgramme, Offsite & Utilities, Water Treatment Facilities, ProjectE&I construction and pre-commissioning services, Point-a-Pierre Refinery, Trinidadand TobagoPetroleum Company of Trinidad & Tobago Ltd (Petrotrin) Gasoline OptimisationProgramme, Alky/Acid Plants, ProjectE&I construction and pre-commissioning services, Point-a-Pierre Refinery, Trinidadand TobagoEOG ResourcesE&I works on EOG offshore production platforms, Trinidad and TobagoPetroleum Company of Trinidad & Tobago Ltd (Petrotrin)Various E&I construction and commissioning services (new laboratory project,FCCU upgrade project, API separator, lighting upgrades, new warehouse facility)Trinidad and Tobago
Total Indeni Refinery Stack rehabilitation and maintenance contract, instrumentmaintenance contract on Indeni Refinery, Zambia
South Hook LNG Terminal Provision of technical commissioning and assettransfer support services to ExxonMobil on itsSouth Hook LNG Terminal, Great Britain – Wales
Adriatic LNG Offshore TerminalMulti-discipline completions and commissioningservices of offshore LNG terminal for Terminale GNLAdriatico S.r.l. – ExxonMobil (45%), Qatar TerminalsLtd (45%) and Edison SpA (10%), Adriatic Sea, Italy
Samir RefineryProject management and technical support forcommissioning of new diesel manufacturing plant, Morocco
BP/SangachalCommissioning services, Baku, Azerbaijan
world reach 2009 43
Thammama “C” Instrumentation and Control SystemUpgradeProvision of EPC services for control systems upgrade for GASCO, Abu Dhabi, United Arab Emirates OGD III ProjectE&I, telecommunications and SCADA installation works for Eastern Bechtel, Abu Dhabi, United Arab EmiratesADGAS Plant 42/43 Control System Upgrade EPC Services for Control Systems, Abu Dhabi, United Arab EmiratesReplacement of LV Distribution Boards, Zirku Island Provision of EPC services for ZADCO. Abu Dhabi, United Arab EmiratesGasco Compressor Upgrade – Ruwais EPC upgrade and relocation of turbine control systems forrefrigeration compressors for both Train 1 and Train 2 NGLfractionation plant, United Arab EmiratesADGAS Storex Control System UpgradeThe upgrade of the Storex control room systems andassociated electrical and field instrumentation devices onDas Island, Abu Dhabi, United Arab EmiratesZADCO Upper Zakum Field Wellhead Platform 15 – NewWater Injection PumpEPC scope for the installation of a new water injectionpump on Wellhead Platform15, Abu Dhabi, United ArabEmirates
Rapid Growth Project 5 – Yandi Overhead LinesSupply and installations of 33kV power line and fibreoptic cable, Western AustraliaRapid Growth Project 5 – Yandi North West VillageSupply and installation of the high and mediumvoltage and communications infrastructure for theYandi North West Village, Pilbara Region, WesternAustraliaPluto LNG Onshore Site AInstallation of underground cabling on Pluto site “A”Supply and installation of all duct banks and roadcrossing, testing of all cabling, pre-installation andpost-installation, Karratha, Western AustraliaPluto Site BElectrical and instrumentation works #1 Site B –process area Electrical and instrumentation, installation and testingwork associated with the LNG train, fractionation unit,power generation, nitrogen removal unit, heated waterand fuel gas units of the LNG plant, Karratha, WesternAustraliaGorgon Construction VillageDesign and construct contract for a state-of-the-art3,300-person construction village. Separate potablewater and fire systems will also be provided by thejoint venture, Barrow Island, Western Australia
Sakhalin 2 Project, Sakhalin Energy InvestmentCompany – Various FacilitiesConstruction and completions management servicesfor SEIC at Lunskoye OPFMulti-discipline management and execution supportservices for the mechanical completion andcommissioning of the Booster Station at Gastello Maintenance and shutdown services at the LNGTerminal at Prigoradnia, Sakhalin Island, RussiaSakhalin 1 ExxonMobil Neftegas OnshoreProcessing Facility (OPF)Civil, mechanical, structural, piping, electrical andinstrumentation works for the Odoptu first stageproduction facility, Odoptu, Sakhalin Island, RussiaSakhalin 1 ExxonMobil Neftegas OnshoreProcessing Facility (OPF)Commissioning management and execution servicesfor the Odoptu first stage production facility, Odoptu, Sakhalin Island RussiaSakhalin 1 ExxonMobil Neftegas Chayvo OPFShutdownShutdown management, planning and executionservices for mechanical vessel inspection shutdownas well as feed-off and start-up operational support,Chayvo, Sakhalin Island, RussiaSakhalin 1 Arkutun Dagi – FEED SupportProvision of multi-discipline engineering team tosupport Worley Parsons Houston office for FEEDstudy for Arkutun Dagi field, Sakhalin Island, Russia.Sakhalin 1 ExxonMobil Neftegas ChayvoOperations and MaintenanceMulti-discipline support services for operations,maintenance and modifications works on ChayvoOPF, Sakhalin Island, Russia
Banyu Urip Early Production Facility Contracted by Mobil Cepu Ltd (MCL)to provide technical support servicesto the main contractor (Exterran) forthe mechanical completion, pre-commissioning, commissioning,and start-up services at the BanyuUrip EPF, Cepu, Indonesia
Bintulu Offshore Receiving TerminalCompletions and commissioningservices consisting of mechanical,electrical and instrument supervisorsand technicians to assist constructioncompletion and carry outcommissioning activities for theBintulu Offshore Receiving Facility forphase 1 of the Sarawak GasDevelopment Project, Malaysia
Sipchem APU Engineering, procurement and constructionservices for the Sipchem APU, Jubail, SaudiArabiaPetrokemya Isopentane Project EPC services for piping, equipment, electrical (lowvoltage), and instrumentation, civil, structural, firefighting and deluge system, Jubail, Saudi ArabiaSipchem Jubail Acetyls Complex Pipeline, PortFacility and Export PipelinesEPC services for product pipeline, port facilitiesand ship loading at KFIP, Jubail II Industrial City,Saudi ArabiaSaudi Kayan – K020 – HV Electrical InstallationOffplot communication works, Jubail, Saudi Arabia Saudi Kayan – K034 – System Integrator and LoopCheckingSaudi Kayan – K070 – Electrical EquipmentInstallationSaudi Kayan – K088 – Install Backbone Cabling,Jubail, Saudi ArabiaNCP – Greenfield Project Electrical & instrumentation construction works forWorley Parsons, Jubail, Saudi ArabiaKayan KBR Olefins ProjectConstruction management and support services,Jubail, Saudi Arabia
Gorgon LNG Telecommunications PackageComplete EPC scope and five-year support andmaintenance of the telecommunications andelectronic systems for the Gorgon LNG Project in allproject locations in Western Australia including BarrowIsland, Dampier and Perth, Western AustraliaGorgon Temporary Construction Buildings – DecmilThe installation of high voltage cables for above andbelow ground works. It will also include the installationof substations, ring main units and distribution boards.Low voltage cables will also be installed as the mainelectrical power supply for all the temporary buildings,which will be occupied during the construction periodof 2010-2011, Barrow Island, Western AustraliaThiess Degremont Victorian Desalination Project Installation and testing of high voltage cabling,switchboards, transformers, UPS systems, instrumentcontrol system cabinets, motor control stations, fieldpanels, lighting and small power, trace heating,process instrumentation, fire and gas detection andprotection devices, above ground cabling, earthingand bonding, as well as the recovery and terminationof cables installed underground, Melbourne, Victoria
Kayan TR Phenolix Project Construction management and support services,Jubail, Saudi ArabiaKayan Sabic Olefins PMT ProjectConstruction management and support services,Jubail, Saudi ArabiaRoyal Commission – Jubail II InfrastructureDevelopment Engineering studies, FEED, preparation of designdrawings and specification and bid packages forinfrastructure development in Jubail II IndustrialCity, Saudi ArabiaSipchem General Engineering ServicesProvision of conceptual and detailed design andconstruction services for Sipchem, Jubail, SaudiArabiaSaudi Aramco Shell Refinery (SASREF) Design engineering and drafting services, Jubail,Saudi ArabiaS-Chem – Saudi Chevron Phillips CompanyDesign Engineering and Drafting ServicesNew styrene loading systemsDetail engineering for new styrene loading system Berth 41Jubail Export Refinery/TOTAL – ProjectManagement ConsultancyEngineering for TOTAL man camp and PMT Support, Jubail, Saudi Arabia
Sidra Medical and Research Centre Design and construction of the electrical systemson Sidra Medical & Research Centre (SMRC)situated in Qatar Foundation’s Education City, Qatar WOQOD (Qatar Fuel) Receiving & LoadingFacilities EPC of receiving and loading facilities for LaffanRefinery Ltd Company, QatarQatar Petroleum Dukhan Two GlycolRegeneration TrainsEngineering, procurement, installation andcommissioning for two new glycol regenerationtrains at Fahahil Stripping Plant in Dukhan, QatarQatar Petroleum Offshore Engineering andConsultancy Services for Plant ChangeRequests and Miscellaneous EngineeringSupport Services Three-year contract for engineering consultancyservices for plant change requests andmiscellaneous engineering support services, QatarShell Pearl GTL – Utilities and offsites Electrical and instrumentation construction and commissioning services for the EPCMcontractor JK JV (JGC and KBR), Ras Laffan Industrial City, Qatar
Shell Pearl GTL – Air Separation Units Electrical and instrumentation construction andcommissioning services for the EPC contractorLinde, Ras Laffan Industrial City, QatarRas Laffan Olefins Complex Electrical and instrumentation completions andcommissioning services for the EPC contractorTechnip France, Ras Laffan Industrial City, QatarQatargas Common Lean LNG Loading Facilities– Berth 6 Installation and commissioning electrical,instrumentation & telecommunications works for theQatargas CLLNG Loading Facilities for the EPCMFluor Mideast Ltd Qatar Fertiliser Company (QAFCO) V AmmoniaTanks Electrical and instrumentation installation andcommissioning works for the EPC contractor, CB&I Shell Pearl GTL – PI-077 Qatar General services work associated with Pearl GTL,Ras Laffan Industrial City, QatarShell Pearl GTL – Commissioning Support Support for Chiyoda/HHI on Package C4, feed gaspreparation, Ras Laffan, Industrial City, Qatar
Ras Gas Trains 6 and 7Commissioning support for the PMT, Ras LaffanIndustrial City, QatarQatarGas Common Sulfur Project CSP Commissioning services for Washington GroupInternational, Ras Laffan Industrial City, QatarCB&I – Pearl GTLCivil construction services, Ras Laffan Industrial City,QatarQatarGas II, III, IV Electrical and instrumentation commissioning supportfor QatarGas operating company expansion and start-up team, Ras Laffan Industrial City, QatarRasGas Common Offplots Projects (COP)Construction management support for the EPCMcontractor Fluor, Ras Laffan Industrial City, QatarQChem II – High Density Polyetheylene (HDPE) andNormal Alpha Olefins (NAO) Construction and commissioning support services forthe EPC contractor, Ras Laffan Industrial City, QatarQatalum Smelter Installation support for NKM Noell Installation support for Kempe Engineering Services
OMV Onshore Production FacilitiesEPC civil, structural, mechanical,piping, process, electrical controlsystems, telecommunications scopefor 30,000-bpd oil processing facility,Yemen
44 Kentz Annual Report
some of our 2009 and ongoing projectsSpecialist EPC
Gorgon LNG Project, Gorgon LNG Construction VillageWestern Australia.Design and construct contract for a state-of-the-art 3,300-person constructionvillage.
Engineering, design, procurement, project management and multi-disciplineconstruction services for the 3,300-person construction village to support the GorgonGas Field development.
Project Value: US$378m (Kentz 1/3 share)
Gorgon LNG Telecommunications PackageElectrical, instrumentation, telecommunications and IT scope.
Complete EPC scope and five-year support and maintenance of thetelecommunications and electronic systems for the Gorgon LNG Project in all projectlocations in Western Australia including Barrow Island, Dampier and Perth.
Project Value: US$125m
OMV Onshore Production Facilities, Yemen. EPC for a 30,000 – bpd oil central processing facility (CPF).
Engineering, procurement, construction and commissioning of the 30,000-bpd oil CPF for civil, structural, mechanical, process, piping, electrical, control andtelecommunications systems work scopes for OMV (Yemen Block S2) explorationGmbH at Al Uqlah, Yemen. The project comprises oil receiving, processing andstorage facilities for three x 10,000 bpd trains, including all associated utilities, inaddition to permanent operations and maintenance camp and office facilities for client.
Project Value: US$146m
Laffan Refinery, Qatar. EPC scope of work for multi-discipline project.
The project scope is to provide a main fuel truck gantry facility for WOQOD. Also thepipeline to WOQOD tanks at Ras Laffan jetty. Both lines will come from the LaffanRefinery tank farm. The engineering and procurement phase which will be executedentirely from Kentz office in Doha, Qatar.
Project Value: US$85m
Gautrain Tunnel Ventilation, STMS & SAMS Control Systems, South Africa. Contract A: Mechanical ventilation for tunnels.
Complete EPC and start-up on a turnkey basis.
Contract B: STMS & SAMS control systems.
Complete engineering, procurement, construction and start-up on a turnkey basis ofthe whole of the station and tunnel management system for the complete Gautrain.
Project Value: US$23m
some of our 2009 and ongoing projects 45
Construction
Shell Pearl GTL, Qatar. Electrical and instrumentation scope for utility and flare areas, materials managementand commissioning support.
Supervision, installation, testing, pre-commissioning and commissioning support forthe utilities electrical and instrumentation scope of work for Qatar Shell GTL PearlProject, Ras Laffan.
Project Value: US$136m
Eskom Medupi Power Station, Lephalale, South Africa. Steel, mechanical and piping scope.
Supervision, installation, pre-commissioning, commissioning and testing of the sixdirect air-cooled condensers and associated equipment on the power station. Shopdetailing design, supply and fabrication of 26,000 tonnes of structural steel work,11,000 tonnes of ducting, 1,800 tonnes of piping and 40,000 tonnes of mechanicalequipment.
Project Value: US$250m
Moatize Coal Project, Mozambique. Coal preparation plant and the materials handling system.
The scope of work includes the structural (steel), mechanical, electrical,instrumentation and piping erection work for the coal processing plant.
Project Value: US$69m
Pluto LNG Project, Pluto LNG Onshore E&I – Site B Process Contract, Western Australia. Underground cabling scope for a “greenfield” LNG liquefaction plant.
Installation and testing of high voltage cabling, switchboards, transformers, UPSsystems, instrument control system cabinets, motor control systems, field panels,lighting and small power, trace heating, process instrumentation, fire and gasdetection and protection devices, above-ground cabling, earthing and bonding, aswell as the recovery and termination of cables installed underground.
Pluto LNG – Onshore Site-Wide Specialist InstrumentationSupervision and execution of the onshore site-wide electrical and instrumentationtesting and commissioning scope.
Combined Project Value: US$107m
Saudi Kayan Petrochemical Contract, Saudi Arabia. Combined Saudi Kayan Petrochemical Plant at Jubail, Kingdom of Saudi Arabia.
Electrical and associated civil scope for 230KV and 34.5KV substations at Jubail.Systems integration and loop checking scope for Petrochemical Plant at Jubail.Electrical and associated civil scope for equipment installation and associated worksfor substations 70, 70A, 72, 72A and 83. Instrumentation, telecommunications andcivil scope for the backbone cable installation.
Project Value: US$42m
Chayvo OPF Shutdown, Sakhalin. Mechanical vessel inspection shutdown as well as production feed-off and start-upsupport operations.
Shutdown management, planning and execution services for mechanical vesselinspection shutdown including nitrogen purging and steaming, as well as other feed-off and start up operational support services. The Chayvo OPF is locatedapproximately 600km north of Yuzhno on Sakhalin Island, Russia and is the first everfull facility shutdown on Sakhalin.
Project Value: US$25m
PetroSA Shutdown, GTL Plant & FA Platform, South Africa. Complete scope of services for the October 2009 shutdown at the refinery andreformer units of the GTL plant and the FA platform offshore.
Scope development, prefabrication, preparation and planning for the October 2009shutdown at the GTL facility in Mossel Bay and the FA platform locatedapproximately 80km off the coast of Mossel Bay, South Africa. Scope of work includes mechanical maintenance including statutory and off-lineworks, electrical maintenance, instrumentation, piping repairs and vessel repairs.Work on over 172 pressure vessels, 140 heat-exchangers and fin-fans, 18 processcolumns and 1,072 valves.
Project Value: US$8m
Kuwait Oil Company (KOC) PMC, Kuwait. Provision of support services to Fluor Corporation.
Kentz is providing engineering and management services support to Fluor Corporationfor the co-ordination, planning, front-end design, engineering, tender evaluation,contracting, project controls, contract administration, construction management andtraining of KOC project staff.
Project Value: US$90m
46 Kentz Annual Report
Technical Support Services
Right: The prestigious Shell Pearl GTL Project in Qatar
47
our people48 Kentz Annual Report
Above: Rafiga Asgarova, AzerbaijaniPA & HR Co-ordinatorKentz employee for 1 yearKentz world presence: Baku City, Azerbaijan
During 2009 the global economic situation eased capacity constraint in the industry asthe availability of competent human resources generally continued to improve. Qualifiedand experienced people were more readily available across the discipline spectrum andeased the pressure to retain skills within the Group.
The Corporate-led HR Strategy embarked upon in 2007 has achieved its strategic aim of“the right person, in the right job at the right time”. The training and development initiativeshave started to achieve the end goal of providing future leaders for the Group andemployees that have been through the various training and development programmes arebeginning to take their places in management roles.
The recruitment process based on the Taleo System has allowed us to source topcandidates from across the globe. The strategy continues to be based on the imperativethat in order for the Group to grow and diversify, it has to continue to attract and retainthe right people with the right skills, experience and attitude to embrace our values andworld-class operational, health, safety and environmental standards. The Group retentionstrategy during 2009 continued to be successful, albeit with assistance from the globaleconomic situation, and can be gauged by the low turnover among the core managementgroup, which at just 5% was down from 6% in 2008 and continues to be well below theindustry average.
The average length of service of our top 100 core management as at the end of 2009 was16 years, slightly down on the 17 years of the previous year mainly due to the increasedrecruitment of highly skilled and experienced individuals into the Group. Of this coremanagement, 31% have 20 years or more service with the Group compared to 34% in2008, marginally down due to the retirement of long-serving employees. During 2009 wemaintained approximately 10,500 employees, on average, with more than 35 differentnationalities working in 26 different countries.
During 2009, 13 of the 54 engineering and quantity surveying graduates recruited in 2007and 2008 completed the Supervisory Management Development Programme (SMDP).This programme is intended for new graduates hired into the Group and is a 24-monthprogramme. During 2009 a further 24 graduates were recruited and placed on the SMDP.The Mentoring Programme continues to be the foundation on which the graduatedevelopment programmes are based and during 2009 a further six mentors were trainedin the Group.
For employees who have shown potential and ability to progress into middle and seniormanagement positions, the Executive Diploma in Leadership and Management (EDipLM)programme continues to be an invaluable learning experience. The programme aims todevelop management and leadership skills in employees who have been identified asfuture managers and leaders in the Group. At the end of 2009, 42 employees have
16 yearsthe average length of service for the
top 100core management
31%of top 100 core management have
20 years or more service with the Group
over35different nationalitieswithin our 10,500 employees
working in 26 different countries
84 people have been throughthe long-term in-house leadership development
training programmes
Executive Diploma and MBA graduates 2009
successfully completed the programme and in September 2009, 16 employeesembarked on the 2009/2010 programme. Of the 42 employees who have completed theprogramme to date, 62% have been promoted into more senior roles subsequent tocompleting the programme. During 2009 a review of the EDipLM was undertaken andcurrently a reaccreditation and academic validation exercise is being undertaken withNottingham Trent University in the UK, the outcome of which will be the introduction of aDiploma in Management and Leadership accredited by the university – this diploma willreplace the EDipLM. The first programme under Nottingham Trent University willcommence in the last quarter of 2010.
A number of employees are currently registered for external and internal MBAprogrammes. Four are registered with Manchester University and four are on the internalMBA accredited by the Business School Netherlands. During 2009 two employeesobtained their internal MBAs. As with the EDipLM, a review and academic validationexercise was undertaken during 2009 on the internal MBA with a view to reaccrediting thedegree through Nottingham Trent University. This accreditation and academic validation iswell advanced and by October 2010 a Master of Science in Management and Leadershipaccredited by Nottingham Trent University will replace the current internal MBA. TheMasters degree is intended as a follow-through on the Diploma in Management andLeadership and the first group will commence on the programme in 2011.
The Skills Enhancement Courses (SECs),which were developed in-house tosupplement the SMDP, EDipLM and MBAinitiatives, were utilised in the Middle East,South Africa and the Arctic region. A totalof 182 employees attended these coursesduring 2009. Business units and functionaldivisions within the Group continued tosend employees on various externaltechnical and functional trainingprogrammes.
our people 49
Thiess Decmil Kentz (TDK) JV Gorgon Team,Australia
Saudi Kayan Project Management Team, Saudi Arabia
Kentz Serba Bintulu Offshore ReceivingFacility Project Team, Malaysia
50 Kentz Annual Report
During 2009 the Group’s degree and apprenticeship support programme has continuedto grow. In Ireland 65 apprentices were contracted and eight were contracted in SouthAfrica as compared to a total of 46 apprentices contracted in the Group in 2008. In SouthAfrica a further 37 individuals were taken on and placed on accredited craft trainingprogrammes. Throughout the Group 20 external bursaries for university or college placeswere given in 2009 and nine employees were given assistance to complete degrees anddiplomas part-time.
The Taleo Recruitment System is being extensively used throughout the Group and hasstrengthened and made our recruitment process more efficient. At the end of 2009 therewere over 68,250 CVs on the data base, and 360 individuals in the supervisory, specialistand management categories were hired through the system by the Group in 2009.
Due to the global economic situation in 2009, the requirement for using recruitmentagencies has not been as critical as in previous years. Nevertheless we have maintainedour relationship with our recruitment agents in Ireland, the UK and Europe as well as thosein India, the Philippines and other South East Asian countries, which are the main sourcesof the majority of our labour. We continue to expand and consolidate our recruitmentfootprint globally by making extensive use of global recruitment websites and arecontinually exploring new non-traditional labour markets in which to source the skilled andexperienced people we require.
Kentz Pluto Team, Australia
Kearl Telecoms Project team members, Canada
Above: Zahid Ali Hasimi, IndianHelperKentz employee for 18 yearsKentz world presence: Safat, Kuwait
Closely aligned with our recruitment initiatives is our remuneration strategy to ensure that we attract andretain the best people in the industry. To this end and to keep aligned with market remunerations levels, in2009 we again undertook remuneration and benefit surveys in Ireland, the UK, South Africa, Australia andthe Middle East. The outcome indicates that the Groups remuneration and benefits packages are wellaligned with those in the relevant markets in which we operate.
During 2009 the Talent Management System was rolled out and the 2009 performance review for staff wasconducted via this system. The HR management information system was fully developed and tested andwill be implemented in the first quarter of 2010. This system will give management the ability to garnerinformation about our Human Resources at the touch of a button. This information is critical in managingour people globally and effectively.
2010 is a consolidation year in which the Group’s HR strategy will continue to focus on attracting andretaining talented and experienced people required to drive the Group’s growth whilst at the same timeaffording every employee the opportunity to develop to their full potential in a safe, stimulating and excitingenvironment.
In 2009, as in previous years, the Kentz annual CEO awards were presented to deserving employees. Theaward for Outstanding Safety Leadership went to Garry Ford, Project Manager on the Pearl GTL Project inQatar and the award for Outstanding Commitment and Dedication went to Donal Dempsey, Manager ofEngineering Services for Qatar, the United Arab Emirates and Kuwait, based in our Qatar Engineering office.In 2009 a new award was introduced by the CEO, the Emerging Employee of the Year award – this wasawarded to Michael Regan, Engineering Design Manager, based on the Gorgon Project in Australia.
our people 51
Laffan Refinery Project Team, Qatar
Thiess Decmil Kentz (TDK) JV Team, Thailand
52 Kentz Annual Report
Our Vision, Values and PurposeOur vision, values and purpose are the foundation of Kentz’s strategic direction and formthe basis for everyday operation of our business.
Balanced Score CardA new balanced scorecard (BSC) was developed during 2009 to ensure the criticalsuccess factors detailed in the score card effectively translate our mission and strategyinto a comprehensive set of performance measures.
These performance measures are taken from the four different perspectives of theorganisation:
1) Financial
2) Customer
3) Internal systems
4) People and culture
This BSC will be used as an ongoing management tool to mobilise and guide theorganisation in the correct strategic direction. Through regular reviews of the BSC, a focuson our strategic goals is being achieved.
policies and systems
Above: Paul Loughnane, IrishSenior EPC ManagerKentz employee for 19 yearsKentz world presence: Abu Dhabi, United Arab Emirates
Our Vision, Values and Purpose
Vision
PurposeValues
Safety
Reputation
Tenacity
Pride
Loyalty
Respect
Teamwork
“To be recognised globally as the specialist services provider of choice”
The safety and health of all ouremployees is the most importantvalue held by our Company. No onegets hurt and everyone goes homesafe and well
Our current and future successstands on our reputation
We are committed to our clients todelivering whatever it takes withoutcompromising our values
We take pride in everything we do
Our people’s loyalty to ourbusiness, our clients, our partnersis unquestionable
We respect all individuals, culturesand the environment within andconnected to our business
Working together to achieveorganisational goals
• To our Staff is to ensure
- Home safe
- Challenging projects
- Life career
- A sense of belonging
- A sense of adventure
• To our Customers is to focus on
- Building a safer workplace
together
- Adding to their reputation
- Adding to their competitiveness
• To our Communities to ensure
- Home safe
- Employability and sustainability
- Care for the environment
policies and procedures 53
Our PoliciesThe policy statements of Kentz relate to:
• Health & Safety • Environment • Human Resources • Quality • Community • Industrial Relations • Drugs & Alcohol • Equal Employment Opportunity • Rehabilitation • Ethical Behaviour • Security • Fitness for Duty
During 2009 we revised our Health and Safety, Environmental, Equal Opportunity, Rehabilitation and Ethical policystatements. The policy statements were revised to ensure their alignment to our business goals and objectives.
Kentz SystemsThe roll-out of our bespoke management tools commenced in late 2009 across the Group, with a number of ourrecently awarded projects implementing the systems. The suite of management tools collectively known as theKentz Project Systems (KPS) consists of our Project Cost Management System (PCMS), Kentz DocumentManagement System (KDMS), Construction and Completion Management System (CCMS) and the Procurementand Material Management System (PAMMS). These four systems communicate with each other, allowing forintegrated co-operation.
In addition to the above tools, a new Human Resources Management system was developed. The HR Profilerwas designed as an enhancement of our existing Human Resources Management Information System (HRMIS).
During 2009 we successfully completed the recertification to the following ISO and OHSAS Managementstandards; ISO 9001:2008 Quality Management System Requirements, ISO 14001:2004 EnvironmentalManagement System Requirements and OHSAS 18001:2007 Occupational Health and Safety ManagementRequirements. As a result of the recertification all four regions of Kentz are now certified to the three standards.The requirements of these three standards are the foundations of our Integrated Management System.
The alignment of our management system with the changeover to three Global Business Units was completedduring 2009. This has resulted in a new structure to Kentz’s management systems that will benefit not only thefunctional and operational units in Kentz but will also benefit our clients with seamless controls.
Kentz Project Systems Overview
PCMS
DMS
PAMMS CCMS
Project Cost Management System• Project Setup • Change Management System
Cost Recording Module• Cost Capture• Invoice Capture• Sales Capture
Cost Forecasting Module• Cost Basis• Cost Forecasting• Management Reports
Document Management System
• General Setup• Kentz Document Control• Client Document Control• Vendor Document Control• Third Party Document Control
• Communications Management • Workflow• Timesheets• Reports
PO/Currency Rates/ Vendors/MRR/OSD
References/Attachments/ Revisions Attachments Attachments
Construction and Completions Management System
Procurement and MaterialsManagement System
• Material Catalogue (MatCat)• Material Management System (MMS)• Procurement Management System (PMS)• Warehouse Management System (WMS)
• Cable & Drum Tracking• Other Tracking Modules:
- Civil/Structural- Control Systems- Electical- Instrumentation- Mechanical- Piping- Telecoms- Welding
• EILS & Logs• Manpower tracking• Commissioning• Daily Allocation
Sheets• S/E Tracking• Progress Payment
Tracking• Reporting
54 Kentz Annual Report
Kentz has a multicultural and diverse workforce, which includes more than 35 different
nationalities working in 26 different countries. We constantly strive to engage with local
communities, support development in countries in which we operate and also countries
of employee origin. It is the aim of all Kentz management to create a mutually beneficial
relationship between our project operations and local communities. Kentz also seeks to
form alliances with local companies, allowing us to gain a greater understanding of the
communities in which we operate, while at the same time benefitting local businesses and
economies through the success of our projects. Kentz is proud of its tradition of providing
sustainable initiatives through assistance and funding to various community projects,
charities, sporting organisations, and training and educational institutions.
Highlights of CommitmentFor six years Kentz has raised money through sponsorship and participation in the
Clonmel Rotary Golf Classic in Clonmel, Co. Tipperary, Ireland. Money raised at the event
is used for a variety of projects including the Society of St Vincent de Paul, a day
orphanage in Zambia, and disaster relief in the Solomon Islands. Additionally, many
organisations local to Clonmel and South Tipperary, Ireland, have been supported. In
recent years these have included the Wheelchair Association, the Cuan Saor Women’s
Refuge, the Samaritans, the Clonmel Red Cross, and various drug awareness projects.
Kentz in South Africa also entered a team in a golf day in early 2009, which was held in
aid of Kosmos Children’s Home in Kriel, near Secunda in South Africa. The aim of the
event was to raise funds for the home to assist with its running and upkeep. The home
has facilities for only 49 children but currently houses 72. The golf day was hosted by
MICA Secunda, Talisman Tool Hire and JAM Properties. The day was a great success,
raising much needed funds for the home.
In March 2009, Thiess Kentz supported the Victorian Bushfire Appeal in Australia by
raising funds and collecting much needed provisions for those affected by the devastating
and tragic bushfires which occurred earlier in the year. The fires ravaged many parts of
Victoria, killing over 200 people and countless wildlife.
The Company held various fundraising events for both office and site-based staff, and the
management team kindly committed to match all employee cash donations. The staff
members were also extremely generous in donating clothing, toys and blankets.
Above: Bob Elliot, British/AustralianArea Manager E&I Victoria Desalination PlantKentz employee for 4 yearsKentz world presence: Wonthaggi, Victoria, Australia
corporate and social responsibility
L-R: Brian Sheerin, Anna Brett, Group BD Executive andAngus Grant, the Rotary Club’s Golf Classic organiser
Children who benefited from Golf Day, South Africa
Staff of Thiess Kentz Perth office who held a coffee morning to raise funds
corporate and social responsibility 55
In April 2009, Kentz sponsored 11 students from Park
House School in Doha, Qatar, to complete a trekking
expedition in Nepal.
The group, accompanied by two teachers from the
school, trekked 100km in four days, during which the
students carried day packs, stayed in very basic
accommodation and sampled the local cuisine. Each of
the students managed to reach the staggering 3,210m
peak that they had set out to conquer.
Park House School is one of the leading educational
providers in Qatar. Expeditions of this sort allow students
to enjoy a range of experiences that will complement the
excellent academic instruction received at the school. Kentz is proud to be assisting Park
House School in giving their students a more holistic education, and congratulates the
students on their remarkable achievement.
As the season of goodwill approached in November and December 2009, Kentz
employees across the globe embraced the joy of giving by donating toys for children in
need.
The employees of Thiess Kentz in Australia sponsored Operation Christmas Child, a
unique project of Samaritan’s Purse that brings joy and hope to children in desperate
situations around the world. The previous year, over 300,000 gift-filled shoe boxes were
collected by teams in Australia and New Zealand and were delivered to South East Asia
and the South Pacific. Globally, Samaritan’s Purse distributed an estimated 7.6 million
shoe boxes to children in 105 countries.
Employees from the Kentz Clonmel office, the Aviva Stadium site and the Waterford
Regional Hospital site in Ireland continued their support of the Secret Santa Project in
association with the St Vincent de Paul Ozanam House Youth Group in Dublin. Each
employee chose a boy or girl from a list of children’s names and bought them a seasonal
gift.
Kentz in South Africa supported the annual Toy Run of the Centurion Motorcycle Club
which took place in late November 2009 in Vanderbijlpark, South Africa. The toy run was
in aid of underprivileged children who might not receive any toys were it not for the
generous donations of those who participated.
Thiess Kentz staff at the Perth office pictured with theirdonations
Park House Students overlooking the Himalayas
Toys loaded up and ready to go
Transforming Lives Through FootballIn June 2009, Kentz Global Oil & Gas Process Systems Limited donated generously to
support the African Medical and Research Foundation (AMREF) football tournament in the
rural district of Soroti, Uganda.
The Soroti region of Uganda has been hit by war, cattle raids and insurgency over the past
two decades. The people of Katine now have the worst health and living conditions in
rural Uganda, and most people live on less than 50p a day. In addition to uniting
communities and spreading vital health messages, the tournament also sought to instil a
sense of hope and pride amongst the villagers.
The tournament was organised by AMREF and its partners, including the Federation of
Uganda Football Association (FUFA). Forty-eight teams competed in front of thousands of
cheering spectators.
With a large audience attending the opening ceremony, AMREF had the opportunity to
communicate widely the vital messages linked to AMREF’s development aspirations. Two
drama groups from Katine performed plays and songs with messages encouraging
people to practise good hygiene and sanitation in their homes, and to make use of health
centres. Local leaders also spoke at the opening ceremony, and thanked Kentz Global Oil
& Gas Process Systems Limited for its generous donation, without which the tournament
would not have been possible.
The donation was also put towards ongoing efforts to empower children and communities
affected by conflict, funding social rehabilitation schemes and enabling reintegration
through football, health and social development.
As a result of the tournament, the Katine sub-county now boasts new sporting facilities
and, perhaps more importantly, a revitalised sporting spirit. With these foundations in
place, it is anticipated that similarly beneficial events will continue to take place in the area.
The tournament aims to support the objectives of AMREF through:
• Improved playing conditions for the children of Katine with the supply of uniforms, balls
and the creation of teams
• Providing organisational structures of football teams as a way of enhancing confidence
in young children
• Improved technical knowledge of football, by the provision of coaches, referees and
governing bodies
• Using the ability of players in Katine as a means of mobilising children around key health
issues, leadership skills, life skills, peace building and conflict resolution
• The active participation of girls in a culturally appropriate way, by fostering respect for
girls in sport, showcasing girls playing football
• Post-conflict reconciliation and healing through sport
56 Kentz Annual Report
Katine locals
Local football fans
corporate and social responsibility 57
Philippine PhilanthropyIn June 2009, Kentz provided sponsorship to Paula Quigley, a Final Year Construction
Management student at the Cork Institute of Technology, Ireland. This enabled her to
spend six weeks working with street children in the Philippines on educational and youth
empowerment projects.
Paula volunteered along with 13 others through SERVE, a development organisation that
is committed to tackling poverty in developing countries. It specialises in working with
marginalised and oppressed communities, and aims to empower them to tackle the root
causes of poverty and injustice. SERVE’s specific focus is on gender equality, children and
young people.
Paula was initially assigned to the Badjao Education Programme in Cebu City. The Badjao
people are commonly known as “Sea Gypsies” and the majority live in houseboats or on
bamboo stilts above the water. They are a peaceful, nomadic tribe but are highly
discriminated against by many Filipinos.
Paula worked at the Nano Nagle Childcare and Learning Centre, which was established
last year to help prepare the Badjao children to attend public schools. She assisted the
teachers with their daily classes and was particularly involved in helping the older children
with their writing and pronunciation. As part of the placement, Paula also spent four days
working on the nearby Gawad Kalinga Housing Construction Project.
Paula’s second assignment was with Akap Bata, an organisation that works with
disadvantaged children all over Manila. Speaking of her time there, Paula said: “I was
fortunate enough to witness the opening of two day care centres for children, and helped
to make and repair furniture. Akap Bata relies on co-sponsorships with non-government
organisations, churches and some government entities, and it does the most incredible
work. When you think that 64% of Filipino children do not attend pre-schools or day care
centres you realise just how invaluable the organisation is. They have so many dedicated
workers, and the whole experience was a real inspiration. I would like to thank Kentz for
its generous sponsorship of my trip. I will never forget my time in the Philippines and the
warmth and hospitality of the families that I was lucky enough to stay with.”
In the Philippines SERVE provides:
• Early education programmes for children in slums in Manila and amongst indigenous
tribes
• Skills training and empowerment opportunities for women from the Ates indigenous
tribe
• Advocacy work on child pornography with the objective of enacting quality legislation
against child pornography
• Education support to children and youth at the Badjao Centre, Cebu
• Skills training and livelihood support for street children in Manila
• Resources for cooking skills, development for young adults at Binalbagan College
• Technical and vocational education for female teenage victims of abuse, Cebu
Paula with Ates tribes-girls
SERVE volunteers pictured at a local day care centre
Paula and another volunteer help to feed children in aslum area
SERVE volunteers pictured at a local day care centre
58 Kentz Annual Report
Kentz Aiding the DisabledIn early 2009, Kentz in South Africa took action in supporting a number of organisations
involved with helping the disabled.
Firstly, Kentz contributed towards IT tuition for three disabled learners in association with
“Action”. Action is an institution which offers IT tuition, as well as Grade 12, to the blind
and disabled people through adult-based education and training. The training programme
consists of three days of IT skills tuition and two days of art and crafts skills tuition
(woodwork, pottery, stained glass and lamp shade manufacture).The duration of the IT
course is eighteen months. On completion, trainees qualify for a Microsoft Office
Specialist Certificate which is internationally recognised.
Kentz sponsorship funds went towards helping the following disabled learners:
• Bongani, aged 24
• Kagiso, aged 19
• Samson, aged 27
Kentz South Africa also became involved with the Support and Care Foundation, by
sponsoring three disabled pupils. The Support and Care Foundation raises funds to help
organisations that are in desperate need of assistance. They help people who are unable
to pay for medical treatment, operations and wheelchairs. The funds raised this year were
for children in desperate need of electrical wheelchairs, Shona buggies, back layers,
normal wheelchairs and prosthesis.
The following children were assisted by Kentz sponsorship:
• Tumi Innocentia Rapoo, aged 6
• Neo Rakuba, aged 5
• David McKlopper, aged 7
Finally, Kentz is also aligned with the Eduplex programme, which is a mainstream
pre and primary school established by the Foundation for Children with a Hearing Loss in
Pretoria, South Africa. The mainstream is specifically designed to integrate a few children
with hearing loss into the regular classes where they learn alongside their hearing peers
without using sign language. The total number of the children in each class is 25 and five
of these children are deaf. The programme commences at Grade 1 and is extended year
by year until the primary school stage is completed at Grade 7.
Kentz also contributed towards the monthly costs of education and audio logical
management for three deaf children.
• Andile Ndala, aged 3
• Zisanda Sithole, aged 6
• Winnie Rankapole, aged 6
Pat Cass of Kentz visited the school, met the headmaster and was impressed with the
facilities and how well the children adjusted to regular mainstream school.
Kagiso, Bongani and Samson
David and Neo
Phidelia with David, Neo and caregivers
Andile, Zisanda and Winnie
59
60chief financial officer’s report
64directors’ report
67independent auditors’ report
68consolidated income statement
69consolidated statement ofcomprehensive income
70consolidated statement of financial position
71consolidated statement ofcash flows
72notes to the consolidated financialstatements for the year ended 31 December 2009
financial review 2009 andconsolidated financial statements
chief financial officer’s report60 Kentz Annual Report
SUMMARY OF KEY FINANCIAL INDICATORS(values and percentage changes)
For the year ended 31 December: 2009 2008 %(US$m) (US$m) Change
Sales Revenue 704.7 643.4 +9.5%
EBITDA * 51.1 42.2 +21.3%
Profit before tax * 44.5 40.7 +9.2%
Profit after tax * 33.3 30.9 +7.9%
Profit after tax attributable to shareholders * 30.8 28.8 +6.9%
Cash generated from operations 67.7 21.9 +209.1%
Net cash from operating activity 56.1 11.0 +408.1%
Cash and equivalents at year end 179.8 154.4 +16.5%
Basic earnings per share (US cents) * 26.46 25.09 +5.5%
Backlog 1,497.4 1,003.8 +49.2%
GROUP INCOME STATEMENT Overview of trends (values and percentage of sales)
Continuing Operations For the year ended 31 December
(Values in US$m) 2009 2008 2007 2006
Sales Revenue 704.7 643.4 544.6 370.1
Gross Profit 94.8 87.6 68.2 56.0
% of sales 13.5% 13.6% 12.5% 15.1%
S.G. & A. expenses * 55.2 51.4 39.7 33.0
% of sales 7.8% 8.0% 7.3% 8.9%
EBITDA * 51.1 42.2 35.2 27.2
% of sales 7.3% 6.6% 6.5% 7.4%
Profit before tax * 44.5 40.7 34.3 25.1
% of sales 6.3% 6.3% 6.3% 6.8%
Profit for the year – continuing operations * 33.3 30.9 26.3 21.4
% of sales 4.7% 4.8% 4.8% 5.8%
ROCE * 25.7% 27.5% 41.4% 40.4%
* 2008 results are before non-recurring flotation costs of US$4.695m which were expensed during the period
The Group accounts are prepared in accordance with IFRS
chief financial officer’s report 61
SUMMARY OF GROUP INCOME STATEMENT HIGHLIGHTS
RevenueSales revenues increased by 9.5% in 2009 to US$704.7m (2008: US$643.4m) reflecting continued strong growth in our
main geographical business regions, particularly in Australasia, Europe and the Caribbean, Africa and the Middle East.
The breakdown of revenue by business unit shows a continuation in the pattern we saw in the first half of 2009, with the
Specialist EPC unit showing a reduction and the Construction and Technical Support Services units both showing
increased shares. Specialist EPC represented 24% of Group revenue (2008: 29%), Construction 49% (2008: 43%) and
Technical Support Services 27% (2008: 28%).
A review of the composition of our order backlog at December 2009 of US$1,497.4m shows that 55.9% of the total
consists of Specialist EPC (31 December 2008: 31.5%). Also, looking at the composition of the pipeline of the future
projects that we are pursuing, which are valued at in excess of US$2.91bn, we can see that 47.2% of that total consists
of Specialist EPC projects. This indicates that this sector should account for a larger portion in future years.
Sales to the oil and gas and petrochemicals market in 2009 totalled US$584.2m or 82.9% of Group revenues, up from
US$532.3m or 82.7% of Group revenues in 2008. Our remaining revenues have come from the power sector (6.5%),
mining and metals sector (2.4%) and from other sectors (8.2%).
Gross profitGross profits of US$94.8m or 13.5% of sales were recorded in 2009, an increase of US$7.2m or 8.2% on the 2008 figure
of US$87.6m.
Selling, general & administrative expenses (SG&A)SG&A expenses in 2009 increased by US$3.7m to US$55.2m in absolute terms (2008: US$51.4m). In relative terms, as
a percentage of sales the number is down by 0.2% to 7.8% (2008: 8.0%). This fall in percentage terms has been achieved
through prudent management of overheads during the year.
Other operating incomeOther operating income for the year was US$1.7m. This mainly consists of sale of scrap, discounts received and recovery
of bad debts previously provided for. This figure is up US$1.1m on the 2008 figure of US$0.6m.
Operating profit before finance costsOperating profit before finance costs for the year increased by US$4.5m to US$41.3m or 5.9% of sales, up from
US$36.8m or 5.7% in 2008.
Geographically, the main increase occurred in the Middle East (up US$8.1m to US$31.0m). This is mainly attributable to
strong performance in our Construction and Technical Support Services business units in Saudi Arabia and Qatar.
In the Arctic and New Areas region, profits are down US$3.0m to US$2.9m. Activity levels in the first half of the year were
substantially lower than anticipated. However, as indicated in the interim results, the position significantly improved in the
latter half of the year.
The operating profit in the Africa region is up US$2.5m to US$14.6m. This is attributable to strong performance in the
shutdown and construction sectors.
The Australasia, Europe and Caribbean region recorded an operating loss of US$8.6m, up US$2.7m on the 2008 loss of
US$5.9m. This is mainly due to costs associated with setting up new structures in Australia to support the Gorgon Projects
and the roll-out costs associated with the new Global Business Unit structure.
Net finance incomeNet finance income for the year was US$1.3m, down US$2.7m from the 2008 figure. This reduction is primarily due to
reduced deposit interest income during the year.
62 Kentz Annual Report
Share of joint ventures’ profit/(loss)Profit for the period from our joint venture operations was US$1.8m (2008: loss of US$0.1m). This income is attributable
to an increase in activity levels and improved margins and builds on the steady figures reported in the first half of the year.
Profit before taxProfit before tax for 2009 is US$44.5m or 6.3% of sales. This represents an increase of 9.2% on the 2008 figure of
US$40.7m, and maintains the net margin percentage at a level that is consistent with the previous two years.
TaxationThe tax charge for the year is US$11.2m, which is an effective tax rate of 25.1%. This compares with an effective rate
of 24.2% for 2008. The slightly higher percentage in 2009 reflects the fact that the Group has expanded its business into
new regions which have higher average tax rates.
Net profit for the yearProfit for the year from continuing operations was US$33.3m, up 7.9% on 2008. Net profit equates to 4.7% of revenue
which is broadly in line with the prior years.
Non-controlling interestNon-controlling interest for the year is US$2.514m or 0.36% of sales (2008: US$2.068m or 0.32%). The non-controlling
interest relates to our Black Economic Empowerment partner in Africa and the higher percentage is due to increased
profits in Africa during the year (profits in Africa increased by 20% from 2008).
Earnings per shareBasic earnings per share for the year were 26.46 US$ cents (2008: 25.09 US$ cents). This calculation is based on a
weighted average number of 116,371,470 shares in issue in 2009.
Diluted earnings per share for the year were 26.35 US$ cents (2008: 25.09 US$ cents). This calculation is based on a
weighted average number of 116,843,209 shares in issue in 2009.
DividendThe Group reports its financial results in US dollars and accordingly declares its dividends in US dollars. Dividends are
paid in sterling using an exchange rate calculated at the record date, and shareholders have the option of electing to have
their dividend paid in another currency. The interim dividend payment amounting to 2.0 US$ cents per share was made
in October 2009 and the Directors intend to propose a final dividend payment of 4.0 US$ cents per share which would
make a total dividend payment of 6.0 US$ cents per share for the year ended December 2009. The final dividend payment
will be made in June 2010 to shareholders on the register at the close of business on 21 May 2010.
SUMMARY OF GROUP BALANCE SHEET HIGHLIGHTS
Working capital
Working capital at year end was US$112.3m, up 9.6% on 2008 year end (US$102.5m).
Current assets at year end were US$378.7m, up US$97.5m or 34.7% on 2008 (US$281.2m). This growth is due to
increased contract receivables of US$66.3m and increased cash balance of US$25.8m, reflecting the strong trading
performance during the year.
Current liabilities at year end were US$266.4m, up US$87.7m or 49.1% on 2008. The increase is attributable to increased
trade and other accruals reflecting the strong trading performance during the year.
Equity Shareholders’ equity at year end was US$140.1m, up 22.8% on 2008 (US$114.1m). This reflects the strong growth in
retained earnings during the year.
Total assetsTotal assets at the end of the year were US$433.9m, up 39.0% or US$121.8m on 2008. The increase is due to a
combination of additional fixed asset purchases (mainly cranes in South Africa), growth in trade receivables and growth in
cash balances reflecting the strong trading performance of the Group during the year.
SUMMARY OF GROUP CASH FLOW HIGHLIGHTS
Cash flow from operationsCash generated from operations for the year was US$67.7m, up 209.1% or US$45.8m on 2008 levels. This is attributable
to a strong trading performance including a significant reduction in work-in-progress levels.
Cash flow used in investing activitiesNet cash used in investing activities was US$26.0m, up 53.6% on the 2008 year end level and primarily related to the
purchase of plant and equipment in South Africa.
Cash flow from financing activitiesNet cash generated from financing activities for the year was US$2.7m. This is the result of net finance lease proceeds of
US$10.0m less dividend payments of approximately US$7.0m.
Net cash and cash equivalentsNet cash and cash equivalents amounted to US$179.8m at year end, up US$25.4m or 16.5% on the 2008 figure of
US$154.4m.
chief financial officer’s report 63
64 Kentz Annual Report
directors’ report
The Directors submit their report together with the Consolidated Financial Statements of the Group for the year ended
31 December 2009.
Principal activities
The principal activities of the Group consist of the provision of mechanical, electrical, controls and instrumentation
engineering, construction and management services to the oil and gas, petrochemical, power, process, water and
environmental, communications and commercial and infrastructure services.
Board of Directors
The Directors who served the Company during the year ended 31 December 2009 were:
Tan Sri Mohd Razali Abdul Rahman
Hugh O’Donnell
Hassan Abas
David Beldotti
Ed Power
Hans Kraus
Brendan Lyons
Results and dividends
The Consolidated Income Statement and Consolidated Statement of Financial Position for the year ended 31 December
2009 are set out on pages 68 and 70. Profit before taxation for the year amounted to US$44.5m, an increase of 9.2%*
on the previous year. After providing for tax and non-controlling interest, the net profit attributable to shareholders was
US$30.8m (2008: US$28.8m*). Basic earnings per share amounted to US$26.46 cents compared with US$25.09* cents
in the previous year, an increase of 5.5%. Dividends proposed and paid during the year amounted to US$6.8m.
Business review and future developments
A review of the Group performance for the year is included in the Chief Executive Officer’s Report and in Outlook, Our
Markets and Sector Focus.
Admission to AIM
The ordinary shares of the Company were admitted to trading on the AIM Market of the London Stock Exchange on 5
February 2008. The listing raised Stg£66.7m (US$131.8m) before expenses, of which Stg£18.8m (US$37.1m) was raised
by the Company, before expenses, with the remainder going to the selling shareholders. The placing price was 115p per
share.
* 2008 results are before non-recurring flotation costs of US$4.7m which were expensed during the period.
directors’ report 65
Directors’ beneficial interests in ordinary sharesAt 31 December At 31 December
2008 2009Hassan Abas (i) 15,000,000 15,437,500
Tan Sri Mohd Razali Abdul Rahman (i) 15,000,000 15,437,500
Hugh O’Donnell 7,500,000 7,500,000
Ed Power (ii) 1,182,521 1,099,884
The Company operates a share option scheme for certain employees and in addition to the interests disclosed above
certain Directors have options to acquire shares in the Company. Full details are as follows:
Director Number Granted Exercised Number Exercise Date from Expiry dateand date at during during at 31 price whichof grant 1 January 2009 year year December 2009 Stg£ exercisable
Hugh O’Donnell
1 July 2009 - 127,000 - 127,000 1.545 1 July 2012 30 June 2019
Ed Power
1 July 2009 - 127,000 - 127,000 1.545 1 July 2012 30 June 2019
No options lapsed during the year. The market price of the shares at 31 December 2009 was Stg£1.99 and the price
during 2009 ranged from Stg£0.97 to Stg£2.17.
Significant shareholders
Interests in 3% or more of the issued share capital which have been notified to the Company in accordance with the
Articles of Association of the Company were:
At 31 December 2008 At 31 December 2009
No. of shares % No. of shares %Kerbet Limited 30,000,000 25.78 30,875,000 26.53Noel Kelly 7,500,000 6.44 7,500,000 6.44Hugh O’Donnell 7,500,000 6.44 7,500,000 6.44Danache Holdings Limited 13,339,213 11.46 11,660,570 10.02Blackrock Investment Management (UK) 7,807,121 6.71 9,212,957 7.92BAE Systems Pension Fund Investors 5,725,000 4.92 5,725,000 4.92Schroder Investment Management 6,950,000 5.97 4,675,000 4.02Standard Life Investments - - 3,576,309 3.07Henderson Global Investors 4,416,713 3.80 - -
(i) These shares are held indirectly by Hassan Abas and Tan Sri Mohd Razali Abdul Rahman respectively through Kerbet
Limited. 20% of the shares in Kerbet Limited are beneficially held by Covili Investment Limited and the remaining 80%
held by Gigondas Real Estate Inc. Each of Hassan Abas and Tan Sri Mohd Razali Abdul Rahman indirectly hold a
beneficial interest of 50% of the shares in both of Covili Investment Limited and Gigondas Real Estate Inc.
(ii) These shares are held indirectly by Ed Power through Danache Holdings Limited. Ed Power has a beneficial interest of
approximately 9.43% of Danache Holdings Limited. The shares in Danache Holdings Limited are held by Essex Trust
Limited in trust for certain managers of the Group, of which Ed Power is one.
66 Kentz Annual Report
Going concern
The Directors confirm that it is appropriate to apply the going concern concept in preparing the Financial Statements of
the Group. In forming this view, the Directors have reviewed the Group’s budgets and projections, and have satisfied
themselves that the Group is in a sound financial position.
Statement of Directors’ responsibilities
Jersey company law requires the Directors to prepare the Financial Statements for each financial year which give a true
and fair view of the state of affairs of the Group and of the Company and of the profit or loss of the Group for that year.
In preparing those Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them on a consistent basis;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material differences disclosed and
explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis unless it is not appropriate to presume that the Group
will continue in business.
The Directors are responsible for keeping proper books of accounting records which disclose with reasonable accuracy
at any time the financial position of the Group and the Company and to ensure that the Financial Statements comply with
relevant legislation. They are also responsible for safeguarding the assets of the Group and for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Auditors
The auditors, BDO, Registered Auditors, have expressed their willingness to continue in office in accordance with Article
109(4) of Companies (Jersey) Law, 1991.
On behalf of the Board of Directors
Hugh O’Donnell Ed Power
Director Director
27 April 2010
67
independent auditors’ report
To the shareholders of Kentz Corporation Limited
We have audited the Group Financial Statements of Kentz Corporation Limited (“the Company”) and its subsidiaries
(together “the Group”) for the year ended 31 December 2009 which comprise the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated
Statement of Cash Flows and the related notes 1 to 34. These Group Financial Statements have been prepared under
the accounting policies set out therein.
This report is made solely to the Company’s members, as a body, in accordance with Article 110 of the Companies
(Jersey) Law 1991 and the terms of our letter of engagement. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
The Directors are responsible for preparing the Annual Report and the Group Financial Statements in accordance with
applicable Jersey law as set out in the Statement of Directors’ Responsibilities and International Financial Reporting
Standards.
Our responsibility is to audit the Group Financial Statements in accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the Group Financial Statements give a true and fair view and whether the
Group Financial Statements have been properly prepared in accordance with the Companies (Jersey) Law 1991. We also
report to you whether, in our opinion, we have not received all the information and explanations we require for our audit.
We read other information contained in the Annual Report and consider whether it is consistent with the audited Group
Financial Statements. The other information comprises the Chairman’s Statement, Chief Executive Officer’s Report, the
Corporate Governance Report, Chief Financial Officer’s Report and the Directors’ Report. We consider the implications
for our report if we become aware of any apparent misstatements or material inconsistencies with the Group Financial
Statements. Our responsibilities do not extend to any other information.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in
the Group Financial Statements. It also includes an assessment of the significant estimates and judgements made by the
Directors in the preparation of the Group Financial Statements, and of whether the accounting policies are appropriate to
the Group’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the Group Financial Statements are free
from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also
evaluated the overall adequacy of the presentation of information in the Group Financial Statements.
Opinion
In our opinion:
• The Group Financial Statements give a true and fair view, in accordance with the International Financial Reporting
Standards, of the state of the Group’s affairs as at 31 December 2009 and of its profit for the year then ended.
• The Group Financial Statements have been properly prepared in accordance with the Companies (Jersey) Law 1991.
BDO
Dublin
Registered Auditors
27 April 2010
68 Kentz Annual Report
consolidated income statement
Year Ended 31 December
2008
In thousands of USD Notes 2009 Before Flotation 2008flotation costs
Total costs (Note 4) Total
Revenue 3 704,662 643,414 - 643,414Cost of sales (609,849) (555,773) - (555,773)
Gross profit 94,813 87,641 - 87,641
Administration expenses (52,727) (48,848) - (48,848)Distribution & selling costs (2,430) (2,561) - (2,561)Other operating income/(cost) 1,654 609 (4,695) (4,086)
Operating profit/(loss) before finance costs 5 41,310 36,841 (4,695) 32,146
Net finance income 8 1,333 3,994 - 3,994
Share of joint ventures’ profit/(loss) 1,813 (118) - (118)
Profit/(loss) before tax 44,456 40,717 (4,695) 36,022
Tax expense 9 (11,150) (9,845) - (9,845)
Profit/(loss) for the year 33,306 30,872 (4,695) 26,177
Attributable to:Equity holders of the parent 30,792 28,804 (4,695) 24,109Non-controlling interest 20 2,514 2,068 - 2,068
Profit/(loss) for the year 33,306 30,872 (4,695) 26,177
Earnings per share (US$ cents) 11Basic 26.46 25.09 (4.09) 21.00Diluted 26.35 - - -
The attached notes 1 to 34 form part of these Consolidated Financial Statements.
On behalf of the Board
Hugh O’Donnell Ed Power
Director Director
69
consolidated statement of comprehensive income
Year Ended 31 December
In thousands of USD Notes 2009 2008
Profit for the year 33,306 26,177
Other comprehensive income
Exchange translation differences- on employee benefits (402) 802- on foreign currency net investments (522) 3,150
Actuarial gains/(losses) on defined benefits plans 26 2,156 (8,316)
Total other comprehensive income/(expense) 1,232 (4,364)
Total comprehensive income 34,538 21,813
Total comprehensive income attributable to:Equity holders of the parent 32,024 19,745 Non-controlling interest 20 2,514 2,068
Total recognised income and expenses for the year 34,538 21,813
The attached notes 1 to 34 form part of these Consolidated Financial Statements.
70 Kentz Annual Report
consolidated statement of financial position
Year Ended 31 December
In thousands of USD Notes 2009 2008
ASSETSNon-current assetsProperty, plant & equipment 12 47,447 25,345Goodwill 13 - 543Other investments 14 7,632 2,902Trade and other receivables 16 - 1,936Deferred tax asset 24 149 184
Total non-current assets 55,228 30,910
Current assetsInventories 15 25,150 39,157Trade and other receivables 16 161,359 84,078Amounts owed by related parties 31 11,868 3,412Cash and bank balances 17 180,284 154,504
Total current assets 378,661 281,151
Total assets 433,889 312,061
EQUITYShare capital 18 2,284 2,284Share premium 19 39,568 39,568Reserves 19 3,205 2,388Retained earnings 19 95,040 69,861
Total equity attributable to equity holders of the parent 19 140,097 114,101 Non-controlling interests 20 2,827 125
Total equity 142,924 114,226
LIABILITIES
Non-current liabilitiesInterest bearing loans and borrowings 22 - 30Obligations under finance leases – due after 1 year 25 8,202 -Employee benefit obligations 26 13,128 15,670Amounts owed to related parties 31 92 92Trade and other payables 2,805 3,278Deferred tax liabilities 24 374 81
Total non-current liabilities 24,601 19,151
Current liabilitiesTrade and other payables 21 254,546 170,464Corporation tax payable 4,545 4,317Interest bearing loans and borrowings 22 1,969 2,009Obligations under finance leases – due within 1 year 25 1,850 -Amounts owed to related parties 31 3,454 1,894
Total current liabilities 266,364 178,684
Total liabilities 290,965 197,835
Total equity and liabilities 433,889 312,061
The attached notes 1 to 34 form part of these Consolidated Financial Statements.The Financial Statements were approved and authorised for issue by the Board on 27 April 2010.
On behalf of the Board
Hugh O’Donnell Ed Power
Director Director
71
consolidated statement of cash flows
Year Ended 31 December
In thousands of USD Notes 2009 2008
Cash flows from operating activitiesProfit before tax 30 44,456 36,022Adjustments for:
Depreciation 8,023 5,448Net finance income (1,333) (3,994)Loss on sale of property, plant & equipment 80 65Share of (profit)/loss from joint ventures (1,813) 118Impairment of goodwill 624 -Current service cost 495 519Share based payment expense 817 -(Increase)/decrease in trade and other receivables (83,111) 22,771Decrease/(increase) in inventories 14,007 (20,964)Increase/(decrease) in trade and other payables 85,477 (18,073)
Cash generated from operations 67,722 21,912
Interest paid (182) (202)Income taxes paid (11,407) (10,662)
Net cash from operating activities 56,133 11,048
Cash flows from investing activities(Investment in)/return from joint venture (1,825) 1,476Disposal of subsidiary (net of cash) - 1,000Purchase of property, plant and equipment (24,258) (22,112)Proceeds from sale of equipment 12 826Interest received 2,005 4,182Pension contribution (1,955) (2,311)
Net cash used in investing activities (26,021) (16,939)
Cash flows from financing activitiesProceeds of share issue - 37,114Expenses associated with new share issue - (3,071)Proceeds from finance lease liabilities 10,291 -Payments of finance lease liabilities (239) -Payments of long-term borrowings (30) (86)Payments of short-term borrowings (503) (168)Proceeds from short-term borrowings 139 1,388Dividends paid to non-controlling interest (150) -Dividends paid to equity holders of the Company (6,845) (2,004)
Net cash generated from financing activities 2,663 33,173
Net increase in cash and cash equivalents 32,775 27,282
Cash and cash equivalents at beginning of year 154,359 123,651Exchange difference (7,336) 3,426
Cash and cash equivalents at end of year 17 179,798 154,359
The attached notes 1 to 34 form part of these Consolidated Financial Statements.
72 Kentz Annual Report
notes to the consolidated financial statementsfor the year ended 31 December 2009
1. Corporate Information
Kentz Corporation Limited (the “Company”) is a company incorporated in Jersey. The Consolidated Financial Statements
comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in jointly
controlled entities and jointly controlled operations.
The Group’s principal activity is the provision of engineering and construction services, principally in the oil services sector.
The Consolidated Financial Statements of Kentz Corporation Limited for the year ended 31 December 2009 were
authorised for issue in accordance with a resolution of the Directors on 27 April 2010.
2. Significant accounting policies
(a) Statement of compliance
The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB).
(b) Basis of preparation
The Financial Statements are presented in US$, rounded to the nearest thousand which represents the functional currency
of the Group, as it is the currency of the primary economic environment in which the Group operates. Foreign operations
are consolidated in accordance with the policies set out in note e(iii) below.
They are prepared on the historical cost basis except that financial instruments held for trading are recorded at their fair
value.
The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have significant effect on the Financial Statements and
estimates with a significant risk of material adjustment in the next year are discussed in note 33.
The accounting policies set out below have been applied consistently to all periods presented in these Consolidated
Financial Statements and in preparing an opening IFRS Statement of Financial Position at 1 January 2004 for the
purposes of the transition to IFRS.
The accounting policies have been applied consistently by Group entities.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that presently are exercisable or convertible are taken into account. The Financial
Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences
until the date that control ceases. See note 32.
notes to the consolidated financial statements 73
2. Significant accounting policies (continued)
(ii) Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject
to joint control. Joint control is the contractually agreed sharing of control such that significant operating and financial
decisions require the consent of more than one venturer. The Group has two types of joint venturers:
- Jointly controlled entities and
- Jointly controlled operations
A jointly controlled entity is an entity over whose activities the Group has joint control, established by contractual
agreement. The results, assets and liabilities of a jointly controlled entity are incorporated in these Consolidated Financial
Statements using the equity method of accounting.
A jointly controlled operation involves the use of assets and other resources of the Group and other venturers rather than
the establishment of a corporation, partnership or other entity. The Group’s proportionate interest in the assets, liabilities,
revenues, expenses and cash flows of jointly controlled operations are incorporated into the Group’s Financial Statements
under the appropriate headings.
(iii) Non-controlling interest
Non-controlling interests in subsidiaries consolidated by the Group are disclosed separately from the Group’s equity and
Income Statement. Losses attributable to non-controlling interests in excess of the non-controlling interest in the net
assets of the subsidiary are adjusted against the interest of the Group unless there is a binding obligation on the part of
the non-controlling interest to contribute additional investment in the subsidiary.
(iv) Transactions eliminated on consolidation
Intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions
are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with
associates and jointly controlled entities are eliminated to the extent of the Group’s interest in the entity. Unrealised losses
are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
74 Kentz Annual Report
2. Significant accounting policies (continued)
(d) International Financial Reporting Standards not yet effective
Set out below are new accounting standards and interpretations which will be applicable going forward. None are
expected to have a significant effect on the results of the operation.
Accounting Standard/Interpretation Type Effective Date
IAS 24 (Revised) – Related Party Disclosures Revised Statement Financial year
commencing on or
after 1 January 2011
IAS 27 (Revised) – Consolidated and separate Revised Statement Financial year
Financial Statements commencing on or
after 1 July 2009
IAS 32 (Amendment) – Financial Instruments: Amended Statement Financial year
Presentation – Classification of Rights Issues commencing on or
after 1 February 2010
IAS 39 – Eligible Hedge items Revised Statement Financial year
commencing on or
after 1 July 2009
IFRS 1 – First time Adoption of International Revised Statement Financial year
Financial Reporting Financial Standards: Improved commencing on or
structure but no technical changes after 1 July 2009
IFRS 2 – Share-based Payment: Group cash- Revised Statement Financial year
settled share-based payment transactions commencing on or
after 1 January 2010
IFRS 3 (Revised) – Business Combinations Revised Statement Financial year
commencing on or
after 1 July 2009
IFRS 9 – Financial Instruments New Statement Financial year
commencing on or
after 1 January 2013
IFRIC 14 (Amendment) – The Limit on a Defined Amended Interpretation Financial year
Benefit Asset, Minimum Funding Requirements commencing on or
and their Interaction – Prepayment of minimum after 1 January 2011
funding requirements.
IFRIC 17 – Distribution of Non-cash Assets New Interpretation Financial year
to owners commencing on or
after 1 July 2009
IFRIC 19 – Extinguishing Financial Liabilities New Interpretation Financial year
with Equity Instruments commencing on or
after 1 July 2010
2. Significant accounting policies (continued)
(e) Foreign currency
(i) Functional and presentation currency
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the respective entity operates (“the functional currency”). The Consolidated Financial
Statements are presented in US Dollars, which is the Group’s presentation currency.
(ii) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are re-translated to US$ at the foreign exchange rate
ruling at the Statement of Financial Position date. Foreign exchange differences arising on translation are recognised in
the Income Statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated to US$ at foreign exchange rates ruling at the
dates the fair value was determined.
(iii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated to US$ at foreign exchange rates ruling at the Statement of Financial Position date. The results and cash flows
of foreign operations are translated to US$ at average exchange rates for the year. Foreign exchange differences arising
on re-translation are recognised directly in a separate component of equity.
(iv) Net investment in foreign operations
Adjustments arising on translation of the results of foreign operations at average rates, and on re-statement of the opening
net assets at closing rates, are dealt with in a separate translation reserve within equity. On disposal of a foreign operation,
accumulated currency translation differences are recognised in the Consolidated Income Statement as part of the overall
gain or loss on disposal; the cumulative currency translation differences arising prior to 1 January 2004 (the transition date
to IFRS) have been set to zero for ascertaining the gain or loss on disposal of a foreign operation subsequent to that date.
Translation differences arising after 1 January 2004 are presented as a separate component of equity in the foreign
currency translation reserve in the Consolidated Statement of Financial Position.
(f) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost, as deemed cost, less accumulated depreciation (see below)
and impairment losses (see accounting policy m).
Certain items of property, plant and equipment which had been re-valued to fair value on or prior to 1 January 2004, the
date of transition to IFRS, are measured on the basis of deemed cost, being the re-valued amount at the date of that
revaluation.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance
leases. The Group has entered into various operating leases, the payments for which are recognised as an expense in the
Consolidated Income Statement on a straight-line basis over the lease terms. (see accounting policy t).
(iii) Depreciation
Depreciation is charged to the Income Statement on a straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment at the following rates:
• Buildings 10%
• Plant and fixtures 10% - 100%
• Motor vehicles 20% - 100%
The residual value, if not insignificant, is re-assessed annually.
notes to the consolidated financial statements 75
76 Kentz Annual Report
2. Significant accounting policies (continued)
(g) Goodwill and intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition of a subsidiary or joint venture, over the Group’s interest in
the fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date of acquisition.
Goodwill on the acquisition of subsidiaries and joint ventures is included in intangible assets. Goodwill is tested annually
for impairment, or more frequently when there is an indication that the goodwill may be impaired and carried at cost less
accumulated impairment losses, if any. Impairment losses previously recognised cannot be reversed (see accounting
policy m).
(ii) Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (see below) and
impairment losses (see accounting policy m).
Expenditure on internally generated goodwill and brands is recognised in the Income Statement as an expense as
incurred.
(iii) Amortisation
Goodwill and intangible assets with an indefinite useful life are not amortised. However they are systematically tested for
impairment at each Statement of Financial Position date.
(h) Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses (see accounting policy m).
(i) Long-term contract work in progress
Amounts recoverable on construction contracts, which are included in trade and other receivables, are stated at the net
sales value of the work done less amounts received as progress payments on account. Cumulative costs incurred, net
of amounts transferred to cost of sales, after deducting foreseeable losses and progress payments on account not
matched with revenue, are included as construction contract balances within inventories. Where the progress billings
exceed the sum of costs incurred and recognised profit or recognised loss, the balance is shown under trade and other
payables as amounts due to customers on contracts.
(j) Financial assets
All financial assets are initially measured at fair value, including transaction costs, except for those financial assets
classified as at fair value through profit or loss which are initially measured at fair value, excluding transaction costs. Where
the effect on fair value at initial recognition of any extended payment terms is not material, no adjustments were made.
The fair value of a financial instrument on initial recognition is normally the transaction price, unless the fair value is evident
from observable market data.
Subsequent measurement for financial assets is set out below.
Loans and receivables
Trade and other receivables (excluding Value Added Taxation, pre-payments and operating lease receivables), loans and
cash and cash equivalents that have fixed or determinable payments that are not quoted in an active market are classified
as loans and receivables.
Loans and receivables are subsequently measured at amortised cost, using the effective interest rate method less any
impairment loss. Interest income is recognised in profit or loss by applying the effective interest rate, except for short-term
trade receivables where the recognition of interest would be immaterial. Trade receivables are carried at original invoice
amount less any impairment loss.
The accounting policy for bank and cash balances is dealt with under cash and cash equivalents set out below.
2. Significant accounting policies (continued)
Trade receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a
review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified.
De-recognition of financial assets
The Group de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire or it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
(k) Financial liabilities
All financial liabilities are initially measured at fair value, including transaction costs, except for those financial liabilities
classified as at fair value through profit or loss, which are initially measured at fair value, excluding transaction costs.
Subsequent measurement for financial liabilities is set out below.
Other financial liabilities not measured at fair value through profit or loss
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis, except for short-term trade payables where the recognition of interest
would be immaterial.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability or, where appropriate, a shorter period.
De-recognition of financial liabilities
The Group de-recognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
expired. On de-recognition, the difference between the carrying amount of the financial liability, including related
unamortised costs, and settlement amounts paid are included in profit or loss.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and
form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the
purpose of the Statement of Cash Flows.
(m) Impairment
The carrying amounts of the Group’s assets, other than inventories and deferred tax assets (see accounting policy u(ii)),
are reviewed at each Statement of Financial Position date to determine whether there is any indication of impairment. If
any such indication exists, the asset’s recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each Statement of Financial Position date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the Consolidated Income Statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets
in the unit (group of units) on a pro rata basis.
Goodwill and indefinite-lived intangible assets were tested for impairment at 1 January 2004, the date of transition to IFRS,
even though no indication of impairment existed.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is
objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised
in profit or loss even though the financial asset has not been de-recognised. The amount of the cumulative loss that is
recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss
on that financial asset previously recognised in profit or loss.
notes to the consolidated financial statements 77
78 Kentz Annual Report
2. Significant accounting policies (continued)
(n) Dividends
Dividends are recognised as a liability in the Group’s Financial Statements in the period in which they are declared by the
Company. In the case of final dividends, this is when approved by the shareholders at the AGM.
(o) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated
Income Statement as incurred.
(ii) Defined benefit plans
The Group’s net obligation in respect of the defined benefit pension plan is calculated by estimating the amount of future
benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted
to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the
Statement of Financial Position date on high quality corporate bonds that have maturity dates approximating to the terms
of the Group’s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. The
excess of scheme liabilities over scheme assets is included in the Statement of Financial Position under non-current
liabilities. The increase in the present value of the liabilities of the scheme expected to arise from employee service (current
service cost) in the period is charged to operating profit. The expected return on the scheme’s assets and the increase
during the period of the scheme’s liabilities, arising from the passage of time, are included as other finance income/costs.
Actuarial gains and losses arising subsequent to the transition to IFRS are recognised in full in the Statement of
Comprehensive Income.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is
recognised as an expense in the Consolidated Income Statement on a straight-line basis over the average period until the
benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the
Consolidated Income Statement.
Where the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised
and past service costs and the present value of any future refunds from the plan or reductions in future contributions to
the plan.
A full actuarial valuation is carried out every 3 years. The next actuarial valuation is due on 1 May 2010.
(iii) Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged
to the Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that,
ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually
vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long
as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting
condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options,
measured immediately before and after the modification, is also charged to the Consolidated Statement of
Comprehensive Income over the remaining vesting period.
2. Significant accounting policies (continued)
(p) Provisions
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable than an outflow of economic benefits will be required to settle the
obligation. If the effect is material, 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, where appropriate, the risks specific to the
liability.
(q) Trade and other payables
Trade and other payables are not interest-bearing and are stated at their settlement amount.
(r) Borrowings
Borrowings are recognised initially at proceeds received, net of transactions costs. Subsequent measurement is at
amortised cost. Finance charges including any premiums payable on settlement are recognised in the Consolidated
Income Statement over the period of the borrowings using the effective rate of interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the Statement of Financial Position date.
(s) Revenue recognition
Contract revenue is recognised under the percentage of completion method. When the outcome of the contract can be
reliably estimated, revenue is recognised by reference to the proportion that accumulated cost of sales up to the year end
bear to the estimated total costs of the contract. When the contract is at an early stage and its outcome cannot be reliably
estimated, revenue is recognised to the extent of costs incurred up to the year end which are considered recoverable.
Revenue related to variation orders is recognised when it is probable that the customer will approve the variation and the
amount of revenue arising from the variation can be reliably measured.
A claim is recognised as contract revenue when settled or when negotiations have reached an advanced stage such that
it is probable that the customer will accept the claim and the amount that it is probable will be accepted by the customer
can be measured reliably.
Losses on contracts are assessed on an individual contract basis and provision is made for the full amount of the
anticipated losses, including any losses relating to future work on a contract, in the period in which the loss is first
foreseen.
(t) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the Consolidated Income Statement on a straight-line basis
over the term of the lease. Lease incentives received are recognised in the Consolidated Income Statement as an integral
part of the total lease expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The
finance charge 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.
(iii) Net financing costs
Net financing costs comprise interest payable on borrowings, calculated using the effective interest rate method, interest
receivable on funds invested, dividend income and gains and losses on hedging instruments that are recognised in the
Consolidated Income Statement.
notes to the consolidated financial statements 79
80 Kentz Annual Report
2. Significant accounting policies (continued)
Interest income is recognised in the Consolidated Income Statement as it accrues, using the effective interest method.
Dividend income is recognised in the Income Statement on the date the entity’s right to receive payments is established
which, in the case of quoted securities, is usually the ex-dividend date. The interest expense component of finance lease
payments is recognised in the Consolidated Income Statement using the effective interest rate method.
(u) Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the
Consolidated Income Statement except to the extent that it relates to items recognised directly in equity, in which case it
is recognised in equity.
(i) Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the Statement of Financial Position date, and any adjustment to tax payable in respect of previous years.
(ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and for the amounts used for taxation purposes. The following temporary differences are not provided
for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor
taxable profit, nor differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the Statement of Financial
Position date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay
the related dividend.
3. Segment reporting
Segment information is presented in respect of the Group’s geographical and business segments. The primary format,
geographical segments, is based on the Group’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly income-earning assets and revenue, interest-bearing
loans, borrowings and expenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to
be used for more than one period.
(i) Geographical segments
The Group manages its business on a worldwide basis by organising its activities into four distinct regions. The
geographical areas are:
• Middle East
• Africa
• Australasia, Europe and Caribbean
• Arctic and New Areas region.
Australasia, Europe and Caribbean includes all costs associated with the Group’s administrative function.
Arctic and New Areas region includes costs of investing in and developing the Group’s presence in New Areas during
2009.
3. Segment reporting (continued)
In presenting the information on the basis of geographical segments, segment revenue and segment assets are based on
the geographical location of assets.
(ii) Business segments
The Group’s activity comprises of the following main business segments:
• Specialist engineering, procurement, and construction (EPC)
• Construction
• Technical support services
Primary segment information by location of assets
Geographical segments
Year ended 31 December
In thousands of USD 2009 2008
Revenue by location of assetsMiddle East 445,629 405,951Africa 158,636 131,108Australasia, Europe and Caribbean 39,480 15,787Arctic and New Areas 60,917 90,568
Total revenue 704,662 643,414
Operating profit/(loss) before net finance cost by location of assetMiddle East 30,956 22,896Africa 14,635 12,173Australasia, Europe and Caribbean (8,608) (5,912)Arctic and New Areas 2,867 5,892
39,850 35,049
Unallocated Group income 1,460 1,792
Operating profit before finance costs 41,310 36,841
Flotation costs - (4,695)
Net finance income 1,333 3,994
Share of joint ventures’ profit/(loss) 1,813 (118)
Profit before tax 44,456 36,022
Income tax expense (11,150) (9,845)
Profit for the year 33,306 26,177
notes to the consolidated financial statements 81
82 Kentz Annual Report
3. Segment reporting (continued)
At 31 December
In thousands of USD 2009 2008
Segment assets (including tax) by location of assetsMiddle East 234,728 173,966Africa 82,090 50,830Australasia, Europe and Caribbean 80,787 51,149Arctic and New Areas 36,284 36,116
Total assets as reported in the Statement of Financial Position 433,889 312,061
Segment liabilities (including tax) by location of assetsMiddle East 169,205 114,516Africa 57,909 38,232Australasia, Europe and Caribbean 33,481 16,511Arctic and New Areas 17,242 12,906
Total segmental liabilities 277,837 182,165
Reconciliation of total liabilities as reported in the Statement of Financial Position
Employee benefits 13,128 15,670
Total liabilities as reported in Statement of Financial Position 290,965 197,835
Other segment informationCapital expenditureMiddle East 3,313 6,774Africa 20,291 13,491Australasia, Europe and Caribbean 401 1,672Arctic and New Areas 253 176
Group total 24,258 22,113
DepreciationMiddle East 3,578 2,788Africa 3,577 1,977Australasia, Europe and Caribbean 478 658Arctic and New Areas 390 25
Group total 8,023 5,448
3. Segment reporting (continued)
Secondary segment information by business
Business segments
Year ended 31 December
In thousands of USD 2009 2008
Revenue by businessSpecialist EPC 166,006 184,471Construction 348,148 279,204Technical support services 190,508 179,739
Total revenue 704,662 643,414
At 31 DecemberIn thousands of USD 2009 2008
Segment assets by businessSpecialist EPC 67,685 40,482Construction 123,815 97,480Technical support services 41,985 26,077
233,485 164,039
Unallocated assets 200,404 148,022
Total assets 433,889 312,061
Year ended 31 December
In thousands of USD 2009 2008
Capital expenditure by businessSpecialist EPC 1,517 2,186Construction 21,659 16,945Technical support services 534 910Unallocated 548 2,072
Group total 24,258 22,113
notes to the consolidated financial statements 83
84 Kentz Annual Report
4. AIM listing and flotation costs
The ordinary shares of the Company were admitted to trading on the AIM market of the London Stock Exchange on 5
February 2008. The Company raised US$37.1m before expenses from the listing. Total expenses associated with the
admission of Kentz Corporation Limited to the AIM are US$7.8m. These are reflected in the Consolidated Financial
Statements for the 12-month period ended 31 December 2008 with US$3.1m being offset against share premium raised
and US$4.7m being charged to the Consolidated Income Statement.
5. Operating profit before finance costs
Year ended 31 December
In thousands of USD 2009 2008This is arrived at after chargingDepreciation 8,023 5,448Operating lease rentals - plant and machinery 9,621 7,174- other 8,429 7,999Audit fees for audit services 665 673Directors’ remuneration (note 7) 3,929 4,878Loss on sale of fixed assets 80 65
6. Staff cost
Year ended 31 December
2009 2008In numberContinuing operationsContracts 10,027 10,092Administration 298 297Management 112 104
Group total 10,437 10,493
Staff costs for all employees, including Executive Directors, consist of:
Year ended 31 December
In thousands of USD 2009 2008Continuing operations
Wages and salaries 264,497 266,155Share-based payment expense (note 27) 817 -Other pension costs 1,518 1,197
Group total 266,832 267,352
7. Directors’ remuneration
In thousands of USD
Year ended 31 December 2009Executive Directors Basic salary Performance Share based Other Total
and fees related bonus paymentHugh O’Donnell 436 1,800 18 207 2,461Ed Power 318 511 18 144 991
754 2,311 36 351 3,452
Non-Executive DirectorsTan Sri Mohd Razali Abdul Rahman 100 - - - 100Hassan Abas 68 - - - 68David Beldotti 92 - - 72 164Hans Kraus 72 - - - 72Brendan Lyons 73 - - - 73
405 - - 72 477
Total Directors’ Remuneration 1,159 2,311 36 423 3,929
Year ended 31 December 2008Executive Directors Basic salary Performance Share based Other Total
and fees related bonus paymentHugh O’Donnell 453 2,000 - 212 2,665Ed Power 301 802 - 123 1,226Noel Kelly(1) 191 292 - - 483
945 3,094 - 335 4,374
Non-Executive DirectorsTan Sri Mohd Razali Abdul Rahman 104 - - - 104Hassan Abas 58 - - - 58David Beldotti 96 - - 72 168Hans Kraus 80 - - 19 99Brendan Lyons 75 - - - 75
413 - - 91 504
Total Directors’ Remuneration 1,358 3,094 - 426 4,878
(1) Noel Kelly retired on 10 June 2008.
notes to the consolidated financial statements 85
86 Kentz Annual Report
8. Net finance income/(cost)Year ended 31 December
In thousands of USD 2009 2008
Deposit interest receivable 2,187 4,184Interest payable on bank overdrafts and loans (182) (42)Pension finance charge (672) (148)
1,333 3,994
9. Tax expenseYear ended 31 December
In thousands of USD 2009 2008
Tax on foreign operations 11,129 9,584Deferred tax on foreign operations 21 261
11,150 9,845
Factors affecting tax charge Profit on ordinary activities before tax 44,456 40,717
Profit on ordinary activities before tax by standard rate of corporation tax of nil - -
Effects of:Higher tax rates on overseas earnings 11,129 9,584
11,129 9,584
10. DividendsYear ended 31 December
In thousands of USD 2009 2008
Dividends approved (note 19) 6,845 2,004
6,845 2,004
The interim dividend payment amounting to 2.0 US$ cents per share was made in October 2009 and, the Directors have
proposed a final dividend payment of 4.0 US$ cents per share which would make a total dividend payment of 6.0 US$
cents per share for the year ended 31 December 2009.
11. Earnings per share
The calculations of earnings per ordinary share are based on the following profits attributable to ordinary shareholders and
the weighted average number of shares in issue:
Year Ended 31 December
2008
In thousands of USD 2009 Before Flotation 2008flotation costs
Total costs (Note 4) Total
Profit/(loss) attributable to ordinary shareholders 30,792 28,804 (4,695) 24,109
No. ’000 No. ’000 No. ’000 No. ’000Weighted average number of shares of the Company used in basic EPS 116,371 114,802 114,802 114,802
Effects of:- Employee share options 472 n/a n/a n/a
Weighted average number of shares of the Company used in diluted EPS 116,843 n/a n/a n/a
Earnings per share (US$ cents) Basic 26.46 25.09 (4.09) 21.00
Diluted 26.35 n/a n/a n/a
12. Property, plant & equipment
Land and Plant and Motor In thousands of USD buildings fixtures vehicles Total
CostAs at 1 January 2009 383 31,931 10,133 42,447Additions 5,664 15,524 3,070 24,258Disposals - (430) (365) (795)Exchange adjustment 832 6,240 493 7,565
As at 31 December 2009 6,879 53,265 13,331 73,475
DepreciationAs at 1 January 2009 - 13,248 3,854 17,102Charge for the year 82 5,601 2,340 8,023Disposals - (388) (315) (703)Exchange adjustment 11 1,445 150 1,606
As at 31 December 2009 93 19,906 6,029 26,028
Net carrying amountsAs at 31 December 2008 383 18,683 6,279 25,345
As at 31 December 2009 6,786 33,359 7,302 47,447
notes to the consolidated financial statements 87
88 Kentz Annual Report
12. Property, plant & equipment (continued)
The net book value of property, plant and equipment for the Group includes the following amounts in respect of assets
held under finance lease and hire purchase contracts.
Year ended 31 DecemberIn thousands of USD 2009 2008
Net book value of assets held under finance leases 14,644 -Depreciation on the assets held underfinance lease 286 -
13. GoodwillYear ended 31 December
In thousands of USD 2009 2008
Opening balance 543 760Impairment (624) -Exchange adjustments 81 (217)
Closing balance - 543
On 1 January 2007 Kentz (Proprietary) Limited, a Group company incorporated in South Africa acquired the 10% non-
controlling interest in Kentz Automation and Drives Projects (Proprietary) Limited, a company incorporated in South Africa.
This goodwill has been fully impaired in 2009 as Kentz Automation and Drives Projects (Proprietary) Limited is not
undertaking any new contracts.
14. Other investments Joint
In thousands of USD Venture Other Total
Balance at 1 January 2008 3,925 4 3,929Capital return (437) - (437)Exchange adjustments 567 - 567Share of joint venture profits (118) - (118)Loan repaid (1,039) - (1,039)
As at 31 December 2008 2,898 4 2,902
Balance at 1 January 2009 2,898 4 2,902Additional investment 1,810 15 1,825Exchange adjustments 1,092 - 1,092Share of joint venture profits 1,813 - 1,813
As at 31 December 2009 7,613 19 7,632
In 2006, Kentz Pty Limited, a company incorporated in Australia, which is a subsidiary of the Company, acquired a 50%
interest in an incorporated joint venture known as Thiess Kentz Pty Limited. On 17 December 2009, the name of the joint
venture entity was changed to Kentz E&C Pty Limited.
During 2008, Kentz Russia LLC, a subsidiary of the Company, acquired a 50% interest in two Russian joint ventures
known as Kentz-DEM LLC and Kentz-SMNM LLC.
In 2009, Kentz Pty Limited entered into a joint venture agreement in Australia with Thiess Pty Limited and Decmil Pty
Limited. Kentz Pty Limited has a 33.33% interest in this unincorporated joint venture, known as Thiess Decmil Kentz Joint
Venture.
14.1 Joint ventures
The Group’s interests in these joint ventures are accounted for using the equity method.
At 31 DecemberIn thousands of USD 2009 2008
Total assets 16,961 5,931Total liabilities (9,348) (3,033)
Net investment in the joint ventures 7,613 2,898
15. InventoriesAt 31 December
In thousands of USD 2009 2008
For construction contracts in progress at the Statement of Financial Position date:Cumulative costs incurred net of amounts transferredto cost of sales under percentage of completion accounting 25,150 39,157
Total inventories 25,150 39,157
16. Trade and other receivablesAt 31 December
In thousands of USD 2009 2008
Contract trade receivables 125,844 71,569Retentions held by customers 17,259 5,207Prepayments and accrued income 5,043 4,133Other debtors 10,588 346VAT recoverable 1,942 2,646Corporation tax recoverable 683 177
Total trade and other receivables 161,359 84,078
Retentions due after one year - 1,936
Contract trade receivables that are more than 90 days past due are not considered impaired. At 31 December 2009, the
aging of the contract trade receivables was as follows:At 31 December
In thousands of USD 2009 2008
0 – 60 days 108,847 61,80460 – 90 days 6,774 4,237> 90 days 10,223 5,528
Total contract trade receivables 125,844 71,569
notes to the consolidated financial statements 89
90 Kentz Annual Report
17. Cash and cash equivalentsAt 31 December
In thousands of USD 2009 2008
Cash and cash equivalents– continuing operations 180,284 154,504
180,284 154,504Bank overdrafts– continuing operations (486) (145)
Cash and cash equivalents in the Statement of Cash Flows 179,798 154,359
At 31 DecemberIn thousands of USD 2009 2008
Cash at bank and in hand 79,688 85,665Short-term deposits 100,596 68,839
Total cash and bank balances 180,284 154,504
18. Share capital
The share capital of the Company as at 31 December was as follows:In thousands 2009 2008
Authorised share capital186,333,300 ordinary shares of Stg£0.01 each 1,863 1,863
Called up share capital116,371,470 ordinary shares of Stg£0.01 each 1,164 1,164
US Dollar equivalent 2,284 2,284
19. EquityShare Share Share Cumulativecapital premium Capital option Retained translation
In thousands of USD account account reserve reserve earnings reserves Total
At 1 January 2008 14 7,796 206 - 53,930 372 62,318Issue of shares 323 36,791 - - - - 37,114Expenses associated with share issue - (3,072) - - - - (3,072)Bonus issue 1,947 (1,947) - - - - -Total recognised income and expense - - - - 16,595 3,150 19,745Transfer to statutory reserve - - 2,182 - (2,182) - -Dividends (note 10) - - - - (2,004) - (2,004)
At 31 December 2008 2,284 39,568 2,388 - 66,339 3,522 114,101
At 1 January 2009 2,284 39,568 2,388 - 66,339 3,522 114,101Expenses associated with share-based payments - - - 817 - - 817Total recognised income and expense - - - - 32,546 (522) 32,024Dividends (note 10) - - - - (6,845) - (6,845)
At 31 December 2009 2,284 39,568 2,388 817 92,040 3,000 140,097
The capital reserve is a non-distributable reserve which relates to statutory requirements in certain countries in the Middle
East whereby a certain percentage of the profit for a period must be transferred to a statutory reserve which is not
available for distribution.
The cumulative translation reserve is used to record exchange differences arising from the translation of the Financial
Statements in foreign subsidiaries. It is also used to record exchange differences arising on monetary items that form part
of the Group’s net investment in subsidiaries.
20. Non-controlling interest At 31 December
In thousands of USD 2009 2008
Opening balance 125 339Share of profit 2,514 2,068Purchase of non-controlling interest - (2,277)Dividends paid to non-controlling interest (150) -Exchange difference 338 (5)
Closing balance 2,827 125
The non-controlling interest relates to the 25.002% non-controlling interest held by THEBE Investment in Kentz (Pty)
Limited and its subsidiaries as part of the Black Economic Empowerment initiative in South Africa.
notes to the consolidated financial statements 91
92 Kentz Annual Report
21. Trade and other payablesAt 31 December
In thousands of USD 2009 2008
Trade creditors 68,064 39,520Other creditors 29,270 17,600Advances on contracts 34,231 36,956Accruals and deferred income 122,981 76,388
254,546 170,464
22. Interest-bearing loans and liabilities
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.
For more information about the Group’s exposure to interest rate and foreign currency risk, see note 23
At 31 DecemberIn thousands of USD 2009 2008Current liabilitiesBank overdraft 486 145Current portion of secured loans 1,483 1,864
1,969 2,009
- Bank overdraft 486 145
- Secured loans 1,483 1,864
1,969 2,009
Non-current liabilitiesSecured bank loans - 30
- 30
At 31 December
In thousands of USD Currency Interest rate at Term 2009 200831 December 2009 of loan
Short-term loan AED 4.50% 24 months 37 179Short-term loan EUR 2.75% 30 months 1,446 1,685Bank overdraft AED 6.75% On demand 486 145
1,969 2,009
Long-term loan AED n/a 24 months - 30
1,969 2,039
23. Financial instruments
The focus of the Group’s treasury policy is to ensure that there are sufficient funds to finance the business. Any surplus
funds are kept on interest-bearing deposits. Financial instruments held by the Group principally comprise borrowings,
cash and liquid resources and various items such as receivables and payables, all of which arise directly from its
operations. The main purpose of these financial instruments is to finance the operations of the Group.
The risks arising from these financial instruments are liquidity risk, interest rate risk and exchange rate risk. The Board
reviews and agrees policies for managing each of these risks and these are summarised below. These policies have
remained unchanged during the period under review.
(a) Liquidity risk
Cleared funds held at banks are monitored regularly by senior management and it is the Group’s policy to keep surplus
funds on interest-bearing deposits. At the Statement of Financial Position date there were no significant concentrations
of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset.
(b) Interest rate risk
The financial assets of the Group comprise trade and other receivables and cash and cash equivalents. The trade and
other receivables are non interest-bearing. The cash and cash equivalents earn interest at floating rates based on
individual bank base rates.
(c) Foreign currency risk
The Financial Statements are presented in US$, rounded to the nearest thousand which represents the functional currency
of the Group as it is the currency of the primary economic environment in which the Group operates. The Group is
exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the
US$. The currencies giving rise to this risk are primarily Euro, South African Rand, United Arab Emirates Dirham, Saudi
Riyal, Qatari Riyal, Kuwaiti Dinar, Australian Dollar, Malaysian Ringgit, Thai Baht and Russian Rouble.
Exchange rate risk is managed at the subsidiary levels by ensuring that, as far as possible, income and expenses are
denominated in the appropriate functional currency. Certain subsidiaries enter into forward exchange contracts to hedge
the exchange risk. However, the Directors of the Group consider that those contracts outstanding at the relevant periods
are immaterial to the Group and therefore the Directors consider the carrying value to approximate the fair value.
(d) Fair values
The estimated fair values of financial instruments of the Group approximate to their book values as at the relevant period
ends. The following criteria have been used to assess the fair values of the Group’s financial instruments.
• Receivables, cash and cash equivalents and payables are based on their book values due to their short maturity period.
• Loans are based on their book values which represents the Directors’ opinion of their fair values.
The fair value of the Group’s lease obligations approximates their carrying amounts.
As the Group’s bank borrowings bear interest at floating rates, which represent prevailing market rates, the Directors
consider the carrying amount of these borrowings approximates their fair value.
The Directors estimate the fair value of the amounts due to/from related companies approximates to the carrying value.
notes to the consolidated financial statements 93
94 Kentz Annual Report
24. Deferred tax asset/liabilities
Deferred tax is calculated in full on temporary differences under the liability method using tax rates applicable in the various
jurisdictions in which the Group operates in. The movement on the deferred tax account is as shown below:
Year ended 31 DecemberIn thousands of USD 2009 2008
Opening balance (103) (986)Charge to the income statement 21 261Utilised during the year (404) 177Foreign exchange adjustment 711 445
Net deferred tax liability/(asset) at the end of the year 225 (103)
Deferred taxation is reflected in the Statement of Financial Position asDeferred tax asset (149) (184)Deferred tax liability 374 81
Net liability/(asset) 225 (103)
Deferred tax assets not provided
Year ended 31 DecemberIn thousands of USD 2009 2008
Deferred tax assets have not been recognised in respect of the following items:
Unutilised tax losses 8,129 7,880
Tax effect 1,016 985
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit
will be available in the subsidiaries where they arise against which the Group can utilise the benefits thereafter.
25. Obligations under finance leases
Amounts payable under finance leases Minimum lease Present value of payments minimum lease
payments2009 2008 2009 2008
Within one year 2,706 - 1,850 -In the second to fifth years inclusive 8,188 - 6,523 -After five years 2,099 - 1,679 -
12,993 - 10,052 -
Less: future finance charges (2,941) - - -
Present value of lease obligations 10,052 - 10,052 -
Less: Amount due for settlement within 12 months (1,850) -
Amounts due for settlement after 12 months 8,202 -
26. Employee benefits
The following pension schemes operate in the Group.
(a) Irish administered defined benefit scheme
The Group operates a contributory defined benefit pension plan for certain of its General and Professional Staff.
The pension plan is administered by independent trustees and is managed externally by independent investment
managers.
The pension charge in the Income Statement is calculated so as to spread the cost of the pensions over the employees’
expected working lives with the Group. The pension cost is determined in accordance with the advice of qualified
actuaries, using the Attained Aged method. An actuarial valuation was completed for the General and Professional Staff
Plan on 1 May 2007.
The assumptions which most significantly affect the incidence of pension costs are those relating to the rate of return on
the investments of the plan and the rate of increase in salaries and pensions. The financial assumptions inherent in the
actuarial basis underlying the plan assume that the long-term investment return exceeds the rate of increase in
pensionable earnings by 2% per annum.
At the date of the most recent actuarial valuation, the market value of the General and Professional Plan amounted to
€17,627,000 equivalent to US$25,770,000 and the actuarial value of the assets represented 76% of the liability for
benefits under the valuation method, for service to the valuation date, based on salaries projected to retirement or earlier
exit. The actuarial report is not available for public inspection.
notes to the consolidated financial statements 95
96 Kentz Annual Report
26. Employee benefits (continued)
The disclosures required under IAS 19 “Employee Benefits” are as follows:
Year ended 31 December
In thousands of USD 2009 2008
Valuation method Projected Projected unit method unit method
Inflation rate 2.00% 2.00%Salary increases 3.50% 3.50%Increase for pension in payments 3.00% 3.00%Discount rate 5.75% 5.80%Expected rate of return on plan assets 7.10% 7.00%
The major categories of scheme assets as a percentage of the total fair value of scheme assets are as follows:
Equities 76.45% 71.98%Bonds 20.12% 22.81%Property 3.42% 5.00%Cash 0.01% 0.21%
100% 100%
Expense recognised in the Income Statement
Year ended 31 December
In thousands of USD 2009 2008
Current service cost 495 519Interest on obligation 1,993 1,931Expected return on plan assets (1,321) (1,784)
1,167 666
Analysis of the amount recognised in the Statement of Comprehensive Income
Year ended 31 December
In thousands of USD 2009 2008
Actual return less expected return on pension scheme assets 2,289 (9,307)Experience gains/(losses) arising on the scheme liabilities 185 (1,544)Change in the assumptions underlying the present value of the scheme liabilities (318) 2,535
Actuarial gains/(losses) recognised in the statementof comprehensive income 2,156 (8,316)
26. Employee benefits (continued)
The amount included in the Statement of Financial Position arising from the Group’s obligation in respect of its defined benefit scheme is as follows:
Year ended 31 December
In thousands of USD 2009 2008
Present value of defined benefit obligations 37,011 33,555Fair value of plan assets 23,883 17,885
Recognised liability for defined benefit obligations 13,128 15,670
Movement in deficit during the period
Year ended 31 December
In thousands of USD 2009 2008
Opening balance 15,670 9,801Current service cost 495 519Contributions paid (1,955) (2,312)Other finance cost 672 148Actuarial (gain)/loss (2,156) 8,316Foreign exchange loss/(gain) 402 (802)
Deficit at period end 13,128 15,670
Year ended 31 December
In thousands of USD 2009 2008Change in benefit obligationBenefit obligation at beginning of the year 33,555 34,090Service cost 495 519Interest cost 1,993 1,931Plan members’ contributions 668 794Actuarial loss/(gain) 133 (990)Benefits paid (943) (819)Expenses paid (22) (75)Premiums paid - (180)Foreign exchange loss/(gain) 1,132 (1,715)
Benefit obligation at end of the year 37,011 33,555
Year ended 31 December
In thousands of USD 2009 2008Change in plan assetsFair value of plan assets at beginning of the year 17,885 24,289Expected return on plan assets 1,321 1,784Actuarial gain/(loss) 2,289 (9,307)Employer contributions 1,955 2,312Member contributions 668 794Benefits paid from plan (943) (819)Expenses paid (22) (75)Premiums paid - (180)Foreign exchange gain/(loss) 730 (913)
Fair value of plan assets at end of the year 23,883 17,885
notes to the consolidated financial statements 97
98 Kentz Annual Report
26. Employee benefits (continued)
History of scheme assets, liabilities and actuarial gains and losses
2009 2008 2007 2006Amounts recognised in the Statement of Financial PositionPresent value of funded obligations (37,011) (33,555) (34,090) (30,541)Fair value of plan assets 23,883 17,885 24,289 21,953
Net deficit (13,128) (15,670) (9,801) (8,588)
Actual return less expected return on scheme assets 2,289 (9,307) (3,688) 695% of scheme assets 9.6% (52.04%) (15.20%) 3.20%
Experience gain/(loss) arising on scheme liabilities 185 (1,544) (2,791) 470% of scheme liabilities 0.5% (4.60%) (8.20%) 1.50%
(b) Irish administered defined contribution scheme
The Group also operates a defined contribution pension scheme in Ireland.
The pension charge in the Income Statement for the following periods are as follows.
Year ended 31 DecemberIn thousands of USD 2009 2008
Pension charge to the Income Statement 185 180
(c) South African administered scheme
A defined benefit pension plan also operated for the Group’s employees in South Africa. This scheme is in the process of
being converted to a defined contribution scheme. An actuarial valuation was completed for the plan as at 1 August 2003.
An actuarial review of the value of the fund was performed in July 2008.
The pension charge in the Income Statement for the following periods and any shortfall identified in the fund included in
trade and other payables are as follows.
Year ended 31 DecemberIn thousands of USD 2009 2008
Pension charge to the Income Statement 531 387
Shortfall in the fund - 196
(d) Construction Industry Federation (CIF) scheme
Certain companies in the Group also participate in the CIF defined benefit plan.
The pension charge in the Income Statement for the following periods is as follows.
Year ended 31 DecemberIn thousands of USD 2009 2008
Pension charge to the Income Statement 307 111
27. Share-based payment
The Company operates an equity-settled share based remuneration scheme for key management. All key management
are eligible to participate in the scheme, with the vesting conditions being that the individual remains an employee of the
Group over the savings period and subject to certain financial performance conditions being met. In addition, the options
will lapse if the individual leaves within 2 years of satisfying this criterion.
2009 2009 2008 2008Weighted Number Weighted Numberaverage averageexercise exerciseprice (p) price (p)
Outstanding at beginning of the year - - n/a n/aGranted during the year 154.5 5,712,000 n/a n/aForfeited during the year - - n/a n/aExercised during the year - - n/a n/aLapsed during the year 154.5 (54,000) n/a n/a
5,658,000
Of the total number of options outstanding at the end of the year, nil had vested and were exercisable at the end of the
year.
The following information is relevant in the determination of the fair value of options granted during the year under the
equity-settled share-based remuneration scheme operated by the Group.
In thousands of USD 2009 2008
Equity-settledOption pricing model used Black-Scholes n/aWeighted average share price at grant date (in Stg£ pence) 154.5 n/aExercise price (in Stg£ pence) 154.5 n/aExpected life of share award (in years) 5 n/a
Dividend growth rate relative to comparator index
Equity-settled Expected volatility 41.52 n/aExpected dividend growth rate 1.85 n/aRisk-free interest rate 3.06 n/a
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical
analysis of daily share prices over the last three years.
The share-based remuneration expense (note 6) comprises:
In thousands of USD 2009 2008
Equity-settled schemes 817 n/a
The Group did not enter into any share-based payment transactions with parties other than employees during the current
or previous period.
notes to the consolidated financial statements 99
100 Kentz Annual Report
28. Contingent liabilities
(a) Certain banking facilities of the Group and its subsidiaries are secured by various securities, including the assignment
of contract receivables, the cession of book debtors and corporate guarantees from the Company. The Company
together with its subsidiary companies have given corporate guarantees as security for the banking facilities of certain
Group companies amounting to US$423.4m.
(b) The Group’s bankers and certain insurance companies provide guarantees to customers as security against the
possibility of the Group or certain companies related to the Group failing to satisfactorily complete contracts.
Guarantees issued with recourse against the Group amount to:
Year ended 31 DecemberIn thousands of USD 2009 2008
Guarantee bonds provided by banks 175,949 140,555Guarantee bonds provided by insurance companies 103,174 48,919
279,123 189,474
These guarantees are represented by the contractual amount. However, as management fully expects the guarantees to
expire at the end of these terms without being called upon, the contractual amount is not an estimate of future cash flows.
(c) The Company and its subsidiary Kentz International Limited have also provided guarantees for certain Group
companies in respect of performance of obligations under contract and tenders for contracts and a letter of financial
support for Kentz Management Limited.
(d) The Group has received advances on certain contracts as follows:
Year ended 31 DecemberIn thousands of USD 2009 2008
Advances received on contracts 34,231 36,956
29. Capital commitments
The following are the annual commitments under non-cancellable operating leases:
Year ended 31 DecemberIn thousands of USD 2009 2008
Within 1 year 11,846 11,873Between 2 and 5 years 5,539 5,803Greater than 5 years 670 1,250
18,055 18,926
30. Profit before tax reported in Statement of Cash FlowsYear ended 31 December
In thousands of USD 2009 2008
Profit before tax as reported in the Consolidated Income Statement 44,456 36,022
Profit before tax as reported in the Consolidated Statement of Cash Flows 44,456 36,022
31. Related parties and related party transactions
Identity of related parties
The Group has a related party relationship with its subsidiaries (see note 32), joint ventures (see note 14.1) and with its
Directors and Executive Officers.
Transactions with key management personnel
In addition to their salaries, the Group also provides non-cash benefits to Directors and Executive Officers, and contributes
to a post-employment defined benefit plan on their behalf. In accordance with the terms of the plan, Directors and
Executive Officers retire at age 60 and are entitled to receive annual payments equivalent to 1/60th of their final
pensionable salary for each year of pensionable service.
Pensionable service is the total number of complete and continuous years (with a maximum of 40) which the individual
has completed with the Group.
Final pensionable salary is the average of the individual’s pensionable salary on 1 May in each of three consecutive years,
the last of these years commencing on 1 May which immediately precedes the individual’s 59th birthday.
The key management personnel compensations are as follows:
Year ended 31 DecemberIn thousands of USD 2009 2008
Short-term Employee Benefits 6,751 6,241Post-employment benefits 554 462Share-based payments 224 -
7,529 6,703
Total remuneration is included in the Consolidated Income Statement (see note 6):Year ended 31 December
In thousands of USD 2009 2008
Directors 3,929 4,878Executive Officers 7,529 6,703
11,458 11,581
Management Incentivisation Arrangement
Pursuant to discussions in 2006 and 2007, Kerbet Limited formally signed share purchase agreements to dispose of 20%
of the issued share capital of the Company to Siemers Holdings Limited (4.25%) and Danache Holdings Limited (15.75%)
for an aggregate purchase price of US$18.8m. Siemers Holdings Limited and Danache Holdings Limited were
established for the purpose of this transaction and are each owned by a trustee, Essex Trust Limited, for and on behalf
of 83 members of the Group’s senior management. The Company is not a party to this arrangement, but has agreed to
meet certain costs relating to the arrangement.
Following admission to AIM, Siemers Holdings Limited sold all of its ordinary shares in the Company, and Danache
Holdings Limited sold 33.3% of its shareholding. Danache Holdings Limited now holds 11,660,570 shares in the
Company.
Description of the other related parties
Kerbet Limited
At 31 December 2009, the Company was 26.5% owned by Kerbet Limited, a company registered in Jersey. Kerbet
Limited is ultimately owned by Gigondas Real Estate Inc (80%) and Covili Investment Limited (20%). Both of these
companies are registered in the British Virgin Islands and are beneficially owned by two of the Company’s Directors, Tan
Sri Mohd Razali Abdul Rahman and Hassan Abas.
notes to the consolidated financial statements 101
102 Kentz Annual Report
31. Related parties and related party transactions (continued)
Saffa Limited
Saffa Limited, a company incorporated in the Republic of Ireland, is beneficially owned by three of the Company’s
Directors. In 2005, a property owned by the Group was sold to Saffa Limited at open market value based on an
independent valuation for an amount of US$3,155,941. The property was subsequently leased to the Group by Saffa
Limited.
The Group pays rent to Saffa Limited and collects rental income on Saffa Limited’s behalf. Amounts due to/from the Group
to Saffa Limited are included in related parties.
Peremba Group companies
Tan Sri Mohd Razali Abdul Rahman and Hassan Abas, who are Directors of the Company, are also shareholders in the
Peremba Group companies incorporated in Malaysia.
Carmyle Limited
On 30 June 2007, Carmyle Limited entered into an agreement to purchase all of the shares held by the Kentz Group in
Likusasa Engineering & Contracting (Proprietary) Limited for US$1,000,000. Tan Sri Mohd Razali Abdul Rahman, Hassan
Abas and Hugh O’Donnell, who are Directors in the Company, are also shareholders in Carmyle Limited. At 31 December
2007, US$1,000,000 in respect of this purchase consideration together with US$10,543 of expenses incurred on Carmyle
Limited’s behalf is included in amounts due from related parties. On 30 January 2008, the purchase consideration of
US$1,000,000 was received. At 31 December 2008, an amount of US$20,982 was due in respect of expenses incurred
on Carmyle Limited’s behalf.
Transactions with joint ventures
Subsidiary companies incurred reimbursable costs on behalf of the joint ventures listed in note 32.
Amount due from related partiesAt 31 December
In thousands of USD 2009 2008
Joint ventures 11,418 3,011Kerbet Limited 61 53Carmyle Limited - 21Peremba Group companies 234 325Saffa Limited 155 2
11,868 3,412
Amount due to related partiesAt 31 December
In thousands of USD 2009 2008Current liabilities
Joint ventures 2,887 1,430Peremba Group companies 374 319Kerbet Limited 146 145Saffa Limited 47 -
3,454 1,894
At 31 DecemberIn thousands of USD 2009 2008Non-current liabilities
Kerbet Limited (Shareholders’ advance) 92 92
32. Subsidiaries, quasi-subsidiaries and joint ventures
The Company has dominant influence over the subsidiaries listed below. Accordingly, the Consolidated Financial
Statements incorporate 100% of the assets, liabilities, income and expenses (except where otherwise stated) in
accordance with the basis of consolidation accounting policy at 31 December 2009.
Country of
incorporation
Name and registration Nature of business
Kentz Ireland Limited Ireland Mechanical/electrical/
instrumentation
Clonmak Limited Ireland Non trading
Chandler Enterprises Limited Ireland Holding company
Cahirmee Holdings Limited * Ireland Dormant
Kentz Engineering International Limited Ireland Engineering services
Kentz Management Limited Ireland Engineering,
financial and human resources
Kentz Holdings (Europe) B.V. The Netherlands Holding company
Kentz lnternational Limited Channel Islands Holding company
Leonora Limited Channel Islands Holding company
Kentz Overseas Limited Channel Islands Engineering services
Bratoga Limited Channel Islands Engineering services
Kentz TSS Global Limited
(Formerly SA Kentz Proekty Limited) Channel Islands Holding company
Kentz Equatorial Guinea Limited Channel Islands Mechanical/electrical/
instrumentation
Kentz Caspian Limited Isle of Man Mechanical/electrical/
instrumentation
UTS Kent LLC United Arab Emirates Mechanical/electrical/
instrumentation
Saudi Arabian Kentz Company Limited Saudi Arabia Mechanical/electrical/
instrumentation
Radicon Gulf Consulting lndustrial Division Saudi Arabia Engineering services
Qatar Kentz W.L.L. Qatar Mechanical/electrical/
instrumentation
Kentz MiddIe East Holding Company W.L.L. Bahrain Holding company
Kentz Global Oil and Gas Process Systems Limited Bahrain Engineering services
(50% interest)
Kentz Africa Holdings Limited Isle of Man Holding company
Kentz Botswana (Proprietary) Limited Botswana In liquidation
Kentz Africa Proprietary Limited Botswana Dormant
Kentz Engineers and Constructors Botswana (Pty) Limited Botswana Engineering and construction (incorporated 31 March 2009) services
Kentz Mauritius Limited (incorporated 31 March 2009) Mauritius Holding company
Kentz Engineering and Constructors, Limitada Mozambique Engineering and construction (incorporated 31 March 2009 ) services
Kentz South Africa (Proprietary) Limited South Africa Holding company
Kentz (Proprietary) Limited (74.998% interest) South Africa Engineering and contracting
Kentz Management Services (Proprietary) Limited South Africa Dormant
Kentz Property Holdings Limited (56.2% interest) South Africa Property investment and
management company
notes to the consolidated financial statements 103
104 Kentz Annual Report
32. Subsidiaries, quasi-subsidiaries and joint ventures (continued)
Country of
incorporation
Name and registration Nature of business
Kentz Training Solutions Limited (43.5% interest) South Africa Training services
Kentz Automation and Drives Projects (Proprietary) Limited South Africa Mechanical/electrical/
(74.998% interest) instrumentation engineering
Peremba Kentz (Thai) Limited Thailand Engineering services
Kentz MEPC (Malaysia) Sdn. Bhd Malaysia Mechanical/electrical/
instrumentation
Peremba Kentz MEC Sdn. Bhd Malaysia Mechanical/electrical/
instrumentation
Kentz Pty Limited (Australia) Australia Mechanical/electrical/
instrumentation
Kentz (Australia) Pty Limited Australia Mechanical/electrical/
instrumentation
Kentz E&C Pty Limited (50% Interest) Australia Mechanical/electrical/
(Formerly Thiess Kentz Pty Limited) instrumentation
Thiess Decmil Kentz JV (33.33% Interest) Australia Mechanical/electrical/
(Established 13 June 2009) instrumentation
Kentz USA Inc. USA Mechanical/electrical/
instrumentation
Kentz Caribbean LLC USA Mechanical/electrical/
instrumentation
Kentz OJ’s E&I Services JV (50% Interest) Trinidad & Tobago Mechanical/electrical/
instrumentation
Kentz OJ’s JV Barbados Limited (50% Interest) Caribbean Mechanical/electrical/
instrumentation
Kentz Caribbean (PR) Inc. Caribbean Mechanical/electrical/
instrumentation
Kentz Russia LLC Russia Mechanical/electrical/
instrumentation
Kentz-DEM LLC (50% Interest) Russia Mechanical/electrical/
instrumentation
Kentz-SMNM LLC (50% Interest) Russia Mechanical/electrical/
instrumentation
Kentz Canada Holdings Limited Canada Mechanical/electrical/
instrumentation
*This subsidiary was dissolved during the year.
33. Critical accounting estimates and judgements
Management makes estimates and judgements, including assumptions concerning the future. Estimates 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 in the circumstances.
The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are as follows:
Revenue recognition
The Group uses the percentage-of-completion method in accounting for its contract revenue. Use of the percentage-of-
completion method requires management to estimate the stage of completion of a contract to date as a proportion of the
total contract work to be performed in accordance with the accounting policy set out in note 2 (s). As a result, Kentz Group
management is required to estimate the total cost to completion of all outstanding jobs at each period end.
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the
worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such
determination is made.
Pension benefits
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the
discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. The Group
determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine
the present value of estimated future cash outflows expected to be required to settle the pension obligations. In
determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms
of the related pension liability. Other key assumptions for pension obligations are based in part on current market
conditions. Additional information is disclosed in note 26.
34. Events after the reporting period
(a) Final dividend
The Directors have proposed a final dividend of 4.0 US$ cents per share which would make a total dividend payment of
6.0 US$ cents per share for the year ended 31 December 2009. The final dividend payment will be made in June 2010
to shareholders on the register at the close of business on 21 May 2010.
(b) Management control of Australian Joint Venture
From 1 January 2010, following an agreement with Thiess Pty Limited, Kentz has now taken management control of
Thiess Kentz Pty Limited in Australia, although its shareholding remains the same. The joint venture company has changed
its name to Kentz E&C Pty Limited.
notes to the consolidated financial statements 105
106 Kentz Annual Report
shareholder information
Secretary IFG Secretaries (C.I.) Limited
Registered office IFG House
15 Union Street
St Helier
JE1 1FG
Jersey
Channel Islands
Auditors BDO
Registered Auditors
Beaux Lane House
Mercer Street Lower
Dublin 2
Ireland
Solicitors Arthur Cox William Fry
Earlsfort Centre Fitzwilton House
Earlsfort Terrace Wilton Place
Dublin 2 Dublin 2
Ireland Ireland
Simmons & Simmons Ogier
One Ropemaker Street Whiteley Chambers
London EC2Y 9SS Don Street
United Kingdom St Helier
JE4 9WG
Jersey
Channel Islands
Nominated advisor and broker Evolution Securities
100 Wood Street
London EC2V 7AN
United Kingdom
Registrar Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
107
notice of annual general meeting
Notice is hereby given that the Annual General Meeting of Kentz Corporation Limited (the “Company”) will be held at The
Andaz Hotel, 40 Liverpool Street, London, EC2M 7QN, England on Friday, 11 June 2010 at 9.30am for the purpose of
conducting the following business:
Ordinary Business
1. To receive and approve the Company’s financial statements for the year ended 31 December 2009 and the reportsof the Directors and auditors thereon.
2. To re-elect as a Director of the Company Tan Sri Mohd Razali Abdul Rahman (who retires in accordance with Articles33 and 34 of the Articles of Association) and who, being eligible, offers himself for re-election.
3. To re-elect as a Director of the Company Brendan Lyons (who retires in accordance with Articles 33 and 34 of theArticles of Association) and who, being eligible, offers himself for re-election.
4. To re-elect as a Director of the Company Hans Joachim Kraus (who retires in accordance with Articles 33 and 34 ofthe Articles of Association) and who, being eligible, offers himself for re-election.
5. To re-appoint BDO as Auditors to hold office from the conclusion of the meeting to the conclusion of the next annualgeneral meeting of the Company.
6. To authorise, subject to the passing of item 5 referred to above, the Directors to determine the remuneration of BDOas Auditors of the Company for the current financial year.
7. To declare a final dividend of 4.0 US$ cents per ordinary share of the Company in respect of the year endedDecember 2009. This dividend will be paid in June 2010 to the holders of ordinary shares on the register at the closeof business on 21 May 2010.
Special Business
8. To renew by special resolution the Directors’ authority granted on 11 June 2009 pursuant to Article 2.16 of the Articlesof Association to allot up to a maximum of 5,818,573 ordinary shares in the Company which represents 5% of thetotal number of issued ordinary shares in the Company for cash consideration without first being required to offersuch shares to existing members in proportion to their existing holdings pursuant to Article 2.7 of the Articles ofAssociation, as the Directors in their absolute discretion see fit in any number of tranches, such authority to expire atthe next Annual General Meeting unless revoked, varied or extended prior to that meeting by ordinary resolution ofthe members of the Company. The Company does not hold any treasury shares. At present the Directors do notintend to exercise the authority to allot additional ordinary shares.
9. By special resolution pursuant to Article 57 of the Companies (Jersey) Law 1991, as amended, to authorise theCompany generally and unconditionally to purchase up to 10% of its issued share capital provided that:
(1) the maximum aggregate number of ordinary shares that may be purchased is 11,637,147 ordinary shares of£0.01 each;
(2) the minimum price (excluding expenses) which may be paid for each ordinary share is £0.01 each;
(3) the maximum price (excluding expenses) which may be paid for each ordinary share is the higher of:
(a) 105 per cent of the average market value of an ordinary share in the Company for the five business days priorto the day the purchase is made; and
(b) the value of an ordinary share calculated on the basis of the higher of the price quoted for: (i) the lastindependent trade of; and (ii) the highest current independent bid for, any number of the Company's ordinaryshares on the trading venue where the purchase is carried out.
The authority conferred by this resolution shall expire on 11 December 2011 or, if earlier, at the conclusion of theCompany’s next Annual General Meeting.
10. By ordinary resolution pursuant to Article 58A(1)(b) of the Companies (Jersey) Law 1991, as amended, to authorisethe Company to hold any of its limited shares that it has repurchased upon the authorisation under item 9 above, astreasury shares.
Dated: 5th day of May 2010 BY ORDER OF THE BOARD
Registered Office IFG Secretaries (C.I.) Limited
IFG House Company Secretary
15 Union Street
St Helier
JE1 1FG
Jersey
108 Kentz Annual Report
NOTES:
(i) Item 9 seeks authority for the Company to purchase a certain amount of its own ordinary shares and is proposed as a special resolution. If passed, theresolution gives authority for the Company to purchase up to 11,637,147 of its ordinary shares, representing up to 10% of the Company's issuedordinary share capital (it being noted that the Company does not have any treasury shares) as at 5 May 2010. The resolution specifies the minimum andmaximum prices which may be paid for any ordinary shares purchased under this authority. The authority will expire on the earlier of 11 December 2011and the Company’s 2011 Annual General Meeting.
The Directors do not currently have any intention of exercising the authority granted by this resolution. The Directors will only exercise the authority topurchase ordinary shares where they consider that such purchases will be in the best interests of shareholders generally and will result in an increase inearnings per ordinary share.
The Company may either cancel any shares it purchases under this authority or with ordinary resolution approval under item 10 above transfer suchrepurchased shares into treasury (and subsequently sell or transfer them out of treasury or cancel them).
(ii) Any member entitled to attend and vote at this meeting may appoint one or more proxies to attend and on a poll, to vote instead of him. To appointmultiple proxies this form may be photocopied. A proxy need not be a member of the Company. A form of proxy accompanies this notice of AnnualGeneral Meeting. Completion of the proxy does not preclude a member from subsequently attending and voting at the meeting in person if he or sheso wishes.
(iii) The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of suchpower or authority, shall be deposited with the UK Transfer Agent, Capita Registrars (Proxies Department), The Registry, 34 Beckenham Road,Beckenham, Kent, BR3 4TU, England, or the instrument of proxy issued by the Company at least 48 hours before the time appointed for holding themeeting or any adjournment thereof, at which the person named in the instrument proposes to vote or, in the case of a poll, before the time appointedfor taking the poll and, in default, the instrument of proxy shall not be treated as valid.
(iv) A vote given or a poll demanded by proxy or by a duly authorised representative of a body corporate shall be valid notwithstanding the previousdetermination of the authority of the person voting or demanding a poll unless notice of the determination was received by the UK Transfer Agent, CapitaRegistrars (Proxies Department), The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, England, before the commencement of the meetingor adjourned meeting at which the vote is given or the poll demanded or (in the case of a poll taken otherwise than on the same day as the meeting oradjourned meeting) the time appointed for taking the poll.
(vi) Any corporation which is a holder may, by resolution of its Directors or other governing body, authorise such person as it thinks fit to act as itsrepresentative at any general meeting or at any meeting of any class of holders, and the person so authorised shall be entitled to exercise the samepowers on behalf of the corporation which he represents as that corporation could exercise if it were a natural person who is a holder. A corporationpresent at any meeting by such representative shall be deemed for the purposes of these Articles to be present in person.
(vii) Pursuant to Regulation 40 of the Companies (Uncertified Securities) (Jersey) Order 1999, the time by which a person must be entered on the register ofmembers of the Company in order to have the right to attend and vote at the meeting is 6.00 pm on 9 June 2010. Changes to entries on the registerof members after the relevant time will be disregarded in determining the rights of any person to attend or vote at the meeting.
(viii) In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most seniorholder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members inrespect of the joint holding (the first-named being the more senior).
(ix) The issued share capital of the Company as at 5 May 2010 was 116,371,470 ordinary shares, carrying one vote each. The Company holds no treasuryshares and there are no share warrants in existence and therefore, the total number of voting rights in the Company on 5 May 2010 was 116,371,470.
(x) Biographical details of each Director can be found on pages 12 and 13 of the annual report.
109
glossary
AIM Alternative Investment Market
ASU Air Separation Units
Backlog Part of ongoing projects yet to be realised
B2B Back to Basics
BEEP Business Development, Exposure, Experience Programme
BRIC Brazil, Russia, India and China
CEO Chief Executive Officer
CFO Chief Financial Officer
COO Chief Operations Officer
DPC Design, Procurement, Construction
E&I Electrical and Instrumentation
E&P Engineering and Procurement
EBITDA Earnings before Interest, Tax, Depreciation and Amortisation
EDipLM Executive Diploma in Leadership and Management
EMSP Entry Management Supervisory Programme
EPC Engineering, Procurement and Construction
EPCC Engineering, Procurement, Construction and Commissioning
EPIC Engineering, Procurement, Installation and Commissioning
FEED Front-End Engineering and Design Phase
FEEP Financial, Exposure, Experience Programme
FPSO Floating, Production, Storage and Offloading. A converted or custom-built ship-shaped floater, employed to
process oil and gas for a temporary storage prior to transhipment.
FSU Former Soviet Union
GCC Gulf Co-operation Council
GTL Gas-to-Liquids. Transformation of natural gas into liquid fuel based on Fischer Tropsch technology
HR Human Resources
HSE Health, Safety and Environment
IMCA International Management Centres Association
IMF International Monetary Fund
IPO Initial Public Offering
LNG Liquefied Natural Gas
LTI Lost Time Incidents
LTIFR Lost Time Injury Frequency Rate
MBA Masters of Business Administration
MEED Middle East Economic Digest
MBPD Million Barrels Per Day
MTPA Metric Tonnes Per Annum
OSHA Occupational Safety and Health Administration
PBT Profits Before Tax
QCA Quoted Companies Alliance. A not-for-profit organisation dedicated solely to fighting for the interests of the
smaller quoted company (SQC) sector, defined as those quoted companies outside of the FTSE 350, including
those on AIM and PLUS
QEEP Quantity Surveying, Exposure, Experience Programme
REEP Rotation, Exposure, Experience Programme
ROCE Return On Capital Employed
SEC Skills Enhancement Courses
SMDP Supervisory, Management Development Programme
SMEIP Structural, Mechanical, Electrical, Instrumentation and Piping
TRIR Total Recordable Incident Rate
TSI Total Systems Integration
WWT Waste Water Treatment
110 Kentz Annual Report
worldwide offices
www.kentz.com
EuropeIrelandKentz GroupGurtnafleur, Clonmel Co. Tipperary, IrelandTel: Intl+353 52 6122811Fax: Intl+353 52 6126021Email: [email protected]
Kentz Ireland LimitedGurtnafleur, Clonmel Co. Tipperary, IrelandTel: Intl+353 52 6122811Fax: Intl+353 52 6126021Email: [email protected]
Kentz EngineeringInternational Limited (KEIL)Gurtnafleur, Clonmel Co. Tipperary, IrelandTel: Intl+353 52 6122811Fax: Intl+353 52 6126021Email: [email protected]
Middle EastBahrainKentz Middle East Holding (W.L.L.)Regional OfficeP.O. Box 75251, JuffairKingdom of BahrainTel: Intl+973 17 560360Fax: Intl+973 17 582132Email: [email protected]
Kentz Global Oil & Gas ProcessSystems LimitedP.O. Box 75251, JuffairKingdom of BahrainTel: Intl+973 17 560360Fax: Intl+973 17 582132Email: [email protected]
Saudi ArabiaSaudi Arabian Kentz Co. LtdP.O. Box 3462, Al-Khobar 31952Kingdom of Saudi ArabiaTel: Intl+966 3 859 1829Fax: Intl+966 3 859 1836Email: [email protected]
Kentz Engineering International Co. LtdForeign Company Branch OfficeP.O. Box 31412, Al-Khobar 31952Kingdom of Saudi ArabiaTel: Intl+966 3 859 1789Fax: Intl+966 3 859 1856Email: [email protected]
KuwaitKentz Overseas Limited(Kuwait operations)P.O. Box 28244, Safat 13143 KuwaitTel: Intl+965 2398 3020Fax: Intl+965 2398 3014Email: [email protected]
UAEUTS Kent LLC9th Floor, Tower 3, Al Mazyad MallMohammed Bin Zayed City MussafahP.O. Box 34826, Abu DhabiUnited Arab EmiratesTel: Intl+971 2 4013200Fax: Intl+971 2 5591202Email: [email protected]
QatarQatar Kentz (W.l.l.)P.O. Box 3865, Doha, QatarTel: Intl+974 4659435Fax: Intl+974 4552153
Intl+974 4552154Email: [email protected]
AfricaSouth AfricaKentz (Pty) Ltd89 14th Road, Erand Midrand, South AfricaTel: Intl+27 11 203 9600Fax: Intl+27 11 203 9700Email: [email protected]
Kentz (Pty) Ltd 3rd Floor, Hampden Court7 Hampden Road, MorningsideDurban 4001, South AfricaTel: Intl+27 31 312 6317Fax: Intl+27 31 312 6404Email: [email protected]
Kentz Integrated Solutions,a division of Kentz (Pty) LtdNo. 10 Hertz Boulevard Vanderbijlpark 1900, South AfricaTel: Intl+27 16 910 9300Fax: Intl+27 16 933 4543Email:[email protected]
Russia/CaspianRussiaKentz Russia LLC4th Floor, #24-B KommunisticheskiyAvenue, Yuzhno-SakhalinskRussia 693 000Tel: Intl+7 4242 46 49 74/5Fax: Intl+7 4242 46 49 76Email: [email protected]
AzerbaijanKentz Caspian Limited3rd Floor, Room No. 25Khagani Trade CenterKhagani Street, Baku CityAzerbaijanTel: Intl+994 12 598 0522Fax: Intl+994 12 598 0523Email: [email protected]
CaribbeanTrinidadKentz Caribbean LLC5300 Memorial DriveSuite 1060Houston, TX 77007, USATel: Intl+1 713 862 4066Fax: Intl+1 713 862 3342Email: [email protected]
Kentz-OJ’s E&I Services JV#65 New SettlementDow Village, CaliforniaTrinidad, West IndiesTel: Intl+1 868 636 1667Fax: Intl+1 868 679 6917Email: [email protected]
Puerto RicoKentz Caribbean PR Inc.P.O. Box 51432, Toa BajaPuerto Rico 00950-1432Tel: Intl+1 868 684 8649Tel: Intl+1 868 387 5599Email: [email protected]
North AmericaUSAKentz USA Inc.5300 Memorial Drive, Suite 1060Houston, TX 77007, USATel: Intl+1 713 862 4066Fax: Intl+1 713 862 3342Email: [email protected]
CanadaKentz Canada LimitedFirst Alberta PlaceSuite 1520, 777, 8th Avenue SWCalgary, Alberta T2P 3R5, CanadaTel: Intl+1 403 532 1119Fax: Intl+1 403 873 7293Email: [email protected]
AustralasiaMalaysiaKentz MEPC(Malaysia) Sdn. Bhd.Suite J-05-13 Solaris Mont’ KiaraNo. 2 Jalan Solaris, Mont’ Kiara 50480 Kuala LumpurMalaysiaTel: Intl+603 6203 7300Fax: Intl+603 6203 7311Email: [email protected]
AustraliaKentz E&C Pty Ltd6/305 Montague RoadWest End, BrisbaneQLD 4101, AustraliaTel: Intl+61 7 3370 8100Fax: Intl+61 7 3370 8101Email: contactaustralia.kentz.com
Kentz E&C Pty LtdKentz Pty LtdLevel 1, 191 St Georges Terrace Perth, WA 6000Western AustraliaTel: Intl+61 8 9442 2500Fax: Intl+61 8 9226 5435Email: contactaustralia.kentz.com
Kentz E&C Pty LtdLevel 9, 417 St Kilda RoadMelbourne, VIC 3004, AustraliaTel: Intl+61 3 9864 8888Fax: Intl+61 3 9864 8811Email: contactaustralia.kentz.com
2 Kentz Annual Report
3financial highlights
4corporate development andoperational highlights
6chairman’s statement
8chief executive officer’s report
12board of directors
14corporate governance
16key executives and organisation
20outlook, our markets and sector focus
36our HSE performance
42world reach 2009
44some of our 2009 and ongoing projects
48our people
52policies and systems
54corporate and social responsibility
59financial review 2009 andconsolidated financial statements
106shareholder information
107notice of annual general meeting
109glossary
110worldwide offices
Kentz Group is a specialist solutions provider operating principally
within the oil and gas services sectors with over 10,000 staff
worldwide. We deliver our solutions through a wide range of
engineering and construction services using our global network of
offices. We are currently delivering projects in 26 countries with a
strong presence throughout the Middle East and several other oil
and gas developing regions. At Kentz we bring a global reach to our
clients and partners worldwide with consistent performance in
safety, systems applications and fast-track project delivery.
who are we
over 10,000 employees
26 countries
total order backlog ofUS$1,497.4m
as of December 2009
annual report, accounts
& sustainability developments
2009
www.kentz.com providing specialist services worldwide
For more information about Kentz, please refer to our website
www.kentz.com
Evolution Securities Ltd (NOMAD and Broker)
100 Wood Street, London EC2V 7AN
Tel: +44 (0)20 7071 4300
Rob Collins
Chris Sim
Kentz Investor Relations Team
Kentz Corporation Limited
Gurtnafleur, Clonmel, Co. Tipperary, Ireland
Tel: +353 52 6139806
Elizabeth Rous
Catríona Nugent
innovat ion & excel lence
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Kentz Annual R
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