TRANSFORMING FOR A BETTER FUTURE - listed...

ICON OFFSHORE BERHAD (984830-D)

ANNUAL REPORT 2016

T R A N S F O R M I N G F O R A

B E T T E R F U T U R E

SEEING THEPOSSIBILITIES

In its basic configuration, Tangram resembles a rectangle made out of

a seven-piece puzzle. However, with imagination and determination,

the ancient puzzle is capable of transforming into an infinite amount of

shapes and items.The following page demonstrates the forming of a

vessel and a person, two of our most valuable assets.

VESSEL

With a strong foundation and sound management,

ICON is poised for growth, with infinite possibilities.

Just like the Tangram, the sky is the limit.

EXPANDING THEPOSSIBILITIES

PERSONNEL

VISION

To be the preferred g lobal offshore mar ine serv ice prov ider for the o i l and gas industry.

MISSION

We are committed to creat ing va lue for our customers, employees and stakeholders by employ ing a f leet of modern vessels; uphold ing the h ighest standard of Heal th, Safety and Envi ronmenta l pract ices; as wel l as ensur ing the cont inuous development of our greatest asset – our PEOPLE.

VALUES

I

C

O

N

We hope to achieve our V is ion and Miss ion by uphold ing these tenets of our core va lues:

Integr i ty and mutual respect

Committed to creat ing va lue

Operate as one - Teamwork

Navigate the extra mi le

In i ts basic conf igurat ion, Tangram resembles a rectangle made out of a seven-piece puzz le. However, wi th imaginat ion and determinat ion, the ancient puzz le is capable of t ransforming into an inf in i te amount of shapes and i tems.

With a strong foundat ion and sound management, Icon Offshore Berhad (“ ICON” or “ the Group” or “ the Company”) is poised for growth,

wi th in f in i te possib i l i t ies. Just l ike the Tangram, the sky is the l imi t .

T R A N S F O R M I N G F O R A B E T T E R F U T U R E

3 About Us

4 Corporate Information

6 Corporate Structure

8 Type of Vessels

OUR BUSINESS

39 Directors’ Profile

48 Senior Management Team

52 Audit and Risk Management

Committee Report

55 Statement of Corporate Governance

70 Statement on Risk Management and

Internal Control

73 Statement of Directors’ Responsibility

HOW WE ARE GOVERNED

11 Chairman’s Statement

14 Management Discussion and Analysis

23 Financial Highlight

24 Operational Highlight

25 Share Price Performance

26 Calendar of Significant Events

28 Health, Safety and Environment

OUR STRATEGY & PERFORMANCE REVIEW

FINANCIAL STATEMENTS

CORPORATE SOCIAL RESPONSIBILITY

167 List of Vessels

168 List of Property

169 Analysis of Shareholdings

173 Notice of Annual General Meeting

- Proxy Form

OTHER INFORMATION

3 About Us

4 Corporate Information

6 Corporate Structure

8 Type of Vessels

OUR BUS INESS01

01 OUR BUSINESSICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

3

ABOUT US

C O M B I N E D M A N A G E M E N T E X P E R I E N C E

O F M O R E T H A N

120 YEARSI N T H E O I L & G A S ( “ O & G ” )

B U S I N E S S

297,368M A N H O U R S

W I T H O U T L O S T T I M E I N J U R Y

( “ LT I ” )

A T O TA L O F

34O F F S H O R E S U P P O R T

V E S S E L ( “ O S V ” )

R E V E N U E

RM226.9MILLION

L A R G E S T O S V P R O V I D E R I N

MALAYSIA

T O TA L O R D E R B O O K

RM510.3MILLION

01 OUR BUSINESS ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

4

CORPORATE INFORMATION

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun UdaChairman and Non-Independent Non-Executive Director

Amir Hamzah bin AzizanManaging Director and Non-Independent Executive Director

Syed Yasir Arafat bin Syed Abd KadirNon-Independent Non-Executive Director

Datuk Wira Azhar bin Abdul HamidSenior Independent Non-Executive Director

Edwanee Cheah bin AbdullahIndependent Non-Executive Director

Madeline Lee May MingIndependent Non-Executive Director

Datuk Abdullah bin AhmadIndependent Non-Executive Director

Farina binti Farikhullah KhanIndependent Non-Executive Director

Datuk Abdullah bin KarimIndependent Non-Executive Director

BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

Syed Yasir Arafat bin Syed Abd KadirChairman

Amir Hamzah bin Azizan

Captain Hassan bin Ali

Lim Fu Yen

AUDIT AND RISK MANAGEMENT COMMITTEE

Datuk Wira Azhar bin Abdul Hamid Chairman

Edwanee Cheah bin Abdullah

Syed Yasir Arafat bin Syed Abd Kadir

REMUNERATION COMMITTEE

Edwanee Cheah bin AbdullahChairman

Madeline Lee May Ming


NOMINATION COMMITTEE

Edwanee Cheah bin Abdullah Chairman



EMPLOYEES’ SHARE SCHEME COMMITTEE

Edwanee Cheah bin Abdullah Chairman



COMPANY SECRETARIES

Chua Siew Chuan (MAICSA No. 0777689)

Chin Mun Yee (MAICSA No. 7019243)


5

CORPORATE INFORMATION

REGISTERED OFFICE

Level 7,Menara Milenium,Jalan Damanlela, Pusat Bandar Damansara,Damansara Heights,50490 Kuala Lumpur.

Tel. No. : 603 2084 9000Fax No. : 603 2094 9940

HEAD/MANAGEMENT OFFICE

Level 12A, East Wing,The Icon,No. 1, Jalan 1/68F,Off Jalan Tun Razak,55000 Kuala Lumpur.Tel. No. : 603 2180 6300Fax No. : 603 2165 1086Website : www.iconoffshore.com.myEmail : [email protected]

KEMAMAN OFFICE

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

LABUAN OFFICE

Lot 6875, Bestari Warehouse,Jalan Patau-Patau,87000 Labuan F.T.Tel. No. : 6087 410 387Fax No. : 6087 410 424Email : [email protected]

AUDITORS

PRICEWATERHOUSECOOPERSLevel 10, 1 Sentral,Jalan Rakyat, Kuala Lumpur Sentral,PO Box 10192, 50706,Kuala Lumpur, Malaysia.

PRINCIPAL BANKERS

Affin Bank Berhad

AmBank (M) Berhad

AmInvestment Bank Berhad

Bank Pembangunan Malaysia Berhad

Malayan Banking Berhad

OCBC Bank (Malaysia) Berhad

RHB Bank Berhad

Standard Chartered Saadiq Berhad

SHARE REGISTRAR

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

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad (Main Market)Listed since: 25 June 2014Sector: Trading/ServicesStock name: ICONStock code: 5255


6

CORPORATE STRUCTURE

ICON OFFSHORE BERHADHolding Company

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

ICON FLEET SDN. BHD.Vessel holding company

51%Icon Bahtera (B) Sdn. Bhd.* Icon Maritime Training

Centre Sdn. Bhd.

Omni Ventures Sdn. Bhd.

Icon Azra (L) Inc.

Icon Dahan 1 (L) Inc.

Icon Dahan 2 (L) Inc.

Icon Huma (L) Inc.

Icon Ocean (L) Inc.

Omni Power Sdn. Bhd.

Icon Aliza (L) Inc.

Icon Biru 2 (L) Inc.

Icon Explorer (L) Inc.

Icon Kayra (L) Inc.

Omni Marine Sdn. Bhd.

Icon Andra (L) Inc.

Icon Biru 1 (L) Inc.

Icon Dawai (L) Inc.

Icon Ikhlas (L) Inc.

Omni Triton Sdn. Bhd.

Icon Astrid (L) Inc.

Icon Corridor (L) Inc.

Icon Gaya (L) Inc.

Icon Lotus (L) Inc.

100%

* Ownership interest held by non-controlling interest is 49%


7

CORPORATE STRUCTURE

100%

Icon Pinang 2 (L) Inc.

Icon Puteri 1 (L) Inc.

Icon Puteri 2 (L) Inc.

Icon Tigris (L) Inc. Omni Offshore (L) Inc.

Icon Piai 2 (L) Inc.


Icon Sari (L) Inc. Omni Flotilla (L) Inc.

Icon Zara (L) Inc. Omni Victory (L) Inc.

Icon Piai 1 (L) Inc.


Icon Samudera (L) Inc. Omni Emery (L) Inc.

Icon Waja (L) Inc. Omni Stella (L) Inc.


Icon Pioneer (L) Inc.

Icon Sophia (L) Inc. Omni Marissa (L) Inc.

ICON SHIP MANAGEMENT SDN. BHD.Ship management company

51%ICON-FOB Holdings (L) Inc.

100%ICON-FOB 1 (L) Inc.


8

TYPE OF VESSELS

OMNI AKIRA OMNI ANTEIA OMNI EMERY 1

These vessels are used to support offshore oil rigs, platforms and other installations and to tow mobile structures and position their mooring anchors in order to ensure their anchors are placed in a proper position. Our AHTs have a bollard pull that ranges from 40 tonnes to 70 tonnes and horsepower engines ranging from

3,200 to 5,152 Brake Horse Power (“BHP”) which are suitable to operate in shallow water fields.

The defining characteristics of AHTs are their engine power, measured in BHP and the size of their winches in terms of line pull and wire storage capacity. AHTs also possess aft decks which are utilised during anchor

handling and towing operations and for the carriage of deck cargo. The stern of the vessel is open to the sea, with a stern roller fitted to enable the vessel to recover and deploy anchors, while maintaining a clear area for the

vessel’s work wire.

AHTs are also capable of performing a variety of functions in harsher weather conditions compared to traditional vessels. AHTs are capable of providing long range towage services when floating platforms need to be mobilised to other fields, countries or repair yards. Deep water AHTs also provide support for construction

work in transporting and carrying out projects for mobilisation of structures for floatovers, or launching or installation, positioning, hook-up and commissioning work.

AHTAnchor Handling Tug Vessel

Bollard Pull

40-70 tonnes

Engine

3,200-5,220 BHP

Clear Deck Space

150-240 m2

Utility Vessels are much smaller versions of SSVs but without cargo tanks for drilling fluids or cement. UVs primarily operate in shallow water and are typically used to transport deck cargo, fuel, fresh water, food provisions and personnel.

Engine

3,600 BHP

Bollard Pull

50 tonnes

TANJUNG GAYA

UVUtility Vessel

Clear Deck Space

230 m2

AHTSs are suited for “in-field support” as the vessels have to leave space and deadweight capacity for the carriage of drilling mud, cement, base oil, drill water, and other supplies. The stern of the vessel is open to the sea, with a stern roller fitted to enable the vessel to recover and deploy anchors, while maintaining a clear area for the vessel’s work wire. From time to time, when not performing anchor handling and towing services, our AHTSs also function as SSVs and are also able to serve as safety standby rescue and fire-fighting vessels for oil spill response and recovery efforts.

ICON AZRA

TANJUNG BIRU 1

ICON IKHLAS

TANJUNG BIRU 2

ICON SOPHIA

TANJUNG DAHAN 2

TANJUNG PUTERI 1

OMNI PERKASA

ICON ZARA

OMNI STELLA

OMNI GAGAH

TANJUNG DAWAI

TANJUNG PUTERI 2

OMNI TIGRIS

OMNI MARISSA

TANJUNG HUMA

TANJUNG SARI

OMNI VICTORY

ICON LOTUS

TANJUNG DAHAN 1

ICON SAMUDERA

AHTSAnchor Handling Tug &

Supply Vessel

Bollard Pull

60-110 tonnes

Engine

5,150 BHP

Clear Deck Space

330-390 m2


9

TYPE OF VESSELS

Our AWBs are equipped with DP2 positioning system with four point mooring capabilities. AWB vessels usually have a large deck area, used for the carriage of auxiliary equipment, spools, containers, etc. The main crane capacity ranges from 50 tonnes to 65 tonnes. Meanwhile, the maximum accommodation capacity is 200 pax including marine crew.

AWBAccommodation

Workboat

Clear Deck Space

800 m2

Accommodation

200 men

Pedestal Crane

50-65 tonnes

ICON VALIANT ICON ALIZAICON KAYRA

SSVs primarily operate in shallow water. Our SSVs are primarily used for the transportation of equipment, cargo pipe, drilling fluids, cement, fuel and fresh water from supply bases to offshore platforms and facilities.

SSVStraight Supply Vessel

Clear Deck Space

403 m2

Engine

5,110 BHP

Length

60 Meter

TANJUNG PINANG 1

TANJUNG PINANG 4

TANJUNG PINANG 2

TANJUNG PINANG 3

Note: Details on page 167.

PSVs are capable of working in deep water conditions and serves various types of drilling rigs and platforms, including drill ships, fixed platforms, Floating Production Storage and Offloading (“FPSO”) and semi-submersible rigs. Our PSV is equipped with a Dynamic Positioning (“DP”) Class 2 system, enabling it to accurately manoeuvre and operate in adverse weather conditions. Our PSV is the first Malaysian built diesel electric PSV and has a 750m2 main deck cargo area. It can accommodate up to 60 personnel, including marine crew. PSVs are designed to deliver large quantities of cargo to offshore drilling and production sites. They also provide logistical support during offshore construction work. PSVs are designed for optimum capacity, and are distinguished by their (i) deadweight; (ii) available deck area for the transportation of cargo such as pipes, equipment and spares; and (iii) below-deck capacity for the storage of drilling fluid, mud and cement used in the drilling process and tank storage for water and fuel oil.

TANJUNG PIAI 1 TANJUNG PIAI 2

PSVPlatform Support

Vessel

Clear Deck Space

750 m2

Engine (Diesel Electric)

6,970 BHP

Deadweight

3,500 tonnes

0211 Chairman’s Statement

14 Management Discussion and Analysis

23 Financial Highlight

24 Operational Highlight

25 Share Price Performance

26 Calendar of Significant Events

28 Health, Safety and Environment

OUR STRATEGY & PERFORMANCE REV IEW

02 OUR STRATEGY & PERFORMANCE REV IEW

11

ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

CHAIRMAN’S STATEMENT

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda

Chairman

MARKET CAPITALISATION

RM429.7 MILL ION

SHAREHOLDERS’ FUND

RM572.3 MILL ION

DEAR SHAREHOLDERS,

On behal f of the Board of Di rectors, I hereby present the annual report and audi ted f inancia l statements of ICON for the f inancia l year ended 31 December 2016 (“FYE2016”) .

The low crude o i l pr ice env i ronment cont inued to drast ica l ly impact the business env i ronment wi th a l l o i l and gas p layers across the supply chain affected. Many have been h i t hard with severa l companies even winding-up or d ivers i fy ing into other industr ies.


12



WE HAVE

EXEMPLIFIED

CONTINUED

RESILIENCE IN THE

FACE OF ADVERSITY

TO EMERGE AS A

BETTER GROUP –

PRIMED TO COMPETE

AND WIN GOING

FORWARD.

The magnitude and length of the present downturn is unprecedented. In response, capex by oil and gas majors and national oil companies continues to decrease on the back of record-low oil prices. This has further led to significant decline in vessel charter and utilisation rates.

Since the start of the present downturn in FYE2014, vessel charter rates have dipped by a third. Given the nature of the external business environment, the Group’s financial performance was in line with other industry players who have also been adversely impacted.

Yet, the Group has exemplified resilience and operational excellence amidst the turbulence.

Rather than to simply ride out the storm and weather the turbulence which may have impaired our ability to operate going forward, we embarked on a transformation process to develop a more robust business model. These measures were financially prudent; and necessary to see out the current tough times and to deliver improved shareholder value over the long-term.

Importantly, as we pursued our rationalisation strategy, specific efforts were made to preserve the inherent strengths and intrinsic value of ICON. The Group consolidated its strengths while addressing weaknesses and mitigating risk exposure. This included but was not limited to capital and cost restructuring, cash flow conservation and other strategies.

I am happy to share that our transformation efforts have been successful. A process that though painful initially, will lead to a stronger and more dynamic business entity.

We have exemplified continued resilience in the face of adversity to emerge a better Group – primed to compete and win going forward. We have put in place the

foundations for a better, stronger and more competitive entity with greater operational capability. ICON is now primed to compete more effectively; to secure contracts within the low-oil price environment; as well as to be more successful once the market recovers.

FINANCIAL PERFORMANCE

During the financial year, Group revenue decreased to RM226.9 million from RM266.6 million in the previous financial year. The decline is largely due to reduced vessel utilisation rates arising from lack of demand from oil and gas majors which was impacted by reduced exploration and production activity within a depressed oil and gas sector. On the back of reduced revenue, gross profit also dipped by RM32.3 million – a 34% decline compared to the preceding financial year.

The Group registered a lower loss after tax position of RM146.7 million – a significant reduction from the previous year’s RM363.3 million. This is largely due to the reduction of impairments as compared to FYE2015.

OUTLOOK & PROSPECTS – EVOLVING TODAY, RISING TOMORROW

Crude oil prices have risen to a range of USD50 – USD60 per barrel, supported by growing confidence amidst a production quota agreement inked by Organisation of the Petroleum Exporting Countries (“OPEC”) and Non-OPEC members.

This certainly offers a measure of positivity. While any recovery will be gradual and only felt in the latter part of FYE2017 and beyond, current prices provide an excellent opportunity for oil and gas majors to re-invest in capex. Importantly, there needs to be price stability, which will further bolster market confidence in the oil and gas sector.


13



We also await to see the policies of the new US President with regards to the oil and gas sector. There is still plenty of inventory in the market due to the oversupply of crude with production having outstripped supply in the past two years. Hence, recovery in the oil and gas sector will also need to be supported by strong economic growth in key economies such as India, China and the Eurozone. Strong GDP growth will help reduce stockpiles while stimulating greater demand for crude oil.

While FYE2016 was a year of transition and evolution for ICON, we have put in place the fundamentals to compete and thrive going forward. ICON is primed to compete given its strength, capability and track record as a proven pure play OSV operator – the largest in Malaysia.

In January 2017, Hallmark Odyssey Sdn. Bhd., a wholly owned subsidiary of Ekuiti Nasional Berhad (“Ekuinas”), entered into a conditional share sale and purchase agreement with UMW Oil & Gas Corporation Berhad (“UMWOG”) that will see the former swap its entire holding of ICON with UMWOG as part of consolidating its oil and gas business.

The new entity will be one of the largest integrated offshore service providers across the oil and gas value chain – delivering economies of scale and more comprehensive solutions to oil and gas majors. We can unlock synergy with expanded assets allowing us to offer bundling of services. The proposed merger and acquisition exercise puts us in prime position to capitalise on the expected recovery across the sector in late FYE2017 and beyond.

Discussions are presently underway and if the merger materialises, prospects augur well for going forward. With that, we look to the future with renewed confidence and optimism.

ACKNOWLEDGEMENTS

On behalf of the Board, I wish to extend my thanks to the Management and employees of ICON who have been excellent with their exemplary professionalism and contributions in FYE2016.

Similarly, I also convey my appreciation to my fellow Board members for their counsel. In particular, I wish to express my gratitude to Dato’ Abdul Rahman bin Ahmad who has stepped down from the Board of Directors during the financial year. His contributions to the Group, including filling in as interim Executive Director during a transition period is well remembered and appreciated. We wish him all the best in his future undertakings as he assumes a new role as President and Group Chief Executive Officer of Perbadanan Nasional Berhad (“PNB”).

I also wish to welcome Datuk Abdullah bin Karim and Puan Farina binti Farikhullah Khan who joined the Board during the financial year. I am confident that their expertise and experience will be an asset to the Group going forward.

In the same vein, I wish to thank our shareholders, customers, suppliers, business partners and financiers for their continued confidence and unwavering support to ICON during the year under review.

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun UdaChairman5 April 2017


14


Amir Hamzah bin Azizan

Managing Director

REVENUE

RM226.9 MILL ION

TOTAL ASSET

RM1.38 BILL ION

ADJUSTED EBITDA

RM88.2 MILL ION

MANAGEMENT DISCUSSION & ANALYSIS

KNOWN TRENDS & EVENTS

The year under review proved to be a year of unprecedented

turbulence and chal lenge as oi l and gas players bore the brunt of

the industry downturn.

The slump in crude oi l pr ices, which began dur ing mid-2014,

reached i ts height dur ing the f inancial year as crude oi l pr ices

plummeted to record lows and oi l and gas majors cut-back further on already shr inking capex and

operat ional expenditure (“opex”) . Explorat ion and Product ion (“E&P”) act iv i t ies cont inued

to decrease and the s i tuat ion proved extremely chal lenging for

OSV providers such as ICON.


15


MANAGEMENT DISCUSSION AND ANALYSIS

Across the board, a good number of companies could not face the external environment resulting in some long standing players undergoing restructuring, takeover and in some instances filing for bankruptcy. It is against this backdrop of volatility that ICON continued to operate – exemplifying resilience in its ability to service and win contracts.

In fact, rather than adopt a passive approach, in FYE2016, the Group responded pro-actively to the continued downturn within the oil and gas sector.

While external factors are invariably beyond the Group’s control, ICON implemented key short term strategies to ride out the downturn. We also looked to restructure our Group structure and operations to operate sustainably within the present low crude oil price environment. Strategic efforts were focused on optimising the core assets of manpower, vessels, customer and vendor relationships and maintaining our operational excellence in Health, Safety and Environment (“HSE”) parameters. In particular, measures implemented were restructuring our financial commitments, revamping our business model, reducing operating cost and conserving cash flow.

We also focussed on quick wins and looked to drive vessel utilisation rates via competitive bidding.

As a result of our painstaking efforts, ICON continued to reflect its professionalism and commitment to the oil and gas majors throughout FYE2016. We exemplified a high level of service delivery and reliability – on par with, or better than industry benchmarks. We also secured new charters throughout the financial year. Equally important, the Group was successful in further expanding its overseas business operations.

The measures implemented enabled ICON to weather the storm and has placed the Group in prime position to capitalise on the impending but gradual market recovery expected in the latter part of FYE2017 and beyond.

Through the efforts of our parent company, ICON could be part of a consolidation exercise, which if completed will create one of the largest oil and gas service players in Malaysia. The post-merger entity will be able to compete across the width and breadth of the oil and gas supply chain while also expanding beyond Malaysia. This will reduce our reliance solely on the OSV niche segment of the oil and gas industry.

It is against this backdrop and highlights that the financial and operational performance of ICON in FYE2016 is premised on.

GROUP PROFILE & PRINCIPAL BUSINESS OPERATIONS

ICON is the largest OSV provider in Malaysia and one of the largest in Southeast Asia in terms of number of vessels. As at December 2016, the Group has 34 vessels available for charter operating in waters off Malaysia, Brunei and Thailand.

Our fleet comprises of twenty four anchor handling tug and supply (“AHTS”) and anchor handling tug (“AHT”) vessels, four straight supply vessels (“SSV”), two platform supply (“PSV”) vessels, three accomodation workboat (“AWB”) and one utility vessel (“UV”).

Our fleet operating primarily in shallow water is equipped with technologically advanced equipment and machineries to provide a wide range of logistical support services throughout the entire offshore oil and gas life cycle. Each vessel type has its specific purpose across the upstream segment supporting exploration, development, production and decommissioning activities.


16



Breakdown by Domestic and International Business

Identification of Potential

UPSTREAM OIL & GAS VALUE CHAIN

u Geological & geophysical mapping & modeling via seismic surveys

u Analysis & interpretation of geological data to identify the potential of hydrocarbon bearing formations

Exploration & Appraisal

u Wildcat wells drilled to assess potential of basin

u Appraisal wells across the potential of any discovery made during the exploration phase

u Flow rates assessed

AHTAHTSAWBPSVSSV

Field Development

u Development scenario screening

u Pre-FEED & FEED studies

u Detailed engineeringu Fabrication &

procurementu Offshore

construction, installation, hookup & commissioning

AHTAHTSAWBPSVSSVTugs

Operation & Maintenance

u Inspection, repair & maintenance

u Enhanced oil recovery

u Brownfield development & injection wells

u Work over of existing wells

AHTAHTSAWB PSVSSVTugs

Abandonment

u The decommissioning of end-of-field infrastructure

u Re-use / recycle / dispose

AHTAHTSAWB

uw

uw

uw uw uw

Type of OSVs deployed

At present, 63% of our business stems from local operations while the rest are from overseas contracts. In FYE2016, we saw a healthy growth in our overseas operations to contribute more than one third of revenue (27% in FYE2015).

Moving forward, we intend to continue expanding both local and overseas business segments.

KEY OPERATIONAL HIGHLIGHTS

Indicators FYE2016 FYE2015 FYE2014

Vessel Utilisation rates 52% 60% 78%

Order book RM510.3 mil RM686.0 mil RM760.2 mil

Number of employees 116 165 177

Man-hours without LTI 297,368 13.0 mil 6.8 mil

Overseas Revenue

Malaysia Revenue

2015 28%

2015 72%

2016 37%

2016 63%

Inner: YTD Dec 2016: RM226.9mil

Outer: YTD Dec 2015: RM266.6mil


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FINANCIAL HIGHLIGHTS

In FYE2016, Group revenue decreased by 15% to RM226.9 million from RM266.6 million in the previous financial year. The decline in revenue is primarily attributable to a reduced vessel utilisation rate of 52% in FYE2016 compared to 60% in FYE2015 as well as weaker market charter daily rates.

Aside from lower demand and activities within the oil and gas industry, vessel utilisation rates have dipped due to completion of certain long-term contracts, delays in awarding of new contracts and longer monsoon period off-hires in FYE2016.

Corresponding to the decrease in revenue, the Group’s gross profit decreased by 34% or RM32.4 million to RM63.4 million.

With reduced revenue, the Group has worked tirelessly to reduce its overall cost structure and has been successful in cutting back on cost of sales, administrative expenses and other related costs.

In FYE2016, cost of sales decreased by 4% or RM7.3 million to RM163.5 million compared to FYE2015. This was a result of the Group’s diligent cost-saving initiatives and restructuring exercise undertaken during the financial year. There were significant savings resulting from better fuel consumption monitoring, the laying-up of under-utilised vessels and other measures implemented in FYE2016. The decrease was also due to lower depreciation charges incurred for vessels impaired during FYE2015.

Administrative expenses also decreased by 7% or RM3.3 million to RM41.8 million in FYE2016. This was primarily due to lower payroll cost and was partly offset by the following: unrealised loss on foreign exchange, a one-off Mutual Separation Scheme payment of RM1.0 million; a one-off professional fee which involved branding/

reputation recovery, loan rescheduling/restructuring fees and legal advisory opinion for rescheduling shipbuilding contracts.

The Group also registered lower impairment charges of RM135.5 million for the financial year ended 31 December 2016. This is a 64% reduction compared to RM376.0 million in the quarter ended 31 December 2015.

As a result of these measures and others, the Group has reduced its loss after tax position by 60% from FYE2015. For FYE2016, the Group’s loss after tax was cut to RM146.7 million – a significant reduction from the previous financial year’s loss after tax of RM363.3 million.

FINANCIAL INDICATORS FYE2016RM‘000

FYE2015RM‘000

FYE2014RM‘000

Revenue 226,915 266,566 318,877

Profit/(loss) before interest and tax (109,625) (326,565) 106,538

Finance costs (40,200) (36,996) (50,138)

Net profit/(loss) (146,699) (363,288) 59,354

Shareholders’ equity 572,259 718,828 1,080,606

Total assets 1,381,918 1,520,760 1,781,693

Borrowings 712,225 723,017 668,483

Debt/equity ratio 1.24 1.01 0.62

Earnings/(loss) per share (sen) (12.98) (30.93) 7.41

Net assets per share 0.49 0.61 0.92

Market Capitalisation (as at financial year end) 429,672 506,189 195,867


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CAPITAL STRUCTURE & SIGNIFICANT CHANGES TO ASSETS

As at 31 December 2016, the Group’s current liabilities exceed current assets by RM129.8 million. This is due to largely to an increase in short-term borrowings to fund new vessel deliveries and working capital requirements.

Management is of the view that ICON is in a position to realise its assets and discharge its liabilities. The Group’s financial position will improve going forward as efforts to reduce costs bites, rescheduling/restructuring of debts takes into effect and continued support of its parent company. The Group has also successfully deferred a large portion of capex to the subsequent financial years.

CASH FLOW, CASH AND BANK BALANCES

Summary FYE2016(RM‘000)

FYE2015(RM‘000)

Net cash inflow from operating activities

99,716 146,049

Net cash outflow from investing activities

(86,257) (138,240)

Net cash (outflow)/inflow from financing activities

(57,235) 6,682

Net (decrease)/increase in cash balance

(43,614) 14,574

Cash and bank balances 58,720 95,354

NET GEARING RATIO

CAPEX COMMITMENTS - VESSELS (RM MILLION)

2017 2018 2019

13.5

27.6

The Group’s cash reserves are RM58.7 million as at 31 December 2016; a decrease of 38% from FYE2015’s RM95.4 million. The decrease is attributable to capex for the two vessels made in FYE2016 – Icon Aliza and Icon Atiqah.

However, the Group had conserved cash flow by restructuring its loan repayment schedule. In FYE2016, loans with two banks and a syndicated term loan which constituted 58% of the Group’s loan book were successfully restructured. In doing so, the Group was able to free-up RM78.2 million of cash by deferring or reducing debt servicing payments due in FYE2016 to FYE2018 and beyond.

The Group has also deferred deliveries of three vessels under construction in 2015 through these measures, cash outflow of RM96.7 million will be deferred to Q4 2018 and beyond, thereby reducing capital commitments.

With the steps taken above, the Group is able to generate sufficient cash inflows from the charter hire contracts to meet working capital requirements and repay existing loan obligations while servicing contracts and maintaining business operations.

The Group’s net gearing ratio was 1.14 times as at 31 December 2016. Gearing had increased as a result of impairment on vessels in the previous year.

If required, the Group may also obtain financial support from its immediate holding company. The Group remains prudent in maintaining a sound financial position that enables the execution of our strategic objectives in creating value over the coming years.

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

2014

0.55

2015

0.87

2016

1.14


19



ORDER BOOK STATUSCONTRACT WINS

ICON continued to drive vessel utilisation through competitive bidding.

In May 2016, the Group secured a one year contract of RM42 million from ExxonMobil Exploration and Production Malaysia Inc. for the provision of two SSVs. The contract comes with a one-year extension option.

In December 2016, ICON bagged a RM5.6 million one-year contract to provide a SSV to EQ Petroleum Production Malaysia Ltd.

In March 2017, ICON and Zell Transportation Sdn. Bhd. was awarded another long term contract valued at RM72.0 million for the charter of an AWB namely Icon Valiant to SPHI Marine Sdn. Bhd., a company operating in Brunei. The contract is for a period of three years with an extension option for a period of up to two years on a yearly basis. This win further entrenches our presences in the regional market space within the OSV sector.

In the same month, Halliburton Energy Services (Malaysia) Sdn. Bhd. (“Halliburton”) awarded ICON an approximately RM8.0 million contract for the provision of one PSV for a period of up to nine months.

On 17 March 2017, ICON was awarded a three-year Umbrella contract from PETRONAS Carigali Sdn. Bhd. (PCSB) for the provision of spot charter marine vessels services. The contract is effective from 15 March 2017 until 14 March 2020, with an extension option for two years.

These contract wins bring our total order book to RM510.3 million as at end December 2016, 52% of our order book are for firm orders.

VESSEL MANAGEMENT

We pursued a well-balanced mix of “cold lay-up” of vessels and “hot standby”. We laid up six vessels after charter rates had dropped in FYE2015. Laying-up a vessel would cost only a fraction of having it on “hot standby”. But the decision to lay-up must be made with care to ensure sufficient vessels are available to service contracts. One of these laid-up vessels has been activated to service secured contracts.

ICON also undertook enhanced repair and maintenance work as part of our scheduled dry-docking and planned maintenance program. This is to improve vessel readiness for hire when demand eventually picks-up.

One new initiative during the year was the implementation of the electronic fuel monitoring system on several vessels. This allowed for real time assessment of vessel journeys, fuel consumption and other vital information. The electronic system was supplemented by a manual system that also allowed for close inspection and monitoring of vessel movements; all geared towards helping the Group optimise fuel consumption and operational productivity of each vessel.

We also successfully sought out bulk arrangements for end-block and dry-docking with vendors. This enabled us to leverage on the economies of scale generated to further reduce costs incurred in this area. The pre-planning of such activity further added an element of predictability which further contributed to economies of scale.

While we have delayed delivery of three vessels, we took delivery of Icon Aliza – an AWB in November 2016, albeit at a later window than the original shipbuilding contract date. We are in the midst of bidding for long-term contracts for the said vessel.

Firm

Option

52%

48%

Order book replenished to

RM510.3mil

(31 December 2016)


20



PEOPLE MANAGEMENT & DEVELOPMENT INITIATIVES

We continue to prioritise our sea faring community. The introduction of a performance based staff appraisal system for crew has set the bar on expected standards while recognising and rewarding exemplary performance. The system, introduced in July 2016 has been effective in improving crew morale, providing greater transparency in how crew are assessed on their conduct and contributions, and has cultivated the seeds of a merit or results based culture among ICON’s sea faring community.

This is part of developing a sustainable organisation and aside from good financial and business fundamentals; people are an essential component of achieving business and operational sustainability. Hence, the focus on building our talent pipeline, which will meet ICON’s needs for skilled manpower in the years to come.

We continue to maintain relationships with Akademi Laut Malaysia (“ALAM”) and other marine institutions towards developing the talent pool of seafarers for the betterment of ICON and the OSV industry.

BUSINESS RISK MITIGATION

As the market enters into a period of gradual recovery, the Group foresees stiff competition from both overseas based and local OSV providers. This may result in further pressure on vessel charter rates.

However, ICON is primed for the challenge. Given our inherent strengths as the largest OSV player, our proven track records for contract delivery and HSE and our stronger business fundamentals after our restructuring, we are confident of addressing market competition to expand our order book going forward.


21



Our dependence on the OSV market may potentially be a risk factor as any downturn in the sector as experienced previously may impact business performance. Hence, measures that allow for diversification within the upstream supply chain as well as the downstream segment have been pursued to reduce exposure and dependence on a single niche segment.

Manpower continues to also be a key business consideration. Throughout the industry, there remains a shortage of qualified, competent and experienced offshore staff including crews on-board vessels. Hence, ICON in addressing this issue, has invested substantially in developing staff for its operational needs. More details of our talent development and retention strategy are given in the CSR section of this annual report.

OUTLOOK AND PROSPECTS

We look forward to the future with cautious optimism given that crude oil price has risen steadily over the past six months – stabilising above the USD50 mark. The present production quota agreed to by OPEC and non-OPEC member countries is expected to hold which will help support the rising price of crude.

With these cuts, inventories will decline as demand outstrips supply by the second half of 2017 – supporting momentum for higher crude oil prices.

This bodes well for the industry as the present crude oil price provides an ideal scenario for oil and gas majors to resume with capex for E&P activities. The cascading effect will spur activity within the OSV sector and the overall upstream segment of the oil and gas value chain.

There is certainly cause for cautious optimism, barring any unforeseen developments within the global oil and gas sector and the macro-economic environment. However, despite the expected recovery, the impact to oilfield services will lag as oil majors need time to reach a final investment decision (“FID”) for new projects and award new supply contracts. We foresee recovery to be gradual rather than quick and the effects will be more apparent in the latter part of FYE2017 and beyond.

Having taken all measures to create a more competitive and robust ICON, the Group is now poised to evolve further in capitalising on improving market conditions going forward. Having rationalised our costs and liabilities and improved our productivity, we have elevated the Group to a higher level

of competitiveness. We are primed to bid and secure for new contracts arising from renewed activity by oil and gas majors as crude oil prices hold stable at the USD50 - USD60 range.

Going forward, we will continue to transform and pursue our strategies. Essentially, with each measure taken, ICON has laid the building blocks for a more robust entity and solid future going forward. Our internal improvements have enabled us to become a viable partner of value, which now puts on the verge of a very exciting milestone in the Group’s future.


22


In January 2017, ICON was informed that Hallmark Odyssey Sdn. Bhd., a wholly owned subsidiary of Ekuinas, entered into a conditional share sale and purchase agreement with UMWOG to swap its entire holding of the Company with UMWOG with the intention of consolidating their oil and gas business.

The consolidation is expected to create a major integrated offshore service provider across the oil and gas chain and will be in a position to benefit from the expected recovery of activities in the oil and gas sector. With the expanded fleet of assets, it will be able to offer more comprehensive solutions to its customers and expects to benefits from synergies that may arise from the bundling of the services offered.

The negotiation and due diligence process of this deal is on-going. Should the deal be successfully concluded, we will have a more diverse capability as part of a larger group and have greater portfolio stability and revenue opportunities.

In the meantime, ICON will continue to operate as per its set strategies and objectives.

Essentially, we have embarked on a journey of transformation that will ensure the long-term future of ICON. We are quietly confident of our future with a turnaround in prospects going forward in the latter part of FYE2017, barring any unforeseen circumstances.

DIVIDEND POLICY

The Group’s ability to pay out dividends is based on its profitability and its long-term strategic plans for cash conservation as well as to drive future growth plans. Given the Group’s financial performance, no dividend was declared by the Board in FYE2016.

Amir Hamzah bin AzizanManaging Director5 April 2017



23


FINANCIAL HIGHLIGHT

REVENUE

(RM MILLION)334.8

318.8

266.6

226.9

’13

’14

’15

’16

ADJUSTED EBITDA*

(RM MILLION)

190.8

184.8

128.0

88.2

’13

’14

’15

’16

ADJUSTED PAT*

(RM MILLION)89.5

90.7

26.0

(11.2)

’13

’14

’15

’16

TOTAL ASSETS

(RM MILLION)1,575.7

1,781.7

1,520.8

1,381.9

’13

’14

’15

’16

2.8

0.6

0.9

1.1

NET GEARING RATIO

(%)

’13

’14

’15

’16

EQUITY ATTRIBUTABLE TO SHAREHOLDERS

(RM MILLION)

379.4

1,080.6

718.8

572.3

’13

’14

’15

’16

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

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


24


OPERATIONAL HIGHLIGHT

FLEET UTILISATION RATE

Chartered/ on-hired period

Planned maintainence programme and

scheduled dry-docking

Available for charter/ Temporary shutdowns/

lay-ups

52%

Fleet Utilisation Rate in FYE2016

52% 8%

40%

HSE STATISTICS

297,368 Man-hours without LTI

ORDER BOOK REVENUE BY GEOGRAPHY

Option 48%

Total order book as at31 December 2016

RM510.3mil

Firm 52%

Overseas Revenue

Malaysia Revenue

2015 28%

2015 72%

2016 37%

2016 63%

Inner: YTD Dec 2016: RM226.9mil

Outer: YTD Dec 2015: RM266.6mil


25


SHARE PRICE PERFORMANCE

Share Performance First Quarter Ended

31 Mar 2017

Financial Year Ended

31 Dec 2016

Financial Year Ended

31 Dec 2015

Quarter / Year high* 0.48 0.42 0.87

Quarter / Year low* 0.38 0.30 0.27

Quarter / Year close 0.48 0.37 0.43

Market Capitalisation 559,162,923 429,672,544 506,189,593

* Based on daily last traded price

3 JAN 2016 > 31 MAR 2017

0.500

0.480

0.460

0.440

0.420

0.400

0.380

0.360

0.340

0.320

0.300Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar


26


CALENDAR OF S IGNIF ICANT EVENTS

ICON held its 4th Annual General Meeting & Extraordinary General Meeting.Launching of Icon Atiqah.

ICON feted orphans and underprivileged children during the holy month of Ramadhan.

LIST OF 2016 AWARDS

• ExxonMobil Personnel Recognition Award Marine Safety & Performance for Q1 2016 (Muhammad Ibrahim Abd Aziz – HSSE Executive)

• Ampelmann 150,000 Safe Offshore Transfers on ICON Kayra

• 3-years safe operations for Floating Production Storage and Offloading (“FPSO”) Perisai Kamelia since 11 November 2013 – 2016 (Icon Lotus)

J A N F E B M A C A P R M A Y J U N


27


CALENDAR OF S IGNIF ICANT EVENTS

J U L A U G S E P T O C T N O V D E C

Staff, Board Members of ICON and invited guests celebrated Hari Raya in KL.

ICON organized its first career talk in Kolej Vokasional Setapak.

Two schools in Kemaman participated in the career talk organized by ICON and supported by ALAM.

¶ ICON held Career Talk in Kolej Vokasional Labuan.

· ICON took delivery of Icon Aliza.


28


HEALTH, SAFETY AND ENVIRONMENT

ICON cont inues to p lace the utmost importance on Heal th, Safety and Envi ronment (“HSE”) .

In essence, excel lent HSE performance is our l icense to operate. An excel lent HSE performance and t rack record prov ides the Group with a tangib le compet i t ive advantage when bidding for contracts. However, our mot ivat ion is not mere ly dr iven by business object ives. I t is a lso in l ine wi th our corporate phi losophy of being a responsib le partner to the o i l and gas majors and a responsib le OSV with in the upstream supply chain. The cont inued emphasis on HSE is a lso a ref lect ion of our commitment to ensure the safety and secur i ty of our employees, both onshore and offshore.


29



297,368 MAN-HOURS WITHOUT LTI

In FYE2016, we are proud to have set a new benchmark of 16,437,880 man-hours without LTI since inception – a reflection of the Group’s exemplary best practices and overall approach to HSE. However, towards the end of the year, the Group had an unfortunate incident which led to a fatality on board one of our vessels.

A detailed investigation into the matter was subsequently launched to identify the root causes for the incident and how similar incidents can be avoided in the future. This incident has served as a further learning point on do’s and don’ts on improving HSE; as well as providing a more secure working environment for crews aboard vessels. Lesson learnt have been circulated to all fleet vessels and shared with the crew. New processes have been rolled out to ensure that gaps have been identified and closed.

Ultimately, HSE excellence is a mind-set and it is necessary for the culture of the organisation to embrace HSE excellence as a way of life within ICON. As such, HSE training efforts have been increased to further emphasise safety among crews to prevent future incidents.

While HSE policies and procedures are obligatory, it is the human factor that remains the most challenging. It is attitude rather than aptitude which leads to HSE issues.

In combatting this challenge, Management continues to play an active role in championing HSE across the organisation. Across the Group, Management leads by taking an active and prominent role in cascading HSE across to staff – both onshore and offshore. Management shows the way by actively participating in HSE related programmes and events.

HSE Awards

Despite the incident, ICON continued to earn the recognition of the oil and gas majors – receiving several HSE related awards during the year.

• ExxonMobil Personnel Recognition Award Marine Safety & Performance for Q1 2016 (Muhammad Ibrahim Abd Aziz – HSSE Executive)

• Ampelmann 150,000 Safe Offshore Transfers on ICON Kayra• 3-years safe operations for FPSO Perisai Kamelia since 11 November 2013 – 2016

(Icon Lotus)

HSE Statistics for YTD December 2016

1

1

416

711,309

Lost Time Injury

Restricted Workday/ Medical Treatment

First Aid

Property Damage

Near Miss

Unsafe Act & Unsafe Condition


30



HSE STRATEGY & APPROACH FOR FYE2016

The Group has built a robust HSE framework since its inception consisting of fundamental systems, processes and structure to drive HSE excellence within this area. In FYE2016, in augmenting the existing framework, emphasis was placed on driving HSE performance through leadership and commitment.

Through experience, we are aware that the human factor is paramount in the realisation of HSE aspirations and objectives. Organisational mindset, morale, behavior and understanding is equally vital as per tangible standard operating procedures (“SOPs”), operational benchmarks and other “hard” components.

Hence, the decision was taken to leverage on leadership across the organisation to champion HSE initiatives as their involvement on the ground would have a profound positive impact in encouraging desired behaviour and mind-set change among staff, both onshore and offshore.

In emphasising HSE leadership, one of the key initiatives undertaken in FYE2016 was management visits to vessels. Throughout the year, senior management and other levels of management visited over 24 vessels amounting to 192 visits. These were vessels at bases, vessels under repair and vessels at the new building stage. The visits also served as opportunities for management to engage crews, to identify their key concerns and challenges, to build closer rapport and importantly to collectively address HSE matters.

The visits were effective in providing first-hand knowledge of HSE challenges experienced by crews; as well as how can the Group better support them in these areas.

On a separate note, in order to better observe crews during their daily activities on site, the Group has embarked on a roving program by shore based personnel comprising of HSE, Technical, Marine Audit & Marine Operation teams. During these visits, various programs were conducted for the benefit of staff. These include emergency drills, compliance to procedures, safety meetings, safety trainings, risk assessment sessions, safety walkabout inspections, etc.

Across the Group, four major HSE campaigns were initiated – once quarterly. These are HSE Rules & Procedures, Risk in Routine Activity, PPE Compliance and Monsoon & Stop Work Campaigns. All four campaigns were held towards reinforcing existing HSE messages or desired behaviours to staff. Prevention is better than cure and these campaigns were designed to inculcate a pro-active mind-set of taking precautionary measures and to be vigilant in avoiding HSE incidents.

A specific HSE initiative was undertaken for all marine crew serving the Brunei fleet. This seminar was conducted by the management for the purpose of operational staff - shore base and marine crew. This was to set the expectation from the onset for high HSE standards and work culture to be employed throughout the project duration. Importantly, it provided a platform for staff, particularly offshore and marine crew on the charterer’s benchmarks regarding safety expectations and work culture. Key areas covered include indication of HSE performance, operational safety culture on board and ashore and other areas.

Over and above our HSE campaigns, various HSE seminars, training programmes and other initiatives were held during the financial year. These included random Urine Drug and Alcohol Testing (“UDAT”) on board vessels, review of vessels Job Hazard Analysis (“JHA”) and Permit To Work (“PTW”), publication of the Group’s periods HSE bulletin, e-iconscope, safety forum

engagement sessions with officers and engineers of vessels.

We believe that timely and accurate information is key to HSE performance. With that, several sharing sessions were held where vessel crews would share their insights and experiences with each other via a peer learning approach. These informal discussions were ideal avenues to learn from each other’s experiences, to exchange views and to develop a stronger sense of camaraderie. It was a valuable experience for vessel crews to benefit from their mutual first-hand experience.

The Group also published HSE circulars all year round providing key information such as ZIKA virus information, heat wave alert and North East monsoon alert and adverse weather forecasts as and when the need arose.

ENVIRONMENT

The Group remains committed to keeping the environment and the marine ecosystem pollutant free. In FYE2016, the Group focused on the following initiatives or areas as part of its larger environmental preservation strategy.

Prevention of oil and chemical leaks and spills on board ICON vessels

The best way to address leaks and spills is to ensure they do not happen at all. As such, special efforts were made to address oil and chemical leaks on board vessels before they flowed overboard and into the sea.

This meant enhancing SOPs to prioritise vessel leaks and spills. Crews were briefed and trained on the new procedures and we are happy to note that the effort has been well received. By aiming to eliminate or reduce leaks and spills, not only do we conserve the marine eco-system, we also help to safeguard the overall conditions of our vessels and their operating capabilities.


31



Management of on board waste

ICON ascribes to a comprehensive Garbage Management Plan (“GMP”) to ensure that all waste on board vessels are segregated, stored and disposed appropriately. This GMP is in accordance with the revised International Convention for the Prevention of Pollution from Ships (“MARPOL”) 73/78, Annex V IMO Res. MEPC.201 (62).

In this regard, all vessels are fitted with food waste dispensers which shred food wastes into smaller pieces which are then disposed of safely in an ecologically friendly environment. Waste that cannot be disposed at seas are incinerated or sent to the shore disposal facility as governed by the GMP.

Reduction of the quantity of waste generated on board ships

The Group continues to find ways to reduce waste on board vessels. This includes introducing recycling on vessels, separation of waste and other measures.

Constant Staff Training & Education

Our crew is constantly reminded of the need to protect the environment and the need to dispose dirty oil, garbage and other residues correctly. Guidelines are made available in the Garbage Record Book and notices are posted on board as a reminder.

Our fleet also uses diesel oil as opposed to fuel oil with the former producing less sludge, resulting in less cleaning required. With less cleaning, less cleaning products are used and the overall chain reaction is a cleaner operating vessel. This further contributes to reduced cost, less down-time and improved productivity for each vessel.

Efforts to reduce fuel consumption through electronic fuel monitoring systems have also made our fleet “greener”. Less fuel consumed results in an overall lower carbon footprint, which has been well received by oil and gas majors and national oil companies.

Prevention of Air Pollution

ICON initiative in reducing air pollution is by strict compliance to MARPOL Annex VI.

03 CORPORATESOC IALRESPONS IB IL ITY

03 CORPORATE SOCIAL RESPONSIB IL ITYICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

33

Despite the difficulties encountered in FYE2016, ICON continued

to play its role as a responsible corporate citizen based on a

triple bottom line philosophy of serving people, planet and profit.

We are of the view that the continued success of ICON is best

assured if we adopt a comprehensive perspective beyond the

single-minded pursuit of revenue and profits.

By emphasising economic, social and environmental parameters, we are equipped with the vision and blueprint to build a better business model, an inspired organisational culture and to create a dynamic company that is also a desired place to work. Hence, our efforts go beyond mere altruism but to truly deliver value to all stakeholders while safeguarding the long-term future and prospects of the Group.

TALENT DEVELOPMENT

In FYE2016, ICON continued to focus on the essential requirement of further developing a sustainable talent pool for the Group. Talent remains a key concern or challenge for any maritime player. As processes, systems and technology become increasingly streamlined and accessible to all companies; talent is arguably growing in importance as a vital differentiator for any organisation.

While the present industry downturn may give the misconception that talent development can be slowed down or even halted, this would not be a strategic move in the long run. Talent must constantly be nurtured based on a long-term perspective, both in quality and quantity. Given the high rate of attrition within the industry due to talents leaving the industry or moving overseas for better remuneration, a large local talent pool of young and competent Malaysians are needed.

For ICON, despite the challenging operating conditions encountered in FYE2016, we continued to drive talent recruitment, development and retention. Our efforts were intensified in FYE2016 based on supporting strategic objectives in line with the Group’s future plans going forward.

Key focus areas included competency development and intervention overall talent pool development for both onshore and offshore staff. Having said that, a greater emphasis was placed on offshore staff who make up almost 83% of our total workforce (116 onshore and more than 600 offshore staff).

CORPORATE SOCIAL RESPONSIBIL ITY

WE OFFER

3 TYPES OF TRAINING

PROGRAMMES

36TRAINEES AT VARIOUS

LEVELS OF COMPETENCE AND QUALIFICATIONS

03 CORPORATE SOCIAL RESPONSIB IL ITY ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

34


Competency Development via New Appraisal System

One of key areas identified for ICON was the need to cultivate a culture of excellent performance within the organisation. This is vital in a highly competitive industry, more so during the present market downturn. The need to perform at one’s best to meet or even exceed client’s expectations is crucial towards delivering on contracts.

The individual employee may not see his/her contribution towards the end goal, but essentially everyone has a role to play in the internal supply chain. Hence excellence in job performance needs to be cultivated, and equally important to be recognised and rewarded.

The Group developed a new merit performance appraisal/assessment system that specifically sets expectations for job performance, results and outcomes while also recording and recognising achievements. This system encourages individual ownership of work and initiative as rewards are tied to both individual and overall job performance.

The system has been cascaded to both onshore and offshore staff. Thus far, it has borne encouraging results. Across the Group, Management has seen a visible difference in the output and performance of staff as a whole.

While the system is still in its early stages and can be improved further, it has been well received across the ICON Group and will continue to be refined going forward.

Competency Development via Training Programmes

While setting benchmarks for employees to deliver expected performance is crucial, providing them with the knowledge, expertise and competence to deliver is also essential. Hence various training and development programmes were held for staff.

The training programmes for onshore staff are mostly for sharpening of skills, concepts, changing of attitude and gaining more knowledge to enhance their performance in their specific area of work such as safety and health, risk management, corporate governance, corporate reporting, human resource management, corporate communication and financial requirements.

In the first quarter of 2016, we organised two Skill Enhancement Program (“SKEP”) Module 3 courses. The SKEP training is a 3-day intensive course specific for junior officers & engineers to improve their knowledge on OSV operations, particularly

The training programmes for onshore staff for gaining more knowledge to enhance their performance in their specific area of work such as safety and health

Following are specific details of initiatives rolled-out in FYE2016.


35


in the areas of anchor handling, towing, cargo operation, mooring & other vital areas of performance. The course is conducted by experienced external consultants with a high emphasis on creating a safe working environment via proper working knowledge and procedures to execute tasks correctly. In familiarising our crews with the Bassnet & Smart Logistic system, ICON organised a dedicated training session to enable our crew to gain first hand, practical experience and exposure to the said system. This is essential given that the Bassnet & Smart Logistic system is utilised on every ICON vessel.

With safety being an utmost priority, a Safety Seminar Programme (“SSP”) was held to ensure all marine crew serving the Brunei fleet were familiar with the Charterer’s HSE expectations and work culture. The session was conducted for operational staff, both shore based and marine crew.

On a separate note, Officers Forums were held for both junior and senior officers.

The Junior Officers Forums were held in October 2016 and again in March 2017. Attended by Officers, Junior 2nd Officers, 4th Engineers & 3rd Engineers, the course covers SKEP Bassnet & Smart Logistic System and Icon Vessel Daily Report (“IVDR”) training. The second session saw the inclusion of a first aid module conducted by St John Ambulance Malaysia.

The Senior Officers Forum conducted in November 2016 saw more intense SKEP training. It also included sessions where Heads of every Department were present so that any issues could be raised to facilitate continuous improvement and to promote-cross sharing of knowledge and mutual learning. The Senior Officers Forum was attended by Masters, Chief Engineers, 2nd Engineers & Chief Officers.

Talent Pool Development

Over the years, ICON has established strong ties with ALAM, Politeknik Ungku Omar, Jabatan Kejuruteraan Marin and various maritime institutions, locally and internationally. At present, we have 27 trainees at various levels of competence and qualifications pursuing their continued education. They will graduate as qualified maritime professionals who will then be absorbed into ICON.

Among the trainees include those pursuing training as Dynamic Positioning Operators (“DPO”). This is one of the key positions where talent is needed across the Malaysian maritime industry. ICON has been proactive in developing its own talent requirements in this area. Our candidates have, or will attend the Dynamic Positioning Basic, Advance & Full certification courses approved by The Nautical Institute of London. We look forward to absorbing successful candidates into the organisation in the near future who will serve as DP officers on board ICON vessels.

We have participants also pursuing ALAM’s Advance Post Sea Programme (“APS”) for 2017. We have several talents who will come through this programme which consists of a combined class on Deck and Engine. Certainly their talents will be a welcome addition to the Group going forward.

On a separate note, we presently have young talents who are undergoing the On Job Training Employment Programme (“OJTE”) – serving as Engineers and Officers. Others are undergoing their final year at ALAM with another batch commencing Shipboard Cadetship Training. The latter group will require 12 months of sea time before they graduate.

PROMOTING MARITIME CAREERS AT GRASSROOTS LEVEL

While collaboration with ALAM and other organisations enhances the quality of the talent pool, there is a need to focus on the quantity; that is to create greater awareness and interest among Malaysians on pursuing a maritime career.

Malaysia has had a long-standing and respected tradition as a sea-faring nation that stretches back for centuries. From the days of the Malacca Sultanate and even before, the country has been the cradle of a maritime culture that linked the East and the West. The story of the sea and Malaysia’s own unique narrative are inseparable to say the least.

03 CORPORATE SOCIAL RESPONSIB IL ITY ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

36

It is only right that Malaysia, now in the 21st century continues to sustain its proud sea-faring tradition. However, in today’s modern world, building Malaysia’s next generation of able seafarers; in terms of both quality and quantity remains a challenge.

Unlike more popular career choices such as medicine, engineering or aviation, a maritime profession does not appear high on the list of most young people due to lack of industry branding and exposure; and several misconceptions that jobs in this industry do not offer promising career pathways or are low-paying and inherently dangerous.

In addressing these issues, ICON undertook the bold step to go directly to the grassroots level – holding career talks at schools nationwide. In FYE2016, ICON visited four schools nationwide speaking to almost 500 students. These schools were Kolej Vokasional Setapak (Kuala Lumpur), Kolej Vokasional Labuan (Labuan), SMK Kijal and SMK Ayer Puteh (both in Kemaman, Terengganu).

These talks included audio visual aids for greater impact and question and answer sessions for students. Conducted by ICON’s own staff and ALAM’s representative, these talks were held for the benefit of the next generation on career prospects of working in the maritime industry.

The talk was certainly an eye-opener for the many secondary school level students, many of whom never even knew about a possible, exciting and rewarding career in the maritime industry. Certainly, the talks were worthwhile given the positive feedback and interest received from participants. If anything, these outreach efforts clearly illustrate that if awareness is provided, more youths would consider the possibility of a maritime career, more so those from lower to middle income families.

This is of great significance as a maritime career is a viable option for many of these youths to escape their disadvantaged backgrounds and to enjoy the fruits of the nation’s socio-economic progress. With that, whole families and ultimately villages or communities get be uplifted.

Going further, a field trip to ALAM was organized by ICON for 42 students from Kolej Vokasional Setapak. These students were selected based on their majoring courses being pursued at college.

Once again, the visit served to further re-inforce the interest of working at sea with plenty of positive feedback received. It has further sowed the seeds of a maritime career in these young men and women, which we hope will germinate and come to fruition in the future.

Going forward, the ICON school visits and career talk programme as well as visits to ALAM will be continued to tap more young Malaysians across the country.

4

nationwide schools

ICON holds career talks at

five hundredstudents



37

SUPPORTING THE COMMUNITY & MAKING A POSITIVE DIFFERENCE

Despite the challenges faced during a downturn year, ICON continued to uphold its corporate social responsibility (“CSR”) obligations. We believe that Corporates have a role to play in the betterment of society using available financial and non-financial resources and means.

In FYE2016, the Group continued to make a positive difference in the lives of certain segments of the community that we work in. During the holy month of Ramadan, we continued to hold “buka puasa” event for orphans and underprivileged children.

Later in the year, we also made donations for Hari Raya Qurban in the areas we operate. This includes sponsoring several cows for sacrifice with the meat being offered to the poor. Not only did the Group contributed to the needy, we went a step further to participate in these events with staff attending the Hari Raya Qurban events, both in Kemaman and Labuan.

Another event that saw active staff participation was the gotong-royong (communal clean-up) activity held in benefit of - Persatuan Kebajikan Baitul Kasih – a charity home for orphans and underprivileged children. As the home was moving the children to a new location, ICON staff came forward to assist – helping to spruce up the new place. The day-long event was a tiring but most satisfying affair as the toil and sweat put into cleaning up the new home has made a big difference to the children’s comfort.

In all of these events, ICON staff were actively involved in ensuring the events were a resounding success. It is indeed heartening to see the warm hearts and generous spirits of our people in making a meaningful difference in the lives of the needy.

As we reached out to the community, we continued to also celebrate our “internal community” – the people of ICON, our greatest and most vital asset. In FYE2016, we continued to hold our Hari Raya Aidil Fitri and other festive celebrations for staff. These events serve as an avenue to bring staff together towards forging closer bonds and to create a stronger sense of community.

We are emboldened by the results of our CSR efforts and intend to continue driving our social outreach agenda moving forward. Certainly our capabilities to contribute will be influenced by overall market conditions and business performance, but regardless, we endeavor to continuing playing our role as a responsible corporate citizen and to bring a meaningful difference in the lives of as many as possible who have come to know and experience the ICON brand.


04 HOW WE ARE GOVERNED39 Directors’ Profile

48 Senior Management Team

52 Audit and Risk Management

Committee Report

55 Statement of Corporate Governance

70 Statement on Risk Management and

Internal Control

73 Statement of Directors’ Responsibility

04 HOW WE ARE GOVERNEDICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

39

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda, was appointed to the Board on 26 February 2014 and he is the Chairman and Non-Independent Non-Executive Director of the Company.

He is a Fellow of the Institute of Chartered Accountants in England and Wales, and a member of the Malaysian Institute of Accountants. He is also a member of the Malaysian Institute of Certified Public Accountants and served on its council for 24 years, including three years as its president.

He is also the Chairman of Ekuiti Nasional Berhad, Maxis Berhad, Yayasan Raja Muda Selangor and Yayasan Amir. He is presently a Director of Khazanah Nasional Berhad and Yayasan DayaDiri. He is also the Chancellor of University Selangor.

He was formerly Executive Chairman of PricewaterhouseCoopers (“PwC”) Malaysia, Chairman of the Malaysian Accounting Standards Board and Danamodal Nasional Berhad. His previous international appointments include being a member of the PwC Global IFRS Board and the Standards Advisory Council of the International Accounting Standards Board. His previous public appointments include being a member of the Securities Commission Malaysia, the Malaysian Communications and Multimedia Commission, the Investment Panel of the Employees Provident Fund and the Board of Trustees of the National Art Gallery.

70, Male, Malaysian

Chairman

Non-Independant Non-Executive Director

RAJA TAN SRI DATO’ SERI ARSHADBIN RAJA TUN UDA

He is a nominee of Ekuinas Capital Sdn. Bhd., which indirectly holds the entire equity interest in Hallmark Odyssey Sdn. Bhd., a major shareholder of the Company, through E-Cap (Internal) One Sdn. Bhd. and E-Cap (Internal) Two Sdn. Bhd.

He has attended all eight Board Meetings held in the financial year ended 31 December 2016.

DIRECTORS’ PROFILE

04 HOW WE ARE GOVERNED ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

40


Encik Amir Hamzah bin Azizan, was appointed as the Managing Director of the Company on 1 March 2016 (“MD”) and is our Non-Independent Executive Director.

He holds a Bachelor of Science Degree in Management (majoring in Finance and Economics) from Syracuse University, New York. He has also attended the Stanford Executive Programme at Stanford University, United States of America and the Corporate Finance Evening Programme at the London Business School, United Kingdom.

He has 27 years of industry and international experience and extensive knowledge in the oil and gas industry and marine logistics sector. In addition, he has in-depth experience in leading stock-market listed companies, with a strong track record of creating shareholder value through integration operations and accelerating earning growth by expanding into new markets and increasing market share.

He started his career within the Shell Group of Companies for 10 years, serving in various capacities, including as Head of Financial Services and Manager of Planning and Support at Sarawak Shell Berhad, Corporate Finance Executive at Shell Malaysia Limited, Marketing Credit Accountant at Shell Singapore Pte. Ltd., Internal Auditor at Shell Eastern Petroleum Pte. Ltd., and Senior Treasury Advisory at Shell International Ltd., London. In the year 2000, he joined MISC Berhad as the Group’s General Manager, Corporate Planning Services. Subsequently in 2004, he was the Regional Business Director (Europe, Americas, Africa and FSU) of MISC Berhad in London, United Kingdom before being appointed as the President/Chief Executive Officer (“CEO”) of AET Tanker Holdings Sdn. Bhd. on 1 April 2005. He was then promoted as the President/CEO of MISC Berhad on 1 January 2009 and served until 14 June 2010.

49, Male, Malaysian

Managing Director

Non-Independant Executive Director

AMIR HAMZAH BIN AZIZAN

Subsequently he became the MD/CEO of PETRONAS Dagangan Berhad since 15 June 2010 until 31 August 2012, when he became the Group MD/CEO of PETRONAS Lubricants International. At the same time, he was also the Vice President Downstream Marketing from 1 March 2011 until 1 July 2013, when he became the Vice President Lubricants for Petroliam Nasional Berhad.

On 1 July 2016, he was appointed as a Director of UEM Edgenta Berhad (“UEM Edgenta”). Subsequently on 29 August 2016, he was appointed as the Chairman for both the Board and the Nomination Committee of UEM Edgenta.

He has attended all six Board Meetings held in the financial year ended 31 December 2016 since his appointment on 1 March 2016.


41

Datuk Wira Azhar bin Abdul Hamid, was appointed to the Board on 26 February 2014. He is a qualified Accountant and is a Fellow of the Chartered Association of Certified Accountant (UK). He is also a member of the Malaysian Institute of Accountants.

He is a Senior Independent Non-Executive Director and is also the Chairman of Audit and Risk Management Committee of the Company.

He began his career as a Financial Internal Audit Manager at British Telecoms Plc. in London, United Kingdom and served from 1989 to 1991 where he was responsible for operational review audits at British Telecoms District Offices in South East England. He then joined the Malaysian Co-Operative Insurance Society Ltd. as the Head of Finance from 1992 to 1994. Subsequently in 1994, he joined the Sime Darby Berhad Group and held various financial and senior management positions in manufacturing, oil and gas, industrial equipment and plantation businesses, before leaving Sime Darby Berhad Group in 2010. Datuk Wira Azhar’s last position in the Sime Darby Berhad Group was Executive Vice President in Plantation Division. In January 2011, he was appointed as Independent Director of Perbadanan Kemajuan Negeri Perak and from September 2011 to December 2014, he was the Chief Executive Officer of Mass Rapid Transit Corporation Sdn. Bhd.

55, Male, Malaysian

Senior Independent Non-Executive Director

DATUK WIRA AZHAR BIN ABDUL HAMID


He was appointed as a Director in Hong Leong Bank Berhad on 15 May 2015 and a member of the Audit Committee of Hong Leong Bank Berhad on 20 October 2015. He is also the Chairman of Tradewinds Corporation Berhad and a Director of Hume Industries Berhad. He also holds several directorships in other private limited companies. To date, he is the Group Managing Director of Malakoff Corporation Berhad.

He has attended seven out of eight Board Meetings held in the financial year ended 31 December 2016.


42

Syed Yasir Arafat bin Syed Abd Kadir, was appointed to the Board on 14 November 2013. He graduated from University of Essex, United Kingdom in 1994 with a Bachelor of Arts (Hons) degree in Accounting and Financial Management.

He is the Non-Independent Non-Executive Director of the Company. He is a member of the Audit and Risk Management Committee, Remuneration Committee, Nomination Committee and the Employees’ Share Scheme Committee of the Company.

He began his career in 1994 as an Executive in the Project Development Department of Aseambankers Malaysia Berhad (now known as Maybank Investment Bank Berhad). In 1996, he joined the Capital Markets Department of Commerce International Merchant Bankers Berhad (now known as CIMB Investment Bank Berhad) as an Executive until 1998. He subsequently joined Pengurusan Danaharta Nasional Berhad as an Executive from 1998 to 1999. He joined United Overseas Bank (Malaysia) Berhad as a Deputy Manager in the Investment Banking Division, Corporate Finance in 2000 and was involved in corporate advisory work until he left in 2001. He joined ING Corporate Advisory (Malaysia) Sdn. Bhd. in 2001 and served for nine years, starting as Vice President of Corporate Finance, specialising in areas of mergers and acquisitions, equity and equity-linked fund raising, debt fund raising and financial advisory for some of Malaysia’s leading companies in banking, plantations, automotive, telecommunications and property, among others. His last position was Country Manager of ING Wholesale Banking, a position that he was promoted to in 2007, overseeing both ING Corporate Advisory (Malaysia) Sdn. Bhd. and ING Bank N.V. Labuan Branch operations in Malaysia. He joined Ekuiti Nasional Berhad (“Ekuinas”) in 2009 as the Managing

45, Male, Malaysian

Non-Independent Non-Executive Director

SYED YASIR ARAFAT BIN SYED ABD KADIR

Partner, Investment, where he oversees the Investment Team and leads Ekuinas’s portfolio investments in the oil and gas industry. Currently, he is an Executive Director and Chief Executive Officer of Ekuinas leading its management committee and is a member of its Investment Committee.

He is a Director of Hallmark Odyssey Sdn. Bhd. (“HOSB”), a major shareholder of the Company. HOSB is a major subsidiary of E-Cap (Internal) One Sdn. Bhd., which in turn is a wholly-owned subsidiary of Ekuinas Capital Sdn. Bhd.

He has attended all eight Board Meetings held in the financial year ended 31 December 2016.



43

Edwanee Cheah bin Abdullah, was appointed to the Board on 26 February 2014.

He obtained a Diploma in Mechanical Engineering from Singapore Polytechnic in 1973. In 1999, he obtained a Master in Business and Administration (Technology) degree which was jointly awarded by Deakin University in Melbourne, Australia and the Association of Professional Engineers, Scientists and Managers in Australia.

He is an Independent Non-Executive Director of the Company. He is a member of the Audit and Risk Management Committee. He is also the Chairman of the Remuneration Committee, Nomination Committee and Employees’ Share Scheme Committee of the Company.

He has over 40 years of international experience in the energy and oil and gas industries. He began his career with Shell Brunei LNG Sdn. Bhd. in 1973 as a trainee engineer and has since served various companies with the Shell Group of Companies (“Shell Group”) in Malaysia, Singapore, Brunei, South Korea, Netherlands, United Kingdom and United States of America for 32 years. During his tenure with the Shell Group, he had assumed various positions including Engineer, Site Representative Manager, Division Head and Global Consultant where he

66, Male, Malaysian

Independent Non-Executive Director

EDWANEE CHEAH BIN ABDULLAH

was responsible for, among others, engineering related matters, project management and internal consultancy. In 2006, he left Shell International Exploration and Production B.V., Netherlands. In 2007, he joined S 2 Click Sdn. Bhd., an oil and gas consultancy firm, as the Director and Principal Consultant, where he provided consultancy services to various oil and gas companies.

He has attended seven out of the eight Board Meetings held in the financial year ended 31 December 2016.



44


Madeline Lee May Ming, was appointed to the Board on 26 February 2014.

She obtained her Bachelor of Laws (Hons) degree from Queens University Belfast, United Kingdom in 1991. She pursued her postgraduate studies at the same university and graduated with a Master of Laws in 1992. In 1993, she became a member of Grays Inn, United Kingdom and was called to the Bar of England and Wales. She was subsequently called to the Singapore Bar in 1995 and also to the Malaysian Bar in 2001.

She is an Independent Non-Executive Director of the Company. She is a member of the Remuneration Committee, Nomination Committee and the Employees’ Share Scheme Committee of the Company.

48, Female, Malaysian


MADELINELEE MAY MING

She has been in legal practice for over 20 years. She embarked her career as a pupil Barrister in the Chambers of 4 Brick Court, London, United Kingdom in 1993 until 1994. She continued her international legal practice in Singapore until 1996 and in Vietnam until 1999. She resumed her legal practice in Malaysia in 2000 with Messrs. Raslan Loong and thereafter, Messrs. Mazlan & Associates where she was a Partner in 2006. In 2014, she left Messrs. Mazlan and Associates and is now with Messrs. Ilham Lee, as a founding partner.

She has attended all eight Board Meetings held in the financial year ended 31 December 2016.


45


Datuk Abdullah bin Ahmad, was appointed to the Board on 24 March 2015.

He graduated from University Malaya in 1970 with a Bachelor of Arts. He then obtained his post-graduate Diploma in Management Science from National Institute of Public Administration (INTAN) in 1974 and Certificate in Petroleum Management (Arthur D’Little) Boston, United States of America in 1985.

He is an Independent Non-Executive Director of the Company.

He was formerly an Administrative and Diplomatic Service Officer. He started his career as a civil servant assigned to various divisions within the purview of the Ministry of Home Affairs. His last position was in Public Services Department. In 1979, he joined Petroliam Nasional Berhad (“PETRONAS”) as the Head of Human Resource Planning and Recruitment. Whilst serving PETRONAS, he was exposed to both upstream and downstream at operating unit level, including Carigali-BP (a joint venture

69, Male, Malaysian


DATUK ABDULLAH BIN AHMAD

company between PETRONAS Carigali and British Petroleum Development Company, United Kingdom) for exploration and production of oil, offshore Kudat, followed by other postings to domestic marketing, area office, regional office, petrochemical plant and subsidiaries in various capacities, including Board member of PETRONAS property related subsidiaries.

He has attended seven out of the eight Board Meetings held in the financial year ended 31 December 2016.


46

Puan Farina binti Farikhullah Khan, was appointed to the Board on 18 May 2016.

She graduated from University of New South Wales, Australia with Bachelor of Commerce (Accounting). She is a Fellow of the Institute of Chartered Accountants in Australia. She also attended Advanced Management Program at Harvard Business School.

She is an Independent Non-Executive Director of the Company.

She has 29 years of working experience, with 19 years in oil and gas industry and 10 years in management capacity. She started her career in 1994 with Coopers & Lybrand, Australia, where she was involved in the area of audit and business services. In 1997, she returned to Malaysia to join Petroliam Nasional Berhad (“PETRONAS”) in the Corporate Planning and Development Division where she started as an executive and in the ensuing years until 2005, she held various positions including Senior Manager (Strategy and Portfolio) in Group Strategic Planning of PETRONAS. She subsequently assumed the position of the Chief Financial Officer of PETRONAS Carigali Sdn. Bhd (“PETRONAS Carigali”), one of the largest subsidiaries of PETRONAS with operations over 23 countries, from 2006 to 2010. She then served as the Chief Financial Officer at PETRONAS Exploration and Production Business, the largest arm of PETRONAS Business, from mid-2010 until 2013, where the business included both PETRONAS Carigali Group of Companies as well as the Petroleum Management Unit of PETRONAS.

45, Female, Malaysian


FARINA BINTI FARIKHULLAH KHAN


Prior to leaving PETRONAS Group at the end of 2015 to pursue her other interests, she was a Chief Financial Officer of PETRONAS Chemical Group Berhad, the largest listed entity of PETRONAS, for two years. On 14 April 2017, she was appointed as a Director of Ambank Islamic Berhad.

She has attended all four Board Meetings held in the financial year ended 31 December 2016 since her appointment on 18 May 2016.


47

Datuk Abdullah bin Karim, was appointed to the Board on 1 October 2016.

He graduated from University of Western Australia with Bachelor of Sciences in Mechanical Engineering. He later pursued Diploma in Gas Engineering from Illinois Institute of Technology in United States of America.

He is an Independent Non-Executive Director of the Company.

He joined Petroliam Nasional Berhad (“PETRONAS”) in 1977 and has over 39 years of experiences in the oil and gas industry. He served as a Project Engineer (1981) and General Manager, Engineering Division (1991) in PETRONAS Carigali Sdn. Bhd. (“PETRONAS Carigali”), responsible for petroleum engineering, drilling and facilities development in new oil and gas fields. He became the Executive Assistant to the President of PETRONAS in 1994, after which he was appointed as the Managing Director (“MD”)/Chief Executive Officer (“CEO”) of OGP Technical Services Sdn. Bhd., a project management consultancy company from 1995 to 1999.

In 1999, he assumed the position of MD/CEO of Malaysia LNG Group of Companies, responsible for construction of MLNG 3 plant, marketing and operations of the PETRONAS LNG Complex in Bintulu before his appointment as Vice President, Exploration and Production of Petronas Business in 2004. In March 2007, he assumed the position of MD/CEO of PETRONAS Carigali, a wholly-owned subsidiary of PETRONAS involved in the exploration, development and production in Malaysia as well as in 23 countries worldwide. In July 2010, Datuk Abdullah was appointed as the President/CEO of PETRONAS Carigali Sdn. Bhd. until 2012. He was the Vice President and Venture Director, LNG Projects in Malaysia from July 2012 prior to his retirement in 2016.

64, Male, Malaysian


DATUK ABDULLAH BIN KARIM


He was appointed as a Director of UZMA Berhad and a member of the Audit Committee and the Nomination Committee of UZMA Berhad on 25 August 2016.

He has attended one Board Meeting held in the financial year ended 31 December 2016 since his appointment on 1 October 2016.

Save as disclosed above, none of the Directors has:-(i) any family relationship with any Directors and/or major shareholders of the

Company;(ii) any conflict of interests with the Company;(iii) any conviction for offences (other than traffic offences) within the past five years,

if any; and(iv) any public sanction or penalty imposed by the relevant regulatory bodies during

the financial year 2016.


48

SENIOR MANAGEMENT TEAM

Amir Hamzah Azizan’s profile is presented on page 40. Capt. Hassan Ali (“Capt. Hassan”), Malaysian, male, aged 59 was appointed as the Chief Operating Officer of ICON effective 1 March 2016.

Capt. Hassan has more than 39 years of experience in the shipping industry spanning across various companies such as Malaysia International Shipping Corporation Berhad (“MISC Berhad”), PETRONAS Carigali Sdn. Bhd., Malaysian Maritime Academy, Orient Overseas Container Line (Malaysia) Sdn. Bhd. and Gugusan Maritime Sdn. Bhd., etc. His last position prior to joining ICON was Chief Executive Officer of Tanjung Kapal Services Sdn. Bhd..

As the Chief Operating Officer, Capt. Hassan has an overall accountability for the Operations and Technical functions of the Group. He supports the Managing Director in developing the corporate and operational strategies and facilitates these efforts across the Group.

Capt. Hassan earned his Master‘s Degree in Science from University of Wales College of Cardiff. He also holds a Master of Foreign Going Certificate of Competency (Class 1).

CAPTAIN HASSAN ALI

Chief Operat ing Off icer

AMIR HAMZAH AZIZAN

Managing Director


49


Zaleha Abdul Hamid (“Zaleha”), Malaysian, female, aged 44 was appointed as the Chief Financial Officer of ICON from 1 April 2013 until 31 March 2017.

She was primarily responsible to provide strategic financial leadership across the Group and to ensure compliance to regulatory requirements, accounting standards, and other corporate directives and objectives that are related to financial/accounting activities. She was also responsible in providing leadership and direction to the Information Technology and Corporate Governance & Risk Management functions of the Group. Zaleha has more than 20 years of experience in audit and finance functions. She started her career in 1997 as an Audit Assistant with PricewaterhouseCoopers (Malaysia) and progressed to Audit Manager’s position. In 2006, she joined CIMB Aviva Takaful Berhad to lead the finance and support services of the newly set up takaful division. Subsequently, she joined Ekuinas as a Financial Controller and later as Director, Portfolio Performance Management focusing on Oil & Gas investee companies. She holds a Bachelor of Science Degree (Econ) Honours in Accounting & Finance from University of Wales, Aberystwyth, UK and currently a fellow member of the Association of Chartered Certified Accountants (FCCA) and Malaysian Institute of Accountants (MIA).

Idham Adnan Jamil (“Idham”), Malaysian, male, aged 44 is the Chief Financial Officer of ICON effective 1 April 2017.

Idham has over 20 years of experience in finance functions in oil & gas industry locally and internationally. He started his career with Arab-Malaysian Corporation Bhd in 1995.

After about three years, he left to join Petroliam Nasional Berhad (“PETRONAS”). He held several positions in PETRONAS Group, both locally and abroad. His last posting was as Chief Accountant, PETRONAS (Vietnam) Co., Ltd. He left PETRONAS in 2010 to take up the challenge in Qatar Petroleum as Senior Specialist, Joint Interest Group, Planning and Policy Directorate. After about four years in Qatar, he returned to Malaysia to join Shapadu Energy & Engineering as the Group Chief Financial Officer until January 2017.

Idham is currently a Member of the Institute of Chartered Accountants, Australia (ICAA) and Malaysian Institute of Accountants (MIA). He obtained he Bachelor Commerce (Accounting) Degree from University of New South Wales, Australia.

IDHAM ADNAN JAMIL

Chief F inancia l Off icer

(effect ive 1 Apr i l 2017)

ZALEHA ABDUL HAMID

Chief F inancia l Off icer

(unt i l 31 March 2017)


50


Jamalludin Obeng, Malaysian, male, aged 52 was appointed as the Chief Commercial Officer of ICON effective 1 March 2017.

He is responsible for the strategy and development of new business opportunities and growth, and at the same time provides leadership and direction for commercial and chartering. Prior to joining ICON, he was the Group Business Development Director for Petra Energy Berhad, with concurrent responsibilities as the Chief Executive Officer of Petra Fabricators Sdn. Bhd. He has more than 26 years of working experience with 23 years in the oil and gas industry, which included a 10 years stint in Petroliam Nasional Berhad (“PETRONAS”) and a nine years stint in the Kencana Petroleum Group which subsequently became part of SapuraKencana Petroleum Berhad. During his tenure of service in PETRONAS which started in 1990, his job functions were mostly in project economics, business and project planning mainly in Upstream. After PETRONAS, he was with Cahya Mata Sarawak Berhad, for a period of three years as the Business Development Manager starting in 2000 and later as the Group Procurement Manager. In SapuraKencana Group, he was the Vice President (Fabrication), with concurrent responsibilities as the Managing Director for its main subsidiary of construction and fabrication arm, Kencana HL Sdn. Bhd., a position he held from 2008 to 2012, after heading Business Development. He later moved to MMHE Berhad, where he was the General Manager of Business Development and Commercial from 2012 to 2014. He holds a Master of Arts Degree in Educational Computing from University of San Francisco and a Bachelor of Arts Degree in Economics from California State University, Fresno, USA.

Maizatul Aznin Mohamed (“Maizatul”), Malaysian, female, aged 44 is the Senior General Manager of Legal & Secretarial of ICON since 9 February 2015.

She is responsible to oversee and provide legal advice and guidance on major company activities and business issues including as a custodian of Company’s interest commercially and legally. She is also responsible in managing all secretariat and management/board relationships.

Maizatul has extensive experience in stakeholder management and collaboration with local and international legal firms. Prior to joining ICON, she served as General Counsel of Malakoff Corporation Berhad (“Malakoff”) a leading independent power producer in Malaysia. During her stint at Malakoff she was appointed as a director of Muscat City Desalination Company S.A.O.C., a joint-venture company with Sumitomo Corporation and Cadagua S.A. from 2013. She started her career with Golden Hope Plantations Berhad in 1998.

She holds a Bachelor of Laws Degree (Hons) from University of East London and also a member of Malaysian Association of Company Secretaries (MACS).

MAIZATUL AZNIN MOHAMED

Senior Genera l Manager, Legal & Secretar ia l

JAMALLUDIN OBENG

Chief Commercia l Off icer


51

Kamarunnihar Abdul Samad Malaysian, female, aged 54 is the General Manager of Human Capital of ICON since 1 August 2016.

She brings with over 20 years of experience in Human Resource Management. She started her career with MARA in 1985 as an educator. In 1992, she joined the corporate world as a Training Executive with one of the subsidiaries of Kumpulan Guthrie Berhad. Since then she has been in the field of Human Resource Management and has served in several companies including Radicare (M) Sdn. Bhd., CIMB, Malaysia International Shipping Corporation Berhad (“MISC Berhad”) and PETRONAS Lubricants International. She has also accumulated a wealth of experience as a Human Resource Consultant with the Performance and Rewards team of Towers Perrin (now known as Willis Towers Watson).

As the General Manager of Human Capital she has the strategic and functional responsibilities for all of the Human Resources disciplines which include Compensation and Benefits, Training and Development, Employee Relations and Recruitment and Selection.

She holds a Master of Science Degree in Corporate Communication from UPM and a Bachelor of Science Degree in Mathematics from Western Illinois University, USA.

Ronnie Khoo Boo Eam, Malaysian, male, aged 40, is the General Manager of Strategic Planning of ICON since 1 January 2017.

Prior to that he was General Manager of Coporate Finance & Strategy.

He is responsible for developing and executing the Company’s overall strategy, corporate growth and investor relations. He graduated with a Bachelor of Commerce Degree from Curtin University of Technology, Australia and is currently a member of CPA, Australia. He joined the Company in September 2009. Ronnie has 17 years of working experience in strategy, corporate finance/fund raising, capital investments, mergers and acquisition and audit. He started his career in 2000 with PricewaterhouseCoopers Malaysia in the Assurance and Business Advisory Services department where he spent 6 years. In 2006, he joined Asian Finance Bank Berhad as a pioneer member to setup the bank’s internal audit function before its incorporation in 2007. After three years, he left to join the Company (formerly Omni Petromaritime Sdn. Bhd.) and held various position in Corporate Finance and Strategy and Strategic Planning. During his tenure in the Company, he was actively involved in the Company’s vessel fleet growth, debt and equity funding and joint ventures.


RONNIE KHOO BOO EAM

Genera l Manager, Strategic Planning

KAMARUNNIHAR ABD SAMAD

Genera l Manager, Human Capita l

Save as disclosed above, none of the Senior Management has:-(i) any directorship in public companies and listed issuers save and except for Amir Hamzah bin Azizan (refer to page 40);(ii) any family relationship with any Directors and/or major shareholders of the Company;(iii) any conflict of interests with the Company;(iv) any conviction for offences (other than traffic offences) within the past five years, if any; and(v) any public sanction or penalty imposed by the relevant regulatory bodies during the financial year 2016.


52

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

The Board of Directors (“Board”) of ICON is pleased to present the following report of the Audit and Risk Management Committee (“ARMC”) for the financial year ended 31 December 2016 (“ARMC Report or Report”).

MEMBERSHIP AND MEETING

The ARMC consists of all Non-Executive Directors with a majority of them being Independent Non-Executive Directors, including the Chairman. The Chairman of the ARMC, namely, Datuk Wira Azhar bin Abdul Hamid, is a qualified Chartered Accountant and a member of the Malaysian Institute of Accountants. Accordingly, the composition of the ARMC complies with the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The ARMC meetings are convened in orderly manner, structured through the use of an agenda. Minutes of the ARMC meetings and ARMC papers are circulated to all members prior to the meeting for discussion. The ARMC’s Chairman updates the Board on principal matters and key issues discussed at the ARMC meetings for further discussion, deliberation and approval.

During the financial year ended 31 December 2016, a total of six ARMC meetings were held and the respective member’s attendance is shown in the following table:

Name of ARMC MemberNo. of Meetings Attended / Held

Percentage of Attendance (%)

Datuk Wira Azhar bin Abdul Hamid(Chairman)Senior Independent Non-Executive Director

6/6 100

Edwanee Cheah bin Abdullah(Member)Independent Non-Executive Director

6/6 100

Syed Yasir Arafat bin Syed Abd Kadir(Member)Non-Independent Non-Executive Director

6/6 100

The MD and Chief Financial Officer (“CFO”) are in attendance at each of the ARMC meetings to brief the ARMC on the reports and specific issues. The representatives of the External Auditors and the Internal Auditors are also invited to attend the ARMC meetings to present reports as and when required.

The ARMC has conducted private discussions with the External Auditors, Messrs PricewaterhouseCoopers without the presence of the Management during its meetings on 4 April 2016 and 23 November 2016.

ROLES AND RESPONSIBILITIES OF THE AUDIT AND RISK MANAGEMENT COMMITTEE

The ARMC is responsible for assisting the Board in fulfilling its statutory and fiduciary responsibilities which include, but are not limited to the following:a) To oversee the integrity of financial statements and quarterly announcements, significant financial reporting issues and judgements, and

accounting and financial reporting processes, policies and practices;b) To oversee the corporate governance, risk management and internal control arrangements;c) To oversee the compliance with legal, regulatory and reporting requirements;d) To oversee the External Auditors;e) To oversee the internal audit function; and f) To review the related party transactions.


53


The roles and responsibilities of the ARMC are set out in written terms of reference which are reviewed periodically by the ARMC taking into consideration relevant legislation and recommended best practice. The detailed terms of reference for the ARMC is available on the Company’s website at www.iconoffshore.com.my. SUMMARY OF WORK OF THE AUDIT AND RISK MANAGEMENT COMMITTEE

During the financial year ended 31 December 2016 and up to the date of approval of this Report, the ARMC in discharging its functions and duties had carried out the following work to meet its responsibilities:

A. FINANCIAL REPORTING

i) Review of the quarterly unaudited financial statements and its explanatory notes thereon, and annual audited financial statements to ensure compliance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965; and

ii) Review of the significant matters highlighted by the External Auditors in the annual financial statements and significant closing adjustments by Management.

B. CORPORATE GOVERNANCE, INTERNAL CONTROL ARRANGEMENTS AND COMPLIANCE

i) Review of the Remuneration Policy, revised terms of reference of ARMC, revised terms of reference of Nomination Committee, revised terms of reference of Executive Committee and terms of reference of Employees’ Share Scheme Committee for adoption by the Group, prior to submission to the Board for consideration and approval;

ii) Review the status and performance of the Group’s major on-going and completed improvement initiatives, among others, manpower rationalisation exercise, re-scheduling and restructuring financing plan on the existing loan with lenders, post mortem on vessels underwent dry-docking (Tanjung Huma and Tanjung Dahan1), rolling 12 months cash flow projections, newly developed Vessel Dry-docking (Scheduled and Unscheduled) Procedure Manual, competency issues and incentives to offshore staff, issues on crew income tax, voluntary disclosure and settlement to Inland Revenue Board of Malaysia, indulgence of loan covenants, and projection of foreign exchange exposure;

iii) Review and deliberate on the governance review report, issues and recommendations from the Corporate Governance and Risk Management Department (“CGRM”) in relation to the governance review conducted during the financial year; and

iv) Review of the Statement of Corporate Governance, ARMC Report, Statement on Risk Management and Internal Control, and Statement of Directors’ Responsibility for insertion into the annual report.

C. RISK MANAGEMENT

i) Review of the quarterly business risk assessment and risk management reports to identify and manage key business risks, as well as to monitor the status of the mitigating measures: and

ii) Review of the revamp of Risk Management Framework.

D. EXTERNAL AUDITORS

i) Review and approval of the audit plan of the External Auditors, including their scope of work for the financial year; andii) Review of the performance and independence of the External Auditors and consider for change or reappointment, and fees of the

External Auditors before recommending to the Board for approval.

E. INTERNAL AUDITORS

i) Review and approval of the audit plan of the Internal Auditors, including their scope of work for the financial year;ii) Review and assess the effectiveness of the internal audit function;iii) Review and approval of the appointment and fees of outsourced Internal Auditors; andiv) Review and deliberate on the audit reports, issues and recommendations from the Internal Auditors in relation to the audit conducted

during the financial year and up to the date of approval of this Report.


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F. RELATED PARTY TRANSACTION

Review of a related party transaction to be entered into by the Company and the Group to ensure such transaction was conducted in accordance with the Company’s policies and procedures and the Listing Requirements of Bursa Securities on related party transactions, and proper disclosure was made in accordance with the Listing Requirements of Bursa Securities.

INTERNAL AUDIT FUNCTION

The Group internal audit function is outsourced to an audit firm, Deloitte Enterprise Risk Services Sdn. Bhd. (“Deloitte”). The internal audit function reports directly to the ARMC and is guided by the Internal Audit Charter. Its principal role is to undertake independent, regular and systematic review and appraisal of the Group’s risk management, control and governance processes designed and represented by the Management, so as to determine whether they are adequate, functioning in an appropriate manner and form a robust internal control.

During the financial year and up to the date of approval of this Report, Deloitte had carried out five risk-based operational audit reviews in accordance with the approved annual internal audit plan, namely, Fleet Operations, Stock Management and Shipbuilding Management, Procurement Process, Financial Management, Fleet Human Capital Management, and Human Resources and Information Technology Management. The significant audit findings raised by Deloitte for the internal audit review on Fleet Operations, Stock Management and Shipbuilding Management include the non-compliance and inadequate monitoring of the budget for dry-docking cost, weaknesses in on-board stock management, and inadequate tank sounding practices and its discrepancies analysis in monthly report, Procurement Process include inadequate monitoring of purchases made, lack of monitoring of the status of purchases made and long outstanding payments to suppliers, Financial Management include weaknesses in petty cash management, Fleet Human Capital Management include weaknesses in crew salary regularisation and non-compliance with / inaccurate computation of regulatory deduction of crew salary, whilst Human Resource and Information Technology Management include weaknesses in human capital development and training management. Certain audit findings arise due to arrangements or practices prior to the initial public offering (“IPO”) in June 2014. Subsequent to the IPO, the Management has taken steps to enhance the internal controls and strengthen the effectiveness of policies and procedures. The corresponding reports of the internal audit reviews were presented to the ARMC in February, August and November 2016, and February 2017 respectively, and forwarded to the Management for their attention and actions. The Management is responsible for ensuring that the action plans are performed within the required timeframe.

Follow-up reviews on previous internal audit were also performed by Deloitte to monitor the progress made towards the implementation of these actions. The results of the follow-up audit for Procurement Process, Financial Management and Fleet Human Capital were presented to the ARMC in the subsequent quarterly ARMC meeting until the audit findings were closed. All audit findings in relation to these audit reviews were closed within the target date of implementation. The results of follow-up internal audit review for Human Resource and Information Technology Management will be presented to the ARMC in May 2017.

On 23 November 2016, Deloitte presented to the ARMC the revised annual internal audit plan 2017 outlining their scope of work for operational audits for the financial year ending 31 December 2017, covering fleet operations, shipbuilding management and stock management, bidding and contract management, procurement, finance, and corporate finance and strategy. The revised annual internal audit plan 2017 was approved for execution with immediate effect. Deloitte’s internal audit service was extended to three years ending Quarter 2, 2019, with yearly appointment to ensure that Deloitte is able to discharge an effective and comprehensive internal audit plan coupled with solid assessment of the Group’s risk management, control and governance processes.

For the financial year ended 31 December 2016, the total cost incurred for the internal audit function was RM117,893.

This report is made in accordance with a resolution of the Board dated 5 April 2017.


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STATEMENT OF CORPORATE GOVERNANCE

The Board of ICON recognises that the exercise of good governance in conducting the affairs of the Group with integrity, transparency and professionalism are the key components for the Group’s continuing progress and success as these would not only safeguard and enhance shareholders’ value but also provide assurance that the interests of the other stakeholders are preserved.

The Board of ICON is committed to comply with the principles and recommendations embodied in the Malaysian Code on Corporate Governance 2012 (“the Code”) in order to meet the highest standard of corporate governance. Our Company has commenced adopting the Code since its listing on the Main Market of Bursa Securities on 25 June 2014 and is continuously striving to pursue this objective.

The Board of ICON is pleased to present the following reports on the application of the principles as set out in the Code and the extent to which the Group has complied with the best practices of the Code during the financial year ended 31 December 2016.

PRINCIPLE 1: ESTABLISHED CLEAR ROLES AND RESPONSIBILITIES

A. THE BOARD

The Board is the ultimate body which takes full responsibility for the overall performance and governance of the Group. It resolves key business matters and corporate policies except those reserved for shareholders as provided in the Articles of Association (“the Articles”) of our Company, the Companies Act, 2016 (“the Act”) and other regulatory requirements. The Board establishes the vision and strategic objectives of the Group, directing policies, and strategic action plans and stewardship of the Group’s resources towards realising the Group’s mission.

The Board exercises due diligence and care in discharging their duties and responsibilities to ensure that high ethical standards are applied, through compliance with the relevant rules and regulations, directives, practice notes and guidelines in addition to adopting the best practices in the Code and act in the best interest of the Group and shareholders.

B. DUTIES AND RESPONSIBILITIES OF THE BOARD

In carrying out their duties and responsibilities, the Board exercises great care to ensure that high ethical standards and corporate behaviour are upheld. To enhance accountability and transparency, the Board has specific functions reserved for the Board and those delegated to the Management. The Board members are constantly mindful that the interests of the Group’s stakeholders are always being protected.

In ensuring an effective discharge of its functions, the Board adopts the Board Charter (“the Charter”) which sets out the following key responsibilities:

a) To review, challenge and approve the annual corporate plan, which includes the overall corporate strategy, marketing plan, human resources plan, information technology plan, financial plan, budget, regulatory compliance plan and risk management plan;

b) To oversee the conduct of the businesses and to determine whether the businesses are being properly managed;

c) To identify principal risks and ensure the implementation of appropriate internal controls and mitigation measures to effectively monitor and manage these risks;

d) Succession planning, including appointing, training, fixing the remuneration of, and where appropriate, replacing the Directors and key Management;

e) To oversee the development and implementation of an investor relations programme or shareholders communications policy for the Group; and

f) To review the adequacy and integrity of the internal controls and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines (including the Listing Requirements of Bursa Securities, securities laws and the Act).

The Board is cognisance of the importance of business sustainability and, in conducting the Group’s business, the impact on the environment, social and governance are taken into consideration.

The Directors of our Company recognise the importance to devote sufficient time and efforts to carry out their duties and responsibilities and have committed to this requirement at the time of their appointment. The Director is at liberty to accept other Board appointments so long as the appointment is not in conflict with the business of our Company and does not affect his performance as a Director.


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None of the Directors of our Company is holding more than five directorships in public listed companies and it is the policy of our Company for Directors to ensure that the number of their directorships is in compliance with the Listing Requirements of Bursa Securities before accepting any new directorship.

C. DIRECTOR’S CODE OF ETHICS

The Directors, in discharging its responsibilities, continue to adhere to the adopted Director’s Code of Ethics. The Director’s Code of Ethics is based on principles in relation to sincerity, integrity, responsibility and Corporate Social Responsibility, and is formulated to enhance the standard of corporate governance and corporate behaviour.

D. EMPLOYEES’ CODE OF ETHICS

Our Company’s Employees’ Code of Ethics ensures that all employees observe and maintain high ethical business standards of honesty and integrity in all aspects of our operations. The Employee’s Code of Ethics highlights key issues to help employees perform their duties in line with our Company’s standards such as ensuring a safe working environment, effectively managing our Company’s assets and property, safeguarding confidential information as well as dealing with external parties such as customers, vendors, media, competitors and government agencies.

E. SERVICE PROVIDER CODE OF CONDUCT

The Group believes that relationships with service providers should be based on the principles of integrity, honesty, accountability and compliance with laws and regulations. With this objective, the Service Provider Code of Conduct (“COC”) requires service providers, which include suppliers, contractors, professional advisors, consultants and other business associates, to adhere to this COC when conducting business with the Group. The Group may take the necessary action for breaches of the COC which includes but not limited to termination and preclusion from proposing any work for the Group for a pre-determined period.

F. ANTI-FRAUD AND WHISTLEBLOWING POLICY

The Anti-Fraud and Whistleblowing Policy is built into the Group’s culture towards elimination of fraud and corruption. It also promotes a transparent and open environment for fraud reporting within the Group.

G. ACCESS TO INFORMATION

Each Director is provided with the agenda and a complete set of Board papers containing the quantitative and qualitative information prior to each Board meeting with the aim of enabling the Directors to make informed decisions and seek clarifications that they may require from the Management ahead of the meeting date. The relevant member of the Management team is invited to attend the Board meetings to advise or report to the Board on the matters relating to their areas of responsibility when necessary for an effective deliberation and decision making.

The Board has direct access to the Senior Management on

information relating to our Company’s businesses and affairs in the discharge of their duties. The Directors have also access to the advices and services of our Company Secretaries and all information in relation to the Group whether as a full Board or in their individual capacity to assist them in furtherance of their duties. From time to time, the Directors are regularly updated by our Company Secretaries and/or Management on any latest development in the statutory requirements relating to their duties and responsibilities. Our Company Secretaries attend all the Board meetings and ensures all the proceedings, deliberations and resolutions passed are properly recorded and maintained.

The Directors will also seek the independent advices from independent professional advisers at our Company’s expense, if necessary

H. BOARD CHARTER

The Board has adopted a formal charter which is available in our corporate website at www.iconoffshore.com.my. The Charter was established to assist the Board to provide strategic guidance to our Company and effectively oversight of its Management, for the benefits of the shareholders and other stakeholders. The Board is guided by the Charter which provides reference for the Directors in relation to the Board’s roles, authorities, duties, responsibilities and functions. It adopts the principles of good governance and is designed to maximise our Company’s compliance, by adopting best practice requirements. The Board will review the Charter as and when necessary to ensure it remains consistent with the Board’s objectives and responsibilities, including the relevant standards of corporate governance.


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PRINCIPLE 2: STRENGTHENING COMPOSITION

A. BOARD COMPOSITION AND BALANCE

As at the date of this Statement, the Board of ICON currently consists of nine members, comprising one MD, one Senior Independent Non-Executive Director, two Non-Independent Non-Executive Directors (one of them is the Chairman) and five Independent Non-Executive Directors. The Board composition complies with the Listing Requirements of Bursa Securities that requires at least two or one-third of the Board, whichever is the higher, to be Independent Directors. The Board has maintained its mix of Directors from diverse professional background with a wide range of experience and expertise in the field of business, oil and gas industry, information technology, economics, legal, finance and accounting. In view of the size of the Group and its business complexity, the Board is of the opinion that its current composition and size remains optimum and conducive for effective deliberations at Board meetings.

The MD has an overall responsibility for the day-to-day management of operational and financial matters of the Group, implementation of the Group’s policies and the Board’s decisions, and development and implementation of the business and corporate strategies. He is supported by the Management team.

There is a clear segregation of roles and responsibilities between the Chairman and the MD to ensure a balance of power and authority, such that no one individual has unfettered powers of decision making. Their respective roles and responsibilities are clearly defined in the Charter. The role of the Chairman is held by a Non-Independent Non-Executive Director of our Company.

It is a recommendation of the Code that the Board must comprise a majority of Independent Directors where the Chairman of the Board is not an Independent Director. The current Board composition meets the requirement of the Code with six out of nine Directors being independent. Datuk Wira Azhar bin Abdul Hamid is our Company’s Senior Independent Non-Executive Director who serves as the point of contact for shareholders to raise their concerns, an alternative to the formal channel of communication with shareholders.

B. APPOINTMENT TO THE BOARD

The appointment of new Board members are considered, evaluated and assessed by the Nomination Committee (“NC”) in accordance with the criteria set up in the Charter prior to the recommendation to the Board for approval. The approving

authority to nominate new appointments lies within the Board’s responsibility upon considering the recommendations from the NC. Our Company Secretaries will ensure that all the appointments are properly made in accordance with the relevant regulatory requirements.

The appointment, re-election and annual assessment of the Directors are set up in the Charter, the primary responsibility of which has been delegated to the NC. The NC proposes nominees for appointment to the Board, and recommends to the Board on the appointment, re-election and assessment of the Directors of the Group/Company for approval.

The Board has established a clear and transparent nomination

process for the appointment of Director of our Company. The nomination process involves the following stages:a) Identification of candidates;b) Evaluation of the suitability of candidates based on the

criteria set;c) Recommendation by NC to the Board; andd) Approval by the Board.

C. BOARD DIVERSITY

The Board considers that diversity includes differences that relate to gender, age, ethnicity and cultural background. It also includes differences in background, experience, skills and competency, education and functional expertise. As part of the Board’s routine considerations regarding Board renewal, it will continue its focus on diversity as it has in recent years to ensure that there is an appropriate mix of diversity, skills, experience and expertise represented on the Board.

D. RE-ELECTION OF DIRECTORS

The Articles of the Company provides that one third of the Directors for the time being and those appointed during the financial year shall retire from office and shall be eligible for re-election at every Annual General Meeting (“AGM”). The Articles further provides that all Directors shall retire from office at least once every three years but shall be eligible for re-election. The Articles also provides that the Directors to retire in every year shall be those who have been longest in office since their last election but as between Directors of equal seniority, the Directors to retire shall (unless they otherwise agree among themselves) be determined from among them.

The NC recommends to the Board who are the retiring Directors based on the above for consideration before tabling the same for shareholders’ approval.


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BOARD COMMITTEES

A. AUDIT AND RISK MANAGEMENT COMMITTEE

The terms of reference of the ARMC is available on the Company’s website at www.iconoffshore.com.my and the activities performed during the financial year under review are set out under the ARMC Report. The terms of reference are in line with the Listing Requirements of Bursa Securities and the best practices as set out in the Code.

B. NOMINATION COMMITTEE

The NC comprises exclusively of Non-Executive Directors, a majority of whom are independent. The Chairman of the NC is the Independent Non-Executive Director identified by the Board. The members of the NC are as follows:

Name of the NC Member

Edwanee Cheah bin AbdullahChairmanIndependent Non-Executive Director

Madeline Lee May MingMemberIndependent Non-Executive Director

Syed Yasir Arafat bin Syed Abd KadirMemberNon-Independent Non-Executive Director

The NC met five times during the financial year ended 31 December 2016 and the meetings were attended by all the members of the NC. The duties and responsibilities of the NC amongst others are as follows:

a) Board composition and succession planning

i) To review the Board structure, size and composition, and make recommendations to the Board with regard to any adjustments that are deemed necessary to ensure the appropriate Board balance and giving full consideration to succession planning for the Directors; and

ii) To review annually the Board’s mix of skills and experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board, independence and diversity (including gender diversity) required to meet the needs of our Company.

b) Appointments to the Board and the Board Committees

i) To be responsible, having evaluated the balance of skills, experience and other qualities on the Board, for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise, giving full consideration to succession planning;

ii) To consider, in making its recommendations, candidates for directorships proposed by the MD and within the bounds or practicability, by any other Senior Management or any Director or shareholder;

iii) In identifying suitable candidates, the NC shall consider candidates from a wide range of backgrounds. The criteria used in assessment of new candidates before recommendation to the Board shall include but not limited to the following:• Skills and competency;• Knowledge and expertise;• Regional and industry experience;• Academic and professional qualifications;• Background, race, gender, age and nationality;

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• High personal and professional ethics, integrity and values;

• Ability to devote the required amount of time to discharge the duties and responsibilities of the Board;

• Financial capability and business stability to develop significant time, energy and resources;

• Other directorships; and• In the case of candidates for the position of Independent

Non-Executive Director, the NC should also evaluate the candidates’ ability to discharge responsibilities/functions as expected from an Independent Non-Executive Director.

iv) The determination as to who shall be appointed to the Board shall be the responsibility of the Board as a whole after considering the recommendation from the NC;

v) To recommend to the Board to fill the seats on Board Committees; and

vi) To recommend to the Board for any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of a MD as an employee of our Company subject to the provisions of the law and their service contract.

c) Assessment of performance

i) To assess annually the performance and effectiveness of the Board as a whole, the Board Committees and the individual Director;

ii) To ensure that each Director, MD or CFO has the character, experience, integrity, competency and time to discharge his/her role, as the case may be; and

iii) To assess annually the independence of Directors to ensure that the Independent Non-Executive Directors can continue to bring independent and objective judgement to Board deliberations.

d) Rotation and retirement of Directors

To recommend to the Board for re-election by shareholders of any Director under the retirement by rotation provisions in the Articles, having due regard to their performance and ability to continue to contribute to the Board in the light of the skills, knowledge and experience required.

e) Continuing education programme for Directors

i) To orient and educate new Directors as to the nature of the business, current issues within our Company and the corporate strategies, the expectations of our Company concerning input from the Directors and the general responsibilities of Directors;

ii) To review and make recommendations to the Board in relation to the training and development programme for the Directors; and

iii) To ensure that the Directors have access to appropriate training and development opportunities that supports the work of the Directors and the Board.

Following the duties and responsibilities of the NC, the NC had during the financial year under review undertake the following main activities:-

a) Annual assessment of the Board’s effectiveness as a whole, the Board Committee and the contribution of each individual Director;

b) Reviewed the size and composition of the Board;

c) Recommended the re-election of Directors;

d) Recommended the training programmes for Directors; and

e) Recommended the Audit and Risk Management Committee Members Self and Peers Evaluation Form in addition to the existing evaluation forms used to assess the Board and Board Committees.

In addition to the above, the NC had also reviewed and assessed the appointment of the Chief Commercial Officer and the CFO in line with the approved Limits of Authority.

Upon the recent annual review and assessment, the NC having considered the aspects of succession planning and boardroom diversity, is satisfied that the size of the Board and Board Committees is optimum and there is an appropriate mix of skills, knowledge, experience and competencies in the Board’s composition which is corresponding to the Board’s duties and responsibilities. The NC is satisfied that all Directors are suitable and qualified to hold their positions in view of their competency, qualifications, skills and experiences.

From the assessment of the independence of the Independent Directors, the NC is satisfied that all Independent Directors of our Company have fulfilled the established criteria set for Independent Director.


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All the deliberations, assessments and evaluations including recommendations of the NC are properly documented and minuted.

C. REMUNERATION COMMITTEE

The Remuneration Committee (“RC”) comprises exclusively of Non-Executive Directors, a majority of whom are independent. The members of the RC are as follows:

Name of the RC Member




The RC met four times during the financial year ended 31 December 2016 and the meetings were attended by all the members of the RC. The duties and responsibilities of the RC are as follows:

a) To study and propose to the Board the various forms of remuneration and fees appropriate for the Directors;b) To determine and recommend to the Board the framework or broad policy for the remuneration package of the MD and such other

members of the Management as it is designated to consider;c) To establish a formal and transparent procedure for developing policy on the total individual remuneration package of the MD and

other designated Management personnel including, where appropriate, bonuses, incentives and share options;d) To design the remuneration package for the MD and other designated Management personnel with the aim of attracting and retaining

high calibre Management personnel who will deliver success for the shareholders and high standards of services for stakeholders, while taking into consideration the business environment in which the Group operates. Once formulated, to recommend to the Board for approval;

e) To review and recommend to the Board any improvement on designated Management personnel’s remuneration policy and package and any other issues relating to benefits for the designated Management personnel on an annual basis;

f) To consider and recommend to the Board the various terms of engagement to be included in any contract of service between our Company and the MD and other designated Management personnel;

g) To review any major changes in employee benefits structures throughout the Group, and if deemed fit, to recommend to the Board for adoption; and

h) To review and recommend to the Board for adoption, the framework for the Group’s annual incentive scheme. The framework for the annual incentive scheme may include:i) Merit increment;ii) Merit bonus; andiii) Retention and reward incentives.

The RC’s aims, goals or objectives reflect our Company’s overall philosophy that all employees should be appropriately rewarded so as to attract and retain high calibre persons who possess the know-how knowledge to operate and manage our Company successfully.

The levels of remuneration for Executive Director are determined based on the corporate and individual’s performance, whilst the level of remuneration for Non-Executive Directors would reflect the experience and level of responsibilities undertaken by the particular Non-Executive Director. Our Company aims to align the interests of its Executive Director as closely as possible with the interests of shareholders in promoting the Group’s strategies. Total remuneration for Executive Director comprises basic salary, performance related bonus, benefit-in-kind and emoluments. The basic salary and benefits are competitive and reviewed annually. The basic salary is set by the RC annually after consideration of our Company’s performance and market conditions.

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The procedures for approving the Executive Director’s remuneration are as follows:

a) RC to determine the Key Performance Indicators (“KPIs”) for the Executive Director based on the financial results, financial ratios and human capital management;

b) RC to review and assess the performance achieved by the Executive Director based on the KPIs set; andc) RC to make recommendation of the remuneration package for the Executive Director to the Board for approval.

D. DIRECTORS REMUNERATION

The RC reviews the remuneration package of the Executive Director, who is also the MD, annually to ensure that he is awarded appropriately for his contributions to the Group’s growth and profitability.

The Non-Executive Directors’ fees are approved by the Board and are subject to the shareholders’ approval at the AGM. The review of the Non-Executive Directors’ fees takes into account the trends of similar positions in the market and any additional responsibilities undertaken such as acting as Chairman of the Board or Board Committees.

The details on the aggregate remuneration of the Directors of the Company comprising remuneration received/receivable from the

Company and its subsidiary companies for the financial year ended 31 December 2016 is set out in Note 9 to the Financial Statement.

The number of Directors whose total remuneration falls within the respective bands are as follows:

(a) Group

No. of Directors

Range of Remuneration Executive Directors Non-Executive Directors

Less than RM50,000 - 1

RM50,001 to RM100,000 - 2

RM100,001 to RM150,000 - 4

RM150,001 to RM200,000 - 1

RM200,001 to RM250,000 - -

RM250,001 to RM300,000 - -

RM300,001 to RM350,000 - -

RM350,001 to RM400,000 - -

RM400,001 to RM450,000 - -

RM450,001 to RM500,000 - -

More than RM500,000 1 -


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1 2 3

(b) Company

No. of Directors

Range of Remuneration Executive Directors Non-Executive Directors

Less than RM50,000 - 1

RM50,001 to RM100,000 - 2

RM100,001 to RM150,000 - 4

RM150,001 to RM200,000 - 1

RM200,001 to RM250,000 - -

RM250,001 to RM300,000 - -

RM300,001 to RM350,000 - -

RM350,001 to RM400,000 - -

RM400,001 to RM450,000 - -

RM450,001 to RM500,000 - -

More than RM500,000 1 -

Note: Syed Yasir Arafat bin Syed Abd Kadir, being the nominee of the holding company, Hallmark Odyssey Sdn. Bhd. (“HOSB”) to the Board of ICON has waived his

entitlement for Director’s fee.

Dato’ Abdul Rahman bin Ahmad ceased to be the nominee of HOSB, to the Board of ICON on 29 February 2016. Therefore, from 1 March 2016 until his resignation as Director of the Company on 30 September 2016, he is entitled to fees and emoluments.

E. EMPLOYEES’ SHARE SCHEME COMMITTEE

The Employees’ Share Scheme Committee (“ESSC”) comprises exclusively of Non-Executive Directors, a majority of whom are independent. The members of the ESSC are as follows:

Name of the ESSC Member




The ESSC met twice during the financial year ended 31 December 2016 and the meetings were attended by all the members of the ESSC. The duties and responsibilities of the ESSC are to administer the Employees’ Share Scheme (“Scheme”) in accordance with the By-Laws in such manner as the ESSC shall in its discretion deem fit with such powers as are conferred upon it by the Board.


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The establishment of the Scheme among others serve to align the interest of eligible person of the Group with the corporate goals of the Group and to achieve the following positive outcome:

a) To further motivate the eligible person of the Group towards better performance through higher productivity and loyalty;b) To recognise the contributions and/or services of the eligible person who are considered vital to the operations and continued growth

of the Group, especially in view of the challenging market conditions faced by oil and gas companies and service providers;c) To stimulate a greater sense of belonging and dedication by providing the eligible person of the Group with an opportunity to further

increase their participation in the equity of the Company via the Scheme; andd) To reward the eligible person of the Group by allowing them to participate in the Company’s profitability and eventually realise capital

gains arising from any appreciation in the value of the Company’s ordinary shares.

F. EXECUTIVE COMMITTEE

The Executive Committee (“EXCO”) was constituted by the Board as a sub-committee of the Board and its general purpose is to provide an effective oversight of the business of the Group and to ensure that the Group’s operations are aligned with the strategy approved by the Board and implemented within the framework and agreed financial limits as approved by the Board from time to time.

The EXCO consists of up to three members of whom nominated by Ekuinas and up to three members of whom comprise of the key Management of our Company. The Chairman of the EXCO is appointed by the Board. The EXCO comprises the following members:

Name of the EXCO Member

Syed Yasir Arafat bin Syed Abd KadirChairmanNon-Independent Non-Executive Director

Dato’ Abdul Rahman bin Ahmad*MemberNon-Independent Non-Executive Director

Amir Hamzah bin Azizan**MemberMD

Captain Hassan bin AliMemberChief Operating Officer

Lim Fu Yen***Member

Note: * Dato’ Abdul Rahman bin Ahmad ceased to be the EXCO member with effect from 29 February 2016. ** Amir Hamzah bin Azizan was appointed the MD of ICON on 1 March 2016. *** Lim Fu Yen is the Director of Investment of Ekuinas.

The EXCO generally:

a) Reviews the strategy of the Group and make recommendations to the Board, and monitor the implementation of the Group’s strategy;

b) Reviews the business plan and budgets and monitor progress and performance of the business plan and budgets, including performance against agreed KPIs in all aspects of the Group’s operations;

c) Ensures that the Group maintains a sound framework of reporting on internal control and regulatory compliance;d) Reviews and recommends to the RC and/or the Board, the framework or broad policy for the remuneration package, employee

benefits and annual incentive schemes of our Company’s employees; ande) Assumes any other powers and responsibilities that may from time to time be assigned or delegated to the EXCO by the Board.

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PRINCIPLE 3: REINFORCE INDEPENDENCE

INDEPENDENCE

The Independent Non-Executive Directors are independent of Management and free from any business relationship which could materially interfere with their independent and objective judgement. Their presence ensures that issues of strategies, performance and resources proposed by the Management are objectively evaluated and providing a capable check and balance for the Management.

The Board has adopted a Policy and Procedure on Independence of Independent Directors that describes how the Board assesses the independence of each Independent Director. In determining the independence of each individual Independent Director, the Board considers all relevant information, facts and circumstances and the assessment of the independence of its Independent Directors is undertaken annually. Each Director is also required to immediately disclose to the Board if they have an interest or relationship which is likely to impact on their independence or if an Independent Director believes he may no longer be independent.

From the recent assessment of the independence of the Independent Directors, the Board was satisfied that Datuk Wira Azhar bin Abdul Hamid, Edwanee Cheah bin Abdullah, Madeline Lee May Ming, Datuk Abdullah bin Ahmad, Farina binti Farikhullah Khan and Datuk Abdullah bin Karim are suitable and qualified to act as Independent Non-Executive Directors of our Company. None of the said Independent Non-Executive Directors of our Company has exceeded the tenure of a cumulative term of nine years in the Board.

PRINCIPLE 4: FOSTER COMMITMENT

A. BOARD MEETINGS

The Board meets at least once every quarter and additional meetings are convened as and when necessary. Meetings are scheduled in advance before the start of each financial year to enable the Directors to plan their schedules accordingly. Board meetings are conducted in an orderly manner, structured through the use of an agenda. Board members are provided with the structured agenda together with the relevant documents and information in advance of each Board meeting.

Minutes of the Board meeting are circulated to the Directors for their perusal prior to the confirmation of the minutes at the following Board meeting. The Directors may request for further clarification or raise comments on the minutes prior to the confirmation of the minutes as a correct record of the proceedings at the Board meeting.

During the financial year ended 31 December 2016, a total of eight Board meetings were held and the respective Director’s attendance is shown in the following table:

Name of DirectorNo. of Meetings Attended / Held

Percentage of Attendance (%)

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun UdaChairman

8/8 100

Dato’ Abdul Rahman bin Ahmad(Resigned on 30 September 2016)

7/7 100

Datuk Wira Azhar bin Abdul Hamid 7/8 88

Syed Yasir Arafat bin Syed Abd Kadir 8/8 100

Edwanee Cheah bin Abdullah 7/8 88

Madeline Lee May Ming 8/8 100

Datuk Abdullah bin Ahmad 7/8 88

Amir Hamzah bin Azizan(Appointed on 1 March 2016 and there were two Board meetings held prior his appointment)

6/6 100

Farina binti Farikhullah Khan(Appointed on 18 May 2016 and there were four Board meetings held prior her appointment)

4/4 100

Datuk Abdullah bin Karim(Appointed on 1 October 2016 and there were seven Board meetings held prior to his appointment)

1/1 100

All the Directors have complied with the minimum of 50% attendance requirements in respect of Board meeting as stipulated in the Listing Requirements of Bursa Securities.


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B. DIRECTORS’ TRAINING

The Board acknowledges that continuous education is vital for its Board members to gain insight and maintain the Board members awareness of the economy, technological advances, latest regulatory developments and management strategies. The NC assesses the training needs of the Directors from time to time and ensures the fulfilment of such training deemed appropriate. The Board members are also encouraged to attend training programmes and seminars to keep abreast with developments in the industry as well as to enhance their professionalism and knowledge.

Training programmes attended by the Directors for the financial year ended 31 December 2016 are as follows:

Name of Director Seminar/Conference/Training Programme Attended

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda

Trans-Pacific Partnership Agreement Being a Change Agent in a Large OrganisationMOF Executive Talk - Peranan Jawatankuasa Audit Syarikat Dalam Memastikan Tadbir Urus SyarikatKLBC Fireside Chat - Developments in ASEAN Community BuildingKLBC Fireside Chat - Brexit : Pros & Cons and Its Impact on UK - Malaysia TradePwC - How to Build or Burn Trust in an OrganisationRoundtable Discussion on Proposed Draft of the Malaysian Code on Corporate Governance 2016New Companies Act and Directors’ Duties and ObligationsYayasan Amir ConferenceBursa Malaysia - Effective Board EvaluationsBursa Malaysia - Leadership Excellence from the ChairKhazanah Megatrends ForumKLBC - Global Britain UK - Malaysian Relations & Post-BrexitTechnology DisruptionEmerging Leaders’ Dialogue Asia - Leadership for Sustainable Development12th Khazanah Global Lecture

Datuk Wira Azhar bin Abdul Hamid

Trans-Pacific Partnership AgreementCompanies Act 2016 And Its Implications To DirectorsCorporate Governance Breakfast Series with Directors: Anti-Corruption & Integrity -

Foundation of Corporate SustainabilitySpecial Invitation to Industry Briefing on Directors Register ImplementationDirectors Remuneration Report 2015: Briefing Session for Directors, A Special Briefing

on the Implementation of the RecommendationsFIDE Core Programme - Module A2016 BNM Governor’s Address on the Malaysia Economy & Panel DiscussionAudit Committee Conference 2016Concept Paper on Corporate GovernanceConcept Paper on Shareholder SuitabilityAmendments to Bursa Malaysia Securities Berhad Main Market Listing RequirementsFide Core Programme - Module B


Trans-Pacific Partnership Agreement Capital Budgeting & New Venture AnalysisGlobal PE Summit

Edwanee Cheah bin Abdullah Trans-Pacific Partnership AgreementRisk Management Programme for Audit and Risk Committee: I Am Ready to Manage Risk


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Name of Director Seminar/Conference/Training Programme Attended

Madeline Lee May Ming Trans-Pacific Partnership AgreementUpdates to the Companies Act 2016Seminar on Tax for Lawyers

Datuk Abdullah bin Ahmad Trans-Pacific Partnership Agreement

Amir Hamzah bin Azizan Trans-Pacific Partnership AgreementC-Suite Sustainability Breakfast TalkMaybank IB’s Regional Oil and Gas ConferenceAdvanced Analytics in HRScanning the Horizon: O&G Outlook to 2020Khazanah Megatrends ForumUEM Group’s The Exchange 201612th Khazanah Global Lecture

Farina binti Farikhullah Khan Trans-Pacific Partnership AgreementMandatory Accreditation Program for Directors of Public Listed CompaniesEmpowering Women Series: For Seminar Leaders

Datuk Abdullah bin Karim Mandatory Accreditation Programme for Directors of Public Listed Companies

The Directors will continue to undergo other relevant trainings, programmes and seminars as and when necessary to ensure they remain well equipped with the relevant and requisite knowledge to discharge their duties effectively.

PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING

ACCOUNTABILITY AND AUDIT

A. FINANCIAL REPORTING

The Board strives to ensure that our financial reporting to its stakeholders, in particular, the shareholders, investors and regulatory authorities by means of the annual audited financial statements and quarterly announcements, represents a clear, balanced and comprehensive assessment of the Group’s financial performance, financial position and future prospects of the Group at the end of each quarter and the financial year.

The ARMC assists the Board in ensuring the accuracy, adequacy and quality of the financial reporting prior to recommendation to the Board for approval and submission to Bursa Securities within the prescribed period.

B. DIRECTORS’ RESPONSIBILITY STATEMENT IN PREPARING THE ANNUAL AUDITED FINANCIAL STATEMENTS

The Board ensures that the financial statements are drawn up in accordance with the Act and the applicable approved financial reporting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and our Company as at the end of the financial year and of the results and cash flows of the Group and our Company for the financial year.

In preparing the financial statements, the Directors have:

a) Applied relevant and appropriate accounting policies consistently and in accordance with applicable approved financial reporting standards;

b) Made judgements and estimates that are prudent and reasonable; and

c) Prepared the financial statements on a going concern basis.


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The Directors are responsible for ensuring that proper accounting records are kept in accordance with the Act. The Directors also have overall responsibility in taking such steps as are reasonably open to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities.

C. RELATIONSHIP WITH EXTERNAL AUDITORS

The Board has established a formal and transparent working relationship with the Group’s External Auditors that enables the Board to seek their professional advice and ensure compliance with accounting standards and regulatory requirements. The ARMC met with the External Auditors regularly at its meeting to review and discuss the scope and adequacy of our Company’s audit plan, audit reports and annual audited financial statements, in which at least two meetings shall be held without the Executive Directors and Management presence in a year.

The ARMC is tasked with authority from the Board to review

any matters concerning the appointment and re-appointment, audit fee, resignation or dismissal of External Auditors, and to assess the independence of the External Auditors based on the External Auditors Appointment and Independence Policy and Procedure to ensure they have been independent throughout the conduct of the audit engagement with the Group.

PRINCIPLE 6: RECOGNISE AND MANAGE RISKS

RISK MANAGEMENT AND INTERNAL CONTROL

The Board recognising the importance of risk management and internal controls, and has established a structured risk management framework to identity, evaluate, control, monitor and report the key business risks faced by the Group on an on-going basis to safeguard shareholders’ investment and the Group’s assets.

The Board has also established internal control policies and procedures and monitors to ensure that such internal control system is implemented and effectively carried out by the Management team through periodic independent reviews by the Internal Auditors and External Auditors.

The Board has outsourced the internal audit function to an independent professional audit firm effective from May 2015. The internal audit function reports directly to the ARMC and conducts regular audits to review and provide assurance to the Board on the adequacy and effectiveness of the Group’s risk management, control and governance processes.

The Statement on Risk Management and Internal Control set out in this Annual Report provides an overview of the state of risk management and internal control within the Group.

PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

The Board recognises the importance of transparency and accountability in communication and dissemination of clear, relevant and comprehensive information on the Group’s business activities to shareholders, investors and other stakeholders. To this effect, the Board has maintained an effective Corporate Disclosure Policy that enables both Management and the Board to communicate effectively with the shareholders and investors. In formulating the Corporate Disclosure Policy, the Board is guided by best practices and disclosure requirements as set out in the Listing Requirements of Bursa Securities.

Our Company’s Annual Report remains a key channel of communication with the Group’s stakeholders. The Annual Report provides corporate information, performance review of our financial results, financial highlights and other activities in order to facilitate shareholders’ easy access to key information. Copies of the Company’s Annual Report are available in our corporate website at www.iconoffshore.com.my.

In addition to that, our Company also makes timely, complete and accurate disclosures and announcements to Bursa Securities, including financial results on a quarterly basis to provide the shareholders and the investing public an updated overview of the Group’s performance and operations.

The other modes of communication with shareholders and investors include the circular, quarterly analysts briefing and ICON’s website at www.iconoffshore.com.my.

Shareholders and investors are also encouraged to convey their enquiries and concerns regarding the Group through Corporate Communications Department via email at [email protected].


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PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

ANNUAL GENERAL MEETING

The AGM is the principal forum for the Board to meet with the shareholders. The Company holds its AGM at places that are easily accessible and at a time convenient to the shareholders to encourage them to attend the meeting. At the AGM, the MD will give a presentation on our operational and financial performance during the financial year and his views and insight on the future prospects of the Group’s businesses. The Board encourages and welcomes shareholders to raise questions pertaining to the business activities of the Group and on the resolutions being proposed at the meeting and the Board will respond to shareholders’ questions during the meeting. At the commencement of the general meeting, the shareholders will be informed of their right to demand a poll vote. The Company’s Fifth AGM on 24 May 2017 will be the first AGM that it will enter into this new regime for voting.

Compliance Statement

The Board is committed to achieving a high standard of Corporate Governance throughout the organisation and would endeavour to apply the recommendations of the Code.

This Statement of Corporate Governance has been approved by the Board of ICON on 5 April 2017.

ADDITIONAL COMPLIANCE INFORMATION

A. UTILISATION OF PROCEEDS RAISED FROM CORPORATE EXERCISE

There were no proceeds raised from corporate exercise during the financial year ended 31 December 2016.

B. AUDIT AND NON-AUDIT FEES

For the financial year ended 31 December 2016, Messrs. PricewaterhouseCoopers, the External Auditors has rendered audit and non-audit services to the Group. A breakdown of fees payable is listed as below for information:-

Company(RM)

Group(RM)

Audit services rendered 174,000 652,000

Non-audit services rendered

- Tax Agent - 114,934

- Transfer Pricing - 60,000

- Crew Personal Tax Compliance Review - 220,000

Total 174,000 1,046,934


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C. MATERIAL CONTRACTS

There is no material contract, not entered into within the ordinary course of business of our Company and its subsidiaries, involving the interest of the Directors, chief executive who is not a director and major shareholders of our Company, either still subsisting at the end of the financial year or entered into since the end of the previous financial year.

D. EMPLOYEES’ SHARE SCHEME

The establishment of the Scheme was approved by the board of Directors on 3 March 2014. The Scheme consists namely Employees’ Share Option Scheme (“ESOS”) and Employees’ Share Grant Plan (“ESGP”). The details of the Scheme since its commencement up to financial year ended 31 December 2016 are as follows:

A) ESOS 5,470,000 units of the Company’s shares granted to eligible employees.

B) ESGP 5,940,000 units of the Company’s shares issued under ESGP to eligible employees.

Percentage of shares granted to Executive Director and Senior Management under the Scheme during the financial year and since its commencement up to the financial year ended 31 December 2016 is set out below:

During the financial yearSince commencement up to

31 December 2016

Description of Scheme Executive Director Senior Management Executive Director Senior Management

ESOS 0% 8% 0% 8%

ESGP 0% 11.6% 0% 11.6%

No shares for both ESOS and ESGP were vested, exercised or cancelled under the Scheme since its commencement up to the financial year ended 31 December 2016.

No options were granted to the Executive Director and Non-Executive Directors under the Scheme since its commencement up to the financial year ended 31 December 2016.

The information on the Scheme for the financial year is set out in Note 24 to the Financial Statements.

E. RECURRENT RELATED PARTY TRANSACTIONS

During the financial year under review, there was no recurrent related party transaction entered by the Group.


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BOARD RESPONSIBILITY

The Board acknowledges their responsibility for the Group’s system of internal control, and for reviewing the adequacy and integrity of this system. However, in view of the limitations inherent in any system, it should be noted that such system of internal control is designed to manage, rather than to eliminate the risks of failure to achieve the Group’s objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatements, frauds, losses or breaches of laws and regulations.

The Board has established an on-going process for identifying, evaluating and managing the significant risks faced by the Group. The Board shall continue to improve the system of internal control and review the controls in place, with the aim to ensure that the system is adequate to mitigate the significant risks. The Management assists the Board in the implementation of the Board’s policies and procedures, and in the design, operation and monitoring of suitable internal controls to mitigate and control these risks. This process has been in place for the financial year under review and up to the date of approval of this Statement, and is regularly reviewed by the Board through its ARMC which is supported by the internal audit function and CGRM.

RISK MANAGEMENT

RISK MANAGEMENT FRAMEWORK

A Risk Management Framework was developed to ensure that risks are managed effectively, efficiently and coherently across the Group. Key risk events were identified, evaluated, discussed and with the approval of the Board, appropriate measures were taken to control and mitigate these risks. The key risks affecting the achievement of the Group objectives identified by respective risk owners are categorised into four types, namely:

1 Strategic Risk; 3 Financial Risk; and

2 Market Risk; 4 Operational Risk.

These risks are evaluated to determine the appropriate risk treatment and are managed through, among others:

• On-going monitoring of key economic changes, industry outlook and regulatory developments;• Detailed policies and standard operating procedures;• Established limits of authority;• Setting and monitoring of KPIs; and• Periodic operational and financial reporting.

Reviewing of key risks is performed on a quarterly basis, in which the Group risk profiles and rating, newly registered risks, corresponding risk mitigating actions identified and their progress are discussed and presented to the Board through the ARMC.

The Risk Management Framework was last reviewed and enhanced in February 2017.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Board is pleased to present this statement on Risk Management and Internal Control (“the Statement”) pursuant to paragraph 15.26(b) of the Listing Requirements of Bursa Securities. To prepare this Statement, the Board has been guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers issued by The Institute of Internal Auditors Malaysia with the endorsement of Bursa Securities.

Ü

Ü

Ü

Ü


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INTERNAL CONTROL

The Board recognises the importance of maintaining a sound system of internal control to safeguard shareholders’ investments and the Group’s assets. The key elements of the Group’s system of internal control are described as follows:


1 AUDIT AND RISK MANAGEMENT COMMITTEE 5 ORGANISATIONAL STRUCTURE WITH DEFINED RESPONSIBILITY

The ARMC is wholly comprised of Non-Executive Board members and has full access to both Internal Auditors and External Auditors. It shall meet with the Internal Auditors without the Management present at least once a year and with the External Auditors at least twice a year or when necessary. Deloitte, the audit firm engaged to carry out the internal audit function for the Group reports directly to the ARMC. The activities performed by the ARMC during the financial year under review are set out in the Audit and Risk Management Committee Report.

Properly defined organisation structure with clear reporting lines, formalised responsibilities and delegation of authority has been established as a control mechanism in terms of lines of reporting and accountability.

2 BOARD COMMITTEE 6 SETTING AND MONITORING KPIs

Besides the ARMC, our Company also has NC, RC and ESSC. These Board Committees are established to assist the Board in providing independent oversight of the Group’s management with responsibilities and authorities clearly specified in their respective terms of reference.

The Group uses KPIs to measure the achievement of its strategic objectives. Corporate KPIs which are linked to the Group’s strategic objectives are established at the beginning of the year, and cascaded down to individual employees. Monitoring of the performance of Corporate KPIs is carried out during meetings of the Management and EXCO on a monthly basis, and the Board on a quarterly basis. Individual KPIs are monitored through mid-year and year-end employee performance appraisal.

3 OUTSOURCED INTERNAL AUDIT FUNCTION 7 ESTABLISHED LIMITS OF AUTHORITY

The Group’s internal audit function is outsourced to Deloitte. Its primary role is to provide independent assurance service to the Board, ARMC and Management, focusing on reviewing the effectiveness of the risk management, control and governance processes that Management has put into place.

Approved limits of authority are imposed on the Management team in respect of the day-to-day operations as a control to minimise any risk of abuse of authority, and to ensure segregation of duties.

4 CORPORATE GOVERNANCE AND RISK MANAGEMENT

8 BUDGETING PROCESS AND FINANCIAL REPORTING

The role of CGRM is to assist the ARMC of our Company in the effective discharge of their risk management and corporate governance responsibilities, with emphasis given to assist the MD and Management in the successful implementation of the Corporate Governance Framework across the Group.

Each department undertakes a comprehensive yearly budgeting and forecasting process. Management conducts monthly reviews of the financial performance of the Group against financial budget which are subsequently presented to the EXCO together with action plans.

The Management takes into consideration key economic changes, market and industry outlook and regulatory developments in the preparation of budgeting and forecasting, and deliberate the same during reporting to the EXCO and Board.


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ADEQUACY OF RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

The Board has satisfactorily received reasonable assurance from the MD and the CFO that the Group’s risk management and internal control system is operating adequately, in all material aspects for the financial year under review and up to the date of approval of this Statement, and that improvement in certain areas is on-going.

CONCLUSION

The Board believes that the development of a sound system of risk management and internal control is an on-going process and hence, has taken steps to progressively improve the system. During the financial year under review, certain areas for improvement in the system were identified. The Management has been responsive to the issues raised and has taken the necessary actions to address the areas for improvement highlighted by the External Auditors and Internal Auditors. The Board is of the view that the system of risk management and internal control in place is adequate for the financial year under review and up to the date of approval of this Statement.

This Statement is made in accordance with a resolution of the Board dated 31 March 2017.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

As required by Paragraph 15.23 of the Listing Requirements of Bursa Securities, the External Auditors have reviewed this Statement. Their limited assurance review was performed in accordance with Recommended Practice Guide (“RPG 5 (Revised)”) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require the External Auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

9 POLICY AND STANDARD OPERATING PROCEDURE FRAMEWORK

A Policy and Standard Operating Procedure Framework was developed to ensure key processes within the Group are properly documented, communicated and implemented by the Management as well as to ensure that internal control principles and mechanisms are embedded in the Group’s operations.

10 CODE OF ETHICS

The Board and Senior Management set the tone at the top for corporate behaviour and corporate governance. The Code of Ethics (“COEs”) has been formalised and adopted for the Directors and employees of the Group to encourage high standards of conduct that are associated with ethical business practices. It is a requirement for all Directors and employees of the Group to understand the COEs, and to acknowledge and sign off on the declaration form.

11 SERVICE PROVIDER CODE OF CONDUCT

The Group believes that relationships with service providers should be based on the principles of integrity, honesty, accountability and compliance with laws and regulations. With this objective, the Service Provider Code of Conduct (“COC”) requires service providers, which include suppliers, contractors, professional advisors, consultants and other business associates, to adhere to this COC when conducting business with the Group. The Group may take the necessary action for breaches of the COC which includes but is not limited to termination and preclusion from proposing any work for the Group for a pre-determined period.

12 ANTI-FRAUD AND WHISTLEBLOWING POLICY

The Policy is built into the Group’s culture towards elimination of fraud and corruption. It also promotes a transparent and open environment for fraud reporting within the Group.

13 CORPORATE DISCLOSURE POLICY

The Corporate Disclosure Policy was developed to ensure information directed to shareholders, stakeholders and the general public fairly and accurately represents the Group. Hence, investors and potential investors can make properly informed investment decisions, and current stakeholders can be informed of the Company’s material information and its objectives.



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STATEMENT OF DIRECTORS’ RESPONSIBIL ITY

The Act requires the Directors to lay before the Company at its Annual General Meeting, the Audited Financial Statements, which include the Consolidated Statement of Financial Position and the Consolidated Statement of Comprehensive Income of the Group and the Company for each financial year, made out in accordance with the applicable approved accounting standards and the provisions of the Act. This is also in line with Paragraph 15.26 (a) of the Listing Requirements of Bursa Securities.

The Directors are required to take reasonable steps in ensuring that the Consolidated Financial Statements give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year ended 31 December 2016.

The Financial Statements of the Group and the Company for the financial year under review are set out on pages 87 to 166 of this Annual Report.

In the preparation of the Financial Statements, the Directors are satisfied that the Group and the Company have used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgement and estimates. The Directors also confirm that all accounting standards which they consider to be applicable have been complied with.

The Directors are required under the Act to ensure that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and to cause such records to be kept in such manner as to enable them to be conveniently and properly audited.

0575 Directors’ Report

79 Statement by Directors

79 Statutory Declaration

80 Independent Auditors’ Report

87 Statements of Comprehensive Income

88 Statements of Financial Position

90 Statements of Changes In Equity

94 Statements of Cash Flows

97 Notes to the Financial Statements

F INANC IAL STATEMENTS

05 F INANCIAL STATEMENTSICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

75

DIRECTORS’ REPORTFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016

The Directors submit their report together with the audited financial statements of the Group and the Company for the financial year ended 31 December 2016.

PRINCIPAL ACTIVITIES

The Company is an investment holding company. The principal activities of the Group are vessel owning/leasing and provision of vessel chartering and ship management services to oil and gas related industries. The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements. There were no significant changes in the nature of these principal activities during the financial year.

FINANCIAL RESULTS

GroupRM

CompanyRM

Loss for the financial year

- Equity holders of the Company (152,746,880) (121,265,961)

- Non-controlling interests 6,047,926 -

(146,698,954) (121,265,961)

DIVIDEND

No dividend has been paid, declared or proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December 2016.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.

DIRECTORS

The Directors who have held office during the financial year and during the period from the end of the financial year to date of the report are as follows:

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun UdaDatuk Wira Azhar bin Abdul HamidSyed Yasir Arafat bin Syed Abd KadirEdwanee Cheah bin AbdullahMadeline Lee May MingDatuk Abdullah bin AhmadAmir Hamzah bin AzizanFarina binti Farikhullah Khan (appointed with effect from 18 May 2016)Datuk Abdullah bin Karim (appointed with effect from 1 October 2016)Dato’ Abdul Rahman bin Ahmad (resigned with effect from 30 September 2016)

05 F INANCIAL STATEMENTS ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

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DIRECTORS’ REPORTFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016 (CONTINUED)

DIRECTORS’ INTERESTS

According to the register of Directors’ shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, the interests and deemed interests in the shares of the Company or its subsidiaries or its holding company or subsidiaries of the holding company at the end of the financial year are as follows:

Number of ordinary shares of RM0.50 each

At1.1.2016 Bought Sold

At31.12.2016

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda 150,000 - - 150,000

Edwanee Cheah bin Abdullah 200,000 - - 200,000

Madeline Lee May Ming 60,000 - - 60,000

Amir Hamzah bin Azizan - 1,000,000 - 1,000,000

Other than the above, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no Director of the Group and the Company has received or become entitled to receive any benefit (other than the benefits shown under Directors’ remuneration) by reason of a contract made by the Group and the Company or a related corporation with any Director or with a firm of which any Director is a member, or with a company in which any Director has a substantial financial interest except that Executive Director of the Group and the Company received remuneration from related corporations in their capacity as Director or employees of that related corporations in accordance with the terms of their respective service contracts.

DIRECTORS’ REMUNERATION

Details of Directors’ remuneration are set out in Note 9 to the financial statements.

ISSUE OF SHARES

There was no new share issuance during the financial year.


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STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and the Company were prepared, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts have been written off and that adequate allowance is made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business including the values of current assets as shown in the accounting records of the Group and the Company have been written down to an amount which the current assets might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve (12) months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Company to meet their obligations when they fall due.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group and the Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group and the Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.


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STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)

In the opinion of the Directors:

(a) the results of the Group and the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the impairment loss on vessels as disclosed in the statement of comprehensive income of the Group and the impairment loss on investments in subsidiaries as disclosed in the statement of comprehensive income of the Company; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a

material and unusual nature likely to affect substantially the results of the operations of the Group and the Company for the financial year in which this report is made.

HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION

The Directors regard Hallmark Odyssey Sdn. Bhd., a company incorporated and domiciled in Malaysia, as the Company’s immediate holding company, and Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company’s ultimate holding foundation.

SUBSIDIARIES

Details of subsidiaries are set out in Note 16 to the financial statements.

AUDITORS’ REMUNERATION

Details of auditors’ remuneration are set out in Note 7 to the financial statements.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

This report was approved by the Board of Directors on 31 March 2017. Signed on behalf of the Board of Directors:

AMIR HAMZAH BIN AZIZAN RAJA TAN SRI DATO’ SERI ARSHAD BIN RAJA TUN UDAMANAGING DIRECTOR CHAIRMAN

Kuala Lumpur



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PURSUANT TO SECTION 251(2) OF THE COMPANIES ACT, 2016

We, Amir Hamzah bin Azizan and Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda, being two of the Directors of Icon Offshore Berhad, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 87 to 165 are drawn up so as to give a true and fair view of the accompanying financial position of the Group and the Company as at 31 December 2016 and financial performance of the Group and of the Company for the financial year ended 31 December 2016 in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The supplementary information set out in Note 30 on page 166 has been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 31 March 2017.

AMIR HAMZAH BIN AZIZAN RAJA TAN SRI DATO’ SERI ARSHAD BIN RAJA TUN UDAMANAGING DIRECTOR CHAIRMAN

Kuala Lumpur

STATUTORY DECLARATION

PURSUANT TO SECTION 251(1) OF THE COMPANIES ACT, 2016

I, Zaleha binti Abdul Hamid, being the Officer primarily responsible for the financial management of Icon Offshore Berhad, do solemnly and sincerely declare that the financial statements set out on pages 87 to 166 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

ZALEHA BINTI ABDUL HAMIDCHIEF FINANCIAL OFFICER

Subscribed and solemnly declared by the above named Zaleha binti Abdul Hamid at Kuala Lumpur before me, on 31 March 2017.

COMMISSIONER FOR OATHS

STATEMENT BY DIRECTORS


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INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ICON OFFSHORE BERHAD(Incorporated in Malaysia)(Company No. 984830 D)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of Icon Offshore Berhad (“the Company”) and its subsidiaries (“the Group”) give a true and fair view of the financial position of the Group and of the Company as at 31 December 2016, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

What we have audited

We have audited the financial statements of the Group and of the Company, which comprise the statements of financial position as at 31 December 2016 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 87 to 165.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.

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

Independence and other ethical responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Our audit approach

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of Group and the Company. In particular, we considered where the Directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group and of the Company, the accounting processes and controls, and the industry in which the Group and the Company operate.


81

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ICON OFFSHORE BERHAD (CONTINUED)(Incorporated in Malaysia)(Company No. 984830 D)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters How our audit addressed the key audit matter

Impairment assessment of the vessels

As at 31 December 2016, the carrying value of the Group’s vessels, vessels under construction, vessel parts and drydocking expenditure capitalised was RM1.2 billion, after taking into account an impairment charge of certain vessels in the current financial year of RM135.5 million due to continued depressed market conditions in the oil and gas industry.

An impairment loss is recognised for the amount by which the carrying value of the vessel exceeds its recoverable amount. The recoverable amount is the higher of a vessel’s fair value less cost of disposal (“FVLCOD”) and value in use (“VIU”).

We focused on this area as it involved significant management judgement in relation to the:• estimated fair value of the vessels, as provided by an

independent professional valuer; and• estimated utilisation rates and charter rates used in the cash

flow projections when determining VIU.

Refer to Note 2.4 and 2.5 – Summary of significant accounting policies, Note 3(i) - Critical accounting estimates and judgements and Note 13 - Property Plant and Equipment to the consolidated financial statements where the impairment of the vessels has been discussed.

We have performed the following audit procedures:• Where the recoverable amounts of the vessels are based on

FVLCOD, we evaluated the competencies of the independent professional valuer engaged by management and held discussions with the valuer to understand the assumptions and valuation techniques used in deriving the fair values of the vessels.

• Where the recoverable amounts of the vessels are based on VIU, we tested the discounted cash flow projections by performing the following procedures:- for the period under contract, compared the vessel utilisation

and charter rates to locked-in contracts;- following the end of the contract period, compared the

assumption on subsequent utilisation of the vessels and charter rates to their respective average historical rates;

- on future industry outlook and long term growth rate, compared to market data on economic and industry forecasts; and

- considered the sensitivity of the recoverable amount of impaired vessels by varying the utilisation rates and charter rates used in the cash flow projections.

Based on the procedures carried out above, no material exceptions were noted.


82


Key audit matters (continued)


Ability of the Group to meet its loan repayments

As at 31 December 2016, the Group was in a net current liabilities position of RM129.8 million.

The Group is dependent upon its ability to generate sufficient cash flows to meet scheduled loan repayments and covenant requirements. The current depressed market conditions in the oil and gas industry has placed increased pressure on these cash flows and the ability of the Group to comply in the future with financial covenant ratios. The short term borrowings payable over the next 12 months amounted to RM228.0 million.

We focused on this area due to the significant assumptions used by management in arriving at the Group’s cash flow projection for the next 12 months.

Refer to Note 2.1 – Basis of preparation, Note 4(ii) – Liquidity Risk and Note 22 – Borrowings to the consolidated financial statements.

In assessing the ability of the Group to meet its scheduled loan repayments, we:• evaluated the reasonableness of the assumptions made in the

management’s cash flow projection for the next 12 months specifically on the estimated utilisation rates and charter rates that were also tested by us as part of the impairment assessment of the vessels;

• considered the Group’s unutilised bank facilities available for drawdown;

• tested management’s assessment of the Group’s compliance with the bank loan covenants; and

• obtained and checked correspondence with the banks with regards to deferred repayment under the rescheduling and restructuring of the bank loans.

We checked the adequacy and appropriateness of the disclosures in the notes to the financial statements.

Recognition of deferred tax assets

As at 31 December 2016, the Group has recorded deferred tax assets of RM48.5 million which is largely due to unutilised capital allowances and unabsorbed tax losses of Icon Ship Management Sdn. Bhd. (“ISM”). The ultimate recoverability of the deferred tax assets is dependent on the future taxable profits based on the Board approved budget for ISM.

We focused on this area due to the judgement involved in determining the probability that future taxable profits will be available.

Refer to Note 2.13 - Summary of significant accounting policies, Note 3(iv) - Critical accounting estimates and judgements and Note 17 - Deferred taxation to the financial statements.

We compared management’s assessment of the taxable profit projections of ISM to the Board approved budget.

We checked that the key assumptions used in determining the taxable profit projections were reasonable and consistent with those used in the impairment assessment of vessels.




83


Key audit matters (continued)


Impairment assessment of investments in subsidiaries (Company financial statements)

As at 31 December 2016, the carrying value of the investments in subsidiaries after impairment is RM681.9 million. Impairment made during the financial year of RM113.1 million relates to subsidiaries where the principal activities are vessel owning/leasing and provision of vessel chartering.

For the purpose of impairment testing, the recoverable amount of the investments in subsidiaries was determined based on the FVLCOD of the Group’s vessel fleet, and the outstanding loan and working capital balances of the subsidiaries.

We focused on this area due to the significant judgements and assumptions made by management in determining the recoverable amount of the investments.

Refer to Note 2.2 - Summary of significant accounting policies and Note 16 - Investments in subsidiaries.

We performed the following procedures to assess the reasonableness of the recoverable amount of the investments in subsidiaries:

• We have evaluated the competencies of the independent professional valuer engaged by management and held discussions with the valuer to understand the assumptions and valuation techniques used in deriving the fair values of the vessels.

• We checked the outstanding loan amounts to the bank confirmations, and checked the working capital balances to the financial position of the subsidiaries as at 31 December 2016.


Information other than the financial statements and auditors’ report thereon

The Directors of the Company are responsible for the other information. The other information comprises Statement on Risk Management and Internal Control and Directors’ Report, which we obtained prior to the date of this auditors’ report, and the other part of the information contained in the annual report, which is expected to be made available to us after that date. Other information does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.



84


Information other than the financial statements and auditors’ report thereon (continued)

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the financial statements

The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group and the Company’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.



85


Auditors’ responsibilities for the audit of the financial statements (continued)

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 16 to the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.



86

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 30 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS YEE WAI YIN(No. AF: 1146) 02081/08/2018JChartered Accountants Chartered Accountant

Kuala Lumpur31 March 2017



87

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016

Group Company

Note2016

RM2015

RM2016

RM2015

RM

Revenue 5 226,915,378 266,565,638 - -

Cost of sales (163,471,981) (170,775,490) - -

Gross profit 63,443,397 95,790,148 - -

Other income 4,224,248 1,785,989 81,006 201,525

Administrative expenses (41,814,553) (45,056,435) (6,182,627) (5,072,995)

Other expenses

- Impairment loss on vessels 13 (135,476,980) (195,373,000) - -

- Impairment loss on goodwill 14 - (180,643,348) - -

- Impairment loss on investments in subsidiaries 16 - - (113,132,646) (180,643,348)

- Others - (3,132,000) - -

Loss from operations (109,623,888) (326,628,646) (119,234,267) (185,514,818)

Finance costs 6 (40,199,975) (36,996,193) (2,031,694) -

Share of (loss)/profit from a joint venture (1,124) 63,629 - -

Loss before taxation 7 (149,824,987) (363,561,210) (121,265,961) (185,514,818)

Taxation 10 3,126,033 272,794 - -

Loss for the financial year (146,698,954) (363,288,416) (121,265,961) (185,514,818)

Other comprehensive income:

Items that will be reclassified subsequently to profit or loss:

Currency translation differences 129,252 1,361,302 - -

Total comprehensive loss for the financial year (146,569,702) (361,927,114) (121,265,961) (185,514,818)

(Loss)/income attributable to:

- Equity holders of the Company (152,746,880) (364,086,731) (121,265,961) (185,514,818)

- Non-controlling interests 6,047,926 798,315 - -

(146,698,954) (363,288,416) (121,265,961) (185,514,818)

Total comprehensive (loss)/income attributable to:

- Equity holders of the Company (152,680,962) (363,011,522) (121,265,961) (185,514,818)

- Non-controlling interests 6,111,260 1,084,408 - -

(146,569,702) (361,927,114) (121,265,961) (185,514,818)

Loss per share for loss attributable to the ordinary equity holders of the Company: 11

Basic/diluted loss per share (sen) (12.98) (30.93)

The notes set out on pages 97 to 165 form an integral part of these financial statements.


88

STATEMENTS OF F INANCIAL POSIT IONAS AT 31 DECEMBER 2016

Group Company

Note2016

RM2015

RM2016

RM2015

RM

NON-CURRENT ASSETS

Property, plant and equipment 13 1,191,849,908 1,288,422,874 - -

Intangible assets 14 - - - -

Investment in a joint venture 15 4,231,366 4,232,490 - -

Investments in subsidiaries 16 - - 681,850,368 689,114,582

Deferred tax assets 17 49,894,120 46,590,022 - -

1,245,975,394 1,339,245,386 681,850,368 689,114,582

CURRENT ASSETS

Inventories 3,033,184 1,605,697 - -

Trade and other receivables 18 71,186,856 81,088,346 212,083 420,389

Tax recoverable 3,002,936 3,466,298 10,000 9,163

Cash and bank balances 20 58,720,087 95,354,013 47,751 25,908,452

135,943,063 181,514,354 269,834 26,338,004

CURRENT LIABILITIES

Trade and other payables 21 59,020,042 76,295,965 1,779,850 1,198,301

Amount due to a subsidiary 19 - - 22,255,022 41,255,022

Borrowings 22 206,664,813 181,144,834 106,352,028 -

Tax payable 102,943 753,452 - -

265,787,798 258,194,251 130,386,900 42,453,323

NET CURRENT LIABILITIES (129,844,735) (76,679,897) (130,117,066) (16,115,319)


89

STATEMENTS OF F INANCIAL POSIT IONAS AT 31 DECEMBER 2016 (CONTINUED)

Group Company

Note2016

RM2015

RM2016

RM2015

RM

NON-CURRENT LIABILITES

Trade and other payables 21 36,949,480 - - -

Borrowings 22 505,560,533 541,872,317 - -

Deferred tax liabilities 17 1,361,889 1,864,713 - -

543,871,902 543,737,030 - -

NET ASSETS 572,258,757 718,828,459 551,733,302 672,999,263

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

Share capital 23 588,592,550 588,592,550 588,592,550 588,592,550

Share premium 23 311,210,080 311,210,080 311,210,080 311,210,080

Foreign currency translation reserves 946,789 880,871 - -

Accumulated losses (335,835,545) (183,088,665) (348,069,328) (226,803,367)

Non-controlling interest 7,344,883 1,233,623 - -

TOTAL EQUITY 572,258,757 718,828,459 551,733,302 672,999,263



90

STATEMENTS OF CHANGES IN EQUITYFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016

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9

STATEMENTS OF CHANGES IN EQUITYFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016 (CONTINUED)


92


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94

Group Company

Note2016

RM2015

RM2016

RM2015

RM

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before taxation (149,824,987) (363,561,210) (121,265,961) (185,514,818)

Adjustments for:

Amortisation of intangible assets - 3,132,000 - -

Depreciation of property, plant and equipment 62,418,345 65,719,917 - -

Interest expense 40,199,975 36,996,193 2,031,694 -

Interest income (706,414) (1,089,720) (76,078) (200,189)

Impairment of goodwill - 180,643,348 - -

Impairment of vessels 135,476,980 195,373,000 - -

Impairment of investments in subsidiaries - - 113,132,646 180,643,348

Unrealised loss/(gain) on foreign exchange 5,066,373 4,370,944 74 (74)

Share of loss/(profit) of joint venture 1,124 (63,629) - -

Operating profit/(loss) before working capital changes 92,631,396 121,520,843 (6,177,625) (5,071,733)

Changes in working capital:

Inventories (1,427,487) (62,050) - -

Receivables 6,782,881 13,844,589 208,306 (78,364)

Payables 2,597,217 13,615,968 581,549 339,728

Cash generated from/(used in) operations 100,584,007 148,919,350 (5,387,770) (4,810,369)

Tax paid (1,336,837) (3,720,443) (10,837) (11,663)

Tax refund 468,801 850,236 10,000 -

Net cash generated from/(used in) operating activities 99,715,971 146,049,143 (5,388,607) (4,822,032)

STATEMENTS OF CASH FLOWSFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016


95

Group Company

Note2016

RM2015

RM2016

RM2015

RM

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (87,226,765) (139,329,831) - -

Interest received 969,717 1,089,720 76,078 200,189

Advances to subsidiaries - - (105,868,432) (46,667,303)

Net cash used in investing activities (86,257,048) (138,240,111) (105,792,354) (46,467,114)

CASH FLOWS FROM FINANCING ACTIVITIES

Advances from immediate holding company 35,000,000 - 35,000,000 -

Issuance of shares to non-controlling interest - 149,215 - -

Drawdown of borrowings (net of transaction cost) 118,000,000 208,560,048 105,000,000 -

Repayment of finance lease liabilities (33,036) (33,036) - -

Repayment of advances from immediate holding company (35,000,000) - (35,000,000) -

Repayment of borrowings (131,473,562) (158,861,422) - -

Repayment of amount due to a subsidiary - - (19,000,000) -

Net increase of amount due to a subsidiary - - - 43,004,467

Interest paid (36,748,312) (37,170,805) (679,666) -

Increase in fixed deposits pledged (6,980,199) (5,961,565) - -

Net cash (used in)/generated from financing activities (57,235,109) 6,682,435 85,320,334 43,004,467

STATEMENTS OF CASH FLOWSFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016 (CONTINUED)


96

Group Company

Note2016

RM2015

RM2016

RM2015

RM

Exchange gains/(loss) on cash and bank balances 162,061 82,776 (74) 74

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (43,614,125) 14,574,243 (25,860,701) (8,284,605)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 83,108,970 68,534,727 25,908,452 34,193,057

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 20 39,494,845 83,108,970 47,751 25,908,452

Cash and cash equivalents 39,494,845 83,108,970 47,751 25,908,452

Deposits pledged as security 19,225,242 12,245,043 - -

Cash and bank balances 20 58,720,087 95,354,013 47,751 25,908,452

STATEMENTS OF CASH FLOWSFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016 (CONTINUED)



97

NOTES TO THE F INANCIAL STATEMENTSFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016

1 GENERAL INFORMATION

The Company is a public company, incorporated and domiciled in Malaysia.

The Company is an investment holding company. The principal activities of the Group are vessel owning/leasing and provision of vessel chartering and ship management services to oil and gas related industries. The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements. There were no significant changes in the nature of these principal activities during the financial year.

The Directors regard Hallmark Odyssey Sdn. Bhd., a company incorporated and domiciled in Malaysia, as the Company’s immediate holding company, and Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company’s ultimate holding foundation.

The address of the registered office of the Company is:

Level 7, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara Damansara Heights 50490 Kuala Lumpur

The address of the principal place of business of the Company is:

Level 12A, East Wing, The Icon No. 1, Jalan 1/68F Off Jalan Tun Razak 55000 Kuala Lumpur

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all the financial years presented, unless otherwise stated.

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and the Company have been prepared under the historical cost convention unless otherwise indicated in the accounting policies below and are presented in Ringgit Malaysia (“RM”). The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported financial year. It also requires the Directors to exercise their judgement in the process of applying the Group and Company’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.


98

NOTES TO THE F INANCIAL STATEMENTSFOR THE F INANCIAL YEAR ENDED 31 DECEMBER 2016 (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (continued)

For the financial year ended 31 December 2016, the Group and the Company incurred a net loss after tax of RM146,698,954 and RM121,265,961 respectively and, as at 31 December 2016, the Group and the Company’s current liabilities exceeded their current assets by RM129,844,735 and RM130,117,066 respectively.

The Group had taken steps to review the loan repayment schedule and the capital commitment for vessels under construction. As at 31 December 2016, the Group has completed all three restructuring and rescheduling of the loan repayments with the banks to allow the Group to defer certain amounts of the current loan obligations. The Group has also deferred the delivery and payment for vessels under construction.

During the financial year, the Group and the Company obtained a new revolving credit facility, Short Term Revolving Credit-i (“STRC-i”) of RM150 million, from a bank for its working capital requirements. The STRC-i facility is available for 5 years. As at 31 December 2016, the Group has RM45.0 million of unutilised facility available for drawdown.

On 19 January 2017, the Group’s immediate holding company, a subsidiary of Ekuiti Nasional Berhad (“Ekuinas”), entered into a conditional share sale and purchase agreement with UMW Oil & Gas Corporation Berhad (“UMW-OG”) to dispose of 497,768,820 ordinary shares of the Company to UMW-OG, representing a 42.3% equity interest in the Company, with the intention of consolidating their oil and gas businesses. The combination is expected to create a major integrated offshore service provider across the oil and gas chain and the enlarged group will be in a position to benefit from the expected recovery of activities in the oil and gas sector. Upon the completion of this consolidation exercise, UMW-OG will embark on a recapitalisation exercise via a proposed rights issue.

The Group and the Company will also be able to obtain the required financial support from its immediate holding company, if necessary. However, the financial support will automatically cease to be of effect upon the completion of the above-mentioned share purchase agreement.

With the steps taken above, together with the proposed consolidation exercise, the Directors believe that the Group and the Company will be able to realise their assets and discharge their liabilities in the normal course of business, meet existing loan repayment obligations, and to carry on their business without significant curtailment of operations. Thus, the Directors believe no material uncertainty exists that may cast significant doubt on the Group and the Company’s ability to continue as going concerns.

As such, the Directors believe that it is appropriate to prepare the financial statements of the Group and the Company on a going concern basis.

Standards, amendments to published standards and interpretations that are effective:

The Group and the Company have applied the following amendments for the first time for the financial year beginning on 1 January 2016:

• Amendments to MFRS 11 ‘Joint arrangements’ - Accounting for acquisition of interests in joint operations• Amendments to MFRS 101 ‘Presentation of financial statements’ – Disclosure initiative• Amendments to MFRS 127 ‘Equity method in separate financial statements’• Amendments to MFRS 116 & 138 ‘Clarification of Acceptable Methods of Depreciation and Amortisation’• Amendments to MFRS 10, 12 & 128 ‘Investment entities – Applying the consolidation exception’ • Annual Improvements to MFRSs 2012 – 2014 Cycle

The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods.


99




Standards, amendments to published standards and interpretations to existing standards that have been issued but not yet effective:

A number of new standards and amendments to standards and interpretations are effective for financial year beginning after 1 January 2016. None of these is expected to have a significant effect on the consolidated financial statements of the Group and the Company, except the following set out below:

• Amendments to MFRS 107 ‘Statement of Cash Flows – Disclosure Initiative’ (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities.

• Amendments to MFRS 112 ‘Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses’ (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value.

In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible

temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences.

The amendments shall be applied retrospectively.

• Annual Improvements to MFRS 12 “Disclosures of Interests in Other Entities” clarify that when an entity’s interest in a subsidiary, a joint venture or an associate classified as held for sale in accordance with MFRS 5, the entity is not required to disclose summarised financial information of these interests. Other disclosure requirements in MFRS 12 remain applicable.

• Annual Improvements to MFRS 128 “Investments in Associates and Joint Ventures” (effective from 1 January 2018) allow:• Venture capital organisations, mutual funds, unit trusts and similar entities to elect, on an individual basis, measuring

their investments in associates and joint ventures at fair value through profit or loss. • An entity that is not an investment entity to retain the fair value measurement applied by its associates or joint ventures

(that are investment entities) when applying equity method.

• Amendments to MFRS 2 (effective from 1 January 2018) addresses classification and measurement issues address the following:

Measurement of cash-settled awards• The amendment clarifies that the fair value of a cash-settled award is determined on a basis consistent with that used

for equity settled awards, where the impact of vesting and non-vesting conditions is considered.

Classification of share-based payment awards with net settlement feature for withholding tax obligations• The Amendments introduce an exception to the principles of MFRS 2 when an employer is obliged under the tax law

to withhold some of the shares to which an employee is entitled under a share-based payment award and to remit the employee’s tax obligation to the tax authority on behalf of the employee.

Modification of cash-settled awards to equity-settled awards• The amendments clarify that when an award is modified from cash-settled to equity-settled, the liability for the original

award is derecognised, and the modified equity-settled award is recognised in equity to the extent of goods or services received at the modification date.

• The modified award is measured by reference to the fair value of the equity instruments on the modification date. The resultant difference is recognised in profit or loss.


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Standards, amendments to published standards and interpretations to existing standards that have been issued but not yet effective: (continued)

• MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS 139 ‘Financial Instruments: Recognition and Measurement’.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income (“OCI”). The basis of classification depends on the entity’s business model and the cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

• MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018) replaces MFRS 118 ‘Revenue’ and MFRS 111 ‘Construction contracts’ and related interpretations.

The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

A new five-step process is applied before revenue can be recognised:• Identify contracts with customers; • Identify the separate performance obligations;• Determine the transaction price of the contract;• Allocate the transaction price to each of the separate performance obligations; and• Recognise the revenue as each performance obligation is satisfied.

Key provisions of the new standard are as follows:• Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the

contract price must generally be allocated to the separate elements.• If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an outcome etc),

minimum amounts of revenue must be recognised if they are not at significant risk of reversal.• The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point

in time at the end of a contract may have to be recognised over the contract term and vice versa.• There are new specific rules on licenses, warranties, non-refundable upfront fees, and consignment arrangements,

to name a few.• As with any new standard, there are also increased disclosures.


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Standards, amendments to published standards and interpretations to existing standards that have been issued but not yet effective: (continued)

• MFRS 16 ‘Leases’ (effective from 1 January 2019) supersedes MFRS 117 ‘Leases’ and the related interpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases

(off balance sheet). MFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’ and

the lease liability is accreted over time with interest expense recognised in the income statement. For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either

operating leases or finance leases and account for them differently.

Management is currently assessing the impact arising from the initial application of these standards on the financial statements of the Group and the Company.

2.2 Basis of consolidation

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss (Note 2.8).

Acquisition-related costs are expensed as incurred.


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2.2 Basis of consolidation (continued)

(a) Subsidiaries (continued)

If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date, any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Related company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Profit or loss and each component of other comprehensive income of the subsidiaries are attributed to the parent and the non-controlling interest, even if this results in the non-controlling interest having a deficit balance.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. Refer to Note 2.8 on the accounting policy for goodwill.

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in equity attributable to owners of the Group.

(c) Disposal of subsidiaries

When the Group ceases to consolidate because of a loss of control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Gains or losses on the disposal of subsidiaries include the effect of de-recognising the carrying amount of goodwill relating to the subsidiaries sold.


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2.2 Basis of consolidation (continued)

(d) Joint arrangements

A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more parties, where decisions about the relevant activities relating to the joint arrangement require unanimous consent of the parties sharing control. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement. A joint venture is a joint arrangement whereby the joint venturers have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the joint operators have rights to the assets and obligations for the liabilities, relating to the arrangement.

Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position. Under the equity method, the investment in a joint venture is initially recognised at cost, and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the joint venture in profit or loss, and the Group’s share of movements in other comprehensive income of the joint venture in other comprehensive income. Dividends received or receivable from a joint venture are recognised as a reduction in the carrying amount of the investment. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture, including any long-term interests that, in substance, form part of the Group’s net investment in the joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture is impaired. An impairment loss is recognised for the amount by which the carrying amount of the joint venture exceeds its recoverable amount. The Group presents the impairment loss adjacent to ‘share of profit/(loss) of a joint venture’ in the income statement.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

When the Group ceases to equity account its joint venture because of a loss of joint control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amount previously recognised in other comprehensive income in respect of the entity is accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a joint venture is reduced but joint control is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

2.3 Investments in subsidiaries and joint ventures in separate financial statements

In the Company’s separate financial statements, investments in subsidiaries and joint ventures are carried at cost less accumulated impairment losses. On disposal of investments in subsidiaries and joint ventures, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

The amounts due from subsidiaries of which the Company does not expect repayment in the foreseeable future are considered as part of the Company’s investments in the subsidiaries.


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2.4 Property, plant and equipment

Property, plant and equipment are initially stated at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost of an item of property, plant and equipment is determined after deducting rebates, discounts and the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of purchased property, plant and equipment. Cost also include borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (refer to accounting policy Note 2.22 on borrowing costs). All property, plant and equipment are subsequently stated at historical cost less accumulated depreciation and impairment losses.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction wherein the parties had each acted knowledgeably and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices of similar items when available and replacement cost where appropriate.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses in profit or loss during the financial year in which they are incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

Gains or losses on disposals are determined by comparing the net proceeds with the carrying amounts and are included in other income/(expenses) in profit or loss.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has a different useful life, is depreciated separately.

Property, plant and equipment are depreciated on the straight-line basis to allocate the cost of each asset to their residual values over their estimated useful lives, summarised as follows:

Vessels 25 yearsVessel parts 10 yearsDrydocking expenditure 5 yearsBuilding 50 yearsMotor vehicles 4 - 5 yearsOffice equipment 5 - 10 yearsComputers 5 yearsFurniture and fittings 10 yearsRenovation 5 years


105



2.4 Property, plant and equipment (continued)

Depreciation on vessels under construction commences when the vessels are ready for their intended use.

Drydocking expenditure represents major inspection and overhaul costs and is depreciated to reflect the consumption of benefits, which are to be replaced or restored by the subsequent drydocking generally every five years. The Group has included these drydocking costs as a separate component of the vessels’ costs.

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each reporting period. The residual values of the vessels is 5% based on ship demolition prices i.e. scrap value.

At the end of the financial year, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note 2.5 on impairment of non-financial assets.

2.5 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill or intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal (“FVLCOD”) and value in use (“VIU”). For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“cash generating units”). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to profit or loss unless it reverses a previous revaluation in which case it is charged to the revaluation surplus reserve. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in profit or loss unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus reserve.


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2.6 Non-current assets (or disposal groups) held-for-sale

Non-current assets (or disposal groups) are classified as assets held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in profit or loss.

2.7 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time.

(a) Finance leases

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.


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2.7 Leases (continued)

(a) Finance leases (continued)

Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease expense.

(b) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on the straight-line basis over the lease period. Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in profit or loss when incurred.

2.8 Intangible assets

(a) Goodwill

Goodwill arises from a business combination and represents the excess of the aggregate of fair value of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired and liabilities assumed on the acquisition date. If the fair value of consideration transferred, the amount of non-controlling interest and the fair value of previously held interest in the acquiree are less than the fair value of the net identifiable assets of the acquiree, the resulting gain is recognised in profit or loss.

Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(b) Acquired charter contracts

Charter contracts acquired in a business combination are recognised at fair value at the acquisition date. Charter contracts have a finite useful life and amortisation is calculated using the straight-line method to allocate the fair value of the contract over their contract periods which range from 1 to 4 years.


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2.9 Cash and cash equivalents

For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

2.10 Inventories

Inventories represent fuel on-board vessels which are stated at the lower of cost and net realisable value. Cost is determined based on the first-in, first-out method for fuel. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

Cost of purchased inventory is determined after deducting rebates, discounts and the amount of GST, except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of purchased inventory.

2.11 Financial assets

(a) Classification

The Group and the Company classify their financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting period. The Group and the Company’s financial assets are loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. The Group and the Company’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and bank balances’ in the statements of financial position (Notes 18 and 20).


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2.11 Financial assets (continued)

(b) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset for all financial assets not carried at fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss.

(c) Subsequent measurement - gains and losses

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

(d) Subsequent measurement - impairment

Assets carried at amortised cost

The Group and the Company assess at the end of the financial year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the customers or customers of debtors is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in economic conditions that correlate with defaults.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If loans and receivables have a variable rate, the discount rate for measuring any impairment losses is the current effective interest rate determined under the contract. As a practical expedient, the Group and the Company may measure impairment on the basis of an instrument’s fair value using an observable market price.


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2.11 Financial assets (continued)

(d) Subsequent measurement - impairment (continued)

Assets carried at amortised cost (continued)

If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the customers’ credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

When a receivable is uncollectible, it is written off against the related impairment account. Such receivables are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

(e) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership.

2.12 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount presented in the statements of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy.

2.13 Current and deferred income tax

Tax expense for the financial year comprises current and deferred income tax. The income tax expense or credit for the financial year is the tax payable on the current financial year’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company, the Group’s subsidiaries and joint ventures operate and generate taxable income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.


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2.13 Current and deferred income tax (continued)

Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the financial year and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses or unused tax credits can be utilised.

Deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the investor and joint venturer and it is probable that the temporary difference will not reverse in the foreseeable future. Generally, the investor and joint venturer are unable to control the reversal of the temporary difference for subsidiaries and joint ventures. Only where there is an agreement in place that gives the parent and joint venturer the ability to control the reversal of the temporary difference, a deferred tax liability is not recognised.

Deferred tax assets are recognised on deductible temporary differences arising from investments in subsidiaries and joint ventures only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the deductible temporary difference can be utilised.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.14 Provisions

Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.

Where the Group and the Company expect a provision to be reimbursed by another party, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.


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2.14 Provisions (continued)

Provisions are measured at the present value of management’s best estimate of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as finance cost expense.

2.15 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised as finance cost in profit or loss.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss within other income or finance costs.

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 end of the financial year.

2.16 Employee benefits

(a) Short-term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the financial year in which the employees render the related service are recognised in respect of employees’ services up to the end of the financial year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as other payables in the statement of financial position.

(b) Defined contribution plans

The Group and the Company make contributions to the Employees Provident Fund (“EPF”) as required by law in Malaysia, which are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.


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2.16 Employee benefits (continued)

(c) Termination benefits

Termination benefits are payable when employment is terminated by the Group and the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group and the Company recognise termination benefits at the earlier of the following dates: (a) when the Group and the Company can no longer withdraw the offer of those benefits; and (b) when the Group and the Company recognise costs for a restructuring that is within the scope of MFRS 137 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the financial year are discounted to their present value.

(d) Bonus plans

The Group and the Company recognise a liability and an expense for bonuses, based on a formula that takes into consideration the profit attributable to the Group and the Company’s shareholders after certain adjustments. The Group and the Company recognise a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.17 Share capital

(a) Classification

Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium, if any. Both ordinary shares and share premiums are classified as equity.

Preference share capital is classified as equity if they are non-redeemable, or redeemable but only at the Company’s option, and any dividends are discretionary.

(b) Share issue costs

Incremental costs directly attributable to the issue of new shares or options are deducted from equity, net of any related income tax benefit.

(c) Dividend distribution

A liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group and the Company, on or before the end of the financial year but not distributed at the end of the financial year.

Distributions to holders of an equity instrument is recognised directly in equity.


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2.17 Share capital (continued)

(d) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares,• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements

in ordinary shares issued during the financial year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion

of all dilutive potential ordinary shares.

2.18 Trade payables

Trade payables represent liabilities for goods or services provided to the Group and Company prior to the end of financial year which are unpaid. Trade payables are classified as current liabilities unless payment is not due within 12 months after the financial year. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value, with the amount of GST included. The net amount of GST payable to the government is presented as other payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable from, or payable to, the government are classified as operating cash flows.

Trade payables are subsequently measured at amortised cost using the effective interest method.


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2.19 Foreign currencies

(a) 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 entity operates (the “functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Group and the Company’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. However, exchange differences are deferred in other comprehensive income when they arise from qualifying cash flow or net investment hedges or are attributable to items that form part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in profit or loss within finance income or cost. All other foreign exchange gains and losses are presented in profit or loss on a net basis within administrative expenses.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.


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2.19 Foreign currencies (continued)

(c) Group companies

The results and financial position of one of the Company’s subsidiaries (none of which has the currency of a hyperinflationary economy) that has a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

• income and expenses for each statement of comprehensive income presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of other comprehensive income.

Goodwill and fair value adjustments arising on the acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a joint venture that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences relating to that foreign operation recognised in other comprehensive income and accumulated in the separate component of equity are reclassified to profit or loss, as part of the gain or loss on disposal. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the Group’s ownership interest in associates or joint ventures that do not result in the Group losing significant influence or joint control) the proportionate share of the accumulated exchange difference is reclassified to profit or loss.


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2.20 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group’s activities. Revenue is shown net of goods and services tax, returns, rebates and discounts and amounts collected on behalf of third parties and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. The following specific recognition criteria must also be met before revenue is recognised:

Chartering and hiring of vessels

Charter hire income from vessels is recognised upon rendering of services to customers, over the term of the charter hire contract. For income from the hire of forerunner vessels, it is assessed whether the Group is acting as a principal or an agent. Where it has been assessed that the Group is acting as an agent, income is recognised net of charter costs.

Backcharges to charterers and other revenue

Backcharges to charterers and other revenue is recognised when services are rendered.

2.21 Interest income

The Group and the Company earn interest income from deposits placed with licensed banks. Interest income is recognised on an accrual basis.

2.22 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale, after which such expense is charged to profit or loss. Capitalisation of borrowing cost is suspended during extended periods in which active development is interrupted.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the financial year in which they are incurred.


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2.23 Prepayments

Prepayments are amounts paid in advance for services yet to be received. Prepayments are recognised as an expense in profit or loss when the services are subsequently received.

2.24 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group’s Board of Directors and Managing Director that makes strategic decisions.

2.25 Contingent liabilities and assets

The Group does not recognise contingent assets and liabilities other than those arising from business combinations, but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

2.26 Share based payments

(a) Employees’ share options

The Group operates a number of equity-settled, share-based compensation plan under which the entity receives services from employees as consideration for equity instruments (options) of the Company. The fair value of the options granted in exchange for the services of the employees are recognised as employee benefit expense with a corresponding increase to share option reserve within equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

- including any market performance conditions (for example, an entity’s share price); - excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales

growth targets and remaining an employee of the entity over a specified time period); and - including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding of

shares for a specific period of time).

Non-market vesting conditions and service conditions are included in assumptions about the number of options that are expected to vest.


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2.26 Share based payments (continued)

(a) Employees’ share options (continued) The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions

are to be satisfied. At the end of the reporting period, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to share option reserve in equity.

In circumstances where employees provide services in advance of the grant date, the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. When options are not exercised and lapsed, the share option reserve is transferred to retained earnings.

In its separate financial statements of the Company, the grant by the Company of options over its equity instruments to the employees of subsidiary in the Group is treated as a capital contribution to the subsidiary. The fair value of options granted to employees of the subsidiary in exchange for the services of the employees to the subsidiary are recognised as investments in subsidiaries, with a corresponding credit to equity of the Company.

(b) Employees’ share grants

The fair value of the employees’ share grants granted to employees for nil consideration under the short-term incentive scheme is recognised as an expense over the relevant service period, being the year to which the bonus relates and the vesting period of the shares. The fair value is measured at the grant date of the shares and is recognised in equity in the share-based payment reserve. The number of shares expected to vest is estimated based on the non-market vesting conditions. The estimates are revised at the end of each reporting period and adjustments are recognised in profit or loss and the share-based payment reserve.

Where shares are forfeited due to a failure by the employee to satisfy the service conditions, any expenses previously recognised in relation to such shares are reversed effective the date of the forfeiture.

The shares to be granted under the employees’ share grants are existing shares which were held by the Company’s related company, Sempena Fokus Sdn. Bhd., and transferred to the Employee Share Trust at the grant date and are held by the trust until such time as they are vested.


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3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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 under the circumstances.

The Group makes estimates and assumptions concerning the future. 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 addressed below.

Key assumptions and sources of estimation uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncertainty at the end of the financial year that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(i) Impairment of vessels

The Group reviews its vessels for impairment in accordance with its accounting policy in Note 2.5. The recoverable amounts of the vessels have been determined based on the higher of their FVLCOD and their VIU.

In cases where FVLCOD is used to determine the recoverable amount of the CGUs, valuation were performed by an independent valuer using the market approach, including consideration of recent market transaction of vessels of similar type and age. For VIU calculations, the future cash flows are based on contracted cash flows and estimates of uncontracted cash flows for the useful lives of each CGUs, including scrap values discounted by an appropriate discount rate.

Significant judgement is required in the estimation of the present value of future cash flows generated by the cash-generating units, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. The key assumptions used in the VIU calculations are disclosed in Note 13.


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3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

Key assumptions and sources of estimation uncertainty (continued)

(ii) Impairment of investments in subsidiaries The Group tests investments in subsidiaries for impairment in accordance with its accounting policy in Note 2.5. The subsidiaries are considered as a single CGU, as the principal activities of the subsidiaries, comprising vessel owning/leasing

activities and the provision of vessel chartering and ship management services to oil and gas related industries, are organised into a single integrated business. The recoverable amount of the subsidiaries has been determined based on the higher of their FVLCOD and their VIU.

The recoverable amount of the investments in subsidiaries was determined using FVLCOD, which was higher than the VIU.

The FVLCOD was based on the valuation of the vessels performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. Thereafter, the valuation of the vessels were adjusted for outstanding loan and working capital balances to arrive at the recoverable amount. The key assumptions used are disclosed in Note 16.

(iii) Useful lives and residual values of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives after deducting their residual values. Management exercises their judgement in estimating the useful lives and the residual value of the depreciable assets. The useful lives are estimated based on management’s knowledge of the vessels owned by the Group and industry experience and are normally equal to the design life of the vessel. Residual values of the vessels are estimated based on prevailing market conditions and expected amount to be obtained for the vessels at the end of their useful lives in future, after deducting the estimated costs of disposal. The Group assesses annually the useful lives and the residual value of the property, plant and equipment and if the expectation differs from the original estimate, such difference will impact the depreciation in the financial year in which such estimate has been changed.

(iv) Impairment of receivables

At each reporting date, the Group assesses whether there is objective evidence that receivables have been impaired. Potential impairment loss is derived based on a review of the current status of existing receivables and collection track record. Such provisions are adjusted periodically to reflect the actual and anticipated impairment.

(v) Deferred tax assets

Deferred tax assets are recognised for all unutilised tax losses and unutilised capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies as disclosed in Note 17.

Assumptions about generation of future taxable profits depend on management’s estimates of future profitability. These depend on estimates of future revenue, operating costs, capital expenditure, and other working capital transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and capital allowances.


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4 FINANCIAL RISK MANAGEMENT

The Group and the Company’s overall financial risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group and the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Group and the Company’s financial risk management policies. The Directors of the Group and the Company regularly review these risks and approve the policies, which cover the management of these risks.

The Group and the Company are exposed to credit and counterparty risk, liquidity risk, interest rate risk, foreign currency exchange risk and capital risk.

(i) Credit and counterparty risk

Credit risk arises when sales are made on credit terms. Customers are subject to credit checks and outstanding accounts are followed up on a timely basis. Credit risk concentration is monitored by monitoring the performance of customers and actively engaging with customers to ensure payments are settled within the credit period.

The Group is exposed to the risk that the financial position of its customers may change during the contracted period and that they will not be able to meet its obligations under the terms of the contract. Given the limited number of major customers and the significant portion they represent of the Group’s revenue, the inability by one or more of the Group’s major customers to make full payment on any of its contracts may have a material adverse effect on the financial position. To mitigate this risk, credit quality of potential customers is assessed by taking into account their current financial position, past experience and other factors before entering into a contract. This evaluation includes examination of the counterparty’s default rates as well as their credit quality. Outstanding receivables are closely monitored in order to pursue full recovery.

The credit quality of financial assets that are not impaired can be assessed by reference to external credit ratings (if available) for cash and bank balances and to historical information about counterparty default rates for trade and other receivables:

Group Company

2016RM

2015RM

2016RM

2015RM

Cash and bank balances (excludes cash in hand)

Counterparties with external credit rating (“RAM”)*

AAA 13,989,101 52,603,596 46,619 25,907,196

AA2 11,514,239 13,637,832 1,130 1,254

AA3 9,144,802 17,105,250 - -

Counterparty with no credit rating** 24,026,854 11,889,322 - -

58,674,996 95,236,000 47,749 25,908,450


123


4 FINANCIAL RISK MANAGEMENT (CONTINUED)

(i) Credit and counterparty risk (continued)

The credit quality of financial assets that are not impaired can be assessed by reference to external credit ratings (if available) for cash and bank balances and to historical information about counterparty default rates for trade and other receivables: (continued)

Group2016

RM2015

RM

Trade and other receivables

Counterparties without external credit rating

Group 1 1,007,183 1,989,619 Group 2 67,886,035 73,618,009

The Group classifies their receivables into the following groups:

Group 1 - new customers/related parties (less than six (6) months).

Group 2 - existing customers/related parties (more than six (6) months) with no defaults in the past.

Group 3 - existing customers/related parties (more than six (6) months) with some defaults in the past. All defaults were fully recovered.

* RAM represents Rating Agency Malaysia.** The cash and bank balances are held in financial institutions outside Malaysia.

As at 31 December 2016, the Company has provided corporate guarantees to financial institutions on behalf of its subsidiaries, which are repayable on demand in the event of default, amounted to RM554,203,611 (2015: RM489,386,036). The Company monitors on an ongoing basis the results of and repayment made by its subsidiaries.

(ii) Liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group and the Company carry out monthly rolling cash flows review for the next 12 months to ensure that the business operations have sufficient funds available to meet its obligations as and when they fall due. Historically, treasury management has proven that the Group and the Company have the ability to meet its obligations as and when they fall due and the Group and the Company have not defaulted on any obligations due or payable to financial institutions or creditors.

During the financial year, the Group and the Company obtained a new revolving credit facility, Short Term Revolving Credit-i (“STRC-i”) of RM150.0 million, from a bank for its working capital requirements. The STRC-i facility is available for 5 years. As at 31 December 2016, the Group has RM45.0 million of unutilised facility available for drawdown.


The Group and the Company will also be able to obtain the required financial support from its immediate holding company, if necessary. However, the financial support will automatically cease to be of effect upon the completion of the above-mentioned share purchase agreement.


124



(ii) Liquidity risk (continued)

The table below summarises the maturity profile of the Group and the Company’s liabilities (including interest on borrowings) at the financial year end based on contractual undiscounted repayment obligations.

Within1 year

RM

Between 1and 2 years

RM

Between 2and 5 years

RM

Over5 years

RMTotal

RM

Group

At 31 December 2016

Bank borrowings 227,964,458 145,843,504 266,715,365 160,742,835 801,266,162

Finance lease liabilities 61,559 37,898 12,206 - 111,663

Redeemable preference shares 9,209,512 - - - 9,209,512

Trade and other payables 51,008,236 39,916,313 - - 90,924,549

288,243,765 185,797,715 266,727,571 160,742,835 901,511,886

At 31 December 2015

Bank borrowings 207,004,528 158,997,614 321,026,463 145,937,250 832,965,855

Finance lease liabilities 80,194 43,378 12,206 - 135,778

Redeemable preference shares 9,209,512 - - - 9,209,512

Trade and other payables 75,504,223 - - - 75,504,223

291,798,457 159,040,992 321,038,669 145,937,250 917,815,368

Company

At 31 December 2016

Bank borrowings 106,352,028 - - - 106,352,028


Amount due to a subsidiary 22,255,022 - - - 22,255,022

130,386,900 - - - 130,386,900

At 31 December 2015


Amount due to a subsidiary 41,255,022 - - - 41,255,022

42,453,323 - - - 42,453,323


125



(ii) Liquidity risk (continued)

As at 31 December 2016, the Company has provided corporate guarantees to financial institutions on behalf of its subsidiaries, which are repayable on demand in the event of default, amounted to RM554,203,611 (2015: RM489,386,036).

(iii) Interest rate risk

Interest rate risk arises from fluctuations in interest rates. Bank borrowings consist of variable rate debt obligations linked to applicable bank rates. Bank rates are typically reviewed and adjusted periodically in accordance with prevailing interest rates. Increases in interest rates would increase interest expenses relating to the Group’s outstanding floating rate borrowings and increase the cost of new debt. Interest rates applicable to borrowings are regularly reviewed against the prevailing and anticipated market interest rates in order to determine if refinancing or early repayment is warranted. The table below sets forth the carrying amounts of borrowings, by floating interest rate terms.

Group Company

2016RM

2015RM

2016RM

2015RM

Floating rate loans (unhedged) 479,317,232 460,392,064 106,352,028 -

Impact on profit for the financial year and equity:

1.0% increase in interest rate (4,793,172) (4,603,921) (1,063,520) -

1.0% decrease in interest rate 4,793,172 4,603,921 1,063,520 -

(iv) Foreign currency exchange risk

The Group’s foreign currency exchange risk arises primarily from the purchase of vessels, materials, spare parts, other services relating to the maintenance of vessels and borrowings as well as contracts for which the charter rate is denominated in US Dollar (“USD”) and Brunei Dollar (“BND”). The Group occasionally enters into forward contracts for USD in order to manage their exposure to fluctuations in the exchange rate between the RM and USD.

The Group has several USD denominated bank accounts, a USD denominated borrowing for a vessel and a BND denominated borrowing for a vessel.


126



(iv) Foreign currency exchange risk (continued)

The currency exposure of financial assets and financial liabilities of the Group and of the Company that are not denominated in the functional currency of the respective companies are set below:

Borrowings are denominated in the following currencies:

Group

2016RM

2015RM

Ringgit Malaysia 606,664,997 585,408,517

Brunei Dollar 98,575,646 127,701,530

US Dollar 6,984,703 9,907,104

712,225,346 723,017,151

Cash and bank balances are denominated in the following currencies:

Group Company

2016RM

2015RM

2016RM

2015RM

Ringgit Malaysia 32,235,086 71,472,384 47,304 25,907,931

Brunei Dollar 24,026,854 10,339,622 - -

US Dollar 2,458,147 13,542,007 447 521

58,720,087 95,354,013 47,751 25,908,452


127



(iv) Foreign currency exchange risk (continued)

Trade and other payables (current and non-current) are denominated in the following currencies:

Group

2016RM

2015RM

Current


Brunei Dollar 12,935,546 8,611,811

US Dollar 2,026,466 17,954,906

Thai Baht 38,990 4,436,736

Others 2,885,668 634,666

59,020,042 76,295,965

Non-current

US Dollar 36,949,480 -

95,969,522 76,295,965

Trade and other receivables are denominated in the following currencies:

Group

2016RM

2015RM


Brunei Dollar 30,731,301 33,457,763

US Dollar 3,353,270 2,850,695

68,893,218 75,607,628

The impact on profit after taxation for the financial year is mainly as a result of translation of USD bank balances trade and other payables, trade and other receivables and borrowings held by companies within the Group for which their functional currencies are not USD.

Group

2016RM

2015RM

Impact on profit for the financial year and equity:

10.0% increase in USD exchange rate (3,812,277) (1,146,931)

10.0% decrease in USD exchange rate 3,812,277 1,146,931


128



(v) Capital risk management

The Group and the Company regard capital as share capital, borrowings and retained earnings as presented in the statements of financial position. The Group and the Company’s objectives when managing capital are to safeguard the Group and the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group and the Company may return capital to shareholders, issue new shares or sell assets to reduce debt. The Group and the Company monitor capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statements of financial position) less cash and bank balances. Total equity is calculated as shareholders’ equity as shown in the statements of financial position.

Group Company

2016RM

2015RM

2016RM

2015RM

Finance lease liabilities 86,963 110,619 - -

Borrowings 712,138,383 722,906,532 106,352,028 -

Debt 712,225,346 723,017,151 106,352,028 -

Less: Cash and bank balances (58,720,087) (95,354,013) (47,751) (25,908,452)

Net debt 653,505,259 627,663,138 106,304,277 (25,908,452)

Total equity 572,258,757 718,828,459 551,733,302 672,999,263

Net gearing ratio (times) 1.14 0.87 0.19 n/a

(vi) Fair values

The carrying values of the balances disclosed in the financial statements approximate their fair values except as disclosed in the notes to the financial statements. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques.

The different levels of fair values have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).


129


5 REVENUE

Group Company

2016RM

2015RM

2016RM

2015RM

Charter hire of own vessels 217,114,698 252,789,646 - -

Charter hire of forerunner vessels 192,594 1,987,480 - -

Backcharges to charterers 9,179,624 10,474,638 - -

Others 428,462 1,313,874 - -

226,915,378 266,565,638 - -

6 FINANCE COSTS

Group Company

2016RM

2015RM

2016RM

2015RM

Term loan interest/profit 37,356,333 36,642,138 - -

Interest on amount due to immediate holding company 679,666 - 679,666 -

Revolving credit 2,091,204 1,071,193 1,352,028 -

Finance lease interest 3,631 2,199 - -

Bank overdrafts interest 53,939 105,039 - -

Other finance charges 15,202 101,631 - -

Total finance costs 40,199,975 37,922,200 2,031,694 -

Less: Amount capitalised to qualifying assets (Note 13) - (926,007) - -

Finance costs 40,199,975 36,996,193 2,031,694 -


130


7 LOSS BEFORE TAXATION

Loss before taxation is stated after charging/(crediting):

Group Company

2016RM

2015RM

2016RM

2015RM

Amortisation of intangible assets - 3,132,000 - -

Auditors’ remuneration

- audit 652,000 662,000 174,000 180,000

- other services 394,934 31,000 - 27,000

Consumable cost 10,417,727 7,010,817 - -

Depreciation of property, plant and equipment 62,418,345 65,719,917 - -

Employee benefits expense 66,687,154 74,442,670 3,301,936 2,571,820

Impairment loss on goodwill - 180,643,348 - -

Impairment loss on vessels 135,476,980 195,373,000 - -

Impairment loss on investments in subsidiaries - - 113,132,646 180,643,348

(Reversal of impairment)/impairment of receivables (net) (494,882) 769,212 - -

Insurance expenses 4,794,667 5,532,954 7,549 -

Insurance recovery* (2,655,191) - - -

Interest income (706,414) (1,089,720) (76,078) (200,189)

Professional fees 2,152,226 2,197,683 766,745 947,084

Accrual for underassessment of crew income tax for prior years 8,112,450 - - -

Rental of premises 2,583,791 2,071,147 - -

Ship operation and charter hire costs 28,065,306 34,769,639 - -

Realised loss on foreign exchange 870,275 1,329,218 1,333 23,731

Unrealised loss/(gain) on foreign exchange 5,066,373 4,370,944 74 (74)

Write-down of inventories - 556,354 - -

* During the financial year, the insurers of the Group’s vessels have approved claims made in relation to the repairs of certain damaged vessels in accordance with the vessel insurance policies. Insurance recovery of RM2,655,191 (2015: NIL) is recognised as other income.


131


8 EMPLOYEE BENEFITS EXPENSE

Group Company

2016RM

2015RM

2016RM

2015RM

Wages, salaries and bonus 60,031,431 68,226,025 2,815,482 2,155,447

Social security costs 312,117 352,217 2,122 1,653

Termination benefit 1,004,689 - - -

Defined contribution plan 5,338,917 5,864,428 484,332 414,720

66,687,154 74,442,670 3,301,936 2,571,820

Included in employee benefits expense of the Group and the Company are the Executive Directors’ remuneration amounting to RM1,683,298 (2015: RM813,739) as further disclosed in Note 9.

9 DIRECTORS’ REMUNERATION

Group and Company

2016RM

2015RM

Executive:

Salaries and bonuses 1,414,000 683,813

Defined contribution plan 269,298 129,926

1,683,298 813,739

Non-Executive:

Fees and emoluments 824,500 672,500

Total Directors’ remuneration (excluding benefits-in-kind) 2,507,798 1,486,239

Benefits-in-kind received by the Directors of the Group and the Company amounted to RM83,171 (2015: RM7,200).


132


10 TAXATION

Group Company

2016RM

2015RM

2016RM

2015RM

Current income tax:

Current financial year

- Malaysian corporate income tax 595,228 640,000 - -

Under provision of income tax in prior financial year

- Malaysian corporate income tax (255,027) (92,808) - -

- Brunei corporate income tax 340,688 320,995 - -

680,889 868,187 - -

Deferred tax

Deferred tax relating to the origination and reversal of temporary differences (Note 17) (3,806,922) (1,140,981) - -

Tax credit for the financial year (3,126,033) (272,794) - -

Subsequent to the announcement in the Malaysian Budget 2014 of a reduction in the corporate tax rate with effect from year of assessment 2016, the income tax is calculated at the statutory tax rate at 24% (2015: 25%) on the estimated chargeable profit for the financial year. Subsidiaries of the Company, being Malaysian tax residents incorporated in Labuan under the Labuan Companies Act, 1990, are taxed at 3% of profit before taxation or RM20,000 in accordance with the Labuan Business Activity Tax Act, 1990. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

Reconciliations of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and the Company are as follows:

Group Company

2016RM

2015RM

2016RM

2015RM

Loss before taxation (149,824,987) (363,561,210) (121,265,961) (185,514,818)

Taxation at Malaysian statutory tax rate at 24% (2015: 25%) (35,957,997) (90,890,303) (29,103,831) (46,378,705)

Deferred tax assets not recognised during the financial year 34,663 316,456 - -

Effect of change in tax rate on deferred tax 687,109 329,797 - -

Effects of different tax rate in Labuan 29,766,660 36,114,463 - -

Effects of different tax rate in Brunei (814,995) (159,840) - -

Tax effect of expenses that are not deductible for tax purposes 4,934,133 59,630,014 29,103,831 46,413,362

Tax effect of income not subject to tax (75,992) (209,517) - (34,657)

Tax effect on transfer of vessels between countries - (5,632,051) - -

(Over)/under provision of tax in prior financial year (1,699,614) 228,187 - -

Tax credit for the financial year (3,126,033) (272,794) - -


133


11 LOSS PER SHARE (“LPS”)

The basic LPS has been calculated based on the consolidated loss attributable to equity holders of the Company and divided by the weighted number of ordinary shares in issue.

Group

2016RM

2015RM

Loss attributable to equity holders of the Company (RM) (152,746,880) (364,086,731)

Weighted average number of ordinary shares in issue 1,177,185,100 1,177,185,100

Basic/diluted LPS (sen) (12.98) (30.93)

As at 31 December 2016, the Company has 5,470,000 dilutive potential ordinary shares outstanding pursuant to the issuance of the Employees’ Share Option Scheme on 28 December 2016 as disclosed in Note 24. These potential ordinary shares are anti-dilutive and are consequently excluded from the determination of diluted LPS.

12 SEGMENT REPORTING

(i) Reportable segment

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers comprising the Board of Directors and the Managing Director. The chief operating decision-makers are responsible for allocating resources, assessing performance of the operating segments and making strategic decisions.

The Group is organised as a single integrated business operation comprising vessel owning/leasing activities and the provision of vessel chartering and ship management services to oil and gas related industries. These integrated activities are known as the offshore support vessel operations. The Group as a whole is regarded as an operating segment. In making decisions about resource allocation and performance assessment, the key management regularly reviews the financial results of the Group as a whole. Hence, the information that is regularly provided to the key management is consistent with that presented in the financial statements.


134


12 SEGMENT REPORTING (CONTINUED)

(ii) Geographical information

The Group’s operations are carried out predominantly in Malaysia. Revenue earned by the Group analysed by the location of its external customers is as follows:

2016 2015

% RM % RM

Revenue

Malaysia 63 143,217,240 72 192,584,621

Brunei 34 76,501,140 25 65,364,029

Thailand 3 7,196,998 3 8,616,988

Total 100 226,915,378 100 266,565,638

(iii) Major customers

The Group has several single customers which generated revenue amounting to 10% or more of the Group’s total revenue:

2016 2015

% RM % RM

Direct

Customer 1 36 82,279,796 40 107,028,195

Customer 2 34 76,501,140 25 65,364,029

Total 70 158,780,936 65 172,392,224


135


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--

--

-22

4,78

9,69

6

Net b

ook

valu

e16

8,01

4,94

41,

076,

046,

574

4,39

2,90

034

,022

,303

740,

087

363,

455

410,

915

2,62

4,04

534

8,34

91,

459,

302

1,28

8,42

2,87

4


137


13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(i) Included in the property, plant and equipment are motor vehicles and office equipment which were acquired by means of finance lease arrangements with net carrying amounts of RM25,884 (2015: RM34,134).

(ii) Borrowing costs amounting to RM926,007 were capitalised as vessels under construction during the financial year ended 31 December 2015.

(iii) Certain vessels of the Group with net book values amounting to RM989,942,661 and RM118,448,895 have been respectively charged to secure loan and bank guarantee facilities granted to the Group as disclosed in Note 22.

(iv) Drydocking expenditure accrued of RM6,475,648 (2015: RM8,357,451) was capitalised as at the financial year ended 31 December 2016.

Impairment assessment of vessels

As a result of the continued depressed market conditions in the oil and gas industry, the Group recognised an impairment loss of RM135,476,980 on certain vessels during the financial year based on the total recoverable amount of RM782,584,398 of which RM704,140,000 were determined based on fair value less costs of disposal (“FVLCOD”) and RM78,444,398 were determined based on value in use method (“VIU”). The Group considered each vessel as a cash-generating unit. They are grouped together for disclosure purpose.

FVLCOD

The fair values of the vessels have been assessed by independent professional valuers. The valuation was performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. The valuation technique is therefore classified as level 2 measurement in the fair value hierarchy. Costs of disposal were determined at 1.0% (2015: 1.0%) of total costs of vessels and reflect management’s expectations based on past experience with disposal of assets and industry benchmarks.

VIU

The key assumptions used in the VIU calculations are as follows:

• The cash flows projection is based on the remaining useful lives of the vessels;• Utilisation rates and charter rates are based on past performance, management’s expectation of market development and

weighted average growth rates that are consistent with forecasts included in industry reports; and• Discount rate of 11.0% (2015: 12.0%) is applied.

The discount rates used are pre-tax and reflect specific risks relating to the CGUs. The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk premium at the date of assessment of the CGUs. The Group had taken into consideration the current depressed market conditions in the oil and gas industry in the cash flow projections, which include lower forecasted vessel utilisation and charter rates.

For the impaired vessels where the recoverable amounts are based on VIU, the total impairment losses recognised on these vessels amounted to RM10,484,602 during the current financial year. These VIUs are sensitive to the extent that there will be additional impairment charges of up to RM7,758,398 if the VIUs of these vessels were reduced to their fair values.


138


14 INTANGIBLE ASSETS

GoodwillRM

Acquiredcharter

contractsRM

TotalRM

Group

At 31 December 2015

Cost

Beginning/end of the financial year 180,643,348 44,880,000 225,523,348

Accumulated amortisation

Beginning of the financial year - (41,748,000) (41,748,000)

Amortisation charge during the financial year - (3,132,000) (3,132,000)

End of the financial year - (44,880,000) (44,880,000)

Accumulated impairment loss

Beginning of the financial year - - -

Impairment charge during the financial year (180,643,348) - (180,643,348)

End of the financial year (180,643,348) - (180,643,348)

Net book value

End of the financial year - - -

Acquired charter contracts

Amortisation of acquired charter contracts is included in other expenses in the statement of comprehensive income.

Goodwill and acquired charter contracts were fully impaired and amortised respectively during the financial year ended 31 December 2015.


139


14 INTANGIBLE ASSETS (CONTINUED)

Goodwill

During the financial year ended 31 December 2015, the Group had concluded that the entire carrying value of goodwill of RM180,643,348 was not recoverable, and correspondingly recorded an impairment charge of RM180,643,348 against the carrying value of goodwill.

The recoverable amount of the Group’s CGUs for assessment of goodwill impairment was determined based on the higher of FVLCOD or VIU. The valuation of the vessels was performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. The valuation technique was therefore classified as level 2 measurement of the fair value hierarchy.

Costs of disposal were determined at 1.0% of total costs of vessels and reflect management’s expectations based on past experience with disposal of assets and industry benchmarks.

The key assumptions used in the VIU calculations during the financial year ended 31 December 2015 are as follows:

• Utilisation rates and charter rates were based on past performance, management’s expectation of market development and weighted average growth rates that were consistent with forecasts included in industry reports;

• Discount rate of 12.0% was applied; and• Terminal growth rate of 3.0% was applied.

The discount rates used were pre-tax and reflected specific risks relating to the CGUs. The discount rates applied to the cash flow projections were derived from the cost of capital plus a reasonable risk premium at the date of assessment of the CGUs. The Group had taken into consideration the depressed market conditions in the oil and gas industry during the financial year ended 31 December 2015 in the cash flow projections, which included lower forecasted vessel utilisation and charter rates.


140


15 INVESTMENT IN A JOINT VENTURE

Group

2016RM

2015RM

Unquoted shares, at cost 4,132,742 4,132,742

Share of post-acquisition results and reserves 98,624 99,748

4,231,366 4,232,490

Share of post-acquisition results and reserves

At 1 January 99,748 36,119

Share of (loss)/profit (1,124) 63,629

At 31 December 98,624 99,748

The joint venture listed below has share capital consisting solely of ordinary shares, which is held indirectly through a subsidiary of the Company. The country of incorporation of the joint venture is the same as its principal place of business.

Details of the joint venture are as follows:

Group’s effective interest

Name of company Principal activity 2016%

2015%

Country of incorporation

Icon-FOB Holdings (L) Inc. Leasing of vessels 51 51 Malaysia

Icon-FOB 1 (L) Inc. Leasing of vessels 51 51 Malaysia

Icon-FOB Holdings (L) Inc. is a private company, with financial year end of 31 December, and there is no quoted market price available for its shares. There are no commitments and contingent liabilities relating to the Group’s interest in the joint venture.

Icon-FOB 1 (L) Inc. is private company, wholly owned by Icon-FOB Holdings (L) Inc. (“Icon-FOB Group”), with financial year end of 31 December.

Summarised financial information of joint venture

Set out below is the summarised financial information for Icon-FOB Group, which is accounted for using the equity method:

Icon-FOB Group

2016RM

2015RM

Assets and liabilities

Current assets

Cash and cash equivalents 2,295 2,198

Other current assets 10,742,250 10,722,250

Total current assets 10,744,545 10,724,448


141


15 INVESTMENT IN A JOINT VENTURE (CONTINUED)

Icon-FOB Group

2016RM

2015RM

Assets and liabilities (continued)

Current liabilities

Current financial liabilities (2,427,749) (2,425,449)

Other current liabilities (20,000) -

Total current liabilities (2,447,749) (2,425,449)

Net assets 8,296,796 8,298,999

Summarised statement of comprehensive income

(Loss)/profit from continuing operations (2,203) 144,762

Income tax expense - (20,000)

(Loss)/profit after tax and total comprehensive (loss)/income for the financial year (2,203) 124,762

Dividend received - -

Reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture:

Group

2016RM

2015RM

Opening net assets 8,298,999 8,174,237

(Loss)/profit for the financial year (2,203) 124,762

Closing net assets 8,296,796 8,298,999

Post-acquisition interest in joint venture at 51% 4,231,366 4,232,490

Carrying value 4,231,366 4,232,490


142


16 INVESTMENTS IN SUBSIDIARIES

Note Company

2016RM

2015RM

Unquoted shares, at cost 489,327,819 489,327,819

Amounts due from subsidiaries (a) 381,298,543 380,430,111

Capital contribution to a subsidiary (b) 105,000,000 -

975,626,362 869,757,930

Impairment loss (293,775,994) (180,643,348)

681,850,368 689,114,582

(a) The amounts due from subsidiaries arose from advances which are unsecured and non-interest bearing with no fixed terms of repayment. The Company does not currently anticipate any repayment of the advances. These advances have been treated as extensions of its investments in subsidiaries.

(b) Advances of RM105,000,000 owing by a subsidiary to the Company as at 31 December 2016 were reclassified from amounts due from subsidiaries to investments in subsidiaries after having considered the working capital needs of the subsidiary as approved by the Board of Directors of the Company. Subsequently, these advances are not repayable by the subsidiary and are treated as an increase in the Company’s investment in the subsidiary.

Impairment assessment of investments in subsidiaries

During the financial year ended 31 December 2016, the Group performed an impairment assessment of the carrying value of the investments in subsidiaries. The recoverable amount of the Company’s subsidiaries for assessment of impairment was determined based on the higher of FVLCOD and VIU. The subsidiaries are considered as a single CGU, as the principal activities of the subsidiaries, comprising vessel owning/leasing activities and the provision of vessel chartering and ship management services to oil and gas related industries, are organised into a single integrated business.

The recoverable amount of the investments in subsidiaries of RM681,850,368 was determined using FVLCOD, which was higher than the VIU. The FVLCOD was based on the valuation of the vessels performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. Thereafter, the valuation of the vessels were adjusted for outstanding loan and working capital balances to arrive at the recoverable amount. The valuation technique is therefore classified as level 2 measurement in the fair value hierarchy.

Costs of disposal were determined at 1.0% (2015: 1.0%) of total costs of vessels and reflect management’s expectations based on past experience with disposal of assets and industry benchmarks.


143


16 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The details of the Company’s subsidiaries are as follows:

The Company’s effective interest

Names of subsidiariesCountry of incorporation Principal activities

2016%

2015%

Direct subsidiaries

Icon Ship Management Sdn. Bhd. Malaysia Ship management services to the oil and gas related industries

100 100

Icon Fleet Sdn. Bhd. Malaysia Investment holding 100 100

Icon Offshore Group Sdn. Bhd. Malaysia Provision of vessel services to the oil and gas related industries

100 100

Indirect subsidiaries

Omni Marine Sdn. Bhd. Malaysia Vessel owner, operator and provision of vessel services to the oil and gas related industries

100 100

Omni Triton Sdn. Bhd. Malaysia Dormant 100 100

Omni Power Sdn. Bhd. Malaysia Dormant 100 100

Omni Ventures Sdn. Bhd. Malaysia Dormant 100 100

Icon Maritime Training Centre Sdn. Bhd.&

Malaysia Dormant 100 100

Icon Explorer (L) Inc.#& Malaysia Dormant 100 100

Icon Kayra (L) Inc.# Malaysia Dormant 100 100

Omni Emery (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Victory (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Marissa (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Stella (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Flotilla (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Offshore (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Azra (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Samudera (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Ikhlas (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Zara (L) Inc.# Malaysia Leasing of vessels 100 100


144



The details of the Company’s subsidiaries are as follows: (continued)



2016%

2015%

Indirect subsidiaries (continued)

Icon Waja (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Corridor (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Ocean (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Puteri 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Puteri 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Dawai (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Huma (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Sari (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Biru 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Biru 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Dahan 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Dahan 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Pinang 1 (L) Inc.# Malaysia Leasing of vessels 100 100




Icon Piai 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Piai 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Gaya (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Tigris (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Lotus (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Sophia (L) Inc.# Malaysia Leasing of vessels 100 100


145



The details of the Company’s subsidiaries are as follows: (continued)



2016%

2015%

Indirect subsidiaries (continued)

Icon Bahtera (B) Sdn. Bhd.+$ Brunei Vessel owner, operator and provision of vessel services to the oil and gas related industries

51 51

Icon Aliza (L) Inc.#& Malaysia Leasing of vessels 100 100

Icon Pioneer (L) Inc. #& Malaysia Leasing of vessels 100 100

Icon Astrid (L) Inc. #& Malaysia Leasing of vessels 100 100

Icon Andra (L) Inc. #& Malaysia Leasing of vessels 100 100

# Incorporated in the Federal Territory of Labuan, under the Labuan Companies Act, 1990.& These entities have yet to commence operations.+ Audited by a firm other than PwC.$ Ownership interest held by non-controlling interest is 49% (2015: 49%).

Capital and other commitments for the subsidiaries are disclosed in Note 25. There are no material contingent liabilities relating to the subsidiaries.


146



Set out below is summarised financial information for Icon Bahtera (B) Sdn. Bhd. (“IBSB”) that has non-controlling interest that is material to the Group. The amounts disclosed are before related company eliminations.

IBSB

2016RM

2015RM

Current assets 51,664,067 41,894,068

Current liabilities (46,522,855) (38,321,313)

Current net assets 5,141,212 3,572,755

Non-current assets 127,400,759 130,038,986

Non-current liabilities (98,702,857) (127,945,860)

Non-current net assets 28,697,902 2,093,126

Net assets 33,839,114 5,665,881

Accumulated non-controlling interest 7,344,883 1,233,623

Summarised statement of comprehensive income

Revenue 76,501,139 65,364,029

Profit after tax for the financial year 12,342,706 2,526,339

Other comprehensive income 129,252 1,361,302

Total comprehensive income for the financial year 12,471,958 3,887,641

Profit after tax allocated to non-controlling interest at 49% 6,047,926 798,315

Summarised statement of cash flows

Cash flows from operating activities 32,812,398 9,156,938

Cash flows from investing activities (153,747) (130,943,600)

Cash flows from financing activities (19,554,184) 131,607,426

Effect of exchange rate changes 582,766 350,549

Net increase in cash and bank balances 13,687,233 10,171,313


147



On 19 October 2015, pursuant to the completion of joint venture agreement between Icon Fleet Sdn. Bhd. (“Icon Fleet”), a wholly-owned subsidiary of the Company, and Zell Transportation Sdn. Bhd. (“ZT”) for IBSB the issued and paid up capital of IBSB was increased from RM258 to RM306,224 by way of allotment and issuance of 99,000 new ordinary shares of BND 1.00 each at par value, of which 50,900 new ordinary shares were subscribed by Icon Fleet. As a result, Icon Fleet now holds 51% of ownership interest in IBSB whilst ZT holds the remaining 49%. IBSB remains a subsidiary of the Company in the financial year ended 31 December 2016.

17 DEFERRED TAXATION

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position.

Group

2016RM

2015RM

Deferred tax assets

- recoverable after more than 12 months 42,061,161 40,679,831

- recoverable within 12 months 7,832,959 5,910,191

49,894,120 46,590,022

Deferred tax liabilities

- to be settled after more than 12 months (1,222,220) (1,748,794)

- to be settled within 12 months (139,669) (115,919)

(1,361,889) (1,864,713)

Deferred tax assets (net) 48,532,231 44,725,309

Subject to income tax:

Deferred tax assets

- property, plant and equipment 48,901,093 43,888,222

- unutilised tax losses 10,535,932 5,000,017

- provisions 691,261 748,532

Offsetting (10,234,166) (3,046,749)

Deferred tax assets (after offsetting) 49,894,120 46,590,022


148


17 DEFERRED TAXATION (CONTINUED)

Group

2016RM

2015RM

Deferred tax liabilities

- property, plant and equipment (11,467,230) (4,911,462)

- others (128,825) -

Offsetting 10,234,166 3,046,749

Deferred tax liabilities (after offsetting) (1,361,889) (1,864,713)

The movements during the financial year relating to deferred taxation are as follows:

Group

2016RM

2015RM

Beginning of financial year 44,725,309 43,584,328

Credited/(charged) to profit or loss (Note 10):

- property, plant and equipment (Malaysia) 843,383 (7,887,349)

- property, plant and equipment (Brunei) (2,386,280) 5,373,677

- intangible assets - 782,835

- unutilised tax losses 5,535,915 3,244,949

- provisions (57,271) (373,131)

- others (128,825) -

Deferred tax assets (after offsetting) 48,532,231 44,725,309

The deferred tax assets recognised as at 31 December 2016 include an amount of RM10,535,932 which relates to carried forward tax losses of Icon Ship Management Sdn. Bhd., which incurred losses during the financial year following depressed market conditions in the oil and gas industry. Based on the budget approved by the Board of Directors, the Company will resume utilisation of the carried forward tax losses in the following years using the estimated taxable income in view of gradual rise of crude oil prices that could lead to improving market conditions going forward. The losses can be carried forward indefinitely and have no expiry date.


149


17 DEFERRED TAXATION (CONTINUED)

The amount of unutilised capital allowances and unutilised tax losses (both of which have no expiry date) of the Company’s subsidiaries, for which no deferred tax asset is recognised in the statements of financial position as it is not probable that taxable profit will be available against which these temporary differences can be utilised are as follows:

Group

2016RM

2015RM

Unutilised capital allowances 20,394,365 20,394,365

Unutilised tax losses 2,151,689 2,007,260

18 TRADE AND OTHER RECEIVABLES

Group Company

2016RM

2015RM

2016RM

2015RM

Trade receivables 62,743,107 48,577,761 - -

Other receivables 4,539,772 6,680,211 - -

Accrued income 3,098,291 22,332,490 - -

Less: Impairment of trade receivables (1,487,952) (1,982,834) - -

68,893,218 75,607,628 - -

Prepayments 2,293,638 5,480,718 212,083 420,389

71,186,856 81,088,346 212,083 420,389

Trade receivables are denominated in Ringgit Malaysia, Brunei Dollar and US Dollar.

The credit term of trade receivables ranges from 30 to 60 days (2015: 30 to 60 days).


150


18 TRADE AND OTHER RECEIVABLES (CONTINUED)

Ageing analysis of trade and other receivables

As at the end of the financial year, the trade and other receivables ageing (excluding prepayments) is as follows:

Group

2016RM

2015RM

Neither past due nor impaired 30,747,521 25,508,949

One month past due but not impaired 17,818,610 18,282,393

Two to six months past due but not impaired 13,021,868 4,235,300

More than six months past due but not impaired 4,206,928 5,348,496

65,794,927 53,375,138

Impaired 1,487,952 1,982,834

67,282,879 55,357,972

Accrued income 3,098,291 22,232,490

70,381,170 77,590,462

Trade and other receivables that are neither past due nor impaired

None of the Group’s trade receivables and other receivables that are neither past due nor impaired have been renegotiated during the financial year.

Trade receivables that are past due but not impaired

Based on past experience and no adverse information to date, the Directors of the Group are of the opinion that no impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.

Trade receivables that are impaired

Group

2016RM

2015RM

Movement in impairment of receivables:

Beginning of the financial year 1,982,834 1,291,086

Written off during the financial year - (77,464)

Charge during the financial year 106,987 1,003,530

Reversal during the financial year (601,869) (234,318)

End of the financial year 1,487,952 1,982,834


151


18 TRADE AND OTHER RECEIVABLES (CONTINUED)

Trade receivables that are impaired (continued)

Impairment of trade receivables are individually determined by the Group. The individually impaired trade receivables mainly relate to customers which are in difficult financial situations. These receivables are not secured by collateral.

19 AMOUNTS DUE TO SUBSIDIARIES

Amounts due to subsidiaries are unsecured, interest-free and repayable on demand.

20 CASH AND BANK BALANCES

Group Company

2016RM

2015RM

2016RM

2015RM

Fixed deposits with licensed banks 8,339,360 11,921,152 - -

Bank balances 50,335,636 83,314,848 47,749 25,908,450

Cash in hand 45,091 118,013 2 2

Cash and bank balances 58,720,087 95,354,013 47,751 25,908,452

Less: Deposits pledged as security (19,225,242) (12,245,043) - -

Cash and cash equivalents 39,494,845 83,108,970 47,751 25,908,452

Deposits of the Group were pledged to secure loan and bank guarantee facilities as disclosed in Note 22.

The interest rates of deposits of the Group at the reporting date range from 2.20% to 3.60% per annum (2015: 2.70% to 3.21%).


152


21 TRADE AND OTHER PAYABLES

Group Company

2016RM

2015RM

2016RM

2015RM

Current

Trade payables 16,054,483 9,385,336 - -

Other payables 18,210,803 41,142,590 70,269 220,774

Accruals 24,754,756 25,768,039 1,709,581 977,527

59,020,042 76,295,965 1,779,850 1,198,301

Non-current

Other payables 36,949,480 - - -

95,969,522 76,295,965 1,779,850 1,198,301

The total trade and other payables are mainly denominated in Ringgit Malaysia with credit terms of 30 days (2015: 30 days).

Non-current other payables are in relation to deferred payments for the vessels under construction.

The carrying amounts of the other payables approximate their fair values.

22 BORROWINGS

Group Company

2016RM

2015RM

2016RM

2015RM

Current:

Bank borrowings

- term loans 78,054,323 141,853,623 - -

- revolving credit (Commodity Murabahah Financing-i) 13,000,000 30,014,548 - -

- revolving credit (Short Term Revolving Credit-i) 106,352,028 - 106,352,028 -

Redeemable preference shares 9,209,512 9,209,512 - -


206,664,813 181,144,834 106,352,028 -

Non-current:

Bank borrowings - term loans 505,522,520 541,828,849 - -


505,560,533 541,872,317 - -

Total borrowings 712,225,346 723,017,151 106,352,028 -


153


22 BORROWINGS (CONTINUED)

For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature. Material differences are identified only for the following borrowings where the table below shows the carrying amounts and fair values of the borrowings, by valuation method.

The fair values of the borrowings are estimated using the income approach, by discounting the cash flows based on the market interest rates of a comparable instrument. This is a Level 2 fair value in the fair value hierarchy (see Note 4(vi)).

Carrying amount Fair value

2016RM

2015RM

2016RM

2015RM

Group

Fixed rate term loans 224,611,639 253,304,956 242,566,628 256,316,274

The range of interest/profit rates (per annum) are as follows:

Group Company

2016%

2015%

2016%

2015%

Term loans 4.09 - 6.59 4.09 - 6.59 - -

Revolving credit 5.90 - 6.15 5.90 - 6.15 4.20 - 4.37 -


154



Group

At 31 December 2016 Interest/profit rate terms

Totalcarryingamount

RM

Maturity profile

< 1 year 1 - 2 years 2 - 5 years > 5 years

RM RM RM RM

Secured:

- term loans Fixed rates depending on disbursement of tranches 224,611,639 21,653,888 38,899,605 127,463,715 36,594,431

Floating rate varying based on cost of funds 358,965,204 56,400,435 81,492,105 112,676,630 108,396,034

Redeemable preference shares Discretionary dividends 9,209,512 9,209,512 - - -

Revolving credit (Commodity Murabahah Financing-i)

Floating rate varying based on cost of funds 13,000,000 13,000,000 - - -

Revolving credit (Short Term Revolving Credit-i)


712,138,383 206,615,863 120,391,710 240,140,345 144,990,465


155



Group


Totalcarryingamount

RM

Maturity profile


RM RM RM RM

Secured:

- term loans Fixed rates depending on disbursement of tranches 253,304,956 55,738,725 44,669,494 111,216,764 41,679,973

Floating rate varying based on cost of funds 430,377,516 86,114,898 85,912,544 163,901,299 94,448,775

Redeemable preference shares Discretionary dividends 9,209,512 9,209,512 - - -

Revolving credit (Commodity Murabahah Financing-i)


722,906,532 181,077,683 130,582,038 275,118,063 136,128,748

Company


Totalcarryingamount

RM

Maturity profile


RM RM RM RM



106,352,028 106,352,028 - - -

At 31 December 2015


Floating rate varying based on cost of funds - - - - -


156



Term loans

The term loans were arranged to finance the construction and purchase of vessels for the Group and were secured as follows (either single security or combination of securities):

(i) Fixed charges over vessels (see Note 13 (iii));(ii) Assignment of insurance policies for the vessels charged in (i) above;(iii) Assignment of charter proceeds for the vessels charged in (i) above;(iv) Assignment of ship building contracts for the vessels charged in (i) above; (v) Placement of deposits; and(vi) Corporate guarantees by the Company and Icon Fleet Sdn. Bhd.

As at 31 December 2016, the Group has provided bank guarantees, tender bonds and bid bonds amounting to RM9,549,533 (2015: RM9,040,848) primarily due to the tendering of new contracts and as guarantee for the performance of charter contracts by the Company’s subsidiaries.

The term loans of the Group are subject to certain financial covenants, limitation to certain asset sales or transfers and maintaining majority ownership in certain subsidiaries by the Group. The Group is in compliance with these covenants during the financial year.

Revolving credit (Commodity Murabahah Financing-i) (“RC-CMFi”)

One of the subsidiaries, Icon Offshore Group Sdn. Bhd. obtained a RC-CMFi facility of RM30.0 million for working capital purpose on 15 May 2014. RC-CMFi was secured as follows:

(i) A monthly sinking fund;(ii) Placement of deposit of 20% upon each utilisation; and(iii) Corporate guarantee by the Company.

Revolving credit (Short Term Revolving Credit-i) (“STRC-i”)

The Company had obtained STRC-i facility of RM150.0 million for working capital purpose on 20 July 2016. The facility availability is 5 years, subject to the bank’s review from time to time.


157



Redeemable preference shares (“RPS”)

One of the subsidiaries, Icon Bahtera (B) Sdn. Bhd. (“IBSB”) (hereafter “the issuer”) issued RPS on 19 October 2015, of which 3,011,000 RPS were subscribed by IBSB’s non-controlling interest. The salient terms were as follows:

(a) The RPS is at an issue price of BND1.00 each and par value of BND0.01 each.

(b) The issuer shall have the discretion whether to declare any dividend as well as the quantum of such dividend subject always to:

i. No dividend is payable to RPS holders if no dividend is declared for the ordinary shareholders for the relevant financial year; and

ii. Any dividend, if declared, is a non-cumulative preferential dividend and is distributed on an equitable basis.

(c) In the event of repayment of capital by the issuer, each RPS holder will be entitled to participate in such repayment and will rank pari passu with the ordinary shareholders.

(d) The RPS shall carry no right to vote at any general meeting of the issuer except with regards to any proposal to reduce the capital of the issuer, to wind up the issuer, during the winding up of the issuer and on any proposal that affects the rights attached to the RPS. In any such case, the RPS holders shall have one vote for each RPS held and may demand a poll at a general meeting of the issuer on any resolutions on which the holders may vote.

(e) An RPS holder may, at any time, by a written notice to the issuer, redeem all the RPS in issue.

Finance lease liabilities

Group

2016RM

2015RM

Minimum lease payment:

- Not later than 1 year 61,559 80,194

- Later than 1 year and not later than 5 years 50,104 55,584

111,663 135,778

Future finance charges (24,700) (25,159)

Present value of finance lease liabilities 86,963 110,619

Principal portion payables:

- Not later than 1 year 48,950 67,151

- Later than 1 year and not later than 5 years 38,013 43,468

Present value of finance lease liabilities 86,963 110,619

The carrying amounts of the finance lease liabilities approximate their fair values.


158


23 SHARE CAPITAL AND SHARE PREMIUM

SHARE CAPITAL

Group and Company

2016RM

2015RM

Authorised:

Ordinary shares of RM0.50 each:

Beginning/end of the financial year 1,497,000,000 1,497,000,000

RCPS-i of RM0.01 each:

Beginning/end of the financial year 3,000,000 3,000,000

Issued and fully paid:

Ordinary shares of RM0.50 each:


SHARE PREMIUM

Group and Company

2016RM

2015RM



159


24 SHARE BASED PAYMENTS

Employees’ Share Scheme

The establishment of the Group’s Employees’ Share Scheme (“the Scheme”) was approved by the Board of Directors on 3 March 2014. The Scheme comprises the Employees’ Share Option Scheme and Employees’ Share Grant Plan. The Scheme is designed to provide, among others, long-term incentives for the Group’s confirmed full-time employees (including an Executive Director) to deliver long-term shareholder returns.

The salient terms of the Scheme are as follows:

Maximum number of ordinary shares available under the Scheme

Subject to the By-Laws governing the Scheme (“By-Laws of the Scheme”), the maximum number of shares which may be made available under the Scheme shall not exceed 5% of the issued and paid-up ordinary share capital of the Company from time to time or at any point of time during the duration of the Scheme.

Basis of allocation and maximum allowable allotment

Subject to the By-Laws of the Scheme, the maximum aggregate number of scheme shares that may be allotted to an eligible person shall be determined at the discretion of the Employees’ Share Scheme Committee (“ESS Committee”) after taking into consideration factors that the ESS Committee may deem relevant subject to the said By-Laws and any applicable law.

(a) Employees’ Share Option Scheme (“ESOS”)

Under the ESOS, participants are granted options which vest on an annual pro-rata basis over a 4 year period to 1 March 2021 in accordance with the By-Laws of the Scheme. Participation in the ESOS is at the ESS Committee’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

Once vested, the options remain exercisable up to the expiry date of the ESOS on 28 December 2021.

Options are offered under the plan for a nominal consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share.

The exercise price of options is based on the par value of shares of RM0.50 each.

The salient terms of the ESOS are as follows:

(i) Eligibility

Employees of the Group (including an Executive Director) who meet the following criteria as at the date of offer shall be eligible to be considered as an eligible employee to participate in the ESOS:

a. is a full time employee (including employment in the capacity of an Eligible Senior Management Employee as defined in the By-Laws of the Scheme) whose employment with the Group has been confirmed in writing and has not served a notice of resignation or received a notice of termination (including employees serving in a specific designation under an employment contract for a fixed duration);

b. has been in employment with the Group for a minimum of 1 year, consecutively;c. has attained 18 years of age;


160


24 SHARE BASED PAYMENTS (CONTINUED)

(a) Employees’ Share Option Scheme (“ESOS”) (continued)

The salient terms of the ESOS are as follows: (continued)

(i) Eligibility (continued)

d. if he is an Executive Director, the specific allocation of the ESOS options offered by the Company to him in his capacity as an Executive Director under the ESOS has been approved by the shareholders of the Company at a general meeting;

e. is not an undischarged bankrupt; andf. fulfills any other criteria and/or falls within such category as may be determined by the ESS Committee from time to time.

No eligible person or ESOS holder may participate at any time in another employees’ share option scheme or share scheme of another corporation outside the Group without prior written consent of the ESS Committee.

(ii) Ranking of shares

The ESOS shares to be allotted pursuant to the Scheme shall rank pari passu in all respects with the then existing shares.

(iii) Alteration of share capital and adjustment

In the event of any alteration in the capital structure of the Company during the duration of the ESOS, the ESS Committee may make such corresponding alterations to the ESOS:

a. the ESOS option price; and/orb. the number of ESOS shares comprised in an offer, ESOS option or any portion thereof that is unvested or unexercised.

Set out below are summaries of options granted under the ESOS:

Average exercise price per

share optionRM

Number of options

Units

At 31 December 2015 - -

Granted during the financial year 0.50 5,470,000

At 31 December 2016 0.50 5,470,000

Vested and exercisable as at 31 December 2016 - -

Share options outstanding at the end of the financial year have the following expiry date and exercise prices:

Grant date Expiry date

Exerciseprice

RM

Share optionsDecember 2016

Units

28 December 2016 28 December 2021 RM0.50 5,470,000

Weighted average remaining contractual life of options outstanding at the end of the financial year 5.0 years


161



(a) Employees’ Share Option Scheme (“ESOS”) (continued)

Fair value of options granted

The assessed fair value at grant date of options granted during the financial year ended 31 December 2016 was RM0.04 per option. The fair value at grant date is independently determined using the Monte Carlo simulation model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk free interest rate for the term of the option and the correlations and volatilities of the Malaysian Oil & Gas Index.

The model inputs for options granted during the financial year ended 31 December 2016 included:

(i) options are granted for nominal consideration and vested based on a pro-rata basis over a four year period. Vested options are exercisable for up to the expiry date of the options;

(ii) exercise price: RM0.50;(iii) grant date: 28 December 2016;(iv) expiry date: 28 December 2021; (v) share price at grant date: RM0.39;(vi) expected price volatility of the Company’s shares: 18.03%;(vii) expected dividend yield: nil; and(viii) risk-free interest rate: 3.75%.

The expected price volatility is based on the historic volatility of the Malaysian Oil & Gas Index (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

The value of employee services received for the 4 days from 28 December 2016 to 31 December 2016 for the issue of share options is not material for the Group.

(b) Employees’ Share Grant Plan (“ESGP”)

ESGP is a grant of shares by the Company to eligible person for no cash consideration. All confirmed full-time employees (including an Executive Director) who meet the eligibility requirements are eligible to participate in the ESGP. Employees may elect not to participate in the ESGP.

The eligibility requirements for an employee to participate in the ESGP are as follows:

a. is a full time Senior Management Employee as defined in the By-Laws of the Scheme (as shall be determined by the ESS Committee) whose employment with the Group has been confirmed in writing and has not served a notice of resignation or received a notice of termination;

b. has been in employment with the Group for a minimum of 1 year consecutively;c. has attained 18 years of age;d. if he is an Executive Director, the specific allocation of the New ESGP Shares, as defined in the By-Laws of the Scheme,

offered or granted by the Company to him in his capacity as an Executive Director under the ESGP has been approved by the shareholders of the Company at a general meeting;

e. is not an undischarged bankrupt; andf. fulfills any other criteria and/or falls within such category as may be determined by the ESS Committee from time to time.

The ESGP shares are Sempena Fokus Sdn. Bhd. (“SFSB”)’s shares in the Company and are transferred to Maybank Trustees Berhad.


162



(b) Employees’ Share Grant Plan (“ESGP”) (continued)

The said ESGP shares are held in trust by Maybank Trustees Berhad, in accordance with the By-laws of the Scheme and its Trust Deed dated 31 December 2014 signed between Maybank Trustees Berhad, the Company, and SFSB.

Under the ESGP, up to 5,940,000 fully paid ordinary shares in the Company may be granted to eligible person on an annual pro-rata basis over a 5 year period to 1 March 2022 for no cash consideration. The number of shares issued to participants in the ESGP is the offer amount modified based on the achievement of the annual performance criteria as determined by the ESS Committee on an on-going basis. The performance measures and their weightings are determined by the ESS Committee based on the priorities of the Group on an annual basis.

Offers under the ESGP are at the discretion of the ESS Committee, and no offer may be made unless the Group and the respective eligible person achieve the performance criteria. As at 31 December 2016, the performance criteria has not been finalised by the ESS Committee.

In all other respects the shares rank equally with other fully-paid ordinary shares on issue.

The number of shares issued under ESGP is as follows:

2016 2015

Number of shares issued under plan to participating employees 5,940,000 -

The number of shares that are expected to vest has yet to be determined as the targets upon which the number of shares granted will be based have not been approved by the Board of Directors to date.

25 COMMITMENTS

(a) Capital expenditure

Authorised capital expenditure not provided for in the financial statements are as follows:

Group

2016RM

2015RM

Approved and contracted for:

Property, plant and equipment 96,723,000 153,322,115


163


25 COMMITMENTS (CONTINUED)

(b) Non-cancellable operating lease commitments

The future minimum lease payments under non-cancellable operating leases are as follows:

Group

2016RM

2015RM

- Not later than one year 1,971,078 348,722

- Later than one year and not later than five years 1,526,277 670,721

26 SIGNIFICANT RELATED PARTY TRANSACTIONS

Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Group is controlled by Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia formed by the Malaysian Federal Government.

(i) The related parties and their relationships with the Company are as follows:

Related parties Relationship

Yayasan Ekuiti Nasional Ultimate holding foundation Hallmark Odyssey Sdn. Bhd. Immediate holding company E-Cap (Internal) One Sdn. Bhd. Intermediate holding company Ekuiti Nasional Berhad Intermediate holding company Sempena Fokus Sdn. Bhd. Related company Icon Ship Management Sdn. Bhd. Subsidiary Icon Fleet Sdn. Bhd. Subsidiary Icon Offshore Group Sdn. Bhd. Subsidiary

Key management personnel

Key management personnel of the Group comprise members of the senior leadership team who are directly responsible for the financial and operating policies and decisions of the Group and the Company. The remuneration of key management personnel paid by the Group and the Company during the financial year was as follows:

Group Company

2016RM

2015RM

2016RM

2015RM

Salaries and allowances 3,369,478 3,174,126 2,630,503 2,325,769

Defined contribution plan 593,225 569,131 486,454 441,907

3,962,703 3,743,257 3,116,957 2,767,676

During the financial year, certain members of the Group’s key management were granted options under the ESOS and/or participated in the ESGP as disclosed in Note 24.


164


26 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

(ii) Significant related party transactions

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. The related party transactions described below were carried out on terms and conditions agreed with related parties.

Company

2016RM

2015RM

Advances from immediate holding company 35,000,000 -

Repayment of advances from immediate holding company (35,000,000) -

Interest on advances from immediate holding company 679,666 -

Repayment to/(advances from) Icon Offshore Group Sdn. Bhd. 19,000,000 (36,872,296)

Advances to Icon Fleet Group 77,500 20,049,447

Advances to Icon Ship Management Sdn. Bhd. 105,790,934 20,485,685

During the financial year, the Group obtained a short term revolving credit facility of RM150,000,000 from a bank. The Group’s immediate holding company has secured this credit facility with a pledged fixed deposit to the bank for an amount of not less than the outstanding facility amount disbursed by the bank to the Group. As at 31 December 2016, RM105,000,000 of the credit facility has been disbursed by the bank to the Group.

(iii) Significant related party balances

Included in the Company’s statement of financial position are the following significant related party balances arising from normal business transactions:

Company

2016RM

2015RM

Amount due to a subsidiary 22,255,022 41,255,022

Apart from the transactions disclosed above, the Group has entered into transactions that are collectively, but not individually significant with other government-related entities. These transactions include vessel chartering, drydocking expenditure and repairs and maintenance. They are conducted in the ordinary course of the Group’s business on terms consistently applied in accordance with the Group’s internal policies and processes.


165


27 FINANCIAL INSTRUMENTS BY CATEGORY

Analysis of the financial instruments for the Group and the Company are as follows:

Group Company

2016RM

2015RM

2016RM

2015RM

Financial assets - Loans and receivables:

Trade and other receivables (excluding prepayments) 68,893,218 75,607,628 - -

Cash and bank balances 58,720,087 95,354,013 47,751 25,908,452

127,613,305 170,961,641 47,751 25,908,452

Financial liabilities at amortised costs:

Trade and other payables 86,067,827 75,504,223 1,649,808 1,198,301

Borrowings 712,225,346 723,017,151 106,352,028 -

Amount due to a subsidiary - - 22,255,022 41,255,022

798,293,173 798,521,374 130,256,858 42,453,323

28 EVENT OCCURRING AFTER THE REPORTING PERIOD


29 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors dated 31 March 2017.


166


30 DISCLOSURE OF REALISED AND UNREALISED RETAINED PROFITS

The following analysis is prepared in accordance with Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the context of disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.

The breakdown of retained profits of the Group and the Company as at the balance sheet date, into realised and unrealised profits, pursuant to the directive, is as follows:

Group Company

2016RM

2015RM

2016RM

2015RM

Total (accumulated losses)/retained profits:

- Realised (221,359,936) 74,859,050 (348,069,328) (226,803,367)

- Unrealised 48,532,227 42,283,431 - -

(172,827,709) 117,142,481 (348,069,328) (226,803,367)

Total share of (loss)/profit from a joint venture:

- Realised 98,624 63,629 - -

(172,729,085) 117,206,110 (348,069,328) (226,803,367)

Less: Consolidation adjustments (163,106,460) (300,294,775) - -

Total accumulated losses as per financial statements (335,835,545) (183,088,665) (348,069,328) (226,803,367)

The disclosure of realised and unrealised profits/(losses) above is solely for compliance with the directive issued by Bursa Malaysia Securities Berhad and should not be used for any other purposes.

06 OTHER INFORMATIONICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

167

L IST OF VESSELS

NO. VESSEL BHP VESSEL TYPE

1 TANJUNG DAHAN 1 5,444 AHTS

2 TANJUNG DAHAN 2 5,444 AHTS

3 TANJUNG PUTERI 1 5,444 AHTS

4 TANJUNG PUTERI 2 5,444 AHTS

5 TANJUNG BIRU 1 5,220 AHTS

6 TANJUNG BIRU 2 5,220 AHTS

7 TANJUNG DAWAI 5,444 AHTS

8 TANJUNG SARI 5,444 AHTS

9 TANJUNG HUMA 5,428 AHTS

10 OMNI VICTORY 8,000 AHTS

11 OMNI GAGAH 5,444 AHTS

12 OMNI PERKASA 5,444 AHTS

13 OMNI MARISSA 5,220 AHTS

14 OMNI STELLA 5,220 AHTS

15 OMNI TIGRIS 5,220 AHTS

16 ICON AZRA 5,150 AHTS

17 ICON SAMUDERA 5,150 AHTS

18 ICON IKHLAS 5,150 AHTS

19 ICON ZARA 5,150 AHTS

20 ICON LOTUS 5,150 AHTS

21 ICON SOPHIA 5,150 AHTS

22 OMNI ANTEIA 5,220 AHT

23 OMNI EMERY 4,200 AHT

24 OMNI AKIRA 3,200 AHT

25 TANJUNG PINANG 1 5,110 SSV




29 TANJUNG GAYA 3,600 UTILITY

30 TANJUNG PIAI 1 6,970 PSV

31 TANJUNG PIAI 2 6,970 PSV

32 ICON KAYRA 6,000 AWB

33 ICON VALIANT 5,200 AWB

34 ICON ALIZA 5,200 AWB

06 OTHER INFORMATION ICON OFFSHORE BERHAD ∙ ANNUAL REPORT 2016

168

L IST OF PROPERTY

ADDRESS DESCRIPTION STATUS AGE OF PROPERTY NBV

Lot 13837, Jalan Penghiburan,Bakau Tinggi,24000 Kemaman,Terengganu Darul Iman

Shop Office Freehold 8 RM722,946


169

ANALYSIS OF SHAREHOLDINGSAS AT 30 MARCH 2017

Total Issued Share Capital : 1,177,185,100 ordinary shares Class of Shares : Ordinary shares Number of Shareholders : 8,563Voting Rights : One (1) vote per shareholder on a show of hands One (1) vote per ordinary share on a poll

Size of ShareholdingsNo. of

ShareholdersPercentage (%)

of ShareholdersNo. of

Shares HeldPercentage (%)

of Issued Capital

1 - 99 78 0.91 2,101 0.00

100 - 1,000 642 7.50 476,256 0.04

1,001 - 10,000 3,964 46.29 23,632,257 2.01

10,001 -100,000 3,428 40.03 108,650,764 9.23

100,001 to less than 5% of Issued Shares 449 5.24 447,362,134 38.00

5% and above of Issued Shares 2 0.02 597,061,588 50.72

Total 8,563 100.00 1,177,185,100 100.00

DIRECTORS’ SHAREHOLDINGS ACCORDING TO THE REGISTER OF DIRECTORS’ SHAREHOLDINGS

Direct Interest Indirect Interest

DirectorsNo. of

shares heldPercentage

(%)No. of

shares heldPercentage

(%)

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda 150,000 0.01 0 0

Amir Hamzah bin Azizan 1,000,000 0.08 0 0

Datuk Wira Azhar bin Abdul Hamid 0 0 0 0

Syed Yasir Arafat bin Syed Abd Kadir 0 0 0 0

Edwanee Cheah bin Abdullah 200,000 0.02 0 0

Madeline Lee May Ming 60,000 0.01 0 0

Datuk Abdullah bin Ahmad 0 0 0 0

Farina binti Farikhullah Khan 0 0 0 0

Datuk Abdullah bin Karim 0 0 0 0


170

SUBSTANTIAL SHAREHOLDERS ACCORDING TO THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

No. of Shares Held

Substantial Shareholders Direct Percentage (%) Indirect Percentage (%)

Hallmark Odyssey Sdn. Bhd. 497,768,820 42.28 - -

Lembaga Tabung Haji 102,111,868 8.67 - -

E-Cap (Internal) One Sdn. Bhd. - - 497,768,820(1) 42.28

E-Cap (Internal) Two Sdn. Bhd. - - 497,768,820(1) 42.28

Ekuinas Capital Sdn. Bhd. - - 501,081,988(2) 42.57

Yayasan Ekuiti Nasional - - 501,081,988(3) 42.57

UMW Oil & Gas Corporation Berhad 497,768,820(4) 42.28 - -

UMW Holdings Berhad - - 497,768,820(5) 42.28

Notes:-(1) Deemed interested through its shareholdings in Hallmark Odyssey Sdn. Bhd. (“HOSB”) pursuant to Section 8(4) of the Companies Act,

2016.(2) Deemed interested through its shareholdings in HOSB, Sempena Fokus Sdn. Bhd. (“SFSB”), E-Cap (Internal) One Sdn. Bhd. (“E-Cap

(Internal) One”) and E-Cap (Internal) Two Sdn. Bhd. (“E-Cap (Internal) Two”) pursuant to Section 8(4) of the Companies Act, 2016.(3) Deemed interested through its shareholdings in HOSB, SFSB, E-Cap (Internal) One, E-Cap (Internal) Two and Ekuinas Capital

Sdn. Bhd. pursuant to Section 8(4) of the Companies Act, 2016.(4) Deemed interested in the shares of ICON pursuant to Section 8(6) of the Companies Act, 2016 by virtue of the conditional share

purchase agreement dated 19 January 2017 entered into made between UMW Oil & Gas Corporation Berhad (“UMW-OG”) and HOSB for the acquisition by UMW-OG of 497,768,820 ordinary shares in ICON held by HOSB, representing approximately 42.28% of the total issued share capital of ICON.

(5) Deemed interested in the shares of ICON pursuant to Section 8(4) of the Companies Act, 2016 by virtue of its interest in UMW-OG.



171


THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS

No. Shareholders No. of Shares Held Percentage (%)

1. HALLMARK ODYSSEY SDN. BHD. 497,768,820 42.28

2. LEMBAGA TABUNG HAJI 99,292,768 8.43

3. LEMBAGA TABUNG ANGKATAN TENTERA 35,638,200 3.03

4. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.- EMPLOYEES PROVIDENT FUND BOARD

32,839,600 2.79

5. AMANAHRAYA TRUSTEES BERHAD - AMANAH SAHAM BUMIPUTERA

28,579,900 2.43

6. CIMB GROUP NOMINEES (TEMPATAN) SDN. BHD.- YAYASAN HASANAH

26,947,700 2.29

7. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- EXEMPT AN FOR MAYBANK TRUSTEES BHD (ICON ESGP)

23,667,000 2.01

8. HSBC NOMINEES (ASING) SDN. BHD.- MORGAN STANLEY & CO. INTERNATIONAL PLC

17,522,300 1.49

9. JAMAL BIN YUSOF @ GORDON DUCLOS 17,410,112 1.48

10. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.- KUMPULAN WANG PERSARAAN (DIPERBADANKAN)

15,851,200 1.35

11. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- ETIQA TAKAFUL BERHAD

14,000,000 1.19

12. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.- KUMPULAN WANG PERSARAAN (DIPERBADANKAN)

10,000,000 0.85

13. RAHMAN BIN YUSOF 7,116,204 0.60

14. CIMSEC NOMINEES (TEMPATAN) SDN. BHD.- CIMB FOR NG PAIK PHENG

6,839,400 0.58

15. MUHAMAD ALOYSIUS HENG 5,706,000 0.48

16. AMANAHRAYA TRUSTEES BERHAD - AFFIN HWANG GROWTH FUND

5,088,000 0.43

17. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- PLEDGED SECURITIES ACCOUNT FOR TEE TIAM HOCK

4,000,000 0.34

18. AMANAHRAYA TRUSTEES BERHAD - AFFIN HWANG PRINCIPLED GROWTH FUND

3,998,000 0.34

19. CIMB GROUP NOMINEES (TEMPATAN) SDN. BHD.- CIMB ISLAMIC TRUSTEE BERHAD FOR PACIFIC DANA AMAN

3,923,100 0.33

20. AMSEC NOMINEES (TEMPATAN) SDN. BHD.- MTRUSTEE BERHAD FOR PACIFIC DIVIDEND FUND

3,905,400 0.33


172


THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS

No. Shareholders No. of Shares Held Percentage (%)

21. AMSEC NOMINEES (TEMPATAN) SDN. BHD.- MTRUSTEE BERHAD FOR PACIFIC PEARL FUND

3,471,400 0.29

22. HSBC NOMINEES (ASING) SDN. BHD.- EXEMPT AN FOR MORGAN STANLEY & CO. INTERNATIONAL PLC

2,842,800 0.24

23. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- PLEDGED SECURITIES ACCOUNT FOR HASSAN BIN ALI

2,770,300 0.24

24. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- PLEDGED SECURITIES ACCOUNT FOR ISY HOLDINGS SDN. BHD.

2,650,000 0.23

25. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- ETIQA TAKAFUL BERHAD

2,495,000 0.21

26. CIMB GROUP NOMINEES (TEMPATAN) SDN. BHD.- AFFIN HWANG ASSET MANAGEMENT BERHAD FOR SUN LIFE MALAYSIA ASSURANCE BERHAD

2,459,000 0.21

27. MAYBANK NOMINEES (TEMPATAN) SDN. BHD.- PLEDGED SECURITIES ACCOUNT FOR SEMPENA FOKUS SDN. BHD.

2,333,333 0.20

28. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN. BHD.- PLEDGED SECURITIES ACCOUNT FOR LEE YAW HIONG

2,300,000 0.20

29. MAYBANK SECURITIES NOMINEES (ASING) SDN. BHD.- PLEDGED SECURITIES ACCOUNT FOR MADON INVESTMENTS LTD

2,210,000 0.19

30. DB (MALAYSIA) NOMINEE (ASING) SDN. BHD.- EXEMPT AN FOR DEUTSCHE BANK AG LONDON

2,068,200 0.18


173

NOTICE OF ANNUAL GENERAL MEETING

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of the Directors and the Auditors thereon.

[Please refer to Explanatory Note (i)]

2. To re-elect the following Directors who are retiring pursuant to Article 106 of the Company’s Articles of Association, and being eligible, have offered themselves for re-election:-

(a) Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda Resolution 1

(b) Encik Edwanee Cheah bin Abdullah Resolution 2

3. To re-elect the following Directors who are retiring pursuant to Article 113 of the Company’s Articles of Association, and being eligible, have offered themselves for re-election:-

[Please refer to Explanatory Note (ii)]

(a) Puan Farina binti Farikhullah Khan Resolution 3

(b) Datuk Abdullah bin Karim Resolution 4

4. To approve the payment of the proposed revision of the Directors’ fees of RM712,000 for the financial year ended 31 December 2016.

Resolution 5

5. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company until the conclusion of the next Annual General Meeting of the Company and to authorise the Directors to fix their remuneration.

Resolution 6

AS SPECIAL BUSINESS

To consider and, if thought fit, with or without any modification, to pass the following ordinary resolutions:-

6. ORDINARY RESOLUTION NO. 1 Resolution 7

- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016

“THAT subject to Sections 75 and 76 of the Companies Act 2016 and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the total number of issued shares of the Company for the time being and the Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad;

AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of the Company will be held at Grand Summit Ballroom, Level M1, Connexion Conference & Event Centre at The Vertical, No. 8, Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur on Wednesday, 24 May 2017 at 10:00 a.m. for the following purposes:-


174

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

7. To transact any other business for which due notice shall have been given.

By Order of the Board

CHUA SIEW CHUAN (MAICSA 0777689)CHIN MUN YEE (MAICSA 7019243)Company Secretaries

Kuala Lumpur28 April 2017

Explanatory Notes on Ordinary Business/Special Business:

(i) Item 1 of the Agenda

This Agenda item is meant for discussion only, as the provision of Section 340(1) of the Companies Act 2016 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

(ii) Item 3 of the Agenda

Puan Farina binti Farikhullah Khan and Datuk Abdullah bin Karim were appointed as the Independent Non-Executive Directors of the Company on 18 May 2016 and 1 October 2016 respectively, after due deliberation and discussion by the Nomination Committee and the Board of Directors on various criteria including their experience, expertise, skill sets, competence and value proposition which they could contribute, during the Meetings of Nomination Committee and Board of Directors, respectively.

Please refer to page 46 and 47 of the Annual Report 2016 for further details of Puan Farina binti Farikhullah Khan and Datuk Abdullah bin Karim.

(iii) Item 6 of the Agenda

The proposed adoption of the Ordinary Resolution No. 1 is for the purpose of granting a renewed general mandate (“General Mandate”) and empowering the Directors of the Company, pursuant to Sections 75 and 76 of the Companies Act 2016, to issue and allot new shares in the Company from time to time provided that the aggregate number of shares issued pursuant to the General Mandate does not exceed 10% of the total number of issued shares of the Company for the time being. The General Mandate, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

The General Mandate will provide flexibility to the Company for allotment of shares for any possible fund raising activities for the purpose of funding future investment project(s), working capital and/or acquisition(s).

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the Fourth Annual General Meeting held on 17 May 2016 and which will lapse at the conclusion of the forthcoming Fifth Annual General Meeting.


175

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

Notes:

1. For the purposes of determining a member who shall be entitled to attend and vote at the forthcoming Fifth Annual General Meeting of the Company, the Company shall be requesting the Record of Depositors as at 17 May 2017. Only a depositor whose name appears in the Record of Depositors as at 17 May 2017 shall be entitled to attend and vote at the meeting as well as for appointment of proxy(ies) to attend and vote on his/her stead.

2. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney

duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation. There shall be no restriction as to the qualification of the proxy.

3. A member may appoint not more than two proxies to attend the same meeting. Where a member of the Company is an authorised

nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a member or the authorised nominee appoints two proxies, he shall specify the proportion of his shareholdings to be represented

by each proxy. 5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for the omnibus account, there is no

limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where an exempt authorised nominee appoints two or more proxies to attend and vote at the same meeting, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

6. 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 that power or authority shall be deposited by hand at or by facsimile transmission to the Company’s Share Registrar, Symphony Share Registrar Sdn. Bhd. not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposed to vote and in default the instrument of proxy shall not be treated as valid.

7. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as

authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in this Proxy Form.

This page has been intentionally left blank.

FORM OF PROXY

(Company No.: 984830-D)Incorporated in Malaysia

I/We ___________________________________________________________NRIC No./Company No. _________________________________________________ (Full Name in Block Capital)

of_____________________________________________________________________________________________________________________________________ (Full Adress) being a member/members of ICON OFFSHORE BERHAD (“Company”), hereby appoint ___________________________________________________________ (Full Name in Block Capital)

NRIC. No./Passport No. _____________________________________of __________________________________________________________________________ (Full Adress)

______________________________________________________________________________________________________________________________________ (Full Adress)

or failing him/her, __________________________________NRIC No./Company No. _____________________________of_________________________________ (Full Name in Block Capital)

______________________________________________________________________________________________________________________________________ (Full Adress)

or failing him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us and on *my/our behalf at the Fifth Annual General Meeting of the Company to be held at Grand Summit Ballroom, Level M1, Connexion Conference & Event Centre at The Vertical, No. 8, Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur on Wednesday, 24 May 2017 at 10:00 a.m. and at any adjournment thereof.

The proxy is to vote on the business before the Meeting as indicated below (if no indication is given, the proxy will vote as he/she thinks fit or abstain fromvoting):-

Item Agenda

1 To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of the Directors and the Auditors thereon.

Ordinary Business Resolution For Against

2(a) To re-elect Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda who is retiring pursuant to Article 106 of the Company’s Articles of Association, and being eligible, has offered himself for re-election.

1

2(b) To re-elect Encik Edwanee Cheah bin Abdullah who is retiring pursuant to Article 106 of the Company’s Articles of Association, and being eligible, has offered himself for re-election.

2

3(a) To re-elect Puan Farina binti Farikhullah Khan who is retiring pursuant to Article 113 of the Company’s Articles of Association, and being eligible, has offered herself for re-election.

3

3(b) To re-elect Datuk Abdullah bin Karim who is retiring pursuant to Article 113 of the Company’s Articles of Association, and being eligible, has offered himself for re-election.

4

4 To approve the payment of the proposed revision of the Directors’ fees of RM712,000 for the financial year ended 31 December 2016.

5

5 To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company until the conclusion of the next Annual General Meeting of the Company and to authorise the Directors to fix their remuneration.

6

Special Business

6 Authority to Issue Shares Pursuant to Sections 75 and 76 of the Companies Act 2016. 7

7 To transact any other ordinary business for which due notice shall have been given.

* Strike out whichever not applicable.

As witness my/our hand ______________________ this day _______ of 2017.

_______________________________Signature of Member/Common Seal

For appointment of more than one (1) proxy, percentage of shareholdings to be represented by the proxies

No. of shares Percentage

Proxy 1

Proxy 2

Proxy 3

Total 100%

CDS Account No.

Number of ordinary shares

STAMP

SHARE REGISTRARSymphony Share Registrars Sdn BhdLevel 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanMalaysia

Please fold here to seal

Please fold here to seal

Notes:

1. For the purposes of determining a member who shall be entitled to attend and vote at the forthcoming Fifth Annual General Meeting of the Company, the Company shall be requesting the Record of Depositors as at 17 May 2017. Only a depositor whose name appears in the Record of Depositors as at 17 May 2017 shall be entitled to attend and vote at the meeting as well as for appointment of proxy(ies) to attend and vote on his/her stead.

2. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation. There shall be no restriction as to the qualification of the proxy.

3. A member may appoint not more than two proxies to attend the same meeting. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a member or the authorised nominee appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for the omnibus account, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where an exempt authorised nominee appoints two or more proxies to attend and vote at the same meeting, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

6. 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 that power or authority shall be deposited by hand at or by facsimile transmission to the Company’s Share Registrar, Symphony Share Registrar Sdn. Bhd. not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposed to vote and in default the instrument of proxy shall not be treated as valid.

7. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in this Proxy Form.

www.iconoffshore.com.my

ICON OFFSHORE BERHAD(Company No.: 984830-D)

Incorporated in Malaysia under the Companies Act, 1965

Level 12A, East Wing, The IconNo. 1, Jalan 1/68F, Off Jalan Tun Razak

55000 Kuala Lumpur, MalaysiaT : 603 2180 6300F : 603 2165 1086

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