Icon Offshore AR16 Proposal

Annual Report 2016

Transforming Through Growth

VALUES

VISION

We hope to achieve our Vision and Mission by upholding these tenets of our core values:

To be the preferred global offshore marine service provider for the oil and gas industry.

I

Integrity and mutual respect

C

Committed to creating value

O

Operate as one - Teamwork

N

Navigate the extra mile

MISSION We are committed to creating value for our customers, employees and stakeholders by employing a fleet of modern vessels; upholding the highest standard of Health, Safety and Environmental practices; as well as ensuring the continuous development of our greatest asset – our PEOPLE.

Transforming Through Growth The cover design draws upon the moment of metamorphosis from a cocoon into an adult butterfly, it has reflects development and transformation of ICON and is an apt illustration of the group’s growth through harnessing our current strengths and brings us closer to our goals. It also symbolizes the various strategic moves that ICON has taken to better position ourselves to propel transformation in the competitive landscape.

Moving forward, like the butterfly, ICON will also spread the wings to expand our integrated services covering upstream and downstream sector to reinforce our positioning and pave the way for future opportunities.

AT A GLANCE Revenue

ORDER BOOK

million

million

rm266.66 rm686

60

%

Fleet utilisation RATE

33

VESSELS (6 types)

CONTENTS Corporate Information Corporate Information Corporate Structure Type of Vessels Financial Highlight Operational Highlight Board of Directors Directors’ Profile Senior Management Team Profile of Senior Management Team

2 4 6 8 9 12 14 18 19

Performance Review Chairman’s Statement

22

Management Discussion & Analysis Calendar of Significant Events Health, Safety and Environment Sustainability Report

28 40 42 44

Financial Statements Supplemental Information

65 143

Other Corporate Information

Corporate Governance Audit and Risk Management Committee Report Statement of Corporate Governance Statement on Risk Management and Internal Control Statement of Directors’ Responsibility

Financial Statements

46 50 61 64

List of Vessels List of Property Analysis of Shareholdings

146 147 148

Notice of Annual General Meeting • Proxy Form

151

4

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

CORPORATE INFORMATION EXECUTIVE COMMITTEE Syed Yasir Arafat bin Syed Abd Kadir (Chairman) Amir Hamzah bin Azizan* Dato’ Abdul Rahman bin Ahmad ** 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

BOARD OF DIRECTORS Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda (Chairman and Non-Independent Non-Executive) Amir Hamzah bin Azizan* (Managing Director and Non-Independent Executive Director) Dato’ Abdul Rahman bin Ahmad ** (Non-Independent Non-Executive Director) Syed Yasir Arafat bin Syed Abd Kadir (Non-Independent Non-Executive Director) Datuk Wira Azhar bin Abdul Hamid (Senior Independent Non-Executive Director) Edwanee Cheah bin Abdullah (Independent Non-Executive Director) Madeline Lee May Ming (Independent Non-Executive Director) Datuk Abdullah bin Ahmad (Independent Non-Executive Director)

ReMUNeRATION COMMITTee Edwanee Cheah bin Abdullah (Chairman) Madeline Lee May Ming Syed Yasir Arafat bin Syed Abd Kadir NOMINATION COMMITTee Edwanee Cheah bin Abdullah (Chairman) Madeline Lee May Ming Syed Yasir Arafat bin Syed Abd Kadir COMPANY seCReTARY Chin Mun Yee (MAICSA No. 7019243) Chua Siew Chuan (MAICSA No. 0777689) RegIsTeReD OFFICe Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur.

Tel. No. : +603 2084 9000/9182 Fax No. : +603 2094 9940

Note: * He assumed the position of Managing Director of the Company on 1 March 2016 and subsequently became a member of Executive Committee (EXCO) ** Dato’ Abdul Rahman bin Ahmad ceased as a representative of Hallmark Odyssey Sdn. Bhd., (the major shareholder of ICON) pursuant to his retirement as a Chief Executive Officer of Ekuiti Nasional Berhad (Ekuinas) on 29 February 2016. Please refer to page 57.

CORPORATE INFORMATION

ANNUAL REPORT 2016

5

CORPORATE INFORMATION

HEAD/MANAGEMENT OFFICE Level 12A, East Wing The Icon No. 1, Jalan 1/68F Off Jalan Tun Razak 55000 Kuala Lumpur, Malaysia Tel. No. : +603 2180 6300 Fax No. : +603 2165 1086 Website : www.iconoffshore.com.my Email : enquiry@iconoffshore.com.my KEMAMAN OFFICE Lot 13837, Jalan Penghiburan, Bakau Tinggi 24000 Kemaman, Terengganu, Malaysia Tel. No. : +609-8502 740 Fax No. : +609-8502 744 Email : kemaman@iconoffshore.com.my Labuan OFFICE Lot 6875, Bestari Warehouse, Jalan Patau-Patau 87000 Labuan F.T., Malaysia Tel. No. : +6087-410 387 Fax No. : +6087-410 424 Email : labuan@iconoffshore.com.my AUDITORS PRICEWATERHOUSECOOPERS Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, PO Box 10192, 50706 Kuala Lumpur Sentral LEGAL ADVISERS Wong & Partners Member firm of Baker & McKenzie International Level 21, The Gardens South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia Tel. No. : +603 2298 7888

SKRINE & Co Unit No. 50-8-1, 8th floor, Wisma UOA Damansara, 50, Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia Tel. No. : +603 2081 3999 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, Malaysia Tel. No.: +603 7849 0777 STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad (Main Market) Listed since: 25 June 2014 Sector: Trading/Services Stock name: ICON Stock code: 5255

6

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

CORPORATE STRUCTURE

100%

100%

ICON OFFSHORE GROUP SDN. BHD. Licence holder

ICON FLEET SDN. BHD. Vessel holding company

51%

100%

100%

100%

Icon Bahtera (B) Sdn. Bhd.*

Icon Maritime Training Centre Sdn. Bhd.

Icon Andra (L) Inc.

Icon Dawai (L) Inc.

Icon Aliza (L) Inc.

Icon Explorer (L) Inc.

Icon Astrid (L) Inc.

Icon Gaya (L) Inc.

Icon Azra (L) Inc.

Icon Huma (L) Inc.

Icon Biru 1 (L) Inc.

Icon Ikhlas (L) Inc.

Icon Biru 2 (L) Inc.

Icon Kayra (L) Inc.

Icon Corridor (L) Inc.

Icon Lotus (L) Inc.

Icon Dahan 1 (L) Inc.

Icon Ocean (L) Inc.

Omni Marine Sdn. Bhd.

Omni Power Sdn. Bhd.

Omni Triton Sdn. Bhd.

Omni Ventures Sdn. Bhd.

Icon Dahan 2 (L) Inc.

CORPORATE INFORMATION

ANNUAL REPORT 2016

7

CORPORATE STRUCTURE

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

100%

100%

100%

51%

Icon Piai 1 (L) Inc.

Icon Samudera (L) Inc.

Omni Emery (L) Inc.

ICON-FOB Holdings (L) Inc.

Icon Piai 2 (L) Inc.

Icon Sari (L) Inc.

Omni Flotilla (L) Inc.

Icon Pinang 1 (L) Inc.

Icon Sophia (L) Inc.

Omni Marissa (L) Inc.

100% Icon Pinang 2 (L) Inc.

Icon Tigris (L) Inc.

Omni Offshore (L) Inc.

Icon Pinang 3 (L) Inc.

Icon Waja (L) Inc.

Omni Stella (L) Inc.

Icon Pinang 4 (L) Inc.

Icon Zara (L) Inc.

Omni Victory (L) Inc.

ICON-FOB 1 (L) Inc.

Icon Pioneer (L) Inc.

Icon Puteri 1 (L) Inc.

Icon Puteri 2 (L) Inc. * Ownership interest held by non-controlling interest is 49%

8

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

FINANCIAL HIGHLIGHT

200

100

280

160

80

210

120

60

80

70

40

40

0

2014

2015

2016

20

0

2014

2015

2016

Equity Attributable to Shareholders

Total AssetsRM RM (‘000)

90,747

266,566

318,877

334,863

140

26,023

350

89,574

RM (‘000)

128,088

RM (‘000)

184,801

Adjusted PAT*

RM (‘000)

190,868

Adjusted EBITDA*

Revenue

0

2014

2015

2016

Gearing Ratio

400 0

300

2014

2015

2016

0

1.2

0.87

600

1.00

800

0.55

1.8 0.62

900

2.78

1,200

718,828

2.4

1,080,606

1,200

379,364

1,600

1,520,760

3.0

1,781,693

1,500

1,575,717

2,000

2.91

RM (‘000)

0.6

2014

2015

2016

0

2014 Gearing Ratio (Gross)

2015

2016

Gearing Ratio (Net)

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortisation PAT – Profit After Taxation * Adjusted EBITDA and Adjusted PAT excludes exceptional items mainly impairment of goodwill and vessels of RM180.6 million and RM195.4 million respectively in FY2015. Details on page143.

CORPORATE INFORMATION

ANNUAL REPORT 2016

9

OPERATIONAL HIGHLIGHT Fleet utilisation rate

Order Book

Chartered/on-hired period

Firm period

Available for charter/ Temporary shutdowns/ lay-ups

Extension option period

Planned maintainence programme and scheduled dry-docking

10%

FY2016 30%

60%

60%

Revenue by Geography

Total order book as at 31 December 2016:

38%

62%

RM 686 million

HSE Statistics LTI : Lost Time Injury

Overseas revenue Malaysia revenue

28%

Revenue 2016

72%

RM 266.6

million

13.0

million Man hours without LTI

Widening our scope - Breaking new ground Ahac fue es avo, quem in vius fui simover entrudees ce re pris. Egilin tus, confintemqua reis efex sultorum iam, publinces et? Quidionernit que ius con ad per hocaeli caestus, sen tu escidicaes ad acturo mantius, potem ture comac movitan derendac ium constorum intentius, Cupiones? Uro Catus, mus. Hinat, ut est concutumed publintem ta, su sendeesu me tem etribus sa depos es eo estiam consceri esteri sedo.

12

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

BOARD OF DIRECTORs

01

02

03

04

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda

Amir Hamzah bin Azizan

Dato’ Abdul Rahman bin Ahmad

Datuk Wira Azhar bin Abdul Hamid

Non-Independent NonExecutive Director

senior-Independent Non-Executive Director

chairman Non-Independent NonExecutive Director

Managing Director Non-Independent Executive Director

CORPORATE INFORMATION

ANNUAL REPORT 2016

13

BOARD OF DIRECTORs

05 Syed Yasir Arafat bin Syed Abd Kadir Non-Independent NonExecutive Director

06

07

Edwanee Cheah bin Abdullah

Datuk Abdullah bin Ahmad

Independent nonExecutive Director

Independent nonExecutive Director

08 Madeline Lee May Ming Independent nonExecutive Director

14

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

DIRECTORS’ PROFILE

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda chairman Non-Independent Non-Executive Director Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda, Malaysian, aged 69, is the Chairman and Non-Independent Non- Executive Director of our Company.Raja Arshad is also the Chairman of Ekuiti Nasional Berhad (Ekuinas), Maxis Berhad, Yayasan Raja Muda Selangor and Yayasan Amir.

He is presently a Director of Khazanah Nasional Berhad (Khazanah), Yayasan DayaDiri and ACR Retakaful Berhad. 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, the Malaysian Communications and Multimedia Commission, the Investment Panel of the Employees Provident Fund and the Board of Trustees of the National Art Gallery.

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.

CORPORATE INFORMATION

ANNUAL REPORT 2016

15

DIRECTORS’ PROFILE

Amir Hamzah bin Azizan Managing Director Non-Independent Executive Director Amir Hamzah Bin Azizan, aged 48, is the Managing Director (MD) and Non-Independent Executive Director of our Company.

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 started his career within the Shell Group of Companies for 10 years, serving in various capacities, including as Head of Financial Services and Manager, Planning & 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 President/Chief Executive Officer (CEO), AET Tanker Holdings Sdn. Bhd. on 1 April 2005. He was promoted to become the President/CEO of MISC Berhad on 1 January 2009 and served until 14 June 2010. He was subsequently made the MD/CEO of Petronas Dagangan Berhad from 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 PETRONAS. He became our MD on 1 March 2016.

16

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

SENIOR MANAGEMENT TEAM

From left to right:

Captain hassan bin Ali

Zaleha binti Abdul hamid

Amir hamzah bin Azizan

Chief Operating Officer

Chief Financial Officer

Managing Director

CORPORATE INFORMATION

ANNUAL REPORT 2016

17

profile of SENIOR MANAGEMENT TEAM

Amir Hamzah bin Azizan

Captain Hassan bin Ali

Zaleha binti Abdul Hamid

Managing Director

Chief Operating Officer

Chief Financial Officer

Encik Amir Hamzah Azizan is responsible for the day-to-day management as well as the co-ordination of the administrative and business activities of the Group. He has 26 years of proven industry and international experience and extensive knowledge of the oil and gas industry, and marine logistics sector. Apart from that, he has in-depth experience of leading stock-market listed companies, with a strong track record of creating shareholder value through integrating operations and accelerating earnings growth by expanding into new markets and increasing market share.

Captain Hassan is responsible for the management and operation of the Company’s fleet of vessels as well as the commercial and chartering activities of the Group. He has over 38 years of experience in the marine transportation industry. This makes him an excellent candidate for his current role as he understands the industry thoroughly, therefore is well-equipped to make accurate judgement.

Puan Zaleha is responsible for overseeing the finance, information technology, corporate finance and strategy functions.

Her experience of over 16 years in audit and finance functions makes her the right fit for the job as she has had extensive experience in audit and assurance.

She is currently a Member of Malaysian Institute of Accountants (MIA) and a Fellow of the Association of Chartered Certified Accountants (FCCA). All our senior management staff have different responsibilities in the Group and work well together as a unit in supplementing each other’s differences and strengths.

Reducing costs and raising standards.

Profitable growth Ahac fue es avo, quem in vius fui simover entrudees ce re pris. Egilin tus, confintemqua reis efex sultorum iam, publinces et? Quidionernit que ius con ad per hocaeli caestus, sen tu escidicaes ad acturo mantius, potem ture comac movitan derendac ium constorum intentius, Cupiones? Uro Catus, mus. Hinat, ut est concutumed publintem ta, su sendeesu me tem etribus sa depos es eo estiam consceri esteri sedo.

20

ICON OFFSHORE BERHAD

performance review

CHAIRMAN’S STATEMENT DEAR SHAREHOLDERS, ON BEHALF OF THE BOARD OF DIRECTORS, I PRESENT TO YOU THE ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS OF ICON OFFSHORE BERHAD (ICON/GROUP) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (FY2015).

33 vessels REVENUE

266.6

RM

million

FINANCIAl PeRFORMANCe In FY2015, the Group’s revenue decreased by RM52.3 million to RM266.6 million. The Group reported an Adjusted PAT of RM26.0 million. However, given the need to make provisions for exceptional items which includes impairment for vessels of RM195.4 million and impairment for goodwill of RM180.6 million, the Group recorded a loss after tax of RM363.3 million in FY2015.

This decrease in both revenue and earnings was attributable to reduced demand for OSVs from oil and gas majors which in turn contributed to reduced vessel utilisation and charter rates.

UPhOlDINg CORPORATe gOveRNANCe In FY2015, ICON continued to implement the highest standards and best practices for corporate governance and risk management throughout the organisation. This is achieved through the strengthening of the Group’s internal policies as well as operating procedures and practices towards reducing risk exposure and providing for better operational and financial controls.

The Group subscribes to the principles and recommendations set out in the Malaysian Code of Corporate Governance 2012. Details of our 2015 corporate governance measures, risk management practices and internal control policies can be found in the relevant sections of this Annual Report.

performance review

ANNUAL REPORT 2016

21

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda Chairman

“

“

ICON continued to implement the highest standards and best practices for corporate governance and risk management throughout the organisation.

22

ICON OFFSHORE BERHAD

performance review

Management Discussion and Analysis

Despite these challenges, ICON has continued to persevere and to exemplify resilience in the face of adversity. While the Group’s short term business and operational performance has been impacted as per other OSV players, we continued to make steady progress in improving our business fundamentals and internal capabilities.

Importantly, in FY2015, the Group has delivered on its contract commitments to oil and gas majors and stayed on course towards realising its long-term business objectives.

FINANCIAl PeRFORMANCe During FY2015, ICON’s revenue decreased by 16.4% to RM266.6 million from RM318.9 million in FY2014. The lower revenue was mainly attributable to a lower fleet utilisation rate of 60% as compared to 78% in FY2014 due to reduced activities and lower demand from oil and gas majors during the year, while sustaining our average success rate for contract tenders.

Adjusted PAT (excluding exceptional items) was recorded at RM26.0 million. However

,with the in clusion of exceptional items the Group reported a loss after tax of RM363.3 million.

The total exceptional items recorded in FY2015 amounted to RM389.3 million which were higher than RM31.4 million in FY2014. The significant exceptional items included provision for vessels’ impairment of a certain age group and with lower technical specifications of RM195.4 million, in line with the Group’s fleet rejuvenation strategy. Under this strategy, ICON continuously review vessels for disposal and acquires new vessels with higher technical specifications. Impairment provision was also made for goodwill arising from the acquisition of Tanjung Kapal Services Sdn. Bhd. and Omni Petromaritime Sdn. Bhd. in 2012, which amounted to RM180.6 million.

performance review

ANNUAL REPORT 2016

23

Management Discussion and Analysis

ORDER BOOK

686 million

RM The Group’s net gearing ratio increased to 0.87x for FY2015, compared to 0.55x in the previous year. During the year under review, ICON procured a loan of BND37 million to finance the acquisition.

ADDRessINg ChAlleNges, MAKINg sTeADY PROgRess ICON has continued to make steady progress across its various business operations.

In FY2015, we further expanded into overseas waters through our joint venture (JV) partnership in Brunei with Zell Transportation Sdn. Bhd. (Zell). Under the JV partnership, ICON provides OSV to service contracts and operations in Brunei Darussalam. This was done in line with establishing and expanding our business presence in the regional market space in view of tapping opportunities within the OSV sector.

Our efforts have already begun to yield results in FY2015 itself, with notable contract wins in Brunei.

Elsewhere, we continued to bid competitively for domestic and regional contracts to ensure vessel utilisation was maximised. The Group’s order book remained strong at RM686 million for FY2015. Out of this total, RM425.3 million is for firm periods and RM260.7 million is for extension options period. A significant portion of our order book is long term (more than one year) in nature which will provide ICON with earnings visibility in FY2016 and beyond.

The Group also looked to optimise operating costs and further improve operational efficiency during the year under review. Various measures were undertaken in FY2015 which included but were not limited to, controlling fuel consumption as well as managing the number of crew onboard our vessels to optimise operational gross profit margins while taking into consideration various safety and regulatory requirements in the industry.

In addition, during periods of low demand, ICON conducted temporary shutdowns

ADJUSTED PAT

26.0 million

RM 3.0 2.5 2.9 1.5 1.0 0.5

‘14

‘15 Gross

‘16 Net

Leveraging our strength - Nurturing potential Ahac fue es avo, quem in vius fui simover entrudees ce re pris. Egilin tus, confintemqua reis efex sultorum iam, publinces et? Quidionernit que ius con ad per hocaeli caestus, sen tu escidicaes ad acturo mantius, potem ture comac movitan derendac ium constorum intentius, Cupiones? Uro Catus, mus. Hinat, ut est concutumed publintem ta, su sendeesu me tem etribus sa depos es eo estiam consceri esteri sedo.

26

ICON OFFSHORE BERHAD

performance review

Calendar of Significant Events

1

FebRUARY

2

1. Delivery of Icon valiant ICON takes delivery of Icon Valian 2. The langkawi International Maritime and Aerospace exhibition 2015 ICON inks two Memorandum of Understanding (MoU) at the Shipbuilding, Ship Repair and Offshore Support Vessel Pavillion during the LIMA 2015 event. A MoU with Akademi Laut Malaysia (ALAM) is a collaboration to develop a combined Standard of Training, Certification and Watchkeeping (STCW) and Malaysian Certification of Competency training programme for the maritime industry.

Another MoU was with Generation Six Sdn. Bhd. Development Corporation (MDeC).

3

4

MARCH

MAY

3. Delivery of Tanjung Piai 2 ICON takes delivery of Tanjung Piai 2

4. 3rd Annual general Meeting ICON held its 3rd Annual General Meeting at The Royale Chulan Hotel, Kuala Lumpur with attendees of about 400 shareholders.

performance review

ANNUAL REPORT 2016

27

Calendar of Significant Events

5

6

JUNE

JULY

5. OgA 2015 The 15th Asian Oil, Gas & Petrochemical Engineering Exhibition 2015 (OGA 2015) is an event held every two years with the participation of the oil and gas players. ICON participated in this event which saw more than 23,000 visitors during the threeday event which was held at the Kuala Lumpur Convention

6. Iftar Ramadhan During the holy month of Ramadhan, the orphans and underprivileged children especially are remembered. This year, ICON has identified Pertubuhan Kebajikan Baitul Kasih Wilayah Persekutuan dan Selangor (PK BAITUL KASIH) to join ICON employees to celebrate the holy month with a breaking of fast.

7

8

JULY

DECEMBER

7. hari Raya Aidil Fitri Open house ICON feted its business partners, corporate clients, bankers, vendors and staff during the Hari Raya Aidil Fitri Open House which was held at a hotel in Kuala Lumpur.

8. HSE Day 2015 ICON held its HSE Day themed, ‘HSE through Leadership and Commitment’, attended by Icon Offshore’s staff.

28

ICON OFFSHORE BERHAD

CORPORATE INFORMATION

sustainability report Upholding Responsible Economic Practices Upholding Responsible Social Practices Upholding Responsible Environment Practices

Corporate Social Responsibility (CSR) is widely acknowledged as a company’s commitment to operate in a sustainable and responsible manner to serve the interest of its shareholders, employees and its community alike. ICON has embraced CSR as the cornerstone of our Company’s philosophy, with the aim to give back to the community we work in. eDUCATION, ICON’s FlAgshIP INITIATIve Education has always been at the heart of ICON’s CSR strategy, programmes and initiatives. We have formulated our CSR strategy as a long-term journey, not as a quick, one-off initiative. In this, we strive to reach out to needy and under-performing students in schools and increase access to educational opportunities for such school children, irrespective of race, religion or social background.

One such educational initiative commenced in 2013 in which ICON partnered the

Dyslexia Association of Malaysia (Persatuan Dyslexia Malaysia or PDM) to train teachers and psychologists to better assess students with this learning disability. Using a train-the-trainer approach, workshops were organised for international experts to train local teachers and psychologists in the various methods of conducting tests to identify schoolchildren with this learning impediment and impart specially designed, internationally accepted practical teaching methods for such students.

Equipped and keen to employ these latest, cutting edge knowledge, ICON partnered PDM in organising similar

CORPORATE INFORMATION

ANNUAL REPORT 2016

29

sustainability report

workshops in Johor Baru and Kedah in 2014, where a total of 270 participants from diverse backgrounds ranging from parents, teachers, minders and healthcare professionals involved themselves in this series of workshops, facilitated by an occupational therapist, speech therapist and psychologist. Mindful that wholistic education transcends the confines of classrooms and lecture halls, ICON further sponsored PDM’s Sport’s Day with our employees volunteering their own time at this inspiring event. .

Following these earlier initiatives, we realised that ICON could contribute to further enhance the awareness of dyslexia and thereby assist students with their learning difficulty. We then embarked on a pilot initiative in 2015 to further establish the incidence of dyslexia amongst schoolchildren. Working again in partnership with PDM, two primary schools were selected, namely SJK (Tamil) Ladang Valambrosa at Kapar, Kelang and SJK (Cina) Nan Yik (Lee Rubber), Gombak, Kuala Lumpur. Led by the PDM’s Honorary President, a team of six

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trained assessors visited the schools and conducted relevant screening tests on a total of 172 schoolchildren. Their findings and recommendation were submitted to the respective schools for their review and consideration, with PDM’s assurance of further support where needed.

PROgRAMMes IN The PIPelINe The experience gained in this and the preceding years’ activity has redoubled our effort to map out practical initiatives for 2016, maintaining education as a primary focus area. We aim to provide tuition classes for students at two secondary schools in Kemaman to better prepare them for their upcoming “Sijil Pelajaran Malaysia” (SPM) examination.

We are in the midst of researching various approaches to enhance human capital development in the oil and gas industry.

One such approach is to lay the foundation at the early stages of tertiary education by organising educational field trips to our business operation sites and also provide opportunities for practical on-the-job training stints.

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In this aspect, ICON as one of Ekuinas’s portfolio companies has participated in their Iltizam Professional Development Programme (PDP) since 2013, a structured program in developing and nurturing local graduates to enhance their employability through placement at Ekuinas portfolio companies. We took five graduate trainees in 2015 to undergo on-the- job training at ICON. In addition, we will absorbed them into our ICON workforce when there is a match of capability and job opportunity.

“Education has always been at the heart of ICON’s CSR strategy, programmes and initiatives.”

30

ICON OFFSHORE BERHAD

CORPORATE GOVERNANCE

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 Board of Bursa Malaysia in 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 2015.

DIRECTORS 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 Act and other regulatory requirements. The Board establishes the vision and strategic objectives of the Group, directing policies, 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 acts in the best interest of the Group and shareholders.

B. BOARD CHARTER The Board has adopted a formal charter which is available in our corporate website. The Board Charter (the Charter) was established to assist the Board to provide strategic guidance to our Company and effective oversight of its Management, for the benefits of the shareholders and other stakeholders. The Board is guided by the Charter which provides reference for 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, 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, and all the relevant standards of corporate governance.

C. bOARD COMPOsITION AND bAlANCe As at the date of this Statement, the Board of ICON currently consists of eight members namely a Managing Director, one Senior Independent Non-Executive Director, three Non-Independent Non-Executive Directors (including the Chairman) and three Independent Non-Executive Directors. The Board composition complies with the Listing Requirements of Bursa Malaysia 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 Board of ICON is committed to comply with the principles and recommendations embodied in the Code in order to meet the highest standard of corporate governance. We note that with the resignation of James William Iler, our Independent Non-Executive Director on 26 August 2015 and the appointment of our new Managing Director on 1 March 2016, the Board is not comprised of a majority of independent directors when the Chairman is not an independent director as recommended by the Code. The Company is now actively engaging with potential candidates in pursuit of appointing an additional Independent Non-Executive Director.

FINANCIAL STATEMENTS Directors’ Report

66

Statement By Directors

70

Statutory Declaration

70

Independent Auditors’ Report

71

Statements Of Comprehensive Income

73

Statements Of Financial Position

74

Statements Of Changes In Equity 80 Statements Of Cash Flows

76

Notes To The Financial Statements

83

32

ICON OFFSHORE BERHAD

FINANCIAL STATEMENTS

DIRECTORS’ REPORT FOR THE FINANCIAL 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 2015.

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

Group Company RM RM

Loss for the financial year - Equity holders of the Company - Non-controlling interests

364,086,731) 798,315

(363,288,416) (185,514,818)

(185,514,818) –

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 2015.

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 since the date of the last report are as follows: Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda Datuk Wira Azhar bin Abdul Hamid Dato’ Abdul Rahman bin Ahmad Syed Yasir Arafat bin Syed Abd Kadir Edwanee Cheah bin Abdullah Madeline Lee May Ming Datuk Abdullah bin Ahmad Amir Hamzah bin Azizan (appointed with effect from 1 March 2016) Dr. Jamal bin Yusof @ Gordon Duclos (resigned with effect from 27 May 2015) James William Iler (resigned with effect from 26 August 2015)

FINANCIAL STATEMENTS

ANNUAL REPORT 2016

33

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

Group

Note 2016 2015

RM RM

2016 RM

Company 2015 RM

1,288,422,874 1,378,168,441 - 183,775,348 4,232,490 4,168,861 - - 46,590,022 45,188,087

- - - 689,114,582 -

829,222,798 -

1,339,245,386 1,611,300,737

689,114,582

829,222,798

NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment in a joint venture Investment in subsidiaries Deferred tax assets

13 14 15 16 17

CURRENT ASSETS Inventories Trade and other receivables 18 Tax recoverable Cash and bank balances 20

1,605,697 81,088,346 3,466,298 95,354,013

1,543,732 92,075,917 1,954,830 74,818,205

- 420,389 9,163 25,908,452

342,025 34,193,057

181,514,354

170,392,684

26,338,004

34,535,082

CURRENT LIABILITIES Trade and other payables 21 Amounts due to subsidiaries 19 Borrowings 22 Taxation

76,295,965 - 181,144,834 753,452

29,755,924 - 129,477,599 1,244,006

1,198,301 41,255,022 - -

858,573 4,382,726 2,500

258,194,251

160,477,529

42,453,323

5,243,799

NET CURRENT (LIABILITIES)/ASSETS

(76,679,897)

9,915,155

(16,115,319)

29,291,283

www.iconoffshore.com.my ICON OFFSHORE BERHAD (Company No.: 984830-D) Incorporated in Malaysia under the Companies Act, 1965

Level 12A, East Wing, The Icon No. 1, Jalan 1/68F Off Jalan Tun Razak 55000 Kuala Lumpur, Malaysia T : +603 2180 6300 F : +603 2165 1086