AN INTEGRATED ENERGY EQUIPMENT & SERVICES HUB

Transcription

1 annual report 2009 AN INTEGRATED ENERGY EQUIPMENT & SERVICES HUB

2 Contents About 1 Chairman s Message to Shareholders 2 Operation & Financial Review 6 Financial Highlights 12 Corporate Data 14 Board of Directors 16 Board of Advisors 18 Management Board 19 Regional Directors 21 Group Structure 22

3 ABout Ks energy services limited A Globally Accredited and Integrated Oil & Gas Services Provider ( KS Energy ) is a leading one-stop energy services provider to the global oil and gas ( O&G ), marine and petrochemical industries. The shares of KS Energy are traded on the main board of the Singapore Exchange. The core activities of KS Energy are in distribution and capital equipment charter and services. For its distribution business, KS Energy ranks as one of the leading distributors of oil and gas equipment, spare parts, consumables and industrial products in the region. Together with Aqua- Terra Supply Co., Limited ( Aqua-Terra or ATS ) and SSH Corporation Ltd ( SSH ), the KS Energy Group distributes more than 60,000 oil and gas related products comprising more than 300 international brands of products. Following the acquisition of Atlantic Oilfi eld Services Ltd ( AOS ) in May 2007, KS Energy now has the capability to supply, as well as operate capital equipment, including onshore and offshore rigs. Integrating the twin capabilities of AOS and KS Energy, the Group now has the ability to provide a full suite of services directly to the oil and gas companies, tendering for high value and high margin projects. Headquartered in Singapore, it has a geographical reach spanning South East Asia, China, the Middle East, the North Sea, Europe and the USA. For more information, please visit our website: Annual Report

4 chairman s MessAge to shareholders We will be looking to expand our operations in Indonesia, Australia, India and Africa. In China, where we currently have more than 16 offi ces, we will be looking to consolidate and strengthen our operations and participate in more infrastructure and energy projects. 2 Annual Report 2009

5 Anchor chains one of the products distributed by the Group The top view of one of KS Energy s rig Our total borrowings were lower this year and our gearing improved from 0.76 times to 0.58 times at the close of FY2009. Dear Shareholders, The global uncertainties in 2009 continue to challenge the oil and gas industry. Lower energy demand coupled with reduced manufacturing activities led to lower oil prices. This in turn affected the businesses in the entire oil and gas supply chain. However, this gave rise to many opportunities as businesses look for partnerships, strategic alliances and capital assets divestments. At KS Energy, our team put in extra efforts on both the operational and fi nancing fronts. The year saw our entry into clean energy with the deployment of our Titan 2 lift boat for the installation of windmills in Europe. While the tenure of the project was shortened by the inclement weather, it gave us invaluable experience and insight into the rapidly growing clean energy industry. The performance of our drilling and distribution businesses was affected by the economic uncertainties over the last two years. Nonetheless, the situation has allowed us to improve our operations although compared to the previous fi nancial year, FY2009 ended with lower revenue and net profi t after tax. Annual Report

6 In anticipation of the financial challenges, we have successfully completed our first warrants issue which brought net proceeds of $16.4 million into the Group. The money had been used to fund our working capital needs. Our total borrowings were lower this year and our gearing improved from 0.76 times to 0.58 times at the close of FY2009. On behalf of all my fellow directors and colleagues, I thank you for the trust and confidence that you had given to us as we face the challenges of We appreciate your continuing support for the year 2010 and will do our best to grow KS Energy. Another highlight of the year was our proposal to consolidate our distribution business with that of our subsidiary Aqua-Terra Supply Co Limited ( ATS ) and our associate company SSH Corporation Ltd ( SSH ), subject to approvals from our shareholders and the relevant authorities. Once completed, our distribution businesses will be consolidated under our new subsidiary KS Distribution Pte Ltd ( KS Distribution ). This is a joint-venture company with Actis, a leading private equity investor in emerging markets. This new entity will start off with more than 60,000 line items representing 300 globally accredited brands and a reach across nine countries, a base from which it will continue to grow and expand. Yours sincerely, Kris Taenar Wiluan Executive Chairman and Chief Executive Officer For the year 2010, we expect the world economy to stabilise and demand for energy to increase. We will continue to consolidate our oil and gas operations and look for strategic alliances and acquisitions that can complement and add value to our businesses. Concurrently, we will invest in our people and strengthen our competitive capabilities to further grow our distribution business. We will be looking to expand our operations in Indonesia, Australia, India and Africa. In China, where we currently have more than 16 offices, we will be looking to consolidate and strengthen our operations and participate in more infrastructure and energy projects. 4 Annual Report 2009

7 Pipes - Product distributed by SSH A Shackle - Product distributed by Aqua-Terra Another highlight of the year was our proposal to consolidate our distribution business with that of our subsidiary Aqua-Terra Supply Co Limited ( ATS ) and our associate company SSH Corporation Ltd ( SSH ). Our distribution businesses will be consolidated under our new subsidiary- KS Distribution Pte Ltd. ( KS Distribution ) Annual Report

8 operation & FinAnciAl ReVieW OVERVIEW FY2009 witnessed a year of volatile oil prices and sluggish global economy. Feeling the impact of the weak market demand, both our Distribution and Drilling and Capital Equipment Charter businesses reported weaker performance. As a result, KS Energy closed the year on lower revenue and profi tability. Another challenge this year was the credit crunch as fi nancial institutions globally contracted their loan portfolios. To counter these effects, the Group successfully completed its fi rst warrant issue in August 2009, raising approximately $16.4 million. The money had been used to fund our working capital needs. Our total borrowings were lower this year and our gearing improved from 0.76 times to 0.58 times at the close of FY Our integration efforts took another step forward as we continue with our efforts to streamline our Distribution business and re-organise our Drilling and Capital Equipment Charter business. The current slow-down in the global economic landscape has given us the opportunity to speed up our business consolidation and in the process, bring us closer to our vision to transform KS Energy into an integrated energy services hub. The current slow-down in the global economic landscape has given us the opportunity to speed up our business consolidation and in the process, bring us closer to our vision to transform KS Energy into an integrated energy services hub. 6 Annual Report 2009

9 Subsequently, on 8 December 2009, we announced our proposal to consolidate our distribution businesses with that of our subsidiary Aqua- Terra Supply Co Limited and our associate company - SSH Corporation Ltd. When approved, all our distribution businesses will be contained under our newly incorporated subsidiary KS Distribution Pte Ltd, a jointventure company owned by KS Energy and Actis a leading private equity investor in emerging markets. For our drilling and capital equipment charter business, the contracts previously secured commenced operation this year. The challenge in this business segment was the declining day rates. Contracts that are due for renewal were re-contracted at lower rates. We foresee that this situation will persist so long as uncertainty overhangs the recovery of the global economy. FINANCIAL REVIEW Revenue The Group s revenue for the fi nancial year 2009 ( FY09 ) amounted to $489.8 million compared to $611.0 million reported for the previous year ( FY08 ), representing a decrease of 19.8%. By business segment, revenue from the Distribution business was lower by 33.3%, declining from $361.8 million in FY08 to $241.5 million in FY09. The revenue for the Drilling and Capital Equipment business remained relatively stable compared to the previous fi nancial year. Other operating income was lower in FY09 due to the reduction in the sale of investments during the year compared to FY08. As a result, other operating income was lower by 38.5%, decreasing from $16.1 million to $9.9 million in FY09. Included in this fi gure are the gain of $2.0 million from the divestment of an associate and $4.5 million from the sale of availablefor-sale equity securities. Annual Report

10 Expenses Distribution costs totalled $21.1 million in FY09, representing a decrease of 15.3%, compared to $24.9 million incurred in FY08. This is in line with the lower level of activities in the Group s Distribution business. Administrative expenses reported a drop of 24.5%, decreasing from $37.1 million to $28.0 million due to lower manpower costs and jobs credit grant received. Other operating expenses contracted by 26.1%, decreasing from $31.4 million to $23.2 million mainly due to foreign exchange differences, lower allowance for doubtful debts and operating expenses from non-core assets that were divested last year. With the repayment of borrowings, fi nance costs were also lower during the year. Finance costs decreased from $25.8 million to $17.0 million, representing a reduction of 34.1%. Profitability Gross profi t margin narrowed from 27.0% to 23.0% refl ecting the diffi cult market conditions. In FY09, gross profi t totalled $112.9 million compared to $165.1 million in FY08, representing a decrease of 31.6%. The share of results from associates declined from a profi t of $8.2 million in FY08 to a loss of $0.1 million in FY09 due to lower contribution from an associate. The Group s share of results of jointly controlled entities rose from a loss of $4.6 million in FY08 to a profi t of $19.4 million in FY09. This is mainly from the insurance claim for the KS Titan 1 lift boat as well as the gain from the divestment of a jointly controlled entity. At the close of the fi nancial year 2009, the Group reported a net profi t after tax and minority interest of $40.0 million, representing a decrease of 22.9% from the net profi t after tax and minority interest of $51.9 million reported in FY08. 8 Annual Report 2009

11 BALANCE SHEET REVIEW Current Assets Compared to 31 December 2008, the Group s current assets as at 31 December 2009 decreased by $30.2 million from $340.2 million to $310.0 million due mainly to decrease in trade receivables. Non-current Assets Total non-current assets were lower this year mainly due to disposal of investment in available-for-sale equity securities and depreciation of plant and equipment during the year. Compared to the previous fi nancial year, total non-current assets was lower by $16.4 million, decreasing from $590.4 million to $574.0 million. Current and Non-current Liabilities Total current liabilities rose from $297.0 million last year to $343.6 million this year due to the reclassifi cation of convertible bond to current liabilities, ameliorated by net repayment of bank loans during the period. Total bank borrowings decreased from $345.5 million in FY08 to $308.3 million. As a result of the reclassifi cation, the balance sheet showed a net current liabilities position and a reduction in non-current liabilities from $214.7 million to $80.0 million. As announced on 26 January 2010, the Company has entered into a purchase agreement for the proposed issue of new convertible bonds of up to an aggregate of $107 million. Equity attributable to equity holders of the parent Equity attributable to equity holders of the parent increased by $40.5 million from $366.4 million as at 31 December 2008 to $406.9 million as at 31 December 2009, and included in this amount are the proceeds from the issue of warrants. Annual Report

12 CASH FLOW STATEMENT REVIEW Cash Flow from Operating Activities Operating activities generated cash infl ow of $62.7 million as at 31 December Cash Flow from Investing Activities Net cash outfl ow amounted to $1.7 million. This is attributable mainly to the costs incurred for capital equipment upgrading. Cash Flow from Financing Activities There was a net cash outfl ow of $48.9 million due to the repayment of bank borrowings and payment of dividends to shareholders. Included in this amount is a cash infl ow of $16.4 million being proceeds from the issuance of warrants during the year. At the close of the fi nancial year ended 31 December 2009, cash and cash equivalents totalled $72.2 million (FY08: $68.3 million). With the repayment of borrowings, fi nance costs were also lower during the year. Finance costs decreased from $25.8 million to $17.0 million, representing a reduction of 34.1%. Installation of windmill tower 10 Annual Report 2009

13 Propeller used in vessels Valves distributed by KS Flow Control At the close of the fi nancial year ended 31 December 2009, cash and cash equivalents totalled $72.2 million (FY08: $68.3 million). Annual Report

14 Financial Highlights FINANCIAL HIGHLIGHTS $ 000 $ 000 $ 000 $ 000 $ 000 Revenue 489, , , , ,081 Profit before Tax 52,725 65,542 92,933 64,906 41,538 Net Profit after Tax 43,556 60,333 79,759 54,923 37,094 Net Profit attributable to Equity Holders 40,041 51,920 73,757 50,702 33,604 Key Balance Sheet Indicators Shareholders Fund 406, , , , ,482 Total Assets 884, , , , ,554 Total Liabilities 423, , , , ,098 Performance Indicators Earnings Per Share (cents/share)* Net Asset Value (cents/share)* Financial Ratios ROE(%) ROA(%) Current Ratio (times) Net Gearing (times) Net Cash * The comparative figures have been adjusted for new share placements and bonus share issues for the period up to 31 December Annual Report 2009

15 SEGMENTAL REVENUE & RESULTS FY2009 FY2008 Change Distribution and Other Capital Equipment & Related Services Revenue % Profit for the year % Revenue % Profit for the year % Revenue Trend (S$ Million) Profit Attributable To Equity Holders (S$ Million) Shareholders Fund (S$ Million) CAGR = 16.2% CAGR = 4.5% CAGR = 38.8% A view of the working deck on an offshore drilling rig. The KS Energy Group s Geographic Presence North Sea Denmark Holland Norway USA Office Jackup rig or lift boat Tunisia India Pakistan China Thailand Hong Kong Vietnam Malaysia Indonesia Singapore Headquartered in Singapore, the KS Energy Group has a geographical reach spanning South-East Asia, China, the Middle East, Mediterranean, Africa, the North Sea, the European Union and the USA. Jackup rig under management Egypt UAE Kurdistan Land rig Qatar Annual Report

16 corporate DAtA BOARD OF DIRECTORS KRIS TAENAR WILUAN Executive Chairman & Chief Executive Offi cer KOH SOO KEONG Executive Director ABDULLAH MOHAMMED SALEH Non-Executive Director LIM HO SENG Lead Independent Director LEE BENG CHENG Independent Director WONG MENG YENG Independent Director NELSON McCALLUM GIBB Alternate Director to Mr Abdulla Mohammed Saleh and Director of Group Business Development AUDIT COMMITTEE LIM HO SENG WONG MENG YENG LEE BENG CHENG Chairman REGISTRAR & SHARE TRANSFER OFFICE Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte Ltd) 8 Cross Street #11-00 PWC Building Singapore NOMINATING COMMITTEE WONG MENG YENG Chairman LEE BENG CHENG KRIS TAENAR WILUAN REMUNERATION COMMITTEE LEE BENG CHENG Chairman WONG MENG YENG LIM HO SENG COMPANY SECRETARIES SHIRLEY LIM BUSARAKHAM KOHSIKAPORN REGISTERED OFFICE No 19 Jurong Port Road Singapore Tel: (65) Fax: (65) Website: Company Registration No: G AUDITORS KPMG LLP Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore Partner-in-charge: TAN HUAY LIM Year of appointment: 2005 BANKERS Deutsche Bank The Development Bank of Singapore Limited The Hong Kong & Shanghai Banking Corporation Limited ING Bank N.V. Maybank Group Oversea-Chinese Banking Corporation Limited Standard Chartered Bank United Overseas Bank Limited 14 Annual Report 2009

17 Loading steel pipes Cutting wire ropes Another challenge this year was the credit crunch as fi nancial institutions globally contracted their loan portfolios. To counter these effects, the Group successfully completed its fi rst warrant issue in August 2009, raising approximately $16.4 million. The money had been used to fund our working capital needs. Our total borrowings were lower this year and our gearing improved from 0.76 times to 0.58 times at the close of FY Annual Report

18 BoARD of DiRectoRs KRIS TAENAR WILUAN Executive Chairman & Chief Executive Offi cer Mr Wiluan was appointed the Chairman and Chief Executive Offi cer of KS Energy in Mr Wiluan is the founder of the Citramas Group, whose business activities include oilfi eld equipment manufacturing, shipping and logistics, drilling services, infrastructure development comprising port, ferry terminals and telephone companies, and the hotel and leisure industry. Under the umbrella of the Citramas Group is the Indonesian publiclisted PT Citra Tubindo Tbk, a manufacturer of tubular products for the oil and gas industry whose shares are quoted on the Jakarta and Surabaya Stock Exchanges, and 35 other subsidiary companies whose activities span different parts of ASEAN. The Citramas Group provides employment to more than 3,000 employees across the region. KRIS TAENAR WILUAN Executive Chairman & Chief Executive Offi cer The President of the Citramas Group, Mr Wiluan is also the President and CEO of PT Citra Tubindo Tbk, and the Chairman of PT Citra Bonang, a Jakarta-based industrial chemicals and food distribution group of companies with more than 50 branches throughout Indonesia. Mr Wiluan is also the Chairman and Chief Executive Offi cer of Aqua-Terra Supply Co. Limited and the Executive Chairman and Chief Executive Offi cer of SSH Corporation Ltd. He graduated from London University with a BSc Honours Degree in Mathematics and Computer Science. KOH SOO KEONG Executive Director Mr Koh was appointed as an Executive Director in May Mr Koh was, until April 2007, the Chief Executive Offi cer and President of Toll Asia Pte Ltd, formerly SembCorp Logistics Ltd (SembLog) which was acquired by Toll in May Currently, he is the Managing Director of EcoSave Pte Ltd. With over 20 years of experience in the logistics industry, he has helmed SembLog and its preceding companies since He is a board member of four other publicly listed companies and the Chairman of the Agri-Food and Veterinary Authority of Singapore. KOH SOO KEONG Executive Director Mr Koh holds a Bachelor of Engineering (Honours), a Master of Business Administration and a Postgraduate Diploma in Business Law from the National University of Singapore. ABDULLA MOHAMMED SALEH Non-Executive Director Mr Saleh was appointed as Chairman of the Dubai Financial Services Authority on 17 June 2007, having served as a director of the DFSA since Mr Saleh is the Vice Chairman of Emirates NBD PJSC, the largest banking entity in the Middle East. Emirates NBD PJSC was formed by the merger of National Bank of Dubai (NBD) and Emirates Bank International (EBI). Mr Saleh was one of NBD s founders in 1963, and became its Managing Director from 1982 until January 2004 and thereafter Chairman from 2005 till the merger with EBI. ABDULLA MOHAMMED SALEH Non-Executive Director Mr Saleh is a former adviser on fi nancial matters to the Late Ruler of Dubai, HH Sheikh Rashid Bin Saeed Al Maktoum. He served as an Arbitrator on the Paris-based High Board of the Euro-Arab Arbitration Centre, from 1988 to He is a Board Member of the Dubai Chamber of Commerce and Industry. He has been a Member of the Board of Qatar Fuel Additives Company since 1990 and has been Chairman of International Octane Limited since He is a Director and major shareholder of Dubai Transport Company LLC (DUTCO), the holding company of the DUTCO Group of Companies. He has been Chairman of MARSH INSCO (insurance brokers) since Mr Saleh was educated in Sharjah and London and also attended the Institute of Bankers after completing his academic studies. 16 Annual Report 2009

19 LIM HO SENG Lead Independent Director Mr Lim is Lead Independent Director and Chairman of the Audit Committee and a member of the Remuneration Committee of the Group. He was appointed our Independent Non- Executive Director on 1 September He is the Chairman of Baker Technology Ltd and sits on the Board of several other public companies listed on the Stock Exchange of Singapore. He was the former Chief Executive Offi cer of NTUC Fairprice Cooperative Ltd. Mr Lim is a Fellow of the Institute of Certifi ed Public Accountants Singapore, the Institute of Certifi ed Public Accountants Australia and the Association of Chartered Certifi ed Accountants of United Kingdom. He is also a Fellow of the Institute of Chartered Secretaries & Administrators and the Singapore Institute of Directors. LEE BENG CHENG Independent Director Mr Lee has extensive experience in the oil and gas and marine industries, having worked in the oil refi ning and petrochemical sectors, offshore drilling rig and platform construction including drilling several oil and gas wells both onshore and offshore in Asia. He held senior positions in several public-listed and private entities in the hydrocarbon industry in Singapore, Malaysia and China including Vice Chairman of the listed Shenzhen-Chiwan Petroleum Supply Base, Chairman of Singapore Offshore Petroleum Supply Base, President of Sembawang Marine & Logistics Ltd (formerly known as Sembawang Maritime Ltd), Managing Director of Hong Kong listed Promet Petroleum Ltd. Mr Lee holds a First Class Honours Degree in Mechanical Engineering and a Master of Science (with distinction) from Leeds University, UK. He is also a member of the Singapore Institute of Management, the Institute of Engineers Singapore and the Singapore Institute of Directors. WONG MENG YENG Independent Director LIM HO SENG Lead Independent Director LEE BENG CHENG, BILLY Independent Director Mr Wong has been an advocate and solicitor in Singapore since 1984 and practises corporate law. He is currently a director of Alliance LLC, a law corporation he co-founded in Over the last 10 years he has been an Independent Director of several companies listed on the Singapore Exchange. Mr Wong graduated from the National University of Singapore in 1983 with a Bachelor of Laws (Honours) Degree. NELSON McCALLUM GIBB Alternate Director to Mr Abdulla Mohammed Saleh and Director of Group Business Development Mr Gibb was appointed as an alternate director to Mr Abdulla Mohammed Saleh on 22 December He has been with Dutco since 1996 and is currently the Group s Chief Operating Offi cer. The Dutco Group is a leading Dubai based conglomerate comprising 20 Companies and over 25,000 employees. WONG MENG YENG Independent Director The Company has signifi cant interests in all sectors of construction, hospitality & leisure, oil and gas, manufacturing, development and investments and trading. Dutco are partners in the Middle East with many international companies such as the Balfour Beatty plc from the UK and Mc Connell Dowell Ltd. from Australia. Prior to joining Dutco in 1996, Mr Gibb was the Director for the International Business of the leading Mechanical and Electrical Engineering Company, Balfour Kilpatrick Ltd (a member of the Balfour Beatty Group of Companies, a major UK listed Construction Group), whose Projects and Companies were based across Asia, Africa, and the Middle East. Mr Gibb was educated in West Africa, Indonesia and Scotland, completing his BA (Hons) at Stratchclyde University in Glasgow. Mr Gibb sits on many of the Boards of the Group of Companies of the Dutco Group. NELSON McCALLUM GIBB Alternate Director to Mr Abdulla Mohammed Saleh Annual Report

20 BoARD of ADVisoRs LEE SENG QUEE Mr Lee joined the Company on 1 March 2007 as Strategic Advisor to Chairman. Mr Lee has been with the Citramas Group since 1978, where he is responsible for corporate matters. He is also an Advisor to the Board of Directors of PT Citra Tubindo Tbk. Mr Lee practises as a Public Accountant and holds professional qualifi cations including Fellow Member of the Institute of Certifi ed Public Accountants of Singapore; Fellow Member of CPA Australia; Fellow Member of the Association of Chartered Certifi ed Accountants; Fellow Member of the Institute of Chartered Secretaries and Administrators, UK and Member of the Singapore Institute of Directors. Mr Lee also holds a Master of Business Administration majoring in Business Laws from the Nanyang Business School, Nanyang Technological University. Mr Lee is author of and updates the publication, CCH Hands On Guide for Corporate Secretarial Essentials. SHEIKH FAISAL F.J. AL THANI Sheikh Al-Thani was appointed an Independent Director of the Group on 20 January He has over 23 years of working experience in the oil and gas industry in Qatar. He started his career in 1987 with state-owned Qatar Petroleum and spent more than a decade working there before being seconded to Arco Qatar, British Petroleum and Anadarko Qatar Energy Co., LLC as Deputy General Manager and Qatar Petroleum representative in the said companies. In March of 2008, he assumed the position of Sr. Director and Head of Business Development in the Middle East for Maersk Oil Qatar as seconded by Qatar Petroleum. Sheikh Al-Thani is the Chairman of both Naama Real Estate Company and Qatar National Export Import Company. He is a prolifi c author and has published numerous books on risk management and trends in the oil and gas industry in the Middle East. He is also the current Chairman of the Society of Petroleum Engineers International - Qatar Section and the Chairman and founding member of the local Qatar Society of Petroleum Engineers (QSPE), a Fulbright scholar, completed his fi rst degree in Petroleum Engineering at the University of Tulsa, Oklahoma followed by a Masters in Project Management at the University of Bath as well as a PhD in Project Finance at Leeds University, UK. NG SHIN EIN Ms Ng Shin Ein was appointed to the Board in 1 May She is the Regional Managing Director of Blue Ocean Associates Pte Ltd, a pan-asian investment and strategic advisory fi rm. Blue Ocean Associates takes proprietary stakes in companies and also advises corporates and other investment funds. Prior to this, Ms Ng was with the Singapore Exchange, where she was responsible for developing Singapore s capital market by bringing foreign companies to list in Singapore. Additionally, she was part of the Singapore Exchange s IPO Approval Committee. Ms Ng started her career as a corporate lawyer in Messrs Lee & Lee. Whilst in legal practice, she advised on joint ventures, mergers and acquisitions and fund-raising exercises. Ms Ng also serves on the board of Yanlord Land Group Ltd and First Resources Ltd, both listed on SGX, and is also a director of NTUC Fairprice. 18 Annual Report 2009

21 MAnAgeMent BoARD KRIS TAENAR WILUAN Executive Chairman & Chief Executive Offi cer Mr Wiluan was appointed the Chairman and Chief Executive Offi cer of KS Energy in Mr Wiluan is the founder of the Citramas Group, whose business activities include oilfi eld equipment manufacturing, shipping and logistics, drilling services, infrastructure development comprising port, ferry terminals and telephone companies, and the hotel and leisure industry. Under the umbrella of the Citramas Group is the Indonesian public-listed PT Citra Tubindo Tbk, a manufacturer of tubular products for the oil and gas industry whose shares are quoted on the Jakarta and Surabaya Stock Exchanges, and 35 other subsidiary companies whose activities span different parts of ASEAN. The Citramas Group provides employment to more than 3000 employees across the region. The President of the Citramas Group, Mr Wiluan is also the President and CEO of PT Citra Tubindo Tbk, and the Chairman of PT Citra Bonang, a Jakarta-based industrial chemicals and food distribution group of companies with more than 50 branches throughout Indonesia. Mr Wiluan is also the Chairman and Chief Executive Offi cer of Aqua-Terra Supply Co. Limited and the Executive Chairman and Chief Executive Offi cer of SSH Corporation Ltd. He graduated from London University with a BSc Honours Degree in Mathematics and Computer Science. KOH SOO KEONG Executive Director Mr Koh was appointed as an Executive Director in May Mr Koh was, until April 2007, the Chief Executive Offi cer and President of Toll Asia Pte Ltd, formerly SembCorp Logistics Ltd (SembLog) which was acquired by Toll in May Currently, he is the Managing Director of EcoSave Pte Ltd. With over 20 years of experience in the logistics industry, he has helmed SembLog and its preceding companies since He is a board member of four other publicly listed companies and the Chairman of the Agri-Food and Veterinary Authority of Singapore. Mr Koh holds a Bachelor of Engineering (Honours), a Master of Business Administration and a Postgraduate Diploma in Business Law from the National University of Singapore. DR ADAM PAUL BRUNET Managing Director of Oil, Gas and Energy Services CEO of Atlantic Oilfi eld Services Ltd Dr Brunet has worked in the oil industry since he left college in 1977 and started work as a Field Engineer for Schlumberger S.A. in West Africa. Since 1983, Dr Brunet has been involved in establishing and managing PT Citra Tubindo Tbk ( Tubindo ) and is presently the Technical Director. He oversees the manufacturing processes, engineering and business development as well as procurement and marketing functions of Tubindo and its group of companies. Dr Brunet, a postgraduate from Oxford University, is also an established academic who specialises in operations management. Through strategic alliances and joint ventures, Dr Brunet has capitalised on Tubindo s engineering capabilities to develop new technologies, products and services, transforming the company into an export driven entity supplying global oil and gas companies. In 2003, he established an intellectual properties subsidiary to develop the market for Tubindo s technologies. From 2006 to 2010, Dr Brunet has acted as an Executive Director in KS Energy focusing on the Capital Equipment Division and later Managing Director of Oil, Gas and Energy Services. In January 2009, Dr Brunet was appointed Executive Director of KS Energy subsidiary Atlantic Oilfi eld Services Ltd and became its CEO on 1 May WOO PENG KONG Managing Director of Group Capital Equipment and Projects Mr Woo joined the Group in 2004 when the GlobalTech group of companies, which he co-founded in 2002, became its subsidiaries. He was appointed subsequently as the Chief Operating Offi cer and Executive Director of the Group. In May 2009, he was appointed as Managing Director of Group Capital Equipment and Projects. In 2009, he took charge of the management and supervision of asset owning companies and capital equipment projects of the Group; oversaw the marketing and sale of oil & gas equipment; and managed the review and implementation of projects and investments. An engineer by training, Mr Woo has more than 25 years of experience in the oil and gas and marine industry, assuming diversifi ed senior management roles in engineering, sales & marketing, new business start-up and joint-ventures with particular expertise in business operations and fi nancial management. Mr Woo holds a First Class Honours Bachelor Degree in Mechanical Engineering from the then University of Singapore and a Certifi ed Diploma in Accounting & Finance from the Chartered Association of Certifi ed Accountants. *Mr Woo resigned from the Management Board in January Annual Report

22 MAnAgeMent BoARD GOH BOON CHYE Managing Director of Group Distribution Business Mr Goh joined the Group in He is responsible to grow the Group s distribution businesses in new markets around the world. Mr Goh was the Chief Financial Offi cer in On 29 November 2002, Mr Goh held the post of Chief Operating Offi cer. Mr Goh was appointed the Chief Business Development Offi cer on 16 February Prior to 1998, Mr Goh held the post of Financial Controller in Parker Hannifi n Pte Ltd and Motorola Electronics Pte Ltd. Mr Goh graduated from the then University of Singapore in 1976 with a Bachelor of Accountancy Degree and is a Certifi ed Accountant by profession. He also holds a MBA from Oklahoma City University. Mr Goh is a fellow of the Singapore Institute of Certifi ed Public Accountants and the Association of Chartered Certifi ed Accountants of United Kingdom. WONG SOON YIN Chief Financial Offi cer Ms Wong was appointed as Chief Financial Offi cer in December Ms Wong is responsible for the accounting and fi nance matters of the Company. She sits on the Board of various subsidiaries within the KS Group. She has almost 30 years of experience as an accounting professional. Prior to joining KS Energy, Ms Wong was the Chief Financial Offi cer of Green Dot Capital Pte Ltd. She has extensive accounting and fi nancial experience from her previous employment with the Singapore Technologies Group and Ernst & Young. Ms Wong is a fellow with the Institute of Certifi ed Public Accountants of Singapore. She holds a Bachelor of Accountancy Degree from the then University of Singapore. DIANA LENG Director of Group Treasury Ms Leng joined the Group in 2007 and was appointed a member of the Management Board a year later. Ms Leng is responsible for Group Treasury, Corporate Finance, Mergers & Acquisitions, and all funding-related activities. She also sits on the Board of Atlantic Oilfi eld Services (AOS), the Group s operating arm of its Capital Equipment Division as well as several other subsidiaries within the KS Group. Ms Leng brings with her considerable experience in banking and fi nance, having held several positions in banking, insurance and asset management. She started her banking career in the Netherlands, and held various positions internationally. In her last position as Director of Business Management of a global bank, she was responsible for the development and implementation of business strategies for its Corporate Lending Group in Asia. Prior to that, she was a Vice President in its Structured Finance department, handling origination, structuring and execution of transactions, as well as the provision of fi nancing solutions for clients trading in oil and other commodities. Ms Leng holds a Bachelor of Business Administration from Maastricht University, the Netherlands with a minor degree in Finance from the Leonard Stern School of Business at New York University, USA, and a Master of Business Administration (with Distinction) from Maastricht University. NELSON McCALLUM GIBB Alternate Director to Mr Abdulla Mohammed Saleh and Director of Group Business Development Mr Gibb was appointed as an alternate director to Mr Abdulla Mohammed Saleh on 22 December He has been with Dutco since 1996 and is currently the Group s Chief Operating Offi cer. The Dutco Group is a leading Dubai based conglomerate comprising 20 Companies and over 25,000 employees. The Company has signifi cant interests in all sectors of construction, hospitality & leisure, oil and gas, manufacturing, development and investments and trading. Dutco are partners in the Middle East with many international companies such as the Balfour Beatty plc from the UK and Mc Connell Dowell Ltd. from Australia. Prior to joining Dutco in 1996, Mr Gibb was the Director for the International Business of the leading Mechanical and Electrical Engineering Company, Balfour Kilpatrick Ltd (a member of the Balfour Beatty Group of Companies, a major UK listed Construction Group), whose Projects and Companies were based across Asia, Africa, and the Middle East. Mr Gibb was educated in West Africa, Indonesia and Scotland completing his BA (Hons) at Stratchclyde University in Glasgow. Mr Gibb sits on many of the Boards of the Group of Companies of the Dutco Group. 20 Annual Report 2009

23 RegionAl DiRectoRs ADI HARSONO China & Pacifi c Mr Harsono joined the company on 1 February 2008 and is responsible for managing the Company s activities in China. Prior to joining KS Energy, Mr Harsono was the Director of Schlumberger in Jakarta, Houston and Shanghai. He spent 25 years with Schlumberger starting from a fi eld engineer in West Africa, Europe, Middle East, Australia, Asia and USA. He was also the General Manager of Schlumberger s Smart Card Business in Shanghai. He is active in Business Association and government related activities that allow him access to high level business and government networks. Mr Harsono holds a Master Degree in Physics from Gadjahmada University, Yogyakarta, Indonesia. SYED ABDEL NASSER BIN SYED HASSAN ALJUNIED Middle East & India Mr Aljunied joined the Company on 1 January 2007 as the Strategic Investment Advisor for the Middle East in He currently sits on the board of Atlantic Oilfi eld Services, a Dubai based subsidiary of KS Energy. Mr Aljunied is a Director and shareholder of the Greenworld Group, an integrated timber producer in the Forestry and Wood production business. In 2000, Mr Aljunied co-founded Asiawerks Global Investment Group (AGI), a boutique private equity investment advisory fi rm. He has been an Independent and Non-Executive Director and Chairman of Audit Committee for Singapore listed Maveric Ltd since Additionally, he is also a board member and shareholder of CMS Trust Berhad, an asset management Company with more than RM2 billion under management. Prior to starting his businesses in 2000, he headed the Asian FX & Fixed Income derivatives team for the Emerging Markets Group at Credit Suisse First Boston ( CSFB ). During the 90s, he was Vice President & Money Manager at both Chase Private Bank and later Smith Barnet Asset Management where he managed Middle East private wealth and institutional money. Mr Aljunied graduated from the National University of Singapore with a Degree in double Physics. MICHAEL D. REIZER Americas Mr Reizer joined the Company in 2007 and is responsible for managing the Company s activities in North and South America. Prior to joining KS Energy, Mr Reizer was President and CEO of Bredero Shaw Ltd., a London/Houston based applicator of engineered coating systems to onshore and offshore pipelines. Mr Reizer joined Bredero in 1978 as Vice President, Asia and Middle East Operations, based in Singapore where he was located until 1991, and relocating to London, England as President of the Group. Mr Reizer also served as a Director of the International Pipeline Contractors Association. Prior to joining Bredero Shaw, he held Senior International Marketing positions with major suppliers to the International Oil and Gas Industry. Mr Reizer holds a Bachelor Degree in Biology from Regis University, Denver Colorado, USA. ALFRED SCHWEGLER Europe & Africa Mr Schwegler was appointed as the Regional Director for Europe and Africa of the Group on 1 May 2009, responsible for business activities in Europe and Africa. He sits on the board of Atlantic Oilfi eld Services Ltd since 30 May Mr Schwegler has more than 30 years of experience in the oil and gas business and has proven international experience especially in the North Sea. Mr Schwegler holds a Bachelor degree in mechanical engineering Degree with major in energy. Annual Report

24 Group Structure AS AT 31ST DECEMBER 2009 Distribution and others 54.8% Aqua-Terra Supply Co. Limited* Note % SSH Corporation Ltd* Note 1 100% KS Flow Control Pte Ltd Note 1 100% KS Equipment (Shanghai) Ltd 99.9% PT KS Flow Control 100% KS Distribution Pte Ltd Note 1 100% GlobalTech Group Pte Ltd 80% GlobalTech Offshore & Marine Pte Ltd 70% GlobalTech System Engineering Pte Ltd Note 1 and 2 Note 3 Capital Equipment AND Related SERVICES 100% Sphinx Frontier Ltd 100% Atlantic Oilfield Services Ltd 100% Atlantic Marine Services (Cyprus) Group Limited 100% Atlantic Marine Services Denmark BV 100% Atlantic Marine Services BV 100% KS Discovery (HK) Limited 100% Atlantic Onshore Services BV 100% QIM Ventures Limited 100% Atlantic Marine Service Egypt 100% KS Discoverer 2 Pte Ltd 100% KS Discoverer 3 (HK) Limited 100% KS Discoverer 4 Pte Ltd 100% KS North Sea Rig Pte Ltd 100% KS Oilfield Services Ltd 100% United Oilfield Services Pte Ltd 50% Casadilla Group Pte Ltd 50% Yakki International Pte Ltd 50% Global Oilfield Services Pte Ltd 70% KT Lion Oilfield Services Limited 50% Girdnal Oilfield Services Inc 50% KSAM2 Petrodrill Offshore Inc 100% KS Technical Resources Pte Ltd 100% Specialist Resources International Pte Ltd * Listed on SGX Main Board Note 1: Please note that pursuant to the Business Consolidation, this structure will change upon completion of Business Consolidation Note 2: GlobalTech Offshore & Marine Pte Ltd became a wholly-owned subsidiary of KS Flow Control Pte Ltd on 7 January 2010 Note 3: As at 7 January 2010, GlobalTech Group Pte Ltd held 82% shareholding in GlobalTech System Engineering Pte Ltd 22 Annual Report 2009

25 Other operating income was lower in FY09 due to the reduction in the sale of investments during the year compared to FY08. As a result, other operating income was lower by 38.5%, decreasing from $16.1 million to $9.9 million in FY09. Annual Report

26 Financial Contents Corporate Governance Statement 25 Directors Report 34 Statement by Directors 38 Independent Auditors Report 39 Consolidated Income Statement 40 Balance Sheets 42 Consolidated Statement of 43 Changes in Equity Consolidated Cash Flow Statement 45 Notes to the Financial Statements 47 Statistics of Shareholders 130 Notice of Annual General Meeting 134 Proxy Form

27 CORPORATE GOVERNANCE STATEMENT (the Company ) is committed to maintaining good standards of corporate governance in conducting the Group s business and the Board of Directors of the Company (the Board ) ensures that an effective self-regulatory and monitoring mechanism exists and is maintained. The Company confirms that it has adhered to the principles and guidelines as set out in the 2005 Code of Corporate Governance ( Code ), where applicable, and explanations are provided for areas of non-compliance. BOARD OF DIRECTORS Principle 1: Board s Conduct of its Affairs The Board s primary role is to protect and enhance long-term shareholders value. It sets the overall strategic direction of the Company and supervises the management of the Company (the Management ). It is also responsible for the overall corporate governance of the Company including setting its strategic direction, establishing goals for the Management and monitoring the achievement of these goals. The principal functions of the Board apart from its statutory responsibilities are to: a) set values and standards of the Company and ensure that obligations to shareholders and others are understood and met; b) provide entrepreneurial leadership, approve the strategic and financial objectives, corporate policies and authorisation matrix of the Company; c) oversee the processes for risk management, financial reporting and compliance and evaluate the adequacy of internal controls; approve annual budget, key operational matters, major acquisition and divestment proposals, major funding proposals of the Company; d) review management performance; e) approve the nominations to the Board of Directors and appointment of key management, as may be recommended by the Nominating Committee; and f) assume responsibility for corporate governance framework of the Company. To facilitate effective management, certain functions of the Board have been delegated to various Board Committees, namely Audit, Nominating and Remuneration Committees. Each Board Committee has the authority to examine particular issue and report back to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the Board. Further information regarding the functions of the respective Board Committees is set out in the later part of this Report. The Board conducts regular scheduled meetings on a quarterly basis. Ad-hoc meetings are convened when circumstances require. The Company s Articles of Association (the Articles ) provide for Board meetings to be conducted by way of telephone and video conferencing. Annual Report

28 CORPORATE GOVERNANCE STATEMENT The attendance of the Directors at meetings of the Board and Board committees as well as number of such meetings during the financial year is set out in the table below: Name of Director No. of Meetings Held Board Attendance Audit Committee No. of Meetings Held Attendance Nominating Committee No. of Meetings Held Attendance Remuneration Committee No. of Meetings Held Mr. Kris Taenar Wiluan Attendance Mr. Koh Soo Keong* Mr. Abdulla Mohammed Saleh* (Alternate: Nelson McCallum Gibb) Mr. Lim Ho Seng Mr. Lee Beng Cheng Mr. Wong Meng Yeng Mr. Goh Boon Chye * Dr. Adam Paul Brunet* Sheikh Faisal F.J. Al-Thani* Mr. Woo Peng Kong* * Dr Adam Paul Brunet retired on 28 April 2009 * Sheikh Faisal F. J. Althani retired on 28 April 2009 * Mr Koh Soo Keong was re-designated as an executive director on 1 May 2009 * Mr. Goh Boon Chye resigned on 1 May 2009 * Mr. Woo Peng Kong resigned on 1 May 2009 * Mr. Abdulla Mohammed Saleh was appointed on 1 May 2009 (Alternate: Nelson McCallum Gibb was appointed on 22 December 2009) Principle 2: Board Composition and Balance The Board of Directors comprises the following: Executive Directors Mr. Kris Taenar Wiluan Mr. Koh Soo Keong Non-Executive and Non-Independent Director Mr. Abdulla Mohammed Saleh (Alternate: Nelson McCallum Gibb) Non-Executive and Independent Directors Mr. Lim Ho Seng Mr. Lee Beng Cheng Mr. Wong Meng Yeng There is an independent element on the Board with three independent directors out of six directors of the Company. The size of the Board is reviewed on an ongoing basis and its current size is considered appropriate for the facilitation of effective decision making. As a team, the Board collectively provides core competencies in the areas of oil and gas industry knowledge, legal, accounting, finance, business and management experience. Key information of the Board members is set out on pages 16 and 17 of the Annual Report. 26 Annual Report 2009

29 CORPORATE GOVERNANCE STATEMENT The duties and responsibilities of the executive directors are clearly set out in their service agreements and the duties and responsibilities of the non-executive directors are clearly set out in their Engagement Letters. Each Director is responsible for his own training needs and utilizes a budget provided by the Company for his training requirements to keep abreast developments in law, regulation, accounting and industrial practices and changes in technology. The Company has orientation programmes for newly appointed directors to familiarise themselves with the Company s senior management, culture, business, governance and best practices. An orientation programme was conducted for a newly appointed director, Mr Abdulla Mohammed Saleh, in FY2009. Principle 3: Chairman and CEO The Board is of the opinion that there is an independent element on the Board to enable independent exercise of objective judgment on corporate affairs of the Group and that there is a good balance of power and authority. As such, there is no need for the role of the Chairman and the CEO to be separated. The Group s Executive Chairman and Chief Executive Officer ( CEO ), Mr. Kris Taenar Wiluan plays an instrumental role in developing the business of the Group and provides the Group with strong leadership and vision. He is responsible for the operational and strategic policies of the Group. The Group s Executive Chairman also has the responsibilities of setting the meeting agenda of the board meetings, leading the other Board members, promoting high standards of corporate governance and maintaining effective communication with shareholders of the Company. He ensures that board meetings are held when necessary. He reviews most board papers before they are presented to the Board and ensures that board members are provided with complete, adequate and timely information. As a general rule, board papers are sent to directors in advance in order for directors to be adequately prepared for the meeting. Management staff who can provide additional insight into matters under review to be discussed, are invited to attend board meetings, as and when necessary. The two Executive Directors and the Management Board are responsible for the day-to-day operations of the Company. There is clear division of responsibilities between the Executive Chairman and the Executive Directors. The Executive Chairman and CEO s performance and appointment to the Board is reviewed periodically by the Nominating Committee ( NC ) and his remuneration package is reviewed by the Remuneration Committee ( RC ). Lead Independent Director ( LID ) Mr Lim Ho Seng was appointed LID on 1 May As LID, Mr Lim is the principal liaison to address shareholders concerns, in which direct contact through normal channels of the Chairman/CEO or CFO has failed to resolve or for which such contact is inappropriate. His other specific roles as LID are as follows: a) act as liaison between the independent directors of the Board and the Chairman of the Board; b) advise the Chairman of the Board as to the quality, quantity and timeliness of the information submitted by the Company s management that is necessary or appropriate for the independent directors to effectively and responsibly perform their duties; c) assist the Board and Company officers in better ensuring compliance with and implementation of the Governance Guidelines; and d) serve as a liaison for consultation and communication with shareholders. Annual Report