On Course Through Excellence

Transcription

1 MICLYN EXPRESS OFFSHORE LIMITED ANNUAL REPORT 21 Miclyn Express Offshore Limited Inaugural Annual Report 21 On Course Through Excellence

2 Contents Chairman s Address 1 CEO s Review of Operations 2 Information on the Company 1 Corporate Governance Statement 2 Directors Report 34 Remuneration Report 39 Financial Highlights 5 21 Financial Statements 52 Additional Stock Exchange Information 126 Appendix MEO Fleet List 128

3 Miclyn Express Offshore Limited Inaugural Annual Report 21 1 Chairman s Address enable the business to execute its Australian growth strategy. It was important that the business positioned itself to take advantage of the growing opportunities in Australia s North West shelf. Already MEO has been able to use Samson s customer relationships and operational platform to position the combined business to win contracts in Australia, particularly in relation to near-shore civil construction work around Barrow Island. The next phase of the strategy involves positioning the combined business to win offshore contracts using existing MEO vessels. Both MEO and Samson are already working hard to secure contracts for our fleet in this space. Mr Neil Hamilton Chairman It is a pleasure to present the first Annual Report for Miclyn Express Offshore Limited ( MEO or the Company ) (ASX:MIO) as a publicly listed company. The financial year ended 3 June 21 ( FY1 ) covers the periods both before and after the successful Initial Public Offering ( IPO ) that took place on 26 March 21. As such the results require close analysis and understanding of non-recurring transactions and cost, and the changed capital and financing structure, to develop a clear view of the normalised earnings of the business. The statutory EBITDA forecast in the prospectus dated 2 March 21 has been met for FY1 and the Company is able to confirm that it remains comfortable with the statutory EBITDA forecast for calendar year 21 ( CY1 ). The business has performed largely in line with expectations and market conditions appear to remain stable and sound. During the financial year, the Company continued to execute its fundamental strategy of growing and renewing its fleet and securing long-term contracts. The strong margins and cash flows generated by the business will continue to fund the Company s organic growth in the years ahead. We continue to find investment opportunities yielding attractive returns and will continue to put the Company s free cash to good use. Since IPO, the Board has been active in assessing risk across the organisation and has established an Audit, Risk Management and Safety Committee to ensure the Company is well governed, adopts a value-based approach to risk-taking, provides a safe working environment for its employees and other stakeholders, and complies with regulatory and reporting requirements. We are confident of capturing new opportunities against the backdrop of a positive outlook for the oil and gas industry in all our major operating regions. The Board thanks the management team and staff at MEO for their achievements and commitment during a year of significant change for the Company. We look to the year ahead with optimism and expect to deliver attractive earnings growth and value to our shareholders. Whilst the IPO required a significant commitment of time from management, its successful completion ensures that MEO has a sound balance sheet, with sufficient access to finance and free cash flows from operations to support strong growth. In addition to the IPO, MEO also completed the 5% acquisition of Samson Maritime Holdings Pty Ltd ( Samson ). This acquisition provided an immediate platform that will Neil Hamilton Chairman 15 September 21

4 2 Miclyn Express Offshore Limited Inaugural Annual Report 21 CEO s Review of Operations Dear Fellow Shareholders, For the financial year ended 3 June 21, MEO achieved strong earnings growth in its first year as a publicly listed company. Revenues increased by 19%, and EBITDA by 2%, against prior year. Whilst revenues were marginally below our statutory prospectus forecast, EBITDA outperformed that same forecast by 1%. We continued to see strong margins, having achieved an overall gross profit margin before depreciation and amortisation of 58.8%. Fleet utilisation was satisfactory, except in the challenging segment in which our Tug and Barge fleet operates. Slower than anticipated restoration of offshore construction activity and increased supply negatively affected this segment. Overall utilisation 1 was at 71% in FY1, dragged down largely by the Tug and Barge fleet which represents 25% of the overall fleet in absolute vessel numbers, but only 11% of FY1 revenue. Whilst fleet utilisation was below expectations, we achieved better than anticipated earnings quality as we realise our strategy of optimising long-term utilisation, whereby we increasingly move towards more specialised vessels which yield better margins and attract contracts of longer duration. We anticipate fleet utilisation to trend upwards in the coming financial year. Our returns and margins are robust and I expect looking ahead that these will continue to be achievable barring another global catastrophic event. The consistent execution of the strategy should drive utilisation further up, enhance margins in absolute dollar terms, and generate a positive outlook for the future growth of MEO. MEO had a very good year in terms of Health, Safety, Quality and Environment ( HSQE ) performance with zero Lost Time Incidents ( LTIs ) against a landscape of 7.2 million man hours worked. MEO s clients recognise this performance and increasingly make MEO the service provider of choice for their specialised support vessel needs. Macro Uncertainty with Asia Pacific Leading the Post Global Financial Crisis Recovery As we see the spill over effects of the global financial crisis that plagued the world economy in 28-9, there continues to be a large degree of uncertainty in the macroeconomic environment. One of the major hurdles for the global economy is the process of stabilising the over-leveraged economies, in particular the Euro zone countries. The unsustainably high fiscal deficits that resulted from government-injected stimuli in such economies will now need to be managed downwards, whilst balancing risks of stagnation and inflation. This is likely to generate further volatility in financial and resources markets, especially in the developed world and for an unknown period of time. The risk of a double-dip recession is a looming concern, but whether or not it will come about is yet to be seen. It appears that Asia Pacific, where MEO generates much of its revenue, is staging a more vigorous and balanced recovery. The region has achieved stronger growth, lower unemployment, and lower debt than major developed economies in the preceding twelve months. There are a number of factors supporting the Asia Pacific recovery. Export-orientated economies in the region are benefiting from trade normalisation. Industrial production and 1 Calculated as the average over all vessels of total revenue days divided by 365 days. 2 Brake horsepower.

5 Miclyn Express Offshore Limited Inaugural Annual Report 21 3 exports are being boosted by the bottoming of the inventory cycle both domestically and abroad. Capital is flowing into the region as the growth differential is realised and risk appetite increases, creating liquidity. All of this is occurring against a backdrop of resilient domestic demand, strong private and public sector balance sheets and timely financial stimulus enabled by low pre crisis sovereign debt levels. It appears the outlook for our major operating region remains positive. Oversupply Concerns Remain, for Specific Vessel Segments Newbuilding orders came to an almost complete standstill in 29 as offshore vessel providers fortified their balance sheets. Prior to the global financial crisis a number of industry players implemented highly geared, speculative shipbuilding strategies to take advantage of the strong increase in demand (and as a result in rates) for vessels as oil and gas majors, nationals and independents increasingly moved their operations offshore and further afield. When the oil price fell below US$35 per barrel in 28, the oil majors began deferring projects just as the influx in vessel supply was coming into the market. This put pressure on rates and utilisation, particularly in the more crowded generic vessel segments such as Platform Supply Vessels ( PSVs ) and Anchor Handling Tug/Supply vessels ( AHTS ) where most of this investment took place. Whilst a large portion of vessels that were ordered during the pre global financial crisis boom period have now been absorbed by the market, there still appears to be a residual supply issue, particularly in the higher specification vessel segments such as larger PSVs and AHTS over 16, BHP 2 (designed for deep water operations). These categories are likely to come under pressure despite an increase in deeper water exploration activities. The recent Deepwater Horizon accident in the US Gulf and the fact that a large number of the new drilling rigs being built for this segment will be equipped with Dynamic Positioning capabilities will contribute to this pressure. It is important to note that MEO is currently not active in crowded vessel segments such as AHTS and PSVs. We would only consider entry into these segments against long-term, low risk contracts with strategic

6 4 Miclyn Express Offshore Limited Inaugural Annual Report 21 CEO s Review of Operations (cont.) customers. We prefer to concentrate on niche vessel segments that attract longer term charters and are less exposed to spot rate fluctuations. It is also important to realise that the majority of field development in our main operating regions South-East Asia, Australia and the Middle East are expected to be predominantly in shallower waters. Continued Strong Industry Outlook The oil and gas companies are fighting a constant battle against resource depletion. New fields need to be discovered and brought on line and new frontiers need to be explored in order to maintain production and proven reserves on their balance sheets. Global growth in demand for oil and gas shows no significant signs of slowing and most experts and industry observers seem to agree that it is safe to assume the oil price will remain robust. as Asia for reasons of specification (vessels are over specified for most operations in this region) and the impact of distance on the cost of mobilisation and demobilisation. Drilling programs may be delayed, however, due to regulator and oil company driven safety enhancements, but increased requirements for safety stand by vessels may contribute to strengthening demand. Our Strategy is Straight Forward: Maximise Utilisation, Grow and Renew the Fleet Our greatest strategic emphasis at MEO is on maximising the utilisation of our fleet. In order to provide stable revenue streams and improve earnings visibility whilst at the same time growing margins and thus returns, MEO persistently seeks to migrate more of its fleet towards long-term charters. There seems to be a consensus among analysts that Asian oil demand will substantially exceed production by 23. In addition, the Asian region contains almost half of global undeveloped shallow water oil and gas fields. We expect that the combination of increasing demand and the large number of undeveloped fields will drive strong demand for our vessels over the medium term in Asia. The Deepwater Horizon accident is unlikely to have any significant impact on the supply side of our markets in Asia. The vessels that may look outside of the Gulf of Mexico for work during the temporary deepwater drilling ban are unlikely to be redeployed as far afield We aim to maintain a vessel mix that is conducive to long-term charterability. As mentioned, MEO consciously avoids the highly competitive Offshore Service Vessel ( OSV ) sub segments such as AHTS and PSVs which presently suffer from oversupply, although the potential to participate in these segments still exists against long-term contracts with existing customers. We also aim to actively manage down our exposure to project work in segments such as the Tug and Barge fleet. MEO s main focus is to operate in niche vessel segments and to customise existing vessels and newbuildings to the needs of our customers, to assist in obtaining long-term charter opportunities.

7 Miclyn Express Offshore Limited Inaugural Annual Report 21 5 Our strategy is straight forward: 1. Fleet renewal Crew/Utility Vessels We will maintain a young fleet through an ongoing fleet renewal program focusing particular attention on Crew/Utility Vessels. Under the program, the Group will dispose of older, lower specification vessels that are less efficient to run, and which end their lives in the spot market. We will replace these with new, higher specification vessels that deliver top line growth through higher charter rates, improved utilisation and lower costs to operate. 2. Fleet expansion OSVs The Group will focus on continuing to add to its fleet of specialised OSVs. These vessels are expected to be in high demand going forward and are likely to attract long-term charters. We will continue to focus a good proportion of our capital expenditure on the OSV fleet expansion due to the high margins and strong returns they achieve. We currently have five newbuildings in progress in this segment. The OSV newbuildings are targeted towards upcoming opportunities which are visible as a result of our close co-operation with key customers. 3. Repositioning in Tug and Barge fleet The market conditions we have experienced in the year under review were challenging and the expectation is that these conditions (in a more moderate form) will continue for some time longer. This portion of our fleet operates mostly in project type activity, supporting offshore construction logistics. We will be assertively pursuing the longer term opportunities for this segment and attempt to ensure improved utilisation of these vessels by forming strategic alliances with some of our major clients. The work we recently secured with DB Schenker in Australia for a combination of Tugs and Barges is a good example of the kind of opportunity we will be pursuing and we expect to see more of. 4. Customer led focus and support infrastructure Strong, long-term relationships with many of our core customers is an important aspect of our business. These relationships promote stable and increasing revenues and cross selling opportunities. The Group will continue to develop strategic relationships with core customers in order to ensure charter renewals and to increase the number of vessels being chartered by individual customers as new opportunities come online. We will leverage on these relationships to cross-market our diverse fleet and penetrate a variety of regions through our customers geographically diverse operations. These long-term relationships in key operating locations have enabled us over time to build on the ground support centres in these geographies. In turn we are able to leverage off this position to secure additional long-term business with the very same or sometimes different customers in that region as it is increasingly viewed that operationally sensitive services such as offshore vessels need close quarter back up. Few of our competitors are able to provide this due to lack of scale in the relevant location. In addition to these four key pillars of our strategy, MEO will continue to actively but selectively pursue valve-accretive acquisition opportunities with revenue and cost synergy potential. We will seriously assess opportunities for expansion into our target geographic markets, as well as opportunities to acquire more vessels that can service our existing customers growing requirements. Given the highly fragmented nature of the industry, a number of opportunities exist, but we are conscious of maintaining our balance sheet discipline and providing value to shareholders.

8 6 Miclyn Express Offshore Limited Inaugural Annual Report 21 CEO s Review of Operations (cont.) PERFORMANCE ACROSS VESSEL SEGMENTS Offshore Support Vessels ( OSVs ) MEO s OSV fleet had a particularly strong year in FY1 achieving an overall utilisation of 86%. Revenues were up 86% on prior year, with a gross profit margin before depreciation and amortisation of 71%. This performance is underpinned by full year revenue contribution of seven new vessels added in the prior financial year, along with the introduction of four new vessels during FY1. MEO continues to expand its OSV fleet with another five vessels under construction in the Batam Shipyard, three of which are scheduled to join the fleet in financial year ended 3 June 211 ( FY11 ). The Company continues to see strong returns on capital expenditure spent in this vessel segment, as well as a number of long-term charter opportunities. Tugs and Barges The Tug and Barge fleet only contributes a relatively small proportion of our group revenues, but utilisation remained challenging in FY1. MEO has seen a pick up in activity in the first half of FY11, but utilisation has been negatively impacted by the mobilisation of tugs and barges for a major civil construction logistics contract with DB Schenker for Gorgon. Rates are getting slightly stronger since their post global financial crisis slide, however competition remains strong as vessels compete for short term project work. Over time MEO will favour chasing longer term charter opportunities such as the recent project win with DB Schenker (see ASX announcement dated 23 August 21) and aim to forge alliance type relationships with one or more key customers in this segment to further enhance utilisation. Crew/Utility Vessels MEO s Crew/Utility Vessel fleet continued to deliver a stable, highly visible revenue stream in FY1 and achieved strong utilisation at 83%. Revenues were up 6% on prior year, with a gross profit margin before depreciation and amortisation of 51%. Fleet renewal activity will ramp up with six new vessels already purchased and scheduled to commence work in FY11. MEO also plans on disposing some of the more mature vessels in the fleet in FY11. This renewal process will drive up utilisation and earnings across the fleet in combination with modest disposal gains. Shipyard Operations The Batam Shipyard is largely an internal strategic asset, the capacity of which is mostly used for internal newbuilding and fleet maintenance requirements. There is however a modest revenue stream from third party clients for conversions and ship repair that offsets a significant proportion of the fixed costs incurred on this facility. The fixed costs are modest as a result of the prevailing system of carrying out projects with a large sub-contract content. At the same time this asset gives MEO significant cost advantages.

9 Miclyn Express Offshore Limited Inaugural Annual Report 21 7 During FY1, the Shipyard continued to execute the Company s newbuilding program. The major highlight was the launch of Miclyn Constructor I, a work and accommodation barge that has an eight point mooring system, a pedestal crane and accommodation for 268 people. The vessel secured a three year contract (plus 2 x 1 year extention options) in Malaysia that commenced immediately after completion of the vessel at a very attractive rate of return. A further five OSVs are under construction, three of which are scheduled for completion in FY11. Regional Performance and Outlook South-East Asia continues to perform well and promises further growth opportunities. Thailand continues to produce very attractive results as we leverage off our longstanding relationships with customers like Chevron and PTT E&P. Malaysia represents a growth opportunity and we are actively seeking to deploy more vessels into the region through our recently developed local flag structure. Indonesia is a highly protected market with significant potential for growth. Indonesian cabotage law constitutes an important barrier to entry, but we should be well positioned through our recently established joint venture with local partner PT Berlian Laju Tanker to turn this barrier into an opportunity. Additionally we foresee expansion of revenues from countries like Bangladesh, Vietnam, Cambodia and Myanmar. The Middle East, operated out of our United Arab Emirates ( UAE ) regional office, remains an important operating region for MEO. We are strongly positioned in this market with 42 vessels currently deployed in the region supported by infrastructure in strategic locations. The Dubai Crisis had a significant impact on the civil construction market in the UAE in FY1. We did however manage to redeploy the few vessels we had working in this segment into the Persian Gulf and we continue to see strong utilisation of our entire Middle Eastern fleet, with the current hotspots being Saudi Arabia, UAE, Qatar and Iran. The Australian market is showing significant upside potential, with a number of major projects coming online including the much anticipated Gorgon project. We are well positioned to win contracts in Australia through our recent 5% investment in Samson. At present we see a number of opportunities in the near shore civil construction space, such as the development of Barrow Island and the Queensland coal seam gas export facility developments. As opportunities in the offshore space arise we will be offering existing MEO OSVs that are well-suited to the work and the operating environment. Integration and harvesting of synergies in relation to this acquisition are well underway. We continue to see short-term project opportunities in India, and we will continue to actively deploy vessels into the region each year when the monsoon season in South-East Asia slows demand for our project driven fleet. There are a number of local providers in India, making it a highly competitive environment for a long-term ongoing presence, but we continue to see opportunities for project work in the subsea, construction, seismic and logistics support spaces. Strong Balance Sheet, with No Significant Extra Gearing Required to Fund Attractive Growth We have a strategy of keeping for the foreseeable future our balance sheet conservatively geared. We have a US$12 million five year term loan in place, with an undrawn US$3 million additional revolving credit facility. We also have a relatively small amount of location-specific asset-backed debt in place in joint ventures. Our continuing capital expenditure program is funded primarily out of free cashflow from operations. The self-imposed constraint on gearing creates an important discipline in the business, whereby each investment is carefully reviewed against benchmark opportunities to ensure that we accept only those new opportunities which are high-yielding and/or strategically significant. HSQE Remains Our Top Operational Priority Over the years MEO has built a strong culture of awareness of safety both in the Shipyard in Batam and on board our vessels, with deeply embedded systems and enthusiastic commitment across the entire organisation. We are world class in the field of HSQE performance, with zero lost time injuries for fleet operations in 2.6 years or 15 million man hours as at 3 June 21. A good deal of top management time is directed towards delivering and maintaining the safety message, interacting with staff and conducting management visits. I am very proud of what we have achieved in this field and of our team of professionals who have driven this discipline to where it is now. It is my firm belief that management commitment and visibility have been key to achieving our level of success.

10 8 Miclyn Express Offshore Limited Inaugural Annual Report 21 CEO s Review of Operations (cont.) Our earnings remain highly visible given the strategic push to move our fleet towards longer term charter opportunities. The relatively small and reducing component of our fleet exposed to the spot market will continue to present us with some challenges, but we believe we are well placed to deliver strong earnings growth.

11 Miclyn Express Offshore Limited Inaugural Annual Report 21 9 CEO s Review of Operations (cont.) Continued Intense Focus on Operating Expenditure and Overheads At MEO we have a continuous focus on cost. An annual cost management exercise considers all expenditure types through the business. Through vigilance and continuous improvement in areas such as procurement, financing and vessel technical maintenance systems, we strive to contain our overheads and reduce our vessel operating costs to maintain industry competitive levels. Our overhead cost base has however increased in FY1 as a result of the additional costs associated with becoming a listed company. We also recently implemented SAP which comes with additional cost, but will inevitably improve back office efficiency and free up our people to spend time on value added initiatives such as strategic oversight and the improvement of working capital. People and Systems Are the Backbone Our values are clear: Safety as a top priority, Honesty, Diversity, Excellence and Passion. These are very much alive and deeply embedded throughout the organisation and our people are regularly reminded of and measured against these values. We continually strive to be an employer of choice and actively promote diversity within the organisation. Gender diversity is important to MEO in the Singapore head office. The gender split currently stands at 45% male and 55% female. We also employ an eclectic mix of nationalities from 22 different countries! The pre global financial crisis pressure on our ability to attract and retain competent senior vessel crew members has since significantly eased. As we continue to grow as an organisation, the capability of our people becomes even more important. We have high quality managers and staff across all our business segments and operating regions. We have sound policies in place to attract and retain talent, including an employee share option scheme for management and a performance bonus scheme aligned with shareholder value and Company performance. We strive to ensure that MEO is a safe, desirable and enjoyable place to work. Shareholder Returns Between listing and 3 June 21, the share price fell by 24% from the listing price of A$1.9 to A$1.45. While this is disappointing, the movement of Australian and international equity markets suggest that to a large degree macroeconomic factors have played a part in the share price, and we are hopeful that continued realisation of our strong revenue and earnings growth will be reflected through share price improvement. Our dividend policy announced in the listing prospectus provides for dividends to be paid at 2% to 4% of net profit after tax ( NPAT ) for the period from listing to 31 December 21. NPAT for the period from listing to 3 June 21 was US$9. million. Dividends will be unfranked as they are paid from a non-australian entity. The Board has already approved a dividend reinvestment plan, and further details will be provided closer to the dividend announcement date. An Exciting Year Ahead We remain comfortable with our statutory CY1 EBITDA prospectus forecast. Beyond CY1, we anticipate continued strong top line growth for the existing fleet plus scheduled newbuildings. We are seeing a strong pipeline of commercial opportunities which supports the utilisation expectations underpinning our forecasts. Uncommitted, blue sky investment and growth opportunities are not factored into our growth expectations and represent additional upside if realised. Our earnings remain highly visible given the strategic push to move our fleet towards longer term charter opportunities. The relatively small and reducing component of our fleet exposed to the spot market will continue to present us with some challenges, but we believe we are well placed to deliver strong earnings growth. I would like to thank our clients, our staff ashore and at sea, our suppliers, our bankers and our board and shareholders for their strong support in the past year. FY1 has been an exciting year with a strong performance achieved and we look forward to proving that we can continue to deliver on our promises! This is overlaid with a clear and simple management organisation structure and strong and mature systems to make it all work to the best possible degree of efficiency and effectiveness. I would like to pay tribute to our people for navigating their way through a period of exceptional change. Your commitment and quality will serve our new shareholders well. Diederik de Boer Chief Executive Officer 15 September 21

12 1 Miclyn Express Offshore Limited Inaugural Annual Report 21 Information on the Company Our Business MEO is a leading provider of service vessels to the expanding offshore oil and gas industry across South-East Asia, Australia and the Middle East. Competitive Advantage Broad range of services across the entire oil and gas activity chain The ability to provide a wide range of service vessels across all phases of the offshore oil and gas cycle is a source of significant valueadd to existing and potential customers and is a key differentiating factor between MEO and its core competitors. STAGES IN THE OFFSHORE OIL AND GAS CYCLE Exploration Development Production Offshore Civil Construction Phase Length 1 to 3 years 2 to 4 years 5 to 55 years 1 to 3 years Sensitivity to oil price High Medium Low None Percentage of MEO revenue, FY1 1 22% 2% 48% 1% OSV s Tugs and Barges Crew/Utility Vessels Coastal Survey Vessels 1 Excludes Shipyard revenue, e which represents 1.2% of total revenues

13 Miclyn Express Offshore Limited Inaugural Annual Report Large, young and diverse fleet With a fleet of 116 vessels (excluding newbuildings) at the time of this report, MEO is a leading offshore oil and gas service vessel company by fleet size across the regions and sectors in which it operates. The fleet is well diversified, consisting of OSVs, Crew/ Utility Vessels, Tugs, Barges and Coastal Survey Vessels ( CSVs ). MEO can provide comprehensive vessel support to its customers. As a result, the size and range of vessels in the fleet makes MEO an attractive provider of support vessel solutions. Consolidation of service providers is increasingly important to MEO s customers as it enables them to focus on their core business. MEO maintains a strategy of fleet renewal to ensure operational efficiency and attractiveness to customers. The importance of vessel age is also driven by increasingly strict environmental standards and regulatory requirements. Further, major oil companies increased emphasis on safety standards is adding to the demand for newer vessels, with higher levels of integral safety becoming an increasingly important criterion in the tendering process. Fleet renewal also provides benefits through greater operational reliability, higher fuel efficiency, and lower maintenance costs. Newer vessels with high specifications generally achieve higher DCRs than older vessels or vessels with lower specifications. AVERAGE AGE OF FLEET BY VESSEL SEGMENT Jun 7 3 Jun 8 3 Jun 9 3 Dec 9 3 Jun 1 OSVs Crew/Utility Vessels Tugs and Barges CSVs Long operating track record and deep customer relationships MEO has a 3 year track record (including through its predecessor companies) of service to the offshore oil and gas industry. Over this time, the Group has developed strong relationships with a number of high quality customers, including Chevron, Saipem, Larsen & Toubro, PTT, CGG Veritas and McDermott. These relationships continue to generate repeat contracts as MEO has become a provider of choice through its track record of operational excellence.

14 12 Miclyn Express Offshore Limited Inaugural Annual Report 21 Information on the Company (cont.) Support infrastructure in key operating regions In addition to the comprehensive technical support available through their head office, MEO has operational support centers in Indonesia (including a Shipyard in Batam), Australia, Saudi Arabia, Thailand and the UAE. Through these centers, the Group is able to provide efficient technical response and support to its fleet and reduce vessel downtime. The centers are located in close proximity to the major offshore oil and gas fields in which MEO operates, enabling efficient routine technical management and effective customer response and support. These support centers are only viable with scale, providing a competitive advantage over smaller operators who are forced to use third party providers and are thus unable to service their fleet with the same level of reliability or cost-effectiveness. Vertically integrated business model MEO owns a Shipyard in Batam, Indonesia which provides a number of significant competitive advantages including: Control over cost, timing and quality of newbuilding activity as well as repair and maintenance of fleet Ability to prioritise internal work (Newbuildings, customisation, conversions, repair and maintenance) Lower costs (avoiding the margin which external shipyards typically command) Ability to convert or customise vessels to meet specific customer requirements resulting in higher DCR s, utilisation and increased switching costs See page 18 for further information regarding the Shipyard business. Geographically diversified MEO has a diverse fleet profile and has built a presence in a number of regional jurisdictions. The mobility of its asset base means that vessels can be readily redeployed as the comparative attractiveness between operating locations changes. Strong barriers to entry Strong HSQE record The Group maintains comprehensive HSQE practices across its entire fleet to ensure the safe operation of its vessels and prevention of pollution and to provide an injury and incident free work environment. Strengthening HSQE requirements in the industry create high barriers to entry to new competition. The HSQE track record of vessel providers is an important criterion for customers when awarding a charter contract. MEO has an exemplary HSQE record with zero lost time injuries for fleet operations over the past 2.6 years during which 15 million man hours have been worked 2. Established customer relationships, diversified fleet portfolio, scale, support infrastructure and HSQE record make it difficult for MEO s business model to be replicated. This has allowed the Company to build strong and sustained working relationships with key oil and gas players (both national oil companies and independents as well as their preferred contractors) in major operating locations across Australia, South-East Asia and the Middle East, and continues to provide new and exciting opportunities that would not typically be available to new, small, or unproven entrants. 2 As at 3 June 21.

15 Miclyn Express Offshore Limited Inaugural Annual Report MEO Operating Locations MEO s main areas of operation include South-East Asia, Australia and the Middle East. The Group is specifically looking to grow its existing operations in Australia, Indonesia and Malaysia, whilst maintaining its dominant market share in growing markets such as Thailand and the Middle East. The Group also periodically relocates vessels to India during the South-East Asia monsoon season to take advantage of the seasonal project work. Regional performance and outlook are discussed in detail in the CEO Review of Operations section. operating regions History and Development MEO has been operating through its predecessor companies since the 197s. The current business was established in November 27 through the combination of the OSV, Tug, Barge and Shipyard business of Miclyn Offshore Pte Ltd ( MO ) and the Crew/Utility Vessel business of Express Offshore Transport Pte Ltd ( EOT ). Since the merger of EOT and MO in November 27, the following benefits have been achieved: Integration of the two businesses to achieve cost and revenue synergies which continue today; 42 vessels added to the fleet while continuing the fleet renewal plan, resulting in an increase in the number of vessels to 116 as at the time of this report (excluding newbuilds); Shifting of the majority of vessels onto long-term contracts, resulting in high and sustained utilisation levels for all vessels, particularly OSVs and Crew/Utility Vessels; 5.% investment in Samson: 11 vessels added to the fleet and platform provided for MEO to participate in growing activity in Australia s North-West Shelf Establishment of a joint venture with PT Berlian Laju Tanker Tbk ( BLT ), a major international shipping line in Indonesia

16 14 Miclyn Express Offshore Limited Inaugural Annual Report 21 Information on the Company (cont.) 1976 Commenced offshore vessel operations in South-East Asia 24 Commenced operations in India First offshore civil construction contract 1978 Commenced operations in the Middle East 1982 Focused on specialised OSVs and Barges 1982 Commenced Crew/Utility Vessel operations 1995 Commenced operations in Australia 1999 Achieved ISM Code compliance EOT entered into the Uniwise Joint Venture in order to service Thai territorial waters 26 Acquired Shipyard in Batam, Indonesia 27 Miclyn Offshore and EOT merged to form MEO 28 Fleet expanded by 14 vessels 29 Fleet expanded by 15 vessels 21 Listing of MEO on ASX Completion of 5% acquisition in Samson Established Joint Venture with BLT in Indonesia Operations MEO operates a vertically integrated business model through its: Vessel Chartering business provision of vessels to customers engaged across all phases of the offshore oil and gas cycle and in the marine civil construction industry (Vessel Chartering was responsible for 98.8% of FY21 revenue); and Shipyard business provision of in-house newbuilding, conversion, repair and maintenance services as well as third party conversion, repair and maintenance services when spare capacity exists (the Shipyard was responsible for 1.2% of FY21 revenue).

17 Miclyn Express Offshore Limited Inaugural Annual Report MEO is a leading provider of service vessels to the expanding offshore oil and gas industry across South-East Asia, Australia and the Middle East

18 16 Miclyn Express Offshore Limited Inaugural Annual Report 21 Information on the Company (cont.) Vessel Chartering Business MEO operates a young and diverse fleet of 116 vessels 1 across the oil and gas activity supply chain and civil construction segment. OSVs Crew/Utility Vessels Description OSV is a broad classification of vessels that provide a variety of transportation, accommodation and support services across the oil and gas cycle. Vessel sub categories include Anchor Handling Tug ( AHTs ), Anchor Handling Tugs Supply Vessels ( AHTSs ), Multi Purpose Vessels ( MPVs ), straight supply and utility vessels and specialised vessels that are used for specific purposes such as seismic survey. The Group is active across most sub-categories with the major exception of AHTSs and PSVs which are highly competitive sectors. Number of vessels 1 16 Operating regions South-East Asia, Middle East, India, Norway and Australia Key customers CGGVeritas, Chevron, Fugro, Leighton, IOOC, Saipem, Petronas Typical contract duration 1 to 3 years % FY1 revenue 2 5% FY1 Utilisation 86% Description Crew/Utility Vessels are used principally for the fast transportation of personnel and critical supplies to and from (or between) oil and gas offshore platforms. Crew/Utility Vessels are used primarily in the production phase of the offshore oil and gas cycle; however, they also provide support services to offshore construction projects, as well as to the seismic industry. Number of vessels 2 65 Operating regions South-East Asia and Middle East Key customers CGGVeritas, Chevron, Nippon Steel, McDermott, IOOC, PTT, Barwil, Saudi Aramco, Dubai Petroleum Typical contract duration 1 to 3 years % FY1 revenue 2 38% FY1 Utilisation 83% 1 As at the time of this report, excluding newbuildings. 2 Excludes Shipyard revenue, which represents 1.2% of total revenues

19 Miclyn Express Offshore Limited Inaugural Annual Report Tugs and Barges Coastal Survey Vessels Description Barges are mainly used in the development phase of the offshore oil and gas cycle for the transportation of oilfield equipment, pipes and other heavy steel structures on deck. They are also used in the transportation of granite and stone for marine civil construction and land reclamation projects. Tugs are used to tow barges to and from work locations. Number of vessels 1 8 Tugs, 21 Barges Operating regions South-East Asia, Middle East, India and Australia Key customers DB Schenker, Global Industries, McDermott, CPC, Saipem, NPCC, CUEL Typical contract duration 1 to 6 months % FY1 revenue 2 5% Tugs, 6% Barges Description Primarily used in near-shore civil construction projects such as port development and dredging. Number of vessels 1 6 Operating regions Australia Key customers Van Oord, Boskalis, Leighton, Jande Nol Typical contract duration 1 to 6 months % FY1 revenue 2 1% FY1 Utilisation 64% FY1 Utilisation 38% Tugs, 37% Barges

20 18 Miclyn Express Offshore Limited Inaugural Annual Report 21 Information on the Company (cont.) Shipyard Business MEO uses its Shipyard in Batam, Indonesia as a berthing base for its South-East Asian fleet, for in-house newbuilding, conversion, repair and maintenance work and for third party conversion, repair and maintenance work. Traditionally, the Shipyard operates as a strategic asset for internal use, and third party revenues are limited to opportunistic use of infrastructure for third party repair and maintenance work. The Shipyard occupies a land area of approximately 133,35sqm (including a 6,562sqm slipway that can accommodate vessels of approximately 8m in length and Barges of approximately 1m in length). It has sea frontage of approximately 216m and a 1m jetty. MEO has the ability to construct steel hulled vessels (OSVs, Tugs and Barges) in the Batam Shipyard and currently has five OSVs under construction: Newbuildings are targeted towards niche industry segments that are likely to be chartered on a long-term basis and yield attractive rates of return. MEO has the ability to customise vessels throughout the build process to satisfy specific customer requirements, providing particular flexibility to meet specific commercial opportunities beyond what is typically available through external builds. People MEO employs 82 staff including 12 permanent Shipyard staff, 163 shorebased staff and 555 seafarers 1. The Group has an experienced and incentivised management team with a demonstrated track record of delivering strong results. Vessel Type Expected completion Constructor II Accommodation Work Barge Oct/Nov 21 Magellan I & II AHT Mar/Apr 211 Sovereign I & II Multi Purpose Nov/Dec 211 ORGANISATIONAL STRUCTURE Chief Executive Officer Diederik De Boer Chief Commercial Officer Ashley Robinson Chief Operations Officer Darren Ang Chief Financial Officer Nick Gleeson Chartering / Business Development Fleet Operational and Technical Compliance Group General Counsel Human Resources Shipyard Marketing Group HSQE Accounting and Financial Control Newbuilding / Engineering Investor Relations Fleet Management Treasury Operations Crewing Financial Planning and Analysis Technical Purchasing Information Technology 1 As at 3 June 21, includes Joint Venture staff

21 Miclyn Express Offshore Limited Inaugural Annual Report Senior Management Team Diederik de Boer Chief Executive Officer Diederik, 57, is responsible for the overall execution of MEO s corporate and business strategies and plans. He has 3 years of experience in the maritime industry. Diederik has worked with the MEO Group and its predecessor companies since 1991, when he was appointed the general manager of CW Marine Services (Singapore) and regional director of SvitzerWijsmuller. From 1979 to 199, he worked in the same industry for SMIT, in which his last position was as marketing and operations manager, where he was responsible for the Far East offshore vessel fleet. Diederik has a bachelor s degree from the Erasmus University Rotterdam in law and a MBA from the Graduate Institute of Management in Delft. Darren Ang Chief Operating Officer Prior to joining EOT in 25, Darren, 39, was employed as an assistant engineer at A.P. Moller from May 1991 to February 1992, a petroleum surveyor at Det Norske Veritas from November 1994 to August 1995 and a marine-related consultant at Bureau Veritas from October 1997 to May He also worked at SvitzerWijsmuller from May 1999 until joining EOT. During his tenure at SvitzerWijsmuller, Darren held various positions in the company, including operations manager, deputy general manager and general manager. Between September 1995 and September 1997, Darren attended the University of Newcastle upon Tyne, where he graduated with a bachelor s degree (first class) in marine engineering. Darren is also a member of the Institute of Marine Engineers, the Society of Naval Architects and Marine Engineers and the Singapore Institute of Management. Nick Gleeson Chief Financial Officer Nick, 39, was appointed to the role of CFO in December 29. Prior to this, Nick was CFO of Oslo Stock Exchange-listed BW Gas Limited, the largest owner and operator of LPG carriers and one of the largest independent owners and operators of LNG carriers globally. Nick started his career with KPMG in Sydney, before joining Philips Electronics, where he held various audit chief, financial controller, and CFO roles. Following this, Nick was CFO UK and Asia for Swiss-listed Compagnie Financière Tradition s TFS and Tradition businesses. Nick has broad experience across the finance, accounting and management fields. Nick has an MBA from INSEAD and is an Australian Chartered Accountant. Ashley Robinson Chief Commercial Officer Ashley, 45, was appointed to the role of CCO in January 21. Prior to his appointment with the Group, Ashley acted as group general manager at Amsbach Group. While at Amsbach Group, Ashley led the development of the business from a group of loosely related individual businesses into a coordinated entity supporting each other s activities and jointly developing their market share. Prior to this Ashley has held a number of management and business development roles at various maritime companies. Ashley also has extensive experience working on offshore vessels and is a class one master mariner. Ashley has over 25 years experience in the marine services industry.

22 2 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement MEO was listed on the ASX on 26 March 21. MEO is a leading provider of service vessels to the expanding offshore oil and gas industry across South-East Asia, Australia and the Middle East. Through its predecessor entities, the Company has been operating since the 197s. The MEO Group is headquartered in Singapore, and operates predominantly across South-East Asia, Australia and the Middle East, but also further afield. As a result of the sensitive nature of its operations, the diversity of its operating locations, and it s listing on the ASX, MEO is subject to an extensive range of regulatory and governance requirements. MEO is committed to achieving and maintaining a high standard of governance in managing the business and affairs of the Group, as it recognises that there is a positive correlation between good governance and the creation and enhancement of and growth in sustainable shareholders value. The Board of Directors is responsible for the corporate governance of the Group, but at the same time the Company is committed to ensuring that a good governance culture is embraced throughout the organisation. This statement outlines the key elements of MEO s corporate governance processes with reference to the ASX Corporate Governance Council s Corporate Governance Principles and Recommendations ( CGPR ). A checklist summarising our compliance is included at the end of this statement. Where recommendations have not been followed for any reason, the Company has provided an explanation as to why they have not been followed. Governance framework The Board: formally delegates some of its functions to Committees with this delegation clarified by formal Board and Committee Charters delegates certain functions to the CEO and key management specific authorities, via a Board-approved delegation of authorities retains accountability and receives assurance through Committee and management reporting structures; and policies retains direct responsibility for a range of matters such as strategic direction; CEO succession; budget setting; dividend policy; and corporate governance processes and oversight Board of Directors External auditors Outsourced internal auditors Group and external legal counsel Other professional advisors Independent Assurance Chief Executive Officer Leadership of management team Implementation of strategy Day-to-day management and oversight of the business Board Sub-Committees Nomination and Remuneration Committee Audit, Risk Management & Safety Committee Remuneration Nomination Audit Risk Management Safety Oversee remuneration practices Executive remuneration policy Share-based compensation planning Non-Executive Director remuneration Recommend CEO remuneration Approve key executive remuneration packages and contracts Review Board performance Review Board size and composition Ensure Director induction and continuing education Director appointment and succession planning Review financial statements preparation & methodology Oversee financial control and financial risk mitigation Review significant issues raised by internal / external audit Determine risk appetite Review risk management method Oversee risk monitoring & mitigation Approve risk management & authority limits Approve HSQE program Oversee HSQE monitoring, risk mitigation and incident response Oversee delegation of HSQE responsibilities

23 Miclyn Express Offshore Limited Inaugural Annual Report Board of Directors Roles and Responsibilities The Board represents and serves the interests of the Company s shareholders by overseeing and appraising the Company s business strategy, including approving its strategic goals and policies. This includes overseeing the financial and human resources the Company has in place to meet its objectives and the review of management performance. The Board has adopted the Board Charter And Relationship With Management, a copy of which can be found under the Corporate Governance section of the Company s website at The Board Charter And Relationship with Management outlines the functions and responsibilities of the Board, matters which are specifically reserved for the Board or its committees, guidance on relationship with management including the authority delegated to the Chief Executive Officer and delegation of its responsibilities to the committees established by the Board from time to time. Some of the matters that the Board has specifically reserved for its or its committees decision are:- the appointment and removal of the CEO; approval of the financial statements and accounts; and approval of major capital expenditure, acquisitions and divestitures in excess of authority levels delegated to management. The Management team is expected to provide the Board with information regularly in a spirit of openness and trust regarding the development and progress of the business, as well as in a form, timeframe and quality that will enable the Board to discharge its duties effectively. The practice of open dialogues between individual members of the Board and the Management team is encouraged to enable Directors to gain a better understanding of the business. The Board collectively, and each Director individually (subject to the approval of the Chairman), has the right to seek independent professional advice. Membership The Board currently has 7 Directors, with 6 Non-Executive Directors and 1 Executive Director. A letter of appointment was issued to each Director upon their appointment which sets out the terms of their appointment such as the Directors remuneration, key roles and responsibilities, their ongoing Director s compliance requirements, including the basis upon which they will be indemnified. Skills, Experience, Attributes and Diversity The Board embraces diversity within the Board, the Management and staff of the Company. As regards the Board, its 7 members are made up of 5 different nationalities and are between 36 and 61 years of age. The Board considers that the diverse range of backgrounds of the existing Board members enable them to provide effective governance of the business and direction for the Group. A description of the skills, experience and expertise relevant to the position of Director held by each Director in office at the date of this annual report is included in the Directors Report. Diversity is one of the five core values of the Company s Values, Mission and Guiding Principles ; the other core values being Safety, Honesty, Excellence and Passion. Accordingly, the Company places great emphasis on having a high level of diversity amongst its employees, but at the same time it recognises that given the industry within which the Company operates and the lack of gender diversity among the pool of qualified crew available for hire, there is an inherent limitation in terms of what can be immediately achieved. The Company thus seeks to achieve a high level of diversity in accordance with other benchmarks such as nationality and age. Within

24 22 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement (cont.) the Management team, all 4 members are male but are of different nationalities and between 39 and 57 years of age. As at 3 June 21, the Group s 82 employees were made up of 22 different nationalities and were between 19 and 64 years of age. The detailed breakdown of the Group s employees by gender as at 3 June 21 is as follows:- Description Gender Male (%) Female (%) Total (%) Singapore head office Group (Managers & above) Group (onshore employees only) Group The Board notes that the ASX Corporate Governance Council has on 3 June 21 issued final amendments to its Corporate Governance Principles and Recommendations (2nd Edition) relating to diversity, remuneration, trading policies and briefings, which will take effect for the first financial year for listed entities beginning on or after 1 January 211 ( 211 Amendments ). The Company has undertaken a review of the 211 Amendments against its existing corporate governance practices, and note that it is already in compliance with most of those amendments and new recommendations. A checklist summarising our compliance against the new recommendations is also included at the end of this statement. The Board notes that new Recommendation 3.2 of the 211 Amendments provides, among other things, that companies should establish a policy concerning diversity and disclose the policy or a summary of that policy, and for this purpose diversity includes, but is not limited to, gender, age, ethnicity and cultural background. Whilst the Company does not have a written policy on diversity, it does recognise the virtues of having a high level of diversity in the Board, the Management team and the staff. Given the diversity in nationalities, backgrounds and ages of the Directors and the Management team, the Board believes that there is already a high level of diversity in respect of the Board, the Management team and its employees. Nevertheless, the Board will review the recommendations of the 211 Amendments and consider them for adoption during the next financial year. In connection with the listing of the Company on the ASX, which took place on 26 March 21, all the Directors were appointed on 19 February 21 with Mr Nick Peterson joining the Board on 1 March 21. However, 3 of the 6 Non-Executive Directors were Non- Executive Directors of MEO Holdings Limited 1, the previous holding company of the Group s business, and therefore already have a thorough understanding of the Group s business. The Company is of the view that the Non-Executive Directors, as a whole, contribute international and operational experience, knowledge of international capital markets and a deep understanding of the sectors in which it operates. Directors are expected to act at all times with honesty and integrity, and observe the highest standards of ethical behaviour. Each Director must ensure that no decision or action is taken that places his interests over those of the Company. Independence The Board recognises the importance of independent perspectives and judgment on key issues and decisions, and values constructive debate. With the approval of the Chairman, Directors may procure independent professional advice at MEO s expense in the course of discharging their responsibilities in that role. 1 Mr Nick Peterson was appointed the Chairman and Director MEO Holdings Limited since 3 November 27, whilst Mr Philip Aiken was appointed a Director of MEO Holdings Limited since 19 January 29 and Mr Ajaib Hari Dass since 1 June 29.

25 Miclyn Express Offshore Limited Inaugural Annual Report Independent Directors The Board s policy is that there should be a majority of independent Non-Executive Directors, and this intention is embodied in the Board Charter And Relationship with Management. The Board has considered the independence of each of the Directors in office at the date of the Directors Report. The Board considers Directors to be independent where they are independent of management and free of any business or other relationship that could materially interfere with, or could reasonably be perceived to interfere with, the exercise of their unfettered and independent judgment. The Board considers the materiality of any given relationship on a case-by case basis and has adopted materiality guidelines to assist it in this regard. The Board assesses the independence of Directors upon their appointment and regularly reviews and assesses the independence of Non-Executive Directors. The Board considers the following Non-Executive Directors to be independent:- Mr Neil Hamilton Chairman, Non-Executive Director Mr Ajaib Hari Dass Non-Executive Director Mr George Venardos Non-Executive Director Mr Philip Aiken Non-Executive Director Mr William Bill Bloking FAICD - Non Executive Director Mr Philip Aiken was a Senior Adviser for Macquarie Capital (Europe) Limited, part of the Macquarie Group, from January 27 until August 29 and provided consultancy services to Macquarie Group during that time. Mr Aiken has also acted as the Macquarie Group s representative on the board of MEO Holdings Limited, the previous holding company of the Group s business, since 19 January 29. Mr Ajaib Hari Dass has been acting as Mr Michael Kum s representative on the board of MEO Finance Limited since 1 August 29, being the date on which Mr Kum resigned from the board. Mr Hari Dass also acted as Mr Kum s representative on the board of MEO Holdings Limited from 1 June 29 until the reorganisation of the Group. Neither Mr Philip Aiken nor Mr Ajaib Hari Dass are acting as a representative of the Macquarie Group or Mr Michael Kum, respectively, since their appointment to the Board of MEO. Having regard to the nature and extent of the work performed by Mr Aiken and Mr Hari Dass prior to their appointments to the Board and to their roles and responsibilities as Directors, the Board has determined that Mr Aiken and Mr Hari Dass are independent Directors. The Board has determined that Mr Nick Peterson is a non-independent Non-Executive Director. This is due to the provision of a specific term in the Board Charter And Relationship With Management that for so long as Macquarie Capital Group Limited and/or its affiliates hold 15% or more of the Shares in the Company, the Board will include one Director nominated by Macquarie Capital Group Limited, and that in accordance with this power, Macquarie Capital Group Limited has nominated Nick Peterson as a Director. The Board considers that the majority of the Board is independent and that there is consequently strong independent judgment in the decision-making process. Chairman / CEO The Chairman, Mr Neil Hamilton, is considered by the Board to be independent. He was appointed Chairman on 19 February 21. The Chairman s role includes: providing effective leadership to the Board in relation to all Board matters representing the Board to the shareholders and communicates the Board s position;

26 24 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement (cont.) convening regular Board meetings throughout the year, and ensuring that minutes of meetings accurately record decisions taken; guiding the agenda and conduct all Board meetings; and promoting constructive and respectful relations between the Board and management. Mr Diederik de Boer was appointed CEO of the Group. The CEO s role includes:- effective leadership of the management team; implementing strategic objectives, plans and budgets approved by the Board; and the day-to-day management of the Group s operations. As an additional safeguard in preserving independence, the Board s policy is that the Chairman should be an independent Non- Executive Director, and accordingly there is a separation of the roles of the Chairman and CEO. The division of responsibility between the Chairman and the CEO is clear and is set out in the Board Charter And Relationship With Management. Induction Programme The CEO has assumed the primary role in ensuring that new Directors and key executives undergo a comprehensive induction programme within the first year of their appointment, and receive appropriate training and education on a continuing basis relating to developments within the Company and industry within which it operates, to assist them in fulfilling their duties and responsibilities. This induction programme includes meetings with fellow Directors, meetings with and presentations by the management team in Singapore and of MEO Groups overseas offices, as well as site visits to the Company s Shipyard in Batam, Indonesia. The programme will enable the new appointees to gain a better understanding of the Company s strategic, financial, operational and commercial position, as well as the culture, values and risk management practices of the Company. In early 21, an introductory site visit to the Company s Shipyard in Batam, Indonesia was arranged for Mr Neil Hamilton and Mr George Venardos, and a separate visit was arranged for Mr William Bill Bloking. Meetings were also arranged between these Directors and the management team in Singapore at or about the same time. Messrs Nick Peterson, Philip Aiken and Ajaib Hari Dass were Non- Executive Directors of MEO Holdings Limited and already have an intimate knowledge of the Group s business. When opportunities arise, the Chief Executive Officer will also invite Directors to meet with the Company s joint venture partners and key customers. This will enable the Directors to gain a better understanding of the Company s key stakeholders, whilst improving relationships and raising the profile of the Company by providing such partners and key customers the opportunity to have access to the Board. Full access to all documentation pertaining to the Company is provided to the Directors, and the Company ensures that new Directors and key executives are aware of their rights, duties and responsibilities. Collectively, the Board also has the right to seek independent professional advice to discharge its responsibilities. Individual Directors may, with the approval of the Chairman, also seek similar independent professional advice. In connection with the listing of the Company on the ASX, the Company s external legal advisers were available to the Directors to answer any questions they may have had regarding their rights, duties and responsibilities as Directors.

27 Miclyn Express Offshore Limited Inaugural Annual Report Company Secretary The Board has the power to appoint and remove the Company Secretary. Mr Lawrence Chan was appointed as the Company Secretary on 19 February 21 by the Board. He is responsible for ensuring that Board procedures are complied with and advising the Board on governance matters. The Company Secretary also provides corporate secretariat services to the committees, and all Directors have access to the Company Secretary. Board and Board Committees Composition and Attendance of Meetings Held as at 3 June 21 Audit, Risk Status Board of Directors Board Committee [Dissolved] Management & Safety Committee Nomination and Remuneration Committee Meetings held/ Attended Meetings held/ Attended Meetings held/ Attended Meetings held/ Attended Neil Hamilton Chairman, Non-Executive Independent Chair 3/3 1/1 n/a Chair 1/1 Diederik de Boer CEO, Executive Director 3/3 1/1 n/a n/a Ajaib Hari Dass Non-Executive, Independent 3/3 1/1 n/a /1 George Venardos Non-Executive, Independent 3/3 n/a Chair 1/1 1/1 Nick Peterson Non-Executive 2/2* n/a /1* n/a Philip Aiken Non-Executive, Independent 3/3 n/a 1/1 n/a William Bill Bloking Non-Executive, Independent 3/3 n/a 1/1 n/a * Nick Peterson was appointed as Non-Executive Director of the Company on 1 March 21 and he was then appointed a member of Audit, Risk Management and Safety Committee on 6 May 21 Board Committees Nomination and Remuneration Committee The Board has established a Nomination and Remuneration Committee. The Nomination and Remuneration Committee comprises three members, all of whom including the Chairman are independent Non-Executive Directors. In this regard, the Board notes that the present structure of the Nomination and Remuneration Committee is already in compliance with new Recommendation 8.2 of the 211 Amendments. The Nomination and Remuneration Committee s purpose is to act as a recommendatory body to assist the Board in relation to matters relating, but not limited, to succession planning, recruitment and the appointment and remuneration of the Directors and CEO, selection and appointment practices and remuneration arrangements for management and employees of the Group. The Nomination and Remuneration Committee may also assist the Board in relation to any corporate governance issues related to the Directors, as requested by the Board from time to time.

28 26 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement (cont.) The Board has set out the roles and responsibilities of the Nomination and Remuneration Committee in the committee s Charter, a copy of which is posted on the Corporate Governance section of the Company s website. The formal policy and procedure adopted by the Board in relation to the selection and appointment of new Directors is set out in item 4 of the committee s Charter, and this policy includes the option for the Nomination and Remuneration Committee to engage external search organisations to identify potential candidates, as well as listing factors to be taken into account in the selection process. Such factors include a consideration of the skills, experience, expertise and personal qualities that will complement the effectiveness of the Board as a whole, taking into account of any pre-existing gaps in the skills and experience within the Board. The Board has directed that the Nomination and Remuneration Committee review the 211 Amendments relating to diversity in connection with the board selection process and board renewal, and make its recommendations to the Board during the next financial year. The Nomination and Remuneration Committee has access to adequate internal and external resources in the discharge of its responsibilities, as it may require. Details of the performance evaluation process for senior executives are set out in the Remuneration Report, which forms part of the Directors Report in this Annual Report. The Board plans to carry out a performance evaluation for senior executives in December 21, to be applied to the annual remuneration review cycle of the Group. Details of the remuneration policies and practices and the remuneration paid to the Directors are also set out in the Remuneration Report of this Annual Report. Under the Company s bye-laws, if the number of Directors, after excluding (i) a Director who is a Managing Director; and (ii) a Director appointed by the Directors during the year and standing for election is 5 or less, then 2 of the remaining Directors must retire from office. If the number after excluding the above items (i) and (ii) is more than 5, one-third of those Directors (to the nearest whole number) must retire from office at the Company s Annual General Meeting. Pursuant to the bye-laws of the Company, a Managing Director is not subject to retirement by rotation. The full Board, as presently constituted, was formed in March 21, and the Company was listed on the ASX on 26 March 21. The Board has therefore had the opportunity to work together for only a few months. In addition, half of the non-executive Directors have also only been exposed to the Group s business for only a similarly short period of time. Accordingly, the Nomination and Remuneration Committee is of the view that it would be premature to conduct a performance evaluation for the Board, its committees and individual Directors for the current reporting period. Audit, Risk Management and Safety Committee The Board has established an Audit, Risk Management and Safety Committee, and has set out its roles and the responsibilities it undertakes in the committee s Charter, a copy of which can be found under the Corporate Governance section of the Company s website. The Chair of the Audit, Risk Management and Safety Committee is an independent, Non-Executive Director who is not chair of the Board. Details of the qualifications of each of the members of this committee are set out in the Directors Report. In relation to the audit aspects, the Audit, Risk Management and Safety Committee assists the Board:- in relation to the reporting of financial information; in relation to the appropriate application and amendment of accounting policies;

29 Miclyn Express Offshore Limited Inaugural Annual Report in relation to the appointment, independence and remuneration of the external auditor; and by acting as a link between the external auditor, the Board and management of the Company, by receiving reports from management, reviewing those reports, and subsequently making recommendations to the Board within the Audit, Risk Management and Safety Committee s areas of recommendatory responsibility and in accordance with any legal, accounting or other relevant requirements. The Audit, Risk Management and Safety Committee also assists the Board with respect to formulating risk management strategies and monitoring compliance with those strategies to ensure that:- the Company s ongoing risk management program effectively identifies all areas of potential risk (including financial, business and operational risks); adequate policies and procedures have been designed and implemented to manage identified risks; a regular program of audits is undertaken to test the adequacy of and compliance with prescribed policies, and remedial action is taken where necessary; and the procedures the Company has in place are compliant with laws and regulations (particularly those which have a major potential impact on the Company in areas such as trade practices, occupational health and operational safety, including physical safety and accident prevention, and also the environment including (pollution prevention), by receiving reports from management, reviewing these reports, and subsequently making recommendations to the Board within the committee s areas of recommendatory responsibility and in accordance with any legal or other relevant requirements. The Audit, Risk Management and Safety Committee may seek the advice of the Company s auditors, solicitors or such other independent advisers as to any matter pertaining to its responsibilities as it may require. External/Internal Auditors The role of the Company s external auditor is to provide an independent opinion that our financial statements are true and fair, and comply with International Financial Reporting Standards ( IFRS ). The Company s external auditor is Deloitte & Touche LLP in Singapore ( DTT ), who was appointed on 1 March 21, and at present the lead audit partner is Shariq Barmaky. To avoid possible independence or conflict issues, the Audit, Risk Management and Safety Committee monitors the breakdown of aggregate audit and non audit-related fees charged by the external auditor, as well as the nature of such non audit-related work proposed to be performed by the external auditor. Based on a review conducted by the Audit, Risk Management and Safety Committee, the Board is satisfied with the nature of the non-audit services provided by DTT during the financial year and has determined that the services provided, and the amount paid for those services, are compatible with the general standard of independence for auditors and that the external auditor s independence has not been compromised. The auditors have also provided a confirmation of their independence to the Audit, Risk Management and Safety Committee. The Company has engaged Ernst & Young Advisory Pte. Ltd. as its internal auditors. The internal auditors are charged with evaluating, testing and reporting on the adequacy and effectiveness of management s control of operational risk. The internal auditors report directly to the Audit, Risk Management and Safety Committee on all significant internal audit matters and findings.

30 28 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement (cont.) The Audit, Risk Management and Safety Committee has rights of access to management and to auditors (external and internal) without management present, and rights to seek explanation and additional information from both management and auditors. Whilst the internal audit function reports to senior management, the internal auditors also report directly to the Audit, Risk Management and Safety Committee. Management Risks Assurances In line with the Company s system of internal sign-offs, the CEO and CFO have provided written assurances to the Board that having made appropriate enquiries, they have formed the opinion that: the financial records of the Company and its subsidiaries are maintained in accordance with applicable laws and regulations; the financial statements for the financial year ended 3 June 21 have been prepared in accordance with the relevant accounting standards, and give a true and fair view, in all material respects, of the financial position and performance of the Company and its subsidiaries; and the assurances given are based on a sound system of risk management and internal compliance which, in all material respects: is consistent with the policies adopted and delegated by the Board; is based on the risk management framework adopted by the Board; and is operating effectively in relation to financial reporting risks. The Board has also received Management s assessment and report that the material business risks facing the Group are being effectively managed in line with the risk management and internal control systems designed and implemented by Management and approved by the Board. Board Committee In early 21, the Board had established a Board Committee with the full powers of the Board to approve all matters in connection with, among other things, the application and listing of the Company on the ASX and the final form of al documentation in connection therewith. The Board Committee comprised of 3 members consisting of:- any two of: Mr Diederik de Boer Mr Philip Aiken Mr Ajaib Hari Dass and any one of: Mr Neil Hamilton Mr George Vernados The Board Committee has since been dissolved by the Board on 6 May 21.

31 Miclyn Express Offshore Limited Inaugural Annual Report Operational Policies Code of Conduct The Company is committed to the highest level of integrity and ethical standards in all business practices, and has established a Code of Conduct which outlines how the Company expects its representatives, inclusive of employees and Directors, to behave and conduct business in the workplace on a range of issues, including legal compliance and guidelines on appropriate ethical standards. A copy of the Code of Conduct can be found under the Corporate Governance section of the Company s website. Policy for Dealing in Securities The Company has adopted a Policy for Dealing in Securities which governs trading in Company securities by Directors, officers, senior executives, employees and their associates ( Relevant Persons ). A copy of the Company s Policy for Dealing in Securities can be found under the Corporate Governance section of the Company s website. The purpose of the Policy for Dealing in Securities is to ensure awareness of insider trading rules, and of the fact that trading must not proceed without prior notification and approval in certain circumstances. Any Relevant Person who is in possession of price sensitive information which is not generally available to the market must not deal in the Company s securities. Subject to notification and approval requirements, Directors and senior executives may deal in Company securities during any of the following periods: the four week period commencing 24 hours after the announcement of the preliminary final statement or full year results announcement to ASX; the four week period commencing 24 hours after the announcement to ASX of the half year results; the four week period commencing 24 hours after the Company s annual general meeting; and the period that the Company has a current prospectus or other form of disclosure document on issue under which persons may subscribe for securities in the Company. During any other period, Directors and senior executives must receive approval for any proposed dealing in the Company s securities in accordance with the policy. The policy provides that if a Director or senior executive wishes to deal in the Company s securities during the above trading windows, they must, in advance of any proposed dealings, advise the Chairman (in the case of Directors, including the CEO), the Board or the chairman of the Audit, Risk Management and Safety Committee (in the case of the Chairman), the CEO and the Company Secretary (in the case of senior executives) of their intention to do so. During normal trading periods, Directors shall satisfy themselves that they are not in possession of any material information. Chairman s approval shall be sought prior to any acquisition. Once an acquisition has been made, the Directors shall notify the CFO, Group General Counsel and the Investor Relations Manager.

32 3 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement (cont.) Disclosure Policy In keeping with its commitment to achieving and maintaining a high standard of governance, the Company will disclose to the ASX any information concerning the Company which is not generally available and which, if it was made available, a reasonable person would expect to have a material effect on the price or value of Shares. In addition, the Company will provide ASX with any information necessary to correct or prevent a false market in Shares. All information provided to ASX for release to the market will be posted on the Company s website after ASX confirms the announcement has been made. A copy of the Disclosure Policy can be found under the Corporate Governance section of the Company s website. Shareholders Communication The Company has also adopted a shareholder communications strategy aimed at ensuring that shareholders of the Company are well informed of all major developments affecting the Company s state of affairs. Since its listing, the Company has been providing a Shareholder Calendar under the Investor Relations section of the Company s website, which sets out the dates of key events such as the announcement of financial results as well as shareholder meetings. The announcement of the Company s full year financial results ended 3 June 21 was webcasted, and arrangements have been made to webcast the Company s shareholders meeting to be held on 19 November 21. In addition, the Company has made available its key presentations and webcasts made during the year under the Investor Relations section of the Company s website. During the year, regular dialogue sessions and meetings were scheduled with institutional shareholders and investor representatives to discuss the Company s strategy and its financial and operating performance. Summary records of all such investor conferences and briefings are always prepared and maintained for the Company s reference. The Company notes the 211 Amendments relating to briefings, which recommends that where possible, companies should arrange for advance notification of significant group briefings (including, but not limited to, results announcements) and make them widely accessible, including through the use of webcasting or any other mass communication mechanisms as may be practical. In addition, the 211 Amendments relating to briefings also recommends that companies should keep a summary record for internal use of the issues discussed at group or one-on-one briefings with investors and analysts, including a record of those present, and the time and place of the meeting. In this regard, the Company is pleased to note that its shareholders communication initiatives have enabled it to comply with these recommendations of the 211 Amendments ahead of its scheduled application in 211. The Company s annual shareholders meeting is the principal forum for shareholders to engage in dialogue with the Board. The Company has already complied with the statutory requirement to hold its Annual General Meeting in the current year, which was held prior to the Company s listing on the ASX on 26 March 21. Accordingly, the Company will be convening a Special General Meeting on 19 November 21 to provide shareholders with the opportunity to meet and have a dialogue session with the Board since the Company s listing on the ASX. Shareholders are encouraged to attend the Company s shareholder meetings to ensure a high level of accountability and to stay apprised of the Group s strategy and goals.

33 Miclyn Express Offshore Limited Inaugural Annual Report Compliance Checklist Principle Recommendation Compliance Principle 1: Lay solid foundations for management and oversight 1.1 Establish the functions reserved to the Board and those delegated to senior executives and disclose those functions. Complied 1.2 Disclose the process for evaluating the performance of senior executives. Complied 1.3 Provide the information indicated in the Guide to reporting on Principle 1. Note a. Principle 2: Structure the Board to add value 2.1 A majority of the Board should be independent directors. Complied 2.2 The chair should be an independent director. Complied 2.3 The roles of chair and chief executive officer should not be exercised by the same individual. Complied 2.4 The Board should establish a nomination committee Complied 2.5 Disclose the process for evaluating the performance of the Board, its committees and individual directors Complied 2.6 Provide the information indicated in the Guide to reporting on Principle 2. Note b. Principle 3: Promote ethical and responsible decision-making 3.1 Establish a code of conduct and disclose the code or a summary of the code as to: the practices necessary to maintain confidence in the company s integrity the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. 3.2 Establish a policy concerning trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy Complied Complied 3.3 Provide the information indicated in the Guide to reporting on Principle 3. Complied Principle 4: Safeguard integrity in financial reporting 4.1 The Board should establish an audit committee. Complied 4.2 The Audit Committee should be structured so that it: consists only of non-executive directors consists of a majority of independent directors is chaired by an independent chair, who is not chair of the Board; and has at least three members. Complied The Audit Committee should have a formal charter.

34 32 Miclyn Express Offshore Limited Inaugural Annual Report 21 Corporate Governance Statement (cont.) Principle Recommendation Compliance 4.3 Provide the information indicated in the Guide to reporting on Principle 4. Complied Principle 5: Make timely and balanced disclosure 5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rules requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies Complied 5.2 Provide the information indicated in the Guide to reporting on Principle 5. Complied Principle 6: Respect the rights of shareholders 6.1 Design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. Complied 6.2 Provide the information indicated in the Guide to reporting on Principle 6. Complied Principle 7: Recognise and manage risk 7.1 Establish policies for the oversight and management of material business risks and disclose a summary of those policies 7.2 The Board should require management to design and implement the risk management and internal control system to manage the Company s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the company s management of its material business risks. 7.3 The Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Complied Complied Complied 7.4 Provide the information indicated in the Guide to reporting on Principle 7. Complied Principle 8: Remunerate fairly and responsibly 8.1 The Board should establish a remuneration committee. Complied 8.2 Clearly distinguish the structure of non-executive directors remuneration from that of executive directors and senior executives. Complied

35 Miclyn Express Offshore Limited Inaugural Annual Report Principle Recommendation Compliance 8.3 Provide the information indicated in the Guide to reporting on Principle 8. Note c. Corporate Governance Principles and Recommendations with 21 Amendments (2nd Edition) New 3.2 New 3.3 New 3.4 New 8.2 Establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them. Disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them. Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board. The Remuneration Committee should be structured so that it: consists of majority of independent directors is chaired by an independent director has at least three members Note d. Note d. Complied Complied a. Complied, except that due to the recent change in the Board structure the review by the current Board will take place after the reporting period. b. Complied, except that due to the recent change in the Board structure the performance evaluation will take place after the reporting period. c. Complied, except that the summary of the Company s policies on risk oversight and management of material business risks is not yet available in the Company s website. d. A comprehensive policy relating to diversity is planned to be implemented in the coming year including measurable objectives.

36 34 Miclyn Express Offshore Limited Inaugural Annual Report 21 Directors Report The Directors of MEO hereby submit the Directors Report for the financial year ended 3 June 21. Directors The names and particulars of the Directors of the Company during or since the end of the financial year are: Mr Neil Hamilton Chairman, Non-Executive Director Neil, 58, has over 26 years of senior management experience, including 15 years in executive roles in the funds management, investment, insurance and resource sectors and prior to this within the legal profession. Neil has broad directorship experience across a range of ASX-listed companies. He is currently the chairman of Mount Gibson Iron and Oz Minerals. In line with accepted corporate governance standards with regard to appropriate levels of board members, Neil had resigned from his positions as chairman of IRESS Market Technology and Northern Iron in May 21. Mr Diederik de Boer Chief Executive Officer, Executive Director Diederik, 57, is responsible for the overall execution of MEO s corporate and business strategies and plans. He has 3 years of experience in the maritime industry. Diederik has worked with the MEO Group and its predecessor companies since 1991, when he was appointed the general manager of CW Marine Services (Singapore) and regional director of SvitzerWijsmuller. From 1979 to 199, he worked in the same industry for SMIT, in which his last position was as marketing and operations manager, where he was responsible for the Far East offshore vessel fleet. Diederik has a bachelor s degree from the Erasmus University Rotterdam in law and a MBA from the Graduate Institute of Management in Delft. Mr Philip Aiken Non-Executive Director Philip, 61, is currently the chairman of Robert Walters and a Non-Executive Director of Kazakhmys, Essar Energy and National Grid, each of which is listed on the London Stock Exchange. He has over 35 years experience in the manufacturing and resources industries. Philip started his career in 197 as an engineer with CIG in Australia and was appointed the managing director of CIG in He was the regional director (South Pacific) at the BOC Group in Australia from 199 to 1992 and was subsequently appointed as the managing director (Gases, Europe) in 1993, a position he held until In 1995, Mr Aiken joined BTR Nylex as a managing director and was concurrently also an Executive Director of BTR. In 1997, he joined BHP Billiton Group and from August 1997 until his retirement at the end of 26, he was responsible for BHP Billiton s petroleum and energy businesses. Philip was a senior adviser for Macquarie Capital (Europe) from January 27 until August 29. Philip obtained a bachelor s degree in engineering (chemical) from the University of Sydney and attended the Harvard Business School s Advance Management Program in 1989.

37 Miclyn Express Offshore Limited Inaugural Annual Report Mr William Bill Bloking FAICD Non-Executive Director Bill, 6, brings over 36 years experience in the global oil and gas industry and the oil and gas service industry, including nearly 2 years in senior management and directorship roles. He is a former General Manager of natural gas with Esso Indonesia, Chief Operating Officer of Esso Eastern Products Trading Company, and President, Australia Asia Gas for BHP Billiton Petroleum. He was educated at the University of South Carolina in science and mechanical engineering (summa cum laude) and served in the US Army from 1969 until 1972, including 12 months in Vietnam. Bill is a governor of the American Chamber of Commerce in Australia, an Adjunct Professor at Murdoch University and a Fellow of the Australian Institute of Company Directors. His strong chairman and directorship experience includes current roles as chairman of KAL Energy and Nido Petroleum and as a Non-Executive Director of the John Holland Group, the West Australian Symphony Orchestra and the Lions Eye Institute. Mr Ajaib Hari Dass Non-Executive Director Ajaib, 61, is currently a managing partner at Haridass Ho & Partners, is an accredited mediator of the Singapore Mediation Centre administered by the Singapore Academy of Law, is a magistrate of the Singapore Subordinate Courts, sits as a referee of the Small Claims Tribunal and is a mediator at the Singapore Subordinate Courts, Criminal Relations Disputes. Ajaib has 33 years of experience in active legal practice, having been called to the bar in He specialises in all admiralty matters both of a litigious and non-litigious nature, as well as matters relating to ship sale and purchase and the financing aspects of such transactions, with particular expertise in the area of admiralty matters and matters relating to general and marine insurance, e.g. collision, cargo claims and charterparty disputes. Ajaib also handles general commercial and banking litigation work. Ajaib obtained a bachelor s degree in law with honours from the University of London and was admitted to practice as a barrister-at-law at Middle Temple, London. Mr Nick Peterson Non-Executive Director Nick, 36, currently leads Macquarie Group s Industrials advisory team across Asia, in line with which his responsibilities include mergers and acquisitions, equity capital markets, debt capital markets and principal investment transactions in the transport, consumer, basic materials, manufacturing and healthcare sectors. In 21, Nick helped establish Macquarie Group s Resources advisory team in London and was based in Europe until 23. Nick has over 13 years experience in the finance industry, and was a Director of Dyno Nobel prior to its listing on the ASX and the Chairman of MEO until his retirement on 15 February 21. Nick graduated with a double degree in business and law with honours from the University of Queensland. Nick was formerly a part time lecturer for the University of Melbourne s Masters of Applied Finance programme and a tutor in the University of Queensland s Master of Business Administration course. Mr George Venardos Non-Executive Director George, 52, has over 3 years experience in financial services, including former positions as group chief financial officer of Insurance Australia Group and chairman of the Finance & Accounting Committee of the Insurance Council of Australia. He is a Fellow of the Institute of Chartered Accountants in Australia, the Australian Institute of Company Directors, the Taxation Institute of Australia and the Institute of Chartered Secretaries and Administrators (London). George has significant directorship experience and holds current ASX listed company positions with IOOF, Ardent Leisure and Bluglass.

38 36 Miclyn Express Offshore Limited Inaugural Annual Report 21 Directors Report (cont.) Directorships of Other Listed Companies The directorships of other listed companies held by Directors in the 3 years immediately before the end of the financial year are as follows: Name Company Period of Directorship Neil Hamilton Integrated Group Limited Insuran ce Austral ia Group Ltd. IRESS Market Te chnology Limited Mount Gibson Iron Limited OZ Minerals Limited Programmed Maintainance Services Ltd Metcash Limited Northern Iron Limited Since Aug Since Apr 27 Since Feb Since Feb May 21 Philip Aiken George Venardos Robert Walters plc Kazazhmys plc National Grid plc Essar Energy plc Bluglass Limited IOOF Holdings Ltd Ardent Leisure Ltd IAG Finance New Zealand Ltd Australian Wealth Management Ltd Since 2 Since 26 Since 28 Since 21 Since Nov 28 Since Apr 29 Sin ince Sep Ajaib Hari Dass Sembcorp Marine Ltd Sin ince 31 Oc t 23 William Bill Bloking KAL Energy Limited John Holland Grap Nido Petroleum Limi te d Norwest Energy NL Cool Energy Ltd Sin ince Mar 2 7 Sin ince Feb 2 7 Sin ince Feb 2 8 Feb 2 7 Jun 29 Jan 2 7 Ma r 299 Directors Shareholdings The following table sets out each Directors relevant interest in shares of the Company at the date of this report: Na me Direct Or di na ry Shares Indi dire rect Shar are Opti on s Neil Hamilto ton 197, 7,763 Di ederik de Boer 2,4,996 3, 1,324,67 Phil ilip ip Aik iken 51,315 William Bill Bloking 61,315 Ajai b Hari Das ass 63,1,157 Nick Peterson 23, Geor orge Ven enar ardo dos 33,157 The Directors do not have any additional interests in shares or options of any related body corporate of the Company.

39 Miclyn Express Offshore Limited Inaugural Annual Report Company Secretary Mr Lawrence Chan was appointed as Group General Counsel in November 29, and was appointed by the Board of Directors as the Company Secretary of MEO on 19 February 21. Prior to joining the Group, Lawrence was the General Manager, Legal of an independent energy resources development company operating throughout the energy supply chain from upstream through to downstream projects. Lawrence started his career with Drew & Napier, one of the largest law firms in Singapore, before joining Keppel Corporation Limited, a Singapore conglomerate and the world s largest offshore oil rig builder, as its in-house legal counsel. In 25, he accepted an offer to join the Executive Chairman s office in Keppel Corporation, and as a result was appointed to undertake various senior managerial positions in corporate development and investments within the Keppel Group. He was also an ambassador for the Keppel Group and represented Singapore in the Clipper Round The World Yacht Race 27/28. Lawrence is a Barrister-at-Law of England & Wales (Middle Temple) as well as an Advocate & Solicitor of the Supreme Court of Singapore. Principal Activities The principal activity of the Company is investment holdings and the principal activities of the consolidated entity during the course of the financial year were: Operating crewed vessel charters Operating a Shipyard business There were no significant changes in the nature of the activities of the consolidated entity during the financial year. Review of Operations A review of, and information about the operations of the consolidated entity for the financial year and the results of those operations are set out in the Chairman s Address and the Chief Executive Officer s Review of Operations in this Annual Report. Changes in State of Affairs and Subsequent Events The Company was listed on the Australian Securities Exchange, with share trading (deferred, conditional) commencing on 26 March 21. Concurrent with listing the corporate structure was reorganised with a new holding company receiving the proceeds of the listing and using these to acquire the pre-existing MEO Group. Concurrent with the listing, the pre-existing Group debt facility was paid down and refinanced with a US$12 million 5-year term loan and an undrawn US$3 million additional revolving credit facility. On 14 January 21 the Board of Directors was restructured in preparation for the ownership change and stock exchange listing. Neil Hamilton was appointed Chairman of the Group, and George Venardos and William Bill Bloking were appointed to the Board. Philip Aiken, Nick Peterson, Ajaib Hari Dass, and Diederik de Boer remained on the Board. On 9 April 21, MEO announced the completion of the acquisition of a 5% stake in Samson, providing a platform for business development in Australia. Also on 9 April 21, MEO announced the acquisition of four new charter contracts in Australia, with an aggregate value of A$11 million, with charter terms of 6 12 months, and the sale of one of our oldest vessels, the Miclyn Moon (built in 1974). No matter or circumstance has arisen since 3 June 21 that has significantly affected or may significantly affect the operations, the results of operations or state of affairs of the Group in future years. Future Developments The Chairman s Address and the Chief Executive Officer s Review of Operations give an indication, in general terms, of likely developments in the Company s operations in future financial years, and the expected results of those operations. Environmental Regulations The Group has complied with all environmental regulations applying to its operation. Dividends Dividends to Shareholders, to the extent they are paid, are expected to be payable in arrears for the six month periods ending 31 December and 3 June. Dividends will be declared in US dollars and paid in Australian dollars. For payment to Shareholders, dividends will be converted into Australian dollars at a spot exchange rate on the business day prior to the dividend payment date. Subject to the Directors discretion and their assessment of investment opportunities available to the Group, the Directors expect to distribute to Shareholders between 2% and 4% of the Group s net profit after tax. The Directors anticipate that the first dividend to Shareholders will be declared in respect of the period from Listing to 31 December 21, and will become payable in February 211. Given that a significant proportion of MEO s earnings are generated outside Australia, it is unlikely that dividends will be franked.

40 38 Miclyn Express Offshore Limited Inaugural Annual Report 21 Directors Report (cont.) Shares under Option Details of unissued MEO shares under option at the date of this report are: - Exercise price of option (A$) Number of shares under option Class of shares Expiry date of option $1.9 2,617,74 Ordinary 19 September 213 These share options vest on the date of release of the Company s Financial Year 213 results, estimated to be 19 August 213. The options can be exercised in the 3 day period subsequent vesting date subject to the Company meeting certain performance criteria outlined in the Remuneration Report. Holders of options over unissued shares in the Company do not have the right, by virtue of the option, to participate in any share issue of the Company. No shares have been issued during or since the end of the financial year as a result of exercise of an option. Insurance and Indemnities of Officers and Auditors During the financial year, the Company paid a premium of US$35, in respect of a contract insuring the Directors and Officers of the Company and of any related Body Corporate against liability incurred in, or arising out of, the conduct of the business of the Company or the discharge of the duties of such a Director, Company Secretary or Executive Officer to the extend permitted by law. The Company has also purchased a Prospectus liability insurance to insure the Directors, Company Secretary and Executive Officers against liability incurred in, or arising from the listing of the Company s securities on the Australian Securities Exchange and disclosure statements made in the prospectus for a period of 5 years from the date of the lodgment of the prospectus, i.e. 2 March 21. Directors Meeting Details on the number of Directors meetings held during the financial year and the number of meetings attended by each Director can be found in the Corporate Governance Statement section of the Annual Report. Proceedings On Behalf of the Company No persons applied for leave under s.237 of the Australian Corporations Act 21 to bring, or intervene in, proceedings on behalf of the Company during the financial year. Non-Audit Services Details of the non-audit services undertaken by our External Auditor, DTT, including the amounts paid for non-audit services, are set out in note 45 Auditors remuneration in the financial statements of this Annual Report. Based on advice provided by the Risk and Audit Committee, the Directors have formed the view that the provision of non-audit services means that auditor independence was not compromised. Information about our policy in relation to the provision of non-audit services by the auditor is set out in the Audit, Risk Management and Safety Committee Section of the Corporation Governance Statement. Rounding Off of Amounts Amounts in the Director s report and the Financial Report have been rounded off to the nearest thousand dollars, unless otherwise indicated. This Director s Report is made in accordance with a resolution of the Board of Directors dated/passed on 13 August 21. On behalf of the Directors The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified nor agreed to indemnify any officer or auditor of the Company or of any related body corporate against a liability incurred in their capacity as officer or auditor. Neil Hamilton Chairman 15 September 21

41 Miclyn Express Offshore Limited Inaugural Annual Report Remuneration Report Message from the Board of Directors As this is the first Remuneration Report since public listing, the Board has not yet undertaken its annual review of remuneration policies and practices, which is planned to be carried out in the fourth quarter of each calendar year. The Board has, however, reviewed the remuneration arrangements in place, both long-term and listing-related, to ensure that remuneration has been in line with existing policies and with established market practices. In March 21, MEO successfully listed on the Australian Securities Exchange. This was the culmination of efforts undertaken since the combination of Miclyn Offshore and Express Offshore Transport in 27. A portion of the total payments made to senior management in financial year 21 is related to the successful execution of the listing, and the realisation of a Management Incentive Scheme which allowed for the allocation of sweet equity and cash bonuses on listing of the Company, and the issuance of employee stock options in line with an Employee Incentive Plan. The Board is focused on achieving an appropriate balance between the reasonable expectations of stakeholders and the need to maintain competitive remuneration to attract and reward management of a caliber suitable to achieve optimal performance and effective governance and control of the Group. The Board is focused on achieving an appropriate balance between the reasonable expectations of stakeholders and the need to maintain competitive remuneration to attract and reward management of a caliber suitable to achieve optimal performance and effective governance and control of the Group. We are committed to a transparent, concise, and clear Report and welcome your interest in this important aspect of the business. Neil Hamilton Chairman, Nomination and Remuneration Committee 15 September 21 1 Excludes shipyard revenue, which represents % of total revenues.

42 4 Miclyn Express Offshore Limited Inaugural Annual Report 21 Remuneration Report (cont.) Introduction to the Remuneration Report The Directors of MEO present the Remuneration Report for the Company and its controlled entities for the year ended 3 June 21. The Remuneration Report provides details on the remuneration for the Company s non-executive Directors, CEO and senior management team. These are those individuals key to the strategic planning, direction, and control of the affairs of the Company and its controlled entities. This senior management team includes the highest remunerated executives (on an annualised basis) of the Company and Group for the financial year. Directors and Senior Management The individuals who have held directorships and senior management positions during the reporting period are listed below. Further details on Directors and Senior Management are included on pages (Directors) and 19 (Senior Management) of the annual report. Directors The Directors of MEO during and since the end of the financial year were as follows. Except as noted, these Directors held their current position for the whole of the financial year and since 3 June 21. Mr. Neil Hamilton Chairman, Independent Director (appointed 14 January 21) Mr. Diederik de Boer Chief Executive Officer Mr. Michael Kum Non-independent Director (resigned 1 June 29) Mr. Nick Peterson Non-independent Director Mr. Philip Aiken Independent Director Mr. Ajaib Hari Dass Independent Director Mr. George Venardos Independent Director (appointed 14 January 21) Senior Management The term senior management is used in this Remuneration Report to refer to the following individuals. Except as noted, these senior management held their current position for the whole of the financial year and since 3 June 21. Mr. Diederik de Boer Chief Executive Officer Mr. Darren Ang Chief Operations Officer Mr. Nick Gleeson Chief Financial Officer (appointed 14 December 29) Mr. Ashley Robinson Chief Commercial Officer (appointed 1 January 21) Mr. Michael Kum Deputy Chairman/Executive Director (resigned 1 June 29) Mr. Cornell Tsiang Chief Financial Officer (resigned 9 December 29) Ms. Jocelyn Kum Chief Commercial Officer (resigned 15 November 29) Mr. William Bill Bloking Independent Director (appointed 14 January 21)

43 Miclyn Express Offshore Limited Inaugural Annual Report The Nomination and Remuneration committee will review the remuneration packages of all Directors on an annual basis and make recommendations to the Board. The remuneration policy for the Group s Board and senior management was already in place ahead of the listing, and has not been adjusted since that time. The Board plans to carry out a review of remuneration practices in the Group in December 21, to be applied to the annual remuneration review cycle of the Group, the results of which are to be implemented effective 1st January 211. The principles underlying the structure and quantum of Directors and senior management remuneration are as follows: establish compensation at a level which allows MEO to attract suitably talented and experienced Directors and senior management, while remaining cost competitive with its industry and geographic peers divide senior management compensation between fixed and variable components in a manner which is in line with established industry practice, while allowing that a substantial proportion of senior management remuneration is linked to performance divide variable components of senior management remuneration between short-term incentive ( STI ) payments and long-term incentive ( LTI ) payments in a manner which allows immediate reward of positive achievements in growth and profitability, but reinforces the importance of running the business with long-term strategic goals at the forefront of the decision process define performance-based remuneration for senior management in a manner whereby achievement is clearly measurable and objectively verifiable Relationship Between the Remuneration Policy and Company Performance Remuneration of senior management and employees of MEO comprises a combination of fixed and variable remuneration. The aggregate remuneration range and the balance between the fixed and variable components of remuneration are determined considering a broad range of factors, including: the skillset requirements for each executive role, giving consideration to corporate objectives; individual role requirements; and the potential of each role to generate value in the organisation; and benchmark remuneration geographically and across the industry, which drives the remuneration required to attract and retain appropriate talent. The variable components of remuneration, and the split between short-term and long-term incentive, are driven by a combination of: benchmark remuneration practices geographically and across the industry; the nature of performance contribution by the individual role, and the performance criteria relevant to each role; the balance in criticality between short-term and long-term performance against each performance criterion; and actual achievement against each pre-determined performance criterion. draw clear and transparent links between performance criteria and long-term shareholder value creation establish oversight mechanisms including annual reviews by the Nomination and Remuneration Committee to ensure that remuneration policy is operating effectively in the long-term interests of the Group and its key stakeholders

44 42 Miclyn Express Offshore Limited Inaugural Annual Report 21 Remuneration Report (cont.) The following table explains by remuneration element the factors driving determination of the nature and quantum of benefits payable, and the methodology applied in determining the actual remuneration amount in any given remuneration period. Remuneration Element Driving Factors Methodology Base salary & supplements Performance bonus Stock options Employee shares Role requirements / technical skillsets Geographic & industry standards Value potential in role Market practices geographic and industry standards Degree of value creatio ion potent ntia ial throug h outperformance Retention element for key management Close link between shareholder value and remuneration Direct link between business performance and remuneration Additional retention element Reward specific one-off major value creation Market-benchmarking for median salaries Competitive selection process drives deviation from market-mean Market-benchmarking Bonus for overachievement not normal performance Annual measur ement & re-set of KPIs linked to Group strategy review Long-dated vesting (21 plan vests in 2nd half 213) Split between EPS and TSR to reward profitability and shareholder returns Escrowed to match realisation of forecast Limited to most senior management / top contributors Key terms of employment contracts Senior management employee contracts are established with a 3-month notice period for termination, exercisable by either employer or employee at their discretion. For the CEO the notice period is 6 months. The CEO has entered into a Service Agreement which came into effect on 1st April 21 whereby initial employment is fixed for a term of 3 months, whereafter the 6-month notice period comes into effect. None of the employment contracts of senior management stipulate termination payments beyond the settlement of notice period.

45 Miclyn Express Offshore Limited Inaugural Annual Report Key Remuneration Events: Financial Year 29/1 Changes to the senior management team In the first half of the financial year, the Chief Financial Officer (Cornell Tsiang) and Chief Commercial Officer (Jocelyn Kum) tendered their resignations from the Group. In determining the remuneration packages for the incoming Chief Financial Officer (Nick Gleeson) and Chief Commercial Officer (Ashley Robinson), the Board in place at the time took into account the views of the shareholders as well as the prevailing market conditions in the industry, the requirements of the roles in light of the impending listing of the Company, and the skillsets required post-listing for the continued success of the business. Payments under the Management Incentive Scheme ( MIS ) In the former Group structure and under pre-ipo ownership, the Board established a MIS which provides for incentive payments in the form of shares and / or cash to employees who contributed to the successful public listing of the Group. The objectives of the scheme were to: provide an opportunity for participation in the equity of the Company upon a listing, and for participants to become shareholders of the Group upon listing, aligning closely the interests of management and employees with the long-term success of the business; motivate participants to strive for performance excellence and achievement of a high level of contribution to the Group ahead of the listing; give recognition to contributions made or to be made by participants through a variable component of their remuneration package the majority of which value is realised only after publishing the results for the forecast period reported in the prospectus issued for the listing; and to The awards available under the scheme were achieved as a result of the successful listing of the business, with key criteria such as the total value of the listing and effective cash management underpinning the calculation of the total awards to senior management. The structure of the MIS provided for 25% of amounts awarded to be paid immediately on listing in cash; and the remaining 75% to be issued as shares held under escrow until after the release of the Group s results for the calendar year ending 31 December 21 (the prospectus forecast period). In light of the stated objectives of the plan, and the mode of payment including the escrow over the shares, the cash bonuses have been recognised as short-term incentives, and the shares issued as long-term incentives. The total of cash payments to senior management under the MIS were US$495, and the total value of sweet equity shares issued were US$1,521, (valued at listing price A$1.9). Payments under the Employee Incentive Plan ( EIP ) During the year the Board established an EIP which provides for the Board to invite eligible employees to participate in a grant of options to acquire fully paid ordinary shares in the Company. After listing, the Board invited a number of employees, including all of the current senior management, to participate in the 21 EIP offer. The terms of the 21 EIP offer are as follows: there are two types of options included in the offer: - EPS options, which make up 75% of the issuance, and whose performance hurdles are linked to Earnings Per Share - TSR options, which make up 25% of the issuance, and whose performance hurdles are linked to Total Shareholder Returns make employee remuneration sufficiently competitive to retain participants whose contributions are important to the long-term growth and profitability of the Group.

46 44 Miclyn Express Offshore Limited Inaugural Annual Report 21 Remuneration Report (cont.) the EPS options are to be issued in four tranches, as follows: Tranche % of total EPS Performance hurdles linked to: % 1st half financial year 211 results announcement % Financial year 211 results announcement % Financial year 212 results announcement % Financial year 213 results announcement no options vest until after the release of the results announcement for the financial year ending 3 June 213, meaning that except with the specific exemption of the Board, continuous employment until the release of those results is a pre-condition to employees benefiting from the EIP TSR options vest after the release of the results announcement for the financial year ending 3 June 213, and their performance hurdles are linked to total shareholder returns between listing and that reporting date This EIP represents the only options series on issue in the Company. The grant date for this option series is 1 April 21. Fair value of each contingent option at grant date was A$.89 (US$.81). In aggregate 2,617,74 contingent options were issued exercisable at A$1.9 per share. Based on an external valuation, the total value of options issued to senior management under the EIP, recorded as remuneration in the current reporting period, is US$58,. Remuneration of CEO and senior management Details of the remuneration of the CEO and senior management are set out on in detail below this section. The aggregate remuneration paid to senior management in the FY1 is set out in the table below. It is noteworthy that the completion of the initial public offering in 21 results in significantly higher STI and LTI payments than might normally be expected. This is due to a combination of cash bonuses on IPO completion (STI: US$495,), and sweet equity shares issued on IPO completion (LTI: US$1,521,). The cash and other benefits received by senior management in the FY1 is lower than is shown in this report, as a result of the accrual taken up for employee stock options not yet vested (US$58,), and sweet equity shares under escrow until release of results for the calander year 21 (US$1,521,).

47 Miclyn Express Offshore Limited Inaugural Annual Report US$ s Fixed STI LTI Others* Total Diederik de Boer CEO ,43 Darren Ang COO Nick Gleeson CFO Ashley Robinson CCO Cornell Tsiang Former CFO Jocelyn Kum Former CCO * others includes accommodation, transport, insurances, fuel, and fitness allowances Percentage of total remuneration achieved by type Fixed STI Variable LTI Remuneration including IPO-specific remunerar tion CEO 27% 19% 54% Other senior man agement 41% 17% 42% Remuneration excludi ding IPO PO-s -spe peci fic remunerati on CE O 81% 11% 8% Other senior man anaga ement 91% 7% 2%

48 46 Miclyn Express Offshore Limited Inaugural Annual Report 21 Remuneration Report (cont.) US$ s Financial Short-term Post-employment Share-based Other TOTAL Year Salary 1 Bonus 2 Benefits 3 CPF 4 service ESOP 5 Equity End of Sweet long term TOTAL ex end of service Executives Diederik de Boer ,43 1,43 Chief Executive Officer Darren Ang Chief Operations Officer Nick Gleeson Chief Financial Officer (appointed 14 Dec 29) Ashley Robinson Chief Commercial Officer (appointed 1 Jan 21) Former Executives Michael Kum Deputy Chairman/ 21 Executive Director (resigned 1 Jun 29) Cornell Tsiang Chief Financial Officer (resigned 9 Dec 29) Jocelyn Kum Chief Commercial Officer (resigned 15 Nov 29) Total ,521 3,366 3,276 Total ,399 1,399 1 Salary includes base salary, annual wage supplement, and annual leave supplement. 2 Bonus includes annual performance bonus determined based on achievement against pre-determined performance objectives; and one-off IPO bonus. 3 Benefits include housing allowance; transport allowance; medical insurances; fuel allowances; and fitness centre membership subsidies. 4 CPF (Central Provident Fund) is the allocation of a proportion of salary to a government-administered pension fund in Singapore 5 Employee stock options issuance, accounted for in accordance with IFRS2, valuation provided by an external advisor 6 Sweet equity shares issued on completion of listing, escrowed until the release of the financial report for the calendar year ending 31st December 21

49 Miclyn Express Offshore Limited Inaugural Annual Report Short-term Incentives STIs in 21 comprised the traditional annual performance bonus, as well as a one-off bonus for successful completion of the listing ( IPO bonus ) issued under the Management Incentive Scheme. US$ s Financial Year Annual bonus STI type IPO bonus Total STI Executives Diederik de Boer Chief Executive Officer Darren Ang Chief Operations Officer Nick Gleeson Chief Financial Officer (appointed 1 Jan 21) Ashley Robinson Chief Commercial Officer (appointed 1 Jan 21) Former Executives Michael Kum De pu ty Chairman/Executive Director (resigned 1 Jun 29) Cornell Tsiang Chief Financial Officer (res igned 9 Dec 29 ) Jo celyn Kum Ch ief Commer erci al Officer (resigned 15 Nov 29) Total Tota l As at 3 June 21.

50 48 Miclyn Express Offshore Limited Inaugural Annual Report 21 Remuneration Report (cont.) Long-term Incentives LTIs in 21 comprised employee stock options issued under the Employee Incentive Plan, and sweet equity (shares) issued under the Management Incentive Scheme. LTI type US$ s Financial Year Employee Incentive Plan Sweet Equity Total LTI # options US$ s # shares US$ s Executives Diederik de Boer Chief Executive Officer ,324, , Darren Ang Chief Operations Officer , , Nick Gleeson Chief Financial Officer (appointed 14 Dec 29) , 8,61 7 9, Ashley Robinson Chief Commercial Officer (appointed 1 Jan 21) , , Former Executives Michael Kum Deputy Chairman/Executive Director (resigned 1 Jun 29) Cornell Tsiang Chief Financial Officer (resigned 9 Dec 29) ,4, Jocelyn Kum Chief Commercial Officer (resigned 15 Nov 29) , Total Total , 1, ,522 1, ,57 579

51 Miclyn Express Offshore Limited Inaugural Annual Report Remuneration of Non-executive Directors Non-executive Directors remuneration is reviewed at least annually by the full Board, taking into account the findings and recommendations of the Nomination and Remuneration Committee, and external benchmarking of Directors remuneration against the remuneration of Non-executive Directors serving on the Boards of comparable companies in particular in terms of size, industry, and geography. Non-executive Directors of MEO receive fixed remuneration only, which is limited to annual Board fees. There are no additional fees for serving on Board Committees. Remuneration is paid quarterly in arrears in cash. There is no variable or other performance-related component to the remuneration structure for Non-executive Directors. There is no share-based payment plan. There is no superannuation element for Non-executive Directors as the Company is Bermudan and there is therefore no attaching requirement. The non-independent Director, Mr Nick Peterson, has elected not to be paid Board fees. Remuneration of the sole Executive Director, Mr. Diederik de Boer, has been presented together with details of senior management remuneration (above). Remuneration for Non-Executive Directors for the FY1 is limited to the period of service 14 January 21 to 3 June 21. Prior to 14 January 21 the Company was not paying Board fees. Total Board remuneration for the period was US$256,. The details of these payments are set out in the table below. US$ s Fixed STI LTI Others Total Neil Hamilton George Venardos Ajaib Hari Dass William Bill Bloking Philip Aiken Nick Peterson The Board has determined that Non-executive Directors remuneration will not be adjusted for the financial year ended 3 June 211.

52 5 Miclyn Express Offshore Limited Inaugural Annual Report 21 Financial Highlights FINANCIAL HIGHLIGHTS Audited Financial Statements FY21 Audited Financial Statements FY29 US$' Financial performance Revenue 116,459 98,23 Gross profit before depreciation and amortisation 68,58 58,531 EBITDA 59,34 49,166 EBIT 45,552 39,195 Profit before tax 3,638 15,91 Net profit after tax attributable to owners of the Company 27,486 11,926 Cash flows Net cash flows from operating activities 25,716 25,263 Net cash flows from investing activities (44,355) (63,865) Net cash flows from financing activities 1,136 48,542 Cash and cash equivalents at end of year 14,811 23,178 Balance sheet Cash and cash equivalents 14,811 23,178 Interest-bearing debt 136, ,884 Net assets 236,82 47,583 Share capital 26,787 2,98 Equity attributable to owners of the Company 236,75 43,54 Financial ratios Gross profit margin 1 59% 6% Earnings per share (US cents) (Note 15) Return on assets 2 11% 11% Return on equity 3 19% 91% Net debt to equity ratio 4 51% 592% FY1 REVENUE FY9 REVENUE CSVs 1% Shipyard 1% Barges 15% Shipyard 2% Barges 6% OSVs 49% OSVs 31% Tugs 5% Crew/Utility Vessels 38% Tugs 1% Crew/Utility Vessels 42% 1. Gross profit before depreciation and amortisation 2. EBIT over total assets 3. EBIT over equity attributable to owners of the Company 4. Net debt over equity attributable to owners of the Company

53 Miclyn Express Offshore Limited Inaugural Annual Report Financial Highlights In financial year 21, revenue increased by 19% and EBITDA by 2% against prior year Strong growth % FY1 98. FY9 2% FY1 FY9 16% FY1 FY9 131% FY1 FY9 REVENUE (US$m) EBITDA (US$m) EBIT (US$m) NPAT (US$m)

54 52 Miclyn Express Offshore Limited Inaugural Annual Report Financial Statements Contents Page Statement of Directors 53 Independent Auditors Report 54 Consolidated Statement of Comprehensive Income 55 Consolidated Statement of Financial Position 56 Consolidated Statement of Changes in Equity 57 Consolidated Statement of Cash Flows Notes to the Financial Statements 6 125

55 Miclyn Express Offshore Limited Inaugural Annual nual Report Statement of Directors In the opinion of the Directors, the consolidated financial statements of the Group as set out on pages 55 to 125 are drawn up so as to give a true and fair view of the state of affairs of the Group as at 3 June 21 and of the results, changes in equity and cash flows of the Group for the financial year then ended, and at the date of this statement, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they fall due. ON BEHALF OF THE BOARD OF DIRECTORS Neil Douglas Hamilton Diederik Christiaan de Boer 13 August 21

56 54 Miclyn Express Offshore Limited Inaugural Annual Report 21 Independent Auditors Report to the Members of Miclyn Express Offshore Limited We have audited the financial statements of Miclyn Express Offshore Limited (the Company ) and its subsidiaries (the Group ) which comprise the consolidated statement of financial position as at 3 June 21, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 55 to 125. Directors Responsibility for the Financial Statements The Directors of the entity are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of the Group are properly drawn up in accordance with International Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group as of 3 June 21 and of the results, changes in equity and cash flows of the Group for the year ended on that date. Public Accountants and Certified Public Accountants Singapore 13 August 21

57 Miclyn Express Offshore Limited Inaugural Annual nual Report Consolidated Statement of Comprehensive Income FOR THE YEAR ENDED 3 JUNE 21 Notes 3 June 21 US$ 3 June 29 US$ Revenue 6 116,459 98,23 Cost of sales (6,97) (49,74) Gross profit 55,489 48,949 Other gains and losses 8 6,898 4,936 Administration expenses 9 (16,584) (14,422) Finance costs 11 (15,3) (24,159) Other expenses 12 (135) (213) Profit before tax 13 3,638 15,91 Income tax expense 14 (2,86) (2,191) PROFIT FOR THE YEAR 27,832 12,9 Other comprehensive income Exchange differences arising on translating of foreign operations (281) (1,54) Net fair value (losses)/gains on cash flow hedges (1,896) 1,896 Other comprehensive income for the year, net of tax (2,177) 842 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 25,655 13,742 Profit attributable to: Owners of the Company 27,486 11,926 Non-controlling interests ,832 12,9 Total comprehensive income attributable to: Owners of the Company 25,34 12,768 Non-controlling interests ,655 13,742 Earnings per share Basic (USD cents per share) Diluted (USD cents per share) See accompanying notes to financial statements

58 56 Miclyn Express Offshore Limited Inaugural Annual Report 21 Consolidated Statement of Financial Position AT 3 JUNE 21 Notes 3 June 21 3 June 29 US$ US$ Assets Current assets Cash and cash equivalents 16 14,811 23,178 Trade and other receivables 17 36,798 31,346 Inventories 18 4,628 4,477 56,237 59,1 Assets classified as held for sale ,828 Total current assets 56,647 64,829 Non-current assets Property, plant and equipment 22 32,549 27,36 Deferred tax assets Intangible assets 23 48,634 32,836 Other non-current assets Total non-current assets 351,452 33,242 Total assets 48,99 368,71 Liabilities Current liabilities Trade and other payables 25 21,699 27,613 Borrowings 26 9, ,877 Other financial liabilities 28 7,596 Current tax liabilities 14 5,597 4,15 Provisions Deferred consideration 3 5,97 Total current liabilities 42,97 317,895 Non-current liabilities Borrowings ,122 7 Deferred tax liabilities Provisions 29 2,1 2,569 Total non-current liabilities 129,2 2,593 Net assets 236,82 47,583 Equity Capital and reserves Share capital 31 26,787 2,98 Share premium ,12 Reserves 33 (46,16) (48,173) Retained earnings ,382 89,129 Equity attributable to owners of the Company 236,75 43,54 Non-controlling interests ,529 Total equity 236,82 47,583 See accompanying notes to financial statements

59 Miclyn Express Offshore Limited Inaugural Annual nual Report Consolidated Statement of Changes in Equity FOR THE YEAR ENDED 3 JUNE 21 Share Notes Capital Share premium Other equity reserves Hedging reserve Translation reserve Share option reserve Retained earnings Attributable to owners of the Company Noncontrolling interests Total US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ Balance at 1 July 28 2,98 (52,54) ,23 27,379 3,946 31,325 Total comprehensive income for the year 1,896 (1,54) 11,926 12, ,742 Additional capital contribution 33(a)(i) 2,516 2,516 2,516 Deemed capital contribution (391) Balance at 3 June 29 2,98 (49,147) 1,896 (922) 89,129 43,54 4,529 47,583 Payment of dividends to pre-ipo shareholders 36 (5,233) (5,233) (5,233) Total comprehensive income for the year (1,896) (25) 27,486 25, ,655 Issue of share capital 31 & 32 24, , ,65 469,65 Administrative acquisition of interest in a subsidiary 32 (292,656) (292,656) (292,656) Additional capital contribution 33(a)(i) 17,584 17,584 17,584 Repayment of capital contribution 33(a)(i) (7,357) (7,357) (7,357) Acquisition of additional interest in a subsidiary 19(i) (2,8) (2,8) (4,117) (6,917) Additional payment for acquisition of interest in a subsidiary 33(a)(iii) (3,314) (3,314) (3,314) Recognition of share-based payment 33(d) IPO and its related expenses 32 (7,78) (7,78) (7,78) Balance at 3 June 21 26, ,12 (45,34) (1,172) 1 111, , ,82 See accompanying notes to financial statements

60 58 Miclyn Express Offshore Limited Inaugural Annual Report 21 Consolidated Statement of Cash Flows FOR THE YEAR ENDED 3 JUNE 21 Notes 3 June 21 US$ 3 June 29 US$ Cash flows from operating activities Profit for the year 27,832 12,9 Income tax expense recognised in profit 2,86 2,191 Amortisation of provisions (74) (895) Amortisation of drydocking expenditure 1,472 1,239 Depreciation of property, plant and equipment 12,1 8,732 Property, plant and equipment written off Gain on disposal of property, plant and equipment (net) (3,844) (2,344) Amortisation of debt upfront fee 5,134 1,7 Interest expense 8,16 14,149 Interest income (116) (55) Expense recognised in respect of share-based payments 1 Hedge ineffectiveness on interest rate swaps hedges 1,974 2,926 Unrealised currency translation (gains)/losses (521) 269 Fair value (gains)/losses on interest rate swaps (294) 6,14 54,73 46,3 Movements in working capital Increase in trade and other receivables (4,332) (8,199) Increase in inventories (151) (1,8) (Decrease)/increase in trade and other payables (11,765) 6,166 Cash generated from operations 37,825 43,187 Income tax paid (1,388) (849) Interest paid (1,721) (17,75) Net cash generated from operating activities 25,716 25,263 Cash flows from investing activities Interest received Proceeds from disposal of property, plant and equipment 7,814 6,973 Payments for property, plant and equipment (33,88) (7,893) Payments for intangible assets (896) Payments for additional interest in a subsidiary 19(i) (6,917) Proceeds from disposal of interest in a subsidiary, net of cash disposed 19(iv) (55) Investment in a Joint Venture 2 (1,834) Net cash used in investing activities (44,355) (63,865)

61 Miclyn Express Offshore Limited Inaugural Annual nual Report Notes 3 June 21 US$ 3 June 29 US$ Cash flows from financing activities Dividends paid to pre-ipo shareholders 36 (5,233) Additional capital contribution 33(a)(i) 17,584 2,516 Repayment of capital contribution 33(a)(i) (7,357) Additional payment for acquisition of interest in a subsidiary 33(a)(ii) (3,314) Financing activities in relations to IPO (net) 2(i) 3,826 Proceeds from borrowings 1,93 49,799 Repayments of borrowings (6,269) (3,767) Repayments of obligations under finance leases (4) (6) Net cash generated from financing activities 1,136 48,542 Net (decrease)/increase in cash and cash equivalents (8,53) 9,94 Cash and cash equivalents at the beginning of the year 23,178 13,378 Effects of exchange rate changes on the balance of cash held in foreign currencies 136 (14) Cash and cash equivalents at the end of the year 16 14,811 23,178 See accompanying notes to financial statements.

62 6 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements 1. General information Miclyn Express Offshore Limited, ( the Company ) was incorporated in Bermuda on 11 September 29. The registered address is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The principal place of business is 3 HarbourFront Place, #11-1/4 HarbourFront Tower 2, Singapore The Company and its subsidiaries ( the Group ) are principally engaged as owners, charterers and marketers of offshore support vessels, crew/utility vessels, tugs, barges and coastal survey vessels; and in ship repairs and ship building, crewboat operations, shipyard owning and investment holding. 2. Accounting for Initial Public Offering ( IPO ) structure During the financial year ended 3 June 21 the Company effected a combination by acquiring MEO Finance Company Limited ( MEO Finance ), the legal parent entity of MEO Finance Group, becoming the Australian Securities Exchange ( ASX ) listed legal parent entity of Miclyn Express Offshore Group (comprise of Miclyn Offshore Pte Ltd Group and Miclyn Express Offshore Pte Ltd Group). The combination was effected by issuing shares in the Company under the IPO contemporaneously with the Company s acquisition of MEO Finance. Previously, for the financial year ended 3 June 29, the consolidated financial statements of MEO Finance Group were drawn up in accordance with Singapore Financial Reporting Standards ( SFRS ). The consolidated financial statements herein are being presented in accordance with International Financial Reporting Standards ( IFRS ). There are no significant differences arising through the application of IFRS as compared with SFRS. In substance, the transaction was an administrative restructuring of MEO Finance Group to facilitate the Group s listing on the ASX, the sale of existing shareholders interests, and the raising of additional capital to pay down debt and to acquire a new investment in a jointly controlled subsidiary. As such, in accordance with the principles of IFRS 3 (28) Business Combinations, the transaction is recorded as though the existing MEO Finance Group acquired the Company. The major implications of the accounting for the IPO transaction are that consolidated financial statements are prepared in the name of the Company, however comparatives are provided as though the transaction represents a continuation of the financial statements of MEO Finance Group and accordingly: 1. the assets and liabilities are recognised and measured in these consolidated financial statements at the carrying amounts of the existing MEO Finance Group, rather than at fair value at the date of acquisition by the Company; 2. the retained earnings and other equity balances recognised in these consolidated financial statements are the existing retained earnings and other equity balances of MEO Finance Group; 3. the amount recognised as issued equity instruments in these consolidated financial statements is determined by adding the additional equity retained by the Group, following the sale of securities on ASX, to the issued equity recorded in the MEO Finance Group financial statements immediately before the acquisition; and 4. comparative information presented in these consolidated financial statements is that of MEO Finance Group.

63 Miclyn Express Offshore Limited Inaugural Annual nual Report Accounting for Initial Public Offering ( IPO ) structure (continued) The transactions arising from the IPO recorded by the Group during this financial year are summarised as follows: (i) Financing activities amounting to US$3,826, comprise of total funds raised: the total proceeds raised from shares issued on completion of the IPO was US$469,65,, which comprise of 271,7, ordinary shares issued at par value, amounting to US$24,689, (Note 31), and share premium of US$444,376, (Note 32); drawn down of new bank loan amounting to US$12,, (Note 26), offset by funds used for the following financing activities: acquisition of MEO Finance Group for a consideration of US$292,656, (Note 32); full repayment of the existing debts prior to IPO amounting to US$276,318, (Note 26) and the total interest accrued of US$961, and fund breaking fee for interest rate swaps of US$7,596, (Note 28) was paid; the total expenses incurred relating to the IPO amounted to US$17,149,, out of which US$7,78, was borne by the Group and charged against equity (Note 32). The remaining IPO related expenses were borne directly by shareholders existing prior to IPO (Note 44(ii)). (ii) Investing activities amounting to US$1,834, comprise: Acquisition of a 5% joint venture interest in Samson Maritime Holdings (Note 2) for a total consideration of US$21,165, comprise of cash consideration of US$16,68, (or US$1,834, net of cash acquired) and a deferred issue of shares of US$5,97, (Note 3). RESTRUCTURING EXERCISE IN 28 The MEO Finance Group was formed on 23 November 27 pursuant to the following transactions ( Restructuring Exercise ): MEO Finance, through its wholly owned subsidiary Miclyn Finance Limited, entered into an agreement dated 1 November 27 with the original individual shareholders of Miclyn Offshore Pte Ltd, Mr Kum Soh Har and Ms Ong Bee Yong ( the Agreement ). The acquisition completion date was 23 November 27.

64 62 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 2. Accounting for Initial Public Offering ( IPO ) structure (continued) RESTRUCTURING EXERCISE IN 28 (continued) Pursuant to the Agreement, which included a detailed restructuring plan of the business of Miclyn Offshore Pte Ltd, the individual shareholders agreed to transfer 7% of their effective interest in the issued share capital of Miclyn Offshore Pte Ltd to Macquarie Investments Australia Pty Limited (a wholly owned subsidiary of Macquarie Group Limited, a company listed on the Australian Securities Exchange). As part of the same Agreement, the individual shareholders and Macquarie Investments Australia Pty Limited then immediately transferred their entire effective interest in the issued share capital of Miclyn Offshore Pte Ltd to Miclyn Finance Limited. On the original transfer of shares, the individual shareholders received aggregate consideration consisting of: (i) the allotment and issue of an aggregate of 39.92% of the capital of MEO Holdings Limited (MEO Finance s immediate holding company) credited as fully paid to Ray Rider Limited, a company owned by Mr Kum Soh Har and Ms Ong Bee Yong; and (ii) a cash payment of US$162,553,329, after repayment of all outstanding debts of Miclyn Offshore Pte Ltd on 23 November 27 amounting to US$48,33,963. During the financial year ended 3 June 28, on 23 November 27, as part of this restructure and business combination, MEO Finance acquired Marine Services Holdings Limited, the holding company of the EOT businesses owned by Macquarie Asset Finance Limited ( MAFL ), a wholly owned subsidiary of Macquarie Group. MAFL had previously acquired Miclyn Express Offshore Pte Ltd (formerly known as Express Offshore Transport Pte Ltd) ( EOT ) in July 27. The assets and liabilities of Miclyn Express Offshore Pte Ltd and its holding companies (Oceantrans Investments Limited and Marine Services Holdings Limited) were recorded in the consolidated MEO Finance s statement of financial position at their fair values at the date of acquisition by MEO Finance, being 23 November 27. As MEOF had no previous operations and was incorporated solely for the purpose of acquiring Miclyn Offshore Pte Ltd pursuant to the Agreement and since both Mr Kum Soh Har and Ms Ong Bee Yong transferred their shareholdings in Miclyn Offshore Pte Ltd in return for the shareholdings in MEOF s immediate holding company, Miclyn Offshore Pte Ltd was deemed to be the parent entity of the MEOF Group in order to reflect the economic substance of the Restructuring Exercise. 3. Adoption of new and revised Accounting Standards In the current financial year, the Group has adopted all the new and revised Standards and Interpretations that are relevant to its operations and effective for annual periods beginning on or after 1 July 29. The adoption of these new/revised Standards and Interpretations does not result in changes to the Group s accounting policies and has no material effect on the amounts reported for the current or prior financial years except as follows: IAS 1 (as revised in 27) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 29) The revised Standard has introduced terminology changes (including revised titles for the financial statements) and has resulted in changes in the format and content of the financial statements. However, the revised Standard has no impact on the reported results or financial position of the Group.

65 Miclyn Express Offshore Limited Inaugural Annual nual Report Adoption of new and revised Accounting Standards (continued) Amendments to IAS 23 Borrowing Costs (effective for annual periods beginning on or after 1 January 29) An entity is required to capitalise borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset as part of the cost of that asset. The option of immediately recognising those borrowing costs as an expense, which is in the previous version of IAS 23, has been removed. The amendments are generally to be applied prospectively to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after the effective date of the revised Standard. As at 3 June 21, the revised Standard has no material impact on the reported results or financial position of the Group. IFRS 3 (as revised in 28) Business Combinations (effective for business combinations for which the acquisition date is on or after the beginning of the first annual period beginning on or after 1 July 29). IFRS 3 (28) is applicable prospectively to business combinations for which the acquisition date is on or after 1 July 29. Its adoption has no material impact on the reported results or financial position of the Group. IAS 27 (Revised in 28) Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 29) IAS 27 (28) is applicable for periods beginning 1 July 29 and has been applied retrospectively in accordance with the relevant transitional provisions. The revised Standard has affected the Group s accounting policies regarding changes in ownership interests in its subsidiaries that do not result in a change in control. In prior years, in the absence of specific requirements in FRSs, increases in interests in existing subsidiaries were treated in the same manner as the acquisition of subsidiaries, with goodwill or a bargain purchase gain being recognised where appropriate; for decreases in interests in existing subsidiaries that did not involve a loss of control, the difference between the consideration received and the carrying amount of the share of net assets disposed of was recognised in profit or loss. Under IAS 27 (28), all such increases or decreases are dealt with in equity, with no impact on goodwill or profit or loss. When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised Standard requires that the Group derecognise all assets, liabilities and non-controlling interests at their carrying amount. Any retained interest in the former subsidiary is recognised at its fair value at the date that control is lost. A gain or loss of control is recognised in profit or loss as the difference between the proceeds, if any, and these adjustments. In respect of the additional acquisition during the period of the Group s interest in Ellisons Imexports Pte Ltd (Note 19(i)), the impact of the change in policy has been that the difference of US$2,8, between the consideration paid and the transfer between the parent s equity and non-controlling interests has been recognised directly in equity. Had the previous accounting policy been applied, the additional acquisition would have been treated in the same manner as the acquisition of subsidiaries, with goodwill or a bargain purchase being recognised.

66 64 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 3. Adoption of new and revised Accounting Standards (continued) IAS 27 (Revised in 28) Consolidated and Separate Financial Statements (continued) (effective for annual periods beginning on or after 1 July 29) The revised Standard is also expected to affect the accounting for changes in ownership interests in future accounting periods, but the impact will only be determined once the detail of future transactions is known. Amendments to IFRS 7 Financial Instruments : Disclosures Improving Disclosures about Financial Instruments (effective for annual periods beginning on or after 1 January 29) The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments. IFRS 8 Operating Segments The Group adopted IFRS 8 with effect from 1 July, 29. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required an entity to identify two sets of segments (Business and Geographical), using a risks and rewards approach, with the entity s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. At the date of authorisation of these financial statements, the following Standards and amendments that are relevant to the Group were issued but not effective: IAS 1 Presentation of Financial Statements (Amendments arising from changes to IFRSs) IAS 24 Related Party Disclosures (Revised) IFRS 9 Financial Instruments Amendment to IAS 39 Financial Instruments: Recognition and Measurement Eligible Hedged Items Amendment to IAS 39 Financial Instruments: Recognition and Measurement and IFRIC 9 Reassessment of Embedded Derivatives Amendments relating to Embedded Derivatives Amendments to IFRS 2 Group Cash-Settled Share Based Payment Transactions Consequential amendments were also made to various standards as a result of these new/revised standards. The management anticipates that the adoption of the above Standards and amendments in future periods will not have a material impact on the financial statements of the Group in the period of their initial adoption.

67 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies 4.1 Basis of compliance These financial statements are general purpose financial statements which have been prepared in accordance with the International Financial Reporting Standards ( IFRS ). The financial statements comprise the consolidated financial statements of the Group. The financial statements were authorised for issue by the Directors on 13 August Basis of preparation The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in United States dollars, rounded to the nearest thousand, unless otherwise noted. 4.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controlling interests in subsidiaries are identified separately from the Group s equity therein. The interest of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquiree s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interest is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity. Total comprehensive income is attributed to noncontrolling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Group s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

68 66 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.3 Basis of consolidation (continued) When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest; and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measure or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. 4.4 Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised. Where a business combination is achieved in stages, the Group s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. The acquiree s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS are recognised at their fair value at the acquisition date, except that: deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; liabilities or equity instruments related to the replacement by the Group of an acquiree s share-based payment awards are measured in accordance with IFRS 2 Share-based Payment; and assets or disposals that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

69 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.4 Business combinations (continued) If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year. 4.5 Interests in joint ventures A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control. Where a group entity undertakes its activities under joint venture arrangements directly, the Group s share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognised in the financial statements of the relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group s share of the output of jointly controlled assets, and its share of joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions will flow to/from the group and their amount can be measured reliably. The Group s interests in assets where the Group does not have joint control are accounted for in accordance with the substance of the Group s interests. Where such arrangements give rise to an undivided interest in the individual assets and liabilities of the joint venture, the Group recognises its undivided interest in each asset and liability and classifies and presents those items according to their nature. Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group reports its interests in jointly controlled entities using proportionate consolidation, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. The Group s share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-line basis. Any goodwill arising on the acquisition by the Group of an interest in a jointly controlled entity is accounted for in accordance with the Group s accounting policy for goodwill (Note 4.6). Where the Group entities transact with their jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group s interests in the joint venture.

70 68 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.6 Goodwill Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Group s interest in the fair value of the acquiree s identifiable net assets exceed the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group s cash generating units expected to benefit from the synergies of the combination. Cash generating units are the smallest identifiable group of assets, liabilities and associate goodwill that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Cash generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 4.7 Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell. Any impairment loss on initial classification and subsequent measurement is recognised in the consolidated statement of comprehensive income. Subsequent increases in fair value less costs to sell (not exceeding the accumulated impairment loss that have been previously recognised) are recognised in the consolidated statement of comprehensive income.

71 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.8 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable for rendering of services in the ordinary course of the Group s activities, net of goods and services tax, rebates and discounts, where applicable, and after eliminating sales within the Group. Revenue is recognised as follows: Chartering revenue Revenue from chartering contracts is recognised on a time proportionate basis. Probable losses on voyages are provided in full at the time such losses can be estimated. Amounts receivable or payable arising from profit share arrangements are accrued based on estimates of amounts earned as at the reporting date. Deferred revenue is recorded when payments are received in advance for the group s services. As a related service is rendered, revenue is recognised. Rendering of services Revenue from ship repair services is recognised over the period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be performed. Revenue from short-term shipbuilding contracts is recognised when the service is rendered. Mobilisation/demobilisation income Mobilisation and demobilisation income is recognised upon completed delivery of services. Wharfages and commission income Wharfages and commission income is recognised when the service is rendered. Ship management income Revenue from management contracts is recognised on a time-proportionate basis. Deferred revenue is recorded when payments are received in advance for these services. Dividend and interest income Dividend revenue from investments is recognised when the shareholder s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably). Interest income is accrued on a time-proportionate basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset s net carrying amount.

72 7 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.9 Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group as lessor Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which the benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. The Group as lessee Assets held under finance leases are recognised as assets of the group at their fair values at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reductions of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group s policy on borrowing costs (Note 4.11). Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 4.1 Foreign currencies The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in United States dollars ( US$ ), which is the functional currency of the Company and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recorded at the rate of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

73 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.1 Foreign currencies (continued) Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised as other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised as other comprehensive income. Exchange differences on foreign currency borrowings relating to assets under construction for future productive use are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings. Exchange differences on transactions entered into in order to hedge certain foreign currency risks are described in the hedge accounting policies above. For the purpose of presenting consolidated financial statements, the assets and liabilities of the group s foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. On the disposal of a foreign operation (i.e. disposal of the Group s entire interest in a foreign operation, or loss of joint control over a jointly controlled entity that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have been previously been attributed to non-controlling interests are derecognised, but they are not reclassified to profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate Borrowing costs 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 prepare 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. 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 period in which they are incurred.

74 72 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.12 Retirement benefit costs Payments to defined contribution retirement benefit plans are charged as expenses as they fall due. Payments made to statemanaged retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Group s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period Share-based payments The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments to employees and others providing similar services are measured at fair value of the equity instruments at the date of grant. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 35. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group s estimate of the number of equity instruments that will eventually vest. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve. Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of other comprehensive income because of items of incomes and expenses that are taxable or deductible in other years and items that are never taxable or deductible. The Group s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

75 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.15 Taxation (continued) Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantially enacted by the end of each reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its asset and liabilities. 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 they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the year Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of business combinations, the tax effect is included in the accounting for the business combination.

76 74 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.16 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amounts of the replaced components are written off to the statement of comprehensive income. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of comprehensive income as incurred. Depreciation is calculated using the straight-line method to allocate the cost less its residual values estimated by the management so as to write-off items of property, plant and equipment over their estimated useful lives. The estimated useful lives of assets are summarised as follows: Vessels Barges 2 years Vessels Others 25 years Vessels Equipment 3 to 5 years Drydocking Not more than 5 years Leasehold land Over the remaining lease period of 38 years Buildings 2 years Furniture and fittings 3 to 1 years Office equipment 3 to 5 years Motor vehicles 1 years Plant and machinery 2.5 to 5 years No depreciation is provided on vessels under construction. The depreciation method, useful lives and residual values are reviewed at each year end and with the effect of any changes in estimate accounted for on a prospective basis. Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset 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. Other subsequent expenditure is recognised as repair and maintenance expense in the statement of comprehensive income during the financial year in which it is incurred. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

77 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.16 Property, plant and equipment (continued) The gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income. Fully depreciated assets are retained in the financial statements until they are no longer in use and no further charge is taken for depreciation in respect of these assets. Borrowing costs incurred on vessels constructed prior to 1 July 29 have been expensed to the income statement. There was no new construction of vessels subsequent to 1 July Intangible assets Intangible assets acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets not in use are not amortised, and are subject to impairment at least annually Impairment of tangible and intangible assets excluding goodwill At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those tangible and intangible assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the tangible and intangible asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are allocated to individual cash generating units, or otherwise they are allocated to the smallest group of cash generating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, provided that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the profit or loss.

78 76 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.19 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted-average basis. Cost of work-in-progress comprises raw materials, direct labour, sub-contractors costs, other direct cost and related production overheads but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less all estimated cost of completion and cost necessary to make the sale. 4.2 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that the Group will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably Financial assets All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount on initial recognition. Loans and receivables Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

79 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.21 Financial assets (continued) Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been adversely affected. For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 74 days (29: 86 days), as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received Financial liabilities and equity instruments issued by the Group Classification as debt or equity Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

80 78 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 4. Significant accounting policies (continued) 4.22 Financial liabilities and equity instruments issued by the Group (continued) Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognised as the proceeds received, net of direct issue costs. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transactions costs and are subsequently measured at amortised cost, using the effective interest method with interest expense recognised on an effective yield basis. For interest bearing bank loans, any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group s accounting policy for borrowing costs. Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged, cancelled or they expire Fair value estimation for financial assets and liabilities The carrying amounts of current financial assets and liabilities, carried at amortised cost, approximate their fair values. The fair values of financial instruments traded in active markets (such as exchange traded and over-the-counter securities and derivatives) are based on quoted market prices at the end of each reporting period. The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as estimated discounted cash flows, are also used to determine the fair values of the financial instruments. The fair values of financial liabilities carried at amortised cost are estimated by discounting the future contractual cash flows at the current market interest rates that are available to the Group for similar financial liabilities Derivative financial instruments From time to time, the Group enters into derivative financial instruments to manage its exposure to interest rate risk, through interest rate swaps (Note 28). The Group designates certain derivatives as hedges of fixed interest commitments (cash flow hedges).

81 Miclyn Express Offshore Limited Inaugural Annual nual Report Significant accounting policies (continued) 4.24 Derivative financial instruments (continued) Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognised as a financial asset; a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities. Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in either the other gains or losses line item. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the statement of comprehensive income as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. Hedging is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, exercised, or when it no longer qualifies for hedging accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised in profit or loss Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax ( GST ), except: (i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or (ii) for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.

82 8 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 5. Critical accounting judgements and key sources of estimation uncertainty In the application of the Group s accounting policies, which are described in Note 4, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical accounting judgements and key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year: Allowance for doubtful debts The policy for allowance for doubtful debts of the Group is based on the evaluation of collectability and on management s judgement. A considerable amount of judgement is required in assessing the expected ultimate realisation of these receivables, including the credit-worthiness of each customer. Management has assessed the collectability of gross trade receivables of US$3,63, (29 : US$23,49,) (Note 17) and considered that an allowance for doubtful debts amounting to US$917, (29 : US$312,) is required. Fair value of assets and liabilities on acquisition of joint venture In determining the fair value of assets and liabilities held by a joint venture during acquisition in April 21 (Note 2), management used third party valuations and also used other sources. The fair values used in determination of goodwill are considered by management to be reasonable. Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the end of the reporting period was US$47,738, (29 : US$32,836,). Details of the goodwill are provided in Note 23 to the financial statements. Impairment of vessels Vessels (including drydocking) net carrying amount of US$251,193, (29 : US$186,216,) was subject to an impairment test in the financial year ended 3 June 21. The impairment test involves comparing the recoverable amount of each individual asset class, namely Offshore Support Vessels, Crew/Utility Vessels, Tugs, Barges, and Coastal Survey Vessels, as each asset class has been determined to be the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets, otherwise known as cash generating unit, against its carrying value.

83 Miclyn Express Offshore Limited Inaugural Annual nual Report Critical accounting judgements and key sources of estimation uncertainty (continued) Impairment of vessels (continued) Recoverable amount is defined as the higher of the value in use and fair value less cost to sell. Value in use is the present value of the future cash flows expected to be derived from the cash generating unit, including terminal value. Fair value is the amount obtainable from the sale of the cash generating unit in an arm s length transaction between knowledgeable, willing parties. The fair value was based on valuation reports prepared by independent third party valuers which represent an appraisal of the vessels present day indicative market value in each of the cash generating units. In 21, no value in use assessment was done as the fair values of the class of assets were assessed by the external valuer to be higher than the carrying amount. The carrying values of vessels are disclosed in Note 22. Residual values and useful lives of property, plant and equipment The Group reviews the residual values and useful lives of property, plant and equipment at the end of each reporting period, in accordance with the accounting policy stated in Note 4. Significant judgement is required in determining the residual values and useful lives of property, plant and equipment. In determining the residual values and useful lives of vessels, the Group considers the scrap steel market price, the expected usage, maintenance and repair cost, technical or commercial obsolescence and legal or similar limits to the use of plant and equipment. The Group adopts a policy of depreciating the cost of its vessels, after allowing for residual values, over an assumed economic life span of 2 to 25 years from the date of initial delivery of a vessel from the Shipyard. However, the assumptions regarding economic life span and the estimated residual values may differ from the original estimates. Such differences will impact depreciation prospectively from the year in which the estimated economic useful life or the residual value changes. The carrying values of property, plant and equipment are disclosed in Note 22. Taxation in different jurisdictions The Group is subject to income taxes in a number of jurisdictions. In determining income tax liabilities, management is required to estimate the deductibility of certain expenses and the amount of capital allowances available in each tax jurisdiction. Management has estimated its income tax liabilities in all the jurisdictions in which it operates, and the amounts recorded as at 3 June 21 are considered reasonable. Fair value of share-based payment The fair value was assessed by an independent third party valuer. The valuer used the Binomial/Lattice model. Based on the valuation report, an expense of US$1, was recognised. Details of the variables used in the valuation are set out in Note 35.

84 82 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 5. Critical accounting judgements and key sources of estimation uncertainty (continued) Accounting for debt fees, IPO cash bonus and sweet equity cash borne by pre-ipo shareholders As further described in 44(ii), these costs are allocated between the Group and pre-ipo shareholders and the Group s share is recognised in the financial statements. 6. Revenue The following is an analysis of the Group s revenue for the year. 3 June 21 US$ 3 June 29 US$ Charter revenue 112,14 95,214 Mobilisation/demobilisation income 1, Ship management income 1, Ship repair income 1,493 1,55 116,459 98,23 See note 7 below for an analysis of revenue by operating segments. 7. Segmental information Information reported to the Group s chief operating decision maker for the purposes of resource allocation and assessment of segment performance is focused on the category of vessels generating charter revenue and Shipyard generating repair service revenue. The principal categories of these revenue are Offshore Support Vessels, Crew/Utility Vessels, Tugs, Barges, Coastal Survey Vessels and Shipyard services. The Group s reportable segments under IFRS 8 are therefore Offshore Support Vessels, Crew/Utility Vessels, Tugs, Barges, Coastal Survey Vessels and Shipyard services as further described below: Offshore support vessels Transportation and various support services across the entire offshore oil and gas cycle Crew/utility vessels Transportation of personnel and supplies to and from oil and gas production platforms Tugs Transportation of barges to and from work locations Barges Transportation of oilfield equipment, heavy steel structures, raw materials and/or accommodation for personnel working at offshore sites Coastal survey vessels Near-shore civil construction and oil/gas field exploration, development and production support. Shipyard Used as berthing base and/or to provide production support, newbuilding, conversion, repair and maintenance services both in-house and to joint ventures and third parties. Information regarding the Group s reportable segments is presented below.

85 Miclyn Express Offshore Limited Inaugural Annual nual Report Segmental information (continued) (i) Segment revenue and results The following is an analysis of the Group s revenue and results by reportable segment: Segment Revenue Segment profit/(loss) 3 June 21 3 June 29 3 June 21 3 June 29 US$ US$ US$ US$ Offshore support vessels 57,456 3,872 36,28 17,883 Crew/utility vessels 43,991 41,642 17,7 16,416 Tugs 5,191 9,411 (1,448) 3,46 Barges 7,247 14,616 4,241 11,238 Coastal survey vessels 1, ,34 96,541 56,142 48,583 Eliminations (25,149) (1,979) Shipyard 26,574 3,461 1,425 1,482 (653) 366 Total 116,459 98,23 55,489 48,949 Other gains and losses 6,898 4,936 Central administration costs and Directors salaries (16,584) (14,422) Finance costs (15,3) (24,159) Other expenses (135) (213) Profit before tax 3,638 15,91 Income tax expense (2,86) (2,191) Consolidated profit for the year 27,832 12,9 Revenue and results reported above represents revenue generated from external customers. The accounting policies of the reportable segments are the same as the Group s accounting policies described in Note 4. Segment profit represents the profit earned by each segment without allocation of central administration costs and Directors salaries and finance costs, and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

86 84 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 7. Segmental information (continued) (ii) Segment assets and liabilities 3 June 21 3 June 29 US$ US$ Segment assets Offshore support vessels 187,872 16,25 Crew/utility vessels 136, ,13 Tugs 17,197 1,958 Barges 27,859 33,12 Coastal survey vessels 6,524 Shipyard 8,189 7,931 Total segment assets 384,7 336,371 Unallocated 24,92 31,7 Consolidated assets 48,99 368,71 Segment liabilities Offshore support vessels 8,186 53,387 Crew/utility vessels 18,56 23,15 Tugs 4,583 6,927 Barges 737 1,618 Coastal survey vessels 1,65 Shipyard 6,252 5,33 Total segment liabilities 39,869 98,98 Unallocated 131, ,58 Consolidated liabilities 171,297 32,488 For the purposes of monitoring segment performance and allocating resources between segments: all assets are allocated to reportable segments other than cash and cash equivalents, other receivables and prepayments, intangible assets, other non-current assets, deferred tax assets and certain property, plant and equipment used for administrative purposes. Goodwill has been allocated to reportable segments as described in Note 23. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments; and all liabilities are allocated to reportable segments other than borrowings (excluding the capital expenditure facility loans), other financial liabilities, current and deferred taxation. Liabilities for which reportable segments are jointly liable are allocated in proportion to the cost of sales incurred.

87 Miclyn Express Offshore Limited Inaugural Annual nual Report Segmental information (continued) (iii) Other segment information Depreciation and amortisation 3 June 21 3 June 29 Additions to non-current assets 3 June 21 3 June 29 US$ US$ US$ US$ Offshore support vessels 4,559 2,178 23,593 49,57 Crew/utility vessels 5,533 4,866 6,428 17,286 Tugs , Barges 1,49 1, ,76 Coastal survey vessels Shipyard ,163 Unallocated ,482 9,971 33,88 7,893 (iv) Geographical information The Group s vessels carried out work in nine principal geographical areas Thailand, UAE (regional office for the Middle East), Indonesia, Australia, India, Malaysia, Vietnam, Norway and Papua New Guinea. The Group s revenue from external customers and information about its segment assets (non-current assets including only property, plant and equipment) by geographical location are detailed below: Revenue from external customers 3 June 21 3 June 29 3 June 21 Non-current assets 3 June 29 US$ US$ US$ US$ Thailand 37,573 24,855 7,58 51,533 UAE 28,722 33,21 58,761 56,232 Indonesia 1,817 6,269 4,219 13,162 Australia 5,73 6,28 12,923 25,517 India 5,693 8,574 16,91 2,286 Malaysia 5,12 4,752 24,582 3,381 Vietnam 4,533 1,892 4,936 1 Norway 3,572 4,82 5,39 2 Papua New Guinea 3, Other 3 11,215 7,632 69,589 1, ,459 98,23 32,549 27,36 1 The revenues were derived from non-current assets that were serving several geographical segments. The relevant vessels values were reflected under the major segment that they serve during the relevant periods. 2 For the financial year ended 3 June 29, revenue from Norway was derived from non-current assets held for sale. The relevant vessel was reclassified back to property, plant and equipment during the financial year ended 3 June 21, after an external party declined to exercise its option to purchase the vessel (Note 21). 3 Included in other non-current assets are vessels under construction of US$4,498, (29 : US$74,839,) (Note 22).

88 86 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 7. Segmental information (continued) (v) Information about major customers Included in revenues arising from charter revenue of US$112,14, (29 : US$95,214,), (Note 6) are revenues of approximately US$26,64, (29 : US$16,733,) which arose from crew/utility vessels and offshore support vessels to the Group s largest customer from Thailand. 8. Other gains and losses 3 June 21 US$ 3 June 29 US$ Gain on disposal of property, plant and equipment 3,847 2,453 Amortisation of provisions Interest income Sundry income Net foreign exchange gain 1, ,898 4, Administration expenses 3 June 21 US$ 3 June 29 US$ Employee benefits expenses (Note 1) 1,227 8,65 Professional fees 2,111 3,423 Bank charges Travelling expenses Depreciation of property, plant and equipment Office rent Allowance for doubtful debt Others 1, ,584 14,422

89 Miclyn Express Offshore Limited Inaugural Annual nual Report Employee benefits expenses 3 June 21 US$ 3 June 29 US$ Wages and salaries 7,517 6,262 Employer s contribution to defined contribution plans Share-based payments (Note 35) 1 Directors remuneration Other employee benefits 1, ,227 8, Finance costs 3 June 21 3 June 29 US$ US$ Interest expense arising from: Bank loans 8,66 14,131 Interest expense (related party) 2 14 Finance lease obligations 3 1 Other finance costs ,16 14,149 Amortisation of debt upfront fee 5,134 1,7 Total interest expense for financial liabilities not classified as at fair value through profit or loss 13,24 15,219 Commitment fee in relation to bank facility 11 Fair value (gains)/losses on interest rate swaps (294) 6,14 Hedge ineffectiveness on interest rate swaps hedges 1,974 2,926 15,3 24, Other expenses 3 June 21 US$ 3 June 29 US$ Other expenses 14 Loss on disposal of property, plant and equipment 3 19 Property, plant and equipment written off

90 88 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 13. Profit before tax Profit before tax has been arrived at after charging (crediting): 3 June 21 3 June 29 US$ US$ Depreciation and amortisation: Depreciation of property, plant and equipment 12,1 8,732 Amortisation of drydocking expenditure 1,472 1,239 13,482 9,971 Costs of defined contribution plans including in employee benefits expense Directors remuneration Employee benefits expense (excluding Directors remuneration) 8,797 6,752 Charter hire expense 3,349 3,942 Net foreign exchange gain (1,416) (957) Cost of inventories recognised as expense in cost of sales Bad debts written off 17 Allowance for doubtful debts Inventories written off Income taxes 3 June 21 3 June 29 US$ US$ Tax expense comprises: Current tax expenses in respect of the current year 2,489 1,437 Adjustments recognised in the current year in relation to current tax of prior years 6 39 Deferred tax expense relating to the origination and reversal of temporary differences (145) (3) Foreign withholding tax paid Total tax expense 2,86 2,191

91 Miclyn Express Offshore Limited Inaugural Annual nual Report Income taxes (continued) The expense for the year can be reconciled to the accounting profit as follows: 3 June 21 US$ 3 June 29 US$ Profit before tax 3,638 15,91 Tax at the domestic income tax rate of 17%* (29 : 17%) 5,28 2,565 Tax exempt income (4,9) (2,33) Effect of different tax rates of subsidiaries operating in other jurisdictions Non-deductible expenses Foreign withholding tax Unutilised tax loss not recognised as deferred tax asset 14 Adjustments recognised in the current year in relation to the current year tax of prior years 6 39 Income tax expense recognised in profit or loss 2,86 2,191 * The tax rate used represents the domestic tax rate of Singapore, the country in which the Group is domiciled. In accordance with the provisions of the Singapore Income Tax Act ( the Act ), the operating profits from shipping activities of vessels plying international waters are tax-exempt. The exemption is subject to the Group meeting the terms and conditions set out in Section 13A of the Act. In addition, income tax is chargeable on interest received during the financial year which is treated as a separate source of income for tax purposes. Current liabilities 3 June 21 3 June 29 US$ US$ Current liabilities Income tax payable 5,597 4,15

92 9 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 14. Income taxes (continued) Deferred tax balances The following are the major deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the current and prior reporting periods: Accelerated tax depreciation Tax losses Total US$ US$ US$ At 1 July 28 2 (64) (44) Credit to profit or loss (3) (3) At 3 June (64) (47) Charge/(credit) to profit or loss 6 (25) (145) At 3 June (269) (192) The following is the analysis of the deferred tax assets and liabilities balances for presentation purposes: 3 June 21 US$ 3 June 29 US$ Deferred tax assets Deferred tax liabilities (77) (17) The Group has unremitted retained earnings of US$1,775, (29: US$7,896,) from a joint venture in Thailand. No deferred tax liability at 1%, being the tax rate, is provided for as it is not expected that a liability will crystalise. 15. Earnings per share (a) Basic earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 3 June 21 US$ 3 June 29 US$ Profit for the year attributable to owners of the Company 27,486 11,926 Weighted average number of ordinary shares used in calculation of basic earnings per share ( ) 271,7 271,7* Basic earnings per share (USD cents per share) * For the purpose of calculating basic EPS for the comparative period, the weighted average number of ordinary shares was based on the number of shares deemed to be the additional equity, following the sale of securities on ASX, recorded in the issued equity of the MEO Finance Group immediately before the acquisition.

93 Miclyn Express Offshore Limited Inaugural Annual nual Report Earnings per share (continued) (b) Diluted earnings per share For the purpose of calculating diluted earnings per share, profit attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary shares, which is due to shares to be issued for deferred consideration (Note 3). The shares options are anti-dilutive and, accordingly, no adjustment is made for them. Diluted earnings per share attributable to owners of the Company is calculated as follows: 3 June 21 US$ 3 June 29 US$ Profit for the year attributable to owners of the Company 27,486 11,926 Weighted average number of ordinary shares used in calculation of basic earnings per share ( ) 271,7 271,7 Weighted average number of shares to be issued arising from acquisition of interest in a joint venture ( ) 73* Weighted average number of ordinary shares used in calculation of diluted earnings per share ( ) 272,43 271,7 Diluted earnings per share (USD cents per share) * The 3 June 21 weighted average number of shares to be issued from acquisition of interest in Samson has been calculated as 3 months over 12 months x 2,919, Shares (Note 3). 16. Cash and cash equivalents 3 June 21 US$ 3 June 29 US$ Cash and bank balances 14,739 17,12 Fixed deposits 72 6,76 14,811 23,178 Fixed deposits bear average effective interest rate of.3247% (29 :.6475%) per annum and for varying tenures range from 7 to 365 days (29 : 7 to 365 days).

94 92 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 17. Trade and other receivables 3 June 21 US$ 3 June 29 US$ Trade receivables 3,63 23,49 Allowance for doubtful debts (917) (312) 29,146 23,178 Trade balances due from: Related parties (Note 44) Other shareholders of joint ventures (Note 44) ,669 23,63 Non-trade balances due from: Intermediate holding company (Note 43) 17 Related party (Note 44) Pre-IPO shareholders (i) 3,54 Shareholders of joint ventures ,578 Deposits 2,117 1,17 Prepayments 1,916 1,2 Insurance claims (ii) Other receivables 2,511 1,167 36,798 31,346 (i) As at 3 June 29, the balance recoverable from shareholders existing prior to IPO was for professional fees incurred for the cancelled IPO listing effort in the financial year ended 3 June 29. This was collected subsequent to the end of the reporting period. (ii) The insurance claims as at 3 June 21 are for damages sustained by eight vessels which have been lodged with the insurer. Management is confident that these claims are recoverable under the insurance policies in place. The insurance claim as at 3 June 29 pertained to seven vessels that sank during that year and the amount was settled subsequent to 3 June 29. Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost. The average days sales outstanding as at 3 June 21 is 74 days (29 : 86 days). No interest is charged on overdue trade receivables. The Group recognises allowance for doubtful debts against specific identified trade receivables with outstanding balances more than 9 days, determined by reference to past default experience of the counterparty and an analysis of the counterparty s current financial position.

95 Miclyn Express Offshore Limited Inaugural Annual nual Report Trade and other receivables (continued) Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period but against which the Group has not recognised an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Group to the counterparty. Ageing of past due but not impaired: 3 June 21 US$ 3 June 29 US$ < 9 days 11,124 6,959 > 9 days 932 2,152 12,56 9,111 Movement in allowance for doubtful debts: 3 June 21 US$ 3 June 29 US$ Balance at beginning of year 312 Allowance during the year Allowance utilised during the year (49) Balance at end of the year In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to customer base being credit worthy customers from the oil and gas sector. Ageing of impaired trade receivables: 3 June 21 US$ 3 June 29 US$ 91 to 12 days 11 > 12 days

96 94 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 18. Inventories 3 June 21 US$ 3 June 29 US$ Raw materials Spare parts and consumables 3,972 3,695 Bunkers and lube oil Work-in-progress 9 2 4,628 4,477 The cost of inventories recognised as an expense during the period was US$322, (29 : US$487,). 19. Subsidiaries The details of the subsidiaries as at 3 June 21 are as follows: Name of subsidiaries and country of incorporation and operation Principal activities Effective equity interest held 3 June 21 3 June 29 % % MEO Finance Company Limited Bermuda Marine Services Holdings Limited Bermuda Oceantrans Investments Limited Bermuda Miclyn Finance Limited Bermuda MEO Investments Pte Ltd Singapore Investment holding Investment holding Investment holding Investment holding Investment holding 1. Miclyn Offshore Pte Ltd Singapore Miclyn Express Offshore Pte Ltd Singapore Investment holding, owner and charterer of vessels Investment holding, owner and charterer of vessels Miclyn Shipbuilding & Engineering Pte Ltd Singapore Ship building and ship repair Miclyn Offshore (Middle East & Africa) FZE United Arab Emirates Airmat Singapore Pte Ltd Singapore Marketing offshore vessels and providing support services Owner and charterer of vessels and barges

97 Miclyn Express Offshore Limited Inaugural Annual nual Report Subsidiaries (continued) Name of subsidiaries and country of incorporation and operation Principal activities Effective equity interest held 3 June 21 3 June 29 % % Entrons (Singapore) Pte Ltd Singapore Girino Enterprise Pte Ltd Singapore Halom Pte Ltd Singapore Ken-Mok Engineering & Fabricators Pte Ltd Singapore Koleth (S) Pte Ltd Singapore Maldives Fishery Pte Ltd Singapore Ticwink Pte Ltd Singapore Offshore Charters Pte Ltd Singapore Stardazz Pte Ltd Singapore Ellisons Imexports Pte Ltd (i) Singapore Owner and charterer of vessels and barges Owner and charterer of vessels and barges Owner and charterer of vessels and barges Owner and charterer of vessels and barges Owner and charterer of vessels and barges Owner and charterer of vessels and barges Owner and charterer of vessels and barges Ship management, owner and charterer of vessels Owner and charterer of vessels and barges Owner and charterer of vessels and barges Blansco Sdn Bhd Malaysia Cuig Maritime Pte Ltd Singapore Express Offshore Transport Limited Hong Kong Express Offshore Transport (UAE) LLC (iii) United Arab Emirates Indowise Shipping Limited (ii) Saint Vincent and the Grenadines PT. Ekspres Servisindo (iii) Indonesia PT. Loh & Loh Construction Indonesia Indonesia Shipowner and charterer Crewboat operations Shipowner and charterer Shipowner and charterer Shipowner and charterer Ship repair and maintenance Shipyard owner 1. 1.

98 96 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 19. Subsidiaries (continued) Name of subsidiaries and country of incorporation and operation Principal activities Effective equity interest held 3 June 21 3 June 29 % % P.T. Miclyn Shipbuilding Engineering Indonesia Miclyn Express Offshore (L) Bhd Malaysia Ship building and ship repair Owner and charterer of vessels & barges 1. Alliance Offshore Services Pte Ltd (iv) Singapore Owner and charterer of vessels and barges 1. (i) On 28 October 29, the Group acquired an additional 49% of the issued share capital of Ellisons Imexports Pte Ltd ( Ellisons ) for a purchase consideration of US$6,917, based on the fair value of net assets acquired of US$14,148,. In accordance with the requirements of IAS 27, Consolidation and Separate Financial Statements, the difference of US$2,8, between the purchase consideration of US$6,917, and the carrying amount of noncontrolling interests of US$4,117, has been taken into the other equity reserve in the financial year ended 3 June 21. (ii) Although the company does not own more than 5% of the equity shares of Indowise Shipping Ltd, and consequently it does not control more than half of the voting power of those shares, it has the power to appoint and remove the majority of the Board of Directors and control of the entity is by the Board. As a result, Indowise Shipping Ltd is controlled by the company and is consolidated in the financial statements. (iii) A certain proportion of the equity interest of the Group was held through nominees. (iv) During the financial year ended 3 June 21, the Group disposed of 5% of its interest in Alliance Offshore Services Pte Ltd ( AOSPL ), reducing its continuing interest to 5% joint venture interest for a consideration of US$9,. Subsequent to the disposal, AOSPL is accounted for as a joint venture, using proportionate consolidation method. Disposal Carrying amount US$ Identifiable assets and liabilities Cash and cash equivalents (559) Trade and other receivables (363) Trade and other payables 913 Identifiable net assets disposed (9) Cash consideration received 9 Less: Cash and cash equivalents in subsidiary disposed (559) Net cash outflow on disposal (55)

99 Miclyn Express Offshore Limited Inaugural Annual nual Report Joint ventures The details of the joint ventures are as follows: Name of joint ventures and country of incorporation and operation Principal activities Effective equity Interest held 3 June 21 3 June 29 % % Uniwise Holdings Limited Thailand Uniwise Offshore Limited Thailand Alliance Offshore Service Limited Hong Kong Alliance Offshore Services Pte Ltd (Note 19(iv)) Singapore Samson Maritime Holdings Pty Ltd (see note below) Australia Investment holding Offshore support vessel business Ship owner and charterer Owner and charterer of vessels and barges 5. Investment holding 5. On 8 April 21, the Group completed the purchase of a 5% joint venture interest in Samson Maritime Holdings Pty Ltd ( Samson ), a company incorporated in Australia, for a total purchase consideration of US$21,165, (Note 3). The financial statements of Samson are included in the Group s financial statements from 8 April 21, upon the completion of the business combination. The share of net assets acquired in the transaction, and the goodwill arising, are as follows: Carrying amounts in acquiree s books Fair value adjustments Fair value amount 21 US$ US$ US$ Net assets acquired: Cash and cash equivalents 5,234 5,234 Trade and other receivables 1,48 1,48 Inventories Property, plant and equipment 11,22 (763) 1,259 Deferred tax assets Borrowings (5,49) (5,49) Trade and other payables (6,834) (6,834) Income tax payable (74) (74) Deferred tax liabilities (16) (16) Net assets acquired: 5,55 (763) 4,787 Goodwill (Note 23) 16,378 Total consideration: 21,165 Consideration to be satisfied by shares (Note 3) (5,97) Cash consideration paid 16,68 Cash and cash equivalents acquired (5,234) Net cash outflow arising on acquisition 1,834

100 98 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 2. Joint ventures (continued) Samson contributed US$3,13, to revenue and US$(236,) to the group s profit before tax for the period between the date of acquisition and the end of the reporting period. The following amounts are included in the Group s financial statements as a result of proportionate consolidation of above joint ventures: 3 June 21 3 June 29 US$ US$ Assets and liabilities Non-current assets 32,95 18,47 Current assets 8,363 4,393 Current liabilities (6,131) (5,268) Non-current liabilities (13,947) (5,745) Revenue 11,798 5,215 Expenses (8,) (2,25) 21. Assets classified as held for sale The Group entered into agreements to sell its vessels to third parties at the end of their respective charter periods. Accordingly, these vessels to be sold have been classified as assets held for sale and are separately presented on the statement of financial position. Details of these vessels held for sale are as follows: A 3 June 29 On 19 August 29, the subsidiary entered into an agreement, named addendum No. 4, with an external party whereby an option was granted to the external party to purchase a vessel upon completion of the charter period on 14 December 29, for a consideration of US$9,,. As at 3 June 29, the vessel had a net carrying value of US$5,828,. The vessel delivery date was agreed to be 15 December 29. B 3 June 21 Following from (A) above, the external party declined to exercise its option to purchase the vessel when addendum No. 4 expired. As at the financial year ended 3 June 21, the vessel was reclassified to property, plant and equipment. During the financial year ended 3 June 21, a subsidiary of the Group has confirmed plans to sell a crew/utility vessel to an external party for a consideration of US$31,. As at 3 June 21, the vessel has a net carrying value of US$41,. Subsequent to the year end, the vessel was sold.

101 Miclyn Express Offshore Limited Inaugural Annual nual Report Property, plant and equipment Vessels Drydocking Leasehold land & building Furniture and fittings Office equipment Motor vehicles Plant and machinery Vessel under construction Total US$ US$ US$ US$ US$ US$ US$ US$ US$ Cost: At 1 July ,834 3,285 6, ,81 89, ,736 Additions 7,834 3, ,62 57,359 7,893 Disposals (4,575) (687) (137) (8) (28) (135) (5,822) Exchange differences 93 (12) (718) (6) (22) (4) (161) (257) (1,87) Transfer 72, (72,135) At 3 June ,31 5,639 6, ,586 74, ,72 Acquisition of joint venture (Note 2) 9, ,259 Additions 2,846 2, ,659 25,249 33,88 Disposals (5,39) (2,59) (1) (3) (32) (12) (7,146) Write-off (141) (781) (225) (13) (292) (1,569) Exchange differences (3) 288 (25) 1,382 Transfer 59,874 2 (187) (59,689) Reclassified as held for sale (725) (57) (73) (855) Reclassified from held for sale (Note 21) 6,298 6,298 At 3 June ,18 5,146 7, ,342 4, ,177 Accumulated depreciation and impairment: At 1 July 28 6,84 1, ,891 Depreciation for the year 7,172 1, ,971 Disposals (2,451) (574) (34) (8) (12) (33) (3,22) Exchange differences (149) (4) (58) (5) (1) (29) (246) At 3 June 29 11,376 2, ,623 16,414 Depreciation for the year 9,869 1, ,455 13,482 Disposals (2,232) (931) (1) (1) (8) (3) (3,176) Write-off (89) (781) (181) (114) (286) (1,451) Exchange differences Reclassified as held for sale (338) (47) (6) (445) Reclassified from held for sale (Note 21) At 3 June 21 19,64 2,69 1, ,88 25,628 Carrying amount: At 3 June ,116 3,77 6, ,462 4,498 32,549 At 3 June ,925 3,291 5, ,963 74,839 27,36 The carrying amount of the Group s motor vehicles includes an amount of US$9, (29 : US$13,) secured in respect of assets held under finance leases. During the financial year ended 3 June 21, the Group has pledged the property, plant and equipment of certain subsidiaries amounting to US$268,278, (inclusive of purchase price allocations of US$2,769,) to secure banking facilities granted to the Group (Note 26).

102 1 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 22. Property, plant and equipment (continued) As at 3 June 29, two crew boats belonging to a subsidiary of the Group were being detained by the Indonesian authorities due to irregularities with the sailing licenses. The two detained vessels are allowed to operate within Indonesian waters only. As at 3 June 21, the two vessels had not yet been released, however no impairment is considered necessary at this stage as management continues to work with the Authorities on their release while continuing to operate the vessels within Indonesian waters. 23. Intangible assets 3 June 21 3 June 29 US$ US$ Composition: Goodwill (note (a)) 47,738 32,836 Licences (note (b)) ,634 32,836 (a) Goodwill 3 June 21 3 June 29 US$ US$ Cost and carrying amount: Balance at beginning of year 32,836 32,836 Arising from acquisition of interest in joint venture (Note 2) 16,378 Effect of foreign currency exchange differences (1,476) Balance at end of the year 47,738 32,836 As at 3 June 21, goodwill arises from the purchase on 8 April 21 of a 5% joint venture interest in Samson Maritime Holdings Pty Ltd ( Samson ), a company incorporated in Australia, for a total purchase consideration of US$21,165,. The goodwill arising on this acquisition was attributable to the anticipated future earnings of the Samson fleet, and to enhance profitability through operating synergies. A major value-driver of the combination is the anticipated revenues arising through opportunities to support civil construction and field development projects in Australia not only with the Samson fleet, but with other vessels owned within the Group. The goodwill as at 3 June 29 primarily arises from the acquisition of Marine Services Holdings Limited ( MSHL ), its subsidiaries and joint ventures for a total consideration of US$94,7,, on 23 November 27. The goodwill arising on this acquisition was attributable to the anticipated future operating synergies from the combination. Impairment tests for goodwill Goodwill is allocated to the Group s cash generating units ( CGUs ) identified according to business segments.

103 Miclyn Express Offshore Limited Inaugural Annual nual Report Intangible assets (continued) (a) Goodwill (continued) A segment-level summary of the goodwill allocation is as follows: 3 June 21 3 June 29 US$ US$ Offshore support vessels Crew/utility vessels 4,477 32,717 Tugs 3,654 Coastal survey vessels 3,488 Total segment assets 47,738 32,836 The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amount of each CGU is determined through value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to charter rates, direct costs and terminal value of equity during the financial year. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risk specific to the CGU. The growth rates are based on industry growth forecasts. Changes in charter rates and direct costs are based on expectations of future changes in the market. The management has prepared future cash flow forecasts which indicate that growth is expected to be flat from 21 to 216 (29 : 3% from 29 to 21 and flat growth from 21 to 215). The management estimates a terminal value on equity based on 7. times (29 : 7.2 times) earnings before interest, depreciation and tax. A discount rate of 11.6% (29 : 11.2%) is applied to these forecasted cash flows. Based on these value in use calculations, management are of the opinion that there is no impairment loss on goodwill. If management s estimate of discount rate increases or decreases by 1% (29 : 1%), the effect on the value in use will be as follows: 3 June 21 3 June 29 Increase (Decrease) Increase (Decrease) US$ US$ US$ US$ Crew/utility vessels 1,194 (1,239) 4,2 (4,4) Tugs 18 (187) Costal survey vessels 173 (179)

104 12 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 23. Intangible assets (continued) (b) Licences Licences represent the licences fee relating to the computer software purchased during the financial year ended 3 June 21. No amortisation has been made during the financial year ended 3 June 21 as the software has not been commissioned as at 3 June Other non-current assets As at 3 June 29, the other non-current assets represent upfront loan arrangement fees paid on loan facilities which had yet to be drawn down at year end. 25. Trade and other payables 3 June 21 3 June 29 US$ US$ Trade payables Outside parties 11,348 14,47 Related parties (Note 44) 129 1,816 11,477 16,286 Non-trade payables: Related parties (Note 44) 1,233 Pre-IPO holding company (Note 43) 11 1,343 Other payables 1,156 6,56 Accrued expenses 9,66 3,928 21,699 27,613 The average credit period for trade payables is 39 days (29 : 3 days). No interest is charged on overdue balances. Trade payables principally comprise amounts outstanding for trade purchases and are mainly denominated in United States dollars.

105 Miclyn Express Offshore Limited Inaugural Annual nual Report Borrowings 3 June 21 3 June 29 US$ US$ Secured at amortised cost Bank loans 136,25 277,872 Finance lease liabilities (Note 27) , ,884 Current 9, ,877 Non-current 127, , ,884 Non-current portion is payable as follows: Within 1 year 16,395 5 Within 2 to 5 years 11,617 2 More than 5 years ,122 7 Summary of borrowing arrangements: 3 June 21 US$ 3 June 29 US$ Balance at beginning of year 277,872 23,83 Acquisition of interest in joint venture (Note 2) 5,49 Loans drawn during the financial year 13,93 5,674 Debt upfront fee prepaid (875) Amortisation of prepaid debt upfront fee 5,14 1,7 Repayment of loans (282,587) (3,767) Effect of foreign currency exchange differences (532) (33) Balance at end of year 136,25 277,872 During the financial year ended 3 June 21, the Group repaid all its existing debts, except debt obligations of joint ventures, incurred prior to the IPO, amounting to US$276,318,, and put in place a new secured term loan facility amounting to US$12,, and a revolving facility of US$3,,. The term loan facility has been drawn down as at the end of the reporting period, and is repayable semi-annually in the following tranches:

106 14 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 26. Borrowings (continued) Summary of borrowing arrangements (continued): Repayment Term Percentage Repayment (%) March 211, September 211, March 212, September March 213, September March September Final Maturity Date 5 years from the first loan drawdown date 37.5 The term loan drawn down bears an effective interest rate of 3.4% during the year and interest is charged at LIBOR plus a fixed rate of 2.75% per annum. It is secured by pledges of share capital and assets of certain subsidiaries. The carrying amounts of assets pledged are US$258,244,. The carrying amount of the term loan approximates its fair value. The remaining US$16,25, borrowings is comprised as follows: (i) A revolving bill facility amounting to US$5,753,, which represents the Group s proportionate share of the facility, was secured by the fleet and total assets held by a certain joint venture companies. The bill facility is repayable 5 years from the end of the financial year ended 3 June 21 and bears interests at Bank Bill Swap Bid Rate ( BBSY ) rate plus a line fee of 3.8% per annum. These facilities, together with the unused facilities below, are proportionately guaranteed by shareholders of the joint venture and a subsidiary of the Group. As at 3 June 21, the subsidiary has provided limited guarantee amounting to A$8,29, (equivalent to US$7,533,) (29 : NIL) for this facility. The joint venture has unused Receivables Finance, Vehicle Financing and Corporate Charge Card facilities amounting to US$3,168,; and The carrying amount of the borrowings approximate their fair value. (ii) Term debt facilities held by a certain joint venture with the Group s proportionate share of the outstanding debt amounting to US$1,497, as at the financial year ended 3 June 21. These facilities are amortised over the facility tenors, and will mature between July 213 and April 215. The facilities bear interest at LIBOR plus a margin of 1.% to 2.% and are secured by the certain vessels held by the joint venture. This facility is jointly guaranteed by shareholders of the joint venture and a subsidiary of the Group. As at 3 June 21, the subsidiary has provided corporate guarantee amounting to US$7,4,. As at the financial year ended 3 June 21, the joint venture has unused overdraft facility and forward contract credit facility amounting to US$37, and US$1,, respectively. The carrying amount of the borrowings approximate their fair value.

107 Miclyn Express Offshore Limited Inaugural Annual nual Report Borrowings (continued) Summary of borrowing arrangements (continued): At 3 June 29, the bank loans were comprised as follows: (i) A senior loan balance amounting to US$22,83,, which is repayable over 26 quarterly instalments commencing from 1 July 29 and bearing effective interest rate of 5.37% per annum. Interest is charged at LIBOR plus a margin of 2% to 3% which varies in accordance with the Group financial conditions. The loan is secured by a first ranking charge over all assets of the Company and its subsidiaries. The carrying amount of the loan approximates its fair value. (ii) A capital expenditure facility loan balance amounting to US$68,289, is repayable over 22 quarterly instalments commencing from 1 July 29 and bearing an effective interest rate at 5.37% per annum. Interest is charged at LIBOR plus a margin of 2% to 3% which varies in accordance with the Group financial conditions. This facility is secured by pledges of share capital and assets of certain subsidiaries. The carrying amount of the loan approximates its fair value; and (iii) Bank borrowings balance of US$7,5, under a revolving working capital facility, bearing an effective interest rate of 5.37% per annum and repayable on the last day of the interest period. This facility is secured by pledges of share capital and assets of certain subsidiaries. The carrying amount of the loan approximates its fair value. As at 3 June 29, in accordance with IAS 1, the existence of the technical events of default at the end of the reporting period required the Group to classify all its interest bearing liabilities under the debt facilities as current liabilities. 27. Obligations under finance lease Leasing arrangements Finance leases relate to motor vehicles with average lease terms of 5 years (Note 22). The Group has option to purchase the vehicle for a nominal amount at the conclusion of the lease arrangements. The Group s obligations under finance lease are secured by the lessors title to the leased assets. Finance lease liabilities Minimum lease payments Present value of minimum lease payments 3 June 21 3 June 29 3 June 21 3 June 29 US$ US$ US$ US$ Amount payable under finance lease: Within one year Later than one year but not later than five years Present value of lease obligation

108 16 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 27. Obligations under finance lease (continued) Finance lease liabilities (continued) 3 June 21 3 June 29 US$ US$ Included in the financial statements as: current borrowings (Note 26) 5 5 non-current borrowings (Note 26) The effective borrowing rate was 5.5% per annum. Interest rates are fixed at the contract date, and thus expose the Group to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The fair value of the Group s finance lease obligations approximate their carrying amount. 28. Other financial liabilities 3 June 21 US$ 3 June 29 US$ Derivative that are designated and effective as hedging instruments carried at fair value Interest rate swaps 7,596 The Group has adopted cash flow hedge accounting with effect from 1 April 29. The Group uses interest rate swaps to manage its exposure to interest rate movements on its bank loans by swapping a proportion of those bank loans from floating rates to fixed rates. The Group tests hedge effectiveness on a quarterly basis. The portion of the gain or loss on the hedging instrument and the gain or loss on the hedged item is recognised directly in hedge reserve in other comprehensive income and the ineffective portion is recognised in other comprehensive income. During the financial year end 3 June 21, the Group pre-terminated its interest rate swap instruments arising from the refinancing of all its debt existing prior to the IPO. As at 3 June 21, the Group did not enter into any interest rate swap instruments. During the financial year ended 3 June 29, contracts with average notional value of US$169,227, carried floating interest receipts at LIBOR, which approximates an average of 2.48% during the year. The fair value of swaps entered into as at 3 June 29 is estimated at US$7,596,. These amounts are based on quoted market prices for equivalent instruments at the end of the reporting period. As at 3 June 29, the notional value of the interest swaps is US$192,326,832; out of which US$11,75, have fixed interest payments at an average rate of 4.82% for the period up until 212 and US$9,576,832 have fixed interest payments at an average rate of 1.43% up till December 29.

109 Miclyn Express Offshore Limited Inaugural Annual nual Report Provisions Provisions represent the fair value of existing fixed rate contracts with customers at date of acquisition of subsidiaries. Amortisation is provided based on the remaining contract lease period of the off market contracts, ranging from 2 to 9.5 years. 3 June 21 3 June 29 US$ US$ Cost: Balance at beginning and end of year 4,7 4,7 Accumulated amortisation: Balance at beginning of year 1, Amortisation for the year Balance at end of year 2,131 1,427 Carrying amount: Balance at end of year 2,569 3,273 Current Non-current 2,1 2, Deferred consideration On 24 February 21, the Group entered into a Share Subscription and Sale Agreement with the existing shareholders of Samson Maritime Holdings Pty Ltd ( Samson Maritime ), incorporated in Australia, a joint-venture company, to acquire a 5% joint venture interest in Samson Maritime (Note 2). The total purchase consideration of US$21,165, comprises cash consideration of US$16,68, paid upon completion of the acquisition and a deferred issue of shares of the Company at IPO price (A$1.9), amounting to US$5,97, representing 2,919, shares of the Company, to occur on 24 February 211. The deferred consideration can be adjusted for certain claims by the group over the weighted average market price of the Company shares based on the 5 trading days immediately preceding the Deferred Payment Date. Accordingly, the deferred issue of shares in the Company has been taken into current liability as Deferred consideration. The net assets acquired in the transaction are disclosed in Note 2 to the financial statements. 31. Fully paid ordinary shares Number of shares Share capital US$ At 1 July 28 and 3 June 29 3,25,2 2,98 Issued for cash (Note 2) 271,7, 24,689 Investment in MEO Finance (Note 2) (3,25,2) 271,7, 26,787

110 18 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 31. Fully paid ordinary shares (continued) During the financial year ended 3 June 21, the Company successfully raised funds by issuing 271,7, new ordinary shares with par value of US$.9 (A$.1) through the IPO exercise. The funds raised were used to help the Company to effect the business combination of acquiring MEO Finance Company Limited (Note 2), to repay debts incurred prior to the IPO (Note 26), and to acquire 5% joint venture interest in Samson Maritime Holdings Pty Ltd (Note 2). As at 3 June 21, there is a deferred issue of 2,919, shares of the Company relating to the acquisition of this joint venture company (Note 3). As at 3 June 21, the share capital presented is determined by adding the additional equity retained by the Group to the issued equity recorded in the MEO Finance Group financial statements immediately before the acquisition (Note 2). However, the equity structure which refers to the number and type of shares issued will reflect the equity structure of the Company. For the financial year ended 3 June 29, the share capital presented is that of Miclyn Offshore Pte Ltd (Note 2). Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company. 32. Share premium 3 June 21 US$ 3 June 29 US$ Balance at the beginning of year Issued for cash (Note 2) 444,376 Investment in MEO Finance (Note 2) (292,656) IPO and its related expenses (7,78) 144,12 During the financial year ended 3 June 21, share premium of US$444,376,, determined by the market price in excess of the par value from the shares issued for cash during the IPO, was recorded. The portion of the share premium received from the IPO of US$292,656, was used to finance the acquisition of MEO Finance Company Limited (Note 2) during the same financial year ended 3 June 21. In addition, IPO expenses amounting to US$7,78, were also deducted against the share premium account during the same financial year.

111 Miclyn Express Offshore Limited Inaugural Annual nual Report Reserves 3 June 21 3 June 29 US$ US$ Composition Other equity reserve (45,34) (49,147) Hedging reserve 1,896 Translation reserve (1,172) (922) Share option reserve 1 (46,16) (48,173) Movements (a) Other equity reserve Balance at the beginning of year (49,147) (52,54) Additional capital contributions (i) 17,584 2,516 Repayment of capital contributions (i) (7,357) Deemed capital contributions 391 Acquisition of additional interest in a subsidiary (Note 19 (i)) (2,8) Additional payment for acquisition of interest in a subsidiary (ii) (3,314) Balance at end of year (45,34) (49,147) Other equity reserve represents the excess of share capital of the MEO Finance over the net equity of Miclyn Offshore Pte Ltd and its subsidiaries subsequent to the restructuring in 28 (Note 2). (i) Additional/Repayment of capital contributions During the financial year ended 3 June 21, the shareholders injected US$17,584, in cash to MEO Finance for 17,584, shares at US$1. per share. In 28, the Group waived a debt of US$7,357, owing to MEO Holdings Limited and the amount was accordingly recorded as a capital contribution. In 21, the amount was reclassified as a debt owing to MEO Holdings Limited and the Group repaid US$7,357, in cash to MEO Holdings Limited. During the financial year ended 3 June 29, the shareholders injected US$2,516, in cash to MEO Finance for 2,516, shares at US$1. per share.

112 11 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 33. Reserves (continued) (a) Other equity reserve (continued) (ii) Additional payment for combination of interest in a subsidiary Following the Group s combination of Miclyn Offshore Pte Ltd on 23 November 27 (Note 2), a dispute in relation to the final purchase price adjustment had arisen with the vendor/shareholder. In the financial year ended 3 June 21, subsequent to the further discussion with the vendor/shareholder to resolve the dispute, an amount of US$3,314, additional consideration was paid to the vendor/shareholder. Accordingly the additional consideration for the dispute has been taken into other equity reserve. (b) (c) 3 June 21 3 June 29 US$ US$ Hedging reserve Balance at beginning of year 1,896 Loss on cash flow hedging 1,896 Reclassification to profit or loss upon pre-termination of interest rate swap instruments prior to IPO (Note 28) (1,896) Balance at end of year 1,896 Translation reserve Balance at beginning of year (922) 132 Exchange differences arising on translation of foreign operations (25) (1,54) Balance at end of year (1,172) (922) (d) Share option reserve Balance at beginning of year Arising from share-based payments 1 Balance at end of year Retained earnings 3 June 21 3 June 29 US$ US$ Balance at beginning of year 89,129 77,23 Net profit attributable to members of the Company 27,486 11,926 Payment of dividends to pre-ipo shareholders (Note 36) (5,233) Balance at end of year 111,382 89,129

113 Miclyn Express Offshore Limited Inaugural Annual nual Report Share-based payments The Group has adopted an equity compensation plan ( Plan ) to assist in the attraction, motivation, and retention of employees including Executive Directors ( Plan Participants ) to and within the Company. The Plan enables the Company to grant options ( Employee and Executive Options ) to Plan Participants. Each Employee and Executive Option is a conditional entitlement to one Share, subject to the satisfaction of specified performance conditions. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time between the date of vesting and the date of their expiry. If the options remain unexercised after a period of 5 years from the date of grant, the options expire. Options are forfeited if the employee leaves the group before the options vest. Under the Plan, the Group may grant Employee and Executive Options to employees within the Group from time to time as determined by the Board in its discretion and in accordance with the rules of the Plan and applicable law. In respect of the initial grant of Employee and Executive options granted to the eligible Plan Participants, the grant date was the date of the Listing. An Employee and Executive Option will vest and become exercisable to the extent that the performance conditions specified at the time of grant are satisfied. The Board has discretion under the Plan as to the terms upon which it will offer options under the Plan, including the performance conditions. It is proposed that the performance conditions attached to the initial grant of Employee and Executive Options will involve an approximate three years employment service condition, earning per share ( EPS ) growth target hurdles and a comparative total shareholders return ( TSR ) hurdle. In addition, the performance condition to be used to determine the number of TSR Employee and Executive Options that vest compares the TSR performance of the Company with the TSR performance of each of the individual entities in a comparator group of entities across the TSR performance. Broadly, TSR is the growth in share price plus dividend reinvested. The exercise price will be determined by the Board and will usually equal the volume weighted average price of the Shares over the one week period up to and including the date of grant of the Employee and Executive Options. As such, no Employee and Executive option will vest unless the Plan Participant is employed on the date of the Financial Year 3 June 213 result announcement. Details of the share options outstanding during the year are as follows: Group 21 Number of share options Outstanding at the beginning of the year Granted during the year 2,617,74 Outstanding at the end of the year 2,617,74 Exercisable at end of the year

114 112 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 35. Share-based payments (continued) The fair value of the share options granted during the financial year is US$.81 per option. Options were priced using a binomial/lattice model. The inputs into the valuation model were as follows: Group 21 Share price A$1.9 (equivalent to US$1.73) Exercise price A$1.9 (equivalent to US$1.73) Expected volatility 35% Expected life 4.4 years Risk free rate 4.7% Expected dividend yield 1.65% Where relevant, the expected life used in the model has been adjusted based on management s best estimate for the effects of non-transferability, exercise restrictions, and behavioural considerations. Expected volatility was determined by the valuer by reference to the volatility of the peer group of group, comprising companies in the same industry that are listed on the ASX. The group recognised total expenses of US$1, related to equity-settled share-based payment transaction during the year. 36. Dividends During the financial year ended 3 June 21, prior to IPO, MEO Finance declared and paid an interim exempt dividend of US$1.63 per share amounting to a total of US$5,233, in respect of the financial year ended 3 June 21, to pre-ipo shareholders. 37. Non-controlling interests 3 June 21 3 June 29 US$ US$ Balance at beginning of year 4,529 3,946 Share of profit for the year Share of exchange difference for the year (31) Deemed capital contribution (391) Reduction in non-controlling interests arising on the acquisition of additional interest in subsidiary (Note 19 (i)) (4,117) Balance at end of year 727 4,529

115 Miclyn Express Offshore Limited Inaugural Annual nual Report Commitments The Group had the following outstanding commitments: Capital commitments contracted but not provided for in respect of: 3 June 21 US$ 3 June 29 US$ Expenditure for licences fee, contracted for 331 Expenditure for vessels, contracted for 29,67 22, Operating lease arrangement The Group as lessee 3 June 21 3 June 29 US$ US$ Minimum lease payments under operating leases recognised as an expense in the financial year At the end of the reporting period, the Group has outstanding commitments under non-cancellable operating leases, which fall due as follows: 3 June 21 3 June 29 US$ US$ Within one year In the second to fifth year inclusive 1, , Operating lease payments represent rentals payable by the Group for its office premises and equipment. The rentals are fixed for three and five years respectively. The Group as lessor 3 June 21 US$ 3 June 29 US$ Charter revenue (112,14) (95,214) Charter expenses 3,349 3,743

116 114 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 39. Operating lease arrangement (continued) At the end of the reporting period, the Group has outstanding commitments under non-cancellable operating leases, which fall due as follows: 3 June 21 3 June 29 US$ US$ Within one year 85,767 7,68 In the second to fifth year inclusive 66,797 16, , ,83 4. Contingent liabilities As at 3 June 21, subsidiaries of the Group have issued corporate guarantees to banks for borrowings of certain joint ventures amounting to US$7,4, (29 : US$7,4,) and A$8,29, (29 : A$ Nil). 41. Financial instruments, financial risk and capital risk management (a) Capital risk management policies and objectives The Group s objectives when managing capital are to safeguard the Group s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings. The Group is required to fulfil certain financial covenants under certain borrowing arrangements. As at 3 June 21, the Group is in compliance with all externally imposed financial covenants pertaining to capital structure. The Group s overall strategy remains unchanged from the financial year ended 3 June 29. (b) Significant accounting policies Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement, and the bases for recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed in Note 4.

117 Miclyn Express Offshore Limited Inaugural Annual nual Report Financial instruments, financial risk and capital risk management (continued) (c) Categories of financial instruments The following table sets out the financial instruments as at the end of each reporting period: 3 June 21 3 June 29 US$ US$ Financial assets Loans and receivables (including cash and cash equivalents) 49,693 53,522 Financial liabilities Derivative financial instruments designated as hedging instruments 7,596 Amortised cost 157,957 35,497 The fair value of the Group s financial assets and financial liabilities approximate their carrying amounts. (d) Financial risk management policies and objectives The Group s activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group s overall risk management strategy seeks to minimise adverse effects from the unpredictability of interest rate risk on the Group s financial performance by entering into interest rate swaps to hedge its interest rate risk. The Group s Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operation of the Group through internal risk reports which analyse exposures by degree and magnitude risks. These risks include market risk (including currency risk and fair value interest rate risk), credit risk, liquidity risk and cash flow interest rate risk. The Group seeks to minimise the effect of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group policies approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivatives financial instruments, and the investment of excess liquidity. Compliances with policies and exposure limits is reviewed by the management on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purpose. The Corporate Treasury function reports quarterly to the Group s risk management committee, an independent party that monitor risk and policies implemented to mitigate risk exposures. (e) Market risk The Group s activities expose it to the financial risks of changes in foreign currency exchange rates (Note 41(f)). The Group is also subject to interest rates risk (Note 41(g)). In the financial year ended 3 June 29, the Group entered into interest rate swaps to mitigate the risk of rising interest rates. The financial instrument was pre-terminated prior to IPO (Note 28). The Group did not hedge its interest rate exposures in the financial year ended 3 June 21.

118 116 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 41. Financial instruments, financial risk and capital risk management (continued) (f) Foreign currency risk management The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Group reviews its exposure to foreign currency risk and puts in place hedges on a needs basis, assessed with reference to the size and certainty of each exposure. During the financial years ended 3 June 29 and 3 June 21, the Group did not have in place any foreign currency hedges. The carrying amounts of the Group s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows: The Group At 3 June 21 United United Arab States Singapore Japanese Saudi Emirates dollar dollar yen riyal dirham Others Total US$ US$ US$ US$ US$ US$ US$ Financial assets Cash and cash equivalents 8,892 1, ,41 14,811 Trade and other receivables 25, ,596 3,98 4,422 34,882 Total assets 33,896 2,683 1,596 3,686 7,832 49,693 Financial liabilities Trade and other payables (9,643) (6,114) (1,826) (1,11) (3,15) (21,699) Borrowings (13,498) (5,76) (136,258) Total liabilities (14,141) (6,114) (1,826) (1,11) (8,865) (157,957) Net (Liabilities) Assets (16,245) (3,431) (1,826) 1,596 2,675 (1,33) (18,264) Capital commitments (18,85) (1,572) (413) (148) (29,938) Currency exposure of financial liabilities net of those denominated in the respective entities functional currencies 125,5 125,5 Currency exposure (14,3) (2,239) 1,596 2,675 (1,181) (13,152)

119 Miclyn Express Offshore Limited Inaugural Annual nual Report Financial instruments, financial risk and capital risk management (continued) (f) Foreign currency risk management (continued) United United Arab States Singapore Japanese Saudi Emirates dollar dollar yen riyal dirham Others Total US$ US$ US$ US$ US$ US$ US$ The Group At 3 June 29 Financial assets Cash and cash equivalents 19,27 2, ,42 23,178 Trade and other receivables 24,994 1,96 1,95 1, ,344 Total assets 44,264 3,137 1,95 2,31 1,87 53,522 Financial liabilities Trade and other payables (14,56) (7,274) (96) (1,62) (4,585) (27,613) Net interest rate swaps (7,596) (7,596) Borrowings (277,872) (12) (277,884) Total liabilities (299,524) (7,274) (96) (1,62) (4,597) (313,93) Net (Liabilities) Assets (255,26) (4,137) (96) 1, (2,727) (259,571) Capital commitments (6,81) (11,12) (4,552) (371) (22,745) Currency exposure of financial liabilities net of those denominated in the respective entities functional currencies 262,7 262,7 Currency exposure (15,149) (4,648) 1, (3,98) (2,246) Foreign currency sensitivity analysis The Group is mainly exposed to the following currencies: Singapore dollars ( SGD ), Japanese Yen ( JPY ) and United Arab Emirates dirham ( AED ). The following table details the Group s sensitivity to a 5% (29 : 5%) increase and decrease in the SGD, JPY and AED. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5 % (29 : 5%) change in foreign exchange rates. A positive number indicates an increase in profit and equity where the United States dollars strengthened 5% against the relevant currency. For a 5% (29 : 5%) weakening of the United States dollar against the relevant currency, there would be a comparable impact on the profit and equity, and the balances below would be negative.

120 118 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 41. Financial instruments, financial risk and capital risk management (continued) (f) Foreign currency risk management (continued) Foreign currency sensitivity analysis (continued) If the SGD, JPY and AED change against the USD by 5% (29 : 5%) with all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position will be as follows: 3 June 21 3 June 29 Increase / (Decrease) Profit or loss Equity Profit or loss Equity US$ US$ US$ US$ SGD against USD JPY against USD AED against USD (134) (134) (35) (35) The losses in profit or loss and equity are mainly attributable to the exposure outstanding on SGD and JPY payables and the capital commitment in the Group, and AED receivables as at the end of the reporting period. (g) Cash flow and interest rate risk management Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates. The Group s excess funds are invested in bank deposits. The Group manages its interest rate risks by placing such balances on varying maturities of between 7 days to 365 days to match its cash flow needs. The cash and cash equivalent balance at 3 June 21 was US$14,811, (29 : US$23,178,) and the weighted average effective interest deposit rate for the financial year was.3247% (29 :.6475%). The market sentiment is that interest rate is expected to continue to be low and the impact of any interest rate change has been assessed to be immaterial. During the financial year ended 3 June 21, the Group has pre-terminated its interest rate swap instruments arising from the refinancing of all its debts incurred prior to IPO, thereafter and as at 3 June 21, the Group did not enter into any interest rate swap instrument. For the financial years ended 3 June 29 and 3 June 21, the Group s interest rate risk mainly arises from bank borrowings. Out of the US$277,872,, total bank loans outstanding as at 3 June 29, the Group entered into interest rate swaps with notional amount of US$19,62,411 that effectively hedge against the interest rate risks of a portion of the bank loans. The remaining amount of US$87,89,589 is subject to interest rate risk. These borrowings are at floating rates of interest pegged to LIBOR plus margin. The Group did not enter into any interest rate hedging for its bank borrowings existing as at 3 June 21.

121 Miclyn Express Offshore Limited Inaugural Annual nual Report Financial instruments, financial risk and capital risk management (continued) (g) Cash flow and interest rate risk management (continued) Interest rate sensitivity analysis The Group s borrowings at variable rates on which effective hedges have not been entered into are denominated mainly in USD. If USD interest rates increase/decrease by.5% (29 :.5%) with all other variables including tax rate being held constant, the profit or loss will be lower/higher by US$682, (29 : US$338,) as a result of higher/ lower interest expense on these borrowings. (h) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The major classes of financial assets of the Group are bank deposits and trade receivables. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Monthly accounts receivable status meetings are each attended by at least one of the Chief Executive Officer, Chief Commercial Officer and/or Chief Financial Officer. There is an adequate credit management policy in place and there is no significant concentration of credit risk of trade debts. Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with good collection track record with the Group. There is no other class of financial assets that is past due and/or impaired except for trade receivables. As at 3 June 21, trade receivables outstanding for more than 9 days is approximately US$1,849, (29 : US$2,464,), out of which US$917, (29 : US$312,) has been identified for impairment as at 3 June 21. The majority of the balances are not impaired because these are from credit worthy customers in the oil and gas sector. (i) Liquidity risk management The Group manages liquidity risk by maintaining sufficient cash and marketable securities to enable it to meet normal operating commitments, having an adequate amount of committed credit facilities and the ability to close market positions at a short notice. The table below analyses the maturity profile of the financial liabilities (including derivative financial liabilities) of the Group based on contractual undiscounted cash flows.

122 12 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 41. Financial instruments, financial risk and capital risk management (continued) (i) Liquidity risk management (continued) On demand or within Between Between 1 year 1 and 2 year 2 and 5 year Over 5 years Adjustments Total US$ US$ US$ US$ US$ US$ At 3 June 21 Financial Liabilities Trade and other payables 21,699 21,699 Borrowings 9,242 16, , (7,843) 136,258 3,941 16, , (7,843) 157,957 On demand or within Between Between 1 year 1 and 2 year 2 and 5 year Over 5 years Adjustments Total US$ US$ US$ US$ US$ US$ At 3 June 29 Financial Liabilities Trade and other payables 27,613 27,613 Borrowings 277, ,884 Derivative financial instruments Interest rate swaps 7,596 7, , ,93 (j) Fair values of financial assets and financial liabilities The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, provisions and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements. The fair values of financial assets and financial liabilities are determined as follows: (i) the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; (ii) the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; and

123 Miclyn Express Offshore Limited Inaugural Annual nual Report Financial instruments, financial risk and capital risk management (continued) (j) Fair values of financial assets and financial liabilities (continued) (iii) the fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, discounted cash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives. Management is of the opinion that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values. The company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) 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 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Financial instruments measured at fair value Total Level 1 Level 2 Level 3 Financial Liability Derivative financial instruments US$ US$ US$ US$ At 3 June 21 At 3 June 29 7,596 7, Key management personnel compensation Compensation of Directors and key management personnel The remuneration of Directors and other members of key management during the year was as follows: 3 June 21 3 June 29 US$ US$ Short term benefits 1,419 1,366 Termination benefits 9 Share-based payments 58 Post employment benefits ,66 1,399

124 122 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 43. Holding company and related company transactions For the financial year ended 3 June 29 and to the date of the IPO, MEO Finance Group was a subsidiary of MEO Holdings Limited, incorporated in Bermuda. The ultimate holding company was Macquarie Group Ltd, incorporated in Australia. Following the IPO during the financial year, Macquarie Group Limited ceased to be the holding company. For the current year, the Company effected a combination by acquiring MEO Finance Group for the purpose of IPO as disclosed in Note 2 to the financial statements. Related companies in these financial statements up to the date of the IPO, refer to members of Macquarie Group Ltd s group of companies. Some of the Group s transactions and arrangements are between members of the Group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances (trade and non-trade) are unsecured, interest-free and repayable on demand unless otherwise stated. 44. Related party transactions Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Some of the Group s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated. During the year, the Group entered into the following transactions with related parties: 3 June 21 3 June 29 (i) Related parties of the Group prior to IPO US$ US$ The following fees and expenses were paid to related parties of the Group prior to IPO: ECM fee 8,378 Debt advisory fee (see below) 1,518 Fund breaking fee for the derivative instrument for interest rate swap 2,84 12,736 An ECM (Equity Capital Market) fee was paid to Macquarie Group and its affiliates. The fee was based on the total proceeds raised during the IPO exercise. A debt advisory fee was paid to Macquarie Group and its affiliates for advisory services rendered in relation to new debts raised. A fund breaking fee was paid to Macquarie Group and its affiliates for the pre-termination of interest rate swaps during the IPO exercise.

125 Miclyn Express Offshore Limited Inaugural Annual nual Report Related party transactions (continued) 3 June 21 3 June 29 (ii) Pre-IPO shareholders of the Group The following fees and expenses were paid and borne by pre-ipo shareholders: US$ US$ IPO fees and expenses 2,474 ECM fee 2,644 Debt advisory fee 1,518 Debt upfront fees 2,85 9,441 IPO cash bonus to employees 618 Management incentive sweet equity 98 Management incentive cash ,673 IPO fees and expenses were paid to lawyers, accountants, valuers, other consultants and include other incidental expenses incurred associated with the IPO exercise. Debt upfront fees were paid to the lenders in relation to the new debt facilities which were put in place during the IPO exercise. IPO cash bonus was paid one-off and was linked to IPO completion. Management incentive sweet equity was paid one-off and was linked to IPO completion and the shares are escrowed until release of financial results for 31 December 21. Management incentive cash refers to the amount to certain management staff. (iii) 3 June 21 3 June 29 US$ US$ Joint-ventures of the Group Charter hire income (388) (8) Repair income (68) Management fee income (348) (191) Interest income (26) (23) Charter hire expenses 1,85 1,244 Mobilisation/demobilisation expenses 18 Repair expenses 34 5 Brokerage fee paid 4 22 Agency fee paid 16 Interest paid 2 14 Management fee expenses paid

126 124 Miclyn Express Offshore Limited Inaugural Annual Report 21 Notes to the Financial Statements (cont.) 44. Related party transactions (continued) 3 June 21 3 June 29 (iv) Companies in which certain Directors of the Company have interest US$ US$ Charter hire income (1,718) Reimbursement of expenses from related parties (44) Reimbursement of expenses to related parties 2, Auditors remuneration 3 June 21 3 June 29 (a) Auditor of the parent entity US$ US$ Audit of the financial report Other services (b) Related practices of the parent entity auditor Audit of the financial report Tax and other services (c) Other auditors Audit of the financial report Tax and related services Other services The auditor of Miclyn Express Offshore Limited is Deloitte & Touche LLP in Singapore. Deloitte & Touche LLP in Singapore and its related practices have also received remuneration amounting to US$295, for services provided during the IPO, which were charged against Share premium (Note 32) as IPO and its related expenses.

127 Miclyn Express Offshore Limited Inaugural Annual nual Report Comparatives As disclosed in Note 2 to the financial statements, on the accounting for IPO structure, the consolidated financial statements of the Group is a continuation of the financial statements of MEO Finance Group. Accordingly, the comparative figures pertain to MEO Finance Group. Certain of the prior year s figures have been reclassified to conform with the current year s presentation. As a result, certain line items have been amended on the face of the statement of comprehensive income and the related notes to the financial statements as follows: As previously reported Adjustments As restated US$ US$ US$ Statement of comprehensive income Revenue 97, ,23 Other gains and losses 5,648 (712) 4,936

128 126 Miclyn Express Offshore Limited Inaugural al Annual Report 21 Additional Stock Exchange Information AS AT 21 SEPTEMBER 21 Ordinary Share Capital 271,7, fully paid ordinary shares are held by 1,862 individual shareholders. All issued ordinary shares carry one vote per share. Substantial shareholders Number of Shares % of Issued Capital Macquarie Capital Group Limited 92,378,1 34. Ray Rider 27,17, 1. AMP Limited 19,111, Westpac Banking Corporation 16,643, Distribution of Holders of Ordinary Shares Size of Holding Number of Ordinary Shareholders 1 to 1, 86 1,1 to 5, 428 5,1 to 1, 548 1,1 to 1, 714 1,1 and Over 86 Total 1,862 Twenty Largest Shareholders Number of Shares % of Issued Capital Macquarie Capital Group Limited 92,378,1 34.% HSBC Custody Nominees (Australia) Limited 36,166, % Ray Rider Limited 27,17, 1.% JP Morgan Nominees Australia Limited 18,371,5 6.76% National Nominees Limited 15,768, % Cogent Nominees Pty Limited - SMP Accounts 7,173, % AMP Life Limited 6,688, % Citicorp Nominees Pty Limited 5,613,24 2.7% Cogent Nominees Pty Limited 5,34, % JP Morgan Nominees Australia Limited Cash Income A/C 3,918, % Bond Street Custodians Limited Macquarie Smaller Co s A/C 2,58,629.92% Bond Street Custodians Limited Macquarie Alpha Opport A/C 2,11,36.78% MR Diederik De Boer 2,4,996.75% Argo Investments Limited 1,896,859.7% ANZ Nominees Limited Cash Income A/C 1,55,196.55% Blueflag Holdings Pty Ltd The Blueflag A/C 873,684.32% ABN Amro Clearing Sydney Nominees Pty Ltd Custodian A/C 787,223.29% HSBC Custody Nominees (Australia) Limited GSI EDA 7,.26% Citicorp Nominees Pty Limited CFSIL Cwlth Aust SHS 1 A/C 691,527.25% Merrill Lynch (Australia) Nominees Pty Limited 645,814.24% TOTAL 232,347, %

129 Miclyn Express Offshore Limited Inaugural Annual Report Voting Rights All ordinary shares carry one vote per share without restriction. Shares Under Escrow 122,349,87 shares are subject to voluntary escrow under which any dealings in shares are restricted until three days after the announcement of the Company s first half FY211 results with limited exceptions. Unquoted Options 2,617,74 unlisted options are held by 24 individual option holders. Unmarketable Parcels There are no shareholders holding less than a marketable parcel of ordinary shares. Application of Cash and Cash Equivalents post IPO Cash and assets in a form readily convertible to cash at the time of admission were used in a way that was consistent with the business objectives of MEO from the period of admission to 3 June 21. Shareholder Enquiries Shareholders can obtain information about their shareholding by contacting the Company s share registry: Link Market Services Limited Locked Bag A14 SYDNEY SOUTH NSW 1235 Tel: or (2) (within Australia) (outside Australia) Fax: (2) or (2) (for proxy voting) registrars@linkmarketservices.com.au Change of Address Shareholders should notify the share registry in writing immediately there is a change to their registered address. Stock Exchange Listing Shares in MEO are listed on the Australian Securities Exchange (ticker: MIO). Publications The Annual Report is the main source of information for shareholders.

130 128 Miclyn Express Offshore Limited Inaugural Annual Report 21 APPENDIX MEO Fleet List Offshore Service Vessels ( OSVs ) No. Name Type of Vessel Year Built Bollard Pull (tonnes) Gross Register Tonnage Flag 1 MICLYN MIGHT Anchor handling Tug / Utility Vessel ,62 Singapore 2 MICLYN POWER Anchor handling Tug / Utility Vessel Singapore 3 MICLYN ORION Anchor handling Tug / Utility Vessel Singapore 4 MICLYN OPAL Anchor Handling Tug / Utility Vessel Singapore 5 MICLYN ONYX Anchor Handling Tug / Utility Vessel Singapore 6 MICLYN VENTURE Anchor Handling Tug / Utility Vessel Singapore 7 MICLYN VICTORY Anchor Handling Tug / Utility Vessel Singapore 8 MICLYN GLORY Multi Purpose Supply Vessel 24 Nil 946 Singapore 9 MICLYN GRACE Multi Purpose Offshore Support Vessel 29 Nil 1,54 Panama 1 MICLYN GRAND Multi Purpose Offshore Support Vessel 29 Nil 1,54 Panama 11 MICLYN ENDURANCE Multi Purpose Offshore Support Vessel 27 Nil 2,397 Singapore 12 MICLYN ENERGY Multi Purpose Offshore Support Vessel 28 Nil 2,31 Panama 13 MICLYN ENTERPRISE Multi Purpose Offshore Support Vessel 28 Nil 2,397 Panama 14 FUGRO SOLSTICE Multi Purpose Offshore Support Vessel 28 Nil 2,397 Singapore 15 VERITAS VOYAGER Seismic Survey Vessel 25 Nil 2,943 Singapore 16 MICLYN CONSTRUCTOR I Work and Accommodation Barge 21 Nil 8,58 Malaysia OSVs Under Construction No. Name Type of Vessel Year Built Bollard Pull Gross Register Tonnage Flag 1 MICLYN CONSTRUCTOR II Work and Accommodation Barge TBA Nil TBA TBA 2 MICLYN MAGELLAN I Anchor Handling Tug / Utility Vessel TBA TBA TBA TBA 3 MICLYN MAGELLAN II Anchor Handling Tug / Utility Vessel TBA TBA TBA TBA 4 MICLYN SOVEREIGN I Multi Purpose Vessel TBA TBA TBA TBA 5 MICLYN SOVEREIGN II Multi Purpose Vessel TBA TBA TBA TBA

131 Miclyn Express Offshore Limited Inaugural Annual Report Tugs No. Name Type of Vessel Year Built Bollard Pull (tonnes) Flag Gross Register Tonnage 1 MICLYN AMBER Towing Tug Singapore MICLYN BAY Towing Tug Singapore MICLYN RUBY Towing Tug Singapore MICLYN JADE Towing Tug Singapore MICLYN PEARL Towing Tug Singapore CAPE MAC* Azimuth Drive Tug Australia SAMSON MARINER Shallow Drafted Multi Purpose Tug Australia 15 8 MICLYN LEGEND Towing/ Pusher Tug/ Utility Singapore SAMSON 11 Multi Purpose Support Vessel Australia 218 Barges No. Name Type of Vessel LxBxH (FT) Year Built Deck Load (MT/m2) Deadweight Tonnage Flag 1 MICLYN 131 Offshore Work Barge 13 X 55 X ,36 Singapore 2 MICLYN 181 Offshore Flat Top Deck Cargo Barge 18 X 6 X ,616 Singapore 3 MICLYN 23 Offshore Flat Top Deck Cargo Barge 22 X 64 X ,5 Singapore 4 MICLYN 253 Offshore Flat Top Deck Cargo Barge 25 X 8 X ,5 Singapore 5 MICLYN 255 Offshore Flat Top Deck Cargo Barge 25 X 8 X ,5 Singapore 6 MICLYN 256 Offshore Flat Top Deck Cargo Barge 25 X 8 X ,5 Singapore 7 MICLYN 257 Offshore Flat Top Deck Cargo Barge 25 X 8 X ,5 Singapore 8 MICLYN 258 Offshore Flat Top Deck Cargo/Tank Barge 25 X 8 X ,5 Singapore 9 MICLYN 259 Offshore Flat Top Deck Cargo Barge 25 X 8 X ,5 Singapore 1 MICLYN 251 Offshore Flat Top Deck Cargo Barge 25 X 8 X ,5 Singapore 11 MICLYN 283 Offshore Flat Top Deck Cargo Barge 28 X 9 X , Singapore 12 MICLYN 285 Offshore Flat Top Deck Cargo Barge 28 X 9 X , Singapore 13 MICLYN 286 Offshore Flat Top Deck Cargo Barge 28 X 9 X , Singapore 14 MICLYN 287 Offshore Flat Top Deck Cargo Barge 28 X 9 X , Singapore 15 MICLYN 288 Offshore Flat Top Deck Cargo Barge 28 X 9 X , Singapore 16 MICLYN 31 Offshore Flat Top Deck Cargo Barge 3 X 9 X ,1 Singapore 17 MICLYN 33 Offshore Flat Top Deck Cargo Barge 3 X 9 X , Singapore 18 MICLYN 35 Offshore Flat Top Deck Cargo Barge 3 X 9 X , Singapore 19 MICLYN 3316 Offshore Flat Top Deck Cargo Barge 33 X 1 X , Singapore 2 MICLYN 3317 Offshore Flat Top Deck Cargo Barge 33 X 1 X , Singapore 21 MICLYN 3318 Offshore Flat Top Deck Cargo Barge 33 X 1 X , Singapore * Cape Mac is chartered in (not owned by MEO)

132 13 Miclyn Express Offshore Limited Inaugural al Annual Report 21 APPENDIX MEO Fleet List (cont.) Crew/Utility Vessels No. Name Size (FT) Year Built Horse Power Max Speed (knots) Passanger Capacity Flag 1 MAHAKAM EXPRESS x 275 bhp Panama 2 AOS x 96 bhp 2 83 Panama 3 AOS x 51 bhp Panama 4 AOS x 655 bhp Panama 5 AOS x 51 bhp Panama 6 UNI EXPRESS x 895 kw 24 5 Thailand 7 UNI EXPRESS x 1,44 kw Thailand 8 UNI EXPRESS x 1,35 bhp Thailand 9 UNI EXPRESS x 1,35 bhp Thailand 1 UNI EXPRESS x 1,35 bhp Thailand 11 UNI EXPRESS x 1,35 bhp Thailand 12 UNI EXPRESS x 1,35 bhp Thailand 13 UNI EXPRESS "2 x 1,35 bhp 1 x 1,399 bhp" Thailand 14 UNI EXPRESS x 1,35 bhp Thailand 15 UNI EXPRESS x 1,35 bhp Thailand 16 UNI EXPRESS x 1,35 bhp Thailand 17 UNI EXPRESS x 1,35 bhp Thailand 18 UNI EXPRESS x 1,35 bhp Thailand 19 EXPRESS x 43 bhp 23 8 UAE 2 EXPRESS x 57 bhp 28 6 Panama 21 EXPRESS x 57 bhp Panama 22 EXPRESS x 57 bhp UAE 23 EXPRESS x 51 bhp 16 2 UAE 24 EXPRESS x 51 bhp UAE 25 EXPRESS x 51 bhp 26 6 Panama 26 EXPRESS x 51 bhp 16 6 Panama 27 EXPRESS x 51 bhp Panama 28 EXPRESS x 51 bhp Panama 29 EXPRESS x 51 bhp 16 3 Panama 3 EXPRESS x 655 bhp 17 5 Panama 31 DNV EXPRESS x 43 bhp 24 1 UAE 32 EXPRESS x 7 bhp UAE 33 EXPRESS x 615 kw 24 5 Panama

133 Miclyn Express Offshore Limited Inaugural Annual Report Crew/Utility Vessels No. Name Size (FT) Year Built Horse Power Max Speed (knots) Passanger Capacity Flag 34 EXPRESS x 615 kw 24 5 Panama 35 EXPRESS x 655 bhp 17 4 Panama 36 EXPRESS x 51 bhp 16 5 Panama 37 EXPRESS x 51 bhp 16 5 Panama 38 EXPRESS x 51 bhp 16 5 Panama 39 EXPRESS x 7 bhp 25 2 Panama 4 EXPRESS x 51 bhp 16 3 UAE 41 EXPRESS x 969 bhp 3 12 Panama 42 EXPRESS x 51 bhp 16 7 Panama 43 EXPRESS x 51 bhp Malaysia 44 EXPRESS x 51 bhp Panama 45 EXPRESS x 51 bhp Panama 46 EXPRESS x 51 bhp Panama 47 EXPRESS x 51 bhp Panama 48 EXPRESS x 51 bhp Panama 49 EXPRESS x 634 kw 21 1 Panama 5 EXPRESS x 51 bhp 16 7 Panama 51 EXPRESS x 51 bhp 16 7 Panama 52 EXPRESS x 51 bhp 16 7 Panama 53 EXPRESS x 68 bhp 17 8 Panama 54 EXPRESS x 1, bhp 2 1 Panama 55 EXPRESS x 96 bhp 2 1 Panama 56 EXPRESS x 1,35 bhp 24 2 Panama 57 EXPRESS x 1,35 bhp 24 2 Panama 58 EXPRESS x 1,35 bhp Panama 59 EXPRESS x 1,35 bhp Panama 6 EXPRESS x 1,35 bhp Panama 61 EXPRESS x 1,35 bhp Panama 62 EXPRESS x 1,35 bhp 26 7 Panama 63 EXPRESS x 1,35 bhp 26 7 Panama 64 SAMSON SUPPLIER SAMSON SUPPORTER "2 x 1,35 bhp 1 x 1,399 bhp" "2 x 1,35 bhp 1 x 1,399 bhp" Panama 29 5 Panama

134 132 Miclyn Express Offshore Limited Inaugural al Annual Report 21 APPENDIX MEO Fleet List (cont.) Crew/Utility Vessels Under Construction No. Name Size (FT) Year Built Horse Power Max Speed (knots) Passanger Capacity Flag 1 UNI EXPRESS x 1,35 bhp 25 7 Thailand 2 EXPRESS x 7 bhp TBA 3 EXPRESS x 7 bhp TBA Coastal Survey Vessels No. Name Type of Vessel Year Built Engine Type Max Speed (knots) Flag 1 TOP CAT Hydrographic Survey / Personnel Transfer Vessel x Yanmar 19 Australia 2 LADY CHRISTINE Hydrographic Survey / Personnel Transfer Vessel 2 2 x Volvo TAMD 63P 24 Australia 3 OCEAN EAGLE Hydrographic Survey / Personnel Transfer Vessel x Detroit 8V92 26 Australia 4 VIGILANT Hydrographic Survey / Personnel Transfer Vessel 2 2 x Scania DSI Australia 5 FINE TIME Hydrographic Survey / Personnel Transfer Vessel x Scania 28 Australia 6 ALERT High Speed Multi Purpose Vessel 2 2 x Man D Australia Aggregate number of vessels in the fleet is 116 at the time of this report (excluding new buildings) excluding the Cape Mac which is chartered in (not owned by MEO).

135 Corporate Information REGISTERED ADDRESS AUSTRALIA Suite 1.3, 55 Miller Street Pyrmont, NSW, 29 Australia BERMUDA Clarendon House 2 Church Street Hamilton HM11 Bermuda HEAD OFFICE SINGAPORE Miclyn Express Offshore 3 HarbourFront Place #11-1/4 HarbourFront Tower 2 Singapore Tel: Fax: REGIONAL OFFICES AND SUPPORT CENTRES INDONESIA Jakarta PT Ekspres Servisindo Gedung Usmar Ismail (PARFI) Jln H R Rasuna Said Kav C22 Lantai 3 Jakarta Selatan 1294 Indonesia Tel: /3/7/8 Fax: Batam Shipyard Jalan Brigjen Katamso Km 19 Tanjung Uncang Batam Indonesia Tel: Fax: THAILAND Bangkok Uniwise Offshore Ltd 25 Alma Link Building 15th Floor Soi Chitlom Ploenchit Road Lumphini Pathumwan Bangkok 133 Tel: Fax: Songkhla Uniwise Offshore Ltd 28 Sukhum Road Tambol Boryang Amphur Muang Songkhla, 9 Tel: Fax: Sattahip Uniwise Offshore Ltd. 234/37-38 Mu. 6 Tambol Sattahip Amphur Sattahip Chonburi, 218 Tel: Fax: MIDDLE EAST Dubai (UAE) Express Offshore Transport (UAE) LLC 1st Floor Unit 12 Cayan Business Centre, Tecom C P. O. Box 4972, Dubai, UAE Tel: Fax: Ras Tanura (Saudi Arabia) Barwil Agencies P O Box 174 Rahima Tel: /21 Fax: Sharjah (UAE) Miclyn Offshore (Middle East & Africa) FZE Leased Offi ce Building 1 Offi ce No. 1F-28 P O Box Hamriyah Free Zone Sharjah UAE Tel: Fax: Fujairah (UAE) Barwil Ships Service Co (UAE) LLC 1st Floor Wing FA & FB Fujairah International Trading Company Building No 2 P.O. Box 898 Fufairah UAE Tel: Fax: AUSTRALIA Fremantle Samson Maritime Head Offi ce Corner Mews Road and Capo D Orlando Drive Fremantle P.O.Box 1864, Fremantle, WA 6959, Australia Tel: Fax: Darwin Samson Maritime 3/68 Marina Boulevard Cullen Bay NT 82 Australia Tel: Point Samson Samson Maritime Operational Base 9 Bill Miller Drive Point Samson WA 672 Australia Tel: Fax: INVESTOR RELATIONS Adam Clayton Tel: adam.clayton@miclynexpressoffshore.com SHARE REGISTRY Link Market Services Limited Locked Bag A14 SYDNEY SOUTH NSW 1235 Tel: or (2) (within Australia) (outside Australia) Fax: (2) or (2) (for proxy voting) registrars@linkmarketservices.com.au AUDITORS Deloitte & Touche LLP 6 Shenton Way, #32- DBS Building Tower Two Singapore 6889 Tel: Partner in-charge: Shariq Barmaky PRINCIPAL BANKERS Oversea-Chinese Banking Corporation Limited Standard Chartered Bank WestLB AG, Hong Kong Branch CORPORATE WEBSITE ASX CODE MIO Designed and produced by (65)

136 3 HarbourFront Place #11 1/4 HarbourFront Tower 2 Singapore 99254