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1 DELIVERING ON STRATEGY ANNUAL REPORT 2012

2 delivering on strategy and results Titan Energy Services (Titan or TTN) listed on the Australian Securities Exchange in December We have delivered on our strategy and results since listing. EBITDA (A$M) 7.4M 8.1M (2) 4.2M 5.4M (1) 2.7M FY2009 FY2010 FY2011 FY2012 FY2012 Actual Proforma +44 % Compound annual growth rate since FY2009 $8.1m delivery of Proforma ebitda guidance safety 461 days LTI free on Rig days LTI free on Rig days LTI free on Rig 3 ATLas increased utilisation to 83% RCH increased capacity to 404 rooms from 110 diversified Acquisition of Resources Camp Hire and establishment of Nektar Remote Hospitality Note 1: Proforma Consolidated Results for Titan Energy Services for the year ended 30 June 2011, assuming Titan Energy Services operated RCH and Atlas Drilling for year then ended. Prior year results based on audited management accounts of Atlas Drilling Co Pty Ltd and RCH that now form part of the Titan group. For the FY11 year, RCH was owned by the Hinman group with whom the Titan group entered into an asset sale agreement to acquire the assets of RCH as of 1 July These results formed the basis of the historical data provided in the Titan Prospectus in November Note 2: Proforma EBITDA is arrived at after adding back transaction costs associated with the RCH acquisition and share based expenses associated with the company s IPO.

3 Titan Energy Services is an oil and gas field services business that provides accommodation services, drilling, catering, transport and logistics and equipment hire to the coal seam gas (CSG) sector in Australia. contents 2 Company Overview 4 Chairman s Report 6 Managing Director s Report 12 Board of Directors 12 Senior Management 14 Financial Report TITAN ENERGY SERVICES ANNUAL REPORT

4 company overview Titan Energy Services has three wholly owned operating businesses: Atlas Drilling Co (Atlas or Atlas Drilling), Resources Camp Hire (RCH) and Nektar Remote Hospitality (Nektar). Nektar was recently established as part of our strategy to expand our range of services to the CSG market and expand our customer base. At the time of acquisition, RCH had 110 rooms. Since then, the business has grown to 404 rooms underpinned by the ongoing growth in the CSG market in Queensland and the increased recognition of the RCH business. NEKTAR remote hospitality In line with Titan s strategy to expand the number of services it can oer within the broader CSG services market, Nektar was established in April Nektar provides remote catering and camp management services to the mining and CSG industry by drawing on the experience and established presence of Titan and operating companies Atlas Drilling and RCH. ATLAS DRILLING Atlas Drilling was founded in September 2007 as a specialist provider of drilling services to the CSG industry, including rig and support sta. Atlas Drilling has grown organically through the acquisition of two drilling rigs (Gefco Speedstar 185k drilling rigs) and operates a third drilling rig (Schramm TXD drilling rig) on behalf of a third party. Atlas Drilling is capable of 24 hour per day operations and has production, appraisal, exploration and directional drilling capability. Since Atlas Drilling was established it has sought to deliver greater CSG drilling eiciencies through the application of its experience, understanding of drilling techniques and applications for fit-forpurpose equipment packages. Demand for its services is driven by Atlas Drilling s ability to add value to its operations and achieve client objectives on time and on budget. Atlas Drilling aims to consistently deliver a high quality service oering to its clients in terms of equipment, safety, documentation and process. Management believe that a significant level of demand for drilling services, particularly in the CSG industry will continue. This is due to the rapid expansion of Australia s CSG industry since 2001, with multi-billion dollar investments aimed at supplying domestic consumers and the development of LNG export facilities in Queensland. Atlas Drilling has long established relationships with a number of the leading participants in the CSG industry in Queensland. These relationships cover the majority of participants in the CSG industry, from early stage explorers to gas developers and producers. Atlas Drilling currently contracts its services to Queensland Gas Company (a BG group business), Arrow Energy, and Pangaea Resources. Atlas Drilling is based in Brisbane with equipment located and serviced in Roma. RESOURCES CAMP HIRE RCH was established in 2010 to service the growing oil and gas sector on the east coast of Australia with quality portable accommodation. RCH is primarily focussed on the CSG development and related services industries. In September 2011, after an extensive due diligence exercise into the market for portable camps, Titan decided to acquire RCH. RCH typically hires out its accommodation units on short to medium term usually on fixed term contracts to customers. Ancillary and support services associated with the accommodation units are either provided directly by RCH or by sub-contractors. RCH s accommodation units, commonly referred to as camps, provide accommodation solutions to its customers. The camps are easily transported and can be set up within three to four hours which makes them ideal for CSG drill rigs due to the need to regularly relocate. The camps are also ideally suited to assist other support services to the oil and gas sector including seismic surveyors, infrastructure companies, pipeline projects, road crews and engineering contractors. Nektar secured its first contract in June 2012 for an 18 month term and has since built on this. Nektar now contracts with four clients in remote locations throughout Queensland. As at 30 September 2012, Nektar has served approximately 6,000 meals in remote locations throughout Queensland. With an integrated capability and commitment to customer satisfaction, Nektar aims to develop and maintain a productive camp environment to support our client s operational and corporate objectives and facilitate camp management. Future Growth Titan s strategy is to build a diversified oil and gas services business within Australia. This strategy has been developed to maximise the opportunity presented by the significant increase in forecast CSG and LNG Development expenditure in the medium term and to service the industry once developed in the longer term. Titan envisages that future developments can be made in services complementary to those already operating within the Titan group. The group currently rents a small amount of equipment to clients on an as needed basis. It is expected that this part of the business will expand in the medium term along with other services currently being reviewed by the group which will either be developed or acquired should a suitable acquisition be identified. 2 COMPANY OVERVIEW

5 PORTABLE ACCOMMODATION Darren Bishell General Manager, Resources Camp Hire REMOTE REMOTE HOSPITALITY Lee Buckingham General Manager, Nektar Remote Hospitality cgs drilling Jim Diakos Director, Titan Energy Services and General Manager, Atlas Drilling EQUIPMENT RENTAL (1) Equipment including pumps and ancillary drilling tools is currently being hired to third parties The group is looking to expand this business in the medium term TRANSPORT AND LOGISTICS Both RCH and Atlas own transport assets including trucks, trailers and loaders which, when combined could form the core of a stand alone transport and logistics business TITAN s STRATEGY is to leverage: the significant expenditure being undertaken in the CSG LNG industry; and Titans extensive CSG LNG industry knowledge and contacts. DIVERSIFY BUSINESS TO INCLUDE: an expanded equipment hire service; transport and logistics services; and other complementary CSG services businesses. Note 1: Currently provided by Atlas Drilling. TITAN ENERGY SERVICES ANNUAL REPORT

6 CHAIRMAN S REPORT Dear shareholder The FY12 financial year was a memorable period for our company, highlighted of course by our successful listing on the Australian Securities Exchange (ASX). Titan s listing took place on 7 December 2011 with the company raising $5 million in its Initial Public Oering, which contributed to a market capitalisation on listing of $28.1M. Ten months later in our first annual report as a listed company I am pleased to report that Titan has performed credibly and delivered on the earnings and business growth strategies set at the time of the equity raising. During its maiden year as a listed group, Titan delivered $3.9M in earnings before interest and tax (EBIT) and $2.3M in net profit after tax (NPAT). Titan also paid a 2.0 cents per share fully franked dividend to shareholders. Importantly, solid foundations were built for future growth across the businesses operating segments. Before discussing Titan s outlook for 2012/13 in greater detail, I would like to briefly reflect on some of the key milestones in our company s development to date. The business was formed by combining Atlas Drilling with the RCH. Atlas Drilling was established in 2007 to capitalise on the impending increase in CSG drilling as major projects progressed towards production and became operational. Atlas Drilling s management team have been building their reputation within the CSG drilling industry for five years and delivered their most successful year to date during 2011/12, in terms of quality of contract and profitability. The RCH acquisition was another key milestone and was a strategic investment in a business that was set to grow rapidly as an accommodation provider to the CSG developers and service providers. Since acquisition, the business has grown significantly and has integrated well within the Titan group. In line with Titan s stated objective of building a diversified CSG services company, Nektar Remote Hospitality was formed in April 2012 and has become the third key segment of our business. Nektar, a business that provides catering and camp management services was a logical extension to RCH and won its first contract in conjunction with RCH for an 18 month term, six weeks after start up. 4 CHAIRMAN S REPORT

7 Looking ahead to FY13, Titan will continue organic expansion and strategic investments. The company is well placed to take advantage of the significant growth within the CSG sector. While the new financial year is in its infancy, Titan is already taking significant steps towards its targets. Earnings are expected to improve considerably, with the group targeting a potential doubling of EBIT to between $7.0M and $8.0M. The company recently announced further commitments to Atlas s and RCH s growth with a longer term contract agreed with QGC for drilling services and APLNG for a significant camp contract. Titan is a young company. However, it draws on a wealth of Board and management experience in the oil & gas and CSG sectors. Jim Sturgess was appointed Managing Director in May 2011 and leads an experienced and highly capable management team. The Board believes this team s experience is a dierentiating factor for a company of Titan s size and expects that this will be crucial in directing the company through its ongoing growth and success. Thank you for your support of the company. Shaun Scott Chairman +45 % $33.5M Total revenue Titan revenue growth TITAN ENERGY SERVICES ANNUAL REPORT

8 Managing director S Report The FY12 financial year, Titan Energy Services first as a public company, will be remembered as a successful year. During the 12 months to 30 June 2012, Titan generated a net profit after tax (NPAT) of $2.3M, a good result which was in line with previous market guidance. Shareholders were rewarded with Titan s inaugural dividend of 2.0 cents per share, a 25% payout of NPAT. Key business units Atlas Drilling and RCH delivered their best full year results, while a third business, Nektar, was developed and launched during the fourth quarter to create a new revenue stream for the group. Pleasingly, Titan also delivered on the strategic objectives that were set for 2011/12, as outlined in the following table: Strategic objective FY12 Result List on the ASX 7 December 2011 þ Proforma EBITDA guidance EBITDA $8.1M (1) þ between $7.8M $8.2M Acquire RCH September 2011 þ (eective from 1 July 2011) Profitable growth of the RCH business 110 > 236 rooms þ (as at 30 June 2012) $3.2M > $4.2M EBITDA Improve utilisation of Atlas Drilling rigs 95% 2H FY12 þ Organic Nektar start-up, April 2012 þ Acquisition Ongoing þ Employ experienced management team Appointed CFO Appointed GM of Atlas Appointed GM of RCH Appointed GM of Nektar Further details on TTN s overall financial results, its performance in its key operating segments and its commitment to workplace safety are included in the following sections, along with commentary on market conditions and the company s outlook for FY13. Before discussing each of these areas separately, I would like to congratulate our teams for their contributions to the company s success. It has been a busy year and delivering on our promises has, of course, relied on the delivery by our people. þ Note 1: Proforma EBITDA is arrived at after adding back transaction costs associated with the RCH acquisition and share based expenses associated with the company s IPO. 6 MANAGING DIRECTOR S REPORT

9 130% NPAT increase from FY11 Financial Performance Titan s $2.3M NPAT was built on improved utilisation of Atlas Drilling and solid growth within the RCH business. When half year results were released for the six months to 31 December 2011, Titan management forecast proforma earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.0M. This was reiterated in June 2012 and the company ultimately delivered a proforma EBITDA result of $8.1M. Titan s financial achievements are summarised in the table below: $ Million Actual 30 June 2012 Proforma 30 June 2011 (1] % Change Revenue % Statutory EBITDA % EBITDA margin % 22.1% 21.6% 0.5% EBIT % EBIT margin % 11.6% 11.3% 0.3% Net profit before tax % Net profit after tax % Basic earnings per share (cents) n/a n/a Dividends per share (cents) 2.0 Nil n/a FULL YEAR GUIDANCE EXCEEDED Statutory EBITDA % Acquisition & Share based payments Proforma EBITDA (2) % Pleasingly, the FY13 has started strongly with: the significant increase in rooms within the RCH business contributing from the start of the financial year and adding an additional 168 rooms; solid contracts leading to high utilisation within the Atlas business; and the start-up Nektar business performing well and winning several new contracts Note 1: Proforma consolidated results for Titan Energy Services for the year ended 30 June 2011, assuming Titan Energy Services operated RCH and Atlas Drilling for year then ended. Prior year results based on audited management accounts of Atlas Drilling Co Pty Ltd and RCH that now form part of the Titan group. For the FY11 year, RCH was owned by the Hinman group with whom the Titan group entered into an asset sale agreement to acquire the assets of RCH as of 1 July These results formed the basis of the historical data provided in the Titan Prospectus in November Note 2: Proforma EBITDA is arrived at after adding back transaction costs associated with the RCH acquisition and share based expenses associated with the company s IPO. TITAN ENERGY SERVICES ANNUAL REPORT

10 Assuming current trends continue, the group expects full year earnings to increase to between $7.0M $8.0M EBIT (FY12 $3.9M). This corresponds with an EBITDA forecast of $12.0 $13.0M. If achieved, the top end of this EBIT range will represent a 100% increase in earnings for FY13. Safety The group continues to focus on safety and places people s health and well-being first. Safety reporting across the group is consistent and transparent and reinforces the philosophy of continuous improvement in safety outcomes. The group achieved an overall total recordable injury frequency rate (TRIFR) result of 17.9, which included one lost time injury (LTI). While this result is an improvement on the prior year, the group is committed to providing a safe environment for all sta and contractors and has taken steps to increase safety outcomes and awareness. Atlas Drilling Atlas Drilling owns two production rigs and operates a third rig under an Operating & Maintenance Agreement with an external party. During the second half of the year, the Atlas business recorded strong utilisation across all three rigs and, as a result, produced a record profit. Second half utilisation was 95% (1H: 73%), which took the full year result to 82%. Atlas contracts to two of the four major CSG development companies and has agreements in place for these rigs through to at least the fourth quarter of In January 2012, Gus Van Der Heide was appointed CEO of Atlas. Gus has a strong understanding of the oil and gas industry, through a long employment history in Australia and overseas. In July 2012, Gus Van Der Heide was subsequently appointed COO of the Titan group, with Atlas co-founder Jim Diakos taking over the role of GM. Atlas Drilling s results for FY12 are summarised in the table below: Actual Proforma $ Million 30 June June 2011 (1) % Change Utilisation 82% 59% 23% Revenue % EBITDA % EBITDA margin 20% 12% 8% CAPEX % PP&E % 145% EBITDA growth from increased productivity and contract term Note 1: Prior year results based on audited management accounts of Atlas Drilling Co Pty Ltd that now forms part of the Titan group. 8 MANAGING DIRECTOR S REPORT

11 Resources Camp Hire In September 2011, Titan acquired the business and assets of RCH, a full service portable accommodation business targeting the CSG industry. RCH also provides transport, maintenance and catering services to its clients. At acquisition, RCH had 110 rooms. Since then, the business has grown to 404 rooms, an increase of 267%. Utilisation of available rooms for FY12 was 86%. Under Titan ownership, RCH has also produced a record result in FY12. Demand remains strong and RCH is well positioned to deliver on this growth in the upcoming year. Since the acquisition, the business has appointed a new management team led by General Manager Darren Bishell. Darren has extensive experience in remote area logistics in the armed forces and private industry. The business has also appointed a dedicated Sales Manager, Lynda Shields, who has diverse experience in sales, marketing and business development across a range of industries. RCH is a young and developing business experiencing significant demand for its quality product and service. RCH s financial achievements for 2012 are summarised below. $ Million Weighted Average rooms Actual 30 June 2012 Proforma (1) 30 June 2011 % Change % Utilisation 86% 88% (2%) Total revenue % EBITDA % EBITDA margin 46% 48% (2%) Capex 4.3 PP&E 14.2 Nektar Nektar Remote Hospitality was launched in April 2012 to provide catering and camp management services to remote sites. Nektar was a logical organic growth opportunity for the group and its early successes have been encouraging. Nektar achieved its first contract within six weeks of establishing the company. Four more contracts have been won during the first quarter of FY13. While still within the start-up phase of its growth, the group is expecting a strong year from Nektar. In its infancy, the business has worked closely with RCH to provide a broad oering to the accommodation businesses clients. In the longer term, we expect additional growth opportunities will come from third parties. Lee Buckingham joined the company as General Manager in April 2012 to establish and develop Nektar. Lee brings 25 years of product development, catering and new business development experience. nektar is a natural fit for titan, pitching jointly for accommodation and catering contracts with rch. Note 1: Prior year results based on reviewed management accounts of RCH that now forms part of the Titan group. For the FY11 year, RCH was owned by the Hinman group with whom the Titan group entered into an asset sale agreement to acquire the assets of RCH as of 1 July These results formed the basis of the independently reviewed historical data provided in the Titan Prospectus in November TITAN ENERGY SERVICES ANNUAL REPORT

12 QLD CSG-LNG drilling expenditure (1995 to 2026) (1) 2,500 Actual Forecast Drilling expenditure ($m, real 2011) For personal use only 2,000 1,500 1, Low Cost Mid Cost High Cost Queensland CSG LNG Drilling (# of Wells) (1) Number of wells Arrow T4 Arrow T3 APLNG T4 APLNG T3 GLNG T3 QCLNG T3 Arrow T2 Arrow T1 APLNG T2 APLNG T1 GLNG T2 GLNG T1 QCLNG T2 QCLNG T1 Committed Total Likely 2011 Total Market Opportunities The CSG market continues to grow as four major projects move closer to production. Titan is well placed to maximise exposure to this growth during the development phase and to service the industry when it enters full production. The Queensland CSG market is still within its infancy, with significant expenditure required to develop the region for the export market. In the report detailed in our prospectus, ACIL Tasman estimated drilling expenditure in QLD was forecast to increase from approximately $650 million per annum in 2011 (2) to more than $1.5 billion per annum by 2015 (2) (see chart above). To meet the growing LNG production capacity, the number of CSG wells being drilled per annum is forecast to increase from approximately 600 wells in 2010 to more than 2,000 wells by On the basis of the first five committed LNG trains alone (including APLNG T2), ACIL Tasman estimates that drilling activity will reach a peak of approximately 1,560 wells, before reducing to a sustained level of approximately 800 wells (see chart above). The majority of these wells will be drilled in remote locations, requiring temporary accommodation and camp managment, drilling and logistics support. Once developed, the industry will have a long lifespan, requiring continued drilling and service support. In addition to directly servicing Oil and Gas producers, significant additional opportunities exist for the camp and catering businesses within the civil and structural infrastructure markets. The ramp-up of activity is expected to fill additional camps and ensure drilling rigs are utilised. Nektar will leverage from these business opportunities, as well as growing independently. The future Looking ahead, we are focussed on expanding and diversifying Titan s service oerings to take advantage of the increase in CSG activity. The company intends to expand with the CSG sector and increase market share in its drilling, remote camps and catering service oerings. We will also look for acquisitions that make sense. The group s three current business units are performing at record levels, our balance sheet remains strong and we expect to generate significant cashflow during the year to fund continued growth. I would like to take this opportunity to thank our sta, shareholders and Board, many of whom have been with the company prior to and since listing on the ASX. Management is focussed on achieving strong growth within the business and delivering solid shareholder returns as we grow. Sincerely Jim Sturgess Managing Director Note 1: Per the ACIL TASMAN report included in Titan s IPO Prospectus. Note 2: Mid cost forecast from the ACIL Tasman forecast included in Titan s IPO Prospectus. 10 MANAGING DIRECTOR S REPORT

13 We continue to introduce changes to improve our safety performance and culture. Managing Director, Jim Sturgess TITAN ENERGY SERVICES ANNUAL REPORT

14 Board of directors Shaun Scott (age 47) B.Bus, BA, ACA Independent Non-executive Chairman Shaun is a Chartered Accountant with over 25 years of experience in upstream and downstream projects, mergers and acquisitions and finance in the energy sector in Australia, Asia, and the United States. Shaun is currently an Executive Director of ASX listed Dart Energy Ltd, a Non-executive Director of ACER Energy Ltd, Site group International Ltd and Chairman elect of Anaeco Ltd. Shaun previously held the roles of Chief Executive Oicer (Australia), Chief Commercial Oicer and Chief Financial Oicer with Arrow Energy Limited prior to its acquisition by Royal Dutch Shell plc and PetroChina in Prior to joining Arrow in 2004, Shaun held a variety of senior executive roles in the oil and gas industry. Jim Sturgess (age 49) B.Comm, FCA Managing Director Jim has been Managing Director of Titan Energy Services Limited since May Jim was previously CEO of the City of Brisbane Investment Corporation. Prior to this, Jim spent over seven years at Flight Centre Limited as Chief Financial Oicer and then Executive General Manager of Global Property, Procurement & Projects. Jim was a Regional General Manager at Ernst & Young and the Director of Finance and HR at Starwood Hotels & Resorts. Aside from his management skills, Jim brings to the Board extensive experience in acquisitions and growth companies. Jim Diakos (age 43) B.Eng, B.Sc Executive Director and General Manager of Atlas Drilling Jim is a co-founder of Atlas Drilling and has 18 years experience in the oil and gas industry in Australia. Jim s specialities are in the area of drilling, completion and production engineering and he has been involved in the CSG sector since Jim has held various positions in a number of large and small Operating companies during his career including Santos, Inland Oil Refiners, Oil company of Australia, Origin Energy and Blue Energy and has been involved in the drilling service sector since the formation of Atlas Drilling in senior management Jim Sturgess (age 49) Managing Director Refer to Section 5.1 Jim Diakos (age 43) Director and General Manager, Atlas Drilling Refer to Section CHAIRMAN S REPORT David Thornton (age 43) B.Bus, CPA, MAICD, Chief Financial Oicer (CFO) David Thornton joined Titan Energy Services in September 2011 as CFO. David has experience as a senior finance professional across a range of industries including manufacturing, retail and media. Prior to joining Titan Energy Services, David served in senior finance roles in the Bradnam group, a major supplier to the construction industry and APN News and Media as part of the Australian and New Zealand publishing businesses. In addition to leading the various finance functions in these businesses, David was involved in business strategy development and business restructuring to meet long term cyclic change of these industries. Gus van der Heide (age 60) COO, Titan Energy Services Gus has more than 30 years experience in the oil and gas industry, much of that on international assignment throughout Asia as well as significant time in Australia. Prior to returning home to Brisbane, Gus was Far East Vice President for NOV Well Site Services based in Singapore, with responsibility for organic and geographical growth in solids control and waste management businesses. Gus brings a broad range of operations and strategic management experience in the oil and gas services sector to Atlas Drilling.

15 Stephen Bizzell (age 44) B.Comm, ACA, MAICD Non-executive Director Stephen is the Chairman of boutique corporate advisory and funds management group Bizzell Capital Partners Pty Ltd, Executive Director of Dart Energy Ltd and a Non-executive Director of Hot Rock Ltd, Stanmore Coal Ltd, Diversa Ltd and Armour Energy Ltd. He is Chairman of Renison Consolidated Mines NL and Renaissance Uranium Limited. Stephen was previously an Executive Director of Arrow Energy Ltd from 1999 until its recent acquisition by Shell and PetroChina, for $3.5 billion. He was instrumental in Arrow s corporate and commercial success and its growth from a junior explorer to a large integrated energy company. Stephen is qualified as a Chartered Accountant and early in his career was employed in the Corporate Finance division of Ernst & Young and the Corporate Tax division of Coopers & Lybrand. He has had considerable experience and success in the fields of corporate restructuring, debt and equity financing and mergers and acquisitions and has over 20 years corporate finance and public company management experience in the resources sector in Australia and Canada with various public companies. Simon Keyser (age 44) B.Bus, ACA Non-executive Director Simon has over 20 years experience in the finance industry including specialising in the resources and energy sectors. Simon is a director of XLX Pty Ltd, an investment company focussed on the resources and energy sectors. XLX is a major shareholder in Titan Energy Services Limited. Simon is the co-owner and director of Ironstone Capital a corporate advisory business. He is also a director of G&S Engineering Pty Ltd, Malabar Coal Ltd, and is on the Board of MS Queensland. Simon has held senior investment banking positions with Wilson HTM and Chase (now JP Morgan Chase) and has advised companies on capital raisings and mergers and acquisitions in Australia and Europe. Simon holds a B.Bus from the Queensland University of Technology, Grad Dip from FINSIA and is a Chartered Accountant. Wayne Seabrook (2) (age 52) B.Eng (Chem 1st Hons) FINSIA, AUSIMM Non-executive Director Wayne has more than 30 years experience in the resource and resource service sectors. Wayne has had senior corporate finance roles with Macquarie Bank, Challenger International and Wilson HTM. He has managed capital raisings and corporate transactions for many resource, energy and resource services companies. His development and operations background includes senior, executive, and Board roles with: Apollo Gas Ltd, PMA Ltd, Alcoa of Australia, Macraes Mining Ltd, Minproc Engineers Ltd and Barclay-Mowlem. Wayne is a director of XLX Pty Ltd, an investment company focussed on the resources and energy sectors. XLX Pty Ltd is a major shareholder in Titan Energy Services Limited. He is also a director of Malabar Coal Ltd and Ironstone Capital Pty Ltd a corporate advisory firm. Wayne holds a B.Eng (Chem 1st Hons) from the University of Canterbury, New Zealand and a Grad Dip from FINSIA.. Darren Bishell (age 44) General Manager, Resources Camp Hire Darren has held General Manager positions in the oil and gas service sector with the Shorelands group, ShoreAir and Veolia Environmental Services. Prior to these roles, Darren was a logistics training manager with the Australian Department of Defence. Lee Buckingham (age 44) General Manager, Nektar Remote Hospitality Lee has been General Manager of Nektar Remote Hospitality since the company formed in April Lee was previously General Manager of the Brisbane Rugby Club. Prior to this, Lee spent over five years in operational and management positions within the Panther s group and Revesby Workers Club in Sydney. With a background in product development, catering and new business development over 25 years internationally, Lee brings to the company and group an excellent background within the food and beverage management and operation. Note 1: XLX Capital Pty Ltd is a 100% subsidiary of XLX Pty Ltd. XLX Pty Ltd is a major shareholder in Titan Energy Services. Note 2: As per the ASX release dated 18 October 2012 Wayne Seabrook resigned from the Titan Board being replaced by Mr Mark Snape. TITAN ENERGY SERVICES ANNUAL REPORT

16 FINANCIAL REPORT contents 14 FINANCIAL REPORT 15 Director s Report 22 Remuneration Report (Audited) 27 Auditor s Independence Declaration 28 Corporate Governance Statement 34 Statement of Comprehensive Income 35 Statement of Financial Position 36 Statement of Changes in Equity 37 Statement of Cashflows 38 Notes to the Financial Statements 76 Directors Declaration 77 independent Auditor s Report to the Members of Titan Energy Services Limited 79 Shareholder Information 81 Corporate Directory

17 DIRECTORS REPORT Your directors present their report, together with the financial statements of the group, being the company and its controlled entities, for the financial year ended 30 June Directors The following persons were directors of Titan Energy Services Limited during the whole of the year and up to the date of this report, unless otherwise stated: Shaun Scott (appointed 27 October 2011) Stephen Bizzell Simon Keyser Wayne Seabrook James Sturgess Jim Diakogiannis (appointed 27 October 2011) Principal Activities The principal activities of the group during the financial year were the provision of drilling, accommodation and catering services predominately to the coal seam gas and associated industries. The following significant changes in the nature of the principal activities occurred during the financial year: The group was formed during the year via the acquisition of Atlas Drilling Co Pty Ltd, and acquisition of the business operations and assets of the Resources Camp Hire temporary accommodation hire business, which enabled the group to commence the provision of drilling and accommodation hire services. There were no other significant changes in the nature of the group s principal activities during the financial year. Operating Results and Review of Operations for the Year Drill Rigs Camps Catering Total $ $ $ $ Year ended 30 June 2012 Revenue Revenue from external customers 24,314,074 9,102,625 33,416,699 Inter-segment revenue 140,940 24,943 30, ,835 Total segment revenue 24,455,014 9,127,568 30,952 33,613,534 Segment result EBITDA 4,904,684 4,244,872 (38,559) 9,110,997 Unallocated: Interest revenue 74,143 Interest expense and borrowing costs (654,013) Depreciation (3,513,413) Corporate expenses (1,754,681) Net profit before tax from continuing operations 3,263,033 Tax expense (992,843) Net profit after tax from continuing operations 2,270,190 DIRECTORS REPORT TITAN ENERGY SERVICES ANNUAL REPORT

18 DIRECTORS REPORT (cont.) Review of Operations Refer to Managing Director s report on pages Financial Position The key to maintaining growth is the ability to fund the expansion. During the year, the group entered into new finance facilities. The facilities have been used to fund the initial payment of the RCH business and incremental capex requirements for both RCH and Atlas. In addition to the debt facilities, Titan Energy Services Limited raised $5.0M through an IPO in early December The proceeds have been used to settle the deferred RCH payment in January 2012 and ongoing capital expenditure requirements. Due to expansion and upgrades particularly in the second half of the year, the group s capital expenditure has grown but is expected to reduce during the first part of the new year. Capital expenditure funding has been via the debt and equity issues noted above, with the balance from the operating cashflow of the business. The group position at 30 June 2012 is strong. Current contracts in the business will support high utilisation rates and solid operating cashflow. At 30 June 2012, the group had $1.4M in cash and access to additional $1.3M in capex facilities and a $1.0M overdraft facility. Additional financial information contained in pages Significant Changes in the State of Aairs The following significant changes in the state of aairs of the parent entity occurred during the financial year: 1. On 12 September and 31 October 2011, pursuant to share exchange agreements, Titan Energy Services Limited issued a total of 7,087,025 ordinary shares to existing shareholders of Atlas Drilling Co Pty Ltd (on the basis of one Titan Energy Services Limited share for every one Atlas Drilling Co Pty Ltd ordinary share held) in order to eect a business restructure to create Titan Energy Services Limited as the holding company for the group. 2. On 16 August 2011, the group, via its subsidiaries Titan Resources Camp Hire Pty Ltd and Titan Plant Logistics Pty Ltd, entered into an Asset Sale Agreement to acquire the business operations and assets of the Resources Camp Hire temporary accommodation hire business, for a purchase consideration of $16,707,077. The acquisition was completed on 24 September 2011 and is eective from 1 July On 7 December 2011, Titan Energy Services Limited listed on the ASX after successfully raising $5.0M predominately from new retail investors. The proceeds from the capital raising were used to finalise the purchase of the RCH business via the payment of a deferred settlement amount. The balance of the IPO funds was used to fund the listing costs and fund future capital expenditure. 4. On 18 May 2012, Titan Energy Services Limited established Nektar Remote Hospitality Services to further the service oering to our clients. Nektar will provide camp catering and management services to internal and external clients. Nektar entered into its first contract with a civil construction company in June The contract term is for 18 months. Events after the Reporting Period The directors have recommended a final fully franked ordinary dividend of $569,135 (2.0 cents per fully paid share) be paid on 19 October 2012 out of retained profits and a positive net asset balance at 30 June The dividend is 25% of NPAT, in line with the stated objective contained in the Prospectus. Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly aected or could significantly aect the operations of the group, the results of those operations, or the state of aairs of the group in future financial years. Likely Developments and Expected Results of Operations Likely developments, future prospects and business strategies of the operations of the group and the expected results of those operations in future financial years have not been included in this report because the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the group. 16 DIRECTORS REPORT

19 DIRECTORS REPORT (cont.) Dividends No dividends were paid or declared during the financial period. Environmental Regulation The company s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. Information on the Directors Shaun Scott Role Experience Age 47. B.Bus, BA, ACA Independent Non-executive Chairman Shaun is a Chartered Accountant with over 25 years of experience in upstream and downstream projects, mergers and acquisitions and finance in the energy sector in Australia, Asia, and the United States. Special Responsibilities Interest in Shares and Options (direct and indirect) Stephen Bizzell Role Experience Special Responsibilities Interest in Shares and Options (direct and indirect) Shaun is currently an Executive Director of ASX listed Dart Energy Ltd, a Non-executive Director of ACER Energy Ltd, Site group International Ltd and Chairman elect of Anaeco Ltd. Shaun previously held the roles of Chief Executive Oicer (Australia), Chief Commercial Oicer and Chief Financial Oicer with Arrow Energy Limited prior to its acquisition by Royal Dutch Shell plc and PetroChina in Prior to joining Arrow in 2004, Shaun held a variety of senior executive roles in the oil and gas industry. Audit Committee, Risk and Safety Committee, Remuneration Committee Shares 696,354 Options 350,719 Age 44. B.Comm, MAICD Non-executive Director Stephen is the Chairman of boutique corporate advisory and funds management group Bizzell Capital Partners Pty Ltd, Executive Director of Dart Energy Ltd and a Non-executive Director of Hot Rock Ltd, Stanmore Coal Ltd, Diversa Ltd and Armour Energy Ltd. He is Chairman of Renison Consolidated Mines NL and Renaissance Uranium Limited. Stephen was previously an Executive Director of Arrow Energy Ltd from 1999 until its recent acquisition by Shell and PetroChina, for $3.5 billion. He was instrumental in Arrow s corporate and commercial success and its growth from a junior explorer to a large integrated energy company. Stephen is qualified as a Chartered Accountant and early in his career was employed in the Corporate Finance division of Ernst & Young and the Corporate Tax division of Coopers & Lybrand. He has had considerable experience and success in the fields of corporate restructuring, debt and equity financing and mergers and acquisitions and has over 20 years corporate finance and public company management experience in the resources sector in Australia and Canada with various public companies. Audit Committee, Remuneration Committee Shares 2,417,585 Options 280,576 TITAN ENERGY SERVICES ANNUAL REPORT

20 DIRECTORS REPORT (cont.) Simon Keyser Role Experience Age 44. B.Bus, ACA Non-executive Director Simon has over 20 years experience in the finance industry including specialising in the resources and energy sectors. Special Responsibilities Interest in Shares and Options (direct and indirect) Simon is a director of XLX Pty Ltd, an investment company focussed on the resources and energy sectors. XLX is a major shareholder in Titan Energy Services Limited. Simon is the co-owner and director of Ironstone Capital a corporate advisory business. He is also a director of G&S Engineering Pty Ltd, Malabar Coal Ltd, and is on the Board of MS Queensland. Simon has held senior investment banking positions with Wilson HTM and Chase (now JPMorgan Chase) and has advised companies on capital raisings and mergers and acquisitions in Australia and Europe. Simon holds a B.Bus from the Queensland University of Technology, Grad Dip from FINSIA and is a Chartered Accountant. Audit Committee Shares 448,609 Options 280,576 Wayne Seabrook 1 Role Experience Simon Keyser owns 20% of XLX Pty Ltd and therefore will have a relevant interest in Shares that XLX Pty Ltd has. XLX Pty Ltd will hold a relevant interest in 6,836,970 Shares, including Shares under management and those Shares in which Wayne Seabrook and Simon Keyser also have an interest. Age 52. B.Eng (Chem 1st Hons) Non-executive Director Wayne has more than 30 years experience in the resource and resource service sectors. Special Responsibilities Interest in Shares and Options (direct and indirect) Wayne has had senior corporate finance roles with Macquarie Bank, Challenger International and Wilson HTM. He has managed capital raisings and corporate transactions for many resource, energy and resource services companies. His development and operations background includes senior, executive, and Board roles with: Apollo Gas Ltd, PMA Ltd, Alcoa of Australia, Macraes Mining Ltd, Minproc Engineers Ltd and Barclay-Mowlem. Wayne is a director of XLX Pty Ltd, an investment company focussed on the resources and energy sectors. XLX Pty Ltd is a major shareholder in Titan Energy Services Limited. He is also a director of Malabar Coal Ltd and Ironstone Capital Pty Ltd a corporate advisory firm. Wayne holds a B.Eng (Chem 1st Hons) from the University of Canterbury, New Zealand and a Grad Dip from FINSIA. Risk and Safety Committee, Remuneration Committee Shares 424,240 Options 280,576 Wayne Seabrook owns 20% of XLX Pty Ltd and therefore will have a relevant interest in Shares that XLX Pty Ltd has. XLX Pty Ltd will hold a relevant interest in 6,836,970 Shares, including Shares under management and those Shares in which Wayne Seabrook and Simon Keyser also have an interest. Note 1: As per the ASX release dated 18 October 2012 Wayne Seabrook resigned from the Titan Board being replaced by Mr Mark Snape. 18 DIRECTORS REPORT

21 DIRECTORS REPORT (cont.) Jim Diakogiannis Role Experience Age 43. B.Eng, B.Sc Executive Director Jim is a co-founder of Atlas Drilling and has 18 years experience in the oil and gas industry in Australia. Jim s specialities are in the area of drilling, completion and production engineering and he has been involved in the CSG sector since Special Responsibilities Interest in Shares and Options (direct and indirect) James Sturgess Role Jim has held various positions in a number of large and small Operating companies during his career including Santos, Inland Oil Refiners, Oil company of Australia, Origin Energy and Blue Energy and has been involved in the drilling service sector since the formation of Atlas Drilling in Risk and Safety Committee Shares 1,734,032 Performance rights 255,000 Age 49. B.Comm, FCA Managing Director Experience Jim has been Managing Director of Titan Energy Services Limited since May Special Responsibilities Interest in Shares and Options (direct and indirect) Jim was previously CEO of the City of Brisbane Investment Corporation. Prior to this, Jim spent over seven years at Flight Centre Limited as Chief Financial Oicer and then Executive General Manager of Global Property, Procurement & Projects. Jim was a Regional General Manager at Ernst & Young and the Director of Finance and HR at Starwood Hotels & Resorts. Aside from his management skills, Jim brings to the Board extensive experience in acquisitions and growth companies. Nil Shares 240,000 Performance rights 255,000 Company Secretary The Company Secretary is David Thornton B.Bus, CPA, MAICD. David was appointed as Company Secretary of Titan Energy Services Limited on 27 October He has worked in senior finance roles including most recently as CFO of The Bradnam group and APN News and Media, Regional Publishing. David is also the CFO of the group. TITAN ENERGY SERVICES ANNUAL REPORT

22 DIRECTORS REPORT (cont.) Meetings of Directors During the financial year, 11 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows: DIRECTORS MEETINGS AUDIT COMMITTEE RISK AND SAFETY COMMITTEE REMUNERATION COMMITTEE Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended Shaun Scott Stephen Bizzell Simon Keyser Wayne Seabrook James Sturgess 7 7 Jim Diakogiannis Indemnifying Oicers During or since the end of the financial year, the group paid insurance premiums of $22,365 to insure directors against liabilities for costs and expenses incurred by them in defending legal proceedings arising from their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the company. Options At the date of this report, the unissued ordinary shares of Titan Energy Services Limited under option are as follows: Granted Date Options/ performance rights Number under Option Exercise Price of Options No. of Shares Issued 2012 Expiry Date Directors of Titan Energy Services Limited Key Management Personnel 4 Nov 2011 Options 1,192,447 $ December Nov 2011 Performance rights 503, June Nov 2011 Performance 320, June 2014 rights Option holders do not have any rights to participate in any issues of shares or other interests in the company or any other entity. There have been no unissued shares or interests under option of any controlled entity within the group during or since the end of the reporting period. For details of options issued to directors and executives as remuneration, refer to the remuneration report on page 22 of the Annual Report. During the year ended 30 June 2012, there were no options exercised. 20 DIRECTORS REPORT

23 DIRECTORS REPORT (cont.) Proceedings on Behalf of Company No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. Non-audit Services The Board of directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act The directors are satisfied that the services disclosed below did not compromise the external auditor s independence for the following reasons: all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely aect the integrity and objectivity of the auditor; and the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The following fees were paid or payable to Lawler Hacketts Audit and its related practices for non-audit services provided during the year ended 30 June 2012: $ Taxation services 28,379 Due diligence investigations 86, ,076 Auditor s Independence Declaration A copy of the auditor s independence declaration as required under s 307C of the Corporations Act 2001 is set out on page 27 for the year ended 30 June TITAN ENERGY SERVICES ANNUAL REPORT

24 REMUNERATION REPORT (AUDITED) Remuneration Policy The remuneration policy of Titan Energy Services Limited has been designed to align key management personnel (KMP) objectives with shareholder and business objectives by providing a fixed remuneration component and oering specific short and long term incentives based on key performance areas aecting the group s financial results. The Board of Titan Energy Services Limited believes the remuneration policy to be appropriate and eective in its ability to attract and retain high-quality KMP to run and manage the group, as well as create goal congruence between directors, executives and shareholders. The Board s policy for determining the nature and amount of remuneration for KMP of the group is as follows: The remuneration policy is to be developed by the remuneration committee and approved by the Board. All executive KMP receive a base salary (which is based on factors such as experience and market rates of pay), superannuation, fringe benefits, performance rights and performance incentives. Performance incentives are generally only paid once pre-determined key performance indicators (KPIs) have been met. Incentives paid in the form of options or rights are intended to align the interests of the directors and company with those of the shareholders. In this regard, KMP are prohibited from limiting risk attached to those instruments by use of derivatives or other means. The remuneration committee reviews KMP packages annually by reference to the group s performance, executive performance and comparable information from industry sectors. The performance of KMP is measured against criteria agreed annually with each executive and is based predominantly on the forecast growth of the group s profits. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the committee s recommendations. Any change must be justified by reference to measurable performance criteria. The policy is designed to reward KMP for performance results leading to long term growth in shareholder wealth. KMP are also entitled and encouraged to participate in the employee share and option arrangements to align directors interests with shareholders interests. Options and performance rights granted under the arrangement do not carry dividend or voting rights. Each option and performance right is entitled to be converted into one ordinary share once the hurdles have been met and is valued using the Black-Scholes or Monte Carlo methodologies. All remuneration paid to KMP is valued at the cost to the company and expensed. The Board s policy is to remunerate Non-executive Directors at market rates for time, commitment and responsibilities. The remuneration committee determines payments to the Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders at the Annual General Meeting. Current remuneration for non-executive directors is as follows: Fees including Superannuation Chairman $65,000 Non-executive Director $40,000 Performance-based Remuneration Key performance indicators (KPIs) are set annually, with a certain level of consultation with KMP. The measures are specifically tailored to the area each individual is involved in and has a level of control over. The KPIs target areas the Board believes hold greater potential for group expansion and profit, covering financial and non-financial as well as short and long term goals. The level set for each KPI is based on budgeted figures for the group and respective industry standards. Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number of the KPIs achieved. Following the assessment, the KPIs are reviewed by the remuneration committee in light of the desired and actual outcomes and their eiciency is assessed in relation to the group s goals before the KPIs are set for the following year. In determining whether or not a financial KPI has been achieved, Titan Energy Services Limited bases the assessment on audited figures. 22 REMUNERATION REPORT (AUDITED)

25 REMUNERATION REPORT (AUDITED) (cont.) Relationship between Remuneration Policy and Company Performance The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. Two methods have been applied to achieve this aim: a performance-based bonus based on KPIs and the issue of options and performance rights to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The performance-related proportions of remuneration based on these targets are included in the table below. The objective of the reward schemes is to both reinforce the short and long term goals of the group and provide a common interest between management and shareholders. The satisfaction of the performance conditions is based on a review of the audited financial statements of the group, as such figures reduce any risk of contention relating to payment eligibility. The Board does not believe that performance conditions should include a comparison with factors external to the group at this time. Employment Details of Members of Key Management Personnel The following table provides employment details of persons who were, during the financial year, members of KMP of the group. The table also illustrates the proportion of remuneration that was performance and non-performance based and the proportion of remuneration received in the form of options or performance rights. Position Held as at 30 June 2012 and any Change during the Year Non-salary Cash-based Incentives % Proportions of Elements of Remuneration Related to Performance Shares/Units % Options/Rights % Proportions of Elements of Remuneration Not Related to Performance Fixed Salary/Fees % James Sturgess Managing 21% 0% 10% 69% 100% Director Jim Diakogiannis Executive 21% 0% 10% 69% 100% Director David Thornton CFO 14% 0% 8% 78% 100% Gus van der Heide CEO 22% 0% 5% 73% 100% Atlas Drilling Darren Bishell GM RCH 20% 0% 9% 71% 100% Total % The employment terms and conditions of KMP are formalised in contracts of employment. Key terms of the contract are as follows: KMP Contract Duration Notice period Termination Payments James Sturgess Employment will continue until terminated by notice in accordance with the provisions of the agreement Titan to James Sturgess 6 months James Sturgess to Titan 4 months Titan or Jim Diakogiannis to give 3 months Titan may make a payment in lieu Issue of shares connected to performance rights in accordance with the performance rights plan Titan may make a payment in lieu Jim Diakogiannis Employment will continue until terminated by notice in accordance with the provisions of the agreement Issue of shares connected to performance rights in accordance with the performance rights plan Titan may make a payment in lieu David Thornton Employment will continue until terminated by notice in accordance with the provisions of the agreement Titan or David Thornton to give 3 months Issue of shares connected to performance rights in accordance with the performance rights plan TITAN ENERGY SERVICES ANNUAL REPORT

26 REMUNERATION REPORT (AUDITED) (cont.) KMP Contract Duration Notice period Termination Payments Gus van der Heide Employment will continue until terminated by notice in accordance with the provisions of the agreement Titan or Gus van der Heide to give 3 months Titan may make a payment in lieu Issue of shares connected to performance rights in accordance with the performance rights plan Darren Bishell Employment will continue until terminated by notice in accordance with the provisions of the agreement Titan or Darren Bishell to give 3 months Titan may make a payment in lieu Issue of shares connected to performance rights in accordance with the performance rights plan Remuneration Details for the Year Ended 30 June 2012 The following table of benefits and payments details, in respect to the financial year, the components of remuneration for each director and member of KMP of the group: Table of Benefits and Payments for the Year Ended 30 June 2012 Name Commencement Date Salary and Fees 1 Post Employment Benefits Super 2 Cash Bonus 3 Share Based Payments Options/ PR s 4 Total Directors Shaun Scott Chairman Stephen Bizzell Non-executive Director Simon Keyser Non-executive Director Wayne Seabrook Non-executive Director James Sturgess Managing Director Jim Diakogiannis Executive Director 27/10/ ,786 3,131 41,830 79,747 28/03/ ,333 33,464 56,797 28/03/ ,333 33,464 56,797 28/03/ ,333 33,464 56,797 16/05/ ,000 27,000 38, ,450 1/11/ ,936 17,065 44, ,826 Other KMP Gus van der Heide CEO Atlas Darren Bishell GM RCH David Thornton CFO 3/01/ ,615 12,385 20, ,811 10/10/ ,029 11,433 1, ,556 19/09/ ,443 12,442 1, ,979 Total 1,121,808 83, ,496 1,453,760 Note 1: Salary and directors fees may be delivered as a combination of cash and prescribed non financial benefits at the executives discretion. directors and executives are oered a competitive base pay that comprises the fixed component of pay and rewards. Base pays are reviewed annually to ensure the rate is competitive with the market. Note 2: Post employment benefits is statutory superannuation and calculated as 9% of the base pay. Stephen Bizzell, Simon Keyser and Wayne Seabrook superannuation components are included in the directors fees and are paid on receipt of invoice by Titan Energy Services Limited. There are no other retirement benefits paid by Titan Energy Services Limited. Note 3: A portion of the KMP pay is by way of an at risk bonus. This is subject to satisfactory completion of set KPI s and payable at the discretion of the Managing Director. Note 4: Option and performance rights values have been determined using the Black-Scholes and Monte Carlo methods. 24 REMUNERATION REPORT (AUDITED)

27 REMUNERATION REPORT (AUDITED) (cont.) Securities Received that Are Not Performance Related No members of KMP are entitled to receive securities which are not performance-based as part of their remuneration package. Share-based Payments Options The terms and conditions relating to the options are detailed on page 20 of the Annual Report. Movements during the year are as follows: Balance at Beginning of Year Issued During the Year Exercised During the Year Lapsed During the Year Other Changes During the Year Balance at End of Year Shaun Scott 350, ,719 Chairman Stephen Bizzell 280, ,576 Non-executive Director Simon Keyser 280, ,576 Non-executive Director Wayne Seabrook 280, ,576 Non-executive Director Total 1,192,447 1,192,447 Performance rights The terms and conditions relating to performance rights granted as remuneration during the year to KMP are as follows: Balance at Beginning of Year Issued During the Year Vested During the Year 3 Lapsed During the Year Other Changes During the Year Balance at End of Year James Sturgess CEO 255,000 (36,125) (6,375) 212,500 Titan 1 Jim Diakogiannis 255,000 (42,500) 212,500 Executive Director 1 Gus van der Heide 120,000 (20,000) 100,000 CEO Atlas 2 Darren Bishell 120,000 (20,000) 100,000 GM RCH 2 David Thornton 120,000 (20,000) 100,000 CFO 2 Total 870,000 (98,625) (46,375) 725,000 Note 1: Executive directors have been issued 255,000 performance rights each which are split as follows a) 127,500 performance rights divided into three (3) equal tranches of 42,500 performance rights each for the first three years of employment vesting when business unit or group profit targets are met. b) 127,500 performance rights divided into three (3) equal tranches of 42,500 performance rights based on the ten day volume weighted average price (VWAP) exceeding i.w $1.76 ii.w $2.06 iii.w $2.35 Note 2: Other KMP have been issued 120,000 performance rights each which are split as follows a) 60,000 performance rights divided into three (3) equal tranches of 20,000 performance rights each for the first three years of employment vesting when business unit or group profit targets are met. b) 60,000 performance rights divided into three (3) equal tranches of 20,000 performance rights based on the ten day volume weighted average price (VWAP) exceeding i.w $1.50 ii.w $1.75 iii.w $2.00 Note 3: Performance rights will vest as KMP met the required performance hurdles. The Board has determined that these employees met their performance targets during the year. Their rights will be converted to ordinary shares within 30 days of the Audited Financial Statements of the group being completed. No performance rights have vested as a result of Titan Energy Services Limited share price meeting the VWAP requirements. TITAN ENERGY SERVICES ANNUAL REPORT

28 REMUNERATION REPORT (AUDITED) (cont.) There have not been any alterations to the terms or conditions of any grants since grant date. Securities Received that Are Performance Related There were no ordinary shares issued in Titan Energy Services Limited as a result of the exercise of remuneration options or performance rights to any director of Titan Energy Services during the year. This directors report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of directors. James Sturgess Director Dated: 21 August REMUNERATION REPORT (AUDITED)