POSHS COMPETITIVE STRENGTHS

1. Largest Asia-based international operator

of offshore support vessels and one of
the top 5 globally
1

Large, diversied eet of 112 offshore support
vessels
2
2. Global reach with a proven international
operating track record
POSH believes that the geographical diversication
of its operations reduces dependence on and risk
exposure to any single geographical market and/or
customer
3. Strong parentage: a member of the
Kuok (Singapore) Limited (KSL) Group
Dedicated offshore support vessel business of the
KSL Group
POSH believes its strategic relationships with
afliated shipyards of the KSL Group will allow POSH
to respond rapidly to changing market dynamics
4. Established reputation and
long-standing relationships with
key oil and gas industry players
Leading global shipyards and offshore engineering
companies such as Saipem, Hyundai Heavy
Industries, Technip Singapore and SapuraClough
Offshore work with POSH on a regular basis
Established reputation and long-standing relationships
with global oil and gas majors and international oil
and gas contractors
5. Highly-experienced and committed
management team
Chief Executive Ofcer and Executive Director, Mr.
Seow Kang Hoe, Gerald, has more than 40 years
experience in the shipping industry
Management team includes 12 shore-based Master
Mariners and 23 Chief Engineers with an aggregate
sea-going experience of more than 600 years
3
This document is important. If you are in any doubt as to the action you should take,
you should consult your legal, fnancial, tax or other professional adviser.
This is the initial public offering of the ordinary shares (our Shares) of PACC Offshore Services
Holdings Ltd. (our Company). We are issuing 252,020,000 new Shares for subscription by
investors at the Offering Price (as dened below). The Offering (as dened below) comprises:
(i) an international offering to investors, including institutional and other investors in Singapore
(the International Offering), including 25,200,000 Shares (the Reserved Shares) reserved
for the directors, management, employees and business associates of our Company, our
subsidiaries and our joint ventures, and Kuok (Singapore) Limited (KSL) and its subsidiaries
(including Pacic Carriers Limited (PCL) and its subsidiaries) who have contributed to our
success to be determined by us at our sole discretion, and (ii) an offering to the public in
Singapore (the Public Offering). The International Offering and the Public Offering (together,
the Offering) will consist of an aggregate of 252,020,000 Shares (the Offering Shares). The
offering price (the Offering Price) for each Offering Share is S$1.15.
At the same time as but separate from the Offering, each of Hwang Investment Management
Berhad and Fortress Capital Asset Management (M) Sdn Bhd (collectively, the Cornerstone
Investors) has entered into a cornerstone subscription agreement with our Company
(collectively, the Cornerstone Subscription Agreements) to subscribe for an aggregate of
85,605,000 new Shares at the Offering Price (the Cornerstone Shares), conditional upon
the Management and Underwriting Agreement and Placement Agreement (each as dened
herein) having been entered into and not having been terminated pursuant to their terms on
or prior to the Listing Date (as dened here).
The Offering is underwritten by DBS Bank Ltd. (DBS Bank), Merrill Lynch (Singapore) Pte.
Ltd. (Merrill Lynch) and Oversea-Chinese Banking Corporation Limited (OCBC Bank)
(together, the Joint Issue Managers, Bookrunners and Underwriters) at the Offering Price.
In connection with the Offering, PCL (the Over-allotment Option Provider) has granted
Merrill Lynch, as stabilising manager (the Stabilising Manager), acting on behalf of the
Joint Issue Managers, Bookrunners and Underwriters, an over-allotment option (the Over-
allotment Option), exercisable in whole or in part on one or more occasions from the date
of commencement of dealing in our Shares on the Singapore Exchange Securities Trading
Limited (the SGX-ST) (the Listing Date) until the earlier of (i) the date falling 30 days from
the Listing Date, or (ii) the date when the Stabilising Manager or its appointed agent has
bought, on the SGX-ST, an aggregate of 46,125,000 Shares, representing approximately
18.3% of the total Offering Shares, to undertake stabilising actions, to purchase from PCL up
to an aggregate of 46,125,000 Shares (the Additional Shares) (representing approximately
18.3% of the total Offering Shares) at the Offering Price, solely to cover the over-allotment
of the Offering Shares, if any. The exercise of the Over-allotment Option will not increase the
total number of issued Shares immediately after completion of the Offering.
Prior to the Offering, there was no public market for our Shares. An application has been
made to the SGX-ST for permission to list all our issued Shares, the Offering Shares, the
Cornerstone Shares, the Additional Shares, the Shares which may be issued upon the
exercise of options to be granted under the POSH Share Option Plan (the Option Shares)
and the Shares which may be issued upon the release of awards to be granted under the
POSH Performance Share Plan (the Performance Shares) on the Mainboard of the SGX-
ST. Such permission will be granted when our Shares have been admitted to the Ofcial
List of the SGX-ST. Acceptance of applications for the Offering Shares will be conditional
upon, among others, permission being granted by the SGX-ST to deal in and for quotation
of all our issued Shares, the Offering Shares, the Cornerstone Shares, the Additional Shares,
the Option Shares and the Performance Shares. Monies paid in respect of any application
accepted will be returned to you, at your own risk, without interest or any share of revenue or
other benet arising therefrom if the Offering is not completed because the said permission
is not granted or for any other reason, and you will not have any right or claim against
us, the Over-allotment Option Provider or the Joint Issue Managers, Bookrunners and
Underwriters. Our Company has received a letter of eligibility from the SGX-ST for the listing
and quotation of all our issued Shares, the Offering Shares, the Cornerstone Shares, the
Additional Shares, the Option Shares and the Performance Shares on the Mainboard of the
SGX-ST. Our Companys eligibility to list and admission of our Shares to the Ofcial List of the
SGX-ST is not to be taken as an indication of the merits of the Offering, our Company, any
of our subsidiaries, our Shares (including the Offering Shares, the Cornerstone Shares, the
Additional Shares, the Option Shares and the Performance Shares), the POSH Share Option
Plan or the POSH Performance Share Plan. The SGX-ST assumes no responsibility for the
correctness of any statements or opinions made or reports contained in this Prospectus.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of
Singapore (the Authority or MAS) on April 7, 2014, and April 17, 2014, respectively. The
Authority assumes no responsibility for the contents of this Prospectus. Registration of this
Prospectus by the Authority does not imply that the Securities and Futures Act, Chapter 289
of Singapore (the Securities and Futures Act or the SFA), or any other legal or regulatory
requirements, have been complied with. The Authority has not, in any way, considered the
merits of our Shares being offered for investment (or of the Additional Shares, where the
Over-allotment Option is exercised).
No Shares will be allotted on the basis of this Prospectus later than six months after the date
of registration of this Prospectus with the Authority.
Investing in our Shares involves risks. See Risk Factors for a discussion of certain
factors to be considered in connection with an investment in our Shares.
Nothing in this Prospectus constitutes an offer for securities for sale in the United States
of America (United States or U.S.) or any other jurisdiction where it is unlawful to do
so. The Offering Shares have not been, and will not be, registered under the United States
Securities Act of 1933, as amended (the Securities Act) or the securities laws of any state
of the United States and accordingly, may not be offered or sold within the United States (as
dened in Regulation S under the Securities Act (Regulation S)). The Offering Shares are
only being offered and sold outside the United States in offshore transactions as dened in,
and in reliance on, Regulation S. For further details about restrictions on offers, sales and
transfers of our Shares, see Plan of Distribution.
Investors applying for Offering Shares by way of application forms or electronic applications
(both as referred to in Appendix G Terms, Conditions and Procedures for Application
for and Acceptance of the Offering Shares in Singapore) in the Public Offering will pay the
Offering Price on application, subject to refund of the full amount or, as the case may be, the
balance of the application monies (in each case without interest or any share of revenue or
other benet arising therefrom and without any right or claim against us, the Over-allotment
Option Provider or the Joint Issue Managers, Bookrunners and Underwriters), where (i) an
application is rejected or accepted in part only, or (ii) the Offering does not proceed for any
reason. Investors applying for the International Offering are required to pay the Offering Price.
Offering in respect of 252,020,000 Offering Shares
(subject to the Over-allotment Option)
Offering Price:
S$1.15 per Offering Share
Joint Issue Managers, Bookrunners and Underwriters
PACC OFFSHORE SERVICES HOLDINGS LTD.
Company Registration No.: 200603185Z
Incorporated in Singapore on 7 March 2006
PROSPECTUS DATED APRIL 17, 2014 (Registered by the Monetary Authority of Singapore on April 17, 2014)
PACC OFFSHORE SERVICES HOLDINGS LTD.
Company Registration No.: 200603185Z
Incorporated in Singapore on 7 March 2006

http://www.posh.com.sg
Address: 1 Kim Seng Promenade, #07-02
Great World City
Singapore 237994
Tel: (65) 6733 3500
This overview section is qualifed in its entirety by, and should be read in
conjunction with, the full text of this Prospectus. Meanings of capitalised terms
used may be found in the sections entitled Defned Terms and Abbreviations
and Glossary of Technical Terms of this Prospectus
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POSHS COMPETITIVE STRENGTHS
1. Largest Asia-based international operator
of offshore support vessels and one of
the top 5 globally
1

Large, diversied eet of 112 offshore support
vessels
2
2. Global reach with a proven international
operating track record
POSH believes that the geographical diversication
of its operations reduces dependence on and risk
exposure to any single geographical market and/or
customer
3. Strong parentage: a member of the
Kuok (Singapore) Limited (KSL) Group
Dedicated offshore support vessel business of the
KSL Group
POSH believes its strategic relationships with
afliated shipyards of the KSL Group will allow POSH
to respond rapidly to changing market dynamics
4. Established reputation and
long-standing relationships with
key oil and gas industry players
Leading global shipyards and offshore engineering
companies such as Saipem, Hyundai Heavy
Industries, Technip Singapore and SapuraClough
Offshore work with POSH on a regular basis
Established reputation and long-standing relationships
with global oil and gas majors and international oil
and gas contractors
5. Highly-experienced and committed
management team
Chief Executive Ofcer and Executive Director, Mr.
Seow Kang Hoe, Gerald, has more than 40 years
experience in the shipping industry
Management team includes 12 shore-based Master
Mariners and 23 Chief Engineers with an aggregate
sea-going experience of more than 600 years
3
This document is important. If you are in any doubt as to the action you should take,
you should consult your legal, fnancial, tax or other professional adviser.
This is the initial public offering of the ordinary shares (our Shares) of PACC Offshore Services
Holdings Ltd. (our Company). We are issuing 252,020,000 new Shares for subscription by
investors at the Offering Price (as dened below). The Offering (as dened below) comprises:
(i) an international offering to investors, including institutional and other investors in Singapore
(the International Offering), including 25,200,000 Shares (the Reserved Shares) reserved
for the directors, management, employees and business associates of our Company, our
subsidiaries and our joint ventures, and Kuok (Singapore) Limited (KSL) and its subsidiaries
(including Pacic Carriers Limited (PCL) and its subsidiaries) who have contributed to our
success to be determined by us at our sole discretion, and (ii) an offering to the public in
Singapore (the Public Offering). The International Offering and the Public Offering (together,
the Offering) will consist of an aggregate of 252,020,000 Shares (the Offering Shares). The
offering price (the Offering Price) for each Offering Share is S$1.15.
At the same time as but separate from the Offering, each of Hwang Investment Management
Berhad and Fortress Capital Asset Management (M) Sdn Bhd (collectively, the Cornerstone
Investors) has entered into a cornerstone subscription agreement with our Company
(collectively, the Cornerstone Subscription Agreements) to subscribe for an aggregate of
85,605,000 new Shares at the Offering Price (the Cornerstone Shares), conditional upon
the Management and Underwriting Agreement and Placement Agreement (each as dened
herein) having been entered into and not having been terminated pursuant to their terms on
or prior to the Listing Date (as dened here).
The Offering is underwritten by DBS Bank Ltd. (DBS Bank), Merrill Lynch (Singapore) Pte.
Ltd. (Merrill Lynch) and Oversea-Chinese Banking Corporation Limited (OCBC Bank)
(together, the Joint Issue Managers, Bookrunners and Underwriters) at the Offering Price.
In connection with the Offering, PCL (the Over-allotment Option Provider) has granted
Merrill Lynch, as stabilising manager (the Stabilising Manager), acting on behalf of the
Joint Issue Managers, Bookrunners and Underwriters, an over-allotment option (the Over-
allotment Option), exercisable in whole or in part on one or more occasions from the date
of commencement of dealing in our Shares on the Singapore Exchange Securities Trading
Limited (the SGX-ST) (the Listing Date) until the earlier of (i) the date falling 30 days from
the Listing Date, or (ii) the date when the Stabilising Manager or its appointed agent has
bought, on the SGX-ST, an aggregate of 46,125,000 Shares, representing approximately
18.3% of the total Offering Shares, to undertake stabilising actions, to purchase from PCL up
to an aggregate of 46,125,000 Shares (the Additional Shares) (representing approximately
18.3% of the total Offering Shares) at the Offering Price, solely to cover the over-allotment
of the Offering Shares, if any. The exercise of the Over-allotment Option will not increase the
total number of issued Shares immediately after completion of the Offering.
Prior to the Offering, there was no public market for our Shares. An application has been
made to the SGX-ST for permission to list all our issued Shares, the Offering Shares, the
Cornerstone Shares, the Additional Shares, the Shares which may be issued upon the
exercise of options to be granted under the POSH Share Option Plan (the Option Shares)
and the Shares which may be issued upon the release of awards to be granted under the
POSH Performance Share Plan (the Performance Shares) on the Mainboard of the SGX-
ST. Such permission will be granted when our Shares have been admitted to the Ofcial
List of the SGX-ST. Acceptance of applications for the Offering Shares will be conditional
upon, among others, permission being granted by the SGX-ST to deal in and for quotation
of all our issued Shares, the Offering Shares, the Cornerstone Shares, the Additional Shares,
the Option Shares and the Performance Shares. Monies paid in respect of any application
accepted will be returned to you, at your own risk, without interest or any share of revenue or
other benet arising therefrom if the Offering is not completed because the said permission
is not granted or for any other reason, and you will not have any right or claim against
us, the Over-allotment Option Provider or the Joint Issue Managers, Bookrunners and
Underwriters. Our Company has received a letter of eligibility from the SGX-ST for the listing
and quotation of all our issued Shares, the Offering Shares, the Cornerstone Shares, the
Additional Shares, the Option Shares and the Performance Shares on the Mainboard of the
SGX-ST. Our Companys eligibility to list and admission of our Shares to the Ofcial List of the
SGX-ST is not to be taken as an indication of the merits of the Offering, our Company, any
of our subsidiaries, our Shares (including the Offering Shares, the Cornerstone Shares, the
Additional Shares, the Option Shares and the Performance Shares), the POSH Share Option
Plan or the POSH Performance Share Plan. The SGX-ST assumes no responsibility for the
correctness of any statements or opinions made or reports contained in this Prospectus.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of
Singapore (the Authority or MAS) on April 7, 2014, and April 17, 2014, respectively. The
Authority assumes no responsibility for the contents of this Prospectus. Registration of this
Prospectus by the Authority does not imply that the Securities and Futures Act, Chapter 289
of Singapore (the Securities and Futures Act or the SFA), or any other legal or regulatory
requirements, have been complied with. The Authority has not, in any way, considered the
merits of our Shares being offered for investment (or of the Additional Shares, where the
Over-allotment Option is exercised).
No Shares will be allotted on the basis of this Prospectus later than six months after the date
of registration of this Prospectus with the Authority.
Investing in our Shares involves risks. See Risk Factors for a discussion of certain
factors to be considered in connection with an investment in our Shares.
Nothing in this Prospectus constitutes an offer for securities for sale in the United States
of America (United States or U.S.) or any other jurisdiction where it is unlawful to do
so. The Offering Shares have not been, and will not be, registered under the United States
Securities Act of 1933, as amended (the Securities Act) or the securities laws of any state
of the United States and accordingly, may not be offered or sold within the United States (as
dened in Regulation S under the Securities Act (Regulation S)). The Offering Shares are
only being offered and sold outside the United States in offshore transactions as dened in,
and in reliance on, Regulation S. For further details about restrictions on offers, sales and
transfers of our Shares, see Plan of Distribution.
Investors applying for Offering Shares by way of application forms or electronic applications
(both as referred to in Appendix G Terms, Conditions and Procedures for Application
for and Acceptance of the Offering Shares in Singapore) in the Public Offering will pay the
Offering Price on application, subject to refund of the full amount or, as the case may be, the
balance of the application monies (in each case without interest or any share of revenue or
other benet arising therefrom and without any right or claim against us, the Over-allotment
Option Provider or the Joint Issue Managers, Bookrunners and Underwriters), where (i) an
application is rejected or accepted in part only, or (ii) the Offering does not proceed for any
reason. Investors applying for the International Offering are required to pay the Offering Price.
Offering in respect of 252,020,000 Offering Shares
(subject to the Over-allotment Option)
Offering Price:
S$1.15 per Offering Share
Joint Issue Managers, Bookrunners and Underwriters
PACC OFFSHORE SERVICES HOLDINGS LTD.
Company Registration No.: 200603185Z
Incorporated in Singapore on 7 March 2006
PROSPECTUS DATED APRIL 17, 2014 (Registered by the Monetary Authority of Singapore on April 17, 2014)
PACC OFFSHORE SERVICES HOLDINGS LTD.
Company Registration No.: 200603185Z
Incorporated in Singapore on 7 March 2006

http://www.posh.com.sg
Address: 1 Kim Seng Promenade, #07-02
Great World City
Singapore 237994
Tel: (65) 6733 3500
This overview section is qualifed in its entirety by, and should be read in
conjunction with, the full text of this Prospectus. Meanings of capitalised terms
used may be found in the sections entitled Defned Terms and Abbreviations
and Glossary of Technical Terms of this Prospectus
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Vessels
1
are designed with diesel electric
propulsion and Clean-Design Notation and
Green Passports, reducing and limiting the
ships combustion machinery emissions and
accidental sea pollution

Combined feet of 112 vessels
2
, comprising:
14 Anchor Handling Tug Supply (AHTS) vessels,
13 Platform Supply Vessels (PSVs), 19 Anchor
Handling Tugs (AHTs), 9 towing tugs, 20 barges, 5
accommodation vessels
3
, 23 harbour tugs, 4 crane
barges and 5 support vessels

15 Vessels
4
on order and scheduled for
delivery: Comprises 2 deck cargo barges, 2 ASD
harbour tugs, 3 DP2 accommodation vessels, 3
DP2 AHTS, 2 DP3 SSAVs and 3 vessels which our
joint ventures have on order

Services: anchor handling, ocean towage and
installation, ocean transportation, heavy-lift,
offshore accommodation, harbour towage and
emergency response
LARGE, MODERN AND DIVERSE FLEET
OF OFFSHORE SUPPORT VESSELS
POSH IS THE LARGEST ASIA-BASED
INTERNATIONAL OPERATOR OF
OFFSHORE SUPPORT VESSELS AND
ONE OF THE TOP FIVE GLOBALLY
5
1
DP2 PSVs, DP2 accommodation vessels and DP3 SSAVs
2
As of December 31, 2013
3
Includes one vessel that is undergoing conversion into an accommodation vessel
4
As of the Latest Practicable Date. Not including one vessel undergoing conversion into an accommodation vessel
5
Based on Inelds data on the number of vessels operated by POSH and the other major international providers of global support vessels
GLOBAL REACH WITH A PROVEN INTERNATIONAL OPERATING TRACK RECORD
THE POSH FLEET
2
Number
25
20
15
10
5
0
5
Support
Vessels
Offshore Supply Vessels Offshore Accomodation Harbour Services and Emergency Response Transportation and Installation
Crane
Barges
Harbour
Tugs
Towing
Tugs
Barges PSV AHTs AHTS Accomodation
Vessels
4
23 20
13
5
17
14
9
2
Mexico
New
Caledonia
Egypt
China
Thailand UAE
Russia
Venezuela
Countries operated in over the years
Countries currently operating in
Nigeria
Singapore
Angola
Australia Indonesia
India Malaysia Gabon
Myanmar
Vietnam
Congo
South
Africa
New
Zealand
Philippines
Brazil
UK Oman
Italy
Saudi
Arabia Iran
Vessels
1
are designed with diesel electric
propulsion and Clean-Design Notation and
Green Passports, reducing and limiting the
ships combustion machinery emissions and
accidental sea pollution

Combined feet of 112 vessels
2
, comprising:
14 Anchor Handling Tug Supply (AHTS) vessels,
13 Platform Supply Vessels (PSVs), 19 Anchor
Handling Tugs (AHTs), 9 towing tugs, 20 barges, 5
accommodation vessels
3
, 23 harbour tugs, 4 crane
barges and 5 support vessels

15 Vessels
4
on order and scheduled for
delivery: Comprises 2 deck cargo barges, 2 ASD
harbour tugs, 3 DP2 accommodation vessels, 3
DP2 AHTS, 2 DP3 SSAVs and 3 vessels which our
joint ventures have on order

Services: anchor handling, ocean towage and
installation, ocean transportation, heavy-lift,
offshore accommodation, harbour towage and
emergency response
LARGE, MODERN AND DIVERSE FLEET
OF OFFSHORE SUPPORT VESSELS
POSH IS THE LARGEST ASIA-BASED
INTERNATIONAL OPERATOR OF
OFFSHORE SUPPORT VESSELS AND
ONE OF THE TOP FIVE GLOBALLY
5
1
DP2 PSVs, DP2 accommodation vessels and DP3 SSAVs
2
As of December 31, 2013
3
Includes one vessel that is undergoing conversion into an accommodation vessel
4
As of the Latest Practicable Date. Not including one vessel undergoing conversion into an accommodation vessel
5
Based on Inelds data on the number of vessels operated by POSH and the other major international providers of global support vessels
GLOBAL REACH WITH A PROVEN INTERNATIONAL OPERATING TRACK RECORD
THE POSH FLEET
2
Number
25
20
15
10
5
0
5
Support
Vessels
Offshore Supply Vessels Offshore Accomodation Harbour Services and Emergency Response Transportation and Installation
Crane
Barges
Harbour
Tugs
Towing
Tugs
Barges PSV AHTs AHTS Accomodation
Vessels
4
23 20
13
5
17
14
9
2
Mexico
New
Caledonia
Egypt
China
Thailand UAE
Russia
Venezuela
Countries operated in over the years
Countries currently operating in
Nigeria
Singapore
Angola
Australia Indonesia
India Malaysia Gabon
Myanmar
Vietnam
Congo
South
Africa
New
Zealand
Philippines
Brazil
UK Oman
Italy
Saudi
Arabia Iran
6. Well-positioned to capture
market opportunities across
all business segments
OFFSHORE
SUPPLY
VESSELS
TRANSPORTATION
AND INSTALLATION
OFFSHORE
ACCOMMODATION
HARBOUR
SERVICES AND
EMERGENCY
RESPONSE
5 vessels
3
(including
one vessel undergoing
conversion into
a 198-person
accommodation vessel)
Expected to operate
the youngest high-berth
accommodation vessels
eet in the world with
the delivery of two
750-person DP3 SSAVs
by end 2014
4
Two 238-person DP2
accommodation vessels
scheduled to be delivered
by end 2014
One 238-person DP2
accommodation vessel
scheduled to be delivered
by rst quarter of 2015
One of the largest deepwater AHT eets in the world
4
Built up a track record in completing many demanding
and high-value ocean towage projects, having
successfully completed 53 oating system T&I
contracts since 1991
3
Awarded the transportation and installation contract
for Ichthys Central Processing Facility
(CP Facility), which is expected to be the worlds
largest CP Facility installed to date when completed
The youngest deepwater AHTS and PSV eet and the
youngest midwater AHTS and PSV eet globally, with an
average age of 2.3 and 2.2 years, as at December 31,
2013 respectively
4

Harbour Services
business has been
operating for over 10
years
One of the two main
offshore support vessel
operators globally
to offer emergency
response services which
include salvage, wreck
removal, rescue and oil-
spill response services
4

1
Based on data provided by Ineld Systems Limited on the number of vessels operated by POSH and the other major international providers of global support vessels
2
As of December 31, 2013
3
As of the Latest Practicable Date
4
According to Ineld Systems Limited
1. MAINTAINING GROWTH MOMENTUM
Growing since incorporation in 2006
Total assets have grown from US$35.7 million as at
December 31, 2006 to US$1.8 billion as at December
31, 2013
In-principle approval given by the Board for a capital
expenditure budget of US$291.5 million for the further
expansion of our feet in the offshore supply vessels
(OSV), transportation and installation and harbour
services and emergency response business segments
(including the acquisition of multifunctional support
vessels (MSV)) (Further Fleet Expansion)
- Plan to implement the Further Fleet Expansion in 2014
2. BROADEN FLEET DIVERSIFICATION
Expanding our feet through the acquisition of larger and
more sophisticated vessels
15 vessels on order and scheduled for delivery and one
vessel undergoing conversion into an accommodation
vessel
1

3. EXPAND INTO DEEPWATER OFFSHORE
ACCOMMODATION AND OTHER HIGH-GROWTH
ASSET CLASSES
Focus on high-capacity and high-specifcation offshore
accommodation vessels
Exploring entry into the Inspection, Maintenance and
Repair (IMR) segment and potential acquisition of
IMR vessels
4. MAINTAIN HIGH SERVICE RELIABILITY
5. OPTIMISE CHARTER MIX FOR OSV AND
OFFSHORE ACCOMMODATION FLEET
To provide stable revenue streams
Long-term charters: predictable and reliable cash fows
Short-term charters: beneft from higher day rates
6. EXPAND INTO NEW GEOGRAPHIC MARKETS
WITH SIGNIFICANT GROWTH POTENTIAL
Australia, Indonesia, Latin America and the EMEA
2

region
Net Prot: 3-Year CAGR* of 67.4%
26.2
53.5
73.4
10.9
22
30.9
Net Prot (US$million)
Net Prot Margin (%)
3
POSHS STRATEGIES
1
As of the Latest Practicable Date
2
Europe, Middle East and Africa
3
Derived by dividing net prot over revenue
* Compounded annual growth rate
Year ended 31 December 2011 Year ended 31 December 2012 Year ended 31 December 2013
TABLE OF CONTENTS
Page
Notice to Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Capitalisation and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Exchange Rates and Exchange Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Selected Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Selected Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Managements Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Share-Based Incentive Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Interested Person Transactions and Potential Conflicts of Interest . . . . . . . . . . . . . . 198
Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Description of our Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Clearance and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
General and Statutory Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Defined Terms and Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
i
Glossary of Technical Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
Appendix A Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B Letter from KPMG CF relating to the Mark-up for Shared Services . . B-1
Appendix C Letter from KPMG CF relating to the Shareholders Mandate . . . . . C-1
Appendix D Summary of Selected Articles of Association of our Company . . . D-1
Appendix E List of Present and Past Principal Directorships of our Directors
and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Appendix F List of Subsidiaries and Associated Companies . . . . . . . . . . . . . . . F-1
Appendix G Terms, Conditions and Procedures for Application for and
Acceptance of the Offering Shares in Singapore . . . . . . . . . . . . . . . G-1
Appendix H Audited Consolidated Financial Statements for the Years Ended
December 31, 2011, 2012 and 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . H-i
Appendix I Unaudited Pro Forma Financial Statements for the Year Ended
December 31, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-i
Appendix J List of Mandated Interested Persons . . . . . . . . . . . . . . . . . . . . . . . . . J-1
Appendix K Independent Valuation Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1
ii
NOTICE TO INVESTORS
No person is authorised to give any information or to make any representation not contained in
this Prospectus and any information or representation not so contained must not be relied upon
as having been authorised by or on behalf of us, the Over-allotment Option Provider or the Joint
Issue Managers, Bookrunners and Underwriters. Neither the delivery of this Prospectus nor any
offer, sale or transfer made hereunder shall under any circumstances imply that the information
herein is correct as of any date subsequent to the date hereof or constitute a representation that
there has been no change or development reasonably likely to involve a material adverse change
in our affairs, condition and prospects or our Shares since the date hereof. In the event any
changes occur, where such changes are material or required to be disclosed by law, the SGX-ST
and/or any other regulatory or supervisory body or agency, or if we otherwise determine, we and
the Over-allotment Option Provider will make an announcement of the same to the SGX-ST and,
if required, issue and lodge an amendment to this Prospectus or a supplementary document or
replacement document pursuant to Section 240 or, as the case may be, Section 241 of the SFA
and take immediate steps to comply with the said sections. Investors should take notice of such
announcements and documents and upon release of such announcements or documents shall be
deemed to have notice of such changes.
None of us, the Over-allotment Option Provider, the Joint Issue Managers, Bookrunners and
Underwriters or any of our or their affiliates, directors, officers, employees, agents,
representatives or advisers are making any representation or undertaking to any investors in our
Shares regarding the legality of an investment by such investor under appropriate investment or
similar laws. In addition, investors in our Shares should not construe the contents of this
Prospectus or its appendices as legal, business, financial or tax advice. Investors should be aware
that they may be required to bear the financial risks of an investment in our Shares for an indefinite
period of time. Investors should consult their own professional advisers as to the legal, tax,
business, financial and related aspects of an investment in our Shares.
The Offering Shares have not been, and will not be, registered under the Securities Act and
accordingly, may not be offered or sold within the United States. The Offering Shares are only
being offered and sold outside the United States in offshore transactions as defined in, and in
reliance on, Regulation S.
We and the Over-allotment Option Provider are subject to the provisions of the Securities and
Futures Act and the Listing Manual regarding the contents of this Prospectus. In particular, if after
this Prospectus is registered but before the close of the Offering, we and the Over-allotment
Option Provider become aware of:
(a) a false or misleading statement in this Prospectus;
(b) an omission from this Prospectus of any information that should have been included in it
under Section 243 of the Securities and Futures Act; or
(c) a new circumstance that has arisen since this Prospectus was lodged with the Authority
which would have been required by Section 243 of the Securities and Futures Act to be
included in this Prospectus if it had arisen before this Prospectus was lodged,
that is materially adverse from the point of view of an investor, we and the Over-allotment Option
Provider may lodge a supplementary or replacement document with the Authority pursuant to
Section 241 of the Securities and Futures Act.
iii
Where applications have been made under this Prospectus to subscribe for and/or purchase the
Offering Shares prior to the lodgment of the supplementary or replacement document and the
Offering Shares have not been issued and/or transferred to the applicants, we and the
Over-allotment Option Provider shall either:
(i) within seven days from the date of lodgment of the supplementary or replacement document,
provide the applicants with a copy of the supplementary or replacement document, as the
case may be, and provide the applicants with an option to withdraw their applications; or
(ii) treat the applications as withdrawn and cancelled and return all monies paid, without interest
or any share of revenue or other benefit arising therefrom and at the applicants own risk, in
respect of any applications received, within seven days from the date of lodgment of the
supplementary or replacement document.
Where applications have been made under this Prospectus to subscribe for and/or purchase the
Offering Shares prior to the lodgment of the supplementary or replacement document and the
Offering Shares have been issued and/or transferred to the applicants, we and the Over-allotment
Option Provider shall either:
(1) within seven days from the date of lodgment of the supplementary or replacement document,
provide the applicants with a copy of the supplementary or replacement document, as the
case may be, and provide the applicants with an option to return to us and the Over-allotment
Option Provider, those Offering Shares that the applicants do not wish to retain title in; or
(2) treat the issue and/or sale of the Offering Shares as void and return all monies paid, without
interest or any share of revenue or other benefit arising therefrom and at the applicants own
risk, in respect of any applications received, within seven days from the date of lodgment of
the supplementary or replacement document.
Any applicant who wishes to exercise his option to withdraw his application or return the Offering
Shares issued and/or sold to him shall, within 14 days from the date of lodgment of the
supplementary or replacement document, notify us and the Over-allotment Option Provider,
whereupon we and the Over-allotment Option Provider shall, within seven days from the receipt
of such notification, return the application monies without interest or any share of revenue or other
benefit arising therefrom and at the applicants own risk.
Under the Securities and Futures Act, the Authority may in certain circumstances issue a stop
order (the Stop Order) to us and the Over-allotment Option Provider, directing that no or no
further Offering Shares be allotted, issued or sold. Such circumstances will include a situation
where this Prospectus (i) contains a statement which, in the opinion of the Authority, is false or
misleading, (ii) omits any information that is required to be included in accordance with the
Securities and Futures Act or (iii) does not, in the opinion of the Authority, comply with the
requirements of the Securities and Futures Act.
Where the Authority issues a Stop Order pursuant to Section 242 of the Securities and Futures
Act:
(A) in the case where the Offering Shares have not been issued and/or transferred to the
applicants, the applications for the Offering Shares pursuant to the Offering shall be deemed
to have been withdrawn and cancelled and we and the Over-allotment Option Provider, shall,
within 14 days from the date of the Stop Order, pay to the applicants all monies the applicants
have paid on account of their applications for the Offering Shares; or
iv
(B) in the case where the Offering Shares have been issued and/or transferred to the applicants,
the issue and/or sale of the Offering Shares shall be deemed void and we and the
Over-allotment Option Provider shall, within seven days from the date of the Stop Order, pay
to the applicants all monies paid by them for the Offering Shares.
Where monies paid in respect of applications received or accepted are to be returned to the
applicants, such monies will be returned at the applicants own risk, without interest or any share
of revenue or other benefit arising therefrom, and the applicants will not have any claim against
us, the Over-allotment Option Provider and the Joint Issue Managers, Bookrunners and
Underwriters.
The distribution of this Prospectus and the offer, subscription, purchase, sale or transfer of our
Shares may be restricted by law in certain jurisdictions. We, the Over-allotment Option Provider
and the Joint Issue Managers, Bookrunners and Underwriters require persons into whose
possession this Prospectus comes to inform themselves about and to observe any such
restrictions at their own expense and without liability to us, the Over-allotment Option Provider or
the Joint Issue Managers, Bookrunners and Underwriters. This Prospectus does not constitute an
offer of, or an invitation to purchase or subscribe for, any of our Shares in any jurisdiction in which
such offer or invitation would be unlawful. Persons to whom a copy of this Prospectus has been
issued shall not circulate to any other person, reproduce or otherwise distribute this Prospectus
or any information herein for any purpose whatsoever nor permit or cause the same to occur.
In connection with the Offering, the Over-allotment Option Provider has granted the Stabilising
Manager, acting on behalf of the Joint Issue Managers, Bookrunners and Underwriters, the
Over-allotment Option, exercisable in whole or in part on one or more occasions from the Listing
Date until the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when the
Stabilising Manager or its appointed agent has bought, on the SGX-ST, an aggregate of
46,125,000 Shares, representing approximately 18.3% of the total Offering Shares, to undertake
stabilising actions, to purchase from PCL up to an aggregate of 46,125,000 Additional Shares
(representing 18.3% of the total Offering Shares) at the Offering Price, solely to cover the
over-allotment of the Offering Shares, if any. The exercise of the Over-allotment Option will not
increase the total number of issued Shares immediately after completion of the Offering.
In connection with the Offering, the Stabilising Manager or its appointed agent may over-allot
Shares or effect transactions which may stabilise or maintain the market price of our Shares at
levels above those that would otherwise prevail in the open market. Such transactions may be
effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulations, including the Securities and Futures Act
and any regulations thereunder. However, we cannot assure you that the Stabilising Manager or
its appointed agent will undertake stabilising action. Such transactions may commence on or after
the Listing Date and, if commenced, may be discontinued at any time and shall not be effected
later than the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when the
Stabilising Manager or its appointed agent has bought, on the SGX-ST, an aggregate of
46,125,000 Shares, representing approximately 18.3% of the total Offering Shares, to undertake
stabilising actions.
v
NOTICE TO INVESTORS IN THE EUROPEAN ECONOMIC AREA
This Prospectus is not a prospectus for the purposes of the Prospectus Directive as implemented
in Member States of the European Economic Area. This Prospectus has been prepared on the
basis that all offers of the Offering Shares will be made pursuant to an exemption under the
Prospectus Directive from the requirement to produce a prospectus in connection with offers of the
Offering Shares. Accordingly, any person making or intending to make any offer within the
European Economic Area of the Offering Shares which are the subject of the offering
contemplated in this Prospectus should only do so in circumstances in which no obligation arises
for us or any of the Underwriters to produce a prospectus for such offers. The expression
Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010
PD Amending Directive, to the extent implemented in the relevant Member State), and includes
any relevant implementing measure in the relevant Member State and the expression 2010 PD
Amending Directive means Directive 2010/73/EU.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements which are statements that are not historical
facts, including statements about our beliefs and expectations. Forward-looking statements
generally can be identified by the use of forward-looking terminology, such as may, will,
could, expect, anticipate, intend, plan, believe, seek, estimate, project and similar
terms and phrases. These statements include, among others, statements regarding our business
strategy, future financial position and results, and plans and objectives of our management for
future operations. Forward-looking statements are, by their nature subject to substantial risks and
uncertainties, and investors should not unduly rely on such statements.
Forward-looking statements reflect our current views with respect to future events and are not a
guarantee of future performance. These statements are based on our managements beliefs and
assumptions, which in turn are based on currently available information. Although we believe the
assumptions upon which these forward-looking statements are based are reasonable, any of
these assumptions could prove to be inaccurate, and the forward-looking statements based on
these assumptions could be incorrect. Actual results may differ materially from information
contained in the forward-looking statements as a result of a number of factors, many of which are
beyond our control, including:
our ability to obtain financing in the future to fund capital expenditures, acquisitions and other
general corporate activities;
the availability of cash for payment of dividends;
our ability to obtain shareholder approval, if necessary, to implement any of our strategies or
to undertake expansion plans;
the availability of vessels for purchase, the time which it may take to construct new vessels,
or vessels useful lives;
general offshore market conditions and trends, including charter rates, vessel values, bunker
fuel expenses and factors affecting vessel supply and demand;
the strength of world economies and currencies and general domestic and international
political conditions;
changes in governmental rules and regulations or actions taken by regulatory authorities;
and
other factors discussed under Risk Factors.
vi
Because of these factors, we caution you not to place undue reliance on any of our forward-
looking statements. Forward-looking statements we make represent our judgment on the dates
such statements are made. New risks and uncertainties arise from time to time, and it is
impossible for us to predict these events or how they may affect us. Save as required by all
applicable laws of applicable jurisdictions, including the Securities and Futures Act, and/or rules
of the SGX-ST, we assume no obligation to update any information contained in this document or
to publicly release the results of any revisions to any forward-looking statements to reflect events
or circumstances that occur, or that we become aware of, after the date of this Prospectus.
INDUSTRY AND MARKET DATA
This Prospectus includes market share and industry data and forecasts that we obtained from
industry publications and surveys, reports of governmental agencies and internal company
surveys. Infield Systems Limited (the Independent Market Research Consultant) was the
primary source for third party industry data and forecasts. Industry publications and surveys and
forecasts generally state that the information contained therein has been obtained from sources
believed to be reliable, but there can be no assurance as to the accuracy or completeness of
included information. While we, the Over-allotment Option Provider and the Joint Issue Managers,
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is
extracted accurately and in its proper context, we, the Over-allotment Option Provider and the
Joint Issue Managers, Bookrunners and Underwriters have not independently verified any of the
data from third party sources or ascertained the underlying economic assumptions relied upon
therein and neither we, the Over-allotment Option Provider nor the Joint Issue Managers,
Bookrunners and Underwriters makes any representation as to the accuracy or completeness of
that information. Statements as to our market position are based on the most currently available
market data.
The information and data contained in the report appearing in Appendix A Industry Overview
were taken from Infields databases and other sources available in the public domain. Infield has
advised us that it accurately describes the offshore marine services market, subject to the
availability and reliability of the data supporting the statistical and graphical information
presented. Infields methodologies for collecting information and data, and therefore the
information discussed in the report appearing in Appendix A Industry Overview, may differ from
those of other sources, and does not reflect all or even necessarily a comprehensive set of the
actual transactions occurring in the offshore marine services market. Although we, the Over-
allotment Option Provider and the Joint Issue Managers, Bookrunners and Underwriters believe
the information and data in report appearing in Appendix A Industry Overview to be accurate,
we, the Over-allotment Option Provider and the Joint Issue Managers, Bookrunners and
Underwriters have not independently verified the information or data. The source of all tables and
charts in the report appearing in Appendix A Industry Overview is Infield unless otherwise
indicated.
vii
CERTAIN DEFINED TERMS AND CONVENTIONS
In this Prospectus, references to S$ or Singapore dollars or Singapore cents are to the lawful
currency of the Republic of Singapore, references to US$, U.S. dollars or U.S. cents are to
the lawful currency of the United States of America, references to Rp. or rupiah are to the lawful
currency of Indonesia, references to peso or Mexican Peso are to the lawful currency of
Mexico, references to are to the lawful currency of the United Kingdom, references to C are
to Euro, the lawful currency of certain nations within the European Union, references to R are
to the lawful currency of South Africa and references to RM are to the lawful currency of
Malaysia. For the readers convenience, unless otherwise indicated, certain U.S. dollar amounts
in this Prospectus have been translated into Singapore dollars based on the exchange rate of
S$1.27 = US$1.00, quoted by Bloomberg L.P. on the Latest Practicable Date. However, such
translations should not be construed as a representation that Singapore dollar or U.S. dollar
amounts have been, could have been or could be converted into U.S. dollars or Singapore dollars,
as the case may be, at the rate indicated, any particular rate or at all. See Exchange Rates and
Exchange Controls Exchange Rates for further information regarding rates of exchange
between the Singapore dollar and the U.S. dollar.
We have included the exchange rate quoted above in its proper form and context in this
Prospectus. Bloomberg L.P. has not provided its consent, for the purposes of Section 249 of the
Securities and Futures Act, to the inclusion of the exchange rate quoted above in this Prospectus,
and is thereby not liable for such information under Sections 253 and 254 of the Securities and
Futures Act. While we, the Over-allotment Option Provider and the Joint Issue Managers,
Bookrunners and Underwriters have taken reasonable actions to ensure that the above exchange
rate has been reproduced in its proper form and context, neither we, the Over-allotment Option
Provider, the Joint Issue Managers, Bookrunners and Underwriters nor any other party has
conducted an independent review of the information or verified the accuracy of the contents of the
relevant information.
All trademarks appearing herein are the property of their respective owners.
In this Prospectus, references to the Latest Practicable Date refer to March 25, 2014.
Any discrepancies in any tables, graphs or charts included in this Prospectus between the totals
and the sums of the amounts listed are due to rounding.
The information on our website or any website directly or indirectly linked to our website or the
websites of any of our related corporations or other entities in which we may have an interest is
not incorporated by reference into this Prospectus and should not be relied on.
In this Prospectus, references to our Company or POSH are to PACC Offshore Services
Holdings Ltd. and, unless the context otherwise requires, we, us, our and our Group refer
to PACC Offshore Services Holdings Ltd. and its subsidiaries taken as a whole. Unless the context
otherwise requires, references in this Prospectus to our vessels, fleet, vessel fleet or combined
vessel fleet refer to vessels which POSH and its subsidiaries own, as well as vessels held through
our joint ventures, which we account for as jointly controlled entities using the equity method, and
references to and descriptions of our business in this Prospectus refer to the business carried out
by our Group together with such joint ventures. All references to our Board of Directors or our
Directors are to the board of Directors of PACC Offshore Services Holdings Ltd.
In this Prospectus, the definitions and explanation of technical terms found in this section and
Defined Terms and Abbreviations apply throughout where the context so admits.
viii
Our customers named in this Prospectus are generally referred to, in this Prospectus, by their
trade names. Our contracts with these customers are typically with an entity or entities in that
customers group of companies.
In addition, unless we indicate otherwise, all information in this Prospectus assumes (i) that the
Over-allotment Option is not exercised; and (ii) that no Offering Shares have been re-allocated
between the International Offering and the Public Offering.
ix
CORPORATE INFORMATION
Directors Kuok Khoon Ean (Chairman and Non-Executive
Director)
Seow Kang Hoe, Gerald (Chief Executive Officer
and Executive Director)
Wu Long Peng (Non-Executive Director)
Teo Joo Kim (Non-Executive Director)
Ahmad Sufian @ Qurnain Bin Abdul Rashid
(Independent Director)
Ma Kah Woh (Independent Director)
Jude Philomen Benny (Lead Independent Director)
Wee Joo Yeow (Independent Director)
Company Secretary Tay Cheng Imm Dawn, Bachelor of Laws
Registered Office 1 Kim Seng Promenade, #07-02
Great World City
Singapore 237994
Principal Place of Business 1 Kim Seng Promenade, #06-01
Great World City
Singapore 237994
Company Registration Number 200603185Z
Over-allotment Option Provider Pacific Carriers Limited
1 Kim Seng Promenade, #07-02
Great World City
Singapore 237994
Share Registrar Boardroom Corporate & Advisory Services Pte. Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Joint Issue Managers, Bookrunners
and Underwriters
DBS Bank Ltd.
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
Oversea-Chinese Banking Corporation Limited
65 Chulia Street #06-00
OCBC Centre
Singapore 049513
x
Legal Advisers to our Company and
the Over-allotment Option Provider as
to Singapore law
Allen & Gledhill LLP
One Marina Boulevard #28-00
Singapore 018989
Legal Advisers to our Company
as to Indonesia law
Hadromi & Partners Law Firm
Setiabudi Atrium, 2nd Floor, Suite 209A
Jl. H.R. Rasuna Said Kav. 62
Jakarta 12920, Indonesia
Legal Advisers to our Company
as to Malaysia law
Jeff Leong, Poon & Wong
B-11-8, Level 11, Megan Avenue II
Jalan Yap Kwan Seng
50450 Kuala Lumpur, Malaysia
Legal Advisers to our Company
as to Mexico law
Basham, Ringe y Correa, S.C.
Paseo de los Tamarindos 400-A 9 Piso
Bosques de Las Lomas
Mxico D.F.
Legal Advisers to the Joint Issue
Managers, Bookrunners and
Underwriters as to Singapore law
WongPartnership LLP
12 Marina Boulevard Level 28
Marina Bay Financial Centre Tower 3
Singapore 018982
Legal Advisers to the Joint Issue
Managers, Bookrunners and
Underwriters as to United States
federal securities law
Sidley Austin LLP
Level 31
Six Battery Road
Singapore 049909
Independent Auditors Ernst & Young LLP
Public Accountants and Chartered Accountants
One Raffles Quay
North Tower, Level 18
Singapore 048583
Partner-in-charge: Yee Woon Yim,
Chartered Accountant
Independent Financial Adviser KPMG Corporate Finance Pte Ltd
16 Raffles Quay
#22-00
Hong Leong Building
Singapore 048581
Independent Market Research
Consultant
Infield Systems Limited
Suite 502
1 Alie Street
London E1 8DE
United Kingdom
xi
Independent Valuer Clarkson Valuations Limited
St. Magnus House
3 Lower Thames Street
London EC3R 6HE
United Kingdom
Principal Bankers Bank of America NA, Singapore Branch
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
DBS Bank Ltd.
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
Oversea-Chinese Banking Corporation Limited
65 Chulia Street #06-00
OCBC Centre
Singapore 049513
Receiving Bank DBS Bank Ltd.
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
xii
SUMMARY
You should read the following summary together with the more detailed information regarding us
and the Offering Shares being sold in this Offering, including our financial statements and related
notes appearing elsewhere in this Prospectus. You should carefully consider, among other things,
the matters discussed in Risk Factors.
Overview
We are the largest Asia-based international operator of offshore support vessels and one of the
top five globally, based on Infields data on the number of vessels operated by us and the other
major international providers of global support vessels, with a diversified fleet servicing offshore
oil and gas exploration and production (E&P) activities. Our offshore support vessels perform
anchor handling services, ocean towage and installation, ocean transportation, heavy-lift and
offshore accommodation services. Our vessels also provide harbour towage and emergency
response services.
As of December 31, 2013 and as of the Latest Practicable Date, we operated a combined fleet of
112 and 110 vessels, respectively, including 45 and 47 vessels, respectively, owned by our joint
ventures (of which, as of the Latest Practicable Date, one vessel is undergoing conversion into an
accommodation vessel and two vessels are chartered by a joint venture as a charterer on
long-term charters). This combined fleet comprises Anchor Handling Tug Supply Vessels
(AHTS), Anchor Handling Tugs (AHTs), ocean-towing tugs, Platform Supply Vessels (PSVs),
accommodation vessels, utility vessels and crane and deck barges. As of the Latest Practicable
Date, we have on order and scheduled for delivery 15 vessels, comprising two deck cargo barges,
two Azimuth Stern Drive (ASD) harbour tugs, three Dynamic Positioning (DP) 2 or DP2
accommodation vessels, three DP2 AHTS, two DP3 Semi-Submersible Accommodation Vessels
(SSAVs), and three vessels which our joint ventures have on order. In addition, we have one
vessel that is undergoing conversion into an accommodation vessel. Please see Business
Vessels to be Delivered for further details.
Our fleet operates worldwide serving offshore oilfields in Asia, Africa and Latin America. We have
provided vessels and services for projects involving many of the worlds major oil companies, as
well as many large international offshore contractors, such as Saipem, Hyundai Heavy Industries,
Technip and SapuraClough Offshore.
We earn revenue primarily from time charters of our vessels. We also earn significant revenue
from lump-sum project contracts for which our vessels are deployed.
We manage and measure our business performance in four distinct operating segments which are
the Offshore Supply Vessels (OSV) Segment, the Transportation and Installation (T&I)
Segment, the Offshore Accommodation (OA) Segment and the Harbour Services and
Emergency Response (HSER) Segment.
See Business for further information on our business.
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Our Competitive Strengths
Largest Asia-based international operator with a diversified fleet of offshore support
vessels
We are the largest Asia-based international operator of offshore support vessels and one of the
top five globally, based on Infields data on the number of vessels operated by us and the other
major international providers of global support vessels. As of December 31, 2013 and as of the
Latest Practicable Date, we operated a combined fleet of 112 and 110 vessels, respectively,
including 45 and 47 vessels, respectively, owned by our joint ventures (of which, as of the Latest
Practicable Date, one vessel is undergoing conversion into an accommodation vessel and two
vessels are chartered by a joint venture as a charterer on long-term charters). This combined fleet
comprises AHTS, AHTs, ocean-towing tugs, PSVs, accommodation vessels, utility vessels and
crane and deck barges. As of the Latest Practicable Date, we have on order and scheduled for
delivery 15 vessels, comprising two deck cargo barges, two ASD harbour tugs, three DP2
accommodation vessels, three DP2 AHTS, two DP3 SSAVs, and three vessels which our joint
ventures have on order. In addition, we have one vessel that is undergoing conversion into an
accommodation vessel. Please see Business Vessels to be Delivered for further details.
Our large and diverse fleet, coupled with our ability to provide value-added services (such as the
added value in providing transportation services through our T&I Segment together with
positioning and set-up services through our OSV Segment), enables us to deliver comprehensive
solutions to our customers by leveraging on our multi-segment offshore capabilities to actively
cross-sell our services and secure contracts that are otherwise difficult as a single service-
provider, thereby setting us apart and positioning us favourably to compete for tenders. Our
involvement across a wide scope of the offshore oilfield services through our different business
segments enables us to better understand and respond to our customers needs and allows us to
anticipate future offshore oilfield service needs. Our diversified fleet and service offerings enable
us to achieve financial performance and resilience during industry downturns. We have been
profitable every financial year since our business expansion in 2007.
We constantly monitor demand for offshore services, charter rates, vessel types and fleet size
through our involvement across the wide scope of offshore oilfield services through our different
business segments. With this knowledge, we are able to optimise the portfolio mix of our fleet in
order to better service our customers and respond in a timely manner to industry trends. For
example, as at the Latest Practicable Date, we have ordered two DP3 SSAVs to cater to the
increased demand for deepwater accommodation vessels. We believe this is a key competitive
advantage that differentiates us from our competitors.
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Well-positioned to capture market opportunities across all our business segments
We believe that each of our business segments is well-positioned to capture market opportunities.
Offshore Supply Vessels
We are one of the leading Asia-based operators of AHTS and PSVs with a fleet of 14 AHTS and
13 PSVs as at December 31, 2013 and 15 AHTS and 13 PSVs as at the Latest Practicable Date.
According to Infield, we have the youngest deepwater AHTS and PSV fleet and the youngest
midwater AHTS and PSV fleet globally, with an average age of 2.3 and 2.2 years, as at December
31, 2013, respectively. The age profile of our fleet is a key competitive advantage as modern
vessels are often preferred due to better reliability and emphasis on higher environmental and
safety standards.
Our modern deepwater AHTS are well-placed to benefit from the growing demand for deepwater
vessels arising from increased deepwater oil and gas E&P activity across the world. Furthermore,
all of our AHTS and PSVs are equipped with Dynamic Positioning or DP technology which is
increasingly a pre-requisite for most offshore projects.
Transportation and Installation
We are one of Asias leading operators providing deepwater towage services for various
high-value offshore assets, such as rigs and FPSOs, and offshore construction, transportation and
support services in the shallow-water segment.
According to Infield, we have one of the largest deepwater AHT fleets in the world ranked by fleet
size. We have built up a track record in completing many demanding and high-value ocean towage
projects, having successfully completed 53 floating system (including FPSOs) transportation and
installation contracts since 1991 as of the Latest Practicable Date. According to Infield, we have
been involved in at least seven of the 35 floating unit installations that have taken place in
Asia-Pacific between 2010 and 2013, including five of the 15 largest in terms of topside weight.
In the first half of 2013, we were awarded the transportation and installation contract for Ichthys
Central Processing Facility (CP Facility) as well as the Ichthys FPSO. Once the Ichthys CP
Facility is completed, the structure is expected to be the worlds largest CP Facility installed to
date.
Offshore Accommodation
As at the Latest Practicable Date, we have ordered two 750-person DP3 SSAVs. These vessels
are scheduled to be delivered by the end of 2014. As at the Latest Practicable Date, we are in the
final stages of procuring a charter contract for the commercial deployment of one of the vessels
when it is delivered. The execution of the charter contract is pending the completion of due
approval process of the counterparty. Notwithstanding, there is no assurance that the charter
contract will ultimately be executed by the counterparty. Such vessels are expected to capture the
rising demand for high-capacity and high-specification accommodation vessels specially catering
to the deepwater segment. These vessels will have modern structural designs (including one of
the largest offshore heli decks), technology (such as DP3) and equipment and will be certified as
Comfort Class (DNV Notation (1A1) Ship shaped) by DNV by complying with strict noise and
vibration control requirements. The specifications of these vessels include having a deck space
of 2,000 square metres, a maximum deck load of 3,000 metric tonnes and 390 cabins of one, two
or four persons. According to Infield, as at the close of 2013, there were only three operational
SSAVs with berth capacity of more than 600-person and another three on order or under
4
construction (including our two 750-person DP3 SSAVs). According to Infield, upon the delivery of
our two DP3 SSAVs, we will operate the youngest high-berth accommodation vessel fleet in the
world.
As at the Latest Practicable Date, we have also ordered three 238-person DP2 accommodation
vessels, of which two are scheduled to be delivered by the end of 2014 and one is scheduled to
be delivered by the first quarter of 2015. In addition, we have one vessel that is undergoing
conversion into a 198-person accommodation vessel, which is expected to be delivered by the
second quarter of 2014.
When all of the accommodation vessels that are under construction or undergoing conversion are
delivered by 2015, our accommodation capacity will increase from 879 persons as at the Latest
Practicable Date to 3,291 persons (this includes one 191-person accommodation vessel that is
committed for sale after the Latest Practicable Date).
Harbour Services and Emergency Response
Our Harbour Services business has been operating for over 10 years. We own, operate and
manage a fleet of harbour tugs and heavy lift crane barges, which are actively engaged in
supporting harbour towage operators and providing heavy lift services to shipyards engaged in the
construction, and repair and conversion of ships and offshore drilling units, and other offshore
structures and topside production and processing facilities. In November 2013, our subsidiary,
POSH Semco Pte. Ltd. (POSH Semco), was granted a public licence by the Maritime and Port
Authority of Singapore (MPA) for the provision of towage services to vessels within the limits of
the port and the approaches to the port as described in Government Regulations. According to
Infield, we are also one of the two main offshore support vessel operators globally to offer
emergency response services which include salvage, wreck removal, rescue and oil-spill
response services. Emergency, salvage and oil spill response services encompass emergency
assistance to vessels that encounter grounding, collision, incidences of fire and oil spillage as a
consequence of collisions and groundings. In particular, salvage refers to the process of
recovering a vessel, its cargo, or other property after a shipwreck, grounding or other marine
accidents or incidents, and encompasses refloating, towing and recovery of a sunken, grounded
or incapacitated vessel.
Established reputation and long-standing relationships with key oil and gas industry
players
As a result of our proven international operating track record, we have built a strong reputation
and an extensive network of customers including global oil and gas majors and international oil
and gas contractors. Leading global shipyards and offshore engineering companies, such as
Saipem, Hyundai Heavy Industries, Technip and SapuraClough Offshore, also work with us on a
regular basis. Our reputation and long-standing relationships with customers enable us to
compete effectively and continue to grow our business.
Strong parentage
We believe that our Group benefits significantly from being a member of the KSL Group. Our
parent, KSL, shares common heritage with two other holding companies, namely, Kerry Holdings
Limited in Hong Kong and Kuok Brothers Sdn Bhd in Malaysia, in that they were all founded by
the Kuok family, which together with their related companies, are commonly referred to as the
Kuok Group. The Kuok Group is a well-regarded conglomerate with diversified investments in
commodities, hospitality, logistics, real estate and shipping businesses, among others. The Kuok
Group is the single largest shareholding group in listed companies such as Hong Kong-listed
Kerry Properties Limited, Shangri-La Asia Ltd. and SCMP Group Ltd. (publisher of the South
5
China Morning Post), Singapore-listed Wilmar International Limited and Malaysia-listed PPB
Group Berhad (PPB) and Malaysian Bulk Carriers Berhad (MBC). Our parentage makes us a
preferred partner for leading local entities when we enter new markets or form strategic alliances.
As the dedicated offshore support vessel business of the KSL Group, we have ready access to the
affiliated shipyards of the KSL Group. We believe our strategic relationships with these shipyards
will allow us to respond rapidly to changing market dynamics through quick turnaround times for
newbuilds (although there is no publicly available information on the turnaround times for other
shipyards) and manage our own maintenance and refurbishment costs as we enjoy operational
advantages from our ready access to these shipyards such as the ability to gain a closer level of
control and cooperation with the shipyards in terms of design and technical specifications, costing
and procurement of equipment, and delivery timelines, as described below:
We are actively engaged in determining the design and technical specifications of the
vessels. In this regard, the specifications of the vessels and the identification and costing of
the various engines, parts and technical equipment (including replacement parts and
equipment) are specified by us. We are actively involved in the procurement of such engines,
parts and equipment (including identifying and selecting the suppliers and engaging in
negotiations with such suppliers) prior to the shipyards placing the orders for and importing
these engines, parts and equipment on our behalf for regulatory, operational and logistical
convenience. In this way, we are able to gain a closer level of control over the costing of
engines, parts and equipment (including replacement parts and equipment), which in turn
translates into costs savings.
We station our technical superintendents in the shipyards as our vessels are being built, to
monitor the construction and to ensure that the construction is correctly carried out in
accordance with our approved designs and specifications and to further ensure timely
delivery.
Another perspective of timely delivery relates to a scenario where we require vessels for a
specific delivery in the future. This could be due to potential deployment or anticipation of a
supply crunch for certain asset classes due to various reasons (for example, aging vessels
scheduled for scrap etc.), and in this regard, not all shipyards may have available berths and
capacity space to meet such future deliveries.
Not all shipyards are willing to build vessels to bespoke design specifications and have
separate arrangements on the equipment package; instead, they prefer to build repeat
designs, to benefit from their experience and economies of scale and gain discounts for their
own benefit from equipment suppliers and manufacturers.
Our transactions with the KSL Group are conducted on an arms length basis, as further detailed
in the section on Interested Person Transactions and Potential Conflicts of Interest.
Highly-experienced and committed management team with a proven track record
We have a committed, experienced and highly-qualified management team led by our Chief
Executive Officer and Executive Director, Mr. Seow Kang Hoe, Gerald who has more than 40
years of experience in the shipping industry (including 15 years of sea-going experience and more
than 20 years of senior management experience), as further described in Management
Directors. Our Executive Officers come with varied and synergistic backgrounds including
Engineering, Marine and Finance which enable them to lead and manage our Company.
6
Our management team includes 12 shore-based Master Mariners and 23 Chief Engineers with an
aggregate sea-going experience of more than 600 years, as at the Latest Practicable Date. The
depth and diversity of our managements technical and operational expertise and experience
enable us to identify, evaluate and capitalise on market opportunities and to better anticipate
industry trends and invest in relevant assets to respond to our customers needs. In this regard,
we have successfully expanded the scale of our fleet in terms of both capabilities and size (the
vessels we operate grew from 98 vessels as at December 31, 2011 to 110 vessels as at the Latest
Practicable Date, of which, as of the Latest Practicable Date, one vessel is undergoing conversion
into an accommodation vessel). Our extensive experience and expertise in marine operations,
marine engineering and fleet management allow us to proactively manage our fleet and achieve
a high level of reliability, safety and efficiency in our operations.
Recognising the technical capabilities required to operate and manage the two 750-person DP3
SSAVs which we have ordered as at the Latest Practicable Date and which are scheduled for
delivery by the end of 2014, we have established an internationally-experienced management
team with a proven track record. Heading this team is our Project Director, Operations, with more
than 30 years of experience in North Sea and Latin America, including 17 years of handling
day-to-day operations for four SSAVs.
Strategy
Broaden fleet diversification
We look to continue to diversify our fleet and leverage on our multi-segment offshore capabilities
to actively cross-sell our services and secure contracts that would otherwise be difficult as a
single-service provider.
We are enhancing our market-leading positions in each of our OSV, T&I and HSER Segments (as
further described under Our Competitive Strengths Well-positioned to capture market
opportunities across all our business segments), and also the capabilities of our OA Segment, by
currently expanding our fleet through the acquisition of larger and more sophisticated vessels. As
of the Latest Practicable Date, we have on order and scheduled for delivery 15 vessels,
comprising two deck cargo barges, two ASD harbour tugs, three DP2 accommodation vessels,
three DP2 AHTS, two DP3 SSAVs, and three vessels which our joint ventures have on order. In
addition, we have one vessel that is undergoing conversion into an accommodation vessel. With
respect to the OA Segment, recognising the technical capabilities required to operate and manage
the DP3 SSAVs, we have established an internationally-experienced management team with a
proven track record (as further described under Our Competitive Strengths Highly-
experienced and committed management team with a proven track record). With respect to the
HSER Segment, in November 2013, our subsidiary, POSH Semco, was granted a public licence
by the MPA for the provision of towage services to vessels within the limits of the port and the
approaches to the port as described in Government Regulations. Please see Business
Vessels to be Delivered for further details, including details on the contracted delivery date.
Please also see Managements Discussion and Analysis of Financial Condition and Results of
Operations Capital Expenditures and Divestments for further details on our contractual
commitments relating to vessels which our Company and our subsidiaries have on order and
scheduled for delivery and how such committed future capital expenditures are expected to be
funded.
We adopt investment management processes in evaluating our fleet expansion plans. Factors
which determine the level and timing of our fleet expansion include our assessment of the market
demand and cost of investment for new vessels, our ability to secure attractive charter rates and
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our expected return on investment. By adhering to a disciplined and structured set of criteria for
evaluating and determining the need for fleet expansion, we are able to maintain a sustainable
growth model.
Separately, we continue to upgrade our existing assets through our fleet optimisation programme
to further enhance our competitiveness and ability to secure new and more complex contracts.
Under the fleet optimisation programme, we may dispose of older and/or lower-specification
vessels that are less efficient to operate and upgrade existing vessels with more sophisticated
technology and equipment. We may also acquire or build new vessels to optimise the number and
mix of vessels within the fleet. For example, we have upgraded a DP1 AHTS into a DP2 AHTS.
In addition, as at the Latest Practicable Date, we have one vessel that is undergoing conversion
into an accommodation vessel. Please see Business Vessels to be Delivered for further
details, including details on the contracted delivery date. Please also see Managements
Discussion and Analysis of Financial Condition and Results of Operations Capital Expenditures
and Divestments for further details on our contractual commitments relating to vessels which our
Company and our subsidiaries have on order and scheduled for delivery and how such committed
future capital expenditures are expected to be funded. In this way, we continue to respond to our
customers requirements and are likely to secure charters at higher charter rates.
Expand into deepwater offshore accommodation and other high-growth asset classes
We intend to actively expand our fleet and venture into new market opportunities, such as
deepwater offshore accommodation, that are expected to be in high demand going forward.
Our two SSAVs that are scheduled to be delivered by the end of 2014 were specially designed with
additional ancillary features to enhance the vessels overall functionality. The two vessels are
being constructed using modern structural designs and are equipped with the latest technology
and specifications. Some key features include their DP3 technology, telescopic gangway, wide
deck area and a moon-pool which provide us with the flexibility to expand into the Inspection,
Maintenance and Repair (IMR) segment in the future. The IMR segment comprises routine
inspection, maintenance and repair work to ensure system integrity and continued performance of
offshore assets, including subsea facilities and installations. In particular, such work could involve
a combination of services such as survey and maintenance of pipelines, support for diving,
structural inspections, support for laying cables and hoses, bolt inspection and replacement,
support for drilling, light inspection work, support for the maintenance of offshore infrastructures
and well stimulation. As at the Latest Practicable Date, we are in the final stages of procuring a
charter contract for the commercial deployment of one of the vessels when it is delivered. The
execution of the charter contract is pending the completion of due approval process of the
counterparty. Notwithstanding, there is no assurance that the charter contract will ultimately be
executed by the counterparty.
Aside from our high-capacity and high-specification offshore accommodation vessels, we are
exploring entry into IMR services to complement our range of deepwater offshore services. These
services complement our Companys OSV services by allowing our Company to provide additional
value-added services (for instance, divers to conduct inspection and survey of deepwater
structures) to customers of the OSV Segment in respect of deepwater structures that our
Company has provided OSV services for. In connection with this, we are currently exploring the
feasibility of acquiring new asset classes such as IMR vessels. In December 2013, our Board of
Directors gave in-principle approval for a capital expenditure budget of US$291.5 million which is
mainly for the further expansion of our fleet (including the acquisition of multifunctional support
vessels (MSVs)) (as further described in Maintaining our growth momentum below). Save for
the foregoing, as at the Latest Practicable Date, our Company has not identified any specific IMR
assets to be acquired. A decision to invest in these IMR assets has not yet been made and will
be subject to completion of our feasibility study on the provision of such services, including a study
8
on the potential return on investment and cost of return. We currently expect to fund any capital
expenditures that may be incurred in connection with the acquisition of such IMR assets from cash
flows from operations and bank borrowings.
Maintain high service reliability
We believe it is important to maintain a high level of service reliability given the increasingly
stringent environmental regulations and the strong emphasis on safety and quality standards.
One of our core policies is to be actively involved in monitoring the construction of our vessels
including vessel design, equipment selection and quality of construction. This ensures that the
vessels are constructed to meet our quality and technical specification requirements. We practise
planned maintenance programmes for our vessels. In addition, we have recently implemented
predictive maintenance measures for our high-specification and high-capacity vessels.
We continue to invest significantly in our workforce by recruiting, developing and retaining talent.
We believe that our highly-experienced and well-trained workforce play an important role in the
success and growth of our Group and in maintaining our high level of service standards and
operational efficiency. For example, we undertake ongoing in-house education programmes to
keep our crew abreast of market developments and knowledge through holding sea staff seminars
in the Philippines, where we inculcate in our workforce our Groups vision and core values,
conduct training to maintain continual education, and build rapport and team work between the
shore and sea staff.
Optimise charter mix for our OSV and OA fleet
In order to provide stable revenue streams, we intend to optimise our mix of long-term charter
contracts and short-term charter contracts for our OSV and OA fleet. However, we do not have a
target ratio of long-term charter contracts to short-term charter contracts as this depends on the
state of the market (such as the demand and supply dynamics). We aim to maintain and prefer
long-term charters which provide us with predictable and reliable cash flows, and less exposure
to seasonality and revenue volatility. We would also like to further optimise our charter mix by
engaging in short-term contracts which allow us to benefit from higher day rates.
Expand into new geographic markets with significant growth potential
We aim to continue growing our presence in markets which offer significant growth potential such
as Australia, Indonesia, Latin America and the EMEA region or Europe, Middle East and Africa. We
will expand our presence in Mexico which will serve as our springboard for our strategic expansion
into other regions of Latin America. Accordingly, we are constantly looking out for suitable
opportunities to enhance the scale of our business through synergistic strategic alliances and
mergers and acquisitions which will better enable us to establish our presence in new high-growth
markets. As at the Latest Practicable Date, we have not formalised any specific plans for such
expansion as our Company has not identified any such opportunities to enhance the scale of our
business or any targets for such mergers and acquisitions. We currently expect to fund any such
expansion from cash flows from operations and bank borrowings.
Maintaining our growth momentum
Our Company is a relatively young company and we have been growing since we were
incorporated, from total assets of US$35.7 million as at December 31, 2006 to US$1.8 billion as
at December 31, 2013. We believe we are still in a growth phase, and we intend to continue to
enhance and retain our market-leading positions by maintaining our growth momentum in our
business segments.
9
In December 2013, our Board of Directors gave in-principle approval for a capital expenditure
budget of US$291.5 million which is mainly for the further expansion of our fleet in the OSV, T&I
and HSER Segments (including the acquisition of MSVs as further described in Expand into
deepwater offshore accommodation and other high-growth asset classes) (Further Fleet
Expansion). This is in addition to the vessels we have on order and scheduled for delivery as
described in Business Vessels to be Delivered. Whilst we have identified the relevant types of
vessels to be acquired, we have not contractually committed to acquire any of these assets as at
the Latest Practicable Date. We currently plan to implement such Further Fleet Expansion in 2014
and expect to fund such acquisitions from cash flows from operations and bank borrowings. The
planned partial repayment of the outstanding amounts under our revolving facilities using the net
proceeds from the Offering and the issue of the Cornerstone Shares would increase our available
debt headroom under these facilities, which may be utilised towards funding the Further Fleet
Expansion and our future capital expenditure.
Valuations
We have obtained charter-free valuations for the vessels we operated as of December 31, 2013,
including 45 vessels owned by our joint ventures (of which one vessel is undergoing conversion
into an accommodation vessel and one vessel is chartered by a joint venture as a charterer on a
long-term charter), as well as vessels we had on order as of December 31, 2013, to reflect the
value that would be obtained from selling these vessels in the market on a willing buyer, willing
seller basis without any charter agreements in place. The valuations could be materially affected
should any of the vessels be tendered for sale with a pre-existing charter attached.
These vessels were valued by the Independent Valuer as at December 31, 2013 and are not a
guide to the market values of the vessels at any other point in time. The valuation was based on
recent transactions, negotiations and brokers market knowledge.
No physical inspection or examination of the vessels classification records was performed prior
to the valuation of the vessels. For the full terms and methodology of the Independent Valuer,
please see their valuation certificate which is reproduced in full in Appendix K Independent
Valuation Certificate. There can be no assurance that the valuations prepared by the Independent
Valuer reflect the true value of the vessels, or that other independent valuers would have arrived
at the same valuation. Please see Risk Factors Valuations of the vessels may not be indicative
of the true value of the vessels.
The appraised value of each of the vessels is set out below. Please see Appendix K
Independent Valuation Certificate for further details.
10
Offshore Supply Vessels
No. Vessel Type Current Name
Charter-free Value
(US$)
1 AHTS POSH Conquest 53,000,000
2 AHTS POSH Constant
(1)
53,000,000
3 AHTS POSH Champion 50,350,000
4 AHTS POSH Commander 50,350,000
5 AHTS POSH Courage 53,500,000
6 AHTS POSH Concorde 53,500,000
7 AHTS POSH Persistence 31,000,000
8 AHTS POSH Resolve 20,000,000
9 AHTS POSH Resolute 20,000,000
10 AHTS POSH Rapid 20,000,000
11 AHT Salvirile 5,500,000
12 AHT Salvision 5,500,000
13 PSV POSH Shearwater
(1)
29,000,000
14 PSV POSH Skua 23,000,000
15 Mudboat (PSV) POSH Gannet 29,500,000
16 PSV POSH Sandpiper 29,000,000
17 PSV POSH Fulmar (Hull PX 1018) 29,000,000
18 PSV POSH Pelican (Hull PX 1019) 29,000,000
19 PSV Caballo Babieca
(2)
19,000,000
20 Mudboat (PSV) Don Casiano
(2)
22,500,000
21 PSV Caballo Argento
(2)
26,000,000
22 Mudboat (PSV) Caballo Monoceros
(2)
20,950,000
23 Mudboat (PSV) Caballo Copenhagen
(2)
25,500,000
24 Mudboat (PSV) Caballo Scarto
(2)
24,250,000
25 Mudboat (PSV) Rodrigo DPJ
(3)(5)
20,950,000
26 AHTS Caballo Grano de Oro
(3)(6)
28,000,000
27 AHTS WINPOSH Rampart
(4)
20,500,000
28 AHTS WINPOSH Resolve
(4)
20,500,000
29 AHTS WINPOSH Regent
(4)
19,000,000
Notes:
(1) We have sold to and chartered back this vessel from our joint venture, PT. Mandiri Abadi Maritim, on a long-term
charter.
(2) Owned by our joint venture, Servicios Martimos Gosh, S.A.P.I. de C.V.
(3) Owned by our joint venture, Sermargosh2 S.A.P. I. de C.V. and its subsidiaries.
(4) Owned by our joint venture, PT. Win Offshore.
(5) To be renamed POSH Honesto.
(6) To be renamed POSH Hermosa.
11
Transportation and Installation
No. Vessel Type Current Name
Charter-free Value
(US$)
30 Submersible Barge POSH Giant I 9,250,000
31 Submersible Barge POSH Giant II 11,250,000
32 AHT POSH Achiever 12,600,000
33 AHT POSH Assistor 12,600,000
34 AHT Maritime Putri 4,600,000
35 AHT Maritime Putra 4,600,000
36 AHT POSH Pahlawan 7,750,000
37 AHT POSH Panglima 7,750,000
38 AHT Salvaree 3,350,000
39 AHT Maritime Mesra 4,250,000
40 AHT POSH Mulia 4,250,000
41 Towing Tug Greenville 126 1,450,000
42 Towing Tug Greenville 168 1,450,000
43 Towing Tug Maritime Ratu 1,800,000
44 Towing Tug Maritime Raja 1,800,000
45 Towing Tug Maritime Ratna 1,950,000
46 Towing Tug Salvalour 2,600,000
47 Deck/Tank Barge Maritime Honour 3,400,000
48 Deck/Tank Barge Maritime Glory 2,100,000
49 Deck/Tank Barge Maritime Pride 2,100,000
50 Deck/Tank Barge Maritime Courage 2,350,000
51 Deck/Tank Barge Maritime Faith 1,450,000
52 Deck/Tank Barge Maritime Icon 1,500,000
53 Deck/Tank Barge Maritime Topaz 1,500,000
54 Deck/Tank Barge Maritime West 1,450,000
55 Deck/Tank Barge Maritime Falcon 1,050,000
56 Deck/Tank Barge Maritime Hawk 1,050,000
57 Deck/Tank Barge Maritime Swift 950,000
58 Towing Tug Mandiri Tango 3 1,350,000
59 Towing Tug Tango 7 1,900,000
60
Coal/Bulk/
Container Barge
Mandiri Bravo 2 1,500,000
61
Coal/Bulk/
Container Barge
Mandiri Bravo 4 1,500,000
62
Coal/Bulk/
Container Barge
Bravo 7 2,000,000
12
No. Vessel Type Current Name
Charter-free Value
(US$)
63 Deck/Tank Barge WINPOSH 3301
(1)
2,100,000
64
Submersible
Launch Floatover
Barge
POSH Mogami
(2)
25,000,000
65 AHT Salveritas
(3)
26,500,000
66 AHT Salviceroy
(3)
26,500,000
67 AHT Salvigilant
(3)
26,500,000
68 AHT Salvanguard
(3)
26,250,000
69 AHT Salviscount
(3)
26,250,000
70 AHT Terasea Falcon
(3)
45,000,000
71 AHT Terasea Hawk
(3)
45,000,000
72 Towing Tug Tenaga Maju
(4)
700,000
73 Deck/Tank Barge Maritime East
(4)
1,100,000
74 Deck/Tank Barge Maritime Hope
(4)
1,100,000
75 AHT Terasea Eagle (Hull 78)
(5)
45,000,000
Notes:
(1) Owned by our joint venture, PT. Win Offshore.
(2) Owned by our joint venture, Nimitrans Pte. Ltd.
(3) Owned by our joint venture, POSH Terasea Pte. Ltd. and its subsidiaries.
(4) Owned by our joint venture, PT. Mandiri Abadi Maritim.
(5) Chartered by our joint venture, POSH Terasea Pte. Ltd.s subsidiary, as a charterer on a long-term charter (and on
that basis, the vessel is accounted for as a vessel owned by our joint venture).
Offshore Accommodation
No. Vessel Type Current Name
Charter-free Value
(US$)
76
Accommodation
Vessel
PAC Bintan 18,500,000
77
Accommodation
Vessel
POSH Bali 17,000,000
78
Accommodation
Vessel
POSH Bangka 17,100,000
79
Accommodation
Vessel
PW Natuna
(1)
23,000,000
80
Accommodation
Vessel
Jasa Setia (to be renamed
POSH Bawean)
(2)
17,100,000
Notes:
(1) Owned by our joint venture, Pacific Workboats Pte. Ltd.
(2) This vessel is undergoing conversion into an accommodation vessel and is chartered back from our joint venture,
PT. Mandiri Abadi Maritim, on a long-term charter.
13
Harbour Services and Emergency Response
No. Vessel Type Current Name
Charter-free Value
(US$)
81
Utility/Emergency
Support
Salvixen 250,000
82 Workboat Work Boat I 185,000
83
Utility/Emergency
Support
Salvern 250,000
84 ASD Tug POSH Humility 6,450,000
85 Harbour Tug POSH Harvest 4,900,000
86 ASD Tug POSH Helper 6,500,000
87 Harbour Tug PW Rapi 460,000
88 Harbour Tug PW Rajin 460,000
89 Harbour Tug Intan 675,000
90 Harbour Tug Ikhlas 675,000
91 Crane Barge Semco L301 1,100,000
92 Crane Barge Semco L88 450,000
93 Crane Barge PW L-1501
(1)
2,500,000
94 Crane Barge PW L-801
(1)
13,000,000
95
ASD Tug/
Harbour Tug
PW Tekun
(1)
3,650,000
96
ASD Tug/
Harbour Tug
PW Teguh
(1)
3,850,000
97
ASD Tug/
Harbour Tug
PW Tegap
(1)
3,650,000
98
ASD Tug/
Harbour Tug
PW Tegas
(1)
3,850,000
99
ASD Tug/Harbour
Tug
PW Zeta
(1)
3,950,000
100
ASD Tug/
Harbour Tug
PW Gamma
(1)
5,150,000
101
ASD Tug/
Harbour Tug
PW Kappa
(1)
5,150,000
102 Utility Tug PW Resource
(1)
2,800,000
103 Utility Tug PW Reliance
(1)
4,000,000
104
ASD Tug/
Harbour Tug
PW Iota
(1)
5,000,000
105
ASD Tug/
Harbour Tug
PW Lambda
(1)
5,000,000
106
ASD Tug/
Harbour Tug
PW Tenang
(1)
5,000,000
14
No. Vessel Type Current Name
Charter-free Value
(US$)
107
ASD Tug/
Harbour Tug
PW Tenaga
(1)
5,000,000
108
ASD Tug/
Harbour Tug
PW Teraju
(1)
5,200,000
109
ASD Tug/
Harbour Tug
PW Tepat
(1)
5,200,000
110
ASD Tug/
Harbour Tug
Sea Basset
(2)
1,500,000
111
ASD Tug/
Harbour Tug
PW Benar
(1)
5,650,000
112
ASD Tug/
Harbour Tug
PW Berani
(1)
(Hull PX 1026) 5,650,000
Notes:
(1) Owned by our joint venture, Pacific Workboats Pte. Ltd.
(2) Owned by our joint venture, PT. Win Offshore.
Vessels to be delivered
(1)
No. Vessel Type Current Name
Charter-free Value
(US$)
113
Accommodation
vessel Light
Construction Vessel
POSH Endurance (Hull PX
1020)
43,000,000
114
Accommodation
vessel Light
Construction Vessel
POSH Endeavour (Hull PX
1021)
43,000,000
115 AHTS
WINPOSH Ready
(2)
(Hull PX
1022)
22,000,000
116 AHTS POSH Radiant (Hull PX 1023) 22,000,000
117
Semi Submersible
Accommodation
Vessel
POSH Xanadu (Hull C1213) 240,000,000
118
Semi Submersible
Accommodation
Vessel
POSH Arcadia (Hull C1318) 240,000,000
119
Accommodation
vessel Light
Construction Vessel
POSH Enterprise (Hull PX
1031)
43,000,000
120 AHTS Hull PX 1032 22,000,000
121
ASD Tug/Harbour
Tug
Hull PX 1033 5,650,000
122
ASD Tug/Harbour
Tug
Hull PX 1035 5,650,000
123 AHT Terasea Osprey (Hull 79)
(3)
45,000,000
124
ASD Tug/Harbour
Tug
PW Tetap (Hull PX 1029)
(4)
5,350,000
15
No. Vessel Type Current Name
Charter-free Value
(US$)
125
ASD Tug/Harbour
Tug
PW Tangkas (Hull PX 1030)
(4)
5,350,000
Notes:
(1) Excluding one vessel that is undergoing conversion into an accommodation vessel. See Offshore Accommodation
above.
(2) As of the Latest Practicable Date, the construction of the vessel has been completed and the vessel has been
delivered and is owned by our joint venture, PT. Win Offshore.
(3) As of the Latest Practicable Date, the construction of the vessel has been completed and the vessel has been
delivered and is chartered by our joint venture, POSH Terasea Pte. Ltd.s subsidiary, as a charterer on a long-term
charter (and on that basis, the vessel is accounted for as a vessel owned by our joint venture).
(4) Under construction and pending delivery to our joint venture, Pacific Workboats Pte. Ltd.
Company Background
Our Company was incorporated in Singapore on March 7, 2006 under the Companies Act as a
private company limited by shares under the name of PACC Offshore Pte. Ltd. On October 23,
2007, we changed our name to PACC Offshore Services Holdings Pte. Ltd. On April 2, 2014, we
were converted into a public company limited by shares and changed our name to PACC Offshore
Services Holdings Ltd.
Our telephone number is (65) 6733 3500 and our facsimile number is (65) 6738 9300. Our website
address is http://www.posh.com.sg. Information contained on our website is not incorporated by
reference into, and does not form part of, this Prospectus.
16
THE OFFERING
Our Company . . . . . . . . . . . . . . . . . . . PACC Offshore Services Holdings Ltd., a company
incorporated under the laws of Singapore.
Offering Shares . . . . . . . . . . . . . . . . . 252,020,000 ordinary shares of our Company.
Offering . . . . . . . . . . . . . . . . . . . . . . . Consists of the International Offering and the Public
Offering, each as described below.
International Offering . . . . . . . . . . . . . 212,020,000 Offering Shares are being offered by way of
an international placement to investors, including
institutional and other investors in Singapore, pursuant
to the Offering.
The Offering Shares have not been, and will not be,
registered under the Securities Act and, accordingly,
may not be offered or sold within the United States. The
Offering Shares are only being offered and sold outside
the United States in offshore transactions as defined in,
and in reliance on, Regulation S. These Offering Shares
will, subject to certain conditions, be underwritten by the
Joint Issue Managers, Bookrunners and Underwriters at
the Offering Price.
Public Offering . . . . . . . . . . . . . . . . . . 40,000,000 Offering Shares are being offered at the
Offering Price by way of an offering to the public in
Singapore.
These Offering Shares will, subject to certain conditions,
be underwritten by the Joint Issue Managers,
Bookrunners and Underwriters at the Offering Price.
Reserved Shares . . . . . . . . . . . . . . . . 25,200,000 Offering Shares out of the Offering Shares in
the International Offering have been reserved for the
directors, management, employees and business
associates of our Company, our subsidiaries and our
joint ventures, and KSL and its subsidiaries (including
PCL and its subsidiaries) who have contributed to our
success to be determined by us at our sole discretion.
The Reserved Shares will be offered on the same terms
as the other Offering Shares in the International Offering.
In the event that any of such Reserved Shares are not
fully taken up, they will be available to satisfy over-
subscription (if any) for Offering Shares in the
International Offering and/or the Public Offering.
17
Cornerstone Investors . . . . . . . . . . . . At the same time as but separate from the Offering, each
of the Cornerstone Investors has entered into a
cornerstone subscription agreement with our Company
to subscribe for an aggregate of 85,605,000 new Shares
at the Offering Price, conditional upon the Management
and Underwriting Agreement and Placement Agreement
having been entered into and not having been
terminated pursuant to their terms on or prior to the
Listing Date.
Clawback and Re-allocation. . . . . . . . Offering Shares may be re-allocated between the
International Offering and the Public Offering, at the
discretion of the Joint Issue Managers, Bookrunners and
Underwriters in consultation with our Company.
Offering Price . . . . . . . . . . . . . . . . . . . S$1.15 for each offering share. Investors are required to
pay the Offering Price in Singapore dollars.
Purchasers and/or subscribers of the Offering Shares under
the International Offering may be required to pay an
additional brokerage fee of up to 1.0% of the Offering Price.
Use of Proceeds . . . . . . . . . . . . . . . . Based on the Offering Price per Offering Share of
S$1.15, the net proceeds from the Offering and the issue
of the Cornerstone Shares, assuming the Over-allotment
Option is not exercised and after deducting the
commissions and other estimated offering expenses
payable by us (estimated to be approximately S$13.4
million, or approximately 3.5% of the gross proceeds
from the Offering and the issue of the Cornerstone
Shares), are estimated to be approximately S$374.8
million. We will not receive any of the net proceeds from
the exercise of the Over-allotment Option granted by the
Over-allotment Option Provider.
We intend to use all of the net proceeds received by us
from the Offering and from the issue of the Cornerstone
Shares to repay part of the outstanding amounts under
our revolving facilities which have been used for our
working capital and capital expenditure. Please see
further details on such facilities in Managements
Discussion and Analysis of Financial Condition and
Results of Operations Description of Material
Indebtedness, including the maturity of such
indebtedness.
Pending the deployment of our net proceeds from the
Offering and the issue of the Cornerstone Shares as
aforesaid, the funds may be used for working capital
purposes, placed in short-term deposits with banks or
financial institutions or invested in money market
instruments as we may deem fit.
See Use of Proceeds.
18
Application Procedures for
Public Offering . . . . . . . . . . . . . . . . . . Investors applying for Offering Shares under the Public
Offering must follow the application procedures set forth
in Appendix G Terms, Conditions and Procedures for
Application for and Acceptance of the Offering Shares in
Singapore. Applications must be paid for in Singapore
dollars. The minimum initial application is for 1,000
Offering Shares. An applicant may apply for a larger
number of Offering Shares in integral multiples of 1,000
Offering Shares.
Over-allotment Option . . . . . . . . . . . . In connection with the Offering, the Over-allotment
Option Provider has granted the Stabilising Manager,
acting on behalf of the Joint Issue Managers,
Bookrunners and Underwriters, the Over-allotment
Option, exercisable in whole or in part on one or more
occasions from the Listing Date until the earlier of (i) the
date falling 30 days from the Listing Date, or (ii) the date
when the Stabilising Manager or its appointed agent has
bought, on the SGX-ST, an aggregate of 46,125,000
Shares, representing approximately 18.3% of the total
Offering Shares, to undertake stabilising actions, to
purchase from PCL up to an aggregate of 46,125,000
Additional Shares (representing 18.3% of the total
Offering Shares) at the Offering Price, solely to cover the
over-allotment of the Offering Shares, if any. The
exercise of the Over-allotment Option will not increase
the total number of issued Shares immediately after
completion of the Offering.
Unless we indicate otherwise, all information in this
Prospectus assumes that the Over-allotment Option is
not exercised. See Plan of Distribution Over-allotment
Option.
19
Lock-up . . . . . . . . . . . . . . . . . . . . . . . PCL and Lightwell Shipping Inc. have each given an
undertaking to the Joint Issue Managers, Bookrunners
and Underwriters that they will not, without the prior
written consent of the Joint Issue Managers,
Bookrunners and Underwriters (such consent not to be
unreasonably withheld or delayed), directly or indirectly
offer, sell or otherwise dispose of their Shares,
comprising 1,111,306,065 Shares held directly by PCL
and 314,709,645 Shares held directly by Lightwell
Shipping Inc. (as well as such number of Offering Shares
to be subscribed for by Lightwell Shipping Inc.), for a
period of six months after the Listing Date. The foregoing
lock-up restrictions shall not apply to (i) any transfer of
Shares by PCL to its parent company (being a company
that holds a direct or indirect interest over the entire
issued share capital of PCL), provided that such parent
company shall provide a similar undertaking in respect of
any Shares subject to such transfer; (ii) any Shares sold
by PCL pursuant to the Over-allotment Option granted by
PCL to the Stabilising Manager; and (iii) the transfer of
Shares pursuant to the Share Lending Agreement (as
defined and described in Plan of Distribution), provided
that these restrictions will apply to the Shares returned to
PCL pursuant to the Share Lending Agreement.
PCL has also given an undertaking to the Joint Issue
Managers, Bookrunners and Underwriters that, subject
to the transfer of any of the 15,843,750 Shares, which
are held by certain of KSLs group employees, to PCL
pursuant to the exercise of the right by PCL to have any
of such Shares transferred to itself or to its order (as
described in Principal Shareholders), they will not,
without the prior written consent of the Joint Issue
Managers, Bookrunners and Underwriters (such consent
not to be unreasonably withheld or delayed), directly or
indirectly offer, sell or otherwise dispose of any of such
Shares subject to such transfer for a period of six months
after the Listing Date. The foregoing lock-up restrictions
shall not apply to (i) any transfer of Shares by PCL to its
parent company (being a company that holds a direct or
indirect interest over the entire issued share capital of
PCL), provided that such parent company shall provide a
similar undertaking in respect of any Shares subject to
such transfer; (ii) any Shares sold by PCL pursuant to the
Over-allotment Option granted by PCL to the Stabilising
Manager; and (iii) the transfer of Shares pursuant to the
Share Lending Agreement (as defined and described in
Plan of Distribution), provided that these restrictions
will apply to the Shares returned to PCL pursuant to the
Share Lending Agreement.
20
MBC has given an undertaking to the Joint Issue
Managers, Bookrunners and Underwriters that they will
not, without the prior written consent of the Joint Issue
Managers, Bookrunners and Underwriters (such consent
not to be unreasonably withheld or delayed), directly or
indirectly offer, sell or otherwise dispose of their shares
of Lightwell Shipping Inc. for a period of six months after
the Listing Date.
KSL has given an undertaking to the Joint Issue
Managers, Bookrunners and Underwriters that:
they will not, without the prior written consent of the
Joint Issue Managers, Bookrunners and
Underwriters (such consent not to be unreasonably
withheld or delayed), directly or indirectly offer, sell
or otherwise dispose of their shares of PCL for a
period of six months after the Listing Date. The
foregoing lock-up restrictions shall cease to apply if
PCL ceases to hold (a) any of the 1,111,306,065
Shares held directly by PCL or (b) any of the
15,843,750 Shares, which are held directly by
certain of KSLs group employees and which are
transferred to PCL pursuant to the exercise of the
right by PCL to have any of such Shares transferred
to itself or to its order (as described in Principal
Shareholders), pursuant to any transfer of such
Shares by PCL to its parent company as further
described above;
subject to the transfer of any of the 1,127,149,815
Shares held directly by PCL to KSL as further
described above, they will not, without the prior
written consent of the Joint Issue Managers,
Bookrunners and Underwriters (such consent not to
be unreasonably withheld or delayed), directly or
indirectly offer, sell or otherwise dispose of any of
such Shares subject to such transfer for a period of
six months after the Listing Date;
subject to the transfer of any of the 15,843,750
Shares, which are held directly by certain of KSLs
group employees, to KSL pursuant to the exercise
of the right by KSL to have any of such Shares
transferred to itself or to its order (as described in
Principal Shareholders), they will not, without the
prior written consent of the Joint Issue Managers,
Bookrunners and Underwriters (such consent not to
be unreasonably withheld or delayed), directly or
indirectly offer, sell or otherwise dispose of any of
such Shares subject to such transfer for a period of
six months after the Listing Date; and
21
they will not register any transfer of KSL shares to
any person who is not a shareholder of KSL as at
the date of such undertaking for a period of six
months after the Listing Date.
Certain of KSLs group employees have each given an
undertaking to the Joint Issue Managers, Bookrunners
and Underwriters that they will not, without the prior
written consent of the Joint Issue Managers,
Bookrunners and Underwriters (such consent not to be
unreasonably withheld or delayed), directly or indirectly
offer, sell or otherwise dispose of an aggregate of
27,975,000 Shares for a period of six months after the
Listing Date. These employees include certain of our
Directors (namely, Mr. Seow Kang Hoe, Gerald, Mr. Teo
Joo Kim and Mr. Wu Long Peng) and certain of our
Executive Officers (namely, Mr. Lee Keng Lin, Mr. Chai
Ulva, Mr. Ng Eng Khin and Mr. Sim Hee Ping). Such
Shares relate to the Shares transferred by PCL in 2013
to such persons pursuant to the exercise of options
granted by PCL to such persons. The foregoing lock-up
restrictions shall not apply to any transfer of any of the
15,843,750 Shares, which are held by certain of KSLs
group employees, to PCL or, as the case may be, KSL
pursuant to the exercise of the right by PCL or, as the
case may be, KSL to have any of such Shares
transferred to itself or to its order (as described in
Principal Shareholders), provided that PCL or, as the
case may be, KSL shall provide a similar undertaking in
respect of any Shares subject to such transfer.
The Cornerstone Investors are not subject to any lock-up
restrictions in respect of their shareholdings.
Stabilisation . . . . . . . . . . . . . . . . . . . . In connection with the Offering, the Stabilising Manager
or its appointed agent may over-allot Shares or effect
transactions which may stabilise or maintain the market
price of our Shares at levels above those that would
otherwise prevail in the open market. Such transactions
may be effected on the SGX-ST and in other jurisdictions
where it is permissible to do so, in each case in
compliance with all applicable laws and regulations,
including the Securities and Futures Act and any
regulations thereunder. However, we cannot assure you
that the Stabilising Manager or its appointed agent will
undertake stabilising action. Such transactions may
commence on or after the Listing Date and, if
commenced, may be discontinued at any time and shall
not be effected later than the earlier of (i) the date falling
30 days from the Listing Date, or (ii) the date when the
Stabilising Manager or its appointed agent has bought,
on the SGX-ST, an aggregate of 46,125,000 Shares,
representing approximately 18.3% of the total Offering
Shares, to undertake stabilising actions.
22
Dividend Policy. . . . . . . . . . . . . . . . . . Whilst we do not have a formal dividend policy, our Board
of Directors may from time to time consider paying
dividends in a manner that is in line with our financial
performance, after taking into consideration the factors
described in Dividend Policy to allow Shareholders to
participate in the profits of our Group. See Dividend
Policy.
Listing and Trading. . . . . . . . . . . . . . . Prior to the Offering, there was no public market for our
Shares. An application has been made to the SGX-ST for
permission to list all our issued Shares, the Offering
Shares, the Cornerstone Shares, the Additional Shares,
the Option Shares and the Performance Shares on the
Mainboard of the SGX-ST. Such permission will be
granted when our Shares have been admitted to the
Official List of the SGX-ST. Acceptance of applications for
the Offering Shares will be conditional upon, among
others, permission being granted by the SGX-ST to deal in
and for quotation of all our issued Shares, the Offering
Shares, the Cornerstone Shares, the Additional Shares,
the Option Shares and the Performance Shares. Our
Company has not applied to any other exchange to list our
Shares.
Our Shares are expected to commence trading on a
ready basis at 9.00 a.m. on April 25, 2014 (Singapore
time). See Indicative Timetable.
Our Shares will, upon their listing and quotation on the
SGX-ST, be traded on the SGX-ST under the book-entry
(scripless) settlement system of The Central Depository
(Pte) Limited (CDP). Dealing in and quotation of our
Shares will be in Singapore dollars. Our Shares will be
traded in board lots of 1,000 Shares.
Settlement . . . . . . . . . . . . . . . . . . . . . Our Company expects to receive payment for all the
Offering Shares in the Offering on or around April 25,
2014. Delivery of the global share certificates
representing the Offering Shares to CDP for deposit into
the securities accounts of successful applicants is
expected to be made on or about April 25, 2014.
Risk Factors . . . . . . . . . . . . . . . . . . . . You should carefully consider certain risks connected
with an investment in our Shares, as discussed under
Risk Factors.
23
Indicative Timetable
An indicative timetable for trading in our Shares is set forth below for the reference of applicants
for the Offering Shares:
Date and time (Singapore) Event
April 17, 2014, at 5.00 p.m. Opening date and time for the Public Offering.
April 23, 2014, at 12.00 noon Closing date and time for the Public Offering.
April 24, 2014 Balloting of applications in the Public Offering, if necessary.
Commence returning or refunding of application monies to
unsuccessful or partially successful applicants, if necessary.
April 25, 2014, at 9.00 a.m. Commence trading on a ready basis.
April 30, 2014 Settlement date for all trades done on a ready basis on
April 25, 2014.
The above timetable is indicative only and is subject to change. The above timetable and
procedures may also be subject to such modifications as the SGX-ST may in its discretion decide,
including the commencement date of trading on a ready basis. It assumes: (i) that the closing of
the Public Offering is April 23, 2014, (ii) that the date of admission of our Company to the Official
List of the SGX-ST is April 25, 2014, and (iii) compliance with the SGX-STs shareholding spread
requirement. All dates and times referred to above are Singapore dates and times.
We, may at our discretion, in consultation with the Joint Issue Managers, Bookrunners and
Underwriters and subject to all applicable laws and regulations and the rules of the SGX-ST, agree
to extend or shorten the period during which the Offering is open, provided that the Public Offering
may not be less than two Market Days (as defined herein).
In the event of the extension or shortening of the time period during which the Offering is open,
we will publicly announce the same:
(a) through a SGXNET announcement to be posted on the Internet at the SGX-ST website
http://www.sgx.com; and/or
(b) in one or more major Singapore newspapers such as The Straits Times, The Business Times
and Lianhe Zaobao.
Investors should consult the SGX-ST announcement on the ready listing date on the Internet at
the SGX-ST website, or the newspapers, or check with their brokers on the date on which trading
on a ready basis will commence.
We will provide details of and the results of the Public Offering through SGXNET and/or in one or
more major Singapore newspapers, such as The Straits Times, The Business Times and Lianhe
Zaobao.
We reserve the right to reject or accept, in whole or in part, or to scale down or ballot any
application for the Offering Shares, without assigning any reason therefor, and no enquiry and/or
correspondence on our decision will be entertained. In deciding the basis of allocation, due
consideration will be given to the desirability of allocating the Offering Shares to a reasonable
number of applicants with a view to establishing an adequate market for our Shares.
24
In respect of an application made under the Public Offering, where any such application is
rejected, the full amount of the application monies will be refunded (without interest or any share
of revenue or other benefit arising therefrom) to the applicant, at his own risk, within 24 hours after
the balloting of applications (provided that such refunds are made in accordance with the
procedures set forth in Appendix G Terms, Conditions and Procedures for Application for and
Acceptance of the Offering Shares in Singapore).
In respect of an application made under the Public Offering, where any such application is
accepted in part only, any balance of the application monies will be refunded (without interest or
any share of revenue or other benefit arising therefrom) to the applicant, at his own risk, within 14
Market Days after the close of the Public Offering (provided that such refunds are made in
accordance with the procedures set forth in Appendix G Terms, Conditions and Procedures for
Application for and Acceptance of the Offering Shares in Singapore).
Applications and acceptances under the Placement will be determined by the Joint Issue
Managers, Bookrunners and Underwriters in consultation with us.
Where the Offering does not proceed for any reason, the full amount of application monies
received pursuant to an application made under the Public Offering (without interest or any share
of revenue or other benefit arising therefrom) will be returned within three Market Days after the
Public Offering is discontinued (provided that such refunds are made in accordance with the
procedures set forth in Appendix G Terms, Conditions and Procedures for Application for and
Acceptance of the Offering Shares in Singapore).
25
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial data should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations and
our audited consolidated financial statements for the years ended December 31, 2011, 2012 and
2013 and related notes thereto, all of which are included elsewhere in this Prospectus.
Summary consolidated statements of comprehensive income
Year ended December 31,
2011 2012 2013
(US$000) (US$000) (US$000)
(audited) (audited) (audited)
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,950 242,966 237,263
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (185,542) (181,892) (164,872)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,408 61,074 72,391
Other operating income . . . . . . . . . . . . . . . . . . . . . 17,721 40,447 50,379
Distribution costs . . . . . . . . . . . . . . . . . . . . . . . . . . (1,369) (1,222) (1,613)
General and administrative expenses . . . . . . . . . . (23,761) (29,047) (31,686)
Other operating expenses . . . . . . . . . . . . . . . . . . . (6,522)
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,451) (13,163) (12,963)
Share of joint ventures results . . . . . . . . . . . . . . . (5,065) (3,629) 850
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . 25,961 54,460 77,358
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 (940) (3,987)
Net profit for the year, representing total
comprehensive income attributable to
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,218 53,520 73,371
Earnings per share (cents per share)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18 4.46 6.02
Diluted
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18 4.33 4.95
Adjusted
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.70 3.40 4.03
Notes:
(1) For comparative purposes, basic earnings per share have been computed based on the weighted average number
of Shares in the pre-Offering share capital of our Company, being 1,201,125,000 Shares, 1,201,125,000 Shares and
1,218,077,000 Shares (after the Share Split and Consolidation) in each of the years ended December 31, 2011,
2012 and 2013, respectively.
(2) For comparative purposes, diluted earnings per share have been computed based on the weighted average number
of Shares in the pre-Offering share capital of our Company, being 1,201,125,000 Shares, 1,236,570,000 Shares and
1,482,375,000 Shares (after the Share Split and Consolidation) in each of the years ended December 31, 2011,
2012 and 2013, respectively.
(3) For comparative purposes, adjusted earnings per share have been computed based on the weighted average
number of Shares in the post-Offering share capital of our Company, being 1,538,750,000 Shares, 1,574,195,000
Shares and 1,820,000,000 Shares (after the Share Split and Consolidation) following the completion of the Offering
and the issue of the Cornerstone Shares in each of the years ended December 31, 2011, 2012 and 2013,
respectively.
26
Summary statements of financial position
As at December 31,
2011 2012 2013
(US$000) (US$000) (US$000)
(audited) (audited) (audited)
Assets
Non-current assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295,303 295,303 295,303
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734,181 768,741 1,037,610
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602 327 251
Loans to joint ventures . . . . . . . . . . . . . . . . . . . . . . . 191,197
Interest in joint ventures . . . . . . . . . . . . . . . . . . . . . . 5,384 8,484 20,072
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,235 8,593 8,847
1,045,828 1,081,448 1,553,280
Current assets
Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,905 5,979 1,265
Receivables and other current assets . . . . . . . . . . . . . 65,298 63,849 67,845
Amounts owing from joint ventures and fellow
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,822 208,084 90,170
Loans to joint ventures . . . . . . . . . . . . . . . . . . . . . . . 17,482 22,656 26,089
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,941 5,937
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . 498 517 10,552
257,946 307,022 195,921
Fixed assets classified as held-for-sale . . . . . . . . . . . . 10,677 24,320
257,946 317,699 220,241
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,303,774 1,399,147 1,773,521
Equity and liabilities
Equity attributable to shareholders . . . . . . . . . . . . .
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380,975 380,975 530,975
Accumulated profits . . . . . . . . . . . . . . . . . . . . . . . . . . 213,049 266,569 333,022
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 14,970 298
594,322 662,514 864,295
Non-current liabilities
Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 300,000
Redeemable convertible preference shares . . . . . . . . . 135,328
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . 94 178 166
94 435,506 300,166
Current liabilities
Payables and accruals. . . . . . . . . . . . . . . . . . . . . . . . 71,396 50,336 62,089
Advances received from customers . . . . . . . . . . . . . . . 12,778
Amounts owing to joint ventures and fellow
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,698 23,850 23,367
Amounts owing to holding companies . . . . . . . . . . . . . 182 1,268 649
Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,590 225,325 507,426
Provision for taxation. . . . . . . . . . . . . . . . . . . . . . . . . 1,492 348 2,751
709,358 301,127 609,060
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 709,452 736,633 909,226
Net current (liabilities)/assets . . . . . . . . . . . . . . . . . (451,412) 16,572 (388,819)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594,322 662,514 864,295
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . 1,303,774 1,399,147 1,773,521
27
Summary consolidated statements of cash flow
Year ended December 31,
2011 2012 2013
(US$000) (US$000) (US$000)
(audited) (audited) (audited)
Net cash generated from operating activities . . . . 85,877 65,676 135,217
Net cash (used in) investing activities . . . . . . . . . . (264,612) (128,756) (405,056)
Net cash generated from financing activities . . . . . 176,559 63,099 279,874
Net (decrease)/increase in cash
and cash equivalents . . . . . . . . . . . . . . . . . . . . . (2,176) 19 10,035
Cash and cash equivalents
at beginning of year . . . . . . . . . . . . . . . . . . . . . . 2,674 498 517
Cash and cash equivalents at end of year . . . . . . 498 517 10,552
28
RISK FACTORS
An investment in our Shares involves significant risks. Prospective investors should consider the
risks described below before making an investment decision. Additional risks not presently known
to us or that we currently deem immaterial may also impair our business operations. Our business,
financial condition, results of operations and prospects may be materially and adversely affected
by any of these risks. The trading price and value of our Shares could decline due to any of these
risks and you may lose all or part of your investment.
This Prospectus also contains forward-looking statements which involve risks and uncertainties.
The actual results of our operations could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the risks we face as described
below and elsewhere in this Prospectus. See Forward-Looking Statements.
Before deciding to invest in our Shares, prospective investors should seek professional advice
from their advisors about their particular circumstances.
Risks Relating to Our Business and Operations
Our fleet optimisation programme as well as continuing maintenance for our fleet will
require significant capital expenditure.
We operate in a capital intensive industry, which requires substantial levels of funding. We have
a fleet optimisation programme, comprising fleet renewal initiatives (which are focused on
maintaining or improving the average age of our existing fleet and upgrading vessel
specifications) and fleet re-profiling initiatives (which are focused on acquiring or building new
vessels to optimise the number and mix of vessels within the fleet in response to changes in
market dynamics and for future growth). As of the Latest Practicable Date, we have on order and
scheduled for delivery 15 vessels, comprising two deck cargo barges, two ASD harbour tugs,
three DP2 accommodation vessels, three DP2 AHTS, two DP3 SSAVs, and three vessels which
our joint ventures have on order. In addition, we have one vessel that is undergoing conversion
into an accommodation vessel. Please see Business Vessels to be Delivered for further
details. These require significant capital expenditure (being capital expenditure incurred mainly
with respect to the acquisition of new vessels and conversion of existing vessels) and we will incur
depreciation expense over the useful life of the corresponding assets. Please see Managements
Discussion and Analysis of Financial Condition and Results of Operations Capital Expenditures
and Divestments for further details on the capital expenditures of our Company and our
subsidiaries on vessels and vessels under construction for the years ended December 31, 2011,
2012 and 2013. We intend to fund our fleet expansion through borrowings under credit facilities
from our lenders, our cash on hand and cash flow from operations. Our long-term capital
requirements may increase significantly in the future, which may require us to raise more capital
or incur additional indebtedness. Any increase in our indebtedness may also result in increased
interest costs. For further information on our indebtedness, see Managements Discussion and
Analysis of Financial Condition and Results of Operations Description of Material
Indebtedness.
In addition, significant expenditure is required to maintain the quality of our vessels in the long
term. Our maintenance-related expenditure includes the cost of repairs, surveys, dry-docking and
modifying existing vessels to the extent that such expenditure is incurred to maintain or upgrade
the operating capacity or capability of our fleet. We incurred expenses relating to the maintenance
and repair of our vessels of US$5.4 million, US$6.8 million and US$5.8 million for the years ended
December 31, 2011, 2012 and 2013, respectively. Such expenses are accounted for as part of our
vessel operating expenses. In addition, dry-docking expenses in respect of our vessels amounted
to US$2.8 million, US$6.3 million and US$3.4 million for the years ended December 31, 2011,
2012 and 2013, respectively. Our vessels are docked periodically for repairs and renewals of class
29
certifications. Vessels may also need to be docked in the event of accidents or other unforeseen
damage. For further information on our capital expenditure, see Managements Discussion and
Analysis of Financial Condition and Results of Operations Capital Expenditures and
Divestments.
Our maintenance-related expenditure may increase as a result of a variety of factors, including:
increases in the cost of labour, materials and spare parts;
changes in customer requirements;
increases in the size of our fleet;
technical developments for equipment;
defects and deficiencies of the vessels;
changes in governmental regulations and maritime self-regulatory organisation standards
relating to safety, security or the environment; and
changes in competitive standards.
We cannot assure you that we will have sufficient capital resources, including, among others, cash
on hand, cash flow from operations and available borrowings under our credit facilities, to build,
acquire, modify and repair our vessels and equipment required to expand or to maintain our
current fleet size and configuration. Additionally, the inability to obtain sufficient financing or the
inability of one or more of our lenders to provide committed funding could adversely affect our
ability to complete our fleet optimisation programme.
We cannot assure you that market conditions and/or other factors will allow us to obtain future
financing on terms acceptable to us, or at all. Our ability to arrange financing and the costs of such
financing are dependent on numerous factors, including general economic and capital market
conditions, credit availability from banks, the continued success of our operations and other laws
that impact our ability to raise capital. If we are unable to raise adequate capital in a timely manner
and on acceptable terms, or at all, our business prospects, financial condition and results of
operations could be adversely affected. Further, if we decide to raise additional funds through the
issuance of equity or equity-linked instruments, your interests as our Shareholder will be diluted.
If we decide to meet our capital requirements through debt financing, our interest obligations will
increase and we may be subject to additional restrictive covenants.
We have experienced and may continue to experience negative working capital and we may
incur substantial indebtedness in the future as a result of our strategy of expanding our
fleet.
We had negative working capital of US$451.4 million and US$388.8 million as at December 31,
2011 and December 31, 2013, respectively. This is primarily due to the manner in which we funded
our vessel-related capital expenditures during the years ended December 31, 2011 and 2013. To
fund these costs, we have relied on equity capital, cash flows from operations and bank
borrowings. Such bank borrowings were drawn under our credit facilities, of which 68.4% is
uncommitted and subject to annual review (Annual Renewable Facilities) while the remaining
31.6% is committed for a fixed term (Term Facilities) as at December 31, 2013. Both the Annual
Renewable Facilities and the Term Facilities are revolving credit facilities. The amounts available
under the Annual Renewable Facilities are subject to annual review and generally carry lower
interest rates, while the amounts available under the Term Facilities are for three years, expiring
on December 30, 2015. The amounts drawn down under the uncommitted portion of our facilities
30
are subject to variation, reduction or cancellation by the lenders at any time, whereupon such
amounts shall become due and payable. If our Annual Renewable Facilities are not renewed by
their annual review deadline, such facilities will be deemed to be cancelled and all amounts
outstanding under these facilities would become due and payable at such time. As a greater
proportion of such bank borrowings were drawn against under the Annual Renewable Facilities
due to lower financing costs as compared to the financing costs under the Term Facilities, a
greater proportion of our bank borrowings are reported as current liabilities, hence resulting in
such negative working capital. There is no assurance that we may not continue to experience such
negative working capital. In addition, under our loan agreements, KSL is required to remain our
largest shareholder after our Listing (although no specific shareholding threshold is specified). For
further details on our capital expenditures and our bank borrowings, please see Managements
Discussion and Analysis of Financial Condition and Results of Operations Capital Expenditures
and Divestments and Managements Discussion and Analysis of Financial Condition and Results
of Operations Description of Material Indebtedness.
We have and will continue to have a significant amount of borrowings.
As of December 31, 2013, our total borrowings were US$807.4 million. We may incur additional
indebtedness in connection with future acquisitions, subject to limitations, under our existing loan
facilities or any future facilities we may enter into. A substantial level of debt could, among other
things:
impair our ability to obtain additional financing, if necessary, for working capital, capital
expenditures, acquisitions or other purposes on favourable terms, if at all;
require us to use a substantial portion of our cash from operations to make principal and
interest payments on our debt, reducing the funds that would otherwise be available for
operations, future business opportunities and dividends;
make us more vulnerable, as compared to competitors with less debt, to changing interest
rates, competitive pressures or a downturn in the marine offshore services market, in
particular, or the economy, in general; and
limit our flexibility in responding to changing business and economic conditions.
As we operate in a capital-intensive industry, we have historically required capital to acquire or
carry out improvement or upgrade work on our vessels and may require additional capital in the
future to fund the acquisition or construction of our vessels. In addition, unanticipated changes in
governmental regulation and safety or other equipment standards may require unanticipated
expenditures for modifications or the addition of new equipment.
Our ability to service our indebtedness will depend upon, among other things, our future business,
financial condition, cash flows and results of operations, which will be affected by prevailing
economic conditions and financial, business, regulatory and other factors, many of which are
beyond our control. If our operating cash flows are not sufficient to service our future
indebtedness, we will be forced to take action such as seeking additional equity capital, reducing
or not declaring dividends or other distributions, reducing or delaying acquisitions, investments or
capital expenditures, selling assets, restructuring or refinancing our debt, or seeking bankruptcy
protection.
31
Our charter rates and vessel utilisation ratios, as well as our ability to charter-out our
vessels, are dependent on the supply and demand for various marine offshore services in
the markets in which we operate. Any oversupply of vessels in these markets would likely
have a negative effect on the charter rates and vessel utilisation ratios for our vessels, our
ability to charter out our vessels as well as our operating margins.
Charter rates for offshore support vessels in the markets in which we operate is a function of the
supply of and demand for vessels in such markets. Excess vessel supply in the marine offshore
services industry may be caused by, among other factors, an increased order book for new
vessels, the completion and delivery of newly built vessels, the mobilisation of existing vessels
from one offshore market to other markets and the use of vessels specialised for one activity in
another activity.
There may be a large number of vessels currently under construction and industry participants
may have placed a large number of orders for new vessels to be delivered over the next few years.
We may be subject to increased competition from new vessels mobilising into regions in which we
operate. Any increase in the availability or the supply of offshore support vessels in the markets
where we presently operate would increase competition for charters and result in lower charter
rates and vessel utilisation ratios, and may also affect our ability to charter out our vessels, which
would adversely affect our operating margins and, in turn, results of operations.
Our results of operations and profitability may be adversely affected by our inability to
select or negotiate favourable charter contract terms and the failure to utilise our fleet at
profitable levels.
Our charter contracts with our customers are non-exclusive and cease upon the expiry dates of
the initial charter term, although in some instances, charterers may have sole discretion as to
whether they wish to extend the charter contracts following expiration of the initial charter term on
the same rates and conditions. Our customers may not renew their charter contracts with us or
continue to engage our services. In addition, our customers may terminate our services
prematurely by giving us notice in accordance with the terms of the contract or upon the
occurrence or non-occurrence of certain events (see Termination of our contracts or inability to
obtain contracts for our vessels for any significant period may adversely affect our financial
condition and results of operations). We cannot assure you that we will be successful in entering
into new charter contracts for vessels which we acquire in the future. Our ability to charter-out
vessels and re-charter vessels, and the charter rate under any renewal or replacement charter,
depend upon, among other things, the prevailing availability of charters and economic conditions
in the market at that time.
Although we generally endeavour to obtain favourable terms in contracts for our vessels, demand
and market conditions at the time of negotiating contracts for use of our vessels may result in us
having to accept less favourable terms. In addition, most of our contracts are awarded through a
competitive bidding process, which limits our ability to negotiate contract terms with our
customers. In some instances, we may also be required to use customer specific standard forms
of charter which may further affect our ability to negotiate such contract terms.
We, as well as our joint ventures, are exposed to the credit risks of our customers and
certain other third parties, and the non-performance or insolvency of these parties could
adversely affect our financial condition and results of operations.
We grant credit terms to certain of our customers and are therefore exposed to potential payment
delays and default by such customers. Any default, non-payment or non-performance by our
customers and certain other third parties or the failure by the shipyard to build or deliver vessels
currently under construction in a timely manner, or at all, could adversely affect our financial
condition and results of operations. Furthermore, some of our customers may be highly leveraged
32
and subject to their own operating and regulatory risks. We cannot guarantee that our customers
will make timely payments to us or that they will be able to fulfil their payment obligations to us.
For the years ended December 31, 2011, 2012 and 2013, 24.0%, 26.3% and 26.7%, respectively,
of our total revenues were contributed by our five largest customers (based on revenue
contribution in the respective year). For the years ended December 31, 2011, 2012 and 2013,
there have been no instances of default by our customers which have materially affected our
financial condition and results of operations. Please see Business Our Customers for further
details. Any major delay or default by one or more of these major customers could significantly
affect our revenues, and consequently, our cash flow and financial performance.
Our joint ventures are similarly exposed to the credit risks of their customers and certain other
third parties, and the non-performance of or insolvency of these customers and third parties could
adversely affect the results of our joint ventures and, in turn, our financial condition and results of
operations.
We and one of our joint ventures, Servicios Martimos Gosh, S.A.P.I. de C.V. (GOSH), have
chartered a total of eight vessels to Oceanografa, S.A. de C.V. (OSA), six of which have, in turn,
been chartered by OSA to the Petroleos Mexicanos group of companies (collectively, PEMEX),
which is a Mexican state-owned petroleum company involved in the oil and gas sector. Two
persons who hold interests (which may either be direct or indirect interests) in OSA also hold
interests in two of the shareholders of GOSH (who each have interest of 25% in GOSH). Save for
the foregoing, there are no relationships between the parties.
As at the Latest Practicable Date, the administration of OSA has been placed under the control
of the Mexican government, in connection with the Mexican governments investigations of OSA
over alleged fraud arising from billings charged by OSA to PEMEX. Whilst the charters of two
vessels by OSA from our Group have expired, the six vessels chartered by OSA from GOSH
continue to be deployed on charter to PEMEX. Save for major decisions which require unanimous
agreement among us and our joint venture partners of GOSH, on a day-to-day basis, our Group
manages the commercial and technical operations of GOSH (including the chartering of vessels).
To the best of our knowledge, none of the vessels of our Group and GOSH are involved in the
fraud allegations. None of our Directors and Executive Officers are involved in the fraud
allegations.
As at the Latest Practicable Date, there was outstanding charter hire for the charter of the vessels
due from OSA to our Group and GOSH in the amounts of US$1.9 million and US$16.4 million
respectively.
The abovementioned amount owing to GOSH relates to invoices prior to the establishment of an
irrevocable trust arrangement with OSA and PEMEX on August 8, 2013, pursuant to which PEMEX
will pay all charter hire invoiced by OSA into an irrevocable trust for the benefit of GOSH and our
Company. Although since the establishment of the trust, payments of such charter hire (arising
from invoices for the continuing deployment of the six vessels on charter to PEMEX) have been
made to the trust and subsequently distributed for, amongst others, payment of vessel operating
expenses, repayment of loan and interest owing by GOSH to our Company (which loan is further
described below) and payments to GOSH, there can be no assurance that there will be no
attempts by the creditors of OSA and the Mexican government to dispute the trust arrangement
and claim against charter hires paid or payable to the trust. In addition, the risk of default,
non-payment or non-performance by our customers or third parties described above would apply
equally to PEMEX and there is no assurance that PEMEX would not default in making payments
of such charter hire to OSA through the trust for any reason, including any attempt by PEMEX to
set off any such charter hire payable by it against any other amounts owing to it by OSA.
33
As our Group recognises our proportionate economic interests in GOSH and therefore accounts
for our proportionate share of the results of GOSH accordingly, in view of the uncertainties arising
from the state of affairs of OSA under the Mexican governments administration, we have made
an allowance of US$8.2 million for the year ended December 31, 2013, being our proportionate
share of GOSH relating to the US$16.4 million outstanding charter hire owing by OSA to GOSH.
Of the US$1.9 million outstanding charter hire due from OSA to our Group, we have made an
allowance of approximately US$0.5 million for the year ended December 31, 2013, being the
amount attributable to services and invoices pertaining to the said year, and we currently expect
to make an additional allowance of up to approximately US$1.4 million for the year ending
December 31, 2014, being the amount attributable to services and invoices rendered for the year.
Please also see Managements Discussion and Analysis of Financial Conditions and Results of
Operations Material Events After December 31, 2013 and Managements Discussion and
Analysis of Financial Conditions and Results of Operations Review of Operating Results Year
ended December 31, 2013 compared to year ended December 31, 2012. Although we intend to
apply to the administrator of OSA to recover such amounts owing, there can be no assurance that
we may be able to recover the amount, in full or in part, if at all.
Our Company has also granted a loan (of which the outstanding amount as at December 31, 2013
was US$109.8 million) to GOSH for the acquisition, modification and mobilisation of the six
vessels of GOSH which have been chartered to OSA. The loan was granted in view of the
unacceptable terms offered by the local banks in Mexico. There are no fixed repayment
instalments and the charter hire that is paid into the trust (referred to above) are paid back to our
Group and the net amount (after deducting commission, vessel operating expenses and taxes) is
applied against the loan. As security for the loan, we have share pledge agreements with the two
Mexican shareholders of GOSH (representing 50.0% interests in GOSH) and mortgages over the
six vessels owned by GOSH. Please see Summary Valuation for further details on the
valuation of the vessels owned by GOSH. To safeguard our interest, we have in March 2014
initiated legal actions to recover full repayment of the outstanding loan and interest payable to us,
including legal actions to enforce our rights under the share pledge agreements to require the sale
of the shares held by the two Mexican shareholders to such person as we may nominate whereby
the proceeds from such sale will be paid to us to reduce our loan to GOSH (as further described
in Managements Discussion and Analysis of Financial Conditions and Results of Operations
Material Events After December 31, 2013 and Business Legal Proceedings). There can be no
assurance that the security interest we have in respect of this loan will enable us to recover the
amount owing, in full or in part, if at all or that the enforcement of such security interest will not
give rise to any impairment in our investment in GOSH.
As matters pertaining to the administration and investigation of OSA are ongoing, we do not make
any assurances that there will not be other claims, losses or liabilities in connection with GOSH
or our other operations in Mexico.
Changes in technology may render our current vessel technology and equipment obsolete
or may require us to make substantial capital investment.
We operate in an industry that is highly technical and technology-based. The technological
standards of our vessels, equipment and machinery may change depending on the requirements
of the industry. We may also need to improve our technical knowledge and technological
capabilities as our customers undertake larger and more complex projects. The vessels,
equipment and processes that we currently use may become obsolete or less efficient compared
to more advanced technology vessels, equipment and processes that may be developed in the
future. If we are unable to meet our customers requirements, this may affect their confidence in
us and we may not be able to bid for charters on attractive terms. The cost of upgrading our
vessels or equipment or implementation of such advanced technology processes could be
significant and could adversely affect our results of operations and financial position. In addition,
34
any such new technology or vessel or equipment that we acquire may not function as expected
which in turn may have an adverse impact on our business, financial condition, results of
operations and prospects.
Our operations are international, and we are exposed to risks associated with operations
in various jurisdictions.
We are incorporated in Singapore, our vessels are flagged in Singapore and other jurisdictions
and our vessels are deployed and operate globally. As such, we are subject to international law
and to governmental regulations and safety and licensing standards in various jurisdictions. This
may cause us to incur additional expenditures and also requires management time and effort to
address.
Our customers, ship builders and suppliers are also located in different jurisdictions across the
world, particularly in Asia, Africa and Latin America, including without limitation Mexico, Brazil,
Angola, China and Indonesia. In case of any default or delay in payment or any other dispute with
any of these parties, we may need to initiate legal proceedings or take other appropriate actions.
Enforcement of arbital awards or court judgments in our favour or of our legal rights may be
difficult, time consuming or not possible at all in some of the jurisdictions in which are involved or
by virtue of the difficulties associated with enforcement across jurisdictions. An inability to
successfully enforce our legal rights in these jurisdictions could have a material adverse effect on
our financial condition and results of operations. See We, as well as our joint ventures, are
exposed to the credit risk of our customers and certain other third parties, and the non-
performance or insolvency of these parties could adversely affect our financial condition and
results of our operations for more information on developments with respect to our joint ventures
and other operations in Mexico.
Our operations are also influenced by economic and market conditions in various countries,
particularly in Asia, Africa and Latin America, including without limitation Mexico, Brazil, Angola,
China and Indonesia. These countries from time to time experience political, economic and social
instability, adversely affecting offshore E&P activity and the companies that operate in and service
that sector. Adverse developments in these markets may have a material adverse effect on our
business and revenues.
We may become dependent on a few significant customers for a large proportion of our
revenue.
We may become dependent on a small number of key customers for a significant portion of our
revenues. For the years ended December 31, 2011, 2012 and 2013, 24.0%, 26.3% and 26.7%,
respectively, of our total revenues came from our five largest customers (based on revenue
contribution in the respective year). For the years ended December 31, 2011, 2012 and 2013, the
number of customers we had that accounted for 5.0% or more of our total revenues were one, two
and three, respectively. Generally, our Company is not dependent on particular customers.
Customers who accounted for 5.0% or more of our total revenues in each year are not necessarily
recurring and the revenue from such customers may vary from year-to-year. Please see Business
Our Customers for further details, including the names of each customer that accounted for
5.0% or more of our total revenues for each of the years ended December 31, 2011, 2012 and
2013.
While it is normal for our customer base to change over time, if one or more of our key customers
is unable to honour their contracts or charters with us, terminates such contracts or charters or
decides not to contract for or charter our vessels in the future, we may be unable to obtain
contracts or charters on comparable terms or may become subject to the volatile spot market,
which is highly competitive and subject to significant price fluctuations and we could suffer a loss
of revenues that could adversely affect our business, financial condition and results of operations.
35
In addition, there are a limited number of customers and projects available in the markets in which
we operate. Our business is dependent on the decisions and actions of our customers, and there
are factors outside our control, which might result in the termination of a project or the loss of a
customer. A significant portion of our revenue may become attributable to a few significant
customers in the near future. The loss or financial difficulties of any of our significant customers,
or significant decreases in the volumes of work from these significant customers, would have an
adverse effect on our financial condition and profitability. For details, see Business Our
Customers.
Certain offshore markets are seasonal and depend, in part, on weather conditions. As a
result, our results of operations will vary throughout the year.
Certain offshore markets are affected by seasonal weather conditions. For example, business in
the South China Sea is adversely affected by the northeast monsoon from November to March and
in the Indian Ocean by the southwest monsoon from July to September. The vessel utilisation
ratios of our vessels operating in the affected areas are generally at their lowest during the
monsoon season. Although our vessels are not currently deployed there, the North Sea is another
offshore market affected by seasonality, where winter weather conditions hinder operations.
Operations in any market may, however, be affected by unusually long or short offshore
construction seasons due to, among other things, abnormal weather conditions, as well as market
demand associated with increased development activities. Accordingly, the results of any given
period are not necessarily indicative of annual results or continuing trends, and may vary.
Termination of our contracts or inability to obtain contracts for our vessels for any
significant period may adversely affect our financial condition and results of operations.
Certain of our vessels operate under short-term charters. The initial term of some of our charter
contracts may be extended on one or more occasions, at the option of our customers.
Our vessel charters are subject to early termination by our customers under certain conditions,
such as defaults by the parties, force majeure events, our failure to commence our services on
schedule, the loss or destruction of the vessel and breach of any material provision by us of the
charter contract. While some of these contracts have early termination penalties or other
provisions designed to discourage our customers from exercising such termination rights, we
cannot assure you that our customers would not choose to exercise their termination rights in spite
of such penalties. Additionally, customers without contractual termination rights may nevertheless
choose to terminate their contracts despite the possibility of litigation. The rates payable under the
charters may also be reduced or suspended for various reasons, including non-performance by
us, the lay-up of the vessel at the charterers option, request for suspension by the charterer, loss
or seizure of a vessel, events of force majeure or any other reasons which render the vessel
unavailable for duties for specified periods of time.
Upon the termination of any of our contracts, we cannot assure you that we will be able to obtain
other contracts for such vessels on better or comparable terms, or at all. In addition, termination
arising in the context of a breach by the other party may require that we initiate legal proceedings
to obtain redress. As our operations are global, we may be required to take such action in foreign
jurisdictions. See Our operations are international, and we are exposed to risks associated with
operations in various jurisdictions above for more information on the risks associated with
seeking legal remedies in foreign jurisdictions. If we are unable to obtain contracts for any of our
vessels for a significant period, or if we are only able to do so at rates lower than previously
obtained, our financial condition and results of operations would be adversely affected.
There have been two incidents of early termination of a charter arising in the context of a breach
and where revenue was affected by such termination (as described below) by our Groups
customers in each of the years ended December 31, 2012 and 2013. For the years ended
36
December 31, 2012 and December 31, 2013, the amount of revenue that was affected by the
termination (being the amount that could have been earned by our Group if the relevant charters
have continued up to the end of the charter period or up to December 31, 2012 or, as the case may
be, December 31, 2013 (whichever is earlier)) was US$1.5 million and US$0.6 million,
respectively. Our Group has commenced arbitration with the counterparty for one of these
terminations and is in the process of seeking appropriate legal recourse and remedies with
respect to the other termination.
We are subject to fixed costs regardless of our level of business activity. Downtime or
reduced demand, weather interruptions or other causes can have a significant negative
effect on our results of operations and financial condition as a consequence.
We are subject to fixed costs such as administrative overheads, personnel costs, interest costs
and maintenance costs which will not necessarily fluctuate in proportion to changes in operating
revenues. Costs for operating our vessels such as crew costs and fuel costs while our vessels wait
for commercial deployment and/or are between contracts are generally fixed or only semi-variable
regardless of the charter rates being earned. These fixed costs can have a significant negative
effect on our financial condition and results of operations in the event of lower revenue arising
from lower charter rates, downtime, reduced demand, weather interruptions or other causes.
Unanticipated delays in the completion and delivery of vessels either under construction or
in shipyards for scheduled dry-docking may have an adverse effect on our results of
operations.
As of the Latest Practicable Date, we have on order and scheduled for delivery 15 vessels,
comprising two deck cargo barges, two ASD harbour tugs, three DP2 accommodation vessels,
three DP2 AHTS, two DP3 SSAVs, and three vessels which our joint ventures have on order. In
addition, we have one vessel that is undergoing conversion into an accommodation vessel. Please
see Business Vessels to be Delivered for further details. To the extent that we purchase
vessels directly from shipyards, we would be required to expend substantial sums in the form of
down payments and progress payments during the construction of vessels, but would not derive
any revenue from these vessels until after their delivery. As part of our operations, we also
routinely engage shipyards to dry-dock our vessels for regulatory compliance and to provide
repair and maintenance services. Vessel construction and dry-dockings are subject to the risks of
delay and cost overruns inherent in any large project, due to a number of factors, including:
shortages or delay in the provision of equipment, material or skilled labour;
the shipyards refusal to fulfil its contractual obligations;
quality or engineering problems;
lack of raw materials;
bankruptcy or other financial crisis of the shipbuilder or one or more of its key vendors;
hostilities, or political or economic disturbances in the countries where the vessels are being
built;
weather interference or catastrophic event, such as a major earthquake or fire;
our requests for changes to the original vessel specifications;
difficulties in fulfilling necessary classification society requirements;
37
inability to obtain necessary certifications and approvals; and
a dispute with the shipyard over the vessel specifications outlined in the shipbuilding
contract.
Significant delays could have an adverse effect on anticipated contract commitments or
anticipated revenues with respect to vessels under construction. Further, significant cost overruns
or delays for vessels under construction that are not adequately protected by liquidated damages
provisions could adversely affect our financial condition and results of operations. There may also
be alterations or changes in the rules of classification societies or in any other applicable rules or
regulations to which the construction or operation of our vessels is required to conform, that
require us to incur additional expenditure and increase the time required to build, upgrade and
maintain our vessels. In the case of a delay in the delivery of vessels purchased directly from the
shipyard, we would only receive penalty payments from the shipbuilder after a certain grace
period. Such delays in the delivery of, or failure to deliver, any vessels would delay the receipt of
revenues under the charters for such vessels or may result in our inability to service previously
agreed charters, which may cause us to incur penalty charges.
A proportion of our vessels are chartered on long-term charters, which could subject us to
unfavourable rates for a certain period of time.
A proportion of our existing vessels are chartered on long-term charters, with terms generally in
excess of one year. For the years ended December 31, 2011, 2012 and 2013, 24.1%, 30.6% and
42.9%, respectively, of our total revenues were attributable to long-term charters (on our
wholly-owned vessels and chartered vessels which our Company and our subsidiaries operate as
charterers). See Business Business Segments for a segment-wise breakdown of this
information. While these contracts provide a relatively stable and predictable source of income,
thereby allowing us to avoid the risk of market fluctuations, the charter rates are either fixed prior
to the commencement of the charter or determined in accordance with an agreed formula for the
duration of the charter. Factors beyond our control such as increases in crewing costs could cause
these predetermined rates to become less profitable. In the event that the market improves and
charter rates go up, we will be unable to revise charter rates in order to benefit from the improved
market. Nonetheless, we would be contractually bound to continue performance at these rates for
the term of the charter which could have a material and adverse effect on our business, financial
condition and results of operation, as well as opportunity costs if charter rates increase. Please
also see Managements Discussion and Analysis of Financial Condition and Results of
Operations Key Factors Affecting Our Results of Operations Our order book for further details
on how the extent to which we have contracted in advance to fill our vessel order book can affect
our results of operations.
We have entered into, and expect to continue to enter into, joint ventures in the course of
our operations which exposes us to certain risks.
We have joint ventures in Singapore, Indonesia, India and Mexico with local companies.
Additionally, we may also enter into joint ventures for other strategic reasons. In some cases, we
may have to finance these joint ventures in connection with our commercial objectives. While the
joint venture partner may provide local knowledge and experience, entering into joint ventures
inevitably require us to surrender a measure of control over the assets and operations devoted to
the joint venture, and occasions may arise when we do not agree with the business goals and
objectives of our joint venture partner, or other factors may arise that make the continuation of the
relationship unwise or untenable. Any such disagreements or discontinuation of the relationship
could disrupt our operations and affect the continuity of our business. Our joint venture
agreements require the parties to negotiate in good faith to resolve disputes or deadlock
situations. With respect to six of our joint ventures, the joint venture agreements provide for
termination in certain circumstances (such as by mutual consent or for cause, for example, in the
38
case of a breach of the joint venture agreement or in the event of the bankruptcy of a shareholder).
If there is no resolution to any disputes or deadlock situations, or if the termination provisions are
triggered, our joint venture agreements provide that a shareholder may elect to buy out the other
shareholders shares or sell his shares to the other shareholders at a price which may be
determined with reference to an objective benchmark (such as revalued net asset value whereby
assets are marked-to-market. In such a case, the net asset value of the joint venture is adjusted
to take into account the market value of the vessels determined with reference to independent
valuations) or that the joint venture may be terminated (such as by way of liquidation). The price
determination terms referred to above are provided for in all of our joint venture agreements and
apply only to termination of the joint venture. There are typically no termination payments in the
form of penalties. If we are unable to resolve issues with a joint venture partner, we may decide
to exit or terminate the joint venture and either locate a different partner and continue to work in
the area or seek opportunities for our vessels in another jurisdiction. We have agreed with one of
our joint venture partners that in the event that our Company ceases to be a related corporation
of PCL or, as the case may be, our Company undergoes a change in shareholding, control or
management which, in the reasonable opinion of our Company and the joint venture partner, may
have a material adverse effect on the business of the relevant joint venture or affect the
relationship between our Company and such joint venture partner (although no specific threshold
is specified), then we will be required to transfer all the shares of the relevant joint venture which
are held by us to PCL or, as the case may be, such joint venture partner has the right to terminate
the relevant joint venture agreement, respectively. Whether a change in shareholding, control or
management of the Company will have a material adverse effect on the business of the relevant
joint venture depends on the factual circumstances at the relevant time when such change occurs
and this is required to be determined based on the reasonable opinion of our Company and the
joint venture partner (after their assessment of such factual circumstances). Although the relevant
joint venture partner has declined to grant us a waiver from compliance with such provisions in
connection with our Listing, we plan to continue to engage the relevant joint venture partner on
agreeing to an appropriate modification of such provisions. There is no assurance that the
relevant joint venture partner will agree to such modification. In addition, notwithstanding that we
may be required to transfer all the shares of the relevant joint venture which are held by us to PCL
in the circumstances as described above, as KSL has provided the Non-Competition Undertaking
in our favour (as described in Interested Person Transactions and Potential Conflicts of Interest
Potential Conflicts of Interest Non-Competition Undertaking, PCL, being a subsidiary of KSL,
will be prohibited from accepting any such transfer of all the shares of the relevant joint venture
from us. In view of the foregoing, the relevant joint venture may be required to be terminated and
unwound. The manner in which the joint venture will be terminated (whether by way of a buy-out
of our shares of the joint venture by the joint venture partner or vice versa or by way of a
liquidation) has not been determined. In the event of such a buy-out of our Companys shares of
the joint venture, our Company is expected to receive a purchase price (to be agreed with the
purchaser) for the buy-out of such shares, and in the event of a liquidation, our Company is
expected to receive its share of the liquidation proceeds or assets of the joint venture arising from
any such winding-up. For the avoidance of doubt, in the event of any such winding-up, as PCL is
not a shareholder in the joint venture, PCL does not have the right to receive any of the liquidation
proceeds or assets of the joint venture. There are no termination payments in the form of
penalties. While we expect that we can continue to undertake the activities currently undertaken
by the relevant joint venture, there is no assurance that the relevant joint venture partner will not
exercise its right to terminate the joint venture agreement or, as the case may be, that the relevant
joint venture would be required to be terminated and unwound, upon or subsequent to our Listing.
For the three years ended December 31, 2011, 2012 and 2013, the relevant joint venture
contributed approximately 17.6%, 15.2% and 5.8% to our net profits and as at December 31,
2013, our costs of investment in the relevant joint venture was approximately US$0.3 million.
Other than the foregoing joint venture, we have two other joint ventures in which our joint venture
agreements require consent of our partners for a change in control; however, these joint ventures
are not material to our business, financial condition or results of operations. The unwinding of an
existing relationship could prove to be difficult or time-consuming, and the loss of revenue related
39
to the exit from or termination or unwinding of a joint venture and costs related to the sourcing of
a new joint venture partner or the mobilisation of vessels to another area could materially and
adversely affect our business, financial condition, results of operations or cash flows.
We face risks associated with the service life and maintenance of our fleet.
As of December 31, 2013 and as of the Latest Practicable Date, our Offshore Supply Vessels fleet
had an average age of 2.8 and 3.1 years, respectively. As of December 31, 2013 and as of the
Latest Practicable Date, our Transportation and Installation fleet had an average age of 6.9 and
7.2 years, respectively. As of December 31, 2013 and as of the Latest Practicable Date, our
Offshore Accommodation fleet had an average age of 10.0 and 10.2 years, respectively. As of
December 31, 2013 and as of the Latest Practicable Date, our Harbour Services and Emergency
Response fleet had an average age of 8.9 and 9.6 years, respectively. See Business Overview
for further details.
These vessels were built by various shipyards or acquired from the market and hence have
different construction quality and reliability. The service life of our fleet may ultimately depend
upon the efficiency of the particular vessel, as well as the demand for the equipment and the
services that they can perform. The service life of a vessel will also be determined by the quality
of its construction and whether it has been properly maintained. We cannot guarantee that our
vessels will have a long service life.
In general, expenditure and other costs required in order to maintain a vessel in good operating
condition increase with the age of the vessel. Older vessels are typically more costly to maintain
than more recently constructed vessels and are subject to lower vessel utilisation ratios due to
their higher maintenance requirements. In addition, as cost efficiency decreases with the age of
vessels, older vessels are less desirable to charterers. As a result, some of our customers may
set age restrictions for vessels which they will charter.
Governmental regulations, safety or equipment standards relating to the age of vessels and new
environmental requirements may require us to incur significant capital expenditure for alterations
or the addition of new equipment to our vessels. This may, in turn, restrict the types of activities
which our vessels may engage in. New technical solutions may also be introduced and adopted
by our competitors that are more advanced than our vessels, resulting in less demand for our fleet,
lower charter rates, and potentially costly upgrades. We cannot guarantee that, as our vessels
age, market conditions will justify such expenditures or enable us to operate our vessels profitably
during the remainder of their useful lives. If we sell our vessels, we cannot be certain that the price
for which we sell them will be equal to, or greater than, their carrying amounts on our financial
statements at that time.
Furthermore, when our vessels are taken out of service at regular intervals for routine inspections
and maintenance, they may require more extensive repairs than those which were anticipated,
and there may be delays in bringing them back into service. Such delays may have a material
adverse effect upon our business, financial condition and results of operations.
In addition, when our vessels are docked, they are not available for hire and, as a result, do not
generate any revenue and could also adversely affect our vessel utilisation ratios. Please also see
Managements Discussion and Analysis of Financial Condition and Results of Operations Key
Factors Affecting Our Results of Operations Vessel utilisation ratios for further details.
40
We may not be able to obtain suitable vessels in order to expand our fleet or suitable
equipment to modify and upgrade our existing vessels.
Our business strategies and future plans are centred around the type, size and capacity of our
fleet. In the event that we need to acquire new or secondhand vessels to expand our fleet, we
cannot guarantee that vessels meeting our size, technical and quality requirements will be
available at prices or delivery times which are acceptable or beneficial to us. Typically, a new
vessel may be delivered between 12 to 30 months from the date when we place an order
depending on the sophistication of its equipment and the order backlog at the constructing
shipyards. As a result, our ability to increase revenues may be adversely affected. In the event
that the cost of acquiring vessels increases, our capital expenditures and/or operating costs may
increase, which may adversely affect our profitability.
We may not have adequate insurance, and we are subject to uninsured risks.
We maintain insurance coverage against certain risks which our management considers to be
customary in our industry, including catastrophic marine disasters, war, hostilities, terrorism or
piracy, environmental accidents, damage to and loss of vessels, cargo and property loss or
damage, injuries or deaths, and business interruptions caused by mechanical failure, human
error, war, terrorism, piracy, political action in various countries, hostilities, labour strikes, port
closures, boycotts or adverse weather conditions.
These risks present a threat to the safety of personnel and to our vessels, cargo, equipment under
tow and other property, as well as the environment. We could be required to suspend our
operations or terminate our charters as a result of these hazards. In such event, we would
experience loss of revenue and possibly property damage, and additionally, third parties may have
significant claims against us for damages due to personal injury, death, property damage,
pollution and loss of business. Additionally, we may be penalised by the relevant authorities if we
are determined to be responsible for the occurrence of any of such hazards.
We carry insurance as described in Business Insurance in respect of each of our vessels to
protect against the majority of the accident-related risks involved in the conduct of our business.
However, our insurance policies contain deductibles (generally in the range of US$15,000 to
US$100,000 which are the amounts to be borne by us with respect to any amounts claimed under
the insurance policy), limitations (which refers to the limit on the amount of loss which may be
covered by the relevant insurance policy; such limit varies from insurer to insurer) and exclusions
(which refer to provisions which eliminate coverage for certain acts or locations. For example,
there may not be coverage if the loss arose out of gross negligence, fraud or wilful misconduct;
in addition, a vessel will not be insured for operations in a location which is not covered by the
relevant policy) which are standard in the shipping industry, but which may nevertheless increase
our costs or reduce our recovery in the event of a loss. We cannot assure you that any particular
insurance claim will be paid. In addition, the occurrence of any adverse event, resulting in an
insurance claim, may lead to an increase in our insurance premiums. Details of insurance claims
made by us in the years ended December 31, 2011, 2012 and 2013, as at the Latest Practicable
Date, are set out below:
41
No. of
claims
commenced
in the year
ended
December
31, 2011
Aggregate
Net Claim
(US$000)
No. of
claims
commenced
in the year
ended
December
31, 2012
Aggregate
Net Claim
(US$000)
No. of
claims
commenced
in the year
ended
December
31, 2013
Aggregate
Net Claim
(US$000)
Settled Claims
as at the Latest
Practicable Date 3 366 4 637 3 82
(4)
Outstanding
Claims as at
the Latest
Practicable
Date
(1)
5 2,232
(3)
3 1,320
Total
(2)
3 366 9 2,869 6 1,402
(4)
Notes:
(1) These relate to claims which we have submitted to our insurers and for which the claims are still in progress.
(2) Comprising settled claims and outstanding claims.
(3) This amount is with respect to four claims. The amount with respect to the remaining claim has not been determined
as at the Latest Practicable Date.
(4) The claims include an amount of approximately S$42,000 which amount has not been aggregated with the U.S.
dollars amount of claims in the table above.
We also cannot assure you that our insurance will be adequate to cover all losses that we may
incur in the future. If we incur an uninsured loss or a loss in excess of insured limits or if our
insurers fail to fulfil their obligations for the sum insured, we could be required to pay
compensation or lose capital invested in the asset, as well as anticipated future revenue from that
vessel. We would also remain liable for any indebtedness or other financial obligation related to
that vessel. Moreover, the introduction of new and stricter environmental regulations in the past
had led to higher costs for insurance covering environmental damage or pollution. The
introduction of new or more stringent regulations in the future could lead to further increases in
insurance costs or make this type of insurance unavailable. Even if our insurance coverage is
adequate to cover our asset losses, we may not be able to obtain timely or appropriate
replacement for a vessel in the event of an asset loss to cover our loss of earnings.
Further, we cannot assure you that insurance coverage will be available at costs and terms
acceptable to us or that such coverage will be adequate with respect to future claims that may
arise. If we are not able to adequately insure against the risks we face, or our insurance coverage
is inadequate to cover our losses, our business, financial condition and results of operations could
be adversely affected.
We may not be able to implement our business strategies successfully or manage our
growth effectively.
Our future growth and earnings will depend, to a significant extent, upon the successful
implementation of our business strategies. Our ability to achieve our business and financial
objectives is subject to a variety of factors, many of which are beyond our control. The principal
objective of our business strategies is to enhance shareholder value by expanding our fleet of
vessels, upgrading our vessels, forming synergistic strategic alliances, optimising the mix of
charter contracts and expanding into new geographic regions and new asset classes with
significant growth potential. Our future growth will depend upon a number of factors, including our
ability to:
successfully manage our liquidity and obtain the necessary financing to fund our growth;
42
implement appropriate operating and financial systems;
receive timely delivery of newly-built vessels;
maintain or develop new and existing customer relationships;
maintain our safety record;
place our vessels on profitable charters and generate cash flow sufficient to justify our
investment;
control our operating costs;
hire and retain qualified personnel and crew;
identify and complete attractive acquisitions, joint ventures or strategic alliances; and
identify and capitalise on opportunities in new markets.
Our failure to execute our business strategies or to manage our growth effectively could adversely
affect our business, financial condition and results of operations. In addition, the implementation
of our business strategies may not necessarily translate into successful results. Furthermore, we
may decide to alter or discontinue certain business strategies and adopt alternative or additional
strategies in response to our operating environment or competitive situation, as well as factors or
events which are beyond our control.
We are expanding our business operations in the Offshore Accommodation Segment which
subjects us to additional uncertainties.
We have identified the Offshore Accommodation Segment as a sector for growth and further
development and investment.
As at the Latest Practicable Date, we have ordered two 750-person DP3 SSAVs. These vessels
are scheduled to be delivered by the end of 2014. As at the Latest Practicable Date, we are in the
final stages of procuring a charter contract for the commercial deployment of one of the vessels
when it is delivered. The execution of the charter contract is pending the completion of due
approval process of the counterparty. Notwithstanding, there is no assurance that the charter
contract will ultimately be executed by the counterparty. As at the Latest Practicable Date, we
have also ordered three 238-person DP2 accommodation vessels, of which two are scheduled to
be delivered by the end of 2014 and one is scheduled to be delivered by the first quarter of 2015.
In addition, we have one vessel that is undergoing conversion into a 198-person accommodation
vessel, which is expected to be delivered by the second quarter of 2014.
When all of the accommodation vessels that are under construction or undergoing conversion are
delivered by 2015, our accommodation capacity will increase from 879 persons as at the Latest
Practicable Date to 3,291 persons (this includes one 191-person accommodation vessel that is
committed for sale after the Latest Practicable Date).
There may be unexpected delays in delivery of our vessels, and we may not be able to locate
suitable charters for these vessels. Given our lack of track record in deepwater accommodations
and the contemplated scale-up in our operations, we may be subject to new operational
uncertainties in this segment. These uncertainties relate to the challenges arising from our
operation of the DP3 SSAVs, including crewing (such as the sourcing and screening of qualified
crew with the relevant experience in operating such vessels), technical support (such as sourcing
and recruitment of qualified technical staff with the relevant competencies in operating and
43
supporting the operations of such vessels) and on-board repairs, maintenance and installations
without dry-docking and while the relevant vessel is operational. Accordingly, you should consider
our business and prospects in light of the risks, expenses and challenges that we will face as we
enter deepwater accommodations and ramp up our overall business in this segment. If we are
unable to implement our business plans for the Offshore Accommodation Segment, or our
business plans do not succeed, our business prospects, financial condition and results of
operations could be adversely affected.
We are exposed to variations in interest rates.
We finance the acquisition of our vessels and working capital partly through bank borrowings. Any
fluctuations in market interest rates will affect the cost of our borrowings, to the extent that such
indebtedness is subject to floating interest rates. Any significant increase in interest rates will have
a significant and adverse impact on our ability to expand our fleet and our business, financial
condition and results of operations may be adversely affected.
We are dependent on key management personnel and skilled crew for our operations and
profitability.
To a significant extent, our success depends upon the skills, capabilities and efforts of our
management team, as well as our ability to hire and retain key management personnel. Our ability
to continue to attract, retain and motivate key personnel and senior members of our management
team will have an impact on our operations. The competition for skilled and highly-capable
employees is intense, and the loss of the services of one or more of these individuals, without
adequate replacements or the inability to attract new qualified personnel at a reasonable cost,
would have a material adverse effect upon our financial performance and operations.
In addition, as we expand our fleet and operations, we will need to recruit and retain suitably
skilled and qualified personnel such as vessel captains, engineers, technicians, and shore-side
administrative and management personnel. Over the last few years, competition for labour
required for marine offshore services and operations has intensified as the number of offshore
support vessels worldwide increased, leading to shortages of qualified personnel in the industry
and creating upward pressure on wages and higher turnover. We may experience a reduction in
the experience level of our personnel as a result of any increased attrition, which could lead to
higher downtime and more operating incidents, which in turn could decrease revenues and
increase costs. Competition has also resulted in inflationary pressure on hiring, training and
retention costs for such personnel. In addition, we are dependent on the services of a number of
expatriate personnel, for which work permits and visas are required. If we are unable to recruit
suitable employees as we expand our fleet, our business, financial condition and results of
operations may be adversely affected.
As long as our vessels are operationally deployed, the vessels will have to be manned by marine
crew. With the increase in the number of vessels within various categories in the global shipping
market, including dry bulk, tankers and container vessels, the demand for crew has increased
significantly. This has resulted in higher crewing costs which include wages and salaries,
healthcare-related benefits and insurance, increased leave pay and service bonus. In the event
that there is any disruption in the supply of crew, whether by reason of any labour disputes,
regulatory changes, health quarantines imposed as a result of disease outbreaks, or increased
demand for skilled labour, it may be necessary for us to find alternative sources of skilled labour,
which may, in turn, result in higher crew costs. Where we cannot source skilled labour, our
business will be disrupted and our financial performance will be adversely affected. For the years
ended December 31, 2011, 2012 and 2013, there have been no instances where our business has
been materially and adversely disrupted and our financial performance has been materially and
adversely affected due to an inability to source for skilled labour.
44
Crew costs account for a significant proportion of our total operational costs. For the year ended
December 31, 2013, crew costs accounted for approximately 33.3% of our total operational costs.
Any increase in our crew costs as a percentage of total operational costs is likely to adversely
affect our financial condition, results of operations and profitability.
Our loan agreements contain financial and other covenants that may limit our liquidity and
corporate activities.
Our loan agreements impose certain financial covenants and other restrictions on us. These
restrictions limit or may limit our ability to incur additional indebtedness, and to change our
business. In addition, KSL is required to remain our largest shareholder after our Listing (although
no specific shareholding threshold is specified). Please refer to the section entitled
Managements Discussion and Analysis of Financial Condition and Results of Operations
Description of Material Indebtedness for further details on the aggregate level of our credit
facilities which may be affected by a breach of such condition or restriction. Accordingly, we may
need to obtain waivers or consent from our lenders with respect to the aforementioned. The
interests of our lenders may be different from our and your interests, and we cannot assure you
that we will be able to obtain lenders consent when needed, or at all. This may prevent actions
that are in our and/or your best interests, which could have a material adverse effect on our
business, financial condition and results of operations.
Pursuant to our loan agreements, we are required to maintain certain financial ratios. As of
December 31, 2010, we did not fulfil the requirements of a financial ratio in our credit facilities and
the banks subsequently granted us a waiver from compliance in accordance with the terms of our
loan agreements. While we have been in compliance with our financial ratios for the years ended
December 31, 2011, 2012 and 2013, we cannot assure you that, in the future, we will be able to
maintain our financial ratios or that, in the event of our failure to do so, our lenders will grant us
a waiver from compliance with such financial ratios in accordance with the terms of our loan
agreements. Please refer to the section entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations Description of Material Indebtedness for further
details.
Consequently, should we fail to maintain such financial ratios or other undertakings or in the event
of our failure to obtain a waiver from compliance with such obligations, we would be in default of
such loan agreements. In addition, should we fail to comply with such obligations, we may risk
triggering cross-defaults (which refer to situations where a default under one facility triggers a
default in another facility which may lead to us being in default of multiple loan agreements with
our lenders). Loan facilities typically provide for certain events of default that may be triggered
under certain events. Typically, such events of default include an event where the borrower is in
default of its obligations under any other facility. An event of default, if not cured or waived, will
result in outstanding indebtedness under our loan agreements to be immediately due and payable
and may impair our ability to obtain further financing, which may adversely affect our business and
financial condition, as well as our results of operations. Please also see Managements
Discussion and Analysis of Financial Condition and Results of Operations Description of
Material Indebtedness for further details.
We are subject to the tax regimes of the jurisdictions in which we operate.
We operate in several jurisdictions and our activities are to a large extent governed by the fiscal
legislation of the jurisdictions in which we operate. Our activities may be deemed to form a
permanent establishment according to the tax laws of those jurisdictions. We are therefore
exposed to a material risk regarding the application of such tax regulations. Accordingly, future
changes in the tax legislation of those relevant jurisdictions could have a material adverse effect
on our business, financial condition and results of operations. For example, a tax reform recently
came into effect in January 2014 in Mexico, which increased the tax on dividends paid to foreign
45
residents, imposed additional requirements on tax deductibility of payments made to related
parties, abolished the accelerated depreciation treatment of fixed assets and introduced value
added tax to the temporary importation of assets.
In particular, we and our approved subsidiaries and joint ventures (namely POSH Semco, POSH
Maritime Pte. Ltd., Swallow Pte. Ltd., POSH Havila Pte. Ltd. and Pacific Workboats Pte. Ltd.) were
granted tax free status with respect to our shipping income for a period commencing from January
1, 2008, or, in the case of Swallow Pte. Ltd., June 1, 2008, until December 31, 2017 under the
Approved International Shipping Enterprise Scheme of the MPA (the AIS Scheme). Accordingly,
any change to or abolition of the AIS Scheme or the withdrawal, revocation or non-renewal of the
tax free status of our companies and our approved subsidiaries and joint ventures could
significantly increase our tax liability with respect to foreign flagged vessels and foreign
non-shipping sources of income.
We may fail to maintain certification by classification societies and flag states.
The hull and machinery of every vessel must be classed by a classification society authorised by
the flag state (being the state under whose laws a vessel is registered or licensed). In addition,
every vessel is required by the laws and regulations of its flag state to undergo regular inspection
and certification by the relevant flag state authority or duly authorised organisation.
Our vessels are also sometimes subject to other surveys and inspections pursuant to the
particular laws and regulations of the port states in which they operate. These port state control
inspections are undertaken by officers duly authorised by the port state to verify that the condition
of the vessel and its equipment comply with the requirements of international regulations and that
the vessel is manned and operated in compliance with international regulations.
If any vessel does not maintain its class, or fails any survey or inspection, that vessel may be
unable to operate or even detained in port until its deficiencies have been rectified. The failure to
maintain a vessels class or the failure of a survey or inspection could also cause us to be in
violation of our insurance policies, and may lead an insurer to decline coverage. Such vessel class
maintenance requirement is standard in shipping insurance policies and present in all of our
insurance policies. Such inability to operate, detentions, or violations of our insurance policies,
may have a negative impact upon our business and financial condition and results of operation.
We are exposed to risks associated with currency fluctuations.
The reporting currency for our consolidated financial statements is U.S. dollars, while our
operations are international and capital expenditures (including vessel and equipment purchases)
are thus made in several currencies. We are therefore exposed to currency fluctuations and
exchange rate risks. While our charter contracts are U.S. dollar-denominated, some of our
operating costs are not. Adverse currency movements may have a negative impact upon our
business, financial condition and results of operations.
We may enter into derivative financial instruments and hedging transactions, which involve
risks.
We operate internationally and are thus exposed to risks arising from foreign exchange
fluctuations related to transactions that may be entered into in a currency other than our functional
currency. The purchases and installation of equipment for our vessels under construction,
upgrading of our vessels, repairs and renewals, component and material expenses may take
place in the local currency of the equipment supplier or shipyards. Furthermore, we may require
local services in the various countries in which we operate and such services will take place in the
local currency. Our Board of Directors has adopted a policy that foreign exchange transactions
can only be entered into for hedging purposes. In this regard, foreign exchange contracts will be
46
entered into for specific currency exposure and tenure and upon the discharge of such exposure
or expiry of such tenure, the relevant foreign exchange contract will be liquidated. Our Chief
Financial Officer is responsible for compliance and reports to our Audit Committee in this regard.
In certain circumstances, due to the constraints or restrictions of certain currencies, a foreign
exchange exposure may not be directly hedged, and consequently a proxy currency may have to
be relied upon. Any foreign exchange contracts entered into involves risks and typically involves
costs, including transaction costs, which may adversely impact the financial condition of the
company. These risks increase as the period covered by the foreign exchange contract increases.
Future acquisitions, joint ventures or other arrangements may expose us to increased
operating risks.
We may consider inorganic growth by way of strategic mergers, acquisitions or joint ventures with
other parties if we determine that it is in our long-term interest. Acquisitions that we make, along
with potential joint ventures and other investments, expose us to additional business and
operating risks and uncertainties, including:
direct and indirect costs in connection with the transaction;
the ability to effectively integrate and manage the acquired businesses;
coordinating internal systems, controls, procedures and policies;
the ability to realise our investment in the acquired business;
disruption of our on-going business and the diversion of managements time and attention
from other business concerns;
the risk of entering markets in which we may have no or limited direct prior experience;
the potential loss of key employees and customers of the acquired businesses;
the risk that an acquisition could reduce our future earnings; and
exposure to unknown liabilities.
Although our management will attempt to evaluate the risks inherent in any particular transaction,
we cannot assure you that we can completely ascertain all such risks. In addition, prior
acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial
additional indebtedness and other expenses. Future acquisitions may also result in potentially
dilutive issuances of equity securities. We cannot assure you that difficulties encountered with
acquisitions will not have a material adverse effect on our business.
Valuations of the vessels may not be indicative of the true value of the vessels.
We have obtained charter-free valuations for the vessels we operated as of December 31, 2013,
including 45 vessels owned by our joint ventures (of which one vessel is undergoing conversion
into an accommodation vessel and one vessel is chartered by a joint venture as a charterer on a
long-term charter), as well as vessels we had on order as of December 31, 2013, to reflect the
value that would be obtained from selling these vessels in the market on a willing buyer, willing
seller basis without any charter agreements in place. The valuations could be materially affected
should any of the vessels be tendered for sale with a pre-existing charter attached.
47
These vessels were valued by the Independent Valuer as at December 31, 2013 and are not a
guide to the market values of the vessels at any other point in time. The valuation was based on
recent transactions, negotiations and brokers market knowledge.
No physical inspection or examination of the vessels classification records was performed.
Instead, the valuations were based on various assumptions including, but not limited to, that a
sale is on a willing buyer, willing seller basis with the relevant vessel being in good and
seaworthy condition with delivery in an acceptable area, free of encumbrances, maritime liens and
any other debts whatsoever, ready to load any permissible cargo and prepared for prompt charter
free delivery in a commercial loading zone. The valuation was made on the basis of a sale of an
individual vessel. Should more than one vessel of the same type be tendered for sale at the same
time, there is no guarantee that the valuation would be applicable. This valuation methodology is
based on customary methods used in the shipping industry which is different from methodology
commonly used in valuing other asset classes, for example, real estate property. As the net book
values of vessels are not taken into account when valuing vessels, the valuation of the vessels will
be different from their net book values. For the full terms and methodology of the Independent
Valuer, please see their valuation certificate which is reproduced in full in Appendix K
Independent Valuation Certificate. The terms and methodology in the valuation certificate are
material to the valuations and should be fully understood.
Further, there can be no assurance that the valuations prepared by the Independent Valuer reflect
the true value of the vessels, or that other independent valuers would have arrived at the same
valuation.
The independent valuation certificate has been commissioned from the Independent Valuer on a
charter free basis. This valuation method (explained in full in the valuation certificate in
Appendix K Independent Valuation Certificate) does not take into account any effect or
constraint which flows from the leases which attach to the vessels. Valuations assessed on a
charter attached basis can vary materially from valuations based on charter free methodology.
Accordingly, the basis on which the independent valuation certificate has been prepared may not
be a true indication of the vessels value to us or the price it may bring upon a sale in the market.
Risks Relating to Our Industry
Our industry is highly competitive and subject to intense price competition, which could
depress vessel charter rates and vessel utilisation ratios, thereby adversely affecting our
business, financial condition and results of operations.
We operate in an intensely competitive industry and the principal competitive factors in our
industry include:
charter rates;
service and reputation of vessel operations and crew;
national flag preference;
pre-qualification criteria and prior experience;
availability of qualified crew;
operating costs and conditions;
suitability of vessel types;
48
age of vessels;
vessel availability including supply of new vessels;
technical capabilities of vessels, equipment and personnel;
safety record; and
laws and regulations.
Most of our offshore services contracts are traditionally awarded through competitive bidding
processes subject to the satisfaction of prescribed pre-qualification criteria and experience. While
the competitive factors set out above are important considerations in customer decisions, pricing
is usually a key factor in determining which offshore support vessels provider is awarded a
contract. Consequently, our industry has been frequently subject to intense price competition. This
competitive bidding process may have an adverse effect on the profit margins that we are able to
attain. In addition, our industry has historically been cyclical and is affected by oil and gas price
levels and volatility. There have been periods of high demand, short vessel supply and high
charter rates, followed by periods of low demand, excess vessel supply and low charter rates.
Changes in oil and gas prices can have a dramatic effect on vessel demand. During periods of
excess vessel supply, competition in the industry will intensify and we would have to enter into
lower rate contracts or our vessels could be idle for long periods of time.
Our industry is also highly fragmented among many global and regional owners and operators of
vessels. We compete with local, regional and global companies, many of which have established
reputations and track records in our industry. We cannot assure you that we will be able to
successfully compete in the markets in which we currently operate and intend to operate. Local
competitors in each country in which we operate may have more domestic experience and better
relationships with customers than we do. In addition, many governments favour, or effectively
require contracts to be awarded to, local contractors or require foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. Such policies may affect our ability
to compete effectively. Some other companies may have larger, more diverse fleets and
businesses, have greater financial and other resources, greater brand recognition and reputation,
greater geographical reach or lower capital costs. This may allow them to better withstand industry
downturns, compete on the basis of price, relocate assets more easily and build or acquire
additional assets, all of which may affect our revenues and profitability. Moreover, if other
companies relocate or acquire vessels for operations in the geographical regions where we
operate, the level of competition in such regions may increase, and our business and financial
performance could be adversely affected as demand for our vessels and services could be
negatively affected by increased supply of similar vessels and services.
We are exposed to piracy, war, sabotage and terrorism risks, which could potentially
disrupt our operations as well as harm our business in various ways.
Acts of war, piracy, sabotage, unsettled political conditions, social unrest, terrorist attacks or any
similar attacks in countries where we currently or may in the future operate will affect the ability
of our vessels to call on the ports of such countries or to provide offshore services to companies
with operations in such countries. Our vessels could also be subjected to acts of piracy, which
could result in death or injury to our crew, vessel or other property damage. Should such risks
develop into actual events, the ability of our customers to meet their payment obligations to us
may be affected, and could also entitle our customers to terminate our charter contracts. We may
also face increased vessel operating costs (including increased insurance and security costs)
should such risk materialise. Such acts may also adversely affect our operations in unpredictable
ways, including causing changes in the insurance markets and disruptions of fuel supplies and
markets. The occurrence of any of these events may also result in a general loss of business
49
confidence, which could potentially lead to economic recession and have an adverse effect on our
business, financial condition and results of operations. Any deterioration in international relations
may also result in increased concern regarding regional stability, which may in turn adversely
affect the price of our Shares.
Governments could requisition our vessels during a period of war or emergency without
adequate compensation, resulting in loss of earnings and adversely affecting our business,
financial condition and results of operations.
A government could requisition or seize one or more of our vessels for title or for hire. Requisition
for title occurs when a government takes control of a vessel and becomes its owner. Requisition
for title will have a significant negative effect on us as it will result in loss of title and all revenues
from the requisitioned vessel. Also, a government could requisition our vessels for hire.
Requisition for hire occurs when a government takes control of a vessel and effectively becomes
its charterer at dictated charter rates. Generally, requisitions occur during a period of war or
emergency. Although we would be entitled to compensation in the event of a requisition of one or
more of our vessels, the amount and timing of such compensation would be uncertain.
Requisitions would likely result in reduced income for us. Therefore, government requisition of one
or more of our vessels may negatively affect our business, financial condition and results of
operations.
Further, in the event of war, we may be considered resident within a particular area for the
purposes of trading or doing business through our vessels, within the territory of any hostile nation
with which Singapore is at war, and this may consequently have an adverse impact upon our
financial condition and results of operations.
Our operations are dependent on the state of the offshore oil and gas industry.
As we are principally engaged in the provision of offshore support vessels to new and existing
customers in the offshore oil and gas industry, our operations are dependent on the state of the
offshore oil and gas industry, in particular, the level of activities in the exploration, development
and production of oil and gas. These activities are affected by factors beyond our control, including
fluctuations in oil and gas prices, and more generally, the state of the global economy.
Oil and gas prices have a direct bearing on the level of activities in the offshore oil and gas
industry, as it affects the capital spending by customers in the offshore oil and gas industry. Higher
oil and gas prices typically lead to an increase in oil and gas E&P activities as the potential return
from the upstream activity increases. Major oil and gas companies are likely to be motivated to
explore potential oil and gas fields that are otherwise not commercially feasible to operate when
oil and gas prices are high. Conversely, when there are low oil and gas prices, major oil and gas
companies typically reduce their spending budgets for offshore drilling, exploration and
development. A decline in the levels of activity in the offshore oil and gas industry may result in
decreased demand for our offshore support vessels, and consequently a decrease in charter rates
and vessel values, and may also affect our ability to charter-out our vessels, which could
adversely affect our business, financial condition and results of operations.
Other factors affecting the state of the offshore oil and gas industry include:
global and regional economic and political conditions which could have an impact upon,
among other things, the supply of, demand for and price of oil, and the demand for various
types of vessels;
environmental concerns and regulations;
weather;
50
the number of newbuilding deliveries and shipyard capacity;
the laws, regulations, policies and directives relating to energy, investment, taxation and
such other laws and regulations promulgated by the governments from which our customers
will need to obtain licenses to engage in the exploration, development and production of oil
and gas;
the supply of and demand for vessels; and
national or international regulations that may effectively cause increases or reductions in
offshore development.
The success of our business is dependent, in part, on our ability to anticipate the risks we face,
and to effectively manage our business in the event of a reduction in the levels of activity in the
offshore oil and gas industry resulting from a reduction in capital spending. We may not be able
to anticipate or effectively manage these risks, which could have a material adverse effect on our
business, financial condition and results of operations.
The market value of our vessels can fluctuate significantly and, as a result, affect our
financing ability.
The highly cyclical nature of the offshore support vessel industry could result in significant
volatility in vessel values and affect our financing ability. The fluctuation in the market value of our
fleet over time is likely to be influenced by a number of factors including:
age of the vessels;
vessel specification and the general condition of the vessels;
global economic and market conditions affecting the offshore oil and gas industry;
competition;
changes in supply of, and demand for, certain types and sizes of vessels;
changes in the cost of building new vessels;
the cost of retrofitting or modifying existing vessels;
cost and availability of long lead-time items, including engines, propellers and specialised
on-board equipment such as cranes;
shipyard capacity and order book;
governmental or other regulations;
the prevailing level of charter rates; and
technological advances.
51
We may be subject to actual and threatened litigation and other regulatory proceedings.
Operating vessels involves inherent risks to both persons and property. For example, a collision
at sea could result in vessel damage, loss of cargo, loss of life, and/or significant environmental
pollution. We may become involved in lawsuits and regulatory actions relating to our business.
Defending private actions can be costly and time consuming. If a judgment were to be rendered
against us, we might be exposed to substantial financial liabilities, which might not be covered by
our insurance. In addition to private actions, governmental and quasi-governmental agencies
could bring a variety of actions against us. Other than the financial costs of defending these
actions, governmental or quasi-governmental agencies may impose penalties for failure to comply
with maritime laws, rules or regulations. In addition to financial penalties, we could be sanctioned,
as a result of which we may be unable to operate our vessels or be forced to incur substantial
costs to comply with these maritime laws, rules and regulations.
We are subject to various governmental and international laws and regulations and require
various licences and permits for our operations, and we may be subject to risks associated
with non-compliance with such laws and regulations or licences and permits.
As we operate in various jurisdictions around the world, our operations are subject to various
government and international laws and regulations in the form of international conventions and
treaties, and regional, national, state and local laws and regulations in force in the jurisdictions in
which our vessels operate or are registered. These laws and regulations relate to, among others,
ownership of vessels, maintenance of vessels, construction and operation of vessels, workers
health and safety, vessel manning, discharges of hazardous substances into the environment and
environmental protection.
The technical requirements of these laws and regulations are becoming increasingly complex,
stringently enforced and expensive to comply with, and this trend is likely to continue. The relevant
organisations establish safety criteria and are authorised to investigate accidents and recommend
approved safety standards. If we fail to comply with the requirements of any of these laws or the
rules or regulations of these agencies and organisations, we could be subject to substantial
administrative, civil and criminal penalties, the imposition of remedial obligations, and the
issuance of injunctive relief.
The risk of incurring substantial costs in order to comply with various laws and regulations or
substantial liabilities and penalties for non-compliance is inherent in our business. We may incur
significant costs in, among others, modifying our vessels or obtaining insurance coverage if
applicable governmental and international regulations become more stringent or additional
regulations or controls requiring the adoption of new requirements or procedures are introduced.
Any failure to comply with such laws and regulations may also result in the cancellation or
termination of our present contracts, new contracts not being awarded to us, or regulatory
authorities imposing fines, penalties or sanctions on us, including prohibiting us from continuing
our operations, which could have an adverse effect on our business and reputation. As a result,
we could be exposed to potential liability for conduct or conditions caused by third parties over
whom we have no control. Because such laws and regulations are often revised, we cannot
predict the ultimate costs of compliance or the impact thereof on the resale price or useful price
of our vessels or other aspects of our operations.
We also require various licences and permits for our operations, as further described in
Government Regulations. Our licences and permits may also be granted for fixed periods of time
after the expiry of which these need to be renewed from time to time. There is no assurance that
upon expiration of such licences and permits, we will be able to successfully renew them in a
timely manner or at all, or that the renewal of such licences and permits will not be attached with
conditions which we may find difficult to comply with, or that if the relevant authorities enact new
laws and regulations, we will be able to successfully meet their requirements. Our licences and
52
permits may also be subject to certain notification and/or filing requirements under applicable laws
and regulations. In November 2013, our subsidiary, POSH Semco, was granted a public licence
by the MPA for the provision of towage services to vessels within the limits of the port and the
approaches to the port as described in Government Regulations. POSH Semco, being the public
licensee, is required to obtain the written approval of the MPA before effecting, carrying out or
permitting any dealing, transaction or scheme which will result in any change in, or acquisition of,
effective control of the public licensee. Effective control means the holding of shares which carry
the right to exercise, or control the exercise of not less than 25.0% of the votes attached to the
voting shares of the public licensee. We have made an application to the MPA for its written
approval for KSLs acquisition of our Shares which are held by PCL, which acquisition is
conditional upon, amongst others, the written approval of the MPA. As at the Latest Practicable
Date, we have not received the MPAs written approval for such acquisition. Following our Listing,
we are also required to monitor any transfer of Shares which results in a change in effective
control of the public licensee and notify the MPA of such a change. In the event the public licensee
fails to comply with its obligations under the public licence, the MPA may cancel or suspend the
licence, or impose a fine in such amount as it thinks fit. In the event that there is a transfer of
Shares which results in a change in effective control of the public licensee after our Listing, there
is no assurance that the MPA would approve such transfer and that our licence would not be
cancelled or suspended or that we would not be subject to a fine. Failure by us to obtain, renew
or maintain the required licences and permits, failure by us to comply with such requirements
under such applicable laws and regulations, or cancellation, suspension or revocation of any of
our licences and permits may result in the interruption of our operations and may have a material
adverse effect on our business.
See Government Regulations for details on the international conventions and laws and
regulations of the various jurisdictions (such jurisdictions being Singapore, Indonesia, Malaysia
and Mexico) which are material to the business of our Group, as well as our Directors statement
regarding receipt of all requisite approvals and our compliance with international conventions and
laws and regulations that would materially affect our business operations.
Our joint ventures are similarly subject to various governmental and international laws and
regulations and require various licences and permits for their operations, and our joint ventures
may similarly be subject to risks associated with non-compliance with such laws and regulations
or licences and permits.
Severe adverse weather conditions may affect our business and results of operations.
Severe adverse weather conditions and natural hazards, including typhoons, storms and
tsunamis, may interfere with our ability to charter out our vessels as required. It may be impossible
to predict adverse weather conditions, and the sudden onset of severe weather conditions could
result in damage to, or complete loss of, our vessels. Although there may be situations where risk
is allocated through the terms of the charter agreements to the charterer, there may be unforeseen
circumstances where we bear this risk which may adversely impact our business, financial
condition and results of operations. Our operations may experience disruption if any of our vessels
or our equipment suffers significant downtime, thereby affecting our business, financial condition
and results of operations.
Our operations may be adversely affected by infectious communicable diseases.
The crew operating our vessels are generally engaged on a contractual basis and may have
travelled or worked in areas affected by infectious communicable diseases prior to working on our
vessels or may be exposed to such infectious diseases while operating our vessels. If any one of
our crew members is suspected to have contracted or contracts an infectious communicable
disease such as Severe Acute Respiratory Syndrome, avian influenza, the H1N1 virus or any
other serious infectious disease, the entire crew on the vessel may have to be quarantined for a
53
substantial period of time. This would interrupt the operations of the vessel and result in delays
in performing the work which the vessel has been chartered for, which may have an adverse effect
on our business and financial position. In addition, our onshore staff may also be affected by such
infectious communicable diseases which could result in disruption of our business operations. We
cannot assure you that any precautionary measures taken against infectious diseases would be
effective.
We may be liable for damages arising from marine-related accidents and risks.
The operation of offshore support vessels is subject to various risks such as adverse weather and
sea conditions, mechanical failures, human errors and catastrophic marine disasters which could
lead to accidents involving personal injury, damage to or loss of vessels, cargo, equipment or the
environment.
In the event of an oil spill or damaged or lost cargo, we may incur liability for containment,
clean-up and salvage costs and other damages. We may also be liable for damages sustained in
collisions and wreck removal charges arising from the operation of our offshore support vessels.
In addition, we may be liable for substantial fines and penalties imposed by the authorities of the
relevant jurisdictions. Where the loss or damage is to our own vessel, the affected vessel may
need to be repaired at a shipyard facility, resulting in their not being available for hire and this
could adversely affect our vessel utilisation ratios. The cost and duration of repairs may be
unpredictable and could be substantial or may exceed estimates. We may have to pay repair costs
that our insurance will not cover. The loss of earnings while these vessels are being repaired and
repositioned, as well as the actual cost of the repairs, would result in a decrease in our earnings.
Please also see Managements Discussion and Analysis of Financial Condition and Results of
Operations Key Factors Affecting Our Results of Operations Vessel utilisation ratios for
further details.
In line with industry practice, under certain of our charter contracts, we and our counterparties
waive rights of claim or recovery against one another, and our respective contractors and
subcontractors for loss or damage to our vessels, property or equipment, cargo, economic loss
suffered by us, or injuries to or death of any persons arising out of any act, omission or default on
the part of our charterers, their contractors or sub-contractors. The waiver of these rights to claim
or recovery may not be fully reciprocated by our counterparties.
Our risk assessment and safety management system for our employees, may not be sufficient to
ensure that accidents leading to the above outcomes will not arise. We cannot assure you that all
risks can be adequately insured against or that any insured sum will be paid. In the event of an
accident that is not covered by our insurance policies or claims which are in excess of our
insurance coverage or are successfully contested by the insurance companies, our business,
financial condition and results of operations will be adversely affected.
For the years ended December 31, 2011, 2012 and 2013, there have been no marine-related
accidents which have had a material and adverse effect on our business, financial condition and
results of operations.
Maritime claimants could arrest our vessels, which could interrupt our cash flow and result
in a significant loss of earnings.
Under the maritime law of many jurisdictions, claimants for breach of certain maritime contracts,
vessel mortgagees, crew members, suppliers of goods and services to a vessel, shippers of cargo
and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts,
claims or damages. In addition, in certain jurisdictions, a maritime lienholder may enforce its lien
by arresting a vessel through foreclosure proceedings. This would apply even if our vessels are
54
chartered-out (whether on a bareboat charter basis or otherwise). The arrest or attachment of one
or more of our vessels could result in a significant loss of earnings and cash flow and we may be
required to pay large sums of money to have the arrest lifted.
In addition, international vessel arrest conventions and certain national jurisdictions permit
so-called sister ship arrests, allowing the arrest of vessels that are within the same legal
ownership as the vessel which is subject to the claim or lien. Certain jurisdictions go further,
permitting not only the arrest of vessels within the same legal ownership, but also any associated
vessel. In these jurisdictions, an association may be recognised when two vessels are owned by
companies controlled by the same party. Consequently, a claim may be asserted against us or our
vessels for the liability of one or more of the other vessels we own or of vessels owned by any of
our affiliates.
Any arrest of one or more of our vessels could result in a material loss of earnings and cash flow
for us or require us to provide security to have the arrest lifted.
Risks Relating to Investment in Our Shares
Because the initial public offering price is substantially higher than our book value per
Share, you will incur immediate and substantial dilution.
The Offering Price is a multiple of the value of our net tangible assets per Share based on our
issued share capital as of the date of this Prospectus. Investors who purchase and/or subscribe
for our Shares in the Offering will therefore experience immediate and significant dilution of net
tangible book value per share of our Shares they own. For a calculation of the dilution purchasers
and/or subscribers in this offering will incur, see Dilution.
Future sales of our Shares by our Controlling Shareholders could adversely affect the
market price of our Shares.
Following the Offering and the issue of the Cornerstone Shares, we will have 1,820,000,000
issued Shares, of which 61.1% and 17.3% will be directly owned by KSL and Lightwell Shipping
Inc., respectively (assuming in each case that the Over-allotment Option is not exercised, that
PCL has transferred the 1,111,306,065 Shares held directly by it to KSL as further described in
Share Capital, that none of the 15,843,750 Shares, which are held by certain of KSLs group
employees, are transferred to KSL pursuant to the exercise of the right by KSL to have any of such
Shares transferred to itself or to its order (as described in Principal Shareholders) and Lightwell
Shipping Inc. does not subscribe for any Offering Shares. Upon our admittance to the Official List
of the SGX-ST, our Shares will be tradable on the Main Board of the SGX-ST. Under lock-up
arrangements (as described in Plan of Distribution No Sale of Similar Securities and Lock-up),
KSL and Lightwell Shipping Inc. have each agreed not to transfer their Shares for a period from
the Listing Date until the date falling six months from the Listing Date. If, in the limited
circumstances permitted under the lock-up arrangements during such period or upon the
expiration of the lock-up arrangements, either KSL or Lightwell Shipping Inc. sells or is perceived
as intending to sell a substantial amount of our Shares, this may have a material adverse impact
upon the market price of our Shares. Sales of a substantial number of the Shares in the public
market following the Offering, or the perception that these sales could occur, may also impair our
ability to raise additional capital through the sale of our equity securities in the future.
Upon completion of the Offering, our Controlling Shareholders will continue to own a
significant number of our Shares.
Following the Offering and the issue of the Cornerstone Shares, assuming that the Over-allotment
Option is not exercised, that PCL has transferred the 1,111,306,065 Shares held directly by it to
KSL as further described in Share Capital, that none of the 15,843,750 Shares, which are held
55
by certain of KSLs group employees, are transferred to KSL pursuant to the exercise of the right
by KSL to have any of such Shares transferred to itself or to its order (as described in Principal
Shareholders) and Lightwell Shipping Inc. does not subscribe for any Offering Shares, KSL and
Lightwell Shipping Inc. will directly own approximately 61.1% and 17.3% of our Shares,
respectively. As a result, they will be able to significantly influence our corporate actions including
election of our Directors, deterring or delaying mergers and takeovers, even if such a transaction
would be beneficial to other Shareholders or in the best interests of our Company. We cannot
assure you that their objectives as Controlling Shareholders will not conflict with our business
goals and objectives.
Corporate disclosure and accounting standards in Singapore may vary from applicable
standards in other jurisdictions.
Our corporate affairs are governed by our Memorandum and Articles of Association, by the laws
governing corporations incorporated in Singapore and will be governed by the Listing Manual
upon our admission to the Main Board of the SGX-ST. The rights of our Shareholders and the
responsibilities of our management and our Board of Directors under Singapore law may be
different from those applicable to a company incorporated in another jurisdiction. Principal
shareholders of Singapore companies do not owe fiduciary duties to minority shareholders, as
compared, for example, to controlling shareholders in certain other jurisdictions. Our public
shareholders may have more difficulty in protecting their interests in connection with actions taken
by our management, members of our Board of Directors or our principal Shareholders than they
would as shareholders of a company incorporated in another jurisdiction. See Description of our
Shares Minority Rights.
There may be different publicly available information about companies that are publicly traded in
Singapore, such as ours, than is regularly made available by public companies in other
jurisdictions. These differences include the timing and extent of disclosure of beneficial ownership
of equity securities of officers, directors and significant shareholders, the lack of official
certification of disclosure and financial statements in periodic public reports, and the lack of
disclosure of off-balance sheet transactions in managements discussion of results of operations
in periodic public reports. In addition, our financial statements are prepared in accordance with
Singapore Financial Reporting Standards (SFRS), which may differ in certain respects from
generally accepted accounting principles in other jurisdictions where shareholders may reside.
Overseas Shareholders may not be able to participate in future rights offerings or certain
other equity issues we may make.
If we offer, or cause to be offered to Shareholders, rights to subscribe for additional Shares or any
right of any other nature, we will have discretion as to the procedure to be followed in making such
rights available to Shareholders, or in disposing of such rights for the benefit of such Shareholders
and making the net proceeds available to such Shareholders. We may choose not to offer such
rights to the Shareholders having an address in a jurisdiction outside Singapore and such
Shareholders may experience a dilution in their shareholdings as a result.
Our Shares have never been publicly traded and the Offering may not result in an active or
liquid market for our Shares.
Prior to the Offering, there has been no public market for our Shares and an active public market
for our Shares may not develop or be sustained after the Offering. The trading price of the Shares
may fluctuate after this Offering due to a variety of factors, including our results of operations and
the performance of our business, competitive conditions, general economic, political and social
factors, volatility in the Singapore and global securities markets and the performance of the
Singapore economy. Therefore, we cannot predict the extent to which a trading market will
develop or how liquid that market might become. We cannot assure you that an active trading
56
market for our Shares will develop or, if developed, will be sustained, or that the trading price for
our Shares will not decline below the Offering Price. If an active trading market is not developed
or sustained, the liquidity and trading price of our Shares could be materially and adversely
affected. While we have received a letter of eligibility from the SGX-ST to have our Shares listed
and quoted on the SGX-ST, this should not be taken as an indication of the merits of the Offering,
our Company or our Shares, and the listing and quotation of our Shares does not guarantee that
a trading market for our Shares will develop or, if a market does develop, the liquidity of that
market for our Shares. Although we currently intend that our Shares will remain listed on the
SGX-ST, there is no guarantee of the continued listing of our Shares.
The market price of our Shares may decline after the Offering.
The market price of our Shares may be volatile and could fluctuate significantly and rapidly in
response to, inter alia, the following factors, some of which are beyond our control:
variations in our operating results;
success or failure of our management team in implementing business and growth strategies;
gain or loss of any important business relationship;
changes in securities analysts recommendations, perceptions or estimates of our financial
performance;
changes in conditions affecting the industry, the general economic conditions or stock market
sentiments or other events or factors;
the operating and share price performance of other companies;
the liquidity of the market for our Shares;
differences between our actual financial operating results and those expected by investors
and analysts;
changes in accounting principles or other developments affecting us, our customers or our
competitors;
additions or departures of key personnel;
changes in general market conditions and broad market fluctuations;
negative publicity; and
involvement in litigation.
These fluctuations may be exaggerated if the trading volume of our Shares is low. Volatility in the
price of the Shares may be unrelated or disproportionate to our results of operations. It may be
difficult to assess our performance against either domestic or international benchmarks.
In addition, the SGX-ST and other securities markets have from time to time experienced
significant price and volume fluctuations that are not related to the operating performance of any
particular company. These fluctuations may also materially and adversely affect the market price
of our Shares.
57
The Offering Price has been determined following a book-building process by agreement between
our Company and the Joint Issue Managers and Bookrunners and may not be indicative of prices
that will prevail in the trading market. You may not be able to resell your Shares at a price that is
attractive to you.
Future changes in the value of the Singapore dollar against the U.S. dollar or other
currencies will affect the foreign currency equivalent of the value of our Shares and our
dividends.
Our Shares will be quoted in Singapore dollars on the SGX-ST. Dividends, if any, in respect of our
Shares will be declared and paid in Singapore dollars. For further details, see Dividend Policy.
Fluctuations in the exchange rate between the Singapore dollar and the U.S. dollar or other
currencies will affect, among other things, the foreign currency value of the proceeds which a
Shareholder would receive upon the sale in Singapore of our Shares and the foreign currency
value of our dividends. See also Exchange Rates and Exchange Controls Exchange Rates.
You may have difficulty in serving us with legal process or enforcing judgments against our
Company or our Directors outside Singapore.
We are a limited liability company incorporated in Singapore and a substantial portion of our
assets are, due to their nature, not located in any fixed place. As a result, it may be difficult or
impossible for investors to effect service of process upon us or our Directors and management
outside Singapore if they believe that their rights have been infringed under securities laws or
otherwise. Even if investors are successful in bringing an action of this kind, the laws of Singapore
and of other jurisdictions may prevent or restrict investors from enforcing a judgment against our
assets or against our Directors and management.
Additional funds raised through issuance of the new Shares for our future growth will dilute
Shareholders equity interest.
We may, in the future, expand our capabilities and business through acquisitions, joint ventures
and strategic partnerships with parties who can add value to our business. We may also require
additional equity funding after the Offering. If we choose to issue new Shares in order to finance
future expansion, acquisitions, joint ventures and strategic partnerships, our Shareholders will
face dilution of their shareholdings.
Singapore laws contain provisions that could discourage a take-over of our Company.
We are subject to the Singapore Code on Take-overs and Mergers (the Singapore Take-Over
Code). The Singapore Take-Over Code contains provisions that may delay, deter or prevent a
future take-over or change in control of our Company. Under the Singapore Take-Over Code,
except with the consent of the Securities Industry Council of Singapore, any person acquiring an
interest, whether by a series of transactions over a period of time or not, either on his own or
together with parties acting in concert with him, in 30.0% or more of our voting shares is required
to extend a take-over offer for our remaining voting shares in accordance with the Singapore
Take-Over Code. Except with the consent of the Securities Industry Council of Singapore, a
take-over offer is also required to be made if a person holding between 30.0% and 50.0% (both
inclusive) of our voting shares, either on his own or together with parties acting in concert with
him, acquires additional voting shares representing more than 1.0% of our voting shares in any
six-month period. While the Singapore Take-Over Code seeks to ensure an equality of treatment
among shareholders, its provisions may discourage or prevent certain types of transactions
involving an actual or threatened change of control of our Company which may in turn adversely
affect the market price of our Shares and the ability to realise any benefit from a potential change
of control.
58
Our loan agreements contain a restrictive covenant which could have the effect of
discouraging, delaying or deterring a third party from making an offer for our Shares.
Our loan agreements contain a restrictive covenant that mandates that KSL must continue to be
the largest shareholder of our Company after our Listing (although no specific shareholding
threshold is specified). Please refer to the section entitled Managements Discussion and
Analysis of Financial Condition and Results of Operations Description of Material Indebtedness
for further details on our credit facilities. As any person who acquires a controlling block in excess
of KSLs interest will trigger a breach of this covenant in the absence of a waiver from the lenders
or a refinancing of the loans, this restrictive covenant could potentially deter the acquisition of a
controlling block of our Shares by a person or entity (or a group of persons or entities acting in
concert), thereby impeding the ability of our Shareholders to benefit from a change in control
and/or the ability to realise any potential change of control premium. As such, the existence of the
restrictive covenant could discourage a take-over of our Company.
We will have to rely principally on dividends and other distributions on equity paid by our
operating subsidiaries and any limitations on their ability to pay dividends to us could
adversely impact your ability to receive dividends on our Shares.
Dividends and other distributions on equity paid by our subsidiaries will be our principal source for
cash in order for us to be able to pay any dividends and other cash distributions to our
Shareholders. If our subsidiaries incur debt in the future, the instruments governing the debt may
restrict their ability to pay dividends or make other distributions to us.
Additionally, certain of our subsidiaries ability to pay dividends may be restricted by law or their
constitutive documents. With respect to our subsidiaries in Mexico, according to Article 21 of the
General Corporation Law of Mexico, all companies are required to set aside from their profits a
legal reserve fund of at least 5.0% of their yearly earnings until an amount equal to 20.0% of the
capital stock of the company is reached. Please see Exchange Rates and Exchange Controls
Exchange Controls Mexico for further details. As for our subsidiaries in Malaysia, the Financial
Services Act, 2013 (FSA) states that written approval from the Central Bank of Malaysia is
required if a person undertakes or engages in any transaction in relation to the importing into, or
exporting out of Malaysia, of any foreign currency. As such, in order for our subsidiaries to pay
dividends to us, they would have to first seek approval from the Central Bank of Malaysia. Please
see Exchange Rates and Exchange Controls Exchange Controls Malaysia for further details.
59
USE OF PROCEEDS
Based on the Offering Price per Offering Share of S$1.15, the net proceeds from the Offering and
the issue of the Cornerstone Shares, assuming the Over-allotment Option is not exercised and
after deducting the commissions and other estimated offering expenses payable by us (estimated
to be approximately S$13.4 million, or approximately 3.5% of the gross proceeds from the Offering
and the issue of the Cornerstone Shares), are estimated to be approximately S$374.8 million. If
the Over-allotment Option is exercised in full, the net proceeds from the Offering, the issue of the
Cornerstone Shares and the sale of the Additional Shares are estimated to be approximately
S$426.7 million.
We will not receive any of the net proceeds from the exercise of the Over-allotment Option granted
by the Over-allotment Option Provider.
Use of Proceeds
We intend to use all of the net proceeds received by us from the Offering and from the issue of
the Cornerstone Shares to repay part of the outstanding amounts under our revolving facilities
which have been used for our working capital and capital expenditure.
With regard to such credit facilities to fund our working capital and capital expenditures, we
typically apply the cash flows generated from our operations towards repaying the facilities and
therefore reducing the outstanding amounts under these facilities. As these facilities are revolving
in nature, such repayments would increase the headroom of available funding under these
facilities and our working capital and capital expenditures are drawn from such available
headroom. On the basis of the foregoing, we treat our available funding as being a combination
of cash flows from operations and bank borrowings (through such credit facilities), insofar as our
capital expenditures are concerned.
A breakdown of the repayment of such outstanding amounts is set out below:
Lender
Amount to be repaid (in millions)/
Percentage of net proceeds
DBS Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S$134.0/35.8%
Bank of America NA, Singapore Branch . . . . . . . . . . S$73.0/19.5%
OCBC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S$167.8/44.7%
Please see further details on such facilities in Managements Discussion and Analysis of
Financial Condition and Results of Operations Description of Material Indebtedness, including
the maturity of such indebtedness.
For each Singapore dollar of the gross proceeds that we receive from the Offering and the issue
of the Cornerstone Shares, we intend to use:
approximately 96.5 cents to repay part of the outstanding amounts under our revolving
facilities which have been used for our working capital and capital expenditure; and
approximately 3.5 cents to pay for commissions and other estimated offering expenses
payable by us.
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The foregoing discussion represents our best estimate of our allocation of the net proceeds that
we receive from the Offering and the issue of the Cornerstone Shares based on our current plans
and estimates regarding our anticipated expenditures. While we expect that the timing and final
amount of disbursements to be made for the foregoing purposes shall be determined by our
Directors with a view to obtaining the optimum benefit for us, due to future events or
developments, such as changes in economic, political or other conditions in the locations where
we propose to make investments, or events which have a material adverse effect on the offshore
industry in these locations, actual expenditures may vary from these estimates and we may find
it necessary or advisable to reallocate our net proceeds within the categories described above or
use portions of our net proceeds for other purposes. In the event that we decide to reallocate our
net proceeds for other purposes, we will publicly announce our intention to do so through a
SGXNET announcement to be posted on the Internet at the SGX-ST website http://www.sgx.com.
Pending the deployment of our net proceeds from the Offering and the issue of Cornerstone
Shares as aforesaid, the funds may be used for working capital purposes, placed in short-term
deposits with banks or financial institutions or invested in money market instruments as we may
deem fit.
As and when the funds from the Offering are materially disbursed, our Company will make periodic
announcements via SGXNET on the use of the net proceeds and will provide a status report on
the use thereof in our annual report.
There is no minimum amount which, in the reasonable opinion of our Directors, must be raised
from the Offering.
Expenses
We estimate that the expenses payable by us in connection with the Offering, the issue of the
Cornerstone Shares and the application for listing, including the commission and all other
incidental expenses relating to the Offering and the issue of the Cornerstone Shares (not including
the commission and other expenses payable by the Over-allotment Option Provider), will amount
to approximately S$13.4 million based on the Offering Price. A breakdown of these expenses is
set out below:
Expenses
As a Percentage of the
Gross Proceeds from the
Offering and the issue of
the Cornerstone Shares
(in millions)
Underwriting and placement commission
(1)
. . . . S$8.3 2.1%
Professional and accounting fees . . . . . . . . . . . S$4.1 1.1%
Other Offering-related expenses
(2)
. . . . . . . . . . . S$1.0 0.3%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S$13.4 3.5%
Notes:
(1) The underwriting and placement commission will be, on a per Share basis, S$0.02.
(2) Includes advertising and printing expenses.
61
We and the Over-allotment Option Provider will severally pay the Joint Issue Managers,
Bookrunners and Underwriters, as compensation for their services in connection with the offer of
the Offering Shares in the Offering and the Cornerstone Shares pursuant to the Cornerstone
Subscription Agreements, a combined underwriting and placement commission (excluding goods
and services tax) amounting to 2.0% of the total gross proceeds from the sale of the new Offering
Shares and the Cornerstone Shares (including the proceeds from the sale of the Additional
Shares, if the Over-allotment Option is exercised). Underwriting and placement commission of
S$0.02 for each new Offering Share and Cornerstone Share are payable by us. The Over-
allotment Option Provider will pay the Joint Issue Managers, Bookrunners and Underwriters, as
compensation for their services in connection with the Offering, underwriting and placement
commission (excluding goods and services tax) amounting to 2.0% of the total gross proceeds
from the sale of the Additional Shares by the Over-allotment Option Provider (if the Over-allotment
Option is exercised). Underwriting and placement commission of S$0.02 for each Additional Share
is payable by the Over-allotment Option Provider.
The aggregate expenses of the Offering (not including the Joint Issue Managers, Bookrunners and
Underwriters underwriting and placement commission and other expenses payable by the
Over-allotment Option Provider) are estimated to be S$13.4 million and are payable by us.
Purchasers and/or subscribers of the Offering Shares under the International Offering may be
required to pay an additional brokerage fee of up to 1.0% of the Offering Price.
See Plan of Distribution for further details.
62
DIVIDEND POLICY
Statements contained in this section that are not historical facts are forward-looking statements.
Such statements are subject to certain risks and uncertainties which could cause actual results to
differ materially from those which may be forecast and projected. Under no circumstances should
the inclusion of such information herein be regarded as a representation, warranty or prediction
with respect to the accuracy of the underlying assumptions by us, the Over-allotment Option
Provider, the Joint Issue Managers, Bookrunners and Underwriters or any other person. Investors
are cautioned not to place undue reliance on these forward-looking statements that speak only as
at the date hereof. See Notice to Investors Forward-looking Statements.
For the year ended December 31, 2011, we paid dividends to our Shareholders of US$0.035 per
Share. For the year ended December 31, 2012, we paid dividends to our Shareholders and
holders of our redeemable convertible preference shares (RCPS) of US$0.035 per share for
each Share and each RCPS. Please see Managements Discussion and Analysis of Financial
Condition and Results of Operations Redeemable Convertible Preference Shares for further
details on the RCPS. As at the Latest Practicable Date, no dividends have been declared in
respect of the year ended December 31, 2013. The amount of our Companys past dividends is
not indicative of the amount that our Company will pay in the future. Whilst historically our
Company had paid dividends in U.S. dollars, our Shares will be quoted in Singapore dollars on the
SGX-ST and hence our Board of Directors has resolved that future dividends will be declared and
paid in Singapore dollars. In this manner, Shareholders will be assured of the absolute amount
receivable in Singapore dollars against a quoted Singapore dollars share. Please also see Risk
Factors Risks Relating to Investment in Our Shares Future changes in the value of the
Singapore dollar against the U.S. dollar or other currencies will affect the foreign currency
equivalent of the value of our Shares and our dividends.
The declaration and payment of dividends may be recommended by our Board of Directors at their
discretion and will depend on a number of factors, including our earnings, capital requirements
and overall financial position. This, in turn, depends on our strategy, the successful
implementation of our strategy and on financial, competitive, regulatory, general economic
conditions and other factors that may be specific to us or specific to our industry, many of which
are beyond our control. There can be no assurance that dividends will be paid in the future or as
to the timing of any dividends that are to be paid in the future. Whilst we do not have a formal
dividend policy, our Board of Directors may from time to time consider paying dividends in a
manner that is in line with our financial performance, after taking into consideration the factors
described above, to allow Shareholders to participate in the profits of our Group.
No inference should or can be made from any of the foregoing statements as to our actual future
profitability or ability to pay dividends.
For information relating to taxes payable on dividends, see Taxation.
63
CAPITALISATION AND INDEBTEDNESS
The table below sets forth our capitalisation and indebtedness as of February 28, 2014:
on an actual basis; and
as adjusted to reflect the issue and offer of the Offering Shares at the Offering Price, the
issue of the Cornerstone Shares, the application of our net proceeds from the Offering and
the issue of the Cornerstone Shares.
You should read this table in conjunction with Selected Consolidated Financial Information,
Managements Discussion and Analysis of Financial Condition and Results of Operations and
our consolidated financial statements and related notes thereto included elsewhere in this
Prospectus.
As of February 28, 2014
Actual As adjusted
(in US$000,
unless otherwise stated)
Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,585 1,585
Borrowings current liabilities
(1)
. . . . . . . . . . . . . . . . . . . . . . 483,145 187,973
Borrowings non-current liabilities
(1)
. . . . . . . . . . . . . . . . . . . 300,000 300,000
Total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783,145 487,973
Shareholders equity:
Ordinary shares:
Actual issued and outstanding as of
February 28, 2014: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530,975 530,975
Adjusted for Shares to be issued pursuant to the
Offering and the issue of the Cornerstone Shares . . . . . 295,172
Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 298
Accumulated profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345,366 345,366
Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . 876,639 1,171,811
Total capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,659,784 1,659,784
Note:
(1) As of February 28, 2014, all such borrowings are non-guaranteed and unsecured. Such borrowings exclude bankers
guarantees and letters of credit.
As of February 28, 2014, save for:
refund guarantees and performance bonds/guarantees for an aggregate amount of US$5.9
million provided by us on behalf of our joint venture, POSH Terasea Pte. Ltd. (prior to such
joint venture having secured its credit facilities for the issuance of such guarantees or bonds
and against which a proportionate indemnity was provided by our joint venture partner in our
favour).
64
The refund guarantees are guarantees provided for advance payments by our joint ventures
customers under lump-sum project contracts. In the event that the relevant lump-sum project
contracts are terminated, our joint venture is required to refund its customers the advance
payments. Should our joint venture be unable to make such refunds, its customers may claim
for such advance payments from our lenders under the refund guarantees, in which case we
would be required to repay our lenders for the amounts paid to the customers. In the event
that a claim is made against us in reliance on the refund guarantees, the relevant joint
venture partner would be required to pay us, under their indemnity, for an amount of the claim
proportionate to their shareholding in the joint venture.
The performance bonds/guarantees are guarantees provided to secure contractual
performance. In the event that our joint venture fails to complete the relevant contract
secured by such performance bonds/guarantees, its customers may claim for monetary
compensation from our lenders under the performance bonds/guarantees, in which case we
would be required to repay our lenders for the amounts paid to the customers. In the event
that a claim is made against us in reliance on the performance bonds/guarantees, the
relevant joint venture partner would be required to pay us, under their indemnity, for an
amount of the claim proportionate to their shareholding in the joint venture; and
a corporate guarantee for an aggregate amount of US$6.8 million (excluding ancillary
lenders costs, charges and expenses) provided by us on behalf of our joint venture, PT. Win
Offshore (and against which a proportionate corporate guarantee was provided by our joint
venture partner on behalf of the joint venture). The corporate guarantee is a guarantee
provided to secure repayment of a loan of the joint venture. In the event that our joint venture
defaults on its payment obligations under the loan, its lender may claim for the amounts
owing by the joint venture from us, in which case we would be required to pay the lender of
the joint venture for the amounts owing,
there are no indirect and contingent indebtedness with respect to third parties and all of the
indebtedness are non-guaranteed and unsecured.
65
DILUTION
If you invest in the Offering Shares, your interest will be diluted to the extent of the difference
between the price you paid per Offering Share and the net asset value per Share immediately after
completion of the Offering. Dilution is determined by subtracting the net asset value per Share
immediately after completion of the Offering from the price paid by the new investors in the
Offering. Net asset value per Share represents total assets minus total liabilities divided by the
total number of Shares outstanding immediately prior to the Offering. As of December 31, 2013
(and after adjustment for the Share Split and Consolidation), our net asset value per Share was
US$0.58 (or S$0.74 based on an exchange rate of S$1.27 to US$1.00). Our net asset value per
Share as of December 31, 2013, as adjusted for the Share Split, Consolidation and the issue of
the Offering Shares and the Cornerstone Shares (after deducting underwriting and placement
commission and other estimated expenses payable by us) was US$0.64 (or S$0.81 based on an
exchange rate of S$1.27 to US$1.00).
Based on the Offering Price per Offering Share of S$1.15, or US$0.91 based on an exchange rate
of S$1.27 to US$1.00, there will be an immediate dilution in net assets of S$0.34 (or US$0.27) per
Share (or approximately 29.6%) to new investors purchasing Shares at the Offering Price.
The following table illustrates this dilution on a per Share basis:
Offering Price per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S$1.15
Net assets per Share as of December 31, 2013, as adjusted for the Share Split
and Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S$0.74
Net assets per Share as of December 31, 2013, as adjusted for the Share Split,
Consolidation and the issue of the Offering Shares and the Cornerstone Shares
(after deducting underwriting and placement commission and other estimated
expenses payable by us) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S$0.81
Dilution in net assets per Share to new investors . . . . . . . . . . . . . . . . . . . . . . . . . . . S$0.34
Dilution in net assets per Share to new investors (%). . . . . . . . . . . . . . . . . . . . . . . . 29.6%
The following table sets forth the total number of Shares acquired by our Directors and Substantial
Shareholders and their associates during the period of three years prior to the date of lodgment
of this Prospectus, the total consideration paid by them and the average price (effective cash cost)
per Share to them. The following table also sets out the total number of Shares acquired by our
investors pursuant to the Offering, the total consideration paid and the average price (effective
cash cost) per Share to them.
No. of
Shares
Acquired Total Consideration
Average Price
(Effective Cash
Cost) per Share
Substantial Shareholders and
their Associates
PCL
Conversion of RCPS . . . . . . . . . . 26,986,419
(1)

(1)(2)
US$4.00
(or approximately
S$5.08)
(1)(2)
Purchase of Shares from Eternal
Fame International Limited in
December 2013
(3)
. . . . . . . . . . 3,517,723
(1)
US$12,312,030.50
(or approximately
S$15,636,278.74)
(1)
US$3.50
(or approximately
S$4.45)
(1)
66
No. of
Shares
Acquired Total Consideration
Average Price
(Effective Cash
Cost) per Share
Purchase of Shares from an ex-
Shareholder, Singa Star Pte
Ltd, in February 2014. . . . . . . . 6,150,000
(1)
US$49,968,750.00
(or approximately
S$63,460,312.50)
(1)
US$8.125
(or approximately
S$10.32)
(1)
Eternal Fame International
Limited
(3)
. . . . . . . . . . . . . . . . .
(1)
Purchase of Shares from an ex-
Shareholder, Lim Bok Kee, in
March 2011 . . . . . . . . . . . . . . . 50,000
(1)
S$141,538.70
(1)
S$2.83
(1)
Purchase of Shares from an ex-
Shareholder, Lee Miu Kim, in
September 2011. . . . . . . . . . . . 20,000
(1)
S$56,376.48
(1)
S$2.82
(1)
Purchase of Shares from an
ex-Shareholder, Tang Ying
Kee, in March 2012 . . . . . . . . . 250,000
(1)
S$736,323.73
(1)
S$2.95
(1)
Conversion of RCPS . . . . . . . . . . 2,239,723
(1)

(1)(2)
US$4.00
(or approximately
S$5.08)
(1)(2)
Lightwell Shipping Inc.
Conversion of RCPS. . . . . . . . . . 7,961,286
(1)

(1)(2)
US$4.00
(or approximately
S$5.08)
(1)(2)
Directors
Seow Kang Hoe, Gerald
Conversion of RCPS . . . . . . . . . . 58,539
(1)

(1)(2)
US$4.00
(or approximately
S$5.08)
(1)(2)
Purchase of Shares from PCL
(4)
. 500,000
(1)
US$1,750,000
(or approximately
S$2,222,500)
(1)
US$3.50
(or approximately
S$4.45)
(1)
Wu Long Peng
Conversion of RCPS . . . . . . . . . . 58,539
(1)

(1)(2)
US$4.00
(or approximately
S$5.08)
(1)(2)
Purchase of Shares from PCL
(4)
. 375,000
(1)
US$1,312,500
(or approximately
S$1,666,875)
(1)
US$3.50
(or approximately
S$4.45)
(1)
Teo Joo Kim
Conversion of RCPS . . . . . . . . . . 58,539
(1)

(1)(2)
US$4.00
(or approximately
S$5.08)
(1)(2)
Purchase of Shares from PCL
(4)
. 500,000
(1)
US$1,750,000
(or approximately
S$2,222,500)
(1)
US$3.50
(or approximately
S$4.45)
(1)
67
No. of
Shares
Acquired Total Consideration
Average Price
(Effective Cash
Cost) per Share
New Investors pursuant to the
Offering and the issue of the
Cornerstone Shares . . . . . . . . 337,625,000 S$388,268,750 S$1.15
Notes:
(1) Prior to the Share Split and Consolidation.
(2) No consideration was paid as the Shares were issued pursuant to the conversion of our RCPS (as described in
Share Capital) at the ratio of one Share for each RCPS which was in turn issued at an issue price of US$4.00 (or
approximately S$5.08) each.
(3) Eternal Fame International Limited is a subsidiary of KSL and the Shares held by Eternal Fame International Limited
were transferred to PCL in December 2013.
(4) Pursuant to the exercise of options granted by PCL.
The foregoing table and calculations assume no exercise of the Over-allotment Option.
In addition, in December 2013 and March 2014, PCL has agreed to sell, and KSL has agreed to
purchase, 150,286,642 Shares (or such equivalent number of Shares after adjusting for any
subsequent bonus issue, consolidation or subdivision of Shares, including the Share Split and
Consolidation), less (a) any Shares that may be sold by PCL pursuant to the exercise of the
Over-allotment Option, and (b) any of the 2,112,500 Shares (or such equivalent number of Shares
after adjusting for any subsequent bonus issue, consolidation or subdivision of Shares, including
the Share Split and Consolidation) which are held by certain of KSLs group employees, and which
are not transferred to PCL (pursuant to the exercise of the right of PCL to have any of such Shares
transferred itself or to its order) prior to completion, in other words, up to 1,127,149,815 Shares
(after adjusting for the Share Split and Consolidation). The transfer is to be completed as soon as
practicable after the Listing Date. KSL has made an application to the Securities Industry Council
for a confirmation, and the Securities Industry Council has confirmed, that KSL will not be required
to make a mandatory general offer for our Company under Rule 14 of the Singapore Code on
Take-overs and Mergers as a result of KSLs acquisition of such Shares. In addition, we have
made an application to the MPA for its written approval for KSLs acquisition of our Shares which
are held by PCL, which acquisition is conditional upon, amongst others, the written approval of the
MPA. As at the Latest Practicable Date, we have not received the MPAs written approval for such
acquisition.
The transfer is intended to streamline the activities of the PCL group to allow it to focus on its
operating activities, including ship management, owning and operating bulk carriers, container
feeder vessels, tankers, gas carriers and liner/breakbulk vessels. The PCL group, helmed by PCL
as the intermediate holding company having strategic management oversight, is the KSL Groups
shipping arm whose primary focus is on the following shipping segments: dry bulk, tanker and
break-bulk liner shipping activities. In 2006, our Company was incorporated as a wholly-owned
subsidiary of PCL to diversify into the offshore marine support services business. As our Company
will be managed and operated separately and distinctly from the PCL group after our Listing, PCL
would cease to have strategic management oversight over our Company which will then be a
quoted investment asset within the KSL Group. KSL is the ultimate holding company and holds all
of the KSL Groups key listed investments.
The consideration for the transfer was based on the net tangible asset value of the sale shares,
computed on the basis of the audited accounts of our Company for the year ended December 31,
2013.
68
EXCHANGE RATES AND EXCHANGE CONTROLS
Exchange Rates
The following table sets forth, for the periods indicated, the average, high, low and period end
exchange rates between the Singapore dollars and the U.S. dollar, as quoted by Bloomberg L.P.
The exchange rate as of the Latest Practicable Date, as quoted by Bloomberg L.P., was S$1.27
per US$1.00. No representation is made that the Singapore dollar amounts actually represent
such U.S. dollar amounts or could have been or could be converted into U.S. dollars at the rate
indicated, any particular rate or at all.
Average
(1)
High Low
Period
End
Year/Month/Period (Singapore dollar per U.S. dollar)
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 1.32 1.20 1.30
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 1.30 1.22 1.22
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 1.28 1.22 1.26
September 2013 . . . . . . . . . . . . . . . . . . . . . . 1.26 1.28 1.25 1.26
October 2013 . . . . . . . . . . . . . . . . . . . . . . . . 1.24 1.25 1.24 1.24
November 2013 . . . . . . . . . . . . . . . . . . . . . . 1.25 1.26 1.24 1.26
December 2013 . . . . . . . . . . . . . . . . . . . . . . 1.26 1.27 1.25 1.26
January 2014 . . . . . . . . . . . . . . . . . . . . . . . . 1.27 1.28 1.26 1.28
February 2014 . . . . . . . . . . . . . . . . . . . . . . . 1.27 1.28 1.26 1.27
March 2014 (through to March 25, 2014). . . 1.27 1.28 1.26 1.27
Source: Bloomberg L.P. We have included the exchange rates quoted above in its proper form and context in this
Prospectus. Bloomberg L.P. has not provided its consent, for the purposes of Section 249 of the Securities and Futures
Act, to the inclusion of the exchange rates quoted above in this Prospectus, and is thereby not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. While we, the Over-allotment Option Provider and the Joint
Issue Managers, Bookrunners and Underwriters have taken reasonable actions to ensure that the above exchange rates
have been reproduced in its proper form and context, neither we, the Over-allotment Option Provider, the Joint Issue
Managers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information or
verified the accuracy of the contents of the relevant information.
Note:
(1) The yearly/periodic average rate is the average of the exchange rate on the last business day of each month during
that year/period. The monthly average rate is the average of the exchange rate on each day during that month.
Exchange Controls
As at the date of this Prospectus, no exchange control restrictions are in effect in Singapore.
However, exchange control regulations may exist in certain jurisdictions in which we do business,
as further described below.
69
Indonesia
(a) Transfer of Funds
Transfer of funds in the form of cash dividends, loans or advances is not prohibited under
Law Number 3 Year 2011 concerning the Transfer of Funds. Based on Law Number 8 Year
2010 concerning the Prevention and Eradication of Money Laundering (the Money
Laundering Law), financial service providers must report to the Financial Transaction
Reports and Analysis Centre (Pusat Pelaporan dan Analisis Transaksi Keuangan or the
PPATK) if there is a:
(i) suspicious transaction;
(ii) transaction of at least Rp. 500,000,000 (five hundred million rupiah) or equivalent in
other currencies in one day; and/or
(iii) transfer of funds from and to Indonesia.
Although it is not the obligation of a company to file a report as required by PPATK above,
financial service providers may impute certain requirements to the company when
transferring funds using their service in order to comply with the Money Laundering Law.
(b) Exchange Controls
The foreign exchange system in Indonesia is based on a free floating exchange rate system
in which the exchange rate is solely determined by the market. Indonesian residents are free
to exchange currency in the market. A resident is principally free to transfer its funds in
foreign currency to another country.
Article 8 paragraph (3) of the Investment Law (as defined in Government Regulations
Indonesia) states that investors are entitled to transfer and repatriate, in foreign currency,
among others:
(i) capital;
(ii) profit, bank interest, dividend and other earnings;
(iii) funds needed for:
(1) purchasing raw and complementary materials, semi-finished goods and finished
goods; or
(2) compensating capital goods in order to maintain investment sustainability;
(iv) extra funds needed for investment financing;
(v) funds for the repayment of loans;
(vi) royalty or payable fees;
(vii) individual income of a foreign employee in investment companies;
(viii) investment sales or liquidation revenue;
(ix) compensation against loss;
70
(x) compensation against acquisition;
(xi) payments made for technical assistance purposes, fees payable for technical and
management services, payments made under the terms of project contracts and
payments of intellectual property rights; and
(xii) sales of assets to any designated parties in accordance to prevailing laws and
regulations.
According to the above, repatriation of capital and the remittance of profits in foreign
currency by a company is allowed by the Investment Law.
Based on the Regulation of Bank Indonesia Number 13/15/PBI/2011 concerning the
Monitoring of Non-Bank Institutions Foreign Exchange Activities, which was amended by
Regulation of Bank Indonesia Number 14/4/PBI/2012 and also based on Circular of Bank
Indonesia Number 14/24/DSM to all non-bank institutions in Indonesia, PMA Companies (as
defined in Government Regulations Indonesia Foreign Shareholdings) shall submit a
monthly Foreign Exchange Activity (Lalu Lintas Devisa) report to Bank Indonesia (the
Indonesian central bank).
Moreover, based on the Regulation of Bank Indonesia Number 7/14/PBI/2005 concerning
Restrictions on Rupiah Transactions and Foreign Currency Lending by Bank, remittance of
Rupiah through an Indonesian bank to a foreigners (or a joint account between a foreigner
and a non-foreigner) overseas account is prohibited. Bank Indonesia also has restrictions on
carrying Rupiah out of and into Indonesian customs area. According to Regulation of Bank
Indonesia Number 4/8/PBI/2002, carrying Rupiah amounting to Rp. 100,000,000 (one
hundred million Rupiah) or more out of Indonesian customs area can only be done after
obtaining approval from Bank Indonesia. On the other hand, carrying Rupiah amounting to
Rp. 100,000,000 (one hundred million rupiah) into Indonesian customs area shall be subject
to verification of its authenticity by the Customs and Excise official on arrival.
Malaysia
The applicable foreign exchange laws and regulations in Malaysia are administered by Bank
Negara Malaysia (BNM) pursuant to the FSA. BNM is vested with the powers to enforce the
provisions of the FSA and to grant permissions and consents on transactions which require prior
approval under the FSA. BNM has also been given the power under sections 214(2), 214(5),
214(6) and 261 of the FSA to issue notices which sets out transactions that are prohibited under
the FSA but may be allowed with prior approval of BNM.
The following laws and regulations in relation to foreign exchange laws and regulations will be
applicable to persons who are deemed non-residents of Malaysia:
(a) Repatriation of funds
A non-resident is allowed to repatriate funds from Malaysia, including any income earned or
proceeds from divestments of ringgit assets, provided that the repatriation is made in a
foreign currency. However, the FSA states that written approval of BNM is required if a
person undertakes or engages in any transaction in relation to the importing into, or exporting
out of Malaysia, of any foreign currency.
71
(b) Borrowing
Borrowing in Malaysian ringgit
Non-residents other than financial institutions are allowed to obtain ringgit financing from:
(i) licensed onshore banks (excluding licensed international Islamic banks) only for any
amount to finance real sector activities in Malaysia, the settlement for the purchase of
goods or services with a resident, or the purchase of residential and commercial
properties in Malaysia except for the purchase of land;
(ii) resident stockbroking corporation and licensed onshore banks with stockbroking
licences for margin financing;
(iii) licensed insurer or a licensed takaful operator up to the attained cash surrender value
of any life insurance policy or family takaful certificate purchased by the non-resident;
(iv) resident companies and individuals for any amount to finance real sector activities in
Malaysia;
(v) individuals who are immediate family members for any amount and purpose; and
(vi) employers in Malaysia for any amount pursuant to the terms and conditions of the
service and for use in Malaysia.
Borrowing in foreign currency
Non-residents are free to obtain foreign currency financing in any amount from licensed
onshore banks. Proceeds of the borrowing can be utilised in or outside Malaysia.
Non-residents are also allowed to issue foreign-currency denominated sukuk/bonds in
Malaysia for use in or outside Malaysia.
Mexico
In Mexico, there are no restrictions for the remittance or repatriation of profits, dividends, interest
payments, capital or any other service payments. In addition, there are no exchange controls in
Mexico on any inward or outward investments. Foreign currencies may be bought and sold freely
and there are no restrictions on the maintenance of foreign currency bank accounts in Mexico by
companies.
Non-residents of Mexico are allowed to freely repatriate their investments in the country and there
are no exchange control limitations on remittances in foreign currency for the repatriation of
capital investments and repayments of intercompany loans or for remittance of dividends,
intercompany interest or branch profits. However, it should be noted that according to Article 21
of the General Corporation Law of Mexico, all companies are required to set aside from their
profits a legal reserve fund of at least 5.0% of their yearly earnings until an amount equal to 20.0%
of the capital stock of the company is reached.
The Mexican financial system allows and regulates the participation of foreigners in the capital of
the companies. The limit of foreign participation for charter companies is 49.0% However, Mexico
has entered into commercial treaties with many countries with special provisions allowing a higher
percentage of foreign participation. For example, the North American Free Trade Agreement
establishes conditions for 100.0% foreign investment participation in financial leasing, factoring,
and special purpose financial companies.
72
Mexico has also entered into an agreement with the Government of the United States and the
Government of the Republic of Singapore on the promotion and reciprocal protection of
investments, establishing that all money transfers related to an investment of an investor of the
other contracting party shall be made freely and without delay into and out of its area. Money
transfers shall be made in a freely usable currency at the market rate of exchange prevailing on
the date of transfer. This agreement does not allow a higher percentage of foreign participation.
73
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial data should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations and
our audited consolidated financial statements for the years ended December 31, 2011, 2012 and
2013 and the related notes thereto, all of which are included elsewhere in this Prospectus.
Selected consolidated statements of comprehensive income
Year ended December 31,
2011 2012 2013
(US$000) (US$000) (US$000)
(audited) (audited) (audited)
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,950 242,966 237,263
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (185,542) (181,892) (164,872)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,408 61,074 72,391
Other operating income . . . . . . . . . . . . . . . . . . . . . 17,721 40,447 50,379
Distribution costs . . . . . . . . . . . . . . . . . . . . . . . . . . (1,369) (1,222) (1,613)
General and administrative expenses . . . . . . . . . . (23,761) (29,047) (31,686)
Other operating expenses . . . . . . . . . . . . . . . . . . . (6,522)
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,451) (13,163) (12,963)
Share of joint ventures results . . . . . . . . . . . . . . . (5,065) (3,629) 850
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . 25,961 54,460 77,358
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 (940) (3,987)
Net profit for the year, representing total
comprehensive income attributable to
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,218 53,520 73,371
Earnings per share (cents per share)
Basic
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18 4.46 6.02
Diluted
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18 4.33 4.95
Adjusted
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.70 3.40 4.03
Notes:
(1) For comparative purposes, basic earnings per share have been computed based on the weighted average number
of Shares in the pre-Offering share capital of our Company, being 1,201,125,000 Shares, 1,201,125,000 Shares and
1,218,077,000 Shares (after the Share Split and Consolidation) in each of the years ended December 31, 2011,
2012 and 2013, respectively.
(2) For comparative purposes, diluted earnings per share have been computed based on the weighted average number
of Shares in the pre-Offering share capital of our Company, being 1,201,125,000 Shares, 1,236,570,000 Shares and
1,482,375,000 Shares (after the Share Split and Consolidation) in each of the years ended December 31, 2011,
2012 and 2013, respectively.
(3) For comparative purposes, adjusted earnings per share have been computed based on the weighted average
number of Shares in the post-Offering share capital of our Company, being 1,538,750,000 Shares, 1,574,195,000
Shares and 1,820,000,000 Shares (after the Share Split and Consolidation) following the completion of the Offering
and the issue of the Cornerstone Shares in each of the years ended December 31, 2011, 2012 and 2013,
respectively.
74
Selected statements of financial position
As at December 31,
2011 2012 2013
(US$000) (US$000) (US$000)
(audited) (audited) (audited)
Assets
Non-current assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295,303 295,303 295,303
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734,181 768,741 1,037,610
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 602 327 251
Loans to joint ventures . . . . . . . . . . . . . . . . . . . . . . 191,197
Interest in joint ventures . . . . . . . . . . . . . . . . . . . . . 5,384 8,484 20,072
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . 123
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,235 8,593 8,847
1,045,828 1,081,448 1,553,280
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,905 5,979 1,265
Receivables and other current assets. . . . . . . . . . . . 65,298 63,849 67,845
Amounts owing from joint ventures and fellow
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,822 208,084 90,170
Loans to joint ventures . . . . . . . . . . . . . . . . . . . . . . 17,482 22,656 26,089
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,941 5,937
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . 498 517 10,552
257,946 307,022 195,921
Fixed assets classified as held-for-sale . . . . . . . . . . 10,677 24,320
257,946 317,699 220,241
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,303,774 1,399,147 1,773,521
Equity and liabilities
Equity attributable to shareholders
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380,975 380,975 530,975
Accumulated profits . . . . . . . . . . . . . . . . . . . . . . . . . 213,049 266,569 333,022
Other reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 14,970 298
594,322 662,514 864,295
Non-current liabilities
Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 300,000
Redeemable convertible preference shares . . . . . . . 135,328
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . 94 178 166
94 435,506 300,166
Current liabilities
Payables and accruals. . . . . . . . . . . . . . . . . . . . . . . 71,396 50,336 62,089
Advances received from customers . . . . . . . . . . . . . 12,778
Amounts owing to joint ventures and fellow
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,698 23,850 23,367
Amounts owing to holding companies. . . . . . . . . . . . 182 1,268 649
Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,590 225,325 507,426
Provision for taxation . . . . . . . . . . . . . . . . . . . . . . . . 1,492 348 2,751
709,358 301,127 609,060
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 709,452 736,633 909,226
Net current (liabilities)/assets . . . . . . . . . . . . . . . . (451,412) 16,572 (388,819)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594,322 662,514 864,295
Total equity and liabilities . . . . . . . . . . . . . . . . . . . 1,303,774 1,399,147 1,773,521
75
Selected consolidated statements of cash flow
Year ended December 31,
2011 2012 2013
(US$000) (US$000) (US$000)
(audited) (audited) (audited)
Net cash generated from operating activities . . . . 85,877 65,676 135,217
Net cash (used in) investing activities . . . . . . . . . . (264,612) (128,756) (405,056)
Net cash generated from financing activities . . . . . 176,559 63,099 279,874
Net (decrease)/increase in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . (2,176) 19 10,035
Cash and cash equivalents at beginning
of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,674 498 517
Cash and cash equivalents at end of year . . . . . . . . 498 517 10,552
76
SELECTED PRO FORMA FINANCIAL INFORMATION
The following selected pro forma financial data should be read in conjunction with the report from
the Independent Auditors in relation to the unaudited pro forma consolidated financial information
of our Group for the year ended December 31, 2013 and the related notes thereto (together, the
Pro Forma Financial Statements), included in Appendix I in this Prospectus.
Our Group had entered into certain acquisitions and disposals of assets during the period
commencing on January 1, 2013 and ending on the date of registration of this Prospectus with the
MAS. The relevant acquisitions and disposals are disclosed in Note 4 to the Pro Forma Financial
Statements.
To illustrate the effect of such acquisitions and disposals on the audited financial statements of our
Group for the year ended December 31, 2013, the Pro Forma Financial Statements have been
prepared, on the basis of the assumptions set out in Note 2 to the Pro Forma Financial
Statements, to illustrate what:
(i) the financial results of our Group for the year ended December 31, 2013 would have been
if the significant events discussed in Note 4 to the Pro Forma Financial Statements had taken
place on January 1, 2013;
(ii) the financial position of our Group as at December 31, 2013 would have been if the
significant events discussed in Note 4 to the Pro Forma Financial Statements had taken
place as at the relevant dates presented; and
(iii) the cash flows of our Group for the year ended December 31, 2013 would have been if the
significant events discussed in Note 4 to the Pro Forma Financial Statements had taken
place on January 1, 2013,
as set out in the following tables.
The Pro Forma Financial Statements have been prepared for illustrative purposes only and
because of its nature, may not give a true and fair picture of our actual financial position and
results and is not necessarily indicative of the results of the operations or the related effects on
the financial position that would have been attained had the above mentioned existed earlier.
77
Selected Pro Forma Consolidated Statement of Comprehensive Income
Year ended
December 31,
2013
(US$000)
(unaudited)
Revenue 225,748
Cost of sales (159,095)
Gross profit 66,653
Other operating income 53,833
Distribution costs (1,613)
General and administrative expenses (31,686)
Finance costs (12,963)
Share of joint ventures results 4,111
Profit before taxation 78,335
Taxation (3,987)
Net profit for the year, representing total comprehensive income attributable
to shareholders 74,348
78
Selected Pro Forma Consolidated Statement of Financial Position
As at
December 31,
2013
US$000
(unaudited)
Assets
Non-Current Assets
Goodwill 295,303
Fixed assets 1,071,060
Intangible assets 251
Loans to joint ventures 191,197
Interest in joint ventures 20,072
Prepayments 8,847
1,586,730
Current Assets
Consumables 1,265
Receivables and other current assets 67,845
Amounts owing from joint ventures and fellow subsidiaries 90,170
Loans to joint ventures 26,089
Cash and cash equivalents 10,552
195,921
Fixed assets classified as held-for-sale
195,921
Total Assets 1,782,651
Equity and Liabilities
Equity Attributable to Shareholders
Share capital 530,975
Accumulated profits 337,206
Other reserves 298
868,479
Non-Current Liabilities
Bank borrowings 300,000
Deferred tax liabilities 166
300,166
Current Liabilities
Payables and accruals 62,089
Advances received from customers 12,778
Amounts owing to joint ventures
and fellow subsidiaries 23,367
Amounts owing to holding companies 649
Bank borrowings 512,372
Provision for taxation 2,751
614,006
Total Liabilities 914,172
Net Current Liabilities (418,085)
Net Assets 868,479
Total Equity and Liabilities 1,782,651
79
Selected Pro Forma Consolidated Cash Flow Statement
Year ended
December 31,
2013
US$000
(unaudited)
Net cash generated from operating activities 121,477
Net cash used in investing activities (410,002)
Net cash generated from financing activities 298,560
Net increase in cash and cash equivalents 10,035
Cash and cash equivalents at beginning of year 517
Cash and cash equivalents at end of year 10,552
80
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of
operations in conjunction with the section entitled Selected Consolidated and Other Financial
Data and our consolidated financial statements and the related notes included elsewhere in this
Prospectus. This discussion contains forward-looking statements that are subject to numerous
risks and uncertainties, including, but not limited to, those described in the Risk Factors section
of this Prospectus. Actual results could differ materially from those contained in any forward-
looking statements.
Overview
We are the largest Asia-based international operator of offshore support vessels and one of the
top five globally, based on Infields data on the number of vessels operated by us and the other
major international providers of global support vessels, with a diversified fleet servicing offshore
oil and gas E&P activities. Our offshore support vessels perform anchor handling services, ocean
towage and installation, ocean transportation, heavy-lift and offshore accommodation services.
Our vessels also provide harbour towage and emergency response services.
As of December 31, 2013 and as of the Latest Practicable Date, we operated a combined fleet of
112 and 110 vessels, respectively, including 45 and 47 vessels, respectively, owned by our joint
ventures (of which, as of the Latest Practicable Date, one vessel is undergoing conversion into an
accommodation vessel and two vessels are chartered by a joint venture as a charterer on
long-term charters). This combined fleet comprises AHTS, AHTs, ocean-towing tugs, PSVs,
accommodation vessels, utility vessels and crane and deck barges. As of the Latest Practicable
Date, we have on order and scheduled for delivery 15 vessels, comprising two deck cargo barges,
two ASD harbour tugs, three DP2 accommodation vessels, three DP2 AHTS, two DP3 SSAVs and
three vessels which our joint ventures have on order. In addition, we have one vessel that is
undergoing conversion into an accommodation vessel. Please see Business Vessels to be
Delivered for further details.
Our fleet operates worldwide serving offshore oilfields in Asia, Africa and Latin America. We have
provided vessels and services for projects involving many of the worlds major oil companies, as
well as many large international offshore contractors, such as Saipem, Hyundai Heavy Industries,
Technip and SapuraClough Offshore.
We earn revenue primarily from time charters of our vessels. We also earn significant revenue
from lump-sum project contracts for which our vessels are deployed.
We manage and measure our business performance in four distinct operating segments which are
the Offshore Supply Vessels or OSV Segment, the Transportation and Installation or T&I
Segment, the Offshore Accommodation or OA Segment and the Harbour Services and Emergency
Response or HSER Segment.
Material Events After December 31, 2013
We and one of our joint ventures, GOSH, have chartered a total of eight vessels to OSA, six of
which have, in turn, been chartered by OSA to PEMEX, which is a Mexican state-owned petroleum
company involved in the oil and gas sector. Two persons who hold interests (which may either be
direct or indirect interests) in OSA also hold interests in two of the shareholders of GOSH (who
each have interest of 25% in GOSH). Save for the foregoing, there are no relationships between
the parties.
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As at the Latest Practicable Date, the administration of OSA has been placed under the control
of the Mexican government, in connection with the Mexican governments investigations of OSA
over alleged fraud arising from billings charged by OSA to PEMEX. Whilst the charters of two
vessels by OSA from our Group have expired, the six vessels chartered by OSA from GOSH
continue to be deployed on charter to PEMEX. Save for major decisions which require unanimous
agreement among us and our joint venture partners of GOSH, on a day-to-day basis, our Group
manages the commercial and technical operations of GOSH (including the chartering of vessels).
To the best of our knowledge, none of the vessels of our Group and GOSH are involved in the
fraud allegations. None of our Directors and Executive Officers are involved in the fraud
allegations.
As at the Latest Practicable Date, there was outstanding charter hire for the charter of the vessels
due from OSA to our Group and GOSH in the amounts of US$1.9 million and US$16.4 million
respectively.
The abovementioned amount owing to GOSH relates to invoices prior to the establishment of an
irrevocable trust arrangement with OSA and PEMEX on August 8, 2013, pursuant to which PEMEX
will pay all charter hire invoiced by OSA into an irrevocable trust for the benefit of GOSH and our
Company. Since the establishment of the trust, payments of such charter hire (arising from
invoices for the continuing deployment of the six vessels on charter to PEMEX) have been made
to the trust and subsequently distributed for, amongst others, payment of vessel operating
expenses, repayment of loan and interest owing by GOSH to our Company (which loan is further
described below) and payments to GOSH.
As our Group recognises our proportionate economic interests in GOSH and therefore accounts
for our proportionate share of the results of GOSH accordingly, in view of the uncertainties arising
from the state of affairs of OSA under the Mexican governments administration, we have made
an allowance of US$8.2 million for the year ended December 31, 2013 being our proportionate
share of GOSH relating to the US$16.4 million outstanding charter hire owing by OSA to GOSH.
Of the US$1.9 million outstanding charter hire due from OSA to our Group, we have made an
allowance of approximately US$0.5 million for the year ended December 31, 2013 being the
amount attributable to services and invoices pertaining to the said year, and we currently expect
to make an additional allowance of up to approximately US$1.4 million for the year ending
December 31, 2014 being the amount attributable to services and invoices rendered for the year.
Please also see Managements Discussion and Analysis of Financial Conditions and Results of
Operations Material Events After December 31, 2013 and Managements Discussion and
Analysis of Financial Conditions and Results of Operations Review of Operating Results Year
ended December 31, 2013 compared to year ended December 31, 2012.
Our Company has also granted a loan (of which the outstanding amount as at December 31, 2013
was US$109.8 million) to GOSH for the acquisition, modification and mobilisation of the six
vessels of GOSH which have been chartered to OSA. The loan was granted in view of the
unacceptable terms offered by the local banks in Mexico. There are no fixed repayment
instalments and the charter hire that is paid into the trust (referred to above) are paid back to our
Group and the net amount (after deducting commission, vessel operating expenses and taxes) is
applied against the loan. As security for the loan, we have share pledge agreements with the two
Mexican shareholders of GOSH (representing 50.0% interests in GOSH) and mortgages over the
six vessels owned by GOSH. Please see Summary Valuation for further details on the
valuation of the vessels owned by GOSH. To safeguard our interest, we have in March 2014
initiated legal actions to recover full repayment of the outstanding loan and interest payable to us,
including legal actions to enforce our rights under the share pledge agreements to require the sale
of the shares held by the two Mexican shareholders to such person as we may nominate whereby
the proceeds from such sale will be paid to us to reduce our loan to GOSH. No allowance was
made in this regard given that (a) we expect that the contracts with PEMEX will remain operational
until 2015, and the charter income from the contracts with PEMEX (which, when invoiced by OSA,
82
are payable to the trust and on the basis that such amounts are paid by PEMEX into the trust) is
sufficient to service GOSHs vessel operating expenses, as well as its obligations to service the
loan and current and future interest payable to us by GOSH; and (b) as security for the loan, we
have share pledge agreements with the two Mexican shareholders of GOSH (representing 50.0%
interests in GOSH) and mortgages over the six vessels owned by GOSH. We understand from our
legal advisers as to Mexico law, Basham, Ringe y Correa, S.C., that the mortgages over the six
vessels owned by GOSH are enforceable under Mexico law in accordance with their respective
terms and there is no reason to believe that there are currently any issues (including any issues
arising from the Mexican governments investigations of OSA over alleged fraud arising from
billings charged by OSA to PEMEX) that may give rise to prevent the enforcement of such
mortgages. Please refer to the section titled Risk Factors Risks Relating to Our Business and
Operations We, as well as our joint ventures, are exposed to the credit risks of our customers
and certain other third parties, and the non-performance or insolvency of these parties could
adversely affect our financial condition and results of operations for further details on the share
pledge agreements and mortgages.
Please also see Review of Operating Results Year ended December 31, 2013 compared to
year ended December 31, 2012 and Risk Factors Risks Relating to Our Business and
Operations We, as well as our joint ventures, are exposed to the credit risks of our customers
and certain other third parties, and the non-performance or insolvency of these parties could
adversely affect our financial condition and results of operations and Business Legal
Proceedings for further details.
Key Factors Affecting Our Results of Operations
Activity in offshore oil and gas E&P
The demand for our services depends on the level of activity in offshore oil and gas E&P. The level
of such activity has historically been volatile and the volatility is likely to continue to be so in the
future. The level of offshore E&P activity has been closely related to global oil and gas prices.
Prices peaked in the middle of 2008, after which they fell sharply. Oil and gas prices have since
late 2009 recovered from their lows. Future volatility in global oil and gas prices will likely affect
the level of E&P activity, which would in turn affect demand for our services.
Following the Deepwater Horizon incident in April 2010, there was a cessation of drilling activity
in the U.S. Gulf of Mexico due to oil spill cleanup efforts and a drilling moratorium. Although the
moratorium was lifted in October 2010, drilling activity in that region has been slow to recover and
has yet to return to pre-incident levels. It remains uncertain what impact the incident itself may
have on the regulation of offshore oil and gas E&P sector. Announced and anticipated changes in
laws and regulations regarding offshore oil and gas exploration and development activities, the
cost or availability of insurance, and decisions by customers, governmental agencies, or other
industry participants could further reduce demand for our services or increase our costs of
operations.
Trends within the offshore oil and gas E&P sector will also affect our results. In particular, we
believe that continued growth in deepwater oil E&P activity will be positive across our business
segments, as we have increasingly oriented our business towards deepwater activity and such
activity generally requires a wider range of offshore support services and more specialised
capabilities and vessels that can command better pricing over conventional assets. Deepwater oil
exploration activity requires sustained higher oil prices to encourage the substantial additional
investment required.
In addition, as our fleet can be deployed globally, we are able to pursue business opportunities in
regions where offshore oil and gas E&P activity is growing most rapidly, subject to any limitations
imposed by local laws and regulations.
83
Size and composition of our fleet
The number and types of vessels in our fleet are important factors that directly affect our results
of operations. In recent years, we have significantly increased our fleet size and the mix of vessels
has changed. As of December 31, 2013 and as of the Latest Practicable Date, POSH and its
subsidiaries owned 67 and 63 vessels, respectively, including three vessels which we have sold
to and chartered back from a joint venture on long-term charters (and on that basis, these vessels
are accounted for as vessels owned by POSH and its subsidiaries). These figures exclude vessels
owned by joint venture companies that are not consolidated in our financial statements. For further
details, see Business Overview and Business Vessels to be Delivered. The composition of
our fleet affects our results of operations, as market demand, day rates and operating expenses
may vary for vessels of different types, ages and specifications. Generally, demand and day rates
for newer and higher specification vessels will, in the absence of other relevant factors, be higher
than for older and lower specification vessels.
Terms of our contracts
We earn and recognise revenues primarily from time charter of our vessels to our customers
based upon daily rates of hire. We also recognise significant revenue from lump-sum project
contracts, and these are translated into time charter equivalent for revenue recognition purposes.
In our lump-sum contracts, which are generally for towage projects, we determine the deployment
of our vessels. To a lesser extent, we enter into bareboat charters.
Contracts on a time charter basis with our customers are on a fixed day rate basis. Revenue from
our contracts is generally driven by our day rates and the period over which our vessels are under
contract. Certain contracts provide for mobilisation and demobilisation fees to be paid. In such
instances, the fees are recognised over the period of the contracts which includes the mobilisation
and demobilisation days. As contracts on time charter basis with our customers are on a fixed day
rate basis, we have no ability to adjust rates in response to any increase in the costs of crewing,
maintenance, repairs, spare parts, consumables and compliance with any new rules and
regulations. Generally such costs are fairly consistent but may fluctuate due to events beyond our
control, and any substantial increase in such costs would adversely affect our profitability. The
potential for mismatch between costs and fixed day rates may be exacerbated by options given
to customers under some contracts to extend such contracts at the day rates applicable during the
initial contractual term. However, in the event that there is a change in the area of operation
according to the customers requirements, we can negotiate higher rates from the customer,
depending on market conditions.
Our order book
In many cases, we enter into charters and project contracts well in advance of the deployment of
the vessels, while such vessels are deployed elsewhere or under construction or renovation. The
extent to which we have contracted in advance to fill our vessel order book can have both
positive and negative effects on our results of operations. For example, if, under a charter or other
contract reached in advance for a particular vessel, we are able to lock in pricing that is higher
than the rates prevailing at the time the vessel is actually deployed, the impact will be positive.
However, if prices subsequently increase, we will have forgone the opportunity to earn higher
rates.
The extent to which we seek to fill out our order book in advance will depend on our view of pricing
trends in our industry as well as the prevailing opportunities for long-term charters and project
contracts. We regularly assess market conditions and trends to strike a balance between the
stability in revenue afforded by a more extensive order book and the opportunity to take advantage
of possible future positive pricing trends.
84
For more information on our order book by segment, see Business Business Segments.
Vessel utilisation ratios
The vessel utilisation ratio is the number of days in a given period during which a wholly-owned
vessel generates revenue compared to the total number of days in that period that such vessel
was available. Available days is defined as total calendar days or from the day when the vessel
is first delivered to us (in the case of a newbuilding or a newly acquired vessel) less days for
scheduled dry-docking or repairs.
The number of days that each of our vessels is utilised, as well as the operating day rates payable
under our contracts, are largely dependent upon market supply and demand. Our available days
may be lower during periods when our vessels are off-hire or out of service (due to, for example,
dry-docking, maintenance and repair or inability to procure a contract). Each of our vessels is
likely to be docked from time to time for surveys and repairs. When our vessels are docked, they
are not available for hire and, as a result, do not generate any revenue. Our vessels may also be
subject to accidents and incidents that may result in their not being available for hire and are
subject to a number of operating risks. The operation, maintenance, building, refurbishing,
upgrading and repair of our vessels will require substantial expenditure and may exceed estimates
that could adversely affect our vessel utilisation ratios.
Competition
Our performance is affected by competition in the markets where we operate. We operate in a
highly competitive industry and face numerous competitors in each of the geographical regions in
which we operate, ranging from global owners and operators of vessels that operate in many
regions to smaller local companies that typically concentrate their activities in one specific region.
Local competitors in each country in which we operate may have more domestic experience and
better relationships with customers than we do. In addition, certain countries may have regulations
or practices that may effectively require contracts to be awarded to local contractors or require
foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Major
offshore supply vessels operators are expanding rapidly in terms of both fleet size and quality. We
believe that the relatively young age and modern features of our vessels, our ability to manage our
vessels with lower operating costs, and our ability to provide reliable services provide us with
competitive advantages. However, oversupply of vessels in any particular segment of our
business may adversely affect our pricing and margins. Our profitability will depend to a large
degree on the aforementioned competitive factors and our ability to differentiate ourselves from
our competitors. See Appendix A Industry Overview for more information on other companies
operating in our industry.
Increase in environmental protection and related regulations
We are subject to environmental protection laws and regulations in the various jurisdictions that
we operate. Domestic and international regulators have established safety criteria and are
authorised to investigate vessel accidents and recommend improved safety standards. They also
regulate and enforce various aspects of vessel operations, including classification, certification,
routes, dry-docking intervals, crew requirements, tonnage requirements and restrictions, hull
requirements and vessel documentation. Government regulations, safety or equipment standards
relating to the age of vessels and new environmental requirements may require us to incur
significant capital expenditure for alterations or the addition of new equipment to our vessels. This
may, in turn, restrict the types of activities which our vessels may engage in. We anticipate that
increased environmental protection may place additional burdens on us and increase our
operating costs.
85
Access to capital and cost of financing
Our performance is affected by our access to capital, our unutilised credit facilities and the total
amount raised through other financing methods, as well as interest rate fluctuations and other
financing costs. We finance vessel acquisitions and constructions through bank borrowings,
equity capital and cash flow from our operating activities. Access to capital and cost of capital are
important to our performance, and future tightening of liquidity could negatively affect our
performance. As of December 31, 2013, our outstanding borrowings amounted to US$807.4
million. The weighted-average interest rate per year applicable to our bank borrowings was 1.9%
per annum for the year ended December 31, 2013. In addition, our access to capital and cost of
financing are affected by regulatory restrictions imposed from time.
Fleet Optimisation
Over the years, we have disposed of vessels as we re-profile and upgrade our fleet to meet
changing market demands. Our track record of having acquired vessels at competitive prices has
enabled us to recognise gains from disposals of various vessels. From 2007 to December 31,
2013, we recorded gains from disposal of vessels totalling US$90.0 million. For the years ended
December 31, 2011, 2012 and 2013, the gains arising from the disposals of our vessels amounted
to US$13.6 million, US$11.3 million and US$10.9 million, respectively.
Please also see Business Fleet Optimisation for further details.
Seasonality
Certain offshore markets are affected by seasonal weather conditions. For example, business in
the South China Sea is adversely affected by the northeast monsoon from November to March and
in the Indian Ocean by the southwest monsoon from July to September. The vessel utilisation
ratios of our vessels operating in the affected areas are generally at their lowest during the
monsoon season. Although our vessels are not currently deployed there, the North Sea is another
offshore market affected by seasonality, where winter weather conditions hinder operations.
Operations in any market may, however, be affected by unusually long or short offshore
construction seasons due to, among other things, abnormal weather conditions, as well as market
demand associated with increased development activities. Accordingly, the results of any given
period are not necessarily indicative of annual results or continuing trends, and may vary.
In recent periods, our revenue has not been subjected to significant seasonal variation.
Share of joint ventures results
The foregoing factors also contribute to the results of our joint ventures that operate vessels.
As of December 31, 2013 and as of the Latest Practicable Date, our jointly-controlled joint
ventures had 45 and 47 vessels, respectively, excluding three vessels which we have sold to and
chartered back from a joint venture on long term charters, three vessels which are deployed
outside our Group and including two vessels chartered by a joint venture as a charterer on
long-term charters (and on that basis, these vessels are accounted for as vessels owned by the
relevant joint venture).
As our joint ventures are accounted for under the equity method in our consolidated financial
statements, the impact of changes in their fleets and of the other factors described above flow to
our results through our proportionate share in the results of these entities.
86
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with SFRS. SFRS
requires that we adopt accounting policies and make estimates that, our Directors believe, are the
most appropriate under the circumstances for the purposes of giving a true and fair view of our
results and financial condition. In preparing our consolidated financial statements, we made
certain estimates and assumptions about future events based on our experience. The resulting
accounting estimates will, by definition, seldom equal the actual results. Consistent with the
accounting principle of matching expenses and revenue, it will be necessary to estimate or make
necessary provisions for certain expenses yet to be invoiced or revenues yet to be received.
These will be included as carrying amounts in the current assets and liabilities.
Below we describe certain of our critical accounting policies and estimates. For further details on
our critical accounting policies and estimates, see Note 2 to our consolidated financial statements.
Depreciation of vessels
Our Groups cost of vessels, less their estimated scrap value, is depreciated on a straight-line
basis over the estimated useful life. The useful lives and scrap values of the vessels are based
on estimations commonly applied in the shipping industry. Changes in market situation and
individual condition of the vessels might impact the economic useful life and the scrap value.
Accordingly, future depreciation charges could be subject to revision.
Fair value of financial instruments
Where the fair values of financial instruments recorded on the balance sheet cannot be derived
from active markets, they are determined using valuation techniques including the discounted
cash flow model. The inputs to these models are derived from observable market data where
possible, but where this is not feasible, a degree of judgement is required in establishing fair
values. The judgments include considerations of liquidity and model inputs regarding the future
financial performance of the investee, its risk profile, and economic assumptions regarding the
industry and geographical jurisdiction in which the investee operates. Changes in assumptions
about these factors could affect the reported fair value of financial instruments.
Impairment of loans and receivables
Our Group assesses at the end of each reporting period whether there is any objective evidence
that a financial asset is impaired. To determine whether there is objective evidence of impairment,
our Group considers factors such as the probability of insolvency or significant financial difficulties
of the debtor and default or significant delay in payments. Where there is objective evidence of
impairment, the amount and timing of future cash flow are estimated based on historical loss
experience for assets with similar credit risk characteristics.
Impairment of goodwill
Our Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the value in use of the cash-generating units to which the goodwill is allocated.
Estimating the value in use requires our Group to make an estimate of the expected future cash
flows from the cash generating units and also to choose suitable discount rates in order to
calculate the present value of those cash flows.
87
Certain Income Statement Items
Revenue
Revenue represents income derived from the charter hire of vessels, the provision of offshore
support and marine services (including transportation, towing, mooring and installation) and
services performed for oil spill and salvage operations.
The following table sets forth our revenue by business segment for the years indicated:
Year ended December 31,
2011 2012 2013
US$ in
millions %
US$ in
millions %
US$ in
millions %
(audited)
Offshore Supply Vessels . . . 85.3 35.4 91.0 37.4 120.3 50.7
Transportation and
Installation . . . . . . . . . . . . . . 103.5 43.0 100.1 41.2 65.1 27.4
Offshore Accommodation . . . 22.2 9.2 23.2 9.6 29.5 12.4
Harbour Services and
Emergency Response . . . . . 29.9 12.4 28.7 11.8 22.4 9.5
Total revenue . . . . . . . . . . . 240.9 100.0 243.0 100.0 237.3 100.0
(a) Offshore Supply Vessels Segment
Revenue from the OSV Segment is mainly derived from the deployment of a fleet of 8,000
to 16,000 BHP AHTS and 2,200 to 4,100 DWT PSVs to provide multi-role services such as
towing and positioning drilling rigs, and materials transportation. Revenue from the OSV
Segment accounted for 35.4%, 37.4% and 50.7% of total revenue for the years ended
December 31, 2011, 2012 and 2013, respectively.
(b) Transportation and Installation Segment
Revenue from the T&I Segment is mainly derived from the deployment of 12,000 to 16,300
BHP AHTs designed for ocean towing, transportation of FPSO and other large offshore
structures and installation of offshore structures in offshore oilfields. In addition, this segment
operates a fleet of 4,000 to 8,000 BHP AHTs in shallow waters, which are primarily engaged
in the support of shallow water pipelay and platform construction work. Revenue from the T&I
Segment accounted for 43.0%, 41.2% and 27.4% of total revenue for the years ended
December 31, 2011, 2012 and 2013, respectively.
(c) Offshore Accommodation Segment
Revenue from the OA Segment is mainly derived from the deployment of accommodation
vessels that provide accommodation, lifting, heli deck, catering, workshop and storage
facilities in offshore oilfields for offshore construction and/or maintenance operations.
Revenue from the OA Segment accounted for 9.2%, 9.6% and 12.4% of total revenue for the
years ended December 31, 2011, 2012 and 2013, respectively.
88
(d) Harbour Services and Emergency Response Segment
Revenue from HSER Segment is mainly derived from the deployment of a fleet of 3,200 to
5,000 BHP ASD harbour tugs and heavy lift crane barges with Safe Working Load (SWL)
capacities ranging from 60 tonnes to 1,500 tonnes to provide harbour towage operations and
heavy lift services. The HSER Segment also offers a comprehensive range of services,
equipment and personnel for salvage, rescue and oil spill response operations globally.
Revenue from the HSER Segment accounted for 12.4%, 11.8% and 9.5% of total revenue for
the years ended December 31, 2011, 2012 and 2013, respectively.
The following table sets forth our proforma revenue by geography, being the respective
geographic regions of our customers place of business (based on their business addresses) for
the years indicated:
Year ended December 31,
2011 2012 2013
US$ in
millions %
US$ in
millions %
US$ in
millions %
(audited)
Oceania
Australia . . . . . . . . . . . . . . 6.9 2.9 19.7 8.1 1.1 0.5
Pacific Islands. . . . . . . . . . 5.4 2.2 7.0 2.9 5.4 2.3
Asia Pacific
Singapore . . . . . . . . . . . . . 60.0 24.9 59.9 24.7 78.6 33.1
Thailand . . . . . . . . . . . . . . 16.0 6.6 16.5 6.8 10.7 4.5
Indonesia . . . . . . . . . . . . . 6.4 2.7 3.0 1.2 2.3 1.0
Vietnam. . . . . . . . . . . . . . . 10.5 4.3 6.2 2.5 19.1 8.0
Malaysia . . . . . . . . . . . . . . 15.4 6.4 27.4 11.3 43.9 18.5
China . . . . . . . . . . . . . . . . 2.4 1.0 3.6 1.5 3.3 1.4
Others . . . . . . . . . . . . . . . . 38.7 16.0 10.7 4.4 10.5 4.4
Americas
North America . . . . . . . . . . 5.7 2.4 2.0 0.8 n.m.
(1)
0.0
South America . . . . . . . . . 9.5 4.0 6.4 2.6 4.1 1.7
Middle East and West Asia . . 25.3 10.5 58.7 24.2 30.3 12.8
Africa
Congo . . . . . . . . . . . . . . . . 0.5 0.2 2.4 1.0 17.2 7.3
Others . . . . . . . . . . . . . . . . 5.2 2.2 n.m.
(2)
0.0 2.8 1.2
Europe . . . . . . . . . . . . . . . . . 33.0 13.7 19.4 8.0 7.9 3.3
Total revenue . . . . . . . . . . . 240.9 100.0 243.0
(3)
100.0
(3)
237.3
(3)
100.0
89
Notes:
(1) The amount was approximately US$32,000.
(2) The amount was approximately US$21,000.
(3) Figures may not add up due to rounding.
Such geographic regions represent the respective geographic regions of our customers place of
business (based on their business addresses). Accordingly, the geographic regions of our
customers place of business (based on their business addresses) in the table above is not
reflective of the locations where we operate. Our fleet operates worldwide serving offshore
oilfields in Asia, Africa and Latin America and we have a proven international operating track
record over many years. Please see Business Our Competitive Strengths Global reach with
a proven international operating track record for further details. Information on our proforma
revenue by geography does not form part of our audited consolidated financial statements for the
years ended December 31, 2011, 2012 and 2013 and the related notes thereto. Such disclosure
has been inserted for compliance only and will not be adopted for ongoing financial reporting.
Cost of sales
Cost of sales consists of project cost and commission, vessel operating expenses, docking
expenses, cost of chartered-in vessels and depreciation and amortisation charges.
The following table sets forth details of our cost of sales for the years indicated:
Year ended December 31,
2011 2012 2013
US$ in
millions %
US$ in
millions %
US$ in
millions %
(audited)
Project cost & commission. . 34.5 18.6 29.0 15.9 18.0 10.9
Vessel operating expenses . . 59.7 32.2 52.1 28.6 51.7 31.4
Docking expenses . . . . . . . . 3.1 1.7 6.9 3.8 3.4 2.0
Chartered-in vessels . . . . . . 53.3 28.7 57.6 31.7 55.3 33.6
Depreciation & Amortisation. 34.9 18.8 36.3 20.0 36.5 22.1
Total cost of sales . . . . . . . 185.5 100.0 181.9 100.0 164.9 100.0
Project costs are mainly costs directly related to specific projects such as rental of specialised
equipment, bunker and the cost of specialised personnel. Commission is paid to brokers for
sourcing the charters. Project costs and commission accounted for 18.6%, 15.9% and 10.9% of
total cost of sales for the years ended December 31, 2011, 2012 and 2013, respectively. Please
see Year ended December 31, 2013 compared to year ended December 31, 2012 Cost of
sales and Year ended December 31, 2012 compared to year ended December 31, 2011 Cost
of sales for further details on the decrease in project costs and commission as a percentage of
total cost of sales.
Vessel operating expenses are mainly recurring expenses related to the operation of vessels such
as crewing, consumables, repairs and maintenance, insurance and vessel management fee.
Vessel operating expenses accounted for 32.2%, 28.6% and 31.4% of total cost of sales for the
years ended December 31, 2011, 2012 and 2013, respectively.
90
Docking expenses for vessels accounted for 1.7%, 3.8% and 2.0% of total cost of sales for the
years ended December 31, 2011, 2012 and 2013, respectively.
Chartered-in vessel expense is charter hires for vessels from third parties and joint ventures.
Chartered-in vessel expense accounted for 28.7%, 31.7% and 33.6% of total cost of sales for the
years ended December 31, 2011, 2012 and 2013, respectively.
Depreciation and amortisation charges are depreciation charges for vessels and amortisation of
capitalised docking cost. Depreciation and amortisation charges accounted for 18.8%, 20.0% and
22.1% of total cost of sales for the years ended December 31, 2011, 2012 and 2013, respectively.
The following table sets forth our cost of sales by business segment for the years indicated:
Year ended December 31,
2011 2012 2013
US$ in
millions %
US$ in
millions %
US$ in
millions %
(audited)
Offshore Supply Vessels . . . 72.6 39.1 73.3 40.3 89.9 54.5
Transportation and
Installation . . . . . . . . . . . . . . 75.6 40.7 74.1 40.7 45.5 27.6
Offshore Accommodation . . . 15.5 8.4 16.2 8.9 15.5 9.4
Harbour Services and
Emergency Response . . . . . 21.8 11.8 18.3 10.1 14.0 8.5
Total cost of sales . . . . . . . 185.5 100.0 181.9 100.0 164.9 100.0
Gross Profit and Gross Profit Margin
The following table sets forth our gross profit by business segment for the years indicated:
Year ended December 31,
2011 2012 2013
US$ in
millions %
US$ in
millions %
US$ in
millions %
(audited)
Offshore Supply Vessels . . . 12.7 22.9 17.7 29.0 30.4 42.0
Transportation and
Installation . . . . . . . . . . . . . . 27.9 50.4 26.0 42.5 19.6 27.1
Offshore Accommodation . . . 6.7 12.1 7.0 11.5 14.0 19.3
Harbour Services and
Emergency Response . . . . . 8.1 14.6 10.4 17.0 8.4 11.6
Total gross profit . . . . . . . . 55.4 100.0 61.1 100.0 72.4 100.0
91
The following table sets forth our gross profit margin by business segment for the years indicated:
Year ended December 31,
2011 2012 2013
% % %
(audited)
Offshore Supply Vessels . . . . . . . . . . . . . . . . . . . . 14.9 19.5 25.3
Transportation and Installation. . . . . . . . . . . . . . . . 27.0 26.0 30.1
Offshore Accommodation . . . . . . . . . . . . . . . . . . . . 30.2 30.2 47.4
Harbour Services and Emergency Response . . . . 27.1 36.2 37.5
Overall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.0 25.1 30.5
The OSV Segment generated 22.9%, 29.0% and 42.0% of total gross profit for the years ended
December 31, 2011, 2012 and 2013, respectively. The gross profit margin of this segment
increased from 14.9% in the year ended December 31, 2011 to 19.5% in the year ended
December 31, 2012. For the year ended December 31, 2013 the OSV Segment increased its
gross profit margin from 19.5% in the previous year to 25.3%.
The T&I Segment generated 50.4%, 42.5% and 27.1% of total gross profit for the years ended
December 31, 2011, 2012 and 2013, respectively. The gross profit margin of this segment
decreased from 27.0% in the year ended December 31, 2011 to 26.0% in the year ended
December 31, 2012. For the year ended December 31, 2013, the T&I Segment increased its gross
profit margin from 26.0% in the previous year to 30.1%.
The OA Segment generated 12.1%, 11.5% and 19.3% of total gross profit for the years ended
December 31, 2011, 2012 and 2013, respectively. The gross profit margin of this segment
remained at 30.2% in the year ended December 31, 2011 as compared with the year ended
December 31, 2012. For the year ended December 31, 2013, the OA Segment increased its gross
profit margin from 30.2% in the previous year to 47.4%.
The HSER Segment generated 14.6%, 17.0% and 11.6% for the years ended December 31, 2011,
2012 and 2013, respectively. The gross profit margin of this segment increased from 27.1% in the
year ended December 31, 2011 to 36.2% in the year ended December 31, 2012. For the year
ended December 31, 2013, the HSER Segment increased its gross profit margin from 36.2% in the
previous year to 37.5%.
Our overall gross profit margin increased from 23.0% in the year ended December 31, 2011 to
25.1% and 30.5% in the years ended December 31, 2012 and 2013, respectively.
Other Operating Income
Other operating income comprises interest income, gain on disposal of fixed assets, foreign
exchange gain, fair value gain on foreign exchange contracts and sundry income. Gain on
disposal of vessels amounted to approximately US$13.6 million, US$11.3 million and US$10.9
million representing 76.8%, 28.0% and 21.6% of total other operating income for the years ended
December 31, 2011, 2012 and 2013, respectively. Other operating income also comprises net fair
value gains on foreign exchange contracts amounting to US$13.2 million and US$19.0 million
representing 32.7% and 37.7% of total other operating income for the year ended December 31,
2012 and 2013, respectively.
92
Distribution Costs
Distribution costs mainly comprise telecommunications, travelling and sales and marketing
related expenses.
General and Administrative Expenses
Administrative expenses mainly consist of personnel expenses, office expenses, shared services
costs, allowance for doubtful debts and non-vessel related depreciation charges of fixed assets.
The following table sets forth details of our general and administrative expenses for the years
indicated:
Year ended December 31,
2011 2012 2013
US$ in
millions %
US$ in
millions %
US$ in
millions %
(audited)
Personnel expenses. . . . . . . 14.3 60.1 15.5 53.4 18.6 58.7
Office expenses . . . . . . . . . . 4.0 16.8 4.1 14.2 5.3 16.7
Shared services costs . . . . . 4.2 17.6 4.0 13.8 3.6 11.4
Allowance for doubtful
debts . . . . . . . . . . . . . . . . . . 1.0 4.2 4.9 16.9 3.8 11.9
Depreciation . . . . . . . . . . . . . 0.3 1.3 0.5 1.7 0.4 1.3
Total general and
administrative expenses . . 23.8 100.0 29.0 100.0 31.7 100.0
Personnel expenses include mainly directors remuneration, administrative staff salaries and
benefits amounting to US$14.3 million, US$15.5 million and US$18.6 million representing 60.1%,
53.4% and 58.7% of total general and administrative expenses for the years ended December 31,
2011, 2012 and 2013, respectively.
Office expenses include mainly office rental and utilities amounting to US$4.0 million, US$4.1
million and US$5.3 million representing 16.8%, 14.2% and 16.7% of total general and
administrative expenses for the years ended December 31, 2011, 2012 and 2013, respectively.
Shared services costs are mainly shared human resources, internal audit, information technology,
legal and treasury services amounting to US$4.2 million, US$4.0 million and US$3.6 million
representing 17.6%, 13.8% and 11.4% of total general and administrative expenses for the years
ended December 31, 2011, 2012 and 2013, respectively. Please refer to the Interested Person
Transactions and Potential Conflicts of Interest section of this Prospectus for further details.
Other Operating Expenses
Other operating expenses mainly comprise foreign exchange losses.
Finance Costs
Finance costs mainly comprise interest expense on bank borrowings.
93
Share of Joint Ventures Results
Share of joint ventures results comprises share of results from our joint venture entities. In the
year ended December 31, 2013, we reported our share of joint ventures results totalling US$9.1
million. However, developments in Mexico necessitated the allowance of US$8.2 million pertaining
to trade debts that may be doubtful. Consequently, net of debt allowance, our share of joint
ventures results is thus US$0.9 million for the year ended December 31, 2013.
Please refer to Material Events After December 31, 2013 and Key Factors Affecting Our
Results of Operations Share of joint ventures results above for further details.
Taxation
The statutory corporate income tax rate in Singapore is 17%. However, income derived from the
charter hire of vessels stationed in waters outside of Singapore is exempt from Singapore income
tax, although other income is not. In addition, payment to us from certain other jurisdictions may
be subject to withholding or other taxes. Please refer to the Taxation section of this Prospectus
for further details.
Review of Operating Results
Year ended December 31, 2013 compared to year ended December 31, 2012
Revenue
Revenue declined by US$5.7 million or 2.3% from US$243.0 million in the year ended December
31, 2012 to US$237.3 million in the year ended December 31, 2013 mainly due to a decrease in
revenue in the T&I and HSER Segments and partially offset by an increase in revenue from the
OSV and OA Segments. Changes in charter and utilisation rates are driven by market factors
(namely, global supply and demand for vessels). The table below provides segment-wise revenue
information and explanations for the principal reasons for the changes in the various segments:
Revenue
Year ended
December 31,
Percentage
change 2012 2013 Change Explanation
US$ in millions
OSV. . . . . . . 91.0 120.3 29.3 32.2% Increase in charter rates and utilisation
(US$13.3 million) and the addition of
seven new vessels (US$14.9 million)
T&I. . . . . . . . 100.1 65.1 (35.0) (34.9)% Sale of five vessels to our joint venture,
POSH Terasea Pte. Ltd. (US$28.5
million) and lower charter rates and
utilisation (US$7.1 million)
OA. . . . . . . . 23.2 29.5 6.3 27.2% Higher charter rates offset in part by
lower utilisation
HSER . . . . . 28.7 22.4 (6.3) (22.0)% Decrease in utilisation offset in part by
increase in average charter rates for
harbour tugs (US$3.6 million) and
income from salvage operations
(US$0.7 million)
Total
Revenue . . . 243.0 237.3 (5.7) (2.3)%
94
Cost of sales
Costs of sales decreased by US$17.0 million or 9.3% from US$181.9 million for the year ended
December 31, 2012 to US$164.9 million for the year ended December 31, 2013 primarily due to
lower project cost, commission and docking expenses. The lower project cost and commission
was principally due to reduced project activities, principally in the T&I Segment, in this period. The
reduced project activities in the T&I Segment resulted from the sale of five vessels to our joint
venture, POSH Terasea Pte. Ltd.
Gross profit and gross profit margin
Lower cost of sales (as explained above) more than offset the decline in revenue (as explained
in the immediately preceding table) and resulted in increased gross profits and overall gross profit
margins. For the year ended December 31, 2013, gross profit increased by US$11.3 million to
US$72.4 million (when compared against the same period last year of US$61.1 million). Gross
profit margin increased to 30.5% from 25.1% in the same period last year.
The increased gross profit margins are mainly attributable to the OA and the OSV Segments, due
to the higher average charter rates achieved, as well as the decline in cost of sales, achieved as
described above.
Other operating income
Other operating income increased by US$10.0 million or 24.8% from US$40.4 million for the year
ended December 31, 2012 to US$50.4 million for the year ended December 31, 2013 mainly due
to an increase in net fair value gains on foreign exchange contracts of US$5.9 million and an
increase in interest income of US$3.5 million.
Distribution costs
Distribution costs increased by US$0.4 million or 33.3% from US$1.2 million for the year ended
December 31, 2012 to US$1.6 million for the year ended December 31, 2013.
General and administrative expenses
Administrative expenses increased by US$2.7 million or 9.3% from US$29.0 million for the year
ended December 31, 2012 to US$31.7 million for the year ended December 31, 2013 mainly due
to personnel expenses and office expenses.
Other operating expenses
There were no other operating expenses for the year ended December 31, 2013.
Finance costs
Cost of borrowings, at 1.9%, for the year ended December 31, 2013 versus 2.1% for the same
period last year, resulted in lower finance costs of US$13.0 million, a decrease of US$0.2 million
from US$13.2 million.
95
Share of joint ventures results
Share of joint ventures results improved from a loss of US$3.6 million for the year ended
December 31, 2012 to a profit of US$0.9 million for the year ended December 31, 2013. The loss
for the year ended December 31, 2012 was due to our share of losses in joint ventures which
included our share of the start-up cost of our Mexican joint venture, Servicios Martimos Gosh,
S.A.P.I. de C.V.. This was partially offset by our share of profits from other joint ventures. For the
year ended December 31, 2013, our share of joint ventures results would have been US$9.1
million. Operationally, in the year ended December 31, 2013, our Singapore, Mexico and
Indonesia joint ventures and a newly established joint venture, POSH Terasea Pte. Ltd., were
profitable. However, due to developments in Mexico, as detailed in Material Events After
December 31, 2013, and on a prudent basis, we made an allowance of US$8.2 million pertaining
to our share of debts in GOSH that may be doubtful. Consequently, our share of joint ventures
results for the year ended December 31, 2013 is US$0.9 million, an improvement against the
previous comparative year nonetheless.
Profit before taxation
For the foregoing reasons, profit before taxation increased by US$22.9 million or 42.0% from
US$54.5 million for the year ended December 31, 2012 to US$77.4 million for the year ended
December 31, 2013.
Taxation
Taxation increased by US$3.1 million or 344.4% from US$0.9 million for the year ended December
31, 2012 to US$4.0 million for the year ended December 31, 2013, primarily due to higher non-tax
exempt income and Singapore income tax payable in respect of higher interest income from
foreign countries.
Net profit
As a result of the foregoing, net profit increased by US$19.9 million or 37.2% from US$53.5 million
for the year ended December 31, 2012 to US$73.4 million for the year ended December 31, 2013.
96
Year ended December 31, 2012 compared to year ended December 31, 2011
Revenue
Revenue increased by US$2.1 million or 0.9% from US$240.9 million in the year ended December
31, 2011 to US$243.0 million in the year ended December 31, 2012 mainly due to the increase in
revenue from the OSV and OA Segments and partially offset by the decrease in revenue from the
T&I and HSER Segments. Changes in charter and utilisation rates are driven by market factors
(namely, global supply and demand for vessels). The table below provides segment-wise revenue
information and explanations for the principal reasons for the changes in the various segments:
Revenue
Year ended
December 31,
Percentage
change 2011 2012 Change Explanation
US$ in millions
OSV . . . . . . . 85.3 91.0 5.7 6.7% Increase in charter rates and utilisation for
AHTS vessels (US$9.3 million) offset in part
by a decline in PSV charter rates and
utilisation (US$5.5 million)
T&I . . . . . . . . 103.5 100.1 (3.4) (3.3)% Lower charter rates and utilisation for AHT
vessels (US$4.4 million) and lower charter
rates and utilisation for towage (US$2.5
million) offset in part by higher charter rates
and utilisation for barges (US$1.9 million)
and higher revenue from chartered-in
vessels (due to an increase in chartered-in
vessels from 10 in the year ended
December 31, 2011 to 30 in the year ended
December 31, 2012) (US$1.6 million)
OA . . . . . . . . 22.2 23.2 1.0 4.5% Higher revenue from a chartered-in vessel
(whereas none was chartered-in during the
prior year) (US$0.8 million) and higher
charter rates and utilisation for
accommodation vessels (US$0.2 million)
HSER . . . . . . 29.9 28.7 (1.2) (4.0)% Lower revenue from chartered-in vessels
(due to a decrease in chartered-in vessels
from 21 in the year ended December 31,
2011 to five in the year ended December
31, 2012) (US$2.5 million) and lower
charter rates and utilisation for harbour tugs
(US$2.2 million) offset in part by an
increase in income from salvage operations
(US$2.8 million) and charter rates and
utilisation from heavy lift vessels (US$0.4
million)
Total
Revenue . . . . 240.9 243.0 2.1 0.9%
97
Cost of sales
Cost of sales decreased by US$3.6 million or 1.9% from US$185.5 million in the year ended
December 31, 2011 to US$181.9 million in the year ended December 31, 2012, primarily due to
lower vessel operating expenses and project cost and commission which were partially offset by
higher expenses for chartered-in vessels and docking expenses in the year ended December 31,
2012.
In the year ended December 31, 2011, we incurred higher vessel operating expenses in Latin
America. These expenses, which were not incurred in the year ended December 31, 2012, were
principally attributable to higher crew costs due to a requirement to hire local crew for such
operations in Latin America. The decrease in project cost and commission was mainly due to lower
project activities, principally in the OA Segment, in the year ended December 31, 2012. The
decrease in project cost and commission in the OA Segment was attributable to the reduction in
the number of new contracts commenced in 2012, from two in the year ended December 31, 2011
to one in the year ended December 31, 2012, as project costs and commissions are
disproportionately borne at the commencement of a contract. The increase in chartered-in vessels
expenses was mainly due to an increase in the number of chartered-in vessels in the year ended
December 31, 2012 to 41 from 38 in the year ended December 31, 2011.
Gross profit and gross profit margin
As a result of the increase in revenue (as explained in the immediately preceding table) and
decrease in cost of sales (as explained above), gross profit increased by US$5.7 million or 10.3%
from US$55.4 million in the year ended December 31, 2011 to US$61.1 million in the year ended
December 31, 2012. Overall gross profit margin increased by 2.1% from 23.0% in the year ended
December 31, 2011 to 25.1% in the year ended December 31, 2012 mainly due to gross profit
margin improvement in the OSV Segment resulting from an increase in average charter rates for
AHTS vessels.
Other operating income
Other operating income increased by US$22.7 million or 128.2% from US$17.7 million in the year
ended December 31, 2011 to US$40.4 million in the year ended December 31, 2012, primarily due
to higher interest income of US$12.6 million and an increase in net fair value gains on foreign
exchange contracts of US$13.2 million. The higher interest income was mainly due to a full
calendar year of interest income on loans to our Mexican joint venture Servicios Martimos Gosh,
S.A.P.I. de C.V. in the year ended December 31, 2012 (such loans totalling US$113.6 million as
of December 31, 2012) versus partial year of interest income on such loans in the year ended
December 31, 2011 (such loans totalling US$142.8 million as of December 31, 2011). The
increase in net fair value gains on foreign exchange contracts relates to these contracts carried
beyond their hedging periods. The contracts were retained beyond their hedging periods because
of our Companys view that the relevant reference currency would move in favour of our Company.
Distribution costs
Distribution costs decreased by US$0.2 million or 14.3% from US$1.4 million in the year ended
December 31, 2011 to US$1.2 million in the year ended December 31, 2012.
General and administrative expenses
Administrative expenses increased by US$5.2 million or 21.8% from US$23.8 million in the year
ended December 31, 2011 to US$29.0 million in the year ended December 31, 2012.
98
The higher administrative expenses in the year ended December 31, 2012 was mainly due to
higher bad and doubtful debt. The higher bad and doubtful debt provision for the year ended
December 31, 2012 was due to a write-off of US$3.2 million, which represented the disputed
amount in connection with the sale price of a vessel sold by our Group to a counterparty for
US$18.5 million. The vessel was originally chartered to the counterparty with an option to
purchase the vessel over the period of the charter. The counterparty had exercised the option and
taken the position that the option price should be reduced by a portion of the total charter hire
already paid by the counterparty. Following negotiations with the counterparty, our Group had
decided to amicably resolve the matter with the counterparty and this resulted in the write-off of
the US$3.2 million.
Other operating expenses
There were no other operating expenses in the year ended December 31, 2012.
Finance costs
Finance costs increased by US$2.7 million or 25.7% from US$10.5 million in the year ended
December 31, 2011 to US$13.2 million in the year ended December 31, 2012 primarily due to
higher levels of borrowing during the year ended December 31, 2012. The eventual finance costs
arising from the higher levels of borrowings were tempered by a lower weighted average rate of
interest.
Share of joint ventures results
Our joint ventures reported a loss and our share amounted to US$3.6 million for the year ended
December 31, 2012, compared with a loss of US$5.1 million in the year ended December 31,
2011. This was mainly due to the improvement in results of one of our Singapore joint ventures,
Pacific Workboats Pte. Ltd., which was partially offset by losses from our Mexican joint venture,
Servicios Martimos Gosh, S.A.P.I. de C.V., in the year ended December 31, 2012. These losses
were due to start-up costs and the non-commercial deployment of four vessels whilst they were
undergoing conversion to mud boats. Servicios Martimos Gosh S.A.P.I. de C.V. commenced
operations in 2012.
Profit before taxation
For the foregoing reasons, profit before taxation increased by US$28.5 million or 109.6% from
US$26.0 million in the year ended December 31, 2011 to US$54.5 million in the year ended
December 31, 2012.
Taxation
We recorded taxation expenses of US$0.9 million in the year ended December 31, 2012 mainly
due to higher levels of withholding taxes incurred in foreign countries, compared to a reported net
credit in taxation of US$0.2 million in the year ended December 31, 2011.
Net profit
As a result of the foregoing, net profit increased by US$27.3 million or 104.2% from US$26.2
million in the year ended December 31, 2011 to US$53.5 million in the year ended December 31,
2012.
99
Certain Balance Sheet Items
Year ended December 31, 2013
Non-current assets
Non-current assets mainly comprise fixed assets, goodwill, loan to joint ventures and interest in
joint ventures. As of December 31, 2013, our non-current assets amounted to US$1,553.3 million,
representing 87.6% of our total assets.
The largest component of our non-current assets is our fixed assets which amounted to
US$1,037.6 million. This mainly comprises our existing vessels (other than vessels held for sale)
and vessels under construction of US$634.6 million and US$400.3 million, respectively.
Goodwill of US$295.3 million relates to goodwill arising from the acquisition of PSA Marines
offshore business in 2007.
Interest in joint ventures amounted to US$20.1 million and mainly comprises receivable from a
joint venture of US$28.8 million and unquoted equity investments of US$39.5 million, partially
offset by deferred income of US$62.5 million. The receivable from a joint venture arises from the
sales of vessels to the joint venture company and forms part of our Companys net investment in
the joint venture. The deferred income relates to gain on disposal of vessels to joint ventures in
excess of our investment in certain joint ventures.
Loan to joint ventures was US$191.2 million. This amount is a reclassification from current assets
following an agreement on the terms and tenure of loans to two of our joint ventures.
Current assets
Current assets mainly comprise amounts owing from joint ventures and fellow subsidiaries,
receivables and other current assets, and loans to joint ventures. As of December 31, 2013, our
current assets amounted to US$220.2 million, representing 12.4% of our total assets.
Amounts owing from joint ventures and fellow subsidiaries amounted to US$90.2 million and
mainly comprise receivables from our joint ventures. These receivables arise from the sale of
vessels to them and include interest charged. Receivables and other current assets amounted to
US$67.8 million and mainly comprise trade receivables from our customers. The US$26.1 million
represents our proportionate shareholder loans to joint ventures for capital expenditure and
working capital loans.
Non-current liabilities
Non-current liabilities mainly comprise bank borrowings of US$300.0 million. As of December 31,
2013, our non-current liabilities amounted to US$300.2 million, representing 33.0% of our total
liabilities.
Current liabilities
Current liabilities mainly comprise bank borrowings of US$507.4 million, payables and accruals of
US$62.1 million and amounts owing to joint ventures and fellow subsidiaries of US$23.4 million.
As of December 31, 2013, our current liabilities amounted to US$609.1 million, representing
67.0% of our total liabilities.
The payables and accruals of US$62.1 million comprise mainly payables and accruals arising
from operating activities.
100
The amounts owing to joint ventures relate to trade payables arising from vessels chartered in
from our joint ventures. The amounts owing to fellow subsidiaries mainly arise from payables from
vessels under construction.
Equity attributable to shareholders
Equity attributable to shareholders of US$864.3 million comprises share capital, accumulated
profits and other reserves of US$531.0 million, US$333.0 million and US$0.3 million respectively,
as of December 31, 2013. The increase in share capital was due to the conversion of RCPS into
ordinary shares which occurred in the last quarter of 2013.
Year ended December 31, 2012
Non-current assets
Non-current assets mainly comprise fixed assets and goodwill. As of December 31, 2012, our
non-current assets amounted to US$1,081.4 million, representing 77.3% of our total assets.
The largest component of our non-current assets is our fixed assets which amounted to US$768.7
million. This mainly comprises our existing vessels and vessels under construction of US$600.3
million and US$166.2 million, respectively.
Goodwill of US$295.3 million relates to the goodwill arising from the acquisition of PSA Marines
offshore business in 2007.
Current assets
Current assets mainly comprise amounts owing from joint ventures and fellow subsidiaries,
receivables and other current assets and loans to joint ventures. As of December 31, 2012, our
current assets amounted to US$317.7 million, representing 22.7% of our total assets.
Amounts owing from joint ventures and fellow subsidiaries amounted to US$208.1 million and
mainly comprise non-trade receivables from our joint ventures of US$193.4 million arising from
the sale of our vessels to them. Receivables and other current assets amounted to US$63.8
million and mainly comprise trade receivables from our customers of US$50.7 million. The
US$22.7 million represents our proportionate shareholder loans to joint ventures for capital
expenditure and working capital purposes.
Non-current liabilities
Non-current liabilities mainly comprise bank borrowings of US$300.0 million and RCPS of
US$135.3 million. As of December 31, 2012, our non-current liabilities amounted to US$435.5
million, representing 59.1% of our total liabilities.
Current liabilities
Current liabilities mainly comprise bank borrowings of US$225.3 million, payables and accruals of
US$50.3 million and amounts owing to joint ventures and fellow subsidiaries of US$23.9 million.
As of December 31, 2012, our current liabilities amounted to US$301.1 million, representing
40.9% of our total liabilities.
The payables and accruals mainly comprise trade payables of US$10.6 million and accruals of
US$36.7 million, which mainly comprise accrued operating expenses.
101
The amounts owing to joint ventures relate to trade payables arising from vessels chartered in
from our joint ventures. The amounts owing to fellow subsidiaries mainly arise from payables from
vessels under construction.
Equity attributable to shareholders
Equity attributable to shareholders mainly comprises share capital and accumulated profits of
US$381.0 million and US$266.6 million, respectively as of December 31, 2012.
Liquidity and Capital Resources
Our liquidity requirements arise from our need to finance our capital expenditure and our working
capital. To fund these requirements, we have relied on equity capital, cash flows from operations
and bank borrowings. With regard to such credit facilities to fund our working capital and capital
expenditures, we typically apply the cash flows generated from our operations towards repaying
the facilities and therefore reducing the outstanding amounts under these facilities. As these
facilities are revolving in nature, such repayments would increase the headroom of available
funding under these facilities and our working capital and capital expenditures are drawn from
such available headroom. On the basis of the foregoing, we treat our available funding as being
a combination of cash flows from operations and bank borrowings (through such credit facilities),
insofar as our capital expenditures are concerned. Going forward, we expect to continue to incur
significant capital expenditure for the expansion of our fleet. Our Directors are of the opinion that
the working capital available to us, after taking into account our anticipated cash flow from
operations, committed debt facilities, together with proceeds from this Offering and our existing
cash, is sufficient for our present requirements and for at least 12 months after the listing of our
Company on the Main Board of the SGX-ST. Our anticipated cash flows from operations depend
on several factors beyond our control, such as conditions in the offshore oil and gas industry,
demand and supply of vessels in the markets we operate in and the laws and regulations in the
maritime industry, including cabotage laws. We may therefore be required to incur additional
indebtedness or issue additional equity in the future.
We recorded net current liabilities of US$388.8 million as of December 31, 2013, which were
primarily due to the drawdown of loans to fund the acquisition and construction of vessels.
Cash Flow
The following table sets forth selected cash flow data from our consolidated statement of cash
flows for the years indicated:
Year ended December 31,
2011 2012 2013
(US$ in millions)
Net cash generated from operating activities . . . . 85.9 65.7 135.2
Net cash used in investing activities . . . . . . . . . . . (264.6) (128.8) (405.1)
Net cash generated from financing activities . . . . . 176.5 63.1 279.9
Net (decrease)/increase in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.2) 10.0
Cash and cash equivalents at beginning
of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 0.5 0.5
Cash and cash equivalents at end of the year . . . 0.5 0.5 10.5
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Net cash flow generated from operating activities
Net cash generated from operating activities for the year ended December 31, 2013 was
US$135.2 million mainly due to profit before taxation of US$77.4 million, adjustments for non-cash
items of US$36.6 million and decrease in working capital of US$21.2 million. The adjustments for
non-cash items mainly comprise depreciation of fixed assets of US$36.7 million, net fair value
adjustment on foreign exchange contracts of US$5.9 million and share of joint ventures results of
US$0.9 million. The decrease in working capital of US$21.2 million related mainly to higher trade
payables and accruals due principally to an increase in our operating activities and timing of
payables.
Net cash generated from operating activities for the year ended December 31, 2012 was US$65.7
million mainly due to profit before taxation of US$54.5 million, adjustments for non-cash items of
US$28.8 million and increase in working capital of US$17.6 million. The adjustments for non-cash
items mainly comprise depreciation of fixed assets of US$37.0 million, gain on disposal of fixed
assets of US$11.3 million, net fair value gains on foreign exchange contracts of US$4.0 million
and share of joint ventures results of US$3.6 million. The decrease in working capital consisted
primarily of an increase in receivables and other current assets of US$0.5 million and a decrease
in payables and accruals of US$20.9 million. The decrease in payables and accruals was mainly
due to an advance received from our Mexican joint venture partner in 2011 as their contribution
towards the acquisition of vessels for the Mexican joint venture. These advances were capitalised
in the year ended December 31, 2012 when the Mexican joint venture was formalised.
Net cash generated from operating activities for the year ended December 31, 2011 was US$85.9
million mainly due to profit before taxation of US$26.0 million, adjustments for non-cash items of
US$26.9 million, decrease in working capital of US$33.0 million and US$10.3 million interest paid.
The adjustments for non-cash items mainly comprise depreciation of fixed assets of US$35.3
million, gain on disposal of fixed assets of US$13.6 million, net fair value adjustment in the foreign
exchange contracts of US$1.9 million and share of joint ventures results of US$5.1 million. The
decrease in working capital consisted primarily of an increase in consumables of US$4.2 million,
a decrease in receivables and other current assets of US$7.5 million and an increase in payables
and accruals of US$31.3 million. The increase in consumables was mainly due to increase in
bunkers purchased. The decrease in receivables and other current assets was mainly due to
decrease in advance to suppliers and claims receivables, partially offset by increase in unbilled
receivables. The increase in payables and accruals was mainly due to an advance received from
our Mexican joint venture partner as their contribution towards the acquisition of vessels for the
Mexican joint venture. These advances were capitalised in the year ended December 31, 2012
when the Mexican joint venture was formalised.
Net cash flow used in investing activities
The net cash used in investing activities is primarily for the acquisition of fixed assets, increase
in amounts owing from joint ventures and interest in joint ventures, which was partially offset by
the proceeds from disposal of fixed assets.
Net cash used in investing activities for the year ended December 31, 2013 was US$405.1 million
mainly due to the additions of fixed assets of US$416.5 million and interest in joint ventures of
US$28.0 million, partially offset by proceeds from disposal of fixed assets of US$26.7 million. The
additions of fixed assets mainly relate to newbuild deliveries and milestone payments for vessels
under construction. The proceeds from disposals of fixed assets mainly relate to the sale of six
vessels.
Net cash used in investing activities for the year ended December 31, 2012 was US$128.8 million
mainly due to additions of fixed assets of US$165.3 million and interest in joint ventures of
US$19.0 million, partially offset by proceeds from disposal of fixed assets of US$35.3 million and
103
a decrease in amounts owing from joint ventures of US$20.3 million The additions of fixed assets
mainly related to newbuild deliveries and vessels under construction. The decrease in amounts
owing from joint ventures was mainly due to the conversion of US$18.9 million of the amounts
owing into equity (as a result of the formalisation of a joint venture) and partly from repayment
from our joint ventures. The proceeds from the disposals of fixed assets primarily related to sale
of nine vessels.
Net cash used in investing activities for the year ended December 31, 2011 was US$264.6 million
mainly due to acquisition of fixed assets of US$250.6 million and an increase in amounts owing
from joint ventures of US$36.4 million, partially offset by proceeds from disposal of fixed assets
of US$22.4 million. The acquisition of fixed assets mainly related to newbuild deliveries and
vessels under construction. The increase in amounts owing from joint ventures mainly related to
sale of vessels to our joint ventures. The proceeds from the disposals of fixed assets were mainly
related to the sale of three vessels.
Net cash flow generated from financing activities
Net cash generated from financing activities primarily comprises proceeds from equity raisings
and borrowings, offset by repayments on equity and debt and dividend payments, as well as
changes in the net balances owed to/from fellow subsidiaries or our immediate holding company.
Net cash generated from financing activities for the year ended December 31, 2013 was US$279.9
million mainly due to the drawdown from bank loans of US$282.1 million. The net proceeds from
bank loans were mainly used for capital expenditure and working capital. The increase in net
amounts owing from fellow subsidiaries mainly relates to payments made for the construction of
vessels.
Net cash generated from financing activities for the year ended December 31, 2012 was US$63.1
million mainly due to the proceeds from the issuance of 37,500,000 RCPS at US$4.00 per RCPS
in November 2012 for a total consideration of US$150.0 million and net decrease in amounts
owing from fellow subsidiaries of US$9.3 million, partially offset by net repayment of bank loans
of US$97.3 million. The proceeds from the issuance of RCPS were used for partial repayment of
bank borrowings. The decrease in net amounts owing from fellow subsidiaries was mainly due to
increase in payables for the construction of vessels.
Net cash generated from financing activities for the year ended December 31, 2011 was US$176.5
million mainly due to the net proceeds from bank loans of US$187.3 million, partially offset by
dividend paid of US$5.6 million and repayments of loans from our immediate holding company of
US$13.3 million. The net proceeds from bank loans were mainly used for capital expenditure and
working capital. The decrease in net amounts owing from fellow subsidiaries was mainly due to
the settlement of equipment purchase on behalf of fellow subsidiaries.
Contractual Obligations and Commitments
Our principal contractual payment obligations are for our bank borrowings and vessel-related
capital expenditures. As of the Latest Practicable Date, our bank borrowings were US$800.1
million with a weighted average interest rate of 1.8%. Part of the credit facilities amounting to
US$300.0 million are on a committed basis and mature on December 30, 2015. For more
information on the terms of our outstanding borrowings, see Description of Material
Indebtedness below. For more information about our committed capital expenditures, see
Capital Expenditures and Divestments below.
With respect to our bank borrowings, we intend to use all of the net proceeds received by us from
the Offering and from the issue of the Cornerstone Shares to repay part of the outstanding
amounts under our revolving facilities. We expect to fund our contractual obligations and
104
commitments under our bank borrowings (excluding any outstanding amounts under our revolving
facilities to be repaid using the net proceeds from the Offering and from the issue of the
Cornerstone Shares) mainly from cash flows from operations.
In addition, we intend to fund our contractual obligations and commitments for vessel-related
capital expenditures from cash flows from operations and bank borrowings. With regard to such
credit facilities to fund our working capital and capital expenditures, we typically apply the cash
flows generated from our operations towards repaying the facilities and therefore reducing the
outstanding amounts under these facilities. As these facilities are revolving in nature, such
repayments would increase the headroom of available funding under these facilities and our
working capital and capital expenditures are drawn from such available headroom. On the basis
of the foregoing, we treat our available funding as being a combination of cash flows from
operations and bank borrowings (through such credit facilities), insofar as our capital expenditures
are concerned. The planned partial repayment of the outstanding amounts under our revolving
facilities using the net proceeds from the Offering and the issue of the Cornerstone Shares would
increase our available debt headroom under these facilities, which may be utilised towards
funding our capital expenditure.
Capital Expenditures and Divestments
The following table sets forth a summary of the capital expenditures of our Company and our
subsidiaries during the periods indicated:
Year ended December 31,
January 1,
2014 to
the Latest
Practicable
Date 2011 2012 2013
(US$ in millions)
(audited) (unaudited)
Vessels and vessels under
construction . . . . . . . . . . . . . . . . . . . . . . 249.1 163.2 414.5 43.4
Dry-docking cost . . . . . . . . . . . . . . . . . . 1.2 1.8 1.0 0.2
Others . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.3 1.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250.6 165.3 416.5 43.6
To fund this capital expenditure, we have relied on equity capital, cash flows from operations and
bank borrowings under our existing credit facilities. With regard to such credit facilities to fund our
working capital and capital expenditures, we typically apply the cash flows generated from our
operations towards repaying the facilities and therefore reducing the outstanding amounts under
these facilities. As these facilities are revolving in nature, such repayments would increase the
headroom of available funding under these facilities and our working capital and capital
expenditures are drawn from such available headroom. On the basis of the foregoing, we treat our
available funding as being a combination of cash flows from operations and bank borrowings
(through such credit facilities), insofar as our capital expenditures are concerned.
105
The balance of capital expenditures payable as of the Latest Practicable Date in respect of which
our Company and our subsidiaries have contractual commitments amount to US$162.7 million.
These relate to vessels which our Company and our subsidiaries have on order and scheduled for
delivery in 2014 and 2015. The total cost of such vessels is US$551.7 million and US$52.5 million,
respectively. For further details, see Business Vessels to be Delivered. As of the Latest
Practicable Date, our Company and our subsidiaries have not entered into any such contractual
commitments beyond 2015.
We currently expect to fund the committed future capital expenditures of our Company and our
subsidiaries from cash flows from operations and bank borrowings from our existing credit
facilities.
In December 2013, our Board of Directors gave in-principle approval for a capital expenditure
budget of US$291.5 million which is mainly for the further expansion of our fleet in the OSV, T&I
and HSER Segments (including the acquisition of MSVs as further described in Business
Strategy Expand into deepwater offshore accommodation and other high-growth asset classes).
This is in addition to the vessels we have on order and scheduled for delivery as described in
Business Vessels to be Delivered. Whilst we have identified the relevant types of vessels to
be acquired, we have not contractually committed to acquire any of these assets as at the Latest
Practicable Date. We plan to implement such Further Fleet Expansion in 2014 and expect to fund
such acquisitions from cash flows from operations and bank borrowings. The planned partial
repayment of the outstanding amounts under our revolving facilities using the net proceeds from
the Offering and the issue of the Cornerstone Shares would increase our available debt headroom
under these facilities, which may be utilised towards funding the Further Fleet Expansion and our
future capital expenditure.
The following table sets forth a summary of the divestments of our Company and our subsidiaries
during the periods indicated:
Year ended December 31,
January 1,
2014 to
the Latest
Practicable
Date 2011 2012 2013
(US$ in millions)
(audited) (unaudited)
Vessels. . . . . . . . . . . . . . . . . . . . . . . . . . 122.4 82.8 97.3 38.8
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.4 82.8 97.3 38.8
As of the Latest Practicable Date, in line with our fleet re-profiling initiatives, we have committed
to dispose four of our vessels at an aggregate sale price of US$14.7 million. Of these, the number
of vessels committed for sale in the years ending December 31, 2014 and 2015 is two and two
(both pursuant to charters with options to purchase), respectively.
Description of Material Indebtedness
We had total credit facilities of US$950.0 million in place with the Joint Issue Managers,
Bookrunners and Underwriters and certain of their affiliates as of December 31, 2013, of which the
Term Facilities of US$300.0 million is committed up to December 30, 2015, whereas the balance
of US$650.0 million under the Annual Renewable Facilities is uncommitted and subject to annual
review. This debt is in the form of revolving facilities which are not at fixed rates and for the
purposes of our working capital and capital expenditure. Unlike a term loan, any repayments will
106
increase the amount available to be drawn down under the facilities for the duration of the
facilities. Accordingly, the amount of outstanding bank borrowings under the facilities will fluctuate
according to the amounts drawn down and the amounts repaid. The Annual Renewable Facilities
generally carry lower interest rates. There is no fixed repayment term under the facilities. In this
regard, we have not implemented any predetermined criteria as to the timing and manner of
repayment of the facilities (in terms of amounts and allocation). Generally, we allocate our
repayments between the facilities taking into account the available amounts under each facility
compared to the relevant funding requirements.
Our total outstanding debt as of December 31, 2013 was US$807.4 million. The total amount of
repayments during the year ended December, 31 2013 was US$161.9 million. Such amount was
repaid from the cashflow from operations and sale of assets. The total amount drawn down on the
bank borrowings during the year ended December 31, 2013 was US$444.0 million, and such
amounts were used for (a) capital expenditure being US$416.5 million (comprising US$414.5
million for vessels and vessels under construction, US$1.0 million for dry-docking cost and
US$1.0 million for other miscellaneous capital expenditure); and (b) our net capital contributions
to our joint ventures and dividends paid to our Shareholders with respect to the year ended
December 31, 2012 (being US$27.5 million).
The following table sets forth a summary of the material indebtedness of our Company and our
subsidiaries as of December 31, 2013:
Financial
Institution/
Lender
Type of
facilities
Amount of
facilities
granted
(US$ in
millions)
Amount
utilised
as of
December 31,
2013 (US$ in
millions)
Amount
unutilised
as of
December 31,
2013 (US$ in
millions) Maturity Profile Security
DBS Bank Revolving
facility
350.0 286.4
(1)
63.6 US$150.0 million
(committed up to
December 30,
2015)
Unsecured
US$200.0 million
(available on an
uncommitted
basis up to
December 30,
2015, which
availability is
subject to annual
review)
Bank of
America
NA,
Singapore
Branch
(BoA)
Revolving
facility
250.0 217.5
(2)
32.5 US$250.0 million
(available on an
uncommitted
basis, which
availability is
subject to annual
review)
(3)
Unsecured
107
Financial
Institution/
Lender
Type of
facilities
Amount of
facilities
granted
(US$ in
millions)
Amount
utilised
as of
December 31,
2013 (US$ in
millions)
Amount
unutilised
as of
December 31,
2013 (US$ in
millions) Maturity Profile Security
OCBC
Bank
Revolving
facility
350.0 303.5 46.5 US$150.0 million
(committed up to
December 30,
2015)
US$200.0 million
(available on an
uncommitted
basis up to
December 30,
2015, which
availability is
subject to annual
review)
Unsecured
Notes:
(1) The amount utilised excludes bankers guarantees for an aggregate amount of US$9.6 million.
(2) The amount utilised excludes letters of credit for an aggregate amount of US$0.9 million.
(3) To our Companys knowledge, the availability of the facility has been extended up to January 31, 2015 following an
annual review, subject to the terms and conditions of the facility.
As at December 31, 2013, the amount unutilised under our facilities was US$142.6 million, of
which US$110.1 million was under the committed portion and US$32.5 million was under the
uncommitted portion.
The current revolving facilities extended by DBS Bank, BoA and OCBC Bank were originally
negotiated and signed in 2009, 2008 and 2009 respectively.
The amounts drawn down under the uncommitted portion of our facilities are subject to variation,
reduction or cancellation by the lenders at any time, whereupon such amounts shall become due
and payable. If our Annual Renewable Facilities are not renewed by their annual review deadline,
such facilities will be deemed to be cancelled and all amounts outstanding under these facilities
would become due and payable at such time. While the relevant bank conducts its annual review,
the facilities will continue to be available to us. No repayment is required to be made prior to an
annual review. The banks typically engage in discussion with our Company prior to the start of the
annual review, usually from the last month of the year and straddling across the start of the
following year when annual financial statements are prepared. The banks would require an update
of our affairs, financial condition, business, the market and a going forward picture. At that stage,
the banks will provide an indication of the continuity of the facilities. In the event that the banks
decline to renew the facilities, we will seek alternative financing and in this regard, we believe that
there will be sufficient time to seek such alternative financing given that the banks would already
be working closely with us from the start of the review process. We do not foresee any difficulties
in procuring alternative financing given our strong parentage and operational track record.
To the best of our Directors knowledge, as of the Latest Practicable Date, we are not in breach
of any of the terms and conditions or covenants associated with any credit arrangement or bank
loan which could materially affect our financial position and results or business operations, or the
investments of our Shareholders.
108
Our loan agreements impose certain financial covenants and other restrictions on us. These
restrictions limit or may limit our ability to incur additional indebtedness, and to change our
business. In addition, KSL is required to remain our largest shareholder after our Listing (although
no specific shareholding threshold is specified). We have obtained an undertaking from KSL to
notify us as soon as it becomes aware of any share pledging arrangements relating to its Shares
and of any event which may result in a breach of our loan provisions.
Pursuant to our loan agreements, we are required to maintain certain financial ratios, being
consolidated net borrowings to consolidated tangible net worth, consolidated net borrowings to
EBITDA, consolidated net borrowings to consolidated tangible assets, and EBITDA to
consolidated interest expenses. As of December 31, 2010, we did not fulfil the requirements of a
financial ratio in our credit facilities with DBS Bank and OCBC Bank (which credit facilities had
outstanding amounts as of December 31, 2010 of US$346.5 million), and, in accordance with the
terms of our loan agreements, the banks subsequently granted us an unconditional waiver from
compliance in acknowledgement of the state of the offshore oil and gas industry at the relevant
time, as described in detail below. The relevant covenant referred to is the consolidated net
borrowings to EBITDA financial ratio. We did not fulfill the requirements of the relevant financial
ratio primarily due to an increase in our consolidated net borrowings arising from the drawdown
of loans to fund the acquisition and construction of vessels (with limited EBITDA contribution) and
a decrease in EBITDA in the year ended December 31, 2010 due to a downturn in the state of the
offshore oil and gas industry arising from the recent financial crisis and the Deepwater Horizon
incident in April 2010. As a consequence of uncertainties in the world economy, the oil majors (in
the financial year ended December 31, 2010) had slowed down E&P activities. Coupled with
over-supply of vessels in the offshore services sector and exacerbated by the oil spill crisis and
the resultant moratorium on deep water drilling in the Gulf of Mexico, both rates and utilisation
were severely impacted. Consequently the activities and results of our Group were not spared,
with adverse impact on attributable profits and hence EBITDA. Meanwhile, our Group was already
committed to a pipeline of newbuildings that were either delivered or being built. This had the
effect of increasing our overall net borrowings. Hence, the convergence of a dismal offshore
services market against our Groups capital expenditure commitments resulted in the
abovementioned breach. The non-fulfilment of this financial ratio had no material impact on our
financial condition as of December 31, 2010. For the years ended December 31, 2011, 2012 and
2013, we have been in compliance with our financial ratios. We actively and continuously monitor
our compliance with our financial ratios under all of our bank facilities. This function is managed
by the finance department of our Company and tested on a quarterly basis, as management
accounts are prepared. However, we cannot assure you that, in the future, we will be able to
maintain our financial ratios or that, in the event of our failure to do so, our lenders will grant us
a waiver from compliance with such financial ratios in accordance with the terms of our loan
agreements. There are no stipulated limits to the number of waivers that may be granted pursuant
to the loan agreements and that the waivers are to be assessed by the relevant bank on a
case-by-case basis.
Consequently, should we fail to maintain such financial ratios or other undertakings or in the event
of our failure to obtain a waiver from compliance with such obligations, we would be in default of
such loan agreements. In addition, should we fail to comply with such obligations, we may risk
triggering cross-defaults (which refer to situations where a default under one facility triggers a
default in another facility which may lead to us being in default of multiple loan agreements with
our lenders). Loan facilities typically provide for certain events of default that may be triggered
under certain events. Typically, such events of default include an event where the borrower is in
default of its obligations under any other facility. There are cross-default provisions in our loan
agreements with DBS Bank and OCBC Bank, but not with our loan agreement with BoA as the
facility from BoA is an uncommitted facility, under which the drawn down amounts are subject to
variation, reduction or cancellation by BoA at any time, whereupon such amounts shall become
due and payable. In the event that the cross-default provisions in either of our loan agreements
109
with DBS Bank or OCBC Bank are triggered, such event would not automatically trigger an event
of default under our loan agreement with BoA; nonetheless, BoA would be entitled to vary, reduce
or cancel the amounts drawn down under our facility with BoA at any time.
Redeemable Convertible Preference Shares
In November 2012, we issued 37,500,000 RCPS at US$4.00 per RCPS for a total consideration
of US$150.0 million. The holders of the RCPS included our Substantial Shareholders (PCL and
Lightwell Shipping Inc.), Eternal Fame International Limited (a subsidiary of KSL), certain of our
Directors (namely, Mr. Seow Kang Hoe, Gerald, Mr. Wu Long Peng, and Mr. Teo Joo Kim) and one
of our Executive Officers (namely, Mr. Ng Eng Khin). On December 9, 2013, all RCPS were
converted into ordinary shares, as described in Share Capital.
Prior to their conversion, an RCPS holder was entitled to receive dividends at the same rate as
that which is declared for ordinary shares. The RCPS were convertible at the option of the holder
at any time on or before November 14, 2017 on the basis of one ordinary share for one RCPS held.
Each RCPS was automatically and mandatorily redeemable immediately upon the expiry of five
years after the issue date of the RCPS. Each RCPS holder had the right to require us to redeem
the whole or any part of the RCPS held by the RCPS holder (for an amount per RCPS equal to
the issue price of each RCPS plus an amount equal to all dividends declared and unpaid thereon)
upon the RCPS holder being informed that the shares in our Company will be listed on a stock
exchange. Any RCPS not so redeemed was to be automatically and mandatorily converted into
ordinary shares (at the conversion rate of one ordinary share for each RCPS held) on or before
the listing date.
Foreign Currency and Interest Rate Risk Disclosures
The following discussion summarises our exposure to fluctuations in foreign exchange rates and
interest rates and the policies we have implemented to mitigate and control these risks. It is
difficult to accurately predict changes in economic or market conditions and anticipate the effects
of such changes on our financial performance and business operations. See Note 31 to our
consolidated financial statements for more information on our exposure to such risks.
Foreign Currency Risk
We operate internationally and entities in our Group may transact in currencies other than their
respective functional currencies, hence the U.S. dollar is our functional currency. When we
transact in currencies other than the U.S. dollar, there is an exchange risk exposure inherent in
our operations as a result of currency movements, and this is monitored daily. Foreign currency
denominated assets and liabilities give rise to foreign exchange exposures. We enter into forward
contracts to hedge our currency risk exposure as and when required. Our Board of Directors has
adopted a policy that foreign exchange transactions can only be entered into for hedging
purposes. In this regard, foreign exchange contracts will be entered into for specific currency
exposure and tenure and upon the discharge of such exposure or expiry of such tenure, the
relevant foreign exchange contract will be liquidated. Our Chief Financial Officer is responsible for
compliance and reports to our Audit Committee in this regard.
We have conducted a sensitivity analysis of our exposure to exchange rate risk. If the Singapore
dollar had strengthened against the U.S. dollar by 5.0% with all other variables held constant, our
profit for the year ended December 31, 2013, net of tax, would have decreased by US$245,000.
If the U.S. dollar had strengthened against the Singapore dollar by an additional 5.0% with all
other variables held constant, our profit for the year ended December 31, 2013, net of tax, would
have increased by US$245,000.
110
Interest Rate Risk
We are subject to interest rate risk through our various credit and financing facilities, many of
which bear interest at variable rates. As of December 31, 2013, debt totalling US$807.4 million,
or 100.0% of our total outstanding debt, accrued interest at variable rates. We manage our interest
rate exposure by borrowing short term and in tranches at fixed interest rates.
We have conducted a sensitivity analysis of our exposure to interest rate risk. If U.S. dollar
interest rates had been 25 basis points lower/higher and all other variables were held constant,
our profit for the year ended December 31, 2013, net of tax, would have been US$1.7 million
higher/lower.
Counterparty Credit Risk
We are exposed to the credit risk of our customers and certain other third parties such as local
intermediaries with whom we co-operate in rendering services to certain of our international
customers. We seek to minimise credit risk by limiting business dealings to business partners of
high creditworthiness. We also monitor receivables on an on-going basis. Please also see
Material Events After December 31, 2013 and Risk Factors Risks Relating to Our Business
and Operations We, as well as our joint ventures, are exposed to the credit risks of our
customers and certain other third parties, and the non-performance or insolvency of these parties
could adversely affect our financial condition and results of operations.
Trend Information
For the year ending December 31, 2014 and barring unforeseen circumstances, our Directors
have observed the following trends:
(a) the demand for offshore services will increase with the growth in E&P spending as demand
for oil and gas rises. We expect our revenue from all of our business segments to increase
in line with the increase in activity in the global offshore oil and gas industry; and
(b) we expect the upward trend in the oil and gas industry to have a positive impact on the
demand for offshore services. The utilisation and charter rates of our offshore support
vessels are expected to improve and result in an increase in our revenue.
Operating costs, which include crew wages, supplies and charter cost, are expected to increase
in tandem with the increase in the level of offshore activities and deployment of new vessels. We
also expect crew costs to increase with the introduction of the Maritime Labour Convention 2006
by the International Labour Organization (as further described in Government Regulations)
which came into force in August 2013.
Save as disclosed above and in the sections Risk Factors, Managements Discussion and
Analysis of Financial Condition and Results of Operations, Appendix A Industry Overview,
Business and Government Regulations, we are not aware of any known trends, uncertainties,
demands, commitments or events that are reasonably likely to have a material effect on sales or
revenue, profitability, liquidity or capital resources, or that would cause financial information
disclosed in this document to be not necessarily indicative of the future operating results or
financial condition of our Group, in respect of the year ending December 31, 2014.
Changes in Accounting Policies and Standards
We have not made any material changes in our accounting policies during the three years ended
December 31, 2013.
See Note 2 to our consolidated financial statements for a discussion of the expected impact of
issued but not yet effective accounting standards.
111
BUSINESS
Overview
We are the largest Asia-based international operator of offshore support vessels and one of the
top five globally, based on Infields data on the number of vessels operated by us and the other
major international providers of global support vessels, with a diversified fleet servicing offshore
oil and gas E&P activities. Our offshore support vessels perform anchor handling services, ocean
towage and installation, ocean transportation, heavy-lift and offshore accommodation services.
Our vessels also provide harbour towage and emergency response services.
As of December 31, 2013 and as of the Latest Practicable Date, we operated a combined fleet of
112 and 110 vessels, respectively, including 45 and 47 vessels, respectively, owned by our joint
ventures (of which, as of the Latest Practicable Date, one vessel is undergoing conversion into an
accommodation vessel and two vessels are chartered by a joint venture as a charterer on
long-term charters). This combined fleet comprises AHTS, AHTs, ocean-towing tugs, PSVs,
accommodation vessels, utility vessels and crane and deck barges. As of the Latest Practicable
Date, we have on order and scheduled for delivery 15 vessels, comprising two deck cargo barges,
two ASD harbour tugs, three DP2 accommodation vessels, three DP2 AHTS, two DP3 SSAVs, and
three vessels which our joint ventures have on order. In addition, we have one vessel that is
undergoing conversion into an accommodation vessel. Please see Business Vessels to be
Delivered for further details.
Our fleet operates worldwide serving offshore oilfields in Asia, Africa and Latin America. We have
provided vessels and services for projects involving many of the worlds major oil companies, as
well as many large international offshore contractors, such as Saipem, Hyundai Heavy Industries,
Technip and SapuraClough Offshore.
We earn revenue primarily from time charters of our vessels. We also earn significant revenue
from lump-sum project contracts for which our vessels are deployed.
We manage and measure our business performance in four distinct operating segments which are
the Offshore Supply Vessels or OSV Segment, the Transportation and Installation or T&I
Segment, the Offshore Accommodation or OA Segment and the Harbour Services and Emergency
Response or HSER Segment.
The following table sets forth certain data for our fleet broken down by business segment for the
periods indicated:
As of December 31,
As of the
Latest
Practicable
Date 2011 2012 2013
Offshore Supply Vessels
Number of vessels . . . . . . . . . . . . . . . . . 18 22 29 30
Average age of vessels (year)
(1)
. . . . . . 2.1 2.6 2.8 3.1
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . . . 74.6 89.4 83.3 71.9
Transportation and Installation
Number of vessels . . . . . . . . . . . . . . . . . 48 47 46 45
Average age of vessels (year)
(1)
. . . . . . 6.8 7.1 6.9 7.2
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . . . 70.4 79.3 71.4 65.6
112
As of December 31,
As of the
Latest
Practicable
Date 2011 2012 2013
Offshore Accommodation
Number of vessels . . . . . . . . . . . . . . . . . 4 4 5 5
(3)
Average age of vessels (year)
(1)
. . . . . . 10.5 11.5 10.0 10.2
(4)
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . . . 85.0 90.0 79.8 59.4
(4)
Harbour Services and Emergency
Response
Number of vessels . . . . . . . . . . . . . . . . . 28 27 32 30
Average age of vessels (year)
(1)
. . . . . . 8.1 8.8 8.9 9.6
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . . . 34.6 54.1 41.2 43.3
Notes:
(1) Average age is the total age of all vessels within the relevant category, divided by the total number of vessels within
that category.
(2) Vessel utilisation is a function of the hire days, i.e. days in which the vessels were commercially deployed, against
the available days. Available days are calendar days less days for scheduled docking or repairs.
(3) Including one vessel that is undergoing conversion into an accommodation vessel.
(4) Excluding one vessel that is undergoing conversion into an accommodation vessel.
For the years ended December 31, 2012 and 2013, we recorded revenue of US$243.0 million and
US$237.3 million, respectively, and net profit after tax for the years ended December 31, 2012 and
2013 was US$53.5 million and US$73.4 million, respectively.
The following table sets forth revenue and segment results
(1)
for each of our business segments
for the years indicated below:
For the year ended December 31,
2011 2012 2013
(US$) (US$) (US$)
(in millions)
Revenue
Offshore Support Vessels . . . . . . . . . . . . . . . . . . . 85.3 91.0 120.3
Transportation and Installation. . . . . . . . . . . . . . . . 103.5 100.1 65.1
Offshore Accommodation . . . . . . . . . . . . . . . . . . . . 22.2 23.2 29.5
Harbour Services and Emergency Response . . . . 29.9 28.7 22.4
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240.9 243.0 237.3
Segment Results
(1)
Offshore Supply Vessels . . . . . . . . . . . . . . . . . . . . 11.6 12.8 24.8
Transportation and Installation. . . . . . . . . . . . . . . . 24.1 16.4 17.5
Offshore Accommodation . . . . . . . . . . . . . . . . . . . . 6.4 6.3 11.3
Harbour Services and Emergency Response . . . . 5.3 10.8 4.7
Note:
(1) Our management monitors the operating results of our business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on
revenue and expenses resulting from the operating activities of a segment that is directly attributable to the relevant
segment. Segment results are derived from segment revenue less direct segment expenses and administrative or
shared services expenses will be allocated on a reasonable basis to the relevant segment.
113
Our History and Group Structure
Our Company was incorporated as a wholly-owned subsidiary of PCL in 2006. In August 2007, we
acquired PSA Marines offshore business consisting of SEMCO Pte. Ltd. (now known as POSH
Semco Pte. Ltd.), a leading FPSO towage operator, and Maritime Pte. Ltd. (now known as POSH
Maritime Pte. Ltd.), one of Asias leading transportation and installation operators, and various
ship owning entities. Subsequently, in December 2008, MBC acquired a 21.2% equity interest in
our Company. As of December 31, 2013, MBC held an equity interest of 21.2% in our Company.
The table below sets forth our key milestones since incorporation:
Year Milestone
March 2006 Incorporation of our Company.
March 2006 Our Company marked its foray into the oilfield services sector
by placing orders for two units of 10,000 BHP AHTS and 14
units of 8,000 BHP AHTS between 2006 and 2007.
August 2006 Our Company placed orders for two units of 16,000 BHP DP2
AHTS (Havyard 842 design), marking our foray into the
deepwater sector.
August 2007 Acquisition of PSA Marines offshore business, marking our
Companys entry into the Transportation and Installation
segment.
October 2007 Change of the name of our Company from PACC Offshore
Pte. Ltd. to PACC Offshore Services Holdings Pte. Ltd.
December 2008 Equity investment by MBC.
December 2008 Our Company converted two container ships to 191-person
accommodation vessels and another container ship to a
197-person accommodation vessel and ventured into the
Offshore Accommodation market in the same year. We also
ordered one 300-person accommodation vessel.
December 2010 Acquisition of two Diesel Electric PSVs, and subsequent
acquisition of a further six PSVs, signifying the formation of
our PSV fleet.
December 2012 to March 2013 Our Company enhanced its position in the Offshore
Accommodation market with the order for two units of 750-
person DP3 SSAVs.
First half 2013 We were awarded the transportation and installation contract
for Ichthys CP Facility as well as the Ichthys FPSO. Once the
Ichthys CP Facility is completed, the structure is expected to
be the worlds largest CP Facility installed to date.
March 2014 We were awarded the transportation and installation contract
by an oil major for the towage in 2015 of a FPSO. The FPSO
is being fabricated and constructed in South Korea and will be
towed to the Quad 204 area in the North Sea.
114
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115
Our Competitive Strengths
We believe that our position as one of the leading players in the offshore support vessels industry
is based on the following competitive strengths.
(a) Largest Asia-based international operator with a diversified fleet of offshore support
vessels
We are the largest Asia-based international operator of offshore support vessels and one of
the top five globally, based on Infields data on the number of vessels operated by us and the
other major international providers of global support vessels. As of December 31, 2013 and
as of the Latest Practicable Date, we operated a combined fleet of 112 and 110 vessels,
respectively, including 45 and 47 vessels, respectively, owned by our joint ventures (of
which, as of the Latest Practicable Date, one vessel is undergoing conversion into an
accommodation vessel and two vessels are chartered by a joint venture as a charterer on
long-term charters). This combined fleet comprises AHTS, AHTs, ocean-towing tugs, PSVs,
accommodation vessels, utility vessels and crane and deck barges. As of the Latest
Practicable Date, we have on order and scheduled for delivery 15 vessels, comprising two
deck cargo barges, two ASD harbour tugs, three DP2 accommodation vessels, three DP2
AHTS, two DP3 SSAVs, and three vessels which our joint ventures have on order. In addition,
we have one vessel that is undergoing conversion into an accommodation vessel. Please
see Business Vessels to be Delivered for further details.
Our large and diverse fleet, coupled with our ability to provide value-added services, (such
as the added value in providing transportation services through our T&I Segment together
with positioning and set-up services through our OSV Segment), enables us to deliver
comprehensive solutions to our customers by leveraging on our multi-segment offshore
capabilities to actively cross-sell our services and secure contracts that are otherwise
difficult as a single service-provider, thereby setting us apart and positioning us favourably
to compete for tenders. Our involvement across a wide scope of the offshore oilfield services
through our different business segments enables us to better understand and respond to our
customers needs and allows us to anticipate future offshore oilfield service needs. Our
diversified fleet and service offerings enable us to achieve financial performance and
resilience during industry downturns. We have been profitable every financial year since our
business expansion in 2007.
We constantly monitor demand for offshore services, charter rates, vessel types and fleet
size through our involvement across the wide scope of offshore oilfield services through our
different business segments. With this knowledge, we are able to optimise the portfolio mix
of our fleet in order to better service our customers and respond in a timely manner to
industry trends. For example, as at the Latest Practicable Date, we have ordered two DP3
SSAVs to cater to the increased demand for deepwater accommodation vessels. We believe
this is a key competitive advantage that differentiates us from our competitors.
116
(
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117
(c) Well-positioned to capture market opportunities across all our business segments
We believe that each of our business segments is well-positioned to capture market
opportunities.
Offshore Supply Vessels
We are one of the leading Asia-based operators of AHTS and PSVs with a fleet of 14 AHTS
and 13 PSVs as at December 31, 2013 and 15 AHTS and 13 PSVs as at the Latest
Practicable Date. According to Infield, we have the youngest deepwater AHTS and PSV fleet
and the youngest midwater AHTS and PSV fleet globally, with an average age of 2.3 and 2.2
years, as at December 31, 2013, respectively. The age profile of our fleet is a key competitive
advantage as modern vessels are often preferred due to better reliability and emphasis on
higher environmental and safety standards.
Our modern deepwater AHTS are well-placed to benefit from the growing demand for
deepwater vessels arising from increased deepwater oil and gas E&P activity across the
world. Furthermore, all of our AHTS and PSVs are equipped with Dynamic Positioning or DP
technology which is increasingly a pre-requisite for most offshore projects.
Transportation and Installation
We are one of Asias leading operators providing deepwater towage services for various
high-value offshore assets, such as rigs and FPSOs, and offshore construction,
transportation and support services in the shallow-water segment.
According to Infield, we have one of the largest deepwater AHT fleets in the world ranked by
fleet size. We have built up a track record in completing many demanding and high-value
ocean towage projects, having successfully completed 53 floating system (including FPSOs)
transportation and installation contracts since 1991 as of the Latest Practicable Date.
According to Infield, we have been involved in at least seven of the 35 floating unit
installations that have taken place in Asia-Pacific between 2010 and 2013, including five of
the 15 largest in terms of topside weight. In the first half of 2013, we were awarded the
transportation and installation contract for Ichthys CP Facility as well as the Ichthys FPSO.
Once the Ichthys CP Facility is completed, the structure is expected to be the worlds largest
CP Facility installed to date.
Offshore Accommodation
As at the Latest Practicable Date, we have ordered two 750-person DP3 SSAVs. These
vessels are scheduled to be delivered by the end of 2014. As at the Latest Practicable Date,
we are in the final stages of procuring a charter contract for the commercial deployment of one
of the vessels when it is delivered. The execution of the charter contract is pending the
completion of due approval process of the counterparty. Notwithstanding, there is no
assurance that the charter contract will ultimately be executed by the counterparty. Such
vessels are expected to capture the rising demand for high-capacity and high-specification
accommodation vessels specially catering to the deepwater segment. These vessels will have
modern structural designs (including one of the largest offshore heli decks), technology (such
as DP3) and equipment and will be certified as Comfort Class (DNV Notation (1A1) Ship
shaped) by DNV by complying with strict noise and vibration control requirements. The
specifications of these vessels include having a deck space of 2,000 square metres, a
maximum deck load of 3,000 metric tonnes and 390 cabins of one, two or four persons.
According to Infield, as at the close of 2013, there were only three operational SSAVs with
118
berth capacity of more than 600-person and another three on order or under construction
(including our two 750-person DP3 SSAVs). According to Infield, upon the delivery of our two
DP3 SSAVs, we will operate the youngest high-berth accommodation vessel fleet in the world.
As at the Latest Practicable Date, we have also ordered three 238-person DP2
accommodation vessels, of which two are scheduled to be delivered by the end of 2014 and
one is scheduled to be delivered by the first quarter of 2015. In addition, we have one vessel
that is undergoing conversion into a 198-person accommodation vessel, which is expected
to be delivered by the second quarter of 2014.
When all of the accommodation vessels that are under construction or undergoing
conversion are delivered by 2015, our accommodation capacity will increase from 879
persons as at the Latest Practicable Date to 3,291 persons (this includes one 191-person
accommodation vessel that is committed for sale after the Latest Practicable Date).
Harbour Services and Emergency Response
Our Harbour Services business has been operating for over 10 years. We own, operate and
manage a fleet of harbour tugs and heavy lift crane barges, which are actively engaged in
supporting harbour towage operators and providing heavy lift services to shipyards engaged
in the construction, and repair and conversion of ships and offshore drilling units, and other
offshore structures and topside production and processing facilities. In November 2013, our
subsidiary, POSH Semco, was granted a public licence by the MPA for the provision of
towage services to vessels within the limits of the port and the approaches to the port as
described in Government Regulations. According to Infield, we are also one of the two main
offshore support vessel operators globally to offer emergency response services which
include salvage, wreck removal, rescue and oil-spill response services. Emergency, salvage
and oil spill response services encompass emergency assistance to vessels that encounter
grounding, collision, incidences of fire and oil spillage as a consequence of collisions and
groundings. In particular, salvage refers to the process of recovering a vessel, its cargo, or
other property after a shipwreck, grounding or other marine accidents or incidents, and
encompasses refloating, towing and recovery of a sunken, grounded or incapacitated vessel.
(d) Established reputation and long-standing relationships with key oil and gas industry
players
As a result of our proven international operating track record, we have built a strong
reputation and an extensive network of customers including global oil and gas majors and
international oil and gas contractors. Leading global shipyards and offshore engineering
companies, such as Saipem, Hyundai Heavy Industries, Technip and SapuraClough
Offshore, also work with us on a regular basis. Our reputation and long-standing
relationships with customers enable us to compete effectively and continue to grow our
business.
(e) Strong parentage
We believe that our Group benefits significantly from being a member of the KSL Group. Our
parent, KSL, shares common heritage with two other holding companies, namely, Kerry
Holdings Limited in Hong Kong and Kuok Brothers Sdn Bhd in Malaysia, in that they were all
founded by the Kuok family, which together with their related companies, are commonly
referred to as the Kuok Group. The Kuok Group is a well-regarded conglomerate with
diversified investments in commodities, hospitality, logistics, real estate and shipping
businesses, among others. The Kuok Group is the single largest shareholding group in listed
companies such as Hong Kong-listed Kerry Properties Limited, Shangri-La Asia Ltd. and
SCMP Group Ltd. (publisher of the South China Morning Post), Singapore-listed Wilmar
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International Limited and Malaysia-listed PPB and MBC. Our parentage makes us a
preferred partner for leading local entities when we enter new markets or form strategic
alliances.
As the dedicated offshore support vessel business of the KSL Group, we have ready access
to the affiliated shipyards of the KSL Group. We believe our strategic relationships with these
shipyards will allow us to respond rapidly to changing market dynamics through quick
turnaround times for newbuilds (although there is no publicly available information on the
turnaround times for other shipyards) and manage our own maintenance and refurbishment
costs as we enjoy operational advantages from our ready access to these shipyards such as
the ability to gain a closer level of control and cooperation with the shipyards in terms of
design and technical specifications, costing and procurement of equipment, and delivery
timelines, as described below:
We are actively engaged in determining the design and technical specifications of the
vessels. In this regard, the specifications of the vessels and the identification and
costing of the various engines, parts and technical equipment (including replacement
parts and equipment) are specified by us. We are actively involved in the procurement
of such engines, parts and equipment (including identifying and selecting the suppliers
and engaging in negotiations with such suppliers) prior to the shipyards placing the
orders for and importing these engines, parts and equipment on our behalf for
regulatory, operational and logistical convenience. In this way, we are able to gain a
closer level of control over the costing of engines, parts and equipment (including
replacement parts and equipment), which in turn translates into costs savings.
We station our technical superintendents in the shipyards as our vessels are being built,
to monitor the construction and to ensure that the construction is correctly carried out
in accordance with our approved designs and specifications and to further ensure timely
delivery.
Another perspective of timely delivery relates to a scenario where we require vessels for
a specific delivery in the future. This could be due to potential deployment or
anticipation of a supply crunch for certain asset classes due to various reasons (for
example, aging vessels scheduled for scrap etc.), and in this regard, not all shipyards
may have available berths and capacity space to meet such future deliveries.
Not all shipyards are willing to build vessels to bespoke design specifications and have
separate arrangements on the equipment package; instead, they prefer to build repeat
designs, to benefit from their experience and economies of scale and gain discounts for
their own benefit from equipment suppliers and manufacturers.
Our transactions with the KSL Group are conducted on an arms length basis, as further
detailed in the section on Interested Person Transactions and Potential Conflicts of
Interest.
(f) Highly-experienced and committed management team with a proven track record
We have a committed, experienced and highly-qualified management team led by our Chief
Executive Officer and Executive Director, Mr. Seow Kang Hoe, Gerald who has more than 40
years of experience in the shipping industry (including 15 years of sea-going experience and
more than 20 years of senior management experience), as further described in Management
Directors. Our Executive Officers come with varied and synergistic backgrounds
including Engineering, Marine and Finance which enable them to lead and manage our
Company.
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Our management team includes 12 shore-based Master Mariners and 23 Chief Engineers
with an aggregate sea-going experience of more than 600 years, as at the Latest Practicable
Date. The depth and diversity of our managements technical and operational expertise and
experience enable us to identify, evaluate and capitalise on market opportunities and to
better anticipate industry trends and invest in relevant assets to respond to our customers
needs. In this regard, we have successfully expanded the scale of our fleet in terms of both
capabilities and size (the vessels we operate grew from 98 vessels as at December 31, 2011
to 110 vessels as at the Latest Practicable Date, of which one vessel is undergoing
conversion into an accommodation vessel). Our extensive experience and expertise in
marine operations, marine engineering and fleet management allow us to proactively
manage our fleet and achieve a high level of reliability, safety and efficiency in our
operations.
Recognising the technical capabilities required to operate and manage the two 750-person
DP3 SSAVs which we have ordered as at the Latest Practicable Date and which are
scheduled for delivery by the end of 2014, we have established an internationally-
experienced management team with a proven track record. Heading this team is our Project
Director, Operations, with more than 30 years of experience in North Sea and Latin America,
including 17 years of handling day-to-day operations for four SSAVs.
Strategy
(a) Broaden fleet diversification
We look to continue to diversify our fleet and leverage on our multi-segment offshore
capabilities to actively cross-sell our services and secure contracts that would otherwise be
difficult as a single-service provider.
We are enhancing our market-leading positions in each of our OSV, T&I and HSER
Segments (as further described under Our Competitive Strengths Well-positioned to
capture market opportunities across all our business segments), and also the capabilities of
our OA Segment, by currently expanding our fleet through the acquisition of larger and more
sophisticated vessels. As of the Latest Practicable Date, we have on order and scheduled for
delivery 15 vessels, comprising two deck cargo barges, two ASD harbour tugs, three DP2
accommodation vessels, three DP2 AHTS, two DP3 SSAVs, and three vessels which our
joint ventures have on order. In addition, we have one vessel that is undergoing conversion
into an accommodation vessel. With respect to the OA Segment, recognising the technical
capabilities required to operate and manage the DP3 SSAVs, we have established an
internationally-experienced management team with a proven track record (as further
described under Our Competitive Strengths Highly-experienced and committed
management team with a proven track record). With respect to the HSER Segment, in
November 2013, our subsidiary, POSH Semco, was granted a public licence by the MPA for
the provision of towage services to vessels within the limits of the port and the approaches
to the port as described in Government Regulations. Please see Business Vessels to be
Delivered for further details, including details on the contracted delivery date. Please also
see Managements Discussion and Analysis of Financial Condition and Results of
Operations Capital Expenditures and Divestments for further details on our contractual
commitments relating to vessels which our Company and our subsidiaries have on order and
scheduled for delivery and how such committed future capital expenditures are expected to
be funded.
We adopt investment management processes in evaluating our fleet expansion plans.
Factors which determine the level and timing of our fleet expansion include our assessment
of the market demand and cost of investment for new vessels, our ability to secure attractive
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charter rates and our expected return on investment. By adhering to a disciplined and
structured set of criteria for evaluating and determining the need for fleet expansion, we are
able to maintain a sustainable growth model.
Separately, we continue to upgrade our existing assets through our fleet optimisation
programme to further enhance our competitiveness and ability to secure new and more
complex contracts. Under the fleet optimisation programme, we may dispose of older and/or
lower-specification vessels that are less efficient to operate and upgrade existing vessels
with more sophisticated technology and equipment. We may also acquire or build new
vessels to optimise the number and mix of vessels within the fleet. For example, we have
upgraded a DP1 AHTS into a DP2 AHTS. In addition, as at the Latest Practicable Date, we
have one vessel that is undergoing conversion into an accommodation vessel. Please see
Business Vessels to be Delivered for further details, including details on the contracted
delivery date. Please also see Managements Discussion and Analysis of Financial
Condition and Results of Operations Capital Expenditures and Divestments for further
details on our contractual commitments relating to vessels which our Company and our
subsidiaries have on order and scheduled for delivery and how such committed future capital
expenditures are expected to be funded. In this way, we continue to respond to our
customers requirements and are likely to secure charters at higher charter rates.
(b) Expand into deepwater offshore accommodation and other high-growth asset classes
We intend to actively expand our fleet and venture into new market opportunities, such as
deepwater offshore accommodation, that are expected to be in high demand going forward.
Our two SSAVs that are scheduled to be delivered by the end of 2014 were specially
designed with additional ancillary features to enhance the vessels overall functionality. The
two vessels are being constructed using modern structural designs and are equipped with
the latest technology and specifications. Some key features include their DP3 technology,
telescopic gangway, wide deck area and a moon-pool which provide us with the flexibility to
expand into the IMR segment in the future. The IMR segment comprises routine inspection,
maintenance and repair work to ensure system integrity and continued performance of
offshore assets, including subsea facilities and installations. In particular, such work could
involve a combination of services such as survey and maintenance of pipelines, support for
diving, structural inspections, support for laying cables and hoses, bolt inspection and
replacement, support for drilling, light inspection work, support for the maintenance of
offshore infrastructures and well stimulation. As at the Latest Practicable Date, we are in the
final stages of procuring a charter contract for the commercial deployment of one of the
vessels when it is delivered. The execution of the charter contract is pending the completion
of due approval process of the counterparty. Notwithstanding, there is no assurance that the
charter contract will ultimately be executed by the counterparty.
Aside from our high-capacity and high-specification offshore accommodation vessels, we are
exploring entry into IMR services to complement our range of deepwater offshore services.
These services complement our Companys OSV services by allowing our Company to
provide additional value-added services (for instance, divers to conduct inspection and
survey of deepwater structures) to customers of the OSV Segment in respect of deepwater
structures that our Company has provided OSV services for. In connection with this, we are
currently exploring the feasibility of acquiring new asset classes such as IMR vessels. In
December 2013, our Board of Directors gave in-principle approval for a capital expenditure
budget of US$291.5 million which is mainly for the further expansion of our fleet (including
the acquisition of MSVs) (as further described in Maintaining our growth momentum
below). Save for the foregoing, as at the Latest Practicable Date, our Company has not
identified any specific IMR assets to be acquired. A decision to invest in these IMR assets
has not yet been made and will be subject to completion of our feasibility study on the
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provision of such services, including a study on the potential return on investment and cost
of return. We currently expect to fund any capital expenditures that may be incurred in
connection with the acquisition of such IMR assets from cash flows from operations and bank
borrowings.
(c) Maintain high service reliability
We believe it is important to maintain a high level of service reliability given the increasingly
stringent environmental regulations and the strong emphasis on safety and quality
standards.
One of our core policies is to be actively involved in monitoring the construction of our
vessels including vessel design, equipment selection and quality of construction. This
ensures that the vessels are constructed to meet our quality and technical specification
requirements. We practise planned maintenance programmes for our vessels. In addition, we
have recently implemented predictive maintenance measures for our high-specification and
high-capacity vessels.
We continue to invest significantly in our workforce by recruiting, developing and retaining
talent. We believe that our highly-experienced and well-trained workforce play an important
role in the success and growth of our Group and in maintaining our high level of service
standards and operational efficiency. For example, we undertake ongoing in-house
education programmes to keep our crew abreast of market developments and knowledge
through holding sea staff seminars in the Philippines, where we inculcate in our workforce
our Groups vision and core values, conduct training to maintain continual education, and
build rapport and team work between the shore and sea staff.
(d) Optimise charter mix for our OSV and OA fleet
In order to provide stable revenue streams, we intend to optimise our mix of long-term charter
contracts and short-term charter contracts for our OSV and OA fleet. However, we do not
have a target ratio of long-term charter contracts to short-term charter contracts as this
depends on the state of the market (such as the demand and supply dynamics). We aim to
maintain and prefer long-term charters which provide us with predictable and reliable cash
flows, and less exposure to seasonality and revenue volatility. We would also like to further
optimise our charter mix by engaging in short-term contracts which allow us to benefit from
higher day rates.
(e) Expand into new geographic markets with significant growth potential
We aim to continue growing our presence in markets which offer significant growth potential
such as Australia, Indonesia, Latin America and the EMEA region or Europe, Middle East and
Africa. We will expand our presence in Mexico which will serve as our springboard for our
strategic expansion into other regions of Latin America. Accordingly, we are constantly
looking out for suitable opportunities to enhance the scale of our business through
synergistic strategic alliances and mergers and acquisitions which will better enable us to
establish our presence in new high-growth markets. As at the Latest Practicable Date, we
have not formalised any specific plans for such expansion as our Company has not identified
any such opportunities to enhance the scale of our business or any targets for such mergers
and acquisitions. We currently expect to fund any such expansion from cash flows from
operations and bank borrowings.
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(f) Maintaining our growth momentum
Our Company is a relatively young company and we have been growing since we were
incorporated, from total assets of US$35.7 million as at December 31, 2006 to US$1.8 billion
as at December 31, 2013. We believe we are still in a growth phase, and we intend to
continue to enhance and retain our market-leading positions and by maintaining our growth
momentum in our business segments.
In December 2013, our Board of Directors gave in-principle approval for a capital expenditure
budget of US$291.5 million which is mainly for the further expansion of our fleet in the OSV,
T&I and HSER Segments (including the acquisition of MSVs as further described in
Expand into deepwater offshore accommodation and other high-growth asset classes).
This is in addition to the vessels we have on order and scheduled for delivery as described
in Business Vessels to be Delivered. Whilst we have identified the relevant types of
vessels to be acquired, we have not contractually committed to acquire any of these assets
as at the Latest Practicable Date. We currently plan to implement such Further Fleet
Expansion in 2014 and expect to fund such acquisitions from cash flows from operations and
bank borrowings. The planned partial repayment of the outstanding amounts under our
revolving facilities using the net proceeds from the Offering and the issue of the Cornerstone
Shares would increase our available debt headroom under these facilities, which may be
utilised towards funding the Further Fleet Expansion and our future capital expenditure.
Business Segments
We manage and measure our business performance in the following four distinct operating
segments, which are reflective of how we review operating results for the purposes of allocating
resources and assessing performance.
Offshore Supply Vessels
The OSV Segment supports midwater to deepwater operations of rig and oilfield operators during
the exploration, development, construction and production phases. This segment operates 8,000
to 16,000 BHP AHTS and 2,200 to 4,100 DWT PSVs providing multi-role services such as towing
and positioning drilling rigs, and materials transportation. According to Infield, we have the
youngest deepwater AHTS and PSV fleet and the youngest midwater AHTS and PSV fleet
globally, with an average age of 2.3 and 2.2 years, as at December 31, 2013, respectively.
We scaled up our OSV activities in 2007 with the acquisition of Semco Pte. Ltd. From 18 vessels
as at December 31, 2011, this segment operated 30 vessels as of the Latest Practicable Date.
Most of the vessels in our OSV fleet are flagged in Singapore with the remaining flagged in a
number of other countries including Mexico, Malaysia and Indonesia.
Our vessel charters for this segment include both long-term and short-term charters. We define
our short-term charters as having a duration of less than one year. We also define a charter
contract with a duration of one year or more as a long-term charter. Our long-term charters
typically have various durations of between one to four years. From time to time, we may also
deploy our vessels in the spot market to exploit available opportunities (such as during periods
between the expiration of charter and the employment of the vessel on another charter) and the
spot charters are charters which are negotiated and performed immediately and are typically for
short-term (less than one year). Although not typical, spot charters may occasionally be secured
for a charter period in excess of a year.
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For the years ended December 31, 2011, 2012 and 2013, 49.0%, 59.4% and 64.4%, respectively,
of the OSV Segment revenue was attributable to long-term charters (on our wholly-owned vessels
and chartered vessels which our Company and our subsidiaries operate as charterers) and
51.0%, 40.6% and 35.6%, respectively, of the OSV Segment revenue was attributable to
short-term and spot charters (on our wholly-owned vessels and chartered vessels which our
Company and our subsidiaries operate as charterers). As at the Latest Practicable Date,
approximately 46.8% and 21.7% of the total available days (for the wholly-owned vessels we
operate under this segment as at the Latest Practicable Date) for the period from March 26, 2014
to December 31, 2014 and the year ending December 31, 2015, respectively, have already been
booked under charter and other contracts. Such order book amounted to approximately US$48.8
million and US$29.6 million respectively.
The following table provides the number, average age and average vessel utilisation ratios for our
OSV vessels by class for the periods indicated:
As of December 31,
As of the
Latest
Practicable
Date 2011 2012 2013
Offshore Supply Vessels
Number of vessels . . . . . . . . . . . . . . . . . 18 22 29 30
(1)
Average age of vessels (year)
(2)
. . . . . . 2.1 2.6 2.8 3.1
Average vessel utilisation ratio of
wholly-owned vessels
(3)
(%) . . . . . . . . . 74.6 89.4 83.3 71.9
AHTS
Number of vessels . . . . . . . . . . . . . . . 9 13 14 15
Average age of vessels (year)
(2)
. . . . . 1.1 1.6 2.4 2.7
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . 71.3 87.7 89.6 79.4
PSV
Number of vessels . . . . . . . . . . . . . . . 7 7 13 13
Average age of vessels (year)
(2)
. . . . . 2.1 3.1 2.4 2.7
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . 85.3
(4)
66.1 62.4
AHT
Number of vessels . . . . . . . . . . . . . . . 2 2 2 2
Average age of vessels (year)
(2)
. . . . . 6.3 7.3 8.3 8.5
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . 84.0 98.0 100.0 62.7
Notes:
(1) Two of the vessels owned by one of our joint ventures are secured by a mortgage in favour of a third party, to the
extent of the financing of the vessel.
(2) Average age is the total age of all vessels within the relevant category, divided by the total number of vessels within
that category.
(3) Vessel utilisation is a function of the hire days, i.e. days in which the vessels were commercially deployed, against
the available days. Available days are calendar days less days for scheduled docking or repairs.
(4) We did not operate any wholly-owned PSV as at December 31, 2012.
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Transportation and Installation
The T&I Segment supports marine contractors in transportation, construction and maintenance of
oilfield infrastructure and pipelines. We ventured into this segment in 2007 with the acquisition of
Semco Pte. Ltd. and Maritime Pte. Ltd. This segment operated 45 vessels as of the Latest
Practicable Date. Our T&I vessels are deployed and operate globally. Most of these vessels are
flagged in Singapore.
As of the Latest Practicable Date, this segment operated nine 12,000 to 16,300 BHP AHTs
designed for ocean towing, transportation of FPSOs and other large offshore structures and
installation of offshore structures in offshore oilfields. In addition, this segment operates a fleet of
4,000 to 8,000 BHP AHTs in shallow waters, which are primarily engaged in the support of shallow
water pipelay and platform construction work.
As of the Latest Practicable Date, we operated 19 barges, including two submersible barges and
one submersible launch floatover barge, which are used for transportation, floatovers and
launching of platform jackets.
Our vessel charters for this segment include both long-term and short-term charters. We define
our short-term charters as having a duration of less than one year. We also define a charter
contract with a duration of one year or more as a long-term charter. Our long-term charters
typically have various durations of between one to three years. From time to time, we may also
deploy our vessels in the spot market to exploit available opportunities (such as during periods
between the expiration of charter and the employment of the vessel on another charter) and the
spot charters are charters which are negotiated and performed immediately and are typically for
short-term (less than one year). Although not typical, spot charters may occasionally be secured
for a charter period in excess of a year. Our long-term and short-term charters may include
lump-sum project contracts which we define as contracts involving any lump-sum amount that is
paid for services provided over a period of time. Such lump-sum project contracts may be for short
term (less than one year) or long term (one year or more), depending on the duration of the
relevant lump-sum project contracts. For the years ended December 31, 2011, 2012 and 2013,
2.0%, 2.2% and 5.8%, respectively, of the T&I Segment revenue was attributable to long-term
charters (on our wholly-owned vessels and chartered vessels which our Company and our
subsidiaries operate as charterers) and 98.0%, 97.8% and 94.2%, respectively, of the T&I
Segment revenue was attributable to short-term and spot charters (on our wholly-owned vessels
and chartered vessels which our Company and our subsidiaries operate as charterers). Out of
these charters, for the years ended December 31, 2011, 2012 and 2013, 42.4%, 26.5% and
14.2%, respectively, of the T&I Segment revenue was attributable to lump-sum project contracts
(on our wholly-owned vessels and chartered vessels which our Company and our subsidiaries
operate as charterers). As at the Latest Practicable Date, approximately 38.0% and 4.8% of the
total available days (for the wholly-owned vessels we operate under this segment as at the Latest
Practicable Date) for the period from March 26, 2014 to December 31, 2014 and the year ending
December 31, 2015, respectively, have already been booked under charter and other contracts.
Such order book amounted to approximately US$10.6 million and US$0.7 million respectively.
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The following table provides the number, average age and average vessel utilisation ratios for our
T&I vessels by class for the periods indicated:
As of December 31,
As of the
Latest
Practicable
Date 2011 2012 2013
Transportation and Installation
Number of vessels . . . . . . . . . . . . . . . . . 48 47 46 45
(1)
Average age of vessels (year)
(2)
. . . . . . 6.8 7.1 6.9 7.2
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . . . 70.4 79.3 71.4 65.6
AHT
Number of vessels . . . . . . . . . . . . . . . 16 16 17 17
Average age of vessels (year)
(2)
. . . . . 7.0 8.0 5.6 6.0
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . 77.2 82.4 79.3 63.2
Towing Tugs
Number of vessels . . . . . . . . . . . . . . . 9 9 9 9
Average age of vessels (year)
(2)
. . . . . 9.7 10.7 11.7 12.0
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . 54.9 80.6 89.9 75.8
Barges
Number of vessels . . . . . . . . . . . . . . . 23 22 20 19
Average age of vessels (year)
(2)
. . . . . 5.5 5.1 5.8 6.0
Average vessel utilisation ratio of
wholly-owned vessels (%)
(3)
. . . . . . . . 73.4 76.6 58.4 61.7
Notes:
(1) Four of the vessels are secured by mortgages in favour of third parties, to the extent of the financing of the vessels.
(2) Average age is the total age of all vessels within the relevant category, divided by the total number of vessels within
that category.
(3) Vessel utilisation is a function of the hire days, i.e. days in which the vessels were commercially deployed, against
the available days. Available days are calendar days less days for scheduled docking or repairs.
Offshore Accommodation
The Offshore Accommodation Segment owns and operates vessels that provide accommodation,
lifting, heli deck, catering, workshop and storage facilities in offshore oilfields for offshore
construction and/or maintenance operations. Our accommodation vessels are deployed and
operate globally.
We ventured into this segment in 2008 and as of the Latest Practicable Date, we operated five
accommodation vessels, including one vessel that is undergoing conversion into an
accommodation vessel. These vessels are flagged in Indonesia, Malaysia, Panama and Liberia.
As at the Latest Practicable Date, we have ordered two 750-person DP3 SSAVs. These vessels
are scheduled to be delivered by the end of 2014. As at the Latest Practicable Date, we are in the
final stages of procuring a charter contract for the commercial deployment of one of the vessels
when it is delivered. The execution of the charter contract is pending the completion of due
approval process of the counterparty. Notwithstanding, there is no assurance that the charter
contract will ultimately be executed by the counterparty. As at the Latest Practicable Date, we
have also ordered three 238-person DP2 accommodation vessels, of which two are scheduled to
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be delivered by the end of 2014 and one is scheduled to be delivered by the first quarter of 2015.
In addition, we have one vessel that is undergoing conversion into a 198-person accommodation
vessel, which is expected to be delivered by the second quarter of 2014.
When all of the accommodation vessels that are under construction or undergoing conversion are
delivered by 2015, our accommodation capacity will increase from 879 persons as at the Latest
Practicable Date to 3,291 persons (this includes one 191-person accommodation vessel that is
committed for sale after the Latest Practicable Date).
Our vessel charters for this segment include both long-term and short-term charters. We define
our short-term charters as having a duration of less than one year. We also define a charter
contract with a duration of one year or more as a long-term charter. Our long-term charters
typically have various durations of between one to two years. From time to time, we may also
deploy our vessels in the spot market to exploit available opportunities (such as during periods
between the expiration of charter and the employment of the vessel on another charter) and the
spot charters are charters which are negotiated and performed immediately and are typically for
short-term (less than one year). Although not typical, spot charters may occasionally be secured
for a charter period in excess of a year. For the years ended December 31, 2011, 2012 and 2013,
51.2%, 44.2% and 50.5%, respectively, of the OA Segment revenue was attributable to long-term
charters (on our wholly-owned vessels and chartered vessels which our Company and our
subsidiaries operate as charterers) and 48.8%, 55.8% and 49.5%, respectively, of the OA
Segment revenue was attributable to short-term and spot charters (on our wholly-owned vessels
and chartered vessels which our Company and our subsidiaries operate as charterers). As at the
Latest Practicable Date, approximately 41.3% of the total available days (for the wholly-owned
vessels we operate under this segment as at the Latest Practicable Date, excluding one vessel
that is undergoing conversion into an accommodation vessel) for the period from March 26, 2014
to December 31, 2014, have already been booked under charter and other contracts. Such order
book amounted to approximately US$9.5 million. As at the Latest Practicable Date, none of the
total available days (for the wholly-owned vessels we operate under this segment as at the Latest
Practicable Date, excluding one vessel that is undergoing conversion into an accommodation
vessel) for the year ending December 31, 2015 have been booked under charter and other
contracts.
The following table provides the number, average age and average vessel utilisation ratios for our
Offshore Accommodation vessels for the periods indicated:
As of December 31,
As of the
Latest
Practicable
Date 2011 2012 2013
Offshore Accommodation
Number of vessels . . . . . . . . . . . . . . . . . 4 4 5 5
(3)
Average age of vessels (year)
(1)
. . . . . . 10.5 11.5 10.0 10.2
(4)
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . . . 85.0 90.0 79.8 59.4
(4)
Notes:
(1) Average age is the total age of all vessels within the relevant category, divided by the total number of vessels within
that category.
(2) Vessel utilisation is a function of the hire days, i.e. days in which the vessels were commercially deployed, against
the available days. Available days are calendar days less days for scheduled docking or repairs.
(3) Including one vessel that is undergoing conversion into an accommodation vessel.
(4) Excluding one vessel that is undergoing conversion into an accommodation vessel.
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Harbour Services and Emergency Response
Our Harbour Services business has been operating for over 10 years. We own, operate and
manage a fleet of harbour tugs and heavy lift crane barges, which are actively engaged in
supporting harbour towage operators and providing heavy lift services to shipyards engaged in the
construction, and repair and conversion of ships and offshore drilling units, and other offshore
structures and topside production and processing facilities. In November 2013, our subsidiary,
POSH Semco, was granted a public licence by the MPA for the provision of towage services to
vessels within the limits of the port and the approaches to the port as described in Government
Regulations. Our Emergency Response business offers a comprehensive range of services,
equipment and personnel for salvage, wreck removal, rescue and oil spill response operations
globally. Emergency, salvage and oil spill response services encompass emergency assistance to
vessels that encounter grounding, collision, incidences of fire and oil spillage as a consequence
of collisions and groundings. In particular, salvage refers to the process of recovering a vessel, its
cargo, or other property after a shipwreck, grounding or other marine accidents or incidents, and
encompasses refloating, towing and recovery of a sunken, grounded or incapacitated vessel.
As of the Latest Practicable Date, our fleet in this segment comprised 3,200 to 5,000 BHP ASD
harbour tugs and four heavy lift crane barges with SWL capacities ranging from 60 tonnes to 1,500
tonnes. Our tugs are also chartered out to other operators in the Asia-Pacific region. Most of the
vessels in our HSER fleet are flagged in Singapore.
Our vessel charters for this segment include both long-term and short-term charters. We define
our short-term charters as having a duration of less than one year. We also define a charter
contract with a duration of one year or more as a long-term charter. Our long-term charters
typically have various durations of between one to four years. From time to time, we may also
deploy our vessels in the spot market to exploit available opportunities (such as during periods
between the expiration of charter and the employment of the vessel on another charter) and the
spot charters are charters which are negotiated and performed immediately and are typically for
short-term (less than one year). Although not typical, spot charters may occasionally be secured
for a charter period in excess of a year. We are also engaged by several marine oil terminal or oil
transportation companies on a retainer agreement to provide emergency and oil spill response
services. The retainer agreement typically has a duration of one year and provides for our
emergency response service team to be on standby on a call-out basis to respond to any oil spill
or emergency calls from our customers. In effect, this means that the retained entity is
contractually on an order to report for emergency work at all times. For the years ended December
31, 2011, 2012 and 2013, 9.2%, 27.4% and 25.8%, respectively, of the HSER Segment revenue
was attributable to long-term charters (on our wholly-owned vessels and chartered vessels which
our Company and our subsidiaries operate as charterers) and 90.8%, 72.6% and 74.2%,
respectively, of the HSER Segment revenue was attributable to short-term and spot charters,
including our retainer agreement (on our wholly-owned vessels and chartered vessels which our
Company and our subsidiaries operate as charterers). As at the Latest Practicable Date,
approximately 20.4% and 20.2% of the total available days (for the wholly-owned vessels we
operate under this segment as at the Latest Practicable Date) for the period from March 26, 2014
to December 31, 2014 and the year ending December 31, 2015, respectively, have already been
booked under charter and other contracts. Such order book amounted to approximately US$0.2
million and US$0.3 million respectively.
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The following table provides the number, average age and average vessel utilisation ratios for
vessels in this segment for the periods indicated:
As of December 31,
As of the
Latest
Practicable
Date 2011 2012 2013
Harbour Services and Emergency
Response
Number of vessels . . . . . . . . . . . . . . . . . 28 27 32 30
Average age of vessels (year)
(1)
. . . . . . 8.1 8.8 8.9 9.6
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . . . 34.6 54.1 41.2 43.3
Harbour Tugs
Number of vessels . . . . . . . . . . . . . . . 19 18 23 21
Average age of vessels (year)
(1)
. . . . . 3.4 3.6 4.5 5.0
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . 45.1 67.6 59.1 47.1
Crane Barges
Number of vessels . . . . . . . . . . . . . . . 4 4 4 4
Average age of vessels (year)
(1)
. . . . . 23.9 24.9 25.9 26.1
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . 19.3 45.7 27.7 25.7
Support Vessels
Number of vessels . . . . . . . . . . . . . . . 5 5 5 5
Average age of vessels (year)
(1)
. . . . . 13.5 14.5 15.5 15.8
Average vessel utilisation ratio of
wholly-owned vessels (%)
(2)
. . . . . . . . 8.0 19.3 8.5 46.2
Notes:
(1) Average age is the total age of all vessels within the relevant category, divided by the total number of vessels within
that category.
(2) Vessel utilisation is a function of the hire days, i.e. days in which the vessels were commercially deployed, against
the available days. Available days are calendar days less days for scheduled docking or repairs.
Joint Ventures
We enter into joint ventures, from time to time, for strategic reasons as well as to comply with local
regulations and laws, including cabotage laws. We account for these joint ventures as jointly
controlled entities under the equity method. Our joint venture agreements provide for reserved
matters (including but not limited to change of business purpose, increase of share capital,
amendments to the constitutive documents, arrangements with creditors and major capital
expenditure) which will require the unanimous consent of the shareholders. While such major
decisions require unanimous agreement among us and our joint venture partners, on a day-to-day
basis, our Group manages the commercial and technical operations of our joint ventures (save in
the case of PT. Win Offshore). Our joint venture agreements require the parties to negotiate in
good faith to resolve disputes or deadlock situations. With respect to six of our joint ventures, our
joint venture agreements provide for termination in certain circumstances (such as by mutual
consent or for cause, for example, in the case of a breach of the joint venture agreement or in the
event of the bankruptcy of a shareholder). If there is no resolution to any disputes or deadlock
130
situations, or if the termination provisions are triggered, our joint venture agreements provide that
a shareholder may elect to buy out the other shareholders shares or sell his shares to the other
shareholders at a price which may be determined with reference to an objective benchmark (such
as revalued net asset value whereby assets are marked-to-market. In such a case, the net asset
value of the joint venture is adjusted to take into account the market value of the vessels
determined with reference to independent valuations) or that the joint venture may be terminated
(such as by way of liquidation). The price determination terms referred to above are provided for
in all of our joint venture agreements and apply only to termination of the joint venture. There are
typically no termination payments in the form of penalties.
The following is a list of our joint ventures and certain information related thereto as at the dates
indicated:
As of December 31, 2013
As of the Latest
Practicable Date
Effective
percentage
of equity
owned
Number of
vessels
owned
Effective
percentage
of equity
owned
Number of
vessels
owned
Name of Company
Nimitrans Pte. Ltd.. . . . . . . . . . . . . . . 50.0% 1 50.0% 1
PACC Offshore Me xico S.A. de C.V. . 49.0% 0 49.0% 0
Pacific Workboats Pte. Ltd. . . . . . . . . 50.0% 20 50.0% 20
POSH Havila Pte. Ltd. . . . . . . . . . . . . 50.0% 0 50.0% 0
POSH Synergy Marine Private
Limited. . . . . . . . . . . . . . . . . . . . . . . . 50.0% 0 50.0% 0
POSH Terasea Pte. Ltd. and its
subsidiaries . . . . . . . . . . . . . . . . . . . . 62.5% 8
(1)
50.0% 9
(2)
PT. Mandiri Abadi Maritim . . . . . . . . . 49.0% 3
(3)
49.0% 3
(3)
PT. Win Offshore . . . . . . . . . . . . . . . . 49.0%
(4)
5 49.0%
(4)
6
Sermargosh2 S.A.P. I. de C.V. and
its subsidiaries. . . . . . . . . . . . . . . . . . 49.0% 2 49.0% 2
Servicios Martimos Gosh, S.A.P.I.
de C.V.. . . . . . . . . . . . . . . . . . . . . . . . 49.0% 6 49.0% 6
Notes:
(1) Including one vessel which was chartered by the joint venture as a charterer on a long-term charter (and on that
basis, the vessel is accounted for as a vessel owned by the joint venture).
(2) Including two vessels which are chartered by the joint venture as a charterer on long-term charters (and on that
basis, these vessels are accounted for as vessels owned by the joint venture).
(3) Excluding three vessels which we have sold to and chartered back from the joint venture on long-term charters and
three vessels deployed outside our Group.
(4) This refers to our Companys direct interest of 49.0% in PT. Win Offshore. In addition, our joint venture, PT. Mandiri
Abadi Maritim, also holds an interest of 1.0% in PT. Win Offshore.
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Nimitrans Pte. Ltd.
This is a 50:50 jointly controlled entity between our Company and Nippon Marine International
S.A., which is a subsidiary of Nippon Steel & Sumikin Engineering Co., Ltd. This company owns
a submersible launch floatover barge which we operate.
PACC Offshore Mxico, S.A. de C.V.
This is a jointly controlled entity in which Mayan Investments Pte. Ltd. (Mayan) and Inversiones
Costa Afuera, S.A. de C.V. (ICA) have contributed 49% and 51% respectively in the equity of
PACC Offshore Mxico, S.A. de C.V. It is presently a dormant ship owning company.
Pacific Workboats Pte. Ltd.
This is a 50:50 jointly controlled entity between POSH and Dolphin Shipping Company Private
Limited, a wholly-owned subsidiary of SembCorp Marine Ltd. This company owns and operates a
fleet of coastal service vessels including harbour tugs and heavy lift floating cranes.
POSH Havila Pte. Ltd.
This is a 50:50 jointly controlled entity between our Company and Havila Shipping ASA, a
Norwegian offshore supply vessels operator listed on the Oslo Stock Exchange, with each party
contributing offshore supply vessels to the jointly controlled entity by way of a charter
arrangement. We operate these offshore supply vessels.
POSH Synergy Marine Private Limited
This is a 50:50 jointly controlled entity between POSH and Jalhansa Enterprises Private Limited,
an Indian company. The company is currently dormant and will be wound up in due course.
POSH Terasea Pte. Ltd. and its subsidiaries
As at the Latest Practicable Date, we hold a 50.0% equity interest in POSH Terasea Pte. Ltd. with
the remaining 50.0% interest held by Terasea Pte. Ltd., a joint venture between Seabridge Marine
Services Ltd. and Ezion Holdings Limited. POSH Terasea Pte. Ltd. has three wholly-owned
subsidiaries: POSH Terasea (I) Pte. Ltd. and POSH Terasea (II) Pte. Ltd., which are ship owning
companies; and POSH Terasea Offshore Pte. Ltd. which undertakes ocean towage and related
activities, transportation and installation of FPSOs and other large marine structures.
PT. Mandiri Abadi Maritim
This is an Indonesian company in which we have an indirect interest of 49.0% (being our
Companys beneficial interest held by PCL, as trustee, under an interim trust arrangement arising
from PCLs ownership of PT Indopacc Global, an Indonesian company that is beneficially
interested in 49.0% of PT. Mandiri Abadi Maritim), with the remaining 51% interest being ultimately
held by Doktorandus Hananto and Muhammad Jimmy Goh Mahshun. The purpose of the interim
trust arrangement referred to above is to facilitate our Groups recognition of the 49.0% interest
in the joint venture prior to the transfer of the direct interest to our Group, which is in progress. As
at the Latest Practicable Date, we are currently in the process of taking a direct interest in 49.0%
of PT. Mandiri Abadi Maritim by having the shares transferred to our Group from the existing
shareholders holding 49.0% of PT. Mandiri Abadi Maritim. The company owns Indonesian flagged
vessels which are chartered to us for operation.
132
PT. Win Offshore
This is a joint venture between our Company, PT. Mandiri Abadi Maritim and PT. Wintermar
Offshore Marine Tbk, an Indonesian offshore operator listed on the Indonesia Stock Exchange.
PT. Win Offshore owns and operates Indonesian flagged vessels which are on a charter
arrangement with PT. Wintermar Offshore Marine Tbk.
Sermargosh2 S.A.P.I. de C.V. and its subsidiaries
Mayan has a 49.0% interest in this jointly controlled entity with ICA, who contributed 51.0% in the
equity of Sermargosh2 S.A.P.I de C.V. The company is the holding company of three other
companies, GOSH Caballo Eclipse S.A.P.I. de C.V., GOSH Rodrigo DPJ S.A.P.I. de C.V. and
GOSH Caballo Grano de Oro S.A.P.I. de C.V., which are ship owning companies. GOSH Caballo
Eclipse S.A.P.I. de C.V. is currently dormant. Sermargosh2 S.A.P.I de C.V. and its subsidiaries are
in the business of owning and operating vessels in support and service to Mexicos offshore oil
and gas sector.
Servicios Martimos Gosh, S.A.P.I. de C.V.
This is a jointly controlled entity between our Companys subsidiary, Mayan Investments Pte. Ltd.
and GGM Shipping, S.A. de C.V. (renamed Shipping Group Mexico SGM, S.A.P.I. de C.V.),
Arrendadora Caballo de Mar III, S.A de C.V. and ICA, with the parties contributing the respective
equity: 49.0%, 25.0%, 25.0% and 1.0%. The company owns and operates two PSVs and four
mudboats as of the Latest Practicable Date.
Please also see Appendix F List of Subsidiaries and Associated Companies for further details
on our joint ventures.
Vessels to be Delivered
We endeavour to ensure that our vessels are relevant to the market, upgraded and able to operate
in nearly all major offshore oil and gas producing regions. Please see Fleet Optimisation for
further details. As of December 31, 2013 and as of the Latest Practicable Date, we operated a
combined fleet of 112 and 110 vessels, respectively, including 45 and 47 vessels, respectively,
owned by our joint ventures (of which, as of the Latest Practicable Date, one vessel is undergoing
conversion into an accommodation vessel and two vessels are chartered by a joint venture as a
charterer on long-term charters). This combined fleet comprises AHTS, AHTs, ocean-towing tugs,
PSVs, accommodation vessels, utility vessels and crane and deck barges. As of the Latest
Practicable Date, we have on order and scheduled for delivery 15 vessels, comprising two deck
cargo barges, two ASD harbour tugs, three DP2 accommodation vessels, three DP2 AHTS, two
DP3 SSAVs, and three vessels which our joint ventures have on order. In addition, we have one
vessel that is undergoing conversion into an accommodation vessel.
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The following table sets out certain key information regarding our vessels to be delivered as at the
Latest Practicable Date:
Name Type of Vessel
Contracted
Delivery Date Shipyard Size Flag State
PX 1023
(POSH Radiant)
DP2 AHTS Second quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
8,000 BHP Singapore
Hull C1213
(POSH Xanadu)
DP3 SSAV Third quarter
of 2014
Paxocean
Engineering
Zhoushan
Co. Ltd
750-person
(1)
Hull C1318
(POSH Arcadia)
DP3 SSAV Fourth quarter
of 2014
Paxocean
Engineering
Zhoushan
Co. Ltd
750-person
(1)
PX 1020
(POSH Endurance)
DP2
Accommodation
vessel
Third quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
238-person Singapore
PX 1021
(POSH Endeavour)
DP2
Accommodation
vessel
Fourth quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
238-person Singapore
PX 1029
(PW Tetap)
(2)
ASD Harbour Tug Second quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
3,600 BHP Singapore
PX 1030
(PW Tangkas)
(2)
ASD Harbour Tug Second quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
3,600 BHP Singapore
PX 1031
(POSH Enterprise)
DP2
Accommodation
vessel
First quarter of
2015
Paxocean
Engineering
Zhuhai Co. Ltd
238-person Singapore
PX 1032 DP2 AHTS First quarter of
2015
Paxocean
Engineering
Zhuhai Co. Ltd
8,000 BHP
(1)
PX1033 ASD Harbour Tug Fourth quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
4,000 BHP Singapore
PX1035 ASD Harbour Tug Fourth quarter
of 2014
Paxocean
Engineering
Zhuhai Co. Ltd
4,000 BHP Singapore
Jasa Setia
(to be renamed POSH
Bawean)
(3)
Accommodation
vessel
Second quarter
of 2014
DDW-
PaxOcean
Shipyard Pte.
Ltd.
198-person Indonesia
T210
(POSH
Perserverance)
DP2 AHTS Fourth quarter
of 2014
PT. Nanindah
Mutiara
Shipyard
12,000
BHP
Singapore
H1003 Deck cargo barge Third quarter
of 2014
Paxocean
Engineering
Zhoushan
Co. Ltd
7,500 DWT Singapore
H1005 Deck cargo barge Third quarter
of 2014
Paxocean
Engineering
Zhoushan
Co. Ltd
7,500 DWT Singapore
Hull No POET1560
(2)
Floating Crane
Barge
Third quarter
of 2014
POET
Shipbuilding &
Engineering
Pte Ltd
500T
Sheerleg

(1)
134
Notes:
(1) The flag state for the vessel (which refers to the state under whose laws a vessel is registered or licensed) has not
been determined as at the Latest Practicable Date.
(2) This vessel is under construction and is pending delivery to our joint venture, Pacific Workboats Pte. Ltd.
(3) This vessel is undergoing conversion into an accommodation vessel and is chartered back from a joint venture, PT.
Mandiri Abadi Maritim, on a long-term charter and on that basis, is accounted for as a vessel owned by POSH and
its subsidiaries.
Fleet Optimisation
We have a fleet optimisation programme, comprising fleet renewal initiatives (which is focused on
maintaining or improving the average age of our existing fleet and upgrading vessel
specifications) and fleet re-profiling initiatives (which is focused on acquiring or building new
vessels to optimise the number and mix of vessels within the fleet in response to changes in
market dynamics and for future growth).
The demand for offshore services, charter rates, vessel types and fleet size are all interrelated.
Hence, we constantly monitor and seek to optimise the portfolio mix of our vessels to enable us
to continue to capture market opportunities and respond to ever-changing market requirements.
We endeavour to ensure that our vessels are relevant in the right offshore service segments. Such
fleet re-profiling initiatives are aimed at maintaining an optimal and relevant mix of vessels within
our Companys fleet (either by upgrading capacities or capabilities of existing vessels or acquiring
additional vessels to the fleet) in order to enable our Company to continue to capture market
opportunities and respond to changing market requirements. In this regard, our Company has a
criteria and assessment framework in place to assess the re-profiling of its fleet from time to time
within each of the business segments of our Company. These criteria and assessment framework
are based on our Companys monitoring of demand for offshore services, charter rates, vessel
types and fleet size. Our management constantly monitors demand and opportunities in the
offshore services industry through market intelligence such as periodic industry reports. Such
periodic industry reports will provide information and data on E&P activities, worldwide geographic
distribution of offshore installations (such as rigs and FPSOs), the age profile of various types of
vessels deployed in the market, reported orders by various owners worldwide for newbuildings
and deliveries of the various types and classes of vessels (providing data such as delivery dates
and number of vessels etc.), market and charter rates trends. All of this information, coupled with
feedback from our customers, are taken into consideration and forms the criteria for assessing
demand gaps (in terms of vessel types) and opportunities in the marine offshore services sector.
Our Companys fleet renewal initiatives, on the other hand, are focused on the average age and
the technical specifications of the vessels within our Companys fleet. There is not a formalised
process for such fleet renewal initiatives, but rather, this is a continuing and dynamic process for
the continuing renewal of vessels within our Companys fleet, and our Company renews its fleet
dynamically and in response to changes in market dynamics and demand. In this regard, our
Company has a criteria and assessment framework in place, which is based on the age and
technical specifications of the respective vessels. Older vessels require higher vessel operating
costs and hence would adversely impact our profitability. On the other hand, vessels with lower
technical specifications may not meet the demands or requirements of our customers, and
consequently face lower utilisation. We seek to enhance our market-leading positions in each of
our OSV, T&I and HSER Segments, and also the capabilities of our OA Segment, by acquiring
more sophisticated vessels and upgrading existing vessels with more sophisticated technology
and equipment through our fleet optimisation programme. At the same time, under the fleet
optimisation programme, we may dispose of older and/or lower-specification vessels that are less
efficient to operate and redeploy capital for vessel acquisition and upgrading. In this regard, we
work with shipyards and, in particular, affiliated shipyards of the KSL Group, to bring our
operational expertise and our understanding of customers demands to ensure that our vessels
are built to the right design, equipment and specifications. We permanently station our technical
superintendents in the shipyards as our vessels are being built to ensure adherence to quality and
135
delivery timeline. Our strategic relationships with affiliated shipyards also enable us to respond
rapidly to changing market dynamics or new opportunities through quick turnaround times for our
newbuilds. Please also see Business Our Competitive Strengths Strong parentage and
Interested Person Transactions and Potential Conflicts of Interest for further details on our
transactions with the affiliated shipyards of the KSL Group.
As we optimise our fleet portfolio and expand, we expect to continue to sell our older and less
sophisticated vessels and those that are no longer relevant to our business strategy. We are
occasionally approached by third parties expressing interest in our vessels and, depending on
factors including market conditions, the age of the vessel, our fleet strategy and price, we may
consider taking advantage of such opportunity by selling such vessels. In this regard, we generate
a recurring collateral benefit for the reason that we have been able to buy and build a vessel
well, we are able to realise gains when we subsequently dispose of the vessel.
From 2007 to December 31, 2013, we had disposed of vessels at prices that had been contracted
with reference to prevailing market prices of comparable or near comparable vessels available for
sale in the open market at the relevant time. From 2007 to December 31, 2013, we recorded gains
from disposal of vessels totalling US$90.0 million. For the years ended December 31, 2011, 2012
and 2013, the gains arising from the disposals of our vessels amounted to US$13.6 million,
US$11.3 million and US$10.9 million, respectively.
We have pursued the fleet portfolio optimisation strategy described above by maintaining a
disciplined approach developing technical knowledge of offshore service assets, understanding
the market, maintaining strategic access to our affiliated shipyards, leveraging our expertise and
market insights and taking advantage of the right segments in the offshore service market through
both expanding/upgrading of our fleet, as well as disposing of our vessels on a selective basis.
Sales and Marketing
As of the Latest Practicable Date, we have 27 staff in our sales and marketing team. Each business
segment has its dedicated sales and marketing team focused on and specialised in its respective
business segment and clients. Each team closely monitors each project from the initial bidding
phase right through to completion so as to provide a single point of contact for the customer. At each
project completion, the team engages the customer in appraising our service quality and
responsiveness and performance of our vessels. These detailed feedback sessions and subsequent
collaboration with our customers, across the various market segments that we operate in, ensure
that we have a thorough understanding and appreciation of market demands and customers key
requirements and provide us with the means to anticipate future market opportunities.
The quality of our modern vessels, our attention to safety, technical and operational competence,
and our service reliability have enabled us to build a strong reputation in the marketplace and
secure a loyal and growing customer base, including through customer referrals.
We partner with reputable international brokers to identify business and potential customers. As
is the practice in the shipping industry, we pay a percentage commission to such brokers for any
successful business that is concluded.
Our Customers
Our customers include international oil companies, national oil companies, offshore contractors
and shipyards. Our customers operate internationally and within the territorial waters of some
countries which have cabotage laws. In such instances, we may enter into contracts or other
cooperation arrangements with local vessel operators in order to be able to provide services to the
end customers. Generally, our Company is not dependent on particular customers and contracts
are generally awarded based on various factors, including but not limited to the availability of
vessels of the class, type and specifications according to customer requirements and the location
136
of our Companys vessels in relation to the location of the job to be performed. Our vessels are
deployed globally and hence customers who accounted for 5.0% or more of our total revenues in
each year are a reflection of the contracts we have successfully procured from the relevant
customers in the relevant year and do not necessarily reflect any particular trend or reliance on
any customer. For example, we may enter into lump-sum project contracts under the T&I Segment
(which are substantial one-time and non-recurring projects) with different customers in different
years. Accordingly, customers who accounted for 5.0% or more of our total revenues in each year
are not necessarily recurring and the revenue from such customers may vary from year-to-year.
For the years ended December 31, 2011, 2012 and 2013, 24.0%, 26.3% and 26.7%, respectively,
of our total revenues came from our five largest customers (based on revenue contribution in the
respective year). For the years ended December 31, 2011, 2012 and 2013, the number of
customers we had that accounted for 5.0% or more of our total revenues were one, two and three,
respectively. The following customers accounted for 5.0% or more of our total revenues for the
years ended December 31, 2011, 2012 and 2013.
Nature of Services
Provided
As of December 31,
2011 2012 2013
A leading provider of offshore marine
services to the oil and gas industry in Egypt
Charter of vessels
by OSV Segment
1.0% 8.0% 2.8%
Hyundai Heavy Industries Co. Ltd. Charter of vessels
by T&I Segment
10.9% 3.2% 3.8%
Larsen & Toubro Limited Charter of vessels
by T&I Segment
2.0% 6.0% 3.2%
Petro Services Congo Sarl Charter of vessels
by OSV Segment
0.2% 1.0% 7.3%
OFS (Oil Field Supplies) Pte. Ltd. Charter of vessels
by OSV Segment
6.0%
Branch of PTSC PTSC Marine Charter of vessels
by OSV Segment
2.7% 5.2%
Our key customers for each of the past three years ended December 31, 2013 are not necessarily
recurring, and we are not reliant on any particular customer or customers. The customers serviced
by our Group in one year may not necessarily be repeat customers in the following year, and vice
versa. Hence, the table of customers set out above does not necessarily reflect any particular
trend or reliance on any customer.
Terms of Charters
We earn and recognise revenues primarily from time charters of our vessels based upon daily
rates of hire and to a lesser extent from bareboat charters. In addition, we recognise revenue from
lump-sum project contracts. Under a time charter, we retain operational control over the vessels
and are responsible for operating expenses including maintenance and repairs, labour and
insurance, while our customers are responsible for fuel costs. Time charters may range from
several days to five years or more. We generally enter into industry standard forms, such as the
BIMCO Supplytime 2005, BIMCO Towhire 2008, BIMCO TOWCON 2008, BIMCO Bargehire 2008
or Barecon 2001, often with modifications, for charters of our vessels with our customers. Under
a bareboat charter, the charterer takes over operational control of the vessel and is responsible
for all operating expenses, including maintenance and repair, crewing costs and insurance.
Bareboat charters are typically on longer term periods exceeding one year or more.
Typical terms of charter vary across our business segments. See Business Segments above
for further details.
137
Our Suppliers
As we are principally engaged in the operation of offshore support vessels servicing offshore oil
and gas E&P activities, our business activities are of a service nature. We provide vessels with the
necessary crew support to deliver personnel and cargo to offshore installations, handle anchors
for drilling rigs and other marine equipment, support offshore construction and maintenance work
and provide standby safety support service. Such marine support services are provided using our
fleet of vessels and undertaken by our experienced crew and shore-based personnel. In the
provision of our services, except fuel costs, which are often borne by our customers, other vessel
operating expenses, such as purchase of lube oil and deck supplies, are typically our
responsibilities. Such supplies are available from many suppliers in the market and we are not
dependent on any single supplier, which may account for any significant variations in supplies
obtained from any one supplier on a year to year basis. As such, a major supplier (being a supplier
who accounted for 5.0% or more of our total cost of sales) in one year may not necessarily also
be a major supplier in another year, as we may choose to procure supplies from a different
supplier which may offer better rates or services. Accordingly, the table of suppliers set out below
does not necessarily reflect any particular trend or reliance on any supplier. None of our suppliers
accounted for 5.0% or more of our total cost of sales for the years ended December 31, 2011,
2012 and 2013, save for the following:
Nature of Services or
Products Supplied
As of December 31,
2011 2012 2013
Peninsula Petroleum Far East Pte. Ltd. . . . Bunkers 7.2% 3.0% 1.5%
Sentek Marine & Trading Pte. Ltd. . . . . . . . Bunkers 4.1% 11.6% 7.2%
Insurance
The operation of any vessel involves an inherent risk of losses (including damage to our vessel
or third party vessels) attributable to adverse sea and weather conditions and other force majeure
events such as war, piracy, terrorism, and political action or inaction.
We generally maintain the following coverage for our vessels:
Hull and machinery policy. This covers accidental physical loss or damage to our vessels
(including machinery and equipment onboard the vessel) and the vessels proportion of
general average sacrifices and contributions. Coverage for our fleet under each hull and
machinery policy is written based upon our insurable interest in the relevant vessel, which is
assessed at market value, as agreed annually between us and the insurer of the relevant
policy.
Protection and indemnity policy. This covers third party liabilities arising out of our vessels
operations including contractual obligations of owner to crew (for example, personal injury
and illness of a crew member), collision with other vessels or with fixed or floating objects
and oil pollution. Where any employees involved in marine based or waterborne related work
are not covered by a vessels Protection and Indemnity policy, we separately obtain separate
insurance for Workmens Compensation (which includes Employers Liability cover) and
Hospitalisation, Term Life and Personal Accident.
War risk policy. This covers loss or damage to our vessels as a result of certain war or
war-like conditions, including terrorism, sabotage and vandalism and political actions such
as acquisitions by governments.
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Depending on the circumstances of a charter or a lump-sum project contract, where we are acting
as disponent owner of a vessel, we may take out and maintain contractual liability insurance to
cover us against liabilities we have assumed pursuant to indemnities granted under our charters
or contracts.
We also maintain various non-vessel related policies such as:
Machinery All Risk policy. This covers accidental loss or damage to certain of our assets
such as salvage, diving and oil spill response equipment.
Public Liability policy. This covers our legal liability to third parties arising in the course of
our business operations such as accidental damage to third party property or accidental
injury to third parties.
We believe that our current level of insurance is adequate for our business and consistent with
industry practice, and we have not historically experienced a loss in excess of our policy limits.
Competition
We face competition in each of the market segments that we operate in. Our competitors range
from international operators to smaller local companies that typically concentrate their activities in
one specific region. In addition, many countries practice cabotage laws, which favour, or
effectively require contracts to be awarded to local contractors. Such policies may adversely affect
our ability to compete effectively.
Despite the competitive environment and protectionist barriers we encounter, we believe that our
strong financial standing, strong reputation and parentage, technical and operational competence,
the quality of our vessels and the scope of services that we provide, offer important competitive
advantages and enable us to compete effectively in the market segments we operate in.
Employees
As at December 31, 2013, we and our joint ventures employed 277 employees (land based) in
Singapore and overseas. Of our employees, 53 are represented by a union or employed pursuant
to a collective bargaining agreement or similar arrangement. We have not experienced any strikes
or work stoppages, and our management believes that we continue to enjoy good relations with
our employees.
Separately, we engage crewing personnel for our vessels for fixed contracted durations. As at
December 31, 2012 and December 31, 2013, we had engaged a total of 837 and 1,012 crewing
personnel, respectively.
The table below provides the number of employees across various functions for the years
indicated:
Function For the year ended December 31,
2011 2012 2013
Corporate Office/Shared Services . . . . . . . . . . . . . 35 33 34
Fleet Management . . . . . . . . . . . . . . . . . . . . . . . . . 85 99 119
Offshore Supply Vessels . . . . . . . . . . . . . . . . . . . . 22 15 23
Offshore Accommodation . . . . . . . . . . . . . . . . . . . . 6 6 14
Transport and Installation. . . . . . . . . . . . . . . . . . . . 18 21 24
Harbour Services and Emergency Response . . . . 45 49 63
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 223 277
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The steady increase in the number of employees (including employees of our joint ventures) is
due to the expansion of our business over the period.
The following table provides geographical distribution of our employees for the years indicated:
Geographical regions For the year ended December 31,
2011 2012 2013
Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 220 251
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 24
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 223 277
Our future success will depend upon our ability to attract and retain qualified personnel.
Competition for qualified personnel remains intense, and we may not be successful in retaining
our key employees or attracting skilled personnel.
Intellectual Property
As of date, we have not registered any trademark/copyright in Singapore and our business
operations are not dependent on any specific intellectual property.
Despite our efforts to protect our proprietary information, third parties may be able to obtain and
use our proprietary information without authorisation or to develop similar technology
independently. Policing unauthorised use of our intellectual property is often difficult and the steps
taken may not be sufficient to prevent the infringement by unauthorised third parties of our
intellectual property.
Third parties may challenge the validity or scope of our intellectual property from time to time, and
such challenges could result in the limitation or loss of intellectual property rights. Irrespective of
their validity, such claims may result in substantial costs and diversion of resources that could
have an adverse effect on our operations. We have not made any material intellectual property
claims against any third parties.
Health, Safety, Environment and Quality Assurance (HSEQA)
Our success depends to a large extent on the degree of specialisation and skills of our onshore
and offshore employees. We are committed to maintaining high standards of quality, occupational
health and safety and environmental protection. Due to the nature of our operations, we are
subject to various internal and external safety and quality audits to ensure compliance with health,
safety and environmental protection laws and regulations, and to maintain effective waste
prevention and reduction capabilities. We conduct regular safety and environmental audits and
provide systematic health and safety training for our employees. We are proactive in establishing
policies and operating procedures for safeguarding the environment against any hazardous
materials aboard our vessels and at shore-based locations.
Our integrated safety systems, which encompass health, safety, environmental and quality
assurance policies and operating procedures, comply with the International Management Code for
the Safe Operation of Ships and for Pollution Prevention, as required by the International
Convention for the Safety of Life at Sea, as further described in Government Regulations
International Conventions.
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As part of our integrated safety system, we are certified ISO 9001:2008 Quality Management
Standard and OHSAS 18000 Occupational Health Management Standard. These certifications
were awarded in recognition of our commitment and efforts in maintaining a quality management
system in the provision of maintenance and repair works for our vessels, ship management and
chartering services and the provision of marine supplies.
Our quality management system has been certified by Lloyds Register Quality Assurance to the
ISO 9001:2008 Quality Management System Standard. This certification was awarded in
recognition of our office based activities related to ship management of a fleet of offshore support
vessels and tugs trading worldwide.
Our new generation of DP2 PSVs, DP2 accommodation vessels and DP3 SSAVs are designed
with diesel electric propulsion and Clean-Design Notation and Green Passports which reduce and
limit the ships combustion machinery emissions and accidental sea pollution. Clean-Design
Notation stipulates defensive design, accident prevention and consequence limitation
requirements, thus providing additional environmental protection.
Our latest green initiative is the introduction of effective fresh water purification systems
throughout our fleet, thereby eliminating the use of bottled water on board and at the same time
improving the health of our seagoing personnel. As at the Latest Practicable Date, we are also in
the process of implementing the appropriate measures to achieve ISO 14001 accreditation.
Classification
Classification is the process of verifying ship standards against a set of requirements in the rules
established by a classification society. For classification purposes, a ship is surveyed during its
construction on the basis of design approval, tested before being taken into service and surveyed
regularly during its whole operational life until it is scrapped. Every vessels hull and machinery
must be classed by the classification society authorised in its country or elected by its owner. The
classification society ensures that the vessel is built, equipped and maintained in accordance with
the societys rules and regulations which, among other things, incorporate International Maritime
Organisation (IMO) convention requirements with regard to safety and pollution. The class
certificate is valid for five years, subject to periodic inspections. The following surveys are carried
out by a surveyor of the classification society:
annual survey, which is carried out yearly;
intermediate survey, which is carried out every 2.5 years and can be carried out in a vessels
second or third year; and
renewal or special survey, which is carried out once every five years. This survey may be
commenced at the fourth anniversary after the previous survey and progressed throughout
the year with a view to completion by the fifth anniversary. Vessels are also required to be
dry docked twice during the special survey period for inspection of underwater parts. The
period between any two dry dockings must not be more than 36 months, unless the vessel
qualifies for and undergoes an in-water survey.
Depending upon the type and age of a vessel and quality of ongoing maintenance, the scope of
the survey can range from a standard inspection to a more stringent enforcement such as steel
thickness measurement. Defects found at such inspection have to be repaired to the satisfaction
of the classification society before the vessel is allowed to be put into operation. In cases of older
vessels where more wear and tear is typical, a substantial amount of money may have to be spent
for steel renewal or other repairs for compliance with the rules of a classification society and for
the vessel to be maintained under classification. A continuous survey of machinery is generally
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required, with 20.0% of a vessels machinery to be surveyed every year so that all of a vessels
machinery is reviewed every five years. The classification societies with which our vessels are
mainly registered are the Lloyds Register of Shipping, Det Norske Veritas, Bureau Veritas and the
American Bureau of Shipping. As at the Latest Practicable Date, all of our Groups vessels have
undergone annual classification surveys and have complied with the rules of the relevant
classification societies.
Properties
We have leased 9,724 square feet of office space which is used for our business office at No. 1
Kim Seng Promenade, #06-01, #06-01A, #06-01B and #06-01F, Great World City, Singapore
237994 from Midpoint Properties Limited for a period of five years from March 7, 2012. Under such
lease, we have an option to renew the lease for a term of five years, subject to terms and
conditions of the lease. Please also see Interested Person Transactions and Potential Conflicts
of Interest Present and On-going Transactions Provision of Lease Services by an Associate
of KSL for further details. As at the Latest Practicable Date, we also occupy office space in
another location in Singapore on a temporary basis and, rent five residential units in Singapore for
our expatriate employees and rent office space in Mexico, none of which are material.
See Business Segments and Joint Ventures above for ownership information on our
vessels.
Legal Proceedings
An admiralty action was initiated in 2009 against our subsidiary, POSH Semco, in the South
African High Court. LJ Boer Handel B.V. (as owners of the pontoon Margaret and two floating
docks) and LJ Boer Vastgoed B.V. (as owners of 12 barges) (together, the Plaintiffs) have
claimed damages as a result of the loss of and damage to the pontoon Margaret and its cargo of
two floating docks and 12 barges under towage from Shanghai, China to Rotterdam, The
Netherlands by POSH Semco. The damages claimed amounted to (a) C33.8 million (or
approximately S$59.2 million) (comprising C19.2 million (or approximately S$33.6 million) for the
value of the tow and C14.6 million (or approximately S$25.6 million) for the Plaintiffs remaining
damages including loss of profit, contractual penalties and wasted expenditure on ordering
materials and parts for the pontoon and tow); (b) US$2.0 million (or approximately S$2.5 million)
plus C420,000 (or approximately S$735,000) comprising salvage, advisory, expert and finance
costs incurred in relation to the salvage operations; and (c) R11.0 million (or approximately S$1.3
million) comprising the net wreck reduction costs incurred for the removal of the wreck from the
reef, including demolition and monitoring costs less the salvage received for any scrap parts sold.
The trial is currently scheduled to commence in October 2014 and we intend to vigorously defend
against this claim. Our insurers have confirmed that any liability from this suit will be fully covered
without conditions (after taking into account US$1,000 deductibles) by our existing insurance. As
such, we do not envisage any difficulties in making a claim against our insurers for the full amount,
and accordingly, no provision has been made in our consolidated financial statements.
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We may, from time to time, become party to certain proceedings brought by governmental or
private parties. Although the results of litigation and claims cannot be predicted with certainty, we
currently believe that the final outcome of these proceedings will not have a material adverse
effect on our financial position or profitability. Regardless of the outcome, litigation can have an
adverse impact on us because of defence and settlement costs, diversion of management
resources and other factors.
Our Company has also granted a loan (of which the outstanding amount as at December 31, 2013
was US$109.8 million) to our joint venture, GOSH, for the acquisition, modification and
mobilisation of the six vessels of GOSH which have been chartered to OSA. The loan was granted
in view of the unacceptable terms offered by the local banks in Mexico. There are no fixed
repayment instalments and the charter hire that is paid into the trust (referred to above) are paid
back to our Group and the net amount (after deducting commission, vessel operating expenses
and taxes) is applied against the loan. As security for the loan, we have share pledge agreements
with the two Mexican shareholders of GOSH (representing 50.0% interests in GOSH) and
mortgages over the six vessels owned by GOSH. Please see Summary Valuation for further
details on the valuation of the vessels owned by GOSH. To safeguard our interest, we have in
March 2014 initiated legal actions to recover full repayment of the outstanding loan and interest
payable to us, including legal actions to enforce our rights under the share pledge agreement to
require the sale of the shares held by the two Mexican shareholders to such person as we may
nominate whereby the proceeds from such sale will be paid to us to reduce our loan to GOSH (as
described in Risk Factors Risks Relating to Our Business and Operations We, as well as our
joint ventures, are exposed to the credit risks of our customers and certain other third parties, and
the non-performance or insolvency of these parties could adversely affect our financial condition
and results of operations and Managements Discussion and Analysis of Financial Conditions
and Results of Operations Material Events After December 31, 2013). No allowance was made
in this regard given that (a) we expect that the contracts with PEMEX will remain operational until
2015, and the charter income from the contracts with PEMEX (which, when invoiced by OSA, are
payable to the trust and on the basis that such amounts are paid by PEMEX into the trust) is
sufficient to service GOSHs vessel operating expenses, as well as its obligations to service the
loan and current and future interest payable to us by GOSH; and (b) as security for the loan, we
have share pledge agreements with the two Mexican shareholders of GOSH (representing 50.0%
interests in GOSH) and mortgages over the six vessels owned by GOSH. We understand from our
legal advisers as to Mexico law, Basham, Ringe y Correa, S.C., that the mortgages over the six
vessels owned by GOSH are enforceable under Mexico law in accordance with their respective
terms and there is no reason to believe that there are currently any issues (including any issues
arising from the Mexican governments investigations of OSA over alleged fraud arising from
billings charged by OSA to PEMEX) that may give rise to prevent the enforcement of such
mortgages. Please refer to the section titled Risk Factors Risks Relating to Our Business and
Operations We, as well as our joint ventures, are exposed to the credit risks of our customers
and certain other third parties, and the non-performance or insolvency of these parties could
adversely affect our financial condition and results of operations for further details on the share
pledge agreements and mortgages.
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Save as disclosed above, we are not, and have not been, involved in any legal or arbitration
proceedings and no proceedings are currently pending or contemplated which may have or have
had, in the 12 months immediately preceding the date of lodgement of this document with the
MAS, a material effect on our financial position or profitability.
For the readers convenience, the U.S. dollar amount, the Euro amount and the South African
Rand amount in this sub-section have been translated into Singapore dollars based on the
exchange rates of S$1.27 = US$1.00, S$1.75 = C1.00 and S$0.12 = R1.00, quoted by Bloomberg
L.P. on the Latest Practicable Date.
1
1
Such translations should not be construed as a representation that the U.S. dollar, Euro or South African Rand
amounts have been, could have been or could be converted into Singapore dollars, as the case may be, at the rate
indicated, any particular rate or at all.
We have included each of the exchange rates quoted above in its proper form and context in this Prospectus.
Bloomberg L.P. has not provided its consent, for the purposes of Section 249 of the Securities and Futures Act, to
the inclusion of the exchange rates quoted above in this Prospectus, and is thereby not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. While we, the Over-allotment Option Provider and
the Joint issue Managers, Bookrunners and Underwriters have taken reasonable actions to ensure that each of the
above exchange rates have been reproduced in its proper form and context, neither we, the Over-allotment Option
Provider, the Joint Issue Managers, Bookrunners and Underwriters nor any other party has conducted an
independent review of the information or verified the accuracy of the contents of the relevant information.
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GOVERNMENT REGULATIONS
Our operations are significantly affected by a variety of Singapore and international laws and
regulations governing worker health and safety and the manning, construction and operation of
vessels. Domestic and international regulators have established safety criteria and are authorised
to investigate vessel accidents and recommend improved safety standards. They also regulate
and enforce various aspects of marine offshore vessel operations, including classification,
certification, routes, dry docking intervals, manning requirements, tonnage requirements and
restrictions, hull and shafting requirements and vessel documentation.
During the ordinary course of business, our operations are subject to a wide variety of
environmental laws and regulations, including those which regulate the discharge of materials into
the environment, or otherwise relating to the protection of the environment.
In various countries in which we operate, specifically, Indonesia, Mexico and Malaysia, vessel
trade or marine transportation between two ports or places within a country, is subject to rules
known as cabotage laws, which regulate maritime cabotage or coasting trade. Cabotage laws
restrict maritime cabotage to domestic flag vessels qualified to engage in the coasting trade of that
country. There are similar laws in many of the countries in which we operate, which currently
restrict our ability to operate in those countries. Such laws also require vessels engaged in marine
transportation between two points in those countries to be owned and controlled by citizens,
manned by local crew, or locally built. For the years ended December 31, 2011, 2012 and 2013,
the profit contribution attributable to our Companys joint ventures
(1)
in Mexico and Indonesia to
our Groups net profit is as follows:
Percentage of Profit Contribution to Group Net Profit
Year ended December 31,
2011 2012 2013
Indonesia . . . . . . . . . . . . . . . . . . . . 0.3% 2.6%
Mexico . . . . . . . . . . . . . . . . . . . . . . (14.5)% (7.2)%
Note:
(1) Our Company does not have any joint ventures in Malaysia.
In addition, apart from our joint ventures, our Group also earns revenue from the charters of our
vessels which are deployed in Indonesia, Mexico and Malaysia. For the years ended December
31, 2011, 2012 and 2013, the revenue attributable to our Groups operations in Indonesia, Mexico
and Malaysia to our Groups revenue is as follows:
Percentage of Revenue to Group Revenue
Year ended December 31,
2011 2012 2013
Indonesia . . . . . . . . . . . . . . . . . . . . 0.9% 1.2% 2.8%
Mexico . . . . . . . . . . . . . . . . . . . . . . 1.0% 1.8% 1.6%
Malaysia . . . . . . . . . . . . . . . . . . . . . 6.4% 11.3% 18.1%
As at the Latest Practicable Date, to the best of our Directors knowledge, we have obtained all
requisite approvals and are in compliance with all international conventions and laws and
regulations that would materially affect our business operations.
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The international conventions and laws and regulations of the various jurisdictions which are
material to the business of our Group are set out below:
International Conventions
International Conventions Description
International Convention for the
Prevention of Pollution from Ships, 1973
as modified by the Protocols of 1978 and
1997 (MARPOL)
MARPOL was designed to minimise pollution of the
seas, including dumping, oil and exhaust pollution. Its
stated object is to preserve the marine environment
through the complete elimination of pollution by oil
and other harmful substances and the minimisation of
accidental discharge of such substances.
International Convention for the Safety of
Life at Sea (SOLAS)
SOLAS is an international convention protecting the
safety of merchant ships in the world.
International Convention on Load Lines
(ICLL)
The ICLL sets out the limits on the draught to which a
ship may be safely loaded, taking into account the
potential hazards present in different zones and
different seasons, in order to ensure adequate
stability and avoid excessive stress on the ship as a
result of overloading.
International Convention on Standards of
Training, Certification and Watchkeeping
for Seafarers (STCW)
The STCW sets qualification standards for masters,
officers and watch personnel on seagoing merchant
ships.
International Labour Organization Maritime
Labour Convention 2006 (the ILO MLC
2006)
The ILO MLC 2006 is an international labour
convention which establishes minimum working and
living standards for all seafarers working on ships
flying the flags of ratifying countries, including
aspects such as:
minimum working age;
seafarers employment agreements;
hours of work or rest;
payment of wages;
paid annual leave;
repatriation at the end of contract;
on-board medical care;
the use of licensed private recruitment and
placement services;
accommodation, food and catering;
health and safety protection and accident
prevention; and
seafarers complaint handling.
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International Conventions Description
International Safety Management Code
2010 (the ISM Code 2010)
The ISM Code 2010 provides an international
standard for the safe management and operation of
ships and for pollution prevention:
to ensure safety at sea;
to prevent human injury or loss of life; and
to avoid damage to the environment, in
particular, to the marine environment and to
property.
International Ship and Port Facility
Security Code (the ISPS Code)
The ISPS Code is a comprehensive set of measures
to enhance the security of ships and port facilities,
developed in response to the perceived threats to
ships and port facilities in the wake of the 9/11
attacks in the United States. The purpose of the ISPS
Code is to provide a standardised, consistent
framework for evaluating risk, enabling Governments
to offset changes in threat with changes in
vulnerability for ships and port facilities through
determination of appropriate security levels and
corresponding security measures.
Singapore
Merchant Shipping Act, Chapter 179 of Singapore (the MSA)
The MSA covers, inter alia, the registration of ships in Singapore, manning and crew matters as
well as safety issues.
The provisions of the MSA relating to the Singapore registry set out, amongst others, conditions
for registration of ships, transfer of ships and alteration of ships. A ship means any kind of vessel
used in navigation by water, however propelled or moved and includes a barge and an off-shore
industry mobile unit.
The provisions of the MSA relating to manning and certification apply to every Singapore ship and
to any ship that enters or leaves any port in Singapore, save for any ship employed exclusively
in the fishing industry, any pleasure craft, any harbour craft and any ship which is not propelled
by mechanical means (the Exempted Vessels). In particular, subject to any exemption, if a ship
goes to sea or attempts to go to sea without carrying such prescribed number of officers, doctors
and other seamen as it is required to carry, the owner or the master of the ship shall be guilty of
an offence.
Unless extended to foreign ships in prescribed circumstances, the provisions of the MSA relating
to crew matters apply to Singapore ships, save for Exempted Vessels. Such provisions extend to
crew matters such as crew agreements, engagement and discharge of seamen, seamens wages,
provisions and water, medical stores and medical treatment on board ship.
The provisions of the MSA relating to survey and safety, unless otherwise provided, apply to all
Singapore ships wherever they may be and to all ships in Singapore except harbour craft. Such
provisions govern survey and safety matters such as prohibition on going to sea without
certificates, duty of ship to assist others in case of collision, and obligation of shipowner to crew
with respect to reasonable efforts to secure seaworthiness.
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Maritime and Port Authority of Singapore Act, Chapter 170A of Singapore (the MPASA)
The MPASA provides that no person shall provide any marine service or facility or any port service
or facility, unless he is authorised to do so by a public licence or an exemption granted by the MPA.
The MPASA also provides that it shall be the duty of a public licensee to provide reliable, efficient
and economical marine services and facilities or port services and facilities, as the case may be,
to the public in accordance with the conditions of the public licence granted to it and the directions
of the MPA. Under the MPASA, marine services and facilities mean the towage and pilotage of
vessels and the supply of water to vessels, while port services or facilities mean port terminal
services and facilities for the handling, storage and transportation of goods on land adjoining the
foreshore of Singapore and for the handling of passengers carried by vessels.
Our subsidiary, POSH Semco, has been granted a public licence by the MPA for the provision of
towage services to vessels within the limits of the port and the approaches to the port for a period
of 10 years with effect from November 2013. POSH Semco, being the public licensee, is required
to obtain the written approval of the MPA before effecting, carrying out or permitting any dealing,
transaction or scheme which will result in any change in, or acquisition of, effective control of the
public licensee. Effective control means the holding of shares which carry the right to exercise, or
control the exercise of not less than 25.0% of the votes attached to the voting shares of the public
licensee. We have made an application to the MPA for its written approval for KSLs acquisition of
our Shares which are held by PCL, which acquisition is conditional upon, amongst others, the
written approval of the MPA. As at the Latest Practicable Date, we have not received the MPAs
written approval for such acquisition. Following our Listing, we are also required to monitor any
transfer of Shares which results in a change in effective control of the public licensee and notify
the MPA of such a change. In the event the public licensee fails to comply with its obligations
under the public licence, the MPA may cancel or suspend the licence, or impose a fine in such
amount as it thinks fit. In the event that there is a transfer of Shares which results in a change in
effective control of the public licensee after our Listing, there is no assurance that the MPA would
approve such transfer and that our licence would not be cancelled or suspended or that we would
not be subject to a fine.
Prevention of Pollution of the Sea Act, Chapter 243 of Singapore (the PPSA)
Our vessels are subject to the PPSA. The PPSA aims to prevent sea pollution, whether originating
from land or from ships. The PPSA also gives the MPA the power to take preventive measures to
prevent pollution, including denying entry or detaining ships.
In particular, the PPSA provides that subject to the provisions of the PPSA, if any disposal or
discharge of refuse, garbage, waste matter, trade effluent, plastics or marine pollutant in
packaged form occurs from any ship into Singapore, the master, the owner and the agent of the
ship shall each be guilty of an offence. The PPSA further provides that if any refuse, garbage,
waste matter, plastics, marine pollutant in packaged form or trade effluent is discharged from any
ship into Singapore waters, the owner of the ship shall be liable to pay for the costs of any
measure reasonably taken by the appointed authority after the discharge for the purpose of
removing it and for preventing or reducing any damage caused in Singapore by contamination
resulting from the discharge.
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Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act, Chapter 180 of
Singapore (the CLCA)
Our vessels are subject to the CLCA which covers the liability of ships that caused oil pollution in
Singapore.
The CLCA provides, inter alia, that where any oil is discharged or escapes from, inter alia, a ship
constructed or adapted for carrying oil bulk as cargo, the owner of the ship shall, except as
otherwise provided by the CLCA, be liable for any damage caused outside the ship in the territory
of Singapore by contamination resulting from the discharge or escape, for the cost of any
measures reasonably taken after the discharge or escape for the purpose of preventing or
reducing any damage caused in the territory of Singapore by contamination resulting from the
discharge or escape, and for any damage caused in the territory of Singapore by any measures
so taken.
Indonesia
Licences
In order to engage in domestic and international sea transportation tramp for goods in Indonesia,
a company is required to obtain a Sea Transportation Company Business Licence Certificate
(SIUPAL) issued by the Ministry of Transportation as required by Decree of Minister of
Transportation Number KM.33.Year 2001 concerning the Implementation and Development of Sea
Transportation. The SIUPAL has no expiry date and shall be valid continuously so long as the
relevant company is still engaged in such business field activities.
Foreign Shareholding
According to Presidential Regulation Number 36 Year 2010 concerning the List of Business Fields
Closed to Investment and Business Fields Open, with Conditions, to Investment (Negative List),
the business field of domestic and international sea transportation tramp for goods in Indonesia
is open to foreign investors, as long as certain conditions are fulfilled. The maximum portion of
foreign shares permissible in the relevant company is 49%, whereas the remaining 51% must be
owned by an Indonesian shareholder.
The process of establishing a Foreign Investment (Penanaman Modal Asing or PMA) Company
begins with the application for an Investment Principle Licence from the Investment Coordinating
Board (Badan Koordinasi Penanaman Modal) by submitting the investment plan of the foreign
investors. After obtaining the Investment Principle Licence, the Articles of Association of the PMA
Company shall be drafted and incorporated into the deed of establishment of the PMA Company
(the Deed of Establishment) which shall then be executed before a notary. The Deed of
Establishment shall then be submitted to the Minister of Law and Human Rights (MOLHR) for
approval. At the same time a Letter of Domicile from the Provincial Government and a Tax Payers
Number shall be processed. The PMA Company shall obtain the status of a legal entity on the
approval date of the MOLHR. Thereafter, the PMA Company must be registered in the Company
Registry Office.
Since Article 5 of Law Number 25 Year 2007 concerning Investment (Investment Law) requires
that a PMA Company must be in the form of a limited liability company under Indonesian laws, the
provisions of Company Law of Indonesia shall also be applicable to a PMA Company. As with the
local shareholder of a limited liability company under the Company Law of Indonesia, a foreign
investor in a PMA Company shall only be liable up to the extent of the shares it owns in the
company.
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Use of Vessels
Under Law No. 17 Year 2008 regarding Maritime (the Maritime Law), together with its
implementing regulations, vessels must be Indonesian flagged and have Indonesian crews in
order to operate them in Indonesian waters, in the domestic sea transportation tramp for goods.
Such requirements imposed on shipping companies are intended for the implementation of the
cabotage principle to protect national sovereignty and to promote national shipping companies in
Indonesia.
Environmental
Law Number 32 Year 2009 regarding Environmental Protection and Management requires every
person to preserve the environmental functions and to control environmental pollutions and/or
damages. Moreover, the Maritime Law requires every crew member of a vessel to take preventive
measures against and to manage environmental pollution by the vessel. Further provisions on
these laws are specifically regulated in their implementing regulations.
Health and Safety
The Maritime Law provides that every crew member of vessel is entitled to welfare, including
health care and treatment and work accident insurance benefits. Such health and safety benefits
shall be stated in the employment agreement between a crew member and his/her employer, in
accordance with the prevailing laws and regulations.
Malaysia
Merchant Shipping Ordinance 1952
It is compulsory for all Malaysian ships to be registered pursuant to the Merchant Shipping
Ordinance 1952 (the Ordinance). Pursuant to section 66b of the Ordinance, if vessels are
owned by a corporation which is incorporated in Malaysia, has an office in Malaysia and the
majority shareholding of the corporation are not held by Malaysian citizens, these vessels must be
registered with the Malaysia International Ship Registry which is based in Labuan.
On January 1, 1980, a cabotage policy was implemented in Malaysia which reserves the domestic
shipping to Malaysian-owned companies and Malaysian flagged ships. Pursuant to the said policy,
the Ordinance was amended and under the amended Ordinance, the Domestic Shipping
Licencing Board (DSLB) was established to regulate and control the issuance of ship licences
for companies engaged in domestic shipping in Malaysia. As such, if any person decides to
engage in domestic shipping in Malaysia, such person will first have to obtain the relevant licences
from DSLB. As at the Latest Practicable Date, one of our vessels flagged in Malaysia is engaged
in domestic shipping in Malaysia, for which a licence has been obtained by our ship manager, on
our behalf, for a term equivalent to the period of the relevant charter, being January 2014 to
August 2014.
All Malaysian ships must adhere to certain safety regulations under the Ordinance before
proceeding to sea on an international voyage from a port in Malaysia. This is to ensure that the
vessel is fully equipped with items (including a radio) that have complied with the safety
regulations and are qualified as safe and in proper condition for usage at sea. The owner of the
vessel would have to apply to the Surveyor-General of Ships for the relevant certificates of the
same.
A charterer or an operator of a vessel who steers a vessel at sea has to ensure that there is no
discharge of oil or harmful substances in any part of Malaysian waters, the Malaysian coast or the
Malaysian reef.
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Labuan Financial Services and Securities Act 2010
The leasing business in Labuan means the business of letting or sub-letting property on hire for
the purpose of the use of such property by the hirer regardless whether the letting is with or
without an option to purchase the property, including charters of ships. With the exception to the
transportation of passengers or cargo by sea or the letting out on charter of ships on a voyage or
time charter basis, Labuan leasing companies are allowed to carry on leasing of ships on a
bareboat basis.
All Labuan leasing companies are regulated under Section 86 of the Labuan Financial Services
and Securities Act 2010. Labuan leasing companies are deemed as Labuan trading companies
under the Labuan Business Activity Tax Act 1990 and as such, all Labuan leasing companies have
a yearly election of either paying a flat tax rate of RM20,000 per annum or be chargeable for tax
at the rate of 3% of the chargeable net audited profits.
Our subsidiaries in Malaysia, Labrador Shipping Corporation and Newfoundland Shipping
Corporation, have been granted approvals by the Labuan Financial Services Authority in 2013 to
carry on leasing business and to conduct leasing transactions with POSH Semco with respect to
our vessels flagged in Malaysia. The relevant letters of approval do not stipulate the validity period
or the expiration of the licences.
Merchant Shipping (Oil Pollution) Act 1994
If there is a discharge of oil or harmful substances in any part of Malaysian waters, the Malaysian
coast or the Malaysian reef, the liability will extend beyond the charterer or operator of a vessel
to include the registered owner of the vessel at the time of the incident. In the event of bunker oil
pollution, the registered owner, bareboat charterer, manager and operator of the ship shall also be
held liable for any pollution caused by the ship as a result of the incident in any area in Malaysia.
Mexico
In Mexico, there are certain requirements that we have to comply with in order to register and
operate vessels. Some of the laws and regulations which are material to the business of our Group
in Mexico are set out below.
Shipping Regulations and Licences
The maritime authority in Mexico is the Ministry of Communications and Transportation (SCT),
acting through the General Office of Ports and the Merchant Marine and Harbor Masters. Mexican
individuals or entities may flag Mexican vessels owned by them or in their possession under a
financial lease agreement either made with a Mexican or an authorised foreign financial leasing
company.
The requirements to be a Mexican ship-owner include the following:
(a) be a Mexican citizen or a company formed under Mexican law;
(b) have a domicile in Mexico;
(c) be registered in the Mexican Shipping Registry; and
(d) own or possess one or more vessels of at least 500 registered tonnes.
Article 8 (VI) of the Maritime Commercial Law of Mexico provides that the SCT may issue, revoke
or suspend licences and maritime authorisations to provide services by water.
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In addition, Article 42 of the Maritime Commercial Law of Mexico provides that Mexican and
foreign shipowners may use vessels for inland and coastal navigation, subject to the following
provisions:
(i) services where permission from the SCT is required:
(A) passenger and cruise ships;
(B) nautical tourism, using small Mexican or foreign boats for sports and recreation;
(C) safety, rescue and aids to navigation;
(D) barging, maneuvering and lightering in port, except when they are provided under a
contract with the port authority, in according with the Ports Law of Mexico;
(E) dredging, by foreign vessels; and
(F) foreign vessels providing coastal services, although no such permit can be obtained if
there are Mexican vessels that can provide the same service.
(ii) services where permission from the SCT is not required:
(A) cargo and towing;
(B) fishing, except in cases of foreign vessels in accordance with the provisions of the
Maritime Commercial Law of Mexico and its regulations, and international treaties;
(C) dredging by Mexican vessels; and
(D) the use of specialised vessels in civil engineering, naval construction and port
infrastructure as well as those dedicated to assisting in the work of exploration,
extraction and exploitation of hydrocarbons, subject to compliance with the provisions
established in environmental laws and administrative contracts with the government.
The fact that no permit is required from the SCT does not exempt vessels dedicated to services
referred in sub-paragraph (ii) above to comply with the provisions that apply. The SCT is
empowered to verify compliance with such standards.
The requirement to obtain a permit for the provision of services in accordance with the provisions
of Article 42 of the Maritime Commercial Law of Mexico, or the absence of such requirement, does
not prejudice the need for a temporary coastal navigation permit or the need to obtain the Mexican
flagging of the vessel.
With regard to foreign vessels, there are two types of navigation permits the SCT grants through
the General Office of Ports and the Merchant Marine and Harbor Masters.
These encompass the following:
(I) permits for the provision of services on inland waterways or coastal navigation, including:
(A) permits to provide passenger services or inland or coastal navigation;
(B) permits to provide tourist cruise services in coastal waters;
152
(C) permits to provide nautical tourism services, with smaller vessels for pleasure or sports;
and
(D) permits to provide security services, rescue and assistance to navigation.
(II) temporary permits for inland navigation and coastal navigation, including those for:
(A) fishing vessels;
(B) oil vessels, gas, chemical tankers and passage; and
(C) other vessels.
The type of navigation and the activity to be carried out will be taken into account by the SCT.
Investment Regulations and Licences
In accordance with the Foreign Investment Law of Mexico, foreign investors may, as a general
rule, invest in Mexico without any prior authorisation or restriction, except as specifically provided
in the Foreign Investment Law of Mexico. Specifically, the law establishes that foreign investors
may do the following:
(i) hold any proportion of the capital stock of Mexican companies, depending on the type of
business the company is to carry out as some businesses are restricted;
(ii) acquire fixed assets;
(iii) participate in new fields of business or manufacture new product lines; and
(iv) open, operate, expand, and relocate existing establishments, except in the cases prescribed
under the Foreign Investment Law of Mexico as further described below.
In general, the Foreign Investment Law of Mexico stipulates certain restrictions on foreign
investment participation limits, including:
(a) Category 3 activities in which foreign investment is limited to 49.0%:
(A) fresh water, coastal, and exclusive economic zone fishing, not including fisheries;
(B) port administration;
(C) port pilot services for inland navigation under the terms of the law governing this
activity;
(D) shipping companies engaged in using of ships for inland and coastal navigation,
excluding tourism cruises and marine dredging and devices for port construction,
conservation and operation;
(E) supply of fuel and lubricants for ships, airplanes, and railway equipment; and
(F) telecommunications concessionaire companies as provided by Articles 11 and 12 of the
Federal Telecommunications Law of Mexico.
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Foreign investment participation limits in the activities and companies mentioned above may
not be exceeded directly or through trusts, contracts, partnerships or by-law agreements,
pyramiding schemes, or other mechanisms granting any control or higher participation in
excess of the established limit.
(b) Category 4 activities requiring permission to have more than 49.0% foreign participation:
(A) port services allowing ships to conduct inland navigation operations, such as towing,
mooring and barging;
(B) shipping companies engaged in using ships solely on the high-seas; and
(C) companies holding concessions or permits for air fields for public service.
(c) Category 5 a favorable resolution from the Foreign Investment Commission (the
Commission) is required for foreign investment holding, directly or indirectly, a percentage
higher than 49.0% of the capital stock of Mexican companies when the aggregate value of
the assets of such companies at the date of acquisition exceeds the amount determined
annually by the Commission.
The maximum foreign holding of the capital stock of Mexican shipping companies engaged in
coastal trade and navigation in internal waters is 49.0%. Mexican shipping companies with foreign
capital may engage in international navigation or provide port services, such as towage launching,
and line handling, within a Mexican port, and may exceed the 49.0% foreign participation limit with
a favorable resolution of the Commission.
Federal Act to Prevent and Identify Illegally Funded Transactions
As part of recent amendments to the Mexican Legal System, President Enrique Pea Nieto
launched the Federal Act to Prevent and Identify Illegally Funded Transactions (Federal Act): (i)
on October 17, 2012, the law was published in the Federal Official Gazette, (ii) on July 17, 2013,
the law became in full force and effect and (iii) October 1, 2013 marks the commencement of the
obligation to file the electronic notices according to the Article 17 Section VIII.
The purpose of the Federal Act is to track and investigate activities and transactions involving
resources illegally obtained and to impose obligations to Mexican companies engaged in activities
or actions that may be vulnerable to money laundering including providing periodic electronic
reports to Mexican authorities. Such companies are those that are engaged in certain vulnerable
activities (as defined in Articles 8 and 17 of the said legislation) including the marketing and
distribution of new or used vehicles, aircraft or vessels, either regularly or professionally. Under
Article 75 of the Mexican Commercial Code, Paragraph XV, the act of marketing embodies any
contracts related to maritime commerce and internal and external navigation.
A specialised unit for financial analysis has been created to investigate transactions carried out
with illegally obtained resources.
Companies caught by the Federal Act must inter alia:
(a) Identify customers/clients/users (customers) by securing official documents, and obtain a
copy of such documents. These are: (i) identification of the legal representatives of the
company, (ii) Federal Tax Payer of the company, (iii) type of vessels owned by the company,
(iv) Public Deed of incorporation of the company, (v) maritime folio of the vessels, (vi) flag of
the vessels, (vii) registration number of the vessels, (viii) date of the monthly payments of the
charter hire, (ix) the amount of the charter hire and (x) copies of the bareboat charter
agreements. Such information is to be provided to the Mexican authorities in the form of
154
electronic reports on the 17th day of each month following the charter hire. The penalties that
may be imposed are: (i) fines from 13,458.00 Mexican Pesos (200 times the general
minimum wage applicable in the Federal District) to 4,373,850.00 Mexican Pesos (2000
times the general minimum wage applicable in the Federal District) for, inter alia, not filing
the electronic reports in a timely manner or for the non inclusion of the relevant information
in such reports pursuant to Article 18 of the Federal Act; or (ii) 10 per cent. of the value of
the charter agreement for not filing the electronic reports pursuant to Article 17 of the Federal
Act. In accordance with Article 55 of the Federal Act, the Mexican authorities shall refrain
from punishing a first-time offender, provided that the offender rectifies the breach
immediately.
(b) Whenever a business relationship is established that is a relationship between the party
engaged in a vulnerable activity and a customer, except for activities or transactions carried
out occasionally, the provider must request information on the customers activities or
businesses. For such purpose, the provider must use the same information contained in the
notices of registration and updating of activities filed with the Federal Taxpayer Registry.
(c) Require the customer to disclose whether the beneficial owner (that is, the ultimate
beneficiary) is known to the customer and, if so, the official documents that identify the
beneficial owner.
(d) Keep, protect, safeguard and avoid the destruction or hiding of supporting information and
documentation, as well as information that identifies the customer, and keep the information,
either in printed or electronic form, for five years.
(e) File reports with the Treasury Department not later than the 17th day of the month following
the month in which the transaction takes place. Reports must contain the general data of: (i)
the party carrying out a vulnerable activity, (ii) the customer or the user or controlling
beneficiary, as well as information on their activities or occupation, and a general description
of the reported vulnerable activity.
The Federal Act provides that reports should be submitted to the Treasury Department, but
may also be filed through a special-purpose entity, called under the Federal Act a collegiate
entity, such as a chamber, association or other entity, subject to various requirements.
(f) Designate for communication with the Treasury Department an authorised representative for
complying with the obligations set forth in the Federal Act.
(g) Refrain from carrying out transactions with customers who refuse to provide the information
and documentation required to comply with the Federal Act.
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MANAGEMENT
The following chart shows our management reporting structure at the Latest Practicable Date.
General Manager
Christopher
Richards
Group HSEQA
Offshore Supply
Vessels
Offshore
Accommodation
(Deepwater)
Harbour Services
and Emergency
Response
Offshore
Accommodation
(Shallow water)
Transportation
and Installation
(Shallow water)
Fleet Services
Transportation
and Installation
(Deepwater)
Fleet HSEQA
Financial
Accounting
Management
Accounts
Board of Directors
Divisional
Director
Lee Keng Lin
Divisional
Director
Chai Ulva
Divisional
Director
Ng Eng Khin
Divisional
Director
Sim Hee Ping
Chief Financial
Officer
Yeoh Seng
Huat, Geoffrey*
Chief Executive Officer
Seow Kang Hoe, Gerald
Note:
* In addition to reporting directly to our Chief Executive Officer, our Chief Financial Officer also reports to our Audit
Committee.
Directors
Our Board of Directors is responsible to stakeholders, including shareholders, for the long-term
success and financial soundness of our Group. Our Board of Directors has the responsibility to
approve and oversee the implementation of our Groups overall business strategy, establish and
communicate corporate culture and values and establish conflicts of interest policies and a strong
corporate governance environment. Our Chief Executive Officer has been appointed with the key
role of directing, managing and operating the business of our Group. Our Chief Executive Officer
reports directly to our Board of Directors and is responsible and accountable to our Board of
Directors for the business performance of our Group.
The following table sets forth information regarding our Directors:
Name Age Address Position
Date of
Appointment as
Director
Kuok Khoon Ean 58 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Chairman and
Non-Executive
Director
July 18, 2013
Seow Kang Hoe,
Gerald
60 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Chief
Executive
Officer and
Executive
Director
March 7, 2006
156
Name Age Address Position
Date of
Appointment as
Director
Wu Long Peng 60 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Non-Executive
Director
January 28, 2008
Teo Joo Kim 73 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Non-Executive
Director
January 28, 2008
Ahmad Sufian @
Qurnain Bin Abdul
Rashid
64 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Independent
Director
January 9, 2009
Ma Kah Woh 66 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Independent
Director
September 1, 2013
Jude Philomen
Benny
56 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Lead
Independent
Director
September 1, 2013
Wee Joo Yeow 66 1 Kim Seng Promenade,
#07-02
Great World City
Singapore 237994
Independent
Director
December 19, 2013
Certain information on the business and working experience of our Directors is set out below:
Mr. Kuok Khoon Ean is our Chairman and Non-Executive Director.
Mr. Kuok has been with the Kuok Group since 1978 and is currently the chairman of KSL and the
managing director of Kerry Holdings Limited and a non-executive director of Shangri-La Asia
Limited, Shangri-La Hotel Public Company Limited and Wilmar International Limited. He currently
also serves as an independent non-executive director on the boards of Bank of East Asia Limited
and IHH Healthcare Berhad.
He obtained a Bachelor of Arts (Honours) in Economics from University of Nottingham in United
Kingdom.
Mr. Seow Kang Hoe, Gerald is our Chief Executive Officer and Executive Director.
Mr. Seow is responsible for leading the development and execution of our overall business
strategy, with a view to create shareholder value. He is also responsible for day-to-day
management decisions and implementation of our long-term and short-term plans. Mr. Seow is
also currently an executive director of PCL and certain subsidiaries of PCL and KSL. Mr. Seow has
more than 40 years of experience in the shipping industry (including 15 years of sea-going
experience and more than 20 years of senior management experience).
157
He first began his career at Neptune Orient Lines Limited (NOL) in 1971 and he remained with
the NOL group until 1996. From 1986 to 1996, he came ashore and served in various senior
management positions within the NOL group in Singapore and the United States of America.
In 1996, he joined PCL as Senior Manager, Projects & Business Development. Since then, Mr.
Seow was instrumental in developing the liner shipping business (under PACC Container Line Pte
Ltd commencing in 1997), the offshore marine services business (under our Company since 2006)
and the shipbuilding business for PCL and KSL. He was a director of these companies upon their
formation. Mr. Seow subsequently became a director of PCL in 2001.
Mr Seow holds a Certificate of Competency as Master of a Foreign-Going Ship from the Ministry
of Transport of New Zealand and a Degree of Master of Science in Shipping, Trade and Finance
from The City University of London.
Mr. Wu Long Peng is our Non-Executive Director.
Mr. Wu is currently an executive director of KSL, PCL and MBC (a company listed on Bursa
Malaysia). Mr. Wu has more than 30 years of experience in finance. He has been a director of KSL
since 1995. He was previously a financial controller of KSL from 1988 to 1995 and a finance
manager of KSL from 1983 to 1988. From 1980 to 1983, he was an accountant of PCL.
He graduated from and is a member of the Association of Chartered Certified Accountants
(formerly known as The Association of Certified Accountants), United Kingdom and the Institute of
Singapore Chartered Accountants (formerly known as Institute of Certified Public Accountants of
Singapore and Singapore Society of Accountants).
Mr. Teo Joo Kim is our Non-Executive Director.
Mr. Teo has over 30 years of experience in the commodity and shipping industry. He joined KSL
in 1962 and has been a director of KSL since 1972. He was also the chairman of KSL from 1983
to 2013. He was a director of PCL from 1977 to 1992 and became the chairman of PCL in 1993.
He is also currently an executive director of MBC which is listed on Bursa Malaysia.
He graduated from the Institute of Chartered Secretaries and Administrators and the Association
of Chartered Certified Accountants (formerly known as The Association of Certified Accountants)
in United Kingdom.
Mr. Ahmad Sufian @ Qurnain Bin Abdul Rashid is our Independent Director.
Mr. Ahmad Sufian has more than 40 years of experience in the shipping industry. He was the
chairman of Global Maritime Ventures from 1996 to 2003, country manager of American President
Lines from 1989 to 1995, director/general manager of Perbadanan Nasional Shipping Line from
1982 to 1989 and manager of Malaysian International Shipping Corporation from 1977 to 1982. He
is currently also the independent non-executive chairman of MBC, GD Express Carrier Berhad
and WCT Holdings Berhad and an independent non-executive director of PPB, each of which is
listed on Bursa Malaysia.
He obtained a Certificate of Competency as Master of a Foreign-Going Ship in United Kingdom
in 1975 and attended the Advanced Management Program at Harvard Business School in 1993.
He is a Fellow of the Chartered Institute of Logistics and Transport.
Notwithstanding the directorships of Mr. Ahmad Sufian, our Nominating Committee (save for Mr.
Ahmad Sufian) believes that Mr. Ahmad Sufian is able to devote sufficient time to discharge his
duties as our Independent Director. In this regard, our Nominating Committee (save for Mr. Ahmad
Sufian) has discussed with Mr. Ahmad Sufian on the frequency of the meetings of our Board of
158
Directors, as well as the meetings of our Board committees of which Mr. Ahmad Sufian is a
member. Mr. Ahmad Sufian is fully aware of the commitment required of him in his role as our
Independent Director. Mr. Ahmad Sufian has also confirmed that he is able to devote sufficient
time to discharge his duties as our Independent Director. In addition, our Nominating Committee
(save for Mr. Ahmad Sufian) values the contribution of corporate experience from Mr. Ahmad
Sufian. For the reasons set out above, our Nominating Committee (save for Mr. Ahmad Sufian) is
of the opinion that Mr. Ahmad Sufian will be able to devote sufficient time to discharge his duties
as our Independent Director.
Mr. Ma Kah Woh is our Independent Director.
Mr. Ma was a senior partner of KPMG Singapore until his retirement in 2003. He was in charge
of the firms Audit & Risk Advisory Practice and the firms Risk Management function. Upon his
retirement from KPMG Singapore, Mr. Ma acted as consultant with the KPMG Asia Pacific
Regional Office for a period of two years, assisting the Asia Pacific Risk Management Partner in
risk management matters in the Asia Pacific Region.
Mr. Ma currently holds appointments on the board of directors of Mapletree Logistics Trust
Management Ltd. (the manager of Mapletree Logistics Trust, a real estate investment trust listed
on the SGX-ST), Mapletree Investments Pte Ltd, Keppel Infrastructure Fund Management Pte.
Ltd. (the trustee-manager of K-Green Trust, a business trust listed on the SGX-ST), CapitaLand
China Development Fund Pte. Ltd., CapitaLand China Development Fund II Limited and Nucleus
Connect Pte. Ltd. He is also a board member of the National Heritage Board and NRF Holdings
Pte. Ltd., and a trustee on the board of trustees of the National University of Singapore.
Mr. Ma is a Fellow of the Institute of Chartered Accountants in England & Wales as well as a
member of the Institute of Singapore Chartered Accountants.
Mr. Jude Philomen Benny is our Lead Independent Director.
As our Lead Independent Director, Mr. Bennys scope of work will include being available to
Shareholders where they have concerns and for which contact through the normal channels of our
Chairman, our Chief Executive Officer or our Chief Financial Officer has failed to resolve or is
inappropriate.
Mr. Benny is currently a partner at Joseph Tan Jude Benny LLP and has been a lawyer in private
practice with the same firm for more than 20 years since 1988. Mr. Benny is also currently a
director of the MPA and an independent director of BW LPG Limited, listed on the Oslo Stock
Exchange, and was formerly a director of Singapore Maritime Foundation from 2004 to 2011.
Mr. Benny holds a Bachelor of Laws (Honours) from the London University. In recognition of his
public service in Singapore, he was conferred the Public Service Medal in 2013.
Mr. Wee Joo Yeow is our Independent Director.
Mr. Wee was the Managing Director and Head, Corporate Banking Singapore of the United
Overseas Bank (UOB) until his recent retirement. Mr. Wee has more than 30 years of corporate
banking experience. He joined UOB in 2002. Prior to that, Mr. Wee was with Overseas Union Bank
from 1981 to 2001 and was last appointed as the Executive Vice President and Head of Marketing,
Sales, Credit and Origination in Corporate Banking of Overseas Union Bank before its merger into
UOB.
159
Mr. Wee is also currently an independent director of Oversea-Chinese Banking Corporation
Limited and Frasers Centrepoint Limited (each a company listed on the SGX-ST) and Mapletree
Industrial Trust Management Ltd. (the manager of Mapletree Industrial Trust, a real estate
investment trust listed on the SGX-ST).
Mr. Wee graduated from the University of Singapore with a Bachelor of Business Administration
(Honours) degree and New York University with a Master of Business Administration.
Expertise of our Board of Directors
As evidenced by their respective business and working experience set out above, our Directors
possess the appropriate expertise to act as directors of our Company. In accordance with the
requirements under the SGX-ST listing rules, we have made arrangements for our Directors to be
briefed on the roles and responsibilities of a director of a public listed company in Singapore.
Independence of our Independent Directors
The Code of Corporate Governance recommends that there should be a strong and independent
element on the board of directors which is able to exercise objective judgment on corporate affairs
independently, in particular, from the management of the company and any person who has an
interest in not less than 10% of the voting shares, excluding treasury shares, in the company (the
10% Shareholder).
Under the Code of Corporate Governance, an independent director is defined as one who has
no relationship with the listed company (the Listco), its related companies, its 10%
Shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the
exercise of the directors independent business judgment with a view to the best interests of the
Listco. Examples of relationships, which deem a director not to be independent, include:
(a) a director being employed by the Listco or any of its related companies for the current or any
of the past three fiscal years;
(b) a director who has an immediate family member who is, or has been in any of the past three
fiscal years, employed by the Listco or any of its related companies and whose remuneration
is determined by the remuneration committee;
(c) a director, or an immediate family member, accepting any significant compensation from the
Listco or any of its related corporations for the provision of services, for the current or
immediate past fiscal year, other than compensation for board service;
(d) a director:
(i) who, in the current or immediate past fiscal year, is or was; or
(ii) whose immediate family member, in the current or immediate past financial year, is or
was,
a 10% Shareholder of, or a partner in (with 10% or more stake), or an executive officer of,
or a director of, any organisation to which the Listco or any of its subsidiaries made, or from
which the Listco or any of its subsidiaries received, significant payments or material services
(which may include auditing, banking, consulting and legal services), in the current or
immediate past fiscal year. As a guide, payments aggregated over any fiscal year in excess
of S$200,000 should generally be deemed significant;
160
(e) a director who is a 10% Shareholder or an immediate family member of a 10% Shareholder
of the Listco; or
(f) a director who is or has been directly associated with a 10% Shareholder of the Listco, in the
current or immediate past fiscal year.
Mr. Ahmad Sufian @ Qurnain Bin Abdul Rashid, our Independent Director, is the independent
non-executive chairman of MBC. He also holds a shareholding interest of 0.1% in MBC as at the
Latest Practicable Date. In addition, Mr. Ahmad Sufian is also an independent non-executive
director of PPB, which the Kuok Group is a major shareholder of, as described in Business Our
Competitive Strengths Strong parentage.
In his role as the independent non-executive chairman of MBC, Mr. Ahmad Sufian contributes his
maritime knowledge and experience to MBC on an independent basis. MBC continues to regard
Mr. Ahmad Sufian as independent. Also, the principal business of MBC does not compete with that
of ours (as the MBC group is a shipping company which owns and operates dry bulk carriers and
product tankers) and there have been no significant interested person transactions between MBC
and us. Please see Interested Person Transactions and Potential Conflicts of Interest Present
and On-going Transactions Provision of Ship Management Services to and by the MBC Group
for further details. In relation to PPB, the principal business of PPB includes, among others, food
manufacturing and property investment and development. The principal business of PPB does not
compete with that of ours. Further, PPB regards Mr. Ahmad Sufian as independent.
Nonetheless, Mr. Ahmad Sufian will not participate in any discussions of our Board of Directors in
relation to any interested person transactions involving MBC, PPB, subsidiaries of MBC and PPB
and associated companies of MBC and PPB (together, the MBC/PPB Group) or any matters that
might give rise to a conflict of interest with the MBC/PPB Group and shall abstain from voting on
any such proposals at any meeting of our Board of Directors.
Taking into consideration the foregoing, our Board of Directors has determined that Mr. Ahmad
Sufians relationship with MBC or PPB would not interfere, or be reasonably perceived to interfere,
with the exercise of his independent business judgment with a view to the best interests of our
Company and our subsidiaries. On the basis of the foregoing, our Board is of the view that Mr.
Ahmad Sufian should be regarded as independent.
Term of Office for our Directors
Our Directors do not have fixed terms of office. Each Director is required to retire from office once
every three years and for this purpose, at each annual general meeting, one-third of the Directors
for the time being (or, if their number is not a multiple of three, the number nearest to but not less
than one-third) is required to retire from office by rotation and will be eligible for re-election at that
annual general meeting (the Directors so to retire being those longest in office).
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Executive Officers
The following table sets forth information regarding our Executive Officers:
Name Age Address Position
Lee Keng Lin 39 1 Kim Seng
Promenade, #07-02
Great World City
Singapore 237994
Divisional Director (Offshore
Supply Vessels, Offshore
Accommodation (Deepwater),
Harbour Services and
Emergency Response)
Chai Ulva 39 1 Kim Seng
Promenade, #07-02
Great World City
Singapore 237994
Divisional Director (Offshore
Accommodation (Shallow water)
and Transportation and
Installation (Shallow water))
Ng Eng Khin 57 1 Kim Seng
Promenade, #07-02
Great World City
Singapore 237994
Divisional Director
(Transportation and Installation
(Deepwater))
Sim Hee Ping 58 1 Kim Seng
Promenade, #07-02
Great World City
Singapore 237994
Divisional Director (Fleet
Services and Fleet HSEQA)
Christopher Richards 58 1 Kim Seng
Promenade, #07-02
Great World City
Singapore 237994
General Manager (Group
HSEQA)
Yeoh Seng Huat,
Geoffrey
57 1 Kim Seng
Promenade, #07-02
Great World City
Singapore 237994
Chief Financial Officer
Certain information on the business and working experience of our Executive Officers is set out
below:
Mr. Lee Keng Lin is our Divisional Director (Offshore Supply Vessels, Offshore Accommodation
(Deepwater), Harbour Services and Emergency Response).
Mr. Lee has more than 10 years of experience in the offshore marine industry. He has been with
our Group for more than five years, having joined our Group in 2007. Mr. Lee was part of the team
that led our acquisition of PSA Marines offshore business in 2007 and has been instrumental in
the development and operations of various joint ventures and new business divisions. Prior to this,
he was employed by PSA Internationals group as its corporate and business development
manager, where he was based in Europe, from 2006 to 2007 and business development manager
where his responsibilities included business development and charters of harbour tugs, and
offshore support vessels, from 2002 to 2005.
Mr. Lee holds a Bachelor of Engineering (First Class Honours) from the National University of
Singapore and is a Chartered Financial Analyst. He was also an Offshore Services Committee
Member of the Singapore Shipping Association from 2011 to 2013.
Mr. Chai Ulva is our Divisional Director (Offshore Accommodation (Shallow water) and
Transportation and Installation (Shallow water)).
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Mr. Chai has more than 10 years of experience in the offshore marine industry. He was a manager
with PSA Marine Pte Ltd from 2000 to 2006, handling business development and overseas
charters, and served as a director in PSA Marines joint venture company in Fuzhou, China. From
2006 to 2007, Mr. Chai was an assistant general manager of Maritime Pte. Ltd. (now known as
POSH Maritime Pte. Ltd.), involved in PSA Marines offshore business. Since our acquisition of the
business in 2007, Mr. Chai has served our Group as an assistant general manager, a general
manager and a divisional director and has been instrumental in the development of the Offshore
Accommodation (Shallow water) business in our Group.
Mr. Chai holds an Executive Master of Business Administration in Shipping, Offshore & Finance
from the Nanyang Technological University and BI Norwegian Business School.
Mr. Ng Eng Khin is our Divisional Director (Transportation and Installation (Deepwater)).
Mr. Ng has more than 35 years of experience in the offshore marine industry. Mr. Ng was involved
in PSA Marines offshore business prior to our acquisition of the business in 2007. He was a
project superintendent in charge of design, project operation and execution (from 1977 to 1986),
a senior manager (from 1985 to 2001) and a general manager (from 2001 to 2007) specialising
in project management, operation and execution of complex transportation and installation
projects, as well as being responsible for sales, marketing and development. He has been
instrumental in the development of the Transportation and Installation (Deepwater) business of
our Group and is also the President of POSH Terasea Offshore Pte. Ltd.
Mr. Ng holds a Diploma in Sales and Marketing and a Certificate in Sales and Marketing from the
Marketing Institute of Singapore. He also holds a certificate in shipbuilding from the CTSO
Training Centre. Mr. Ng is currently an Ordinary Member of the Marketing Institute of Singapore.
Mr. Sim Hee Ping is our Divisional Director (Fleet Services and Fleet HSEQA).
Mr. Sim has more than 35 years of experience in the shipping industry. Prior to joining our Group
in 2009, he held various positions with NOL from 1977 to 2006. From 1977 to 1987, he was a cadet
engineer and subsequently became a chief engineer in charge of the maintenance of equipment
and machinery on board NOL ships. Between 1987 and 1989, he was seconded to Jurong
Shipyard as a ship repair manager. He was also a technical superintendent from 1989 to 1998 and
a technical director from 1998 to 2006, in charge of managing NOL vessels. From 2006 to 2008,
he was seconded to Neptune Shipmanagement Services Pte Ltd, the ship management arm of
NOL, as the managing director.
Mr. Sim holds a Technician Diploma in Marine Engineering from the Singapore Polytechnic and
has been issued a Certificate of Competency as First Class Engineer (Motorship).
Mr. Christopher Richards is our General Manager, Group HSEQA.
Mr. Richards has more than 40 years of experience in the shipping industry. He has been with our
Group for more than 15 years, having joined in 1996. From 1994 to 1996, Mr. Richards was a
manager, maritime training at the IDESS Maritime Training Centre, Philippines. In 1996, Mr.
Richards joined our Group as manager, marine emergency response. Prior to that, Mr. Richards
was a sea-going officer, navigator and subsequently served as a manager, marine oil spill
response with the British Petroleum from 1972 to 1994.
Mr. Richards holds an Ordinary National Certificate in Nautical Science from the Plymouth School
of Maritime Studies.
Mr. Yeoh Seng Huat, Geoffrey is our Chief Financial Officer, having joined our Group since
November 2013.
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Mr. Yeoh has more than 20 years of working experience in finance and accounting. From 1980 to
1990, Mr. Yeoh was a vice president at The Chase Manhattan Bank and was involved in corporate
banking, corporate finance and debt syndication with assignments in Singapore, New York, Hong
Kong and Jakarta. Subsequent to that, Mr. Yeoh was the head of corporate banking and corporate
finance at United Overseas Bank from 1991 to 1996 before joining Jasper Investments Limited
(then known as Econ International Limited when it was involved in the business of civil
engineering), a listed company on the SGX-ST, in 1996 where he was an executive director for
finance, overseeing administrative and financial matters from 1996 to 2005. Of late, Mr. Yeoh has
been actively involved in the offshore oil and gas drilling industry in his role as the chief executive
officer and executive director of Jasper Investments Limited from 2006 to 2012. He was previously
an independent director of Swissco Holdings Limited from 2012 to 2013 and is currently an
independent director of ASJ Holdings Limited and Global Testing Corporation Limited, each of
which is listed on the SGX-ST.
Mr. Yeoh graduated from the London School of Economics with a Bachelor of Science in
Economics (First Class Honours) and is a Fellow of the Association of Chartered Certified
Accountants, United Kingdom.
Mr. Yeoh considers himself to be adequately familiar with our business operations, accounting
systems and policies despite being employed by us for less than six months. In addition, Mr. Yeoh
has worked closely with the Independent Auditors in the preparation of the financial statements for
the year ended December 31, 2013, and has provided, verified and substantiated operational
information to the Independent Auditors based on his knowledge of our business operations,
accounting systems and policies. Through such involvement, Mr. Yeoh is not aware of any material
misstatements in our accounting records or of any significant weakness in the controls of our
Group.
In considering the suitability of Mr. Yeoh for his role as our Chief Financial Officer, our Audit
Committee has considered several factors, including his qualifications and experience, the
accounting reporting structure, the team that supports and reports to him and the interactions our
Audit Committee had with Mr. Yeoh. Our Audit Committee noted that Mr. Yeoh has more than 20
years of working experience in finance and accounting. Mr. Yeoh has also demonstrated his
knowledge and experience in accounting and financial reporting. In addition, in the event that Mr.
Yeoh is proposed to be appointed as a director of any other listed company, Mr. Yeoh will first
notify our Board of Directors before such appointment and our Board of Directors will assess the
continuing suitability of Mr. Yeoh as our Chief Financial Officer in light of such additional
directorships. After making all reasonable enquiries, and to the best of its knowledge and belief,
nothing has come to our Audit Committees attention to cause it to believe that Mr. Yeoh does not
have the competence, character and integrity expected of a chief financial officer (or its equivalent
rank) of a listed issuer.
Family Relationship/Arrangement or Understanding
Mr. Kuok Khoon Ean has been appointed to our Board of Directors at the request of KSL. Save
for the foregoing, there are no arrangements or understandings with any person pursuant to which
any of our Directors or Executive Officers were selected nor are there any other family
relationships among any of our Directors, Executive Officers or Substantial Shareholders.
Committees of Our Board of Directors
Our Directors recognise the importance of corporate governance and the offering of high
standards of accountability to our Shareholders. We have five board committees: the Audit
Committee, the Remuneration Committee, the Nominating Committee, the Risk Management
Committee and the Executive Committee.
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Our Audit Committee
The terms of reference of our Audit Committee provide that it shall comprise Non-Executive
Directors, a majority of whom shall be independent. The members of our Audit Committee as of
the date of this Prospectus comprise our Independent Directors, Mr. Ma Kah Woh, Mr. Wee Joo
Yeow, Mr. Ahmad Sufian @ Qurnain Bin Abdul Rashid and Mr. Jude Philomen Benny. The
Chairman of our Audit Committee is Mr. Ma Kah Woh.
Responsibilities of our Audit Committee include, among others:
assisting our Board of Directors in discharging its statutory responsibilities on financing and
accounting matters;
reviewing financial statements, including announcements of financial results, significant
financial returns to regulators and any financial information contained in certain other
documents;
reviewing the scope and results of the audit and its cost effectiveness, and the independence
and objectivity of the external auditors;
reviewing and reporting to our Board of Directors on the adequacy and effectiveness of our
internal controls, including financial, operational, compliance and information technology
controls, at least annually;
reviewing, with the external auditor, his evaluation of the system of internal accounting
controls;
reviewing the statements to be included in the annual report concerning the adequacy and
effectiveness of the internal controls, including financial, operational, compliance and
information technology controls;
reviewing any interested person transaction as defined in the Listing Manual of a value of up
to US$1,000,000 and approving any interested person transaction as defined in the Listing
Manual of a value exceeding US$1,000,000. Please see the section Interested Person
Transactions and Potential Conflicts of Interests;
monitoring and reviewing the effectiveness of our internal audit function;
appraising and reporting to our Board of Directors on the audits undertaken by the external
auditors and internal auditors, the adequacy of disclosure of information, and the
appropriateness and quality of the system of management and internal controls;
making recommendations to our Board of Directors on the appointment, reappointment and
removal of the external auditor, and approving the remuneration and terms of engagement
of the external auditor;
reviewing any actual or potential conflicts of interest that may involve our Directors as
disclosed by them to our Board. Upon disclosure of an actual or potential conflict of interests
by a Director, our Audit Committee will consider whether a conflict of interests does in fact
exist. A Director who is a member of our Audit Committee will not participate in any
proceedings of our Audit Committee in relation to the review of a conflict of interests relating
to him. The review will include an examination of the nature of the conflict and such relevant
supporting data, as our Audit Committee may deem reasonably necessary;
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monitor the investments in our customers, suppliers and competitors made by our Directors,
Controlling Shareholders and their respective associates who are involved in the
management of or have shareholding interests in similar or related business of our Company
(to the extent as disclosed by them to our Audit Committee, based on agreed-upon internal
procedures which require annual declarations by such Directors, Controlling Shareholders
and their respective associates, with periodic updates as necessary) and make assessments
on whether there are any potential conflicts of interest;
review on a periodic basis the framework and processes established for the implementation
of the terms of the Non-competition Undertaking (as defined herein) in order to ensure that
such framework and processes remain appropriate; and
review and assess from time to time the prevailing processes put in place to manage any
material conflicts of interest with the KSL Group and consider, where appropriate, additional
measures for the management of such conflicts.
Apart from the duties listed above, our Audit Committee shall review our policy and arrangements
for employees and any other persons to raise concerns, in confidence, about possible wrongdoing
in financial reporting or other matters. Our Audit Committee shall ensure that these arrangements
allow such concerns to be raised, and for proportionate and independent investigation of such
matters to be undertaken and appropriate follow up action to be taken. Our Audit Committee is
also required to discuss matters which may involve any suspected fraud or irregularity, or
suspected infringement of any Singapore laws or regulations or rules of the SGX-ST or any other
regulatory authority in Singapore, which has or is likely to have a material impact on our operating
results or financial position with external auditors and/or such other persons as our Audit
Committee deems fit in its absolute discretion and report such matters to our Board of Directors
at an appropriate time.
Internal Controls
Prior to our application to the SGX-ST for the Listing and as part of the KSL Group, our activities
fall under the internal audit scope of the KSL Group. Please see Interested Person Transactions
and Potential Conflicts of Interest for further details on the internal audit services provided by the
KSL Group. Our activities were reviewed by the internal audit team of the KSL Group as part of
the internal audit cycles of the KSL Group. Such internal audit reports were in turn tabled before
the KSL audit committee. Following the decision to apply to the SGX-ST for the Listing and upon
the formation of our Audit Committee in 2013, our Audit Committee had reviewed the past internal
and external audit reports, covering the years 2009 to 2013. The external auditors have not raised
any significant controls issues arising from their audits.
In 2013, our Audit Committee engaged the external auditors to assess specific areas of internal
controls. These include a review of our new crew payroll software to ensure adequacy of internal
controls. The external auditors also reviewed our general information technology infrastructure
and controls as part of the external audit. KPMG Services Pte Ltd was also engaged to develop
a Board Risk Assurance Framework to help our Board of Directors formally identify the key risks,
the related mitigating measures and sources of assurance currently available to our Board of
Directors and our Audit Committee. Our management has also completed a management controls
self-assessment for 2013.
Based on the foregoing, our Audit Committee has approved an internal audit plan and other
activities to ensure that controls remain adequate and improvements are followed through.
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Our Board of Directors recognises the importance of a sound internal controls system to
safeguard the assets of our Group and our shareholders interest. Our Board of Directors affirms
its overall responsibility for our Groups system of internal controls and for reviewing the adequacy
and integrity of those systems. It should be noted that the internal controls system is designed to
manage rather than to eliminate risks. Accordingly, the internal controls system can only provide
reasonable and not absolute assurance regarding the achievement of our Groups objectives in
the following areas:
(a) effectiveness and efficiency of operations;
(b) reliability of financial reporting; and
(c) compliance with applicable laws and regulations.
The first area addresses an entitys basic business objectives, including performance and
profitability goals and safeguarding of assets. The second relates to the preparation of reliable
financial statements, including interim and full year financial statements. The third deals with
complying with those laws and regulations to which the entity is subject to.
Based on the foregoing, and after making all reasonable enquiries, our Board of Directors, with the
concurrence of our Audit Committee, is of the opinion that the internal controls are adequate to
address our Groups material financial, operational and compliance objectives. Our Board of
Directors notes that all internal controls systems contain inherent limitations and no system of
internal controls can provide absolute assurance against the occurrence of material errors, poor
judgement in decision making, human error, losses, fraud or other irregularities.
Our Nominating Committee
The terms of reference of our Nominating Committee provide that it shall comprise Non-Executive
Directors, a majority of whom shall be independent. The members of our Nominating Committee
as of the date of this Prospectus comprise our Independent Directors, Mr. Jude Philomen Benny,
Mr. Ahmad Sufian @ Qurnain Bin Abdul Rashid and Mr. Ma Kah Woh and our Non-Executive
Director, Mr. Wu Long Peng. The Chairman of our Nominating Committee is Mr. Jude Philomen
Benny. Responsibilities of our Nominating Committee include, among others:
reviewing and assessing candidates for directorships (including executive directorships)
before nominating such candidates for the approval of our Board of Directors;
reviewing and recommending to our Board of Directors the re-election of any Directors under
the retirement provisions in accordance with our Articles of Association at each annual
general meeting;
reviewing the composition of our Board of Directors annually to ensure an appropriate
balance of expertise, skills, attributes and abilities among our Directors;
reviewing and determining annually, and as and when circumstances require, if a Director is
independent, in accordance with the Code of Corporate Governance and any other salient
factors;
where a Director has multiple board representations, deciding whether the Director is able to
and has been adequately carrying out his duties as Director, taking into consideration the
Directors number of listed company board representations and other principal commitments;
and
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where our Chief Executive Officer is an executive director of PCL, an executive director of
a subsidiary of PCL, or an executive director of a subsidiary of KSL, as the case may be,
deciding whether our Chief Executive Officer is able to and has been adequately carrying out
his duties as our Chief Executive Officer.
Our Nominating Committee will decide how our Board of Directors performance is to be evaluated
and propose objective performance criteria which address how our Board of Directors has
enhanced long-term Shareholders value. The Nominating Committee will also implement a
performance evaluation process for assessing the effectiveness of our Board of Directors as a
whole and its board committees and for assessing the contribution of the Chairman of our Board
of Directors and each individual Director to the effectiveness of our Board of Directors and decide
whether or not a Director is able to and has been adequately carrying out his duties as a Director.
The Chairman of our Nominating Committee will act on the results of the performance evaluation
of our Board of Directors, and selections of members of our Board of Directors, in consultation with
our Nominating Committee. Each member of our Nominating Committee shall abstain from voting
on any resolutions in respect of the matter in which he has an interest in.
Our Remuneration Committee
The terms of reference of our Remuneration Committee provide that it shall comprise Non-
Executive Directors, a majority of whom shall be independent. The members of our Remuneration
Committee as of the date of this Prospectus comprise our Independent Directors, Mr. Ahmad
Sufian @ Qurnain Bin Abdul Rashid and Mr. Wee Joo Yeow and our Non-Executive Director, Mr.
Teo Joo Kim. The Chairman of our Remuneration Committee is Mr. Wee Joo Yeow.
Responsibilities of our Remuneration Committee include, among others:
reviewing and recommending to our Board of Directors, in consultation with the Chairman of
our Board of Directors (where applicable, such as in a case where the Chairman of our Board
of Directors is not a member of our Remuneration Committee), for endorsement, a
comprehensive remuneration policy framework and general framework and guidelines for
remuneration of our Directors and management personnel;
reviewing and recommending to our Board of Directors, specific remuneration packages for
each of the Directors and the key management personnel;
review our Companys obligations arising in the event of termination of the Executive
Directors and key management personnels contracts of service, to ensure that such
contracts of service contain fair and reasonable termination clauses which are not overly
generous, with a view to be fair and avoid rewarding poor performance and to recognise the
duty to mitigate loss; and
approving performance targets for assessing the performance of each of the Executive
Directors and key management personnel and recommending such targets as well as
employee specific remuneration packages for each of such Executive Directors and key
management personnel, for endorsement by our Board of Directors, with a view that such
remuneration should be aligned with the interests of shareholders and promote the long-term
success of our Company.
Our Remuneration Committee also periodically considers and reviews remuneration packages in
order to maintain their attractiveness, to retain and motivate the Directors and key management
personnel and to align the interests of management with our Company and Shareholders.
If a member of the Remuneration Committee has an interest in a matter being reviewed or
considered by the Remuneration Committee, he will abstain from voting on that matter.
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Our Risk Management Committee
The members of our Risk Management Committee as of the date of this Prospectus comprise our
Independent Directors, Mr. Ma Kah Woh, Mr. Jude Philomen Benny and Mr. Wee Joo Yeow and
our Chairman and Non-Executive Director, Mr. Kuok Khoon Ean. The Chairman of our Risk
Management Committee is Mr. Kuok Khoon Ean. Responsibilities of our Risk Management
Committee include, among others:
reviewing and discussing with our management our risk governance structure, risk
assessment and risk management guidelines, policies and processes and the adequacy and
effectiveness of our risk management policies and systems;
reviewing and discussing with our management our risk appetite and strategy relating to key
risks, including credit risk, liquidity and funding risk, market risk, product risk, relationship
risk and reputational risk, as well as the guidelines, policies and processes for monitoring
and mitigating such risks; and
reviewing disclosure regarding risk statements to be included in the annual report concerning
the adequacy and effectiveness of our risk management systems.
Our Executive Committee
The members of our Executive Committee as of the date of this Prospectus comprise Mr. Teo Joo
Kim and Mr. Seow Kang Hoe, Gerald. The Chairman of our Executive Committee is Mr. Teo Joo
Kim. Responsibilities of our Executive Committee include, among others:
reviewing our Groups strategy, business plans and annual budget;
reviewing our Groups strategic investments and divestments; and
approving transactions under the authority granted by our Board of Directors under our
Groups financial authority limits.
Service Agreements
There are no existing or proposed service agreements having a fixed term of service entered into
or to be entered into between our Company and our subsidiaries and our Directors.
Our Company has appointed Mr. Seow Kang Hoe, Gerald as our Chief Executive Officer pursuant
to his letter of employment which does not have a fixed term. Mr. Seow has also agreed to devote
the majority of his time and attention to the discharge of his duties as our Chief Executive Officer
in his letter of employment.
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Compensation of Directors and Executive Officers
The compensation, in bands of S$250,000, that we paid to each of our Directors and to our top
five Executive Officers (disclosed in terms of compensation) for services rendered by them in all
capacities to our Company and our subsidiaries for the years ended December 31, 2012 and 2013
(including any benefit in kind and any deferred compensation accrued for the year in question and
payable at a later date) and paid and expected to be payable by our Company and our subsidiaries
to each of these Directors and Executive Officers for services to be rendered by them in all
capacities to our Company and our subsidiaries for the year ending December 31, 2014, is as
follows:
Actual Estimated
(1)
Year Ended December 31,
Year Ending
December 31,
2012 2013 2014
Directors
Kuok Khoon Ean . . . . . . . . . . . . . . . . . . . . A A
Seow Kang Hoe, Gerald . . . . . . . . . . . . . . E I I
Wu Long Peng . . . . . . . . . . . . . . . . . . . . . . A A A
Teo Joo Kim . . . . . . . . . . . . . . . . . . . . . . . . A A A
Ahmad Sufian @ Qurnain Bin Abdul
Rashid . . . . . . . . . . . . . . . . . . . . . . . . . . . . A A A
Ma Kah Woh . . . . . . . . . . . . . . . . . . . . . . . A A
Jude Philomen Benny . . . . . . . . . . . . . . . . A A
Wee Joo Yeow . . . . . . . . . . . . . . . . . . . . . . A A
Executive Officers
Christopher Richards . . . . . . . . . . . . . . . . . B B N.A.
(2)
Lee Keng Lin . . . . . . . . . . . . . . . . . . . . . . . C D D
Chai Ulva . . . . . . . . . . . . . . . . . . . . . . . . . . C C C
Ng Eng Khin. . . . . . . . . . . . . . . . . . . . . . . . C C C
Sim Hee Ping . . . . . . . . . . . . . . . . . . . . . . . B B B
Yeoh Seng Huat, Geoffrey . . . . . . . . . . . . . N.A.
(2)
E
Notes:
(1) Estimated total annual compensation (including estimated discretionary bonus).
(2) Not applicable as the relevant Executive Officer is not one of our top five Executive Officers (in terms of
compensation) for the relevant year.
(3) Band A: Compensation up to S$249,999 per annum.
Band B: Compensation between S$250,000 to S$499,999 per annum.
Band C: Compensation between S$500,000 to S$749,999 per annum.
Band D: Compensation between S$750,000 to S$999,999 per annum.
Band E: Compensation between S$1,000,000 to S$1,249,999 per annum.
Band F: Compensation between S$1,250,000 to S$1,499,999 per annum.
Band G: Compensation between S$1,500,000 to S$1,749,999 per annum.
Band H: Compensation between S$1,750,000 to S$1,999,999 per annum.
Band I: Compensation between S$2,000,000 to S$2,249,999 per annum.
Our Company does not have in place any formal bonus or profit-sharing plan or any other
profit-linked agreement or arrangement with any of our employees, and bonuses are expected to
be paid on a discretionary basis.
We have not set aside or accrued any amounts for our Directors and Executive Officers to provide
for pension, retirement or similar benefits.
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SHARE-BASED INCENTIVE PLANS
Our Group has in place two share-based incentive plans, namely, the POSH Share Option Plan
and the POSH Performance Share Plan, details of which are set out below.
POSH Share Option Plan
On March 28, 2014, our Shareholders approved a share option plan known as the POSH Share
Option Plan (the SOP). The SOP will give participants an opportunity to have a personal equity
interest in our Company. As at the Latest Practicable Date, no options have been granted under
the SOP.
Objectives of the SOP
The objectives of the SOP are as follows:
(a) to motivate participants to optimise their performance standards and efficiency and to
maintain a high level of contribution to our Group;
(b) to retain key executives and executive directors of our Group whose contributions are
essential to the long-term growth and profitability of our Group;
(c) to instil loyalty to, and a stronger identification by employees with the long-term prosperity of,
our Company;
(d) to attract potential employees with relevant skills to contribute to our Group and to create
value for our Shareholders;
(e) to give recognition to the contributions made or to be made by (i) non-executive directors of
our Group, and (ii) key executives and executive directors of our parent company and its
subsidiaries, to the success of our Group; and
(f) to align the interests of employees with the interests of our Shareholders.
Summary of SOP
A summary of the rules of the SOP is set out as follows:
1. Participants
Under the rules of the SOP:
executive directors and employees of our Group or employees of our Group who are
seconded to an associated company of our Company (Group Employees). For the
avoidance of doubt, the secondment of an employee to an associated company of our
Company shall not be regarded as a break in his employment or him having ceased by
reason only of such secondment to be an employee of our Group;
executive directors and employees of our Companys designated holding company and
its subsidiaries other than Group Employees (Parent Group Employees); and
non-executive directors (including our Independent Directors) of our Group (Group
Non-Executive Directors),
are eligible to participate in the SOP.
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Controlling Shareholders of our Company or associates of such Controlling Shareholders are
not eligible to participate in the SOP.
Under the rules of the SOP, our Remuneration Committee may designate a holding company
for the time being of our Company to be our Parent Company (and together with its
subsidiaries, our Parent Group) for the purposes of the SOP. Our Remuneration Committee
has designated KSL as our Parent Company for the purposes of the SOP. The grant of
options to the Parent Group Employees is subject to Chapter 8 of the Listing Manual.
2. Scheme administration
The SOP shall be administered by our Remuneration Committee (Please refer to
Management Committees of Our Board of Directors) with powers to determine, inter alia,
the following:
(a) persons to be granted options;
(b) number of options to be granted; and
(c) modifications to the SOP.
Our Remuneration Committee may consist of Directors (including Directors or persons who
may be participants of the SOP) and may also include one person nominated by our Parent
Company to be a member of our Remuneration Committee. A member of our Remuneration
Committee who is also a participant of the SOP must not be involved in its deliberation in
respect of options granted or to be granted to him.
3. Size of the SOP
The total number of Shares over which our Remuneration Committee may grant new options
on any date, when added to:
(a) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted under the SOP;
(b) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all awards already granted under the POSH Performance
Share Plan (as further described below); and
(c) the total number of Shares subject to any other share option or share schemes of our
Company,
shall not exceed 15% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new option.
In addition, the total number of Shares over which our Remuneration Committee may grant
new options on any date during each of the year for which the SOP is in force, when added
to:
(i) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted under the SOP during the same
year;
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(ii) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all awards already granted under the POSH Performance
Share Plan during the same year; and
(iii) the total number of Shares subject to any other share option or share schemes of our
Company during the same year,
shall not exceed 1.5% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new option.
Our Company believes that the foregoing 15% limit set by the SGX-ST gives our Company
sufficient flexibility to decide the number of Option Shares to offer to eligible participants. The
number of eligible participants is expected to grow over the years. Our Company, in line with
its goals of ensuring sustainable growth, is constantly reviewing its position and considering
the expansion of its talent pool which may involve employing new employees. The employee
base, and thus the number of eligible participants will increase as a result. If the number of
options available under the SOP is limited, our Company may only be able to grant a small
number of options to each eligible participant which may not be a sufficiently attractive
incentive. Our Company is of the opinion that it should have a sufficient number of options
to offer to eligible participants, including new employees as well as existing ones. The
number of options offered must also be significant enough to serve as a meaningful reward
for contributions to our Group. However, it does not necessarily mean that our Remuneration
Committee will definitely issue Option Shares up to the prescribed limit. Our Remuneration
Committee shall exercise its discretion in deciding the number of Option Shares to be
granted to each participant which will depend on the performance and value of the participant
to our Group.
4. Maximum entitlements
The number of Shares comprised in options to be offered to a participant shall be determined
at the absolute discretion of our Remuneration Committee, which shall take into account
such criteria as it considers fit, including (but not limited to) his rank, job performance, years
of service, potential for future development and his contribution to the success and
development of our Group.
However, the grant of options to Parent Group Employees, collectively, will be limited so as
to preserve the availability of Shares for the grant of options to other eligible persons.
Accordingly, the SOP provides that the number of Shares over which options may be granted
will be discretionary, with certain limits and sub-limits imposed for the grant of options to
Parent Group Employees collectively (in aggregate, subject to independent Shareholders
approval in a separate resolution, not more than 20% of the total number of Shares available
for the grant of options under the SOP, and not more than 5% thereof for any one Parent
Group Employee unless approved by independent Shareholders in a separate resolution).
5. Options, exercise period and acquisition price
The options that are granted under the SOP may have acquisition prices that are, at our
Remuneration Committees discretion, set at a price equal to the volume-weighted average
price for our Shares on the SGX-ST over the three consecutive trading days immediately
preceding the date of grant of that option, as determined by our Remuneration Committee by
reference to the daily official list or any other publication published by the SGX-ST (the
Market Price); or at a discount to the Market Price (subject to a maximum discount of 20%).
In accordance with the Listing Manual, options which are fixed at the Market Price (Market
Price Option) may be exercised on a date falling on or after the first anniversary of the date
on which an offer to grant that option is made while options exercisable at a discount to the
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Market Price may be exercised on a date falling on or after the second anniversary from the
date on which an offer to grant that option is made (Discount Price Option). Subject to the
foregoing, our Company may, if it deems fit, impose conditions on the exercise of the options,
such as restricting the number of Shares for which the option may be exercised during the
initial years following its vesting. Options granted under the SOP will have a life span of 10
years for options granted to Group Employees and Parent Group Employees and five years
for options granted to Group Non-Executive Directors.
6. Grant of options
Under the rules of the SOP, there are no fixed periods for the grant of options. As such, offers
of the grant of options may be made at any time from time to time at the discretion of our
Remuneration Committee. However, in the event that an announcement on any matter of an
exceptional nature involving unpublished price sensitive information is made, offers may only
be made on or after the fourth market day after the date on which such announcement is
released.
7. Termination of options
Special provisions for the vesting and lapsing of options apply in certain circumstances
including the following:
(i) an order being made for the winding-up of our Company on the basis, or by reason, of
its insolvency;
(ii) the misconduct on the part of the participant as determined by our Remuneration
Committee in its discretion;
(iii) the participant ceasing to be in the employment of our Group or our Parent Group, as
the case may be, for any reason whatsoever (other than as specified in paragraph (v)
below);
(iv) the bankruptcy of a participant or the happening of any other event which results in his
being deprived of the legal or beneficial ownership of the option;
(v) the participant ceases at any time to be in the employment of our Group or our Parent
Group, as the case may be, by reason of:
(1) ill health, injury or disability (in each case, evidenced to the satisfaction of our
Remuneration Committee);
(2) redundancy;
(3) retirement at or after the legal retirement age;
(4) retirement before the legal retirement age with the consent of our Remuneration
Committee;
(5) the company by which he is employed or to which he is seconded, as the case may
be, ceasing to be a company within our Group or our Parent Group (as the case
may be), or the undertaking or part of the undertaking of such company being
transferred otherwise than to another company within our Group or our Parent
Group (as the case may be);
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(6) his transfer to any Ministry, governmental or statutory body or corporation at the
direction of our Company or our Parent Group (as the case may be); or
(7) any other event approved by our Remuneration Committee;
(vi) any other event approved by our Remuneration Committee; or
(vii) a take-over, reconstruction or amalgamation of our Company or an order being made or
a resolution passed for the winding-up of our Company (other than as provided in
paragraph (i) above or for amalgamation or reconstruction).
Upon the occurrence of any of the events specified in paragraphs (i), (ii) and (iii), an option
then held by a participant shall, subject as provided in the rules of the SOP and to the extent
unexercised, immediately lapse without any claim whatsoever against our Company.
Upon the occurrence of any of the events specified in paragraphs (iv), (v) and (vi) above, our
Remuneration Committee may, in its absolute discretion, preserve all or any part of any
option in accordance with the rules of the SOP. Our Remuneration Committee, in exercising
such discretion, may allow the option to be exercised at any time, notwithstanding that the
date of exercise of such option falls on a date prior to the first day of the exercise period in
respect of such option.
Upon the occurrence of the event specified in paragraph (vii) above, a participant shall be
entitled to exercise in full or in part any option then held by him and as yet unexercised,
during the periods prescribed under the rules of the SOP. To the extent that an option is not
exercised within such prescribed periods, the option shall lapse and become null and void.
If, in connection with any of the events specified in paragraph (vii) above, arrangements are
made for the compensation of participants, whether by the continuation of their options or the
payment of cash or the grant of other options or otherwise, a participant holding an option,
as yet not exercised, may not, at the discretion of our Remuneration Committee, be permitted
to exercise that option.
8. Acceptance of options
The grant of options shall be accepted within 30 days from the date of the offer. Offers of
options made to grantees, if not accepted before the closing date, will lapse. Upon
acceptance of the offer, the grantee must pay our Company a consideration of S$1.00.
9. Rights of shares arising
Subject to the Companies Act and the rules of the Listing Manual, our Company shall have
the flexibility to deliver Shares to participants upon the exercise of their options by way of
either (i) an allotment of new Shares; and/or (ii) the transfer of existing Shares, including any
Shares held by our Company in treasury.
In determining whether to allot new Shares to participants upon the exercise of their options,
our Company will take into account factors such as (but not limited to) the number of Shares
to be delivered, the prevailing market price of the Shares and the cost to our Company of
allotting new Shares or transferring existing Shares.
The financial effects of the above methods are discussed below.
Shares arising from the exercise of options shall be subject to the provisions of the Articles
of Association and Memorandum of Association of our Company, and rank in full for all
entitlements, including dividends or other distributions declared or recommended in respect
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of the then existing Shares, the record date for which is on or after the later of (a) the relevant
date upon which such exercise occurred; and (b) the date of issue of the Shares, and shall
in all respects rank pari passu with other existing Shares then in issue.
10. Duration of the SOP
The SOP shall continue to be in force for a maximum period of 10 years and may continue
beyond the above stipulated period with the approval of our Shareholders by ordinary
resolution in general meeting and of any relevant authorities which may then be required.
11. Abstention from voting
Shareholders who are eligible to participate in the SOP are to abstain from voting on any
shareholders resolution relating to the SOP, including any shareholders resolution relating
to the implementation of the SOP or the making of offers and grants of options under the SOP
at a discount not exceeding the maximum discount (other than a resolution relating to the
participation of, or grant of options to, directors and employees of our Parent Group) and
should not accept nominations as proxy or otherwise for voting unless specific instructions
have been given in the proxy form on how the vote is to be cast.
Our Parent Company (and its associates), and directors and employees of our Parent Group
who are also our Shareholders and are eligible to participate in the SOP, are to abstain from
voting on any shareholders resolution relating to the participation of, or grant of options to,
directors and employees of our Parent Group, and should not accept nominations as proxy
or otherwise for voting unless specific instructions have been given in the proxy form on how
the vote is to be cast.
Adjustment Events under the SOP
If a variation in the ordinary share capital of our Company (whether by way of a capitalisation of
profits or reserves or rights issue, reduction, subdivision, consolidation, distribution or otherwise)
shall take place or if our Company shall make a capital distribution or a declaration of a special
dividend (whether in cash or in specie), then our Remuneration Committee may, in its sole
discretion, determine whether:
(i) the acquisition price of the Shares, class and/or number of Shares comprised in an Option
to the extent unexercised; and/or
(ii) the class and/or number of Shares in respect of which future Options may be granted under
the SOP,
shall be adjusted and if so, the manner in which such adjustments should be made. Any
adjustment must be made in a way that a participant will not receive a benefit that a Shareholder
does not receive.
Unless our Remuneration Committee considers an adjustment to be appropriate, the issue of
securities as consideration for an acquisition or a private placement of securities, or upon the
exercise of any options or conversion of any loan stock or any other securities convertible into
Shares or subscription rights of any warrants, or the cancellation of issued Shares purchased or
acquired by our Company by way of a market purchase of such Shares undertaken by our
Company on the SGX-ST during the period when a share purchase mandate granted by
Shareholders (including any renewal of such mandate) is in force, shall not normally be regarded
as a circumstance requiring adjustment.
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Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by our
Companys auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and
reasonable.
Grant of options with a discounted acquisition price
The ability to offer options to participants of the SOP with acquisition prices set at a discount to
the prevailing market prices of the Shares will operate as a means to recognise the performance
of participants as well as to motivate them to continue to excel while encouraging them to focus
more on improving the profitability and return of our Group above a certain level which will benefit
all Shareholders when these are eventually reflected through share price appreciation. The SOP
will also serve to recruit new employees whose contributions are important to the long-term growth
and profitability of our Group. Discounted options would be perceived in a more positive light by
the participants, inspiring them to work hard and produce results in order to be offered options at
a discount as only participants who have made outstanding contributions to the success and
development of our Group would be granted options at a discount.
At present, our Company foresees that options may be granted with a discount principally in the
following circumstances:
(a) Firstly, where it is considered more effective to reward and retain talented individuals by way
of a discounted price option rather than a market price option. This is to reward the
outstanding performers who have contributed significantly to our Groups performance and
the discounted price option serves as additional incentives to such participants. Options
granted by our Company on the basis of market price may not be attractive and realistic in
the event of an overly buoyant market and inflated share prices. Hence, during such period,
the ability to offer such options at a discount would allow our Company to grant options on
a more realistic and economically feasible basis. Furthermore, options granted at a discount
will give an opportunity to participants to realise some tangible benefits even if external
events cause the share price to remain largely static.
(b) Secondly, where it is more meaningful and attractive to acknowledge a participants
achievements through a discounted price option rather than paying him a cash bonus. For
example, options granted at a discount may be used to compensate participants and to
motivate them during economic downturns when wages (including cash bonuses and annual
wage supplements) are frozen or cut, or they could be used to supplement cash rewards in
lieu of larger cash bonuses or annual wage supplements. Accordingly, it is possible that
merit-based cash bonuses or rewards may be combined with grants of market price options
or discounted price options, as part of eligible participants compensation packages. The
SOP will also provide participants with an incentive to focus more on improving the
profitability of our Group thereby enhancing shareholder value when these are eventually
reflected through the price appreciation of the Shares after the vesting period.
(c) Thirdly, where due to speculative forces and having regard to the historical performance of
the Share price, the market price of the Shares at the time of the grant of the options may
not be reflective of financial performance indicators such as return on equity and/or earnings
growth.
Our Remuneration Committee will have the absolute discretion to grant options where the
acquisition price is discounted, to determine the level of discount (subject to a maximum discount
of 20% of the Market Price) and the grantees to whom, and the options to which, such discount
in the acquisition price will apply provided that our Shareholders in general meeting shall have
authorised, in a separate resolution, the making of offers and grants of options under the SOP at
a discount not exceeding the maximum discount as aforesaid.
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In deciding whether to give a discount and the quantum of such discount (subject to the aforesaid
limit), our Remuneration Committee shall be at liberty to take into consideration such criteria as
our Remuneration Committee may, in its absolute discretion, deem appropriate, including but not
limited to the performance of our Group, the years of service and the individual performance of the
participant, the contribution of the participant to the success and development of our Company
and/or our Group and the prevailing market conditions.
Our Company may also grant options without any discount to the market price. Additionally, our
Company may, if it deems fit, impose conditions on the exercise of the options (whether such
options are granted at the market price or at a discount to the market price), such as restricting
the number of Shares for which the option may be exercised during the initial years following its
vesting.
Rationale for participation of Parent Group Employees and Group Non-Executive Directors
in the SOP
The extension of the SOP to Parent Group Employees and Group Non-Executive Directors allows
our Group to have a fair and equitable system to reward persons who are not employed within our
Group but work closely with our Group and who have made and who continue to make significant
contributions to the long-term growth of our Group.
We recognise that it is important to the well-being and stability of our Group that we acknowledge
the services and contributions made by the categories of persons described above, and that we
continue to receive their support and contributions. In particular, Parent Group Employees and
Group Non-Executive Directors who would be eligible to participate in the SOP are persons who
are able to provide us with valuable support, input and business contacts, and also provide us with
strategic or significant business alliances or opportunities. Companies within our Parent Group
may also contribute significantly to our profitability. The SOP gives us the opportunity to
acknowledge and give recognition to any outstanding achievements and contributions made by
these categories of persons.
By implementing the SOP, we will have a means of providing those who, while they are not
employees of our Group, are nevertheless closely associated with our Group and our business
operations, with an opportunity to share in the success and achievements of our Group as well as
the performance of our Group through participating in the equity of our Company.
The objective is that by doing so, our Company will also strengthen our working relationship with
the participants by inculcating in them a stronger and more lasting sense of identification with our
Group. We believe that the SOP will also enable us to attract, retain and provide incentives to its
participants to achieve higher standards of performance as well as encourage greater dedication
and loyalty by enabling our Company to give recognition to past contributions and services as well
as motivating participants generally to contribute towards the long-term growth of our Group.
Although Group Non-Executive Directors are not involved in the day-to-day running of our Groups
business, they, nonetheless, play an invaluable role in furthering the business interests of our
Group by contributing their experience and expertise. The participation by Group Non-Executive
Directors in the SOP will provide our Company with a further avenue to acknowledge and
recognise their services and contributions to our Group as it may not always be possible to
compensate them fully or appropriately by increasing the directors fees or other forms of cash
payment. In order to minimise any potential conflict of interests and not to compromise the
independence of Group Non-Executive Directors, our Company intends to grant only a nominal
number of options under the SOP to such non-executive directors.
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Parent Group Employees are persons who work closely with our Group. They provide assistance
and support to our Group on a continuing basis in the development and implementation of
business strategies, investments and projects in which we have interests. We recognise that the
continued support of these persons is important to the progress, well-being and stability of our
Group. The grant of options to these persons provides us with a means to acknowledge special
contributions or efforts made by them.
Financial Effects of the SOP
The SOP will increase our issued share capital to the extent of the new Shares that will be allotted
pursuant to the exercise of options. Under the Financial Reporting Standard 102 on Share-based
Payment (FRS 102), the fair value of employee services received in exchange for the grant of
the options would be recognised as an expense. For equity-settled share-based payment
transactions, the total amount to be expensed in the income statement over the vesting period is
determined by reference to the fair value of each option granted at the grant date and the number
of options vested by vesting date, with a corresponding increase in equity.
Before the end of the vesting period, at each balance sheet date, the entity revises its estimates
of the number of options that are expected to vest by the vesting date and recognises the impact
of this revision in the income statement with a corresponding adjustment to equity. After the
vesting date, no adjustment to the income statement would be made. The proceeds net of any
directly attributable transaction costs are credited to the share capital when the options are
exercised.
During the vesting period, the consolidated earnings per share would be reduced by both the
expense recognised and the potential ordinary shares to be issued under the share option
scheme. When the options are exercised, the consolidated NTA will be increased by the amount
of cash received for exercise of the options. On a per share basis, the effect is accretive if the
acquisition price is above the NTA per share but dilutive otherwise.
There will be no cash outlay expended by us at the time of grant of such options as compared to
the payment of cash bonuses. However, as Shareholders may be aware, any options granted to
subscribe for new shares (whether the acquisition price is set at the market price of the shares at
the date of grant or otherwise) have a fair value at the time of grant. The fair value of an option
is an estimate of the amount that a willing buyer would pay a willing seller for the option on the
grant date. Options are granted to participants at a nominal consideration of S$1.00. Insofar as
such options are granted at a consideration that is less than their fair value at the time of grant,
there will be a cost to our Company in that we will receive from the participant upon the grant of
the option a consideration that is less than the fair value of the option.
The following sets out the financial effects of the SOP.
(a) Share capital
The SOP will result in an increase in our Companys issued share capital when new Shares
are allotted to participants. The number of new Shares allotted will depend on, inter alia, the
size of the options granted under the SOP. Whether and when the options granted under the
SOP will be exercised will depend on the acquisition price of the options, when the options
will vest as well as the prevailing trading price of the Shares. In any case, the SOP provides
that the total number of Shares over which our Remuneration Committee may grant new
options on any date, when added to:
(i) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted under the SOP;
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(ii) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all awards already granted under the POSH Performance
Share Plan; and
(iii) the total number of Shares subject to any other share option or share schemes of our
Company,
shall not exceed 15% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new option. If
instead of allotting new Shares to participants, existing Shares are transferred to
participants, the SOP will have no impact on our Companys issued share capital.
(b) NTA
As described in paragraph (c) below on EPS, the grant of options will be recognised as an
expense, the amount of which will be computed in accordance with FRS 102. When new
Shares are allotted pursuant to the exercise of options, there would be no effect on the NTA
due to the offsetting effect of expenses recognised and the increase in share capital.
However, if instead of allotting new Shares to participants, existing Shares are purchased for
transfer to participants, the NTA would be impacted by the cost of the Shares purchased.
(c) EPS
Without taking into account earnings that may be derived by our Company from the use of
the proceeds from the allotment of Shares pursuant to the exercise of options granted under
the SOP, any new Shares allotted pursuant to any exercise of the options will have a dilutive
impact on our Companys EPS.
(d) Dilutive Impact
The allotment of new Shares under the SOP will have a dilutive impact on our consolidated
EPS.
We have made an application to the SGX-ST for permission to deal in and for quotation of the
Option Shares which may be issued upon the exercise of the options to be granted under the SOP.
The approval of the SGX-ST is not to be taken as an indication of the merits of the Offering, our
Company, any of our subsidiaries, our Shares (including the Offering Shares, the Cornerstone
Shares, the Additional Shares, the Option Shares and the Performance Shares), the SOP or the
PSP (as defined below).
POSH Performance Share Plan
On March 28, 2014, our Shareholders approved a share scheme known as the POSH
Performance Share Plan (the PSP).
Rationale for the PSP
Our Directors have implemented the PSP to increase our Companys flexibility and effectiveness
in its continuing efforts to reward, retain and motivate employees and non-executive directors of
our Group, as well as employees and directors of our Parent Group, to achieve increased
performance. Our Directors believe that, in addition to the SOP, the plan will further strengthen our
Companys and our Parent Groups competitiveness in attracting and retaining superior local and
foreign talent.
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The PSP allows our Company to target specific performance objectives and to provide an
incentive for participants to achieve these targets. Our Directors believe that the plan will provide
our Company with a flexible approach to provide performance incentives to employees and
non-executive directors of our Group, as well as employees and directors of our Parent Group
and, consequently, to improve performance and achieve sustainable growth for our Company in
the changing business environment, and to foster a greater ownership culture amongst key senior
management, senior executives and directors of our Group and our Parent Group.
Operation of the PSP
Awards granted under the PSP will be principally performance-based, incorporating an element of
stretched targets for senior executives and significantly stretched targets for key senior
management and non-executive directors aimed at delivering long-term shareholder value.
The PSP uses methods fairly common among major local and multinational companies to
incentivise and motivate senior executives and key senior management to achieve pre-
determined targets which create and enhance economic value for Shareholders. Our Company
believes that the PSP will be an effective tool in motivating senior executives, key senior
management and non-executive directors to work towards stretched goals.
The PSP contemplates the award of fully paid Shares, or the equivalent in cash or a combination
of both, when and after pre-determined performance or service conditions are accomplished.
A participants award under the PSP will be determined at the sole discretion of our Remuneration
Committee. In considering an award to be granted to a participant who is an employee, our
Remuneration Committee may take into account, inter alia, the participants rank, job
performance, years of service and potential for future development, his contribution to the success
and development of our Group. In considering an award to be granted to a participant who is a
non-executive director, our Remuneration Committee may take into account, inter alia, the
participants years of service and his contribution to the success and development of our Group.
Awards granted under the PSP are principally performance-based with performance targets to be
set over a performance period and may vary from one performance period to another performance
period and from one grant to another grant. Performance targets set by our Remuneration
Committee are intended to be based on the overall performance of our Group. Such performance
targets and performance periods will be set according to the specific roles of each participant, and
may differ from participant to participant. The performance targets are stretched targets aimed at
sustaining long-term growth.
Under the PSP, participants are encouraged to continue serving our Group or our Parent Group
beyond the achievement date of the pre-determined performance targets. Our Remuneration
Committee has the discretion to impose a further vesting period after the performance period to
encourage the participant to continue serving our Group or our Parent Group for a further period
of time.
Maximum Limits on Shares
In order to reduce the dilutive impact of the PSP, the total number of Shares over which our
Remuneration Committee may grant new awards on any date, when added to:
(a) the total number of Shares issued and/or issuable and transferred and/or to be transferred
in respect of all awards already granted under the PSP;
(b) the total number of Shares issued and/or issuable and transferred and/or to be transferred
in respect of all options already granted under the SOP; and
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(c) the total number of Shares subject to any other share option or share schemes of our
Company,
shall not exceed 15% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new award.
In addition, the total number of Shares over which our Remuneration Committee may grant new
awards on any date during each of the year for which the PSP is in force, when added to:
(i) the total number of Shares issued and/or issuable and transferred and/or to be transferred
in respect of all awards already granted under the PSP during the same year;
(ii) the total number of Shares issued and/or issuable and transferred and/or to be transferred
in respect of all options already granted under the SOP during the same year; and
(iii) the total number of Shares subject to any other share option or share schemes of our
Company,
shall not exceed 1.5% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new award.
Summary of the PSP
A summary of the rules of the PSP is set out as follows:
1. Eligibility
Group Employees, Parent Group Employees and Group Non-Executive Directors shall be
eligible to participate in the PSP.
Controlling Shareholders of our Company or associates of such Controlling Shareholders are
not eligible to participate in the PSP.
Under the rules of the PSP, our Remuneration Committee may designate a holding company
for the time being of our Company to be our Parent Company (and together with its
subsidiaries, our Parent Group) for the purposes of the PSP. Our Remuneration Committee
has designated KSL as our Parent Company for the purposes of the PSP. The grant of
awards to the Parent Group Employees is subject to Chapter 8 of the Listing Manual.
2. Scheme administration
The PSP shall be administered by our Remuneration Committee (Please refer to
Management Committees of Our Board of Directors) with powers to determine, inter alia,
the following:
(a) persons to be granted awards;
(b) number of shares which are the subject of each award to be granted; and
(c) modifications to the PSP.
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Our Remuneration Committee may consist of Directors (including Directors or persons who
may be participants of the PSP) and may also include one person nominated by our Parent
Company to be a member of our Remuneration Committee. A member of our Remuneration
Committee who is also a participant of the PSP must not be involved in its deliberation in
respect of awards granted or to be granted to him.
3. Awards
Awards represent the right of a participant to receive fully paid Shares free of charge, or the
equivalent in cash or a combination of both, provided that certain prescribed performance
targets (if any) are met and upon expiry of the prescribed performance period.
An award shall be personal to the participant and, prior to the allotment and/or transfer to the
participant of the shares to which the released award relates, shall not be transferred (other
than to a participants personal representative on the death of that participant), charged,
assigned, pledged or otherwise disposed of, in whole or in part, except with the prior
approval of our Remuneration Committee.
4. Participants
The selection of a participant and the number of Shares which are the subject of each award
to be granted to a participant in accordance with the PSP shall be determined at the absolute
discretion of our Remuneration Committee, which shall take into account such criteria as it
considers fit, including (but not limited to) his rank, job performance, years of service and
potential for future development, his contribution to the success and development of our
Group and the extent of effort and difficulty with which the performance condition(s) may be
achieved within the performance period.
However, the grant of awards to Parent Group Employees, collectively, will be limited so as
to preserve the availability of Shares for the grant of awards to other eligible persons.
Accordingly, the PSP provides that the number of Shares over which awards may be granted
will be discretionary, with certain limits and sub-limits imposed for the grant of awards to
Parent Group Employees collectively (in aggregate, subject to independent Shareholders
approval in a separate resolution, not more than 20% of the total number of Shares available
for the grant of awards under the PSP, and not more than 5% thereof for any one Parent
Group Employee unless approved by independent Shareholders in a separate resolution).
5. Details of Awards
Our Remuneration Committee shall decide, in relation to each award to be granted to a
participant:
(a) the date on which the award is to be granted;
(b) the number of Shares which are the subject of the award;
(c) the performance condition(s) and the performance period during which such
performance condition(s) are to be satisfied, if any;
(d) the extent to which Shares, which are the subject of that award, shall be released on the
performance condition(s) being satisfied (whether fully or partially) or exceeded or not
being satisfied, as the case may be, at the end of the performance period;
(e) the vesting date; and
(f) any other condition which our Remuneration Committee may determine in relation to
that award.
183
6. Timing
While our Remuneration Committee has the discretion to grant awards at any time in the
year, it is currently anticipated that awards would in general be made once a year. An award
letter confirming the award and specifying (inter alia) the number of Shares which are the
subject of the award, the prescribed performance target(s), the performance period during
which the performance conditions(s) and the vesting date, will be sent to each participant as
soon as reasonably practicable after the making of an award.
7. Events Prior to Vesting
Special provisions for the vesting and lapsing of awards apply in certain circumstances
including the following:
(i) an order being made for the winding-up of our Company on the basis, or by reason, of
its insolvency;
(ii) the misconduct on the part of the participant as determined by our Remuneration
Committee in its discretion;
(iii) the participant ceasing to be in the employment of our Group or our Parent Group, as
the case may be, for any reason whatsoever (other than as specified in paragraph (v)
below);
(iv) the bankruptcy of a participant or the happening of any other event which results in his
being deprived of the legal or beneficial ownership of the award;
(v) the participant ceases at any time to be in the employment of our Group or our Parent
Group, as the case may be, by reason of:
(1) ill health, injury or disability (in each case, evidenced to the satisfaction of our
Remuneration Committee);
(2) redundancy;
(3) retirement at or after the legal retirement age;
(4) retirement before the legal retirement age with the consent of our Remuneration
Committee;
(5) the company by which he is employed or to which he is seconded, as the case may
be, ceasing to be a company within our Group or our Parent Group (as the case
may be), or the undertaking or part of the undertaking of such company being
transferred otherwise than to another company within our Group or our Parent
Group (as the case may be);
(6) his transfer to any Ministry, governmental or statutory body or corporation at the
direction of our Company or our Parent Group (as the case may be); or
(7) any other event approved by our Remuneration Committee;
(vi) any other event approved by our Remuneration Committee; or
184
(vii) a take-over, reconstruction or amalgamation of our Company or an order being made or
a resolution passed for the winding-up of our Company (other than as provided in
paragraph (i) above or for amalgamation or reconstruction).
Upon the occurrence of any of the events specified in paragraphs (i), (ii) and (iii), an award
then held by a participant shall, subject as provided in the rules of the PSP and to the extent
not yet released, immediately lapse without any claim whatsoever against our Company.
Upon the occurrence of any of the events specified in paragraphs (iv), (v) and (vi) above, our
Remuneration Committee may, in its absolute discretion, preserve all or any part of any
award and decide either to vest some or all of the Shares which are the subject of the award
or to preserve all or part of any award until the end of the relevant performance period. In
exercising its discretion, our Remuneration Committee will have regard to all circumstances
on a case-by-case basis, including (but not limited to) the contributions made by that
participant and the extent to which the performance condition(s) has (have) been satisfied.
Upon the occurrence of the event specified in paragraph (vii) above, our Remuneration
Committee will consider, at its discretion, whether or not to release any award, and will take
into account all circumstances on a case-by-case basis, including (but not limited to) the
contributions made by that participant. If our Remuneration Committee decides to release
any award, then in determining the number of Shares to be vested in respect of such award,
our Remuneration Committee will have regard to the proportion of the performance period(s)
which has (have) elapsed and the extent to which the performance condition(s) has (have)
been satisfied.
8. Size and Duration of the PSP
The total number of Shares over which our Remuneration Committee may grant new awards
on any date, when added to:
(a) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all awards already granted under the PSP;
(b) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted under the SOP; and
(c) the total number of Shares subject to any other share option or share schemes of our
Company,
shall not exceed 15% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new award.
In addition, the total number of Shares over which our Remuneration Committee may grant
new awards on any date during each of the year for which the PSP is in force, when added
to:
(i) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all awards already granted under the PSP during the same
year;
(ii) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted under the SOP during the same
year; and
185
(iii) the total number of Shares subject to any other share option or share schemes of our
Company during the same year,
shall not exceed 1.5% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new award.
The PSP shall continue in force at the discretion of our Remuneration Committee, subject to
a maximum period of 10 years commencing on the date on which the PSP is adopted by our
Company in general meeting, provided always that the PSP may continue beyond the above
stipulated period with the approval of Shareholders by ordinary resolution in general meeting
and of any relevant authorities which may then be required.
Notwithstanding the expiry or termination of the PSP, any awards made to participants prior
to such expiry or termination will continue to remain valid.
9. Operation of the PSP
Our Company will deliver Shares to participants upon vesting of their awards by way of either
(i) an allotment of Shares; or (ii) a transfer of Shares (which may include Shares held by our
Company as treasury shares).
In determining whether to allot Shares to participants upon vesting of their awards, our
Company will take into account factors such as (but not limited to) the number of Shares to
be delivered, the prevailing market price of the Shares and the cost to our Company of
allotting new Shares or transferring existing Shares.
The financial effects of the above methods are discussed below.
New Shares allotted and issued, and existing Shares procured by our Company for transfer,
pursuant to the release of any award shall rank in full for all entitlements, including dividends
or other distributions declared or recommended in respect of the then existing Shares, the
record date for which is on or after the later of (a) the relevant vesting date; and (b) the date
of issue of the Shares, and shall in all other respects rank pari passu with other existing
Shares then in issue.
Our Remuneration Committee shall have full discretion to determine whether any
performance condition has been satisfied (whether fully or partially) or exceeded and in
making any such determination, our Remuneration Committee shall have the right to make
reference to the audited results of our Company or our Group (as the case may be) to take
into account such factors as our Remuneration Committee may determine to be relevant,
such as changes in accounting methods, taxes and extraordinary events, and further, the
right to amend any performance condition if our Remuneration Committee decides that a
changed performance target would be a fairer measure of performance.
10. Abstention from voting
Shareholders who are eligible to participate in the PSP are to abstain from voting on any
shareholders resolution relating to the PSP, including any shareholders resolution relating
to the implementation of the PSP (other than a resolution relating to the participation of, or
grant of awards to, directors and employees of our Parent Group) and should not accept
nominations as proxy or otherwise for voting unless specific instructions have been given in
the proxy form on how the vote is to be cast.
186
Our Parent Company (and its associates), and directors and employees of our Parent Group
who are also our Shareholders and are eligible to participate in the PSP, are to abstain from
voting on any shareholders resolution relating to the participation of, or grant of awards to,
directors and employees of our Parent Group, and should not accept nominations as proxy
or otherwise for voting unless specific instructions have been given in the proxy form on how
the vote is to be cast.
Adjustments and Alterations under the PSP
The following describes the adjustment events under, and provisions relating to alterations of, the
PSP.
1. Adjustment Events
If a variation in the ordinary share capital of our Company (whether by way of a capitalisation
of profits or reserves or rights issue, reduction, subdivision, consolidation, distribution or
otherwise) shall take place or if our Company shall make a capital distribution or a
declaration of a special dividend (whether in cash or in specie), then our Remuneration
Committee may, in its sole discretion, determine whether:
(i) the class and/or number of Shares which are the subject of an award to the extent not
yet vested; and/or
(ii) the class and/or number of Shares in respect of which future awards may be granted
under the PSP,
shall be adjusted and if so, the manner in which such adjustments should be made. Any
adjustment must be made in a way that a participant will not receive a benefit that a
Shareholder does not receive.
Unless our Remuneration Committee considers an adjustment to be appropriate, the issue
of securities as consideration for an acquisition or a private placement of securities, or upon
the exercise of any options or conversion of any loan stock or any other securities convertible
into Shares or subscription rights of any warrants, or the cancellation of issued Shares
purchased or acquired by our Company by way of a market purchase of such Shares
undertaken by our Company on the SGX-ST during the period when a share purchase
mandate granted by Shareholders (including any renewal of such mandate) is in force, shall
not normally be regarded as a circumstance requiring adjustment.
Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by
our Companys auditors (acting only as experts and not as arbitrators) to be in their opinion,
fair and reasonable.
2. Modifications or Alterations to the PSP
The PSP may be modified and/or altered at any time and from time to time by a resolution
of our Remuneration Committee subject to the prior approval of the SGX-ST and such other
regulatory authorities as may be necessary.
However, no modification or alteration shall adversely affect the rights attached to any award
granted prior to such modification or alteration except with the consent in writing of such
number of participants who, if their awards were released to them upon the performance
condition(s) relating to their awards being satisfied in full, would become entitled to not less
187
than three-quarters in number of all the Shares which would fall to be vested upon release
of all outstanding awards upon the performance condition(s) for all outstanding awards being
satisfied in full.
No alteration shall be made to particular rules of the PSP to the advantage of participants
except with the prior approval of Shareholders in general meeting.
Rationale for participation of Parent Group Employees and Group Non-Executive Directors
in the PSP
The extension of the PSP to Parent Group Employees and Group Non-Executive Directors allows
our Group to have a fair and equitable system to reward persons who are not employed within our
Group but work closely with our Group and who have made and who continue to make significant
contributions to the long-term growth of our Group.
We recognise that it is important to the well-being and stability of our Group that we acknowledge
the services and contributions made by the categories of persons described above, and that we
continue to receive their support and contributions. In particular, Parent Group Employees and
Group Non-Executive Directors who would be eligible to participate in the PSP are persons who
are able to provide us with valuable support, input and business contacts, and also provide us with
strategic or significant business alliances or opportunities. Companies within our Parent Group
may also contribute significantly to our profitability. The PSP gives us the opportunity to
acknowledge and give recognition to any outstanding achievements and contributions made by
these categories of persons.
By implementing the PSP, we will have a means of providing those who, while they are not
employees of our Group, are nevertheless closely associated with our Group and our business
operations, with an opportunity to share in the success and achievements of our Group as well as
the performance of our Group through participating in the equity of our Company.
The objective is that by doing so, our Company will also strengthen our working relationship with
the participants by inculcating in them a stronger and more lasting sense of identification with our
Group. We believe that the PSP will also enable us to attract, retain and provide incentives to its
participants to achieve higher standards of performance as well as encourage greater dedication
and loyalty by enabling our Company to give recognition to past contributions and services as well
as motivating participants generally to contribute towards the long-term growth of our Group.
Although Group Non-Executive Directors are not involved in the day-to-day running of our Groups
business, they, nonetheless, play an invaluable role in furthering the business interests of our
Group by contributing their experience and expertise. The participation by Group Non-Executive
Directors in the PSP will provide our Company with a further avenue to acknowledge and
recognise their services and contributions to our Group as it may not always be possible to
compensate them fully or appropriately by increasing the directors fees or other forms of cash
payment. In order to minimise any potential conflict of interests and not to compromise the
independence of Group Non-Executive Directors, our Company intends to grant only a nominal
number of shares comprised in awards under the PSP to such non-executive directors.
Parent Group Employees are persons who work closely with our Group. They provide assistance
and support to our Group on a continuing basis in the development and implementation of
business strategies, investments and projects in which we have interests. We recognise that the
continued support of these persons is important to the progress, well-being and stability of our
Group. The grant of awards to these persons provides us with a means to acknowledge special
contributions or efforts made by them.
188
Financial Effects of the PSP
The PSP is considered a share-based payment that falls under FRS 102 where participants will
receive Shares and the awards would be accounted for as equity-settled share-based
transactions, as described in the following paragraphs.
The fair value of employee services received in exchange for the grant of the awards would be
recognised as a charge to the income statement over the period between the grant date and the
vesting date of an award. The fair value per share of the awards granted will be determined using
an option pricing model. The significant inputs into the option pricing model will include, inter alia,
the share price as at the date of grant of the award, the risk free interest rate, the vesting period,
volatility of the share and dividend yield. The total amount of the charge over the vesting period
is determined by reference to the fair value of each award granted at the grant date and the
number of Shares vested at the vesting date, with a corresponding credit to the reserve account.
Before the end of the vesting period, at each accounting year end, the estimate of the number of
awards that are expected to vest by the vesting date is revised, and the impact of the revised
estimate is recognised in the income statement with a corresponding adjustment to the reserve
account. After the vesting date, no adjustment to the charge to the income statement is made.
The amount charged to the income statement also depends on whether or not the performance
target attached to an award is measured by reference to the market price of the Shares. This is
known as a market condition. If the performance target is a market condition, the probability of the
performance target being met is taken into account in estimating the fair value of the award
granted at the grant date, and no adjustments to the amounts charged to the income statement
are made whether or not the market condition is met. However, if the performance target is not a
market condition, the fair value per share of the awards granted at the grant date is used to
compute the amount to be charged to the income statement at each accounting date, based on
an assessment by us at that date of whether the non-market conditions would be met to enable
the awards to vest. Thus, where the vesting conditions do not include a market condition, there
would be no cumulative charge to the income statement if the awards do not ultimately vest.
The following sets out the financial effects of the PSP.
(a) Share capital
The PSP will result in an increase in our Companys issued share capital when new Shares
are allotted to participants. The number of new Shares allotted will depend on, inter alia, the
size of the awards granted under the PSP. In any case, the PSP provides that the total
number of Shares over which our Remuneration Committee may grant new awards on any
date, when added to:
(a) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all awards already granted under the PSP;
(b) the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted under the SOP; and
(c) the total number of Shares subject to any other share option or share schemes of our
Company,
shall not exceed 15% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares) on the day preceding the date of the relevant new award. If
instead of allotting new Shares to participants, existing Shares are transferred to
participants, the PSP will have no impact on our Companys issued share capital.
189
(b) NTA
As described in paragraph (c) below on EPS, the PSP is likely to result in a charge to our
Companys income statement over the period from the grant date to the vesting date of the
awards. The amount of the charge will be computed in accordance with FRS 102. When new
Shares are allotted under the PSP, there would be no effect on the NTA due to the offsetting
effect of expenses recognised and the increase in share capital. However, if instead of
allotting new Shares to participants, existing Shares are purchased for transferred to
participants, the NTA would be impacted by the cost of the Shares purchased. It should be
noted that the delivery of Shares to participants under the PSP will generally be contingent
upon the eligible participants meeting prescribed performance targets and conditions.
(c) EPS
The PSP is likely to result in a charge to earnings over the period from the grant date to the
vesting date, computed in accordance with FRS 102.
It should again be noted that the delivery of Shares to participants of the PSP will generally
be contingent upon the participants meeting the prescribed performance targets and
conditions.
(d) Dilutive Impact
The allotment of new Shares under the PSP will have a dilutive impact on our consolidated
EPS.
We have made an application to the SGX-ST for permission to deal in and for quotation of the
Performance Shares which may be issued upon the release of the share awards to be granted
under the PSP. The approval of the SGX-ST is not to be taken as an indication of the merits of the
Offering, our Company, any of our subsidiaries, our Shares (including the Offering Shares, the
Cornerstone Shares, the Additional Shares, the Option Shares and the Performance Shares), the
SOP or the PSP.
Disclosures in Annual Reports
Our Company will make such disclosures in our annual report for so long as the SOP or PSP
continue in operation as from time to time required by the Listing Manual including the following
(where applicable):
(a) the names of the members of our Remuneration Committee administering the SOP and PSP;
(b) in respect of the following participants of the SOP and PSP:
(i) Directors of our Company; and
(ii) participants (other than those in paragraph (i) above) who have been granted options
under the SOP and/or who have received shares pursuant to the release of awards
granted under the PSP which, in aggregate, represent 5.0% or more of the total number
of Shares available under the SOP or PSP collectively,
the following information:
(aa) the name of the participant;
190
(bb) the following particulars relating to options granted under the SOP:
(1) options granted during the financial year under review (including terms);
(2) the aggregate number of Shares comprised in options granted since the
commencement of the SOP to the end of the financial year under review;
(3) the aggregate number of Shares arising from options exercised since the
commencement of the SOP to the end of the financial year under review;
(4) the aggregate number of Shares comprised in options outstanding as at the end
of the financial year under review;
(5) the number of new Shares issued to such participant during the financial year
under review; and
(6) the number of existing Shares transferred to such participant during the financial
year under review; and
(cc) the following particulars relating to Shares delivered pursuant to the awards released
under the PSP:
(1) the number of new Shares issued to such participant during the financial year
under review; and
(2) the number of existing Shares transferred to such Participant during the financial
year under review;
(c) (i) the names of and number and terms of options granted to each Parent Group Employee
who receives 5% or more of the total number of Shares available under the SOP to
Parent Group Employees collectively, during the financial year under review;
(ii) the aggregate number of Shares under options granted to Parent Group Employees for
the financial year under review, and since the commencement of the SOP to the end of
the financial year under review;
(iii) the names of and number of Shares comprised in and terms of awards granted to each
Parent Group Employee who receives 5% or more of the total number of Shares
available under the PSP to Parent Group Employees collectively, during the financial
year under review; and
(iv) the aggregate number of Shares comprised in awards granted to Parent Group
Employees for the financial year under review, and since the commencement of the
PSP to the end of the financial year under review;
(d) the number and proportion of Shares comprised in options granted under the plan during the
financial year under review:
(i) at a discount of 10% or less of the market price in respect of the relevant Option; and
(ii) at a discount of more than 10% of the market price in respect of the relevant Option; and
191
(e) in relation to the PSP, the following particulars:
(i) the aggregate number of Shares comprised in awards granted under the PSP since the
commencement of the PSP to the end of the financial year under review;
(ii) the aggregate number of Shares comprised in awards which have been released under
the PSP during the financial year under review and in respect thereof, the proportion of:
(1) new Shares issued; and
(2) existing Shares transferred and, where existing Shares were purchased for
delivery, the range of prices at which such Shares have been purchased,
upon the release of awards granted under the PSP; and
(iii) the aggregate number of Shares comprised in awards granted under the PSP which
have not been released as at the end of the financial year under review.
192
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194
The Shares held by each Shareholder in the table above do not have any interests or carry any
voting rights different from the Offering Shares.
The following diagram summarises our ownership structure immediately before this Offering:
PACC Offshore
Services Holdings Ltd.
Lightwell Shipping Inc.
Kuok (Singapore)
Limited
Other shareholders
(including Directors, Cornerstone
Investors and new investors)
Pacific Carriers Limited
100.00%
3.80%
74.97%
More than
20.00%
100.00%
21.23%
Malaysian Bulk Carriers
Berhad
195
The following diagram summarises our ownership structure immediately after the Offering and the
issue of the Cornerstone Shares (assuming the Over-allotment Option is not exercised):
PACC Offshore
Services Holdings Ltd.
Malaysian Bulk Carriers
Berhad
Lightwell Shipping Inc.
Kuok (Singapore)
Limited
Other shareholders (including
Directors, Cornerstone
Investors and new investors))
Pacific Carriers Limited
100.00%
More than
20.00%
100.00%
61.06%
21.65%
17.29%
Over-allotment Option Provider
The Over-allotment Option Provider will be providing 46,125,000 Additional Shares, or 3.11% of
the share capital immediately before the Offering and 2.53% of the share capital immediately after
the completion of the Offering and the issue of the Cornerstone Shares, in connection with the
Over-allotment Option.
Information on the Cornerstone Investors
At the same time as but separate from the Offering, each of the Cornerstone Investors has entered
into a cornerstone subscription agreement with our Company to subscribe for an aggregate of
85,605,000 new Shares at the Offering Price, conditional upon the Management and Underwriting
Agreement and Placement Agreement having been entered into and not having been terminated
pursuant to their terms on or prior to the Listing Date. The Cornerstone Investors are:
Hwang Investment Management Berhad
Hwang Investment Management Berhad (HwangIM) was incorporated in Malaysia on May 2,
1997 under the Companies Act, 1965 and began operations under the name Hwang-DBS Unit
Trust (HDBSUT) Berhad in 2001. In early 2014, HwangIM was acquired by the Affin Banking
Group (Affin) and hence, is now supported by an established Malaysian financial services
conglomerate. Affin has over 38 years of experience in the financial industry and focuses on
commercial, Islamic and investment banking services, money broking, fund management and
underwriting of life and general insurance business. Additionally, HwangIM is also 30% owned by
196
Nikko Asset Management Asia (Nikko AM Asia), a wholly-owned subsidiary of Tokyo-based
Nikko Asset Management Co. Ltd, an independent Asian investment management franchise.
HwangIM has approximately RM27 billion of assets under management as at April 10, 2014.
Fortress Capital Asset Management (M) Sdn Bhd
Fortress Capital Asset Management (M) Sdn Bhd (FCAM) is an established, independent asset
management and private investment group that was formed in 2003. FCAM is a licensed fund
manager under the Capital Markets and Services Act 2007 of Malaysia. FCAM manages
investment portfolios for institutional investors and the high net worth segment, providing its
clients with independent access to public and private equity opportunities across the Asia-Pacific
region.
Change in Control of our Company
To our knowledge, save as disclosed in this Prospectus, our Company is not owned or controlled
by any person or government and will not be owned or controlled by any person or government
immediately after the completion of the Offering and the issue of the Cornerstone Shares.
As of the date hereof, we are not aware of any arrangement the operation of which may, at a
subsequent date, result in a change of control of our Company.
197
INTERESTED PERSON TRANSACTIONS AND
POTENTIAL CONFLICTS OF INTEREST
Interested Person Transactions
In general, transactions between our Group (when used in this section, our Group refers to our
Company, our subsidiaries and our associated companies) and any of our interested persons
(namely our Directors, Chief Executive Officer or Controlling Shareholders (including various
members of the Kuok Group (being corporations which are owned or controlled by Mr Kuok Hock
Nien and/or interests associated with him) which own, directly or indirectly, interests aggregating
to more than 30% of the shares of KSL) or the associates of such Directors, Chief Executive
Officer or Controlling Shareholders) would constitute interested person transactions.
Certain terms such as associate, control, Controlling Shareholder and interested person
used in this section have the meanings as provided in the Listing Manual, in the SFR and/or in
accordance with the directions of the SGX-ST, unless the context specifically requires the
application of the definitions in one or the other as the case may be.
In line with the rules set out in Chapter 9 of the Listing Manual, a transaction the value of which
is less than S$100,000 is not considered material in the context of the Offering and is not taken
into account for the purposes of aggregation in this section.
The following represents transactions undertaken by us with our interested persons and their
respective associates within the last three years ended December 31, 2011, 2012 and 2013 and
for the period from January 1, 2014 up to the Latest Practicable Date. We have entered into
certain other transactions with our interested persons which are material in the context of the
Offering, as further disclosed in Interested Person Transactions and Potential Conflicts of Interest
Potential Conflicts of Interest Non-Competition Undertaking.
Save as disclosed below and in Interested Person Transactions and Potential Conflicts of Interest
Potential Conflicts of Interest Non-Competition Undertaking, our Group does not have any
other material transactions with any of its interested persons within the last three years ended
December 31, 2011, 2012 and 2013 and for the period from January 1, 2014 up to the Latest
Practicable Date. Investors, upon purchase and/or subscription of the Offering Shares, are
deemed to have specifically approved these transactions with our interested persons and as such
these transactions are not subject to Rules 905 and 906 of the Listing Manual to the extent that
there are no subsequent changes to the terms of the relevant agreements.
Past Transactions
Details of the past transactions between our Group and interested persons which are material in
the context of the Offering, for the past three years ended December 31, 2011, 2012 and 2013 and
for the period from January 1, 2014 until the Latest Practicable Date are as follows:
Provision of Shipbuilding Services by KSL Group
Our Company, our subsidiaries and our joint ventures have procured shipbuilding services from
KSL Group with respect to 19 vessels which have been delivered as of the Latest Practicable
Date.
198
Further details are set out below.
The terms of the shipbuilding services provided by KSL Group had been negotiated on an arms
length basis, taking into consideration our needs and requirements for such services.
Year ended
December 31,
2011
Year ended
December 31,
2012
Year ended
December 31,
2013
For the
period from
January 1,
2014 until
the Latest
Practicable
Date Total
Shipbuilding costs paid
(US$million)
(1)
. . . . . . . . 41.3 94.2 58.7 3.4 197.6
Note:
(1) The payments for shipbuilding services relate to 19 vessels, comprising nine AHTS, four PSV and six harbour tugs.
Such shipbuilding costs include, in some instances, the supply of certain specific vessel parts, equipment or vessel
supplies which we wish to have installed on the relevant vessels.
Purchase of Vessel from an Associate of PCL
In June 2013, we purchased a vessel (which is undergoing conversion into an accommodation
vessel as at the Latest Practicable Date) from PT Newship Nusabersama, an associated company
of PCL, for a consideration of approximately US$2.0 million. While no valuation was conducted on
the vessel, the terms of the purchase had been negotiated on an arms length basis, taking into
consideration the market value of similar vessels available for sale in the open market at the
relevant time.
Charter-in of Vessel from an Associate of PCL
We have, in the past, chartered-in one vessel, being a harbour tug, from PT Newship
Nusabersama, an associated company of PCL, for a period commencing from November 2007 to
May 2011. The charter hire paid for the year ended December 31, 2011 was US$0.3 million. The
terms of the charter had been negotiated on an arms length basis, based on normal commercial
terms.
Provision of Shared Services by KSL Group
The KSL Group has provided various shared services (the Initial Shared Services) to our Group
such as:
(i) treasury support services;
(ii) internal audit services;
(iii) information technology services;
(iv) human resource support services;
(v) corporate and legal support services; and
(vi) insurance services.
199
In connection with the provision of these services, KSL Group charged to us the following costs
directly related to the provision of the services (inclusive of a 5% mark-up):
(1) all personnel-related costs of staff assigned to perform the services;
(2) all other cost incurred in relation with and necessary for KSL Group to properly perform the
services; and
(3) all associated costs for the use of the office premises and attendant facilities.
The terms of the Initial Shared Services had been negotiated on an arms length basis.
The amount paid to KSL Group for the Initial Shared Services for the year ended December 31,
2011 was approximately US$4.2 million.
Please see Interested Person Transactions and Potential Conflicts of Interest Present and
On-going Transactions Provision of Shared Services by PCL for further details on the provision
of shared services on or after January 1, 2012.
Provision of Lease Services by an Associate of KSL
Prior to March 7, 2012, we have entered into the following lease arrangements (collectively, the
Initial Leases) for the purposes of leasing our office space at Great World City in Singapore
from Midpoint Properties Limited (Midpoint Properties), an associated company of KSL.
On January 1, 2008, we entered into a novation agreement with Midpoint Properties and an
unrelated third party, for the novation by the unrelated third party to us of the lease of 1 Kim Seng
Promenade #06-01 (Part) Great World City Podium Tower Singapore 237994. The lease was for
a term commencing from January 1, 2008 and expiring on the fifth anniversary of March 7, 2007,
being the original lease commencement date. The monthly rental (including the service charge
and goods and services tax) was S$39,731.03.
On April 18, 2008, we entered into a lease agreement with Midpoint Properties for the lease of 1
Kim Seng Promenade #06-01F Great World City Podium Tower Singapore 237994. The lease was
for a term of 4 years commencing from March 7, 2008 and the monthly rental (including the service
charge and goods and services tax) was S$3,402.60.
On November 7, 2008, we entered into a lease agreement with Midpoint Properties for the lease
of 1 Kim Seng Promenade #06-01A Great World City Podium Tower Singapore 237994. The lease
was for a term of 2 years commencing from January 1, 2009 and the monthly rental (including the
service charge and goods and services tax) was S$16,650.27. On March 17, 2011, we renewed
such lease for a term of 14 months commencing from January 1, 2011 and the monthly rental
(including the service charge and goods and services tax) was S$10,515.96.
On July 29, 2011, we entered into a lease agreement with Midpoint Properties for the lease of 1
Kim Seng Promenade #06-01B Great World City Podium Tower Singapore 237994. The lease was
for a term of 8 months 6 days commencing from July 1, 2011 and the monthly rental (including the
service charge and goods and services tax) was S$4,681.25.
The terms of the Initial Leases had been negotiated on an arms length basis, on normal
commercial terms, taking into consideration comparable market rates for similar premises at the
relevant time.
200
The amounts paid to Midpoint Properties under the Initial Leases for the years ended December
31, 2011 and 2012 were approximately US$0.5 million and US$0.6 million respectively. Please
see Interested Person Transactions and Potential Conflicts of Interest Present and On-going
Transactions Provision of Lease Services by an Associate of KSL for further details on the
extension of the Initial Leases.
Present and On-going Transactions
Details of the present and on-going transactions between our Group and interested persons which
are material in the context of the Offering, for the past three years ended December 31, 2011,
2012 and 2013 and for the period from January 1, 2014 until the Latest Practicable Date are as
follows:
Provision of Shipbuilding and/or Ship Repair and Maintenance Services by KSL Group
Our Company, our subsidiaries and our joint ventures have procured shipbuilding services, for the
construction of new vessels and/or conversion of existing vessels, from KSL Group with respect
to 15 vessels which are pending delivery as of the Latest Practicable Date.
From time to time, we have also procured ship repair and maintenance services from KSL Group
with respect to vessels owned by our Company, our subsidiaries and our joint ventures.
Further details are set out below.
The terms of the shipbuilding and/or ship repair and maintenance services provided by KSL Group
had been negotiated on an arms length basis, taking into consideration our needs and
requirements for such services.
It is our current intention to continue with such or similar arrangements, pursuant to our
Shareholders Mandate (as defined below) following our listing on the SGX-ST. The continuance
or renewal of these arrangements will be subject to the review procedures under our
Shareholders Mandate.
Year ended
December 31,
2011
Year ended
December 31,
2012
Year ended
December 31,
2013
For the
period from
January 1,
2014 until
the Latest
Practicable
Date Total
Shipbuilding costs paid
(US$million)
(1)
. . . . . . . . 40.1 237.1 45.2 322.4
Ship repair and
maintenance costs paid
(US$million)
(2)
. . . . . . . . 0.8 4.5 n.m.
(3)
5.3
Notes:
(1) The payments for shipbuilding services relate to 15 vessels, comprising three AHTS, four harbour tugs, four
accommodation vessels, two deck cargo barges and two SSAVs. Such shipbuilding costs include, in some
instances, the supply of certain specific vessel parts, equipment or vessel supplies which we wish to have installed
on the relevant vessels.
(2) Excludes ship repair and maintenance costs paid to DDW-PaxOcean Asia Pte. Ltd. (DPA) prior to the acquisition
of DPA by the PCL Group in September 2012.
(3) Not meaningful. The amount was approximately US$85,000.
201
Charter-in of Vessels from the PCL Group
We have chartered-in seven vessels (which charters are subsisting as at the Latest Practicable
Date) from DP Marine Pte. Ltd., a subsidiary of PCL. Further details are set out below. The terms
of such charters had been negotiated on an arms length basis.
Year ended
December 31,
2011
Year ended
December 31,
2012
Year ended
December 31,
2013
For the
period from
January 1,
2014 until
the Latest
Practicable
Date Total
Charter hire paid
(1)
(US$million) . . . . . . . . . . 0.3 6.2 1.6 8.1
Note:
(1) These payments relate to seven vessels, comprising seven AHTs.
Charter-in of Vessels from an Associate of PCL
We have chartered-in three vessels from PT Newship Nusabersama, an associated company of
PCL. Under the terms of the charter, the charter period is 20 years commencing from November
2007 and we have an option to purchase the relevant vessel at any time from the end of 6 months
from the delivery date at such price as shall be mutually agreed between the parties. Further
details are set out below. The terms of such charters had been negotiated on an arms length
basis. Subsequent to the charter-in of such vessels, these vessels have been chartered out by our
Group.
Year ended
December 31,
2011
Year ended
December 31,
2012
Year ended
December 31,
2013
For the
period from
January 1,
2014 until
the Latest
Practicable
Date Total
Charter hire paid
(1)
(US$million) . . . . . . . . . . 0.3 0.3 0.3 n.m.
(2)
0.9
Notes:
(1) These payments relate to three vessels, comprising one towing tug and two barges.
(2) Not meaningful. The amount was approximately US$63,300.
Provision of Ship Management Services to and by the MBC Group
On June 10, 2013, we entered into a ship management agreement with PSM Perkapalan Sdn Bhd
(PPSB), a subsidiary of MBC, pursuant to which we will provide ship management services to
PPSB for an annual management fee of approximately US$0.2 million. On the same date, we
entered into a back-to-back ship management agreement with PPSB, pursuant to which PPSB will
provide ship management services to us with respect to POSH Commander for an annual
management fee of approximately US$0.2 million.
202
On August 14, 2013, we entered into a ship management agreement with PPSB, pursuant to which
we will provide ship management services to PPSB for an annual management fee of
approximately US$0.2 million. On the same date, we entered into a back-to-back ship
management agreement with PPSB, pursuant to which PPSB will provide ship management
services to us with respect to Pac Bintan for an annual management fee of approximately US$0.2
million.
The terms of the above arrangements had been negotiated on an arms length basis.
It is our current intention to continue with such or similar arrangements, pursuant to our
Shareholders Mandate (as defined below) following our listing on the SGX-ST. The continuance
or renewal of these arrangements will be subject to the review procedures under our
Shareholders Mandate.
The amounts paid by us to PPSB pursuant to such arrangements for the year ended December
31, 2013 and the period from January 1, 2014 until the Latest Practicable Date were
approximately US$0.1 million and US$75,200, respectively. The amounts paid by PPSB to us
pursuant to such arrangements for the year ended December 31, 2013 and the period from
January 1, 2014 until the Latest Practicable Date were approximately US$0.1 million and
approximately US$91,800, respectively.
Purchase of Bunkers from Raffles Bunkering Pte. Ltd.
From time to time, we have purchased bunkers from Raffles Bunkering Pte. Ltd., an associated
company of Wilmar International Limited in which various members of the Kuok Group own,
directly or indirectly, interests aggregating to more than 30%. The amounts paid for the purchase
of bunkers for the years ended December 31, 2011, 2012, 2013 and for the period from January
1, 2014 until the Latest Practicable Date were US$0.6 million, US$1.4 million, US$0.5 million and
US$75,750, respectively.
The terms of the purchase of bunkers had been negotiated on an arms length basis.
It is our current intention to continue with such or similar arrangements, pursuant to our
Shareholders Mandate (as defined below) following our listing on the SGX-ST. The continuance
or renewal of these arrangements will be subject to the review procedures under our
Shareholders Mandate.
Provision of Shared Services by PCL and KSL
On November 6, 2012, we entered into a cost recovery agreement (the 2012 Cost Recovery
Agreement) (which was further amended on January 6, 2014) with PCL pursuant to which PCL
has provided from January 1, 2012 to our Group the following services (the Shared Services),
if and when required:
(a) strategic and commercial management services (which refer mainly to the provision of
financial and commercial oversight by directors of the KSL Group through their regular
interaction with our senior management);
(b) human resources and personnel administration services (which refer mainly to payroll
services and human resource support in the form of assistance in recruitment and appraisal
etc);
(c) office administration services (which refer mainly to office maintenance and cleaning and
liaison with landlord on property-related matters);
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(d) legal and corporate secretarial services;
(e) treasury;
(f) back office processes;
(g) information technology;
(h) internal audit;
(i) insurance; and
(j) bunker procurement services (which refer mainly to the purchase of vessel fuel oil and
marine oil necessary for the operations of vessels).
In connection with the transfer of Shares from PCL to KSL as further described in Dilution, on
March 31, 2014, we have entered into a cost recovery agreement with PCL (the 2014 PCL Cost
Recovery Agreement) pursuant to which the 2012 Cost Recovery Agreement will be terminated
and be replaced by the 2014 PCL Cost Recovery Agreement and PCL will provide to our Group
bunker procurement services, if and when required. In addition, we have also entered into a cost
recovery agreement with KSL (the 2014 KSL Cost Recovery Agreement and together with the
2014 PCL Cost Recovery Agreement, the 2014 Cost Recovery Agreements) pursuant to which
KSL will provide to our Group the Shared Services (save for strategic and commercial
management services and bunker procurement services), if and when required.
The 2014 Cost Recovery Agreements are conditional upon the completion of the transfer of
Shares from PCL to KSL.
Our internal audit function is outsourced to the KSL Group because we believe that such
arrangement capitalises on an economies of scale advantage, which translates into potential cost
savings for us. In addition, we are able to benefit from any other recommendations which the KSL
Group may make in the course of their internal audit of the other companies within the KSL Group.
This is not inconsistent with the Code of Corporate Governance. In particular, Guideline 13.2 of
the Code of Corporate Governance provides that the internal audit function can be in-house,
outsourced to a reputable accounting/auditing firm or corporation, or performed by a major
shareholder, holding company or controlling enterprise with an internal audit staff.
In connection with the provision of these services, each of KSL and PCL will charge to us the
following costs directly related to the provision of the services on a cost-recovery basis (inclusive
of a 5% mark-up):
(1) all personnel-related costs of staff assigned to perform the services;
(2) all other costs incurred in relation with and necessary for KSL or, as the case may be, PCL
to properly perform the services; and
(3) all associated costs for the use of the office premises and attendant facilities.
The costs directly related to the provision of the services are based on the time costs of the
relevant services provided which comprise remuneration and its attendant costs (such as CPF
contributions and insurance) and supporting costs (such as rental and utilities).
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In arriving at the mark-up of 5%, our Company took into account the IRAS Transfer Pricing
Guidelines which provides that to facilitate the relevant taxpayers compliance with the arms
length standard while maintaining a high level of adherence to the arms length principle, and
based on industry norms, IRAS is prepared to accept a mark-up of 5% for certain routine support
activities as a reasonable arms length charge for such services, provided that these routine
support activities that the service provider offers to its related party are not also provided to an
unrelated party. Based on the analysis undertaken and subject to the qualification and
assumptions made in the letter from KPMG CF set out in Appendix B, KPMG CF has confirmed
to our Company that taking into account, among other things, the IRAS Transfer Pricing
Guidelines, such mark up of 5% in respect of the provision of the shared services under the cost
recovery agreements described above is on normal commercial terms and is not prejudicial to the
interests of our Company and our minority Shareholders. Please refer to Appendix B for more
details.
The 2014 Cost Recovery Agreements shall continue until terminated by, amongst others, either
party giving to the other party three months notice in writing of its intention to terminate the
agreement.
The terms of the 2012 Cost Recovery Agreement and the 2014 Cost Recovery Agreements had
been negotiated on an arms length basis.
It is our current intention to continue with such or similar arrangements, pursuant to our
Shareholders Mandate (as defined below) following our listing on the SGX-ST. The continuance
or renewal of these arrangements will be subject to the review procedures under our
Shareholders Mandate.
The amounts paid to PCL pursuant to the 2012 Cost Recovery Agreement for the years ended
December 31, 2012 and 2013 and for the period from January 1, 2014 until the Latest Practicable
Date were approximately US$4.0 million, US$3.6 million and US$48,000 respectively.
Provision of Insurance Services by the PCL Group
On July 31, 2013, we entered into an agreement for insurance services (the Insurance Services
Agreement) with PACC Ship Managers Pte Ltd (PACC Ship Managers), a subsidiary of PCL,
pursuant to which PACC Ship Managers will provide as from January 10, 2010 to our Group
services reasonably necessary for the procurement and maintenance by us of insurance for
certain vessels. Please see Business Insurance for details on the coverage we generally
maintain for our vessels. PACC Ship Managers role is to liaise with the relevant insurers to obtain
such coverage. The choice of insurer is decided by us.
Pursuant to the Insurance Services Agreement, we agree to pay PACC Ship Managers a monthly
fee of US$15,000, which fees shall be subject to annual review.
The terms of the Insurance Services Agreement had been negotiated on an arms length basis and
the monthly fee of US$15,000 was agreed upon on the basis that such amount reflected PCL
Groups recognised cost incurred for the time spent to procure and manage the insurance for our
Companys fleet, with a mark-up of 5%.
We intend to take over this function after the Listing. This is currently expected to take place no
later than December 31, 2014.
The amounts paid to PACC Ship Managers under the Insurance Services Agreement for the years
ended December 31, 2011, 2012 and 2013 and for the period from January 1, 2014 until the Latest
Practicable Date were approximately US$0.2 million, US$0.2 million, US$0.2 million and
approximately US$30,000, respectively.
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Provision of Lease Services by an Associate of KSL
On May 30, 2012, we entered into a lease agreement with Midpoint Properties (the 2012 Lease)
for the lease of 1 Kim Seng Promenade #06-01, #06-01A, #06-01B and #06-01F Great World City
Podium Tower Singapore 237994. The lease is for a term of five years commencing from March
7, 2012 and the monthly rental (including the service charge and goods and services tax) is
S$67,630.42. The lease includes an option to renew for a period of five years commencing from
the date immediately following the expiration of the initial term, at a revised rent and service
charge and upon terms and conditions as shall be mutually agreed.
The terms of the 2012 Lease had been negotiated on an arms length basis, on normal commercial
terms, taking into consideration comparable market rates for similar premises at the relevant time.
It is our current intention to continue with such or similar arrangements, pursuant to our
Shareholders Mandate (as defined below) following our listing on the SGX-ST. The continuance
or renewal of these arrangements will be subject to the review procedures under our
Shareholders Mandate.
The amounts paid to Midpoint Properties under the 2012 Lease for the years ended December 31,
2012 and 2013 and for the period from January 1, 2014 until the Latest Practicable Date were
approximately US$0.6 million, US$0.6 million and US$0.2 million respectively.
General Mandate for Interested Person Transactions
We anticipate that we would, on and after the Listing Date, in the ordinary course of business,
continue to enter into certain transactions with our interested persons (as such term is defined in
the Listing Manual and/or in accordance with the directions of the SGX-ST), including but not
limited to those categories of transactions described below. In view of the time-sensitive nature of
commercial transactions, it would be advantageous for us to obtain a Shareholders mandate to
enter into certain interested person transactions in our normal course of business, provided that
all such transactions are carried out on normal commercial terms and are not prejudicial to the
interests of our Company and our minority Shareholders.
Chapter 9 of the Listing Manual allows a listed company to obtain a mandate from its shareholders
for recurrent interested person transactions which are of a revenue or trading nature or for those
necessary for its day-to-day operations. These transactions may not include the purchase or sale
of assets, undertakings or businesses which are not part of our day-to-day operations.
Pursuant to Rule 920(2) of the Listing Manual, our Company may treat a general mandate as
having been obtained from our Shareholders (the Shareholders Mandate) for us to enter into
interested person transactions with our interested persons if the information required under Rule
920(1)(b) of the Listing Manual is included in this Prospectus. In relation to us, the information
required by Rule 920(1)(b) is as follows:
(i) the class of interested persons with which the Entity At Risk (as defined below) will be
transacting;
(ii) the nature of the transactions contemplated under the mandate;
(iii) the rationale for, and benefit to, the Entity At Risk;
(iv) the methods or procedures for determining transaction prices;
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(v) the independent financial advisers opinion on whether the methods or procedures in (iv)
above are sufficient to ensure that the transactions will be carried out on normal commercial
terms and will not be prejudicial to our Company and the interests of our minority
Shareholders;
(vi) an opinion from our Audit Committee if it takes a different view to the independent financial
adviser;
(vii) a statement from us that we will obtain a fresh mandate from our Shareholders if the methods
or procedures in (iv) above become inappropriate; and
(viii) a statement that the interested person will abstain, and has undertaken to ensure that its
associates will abstain, from voting on the resolution approving the transaction.
The Shareholders Mandate will be effective until the earlier of the following: (i) the conclusion of
our first annual general meeting following our admission to the Official List of the SGX-ST; or (ii)
the first anniversary of the date of our admission to the Official List of the SGX-ST. Thereafter, we
will seek the approval of our Shareholders for a renewal of the Shareholders Mandate at each
subsequent annual general meeting.
Entities At Risk
For the purposes of the Shareholders Mandate, an Entity At Risk means:
(i) our Company;
(ii) a subsidiary of our Company that is not listed on the SGX-ST or an approved exchange; or
(iii) an associated company of our Company that is not listed on the SGX-ST or an approved
exchange, provided that we and our interested person(s) have control over the associated
company.
Classes of Mandated Interested Persons
The Shareholders Mandate will apply to the transactions that are carried out with the following
persons (the Mandated Interested Persons):
(i) our Controlling Shareholders (as such term is defined in the Listing Manual), namely, KSL
and MBC, and the associates of KSL (including PCL) and MBC; and
(ii) Raffles Bunkering Pte. Ltd., an associated company of Wilmar International Limited in which
various members of the Kuok Group own, directly or indirectly, interests aggregating to more
than 30%.
The identities of the Mandated Interested Persons as at the Latest Practicable Date are set out
in Appendix J of this Prospectus.
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Categories of Mandated Transactions
The types of transactions to which the Shareholders Mandate will apply (the Mandated
Transactions) are set out below:
(i) the provision of shipbuilding (together with the provision of related refundment guarantees in
favour of our Group), ship repair, ship conversion and maintenance and dry-docking
services, to our Group;
(ii) the provision of management services relating to vessels including inspection of vessels,
periodic drydocking supervision, routine and casualty repairs, engagement and provision of
crew, to and/or by our Group;
(iii) the sale and/or purchase of vessel parts, equipment, bunkers, consumables and such other
vessel supplies required by the vessels (including the provision of services for the sale
and/or purchase of such vessel supplies), to and/or by our Group;
(iv) the provision of:
(1) services as crewing agents for our Groups vessels to recruit and provide crew for
employment on the vessels and ancillary services; and
(2) manning services including acting as crew manager, dealing with engagement and
provision of crew for the vessels, attending to all matters pertaining to discipline, labour
relations, welfare and amenities of such crew and ensuring that such crew are suitably
qualified,
to and/or by our Group;
(v) the provision and/or obtaining of vessel chartering services (including vessel chartering
services relating to harbour towage operations and marine salvage operations), to and/or by
our Group;
(vi) the provision of shipping agency services, to our Group;
(vii) the provision of shared services, including the following services, to our Group (other than
as envisaged in any agreement in force between our Group and the Mandated Interested
Persons):
(1) strategic and commercial management services;
(2) human resources and personnel administration services;
(3) office administration services;
(4) legal and corporate secretarial services;
(5) treasury services;
(6) back office processes;
(7) information technology services;
(8) internal audit;
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(9) insurance services; and
(10) bunker procurement services;
(viii) the leasing and/or rental for the use of properties; and
(ix) the provision or obtaining of such other products and services which are incidental to or in
connection with the provision or obtaining of products and services in sub-paragraphs (i) to
(viii) above.
Rationale for and benefits of the Shareholders Mandate
The Shareholders Mandate and its subsequent renewal on an annual basis would eliminate the
need to convene separate general meetings from time to time to seek Shareholders approval as
and when potential interested person transactions with a specific class of Mandated Interested
Persons arise, thereby substantially reducing administrative time and expenses in convening such
meetings, without compromising the corporate objectives or any strategic advantage and
adversely affecting the business opportunities available to us. These transactions may be
constrained by their time-sensitive and confidential nature, and it may be impractical to seek
Shareholders approval on a case-by-case basis before entering into them.
Our Group should have access to all available markets, products and services with Mandated
Interested Persons and other parties. We benefit from the Mandated Transactions through the
synergies that are derived from the Mandated Interested Persons global network and expertise.
Transacting with the Mandated Interested Persons enhances our ability to explore beneficial
business opportunities. As such, the Shareholders Mandate is important to the success and
viability of our Group.
The Shareholders Mandate is intended to facilitate transactions in the normal course of our
business which are transacted from time to time with the specified classes of Mandated Interested
Persons, provided that they are carried out on our normal commercial terms and are not
prejudicial to our Company and our minority Shareholders.
In accordance with the requirements of Chapter 9 of the Listing Manual, we will: (a) disclose in our
Companys annual report the aggregate value of (i) shipbuilding and ship conversion services
(Shipbuilding and Ship Conversion Services), and (ii) transactions (other than Shipbuilding
and Ship Conversion Services) (Other Mandated Transactions), conducted with Mandated
Interested Persons pursuant to the Shareholders Mandate during the financial year (as well as in
the annual reports for subsequent financial years that the Shareholders Mandate continues to be
in force). Such disclosure will be in the form set out in Rule 907 of the Listing Manual; and (b)
announce the aggregate value of (i) Shipbuilding and Ship Conversion Services; and (ii) Other
Mandated Transactions, conducted with Mandated Interested Persons pursuant to the
Shareholders Mandate for the financial periods that it is required to report on pursuant to Rule 705
of the Listing Manual (which relates to quarterly reporting by listed companies) within the time
required for the announcement of such report. Such disclosure will also be in the form set out in
Rule 907 of the Listing Manual. We will also provide background information on the relevant
number and type of vessels with respect to Shipbuilding and Ship Conversion Services provided
to our Group.
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Review Procedures for Mandated Transactions with Mandated Interested Persons
We have an internal control system in place to ensure that Mandated Transactions with the
Mandated Interested Persons are made on normal commercial terms and consistent with our
Groups usual policies and practices.
In particular, the following review procedures have been implemented:
(i) The employees of our Group will be notified of the identities of the Mandated Interested
Persons and will be required, prior to entering into such transactions, to ensure that all the
Mandated Transactions are consistent with our Groups normal business practices and
policies, and (in the case of services provided by our Group) on terms not more favourable
to the Mandated Interested Persons than those generally available to the public or (in the
case of services provided by the Mandated Interested Persons) on terms not less favourable
to our Group than those generally available to the public, as the case may be, and are not
detrimental to the minority shareholders.
(ii) The transaction prices and terms will be determined as follows:
Shipbuilding and Ship Conversion Services
The transaction prices and terms will be determined based on the prevailing market rates
which will, in turn, be determined by market forces, demand and supply, specifications and
other relevant factors. These factors will include, but will not be limited, to the ability of the
relevant shipyard to construct vessels of required specifications, to accept orders and to
deliver on time, the quality of the vessels constructed by the relevant shipyard, and the
financial capability of the relevant shipyard. The transaction price will also be determined
based on benchmarking information. Such information may be based on available market
intelligence on vessels with comparable specifications. Generally, benchmarking will be
made by comparing publicly-available information including industry databases operated by
independent third parties and transaction prices for other similar transactions by unrelated
third parties, to the extent that such prices have been announced or are publicly available,
or against previous similar transactions that we have entered into in the past. The transaction
price and terms will be no less favourable to the relevant Entity At Risk than what is available
in the market, having regard to all relevant factors. The transaction price and terms will be
subject to the prior approval of our Audit Committee (unless the transaction is of a value of
less than US$1,000,000 as further described below). In assessing and considering the
proposed transaction, our Audit Committee may request for additional information. For
instance, if the relevant benchmarking information is not publicly available, our Audit
Committee may request for market benchmarking information from subscription-based
industry databases or valuation guidance from independent third party brokers or valuers.
Other Mandated Transactions
The transaction prices and terms are determined based on the prevailing market rates which
are determined by market forces, demand and supply, specifications and other relevant
factors. Where practical and feasible, quotations may be obtained from unrelated third
parties for similar or substantially similar transactions, products or services to determine
whether the price and terms offered to/by the Mandated Interested Persons are fair and
reasonable. The transaction price and terms will be no more favourable to the relevant
Mandated Interested Person (where products or services are provided to the Mandated
Interested Person) or, as the case may be, no less favourable to the relevant Entity At Risk
(where products or services are obtained from the Mandated Interested Person) than what
is available in the market, having regard to all relevant factors. Where it is impracticable or
unfeasible for quotes to be obtained from unrelated third parties, the transaction price will be
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based on prevailing market rates agreed upon under similar commercial terms for
transactions with third parties, business practices and policies and on terms which are
generally in line with industry norms to ensure that the transaction is not detrimental to our
Group.
As an illustration, where services are provided by our Group, it may be impracticable or
unfeasible to obtain quotations from unrelated third parties if the prevailing market rates or
prices are not available due to the nature of the services to be provided or due to the
prevailing business conditions. Also as an illustration, where services or products are
provided to our Group, it may be impracticable or unfeasible to obtain quotations from
unrelated third parties if there are no unrelated third party vendors of similar services or
products, if the service or product is proprietary, if there are confidentiality issues or timing
constraints over the provision of services or products by unrelated third party vendors, or if
the prevailing market rates or prices are not available due to the nature of the services or
products to be provided or due to the prevailing business conditions. For instance, in the
case of shared services, there may be cases where there are no unrelated third party
vendors who can provide a one-stop range of required shared services.
(iii) All transactions will be reviewed and approved according to our Groups prevailing internal
financial authority limit. In particular, any transaction of a value of up to US$1,000,000 will be
subject to the prior approval of our Chief Financial Officer and any transaction of a value
exceeding US$1,000,000 will be subject to the prior approval of our Audit Committee. All
transactions will also be reviewed monthly by our Companys finance department to identify
the Mandated Transactions and ensure that they are within our Shareholders Mandate. If
any person has an interest in a transaction, he will abstain from any deliberation and
decision-making in respect of the said transaction.
(iv) The annual internal audit plan will incorporate a quarterly review of the Mandated
Transactions entered into pursuant to our Shareholders Mandate to ensure that the review
procedures in respect of the Mandated Transactions are adhered to.
(v) Our Audit Committee will review the report on Mandated Transactions prepared on a
quarterly basis by our Companys finance department to ascertain that relevant procedures,
guidelines and policies established to monitor the Mandated Transactions have been
complied with.
(vi) Our Board of Directors and our Audit Committee will have the overall responsibility for the
determination of the review procedures, including any addition or variation thereto, where
applicable. Our Board of Directors and our Audit Committee may also appoint individuals or
committees within our Company to examine the Mandated Transactions as they deem
appropriate. If a member of our Board of Directors or our Audit Committee has an interest in
a transaction, he will abstain from any deliberation and decision-making by our Board of
Directors or our Audit Committee in respect of the said transaction.
(vii) A register of Mandated Transactions carried out with Mandated Interested Persons
(recording the basis, including quotations (if available) or, in the case of Shipbuilding and
Ship Conversion Services, benchmarking information or such other additional information as
may be requested by our Audit Committee (such as market benchmarking information or
valuation guidance) (as further described above) obtained to support such basis, on which
they are entered into) will be maintained by our Companys finance department to capture,
on a monthly basis, all Mandated Transactions which are entered into pursuant to the
Shareholders Mandate.
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(viii) Disclosure will be made in the quarterly announcements and the annual report of our
Company in respect of the Mandated Transactions in accordance with Chapter 9 of the
Listing Manual.
If during any of the reviews by our Audit Committee, our Audit Committee is of the view that the
review procedures for Mandated Transactions have become inappropriate or insufficient in the
event of changes to the nature of, or manner in which, the business activities of our Group, our
joint ventures or the Mandated Interested Persons are conducted, or the review procedures for
Mandated Transactions are not sufficient to ensure that the Mandated Transactions are conducted
on normal commercial terms and will not be prejudicial to the interests of our Company and our
minority Shareholders, we will revert to Shareholders for a fresh general mandate based on new
review procedures so that Mandated Transactions are conducted on normal commercial terms
and will not be prejudicial to the interests of our Company and our minority Shareholders.
Review of Non-Mandated Interested Person Transactions and Review by Audit Committee
All other existing and future interested person transactions not subject to the Shareholders
Mandate will be reviewed and approved according to our Groups prevailing internal financial
authority limit and the requirements under Chapter 9 of the Listing Manual, to ensure that they are
carried out on normal commercial terms and are not prejudicial to the interests of our Company
and our minority Shareholders. In particular, any transaction of a value of up to US$1,000,000 will
be subject to the prior approval of our Chief Financial Officer and any transaction of a value
exceeding US$1,000,000 will be subject to the prior approval of our Audit Committee. In the event
that such interested person transactions require the approval of our Board of Directors according
to our Groups prevailing internal financial authority limit and our Audit Committee (in the case of
a transaction of a value exceeding US$1,000,000), relevant information will be submitted to our
Board of Directors and our Audit Committee for review. In assessing and considering the proposed
transactions, our Board of Directors and our Audit Committee may request for additional
information. For example, with respect to the 2012 Cost Recovery Agreement and the 2014 Cost
Recovery Agreements, our Audit Committee may request for a confirmation from the auditors of
KSL or, as the case may be, PCL that the costs directly related to the provision of the services are
based on the time costs of the relevant services provided. In the event that such interested person
transactions require the approval of our Shareholders, additional information may be required to
be presented to Shareholders and an independent financial adviser may be appointed for an
opinion.
A register of such interested person transactions will be maintained by our Companys finance
department to capture, on a monthly basis, all such interested person transactions. All
transactions will also be reviewed monthly by our Companys finance department. Our Audit
Committee will also review the report on such transactions prepared on a quarterly basis by our
Companys finance department to ascertain that relevant procedures, guidelines and policies
established to monitor such transactions have been complied with.
Our Audit Committee will also review all interested person transactions to ensure that the
prevailing rules and regulations of the SGX-ST (in particular, Chapter 9 of the Listing Manual) are
complied with.
Opinion of the Independent Financial Adviser
KPMG CF has been appointed as our independent financial adviser pursuant to Rule 920(1)(b)(v)
of the Listing Manual, to opine on whether the methods and review procedures, as set out above,
are sufficient to ensure that the Mandated Transactions will be carried out on normal commercial
terms and will not be prejudicial to the interests of our Company and our minority Shareholders.
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Based on the analysis undertaken and subject to the qualifications and assumptions made in the
letter from KPMG CF set out in Appendix C, KPMG CF is of the opinion that the current methods
and procedures for determining the transaction prices of the Interested Person Transactions,
(including the Shipbuilding and Ship Conversion Services) if applied strictly, are sufficient to
ensure that the transactions will be carried out on normal commercial terms, and will not be
prejudicial to the interests of our Company and our minority Shareholders. Please refer to
Appendix C for more details.
Potential Conflicts of Interest
Mr. Seow Kang Hoe, Gerald
Mr. Seow Kang Hoe, Gerald (our Chief Executive Officer) is an executive director of PCL and
certain subsidiaries of PCL and KSL. For the avoidance of doubt, he is not the chief executive
officer of PCL or KSL.
Mr. Seow is responsible for overseeing the KSL Groups shipyard activities and PCLs subsidiaries
that are involved in, amongst others, liner/breakbulk operations and he provides oversight and
overall strategic direction to the relevant operating subsidiaries of PCL involved in such
operations. He is not involved in the day-to-day management of the shipyard activities and the
operations of these subsidiaries. The shipyard activities and operations of each of PCLs
subsidiaries are managed separately by the executive director and management team of each of
such subsidiaries. Although Mr. Seow is a member of the board of directors of PACC Container
Line Pte Ltd (PACL), the subsidiary of PCL involved in the liner/breakbulk business, the
day-to-day operations are managed by an executive director of PACL. In respect of shipyard
operations, Mr. Seow is a member of the board of directors of DPA, which is engaged in shipyard
operations. As a board member of DPA, Mr. Seow will provide oversight and overall strategic
direction to the DPA group of companies. He is not involved in the day-to-day management of the
operations of these subsidiaries as that is performed by the chief operating officer of DPA. In
addition, DPA has recruited a senior executive as of mid July 2013 who has served years of
experience at the senior level in the shipyard sector. While there is currently no fixed deadline for
the transition of this senior executive to head the DPA group, it is the objective of the DPA group
to establish and integrate such role of the senior executive to support and supplement the role of
the DPA board of directors as soon as practicable. Mr. Seow is also a member of the board of
directors of PaxOcean Engineering Zhoushan Co., Ltd and PaxOcean Engineering Zhuhai Co.,
Ltd, both of which are subsidiaries of KSL involved in shipyard operations. Each of PaxOcean
Engineering Zhoushan Co., Ltd and PaxOcean Engineering Zhuhai Co., Ltd has a chief executive
officer who is responsible for the day-to-day management of the operations.
We believe that there does not exist any conflict of interest arising from the foregoing for the
following reasons:
(a) The operations of each of PCL and KSL (excluding our Group) do not compete with the
business of our Group. The PCL Groups core activities include ship management, and
owning and operating bulk carriers, container feeder vessels, tankers, gas carriers and
liner/breakbulk vessels whereas KSL is an investment holding company with investments in
PCL, trading of scrap steel, sugar, fertilisers, chemicals, shipyards and provision of
warehousing and storage services;
(b) Mr. Seow will have sufficient time to discharge his responsibilities. In particular, Mr. Seow
expects to allocate the majority of his time towards his role as Chief Executive Officer of our
Company. Please also see Management Service Agreements for further details.
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Notwithstanding such multiple directorships of Mr. Seow, our Nominating Committee believes
that Mr. Seow is able to devote sufficient time and resources to discharge his duties as our
Chief Executive Officer. In this regard, our Nominating Committee considered and discussed
with Mr. Seow the scope of services to be provided by him, as well as the frequency of the
meetings of our Board of Directors. Mr. Seow is fully aware of the commitment required of
him in his role as our Chief Executive Officer and has each confirmed that he is able to
devote sufficient time and resources to discharge his duties as our Chief Executive Officer;
and
(c) KSL has provided a non-competition undertaking in our favour as further described below.
In this regard, our Company is of the view that Mr. Seows continuing appointment as our Chief
Executive Officer is necessary and in the best interests of our Group for the following reasons:
(i) our Group will benefit from leveraging on Mr. Seows significant shipping industry
experience; and
(ii) Mr. Seow was instrumental in developing the offshore marine services business under our
Company since 2006 and has more than 40 years of experience in the shipping industry
(including 15 years of sea-going experience and more than 20 years of senior management
experience). Mr. Seows expertise and experience enables us to continue to identify,
evaluate and capitalise on market opportunities and to better anticipate industry trends and
invest in relevant assets to respond to customers needs.
Others
In September 2012, the PCL Group acquired a 67% shareholding interest in DPA. The remaining
33% shareholding interest in DPA is held by Drydocks World LLC, an independent third party. The
DPA group owns four shipyards (one in Singapore and three in Batam, Indonesia), and it has
credentials in rig building, shipbuilding, ship repair, drillship re-activation, life extension and repair
and conversion. Incidental to DPAs shipyard activities, DPAs assets include a fleet of more than
100 vessels comprising tankers, AHTs, tug boats (the bulk of which are 2,400 BHP and under),
and various types of barges (for example cargo barge, hopper barge, oil barge and work barge).
At the relevant time when PCL Group acquired the 67% shareholding interest, approximately 5%
of these vessels are of the same classes of vessels held by our Group. Over time as vessels in
the fleet are disposed by the DPA group, the percentage of vessels of the same classes of vessels
held by our Group will decrease. As at the Latest Practicable Date, the PCL Group has transferred
its 67% shareholding interest in DPA to KSL and save for two vessels, the remaining DPA groups
vessels comprise vessels that are of a different type from those that are held by our Group and
these do not compete with the business of our Group. The two vessels are also of lower quality
and in addition, the DPA group lacks the requisite HSEQA certification allowing it to commercially
market such vessels and in this regard, the DPA group relies on our Group to commercially deploy
such vessels and our Group will deploy such vessels in a manner such that they do not compete
with our Groups vessels.
To leverage on our Groups stronger marketing capabilities for such vessels, the DPA group
currently engages our Group to manage and market these similar vessels for a fee, and our Group
may charter these vessels from the DPA group if appropriate for its operations. Where possible,
the DPA group may also engage our Group to market the other vessels (which are not similar to
those held by our Group) for a fee.
The PCL Groups acquisition of the DPA group was principally motivated by its desire to acquire
the DPA groups shipyards to complement KSLs diversification into shipyard activities in China.
While the DPA group (prior to PCLs acquisition) was insolvent and had going concern issues, it
nonetheless had the track record and reputation in delivering around 500 vessels across all major
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vessels classes over the past decade. The DPA groups network and track record was viewed by
KSL and the PCL Group as valuable to enhance its status in the shipbuilding sector. The PCL
Group viewed the DPA groups fleet as not core to the business of the DPA group. As a matter of
comparison, PCL had valued the DPA groups fleet at approximately US$30 million at the time of
the acquisition and the commercial intention was to dispose of the vessels eventually. To date, the
DPA groups fleet has been reduced from the original fleet size of 140 vessels (at the time of PCLs
acquisition of the DPA group) to its 110 vessels as the Latest Practicable Date. There are no
intentions to increase the fleet, as it is not a core activity for the DPA group.
The terms of the shareholders agreement relating to DPA provides for certain reserved matters
that would require the consent of each shareholder of DPA. In particular, any material change to
the business of the DPA group as a whole such that it ceases to be principally involved in ship
building, ship repair, ship conversion and other marine related business would require the
approval of each shareholder of DPA.
In addition, PCL and certain of our Directors hold, whether directly or by way of deemed interest,
less than 5.0% in quoted or listed securities of companies that are in similar business as our
Group. However, PCL and such Directors are not involved in the day-to-day management or
operations of such companies.
Save as disclosed above, none of our direct and indirect Controlling Shareholders or our Directors
or their respective associates has any interest in any corporation carrying on the same business
or dealing in similar businesses as us.
Non-Competition Undertaking
On April 7, 2014, KSL provided a non-competition undertaking (the Non-Competition
Undertaking) in our favour, whereby KSL has undertaken that it shall not, and shall procure its
existing and future subsidiaries not to, whether directly or indirectly, engage in, carry on (whether
alone or in partnership or joint venture with anyone else) or otherwise be interested in (whether
as trustee, principal, agent, shareholder, unitholder or in any other capacity) the Relevant
Business (as defined below), save that the undertaking shall not be construed as prohibiting KSL
or any of their subsidiaries from:
(a) having an interest in an existing joint venture which may also be involved in the Relevant
Business where such joint ventures are not wholly-owned by KSL and whose other
shareholder(s) is/are third parties who are not interested persons of our Company for the
purposes of the Listing Manual, provided that KSL shall on a best endeavours basis, if
competing situations arise, obtain consent from its joint venture partner not to undertake any
competing activities. In this regard, the DPA groups vessels do not compete with the
business of our Group or will be deployed in a manner such that they do not compete with
our Groups vessels (as described in Potential Conflicts of Interests Others). Save for
the foregoing, KSL and its existing subsidiaries do not have an interest in an existing joint
venture which may also be involved in the Relevant Business where such joint ventures are
not wholly-owned by KSL and whose other shareholder(s) is/are third parties who are not
interested persons of our Company for the purposes of the Listing Manual;
(b) acquiring, owning or holding an interest in a Relevant Business vessel which is acquired,
owned or held together with our Group (whether in partnership or joint venture). The intention
of this provision is to allow the KSL Group to acquire offshore assets or vessels together with
our Group. Such arrangement is intended to enable our Group to have access to larger
investment opportunities (for example, acquisitions of more or larger offshore assets that
require higher investment costs) by sharing the investment risks with the KSL Group in
respect of such larger investments. Any transaction between our Group and the KSL Group
will be an interested person transaction and will be subject to the rules applicable thereto; or
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(c) the holding, for investment purposes, of a shareholding interest of less than 5.0% in quoted
or listed securities in companies that are in similar business as our Group, provided that KSL
does not have involvement in the day-to-day management or operations of such companies.
Relevant Business is defined as the following existing business segments that we operate or will
operate within the specified classes of assets, as defined and described in this Prospectus:
(i) offshore supply vessels (including the provision of services to support midwater to deepwater
operations of rig and oilfield operators during the exploration, development, construction and
production phases);
(ii) transportation and installation (including the provision of services to support marine
contractors in transportation, construction and maintenance of oilfield infrastructure and
pipelines);
(iii) offshore accommodation (including owning and operating vessels that provide
accommodation, workshop and storage facilities in offshore oilfields for offshore construction
and/or maintenance operations); and
(iv) harbour services (including the provision of harbour towage operations and heavy lift
services to shipyards engaged in the construction, and repair and conversion of ships and
offshore drilling units, and other offshore structures and topside production and processing
facilities) and emergency response (including the provision of services, equipment and
personnel for salvage, wreck removal, rescue and oil spill response operations globally).
For the avoidance of doubt, the Relevant Business shall not include the KSL Business (being the
business of investment holding with investments in PCL, trading of scrap steel, sugar, fertilisers,
chemicals, shipyards and provision of warehousing and storage services), the PCL Business
(being the business of shipping with core activities in ship management, and owning and operating
bulk carriers, container feeder vessels, tankers, gas carriers and liner/breakbulk vessels) and
KSLs shareholding interest in our Company.
The Non-Competition Undertaking shall commence on the Listing Date and be effective until the
earlier of the following events: (i) our Company ceases to be listed on the SGX-ST, or (ii) KSL,
together with its associates in aggregate, ceases to be a Controlling Shareholder of our Company.
The terms of the Non-Competition Undertaking had been negotiated on an arms length basis.
Mitigation
In addition to the Non-Competition Undertaking described above, we also believe that any
potential conflicts of interests, whether with KSL, PCL or otherwise (including those arising from
the Mandated Transactions mentioned above), are mitigated as follows:
(a) our Directors have a duty to disclose their interests in respect of any contract, proposal,
transaction or any other matter whatsoever in which they have any personal material interest,
directly or indirectly, or any actual or potential conflicts of interest (including conflicts of
interest that arise from their directorship(s) or executive position(s) or personal investments
in any other corporation(s)) that may involve them. Upon such disclosure, such Directors
shall not participate in any proceedings of our Board of Directors, and shall in any event
abstain from voting in respect of any such contract, arrangement, proposal, transaction or
matter in which the conflict of interest arises, unless and until our Audit Committee has
determined that no such conflict of interest exists. Hence, Mr. Seow will abstain from
participating in any proceedings involving transactions with KSL or PCL, as the case may be;
216
(b) our Audit Committee is required to examine the internal procedures put in place by our
Company to determine if such procedures put in place have become inappropriate or
insufficient in the event of changes to the nature of, or manner in which, the business
activities of our Group, our joint ventures or the interested persons are conducted, or if they
are sufficient to ensure that interested person transactions are conducted on normal
commercial terms and will not be prejudicial to our Company and our minority Shareholders;
(c) our Audit Committee will review any actual or potential conflicts of interest that may involve
our Directors as disclosed by them to our Board. Upon disclosure of an actual or potential
conflict of interests by a Director, our Audit Committee will consider whether a conflict of
interests does in fact exist. A Director who is a member of our Audit Committee will not
participate in any proceedings of our Audit Committee in relation to the review of a conflict
of interests relating to him. The review will include an examination of the nature of the conflict
and such relevant supporting data, as our Audit Committee may deem reasonably necessary;
(d) our Audit Committee will also monitor the investments in our customers, suppliers and
competitors made by our Directors, Controlling Shareholders and their respective associates
who are involved in the management of or have shareholding interests in similar or related
business of our Company (to the extent as disclosed by them to our Audit Committee) and
make assessments on whether there are any potential conflicts of interest;
(e) upon our listing on the SGX-ST, we will be subject to Chapter 9 of the Listing Manual in
relation to interested person transactions. The objective of these rules is to ensure that our
interested person transactions do not prejudice the interests of our Shareholders as a whole.
These rules require us to make prompt announcements, disclosures in our annual report
and/or seek Shareholders approval for certain material interested person transactions. Our
Audit Committee may also have to appoint independent financial advisers to review such
interested person transactions and opine on whether such transactions are conducted on
normal commercial terms and will not be prejudicial to our interests and the interests of our
minority Shareholders. Under the Listing Manual, our Shareholders Mandate is required to
be renewed at each annual general meeting and disclosure must be made in our annual
report of the aggregate value of interested person transactions conducted pursuant to such
mandate during each financial year, and in the annual reports for the subsequent years
during which such mandate is in force. We must also adopt a new mandate if for any reason
the review procedures under our current Shareholders Mandate have become inappropriate
or insufficient in the event of changes to the nature of, or manner in which, the business
activities of our Group, our joint ventures or the Mandated Interested Persons are conducted,
or the review procedures for Mandated Transactions are not sufficient to ensure that the
Mandated Transactions are conducted on normal commercial terms and will not be
prejudicial to the interests of our Company and our minority Shareholders;
(f) notwithstanding the appointment of certain of our Directors at the request of certain of our
Controlling Shareholders as described in Management Family Relationship/Arrangement
or Understanding, our Directors owe fiduciary duties to us, including the duty to act in good
faith and in our best interests. In addition, a Director may only disclose information (not
otherwise available to him) which he has obtained in his capacity as a director, to the
Controlling Shareholder whose interests he represents, when certain conditions stipulated in
Section 158 of the Companies Act are met. These conditions are that: the relevant director
declares at a meeting of the Directors the person to whom such information is to be disclosed
and particulars of such information; our Board authorises him to make such disclosure; and
the disclosure will not be likely to prejudice us. Therefore, any non-public information
regarding us that any of our Directors wishes to disclose to the Controlling Shareholder
whose interests he represents can only be so disclosed if our Board authorises such
disclosure and our Board is satisfied that such disclosure will not be likely to prejudice us.
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Our Directors are also subject to a duty of confidentiality that precludes a Director from
disclosing to any third party (including any of our Shareholders or their associates)
information that is confidential; and
(g) our Audit Committee will, following the listing of our Company on the SGX-ST, undertake the
following additional responsibilities:
(i) review on a periodic basis the framework and processes established above for the
implementation of the terms of the Non-Competition Undertaking in order to ensure that
such framework and processes remain appropriate; and
(ii) review and assess from time to time the prevailing processes put in place to manage
any material conflicts of interest with the KSL Group and consider, where appropriate,
the additional measures for the management of such conflicts.
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SHARE CAPITAL
Our Company was incorporated in Singapore on March 7, 2006 under the Companies Act as a
private company limited by shares under the name of PACC Offshore Pte. Ltd. On October 23,
2007, we changed our name to PACC Offshore Services Holdings Pte. Ltd. On April 2, 2014, we
were converted into a public company limited by shares and changed our name to PACC Offshore
Services Holdings Ltd.
PCL has in 2013 transferred 3,730,000 existing Shares (before adjusting for the Share Split and
Consolidation) to certain of their group employees (including certain of our Directors (namely, Mr.
Seow Kang Hoe, Gerald, Mr. Teo Joo Kim and Mr. Wu Long Peng) and Executive Officers (namely,
Mr. Lee Keng Lin, Mr. Chai Ulva, Mr. Ng Eng Khin and Mr. Sim Hee Ping)), pursuant to the exercise
of options granted by PCL to such persons. In 2014, PCL has purchased 6,150,000 Shares (before
adjusting for the Share Split and Consolidation) from an ex-Shareholder, Singa Star Pte Ltd. Save
for the foregoing and except as described in this section and in Dilution, there were no significant
changes in the percentage of ownership in our Company in the last three years prior to the Latest
Practicable Date.
In addition, in December 2013 and March 2014, PCL has agreed to sell, and KSL has agreed to
purchase, 150,286,642 Shares (or such equivalent number of Shares after adjusting for any
subsequent bonus issue, consolidation or subdivision of Shares, including the Share Split and
Consolidation), less (a) any Shares that may be sold by PCL pursuant to the exercise of the
Over-allotment Option, and (b) any of the 2,112,500 Shares (or such equivalent number of Shares
after adjusting for any subsequent bonus issue, consolidation or subdivision of Shares, including
the Share Split and Consolidation) which are held by certain of KSLs group employees, and which
are not transferred to PCL (pursuant to the exercise of the right of PCL to have any of such Shares
transferred itself or to its order) prior to completion, in other words, up to 1,127,149,815 Shares
(after adjusting for the Share Split and Consolidation). The transfer is to be completed as soon as
practicable after the Listing Date. See Dilution for further details.
As at December 31, 2013, the date of our most recent balance sheet, our issued and paid-up
share capital was US$530,975,000 comprising 197,650,000 Shares.
Details of the changes in our issued and paid-up share capital in the last three years prior to the
Latest Practicable Date and the resultant issued and paid-up share capital immediately after the
Offering and the issue of the Cornerstone Shares are set out below:
Date Purpose of Issue
Issue price
per Share No. of Shares
Resultant Issued
Share Capital
November 15,
2012
To raise working
capital
US$4.00 37,500,000 RCPS US$380,975,000
(comprising
160,150,000
ordinary shares)
US$150,000,000
(comprising
37,500,000
RCPS)
December 9,
2013
Conversion of
RCPS

(1)
37,500,000
Shares
US$530,975,000
(comprising
197,650,000
ordinary shares)
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Date Purpose of Issue
Issue price
per Share No. of Shares
Resultant Issued
Share Capital
March 28, 2014 Share Split and
Consolidation
1,284,725,000
Shares
US$530,975,000
(comprising
1,482,375,000
ordinary shares)
Immediately after
the Offering and
the issue of the
Cornerstone
Shares
The Offering and
the issue of the
Cornerstone
Shares
S$1.15 337,625,000 US$836,698,425
(2)
(comprising
1,820,000,000
ordinary shares)
Notes:
(1) No consideration was paid as the Shares were issued pursuant to the conversion of our RCPS at the ratio of one
Share for each RCPS which was in turn issued at an issue price of US$4.00 each.
(2) Based on gross issue price per Share of S$1.15 converted into U.S. dollars at the exchange rate of
S$1.27=US$1.00.
Except as described above, there has been no change in our issued and paid-up share capital in
the last three years prior to the Latest Practicable Date.
On March 28, 2014 and April 14, 2014, our Shareholders passed resolutions to approve, inter alia,
the following:
(a) the conversion of our Company into a public company limited by shares and the adoption of
a new set of Articles of Association;
(b) the change of our name to PACC Offshore Services Holdings Ltd.;
(c) the sub-division of each ordinary share in the capital of our Company into fifteen Shares (the
Share Split);
(d) contingent upon the Share Split, the consolidation of every two ordinary shares in the capital
of our Company into one Share (the Consolidation);
(e) that pursuant to Section 161 of the Companies Act, authority be given to our Directors to:
(i) issue Shares whether by way of rights, bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, Instruments) that might or
would require Shares to be issued, including but not limited to the creation and issue of
(as well as adjustments to) warrants, debentures or other instruments convertible into
Shares,
at any time and upon such terms and conditions and for such purposes and to such person(s)
as the Directors may in their absolute discretion deem fit; and
(notwithstanding the authority conferred by such authority may have ceased to be in force)
issue Shares in pursuance of any Instrument made or granted by our Directors while such
authority was in force,
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provided that:
(1) the aggregate number of Shares to be issued pursuant to such authority (including new
Shares to be issued in pursuance of Instruments made or granted pursuant to such
authority) shall not exceed 50.0% of the total number of issued Shares in the capital of
our Company excluding treasury shares (as calculated in accordance with sub-
paragraph (2) below), of which the aggregate number of Shares to be issued other than
on a pro rata basis to shareholders of our Company may not exceed 20.0% of the total
number of issued Shares in the capital of our Company excluding treasury shares (as
calculated in accordance with sub-paragraph (2) below);
(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the
purpose of determining the aggregate number of Shares that may be issued under
sub-paragraph (1) above, the percentage of issued Shares in the capital of our
Company shall be based on the total number of issued Shares in the capital of our
Company excluding treasury shares immediately following the close of the Offering and
the issue of the Cornerstone Shares, after adjusting for:
(A) new Shares arising from the conversion or exercise of any convertible securities
or share options or vesting of share awards which are outstanding or subsisting at
the time such authority is passed; and
(B) any subsequent bonus issue, consolidation or subdivision of shares in the capital
of our Company;
(3) in exercising the authority conferred by such authority, our Company shall comply with
the provisions of the Listing Manual for the time being in force (unless such compliance
has been waived by the SGX-ST) and our Articles of Association; and
(4) (unless revoked or varied by our Company in general meeting) the authority conferred
by such authority shall continue in force until the conclusion of the next annual general
meeting of our Company or the date by which the next annual general meeting of our
Company is required by law to be held, whichever is the earlier; and
(f) that authority be given to our Directors to issue Shares and offer the same to such persons,
on such terms and conditions and with such rights or restrictions as they may think fit to
impose, in connection with the Offering, the cornerstone subscriptions and the admission of
our Company to the Official List of the SGX-ST;
(g) the adoption of the POSH Share Option Plan and the POSH Performance Share Plan and
that authority be given to our Directors to allot and issue new Shares as may be required to
be issued pursuant to the exercise of options granted under the POSH Share Option Plan
and the vesting of awards granted under the POSH Performance Share Plan, provided that
the total number of Shares over which options and awards may be granted on any date, when
added to the total number of Shares issued and/or issuable and transferred and/or to be
transferred in respect of all options already granted and the total number of Shares issued
and/or issuable and transferred and/or to be transferred in respect of all awards already
granted, shall not exceed 15% of the total number of issued Shares (excluding treasury
shares) on the date preceding the date of the relevant option or award;
(h) that authority be given to our Directors to grant options under the POSH Share Option Plan,
with an acquisition price set at a discount of up to 20% of the market price for the Shares at
the time of grant;
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(i) that authority be given to our Directors to grant options under the POSH Share Option Plan
to persons who are employees (including executive directors) of our Companys designated
holding company and/or its subsidiaries other than our Company and our subsidiaries
(Parent Group Employees/Directors), provided that:
(i) the aggregate number of Shares which may be offered by way of grant of options to
Parent Group Employees/Directors collectively under the POSH Share Option Plan
shall not exceed 20% of the total number of Shares available under the POSH Share
Option Plan; and
(ii) any option to be granted to a Parent Group Employee/Director which, together with
options already granted to that Parent Group Employee/Director under the POSH Share
Option Plan, represents 5% or more of the total number of Shares available to Parent
Group Employees/Directors collectively under the POSH Share Option Plan, shall be
subject to the approval of independent shareholders of our Company;
(j) that authority be given to our Directors to grant awards under the POSH Performance Share
Plan to Parent Group Employees/Directors, provided that:
(i) the aggregate number of Shares which may be offered by way of grant of awards to
Parent Group Employees/Directors collectively under the POSH Performance Share
Plan shall not exceed 20% of the total number of Shares available under the POSH
Performance Share Plan; and
(ii) any awards to be granted to a Parent Group Employee/Director which, together with
awards already granted to that Parent Group Employee/Director under the POSH
Performance Share Plan, represents 5% or more of the total number of Shares
available to Parent Group Employees/Directors collectively under the POSH
Performance Share Plan, shall be subject to the approval of independent shareholders
of our Company; and
(k) the adoption of the Shareholders Mandate for Interested Person Transactions, details of
which are set out in Interested Person Transactions and Potential Conflicts of Interests
Shareholders Mandate for Interested Person Transactions.
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DESCRIPTION OF OUR SHARES
The following statements are brief summaries of the more important rights and privileges of
Shareholders conferred by the laws of Singapore and our Articles of Association. These
statements summarise the material provisions of our Companys Articles of Association but are
qualified in their entirety by reference to our Companys Articles of Association and the laws of
Singapore. See Appendix D Summary of Selected Articles of Association of our Company.
Shares
Our Shares, which have identical rights in all respects, rank equally with one another. Our Articles
of Association provide that we may issue shares of a different class with preferential, deferred,
qualified or special rights, privileges or conditions as our Board of Directors may think fit, and may
issue preference shares which are, or at our option are, redeemable, subject to certain limitations.
All of our Shares are in registered form. We may, subject to the provisions of the Companies Act
and the rules of the SGX-ST, purchase our own Shares. However, we may not, except in the
circumstances permitted by the Companies Act, grant any financial assistance for the acquisition
or proposed acquisition of our Shares.
New Shares
We may only issue new Shares with the prior approval of our Shareholders in a general meeting.
Shareholders
We only recognise the persons who are registered in our register of members and, in cases in
which the person so registered is CDP or its nominee, as the case may be, we recognise the
persons named as the depositors in the depository register maintained by CDP for our Shares as
holders of our Shares.
We will not, except as required by law, recognise any equitable, contingent, future or partial
interest in any of our Shares, or any interest in any fractional part of a Share, or other rights in
respect of any Share, other than the absolute right thereto of the person whose name is entered
in our register of members as the registered holder thereof, or of the person whose name is
entered in the depository register maintained by CDP for that Share.
We may close our register of members at any time or times if we provide the SGX-ST with at least
five clear Market Days notice, or such other periods as may be prescribed by the SGX-ST.
However, our register of members may not be closed for more than 30 days in aggregate in any
calendar year. We typically close our register of members to determine Shareholders entitlement
to receive dividends and other distributions.
Transfer of Shares
There is no restriction on the transfer of fully paid-up Shares except where required by law or the
listing rules of, or bye-laws and rules, governing any securities exchange upon which our Shares
are listed or as provided in our Articles of Association. Our Board of Directors may in their
discretion decline to register any transfer of Shares on which we have a lien and in the case of
Shares not fully paid-up may refuse to register a transfer to a transferee of whom they do not
approve. A Shareholder may transfer any Shares registered in its own name by means of a duly
signed instrument of transfer in a form approved by any securities exchange upon which our
Shares are listed or in any other form acceptable to our Directors. Our Board of Directors may also
decline to register any instrument of transfer unless, among other things, it has been duly stamped
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and is presented for registration together with the share certificate and such other evidence of title
as they may require. A Shareholder may transfer any Shares held through the SGX-ST book-entry
settlement system by way of a book-entry transfer without the need for any instrument of transfer.
We will replace lost or destroyed certificates for Shares provided that the applicant pays a fee
which will not exceed S$2.00, and furnishes such evidence and a letter of indemnity as our Board
of Directors may require.
General Meetings of our Shareholders
We are required to hold a general meeting of Shareholders every year and not more than 15
months after the holding of the last preceding annual general meeting. Our Board of Directors may
convene an extraordinary general meeting whenever they think fit and it must do so upon the
written request of Shareholders representing not less than 10.0% of the total voting rights of all
Shareholders. In addition, two or more Shareholders holding not less than 10.0% of our total
number of issued Shares may call a meeting of our Shareholders.
Unless otherwise required by law or by our Articles of Association, voting at general meetings is
by ordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at that
meeting. An ordinary resolution suffices, for example, for the appointment of directors. A special
resolution, requiring the affirmative vote of at least 75.0% of the votes cast at the meeting, is
necessary for certain matters under Singapore law, including:
voluntary winding-up;
amendments to our Memorandum of Association and our Articles of Association;
a change of our corporate name; and
a reduction in the share capital.
We must give at least 21 days notice in writing for every general meeting convened for the
purpose of passing a special resolution. Ordinary resolutions generally require at least 14 days
notice in writing. For so long as our Shares are listed on the SGX-ST, at least 14 days notice of
any general meeting shall be given in writing to the SGX-ST and by advertisement in the daily
press.
The notice must be given to every Shareholder who has supplied us with an address in Singapore
for the giving of notices and must set forth the place, the day and the hour of the meeting and, in
the case of special business, the general nature of that business.
Voting Rights
A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy.
A proxy need not be a Shareholder. A person who holds Shares through the SGX-ST book-entry
settlement system will only be entitled to vote at a general meeting as a Shareholder if his name
appears on the depository register maintained by CDP 48 hours before the general meeting.
Except as otherwise provided in our Articles of Association, two or more Shareholders must be
present in person or by proxy or attorney, representing one-third or more of our total issued
Shares to constitute a quorum at any general meeting. Under our Articles of Association:
on a show of hands, every Shareholder present in person or by proxy shall have one vote
(provided that in the case of a Shareholder who is represented by two proxies, only one of
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the two proxies as determined by that Shareholder or, failing such determination, by the
chairman of the meeting (or by a person authorised by the chairman of the meeting) in his
sole discretion shall be entitled to vote on a show of hands); and
on a poll, every Shareholder present in person or by proxy or attorney shall have one vote
for each Share which he holds or represents.
With effect from August 1, 2015, the Listing Manual requires all resolutions at general meeting to
be voted by poll. Our Articles of Association provide that if so required by the rules of any stock
exchange upon which shares in our Company may be listed, a resolution put to vote of all general
meetings shall be conducted by poll. A poll may be demanded in certain circumstances, including:
by the chairman of the meeting;
by not less than two Shareholders present in person or by proxy or attorney and entitled to
vote at the meeting;
by any Shareholder present in person or by proxy or attorney and representing not less than
one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting;
and
by any Shareholder present in person or by proxy or attorney and holding not less than
10.0% of the total number of paid-up Shares (excluding treasury shares).
In the case of a tie vote, whether on a show of hands or on a poll, the chairman of the meeting
shall be entitled to a casting vote.
Limitations on Rights to Hold Shares
Singapore law and our Articles of Association do not impose any limitations on the right of
non-resident or foreign Shareholders to hold or exercise voting rights attached to our Shares.
Dividends
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but
we may not pay dividends in excess of the amount recommended by our Board of Directors. Our
Board of Directors may also declare an interim dividend without the approval of our Shareholders.
We must pay all dividends out of our profit(s) available for distribution.
All dividends we pay are pro rata in amount to our Shareholders in proportion to the amount paid
up or credited as paid on each Shareholders Shares, unless the rights attaching to an issue of
any share or class of shares provide otherwise.
Unless otherwise directed, dividends may be paid by a cheque or warrant sent through the post
to each Shareholder at his registered address appearing in our register of members or (as the
case may be) the depository register. However, our payment to CDP of any dividend payable to
a Shareholder whose name is entered in the depository register shall, to the extent of payment
made to CDP, discharge us from any liability to that Shareholder in respect of that payment.
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Bonus and Rights Issue
Our Board of Directors may, with the approval from our Shareholders at a general meeting,
capitalise any sums standing to the credit of any of our Companys reserve accounts or other
undistributable reserve or any sum standing to the credit of profit and loss account and distribute
the same as bonus Shares credited as paid-up to the Shareholders in proportion to their
shareholdings.
Our Board of Directors may also issue bonus Shares to participants of any share incentive or
option scheme or plan implemented by our Company and approved by our Shareholders in such
manner and on such terms as our Board of Directors shall think fit.
Our Board of Directors may also issue rights to take up additional Shares to Shareholders in
proportion to their shareholdings. Such rights are subject to any conditions attached to such issue
and the regulations of any securities exchange upon which our Shares are listed.
Take-overs
The Singapore Code on Take-overs and Mergers, the Companies Act and the Securities and
Futures Act regulate, among other things, the acquisition of ordinary shares of public companies
incorporated in Singapore. Any person acquiring an interest, whether by a series of transactions
over a period of time or not, either on his own or together with parties acting in concert with him,
in 30.0% or more of the voting Shares in our Company or, if such person holds, either on his own
or together with parties acting in concert with him, between 30.0% and 50.0% (both inclusive) of
the voting Shares in our Company, and if he (or parties acting in concert with him) acquires
additional voting Shares representing more than 1.0% of our voting Shares in any six-month
period, must, except with the consent of the Securities Industry Council, extend a mandatory
take-over offer for the remaining voting Shares in accordance with the provisions of the Singapore
Code on Take-overs and Mergers.
Parties acting in concert comprise individuals or companies who, pursuant to an arrangement or
understanding (whether formal or informal), co-operate, through the acquisition by any of them of
shares in a company, to obtain or consolidate effective control of that company. Certain persons
are presumed (unless the presumption is rebutted) to be acting in concert with each other. They
include:
a company and its related companies, the associated companies of any of the company and
its related companies, companies whose associated companies include any of these
companies and any person who has provided financial assistance (other than a bank in the
ordinary course of business) to any of the foregoing for the purchase of voting rights;
a company and its directors (including their close relatives, related trusts and companies
controlled by any of the directors, their close relatives and related trusts);
a company and its pension funds and employee share schemes;
a person and any investment company, unit trust or other fund whose investment such
person manages on a discretionary basis;
a financial or other professional adviser, including a stockbroker, and its clients in respect of
shares held by the adviser and persons controlling, controlled by or under the same control
as the adviser and all the funds managed by the adviser on a discretionary basis, where the
shareholdings of the adviser and any of those funds in the client total 10.0% or more of the
clients equity share capital;
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directors of a company (including their close relatives, related trusts and companies
controlled by any of such directors, their close relatives and related trusts) which is subject
to an offer or where the directors have reason to believe a bona fide offer for the company
may be imminent;
partners; and
an individual and his close relatives, related trusts, any person who is accustomed to act in
accordance with his instructions and companies controlled by the individual, his close
relatives, his related trusts or any person who is accustomed to act in accordance with his
instructions and any person who has provided financial assistance (other than a bank in the
ordinary course of business) to any of the foregoing for the purchase of voting rights.
Subject to certain exceptions, a mandatory take-over offer must be in cash or be accompanied by
a cash alternative at not less than the highest price paid by the offeror or parties acting in concert
with the offeror during the offer period and within the six months preceding the acquisition of
shares that triggered the mandatory offer obligation.
Under the Singapore Code on Take-overs and Mergers, where effective control of a public
company incorporated in Singapore is acquired or combined by a person, or persons acting in
concert, a general offer to all other shareholders is normally required. An offeror must treat all
shareholders of the same class in an offeree company equally. A fundamental requirement is that
shareholders in the company subject to the take-over offer must be given sufficient information,
advice and time to consider and decide on the offer.
Liquidation or Other Return of Capital
If we are liquidated or in the event of any other return of capital, holders of our Shares will be
entitled to participate in the distribution of any surplus assets in proportion to their shareholdings,
subject to any special rights attaching to any other class of shares in our Company.
Indemnity
As permitted by Singapore law, our Articles of Association provide that, subject to the Companies
Act, our Board of Directors and officers shall be entitled to be indemnified by us against any
liability incurred in defending any proceedings, whether civil or criminal:
which relate to anything done or omitted or alleged to have been done or omitted by them as
an officer, director or employee; and
in which judgment is given in their favour or in which they are acquitted or in connection with
any application under any statute for relief from liability in respect thereof in which relief is
granted by the court.
We may not indemnify our Directors and officers against any liability which by law would otherwise
attach to them in respect of any negligence, default, breach of duty or breach of trust of which they
may be guilty in relation to us. However, we may purchase and maintain for our Directors and
Executive Officers insurance against any such liability.
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Substantial Shareholdings
Under the Securities and Futures Act, a person has a substantial shareholding in our Company if
he has an interest (or interests) in one or more voting shares (excluding treasury shares) in our
Company and the total votes attached to that share or those shares, is not less than 5.0% of the
aggregate of the total votes attached to all voting shares (excluding treasury shares) in our
Company.
The Securities and Futures Act requires our Substantial Shareholders, or if they cease to be our
Substantial Shareholders, to give notice to us of particulars of the voting shares in our Company
in which they have or had an interest (or interests) and the nature and extent of that interest or
those interests, and of any change in the percentage level of their interest.
In addition, the deadline for a substantial Shareholder to make disclosure to our Company under
the Securities and Futures Act is two Singapore business days after he becomes aware:
that he is or (if he had ceased to be one) had been a substantial Shareholder;
of any change in the percentage level in his interest; or
that he had ceased to be a substantial Shareholder,
there being a conclusive presumption of a person being aware of a fact or occurrence at the time
at which he would, if he had acted with reasonable diligence in the conduct of his affairs, have
been aware.
Following the above, we will in turn announce or otherwise disseminate the information stated in
the notice to the SGX-ST as soon as practicable and in any case, no later than the end of the
Singapore business day following the day on which we received the notice.
Percentage level, in relation to a Substantial Shareholder in our Company, means the
percentage figure ascertained by expressing the total votes attached to all the voting shares in our
Company in which the Substantial Shareholder has an interest (or interests) immediately before
or (as the case may be) immediately after the relevant time as a percentage of the total votes
attached to all the voting shares (excluding treasury shares) in our Company, and, if it is not a
whole number, rounding that figure down to the next whole number.
While the definition of an interest in our voting shares for the purposes of substantial shareholder
disclosure requirements under the Securities and Futures Act is similar to that under the
Companies Act, the Securities and Futures Act provides that a person who has authority (whether
formal or informal, or express or implied) to dispose of, or to exercise control over the disposal of,
a voting share is regarded as having an interest in such share, even if such authority is, or is
capable of being made, subject to restraint or restriction in respect of particular voting shares.
Minority Rights
Section 216 of the Companies Act protects the rights of minority shareholders of Singapore
incorporated companies by giving the Singapore courts a general power to make any order, upon
application by any of our Shareholders, as they think fit to remedy any of the following situations:
if our affairs are being conducted or the powers of our Board of Directors are being exercised
in a manner oppressive to, or in disregard of the interests of, one or more of our
Shareholders; or
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if we take an action, or threaten to take an action, or our Shareholders pass a resolution, or
propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial
to, one or more of our Shareholders, including the applicant.
Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no
way limited to those listed in the Companies Act itself. Without prejudice to the foregoing,
Singapore courts may:
direct or prohibit any act or cancel or vary any transaction or resolution;
regulate the conduct of our affairs in the future;
authorise civil proceedings to be brought in our name, or on our behalf, by a person or
persons and on such terms as the court may direct;
direct us or some of our Shareholders to purchase a minority Shareholders shares and, in
the case of our purchase of Shares, a corresponding reduction of our share capital;
direct that our Memorandum of Association and our Articles of Association be amended; and
direct that we be wound up.
Legal Framework
The following statements are brief summaries of the laws of Singapore relating to the legal
framework in Singapore and our Board of Directors, which are qualified in their entirety by
reference to the laws of Singapore.
Singapore has a common law system based on a combination of case law and statutes. The
Companies Act is the principal legislation governing companies incorporated under the laws of
Singapore and provides for three main forms of corporate vehicles, being the company limited by
shares, the company limited by guarantee and the unlimited company.
Companies are incorporated by filing with the Accounting and Corporate Regulatory Authority in
Singapore certain electronic forms, including the constitutional documents which comprise its
memorandum and articles of association.
The memorandum of association of a Singapore incorporated company may set out the specific
objects and powers of the company, or may give the company full power to carry on or undertake
any business activity. The articles of association generally contain provisions relating to share
capital and variation of rights, transfers and transmissions of shares, meetings of shareholders,
directors and directors meetings, powers and duties of directors, accounts, dividends and
reserves, capitalisation of profits, secretary, common seal, winding-up and indemnity of the
officers of a company.
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TAXATION
The statements made herein regarding taxation are general in nature and based on certain
aspects of the current tax laws of Singapore and administrative guidelines issued by the relevant
authorities in force as of the date of this Prospectus and are subject to any changes in such laws
or administrative guidelines, or in the interpretation of these laws or guidelines, occurring after
such date, which changes could be made on a retrospective basis. These laws and guidelines are
also subject to various interpretations and the relevant tax authorities or the courts could later
disagree with the explanations or conclusions set out below. The statements below are not to be
regarded as advice on the tax position of any holder of our Shares or of any person acquiring,
selling or otherwise dealing with our Shares or on any tax implications arising from the acquisition,
sale or other dealings in respect of our Shares. The statements made herein do not purport to be
a comprehensive or exhaustive description of all of the tax considerations that may be relevant to
a decision to purchase, own or dispose of our Shares and do not purport to deal with the tax
consequences applicable to all categories of investors, some of which (such as dealers in
securities) may be subject to special rules. Prospective Shareholders are advised to consult their
own tax advisers as to the Singapore or other tax consequences of the acquisition, ownership of
or disposal of our Shares. The statements below are based on the basis that our Company is tax
resident in Singapore for Singapore income tax purposes. It is emphasised that neither our
Company nor any other persons involved in this Prospectus accepts responsibility for any tax
effects or liabilities resulting from the subscription for, purchase, holding or disposal of our Shares.
Individual income tax
An individual is a tax resident in Singapore in a year of assessment if, in the preceding year, he
was physically present in Singapore or exercised an employment in Singapore (other than as a
director of a company) for 183 days or more, or if he resides in Singapore.
Individual taxpayers who are Singapore tax residents are subject to Singapore income tax on
income accruing in or derived from Singapore. All foreign-sourced income received in Singapore
on or after 1 January 2004 by a Singapore tax resident individual (except for income received
through a partnership in Singapore) is exempt from Singapore income tax if the Comptroller of
Income Tax in Singapore (Comptroller) is satisfied that the tax exemption would be beneficial
to the individual.
A Singapore tax resident individual is taxed at progressive rates ranging from 0% to 20% and is
entitled to claim deductions for personal reliefs. A non-resident individual, subject to certain
exceptions and conditions, is subject to Singapore income tax on employment income accruing in
or derived from Singapore at a flat rate of 15% or at tax resident rates, whichever is higher. Other
Singapore-sourced personal investment income such as rental income is taxable to a non-resident
at a flat rate of 20%.
Corporate income tax
A corporate taxpayer is regarded as resident in Singapore for Singapore tax purposes if the
control and management of its business is exercised in Singapore.
Corporate taxpayers who are Singapore tax residents are subject to Singapore income tax on
income accruing in or derived from Singapore and, subject to certain exceptions, on foreign-
sourced income received or deemed to be received in Singapore. Foreign-sourced income in the
form of dividends, branch profits and service income received or deemed to be received in
Singapore by Singapore tax resident companies on or after 1 June 2003 are exempt from tax if
certain prescribed conditions are met.
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A non-resident corporate taxpayer is subject to income tax on income that is accrued in or derived
from Singapore, and on foreign-sourced income received or deemed received in Singapore,
subject to certain exceptions.
The corporate tax rate in Singapore is 17% with effect from the year of assessment 2010. In
addition, three-quarters of up to the first S$10,000, and one-half of up to the next S$290,000, of
a companys chargeable income otherwise subject to normal taxation is exempt from corporate
tax. The remaining chargeable income (after the tax exemption) will be fully taxable at the
prevailing corporate tax rate. In addition, it was announced during the Singapore Budget 2013 that
companies will receive a 30% corporate income tax rebate for the years of assessment 2013,
2014 and 2015, subject to a cap of S$30,000 per year of assessment. New companies will also,
subject to certain conditions and exceptions, be eligible for full tax exemption on their normal
chargeable income of up to S$100,000 and the next S$200,000 normal chargeable income will be
eligible for 50% exemption for each companys first three consecutive years of assessment.
Dividend distributions
With effect from 1 January 2008, all Singapore-resident companies are under the one-tier
corporate tax system (one-tier system).
Dividends received in respect of our Shares by either a resident or non-resident of Singapore are
not subject to Singapore withholding tax, on the basis that our Company is a tax resident of
Singapore.
Under the one-tier system, the tax on corporate profits is final and dividends paid by a
Singapore-resident company are tax exempt in the hands of a shareholder, regardless of whether
the shareholder is a company or an individual and whether or not the shareholder is a Singapore
tax resident.
Gains on disposal of Shares
Singapore does not impose tax on capital gains. Gains arising from the disposal of our Shares
should not be taxable in Singapore unless the seller is regarded as having derived gains of an
income nature. The determination of whether the gains from disposal of shares in a company are
income or capital in nature is based on a consideration of the facts and circumstances of each
case.
Gains derived from the disposal of ordinary shares by companies during the period from June 1,
2012 to May 31, 2017 (both dates inclusive) will be exempt from tax in Singapore (the Tax
Certainty Rules), if immediately prior to the date of disposal:
the divesting company legally and beneficially owns at least 20% of the ordinary shares in
the investee company; and
the divesting company maintains the minimum 20% ordinary shareholding for a minimum
period of at least 24 months prior to the date of disposal.
The Tax Certainty Rules do not apply to the disposal of shares in an unlisted investee company
that is in the business of trading or holding Singapore immovable properties (other than the
business of property development) or disposal of shares where the gains or profits of which are
included as part of the income of a company referred to in Section 26 of the Income Tax Act,
Chapter 134 of Singapore (which applies generally to insurers) or disposal of shares by a
partnership, limited partnership or limited liability partnership one or more of the partners of which
is a company or are companies. To avail of the exemption, the company must furnish the requisite
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information in its income tax return for the year of assessment relating to the basis period in which
the disposal of ordinary shares is made. Supporting documents must be submitted only upon
request.
Shareholders who apply, or who are required to apply, the Singapore Financial Reporting
Standard 39 Financial Instruments: Recognition and Measurement (FRS 39) for the purposes
of Singapore income tax may be required to recognise gains or losses (not being gains or losses
in the nature of capital) in accordance with the provisions of FRS 39 (as modified by the applicable
provisions of Singapore income tax law) even though no sale or disposal of our Shares is made.
Shareholders who may be subject to this tax treatment should consult their accounting and tax
advisers regarding the Singapore income tax consequences of their acquisition, holding and
disposal of our Shares.
Stamp duty
There is no stamp duty payable on the subscription for our Shares.
Where our Shares evidenced in certificated form are acquired in Singapore, stamp duty is payable
on the instrument of their transfer at the rate of S$0.20 for every S$100 or part thereof of the
consideration for, or market value of, our Shares, whichever is higher.
Stamp duty is not applicable however to electronic transfers of our Shares through the scripless
trading system operated by CDP.
Estate duty
Singapore estate duty was abolished with respect to all deaths occurring on or after 15 February
2008.
Goods and Services Tax (GST)
The sale of our Shares by a GST-registered investor belonging in Singapore to another person
belonging in Singapore is an exempt supply not subject to GST. Any input GST (for example, GST
on brokerage) incurred by the GST-registered investor in connection with the making of this
exempt supply is generally not recoverable from and will become an additional cost to the investor
unless the investor satisfies certain conditions prescribed under the GST legislation or certain
GST concessions.
Where our Shares are sold by a GST-registered investor to a person belonging outside Singapore
(and who is outside Singapore at the time of supply), the sale is a taxable supply subject to GST
at a zero rate (i.e. 0%). Any input GST (for example, GST on brokerage) incurred by the
GST-registered investor in making this zero-rated supply for the purpose of his business will,
subject to the provisions of the GST legislation, be recoverable as an input tax credit in his GST
returns.
Investors should seek their own tax advice on the recoverability of GST incurred on expenses in
connection with the purchase and sale of our Shares.
Services such as brokerage and handling services rendered by a GST-registered person to an
investor belonging in Singapore in connection with the investors purchase or sale of our Shares
will be subject to GST at the prevailing rate (currently 7.0%). Similar services rendered
contractually to an investor belonging outside Singapore are subject to GST at zero-rate provided
that the investor is not physically present in Singapore at the time the services are performed and
the services do not directly benefit a person who belongs in Singapore.
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PLAN OF DISTRIBUTION
We, the Over-allotment Option Provider and the Joint Issue Managers, Bookrunners and
Underwriters have entered into a management and underwriting agreement dated April 17, 2014
(the Management and Underwriting Agreement). We, the Over-allotment Option Provider and
the Joint Issue Managers, Bookrunners and Underwriters have also entered into a placement
agreement dated April 17, 2014 (the Placement Agreement). Subject to the terms and
conditions contained in the Management and Underwriting Agreement and the Placement
Agreement, we and the Over-allotment Option Provider have agreed to appoint the Joint Issue
Managers, Bookrunners and Underwriters named below to procure subscribers or purchasers,
and the Joint Issue Managers, Bookrunners and Underwriters have agreed, severally, and not
jointly, to procure subscribers or purchasers, or failing which, to subscribe for or purchase the
number of Offering Shares and the Cornerstone Shares set forth opposite its name below at the
Offering Price.
Number of Shares
DBS Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,541,667
Merrill Lynch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,541,666
OCBC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,541,667
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,625,000
Subject to certain conditions, we and the Over-allotment Option Provider have agreed to
indemnify the Joint Issue Managers, Bookrunners and Underwriters against certain liabilities
(including liabilities under the Securities and Futures Act in relation to any part of this Prospectus
being false or misleading) incurred in connection with the Public Offering and the International
Offering, except in relation to any claim arising out of the wilful default, fraud or gross negligence
of the Joint Issue Managers, Bookrunners and Underwriters. Please refer to General and
Statutory Information Management and Underwriting Agreement and Placement Agreement for
more information.
Prior to this Offering, there has been no public market for the Offering Shares. The Offering Price
has been determined following a book-building process by agreement between us and the Joint
Issue Managers, Bookrunners and Underwriters. Among the factors that have been considered in
determining the Offering Price are the level of demand for the Offering Shares and currently
prevailing general conditions in the equity securities market.
Commission
We and the Over-allotment Option Provider will severally pay the Joint Issue Managers,
Bookrunners and Underwriters, as compensation for their services in connection with the offer of
the Offering Shares in the Offering and the Cornerstone Shares pursuant to the Cornerstone
Subscription Agreements, a combined underwriting and placement commission (excluding goods
and services tax) amounting to 2.0% of the total gross proceeds from the sale of the new Offering
Shares and the Cornerstone Shares (including the proceeds from the sale of the Additional
Shares, if the Over-allotment Option is exercised. Underwriting and placement commission of
S$0.02 for each new Offering Share and Cornerstone Share are payable by us.
Reserved Shares
25,200,000 Offering Shares out of the Shares in the International Offering have been reserved for
subscription or purchase by the directors, management, employees and business associates of
our Company, our subsidiaries and our joint ventures, and KSL and its subsidiaries (including PCL
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and its subsidiaries) who have contributed to our success (to be determined by us at our sole
discretion). If any of the Reserved Shares are not taken up, they will be available to satisfy
over-subscription (if any) for the Offering Shares in the International Offering and/or the Public
Offering. Reserved Shares subscribed or purchased will be, except as restricted by applicable
securities laws, available for resale following the Offering.
Over-allotment Option
In connection with the Offering, the Over-allotment Option Provider has granted the Stabilising
Manager, acting on behalf of the Joint Issue Managers, Bookrunners and Underwriters, the
Over-allotment Option, exercisable in whole or in part on one or more occasions from the Listing
Date until the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when the
Stabilising Manager or its appointed agent has bought, on the SGX-ST, an aggregate of
46,125,000 Shares, representing approximately 18.3% of the total Offering Shares, to undertake
stabilising actions, to purchase from PCL up to an aggregate of 46,125,000 Additional Shares
(representing 18.3% of the total Offering Shares) at the Offering Price, solely to cover the
over-allotment of the Offering Shares, if any. The exercise of the Over-allotment Option will not
increase the total number of issued Shares immediately after completion of the Offering.
Securities Lending and Borrowing Agreement
The Stabilising Manager will enter into a share lending agreement (the Share Lending
Agreement) with PCL to borrow up to 46,125,000 Shares from it, which will be borrowed before
the commencement of trading of our Shares on the SGX-ST, for the purpose of facilitating
settlement of over-allotments, if any, in connection with this Offering pending exercise of the
Over-allotment Option and stabilising actions. Any Shares that may be borrowed by the Stabilising
Manager under the Share Lending Agreement will be returned by the Stabilising Manager to PCL
either through the purchase of Shares in the open market by the Stabilising Manager in the
conduct of stabilisation activities or through exercise of the Over-allotment Option by the
Stabilising Manager on behalf of itself and the Initial Purchasers.
No Sale of Similar Securities and Lock-up
PCL and Lightwell Shipping Inc. have each given an undertaking to the Joint Issue Managers,
Bookrunners and Underwriters that they will not, without the prior written consent of the Joint
Issue Managers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or
delayed), directly or indirectly offer, sell or otherwise dispose of their Shares, comprising
1,111,306,065 Shares held directly by PCL and 314,709,645 Shares held directly by Lightwell
Shipping Inc. (as well as such number of Offering Shares to be subscribed for by Lightwell
Shipping Inc.), for a period of six months after the Listing Date. The foregoing lock-up restrictions
shall not apply to (i) any transfer of Shares by PCL to its parent company (being a company that
holds a direct or indirect interest over the entire issued share capital of PCL), provided that such
parent company shall provide a similar undertaking in respect of any Shares subject to such
transfer; (ii) any Shares sold by PCL pursuant to the Over-allotment Option granted by PCL to the
Stabilising Manager; and (iii) the transfer of Shares pursuant to the Share Lending Agreement,
provided that these restrictions will apply to the Shares returned to PCL pursuant to the Share
Lending Agreement.
PCL has also given an undertaking to the Joint Issue Managers, Bookrunners and Underwriters
that, subject to the transfer of any of the 15,843,750 Shares, which are held by certain of KSLs
group employees, to PCL pursuant to the exercise of the right by PCL to have any of such Shares
transferred to itself or to its order (as described in Principal Shareholders), they will not, without
the prior written consent of the Joint Issue Managers, Bookrunners and Underwriters (such
consent not to be unreasonably withheld or delayed), directly or indirectly offer, sell or otherwise
dispose of any of such Shares subject to such transfer for a period of six months after the Listing
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Date. The foregoing lock-up restrictions shall not apply to (i) any transfer of Shares by PCL to its
parent company (being a company that holds a direct or indirect interest over the entire issued
share capital of PCL), provided that such parent company shall provide a similar undertaking in
respect of any Shares subject to such transfer; (ii) any Shares sold by PCL pursuant to the
Over-allotment Option granted by PCL to the Stabilising Manager; and (iii) the transfer of Shares
pursuant to the Share Lending Agreement, provided that these restrictions will apply to the Shares
returned to PCL pursuant to the Share Lending Agreement.
MBC has given an undertaking to the Joint Issue Managers, Bookrunners and Underwriters that
they will not, without the prior written consent of the Joint Issue Managers, Bookrunners and
Underwriters (such consent not to be unreasonably withheld or delayed), directly or indirectly
offer, sell or otherwise dispose of their shares of Lightwell Shipping Inc. for a period of six months
after the Listing Date.
KSL has given an undertaking to the Joint Issue Managers, Bookrunners and Underwriters that:
they will not, without the prior written consent of the Joint Issue Managers, Bookrunners and
Underwriters (such consent not to be unreasonably withheld or delayed), directly or indirectly
offer, sell or otherwise dispose of their shares of PCL for a period of six months after the
Listing Date. The foregoing lock-up restrictions shall cease to apply if PCL ceases to hold (a)
any of the 1,111,306,065 Shares held directly by PCL or (b) any of the 15,843,750 Shares,
which are held directly by certain of KSLs group employees and which are transferred to PCL
pursuant to the exercise of the right by PCL to have any of such Shares transferred to itself
or to its order (as described in Principal Shareholders), pursuant to any transfer of such
Shares by PCL to its parent company as further described above;
subject to the transfer of any of the 1,127,149,815 Shares held directly by PCL to KSL as
further described above, they will not, without the prior written consent of the Joint Issue
Managers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or
delayed), directly or indirectly offer, sell or otherwise dispose of any of such Shares subject
to such transfer for a period of six months after the Listing Date;
subject to the transfer of any of the 15,843,750 Shares, which are held directly by certain of
KSLs group employees, to KSL pursuant to the exercise of the right by KSL to have any of
such Shares transferred to itself or to its order (as described in Principal Shareholders),
they will not, without the prior written consent of the Joint Issue Managers, Bookrunners and
Underwriters (such consent not to be unreasonably withheld or delayed), directly or indirectly
offer, sell or otherwise dispose of any of such Shares subject to such transfer for a period of
six months after the Listing Date; and
they will not register any transfer of KSL shares to any person who is not a shareholder of
KSL as at the date of such undertaking for a period of six months after the Listing Date.
Certain of KSLs group employees have each given an undertaking to the Joint Issue Managers,
Bookrunners and Underwriters that they will not, without the prior written consent of the Joint
Issue Managers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or
delayed), directly or indirectly offer, sell or otherwise dispose of an aggregate of 27,975,000
Shares for a period of six months after the Listing Date. These employees include certain of our
Directors (namely, Mr. Seow Kang Hoe, Gerald, Mr. Teo Joo Kim and Mr. Wu Long Peng) and
certain of our Executive Officers (namely, Mr. Lee Keng Lin, Mr. Chai Ulva, Mr. Ng Eng Khin and
Mr. Sim Hee Ping). Such Shares relate to the Shares transferred by PCL in 2013 to such persons
pursuant to the exercise of options granted by PCL to such persons. The foregoing lock-up
restrictions shall not apply to any transfer of any of the 15,843,750 Shares, which are held by
certain of KSLs group employees, to PCL or, as the case may be, KSL pursuant to the exercise
235
of the right by PCL or, as the case may be, KSL to have any of such Shares transferred to itself
or to its order (as described in Principal Shareholders), provided that PCL or, as the case may
be, KSL shall provide a similar undertaking in respect of any Shares subject to such transfer.
Price Stabilisation
In connection with the Offering, the Stabilising Manager or its appointed agent may over-allot
Shares or effect transactions which may stabilise or maintain the market price of our Shares at
levels above those that would otherwise prevail in the open market. Such transactions may be
effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulations, including the Securities and Futures Act
and any regulations thereunder. However, we cannot assure you that the Stabilising Manager or
its appointed agent will undertake stabilising action. Such transactions may commence on or after
the Listing Date and, if commenced, may be discontinued at any time and shall not be effected
later than the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when the
Stabilising Manager or its appointed agent has bought, on the SGX-ST, an aggregate of
46,125,000 Shares, representing approximately 18.3% of the total Offering Shares, to undertake
stabilising actions.
Neither we, the Over-allotment Option Provider nor the Joint Issue Managers, Bookrunners and
Underwriters make any representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Shares. In addition, neither we,
the Over-allotment Option Provider nor the Joint Issue Managers, Bookrunners and Underwriters
make any representation that the Stabilising Manager will engage in these transactions or that
these transactions, once commenced, will not be discontinued without notice (unless such notice
is required by law). The Stabilising Manager will also be required to make a public announcement
through the SGX-ST in relation to the cessation of the stabilising actions and the number of
Shares in respect of which the Over-allotment Option has been exercised not later than 8.30 a.m.
on the trading day of the SGX-ST immediately after the day of cessation of stabilising actions.
Selling Restrictions
Australia
This offering document does not constitute a prospectus or other disclosure document under the
Corporations Act 2001 (Cth) (Australian Corporations Act) and does not purport to include the
information required of a disclosure document under the Australian Corporations Act. This offering
document has not been lodged with the Australian Securities and Investments Commission
(ASIC) and no steps have been taken to lodge it as such with ASIC. Any offer in Australia of the
Offering Shares under this offering document may only be made to persons who are sophisticated
investors (within the meaning of section 708(8) of the Australian Corporations Act), to
professional investors (within the meaning of section 708(11) of the Australian Corporations Act)
or otherwise pursuant to one or more exemptions under section 708 of the Australian Corporations
Act so that it is lawful to offer the Offering Shares in Australia without disclosure to investors under
Part 6D.2 of the Australian Corporations Act.
Any offer of Offering Shares for on-sale that is received in Australia within 12 months after their
issue by us, or within 12 months after their sale by a selling shareholder (or an Underwriter) under
the Offering, as applicable, is likely to need prospectus disclosure to investors under Part 6D.2 of
the Australian Corporations Act, unless such offer for on-sale in Australia is conducted in reliance
on a prospectus disclosure exemption under section 708 of the Australian Corporations Act or
otherwise.
Any persons acquiring the Offering Shares should observe such Australian on-sale restrictions.
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Canada
The Offering Shares may only be offered or sold, directly or indirectly, in any province or territory
of Canada or to or for the benefit of any resident of any province or territory of Canada, except
pursuant to an exemption from the requirement to file a prospectus in the province or territory of
Canada in which such offer or sale is made, and only by a dealer duly registered under the
applicable securities laws of that province or territory or in accordance with an exemption from the
applicable registered dealer requirements.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (each, a Relevant Member State), an offer to the public of any Offering
Shares may not be made in that Relevant Member State except that an offer to the public in that
Relevant Member State of any Offering Shares may be made at any time under the following
exemptions under the Prospectus Directive, if they have been implemented in that Relevant
Member State:
(a) to legal entities which are qualified investors as defined under the Prospectus Directive; or
(b) to fewer than 100, or if the Relevant Member State has implemented the relevant provisions
of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the
Underwriters for any such offer; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Offering Shares shall result in a requirement for the publication by
us or the Underwriters of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an offer of shares to the public in relation to
any Offering Shares in any Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and any Offering Shares to be offered
so as to enable an investor to decide to purchase or subscribe for the Offering Shares, as the
same may be varied in that Relevant Member State by any measure implementing the Prospectus
Directive in that Relevant Member State; and the expression Prospectus Directive means
Directive 2003/71/EC (and amendments thereto including 2010 PD Amending Directive to the
extent implemented in the Relevant Member State) and includes any relevant implementing
measure in each Relevant Member State and the expression the 2010 PD Amending Directive
means Directive 2010/73/EU.
Each purchaser of the Offering Shares in the Offering located within a Relevant Member State will
be deemed to have represented, acknowledged and agreed that it is a qualified investor within
the meaning of Article 2(1)(e) of the Prospectus Directive and in the case of any Offering Shares
acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus
Directive, (i) the Offering Shares acquired by it in the Offering have not been acquired on behalf
of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant
Member State other than qualified investors, as that term is defined in the Prospectus Directive,
or in circumstances in which the prior consent of the Underwriters has been given to the offer or
resale; or (ii) where Offering Shares have been acquired by it on behalf of persons in any Relevant
Member State other than qualified investors, the offer of those Shares to it is not treated under the
Prospectus Directive as having been made to such persons. We, each Underwriter and their
respective affiliates and others will rely upon the truth and accuracy of the foregoing
representation, acknowledgement and agreement.
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Bahrain
This offering document has been prepared for private information purposes of intended investors
only who will be high net worth individuals and institutions. This offering document is intended to
be read by the addressee only. No invitation has been made in or from the Kingdom of Bahrain
and there will be no marketing or offering of the Offering Shares to any potential investor in
Bahrain. All marketing and offering is made and will be made outside of the Kingdom of Bahrain.
The Central Bank of Bahrain or any other regulatory authority in Bahrain has not reviewed, nor has
it approved, this offering document or the marketing of Offering Shares and takes no responsibility
for the accuracy of the statements and information contained in this offering document, nor shall
it have any liability to any person for any loss or damage resulting from reliance on any statements
or information contained herein.
Dubai International Financial Centre
This offering document relates to an Exempt Offer in accordance with the Offered Securities Rules
of the Dubai Financial Services Authority (DFSA). This offering document is intended for
distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must
not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing
or verifying any documents in connection with Exempt Offers. The DFSA has not approved this
offering document nor taken steps to verify the information set forth herein and has no
responsibility for the offering document. The shares to which this offering document relates may
be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares
offered should conduct their own due diligence on the shares. If you do not understand the
contents of this offering document you should consult an authorized financial advisor.
Hong Kong
We have not been authorized, nor has the contents of this offering document been approved by
any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the
Offering. If you are in any doubt about any of the contents of this offering document, you should
obtain independent professional advice. Accordingly, (i) no Offering Shares may be offered or sold
in Hong Kong by means of this offering document or any other document other than to
professional investors within the meaning of Securities and Futures Ordinance (Cap. 571, Laws
of Hong Kong) (SFO) and any rules made thereunder (professional investor), or in other
circumstances which do not result in the document being a prospectus within the meaning of the
Companies Ordinance (Cap. 32, Laws of Hong Kong) (CO) or which do not constitute an offer
or invitation to the public for the purposes of the CO or the SFO, and (ii) no person may issue or
have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, this offering
document or any other advertisement, invitation or document relating to the Offering Shares which
is directed at, or the contents of which are likely to be accessed or read by, the public in Hong
Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to
Offering Shares which are or are intended to be disposed of only to persons outside Hong Kong
or only to professional investors.
China
This offering document has not been and will not be circulated or distributed in the Peoples
Republic of China, and the Offering Shares may not be offered or sold, and will not be offered or
sold to any person for re-offering or resale, directly or indirectly, to any resident of the Peoples
Republic of China except pursuant to applicable laws and regulations of the Peoples Republic of
China. For the purpose of this paragraph, Peoples Republic of China does not include Taiwan and
the special administrative regions of Hong Kong and Macau.
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Malaysia
No prospectus or other offering material or document in connection with the offer and sale of the
Offering Shares has been or will be registered with the Securities Commission of Malaysia (the
Commission) pursuant to the Capital Markets and Services Act 2007 and no approval for the
offering of the Offering Shares has been obtained from the Commission pursuant to the Capital
Markets and Services Act 2007. Accordingly, this offering document and any other document or
material in connection with the offer or sale, or invitation for subscription or purchase, of the
Offering Shares may not be circulated or distributed, nor may the Offering Shares be offered or
sold, or be made the subject of an invitation for subscription or purchase, whether directly or
indirectly, to persons in Malaysia other than (i) a closed end fund approved by the Commission;
(ii) a holder of a Capital Markets Services License who carries on the business of fund
management; (iii) a person who acquires the Offering Shares, as principal, if the aggregate
consideration for the acquisition is not less than Ringgit 250,000 (or equivalent in a foreign
currency); (iv) a corporation with total net assets exceeding Ringgit 10 million (or equivalent in a
foreign currency) based on the latest audited accounts; (v) a licensed offshore bank as defined
under the Offshore Banking Act 1990; (vi) an offshore insurer as defined under the Offshore
Insurance Act 1990; or (vii) any other person as may be specified by the Commission in any
guideline issued under section 377 of the Capital Markets and Services Act 2007; provided that,
in each of the preceding categories (i) to (vii), the distribution of the Offering Shares is made by
a holder of a Capital Markets Services License who carries on the business of dealing in
securities. This offering document does not constitute and may not be used for the purpose of a
public offering or an issue, offer for subscription or purchase, invitation to subscribe for or
purchase any securities requiring the registration of a prospectus with the Commission under the
Capital Markets and Services Act 2007.
Switzerland
The Offering Shares may not be publicly offered in Switzerland and will not be listed on the SIX
Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in
Switzerland. This offering document has been prepared without regard to the disclosure standards
for issuance prospectuses under Article 652a or Article 1156 of the Swiss Code of Obligations or
the disclosure standards for listing prospectuses under Articles 27 ff. of the SIX Listing Manual or
the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither
this offering document nor any other offering or marketing material relating to the Offering Shares
or the Offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this offering document nor any other offering or marketing material relating to the Offering
Shares or the Offering or us have been or will be filed with or approved by any Swiss regulatory
authority. In particular, this offering document will not be filed with, and the Offering will not be
supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the
Offering has not been and will not be authorized under the Swiss Federal Act on Collective
Investment Schemes (CISA). The investor protection afforded to acquirers of interests in
collective investment schemes under the CISA does not extend to acquirers of the Offering
Shares.
The Offering Shares are being offered in Switzerland by way of a private placement, i.e., to a small
number of selected investors only, without any public offer and only to investors who do not
purchase the Offering Shares with the intention to distribute them to the public. The investors will
be individually approached from time to time. This offering document, as well as any other offering
or marketing material relating to the Offering Shares, is confidential and it is exclusively for the use
of the individually addressed investors in connection with the offer of the Offering Shares in
Switzerland and it does not constitute an offer to any other person. This offering document may
only be used by those investors to whom it has been handed out in connection with the Offering
239
described herein and may neither directly nor indirectly be distributed or made available to other
persons without our express consent. It may not be used in connection with any other offer and
shall in particular not be copied and/or distributed to the public in or from Switzerland.
Taiwan
The Offering Shares have not and will not be registered with the Financial Supervisory
Commission of Taiwan or any other governmental authorities of Taiwan, and are not being offered
or sold and may not be offered or sold, directly or indirectly, in Taiwan or otherwise, to, or for the
benefit of, any resident or entity of Taiwan, except (a) pursuant to the requirements of the
securities related laws and regulations in Taiwan; and (b) in compliance with any other applicable
requirements of Taiwan laws.
United Arab Emirates (other than the Dubai International Financial Centre)
This offering document has not been, and is not intended to be, approved by the UAE Central
Bank, the UAE Ministry of Economy, the Emirates Securities and Commodities Authority or any
other authority in the United Arab Emirates (the UAE), or by the Dubai Financial Services
Authority or any other authority in any of the free zones established and operating in the UAE (the
Free Zones).
It should not be assumed that any of us, the Underwriters or any placement agent (i) has received
any authorization or license from the UAE Central Bank or any other authorities in the UAE or any
Free Zone to sell or market the Offering Shares therein; (ii) is a licensed broker, dealer or
investment adviser under the laws applicable in the UAE or any Free Zone; or (iii) advises
residents of the UAE or any Free Zone as to the appropriateness of investing in or purchasing or
selling securities or other financial products.
This offering document does not constitute a public offer of securities in the UAE under the UAE
Commercial Companies Law (Federal Law No. 8 of 1984) (as amended) or otherwise. This
offering document is being distributed to a limited number of selected institutional and other
sophisticated investors in the UAE (a) upon their request and confirmation that they understand
that the Offering Shares have not been approved or licensed by or registered with the UAE Central
Bank or any other relevant licensing authorities or governmental agencies in the UAE and may not
be offered or sold directly or indirectly to the public in the UAE; and (b) on the condition that this
offering document will not be provided to any person other than the original recipient, is not for
general circulation in the UAE and may not be reproduced or used for any other purpose. The
information contained in this offering document is not intended to lead to the sale of any securities
or the consummation of any agreement of any nature within the territory of the UAE.
United Kingdom
Any investment or investment activity to which this offering document relates is directed only at,
available only to, and will be engaged in only with (i) persons who are outside the United Kingdom
or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) persons falling within Article
49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Order (all
such persons together being referred to as relevant persons). Persons who are not relevant
persons must not take any action on the basis of this offering document and should not act or rely
on it or any of its contents. Any investment or investment activity to which this offering document
relates is available only to relevant persons and will be engaged in only with relevant persons.
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Other Relationships
The Joint Issue Managers, Bookrunners and Underwriters and certain of their affiliates have
performed commercial banking, investment banking and other advisory services for us and our
affiliates from time to time for which they received customary fees and expenses. The Joint Issue
Managers, Bookrunners and Underwriters may, from time to time, trade in our securities, engage
in transactions with, and perform services for us and our affiliates in the ordinary course of their
business. Please see Managements Discussion and Analysis of Financial Condition and Results
of Operations Description of Material Indebtedness for details on the credit facilities extended
to our Group by the Joint Issue Managers, Bookrunners and Underwriters and certain of their
affiliates.
Save as disclosed above, in the reasonable opinion of our Directors, our Company and our
subsidiaries do not have any material relationship with the Joint Issue Managers, Bookrunners
and Underwriters.
Persons Intending to Subscribe and/or Purchase in the Offering
On April 2, 2014, MBC has convened an extraordinary general meeting of its shareholders to be
held on April 17, 2014 for the purposes of seeking their approval for the subscription of the
Offering Shares in the Offering for a subscription value of up to US$70 million in aggregate.
Save for the above, we are not aware of any person who intends to purchase and/or subscribe for
more than 5.0% of the Offering Shares pursuant to the Offering.
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CLEARANCE AND SETTLEMENT
A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of our Shares
on the Mainboard of the SGX-ST. For the purpose of trading on the SGX-ST, a board lot of our
Shares will comprise 1,000 Shares. Upon listing and quotation on the SGX-ST, our Shares will be
traded under the book-entry (scripless) settlement system of CDP, and all dealings in and
transactions of the Shares through the SGX-ST will be effected in accordance with the terms and
conditions for the operation of Securities Accounts with CDP, as amended from time to time.
CDP, a wholly-owned subsidiary of the Singapore Exchange Limited, is incorporated under the
laws of Singapore and acts as a depository and clearing organisation. CDP holds securities for its
account holders and facilitates the clearance and settlement of securities transactions between
account holders through electronic book-entry changes in the Securities Accounts maintained by
such account holders with CDP.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on
behalf of persons who maintain, either directly or through depository agents, Securities Accounts
with CDP. Persons named as direct Securities Account holders and depository agents in the
depository register maintained by CDP, rather than CDP itself, will be treated, under our Articles
of Association and the Act, as members of our Company in respect of the number of Shares
credited to their respective Securities Accounts.
Persons holding our Shares in Securities Accounts with CDP may withdraw the number of Shares
they own from the book-entry settlement system in the form of physical share certificates. Such
share certificates will, however, not be valid for delivery pursuant to trades transacted on the
SGX-ST, although they will be prima facie evidence of title and may be transferred in accordance
with our Articles of Association. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and
a fee of S$25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing the
Shares from the book-entry settlement system and obtaining physical share certificates. In
addition, a fee of S$2.00 or such other amount as our Directors may decide, is payable to the
share registrar for each share certificate issued and a stamp duty of S$10.00 is also payable
where our Shares are withdrawn in the name of the person withdrawing our Shares or S$0.20 per
S$100.00 or part thereof of the last-transacted price where it is withdrawn in the name of a third
party. Persons holding physical share certificates who wish to trade on the SGX-ST must deposit
with CDP their share certificates together with the duly executed and (where necessary) stamped
instruments of transfer in favour of CDP, and have their respective Securities Accounts credited
with the number of Shares deposited before they can effect the desired trades. A fee of S$10.00
is payable upon the deposit of each instrument of transfer with CDP. The above fees may be
subject to such charges as may be in accordance with CDPs prevailing policies or the current tax
policies that may be in force in Singapore from time to time.
Transactions in the Shares under the book-entry settlement system will be reflected by the sellers
Securities Account being debited with the number of Shares sold and the buyers Securities
Account being credited with the number of Shares acquired. No transfer stamp duty is currently
payable for the Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.04%
of the transaction value subject to a maximum of S$600.00 per transaction. The clearing fee,
instrument of transfer deposit fee and share withdrawal fee may be subject to GST of 7% (or such
other rate prevailing from time to time).
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement
in CDP on a scripless basis. Settlement of trades on a normal ready basis on the SGX-ST
generally takes place on the third Market Day following the transaction date, and payment for the
securities is generally settled on the following business day. CDP holds securities on behalf of
investors in Securities Accounts. An investor may open a direct account with CDP or a
sub-account with a depository agent. A depository agent may be a member company of the
SGX-ST, bank, merchant bank or trust company.
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LEGAL MATTERS
Certain legal matters in connection with this Offering will be passed upon for us by Allen & Gledhill
LLP, Hadromi & Partners Law Firm, Jeff Leong, Poon & Wong and Basham, Ringe y Correa, S.C.
with respect to matters of Singapore law, Indonesia law, Malaysia law and Mexico law,
respectively.
Certain legal matters in connection with this Offering will be passed upon for the Joint Issue
Managers, Bookrunners and Underwriters by WongPartnership LLP and Sidley Austin LLP with
respect to Singapore law and United States federal securities law, respectively.
Save for the statements attributed to Basham, Ringe y Correa, S.C. in Managements Discussion
and Analysis of Financial Condition and Results of Operations Material Events After December
31, 2013 and Business Legal Proceedings as described in Experts, each of Allen & Gledhill
LLP, Hadromi & Partners Law Firm, Jeff Leong, Poon & Wong, Basham, Ringe y Correa, S.C.,
WongPartnership LLP and Sidley Austin LLP does not make, or purport to make, any statement
in this Prospectus and is not aware of any statement in this Prospectus which purports to be based
on a statement made by it and each of them makes no representation, express or implied,
regarding, and to the extent permitted by law takes no responsibility for, any statement in or
omission from this Prospectus.
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INDEPENDENT AUDITORS
Our consolidated financial statements for the years ended December 31, 2011, 2012 and 2013
included in this Prospectus have been audited by Ernst & Young LLP, Independent Auditors, as
stated in their report appearing in this Prospectus.
Ernst & Young LLP, named as Independent Auditors, has given and has not withdrawn its written
consent to the issue of this Prospectus with the inclusion herein of (i) its name and all references
thereto, (ii) its report on the audit of our consolidated financial statements for the years ended
December 31, 2011, 2012 and 2013 and (iii) its report on the unaudited pro forma financial
statements for the year ended December 31, 2013, in the form and context in which they are
included in this Prospectus and to act in such capacity in relation to this Prospectus. The above
mentioned report was prepared for the purpose of incorporation in this Prospectus.
244
EXPERTS
Infield, named as the Independent Market Research Consultant, has given and has not withdrawn
its written consent to the issue of this Prospectus with the inclusion herein of its name and all
references thereto, the report appearing in Appendix A Industry Overview, and the statements
attributed to it appearing on pages 1, 2, 4, 5, 81, 112, 116, 118, 119 and 124 of this Prospectus,
in the form and context in which they are included in this Prospectus and to act in such capacity
in relation to this Prospectus. The report appearing in Appendix A Industry Overview and the
statements attributed to it appearing on pages 1, 2, 4, 5, 81, 112, 116, 118, 119 and 124 of this
Prospectus were prepared for the purpose of incorporation in this Prospectus.
KPMG Corporate Finance Pte Ltd, named as the Independent Financial Adviser, has given and
has not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of
its name and all references thereto, the letter from KPMG CF relating to the mark-up for shared
services, the letter from KPMG CF relating to the Shareholders Mandate, the statement attributed
to it in Interested Person Transactions and Potential Conflicts of Interests Present and
On-going Transactions Provision of Shared Services by PCL and KSL and the statement
attributed to it in Interested Person Transactions and Potential Conflicts of Interests
Shareholders Mandate for Interested Person Transactions Opinion of the Independent Financial
Adviser, in the form and context in which they are included in this Prospectus and to act in such
capacity in relation to this Prospectus. The letters, the statement attributed to it in Interested
Person Transactions and Potential Conflicts of Interests Present and On-going Transactions
Provision of Shared Services by PCL and KSL and the statement attributed to it in Interested
Person Transactions and Potential Conflicts of Interests Shareholders Mandate for Interested
Person Transactions Opinion of the Independent Financial Adviser were prepared for the
purpose of incorporation in this Prospectus.
Clarkson Valuations Limited, named as the Independent Valuer, has given and has not withdrawn
its written consent to the issue of this Prospectus with the inclusion herein of its name and all
references thereto, the valuation certificate appearing in Appendix H Independent Valuation
Certificate, and the appraised value of the relevant vessels attributed to it appearing in Summary
Valuations of this Prospectus, in the form and context in which they are included in this
Prospectus and to act in such capacity in relation to this Prospectus. The valuation certificate
appearing in Appendix K Independent Valuation Certificate and the appraised value of the
relevant vessels attributed to it appearing on Summary Valuations of this Prospectus were
prepared for the purpose of incorporation in this Prospectus.
Basham, Ringe y Correa, S.C. named as our legal advisers as to Mexico law, has given and has
not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its
name and all references thereto, and the statements attributed to it in Managements Discussion
and Analysis of Financial Condition and Results of Operations Material Events After December
31, 2013 and Business Legal Proceedings, in the form and context in which they are included
in this Prospectus and to act in such capacity in relation to this Prospectus. The statements
attributed to it in Managements Discussion and Analysis of Financial Condition and Results of
Operations Material Events After December 31, 2013 and Business Legal Proceedings were
prepared for the purpose of incorporation in this Prospectus.
None of the Independent Market Research Consultant, the Independent Financial Adviser, the
Independent Valuer and Basham, Ringe y Correa, S.C. is employed by our Company or our
subsidiaries on a contingent basis, has a material interest, whether direct or indirect in our Shares
or the shares of our subsidiaries, or has a material economic interest, whether direct or indirect,
in our Company including an interest in the success of the Offering.
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GENERAL AND STATUTORY INFORMATION
Present and Past Principal Directorships of our Directors and Executive Officers
The present principal and past directorships held by our Directors and Executive Officers in the
last five years preceding the Latest Practicable Date (excluding those held in our Company) are
set out in Appendix E List of Present and Past Principal Directorships of our Directors and
Executive Officers.
Material Background Information
1. Except as otherwise set out below, as at the date of this Prospectus, none of our Directors
and Executive Officers has:
(a) at any time during the last ten years, had an application or a petition under any
bankruptcy laws of any jurisdiction filed against him or against a partnership of which
he was a partner at the time he was a partner or at any time within two years from the
date he ceased to be a partner;
(b) at any time during the last ten years, had an application or a petition under any law of
any jurisdiction filed against an entity (not being a partnership) of which he was a
director or an equivalent person or a key executive, at the time when he was a director
or an equivalent person or a key executive of that entity or at any time within two years
from the date he ceased to be a director or an equivalent person or a key executive of
that entity, for the winding-up or dissolution of that entity or, where the entity is the
trustee of a business trust, that business trust, on the ground of insolvency;
(c) any unsatisfied judgment against him;
(d) ever been convicted of any offence, in Singapore or elsewhere, involving fraud or
dishonesty which is punishable with imprisonment, or has been the subject of any
criminal proceedings (including any pending criminal proceedings of which he is aware)
for such purpose;
(e) ever been convicted of any offence, in Singapore or elsewhere, involving a breach of
any law or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere, or has been the subject of any criminal proceedings (including
any pending criminal proceedings of which he is aware) for such breach;
(f) at any time during the last ten years, had judgment entered against him in any civil
proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere,
or a finding of fraud, misrepresentation or dishonesty on his part, or been the subject
of any civil proceedings (including any pending civil proceedings of which he is aware)
involving an allegation of fraud, misrepresentation or dishonesty on his part;
(g) ever been convicted in Singapore or elsewhere of any offence in connection with the
formation or management of any entity or business trust;
(h) ever been disqualified from acting as a director or an equivalent person of any entity
(including the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;
246
(i) ever been the subject of any order, judgment or ruling of any court, tribunal or
governmental body permanently or temporarily enjoining him from engaging in any type
of business practice or activity;
(j) ever, to his knowledge, been concerned with the management or conduct, in Singapore
or elsewhere, of the affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
(ii) any entity (not being a corporation) which has been investigated for a breach of
any law or regulatory requirement governing such entities in Singapore or
elsewhere;
(iii) any business trust which has been investigated for a breach of any law or
regulatory requirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law
or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; and
(k) been the subject of any current or past investigation or disciplinary proceedings, or has
been reprimanded or issued any warning, by the MAS or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or
elsewhere.
In 1993, Mr. Wu Long Peng assisted the Commercial Affairs Department (CAD) in its
investigation relating to Newship Agencies Pte Ltd (Newship Agencies) (now known as
Newship Marine Services Pte Ltd) of which he was a director at the relevant time. Mr. Teo Joo
Kim was also a director of Newship Agencies at the relevant time but was not requested to
assist the CAD in the investigation. The CAD did not provide any information on the offences
being investigated. Neither Mr. Wu nor Mr. Teo was the subject of the said investigation.
Following the interviews, the CAD did not pursue its investigation further and Newship
Agencies has not been charged with any breach of law.
Mr. Yeoh Seng Huat, Geoffrey was a director of Econ Corporation Limited (ECL) when it
went into judicial management in March 2004. Mr. Yeoh was a past director of Neptune
Marine Invests AS, which was dormant when it filed for voluntary liquidation in June 2010 and
has since been liquidated.
ECL was debarred from tendering for public construction works for a period till March 2009,
on grounds of the termination of certain public construction contracts arising from the failure
of ECL to complete the relevant contracts as a contractor. ECLs directors were similarly
debarred on grounds that they were directors of a company that failed to complete the
relevant public construction contracts.
Mr. Yeoh joined the board of Carats Ltd on August 29, 2005 as an independent director and
a member of its audit committee. On November 2005, the audit committee appointed KPMG
as its special auditor to conduct a review of certain transactions which took place prior to Mr.
Yeohs appointment as an independent director. The report issued by KPMG was
subsequently referred to the Monetary Authority of Singapore and the Commercial Affairs
Department.
247
On his appointment to the board of a company listed on the Singapore Exchange Securities
Trading Limited on January 2, 2014, Mr. Wee Joo Yeow had notified (the Initial Notice) that
listed company of his interest in shares in that listed company. Due to an inadvertent
oversight, his direct interest in a further 10,000 shares in that listed company, which were
purchased prior to his appointment to the board of that listed company, was omitted from the
Initial Notice. Upon realising the omission on January 14, 2014, he immediately notified that
listed company. As disclosure was not made in respect of all his interest in shares in that
listed company within the prescribed time period, the Monetary Authority of Singapore on
February 6, 2014 issued a supervisory warning to Mr. Wee to comply with Section 133 of the
Securities and Futures Act and other applicable laws and regulations at all times.
2. Except for the Over-allotment Option and pursuant to the POSH Share Option Plan and
POSH Performance Share Plan, as of the Latest Practicable Date, no person has been, or
has the right to be, given an option to subscribe for any of our Shares or any of the shares
of our subsidiaries.
Subsidiaries and Associated Companies of our Company
3. The details of each subsidiary and associated company of our Company are set out in
Appendix F List of Subsidiaries and Associated Companies.
4. The following table sets out all changes in the issued and paid-up share capital of each of
our subsidiaries within the three years preceding the Latest Practicable Date:
Date
No. of
Shares
Issued Price per Share Purpose
Resulting
Issued Share
Capital
Avocet Shipping Pte. Ltd.
August 3,
2011
50,000 US$1.00 Issued on
incorporation
US$50,000
Labrador Shipping Corporation
October 23,
2012
6,399,999 US$1.00 To partially satisfy the
purchase
consideration of a
vessel
US$6,400,000
Larkspur Pte. Ltd.
November
28, 2012
1 S$1.00 Issued on
incorporation
S$1.00
Mayan Investments Pte. Ltd.
September
1, 2011
1 US$1.00 Issued on
incorporation
US$1.00
Newfoundland Shipping Corporation
March 6,
2013
1 US$1.00 Issued on
incorporation
US$1.00
July 18,
2013
1,580,000 US$1.00 To satisfy 10% of the
purchase
consideration of a
vessel
US$1,580,001.00
248
Date
No. of
Shares
Issued Price per Share Purpose
Resulting
Issued Share
Capital
Operadora de Servicios Costa Afuera, S.A. de C.V.
December
13, 2011
50,000 1 Mexican Peso Issued on
incorporation
50,000 Mexican
Pesos
POSH Fleet Services Mexico S.A. de C.V.
November
23, 2011
100 1,000 Mexican
Pesos
Issued on
incorporation
100,000 Mexican
Pesos
POSH Gannet S.A. de C.V.
October 23,
2013
100 10 Mexican
Pesos
Issued on
incorporation
1,000 Mexican
Pesos
POSH Skua S.A. de C.V.
October 23,
2013
100 10 Mexican
Pesos
Issued on
incorporation
1,000 Mexican
Pesos
Semco Salvage And Towage Pte. Ltd.
November
26, 2013
50,000 US$1.00 Issued on
incorporation
US$50,000
Share Capital
5. As of the Latest Practicable Date, there is only one class of shares in the capital of our
Company. There are no founder, management or deferred shares. The rights and privileges
attached to our shares are stated in our Articles of Association.
Material Contracts
6. The following are contracts, not being entered into in the ordinary course of business, that
have been entered into by our Company and our subsidiaries within the two years preceding
the date of lodgment of this Prospectus and are or may be material:
(a) the Cornerstone Subscription Agreements relating to the subscription of the
Cornerstone Shares by the Cornerstone Investors (as described in Principal
Shareholders Information on Cornerstone Investors); and
(b) the Non-Competition Undertaking (as described in Interested Person Transactions and
Potential Conflicts of Interests Potential Conflicts of Interests of this Prospectus).
Miscellaneous
7. There have been no public take-over offers by third parties in respect of our Shares or by our
Company in respect of other companies shares or units of a business trust which have
occurred between the beginning of the year ended December 31, 2013 and the Latest
Practicable Date.
8. Save as disclosed in this Prospectus, our Directors are not aware of any event which has
occurred since December 31, 2013 and up to the Latest Practicable Date, which may have
a material effect on the financial position and results of our Group.
249
9. Save as disclosed in this Prospectus and barring unforeseen circumstances, our Directors
are not aware of any known trends, uncertainties, demands, commitments or events that are
reasonably likely to have a material effect on our Groups net sales or revenues, profitability,
liquidity or capital resources, or that would cause financial information disclosed in this
Prospectus to be not necessarily indicative of our future operating results or financial
condition.
Management and Underwriting Agreement and Placement Agreement
10. Pursuant to the Management and Underwriting Agreement dated April 17, 2014 between our
Company, the Over-allotment Option Provider and the Joint Issue Managers, our Company
appointed the Joint Issue Managers to manage the Offering. The Joint Issue Managers will
receive a management fee from our Company for their services rendered in connection with
the Offering.
11. Under the Management and Underwriting Agreement, our Company and the Over-allotment
Option Provider undertakes to hold the Joint Issue Managers, their Affiliates (as defined in
Rule 501(b) of the United States Securities Act of 1933) and their respective directors,
employees and agents (Indemnified Persons) fully and effectively indemnified against all
liabilities, costs and expenses, (including, without limitation, legal fees, all payments, costs,
expenses and charges arising out of, in relation to or in connection with the investigation,
dispute, defence or settlement of or response to any investigations, judgment, awards,
proceedings, demands, actions (together, Actions) on a full indemnity basis or the
enforcement of any such settlement or any judgment obtained in respect of any Actions), and
any applicable GST or value added or any other tax (each a Loss and together the
Losses) arising out of any claim (whether or not any such claim involves or results in any
actions or proceedings), investigations, judgment, awards, proceedings, demands, actions
which may be brought or threatened to be brought against any of them in relation to the offer
of the Offering Shares (whether or not compromised or settled) arising out of:
(a) performance of the Joint Issue Managers obligations under the Management and
Underwriting Agreement or any Action which may be brought against any of them in
relation to the Offering or the allotment and issue of the Shares;
(b) any failure by our Company or the Over-allotment Option Provider to comply with any
requirements of any statute or statutory regulation, governmental or ministerial order or
decree or decision, directive or circular of the SGX-ST, the Authority or any other
governmental or regulatory body;
(c) any breach or alleged breach by our Company or the Over-allotment Option Provider of
any of the representations and warranties provided by each of them contained in
Clauses 13.1 and 13.2 respectively of the Management and Underwriting Agreement or
any of the obligations of our Company, the Over-allotment Option Provider or any of
their respective directors, officers, employees contained in the Management and
Underwriting Agreement; and
(d) any failure or delay in performing our Companys or the Over-allotment Option
Providers undertakings or obligations in the Management and Underwriting Agreement,
including in any such case (but without prejudice to the generality of the foregoing) all costs,
charges and expenses which the Joint Issue Managers or their directors, employees or
agents may properly or reasonably incur or bear in disputing any such claim made against
them or in establishing any claim on their part under the foregoing provisions, in each case
250
except in relation to any claim arising out of the wilful default, fraud or gross negligence of
the Joint Issue Managers. The above indemnity provided by the Over-allotment Option
Provider is only to the extent that the Over-allotment Option is exercised.
Consents
12. Each of DBS Bank, Merrill Lynch and OCBC Bank, named as one of the Joint Issue
Managers, Bookrunners and Underwriters, has given, and not withdrawn its written consent
to the issue of this Prospectus with the inclusion herein of its name and all references thereto
in the form and context in which they are included in this Prospectus and to act in such
capacity in relation to this Prospectus.
Responsibility Statement
13. Our Directors and the Over-allotment Option Provider collectively and individually accept full
responsibility for the accuracy of the information given in this Prospectus and confirm after
making all reasonable enquiries that, to the best of their knowledge and belief, this
Prospectus constitutes full and true disclosure of all material facts about the Offering, our
Company and our subsidiaries, and our Directors and the Over-allotment Option Provider are
not aware of any facts the omission of which would make any statement in this Prospectus
misleading. Where information in this Prospectus has been extracted from published or
otherwise publicly available sources or obtained from a named source, the sole responsibility
of our Directors and the Over-allotment Option Provider has been to ensure that such
information has been accurately and correctly extracted from those sources and/or
reproduced in this Prospectus in its proper form and context.
Documents Available for Inspection
14. The following documents or copies thereof may be inspected at 1 Kim Seng Promenade,
#07-02, Great World City, Singapore 237994 during normal business hours for a period of six
months from the date of registration by the MAS of this Prospectus:
(a) the Memorandum and Articles of Association of our Company;
(b) the material contracts referred to in General and Statutory Information Material
Contracts;
(c) the rules of the POSH Share Option Plan and the POSH Performance Share Plan;
(d) the Independent Market Research Consultants report appearing in Appendix A
Industry Overview;
(e) the Independent Valuers valuation certificate appearing in Appendix K Independent
Valuation Certificate;
(f) the letter from KPMG CF relating to the mark-up for shared services set out in
Appendix B;
(g) the letter from KPMG CF relating to the Shareholders Mandate set out in Appendix C;
(h) the Independent Auditors report on the audit of our consolidated financial statements
for the years ended December 31, 2011, 2012 and 2013;
(i) the Independent Auditors report on the our unaudited pro forma financial statements for
the year ended December 31, 2013;
251
(j) the audited consolidated financial statements of our Company and our subsidiaries for
the years ended December 31, 2011, 2012 and 2013 as set out in Appendix H;
(k) the unaudited pro forma financial statements of our Company and our subsidiaries for
the year ended December 31, 2013 as set out in Appendix I;
(l) the audited financial statements (including all notes, reports or information relating
thereto which are required to be prepared under the Companies Act, where applicable)
of our Company and our subsidiaries for the years ended December 31, 2011, 2012 and
2013; and
(m) the letters of consent referred to in Independent Auditors, Experts and General and
Statutory Information Consents.
Sources
15. We have included the information from Bloomberg L.P. in their proper form and context in this
Prospectus. Bloomberg L.P. has not provided its consent, for the purposes of Section 249 of
the Securities and Futures Act, to the inclusion of the information cited and attributed to it,
in this Prospectus and is thereby not liable for such information under Sections 253 and 254
of the Securities and Futures Act. While we, the Over-allotment Option Provider and the Joint
Issue Managers, Underwriters and Bookrunners have taken reasonable actions to ensure
that the relevant information from the relevant source has been reproduced in its proper form
and context, neither we, the Over-allotment Option Provider, the Joint Issue Managers,
Underwriters and Bookrunners nor any other party has conducted an independent review or
verified the accuracy or completeness of the relevant information.
252
DEFINED TERMS AND ABBREVIATIONS
Group Companies
POSH Semco . . . . . . . . . . . . . . . . . . . POSH Semco Pte. Ltd.
Other Corporations and Agencies
Authority or MAS . . . . . . . . . . . . . . . . The Monetary Authority of Singapore.
CDP . . . . . . . . . . . . . . . . . . . . . . . . . . The Central Depository (Pte) Limited.
CPF . . . . . . . . . . . . . . . . . . . . . . . . . . The Central Provident Fund.
DBS Bank. . . . . . . . . . . . . . . . . . . . . . DBS Bank Ltd.
DPA . . . . . . . . . . . . . . . . . . . . . . . . . . DDW-PaxOcean Asia Pte. Ltd.
GOSH Caballo Eclipse. . . . . . . . . . . . GOSH Caballo Eclipse, S.A.P.I. de C.V.
GOSH Caballo Grano de Oro . . . . . . GOSH Caballo Grano de Oro, S.A.P.I. de C.V.
GOSH Rodrigo DPJ . . . . . . . . . . . . . . GOSH Rodrigo DPJ, S.A.P.I. de C.V.
Independent Financial Adviser
or KPMG CF. . . . . . . . . . . . . . . . . . . .
KPMG Corporate Finance Pte Ltd, the independent
financial adviser.
Independent Market Research
Consultant or Infield. . . . . . . . . . . . . . Infield Systems Limited
Independent Valuer . . . . . . . . . . . . . . Clarkson Valuations Limited
IRAS. . . . . . . . . . . . . . . . . . . . . . . . . . Inland Revenue Authority of Singapore.
Joint Issue Managers, Bookrunners
and Underwriters . . . . . . . . . . . . . . . . DBS Bank, Merrill Lynch and OCBC Bank.
KSL . . . . . . . . . . . . . . . . . . . . . . . . . . Kuok (Singapore) Limited.
KSL Group . . . . . . . . . . . . . . . . . . . . . KSL and its subsidiaries (including the PCL Group). This
does not include our Group.
MBC . . . . . . . . . . . . . . . . . . . . . . . . . . Malaysian Bulk Carriers Berhad.
Merrill Lynch. . . . . . . . . . . . . . . . . . . . Merrill Lynch (Singapore) Pte. Ltd.
MPA . . . . . . . . . . . . . . . . . . . . . . . . . . Maritime and Port Authority of Singapore.
Nimitrans . . . . . . . . . . . . . . . . . . . . . . Nimitrans Pte. Ltd.
OCBC Bank . . . . . . . . . . . . . . . . . . . . Oversea-Chinese Banking Corporation Limited.
Over-allotment Option Provider . . . . . PCL.
PCL . . . . . . . . . . . . . . . . . . . . . . . . . . Pacific Carriers Limited.
PCL Group . . . . . . . . . . . . . . . . . . . . . PCL and its subsidiaries. This does not include our
Group.
PPB . . . . . . . . . . . . . . . . . . . . . . . . . . PPB Group Berhad.
POSH Terasea . . . . . . . . . . . . . . . . . . POSH Terasea Pte. Ltd.
POSH Terasea (I) . . . . . . . . . . . . . . . . POSH Terasea (I) Pte. Ltd.
POSH Terasea (II) . . . . . . . . . . . . . . . POSH Terasea (II) Pte. Ltd.
POSH Terasea Offshore. . . . . . . . . . . POSH Terasea Offshore Pte. Ltd
PT. Win Offshore . . . . . . . . . . . . . . . . PT. Win Offshore.
Sermargosh2 . . . . . . . . . . . . . . . . . . . Sermargosh2 S.A.P.I. de C.V.
253
SGX-ST . . . . . . . . . . . . . . . . . . . . . . . Singapore Exchange Securities Trading Limited.
Stabilising Manager . . . . . . . . . . . . . . Merill Lynch (Singapore) Pte. Ltd.
Terasea . . . . . . . . . . . . . . . . . . . . . . . Terasea Pte. Ltd.
General
Additional Shares. . . . . . . . . . . . . . . . . An aggregate of 46,125,000 Shares which are the subject of
the Over-allotment Option.
Articles of Association . . . . . . . . . . . . . Articles of association of our Company.
Audit Committee . . . . . . . . . . . . . . . . . The audit committee of our Company.
Board of Directors . . . . . . . . . . . . . . . . Our Companys board of directors.
Closing Date . . . . . . . . . . . . . . . . . . . . The closing date of the Offering.
Code of Corporate Governance . . . . . . Code of Corporate Governance 2012.
Companies Act . . . . . . . . . . . . . . . . . . Companies Act, Chapter 50 of Singapore.
Cornerstone Investors . . . . . . . . . . . . . Hwang Investment Management Berhad and Fortress
Capital Asset Management (M) Sdn Bhd.
Cornerstone Shares . . . . . . . . . . . . . . . The Shares issued pursuant to the Cornerstone
Subscription Agreements.
Cornerstone Subscription Agreements . The cornerstone subscription agreements entered into
between our Company and the Cornerstone Investors.
CPF Funds . . . . . . . . . . . . . . . . . . . . . CPF Investible Savings.
Directors . . . . . . . . . . . . . . . . . . . . . . . The directors of our Company.
EBITDA. . . . . . . . . . . . . . . . . . . . . . . . Earnings before interest, tax, depreciation and amortisation.
EPS . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings per share.
Executive Directors . . . . . . . . . . . . . . . The executive Directors of our Company.
Executive Officers . . . . . . . . . . . . . . . . The executive officers of our Company.
Independent Directors . . . . . . . . . . . . . The independent Directors of our Company.
International Offering . . . . . . . . . . . . . . The international placement of Offering Shares to investors,
including institutional and other investors in Singapore.
Latest Practicable Date . . . . . . . . . . . . March 25, 2014 being the latest practicable date prior to the
lodgement of this Prospectus with the Authority.
Listing Date . . . . . . . . . . . . . . . . . . . . . The date of commencement of dealing in our Shares on the
SGX-ST.
Listing Manual . . . . . . . . . . . . . . . . . . . Listing Manual of the SGX-ST.
Management and Underwriting
Agreement . . . . . . . . . . . . . . . . . . . . . . The management and underwriting agreement made
between our Company, the Over-allotment Option Provider
and the Joint Issue Managers, Bookrunners and
Underwriters dated April 17, 2014 in relation to the Offering.
Market Day . . . . . . . . . . . . . . . . . . . . . A day on which the SGX-ST is open for trading in securities.
Memorandum. . . . . . . . . . . . . . . . . . . . Memorandum of association of our Company.
Nominating Committee. . . . . . . . . . . . . The nominating committee of our Company.
Non-Executive Directors. . . . . . . . . . . . The non-executive Directors of our Company.
NTA. . . . . . . . . . . . . . . . . . . . . . . . . . . Net tangible assets.
254
Offering . . . . . . . . . . . . . . . . . . . . . . . . The International Offering and the Public Offer.
Offering Price. . . . . . . . . . . . . . . . . . . . S$1.15 for each Offering Share.
Offering Shares . . . . . . . . . . . . . . . . . . 252,020,000 Shares offered by our Company in the Offering.
Option Shares . . . . . . . . . . . . . . . . . . . The new Shares to be allotted and issued pursuant to the
exercise of options under the SOP.
Over-allotment Option . . . . . . . . . . . . . The option granted by the Over-allotment Option Provider to
the Stabilising Manager, acting on behalf of the Joint Issue
Managers, Bookrunners and Underwriters, exercisable in
whole or in part on one or more occasions from the Listing
Date until the earlier of (i) the date falling 30 days from the
Listing Date, or (ii) the date when the Stabilising Manager or
its appointed agent has bought, on the SGX-ST, an
aggregate of 46,125,000 Shares, representing 18.3% of the
total Offering Shares, to undertake stabilising actions, to
purchase from PCL up to an aggregate of 46,125,000
Additional Shares (representing 18.3% of the total Offering
Shares) at the Offering Price, solely to cover the over-
allotment of the Offering Shares, if any.
per cent or %. . . . . . . . . . . . . . . . . . . . Per centum or percentage.
Performance Shares . . . . . . . . . . . . . . The new Shares to be allotted and issued pursuant to the
grant of awards under the PSP.
Placement Agreement . . . . . . . . . . . . . The placement agreement made between our Company, the
Over-allotment Option Provider and the Joint Issue
Managers, Bookrunners and Underwriters dated April 17,
2014 in relation to the Offering.
Prospectus . . . . . . . . . . . . . . . . . . . . . This prospectus dated April 17, 2014.
PSP . . . . . . . . . . . . . . . . . . . . . . . . . . POSH Performance Share Plan.
Public Offering . . . . . . . . . . . . . . . . . . . An offering of Offering Shares to the public in Singapore.
RCPS . . . . . . . . . . . . . . . . . . . . . . . . . Our redeemable convertible preference shares as described
in Managements Discussion and Analysis of Financial
Condition and Results of Operations Redeemable
Convertible Preference Shares.
Record Date . . . . . . . . . . . . . . . . . . . . The date as at the close of business on which the
Shareholders must be registered in order to participate in
any dividends, rights, allotments or other distributions.
Regulation S . . . . . . . . . . . . . . . . . . . . Regulation S under the U.S. Securities Act, as amended,
modified and supplemented from time to time.
Remuneration Committee. . . . . . . . . . . The remuneration committee of our Company.
Reserved Shares . . . . . . . . . . . . . . . . . 25,200,000 Offering Shares under the International Offering
reserved for the directors, management, employees and
business associates of our Company, our subsidiaries and
our joint ventures, and KSL and its subsidiaries (including
PCL and its subsidiaries) who have contributed to our
success.
Securities Act. . . . . . . . . . . . . . . . . . . . The United States Securities Act of 1933, as amended.
Securities Account . . . . . . . . . . . . . . . . Securities account maintained by a depositor with CDP.
Securities and Futures Act or SFA . . . . Securities and Futures Act, Chapter 289 of Singapore.
255
SFRS . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Financial Reporting Standards.
Shareholders . . . . . . . . . . . . . . . . . . . . Registered holders of our Shares, except where the
registered holder is CDP, the term Shareholders shall, in
relation to such Shares, mean the depositors whose
Securities Accounts are credited with Shares.
Shares. . . . . . . . . . . . . . . . . . . . . . . . . Ordinary shares in the capital of our Company.
SFR . . . . . . . . . . . . . . . . . . . . . . . . . . Securities and Futures (Offers of Investments) (Shares and
Debentures) Regulations 2005.
SOP . . . . . . . . . . . . . . . . . . . . . . . . . . POSH Share Option Plan.
United States or U.S. . . . . . . . . . . . . . . The United States of America.
The expressions depositor, depository agent and depository register shall have the meanings
ascribed to them respectively in Section 130A of the Companies Act.
The expressions associate, associated company, Controlling Shareholder, related
corporation and subsidiary shall have the meanings ascribed to them in the Fourth Schedule of
the SFR, save that in the sections Interested Person Transactions and Potential Conflicts of
Interests, Management Committees of Our Board of Directors and Share-Based Incentive
Plans, such terms, if used, shall have the meanings ascribed to them in the Listing Manual, the
SFR and/or in accordance with the directions of the SGX-ST as the context so requires. The
expression Substantial Shareholder shall have the meanings ascribed to it in the Securities and
Futures Act.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders
and vice versa.
Any reference in this Prospectus to any legislation or enactment refers to the legislation or
enactment as amended or re-enacted unless the context otherwise requires.
256
GLOSSARY OF TECHNICAL TERMS
Following are definitions of technical terms used in this Prospectus.
AHT . . . . . . . . . . . . . . . . . . . . . . . . . . Anchor Handling Tug.
AHTS . . . . . . . . . . . . . . . . . . . . . . . . . Anchor Handling Tug Supply Vessel.
ASD . . . . . . . . . . . . . . . . . . . . . . . . . . Azimuth Stern Drive.
BHP . . . . . . . . . . . . . . . . . . . . . . . . . . Brake horsepower.
BIMCO . . . . . . . . . . . . . . . . . . . . . . . . Baltic and International Maritime Council.
CP Facility . . . . . . . . . . . . . . . . . . . . . Central Processing Facility.
DNV . . . . . . . . . . . . . . . . . . . . . . . . . . Det Norske Veritas.
deepwater AHT. . . . . . . . . . . . . . . . . . AHT with engine power capacity surpassing the 10,000
BHP mark.
deepwater AHTS . . . . . . . . . . . . . . . . AHTS with engine power capacity surpassing the
10,000 BHP mark.
deepwater PSV . . . . . . . . . . . . . . . . . PSV with cargo carrying capability exceeding 3,500
DWT.
DP . . . . . . . . . . . . . . . . . . . . . . . . . . . Dynamic Positioning which is a computer-controlled
system to automatically maintain a vessels position
and heading by using its own propellers and thrusters.
DWT . . . . . . . . . . . . . . . . . . . . . . . . . . Dead-weight tonnes.
E&P . . . . . . . . . . . . . . . . . . . . . . . . . . Exploration and production.
FPSO . . . . . . . . . . . . . . . . . . . . . . . . . Floating production storage and offloading vessels and
structures.
HSER or Harbour Services and
Emergency Response . . . . . . . . . . . . Habour Services and Emergency Response segment.
IMR. . . . . . . . . . . . . . . . . . . . . . . . . . . Inspection, Maintenance and Repair.
midwater AHTS . . . . . . . . . . . . . . . . . AHTS with engine power capacity of between 7,000
BHP and 10,000 BHP.
midwater PSV . . . . . . . . . . . . . . . . . . PSV with cargo carrying capability of between 2,500
DWT and 3,500 DWT.
MSV . . . . . . . . . . . . . . . . . . . . . . . . . . Multifunctional support vessel.
OA or Offshore Accommodation. . . . . Offshore Accommodation segment.
OSV or Offshore Supply Vessels . . . . Offshore Supply Vessels segment.
PSV . . . . . . . . . . . . . . . . . . . . . . . . . . Platform supply vessel.
SSAV . . . . . . . . . . . . . . . . . . . . . . . . . Semi-Submersible Accommodation Vessel.
SWL . . . . . . . . . . . . . . . . . . . . . . . . . . Safe working load.
T&I or Transportation and
Installation . . . . . . . . . . . . . . . . . . . . . Transportation and Installation segment.
257
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A-1
APPENDIX A
INDUSTRY OVERVIEW
1




























Offshore Marine Services Market Overview
A Report prepared for PACC Offshore Services Holdings
Pte. Ltd. (to be renamed PACC Offshore Services
Holdings Ltd.) by Infield Systems Limited.



A-2


2



This report has been prepared for inclusion in the prospectus (the Prospectus) in connection with
the initial public offering of the ordinary shares of PACC Offshore Services Holdings Pte. Ltd. (to be
renamed PACC Offshore Services Holdings Ltd.) on the Main Board of the Singapore Exchange
Securities Trading Limited. This report is dated February 24
th
2014.

Some of the statements contained in this document are forward-looking statements. Forward
looking statements include, but are not limited to, statements concerning estimates of recoverable
hydrocarbons, expected hydrocarbon prices, expected costs, numbers of development units,
statements relating to the continued advancement of the industrys projects and other statements
which are not historical facts. When used in this document, and in other published information of
Infield Systems Limited, the words such as "could," "forecast, estimate," "expect," "intend," "may,"
"potential," "should," and similar expressions are forward-looking statements.

Although Infield Systems Limited believes that its expectations reflected in the forward-looking
statements are reasonable, such statements involve risk and uncertainties and no assurance can be
given that actual results will be consistent with these forward-looking statements. Various factors
could cause actual results to differ from these forward-looking statements, including the potential
for the industrys projects to experience technical or mechanical problems or changes in financial
decisions, geological conditions in the reservoir resulting in a non-commercial level of oil and gas
production, changes in product prices and other risks not anticipated by Infield Systems Limited.
Since forward-looking statements address future events and conditions, by their very nature, they
involve inherent risks and uncertainties.

Infield Systems Limited 2014







For and behalf of Infield Systems Limited:



Mr Quentin Whitfield

Director, Infield Systems Limited





A-3


3


1 INTRODUCTION
1.1 General Overview
PACC Offshore Services Holdings Pte. Ltd. (to be renamed PACC Offshore Services Holdings Ltd.)
(POSH) is seeking to complete an initial public offering (IPO) of ordinary shares on the Main
Board of the Singapore Exchange Securities Trading Limited. As part of the due process for the IPO,
independent market consultant Infield Systems Limited a leading provider of transaction support,
market intelligence and strategic services to the offshore oil and gas industry has compiled the
following independent market report dated February 24
th
2014. The report consists of a global
economic outlook, an offshore exploration and production market analysis and forecast, as well as a
comparative overview of the offshore marine service sector.



A-4


4


2 OFFSHORE MARKET OVERVIEW
2.1 Macro Market Indicators
2.1.1 Global economic outlook 2013-2017
Five years after the worst financial crisis since the Great Depression, the global economy is likely
moving towards a healthier and less volatile period. Although advanced economies still face serious
changes, such as a high unemployment rate and a heavy debt burden, economic sentiment is
gradually improving and the likelihood of another major crisis has declined. In the developing world
the strong growth momentum shown in the past decade seems to be decelerating, but growth will
likely remain solid compared with their developed counterparts.


Overall, we expect the global economy to expand by a compound annual growth rate (CAGR) of
3.6% in the upcoming five-year cycle, significantly higher than the 2.1% CAGR during the volatile
period between 2008 and 2012, but still behind the 4.1% CAGR registered during the boom years of
2003 to 2007.

The unexpectedly long-lasting recession in the Eurozone will partially offset growth in the US and
Japan, resulting in weaker GDP growth in the developed world this year and in 2014. The majority of
global economic growth will therefore come from developing countries over the forecast period with
Organisation for Economic Co-operation and Development (OECD) countries expected to grow at a
CAGR of 2.2%, compared to 5.8% CAGR in non-OECD economies.


Figure 1: Historical Manufacturing PMI (January 2011-May 2013)
1


Figure 2: Historical Consumer Confidence (January 2011-May 2013)
2



Figure 3: Historical and Forecast Global GDP by Region (2008-2017)
3


Figure 4: Historical and Forecast Global GDP by Country (2008-2017)
4


35
40
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Apr/11 Aug/11 Dec/11 Apr/12 Aug/12 Dec/12 Apr/13 Aug/13
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Mar/11 Jul/11 Nov/11 Mar/12 Jul/12 Nov/12 Mar/13
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0
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
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t
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Europe North America Asia Latin America Middle East Africa Australasia
CAGR
3.6%
0
20
40
60
80
100
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
United States China Japan Germany
France United Kingdom Brazil Russia
Italy India Others
U
S
D
t
n

CAGR
3.6%
A-5


5



Figure 5: Forecast Global GDP Growth by Region (2013-2017)
5


Figure 6: Forecast Global GDP Share (2017)
6


2.1.2 Oil Supply and Demand 2013-2017
We anticipate a largely balanced crude oil market over the rest of the decade with prolonged
periods of excess supply or demand unlikely. We forecast a decline in long-term oil demand growth
to about 1.0% p.a. The rise in demand will mainly be met by the accelerated development of
unconventional oil resources such as tight oil and deep-water reserves.


Figure 7: Historical and Forecast Global Oil Supply by Region (2008-2017)
7


Figure 8: Historical and Forecast Global Oil Demand by Region (2008-
2017)
8

Crude Oil Demand
We anticipate that global oil demand will grow by 5.3% over the upcoming five years to reach
94.6mbpd in 2017. The projected demand growth is higher than the 3.7% registered over the past
five years but lower than the staggering 10.3% recorded in the period between 2002 and 2007 the
peak years of the so called commodity super-cycle.

In the upcoming five-year cycle, the long-term structural decline in oil demand from developed
economies, especially the US, EU and Japan, is expected to continue because of increased energy
efficiency and sluggish economic growth. In 2012, oil demand in the OECD economies accounts for
51.8% of the global total. The share is anticipated to fall sharply to 45.7% in 2020 and 44.1% in 2025.
Developing economies will therefore contribute the vast majority of oil demand growth in the
foreseeable future.

0%
1%
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3%
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5%
6%
7%
2013 2014 2015 2016 2017
G
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P

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r
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a
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e

Africa Asia Australasia Europe Latin America Middle East North America
Europe
28%
North America
26%
Asia
29%
Latin America
6%
Middle East
5%
Africa
3%
Australasia
3%
0
20
40
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80
100
120
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
m
b
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Other Non-OPEC Saudi Arabia Formal Soviet Union Other OPEC US
CAGR
0.9%
0
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120
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
m
b
p
d

US EU Japan Other OECD Other Non-OECD India China
CAGR
1.0%
A-6


6



Figure 9: Historical Oil Consumption in the US and EU (1990-2012)
9


Figure 10: Chinas Historical and Forecast Five-Year GDP (LHS) and Oil
Demand Growth (RHS) (1983-2017)
10


In China, lower economic growth and energy intensity over the upcoming 5-year cycle implies that
the pace of the countrys oil demand growth will slow significantly to about 4.0% a year from the
6.9% averaged over the past decade. Already over the last five years the ratio of oil demand growth
to GDP growth has declined from a long-term average of around 70.0% to 60.0%. We expect this
trend to continue over the 2013-2017 period, in-line with the re-balancing of Chinas economy away
from fixed investment and construction.

Despite a much lower oil demand growth forecast (4.0% CAGR), relative to the staggering 6.6%
average annual demand growth over the past 20 years, Chinas oil consumption will still likely
exceed the EUs around 2016, while Indias oil consumption will surpass Japans around 2018. India,
the worlds second largest country by population, will likely see its crude consumption rise by an
average of 3.0% p.a. to reach 4.2mbpd in 2017.

In addition, it is worth noting that even without the demand growth from China and India, strong
momentum in other developing economies alone will be able to drive oil demand and offset the
long-term decline of oil consumption in the OECD economies over the forecast period. Oil demand
has increased sharply in the Middle East (4.5% in 2012) and Africa (5.1%). This strong momentum is
expected to continue throughout the next 10 years. In addition, oil consumption growth in South
East Asia and Latin America is also accelerating.
Crude Oil Supply
All of the three key oil producing regions the Organisation of Petroleum Exporting Countries
i

(OPEC), the Former Soviet Union
ii
(FSU) and the US have potential to increase production over
the course of the next decade. Oil production in Saudi Arabia, the worlds largest oil producer, is
expected to increase steadily to reach 11.6mbpd in 2017 from the current level of around 11.0mbpd.
Iraq will be another key contributor to OPEC production growth. In 2012, Iraq produced 3mbpd, a
20-year high. In March, Iraqi authorities revised down the countrys production target to 9.0mbpd
for 2020, together with a high case scenario of 13.0mbpd and a low case scenario of 6mbpd
11
. We
think the low case scenario is achievable if the Iraqi government adopts appropriate supportive
policy measures and if political or sectarian conflict does not further disrupt new developments.

Production in former Soviet Union will likely rise significantly to reach 14.7mbpd in 2017, led by
increased oil related investment in Russia. US production could increase to near 10.8mbpd in 2017
and maintain the level for another 10 years, primarily due to the development of its tight oil

i
OPEC includes: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela
ii
FSU includes: Azerbaijan, Kazakhstan, Russia, Turkmenistan and Uzbekistan
10
12
14
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18
20
22
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
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US EU
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60%
70%
80%
0%
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10%
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1983-1987 1988-1992 1993-1997 1998-2002 2003-2007 2008-2012 2013-2017(E)
GDP Growth Oil Demand Growth Oil Demand Growth / GDP Growth
%
G
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A-7


7


reserves. Before 2009, US oil production had been declining for 17 consecutive years, but the
country is now predicted by some to become the worlds top oil producer by the end of the decade.


Figure 11: Historical and Forecast Global Oil Supply by Type (2008-2017)
12


Figure 12: Historical and Forecast Global Offshore Oil Supply by Water
Depth (2008-2017)
13


Excluding the world's top three oil producers, namely Saudi Arabia, the former Soviet Union and the
US, global production has largely remained stagnant over the past decade at about 53.0mbpd. The
production gains in OPEC countries (excluding Saudi Arabia) have offset the long-term production
declines in the non-OPEC economies (excluding Russia and the US), where production has been hit
by unexpectedly high depletion rates and a lack of major discoveries. The total production of other
OPEC and non-OPEC regions will remain at about 53.0mbpd in the upcoming 5-years as increased
production from unconventional resources such as deep water and heavy oil, and accelerated
investment in Iraq and Brazil, will just offset the increased depletion rate of existing oil fields.

2.1.3 Oil Price Outlook 2008-2017
Lower demand growth in emerging economies and the Eurozone, increased oil supply from
unconventional resources and above average commercial and strategic storage levels in the US have
led to a change in the market structure for Brent crude, suppressing the price to the lower end of its
usual trading range between USD100.0/bbl and USD120.0/bbl.


Figure 13: Historical and Forecast Brent Oil Price Confidence Intervals (2002-
2020)

Figure 14: Historical Brent Trading Range (February 2011-June 2013)

Over the rest of the year, we anticipate that Brent prices will rise slightly to average USD110.0/bbl,
up from the current average of USD107.8/bbl. Prices will be supported by a seasonal rise in demand,
political unrest in the Middle East and the likelihood of production outages affecting the liquidity of
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
m
b
p
d

Onshore Conventional NGL Shallow Water Deep Water Extra Heavy Shale Oil
CAGR
0.9%
0
5
10
15
20
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
m
b
p
d

Shallow Water Deep Water Ultra Deep Water
CAGR
3.0%
0
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50
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100
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150
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2002 2004 2006 2008 2010 2012 2014E 2016E 2018E 2020E
U
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90% Confidence
Interval
70% Confidence
Interval
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May/11 Sep/11 Jan/12 May/12 Sep/12 Dec/12 Apr/13 Aug/13
U
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BRENT
Supply Responses
Demand Responses
A-8


8


the critical Brent benchmark. Most important, however, will be more robust global growth driven by
unconventional stimulus measures across the advanced economies.


Figure 15: Historical and forecast Brent Oil Price (2002-2020)

In the long-term, we believe the supply and demand fundamentals are sufficient so as to support
higher prices. First, unconventional developments are too small to meet rising demand and
compensate for the depletion of existing fields. Second, rising costs of production set a natural floor
for oil prices. For example, Non-OPEC marginal cost of production surged last year to USD104.5/bbl
from USD92.3/bbl in 2011
14
. Third, major oil producing countries need high oil prices to sustain their
economies. The average fiscal breakeven oil price across OPEC countries is likely to rise from
approximately USD94.0/bbl today to USD109.0/bbl by 2017
15
.

However, long-term downside risks for oil price have emerged on the horizon. On the demand side,
the key risks relate to prolonged weakness in the euro area, high fiscal deficits and debt in the US
and Japan, and bumpy economic transition in China. In addition, increased fuel efficiency could
further curb oil demand growth. On the supply side, the risk is mainly associated with excess
investment in the oil-and-gas industry. Global investment in oil-and-gas resources (both onshore and
offshore) is forecast at around USD700.0bn in 2013, four times more than the level a decade ago.

Our in-house view on oil price is that Brent will likely fall somewhere between the prices implied by
the buoyant scenario of the commodity super-cycle shown in the past decade and the gloomy
viewpoint of an oil-glut expected by some economists. In particular, we anticipate that Brent will
continue its appreciation to average around USD116.0/bbl in 2017 and USD125.0/bbl in 2020. We
believe that supply and demand fundamentals are sufficient to support oil price above the
USD100.0/bbl mark in the long-run.
Offshore Field Breakeven Oil Prices
Oil prices are the key determining factor when sanctioning offshore field developments. Currently,
prices are at sufficient levels to sustain the vast majority of projects including most deep and ultra-
deep developments which remain supported by strong field economics. Recent offshore project
delays, such as OGXs Brazilian developments and BPs Mad Gog 2, have mainly been the result of
other factors such as cost escalation rather than oil price sensitivity.

Nevertheless, if Brent prices were to remain persistently below USD90.0/bbl, a 20.0% fall from the
average price of the past three years, then some of the more marginal offshore developments would
be at risk. The most vulnerable would include Arctic projects (breakeven USD80.0/bbl), followed by
ultra-deep water developments in West Africa and the US GoM at USD70.0/bbl. At USD50.0/bbl the
Brazilian market could see a number of scheduled near-term pre-salt developments delayed and
long-term plans deferred.

In our view, oil price volatility is almost irrelevant to global shallow/medium water investment
decisions as shallow water fields are usually viable under extremely low oil price scenarios. For
instance, the average breakeven cost of shallow/medium water developments in the Caspian Sea is
0
30
60
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
$
/
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Brent
Unsustainable Short-
Run Spikes
A-9


9


estimated at USD30.0/bbl.


Figure 16: Historical and Forecast Oil Prices and Estimated Breakeven Costs (USD/bbl) for Offshore Projects (2002-2020)


2.1.4 Gas Supply and Demand 2013-2017
We anticipate that global gas demand will grow at an average of 2.2% p.a. in the upcoming five years
to reach 3,682.0Bcm in 2017 driven mainly by robust demand from emerging economies. The
projected growth rate for gas demand is significantly higher than the 1.0% growth rate projected for
crude oil demand. Asia and the Middle East are expected to see the highest gas demand growth
rates at 4.5% p.a. and 4.1% p.a. to reach 790.0Bcm and 146.0Bcm, respectively. In contrast, Europe
will see its gas consumption fall at a rate of 0.5% to reach 924.0Bcm in 2017.

20
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2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
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90% Confidence Interval
70% Confidence Interval
50% Confidence Interval
Brent
$110
$95
$80
$70
$60
$50
$30
Arctic Region
Ultra-deepwater
(West Africa)
Deep /Ultra Deep water (US Gulf)
Mid-Water (North Sea)
Deep/Ultra Deep Water
(Brazil Pre-Salt)
Shallow/Medium Water
(Caspian Sea)
Brent Average (2011-13)
WTI Average (2011-13)
A-10


10



Figure 17: Historical and Forecast Gas Supply by Region (2008-2017)
16


Figure 18: Historical and Forecast Gas Demand by Region (2008-2017)
17


Pre-2000, global gas demand largely followed a steady rising trend. Since then, it switched to a new,
steeper, rising trajectory as a result of surging demand from rapidly industrialising emerging
economies. In 2012, for example, gas consumption in non-OECD countries grew 4.2%, while OECD
members gas demand only increased by 1.7%.


Figure 19: Historical and Forecast Global Gas Demand Dynamics (1965-
2020)
18


Figure 20: Historical and Forecast OECD and Non-OECD Gas Demand
(2000-2018)
19


Surging demand has fuelled a sharp rise in capital intensive gas developments (both conventional
and unconventional). In addition, new exploration activity has uncovered vast gas resources within
emerging regions such as East Africas Rovuma basin and the Mediterraneans Levant basin. These
are likely to emerge as a key source of global supply over the long-term. Over the next five years,
however, global gas supply is expected to increase by 2.3% p.a. to reach 3,711.0Bcm in 2017. Growth
will be driven by increased production in the Middle East (5.4% p.a.), Australasia
iii
(3.3% p.a.), Africa
(2.6% p.a.) and South East Asia (2.6% p.a.).

2.1.5 Gas Price Outlook 2008-2017
The scale of the shale gas boom and the impact of the Fukushima disaster have caused a major
divergence in global gas prices. The global gas market now has three distinct regional segments. US
gas prices have been suppressed by an abundant supply of shale gas, Asian LNG prices have been
stimulated by nuclear shut-downs in Japan, whilst European gas prices have stayed somewhere in
the middle.


iii
Includes Australia, New Zealand and Papua New Guinea
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
b
c
m

Europe North America Asia Middle East Africa Latin America Australasia
CAGR
2.3%
0
500
1,000
1,500
2,000
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3,000
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4,000
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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Europe North America Middle East Asia Africa Latin America Australasia
CAGR
2.2%
0
1,000
2,000
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4,000
1965 1972 1979 1986 1993 2000 2007 2014E
New Long-term Trend Old Long-term Trend Global Gas Demand
b
c
m

1,000
1,200
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1,600
1,800
2,000
2,200
2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E 2020E
b
c
m

Non-OECD OECD
A-11


11



Figure 21: Global Gas Price Forecast (2012/2020)

Figure 22: Historical and Forecast Gas Price in Key Regions (2005-2020)

Over the rest of the decade, we anticipate that the divergence in regional gas prices will narrow
gradually. This is due to a combination of local demand dynamics, global supply increases from shale
gas, and differentials in local gas market pricing contracts. However, a fully traded global gas market
remains unlikely by the decade end. This is primarily due to the fact that gas trade remains highly
illiquid with the vast majority still supplied via integrated pipeline systems, which provide little
flexibility for inter-regional trade. Moreover, price premiums in Asia will likely remain in the long-
run. This is partly because of the costs associated with shipping US gas to Asia and partly because oil-
indexation remains most entrenched there, not least due to the huge capital cost of new projects
targeting Asian markets.

2.2 Offshore Oil Production and Reserves
In 2012, the offshore industry produced 26.3mbpd of oil, or 30.0% of global production, and
19.5mboepd of gas, or 34.8% of global production. After the 2008 global financial crisis, the fall in
global oil demand was followed by a 5.0% decline in offshore oil production relative to 2012. In
contrast, offshore gas production increased by 28.0% during the period between 2008 and 2012
thanks to resilient gas demand from East Asia, the Middle East and North America.


Figure 23: Top 10 Countries by Offshore Production (Oil + Gas)

Figure 24: Top 10 Countries by Offshore Production Growth (Oil + Gas)

In the coming five years, we anticipate that offshore oil production will rebound strongly at a growth
rate of 5.0% p.a. to reach 35.3mbpd in 2018. Offshore gas production is expected grow at 8.3% p.a.
to reach 31.4mboepd in 2018. The high expectation is mainly driven by persistently high oil prices
globally and high gas prices in Asia and Europe. In addition, brighter prospects for the global
economy and robust investment in the offshore industry are also expected to drive oil and gas
0 5 10 15 20
Japan
China
Brazil
India
Germany
UK
US
USD/mmBtu
2012 2020E
2
4
6
8
10
12
14
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18
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
$
/
m
m
B
t
u

JAPAN (LNG) UK (BNP) US (NYMEX)
2.8
2.5
4.2
3.8
2.6
2.8
2.1
1.9
1.7
2.3
5.9
5.6
5.0
4.7
3.8
3.4
2.9
2.8
2.7
2.3
0
1
2
3
4
5
6
7
Iran Brazil Qatar Norway Saudi
Arabia
USA UK Angola Malaysia Mexico
m
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2012 2018
1.4
1.2
0.6
1.0
0.5
0.1
0.3
0.2
0.0
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2.0
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2012 2018
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12


production growth.

2.2.1 Top 10 Countries by Offshore Production
Based on current forecasts, Iran will likely become the largest offshore producer in the world in five
years time. The countrys offshore production is expected to surge at an annual rate of 13.1% from
2.8 million barrels of oil equivalent per day (mboepd) in 2012 to 5.9mboepd in 2018, driven by
increased output from South Pars/North Dome, the worlds largest gas condensate filed. Brazil is
predicted to become the worlds second largest offshore producer in 2018 driven by large-scale
developments in its pre-salt basins such as the Marlim Sul and Lula fields. Brazils offshore
production is expected to grow by 14.6% p.a. to reach 5.6mboepd in 2018 from 2.5mboepd in 2012.

Qatar wil continue to produce a significant amount of natural gas in the coming five years led by a
number of expansionary projects in the Qatar North field. Saudi Arabias offshore fields are
expected to produce 3.8mboepd in 2018, a 46.5% increase from the 2.6mboepd in 2012. The phase
two development of the Manifa field alone will produce about 1.0mboepd throughout the next five
years.

In Norway, we anticipate that offshore production will rise from 3.8mboepd in 2012 to 4.8mboepd
in 2018. The increase will be led by several major offshore developments such as the Goliat field in
the Barents Sea, the Edvard Grieg and Martin Linge fields in the North Sea, and the Aasta Hansteen
project in the Norwegian Sea.

Offshore production in the UK is expected to rise from 2.3mboepd in 2012 to 3.0mboepd in 2018.
The production increase is driven by greenfield and brownfield developments in shallow/medium
waters such as Jasmine, Brent (redevelopment), Cygnus, Bressay and Mariner and by deepwater
projects such as Laggan Tormore, Claire Ridge Phase II and Rosebank.

Malaysias offshore production is expected to increase from 1.7mboepd in 2012 to 2.7mboepd in
2018, led by a number of new developments such as the Gumusut-Kakap, Kebabangan Deep,
Kasawari and Ubah fields. Angolas production is expected to rise significantly over the coming years
to reach 2.8mboepd in 2018 driven by deepwater and ultra-deepwater projects such as the Cameia
Mound, Bavuca, Sangos and Lirio. Lastly, offshore production in Mexico is predicted to be largely
constant over the coming five years but the risk is to the upside as the country plans to introduce
sweeping energy sector reforms that could pave the way for increased foreign investment and
greater use of private production contracts.

2.2.2 Top 10 Countries by Offshore Growth
Offshore production growth in a number of Asia Pacific countries is expected to be particularly
strong. Australia, Indonesia, India, Vietnam and Myanmar are each expected to see offshore
production increase by 8.0% or more per year in the coming five years. Major new offshore
developments in the Asia Pacific region include Australias Gorgon North and South natural gas
projects, Indonesias deepwater Gendalo and Gehem developments, Vietnams shallow water Ruby
and Su Tu Nau projects, and Myanmars new Yetagun, Shwe and Zawtika projects.

Elsewhere, Russias offshore production is expected to increase by 18.8% p.a. to reach 1.7mboepd in
2018. The strong growth will be driven by on-going development offshore Sakhalin Island and new
projects in the Caspian Sea. A number of deep/ultra-deepwater gas projects in Mediterranean Sea
will see Israels offshore production soar to 0.4mboepd in 2018. Offshore developments in Ghana,
Canada and Turkmenistan will also lead to strong production increases over the next five year cycle.

A-13


13


2.2.3 Top 10 Countries by Offshore Reserves
Estimated at 85.1bnbbls, 2P
iv
offshore oil reserves in Saudi Arabia are the largest in the world. The
Safaniya field and Manifa (Phase 2) together hold around 39.0bnbbls of 2P reserves, more than than
the combined offshore oil reserves in Mexico and Iran, which are ranked the third and the fourth by
offshore oil reserves. Brazils offshore 2P reserves are estimated at 47.1bnbbls, boosted by the
discovery of a number of large deepwater pre-salt fields such as Lula (5.0bnbbls) and Libra
(6.7bnbbls).

Figure 25: Top 10 Countries by Offshore Oil Reserves

Figure 26: Top 10 Countries by Offshore Gas Reserves

Despite having been exploited for over half a century, the North Sea still holds over 30.0bnbbls of 2P
oil reserves. The reserves are shared almost evenly by the UK (15.7bnbbls) and Norway (15.3bnbbls).
The US has about 19.0bnbbl of 2P oil reserves in the GoM, offshore Alaska, California, and the East
and Pacific Northwest Coast. Mexico, Iran, Abu Dhabi, Venezuela and Angola also have significant
offshore oil reserves.

Qatar (148.1bnboe), Iran (102.6bnboe), Russia (95.3bnboe), Australia (39.1bnboe) and Indonesia
(23.5bnboe) are the top five countries ranked by 2P offshore gas reserves. The gas reserves are
concentrated in several giant offshore gas fields. The worlds largest gas filed, the South Pars/North
Dome field is located in the Persian Gulf and is shared between Iran and Qatar. The IEA estimates
that the field holds an estiamted 1,800.0 trillion cubic feet (tcf) of in-situ natural gas and some
50.0bnboe of natural gas condensates. In Russia, the Shtokman field in the South Barents Basin and
the Rusanovskoye field in the Krasnoselkupsky District together hold about 73.3bnboe of 2P oil and
gas reserves. The Greater Gorgon Area offshore Australia has about 11.2bnboe of 2P gas reserves.

2.2.4 Significance of Offshore E&P
Offshore E&P is playing an increasingly important role within the oil and gas industry. As the worlds
onshore basins gradually mature, operators have gone in search of offshore resources in order to
replace produced reserves; first in shallow-waters (<500m) then, since the turn of the century, in
increasingly deeper waters.


iv
Proven and probable reserves
85.1
47.1
27.2
21.1
19.9 19.0
16.7 15.9 15.7 15.3
0
20
40
60
80
100
b
n

b
p
d

Offshore Oil Reserves
148.1
102.6
95.3
39.1
23.5
19.9
12.8 12.0 11.2 10.7
0
20
40
60
80
100
120
140
160
b
n

b
p
d

Offshore Gas Reserves
A-14


14



Figure 27: Historical and Forecast Oil Production Trends Onshore vs. Offshore (mmbpd) (1965-2015)

The increasing dominance of the offshore segment shows no sign of slowing. At all water depths,
offshore exploration has added approximately 43.2bn barrels and 317.9tn cubic feet (tcf) of
undeveloped oil and gas reserves (2P) between 2008 and 2013.


Figure 28: Undeveloped Offshore 2P Oil Reserves by Region (%)

Figure 29: Undeveloped Offshore 2P Gas Reserves by Region (%)

In terms of oil, the largest share of these new resources has come from Latin America, where 25.8bn
barrels have been added, mostly derived from Brazils prolific pre-salt basins. The Northwest
European Continental Shelf (NWECS), North America and West Africa have increased their
undeveloped oil resource base by 57.5%, 39.3% and 28.3%, respectively. The increase is largely due
successful exploration in deepwater and frontier basins such as the Barents and Norwegian Seas,
West of Shetland, Lower Tertiary GoM, West Africas transform margin, the deepwater Kwanza and
Congo basins, and the Gulf of Guinea.

In terms of gas, the largest share of new resources has been added in the Middle East where 79.7tcf
of offshore gas has been discovered since 2008. However, by far the strongest reserves growth has
been seen in South and East Africa where 77.4tcf has been added, a 1,377.7% expansion on 2008
levels. The explosion in resources has been almost entirely down to a series of huge gas discoveries
in the Rovuma basin offshore Tanzania and Mozambique. Similar high-impact finds in Southern
Europes Levant basin also have seen strong reserves growth there, while in Brazils pre-salt large
associated gas volumes have helped to lift undeveloped offshore gas reserves to 71.3tcf. Strong gas
reserves additions have also occurred in Australasia (+29.6tcf), South East Asia (+18.9tcf), and the
NWECS (+14.7tcf).

0
10
20
30
40
50
60
70
80
90
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015E
m
b
p
d

Onshore Offshore Shallow Offshore Deep
Australasia
1%
East Asia
3%
Eastern Europe
2%
Latin America
31%
Middle East
26%
North Africa
1%
North America
9%
NWECS
7%
South & East
Africa
0.02%
South Asia
1%
South East Asia
4%
Southern Europe
0.14%
West Africa
15%
Australasia
8%
East Asia
2%
Eastern Europe
22%
Latin America
5%
Middle East
42%
North Africa
1%
North America
2%
NWECS
3%
South & East
Africa
3%
South Asia
1%
South East Asia
8%
Southern Europe
0.31%
West Africa
3%
A-15


15



Figure 30: Undeveloped 2P Offshore Oil Reserves Growth (2008-2013)
by Region (%)

Figure 31: Undeveloped 2P Offshore Gas Reserves Growth (2008-2013)
by Region (%)

Growth of Deepwater
As noted above, there has been particularly strong growth in deepwater reserves over recent years.
In aggregate, 136.6 billion boe of undeveloped 2P oil and gas reserves currently lie in over 500m of
water, double the 2008 figure and around seven times the level seen in 2000. Figures 32 and 33
show that, though generally not as large as super-giant shallow-water finds, deepwater exploration
has yielded a much higher frequency of notable discoveries since 2000.


Figure 32: Offshore Oil Discovery Trends by Water Depth (m) & Reserve
Size - Size of Bubble (mbbl)

Figure 33: Offshore Gas Discovery Trends by Water Depth (m) & Reserve
Size - Size of Bubble (mboe)

Indeed, as figure 34 illustrates, the average water depth of global oil and gas discoveries made since
2010 is 624m, compared to 422m in the 2000-2009 period and 183m in the decade to 2000.

0%
20%
40%
60%
80%
100%
120%
Oil
0%
200%
400%
600%
800%
1000%
1200%
1400%
1600%
Gas
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1970 1980 1990 2000 2010
W
a
t
e
r

d
e
p
t
h

(
m
)

0
500
1,000
1,500
2,000
2,500
3,000
3,500
1970 1980 1990 2000 2010
W
a
t
e
r

D
e
p
t
h

(
m
)

A-16


16



Figure 34: Historical Discovery Trends by Average Water Depth

These deepwater discoveries have been concentrated in the deepwater triangle of the US GoM,
Brazil and West Africa, with major reserves growth also evident in Australasia, East Africa and the
Eastern Mediterranean in recent years. Asia and the Middle East & Caspian have seen relatively few
deepwater discoveries, partly due to the relative abundance of shallow-water basins in these
regions.

0
250
500
750
1,000
1,250
1,500
1960-1969 1970-1979 1980-1989 1990-1999 2000-2009 2010-2013
Africa Asia Australasia
Europe Latin America Middle East & Caspian Sea
North America Global Average
W
a
t
e
r

D
e
p
t
h

(
m
)

A-17
1
7



F
i
g
u
r
e

3
5
:

U
n
d
e
v
e
l
o
p
e
d

O
f
f
s
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o
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e

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i
l

a
n
d

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a
s

F
i
e
l
d
s

b
y

R
e
s
e
r
v
e

S
i
z
e

(
m
b
o
e
)
A-18
18

Deepwater output now represents around a third of global production - over double the 1990 level.
This trend shows little sign of slowing as high oil prices and a number of important technological
improvements sustain investment in deepwater exploration and production activity.


Figure 36: Historical Oil Price Impact on Offshore Production (000 bpd, USD/bbl)

The development of this growing base of deepwater reserves is being led by IOCs that can leverage
their technological expertise and financial muscle to bring high-margin projects to production.
Pioneering NOCs such as Petrobras are also pushing back the frontier as they seek to tap new-found
ultra-deepwater riches in the prolific pre-salt Santos, Campos and Espirito Santo basins.

It is perhaps no surprise, therefore, that 77% of the USD268bn of forecast deep and ultra-deepwater
investment over the period 2013-2017 is expected to be spent by just ten deepwater specialists:
Petrobras, Total, Chevron, Royal Dutch Shell, BP, Noble Energy, ExxonMobil, Anadarko, Eni and Hess.
Approximately 71.0% will be spent in just five countries: Brazil, Angola, the USA, Nigeria and
Australia.


Figure 37: Forecast Development Capex by Water Depth Group (m)
(2013-2017)

Figure 38: Forecast Deepwater (>500m) Development Capex by Country
(2013-2017)

These deepwater resources will be critical to meeting the worlds future energy needs (see section
2.1.2: Oil Supply and Demand 2013-2017) because the industry as a whole will need to develop an
additional 48.8mn bpd by 2030 in order to offset the decline in existing reserves and meet the
expected rise in global oil demand.

0
20
40
60
80
100
120
0
1,000
2,000
3,000
4,000
5,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
100-999 1000-1499 >1499 Oil Price (USD/bbl)
1
Sustained oil price rise
spurred the
shallow/medium-water
sector (100-999m)
Sustained high
oil price
spurred the
deep-water
sector (1000-
1499m)



2
Sustained
high oil price
spurred the
ultra-deep
water sector
(>1500m))





3
'
0
0
0

b
p
d

U
S
D
/
b
b
l

>1,499m
25%
0-99m
32%
1,000-1,499m
15%
100-499m
22%
500-999m
6%
Brazil
33%
USA
18%
Angola
12%
Nigeria
5%
Israel
3%
Australia
3%
Ghana
3%
Malaysia
3%
India
2%
Norway
2%
Other
16%
A-19


19



Figure 39: Historical and Future Oil Production Requirement (000 bpd)
20
(1980-2030)

2.3 Offshore Activity Indicators
2.3.1 Offshore Capital Expenditure Outlook
From 2008 to 2017, offshore Capex will total USD912.8bn. Some 63.5% of that, or USD579.3bn, will
fall within the forecast period 2013 to 2017. The largest share of forecast Capex is expected to be
directed towards Latin America (19.1%), Europe (18.7%), Asia (18.1%) and Africa (17.2%) but Capex
growth will be strongest in Africa (CAGR 27.2%), Australasia (CAGR 14.9%), Middle East & Caspian
(CAGR 15.0%) and Europe (CAGR 14.9%).


Figure 40: Historical and Forecast Global Offshore Capex (2008-2017) by
Object Type (USDm)

Figure 41: Historical and Forecast Global Offshore Capex (2008-2017) by
Region (USDm)

In terms of object type, the vast majority of forecast spending will be directed towards pipeline
(43.5%) and platform (29.6%) infrastructure. A further 20.8% is expected to be spent on subsea
completions with this segment of the market the fastest growing over the forecast period at a CAGR
of 14.0%; this compares with 11.0% for pipelines, 9.1% for single point moorings (SPMs), 8.2% for
control lines and 7.5% for platforms.

2.3.2 Offshore Operational Expenditure Outlook
While the global base of operational offshore infrastructure is set to fall by a CAGR of 2.5% between
2013 and 2017, industry Opex is still expected to increase as the sharp decline in small platforms
(<2,999 tonnes topside weight) is partially offset by a steady rise in larger units.

The sharp decline in small platforms (CAGR -3.3%) is being led by the US Gulf of Mexico (GoM)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1980 1985 1990 1995 2000 2005 2010 2015E 2020E 2025E 2030E
'
0
0
0

b
p
d

Existing production

4.5% annual rate of depletion

New production requirement

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
ControlLine Pipeline Platform Single Point Mooring Subsea Completion
CAGR
9.3%
U
S
D
m

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
U
S
D
m

A-20


20


where a large number of very small, often unmanned, well-head units face decommissioning and
removal over the forecast period. However, precisely because these units are small and unmanned,
they require relatively little in the way of platform supply or IMR work. We therefore expect the net
effect of their removal on the offshore support vessel market to be limited.

Offsetting the decline in small platforms will be a sharp rise (CAGR +4.5%) in units over 3,000 tonnes
topside weight. This growth is being sustained by the steady rise in deepwater (>500m)
infrastructure which requires a much wider range of IMR and platform supply services often from
specialist deepwater-capable vessels that command a premium over conventional assets.

Growth in operational infrastructure is expected to be strongest among the largest units.
Operational platforms with topside weights of 10,000-19,999; 20,000-39,000; and 40,000-59,999
tonnes are slated to grow by CAGRs of 5.0%, 6.6%, and 4.7%, respectively, over the forecast period.
The proportion of these units in deepwater is expected to rise from 23.2% in 2013 to 27.3% by 2017.


Figure 42: Historical and Forecast Global Offshore Operational Platform
Base by Topside Weight (Tonnes) (2008-2017)

Figure 43: Historical and Forecast Global Offshore Operational Platform
Base by Water Depth (Metres) (2008-2017)

2.3.3 Offshore Platform Installations
Despite recent declines, global platform installation activity is expected to grow through the forecast
period to 2017. In terms of total installations, Asia is forecast to account for nearly 24% of future
fixed and floating platform projects, making it the largest market by number of installations.
Elsewhere, significant growth is expected in Africa and Europe and to a lesser extent in Latin
America, the Middle East & Caspian and Australasia. In North America, where the market is
dominated by activity in the Gulf of Mexico, shallow water platform installations have declined as
onshore unconventional activities have cannibalised investment from the Gulfs gas plays.

The outlook for the Floating Production System (FPS) sector is particularly strong as oil and gas
operators continue to explore and develop deepwater and remote regions. Indeed, over the next
five years 200 floating platforms are forecast to be installed globally representing a growth of 43%
compared to the previous five year period. A significant proportion of this future growth will come
from Brazil, South East Asia, the North Sea and North America. As of July 2013, there were 344
floating production systems (FPSOs
v
, FSO
vi
, Semi-subs, Spars, TLPs
vii
, FLNGs
viii
, FSRUs
ix
and production
barges) in operation globally. The most prevalent floating production system is the FPSO, which

v
Floating production, storage & offloading
vi
Floating storage & offloading
vii
Tension leg platform
viii
Floating liquefied natural gas
ix
Floating storage & regasification unit
7,500
8,000
8,500
9,000
9,500
10,000
10,500
11,000
0
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
N
o
.

o
f

P
l
a
t
f
o
r
m
s

N
o
.

o
f

P
l
a
t
f
o
r
m
s

3,000-6,999 7,000-9,999 10,000-19,999
20,000-39,999 40,000-59,999 60,000-149,999
0-2,999 (RHS)
8,500
9,000
9,500
10,000
10,500
11,000
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
N
o
.

o
f

P
l
a
t
f
o
r
m
s

N
o
.

o
f

P
l
a
t
f
o
r
m
s

100-499 500-999 1,000-1,499 >1,499 0-99 (RHS)
A-21


21


comprises 44% of the current operational fleet of floating platforms.

Figure 44: Historical and Forecast Offshore Production Platform
Installations by Region (Units Installed) (2008-2017)

Figure 45: Historical and Forecast Offshore Production Platform
Installations by Type (Units Installed) (2008-2017)

Global installation activity in the traditional fixed production sector has declined in recent years,
though this decline has mainly been driven by a marked retraction in the US GoM. Outside of the
GoM, the fixed production sector has been more robust as operators have continued to develop
shallow water reserves with traditional infrastructure. As of July 2013, over 9,600 fixed production
platforms were in operation globally.

Whilst fixed activity in the US GoM is set to decline, the region remains the largest in terms of
operational assets with nearly 35% of operational units. Other major markets include Asia (21%), the
Middle East & Caspian (16%), Africa (10%), Latin America (9%) and Europe (8%).

2.3.4 Subsea wells
The subsea production industry has helped unlock deepwater and operationally remote regions
where the deployment of traditional fixed platform technology and exporting pipelines may be too
costly. Indeed, often in combination with FPSOs, subsea technology can provide a cost effective field
development solution for exploiting oil and gas in areas that were previously considered
uneconomic. Subsea production systems can range in size and complexity from a single subsea
satellite well tied-back to the host infrastructure (fixed platform, floating platform, onshore
installation) to a series of wells installed on a number of templates feeding a major central
processing unit on the same field.

Whilst installation activity has declined in recent years, falling from 346 units in 2009 to 228 units in
2012, we anticipate that the number of subsea tree installations will grow year-on-year to 2017
driven by wider industry trends towards the development of deep, remote and marginal reserves.
Total forecast installations are expected to reach 2,551 between 2013 and 2017, a 74% rise on 2008-
2012.

The major drivers of the subsea market will continue to be the deepwater triangle of West Africa,
Latin America and the US GoM, as well as the North Sea. However, the most dramatic rise in subsea
activity over the forecast period is expected in Australasia where the number of subsea tree
installations is expected to rise by a CAGR of 31% to 61 by 2017 driven by new offshore-fed LNG
developments such as Gorgon, Ichthys and Wheatstone.

0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
N
o
.

o
f

P
l
a
t
f
o
r
m
s

0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Fixed Floating
CAGR
10.0%
N
o
.

o
f

P
l
a
t
f
o
r
m
s

A-22


22



Figure 46: Historical and Forecast Subsea Well Installations by Region
(Units) (2008-2017)

Figure 47: Historical and Forecast Subsea Well Installations by Water
Depth (Units) (2008-2017)

Figure 45 above illustrates the move towards deepwater within the subsea market. Over the period
2008-2012, an estimated 625 subsea wells were installed in waters exceeding 1,000 meters. Over
the next five year period, installation in this water depth category is expected to grow by around
67% to 1,044 units as a host of projects in the GoM, West Africa and Brazil are developed. Whilst the
deep and ultra-deep waters are expected to generate the fastest growth over the forecast period,
installation activity should remain strong in waters of less than 1,000m. Total installations in this
category are expected to increase from 843 between 2008-2012 to 1,507 between 2013-2017.

2.3.5 Offshore Drilling Supply and Demand
The global offshore drilling fleet is primarily composed of jackups, semisubmersibles and drillships.
Jackups are generally deployed for exploration and development drilling purposes on the shallow
water continental shelf whilst semisubmersibles and drillships are floating drilling assets designed
for operations in water depths up to 12,000ft.

The global outlook for the drilling sector is positive, with the number of contracted jackups,
semisubmersibles and drillships expected to increase from just over 700 in 2013 to 800 by the end of
2017. A significant proportion of this growth is expected to stem from the development of the
floating rig sector, where growth in the traditional deepwater basins of the GoM, West Africa and
Brazil will be augmented by activity in emerging markets, such as East Africa, South East Asia and the
Eastern Mediterranean.

Whilst utilisation rates for all rig types were negatively affected by the combined effects of the
global economic downturn and the drilling moratorium in the US, the near-term outlook is more
positive. Indeed, since hitting recent lows in 2011, utilisation rates have strengthened for all rig types
across nearly all regions. In 2011, marketed fleet utilisation ran at an average of 76%. A year later,
this figure had risen to 83% and 2013 rates are forecast to average 88%. The mid to long-term
outlook for utilisation is marginally less positive as recent newbuilding activity will increase supply
significantly. However, the rate of attrition within the drilling fleet is likely to increase over the next
five years as rig managers cold stack or retire their aging and comparatively under-utilised assets.
This should ultimately lead to improved utilisation rates in the longer term.

0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
N
u
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b
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o
f

W
e
l
l
s

0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
0-99 100-499 500-999 1,000-1,499 >1,499
N
u
m
b
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r

o
f

W
e
l
l
s

A-23


23



Figure 48: Historical and Forecast Mobile Offshore Drilling Units (2008-
2017) by Contracted Units (LHS) and Utilisation (RHS)

Figure 49: Historical and Forecast Mobile Offshore Drilling Unit
Construction Activity (2008-2017) by Units Delivered

2.4 Industry Structure
2.4.1 Industry structure: Upstream to downstream
The oil and gas industry is split into three principal elements: upstream, mid-stream and
downstream. These divisions form an integrated supply chain from field to consumer covering a
huge range of oil and gas products and raw-materials. This industry structure is illustrated in the flow
chart below:

Figure 50: Oil and Gas Industry Structure
Upstream
The upstream segment can be further divided into exploration and production (E&P) activity. The
former refers to the identification and appraisal of oil and gas reservoirs to determine resource
potential and commercial viability. If a reservoir does prove viable then it will be brought into the
production phase using a range of specialist infrastructure which varies depending upon a wide
range of factors such as reservoir properties, location, and proximity to existing oil and gas
developments.
Midstream
Once in production, these oil and gas resources must be transported to processing infrastructure or
seaborne export terminals. In the case of crude oil, this occurs via pipeline, railway or trucking with
many refineries far from producing centres. In the case of natural gas, a series of small, low pressure,
gathering pipelines connect the wellhead to a centralised processing facility which is normally
located close to production hubs.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
100
200
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600
700
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Demand Supply
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O
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Jackup Semisub Drillship
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Exploration
Field
Development
Production Transportation Refining Distribution Consumer
Seismic data
Exploration geology &
prospecting technology
Drilling rigs and ships
Drilling equipment and
systems
Field development study
and plan
Platform, well, surface
and subsea equipment
Security certification
Pipes
Management systems for
engineering & project;
and well-reservoir-facility
Platforms and production
vessels
Maritime services
Supply ships and supply
bases
Gas in pipes
Oil & LNG on ships
Upstream Downstream Midstream
A-24


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Downstream
Once oil arrives at a refinery it is cracked into a wide range of petroleum products for domestic and
industrial use and, perhaps most importantly, into various transport fuels. In addition, liquid
hydrocarbons form the raw-material base of most chemicals and plastics. These products are then
distributed to end-users via pipeline or trucking. In the case of natural gas, impurities and natural gas
liquids (NGLs) must be removed before it can be shipped into the main trunk distribution systems
that store or carry processed gas directly to utilities, industry, residential end-users, or to
liquefaction terminals for export. This is done both at the wellhead and at centralised processing
facilities close to production centres or pipeline hubs.

2.4.2 E&P Life-Cycle
E&P activity covers five key steps in the life of an oil and gas field:
Identification of Potential
The field life-cycle begins with the acquisition of an exploration licence covering prospective
acreage. These can be in the form of a concession agreement, production sharing contract (PSC) or
service contract depending on the nature of the prevailing regulatory regime. Licences can either
cover an existing field, relatively small tracts located within an existing oil province, or vast and
largely uncharted frontier blocks. As part of the licensing terms operators are normally required to
complete a pre-agreed minimum in terms of exploration activity over the life of the licence. These
obligations usually include a designated amount of surveying activity as well as the completion of at
least one exploration well.

An operators first step on acquiring the licence is to analyse any existing geological or geophysical
data. This could be in the form of previous down-hole data or a wide range of aerial, magnetic,
gravitational or acoustic surveying. This data will help the operator determine where, and in what
form, additional surveying should be conducted. More often than not this means commissioning 2D
and/or 3D seismic surveys followed by extensive geological and geophysical modelling to identify
potential hydrocarbon-bearing formations. These are then ranked in order of prospectivity.

Big advances in seismic technology and computer simulation have had a huge impact on this stage of
the life-cycle, helping oil companies de-risk each prospective target and improving exploration
success rates.
Exploration & Appraisal
Once an operator has identified a suitably prospective formation it may seek to confirm the
presence of hydrocarbons by commissioning an exploration or wildcat well. Common methods of
evaluating a potential drilling prospect include success rate analysis based on geological and
geophysical characteristics, reserves analysis calculated using a volumetric or engineering formula
and financial evaluation using a range of metrics such as return on investment (ROI), discounted
payback and asset net present value.

The duration and cost of drilling varies markedly depending on drilling rig day-rates, drill depth,
underlying geology, location and availability of associated oilfield services. Onshore wells are
generally relatively quick and inexpensive to drill. Offshore wells are much more capital intensive. An
ultra-deepwater wildcat will require a specialist semi-submersible or drillship for around 60-90 days.
Given that a top-of-the-range drilling unit can command a day-rate in excess of USD450,000, that
often pushes the cost of an exploration well beyond the USD50mn mark and, in some cases, even as
high as USD100mn. Shallow water wells take around half that time and require a high-spec jack-up
A-25


25


day-rate of around USD250,000. Total cost is generally therefore in the region of USD10-30mn
x
.

Exploration success rates vary considerably, ranging from dry wells that encounter no presence of a
hydrocarbon system to multi-million barrel discoveries that justify further appraisal drilling and
production testing. The latter will help determine reservoir dynamics, flow characteristics and
commercially recoverable reserves potential.

Given the prohibitive cost of exploration and appraisal drilling, operators rarely attempt to bear all
the financial risk alone. Most choose to enter into a joint operating agreement (JOA) either
covering a single well or a wider working interest area. The JOA defines each partys share of
exploration expenses and how production is to be divided on completion of the well. These
agreements often include licence partners or a separate company that farms into a concession in
return for cash or a certain level of drilling carry. This is especially common where licences are held
by an independent operator with a relatively small capital budget.
Field Development
If the appraisal and reservoir modelling work establishes a reserve base deemed large enough to
support commercial production, full field development studies are then commissioned to confirm an
optimum development concept. A range of front-end engineering and design and detailed
engineering studies outline the specialist infrastructure and engineering solutions required to bring
the field to production. These will vary depending on reservoir properties, location and proximity to
existing oil and gas developments.

Further technical and financial analysis will then be undertaken as part of a final investment
decision. This paves the way for procurement, fabrication and construction to begin in conjunction
with development drilling. Full commercial production commences once development wells are
connected up to platform and processing infrastructure. For most projects this is normally at least
five years from initial discovery but lead times can often be far longer. Figure 51 below shows that,
historically, the global average number of years from discovery to first production is 10.7. There is
also strong regional variation with average lead times in North American just 4.4 years, nearly five
times less than Eastern Europe (21.6 years). The prevalence of small field tiebacks in the US GoM
and the extremely difficult operating environment in Eastern Europe helps to explain the large
disparity.

While the historical average lead time is 10.7 years, operators are becoming progressively more
efficient at bringing new projects on stream. Global lead times have fallen from an average of over
15 years in 1970 to just over five years in 2012 (see figure 52). Again, this is due to a rising number of
smaller field tiebacks as well as a more efficient engineering, procurement, installation and
commissioning (EPIC) process.

x
As noted above, a large number of factors determine exploration well duration and cost. These cost estimates should therefore only be
considered a rough guide.
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26



Figure 51: Average Field Development Lead Times by Region (1970-2013)
(Years)

Figure 52: Average Field Development Lead Times by Year (1970-2013)
(Years)

Operation & Maintenance
Once a field enters the production phase operators must perform routine inspection, maintenance
and repair (IMR) work to ensure system integrity and performance. IMR can range from routine
autonomous monitoring to complex well-intervention such as sand and well cleanout, swabbing, re-
cementing and even re-completion.

Despite regular IMR work and conventional secondary recovery techniques, such as water and steam
flooding, the industry as a whole only recovers around 35% of oil in place within a given reservoir.
However, many operators are investing heavily in the development of enhanced oil recovery
(EOR), or tertiary recovery techniques, to reduce the surface tension or viscosity within a
reservoir, thereby boosting recovery rates. These EOR technologies take a number of forms including
thermal recovery, chemical flood processes, and water or inert gas injection. Together these could
help extract a further 5.0-20% of oil in place.

More widespread use of EOR could unlock a vast quantity of resources. In 2008 the International
Energy Agency (IEA) estimated that CO
2
EOR alone could add 160-300bn barrels of incremental oil
production to 2030, centred mainly on the Middle-East (80-130bn bbl) and North America (20-90bn
bbl)
21
. Recent improvements in EOR technology, such as low salinity water injection, next generation
CO
2
solutions, and more advanced well simulation could mean that the eventual benefits in terms of
output are even higher particularly if they lead to a reduction in the cost of tertiary recovery. Royal
Dutch Shell estimates that, while EOR currently makes up just 4% of global output (around 3-4mn
bpd), this could rise to 20% by 2030
22
.
Decommissioning
Once production from a mature field ceases to be commercially viable the decommissioning and
removal of production and processing infrastructure can begin. This is often a dynamic process as, in
high oil price environments, small satellite accumulations can be tied back to existing infrastructure
to prolong its useful life. This is increasingly common offshore because of the high cost of installing
brand new infrastructure and improvements in long-distance subsea tieback technology.

The regulatory regime governing offshore decommissioning is also relatively new and uncertain,
particularly outside the US GoM and, to a lesser extent, the North Sea. Consequently, in some
jurisdictions field infrastructure is simply abandoned when production is no longer economically
viable.
0
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27



Identification of
Potential
Exploration &
Appraisal
Field Development
Operation &
Maintenance
Geological & Geophysical mapping &
modelling via seismic surveys
Analysis & interpretation of
geological data to identify the
potential of hydrocarbon bearing
formations
Decommissioning
Wildcat wells drilled to assess
potential of basin
Appraisal wells assess the potential
of any discovery made during the
exploration phase
Flow rates assessed
Development scenario screening
Pre-FEED & FEED studies
Detailed engineering
Fabrication & procurement
Offshore construction, installation &
commissioning
Inspection, repair & maintenance
Enhanced oil recovery
Brownfield development and
injection wells
Working over of existing wells
The decommissioning of end-of-field
infrastructure
Re-use / recycle / dispose
AHTS
AHT
PSV
SSAV
Accommodation Barge
AHTS
AHT
PSV
SSAV
Accommodation Barge
Barges
Tugs
AHTS
AHT
PSV
SSAV
Accommodation Barge
Barges
Tugs
AHTS
AHT

Figure 53: Oil and Gas Field Life-cycle

2.4.3 Offshore E&P Market Structure
There are three key players within the offshore E&P market; operators, primary contractors, and
secondary, or sub-contractors. Companies within each of these key layers have different operational
capabilities and organisational structure.



Figure 54: Offshore E&P Supply Chain
A-28


28


Operators
Offshore E&P activity is led by operators these constitute companies with overall control of the
day-to-day operational decision-making within each respective exploration and/or production
licence. They can include national oil companies (NOCs), integrated majors (IOCs), a wide range
of independents, and the upstream arms of utility companies. Often an operator will be the largest
stakeholder in the licence but this is not always the case. Minority operators are often preferred, for
instance, where they possess particular technical expertise or where an NOC is the statutory
operator under licensing terms.

Operators have full command of project decision-making throughout the field life cycle. They also
bear the operational risk associated with any E&P activity though much of that activity is contracted
out to specialist oilfield services companies and sub-contractors which conduct a huge range of
consultative, drilling and well services, construction, management, and support work (see figure 54).
These contracts can range from small scale engineering studies to multi-billion dollar EPIC contracts.
Primary Contractors (Tier 2)
Primary contractors are the engine of the offshore E&P industry. Working very closely with
operators, they provide a wide range of specialist surveying, drilling, engineering and construction
services. Indeed, engineering and construction is increasingly dominated by fully integrated EPIC
contracts performed by tier 1 oilfield services players such as Technip, Saipem, Subsea 7 and
McDermott.
Sub-Contractors (Tier 3)
Sub-contractors provide generic and specialist support to both operators and primary contractors.
Services include a wide range of equipment and personnel provision as well as day-to-day logistics,
communications, training and HSE.

2.4.4 Function and Usage of Offshore Marine Services
This section provides a brief introduction to the function and usage of offshore marine services
vessels (AHT, AHTS, PSV, accommodation vessels (AV), Heavy lift vessels (HLV), pipelay vessel,
multi-purpose vessels (MSV) and diving support vessels (DSV)) in the oil and gas lifecycle of field
development, including key stages such as exploration & appraisal, field development, operation &
maintenance, and decommissioning.


A-29


29



Figure 555: Function and Usage of Offshore Marine Services

AHT vessels can provide towage and construction support services throughout the field lifecycle.
AHTs are capable of providing long range towage services when floating platforms need to be
mobilised to other fields, countries or repair yards. Deepwater AHTs also provide support for
construction work in transporting and carrying out projects for mobilisation of structures for
floatovers, or launching or installation, positioning, hook-up and commissioning work.

AHTSs are employed in each phase of the field lifecycle. In contrast to AHTs, AHTS vessels are suited
for 'in-field support' as the vessels have to leave space and deadweight capacity for the carriage of
drilling mud, cement, base oil, drill water, and other supplies. Some AHTS vessels are also equipped
for fire fighting, rescue operations and oil spill recovery.

PSVs provide supplies to offshore developments in the exploration, field development, and
operation and maintenance stages. PSVs transport supplies to offshore platforms and return any
other cargoes to shore. A PSV will typically have less engine power capacity than its AHTS
counterpart, as its role is supply focussed and PSVs are not equipped or designed to perform towing
functions.

Accommodation vessels and barges provide alternative berthing for offshore personnel in all the
A-30


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stages of the field lifecycle. In exploration and field development stages, accommodation assets are
used to support the presence of on-site workers. In the operation & maintenance stage additional
accommodation might be needed due to IMR requirements. In the decommissioning phase
accommodation unites could be used to provide berthing for specialist decommissioning crew for
large and complex projects.

HLVs are designed for lifting heavy modules to provide support in the commissioning and
decommissioning stages of field development. HLVs could provide towage services to some extent.
However, they are not capable of towing heavy and large floating platforms and providing assistance
in positioning and installation of floating platforms upon arrival at the field.

Pipelay vessels are designed to transport and install tubular pipes and control lines in the field
development stage. The installation process can include barge assets supported by shallow-water
AHTs and tugs or more sophisticated ship-shaped deepwater capable vessels.

MSVs and DSVs include a diverse range of vessels that support construction and/or IMR activity in
the operation and maintenance and the decommissioning stages. Construction work ranges from
basic supply runs to the more specific pre and postlay pipeline work such as seabed preparation.
IMR activity covers a wide spectrum of capabilities aimed at improving or maintaining the
operational performance of offshore assets.

A-31


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3 OFFSHORE OIL AND GAS MARINE VESSELS INDUSTRY
3.1 Introduction and Services Provided
The range of marine vessels that supports the offshore oil and gas industry is diverse in terms of
both size and function. This report focuses on those assets associated with anchor handling duties,
including AHT and AHTS assets, as well as PSV, AV, HLV, Pipelay,MSV and DSV vessels.

AHT and AHTS vessels have traditionally been deployed to tow offshore rigs from one location to
another and to deploy their anchors and mooring systems in order for the drilling asset to maintain a
specific position during the drilling process. AHT and AHTS assets are also used to support the drilling
process in terms of supply runs and safety assurances. AHTs are suited for long range voyage as most
of their underdeck space is allocated for fuel tanks. In contrast, AHTS are designed for in-field
support as the vessels have to leave space and deadweight capacity for the carriage of drilling mud,
cement, base oil, drill water and other supplies. Some AHTS vessels are also equipped for fire
fighting, rescue operations and oil spill recovery. There is additional opportunity for such vessels in
the support of larger anchored construction vessels such as heavy lift assets.

Demand for AHT and AHTS vessels is driven by the number of rigs that are actively drilling, which is
in turn driven by the need to drill wells. The need to drill wells is directly correlated to the prevailing
oil price and the requirement to replace depleted reserves.

A PSV is employed to transport supplies to offshore platforms and return any other cargoes to shore.
PSVs typically have cargo tanks for a variety of goods. However, fuel, water and chemicals are the
primary supplies required by platforms. A PSV will typically have less engine power capacity than its
AHTS counterpart, as its role is more supply focussed.

Demand for PSVs, which are used primarily to supply existing platforms and assist with offshore
construction duties, is driven by the number of operational platforms. More platform installations
will occur if the price of oil is high and if expectations over future energy demand are also high.
Furthermore, a high oil price context may also mean that existing platforms remain economically
feasible and remain operational for a longer period of time.

In addition to AHT, AHTS and PSV vessels, this report also provides analysis on accommodation,
heavy lift and pipelay assets, as well as MSVs and DSVs. Accommodation vessels and barges serve as
alternative berthing for offshore personnel associated with a production platform. On-site
accommodation increases man-hours and reduces expensive crew shuttling. It also enables oil
companies to complete construction or IMR work more quickly, ultimately bringing fields on-stream
faster and reducing loss of production and revenue from a given field.

HLVs are versatile platforms equipped with an offshore crane designed for lifting heavy modules.
These operate within the offshore oil and gas market as well as the renewables sector (primarily in
Northern Europe) and offshore civil marine industry. Additionally, heavy lift vessels can include the
presence of sheerleg cranes which are typically non-self-propelled and used to support ship and
fabrication yards engaged in the construction, maintenance and repair of a range of offshore
structures such as platforms and drilling rigs.

Pipelay vessels are designed to transport and install tubular pipe and control lines utilised in the oil
and gas and associated industries. These can include barge assets supported by shallow-water AHTs
and tugs or more sophisticated ship-shaped deepwater capable vessels.

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32


MSVs and DSVs include a diverse range of vessels that support construction and/or IMR activity.
Construction work ranges from basic supply runs to the more specific pre and post lay pipeline work
such as seabed preparation. IMR activity covers a wide spectrum of capabilities aimed at improving
or maintaining the operational performance of offshore assets.

3.1.1 Support Fleet Analysis
The global fleet of target marine vessels (AHTs, AHTS, PSVs, AVs, HLVs, Pipelays, MSVs and DSVs) is
operated by a wide variety of players with different fleet compositions, service provisions and
regional exposure. Whilst a number of operators provide a fleet of vessels across the whole
spectrum of support vessels, many are segment specialists providing a single capability.

The current fleet of target marine vessels is estimated at 4,975 assets. By far the largest share of the
global fleet consists of PSVs (54%) and AHTSs (31%). These vessels are defined as offshore supply
vessels (OSVs) for the purposes of this report and are analysed extensively in Section 4: Offshore
Supply Vessel Market Analysis.

Other more specialist vessels, such as accommodation, AHTs, pipelay and MSVs/DSVs make up a
much smaller market share at 15%. They are analysed in Section 5: Accommodation Market Analysis
and Section 6: Transport and Installation Market Analysis, respectively. The relatively small market
share of these vessels reflects the type of demand that each vessel type serves with the Capex sector
(pipelay and heavy lift), which is much smaller than the Opex market (PSVs, AHTs and AHTS). AVs can
serve both Opex and Capex markets. Capex work such as commissioning support tends to contribute
the largest portion of work in markets including Brazil, while maintenance work forms the largest
share of the market in conventional sectors such as Mexico and the NWECS.

Whilst each sector has been active in terms of newbuild deliveries, it is the AHT and AHTS market
that has expanded the most over the past five years, with a 14% increase in operational assets
between 2008 and the close of 2012. Elsewhere, there has been considerable growth in the PSV and
multifunctional markets whilst the heavy lift and pipelay sectors have grown at more modest rates.


Figure 566: Historical and Forecast Offshore Support Vessel Fleet by Type
(Units) (2008-2017)

Figure 577: Historical Offshore Support Vessel Fleet Age Profile and
Newbuilds by Type (Units)

With regard to the age profile of the target fleet, a number of trends are clearly apparent. Firstly,
some 34% of the fleet is >20 years old. This weighting towards older tonnage reflects the dynamic
whereby very few offshore assets have ever fully retired and, whilst several have ceased to be
competitive, most tonnage remains operational. Secondly, the recent spate of newbuilds (post 2005)
has bolstered the fleet considerably, with some 39% of the vessels being either under construction
or delivered since 2008.
0
1,000
2,000
3,000
4,000
5,000
6,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
AHTS PSV Heavy Lift Pipelay Multifunctional (MSV/DSV) Semi-sub Accommodation
N
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>1992 1993-97 1998-02 2003-07 2008-12 Newbuild
AHTS PSV Heavy Lift Pipelay MSV DSV Accommodation
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A-33


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Recent deliveries have driven a considerable polarisation in the market. Many operators strictly
provide assets built post 2005, whilst others are more conventionally focussed on older tonnage.
Operating a youthful fleet is considered to be a significant competitive advantage in the market as
operators tend to choose the best available tonnage for a specific project and youthful vessels often
have superior specifications, safety records, and in many cases are more modern.

3.1.2 Drilling Fleet Analysis
The drilling fleet has seen a similar spate of newbuilds across all classes since the mid-2000s, though
semi-submersibles have seen fewer orders than jack-ups and drillships to date. Despite the growth
in overall rig numbers, utilisation levels and dayrates have recovered strongly since the global
financial crisis as demand for drilling units has surged on the back of high oil prices and an increase
in exploration, appraisal and development drilling activity. Indeed, some rig owners have actually re-
activated older stacked jack-ups built in the 1970s & 1980s in order to meet growing demand,
particularly in the shallow water US GoM, Mexico, Middle East and South East Asian markets.

Infield Systems Limited expects the current wave of newbuild activity to continue, particularly
among high-spec jack-ups and drillships, resulting in steady growth of the overall drilling fleet from
an estimated 802 units in 2013, to a forecast fleet of 885 units by the end of 2016. As the large
order-book of newbuild rigs slowly begins to be delivered to the market, operators are expected
gradually to increase the rate at which they retire older units from their operational fleets, in line
with a rise in demand for higher specification assets. Indeed, from 2016, the retirement of older
assets is expected to begin outpacing newbuilds, resulting in a slight reduction in the overall drilling
fleet towards the end of the forecast period.

Figure 588: Historical and Forecast Contracted Rigs vs. AHTS/PSV Fleet
Evolution (Units) (2008-2017)

Figure 599: Historical and Forecast Total Rigs vs. AHTS/PSV Fleet
Evolution (Units) (2008-2017)

Nevertheless, high levels of exploration, appraisal and development drilling are expected to support
utilisation rates above 85% throughout the forecast period with dayrates remaining buoyant as a
result. This is illustrated in figures 57 and 58 above which show the total fleet of active rigs
xi
, a high
proportion of which are expected to remain contracted throughout the forecast period.
3.2 Key Market Drivers
3.2.1 Commodity Price
The prevailing commodity price is a significant indicator towards overall offshore activity levels and
towards the support vessel market in particular. For example, utilisation and dayrates reached a

xi
Active rigs are those that are under contract or cold stacked.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
0
100
200
300
400
500
600
700
800
900
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Contracted Rigs (LHA) AHTS/PSV Fleet (RHA)
N
u
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b
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o
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R
i
g
s

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1,000
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3,000
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4,000
4,500
5,000
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500
600
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Total Rigs (LHA) AHTS/PSV Fleet (RHA)
N
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o
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R
i
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s

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34


peak in 2007-2008 when oil prices were in excess of USD120/bbl. By contrast, a steep fall in
commodity prices can lead to a reduction in short-term E&A drilling, eroding the level of demand for
the support vessel market. With oil prices expected to remain above USD100/bbl throughout the
next five years, Infield Systems Limited believes that the prevailing commodity price will be a
positive driver to the overall support vessel sector.

3.2.2 Offshore E&P Capex Level
After three years of limited contracting activity in the wake of the global financial crisis, industry
capital expenditure rebounded in 2011 and grew significantly in 2012, driven by a resurgence in
emerging market energy demand and operators efforts to monetise new resources in an
environment of rising oil prices. Infield Systems Limited expects this trend to continue, with the US
economic recovery and renewed drive for energy independence likely to push total E&P capital
expenditure, both offshore and onshore, to USD678bn in 2013, a 10% rise year-on-year
23
.

Turning to offshore capital expenditure specifically, Infield Systems Limited expects overall spending
to hit USD579bn over the forecast period between 2013 and 2017, a 74% increase on 2008-2012
xii
.
Capex is slated to grow at a CAGR of 10.5% between 2013 and 2017, resulting in a total commitment
of over USD141bn in 2017. The largest markets over the forecast period will remain Latin America
(19.1%), Europe (18.7%), Asia (18.1%) and Africa (17.2%) but the strongest growth in Capex is
expected to be in Africa (CAGR 27.2%), Middle-East & Caspian (CAGR 15.0%), Australasia (CAGR
14.9%) and Europe (CAGR 14.9%).

Offshore oil field related investment is forecast to grow strongly in West Africa, Latin America and
North America whereas capital expenditure on gas developments is expected to be strongest in
Australia, the North Sea, Israel, Cyprus, Asia and the Middle East. Onshore shale gas in the US is
already posing a large threat to offshore gas production with the initial effect being felt in shallow
water gas activity within the US GoM basin. At present, this threat is largely restricted to the US
GoM because commercial shale gas production has been slow to take off in markets outside North
America. Operators continue to appraise the potential of emerging shale gas basins in markets such
as Australia, China, Argentina and parts of Europe but this activity has not yet damaged offshore
investment. Indeed, a range of factors including relatively high costs of production, underdeveloped
midstream links, limited onshore oilfield services capacity and widespread environmental opposition
means that commercial shale gas production in these emerging basins is unlikely to reach a sufficient
scale within the forecast period of this report to cannibalise offshore spending as it has in the US
GoM.

Within South East Asia, investment on conventional fixed platform infrastructure and associated
pipelines is likely to account for the majority of capital expenditure. The installation of such
equipment is a direct opportunity for offshore support vessels such as pipelayers and heavy lifters.
Furthermore, the addition to the cumulative base of infrastructure is a distinct opportunity for PSVs,
AHTS and AVs.


xii
Infield Systems Limiteds capital expenditure figures cover global engineering, procurement, construction and installation investment
associated with offshore infrastructure. The data excludes non-development drilling and other exploration expenses.
A-35


35



Figure 60: Historical and Forecast Offshore Capex by Region (USDm)
(2008-2017)


Figure 611: Historical and Forecast Offshore Capex by Object Type
(USDm) (2008-2017)
3.2.3 Operational Base of Platforms
The key driver for the PSV market is the operational base of production platforms. While the number
of production platforms has shrunk from 11,345 in 2008 to an estimated 11,101 in 2013, the decline
has been almost entirely due to the removal of small, often unmanned, caisson and piled platforms
in the shallow water GoM. It should be noted that these platforms, when producing, were of limited
opportunity to the PSV fleet as many were unmanned and those that were manned were placed
close to shore for crew or helicopter shuttling services. Their removal could also be seen as an
opportunity to a heavy lift asset or supporting DSV/MSV engaged in the decommissioning of
ageing infrastructure. Thus the net effect of North Americas declining platform base on the support
vessel market is far less severe than the raw operational platform data might suggest.

Moreover, across every region except for North America, the operational base of infrastructure has
actually increased and is expected to continue growing at a CAGR of 2.0% over the forecast period to
reach 7,797 units by 2017. This growth indicates a strong opportunity for additional supply runs.
Meanwhile, the increasing quantity of frontier and remote exploration has created a trend towards
platforms further from shore a key long-term opportunity for the platform supply market and the
accommodation vessel market.


Figure 622: Historical and Forecast Operational Base of Platforms by
Region (Units) (2008-2017)

Figure 633: Historical and Forecast Operational Base of Platforms
Excluding North America by Region (Units) (2008-2017)

The largest increase in operational platforms is expected within Asia, which is expected to have
2,688 platforms operational by the close of 2017, up from 2,284 in 2012. Elsewhere, considerable
growth is also expected within the Middle East & Caspian (CAGR 3.2%), Latin America (CAGR 1.7%)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
U
S
D
m

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
ControlLine Pipeline Platform Single Point Mooring Subsea Completion
CAGR
9.3%
U
S
D
m

0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
N
u
m
b
e
r

o
f

P
l
a
t
f
o
r
m
s

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp.
CAGR
2.1%
N
u
m
b
e
r

o
f

P
l
a
t
f
o
r
m
s

A-36


36


and Africa (CAGR 1.2%).

3.2.4 Offshore Drilling Activity
Whilst the operational base of platforms is a key driver for the PSV market, the bulk of AHT and
AHTS work is associated with the support of drilling rigs, which in turn are engaged with the drilling
of offshore exploration, appraisal and development wells.

Throughout the 2008 to 2012 period, an estimated 17,000 offshore exploration, appraisal and
development wells were drilled across all markets. Over the course of the forecast period, the
number of wells drilled is expected to increase by 13% to over 19,500.

Asia is expected to draw the largest amount of drilling activity with 35% of the market, followed by
Europe with 15%, Africa with 13%, North America with 12%, the Middle East & Caspian with 11%,
and Latin America with 10%. Australasia will see just 3% of the forecast drilling activity. Growth in
offshore drilling is expected to be fastest in North America (CAGR 5.2%), Europe (CAGR 5%) and Asia
(CAGR 2.5%).


Figure 644: Historical and Forecast Offshore Wells by Region (Units)
(2008-2017)

Figure 655: Historical and Forecast Offshore Wells by Type (Units) (2008-
2017)

This growth in the drilling market is a considerable opportunity for the series of AHT and AHTS
vessels in the sector. This is particularly the case in the deepwater segment as operators move into
remote and frontier basins to replace dwindling shallow-water and onshore reserves. The trend is
most marked in relatively mature regions such as the GoM, North Sea, Brazil, parts of West Africa,
and a number of Asian markets such as India and Malaysia. We expect this trend to continue
throughout the forecast period, providing excellent opportunities for specialist deepwater and ultra-
deepwater capable AHTS vessels.

3.2.5 Platform Installation
There are a wide variety of platform structures. The majority of fixed structures sit on steel supports
known as jackets, whilst a small number are built from concrete. Both have topside production
facilities secured on top of their fixed base.

A growing theme in the offshore market is the presence of floating production facilities which do not
sit directly on the seabed, but rather act as gathering systems for subsea wells which are linked by
pipeline infrastructure. Floating platforms can be designed as FPSOs, tension leg platforms (TLP)
and spars, amongst others. Floating platforms are used prominently within deepwaters (>500m)
where it is unfeasible to install a jacket due to the costs involved.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
N
u
m
b
e
r

o
f

W
e
l
l
s

0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
E&A Development
CAGR
2.4%
N
u
m
b
e
r

o
f

W
e
l
l
s

A-37


37



Fixed and floating platform installations represent significant opportunities for support vessel
providers. Firstly, pre-construction site preparation is required, necessitating DSV and MSV support.
During the construction phase, heavy lift vessels are then required to install topside modules with
full commissioning work completed by MSVs/DSVs. Floating platform installations can also represent
a more limited opportunity for AHTs and AHTSs due to platform mooring requirements. Finally, both
fixed and floating structures then require substantial support from PSVs once operational, while
accommodation vessels may also be required to support both construction and IMR operations
relating to the platform.

In the years between 2008 and 2017, over 2,300 platforms are expected to be installed, with some
893 slated for Asian waters. The floating segment will see particularly strong growth over the
forecast period (2013-2017) with unit installations slated to grow by a CAGR of 14.1%, compared to
a 9.0% CAGR for fixed platforms and a 10.0% CAGR overall. The increase in activity is highlighted as a
distinct opportunity for heavy lift, MSV/DSV and PSV support vessels.


Figure 666: Historical and Forecast Platform Installation Activity by
Region (Units Installed) 2008-2017

Figure 677: Historical and Forecast Platform Installation Activity by
Fixture Type (Units Installed) 2008-2017

3.2.6 Pipe and Control Line Installation
Pipelines carry produced hydrocarbons from the seabed to a destination such as a gathering
manifold or onshore terminal. Control lines carry four principal components: electricity, hydraulic
fluids, chemicals and fibre optics. The latter are used to monitor hydrocarbon flows, whereas
electricity and hydraulics are used to control offshore equipment, primarily subsea units. Finally,
chemicals are used for flow assurance purposes.

Between 2008 and 2012, around 38,700km of pipelines were installed globally with Asia, Europe and
the Middle East & Caspian amounting to the largest markets. Over the forecast period, pipeline
installation activity is expected to grow by a CAGR of 9.9% to 15,133km in 2017. The largest markets
will remain Asia and Europe, while the Middle East & Caspian and North America will see a
significant drop in market share. Installation growth is expected to be strongest in Africa (CAGR
47.6%) and Europe (CAGR 20.6%).

Between 2008 and 2012, around 15,200km of control lines were installed globally with Europe, Asia
and the Middle East & Caspian being the largest markets. Over the forecast period, control line
installation activity is expected to grow by a CAGR of 8.9% to 6,417km in 2017. Europe will remain by
far the largest market, while Asia, the Middle East & Caspian and North America will all see their
market share fall slightly. Control line installation growth will be strongest in Europe (CAGR 24%) and
Africa (CAGR 12%). The vessel classes that are likely to benefit the most from this increase in
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
N
u
m
b
e
r

o
f

P
l
a
t
f
o
r
m
s

0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Fixed Floating
CAGR
10.0%
N
u
m
b
e
r

o
f

P
l
a
t
f
o
r
m
s

A-38


38


installation activity include pipelay and MSV/DSV support assets as well as AHTs, tugs and barges
which can be utilised for near-shore work.

Figure 688: Historical and Forecast Pipeline Installation Activity by Region
(Phased KM Installed) (2008-2017)

Figure 699: Historical and Forecast Control Line Installation Activity by
Region (Phased KM Installed) (2008-2017)

3.2.7 Subsea Installation
Subsea infrastructure, such as manifolds, templates, processing units, pipeline end terminals
(Plet), pipeline end manifolds (Plem) and booster pumps also require heavy-lift support. This
growing market is therefore a growing opportunity for heavy lift vessels, whilst installation support is
also an opportunity for support vessels such as multifunctional units and anchor handlers.

Figure 70: Historical and Forecast Subsea Installation Activity by Region
(Units Installed) 2008-2017

Figure 701: Historical and Forecast Subsea Installation Activity by Type
(Units Installed) 2008-2017

Over the 2008-2012 period, an estimated 355 subsea units were installed globally. We expect this
number to increase by around 85.6% over the forecast period to 659. The largest markets over the
forecast period are expected to be Europe, Africa, Asia and Latin America. However, subsea
installation growth will be greatest in Africa (CAGR 31.6%), Australasia (CAGR 24.5%) and Europe
(CAGR 17.5%).

Table 1: Pipeline and Control Line Installation and Support Vessel Capability Summary Table
Drivers AHT AHTS PSV Heavy Lift Accommodation MSV DSV
Commodity Price
Offshore E&P Capex
Operational Base of Platforms
Drilling
Platform Installation
Pipeline & Control Line Installation
Subsea Installation
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
CAGR
8.1%
k
m

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
CAGR
8.7%
k
m

0
20
40
60
80
100
120
140
160
180
200
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Africa Asia Australasia Europe Latin America ME & Casp. North America
CAGR
9.2%
N
u
m
b
e
r

o
f

S
u
b
s
e
a

I
n
s
t
a
l
l
a
t
i
o
n
s

0
20
40
60
80
100
120
140
160
180
200
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Template Manifold Other
N
u
m
b
e
r

o
f

S
u
b
s
e
a

I
n
s
t
a
l
l
a
t
i
o
n
s

A-39


39


3.3 International Operator Fleet Overview
3.3.1 Introduction
This section provides a comparative overview of the size, age, capability and strategy of the 13 major
international vessel providers, namely, Tidewater, Bourbon, Swire Pacific Offshore, Farstad, POSH,
Ezra, China Oilfield Services Limited (COSL), Bumi Armada, Swiber, Mermaid Marine Australia
(MMA), Solstad, Hornbeck and Seacor. Together, these providers make up a significant share of
the global support vessel fleet outlined in Section 3.1.1 Support Fleet Analysis. The section covers the
key target vessel classes: AHTs, AHTS, PSVs and AVs, as summarised in the following table.

Unless the context otherwise requires, references in this report to POSHs vessels, fleet, vessel fleet
or combined vessel fleet refer to vessels which POSH and its subsidiaries own, as well as vessels held
through its joint ventures, which POSH accounts for as jointly controlled entities using the equity
method (the Joint Ventures) as at 31 December 2013. Unless the context otherwise requires,
references in this report to POSHs vessels to be delivered refer to vessels scheduled to be delivered
to POSH and its subsidiaries, as well as the Joint Ventures, as at 31 December 2013.

Table 2: Vessel Fleet Summary Table
xiii

Operator Vessels
Operated
Vessels
Owned
# of
AHTS
# of
AHTs
# of
PSVs
# of Accommodation
Vessels
# of
Newbuilds
xiv

Average Fleet
Age
Bourbon 458 439 87 0 66 0 41 9.5
Tidewater 328 318 133 0 106 0 25 12
Seacor 189 160 18 0 16 0 16 11.5
POSH 112
xv
67
xvi
14 19 13 5
xvii
13 6.5
Swire 101 101 62 20 12 2 18 7.5
COSL 75 75 29 0 4 0 15 8
Swiber 62 50 19 8 0 0 1 4
Hornbeck 61 61 2 0 49 0 18 10
Farstad 59 59 30 0 26 0 5 7.5
Solstad 50 50 22 0 9 0 2 12
B. Armada 45 45 20 5 4 7 5 6.5
Ezra 42 N/A 24 7 8 0 2 4.5
MMA 35 35 5 13 2 0 2 7.5
Industry
Average
125 94 35 5 24 1 12 8

3.3.2 POSH Fleet
POSH is the largest Asia-based international operator which operates globally with a modern and
diverse fleet of 112 vessels including 14 AHTS, 19 AHTs, 13 PSVs, five accommodation vessels
(includes one vessel that is scheduled for conversion into a 198-person accommodation vessel), four
crane barges, 23 harbour tugs, nine towing tugs, 20 barges and five support vessels. The fleet
operates worldwide serving offshore oil fields in Asia, Africa and Latin America.

POSH has successfully expanded the scale of its fleet in terms of both capabilities and size. The
vessels POSH operates grew from 93 vessels as at December 31, 2010 to 112
xviii
vessels as at

xiii
Sources: Infield Systems Limited vessels database
xiv
Newbuilds due for delivery beyond December 31, 2013
xv
Includes one vessel that is scheduled for conversion into a 198-person accommodation vessel
xvi
Vessels owned by POSH and its subsidiaries
xvii
Includes one vessel that is scheduled for conversion into a 198-person accommodation vessel
xviii
Includes one vessel that is scheduled for conversion into a 198-person accommodation vessel
A-40


40


December 31, 2013. As at 31 December 2013, 13 additional vessels are expected to be received
between 2014 and 2015, including three 8,000BHP AHTS, one 16,300BHP AHT, four harbour tugs,
three 238-person accommodation vessels and two 750-person semisubmersible accommodation
vessels.

3.3.3 Competitive Fleet Overview
Persistently high oil prices have stimulated and will continue to encourage offshore drilling activity.
However, the increase in support vessel demand has not been enough to balance the considerable
rise in vessel supply over the last five years, thereby creating excess-supply in the short-term.
However, in the coming years, a certain improvement in the AHTS segment is expected as a large
number of old vessels
24
are expected to be removed from the market and demand for younger,
modern, and more sophisticated vessels increases rapidly.

By contrast, we expect the PSV market to remain in a state of oversupply simply due to the tide of
newbuilds set to be delivered over the forecast period. For instance, Tidewater, Swire and Hornbeck
are expected to receive 18, 14 and 13 new PSVs, respectively, over the next three years.


Figure 712: Average Fleet Capability by Operator (BHP)
xix


Figure 723: Average Fleet Capability by Operator (DWT)
xx


Figure 734: Fleets Operated Including Newbuilds by Operator
xxi


xix
BHP refers to break horsepower
xx
DWT refers to dead-weight tons
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Average PSV DWT
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0
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200
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400
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600
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2
4
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n
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s

No. of Vessels (2013) No. of Vessels (2015) Fleet Age (LHS)
A
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A-41


41


Despite the oversupply of support vessels in some segments of the market, there is a growing need
for deepwater capable vessels, driven by increased deepwater E&P activity across the globe.
Included in the deepwater class are higher-engine power capacity (generally greater than
10,000BHP) AHTSs and large (typically greater than 230-feet and/or with over 3,000DWT) PSVs. In
addition to size and power, deepwater AHTS and PSVs need to be constructed and fitted with more
robust equipment (low pressure anchor handling winches) and redundancies, such as dynamic
positioning 2/3 capabilities and multi-engine or diesel electric propulsion, so as to operate safely and
reliably under harsh conditions.

Consequently, fleet operators with modern tonnage stand to gain. Among the support vessel
operators, POSH, Farstad, Bourbon and Solstad are well positioned in the deepwater market. The
average engine power capacity of their AHT/AHTS vessels is over 10,000BHP and the average cargo
carrying capacity of their PSVs is over 3,000DWT, significantly higher than the specification of other
competitors vessels. In contrast, Tidewater, MMA, Swiber and Bumi Armada have relatively lower
average engine power capacity of AHTS at below 6,100BHP.

Another characteristic of the global support vessel market is the different dynamics in regional
demand and supply. The South East Asian and the North Sea markets have been characterised by
over-capacity of tonnage with low rates and low utilisation over recent years. However, markets
such as West Africa, Brazil and the GoM have seen more attractive rates and utilisation due to the
rapid growth in offshore activity and relatively limited vessel deployment. Vessel operators with a
global presence, sound track-record and larger fleet will have the advantage in capturing new
demand in these regions. POSH, Tidewater, Swire, Bourbon, Hornbeck and Farstad are the strongest
global players with support fleets over 50 vessels (including expected newbuilds) each and revenue
generated from diverse geographic regions.

Given the backdrop of rapid growth in deepwater activity and new regional opportunities, the
strategic objectives of major support vessel operators are broadly similar. The goals are to develop a
young and modern fleet of vessels, maintain a sound execution and safety track record, and pursue a
growing global presence.

Tidewater is currently modernising its fleet (average age 12.6 years), ordering 22 new support
vessels to be delivered in 2013 and in 2014. Bourbon will build 41 new vessels, including 15 new
generation PSVs, in the coming three years. At POSH, the largest international operator based in Asia
by number of vessels operated, its fleet grew from 93 vessels as at December 31, 2010 to over 112
vessels as at December 31, 2013 with 13 additional vessels expected to be received between 2014
and 2015. Farstad will receive 12 newbuilds in the three year period from 2012 to reduce the fleet
age from 7.5 years to 5.5 years. Swire has 26 new vessels under construction, which are expected to
be delivered within the coming three years. Finally, COSL signed an agreement for the construction
of 15 OSVs to enhance its capabilities in deepwater operations.


xxi
Includes all vessels
A-42


42



Figure 745: Vessel Type by Operator (2013)

Figure 756: Vessel Type by Operator (2015)

Along with ordering larger and modern newbuilds, operators have been actively retiring or selling
their oldest AHT/AHTS, especially those built in the 1980s, to maintain a young and modern fleet.
For instance, in 2012, Farstad sold five AHTS constructed in the 1980s and Swire sold four old
vessels.

A number of regional contractors have increased their global presence over the past few years. Ezra,
for example, has evolved from an Asia-centric operator into a global provider with nearly two-thirds
of its revenue generated from outside Southeast Asia in 2012. COSL was predominately a Chinese
regional vessel provider five years ago. Along with CNOOC, its parent company, COSL has now
expanded rapidly into Europe, Southeast Asia and other regions. Finally, Asia-focused Bumi Armada
is also establishing a presence in new markets across Asia, Latin America and Africa. With more
regional-focused vessel operators expanding into international markets, we expect a further
increase of competition in the global market in the coming years.

In summary, major support vessel operators are expanding rapidly in terms of both fleet size and
quality, differentiating themselves further from smaller regional vessels providers such as Pacific
Radiance, Pacific Richfield Marine, and the Shipping Corporation of India. Compared with the high-
powered and modern fleets of the major global operators, the vessel fleets of such smaller regional
vessel providers may lack the size, track record, and capability to provide complete and competitive
services on the global stage.

With a young, large, and modern fleet as well as a global presence, major global operators such as
Farstad, Bourbon, POSH, Swire and Ezra are well positioned to meet existing vessel demand in
addition to that sourced from new and deepwater regions. However, we expect strong competition
in the global support vessel market, especially in the PSV segment, as a large number of newbuilds
are coming into the market over the next three years. We anticipate that operators with high-end
specialised vessels, strong execution track records, and diverse regional base will thrive in this
competitive environment.

POSHs 19 AHTs have an average engine power capacity of 8,536BHP and an average fleet age of 5.9
years. The fleet serves both deepwater and shallow water operations worldwide, with recent work
completed in Asia Pacific, the Indian Ocean, West Africa, Brazil and Venezuela (see table 3 below).

We define a deepwater AHT as having engine power capacity in excess of 10,000BHP and shallow
water AHT as having engine power capacity of less than 10,000BHP. Shallow water AHTs are used
mainly for support of construction work and transportation, while deepwater AHTs provide towage
services when floating platforms need to be mobilised to other fields or to repair yards, and support
F
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458
328
189
112
101
75
62 61 59
50 45 42
35
0
100
200
300
400
500
600
700
AHTS/AHTs PSVs Accommodation Vessels Other Vessels
N
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a
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s
i
a

S
i
n
g
a
p
o
r
e

A
u
s
t
r
a
l
i
a

499
353
205
119 119
90
79
64 63
52 50 44
37
0
100
200
300
400
500
600
700
AHTS/AHTs PSVs Accommodation Vessels Other Vessels
N
u
m
b
e
r

o
f

V
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s
s
e
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s

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43

services for construction activities.

POSH has one of the largest deepwater AHT fleet in the world ranked by fleet size. It is worth noting
that some regional vessel suppliers may operate a competitive fleet of deepwater AHTs. For
example, Harms Bergung, a German based vessel provider, operates a deepwater AHT fleet of six
vessels, including two 24,000BHP and four 16,000BHP AHTs. Fairmount Marine, a Netherlands based
operator, also operates a fleet of six deepwater AHT vessels, of which five are 16,320BHP ocean
tugs built around 2006. POSH has eight deepwater AHT vessels with an average age of 5.2 years,
including three 16,300BHP AHTs, Terasea Eagle, Terasea Falcon and Terasea Hawk. POSH also has 11
shallow water AHTs with an average age of 6.4 years. When the Terasea Osprey is delivered in the
first quarter of 2014, POSHs fleet of deepwater AHTs will have a combined engine power of
128,200BHP, making it the largest in the world ahead of Harms Bergung with 112,000BHP.

Some heavy lift vessel operators such as Dockwise and OHT also compete in rig towage activities.
However, they have limited capability in the towage market as heavy lift vessels are not capable of
handling FPSOs or large-dimension floating platforms. In addition, the heavy lift vessels are designed
only for transportation and are unable to support the positioning and installation of the floating
platforms when they are delivered on location.

POSH is also very competitive in the shallow water AHT market. In the segment, POSH has the third
largest vessel fleet. Interestingly, all the major shallow AHT operators are based in the Asia Pacific
region. In summary, the fleet size and average engine power capacity position POSH as one of the
leading global players in the AHT industry.

It is worth noting that with a young and modern fleet of both deepwater and shallow water AHTs,
POSH has a significant advantage in supporting projects that need the cooperation of both high and
low engine capacity AHTs. Furthermore, in addition to the deepwater and shallow water AHTs,
POSHs transportation and installation fleet has a diverse range of vessels such as tank barges, semi-
submersible barges and launch barges, enabling POSH to provide full n fleet to support large and
complex offshore developments.



Figure 767: Deepwater AHT Vessels

Figure 778: Shallow water AHT Vessels

5.2
7.0
Industry
Average: 6.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0
1
2
3
4
5
6
7
8
9
POSH Swire
V
e
s
s
e
l

# of Deep Water AHT Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
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t

A
g
e

F
l
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e
t

A
g
e

F
l
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A
g
e

7.5
9.5
6.4
6.0
5.0
Industry
Average: 6.9
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
0
2
4
6
8
10
12
14
16
18
Swire MMA POSH Swiber Ezra
V
e
s
s
e
l

# of Shallow Water AHT Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
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F
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A
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44



Figure 789: Total number of AHT Vessels

POSHs has a particularly impressive track record in relation to the transport and installation (T&I)
of large floating production and/or storage systems. As at 31 December 2013, the company has
executed a total of 53 floating system T&I contracts since 1991.

As table 3 below illustrates, 13 of the companys 17 confirmed T&I contracts since 2010 have been
executed in Asia-Pacific. POSH has been involved in at least seven of the 35 floating unit installations
that have taken place in Asia-Pacific between 2010 and 2013
xxii
. That includes five of the 15 largest in
terms of topside weight the Bach Ho FSO (150,000mT), Montara Venture FPSO (148,255mT),
Armada Sterling FPSO (107,000mT), Glas Dowr FPSO (106,685mT) and Ruby II FPSO (104,000mT).
Outside of its core market, POSH has also completed a number of notable T&I contracts for floating
systems including the giant CLOV, Usan and Papa Terra (P-63) FPSOs at 387,000mT, 330,000mT and
322,912mT respectively.

Table 3: POSH Floating Unit Transportation & Installation Contracts (2010-2013)
Vessel or Project Name Type Year Water Depth (m) Destination
CLOV FPSO 2013 1,400 Block 17, Angola
Ikdam FPSO 2013 n/a Singapore
CLOV FPSO 2013 1291 CLOV, Angola
Gumusut-Kakap FPS 2013 1,200 Gumusut-Kakap Field, Malaysia
Cilcap FSO 2013 400 Kota Baru, Indonesia
Ikdam FPSO 2013 280 Offshore Labuan, Malaysia
Papa Terra (P-63) FPSO 2012 n/a Brazil
Armada Sterling FPSO 2012 85 D1 Field, Mumbai High North, India
Montara Venture FPSO 2012 80 Montara Field, Timor Sea
Geudondong FSO 2012 n/a Poleng Madura, Indonesia
Erawan II FSO 2012 67 Gulf of Thailand
Berkut Gravity Based
Structure
N/A 2012 35 Arkun Dagi Field, Offshore Sakhalin
Usan FPSO 2011 800 Nigeria
Glas Dowr FPSO 2011 350 Kitan Field, Timor Sea
Ruby II FPSO 2010 50 Ruby Field, Vietnam
Bach Ho FSO 2010 50 Bach Ho Field, Vietnam
Glas Dowr FPSO 2010 350 Singapore

POSHs impressive track record in this field is set to continue with the towage of the Ichthys central

xxii
These are total floating system installations in Asia-Pacific this includes towed and self-propelled units.
7.4
5.9
9.5
6.0
5.0
Industry
Average: 6.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
0
5
10
15
20
25
Swire POSH MMA Swiber Ezra
V
e
s
s
e
l

# of AHT Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
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F
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F
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45


processing facility (CP Facility) from Geoje to its installation site in the Browse Basin in 2015/2016.
The unit will weigh approximately 137,000mT, measuring 110m by 110m, and with an approximate
draft of 15m. Once the Ichthys CP Facility is completed it will be the worlds largest CP Facility
installed to date.

POSH is likely to continue to benefit from its unique deepwater expertise and track-record. Its fleet
of eight high-specification deepwater AHT vessels (all >12,000BHP), led by the three 16,300BHP
AHTs Terasea Eagle, Terasea Hawk and Terasea Falcon, has an average age of just 5.2 years, making
it very well suited for T&I work with large deepwater FSOs and FPSOs. Of the 17 global T&I contracts
POSH has executed over the 2010-2013 period, four are in more than 500m of water including
Gumusut-Kakap, CLOV and Usan (see figure 80).


Figure 80: Global T&I Market Share by Region (2010-2016)

Figure 791: POSH T&I Contracts by Type, Water Depth & Year (2010-2013)

Rest of the
World
51%
Asia-Pacific
49%
280
1,291
80 85
350
800
50
400
67
1,200
0
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011 2012 2013
W
a
t
e
r

D
e
p
t
h

(
m
)

FPSO FSO FPS
CLOV: Terasea
Falcon, Terasea
Hawk,
Salviceroy
Gumusut-
Kakap: Terasea
Falcon,
Salvanguard,
Salviscount,
Salviceroy
Usan:
Salviscount,
Salviceroy,
Salvigilant
A-46


46


4 OFFSHORE SUPPLY VESSEL MARKET ANALYSIS
This section provides a general overview of the PSV and AHTS market analysing the drivers of
demand, future market trends, current fleet characteristics and prospects for future PSV and AHTS
supply and demand.

Please note that the AHT and pipelay markets are covered within Section 6: Transport and
Installation Market Analysis, the accommodation market is analysed in and Section 5:
Accommodation Market Analysis, and harbour tugs and emergency vessels are covered within
Section 7: Harbour Services and Emergency Response.
4.1 Platform Supply Vessels
4.1.1 Drivers of Demand and Targetable Market
As discussed in Section 3.1.1: Support Fleet Analysis, PSVs are typically engaged to provide support
to the operational base of offshore production platforms. As such, the key market driver for their
employment is the overall quantum of platforms.


Figure 802: Historical and Forecast Operational Base of Platforms by
Region (Units) (2008-2017)

Figure 813: Historical and Forecast Operational Base of Platforms
Excluding North America by Region (Units) (2008-2017)

In total, the operational base of platforms is expected to reduce by a CAGR of 2.5% to 10,032 by
close of 2017 (see Section 4.2.3: Operational Base of Platforms). However, excluding North America,
the operational base is slated to increase from 7,214 in 2013 to 7,797 in 2017, a CAGR of 2.0%.

Accordingly, the overall level of demand in the sector is expected to increase considerably,
particularly given that most of the platform removals in the North American market are small, often
unmanned, units that require relatively little in the way of PSV demand. Beyond North America, the
growth in operational platforms is expected to be strongest in Asia (CAGR 3.3%), the Middle East &
Caspian (CAGR 1.9%), Europe (CAGR 1.3%) and Africa (CAGR 1.2%)

4.1.2 Future Market Trends
In general the service provided by PSVs has remained unchanged since the inception of the market.
The assets continue to provide supplies, including fuel, water and dry bulk to offshore platforms and
return any other cargoes to shore. The key changes within the market have been dictated by the
increased number of platforms in deepwater and in remote locations in addition to procurement
strategies driven by operators such as Statoil ASA (Statoil) that have prioritised greener, more
environmentally friendly assets (see Green Initiatives section below).
0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
N
o
.

o
f

P
l
a
t
f
o
r
m
s

Africa Asia Australasia Europe Latin America ME & Casp. North America
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2008 2009 2010 2011 2012 2013 E 2014 E 2015 E 2016 E 2017 E
N
o
.

o
f

P
l
a
t
f
o
r
m
s

Africa Asia Australasia Europe Latin America ME & Casp.
CAGR
2.1%
A-47


47


Deepwater
In 2000 there were 32 platforms installed in deepwater throughout the offshore market. By 2012
this had increased to 115, and we expect a further increase to 154 over the forecast period. The
considerable growth in the market, fostered by Brazil, West Africa and North America, has increased
deepwater platform supply demand significantly.

As a result of the growth in deepwater demand, which is expected to continue beyond the close of
this forecast, a series of larger vessels have been designed. Deepwater capable vessels have been
equipped with DP systems that facilitate reliable station keeping without the requirement for direct
mooring on the seabed. These vessels have also been designed to be larger than conventional
vessels and have traded at higher rates by comparison.
Green Initiatives
Statoil chartered the worlds first LNG fuelled PSV from Eidesvik Offshore ASA in 2003 and has long
been a pioneer of green initiatives within the OSV market in an attempt to curb emissions. Swapping
conventional diesel for LNG has the potential to reduce CO2 emissions by some 20% and NOX
emissions by 90%, in addition to eliminating emissions of sulphur. Such an example is a clear
indication of a recent shift towards PSVs with high green credentials; indeed, companies such as Det
Norsk Veritas (DNV), a classification society provide clean notations to emphasise the highest
levels of environmental compliance.

The move towards green initiatives such as dual-fuelled vessels has been adopted in Northern
Europe and within North America and is expected to make further inroads to other regions such as
South East Asia in the short to medium term. A trend towards environmental friendly assets is
expected to increase within POSHs target markets, particularly with regards to IOC clients.
Frontier Developments
Frontier developments refer to demand in regions such as the Arctic, East Africa and the ultra-
deepwater basins found in Brazil and West Africa. An increase in demand throughout these regions
is expected throughout the coming period as platform installation in each increase in prominence.
Brazil and West Africa are already key hubs of offshore activity but the Arctic and East Africa remain
very much emergent.

The characteristics of the field developments within frontier regions revolve around assets being
installed in more remote and deeper waters. In order to serve these markets PSVs are likely to
require larger cargo tanks and DP systems.

4.1.3 Fleet Characteristics
In total there were over 2,500 competitive PSVs at the close of 2012. Using the current order-book,
this is expected to increase to some 2,680 by the end of 2013. With attrition
xxiii
set at 40 years post-
delivery, Infield Systems Limited expects to see a limited increase in operational units in the short
term, followed by a long-term reduction. Mirroring the operational base of platforms, the single
largest proportion of PSVs operates in North American waters. The largest growth has been within
Asia and this is likely to continue.

The recent spate of newbuild deliveries has increased the proportion of the fleet which is less than
10 years old, but the bulk of supply remains weighted towards older assets. The fact that much of
the fleet has been operational for over 20 years is considered as a competitive advantage for

xxiii
The gradual reduction of the operational fleet by not replacing assets lost through retirement
A-48


48


operators such as POSH which operates a younger fleet due to conventional tonnage being unable to
work in the deeper, more remote areas that are driving the increase in demand. The average age of
platform supply vessel markets currently within the market sits at 18 years.

In terms of service providers the largest fleets are operated by companies such as Tidewater Marine,
China Oilfield Services Limited, Bourbon Offshore and Hornbeck Offshore. Prominent providers in
South East Asia include Icon Offshore, Bumi Armada and Seacor Marine. POSH will operate a
particularly young fleet with 15 assets expected to be delivered between 2013 and 2015.


Figure 824: Historical and Forecast PSV Supply by Region (Units) (2008-
2017)

Figure 835: Historical Average PSV Vessel Age by Time-Period and
Newbuild Forecast (Units)

With regard to clients, the most significant are expected to be those with the largest operational
production platform bases. Specifically within South East Asia the presence of a range of NOCs such
as PTT Exploration and Production Plc (PTTEP), Petroliam Nasional Berhad (Petronas) and China
National Offshore Oil Corporation Ltd (CNOOC) are large clients, alongside Western IOCs such as
Total, Chevron and Shell which will also account for high levels of demand.

4.1.4 Supply and Demand
Over the previous five years, the platform supply vessel market has seen an increase in demand in
line with an increased base of operational infrastructure outside North America. However, the
increase in supply has been disproportionate to growth in demand and, as such, utilisation fell
considerably during the 2008-2010 market downturn. Post 2010, rates have recovered as newbuild
deliveries have eased, but not to the point where there is a level of undersupply.

Throughout the coming period Infield Systems Limited anticipates a flat utilisation rate between 75%
and 67%. At the close of the forecast period in 2017 the utilisation rate is anticipated to be 74%. As a
market average this figure disguises the polarisation in the fleet whereby younger vessels tend to
achieve higher utilisation than the conventional fleet. During the period of analysis operators of
younger tonnage, such as those operated by POSH, would be expected to outperform the market
average. On a regional basis it is believed that Latin America, Asia and the Middle East report the
highest levels of utilisation due to the prominence of long term charters. These long term charters
are usually signed for five years, plus yearly options.

With regards to dayrates, the PSV market came off sharply from the pre-financial crisis boom years,
after the aforementioned increase in supply and a depressed spot
xxiv
market softened rates.

xxiv
Spot market contracts are short term, one off contracts which are immediately executed. They often carry a premium in terms of
dayrate, but do not offer long term earnings visibility due to their one off nature.
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
N
o
.

o
f

V
e
s
s
e
l
s

Africa Asia Australasia Europe Latin America ME & Casp. North America Global
1,207
74
277
450
577
384
0
200
400
600
800
1,000
1,200
1,400
>1992 1993-97 1998-02 2003-07 2008-12 Newbuild
N
o
.

o
f

V
e
s
s
e
l
s

Average PSV Vessel Age: 18 years
A-49


49


However, the low of 2009-2011 has established a floor for the market of below USD9,000/day with
rates likely to creep up to a range between USD10,500/day and USD30,000/day. In South East Asia,
rates are higher than the global figure with the average expected to amount to a figure in excess of
USD20,000/day. In addition, newer tonnage is expected to return a premium rate in comparison to
older vessels.

This global average continues to conceal a number of different dynamics at work; in the Gulf of
Mexico, PSV earnings slid in 2012 and the downwards trend is projected to continue through the
forecast horizon due to a reduction in the targetable market as the operational base of platforms
declines. Meanwhile, outside of North America a certain level of rate appreciation is expected, with
Asia in particular increasing considerably. The growth in the Asian market is expected to reflect a
tightening supply and demand dynamic in addition to the shifting nature of demand towards
deepwater, and more complex projects.

Figure 846: Historical and Forecast PSV Supply and Demand (Units) and
Utilisation (RHS) (2008-2017)

Figure 857: Historical and Forecast PSV Dayrates (USD/day) and
Utilisation (RHS) (2008-2017)

The general premium of spot market dayrates over charter
xxv
dayrates is expected to continue. This
is particularly important in the North Sea and US Gulf of Mexico where there is a relatively well-
established spot market. Whilst this premium is clear in terms of dayrate values it is also noted that
the market is moving towards long term contracts in a number of regions, including Norway where
Statoil has contracted for periods in excess of five years. Elsewhere the long term charter remains
the main procurement strategy within South East Asia and the Middle East.

4.2 Anchor Handling Tug Supply Vessels
4.2.1 Drivers of Demand and Targetable Market
AHTS vessels combine the supply service provided by PSVs with the capability to tow drilling units
into place and support during drilling operations. As such, in addition to the operational base of
platforms, the key driver for the AHTS market is the prevailing level of demand within the drilling
sector.

xxv
Long term contracts which can vary from six month durations to ten year deployments
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
50
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
t
i
l
i
s
a
t
i
o
n

U
n
i
t
s

PSV (3k-4k DWT) Demand PSV (3k-4k DWT) Supply
PSV (3k-4k DWT) Utilisation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
5,000
10,000
15,000
20,000
25,000
30,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
t
i
l
i
s
a
t
i
o
n

U
S
D
/
d
a
y

3-4k DWT PSV Dayrate (LHA) 3-4k DWT PSV Utilisation (RHA)
A-50


50



Figure 868: Historical Drillship Supply and Demand (Units) and Utilisation
(RHS) 2010-2013

Figure 879: Historical Semisub Supply and Demand (Units) and Utilisation
(RHS) 2010-2013

Utilisation rates within the drillship market remained resiliant throughout the market downturn,
with much of the duress in the sector felt by jackup rigs. Post 2010, each sector within the drilling
market has increased activity considerably and this is forecast to continue throughout the coming
market cycle. The increase in drilling activity, as shown by the increase in wells drilled is treated as
an opportunity for the AHTS fleet.


Figure 880: Historical Jackup Supply and Demand (Units) and Utilisation
(RHS) (2010-2013)

Figure 891: Historical and Forecast Offshore Well Numbers by Type
(Units) (2008-2017)

4.2.2 Future Market Trends
Frontier Drilling
Drilling in frontier and remote locations is set to increase in order to offset the decline in mature
basins such as the shallow water GoM and central & southern North Sea. Drilling in regions such as
the Falkland Islands and within the Arctic periphery is a potential opportunity for the AHTS fleet, but
only high end assets. In order to compete for such work, assets have to adhere to ice-class notations,
environmental friendly legislation and higher bollard pull/power output requirements.

Whilst drilling is expected to increase considerably within remote and frontier locations, Infield
Systems Limited expects opportunities to be characterised by supply related work, as opposed to
direct anchor handling. The majority of frontier wells are expected to be drilled using drillships or
drilling barges, which require proportionally less support as they move under their own power (as
opposed to jackups or semisubs which are towed into place), furthermore the bulk of drillships use
DP and as such do not require anchors to maintain station keeping. The exception to this rule is the
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
0
10
20
30
40
50
60
70
80
90
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013
U
t
i
l
i
s
a
t
i
o
n

U
n
i
t
s

Demand (LHS) Supply (LHS) Utilisation rate (RHS)
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
0
50
100
150
200
250
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013
U
t
i
l
i
s
a
t
i
o
n

U
n
i
t
s

Demand (LHS) Supply (LHS) Utilisation rate (RHS)
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
0
50
100
150
200
250
300
350
400
450
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013
U
t
i
l
i
s
a
t
i
o
n

U
n
i
t
s

Demand (LHS) Supply (LHS) Utilisation rate (RHS)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
N
o
.

o
f

W
e
l
l
s

E&A Development
A-51


51


Arctic market where strict environmental policies and the carbon tax in Norway make the use of DP
prohibitively expensive. As such the rise of frontier drilling is deemed as a positive market trend for
the AHTS sector.
Greater Power Output
Along with an increase in deepwater demand, there has been a considerable increase in the
maximum output of AHTS vessels designed to serve markets where addition power is required.
These capabilities are critical to transport and operate the heavier equipment required to operate at
depths beyond 2,000m. Assets have now been designed in excess of 30,000BHP a significant
increase on the average figures that currently sit close to 10,000BHP.
Multifunctional Vessels
In order to differentiate the service provided by new AHTS assets, vessel operators have sought to
provide a more diverse service in addition to the core markets of supply and anchor handling. In
addition to standard features for fire fighting and oil recovery, a number of AHTS vessels are also
equipped with A-frame and subsea cranes for offshore construction support. In terms of POSHs
market positioning within the sector its assets have a greater range of capabilities than many of its
peers. Specifically the assets within the fleet have larger accommodation berthing capabilities, fire
fighting classifications, whilst a series of vessels have limited lift capability.

4.2.3 Fleet Characteristics
Since the turn of the century vessel operators have sanctioned extensive newbuild programs within
the AHTS sector. Indeed, the delivery of new vessels has outpaced the increase in demand. At the
close of 2012 there were some 1,484 competitive AHTS vessels operational throughout the offshore
market. Through a series of newbuilds, Infield Systems Limited expects this number to increase to
1,547 vessels at the close of 2017. With attrition set at 40 years post-delivery, Infield Systems
Limited expects the increase in supply to ease throughout the forecast period. Indeed, the current
order-book suggests that the competitive fleet is likely to decline to 1,524 vessels by 2017.

The majority of AHTS vessels have been designed with power outputs less than 10,000BHP, although
a significant driver behind a recent increase in supply has come from vessels designed with higher
outputs. The high end of market, with power outputs in excess of 12,000BHP, has the potential to be
deployed across a wide variety of offshore developments and is particularly well suited for deep and
harsher water environments. This reflects an increase in prominence of deepwater drilling that is
expected to continue throughout the forecast as conventional drilling slows.

A-52


52



Figure 902: Historical and Forecast AHTS Supply by Power Band (Units)
(2008-2017)

Figure 913: Historical and Forecast AHTS Supply by Region (Units)
(2008-2017)

With regard to the regional diversification of the fleet, the single largest portion of AHTS vessels
operates within Asia, followed by the Middle East and Europe. The vessels in Europe have tended to
be larger than the global average as they work within the more remote and harsher areas of the
North Sea.

Figure 924: Historical Average AHTS Vessel Age by Time-Period and Newbuild Forecast (Units)

The largest portion of the AHTS fleet has been built between 2008 and 2012, whilst there remain
298 vessels currently in operation that were built pre-1992. The largest service providers in the
market mirror the PSV sector where a number of groups including Bourbon Offshore and Swire
Pacific have extensive fleets whilst a number of smaller groups operate only one vessel. POSH has a
worldwide presence within the market, and operates a fleet that is considerably younger than the
bulk of global competition. The average age of AHTS vessels within the market currently stands at
eleven years, excluding newbuilds in the market.

The client mix for the AHTS sector is more diverse than the PSV market. In addition to operators such
as Petronas Carigali Sdn Bhd (Petronas) and Chevron Indonesia Company, potential clients could
also include drilling unit operators such as Transocean Ltd (Transocean) and Rowan Companies
PLC (Rowan). The bulk contracts are placed with operators, with Petrobras and Statoil being two
of the largest clients, whilst rig operators and construction groups such as Heerema Marine
Contractors (Heerema) are also prominent.

4.2.4 Supply and Demand
A similar pattern to the PSV sector has been observed within the AHTS market, but the downturn in
2009 was more pronounced due to a lack of E&A drilling in mature regions. Consequently, utilisation
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
N
o
.

o
f

V
e
s
s
e
l
s

Other 5-7kbhp 8-10kbhp 12-16kbhp 16-20kbhp
0
100
200
300
400
500
600
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
N
o
.

o
f

V
e
s
s
e
l
s

Africa Asia Australasia Europe Latin America ME & Casp. North America Global
298
21
131
319
713
118
0
200
400
600
800
1,000
1,200
1,400
1,600
>1992 1993-97 1998-02 2003-07 2008-12 Newbuild
N
o
.

o
f

V
e
s
s
e
l
s

Average AHTS Vessel Age: 11 Years
A-53


53


fell across the various power band groups. The more capable tonnage, with power rates above
12,000BHP, has recovered at a faster rate in comparison to low end tonnage which remains
oversupplied. We expect this trend to continue over the forecast period with demand for 12,000-
16,000BHP AHTS expected to grow by a CAGR of 3.8% between 2013 and 2017; while 16,000-
20,000BHP AHTSs are slated to register a 3.3% CAGR over the same period. This compares with just
0.9% CAGR for smaller 8,000-10,000BHP AHTSs.

The supply of AHTS vessels is expected to fall from 234 to 219 vessels among the 8,000-10,000BHP
category as older, less capable vessels are retired. The 12,000-16,000BHP and 16,000-20,000BHP
categories are expected to see supply increase slightly from 177 to 183 vessels and 119 to 124
vessels, respectively.

With the growth in demand for vessels across all classes likely to outstrip supply growth, utilisation
rates are set to increase steadily over the forecast period from an estimated average of 69.8% in
2013 to 76.0% in 2017. Once again, the larger classes of AHTS are likely to outperform, with the
12,000-16,000BHP and 16,000-20,000BHP categories slated to hit 83.0% utilisation by 2017. This
tightening market is reflected in dayrate forecasts which suggest an increase across all classes over
the forecast period. This market therefore represents a distinct opportunity for vessels operated by
POSH.


Figure 935: Historical and Forecast 8-10kBHP AHTS Supply and Demand
(Units) and Utilisation (RHS) (2008-2017)

Figure 946: Historical and Forecast 12-16kBHP AHTS Supply and Demand
(Units) and Utilisation (RHS) (2008-2017)


Figure 957: Historical and Forecast 8-10kBHP AHTS Dayrates (USD/Day)
and Utilisation (RHS) (2008-2017)

Figure 968: Historical and Forecast 12-16kBHP AHTS Dayrates (USD/day)
and Utilisation (RHS) (2008-2017)

In terms of contract lengths, the higher ends of the market (>10,000bhp) see a series of vessels
operating on long-term charters, but a growing proportion of newbuilds have entered the spot
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
25
50
75
100
125
150
175
200
225
250
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
t
i
l
i
s
a
t
i
o
n

U
n
i
t
s

AHTS (8 - 10kbhp) Demand AHTS (8 - 10kbhp) Supply
AHTS (8 - 10kbhp) Utilisation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
140
160
180
200
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
t
i
l
i
s
a
t
i
o
n

U
n
i
t
s

AHTS (12k - 16kbhp) Demand AHTS (12k - 16kbhp) Supply
AHTS (12k - 16kbhp) Utilisation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5,000
10,000
15,000
20,000
25,000
30,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
t
i
l
i
s
a
t
i
o
n

U
S
D
/
d
a
y

8-10k BHP Dayrate (LHA) 8-10k BHP Utilisation (RHA)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
U
t
i
l
i
s
a
t
i
o
n

U
S
D
/
d
a
y

12-16k BHP AHTS Dayrate (LHA) 12-16k BHP AHTS Utilisation (RHA)
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54


market in regions such as Singapore and the North Sea. A number of vessels in the low ends of the
market are on long term contracts, but also trade on the spot market typically in South East Asia and
North America.

The AHTS market is expected to provide considerable opportunities for vessels operated by POSH,
especially given its recent movement towards assets with output in excess of 10,000bhp. The market
within this relatively high end sector throughout POSHs operating regions is likely to outperform the
low ends of the market in terms of both utilisation and dayrates. Specifically we highlight the
opportunity for deepwater drilling support in countries such as Malaysia and Vietnam in addition to
the support of operational infrastructure across South East Asia.

4.3 OSV
xxvi
Competitive Overview
This section analyses the global fleet of AHTSs and PSVs operated by the international players
identified in Section 3.3: International Operator Fleet Overview, namely, POSH, Bourbon, Bumi
Armada, COSL, Ezra, Farstad, Hornbeck, MMA, Seacor, Solstad, Swiber, Swire and Tidewater. AHTs,
pipelay vessels and accommodation vessels are analysed separately in Section 6: Transport and
Installation Market Analysis and Section 5: Accommodation Market Analysis.

4.3.1 POSH OSV Fleet Profile
The following focuses on POSHs offshore supply vessel fleet. POSH operates a fleet of 29 offshore
supply vessels, of which 14 are AHTS, two are AHTs and 13 are PSVs. The fleet has a track record of
worldwide operations serving offshore oilfields in Asia, Africa and Latin America. The 14 young and
modern AHTS vessels have an average engine power capacity of 11,931BHP and the 13 PSVs have an
average cargo carrying capacity of 3,125DWT. The average age of the offshore supply vessels is
about 2.4 years (2.4 years for the AHTS fleet and 2.5 years for the PSV vessels).


Figure 979: Total AHTS Vessels and Average Fleet Age (RHS) by Operator

Figure 98: Total PSV Vessels and Average Fleet Age (RHS) by Operator


xxvi
Offshore supply vessels: Includes AHTS and PSV
11.7
10.3
7.5
8.1
7.9
6.3
4.5
13.2
3.2
10.8
2.4
5.3
13
Industry
Average: 8.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
20
40
60
80
100
120
140
V
e
s
s
e
l

# of AHTS Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

12.2
10.4
9.5
7.2
12.1
2.5
7.2
11.7
4.5
0.0
8.0
4
Industry
Average: 7.4
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
20
40
60
80
100
120
V
e
s
s
e
l

# of PSV Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

A-55


55



Figure 991: Total PSV & AHTS Vessels and Average Fleet Age (RHS) by Operator

Deepwater Offshore Support Vessels
Deepwater oil and gas developments need the support of young and powerful AHTS and PSV vessels
that are capable of operating safely and efficiently in remote areas and harsh sea conditions, as well
as dealing with larger and heavier equipment. A deepwater AHTS is usually defined as an anchor
handling tug supply vessel with engine power capacity surpassing the 10,000BHP mark, and a
deepwater PSV is defined as a platform support vessel with cargo carrying capability exceeding
3,500DWT.

Equipped with high engine power capacity and winches, deepwater AHTS can tow floating platforms
or rigs from one location to another, position and lift heavy anchors. Similarly, deepwater PSVs high
cargo carrying capability and large deck space can be utilised to deploy larger quantities of drilling
supplies, providing the benefits of economies of scale.

POSH operates a young and modern fleet of eight deepwater AHTS and two deepwater PSVs,
including six 16,000BHP AHTS, a 12,240BHP AHTS and two 4,100DWT PSVs. These vessels are
capable of servicing deep sea anchor handling and logistic needs of FPSOs, jack-up and floater rigs.

11.9
10.3
7.5
7.7
9.6
11.4
7.9
4.5
5.5
12.8
2.4
3.2
4.9
Industry
Average: 7.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
50
100
150
200
250
300
V
e
s
s
e
l

# of OSV Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
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t

A
g
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F
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A
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F
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t

A
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e

F
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t

A
g
e

A-56


56



Figure 1002: Deepwater (above 10,000BHP) AHTS Vessels

Figure 1013: Deepwater (above 3,500DWT) PSV Vessels

Figure 1024: Deepwater OSV (AHTS&PSV) Vessels

In the deepwater segment, POSH has the worlds youngest deepwater AHTS and PSV fleet with an
average age of 2.3 years.

The low age of its deepwater fleet will likely enhance POSHs position as a preferred operator in the
deepwater OSV segment. This is because younger offshore support vessels usually have lower rate
of fuel consumption hence lower running cost compared with old vessels, which were designed
before higher oil prices and environmental issues became part of the agenda. Newer vessels are
more reliable requiring fewer off-hire days for repairs and maintenance compared with older
vessels.

In terms of the number of deepwater AHTS vessels, POSHs eight vessel fleet ranks the ninth globally
and the fourth in the Asia Pacific region, slightly smaller than COSLs deepwater AHTS fleet of 10
vessels. In total six major competitors are identified in the Asia Pacific region, including Bumi
Armada, Ezra, Swiber and Swire from South East Asia, COSL from East Asia and Mermaid Marine
from the Australasia region. POSH operates two deepwater PSVs. Except Swire, there is currently no
major competitor offering such deepwater PSVs in the Asia Pacific region.

In summary, POSH is one of the worlds top ten deepwater AHTS operators in terms of vessel
numbers. It operates the worlds youngest and modern deepwater AHTS fleet as judged by fleet age.
In South East Asia, POSH is a leading deepwater OSV provider as it runs the youngest and the third
largest deepwater offshore support vessel fleet in the region. With the offshore industrys increasing
preference for young and modern support vessels, POSHs young deepwater fleet is well positioned
in securing contracts.
8.0
7.0
9.0
15.0
4.5
7.0
9.0
7.0
2.6
4.0
5.5
Industry
Average: 7.1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0
5
10
15
20
25
30
35
V
e
s
s
e
l

# of Deep Water AHTS Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

7.0
9.0
5.0
9.0
7.0
13.0
0.7
Industry
Average: 7.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
5
10
15
20
25
Farstad Tidewater Hornbeck Bourbon Swire Solstad POSH
V
e
s
s
e
l

# of Deep Water PSVs Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

7.6
9.0
7.0
14.4
4.5
2.3
7.0
9.0
Industry
Average: 7.6
0
2
4
6
8
10
12
14
16
0
10
20
30
40
50
60
Farstad Bourbon Swire Solstad Ezra POSH COSL Seacor
V
e
s
s
e
l

# of deepwater OSVs Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
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t

A
g
e

F
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t

A
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A
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F
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t

A
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e

F
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A
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57


Medium/Shallow Water Offshore Supply Vessels
We define AHTS with engine power capacity between 7,000BHP and 10,000BHP as midwater AHTS,
and those with engine power capacity below 7,000BHP as shallowwater AHTS. In the midwater
segment, POSH has the worlds youngest midwater AHTS and PSV fleet, which consists of six
8,000BHP AHTS with an average age of just 2.2 years and nine PSVs with an average of 2.2 years.
POSHs midwater fleet age of 2.2 years is significantly lower than the peer-group average of eight
years.

In the Asia Pacific region, POSH ranks fourth in terms of the number of midwater AHTS vessels and
the second according to the size of its PSV fleet. Swire, Bumi Armada and COSL have 18, 11, and 7
midwater AHTS, respectively. However, as the midwater AHTS fleet of Swire (7.5 years), COSL (8
years) and Bumi Armada (6 years) are significantly older than POSHs two-year average, POSH is one
of the most competitive midwater players in the Asia Pacific region. The young age of POSHs
midwater AHTS fleet will be maintained as it has three new 8,000BHP AHTS due for delivery in 2014
and 2015.


Figure 1035: Midwater (around 8,000BHP) AHTS Vessels

Figure 1046: Midwater (around 3,000DWT) PSV Vessels


Figure 1057: Midwater OSV (AHTS&PSV) Vessels

We define PSVs with cargo carrying capability between 2,500DWT and 3,500DWT as midwater PSVs.
POSH and Bumi Armada are two close rivals in the midwater PSV segment. POSH has seven young
midrange PSVs and has two more newbuilds due for delivery by the end of 2013.

Bumi Armada also has a young fleet of midrange vessels. The company has four brand new midrange
PSVs and is expected to receive five more such vessels in the coming two years. Also Ezra (eight
11.0
10.0
7.5
8.0
13.0
6.0
2.2
4.5
7.0
4.5
13.0
Industry
Average: 7.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
10
20
30
40
50
60
V
e
s
s
e
l

# of Mid Water AHTS Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

12.0
10.0
7.0
2.2
4.5
8.0
7.5
10.0
0.0
8.0
7.0
4
Industry
Average: 6.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
10
20
30
40
50
60
70
V
e
s
s
e
l

# of Mid Water PSVs Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

11.5
10.0
7.5 7.4
2.2
8.0
4.5
11.8
3.8
8.0
7.0
4.2
Industry
Average: 7.2
0
2
4
6
8
10
12
14
0
20
40
60
80
100
120
140
V
e
s
s
e
l

# of Midwater OSVs Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
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e

F
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e
t

A
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e

F
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e
t

A
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e

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58


vessels) has slightly more midwater PSVs in the Asia Pacific region, its fleet are considerably older.
Similarly, global PSV leaders such as Tidewater and Bourbon operate midwater PSV fleets with an
average age exceeding 10 years. With a market increasingly concerned with fuel cost and safety
issues, POSHs new midwater PSV fleet will likely become a regional leader in Asia Pacific waters with
global competitiveness.


Figure 1068: Shallow water (below 7,000BHP) AHTS Vessels

Figure 1079: Shallow water (Below 2,500DWT) PSV Vessels

Figure 10810: Shallow Water OSV (AHTS&PSV) Vessels

Based on our observations, POSH has been concentrating on the deepwater and midwater segments
where barriers to entry are higher. Hence the companys offshore supply vessels have limited
exposure to the shallow water market. We define an AHTS as shallow water if its engine power
capacity is less than 7,000BHP and a shallow water PSV if its cargo carrying capability is less than
2,500DWT. POSH has two shallow water PSVs with an average age of 5.2 years but no AHTS vessel
specifically designed for shallow water offshore supply services.
13.0
11.0
8.0 6.5
3.0
9.0
4.5
5.5
7.0
13.0
12.0
Industry
Average: 8.4
0
2
4
6
8
10
12
14
0
10
20
30
40
50
60
70
80
V
e
s
s
e
l

# of Shallow Water AHTS Fleet Age (RHS) Average Age
F
l
e
e
t
A
g
e

11.0
14.0
14.0
13.0
5.2
Industry
Average: 11.4
0
2
4
6
8
10
12
14
16
0
5
10
15
20
25
30
35
40
Bourbon Tidewater Hornbeck Seacor POSH
V
e
s
s
e
l

# of Shallow Water PSVs Fleet Age (RHS) Average Age
F
l
e
e
t
A
g
e

F
l
e
e
t
A
g
e

F
l
e
e
t
A
g
e

F
l
e
e
t
A
g
e

13.3
11.0
8.0
14.0
6.5
3.0
13.0
4.5
9.0
5.5
7.0
5.2
12.0
Industry
Average: 7.2
0
2
4
6
8
10
12
14
16
0
20
40
60
80
100
120
V
e
s
s
e
l

# of Shallow Water OSVs Fleet Age (RHS) Average Age
F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

F
l
e
e
t

A
g
e

A-59


59


5 ACCOMMODATION MARKET ANAYLSIS
5.1 Introduction to Vessel Types
There is a considerable divergence within the accommodation market in terms of asset types and
capabilities. In general the semisub fleet accounts for the majority of high end supply and has been
able to achieve the highest rates in terms of utilisation and fixture rates. Ship shaped assets have
captured a considerable level of market share within the deepwaters of Brazil and elsewhere whilst
the jackup and barge assets in the market continue to account for much of the low end of the
market; although isolated cases of harsh water deployments have returned rates in excess of
USD150,000/day for jackups in Northern Europe. The main characteristics of the accommodation
fleet are highlighted in the below:

Table 4: Accommodation Fleet Overview
Hull Type Accommodation Capacity Water Depth Dayrate (USDk/day) Met Ocean Capability
Semisub 230-800 If DP then unlimited. Moored <=500m 150-350 Harsh
Ship 200-800 Unlimited 100-250 Benign/Intermediate
Jackup 70-460 120m 70-200 Harsh
Barge 40-900 <=500 50-150 Benign/Intermediate

5.2 Drivers of Demand and Targetable Market
Accommodation vessels serve as alternative berthing for offshore personnel associated with a
production platform. Accommodation vessels are typically chartered for hook-up and commissioning
of new platform installations, maintenance, modification and upgrade work on existing
infrastructure and to support the decommissioning of infrastructure on depleted fields.

The market is primarily driven by increasingly stringent quality, health, safety and environment
requirements with accommodation vessels utilised as opposed to frequently shuttling crew
members via helicopters and boats to offshore infrastructure. Health and safety legislation dictates
maintenance schedules and limits the methods used to transfer critical personnel from shore to
offshore production platforms. Most importantly, by having accommodation vessels on-site, it
facilitates increased man-hours over a shorter period of time as the need for shuttling crew
members is prevented. Consequently, this enables oil companies to complete IMR and modification
work and ultimately bring fields on-stream faster. Having an accommodation unit on site during the
IMR and modification phase can prevent the platform from being shut down for long periods; this
reduces the loss of production volume and as such revenue from a given field.

Roughly 70% of accommodation contracts relate to the maintenance and modification of existing
information, whilst 20% of assets are engaged on commissioning and hook-up work, with the
residual 10% engaged in the smaller decommissioning market.

The fleet of accommodation vessels consists of semisub, jackup, monohull and barge formed vessels.
Semisubmersible assets have traditionally commanded the highest rates within the accommodation
market and are, alongside monohull assets, able to serve the growing deepwater market. Semisub
vessels, in particular, are able to service the high end market in the harsh deepwater environment
due to their high-berth capacity, reducing downtime and the expense of shutting crew members.
Jackups are limited to shallow water activities whilst barges are mainly deployed in shallow water,
but have competed for deeper water work in isolated cases, particularly within West Africa.
A-60


60


5.2.1 Semisub Vessels
Semisub accommodation demand is based on the regional deployment of the semisub fleet. This is a
market in undersupply well-supported by strong fundamentals as further described below. The
majority of the fleet sits either within the North Sea or within Mexico and these two sectors remain
the largest in terms of demand. More recently assets have also been placed in Australia, West Africa
and Brazil, whilst opportunities are expected to emerge within South East Asia.



Figure 1091: Historical and Forecast Average Age of Operational
Platforms by Region (Years) 2008-2017


Figure 1102: Historical and Forecast Semisub Accommodation Demand by
Region (Vessel Days) 2008-2017

The level of accommodation demand on a platform is linked to the complexity of the unit itself and
the age of the installation. As a platform ages it requires a greater level of IMR. With an aging base
of infrastructure in the market, Infield Systems Limited expects a considerable increase in demand
due to the extended IMR and production activities in existing platforms. The aging platform base is
particularly prominent within the North Sea, including both Norway and the UK where a high level of
infrastructure is in excess of 25 years old. In the short to medium term such infrastructure
represents a considerable maintenance opportunity whilst in the long term the decommissioning of
such infrastructure is likely to be a growth market.


Figure 1113: Historical and Forecast Operational Base of Deepwater
Platforms by Water Depth (Units) 2008-2017

Figure 1124: Historical and Forecast Semisub Accommodation Demand by
Type of Work (Vessel Days) 2008-2017

In recent years (post 2008) the semisub accommodation market has become more regionally diverse
as the fleet of vessels has increased in size to meet the sustained demand driven by IMR, installation
and decommissioning work. The vast majority of assets on charter within Mexican waters continue
to be engaged on maintenance and modification support whilst those in the North Sea have seen
0
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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Africa Asia Australasia Europe Latin America ME & Casp. North America
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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Mexico USA Brazil Australasia
West Africa South East Asia Norway UK and Ireland
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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500-999 1000-1499 >1499
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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IRM Accommodation Modification Platform Installation Platform Removal
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61


proportionally greater levels of commissioning work. Assets in the North Sea have also recently been
engaged on decommissioning activity that has yet to characterise demand for semisubs outside of
Europe.

Work within Brazil and the US is characterised by a greater proportion of deepwater work such as
contracts secured on Jack/St Malo on Walker Ridge in the US and the Santos basin in Brazil. The
presence of deepwater demand has contributed to significant growth opportunities for the semisub
fleet operating in these harsh environments, with activity split between commissioning work and
maintenance activity.

During the period of analysis Infield Systems expects demand to peak during 2014 at over 12,400
vessel days (roughly equivalent to some 34 vessels), indicating a market in undersupply. This limited
near-term supply is driven by the aforementioned increased regional diversification of demand
alongside heightened maintenance requirements across countries such as Norway and the UK.
5.2.2 Monohull, Jackup and Barge Vessels
The demand drivers for monohull, jackup and barge type vessels are broadly the same as those
within the semisub market although the activity is weighted towards shallow water activity due to
the presence of jackup activity within the Middle East and the North Sea and the array of barge type
assets within South East Asia.

The presence of monohull assets within the market is split between activity in Latin America,
Northern Europe, West Africa, and to a lesser extent within Australasia. Such assets have the
capacity to perform a multifunctional scope of work as the majority have been equipped with
offshore lift capability and dynamic positioning systems. The presence of such equipment allows the
vessels to perform basic lifts related to commissioning and maintenance work alongside both fixed
and floating platforms.


Figure 1135: Historical and Forecast Operational Base of Platforms by
Region (Units) 2008-2017

Figure 1146: Historical and Forecast non-Semisub Accommodation
Demand by Region (Vessel Days) 2008-2017

The market for non-semisub accommodation is growing within each offshore region, with the
exception of North America. As discussed previously, North America is affected by a reduction in the
operational base of platforms. Elsewhere there are considerable opportunities within the growing
base of infrastructure across regions such as South East Asia and the Middle East.

The largest level of demand for non-semisub accommodation vessels is expected to exist within
Asian waters, whilst there is likely to be considerable growth within the Middle East. Whilst there is
limited decommissioning activity within these regions the aforementioned expanding operational
base of infrastructure is expected to provide a considerable maintenance opportunity whilst
0
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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Africa Asia Australasia
Europe L.America ME & Casp.
N.America exc. North America (RHA)
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2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
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platform installation activity is high across Malaysia, Indonesia and Vietnam.

In general, the work performed by jackup and barges vessels is more conventionally focussed than
the more multifunctional ship shaped vessel. The bulk of assets within the market do not carry the
additional functionality to perform light construction work, whilst jackups are limited to shallow
water work up to 120 metres of water and only few barges have been equipped with dynamic
positioning systems.

5.3 Semisub Future Market Trends
5.3.1 Newbuild Activity
Historically the semisub accommodation market has been dominated by Prosafe ASA and an array of
localised players within Mexico. The assets operating in the North Sea were generally of a higher
specification than the older tonnage within Mexico as a result of more stringent health and safety
legislation within the UK and Norway. More recently entrants such as Floatel International Ltd have
sanctioned newbuilds and made a successful entrance into the North Sea, Brazilian and Australasian
markets.

Newbuilds are expected to enter the market over the next five years. Axis Offshore (a joint venture
between Danish ship owner J. Lauritzen and private equity firm HitecVision), alongside OOS have
ordered tonnage to compete within the market. This spate of ordering has increased competition in
emergent markets such as Brazil but within the North Sea, the vast majority of semisub work
continues to be completed by Prosafe and Floatel.

Alongside this newbuilding activity POSH is expected to make a market entrance in late 2014 with its
two high end assets. Upon delivery of the two newbuilds POSH will offer the market one of the
largest fleets of accommodation vessels capable of berthing in excess of 600 personnel.
5.3.2 Compact Semisubs
In addition to an overall increase in the competitive fleet, there has been the emergence of a new
class of vessel a compact semisub. Traditional semisub accommodation vessels are either
converted drilling hulls or specially built units with berthing capacities up to 500 persons. Compact
semisubs such as those operated by Marine Assets Corporation (MAC) and Hallin Marine are
designed to provide a similarly stable platform with significant berthing capacity but for a lower
initial fabrication cost and a lower dayrate. With a series of these vessels expected to enter the
market (MAC have four assets operational or on-order) the supply side of the sector could change
substantially.
5.3.3 New Areas of Deployment
Historically semisubs have historically worked in either the North Sea or within Mexican waters. The
successful market entrance of Floatel within Brazil has provided a further level of demand whilst
West Africa and South East Asia have provided isolated opportunities in the past. Within a
considerable level of newbuilds expected to enter the market over the coming five years it is likely
that new areas of deployment will increase in prominence as assets seek utilisation. There are
considerable opportunities in Australasia and deepwater South East Asia whilst Brazil and the US will
likely provide additional opportunities in the short to medium term.

This increased regional diversification is expected to be required in order for semisub vessels to
secure adequate levels of utilisation. Infield Systems expects the market to become more diverse as
the benefits of a semisub solution (larger berthing capability, more stable platform etc.) are well
recognised by clients and the historical growth of the market has been limited by a lack of supply as
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evidenced by the recent success of new entrants in the market.

5.4 Barge, Jackup and Ship shaped Future Market Trends
5.4.1 Newbuilds
Alongside the presence of new semisub vessels in the market a series of jackups and barges are
expected to enter the market throughout the coming period. Perdana Petroleum Berhad has a series
of accommodation work barges under construction with the assets able to accommodation 300
offshore personnel. Elsewhere, Gulf Piping Company, of Abu Dhabi is expecting to receive a
Levingston 320EX jackup accommodation liftboat with an accommodation capacity of 160 personnel.
Additionally the asset will be equipped with a 250mT crane designed to support remedial work on
offshore platforms.

In terms of ship shaped newbuilds Nordic Maritime, Logitel Offshore, Promsa Shipping Services,
Polycrest A/S and Edda Accommodation have assets either under construction or on order designed
to be delivered between 2013 and 2016. Ship shaped solutions are expected to account for the
majority of accommodation newbuilds throughout the coming period. The assets themselves are
being designed with larger accommodation blocks than historically installed on such tonnage, with
the average capacity amounting to 500 personnel (the newbuild Edda Accommodation asset is
designed to berth 800 personnel).

The newbuilds likely to be sanctioned in the coming years are expected to continue a trend towards
larger accommodation blocks, additional capabilities in terms of remedial work and heavy lift
capacity and the ability to work in deeper waters. As such, vessels are expected to be larger and
more capable than the incumbent tonnage in the market.

5.5 Fleet Characteristics
At the close of 2012 there were only 19 competitive semisub accommodation vessels globally in the
sector (after the sinking of the Cotemar Jupiter-1 in 2011 and the retirement of the Workships
assets, out of which 58% were older than 30 years). The fleet is expected to increase to 22 by the
close of 2013, out of which 50% were older than 30 years. With a series of newbuilds entering the
market from operators such as Prosafe and Floatel, in addition to market entrants such as those
discussed above, the cumulative fleet is expected to reach 32 assets by the close of 2017.

The current fleet of 19 competitive semisub accommodation vessels is broadly split between high
end assets operational within the North Sea and Brazil, and the older, more conventional assets
working within Mexican waters. There is a distinct split between the high and low ends of the
market with the Iolair and the MMM vessels able to berth less than 300 personnel and the larger,
dynamically positioning semisubs able to berth in excess of 500 personnel as in the case of the
Floatel Superior and the Floatel Reliance.

Currently there are only three large (more than 600 pax), high-spec (DP2/DP3) semisub vessels
operating in the world, all of which were built in the 1980s (see table 5). Including POSHs two 750
pax newbuilds, the number of high-spec semisub vessels is expected to reach six in 2015. The
modern semisubs, especially the newbuild DP3 vessels, will likely be very competitive in the deepest
offshore waters.



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Table 5: Selected Semisub Accommodation Vessels
Vessel Name Owner Year Built No. of Beds Positioning
NB Semi-Sub Acc Cotemar 2015 750 DP3
POSH Arcadia POSH 2014 750 DP3
POSH Xanadu POSH 2014 750 DP3
Safe Lancia Prosafe 1984 605 DP2
Safe Regency Prosafe 1982 644 DP2
Safe Britannia Prosafe 1980 812 DP2

The distinction between the two ends of the fleet highlights the polarised nature of supply. It is
expected that the higher end vessels, equipped with larger accommodation capacities, dynamic
positioning and construction support capabilities will be able to compete for a wider array of
contracts across the offshore market.

The newbuild compact semisubmersibles offer, in general, more limited berthing capacities than the
larger semisubmersibles within the market. However, assets such as the CSS Olympia are able to
compete on a cost basis for work across regions such as South East Asia and Brazil.

Beyond the semisub accommodation market there were some 191 accommodation vessels
operational at the close of 2012. This included 114 barges, 38 jackups and 39 ship shaped assets.
This total is expected to increase to 220 assets by the close of 2013 and extent further to 239 by the
close of 2017. Again, there is a great level of polarisation in the market the majority of high end
tonnage equipped with construction support capacity and the ability to work within deepwater.

The largest proportion of the non-semisub fleet is currently operational within the Middle East and
South East Asia but a growing number of jackups are operational in the North Sea, particularly UK
waters.


Figure 1157: Historical and Forecast Semisub Accommodation Vessel
Supply by Operator (Units) 2008-2017

Figure 1168: Historical and Forecast Accommodation Vessel Supply by
Hull Type (Units) 2008-2017

5.6 Summary of Major Accommodation Providers
The accommodation market is highly diverse with some 117 separate entities with at least one
vessel either operational or under construction. This overview details the size, age, capability and
strategy of ten major international accommodation service providers namely Prosafe SE (Prosafe),
Sea Trucks Group (Sea Trucks), Intership Ltd (Intership), POSH, Marine Asset Corporation
(MAC), Floatel International Ltd (Floatel), Mantenimiento Marino de Mexico S. de R.L. de C. V
0
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Axis Offshore Dolphin Drilling COSL Workships POSH
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(MMM), Edda Accommodation, Cotemar S.A. de C.V (Cotemar) and COSL.

The operators under coverage here occupy the higher ends of the market, providing a range of
semisub, barges, ships and jackups to support the commissioning, maintenance and
decommissioning of offshore infrastructure. Recently a considerable level of newbuild activity has
seen the fleet change markedly with the successful entrance of Floatel into the North Sea semisub
accommodation market and MAC attempting to enter the market with a new hull design (the
compact semisub).

Despite the considerable increase in supply, driven by the contractors highlighted in the above, the
market for semisub assets remains tight. Semisub vessels work primarily within the North Sea (UK
and Norway) and Mexico but more recently have been deployed in Brazil, deepwater USA, Australia,
West Africa and South East Asia. This more fragmented nature of deployment is indicative of a larger
fleet of vessels being able to serve more markets, and demand for the solution remaining buoyant.

Ship shaped assets are a more recent entry into the accommodation market. Edda Accommodation,
POSH and Lauritzen Tankers have deployed a series of vessels into the sector which are able to
transit faster than semisubs and in many cases perform a wider scope of work. However,
accommodation blocks on such vessels are usually smaller than those found upon semisubs as
topside space is also taken up by cranes and auxiliary equipment used within construction support
work.

Jackups and barges are primarily used within shallow waters across the Middle East, South East Asia
and Europe. Barges have larger accommodation blocks than those found upon jackups, but the
jackup solution can be deployed in harsh waters due to their ability to raise their topside above
harsh waters.

Prosafe operates the largest fleet of assets within the semisub accommodation market and
maintains a dominant market position within the North Sea and Mexico. Within Mexico the group
operates with the local Cotemar and MMM groups which have long term contracts with PEMEX.
Elsewhere in the semisub fleet Floatel have made a successful entrance into the North Sea in
addition to securing a deployment within the deepwater USA. It has also secured long term
contracts with Petrobras in Brazil. COSL also work in the North Sea with its semisub and jackup fleet
contracted on a mix of long term and spot fixture work across the UK and Norway.

Table 6: Accommodation Fleet Summary Table
Fleet Formation Operational Fleet Capacity
Operator Barge Jackup Semisub Ship
Operational Newbuild Avg. Age Total No. Of Beds
Prosafe 13 11 2 25 6,708
Sea Trucks 5 6 9 2 10 3,762
POSH 2 8 5
xxvii
5 6
3,291
Intership 6 5 1 13
3,114
MAC 5 0 5 -1 1,420
Floatel 5 2 3 1 2,430
MMM 3 3 0 27 909
Edda Accommodation 2 1 1 0 1,400
Cotemar 3 1 2 31 1,530
COSL 1 1 2 0 36 684


xxvii
Includes one vessel that is scheduled for conversion into a 198person accommodation vessel and one 191-person vessel that is
committed for sale after December 31, 2013
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66

Sea Trucks maintain a substantial market presence within its core West African segment in addition
to occasional deployment into Australasia and South East Asia. Interships large barge fleet is
primarily deployed within West Africa but assets have also worked within Asia and the Middle East
(Arabian Gulf).

Edda Accommodation operates one ship shaped vessel and has a further asset on order designed to
serve the global market and has worked in both the North Sea and Africa. The operational vessel, the
Edda Fides has performed a wide array of work including transport and installation support in
addition to its basic accommodation capacity.

In terms of overall accommodation capacity the market is broadly split between lower-end jackups
with an average berthing capacity of 200 personnel and semisubs that average close to 500 berths
per vessel. Within each subsector of supply there is further fragmentation with smaller semisub
assets such as those operated by Cotemar and MMM able to berth less than 300 personnel whilst
newbuilds such as the two POSH semisubs are designed to berth more than 700 offshore workers.

The two newbuild semisub vessels ordered by POSH are substantially differentiated from the
majority of its competition. At the close of 2013 there were only three operational semisubs able to
berth in excess of 600 people, and there are a further three on order or under construction, of which
POSH will operate two. Upon delivery of the two newbuild vessels POSH will operate the youngest
high-berth accommodation fleet in the market.

A further clear theme within the accommodation market is the general age of the fleet. The average
age of jackup vessels is in excess of twenty years, whilst despite a considerable level of newbuilding
activity the average age of semisubs stands at 16 years (including newbuilds). Many of the assets
within the market are approaching the end of their operational lives and are either likely to retreat
from the market or require a significant costly upgrade such as that performed by Prosafe on its Safe
Caledonia vessel which amounted to an investment of USD125m.


Figure 1179: Number of Accommodation Vessels and Average
Accommodation Capacity by Operator

Figure 11820: Number of Accommodation Vessels and Average
Accommodation Age by Operator

With the proposed retirement of assets greater than 40 years old there is potential for a
considerable reduction in the competitive supply of assets, thus tightening the supply and demand
balance within the sector. Whilst there have been few retirements in the market thus far (the Etesco
Millennium was cold stacked in late 2011), the increased focus on health and safety legislation in the
wake of Macondo is likely to provide a catalyst to fleet attrition in the future.

516
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700
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25
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Operational Newbuild Avg. Age (RHS)
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5.6.1 POSHs Accommodation Vessels
Whilst POSH operates four accommodation vessels it does not currently have an exposure to the
high end semisub market. We believe that in order to capitalise upon the opportunities within the
market, POSH has ordered two newbuild semisub vessels. The high spec semisub vessels will each
provide 750 berths a considerable increase on the market average and POSHs current fleet.
Including the newbuild and conversion fleet, POSHs total accommodation capability sits at 3,291
xxviii

berths.

The two newbuilds in POSHs fleet have been designed to compete within the highest ends of the
semisub market. The assets, equipped with DP3 systems that will allow the vessels to operate in the
deep waters. Furthermore, the deck space capacity of 2,200m
2
is one of the largest in its class, and
the lift capacities will allow the vessels to perform light construction support in addition to basic
accommodation. Upon delivery, the two vessels will likely operate in the high ends of the
accommodation sector and will have assets comparable and with additional capabilities than its
direct peers.

Machinery redundancy and platform stability are the two key factors determining the quality of
SSAVs. POSHs DP3 SSAVs will be equipped with 9 thrusters to provide optimal redundancy and
safety.

Upon delivery in 2014 the assets will occupy the high end of the market in terms of berthing capacity
and the ability to work within deep and harsh waters.

In addition to the two newbuild semisubs, POSH operates a series of accommodation workboats.
POSHs current fleet consists of five
xxix
accommodation vessels. This current fleet is multifunctional
and has been designed to compete for construction support work as well as basic accommodation
work. In general the existing fleet has a lower accommodation capacity than the other assets within
the group, but a recent set of newbuild orders is likely to expand the fleet in terms of both size and
capability.

Each of the three newbuild DP2 accommodation vessels will offer accommodation capacity of 238
berths, a considerable increase on the market total capacity and POSHs current fleet. The presence
of a series of newbuilds has the potential to extend this regional diversification considerably with
opportunities expected to arise within Latin America and Australasia. If the assets are outfitted to
European standards there are further deployment opportunities in Northern Europe.

5.7 Supply and Demand
The semisub market has been in tight supply over the past five years, despite the entrance of a
series of new contractors. An increase in demand, driven by a more diverse market and a stringent
health and safety environment, has been sufficient so as to absorb new assets in the sector. The
tight supply and demand dynamic is expected to continue throughout the forthcoming period with
the fleet expected to be close to 100% utilised between 2013 and 2015, when the benchmark is
likely to retreat slightly to 92% due to an increase in supply and cooling in demand. Towards the
close of the period of analysis the rate is forecast to recover to 94% in 2017.

The rising demand in the semisub market is driven by the increased regional diversification of
demand. As highlighted previously semisubs have recently been deployed within regions as diverse

xxviii
Includes one 191-person accommodation vessel that is committed for sale after December 31, 2013
xxix
Includes one vessel that is scheduled for conversion into a 198-person accommodation vessel and one vessel that is committed for sale
after December 31, 2013.
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as Brazil, North America, Mexico and Northern Europe. The continued growth of the market, driven
by activity in regions such as West Africa is expected to be sufficient so as to provide high utilisation
for the newbuild semisubs expected to be delivered.

In the short term, Infield Systems Limited expects a level of undersupply in 2014 to be driven by a
peak in demand due to high activity in Norway. Post 2014 demand is expected to soften slightly
before increasing again in 2016. The substantial increase in supply is expected to place some strain
on utilisation in the sector, but rates are likely to remain high.

Whilst semisubs are broadly competitive with each other it is clear that those larger assets equipped
with dynamic positioning and larger berthing capabilities have been able to secure work in deeper
waters and in harsher environments. For example, the Floatel Superior, a DP3 semisub able to berth
504 offshore personnel continues to work for Statoil on a long term basis whilst two Prosafe
newbuilds, the Safe Zephyrus and Safe Boreas are also expected to work for Statoil upon delivery.

Outside of semisub vessels the market is more densely populated and as such utilisation figures have
been lower in recent years. During the period of analysis the sector is expected to report an increase
in activity, despite a reduction in operational infrastructure within North American waters. The
increase is broadly driven by the aforementioned growth within the Middle East and South East Asia.


Figure 1191: Historical and Forecast Semisub Accommodation Supply and
Demand (Vessel Days) and Utilisation (RHS) (2008-2017)

Figure 1202: Historical and Forecast Non-Semisub Accommodation Supply
and Demand (Vessel Days) and Utilisation (RHS) (2008-2017)

Rising demand for semisub vessels across Northern Europe, Mexico and within the new markets of
Brazil and West Africa is expected to foster a considerable increase in accommodation dayrates
throughout the coming period. Historically the highest dayrates have been achieved in Northern
European waters, whilst a considerable proportion of the fleet has been operational on long term
charter to PEMEX in support of the Cantarell field. More recently the market has moved towards
Brazil with a series of contracts secured by Floatel International.

Historically the semisub accommodation market has reported volatile rates, with the period
between 2007 and 2009 characterised by steep fluctuations in fixture rates. Much of this was driven
by PEMEXs signing of several of short term charters (less than six months) for assets such as the
Safe Concordia returning rates of USD320,000/day. The same vessel secured a rate of
USD75,000/day in 2009 for an eight month contract in the same region. The USD75,000/day contract
represented a bareboat rate, whilst the higher rate was secured on a timecharter. The historical
volatility within the market is believed to have been driven by the short term nature of contracts
signed. As contract lengths have been extended to beyond 12 month periods, this volatility has
eased and the spread between the high and low end rates has closed.

0%
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120%
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Within the non-semisub market rates have been, and are expected to be, less volatile as charters are
signed for longer terms. The market is weighted towards maintenance contracts which have
historically been signed for multiple year terms and this has eased short term volatility in overall
rates.


Figure 1213: Historical and Forecast Accommodation Dayrates by Type
(USD000/day) 2008-2017

Figure 1224: Selected Bareboat Semisub Vessel Fixtures by Region
(USD000/day) 2004-2014


Figure 1235: Selected Timecharter Semisub Vessel Fixtures by Region (USD000/day) 2004-2014

The relatively low rates presented within Mexican waters, as shown in figure 120 highlight the
bareboat nature of several of the contracts in the region. Cotemar currently charter several assets
from Prosafe on a bareboat nature in the region which are in turn on contract with PEMEX. There is
a considerable premium attached to more conventional terms fixtures which include the relevant
crew and services.

Each of the semisub accommodation vessels able to berth in excess of 600 personnel have
successfully secured strong utilisation over the past five years. The four Prosafe vessels; Safe
Britannia, Safe Lancia, Safe Regency, and Safe Hibernia (no DP) are currently working in Mexican
waters. The Safe Hibernia is chartered directly to Petrobras whilst the Safe Britannia, Safe Lancia and
Safe Regency are contracted to Cotemar, which as stated above, uses the vessels to work for Pemex
on long term charters. The rates for such bareboat contracts have moved in a relatively tight range
between USD60,000/day and USD75,000/day since 2008. Recent contracts have been secured for
rates at the high end of this range.

In 2013 a series of contracts have been awarded in Northern European waters with Prosafe securing
rates close to USD300,000/day for work on the Mariner field with its newbuild vessels whilst the
Safe Bristolia has secured work for BG International on the Everest North fields. In Norway the Safe
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Brazil Mexico Norway Others UK
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Scandinavia has secured a long term contract with Det Norske Oljeselskap on the Ivar Aasen field
whilst the Floatel Superior has also continued to work for Statoil. Outside of Northern Europe OOS,
a new entrant, has secured work with Petrobras in Brazil for two newbuild accommodation vessels
currently under construction in Yanthai, China.
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6 TRANSPORT AND INSTALLATION MARKET ANALYSIS
6.1 Market Overview
6.1.1 Drivers of Demand and Targetable Market
The transport and installation (T&I) off offshore equipment including floating platforms involves
the towage of non-self propelled infrastructure from one location to another. In the case of offshore
production platforms this usually covers the transit from the fabrication yard to the point of
installation. In the case of drilling units, particularly jackups and semisubmersible rigs this can
include the movement from one drilling site to another. Beyond large infrastructure such as the
aforementioned rigs and production platforms there are considerable further opportunities within
the marine transportation of pipes and subsea equipment in addition to the support of offshore
construction activity. As such, the drivers of demand within the market are the number of platforms
installed, the operational number of fixed and floating production and storage units and the
prevailing level of construction within the offshore market.


Figure 1246: Historical and Forecast Platform Installation by Fixture Type
(Units Installed) 2008-2017

Figure 1257: Historical and Forecast Floating Platform Installation by
Region (Units Installed) 2008-2017

The largest contracts within the market are related to the towage of floating platforms, and within
this sector POSH is a clear market leader. In the period to 2017 Infield Systems Limited expects a
considerable increase in floating platform installation work, particularly within Asian and Latin
American waters. In the long term there is likely to be an increase in opportunities in West African
waters after a relatively quiet number years between 2012 and 2015.
6.1.2 Future Market Trends
Deepwater Installation
With an increase in floating platform installation numbers expected there is likely to a considerable
increase in the amount of deepwater work within the T&I sector. Projects across Brazil, West Africa
and Latin America are expected to provide considerable opportunities and will require T&I assets
with higher power outputs in comparison to the conventional fleet of assets. This increase in
deepwater work is joined by an overall movement towards more remote projects located further
from shore across both drilling and installation activity.
Decommissioning
The majority of activity within the T&I market has traditionally been centred on installation projects
and the transport of fixed and floating production and storage units. More recently there has been a
considerable level of growth within the decommissioning sector, particularly within Northern Europe
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and North America. The decommissioning market represents an opportunity for T&I vessels which
will transport the removed platform topsides and jackets.

6.2 Pipelay
6.2.1 Drivers of Demand and Targetable Market
Pipelay vessels are designed to transport and install tubular pipe and control lines utilised in the oil
and gas, and associated industries. Pipelay vessels themselves have traditionally been dominated by
shallow water barges and this configuration continues to account for the bulk of supply within the
Gulf of Mexico and South East Asia. The development of deepwater fields and the requirement to
transport oil and gas back to shore has led to the development of a deepwater fleet able to operate
in regions such as Brazil. Within Europe the ship-shaped hull configuration has long been the
favoured choice with vessel operators, a trend which is expected to continue.

The two key drivers for the market are the quantum of pipeline and control lines installed within a
given year. The pipeline installation market is the larger in terms of overall size, but considerable
opportunities also exist within the control line market.


Figure 1268: Historical and Forecast Pipeline Installation by Region (KM
Installed) 2008-2017

Figure 1279: Historical and Forecast Control Line Installation by Region
(KM Installed) 2008-2017

Over the forecast period, the installation market is expected to grow considerably in each major
region barring North America. The Asian pipeline installation market is the largest in the sector,
though there has been a considerable level of growth within the Latin American and European
markets. Infield Systems Limited expects a total of over 15,000km of pipelines to be installed in the
global market in 2017, up from 9,782km in 2012. In the control line sector a total of 6,417km is likely
to be installed in 2017, in comparison to the 3,949km in 2012.

POSHs fleet of shallow water AHTs in addition to its ballastable and submersible barges is primarily
engaged in the support of shallow water pipelay and platform construction work. Each of these
markets is expected to increase in volume over the forecast period as shallow water field
development in such emergent markets increases in prominence.

In Australasia, East Asia, the Middle East, South Asia and South East Asia, a total of close to
40,000km of shallow water pipelines are expected to be installed between 2008 and 2017. Of this
40,000km, over 23,000km is expected to be installed between 2013 and 2017. This sizeable increase
in activity, with peak demand in 2016, is a targetable opportunity for the POSH T&I fleet.

The largest proportion of this activity sits within the Middle East whilst South East Asia is expected to
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provide considerable opportunities in countries such as Malaysia and Thailand.


Figure 12830: Historical and Forecast Shallow Water Pipeline Installation
by Region (KM Installed) 2008-2017

Figure 1291: Historical and Forecast Shallow Water Platform Installation
by Region (Units Installed) 2008-2017

In regards to platform installation activity, the shallow water market within POSHs target regions is
expected to remain buoyant with over 750 installations forecast to take place between 2013 and
2017. South East Asia is expected to provide the highest amount of distinct opportunities for the T&I
fleet whilst there is considerable growth forecast in both South Asia and East Asia.
6.2.2 Future Market Trends
Combination Vessels
As with heavy lift assets, pipelay vessels have recently been designed to be more multifunctional. In
the pipelay sector this trend has been characterised by vessels being designed with higher
transportation capacities and cranes designed for offshore lifts. Additionally, assets have been
designed with larger accommodation blocks. The benefits of being more multifunctional are clear a
larger transportation capacity reduces the need for support vessels such as pipe-carriers, while
having the ability to lift modules allows an asset to perform a wider scope of work than a traditional
shallow water pipelay barge. Vessels designed with additional transportation capacities include the
Ceona Amazon an asset utilising a drillship design hull and a rigid reel installation system. A
number of vessels have been designed with significant lift capacities (in excess of 3,000mT), but the
bulk of combination vessels utilise cranes up to 1,000mT.
Trunk Line Installation
A significant driver behind the short term increase in installation activity is the trunk line
xxx
market.
The growth is expected to be characterised by a short term increase in European activity and long
term trends within Australasian and Middle Eastern markets. Whilst activity within the SURF and
conventional markets can be treated as repeatable business, the presence of trunk lines represents
one-off projects such as the Nord Stream, South Stream and Blue Stream projects, as well as the
historical MEDGAZ development.
Flexible Lines
The bulk of lines installed in the offshore market are fabricated from tubular steel. However, since
1972 there has been a growing presence of flexible installation. The lines themselves are composites
of thermoplastic and metallic concentric layers, each with a specific function. The unbonded layers
are free to slide relative to each other and the pipes have annulus venting. The pipe is reeled in
order to facilitate a continuous manufacturing process utilising an interlocking profile. The essential

xxx
Trunk line installation defined as lines in excess of 75km in length and 24 inches in outside diameter
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layers include the carcass, the internal sheath, pressure armour, tensile armour and the external
outer protection sheath. The carcass of the line will generally be corrosion resistant, with AISI grades
of 304-316L with selection criteria based on fluid chemistry and water depth.

Having historically been used for risers
xxxi
, the pipeline solution has recently been utilised as
flowlines and jumpers. Using specialist flexible pipeline installation vessels the pipe can be installed
at speeds of up to 10km per day. The speed of lay has distinct advantages in remote locations and
deepwater where the cost of mobilising a large pipelay vessel would represent a large portion of
overall capital investment.
6.2.3 Fleet Characteristics
Infield Systems Limited estimates that there were 192 competitive pipelay vessels in the market by
the close of 2012 (after removing vessels aged 40 and above). Whilst there is a considerable amount
of newbuild activity in the order-book over the next two years, Infield Systems Limited expects only
a marginal increase in fleet numbers to 202 assets by 2017. The limited increase in the market
highlights the attrition of older vessels.


Figure 1302: Historical and Forecast Pipelay Supply by Operator (Units)
2008-2017

Figure 1313: Historical and Forecast Pipelay Supply by Region (Units)
2008-2017

The largest operators of pipelay vessels in the market include Subsea 7 S.A, Technip S.A and Saipem
SpA in addition to newer market entrants including SapuraKencana Petroleum Berhad
(SapuraKencana). Global Marine operates the largest fleet of control line installation vessels.
While POSH does not operate any pipelay-specific assets, its fleet of shallow water AHTs, tugs and
barges has supported a range of near-shore pipelay installation work in recent years.

With regards to the location of vessels, Asia currently has the largest fleet, followed by Europe and
North America, whilst a considerable proportion of assets seek charters in numerous regions and are
thus classed as global. The fleet in Asia is conventionally focussed with a series of barges accounting
for the majority of supply. This dynamic reflects the shallow, benign nature of demand. In Europe
the bulk of assets have been designed to operate in harsher waters and, as such, are deemed high-
end vessels. Infield Systems Limited anticipates an increase in deepwater demand within Asian
waters towards the close of the forecast period, while newbuild activity in the region is likely to
move towards high-end assets in the long-term. SapuraKencana and Emas (part of Ezra Holdings
Limited) are local operators that have already sought to bring such tonnage to the market.


xxxi
A large diameter pipe that connects a well or manifold to the platform topside
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Figure 1324: Historical Average Pipelay Vessel Age by Time-Period and Newbuild Forecast (Units)

The age profile for pipelay vessels is weighted towards conventional tonnage built pre 1992 but, in
order to service the growing market within deepwaters, a series of newbuilds have been sanctioned.
These assets, built post 2005 tend to be larger than conventional vessels and more multifunctional.
The bulk of newbuilds have been designed for operations in Asia, whilst Petrobras continues to
order flexible vessels for its Brazilian pre-salt developments. The average age of pipelay vessels in
the market is similar to that within the heavy lift sector and currently amounts to 22 years.

6.2.4 Supply and Demand
As a result of the longevity of some shallow-water pipelay assets (>30 years old in some cases), the
pipelay market is similarly in a state of general oversupply, although it is expected to tighten
considerably towards the end of the forecast period due to increasing demand driven primarily by
installation in countries such as Brazil, Norway, the USA, the UK and Australia. However, many of
these projects will be located in deepwater. Consequently shallow water pipelay demand is expected
to slow after 2016.

By contrast, the demand for deepwater pipelay is expected to increase significantly, particularly post
2017, driven by developments in Brazil, the USA, Angola, Norway and Australia. This reflects a
considerable increase in deepwater, harsh environment lines and the growth in SURF lines is likely to
highlight a supply constraint in regards to deepwater vessels and assets with high tension
capabilities. Although the sector is expected to remain oversupplied across the period, the market is
expected to tighten considerably towards the close of the forecast period and will require large ship
shaped assets with DP2/3 capability.

The deepwater market therefore provides a distinct opportunity for high end vessels over the
forecast period. Indeed, operators are increasingly looking to integrate very heavy lift capability with
such pipelay assets. For example, the heavy lift asset Pieter Schelte will additionally have the largest
pipelay capacity in the world and a further three pipelay assets will have lift capability >5,000mt by
2015. Orders for larger conventional pipelay assets may characterise the short term order-book,
particularly for small operators, but over the long-term field development ships may become
increasingly popular amongst the major contractors.

The average global utilisation rate for pipelay assets is expected to be 64% throughout the forecast
period. In 2013, utilisation is expected to average 56% in the global market, although the Asian
sector is likely to exceed this figure considerably.

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Figure 1335: Historical and Forecast Pipelay Supply and Demand (Vessel
Days) and Utilisation (RHS) 2008-2017

Figure 1346: Historical and Forecast Pipelay Dayrates (USDk/day) and
Utilisation (RHS) 2008-2017



0%
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7 HARBOUR SERVICES AND EMERGENCY RESPONSE
7.1 Market Overview
Singapore plays host to about 130 top shipping groups in the world
25
. Boasting the accolade of being
the busiest port in the world in terms of shipping tonnage, Singapore welcomes some 140,000
vessels into her docks annually
26
. In 2012 alone, Singapores port handled a record 31.6 million
twenty-foot equivalent units of container, a 5.7% increase from previous year
27
. Over the next
decade, the maritime industry has been forecasted to grow at an annual rate of 6.5 to 7%.
28


Over time, Singapore has become a pivotal piece in the shipping crossroads between Europe and
Asia. Facing a backdrop of increasing demand for deeper ports and bigger cranes to manage larger
ships, the Singapore government has devised a port unification which would double the deep-water
ports capacity to 65 million twenty-foot equivalent units of container. This is bound to increase
contributions of the maritime industry to GDP, which currently stands at 7%
29
.

Singapore is also a thriving international centre for shipbuilding, ship repairs and conversions. Seated
in the southern peninsula of the Straits of Malacca, Singapore commands over 60% of the world
market share in building jack-up rigs and converting FPSO units
30
. Across the Singapore Straits,
Batam Island has joined Singapore as a niche player for the construction of offshore support vessels
and offshore structures, with companies such as McDermott, Saipem, Sembawang Marine and
Offshore Engineering and Nippon Steel and Engineering have their fabrication facilities for offshore
jackets, and topside production and processing platforms.

Sitting at the crossroads between Asia and Africa and Europe, the Singapore Straits and Malacca
Straits form one of the busiest and congested waterways for shipping globally. Singapore is also one
of the worlds largest oil refining centres. Mega container ships transporting manufactured goods
from North Asia to Africa, India, Middle East and Europe, pass within close quarters of very large
crude carriers and other shipping traffic as they pass through the Singapore Straits (1.2 km at the
narrowest point) and Malacca Straits.

POSH owns, operates and manages a fleet of harbour tugs and heavy lift crane barges, which are
actively engaged in supporting harbour towage operators, providing heavy lift services to the
shipyards engaged in the construction, and repair and conversion of ships and offshore drilling units,
and other offshore structures and topside production and processing facilities. In addition, POSH
provides emergency oil spill response, salvage and wreck removal services. Harbour tugs provide
berthing assistance to vessels and other floating platforms to manoeuvre within the narrow confines
of the harbour and to escort them to safer channels. These harbour tugs may also provide berthing
and hose handling assistance at offshore fields to tankers off-taking crude from the floating storage
units offshore. The harbour tugs are generally of relatively short length, and powered by twin screw
azimuth propellers of between 3,000BHP to 6,000BHP, which are designed for high pulling power in
both astern and ahead mode, and high manoeuvrability within very confined waters.

Emergency, salvage and oil spill response services encompass emergency assistance to vessels that
encounter grounding, collision, incidences fire and of oil spillage as a consequence of collisions and
groundings. This emergency response service is specifically critical for the congested shipping lanes
of the Singapore Straits and Malacca Straits to minimise losses and damage to the vessel, its crew
and its cargo, as well as to limit the clean-up of oil pollution damage from spills, and to remove
wrecks that may constrict shipping channels or pose danger to other ships.

Harbour tugs, utility vessels, AHTs, large floating cranes, barges and other specialised equipment and
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specialist personnel, such as ROV, Divers, Salvage Masters, oil booms, oil recovery and collection
equipment will be required to attend to incidents for rescue, salvage, oil spill control and cleanup,
depending on the severity and scale of such incidents.

Whilst incidents of collisions typically occur in congested waters, emergencies or accidents may
occur globally, following which the specialists and equipment may be deployed to such areas to deal
with the situation.

Other companies that provide salvage and emergency response services include T+T Bisso, Titan,
Svitzer and Smit. POSH and Swire Pacific are the main offshore support vessels operators that
provide such services, leveraging on their core technical marine competency and assets such as tugs,
utility vessels and barges and other equipment located in various parts of the world, and are able to
mobilise assets and equipment in the shortest possible time.

In general, the harbour service market is likely to remain robust in the forthcoming period as
Singapore maintains its position as a key maritime and shipbuilding hub sitting at the crossroads
between the East-West trades, and continues to be one of the worlds busiest ports. The market for
emergency response services is likely to follow a similar growth pattern with the continued
development of the operational base of offshore infrastructure and a heightened focus upon health
and safety legislation within the market.
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8 GLOSSARY & DEFINITIONS
8.1 Glossary
AHTS Anchor handling tug supply vessel IPO Initial public offering
AHT Anchor handling tug JOA Joint operating agreement
bbl Barrel MAC Marine assets corporation
bcf Billion cubic feet mboe Million barrels of oil equivalent
bcm Billion cubic metres mboepd Million barrels of oil equivalent per day
BHP Brake horsepower mbpd Million barrels per day
boe Barrels of oil equivalent mmBtu Million British thermal units
bpd Barrel per day MMM Mantenimiento Marino de Mexico S. de R.L. de C. V
CAGR Compound annual growth rate mT Metric tonne
CNOOC China national offshore oil corporation NGL Natural gas liquid
CNPC China national petroleum corporation NIOC National Iranian oil company
COSL China oilfield services limited NOC National oil company
CSV Construction and specialist vessel NPD Norwegian petroleum directorate
DECC UK Department for energy and climate change NWECS Northwest European Continental Shelf
DNV Det Norsk Veritas OECD Organisation of economic co-operation and development
DP Dynamic Positioning OPEC Organisation of petroleum exporting countries
DWT Dead-weight tonnes OSV Offshore supply vessel
E&A Exploration and appraisal PEMEX Petroles Mexicanos
E&P Exploration and production PIB Nigerian petroleum industry bill
ECB European central bank Plem Pipeline end manifold
EIA US energy information association Plet Pipeline end terminal
EOR Enhanced oil recovery PSC Production sharing contract
EPIC Engineering, procurement, installation and commissioning PSV Platform supply vessel
FEED Front-end engineering and design PTTEP PTT exploration and production
FID Final investment decision ROI Return on investment
FLNG Floating liquefied natural gas ROV Remotely operated vehicle
FPS Floating production system SGX Singapore stock exchange
FPSO Floating production, storage and offloading vessel SPM Single point mooring
FSO Floating storage and offloading tcf Trillion cubic feet
FSRU Floating storage and re-gasification unit tcm Trillion cubic metres
GoM Gulf of Mexico TLP Tension leg platform
IEA International energy agency tpy Tonnes per year
IMR Inspection, maintenance and repair Twh Terawatt-hours
IOC International oil company USD US dollar















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8.2 Definitions
2P reserves Proven and probable reserves
Active rig Rig which has performed drilling work for at least 15 days in a given month
Capex
Capital expenditure associated with offshore developments. Infield Systems Capex forecasts cover global engineering,
procurement, construction and installation spending for the offshore sector. The data excludes non-development drilling
spending and other exploration expenses
Contracted rig Rig which has been under contract at any period during a given month
Damaged Not functioning due to damage sustained
Deepwater AHT An anchor handling tug vessel with engine power capacity surpassing 10,000BHP
Deepwater AHTS An anchor handling tug supply vessel with engine power capacity surpassing 10,000BHP
Deepwater PSV A platform support vessel with cargo carrying capability exceeding 3,500DWT
Destroyed/Lost Platform is destroyed or lost
Development well Production and injection wells drilled as part of a project development
Dry completions Well completions on a fixed or floating production platform
Exploration well Wildcat wells drilled to de-risk a prospective reservoir
Firm Plan
Part of a development concept for a field where the development plan (PDO) has been submitted to the relevant
authority.
Installed On site but not yet functioning
Midwater AHTS An anchor handling tug Supply vessel with engine power capacity between 7,000BHP and 10,000BHP
Midwater PSV A platform support vessel with cargo carrying capability between 2,500DWT and 3,500DWT
Operational Operating as expected
Opex Operational expenditure associated with offshore developments
Possible Part of favoured development concept for field at very early stage of evaluation.
Possible reserves Inferred oil and gas reserves that have a 10-20% chance of commercial recovery
Probable Part of a favoured development concept for a field at development planning stage at company level.
Probable reserves Indicated oil and gas reserves that have a 50% chance of commercial recovery
Proved reserves Oil and gas reserves that have a 90% chance of commercial recovery
QE3
The third round of the US Federal Reserve's unconventional monetary stimulus programme known as 'Quantitative
Easing.' This consists of USD85bn worth of open market government bond and mortgage backed security purchases
(includes changes under 'Operation Twist')
Refurbishment An old platform removed and repaired for re-installation.
Removed Fully removed
Shallow Water AHT An anchor handling tug vessel with engine power capacity below 10,000BHP
Shallow Water AHTS An anchor handling tug Supply vessel with engine power capacity less than 7,000BHP
Shallow Water PSV A platform support vessel with cargo carrying capability less than 2,500DWT
Shut In At field location but production is shut-in at present.
Speculative Predicted development plan on field compared to other similar developed fields
Subsea completions Well completions on the seabed
Topsides Removed Topsides Removed but jacket still on field
Trend Speculative Represents a high level trend
Under Construction Under construction but not yet in place.
Under Conversion Currently being converted from a previous function
Work-over well Re-entries to existing well-bores











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8.3 Endnotes

1
Sources: Institute for Supply Management, August 2013 Manufacturing ISM Report On Business, August 2013,
http://www.ism.ws/ismreport/mfgrob.cfm, September 2013; Markit Economics Ltd, Markit Eurozone Manufacturing PMI, August 2013,
http://www.markiteconomics.com/Survey/Page.mvc/PressReleases; National Bureau of Statistics of China, China's Manufacturing
Purchasing Managers Index (PMI), August 2013, http://www.stats.gov.cn/english/statisticaldata/#
Each of Institute for Supply Management, National Bureau of Statistics of China and Markit Economics Ltd has not provided their consent,
for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information cited and attributed to it, in this report
prepared by Infield Systems Limited and is therefore not liable for such information under Sections 253 and 254 of the Securities and
Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of incorporation in the Prospectus, POSH and
the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus) have relied on Infield Systems Limited to
ensure that the relevant information from the relevant source has been reproduced in its proper form and context and that the
information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any, over-allotment option provider(s),
if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an independent review of the
information from such source or verified the accuracy or completeness of the relevant information.

2
Sources: European Commission, Business and Consumer Surveys, August 2013,
http://ec.europa.eu/economy_finance/db_indicators/surveys/; National Bureau of Statistics of China, Consumer Confidence Index, July
2013, http://www.stats.gov.cn/english/statisticaldata/#; The Regents of the University of Michigan, Thomson Reuters/University of
Michigan Surveys of Consumers, August 2013, http://www.sca.isr.umich.edu/
Each of European Commission, National Bureau of Statistics of China and The Regents of the University of Michigan has not provided their
consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information cited and attributed to it, in this
report prepared by Infield Systems Limited and is therefore not liable for such information under Sections 253 and 254 of the Securities
and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of incorporation in the Prospectus, POSH
and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus) have relied on Infield Systems Limited to
ensure that the relevant information from the relevant source has been reproduced in its proper form and context and that the
information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any, over-allotment option provider(s),
if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an independent review of the
information from such source or verified the accuracy or completeness of the relevant information.

3
Sources: Infield Systems Limited; International Monetary Fund, World Economic Outlook (WEO), April 2013,
http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm
International Monetary Fund has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of
the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

4
Sources: Infield Systems Limited; International Monetary Fund, World Economic Outlook (WEO), April 2013,
http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm
International Monetary Fund has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of
the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

5
Sources: Infield Systems Limited; International Monetary Fund, World Economic Outlook (WEO), April 2013,
http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm
International Monetary Fund has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of
the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

6
Sources: Infield Systems Limited; International Monetary Fund, World Economic Outlook (WEO), April 2013,
http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm
International Monetary Fund has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of
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the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

7
Sources: Infield Systems Limited; BP p.l.c., Statistical Review of World Energy 2013, June 2013,
http://www.bp.com/en/global/corporate/about-bp/statistical-review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

8
Sources: Infield Systems Limited; BP p.l.c., Statistical Review of World Energy 2013, June 2013,
http://www.bp.com/en/global/corporate/about-bp/statistical-review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

9
Sources: Infield Systems Limited; BP p.l.c., Statistical Review of World Energy 2013, June 2013,
http://www.bp.com/en/global/corporate/about-bp/statistical-review-of-world-energy-2013.html; International Monetary Fund, World
Economic Outlook (WEO), April 2013, http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm
Each of BP p.l.c. and International Monetary Fund has not provided their consent, for purposes of Section 249 of the Securities and
Futures Act, to the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is
therefore not liable for such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared
by Infield Systems Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and
Underwriters (each as defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the
relevant source has been reproduced in its proper form and context and that the information is extracted accurately and fairly from the
relevant source. None of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and
Underwriters or any other party has conducted an independent review of the information from such source or verified the accuracy or
completeness of the relevant information.

10
Sources: Infield Systems Limited; BP p.l.c., Statistical Review of World Energy 2013, June 2013,
http://www.bp.com/en/global/corporate/about-bp/statistical-review-of-world-energy-2013.html; International Monetary Fund, World
Economic Outlook (WEO), April 2013, http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm
Each of BP p.l.c. and International Monetary Fund has not provided its consent, for purposes of Section 249 of the Securities and Futures
Act, to the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not
liable for such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield
Systems Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters
(each as defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source
has been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source.
None of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any
other party has conducted an independent review of the information from such source or verified the accuracy or completeness of the
relevant information.

11
Source: Iraq Business News Ltd., Iraq Reviews Oil Targets, March 2013, http://www.iraq-businessnews.com/2013/03/26/iraq-reviews-
oil-targets/
Iraq Business News Ltd. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the
information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes
of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

12
Source: BP p.l.c., Statistical Review of World Energy 2013, June 2013, http://www.bp.com/en/global/corporate/about-bp/statistical-
review-of-world-energy-2013.html
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BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

13
Source: BP p.l.c., Statistical Review of World Energy 2013, June 2013, http://www.bp.com/en/global/corporate/about-bp/statistical-
review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

14
Source: Sanford C. Bernstein & Co., LLC., Bernstein Energy: Era of Cheap Oil Over As Secular Growth in Upstream Cost Inflation
Underpins Triple Digit Oil Prices, May 2012
Sanford C. Bernstein & Co., LLC. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion
of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

15
Source: Standard & Poors Financial Services LLC., Credit FAQ: How Do Middle Eastern Sovereigns' Fiscal Breakeven Oil Prices Affect
Credit Ratings and Oil Prices?, February 2013, Http://www.standardandpoors.com/ratingsdirect
Sanford C. Bernstein & Co., LLC. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion
of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

16
Source: BP p.l.c., Statistical Review of World Energy 2013, June 2013, http://www.bp.com/en/global/corporate/about-bp/statistical-
review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

17
Source: BP p.l.c., Statistical Review of World Energy 2013, June 2013, http://www.bp.com/en/global/corporate/about-bp/statistical-
review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

18
Source: BP p.l.c., Statistical Review of World Energy 2013, June 2013, http://www.bp.com/en/global/corporate/about-bp/statistical-
review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
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253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

19
Source: BP p.l.c., Statistical Review of World Energy 2013, June 2013, http://www.bp.com/en/global/corporate/about-bp/statistical-
review-of-world-energy-2013.html
BP p.l.c. has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the information
cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information under Sections
253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes of
incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

20
Sources: Infield Systems Limited; International Energy Agency, Oil Market Report, April 2011,
http://omrpublic.iea.org/omrarchive/12apr11full.pdf; BP p.l.c., Statistical Review of World Energy 2012, June 2012,
http://www.bp.com/content/dam/bp/pdf/Statistical-Review-2012/statistical_review_of_world_energy_2012.pdf
Each of International Energy Agency and BP p.l.c. has not provided their consent, for purposes of Section 249 of the Securities and Futures
Act, to the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not
liable for such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield
Systems Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters
(each as defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source
has been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source.
None of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any
other party has conducted an independent review of the information from such source or verified the accuracy or completeness of the
relevant information.

21
Source: International Energy Agency, World Energy Outlook, April 2008, http://www.worldenergyoutlook.org/media/weowebsite/2008-
1994/weo2008.pdf
International Energy Agency has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of
the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such
information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for
the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in
the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been
reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None of
POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

22
Source: Royal Dutch Shell plc, Enhanced Oil Recovery Brochure, February 2012, http://www.shell.com/global/future-energy/unlocking-
resources/eor.html
Royal Dutch Shell plc has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the
information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes
of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

23
Source: Barclays Bank PLC, Global E&P Spending Update, June 2013
Barclays Bank PLC has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the
information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes
of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

24
Tidewater defines old vessels as those at least 25 years old and nearing or exceeding original expectations of their estimated economic
lives. The global OSV market has a large number of old vessels, including about 725 vessels, or 26%, of the worldwide fleet. Of these older
vessels, approximately one-third are already stacked.
(Source: Tidewater Inc., 2012 Annual Report, http://phx.corporate-ir.net/phoenix.zhtml?c=81406&p=irol-reportsannual)
Tidewater Inc.has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the
information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information
A-85


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under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes
of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

25
Source: Maritime and Port of Authority of Singapore, A Maritime Gateway to key Asian Markets, 2009,
http://www.mpa.gov.sg/sites/maritime_singapore/what_is_maritime_singapore/gateway_to_asia.page
Maritime and Port of Authority of Singapore has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to
the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for
such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems
Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as
defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has
been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None
of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

26
Source: Maritime and Port of Authority of Singapore, A Strategic Centre for Maritime Business, 2009,
http://www.mpa.gov.sg/sites/pdf/infokit4.pdf
Maritime and Port of Authority of Singapore has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to
the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for
such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems
Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as
defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has
been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None
of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

27
Source: MediaCorp Press Ltd, Spore poised to remain one of worlds top maritime ports: Maersk, September 2013,
http://www.todayonline.com/business/spore-poised-remain-one-worlds-top-maritime-ports-maersk
MediaCorp Press Ltd has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to the inclusion of the
information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems Limited for the purposes
of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as defined in the Prospectus)
have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has been reproduced in its proper
form and context and that the information is extracted accurately and fairly from the relevant source. None of POSH, vendor(s), if any,
over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other party has conducted an
independent review of the information from such source or verified the accuracy or completeness of the relevant information.

28
Source: Maritime and Port of Authority of Singapore, A Strategic Centre for Maritime Business, 2009,
http://www.mpa.gov.sg/sites/pdf/infokit4.pdf
Maritime and Port of Authority of Singapore has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to
the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for
such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems
Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as
defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has
been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None
of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

29
Source: Bloomberg L.P., A Strategic Centre for Maritime Business, September 2013, http://www.bloomberg.com/news/2013-09-24/lee-
seen-spending-8-billion-on-ports-as-support-falls-freight.html
Maritime and Port of Authority of Singapore has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to
the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for
such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems
Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as
defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has
been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None
of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

30
Source: Maritime and Port of Authority of Singapore, A Strategic Centre for Maritime Business, 2009,
http://www.mpa.gov.sg/sites/pdf/infokit4.pdf
Maritime and Port of Authority of Singapore has not provided its consent, for purposes of Section 249 of the Securities and Futures Act, to
the inclusion of the information cited and attributed to it, in this report prepared by Infield Systems Limited and is therefore not liable for
A-86


86


such information under Sections 253 and 254 of the Securities and Futures Act. As this report has been prepared by Infield Systems
Limited for the purposes of incorporation in the Prospectus, POSH and the Joint Issue Managers, Bookrunners and Underwriters (each as
defined in the Prospectus) have relied on Infield Systems Limited to ensure that the relevant information from the relevant source has
been reproduced in its proper form and context and that the information is extracted accurately and fairly from the relevant source. None
of POSH, vendor(s), if any, over-allotment option provider(s), if any, the Joint Issue Managers, Bookrunners and Underwriters or any other
party has conducted an independent review of the information from such source or verified the accuracy or completeness of the relevant
information.

APPENDIX B
LETTER FROM KPMG CF RELATING TO THE MARK-UP FOR
SHARED SERVICES
PACC Offshore Services Holdings Ltd.
1 Kim Seng Promenade
#07-02 Great World City
Singapore 237994
7 April 2014
Dear Sirs
INDEPENDENT FINANCIAL ADVISER: ADVICE IN RESPECT OF 5% MARK-UPS INCLUDED IN
2014 COST RECOVERY AGREEMENTS
For the purpose of this letter, capitalised terms not otherwise defined herein shall have the same
meaning as given to them in the prospectus issued in connection with the initial public offering of
PACC Offshore Services Holdings Ltd. (the Prospectus).
1. INTRODUCTION
On November 6, 2012, PACC Offshore Services Holdings Ltd. (POSH) entered into a cost
recovery agreement (the 2012 Cost Recovery Agreement) with PCL pursuant to which
PCL has provided the following services (the Shared Services), if and when required:
(a) strategic and commercial management services;
(b) human resources and personnel administration services;
(c) office administration services;
(d) legal and corporate secretarial services;
(e) treasury;
(f) back office processes;
(g) information technology;
(h) internal audit;
(i) insurance; and
(j) bunker procurement services.
In connection with the transfer of Shares from PCL to KSL, on 31 March 2014, POSH has
entered into a cost recovery agreement with PCL (the 2014 PCL Cost Recovery
Agreement) pursuant to which the 2012 Cost Recovery Agreement will be terminated and
be replaced by the 2014 PCL Cost Recovery Agreement and PCL will provide to the Group,
bunker procurement services, if and when required. In addition, POSH has also entered into
a cost recovery agreement with KSL (the 2014 KSL Cost Recovery Agreement and
together with the 2014 PCL Cost Recovery Agreement, the 2014 Cost Recovery
B-1
Agreements) pursuant to which KSL will provide to the Group the Shared Services (save for
strategic and commercial management services and bunker procurement services), if and
when required.
In connection with the provision of these services, each of KSL and PCL will charge to POSH
the following costs directly related to the provision of the services on a cost-recovery basis
(inclusive of a 5% mark-up (the Mark-up)):
(1) all personnel-related costs of staff assigned to perform the services;
(2) all other costs incurred in relation with and necessary for KSL or, as the case may be,
PCL to properly perform the services; and
(3) all associated costs for the use of the office premises and attendant facilities.
We understand that the costs directly related to the provision of the services are based on
the time costs of the relevant services provided which comprise remuneration and its
attendant costs (such as CPF contributions and insurance) and supporting costs (such as
rental and utilities).
KPMG Corporate Finance Pte Ltd (KPMG Corporate Finance) have been appointed as the
independent financial adviser (Independent Financial Adviser) to advise as to whether
the Mark-up included in each of the 2014 Cost Recovery Agreements is: (a) on normal
commercial terms; and (b) prejudicial to the interests of POSH and its minority shareholders
(the Minority Shareholders).
2. TERMS OF REFERENCE
KPMG Corporate Finance was neither a party to the negotiations in relation to the 2014 Cost
Recovery Agreements/Mark-up, nor were we involved in the deliberations leading up to the
decision to enter into the 2014 Cost Recovery Agreements/Mark-up and its subsequent
actions relating thereof. We do not, by this letter, warrant the merits of the 2014 Cost
Recovery Agreements/Mark-up other than to form an opinion as to whether the Mark-up
included in each of the 2014 Cost Recovery Agreements is: (a) on normal commercial terms;
and (b) prejudicial to the interests of POSH and its Minority Shareholders.
It is not within our terms of reference to evaluate or comment on the legal, strategic, and/or
commercial merits and risks of the 2014 Cost Recovery Agreements/Mark-up. Our scope of
work also does not include verifying or commenting on the cost of providing the services that
are included in the 2014 Cost Recovery Agreements. We are not addressing the relative
merits of the 2014 Cost Recovery Agreements/Mark-up vis-a-vis any alternative transaction
previously considered by POSH or transactions that POSH may consider in the future, and
as such, we do not express a view thereon. Such evaluations or comments are and remain
the sole responsibility of POSH although we may draw upon their views or make such
comments in respect thereof (to the extent deemed necessary or appropriate by us) in
arriving at our opinion.
In formulating our opinion, we have relied to a considerable extent on the information set out
in the Prospectus, other public information collated by us and the information, opinions and
facts provided to us by POSH, and its other professional advisers. Whilst care has been
exercised in reviewing the information we have relied upon, we have not independently
verified the information. We have made such enquiries and judgment as we deemed
necessary and have found no reason to doubt the accuracy or reliability of such information.
B-2
We have also relied on the responsibility statement of the directors of POSH (the
Directors) that the Prospectus and all documents relating to the Prospectus have been
seen and approved by them and they collectively and individually accept responsibility for the
information given, and confirm that, having made all reasonable enquiries, to the best of their
knowledge and belief, the facts stated and opinions expressed in the Prospectus are fair and
accurate and that there is no other material fact the omission of which would make any
statement in the Prospectus misleading.
This letter is addressed to the Company for their benefit in connection with and for the
purposes of their consideration of the 2014 Cost Recovery Agreements/Mark-up, and the
recommendations made by them shall remain their responsibility.
In rendering our advice and giving our opinion, we did not have regard to the specific
investment objectives, financial situation or unique needs and constraints of any Shareholder
or any specific group of Shareholders. We recommend that any individual Shareholder or
group of Shareholders who may require specific advice in relation to their investment
portfolio(s) consult their stockbroker, bank manager, solicitor, accountant, tax adviser or
other professional advisers.
This letter is governed by, and construed in accordance with, the laws of Singapore, and is
strictly limited to the matters stated herein and does not apply by implication to any other
matter.
Our opinion is based upon market, economic, industry, monetary, and other conditions in
effect on, and the information made available to us as at 25 March 2014, being the Latest
Practicable Date. Such conditions can change significantly over a relatively short period of
time. We assume no responsibility to update, revise or reaffirm our opinion in the light of any
subsequent development after the date of this letter even if it might affect our opinion
contained herein.
Our opinion in relation to whether the Mark-up included in each of the 2014 Cost Recovery
Agreements is: (a) on normal commercial terms; and (b) prejudicial to the interests of POSH
and its Minority Shareholders should be considered in the context of the entirety of our letter
and the Prospectus.
3. EVALUATION OF THE 5% MARK-UPS INCLUDED IN 2014 COST RECOVERY
AGREEMENTS
In the course of our evaluation of the Mark-ups, we have given due consideration to, inter
alia, the following factors:
The rationale for the Mark-ups
The Directors consider that the following rationale supports the entry into the 2014 Cost
Recovery Agreements, including each of the respective Mark-ups:
The KSL/PCL Group & the POSH Group requires common services comprising
Legal/Corporate secretarial, Treasury, Internal Audit, Information Technology, Insurance and
such other services that may be common to both. These services are retained in the
KSL/PCL Group and both Groups entered into a shared service agreement to benefit from
efficient cost management & services.
Pursuant to transfer pricing guidance from the Inland Revenue Authority of Singapore, the
two Groups agree to a 5% mark-up as reflective of an arms length transaction for such
services.
B-3
Basis for arriving at the Mark-ups
We note that the terms of the 2014 Cost Recovery Agreements were negotiated on an arms
length basis.
IRAS Transfer Pricing Guidelines
We note that in arriving at the Mark-ups of 5%, POSH took into account the IRAS Transfer
Pricing Guidelines which provide that to facilitate the relevant taxpayers compliance with the
arms length standard while maintaining a high level of adherence to the arms length
principle, and based on industry norms, IRAS is prepared to accept a mark-up of 5% for
certain routine support activities as a reasonable arms length charge for such services,
provided that these routine support activities that the service provider offers to its related
party are not also provided to an unrelated party.
Proprietary confidential client information
Based on proprietary information with KPMG, a mark-up of 5% is within the range of
commonly adopted mark-up percentages used by multinational companies, including listed
companies in Singapore, for the provision of routine intra-group support services between
related parties.
4. OUR OPINION
Having carefully considered the information available to us and our analysis set out above,
we are of the view that the Mark-up of 5% included in each of the 2014 Cost Recovery
Agreements is: (a) on normal commercial terms; and (b) is not prejudicial to the interests of
POSH and its Minority Shareholders.
In rendering the above opinion, we have not taken into consideration the specific investment
objectives, financial situation, tax position or unique needs and constraints of any individual
Shareholder.
This opinion is governed by, and construed in accordance with the laws of Singapore, and is
strictly limited to the matters stated herein and does not apply by implication to any other
matter.
Yours faithfully
For and on behalf of
KPMG Corporate Finance Pte Ltd
Vishal Sharma
Executive Director
Jeremy Bogue
Director
B-4
APPENDIX C
LETTER FROM KPMG CF RELATING TO THE SHAREHOLDERS MANDATE
Independent Directors
PACC Offshore Services Holdings Ltd.
1 Kim Seng Promenade
#07-02 Great World City
Singapore 237994
7 April 2014
Dear Sirs
PROPOSED SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS
For the purpose of this letter, capitalised terms not otherwise defined herein shall have the same
meaning as given in the prospectus issued in connection with the initial public offering of PACC
Offshore Services Holdings Ltd. (the Prospectus).
1. INTRODUCTION
PACC Offshore Services Holdings Ltd. (POSH or the Company) is proposing to adopt a
shareholders mandate (the Shareholders Mandate) to enable them to enter into certain
categories of transactions with the specified classes of interested persons (Interested
Person Transactions), details of which are set out in the Prospectus to the shareholders
of the Company (the Shareholders). This letter has been prepared for the use of Ahmad
Sufian @ Qurnain Bin Abdul Rashid, Ma Kah Woh, Jude Philomen Benny and Wee Joo Yeow,
being directors of PACC Offshore Services Holdings Ltd., as at the date of the Prospectus,
who are considered independent for the purposes of the proposed adoption of the
Shareholders Mandate (the Independent Directors). This letter is for the purposes of the
Independent Directors formulation of their opinion on the proposed adoption of the
Shareholders Mandate. Unless otherwise defined, all terms in the Prospectus shall have the
same meaning in this letter.
To comply with requirements of Chapter 9 of the Listing Manual, KPMG Corporate Finance
Pte Ltd (KPMG Corporate Finance) has been appointed as the independent financial
adviser (IFA) to provide an opinion to the Independent Directors on whether the methods
and procedures set out in the Shareholders Mandate for determining the transacting prices
of the interested person transactions, if taken as a whole and if applied consistently, are
sufficient to ensure that the transactions will be carried out on normal commercial terms and
will not be prejudicial to the interests of the Company and its minority Shareholders.
2. TERMS OF REFERENCE
The objective of this letter is to provide an independent opinion, for the purposes of Chapter
9 of the Listing Manual, on whether the methods and procedures for determining the
transacting prices of the Interested Person Transactions are sufficient to ensure that the
transactions will be carried out on normal commercial terms and will not be prejudicial to the
interests of the Company and its minority Shareholders.
C-1
The views of KPMG Corporate Finance as set forth in this letter are based on prevailing
market and economic conditions, and our analysis of the information provided in the
Prospectus, as well as information provided to us by the Company, as at 25 March 2014 (the
Latest Practicable Date). Accordingly, this opinion does not take into account any events
or conditions occurring after this date. We assume no responsibility to update, revise or
re-affirm our opinion, factors or assumptions in light of any subsequent development after the
Latest Practicable Date that may affect our opinion or factors or assumptions contained
herein.
It is not within our terms of reference to evaluate or comment on the merits and/or associated
risk, whether commercial, financial or otherwise of any Interested Person Transactions
entered into or about to be entered into, and as such, we do not express an opinion thereon.
Such evaluations or comments are and remain the sole responsibility of the Directors
although we may draw upon their views or make such comments in respect thereof (to the
extent deemed necessary or appropriate by us) in arriving at our opinion.
We have not been involved in the deliberations leading up to the decision by the Directors
to obtain the Shareholders Mandate, or the methods or procedures proposed to be adopted
by the Company to ensure that the relevant Interested Person Transactions will be carried
out on normal commercial terms and will not be prejudicial to the interests of the Company
and its minority Shareholders.
In the course of our evaluation of the methods or procedures adopted for determining
transaction prices in connection with the Shareholders Mandate, we have held discussions
with members of the management team of the Company (the Management). We have also
relied on the information contained in the Prospectus. We have not independently verified
such information furnished by the Management or any representation or assurance made by
them, whether written or verbal, and accordingly cannot and do not warrant or accept
responsibility for the accuracy or completeness of such information, representation or
assurance. Nevertheless, the Management have confirmed to us that, to the best of their
knowledge and belief, the information provided to us (whether written or verbal) as well as
the information contained in the Prospectus constitutes a full and true disclosure, in all
material respects, of all material facts relating to the Shareholders Mandate and there is no
material information the omission of which would make any of the information contained
herein or in the Prospectus inaccurate, incomplete or misleading in any material respect.
We do not warrant the implementation of the methods or procedures for determining the
transaction prices in relation to the Interested Person Transactions covered by the
Shareholders Mandate.
We have also made reasonable enquiries and used our judgement in assessing such
information and have found no reason to doubt the reliability of such information. We have
further assumed that all statements of fact, belief, opinion and intention made by the
Directors in the Prospectus have been reasonably made after due and careful enquiry. We
have not conducted a comprehensive review of the business, operations or financial
condition of the Company or the transactions described in the section entitled Interested
Person Transactions and Potential Conflicts of Interest of the Prospectus.
Our opinion is delivered for the use and benefit of the Independent Directors for their
deliberation on the Shareholders Mandate, and the recommendations made by the
Independent Directors shall remain the responsibility of the Independent Directors. Each
Shareholder may have different investment objectives and considerations and should seek
professional advice.
C-2
We are not required to conduct and have not conducted any review of the historical or current
Interested Person Transactions carried out by the Company. Accordingly, we do not express
any opinion on whether such Interested Person Transactions were or are in compliance with
the review procedures set out under the Shareholders Mandate. The implementation of such
review procedures is the responsibility of the Directors.
We are not required or authorised to obtain, and we have not obtained, any quotations or
transaction prices from third parties for products or services similar to those which are to be
covered by the Shareholders Mandate, and therefore are not able to, and did not, compare
the Interested Person Transactions with similar transactions with third parties. In particular,
the Shareholders Mandate contemplates Interested Person Transactions that may be
entered into only in the future and we have not been requested to opine on any specific
transactions proposed that may form the basis of comparison with quotations or transaction
prices offered by third parties.
We have relied upon the assurance of the Directors (including those who may have
delegated detailed supervision of the Prospectus) that they have taken all reasonable care
to ensure that the facts stated or opinions expressed in the Prospectus are fair and accurate
in all material respects and that no material facts have been omitted which might cause the
Prospectus to be misleading in any material respect.
The Company has been advised by its own professional advisers in the preparation of the
Prospectus (other than this letter). We have no role or involvement and have not provided
any advice, financial or otherwise, whatsoever, in the preparation, review and verification of
the Prospectus (other than this letter). Accordingly, we take no responsibility for and express
no views, whether expressed or implied, on the contents of the Prospectus (other than this
letter).
The Directors have collectively and individually accepted responsibility for the accuracy of
the information contained in the Prospectus, and have confirmed, having made all
reasonable enquiries, that to the best of their knowledge and belief, the facts stated in the
Prospectus are fair and accurate as at the date of the Prospectus and there are no material
facts the omission of which would make any statement in the Prospectus misleading.
Our opinion in relation to the Shareholders Mandate should be considered in the
context of the entirety of this letter and the Prospectus.
3. IPT MANDATE
(a) Interested Person Transactions
Salient information on the Interested Person Transactions including:
(i) Entities At Risk;
(ii) Classes of Mandated Interested Persons;
(iii) Categories of Mandated Transactions;
(iv) Rationale for and benefits of the Shareholders Mandate; and
(v) Review Procedures for Mandated Transactions with Mandated Interested Persons
is set out in the Section entitled Interested Person Transactions and Potential Conflicts
of Interest of the Prospectus.
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(b) Review Procedures for Mandated Transactions with Mandated Interested Persons
We have extracted salient information on the review procedures for Mandated
Transactions with Mandated Interested Persons, as they concern the determination of
transaction prices and terms:
Shipbuilding and Ship Conversion Services
The transaction prices and terms will be determined based on the prevailing market
rates which will, in turn, be determined by market forces, demand and supply,
specifications and other relevant factors. These factors will include, but will not be
limited, to the ability of the relevant shipyard to construct vessels of required
specifications, to accept orders and to deliver on time, the quality of the vessels
constructed by the relevant shipyard, and the financial capability of the relevant
shipyard. The transaction price will also be determined based on benchmarking
information. Such information may be based on available market intelligence on vessels
with comparable specifications. Generally, benchmarking will be made by comparing
publicly-available information including industry databases operated by independent
third parties and transaction prices for other similar transactions by unrelated third
parties, to the extent that such prices have been announced or are publicly available,
or against previous similar transactions that we have entered into in the past. The
transaction price and terms will be no less favourable to the relevant Entity At Risk than
what is available in the market, having regard to all relevant factors. The transaction
price and terms will be subject to the prior approval of our Audit Committee (unless the
transaction is of a value of less than US$1,000,000 as further described below). In
assessing and considering the proposed transaction, our Audit Committee may request
for additional information. For instance, if the relevant benchmarking information is not
publicly available, our Audit Committee may request for market benchmarking
information from subscription-based industry databases or valuation guidance from
independent third party brokers or valuers.
Other Mandated Transactions
The transaction prices and terms are determined based on the prevailing market rates
which are determined by market forces, demand and supply, specifications and other
relevant factors. Where practical and feasible, quotations may be obtained from
unrelated third parties for similar or substantially similar transactions, products or
services to determine whether the price and terms offered to/by the Mandated
Interested Persons are fair and reasonable. The transaction price and terms will be no
more favourable to the relevant Mandated Interested Person (where products or
services are provided to the Mandated Interested Person) or, as the case may be, no
less favourable to the relevant Entity At Risk (where products or services are obtained
from the Mandated Interested Person) than what is available in the market, having
regard to all relevant factors. Where it is impracticable or unfeasible for quotes to be
obtained from unrelated third parties, the transaction price will be based on prevailing
market rates agreed upon under similar commercial terms for transactions with third
parties, business practices and policies and on terms which are generally in line with
industry norms to ensure that the transaction is not detrimental to our Group.
As an illustration, where services are provided by our Group, it may be impracticable or
unfeasible to obtain quotations from unrelated third parties if the prevailing market rates
or prices are not available due to the nature of the services to be provided or due to the
prevailing business conditions. Also as an illustration, where services or products are
provided to our Group, it may be impracticable or unfeasible to obtain quotations from
unrelated third parties if there are no unrelated third party vendors of similar services
C-4
or products, if the service or product is proprietary, if there are confidentiality issues or
timing constraints over the provision of services or products by unrelated third party
vendors, or if the prevailing market rates or prices are not available due to the nature
of the services or products to be provided or due to the prevailing business conditions.
For instance, in the case of shared services, there may be cases where there are no
unrelated third party vendors who can provide a one-stop range of required shared
services.
(c) Validity Period of the Shareholders Mandate
The Shareholders Mandate will be effective until the earlier of the following: (i) the
conclusion of the Companys first annual general meeting following its admission to the
Official List of the SGX-ST; or (ii) the first anniversary of the date of the Companys
admission to the Official List of the SGX-ST. Thereafter, the Company will seek the
approval of its Shareholders for a renewal of the Shareholders Mandate at each
subsequent annual general meeting.
In accordance with Rule 920(1)(b)(viii) of the Listing Manual, interested persons and
their associates shall abstain from voting on resolutions approving Interested Person
Transactions involving themselves and Company. Furthermore, such interested
persons shall not act as proxies in relation to such resolutions unless voting instructions
have been given by the Shareholders.
(d) Disclosure
In accordance with the requirements of Chapter 9 of the Listing Manual, disclosure is
required to be made in the Companys annual report (Annual Report) of the
aggregate value of (i) shipbuilding and ship conversion services (Shipbuilding and
Ship Conversion Services), and (ii) all Interested Person Transactions (other than
Shipbuilding and Ship Conversion Services) (Other Mandated Transactions),
conducted with interested persons pursuant to the Shareholders Mandate during the
current financial year, and in the Annual Reports for subsequent financial years that the
Shareholders Mandate continues in force. Such disclosure must be in the form set out
in Rule 907 of the Listing Manual. POSH will also announce the aggregate value of (i)
Shipbuilding and Ship Conversion Services, and (ii) Other Mandated Transactions,
conducted with interested persons pursuant to the Shareholders Mandate for the
financial periods that it is required to report on pursuant to Rule 705 of the Listing
Manual within the time required for the announcement of such report. Such disclosure
must also be in the form set out in Rule 907 of the Listing Manual. POSH will also
provide background information on the relevant number and type of vessels with
respect to Shipbuilding and Ship Conversion Services provided to the POSH group.
(e) Other Transactions with Interested Persons
The Independent Directors should note that any transaction with interested persons
which does not fall within the ambit of the Shareholders Mandate as set out in section
entitled Interested Person Transactions and Potential Conflicts of Interest of the
Prospectus shall be subject to the relevant provisions of Chapter 9 of the Listing Manual
and/or other applicable provisions of the Listing Manual.
Such transactions will, unless specifically excluded from the ambit of Chapter 9 of the
Listing Manual, require an immediate announcement where:
(i) the transaction is of a value equal to, or more than, 3% of the Groups latest
audited consolidated net tangible assets; or
C-5
(ii) the aggregate value of all transactions entered into with the same Interested
Person during the same financial year amounts to 3% or more of the Groups latest
audited consolidated net tangible assets.
Shareholders approval (in addition to an immediate announcement) is required where:
(i) the transaction is of a value equal to, or more than, 5% of the Groups latest
audited consolidated net tangible assets; or
(ii) the transaction, when aggregated with other transactions entered into with the
same Interested Person during the same financial year, is of a value equal to, or
more than, 5% of the Groups latest audited consolidated net tangible assets.
4. CONCLUSION
In arriving at our opinion on whether the methods and procedures for determining transaction
prices of Interested Person Transactions are sufficient to ensure that the Interested Person
Transactions will be carried out on normal commercial terms and will not be prejudicial to the
interests of the Company and its minority Shareholders, we have considered the following:
(i) Entities At Risk;
(ii) Classes of Mandated Interested Persons;
(iii) Categories of Mandated Transactions;
(iv) Rationale for and benefits of the Shareholders Mandate; and
(v) Review Procedures for Mandated Transactions with Mandated Interested Persons.
Based on the analysis undertaken by us and subject to the qualifications and
assumptions made herein, KPMG Corporate Finance is of the opinion that the current
methods and procedures for determining the transaction prices of the Interested
Person Transactions (including Shipbuilding and Ship Conversion Services), if
applied strictly, are sufficient to ensure that the transactions will be carried out on
normal commercial terms and will not be prejudicial to the interests of the Company
and its minority Shareholders.
We have prepared this letter for the use of the Independent Directors of the Company in
connection with and for the purpose of their consideration of the Shareholders Mandate and
for inclusion in the Prospectus.
The opinion is governed by, and construed in accordance with, the laws of Singapore, and
is strictly limited to the matters stated herein and does not apply by implication to any other
matter.
Yours faithfully
For and on behalf of
KPMG Corporate Finance Pte Ltd
Vishal Sharma
Executive Director
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APPENDIX D
SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF
OUR COMPANY
The following summarises certain provisions of our Articles of Association relating to:
(i) power of a Director to vote on a proposal, arrangement or contract in which he is interested:
Article 102
A Director shall not vote in respect of any contract or arrangement or any other proposal
whatsoever in which he has any personal material interest, directly or indirectly. A Director
shall not be counted in the quorum at a meeting in relation to any resolution on which he is
debarred from voting.
(ii) the remuneration of our Directors:
Article 79
The ordinary remuneration of the Directors shall from time to time be determined by an
Ordinary Resolution of the Company, shall not be increased except pursuant to an Ordinary
Resolution passed at a General Meeting where notice of the proposed increase shall have
been given in the notice convening the General Meeting and shall (unless such resolution
otherwise provides) be divisible among the Directors as they may agree, or failing
agreement, equally, except that any Director who shall hold office for part only of the period
in respect of which such remuneration is payable shall be entitled only to rank in such
division for a proportion of remuneration related to the period during which he has held office.
Article 80
(A) Any Director who holds any executive office, or who serves on any committee of the
Directors, or who otherwise performs services which in the opinion of the Directors are
outside the scope of the ordinary duties of a Director, may be paid such extra
remuneration by way of salary, commission or otherwise as the Directors may
determine.
(B) The remuneration (including any remuneration under Article 80(A) above) in the case of
a Director other than an Executive Director shall be payable by a fixed sum and shall
not at any time be by commission on or percentage of the profits or turnover, and no
Director whether an Executive Director or otherwise shall be remunerated by a
commission on or a percentage of turnover.
Article 82
The Directors shall have power to pay and agree to pay pensions or other retirement,
superannuation, death or disability benefits to (or to any person in respect of) any Director
for the time being holding any executive office and for the purpose of providing any such
pensions or other benefits to contribute to any scheme or fund or to pay premiums.
D-1
Article 83
A Director may be party to or in any way interested in any contract or arrangement or
transaction to which the Company is a party or in which the Company is in any way interested
and he may hold and be remunerated in respect of any office or place of profit (other than
the office of Auditor of the Company or any subsidiary thereof) under the Company or any
other company in which the Company is in any way interested and he (or any firm of which
he is a member) may act in a professional capacity for the Company or any such other
company and be remunerated therefor and in any such case as aforesaid (save as otherwise
agreed) he may retain for his own absolute use and benefit all profits and advantages
accruing to him thereunder or in consequence thereof.
Article 88
The remuneration of a Chief Executive Officer (or person holding an equivalent position)
shall from time to time be fixed by the Directors and may subject to these Articles be by way
of salary or commission or participation in profits or by any or all these modes but he shall
not under any circumstances be remunerated by a commission on or a percentage of
turnover.
Article 98(D)
An Alternate Director shall be entitled to contract and be interested in and benefit from
contracts or arrangements or transactions and to be repaid expenses and to be indemnified
to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to
receive from the Company in respect of his appointment as Alternate Director any
remuneration except only such part (if any) of the remuneration otherwise payable to his
principal as such principal may by notice in writing to the Company from time to time direct.
There are no specific provisions in our Articles of Association relating to a Directors power
to vote on remuneration (including pension or other benefits) for himself or for any other
Director, and whether the quorum at a meeting of our Board of Directors to vote on Directors
remuneration may include the Director whose remuneration is the subject of the vote.
(iii) the borrowing powers exercisable by our Directors:
Article 109
Subject as hereinafter provided and to the provisions of the Statutes, the Directors may
exercise all the powers of the Company to borrow money, to mortgage or charge its
undertaking, property and uncalled capital and to issue debentures and other securities,
whether outright or as collateral security for any debt, liability or obligation of the Company
or of any third party.
Article 109, like any other provision in our Articles of Association, may be amended by a
special resolution of our shareholders.
(iv) the retirement or non-retirement of a Director under an age limit requirement:
There are no specific provisions in our Articles of Association relating to the retirement or
nonretirement of a Director under an age limit requirement. Section 153(1) of the Companies
Act however, provides that no person of or over the age of 70 years shall be appointed a
director of a public company, unless he is appointed or re-appointed as a director of our
Company or authorised to continue in office as a Director of our Company by way of an
ordinary resolution passed at an annual general meeting of our Company.
D-2
(v) the shareholding qualification of a Director:
Article 78
A Director shall not be required to hold any shares of the Company by way of qualification.
A Director who is not a member of the Company shall nevertheless be entitled to attend and
speak at General Meetings.
(vi) the rights, preferences and restrictions attaching to each class of shares:
Article 51
Any General Meeting at which it is proposed to pass a Special Resolution or (save as
provided by the Statutes) a resolution of which special notice has been given to the
Company, shall be called by 21 days notice in writing at the least and an Annual General
Meeting and any other Extraordinary General Meeting by 14 days notice in writing at the
least. The period of notice shall in each case be exclusive of the day on which it is served
or deemed to be served and of the day on which the meeting is to be held and shall be given
in the manner hereinafter mentioned to all members other than such as are not under the
provisions of these Articles and the Act entitled to receive such notices from the Company;
Provided that a General Meeting notwithstanding that it has been called by a shorter notice
than that specified above shall be deemed to have been duly called if it is so agreed:
(a) in the case of an Annual General Meeting by all the members entitled to attend and vote
thereat; and
(b) in the case of an Extraordinary General Meeting by a majority in number of the members
having a right to attend and vote thereat, being a majority together holding not less than
95 per cent of the total voting rights of all the members having a right to vote at that
meeting,
Provided also that the accidental omission to give notice to or the non-receipt of notice by
any person entitled thereto shall not invalidate the proceedings at any General Meeting. So
long as the shares in the Company are listed on any Stock Exchange, at least 14 days notice
of any General Meeting shall be given by advertisement in the daily press and in writing to
the Stock Exchange.
Article 65
Subject and without prejudice to any special privileges or restrictions as to voting for the time
being attached to any special class of shares for the time being forming part of the capital
of the Company and to Article 5, each member entitled to vote may vote in person or by
proxy. On a show of hands, every member who is present in person or by proxy shall have
one vote (provided that in the case of a member who is represented by two proxies, only one
of the two proxies as determined by that member or, failing such determination, by the
Chairman of the meeting (or by a person authorised by him) in his sole discretion shall be
entitled to vote on a show of hands) and on a poll, every member who is present in person
or by proxy shall have one vote for every share which he holds or represents. For the purpose
of determining the number of votes which a member, being a Depositor, or his proxy may cast
at any General Meeting on a poll, the reference to shares held or represented shall, in
relation to shares of that Depositor, be the number of shares entered against his name in the
Depository Register as at 48 hours before the time of the relevant General Meeting as
certified by the Depository to the Company.
D-3
Article 123
Subject to any rights or restrictions attached to any shares or class of shares and except as
otherwise permitted under the Act:
(a) all dividends in respect of shares must be paid in proportion to the number of shares
held by a member but where shares are partly paid all dividends must be apportioned
and paid proportionately to the amounts paid or credited as paid on the partly paid
shares; and
(b) all dividends must be apportioned and paid proportionately to the amounts so paid or
credited as paid during any portion or portions of the period in respect of which the
dividend is paid.
For the purposes of this Article, an amount paid or credited as paid on a share in advance
of a call is to be ignored.
Article 147
If the Company shall be wound up (whether the liquidation is voluntary, under supervision,
or by the court) the Liquidator may, with the authority of a Special Resolution, divide among
the members in specie or kind the whole or any part of the assets of the Company and
whether or not the assets shall consist of property of one kind or shall consist of properties
of different kinds, and may for such purpose set such value as he deems fair upon any one
or more class or classes of property and may determine how such division shall be carried
out as between the members of different classes of members. The Liquidator may, with the
like authority, vest any part of the assets in trustees upon such trusts for the benefit of
members as the Liquidator with the like authority shall think fit, and the liquidation of the
Company may be closed and the Company dissolved, but so that no contributory shall be
compelled to accept any shares or other property in respect of which there is a liability.
(vii) any change in capital:
Article 3
Subject to the Statutes and these Articles, no shares may be issued by the Directors without
the prior approval of the Company in General Meeting but subject thereto and to Article 8,
and to any special rights attached to any shares for the time being issued, the Directors may
allot and issue shares or grant options over or otherwise dispose of the same to such
persons on such terms and conditions and for such consideration and at such time and
subject or not to the payment of any part of the amount thereof in cash as the Directors may
think fit, and any shares may be issued with such preferential, deferred, qualified or special
rights, privileges or conditions as the Directors may think fit, and preference shares may be
issued which are or at the option of the Company are liable to be redeemed, the terms and
manner of redemption being determined by the Directors, Provided always that:
(a) (subject to any direction to the contrary that may be given by the Company in General
Meeting) any issue of shares for cash to members holding shares of any class shall be
offered to such members in proportion as nearly as may be to the number of shares of
such class then held by them and the provisions of the second sentence of Article 8(A)
with such adaptations as are necessary shall apply; and
(b) any other issue of shares, the aggregate of which would exceed the limits referred to in
Article 8(B), shall be subject to the approval of the Company in General Meeting.
D-4
Article 8
(A) Subject to any direction to the contrary that may be given by the Company in General
Meeting or except as permitted under the listing rules of the Stock Exchange, all new
shares shall, before issue, be offered to such persons who as at the date of the offer
are entitled to receive notices from the Company of General Meetings in proportion, as
far as the circumstances admit, to the number of the existing shares to which they are
entitled. The offer shall be made by notice specifying the number of shares offered, and
limiting a time within which the offer, if not accepted, will be deemed to be declined, and,
after the expiration of that time, or on the receipt of an intimation from the person to
whom the offer is made that he declines to accept the shares offered, the Directors may
dispose of those shares in such manner as they think most beneficial to the Company.
The Directors may likewise so dispose of any new shares which (by reason of the ratio
which the new shares bear to shares held by persons entitled to an offer of new shares)
cannot, in the opinion of the Directors, be conveniently offered under this Article 8(A).
(B) Notwithstanding Article 8(A), the Company may by Ordinary Resolution in General
Meeting give to the Directors a general authority, either unconditionally or subject to
such conditions as may be specified in the Ordinary Resolution, to:
(a) (i) issue shares in the capital of the Company (shares) whether by way of
rights, bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, Instruments) that
might or would require shares to be issued, including but not limited to the
creation and issue of (as well as adjustments to) warrants, debentures or
other instruments convertible into shares; and
(b) (notwithstanding the authority conferred by the Ordinary Resolution may have
ceased to be in force) issue shares in pursuance of any Instrument made or
granted by the Directors while the Ordinary Resolution was in force,
provided that:
(1) the aggregate number of shares to be issued pursuant to the Ordinary Resolution
(including shares to be issued in pursuance of Instruments made or granted
pursuant to the Ordinary Resolution) shall be subject to such limits and manner of
calculation as may be prescribed by the Stock Exchange;
(2) in exercising the authority conferred by the Ordinary Resolution, the Company
shall comply with the listing rules of the Stock Exchange for the time being in force
(unless such compliance is waived by the Stock Exchange) and these Articles; and
(3) (unless revoked or varied by the Company in General Meeting) the authority
conferred by the Ordinary Resolution shall not continue in force beyond the
conclusion of the Annual General Meeting of the Company next following the
passing of the Ordinary Resolution, or the date by which such Annual General
Meeting of the Company is required by law to be held, or the expiration of such
other period as may be prescribed by the Statutes (whichever is the earliest).
(C) Except so far as otherwise provided by the conditions of issue or by these Articles, all
new shares shall be subject to the provisions of the Statutes and of these Articles with
reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and
otherwise.
D-5
Article 9
The Company may by Ordinary Resolution:
(a) consolidate and divide all or any of its shares;
(b) sub-divide its shares, or any of them (subject, nevertheless, to the provisions of the
Statutes), and so that the resolution whereby any share is sub-divided may determine
that, as between the holders of the shares resulting from such sub-division, one or more
of the shares may, as compared with the others, have any such preferred, deferred or
other special rights, or be subject to any such restrictions, as the Company has power
to attach to new shares; and
(c) subject to the provisions of the Statutes, convert any class of shares into any other
class of shares.
Article 10
(A) The Company may reduce its share capital or any undistributable reserve in any
manner and with and subject to any incident authorised and consent required by law.
Without prejudice to the generality of the foregoing, upon cancellation of any share
purchased or otherwise acquired by the Company pursuant to these Articles, the
number of issued shares of the Company shall be diminished by the number of the
shares so cancelled, and, where any such cancelled share was purchased or acquired
out of the capital of the Company, the amount of share capital of the Company shall be
reduced accordingly.
(B) The Company may, subject to and in accordance with the Act, purchase or otherwise
acquire its issued shares on such terms and in such manner as the Company may from
time to time think fit. If required by the Act, any share which is so purchased or acquired
by the Company shall, unless held in treasury in accordance with the Act, be deemed
to be cancelled immediately on purchase or acquisition by the Company. On the
cancellation of any share as aforesaid, the rights and privileges attached to that share
shall expire. In any other instance, the Company may hold or deal with any such share
which is so purchased or acquired by it in such manner as may be permitted by, and in
accordance with, the Act.
(viii) any change in the respective rights of the various classes of shares including the action
necessary to change the rights, indicating where the conditions are different from those
required by the applicable law:
Article 6
Whenever the share capital of the Company is divided into different classes of shares,
subject to the provisions of the Statutes, preference capital, other than redeemable
preference capital, may be repaid and the special rights attached to any class may be varied
or abrogated either with the consent in writing of the holders of three quarters of the issued
shares of the class or with the sanction of a Special Resolution passed at a separate General
Meeting of the holders of the shares of the class (but not otherwise) and may be so repaid,
varied or abrogated either whilst the Company is a going concern or during or in
contemplation of a winding-up. To every such separate General Meeting all the provisions of
these Articles relating to General Meetings of the Company and to the proceedings thereat
shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least
holding or representing by proxy at least one-third of the issued shares of the class and that
any holder of shares of the class present in person or by proxy may demand a poll and that
D-6
every such holder shall on a poll have one vote for every share of the class held by him,
Provided always that where the necessary majority for such a Special Resolution is not
obtained at such General Meeting, consent in writing if obtained from the holders of
three-quarters of the issued shares of the class concerned within two months of such
General Meeting shall be as valid and effectual as a Special Resolution carried at such
General Meeting. The foregoing provisions of this Article shall apply to the variation or
abrogation of the special rights attached to some only of the shares of any class as if each
group of shares of the class differently treated formed a separate class the special rights
whereof are to be varied.
Article 7
The special rights attached to any class of shares having preferential rights shall not unless
otherwise expressly provided by the terms of issue thereof be deemed to be varied by the
issue of further shares ranking as regards participation in the profits or assets of the
Company in some or all respects pari passu therewith but in no respect in priority thereto.
The conditions prescribed by Articles 6 and 7 for variation of such rights are not different from
those required under the Companies Act.
(ix) any dividend restriction, the date on which the entitlement to dividends arises, any procedure
for our Shareholders to claim dividends, any time limit after which a dividend entitlement will
lapse and an indication of the party in whose favour this entitlement then operates:
Article 121
The Company may by Ordinary Resolution declare dividends but no such dividend shall
exceed the amount recommended by the Directors.
Article 122
If and so far as in the opinion of the Directors the profits of the Company justify such
payments, the Directors may declare and pay the fixed dividends on any class of shares
carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly or other
dates prescribed for the payment thereof and may also from time to time declare and pay
interim dividends on shares of any class of such amounts and on such dates and in respect
of such periods as they think fit.
Article 123
Subject to any rights or restrictions attached to any shares or class of shares and except as
otherwise permitted under the Act:
(a) all dividends in respect of shares must be paid in proportion to the number of shares
held by a member but where shares are partly paid all dividends must be apportioned
and paid proportionately to the amounts paid or credited as paid on the partly paid
shares; and
(b) all dividends must be apportioned and paid proportionately to the amounts so paid or
credited as paid during any portion or portions of the period in respect of which the
dividend is paid.
For the purposes of this Article, an amount paid or credited as paid on a share in advance
of a call is to be ignored.
D-7
Article 124
No dividend shall be paid otherwise than out of profits available for distribution under the
provisions of the Statutes.
Article 128
The payment by the Directors of any unclaimed dividends or other moneys payable on or in
respect of a share into a separate account shall not constitute the Company a trustee in
respect thereof. All dividends and other moneys payable on or in respect of a share that are
unclaimed after first becoming payable may be invested or otherwise made use of by the
Directors for the benefit of the Company and any dividend or any such moneys unclaimed
after a period of six years from the date they are first payable may be forfeited and if so shall
revert to the Company but the Directors may at any time thereafter at their absolute
discretion annul any such forfeiture and pay the moneys so forfeited to the person entitled
thereto prior to the forfeiture. If the Depository returns any such dividend or moneys to the
Company, the relevant Depositor shall not have any right or claim in respect of such dividend
or moneys against the Company if a period of six years has elapsed from the date such
dividend or other moneys are first payable.
Article 131
Any dividend or other moneys payable in cash on or in respect of a share may be paid by
cheque or warrant sent through the post to the registered address appearing in the Register
of Members or (as the case may be) the Depository Register of a member or person entitled
thereto (or, if two or more persons are registered in the Register of Members or (as the case
may be) entered in the Depository Register as joint holders of the share or are entitled
thereto in consequence of the death or bankruptcy of the holder, to any one of such persons)
or to such person at such address as such member or person or persons may by writing
direct. Every such cheque or warrant shall be made payable to the order of the person to
whom it is sent or to such person as the holder or joint holders or person or persons entitled
to the share in consequence of the death or bankruptcy of the holder may direct and payment
of the cheque or warrant by the banker upon whom it is drawn shall be a good discharge to
the Company. Every such cheque or warrant shall be sent at the risk of the person entitled
to the money represented thereby.
Article 134
Any resolution declaring a dividend on shares of any class, whether a resolution of the
Company in General Meeting or a resolution of the Directors, may specify that the same shall
be payable to the persons registered as the holders of such shares in the Register of
Members or (as the case may be) the Depository Register at the close of business on a
particular date and thereupon the dividend shall be payable to them in accordance with their
respective holdings so registered, but without prejudice to the rights inter se in respect of
such dividend of transferors and transferees of any such shares.
D-8
APPENDIX E
LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF
OUR DIRECTORS AND EXECUTIVE OFFICERS
The present principal and past directorships held by our Directors and Executive Officers in the
last five years preceding the Latest Practicable Date (excluding those held in our Company) are
as follows:
(A) Directors
(1) Kuok Khoon Ean
Present Directorships Past Directorships
Group corporations Group corporations

Other corporations Other corporations
Able Time Group Limited
Allerlon Limited (incorporated in Samoa)
Aveline Marine Limited
Balkane Investment Pte Ltd
Belgravia Assets Limited
Besiktas Emlak Yatirim ve Truizm
Anonim Sirketi
C Tech Fund
Cabo Investments, S.A.
China World Trade Center Ltd.
Clearsky Investments Limited
Cuscaden Properties Pte Ltd
Dartburn Limited
Dateline Assets Limited
Dragon Era Holdings Limited
Eagle Trading Limited
Edensor Limited
Eitan Holdings Pte Ltd
Epsilon Global Communications Pte. Ltd.
Eternal Treasure Investment Limited
Fast Champ Investments Limited
Fast Era Limited
Formano Investments Pte Ltd
Fort Bonifacio Shangri-La Hotel, Inc.
Gamma Telecom Holdings Limited
Gold Pilot International Limited
Hoppersville Limited
IHH Healthcare Berhad
Infobridge Limited
Jetfly Development Limited
Joy Day International Limited
Joyce M. Kuok Foundation
Kaikoura Maritime Inc.
Kellum Limited
Adon Limited (deregistered)
Addu Investments Private Limited
Allerlon Limited (deregistered in
Hong Kong)
Always Best International Limited
Ample Key Limited
Beyond Best Limited (deregistered)
Billion Choices Limited
Celdes Limited (struck-off)
Dymocks Franchise Systems (China)
Limited
Epsilon Telecommunications Holdings
Limited
Fujian Kerry World Trade Centre Co. Ltd.
Full Wing Holdings Limited
Fuzhou Shangri-La Hotel Co., Ltd.
Great Cheer Limited (struck-off)
Happy Day Holdings Limited (struck-off)
Haysland Company Limited
Hillier Limited
Intense Power Limited
Iris Nominees Limited (struck-off)
Jianan Real Estate (Kunming) Co. Ltd.
Ji Xiang Real Estate (Nanjing) Co., Ltd.
Jillings Limited (struck-off)
Jinyao Real Estate (Yinghou) Co., Ltd.
(liquidated)
Kerong (China) Limited (liquidated)
Kerry Chemical Industries Company Limited
(struck-off)
Kerry Coal (Mauritius) Limited (dissolved)
Kerry Real Estate (Hangzhou) Co. Ltd.
Kerry Shanghai (Jiangnan Nanli) Ltd.
Kerry Shanghai (Pudong) Ltd.
E-1
Present Directorships Past Directorships
Group corporations Group corporations
Kerry Cash Management Limited
Kerry Funding Limited
Kerry Group Kuok Foundation (Hong Kong)
Limited
Kerry Group Kuok Foundation Limited
Kerry Group Limited
Kerry Holdings (Beverages) Limited
Kerry Holdings Limited
Kerry Industrial Company Limited
Kerry Technology Limited
Kerry Treasury Limited
KHN Pte Ltd.
Khoon Investments Pte Ltd
Korneld Company Limited
Kota Johore Realty Sdn Bhd
Kuok (Singapore) Limited
Kuok Investments (Singapore) Pte. Ltd.
Kuok Traders (C.I.) Limited
Kuok Traders (Hong Kong) Limited
Labrador Associates Limited
Makonde Investments Limited
Maplegain Investments Limited
Narembim Limited
Neen Developments Sdn. Bhd.
Newington Pte. Ltd.
Novel Magic Limited
Orient Moon Group Limited
Pacific Blue Duxton Holdings Pte Ltd
Pacific China Holdings (Zhoushan)
Pte. Ltd.
Pacific China Holdings (Zhuhai) Pte. Ltd.
PaxOcean Holdings Pte. Ltd.
Perseverance Investments Limited
Portfolio Investments, Inc.
Prime City Holdings Limited
Propartner Holdings Limited
PT Saripuri Permai Hotel
Ranhill Limited
Redlore Pty. Limited
Reeson Limited
Richsky Investments Limited
Safetide Sdn Bhd
Seanoble Assets Limited
Sentosa Beach Resort Pte Ltd
Shang Global City Properties, Inc.
Shangri-La Asia Limited
Shangri-La China Limited
Shangri-La Hotel Limited
Shangri-La Hotel Public Company Limited
Shenzhen Xili Golf Development Co., Ltd.
Siam Suite Holding Limited
Kerry (Shenyang) Real Estate Development
Co. Ltd.
Key Asset Investments Limited
KSM Commodities Limited
Kuok Brothers Sdn. Berhad
Kuok Foundation Berhad
Limpopo Company Inc.
Mallarock International Limited
Mazowie International Limited
Mighty Will Investments Limited
(deregistered)
Million Color Investments Limited
Milton Developments Limited
New Found Limited
New Trend International Limited
Papenda International Limited (struck-off)
Perfex Overseas Limited (dissolved)
Playgain Company Limited
Presstime Limited
Pristine Holdings Limited
PT Narendra Interpacific
Rosy Frontier Limited
SA Lanka Development (Mauritius) Limited
SA Lanka Holdings (Mauritius) Limited
SA Lanka Investments (Mauritius) Limited
SCMP Group Limited
SCMP Newspapers Limited
SCMP Nominees Limited
Sealovers Company Limited
Sanya Shangri-La Hotel Co., Ltd.
Shanghai Ji Xiang Properties Co. Ltd.
Shanghai Pudong Kerry City Properties
Co. Ltd.
Shanghai Pu Dong New Area Shangri-La
Hotel Co. Ltd.
Shangri-La Hotel (Ghana) Limited
Shangri-La Hotel (Kowloon) Limited
Shangri-La Hotels (Japan) Limited
Shangri-La Hotels Lanka (Private) Limited
Shangri-La International Hotel Management
Ltd
Shangri-La International Hotels (Kunming)
Limited
Shangri-La International Hotels (Pacific
Place) Limited
Shangri-La Investments Lanka (Private)
Limited
Shangri-La Mongolia Limited
Shine Up Holdings Limited
Singapore Management University
SLIM International Limited
E-2
Present Directorships Past Directorships
Group corporations Group corporations
Snowmark Pty. Limited
Soaring Dragon Holdings Limited
Stand Fast Limited
Starfame International Limited
Successful Dragon Limited
Sucres et Denrees S.A.
Sunny Fame International Limited
Tandridge Limited
Tangkakji Limited
The Bank of East Asia, Limited
Top Beat Limited
Ubagan Limited
Willgo Limited
Willpower Resources Limited
Wilmar International Limited
Wolverine International Limited
Zheng Ge Ru Foundation
Smart Delight Investments Limited
South China Morning Post Publishers
Limited
The Post Publishing Public Company
Limited
Tianjin Kerry Real Estate Development
Co., Ltd.
Traders Hotel Male Private Limited
Trendfield Inc.
Year Triumph Limited
Zhanfeng Real Estate (Yinghou) Co., Ltd.
Zhanye Real Estate (Yinghou) Co., Ltd.
Zooming Star Corporation
(2) Seow Kang Hoe, Gerald
Present Directorships Past Directorships
Group corporations Group corporations
Avocet Shipping Pte. Ltd.
Mayan Investments Pte. Ltd.
Operadora de Servicios Costa Afuera,
S.A. de C.V.
POSH Fleet Services Mexico, S.A. de C.V.
POSH Maritime Pte. Ltd.
POSH Semco Pte. Ltd.
POSH Vanguard Pte. Ltd.
Semco Salvage And Towage Pte. Ltd.
Singapore Oil Spill Response Centre
Pte Ltd
POSH Fleet Services Pte. Ltd.
Other corporations
Bayfield Pte. Ltd.
DDW-PaxOcean Asia Pte. Ltd.
Flores Shipping Pte. Ltd.
GOSH Caballo Eclipse S.A.P.I. de C.V.
GOSH Caballo Grano de Oro, S.A.P.I.
de C.V.
GOSH Rodrigo DPJ, S.A.P.I. DE C.V.
Moulex Investments Pte Ltd
Newship Marine Services Pte Ltd
PACC Banda Pte Ltd
PACC Container Line Pte Ltd
PACC Offshore Me xico S.A. de C.V.
PACC Orient Trading (Shenzhen) Co., Ltd
PACC Ship Managers Pte Ltd
Pacific Carriers Limited
Pacific China Holdings (Zhoushan)
Pte. Ltd.
Other corporations
Deneb Shipping Pte. Ltd. (struck off)
DP Marine Pte. Ltd.
Dubhe Shipping Pte. Ltd. (struck off)
Flycatcher Pte. Ltd. (struck off)
Kerry Freight Services (Asia) Pte. Ltd.
Kerry Freight (Singapore) Pte. Ltd.
Oriole Pte. Ltd. (struck off)
PAC Bali Shipping Pte Ltd (struck off)
POSH Synergy Marine Private Limited
E-3
Present Directorships Past Directorships
Group corporations Group corporations
Pacific China Holdings (Zhuhai) Pte. Ltd.
Pacific Peregrine Shipping Pte. Ltd.
Pacific Workboats Pte. Ltd.
PaxOcean Engineering Pte. Ltd.
PaxOcean Engineering Zhoushan Co., Ltd
PaxOcean Engineering Zhuhai Co., Ltd
PaxOcean Holdings Pte. Ltd.
PCL Tankers Pte. Ltd.
POSH Havila Pte. Ltd.
POSH Terasea Pte. Ltd.
POSH Terasea Offshore Pte. Ltd.
Sermargosh2 S.A.P.I. de C.V.
Servicios Martimos Gosh, S.A.P.I. de C.V.
Shaula Shipping Pte. Ltd.
Southern Pasifika Shipping Pte. Ltd.
Suhail Shipping Pte. Ltd.
Sunstream Pte. Ltd.
(3) Wu Long Peng
Present Directorships Past Directorships
Group corporations Group corporations
Mayan Investments Pte. Ltd.
Other corporations Other corporations
Ambi Shipping Pte Ltd
Awanapuri Sdn Bhd
Bakti Shipping Pte. Ltd.
Bintulu Adhesives & Chemicals
Sdn Bhd
Brookvale Investments Pte. Ltd.
Camsward Pte Ltd
Century Castle Limited
DDW-PaxOcean Asia Pte. Ltd.
Dunstan Investment Inc
Edensworth Holdings Pte Ltd
Epsilon Global Communications Pte. Ltd.
Gamma Telecom Holdings Limited
Hoxton Assets Limited
Intan Jasa Agencies (Thailand) Co Ltd
JB Distripark Sdn Bhd
Kerry Leisure Concepts Pte Ltd
Kerry Leisure Concepts Sdn Bhd
Kuok (Singapore) Limited
Kuok Ventures Pte. Ltd.
Madu Shipping Pte. Ltd.
Malaysian Bulk Carriers Berhad
Mawar Juara Sdn Bhd
MK Distripark Pte Ltd (in liquidation)
Molek Shipping Pte. Ltd.
Neumetal Pte. Ltd.
Agri-Sarawak Fertilizers Sdn Berhad
(liquidated)
Amethyst International Limited
Aneka Kasturi Sdn Bhd
Anniston Pte. Ltd. (in liquidation)
Azotech Pte. Ltd.
CMR Pacific Pte Ltd
Indah Island Depot Sdn Bhd (liquidated)
Lewington Pte Ltd (liquidated)
Rubber Resources Industries Pte. Ltd.
(struck off)
MTK Chemicals Pte. Ltd. (dissolved)
Seraya Sawmill (Fourseas) Sdn Bhd
(liquidated)
Shantou East Iron & Steel Industry Co Ltd
(liquidated)
Ventoria Limited
E-4
Present Directorships Past Directorships
Group corporations Group corporations
NewQuest (Trading) Pte Ltd
Paccship (UK) Limited
Pacific Carriers Limited
Pacific China Holdings (Zhoushan)
Pte. Ltd.
Pacific China Holdings (Zhuhai) Pte. Ltd.
PaxOcean Holdings Pte. Ltd.
Petanak Enterprises Sdn Bhd
Servicios Martimos Gosh, S.A.P.I. de C.V.
Singapore Adhesives & Chemicals Pte. Ltd.
SIS 88 Pte Ltd
(4) Teo Joo Kim
Present Directorships Past Directorships
Group corporations Group corporations

Other corporations Other corporations
Agri-Sabah Fertilizer Sdn Bhd
Asian Blending Pte Ltd
Atlantic Shipping Pte. Ltd.
Bintulu Adhesives & Chemicals Sdn Bhd
Comfort Assets Ltd
Chinton Ltd
DDW-PaxOcean Asia Pte. Ltd.
Jeki Private Limited
Kaanapali Sdn Bhd
Kaykwang Investments Pte. Ltd.
Kuok (Singapore) Limited
Malaysian Bulk Carriers Berhad
Narsco-Kuok Fertilisers Sdn Bhd
Okinawa Ltd
Pacific Carriers Limited
Pacnav de Mexico SA de CV
Pacnav de Veracruz SA de CV
Pacnav S.A.
Petanak Enterprises Sdn Bhd
Prohill Sdn Bhd
Russett Ltd
Sahalee Investments Pte Ltd
Servicios Corporativos Pacnav SA de CV
Servicios Maritimos Pacnav SA de CV
Singapore Adhesives & Chemicals Pte. Ltd.
SIS 88 Pte Ltd
Pacific China Holdings (Zhoushan)
Pte. Ltd.
Pacific China Holdings (Zhuhai) Pte. Ltd.
PaxOcean Holdings Pte. Ltd.
TmKay Fertilizers Sdn Bhd
Uralkali Sales Pte Ltd
Agri-Sarawak Fertilizers Sdn Bhd
(liquidated)
Allgreen Properties Limited
Camsward Pte Ltd
Midpoint Properties Limited
E-5
(5) Ahmad Sufian @ Qurnain Bin Abdul Rashid
Present Directorships Past Directorships
Group corporations Group corporations

Other corporations Other corporations
Ambi Shipping Pte Ltd
Brilliant Sun Shipping Pte Ltd
Century Castle Limited
Det Norske Veritas AS Sdn Bhd
Eminence Bulk Carriers Pte Ltd
GD Express Carrier Berhad
GD Express Sdn Bhd
GD Technosystems Sdn Bhd
GD Venture (M) Sdn Bhd
Malaysian Bulk Carriers Berhad
Maritime Institute of Malaysia
Matco (Malaysia) Sdn Bhd
Novel Bright Assets Limited
Pacific Ship-Managers Sdn Bhd
PPB Group Berhad
Progress Shipping Pte Ltd
Suff Marine (M) Sdn Bhd
The Shipowners Mutual P&I Assn
(Luxembourg)
WCT Holdings Berhad
Alam Maritim Resources Berhad
Essem Capital Sdn Bhd
Indah Island Depot Sdn Bhd (liquidated)
WCT Berhad (formerly known as WCT
Engineering Bhd)
(6) Ma Kah Woh
Present Directorships Past Directorships
Group corporations Group corporations

Other corporations Other corporations
CapitaLand China Development Fund II
Limited
CapitaLand China Development Fund
Pte. Ltd.
Keppel Infrastructure Fund Management
Pte. Ltd.
Mapletree Investments Pte Ltd
Mapletree Logistics Trust Management Ltd.
National University of Singapore
National Heritage Board
NRF Holdings Pte. Ltd.
Nucleus Connect Pte. Ltd.
Ascott Residence Trust Management
Limited
Bata Emerging Markets Limited
Tenet Capital Ltd. (formerly known as Tenet
Insurance Company Ltd)
Hwa Hong Corporation Limited
SMRT Buses Ltd.
SMRT Trains Ltd.
SMRT Road Holdings Ltd.
SMRT Corporation Ltd
E-6
(7) Jude Philomen Benny
Present Directorships Past Directorships
Group corporations Group corporations

Other corporations Other corporations
Asia Conferences Ltd
BW LPG Limited
JBC Solutions Sdn Bhd
JTJB Myanmar Co. Ltd
JTJB Resources Pte. Ltd.
Kartright (Pte.) Ltd.
Lyre Investment Pte. Ltd.
MP Corporate Secretarial Services Pte. Ltd.
Seaborne Agencies Pte Ltd
The Maritime and Port Authority of
Singapore
Concerto Shipping Pte. Ltd.
Singapore Maritime Foundation
Viola Shipping Pte. Ltd.
Violino Shipping Pte. Ltd.
(8) Wee Joo Yeow
Present Directorships Past Directorships
Group corporations Group corporations

Other corporations
Mapletree Industrial Trust Management Ltd.
Oversea-Chinese Banking Corporation
Limited
Frasers Centrepoint Limited
WJY Holdings Private Limited
WTT Investments Pte Ltd
Other corporations
Orix Leasing Singapore Limited
PLE Investments Pte Ltd (liquidated)
Singapore-Bintan Resort Holdings Pte Ltd
(B) Executive Officers
(1) Lee Keng Lin
Present Directorships Past Directorships
Group corporations Group corporations
POSH Australia Pty Ltd
POSH Semco Pte. Ltd.
POSH Maritime Pte. Ltd.
POSH Fleet Services Pte. Ltd.
Labrador Shipping Corporation
Newfoundland Shipping Corporation

E-7
Present Directorships Past Directorships
Other corporations Other corporations
Pacific Workboats Pte. Ltd.
POSH Havila Pte. Ltd.
POSH Terasea Pte. Ltd.
POSH Terasea Offshore Pte. Ltd.
POSH Terasea (I) Pte. Ltd.
POSH Terasea (II) Pte. Ltd.
PT. Win Offshore

(2) Chai Ulva

Present Directorships Past Directorships
Group corporations Group corporations
POSH Semco Pte. Ltd.
Labrador Shipping Corporation
Newfoundland Shipping Corporation

Other corporations Other corporations

Nimitrans Pte. Ltd.
PT. Win Offshore
DP Marine Pte. Ltd.
(3) Ng Eng Khin
Present Directorships Past Directorships
Group corporations Group corporations
POSH Semco Pte. Ltd.
Semco Salvage And Towage Pte. Ltd.

Other corporations Other corporations

Nimitrans Pte Ltd
(4) Sim Hee Ping
Present Directorships Past Directorships
Group corporations Group corporations
Avocet Shipping Pte. Ltd.
Condor Shipping Pte. Ltd.
Maritime Bravo Pte. Ltd.
Maritime Charlie Pte. Ltd.
Maritime Delta Pte. Ltd.
Jacana Shipping Pte. Ltd.
Larkspur Pte. Ltd.
POSH Fleet Services Pte. Ltd.
Raven Pte. Ltd.
Semco Salvage (I) Pte Ltd
Semco Salvage (II) Pte Ltd
Semco Salvage (III) Pte Ltd

E-8
Present Directorships Past Directorships
Group corporations Group corporations
Semco Salvage (IV) Pte Ltd
Semco Salvage (V) Pte Ltd
Semco Salvage (VI) Pte Ltd
Maritime Alpha Pte. Ltd.
Singapore Oil Spill Response Centre
Pte Ltd
Starling Shipping Pte. Ltd.
Swallow Pte. Ltd.
Other corporations Other corporations

(5) Christopher Richards
Present Directorships Past Directorships
Group corporations Group corporations
Singapore Oil Spill Response Centre
Pte Ltd

Other corporations Other corporations

Loxera Management Pte. Ltd.
(6) Yeoh Seng Huat, Geoffrey
Present Directorships Past Directorships
Group corporations Group corporations
Mayan Investments Pte. Ltd.
Other corporations Other corporations
ASJ Holdings Limited
Global Testing Corporation Limited
Amethyst Capital Ltd
Jasper Cosmopolitan Pte. Ltd.
Jasper Investments Limited
Jasper Offshore (Cyprus) Ltd
PCA Technology Limited
Pulau Investments Ltd
Rockwood Asset Holdings Ltd
Swissco Holdings Limited
Turquoise Offshore Pte. Ltd.
E-9
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APPENDIX F
LIST OF SUBSIDIARIES AND ASSOCIATED COMPANIES
Name
Country of
Incorporation
Principal Place
of Business Principal Activities
Effective
ownership
interest
Australia
POSH Australia
Pty Ltd
Australia Australia Operator of vessels for
offshore marine support
services
100.0%
British Virgin
Islands
Adara Limited British Virgin
Islands
British Virgin
Islands
Dormant 100.0%
India
POSH Synergy
Marine Private
Limited
India India Dormant 50.0%
(1)
Indonesia
PT. Win Offshore Indonesia Indonesia Domestic sea transportation
and international tramper for
goods
49.0%
(2)
PT. Mandiri Abadi
Maritim
Indonesia Indonesia Domestic sea transportation
and international tramper for
goods
49.0%
(3)
Malaysia
Labrador
Shipping
Corporation
Malaysia Malaysia Owner of vessels 100.0%
Newfoundland
Shipping
Corporation
Malaysia Malaysia Owner of vessels 100.0%
Mexico
GOSH Caballo
Grano de Oro,
S.A.P.I. de C.V.
Mexico Mexico Inland navigation operations,
carry out the commercial
exploitation of ships for inland
and coastal navigation as well
as other related services
49.0%
(4)
GOSH Caballo
Eclipse, S.A.P.I.
de C.V.
Mexico Mexico Dormant 49.0%
(5)
GOSH Rodrigo
DPJ, S.A.P.I. de
C.V.
Mexico Mexico Inland navigation operations,
carry out the commercial
exploitation of ships for inland
and coastal navigation as well
as other related services
49.0%
(6)
F-1
Name
Country of
Incorporation
Principal Place
of Business Principal Activities
Effective
ownership
interest
Operadora de
Servicios Costa
Afuera, S.A. de
C.V.
Mexico Mexico Provision of services,
including technical assistance,
management consulting,
transaction and advisory
services
99.0%
(7)
PACC Offshore
Me xico S.A. de
C.V.
Mexico Mexico Offshore business 49.0%
(8)
POSH Fleet
Services Mexico
S.A. de C.V.
Mexico Mexico Ship management 99.0%
(7)
POSH Gannet
S.A. de C.V.
Mexico Mexico Owner and lessor of vessels 100.0%
POSH Skua S.A.
de C.V.
Mexico Mexico Dormant 100.0%
Sermargosh2
S.A.P.I. de C.V.
Mexico Mexico Offshore business 49.0%
(8)
Servicios
Martimos Gosh,
S.A.P.I. de C.V.
Mexico Mexico Inland navigation operations,
carry out the commercial
exploitation of ships for inland
and coastal navigation as well
as other related services
49.0%
(9)
Singapore
(10)
Avocet Shipping
Pte. Ltd.
Singapore Singapore Dormant 100.0%
Condor Shipping
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
Jacana Shipping
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
Larkspur Pte. Ltd. Singapore Singapore Other investment holding
companies, and general
wholesale trade (including
general importers and
exporters)
100.0%
Maritime Alpha
Pte. Ltd.
Singapore Singapore Chartering of tugs, lifting craft,
launches, and diving boats,
barges and offshore support
vessels
100.0%
Maritime Bravo
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
Maritime Charlie
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
Maritime Delta
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
F-2
Name
Country of
Incorporation
Principal Place
of Business Principal Activities
Effective
ownership
interest
Mayan
Investments Pte.
Ltd.
Singapore Singapore Other investment holding
companies
100.0%
Nimitrans Pte.
Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
50.0%
(11)
Pacific Workboats
Pte. Ltd.
Singapore Singapore Building of ships, tankers and
other ocean-going vessels,
and operators of barges,
tugboats and bumboats
(freight)
50.0%
(12)
POSH Fleet
Services Pte. Ltd.
Singapore Singapore Ship management services 100.0%
POSH Havila
Pte. Ltd.
Singapore Singapore Chartering of ships, barges
and boats with crew (freight),
and service activities
incidental to oil and gas
extraction (excluding
surveying)
50.0%
(13)
POSH Maritime
Pte. Ltd.
Singapore Singapore Repair of ships, tankers and
other ocean-going vessels,
and towing and marine
transportation, and floating
crane lift operation
100.0%
POSH Semco
Pte. Ltd.
Singapore Singapore Towing and marine
transportation contracting for
heavy lifting chartering of tug,
and chartering of ships,
barges and boats with crew
(freight)
100.0%
POSH Terasea
Pte. Ltd.
Singapore Singapore Shipping lines, and other
investment holding companies
50.0%
(14)
POSH Terasea (I)
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
50.0%
(15)
POSH Terasea
(II) Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
50.0%
(15)
POSH Terasea
Offshore Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
50.0%
(15)
POSH Vanguard
Pte. Ltd.
Singapore Singapore Dormant 100.0%
Raven Pte. Ltd. Singapore Singapore Chartering of ships, barges
and boats with crew (freight),
and supporting services to
water transport NEC
100.0%
F-3
Name
Country of
Incorporation
Principal Place
of Business Principal Activities
Effective
ownership
interest
Semco Salvage
(I) Pte Ltd
Singapore Singapore Chartering of tugs, lifting craft,
and diving boats, barges and
offshore support vessels
100.0%
Semco Salvage
(II) Pte Ltd
Singapore Singapore Chartering of tugs, lifting craft,
and diving boats, barges and
offshore support vessels
100.0%
Semco Salvage
(III) Pte Ltd
Singapore Singapore Chartering of tugs, lifting craft,
and diving boats, barges and
offshore support vessels
100.0%
Semco Salvage
(IV) Pte Ltd
Singapore Singapore Chartering of tugs, lifting craft,
and diving boats, barges and
offshore support vessels
100.0%
Semco Salvage
(V) Pte Ltd
Singapore Singapore Chartering of tugs, lifting craft,
and diving boats, barges and
offshore support vessels
100.0%
Semco Salvage
(VI) Pte Ltd
Singapore Singapore Chartering of tugs, lifting craft,
and diving boats, barges and
offshore support vessels
100.0%
Semco Salvage
And Towage Pte.
Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
Singapore Oil
Spill Response
Centre Pte Ltd
Singapore Singapore Oil and chemical pollution
prevention and protect marine
environment
100.0%
Starling Shipping
Pte. Ltd.
Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
Swallow Pte. Ltd. Singapore Singapore Shipping lines, and chartering
of ships, barges and boats
with crew (freight)
100.0%
United Kingdom
PACC Offshore
(UK) Limited
United Kingdom United Kingdom Dormant 100.0%
United States of
America
POSH (USA) Inc. United States of
America
United States of
America
Dormant 100.0%
Notes:
(1) The remaining 50.0% is held by Jalhansa Enterprises Private Limited.
(2) This refers to our Companys direct interest of 49.0% in PT. Win Offshore. In addition, our joint venture, PT. Mandiri
Abadi Maritim, also holds an interest of 1.0% in PT. Win Offshore. The remaining 49.0% is held by PT. Wintermar
Offshore Marine Tbk.
(3) Indirect interest (being our Companys beneficial interest held by PCL, as trustee, under an interim trust
arrangement arising from PCLs ownership of PT Indopacc Global, an Indonesian company that is beneficially
interested in 49.0% of PT. Mandiri Abadi Maritim). The remaining 51.0% is ultimately held by Doktorandus Hananto
and Muhammad Jimmy Goh Mahshun. The purpose of the interim trust arrangement referred to above is to facilitate
our Groups recognition of the 49.0% interest in the joint venture prior to the transfer of the direct interest to our
Group, which is in progress. As at the Latest Practicable Date, we are currently in the process of taking a direct
interest in 49.0% of PT. Mandiri Abadi Maritim by having the shares transferred to our Group from the existing
shareholders holding 49.0% of PT. Mandiri Abadi Maritim.
F-4
(4) Sermargosh2 and GOSH Rodrigo DPJ hold 99.999% and 0.001% of the shares of GOSH Caballo Grano de Oro
respectively.
(5) Sermargosh2 and GOSH Caballo Grano de Oro hold 99.999% and 0.001% of the shares of GOSH Caballo Eclipse
respectively.
(6) Sermargosh2 and GOSH Caballo Eclipse hold 99.999% and 0.001% of the shares of GOSH Rodrigo DPJ
respectively.
(7) The remaining 1.0% is held by Inversiones Costa Afuera, S.A. de C.V.
(8) The remaining 51.0% is held by Inversiones Costa Afuera, S.A. de C.V.
(9) Inversiones Costa Afuera, S.A. de C.V., GGM Shipping, S.A. de C.V. (renamed Shipping Group Mexico SGM,
S.A.P.I. de C.V.) and Arrendadora Caballo de Mar III, S.A. de C.V. hold 1.0%, 25.0% and 25.0% of the shares of
Servicios Martimos Gosh, S.A.P.I. de C.V. respectively.
(10) The effective ownership interest is based on the Register of Members.
(11) The remaining 50.0% is held by Nippon Marine International S.A.
(12) The remaining 50.0% is held by Dolphin Shipping Company Private Limited.
(13) The remaining 50.0% is held by Havila Shipping ASA.
(14) The remaining 50.0% is held by Terasea Pte. Ltd.
(15) POSH Terasea holds 100% of the shares of each of POSH Terasea (I), POSH Terasea (II) and POSH Terasea
Offshore.
F-5
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APPENDIX G
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FOR AND
ACCEPTANCE OF THE OFFERING SHARES IN SINGAPORE
Applications are invited for the subscription of the Offering Shares at the offering price of S$1.15
per Share (the Offering Price) on the terms and conditions set out below and in the printed
application forms to be used for the purpose of the Offering and which forms part of the prospectus
(the Application Forms) or, as the case may be, the Electronic Applications (as defined below).
Investors applying for the Offering Shares in the Offering by way of Application Forms or
Electronic Applications are required to pay in Singapore dollars, the Offering Price of S$1.15 per
Offering Share, subject to a refund of the full amount or, as the case may be, the balance of the
applications monies (in each case without interest or any share of revenue or other benefit arising
therefrom) where (i) an application is rejected or accepted in part only, or (ii) if the Offering does
not proceed for any reason.
(1) Your application must be made in lots of 1,000 Shares or integral multiples thereof.
Your application for any other number of Shares will be rejected.
(2) You may apply for the Offering Shares only during the period commencing at 5.00 p.m. on
April 17, 2014 and expiring at 12.00 p.m. on April 23, 2014. The Offering period may be
extended or shortened to such date and/or time as our Company and the Over-allotment
Option Provider may agree with the Joint Issue Managers, Bookrunners and Underwriters,
subject to all applicable laws and regulations and the rules of the SGX-ST.
(3) (a) Your application for the Offering Shares offered in the Public Offering (the Public Offer
Shares) may be made by way of the printed WHITE Public Offer Shares Application
Forms or by way of Automated Teller Machines (ATM) belonging to the Participating
Banks (ATM Electronic Applications) or the Internet Banking (IB) website of the
relevant Participating Banks (Internet Electronic Applications) or the DBS Bank Ltd.
(DBS Bank) mobile banking interface (mBanking Applications which, together with
ATM Electronic Applications and Internet Electronic Applications, shall be referred to as
Electronic Applications). The Participating Banks are DBS Bank (including POSB),
Oversea-Chinese Banking Corporation Limited and United Overseas Bank Limited and
its subsidiary, Far Eastern Bank Limited.
(b) Your application for the Offering Shares offered in the International Offering (the
Placement Shares), other than the Reserved Shares, may be made by way of the
printed BLUE Placement Shares Application Forms (or in such other manner as the
Joint Issue Managers, Bookrunners and Underwriters may in their absolute discretion
deem appropriate).
(c) Your application for the Reserved Shares may only be made by way of printed PINK
Reserved Shares Application Forms.
(4) YOU MAY NOT USE YOUR CPF INVESTIBLE SAVINGS (CPF FUNDS) TO APPLY FOR
THE OFFERING SHARES.
(5) Only one application may be made for the benefit of one person for the Public Offer
Shares in his own name. Multiple applications for the Public Offer Shares will be
rejected, except in the case of applications by approved nominee companies where
each application is made on behalf of a different beneficiary.
G-1
You may not submit multiple applications for the Public Offer Shares via the Public
Offer Shares Application Form, or Electronic Applications. A person who is submitting
an application for the Public Offer Shares by way of the Public Offer Shares
Application Form may not submit another application for the Public Offer Shares by
way of Electronic Applications and vice versa.
A person, other than an approved nominee company, who is submitting an application
for the Public Offer Shares in his own name should not submit any other applications
for the Public Offer Shares, whether on a printed Application Form or by way of
Electronic Application, for any other person. Such separate applications will be
deemed to be multiple applications and shall be rejected.
Joint or multiple applications for the Public Offer Shares shall be rejected. Persons
submitting or procuring submissions of multiple applications for the Public Offer
Shares may be deemed to have committed an offence under the Penal Code, Chapter
224 of Singapore and the Securities and Futures Act, and such applications may be
referred to the relevant authorities for investigation. Multiple applications or those
appearing to be or suspected of being multiple applications (other than as provided
herein) will be liable to be rejected at our discretion.
(6) Multiple applications may be made in the case of applications by any person for (i) the
Placement Shares only (via Placement Shares Application Forms or such other form of
application as the Joint Issue Managers, Bookrunners and Underwriters may in their
absolute discretion deem appropriate) or (ii) the Placement Shares together with a
single application for the Public Offer Shares.
Multiple applications may also be made by any person entitled to apply for the Reserved
Shares, in respect of a single application for the Reserved Shares and (i) a single application
for the Public Offer Shares, or (ii) a single or multiple application(s) for the Placement Shares
(other than the Reserved Shares) (whether via the Placement Shares Application Forms or
in such other manner as the Joint Issue Managers, Bookrunners and Underwriters may in
their absolute discretion deem appropriate) or (iii) both (i) and (ii).
(7) Applications from any person under the age of 18 years, undischarged bankrupts, sole
proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account
holders of CDP will be rejected.
(8) Applications from any person whose addresses (furnished in their printed Application Forms
or, in the case of Electronic Applications, contained in the records of the relevant
Participating Bank, as the case may be) bear post office box numbers will be rejected. No
person acting or purporting to act on behalf of a deceased person is allowed to apply under
the Securities Account with CDP in the deceaseds name at the time of the application.
(9) The existence of a trust will not be recognised. Any application by a trustee or trustees must
be made in his/her or their own name(s) and without qualification or, where the application
is made by way of a printed Application Form by a nominee, in the name(s) of an approved
nominee company or approved nominee companies after complying with paragraph 10
below.
(10) Nominee applications may only be made by approved nominee companies. Approved
nominee companies are defined as banks, merchant banks, finance companies, insurance
companies, licensed securities dealers in Singapore and nominee companies controlled by
them. Applications made by nominees other than approved nominee companies will be
rejected.
G-2
(11) If you are not an approved nominee company, you must maintain a Securities Account
with CDP in your own name at the time of your application. If you do not have an existing
Securities Account with the CDP in your own name at the time of application, your application
may be rejected (if you apply by way of an Application Form) at the sole discretion of the
Company and the Over-allotment Option Provider or you will not be able to complete your
application (if you apply by way of an Electronic Application). If you have an existing
Securities Account with CDP but fail to provide your CDP Securities Account number or
provide an incorrect CDP Securities Account number in your Application Form or in your
Electronic Application, as the case may be, your application may be rejected.
(12) Subject to paragraphs 15 and 16 below, your application is liable to be rejected if your
particulars such as name, National Registration Identity Card (NRIC) or passport number
or company registration number, nationality and permanent residence status, and CDP
Securities Account number provided in your Application Form, or in the case of an Electronic
Application, contained in the records of the relevant Participating Bank at the time of your
Electronic Application, as the case may be, differ from those particulars in your Securities
Account as maintained by CDP. If you have more than one individual direct Securities
Account with the CDP, your application shall be rejected.
(13) If your address as stated in the Application Form or, in the case of an Electronic
Application, contained in the records of the relevant Participating Bank, as the case
may be, is different from the address registered with CDP, you must inform CDP of
your updated address promptly, failing which the notification letter on successful
allocation from CDP will be sent to your address last registered with CDP.
(14) This Prospectus and its accompanying documents (including the Application Forms) have
not been registered in any jurisdiction other than in Singapore. The distribution of this
Prospectus and its accompanying documents (including the Application Forms) may be
prohibited or restricted (either absolutely or unless various securities requirements, whether
legal or administrative, are complied with) in certain jurisdictions under the relevant
securities laws of those jurisdictions.
Without limiting the generality of the foregoing, neither this Prospectus and its accompanying
documents (including the Application Forms) nor any copy thereof may be taken, transmitted,
published or distributed, whether directly or indirectly, in whole or in part in or into the United
States or any other jurisdiction (other than Singapore) and they do not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction where it is unlawful
to do so. The Offering Shares have not been, and will not be, registered under the Securities
Act or the securities laws of any state of the United States and may not be offered or sold
within the United States (as defined in Regulation S). The Offering Shares are being offered
and sold outside the United States (including to institutional and other investors in
Singapore) in offshore transactions as defined in, and in reliance on, Regulation S. There will
be no public offer of Offering Shares in the United States. Any failure to comply with this
restriction may constitute a violation of securities laws of applicable jurisdictions.
Our Company and the Over-allotment Option Provider reserve the right to reject any
application for Offering Shares where our Company and the Over-allotment Option
Provider believe or have reason to believe that such applications may violate the
securities laws or any applicable legal or regulatory requirements of any jurisdiction.
No person in any jurisdiction outside Singapore receiving this Prospectus or its
accompanying documents (including the Application Forms) may treat the same as an offer
or invitation to subscribe for any Offering Shares unless such an offer or invitation could
lawfully be made without compliance with any regulatory or legal requirements in those
jurisdictions.
G-3
(15) Our Company and the Over-allotment Option Provider reserve the right to reject any
application which does not conform strictly to the instructions or with the terms and
conditions set out in this Prospectus (including the instructions set out in the accompanying
Application Forms, in the ATMs and IB websites of the relevant Participating Banks and the
mobile banking interface (mBanking Interface) of DBS Bank) or, in the case of an
application by way of an Application Form, the contents of which is illegible, incomplete,
incorrectly completed or which is accompanied by an improperly drawn up or improper form
of remittance.
(16) Our Company and the Over-allotment Option Provider further reserve the right to treat as
valid any applications not completed or submitted or effected in all respects in accordance
with the instructions and terms and conditions set out in this Prospectus (including the
instructions set out in the accompanying Application Forms and in the ATMs and IB websites
of the relevant Participating Banks and the mBanking Interface of DBS Bank), and also to
present for payment or other processes all remittances at any time after receipt and to have
full access to all information relating to, or deriving from, such remittances or the processing
thereof. Without prejudice to the rights of our Company and the Over-allotment Option
Provider, each of the Joint Issue Managers, Bookrunners and Underwriters as agents of our
Company and the Over-allotment Option Provider, has been authorised to accept, for and on
behalf of our Company and the Over-allotment Option Provider, such other forms of
application as the Joint Issue Managers, Bookrunners and Underwriters may, in consultation
with our Company and the Over-allotment Option Provider, deem appropriate.
(17) Our Company and the Over-allotment Option Provider reserve the right to reject or to accept,
in whole or in part, or to scale down or to ballot, any application, without assigning any
reason therefor, and none of our Company, the Over-allotment Option Provider and/or the
Joint Issue Managers, Bookrunners and Underwriters will entertain any enquiry and/or
correspondence on the decision of our Company and the Over-allotment Option Provider.
This right applies to applications made by way of Application Forms and by way of Electronic
Applications and by such other forms of application as the Joint Issue Managers,
Bookrunners and Underwriters may, in consultation with our Company and the Over-
allotment Option Provider, deem appropriate. In deciding the basis of allocation, our
Company and the Over-allotment Option Provider, in consultation with the Joint Issue
Managers, Bookrunners and Underwriters, will give due consideration to the desirability of
allocating the Offering Shares to a reasonable number of applicants with a view to
establishing an adequate market for the Offering Shares.
(18) In the event that our Company and the Over-allotment Option Provider lodge a
supplementary or replacement prospectus (Relevant Document) pursuant to the
Securities and Futures Act or any applicable legislation in force from time to time prior to the
close of the Offering, and the Offering Shares have not been issued and/or transferred, our
Company and the Over-allotment Option Provider will (as required by law) at our Companys
and the Over-allotment Option Providers sole and absolute discretion either:
(a) within two days (excluding any Saturday, Sunday or public holiday) from the date of the
lodgment of the Relevant Document, give you notice in writing of how to obtain, or
arrange to receive, a copy of the same and provide you with an option to withdraw your
application and take all reasonable steps to make available within a reasonable period
the Relevant Document to you if you have indicated that you wish to obtain, or have
arranged to receive, a copy of the Relevant Document; or
(b) within seven days of the lodgment of the Relevant Document, give you a copy of the
Relevant Document and provide you with an option to withdraw your application; or
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(c) deem your application as withdrawn and cancelled and refund your application monies
(without interest or any share of revenue or other benefit arising therefrom) to you within
seven days from the lodgment of the Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 18(a) and (b) above to
withdraw his application shall, within 14 days from the date of lodgment of the Relevant
Document, notify our Company and the Over-allotment Option Provider whereupon our
Company and the Over-allotment Option Provider shall, within seven days from the receipt
of such notification, return all monies in respect of such application (without interest or any
share of revenue or other benefit arising therefrom).
In the event that the Offering Shares have already been issued and/or transferred at the time
of the lodgment of the Relevant Document but trading has not commenced, our Company
and the Over-allotment Option Provider will (as required by law) either:
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of the
lodgment of the Relevant Document, give you notice in writing of how to obtain, or
arrange to receive, a copy of the same and provide you with an option to return to our
Company and the Over-allotment Option Provider the Offering Shares which you do not
wish to retain title in and take all reasonable steps to make available within a
reasonable period the Relevant Document to you if you have indicated that you wish to
obtain, or have arranged to receive, a copy of the Relevant Document; or
(ii) within seven days from the lodgment of the Relevant Document, give you a copy of the
Relevant Document and provide you with an option to return the Offering Shares which
you do not wish to retain title in; or
(iii) deem the issue and/or sale as void and refund your payment for the Offering Shares
(without interest or any share of revenue or other benefit arising therefrom) within seven
days from the lodgment of the Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 18(c)(i) and (ii) above to
return the Offering Shares issued and/or sold to him shall, within 14 days from the date of
lodgment of the Relevant Document, notify our Company and the Over-allotment Option
Provider of this and return all documents, if any, purporting to be evidence of title of those
Offering Shares, whereupon our Company and the Over-allotment Option Provider shall,
within seven days from the receipt of such notification and documents, pay to him all monies
paid by him for the Offering Shares without interest or any share of revenue or other benefit
arising therefrom and at his own risk, and the Offering Shares issued and/or sold to him shall
be deemed to be void.
Additional terms and instructions applicable upon the lodgment of the Relevant Document,
including instructions on how you can exercise the option to withdraw, may be found in such
Relevant Document.
(19) The Offering Shares may be reallocated between the International Offering and the Public
Offering for any reason, including in the event of excess applications in one and a deficit of
applications in the other at the discretion of the Joint Issue Managers, Bookrunners and
Underwriters, in consultation with our Company and the Over-allotment Option Provider,
subject to any applicable laws.
(20) Subject to your provision of a valid and correct CDP Securities Account number, share
certificates will be registered in the name of CDP or its nominee and will be forwarded only
to CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after
the close of the Offering, and subject to the submission of valid applications and payment for
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the Offering Shares, a statement of account stating that your Securities Account has been
credited with the number of Offering Shares allocated to you. This will be the only
acknowledgement of application monies received and is not an acknowledgement by our
Company. You irrevocably authorise CDP to complete and sign on your behalf as transferee
or renouncee any instrument of transfer and/or other documents required for the issue or
transfer of the Offering Shares allocated to you. This authorisation applies to applications
made both by way of Application Forms and by way of Electronic Applications.
(21) You irrevocably authorise CDP to disclose the outcome of your application, including the
number of Offering Shares allocated to you pursuant to your application, to our Company, the
Over-allotment Option Provider, the Joint Issue Managers, Bookrunners and Underwriters
and any other parties so authorised by CDP, our Company, the Over-allotment Option
Provider and/or the Joint Issue Managers Bookrunners and Underwriters.
(22) Any reference to you or the Applicant in this section shall include an individual, a
corporation, an approved nominee company and trustee applying for the Offering Shares by
way of an Application Form or by way of Electronic Application or by such other manner as
the Joint Issue Managers, Bookrunners and Underwriters may, in their absolute discretion,
deem appropriate.
(23) By completing and delivering an Application Form and, in the case of: (i) an ATM Electronic
Application, by pressing the Enter or OK or Confirm or Yes key or any other relevant
key on the ATM, or (ii) in the case of an Internet Electronic Application, by clicking Submit
or Continue or Yes or Confirm or any other button on the IB website screen in
accordance with the provisions herein, you:
(a) irrevocably agree and undertake to purchase and/or subscribe for the number of
Offering Shares specified in your application (or such smaller number for which the
application is accepted) at the Offering Price for each Offering Share and agree that you
will accept such number of Offering Shares as may be allocated to you, in each case
on the terms of, and subject to the conditions set out in, the Prospectus and its
accompanying documents (including the Application Forms) and the Memorandum of
Association of our Company;
(b) agree that, in the event of any inconsistency between the terms and conditions for
application set out in this Prospectus and its accompanying documents (including the
Application Form) and those set out in the IB websites or ATMs of the Participating
Banks, the terms and conditions set out in the Prospectus and its accompanying
documents (including the Application Forms) shall prevail;
(c) in the case of an application by way of a Public Offer Shares Application Form or an
Electronic Application, agree that the aggregate Offering Price for the Public Offer
Shares applied for is due and payable to our Company and/or the Over-allotment Option
Provider upon application;
(d) in the case of an application by way of a Placement Shares Application Form or such
other forms of application as the Joint Issue Managers, Bookrunners and Underwriters
may in their absolute discretion deem appropriate, agree that the aggregate Offering
Price for the Placement Shares applied for is due and payable to our Company and/or
the Over-allotment Option Provider upon application;
(e) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such
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information, representations and declarations will be relied on by our Company and/or
the Over-allotment Option Provider in determining whether to accept your application
and/or whether to allocate any Offering Shares to you;
(f) agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable
to your application, you have complied with all such laws and none of our Company, the
Over-allotment Option Provider nor any of the Joint Issue Managers, Bookrunners and
Underwriters will infringe any such laws as a result of the acceptance of your
application;
(g) agree and confirm that you are outside the United States; and
(h) understand that the Offering Shares have not been and will not be registered under the
Securities Act or the securities laws of any state of the United States and may not be
offered or sold in the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act and
applicable state securities laws. There will be no public offer of the Offering Shares in
the United States. Any failure to comply with this restriction may constitute a violation
of the United States securities laws.
(24) Acceptance of applications will be conditional upon, among others, our Company and the
Over-allotment Option Provider being satisfied that:
(a) permission has been granted by the SGX-ST to deal in and for the quotation of all of the
(i) issued Shares; (ii) Shares comprised in the Offering, (iii) Cornerstone Shares, (iv)
Additional Shares, (v) Option Shares, and (vi) Performance Shares on the Main Board
of the SGX-ST;
(b) each of the Management and Underwriting Agreement and Placement Agreement,
referred to in the section on Plan of Distribution in this Prospectus, has become
unconditional and has not been terminated; and
(c) the Authority has not served a stop order which directs that no or no further shares to
which this Prospectus relates be allotted, issued or sold (Stop Order). The Securities
and Futures Act provides that the Authority shall not serve a Stop Order if all the
Offering Shares have been issued, sold, and listed for quotation on the SGX-ST and
trading in them has commenced.
(25) In the event that a Stop Order in respect of the Offering Shares is served by the Authority or
other competent authority, and:
(a) the Offering Shares have not been issued and/or transferred (as required by law), all
applications shall be deemed to be withdrawn and cancelled and our Company and the
Over-allotment Option Provider shall refund the application monies (without interest or
any share of revenue or other benefit arising therefrom) to you within 14 days of the
date of the Stop Order; or
(b) if the Offering Shares have already been issued and/or transferred but trading has not
commenced, the issue and/or sale will (as required by law) be deemed void and our
Company and the Over-allotment Option Provider shall refund your payment for the
Offering Shares (without interest or any share of revenue or other benefit arising
therefrom) to you within seven days from the date of the Stop Order.
This shall not apply where only an interim Stop Order has been served.
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(26) In the event that an interim Stop Order in respect of the Offering Shares is served by the
Authority or other competent authority, no Offering Shares shall be issued and/or transferred
to you until the Authority revokes the interim Stop Order. The Authority is not able to serve
a Stop Order in respect of the Offering Shares if the Offering Shares have been issued and/or
transferred and listed on the SGX-ST and trading in them has commenced.
(27) Additional terms and conditions for applications by way of Application Forms are set out in
the section entitled Additional Terms and Conditions for Applications using Printed
Application Forms on pages G-8 to G-11 of this Prospectus.
(28) Additional terms and conditions for applications by way of Electronic Applications are set out
in the section entitled Additional Terms and Conditions for Electronic Applications on pages
G-13 to G-19 of this Prospectus.
(29) All payments in respect of any application for Public Offer Shares, and all refunds where (a)
an application is rejected or accepted in part only, or (b) the Offering does not proceed for
any reason, shall be made in Singapore dollars.
(30) All payments in respect of any application for Placement Shares, and all refunds where (a)
an application is rejected or accepted in part only, or (b) the Offering does not proceed for
any reason, shall be made in Singapore dollars.
(31) All payments in respect of any application for Reserved Shares, and all refunds where (a) an
application is rejected or accepted in part only, or (b) the Offering does not proceed for any
reason, shall be made in Singapore dollars.
(32) No application will be held in reserve.
(33) This Prospectus is dated April 17, 2014. No Shares shall be allotted or allocated on the basis
of this Prospectus later than 6 months after the date of registration of this Prospectus by the
Authority.
Additional Terms and Conditions for Applications using Printed Application Forms
Applications by way of an Application Form shall be made on, and subject to the terms and
conditions of this Prospectus, including but not limited to the terms and conditions set out below,
as well as those set out under the section entitled Terms, Conditions and Procedures for
Application for and Acceptance of the Offering Shares in Singapore on pages G-1 to G-24 of this
Prospectus and the Memorandum and Articles of Association of our Company.
(1) Applications for the Public Offer Shares must be made using the printed WHITE Public Offer
Shares Application Forms and printed WHITE official envelopes A and B, accompanying
and forming part of this Prospectus.
Applications for the Placement Shares (other than the Reserved Shares) must be made
using the printed BLUE Placement Shares Application Forms (or in such manner as the Joint
Issue Managers, Bookrunners and Underwriters may in their absolute discretion deem
appropriate), accompanying and forming part of this Prospectus.
Applications for the Reserved Shares must be made using the printed PINK Reserved
Shares Application Forms, accompanying and forming part of this Prospectus.
Without prejudice to the rights of our Company, the Over-allotment Option Provider and the
Joint Issue Managers, Bookrunners and Underwriters, the Joint Issue Managers,
Bookrunners and Underwriters, as agents of our Company and the Over-allotment Option
Provider, have been authorised to accept, for and on behalf of our Company and the
G-8
Over-allotment Option Provider, such other forms of application, as the Joint Issue
Managers, Bookrunners and Underwriters may (in consultation with our Company and the
Over-allotment Option Provider) deem appropriate.
Your attention is drawn to the detailed instructions contained in the Application Forms and
this Prospectus for the completion of the Application Forms, which must be carefully
followed. Our Company and the Over-allotment Option Provider reserve the right to
reject applications which do not conform strictly to the instructions set out in the
Application Forms and this Prospectus (or, in the case of applications for the
Placement Shares, followed) which are illegible, incomplete, incorrectly completed or
which are accompanied by improperly drawn remittances or improper form of
remittances.
(2) You must complete your Application Forms in English. Please type or write clearly in ink
using BLOCK LETTERS.
(3) You must complete all spaces in your Application Forms except those under the heading
FOR OFFICIAL USE ONLY and you must write the words NOT APPLICABLE or N.A.
in any space that is not applicable.
(4) Individuals, corporations, approved nominee companies and trustees must give their names
in full. If you are an individual, you must make your application using your full name as it
appears on your NRIC (if you have such an identification document) or in your passport and,
in the case of a corporation, in your full name as registered with a competent authority. If you
are not an individual, you must complete the Application Form under the hand of an official
who must state the name and capacity in which he signs the Application Form. If you are a
corporation completing the Application Form, you are required to affix your common seal (if
any) in accordance with your Memorandum and Articles of Association or equivalent
constitutive documents of the corporation. If you are a corporate applicant and your
application is successful, a copy of your Memorandum and Articles of Association or
equivalent constitutive documents must be lodged with the Share Registrar. Our Company
and/or the Over-allotment Option Provider reserve the right to require you to produce
documentary proof of identification for verification purposes.
(5) (a) You must complete Sections A and B and sign page 1 of the Application Form.
(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application
Form. Where paragraph 7(a) is deleted, you must also complete Section C of the
Application Form with particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may
be, on page 1 of the Application Form, your application is liable to be rejected.
(6) You (whether an individual or corporate applicant, whether incorporated or unincorporated
and wherever incorporated or constituted) will be required to declare whether you are a
citizen or permanent resident of Singapore or a corporation in which citizens or permanent
residents of Singapore or any body corporate constituted under any statute of Singapore
have an interest in the aggregate of more than 50.0% of the issued share capital of or
interests in such corporation. If you are an approved nominee company, you are required to
declare whether the beneficial owner of the Offering Shares is a citizen or permanent
resident of Singapore or a corporation, whether incorporated or unincorporated and
wherever incorporated or constituted, in which citizens or permanent residents of Singapore
or any body corporate incorporated or constituted under any statute of Singapore have an
interest in the aggregate of more than 50.0% of the issued share capital of or interests in
such corporation.
G-9
(7) You may apply and make payment for your application for the Public Offer Shares in
Singapore currency using only cash. Each application must be accompanied by a cash
remittance in Singapore currency for the full amount payable in Singapore dollars of the
Offering Price of S$1.15 for each Public Offer Share, in respect of the number of Public Offer
Shares applied for. The remittance must be in the form of a BANKERS DRAFT or
CASHIERS ORDER drawn on a bank in Singapore, made out in favour of POSH SHARE
ISSUE ACCOUNT crossed A/C PAYEE ONLY with your name, CDP Securities Account
number and address written clearly on the reverse side. Applications not accompanied by
any payment or accompanied by any other form of payment will not be accepted. No
combined Bankers Draft or Cashiers Order for different CDP Securities Accounts shall be
accepted. Remittances bearing NOT TRANSFERABLE or NON-TRANSFERABLE
crossings will be rejected.
(8) Monies paid in respect of unsuccessful applications are expected to be returned (without
interest or any share of revenue or other benefit arising therefrom) to you by ordinary post,
in the event of over-subscription for the Public Offer Shares, within 24 hours of the balloting
(or such shorter period as the SGX-ST may require), at your own risk. Where your application
is rejected or accepted or in part only, the full amount or the balance of the application
monies, as the case may be, will be refunded (without interest or any share of revenue or
other benefit arising therefrom) to you by ordinary post at your own risk within 14 Market
Days after the close of the Offering, PROVIDED THAT the remittance accompanying such
application which has been presented for payment or other processes has been honoured
and the application monies received in the designated share issue account. If the Offering
does not proceed for any reason, the full amount of application monies (without interest or
any share of revenue or other benefit arising therefrom) will be returned to you within three
Market Days after the Offering is discontinued.
(9) Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.
(10) By completing and delivering the Application Forms, you agree that:
(a) in consideration of our Company and the Over-allotment Option Provider having
distributed the Application Form to you and by completing and delivering the Application
Form before the close of the Offering:
(i) your application is irrevocable;
(ii) your remittance will be honoured on first presentation and that any monies
returnable may be held pending clearance of your payment without interest or any
share of revenue or other benefit arising therefrom; and
(iii) you represent and agree that you are located outside the United States (within the
meaning of Regulation S);
(b) all applications, acceptances or contracts resulting therefrom under the Offering shall
be governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(c) in respect of the Public Offer Shares for which your application has been received and
not rejected, acceptance of your application shall be constituted by written notification
by or on behalf of our Company and/or the Over-allotment Option Provider and not
otherwise, notwithstanding any remittance being presented for payment by or on behalf
of our Company and/or the Over-allotment Option Provider;
G-10
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at
any time after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of
our Company, the Over-allotment Option Provider, the Joint Issue Managers,
Bookrunners and Underwriters or any other person involved in the Offering shall have
any liability for any information not contained therein;
(f) you consent to the disclosure of your name, NRIC/passport number or company
registration number, address, nationality, permanent resident status, Securities Account
number, and share application amount to the Share Registrar, CDP, CPF Board,
Securities Clearing Computer Services (Pte) Ltd (SCCS), SGX-ST, our Company, the
Over-allotment Option Provider, the Joint Issue Managers, Bookrunners and
Underwriters and other authorised operators (the Relevant Parties); and
(g) you irrevocably agree and undertake to purchase and/or subscribe for the number of
Public Offer Shares applied for as stated in the Application Form or any smaller number
of such Public Offer shares that may be allocated to you in respect of your application.
In the event that our Company and the Over-allotment Option Provider decide to
allocate any smaller number of Public Offer Shares or not to allocate any Public Offer
Shares to you, you agree to accept such decision as final.
Procedures Relating to Applications for the Public Offer Shares by Way of Printed
Application Forms
(1) Your application for the Public Offer Shares by way of printed Application Forms must be
made using the WHITE Public Offer Shares Application Forms and WHITE official envelopes
A and B.
(2) You must:
(a) enclose the WHITE Public Offer Shares Application Form, duly completed and signed,
together with correct remittance for the full amount payable at the Offering Price in
Singapore currency in accordance with the terms and conditions of this Prospectus and
its accompanying documents, in the WHITE official envelope A provided;
(b) in appropriate spaces on the WHITE official envelope A:
(i) write your name and address;
(ii) state the number of Public Offer Shares applied for; and
(iii) tick the relevant box to indicate form of payment;
(c) SEAL THE WHITE OFFICIAL ENVELOPE A;
(d) write, in the special box provided on the larger WHITE official envelope B addressed
to PACC Offshore Services Holdings Ltd., c/o Boardroom Corporate & Advisory
Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623,
the number of Public Offer Shares you have applied for;
(e) insert the WHITE official envelope A into the WHITE official envelope B and seal the
WHITE OFFICIAL ENVELOPE B; and
G-11
(f) affix adequate Singapore postage on the WHITE official envelope B (if dispatching by
ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY
HAND the documents at your own risk to PACC Offshore Services Holdings Ltd., c/o
Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01
Singapore Land Tower, Singapore 048623, so as to arrive by 12.00 p.m. on April 23,
2014 or such other date(s) and time(s) as our Company and the Over-allotment Option
Provider may agree with the Joint Issue Managers, Bookrunners and Underwriters.
Courier services or Registered Post must NOT be used.
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected. Except for application for the Placement Shares where remittance is
permitted to be submitted separately, applications for the Public Offer Shares not
accompanied by any payment or any other form of payment will not be accepted.
(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
Procedures Relating to Applications for the Placement Shares (other than the Reserved
Shares) by Way of Printed Application Forms
(1) Your application for the Placement Shares (other than the Reserved Shares) by way of
printed Application Forms must be made using the BLUE Placement Shares Application
Forms.
(2) The completed and signed BLUE Placement Shares Application Form and your remittance,
in accordance with the terms and conditions of this Prospectus, for the full amount payable
at the Offering Price, as the case may be, for each Placement Share in respect of the number
of Placement Shares applied for, with your name, Securities Account number and address
clearly written on the reverse side, must be enclosed and sealed in an envelope to be
provided by you. Your application for Placement Shares must be delivered to PACC Offshore
Services Holdings Ltd., c/o Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles
Place, #32-01 Singapore Land Tower, Singapore 048623, to arrive by 12.00 p.m. on April 23,
2014 or such other date(s) and time(s) as our Company and the Over-allotment Option
Provider may agree with the Joint Issue Managers, Bookrunners and Underwriters. Courier
services or Registered Post must NOT be used.
(3) In respect of an application for Placement Shares (other than the Reserved Shares), you may
alternatively remit your application monies by electronic transfer to the account of PACC
Offshore Services Holdings Ltd., Current Account No. 003-710535-0 in favour of POSH
SHARE ISSUE ACCOUNT by 12.00 p.m. on April 23, 2014 or such other date(s) and time(s)
as our Company and the Over-allotment Option Provider may agree with the Joint Issue
Managers, Bookrunners and Underwriters. Applicants who remit their application monies via
electronic transfer should send a copy of the telegraphic transfer advice slip to PACC
Offshore Services Holdings Ltd., c/o Boardroom Corporate & Advisory Services Pte. Ltd., 50
Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, to arrive by 12.00 p.m. on
April 23, 2014 or such other date(s) and time(s) as our Company and the Over-allotment
Option Provider may agree with the Joint Issue Managers, Bookrunners and Underwriters.
(4) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected.
(5) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
G-12
Procedures Relating to Applications for the Reserved Shares by Way of Printed Application
Forms
(1) Your application for the Reserved Shares by way of printed Application Forms must be made
using the PINK Reserved Shares Application Forms.
(2) The completed and signed PINK Reserved Shares Application Form and your remittance, in
accordance with the terms and conditions of this Prospectus, for the full amount payable at
the Offering Price, as the case may be, for each Reserved Share in respect of the number
of Reserved Shares applied for, with your name, Securities Account number and address
clearly written on the reverse side, must be enclosed and sealed in the WHITE official
envelope. Your application for Reserved Shares must be delivered to PACC Offshore
Services Holdings Ltd., c/o Dawn Tay/Lua Peng Hui, Human Resources Department, 1 Kim
Seng Promenade, #07-02 Great World City, Singapore 237994, to arrive by 3.00 p.m. on April
22, 2014 or such other date(s) and time(s) as our Company and the Over-allotment Option
Provider may agree with the Joint Issue Managers, Bookrunners and Underwriters. Courier
services or Registered Post must NOT be used.
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected.
(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
Additional Terms and Conditions for Electronic Applications
Electronic Applications shall be made on and subject to the terms and conditions of this
Prospectus, including but not limited to the terms and conditions set out below and those under
the section Terms, Conditions and Procedures for Application for and Acceptance of the Offering
Shares in Singapore on pages G-1 to G-24 of this Prospectus, as well as the Memorandum of
Association of our Company.
(1) The procedures for Electronic Applications are set out on the ATM screens of the relevant
Participating Banks (in the case of ATM Electronic Applications) and the IB website screens
of the relevant Participating Banks (in the case of Internet Electronic Applications) and the
mobile banking interface of the relevant Participating Banks (in the case of mBanking
Applications). Currently, DBS Bank, Oversea-Chinese Banking Corporation Limited and
United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited are the
Participating Banks through which Internet Electronic Applications may be made and DBS
Bank is the only Participating Bank through which mBanking Applications may be made.
(2) For illustration purposes, the procedures for Electronic Applications for Public Offer Shares
through ATMs and the IB website of DBS Bank and the mBanking Interface (together the
Steps) are set out in pages G-19 to G-24 of this Prospectus. The Steps set out the actions
that you must take at ATMs, the IB website or the mBanking Interface of DBS Bank to
complete an Electronic Application. The actions that you must take at the ATMs or the IB
websites of the other Participating Banks are set out on the ATM screens or the IB website
screens of the respective Participating Banks. Please read carefully the terms and conditions
of this Prospectus and its accompanying documents (including the Application Form), the
Steps and the terms and conditions for Electronic Applications set out below before making
an Electronic Application.
G-13
(3) Any reference to you or the Applicant in these Additional Terms and Conditions for
Electronic Applications and the Steps shall refer to you making an application for Public Offer
Shares through an ATM of one of the relevant Participating Banks or the IB website of a
relevant Participating Bank or the mBanking Interface of DBS Bank.
(4) If you are making an ATM Electronic Application:
(a) You must have an existing bank account with and be an ATM cardholder of one of the
Participating Banks. An ATM card issued by one Participating Bank cannot be used to
apply for Public Offer Shares at an ATM belonging to other Participating Banks.
(b) You must ensure that you enter your own Securities Account number when using the
ATM card issued to you in your own name. If you fail to use your own ATM card or do
not key in your own Securities Account number, your application will be rejected. If you
operate a joint bank account with any of the Participating Banks, you must ensure that
you enter your own Securities Account number when using the ATM card issued to you
in your own name. Using your own Securities Account number with an ATM card which
is not issued to you in your own name will render your Electronic Application liable to
be rejected.
(c) Upon the completion of your ATM Electronic Application, you will receive an ATM
transaction slip (Transaction Record), confirming the details of your ATM Electronic
Application. The Transaction Record is for your retention and should not be submitted
with any printed Application Form.
(5) If you are making an Internet Electronic Application or an mBanking Application:
(a) You must have an existing bank account with, and a User Identification (User ID) as
well as a Personal Identification Number (PIN) given by, the relevant Participating
Bank.
(b) You must ensure that the mailing address of your account selected for the application
is in Singapore and you must declare that the application is being made in Singapore.
Otherwise, your application is liable to be rejected. In connection with this, you will be
asked to declare that you are in Singapore at the time you make the application.
(c) Upon the completion of your Internet Electronic Application through the IB website of
the relevant Participating Bank or the mBanking Interface of DBS Bank, there will be an
on-screen confirmation (Confirmation Screen) of the application which can be
printed out or screen captured by you for your record. This printed record or screen
capture of the Confirmation Screen is for your retention and should not be submitted
with any printed Application Form.
(6) In connection with your Electronic Application for Public Offer Shares, you are required to
confirm statements to the following effect in the course of activating the Electronic
Application:
(a) that you have received a copy of the Prospectus (in the case of ATM Electronic
Applications) and have read, understood and agreed to all the terms and conditions of
application for the Public Offer Shares and the Prospectus prior to effecting the
Electronic Application and agree to be bound by the same;
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(b) that you consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent resident status, CDP Securities Account number, CPF
Investment Account number (if applicable) and Public Offer Share application amount
(the Relevant Particulars) from your account with the relevant Participating Bank to
the Relevant Parties; and
(c) where you are applying for the Public Offer Shares, that this is your only application for
the Public Offer Shares and it is made in your name and at your own risk.
Your application will not be successfully completed and cannot be recorded as a completed
transaction unless you press the Enter or OK or Confirm or Yes or any other relevant
key in the ATM or click Confirm or OK or Submit or Continue or Yes or any other
relevant button on the website screen or the mBanking Interface. By doing so, you shall be
treated as signifying your confirmation of each of the three statements above. In respect of
statement 6(b) above, your confirmation, by pressing the Enter or OK or Confirm or
Yes or any other relevant key in the ATM or clicking Confirm or OK or Submit or
Continue or Yes or any other relevant button, shall signify and shall be treated as your
written permission, given in accordance with the relevant laws of Singapore, including
Section 47(2) of the Banking Act, Chapter 19 of Singapore, to the disclosure by that
Participating Bank of the Relevant Particulars of your account(s) with that Participating Bank
to the Relevant Parties.
By making an Electronic Application you confirm that you are not applying for the Public Offer
Shares as a nominee of any other person and that any Electronic Application that you make
is the only application made by you as the beneficial owner. You shall make only one
Electronic Application for the Public Offer Shares and shall not make any other application
for the Public Offer Shares whether at the ATMs of any Participating Bank, the IB websites
of the relevant Participating Banks or the mBanking Interface of DBS Bank or on the
Application Forms. Where you have made an application for the Public Offer Shares on an
Application Form, you shall not make an Electronic Application for the Public Offer Shares
and vice versa.
(7) You must have sufficient funds in your bank account and/or your CPF Investment Account
with your Participating Bank and/or CPF Agent Bank at the time you make your ATM
Electronic Application, Internet Electronic Application or mBanking Application, failing which
such Electronic Application will not be completed. Any Electronic Application which does not
conform strictly to the instructions set out in this Prospectus or on the screens of the ATMs
or on the IB website of the relevant Participating Bank or the mBanking Interface of DBS
Bank, as the case may be, through which your Electronic Application is being made shall be
rejected.
(8) You may apply and make payment for your application for the Public Offer Shares in
Singapore currency through any ATM or IB website of your Participating Bank or the
mBanking Interface of DBS Bank (as the case may be) by authorising your Participating Bank
to deduct the full amount payable from your bank account(s) with such Participating Bank.
(9) You irrevocably agree and undertake to subscribe for and to accept the number of Public
Offer Shares applied for as stated on the Transaction Record or the Confirmation Screen or
any lesser number of such Public Offer Shares that may be allocated to you in respect of your
Electronic Application. In the event that our Company and the Over-allotment Option
Provider decide to allocate any lesser number of such Public Offer Shares or not to allocate
any Public Offer Shares to you, you agree to accept such decision as final. If your Electronic
Application is successful, your confirmation (by your action of pressing the Enter or OK
or Confirm or Yes or any other relevant key in the ATM or clicking Confirm or OK or
Submit or Continue or Yes or any other relevant button on the Internet screen or the
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mBanking Interface of DBS Bank) of the number of Public Offer Shares applied for shall
signify and shall be treated as your acceptance of the number of Public Offer Shares that
may be allocated to you and your agreement to be bound by the Memorandum and Articles
of Association of our Company.
(10) Our Company and the Over-allotment Option Provider will not keep any application in
reserve. Where your Electronic Application is unsuccessful, the full amount of the application
monies will be returned (without interest or any share of revenue or other benefit arising
therefrom) to you by being automatically credited to your account with your Participating
Bank or CPF Agent Bank, within 24 hours of the balloting (or such shorter period as the
SGX-ST may require) provided that the remittance in respect of such application which has
been presented for payment or other processes has been honoured and the application
monies received in the designated share issue account.
Where your Electronic Application is accepted or rejected in full or in part only, the balance
of the application monies, as the case may be, will be returned (without interest or any share
of revenue or other benefit arising therefrom) to you by being automatically credited to your
account with your Participating Bank or CPF Agent Bank, within 14 Market Days after the
close of the Offering provided that the remittance in respect of such application which has
been presented for payment or other processes has been honoured and the application
monies received in the designated share issue account.
If the Offering does not proceed for any reason, the full amount of application monies
(without interest or any share of revenue or other benefit arising therefrom) will be returned
to you within three Market Days after the Offering is discontinued.
Responsibility for timely refund of application monies (whether from unsuccessful or partially
successful Electronic Applications or otherwise) lies solely with the respective Participating
Banks and/or CPF Agent Banks. Therefore, you are strongly advised to consult your Participating
Bank and/or CPF Agent Bank as to the status of your Electronic Application and/or the refund of
any money to you from an unsuccessful or partially successful Electronic Application, to
determine the exact number of Public Offer Shares, if any, allocated to you before trading the
Shares on the SGX-ST. None of the SGX-ST, CDP, CPF Board, SCCS, the Participating Banks,
the CPF Agent Banks, our Company, the Over-allotment Option Provider or the Joint Issue
Managers, Bookrunners and Underwriters assume any responsibility for any loss that may be
incurred as a result of you having to cover any net sell positions or from buy-in procedures
activated by the SGX-ST.
(11) If your Electronic Application is unsuccessful, no notification will be sent by the relevant
Participating Bank.
(12) Applicants who make ATM Electronic Applications through the ATMs of the following Participating
Banks may check the provisional results of their ATM Electronic Applications as follows:
Bank Telephone Other Channels
Operating
Hours
Service
expected from
DBS Bank Ltd.
(including POSB)
(DBS Bank)
1800 339 6666
(for POSB
account holders)
1800 111 1111
(for DBS
account holders)
IB
http://www.dbs.com
(1)
24 hours
a day
Evening of the
balloting day
Oversea-Chinese
Banking
Corporation
Limited
(OCBC Bank)
1800 363 3333 Phone Banking/ATM/IB
http://www.ocbc.com
(2)
24 hours
a day
Evening of the
balloting day
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Bank Telephone Other Channels
Operating
Hours
Service
expected from
United Overseas
Bank Limited
and its subsidiary,
Far Eastern
Bank Limited
(UOB Group)
1800 222 2121 ATM (Other Transactions
IPO Results
Enquiry)/Phone
Banking/Internet Banking
http://www.uobgroup.com
(3)
24 hours
a day
Evening of the
balloting day
Notes:
(1) Applicants who have made Internet Electronic Applications through the IB websites of DBS Bank or mBanking
Applications through the mBanking Interface of DBS Bank may also check the results of their applications
through the same channels listed in the table above in relation to ATM Electronic Applications made at the
ATMs of DBS Bank.
(2) Applicants who have made Electronic Application through the ATMs of OCBC Bank may check the results of
their applications through OCBC Bank Personal Internet Banking, OCBC Bank ATMs or OCBC Bank Phone
Banking services.
(3) Applicants who have made Electronic Application through the ATMs or the IB website of the UOB Group may
check the results of their applications through UOB Personal Internet Banking, UOB Group ATMs or UOB
Phone Banking services.
(13) ATM Electronic Applications shall close at 12.00 p.m. on April 23, 2014 or such other date(s)
and time(s) as our Company and the Over-allotment Option Provider may agree with the
Joint Issue Managers, Bookrunners and Underwriters. All Internet Electronic Applications
and mBanking Applications must be received by 12.00 p.m. on April 23, 2014, or such other
date(s) and time(s) as our Company and the Over-allotment Option Provider may agree with
the Joint Issue Managers, Bookrunners and Underwriters. Internet Electronic Applications
and mBanking Applications are deemed to be received when they enter the designated
information system of the relevant Participating Bank.
(14) You are deemed to have irrevocably requested and authorised our Company and the
Over-allotment Option Provider to:
(a) register the Public Offer Shares allocated to you in the name of CDP for deposit into
your Securities Account or a nominee of CDP for deposit in the special CPF securities
sub-account of the nominee company of the CPF Agent Bank;
(b) return or refund (without interest or any share of revenue earned or other benefit arising
therefrom) the application monies, should your Electronic Application be rejected or if
the Offering does not proceed for any reason, by automatically crediting your bank
account with your Participating Bank or CPF Agent Bank, with the relevant amount
within 24 hours after balloting (or such shorter period as the SGX-ST may require), or
within three Market Days if the Offering does not proceed for any reason, after the close
or discontinuation (as the case may be) of the Offering, PROVIDED THAT the
remittance in respect of such application which has been presented for payment or such
other processes has been honoured and application monies received in the designated
share issue account; and
(c) return or refund (without interest or any share of revenue or other benefit arising
therefrom) the balance of the application monies, should your Electronic Application be
rejected or accepted in part only, by automatically crediting your bank account with your
Participating Bank or CPF Agent Bank, at your risk, with the relevant amount within 14
Market Days after the close of the Offering, PROVIDED THAT the remittance in respect
of such application which has been presented for payment or such other processes has
been honoured and application monies received in the designated share issue account.
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(15) You irrevocably agree and acknowledge that your Electronic Application is subject to risks of
electrical, electronic, technical and computer-related faults and breakdown, fires, acts of God
and other events beyond the control of the Participating Banks, our Company, the
Over-allotment Option Provider and the Joint Issue Managers, Bookrunners and
Underwriters, and if, in any such event our Company, the Over-allotment Option Provider, the
Joint Issue Managers, Bookrunners and Underwriters, and/or the relevant Participating Bank
do not receive your Electronic Application, or any data relating to your Electronic Application
or the tape or any other devices containing such data is lost, corrupted or not otherwise
accessible, whether wholly or partially for whatever reason, you shall be deemed not to have
made an Electronic Application and you shall have no claim whatsoever against our
Company, the Over-allotment Option Provider, the Joint Issue Managers, Bookrunners and
Underwriters and/or the relevant Participating Bank for any Public Offer Shares applied for
or for any compensation, loss or damage.
(16) The existence of a trust will not be recognised. Any Electronic Application by a trustee must
be made in his own name and without qualification. Our Company and the Over-allotment
Option Provider shall reject any application by any person acting as nominee (other than
approved nominee companies).
(17) All your particulars in the records of your Participating Bank at the time you make your
Electronic Application shall be deemed to be true and correct and your Participating Bank
and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been
any change in your particulars after making your Electronic Application, you must promptly
notify your Participating Bank.
(18) You should ensure that your personal particulars as recorded by both CDP and the relevant
Participating Bank are correct and identical, otherwise, your Electronic Application is liable
to be rejected. You should promptly inform CDP of any change in address, failing which the
notification letter on successful allocation will be sent to your address last registered with
CDP.
(19) By making and completing an Electronic Application, you are deemed to have agreed that:
(a) in consideration of our Company and/or the Over-allotment Option Provider making
available the Electronic Application facility, through the Participating Banks acting as
agents of our Company and/or the Over-allotment Option Provider, at the ATMs and IB
websites of the relevant Participating Banks and the mBanking Interface of DBS Bank:
(i) your Electronic Application is irrevocable;
(ii) your Electronic Application, the acceptance by our Company and/or the Over-
allotment Option Provider and the contract resulting therefrom under the Public
Offering shall be governed by and construed in accordance with the laws of
Singapore and you irrevocably submit to the non-exclusive jurisdiction of the
Singapore courts; and
(iii) you represent and agree that you are not located in the United States (within the
meaning of Regulations S);
(b) none of CDP, our Company, the Over-allotment Option Provider, the Joint Issue
Managers, Bookrunners and Underwriters, the Participating Banks and the CPF Board
shall be liable for any delays, failures or inaccuracies in the recording, storage or in the
transmission or delivery of data relating to your Electronic Application to our Company,
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the Over-allotment Option Provider or CDP or the SGX-ST due to breakdowns or failure
of transmission, delivery or communication facilities or any risks referred to in
paragraph 15 above or to any cause beyond their respective controls;
(c) in respect of the Public Offer Shares for which your Electronic Application has been
successfully completed and not rejected, acceptance of your Electronic Application
shall be constituted by written notification by or on behalf of our Company and/or the
Over-allotment Option Provider and not otherwise, notwithstanding any payment
received by or on behalf of our Company and/or the Over-allotment Option Provider;
(d) you will not be entitled to exercise any remedy for rescission for misrepresentation at
any time after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of
our Company, the Over-allotment Option Provider, the Joint Issue Managers,
Bookrunners and Underwriters or any other person involved in the Offering shall have
any liability for any information not contained therein; and
(f) you irrevocably agree and undertake to subscribe for the number of Public Offer Shares
applied for as stated in your Electronic Application or any smaller number of such Public
Offer Shares that may be allocated to you in respect of your Electronic Application. In
the event our Company and the Over-allotment Option Provider decide to allocate any
smaller number of such Public Offer Shares or not to allocate any Public Offer Shares
to you, you agree to accept such decision as final.
Steps for ATM Electronic Applications for Public Offer Shares through ATMs of DBS
(including POSB ATMs)
Instructions for ATM Electronic Applications will appear on the ATM screens of the respective
Participating Bank. For illustration purposes, the steps for making an ATM Electronic Application
through a DBS Bank or POSB ATM are shown below. Certain words appearing on the screen are
in abbreviated form (A/C, amt, appln, &, I/C, No., SGX and Max refer to Account,
amount, application, and, NRIC, Number, SGX-ST and Maximum, respectively).
Instructions for ATM Electronic Applications on the ATM screens of Participating Banks (other than
DBS Bank (including POSB)), may differ slightly from those represented below.
Step 1 : Insert your personal DBS Bank or POSB ATM Card.
2 : Enter your Personal Identification Number.
3 : Select MORE SERVICES.
4 : Select language (for customers using multi-language card).
5 : Select ESA-IPO SHARE/INVESTMENTS.
6 : Select ELECTRONIC SECURITY APPLN (IPOS/BOND/ST-NOTES/SECURITIES).
7 : Read and understand the following statements which will appear on the screen:
THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE
IN, OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT
OR PROFILE STATEMENT (AND IF APPLICABLE, A COPY OF THE
REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT OR
PROFILE STATEMENT) WHICH CAN BE OBTAINED FROMANY DBS/POSB
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BRANCH IN SINGAPORE AND, WHERE APPLICABLE, THE VARIOUS
PARTICIPATING BANKS DURING BANKING HOURS, SUBJECT TO
AVAILABILITY.
(IN THE CASE OF SECURITIES OFFERING THAT IS SUBJECT TO A
PROSPECTUS/OFFER INFORMATION/DOCUMENT REGISTERED WITH
THE MONETARY AUTHORITY OF SINGAPORE) ANYONE WISHING TO
ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES) SHOULD
READ THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT (AS
SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORE
SUBMITTING HIS APPLICATION WHICH WILL NEED TO BE MADE IN THE
MANNER SET OUT IN THE PROSPECTUS/DOCUMENT OR PROFILE
STATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE). A
COPY OF THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT,
AND IF APPLICABLE, A COPY OF THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT
HAS BEEN LODGED WITH AND REGISTERED BY THE MONETARY
AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY FOR
ITS OR THEIR CONTENTS.
(IN THE CASE OF SECURITIES OFFERING THAT DOES NOT REQUIRE A
PROSPECTUS TO BE REGISTERED WITH THE MONETARY AUTHORITY OF
SINGAPORE) THE OFFER OF SECURITIES (OR UNITS OF SECURITIES)
MAY BE MADE IN A NOTICE PUBLISHED IN A NEWSPAPER AND/OR A
CIRCULAR/DOCUMENT DISTRIBUTED TO SECURITY HOLDERS. ANYONE
WISHING TO ACQUIRE SUCH SECURITIES (OR UNITS OF SECURITIES)
SHOULD READ THE NOTICE/CIRCULAR/DOCUMENT BEFORE
SUBMITTING THIS APPLICATION, WHICH WILL NEED TO BE MADE IN THE
MANNER SET OUT IN THE NOTICE/CIRCULAR/DOCUMENT.
PRESS THE ENTER KEY TO CONFIRM THAT YOU HAVE READ AND
UNDERSTOOD.
8 : Select POSH to display details.
9 : Press the ENTER key to acknowledge:
YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF THE
APPLICATION AND (WHERE APPLICABLE) THE PROSPECTUS, OFFER
INFORMATION STATEMENT, DOCUMENT, PROFILE STATEMENT,
REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT/
PROFILE STATEMENT NOTICE AND/OR CIRCULAR.
YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NO.,
ADDRESS, NATIONALITY, CDP SECURITIES A/C NO., CPF INVESTMENT
A/C NO. AND SECURITY APPLN AMOUNT FROM YOUR BANK A/C(S) TO
UNIT REGISTRARS, SGX, SCCS, CDP, CPF AND THE ISSUER/
VENDOR(S).
FOR FIXED AND MAX PRICE SECURITIES APPLICATION, THIS IS YOUR
ONLY APPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR
OWN RISK.
THE MAXIMUM PRICE FOR EACH SECURITY IS PAYABLE IN FULL ON
APPLICATION AND SUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.
G-20
FOR TENDER SECURITIES APPLICATION, THIS IS YOUR ONLY
APPLICATION AT THE SELECTED TENDER PRICE AND IT IS MADE IN
YOUR OWN NAME AND AT YOUR OWN RISK.
YOU ARE NOT A US PERSON AS REFERRED TO IN (WHERE APPLICABLE)
THE PROSPECTUS, OFFER INFORMATION STATEMENT, DOCUMENT,
PROFILE STATEMENT, REPLACEMENT OR SUPPLEMENTARY
PROSPECTUS/DOCUMENT/PROFILE STATEMENT, NOTICE AND/OR
CIRCULAR.
THERE MAY BE A LIMIT ON THE MAXIMUM NUMBER OF SECURITIES
THAT YOU CAN APPLY FOR SUBJECT TO AVAILABILITY. YOU MAY BE
ALLOCATED A SMALLER NUMBER OF SECURITIES THAN YOU APPLIED
FOR OR (IN THE CASE OF AN EARLIER CLOSURE UPON FULL
SUBSCRIPTION) YOUR APPLICATION MAY BE REJECTED IF ALL THE
AVAILABLE SECURITIES HAVE BEEN FULLY ALLOCATED TO EARLIER
APPLICANTS.
10 : Select your nationality.
11 : Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the
POSB account (Current/Savings) from which to debit your application monies.
12 : Enter the number of securities you wish to apply for using cash.
13 : Enter or confirm (if your CDP Securities Account number has already been stored
in DBSs records) your own 12-digit CDP Securities Account number (Note: This
step will be omitted automatically if your Securities Account Number has already
been stored in DBSs records).
14 : Check the details of your securities application, your CDP Securities Account
number, number of securities and application amount on the screen and press the
ENTER key to confirm your application.
15 : Remove the Transaction Record for your reference and retention only.
Steps for Internet Electronic Application for Public Offer Shares through the IB Website of
DBS Bank
For illustrative purposes, the steps for making an Internet Electronic Application through the DBS
IB website are shown below. Certain words appearing on the screen are in abbreviated form
(A/C, &, amt, I/C and No. refer to Account, and, Amount, NRIC and Number,
respectively).
Step 1 : Click on DBS website (www.dbs.com).
2 : Login to Internet banking.
3 : Enter your User ID and PIN.
4 : Enter your DBS iB Secure PIN.
5 : Select Electronic Security Application (ESA).
6 : Click Yes to proceed and to warrant, among others, that you are currently in
G-21
Singapore, you have observed and complied with all applicable laws and
regulations and that your mailing address for DBS mailing address for DBS
Internet Banking is in Singapore and that you are not a U.S. person (as such term
is defined in Regulation S under the United States Securities Act of 1933,
amended).
7 : Select your country of residence and click I confirm.
8 : Click on POSH and click Submit.
9 : Click on I Confirm to confirm, among others:
You have read, understood and agreed to all terms of this application and the
Prospectus/Document or Profile Statement and if applicable, the
Supplementary or Replacement Prospectus/Document or Profile Statement.
You consent to disclose your name, I/C or Passport No., address, nationality,
CDP Securities A/c No., CPF Investment A/c No. (if applicable) and securities
application amount from your DBS/POSB Account(s) to registrars of
securities, SGX, SCCS, CDP, CPF Board and issuer/vendor(s).
You are not a U.S. Person (as such term is defined in Regulation S under the
United States Securities Act of 1933, as amended).
You understand that the securities mentioned herein have not been and will
not be registered under the United States Securities Act of 1933, as amended
(the US Securities Act) or the securities laws of any state of the United
States and may not be offered or sold in the United States or to, or for the
account or benefit of any US person (as defined in Regulation S under the
US Securities Act) except pursuant to an exemption from or in a transaction
not subject to, the registration requirements of the US Securities Act and
applicable state securities laws. There will be no public offer of the securities
mentioned herein in the United States. Any failure to comply with this
restriction may constitute a violation of the United States securities laws.
This application is made in your own name and at your own risk.
For FIXED/MAX price securities application, this is your only application. For
TENDER price securities application, this is your only application at the
selected tender price.
For FOREIGN CURRENCY securities, subject to the terms of the issue,
please note the following: the application monies will be debited from your
bank account in S$, based on the Banks prevailing board rates at the time of
application. Any refund monies will be credited in S$ based on the Banks
prevailing board rates at the time of refund. The different prevailing board
rates at the time of application and the time of refund of application monies
may result in either a foreign exchange profit or loss or application monies
may be debited and refund credited in S$ at the same exchange rate.
For 1ST-COME-1ST-SERVE securities, the number of securities applied for
may be reduced, subject to availability at the point of application.
10 : Fill in details for securities application and click Submit.
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11 : Check the details of your securities application, your CDP Securities A/C No. and
click Confirm to confirm your application.
12 : Print the Confirmation Screen (optional) for your reference and retention only.
Steps for mBanking Applications for Public Offer Shares through the mBanking Interface of
DBS Bank
For illustrative purposes, the steps for making an mBanking Application are shown below. Certain
words appearing on the screen are in abbreviated from (A/C, &, amt, I/C, SGX and No.
refer to Account, and, Amount, NRIC, SGX-ST and Number, respectively).
Step 1 : Click on DBS Bank mBanking application using your User ID and PIN.
2 : Select Investment Services.
3 : Select Electronic Securities Application.
4 : Select Yes to proceed and to warrant, among others, that you are currently in
Singapore, you have observed and complied with all applicable laws and
regulations and that your mailing address for DBS Internet Banking is in Singapore
and that you are not a U.S. Person (as such term is defined in Regulation S under
the United States Securities Act of 1933 as amended).
5 : Select your country of residence.
6 : Select POSH.
7 : Select Yes to confirm, among others:
You have read, understood and agreed to all terms of this application and the
Prospectus/Document or Profile Statement and if applicable, the
Supplementary or Replacement Prospectus/Document or Profile Statement.
You consent to disclose your name, I/C or Passport No., address, nationality,
CDP Securities A/c No. and securities application amount from your
DBS/POSB Account(s) to registrars of securities, SGX, SCCS, CDP and
issuer/vendor(s).
You are not a U.S. Person (as such term is defined in Regulation S under the
United States Securities Act of 1933, as amended).
You understand that the securities mentioned herein have not been and will
not be registered under the United States Securities Act of 1933, as amended
(the US Securities Act) or the securities laws of any state of the United
States and may not be offered or sold in the United States or to, or for the
account or benefit of any US person (as defined in Regulation S under the
US Securities Act) except pursuant to an exemption from or in a transaction
subject to, the registration requirements of the US Securities Act and
applicable state securities laws. There will be no public offer of the securities
mentioned herein in the United States. Any failure to comply with this
restriction may constitute a violation of the United States securities laws.
This application is made in your own name and at your own risk.
G-23
For FIXED/MAX price securities application, this is your only application. For
TENDER price securities application, this is your only application at the
selected tender price.
FOR FOREIGN CURRENCY Securities, subject to the terms of the issue,
please note the following: the application monies will be debited from your
bank account in S$, based on the Banks prevailing board rates at the time of
application. Any refund monies will be credited in S$ based on the Banks
prevailing board rates at the time of refund. The different prevailing board
rates at the time of application and the time of refund of application monies
may result in either a foreign exchange profit or loss or application monies
may be debited and refund credited in S$ at the same exchange rate.
FOR 1ST-COME-1ST-SERVE securities, the number of securities applied for
may be reduced, subject to availability at the point of application.
8 : Fill in details for securities application and click Submit.
9 : Check the details of your securities application, your CDP Securities A/C No. and
click Confirm to confirm your application.
10 : Where applicable, capture Confirmation Screen (optional) for your reference and
retention only.
G-24
APPENDIX H
AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013
H-i
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Audited Consolidated Financial Statements
for the Financial Years ended 31 December 2011, 2012 and 2013
CONTENTS
Page
Independent auditors report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
Statement of financial position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-3
Consolidated statement of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-4
Consolidated statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-5
Consolidated statement of cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-6
Notes to the financial statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-7
H-ii
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Report from the Independent Auditors in relation to the
Audited Consolidated Financial Statements
for the Financial Years ended 31 December 2011, 2012 and 2013
7 April 2014
The Board of Directors
No. 1 Kim Seng Promenade
#07-02 Great World City
Singapore 237994
Dear Sirs,
We have audited the accompanying consolidated financial statements of PACC Offshore Services
Holdings Ltd. (the company) and its subsidiaries (collectively the group) which comprise the
consolidated statement of financial position, consolidated statement of comprehensive income,
consolidated statement of changes in equity and statement of cash flow for the financial years
then ended, and a summary of significant accounting policies and other explanatory information.
Managements responsibility for the financial statements
The companys management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with the provisions of Singapore Financial
Reporting Standards, and for devising and maintaining a system of internal accounting controls
sufficient to provide a reasonable assurance that assets are safeguarded against loss from
unauthorised use or disposition; and transactions are properly authorised and that they are
recorded as necessary to permit the preparation of true and fair profit and loss accounts and
balance sheets and to maintain accountability of assets.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Singapore 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 auditors
judgment, including the assessment of the risk 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 entitys 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 entitys internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, 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.
H-1
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Report from the Independent Auditors in relation to the
Audited Consolidated Financial Statements
for the Financial Years ended 31 December 2011, 2012 and 2013
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the group as of 31 December 2011, 2012 and 2013, and their financial
performance, changes in equity and cash flow for the years then ended 31 December 2011, 2012
and 2013 in accordance with Singapore Financial Reporting Standards.
Restriction on Distribution and Use
This report is made solely to you as a body and for the inclusion in the prospectus to be issued
in relation to the proposed offering of the shares of the company in connection with the companys
listing on the Singapore Exchange Securities Trading Limited.
ERNST & YOUNG LLP
Public Accountants and Chartered Accountants
Singapore
Partner in charge: Yee Woon Yim
H-2
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Statement of financial position
as at 31 December 2011, 2012 and 2013
Note 2011 2012 2013
US$000 US$000 US$000
Assets
Non-Current Assets
Goodwill 4 295,303 295,303 295,303
Fixed assets 5 734,181 768,741 1,037,610
Intangible assets 6 602 327 251
Loans to joint ventures 12 191,197
Interest in joint ventures 7 5,384 8,484 20,072
Deferred tax assets 123
Prepayments 8 10,235 8,593 8,847
1,045,828 1,081,448 1,553,280
Current Assets
Consumables 9 8,905 5,979 1,265
Receivables and other current assets 10 65,298 63,849 67,845
Amounts owing from joint ventures and fellow
subsidiaries 11 163,822 208,084 90,170
Loans to joint ventures 12 17,482 22,656 26,089
Derivatives 1,941 5,937
Cash and cash equivalents 13 498 517 10,552
257,946 307,022 195,921
Fixed assets classified as held-for-sale 14 10,677 24,320
257,946 317,699 220,241
Total Assets 1,303,774 1,399,147 1,773,521
Equity and Liabilities
Equity Attributable to Shareholders
Share capital 15 380,975 380,975 530,975
Accumulated profits 213,049 266,569 333,022
Other reserves 16 298 14,970 298
594,322 662,514 864,295
Non-Current Liabilities
Bank borrowings 17 300,000 300,000
Redeemable convertible preference shares 18 135,328
Deferred tax liabilities 94 178 166
94 435,506 300,166
Current Liabilities
Payables and accruals 19(a) 71,396 50,336 62,089
Advances received from customers 19(b) 12,778
Amounts owing to joint ventures and fellow
subsidiaries 20 13,698 23,850 23,367
Amounts owing to holding companies 21 182 1,268 649
Bank borrowings 17 622,590 225,325 507,426
Provision for taxation 1,492 348 2,751
709,358 301,127 609,060
Total Liabilities 709,452 736,633 909,226
Net Current (Liabilities)/Assets (451,412) 16,572 (388,819)
Net Assets 594,322 662,514 864,295
Total Equity and Liabilities 1,303,774 1,399,147 1,773,521
The annexed notes form an integral part of and should be read in conjunction with these financial
statements.
H-3
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Consolidated statement of comprehensive income
for the financial years ended 31 December 2011, 2012 and 2013
Note 2011 2012 2013
US$000 US$000 US$000
Revenue 3 240,950 242,966 237,263
Cost of sales (185,542) (181,892) (164,872)
Gross profit 55,408 61,074 72,391
Other operating income 22 17,721 40,447 50,379
Distribution costs (1,369) (1,222) (1,613)
General and administrative expenses (23,761) (29,047) (31,686)
Other operating expenses (6,522)
Finance costs 23 (10,451) (13,163) (12,963)
Share of joint ventures results (5,065) (3,629) 850
Profit before taxation 24 25,961 54,460 77,358
Taxation 25 257 (940) (3,987)
Net profit for the year, representing total
comprehensive income attributable to
shareholders 26,218 53,520 73,371
Earnings per share
(cents per share) 26
Basic 2.18 4.46 6.02
Diluted 2.18 4.33 4.95
The annexed notes form an integral part of and should be read in conjunction with these financial
statements.
H-4
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Consolidated statement of changes in equity
for the financial years ended 31 December 2011, 2012 and 2013
Other Reserves
Share
Capital
(Note 15)
Accumulated
Profits
Foreign
Currency
Translation
Reserve
Equity
Component of
Redeemable
Convertible
Preference
Shares
(Note 18)
Total
Other
Reserves
Total
Equity
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 January 2011 380,975 192,436 298 298 573,709
Net profit and total
comprehensive income for
the year 26,218 26,218
Dividends (Note 35) (5,605) (5,605)
Balance at 31 December
2011 380,975 213,049 298 298 594,322
Balance at 1 January 2012 380,975 213,049 298 298 594,322
Net profit and total
comprehensive income for
the year 53,520 53,520
Equity component of
redeemable convertible
preference shares (Note
18) 14,672 14,672 14,672
Balance at 31 December
2012 380,975 266,569 298 14,672 14,970 662,514
Balance at 1 January 2013 380,975 266,569 298 14,672 14,970 662,514
Net profit and total
comprehensive income for
the year 73,371 73,371
Conversion of redeemable
convertible preference
shares (Note 18) 150,000 (14,672) (14,672) 135,328
Dividends (Note 35) (6,918) (6,918)
Balance at 31 December
2013 530,975 333,022 298 298 864,295
The annexed notes form an integral part of and should be read in conjunction with these financial
statements.
H-5
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Consolidated statement of cash flow
For the financial years ended 31 December 2011, 2012 and 2013
2011 2012 2013
US$000 US$000 US$000
Cash Flow from Operating Activities
Profit before taxation 25,961 54,460 77,358
Adjustments for:
Amortisation of prepayments 582 746 660
Amortisation of intangible assets 139 264 241
Amortisation of deferred gain on disposal of vessels 3,333
Depreciation of fixed assets 35,309 36,974 36,709
Bad debts written off 3,981
Allowance for doubtful debts trade receivables 1,795 3,109
Allowance for doubtful debts related party 1,000
Fixed assets written off 336
Gain on disposal of fixed assets (13,565) (11,287) (10,938)
Net fair value (gains)/loss on derivatives (1,941) (3,996) 5,937
Share of joint ventures results 5,065 3,629 (850)
Interest expense 10,293 12,904 12,762
Interest income (33) (12,587) (15,967)
Operating cash flow before working capital changes 62,810 87,219 112,354
(Increase)/Decrease in consumables (4,192) 2,926 4,714
Decrease/(increase) in receivables and other current
assets 7,478 (543) (7,105)
(Increase)/decrease in prepayments (1,627) 896 (914)
Increase/(decrease) in payables and accruals 31,317 (20,852) 24,547
Cash generated from operating activities 95,786 69,646 133,596
Interest paid (10,293) (14,718) (12,762)
Interest received 33 12,587 15,967
Income taxes refunded/(paid) 351 (1,839) (1,584)
Net cash generated from operating activities 85,877 65,676 135,217
Cash Flow from Investing Activities
Acquisition of intangible assets (466) (67) (165)
Acquisition of fixed assets (250,620) (165,268) (416,523)
Proceeds from disposal of fixed assets 22,351 35,278 26,701
Interest in joint ventures 505 (18,977) (28,010)
(Increase)/decrease in amounts owing from joint
ventures (36,382) 20,278 12,941
Net cash used in investing activities (264,612) (128,756) (405,056)
Cash Flow from Financing Activities
Proceeds from issuance of RCPS 150,000
Proceeds/(repayment) from bank loans, net 187,290 (97,265) 282,101
Dividend paid (5,605) (6,918)
Decrease in amounts owing from fellow subsidiaries,
net 8,148 9,278 5,339
(Repayments to)/loans from holding companies (13,274) 1,086 (648)
Net cash generated from financing activities 176,559 63,099 279,874
Net (decrease)/increase in cash and cash equivalents (2,176) 19 10,035
Cash and cash equivalents at beginning of year 2,674 498 517
Cash and cash equivalents at end of year (Note 13) 498 517 10,552
The annexed notes form an integral part of and should be read in conjunction with these financial
statements.
H-6
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
1 General information
The financial statements of the group for the years ended 31 December 2011, 2012 and
2013 were authorised for issue by the directors.
The company, which is a limited liability company, is incorporated and domiciled in
Singapore.
The registered office and principal place of business of the company is located at No. 1
Kim Seng Promenade, #07-02 and #06-01 Great World City, Singapore 237994
respectively.
The principal activities of the company are in the business of general shipping and
investment holding. The principal activities of the subsidiaries, which provide offshore
marine support services, are disclosed in Note 27 to the financial statements.
The immediate holding company is Pacific Carriers Limited and the ultimate holding
company is Kuok (Singapore) Limited. Both companies are incorporated in the Republic
of Singapore.
2 Summary of significant accounting policies
2.1 Basis of preparation
The consolidated financial statements of the group are prepared in accordance with
Singapore Financial Reporting Standards (FRS).
The financial statements have been prepared under the historical cost convention, except
as disclosed in the accounting policies below.
The financial statements are presented in United States Dollars (US$) and all values are
rounded to the nearest thousand (US$000) unless otherwise indicated.
The financial statements have been prepared on a going concern basis. The group has a
net current liability of US$388,819,000 (2012: net current asset of US$16,572,000) as at
31 December 2013 mainly due to additional bank borrowings drawn down from existing
revolving loan facilities. In the opinion of the directors, the group will be able to generate
positive cash flows from operations as well as with continued funding from lenders to meet
their financial obligations as and when they fall due.
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year
except in the current financial year, the group has adopted all the new and revised
standards which are effective for annual financial periods beginning on or after 1 January
2013 The adoption of these standards did not have any effect on the financial performance
or position of the group and the company.
H-7
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.3 Standards issued but not yet effective
The group has not adopted the following standards that have been issued but not yet
effective:
Description
Effective date
(Annual periods
beginning on or after)
Revised FRS 27 Separate Financial Statements 1 January 2014
Revised FRS 28 Investments in Associates and Joint
Ventures
1 January 2014
FRS 110 Consolidated Financial Statements 1 January 2014
FRS 111 Joint Arrangements 1 January 2014
FRS 112 Disclosures of Interests in Other Entities 1 January 2014
Amendments to FRS 32 Offsetting Financial Assets and
Financial Liabilities
1 January 2014
Amendments to FRS 36 Recoverable Amount Disclosures
for Non-Financial Assets
1 January 2014
Amendments to FRS 110, FRS 112 and FRS 27:
Investment Entities
1 January 2014
Improvements to FRSs (January 2014) 1 July 2014
Except for the Amendments to FRS 111, Revised FRS 28 and FRS 112, the directors
expect that the adoption of the other standards and interpretations above will have no
material impact on the financial statements in the period of initial application. The nature
of the impending changes in accounting policy on adoption of the Amendments to FRS
111, Revised FRS 28 and FRS 112 are described below.
FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint
Ventures
FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint
Ventures are effective for financial periods beginning on or after 1 January 2014.
FRS 111 classifies joint arrangements either as joint operations or joint ventures. Joint
operation is a joint arrangement whereby the parties that have rights to the assets and
obligations for the liabilities whereas joint venture is a joint arrangement whereby the
parties that have joint control of the arrangement have rights to the net assets of the
arrangement.
FRS 111 requires the determination of joint arrangements classification to be based on
the parties rights and obligations under the arrangement, with the existence of a separate
legal vehicle no longer being the key factor. FRS 111 disallows proportionate consolidation
and requires joint ventures to be accounted for using the equity method. The revised FRS
28 was amended to describe the application of equity method to investments in joint
ventures in addition to associates.
H-8
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.3 Standards issued but not yet effective (contd)
The group does not expect any impact on its financial statements as the group currently
applies equity accounting for its investment in joint venture companies.
FRS 112 Disclosure of Interests in Other Entities
FRS 112 Disclosure of Interests in Other Entities is effective for financial periods
beginning on or after 1 January 2014.
FRS 112 is a new and comprehensive standard on disclosure requirements for all forms
of interests in other entities, including joint arrangements, associates, special purpose
vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose
information that helps users of its financial statements to evaluate the nature and risks
associated with its interests in other entities and the effects of those interests on its
financial statements. As this is a disclosure standard, it will have no impact to the financial
position and financial performance of the group when implemented in 2014.
2.4 Basis of consolidation and business combinations
(a) Basis of consolidation
Basis of consolidation from 1 January 2010
The consolidated financial statements comprise the financial statements of the company
and its subsidiaries as at the end of the reporting period. The financial statements of the
subsidiaries used in the preparation of the consolidated financial statements are prepared
for the same reporting date as the company. Where accounting policies of a subsidiary do
not conform to those of the group, adjustments are made on consolidation when the
amounts involved are considered significant to the group.
All intra-group balances, income and expenses and unrealised gains and losses resulting
from intra-group transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on which the
group obtains control, and continue to be consolidated until the date that such control
ceases.
Losses within a subsidiary are attributed to the non-controlling interest even if that results
in a deficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted
for as an equity transaction. If the group loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary at their
carrying amounts at the date when control is lost;
De-recognises the carrying amount of any non-controlling interest;
H-9
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.4 Basis of consolidation and business combinations (contd)
(a) Basis of consolidation (contd)
De-recognises the cumulative translation differences recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss;
Re-classifies the groups share of components previously recognised in other
comprehensive income to profit or loss or retained earnings, as appropriate.
Basis of consolidation prior to 1 January 2010
Certain of the above-mentioned requirements were applied on a prospective basis. The
following differences, however, are carried forward in certain instances from the previous
basis of consolidation:
Losses incurred by the group were attributed to the non-controlling interests until the
balance was reduced to nil. Any further losses were attributed to the group, unless
the non-controlling interest had a binding obligation to cover these. Losses prior to
1 January 2010 were not reallocated between non-controlling interest and the owners
of the company.
Upon loss of control, the group accounted for the investment retained at its
proportionate share of net asset value at the date control was lost. The carrying
values of such investments as at 1 January 2010 have not been restated.
(b) Business combinations
Business combinations from 1 January 2010
Business combinations are accounted for by applying the acquisition method. Identifiable
assets acquired and liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. Acquisition-related costs are recognised as
expenses in the periods in which the costs are incurred and the services are received.
When the group acquires a business, it assesses the financial assets and liabilities
assumed for appropriate classification and designation in accordance with the contractual
terms, economic circumstances and pertinent conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair
value at the acquisition date. Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability will be recognised in accordance
H-10
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.4 Basis of consolidation and business combinations (contd)
(b) Business combinations (contd)
with FRS 39 either in profit or loss or as a change to other comprehensive income. If the
contingent consideration is classified as equity, it is not be remeasured until it is finally
settled within equity.
In business combinations achieved in stages, previously held equity interests in the
acquiree are remeasured to fair value at the acquisition date and any corresponding gain
or loss is recognised in profit or loss.
The group elects for each individual business combination, whether non-controlling
interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the
non-controlling interests proportionate share of the acquirees identifiable net assets.
Any excess of the sum of the fair value of the consideration transferred in the business
combination, the amount of non-controlling interest in the acquiree (if any), and the fair
value of the groups previously held equity interest in the acquiree (if any), over the net fair
value of the acquirees identifiable assets and liabilities is recorded as goodwill. The
accounting policy for goodwill is set out in Note 2.6. In instances where the latter amount
exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss
on the acquisition date.
Business combinations prior to 1 January 2010
In comparison to the above mentioned requirements, the following differences applied:
Business combinations are accounted for by applying the purchase method. Transaction
costs directly attributable to the acquisition formed part of the acquisition costs. The
non-controlling interest (formerly known as minority interest) was measured at the
proportionate share of the acquirees identifiable net assets.
Business combinations achieved in stages were accounted for as separate steps.
Adjustments to those fair values relating to previously held interests are treated as a
revaluation and recognised in equity. Any additional acquired share of interest did not
affect previously recognised goodwill.
When the group acquired a business, embedded derivatives separated from the host
contract by the acquiree were not reassessed on acquisition unless the business
combination resulted in a change in the terms of the contract that significantly modified the
cash flows that otherwise would have been required under the contract.
Contingent consideration was recognised if, and only if, the group had a present
obligation, the economic outflow was more likely than not and a reliable estimate was
determinable. Subsequent adjustments to the contingent consideration were recognised
as part of goodwill.
H-11
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.5 Significant accounting judgments and estimates
The preparation of the groups consolidated financial statements requires management to
make judgments, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at
the end of each reporting period. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the carrying
amount of the asset or liability affected in the future periods.
Judgments made in applying accounting policies
In the process of applying the groups accounting policies, management has made the
following judgments, apart from those involving estimations, which has the most
significant effect on the amounts recognised in the consolidated financial statements:
Determination of functional currency
The group measures foreign currency transactions in the respective functional currencies
of the company and its subsidiaries. In determining the functional currencies of the entities
in the group, judgment is required to determine the currency that mainly influences sales
prices for goods and services and of the country whose competitive forces and regulations
mainly determines the sales prices of its goods and services. The functional currencies of
the entities in the group are determined based on managements assessment of the
economic environment in which the entities operate and the entities process of
determining sales prices.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty at the end of each reporting period, that have a significant risk causing a
material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below:
(a) Depreciation of vessels
The groups cost of vessels, less their estimated scrap value, is depreciated on a
straight-line basis over the estimated useful life. The useful lives and scrap values of
the vessels are based on estimations and these are common estimates applied in the
shipping industry. Changes in market situation and individual condition of the vessels
might impact the economic useful life and the scrap value. Accordingly, future
depreciation charges could be subject to revision. The carrying amount of the groups
vessels at the end of each reporting period is detailed in Note 5 to the financial
statements. A 5% difference in the expected useful lives of these assets from
managements estimates would result in approximately a 5%, 7%, 3% and 2%
variance in the groups profit for the financial years ended 31 December 2011, 2012
and 2013.
H-12
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.5 Significant accounting judgments and estimates (contd)
(b) Fair value of financial instruments
Where the fair values of financial instruments recorded on the balance sheet cannot
be derived from active markets, they are determined using valuation techniques
including the discounted cash flow model. The inputs to these models are derived
from observable market data where possible, but where this is not feasible, a degree
of judgment is required in establishing fair values. The judgments include
considerations of liquidity and model inputs regarding the future financial
performance of the investee, its risk profile, and economic assumptions regarding the
industry and geographical jurisdiction in which the investee operates. Changes in
assumptions about these factors could affect the reported fair value of financial
instruments. The valuation of financial instruments is described in Note 34.
(c) Impairment of loans and receivables
The group assesses at the end of each reporting period whether there is any
objective evidence that a financial asset is impaired. To determine whether there is
objective evidence of impairment, the group considers factors such as the probability
of insolvency or significant financial difficulties of the debtor and default or significant
delay in payments.
Where there is objective evidence of impairment, the amount and timing of future
cash flow are estimated based on historical loss experience for assets with similar
credit risk characteristics. The carrying amount of the groups loans and receivables
at the balance sheet date is disclosed in Note 10.
(d) Impairment of goodwill
The group determines whether goodwill is impaired at least on an annual basis. This
requires an estimation of the value in use of the cash-generating units to which the
goodwill is allocated. Estimating the value in use requires the group to make an
estimate of the expected future cash flows from the cash generating units and also
to choose suitable discount rates in order to calculate the present value of those cash
flow. The carrying amount of the groups goodwill at 31 December 2011, 2012 and
2013 was US$295,303,000.
H-13
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.6 Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is,
where applicable, from the acquisition date, allocated to each of the groups cash-
generating units that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
The cash-generating unit to which goodwill has been allocated is tested for impairment
annually and whenever there is an indication that the cash-generating unit may be
impaired. Impairment is determined for goodwill by assessing the recoverable amount of
each cash-generating unit (or group of cash-generating units) to which the goodwill
relates. Where the recoverable amount of the cash-generating unit is less than the
carrying amount, an impairment loss is recognised in profit or loss. Impairment losses
recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that
cash-generating unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed of in this circumstance is measured based
on the relative fair values of the operations disposed of and the portion of the
cash-generating unit retained.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or
after 1 January 2005 are treated as assets and liabilities of the foreign operations and are
recorded in the functional currency of the foreign operations and translated in accordance
with the accounting policy set out in Note 2.23.
2.7 Fixed assets and depreciation
All items of fixed assets are initially recorded at cost. Subsequent to recognition, fixed
assets are stated at cost less accumulated depreciation and any accumulated impairment
losses. The cost includes the cost of replacing part of the fixed assets. The cost of an item
of fixed assets is recognised as an asset if, and only if, 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.
When significant parts of fixed assets are required to be replaced in intervals, the group
recognises such parts as individual assets with specific useful lives and depreciation,
respectively. Likewise, when a major inspection is performed, its cost is recognised in the
carrying amount of the fixed assets as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognised in profit or loss as
incurred.
H-14
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.7 Fixed assets and depreciation (contd)
Vessels under construction included in fixed assets are not depreciated as these assets
are not yet available for use.
Depreciation of new vessels is calculated utilising the straight-line method to write off the
cost, less estimated scrap value over their estimated useful lives of 20 to 30 years, whilst
for vessels purchased second-hand, depreciation is calculated utilising the straight-line
method to write off the cost, less estimated scrap value over their remaining useful lives.
Cost includes the cost of any major enhancement which increases the future benefits from
the vessels beyond their previously assessed standard of performance and is written off
over the vessels remaining useful lives. Expenditure for maintenance and repairs and
replacement of equipment are charged to profit or loss when incurred.
Drydocking costs, which enhance the useful lives of vessels, are capitalised in the month
in which they are incurred and amortised over periods between 2 to 3 years until the next
drydocking.
For acquisitions and disposals of vessels and drydocking costs during the financial year,
depreciation is provided from the day of acquisition and to the day before disposal
respectively. Fully depreciated assets are retained in the books until they are no longer in
use.
Depreciation is computed on a straight-line basis over the estimated useful lives of the
other assets from the year of acquisition to the year before disposal as follows:
Number of years
Furniture and fittings 10
Office equipment 5
Motor vehicles 5
Plant and machinery 3 5
Computer hardware 3
Renovation 3
The carrying values of fixed assets are reviewed for impairment when events or changes
in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial
year-end, and adjusted prospectively, if appropriate.
An item of property, fixed assets is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss on de-
recognition of the asset is included in profit or loss in the year the asset is derecognised.
H-15
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.8 Intangible assets
Intangible assets acquired separately are measured initially at cost. When the asset is
available for use, it is measured at cost less accumulated amortisation and any
accumulated impairment losses.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite useful lives are amortised over the estimated useful lives and
assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method are reviewed at least at
each financial year-end.
The amortisation expense on intangible assets with finite useful lives is recognised in
profit or loss in the expense category consistent with the function of the intangible assets.
Gains or losses arising from derecognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and
are recognised in profit or loss when the asset is derecognised.
Costs relating to computer software acquired, which are not an integral part of related
hardware, are capitalised and amortised on a straight-line basis over their useful life of 3
years.
2.9 Subsidiaries
A subsidiary is an entity over which the group has the power to govern the financial and
operating policies so as to obtain benefits from its activities.
2.10 Joint ventures
The group has interests in joint ventures which are jointly controlled entities. A joint
venture is a contractual arrangement whereby two or more parties undertake an economic
activity that is subject to joint control, where the strategic financial and operating decisions
relating to the activity require the unanimous consent of the parties sharing control. A
jointly controlled entity is a joint venture that involves the establishment of a separate
entity in which each venturer has an interest.
Investments in joint venture companies are stated in the companys balance sheet at cost
less any impairment losses. In the groups financial statements, they are accounted for
using the equity method of accounting. Under the equity method, the investments in joint
venture companies are carried in the consolidated balance sheet at cost plus post-
acquisition changes in the groups share of net assets of the joint venture companies.
Goodwill relating to a joint venture company is included in the carrying amount of the
investment and is neither amortised nor tested individually for impairment. Any excess of
the groups share of the net fair value of a joint venture companys identifiable assets,
H-16
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.10 Joint ventures (contd)
liabilities and contingent liabilities over the cost of the investment is included as income in
the determination of the groups share of results of the joint venture company in the period
in which the investment is acquired.
The profit or loss reflects the share of the results of operations of the joint venture
companies. Where there has been a change recognised in other comprehensive income
by the joint venture companies, the group recognises its share of such changes in other
comprehensive income. Unrealised gains and losses resulting from transactions between
the group and the joint venture companies are eliminated to the extent of the interests in
the joint venture companies.
The groups share of profit or loss of the joint venture companies is shown on the face of
profit or loss after tax and non-controlling interests in the subsidiaries of joint venture
companies.
When the groups share of losses in a joint venture company equals or exceeds its interest
in the joint venture company, the group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the joint venture company.
After application of the equity method, the group determines whether it is necessary to
recognise an additional impairment loss on the groups investments in its joint venture
companies. The group determines at the end of each reporting period whether there is any
objective evidence that the investments in the joint venture companies are impaired. If this
is the case, the group calculates the amount of impairment as the difference between the
recoverable amounts of the joint venture companies and their carrying values and
recognises the amount in profit or loss.
2.11 Prepayments
Prepayments comprise primarily advances paid for charter hire of vessels. The costs
incurred are amortised over the period of the charter hire contract.
2.12 Financial assets
Initial recognition and measurement
Financial assets are when, and only when, the group becomes a party to the contractual
provisions of the financial instrument. The group determines the classification of its
financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the
case of financial assets not at fair value through profit or loss, directly attributable
transaction costs.
H-17
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.12 Financial assets (contd)
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as
follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading
and financial assets designated upon initial recognition at fair value through profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of
selling or repurchasing in the near term. This category includes derivative financial
instruments entered into by the group that are not designated as hedging instruments in
hedge relationships as defined by FRS 39. Derivatives, including separated embedded
derivatives, are also classified as held for trading unless they are designated as effective
hedging instruments.
Subsequent to initial recognition, financial assets at fair value through profit or loss are
measured at fair value. Any gains or losses arising from changes in fair value of the
financial assets are recognised in profit or loss. Net gains or net losses on financial assets
at fair value through profit or loss include exchange differences, interest and dividend
income.
Derivatives embedded in host contracts are accounted for as separate derivatives and
recorded at fair value if their economic characteristics and risks are not closely related to
those of the host contracts and the host contracts are not held for trading or designated
at fair value through profit or loss. These embedded derivatives are measured at fair value
with changes in fair value recognised in profit or loss. Reassessment only occurs if there
is a change in the terms of the contract that significantly modifies the cash flow that would
otherwise be required.
Loans and receivables
Non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market are classified as loans and receivables. Subsequent to initial recognition,
loans and receivables are measured at amortised cost using the effective interest method,
less impairment. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, and through the amortisation process.
De-recognition
A financial asset is derecognised where the contractual right to receive cash flow from the
asset has expired. On the re-cognition of a financial asset in its entirety, the difference
between the carrying amount and the sum of the consideration received and any
cumulative gain or loss that had been recognised in other comprehensive income is
recognised in profit or loss.
H-18
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.12 Financial assets (contd)
Regular way purchase or sale of financial asset
All regular way purchases and sales of financial assets are recognised or derecognised on
the trade date i.e., the date that the group commits to purchase or sell the asset. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of
assets within the period generally established by regulation or convention in the
marketplace concerned.
2.13 Impairment of financial assets
The group assesses at each end of the reporting period whether there is any objective
evidence that a financial asset or a group of financial assets is impaired.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the group first assesses whether objective
evidence of impairment exists individually for financial assets that are individually
significant, or collectively for financial assets that are not individually significant. If the
group determines that no objective evidence of impairment exists for an individually
assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assess them for
impairment. Assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be recognised are not included in a collective
assessment of impairment.
If there is objective evidence that an impairment loss on financial assets carried at
amortised cost has incurred, the amount of the loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash flow
discounted at the financial assets original effective interest rate. If a loan has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate. The carrying amount of the asset is reduced through the use of an allowance
account. The impairment loss is recognised in profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets
is reduced directly or if an amount was charged to the allowance account, the amounts
charged to the allowance account are written off against the carrying value of the financial
asset.
To determine whether there is objective evidence that an impairment loss on financial
assets has incurred, the group considers factors such as the probability of insolvency or
significant financial difficulties of the debtor and default or significant delay in payments.
H-19
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.13 Impairment of financial assets (contd)
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 was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount
of the asset does not exceed its amortised cost at the reversal date. The amount of
reversal is recognised in profit or loss.
2.14 Consumables
Consumables include consumable stores such as lubricant oil stocks, bunkers and ship
provisions, are stated at the lower of cost and net realisable value. Cost is determined on
a first-in, first-out basis.
Net realisable value is the estimated selling price in the ordinary course of business less
the estimated costs necessary to make the sale. In arriving at the net realisable value, due
allowance is made for all obsolete and slow-moving items.
2.15 Non-current assets held-for-sale
Non-current assets classified as held for sale are measured at the lower of their carrying
amount and fair value less costs to sell. Non-current assets are classified as held for sale
if their carrying amounts will be recovered principally through a sale transaction rather
than through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset or disposal group 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.
2.16 Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the group becomes a party to the
contractual provisions of the financial instrument. The group determines the classification
of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value plus in the case of financial
liabilities not at fair value through profit or loss, directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated
upon initial recognition at fair value through profit or loss. This category includes derivative
financial instruments entered into by the group that are not designated as hedging
H-20
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.16 Financial liabilities (contd)
instruments in hedge relationships. Separated embedded derivatives are also classified
as fair value through profit or loss unless they are designated us effective hedging
instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or loss are
measured at fair value. Any gains or losses arising from changes in fair value of the
financial liabilities are recognised in profit or loss.
The group has not designated any financial liabilities upon initial recognition at fair value
through profit or loss.
Other financial liabilities
After initial recognition, other financial liabilities are subsequently measured at amortised
cost using the effective interest rate method. Gains and losses are recognised in profit or
loss when the liabilities are derecognised and through the amortisation process.
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or
cancelled or has expired. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a de-recognition of
the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in profit or loss.
2.17 Redeemable convertible preference shares
Redeemable convertible preference shares are separated into liability and equity
components based on the terms of the contract.
On issuance of the redeemable convertible preference shares, the fair value of the liability
component is determined using a market rate for an equivalent non-convertible bond. This
amount is classified as a financial liability measured at amortised cost until it is
extinguished on conversion or redemption in accordance with the accounting policy set out
in Note 2.16.
The remainder of the proceeds is allocated to the equity components that is recognised
and included in shareholders equity. Transaction costs are deducted from equity, net of
associated income tax. The carrying amount of the conversion option is not remeasured
in subsequent years.
Transaction costs are apportioned between the liability and equity components of the
redeemable convertible preference shares based on the allocation of proceeds to the
liability and equity components when the instruments are initially recognised.
H-21
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.18 Provisions
Provisions are recognised when the group and company have a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and the amount of
the obligation can be estimated reliably.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the
current best estimate. If it is no longer probable that an outflow of economic resources will
be required to settle the obligation, the provision is reversed.
2.19 Leases
The determination of whether an arrangement is, or contains a lease is based on the
substance of the arrangement at inception date: whether fulfilment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right
to use the asset, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1 January 2005, the date of inception is deemed to
be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.
As lessee
Leases where the lessor effectively retains substantially all the risks and benefits of
ownership of the leased assets are classified as operating leases. Operating lease
payments are recognised as an expense in the income statement over the lease term on
a straight-line basis.
The groups operating leases primarily relate to the rental of its office premises.
2.20 Income taxes
(a) Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at
the amount expected to be recovered from or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount are those that are enacted or substantively
enacted at the end of the reporting period, in the countries where the group operates and
generates taxable income. Current income taxes are recognised in profit or loss.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the end of
the reporting period between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
H-22
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.20 Income taxes (contd)
(b) Deferred tax (contd)
Deferred tax liabilities are recognised for all temporary differences, except in respect of
taxable temporary differences associated with investments in subsidiaries and joint
ventures, where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilised except in respect of
deductible temporary differences associated with investments in subsidiaries and joint
ventures, deferred tax assets are recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilised.
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 profit will be
available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred
tax assets are reassessed at the end of each reporting period and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in the year when the asset is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the end of each reporting period.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current income tax assets against current income tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation authority.
(c) Sales tax
Revenue, expenses and assets are recognised net of the amount of sales tax except:
Where the sales tax incurred on a purchase of assets or services is not recoverable
from the taxation authority, in which case the sales tax is recognised as part of the
cost of acquisition of the asset or as part of the expense item as applicable; and
Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the balance sheets.
H-23
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.21 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow
to the group and the revenue can be reliably measured, regardless of when the payment
is made. Revenue is measured at the fair value of consideration received or receivable,
taking into account contractually defined terms of payment and excluding taxes or duty. No
revenue is recognised if there are significant uncertainties regarding recovery of the
consideration due, associated costs or the possible return of goods.
The following specific recognition criteria must also be met before revenue is recognised:
Charter hire income
Revenue from charter hire is recognised on a time-apportioned basis. Charter hire relates
to the provision of marine related services such as transportation, towing, mooring,
installation and salvage.
Interest income
Interest income is recognised using the effective interest method.
2.22 Employee benefits
(a) Defined contribution plans
The group participates in the national pension schemes as defined by the laws of the
countries in which it has operations. In particular, the Singapore companies in the group
make contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined
contribution pension scheme. Contributions to defined contribution pension schemes are
recognised as an expense in the period in which the related service is performed.
(b) Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees.
Accrual is made for the estimated liability for the unconsumed leave as a result of services
rendered by employees up to the end of the reporting period.
(c) Key management personnel
Key management personnel are those persons having the authority and responsibility for
planning, directing and controlling the activities of the entity. Directors are considered key
management personnel.
H-24
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.23 Foreign currencies
The groups consolidated financial statements are presented in United States Dollars,
which is also the companys functional currency. Each entity in the group determines its
own functional currency and items included in the financial statements of each entity are
measured using that functional currency.
(a) Transactions and balances
Transactions in foreign currencies are measured in the respective functional currencies of
the company and its subsidiaries and are recorded on initial recognition in the functional
currencies at exchange rates approximating those ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate
of exchange ruling at the end of the reporting period. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating
monetary items at the end of the reporting period are recognised in profit or loss except
for exchange differences arising on monetary items that form part of the groups net
investment in foreign operations, which are recognised initially in other comprehensive
income and accumulated under foreign currency translation reserve in equity. The foreign
currency translation reserve is reclassified from equity to profit or loss of the group on
disposal of the foreign operation.
(b) Consolidated financial statements
For consolidation purpose, the assets and liabilities of foreign operations are translated
into USD at the rate of exchange ruling at the end of the reporting period and their profit
or loss are translated at the exchange rates prevailing at the date of the transactions. The
exchange differences arising on the translation are recognised in other comprehensive
income. On disposal of a foreign operation, the component of other comprehensive
income relating to that particular foreign operation is recognised in profit or loss.
In the case of a partial disposal without loss of control of a subsidiary that includes a
foreign operation, the proportionate share of the cumulative amount of the exchange
differences are re-attributed to non-controlling interest and are not recognised in profit or
loss. For partial disposals of joint ventures that are foreign operations, the proportionate
share of the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or
after 1 January 2005 are treated as assets and liabilities of the foreign operations and
translated at the closing rates at the end of reporting period.
H-25
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.24 Contingencies
A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be
confirmed only by the occurrence or nonoccurrence of one or more uncertain future
events not wholly within the control of the group; or
(b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will
be required to settle the obligation; or
(ii) The amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence
will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future
events not wholly within the control of the group.
Contingent liabilities and assets are not recognised on the statement of financial position
of the group.
2.25 Impairment of non-financial assets
The group assesses at each reporting date whether there is an indication that an asset
may be impaired. If any indication exists, or when an annual impairment testing for an
asset is required, the group makes an estimate of the assets recoverable amount.
An assets recoverable amount is the higher of an assets or cash-generating units fair
value less costs to sell and its value in use and is determined for an individual asset,
unless the asset does not generate cash inflow that is largely independent of those from
other assets or group of assets. Where the carrying amount of an asset or cash-generating
unit exceeds its recoverable amount, the asset is considered impaired and is written down
to its recoverable amount. In assessing value in use, the estimated future cash flow
expected to be generated by the asset is 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.
The group bases its impairment calculation on detailed budgets and forecast calculations
which are prepared separately for each of the groups cash-generating units to which the
individual assets are allocated. These budgets and forecast calculations generally cover
a period of five years. For longer periods, a long-term growth rate is calculated and applied
to project future cash flow after the fifth year.
For assets excluding goodwill, an assessment is made at each reporting date as to
whether there is any indication that previously recognised impairment losses may no
longer exist or may have decreased. If such indication exists, the group estimates the
assets or cash-generating units recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to determine the
assets recoverable amount since the last impairment loss was recognised. If that is the
H-26
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.25 Impairment of non-financial assets (contd)
case, the carrying amount of the asset is increased to its recoverable amount. That
increase cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised previously.
2.26 Segment reporting
For management purposes, the group is organised into operating segments based on their
service which are independently managed by the respective segment managers
responsible for the performance of the respective segments under their charge. The
segment managers report directly to the management of the company who regularly
review the segment results in order to allocate resources to the segments and to assess
the segment performance. Additional disclosures on each of these segments are shown in
Note 29, including the factors used to identify the reportable segments and the
measurement basis of segment information.
2.27 Share capital and share issue expenses
Proceeds from issuance of ordinary shares are recognised as share capital in equity.
Incremental costs directly attributable to the issuance of ordinary shares are deducted
against share capital.
2.28 Related parties
A related party is defined as follows:
(a) A person or a close member of that persons family is related to the group and
company if that person:
(i) has control or joint control over the company;
(ii) has significant influence over the company; or
(iii) is a member of the key management personnel of the group or company or of
a parent of the company.
(b) An entity is related to the group and the company if any of the following conditions
applies:
(i) the entity and the company are members of the same group (which means that
each parent, subsidiary and fellow subsidiary is related to the others).
(ii) one entity is an associate or joint venture of the other entity (or an associate or
joint venture of a member of a group of which the other entity is a member).
(iii) both entities are joint ventures of the same third party.
H-27
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
2 Summary of significant accounting policies (contd)
2.28 Related parties (contd)
(iv) one entity is a joint venture of a third entity and the other entity is an associate
of the third entity.
(v) the entity is controlled or jointly controlled by a person identified in (a).
(vi) a person identified in (a) (i) has significant influence over the entity or is a member
of the key management personnel of the entity (or of a parent of the entity).
3 Revenue
Revenue represents income derived from the charter hire of vessels and related services.
4 Goodwill
The carrying amounts of goodwill are allocated as follows:
US$000
Offshore supply vessels 192,526
Transportation and installation 96,071
Harbour services and emergency response 6,706
295,303
Impairment testing on goodwill
The recoverable amounts of the CGUs have been determined based on value in use
calculations using cash flow projections from financial budgets approved by management
covering a five-year period. The pre-tax discount rate applied to the cash flow projections and
the forecasted growth rates used to extrapolate cash flow projections beyond the five-year
period are as follows:
2011 2012 2013
% % %
Growth rates 2 2 2
Pre-tax discount rates 8 8 8
The calculations of value in use for the CGUs are most sensitive to the following
assumptions:
(a) Growth rates The forecasted growth rates are based on managements estimation
derived from past experience and external sources of information available.
(b) Pre-tax discount rates Discount rates reflect managements estimate of the risks
specific to the business.
H-28
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H-30
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
6 Intangible assets
The intangible assets comprise separately acquired software.
Group
US$000
Cost
At 1 January 2011 275
Additions 466
At 31 December 2011 and 1 January 2012 741
Additions 67
Write-off (78)
At 31 December 2012 and 1 January 2013 730
Additions 165
Write-off
At 31 December 2013 895
Accumulated amortisation
At 1 January 2011
Amortisation 139
At 31 December 2011 and 1 January 2012 139
Amortisation 264
At 31 December 2012 and 1 January 2013 403
Amortisation 241
At 31 December 2013 644
Net carrying amount
At 31 December 2011 602
At 31 December 2012 327
At 31 December 2013 251
H-31
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
7 Interest in joint ventures
2011 2012 2013
US$000 US$000 US$000
Unquoted equity investments, at cost 3,729 11,556 39,501
Share of post-acquisition reserves 12,962 10,840 14,224
Deferred income (11,307) (13,912) (62,500)
Receivables from a joint venture 28,847
5,384 8,484 20,072
Deferred income relates to gain on disposal of vessels to joint ventures in excess of the
groups investment in certain joint ventures. Included in share of post-acquisition reserves
in 2011 and 2012 was recognition of losses of a joint venture arising from onerous charter
amounting to US$10,063,000 and US$13,955,000. Receivables from a joint venture arose
from the disposal of vessels to a joint venture for which repayment is neither planned nor
likely to occur in the foreseeable future.
The summarised financial information of the joint ventures, not adjusted for the proportion
of ownership interest held by the group, is as follows:
2011 2012 2013
US$000 US$000 US$000
Total assets 255,242 335,878 720,638
Total liabilities 249,513 269,575 598,816
Revenue 64,985 94,454 179,304
Net loss for the year (10,129) (5,793) (1,344)
H-32
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
7 Interest in joint ventures (contd)
The joint ventures are as follows:
Name of Joint Venture
Country of
Incorporation
Effective Percentage
of Equity Held
Principal Activities 2011 2012 2013
% % %
Pacific Workboats Pte Ltd Singapore 50.0 50.0 50.0 Owner and operator
of vessels
POSH Havila Pte Ltd Singapore 50.0 50.0 50.0 Owner and operator
of vessels
Nimitrans Pte Ltd Singapore 50.0 50.0 50.0 Owner and operator
of vessels
POSH Synergy Marine
Private Limited
India 50.0 50.0 50.0 Dormant
POSH Terasea Pte. Ltd. and
its subsidiaries
Singapore 62.5 Owner and operator
of vessels
PT Win Offshore Indonesia 49.0 Owner and operator
of vessels
PT Mandiri Abadi Maritim Indonesia 49.0 Owner and operator
of vessels
Servicios Maritimos Gosh,
S.A.P.I. de C.V.
Mexico 49.0 49.0 49.0 Offshore business
PACC Offshore Mexico S.A
de C.V
Mexico 49.0 49.0 Dormant
Sermargosh1 S.A.P.I. de
C.V
Mexico 49.0 Offshore business
Sermargosh2 S.A.P.I. de
C.V
Mexico 49.0 49.0 Offshore business
Held through a joint venture
GOSH Rodrigo DPJ, S.A.P.I.
de C.V.
Mexico 49.0 49.0 Owner and operator
of vessels
GOSH Caballo Eclipse
S.A.P.I. de C.V.
Mexico 49.0 49.0 Owner and operator
of vessels
GOSH Caballo Grano de
Oro S.A.P.I. de C.V.
Mexico 49.0 49.0 Owner and operator
of vessels
8 Prepayments
These relate to advances paid for charter hire of vessels.
9 Consumables
Consumables mainly comprised bunkers onboard vessels.
H-33
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
10 Receivables and other current assets
2011 2012 2013
US$000 US$000 US$000
Trade receivables 41,678 50,680 55,995
Other receivables 18,310 9,850 7,150
Deposits 637 415 2,199
60,625 60,945 65,344
Prepayments 4,673 2,904 2,501
65,298 63,849 67,845
Receivables that are past due but not impaired
As at 31 December 2011, 2012 and 2013, the group has trade receivables amounting to
US$26,362,000, US$27,983,000 and US$32,833,000 respectively that are past due at the
end of the reporting period but not impaired. These receivables are unsecured and the
analysis of their aging at the end of the reporting periods is as follows:
2011 2012 2013
US$000 US$000 US$000
Less than 3 months 19,862 24,869 21,389
3 to 6 months 4,527 2,406 7,405
More than 6 months 1,973 708 4,039
26,362 27,983 32,833
Receivables that are impaired
The group has trade receivables that are impaired at the end of the reporting period and
the movements of allowance account used to record the impairment are as follows:
2011 2012 2013
US$000 US$000 US$000
Trade receivables nominal amounts 10,566 12,358 15,145
Allowance for impairment (10,566) (12,358) (15,145)

H-34
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
10 Receivables and other current assets (contd)
Movements in allowance account:
2011 2012 2013
US$000 US$000 US$000
At 1 January 10,620 10,566 12,358
Allowance during the year 1,795 3,109
Doubtful debts written back (54) (3) (322)
At 31 December 10,566 12,358 15,145
Trade receivables that are individually determined to be impaired at the end of the
reporting period relate to debtors that are in significant financial difficulties and have
defaulted on payments. These receivables are not secured by any collateral or credit
enhancements.
Other receivables comprised the following amounts:
2011 2012 2013
US$000 US$000 US$000
Claim receivables 1,260 6,776 2,566
Deferred project costs* 1,237 1,772 635
Unbilled receivables 11,341
Others 4,472 1,302 3,949
18,310 9,850 7,150
* This relates to uncompleted contracts.
Receivables and other current assets are denominated in the following currencies:
2011 2012 2013
US$000 US$000 US$000
United States Dollar 55,564 55,470 60,676
Singapore Dollar 6,414 1,697 4,335
Others 3,320 6,682 2,834
65,298 63,849 67,845
H-35
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
11 Amounts owing from joint ventures and fellow subsidiaries
2011 2012 2013
US$000 US$000 US$000
Amounts owing from joint ventures
Trade 12,212 10,713 9,074
Non-trade 148,224 193,400 80,722
Amount owing from associates of the
immediate holding company (non-trade) 3,358 3,841
Amount owing from fellow subsidiaries of
the immediate holding company
(non-trade) 13 130 374
Amount owing from a fellow subsidiary of
the ultimate holding company (trade) 15
163,822 208,084 90,170
The amounts are unsecured, interest-free and repayable on demand except for amounts
owing from joint ventures of US$142,750,000, US$165,108,000 and US$73,496,000 for
the financial years ended 31 December 2011, 2012 and 2013, which are secured and
bears interest at 6% per annum.
12 Loans to joint ventures
Non-current amounts of US$91,088,000 owing from joint ventures are secured and bear
effective interest rate at 6% per annum. The settlement of those amounts is based on
expected cash flows to be derived over a period not exceeding 5 years.
Non-current amounts of US$89,445,000 owing from joint venture are unsecured and bears
interest at a range of 1.5% to 2.85% per annum. The settlements of these amounts are
based on expected cash flows to be derived over a period of 12 years.
The current amounts of loans to joint ventures are unsecured, interest-free and
subordinated to the borrowings under a loan facility undertaken, except for an amount of
US$26,047,600 (2012: US$13,225,000) which is unsecured and bears interest at a range
of 1.5% to 5%.
H-36
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
13 Cash and cash equivalents
These relate to cash and bank balances which earn interest at daily bank rates.
Cash and cash equivalents are denominated in the following currencies:
2011 2012 2013
US$000 US$000 US$000
United States Dollar 311 249 10,151
Singapore Dollar 176 116 254
Australian Dollar 2 103 75
Others 9 49 72
498 517 10,552
14 Fixed assets classified as held-for-sale
On 1 October 2012, the company entered into a Memorandum of Agreement to dispose of
a vessel to a third party. As at 31 December 2012, the company had received a deposit of
US$1,900,000. On 28 March 2013, the Memorandum of Agreement was terminated and
the deposit was applied towards a revised agreement with the third party in the form of a
6-month bareboat charter, commencing 8 April 2013, with an obligation on the third party
to purchase the vessel at the end of the charter period. The charter was extended for a
further period of 6 months.
During 2013, the group entered into agreements with various parties for the sale of
vessels subsequent to the completion of their respective charter hire with the group.
15 Share capital
2011 2012 2013
US$000 US$000 US$000
Issued and fully paid:
At 1 January
160,150,000 ordinary shares 380,975 380,975 380,975
Conversion of redeemable convertible
preference shares (Note 18) 150,000
At 31 December 380,975 380,975 530,975
The holders of ordinary shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at shareholders meetings. All shares rank
equally with regard to the companys residual assets. The ordinary shares have no par
value.
H-37
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
16 Other reserves
(a) Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising
from the redemption of preference shares.
(b) Equity component of redeemable convertible preference shares
This represents the residual amount of redeemable convertible preference shares
(RCPS) after deducting the fair value of the liability components for the financial year
ended 31 December 2012. The RCPS were converted into fully paid ordinary shares
in the current financial year.
17 Bank borrowings unsecured
2011 2012 2013
US$000 US$000 US$000
Current:
Loan 1 (Revolving) 114,140 130,410 217,485
Loan 2 (Revolving) 244,620 46,035 136,461
Loan 3 (Revolving) 263,830 48,880 153,480
622,590 225,325 507,426
Non current:
Loan 2 (Committed) 150,000 150,000
Loan 3 (Committed) 150,000 150,000
300,000 300,000
Total 622,590 525,325 807,426
The unsecured bank borrowings bear interest at a weighted average rate of 3.42%, 2.08%
and 1.85% per annum for the financial years ended 31 December 2011, 2012 and 2013
respectively.
As at 31 December 2011, the credit facilities of loans 2 and 3 were due to mature in 2012.
As at 31 December 2012, the credit facilities of the loans 2 and 3 have been extended until
30 December 2015.
H-38
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
18 Redeemable convertible preference shares
On 15 November 2012, the group and the company issued 37,500,000 redeemable
convertible preference shares (RCPS) at US$4.00 for a total consideration of
US$150,000,000. The RCPS holder has no voting rights but is entitled to receive dividends
at the same rate as that which is declared for ordinary shares.
The RCPS are convertible at the option of the holder at any time on or before 14 November
2017 on the basis of 1 ordinary share for 1 RCPS held.
Each RCPS shall be automatically and mandatorily redeemed immediately upon the expiry
of five years after the issue date of the RCPS. Each RCPS holder will have the right to
require the company to redeem the whole or any part of the RCPS held by the RCPS
holder upon the RCPS holder being informed that the shares in the company will be listed
on a stock exchange. Any RCPS not so redeemed shall be automatically and mandatorily
converted into ordinary shares (at the conversion rate of one ordinary share for each
RCPS held) on or before the listing date.
The carrying amount of the liability component of RCPS is arrived at as follows:
2011 2012 2013
US$000 US$000 US$000
Face value of RCPS 150,000
Equity component (14,672)
Liability component of RCPS at initial
recognition and at the end of the
reporting period 135,328
On 9 December 2013, the company received from holders of the RCPS, written notices
setting forth their election to convert a total of 37,500,000 RCPS into 37,500,000 fully paid
ordinary shares into the share capital of the company. The accretion of interest expense
has not been recorded as it is deemed to be not material.
19 (a) Payables and accruals
2011 2012 2013
US$000 US$000 US$000
Trade payables 10,795 10,635 13,876
Vessel related accruals 22,664 20,317 17,087
Other accruals 16,072 16,423 27,332
Other payables 21,865 2,961 3,794
71,396 50,336 62,089
Trade and other payables are non-interest bearing. Trade payables are normally settled on
30 days term. Other payables in 2011 mainly relates to advances received from a joint
venture partner.
H-39
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
19 (a) Payables and accruals (contd)
Trade and other payables are denominated in the following currencies:
2011 2012 2013
US$000 US$000 US$000
United States Dollar 66,077 41,122 49,485
Singapore Dollar 4,216 5,099 11,328
Others 1,103 4,115 1,276
71,396 50,336 62,089
19 (b) Advances received from customers
Advances received from customers in 2013 relate to deposits received from various
charterers in connection with the sale of vessels as disclosed in Note 14.
20 Amounts owing to joint ventures and fellow subsidiaries
2011 2012 2013
US$000 US$000 US$000
Amounts owing to joint ventures 11,670 11,959 9,733
Amounts owing to fellow subsidiaries and
associates of the immediate holding
company 2,019 11,891 13,634
Amount owing to a fellow subsidiary of
the ultimate holding company 9
13,698 23,850 23,367
The amounts owing to joint ventures and fellow subsidiaries of the immediate holding
company are trade in nature, unsecured, interest-free, payable on demand, and are to be
settled in cash. These amounts are denominated in United States Dollars.
21 Amounts owing to holding companies
The amounts are non-trade, unsecured, interest-free, payable on demand, and are to be
settled in cash. These amounts are denominated in United States Dollars.
H-40
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
22 Other operating income
2011 2012 2013
US$000 US$000 US$000
Interest income
Joint ventures 12,314 15,836
Others 33 273 131
Gain on disposal of fixed assets 13,565 11,287 10,938
Foreign exchange gain 185 81
Net fair value gains on foreign exchange
contracts 13,193 19,052
Sundry income 4,123 3,195 4,341
17,721 40,447 50,379
23 Finance costs
2011 2012 2013
US$000 US$000 US$000
Interest on borrowings 10,293 12,881 12,762
Others 158 282 201
10,451 13,163 12,963
24 Profit before taxation
Profit before taxation has been arrived at after (charging)/credit:
2011 2012 2013
US$000 US$000 US$000
Audit fees paid to auditors of the
company (192) (208) (272)
Non-audit fees paid to auditors of the
company (34) (34) (34)
Amortisation of intangible assets (Note 6) (139) (264) (241)
Depreciation of fixed assets (Note 5) (35,309) (36,974) (36,709)
Consumables recognised as an expense
in cost of sales (19,512) (15,555) (8,820)
Foreign exchange (loss)/gain (131) 185 81
Net fair value (loss)/gains on foreign
exchange contracts (6,391) 13,193 19,052
Bad debts written off (3,981)
Allowance for doubtful debts trade
receivables (1,795) (3,109)
Staff costs
salaries and related costs (35,298) (36,356) (44,127)
CPF contributions or equivalents (1,135) (1,136) (1,202)
Fixed assets written off (336)
H-41
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
25 Taxation
2011 2012 2013
US$000 US$000 US$000
Current taxation
Singapore tax 146 152 1,849
Foreign tax 1,619 1,904
(Over)/under provision in respect of
prior years (396) (1,038) 227
Deferred taxation
Origination and reversal of temporary
differences (1) 123 2
(Over)/under provision in respect of
prior years (6) 84 5
(257) 940 3,987
The tax expense on the results of the financial years varies from the amount of income tax
determined by applying the Singapore statutory rate of income tax on the groups profits
as a result of the following:
2011 2012 2013
US$000 US$000 US$000
Profit before taxation 25,961 54,460 77,358
Tax at statutory rate of 17% 4,413 9,258 13,150
Tax effect on non-deductible expenses 2,867 1,945 3,376
Tax effect on non-taxable income (6,097) (9,840) (13,052)
(Over)/under provision in respect of prior
years (402) (954) 232
Withholding tax expense 1,619 1,883
Effect of different tax rate in other
countries (201) 194 87
Effect of partial tax exemption and tax
relief (21) (64) (1,997)
Deferred tax assets not recognised 173 6
Benefits from previously unrecognised tax
losses (1,108) (1,092)
Share of results of joint ventures 119 (132) 308
(257) 940 3,987
The group did not recognise deferred tax assets arising from tax losses amounting to
US$9,445,000, US$3,055,000 and US$3,055,000 for the financial years ended 31
December 2011, 2012 and 2013 respectively, in accordance with the accounting policy
stated in Note 2.20(b). The use and availability of these tax losses are subject to the
agreement of the tax authorities and compliance with certain provisions of the tax
legislation of the respective countries in which the subsidiaries operate.
H-42
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
25 Taxation (contd)
The overprovision in respect of prior years arose from provisions no longer required due
to time barred assessments and the resolution and finalisation of prior year open tax
issues with the Comptroller of Income Tax.
Income derived from the charter hire of vessels stationed in waters outside of Singapore
during the year is exempt from income tax under Section 13A and Section 13F of the
Singapore Income Tax Act, Cap. 134.
At the end of the respective reporting periods, no deferred tax liability has been
recognised for taxes that would be payable on the undistributed earnings of certain of the
groups subsidiaries and joint ventures as the group is in a position to control the timing
of the reversal of the temporary differences and it is probable that such differences will not
reverse in the foreseeable future.
26 Earnings per share
Earnings per ordinary share (EPS) is calculated by dividing the groups net profit
attributable to shareholders of the parent by the weighted average number of ordinary
shares outstanding during the financial year.
In respect of the financial years ended 31 December 2011, 2012 and 2013, the weighted
average number of ordinary shares in issue is adjusted to take into account the
sub-division of each ordinary share in the capital of the company into fifteen Shares (the
Share Split) and contingent upon the Share Split, the consolidation of every two ordinary
shares in the capital of the company into one Share.
The calculation of the basic and diluted earnings per share of the group is based on the
following:
2011 2012 2013
US$000 US$000 US$000
Profit for the year attributable to the
shareholders 26,218 53,520 73,371
Weighted average number of ordinary
shares for basic earnings per share
computation* (000) 1,201,125 1,201,125 1,218,077
Effects of dilution:
Redeemable convertible preference
shares (000) 35,445 281,250
Weighted average number of ordinary
shares for diluted earnings per share
computation (000) 1,201,125 1,236,570 1,482,375
* The weighted average number of shares takes into account the weighted average effect of changes in
redeemable convertible preference shares during the year.
H-43
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
27 Subsidiaries in the group
The subsidiaries as at 31 December 2011, 2012 and 2013 are as follows:
Name of Subsidiary
Country of
Incorporation
Effective Percentage
of Equity Held
Principal Activities 2011 2012 2013
% % %
Held by the company
POSH Semco Pte Ltd Singapore 100 100 100 Operator of vessels
for offshore marine
support services
POSH Maritime Pte Ltd Singapore 100 100 100 Operator of vessels
for offshore marine
support services
Singapore Oil Spill
Response Centre Pte Ltd
Singapore 100 100 100 Provision of services
to control pollution
from oil & chemical
spillage & to protect
the marine
environment
Semco Salvage and
Towage Pte Ltd
Singapore 100 Owner and operator
of vessels
Semco Salvage (I) Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Semco Salvage (II) Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Semco Salvage (III) Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Semco Salvage (IV) Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Semco Salvage (V) Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Semco Salvage (VI) Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Maritime Alpha Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Maritime Bravo Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Maritime Charlie Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Maritime Delta Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Raven Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Swallow Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Condor Shipping Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
H-44
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
27 Subsidiaries in the group (contd)
Name of Subsidiary
Country of
Incorporation
Effective Percentage
of Equity Held
Principal Activities 2011 2012 2013
% % %
Jacana Shipping Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Starling Shipping Pte Ltd Singapore 100 100 100 Owner and operator
of vessels
Labrador Shipping
Corporation
Malaysia 100 100 Owner and operator
of vessels
Larkspur Pte Ltd Singapore 100 100 Owner and operator
of vessels
Newfoundland Shipping
Corporation
Malaysia 100 Owner and operator
of vessels
POSH Fleet Services Pte
Ltd
Singapore 100 100 100 Provision of ship
management services
POSH Australia Pty Ltd Australia 100 100 100 Operator of vessels
for offshore marine
support services
POSH (USA) Inc. United States 100 100 100 Dormant
PACC Offshore (UK)
Limited
United
Kingdom
100 100 100 Dormant
POSH Vanguard Pte Ltd Singapore 100 100 100 Dormant
Adara Limited British Virgin
Island
100 100 100 Dormant
Modec Consortium Offshore
Limited
British Virgin
Island
100 100 Liquidated in 2013
Mayan Investments Pte Ltd Singapore 100 100 100 Investment holding
Held through a subsidiary
Avocet Shipping Pte Ltd Singapore 100 100 100 Dormant
Operadora De Servicios
Costa Afuera S.A. de C.V.
Mexico 99 99 Service company
POSH Fleet Services
Mexico S.A. de C.V.
Mexico 99 Ship Management
POSH Gannet S.A. de C.V. Mexico 100 Owner and operator
of vessels
POSH Skua S.A. de C.V. Mexico 100 Dormant
H-45
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
28 Related party transactions
Other than the related party information disclosed elsewhere in the financial statements,
the following are significant transactions with related parties at mutually agreed terms and
amounts:
2011 2012 2013
US$000 US$000 US$000
Immediate holding company
Corporate support fees paid/payable 4,199 4,029 3,604
An associate of the ultimate holding
company
Office rental paid/payable 478 581 612
Ship management fees paid 105
Ship management fees received 170
Purchase of bunkers 553 1,028 509
Subsidiary of the immediate holding
company
Insurance service fees payable 180 180 180
Charter hire paid/payable 300 6,162
Ship repair and maintenance cost paid 836 4,518
An associate of the immediate holding
company
Charter hire paid/payable 290 290 278
Subsidiary of the ultimate holding
company
Shipbuilding costs paid 41,345 119,769 280,141
Joint ventures of the company
Charter hire paid/payable 45,724 45,195 46,249
Charter hire received/receivable 14,687 5,782 7,954
Crew and procurement services fee paid 1,704
Ship management fees paid/payable 300 244 348
Ship management fees
received/receivable 1,722 957 2,199
Management support fees
received/receivable 1,273 1,408 1,824
Project management fees
received/receivable 226 737 181
Sale of vessels received/receivable 121,000 45,500 148,500
Compensation of directors and key
management personnel
Salaries and related costs 1,381 1,543 3,940
CPF contributions or equivalents 20 19 52
H-46
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
29 Segment information
For management purposes, the group is organised into business units based on their
services and has four reportable segments as follows:
Offshore Supply Vessels (OSV)
The OSV segment supports mid to deepwater operations of rig and oilfield operators. This
segment also operates PSVs that transport drilling materials and supplies to drilling rigs,
offshore production platforms as well as pipes and other materials for construction of
marine structures or pipelines.
Transportation and Installation
The Transportation and Installation segment supports marine contractors in construction
and maintenance of oilfield infrastructure and pipelines. This segment operates AHTs
specialising in cross-ocean towing, transporting large marine structures from the builders
yard and installing them in the oilfields, float-over of launching operations of large marine
structure and ballastable tank barges and tugs for transportation of construction materials
and subsea pipes.
Offshore Accommodation
The Offshore Accommodation segment owns and operates vessels that are capable of
meeting a range of accommodation, transportation and hospitality needs in offshore
oilfields for workers carrying out offshore construction and/or maintenance operations.
Harbour Services & Emergency Response
The Harbour Services segment supports the harbour or coastal tugging operations, and
heavy lifting operations of shipyards, ports and oil and gas terminals and operates a
modern fleet of Azimuth Stern Drive (ASD) harbour tugs. In addition, the group operates
a fleet of heavy lift crane barges.
The Emergency Response segment offers a comprehensive range of services, equipment
and personnel capable of handling firefighting, rescue and salvage and oil spill events in
the Asia Pacific and Indian Ocean regions.
No operating segments have been aggregated to form the above reportable operating
segments.
Management monitors the operating results of its business unit separately for the purpose
of making decisions about resource allocation and performance assessment. Segment
performance is evaluated based on operating profit or loss which in certain respects is
measured differently from operating profit or loss in the consolidated financial statements.
Transfer prices between operating segments are on arms length basis in a manner similar
to transactions with third parties.
H-47
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H-49
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
29 Segment information (contd)
Geographical information
Revenues
The group provides a diverse range of offshore support vessels to service the offshore oil
and gas exploration and production activities. The groups operations are international and
in particular where the major offshore oil and gas activities are located. The group has no
specific geographical objective and will deploy its vessels based on the demand and
supply of the various international offshore oil and gas activities. The decision in allocating
resources and assessing performance is driven by the optimal economic returns a vessel
is able to achieve, taking into account demand, vessel specifications, rates, timing and
availability of vessels for the different geographical region. The vessels may be deployed
to other geographical regions at the end of the contract for the aforesaid criteria. Hence,
it is not meaningful to present revenues by countries or geographical locations.
Non-current assets
Non-current assets are based on geographical location of the entities:
2011 2012 2013
US$000 US$000 US$000
Singapore 1,045,705 1,005,576 1,305,973
Southeast Asia 63,166 146,565
Americas 12,706 100,742
1,045,705 1,081,448 1,553,280
Non-current assets information presented above comprises all non-current assets except
deferred tax assets as presented in the consolidated statements of financial position.
Information about a major customer
Revenue from a major customer in 2011 amounted to US$26,198,000 arising from charter
hire of vessels by the Transportation and Installation segment.
There were no customers that individually contributed 10% or more of the groups revenue
for the financial years ended 31 December 2012 and 2013 respectively.
H-50
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
30 Commitments
(a) Capital commitments
2011 2012 2013
US$000 US$000 US$000
Capital expenditure in respect of fixed
assets contracted but not provided for
in the financial statements 87,797 318,914 185,650
(b) Rental commitments
The group has entered into commercial leases primarily in relation to its office premises.
For the financial years ended 31 December 2011, 2012 and 2013, these leases have an
average tenure of between 1 to 5 years with renewal option but no contingent rent
provision included in the contracts. The group is restricted from subleasing its leased
office premises and office equipment to third parties.
Minimum lease payments recognised as an expense in profit or loss for the financial years
ended 31 December 2011, 2012 and 2013 amounted to US$1,040,000, US$1,094,000 and
US$1,166,000 respectively.
Future minimum rental payable under non-cancellable operating leases at the end of the
reporting period are as follows:
2011 2012 2013
US$000 US$000 US$000
Due not later than one year 76 551 553
Due later than one year and not later than
five years 2,297 1,245
76 2,848 1,798
(c) Operating lease commitments as lessee
The group has entered into bareboat leases of vessels. Future minimum bareboat leases
payable under non-cancellable operating leases at the end of the respective reporting
periods are as follows:
2011 2012 2013
US$000 US$000 US$000
Not later than one year 11,951 12,701 15,165
Later than one year and not later than
five years 15,005 8,853 4,009
Later than five years 5,017 4,280 5,410
31,973 25,834 24,584
H-51
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
30 Commitments (contd)
(d) Operating lease commitments as lessor
The group has entered into time-charter and bareboat leases on its vessels. Certain
leases include a clause to enable upward revision of the leasing charge on an annual
basis based on prevailing market conditions.
Future minimum time-charter and bareboat receivable under non-cancellable operating
leases at the end of the respective reporting periods are as follows:
2011 2012 2013
US$000 US$000 US$000
Not later than one year 58,045 55,655 96,873
Later than one year and not later than
five years 41,350 12,855 58,992
99,395 68,510 155,865
(e) Derivative financial instruments
As at the end of the respective reporting periods, the group held forward currency
contracts with notional amounts of approximately US$135,053,000, US$91,894,000 and
US$3,988,000 in 2011, 2012 and 2013, respectively, which are to hedge the groups
payables in foreign currencies. The group does not apply hedge accounting.
31 Financial risk management policies and objectives
The group is exposed to financial risks arising from its operations and the use of financial
instruments. The key financial risks include currency risk, interest rate risk, credit risk and
liquidity risk. The board of directors reviews and agrees policies and procedures for the
management of these risks. It is, and has been throughout the current and previous
financial years, the group policy that no trading in derivatives for speculative purposes will
be undertaken.
The following sections provide details regarding the groups exposure to the above-
mentioned financial risks and the objectives, policies and processes for the management
of these risks. There has been no change to the groups exposure to these financial risks
or the manner in which it manages and measures the risks.
(a) Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to
changes in foreign exchange rates.
H-52
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
31 Financial risk management policies and objectives (contd)
(a) Currency risk (contd)
The group operates internationally and its assets and revenues are essentially United
States Dollar based. Foreign currency denominated assets and liabilities give rise to
foreign exchange exposures. The group is exposed to foreign currency risk mainly arising
from its operations. The group enters into forward contracts to hedge its currency risk
exposure as and when required.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the groups profit net of tax to a
reasonably possible change in the SGD exchange rate against the respective functional
currencies of the group entities, with all other variables held constant.
2011 2012 2013
US$000 US$000 US$000
SGD strengthened 5% 91 (141) (245)
weakened 5% (91) 141 245
(b) Interest rate risk
Interest risk is the risk that the value of a financial instrument will fluctuate because of
changes in market interest rates.
The groups primary interest rate risk relates to its interest-bearing debts. The group
manages its interest rate exposure by borrowing short term and in tranches at fixed
interest rates. This strategy allows it to capitalise on cheaper funding in a low interest rate
environment and achieves a certain level of protection against rate hikes.
Sensitivity analysis for interest rate risk
At the end of the respective reporting periods, if USD interest rates had been 25 basis
points lower/higher with all other variables held constant, the groups profit net of tax
would have been US$753,000, US$1,551,000 and US$1,675,000 higher/lower, arising
mainly as a result of lower/higher interest expense on floating rate loans and borrowings.
(c) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a
counter party default on its obligations. The groups and the companys exposure to credit
risk arises primarily from trade and other receivables.
Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit
monitoring procedures. Credit risk is minimised and monitored via strictly limiting business
dealings by the group with business partners of high creditworthiness. Trade receivables
are monitored on an ongoing basis via the groups management reporting procedures.
H-53
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
31 Financial risk management policies and objectives (contd)
(c) Credit risk (contd)
Advances are made to subsidiaries in support of their respective principal activities.
Surplus cash is placed in a number of reputable banks.
Approximately 14%, 35% and 34% of the groups trade receivables were due from 5 major
customers as at 31 December 2011, 2012 and 2013 respectively.
The credit risk concentration profile of the groups trade at the balance sheet date is as
follows:
Credit risk concentration profile
2011 2012 2013
USD000
%
of total USD000
%
of total USD000
%
of total
By region:
Asia Pacific 29,690 72% 37,423 74% 45,063 80%
Americas 2,242 5% 1,184 2% 445 1%
Africa, Middle East
and Europe 9,746 23% 12,073 24% 10,487 19%
41,678 100% 50,680 100% 55,995 100%
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are due from
creditworthy debtors with good payment record with the group.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in
Note 10.
(d) Liquidity risk
Liquidity risk is the risk that the group or the company will encounter difficulty in meeting
financial obligations due to shortage of funds. The groups and the companys exposure to
liquidity risk arises primarily from mismatch of the maturities of financial assets and
liabilities. The groups and the companys objective is to maintain a balance between
continuity of funding and flexibility through the use of stand-by credit facilities.
The groups and the companys exposure to liquidity risk is minimal. The group and the
company have available bank overdraft facilities at variable interest rates. It is the groups
policy for the placing of surplus funds to be managed centrally.
H-54
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
31 Financial risk management policies and objectives (contd)
(d) Liquidity risk (contd)
Due to the nature of the groups and the companys underlying businesses, management
aims at maintaining flexibility in funding by keeping committed credit lines available.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the groups financial assets and
liabilities at the end of the reporting period based on contractual undiscounted repayment
obligations.
1 year or less 1 to 5 years Total
Group US$000 US$000 US$000
Financial assets
At 31 December 2011
Receivables and other current assets 60,625 60,625
Amounts owing from joint ventures
and fellow subsidiaries 163,822 163,822
Loans to joint ventures 17,482 17,482
Cash and cash equivalents 498 498
Total undiscounted financial assets 242,427 242,427
Financial liabilities
At 31 December 2011
Payables and accruals 71,396 71,396
Amounts owing to joint ventures and
fellow subsidiaries 13,698 13,698
Amounts owing to holding companies 182 182
Bank borrowings 643,883 643,883
Total undiscounted financial liabilities 729,159 729,159
Total net undiscounted financial
liabilities (486,732) (486,732)
H-55
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
31 Financial risk management policies and objectives (contd)
(d) Liquidity risk (contd)
1 year
or less
1 to 5
years
More than
5 years Total
Group US$000 US$000 US$000 US$000
Financial assets
At 31 December 2012
Receivables and other current
assets 60,945 60,945
Amounts owing from joint ventures
and fellow subsidiaries 208,084 208,084
Loans to joint ventures 22,656 22,656
Cash and cash equivalents 517 517
Total undiscounted financial assets 292,202 292,202
Financial liabilities
At 31 December 2012
Payables and accruals 50,336 50,336
Amounts owing to joint ventures
and fellow subsidiaries 23,850 23,850
Amounts owing to holding
companies 1,268 1,268
Bank borrowings 230,012 312,480 542,492
Total undiscounted financial
liabilities 305,466 312,480 617,946
Total net undiscounted financial
liabilities (13,264) (312,480) (325,744)
Financial assets
At 31 December 2013
Receivables and other current
assets 65,344 65,344
Amounts owing from joint ventures
and fellow subsidiaries 90,170 90,170
Loans to joint ventures 26,089 176,427 37,440 239,956
Interest in a joint venture 28,847 28,847
Cash and cash equivalents 10,552 10,552
Total undiscounted financial assets 192,155 205,274 37,440 434,869
Financial liabilities
At 31 December 2013
Payables and accruals 62,089 62,089
Amounts owing to joint ventures
and fellow subsidiaries 23,367 23,367
Amounts owing to holding
companies 649 649
Bank borrowings 516,813 311,100 827,913
Total undiscounted financial
liabilities 602,918 311,100 914,018
Total net undiscounted financial
(liabilities)/assets (410,763) (105,826) 37,440 (479,149)
H-56
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
32 Capital management
The groups objectives when managing capital are to safeguard the groups ability to
continue as a going concern and to maintain an optimal capital structure so as to maximise
shareholder value. The group manages its capital structure by taking into account its
current and projected cash flow, expansion and capital expenditure commitments, and
ensuring a prudent debt equity ratio. The group monitors capital using a gearing ratio,
which is borrowings including redeemable convertible preference shares divided by total
equity.
The debt to equity ratio of the group is 1.05: 1, 0.99: 1 and 0.93: 1 for the financial years
ended 31 December 2011, 2012 and 2013 respectively. No changes were made in the
objectives, policies or processes during the financial years ended 31 December 2011,
2012 and 2013. Other than as disclosed in Note 17, the group has complied with externally
imposed capital requirements for the financial years ended 31 December 2011, 2012 and
2013.
33 Classification of financial assets and liabilities
2011 2012 2013
US$000 US$000 US$000
Financial assets
Receivables and other current assets 60,625 60,945 65,344
Amounts owing from joint ventures and
fellow subsidiaries 163,822 208,084 90,170
Loans to joint ventures 17,482 22,656 217,286
Interest in a joint venture 28,847
Cash and cash equivalents 498 517 10,552
Total loans and receivables 242,427 292,202 412,199
Financial liabilities carried at amortised
cost
Payables and accruals 71,396 50,336 62,089
Amounts owing to joint ventures and
fellow subsidiaries 13,698 23,850 23,367
Amounts owing to holding companies 182 1,268 649
Bank borrowings 622,590 525,325 807,426
Redeemable convertible preference
shares 135,328
Total financial liabilities carried at
amortised cost 707,866 736,107 893,531
H-57
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
34 Fair values of financial instruments
A. Fair values of financial instruments that are carried at fair values
Fair value hierarchy
The group classifies fair value measurement using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The group has designated
derivatives as disclosed in Note 30(e) to the financial statements as Level 2 where inputs
other than quoted prices that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices). These are recurring fair value
adjustments.
Determination of fair value
Derivatives (Note 30(e)): Forward currency contracts are valued using a valuation
technique with market observable inputs. The most frequently applied valuation
techniques include forward pricing models, using present value calculations. The models
incorporate various inputs including the credit quality of counterparties, foreign exchange
spot and forward rates and interest rate curves.
B. Fair values of financial instruments by classes that are not carried at fair values and
whose carrying amounts are reasonable approximation of fair value
Management has determined that the carrying amounts of trade and other receivables,
amounts owing from/to subsidiaries, joint ventures and fellow subsidiaries, loans to joint
ventures, cash and cash equivalents, trade payable and other payables and amount owing
to immediate holding company and borrowings are reasonable approximation of fair
values, either due to their short-term nature or that they are floating rate instruments that
are re-priced to market interest rates on or near the end of the reporting period.
35 Dividends
2011 2012 2013
US$000 US$000 US$000
Dividends on ordinary shares:
Interim dividend of US$0.035 (2011) per
share 5,605
Final dividend of US$0.035 (2012) per
share 5,605
Dividends on redeemable convertible
preference shares:
Final dividend of US$0.035 (2012) per
share 1,313
On 28 June 2013, a final dividend for the financial year ended 31 December 2012
amounting to US$0.035 per share for each ordinary share and each holder of the
redeemable convertible preference share was declared.
H-58
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the financial statements
for the financial years ended 31 December 2011, 2012 and 2013
36 Contingent liabilities
For the year ended 31 December 2013, the company provided refund and performance
guarantees and corporate guarantee on banking facilities for aggregate amount of US$5.9
million and US$6.8 million on behalf of joint ventures.
37 Events after balance sheet date
(a) On 10 January 2014, the group disposed of a vessel to a third party for a
consideration of US$1,200,000.
(b) On 16 January 2014, the company entered into an agreement for the construction of
one anchor handling tug supply vessel amounting to US$25,000,000.
(c) On 6 February 2014, the group disposed of a vessel to a third party for a
consideration of US$10,012,000
(d) On 21 February 2014, the company entered into an agreement for the construction
of two deck cargo barges amounting to US$2,300,000 each.
(e) On 25 February 2014, the group disposed of two harbour tugs to a third party for a
consideration of US$6,700,000 each.
(f) On 4 March 2014, POSH Terasea Pte Ltd took delivery of Terasea Osprey, a 16,000
bhp anchor handling tug. The delivery of Terasea Osprey finalises the joint venture
arrangement with Terasea Pte Ltd and the group recognised a gain on disposal of
assets of US$25,900,000.
(g) On 10 March 2014, the company disposed of a vessel to a joint venture for a
consideration of US$20,500,000.
(h) On March 28, 2014, resolutions were passed to approve, (a) the sub-division of each
ordinary share in the capital of the company into 15 Shares (the Share Split) and
(b) contingent upon the Share Split, the consolidation of every two ordinary shares
in the capital of our Company into one Share.
H-59
This page has been intentionally left blank.
APPENDIX I
UNAUDITED PRO FORMA FINANCIAL STATEMENTS FOR
THE YEAR ENDED DECEMBER 31, 2013
I-i
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Unaudited Pro Forma Consolidated Financial Information of PACC Offshore Services
Holdings Ltd. and its Subsidiaries for the financial year ended 31 December 2013
Index
Page
Report on Examination of Unaudited Pro Forma Consolidated Financial Information. . . . I-1
Unaudited Pro Forma Consolidated Statement of Comprehensive Income. . . . . . . . . . . . I-4
Unaudited Pro Forma Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . I-5
Unaudited Pro Forma Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . I-7
Notes to the Unaudited Pro Forma Consolidated Financial Information . . . . . . . . . . . . . . I-9
I-ii
Report from the Independent Auditors in relation to the
Unaudited Pro Forma Consolidated Financial Information of
PACC Offshore Services Holdings Ltd. and its Subsidiaries
For the financial year ended 31 December 2013
17 April 2014
The Board of Directors
PACC Offshore Services Holdings Ltd.
Dear Sirs:
We have completed our assurance engagement to report on the compilation of pro forma financial
information of PACC Offshore Services Holdings Ltd. (the Company) and its subsidiaries
(collectively, the Group) by the management. The pro forma financial information consist of the
pro forma balance sheet as at 31 December 2013, the pro forma statement of comprehensive
income for the year ended 31 December 2013 and the pro forma statement of cash flows. The
applicable criteria on the basis of which the management has compiled the pro forma financial
information are described in Note 2.
The pro forma financial information has been compiled by the management to illustrate the impact
of the events set out in Note 4, on the Groups financial position as at 31 December 2013 as if the
significant events had taken place on 31 December 2013, and the Groups financial performance
and cash flows for the year ended 31 December 2013 as if the significant events had taken place
at 1 January 2013. As part of this process, information about the Groups financial position,
financial performance and cash flows has been extracted by the management from the Groups
financial statements for the year ended 31 December 2013, on which audit report has been
published respectively.
Managements Responsibility for the Pro Forma Financial Information
The management is responsible for compiling the pro forma financial information on the basis of
the applicable criteria stated in Note 2 of the pro forma financial information.
Practitioners Responsibilities
Our responsibility is to express an opinion about whether the pro forma financial information has
been complied, in all material respects, by the management on the basis of the applicable criteria
stated in Note 2 of the pro forma financial information.
We conducted our engagement in accordance with Singapore Standard on Assurance
Engagements (SSAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus, issued by the Institute of Singapore Chartered
Accountants. This standard requires that the practitioner comply with ethical requirements and
plan and perform procedures to obtain reasonable assurance about whether the management has
complied, in all material respects, the pro forma financial information on the basis of the applicable
criteria stated in Note 2 of the pro forma financial information.
For the purpose of this engagement, we are not responsible for updating or reissuing any reports
or opinions on any historical financial information used in compiling the pro forma financial
information, nor have we, in the course of this engagement, performed an audit or review of the
financial information used in compiling the pro forma financial information.
I-1
Report from the Independent Auditors in relation to the
Unaudited Pro Forma Consolidated Financial Information of
PACC Offshore Services Holdings Ltd. and its Subsidiaries
For the financial year ended 31 December 2013
Practitioners Responsibilities (contd)
The purpose of pro forma financial information included in a prospectus is solely to illustrate the
impact of a significant event or transaction on unadjusted financial information of the entity as if
the event had occurred or the transaction had been undertaken at an earlier date selected for
purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome
of the event or transaction at 31 December 2013 would have been as presented.
A reasonable assurance engagement to report whether the pro forma financial information has
been compiled, in all material respects, on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the management in the compilation
of the pro forma financial information provide a reasonable basis for presenting the significant
effects directly attributable to the event or transaction, and to obtain sufficient appropriate
evidence about whether:
The related pro forma adjustment give appropriate effect to those criteria; and
The pro forma financial information reflects the proper application of those adjustments to the
unadjusted financial information.
The procedure selected depend on the practitioners judgement, having regard to the
practitioners understanding of the nature of the company, the event or transaction in respect of
which the pro forma financial information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion:
(a) The pro forma financial information has been complied:
(i) in a manner consistent with the accounting policies adopted by PACC Offshore Services
Holdings Ltd. and its subsidiaries in its latest audited financial statements, which are in
accordance with the Singapore Financial Reporting Standards; and
(ii) on the basis of the applicable criteria stated in Note 2 of the pro forma financial
information; and
(b) each material adjustment made to the information used in the preparation of the pro forma
financial information is appropriate for the purpose of preparing such unaudited financial
information.
I-2
Report from the Independent Auditors in relation to the
Unaudited Pro Forma Consolidated Financial Information of
PACC Offshore Services Holdings Ltd. and its Subsidiaries
For the financial year ended 31 December 2013
Restriction on Distribution and Use
This report is made solely to you as a body and for the inclusion in the Prospectus (the
Prospectus) to be issued in relation to the proposed initial public offering of the Company in
connection with the Companys listing on the Singapore Exchange Securities Trading Limited.
ERNST & YOUNG LLP
Public Accountants and Chartered Accountants
Singapore
Partner in charge: Yee Woon Yim
I-3
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I-8
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the Unaudited Pro Forma Consolidated Financial Information
for the financial year ended 31 December 2013
The unaudited pro forma financial information should be read in conjunction with the Audited
Financial Statements of PACC Offshore Services Holdings Ltd. (the Company) and its
subsidiaries (collectively the Group) for the financial years ended 31 December 2011, 2012 and
2013 which is set out in Appendix H of the Prospectus.
1 Corporate information
PACC Offshore Services Holdings Ltd. (the Company), which is a limited liability company,
is incorporated and domiciled in Singapore.
The registered office and principal place of business of the company is located at No. 1 Kim
Seng Promenade, #07-02 and #06-01 Great World City, Singapore 237994 respectively.
The principal activities of the company are in the business of general shipping and
investment holding. The principal activities of the subsidiaries are the provision of offshore
marine support services.
The immediate holding company is Pacific Carriers Limited and the ultimate holding
company is Kuok (Singapore) Limited. Both companies are incorporated in the Republic of
Singapore.
2 Basis of preparation of the unaudited pro forma consolidated financial information
The unaudited pro forma consolidated financial information set out in this report has been
prepared for illustrative purposes only. It has been prepared to illustrate what:
(i) the financial results of the Group for the year ended 31 December 2013 would have
been if the significant events discussed in Note 4 had taken place on 1 January 2013;
(ii) the financial position of the Group as at 31 December 2013 would have been if the
significant event discussed in Note 4 had taken place as at the relevant dates
presented; and
(iii) the cash flows of the Group for the year ended 31 December 2013 would have been if
the significant event discussed in Note 4 had taken place on 1 January 2013.
The unaudited pro forma consolidated financial information has been prepared based on the
audited consolidated financial statements of the Group for the financial year ended 31
December 2013; which were prepared in accordance with the Singapore Financial Reporting
Standards, and the following key assumptions have been made:
the significant events discussed in Note 4 take into account the acquisition and disposal
of vessels, based on the delivery date of the vessels as well as the execution date of
the relevant contractual agreement for such acquisition or disposal, within the period
commencing on 1 January 2013 and ending on 17 April 2014, being the date of the
registration of the Prospectus with the Monetary Authority of Singapore;
the milestone payments with respect to agreements for acquisition of vessels take into
account only milestone payments due and payable in the year ended 31 December
2013 and from 1 January 2014 up to 17 April 2014;
with respect to new vessels delivered, the revenue attributed to such vessels from 1
January 2013 was pro-rated based on the actual revenue earned by the vessels or
similar vessels for the actual date of acquisition to 31 December 2013;
I-9
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the Unaudited Pro Forma Consolidated Financial Information
for the financial year ended 31 December 2013
2 Basis of preparation of the unaudited pro forma consolidated financial information (contd)
The audited consolidated financial statements of the Group for the financial year ended 31
December 2013 is a component of the consolidated financial statements of the Group for the
financial years ended 31 December 2011, 2012 and 2013, and were audited by Ernst &
Young LLP Singapore, Public Accountants and Chartered Accountants, Singapore.
The auditors reports on the above financial statements were not subjected to any
qualifications, modifications or disclaimers.
The objective of the unaudited pro forma consolidated financial information is to show what
the historical information might have been had the transaction above taken place on the
respective dates. However, the unaudited pro forma consolidated financial information of the
Group, because of its nature, may not give a true picture of the Groups actual financial
position and results and is not necessarily indicative of the results of the operations or the
related effects on the financial position that would have been attained had the above
mentioned existed earlier.
3 Significant accounting policies
The unaudited pro forma consolidated financial information is prepared using the same
accounting policies as the audited consolidated financial statements of the Group for the
years ended 31 December 2011, 2012 and 2013.
4 Significant events and pro forma financial impact
(i) Acquisition of vessels
(a) Delivery of vessels in 2013
The Group took delivery of seven vessels during the year ended 31 December
2013 with a contracted cost of US$179.4 million. Pro forma revenues, costs of
sales and depreciation were adjusted to illustrate what the financial results of the
Group for the financial year ended 31 December 2013 would have been if the
vessels were delivered on 1 January 2013. The adjustment to the audited
consolidated financial statements for the year ended 31 December 2013 arising
from the delivery of such vessels is as follows:
US$000
Increase in revenue 15,789
Increase in cost of sale (13,148)
As the vessels were delivered in financial year 2013, there were no adjustments
to be made to the unaudited pro forma statement of financial position.
I-10
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the Unaudited Pro Forma Consolidated Financial Information
for the financial year ended 31 December 2013
4 Significant events and pro forma financial impact (contd)
(i) Acquisition of vessels (contd)
(a) Delivery of vessels in 2013 (contd)
Additional pro forma depreciation expenses of US$4.2 million have been adjusted
for in the pro forma consolidated cash flow statement. Cash generated from
operating activities were adjusted to show the increase in receivables of US$15.8
million and the increase in payables of US$8.9 million as these were assumed to
be outstanding for purposes of the unaudited pro forma cash flow statement.
(b) Agreement entered into to acquire vessels
The Group entered into contracts at various dates from 1 January 2013 to 17 April
2014 to acquire nine vessels with a contracted cost of US$309.5 million. At the
date of this report, the Group has not taken delivery of these vessels and no
revenue has been earned. There were no adjustments made to the unaudited pro
forma consolidated statement of comprehensive income.
For purposes of the unaudited pro forma consolidated statement of financial
position and unaudited pro forma consolidated cash flow statement, fixed assets
were adjusted to reflect progress payments of US$44.3 million made subsequent
to financial year 2013 in relation to vessels under construction. The acquisition of
fixed assets was assumed to be funded through bank borrowings.
(ii) Disposal of vessels
(a) Sale of vessels in 2013
The Group disposed four vessels to third parties for an aggregate consideration of
US$6.3 million and six vessels to two joint ventures (being disposal of five vessels
to POSH Terasea Pte. Ltd. group and one vessel to PT. Win Offshore) in financial
year 2013 for an aggregate consideration of US$148.5 million. Pro forma
revenues, cost of sales, gains on disposal of vessels and share of results of joint
ventures were adjusted to illustrate what the financial results of the Group for the
financial year ended 31 December 2013 would have been if the vessels were
delivered to third parties and joint ventures on 1 January 2013.
The five vessels were sold to POSH Terasea Pte. Ltd. group on 15 March 2013 and
the remaining vessel was sold to PT. Win Offshore on 7 October 2013. For the
purposes of these pro forma financial statements, such disposals are assumed to
have taken place on 1 January 2013. Accordingly:
with respect to the five vessels sold to POSH Terasea Pte. Ltd. group, for the
period 1 January 2013 up to 15 March 2013, the revenue and cost of sales
have been reversed and net profits attributable to such vessels are treated as
part of the share of joint ventures results; and
with respect to the vessel sold to PT. Win Offshore, for the period 1 January
2013 up to 7 October 2013, the revenue and cost of sales have been
reversed and net profits attributable to such vessel are treated as part of the
share of joint ventures results.
I-11
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the Unaudited Pro Forma Consolidated Financial Information
for the financial year ended 31 December 2013
4 Significant events and pro forma financial impact (contd)
(ii) Disposal of vessels (contd)
(a) Sale of vessels in 2013 (contd)
The gain on disposal of vessels is assumed to have taken place on 1 January 2013
on which date, the vessels would be carrying a higher net book value compared to
its net book value on the actual date of disposal. Consequently, for the purposes
of these pro forma financial statements, the gain on disposal of vessels is reduced
correspondingly. Gains from the sale of the five vessels to POSH Terasea Pte. Ltd.
group will be recognised in the year ending 31 December 2014 upon contribution
in full by the joint venture partner and therefore no adjustments have been made
in this respect.
The adjustment to the audited consolidated financial statements for the year
ended 31 December 2013 arising from the disposal of such vessels is as follows:
US$000
Decrease in revenue (14,115)
Decrease in cost of sale 10,617
Increase in share of joint ventures results 3,261
Decrease in gain on disposal of vessels (730)
As the disposal of vessels to third parties and the two joint ventures had taken
place in financial year 2013, there were no adjustments to be made to the
unaudited pro forma statement of financial position.
Pro forma depreciation expenses of US$2.0 million, share of results of joint
ventures of US$3.3 million and gain on disposal of vessels of US$0.7 million have
been adjusted for in the unaudited pro forma consolidated cash flow statement.
(b) Agreement entered into to dispose vessels
The Group entered into agreements at various dates from 1 January 2013 to 17
April 2014 for the disposal of eight vessels to third parties for an aggregate
consideration of US$39.4 million, which completion date of disposal is after 17
April 2014.
Pro forma revenues, costs of sales and gains on disposal of vessels were adjusted
to illustrate what the financial results of the Group for the year ended 31 December
2013 would have been if the vessels were disposed on 1 January 2013.
The adjustment to the audited consolidated financial statements for the year
ended 31 December 2013 arising from such agreements for the disposal of
vessels is as follows:
US$000
Decrease in revenue (13,189)
Decrease in cost of sale 8,308
Increase in gain on disposal of vessels 4,184
I-12
PACC OFFSHORE SERVICES HOLDINGS LTD.
and its subsidiaries
Notes to the Unaudited Pro Forma Consolidated Financial Information
for the financial year ended 31 December 2013
4 Significant events and pro forma financial impact (contd)
(ii) Disposal of vessels (contd)
(b) Agreement entered into to dispose vessels (contd)
Fixed assets of US$10.9 million and fixed assets classified as held-for-sale of
US$24.3 million with an aggregate net book value of US$35.2 million at 31
December 2013 were adjusted to illustrate the disposal of these eight vessels.
Proceeds from disposal of vessels of US$39.4 million were assumed to be used to
repay bank borrowings.
A reduction in pro forma depreciation expenses of US$3.3 million and a gain
arising from the disposal of vessels of US$4.2 million have been adjusted for in the
unaudited pro forma consolidated cash flow statement. It is assumed that the net
cash inflows of US$31.1 million from these transactions were used to repay bank
borrowings.
I-13
This page has been intentionally left blank.
APPENDIX J
LIST OF MANDATED INTERESTED PERSONS
KSL
Associates of KSL, namely:
o Agri Borneo Fertilizers S/B
o Agri Export (M) Sdn Bhd
o Agri-Bintulu Fertilizers Sdn Bhd
o Agrifert Malaysia Sdn Bhd
o All New Ltd
o Baylite Company Limited
o Camsward Pte Ltd
o Eden Shipping Limited
o Eternal Fame International Limited
o Helmering Investments Limited
o Jade Assets Limited
o Kuok Ventures Pte Ltd
o Mawar Juara Sdn Bhd
o Mee Lee Investment Pte Ltd
o MK Distripark Pte Ltd (in liquidation)
o Neumetal Pte Ltd
o Neumetal Venture Pte Ltd
o NewQuest (Trading) Pte Ltd
o NewQuest Vietnam Co Ltd
o Newship Marine Services Pte Ltd
o Pacific China Holdings (Zhoushan) Pte Ltd
o Pacific China Holdings (Zhuhai) Pte Ltd
o Palm Mach Sdn Bhd (formerly known as Intan Karang Sdn Bhd)
o PaxOcean Engineering Zhoushan Co., Ltd
o Petawa Sdn Bhd
o PT Agri Indomas
o PT Agri Timur Mas
o RiverPine (PTC) Ltd
o Seri Bayangan Sdn Bhd
o Shalin Limited
o Sure Easy Investments Limited
o Tanjung Agencies Sdn Bhd
o TMKay Fertilizers Sdn Bhd
o PT Pupuk Hikay
o Direct Plus Investments Ltd
o Singapore Adhesives & Chemicals Pte Ltd
o Agri-Sabah Fertilizer Sdn Bhd
o First Property Holdings Pte Ltd
o Newship Inc.
o Cindai Pilihan Sdn Bhd
o JB Distripark Sdn Bhd
o Narsco-Kuok Fertilizers Sdn Bhd
J-1
o PaxOcean Engineering Zhuhai Co., Ltd
o Bintulu Adhesives and Chemicals Sdn Bhd
o Timpano Holdings Limited
o Kerry Leisure Concepts Pte Ltd
o Faralon Holdings Limited
o Allgreen (Yangon) Pte. Ltd.
o Allgreen Properties (Chengdu) Pte. Ltd.
o Allgreen Properties (Qinhuangdao) Pte. Ltd.
o Allgreen Properties (Shanghai) Pte. Ltd.
o Allgreen Properties (Shenyang) Pte. Ltd.
o Allgreen Properties (Tianjin) Pte. Ltd.
o Allgreen Properties (Vietnam) Pte. Ltd.
o Allgreen Properties Limited
o Allgreen Property Management Services Co., Ltd.
o Cuscaden Properties Pte Ltd
o Tanglin Place Development Pte Ltd
o Asian Blending Pte Ltd
o Belfin Investment Pte Ltd
o Benefit Investments Pte Ltd
o Brookvale Investments Pte Ltd
o Cairnhill Green Pte Ltd
o Eastwood Green Pte Ltd
o Green Bay Pte Ltd
o Holland Village Development Pte Ltd
o Jeston Investments Pte Ltd
o Leo Property Management Pte Ltd
o Midpoint Properties Limited
o Newship (Malaysia) Sdn Bhd
o Newship Agencies (Thailand) Co Ltd
o Newstar Agencies Sdn Bhd
o Petals Development Pte Ltd
o Rufiji Pte Ltd
o SIS 88 Pte Ltd
o Sky Top Investments Pte. Ltd.
o Valleypoint Investments Pte Ltd
o Wyndham Construction (Pte) Ltd
o Allgreen-Vuong Thanh Company Limited
o Allgreen-Vuong Thanh Properties Company Limited
o Asiawide Resources Pte Ltd
o Arcadia Development Pte. Ltd.
o Bukit Batok Development Pte Ltd
o Allgreen-Vuong Thanh-Trung Duong Co., Ltd.
o PT Tri Persada Mulia
o Thomson Peak Pte Ltd
o Petanak Enterprises Sdn. Bhd.
o Devonshire Peak Pte Ltd
o Edensworth Holdings Pte Ltd
o Silver Pebble Holdings Limited
o Boonridge Pte Ltd
o Golden Age Joint-Venture Co., Ltd
J-2
o Atticus Investments Pte Ltd
o Gold Pilot International Limited
o Fast Era Ltd
o Prime City Holdings Limited
o Richy Fast Limited
o Borwick Pte Ltd
o PT Kencana Coal (in liquidation)
o Dignitary Holdings Limited
o Flory Co. Inc.
o Bright Tone Investments Ltd.
o Silver Express Holdings Ltd.
o CMR Pacific Electrical Equipment Co., Ltd
o CMR Pacific Pte Ltd
o Tianjin Kerry Real Estate Development Co., Ltd
o Park Speed Ltd
o PCL
o Acrux Maritime Pte Ltd
o Adara Maritime Pte Ltd
o Alam Permai Maritime Limited
o Alam Pesona Maritime Limited
o Alam Pintar Maritime Limited
o Alkaid Maritime Pte Ltd
o Alnath Maritime Pte Ltd
o Altair Maritime Pte Ltd
o Amazon Shipping Limited
o Antares Maritime Pte Ltd
o Antlia Shipping Limited
o Aquarius Shipping (UK) Limited
o Aquila Shipping (UK) Limited
o Aries Shipping Limited
o Athena Maritime Pte Ltd
o Augusteine Ltd
o Avill Shipping Limited
o Avon Shipping Limited
o Bayfield Pte Ltd
o Bilis Shipping (2012) Pte. Ltd.
o Bourne Shipping Limited
o Brighton Keys Holdings Limited
o Brown Sugar Company Limited
o Eratan Shipping Ltd
o Flores Shipping Pte Ltd
o Heron Pte. Ltd.
o Leadon Shipping Limited
o Lombok Shipping Pte Ltd
o Moulex Investments Pte Ltd
o Pac Antares Limited
o PACC Banda Pte Ltd
o PACC Container Line Pte Ltd
o PACC Orient Trading (Shenzhen) Co. Ltd
o PACC Ship Managers (Beijing) Co. Limited
J-3
o PACC Ship Managers Pte Ltd
o Paccship (UK) Limited
o Pacific Carriers Investments Limited
o Parang Shipping Pte. Ltd.
o Paulownia Shipping Limited
o PaxOcean Engineering Pte Ltd
o PaxOcean Marine & Offshore Pte. Ltd.
o PaxOcean Holdings Pte. Ltd.
o PCL (Shipping) Pte. Ltd.
o PCL Investments Inc
o PCL Shipping Inc.
o PCL Tankers Pte Ltd
o Petrogem Shipping Pte. Ltd.
o Petroglo Shipping Pte.Ltd.
o Petroil Shipping Pte. Ltd.
o Petroline Shipping Pte. Ltd.
o Petrone Shipping Pte. Ltd.
o Petrosea Shipping Pte. Ltd.
o PT Indopacc Global
o PUK (A) Limited
o Schedar Shipping Limited
o Seginus Shipping Limited
o Shaula Shipping Pte. Ltd.
o Southern Pasifika Shipping Pte Ltd
o Suhail Shipping Pte. Ltd.
o Sunchoice Enterprises Limited
o Sunstream Pte Ltd
o The Alam Permai Maritime Limited Partnership
o The Alam Pesona Maritime Limited Partnership
o The Alam Pintar Maritime Limited Partnership
o Pacific Peregrine Shipping Pte. Ltd.
o Advantec Shipping Pte Ltd (in liquidation)
o Asian Sealand Infrastructure & Construction Sdn Bhd
o Crown Shipping Pte Ltd
o DDW-PaxOcean Asia Pte. Ltd.
o DDW-PaxOcean Investments Pte Ltd
o DDW-PaxOcean Shipyard Pte. Ltd.
o DP Marine Pte Ltd
o DP Offshore Engineering Pte Ltd
o DP Shipbuilding and Engineering Pte Ltd
o Elastrade (Pte.) Ltd.
o Grandsand Construction Pte Ltd
o Heng Huat Shipbuilding & Construction Pte Ltd
o Intone Pte Ltd
o Labroy Bulk Carriers Pte Ltd
o Labroy Ship Services Pte Ltd
o Labroy Shipping Pte Ltd
o MTS Marinetech Pte Ltd (in liquidation)
o Pan-United Venture Pte Ltd
o PT Drydocks World Pertama
J-4
o PT Graha Trisaka Industri
o PT Nanindah Mutiara Shipyard
o PT Pilar Sukses Industri
o PT Segara Gloria Anugrah Marine
o Seaspec Marine Services Pte Ltd
o Well Commercial Pte Ltd (in liquidation)
o Yukon Marine Pte Ltd
o PT Pelayaran Kencana Gloria Marine
o Hylynx Pte Ltd
o Datum Pointt Holdings Pte Ltd
o Datum Pointt Pte Ltd
o Kleans Corporation Pte Ltd (in liquidation)
o Kmech Corporation
o Kmech Corporation Pte Ltd
o Nexus Sealand Engineering Sdn Bhd
o Tellus Engineering and Construction Pte Ltd
o Alnath (Singapore) Pte Ltd
o Alnath Investments Limited
o Altamira Shipping Pte Ltd
o Atlantic Altamira Pte Ltd
o Atlantic Chartering Company Pte Ltd
o Atlantic Ensenada Pte Ltd
o Atlantic Manzanillo Pte Ltd
o Atlantic Mazatlan Pte Ltd
o Atlantic Merida Pte Ltd
o Atlantic Mexico Pte Ltd
o Atlantic Might Shipping S.A.
o Atlantic Monterrey Pte Ltd
o Atlantic Shipping Pte Ltd
o Atlantic Veracruz Pte Ltd
o Atlantic Yucatan Pte Ltd
o Commonwealth Aircraft Leasing Inc.
o Majesty Oceanic S.A.
o Manzanillo Shipping Limited
o Monterrey Shipping Pte Ltd
o Pacnav de Mexico S.A. de C.V.
o Pacnav de Veracruz S.A. de C.V.
o Pacnav S.A.
o Progreso Shipping Pte Ltd
o Selangat Shipping Pte Ltd
o Sepat Shipping Pte Ltd
o Servicios Corporativos Pacnav S.A. de C.V
o Servicios Maritimos Pacnav S.A. de C.V
o Tampico Shipping Pte Ltd
o Veracruz Shipping Pte Ltd
o P.T. Intakarindo
o P.T. Jasatama Kemasindo
o P.T. Jaya Prima Nusantara
o P.T. Maju Nusantara Prima
o P.T. Newship Nusabersama
J-5
o P.T. Siak Haska Kemassindo
o Pacver S.A. de C.V
o Postag Ventures Sdn Bhd
o Dinar Venture Pte Ltd
o Terminal Maritima de Veracruz S.A. de C.V
o Granelera Manzanillo S.A. de C.V
o Infraestructura Portuaria Del Golfo S.A. de CV
o Multiver de Coatzacoalcos S.A. de C.V
o Multiver de Tuxpan S.A de C.V
o Multiver S.A. de C.V
o PACC Shipping (Phils.), Inc
o Servicios Administrativos TMV S.A. de C.V
o Servicios Integrados de Manzanillo S.A. de C.V
o Servicios Integrados de Tuxpan S.A. de C.V
o Ambi Shipping Pte Ltd
o Beng Kuang Marine Limited
o Terminal Maritima De Topolobampo S.A.de C.V.
MBC
Associates of MBC, namely:
o Alam Budi Sdn Bhd
o Alam Gula Sdn Bhd (in liquidation)
o Alam Senang Sdn Bhd (in liquidation)
o Awanapuri Sdn Bhd
o Bakti Shipping Pte Ltd
o Bistari Shipping Sdn Bhd
o Everspeed Enterprises Limited
o Lightwell Shipping Inc
o MBC Equity Management Sdn Bhd (in liquidation)
o MBC Padu Sdn Bhd
o New Johnson Holdings Limited
o Pacific Ship-Managers Sdn Bhd
o PSM Perkapalan Sdn Bhd
o Spectrapoint Sdn Bhd
o Atlantic Dream Pte Ltd
o Atlantic Progress Pte Ltd
o Brilliant Sun Shipping Pte Ltd
o Eminence Bulk Carriers Pte Ltd
o Novel Bright Assets Limited
o Progress Shipping Pte Ltd
o Brilliant Star Shipping Pte Ltd
o Madu Shipping Pte Ltd
o Molek Shipping Pte Ltd
o Sejahtera Shipping Pte Ltd
Raffles Bunkering Pte. Ltd.
J-6
APPENDIX K
INDEPENDENT VALUATION CERTIFICATE
We have obtained charter-free valuations for the vessels we operated as of December 31, 2013,
including 45 vessels owned by our joint ventures (of which one vessel is undergoing conversion
into an accommodation vessel and one vessel is chartered by a joint venture as a charterer on a
long-term charter), as well as vessels we had on order as of December 31, 2013, to reflect the
value that would be obtained from selling these vessels in the market on a willing buyer, willing
seller basis without any charter agreements in place. The valuations could be materially affected
should any of the vessels be tendered for sale with a pre-existing charter attached.
These vessels were valued by the Independent Valuer as at December 31, 2013 and are not a
guide to the market values of the vessels at any other point in time. The valuation was based on
recent transactions, negotiations and brokers market knowledge.
No physical inspection or examination of the vessels classification records was performed.
Instead, the valuations were based on various assumptions including, but not limited to, that a
sale is on a willing buyer, willing seller basis with the relevant vessel being in good and
seaworthy condition with delivery in an acceptable area, free of encumbrances, maritime liens and
any other debts whatsoever, ready to load any permissible cargo and prepared for prompt charter
free delivery in a commercial loading zone. The valuation was made on the basis of a sale of an
individual vessel. Should more than one vessel of the same type be tendered for sale at the same
time, there is no guarantee that the valuation would be applicable. This valuation methodology is
based on customary methods used in the shipping industry which is different from methodology
commonly used in valuing other asset classes, for example, real estate property. As the net book
values of vessels are not taken into account when valuing vessels, the valuation of the vessels will
be different from their net book values. For the full terms and methodology of the Independent
Valuer, please see their valuation certificate which is reproduced in full in this Appendix. The terms
and methodology in the valuation certificate are material to the valuations and should be fully
understood.
Further there can be no assurance that the valuations prepared by the Independent Valuer reflect
the true value of the vessels, or that other independent valuers would have arrived at the same
valuation.
The independent valuation certificate has been commissioned from the Independent Valuer on a
charter free basis. This valuation method (explained in full in the valuation certificate in this
Appendix) does not take into account any effect or constraint which flows from the leases which
attach to the vessels. Valuations assessed on a charter attached basis can vary materially from
valuations based on charter free methodology. Accordingly, the basis on which the independent
valuation certificate has been prepared may not be a true indication of the vessels value to us or
the price it may bring upon a sale in the market.
K-1
K-2
CLARKSON VALUATIONS LIMITED
St. Magnus House 3 Lower Thames Street London EC3R 6HE
+44 {01 20 7334 0000
www.clarksons.com
No.
1
2
3
4
PACC Offshore Services Holclings Pte. Ltd.
(to be renamed P ACC Offshore Services Holclings Ltd.)
I Kim Seng Promenade
#07 -02 Great World City
Singapore 237994
Ref: cvl/9475-1 3
Dear Sirs,
28
1
h March 2014
ln accordance with your request and subject to our Terms and Conditions which you
have accepted, we have made an assessment of the below vessels by coll ating
brokers' price ideas and using these coupled with brokers' market knowledge as our
reference points. We seek then to validate these ideas and that knowledge, where
possible and appropriate, from details held on our database, from information shown
in the relevant works of reference in our possession and from particulars given to us
for the preparation of these valuations.
We should make it clear that we have not made a physical inspection of the below
vessels, nor have we inspected the vessels' Classification Records but we have
assumed, for the purposes of this valuation, that the vessels were in good and
seaworthy condition.
After consideration, we are of the opinion that the approximate market val ues of the
below mentioned vessels, as at 31
51
December 2013, on the basis of prompt
charterfrce delivery, as between a willing Sell er and a willing Buyer for cash payment
under norma.! commercial terms, were:
Offshore Supply Vessels
Loa(m) Beam(m)
Vessel Current Capacity
(Rounded (Rounded
Cfree
Dwt Built Builder to one to one
Type Name (unit)
decimal decimal
Value US$
place) place)
AHTS
POSH
2,629 2010 Yue.xin S.B.
16,000
74.5 17.2 53,000,000
Conquest BHP
AHTS
POSH
2,577 2010 Yue.xin S.B.
16,000
74.5 17.2 53,000,000
Constant BHP
POSH
Universal
16,000
AHTS
Champion
3,174 2011 Shipbuilding
BHP
75.0 18.0 50,350,000
Corp.
POSH
Universal
16,000
AHTS 3,174 2011 Shipbuilding 75.0 18.0 50,350,000
Commander
Corp.
BHP
(y
POSH
PaxOcean
16,000
s3,soo,oo{ AHTS
Courage
2.533 2012 Engineering
BHP
74.5 17.2
Zhuhai
V1
If
I
Clarkson Valuations limited England No 3354934 : Reg1stered office as above
f
K-3
POSH
PaxOcean
16,000
6 AHTS
Concorde
3,000 2012 Engineering
BHP
74.5 17.2 53,500,000
Zhuhai
POSH
P.T.
12,240
7 AHTS
Persistence
3,197 2013 Nanindah
BHP
76.0 18.5 31 ,000,000
Mutiara
POSH
PaxOcean
8.000
8 AHTS
Resolve
2,457 2011 Engineering
BHP
71 .5 16.6 20,000,000
Zhuhai
POSH
PaxOcean
8,000
9 AHTS
Resolute
2.457 2011 Engineering
BHP
71 .5 16.6 20,000,000
Zhuhai
PaxOcean
8,000
10 AHTS POSH Rapid 2,598 2011 Engineering
BHP
71 .5 16.6 20,000,000
Zhuhai
11 AHT Salvi rile 892 2005
Guangxi 5,000
50.0 12.6 5,500,000
Guij iang BHP
12 AHT Salvision 892 2005
Guangxi 5,000
50.0 12.6 5,500,000
Guij iang BHP
POSH
PaxOcean 670m
2
13 PSV
Shearwater
3,200 2013 Engineering Deck 78.7 16.0 29,000,000
Zhuhai Cargo
Jingj iang
785m
2
14 PSV POSH Skua 4,100 2013 Deck 78.0 18.6 23,000,000
Nanyang
Cargo
Mud boat Jingj iang
785m
2
15 POSH Gannet 4,100 2013 Deck 78.0 18.6 29,500,000
{PSV) Nanyang
Cargo
POSH
PaxOcean 670m
2
16 PSV
Sandpiper
3,200 2013 Engineering Deck 78.7 16.0 29,000,000
Zhuhai Cargo
POSH Fulmar
PaxOcean
17 PSV
(Hull PX 1018}
3,200 2013 Engineering 78.7 16.0 29,000,000
Zhuhai
POSH Pelican
PaxOcean
18 PSV
{Hull PX 1019}
3,200 2013 Engineering 78.7 16.0 29,000,000
Zhuhai
19 PSV
Caballo
3,221 2011
Fujian
75.0 17.3 19,000,000
Babieca Southeast
20
Mud boat
Don Casiano 2,750 2010
Fujian
70.0 16.8 22,500,000
(PSV) Mawei
21 PSV
Caballo
3,300 2010 Bharati S.Y. 73.6 16.0 26,000,000
Argento
22
Mud boat Caballo
2,346 2008 BenderS.B. 64.0 16.5 20,950,000
(PSV) Monoceros
23
Mud boat Caballo
2,828 2010 Yuexin S.B. 6g.9 16.6 25,500,000
(PSV) Copenhagen
24
Mudboat Caballo
2,828 2008 Yuexin S.B. 69.9 16.6 24, 250,000
{PSV) Scarto
25
Mudboat
Rodrigo DPJ 2,346 2008 Bender S.B. 64.0 16.5 20,950,000
{PSV)
Caballo Grano
Fujian
10,800
26 AHTS
de Oro
2,455 2008 Crown
BHP
70.7 16.0 28,000,000
Ocean
WIN POSH
PaxOcean
8,000
27 AHTS 2,278 2012 Engineering 71 .5 16.6 20,500,000
J"
Rampart
Zhuhai
BHP
f
'J!
WINPOSH
PaxOcean
8.000
AHTS
Resolve
2,449 2012 Engineering
BHP
71 .5 16.6 20,500,000
Zhuhai
!I f
K-4
Vessel
No.
Type
30
Submersible
Barge
31
Submersible
Barge
32 AHT
33 AHT
34 AHT
35 AHT
36 AHT
37 AHT
38 AHT
39 AHT
40 AHT
41 Towing Tug
42 Towing Tug
43 Towing Tug
44 Towing Tug
45 Towing Tug
46 Towing Tug
(
1
Deck/Tank
Barge
lA
WIN POSH
Regent
Current
Name
POSH Giant
I
POSH Giant
II
POSH
Achiever
POSH
Assistor
Maritime
Putri
Maritime
Putra
POSH
Pahlawan
POSH
Panglima
Salvaree
Maritime
Mesra
POSHMulia
Greenville
126
Greenville
168
Maritime
Ratu
Maritime
Raj a
Maritime
Raina
Salva lour
Maritime
Honour
Transportation and Installation
Loa (m) Beam (m)
Capacity
(Rounded (Rounded
Cfree
Dwt Built Builder toone toone
(unit)
decimal decimal
Value US$
place) place}
20,000 2008
Pacific Ocean
122.0 36.5 9,250,000
Eng.
20,000 201 1
Jingjiang
122.0 36.5 11,250,000
Nanyang
1.225 2010 Yuexin S.B.
8.000
51 .0 15.0 12,600,000
BHP
1.186 2010 Yuexin S.B.
8,000
51 .0 15.0 12,600,000
BHP
343 2005
Guangxi 5.000
40.0 11.4 4,600,000
Guijiang BHP
334 2005
Guangxi 5,000
40.0 11.4 4,600,000
Guijiang BHP
700 2010
Cheoy Lee 5,000
50.0 12.6 7,750,000
S.Y. BHP
878 2010
Cheoy Lee 5,000
50.0 12.6 7,750,000
S.Y. BHP
838 2000
President 4,040
48.0 13.0 3,350,000
Marine BHP
329 2009
Wuxue Janda 4,000
41.8 10.0 4,250,000
Shipyard BHP
316 2009
WuxueJanda 4,000
41 .8 10.0 4,250,000
Shipyard BHP
723 1997 Wuxl Jiangsu
3,200
34.9 10.6 1,450,000
BHP
371 1997 Wuxl Jiangsu
3,200
34.9 10.6 1,450,000
BHP
460 2004 Yantai Salvage
3,200
36.1 11.2 1,800,000
BHP
460 2005 Yantai Salvage
3,200
36.1 11.2 1,800,000
BHP
270 2006
Rushan 3,200
32.0 9.2 1,950,000
Shipbuilding BHP
893 2000
President 2,700
48.0 13.0 2,600,000
Marine BHP
13,000 2012
Jiangsu
100.6 36.6 3,400,000
Zhong xu
-
'
K-5
48
Decl</Tank Maritime
11,500 2007 Jlnsheng Ships 100.6 30.5 2,100,000
Barge Glory
Deck/Tank Maritime
Taixing
49
Barge Pride
11,500 2007 Ganghua 100.6 30.5 2,100,000
Shipyard
50
Deck/Tank Maritime
11,000 2011
Taizhou
100.6 30.5 2,350,000
Barge Courage Xinggang SY
51
Deck/Tank Maritime
7,700 2007
Nantong
86.0 27.4 1,450,000
Barge Faith Yahua
52
Deck/Tank Maritime
7.700 2008
Nantong
86.0 27.4 1,500,000
Barge Icon Yahua
53
Deck/Tank Maritime
7,700 2008
Nantong
86.0 27.4 1,500,000
Barge Topaz Yahua
54
Deck/Tank Maritime
7,700 2007
Nan tong
86.0 27.4 1,450,000
Barge West Yahua
Decl</Tank Maritime
Tai xing
55
Barge Falcon
5,400 2008 Ganghua 76.2 24.4 1,050,000
Shipyard
Deck/Tank Maritime
Taixing
56
Barge Hawk
5,400 2008 Ganghua 76.2 24.4 1,050,000
Shipyard
57
Deck/Tank Maritime
5,400 2005
Hangzhou
76.2 24.4 950,000
Barge Swift Dongfeng
58 Towing Tug
Mandiri
245 2006 Wuhu Dajiang
3,200
2g.o 9.0 1,350,000
Tango 3 BHP
59 Towing Tug Tango 7 138 2009
Pacific Ocean 3,200
29.5 9.0 1,900,000
Eng. BHP
CoaVBulkl
Mandlri
Nantong
60 Container
Bravo2
12.000 2006 Tianshenggang 111.3 28.0 1,500,000
Barge Shipyard
CoaVBulkl
Mandiri
Nanjing
61 Container
Bravo4
12,000 2006 Yonghua 111.3 28.0 1,500,000
Barge Shipbuilding
CoaVBulkl
Pacific Ocean
62 Container Bravo 7 12,000 2009
Eng.
111.3 28.0 2,000,000
Barge
63
Deck/Tank WIN POSH
12,200 2006 P.T. Nanindah 100.6 33.5 2,100,000
Barge 3301
Submersible
64
Launch POSH
30.500 2012
cosco
150.0 40.0 25,000,000
Float over Mogami Zhoushan
Barge
Universal
12.000
65 AHT Salveritas 2,804 2007 Shipbuilding
BHP
68.0 16.4 26,500,000
Corp.
Universal
12,000
66 AHT Salviceroy 2,804 2007 Shipbuilding 68.0 16.4 26,500,000
Corp.
BHP
Universal
12,000
67 AHT Salvigilant 2,804 2007 Shipbuilding 68.0 16.4 26,500,000
Corp.
BHP
68 AHT Salvanguard 3,197 2004
President 13,500
75.0 18.0 26,250,000

Marine BHP
lg
AHT Salviscount 3,197 2004
President 13,500
75.0 18.0 26,250,000
Marine BHP
' {

..
(
K-6
70 AHT
Terasea
3.369 2013
Japan Marine 16,300
75.3 18.0 45,000,000
Falcon United BHP
71 AHT
Terasea
3,381 2013
Japan Marine 16,300
75.3 18.0 45,000,000
Hawk United BHP
72 Towing Tug
Tenaga
1993
President 2,400
27.0 8.6 700,000
Maju Marine BHP
73
Deck!Tank Maritime
8,000 2004
Hangzhou
86.0 27.4 1,100,000
Barge East Dongfeng
74
Deckffank Maritime
8.000 2004
Hangzhou
86.0 27.4 1,100,000
Barge Hope Dongfeng
Terasea
Japan Marine 16,300
75 AHT Eagle 2013 75.3 18.0 45,000,000
(Hu1178)
United BHP
Offshore Accommodation
loa(m) Beam(m)
Current Capacity
(Rounded (Rounded
Cfree
No. Vessel Type
Name
Owt Built Builder
(unit)
toone toone
Value US$
decimal decimal
place) place)
76
Accommodation
PAC Bintan 3,650 1999
Jiangsu
191 PAX 83.5 20.0 18,500,000
Vessel Yangzij iang
77
Accommodation
POSH Bali 3,800 1997
Jiangsu
191 PAX 90.5 20.0 17,000,000
Vessel Yangzijiang
78
Accommodation POSH
3,813 1998
Jiangsu
197 PAX 90.6 20.0 17,100,000
Vessel Bangka Yangzijiang
79
Accommodation
PIN Natuna 2010
Pacific
300 PAX 95.4 30.0 23,000,000
Vessel Ocean Eng.
Jasa Selia
Accommodation
(to be
Jiangsu
80 renamed 1998 198 PAX 90.6 20.0 17,100,000
Vessel
POSH
Yangzij iang
Bawean)
Harbour Services and Emergency Response
loa(m) Beam (m)
Current Capacity
(Rounded (Rounded
Cfree
No. Vessel Type
Name
Owt Built Builder
(unit)
toone to one
Value US$
decimal decimal
place) place)
Utility I
Master Boat 1.250
81 Emergency Salvixen 1982
Builders BHP
33.5 7.9 250,000
Support
82 Workboat Work Boat I 1989 Unknown 14.3 185,000
Utility/
Cheoy Lee
83 Emergency Salvern 2002 12.5

Support
Shipyards
( I"
ASDTug
POSH
314 2011 Yuexin S.B.
5.150
32.0 11.6
Humility BHP
v
t
K-7
85 Harbour Tug
POSH
195 2010
Pacific 4,000
30.5 9.8 4,900,000
Harvest Ocean Eng. BHP
86 ASDTug
POSH
314 2012 Yuexin S.B.
5,150
33.1 11.6 6,500,000
Helper BHP
87 Harbour Tug PVV Rapi 2007 Fulsail
1,000
16.0 6.0 460,000
BHP
88 Harbour Tug PWRajin 2007
Pacific 1,000
16.0 6.0 460,000
Ocean Eng. BHP
89 Harbour Tug lntan 2008
Bengbu 1,000
16.0 6.0 675,000
Shenzhou BHP
90 Harbour Tug lkhlas 2008
Bengbu 1,000
16.0 6.0 675,000
Shenzhou BHP
91 Crane Barge Semco L301 1973
Tsuneishi 300 Ton
52.5 22.8 1,100,000
Shipbuilding Sheerleg
92 Crane Barge Semco L88 1994
Golden 60Ton
48.8 18.2 450,000
Summit Pte Sheerleg
93 Crane Barge PVV L-1501 1977 Hyundai H.l. 1,500 MT 80.0 36.0 2,500,000
94 Crane Barge PVV L801 2007 YulimCo. 800MT 75.0 32.0 13,000,000
95
ASDTug /
PVVTekun 197 2004 Jurong S.Y.
3,600
30.5 9.6 3,650,000
Harbour Tug BHP
96
ASDTug /
PVVTeguh 197 2005 Jurong S.Y.
3,600
30.5 9.6 3,850,000
Harbour Tug BHP
97
ASD Tug /
PWTegap 197 2004 Jurong S.Y.
3,600
30.5 9.6 3,650,000
Harbour Tug BHP
98
ASDTug/
PWTegas 197 2005 Jurong S.Y.
3,600
30.5 9.6 3,850,000
Harbour Tug BHP
99
ASDTug /
PVV Zeta 109 2009
Bengbu 3,200
25.8 9.5 3,950,000
Harbour Tug Shenzhou BHP
100
ASDTug /
PWGamma 199 2010
Wuxi 4,000
30.5 9.8 5,150,000
Harbour Tug Jlangsu BHP
101
ASDTug /
PVV Kappa 196 2010
Wuxi 4,000
30.5 9.8 5,150,000
Harbour Tug Jiangsu BHP
102 Utility Tug
PW
438 2009
Wuxl 2,800
41 .8 10.0 2,800,000
Resource Jlangsu BHP
103 Utility Tug PW Reliance 329 2008
Wuxi 3,600
41.8 10.0 4,000,000
Jiangsu BHP
104
ASDTug /
PWiota 198 2012
Bengbu 3,600
29.4 9.8 5,000,000
Harbour Tug Shenzhou BHP
105
ASDTug /
PVV Lambda 198 2012
Bengbu 3,600
29.4 9.8 5,000,000
Harbour Tug Shenzhou BHP
ASDTug I
PaxOcean
3.600
106 PWTenang 2012 Engineering 29.0 10.5 5,000,000
f
Harbour Tug
Zhuhai
BHP
11 [}o1
ASDTug /
PaxOcean
3,600
Harbour Tug
PWTenaga 2012 Engineering
BHP
29.0 10.5 5,000,000
Zhuha1
J/1
I '
I
K-8
ASDTug I
PaxOcean
3,600
108 PIN Teraju 2013 Engineering 29.0 10.5 5,200,000
Harbour Tug
Zhuhai
BHP
ASDTug I
Pax Ocean
3,600
109 PIN Tepat 2013 Engineering 29.0 10.5 5,200,000
Harbour Tug
Zhuhal
BHP
110
ASDTugl
Sea Basset 109 1995
Matsuura 3,000
24.0 9.0 1,500,000
Harbour Tug Zosen BHP
ASDTug I
PaxOcean
4,000
111 PIN Benar 186 2013 Engineering 29.0 10.5 5,650,000
Harbour Tug
Zhuhai
BHP
ASDTug l
PIN Berani PaxOcean
4,000
112 (Hull PX 2013 Engineering 29.0 10.5 5,650,000
Harbour Tug
1026) Zhuhai
BHP
Vessels to be Delivered
Loa(m) Beam(m)
Current Capacity
(Rounded (Rounded
CfreeVatue
No. Vessel Type Dwt Built Builder to one to one
Name (unit)
decimal decimal
US$
place) place)
Accommodation POSH
PaxOcean
113
vessel - Light Endurance
3,000 2014 Engineering 88.0 20.0 43,000,000
Construction (Hull PX
Vessel 1020)
Zhuhai
Accommodation POSH
PaxOcean
114
vessel - Light Endeavour
3,000 2014 Engineering 88.0 20.0 43,000,000
Construction (HuiiPX
Vessel 1021)
Zhuhai
WIN POSH
PaxOcean
115 AHTS
Ready
2,350 2014 Engineering
8,000
71 .5 16.6 22,000,000
(HuiiPX BHP
1022)
Zhuhai
POSH
PaxOcean
116 AHTS
Radiant
2.350 2014 Engineering
8,000
71 .5 16.6 22,000,000
(Hull PX BHP
1023)
Zhuhai
Semi POSH
117
Submersible Xanadu
2014
PaxOcean
750 PAX 142.7 45.0 240,000,000
Accommodation (Hull Zhoushan
Vessel
C1213)
Semi POSH
118
Submersible Arcadia
2014
PaxOcean
750PAX 142.7 45.0 240,000,000
Accommodation (Hull Zhoushan
Vessel
C1318)
Accommodation POSH
PaxOcean
119
vessel - Light Enterprise
3,000 2015 Engineering 88.0 20.0 43,000,000
Construction (Hull PX
Vessel 1031)
Zhuhai
HuiJ PX
PaxOcean
8,000
120 AHTS
1032
3,250 2015 Engineering
BHP
71 .5 16.6 22,000,000
Zhuhai
ASDTug/ Hull PX
PaxOcean
4,000
121
Harbour Tug 1033
2014 Engineering
BHP
29.0 10.5 5,650,000
Zhuhai
ASD Tug / Hull PX
PaxOcean
4,000
122 2014 Engineering 29.0 10.5 5,650,000
Harbour Tug 1035
Zhuhai
BHP
Terasea Japan
16.300
123 AHT Osprey 2014 Marine
BHP
75.3 18.0 45,000,000
(Hull79) United
r-
ASDTug l
PIN Tetap PaxOcean
3,600
v
2/ Harbour Tug
(HuiiPX 2014 Engineering
BHP
29.0 10.5 5,350,000
1029) Zhuhai
VL
I
.
I
K-9
125
PIN
PaxOcean
ASDTug/ Tangkas
2014 Engineering
3,600
29.0 10.5 5,350,000
Harbour Tug (Hull PX BHP
1030)_
Zhuhal
The figures set out above relate solely to a subjective opinion of the approximate
market value applying the methodology described above as at the above date and
should not be taken to apply to any other date.
We consider some of these vessels to be a specialist type and, in consequence, valuing
them has been a difficult exercise. Compared to other sectors in the shipping markets,
there is a low level of sale and purchase activity or standardisation of design.
When making our assessment of the newbuilding vessels, we have assumed that the
vessels will be constructed under full supervision by competent and qualified
supervisors and will be in a position to give delivery in a sound and seaworthy trading
condition. We have presumed that the original building contracts will remain in full
force and effect and that all the benefits would accrue to any Buyer.
Please note that our assessment on the JASA SETIA' to be renamed ' POSH
BA WEAN' has been made on the basis that the vessel will be converted into an
Accommodation Vessel. It has been our presumption that such conversion will be
undertaken to a high standard, under full supervision, by competent and qualified
supervisors and that the vessel will be in a position to give prompt delivery.
All statements made are statements of opinion and are not representations of fact. Any
person contemplating entering a transaction of any nature whatsoever or otherwise
having regard to these valuations should satisfy blroself by inspection of the vessels
and their records, or otherwise, as to the correctness of the statements which this
valuation contains.
No assurance or representation is given that the valuations given would have been
sustained or that they would have been realisable in any actual transaction.
The vessels have been valued individually. If two or more of the ships were to have
been placed on the market at the same time, no assurance may be given that the
amount realisable would be equal to the total of the individual values.
This statement has been provided solely for the use of the person to whom it is
addressed and for inclusion in the prospectus to be issued in relation to the proposed
offering of the shares of the PACC Offshore Services Holdings Pte. Ltd. (to be
renamed PACC Offshore Services Holdings Ltd.) (the "Company") in connection with
the Company's listing on the Singapore Exchange Securities Trading Limited.
Save for the inclusion of this statement in the prospectus to be issued by the Company,
this statement is not for circulation or publication without our prior wrinen consent
and no responsibility may be accepted for any other person (save as may be required
b a plieable laws and regulations, including but not limited to, the statutory liabilities
r Sections 253 and 254 of the Securities and futures Act, Chapter 289
.
K-10
No person other than the named addressee of this valuation shall have any rights
whatsoever against Clarkson Valuations Limited as arising out of or relating to this
valuation under the Contract (Rights of Third Parties) Act 1999 or otherwise (save as
may be required by applicable laws and regulations, including but not limited to, the
Securities and Futures Act, Chapter 289 of Singapore).
For and on behalf of

. rL
Dlr tor
S phen Gordon
l
Vessels
1
are designed with diesel electric
propulsion and Clean-Design Notation and
Green Passports, reducing and limiting the
ships combustion machinery emissions and
accidental sea pollution

Combined feet of 112 vessels
2
, comprising:
14 Anchor Handling Tug Supply (AHTS) vessels,
13 Platform Supply Vessels (PSVs), 19 Anchor
Handling Tugs (AHTs), 9 towing tugs, 20 barges, 5
accommodation vessels
3
, 23 harbour tugs, 4 crane
barges and 5 support vessels

15 Vessels
4
on order and scheduled for
delivery: Comprises 2 deck cargo barges, 2 ASD
harbour tugs, 3 DP2 accommodation vessels, 3
DP2 AHTS, 2 DP3 SSAVs and 3 vessels which our
joint ventures have on order

Services: anchor handling, ocean towage and
installation, ocean transportation, heavy-lift,
offshore accommodation, harbour towage and
emergency response
LARGE, MODERN AND DIVERSE FLEET
OF OFFSHORE SUPPORT VESSELS
POSH IS THE LARGEST ASIA-BASED
INTERNATIONAL OPERATOR OF
OFFSHORE SUPPORT VESSELS AND
ONE OF THE TOP FIVE GLOBALLY
5
1
DP2 PSVs, DP2 accommodation vessels and DP3 SSAVs
2
As of December 31, 2013
3
Includes one vessel that is undergoing conversion into an accommodation vessel
4
As of the Latest Practicable Date. Not including one vessel undergoing conversion into an accommodation vessel
5
Based on Inelds data on the number of vessels operated by POSH and the other major international providers of global support vessels
GLOBAL REACH WITH A PROVEN INTERNATIONAL OPERATING TRACK RECORD
THE POSH FLEET
2
Number
25
20
15
10
5
0
5
Support
Vessels
Offshore Supply Vessels Offshore Accomodation Harbour Services and Emergency Response Transportation and Installation
Crane
Barges
Harbour
Tugs
Towing
Tugs
Barges PSV AHTs AHTS Accomodation
Vessels
4
23 20
13
5
17
14
9
2
Mexico
New
Caledonia
Egypt
China
Thailand UAE
Russia
Venezuela
Countries operated in over the years
Countries currently operating in
Nigeria
Singapore
Angola
Australia Indonesia
India Malaysia Gabon
Myanmar
Vietnam
Congo
South
Africa
New
Zealand
Philippines
Brazil
UK Oman
Italy
Saudi
Arabia Iran
POSHS COMPETITIVE STRENGTHS
1. Largest Asia-based international operator
of offshore support vessels and one of
the top 5 globally
1

Large, diversied eet of 112 offshore support
vessels
2
2. Global reach with a proven international
operating track record
POSH believes that the geographical diversication
of its operations reduces dependence on and risk
exposure to any single geographical market and/or
customer
3. Strong parentage: a member of the
Kuok (Singapore) Limited (KSL) Group
Dedicated offshore support vessel business of the
KSL Group
POSH believes its strategic relationships with
afliated shipyards of the KSL Group will allow POSH
to respond rapidly to changing market dynamics
4. Established reputation and
long-standing relationships with
key oil and gas industry players
Leading global shipyards and offshore engineering
companies such as Saipem, Hyundai Heavy
Industries, Technip Singapore and SapuraClough
Offshore work with POSH on a regular basis
Established reputation and long-standing relationships
with global oil and gas majors and international oil
and gas contractors
5. Highly-experienced and committed
management team
Chief Executive Ofcer and Executive Director, Mr.
Seow Kang Hoe, Gerald, has more than 40 years
experience in the shipping industry
Management team includes 12 shore-based Master
Mariners and 23 Chief Engineers with an aggregate
sea-going experience of more than 600 years
3
This document is important. If you are in any doubt as to the action you should take,
you should consult your legal, fnancial, tax or other professional adviser.
This is the initial public offering of the ordinary shares (our Shares) of PACC Offshore Services
Holdings Ltd. (our Company). We are issuing 252,020,000 new Shares for subscription by
investors at the Offering Price (as dened below). The Offering (as dened below) comprises:
(i) an international offering to investors, including institutional and other investors in Singapore
(the International Offering), including 25,200,000 Shares (the Reserved Shares) reserved
for the directors, management, employees and business associates of our Company, our
subsidiaries and our joint ventures, and Kuok (Singapore) Limited (KSL) and its subsidiaries
(including Pacic Carriers Limited (PCL) and its subsidiaries) who have contributed to our
success to be determined by us at our sole discretion, and (ii) an offering to the public in
Singapore (the Public Offering). The International Offering and the Public Offering (together,
the Offering) will consist of an aggregate of 252,020,000 Shares (the Offering Shares). The
offering price (the Offering Price) for each Offering Share is S$1.15.
At the same time as but separate from the Offering, each of Hwang Investment Management
Berhad and Fortress Capital Asset Management (M) Sdn Bhd (collectively, the Cornerstone
Investors) has entered into a cornerstone subscription agreement with our Company
(collectively, the Cornerstone Subscription Agreements) to subscribe for an aggregate of
85,605,000 new Shares at the Offering Price (the Cornerstone Shares), conditional upon
the Management and Underwriting Agreement and Placement Agreement (each as dened
herein) having been entered into and not having been terminated pursuant to their terms on
or prior to the Listing Date (as dened here).
The Offering is underwritten by DBS Bank Ltd. (DBS Bank), Merrill Lynch (Singapore) Pte.
Ltd. (Merrill Lynch) and Oversea-Chinese Banking Corporation Limited (OCBC Bank)
(together, the Joint Issue Managers, Bookrunners and Underwriters) at the Offering Price.
In connection with the Offering, PCL (the Over-allotment Option Provider) has granted
Merrill Lynch, as stabilising manager (the Stabilising Manager), acting on behalf of the
Joint Issue Managers, Bookrunners and Underwriters, an over-allotment option (the Over-
allotment Option), exercisable in whole or in part on one or more occasions from the date
of commencement of dealing in our Shares on the Singapore Exchange Securities Trading
Limited (the SGX-ST) (the Listing Date) until the earlier of (i) the date falling 30 days from
the Listing Date, or (ii) the date when the Stabilising Manager or its appointed agent has
bought, on the SGX-ST, an aggregate of 46,125,000 Shares, representing approximately
18.3% of the total Offering Shares, to undertake stabilising actions, to purchase from PCL up
to an aggregate of 46,125,000 Shares (the Additional Shares) (representing approximately
18.3% of the total Offering Shares) at the Offering Price, solely to cover the over-allotment
of the Offering Shares, if any. The exercise of the Over-allotment Option will not increase the
total number of issued Shares immediately after completion of the Offering.
Prior to the Offering, there was no public market for our Shares. An application has been
made to the SGX-ST for permission to list all our issued Shares, the Offering Shares, the
Cornerstone Shares, the Additional Shares, the Shares which may be issued upon the
exercise of options to be granted under the POSH Share Option Plan (the Option Shares)
and the Shares which may be issued upon the release of awards to be granted under the
POSH Performance Share Plan (the Performance Shares) on the Mainboard of the SGX-
ST. Such permission will be granted when our Shares have been admitted to the Ofcial
List of the SGX-ST. Acceptance of applications for the Offering Shares will be conditional
upon, among others, permission being granted by the SGX-ST to deal in and for quotation
of all our issued Shares, the Offering Shares, the Cornerstone Shares, the Additional Shares,
the Option Shares and the Performance Shares. Monies paid in respect of any application
accepted will be returned to you, at your own risk, without interest or any share of revenue or
other benet arising therefrom if the Offering is not completed because the said permission
is not granted or for any other reason, and you will not have any right or claim against
us, the Over-allotment Option Provider or the Joint Issue Managers, Bookrunners and
Underwriters. Our Company has received a letter of eligibility from the SGX-ST for the listing
and quotation of all our issued Shares, the Offering Shares, the Cornerstone Shares, the
Additional Shares, the Option Shares and the Performance Shares on the Mainboard of the
SGX-ST. Our Companys eligibility to list and admission of our Shares to the Ofcial List of the
SGX-ST is not to be taken as an indication of the merits of the Offering, our Company, any
of our subsidiaries, our Shares (including the Offering Shares, the Cornerstone Shares, the
Additional Shares, the Option Shares and the Performance Shares), the POSH Share Option
Plan or the POSH Performance Share Plan. The SGX-ST assumes no responsibility for the
correctness of any statements or opinions made or reports contained in this Prospectus.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of
Singapore (the Authority or MAS) on April 7, 2014, and April 17, 2014, respectively. The
Authority assumes no responsibility for the contents of this Prospectus. Registration of this
Prospectus by the Authority does not imply that the Securities and Futures Act, Chapter 289
of Singapore (the Securities and Futures Act or the SFA), or any other legal or regulatory
requirements, have been complied with. The Authority has not, in any way, considered the
merits of our Shares being offered for investment (or of the Additional Shares, where the
Over-allotment Option is exercised).
No Shares will be allotted on the basis of this Prospectus later than six months after the date
of registration of this Prospectus with the Authority.
Investing in our Shares involves risks. See Risk Factors for a discussion of certain
factors to be considered in connection with an investment in our Shares.
Nothing in this Prospectus constitutes an offer for securities for sale in the United States
of America (United States or U.S.) or any other jurisdiction where it is unlawful to do
so. The Offering Shares have not been, and will not be, registered under the United States
Securities Act of 1933, as amended (the Securities Act) or the securities laws of any state
of the United States and accordingly, may not be offered or sold within the United States (as
dened in Regulation S under the Securities Act (Regulation S)). The Offering Shares are
only being offered and sold outside the United States in offshore transactions as dened in,
and in reliance on, Regulation S. For further details about restrictions on offers, sales and
transfers of our Shares, see Plan of Distribution.
Investors applying for Offering Shares by way of application forms or electronic applications
(both as referred to in Appendix G Terms, Conditions and Procedures for Application
for and Acceptance of the Offering Shares in Singapore) in the Public Offering will pay the
Offering Price on application, subject to refund of the full amount or, as the case may be, the
balance of the application monies (in each case without interest or any share of revenue or
other benet arising therefrom and without any right or claim against us, the Over-allotment
Option Provider or the Joint Issue Managers, Bookrunners and Underwriters), where (i) an
application is rejected or accepted in part only, or (ii) the Offering does not proceed for any
reason. Investors applying for the International Offering are required to pay the Offering Price.
Offering in respect of 252,020,000 Offering Shares
(subject to the Over-allotment Option)
Offering Price:
S$1.15 per Offering Share
Joint Issue Managers, Bookrunners and Underwriters
PACC OFFSHORE SERVICES HOLDINGS LTD.
Company Registration No.: 200603185Z
Incorporated in Singapore on 7 March 2006
PROSPECTUS DATED APRIL 17, 2014 (Registered by the Monetary Authority of Singapore on April 17, 2014)
PACC OFFSHORE SERVICES HOLDINGS LTD.
Company Registration No.: 200603185Z
Incorporated in Singapore on 7 March 2006

http://www.posh.com.sg
Address: 1 Kim Seng Promenade, #07-02
Great World City
Singapore 237994
Tel: (65) 6733 3500
This overview section is qualifed in its entirety by, and should be read in
conjunction with, the full text of this Prospectus. Meanings of capitalised terms
used may be found in the sections entitled Defned Terms and Abbreviations
and Glossary of Technical Terms of this Prospectus
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