CONTENTS · include QatarGas Group of Companies, Tasweeq, Qatar Aluminum and Qatar Petroleum...

CONTENTS

General Information

Company Profile 02

Vision, Mission & Values 04

Board of Directors 06

2012 Highlights 08

Financial Highlights & Key Figures 09

Message from Board of Directors 14

and Management

Corporate Governance 18

Quality, Health, Safety

& Environment (QHSE) 21

Operational Review 23

Financial Statements 26

His HighnessSheikh Tamim Bin Hamad Bin Khalifa Al-Thani

Emir of the State of Qatar

GULF DRILLING ANNUAL REPORT - PAGE 2

COMPANY PROFILE

Al Doha


Established in May 2004 as the first offshore and onshore drilling service provider in Qatar, Gulf Drilling International Ltd. Q.S.C (GDI) specializes in the provision of contract land and offshore drilling services to oil and gas exploration and production companies. GDI’s client base includes Qatar Petroleum and other international oil and gas operators.

GDI was originally formed as a joint venture between Qatar Petroleum (QP) and Japan Drilling Co. Ltd (JDC). The shares of QP, comprising 70% ownership in GDI, were transferred to Gulf International Services Q.S.C. (GIS) effective February 2008.

GIS is a public shareholding company owned by individual investors and selected institutions including QP. The shares of GIS are listed on the Qatar Exchange. GIS also holds 100% of the shares of Gulf Helicopters Company Q.S.C, Al-Koot Insurance and Reinsurance Company S.A.Q. and Amwaj Catering Services Q.S.C. and is Qatar’s premier service group dedicated to serving the oil and gas industry.

JDC is an international drilling contractor that has been providing offshore drilling services worldwide for more than 40 years. The shares of JDC are listed on the Japan Stock Exchange. As the Joint Venture’s technical partner, JDC supplies operational personnel to GDI through a Technical Services Agreement.

GDI is a growth-oriented company. In less than 9 years, GDI has accumulated twelve (12) rigs, consisting of 5 offshore jack-up rigs, 1 offshore accommodation jack-up barge and 6 Land rigs. In addition, three new build offshore jack-up rigs are under construction, scheduled to be delivered in the second & third quarter of 2013 and third quarter of 2014, respectively. GDI also operates a Lift boat on behalf of its owner.

GDI had 1080 employees as of 31st December 2012, including 85 Qatari Nationals that account for almost 8% of the total work force.

GDI is a world class drilling services provider and the rig contractor of choice for operators in Qatar, providing safe and efficient drilling rig services of the highest quality and class. GDI is driven by its pursuit of excellence and determination to continuously improve.

GDI has thus far operated exclusively in Qatar, as of end of 2012 GDI held 42% share of the offshore rig market and a 86% share of onshore rig market. As part of the GDI’s growth strategy, plans are being implemented to increase GDI’s offshore market share above 50% within the next two years. GDI has also diversified its range of services to now include Accommodation barges and Lift-boats as these activities are complementary to GDI’s existing drilling operations. Significant growth opportunities exist in these segments which GDI plans to exploit aggressively.


GDI is a world class drilling services provider and the rig contractor of choice for operators in Qatar

VISION

VALUES

MISSION

A world class drilling services provider

We perform our work with;• Integrity• Creativity • Teamwork• Respect of diversity

• Work safely• Work efficiently• Promote Hi-Tech, cost effective technology• Continuously improve performance• Add value to everything we do


Providing safe and efficient drilling rig services of the highest quality and class, GDI is driven by its pursuit of excellence and determination to continuously improve


BOARD OF DIRECTORS

Mr. Saad Sherida Al-KaabiChairman of the Board

Mr. Al-Kaabi graduated from the Pennsylvania State University, USA in 1991 with a BSc in Petroleum & Natural Gas Engineering. Currently, he is the Director of Oil & Gas Ventures at Qatar Petroleum. He oversees all exploration and oil & gas development activity in Qatar. Mr. Al-Kaabi reports directly to QP’s Chairman and Managing Director Dr. Mohammed Bin Saleh Al-Sada, H.E. the Minister of Energy & Industry.

Mr. Abdulrahman Ahmad Al-Shaibi Vice Chairman

Mr. Al-Shaibi is currently Director Finance of Qatar Petroleum. He serves on the Board of key financial, oil & gas and other companies that are at the heart of the State’s economy. Some of the major companies include QatarGas Group of Companies, Tasweeq, Qatar Aluminum and Qatar Petroleum International (QPI). Mr. Al-Shaibi is also a member of the State of Qatar Finance Policy and Strategy Committee.

Mr. Ibrahim Jassim Al-OthmanCEO & Director

Mr. Al-Othman holds a BSc in Petroleum Engineering from the University of Southern California and an MBA in Business Administration from the American University of Beirut. He has over 20 years’ of experience in the oil industry working for National, International and Service Oil Companies. He also represents QP as a Director on Boards of several joint ventures.


Sheikh Abdulaziz Bin Thani Al-ThaniDirector

Sheikh Abdul Aziz holds a Bachelor’s degree in Business Information Technology from the American University in Washington, D.C. He has over 10 years of experience in recruitment and manpower planning, with Qatar Petroleum. Sheikh Abdulaziz is currently the General Manager of Qatar TV. Sheikh Abdul Aziz is also a member of several governmental committees, including Permanent Population Committee, Permanent Recruitment Committee of Qatar, Committee of Strategy for the State Labor Market and Conflict of Interest Committee.

Mr. Yuichiro IchikawaDirector

Mr. Ichikawa holds a BSc in Petroleum Engineering from Tokyo University, Japan. He has over 30 years of experience in the drilling industry, especially in the areas of Operations, Engineering and Marketing. He serves as Representative Director and Senior Managing Executive Officer of JDC as well as President and Representative Director of MQJ (Mantle Quest Japan Company Limited).

Mr. Kenzo YamadaDirector

Mr. Yamada holds an MBA in Business Administration from Loyola Marymount University, USA. He has over 30 years’ of experience in the drilling industry, especially in the areas of Administration & Corporate Planning. He also serves as a Managing Executive Officer and General Manager of Corporate Strategy Planning of JDC.

Mr. Yoichi OnoeCOO & Director

Mr. Onoe holds a BSc in Engineering from Waseda University, Japan. He has over 30 years’ of experience in the drilling industry, especially in the areas of Operations, Engineering and Marketing. He also serves as a Managing Executive Officer of JDC.


2012HIGHLIGHTS

Health and Safety GDI had its best safety record since inception.

Operational Efficiency GDI had its lowest rig downtime since inception.

Utilization 100 % Utilization throughout the year. i.e. all rigs were on contract for the full year.

Corporate Performance GDI exceeded its Corporate KPI target of Net income

Business Expansion Progress continued on the US$ 875 million business expansion plan;• Zikreet and 2 new land rigs were

placed into service,

• Construction of Al-Jassra, Qatar 2022 and Dukhan, the three new build offshore jack-up rigs, are on schedule.

Business Development & Marketing: • New contracts were negotiated for

Al-Wajba and Al-Khor containing higher day rates and performance incentives,

• Diversified line of business with the addition of a Lift Boat operation.

Infrastructure ExpansionExpansion and upgrade of Dukhan Support Services Area (DSSA) Base Camp Facilities which includes; new Senior & Junior accommodation facilities, DSSA camp office block, Recreation facility and roads.

2012 was a very successful year for GDI, as reflected by a number of stellar performances and achievements accomplished, including:

Al Wajba


FINANCIAL HIGHLIGHTS & KEY FIGURES

0

50

100

150

200

250

REVENUEUS DOLLARS IN MILLIONS

244.73

187.84

2012 2011 2012 2011

92.09

60.29

GROSS PROFITUS DOLLARS IN MILLIONS

0

20

40

60

80

100

2012 2011

PROFIT BEFORE TAXATIONUS DOLLARS IN MILLIONS

57.44

36.69

0

10

20

30

40

50

60

NET PROFIT FOR THE YEARUS DOLLARS IN MILLIONS

2012 2011 2012 2011

NON-CURRENT ASSETS(NET BOOK VALUE)US DOLLARS IN MILLIONS

56.80

35.64

0

10

20

30

40

50

60730.07

547.35

0

100

200

300

400

500

600

700

800

2012 2011 2012 2011

NON-CURRENT LIABILITIESUS DOLLARS IN MILLIONS

SHAREHOLDERS’ EQUITYUS DOLLARS IN MILLIONS

432.41

350.59

313.51

232.88

0

50

100

150

200

250

300

350

0

100

200

300

400

500

CASH & CASH EQUIVALENTS(AT BEGINNING OF YEAR)US DOLLARS IN MILLIONS

TOTAL EMPLOYEES

2012 2011

1080

855

2012 2011

66.62

Beginning Beginning

0

20

40

60

80

100

120

102.83

0

200

400

600

800

1000

1200

0

50

100

150

200

250


244.73

187.84

2012 2011 2012 2011

92.09

60.29


0

20

40

60

80

100

2012 2011


57.44

36.69

0

10

20

30

40

50

60


2012 2011 2012 2011


56.80

35.64

0

10

20

30

40

50

60730.07

547.35

0

100

200

300

400

500

600

700

800

2012 2011 2012 2011



432.41

350.59

313.51

232.88

0

50

100

150

200

250

300

350

0

100

200

300

400

500


TOTAL EMPLOYEES

2012 2011

1080

855

2012 2011

66.62

Beginning Beginning

0

20

40

60

80

100

120

102.83

0

200

400

600

800

1000

1200


0

50

100

150

200

250


244.73

187.84

2012 2011 2012 2011

92.09

60.29


0

20

40

60

80

100

2012 2011


57.44

36.69

0

10

20

30

40

50

60


2012 2011 2012 2011


56.80

35.64

0

10

20

30

40

50

60730.07

547.35

0

100

200

300

400

500

600

700

800

2012 2011 2012 2011



432.41

350.59

313.51

232.88

0

50

100

150

200

250

300

350

0

100

200

300

400

500


TOTAL EMPLOYEES

2012 2011

1080

855

2012 2011

66.62

Beginning Beginning

0

20

40

60

80

100

120

102.83

0

200

400

600

800

1000

1200

0

50

100

150

200

250


244.73

187.84

2012 2011 2012 2011

92.09

60.29


0

20

40

60

80

100

2012 2011


57.44

36.69

0

10

20

30

40

50

60


2012 2011 2012 2011


56.80

35.64

0

10

20

30

40

50

60730.07

547.35

0

100

200

300

400

500

600

700

800

2012 2011 2012 2011



432.41

350.59

313.51

232.88

0

50

100

150

200

250

300

350

0

100

200

300

400

500


TOTAL EMPLOYEES

2012 2011

1080

855

2012 2011

66.62

Beginning Beginning

0

20

40

60

80

100

120

102.83

0

200

400

600

800

1000

1200


0

50

100

150

200

250


244.73

187.84

2012 2011 2012 2011

92.09

60.29


0

20

40

60

80

100

2012 2011


57.44

36.69

0

10

20

30

40

50

60


2012 2011 2012 2011


56.80

35.64

0

10

20

30

40

50

60730.07

547.35

0

100

200

300

400

500

600

700

800

2012 2011 2012 2011



432.41

350.59

313.51

232.88

0

50

100

150

200

250

300

350

0

100

200

300

400

500


TOTAL EMPLOYEES

2012 2011

1080

855

2012 2011

66.62

Beginning Beginning

0

20

40

60

80

100

120

102.83

0

200

400

600

800

1000

1200

Number of Onshore Rigs 6 4

Number of Offshore Rigs 5 5

Number of Jack-up 1 1accommodation barge

2012 2011


Al Jassra

Al Khor


Message from the Board of Directors and Management

GDI 2


Riding the crest of an industry recovery from a down market cycle that has lead to a significantly greater demand for drilling rigs and higher day rates, GDI combined 100% rig utilization with improved efficiencies, reduced down time, higher day rates and cost optimizations to post significantly better financial results in 2012. Revenue of US$244.7 million was 30% more than the 2011 total of US$187.8 million while Net Income of US$56.8 million was 60% more than the US$35.6 million reported for 2011. Profitability, measured as net income over revenue, increased year over year by 22%.

These strong financial results, combined with operational excellence, enabled GDI to achieve its corporate and team targets. In the process, several milestones, notable achievements and highlights were accomplished, including:

• GDI’s best safety record ever;

• GDI’s lowest rig downtime ever;

• Diversification into two new lines of business with the addition of an Accommodation barge and Lift boat operation;

• New contracts were concluded for two offshore rigs at higher rates;

• DSSA warehouse, logistic and base camp facilities were expanded and upgraded

• Progress continued on GDI’s US$875 million business expansion with:

- 1 accommodation barge and two new land rigs placed into service in 2012;

- Construction of three new jack-up rigs (Al-Jassra, Qatar 2022 and Dukhan) remained on schedule for deliveries in 2013 and 2014;

• Recruited, hired, trained and retained crews and office staff to support an expanded operation.


We are proud of these significant accomplishments and acknowledge the productive performance of our dedicated employees who are so critical to our success.

Looking ahead, we can see that 2013 will pose even greater challenges to GDI as we gear up to receive and place into service two of the three new build jack-up rigs currently under construction at shipyards in Singapore. These hi-tech premium rigs will become not only the best rigs in GDI’s fleet but they will be the best rigs working in the State of Qatar. Our aim is to complete these rigs on schedule and on budget, deliver them safely to Qatar and place them successfully into service as soon as possible in support of our client’s drilling programs. GDI will be calling upon all available resources in 2013 to achieve these formidable objectives.

Further life extension and upgrade work for our older rigs is also planned in 2013. GDI

places a great deal of importance on its planned maintenance activities in order to improve performance, extend the useful life of an asset and maximize its long term value.

With market conditions already strong and showing signs of further strengthening, we are also evaluating additional opportunities for growth that, with further development, could lead to additional investments. We have identified multiple opportunities to add additional onshore and offshore Drilling rigs, Accommodation barges and Lift boats. GDI will favorably consider any prospective acquisition.

With new opportunities and fresh challenges, we look forward for an exciting period that lay ahead of GDI. We are confident of GDI’s ability to rise up to any challenge and successfully perform as a world class drilling service provider.

Saad Sherida Al-Kaabi Ibrahim J. Al-OthmanChairman of the Board Chief Executive Officer


Al Wajba


Corporate Governance


GDI’s Board of Directors, management and all its employees share an ongoing commitment to the highest standards of corporate governance.

GDI operates under a set of formal corporate governance guidelines that have been established through the Board of Directors by the company’s:

• Articles of Association; and• Joint Venture Agreement

Unless reserved to the shareholders under applicable law, all corporate authority resides with the Board of Directors. However, pursuant to the company’s Manual of Financial Authorities (MOFA), specified authority has been delegated by the Board to the CEO who, in turn, has further delegated specified authority to other members of management and employees of the company, in order to implement the company’s mission.

The primary role of the Board of Directors is to:

• Exercise business judgment to promote the long term interests of the shareholders and continuity and vitality of the company.

• Review, monitor and approve fundamental financial and business strategies and major corporate actions of the company.

• Monitor the performance of the company and management by providing advise and feedback.

• Oversee processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance, and satisfy itself as to the quality of such processes.

To assist in the discharging of its responsibilities, the Board has established an Audit Committee comprised solely of Non Executive Directors to interface with the company’s:

• Internal Audit Department, which is under the direct control of the Board and performs audits concerning the execution of business activities by all departments as well as verification of appropriateness and effectiveness of the internal management system; and

• Independent External Auditors, who are appointed by the Board and ratified by the company’s shareholders.

The Audit Committee reviews the scope and coverage of external and corporate audit activities and meets with management, external auditors and internal auditors from time to time to discuss any matters that require their attention.


In addition, with the Board’s oversight, direction and approval, the management of the company has developed and adopted the following corporate governance tools to educate and guide all employees through an Integrated Management System (IMS) designed to document the company’s:

Vision, Mission & Values

Protocols & Codes of Conduct with respect to:• Communication via chain of command• Quality expectations• Business ethics and integrity• Environmental protection• Health, Safety & Security of all employees• Conduct & Behaviour of employees

Company Policies & Procedures

The Board of Directors considers the development of Corporate Governance to be an ongoing process that is subject to continuous improvement. Therefore, the Board is reviewing, and may from time to time adopt, additional best practices as are deemed necessary or appropriate for GDI.

Al Zubarah


QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE)GDI is committed to achieving the superior standards of Quality, Occupational Health & Safety and Environmental care that have been set by the company and we are dedicated to conducting our business in the best manner possible to deliver results that meet or exceed such standards.

In 2012, GDI continued to focus on reviewing and updating its policies and procedures so that they remain in-line with the industry’s best practices.

The ‘Safety Leadership Training Program’ was again conducted in 2012 by engaging the services a third party company renowned for Leadership development expertise. More than 200 persons, including crew, staff and client personnel, participated in these programs in multiple sessions. This program provided an excellent forum from which to communicate the proper safety practices and procedures to be taken by GDI’s staff and crew.

In 2012, GDI achieved a landmark safety record of 0.50 combined Total Recordable Incident Rate (TRIR) that marks the best safety record GDI has had since its inception. This rate was less than the latest IADC (International Association of Drilling Contractors) Industry average for the region of 0.66 over the same period. This achievement is a reflection of our relentless commitment to incorporate safety in all our activities. It is a priority and a mission of GDI to work safely and we will strive for even better safety results in future.

The initial integrated testing iteration of the GDI’s Business Continuity Management system was underway during the last quarter of 2012. This exercise is aimed at training and establishing comfort on GDI’s resilience level and to reduce the impact of an incident/disaster to a tolerable limit.


GDI continues to be certified to the following international standards: ISO 9001 for Quality Management System, ISO 14001 for Environmental Management System and OHSAS 18001 for Occupational Health and Safety Management System as part of its ‘Integrated Management System’ (IMS).

GDI also is in compliance with all applicable laws and regulations as well as IADC standards and regulations. We will continue striving to eliminate injuries, illnesses and incidents with ‘Zero Impact’ to the environment.


OPERATIONALREVIEW

GDI operates five offshore jack-up rigs, one accommodation jack-up barge, six land rigs and a Lift Boat. All of these rigs are all located within the State of Qatar and are working under contracts with international oil and gas companies operating in the region,

including Qatar Petroleum. We drill, complete and work-over oil and gas wells pursuant to the drilling service contracts that we have entered into with our clients. The status of those contracts, as of December 2012, is summarized below.

Rig Name Rig Type Operator/Status

Al-Doha Offshore Jack Up Rig Qatar Petroleum

Al-Rayyan Offshore Jack Up Rig Occidental Petroleum

Al-Wajba Offshore Jack Up Rig Occidental Petroleum

Al-Khor Offshore Jack Up Rig Qatar Shell

Al-Zubarah Offshore Jack Up Rig Qatar Petroleum

Zikreet Offshore Accommodation RasGas Jack-Up Barge

Liftboat Offshore Liftboat Dolphin Energy

GDI-1 Onshore Rig Qatar Petroleum







We provide drilling services on a “day rate” basis which includes the provision of drilling rig, rig crew and associated services to safely carry out the drilling operations required by our clients.

The average downtime rate for GDI’s rigs in 2012 was 0.67% compared to 1.07% for 2011 which indicates phenomenal

The US$875 million business expansion progressed as planned in 2012. The refurbished ‘Zikreet’ accommodation barge and newly constructed 2 land work-over rigs were placed into service in 2012. Construction of the new build jack-up rigs Al-Jassra, Qatar-2022 and Dukhan are on schedule. Al-Jassra and Qatar-2022 are to be placed into service in the second and third quarter of 2013 respectively, whilst Dukhan is expected to be on service in 2014. Several additional business opportunities have also been developed that could trigger further business expansions in the near future. All of our rigs remained under contract

improvement in efficiency in operations. The downtime also compares favorably against the industry’s standard downtime rate. This downtime rate marks the best efficiency result that GDI has achieved since its inception. GDI is pleased to see continued improvement in this critical operating statistic and we will strive to improve our efficiency even further in the years to come.

throughout the year. This yielded a high contract utilization rate of 100% compared to the industry average of less than 80%. The high utilization rate combined with better operating efficiencies helped offset the detrimental effect of reduced demand for drilling services, lower day rates and helped GDI exceed its corporate KPI target set for Net profit.

Routine rig condition surveys were conducted for several rigs in order to identify any major problems or areas that may need further attention or major maintenance work in the future. Also noteworthy is GDIs computerized


maintenance management system, ‘Maximo’ which has helped boost the operational efficiency by helping lower the downtime.

In other highlights GDI has diversified into a new line of business with the addition of a Liftboat operation. The Liftboat was placed into operation with a new client Dolphin Energy from the beginning of 2013.

Infrastructure upgrades were made to GDI premises in DSSA in order to accommodate the growing crew and also to enhance their living conditions. Accordingly two new accommodation blocks to accommodate Junior and Senior crew, new DSSA Office block, a New Recreation facility and other infrastructure upgrades were initiated during the year. The Project was completed in January 2013.

A strong focus on cost controls and cost optimization was again a primary target for GDI in 2012 and improvements in supply chain management and warehousing activities helped drive the improvements that were realized in those processes over the last year.

COMPETITIVE POSITIONGDI’s competitive position has been strengthened by the various associations and relationships that it has established

and developed over the years with various industry players. Our strong affiliation with Qatar Petroleum has served as the keystone to our business model.

Our rig crews are considered to be a key core competency of GDI. They form a safety oriented, environmentally conscious and highly skilled multinational workforce possessing a performance driven work ethic that ensures delivery of the highest level of service to our clients at all times. We are proud of the continued development that has been shown by our skilled work force.

With a broad range of offshore and onshore drilling rigs in our fleet and three new build jack-ups on the way, GDI has positioned itself as an industry leader in Qatar. GDI is the sole Qatari based drilling contractor and has gained vast experience in upstream oil and gas industry over the last several years. This view is supported by the strong operational results that GDI was able to post in 2012 which compare favorably to the rest of the industry, and the diversified international client base.


Gulf Drilling International Limited Q.S.C

FOR THE YEAR ENDED31 DECEMBER 2012

FINANCIALSTATEMENTS

GULF DRILLING ANNUAL REPORT - PAGE 27GULF DRILLING ANNUAL REPORT - PAGE 27


Report on the Financial Statements We have audited the accompanying financial statements

of Gulf Drilling International Limited Q.S.C. (‘the Company’)

, which comprise the statement of financial position as at

31 December 2012 and the statement of comprehensive

income, cash flow statement and statement of changes in

equity for the year then ended, and a summary of significant

accounting policies and other explanatory information.

Director’s responsibility for the Financial StatementsThe Directors are responsible for the preparation and fair

presentation of these financial statements in accordance

with International Financial Reporting Standards, and

for such internal control as management determines is

necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to

fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these

financial statements based on our audit. We conducted

our audit in accordance with International Standards on

Auditing. Those standards require that we comply with

ethical requirements and plan and perform the audit to

obtain reasonable assurance about 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’ judgement, including the assessment of the

risks of material misstatement of the financial statements,

whether due to fraud or error. In making those risk

assessments, the auditors consider internal control

relevant to the entity’s preparation and fair presentation of

the financial statements in order to design audit procedures

that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the

entity’s internal control. An audit also includes evaluating

the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by the

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.

OpinionIn our opinion, the financial statements present fairly, in all

material respects, the financial position of the Company as

at 31 December 2012 and its financial performance and

cash flows for the year then ended in accordance with

International Financial Reporting Standards.

Report on other Legal and Regulatory RequirementsFurthermore, in our opinion, proper books of accounts have

been kept by the Company, an inventory count has been

conducted in accordance with established principles and

the financial statements comply with the Qatar Commercial

Companies’ Law No. 5 of 2002 and the Company’s Articles

of Association. We have obtained all the information and

explanations we required for the purpose of our audit, and

are not aware of any violations of the above mentioned law or

the Articles of Association having occurred during the year

which might have had a material effect on the business of

the Company or its financial position.

Ziad Nader

of Ernst & Young

Auditor’s Registration No. 258

5 February 2013

Doha

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF GULF DRILLING INTERNATIONAL LIMITED Q.S.C.

P.O. Box 1643rd Floor, Al-Abdulghani TowerAirport RoadDoha, State Of Qatar

Tel: +974 445 74111/44 14599Fax: +974 444 14649www.ey.com/me


STATEMENT OF FINANCIAL POSITIONFor the year ended 31 December 2012

2012 2011 Notes US$ US$

ASSETSNon-current asset Property and equipment 3 730,067,791 547,354,242

Current assets Inventories 4 13,548,591 13,314,629Amounts due from related parties 5 49,053,196 23,102,192Accounts receivable and prepayments 6 26,115,932 20,610,868Bank balances and cash 7 26,170,169 66,615,864 114,887,888 123,643,553

TOTAL ASSETS 844,955,679 670,997,795 EQUITY AND LIABILITIES Equity Share capital 8 153,200,000 103,200,000Legal reserve 9 46,157,471 40,475,844Retained earnings 233,057,372 206,922,732

Total equity 432,414,843 350,598,576 Non-current liabilities Non-current portion of term loans 10 309,128,409 229,700,226Employees’ end of service benefits 11 2,222,622 1,653,174Deferred tax liability 12 2,157,553 1,521,772

313,508,584 232,875,172 Current liabilities Amounts due to related parties 5 6,398,632 6,806,654Accounts payable and accruals 13 36,758,493 31,499,961Current portion of term loans 10 55,875,127 49,217,432 99,032,252 87,524,047 Total liabilities 412,540,836 320,399,219 TOTAL EQUITY AND LIABILITIES 844,955,679 670,997,795

Saad Sherida Al-Kaabi Ibrahim J. Al-Othman Chairman of the Board Chief Executive Officer


The attached notes 1 to 20 form part of these financial statements


STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2012

2012 2011 Notes US$ US$

Revenue 244,732,726 187,844,650 Direct costs (152,636,075) (127,548,844) GROSS PROFIT 92,096,651 60,295,806 Other (expenses) income, net 14 (189,271) 4,188,242General and administrative expenses 15 (32,569,725) (26,569,383)Finance income 853,291 1,145,553Finance costs (2,738,898) (2,371,661) PROFIT BEFORE TAX 57,452,048 36,688,557 Deferred tax 12 (635,781) (1,049,596) PROFIT FOR THE YEAR 56,816,267 35,638,961 Other comprehensive income - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR 56,816,267 35,638,961




STATEMENT OF CASH FLOWSFor the year ended 31 December 2012

2012 2011 Notes US$ US$

OPERATING ACTIVITIES Profit before taxation 57,452,048 36,688,557Adjustments for:

Depreciation of property and equipment 3 50,586,608 45,593,125Provision for end of service benefits 11 675,324 427,295Loss on disposal of property and equipment 14 271,323 724,850Write-off of property and equipment 985,902 -Net finance costs 1,885,607 1,226,108

Operating profit before changes in working capital 111,856,812 84,659,935Working capital changes:

Accounts receivable, prepayments and due from related parties (31,456,068) 30,667,857Inventories (233,962) (2,206,993)Accounts payable, accrued expenses and due to related parties 4,850,510 5,211,294

85,017,292 118,332,093Employees’ end of service benefits paid 11 (105,876) (42,357) Net cash from operating activities 84,911,416 118,289,736 INVESTING ACTIVITIES Purchase of property and equipment 3 (234,593,696) (158,538,380)Proceeds from sale of property and equipment 36,314 1,586,084Interest income received 853,291 1,145,553 Net cash used in investing activities (233,704,091) (155,806,743) FINANCING ACTIVITIES Additional capital contribution 8 50,000,000 -Net movement in term loans 86,085,878 63,674,632Interest expense paid (2,738,898) (2,371,661)Dividends paid (25,000,000) (60,000,000) Net cash from financing activities 108,346,980 1,302,971 DECREASE IN CASH AND CASH EQUIVALENTS (40,445,695) (36,214,036) Cash and cash equivalents at 1 January 66,615,864 102,829,900 CASH AND CASH EQUIVALENTS 7 26,170,169 66,615,864 AT 31 DECEMBER




STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2012

Share Legal Retained

capital reserve earnings Total

US$ US$ US$ US$

Balance at 1 January 2011 103,200,000 36,911,948 234,847,667 374,959,615

Total comprehensive income for the year - - 35,638,961 35,638,961

Transfer to legal reserve - 3,563,896 (3,563,896) -

Dividends paid - - (60,000,000) (60,000,000)

Balance at 31 December 2011 103,200,000 40,475,844 206,922,732 350,598,576

Total comprehensive income for the year - - 56,816,267 56,816,267

Additional capital contribution 50,000,000 - - 50,000,000

Transfer to legal reserve - 5,681,627 (5,681,627) -

Dividends paid - - (25,000,000) (25,000,000)

Balance at 31 December 2012 153,200,000 46,157,471 233,057,372 432,414,843

Note:

(i) During the year, the Company paid dividends amounting to US$ 25,000,000

(2011: US$ 60,000,000) equivalent to US$ 0.45 per share (2011: US$ 1.60 per share).




NOTES TO THE FINANCIAL STATEMENTSAt 31 December 2012

1. CORPORATE INFORMATIONGulf Drilling International Limited Q.S.C. (“the Company”) is registered and incorporated in the State of Qatar under commercial registration number 27968 as a Qatar Shareholding Company in accordance with the resolution of the Minister of Economy and Commerce pursuant to the Qatar Commercial Companies’ Law No. 5 of 2002, in particular Article 68 thereof. The Company commenced operations on 18 May 2004. The objectives of the Company are to own or charter offshore jack up drilling rigs, land rigs, work over rigs and accommodation barges and to provide drilling related services to oil and gas companies in Qatar and other countries in the region.

The activities of the Company are governed by a Joint Venture Agreement (JVA) dated 22 March 2004 between Qatar Petroleum and Japan Drilling Co. Ltd. and the Company’s Memorandum and Articles of Association. As per the joint venture agreement, the Company will continue for a period of 25 years unless extended or terminated in accordance with the joint venture agreement. Qatar Petroleum, which owned 70% of the shares in the Company has transferred its ownership of these shares to Gulf International Services Q.S.C. on 12 February 2008. Gulf International Services Q.S.C. is a listed public shareholding company owned by individual investors and selected institutions.The Company’s current shareholders and their respective shareholdings are as follows: Country of incorporation Percentageof holding 2012 2011Gulf International Services Q.S.C. Qatar 70% 70%Japan Drilling Co. Ltd. Japan 30% 30%

The financial statements of the Company for the year ended 31 December 2012 were authorised for issue by the Directors on 5 February 2013.

2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparationThe financial statements of the Company have been prepared on a historical cost basis. The financial statements are presented in United States Dollars (US$) which is the Company’s functional and presentation currency.

2.2 Statement of complianceThe financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the applicable requirements of Qatar Commercial Companies’ Law No. 5 of 2002.

2.3 Changes in accounting policiesThe accounting policies adopted are consistent with those of the previous financial year, except for thefollowing amendments to IFRS effective as of 1 January 2012:• IAS12Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets• IFRS1First-Time Adoption of International Financial Reporting Standards (Amendment) – Severe Hyperinflation and

Removal of Fixed Dates for First-Time Adopters• IFRS7Financial Instruments : Disclosures – Enhanced Derecognition Disclosure Requirements

The adoption of the standards or interpretations is described below:

IAS 12 Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets.The amendment clarified the determination of deferred tax on investment property measured at fair value and introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. It includes the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 should always be measured on a sale basis. The amendment is effective for annual periods beginning on or after 1 January 2012 and has been no effect on the Company’s financial position, performance or its disclosures.



At 31 December 2012

2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

2.3 Changes in accounting policies (continued)IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) – SevereHyperinflation and Removal of Fixed Dates for First-Time AdoptersThe IASB provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency ceases to be subject to hyperinflation. The amendment is effective for annual periods beginning on or after 1 July 2011. The amendment had no impact to the Company.

IFRS 7 Financial Instruments: Disclosures — Enhanced Derecognition Disclosure RequirementsThe amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Company’s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about the entity’s continuing involvement in derecognised assets to enable the users to evaluate the nature of, and risks associated with, such involvement. The amendment is effective for annual periods beginning on or after 1 July 2011. The Company does not have any assets with these characteristics so there has been no effect on the presentation of its financial statements.

2.4 Standards issued but not yet effectiveThe standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are listed below. • IAS1Presentation of Items of Other Comprehensive Income – Amendments to IAS 1 (Effective 1 July 2012)• IAS19Employee Benefits (Revised) (Effective 1 January 2013)• IAS28Investments in Associates and Joint Ventures (as revised in 2011) (Effective 1 January 2013)• IAS32Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32 (Effective 1 January 2014)• IFRS1 Government Loans – Amendments to IFRS 1(Effective 1 January 2013)• IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7 (Effective 1

January 2013)• IFRS9Financial Instruments: Classification and Measurement (Effective 1 January 2015)• IFRS10Consolidated Financial Statements, IAS 27 Separate Financial Statements (Effective 1 January 2013)• IFRS11Joint Arrangements (Effective 1 January 2013)• IFRS12Disclosure of Interests in Other Entities (Effective 1 January 2013)• IFRS13Fair Value Measurement (Effective 1 January 2013)• IFRIC20Stripping Costs in the Production Phase of a Surface Mine (Effective 1 January 2013)

The Company did not early-adopt new or amended standards in 2012.

Annual Improvements May 2012These improvements will not have an impact on the Company, but include:

IFRS 1 First-time Adoption of International Financial Reporting StandardsThis improvement clarifies that an entity that stopped applying IFRS in the past and chooses, or is required, to apply IFRS, has the option to re-apply IFRS 1. If IFRS 1 is not re-applied, an entity must retrospectively restate its financial statements as if it had never stopped applying IFRS.

IAS 1 Presentation of Financial StatementsThis improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is the previous period.

IAS 16 Property Plant and EquipmentThis improvement clarifies that major spare parts and servicing equipment that meet the definition of property,plant and equipment are not inventory.


NOTES TO THE FINANCIAL STATEMENTS

GULF DRILLING ANNUAL REPORT - PAGE 35GULF DRILLING ANNUAL REPORT - PAGE 35

2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)2.4 Standards issued but not yet effective (continued)IAS 32 Financial Instruments, PresentationThis improvement clarifies that income taxes arising from distributions to equity holders are accounted for inaccordance with IAS 12 Income Taxes.

IAS 34 Interim Financial ReportingThe amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures.

These improvements are effective for annual periods beginning on or after 1 January 2013.

2.5 Summary of significant accounting policies

Property and equipmentProperty and equipment is stated at cost less accumulated depreciation and any impairment in value. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self – constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Rigs 10 to 20 yearsPlant and machinery 6 to 7 yearsFurniture and fixtures 6 to 7 yearsComputers and other equipments 3 to 13 yearsVehicles 5 years

The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.

Expenditure incurred to replace a component of an item of property and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property and equipment. All other expenditure is recognised in the income statement as the expense is incurred.

Capital work in progress is stated at cost. When the asset is ready for its intended use, it is transferred from capital work-in-progress to the appropriate category under property and equipment and depreciated in accordance with the Company’s policies.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

The asset’s residual values, useful lives and method of depreciation are viewed and adjusted, if appropriate, at each financial year end.





2.5 Summary of significant accounting policies (continued)

InventoriesInventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing inventories to their present location and condition at purchase cost on a weighted average basis. Net realisable value is based on estimated selling price less any further costs expected to be incurred on disposal.

Trade receivablesTrade receivables are carried at original invoiced amount less provision for non-collectability of these receivables. A provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Company will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognized when they are assessed as uncollectible.

Cash and cash equivalentsFor the purpose of the cash flow statements, cash and cash equivalent consist of cash in hand, bank balances, and short-term deposits with an original maturity of three months or less, net of bank overdrafts, if any.

Financial assetsInitial recognition and measurementFinancial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

The Company’s financial assets include cash and short-term deposits, trade and other receivables.

Subsequent measurementThe subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or lossFinancial 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. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or finance costs in the income statement.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the statement of comprehensive income in finance costs.


At 31 December 2012




Financial assets (continued)

Available-for-sale financial investmentsAvailable-for-sale financial investments include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the income statement in finance costs and removed from the available-for-sale reserve.

For a financial asset reclassified out of the available-for-sale category, any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of comprehensive income.

DerecognitionA financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:• Therightstoreceivecashflowsfromtheassethaveexpired• TheCompanyhas transferred its rights to receive cash flows from theasset orhasassumedanobligation to

pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset.

In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Impairment of financial assetsThe Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.




2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Financial assets (continued)

Financial assets carried at amortised costFor financial assets carried at amortised cost, the Company 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 Company 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 assesses 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 has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is 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 and the amount of the loss is recognised in the statement of comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the income statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the statement of comprehensive income.

Financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings.

Subsequent measurementThe measurement of financial liabilities depends on their classification as follows:

Loans and borrowingsAfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are utilised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of comprehensive income.

DerecognitionA financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income.


At 31 December 2012



2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Accounts payable and accrualsLiabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.

Income tax and deferred taxThe Company is exempted from income tax for an initial period of 10 years commencing from 18 May 2004.The Company may be granted with an additional tax exemption period after the expiry of the initial tax exemption period. Accordingly, no provision for current income tax has been provided for these financial statements.

Deferred tax is provided to the extent of the foreign shareholding of the Company, using the liability method on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on laws that have been enacted as of the reporting date. The carrying amount of deferred tax assets is reviewed at each reporting date 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 income tax asset to be utilised.

ProvisionsProvisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of time value of money is material, provisions are discounted using a current pre tax rate that reflects, when appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Employees’ end of service benefitsThe Company provides end of service to its employees. The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a minimum service period, calculated under the provisions of the Qatar Labour Law and is payable upon resignation or termination of the employee. The expected costs of these benefits are accrued over the period of employment.

With respect to its Qatari employees, the Company makes contributions to Government Pension Fund calculated as a percentage of the employees’ salaries in accordance with the requirements of Law No. 24 of 2002 pertaining to Retirement and Pensions. The Company’s obligations are limited to these contributions, which are expensed when due.

Borrowing costsBorrowing costs that are directly attributable to acquisition or construction of property and equipment are capitalised as part of cost of the asset. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare for its intended use are completed. A capitalisation rate of 100% is used up to the date of completion of substantially all the activities necessary to prepare for its intended use as the entire loans are related to the acquisition of qualifying assets. For the purpose of determining interest available for capitalisation, the costs related to these borrowings are reduced by any investment income on the investment of the borrowing. Other borrowing costs are recognised as expense in the period in which they are incurred.






Foreign currenciesThe financial statements are presented in US$, which is the Company’s functional and presentation currency. The official currency of the State of Qatar, the Company’s country of domicile, is the Qatari Riyal (QR). Certain domestic transactions are conducted in QR, which is pegged to the US$. The Company maintains its financial records and prepares its financial statements in US$, as required by the JVA. All major sales and purchase agreements entered into by the Company are denominated in US$.

Transactions in foreign currencies are initially recorded in the approximate functional currency rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the end of the reporting period. All differences are taken to the statement of comprehensive income. Non-monetary items measured in terms of historical costs 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. Foreign currency gains and losses are reported on a net basis.

Fair valuesFor investments traded in active markets, fair value is determined by reference to quoted market bid prices. The fair value of interest-bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics.

Revenue recognitionRevenue represents rig rental and supply of related ancillary services income earned and invoiced during the year, in accordance with the terms of the contracts entered into with customers. Rig mobilisation fees received to mobilise a drilling unit at the commencement of a contract are recognised as income in the period it is received and associated costs are expensed as incurred. Costs incurred to relocate drilling units for which a contract has not been secured are expensed as incurred.

Interest revenue is recognised as the interest accrues using the effective interest method, under which the rate used exactly discounts, estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Use of estimatesThe preparation of financial statements in conformity with International Financial Reporting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates.

The estimates and underlying assumptions are reviewed regularly. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future.


At 31 December 2012



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3 PROPERTY AND EQUIPMENT (continued)

Notes:a) The depreciation charge has been allocated in the statement of comprehensive income as follows:

2012 2011 US$ US$

Cost of sales 48,649,155 43,747,153

General and administrative expenses (Note 15) 1,937,453 1,845,972

50,586,608 45,593,125

b) The encumbrances and liens on plant and equipment are set out in Note 10.

c) The Company started construction of two offshore drilling rigs in 2011 and another one in 2012 which are expected to be completed between 2013 and 2014. The new jack-up rigs are financed via syndicated loans of US$ 533 million from a consortium of lenders (refer to Note 10 for details of these loan facilities). The amount of borrowing costs capitalised during the year ended 31 December 2012 was US$ 4,308,992 (2011: US$ 1,716,004).

4 INVENTORIES

2012 2011

US$ US$

Drilling materials, spare parts and consumables 14,840,970 14,251,976

Goods in transit 264,184 661,863

15,105,154 14,913,839

Less: Allowance for slow moving and damaged inventories (1,556,563) (1,599,210)

13,548,591 13,314,629

The movement in the allowance for slow moving inventories is as follows:

2012 2011

US$ US$

At 1 January 1,599,210 1,155,805

Provision for the year - 443,405

Reversal of provision (42,647) -

1,556,563 1,599,210




5. RELATED PARTY DISCLOSURESRelated party transactions

Related parties represent shareholders, directors and key management personnel of the Company. Pricing policies and terms of these transactions are approved by the Company’s management.

Transactions with related parties included in the statement of comprehensive income are as follows:

Name of related party Nature of Type of relationship transaction 2012 2011 US$ US$ Qatar Petroleum Affiliated Company Sales 124,220,911 103,050,997 Secondee fees 955,592 484,232 Group Insurance 369,726 319,864 Services rendered 171,533 261,445Qatar Liquefied Gas Company Limited Affiliated Company Sales - 3,553,619

RasGas Company Limited Affiliated Company Sales 19,604,149 -

Japan Drilling Company Ltd. Shareholder Secondee fees & services 3,338,664 3,379,083

Amwaj Catering Affiliated Company Catering services 5,650,541 4,201,299 for rigs

Qatar Fuel (WOQOD) Affiliated Company Purchase of diesel 6,004,222 6,377,113

Al Koot Insurance Affiliated Company Staff medical insurance premium 916,023 778,579

Gulf Helicopters Affiliated Company Services rendered - 20,000

Al Shaheen WellServices Company Affiliated Company Services rendered 1,088,398 711,856

Related party balances

Balances with related parties included in the statement of financial position are as follows:

(a) Amounts due from related parties

2012 2011

US$ US$

Qatar Petroleum and its related parties:

Trade receivables 30,621,650 6,622,604

Unbilled revenue 18,431,546 16,479,588

49,053,196 23,102,192


At 31 December 2012



5. RELATED PARTY DISCLOSURES(continued)

(b) Amounts due to related parties

2012 2011

US$ US$

Qatar Petroleum 1,948,692 1,215,806

Japan Drilling Company 1,944,531 1,675,071

Qatar Fuel (WOQOD) 1,027,441 1,013,081

Amwaj Catering 1,178,693 2,323,833

Al Shaheen Well Services Company 263,610 280,106

Al Koot Insurance 35,665 298,757

6,398,632 6,806,654

(c) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows:

2012 2011

US$ US$

Short term benefits 1,178,051 938,404

Directors’ remuneration (Note 15) 186,471 138,634

1,364,522 1,077,038

6. ACCOUNTS RECEIVABLE AND PREPAYMENTS

2012 2011

US$ US$

Prepayment and advances 5,032,309 4,941,093

Other accounts receivables 21,083,623 15,669,775

26,115,932 20,610,868

7. CASH AND CASH EQUIVALENTS 2012 2011

US$ US$

Bank balances and cash 26,170,169 66,615,864

Included in bank balances and cash is debt service reserve amounting to US$ 11,084,917 (2011: US$

11,080,844) which is restricted in use, in accordance with the provisions of the term loan agreements

entered into with the lenders. Bank balances also include term deposits denominated in Qatari Riyals

amounting to US$ 7,826,899 (2011: US$ 40,262,474) maturing within three months which carry an

effective interest rate of 1.75%. (2011: 2.25%).




8. SHARE CAPITAL 2012 2011

US$ US$

Initially authorised, issued and paid up:

37,574,088 ordinary shares of US$ 2.75(QR 10) each 103,200,000 103,200,000

Additional capital contribution in 2012:

18,200,000 ordinary shares of US$ 2.75 (QR 10) each 50,000,000 -

153,200,000 103,200,000

On 15 February 2012, pursuant to Article 42 of the Articles of Association of the Company, the Board of Directors recommended and on 20 March 2012 the Shareholders resolved and approved an additional equity contribution from the shareholders of up to US$100 million, equivalent to 36,400,000 of shares having a nominal value of QR10 (US$2.75) per share. The contribution is being made in two tranches with US$50 million contributed in May of 2012 through the issuance of 18,200,000 shares. A second equity contribution of up to US$ 50 million is scheduled to be contributed in March of 2013. These capital contributions are being allocated in accordance with the percentage shareholding of each shareholder.

The authorised capital as per the commercial registration is QR 375,740,880 (US$ 103,200,000), however, the Company is in the process of applying for the increase in the authorised capital to accommodate the additional capital contribution of US$ 100 million (QR 364,000,000) and bring the authorized capital to QR 739,740,880 (US$ 203,200,000) accordingly.

9. LEGAL RESERVE

In accordance with the provisions of Qatar Commercial Companies’ Law No 5 of 2002, 10% of the net profit for the year is transferred to the legal reserve until the balance in the reserve equals 50% of the paid up capital. This reserve is not normally available for distribution except in circumstances stipulated in the Qatar Commercial Companies’ Law No. 5 of 2002.

10. TERM LOANS 2012 2011 US$ US$Loan 1 (i) 10,256,417 15,384,621Loan 2 (ii) 31,621,636 45,675,688Loan 3 (iii) 56,875,000 73,125,000Loan 4 (iv) 20,000,000 24,000,000Loan 5 (v) 18,280,000 18,280,000Loan 6 (vi) 178,871,795 107,000,000Loan 7 (vii) 55,000,000 - 370,904,848 283,465,309Less: Unamortised finance costassociated with raising finance (5,901,312) (4,547,651) 365,003,536 278,917,658

2012 2011 US$ US$Classified in the statement of financial position as follows: Current portion 55,875,127 49,217,432Non-current portion 309,128,409 229,700,226 365,003,536 278,917,658


At 31 December 2012



10. TERM LOANS (continued)

Notes

(i) Loan 1: The Company obtained a syndicated loan of US$ 50 million in November 2004 to finance the construction,

upgrading and refurbishment of rigs and purchase of other related assets. The effective interest is LIBOR plus

0.7% and the loan is repayable in 39 equal quarterly instalments of US$ 1,282,051 commencing from 24

May 2005. The loan is secured over the proceeds from Rig Al-Doha.

(ii) Loan 2: The Company obtained a syndicated loan of US$ 130 million in April of 2005 to finance the purchase,

upgrading and refurbishment works of drilling rigs. The effective interest is LIBOR plus 0.7% and the loan is

repayable in 37 equal quarterly instalments of US$ 3,513,514 commencing from 31 March 2006. The loan

has been drawn-down to finance the construction and or purchase of rigs, Al-Wajba, Al-Khor, Al-Zubarah, and

GDI 4. The loan is secured by creating a first preferred mortgage on rig Al-Rayyan in favour of the lenders. The

proceeds from rigs GDI–1 and Al-Rayyan has also been assigned in favour of the lenders.

(iii) Loan 3: The Company obtained a syndicated loan of US$ 130 million in April of 2006 to finance the construction

and purchase of drilling rig, Al-Zubarah and the upgrade and refurbishment works on existing drilling rigs owned

by the Company. The effective interest rate is LIBOR plus 0.80% and the loan is repayable in 32 equal quarterly

instalments of US$ 4,062,500 each commencing from 31 July 2008. The loan is secured by creating a first

preferred mortgage on rig Al-Zubarah in favour of the lenders.

(iv) Loan 4: The Company obtained a loan of US$ 40 million in December 2006 from a Commercial bank to finance

the final payment purchase of offshore rig Al-Khor. The effective interest is LIBOR plus 0.55% and the loan is

repayable in 40 equal quarterly instalments of US$ 1 million each commencing from 31 March 2008. The loan

is secured by way of granting the lender a right of set-off against the credit balances in other accounts of the

Company maintained with the lender.

(v) Loan 5: The Company entered into a loan agreement (“The bridge loan”) with a Commercial bank for a credit

facility of up to US$ 20 million in February of 2008 to finance the final payment for Al-Zubarah rig and also

acquire a new onshore drilling rig. The effective interest is LIBOR plus 1.05%. In 2012, the bridge loan was

replaced by a credit facility of US$ 18.28 million with effective interest rate of LIBOR plus 1.05%.

(vi) Loan 6: The Company obtained a syndicated loan of US$ 430 million in May 2011 from a consortium of lenders,

to finance the construction of two offshore drilling rigs, purchase of one offshore drilling rig and purchase of two

rigs for land operations. The effective interest is LIBOR plus 1.5%. The loan is divided into three sub facilities

of US$ 368 Million, US$ 42 Million and US$ 20 Million, repayable in 28 equal quarterly installments, 26 equal

quarterly installments and 24 equal quarterly installments respectively. The loan is being secured by creating a

first preferred mortgage on all of the above mentioned assets in favor of the lenders.

(vii) Loan 7: The Company obtained a syndicated loan of US$ 215 million in April 2012 from a consortium of

lenders, to finance the construction of one offshore drilling rig and purchase of one accommodation barge. The

effective interest is LIBOR plus 1.75%. The loan is divided into two sub facilities of US$ 165 Million and US$ 50

Million, each repayable in 28 equal quarterly installments. The loan is being secured by creating a first preferred

mortgage on all of the above mentioned assets in favor of the lenders.




10 TERM LOANS (continued)The maturity profiles of the loans are as follows:

As at 31 December 2012

Nominal

interest Year of 5 years

rate maturity 1 year 2 – 5 years and above Total

Loan 1 LIBOR+0.7% 2014 5,128,204 5,128,213 - 10,256,417

Loan 2 LIBOR+0.7% 2015 14,054,052 17,567,584 - 31,621,636

Loan 3 LIBOR+0.8% 2016 16,250,000 40,625,000 - 56,875,000

Loan 4 LIBOR+0.55% 2017 4,000,000 12,000,000 4,000,000 20,000,000

Loan 5 LIBOR+1.05% 2013 6,648,000 11,632,000 - 18,280,000

Loan 6 LIBOR+1.50% 2021 9,794,872 134,527,473 34,549,450 178,871,795

Loan 7 LIBOR+1.75% 2020 - 55,000,000 - 55,000,000

55,875,128 276,480,270 38,549,450 370,904,848

As at 31 December 2011

Nominal

interest Year of 5 years

rate maturity 1 year 2 – 5 years and above Total

Loan 1 LIBOR+0.7% 2014 5,128,205 10,256,416 - 15,384,621

Loan 2 LIBOR+0.7% 2015 14,054,052 31,621,636 - 45,675,688

Loan 3 LIBOR+0.8% 2016 16,250,000 56,875,000 - 73,125,000

Loan 4 LIBOR+0.55% 2017 4,000,000 16,000,000 4,000,000 24,000,000

Loan 5 LIBOR+1.05% 2013 3,562,953 14,717,047 - 18,280,000

Loan 6 LIBOR+1.50% 2021 6,222,222 89,888,889 10,888,889 107,000,000

49,217,432 219,358,988 14,888,889 283,465,309


At 31 December 2012



11 EMPLOYEES’ END OF SERVICE BENEFITS 2012 2011

US$ US$

Balance at the beginning of the year 1,653,174 1,268,236

Provision for the year 675,324 427,295

Less: Payments made during the year (105,876) (42,357)

Balance at the end of the year 2,222,622 1,653,174

12 DEFERRED TAX LIABILITY 2012 2011

US$ US$

Balance at the beginning of the year 1,521,772 472,176

Tax expense relating to the origination

and reversal of temporary differences 635,781 1,049,596

2,157,553 1,521,772

The deferred tax attributable to temporary differences arising between the books of accounts and taxation

basis of depreciation of rigs have been provided using the liability method to the extent of the foreign share

holding in the Company and are measured at the generally applicable tax rate of 10% based on the newly

enacted tax law effective from 1 January 2010.

Further, it has been agreed by the shareholders that the appropriate income tax rate will be applied by the

Company for the measurement of taxation based on the clarification obtained from the Qatar Income Tax

authorities.

13 ACCOUNTS PAYABLE AND ACCRUALS 2012 2011

US$ US$

Trade accounts payables 10,863,612 14,419,629

Other payable 123,728 169,759

Accrued expenses and provisions 25,771,153 16,910,573

36,758,493 31,499,961

The amount recognised for the year ended 31 December 2012 as an expense for the pension liability

for Qatari employees is US$ 424,569 (31 December 2011: US$ 311,747) and the amount yet to be

remitted to the Retirement and Pension Authority amounts to US$ 54,755 (31 December 2011: US$

50,682), which is included in accrued expenses and provisions.




14. OTHER (EXPENSES) INCOME, NET 2012 2011

US$ US$

Loss on disposal of property and equipment (271,323) (724,850)

Miscellaneous income 82,052 4,913,092

(189,271) 4,188,242

15. GENERAL AND ADMINISTRATIVE EXPENSES 2012 2011

US$ US$

Staff costs 19,627,925 14,971,059

Qatarisation expenses 3,309,289 3,200,090

Depreciation (Note 3) 1,937,453 1,845,972

Secondment fees 1,846,204 1,423,103

Office rent 1,415,504 1,415,462

Travelling and transport 1,168,515 874,232

Communication expenses 938,623 944,096

Advertising expenses 573,255 361,009

Training expenses 274,152 146,580

Recruitment costs 221,935 119,399

Printing and stationery 216,870 180,564

Professional fees 201,143 400,351

Directors’ remunerations 186,471 138,634

Disaster recovery expenses 186,170 154,775

Repairs and maintenance 71,629 68,777

Entertainment expenses 37,261 24,072

Miscellaneous expenses 357,326 301,208

32,569,725 26,569,383

16. COMMITMENTS 2012 2011

US$ US$Capital expenditure commitments; Estimated capital expenditure contracted butnot provided for as of the reporting date 399,325,000 334,050,000Estimated capital expenditure approved butnot contracted for as of the reporting date 24,715,800 29,478,205

2012 2011

US$ US$Operating lease commitments:Future minimum lease payments: Within one year 1,414,879 1,414,879After one year but not more than five years 1,414,879 2,829,758

Total operating lease expenditure contractedfor at the reporting date 2,829,758 4,244,637


At 31 December 2012



17. CONTINGENT LIABILITIESAs at reporting date the Company has contingent liabilities as follows:

2012 2011

US$ US$

Letters of credit 4,068,395 875,000

Guarantees 7,869,944 3,350,050

11,938,339 4,225,050

18. FINANCIAL RISK MANAGEMENT

Objectives and policies

The Company’s principal financial liabilities comprise term loans, accounts payable and certain accruals and due to

related parties. The main purpose of these financial liabilities is to raise finance for the Company’s operations. The

Company has various financial assets such as accounts receivables and certain other receivables, amounts due

from related parties and cash and short-term deposits, which arise directly from its operations.

The Board of Directors have the overall responsibility of the establishment and oversight of the Company’s risk

management framework. The Company’s risk management policies are established to identify and analyse the risks

faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

The main risks arising from the Company’s financial instruments are interest rate risk, foreign currency risk, credit

risk and liquidity risk. The Board of Directors reviews and agrees policies for managing each of these risks which

are summarised below.

Interest rate risk

The Company is exposed to interest rate risk on its interest bearing financial liabilities with floating interest rates

(term loans). At the reporting date the interest rate profile of the Company’s financial liabilities with floating interest

were:

Carrying amount

2012 2011

US$ US$

Variable rate instruments:

Term loans (370,904,848) (283,465,309)

The following table demonstrates the sensitivity of the statement of comprehensive income to reasonably possible

changes in interest rates, with all other variables held constant. The sensitivity of the statement of comprehensive

income is the effect of the assumed changes in interest rates on the Company’s profit for one year, based on the

floating rate financial liabilities held at 31 December 2012 and 2011.

Effect on profit

Increase/decrease before tax

in basis points US$

31 December 2012 +50 (1,854,524)

-50 1,854,524

31 December 2011 +50 (1,417,326)

-50 1,417,326




18. FINANCIAL RISK MANAGEMENT (continued)

Foreign currency risk

The Company does not hedge its currency exposure due to its minimal exposure to currency risk as most of the foreign

currency financial liabilities are denominated in Qatari Riyals. As the Qatari Riyal is pegged to the US Dollar, balances

in Qatari Riyals are not considered to represent significant currency risk.

The following table presents the Company’s exposure on major currencies on payables.

Trade payables & due to related parties

2012 2011

US$ US$

Qatari Riyals 5,661,485 6,244,577

United States Dollar 7,776,136 11,291,102

UAE Dirhams 283,626 165,010

Japanese Yen 32,435 223,810

Singapore Dollars 339,473 145,365

Great Britain Pounds 141,551 56,965

Newzland Dollar 1,567 -

Euro - 4,103

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other

party to incur a financial loss. The Company’s exposure to credit risk is as indicated by the carrying amount of its

financial assets which consist principally of accounts receivable, due from related parties and bank balances. Accounts

receivable and due from related parties are shown net of provision for doubtful receivables and bank balances are with

reputed banks having high credit ratings assigned by international credit rating agencies.

The Company provides its services to a small number of oil and gas companies. Its four largest customers account

for 100% of outstanding accounts receivable at 31 December 2012 (2011: 100%).

The Company has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. However,

as the customer is contractually committed to discharge its obligation, management believes that the credit risk with

respect to debtors is also limited.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit

risk at the reporting date in respect of amounts due from related parties and other receivables were as follows:

Neither past Past due but not impaired

due < 30 days 31 – 60 61 – 90 91 – 180 >181days

Total nor impaired US$ days days days US$

US$ US$ US$ US$ US$

2012 43,723,215 41,116,624 - 338,426 225,000 2,043,165 -

2011 17,722,022 16,610,031 1,046,666 - 65,325 - -


At 31 December 2012



18.FINANCIAL RISK MANAGEMENT (continued)Liquidity risk

The Company limits its liquidity risk by ensuring bank facilities are available. The Company’s terms of sales require

amounts to be paid within 30-45 days of the date of sale.

The table below summarises the maturities of the Company’s undiscounted financial liabilities at 31 December 2012 and

2011, based on contractual payment dates and current market interest rates.

At 31 December 2012 Less than 3 3 to 12 2 to 5 More than

months months years 5 years Total

US$ US$ US$ US$ US$

Term loans 15,359,675 46,094,673 293,422,053 44,450,838 399,327,239

Accounts payable and accruals 10,863,612 - - - 10,863,612

Amounts due to related parties 6,398,632 - - - 6,398,632

32,621,919 46,094,673 293,422,053 44,450,838 416,589,483

At 31 December 2011 Less than 3 3 to 12 2 to 5 More than

months months years 5 years Total

US$ US$ US$ US$ US$

Term loans 11,413,620 37,564,497 233,016,753 15,888,888 297,883,758

Accounts payable and accruals 14,419,629 - - - 14,419,629

Amounts due to related parties 6,806,654 - - - 6,806,654

32,639,903 37,564,497 233,016,753 15,888,888 319,110,041

Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and

healthy capital ratios in order to support its business and maximise shareholder value.

The Company manages its capital structure and makes adjustment to it, in light of changes in economic conditions. To

maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, after fulfilling

senior debt obligations, return capital to shareholders or issue new shares. No changes were made in the objectives,

policies or processes during the year ended 31 December 2012 and 31 December 2011.

The Company monitors capital using a gearing ratio, which is debt divided by capital plus debt. The Company includes

within debt, interest bearing loans and borrowings and accounts payable and accruals. Capital includes equity less any

net unrealised gains reserve.

2012 2011

US$ US$

Interest bearing loans and borrowings 370,904,848 283,465,309

Accounts payable and accruals 36,758,493 31,499,961

Net debt 407,663,341 314,965,270

Equity 432,414,843 350,598,576

Capital and net debt 840,078,184 665,563,846

Gearing Ratio 48.5% 47%




19. FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments comprise of financial assets and financial liabilities.

Financial assets consist of bank balances and cash, amount due from related parties and accounts receivables.

Financial liabilities consist of term loans, amounts due to related parties and payables.

The fair values of the financial instruments are not materially different from their carrying values as at the reporting

date.

20. KEY SOURCES OF ESTIMATION UNCERTAINTY

Impairment of accounts receivables

An estimate of the collectible amount of trade and other receivable is made when collection of the full amount is no

longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts

which are not individually significant, but which are past due, are assessed collectively and a provision applied according

to the length of time past due, based on historical recovery rates.

At the reporting date, gross amounts due from related parties and accounts receivable were US$ 70,136,818

(2011: US$ 38,533,973) and no provision was made for doubtful debts for the year (2011: Nil). Any difference

between the amounts actually collected in future periods and the amounts expected will be recognised in the income

statement.

Impairment of inventories

Inventories are held at the lower of cost or net realizable value. when inventories become old or obsolete, an estimate

is made of their net realizable value. For individually significant amounts this estimation is performed on an individual

basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a

provision applied according to the inventory type and the degree of ageing or obsolescence.

At the reporting date, gross value of inventories were US$ 15,105,154 (2011: US$ 14,913,839), with allowance

for slow moving and damaged inventories of US$ 1,556,563 (2011: US$1,599,210). Any difference between the

amounts actually realised in future periods and the amounts expected will be recognised in the income statement.

Useful lives of property and equipment

The Company’s management determines the estimated useful lives of its property and equipment for calculating

depreciation. This estimate is determined after considering the expected usage of the asset, physical wear and tear,

technical or commercial obsolescence.


At 31 December 2012


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