VIKING OFFSHORE AND MARINE LIMITED

ANNUAL REPORT

2015

KEEPING FOCUS STAYING RESILIENT

This document has been prepared by the Company and its contents have been reviewed by the Companys Sponsor, CIMB Bank Berhad, Singapore Branch (the Sponsor) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the SGX-ST), this being the SGX-ST Listing Manual Section B: Rules of Catalist. The Sponsor has not independently verified the contents of this document. This document has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assume no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this document. The contact person for the Sponsor is Mr Tony Toh, Director, Investment Banking. The contact particulars are 50 Raffles Place, #09-01 Singapore Land Tower, Singapore 048623, Telephone +65 6337 5115.

01.pageViking Offshore & Marine LimitedAnnual Report 2015

TABLE OFCONTENTS

02

05

12

15

20

03

07

13

17

04

11

14

19

OUR BUSINESS

CHAIRMANS MESSAGE

MARSHAL SYSTEMS

BOARD MEMBERS

CORPORATE INFORMATION

GROUP STRUCTURE

OPERATIONS REVIEW

PROMOTER HYDRAULICS

EXECUTIVE MANAGEMENT

FINANCIAL SUMMARY

VIKING AIRTECH

VIKING ASSET MANAGEMENT

BUSINESSS ADVISORS

02.page Viking Offshore & Marine Limited Annual Report 2015

OUR BUSINESS

Viking Offshore and Marine is listed on the Singapore Exchange and based in Singapore with a presence in the Asian region and customers all over the world. Further complementing our regional presence, we have a network of service agents spanning the globe. Through our wholly owned subsidiaries, Viking provides offshore and marine system solutions to yards, vessels owners and oil majors around the world. The strength of our products and solutions lies in our robust engineering designs, superior project delivery and many track records over the years.

Our deep engineering and systems know-how, coupled with our years of experience, allow us to adapt our system solution to be portable for onshore and non-oil and gas-centric applications. Increasingly, our system solutions are being accepted and popularised beyond our oil and gas, and offshore and marine customers.

To strengthen our business with more stable and predictable earning streams, we made a strategic move into asset management services. We are constantly on the lookout for attractively valued assets and chartering them to customers from the offshore and marine, and oil and gas industry. As our value proposition, we offer tailored and creative solutions and structures that allow our customers the use of assets for their operational needs and to

OFFSHORE AND MARINE SERVICES

ASSET CHARTERING SERVICES

ANCILLARY SERVICES

Heating, Ventilation, Air-Conditioning & Refrigeration

Fire & Gas Detection

Control & Instrumentation

Marine Telecommunication

Winches, Power Pack & Deck Machinery

Chartering Services

Asset Financing

Venture Capital

Facility Services

Strategic Equity Investment

accommodate their financial capacity. Our current asset portfolio includes investment stakes in two offshore jackup drilling rigs under construction and two land drilling rigs in operational deployment.

Vikings business is now cemented along two major pillars offshore and marine services and asset chartering services.

03.pageViking Offshore & Marine LimitedAnnual Report 2015

GROUPSTRUCTURE

Note: All entities are wholly owned subsidiaries unless otherwise indicated.

Listed on Singapore Exchange

30% shareholding ownership

30% shareholding ownership

Viking Offshore & Marine Limited

Viking Airtech Pte Ltd

Viking Airtech (Shanghai) Co., Ltd

Viking Airtech (Yantai) Co., Ltd

Viking LR1 Pte Ltd Smart Earl Investment Limited

Viking LR2 Pte Ltd Quick Booms Investments Limited

Marshal Offshore & Marine Engrg Co., Ltd

Viking Offshore Malaysia Sdn Bhd

PT Viking Offshore

Viking HVAC Pte Ltd

Marshal Systems Pte Ltd

Promoter Hydraulics Pte Ltd

Viking Asset Management Pte Ltd

Viking Offshore Global Pte Ltd

Viking Facilities Management & Operations Pte Ltd

04.page Viking Offshore & Marine Limited Annual Report 2015

FINANCIALSUMMARY

REVENUE ($MILLION) FINANCIAL PERFORMANCE ($MILLION)

FINANCIAL POSITION ($MILLION)

CASH FLOW ($MILLION)

NET (LOSS) / PROFIT BEFORE TAX ($MILLION)

NET ASSETS ($MILLION)

CASH AND EQUIVALENTS ($MILLION)

2015

2015

85

(9.9)

79

71

58

84

1.5

1.4

0.5

4.7

90

98

93

80

80

2014

2014

2013

2013

2012

2012

2011

2011

2015

2015

2014

2014

2013

2013

2012

2012

2011

2011

7.5

8.7

19.0

11.6

8.8

2011 2012 2013 2014 2015

Revenue 84.0 58.0 70.6 79.0 84.5

Gross Profit 21.2 17.0 21.5 23.5 23.9

Gross Margin 25% 29% 30% 30% 28%

Net Profit/(Loss) Before Tax 4.7 0.5 1.4 1.5 (9.9)

Net Profit/(Loss) After Tax 5.4 0.7 2.2 1.0 (9.4)

2011 2012 2013 2014 2015

Total Assets 118.1 112.5 123.0 156.7 171.4

Total Liabilities 38.2 32.5 29.8 58.8 81.0

Shareholders Equity 79.9 80.0 93.2 97.9 90.4

Net Current Assets 35.0 36.8 49.2 32.3 4.1

Cash & Cash Equivalents 8.8 11.6 19.0 8.7 7.5

2011 2012 2013 2014 2015

Opening Cash Balance 13.1 8.8 11.6 19.0 8.7

Net Cash Flow From Operations 4.5 (0.4) (1.2) (11.5) (7.7)

Net Cash Flow From Investing (6.2) 7.6 (0.5) (21.0) (5.7)

Net Cash Flow From Financing (2.6) (4.4) 9.1 22.1 11.9

Ending Cash Balance 8.8 11.6 19.0 8.7 7.5

05.pageViking Offshore & Marine LimitedAnnual Report 2015

CHAIRMANSMESSAGE

IN LIGHT OF THE CONTINUED DIFFICULT OPERATING ENVIRONMENT OF THE OFFSHORE SECTOR, WE DIVERSIFIED OUR CUSTOMER BASE TOWARDS NON-OIL AND GAS AND ONSHORE CUSTOMER REQUIREMENTS. WHILE THESE INITIATIVES ARE STILL IN THEIR INFANCY, THEIR RESULTS SO FAR HAVE BEEN ENCOURAGING.

DEAR SHAREHOLDERS,

2015 has been a challenging year, fraught with geo-political tensions and uncertainties in the global economy. Market frailty was further shaken as oil prices plunged from a high of US$115 a barrel in June 2014 to under US$30 at the start of 2016. Rising costs and sustained depressed oil prices in the last 18 months have eroded returns for oil companies. This has caused some companies to review their operations and put planned exploration and production projects on hold. Others, particularly those in the offshore and marine industry, have shelved and deferred their future capital expenditure plans and even delayed their existing new build capital infrastructure.

GOODWILL IMPAIRMENT IMPACTS PROFITS FROM OPERATIONS

Given our participation at the core of the oil and gas, and offshore and marine industry, Vikings businesses are by no means insulated from these challenges. The impact of project delay and deferment felt by our customers has cascaded to us. Only a fraction of our order books was fulfilled, with a large portion deferred to later years. The deferring of existing order books and lack of new orders in the market further aggravated an already tough business environment.

Amidst these headwinds, Viking continued to deliver profits, though these were lower than in 2014. That said, our performance was not balanced across all our business pillars as our HVAC and winch businesses recorded less favourable figures. This resulted in us taking a one-time impairment charge on the goodwill recorded in our balance sheet since the acquisition of our HVAC business some six years ago. While this goodwill impairment did not impact our cash flow, it meant that we recorded a loss at the Group level.

DIVERSIFYING ONSHORE TO STIMULATE NEW GROWTH

In light of the continued difficult operating environment of the offshore sector, we diversified our customer base towards non-oil and gas and onshore customer requirements. While these initiatives are still in their infancy, their results so far have been encouraging. Meanwhile, we are also increasing our bidding activities for onshore projects and from new customer bases. In 2015, we managed to make headways in securing a number of projects in this arena; including involvement in onshore terminals, defence-related vessels, dredging and other non-direct oil and gas activities. We look forward to growing deeper and wider into this newly found diversified portfolio.

In addition, we looked to long-term contracts in asset chartering services. While these new business areas are not adequate in compensating for the slowdown, they still represent opportunities for us to cushion the risk in our traditional business portfolio and set the stage for new customer bases and future business growth.

OPTIMISING INFRASTRUCTURE WHILE MANAGING COSTS PRUDENTLY

As new project pipelines become increasingly scarce, we are taking visible steps to manage our cost structure and support lower business activity levels. In this regard, we deferred non-mission critical planned capital expenditures, pending future outcomes. We also carefully assessed non-essential spending and resources costs, making reductions where needed to rightsize our operations. While our aim here was to reduce costs, we also recognised the need to maintain a