Viking Offshore and Marine Ltd Annual Report 2013

8/11/2019 Viking Offshore and Marine Ltd Annual Report 2013

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


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Our Plans 02Our Business 032013 Highlights 04Chairmans Message 06Our Transformation 10Financial Trends 12Our Strategy 16Extend Capabilities 18Expand Markets 22Enter Mainstream 26Our Businesses 30Operations Review 31Viking Airtech 34Marshal Systems 36Promoter Hydraulics 38Our Board Members 42Our Business Advisors 45Our Executive Management 46Corporate Information 48

TABLE OF CONTENTS


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OURPLANS

2 Viking Offshore and Marine Limited

Strengthening foundationand entering mainstream

Our strategy to strengthen our core business capability andenhance our value proposition is helping us to meet the changingand challenging demands of our customers. Through this strategy,we are creating growth by adding and retaining customers;

and enabling this growth through broadening our offering,expanding our geographical reach and moving towards themainstream of offshore and marine industry. We are reshapingour customers experience and offering a suite of products andsolutions that makes us the preferred choice for offshore andmarine customers globally.

DEFINING SUCCESSIN THE OFFSHORE &

MARINE INDUSTRY


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3Annual Report 2013

OURBUSINESS

Viking Offshore and Marine is a SGX-listed company based inSingapore with presence in the Asian region and customers allover the world. Further complementing our regional presence, wehave a network of service agents spanning the globe. Through its

wholly owned subsidiaries, Viking provides offshore and marinesystem solutions to yards, vessels owners and oil majors aroundthe world. The strength of our products and solutions lies in ourrobust engineering designs, superior project delivery and manytrack records over the years. Our system capability spans across:

We optimise solutions byconnecting offshore andmarine specialists

ENABLINGPERFORMANCEIN THE HIGH SEAS

Heating, Ventilation, Air-Conditioning and Refrigerationsystems (HVACR)

Fire and Gas Detection systems Control and Instrumentation systems

Marine Telecommunication systems Winches, Power Packs and Deck Machineries

In 2013, we made a strategic move into the mainstream offshoreand marine industry by acquiring offshore and marine assets.


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2013HIGHLIGHTS


TRANSFORMATIONComplete disposal of non-corebusiness and assetsStrengthen and enlarge core competenciesEnter mainstream by joint-venture toacquire new-build offshore rig asset

SUCCESSFULPROJECT DELIVERY

First-ever turnkey HVACR systems on xedplatform for international oil majorsLargest own-designed UK HSE NORSOK-equivalent HVACR systems for 500-men semi-submersibleFirst-ever series of build-to-order winch systemsfor OSV newbuildUtilise own design to build explosion-proof HVACRsystems

ACQUIRINGNEW ORDERS

Largest total orders across all systems securedin a yearHighest order book carried forward to new yearLargest single order of HVACR systems in history First-ever secured order for integrated vesselmanagement systemsFirst-ever secured telecommunication systemsorder on a drillship

HVACR systems for 2 high-specication drillingsemi-submersible

ACQUIRING ASSETSBroke ground for Viking Innovation Centre,doubling built-up real estate spaceJoint-venture to acquire new-build offshore

jack-up rig asset

SHAREHOLDINGGROWTHSuccessful rights issue 1.9 timesover-subscribedPlacement to new strategic substantialinvestorMarket capitalisation of $120 millionalmost doubled in 12 months


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5Annual Report 2013

Revenue (from continuingoperations) grew to

$70.6 million

%16Net Assets increased to

$93.2 million

Cash and Equivalentsincreased to $19 million

Net Asset Value Per Share

Order book backlog morethan doubled

$85M

Earnings Per Share (fromcontinuing operations)

improved to 0.32 cents.

After Tax Net Prot grew to$2.2 million

Market Capitalisationalmost doubled

New Orders grew 86%


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CHAIRMANSMESSAGE


I) EXTENDING CAPABILITIES AND MOVING UP VALUE CHAIN

We expand our solution value chain by adding morecapabilities to meet customer requirements and differentiateour value through strategic partnerships with leading solutionproviders. We extended our solution application beyondvessels and rigs onto drillships, xed platforms, and othermobile offshore units.

Driving further creativity, we began constructing the VikingInnovation Centre, an enterprise hub at our Kian Teck Roadfacility that will cluster emerging O&M companies. This willpotentially further expand our solution capabilities, andimprove our usage of real estate.

II) EXPANDING MARKETS AND CUSTOMER BASEThe extension of our capabilities invariably opens up moremarket opportunities. We increased interactions andrelationships with customers beyond the traditional yards

and vessel owners to the international oilmajors; and from O&M to oil and gas, andnaval defence. Our increased overseaspresence, coupled with integratedcustomer coverage, has widened anddeepened our customer base and enlargedour footprint as an international player.

III) NEW BUSINESS PILLAR IN MAINSTREAM O&M ASSETSOur foray into mainstream O&M asset ownership and theplanned subsequent entry into chartering business is causefor great excitement. We entered into strategic partnershipswith the founders of Labroy Marine to acquire and co-owntwo drilling jack-up rigs which are designed for depth up to375 feet. The two rigs are currently under construction andour plan is to charter these assets when they are completedsometime in the fourth quarter of 2015.

We will continue to seek out opportunities to acquire moreearnings accretive O&M assets to build up our eet anddevelop a portfolio of long term recurring revenue.

Dear Shareholders,

2013 was an exciting and signicant year for the Group. Wegrew revenues, prots and order book; we shifted our offshoreand marine (O&M) service offerings to higher gear throughparticipating in the acquisition of a newbuild jack-up rig andadded a second rig in early 2014 as a prelude to building aportfolio of O&M assets for recurring revenue.

The seeds of this strategic shift were rst sown in 2010 whenwe began building a suite of O&M services. We extendedour capabilities and expanded the market reach of our corebusinesses, setting the stage for the next transformation to moveinto mainstream asset ownership and chartering services.

FINANCIAL PERFORMANCE IN FY2013

We completed the disposal of our non-core legacy businesses.This allowed us to sharpen our focus and alignresources to accelerate growth in the O&M sectorso as to enhance value to our shareholders.

The Groups Revenue and Net Prots fromcontinuing operations grew 22% and 227%in FY2013, respectively. During the year wesecured $108 million of new orders, 86% higherthan in FY2012. Correspondingly, the Order Book at the end of2013 is $85 million, double that a year ago. Earnings Per Sharegrew 191% to 0.32 cents per share.

Our balance sheet is healthy with Net Assets of $93 million, aCash and Equivalents position of $19 million, and a low gearingof 0.09 times.

OUR STRATEGY YIELDING RESULTS

Our future performance cannot be left to chance; it can only beachieved by a clear, actionable and pertinent strategic focus.Our strategy for 2013 is a three-pronged thrust which combinesextending our suite of capabilities, expanding our market reach andwidening our customer base with more signicantly, developing anew pillar of growth from mainstream offshore assets.

We grew revenues, prots and order book;elevated our value by acquiring offshoreassets to build new growth pillar

We draw optimism fromthe results of our executed

strategy and will continueto stay on this growthcourse going forward


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7Annual Report 2013

REWARD STRONG SHAREHOLDER SUPPORT

Our market capitalisation crossed $120 million at the end of 2013,almost doubling that of a year earlier. On the shareholding front,we raised new capital from a rights issue that was subscribed.We also did a share placement which brought in a new strategicsubstantial shareholder.

We appreciate our shareholders condence in our business andstrategic directions. In view of the favourable nancial performanceand to reward our shareholders for their unwavering support, wehave declared a rst and nal dividend of 0.15 cent per share 50% more than the previous year. This marks our fth consecutiveyear of dividend payment; a record we can be proud of.

OUTLOOK

We draw optimism from the results of our executed strategy andwill continue to stay on this growth course going forward. We havebegun to take the rst step to build our new business pillar whichmarks our dramatic entry into the mainstream O&M sector. I amcondent that this strategy will not only raise our prole but alsoenhance shareholder value.

While having started 2014 with a much stronger order book andparticipation in two rigs, we remain vigilant about the competitiveenvironment and the need to maintain internal efciencies, evenas we look out for fresh opportunities in the O&M sector.

APPRECIATION

We thank our colleagues, customers, partners, investors,shareholders, and our suppliers, for their continued support; andtogether with the resolute action of our committed managementteam, we can all look forward to a brighter future for Viking.

Andy LimChairman

22%Revenue

>$120MMarketCapitalisation

Net Prots227%Grew

Up


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9Annual Report 2013


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OURTRANSFORMATION


2013

Enter Mainstreamfor Growth

Extend our solution capabilitiesExpand our market reach &customer baseEnter mainstream O&M market viaasset acquisition

2011

Aggregate businesses to improvevalue chainIntegrate go-to-market sales andcoverageOptimise infrastructureConsolidate real estate for operations

Integratefor Efciency

2010

Acquire O&M businesses Viking Airtech Promoter Hydraulics Marshal SystemsDispose non-core assets & businesses

Bolt-On forTransformation

2012

Develop and promote Viking overseasBuild on-ground presenceEnter emerging markets

Internationalisefor Growth


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11Annual Report 2013

TRANSFORM BUSINESSACCELERATE GROWTHENHANCE VALUE

2014

Scale-Up Portfoliofor Sustainability

Build long-term sustainability Grow eet of O&M assetsAcquire earnings-accretive assets


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ExtendCapabilities


STRENGTHEN FOUNDATIONENTER MAINSTREAM


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ExpandMarkets

EnterMainstream



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I n

u e n c

i n g F

a c

t o

r s

EXTENDCAPABILITIES

EXPANDMARKETS

ENTERMAINSTREAM

Alliance & partnership Solution bundling Geographical expansion

Strategic partnership

Market Initiatives

Organisation Initiatives

Integrated coverage Cross-selling Competence hubbing On-ground presence

Asset ownership Fund raising

Demand and growth

Emerging markets

Growing visibility

Costcontainment

Resourceconstraints

Marginpressure

Leveraging assets


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To meet the offshore and marine industrysincreasing solution demands, we recognisedthat we had to expand our suite of offeringsand populate our solutions across varied andadditional platforms. Only by doing so can weretain and add customers, and create newbusiness segments. In meeting these objectives,we strive to extend our capabilities.


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EXTENDCAPABILITIES


Extending our capabilitygoes beyond wideningour suite of products andservices; enabling our

application on differentplatforms, and deliveringon higher standards andrequirements.


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WIDENING OUR SOLUTION VALUE CHAINIn seeking to add complementary solutions to widen our valueproposition we secured a partnership agreement with MarioffHi-Fog, an internationally renowned name in high-pressure water-misttechnology re-ghting systems for offshore and marine industry.Additionally, we collaborate with product principals involved in valveremote control system, offshore cargo-carrying units, and deckmachineries peripherals.

EXPAND APPLICATION PLATFORMSWe have traditionally been strong in the mobile platforms of vessels

and offshore rigs. In 2013, we also successfully delivered oursystems on xed platform for oil majors, secured orders on drillshipand in defence arena a growing testament of our capabilities and aprelude to opening up new markets.

BUILD-OUR-OWN CAPABILITYViking Airtech successfully delivered an own-designed and builtexplosion proof HVACR system in addition to our own chiller units.Promoter Hydraulics has successfully added capability to performbuild-to-specications winch systems for customers and secured aseries of such orders from various yards.

RAISING OUR STANDARDSIn 2013 Viking Airtech designed, built and delivered NORSOK-equivalent standard explosion-proof units that meet harsh andhazardous environments. On top of the exacting requirements, wealso successfully delivered the largest own-designed HVACR systemsfor a 500-man semi-submersible.

VIKING INNOVATION CENTREWe broke ground in 2013 commencing the construction of a130,000-square-feet new building; effectively doubling our currentbuilt-up in the same premises. In addition to the income opportunity,the centre will allow us to incubate and uncover start-ups in theoffshore and marine sector which could be game-changers for theindustry.


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The offshore and marine industry is clearly aglobal one in which vessel owners, shipyards,operators, and solution providers operate acrossinternational boundaries. Adjusting our offeringsand solutions appropriately, we can replicate ourservices and solutions across different platformsand geographies. With this in mind, weaccelerated our efforts to capitalise on growth ofoverseas markets and emerging players.To increase the size of our business and toenlarge our customer base; we took action toexpand our markets .


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EXPANDMARKETS


ACQUIRING NEW CUSTOMERSBeyond shipyards and vessel owners, wehave also started working with oil majorssuch as Shell and Total. This not only opensup new relationships with the oil majors butalso provides us opportunities to employour systems on additional applications.Beyond offshore rigs and vessels, wehave also secured orders for solutionsto be installed on drillships and defence-related marine vessels, a completely newsegment. Beyond these successes we arealso working with new yards, especially inChina and the overseas markets.

GROWTH IN DOMESTIC MARKETWe continue to grow in Singapore withrespect to new orders secured. A signicantorder, the largest contract size to-date, wassecured by Viking Airtech for over $21million with ST Marine, with systems thatare not deployed in the traditional oil andgas sector. This specic win is a major

achievement for Viking and allows theGroup to capitalise on the prominence ofSingapores offshore and marine industrywith new orders secured growing 124% andorder book growing 99% year-on-year.

VIBRANT OVERSEAS MARKETAs we continue to expand our geographicalfootprint, our overseas orders haveincreased 58% compared to a year earlierand order book at the end of the year grew108%. While the regional markets showssigns of promise, our biggest growth camefrom China.

GROWING CHINA PROMINENCEIn addition to beeng up resources inexisting operations in China, we built on-ground presence in Nantong to capitaliseon emerging offshore activities there. Ourfabrication plant facility in Yantai is now afully equipped designated manufacturinghub for all of Viking Airtech systems to

meet orders for customers around theworld. Underscoring the success of ourefforts, the China market is now the largestoverseas market and in year 2013 with a127% increase in orders and an order bookalmost two-and-a-half times higher thana year ago. During the year we also won$10 million for HVACR systems, the singlelargest contract out of China so far.

Growing our businessportfolio requires us togeographically expand ourreach to new customers,

deepen relationships withexisting ones, and indoing so enlarge ourmarket share.


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NEW ORDERS SECURED FOR THE YEAR ($MILLION)

2012 2012 2012 2012 2012 20122013

Local Overseas VikingAirtech

MarshalSystems

PromoterHydraulics

Total

2013 2013 2013 2013 2013

25

52

108

26

65

1925

131833

5856

FY 2012 FY 2013

31

31

1117

1622

Singapore

SingaporeOthers

Others

ChinaChina

GEOGRAPHICAL REVENUE CONTRIBUTION ($MILLION)


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In addition to strengthening our core competenceand growing our existing businesses of providingsystem solutions, we are also preparing forthe future. We are building a new businessportfolio of sustainable, predictable and high-margin earnings stream. Encouraged by thecontinued growth and demand for offshore andmarine assets, we gravitate closer towardsthe mainstream industry. Acquiring in-demandoffshore and marine assets and offeringchartering services will drive our core strategy aswe seek to enter the mainstream.


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ENTERMAINSTREAM


We have raised our entire businessproposition by moving into the mainstreamof the industry. We entered into a strategicpartnership with the founders of LabroyMarine to acquire new-build offshore rigs ina manner which lowers cost and mitigatesrisk, importing the necessary expertise toensure success.

Our joint-venture partners are renownedveterans with deep industry experience,which ensures that we have steady handsas we navigate our entry into the industrymainstream. The business structure allowsus to commit lesser funding for a ventureof high value with potentially attractivereturns.

In November 2013, we agreed to take a 30%shareholding in Smart Earl Investment PteLtd, a special-purpose vehicle controlled

by Mr Chan Kwan Bian (Labroy Marineco-founder). In March 2014, we extendedour partnership with Mr Chan by aninvestment of similar size and stake in QuickBooms Investments Ltd. Through theseinvestments, we will be able to co-own apair of CJ46-X100-D GustoMSC cantilever

jack-up rigs. These rigs are currently beingbuilt at a established yard and are expectedto be completed in fourth-quarter of 2015.We will explore charter opportunitiesbefore these rigs are completed.

The above rig investments, via our whollyowned Viking Asset Management Pte Ltd,constitute our business foray into owningand chartering offshore and marine assets.

Investing for the futureand building a new pillarof growth; moving intoindustry mainstream

by acquiring offshoreand marine assets andproviding charter services.


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Cantilever jack-up drilling rigCJ46-X100-D GustoMSCAble to operate in water depth up to 375 feet andaccommodate 120 men


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OPERATIONSREVIEW


Continuing what we started in 2013, we areactively looking to acquire more earningsaccretive O&M assets of various platforms,rigs and vessels to build up our eet anddevelop long term recurring revenue.

Despite the global macro-economicuncertainties this year, the offshore andmarine (O&M) sector continues to bepositive, as the oil and gas sector to which itis dependent on has remained healthy. Theuptrend is accelerating delivery schedulesand putting a squeeze on resourceavailability, while margin pressures continueto prevail. Against this backdrop, the Groupcontinues to evolve, adapt and transform tocapitalise on the industry dynamics.

EXTENDING OUR CAPABILITIES

While we continuously expand our suite ofO&M capabilities to plug solution gaps andincrease value to customers, we needed toapproach it the smart way. We recognisedthe need to add capability without the needto own the solution or the business and,therefore, embarked on forging strategicpartnerships and collaborations withleading O&M product principals that revolvearound our three business pillars.

We collaborated and added complementarysolutions in water-mist technology re-ghting solution, remote control valvesystems, deck machinery peripherals andcargo handling equipment. The re-ghtingsolution is a natural extension to ourexisting re and gas detection systems.Likewise, deck machinery peripherals andcargo handling equipment complement wellwith our winch systems on the topside.Leveraging our power pack hydraulictechnology, we harnessed our technicalknow-how and collaborated with a remote

valve control systems technology owner.These additional offerings extend ourdifferentiation, increase competitivenessand will help to increase revenue goingforward.

While the above demonstrates an externalview of our go-to-market model, internallywe moulded our sales coverage along thesame principles to extend our capabilityand reach to our customers. To maintain

cost efciency and improve productivity,we adopted an integrated coverage modelwhereby our frontline staff now have theability to cross-sell all our product offerings,including those of our partners. Thisapproach has allowed us to contain ourcost, improve utilisation of our resources,and more importantly, strengthen ourcustomer relationship. As a case in point,the Promoter Hydraulics business grewfour-fold in China without any resource on-ground, by leveraging the coverage of VikingAirtech resources in China.

We were successful in winning boththe HVACR and the winch systems inan integrated bid for both our productapplications on a single 500-manaccommodation semi-submersible. Wehad also, for the rst time, secured allour three business solutions on a jack-uprig platform. These are just some of theexamples of our integrated coverage modelextending our capability and expanding ourcustomer relationship and yielding results.


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OPERATIONSREVIEW


GEOGRAPHICAL EXPANSION DRIVES MARKET GROWTH

In 2012, we drove overseas expansion by increasing on-groundpresence across key markets. In 2013, we further intensiedour internationalisation initiative, expanding our coverage tonew customers and deepening our relationships with newer andestablished customers.

Most of these resources were deployed into our China market andthe results were evident as China grew 127% year-on-year in neworders and is now the largest overseas market and fast closingthe gap to our local portfolio size. In addition to our coverage

enhancement, we also shored up our manufacturing capability inour fabrication plant in Yantai, China. This plant is now the hub ofall our HVACR manufacturing operations, capable of supplying toall our customers and meeting European manufacturing standards.

In Indonesia, we successfully delivered our HVACR systems ontoxed platform for the international oil majors. This in itself is amajor milestone as we are able to meet the stringent requirementof international oil majors. As a relativenew entrant to a market brimming withopportunities, it will pave the way for moreorders in the years to come.

Orders from overseas customers accounted

for half of the total orders in 2013. WhileChina represents a signicant overseasmarket for us, accounting for more than 60%of the overseas orders, we are also makinginroads in the other geographies. In particular,Malaysia and Middle-East two oil rich regions with good growthprospects also showed reasonable contribution in new orders in2013.

NEW CUSTOMERS CONTINUED TO DRIVE LOCAL MARKETIMPORTANCE

Despite the growth experiences overseas, Singapore continuesto be an important market for Viking. In 2013, new orders fromlocal customers grew 123% year-on-year and accounted for half ofthe total new orders secured. Albeit, this growth could be skewedby the single-largest ever contract from ST Marine of more than$21 million, the growth rate for Singapore excluding this order isa respectable 39%. The signicance of the ST Marine contractextends beyond its size; it is a win in a relatively new customer in a non-oil and gas arena and adds a new business initiative of providing IntegratedLogistic Support system extending for many years into the future.

Besides ST Marine, 2013 we also added customers in the othermajor yards of Jurong Shipyard and Keppel Singmarine. Coupledwith our strong presence in Keppel FELS, we have now establishedrelationships with all the major yards in Singapore.

EVOLVING BUSINESS MODEL FOR GROWTH

Promoter Hydraulics orders increased to $18.0 million in FY2013from $13.0 million a year earlier as it extended its capabilitiesbeyond vessel platforms to more sophisticated offshore rigs.This follows the successful transformation from a pure stock-and-sell business model up-streamed to design and build-to-orderspecication winch systems and deck machinery player. All of thewinch orders from the Chinese yards are for high-specicationbuild-to-order systems, while majority of the other orders involvesdesign customisation and no longer relies on ready-made stockitems of the past. For the rst time, Promoter also secured orders

to build winch systems for offshore rigs of even higher specicationand exacting requirements.

Promoter Hydraulics business model change emulates that ofViking Airtech and Marshal Systems in developing recurring orderbook and more sustained customer relationships with greatervalue-add. Taking this concept of building more sustainable andlonger-term revenue streams, we took the empty plot of 25,000

sq ft land within the current Kian Teck facilityand constructed a building with 130,000sq ft of built-up area which will generate agood yield of rental stream. Not only are webetter utilising the existing land asset, weare also increasing our existing asset size

considerably.

Construction of the Viking Innovation Centre(VIC) began in April 2013. This enterprisehub will offer workshop space to companies

providing specialised O&M products and services. The centre willcombine research and development, collaboration, innovation,technology test-bedding and incubation of new concepts includingclustering companies into product groups to prepare them for themarket. Expected to be operational in September 2014, VIC willbegin to recognise lease rental in FY2014.

NEW BUSINESS PILLAR IN MAINSTREAM RIGS, OFFSHOREPLATFORMS & VESSELS

Faced with margin and resource pressures in our existing systemsolution business, we strategised to move up the value chain andbuild a sustainable, predictable and higher-margin revenue stream.The evolution of this strategy led Viking to enter into mainstreamoffshore assets ownership and provision of charter services.In November 2013, we executed this strategy via a strategicpartnership with the founders of Labroy Marine to acquire a stakein the rst of two drilling jack-up rigs valued at US$180-million each.

Viking took a 30%-stake in Smart Earl Investment Pte Ltd, aninvestment vehicle belonging to Labroy marine co-founder Mr ChanKwan Bian, for US$5.4 million to be able to jointly own the jack-up

Excluding non-corebusinesses disposedduring the year, the Grouprecorded $70.6 millionrevenue in FY2013, a22%-increase from $57.9million in FY2012


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rig. In March 2014, we participated in the second rig on similarterms by investing in another investment vehicle, Quick BoomsInvestments Limited. Both rigs are expected to be completed andavailable for service in the fourth quarter of 2015.

In addition, Singaporean O&M veteran and the other Labroy Marinefounder Mr Tan Boy Tee subscribed to 40 million new Vikingshares in November 2013. This was followed in March 2014 bya subscription of another 40 million shares, through a privateplacement. His international reputation, track record, corporateexperience and strategic connections, particularly in the O&Mindustry, will help Viking capture signicant new opportunities.

The monies raised through these placements, together with theproceeds raised earlier in April 2013 from the rights issue, will beused to fund the acquisition of the two rigs. Beyond the entry into the mainstream O&M sector, the synergies ofour strategy are clear Vikings three core products and serviceswill be deployed onto the rig. It also creates the strong likelihoodfor Viking to participate in similarly congured rigs built in the sameyard in the future.

FINANCIAL PERFORMANCE IN 2013

Excluding non-core businesses disposed during the year, the Grouprecorded $70.6 million revenue in FY2013, a 22%-increase from

$58.0 million in FY2012, mainly from better order book backlog aswell as higher orders secured during the year.

Despite the competitive pressures, the gross prot marginfor FY2013 was maintained as we leveraged on lower-costmanufacturing overseas. Factors affecting the bottom-line includedthe decrease in other income for the current year, mainly due to theone-off gain of $3.9 million from the sale of quoted equities madein the prior year.

Total expenses of $23.7 million for FY2013 are comparablewith that recorded in the previous year. The higher marketingand distribution expenses is attributable to the higher overseasfreighting charges as a result of a higher mix of overseas orderfullment, in line with our market expansion.

The net prot after tax from continuing operations of $2.2 milliongrew 227% year-on-year driven primarily by higher revenue andthe corresponding prots. Additionally, the current year tax liabilityis more than offset by a write-back of prior year tax provision whichis no longer required.

Net assets for the Group of $93.2 million as at 31 December 2013are higher compared to that as at 31 December 2012, largely dueto the cash proceeds from the rights issue exercise of $9.2 millionas well as a private placement made to a strategic investor for$3.1 million.

GOING FORWARD IN 2014

At the end of 2013, the order book stood at $85 million, morethan doubled from $42 million a year ago, resulting from a generalincrease across all our subsidiaries. Out of the total order book,$55.0 million or 65% was contributed from Viking Airtech, 27% fromMarshal Systems, and the remaining 8% from Promoter Hydraulics.

However, continued competition amidst a challenging marketcondition and tight resource situation has intensied pressureon margins. The Group is striving for higher sales and improvingprocurement productivity. Furthermore, the continued shift in

production capacity to lower-cost countries is expected to yieldcost savings and alleviate a tight resource situation while keepingin mind our strategic focus.

We will continue to execute and widen the strategies we developedin 2013 which yielded good results. Extending our capabilitiesfurther is feasible as we have only scraped the peak of an iceberggiven the large number of solutions required along the vast valuechain. As we expand our reach beyond Asia, we strive to increasemarket share with existing and newly acquired customers.

Continuing what we started in 2013, for the new business pillar,we are actively looking to acquire more earnings accretive O&Massets of various platforms, rigs and vessels to build up our eet

and develop long term recurring revenue.

APPRECIATION

With a strong order book, the success of our strategies executedand foray into the new business of asset ownership and charteringbusiness, we are optimistic and encouraged with our businessdirection in the years to come.

I wish to thank our employees, business partners and all whohave made this challenging journey with us. I look forward to yourcontinuing support and partnership to make 2014 a better year.

Ong Choo GuanChief Executive Ofcer


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VIKINGAIRTECH


BUSINESS PROFILEMany of the regions biggest shipyards and vessel owners prefer Viking Airtech becausewe deliver reliable, comprehensive and specialised HVACR solutions. Our turnkeyservice capabilities include customised design, engineering, manufacturing, installation,supervision, testing and commissioning of HVACR systems for the global offshore andmarine industry.

A strong global sales and service network across ve continents enables us to respondto service queries promptly anywhere in the world and to provide high quality serviceand support. Systems and equipment are designed, engineered and built in-house infabrication plant.

Employs cutting-edge technology in areas of energy-efcient, eco-friendly, explosion proofand ruggedised systems. Comprehensive range of solutions to meet varied customerrequirements air to water-cooled, direct expansion to chill water systems, conventionalpackaged unit to centralised mega chilled water systems.

Designed and built for customers who work under extreme ambient temperatures.Capable of meeting NORSOK and European standards; Middle-Eastern, Russian andAsian ambient conditions. Det Norske Veritas (DNV) certied quality management systemfor over 10 years.

ACCREDITATION Authorised distributor for Carrier Marine Products for 13 years running Certied ISO14001 Environmental Management System and OSHAS 18001 Safety

Management System Manufacturing plant at Yantai China European Manufacturing Standards complied

2013 HIGHLIGHTS Successfully delivered rst ever on xed platform for oil majors Shell and Total. Successfully delivered largest to-date own-designed 500-man semi-submersible. Secured largest order to-date from ST Marine on non-oil and gas related platform

worth more than $21 million. Secured largest order to-date in China for 2 high-specication drilling semi-

submersible on NORSOK equivalent requirements worth more than $10 million.

Million65$146%

YTY Growth

%60Contribution to Group

Order Secured


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The turnkey specialists in Heating,Ventilation, Air-Conditioning andRefrigeration systems


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MARSHALSYSTEMS


BUSINESS PROFILEMarshal is a leading systems integrator preferred by internationally-renowned companiesin the offshore and marine industry. Customers are assured that their assets areprotected when equipped with systems integrated by Marshals specialists. Superiorsystems integration capabilities combined with specialised equipment and systems byleading manufacturers is the reason why Marshal is preferred by leading offshore andmarine companies globally.

Every Marshal Systems solution is designed, engineered and built using tested andproven components from globally-renowned brands. Wide connectivity and interoperabilitywith other subsystems allows for efcient and centralised command and control. Theefcient and effective use of mechanical, electrical and electronics systems designed to

maximise value, made with multiple redundancies mechanism to minimise risk of singlepoint of failure.

ACCREDITATION Certied ISO14001 Environmental Management System and OSHAS 18001 Safety

Management System.

2013 HIGHLIGHTS Secured rst-ever telecommunication systems package on a drillship. Secured rst-ever integrated Vessel Management Systems. Acquired China presence and secured multiple orders to establish the China market.

Million25$31% YTY Growth

%23Contribution to Group

Order Secured


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Leading system integrator forFire and Gas Detection systems,Telecommunication systems, andControl and Instrumentation systems


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Supplier of large range of types andcapacity, ready-built and designed-builtwinches system and deck machineries


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Top left to right: Lin Wei Daniel, Lee Suan Hiang, Lien Kait Long, Tan Wee Peng KelvinBottom left to right: Bo Johansson, Ong Choo Guan, Andy Lim

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ANDY LIM, 56Chairman and Executive Director

Mr Lim was appointed Chairman and Executive Director of the Companyon 15 June 2009. As the founder and Chairman of private equity rmTembusu Partners Pte Ltd, he is currently the Executive Director ofAssociated Leisure International and Chairman of MoneyWorld Groupof Companies. His other board appointments include Chairman ofOverseas Experts Council (Singapore branch) of Peking UniversitysChina Centre for Strategic Studies, President of Enterprise 50Association and a member of the Home Affairs Uniformed ServiceInvest Board of Trustee. His past board appointments includeChairman of Alpha Singapore and Council Member of the NationalCouncil for Anti-Drug Abuse. In September 2004, Mr Lim wasappointed Honorary Consul to the Republic of Lithuania. Mr Limholds an Engineering degree (First Class Honours) from CambridgeUniversity and a Masters in Business Administration from Universityof California at Los Angeles (UCLA).

ONG CHOO GUAN, 62Chief Executive Ofcer and Executive Director

Mr Ong was appointed Chief Executive Ofcer of the Company on 15January 2010, and appointed Executive Director on 16 April 2010. Withmore than 30 years of management experience in the offshore andmarine industry, Mr Ong has been instrumental in driving the growthof Viking Airtech Pte Ltd since its incorporation in 1994 as part ofViking Engineering Group. Since his appointment as Executive Directorof Viking Airtech in 2003, he has turned the business around andbrought Viking Airtech to new heights as a leading HVACR solutionsprovider to shipyards and vessel owners in the region. Prior to joiningViking Engineering Group in 1980 where he was General Manager,Mr Ong was with Jurong Shipyard as the Overall-in-charge Engineer formechanical works onboard the vessels. He is a Mechanical Engineerby profession and received various training in Finance and Accounting,and Marketing Management.

LIN WEI DANIEL, 30Executive Director

Mr Lin was appointed Non-Executive Director of the Board on 13 May2011, and was redesignated Executive Director on 1 May 2012. He isthe Chief Executive Ofcer of the companys wholly-owned subsidiaryViking Asset Management Pte Ltd and also responsible for thecompanys investment arm, Viking Capital Pte Ltd. Prior to this, Mr Linwas an Executive Director of Boutique Mergers & Acquisitions AdvisoryFirm Blue Ocean Capital Par tners, providing bespoke corporate nance

advice to high net worth individuals. Mr Lin also sits on the boards ofSingapore-listed company Nico Steel Holdings Ltd and Ann Aik Limitedas a Non-Executive Director. Mr Lin is also a member of the FinanceCommittee with the Singapore Institute of Directors. He graduatedwith an Honours Degree in Law in 2007 from Bristol University, UnitedKingdom. Mr Lin is the son of Mr Andy Lim, a substantial shareholderand Executive Director of the Company.

LEE SUAN HIANG, 63Lead Independent Director

Mr Lee was appointed Independent Director of the Company on 16April 2010. He is the Chief Executive of the Real Estate DevelopersAssociation of Singapore. A Colombo Plan Scholar in IndustrialDesign (Engineering), he had a varied career in public service asDeputy Managing Director of the Economic Development Board andChief Executive of SPRING Singapore, National Productivity Board,Singapore Institute of Standards and Industrial Research andNational Arts Council. He was also the Chairman of PSB Corporation,Deputy Chairman of the International Federation of Arts Councils andCultural Agencies and Council Member of the International StandardsOrganisation. He is the current President of the EDB Society and aFellow of the UK Chartered Management Institute, Chartered Instituteof Marketing, and World Academy for Productivity Science. Mr Lee wasawarded the Public Administration (Gold) Medal in 1998, World SMEAssociation Award in 2001, Japan External Trade Organisation Awardin 2002 and Chevalier de lOrdre des Arts et Lettres from France in2010.

LIEN KAIT LONG, 65Independent Director

Mr Lien was appointed Non-Executive Director of the Company on 26May 2008. He was redesignated Independent Director on 4 May 2009.Mr Lien has extensive experience in accounting and nance, corporatemanagement and business investment. He has held a number ofsenior management positions as well as executive directorships invarious public and private corporations in Singapore, Hong Kong andChina. He currently serves as an Independent Director on the boardsof several Singapore and Chinese companies listed on the SingaporeExchange. The listed companies that he has present and priorexperience in are from diverse industries including manufacturing,telecommunications, renewable energy, oil & gas, consumer goods,textile and exible packaging. Mr Lien holds a Bachelor of Commerce

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degree from Nanyang University and is a fellow member of the CPAAustralia and the Institute of Singapore Chartered Accountants.

TAN WEE PENG KELVIN, 49Independent Director

Mr Tan was appointed Independent Director of the Company on 25June 2009. He is currently the Managing Director of GBE Holdings PteLtd. He has more than 20 years of professional experience includingsenior management positions at AETOS Security Management, PSAInternational, and Temasek Holdings, the last being the ManagingDirector of its Private Equity Funds Investment Unit. He was aconsultant advising companies investing in China, and also servedwith the Singapore Police Force. A Local Merit Scholar (Police Service),Mr Tan holds a Bachelor in Accountancy (First Class Honours) anda Master in Business Administration from the National Universityof Singapore. He also attended the Programme for ManagementDevelopment at Harvard Business School. Mr Tan currently holdsdirectorship appointments with several other private and public-listedcompanies.

BO JOHANSSON, 73Advisor to Chairman

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OUR BUSINESSADVISORS

BO JOHANSSON, 73Advisor to Chairman

Mr Johansson was appointed Advisor to Chairman of the Companyon 16 April 2010. He is currently Managing Director of VikingEngineering Pte Ltd and was Chairman of Viking Airtech Pte Ltdsince its incorporation until 2009. As a Certied Turbine and GearsEngineer Stal-Laval Turbin AB (now Siemens Sweden AB) since 1969,Mr Johansson has extensive experience as a Specialist Engineer onmain propulsion steam turbines, gears and control systems for variousship-owners, including Golar Management LNG, Shell, BP, British Gas,ExxonMobil, Chevron Shipping USA, Tanker Pacic, Bergesen Norway,

Abu Dhabi Gas, Qatargas, MOL Japan, Sovcomot Russia and others.He also guided Viking Engineering into the eld of self-dischargingships and barges for bulk materials as agents for BMH MarineSweden, now Cargotec Bulk.

JORGE ANTAS BARROS, 55Advisor for Brazil and Latin America Region

Mr Jorge Antas Barros was appointed Advisor to the Group in October2012 to assist and advise on the Groups internationalization planinto Brazil and the Latin American region. Mr Barros is a Portuguesecitizen and a lawyer by profession practicing at Baba & Mata in Lisbon,Portugal. He is the Honorary Consul of the Republic of Lithuania since

2010 and Vice President of the Chamber of Commerce and IndustryPortugal /Baltics since 2011. Between 1985 to 1994, Mr Barros heldvarious key appointments including; European Parliament Ofcer ofEuropean Union in Brussels, Cabinet Minister of National Defenceand the Secretary of State for Defense, and Member of the GermanMarshall Fond/joined the Marshall Memorial Fellowship Program -United States of America. From 1994 onwards, Mr Barros went intothe academic elds holding key appointments as Secretary-Generalof the University Technology of Viseu and subsequently Professorof European Law at the University Technology of Viseu. Mr Barrosgraduated with a Degree in Law from the Catholic University of Lisbon,majoring in International Relations and European Law. He also havequalications in European Law at the Free University of Brussels andthe Catholic University of Leuven in Belgium.

JORGEN GISMERVIK, 50Advisor for Europe Region

Mr Gismervik is a Norwegian citizen who has more than 20 yearsof experience in worldwide oil and gas, and offshore and marineindustries. He is previously a substantial shareholder of MarshalSystems Pte Ltd and has since been appointed as Advisor to theGroup covering the European region and specialization in marinetelecommunication eld. Over the years, Mr Gismervik have built-upseveral telecommunication companies in Europe and since 1999founded a worldwide telecommunication company in Norway where heis also the Executive Director and Chief Executive Ofcer. Additionally,

since 2006, he is also a Director and substantial shareholder ofa Spanish-registered maritime telecommunication company. MrGismervik holds a First Class Honours Bachelor Degree in TelecomEngineering from the University of Stavanger and also possessesseveral relevant and recognized certication for the electronic andtelecommunication industry.

HELMI KOH, 57Advisor for Southeast Asia Region

Mr Helmi Koh is a Singaporean who has more than 30 years ofexperience in worldwide oil and gas, and offshore and marineindustries. He is the Chairman of Samudra Group of Companies

consisting of Samudra MPC, Samudra Asia Pacic, Tap Marine andOffshore Services and District Energy Ventures, doing marine &offshore chartering, project managements and supplies in Malaysia.Mr Koh holds a Masters of Business Administration, and has vastexperience in handling projects over the past 20 years.


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ANDY LIM, 56Chairman and Executive Director

ONG CHOO GUAN, 62Chief Executive Ofcer and Executive Director

LIN WEI DANIEL, 30Executive Director

NG YEAU CHONG, 47Chief Operating Ofcer

Mr Ng was appointed Chief Operating Ofcer of the Company on 6August 2010. Mr Ng has more than 20 years of professional experiencecovering Sales & Marketing, Program Management, and Operations &Training in both public and private sectors. An Overseas Merit Scholar(SAF), Mr Ng was with the Republic of Singapore Navy for more than10 years. Prior to joining the Group, he served as Asia ConsultingSolution Director (Oracle Consulting Services, 2007-2010), VicePresident (UOB, 2000-2007), and Assistant Head (Spring Singapore1999-2000). Mr Ng holds a Master of Arts from University of Oxfordand a MBA (Accountancy) from Nanyang Technological University.Mr Ng is a Certied Financial Analyst (CFA), and a Financial RiskManager (FRM).

LOW JOOI KOK, 49Chief Financial Ofcer

Mr Low was appointed Chief Financial Ofcer of the Company on2 March 2010. Mr Low has more than 20 years of commercialexperience spanning sales, marketing and line-of-business executivemanagement, nancial management and operational management.He was Chief Financial Ofcer of IBM Singapore in 1998, andthen Director of Business Partner Sales for ASEAN and South Asiatill 2009. Prior to joining IBM, Mr Low was with Visa International,holding various appointments overseeing nancial planning andmanagement of strategic business investments for Visa within theAsia-Pacic region. Mr Low holds a Master of Business Administrationfrom Southern Illinois University, Carbondale and is a Certied PublicAccountant.

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TAY MONG SENG JEFFREY, 55Managing Director, Marshal Systems Pte Ltd

Mr Tay is the founder and Managing Director of Marshal Systems PteLtd, a leading system integrator preferred by internationally-renownedcompanies in the offshore and marine industry. He began his careerin the offshore and marine industry in 1981 with Singapore Slipwayand Engineering, a subsidiary of Keppel Shipyard. In 1983, he

joined Kongsberg (Asia) to handle projects for Far East LevingstonShipbuilding which is now known as Keppel FELS. Mr Tay brings tothe Group more than 29 years of industry experience and believesdifferentiation is the key to outshining competitors in the businessworld. Mr Tay received various training and certication in the areasof electrical, electronics, communication services, and also sales andmarketing management.

PEH CHEE OON LAWRENCE, 51General Manager, Viking Airtech Yantai Facility

Mr Peh was appointed General Manager (Yantai-China) of the companyon 1 December 2012. Mr Peh has 14 years of international experience,having worked and lived abroad on 3 continents and 4 cities since1998. With more than 22 years of management experience in thecontract manufacturing industry (both mechanical and electronics). MrPeh received various training and certication in the areas of quality,production, procurement, operations management, and also salesand marketing management.

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Top left to right: Low Jooi Kok, Ng Yeau Chong, Lin Wei Daniel, Tay Mong Seng Jeffrey, Peh Chee Oon LawrenceBottom left to right: Ong Choo Guan, Andy Lim

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CORPORATEINFORMATION


COMPANY REGISTRATIONViking Offshore and Marine Limited(listed on the Singapore Exchange)Registration: 199307300M

REGISTERED OFFICEViking Offshore and Marine Limited21 Kian Teck RoadSingapore 628773Tel: (65) 6601 9500Fax: (65) 6601 9600Email: [email protected]

Website: www.vikingom.com

BANKERSUnited Overseas Bank LimitedOverseas-Chinese Banking Corporation LimitedMalayan Banking BerhadStandard Chartered Bank

AUDITORErnst & Young LLPPublic Accountants and Chartered AccountantsOne Rafes Quay North Tower Level 18Singapore 048583

Partner-In-Charge: Terry Wee Hiang Bing(wef nancial year ended 31 December 2013)

COMPANYS SPONSORCIMB Bank BerhadSingapore Branch50 Rafes Place #09-01Singapore Land TowerSingapore 048623Tel: (65) 6337 5115Contact Person: Tony Toh

SHARE REGISTRAR & SHARETRANSFER OFFICEM&C Services Pte Ltd112 Robinson Road #05-01Singapore 068902

BOARD OF DIRECTORSANDY LIMChairman and Executive Director

ONG CHOO GUANChief Executive Ofcer and Executive Director

LIN WEI DANIELExecutive Director

LEE SUAN HIANGLead Independent Director

LIEN KAIT LONGIndependent Director

TAN WEE PENG KELVINIndependent Director

AUDIT COMMITTEELien Kait Long (Chairman)Tan Wee Peng KelvinLee Suan Hiang

NOMINATING COMMITTEELee Suan Hiang (Chairman)

Tan Wee Peng KelvinLin Wei Daniel

REMUNERATION COMMITTEETan Wee Peng Kelvin (Chairman)Lee Suan HiangLien Kait Long

ADVISOR TO CHAIRMANBo Johansson

COMPANY SECRETARYLin Moi HeyangLotus Isabella Lim Mei Hua


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Viking Offshore and Marine Limited

21 Kian Teck Road Singapore 628773Tel: +65 6601 9500Fax: +65 6601 9600www.vikingom.com


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FINANCIAL STATEMENTS

Table of Contents

2 Corporate Governance Report20 Directors Report26 Statement by Directors27 Independent Auditors Report28 Consolidated Statement of Comprehensive Income29 Balance Sheets30 Statement of Changes in Equity34 Consolidated Cash Flow Statement36 Notes to the Financial Statements

106 Shareholding S tatistics108 Warrantholding Statistics109 Notice of Annual General Meeting114 Appendix

Proxy Form

This document has been prepared by the Company and its contents have been reviewed by the Companys Sponsor, CIMB Bank Berhad, Singapore branch (Sponsor), forcompliance 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. TheSponsor has not independently veri ed the contents of this document. The document has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assumeno 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 contactperson for the Sponsor is Mr Tony Toh, Director, Corporate Finance. The contact particulars are 50 Ra es Place #09-01 Singapore Land Tower Singapore 048623, Telephone:+65 6337 5115.


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CORPORATE GOVERNANCE REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

INTRODUCTION

Viking O shore and Marine Limited ( VOM or the Company or the Group ) is rmly committed to observing and maintaining high standards ofcorporate governance in compliance with the principles and guidelines set out in the Code of Corporate Governance 2012 ( Code ). The Companybelieves that its corporate conduct and growth must be supported by well-de ned policies, transparent and consistent processes, a system ofstringent internal checks and controls, and accountability.

Guided by the Code, VOM adheres and apply them in both substance and form, and continually seek to modify, improve and keep current to itsever-changing business dynamics. The Company believes that only in doing so, Shareholders interests are safeguarded, and the Company isbetter able to deliver its long-term strategic commitments of maximizing Shareholder value and returns.

To attain this aim, our well-diversi ed and quali ed Board Members work closely with our experienced Management personnel, drawing upon closeadherence to the principles and guidelines prescribed in the Code, and other applicable rules and regulations.

This Report sets out our corporate governance framework and practices with speci c reference to guidelines set out in the Code.

BOARD MATTERS

Principle 1: Boards Conduct of its A airs

Every company should be headed by an e ective Board to lead and control the Company. The Board is collectively responsible for the success ofthe Company. The Board works with Management to achieve this and the Management remains accountable to the Board.

The Board sets the benchmark and is responsible for VOMs corporate governance standards and policies. Its leadership responsibilities entailoversight on the Groups business performance and operating and nancial a airs, providing entrepreneurial leadership, setting its strategicdirection and performance objectives, and setting long term goals for VOM and high standards of corporate governance. Speci cally, the principalfunctions of the Board are to:

1. Approve the corporate direction and strategy of the Company and monitor the performance of the Management;

2. Approve the nomination of Directors and appointment of key managerial personnel;

3. Approve the annual budget, major funding proposals and investment proposals, and ensuring the necessary nancial and human resourcesare in place for the Company to meet its objectives;

4. Establish a framework of prudent and e ective controls which enable risks to be properly assessed and managed, including safeguarding

of Shareholders interests and Companys assets;

5. Identify the key stakeholder groups and recognise that their perceptions a ect the Companys reputation;

6. Review the nancial performance and necessary reporting compliance;

7 Set Company values and standards (including ethical standards) and ensure that obligations to Shareholders and other stakeholders areunderstood and met;

8. Assume responsibility for corporate governance; and

9. Consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.


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Besides the formal Board meetings, the Directors also speak on speci c subjects. During the year, the Directors consulted one another severaltimes with respect to the Groups business plans.

The key roles of the Board are:

1. Mr Andy Lim, Chairman and Executive Director2. Mr Ong Choo Guan, Chief Executive O cer and Executive Director3. Mr Daniel Lin Wei, Executive Director4. Mr Lee Suan Hiang, Lead Independent Director5. Mr Lien Kait Long, Independent Director6. Mr Kelvin Tan Wee Peng, Independent Director

Delegation of Authority on certain Board Matters

To assist the Board to e ectively discharge its oversight duties and functions, it delegates speci c areas of responsibilities, without abdicating itsresponsibilities, to three Board Committees namely; the Audit Committee, the Nominating Committee, and the Remuneration Committee, each ofwhich is governed by clear terms of reference which have been approved by the Board. Minutes of all Board Committee meetings are circulated toBoard members so that they are kept abreast of proceedings and matters discussed at such meetings. To address and manage possible con ictsof interest that may arise between Directors interests and those of the Group, the Company has put in place appropriate procedures includingrequiring such Directors to refrain from participating in meetings or discussions (or relevant segments thereof), in addition to abstaining from voting,on any matter in which they are so interested or con icted.

The Board has delegated the day-to-day operations to the Management while reserving key matters for Board approval. Key functions includeapproving the consolidated nancial statements for the Group, con ict of interest checks for Directors, disposal of assets, strategic planning andmaterial acquisitions, share issuances, dividends, and matters which require Board approval as speci ed under the Companys Interested Person

Transaction Policy.

In addition, the Company also appoints each Director to the Chairman position of the key subsidiaries. These are Non-Executive appointmentsand serve as the conduit between the Companys Board and the subsidiarys Board primarily for oversight in performance management as wellas ensuring additional covers for corporate governance. As at 31 December 2013, the Directors holding Chairman appointment at the subsidiaryBoard are:

1. Mr Lee Suan Hiang, Chairman of Viking Airtech Pte Ltd2. Mr Kelvin Tan Wee Peng, Chairman of Marshal Systems Pte Ltd

The Boards approval is required for transactions or matters such as major investments, corporate restructuring, mergers and acquisitions, material

acquisitions or disposal of assets, the release of the Groups nancial results announcements, interested person transactions of a material natureand declaration of dividends.

Management had conducted brie ngs and orientation programmes to familiarise newly appointed Directors and existing Directors with the variousbusinesses, operations and processes of the Group. There are no new Directors appointed during the year.


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Meetings of the Board and Board Committees

The Board convenes regularly for scheduled meetings and any ad-hoc meetings are arranged when required; to review the key activities, nancialperformance, business plans, corporate strategies, potential acquisitions and divestments, and signi cant operational and/or management mattersof the Group. During Board meetings, the Directors actively participate, discuss, deliberate and appraise the matters requiring its attention anddecision. If Directors are unable to attend Board meetings physically, such meetings may be conducted via telephone, video conference or anyother form of electronic or instantaneous communications.

The Directors, who are also the Chairman of the subsidiarys Board are given direct and full access to the Management team of the Groups threemain subsidiaries through scheduled monthly subsidiary Board meetings.

The number of Board meetings and Board Committee meetings held in the current nancial year and the attendance of Directors at these meetingsare as follows:

Attendance of Board Members Board Audit CommitteeNominatingCommittee

RemunerationCommittee

Meetings held during the nancial year ended 31 December 2013 4 4 1 1

Mr Andy Lim 4 NA NA NA Mr Ong Choo Guan 4 NA NA NA Mr Daniel Lin Wei 3 NA 1 NA

Mr Lee Suan Hiang 4 4 1 1Mr Lien Kait Long 4 4 NA 1

Mr Kelvin Tan Wee Peng 4 4 1 1

Upon appointment, each new Director is put through an orientation program to familiarise new Directors with the Groups business activities,strategic directions, policies, major impending projects as well as corporate governance practices of the Group. In addition, new Directors arealso encouraged to attend the relevant courses and programs from the Singapore Institute of Directors ( SID) to be acquainted with the role andresponsibilities of a Director in the context of a listed company.

Directors are continually and regularly updated on the Groups businesses and the regulatory and industry-speci c environments in which theentities of the Group operate. Updates on relevant legal, regulatory and accounting developments may be in writing or disseminated by way ofbrie ngs or presentations. In addition, the Audit Committee Chairman will regularly keep the Board abreast of changes and development within theaccounting and nancial reporting areas. During the year, brie ngs were also conducted for the Board and some Directors also attended externalbrie ngs on the Directors disclosure obligations, recent developments in the laws on insider trading, and the proposed changes to Code by theregulators. The Company also encourages the Directors to be members of the SID, and for them to receive regular journal updates and training

from SID to stay abreast and be apprised of developments in nancial, legal, regulatory requirements, and the business environment.

Principle 2: Board Composition and Guidance

There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate a airs independently, in particular, from Management and 10% Shareholders. No individual or small group of individuals should be allowed to dominate the Boardsdecision making.


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The Board comprises six members, with Independent Directors comprising more than one-third composition of the Board. The Company conductsan annual review of the size and composition of the Board to ensure that both aspects continue to meet the needs of the Group in managing thebusinesses as well as maintaining a strong independent element within the composition of the Board. The Board will continuously review this witha view to enhance corporate governance practices in tandem to proposed changes to the Code.

The Nominating Committee is of the view that the current size and composition is appropriate and conducive to the scope and nature ofthe Groups business, and for facilitating e ective exchanges and decision making. The Board proactively seeks to maintain a balanced mixof experiences, competences, and attributes among the Directors, and this is re ected in the diversity of the Board composition in terms ofbackground and competencies. Such experiences and competencies include nance and accounting, sales and marketing, strategic planning,investment management, relevant industry knowledge, entrepreneurial and management experience, familiarity with regulatory requirements andrisk management. The Management is provided with full and direct access to the Board which also actively provides guidance and a broad range

of views and perspectives.

There exists active participation and engagement among the Directors in often dynamic and stimulating exchanges of views and opinions at boththe Committee and Board meetings. The Directors make decisions using their collective wisdom and exercise their individual opinions whilst atall times acting in the best interest of the Group. No individual or group within the Board dominates or is able to dominate the discussion processand decision making. The Non-Executive Directors also meet regularly without Managements presence to discuss matters such as the Boardse ectiveness and Managements performance. As and when required, the Non-Executive Directors are also invited to participate to review anddeliberate with Management on the Groups business culture, plans and long-term strategies. In addition, the Non-Executive Directors also activelymonitor and provide guidance to the Groups subsidiaries through their appointment as Non-Executive Chairman of the Subsidiaries.

On an annual basis, the Directors are each required to provide information on their current shareholding interests, areas of con icts (if any),Directorship in other companies; and declare their independence (for Independent Directors) and time commitment towards discharging oftheir responsibilities. The Nominating Committee will determine the independence of each Director based on the de nitions and guidelines ofindependence set out in the Code. In respect of the nancial year ended 31 December 2013, the Nominating Committee is satis ed with theindependent status of the Independent Directors and the independent element on the Board is maintained.

The duties and responsibilities of the Executive Directors are clearly set out in their service agreements. The Company has an on-going budget forall Directors to receive relevant training. Board members are encouraged to attend seminars and receive training in connection with their duties asDirectors in areas such as accounting and legal knowledge, particularly on latest developments to relevant laws, regulations, accounting standardsand changing commercial risks to enable them to make well-informed decision and to ensure that the Directors are competent in carrying out theirexpected roles and responsibilities.

Principle 3: Chairman and Chief Executive O cer

There should be a clear division of responsibilities at the top of the Company the working of the Board and the executive responsibility of the

Companys business which will ensure a balance of power and authority, such that no one individual represents a considerable concentrationof power.

The Chairman and the Chief Executive O cer ( CEO) positions are held by separate individuals. This is so that an appropriate balance of powerand authority, with clear divisions of responsibilities and accountability, can be attained. This segregation of roles also facilitates a healthy, openexchange of views and opinions between the Board and Management in their deliberation of the business, strategic plans and key activities of theCompany. The Chairman is not related to the CEO.


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The Chairman bears the primary responsibility for the workings of the Board, ensuring its e ective function, sets its agenda and ensure that adequatetime is available for discussion of all agenda items, in particular strategic issues. He promotes a culture of openness and debate at the Board.He also ensures that the Board meetings, are held whenever necessary; the Directors receive accurate, clear and timely information, encouragesconstructive relations between Management and the Board, as well as between Executive and Independent Directors and facilitates the e ectivecontribution of Independent Directors; and ensures e ective communication with Shareholders. The Chairman also plays an instrumental role incharting corporate directions and strategies, developing business for the Group and providing the Group with strong leadership and vision. He isresponsible for promoting high standards of corporate governance.

The CEO is primarily responsible for the day-to-day management of the operations and performance of the Group; and reports to the Board onthe Groups operations and performance. He has overall responsibility for the organisational e ectiveness and the implementation of policies anddecisions of the Board. The CEO works closely with the Chairman on formulating the Groups operational strategies and matters to be tabled at

the Board level.

The presence of a strong, independent and active participation of the Independent Directors ensures the proper functioning of the Board and goodcheck and balance. All major decisions made by the Chairman and CEO are reviewed by the Audit Committee. Their performance and appointmentto the Board is reviewed by the Nominating Committee and their remuneration packages are reviewed by the Remuneration Committee periodically.

As such, the Board believes that there are adequate safety measures in place against an uneven concentration of power and authority, and theChairman and CEO do not have unfettered powers of decisions.

The Board has also appointed Mr Lee Suan Hiang as the Lead Independent Director to coordinate and to lead the Independent Directors to providea non-executive perspective and contribute to a balance of viewpoints on the Board. He is the principal liaison on Board issues between theIndependent Directors and the Chairman. He is available to shareholders where they have concerns which contact through the normal channelsof the Chairman and CEO or CFO has failed to resolve or is inappropriate.

The Lead Independent Director may call for meetings of Independent Directors from time to time without the presence of other Directors andprovide feedback to the Chairman after such meetings.

Principle 4: Board Membership

There should be a formal and transparent process for the appointment and re-appointment of Directors to the Board.

Nominating Committee

The majority (being two-thirds) of the members of this Committee, including the Chairman, are independent Non-Executive Directors. TheNominating Committee ( NC) comprises:

1. Mr Lee Suan Hiang Lead Independent Director Chairman2. Mr Kelvin Tan Wee Peng Independent Director Member3. Mr Daniel Lin Wei Executive Director Member

The NC is guided by the Terms of Reference approved by the Board and set out the duties and responsibilities of this committee. The NCs principalfunctions are to:

1. Establish procedures for and make recommendations to the Board on all Board and Committees appointments;

2. Determine orientation programs for new Directors, and recommend opportunities for the continued training and professional developmentof the Directors;


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3. Review and make recommendations to the Board for the re-nomination of Directors, taking into consideration the individual Directorscompetencies, commitment, contribution and performance, such as his attendance at meetings of the Board and/or Board committees,participation, candour and any special contribution.The NC is able to determine if a Director has adequately and is able to continue carryingout his/her duties as a Director of the Company. Internal guidelines have been set in place to address the competing time commitmentsfaced when Directors serve on multiple boards;

4. Assess a Directors independence annually, bearing in mind the relevant provisions of the Code and all other salient factors;

5. Review the size and composition of the Board with the objective of achieving a balanced Board with a proper mix of experience andexpertise and progressive renewal of the Board;

6. Recommend to the Board the performance criteria and processes for appraisals to be used for the evaluation of individual Directors, aswell as the e ectiveness of the Board as a whole; The criteria and processes are subject to the Boards approval;

7. Review the appointment of relatives of Directors and/or Substantial Shareholders to managerial positions; and

8. Review of board succession plans for Directors, in particular, the Chairman and the CEO. In its annual review, the NC evaluates and a rms the independent status of the Directors having considered the guidelines set out in the Code.

The NC has con rmed the status of the Non-Executive Directors of the Company as follows:

1. Mr Lee Suan Hiang Independent2. Mr Kelvin Tan Wee Peng Independent3. Mr Lien Kait Long Independent

Although some of the Directors have multiple Board memberships, the NC has considered and is satis ed that each of them is able to and hasadequately carried out his duties as a Director of the Company. As time requirements of each director are subjective, the NC has decided not tox a maximum limit on the number of Directorships a Director can hold. The NC considers that the multiple board representations held presentlyby its Directors do not impede their respective performance in carrying out their duties to the Company.

The Companys Articles of Association ( Articles ) provides that at least one-third of its Directors shall retire from o ce and are subject to re-election at every Annual General Meeting ( AGM). All Directors are required to retire from o ce at least once every three years. The NC is satis edthat the Directors who are retiring in accordance with the Articles at the forthcoming AGM are properly quali ed for re-appointment by virtue oftheir skills, experience and contribution. Newly appointed Directors must also submit themselves for retirement and re-election at the next AGMimmediately following their appointment. The Shareholders approve the appointment or re-appointment of Board members at the AGM.

Description of Nominating Process of New Directors

The search and nomination process for new Directors involves a review of the existing size and composition of the Board. In such reviews,the NC endeavours to ensure that the size of the Board is adequate and not unwieldy to interfere with e ciency in decision-making; and thecomposition of the Board is appropriately diverse with views and opinions for discussion and decision-making. The NC considers factors suchas the ability of the potential candidate to contribute to discussions, deliberations and activities of the Board. In addition, the relevant experience,quali cation, competence and attributes of the prospective candidates are evaluated in considering their appointment to the Board. In doing so,where necessary and appropriate, the NC may rely on its networking contacts and/or recommendations from fellow Board members to assist withidentifying and short listing of candidates.


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Key Information regarding Directors

Key information of the Board members is set out in the Board of Directors section of this Annual Report.

Principle 5: Board Performance

There should be formal assessment of the e ectiveness of the Board as a whole and the contribution by each Director to the e ectiveness of theBoard.

The Board has established and implemented a formal process for assessing the e ectiveness of the Board collectively and individually. The Boardwill also be implementing a process for assessing the e ectiveness of its board committees. Annually, the NC will lead the Board e ectiveness

review through an open face-to-face meeting where each predetermined attribute and criteria is discussed and challenged rigorously to reach aconsensus on the assessment. Each of the attributes will be scored and instances are cited to demonstrate and substantiate against each attributescore as evidential support. Quantitative and qualitative factors are considered in developing the attributes which include areas of evaluation withrespect to Board functions, Board meetings, Board structure and communication. In addition, the Board is also measured on its e ectiveness informulating strategic plans for the Management and monitoring the progress and performance against the set objectives. The Board committeesare also evaluated for their e ectiveness against their respective terms of reference.

When considering the re-appointment of any Director, the NC evaluates the performance of the Director, with the aim of determining the Directorsability to continue to contribute e ectively and demonstrate commitment to the role. This assessment will be done on an annual basis. The criteriaadopted in the assessment includes whether the Director will continue to demonstrate commitment to the role (including commitment of time forBoard and Committee meetings, intensity of participation at meetings and special contributions).

Principle 6: Access to Information

In order to ful l their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

In order for the Board to make an informed decision and to facilitate meaningful deliberated discussions during meetings of the Board and BoardCommittees, Management provides the Board with adequate and timely information on matters which require the Boards decision or approval,or which the Board should have knowledge of. These include reports relating to the nancial and operational performance of the Company, whichare circulated to the Board prior to its meetings. Information provided also include background or explanatory information relating to matters to bebrought before the Board, copies of disclosure documents, budgets, forecasts and monthly internal nancial statements. In respect of budgets,any material variance between the projections and actual results should also be disclosed and explained. For decisions and/or resolutions requiredon major business plans, the Management provides the Board with detailed Board papers, specifying relevant information and justi cationsfor each proposal for which the Board approval is sought. Such information include relevant historical nancial information coupled with future

forecasts, opportunities and risk analyses, mitigation plans, and other key integral commercial issues requiring the Board to focus on.

The Board receives from Senior Management quarterly management accounts which present a balanced and understandable assessment ofthe Groups performance, position and prospects. Besides the provision of such information to the Board, Senior Management also conductpresentations to discuss the information and encourage active exchanges of views and sharing. The Board also delegates the monthly in-depthreview and monitoring of the Group and subsidiarys performance to the respective appointed Non-Executive Chairman of the subsidiary. Monthlymeetings are held whereby the Senior Management will present and review monthly performance and associated results. Directors are givenseparate and independent access to the Companys key management personnel to address any enquiries. Directors are also entitled to requestfrom Management and are provided such additional information as needed in a timely manner to make informed decisions.


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e. Review all matters concerning the remuneration of Non-Executive Directors to ensure that the remuneration is commensurate with thecontribution and responsibilities of the Directors.

The RC reviews the performance objectives (including weightage between quantitative nancial performance gures as well as qualitative businessdevelopment and management attributes). Directors fees are set according to remuneration framework. All Independent Directors are paidDirectors fees, subject to approval at the AGM.

The RC may, from time to time, and where necessary or required, seek advice from external consultants in designing the remuneration frameworkand policies, and xing the remuneration packages of individual Directors and Executive Management of the Company. This is to ensure thatcompetitive compensation and progressive policies, with appropriate mix of short and long term incentives, are in place to attract, retain andmotivate competent and committed Management.

Principle 8: Level and Mix of Remuneration

The level of remuneration should be aligned with the long-term interest and risk policies of the Company appropriate to attract, retain and motivatethe Directors needed to run the Company successfully but companies should avoid paying more than is necessary for this purpose. A signi cant

proportion of Executive Directors remuneration should be structured so as to link rewards to corporate and individual performance.

In making its recommendations to the Board on the level and mix of remuneration, the Remuneration Committee seeks to be competitive in orderto attract, motivate and retain high-performing executives to drive the Groups businesses whilst operating within the Groups risk parameters, soas to maximise long-term Shareholder value. In its deliberation of remuneration level and mix, the RC takes into consideration industry practicesand benchmarks against relevant industry players as well as comparable positional responsibilities to ensure that its remuneration practices arecompetitive. The Company adopts a performance-driven and meritocratic approach to compensation, with rewards linked to individual andcorporate performance to align interests of Management with those of Shareholders and promote the long-term success of the Company. Such

performance-related remuneration should take account of the risk policies of the Company, be symmetric with risk outcomes and be sensitive tothe time horizon of risks.

The Companys remuneration framework comprises a xed component in the form of a basic salary, a variable component linked to the performanceof the individual and the Company, and a long-term

Viking Offshore and Marine Ltd Annual Report 2013

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Transcript of Viking Offshore and Marine Ltd Annual Report 2013