SAPURA ENERGY BERHAD ANNUAL REPORT 2018 01 02 03 04 AT A GLANCE CORPORATE LEADERSHIP MANAGEMENT OVERVIEW DISCUSSION AND ANALYSIS Our Vision Corporate Information Board of Directors President and Group Chief 02 16 20 Executive Oicer’s Statement 40 Facts at a Glance Group Organisational Proile of Board of Directors 04 Structure 22 Strategic Review and Outlook 17 42 Global Footprint Executive Committee 06 Financial Calendar 32 Segmental Results 18 44 Health, Safety and Proile of Excecutive Environment Committee 2018 Strategy at a Glance 08 34 49 5-Year Group Financial Key Risks to the Group Summary 51 10 Commitment to Sustainability Chairman’s Statement TABLE OF 52 12 Commitment to People CONTENTS 53 05 06 07 08 SUSTAINABILITY EVENTS CORPORATE FINANCIAL REPORT GOVERNANCE STATEMENTS Introduction Calendar of Events Corporate Governance Financial Statements 54 80 Overview Statement 107 85 President and Group Chief Executive Oicer’s Message Statement on Risk 56 Management and Internal 09 Control ADDITIONAL Sustainable Operations 99 INFORMATION 59 Report of Board Audit Nurturing Talent and Committee Developing Communities 101 Analysis of Shareholdings 62 237 Additional Compliance Health, Safety and Information Notice of Annual Environment 105 General Meeting 72 241 Statement of Directors’ Responsibility Statement Accompanying 106 Notice of Annual General Meeting 243 Proxy Form OUR VISION Our Vision is to be the best entrepreneurially- led, technically competent and most trusted global oil and gas company in the eyes of our customers, shareholders and most importantly, our empowered people. We will be guided by our honesty, trust and respect for all. We will achieve our business objectives by being safe, agile and professional to continuously strive to meet all of our stakeholders’ expectations. The People of SAPURA ENERGY BERHAD 02 CAPITALISING ON RESILIENCE This year’s theme represents the journey Sapura Energy Berhad has taken to ensure that we are strategically positioned and ready to capitalise on emerging opportunities as gradual optimism returns in the industry. We have leveraged on the resilience of our people and the capabilities of the Group to develop a stronger foundation for recovery. The montage on the cover is a dedication to our people for their commitment throughout this journey. SAPURA ENERGY DAY BERHAD WEDNESDAY (950894-T) DATE 18 JULY 2018 TIME th 10.00 A.M. 7 VENUE GRAND BALLROOM 1 & 2 ANNUAL LEVEL 3 (EAST WING) GENERAL KUALA LUMPUR CONVENTION CENTRE KUALA LUMPUR CITY CENTRE MEETING 50088 KUALA LUMPUR 03 FACTS AT A AT FACTS GLANCE OUR VALUE CHAIN EXPLORATION DEVELOPMENT 04 ENGINEERING AND CONSTRUCTION • 2 Major Fabrication Yards • 1 Subsea Construction Vessel • 2 Anchor Handling Tug Supply Vessels • 1 Minor Fabrication Yard • 42 Remotely Operated Vehicles • 1 Floatover Launch Barge • 6 Derrick Lay Vessels • 3 Survey Vessels • 6 Accommodation Workboats/Barges • 6 Pipelay Vessels • 3 Diving/Support Vessels DRILLING EXPLORATION AND • 8 Tender Barge Rigs PRODUCTION • 7 Semi-Submersible Tender Rigs • Previously referred to as our Energy Segment • Participating Interest in 8 Production Sharing Contracts PRODUCTION REJUVENATION DECOMMISSIONING & ABANDONMENT 05 THE GROUP’S OUR LOCATIONS GLOBAL HOOK-UP & COMMISSIONING FOOTPRINT • This global footprint is based on the United Nations’ issued map. • The designations employed and the presentations of the material on this map do not imply the • Every efort is made to ensure this map is free of errors but there is no warranty that the map or its features expression of any opinion whatsoever on the part of Sapura Energy Berhad or its subsidiaries (“the are either spatially or temporally accurate or it for a particular use. This map is provided without any Group”) concerning the legal status of any country, territory, city or area or of its authorities, or warranty of any kind whatsoever, either expressed or implied. 06 concerning the delimitation of its frontiers or boundaries. South eas t A s ia GEOTECHNICAL/ OPERATIONS & ENGINEERING GEOPHYSICAL FABRICATION SURVEY MAINTENANCE INSTALLATION OF PIPELINES & MARINE, DIVING DRILLING EXPLORATION & FACILITIES & ROV SERVICES PRODUCTION (Remotely Operated Vehicles) • This global footprint is based on the United Nations’ issued map. • The designations employed and the presentations of the material on this map do not imply the • Every efort is made to ensure this map is free of errors but there is no warranty that the map or its features expression of any opinion whatsoever on the part of Sapura Energy Berhad or its subsidiaries (“the are either spatially or temporally accurate or it for a particular use. This map is provided without any Group”) concerning the legal status of any country, territory, city or area or of its authorities, or warranty of any kind whatsoever, either expressed or implied. concerning the delimitation of its frontiers or boundaries. 07 AT A GLANCE HEALTH, SAFETY 01 AND ENVIRONMENT High standards in Health, Safety and Environment (“HSE”) remain a central governing part of our operations at Sapura Energy Berhad (“Sapura Energy”) and its subsidiaries (“the Group”). We remain deeply committed to our Company’s vision of being safe, agile and professional, which includes responsibly managing risks within all aspects of our operations. We execute our work with integrity, honesty and in partnership with all stakeholders; focusing on the health and safety of our employees and the protection of the environment in which we operate. Risks are to be expected in our industry. The Group has in place a robust and comprehensive risk management system to identify, prevent, mitigate and manage such potential risks. Our HSE culture is essentially the way we do business and this is irmly embedded at every level throughout our organisation. Everyone in the Group is responsible for upholding our HSE policies. Every employee and contractor is empowered and has a duty to stop unsafe work when substandard behaviours or conditions are observed. Our extensive experience in the oil and gas sector, as well as our collaboration with industry and government stakeholders, led to the sharing and adoption of HSE best practices. We monitor HSE developments and new initiatives across the industry through these collaborations and sharing, in addition to our own experience, drives a commitment to continuous improvement in all areas of our organisation. 08 SAPURA ENERGY BERHAD ANNUAL REPORT 2018 We are honoured to have been accorded with the following awards and milestone recognitions by our clients for our various HSE achievements: Recipient Achievement Awarding Entity 500,000 man-hours without LTI for SK305 Abandonment PCPP Operating Company Sdn Bhd Sapura Technology Solutions Sdn Bhd Project Total Marine Technology Pty Ltd Platinum IFAP/CGU Safe Way Award Industrial Foundation for Accident Prevention (IFAP) Australia SapuraKencana Mexicana, S.A.P.I. de C.V. Line 76 Project - Zero LTI PEMEX Exploración y Producción S.A. de C.V. (PEMEX) Sapura Fabrication Sdn Bhd 2017 Chairman’s Safety Award ExxonMobil Exploration and Production Malaysia Inc Sapura Ofshore Sdn Bhd 2017 Chairman’s Safety Award ExxonMobil Exploration and Production Malaysia Inc Sapura Drilling Division T-9 - Gold Class 1 Malaysian Society for Occupational Health and Safety (MSOSH) Esperanza - Gold Class 1 Malaysian Society for Occupational Health and Safety (MSOSH) Esperanza - 365 Goal Zero Days Sarawak Shell Berhad/Sabah Shell Petroleum Company Limited Esperanza - 2017 Recognition for Outstanding Performance Sarawak Shell Berhad/Sabah Shell Petroleum Company Limited T-9 - Best Performing Rig – Malaysia 2017 Petronas Carigali Sdn Bhd 2017 Rig Contractor, Best Drilling HSE Performance Petroliam Nasional Berhad ISO Certiications: ISO ISO ISO ISO OHSAS 9001:2015 9001:2008 14001:2015 14001:2004 18001:2007 • Sapura Australia Pty Ltd • Sapura Subsea • SapuraKencana Mexicana, • Sapura Ofshore Sdn Bhd • Sapura Ofshore Sdn Bhd • SapuraKencana Services Sdn Bhd S.A.P.I. de C.V. • Sapura Subsea • Sapura Subsea Services Mexicana, S.A.P.I. de C.V. • Sapura Ofshore Sdn Bhd • Total Marine Technology Services Sdn Bhd Sdn Bhd • Total Marine • Sapura GeoSciences Pty Ltd • Sapura Fabrication • Sapura Fabrication Technology Pty Ltd Sdn Bhd (formerly Sdn Bhd Sdn Bhd • Sapura Fabrication known as SapuraKencana • Sapura Australia Pty Ltd • Total Marine Sdn Bhd GeoSciences Sdn Bhd) Technology Pty Ltd • Sapura Pinewell Sdn Bhd • Sapura Pinewell Sdn Bhd • Sapura Australia Pty Ltd • SapuraKencana Mexicana, S.A.P.I. de C.V. 09 AT A GLANCE 5-YEAR GROUP 01 FINANCIAL SUMMARY Financial year ended 31 January 2014 2015 2016 2017 2018 RM’mil RM’mil RM’mil RM’mil RM’mil Operating results Revenue 8,379 9,943 10,184 7,651 5,895 Proit/(loss) before tax and impairments 1,208 1,671 1,317 668 (191) Proit/(loss) before tax 1,208 1,616 (713) 385 (2,324) Proit/(loss) after tax 1,124 1,433 (791) 206 (2,505) Key Statement of Financial Position Data Cash and cash equivalents 1,387 1,257 1,948 3,520 1,716 Total assets 26,614 34,563 36,492 37,449 29,993 Borrowings 12,361 16,953 18,329 18,647 16,415 Total liabilities 16,413 22,570 24,279 24,369 20,542 Shareholders fund 10,195 11,986 12,207 13,076 9,450 Earning per share (sen) 18.92 23.93 (13.25) 3.50 (42.10) Net assets per share (RM) 1.70 2.01 2.04 2.19 1.59 Net debt to equity (times) 1.08 1.31 1.34 1.16 1.56 10 SAPURA ENERGY BERHAD ANNUAL REPORT 2018 Revenue Proit/(loss) before Tax Proit/(loss) after Tax (RM ‘mil) and Impairments (RM ‘mil) (RM ‘mil) 1,671 1,433 1,317 1,208 1,124 668