Annual Report 2011 Mermaid Marine Australia Limited ABN 21 083 185 693 Corporate Directory Auditors DIRECTORS Deloitte Touche Tohmatsu Tony Howarth Chartered Accountants Chairman Level 14, Woodside Plaza 240 St Georges Terrace Jeffrey Weber PERTH WA 6000 Managing Director Tel: 61 8 9365 7000 James Carver Fax: 61 8 9365 7001 Executive Director Solicitors Mark Bradley Non-Executive Director Blake Dawson Level 32, Exchange Plaza Andrew Edwards 2 The Esplanade Non-Executive Director PERTH WA 6000 Tel: 61 8 9366 8000 COMPANY SECRETARY Fax: 61 8 9366 8111 Dylan Darbyshire-Roberts Bankers Registered Office National Australia Bank Limited Endeavour Shed, 1 Mews Road 100 St Georges Terrace FREMANTLE WA 6160 PERTH WA 6000 Tel: 61 8 9431 7431 Tel: 1300 889 398 Fax: 61 8 9431 7432 Fax: 61 8 9441 9282 Email: [email protected] www.mma.com.au About the cover: Mermaid Reliance towing the Mermaid Regent (fuel barge) in Dampier, Western Australia. The Company was awarded a contract during the year to deliver fuel to Barrow Island to support the Gorgon Project. The fuel barge is the first of its kind in this type of operation, it has been designed specifically to meet the stringent requirements put in place for Barrow Island as part of the Gorgon Project. As part of the Project, Mermaid Marine’s Projects Department managed the entire process from concept through design, conversion, commissioning then delivery from Singapore to Dampier. The fuel barge is now in operation supplying fuel to the island on a regular rotation. Contents Vision and Values 2 About Mermaid Marine 4 Financial Highlights 6 Chairman’s Address 9 Managing Director’s Review of Operations 10 Health & Safety, Environment and Community 16 Corporate Governance Statement 20 Directors’ Report 26 Auditor’s Independence Declaration 43 Audit Report 44 Directors’ Declaration 46 Statement of Comprehensive Income 50 Statement of Financial Position 51 Statement of Changes in Equity 52 Statement of Cash Flows 53 Notes to the Financial Statements 54 Additional Securities Exchange Information 97 Vision and Values To create value for our shareholders, clients, employees and suppliers by providing a range of marine related services safely, professionally and competitively. Our Mission Our Values To differentiate and grow our Company by People providing a superior level of service that We acknowledge that success is founded encompasses the following key strategies: on the commitment and endeavour of the • Relentless focus on safety and a culture of people who work for the Company and with mutual responsibility the Company. • Awareness of our natural and working Integrity environment with a goal of minimal impact Our “license to operate” is dependent upon • Understanding our clients’ current and the integrity of our people, our management emerging requirements systems and our governance systems, all of which guide the overall performance of the • Providing a working environment for Company. our employees that is safe and fulfilling, acknowledges good performance and Initiative and Flexibility presents opportunities for advancement We recognise that superior service is • Clarity in our key business processes dependent upon the ability to address our and a system of continuous review and clients’ current and emerging requirements improvement creatively and with a willingness to explore new possibilities. We accept change as a • Development and maintenance of effective necessary and natural progression towards infrastructure and equipment improved performance. • Meeting our responsibilities to the community and the relevant regulatory Performance authorities We encourage performance excellence and understand that our success and ability to grow is contingent upon professional and diligent execution of our core business. About Mermaid Marine MMA has grown substantially since listing on the Australian Stock Exchange in 1999 to become Australia’s largest marine services provider to the offshore oil and gas industry. With supply bases in Dampier and Over the past 5 years, MMA has Broome and a range of modern invested over $300 million in a fleet offshore vessels, MMA offers its renewal and infrastructure development clients marine logistics services program ensuring it can meet the throughout all phases of the offshore emerging requirements in Australia’s oil and gas development cycle. offshore oil and gas industry. MMA’s head office is in Fremantle, Now a member of the S&P/ASX200 Western Australia, with key operations Index, MMA aims to address its clients’ bases in Dampier and Broome and an current and emerging requirements international office in Singapore. safely, reliably and with a willingness to explore new possibilities. 5 Vessel Supply Slipway Operations Bases MMA owns and operates over 30 MMA operates strategically located MMA’s Dampier Slipway is strategically vessels throughout Australia and supply bases in Dampier and Broome. located at the Dampier Supply Base internationally. and is capable of docking vessels up to Spanning 17 hectares, MMA’s Dampier MMA has a range of vessels available Supply Base has a 6 berth wharf facility, 3,200 tonne displacement. for charter including: open sealed laydown areas, undercover The Slipway is a key MMA asset in storage and offices capable of servicing • Anchor handling tugs that it provides timely maintenance and the array of vessels engaged in offshore • AHTS vessels repair of MMA’s expanding fleet in the support activities. • Platform supply vessels North West and ensures that MMA is MMA is in the unique position of being • Multi-purpose survey vessels capable of servicing its clients’ marine able to offer its clients in the North requirements safely and with a degree • Harbour tugs West Shelf the full range of marine of flexibility that no other operator in the • Barges logistics services from vessel support region can provide. • Accommodation vessels and supply base services, to ship repair and maintenance facilities. MMA’s Slipway is the only ship repair MMA has custom built a number of facility in direct proximity to the North vessels for specialist marine services MMA’s Broome Supply Base operations West Shelf, with the alternatives and is experienced in the provision of encompass over 11 hectares of requiring significant travel time. marine support across the exploration, land, strategically located to service exploration, production and construction construction and production sectors of In addition to servicing MMA’s own activities in the Browse Basin. The the oil and gas development cycle. fleet, the Slipway provides services to Broome Supply Base operations, MMA’s international operating conducted through an incorporated third party operators including routine entity, Mermaid Marine Asia Pte Ltd joint venture between MMA and and emergency dockings, mobilisations (MMAS), is responsible for managing Toll Holdings Ltd, offers clients open and a wide range of marine repairs and the international vessel fleet. MMAS laydown and undercover storage, maintenance services. operates under its own document of recently built offices, casing storage and compliance and works closely with the washdown facilities. The Slipway commenced operations in MMA Projects and Operations teams 2001 and has docked over 500 vessels to conduct project mobilisations, vessel in that time. acquisitions and to source vessels for short term charter to complement the Group’s fleet of owned vessels. Having the flexibility to register vessels under a foreign flag means that MMA can offer its clients a range of international and Australian based solutions. Mermaid Marine Australia Limited Annual Report 2011 Highlights for FY11 Revenue up Net profit after Earnings per share 48.7% to tax up 37.1% to up 24.1% to $289.1m $43.2m 21.1c Full year dividend Operating cashflow Cash at bank up up 12.5% to up 53.8% to 105.6% to 9cps $79.5m $55.1m 7 Financial Highlights Revenue ($m) CAGR* Net profit after tax ($m) CAGR 29% 36% 300 50 250 289.1 40 43.2 200 30 194.4 (1) 150 31.5 163.9 149.4 20 26.5 100 103.1 17.9 10 50 12.5 0 0 07 08 09 10 11 07 08 09 10 11 Earnings per share (cents) CAGR Dividends per share (cents) CAGR 24% 73% 25 10 20 8 9 21.1 8 15 17.0(1) 6 14.5 6 10 11.8 4 8.9 5 2 2 1 0 0 07 08 09 10 11 07 08 09 10 11 Operating cashflow ($m) Return on equity (%) 80 25 79.5 20 60 18.5 15 17.5 17.3(1) 51.7 16.8 40 15.6 10 20 31.0 26.0 5 18.1 0 0 07 08 09 10 11 07 08 09 10 11 (1) Normalised to exclude the one-off tax benefit from the Federal Government Capital Investment Allowance - the shaded area indicates the actual reported results. *CAGR - compound annual growth rate. Mermaid Marine Australia Limited Annual Report 2011 MMA Board of Directors Left to right: Andrew Edwards, Mark Bradley, Tony Howarth, Jeff Weber and James Carver. MMA continues to have a focused strategy to grow its integrated oil and gas marine services business, both within Australia and internationally. 9 Chairman’s Address It gives me great pleasure to present access roads and wharf infrastructure. in the region. Internationally, MMA the Annual Report for Mermaid Marine Demand for our wharf facilities is continues to pursue opportunities to Australia Ltd (“MMA”) for the year consistently high and MMA continues to expand and provide high quality marine ended 30 June 2011. MMA continued provide a critical support role in Dampier solutions to clients. its track record of consistent earnings for the oil and gas industry. The Company is in a strong financial growth, delivering a strong result for A key challenge of operating in Dampier position, having raised $64 million in MMA shareholders in 2011. however, is the increasing pressure new capital by way of an institutional Net Profit after Tax (“NPAT”) for the on costs due to a severe shortage placement and share purchase plan in year increased to $43.2 million and of housing and social services in the October 2010, and is well placed for Earnings per Share (“EPS”) increased to area.