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Annual Report 2015 RISING ABOVE CHALLENGES

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Page 1: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

Annual Report 2015

RISINgABOvE CHAllENgES

Page 2: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

Integrity and mutual respect

Operate as one - Teamwork

Committed to creating value

Navigate the extra mile

We hope to achieve our Vision and Mission by upholding these tenets of our core values:

VALUES

I OC N

VISIONTo be the preferred global offshore marine service provider for the oil and gas industry.

MISSIONWe are committed to creating value for our customers, employees and stakeholders by employing a fleet of modern vessels; upholding the highest standard of Health, Safety and Environmental practices; as well as ensuring the continuous development of our greatest asset – our PEOPLE.

RIsINg AbOve ChAlleNges

The cover depicts ICON’s continued excellence and resolution to rise above the current turbulence and to continue sailing through the difficulties towards greater success as defined by its long-term goal and aspirations.

While Icon Offshore Berhad (ICON/Company), like all Offshore Support Vessel (OSV) players in Malaysia has encountered choppy waters, like a sound water-tight vessel, the Company remains on course and undeterred – sailing onwards towards reaching its intended horizon. For ICON, quality of services will overcome the temporary challenges and further strengthen the Company’s fundamentals towards making it a world-class OSV operator.

Page 3: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

2 Corporate Information

4 Corporate Structure

6 Type of Vessels

8 Financial Highlight

9 Operational Highlight

12 Board of Directors

14 Directors’ Profile

19 Senior Management Team

22 Chairman’s Statement

28 Managing Director’s Review

40 Calendar of Significant Events

42 Health, Safety and Environment

44 Corporate Social Responsibility

CONTENTS

46 Audit and Risk Management

Committee Report

50 Statement of Corporate Governance

61 Statement on Risk Management

and Internal Control

64 Statement of Directors’ Responsibility

65 Financial Statements

143 Supplemental Information

146 List of Vessels

147 List of Property

148 Analysis of Shareholdings

151 Notice of Annual General Meeting

• Proxy Form

Page 4: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

ICON OFFSHORE BERHAD2

CORPORATE INFORMATION

eXeCUTIve COMMITTee

Syed Yasir Arafat bin Syed Abd Kadir(Chairman)

Amir Hamzah bin Azizan*

Dato’ Abdul Rahman bin Ahmad **

Captain Hassan bin Ali

Lim Fu Yen

AUDIT AND RIsK MANAgeMeNT COMMITTee

Datuk Wira Azhar bin Abdul Hamid (Chairman)

Edwanee Cheah bin Abdullah

Syed Yasir Arafat bin Syed Abd Kadir

ReMUNeRATION COMMITTee

Edwanee Cheah bin Abdullah (Chairman)

Madeline Lee May Ming

Syed Yasir Arafat bin Syed Abd Kadir

NOMINATION COMMITTee

Edwanee Cheah bin Abdullah (Chairman)

Madeline Lee May Ming

Syed Yasir Arafat bin Syed Abd Kadir

COMPANY seCReTARY

Chin Mun Yee (MAICSA No. 7019243)

Chua Siew Chuan (MAICSA No. 0777689)

RegIsTeReD OFFICe

Level 7,Menara Milenium,Jalan Damanlela, Pusat Bandar Damansara,Damansara Heights,50490 Kuala Lumpur.Tel. No. : +603 2084 9000/9182Fax No. : +603 2094 9940

bOARD OF DIReCTORs

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda(Chairman and Non-Independent Non-Executive)

Amir Hamzah bin Azizan*(Managing Director and Non-IndependentExecutive Director)

Dato’ Abdul Rahman bin Ahmad **(Non-Independent Non-Executive Director)

Syed Yasir Arafat bin Syed Abd Kadir(Non-Independent Non-Executive Director)

Datuk Wira Azhar bin Abdul Hamid(Senior Independent Non-Executive Director)

Edwanee Cheah bin Abdullah(Independent Non-Executive Director)

Madeline Lee May Ming(Independent Non-Executive Director)

Datuk Abdullah bin Ahmad(Independent Non-Executive Director)

Note:* He assumed the position of Managing Director of the Company on 1 March 2016 and subsequently became a member of Executive Committee (EXCO)** Dato’ Abdul Rahman bin Ahmad ceased as a representative of Hallmark Odyssey Sdn. Bhd., (the major shareholder of ICON) pursuant to his

retirement as a Chief Executive Officer of Ekuiti Nasional Berhad (Ekuinas) on 29 February 2016. Please refer to page 57.

Page 5: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

32015 ANNUAL REPORT

heAD/MANAgeMeNT OFFICe

Level 12A, East WingThe IconNo. 1, Jalan 1/68FOff Jalan Tun Razak55000 Kuala Lumpur, MalaysiaTel. No. : +603 2180 6300Fax No. : +603 2165 1086Website : www.iconoffshore.com.myEmail : [email protected]

KeMAMAN OFFICe

Lot 13837, Jalan Penghiburan, Bakau Tinggi24000 Kemaman, Terengganu, MalaysiaTel. No. : +609-8502 740Fax No. : +609-8502 744Email : [email protected]

lAbUAN OFFICe

Lot 6875, Bestari Warehouse,Jalan Patau-Patau87000 Labuan F.T., MalaysiaTel. No. : +6087-410 387Fax No. : +6087-410 424Email : [email protected]

AUDITORs

PRICEWATERHOUSECOOPERSLevel 10, 1 Sentral,Jalan Travers, Kuala Lumpur Sentral,PO Box 10192, 50706Kuala Lumpur Sentral

legAl ADvIseRs

Wong & PartnersMember firm of Baker & McKenzie InternationalLevel 21, The Gardens South TowerMid Valley City, Lingkaran Syed Putra59200 Kuala Lumpur, MalaysiaTel. No. : +603 2298 7888

SKRINE & CoUnit No. 50-8-1, 8th floor,Wisma UOA Damansara,50, Jalan Dungun,Damansara Heights,50490 Kuala Lumpur, MalaysiaTel. No. : +603 2081 3999

PRINCIPAl bANKeRs

Affin Bank Berhad

AmBank (M) Berhad

AmInvestment Bank Berhad

Bank Pembangunan Malaysia Berhad

Malayan Banking Berhad

OCBC Bank (Malaysia) Berhad

RHB Bank Berhad

Standard Chartered Saadiq Berhad

shARe RegIsTRAR

Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan, MalaysiaTel. No.: +603 7849 0777

sTOCK eXChANge lIsTINg

Bursa Malaysia Securities Berhad (Main Market)Listed since: 25 June 2014Sector: Trading/ServicesStock name: ICONStock code: 5255

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ICON OFFSHORE BERHAD4

CORPORATE STRUCTURE

Holding company

ICON OFFshORe gROUP sDN. bhD.Licence holder

Icon Bahtera (B) Sdn. Bhd.*

* Ownership interest held by non-controlling interest is 49%

ICON FleeT sDN. bhD. Vessel holding company

100%

51%

100%

100%

Icon Corridor (L) Inc.

Icon Azra (L) Inc.

Icon Biru 1 (L) Inc.

Icon Biru 2 (L) Inc.

Icon Aliza (L) Inc.

Icon Andra (L) Inc.

Icon Astrid (L) Inc.

Icon Dahan 1 (L) Inc.

Icon Dahan 2 (L) Inc.

Icon Ikhlas (L) Inc.

Icon Lotus (L) Inc.

Icon Kayra (L) Inc.

Icon Dawai (L) Inc.

Icon Huma (L) Inc.

Icon Gaya (L) Inc.

Icon Explorer (L) Inc.

Icon Ocean (L) Inc.

Omni Marine Sdn. Bhd.

Omni Power Sdn. Bhd.

Omni Ventures Sdn. Bhd.

Omni Triton Sdn. Bhd.

Icon Maritime Training Centre Sdn. Bhd.

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52015 ANNUAL REPORT

Ship management companyICON shIP MANAgeMeNT sDN. bhD.

Icon Tigris (L) Inc.

Icon Samudera (L) Inc.

Icon Zara (L) Inc.

Icon Sophia (L) Inc.

Icon Sari (L) Inc.

Icon Waja (L) Inc.

100%

Omni Offshore (L) Inc.

Omni Emery (L) Inc.

Omni Victory (L) Inc.

Omni Flotilla (L) Inc.

Omni Marissa (L) Inc.

Omni Stella (L) Inc.

ICON-FOB Holdings (L) Inc.51%

ICON-FOB 1 (L) Inc.100%

Icon Puteri 1 (L) Inc.

Icon Puteri 2 (L) Inc.

Icon Pinang 1 (L) Inc.

Icon Pinang 2 (L) Inc.

Icon Pinang 4 (L) Inc.

Icon Piai 1 (L) Inc.

Icon Piai 2 (L) Inc.

Icon Pinang 3 (L) Inc.

Icon Pioneer (L) Inc.

Page 8: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

ICON OFFSHORE BERHAD6

TyPE OF VESSELS

ICON OFFSHORE BERHAD6

PSVPsvs are capable of working in deep water conditions and serve various types of drilling rigs and platforms, including drill ships, fixed platforms, FPsOs and semi-submersible rigs. Our Psv is equipped with a DP2 system, enabling it to accurately manoeuvre and operate in adverse weather conditions. Our PSV is the first Malaysian built diesel electric Psv and has a 750m 2 main deck cargo area. It can accommodate up to 60 personnel, including marine crew. Psvs are designed to deliver large quantities of cargo to offshore drilling and production sites. They also provide logistical support during offshore construction work. Psvs are designed for optimum capacity, and are distinguished by their (i) deadweight; (ii) available deck area for the transportation of cargo such as pipes, equipment and spares; and (iii) below-deck capacity for the storage of drilling fluid, mud and cement used in the drilling process and tank storage for water and fuel oil.

• TANJUNG PIAI 1• TANJUNG PIAI 2

AWBOur AWbs are equipped with DP2 positioning system with four point mooring capabilities. AWb vessels usually have a large deck area, used for the carriage of auxiliary equipment, spools, containers, etc. The main crane capacity ranges from 50 tonnes to 65 tonnes. Meanwhile, the maximum accommodation capacity is 200 people.

• ICON KAYRA• ICON VALIANT

AHTSAHTSs are suited for “in-field support” as the vessels have to leave space and deadweight capacity for the carriage of drilling mud, cement, base oil, drill water, and other supplies. Our AhTss have a bollard pull that ranges from 40 tonnes to 100 tonnes and horsepower engines ranging from 3,200 to 8,000 bhP. some AhTss are also equipped for firefighting, rescue operations and oil spill recovery. The stern of the vessel is open to the sea, with a stern roller fitted to enable the vessel to recover and deploy anchors, while maintaining a clear area for the vessel’s work wire. From time to time, when not performing anchor handling and towing services, our AhTss also function as ssvs and are also able to serve as safety standby rescue and fire-fighting vessels for oil spill response and recovery efforts.

• ICON AZRA • ICON IKHLAS • ICON LOTUS• ICON SAMUDERA • ICON SOPHIA• ICON ZARA• OMNI GAGAH• OMNI MARISSA • OMNI PERKASA • OMNI STELLA • OMNI TIGRIS• OMNI VICTORY• TANJUNG BIRU 1 • TANJUNG BIRU 2• TANJUNG DAHAN 1 • TANJUNG DAHAN 2• TANJUNG DAWAI• TANJUNG HUMA • TANJUNG PUTERI 1 • TANJUNG PUTERI 2 • TANJUNG SARI

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72015 ANNUAL REPORT

Note: Details on page 146.

72015 ANNUAL REPORT

SSVssvs primarily operate in shallow water. Our ssvs are used for the transportation of equipment, cargo pipe, drilling fluids, cement, fuel and fresh water from supply bases to offshore platforms and facilities.

• TANJUNG PINANG 1 • TANJUNG PINANG 2 • TANJUNG PINANG 3 • TANJUNG PINANG 4

TUGUtility vessels are much smaller versions of ssvs but without cargo tanks for drilling fluids or cement. UVs primarily operate in shallow water and are typically used to transport deck cargo, fuel, fresh water, food provisions and personnel.

• TANJUNG GAYA

AHTThese vessels are used to support offshore oil rigs, platforms and other installations and to tow mobile structures and position their mooring anchors in order to ensure their anchors are placed in a proper position. Our AhTs have a bollard pull that ranges from 40 tonnes to 70 tonnes and horsepower engines ranging from 3,200 to 5,152 bhP which are suitable to operate in shallow water fields.

The defining characteristics of AHTs are their engine power, measured in bhP and the size of their winches in terms of line pull and wire storage capacity. AhTs also possess aft decks which are utilised during anchor handling and towing operations and for the carriage of deck cargo. The stern of the vessel is open to the sea, with a stern roller fitted to enable the vessel to recover and deploy anchors, while maintaining a clear area for the vessel’s work wire.

AhTs are also capable of performing a variety of functions in harsher weather conditions compared to traditional vessels. AhTs are capable of providing long range towage services when floating platforms need to be mobilised to other fields, countries or repair yards. Deep water AhTs also provide support for construction work in transporting and carrying out projects for mobilisation of structures for floatovers, or launching or installation, positioning, hook-up and commissioning work.

• OMNI AKIRA• OMNI ANTEIA• OMNI EMERY 1

Page 10: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

ICON OFFSHORE BERHAD8

FINANCIAL HIGHLIGHT

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortisation

PAT – Profit After Taxation

* Adjusted EBITDA and Adjusted PAT excludes exceptional items mainly impairment of goodwill and vessels of RM180.6 million and RM195.4 million respectively in FY2015. Details on page143.

‘13

350

280

210

70

0

140

‘14 ‘15

RevenueRM (‘000)

266,

56633

4,86

3

318,

877

‘13

200

160

120

40

0

80

‘14 ‘15

Adjusted ebITDA*RM (‘000)

128,

088

190,

868

184,

801

‘13

100

80

60

20

0

40

‘14 ‘15

Adjusted PAT*RM (‘000)

26,0

23

89,5

74

90,7

47

3.00

2.40

1.80

0.60

0

1.20

gearing Ratio

0.62

2.91

1.00

0.55

2.78

0.87

‘13

2,000

1,600

1,200

400

0

800

‘14 ‘15

Total AssetsRM (‘000)

1,52

0,76

0

1,57

5,71

7

1,78

1,69

3

‘13

1,500

1,200

900

300

0

600

‘14 ‘15

equity Attributable to shareholdersRM (‘000)

718,

828

379,

364

1,08

0,60

6

Gearing ratio (Gross)

Gearing ratio (Net)

‘14‘13 ‘15

Page 11: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

92015 ANNUAL REPORT

OPERATIONAL HIGHLIGHT

Order book

hse statistics

Fleet utilisation rate

Revenue by geography

Total order book as at 31 December 2015

Firm periodExtension option period

38%

62%

FY2015

60%

Overseas revenueMalaysia revenue

72%

28%

Chartered/on-hired periodAvailable for charter/Temporary shutdowns/lay-upsPlanned maintainence programme and scheduled dry-docking

60%

30%

10%

RM

million266.6

Revenue 2015:

RM

million686

million13.0Man hours without LTI LTI : Lost Time Injury

Page 12: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

Harnessing synergyBinding Partnerships,

RM686 millionORDER BOOKAs at 31 December 2015

Page 13: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

Harnessing synergyICON continues to leverage on its core competencies while tapping the strong strategic partnerships it has maintained to weather the current external challenges and to maintain its position as a recognised leader in the OSV market.

Page 14: RISINg - Icon Offshore Berhadiconoffshore.listedcompany.com/misc/ar2015.pdf · Bank Pembangunan Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad RHB Bank Berhad

ICON OFFSHORE BERHAD12

BOARD OF DIRECTORS

Datuk Wira Azhar bin Abdul hamid

Raja Tan sri Dato’ seri Arshad bin Raja Tun Uda

Dato’ Abdul Rahman bin Ahmad

Amir hamzah bin Azizan

ICON OFFSHORE BERHAD12

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132015 ANNUAL REPORT

edwanee Cheah bin Abdullah

Madeline lee May Ming Datuk Abdullah bin Ahmad syed Yasir Arafat bin syed Abd Kadir

132015 ANNUAL REPORT

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ICON OFFSHORE BERHAD14

DIRECTORS’ PROFILE

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda, Malaysian, aged 69, is the Chairman and Non-Independent Non-Executive Director of our Company.Raja Arshad is also the Chairman of Ekuiti Nasional Berhad (Ekuinas), Maxis Berhad, Yayasan Raja Muda Selangor and Yayasan Amir. He is presently a Director of Khazanah Nasional Berhad (Khazanah), Yayasan DayaDiri and ACR Retakaful Berhad. He is also the Chancellor of University Selangor. He was formerly Executive Chairman of PricewaterhouseCoopers (PwC), Malaysia, Chairman of the Malaysian Accounting Standards Board and Danamodal Nasional Berhad. His previous international appointments include being a member of the PwC Global IFRS Board and the Standards Advisory Council of the International Accounting Standards Board. His previous public appointments include being a member of the Securities Commission, the Malaysian Communications and Multimedia Commission, the Investment Panel of the Employees Provident Fund and the Board of Trustees of the National Art Gallery. He is a Fellow of the Institute of Chartered Accountants in England and Wales, and a member of the Malaysian Institute of Accountants. He is also a member of the Malaysian Institute of Certified Public Accountants and served on its council for 24 years, including three years as its president.

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda

ChairmanNon-Independant Non-Executive Director

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152015 ANNUAL REPORT

Amir Hamzah bin Azizan

Managing DirectorNon-Independant Executive Director

Amir Hamzah Bin Azizan, aged 48, is the Managing Director (MD) and Non-Independent Executive Director of our Company.

He holds a Bachelor of Science Degree in Management (majoring in Finance and Economics) from Syracuse University, New York. He has also attended the Stanford Executive Programme at Stanford University, United States of America and the Corporate Finance Evening Programme at the London Business School, United Kingdom.

He started his career within the Shell Group of Companies for 10 years, serving in various capacities, including as Head of Financial Services and Manager, Planning & Support at Sarawak Shell Berhad, Corporate Finance Executive at Shell Malaysia Limited, Marketing Credit Accountant at Shell Singapore Pte. Ltd., Internal Auditor at Shell Eastern Petroleum Pte. Ltd., and Senior Treasury Advisory at Shell International Ltd., London.

In the year 2000, he joined MISC Berhad as the Group’s General Manager, Corporate Planning Services. Subsequently in 2004, he was the Regional Business Director (Europe, Americas, Africa and FSU) of MISC Berhad in London, United Kingdom before being appointed President/Chief Executive Officer (CEO), AET Tanker Holdings Sdn. Bhd. on 1 April 2005. He was promoted to become the President/CEO of MISC Berhad on 1 January 2009 and served until 14 June 2010. He was subsequently made the MD/CEO of Petronas Dagangan Berhad from 15 June 2010 until 31 August 2012, when he became the Group MD/CEO of Petronas Lubricants International. At the same time, he was also the Vice President Downstream Marketing from 1 March 2011 until 1 July 2013, when he became the Vice President Lubricants for PETRONAS.

He became our MD on 1 March 2016.

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ICON OFFSHORE BERHAD16

Dato’ Abdul Rahman bin Ahmad, Malaysian, aged 46, is a Non-Independent Non-Executive Director of our Company.

He is currently the Non-Executive Chairman of ILMU Education Group Sdn. Bhd., a leading integrated Education group in Malaysia.

He was formerly the CEO of Ekuinas, a government linked private equity firm with assets under management of more than RM3.5 billion.

Prior to joining Ekuinas, Dato’ Abdul Rahman was the Group Managing Director/CEO of Media Prima Berhad, the leading integrated media investment group in Malaysia. He also held the post of Group Managing Director/CEO of Malaysian Resources Corporation Berhad, a leading Malaysian conglomerate involved in property, construction and infrastructure.

Dato’ Abdul Rahman began his career at Arthur Andersen, London, and later served as Special Assistant to the Executive Chairman of Trenergy (M) Berhad/Turnaround Managers Inc Sdn. Bhd. He later served Pengurusan Danaharta Nasional Berhad, the country’s national asset management company and went on to become Executive Director of SSR Associates Sdn. Bhd., a boutique corporate finance consulting firm.

Dato’ Abdul Rahman holds an MA in Economics from Cambridge University, United Kingdom and is a member of the Institute of Chartered Accountants in England and Wales (ICAEW). He is currently also serving as an Independent Director of Axiata Group Berhad and M+S Pte Ltd, a joint venture property company of Khazanah and Temasek Holdings (Private) Limited and RHB Investment Bank Bhd.

Dato’ Abdul Rahman bin Ahmad Datuk Wira Azhar bin Abdul Hamid

Non-Independent Non-Executive Director Senior Independent Non-Executive Director

Datuk Wira Azhar bin Abdul Hamid, Malaysian, aged 55, is a Senior Independent Non-Executive Director of our Company. He is also the Chairman of Audit and Risk Management Committee. He is a qualified Accountant and is a Fellow of the Chartered Association of Certified Accountant (UK). In addition to this, he is a member of the Malaysian Institute of Accountants. He began his career as a Financial Internal Audit Manager at British Telecoms Plc. in London, UK and served from 1989 to 1991 where he was responsible for operational review audits at British Telecoms District Offices in South East England. He then joined the Malaysian Co-Operative Insurance Society Ltd. as the Head of Finance from 1992 to 1994. Subsequently in 1994, he joined the Sime Darby Group and held various financial and senior management position in manufacturing, oil & gas, industrial equipment and plantation businesses, before leaving Sime Darby in 2010. Datuk Wira Azhar’s last position in the Sime Darby Group was in its Plantation Division as Executive Vice President. In January 2011, he was appointed as Independent Director of Perbadanan Kemajuan Negeri Perak and from September 2011 to December 2014, he was the CEO of Mass Rapid Transit Corporation Sdn. Bhd. He was appointed as a director in Hong Leong Bank Berhad (Hong Leong Bank) on 15 May 2015 and a member of the audit committee of Hong Leong Bank on 20 October 2015. He is now the Group Managing Director of Tradewinds Corporation Berhad and also holds several directorships in other private limited companies.

DIRECTORS’ PROFILE (cont’d)

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172015 ANNUAL REPORT

Syed Yasir Arafat bin Syed Abd Kadir, Malaysian, aged 44, graduated from University of Essex, UK in 1994 with a Bachelor of Arts (Hons) degree in Accounting and Financial Management. He began his career in 1994 as an Executive in the Project Development Department of Aseambankers Malaysia Berhad (now known as Maybank Investment Bank). In 1996, he joined the Capital Markets Department of Commerce International Merchant Bankers Berhad (now known as CIMB Investment Bank Berhad) as an Executive until 1998. He subsequently joined Pengurusan Danaharta Nasional Berhad as an Executive from 1998 to 1999. He joined United Overseas Bank (Malaysia) Berhad as a Deputy Manager in the Investment Banking Division, Corporate Finance in 2000 and was involved in corporate advisory work until he left in 2001. He joined ING Corporate Advisory (Malaysia) Sdn. Bhd. in 2001 and served for nine years, starting as Vice President of Corporate Finance, specialising in areas of mergers and acquisitions, equity and equity-linked fund raising, debt fund raising and financial advisory for some of Malaysia’s leading companies in banking, plantations, automotive, telecommunications and property, among others. His last position was Country Manager of ING Wholesale Banking, a position that he was promoted to in 2007, overseeing both ING Corporate Advisory (Malaysia) Sdn. Bhd. and ING Bank N.V. Labuan Branch operations in Malaysia. He joined Ekuinas in 2009 as the Managing Partner, Investment, where he oversees the Investment Team and leads Ekuinas’ portfolio investments in the oil and gas industry. He is a member of the Investment Committee and the Management Committee of Ekuinas. On 1 March 2016, he has assumed the role of the Executive Director and CEO of Ekuinas leading its management committee and is a member of its Investment Committee after the retirement of Dato’ Abdul Rahman bin Ahmad.

Syed Yasir Arafat bin Syed Abd Kadir

Edwanee Cheah bin Abdullah

Non-Independent Non-Executive Director Independent Non-Executive Director

Edwanee Cheah bin Abdullah, Malaysian, aged 65, is an Independent Non-Executive Director of our Company. He is also the Chairman of Remuneration Committee and Nomination Committee. He obtained a Diploma in Mechanical Engineering from Singapore Polytechnic in 1973. In 1999, he obtained a Masters in Business and Administration (Technology) degree which was jointly awarded by Deakin University, Melbourne, Australia and the Association of Professional Engineers, Scientists and Managers, Australia. He has over 40 years of international experience in the energy and oil and gas industry. He began his career with Shell Brunei LNG Sdn. Bhd. in 1973 as a trainee engineer and has since served various companies within the Shell group of companies (Shell Group) in Malaysia, Singapore, Brunei, South Korea, Netherlands, UK and USA for 32 years. During his tenure with the Shell Group, he had assumed various positions including Engineer, Site Representative Manager, Division Head and Global Consultant where he was responsible for, among others, engineering related matters, project management and internal consultancy. In 2006, he left Shell International Exploration and Production B.V., Netherlands. In 2007, he joined S 2 Click Sdn. Bhd., an oil and gas consultancy firm, as Director and Principal Consultant, where he provides consultancy services to various oil and gas companies.

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ICON OFFSHORE BERHAD18

Datuk Abdullah bin Ahmad, Malaysian, aged 68, is an Independent Non-Executive Director of our Company. He graduated from University Malaya in 1970 with a Bachelor of Arts. He obtained his post-graduate Diploma in Management Science from National Institute of Public Administration (INTAN) in 1974 and Certificate in Petroleum Management (Arthur D’Little) Boston, USA in 1985. He was formerly an Administrative & Diplomatic Service Officer. He started his career as a civil servant assigned to various divisions within the purview of the Ministry of Home Affairs. His last posting was in Public Services Department. In 1979, he joined Petroleum Nasional Berhad (PETRONAS) as the Head of Human Resource Planning and Recruitment. Whilst serving PETRONAS he was exposed to both upstream and downstream at operating unit level including Carigali-BP(a joint venture company between PETRONAS Carigali and British Petroleum Development Company, UK) for exploration and production of oil, offshore Kudat, followed by other postings to domestic marketing, area office, regional office, petrochemical plant and subsidiaries in various capacities including Board Member of PETRONAS property related subsidiaries.

Datuk Abdullah bin Ahmad Madeline Lee May Ming

Independent Non-Executive Director Independent Non-Executive Director

Madeline Lee May Ming, Malaysian, aged 47, is an Independent Non-Executive Director of our Company. In 1991, she obtained her Bachelor of Laws (Hons) degree from Queens University Belfast, UK. She pursued her postgraduate studies at the same university and graduated with a Master of Laws in 1992. She became a member of Grays Inn, UK in 1993 and was called to the Bar of England and Wales in the same year. She was subsequently called to the Singapore Bar in 1995 and also to the Malaysian Bar in 2001. She has been in legal practice for over 20 years. She embarked her career as a pupil Barrister in the Chambers of 4 Brick Court, London UK in 1993 until 1994. She continued her international legal practice in Singapore until 1996 and in Vietnam until 1999. She resumed her legal practice in Malaysia in 2000 with Messrs Raslan Loong and thereafter, Messrs Mazlan & Associates where she was made a Partner in 2006. In 2014, she left Mazlan and Associates and is now with Ilham Lee, as a founding partner.

DIRECTORS’ PROFILE (cont’d)

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192015 ANNUAL REPORT

SENIOR MANAGEMENT TEAM

From left to right:

Captain hassan bin AliChief Operating Officer

Amir hamzah bin AzizanManaging Director

Zaleha binti Abdul hamidChief Financial Officer

192015 ANNUAL REPORT

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SucceSS & ProgreSSLaying the Roadmap for Future

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SucceSS & ProgreSSCapitalising on the current scenario to improve internally, ICON embraces the challenges as a means to deliver greater efficiency, productivity and synergy that lays the roadmap for a better and more competitive ICON going forward.

ICON’SSTRATEGIC ROADMAPfor the next 5 years is to weather the storm and re-shape its future

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ICON OFFSHORE BERHAD22

CHAIRMAN’S STATEMENT

DEAR SHAREHOLDERS,

ON BEHALF OF THE BOARD OF DIRECTORS, I

PRESENT TO YOU THE ANNUAL REPORT AND AUDITED

FINANCIAL STATEMENTS OF ICON OFFSHORE BERHAD

(ICON/GROUP) FOR THE FINANCIAL YEAR ENDED

31 DECEMBER 2015 (FY2015).

THE YEAR IN REVIEW MARKS OUR SECOND YEAR AS A

PUBLIC LISTED ENTITY, AND HAS BEEN A CHALLENGING

PERIOD FOR THE OIL AND GAS INDUSTRY AS A WHOLE. THE

CONTINUED SLUMP IN CRUDE OIL PRICES COUPLED WITH

GLOBAL ECONOMIC WEAKNESS AND THE RESULTING

CUTBACK IN ExPLORATION AND PRODUCTION ACTIVITIES

BY OIL AND GAS MAJORS, HAS HAD A TELLING EFFECT

ON ALL OSV PLAYERS, ICON INCLUDED.

HOWEVER, DESPITE THE DIFFICULTIES FACED, ICON HAS

SHOWN ExEMPLARY RESILIENCE IN THE FACE OF ExTREME

ADVERSITY. ICON’S ROBUST AND SUSTAINABLE BUSINESS

MODEL, OUR STRONG BUSINESS FUNDAMENTALS AND

CONTINUED PROFESSIONALISM HAVE ENABLED THE

GROUP TO WEATHER THE STORM AND REGISTER A

MEASURE OF PROGRESS AND ACHIEVEMENT DURING

THE YEAR UNDER REVIEW.

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232015 ANNUAL REPORT

Raja Tan sri Dato’ seri Arshad bin Raja Tun UdaChairman

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ICON OFFSHORE BERHAD24

UPhOlDINg CORPORATe gOveRNANCe

In FY2015, ICON continued to implement the highest standards and best practices for corporate governance and risk management throughout the organisation. This is achieved through the strengthening of the Group’s internal policies as well as operating procedures and practices towards reducing risk exposure and providing for better operational and financial controls.

The Group subscribes to the principles and recommendations set out in the Malaysian Code of Corporate Governance 2012. Details of our 2015 corporate governance measures, risk management practices and internal control policies can be found in the relevant sections of this Annual Report.

FINANCIAl PeRFORMANCe

In FY2015, the Group’s revenue decreased by RM52.3 million to RM266.6 million. The Group reported an Adjusted PAT of RM26.0 million. However, given the need to make provisions for exceptional items which includes impairment for vessels of RM195.4 million and impairment for goodwill of RM180.6 million, the Group recorded a loss after tax of RM363.3 million in FY2015.

This decrease in both revenue and earnings was attributable to reduced demand for OSVs from oil and gas majors which in turn contributed to reduced vessel utilisation and charter rates.

ICON continued to implement the highest standards and best practices for corporate governance and risk management throughout the organisation

PAT Impairment of vessels

Impairment of goodwill

Amortisation of intangible

assets

Change in estimate for

vessels’residualvalue

Tax effect adjustment

Adjusted PAT

100

0

(300)

(200)

(100)

(400)

group Financial OverviewReconciliation of PAT to Adjusted PAT

RM million

CHAIRMAN’S STATEMENT (cont’d)

(363)

195

181 3 1 9 26

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252015 ANNUAL REPORT

CORPORATe sOCIAl ResPONsIbIlITY

Based on the core guiding principles of people, planet and profit, ICON is fully committed to realising its role as a responsible corporate citizen where our business goals are balanced with social and environmental considerations. Full details of our various Corporate Social Responsibility (CSR) initiatives are given in the CSR section of this annual report.

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ICON OFFSHORE BERHAD26

Without a doubt, ICON’s greatest asset is its diverse, multi-national workforce who has been a key pillar in the Group’s growth and progress since its inception.

Cognisant of the important contribution that our workforce makes to our success, ICON has continued to develop its talent pool through specific strategies for recruiting, retaining and developing staff. These included providing competitive remuneration as benchmarked against industry standards, as well as providing ample training and skills development opportunities.

In addition, ICON has also emphasised leadership development and succession planning to ensure the development of capable leaders across all levels of the organisation and to ensure a strong leadership bench for the Group. 20 staff have been selected and completed the leadership training programme last year. The leadership programme serves as the Group’s talent development pipeline towards producing ICON’s future echelon of high-calibre leaders, capable of serving across the Group and operating successfully within the demanding and complex OSV industry segment.

DevelOPINg OUR gReATesT AsseT –

OUR PeOPle

CHAIRMAN’S STATEMENT (cont’d)

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272015 ANNUAL REPORT

OUTlOOK & PROsPeCTs

Given the tepid conditions of the global economy, the languid performance of the United States and China as well as various political uncertainties, we foresee that FY2016 will follow a similar trend to FY2015. Malaysia’s Gross Domestic Product (GDP) growth for 2016 is forecasted to be weaker at 4.5-5%, indicating a slower domestic economy impacted by reduced private consumption and foreign direct investment. We believe that it is prudent therefore, to adopt a more cautious outlook for FY2016.

Despite this however, FY2016 still presents opportunities. Given ICON’s inherent strengths and capabilities, we remain confident that the Group will successfully weather the storm and maintain its track record of profitability while delivering value to our shareholders.

ICON is the largest OSV provider in Malaysia and one of the largest in Southeast Asia in terms of number of vessels. It is a noteworthy achievement that was built over many years and is testament of our strong fundamentals and competitive ability in the niche segment of the oil and gas industry that we operate in.

Despite the expected challenges, we remain on track to achieve long-term, sustainable growth as outlined in our overarching Group strategy.

APPReCIATION

On behalf of the Board, I wish to convey our appreciation to the Management and employees of ICON for their exemplary professionalism and contributions during a most challenging year under review.

I also wish to take this opportunity to welcome Encik Amir Hamzah Azizan (Encik Amir) as ICON’s new Managing Director whose vast experience and industry knowledge will be a valuable addition to the Group.

An industry veteran of 26 years, Encik Amir brings a wealth of related oil and gas experience to the Group, both locally and internationally. We are confident that he will be an asset in ICON’s progress forward, especially in the key area of value creation through mergers and international expansion. Encik Amir’s appointment as Managing Director commenced on 1 March, 2016.

In the same vein, I wish to convey the Board’s appreciation to former ICON Chief Executive Officer, Dr Jamal Bin Yusof, who was instrumental in the creation of ICON through the merger of two companies and who oversaw the successful listing of ICON on Bursa Malaysia in 2014. We also express our thanks to James William Iler,

who served as an Independent Non-Executive Director during the year under review. The Board and Management are grateful for their contributions to ICON and wish them every success in their future endeavours.

I also wish to thank my fellow members of the Board for their counsel and support, as well as express on their behalf, our gratitude to all our shareholders, customers, suppliers, business partners and financiers for their continued confidence and unwavering support to ICON during the financial year under review.

Raja Tan sri Dato’ seri Arshad bin Raja Tun UdaChairman4 April 2016

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ICON OFFSHORE BERHAD28

MANAGING DIRECTOR’S REVIEw

DEAR SHAREHOLDERS,

THE FINANCIAL YEAR ENDED 31ST DECEMBER 2015

(FY2015) WAS INDEED A TURBULENT YEAR FOR THE

OIL AND GAS INDUSTRY

Global demand for crude oil reduced significantly on the back of sluggish economic recoveries primarily in the United States and China. Consecutively, crude oil prices reached a record 11-year low of USD37 per barrel amidst global economic weakness, political turmoil in various parts of the world and general volatility in the oil and gas industry as a whole.

Despite global demand being moderated considerably in FY2015, crude oil production continued to outpace consumption largely due to sustained output from OPEC member nations which remained high, in response to various economic and political factors. The continued surplus in daily production further exacerbated the slide in crude oil prices.

With crude oil prices having dipped considerably, oil and gas majors consequently cut back on capital expenditure (capex) as well as operating expenditure (opex). In Malaysia, PETRONAS and other oil and gas majors temporarily suspended or renegotiated contracts on oil rigs and significantly reduced spending on upstream operations.

The reduced demand from oil and gas majors for OSVs contributed to lower vessel utilisation and marine charter rates both in Malaysia and internationally. This had a ripple effect on the entire industry supply chain including the OSV segment, in which ICON operates.

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292015 ANNUAL REPORT

Amir hamzah bin AzizanManaging Director

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ICON OFFSHORE BERHAD30

Despite these challenges, ICON has continued to persevere and to exemplify resilience in the face of adversity. While the Group’s short term business and operational performance has been impacted as per other OSV players, we continued to make steady progress in improving our business fundamentals and internal capabilities. Importantly, in FY2015, the Group has delivered on its contract commitments to oil and gas majors and stayed on course towards realising its long-term business objectives.

FINANCIAl PeRFORMANCe

During FY2015, ICON’s revenue decreased by 16.4% to RM266.6 million from RM318.9 million in FY2014. The lower revenue was mainly attributable to a lower fleet utilisation rate of 60% as compared to 78% in FY2014 due to reduced activities and lower demand from oil and gas majors during the year, while sustaining our average success rate for contract tenders.

Adjusted PAT (excluding exceptional items) was recorded at RM26.0 million. However, with the inclusion of exceptional items the Group reported a loss after tax of RM363.3 million.

The total exceptional items recorded in FY2015 amounted to RM389.3 million which were higher than RM31.4 million in FY2014. The significant exceptional items included provision for vessels’ impairment of a certain age group and with lower technical specifications of RM195.4 million, in line with the Group’s fleet rejuvenation strategy. Under this strategy, ICON continuously review vessels for disposal and acquires new vessels with higher technical specifications. Impairment provision was also made for goodwill arising from the acquisition of Tanjung Kapal Services Sdn. Bhd. and Omni Petromaritime Sdn. Bhd. in 2012, which amounted to RM180.6 million.

The Group’s net gearing ratio increased to 0.87x for FY2015, compared to 0.55x in the previous year. During the year under review, ICON procured a loan of BND37 million to finance the acquisition of a new Accommodation Workboat Vessel (AWB) to service a long-term contract in Brunei.

MANAGING DIRECTOR’S REVIEw (cont’d)

RM

Revenue

million

266.6

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312015 ANNUAL REPORT

Our efforts have already begun to yield results in FY2015 itself, with notable contract wins in Brunei.

Elsewhere, we continued to bid competitively for domestic and regional contracts to ensure vessel utilisation was maximised. The Group’s order book remained strong at RM686 million for FY2015. Out of this total, RM425.3 million is for firm periods and RM260.7 million is for extension options period. A significant portion of our order book is long term (more than one year) in nature which will provide ICON with earnings visibility in FY2016 and beyond.

The Group also looked to optimise operating costs and further improve operational efficiency during the year under review. Various measures were undertaken in FY2015 which included but were not limited to, controlling fuel consumption as well as managing the number of crew onboard our vessels to optimise operational gross profit margins while taking into consideration various safety and regulatory requirements in the industry.

In addition, during periods of low demand, ICON conducted temporary shutdowns or lay-ups on selected vessels, as well as undertook repair and maintenance work on these vessels as part of our scheduled dry-docking and planned maintenance program to improve vessel readiness for hire when demand eventually picks-up.

ADDRessINg ChAlleNges, MAKINg sTeADY PROgRess

ICON has continued to make steady progress across its various business operations.

In FY2015, we further expanded into overseas waters through our joint venture (JV) partnership in Brunei with Zell Transportation Sdn. Bhd. (Zell). Under the JV partnership, ICON provides OSV to service contracts and operations in Brunei Darussalam. This was done in line with establishing and expanding our business presence in the regional market space in view of tapping opportunities within the OSV sector.

Despite these challenges, ICON has continued to persevere and to exemplify resilience in the face of adversity

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ICON OFFSHORE BERHAD32

MANAGING DIRECTOR’S REVIEw (cont’d)

vesselsavailable for charter and operating in waters off Malaysia, Brunei and Thailand33

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332015 ANNUAL REPORT

ICON’s fleet is equipped with technologically advanced equipment and machineries to provide a wide range of logistical support services throughout the entire offshore oil and gas life cycle. Our vessels can be used for a wide range of services, including seismic survey, drilling operations support, towing, anchor handling and mooring of barges, repair and maintenance support, accommodation facilities for personnel and transportation of personnel and supplies to platforms. In addition, the Group also provides ship management services to third-party vessel owners.

Despite the challenging external circumstances, ICON continued to prioritise its active fleet rejuvenation strategy in tandem with the requirements of the oil and gas majors. We also remained committed to implementing our shipbuilding programme over the

long-term. Taking into account current market conditions however, the Group decided to adopt a more prudent approach to conserve cash expenditure by only taking delivery of newly constructed vessels in FY2017 or at the earliest suitable date, when lucrative potential contracts arise. These are short-term decisions necessitated by the current market scenario and do not detract from the Group’s long term plans to maintain a young, competitive fleet and strengthen ICON’s position as the largest OSV provider in the country and one of the largest in Southeast Asia.

Ultimately, our fleet rejuvenation strategy will enable ICON to improve its fleet utilisation rates, through fleet diversification of selected vessel asset classes and penetration into regional operations. This will strengthen our earnings and provide for more efficient operating performance going forward.

ACTIve FleeT MANAgeMeNT & ReJUveNATION

In FY2015, ICON continued to maintain its undisputed position as the largest OSV provider in Malaysia and one of the largest in Southeast Asia in terms of number of vessels.

As at 31 December 2015, the Group has 33 vessels available for charter and operating in waters off Malaysia, Brunei and Thailand.

Our fleet consists of 21 anchor handling tug and supply (AHTS) vessels which make up 68% of our total fleet; three smaller anchor handling tug (AHT) vessels; four straight supply vessels (SSV); two platform supply (PSV) vessels; two AWB vessels and one utility tug vessel (UV).

ICON continued to maintain its undisputed position as the largest OSV provider in Malaysia and one of the largest in Southeast Asia in terms of number of vessels

FY2015

60%

Chartered/on-hired periodAvailable for charter/Temporary shutdowns/lay-upsPlanned maintainence programme and scheduled dry-docking

Fleet utilisation rate

60%30%

10%

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ICON OFFSHORE BERHAD34

CONTRACTs seCUReD

In FY2015, ICON continued to secure OSV contracts that have, and will continue to contribute significantly to earnings and net tangible assets.

In February 2015, the Group also received another Letter of Award (LOA) from PCSB for the provision of spot charter marine vessels under the Pan Malaysian Umbrella Contract (Umbrella Contract). ICON secured six (6) out of the eight (8) packages offered under the Umbrella Contract, mainly for AHTS Vessel 60 MT, SSV, PSV, UV, Workboats and Work Barges for a continuous 24-hour operation.

Under the Umbrella Contract, ICON will provide the vessel, crew and associated equipment for a continuous 24-hour operation. The Umbrella Contract will continue for a primary period of two (2) years with an extension option of one (1) year.

The contract is a significant achievement for ICON, as it was awarded to only 21 selected players in the sector which make up approximately 20% of the OSV operators in the Malaysian industry. This will ensure that for the next three (3) years including the one year option period, all spot contracts from PCSB will only be awarded to these 21 players. In addition, our participation in the Umbrella Contract will hold us in good stead to win future jobs.

MANAGING DIRECTOR’S REVIEw (cont’d)

Outside Malaysia waters, in May 2015, we secured a second long-term contract via Zell with Brunei Shell Petroleum Company Sdn. Bhd. (BSP) for the provision of one (1) new AWB delivered in the first half 2015 for a firm period of two (2) years, and with one (1) year extension option period. The contract is valued at approximately RM99 million, and brings additional long term contract in Brunei, further cementing our business presence and position in the market there. Progressively, ICON has and continues to grow its overseas operations, emerging as a frontrunner in the region for OSVs.

In July FY2015, we secured two (2) long-term contracts with PETRONAS Carigali Sdn. Bhd. (PCSB) for the provision of AHTS vessels valued at approximately RM55 million. The contract which came into effect in July 2015 is for a firm period of two (2) years with an option to extend for an additional year.

I am also pleased to report that ICON was awarded a charter in October 2015 by ExxonMobil Exploration & Production Malaysia Inc. (EMEPMI) for the provision of two (2) AHTS vessels. The short-term contract is for the provision of, among others, the transportation of supplies from supply bases to drilling rigs or platforms and vice versa, and is valued at approximately RM7.7 million.

In November 2015, we received a letter of award from Borneo Seaoffshore Sdn. Bhd. (Borneo Seaoffshore) for the provision of one (1) deepwater platform supply vessel for Kebabangan Petroleum Operating Company Sdn. Bhd. (KPOC) with the total contract valued at approximately RM51 million. The contract commenced in November 2015 and shall continue for a period of two (2) years with an extension option of one (1) year. This contract award is from a new charterer in our portfolio so we draw satisfaction from having successfully made inroads into an oil and gas major who could potentially offer long-term business opportunities for the Group.

Further, in December 2015, ICON also received a Letter of Intent from Carigali-PTTEPI Operating Company Sdn. Bhd. (CPOC) for the provision of one (1) unit of Utility Tug Vessel (UV) commenced in October 2015, to support production operations and well services activities. The contract which is valued at an estimated RM22 million is for a period of three (3) years with an option for an extension of one (1) year plus one (1) year thereafter.

The above contract was awarded from an existing charterer in the same operational location and is a testament to their confidence and trust in ICON’s service delivery, having already established our reliability and assurance in delivering customer satisfaction.

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352015 ANNUAL REPORT

INDONesIA

PhIlIPPINes

lAOs

ThAIlANDvIeTNAM

CAMbODIA

14 July 2015Two (2) letters of award from PCSB for the provision of two (2) AHTS for a period of 2+1 years.

23 October 2015Letter of award from EMEPMI for the provision of two (2) AHTS. The contract tenure is for a period of 6+1 months and 3 months respectively.

11 December 2015Letter of award from CPOC for the provision of one Utility vessel for a period of 3+1+1 years.

24 November 2015Letter of award from Borneo Seaoffshore for the provision of one (1) deep water PSV to KPOC for a period of 2+1 years.

27 May 20152nd long-term contract through our JV partner with BSP for the provision of one (1) AWB for a period of 2+1 years.

Feb 2015Letter of Award (LOA) from PCSB for the provision of spot charter marine vessels under the Pan Malaysian Umbrella Contract (Umbrella Contract).

sIgNIFICANT CONTRACT AWARDeD IN FY2015

MAlAYsIA

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ICON OFFSHORE BERHAD36

CONTINUeD IMPROveMeNT IN hse

In FY2015, ICON continued to improve on its HSE record, setting new milestones and benchmarks of excellence. HSE is a key focus area for the Group and is effectively our licence to operate. Hence, we make no compromises in constantly practising self-vigilance and self-regulation to ensure the highest standards in day-to-day operations. In FY2015, we are pleased to share that ICON registered 13 million man hours without a Lost Time Injury (LTI). The year also saw several other notable HSE milestones achieved including awards by various oil and gas majors. All of which are a further testament to our exemplary standards and uncompromising commitment to HSE.

PeOPle DevelOPMeNT INITIATIves

ICON views its talent as a key competitive factor and as such, continues to implement various strategies and initiatives to develop its workforce. The Group prioritises the need to provide training and development opportunities for staff across the organisation in line with empowering them to enhance their competencies and professional qualifications. Training is conducted both on-site as well as off-site where required and is based on the job requirements and roles of staff, with each individual possessing his/her own career development pathway.

In addition to staff development, the Group also emphasises succession planning for key managerial positions within the Company as part of its business strategy to ensure smooth transition of the leadership bench in line with the theme of sustainability within ICON.

ICON also continues to commensurate its staff competitively in line with industry standards to ensure we are able to attract and retain the best human capital for the Group’s operational requirements.

MANAGING DIRECTOR’S REVIEw (cont’d)

lost Time Injury (lTI)

First Aid Case

Property Damage

Near Miss

Unsafe Act & Unsafe Condition (UCUX)

Restricted Workday Case/Medical Treatment Case

0

3

16

10

14,169

hse sTATIsTICs FOR FY2015

million13.0Man hours without LTI

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372015 ANNUAL REPORT

We will continue to implement key short-term strategies to ride out the current industry downturn. At the same time, we will continue to adopt a long term perspective by remaining committed to our fleet rejuvenation strategy as well as continue investing in modern, best-in-class OSVs to meet future market needs.

ICON will continue to competitively bid for contracts to further improve our tender success rate and the overall fleet utilisation rate. With regards to optimisation of operational cost, the Group has put in place various rationalisation and cost control measures which will carry through into FY2016.

ICON will also continue to seek out suitable merger and acquisition opportunities while expanding overseas into markets such as Brunei and beyond. Boosted by our recent award by Brunei Shell Petroleum, we will continue to look at foreign shores to boost our vessel utilisation rate and to diversify our income stream beyond Malaysia.

We draw confidence from our track record, our internal strengths and firm fundamentals to see us through the challenging conditions ahead. Combined with our strong fundamentals, we are optimistic of consolidating our position as the best-in-class OSV player in Malaysia. Going forward, as the largest OSV provider in Malaysia, ICON will continue to implement sound strategies to ensure the sustained delivery of value to our stakeholders.

Amir hamzah bin AzizanManaging Director

4 April 2016

Given the prevailing weak crude oil prices, the languid global economy as well as various political developments including the lack of global resolve to balance crude oil production with reduced global demand, we foresee that FY2016 will present a challenging scenario similar to FY2015.

There may be further pressure on charter rates as demand for OSVs maintains a downward trend against a backdrop of further reductions in upstream activity by the oil and gas majors. All oil and gas players and ICON included, will continue to bear the effects of these sluggish conditions.

ICON has put in place various measures to maintain a steady course and to weather the storm effectively. Since our listing last year, we have been pursuing a clear business strategy to not only expand our operations, but also to maintain profitable.

lOOKINg FORWARD

372015 ANNUAL REPORT

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Face oF challengeConfident in the

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Face oF challengeICON maintains its resolve and conviction that tough times do not last but tough companies do. Driven by the strength of its assets, expertise, track record and most importantly, its people, ICON stands poised to continue achieving new milestones of accomplishment.

13.0 millionman hours without LTI

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ICON OFFSHORE BERHAD40

CALENDAR OF SIGNIFICANT EVENTS

Delivery of Icon valiant

ICON takes delivery of Icon Valiant

The langkawi International Maritime and Aerospace exhibition (lIMA) 2015

ICON inks two Memorandum of Understanding (MoU) at the Shipbuilding, Ship Repair and Offshore Support Vessel Pavillion during the LIMA 2015 event. A MoU with Akademi Laut Malaysia (ALAM) is a collaboration to develop a combined Standard of Training, Certification and Watchkeeping (STCW) and Malaysian Certification of Competency Level 3 OSV Operations training programme for the maritime industry. Another MoU was with Generation Six Sdn. Bhd. (G6) to develop computer based training for the OSV industry under the BCiF Development Grant from the Multimedia Development Corporation (MDeC).

hari Raya Aidil Fitri Open house

ICON feted its business partners, corporate clients, bankers, vendors and staff during the Hari Raya Aidil Fitri Open House which was held at a hotel in Kuala Lumpur.

FebRUARY

Iftar Ramadhan

During the holy month of Ramadhan, the orphans and underprivileged children especially are remembered. This year, ICON has identified Pertubuhan Kebajikan Baitul Kasih Wilayah Persekutuan dan Selangor (PK BAITUL KASIH) to join ICON employees to celebrate the holy month with a breaking of fast.

JUlYhse Day 2015

ICON held its HSE Day themed, ‘HSE through Leadership and Commitment’, attended by Icon Offshore’s staff.

DeCeMbeR

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412015 ANNUAL REPORT

Award vessel From

Excellent OSVIS Status – 12 Months OSVIS Extension Period Omni Marissa PETRONAS Carigali Sdn. Bhd.

Active Contribution Towards Near Miss Reporting FY 2015 Omni Perkasa PETRONAS Carigali Sdn. Bhd.

Delivery of Tanjung Piai 2

ICON takes delivery of Tanjung Piai 2

3rd Annual general Meeting

ICON held its 3rd Annual General Meeting at The Royale Chulan Hotel, Kuala Lumpur with attendees of about 400 shareholders.

OgA 2015

The 15th Asian Oil, Gas & Petrochemical Engineering Exhibition 2015 (OGA 2015) is an event held every two years with the participation of the oil and gas players. ICON participated in this event which saw more than 23,000 visitors during the three-day event which was held at the Kuala Lumpur Convention Centre.

MARCh MAY JUNe

eORC Wells 1,000,000 Man-hours lTI Free

ICON received an award from SHELL – PETRONAS for 1,000,000 man-hours LTI Free

lIsT OF 2015 AWARDs

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ICON OFFSHORE BERHAD42

HEALTH, SAFETy AND ENVIRONMENT

ICON’s PRIORITY TOWARDs heAlTh, sAFeTY AND The eNvIRONMeNT

As ICON continues to build up its reputation in the oil and gas industry, we take cognisance of the high expectations of our partners, be it our shareholders, clients, vendors or the community in which we operate in. We are ever vigilant to ensure this strong partnership, one which is based on respect, integrity and professionalism, is upheld by our employees at every level, department and vessel throughout our organisation. Our business operating commitment is to surpass what is required by regulations and guidelines, and chart our own pioneering, iconic standards.

ICON’s hse COMMITMeNT TO OUR eMPlOYees

It is acknowledged that policies upholding stringent Health, Safety and the Environment (HSE) standards would position a Company better in securing sustained commercial prospects. At ICON, there is a far more compelling reason to do so – it is for the health and safety

of our workforce, essentially our family at ICON. This provides the fuel which drives us to ensure stringent processes and protocols do not remain merely as wording in a document or hung in fanciful, framed posters, but is inexorably ingrained into the DNA that makes for our way-of-life at ICON.

Whilst the origins of the above quote is unclear, what resonates clearly to ICON is that our contribution is needed to preserve the environment, ensure efficient use of limited resources through sustained means and manage pollution to our fullest ability, all supported by technological advances in processes and machinery.

CONTINUOUslY IMPROvINg OUR hse PeRFORMANCe

ICON takes pride in the investment of time and effort given to understanding, maintaining and enhancing our HSE standards. Understanding the rationale of why we have stringent processes and procedures in place is the first step toward a successful HSE outcome. Maintaining such measures is the second stage and we manage this with continuous education in emergency drills, incident investigations, robust safety inspections, knowledge of health and safety controls, just to name a few. Training sessions are conducted for both employee and management alike to reinforce the key message that safety cuts across all facets of the organisation and does not discriminate designations.

A top-down approach is our hallmark at ICON, demonstrated at senior management officials’ briefing to employees on our strategic direction and performance to-date. Such engagement opportunities further reaffirm the collective contribution needed from each and every employee in order to achieve our corporate objectives. This transparency and culture of openness ensures stronger buy-in and a heightened sense of empowerment from employees, resulting in improved performance efficiency.

“We do not inherit the earth from our fathers; we borrow it from our children”

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A number of initiatives were conducted over 2015 to ensure optimal understanding on preventative measures and health aspects such as:

Quarter hse Initiatives

1st Quarter Fire Prevention Training ‘Spot the Hazard’ Campaign Launching of UCUx card onshore and offshore Defensive driving course for Company drivers

2nd Quarter Ship to Shore Drills Fire Drill and First Aid Awareness at Labuan site office

3rd Quarter Fire Prevention Awareness Talk by Fire Prevention Centre Cancer Awareness Talk by Healthcare Professionals at Kuala Lumpur

4th Quarter Cancer Awareness Talk at Labuan HSE Day

hse POlICIes eNAble A CONDUCIve WORKINg eNvIRONMeNT

Various policies governing employees have been adopted, some of which are the Safety Management System Policy to maintain safe and reliable operations of ships and environmental impact, a Stop Work Policy to pursue the goal of “no harm” to people, property and environment, as well as a Drug and Alcohol Policy to maintain a safe, healthy and conducive environment for all employees.

UPhOlDINg The hIghesT hse sTANDARDs

Risks are an inherent factor in our industry and are almost tangible in our daily operations. In recognition of this, we have instituted measures to identify and mitigate such risks as best as possible. We look to various internal and external safety audits as a means to validate our strict compliance with HSE protection laws and regulations as well as affirm effective waste prevention and reduction capabilities. Measures taken include the implementation of systems covering formal safety management, comprehensive incident and near-miss reporting as well as investigation and emergency response.

To further strengthen our internal systems, we conduct systematic health and safety training for our employees. We actively safeguard against any hazardous materials aboard our vessels and at shore-based locations. Such materials are maintained in or transferred to confined areas to ensure its containment as a contingency.

OUR hse eFFORTs ReCOgNIseD

Our due diligence and commitment toward HSE continue to secure due recognition from our valued customers. In 2015, we successfully secured the ‘Active Contributing Towards Near Miss Reporting FY 2015’ which was awarded to our vessel Omni Perkasa by PCSB.

ICON was also honoured to receive an award for outstanding HSE performance and dedication from EORC Wells for achieving one million manhours without any LTI.

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ICON OFFSHORE BERHAD44

eDUCATION, ICON’s FlAgshIP INITIATIve

Education has always been at the heart of ICON’s CSR strategy, programmes and initiatives. We have formulated our CSR strategy as a long-term journey, not as a quick, one-off initiative. In this, we strive to reach out to needy and under-performing students in schools and increase access to educational opportunities for such school children, irrespective of race, religion or social background.

One such educational initiative commenced in 2013 in which ICON partnered the Dyslexia Association of Malaysia (Persatuan Dyslexia Malaysia or PDM) to train teachers and psychologists to better assess students with this learning disability. Using a train-the-trainer approach, workshops were organised for international experts to train local teachers and psychologists in the various methods of conducting tests to identify schoolchildren with this

Corporate Social Responsibility (CSR) is widely acknowledged as a company’s commitment to operate in a sustainable and responsible manner to serve the interest of its shareholders, employees and its community alike. ICON has embraced CSR as the cornerstone of our Company’s philosophy, with the aim to give back to the community we work in.

learning impediment and impart specially designed, internationally accepted practical teaching methods for such students.

Equipped and keen to employ these latest, cutting edge knowledge, ICON partnered PDM in organising similar workshops in Johor Baru and Kedah in 2014, where a total of 270 participants from diverse backgrounds ranging from parents, teachers, minders and healthcare professionals involved themselves in this series of workshops, facilitated by an occupational therapist, speech therapist and psychologist. Mindful that wholistic education transcends the confines of classrooms and lecture halls, ICON further sponsored PDM’s Sport’s Day with our employees volunteering their own time at this inspiring event. In that same year, we reached out to the community in the area of our operations and sponsored a tuition programme at four schools at Kemaman, Terengganu. This spurred the school children’s interest

and deepened their understanding of various subjects taught, thereby bringing a more positive perspective of their schooling experience.

Following these earlier initiatives, we realised that ICON could contribute to further enhance the awareness of dyslexia and thereby assist students with their learning difficulty. We then embarked on a pilot initiative in 2015 to further establish the incidence of dyslexia amongst schoolchildren. Working again in partnership with PDM, two primary schools were selected, namely SJK (Tamil) Ladang Valambrosa at Kapar, Kelang and SJK (Cina) Nan Yik (Lee Rubber), Gombak, Kuala Lumpur. Led by the PDM’s Honorary President, a team of six trained assessors visited the schools and conducted relevant screening tests on a total of 172 schoolchildren. Their findings and recommendation were submitted to the respective schools for their review and consideration, with PDM’s assurance of further support where needed.

CORPORATE SOCIAL RESPONSIBILITy

ICON OFFSHORE BERHAD44

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452015 ANNUAL REPORT

PROgRAMMes IN The PIPelINe

The experience gained in this and the preceding years’ activity has redoubled our effort to map out practical initiatives for 2016, maintaining education as a primary focus area. We aim to provide tuition classes for students at two secondary schools in Kemaman to better prepare them for their upcoming “Sijil Pelajaran Malaysia” (SPM) examination.

We are in the midst of researching various approaches to enhance human capital development in the oil and gas industry. One such approach is to lay the foundation at the early stages of tertiary education by organising educational field trips to our business operation sites and also provide opportunities for practical on-the-job training stints.

In this aspect, ICON as one of Ekuinas’s portfolio companies has participated in their Iltizam Professional Development Programme (PDP) since 2013, a structured program in developing and nurturing local graduates to enhance their employability through placement at Ekuinas portfolio companies. We took five graduate

trainees in 2015 to undergo on-the-job training at ICON. In addition, we will absorbed them into our ICON workforce when there is a match of capability and job opportunity.

We are keen to explore symbiotic relationships with those interested, with training exposure at the Malaysian Maritime Agency Sdn. Bhd. (ALAM), the only maritime education and training institution in Malaysia which offers the full range of maritime shipping related training. With such opportunities, we could generate heightened interest amongst students to pursue an exciting career in the oil and gas industry. By forming a potentially suitable talent pool early enough, we could devise appropriate training to nurture their progress and assist to realise their full potential.

As with all CSR initiatives, we are mindful that it is not just the financial resources which determine its success. A key contributory factor to its sustainability is the participation

of employees in such initiatives. In this, we are constantly engaging our employees, to further motivate and increase participation levels in such activities.

We constantly remind ourselves that the true measure of our achievement lies in the many lives ICON has touched and from the positive outcomes delivered for recipients. We have no doubt that together with the relevant partners and our enthusiastic and committed employees, ICON looks forward to instil a greater sense of appreciation not just for education but to prepare them to succeed in life and broaden the range of opportunity, particularly in the area of oil and gas.

452015 ANNUAL REPORT

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ICON OFFSHORE BERHAD46

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

The board of Directors (board) of ICON is pleased to present the following report of the Audit and Risk Management Committee (ARMC) for the financial year ended 31 December 2015.

MeMbeRshIP AND MeeTINg

The ARMC consists of all Non-Executive Directors with a majority of them being Independent Non-Executive Directors, including the Chairman. The Chairman of the ARMC, namely, Datuk Wira Azhar bin Abdul Hamid, is a qualified Chartered Accountant and a member of the Malaysian Institute of Accountants. Accordingly, the composition of the ARMC complies with the Main Market Listing Requirements (Listing Requirements) of Bursa Malaysia Securities Berhad (Bursa Malaysia).

The ARMC meetings are convened in orderly manner, structured through the use of an agenda. Minutes of the ARMC meetings and ARMC papers are circulated to all members prior to the meeting for discussion. The reports presented at the ARMC meetings are highlighted by the ARMC’s Chairman to the Board for further discussion, deliberation and approval.

During the financial year ended 31 December 2015, a total of six ARMC meetings were held and the respective member’s attendance is shown in the following table:

No. of Meetings Percentage ofName of ARMC Member Attended/held Attendance(%)

Datuk Wira Azhar bin Abdul Hamid(Chairman)Senior Independent Non-Executive Director 6/6 100

Edwanee Cheah bin Abdullah(Member)Independent Non-Executive Director 5/6 83

Syed Yasir Arafat bin Syed Abd Kadir(Member) 6/6 100Non-Independent Non-Executive Director

The CEO/MD, CFO and Head of Corporate Governance and Risk Management (CGRM) are in attendance at each of the ARMC meetings to brief the ARMC on the reports and specific issues as and when required. The representatives of the External Auditors and the outsourced audit firm are also invited to attend the ARMC meetings to present reports as and when required.

The ARMC has conducted a private discussion with the External Auditors, Messrs PricewaterhouseCoopers without the presence of the Management during its meetings on 24 March 2015 and 24 November 2015.

AUThORITY OF The AUDIT AND RIsK MANAgeMeNT COMMITTee

In performance of its duty, the ARMC shall have the following authority as empowered by the Board:

a) Have authority to investigate any activity within its terms of reference;

b) Have access to resources required to perform its duties;

c) Have full, free and unrestricted access to any information, records, properties and personnel of the Group and other subsidiaries (if any) or sisters companies;

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472015 ANNUAL REPORT

d) Have direct communication channels with External Auditors, person(s) (in case of an in-house function) or outsourced engagement firm carrying out the internal audit function or activity for the Group (Internal Auditors), and personnel of CGRM Department;

e) Have authority to engage independent professional or other advice; and

f) Able to convene meetings with the External Auditors, the Internal Auditors or both, together with other Independent Non-Executive members of the Board, excluding the attendance of any Executive Directors, at least twice a year in the case of External Auditors or whenever deemed necessary.

DUTIes AND ResPONsIbIlITIes OF The AUDIT AND RIsK MANAgeMeNT COMMITTee

The duties and responsibilities of the ARMC are as follows:

A) bOARD OveRsIghT

1) To obtain satisfactory response from Management on reports issued by the External Auditors, Internal Auditors and the CGRM, and report to the Board:

• Significant findings identified and the impact of audit findings on the operations;

• Deliberations and decisions made at the ARMC’s meetings with focus given to significant issues and resolutions resolved by the ARMC, on a regular basis; and

• A summary of material concerns and weaknesses in the control environment noted during the financial year and the corresponding measures taken to address the issues.

2) To oversee the internal audit function and the CGRM and report to the Board on significant changes in the business and the external environment, which affect key risks;

3) Where the review of audit reports of subsidiaries and any related corporations also falls under the jurisdiction of the ARMC, all the above- mentioned functions shall also be performed by the ARMC in co-ordination with the board of directors of the subsidiaries and related corporation;

4) To review arrangements established by Management for compliance with any regulatory or other external reporting requirements, by-laws and regulations related to our Company’s operations; and

5) To consider other areas as defined by the Board.

b) DeAlINgs WITh eXTeRNAl AUDITORs

1) To recommend to the Board the appointment of the External Auditors, the audit fee and any issues relating to the resignation or dismissal of the External Auditors;

2) To discuss with the External Auditors before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

3) To discuss with the External Auditors, their audit report and evaluation of the system of internal controls and risk management;

4) To discuss problems and reservations arising from the external audits, and any matter the External Auditors may wish to discuss;

5) To review and assess the performance and independence of the External Auditors; and

6) To review the quarterly announcement and year-end financial statements of our Company, focusing particularly on:

• Any changes in accounting policies;

• Significant adjustments arising from the audit;

• The going-concern assumption; and

• Compliance with accounting standards and other legal requirements.

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ICON OFFSHORE BERHAD48

C) OveRsIghT OF INTeRNAl AUDIT FUNCTION AND CgRM

To oversee the internal audit function and the CGRM by:

• Reviewing and approving the annual internal audit plan;

• Reviewing the adequacy of the scope of internal audit and governance review, internal audit and governance review programmes, functions and resources of the internal audit function and the CGRM, and that they have the necessary authority to carry out their work;

• Reviewing the reports prepared by the Internal Auditors and CGRM, discussing major findings and Management’s response, and ensure that appropriate action is taken in respect of the recommendations made by the Internal Auditors and CGRM;

• Determining and recommending to the Board the remit of the internal audit function and the CGRM, and ensure that they are able to undertake their activities independently and objectively;

• Approving any appointment or termination of senior staff members of the internal audit function (in the case of an in-house function), and appointment or dismissal of outsourced Internal Auditors;

• Approving the fees to be paid to the outsourced internal auditors;

• Being informed of resignations of internal audit staff members and providing the resigning staff member with an opportunity to submit his/her reasons for resigning (in case of an in-house function);

• Reviewing and assessing the effectiveness of the internal audit function;

• Ensuring on an on-going basis that the internal audit function and the CGRM has adequate and competent resources; and

• Monitoring closely any significant disagreement between the internal audit function and the CGRM, and Management irrespective of whether they have been resolved.

D) RelATeD PARTY TRANsACTION

To consider any related party transactions that may arise within the Group including any transaction, procedure or course of conduct that raises questions of the Management’s integrity.

sUMMARY OF ACTIvITIes OF The AUDIT AND RIsK MANAgeMeNT COMMITTee DURINg The FINANCIAl YeAR

During the financial year, the ARMC carried out its duties as set out in the terms of reference, particularly on:

a) Review and approval of the audit plan of the CGRM (interim), outsourced Internal Auditors and External Auditors, including their scope of work for the financial year;

b) Review and approval of the appointment and fees of outsourced Internal Auditors;

c) Review of Risk Management Policy and Procedure, Staffing Policy, Communication Policy, Property, Plant and Equipment Policy, Remuneration Policy, revised terms of reference of ARMC, and revised terms of reference of ExCO for adoption by the Group, prior to submission to the Board for consideration and approval;

d) Review and approval of the Internal Audit Charter

prepared by outsourced Internal Auditors;

e) Review of the quarterly business risk assessment and risk management reports to identify and manage key business risks, as well as to monitor the status of the mitigating measures;

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONT’D)

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492015 ANNUAL REPORT

f) Review and deliberate on the audit reports, issues and recommendations from the outsourced Internal Auditors and External Auditors in relation to the audit conducted during the financial year;

g) Review of the quarterly unaudited financial statements and its explanatory notes thereon, and annual audited financial statements to ensure compliance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia;

h) Review of the adequacy of the scope, functions and resources of the internal audit function;

i) Review of the Statement of Corporate Governance, ARMC Report, Statement on Risk Management and Internal Control, and Statement of Directors’ Responsibility for insertion into the annual report; and

j) Review of the performance and independence of the External Auditors and consider for change or reappointment, and fees of the External Auditors before recommending to the Board for approval.

INTeRNAl AUDIT FUNCTION

The Group in-house internal audit function which was previously under the purview of the CGRM is outsourced to an audit firm, Deloitte Enterprise Risk Services Sdn. Bhd. (Deloitte) effective May 2015. The internal audit function reports directly to the ARMC and is guided by the Internal Audit Charter. Its principal role is to undertake independent, regular and systematic review and appraisal of the Group’s risk management, control and governance processes designed and represented by the Management, so as to determine whether they are adequate and functioning in an appropriate manner.

During its first year of engagement, Deloitte had carried out two risk-based operational audit reviews in accordance with the approved annual internal audit plan, namely, Bidding and Customer Contract Management, and Fleet Operations, Stock Management and Shipbuilding Management. The significant audit findings raised by Deloitte for the internal audit review on Bidding and Customer Contract Management

include the absence of formalised contracts with certain brokers, and non-vetting of the contract/charter party agreement, whilst for Fleet Operations, Stock Management and Shipbuilding Management include the non-compliance and inadequate monitoring of the budget for dry-docking cost, weaknesses in on-board stock management, and inadequate tank sounding practices and its discrepancies analysis in monthly report. Certain audit findings arise due to arrangements or practices prior to the initial public offering (IPO) in June 2014. Subsequent to the IPO, the Management has taken steps to enhance the internal controls and strengthen the effectiveness of policies and procedures. The corresponding reports of the internal audit reviews were presented to the ARMC in November 2015 and February 2016 respectively, and forwarded to the Management for their attention and actions. The Management is responsible for ensuring that the action plans are performed within the required timeframe.

A follow-up review on previous internal audit was also performed by Deloitte to monitor the progress made towards the implementation of these actions. The results of the follow-up audit for Bidding and Customer Contract Management were presented to the ARMC in February 2016. All audit findings in relation to this audit review were closed within the target date of implementation. The results of follow-up internal audit review for Fleet Operations, Stock Management and Shipbuilding Management will be presented to the ARMC in May 2016.

On 4 April 2016, Deloitte presented to the ARMC the annual internal audit plan 2016 outlining their scope of work for operational audits for the financial year ending 31 December 2016, covering procurement, finance management, crew management, human resources management, and information technology functions. The annual internal audit plan 2016 was approved for execution with immediate effect.

For the financial year ended 31 December 2015, the total cost incurred for the internal audit function based on invoice received from Deloitte was RM28,371.

This report is made in accordance with a resolution of the Board dated 4 April 2016.

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STATEMENT OF CORPORATE GOVERNANCE

The board of ICON recognises that the exercise of good governance in conducting the affairs of the group with integrity, transparency and professionalism are the key components for the group’s continuing progress and success as these would not only safeguard and enhance shareholders’ value but also provide assurance that the interests of the other stakeholders are preserved.

Management, for the benefits of the shareholders and other stakeholders. The Board is guided by the Charter which provides reference for Directors in relation to the Board’s roles, authorities, duties, responsibilities and functions. It adopts the principles of good governance and is designed to maximise our Company’s compliance, adopting best practice requirements. The Board will review the Charter as and when necessary to ensure it remains consistent with the Board’s objectives and responsibilities, and all the relevant standards of corporate governance.

C. bOARD COMPOsITION AND bAlANCe

As at the date of this Statement, the Board of ICON currently consists of eight members namely a Managing Director, one Senior Independent Non-Executive Director, three Non-Independent Non-Executive Directors (including the Chairman) and three Independent Non-Executive Directors. The Board composition complies with the Listing Requirements of Bursa Malaysia that requires at least two or one-third of the Board, whichever is the higher, to be independent directors. The Board has maintained its mix of Directors from diverse professional background with a wide range of experience and expertise in the field of business, oil and gas industry, information technology, economics, legal, finance and accounting. In view of the size of the Group and its business complexity, the Board is of the opinion that its current composition and size remains optimum and conducive for effective deliberations at Board meetings.

The Board of ICON is committed to comply with the principles and recommendations embodied in the Code in order to meet the highest standard of corporate governance. We note that with the resignation of James William Iler, our Independent Non-Executive Director on 26 August 2015 and the appointment of our new Managing Director on 1 March 2016, the Board is not comprised of a majority of independent directors when the Chairman is not an independent director as recommended by the Code. The Company is now actively engaging with potential candidates in pursuit of appointing an additional Independent Non-Executive Director.

The Board of ICON is committed to comply with the principles and recommendations embodied in the Malaysian Code on Corporate Governance 2012 (the Code) in order to meet the highest standard of corporate governance. Our Company has commenced adopting the Code since its listing on the Main Board of Bursa Malaysia in June 2014 and is continuously striving to pursue this objective.

The Board of ICON is pleased to present the following reports on the application of the principles as set out in the Code and the extent to which the Group has complied with the best practices of the Code during the financial year ended 31 December 2015.

DIReCTORs

A. The bOARD

The Board is the ultimate body which takes full responsibility for the overall performance and governance of the Group. It resolves key business matters and corporate policies except those reserved for shareholders as provided in the Articles of Association (the Articles) of our Company, the Act and other regulatory requirements. The Board establishes the vision and strategic objectives of the Group, directing policies, strategic action plans and stewardship of the Group’s resources towards realising the Group’s mission.

The Board exercises due diligence and care in discharging their duties and responsibilities to ensure that high ethical standards are applied, through compliance with the relevant rules and regulations, directives, practice notes and guidelines in addition to adopting the best practices in the Code and acts in the best interest of the Group and shareholders.

b. bOARD ChARTeR

The Board has adopted a formal charter which is available in our corporate website. The Board Charter (the Charter) was established to assist the Board to provide strategic guidance to our Company and effective oversight of its

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The MD, COO and CFO are the Senior Management of our Company, responsible for the day-to-day management of operational and financial matters of the Group, implementation of the Group’s policies and the Board’s decisions, development and implementation of the business and corporate strategies.

There is a clear segregation of roles and responsibilities between the Chairman and the MD. Their respective roles and responsibilities are clearly defined in the Charter. The role of the Chairman is held by a Non-Independent Non-Executive Director of our Company.

The Board had on 22 May 2014 designated Datuk Wira Azhar bin Abdul Hamid as our Company’s Senior Independent Non-Executive Director.

D. INDePeNDeNCe

The Independent Non-Executive Directors are independent of Management and free from any business relationship which could materially interfere with their independent and objective judgement. Their presence ensures that issues of strategies, performance and resources proposed by the Management are objectively evaluated and providing a capable check and balance for the Management.

The Board has adopted a Policy and Procedure on Independence of Independent Directors that describes how the Board will assess the independence of each Independent Director. In determining the independence of individual Independent Directors, the Board will consider all relevant information, facts and circumstances and the assessment of the independence of its Independent Directors is undertaken annually. Each Director is also required to immediately disclose to the Board if they have an interest or relationship which is likely to impact on their independence or if an Independent Director believes he may no longer be independent.

From the recent assessment of the independence of the Independent Directors, the Board was satisfied that Datuk Wira Azhar bin Abdul Hamid, Edwanee Cheah bin Abdullah, Madeline Lee May Ming, and Datuk Abdullah bin Ahmad are suitable and qualified to act as an Independent Non-Executive Directors of our Company. None of the said Independent Non-Executive Directors of our Company has exceeded the tenure of a cumulative term of nine years in the Board.

e. DIReCTOR’s CODe OF eThICs

The Directors, in discharging its responsibilities, continue to adhere to the adopted Director’s Code of Ethics. The Director’s Code of Ethics is based on principles in relation to sincerity, integrity, responsibility and CSR, and is formulated to enhance the standard of corporate governance and corporate behaviour.

F. DUTIes AND ResPONsIbIlITIes OF The bOARD

In carrying out their duties and responsibilities, the Board exercises great care to ensure that high ethical standards and corporate behaviour are upheld. To enhance accountability and transparency, the Board has specific functions reserved for the Board and those delegated to the Management. The Board members are constantly mindful that the interests of the Group’s stakeholders are always being protected.

In ensuring an effective discharge of its functions, the Board adopts the Charter which sets out the following key responsibilities:

a) To review, challenge and approve the annual corporate plan, which includes the overall corporate strategy, marketing plan, human resources plan, information technology plan, financial plan, budget, regulatory compliance plan and risk management plan;

b) To oversee the conduct of the businesses and to determine whether the businesses are being properly managed;

c) To identify principal risks and ensure the implementation of appropriate internal controls and mitigation measures to effectively monitor and manage these risks;

d) Succession planning, including appointing, training, fixing the remuneration of, and where appropriate, replacing the key management;

e) To oversee the development and implementation of an investor relations programme or shareholders’ communications policy for the Group; and

f) To review the adequacy and integrity of the internal controls and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines (including the Listing Requirements of Bursa Malaysia, securities laws and the Act).

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STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

The Board is cognisance of the importance of business sustainability and, in conducting the Group’s business, the impact on the environment, social and governance will be taken into consideration.

The Directors of our Company recognise the importance to devote sufficient time and efforts to carry out their duties and responsibilities and has committed to this requirement at the time of their appointment. The Director is at liberty to accept other Board appointments so long as the appointment is not in conflict with the business of our Company and does not affect his performance as a Director. None of the Directors of our Company is holding more than five directorships in public listed companies and it is the policy of our Company for Directors to ensure that the number of their directorships is in compliance with the Listing Requirements of Bursa Malaysia before accepting any new directorship.

g. bOARD MeeTINgs

The Board meets at least once every quarter and additional meetings are convened as and when necessary. Meetings are scheduled in advance before the start of each financial year to enable the Directors to plan their schedules accordingly. Board meetings are conducted in an orderly manner, structured through the use of an agenda. Board members are provided with the structured agenda together with the relevant documents and information in advance of each Board meeting.

Minutes of the Board meeting are circulated to Directors for their perusal prior to the confirmation of the minutes at the following Board meeting. The Directors may request for further clarification or raise comments on the minutes prior to the confirmation of the minutes as a correct record of the proceedings at the Board meeting.

During the financial year ended 31 December 2015, a total of nine Board meetings were held and the respective Director’s attendance is shown in the following table:

No. of Meetings Percentage ofName Attended Attendanceof Director /held (%)

Raja Tan Sri 9/9 100Dato’ Seri Arshad bin Raja Tun UdaChairman

Dato’ Abdul Rahman 9/9 100bin Ahmad

Datuk Wira Azhar bin 9/9 100Abdul Hamid

Syed Yasir Arafat bin 9/9 100Syed Abd Kadir

Dr. Jamal bin Yusof @ 1/6 17Gordon Duclos (Granted leave of absenceas a CEO for a period of up to six months beginning 27 April 2015 and ceased office as a director on 27 May 2015)

Edwanee Cheah 7/9 78bin Abdullah

Madeline Lee May Ming 9/9 100

Datuk Abdullah 7/8 88bin Ahmad (Appointed on 24 March 2015 and there was a Board meeting held prior his appointment)

James William Iler 4/6 67(Appointed on 24 March 2015 and there was a Board meeting held prior his appointment, and resigned on 26 August 2015)

Amir Hamzah bin Azizan N/A N/A(Appointed on 1 March 2016)

All the Directors have complied with the minimum of 50% attendance requirements in respect of Board meetings as stipulated in the Listing Requirements of Bursa Malaysia except for Dr. Jamal bin Yusof @ Gordon Duclos who was granted the said leave of absence.

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h. sUPPlY OF INFORMATION

Each Director is provided with the agenda and a complete set of Board papers containing the quantitative and qualitative information prior to each Board meeting with the aim of enabling the Directors to make an informed decisions and seek clarifications that they may require from the Management ahead of the meeting date. The relevant member of the Management team is invited to attend the Board meetings to advise or report to the Board on the matters relating to their areas of responsibility when necessary for an effective deliberation and decision making.

The Board has direct access to the Senior Management on information relating to our Company’s business and affairs in the discharge of their duties. The Directors also have access to the advices and services of our Company Secretary and all information in relation to the Group whether as a full Board or in their individual capacity to assist them in furtherance of their duties. From time to time, the Directors are regularly updated by our Company Secretary on any latest development in the statutory requirements relating to their duties and responsibilities. Our Company Secretary attends all the Board meetings and ensures all the proceedings, deliberations and resolutions passed are properly recorded and maintained.

The Directors may also seek the independent advices from independent professional advisers at our Company’s expense, if necessary.

I. APPOINTMeNT TO The bOARD

The appointment of new Board members are considered, evaluated and assessed by the Nomination Committee (NC) in accordance with the criteria set up in the Charter prior to the recommendation to the Board for approval. The approving authority to nominate new appointments lies within the Board’s responsibility upon considering the recommendations from the NC. Our Company Secretary will ensure that all the appointments are properly made in accordance with the relevant regulatory requirements.

The appointment, re-appointment and annual assessment of the Directors are set up in the Charter, the primary responsibility of which has been delegated to the NC. The NC proposes nominees

for appointment to the Board, and recommends to the Board on the appointment, re-appointment and assessment of the Directors of the Group for approval.

The Board has established a clear and transparent nomination process for the appointment of Director of our Company. The nomination process involves the following stages:

a) Identification of candidates;

b) Evaluation of the suitability of candidates based on the criteria set;

c) Recommendation by NC to the Board; and

d) Approval by the Board.

K. bOARD DIveRsITY

The Board considers that diversity includes differences that relate to gender, age, ethnicity and cultural background. It also includes differences in background, experience, skills and competency, education and functional expertise. As part of the Board’s routine considerations regarding Board renewal, it will continue its focus on diversity as it has in recent years to ensure that there is an appropriate mix of diversity, skills, experience and expertise represented on the Board.

l. Re-eleCTION OF DIReCTORs

The Articles of our Company provides that at every Annual General Meeting of our Company, one-third of the Directors for the time being and those appointed during the financial year shall retire from office and shall be eligible for re-election. The Articles further provides that all Directors shall retire from office at least once every three years but shall be eligible for re-election. The Articles provides also that the Directors to retire in every year shall be those who have been longest in office since their last election but as between Directors of equal seniority, the Directors to retire shall (unless they otherwise agree among themselves) be determined from among them.

The NC recommends who are the retiring Directors based on the above and subsequently provides recommendation to the Board for consideration before tabling the same for shareholders’ approval.

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STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

M. DIReCTORs’ TRAININg

The Board acknowledges that continuous education is vital for its Board members to gain insight and maintain the Board members awareness of the economy, technological advances, latest regulatory developments and management strategies. The NC assesses from time to time the training needs of the Directors and ensures the fulfilment of such training deemed appropriate. The Board members are also encouraged to attend training programmes and seminars to keep abreast with developments in the industry as well as to enhance their professionalism and knowledge.

Training programmes attended by the Directors for the financial year ended 31 December 2015 include Mandatory Accreditation Programme (MAP) for Directors of Public Listed Companies (Pursuant to Paragraph 15.09 of Bursa Securities Listing Requirements), Briefing on Goods and Services Tax (GST), 18th Asia Oil and Gas Conference – Realising Opportunity Amidst Challenges, Khazanah Nasional – Overcoming Adversity, The Interplay Between CG, NFI, and Investment Decision – What Board of Listed Companies Need to Know and The SEA Summit.

The Directors will continue to undergo other relevant training, programmes and seminars as and when necessary to ensure they remain well equipped with the relevant and requisite knowledge to discharge their duties effectively.

bOARD COMMITTees

In enabling the Board to discharge their duties efficiently and effectively, the Board has delegated certain responsibilities to the Board Committees, all of which operate within defined terms of reference that have been approved by the Board to assist the Board in the execution of its duties and responsibilities. The Board Committees include the ARMC, NC and Remuneration Committee (RC).

The respective Board Committees will report their deliberations and recommendations to the Board and all the deliberations and recommendations will then be approved by the Board unless agreed otherwise by the Board.

A. AUDIT AND RIsK MANAgeMeNT COMMITTee

The summary terms of reference of the ARMC are set out under the Audit and Risk Management Committee Report. The terms of reference are in line with the Listing Requirements of Bursa Malaysia and the best practices as set out in the Code.

b. NOMINATION COMMITTee

The NC comprises exclusively of Non-Executive Directors, a majority of whom are independent. The Chairman of the NC is the Independent Non-Executive Director identified by the Board. The members of the NC are as follows:

Name of the NC Member

Edwanee Cheah Chairmanbin Abdullah Independent Non-Executive Director

Madeline Lee May Ming Member Independent Non-Executive Director

Syed Yasir Arafat Memberbin Syed Abd Kadir Non-Independent Non-Executive Director

The NC met three times during the financial year ended 31 December 2015 and the meetings were attended by all the members of the NC. The duties and responsibilities of the NC amongst others are as follows:

a) Board composition and succession planning

i) To review the Board structure, size and composition, and make recommendations to the Board with regard to any adjustments that are deemed necessary to ensure the appropriate Board balance and giving full consideration to succession planning for the Directors; and

ii) To review annually the Board’s mix of skills and experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board, independence and diversity (including gender diversity) required to meet the needs of our Company.

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552015 ANNUAL REPORT

b) Appointments to the Board and the Board Committees

i) To be responsible, having evaluated the balance of skills, experience and other qualities on the Board, for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise, giving full consideration to succession planning;

ii) To consider, in making its recommendations, candidates for directorships proposed by the MD and within the bounds or practicability, by any other Senior Management or any Director or shareholder;

iii) In identifying suitable candidates, the NC shall consider candidates from a wide range of backgrounds. The criteria used in assessment of new candidates before recommendation to the Board shall include but not limited to the following:

• Skills and competency;

• Knowledge and expertise;

• Regional and industry experience;

• Academic and professional qualifications;

• Background, race, gender, age and nationality;

• High personal and professional ethics, integrity and values;

• Ability to devote the required amount of time to discharge the duties and responsibilities of the Board;

• Financial capability and business stability to develop significant time, energy and resources;

• Other directorships; and

• In the case of candidates for the position of Independent Non-Executive Director, the NC should also evaluate the candidates’ ability to discharge responsibilities/functions as expected from an Independent Non-Executive Director.

iv) The determination as to who shall be appointed to the Board shall be the responsibility of the Board as a whole after considering the recommendation from the NC;

v) To recommend to the Board to fill the seats on Board Committees; and

vi) To recommend to the Board for any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of a Managing Director as an employee of our Company subject to the provisions of the law and their service contract.

c) Assessment of performance

i) To assess annually the performance and effectiveness of the Board as a whole, the Board Committees and the individual Director;

ii) To ensure that each Director, MD or CFO has the character, experience, integrity, competency and time to discharge his/her role, as the case may be; and

iii) To assess annually the independence of Directors to ensure that the Independent Non-Executive Directors can continue to bring independent and objective judgement to Board deliberations.

d) Rotation and retirement of Directors

To recommend to the Board for re-election by shareholders of any Director under the retirement by rotation provisions in the Articles, having due regard to their performance and ability to continue to contribute to the Board in the light of the skills, knowledge and experience required.

e) Continuing education programme for Directors

i) To orient and educate new Directors as to the nature of the business, current issues within our Company and the corporate strategies, the expectations of our Company concerning input from the Directors and the general responsibilities of Directors;

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ICON OFFSHORE BERHAD56

ii) To review and make recommendations to the Board in relation to the training and development programme for the Directors; and

iii) To ensure that the Directors have access to appropriate training and development opportunities that supports the work of the Directors and the Board.

Upon the recent annual review and assessment, the NC having considered the aspects of succession planning and boardroom diversity, is satisfied that the size of the Board and Board Committees is optimum notwithstanding the Board is not comprise of a majority of independent directors when the Chairman is not an independent director as recommended by the Code, and there is an appropriate mix of skills, knowledge, experience and competencies in the Board’s composition which is corresponding to the Board’s duties and responsibilities. The NC is satisfied that all Directors are suitable and qualified to hold their positions in view of their competency, qualifications, skills and experiences.

From the assessment of the independence of the Independent Directors, the NC is satisfied that all Independent Directors of our Company have fulfilled the established criteria set for Independent Director.

All the deliberations, assessments and evaluations including recommendations of the NC are properly documented and minuted.

C. ReMUNeRATION COMMITTee

The RC comprises exclusively of Non-Executive Directors, a majority of whom are independent. The members of the RC are as follows:

Name of the RC Member

Edwanee Cheah Chairmanbin Abdullah Independent Non-Executive Director

Madeline Lee May Ming Member Independent Non-Executive Director

Syed Yasir Arafat Memberbin Syed Abd Kadir Non-Independent Non-Executive Director

The RC met twice during the financial year ended 31 December 2015 and the meetings were attended by all the members of the RC. The duties and responsibilities of the RC are as follows:

a) To study and propose to the Board the various forms of remuneration and fees appropriate for the Directors;

b) To determine and recommend to the Board the framework or broad policy for the remuneration package of the MD and such other members of the management as it is designated to consider;

c) To establish a formal and transparent procedure for developing policy on the total individual remuneration package of the MD and other designated management personnel including, where appropriate, bonuses, incentives and share options;

d) To design the remuneration package for the MD and other designated management personnel with the aim of attracting and retaining high-calibre management personnel who will deliver success for the shareholders and high standards of services for stakeholders, while taking into consideration the business environment in which the Group operates. Once formulated, to recommend to the Board for approval;

e) To review and recommend to the Board any improvement on designated management personnel’s remuneration policy and package and any other issues relating to benefits for the designated management personnel on an annual basis;

f) To consider and recommend to the Board the various terms of engagement to be included in any contract of service between our Company and the MD and other designated management personnel;

g) To review any major changes in employee benefits structures throughout the Group, and if deemed fit, to recommend to the Board for adoption; and

h) To review and recommend to the Board for adoption, the framework for the Group’s annual incentive scheme. The framework for the annual incentive scheme may include:

i) Merit increment;

ii) Merit bonus; and

iii) Retention and reward incentives.

STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

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572015 ANNUAL REPORT

The RC’s aims, goals or objectives reflect our Company’s overall philosophy that all employees should be appropriately rewarded so as to attract and retain high caliber persons who possess the know-how knowledge to operate and manage our Company successfully.

The levels of remuneration for Executive Director are determined based on the corporate and individual’s performance, whilst the level of remuneration for Non-Executive Directors would reflect the experience and level of responsibilities undertaken by the particular Non-Executive Director. Our Company aims to align the interests of its Executive Director as closely as possible with the interests of shareholders in promoting the Group’s strategies. Total remuneration for Executive Director comprises basic salary, performance related bonus, benefit-in-kind and emoluments. The basic salary and benefits are competitive and reviewed annually. The basic salary is set by the Remuneration Committee annually after consideration of our Company’s performance and market conditions.

The procedures for approving the Executive Director’s remuneration are as follows:

a) RC to determine the Key Performance Indicators (KPIs) for the Executive Director based on the financial results, financial ratios and human capital management;

b) RC to review and assess the performance achieved by the Executive Director based on the KPIs set; and

c) RC to make recommendation of the remuneration package for the Executive Director to the Board for approval.

D. DIReCTORs ReMUNeRATION

The RC reviews the remuneration package of the Executive Director, who is also the MD, annually to ensure that he is awarded appropriately for his contributions to the Group’s growth and profitability.

The Non-Executive Directors’ fees are approved by the Board and are subject to the shareholders’ approval at the general meeting. The review of the Non-Executive Directors’ fees takes into account the trends of similar positions in the market and any additional responsibilities undertaken such as acting as Chairman of the Board or Board Committees.

The details on the aggregate remuneration of the Directors for the financial year ended 31 December 2015 are as follows:

Fees and Salaries and Defined Emoluments Bonuses Contribution Plan Benefits-in-kind Total (RM) (RM) (RM) (RM) (RM) Executive Director* - 683,813 129,926 7,200 820,939Non-Executive Directors 672,500 - - - 672,500

* Executive Director refers to the former CEO of ICON.

The number of Directors whose total remuneration falls within the respective bands is as follows:

No. of DirectorsRange of Remuneration executive Director* Non-executive Directors

Less than RM 50,000 - 1RM 50,001 to RM 150,000 - 4RM 150,001 to RM 500,000 - 1More than RM500,000 1 -

* Executive Director refers to the former CEO of ICON.

Note:Dato’ Abdul Rahman bin Ahmad and Syed Yasir Arafat bin Syed Abd Kadir being the nominees of the immediate holding company, Hallmark Odyssey Sdn. Bhd. and indirect holding company, E-Cap (Internal) One Sdn. Bhd. respectively have waived their entitlement for Director’s fee. Dato’ Abdul Rahman bin Ahmad ceased to be the representative of Hallmark Odyssey Sdn. Bhd., (the major shareholder of ICON), which is wholly-owned indirectly by Ekuinas Capital Sdn. Bhd. , a fund company that holds the investable capital managed by Ekuinas, with effect from 29 February 2016.

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The ExCO generally:

a) Reviews the strategy of the Group and make recommendations to the Board, and monitor the implementation of the Group’s strategy;

b) Reviews the business plan and budgets and monitor progress and performance of the business plan and budgets, including performance against agreed key performance indicators in all aspects of the Group’s operations;

c) Ensures that the Group maintains a sound framework of reporting on internal control and regulatory compliance;

d) Reviews and recommends to the RC and/or the Board, the framework or broad policy for the remuneration package, employee benefits and annual incentive schemes of our Company’s employees; and

e) Assumes any other powers and responsibilities that may from time to time be assigned or delegated to the ExCO by the Board.

sTAKehOlDeR

A. COMMUNICATION WITh shARehOlDeRs AND INvesTORs

The Board recognises the importance of transparency and accountability in communication and dissemination of clear, relevant and comprehensive information on the Group’s business activities to shareholders, investors and other stakeholders. To this effect, the Board has maintained an effective Corporate Disclosure Policy that enables both Management and the Board to communicate effectively with the shareholders and investors. In formulating the Corporate Disclosure Policy, the Board is guided by best practices and disclosure requirements as set out in the Listing Requirements of Bursa Malaysia.

Our Company’s Annual Report remains a key channel of communication with the Group’s stakeholders. The Annual Report provides corporate information, performance review of our financial results, financial highlights and other activities in order to facilitate shareholders’ easy access to such key information.

In addition to that, our Company also makes timely, complete and accurate disclosures and announcements to Bursa Malaysia, including financial results on a quarterly basis to provide the shareholders and the investing public an updated overview of the Group’s performance and operations.

e. eXeCUTIve COMMITTee

The Executive Committee (ExCO) was constituted by the Board as a sub-committee of the Board and its general purpose is to provide an effective oversight of the business of the Group and to ensure that the Group’s operations are aligned with the strategy approved by the Board and implemented within the framework and agreed financial limits as approved by the Board from time to time.

The ExCO consists of up to three members of whom nominated by Ekuinas and up to three members of whom comprise of the key Management of our Company. The Chairman of the ExCO is appointed by the Board. The ExCO comprises the following members:

Name of the eXCO Member

Syed Yasir Arafat Chairmanbin Syed Abd Kadir Non-Independent Non-Executive Director

Dato’ Abdul Rahman Memberbin Ahmad* Non-Independent Non-Executive Director

Dr. Jamal bin Yusof Member@ Gordon Duclos** Non-Independent Executive Director/CEO

Amir Hamzah Memberbin Azizan*** MD

Captain Hassan bin Ali^ Member COO

Rahman bin Yusof**** Member COO

Lim Fu Yen***** Member

Note:* Please refer to page 57.** Dr. Jamal bin Yusof @ Gordon Duclos the then CEO of the

Group, was on leave of absence for a period of up to six months beginning 27 April 2015 and ceased office due to expiration of his tenure as the CEO of the Group on 15 November 2015.

*** Amir Hamzah bin Azizan was appointed the MD of the Group on 1 March 2016.

**** Rahman bin Yusof the then COO of the Group, was on leave of absence for a period of up to six months beginning 27 April 2015 and ceased office due to expiration of his appointment as the COO of the Group on 15 November 2015.

***** Lim Fu Yen is the Director of Investment of Ekuinas.^ Captain Hassan bin Ali was the Deputy CEO of the Company

and appointed as the Chief Operating Officer of the Company effective 19 November 2015.

STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

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The other modes of communication with shareholders and investors include the Circular, quarterly analysts briefing and ICON’s website at www.iconoffshore.com.my.

Any enquiries or information regarding the Group may be conveyed through Corporate Communications Department at [email protected].

b. The ANNUAl geNeRAl MeeTINg

The Annual General Meeting (AGM) is the principal forum for the Board to meet with the shareholders. At the AGM, a presentation on our operational and financial performance will be presented to the shareholders. The shareholders are encouraged to attend the AGM and raise questions pertaining to the business activities of the Group and the Board will respond to shareholders’ questions during the meeting. At the commencement of the general meeting, the shareholders will be informed of their right to demand a poll vote.

C. eMPlOYees’ CODe OF eThICs

Our Company’s Employees’ Code of Ethics ensures that all employees observe and maintain high ethical business standards of honesty and integrity in all aspects of our operations. The Employee’s Code of Ethics highlights key issues to help employees perform their duties in line with our Company’s standards such as ensuring a safe working environment, effectively managing our Company’s assets and property, safeguarding confidential information as well as dealing with external parties such as customers, vendors, media, competitors and government agencies.

D. seRvICe PROvIDeR CODe OF CONDUCT

The Group believes that relationships with service providers should be based on the principles of integrity, honesty, accountability and compliance with laws and regulations. With this objective, the Service Provider Code of Conduct (COC) requires service providers, which include suppliers, contractors, professional advisors, consultants and other business associates, to adhere to this COC when conducting business with the Group. The Group may take the necessary action for breaches of the COC which includes but not limited to termination and preclusion from proposing any work for the Group for a pre-determined period.

e. ANTI-FRAUD AND WhIsTleblOWINg POlICY

The Policy is built into the Group’s culture towards elimination of fraud and corruption. It also promotes a transparent and open environment for fraud reporting within the Group.

ACCOUNTAbIlITY AND AUDIT

A. FINANCIAl RePORTINg

The Board strives to ensure that our financial reporting to its stakeholders, in particular, the shareholders, investors and regulatory authorities by means of the annual audited financial statements and quarterly announcements, represents a clear, balanced and comprehensive assessment of the Group’s financial performance at the end of each quarter and the financial year.

The ARMC assists the Board in ensuring the accuracy, adequacy and quality of the financial reporting prior to recommendation to the Board for approval and submission to Bursa Malaysia within the prescribed period.

b. DIReCTORs’ ResPONsIbIlITY sTATeMeNT IN PRePARINg The ANNUAl AUDITeD FINANCIAl sTATeMeNTs

The Board ensures that the financial statements are drawn up in accordance with the Act and the applicable approved financial reporting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and our Company as at the end of the financial year and of the results and cash fiows of the Group and our Company for the financial year.

In preparing the financial statements, the Directors have:

a) Applied relevant and appropriate accounting policies consistently and in accordance with applicable approved financial reporting standards;

b) Made judgements and estimates that are prudent and reasonable; and

c) Prepared the financial statements on a going concern basis.

The Directors are responsible for ensuring that proper accounting records are kept in accordance with the Act. The Directors also have overall responsibility in taking such steps as are reasonably open to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities.

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C. RIsK MANAgeMeNT AND INTeRNAl CONTROl

The Board recognising the importance of risk management and internal controls, and has established a structured risk management framework to identity, evaluate, control, monitor and report the key business risks faced by the Group on an on-going basis to safeguard shareholders’ investment and the Group’s assets.

The Board has also established internal control policies and procedures and monitors to ensure that such internal control system is implemented and effectively carried out by the Management team. The Statement on Risk Management and Internal Control set out in this Annual Report provides an overview of the state of risk management and internal control within the Group.

D. RelATIONshIP WITh AUDITORs

The Board has established a formal and transparent working relationship with the Group’s auditors, both internal and external that enables the Board to seek their professional advice and ensure compliance with accounting standards and regulatory requirements. The ARMC met with the external auditors regularly at its meeting to review and discuss the scope and adequacy of our Company’s audit plan, audit reports and annual audited financial statements, in which effective financial year 2015 two meetings have been held without the Management presence.

The ARMC is tasked with authority from the Board to review any matters concerning the appointment and re-appointment, audit fee, resignation or dismissal of external auditors, and to assess the independence of the external auditors based on the External Auditors Appointment and Independence Policy and Procedure to ensure they have been independent throughout the conduct of the audit engagement with the Group.

ADDITIONAl COMPlIANCe INFORMATION

A. UTIlIsATION OF PROCeeDs RAIseD FROM CORPORATe eXeRCIse

Total proceeds of approximately RM410.2 million were raised during our Company listing exercise on the Main Market of Bursa Malaysia on 25 June 2014. The proceeds were utilised for expansion of vessel fieet, repayment of bank borrowings, repayment of advances from immediate holding company, Hallmark Odyssey Sdn. Bhd., working capital and listing expenses purposes. As at 31 December 2015, the proceed raised from the corporate exercise were fully utilised.

b. shARe bUY-bACK

Our Company had duly obtained its shareholders’ approval at the Third AGM held on 27 May 2015 to purchase its own shares up to ten percent (10%) of its total issued and paid-up ordinary share capital.

However, for financial year ended 2015, our Company did not exercise its power to purchase its own shares. However, the Management is proposing to retain the flexibility of exercising such power to purchase its own shares and therefore, intend to renew the said shareholders’ mandate at the Fourth AGM.

C. OPTION OR CONveRTIble seCURITIes

Our Company did not issue any options or convertible securities in the financial year ended 31 December 2015.

D. DePOsITORY ReCeIPTs PROgRAMMe

During the financial year under review, our Company did not sponsor any depository receipt programme.

e. sANCTIONs AND/OR PeNAlTIes

There was no sanction and/or penalty imposed on our Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year.

F. NON-AUDIT Fees

The amount of non-audit fees paid to the External Auditors by our Company for the financial year ended 31 December 2015 amounted to RM 215,161, constituting 25% of the total remuneration of RM877,161 to the External Auditors, for the services rendered on accounting advice on joint venture and GST implementation assistance.

g. vARIATION IN ResUlTs

There was no deviation between the unaudited financial results announced and the audited financial results of the Group for the financial year ended 31 December 2015.

The Group did not release any profit estimate, forecast or projections during the financial year.

h. PROFIT gUARANTee

During the financial year under review, there was no profit guarantee given by the Group.

I. MATeRIAl CONTRACTs

There is no material contract, not entered into within the ordinary course of business of our Company and its subsidiaries, involving the interest of the Directors and major shareholders of our Company, either still subsisting at the end of the financial year or entered into since the end of the previous financial year.

STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

bOARD ResPONsIbIlITY

The Board acknowledges their responsibility for the Group’s system of internal control, and for reviewing the adequacy and integrity of this system. However, in view of the limitations inherent in any system, it should be noted that such system of internal control is designed to manage, rather than to eliminate the risks of failure to achieve the Group’s objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatements, frauds, losses or breaches of laws and regulations.

The Board has established an on-going process for identifying, evaluating and managing the significant risks faced by the Group. The Board shall continue to improve the system of internal control and review the controls in place, with the aim to ensure that the system is adequate to mitigate the significant risks. The Management assists the Board in the implementation of the Board’s policies and procedures on risks and controls by identifying and assessing the risks faced, and in the design, operation and monitoring of suitable internal controls to mitigate and control these risks. This process has been in place for the financial year under review and up to the date of approval of this Statement, and is regularly reviewed by the Board through its ARMC which is supported by the internal audit function and CGRM.

The board is pleased to present this statement on Risk Management and Internal Control (the statement) pursuant to paragraph 15.26(b) of the listing Requirements of bursa Malaysia. To prepare this statement, the board has been guided by the statement on Risk Management and Internal Control: guidelines for Directors of listed Issuers issued by The Institute of Internal Auditors Malaysia with the endorsement of bursa Malaysia.

RIsK MANAgeMeNT

RIsK MANAgeMeNT FRAMeWORK

A Risk Management Framework was developed to ensure that risks are managed effectively, efficiently and coherently across the Group. Key risk events were identified, evaluated, discussed and with the approval of the Board, appropriate measures were taken to control and mitigate these risks. The key risks affecting the achievement of the Group objectives identified by respective risk owners are categorised into four types, namely:

• Strategic Risk;

• Financial Risk;

• Operational Risk; and

• Other Risks.

These risks are evaluated to determine the appropriate risk treatment and are managed through, among others:

• On-going monitoring of key economic changes, industry outlook and regulatory developments;

• Putting in place policies and standard operating procedures;

• Documented limits of authority;

• Setting and monitoring of KPIs; and

• Periodic operational and financial reporting.

Reviewing of key risks are performed on a quarterly basis, in which the Group risk profiles and rating, newly registered risks, corresponding risk mitigating actions identified and their progress are discussed and presented to the Board through the ARMC.

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ICON OFFSHORE BERHAD62

INTeRNAl CONTROl

The Board recognises the importance of maintaining a sound system of internal control to safeguard shareholders’ investments and the Group’s assets. The key elements of the Group’s system of internal control are described as follows:

1) AUDIT AND RIsK MANAgeMeNT COMMITTee

The ARMC is wholly comprised of Non-Executive Board members and has full access to both internal and external auditors, as well as the CGRM. It shall meet with the external auditors without the Management present at least twice a year or when necessary. Deloitte, the audit firm engaged to carry out the internal audit function for the Group, and the CGRM report directly to the ARMC. The activities performed by the ARMC during the financial year under review are set out in the Audit and Risk Management Committee Report.

2) bOARD COMMITTee

Besides the ARMC, our Company also has NC and RC. These Board Committees are established to assist the Board in providing independent oversight of the Group’s management with responsibilities and authorities clearly specified in their respective terms of reference.

3) OUTsOURCeD INTeRNAl AUDIT FUNCTION

The Group internal audit function which was undertaken internally by the CGRM since its establishment in mid-2013 is outsourced to Deloitte in May 2015. Its primary role is to provide independent assurance service to the Board, ARMC and Management, focusing on reviewing the effectiveness of the risk management, control and governance processes that Management has put into place.

4) CORPORATe gOveRNANCe AND RIsK MANAgeMeNT

The role of CGRM is to assist the ARMC of our Company in the effective discharge of their risk management and corporate governance responsibilities, with emphasis given to assist the CEO/MD and Management in the successful implementation of Risk Management Framework, and Policy and Standard Operating Procedure Framework across the Group. CGRM activities updates are submitted to the ARMC on a quarterly basis.

5) ORgANIsATIONAl sTRUCTURe WITh DeFINeD ResPONsIbIlITY

Properly defined organisation structure with clear reporting lines, formalised responsibilities and delegation of authority has been established as a control mechanism in terms of lines of reporting and accountability.

6) DOCUMeNTeD lIMITs OF AUThORITY

Approved limits of authority are imposed on the Management team in respect of the day-to-day operations as a control to minimise any risk of abuse of authority.

7) bUDgeTINg PROCess AND FINANCIAl RePORTINg

Each department undertakes yearly comprehensive budgeting and forecasting process. The Senior Management conducts monthly reviews of the financial performance of the Group against financial budget, and subsequently presented to the ExCO together with actions plan.

8) POlICY AND sTANDARD OPeRATINg PROCeDURe FRAMeWORK

A Policy and Standard Operating Procedure Framework was developed to ensure key processes within the Group are properly documented, communicated and implemented by the Management team. The objective of the written policies and procedures is to ensure that internal control principles and mechanisms are embedded in the Group’s operations.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D)

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632015 ANNUAL REPORT

9) CODe OF eThICs

The Board and Senior Management set the tone at the top for corporate behaviour and corporate governance. The Code of Ethics (COEs) has been formalised and adopted for the Directors and employees of the Group to encourage high standards of conduct that are associated with ethical business practices. It is a requirement for all Directors and employees of the Group to understand their respective COEs, and to acknowledge and sign off on the declaration form.

10) seRvICe PROvIDeR CODe OF CONDUCT

The Group believes that relationships with service providers should be based on the principles of integrity, honesty, accountability and compliance with laws and regulations. With this objective, the Service Provider Code of Conduct (COC) requires service providers, which include suppliers, contractors, professional advisors, consultants and other business associates, to adhere to this COC when conducting business with the Group. The Group may take the necessary action for breaches of the COC which includes but not limited to termination and preclusion from proposing any work for the Group for a pre-determined period.

11) ANTI-FRAUD AND WhIsTleblOWINg POlICY

The Policy is built into the Group’s culture towards elimination of fraud and corruption. It also promotes a transparent and open environment for fraud reporting within the Group.

12) CORPORATe DIsClOsURe POlICY

The Corporate Disclosure Policy was developed to ensure information directed to shareholders, stakeholders and the general public fairly and accurately represents the Group. Hence, investors and potential investors can make properly informed investment decisions, and others can have an understanding of our Company and its objectives.

ADeQUACY OF RIsK MANAgeMeNT AND INTeRNAl CONTROl sYsTeM

The Board has satisfactorily received reasonable assurance from the CEO/MD and the CFO that the Group’s risk management and internal control system is operating adequately, in all material aspects for the financial year under review and up to the date of approval of this Statement, and improvement in certain areas are on-going.

CONClUsION

The Board believes that the development of a sound system of risk management and internal control is an on-going process and hence, has taken steps to progressively improve the system. During the financial year under review, certain areas for improvement in the system were identified. The Management has been responsive to the issues raised and has taken the necessary actions to address the areas for improvement highlighted by the Auditors. The Board is of the view that the system of risk management and internal control in place is adequate for the financial year under review and up to the date of approval of this Statement.

This Statement is made in accordance with a resolution of the Board dated 4 April 2016.

RevIeW OF The sTATeMeNT bY eXTeRNAl AUDITORs

As required by Paragraph 15.23 of the Bursa Malaysia Listing Requirements, the External Auditors have reviewed this Statement. Their limited assurance review was performed in accordance with Recommended Practice Guide (RPG 5 (Revised)) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require the External Auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

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ICON OFFSHORE BERHAD64

STATEMENT OF DIRECTORS’ RESPONSIBILITy

The Companies Act (Act) requires the Directors to lay before the Company at its Annual General Meeting, the

Audited Financial Statements, which includes the Consolidated Statement of Financial Position and the Consolidated

Statement of Comprehensive Income of the Company and its subsideries (Group) for each financial year, made out in

accordance with the applicable approved accounting standards and the provisions of the Act. This is also in line with

Paragraph 15.26 (a) of Bursa Malaysia Listing Requirements.

The Directors are required to take reasonable steps in ensuring that the Consolidated Financial Statements give a

true and fair view of the state of affairs of the Group and the Company as at the end of the financial year ended 31

December 2015.

The Financial Statements of the Group for the financial year in review are set out on pages 73 to 142 of this Annual Report.

In the preparation of the Financial Statements, the Directors are satisfied that the Group has used appropriate

accounting policies, consistently applied and supported by reasonable and prudent judgement and estimates. The

Directors also confirm that all accounting standards which they consider to be applicable have been complied with.

The Directors are required under the Act to ensure that the Group keep accounting records which disclose with

reasonable accuracy of the financial position of the Group, and to cause such records to be kept in such manner as

to enable them to be conveniently and properly audited.

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66 Directors’ Report

70 Statement By Directors

70 Statutory Declaration

71 Independent Auditors’ Report

73 Statements Of Comprehensive Income

74 Statements Of Financial Position

76 Statements Of Changes In Equity

80 Statements Of Cash Flows

83 Notes To The Financial Statements

FINANCIAL STATEMENTS

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ICON OFFSHORE BERHAD66

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

The Directors submit their report together with the audited financial statements of the Group and the Company for the financial year ended 31 December 2015.

PRINCIPAL ACTIVITIES

The Company is an investment holding company. The principal activities of the Group are vessel owning/leasing and provision of vessel chartering and ship management services to oil and gas related industries. The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements. There were no significant changes in the nature of these principal activities during the financial year.

FINANCIAL RESULTS

Group Company RM RM

Loss for the financial year - Equity holders of the Company (364,086,731) (185,514,818)- Non-controlling interests 798,315 –

(363,288,416) (185,514,818)

DIVIDEND

No dividend has been paid, declared or proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December 2015.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.

DIRECTORS

The Directors who have held office since the date of the last report are as follows:

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun UdaDatuk Wira Azhar bin Abdul HamidDato’ Abdul Rahman bin AhmadSyed Yasir Arafat bin Syed Abd KadirEdwanee Cheah bin AbdullahMadeline Lee May MingDatuk Abdullah bin AhmadAmir Hamzah bin Azizan (appointed with effect from 1 March 2016)Dr. Jamal bin Yusof @ Gordon Duclos (resigned with effect from 27 May 2015)James William Iler (resigned with effect from 26 August 2015)

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672015 ANNUAL REPORT

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

DIRECTORS’ INTERESTS

According to the register of Directors’ shareholdings maintained by the Company in accordance with Section 134 of the Companies Act, 1965, the interests and deemed interests in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at the end of the financial year are as follows:

Number of ordinary shares of RM0.50 each At At 1.1.2015 Bought Sold 31.12.2015

Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda 150,000 - - 150,000

Edwanee Cheah bin Abdullah 1,551,194 300,000 (1,651,194) 200,000

Madeline Lee May Ming 60,000 - - 60,000

Other than the above, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no Director of the Group and the Company has received or become entitled to receive any benefit (other than Directors’ remuneration as disclosed in note 9 to the financial statements) by reason of a contract made by the Group and the Company or a related corporation with any Director or with a firm of which any Director is a member, or with a company in which any Director has a substantial financial interest except that certain Directors of the Group and the Company received remuneration from related corporations in their capacity as Directors or employees of that related corporations in accordance with the terms of their respective service contracts.

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ICON OFFSHORE BERHAD68

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

ISSUE OF SHARES

There was no new share issuance during the financial year.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the statements of comprehensive income and statements of financial position of the Group and the Company were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts have been written off and that adequate allowance is made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Group and the Company have been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve (12) months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Company to meet their obligations when they fall due. At the date of this report, there does not exist:

(a) any charge on the assets of the Group and the Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group and the Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group’s and the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the impairment loss on vessels and goodwill as disclosed in the statement of comprehensive income of the Group and the impairment loss on investment in subsidiaries disclosed in the statement of comprehensive income of the Company; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item,

transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and the Company for the financial year in which this report is made.

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692015 ANNUAL REPORT

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION

The Directors regard Hallmark Odyssey Sdn. Bhd., a company incorporated and domiciled in Malaysia, as the Company’s immediate holding company, and Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company’s ultimate holding foundation.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution dated 4 April 2016.

AMIR HAMZAH BIN AZIZAN RAJA TAN SRI DATO’ SERI ARSHAD BIN RAJA TUN UDAMANAGING DIRECTOR CHAIRMAN

Kuala Lumpur

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ICON OFFSHORE BERHAD70

STATEMENT BY DIRECTORS

STATUTORY DECLARATION

PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, Amir Hamzah bin Azizan and Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda, being two of the Directors of Icon Offshore Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 73 to 141 have been properly drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2015 and of the results and cash flows of the Group and the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia.

The supplementary information set out in Note 28 on Page 142 has been prepared in accordance with the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profit or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board of Directors in accordance with their resolution dated 4 April 2016.

AMIR HAMZAH BIN AZIZAN RAJA TAN SRI DATO’ SERI ARSHAD BIN RAJA TUN UDAMANAGING DIRECTOR CHAIRMAN

Kuala Lumpur

PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Zaleha binti Abdul Hamid, being the Officer primarily responsible for the financial management of Icon Offshore Berhad, do solemnly and sincerely declare that the financial statements set out on pages 73 to 142 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

ZALEHA BINTI ABDUL HAMIDCHIEF FINANCIAL OFFICER

Subscribed and solemnly declared by the above named Zaleha binti Abdul Hamid at Kuala Lumpur before me, on 4 April 2016.

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712015 ANNUAL REPORT

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ICON OFFSHORE BERHAD(Company No: 984830-D)(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Icon Offshore Berhad on pages 73 to 141, which comprise the statements of financial position as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 27.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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ICON OFFSHORE BERHAD72

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ICON OFFSHORE BERHAD (CONTINUED)(Company No: 984830-D)(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS (CONTINUED)

OPINION

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditor’s report of the subsidiary of which we have not acted as auditors which is indicated in Note 16 in the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 28 on page 142 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS YEE WAI YIN(No. AF: 1146) (No. 2081/08/16 (J))Chartered Accountants Chartered Accountant

Kuala Lumpur4 April 2016

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732015 ANNUAL REPORT

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

Group Company Note 2015 2014 2015 2014 RM RM RM RM

Revenue 5 266,565,638 318,877,129 - -

Cost of sales (170,775,490) (159,283,404) - -

Gross profit 95,790,148 159,593,725 - -

Other income 1,785,989 7,044,242 201,525 3,504,546

Administrative expenses (45,056,435) (48,377,021) (5,072,995) (19,165,821)

Other expenses - Impairment loss on vessels 13 (195,373,000) - - - - Impairment loss on goodwill 14 (180,643,348) - - - - Impairment loss on investment in subsidiaries 16 - - (180,643,348) - - Others (3,132,000) (11,758,667) - -

(Loss)/profit from operations (326,628,646) 106,502,279 (185,514,818) (15,661,275)

Finance costs 6 (36,996,193) (50,137,941) - (6,705,223)

Share of profit from a joint venture 63,629 36,119 - -

(Loss)/profit before taxation 7 (363,561,210) 56,400,457 (185,514,818) (22,366,498)

Taxation 10 272,794 2,953,682 - (10,000)

(Loss)/profit for the financial year (363,288,416) 59,354,139 (185,514,818) (22,376,498)

Other comprehensive income/(loss):Items that will be reclassified subsequently to profit or loss: Currency translation differences 1,361,302 (194,338) - -

Total comprehensive (loss)/income for the financial year (361,927,114) 59,159,801 (185,514,818) (22,376,498)

(Loss)/profit attributable to: - Equity holders of the Company (364,086,731) 59,354,139 (185,514,818) (22,376,498) - Non-controlling interests 798,315 - - -

(363,288,416) 59,354,139 (185,514,818) (22,376,498)

Total comprehensive (loss)/income attributable to: - Equity holders of the Company (363,011,522) 59,159,801 (185,514,818) (22,376,498) - Non-controlling interests 1,084,408 - - -

(361,927,114) 59,159,801 (185,514,818) (22,376,498)

(Loss)/earnings per share for (loss)/profit attributable to the ordinary equity holders of the Company: 11

Basic and diluted (loss)/earnings per share (30.9) 7.4

The notes set out on pages 83 to 141 form an integral part of these financial statements.

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ICON OFFSHORE BERHAD74

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2015

Group Company Note 2015 2014 2015 2014 RM RM RM RM

NON-CURRENT ASSETS

Property, plant and equipment 13 1,288,422,874 1,378,168,441 - -Intangible assets 14 - 183,775,348 - -Investment in a joint venture 15 4,232,490 4,168,861 - -Investment in subsidiaries 16 - - 689,114,582 829,222,798Deferred tax assets 17 46,590,022 45,188,087 - -

1,339,245,386 1,611,300,737 689,114,582 829,222,798

CURRENT ASSETS

Inventories 1,605,697 1,543,732 - -Trade and other receivables 18 81,088,346 92,075,917 420,389 342,025Tax recoverable 3,466,298 1,954,830 9,163 -Cash and bank balances 20 95,354,013 74,818,205 25,908,452 34,193,057

181,514,354 170,392,684 26,338,004 34,535,082

CURRENT LIABILITIES

Trade and other payables 21 76,295,965 29,755,924 1,198,301 858,573Amounts due to subsidiaries 19 - - 41,255,022 4,382,726Borrowings 22 181,144,834 129,477,599 - -Taxation 753,452 1,244,006 - 2,500

258,194,251 160,477,529 42,453,323 5,243,799

NET CURRENT (LIABILITIES)/ ASSETS (76,679,897) 9,915,155 (16,115,319) 29,291,283

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752015 ANNUAL REPORT

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2015 (CONTINUED)

Group Company Note 2015 2014 2015 2014 RM RM RM RM

NON-CURRENT LIABILITES

Borrowings 22 541,872,317 539,005,775 - -Deferred tax liabilities 17 1,864,713 1,603,759 - -

543,737,030 540,609,534 - -

NET ASSETS 718,828,459 1,080,606,358 672,999,263 858,514,081

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

Share capital 23 588,592,550 588,592,550 588,592,550 588,592,550Share premium 23 311,210,080 311,210,080 311,210,080 311,210,080Foreign currency translation reserves 880,871 (194,338) - -(Accumulated losses)/ retained earnings (183,088,665) 180,998,066 (226,803,367) (41,288,549)Non-controlling interest 1,233,623 - - -

TOTAL EQUITY 718,828,459 1,080,606,358 672,999,263 858,514,081

The notes set out on pages 83 to 141 form an integral part of these financial statements.

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ICON OFFSHORE BERHAD76

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

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772015 ANNUAL REPORT

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD78

A

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STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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792015 ANNUAL REPORT

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD80

Group Company Note 2015 2014 2015 2014 RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

(Loss)/profit before taxation (363,561,210) 56,400,457 (185,514,818) (22,366,498)

Adjustments for: Amortisation of intangible assets 3,132,000 11,758,667 - - Depreciation of property, plant and equipment 65,719,917 56,573,067 - - Gain on disposal of property, plant and equipment - (4,688,734) - - Impairment of receivables 1,003,530 316,790 - - Interest expense 36,996,193 50,137,941 - 6,705,223 Interest income (1,089,720) (2,379,389) (200,189) (3,064,788) Impairment loss on goodwill 180,643,348 - - - Impairment loss on vessels 195,373,000 - - - Impairment loss on investment in subsidiaries - - 180,643,348 - Unrealised loss on foreign exchange 4,370,944 516,455 (74) - Reversal of impairment of receivables (234,318) (2,189,304) - - Share issuance expenses - 14,655,481 - 14,655,481 Share of profit of joint venture (63,629) (36,119) - -

Operating profit/(loss) before working capital changes 122,290,055 181,065,312 (5,071,733) (4,070,582)

Changes in working capital: Inventories (62,050) (167,704) - - Receivables 13,075,377 (3,761,096) (78,364) (342,023) Payables 13,615,968 (6,027,122) 339,728 332,194

Cash generated from/(used in) operations 148,919,350 171,109,390 (4,810,369) (4,080,411)Tax paid (2,870,207) (5,017,436) (11,663) (7,500)

Net cash generated from/(used in) operating activities 146,049,143 166,091,954 (4,822,032) (4,087,911)

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

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812015 ANNUAL REPORT

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

Group Company Note 2015 2014 2015 2014 RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in a joint venture - (4,132,742) - -Purchase of property, plant and equipment (139,329,831) (246,982,079) - -Proceeds from disposal of property, plant and equipment - 24,774,460 - -Interest received 1,089,720 2,379,389 200,189 1,781,237Advances to subsidiaries - - (46,667,303) (319,098,761)

Net cash used in investing activities (138,240,111) (223,960,972) (46,467,114) (317,317,524)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of ordinary shares - 410,228,250 - 410,228,250Share issuance expenses - (22,770,926) - (22,770,926)Issuance of shares to non-controlling interest 149,215 - - -Drawdown of borrowings (net of transaction cost) 208,560,048 79,776,873 - 6,369,370Repayment of finance lease liabilities (33,036) (35,876) - -Repayment of borrowings/advances (158,861,422) (284,732,388) - (7,178,370)Repayment of amounts due to intermediate holding company - (52,650,100) - (53,052,744)Net increase of amounts due from a subsidiary company - - 43,004,467 23,552,359Interest paid (37,170,805) (44,487,374) - (1,549,449)(Increase)/decrease in fixed deposits pledged (5,961,565) 907,919 - -

Net cash generated from financing activities 6,682,435 86,236,378 43,004,467 355,598,490

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ICON OFFSHORE BERHAD82

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

Group Company Note 2015 2014 2015 2014 RM RM RM RM

Exchange gains on cash and bank balances 82,776 55,971 74 -

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 14,574,243 28,423,331 (8,284,605) 34,193,055

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 68,534,727 40,111,396 34,193,057 2

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 20 83,108,970 68,534,727 25,908,452 34,193,057

The notes set out on pages 83 to 141 form an integral part of these financial statements.

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832015 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

1 GENERAL INFORMATION

The Company is a public company, incorporated and domiciled in Malaysia.

The Company is an investment holding company. The principal activities of the Group are vessel owning/leasing and provision of vessel chartering and ship management services to oil and gas related industries. The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements. There were no significant changes in the nature of these principal activities during the financial year.

The immediate holding company is Hallmark Odyssey Sdn. Bhd. The ultimate holding foundation is Yayasan Ekuiti Nasional.

The address of the registered office of the Company is:

Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara,Damansara Heights, 50490 Kuala Lumpur

The address of the principal place of business of the Company is:

Level 12A, East Wing, The IconNo. 1, Jalan 1/68FOff Jalan Tun Razak55000 Kuala Lumpur

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all the financial years presented, unless otherwise stated.

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and the Company have been prepared under the historical cost convention unless otherwise indicated in the accounting policies below and are presented in Ringgit Malaysia (“RM”). The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported financial year. It also requires the Directors to exercise their judgement in the process of applying the Group and Company’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

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ICON OFFSHORE BERHAD84

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (continued)

For the financial year ended 31 December 2015, the Group and the Company incurred a net loss after tax of RM363,288,416 and RM185,514,818 (2014: net profit after tax of RM59,354,139 and net loss after tax of RM22,376,498) respectively and, as at 31 December 2015, the Group and the Company’s current liabilities exceeded their current assets by RM76,679,897 and RM16,115,319 (2014: Net current assets of RM9,915,155 and RM29,291,283) respectively.

The Group has taken steps to review the existing loan repayment schedule and the capital commitment for vessels under construction. The Group will finalise the restructuring and rescheduling of the loan repayments with the banks to allow the Group to defer certain amount of the current loan obligations. The Group has deferred the delivery and finalising the deferment of payment for vessels under construction. In addition, the Group will also be able to obtain the required financial support from its immediate holding company, if necessary.

With the steps taken above, the Directors are of the view that the Group will be able to generate sufficient cash inflows from the charter hire contracts within the next twelve months from the reporting date to meet working capital requirements and repayment of existing loan obligations, and to carry on their business without significant curtailment of operations. The Directors believe that the Group and the Company are able to realise their assets and discharge their liabilities in the normal course of business and that the financial position will be improved through future operating profits and cash flows. Thus, the Directors believe no material uncertainty exists that may cast significant doubt on the Group’s and the Company’s ability to continue as going concerns.

As such, the Directors believe that it is appropriate to prepare the financial statements of the Group and the Company on a going concern basis.

Standards, amendments to published standards and interpretations that are effective:

The Group has applied the following amendments for the first time for the financial year beginning on 1 January 2015:

• Annual Improvements to MFRSs 2010 – 2012 Cycle (Amendments to MFRS 2 ‘Share Based Payment’, MFRS 3 ‘Business Combinations’, MFRS 8 ‘Operating Segments’, MFRS 13 ‘Fair Value Measurement’, MFRS 116 ‘Property, Plant and Equipment’, MFRS 124 ‘Related Party Disclosures’ and MFRS 138 ‘Intangible Assets’)

• Annual Improvements to MFRSs 2011 – 2013 Cycle (Amendments to MFRS 3 ‘Business Combination’, MFRS 13 ‘Fair Value Measurement’ and MFRS 140 ‘Investment Property’)

• Amendments to MFRS 119 ‘Defined Benefits Plans: Employee Contributions’

The adoption of the Annual Improvements to MFRSs 2010 – 2012 Cycle has required additional disclosures about the aggregation of segments. Other than that, the adoption of these amendments did not have any impact on the current or any prior year and are not likely to affect future periods.

Standards, amendments to published standards and interpretations to existing standards that have been issued but not yet effective:

A number of new standards and amendments to standards and interpretations are effective for financial year beginning after 1 January 2015. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except as set out below:

• Amendment to MFRS 11 ‘Joint arrangements’ (effective from 1 January 2016) requires an investor to apply the principles of MFRS 3 ‘Business Combination’ when it acquires an interest in a joint operation that constitutes a business. The amendments are applicable to both the acquisition of the initial interest in a joint operation and the acquisition of additional interest in the same joint operation. However, a previously held interest is not re-measured when the acquisition of an additional interest in the same joint operation results in retaining joint control.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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852015 ANNUAL REPORT

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (continued)

Standards, amendments to published standards and interpretations to existing standards that have been issued but not yet effective: (continued)

• Amendments to MFRS 116 ‘Property, plant and equipment’ and MFRS 138 ‘Intangible assets’ (effective from 1 January 2016) clarify that the use of revenue-based methods to calculate the depreciation of an item of property, plant and equipment is not appropriate. This is because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset.

The amendments to MFRS 138 also clarify that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption can be overcome only in the limited circumstances where the intangible asset is expressed as a measure of revenue or where it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

• MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS 139 “Financial Instruments: Recognition and Measurement”.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income (“OCI”). The basis of classification depends on the entity’s business model and the cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than profit or loss, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

• MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018) replaces MFRS 118

‘Revenue’ and MFRS 111 ‘Construction contracts’ and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.

Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Management is currently assessing the impact arising from the initial application of these standards on the financial statements of the Group and Company.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.2 Basis of consolidation

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss (Note 2.8).

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date, any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Related company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.2 Basis of consolidation (continued)

(a) Subsidiaries (continued)

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Profit or loss and each component of other comprehensive income of the subsidiaries are attributed to the parent and the non-controlling interest, even if this results in the non-controlling interest having a deficit balance.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. Refer to Note 2.8 on the accounting policy for goodwill.

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in equity attributable to owners of the Group.

(c) Disposal of subsidiaries

When the Group ceases to consolidate because of a loss of control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Gains or losses on the disposal of subsidiaries include the effect of de-recognising the carrying amount of goodwill relating to the subsidiaries sold.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.2 Basis of consolidation (continued)

(d) Joint arrangements

A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more parties, where decisions about the relevant activities relating to the joint arrangement require unanimous consent of the parties sharing control. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement. A joint venture is a joint arrangement whereby the joint venturers have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the joint operators have rights to the assets and obligations for the liabilities, relating to the arrangement.

Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position. Under the equity method, the investment in a joint venture is initially recognised at cost, and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the joint venture in profit or loss, and the Group’s share of movements in other comprehensive income of the joint venture in other comprehensive income. Dividends received or receivable from a joint venture are recognised as a reduction in the carrying amount of the investment. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture, including any long-term interests that, in substance, form part of the Group’s net investment in the joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture is impaired. An impairment loss is recognised for the amount by which the carrying amount of the joint venture exceeds its recoverable amount. The Group presents the impairment loss adjacent to ‘share of profit/(loss) of a joint venture’ in the income statement.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

When the Group ceases to equity account its joint venture because of a loss of joint control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amount previously recognised in other comprehensive income in respect of the entity is accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a joint venture is reduced but joint control is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.3 Investments in subsidiaries, joint ventures and associates in separate financial statements

In the Company’s separate financial statements, investments in subsidiaries, joint ventures and associates are carried at cost less accumulated impairment losses. On disposal of investments in subsidiaries, joint ventures and associates, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

The amounts due from subsidiaries of which the Company does not expect repayment in the foreseeable future are considered as part of the Company’s investments in the subsidiaries.

2.4 Property, plant and equipment

Property, plant and equipment are initially stated at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost of an item of property, plant and equipment is determined after deducting rebates, discounts and the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of purchased property, plant and equipment. Cost also include borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (refer to accounting policy Note 2.22 on borrowing costs). All property, plant and equipment are subsequently stated at historical cost less accumulated depreciation and impairment losses.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction wherein the parties had each acted knowledgeably and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices of similar items when available and replacement cost where appropriate.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses in profit or loss during the financial year in which they are incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

Gains or losses on disposals are determined by comparing the net proceeds with the carrying amounts and are included in other income/(expenses) in profit or loss.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has a different useful life, is depreciated separately.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.4 Property, plant and equipment (continued)

Property, plant and equipment are depreciated on the straight-line basis to allocate the cost of each asset to their residual values over their estimated useful lives, summarised as follows:

Vessels 25 yearsVessel parts 10 - 14 yearsDrydocking expenditure 5 yearsBuilding 50 yearsMotor vehicles 4 - 5 yearsOffice equipment 5 -10 yearsComputers 5 yearsFurniture and fittings 10 yearsRenovation 10 years

Depreciation on vessels under construction commences when the vessels are ready for their intended use.

Drydocking expenditure represents major inspection and overhaul costs and is depreciated to reflect the consumption of benefits, which are to be replaced or restored by the subsequent drydocking generally every five years. The Group has included these drydocking costs as a separate component of the vessels’ costs.

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each reporting period. The Group revised the residual values of the vessels from 10% of cost to 5% of cost at the end of the financial year arising from decline in ship demolition prices ie. scrap value. The revision was accounted for as a change in accounting estimate and as a result, the depreciation charge increased by RM1,102,293 for the financial year ended 31 December 2015.

At the end of the financial year, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note 2.5 on impairment of non-financial assets.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.5 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill or intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal (“FVLCOD”) and value in use (“VIU”). For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“cash generating units”). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to profit or loss unless it reverses a previous revaluation in which case it is charged to the revaluation surplus reserve. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in profit or loss unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus reserve.

2.6 Non-current assets (or disposal groups) held-for-sale

Non-current assets (or disposal groups) are classified as assets held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in profit or loss.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.7 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time.

(a) Finance leases

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease expense.

(b) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on the straight-line basis over the lease period. Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in profit or loss when incurred.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.8 Intangible assets

(a) Goodwill

Goodwill arises from a business combination and represents the excess of the aggregate of fair value of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired and liabilities assumed on the acquisition date. If the fair value of consideration transferred, the amount of non-controlling interest and the fair value of previously held interest in the acquiree are less than the fair value of the net identifiable assets of the acquiree, the resulting gain is recognised in profit or loss.

Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(b) Acquired charter contracts

Charter contracts acquired in a business combination are recognised at fair value at the acquisition date. Charter contracts have a finite useful life and amortisation is calculated using the straight-line method to allocate the fair value of the contract over their contract periods which range from 1 to 4 years.

2.9 Cash and cash equivalents

For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

In the statements of financial position, bank overdrafts are shown within borrowings in current liabilities.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.10 Inventories

Inventories represent fuel on-board vessels which are stated at the lower of cost and net realisable value. Cost is determined based on the first-in, first-out method for fuel. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

Cost of purchased inventory is determined after deducting rebates, discounts and the amount of GST, except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of purchased inventory.

2.11 Financial assets

(a) Classification

The Group and the Company classify their financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting period. The Group’s and the Company’s financial assets are loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. The Group’s and the Company’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and bank balances’ in the statements of financial position (Notes 18 and 20).

(b) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset for all financial assets not carried at fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss.

(c) Subsequent measurement – gains and losses

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity financial assets are subsequently carried at amortised cost using the effective interest method.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.11 Financial assets (continued)

(d) Subsequent measurement – impairment

Assets carried at amortised cost

The Group and the Company assess at the end of the financial year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the customers or a group of customers is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in economic conditions that correlate with defaults.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If loans and receivables have a variable rate, the discount rate for measuring any impairment losses is the current effective interest rate determined under the contract. As a practical expedient, the Group and the Company may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the customers’ credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

When receivable is uncollectible, it is written off against the related impairment account. Such receivables are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

(e) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.12 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount presented in the statements of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy.

2.13 Current and deferred income tax

Tax expense for the financial year comprises current and deferred income tax. The income tax expense or credit for the financial year is the tax payable on the current financial year’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company, the Group’s subsidiaries and joint ventures operate and generate taxable income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the financial year and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses or unused tax credits can be utilised.

Deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the investor and joint venturer and it is probable that the temporary difference will not reverse in the foreseeable future. Generally, the investor and joint venturer are unable to control the reversal of the temporary difference for subsidiaries and joint ventures. Only where there is an agreement in place that gives the parent and joint venturer the ability to control the reversal of the temporary difference, a deferred tax liability is not recognised.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.13 Current and deferred income tax (continued)

Deferred tax assets are recognised on deductible temporary differences arising from investments in subsidiaries and joint ventures only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the deductible temporary difference can be utilised.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.14 Provisions

Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.

Where the Group and the Company expect a provision to be reimbursed by another party, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as finance cost expense.

2.15 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised as finance cost in profit or loss.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss within other income or finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the financial year.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.16 Employee benefits

(a) Short-term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the financial year in which the employees render the related service are recognised in respect of employees’ services up to the end of the financial year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as other payables in the statement of financial position.

(b) Defined contribution plans

The Group and the Company make contributions to the Employees Provident Fund (“EPF”) as required by law in Malaysia, which are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(c) Termination benefits

Termination benefits are payable when employment is terminated by the Group and the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group and the Company recognise termination benefits at the earlier of the following dates: (a) when the Group and the Company can no longer withdraw the offer of those benefits; and (b) when the Group and the Company recognise costs for a restructuring that is within the scope of MFRS 137 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the financial year are discounted to their present value.

(d) Profit-sharing and bonus plans

The Group and the Company recognise a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Group’s and the Company’s shareholders after certain adjustments. The Group and the Company recognise a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.17 Share capital

(a) Classification

Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium, if any. Both ordinary shares and share premiums are classified as equity.

Preference share capital is classified as equity if they are non-redeemable, or redeemable but only at the Company’s option, and any dividends are discretionary.

(b) Share issue costs

Incremental costs directly attributable to the issue of new shares or options are deducted from equity, net of any related income tax benefit.

(c) Dividend distribution

A liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group and the Company, on or before the end of the financial year but not distributed at the end of the financial year.

Distributions to holders of an equity instrument is recognised directly in equity.

(d) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares,

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.18 Trade payables

Trade payables represent liabilities for goods or services provided to the Group prior to the end of financial year which are unpaid. Trade payables are classified as current liabilities unless payment is not due within 12 months after the financial year. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value, with the amount of GST included. The net amount of GST payable to the government is presented as other payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable from, or payable to, the government are classified as operating cash flows.

Trade payables are subsequently measured at amortised cost using the effective interest method.

2.19 Foreign currencies

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and the Company’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. However, exchange differences are deferred in other comprehensive income when they arose from qualifying cash flow or net investment hedges or are attributable to items that form part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within finance income or cost. All other foreign exchange gains and losses are presented in profit or loss on a net basis within administrative expenses.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.19 Foreign currencies (continued)

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

• income and expenses for each statement of comprehensive income presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of other comprehensive income.

Goodwill and fair value adjustments arising on the acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a joint venture that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences relating to that foreign operation recognised in other comprehensive income and accumulated in the separate component of equity are reclassified to profit or loss, as part of the gain or loss on disposal. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the Group’s ownership interest in associates or joint ventures that do not result in the Group losing significant influence or joint control) the proportionate share of the accumulated exchange difference is reclassified to profit or loss.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.20 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group’s activities. Revenue is shown net of goods and services tax, returns, rebates and discounts and amounts collected on behalf of third parties and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. The following specific recognition criteria must also be met before revenue is recognised:

Chartering and hiring of vessels

Charter hire income from vessels is recognised upon rendering of services to customers, over the term of the charter hire contract. For income from the hire of forerunner vessels, it is assessed whether the Group is acting as a principal or an agent. Where it has been assessed that the Group is acting as an agent, income is recognised net of charter costs.

Other revenue

Other revenue is recognised when services are rendered.

2.21 Interest income

The Group and the Company earn interest income from deposits placed with licensed banks. Interest income is recognised on an accrual basis.

2.22 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale, after which such expense is charged to profit or loss. Capitalisation of borrowing cost is suspended during extended periods in which active development is interrupted.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the financial year in which they are incurred.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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2.23 Prepayments

Prepayments are amounts paid in advance for services yet to be received. Prepayments are recognised as an expense in profit or loss when the services are subsequently received.

2.24 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group’s Executive Committee that makes strategic decisions.

2.25 Contingent liabilities and assets

The Group does not recognise contingent assets and liabilities other than those arising from business combinations, but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD104

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Key assumptions and sources estimation of uncertainty

The following are key assumptions concerning the future and other key sources estimation of uncertainty at the end of the financial year that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(i) Impairment of goodwill and investment in subsidiaries

The Group tests goodwill and investment in subsidiaries for impairment annually in accordance with its accounting policy in Note 2.8 and 2.5 respectively.

For the purposes of assessing impairment, goodwill is allocated to cash-generating units that are expected to benefit from the future earnings of the business activities in which the goodwill arose.

Significant judgement is required in the estimation of the present value of future cash flows generated by the cash-generating units, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates.

Assessment of the investment in subsidiaries was conducted consistently with the assessment of the goodwill. As at 31 December 2015, the Group assessed the carrying value of the goodwill for impairment and has fully

written down the carrying value of goodwill of RM180,643,348. Changes in assumptions could significantly affect the results of the Group’s impairment of goodwill. The key assumptions used are disclosed in Note 14.

In line with the impairment in goodwill, as at 31 December 2015, the Group has evaluated the carrying amounts of investment in subsidiaries against their recoverable amounts and recorded an impairment charge to the carrying value of investment in subsidiaries of the same amount of RM180,643,348 for the financial year ended 31 December 2015 as disclosed in Note 16.

(ii) Useful lives and residual values of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives after deducting their residual values. Management exercises their judgement in estimating the useful lives and the residual value of the depreciable assets. The useful lives are estimated based on management’s knowledge of the vessels owned by the Group and industry experience and are normally equal to the design life of the vessel. Residual values of the vessels are estimated based on prevailing market conditions and expected amount to be obtained for the vessels at the end of their useful lives in future, after deducting the estimated costs of disposal. The Group assesses annually the useful lives and the residual value of the property, plant and equipment and if the expectation differs from the original estimate, such difference will impact the depreciation in the financial year in which such estimate has been charged.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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Key assumptions and sources estimation of uncertainty (continued)

(iii) Impairment of receivables

At each reporting date, the Group assesses whether there is objective evidence that receivables have been impaired. Potential impairment loss is derived based on a review of the current status of existing receivables and collection track record. Such provisions are adjusted periodically to reflect the actual and anticipated impairment.

(iv) Impairment review of carrying value of vessels

The Group reviews periodically whether vessels have suffered any impairment in accordance with the accounting policy stated in Note 2.4. The recoverable amounts of each vessel, being defined as a cash generating unit, have been determined based on the higher of its FVLCOD and its VIU. For VIU calculations, the future cash flows are based on contracted cash flows and estimates of uncontracted cash flows for the useful lives of each vessel, including scrap values discounted by an appropriate discount rate.

In cases where FVLCOD is used to determine the recoverable amount of the vessel, valuation were performed by an independent valuer using the market approach, including consideration of recent market transaction of vessels of similar type and age. The valuation technique is therefore classified as level 2 measurement of the fair value hierarchy.

The impairment testing for CGU requires estimates and judgement to determine the net present value of future cash flows such as revenue growth, cost escalation and utilisation rates based on historical trends amongst others. The discount rate used is based on industry average that varies over time.

As at 31 December 2015, the Group has evaluated the carrying amounts of vessels against their recoverable amounts and recorded an impairment charge to the carrying value of vessels of RM195,373,000 for the financial year ended 31 December 2015 as disclosed in Note 13.

(v) Deferred tax assets

Deferred tax assets are recognised for all unutilised tax losses and unutilised capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future profitability. These depend on estimates of future revenue, operating costs, capital expenditure, and other working capital transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and capital allowances.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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4 FINANCIAL RISK MANAGEMENT

The Group’s and the Company’s overall financial risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group and the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Group’s and the Company’s financial risk management policies. The Directors of the Group and the Company regularly review these risks and approve the policies, which cover the management of these risks.

The Group and the Company are exposed to credit and counterparty risk, liquidity risk, interest rate risk, foreign currency exchange risk and capital risk management.

(i) Credit and counterparty risk

Credit risk arises when sales are made on credit terms. Customers are subject to credit checks and outstanding accounts are followed up on a timely basis. Credit risk concentration is monitored by monitoring the performance of our customers and actively engaging with customers to ensure payments are settled within the credit period.

The Group is exposed to the risk that the financial position of its customers may change during the contracted period and that they will not be able to meet its obligations under the terms of the contract. Given the limited number of major customers and the significant portion they represent of revenue, the inability by one or more of the Group’s major customers to make full payment on any of its contracts may have a material adverse effect on the financial position. To mitigate this risk, credit quality of potential customers is assessed by taking into account their current financial position, past experience and other factors before entering into a contract. This evaluation includes examination of the counterparty’s default rates as well as their credit quality. Outstanding receivables are closely monitored in order to pursue full recovery.

The credit quality of financial assets that are not impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:

Group Company 2015 2014 2015 2014 RM RM RM RM

Cash and bank balances (excludes cash in hand)Counterparties with external credit rating (“RAM”)*AAA 52,603,596 53,749,975 25,907,196 34,157,458AA2 13,637,832 12,966,732 1,254 35,597AA3 17,105,250 7,790,515 - -

Counterparties with external credit rating (“MARC”)**AA+ - 25,818 - -

Counterparty with no credit rating *** 11,889,322 168,309 - -

95,236,000 74,701,349 25,908,450 34,193,055

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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(i) Credit and counterparty risk (continued)

The credit quality of financial assets that are not impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: (continued)

Group Company 2015 2014 2015 2014 RM RM RM RM

Trade and other receivablesCounterparties without external credit ratingGroup 1 1,989,619 1,768,625 - -Group 2 73,540,460 87,016,936 - -

The Group and the Company classify their receivables into the following groups:

Group 1 – new customers/related parties (less than six (6) months).

Group 2 – existing customers/related parties (more than six (6) months) with no defaults in the past.

Group 3 – existing customers/related parties (more than six (6) months) with some defaults in the past. All defaults were fully recovered.

* RAM represents Rating Agency Malaysia.

** MARC represents Malaysian Rating Corporation Berhad.

*** The cash and bank balance held in a financial institution outside Malaysia.

(ii) Liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group and the Company carry out monthly rolling cash flows review for the next twelve (12) months to ensure that the business operations have sufficient funds available to meet its obligations as and when they fall due. Historically, treasury management has proven that the Group and the Company have the ability to meet its obligations as and when they fall due and the Group and the Company have not defaulted on any obligations due or payable to financial institutions or creditors.

The Group has taken steps to review the existing loan repayment schedule and the capital commitment for vessels under construction. The Group will finalise the restructuring and rescheduling of the loan repayments with the banks to allow the Group to defer certain amount of the current loan obligations. The Group has deferred the delivery and finalising the deferment of payment for vessels under construction. In addition, the Group will also be able to obtain the required financial support from its immediate holding company, if necessary.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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(ii) Liquidity risk (continued)

The table below summarises the maturity profile of the Group’s and the Company’s liabilities (including interest on borrowings) at the financial year end based on contractual undiscounted repayment obligations.

Within Between 1 Between 2 Over 1 year and 2 years and 5 years 5 years Total RM RM RM RM RM

Group

At 31 December 2015

Borrowings 207,004,528 158,997,614 321,026,463 145,937,250 832,965,855Finance lease liabilities 80,194 43,378 12,206 - 135,778Redeemable preference shares 9,209,512 - - - 9,209,512Trade and other payables 75,504,223 - - - 75,504,223

291,798,457 159,040,992 321,038,669 145,937,250 917,815,368

At 31 December 2014

Borrowings 165,398,300 156,696,678 322,405,892 173,295,540 817,796,410Finance lease liabilities 95,171 82,463 56,157 - 233,791Trade and other payables 29,755,924 - - - 29,755,924

195,249,395 156,779,141 322,462,049 173,295,540 847,786,125

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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(ii) Liquidity risk (continued)

Within Between 1 Between 2 Over 1 year and 2 years and 5 years 5 years Total RM RM RM RM RM

Company

At 31 December 2015

Trade and other 1,198,301 - - - 1,198,301 payables Amounts due to subsidiaries 41,255,022 - - - 41,255,022

42,453,323 - - - 42,453,323

At 31 December 2014

Trade and other payables 858,573 - - - 858,573Amounts due to subsidiaries 4,382,726 - - - 4,382,726

5,241,299 - - - 5,241,299

As at December 2015, the Company has provided corporate guarantees to financial institutions on behalf of its subsidiaries, which are repayable on demand in the event of default, amounted to RM489,386,036 (2014 : RM517,924,721).

(iii) Interest rate risk

Interest rate risk arises from fluctuations in interest rates. Bank borrowings consist of variable rate debt obligations linked to applicable bank rates. Bank rates are typically reviewed and adjusted periodically in accordance with prevailing interest rates. Increases in interest rates would increase interest expenses relating to the Group’s outstanding floating rate borrowings and increase the cost of new debt. Interest rates applicable to borrowings are regularly reviewed against the prevailing and anticipated market interest rates in order to determine if refinancing or early repayment is warranted. The table below sets forth the carrying amounts of borrowings, by floating interest rate terms.

Group 2015 2014 RM RM

Floating rate loans (unhedged) 430,377,516 478,618,674

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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(iii) Interest rate risk (continued)

Group 2015 2014 RM RM

Impact on profit for the financial year and equity:

1.0% increase in interest rate (4,303,775) (4,786,187)1.0% decrease in interest rate 4,303,775 4,786,187

(iv) Foreign currency exchange risk

The Group’s foreign currency exchange risk arises primarily from the purchase of vessels, materials, spare parts, other services relating to the maintenance of vessels, and borrowings as well as contracts for which the charter rate is denominated in US dollars (“USD”) and Brunei Dollars (“BND”). The Group occasionally enters into forward contracts for USD in order to manage their exposure to fluctuations in the exchange rate between the RM and USD.

The Group has several USD denominated bank accounts, a USD denominated borrowings for a vessel and a BND denominated borrowings for a vessel.

The impact on profit after taxation for the financial year is mainly as a result of translation of USD bank balances and borrowings held by companies within the Group for which their functional currencies are not USD or BND.

Group 2015 2014 RM RM

Impact on profit for the financial year and equity:

10.0% increase in BND exchange rate (9,251,596) 330,65910.0% decrease in BND exchange rate 9,251,596 (330,659)10.0% increase in USD exchange rate (1,146,931) (825,381)10.0% decrease in USD exchange rate 1,146,931 825,381

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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(iv) Foreign currency exchange risk (continued)

Borrowings are denominated in the following currencies:

Group 2015 2014 RM RM

Ringgit Malaysia 585,408,517 657,818,987Brunei Dollar 127,701,530 -US Dollar 9,907,104 10,664,387

723,017,151 668,483,374

Cash and bank balances are denominated in the following currencies:

Group Company 2015 2014 2015 2015 RM RM RM RM

Ringgit Malaysia 71,472,387 72,024,256 25,907,931 34,193,057Brunei Dollar 10,339,622 168,308 - -US Dollar 13,542,007 2,625,641 521 -

95,354,013 74,818,205 25,908,452 34,193,057

Trade and other payables are denominated in the following currencies:

Group 2015 2014 RM RM

Ringgit Malaysia 44,657,846 21,920,715Brunei Dollar 8,611,811 1,026,650US Dollar 17,954,906 4,303,376Thai Baht 4,436,736 2,319,626Others 634,666 185,557

76,295,965 29,755,924 Trade receivables are denominated in the following currencies:

Group 2015 2014 RM RM

Ringgit Malaysia 34,601,793 67,391,994Brunei Dollar 33,457,763 4,164,931US Dollar 2,850,695 4,088,315

70,910,251 75,645,240

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD112

4 FINANCIAL RISK MANAGEMENT (CONTINUED)

(v) Capital risk management

The Group and the Company regard capital as share capital, borrowings and retained earnings as presented in the statements of financial position. The Group’s and the Company’s objectives when managing capital are to safeguard the Group’s and the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group and the Company may return capital to shareholders, issue new shares or sell assets to reduce debt. The Group and the Company monitor capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statements of financial position) less cash and bank balances. Total equity is calculated as shareholders’ equity as shown in the statements of financial position.

Group Company 2015 2014 2015 2014 RM RM RM RM

Finance lease liabilities 110,619 143,655 - -Borrowings 722,906,532 668,339,719 - -

Debt 723,017,151 668,483,374 - -Less: Cash and bank balances (95,354,013) (74,818,205) (25,908,452) (34,193,057)

Net debt 627,663,138 593,665,169 (25,908,452) (34,193,057)

Total equity 718,828,459 1,080,606,358 672,999,263 858,514,081

Net gearing ratio (times) 0.87 0.55 n/a n/a

(vi) Fair values

The carrying value of the balances disclosed in the financial statements approximates its fair values except as disclosed in the notes to the financial statements.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1132015 ANNUAL REPORT

5 REVENUE

Group Company 2015 2014 2015 2014 RM RM RM RM

Charter hire of own vessels 252,789,646 291,081,276 - -Charter hire of forerunner vessels 1,987,480 6,481,381 - -Other revenue 11,788,512 21,314,472 - -

266,565,638 318,877,129 - -

6 FINANCE COSTS

Group Company 2015 2014 2015 2014 RM RM RM RM

Term loan interest/profit 36,642,138 41,991,790 - 979,538Profit rate on Islamic Redeemable Convertible Preference Shares (“RCPS-i”) - 4,346,774 - 4,346,774Interest on amount due to immediate holding company - 1,378,911 - 1,378,911Revolving credit 1,071,193 1,012,615 - -Finance lease interest 2,199 2,304 - -Bank overdrafts interest 105,039 110,445 - -Other finance charges 101,631 201,542 - -Transaction cost written-off - 5,168,974 - -

Total finance costs 37,922,200 54,213,355 - 6,705,223Less: Amount capitalised to

qualifying assets (Note 13) (926,007) (4,075,414) - -

Finance costs 36,996,193 50,137,941 - 6,705,223

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD114

7 (LOSS)/PROFIT BEFORE TAXATION

(Loss)/profit before taxation is stated after charging/(crediting):

Group Company 2015 2014 2015 2014 RM RM RM RM

Amortisation of intangible assets 3,132,000 11,758,667 - -Auditors’ remuneration- audit 662,000 650,000 180,000 180,000- IPO - 2,748,000 - 2,748,000- other services 31,000 375,785 27,000 240,000Consumable cost 7,010,817 9,195,109 - -Depreciation of property, plant and equipment 65,719,917 56,573,067 - -Employee benefits expense (Note 8) 74,442,670 68,800,258 2,571,820 2,581,837Gain on disposal of property, plant and equipment - (4,688,734) - -Impairment loss on goodwill 180,643,348 - - -Impairment loss on vessels 195,373,000 - - -Impairment loss on investment in subsidiaries - - 180,643,348 -Impairment of receivables 1,003,530 316,790 - -Insurance 5,532,954 4,892,138 - -Interest income (1,089,720) (2,379,389) (200,189) (3,064,788)Interest expense 36,996,193 50,137,941 - 6,705,223IPO-related expenses - 11,907,481 - 11,907,481Loan transaction cost written-off - 5,168,974 - -Professional fees 2,197,683 1,490,958 947,084 615,717Rental of premises 2,071,147 1,481,024 - -Realised loss/(gain) on foreign exchange 1,329,218 (458,562) 23,731 -Reversal of impairment of receivables (234,318) (2,189,304) - -Ship operation and charter hire costs 34,769,639 37,112,414 - -Unrealised loss on foreign exchange 4,370,944 516,455 (74) -Write-down of inventories 556,354 600,198 - -

8 EMPLOYEE BENEFITS EXPENSE

Group Company 2015 2014 2015 2014 RM RM RM RM

Wages, salaries and bonus 68,226,025 62,536,393 2,155,447 2,165,908Social security costs 352,217 352,112 1,653 1,859Defined contribution plan 5,864,428 5,911,753 414,720 414,070

74,442,670 68,800,258 2,571,820 2,581,837

Included in employee benefits expense of the Group and the Company are the Executive Directors’ remuneration amounting to RM2,767,676 (2014: RM2,782,220) and RM813,739 (2014: RM1,059,100) as further disclosed in Note 9.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1152015 ANNUAL REPORT

9 DIRECTORS’ REMUNERATION

Group Company 2015 2014 2015 2014 RM RM RM RM

Executive:Salaries and bonuses 2,325,769 2,338,000 683,813 890,000Defined contribution plan 441,907 444,220 129,926 169,100

2,767,676 2,782,220 813,739 1,059,100

Non-Executive:Fees and emoluments 672,500 549,667 672,500 549,667

Total Directors’ remuneration (excluding benefits-in-kind) 3,440,176 3,331,887 1,486,239 1,608,767

Benefits-in-kind received by the Directors of the Group and the Company amounted to RM7,200 (2014: RM21,600) and RM7,200 (2014: RM7,200) respectively. In addition to the above certain of the directors have received ex-gratia payment from a related company in the financial year ended 31 December 2014 as disclosed in note 25.

10 TAXATION

Group Company 2015 2014 2015 2014 RM RM RM RM

Current income tax:- Current financial year 640,000 1,944,039 - 10,000- Under/(over) provision of tax in prior financial year 228,187 (355,599) - -Deferred tax relating to the origination and reversal of temporary differences (Note 17) (1,140,981) (4,542,122) - -

Tax (credit)/charge for the financial year (272,794) (2,953,682) - 10,000

The Malaysian corporate statutory tax rate for the year of assessment 2015 is 25% (2014: 25%). Subsidiaries of the Company being Malaysian tax residents incorporated in Labuan under the Labuan Companies Act, 1990 are taxed at 3% of profit before taxation or RM20,000 in accordance with the Labuan Business Activity Tax Act, 1990.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD116

10 TAXATION (CONTINUED)

Reconciliations of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and the Company are as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

(Loss)/profit before taxation (363,561,210) 56,400,457 (185,514,818) (22,366,498)

Taxation at Malaysian statutory tax rate at 25% (90,890,303) 14,100,114 (46,378,705) (5,591,625)

Deferred tax assets not recognised during the financial year 316,456 5,137 - -Effect of change in tax rate on deferred tax 329,797 - - -Effects of different tax rate in Labuan 36,114,463 (19,842,423) - -Effects of different tax rate in Brunei (159,840) - - -Tax effect of expenses that are not deductible for tax purposes 59,630,014 7,685,261 46,413,362 5,601,625Tax effect of income not subject to tax (209,517) (143,996) (34,657) -Tax effect on transfer of vessels between countries (5,632,051) - - -Recognition of previously unrecognised temporary differences - (4,402,176) - -Under / (over) provision of tax in prior financial year 228,187 (355,599) - -

Tax (credit)/charge for the financial year (272,794) (2,953,682) - 10,000

11 (LOSS)/EARNINGS PER SHARE (“(LPS)/EPS”)

The basic (LPS)/EPS has been calculated based on the consolidated (loss)/profit attributable to equity holders of the Company and divided by the weighted number of ordinary shares in issue.

Group 2015 2014 RM RM

(Loss)/profit attributable to equity holders (RM) (364,086,731) 59,354,139Weighted average number of ordinary shares in issue 1,177,185,100 801,348,355

Basic and diluted (LPS)/EPS (sen) (30.9) 7.4

There are no dilutive ordinary shares outstanding during the financial year.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1172015 ANNUAL REPORT

12 SEGMENT REPORTING

(i) Reportable segment

The Group is organised as a single integrated business operations comprising the vessel owning/leasing activities and provision of vessel chartering and ship management services to oil and gas and related industries. These integrated activities are known as the offshore support vessel operations. The Group as a whole is regarded as an operating segment. In making decisions about resource allocation and performance assessment, the key management regularly reviews the financial results of the Group as a whole. Hence, the information that is regularly provided to the key management is consistent with that presented in the financial statements.

(ii) Geographical information

The Group’s operations are carried out predominantly in Malaysia. Revenue earned by the Group analysed by the location of its external customers is as follows:

2015 2014 % RM % RM

Revenue

Malaysia 72 192,584,621 87 278,250,808Brunei 25 65,364,029 6 19,869,814Others 3 8,616,988 7 20,756,507

Total 100 266,565,638 100 318,877,129

All vessels are Malaysian-flagged and operate primarily in Malaysia except one vessel with Brunei flag and operates in Brunei.

(iii) Major customers

The Group has several single customers which generated revenue amounting to 10% or more of the Group’s total revenue:

2015 2014 % RM % RM

Direct

Customer 1 40 107,028,195 35 113,063,417Customer 2 25 65,364,029 11 35,012,691Customer 3 8 20,016,270 10 32,549,715

Total 73 192,408,494 56 180,625,823

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD118

13

PRO

PERT

Y, P

LAN

T A

ND

EQ

UIP

MEN

T

Gro

up

Vesselsu

nder

Ve

ssel

Drydoc

king

Motor

Offic

e

Furniture

construction

Vessels

parts

expe

nditure

Building

vehic

les

equip

ment

Computers

andfitting

sRenovation

Total

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

At 31

Dec

embe

r 201

5

Cost

Begi

nning

of t

he fi

nanc

ial y

ear

196,7

89,35

0 1,2

73,04

5,250

5,8

46,89

7 40

,059,2

24

797,9

09

762,2

31

1,036

,668

2,933

,309

558,5

82

2,260

,368

1,524

,089,7

88Re

classi

ficat

ion

(133

,599,2

91)

133,5

99,29

1 -

- -

- -

- -

- -

Addi

tions

10

4,824

,885

46,22

5,712

48

,900

19,05

7,364

-

- 54

,104

1,217

,743

18,42

4 37

,460

171,4

84,59

2Cu

rrenc

y tra

nsla

tion

re

serv

e

-

(89,6

64)

- -

- -

- -

- -

(89,6

64)

End

of th

e fin

ancia

l yea

r

168,0

14,94

4 1,4

52,78

0,589

5,8

95,79

7 59

,116,5

88

797,9

09

762,2

31

1,090

,772

4,151

,052

577,0

06

2,297

,828

1,695

,484,7

16

Accu

mula

ted

dep

recia

tion

Begi

nning

of t

he fi

nanc

ial y

ear

- 96

,989,7

46

877,3

53

16,59

0,460

41

,420

211,3

08

318,6

46

866,4

29

144,5

67

464,7

22

116,5

04,65

1Ch

arge

for t

he fi

nanc

ial y

ear

- 54

,906,9

95

625,5

44

8,503

,825

16,40

2 18

7,468

36

1,211

66

0,578

84

,090

373,8

04

65,71

9,917

Curre

ncy t

rans

latio

n

rese

rve

- 47

,578

- -

- -

- -

- -

47,57

8

End

of th

e fin

ancia

l yea

r

- 15

1,944

,319

1,502

,897

25,09

4,285

57

,822

398,7

76

679,8

57

1,527

,007

228,6

57

838,5

26

182,2

72,14

6

Ac

cum

ulate

d im

pairm

ent lo

ss

Begi

nning

of t

he fi

nanc

ial y

ear

- 29

,416,6

96

- -

- -

- -

- -

29,41

6,696

Char

ge fo

r the

fina

ncia

l yea

r

-

195,3

73,00

0 -

- -

- -

- -

- 19

5,373

,000

End

of th

e fin

ancia

l yea

r

- 22

4,789

,696

- -

- -

- -

- -

224,7

89,69

6

Net b

ook v

alue

16

8,014

,944

1,076

,046,5

74

4,392

,900

34,02

2,303

74

0,087

36

3,455

41

0,915

2,6

24,04

5 34

8,349

1,4

59,30

2 1,2

88,42

2,874

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1192015 ANNUAL REPORT

13

PRO

PERT

Y, P

LAN

T A

ND

EQ

UIP

MEN

T (C

ON

TIN

UED

)

Gro

up

Vesselsu

nder

Ve

ssel

Drydoc

king

Motor

Offic

e

Furniture

construction

Vessels

parts

expe

nditure

Building

vehic

les

equip

ment

Computers

andfitting

sRenovation

Total

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

At 31

Dec

embe

r 201

4

Cost

Begi

nning

of t

he fi

nanc

ial y

ear

106,1

11,47

6 1,1

55,49

8,075

3,9

47,59

7 33

,027,2

69

797,9

09

352,3

41

937,2

42

1,883

,820

493,1

77

1,662

,915

1,304

,711,8

21Ad

ditio

ns

103,2

55,63

3 13

4,610

,425

2,486

,824

8,652

,909

- 40

9,890

99

,426

1,054

,924

65,40

5 59

7,453

25

1,232

,889

Disp

osal

s

-

(29,6

41,00

9)

(587

,524)

(1

,620,9

54)

- -

- (5

,435)

-

- (3

1,854

,922)

Recla

ssific

atio

ns

(12,5

77,75

9)

12,57

7,759

-

- -

- -

- -

- -

End

of th

e fin

ancia

l yea

r

196,7

89,35

0 1,2

73,04

5,250

5,8

46,89

7 40

,059,2

24

797,9

09

762,2

31

1,036

,668

2,933

,309

558,5

82

2,260

,368

1,524

,089,7

88

Accu

mula

ted

dep

recia

tion

Begi

nning

of t

he fi

nanc

ial y

ear

- 51

,950,9

90

486,7

80

9,147

,425

24,28

1 62

,934

393,4

31

187,7

56

83,17

9 28

0,700

62

,617,4

76Ch

arge

for t

he fi

nanc

ial y

ear

- 46

,755,8

38

512,1

29

8,287

,258

17,13

9 14

8,374

13

5,293

47

1,626

61

,388

184,0

22

56,57

3,067

Recla

ssific

atio

ns

- -

- -

- -

(210

,078)

21

0,078

-

- -

Disp

osal

s

-

(1,71

7,082

) (1

21,55

6)

(844

,223)

-

- -

(3,03

1)

- -

(2,68

5,892

)

End

of th

e fin

ancia

l yea

r

- 96

,989,7

46

877,3

53

16,59

0,460

41

,420

211,3

08

318,6

46

866,4

29

144,5

67

464,7

22

116,5

04,65

1

Accu

mula

ted

impa

irmen

t loss

Begi

nning

of t

he fi

nanc

ial y

ear

- 38

,500,0

00

- -

- -

- -

- -

38,50

0,000

Char

ge fo

r the

fina

ncia

l yea

r

-

- -

- -

- -

- -

- -

Disp

osal

s

-

(9,08

3,304

) -

- -

- -

- -

- (9

,083,3

04)

End

of th

e fin

ancia

l yea

r

- 29

,416,6

96

- -

- -

- -

- -

29,41

6,696

Net b

ook v

alue

19

6,789

,350

1,146

,638,8

08

4,969

,544

23,46

8,764

75

6,489

55

0,923

71

8,022

2,0

66,88

0 41

4,015

1,7

95,64

6 1,3

78,16

8,441

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD120

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(i) Included in the property, plant and equipment are motor vehicles and office equipment which were acquired by means of finance lease arrangements with net carrying amounts of RM34,134 (2014: RM44,438).

(ii) Borrowing costs amounting to RM926,007 (2014: RM4,075,414) were capitalised as vessels under construction during the financial year.

(iii) All the vessels have been charged to secure against the borrowings granted to the Group as disclosed in Note 22.

(iv) Drydocking expenditure accrued of RM8,357,451 (2014: RM4,254,937) was capitalised as at the financial year ended 31 December 2015.

(v) As a result of the decline in vessel utilisation and charter rates, the Group recognised an impairment loss of RM195,373,000 on certain vessels during the financial year based on the total recoverable amount of RM712,226,790 determined based on the higher of fair value less costs of disposal (“FVLCOD”) or VIU. The Group considered each vessel as a cash-generating unit. They are grouped together for disclosure purpose.

The fair values of the vessels have been assessed by independent professional valuers.The valuation of the vessels was performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. Costs of disposal were determined at 1% of total costs of vessels (2014: 1% of total costs of vessels) and reflect management’s expectations based on past experience with disposal of assets and industry benchmarks.

The key assumptions used in the VIU calculations are as follows:

• The cash flows projection is based on the remaining useful lives of the vessels;• Utilisation rates and charter rates are based on past performance, management’s expectation of market

development and weighted average growth rates that are consistent with forecasts included in industry reports;

• Discount rate of 12.0% (2014: 12.5%) is applied.

The discount rates used are pre-tax and reflect specific risks relating to the CGUs. The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk premium at the date of assessment of the CGUs. The Group had taken into consideration the current depressed market conditions in the oil and gas industry in the cash flow projections, which include lower forecasted vessel utilisation and charter rates.

Sensitivity to changes in assumptions

Changing the assumptions selected by management could significantly affect the Group’s results. The Group’s review includes the sensitivity of key assumptions to the cash flow projections. Fluctuation in utilisation rate and charter rate by 5% will not have significant impact to the profit or loss.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1212015 ANNUAL REPORT

14 INTANGIBLE ASSETS

Acquired charter Goodwill contracts Total RM RM RM

Group

At 31 December 2015

Cost

Beginning/end of the financial year 180,643,348 44,880,000 225,523,348

Accumulated amortisation

Beginning of the financial year - (41,748,000) (41,748,000)Amortisation charge during the financial year - (3,132,000) (3,132,000)

End of the financial year - (44,880,000) (44,880,000)

Accumulated impairment loss

Beginning of the financial year - - -Impairment charge during the financial year (180,643,348) - (180,643,348)

End of the financial year (180,643,348) - (180,643,348)

Net book value

End of the financial year - - -

At 31 December 2014

Cost

Beginning/end of the financial year 180,643,348 44,880,000 225,523,348

Accumulated amortisation

Beginning of the financial year - (29,989,333) (29,989,333)Amortisation charge during the financial year - (11,758,667) (11,758,667)

End of the financial year - (41,748,000) (41,748,000)

Net book value

End of the financial year 180,643,348 3,132,000 183,775,348

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD122

14 INTANGIBLE ASSETS (CONTINUED)

Acquired charter contracts

Amortisation of acquired charter contracts is included in other expenses in the statements of comprehensive income.

Goodwill

Goodwill represents the excess of cost of acquisition over the fair value of the net assets of acquisitions of its subsidiaries during the financial year ended 31 December 2012.

The goodwill acquired is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For impairment testing purposes, goodwill is monitored by management based on a group of CGUs which represent the Group’s overall ship operation business.

The recoverable amount of the Group’s CGUs for assessment of goodwill impairment was determined based on the higher of fair value less costs of disposal (“FVLCOD”) or VIU. The valuation of the vessels was performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. The valuation technique is therefore classified as level 2 measurement of the fair value hierarchy.

Costs of disposal were determined at 1% of total costs of vessels (2014: 1% of total costs of vessels) and reflect management’s expectations based on past experience with disposal of assets and industry benchmarks.

The key assumptions used in the VIU calculations are as follows:

• Utilisation rates and charter rates are based on past performance, management’s expectation of market development and weighted average growth rates that are consistent with forecasts included in industry reports;

• Discount rate of 12.0% (2014: 12.5%) is applied; and• Terminal growth rate of 3.0% (2014: 3.0%) is applied. The discount rates used are pre-tax and reflect specific risks relating to the CGUs. The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk premium at the date of assessment of the CGUs. The Group had taken into consideration the current depressed market conditions in the oil and gas industry in the cash flow projections, which include lower forecasted vessel utilisation and charter rates.

As of 31 December 2015, the Group had concluded that the entire carrying value of goodwill of RM180,643,348 was not recoverable, and correspondingly recorded an impairment charge of RM180,643,348 against the carrying value of goodwill during the financial year.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1232015 ANNUAL REPORT

15 INVESTMENT IN A JOINT VENTURE Group

2015 2014 RM RM

Unquoted shares, at cost 4,132,742 4,132,742Share of post-acquisition reserves 99,748 36,119

4,232,490 4,168,861

At 1 January 36,119 -Share of profit 63,629 36,119

At 31 December 99,748 36,119

The joint venture listed below has share capital consisting solely of ordinary shares, which is held indirectly by a subsidiary of the Company.

Details of the jointly controlled entity are as follows:

Name of company Principal activities Group’s effective interest Country of 31.12.2015 31.12.2014 incorporation % %

Icon-FOB Holdings (L) Inc.* Leasing of vessels 51 51 MalaysiaIcon-FOB 1 (L) Inc.* Leasing of vessels 51 51 Malaysia

* Audited by PricewaterhouseCoopers (“PwC”), Malaysia.

Icon FOB Holdings (L) Inc is a private company, with financial year end of 31 December, and there is no quoted market price available for its shares. There are no commitments and contingent liabilities relating to the Group’s interest in the joint venture.

Summarised financial information for joint venture

Set out below are the summarised financial information for Icon-FOB Holdings (L) Inc. group which is accounted for using the equity method:

Group 2015 2014 RM RMAssets and liabilities

CurrentCash and cash equivalents 2,198 166,323Other current assets 10,722,250 11,220

Total current assets 10,724,448 177,543

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD124

15 INVESTMENT IN A JOINT VENTURE (CONTINUED)

Group 2015 2014 RM RMAssets and liabilities (continued)

Current (continued)Current financial liabilities (2,425,449) (3,799,834)Other current liabilities - (54,976)

Total current liabilities (2,425,449) (3,854,810)

Non-current

Assets - 11,851,504

Net assets 8,298,999 8,174,237

Summarised statement of comprehensive income

Group 2015 2014 RM RM

Profit from continuing operations 144,762 110,821Income tax expense (20,000) (40,000) Profit/total comprehensive income for the financial year 124,762 70,821

Reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture.

Group 2015 2014 RM RM

Opening net assets/(liabilities) at 1 January 8,174,237 (28,313)Issuance of ordinary shares - 8,131,729Profit for the financial year 124,762 70,821

Closing net asset 8,298,999 8,174,237

Post-acquisition interest in joint venture at 51% 4,232,490 4,168,861

Carrying value 4,232,490 4,168,861

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1252015 ANNUAL REPORT

16 INVESTMENT IN SUBSIDIARIES

Company 2015 2014 RM RM

Unquoted shares, at cost 489,327,819 489,327,819Amounts due from subsidiaries 380,430,111 339,894,979

869,757,930 829,222,798Less: Impairment loss (180,643,348) -

689,114,582 829,222,798

The advances are unsecured and is non-interest bearing with no fixed terms of repayment. The Company does not currently anticipate any repayment of the advances. These advances have been treated as extension of its investment in subsidiaries.

Impairment assessment of investment in subsidiaries

During the financial year ended 31 December 2015, the Group had performed an impairment assessment of the carrying value of the investment in subsidiaries. The recoverable amount of the Company’s subsidiaries for assessment of impairment was determined based on the higher of fair value less costs of disposal (“FVLCOD”) or VIU. The Company’s subsidiaries principal activities are vessels owning/leasing and provision of vessels chartering and ship management services.

For the purpose of determining the fair value of the investment in subsidiaries, the valuation of the vessels was performed by an independent valuer using the market approach, including consideration of the recent market transaction of vessels of similar type and age. The valuation technique is therefore classified as level 2 measurement of the fair value hierarchy.

Costs of disposal were determined at 1% of total costs of vessels (2014: 1% of total costs of vessels) and reflect management’s expectations based on past experience with disposal of assets and industry benchmarks.

The key assumptions used in the VIU calculations are as follows:

• Utilisation rates and charter rates are based on past performance, management’s expectation of market development and weighted average growth rates that are consistent with forecasts included in industry reports;

• Discount rate of 12.0% (2014: 12.5%) is applied; and• Terminal growth rate of 3.0% (2014: 3.0%) is applied. The discount rates used are pre-tax and reflect specific risks relating to the CGUs. The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk premium at the date of assessment of the CGUs. The Group had taken into consideration the current depressed market conditions in the oil and gas industry in the cash flow projections, which include lower forecasted vessel utilisation and charter rates.

As of 31 December 2015, the Group had concluded that the investment in subsidiaries is impaired by RM180,643,348, and correspondingly recorded an impairment charge of RM180,643,348 against the carrying value of investment in subsidiaries for the financial year ended 31 December 2015.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD126

16 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The details of the Company’s subsidiaries which are incorporated in Malaysia, are as follows:

Country of The Company’s effective interestNames of subsidiaries incorporation Principal activities 2015 2014 % %

Direct subsidiaries

Icon Ship Management Malaysia Ship management 100 100 Sdn. Bhd. services to the oil and gas and related industries

Icon Fleet Sdn. Bhd. Malaysia Investment holding 100 100

Icon Offshore Group Malaysia Provision of services for 100 100 Sdn. Bhd. the oil and gas industry

Indirect subsidiaries

Omni Marine Sdn. Bhd. Malaysia Vessel owner, operator and 100 100 provision of vessel services for the oil and gas industry

Omni Triton Sdn. Bhd. Malaysia Dormant 100 100

Omni Power Sdn. Bhd. Malaysia Dormant 100 100

Omni Ventures Sdn. Bhd. Malaysia Dormant 100 100

Omni Offshore (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Emery (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Flotilla (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Victory (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Marissa (L) Inc.# Malaysia Leasing of vessels 100 100

Omni Stella (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Azra (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Samudera (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Ikhlas (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Zara (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Waja (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Corridor (L) Inc. # Malaysia Leasing of vessels 100 100

Icon Ocean (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Puteri 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Puteri 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Dawai (L) Inc.# Malaysia Leasing of vessels 100 100

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1272015 ANNUAL REPORT

16 INVESTMENT IN SUBSIDIARIES (CONTINUED)

The details of the Company’s subsidiaries which are incorporated in Malaysia, are as follows: (continued)

Country of The Company’s effective interestNames of subsidiaries incorporation Principal activities 2015 2014 % % Indirect subsidiaries (continued)

Icon Huma (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Sari (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Biru 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Biru 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Dahan 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Dahan 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Pinang 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Pinang 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Pinang 3 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Pinang 4 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Piai 1 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Piai 2 (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Gaya (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Tigris (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Lotus (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Sophia (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Kayra (L) Inc.# Malaysia Leasing of vessels 100 100

Icon Maritime Training Centre Sdn. Bhd. Malaysia Maritime training 100 100

ICON Bahtera (B) Sdn. Bhd.+$ Brunei Leasing of vessels 51 100

Icon Aliza (L) Inc.#& Malaysia Leasing of vessels 100 100

ICON Pioneer (L) Inc. #& Malaysia Leasing of vessels 100 100

ICON Astrid (L) Inc. #& Malaysia Leasing of vessels 100 100

ICON Andra (L) Inc. #& Malaysia Leasing of vessels 100 100

ICON Explorer (L) Inc. #& Malaysia Dormant 100 100

# Incorporated in the Federal Territory of Labuan, under the Labuan Companies Act, 1990.& These entities have yet to commence operations.+ Audited by a firm other than PwC.$ Ownership interest held by non-controlling interest is 49% (2014: nil).

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD128

16 INVESTMENT IN SUBSIDIARIES (CONTINUED)

Set out below is summarised financial information for Icon Bahtera (B) Sdn. Bhd. that has non-controlling interest that is material to the group. The amounts disclosed are before inter-company eliminations.

Group 2015 RMSummarised statement of financial position

Current assets 41,894,068Current liabilities (38,321,313)

Current net assets 3,572,755

Non-current assets 130,038,986Non-current liabilities (127,945,860)

Non-current net assets 2,093,126

Net assets 5,665,881

Accumulated non-controlling interest 1,233,623

Summarised statement of comprehensive income Group 2015 RM

Revenue 65,364,029

Profit for the period 2,526,339Other comprehensive income 1,361,302

Total comprehensive income for the financial year 3,887,641

Profit allocated to non-controlling interest 798,315

Summarised statement of cash flows Group 2015 RM

Cash flows from operating activities 9,156,938Cash flows from investing activities (130,943,600)Cash flows from financing activities 131,607,426Effect of exchange rate changes 350,549

Net increase in cash and bank balances 10,171,313

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1292015 ANNUAL REPORT

16 INVESTMENT IN SUBSIDIARIES (CONTINUED)

On 19 October 2015, pursuant to the completion of joint venture agreement between Icon Fleet Sdn. Bhd. (“Icon Fleet”), a wholly-owned subsidiary of Icon Offshore Berhad and Zell Transportation Sdn. Bhd. (“ZT”) for Icon Bahtera (B) Sdn. Bhd. (“Icon Bahtera”), the issued and paid up capital of Icon Bahtera was increased from RM258 to RM306,224 by way of allotment and issuance of 99,000 new ordinary shares of BND 1.00 each at par value of which 50,900 new ordinary shares were subscribed by Icon Fleet. As a result, Icon Fleet now holds 51% of ownership interest in Icon Bahtera whilst ZT holds the remaining 49%. Icon Bahtera remains a subsidiary of the Company.

17 DEFERRED TAXATION

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position.

Group Company 2015 2014 2015 2014 RM RM RM RM

Deferred tax assets- recoverable after more than 12 months 40,679,831 42,726,132 - -- recoverable within 12 months 5,910,191 2,461,955 - -

Deferred tax liabilities- to be settled after more than 12 months (1,748,794) (1,076,959) - -- to be settled within 12 months (115,919) (526,800) - -

Deferred tax assets (net) 44,725,309 43,584,328 - -

Subject to income tax:

Deferred tax assets- property, plant and equipment 45,284,848 46,266,885 - -- unused tax losses 3,649,246 404,297 - -- provisions 702,677 1,075,809 - -

Offsetting (3,046,749) (2,558,904) - -

Deferred tax assets (after offsetting) 46,590,022 45,188,087 - -

Deferred tax liabilities- property, plant and equipment (4,911,462) (3,379,828) - -- intangible assets - (782,835) - -

Offsetting 3,046,749 2,558,904 - -

Deferred tax liabilities (after offsetting) (1,864,713) (1,603,759) - -

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD130

17 DEFERRED TAXATION (CONTINUED)

The movements during the financial year relating to deferred taxation are as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

Beginning of financial year 43,584,328 39,042,206 - -

Credited to profit or loss (Note 10):- property, plant and equipment (Malaysia) - 1,602,455 - -- property, plant and equipment (Brunei) 5,373,677 - - -- intangible assets 782,835 2,939,667 - -- unutilised tax losses 3,244,949 - - -

Charged to profit or loss (Note 10):- property, plant and equipment (Malaysia) (7,887,349) - - -- provisions (373,131) - - -

Deferred tax assets (after offsetting) 44,725,309 43,584,328 - -

The deferred tax assets recognised during the financial year ended 31 December 2015 include an amount of RM5,400,000 (2014: Nil) which relates to carried forward tax losses of Icon Ship Management Sdn. Bhd. and Icon Offshore Group Sdn. Bhd.. The subsidiaries have incurred the losses during the financial year following depressed market conditions in the oil and gas industry. The Group had concluded that the deferred assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets for the subsidiaries. The subsidiaries are expected to generate taxable income from 2016 onwards. The losses can be carried forward indefinitely and have no expiry date.

The amount of unutilised capital allowances and unutilised tax losses (both of which have no expiry date) of the Company’s subsidiaries, for which no deferred tax asset is recognised in the statements of financial position as it is not probable that taxable profit will be available against which these temporary differences can be utilised are as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

Unutilised capital allowances 20,394,365 20,330,555 - -Unutilised tax losses 1,311,169 109,155 - -

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1312015 ANNUAL REPORT

18 TRADE AND OTHER RECEIVABLES

Group Company 2015 2014 2015 2014 RM RM RM RM

Trade receivables 68,927,417 74,588,472 - -Other receivables 6,680,211 14,197,089 - -Prepayments 5,480,718 3,290,356 420,389 342,025

81,088,346 92,075,917 420,389 342,025

Group 2015 2014 RM RMTrade and other receivables

Trade receivables 70,910,251 75,645,240Other receivables 6,680,211 14,431,407Less: Impairment of receivables (1,982,834) (1,291,086)

75,607,628 88,785,561

Trade receivables are denominated in Ringgit Malaysia, Brunei Dollar and US Dollars.

The credit term of trade receivables ranges from 30 to 60 days (2014: 30 to 60 days).

Ageing analysis of trade and other receivables

As at the end of the financial year, the trade and other receivables ageing is as follows:

Group 2015 2014 RM RM

Neither past due nor impaired 47,741,439 46,345,300One month past due but not impaired 18,282,393 15,423,807Two to six months past due but not impaired 4,235,300 25,009,694More than six months past due but not impaired 5,348,496 2,006,760

75,607,628 88,785,561Impaired 1,982,834 1,291,086

77,590,462 90,076,647

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD132

18 TRADE AND OTHER RECEIVABLES (CONTINUED)

Trade and other receivables that are neither past due nor impaired

None of the Group’s trade receivables and other receivables that are neither past due nor impaired have been renegotiated during the financial year.

Trade receivables that are past due but not impaired

Based on past experience and no adverse information to date, the Directors of the Group are of the opinion that no impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.

Trade receivables that are impaired

Group 2015 2014 RM RM

Trade receivables - nominal amounts 1,982,834 1,291,086Less: Impairment of receivables (1,982,834) (1,291,086)

- -

Movement in impairment of receivables: Beginning of the financial year 1,291,086 4,563,922 Written off during the financial year (77,464) (1,400,322) Charge during the financial year 1,003,530 316,790 Reversal during the financial year (234,318) (2,189,304)

End of the financial year 1,982,834 1,291,086

Impairment of trade receivable are individually determined by the Group and the Company. The individually impaired trade receivables mainly relate to customers which are in difficult economic situations. These receivables are not secured by collateral.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1332015 ANNUAL REPORT

19 AMOUNTS DUE TO SUBSIDIARIES

Amounts due to subsidiaries are unsecured, interest-free and repayable on demand.

20 CASH AND BANK BALANCES

Group Company 2015 2014 2015 2014 RM RM RM RM

Fixed deposits with licensed banks 11,921,152 8,750,301 - 10,510,862Bank balances 83,314,848 65,951,048 25,908,450 23,682,193Cash in hand 118,013 116,856 2 2

Cash and bank balances 95,354,013 74,818,205 25,908,452 34,193,057Less: Deposits pledged as security (12,245,043) (6,283,478) - -

Cash and cash equivalents 83,108,970 68,534,727 25,908,452 34,193,057

The interest rates of deposits of the Group at the reporting date range from 2.70% to 3.21% per annum (2014: 2.75% to 3.60%).

21 TRADE AND OTHER PAYABLES

Group Company 2015 2014 2015 2014 RM RM RM RM

Trade payables 9,385,336 12,403,199 - -Other payables 41,142,590 4,027,394 220,774 858,573Accruals 25,768,039 13,325,331 977,527 -

76,295,965 29,755,924 1,198,301 858,573

The total trade and other payables are mainly denominated in Ringgit Malaysia with credit terms of 30 days (2014: 30 days).

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD134

22 BORROWINGS

Group 2015 2014 RM RM

Current: Bank borrowings - term loans 141,853,623 129,400,093 - revolving credit (Commodity Murabahah Financing-i) 30,014,548 - Redeemable preference shares 9,209,512 - Finance lease liabilities 67,151 77,506

181,144,834 129,477,599

Non-current: Bank borrowings - term loans 541,828,849 538,939,626 Finance lease liabilities 43,468 66,149

541,872,317 539,005,775

Total borrowings 723,017,151 668,483,374

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1352015 ANNUAL REPORT

22 BORROWINGS (CONTINUED)

The table below shows the carrying amounts and fair value of the borrowings, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of the borrowings are estimated using the income approach, by discounting the cash flows based on the market interest rates of a comparable instrument. This is a Level 2 fair value measurement.

Carrying amount Fair value 2015 2014 2015 2014 RM RM RM RMGroup

Fixed rate term loans 253,304,956 189,721,045 256,316,274 191,261,072

The range of interest/profit rates (per annum) are as follows:

Group 2015 2014 % %

Term loans 4.09 - 6.59 3.00 - 7.75Revolving credit 5.90 - 6.15 6.21

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD136

22

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293

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1372015 ANNUAL REPORT

22 BORROWINGS (CONTINUED)

The term loans were secured as follows (either single security or combination of securities):

(i) Fixed charges over vessels.(ii) Assignment of insurance policies for the vessels charged in (i) above.(iii) Assignment of charter proceeds for the vessels charged in (i) above.(iv) Assignment of ship building contracts for the vessels charged in (i) above.(v) Corporate guarantee by Icon Offshore Berhad and Icon Fleet Sdn. Bhd.

The term loans facilities were arranged to finance the construction and purchase of vessels for the Group.

As at 31 December 2015, the Group has provided bank guarantees, tender bonds and bid bonds amounting to RM9,040,848 primarily due to the tendering of new contracts and as financial guarantee for the performance of our charter contracts by our subsidiaries.

Finance lease liabilities

Group 2015 2014 RM RM

Minimum lease payment:- Not later than 1 year 80,194 95,168- Later than 1 year and not later than 5 years 55,584 91,533

135,778 186,701Future finance charges (25,159) (43,046)

Present value of finance lease liabilities 110,619 143,655

Principal portion payables:- Not later than 1 year 67,151 77,506- Later than 1 year and not later than 5 years 43,468 66,149

Present value of finance lease liabilities 110,619 143,655

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD138

23 SHARE CAPITAL AND SHARE PREMIUM

SHARE CAPITAL Group/Company 2015 2014 RM RM

Authorised: Ordinary shares of RM0.50 each: Beginning of the financial year 1,497,000,000 597,000,000 Created during the financial year - 900,000,000

End of the financial year 1,497,000,000 1,497,000,000

RCPS-i of RM0.01 each: Beginning/End of the financial year 3,000,000 3,000,000

Issued and fully paid: Ordinary shares of RM0.50 each: Beginning of the financial year 588,592,550 257,720,050 Issued during the financial year at RM0.50 each pursuant to: IPO - 110,872,500 RCPS- i conversion to ordinary shares - 220,000,000

End of the financial year 588,592,550 588,592,550

SHARE PREMIUM Group/Company 2015 2014 RM RM

Beginning of the financial year 311,210,080 -Share premium on ordinary shares pursuant to IPO - 299,355,750Listing expenses capitalised - (8,115,445)Share premium upon RCPS- i conversion to ordinary shares - 19,969,775

End of the financial year 311,210,080 311,210,080

The Company was listed on the Main Market of Bursa Malaysia Securities Berhad on 25 June 2014 after an Offer for Sale of approximately 289.02 million Offer Shares and the IPO of approximately 221.75 million. Total gross proceeds of approximately RM410.23 million were raised from the IPO.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1392015 ANNUAL REPORT

24 CAPITAL COMMITMENTS

Group 2015 2014 RM RM

Approved and contracted for: Property, plant and equipment 153,322,115 278,243,175

25 SIGNIFICANT RELATED PARTY TRANSACTIONS

Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Group is controlled by Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia formed by the Malaysian Federal Government.

(i) The related parties and their relationships with the Company, are as follows:

Related parties Relationship

Yayasan Ekuiti Nasional Ultimate holding foundation Hallmark Odyssey Sdn. Bhd. Immediate holding company E-Cap (Internal) One Sdn. Bhd. Intermediate holding company Icon Ship Management Sdn. Bhd. Subsidiary Icon Fleet Sdn. Bhd. Subsidiary

Key management personnel

Key management personnel of the Group comprise members of the senior leadership team who are directly responsible for the financial and operating policies and decisions of the Group and the Company. The remuneration of key management personnel paid by the Group and the Company during the financial year was as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

Salaries and bonus 2,325,769 2,985,146 2,325,769 2,716,550Defined benefit plan 441,907 556,548 441,907 516,148

2,767,676 3,541,694 2,767,676 3,232,698

In the financial year ended 31 December 2014, employees of the Group received payments of RM76.8 million from the ultimate holding foundation pursuant to a cash bonus management incentive plan linked to the achievement of set targets determined at the point of investment by the ultimate holding foundation in the Company. Included in the amounts were RM68 million paid for key management personnel.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD140

25 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

(ii) Significant related party transactions

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. The related party transactions described below were carried out on terms and conditions agreed with related parties.

Company 2015 2014 RM RM

Interest income from a subsidiary - 1,283,550

Advances from Icon Offshore Group Sdn. Bhd. (36,872,296) (4,382,726)

Advances to Icon Fleet Group 20,049,447 139,650,360

Advances to Icon Ship Management Sdn. Bhd. 20,485,685 160,049,716

(iii) Significant related party balances

Included in the Group’s and the Company’s statements of financial position are the following significant related party balances arising from normal business transactions:

Company 2015 2014 RM RM

Amount due to subsidiaries 41,255,022 4,382,726

The transactions have been entered into in the normal course of business at terms mutually agreed between the parties.

Apart from the transactions disclosed above, the Group has entered into transactions that are collectively, but not individually significant with other government-related entities. These transactions include vessel chartering, drydocking expenditure and repairs and maintenance. They are conducted in the ordinary course of the Group’s business on terms consistently applied in accordance with the Group’s internal policies and processes.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1412015 ANNUAL REPORT

26 FINANCIAL INSTRUMENTS BY CATERGORY

Analysis of the financial instruments for the Group and the Company are as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

Financial assets - Loans and receivables:

Trade receivables 68,927,417 74,588,472 - -Other receivables excluding prepayments 6,602,662 14,197,089 - -Cash and bank balances 95,354,013 74,818,205 25,908,452 34,193,057

170,884,092 163,603,766 25,908,452 34,193,057

Financial liabilities at amortised costs:

Trade payables 9,385,336 12,403,199 - -Other payables and accruals 66,118,887 17,352,725 1,198,301 858,573Borrowings 723,017,151 668,483,374 - -Finance lease liabilities 110,619 143,655 - -Amount due to subsidiaries - - 41,255,022 4,382,726

798,631,993 698,382,953 42,453,323 5,241,299

27 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors dated 4 April 2016.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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ICON OFFSHORE BERHAD142

28 DISCLOSURE OF REALISED AND UNREALISED RETAINED PROFITS

The following analysis is prepared in accordance with Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the context of disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.

The breakdown of retained profits of the Group as at the balance sheet date, into realised and unrealised profits, pursuant to the directive, is as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

Total retained profits/(accumulated losses)- Realised 74,859,050 398,947,127 (226,803,367) (41,288,549)- Unrealised 42,283,431 43,067,876 - -

117,142,481 442,015,003 (226,803,367) (41,288,549)Total share of profit from a joint venture:- Realised 63,629 36,119 - -

117,206,110 442,051,122 (226,803,367) (41,288,549)Less: Consolidation adjustments (300,294,775) (261,053,056) - -

Total retained profit/(accumulated losses) as per financial statements (183,088,665) 180,998,066 (226,803,367) (41,288,549)

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)

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1432015 ANNUAL REPORT

The Group presents selected adjusted financial information or components of the Group consolidated statements of comprehensive income for the financial year ended 31 December 2015 and 31 December 2014, adjusting for certain exceptional items.

This section is to provide a better and fairer understanding of our financial performance relating thereto.

(i) Adjustments relating to the acquisition of Icon Ship Management Sdn. Bhd. (“ICON Ship”) and acquisition of Icon Fleet Sdn. Bhd. (“ICON Fleet”)

(a) Amortisation of intangible assets relating to acquired charter contracts

The Company is required to recognise all the identifiable assets and liabilities of ICON Fleet and ICON Ship, based on a purchase price allocation exercise as at the acquisition date of the acquisition of ICON Ship and acquisition of ICON Fleet. The purchase price allocation exercise includes measurement of the assets and liabilities that were not previously recognised by ICON Ship and ICON Fleet such as intangible assets and also to measure the identifiable assets and liabilities at their respective fair values.

Based on the purchase price allocation exercise for the acquisition of ICON Ship and acquisition of ICON Fleet, the charter contracts of ICON Ship and ICON Fleet have been separately identified and measured at fair value, and have also been recognised as intangible assets on the respective acquisition dates. The fair value of the charter contracts is the present value of the net cash flows from the remaining contract period of the respective charter contracts as at the acquisition date after deducting the corresponding estimated operation costs. The acquired charter contracts have a finite useful life and the recognised fair value of these contracts is required to be amortised using a straight-line method over the remaining contract periods which range from one year to four years from acquisition date.

The Group do not expect to recognise additional intangible assets pursuant to these acquisitions. Also, given that the acquired charter contracts have a finite useful life, the carrying amount of the intangible assets were fully amortised by the end of fourth quarter of financial year ended 31 December 2015.

(b) RCPS-i profit rate

The RCPS-i were issued after the completion of the acquisition of ICON Ship and according to the terms of the RCPS-i, the RCPS-i will only be redeemed at 110% of its issue price if our Listing does not happen within two years from the date of issuance. In other words, the actual RCPS-i profit rate will only be payable in the event the RCPS-i are redeemed. Since all the RCPS-i were mandatorily converted into our Shares on 23 May 2014 following the receipt of all relevant authorities’ approvals for our IPO, the profit rate on the RCPS-i was not payable in cash.

The accrued amount of the RCPS-i profit rate recognised in our financial statements has been reversed and reclassified to equity following the conversion of all the RCPS-i into Ordinary Shares on 23 May 2014.

SUPPLEMENTAL INFORMATION

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ICON OFFSHORE BERHAD144

This section is to provide a better and fairer understanding of our financial performance relating thereto. (continued)

(ii) Adjustments relating to the strategic consolidation and subsequent review of the Group business plan.

In consequent of the strategic consolidation, the Group undertook an overall review of our fleet whereupon the Group decided to focus on newer and higher technical specification OSV (being vessels with at least 5,000 BHP and above, and/or equipped with at least a DP2 system) which led to the divestment of our non-OSV, lower technical specification and older OSVs.

a. Disposal of OSV

The Group had disposed two (2) lower technical specification vessels which gave rise to a total gain on disposal of RM4.7 million in the financial year ended 2014 and the tax impact on the proceed on disposal of these vessels was RM3.1 million.

(iii) IPO related expenses

For the financial year ended 31 December 2014, the Group incurred IPO related expenses amounted to RM14.6 million and the Group utilised RM124.0 million of the IPO proceeds for repayment of bank borrowings where the transaction cost of the respective borrowings were written off, in accordance with accounting standards, of RM5,168,974.

(iv) Adjustments relating to the drastic change in economic condition within the oil and gas industry.

a. Impairment loss on vessels

Impairment loss on vessels were recognised for the financial year ended 31 December 2015 amounted to RM195.4 million and the tax impact on the impairment on fair value of vessels on consolidation was RM9.8 million.

b. Impairment loss on goodwill

Impairment loss on goodwill were recognised for the financial year ended 31 December 2015 amounted to RM180.6 million.

c. Change in accounting estimate for residual value of vessels

Change in accounting estimate of vessels’ residual value from 10% of cost to 5% of cost resulted to RM1.1 million additional depreciation recognised for the financial year ended 31 December 2015.

SUPPLEMENTAL INFORMATION(CONTINUED)

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1452015 ANNUAL REPORT

SUPPLEMENTAL INFORMATION(CONTINUED)

The table below sets out our Group’s (loss)/profit after taxation (“(LAT)/PAT”) after excluding the abovementioned adjustments: Group 2015 2014 RM RM

(LAT)/PAT (363,288,416) 59,354,139Gain on disposal of OSV - (4,688,734)

Other expenses: - Amortisation of intangible assets 3,132,000 11,758,667 - Impairment loss on vessels 195,373,000 - - Impairment loss on goodwill 180,643,348 -

Administrative expenses - IPO related expenses (including auditors’ remuneration) - 14,655,481 - Transaction costs written off - 5,168,974

Profit rate of RCPS-i - 4,346,774

Change in accounting estimate for residual value of vessels 1,102,293 -

Tax effect relating to: - Amortisation of intangible assets (783,000) (2,939,667) - Disposal of OSV - 3,091,390 - Impairment on fair value of vessels on consolidation 9,848,260 -

Adjusted PAT 26,027,485 90,747,024

The table below sets out a reconciliation of our Group’s (LAT)/PAT to Earnings before Interest, Tax, Depreciation and Amortisation (“EBITDA”) and Adjusted EBITDA:

Group 2015 2014 RM RM

(LAT)/PAT (363,288,416) 59,354,139Taxation (272,794) (2,953,682)

Profit before taxation (363,561,210) 56,400,457Finance costs 36,996,193 50,137,941Depreciation 65,719,917 56,573,067Amortisation of intangibles assets 3,132,000 11,758,667Share of profit from a joint venture (63,629) (36,119)

EBITDA (257,776,729) 174,834,013Gain on disposal of OSV (4,688,734)

Administrative expenses - IPO related expenses (including auditors’ remuneration) - 14,655,481

Tax effect relating to: - Impairment on fair value of vessels on consolidation 9,848,260 -

Other expenses: - Impairment loss on vessels 195,373,000 - - Impairment loss on goodwill 180,643,348 - Adjusted EBITDA 128,087,879 184,800,760

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ICON OFFSHORE BERHAD146

LIST OF VESSELS

AHTS – Anchor Handling Tug & Supply

AHT – Anchor Handling & Tug

SSV – Straight Supply Vessel

PSV – Platform Support Vessel

AWB – Accommodation Work Boat

BRAKE HORSE YEAR OFNO. VESSEL NAME VESSEL TYPE POWER (BHP) BUILT 1 TANJUNG DAHAN 1 AHTS 5,444 20072 TANJUNG DAHAN 2 AHTS 5,444 20073 TANJUNG PUTERI 1 AHTS 5,444 20084 TANJUNG PUTERI 2 AHTS 5,444 20085 TANJUNG BIRU 1 AHTS 5,220 20096 TANJUNG BIRU 2 AHTS 5,220 20097 TANJUNG DAWAI AHTS 5,444 20078 TANJUNG SARI AHTS 5,444 20099 TANJUNG HUMA AHTS 5,428 200510 OMNI VICTORY AHTS 8,000 200911 OMNI GAGAH AHTS 5,500 200312 OMNI PERKASA AHTS 5,500 200313 OMNI MARISSA AHTS 5,220 201014 OMNI STELLA AHTS 5,220 201015 OMNI TIGRIS AHTS 5,220 200816 ICON AZRA AHTS 5,150 201217 ICON SAMUDERA AHTS 5,150 201218 ICON IKHLAS AHTS 5,150 201219 ICON ZARA AHTS 5,150 201220 ICON LOTUS AHTS 5,150 201221 ICON SOPHIA AHTS 5,150 201322 OMNI ANTEIA AHT/UTILITY 5,220 200823 OMNI EMERY 1 AHT/UTILITY 4,200 200824 OMNI AKIRA AHT/UTILITY 3,200 200625 TANJUNG PINANG 1 SSV 5,110 200626 TANJUNG PINANG 2 SSV 5,110 200627 TANJUNG PINANG 3 SSV 5,110 200628 TANJUNG PINANG 4 SSV 5,110 200629 TANJUNG GAYA TUG/UTILITY 3,600 200830 TANJUNG PIAI 1 PSV 6,970 201131 TANJUNG PIAI 2 PSV 6,970 201332 ICON VALIANT AWB 5,200 201333 ICON KAYRA AWB 6,000 2013

VESSELS UNDER CONSTRUCTION BRAKE HORSE HULL NO. VESSEL TYPE POWER (BHP)

34 SH120 AHTS 10,800 35 ICON ATIQAH AHTS 10,80036 ICON ALIZA AWB 5,20037 SH129 PSV 6,970

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1472015 ANNUAL REPORT

LIST OF PROPERTY

ADDRESS DESCRIPTION STATUS AGE OF PROPERTY NBV

Lot 13837, Jalan Penghiburan, Shop Office Freehold 7 RM740,087 Bakau Tinggi,24000 Kemaman,Trengganu Darul Iman.

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ICON OFFSHORE BERHAD148

ANALYSIS OF SHAREHOLDINGS

DIRECTORS’ DIRECT AND DEEMED INTEREST IN THE COMPANY

As at 31 March 2016, the direct shareholding of our Directors in our Company is shown below:

DIRECTORS DIRECT INTEREST INDIRECT INTEREST

1 Raja Tan Sri Dato’ Seri Arshad bin Raja Tun Uda — 150,000

2 Dato’ Abdul Rahman bin Ahmad — —

3 Datuk Wira Azhar bin Abdul Hamid — — 4 Edwanee Cheah bin Abdullah 200,000 —

5 Datuk Abdullah bin Ahmad — —

6 Amir Hamzah bin Azizan — 1,000,000

7 Syed Yasir Arafat bin Syed Abd Kadir — —

8 Madeline Lim May Ming 60,000 —

As at 31 March 2016, there is no deemed interest shareholding by our Directors.

No. of Shareholders No. of Holdings %SIZE OF HOLDINGS Malaysian Foreign Malaysian Foreign Malaysian Foreign

Less than hundred 61 1 1,565 61 0.00 0.00

100 - 1,000 600 6 469,112 2,700 0.04 0.00

1,001 - 10,000 4,621 18 28,053,196 116,000 2.38 0.01

10,001 - 100,000 4,362 47 142,301,508 1,917,536 12.09 0.16

100,001 to less than 5% of issued shares 539 9 398,471,334 8,790,500 33.85 0.75

5% and above of issued shares 2 0 597,061,588 0 50.72 0.00

TOTAL 10,185 81 1,166,358,303 10,826,797 99.08 0.92

GRAND TOTAL 10,266 1,177,185,100 100.00

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1492015 ANNUAL REPORT

ANALYSIS OF SHAREHOLDINGS (CONT’D)

TOP 30 SHAREHOLDERS BASED ON RECORD OF DEPOSITORS AS AT 31 MARCH 2016

Name of Shareholders No. of Shares % of Shares

1 HALLMARK ODYSSEY SDN. BHD. 497,768,820 42.28

2 LEMBAGA TABUNG HAJI 99,292,768 8.43

3 JAMAL BIN YUSOF @ GORDON DUCLOS 40,870,212 3.47

4 CITIGROUP NOMINEES (TEMPATAN) SDN. BHD. EMPLOYEES PROVIDENT FUND BOARD 38,163,300 3.24

5 LEMBAGA TABUNG ANGKATAN TENTERA 35,638,200 3.03

6 AMANAHRAYA TRUSTEES BERHAD AMANAH SAHAM BUMIPUTERA 28,579,900 2.43

7 SEMPENA FOKUS SDN. BHD. 25,979,835 2.21

8 RAHMAN BIN YUSOF 11,166,204 0.95

9 CARTABAN NOMINEES (TEMPATAN) SDN. BHD. TMF TRUSTEES MALAYSIA BERHAD FOR RHB PRIVATE FUND-SERIES 6 10,000,000 0.85

10 PERMODALAN NASIONAL BERHAD 6,855,100 0.58

11 TAN HAN CHUAN 5,000,000 0.42

12 MUHAMAD ALOYSIUS HENG 4,556,000 0.39

13 CIMSEC NOMINEES (TEMPATAN) SDN. BHD. CIMB BANK FOR LIEW JUN KUAN (MY0750) 3,272,600 0.28

14 CIMSEC NOMINEES (TEMPATAN) SDN. BHD. EXEMPT AN FOR CIMB COMMERCE TRUSTEE BERHAD 3,200,000 0.27

15 ER SOON PUAY 2,966,00 0.25

16 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR TEE TIAM HOCK 2,798,000 0.24

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ICON OFFSHORE BERHAD150

TOP 30 SHAREHOLDERS BASED ON RECORD OF DEPOSITORS AS AT 31 MARCH 2016 (CONTINUED)

Name of Shareholders No. of Shares % of Shares

17 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR HASSAN BIN ALI 2,770,300 0.24

18 CIMSEC NOMINEES (TEMPATAN) SDN. BHD. CIMB BANK FOR LIEW JUN KUAN (MH6869) 2,741,700 0.23

19 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR ISY HOLDINGS SDN. BHD. 2,650,000 0.23

20 MAYBANK NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR SEMPENA FOKUS SDN. BHD. 2,333,333 0.20

21 AMSEC NOMINEES (TEMPATAN) SDN. BHD. AMTRUSTEE BERHAD FOR PACIFIC PEARL FUND (UT-PM-PPF) 2,238,000 0.19

22 MADON INVESTMENTS LTD 2,210,000 0.19

23 CITIGROUP NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR SONG SOON HEE (470272) 2,100,000 0.18

24 MEPRO HOLDINGS BERHAD 2,100,000 0.18

25 SOH OON HAI 2,015,000 0.17

26 CHOO AH NGO 1,800,000 0.15

27 TAN SAW GNOH 1,753,800 0.15

28 MOHAMMED RASHDAN BIN MOHD YUSOF 1,749,400 0.15

29 PHILIP LAI 1,725,000 0.15

30 TE KIM LENG 1,700,000 0.14

ANALYSIS OF SHAREHOLDINGS (CONT’D)

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1512015 ANNUAL REPORT

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting of the Company will be held at Nexus Ballroom 1, Level 3A, Connexion@Nexus, No. 7 Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur on Tuesday, 17 May 2016 at 10:00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2015 together with the Reports of the Directors and the Auditors thereon. (Please refer to Explanatory Note (i))

2. To re-elect the following Directors who are retiring pursuant to Article 106 of the Company’s Articles of Association, and being eligible, have offered themselves for re-election:-

(a) Datuk Wira Azhar Bin Abdul Hamid Resolution 1

(b) Tuan Syed Yasir Arafat Bin Syed Abd Kadir Resolution 2

3. To re-elect Encik Amir Hamzah Bin Azizan who is retiring pursuant to Article 113 of the Company’s Articles of Association, and being eligible, has offered himself for re-election. Resolution 3 (Please refer to Explanatory Note (ii))

4. To approve the payment of the proposed revision of the Directors’ fees of RM584,000.00 for the financial year ended

31 December 2015. Resolution 4

5. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company until the conclusion of the next Annual General Meeting of the Company and to authorise the Directors to fix their remuneration. Resolution 5

AS SPECIAL BUSINESS To consider and, if thought fit, with or without any modification, to pass the following ordinary and special resolutions:-

6. ORDINARY RESOLUTION NO. 1

- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT subject to Section 132D of the Companies Act, 1965 and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being and the Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad;

AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.” Resolution 6

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ICON OFFSHORE BERHAD152

7. ORDINARY RESOLUTION NO. 2- PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT, subject to the Companies Act, 1965 (“the Act”), rules, regulations and orders made pursuant to the Act, provisions of the Company’s Memorandum and Articles of Association and the requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the Directors of the Company be and are hereby authorised to make purchases of ordinary shares of RM0.50 each in the Company’s issued and paid-up share capital through Bursa Securities subject further to the following:-

(i) the maximum number of ordinary shares of RM0.50 each in the Company (“Shares”) which may be purchased and/or held by the Company shall be equivalent to ten per centum (10%) of the issued and paid-up share capital for the time being of the Company;

(ii) the maximum fund to be allocated by the Company for the purpose of purchasing the Shares shall not exceed the aggregate of the share premium of the Company based on the audited financial statements for the financial year ended 31 December 2015 of RM311,210,080;

(iii) the authority conferred by this resolution will commence immediately upon passing of this ordinary resolution and will continue to be in force until:-

(a) the conclusion of the next Annual General Meeting of the Company following the general meeting at which such resolution was passed at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions;

(b) the expiration of the period within which the next Annual General Meeting after that date is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting,

whichever occurs first, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and

(iv) upon completion of the purchase(s) of the Shares by the Company, the Directors of the Company be and are hereby authorised to deal with the Shares in the following manner:-

(a) cancel the Shares so purchased; or

(b) retain the Shares so purchased as treasury shares; or

(c) retain part of the Shares so purchased as treasury shares and cancel the remainder;

the treasury shares of which may be distributed as dividends to shareholders, and/or resold on Bursa Securities, and/or subsequently cancelled;

and in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of Bursa Securities and any other relevant authorities for the time being in force,

AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the Shares.” Resolution 7

NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

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1532015 ANNUAL REPORT

8. SPECIAL RESOLUTION- PROPOSED AMENDMENT TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

“THAT the following proposed amendment to the Articles of Association of the Company be and is hereby approved and adopted:-

AND THAT the Directors and Secretaries of the Company be and are hereby authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the Proposed Amendment to the Articles of Association of the Company.” Resolution 8

9. To transact any other ordinary business for which due notice shall have been given.

BY ORDER OF THE BOARD

CHUA SIEW CHUAN (MAICSA 0777689)CHIN MUN YEE (MAICSA 7019243)Company Secretaries

Kuala Lumpur25 April 2016

Article No. Existing Article Proposed Article

165 (1) The Directors shall from time to time in accordance with Section 169 of the Act, cause to be prepared and laid before the Company in general meeting such profit and loss accounts, balance sheets and reports as are referred to in the section. The interval between the close of a financial year of the Company and the issue of the annual audited accounts, the Directors’ and auditors’ reports (the “Documents”) shall not exceed four months. A copy of the Annual Report including the Documents in printed form or in CD-ROM form or in such other form or electronic media or means or any combination thereof shall not less than 21 days (or such other shorter period as may be agreed by all members entitled to attend and vote at the meeting) before the date of the meeting, provided always that it shall not exceed six months from the close of a financial year of the Company be sent to every member of, and to every holder of debentures of the Company under the provisions of the Act or of these Articles. Any member to whom a copy of the Documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.

The Directors shall from time to time in accordance with Section 169 of the Act, cause to be prepared and laid before the Company in general meeting such profit and loss accounts, balance sheets and reports as are referred to in the section. A copy of the Annual Report including the annual audited accounts, and the Directors’ and auditors’ reports (the “Documents”) in printed form or in electronic format shall not less than 21 days (or such other shorter period as may be agreed by all members entitled to attend and vote at the meeting) before the date of the meeting, provided always that it shall not exceed four months from the close of a financial year of the Company be sent to every member of, and to every holder of debentures of the Company under the provisions of the Act or of these Articles. Any member to whom a copy of the Documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.

NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

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ICON OFFSHORE BERHAD154

Explanatory Notes on Ordinary Business/Special Business:

(i) Item 1 of the Agenda

This Agenda item is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

(ii) Item 3 of the Agenda

Encik Amir Hamzah Bin Azizan was appointed as a Managing Director and Non-Independent Executive Director of the Company on 1 March 2016 after due deliberation and discussion by the Nomination Committee and the Board of Directors on various criteria including his experience, expertise, skill sets, competence and value proposition which he could contribute during deliberation/discussion of Board of Directors’ meetings.

Please refer to page 15 of the Annual Report for further details of Encik Amir Hamzah Bin Azizan. (iii) Item 6 of the Agenda

The proposed adoption of the Ordinary Resolution No. 1 is for the purpose of granting a renewed general mandate (“General Mandate”) and empowering the Directors of the Company, pursuant to Section 132D of the Companies Act, 1965, to issue and allot new shares in the Company from time to time provided that the aggregate number of shares issued pursuant to the General Mandate does not exceed 10% of the issued and paid-up share capital of the Company for the time being. The General Mandate, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

The General Mandate will provide flexibility to the Company for allotment of shares for any possible fund raising activities for the purpose of funding future investment project(s), working capital and/or acquisition(s).

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the Third Annual General Meeting held on 27 May 2015 and of which the said mandate will lapse at the conclusion of the Fourth Annual General Meeting.

(iv) Item 7 of the Agenda

The proposed adoption of the Ordinary Resolution No. 2 is to renew the authority granted by the shareholders of the Company at the Third Annual General Meeting held on 27 May 2015. The proposed renewal of authority will allow the Board of Directors to exercise the power of the Company to purchase not more than 10% of the issued and paid-up share capital of the Company at any time within the time period stipulated in Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Further information on the Proposed Renewal of Share Buy-Back Authority is set out in the Share Buy-Back Statement to Shareholders which is dispatched together with the Company’s 2015 Annual Report.

(v) Item 8 of the Agenda

The proposed adoption of the Special Resolution is to streamline the Articles of Association of the Company with the recent amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

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1552015 ANNUAL REPORT

Notes:

1. For the purposes of determining a member who shall be entitled to attend and vote at the forthcoming Fourth Annual General Meeting of the Company, the Company shall be requesting the Record of Depositors as at 10 May 2016. Only a depositor whose name appears in the Record of Depositors as at 10 May 2016 shall be entitled to attend and vote at the meeting as well as for appointment of proxy(ies) to attend and vote on his/her stead.

2. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy.

3. A member may appoint not more than two (2) proxies to attend the same meeting. Where a member of the

Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a member or the authorised nominee appoints two (2) proxies, he shall specify the proportion of his

shareholdings to be represented by each proxy. 5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for the omnibus

account, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where an exempt authorised nominee appoints two (2) or more proxies to attend and vote at the same meeting, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

6. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or

a notarially certified copy of that power or authority shall be deposited by hand at or by facsimile transmission to the Company’s Share Registrar, Symphony Share Registrar Sdn. Bhd. not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposed to vote and in default the instrument of proxy shall not be treated as valid.

7. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement

reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in this Proxy Form.

NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

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FORM OF PROXY

ICON OFFSHORE BERHAD (984830-D)

(Incorporated in Malaysia)

No. of Shares HeldCDS Account No.

I/We NRIC No./Company No. of and telephone no. being a member/members of ICON OFFSHORE BERHAD (“Company”), hereby appoint NRIC. No of or failing him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us and on *my/our behalf at the Fourth Annual General Meeting of the Company to be held at Nexus Ballroom 1, Level 3A, Connexion@Nexus, No. 7 Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur on Tuesday, 17 May 2016 at 10:00 a.m. and at any adjournment thereof.

The proxy is to vote on the business before the Meeting as indicated below (if no indication is given, the proxy will vote as he/she thinks fit or abstain from voting):-

Agenda

1 To receive the Audited Financial Statements for the financial year ended 31 December 2015 together with the Reports of the Directors and the Auditors thereon.

Ordinary Business

(a) To re-elect Datuk Wira Azhar Bin Abdul Hamid who is retiring pursuant to Article 106 of the Company’s Articles of Association, and being eligible, has offered himself for re-election.

(b) To re-elect Tuan Syed Yasir Arafat Bin Syed Abd Kadir who is retiring pursuant to Article 106 of the Company’s Articles of Association, and being eligible, has offered himself for re-election.

3 To re-elect Encik Amir Hamzah Bin Azizan who was appointed to the Board on 1st March 2016 and is retiring pursuant to Article 113 of the Company’s Articles of Association, and being eligible, has offered himself for re-election.

4 To approve the payment of the proposed revision of the Directors’ fees of RM584,000 for the financial year ended 31 December 2015.

5 To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company until the conclusion of the next Annual General Meeting of the Company and to authorise the Directors to fix their remuneration.

Special Business

6 Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

7 Proposed Renewal of Share Buy-Back Authority

8 Proposed Amendment to the Articles of Association of the Company

9 To transact any other ordinary business for which due notice shall have been given

* Strike out whichever not applicable.

As witness my/our hand this day of 2016.

Signature of Member/Common Seal

NOTES:1. For the purposes of determining a member who shall be entitled to attend and vote at the forthcoming Fourth Annual General Meeting of the Company, the

Company shall be requesting the Record of Depositors as at 10 May 2016. Only a depositor whose name appears in the Record of Depositors as at 10 May 2016 shall be entitled to attend and vote at the meeting as well as for appointment of proxy(ies) to attend and vote on his/her stead.

2. The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy.

3. A member may appoint not more than two (2) proxies to attend the same meeting. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a member or the authorised nominee appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for the omnibus account, there is no limit to the number of proxies

which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Where an exempt authorised nominee appoints two (2) or more proxies to attend and vote at the same meeting, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

6. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited by hand at or by facsimile transmission to the Company’s Share Registrar, Symphony Share Registrar Sdn. Bhd. not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposed to vote and in default the instrument of proxy shall not be treated as valid.

7. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in this Proxy Form.

ForResolution Against

Resolution 1

Resolution 3

Resolution 6

Resolution 2

Resolution 4

Resolution 7

Resolution 8

Resolution 5

2

For appointment of more than one (1) proxy, percentage of shareholdings to be represented by the proxies

No. of shares Percentage

Proxy 1

Proxy 2

Proxy 3

Total 100%

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SHARE REGISTRARSympHONy SHARE REgIStRARS SDN BHDLevel 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanMalaysia

AFFIXSTAMP

Fold this flap for sealing

Then fold here

1st fold here

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ICON OFFSHORE BERHAD(Company No.: 984830-D)Incorporated in Malaysia under the Companies Act, 1965

Level 12A, East Wing, The IconNo. 1, Jalan 1/68FOff Jalan Tun Razak55000 Kuala Lumpur, Malaysia

T : +603 2180 6300F : +603 2165 1086

w w w . i c o n o f f s h o r e . c o m . m y