sapura malaysia - annual report 2005_sapuracrest
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Annual Report 20
05
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Cover Rationale
Using the corporate logo as the focal point for this
concept – the complete logo is formed with all four
annual reports of the individual business units, reflecting
the unique contribution of these business units working
as one towards the corporate goals of Sapura. The
covers are presented in Sapura’s corporate colours, and
the images inlaid in each design capture the energy and
dynamism of the team at Sapura.
The logo segments are chosen to reflect “progress” for
Sapura Technology, “building up” for Sapura Industrial,
“finding new depths” for SapuraCrest Petroleum and
“the stairway to knowledge” for Sapura Resources.
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Corporate Profile 2
Notice of Annual General Meeting 4
Statement Accompanying The Notice of the Annual General Meeting 6
Corporate Structure 8
Board of Directors 10
Corporate Information 15
Chairman’s Statement 18
Corporate Governance Statement 26
Statement on Internal Control 30
Audit Committee Report 33
Additional Compliance Information 39
Statement of Directors’ Responsibility in Respect of 41
the Audited Financial Statements
Financial Statements 43
30 Largest Shareholders 123
30 Largest Warrant Holders 125
Analysis of Shareholdings 127
Analysis of Warrant Holdings 129
Proxy Form
Corporate Representative Form
Request Form for Bahasa Malaysia Version of Annual Report 2005
Contents
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2
SapuraCrest Petroleum Berhad (“SapuraCrest” or “Company”) was incorporated on 3 March
1979 as TH Loy Industries (M) Sdn Bhd, a private limited company. The Company was then in
the business of manufacturing consumer electronics and electrical goods.
The Company became a public company on 5 March 1992, renamed TH Loy Industries (M)
Berhad, and was officially listed on the Second Board of Bursa Malaysia on 15 October 1992. On
4 July 1995, following the sale of its manufacturing business, the Company changed its name to
Crest Petroleum Bhd to reflect its new image and major involvement in the oil and gas industry.
Upon completion of Sapura Technology Berhad’s (formerly known as Sapura Telecommunications
Berhad) acquisition of UEM Land Sdn Bhd’s controlling stake in the Company in the second
quarter of 2003, the Company’s name was changed to SapuraCrest Petroleum Berhad on 9 August
2004 to underscore the investment of the Sapura Group in the Company.
The SapuraCrest Group’s involvement in the oil and gas industry spans the areas of offshore
drilling, installation of pipelines and facilities, marine services and offshore and nearshore
marine engineering and maintenance activities for the oil and gas, marine and power utility
industries. This was further expanded with the recent acquisition of an 80% stake in Total
Marine Technology Pty Ltd (“TMT”), an Australian company based in Perth. With this acquisition,
the SapuraCrest Group is now involved in the design, manufacture and operation of Remote-
Operated Vehicles, a sector which is complimentary to its existing business divisions. With the
larger pool of resources, the Group provides a more complete range of services to upstream
and downstream oil and gas entities. The Group is currently one of the largest integrated oil
and gas service providers in Malaysia and with the acquisition of the stake in TMT and recent
foreign contract wins, is poised for further regional expansion.
Corporate Profile
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3
Over the years our people have been defined by
a set of common qualities – Honourable,
Professional, Resourceful, Resilient and Agile –
qualities that collectively differentiate us from
our industry peers. They remind us of ourheritage. They challenge every one of us to
become the true ambassadors of Sapura.
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4
Notice of Annual General Meeting
Agenda
1. To receive and adopt the Audited Financial Statements
of the Company for the financial year ended 31 January
2005 together with the Directors’ and Auditors’ reports
therein.
Ordinary Resolution 1
2. To approve the Directors’ fees for the financial year
ended 31 January 2005.
Ordinary Resolution 2
3. To re-elect the following Directors who retire pursuant
to Articles 95 and 96 of the Articles of Association of the
Company and being eligible, offers themselves for re-
election.
i Datuk Shahri l Shamsuddin
Ordinary Resolution 3
ii. Tan Sri Datuk Amar (Dr.) Hamid Bugo
Ordinary Resolution 4
4. To appoint Ernst & Young as Auditors of the Company
until the conclusion of the next Annual GeneralMeeting, and to authorise the Directors to fix their
remuneration.
Ordinary Resolution 5
As Special Business, to consider and if thought fit, to
pass the following resolution:
Authority for Directors to issue shares under
Section 132D of the Companies Act, 1965
5. That pursuant to Section 132D of the Companies Act,
1965, and subject to the Listing Requirements of Bursa
Malaysia, the Directors are empowered to issue 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 deemed fit, provided that
the aggregate number of shares issued pursuant to this
resolution does not exceed 10% of the issued and paid-
up share capital of the Company as at the date of such
issuance and that the Directors be and are also
empowered to obtain all necessary approvals from the
relevant authorities for the issuance and the listing of
and quotation for the additional shares so issued on the
Bursa Malaysia and that such authority shall continue to
be in force until the conclusion of the next Annual
General Meeting of the Company.
Ordinary Resolution 6
6. To transact any other business for which due notice
shall have been given.
BY ORDER OF THE BOARD
POH PHEI LING (MAICSA 7035146)
Company Secretary
Selangor Darul Ehsan
4 July 2005
NOTICE IS HEREBY GIVEN THAT the Twenty-Sixth Annual General Meeting of the Company will be
held at the Multi Purpose Hall, Ground Floor, Sapura @ Mines, No. 7 Jalan Tasik, The Mines Resort
City, 43300 Seri Kembangan, Selangor Darul Ehsan on Tuesday, 26 July 2005 at 10.00 a.m. for the
transaction of the following businesses:
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Notice of Annual General Meeting 5
Notes
1. Proxy Forms
A member of the Company who is entitled to attend and
vote at this Meeting is entitled to appoint a proxy to
attend and vote on a show of hands or on a poll in his
stead. A proxy may but need not be a member of the
Company.
An instrument appointing a proxy shall be in writing
and in the case of an individual shall be signed by the
appointor or by his attorney; and in the case of a
corporate member, shall be either under its Common
Seal or signed by its attorney or an officer on behalf of
the corporation.
Where a member appoints more than one (1) proxy, the
appointment shall be invalid unless he specifies the
proportion of his shareholdings to be represented by
each proxy.
The instrument appointing a proxy must be deposited
with the Registrar of the Company, Mega Corporate
Services Sdn Bhd located at Level 15-2, Faber Imperial
Court, Jalan Sultan Ismail, 50250 Kuala Lumpur, not less
than forty-eight (48) hours before the time appointedfor holding the Meeting or any adjournment thereof.
2. Corporate Representative
As an alternative to the appointment of a proxy, a
corporate member may appoint its corporate
representative to attend this Meeting pursuant to
Sections 147(3) and (4) of the Companies Act, 1965. For
this purpose and pursuant to Section 147(5) of the
Companies Act, 1965, the corporate member shall
provide a certificate under its common seal as prima
facie evidence of appointment of the corporate
representative. The corporate member may forward its
own certificate or use the corporate representative
form provided for in the Annual Report of the Company
for the financial year ended 31 January 2005 and
submit it to the Registrar of the Company prior to the
commencement of the Twenty-Sixth Annual General
Meeting of the Company.
3. Directors’ Fees
The Directors’ fees for the financial year ended 31
January 2005 amounted to RM238,983.87.
4. Statement Accompanying the Notice of the Annual
General Meeting
Details required in the Statement Accompanying the
Notice of the Annual General Meeting pursuant to
Paragraph 8.28 (2) of the Listing Requirements of Bursa
Malaysia are set out in page 6 of the Annual Report of the
Company for the financial year ended 31 January 2005.
5. Ordinary Resolution pursuant to Section 132D of
the Companies Act, 1965
The proposed Ordinary Resolution 6, if passed, would,
subject to the Listing Requirements of Bursa Malaysia,enable the Directors to issue up to a maximum of 10%
of the issued and paid-up share capital of the Company
at the date of such issuance for such purposes as the
Directors consider would be in the best interest of the
Company. This authority unless revoked or varied by
the Company at a general meeting will expire at the
conclusion of the next Annual General Meeting.
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6
Directors who are standing for re-election
Datuk Shahril Shamsuddin
Tan Sri Datuk Amar (Dr.) Hamid Bugo
* Details of Datuk Shahril Shamsuddin and Tan Sri Datuk Amar (Dr.) Hamid Bugo are set out in the respective Directors’
Profile on pages 12 to 13 of this report. Details of their respective holdings of securities in the Company can be found on
pages 127 to 128
General Meetings held during the financial year ended 31 January 2005
Type of General Meeting Date of General Meeting Venue of General Meeting
Extraordinary General Meeting 19 February 2004 at 10.00 a.m Nirwana Ballroom 1, Lower Lobby
Mutiara Hotel Kuala Lumpur
Jalan Sultan Ismail
50250 Kuala Lumpur, Malaysia.
Annual General Meeting 27 July 2004 at 10.00 a.m. Multi Purpose Hall
Ground Floor, Sapura@MinesNo.7 Jalan Tasik,
The Mines Resort City
43300 Seri Kembangan
Selangor, Malaysia.
Extraordinary General Meeting 14 October 2004 at 10.00 a.m. Multi Purpose Hall
Ground Floor, Sapura@Mines
No.7 Jalan Tasik
The Mines Resort City
43300 Seri Kembangan
Selangor, Malaysia.
Board of Directors’ Meetings held during the financial year ended 31 January 2005
Details of the Board members’ attendance at the Board meetings of the Company held during the financial year ended 31
January 2005 are set out in pages 27 to 28 of this Annual Report.
Statement Accompanying the Notice of the Annual General MeetingPursuant to Paragraph 8.28 (2) of the Listing Requirements of Bursa Malaysia Securities Berhad
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7
We will win the trust of our stakeholders and
customers by acting with honour, conducting
ourselves with principle, focusing on delivering
value and ensuring that we manage the
resources entrusted to us efficiently.
Honourable
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8
63.5%
100% 100%
100%
70%
Teknik Lengkap
Sdn Bhd
TL Geotechnics
Sdn Bhd
TL Jaya
Sdn Bhd
TL Geohydrographics
Sdn Bhd
100%Petro-Plus
Sdn Bhd
100%Petcon (Malaysia)
Sdn Bhd
100%Sasaran Perdana
Sdn Bhd
36.5%Crest Marine
Engineering Sdn Bhd
100%Probadi
Sdn Bhd
100%Crest Hidayat
(L) Ltd
100%SapuraCrest
Dana SPV Pte Ltd
100%SapuraCrest
Deepwater Pte Ltd
40%
100%
51%
51%
51%
50%
100%
OilServe Marine
Sdn Bhd
100%
Sapura EnergySdn Bhd
TL Offshore
Sdn Bhd
Uzmal Oil Inc
Varia Perdana
Sdn Bhd
Tioman Drilling
Company
Sdn Bhd
TL Marine
Sdn Bhd
OilServe (L)
Berhad
In Members’
Voluntary
Liquidation
Corporate Structure
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9
80%
50%
50%100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
94.44%
30%
36.24%
99.56%
100%
100%
100%
100%
100%
TL Geotechnics
(S) Pte Ltd
TL Geohydrographics
Pty Ltd
TL Geohydrographics
Pte Ltd
Total Marine Technology
Pty Ltd
Unitime Submarine
Ventures Sdn Bhd
BTL
Sdn Bhd
Crest Tender Rigs
Pte Ltd
Sarku Vessels
Pte Ltd
Malaysian Advanced
Refurbishment Services
Sdn Bhd
Sapura Diving
ServicesSdn Bhd
Sapura Retail
Solutions
Sdn Bhd
Sarku ResourcesSdn Bhd
Energy Unlimited
Sdn Bhd
Sapura Power
Services
Sdn Bhd
Sapura Petroleum
Technologies
Sdn Bhd
Norwegian Tender
Rig AS
Geowell
Sdn Bhd
Subang Properties
Sdn Bhd
SE Projects
Sdn Bhd
Sarku Engineering
Services
Sdn Bhd
Sarku Engineering
Services (Offshore)
Sdn Bhd
Sarku Sambang
Sdn Bhd
Sarku Semantan
Sdn Bhd
Sarku Samudera
Sdn Bhd
Sarku 2000
Sdn Bhd
Sarku Marine
Sdn Bhd
Sarku Utama
Sdn Bhd
In Members’ Voluntary
Liquidation
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Boards of Directors10
Board of Directors
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Dato’ Hamzah Bakar
Chairman
Non-Independent Non-Executive Director
Tan Sri Datuk Amar (Dr.) Hamid Bugo
Independent Non-Executive Director
Datuk Shahril bin Shamsuddin
Executive Vice-Chairman
Dato’ Fauziah Dato’ Ismail
Independent Non-Executive Director
Mohamed Rashdi Mohamed Ghazalli
Independent Non-Executive Director
Gee Siew Yoong
Independent Non-Executive Director
From left to right
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12
Dato’ Hamzah Bakar
Non-Independent Non-Executive Chairman
Dato’ Hamzah Bakar, aged 61, a Malaysian, was appointed
to the Board of SapuraCrest on 4 July 2003 as a nominee of
Sapura Technology Berhad (formerly Sapura
Telecommunications Berhad) (“STB”). He was then
appointed as Chairman of the Company on 25 July 2003. He
is also the Chairman of the Nomination, Remuneration and
Option Committees.
Dato’ Hamzah holds a Bachelor of Science (Hons) in
Economics from Queen’s University Belfast, Northern
Ireland and a Masters of Arts in Public Policy and
Administration, with Development Economics from the
University of Wisconsin, USA.
Dato’ Hamzah has served 20 years in various senior
management and board positions in Petroliam Nasional
Berhad (“Petronas”), including Senior Vice President for
Refining and Marketing, and Senior Vice President forCorporate Planning & Development. Prior to joining
Petronas, Dato’ Hamzah was attached to the Economic
Planning Unit (EPU), Prime Minister’s Department for 12 years.
Dato’ Hamzah has no family relationship with the other
Directors and/or with the major shareholders nor has he
any conflict of interests with the Company. He is however, a
nominee Director of STB, the holding company of
SapuraCrest. Dato’ Hamzah has no conviction for offences
within the past 10 years. Currently, Dato’ Hamzah is also on
the Board of CIMB Berhad, SCOMI Group Berhad and UEM
World Berhad.
Datuk Shahril Shamsuddin
Executive Vice-Chairman
Datuk Shahril Shamsuddin, aged 44, a Malaysian, was
appointed to the Board of SapuraCrest on 24 February 2003
as a Non Executive Director and was subsequently appointed
as the Executive Vice-Chairman of SapuraCrest on 25 July
2003. He is also a member of the Company’s Remuneration
and Option Committees.
Datuk Shahril holds a Bachelor of Science in IndustrialTechnology from California Polytechnic, USA and a Masters
of Science in Management of Technology from the
Massachusetts Institute of Technology (MIT Sloan).
After graduating from California Polytechnic, Datuk Shahril
served with Dynatel, California for a year. He then returned
to Malaysia in 1985 and embarked on his career with the
Sapura Group, which was founded by his father, Tan Sri Dato’
Seri Ir. Shamsuddin Abdul Kadir. He held the position of
Assistant Managing Director of the Sapura Group from 1985
to 1990, as well as holding the position of Group General
Manager of Uniphone Sdn Bhd from 1987 to 1990. Datuk
Shahril later became Group Managing Director of the
Sapura Group from 1990 to 1996 before assuming his
current position in the Group as President and Chief
Executive Officer in 1997.
Datuk Shahril does not have any family relationship with the
other Directors on the Board of the Company. However,
Datuk Shahril is deemed to have an indirect interest of
60.06% in the Company by virtue of his direct and indirect
interest in STB and Sapura Holdings Sdn Bhd group of
companies, which are deemed interested in SapuraCrest
pursuant to Section 6A of the Companies Act, 1965.
Presently, Datuk Shahril is also on the Board of STB, Sapura
Industrial Berhad (formerly Sapura Motors Berhad), Sapura
Resources Berhad (formerly Uniphone Telecommunications
Berhad), MIMOS Berhad, Universiti Malaysia Sarawak
(UNIMAS), Malaysian External Trade Development
Corporation (MATRADE), Multimedia Development
Corporation Sdn Bhd and Sapura Holdings Sdn Bhd. Datuk
Shahril is also a member of the Advisory Council of
International Center for Leadership in Finance (ICLIF) and a
member of the Board of Trustees of the Perdana Leadership
Foundation. He has had no conviction for offences within the
past 10 years.
Dato’ Fauziah Dato’ Ismail
Independent Non-Executive Director
Dato’ Fauziah Dato’ Ismail, aged 62, a Malaysian, was first
appointed to the Board of SapuraCrest on 22 October 2001
as a nominee of UEM Land Berhad (formerly Renong
Berhad and previously the holding company of
SapuraCrest) and has remained on the Board since then
save for a brief duration between 17 July 2003 to 24 July
2003. Dato’ Fauziah is also a member of the Company’s
Audit and Option Committees.
Dato’ Fauziah holds a Bachelor of Arts (Honours) from
University of Malaya, a postgraduate Diploma in
Development Administration from the London School of
Directors’ Profile
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13Directors’ Profile
Economics & Political Sciences, and a Masters in PublicAdministrat ion from the University of Houston, USA. She
also attended a certificate course at Harvard Institute of
International Development (HIID) of Harvard University,
USA in Public Enterprise Management and Privatisation.
Dato’ Fauziah served in the Malaysian Administration and
Diplomatic Services from 1966 to her retirement in 1997, in
various positions and capacities. She served, amongst
others, in the Public Services Department, the Prime
Minister’s Department, and the Ministry of Rural
Development. In her job at the Implementatio n Unit of the
Prime Minister’s Department, she was involved in the
administration of the Petroleum Development Act in
developing Malaysia’s petroleum industry, including the
development of Bumiputera participation in the industry.
Dato’ Fauziah has no family relationship with the other
Directors and/or with the major shareholders and has no
conflict of interests with the Company. She has no
conviction for offences within the past 10 years. Currently,
Dato’ Fauziah is also on the Board of KAF-Seagroatt &
Campbell Berhad, CCK Consolidated Holdings Berhad and
UEM Builders Berhad (formerly known as Intria Berhad).
Tan Sri Datuk Amar (Dr.) Hamid Bugo
Independent Non-Executive Director
Tan Sri Datuk Amar (Dr.) Hamid Bugo, aged 59, a Malaysian,
was appointed to the Board of SapuraCrest on 25 July 2003.
He is also a member of the Company’s Nomination and
Audit Committees.
Tan Sri Hamid holds a Bachelor and a Masters of Art
(Economics) from Canterbury University, New Zealand, and
a Teaching Post-Graduate Diploma from Christchurch
Teachers’ College.
Tan Sri Hamid has served both in the private sector and the
public service in Sarawak. He has held various distinguished
positions in the public service, including being the first
general manager of the Land Custody and Development
Authority, Permanent Secretary of the Ministry of Resource
Planning, Sarawak and Administration Manager at Malaysia
LNG Sdn Bhd (a subsidiary of Petronas). He had also been
Chairman and Director of several statutory bodies at
federal and state levels. Prior to his retirement, Tan Sri
Hamid was State Secretary of Sarawak from 1992 to 2000.
Tan Sri Hamid does not have any family relationship withthe other Directors and / or with the major shareholders of
the Company nor has he any conflict or interests with the
Company. He also has had no conviction for offences within
the past 10 years. Currently, Tan Sri Hamid is also on theboard of Sarawak Concrete Industries Berhad, Tradewinds
Corporation Berhad (formerly Pernas International
Holdings Berhad), Permodalan Sarawak Berhad, Mighty
Strike Berhad and Tractors Malaysia Holdings Berhad.
Gee Siew Yoong
Independent Non-Executive Director
Ms Gee Siew Yoong, aged 55, a Malaysian, was appointed to
the Board of SapuraCrest on 4 December 2001. She is also
the Chairman of the Company’s Audit Committee.
Ms Gee is a member of the Malaysian Institute of Certified
Public Accountants and the Malaysian Institute of
Accountants. She started out her career with Price
Waterhouse in 1969. She left in 1981, her last position being
the Senior Audit Manager and Continuing Education
Manager. She then joined the Selangor Pewter Group as
Group Financial Controller during which period she was
seconded to the United States of America from 1983 to 1984
as Chief Executive Officer of Senaca Crystal Inc., a company
in the Selangor Pewter Group undergoing re-organisation
under Chapter XI of the U.S. Bankruptcy Code. Subsequently
from 1985 until 1987, she became the Personal Assistant tothe Executive Chairman of the Lipkland Group.
In 1987 Ms Gee was appointed by Bank Negara Malaysia as
the Executive Director and Chief Executive of Supreme
Finance (M) Berhad, a position she held until 1991. Ms Gee
later served with Land & General Berhad from 1993 to 1997
as Group Divisional Chief, Management Development
Services before joining Multi-Purpose Capital Holdings
Berhad from 1997 to 1999 as Executive Assistant to the
Chief Executive. During this period, Ms Gee was also a
Director of Multi-Purpose Bank Berhad, Multi-Purpose
Insurans Berhad and Executive Director of Multi-PurposeTrustee Berhad.
Ms Gee does not have any family relationship with the other
Directors and/or with the major shareholders of the
Company nor has she any conflict of interests with the
Company. She also has had no conviction for offences
within the past 10 years. Currently, Ms Gee is also on the
Board of Landmarks Berhad.
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14
Mohamed Rashdi Mohamed GhazalliIndependent Non-Executive Director
Encik Mohamed Rashdi Mohamed Ghazalli, aged 48, a
Malaysian, was appointed to the Board of SapuraCrest on 14
November 2003. Encik Rashdi is also a member of the
Company’s Nomination Committee.
Encik Rashdi has over 25 years working experience in the IT
industry. He began his career in 1979 with Telecoms
Malaysia as a Systems Analyst and was involved in the
planning and implementati on of its computer systems. He
then joined the Sapura Holdings Group in 1983 as part of
the team to build and develop its IT business. In 1989, he
moved to Coopers & Lybrand as a Manager in the
Consultancy Division. He became a Partner of the Regional
Consultancy Practice in 1995 and was responsible for the
operations of its Kuala Lumpur office.
With the merger of Coopers & Lybrand and PriceWaterhouse in 1998, Encik Rashdi joined the management
team of PwC Consulting with the task of looking after the
government and services industry. In November 2002 IBM
World Trade Corporation acquired the consulting business
and resources of PricewaterhouseCoopers. Encik Rashdi is
now a partner with IBM Business Consulting Services. As a
Management and IT Consultant, he has led assignments in
strategy development, performance improvement, IT
Planning and implementation with a focus on the
government, telecoms, transport and utility sectors.
Encik Rashdi has no family relationship with the other
Directors and/or with the major shareholders nor has he
any conflict of interests with the Company. He also has no
conviction for offences within the past 10 years. Currently,
Encik Rashdi holds no other directorship in other public
companies.
Directors’ Profile
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Corporate Information
Dato’ Hamzah Bakar
Chairman
Non-Independent Non-Executive Director
Datuk Shahril Shamsuddin
Executive Vice-Chairman
Non-Independent Executive Director
Dato’ Fauziah Dato’ Ismail
Independent Non-Executive Director
Tan Sri Datuk Amar (Dr) Hamid Bugo
Independent Non-Executive Director
Gee Siew Yoong
Independent Non-Executive Director
Mohamed Rashdi Mohamed Ghazalli
Independent Non-Executive Director
Board of Directors
Audit Committee
Gee Siew YoongChairman
Independent Non-Executive Director
Dato’ Fauziah Dato’ IsmailIndependent Non-Executive Director
Tan Sri Datuk Amar (Dr) Hamid BugoIndependent Non-Executive Director
Remuneration Committee
Dato’ Hamzah BakarChairman
Non-Independent Non-Executive Director
Datuk Shahril ShamsuddinExecutive Vice-Chairman
Non-Independent Executive Director
Tan Sri Datuk Amar (Dr.) Hamid BugoIndependent Non-Executive Director
Nomination Committee
Dato’ Hamzah BakarChairman
Non-Independent Non-Executive Director
Mohamed Rashdi Mohamed GhazalliIndependent Non-Executive Director
Tan Sri Datuk Amar (Dr.) Hamid BugoIndependent Non-Executive Director
Director in Charge ofShareholders’ Communications
Gee Siew YoongIndependent Non-Executive Director
Auditors
Ernst & YoungChartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala LumpurTel: 03-2087 7000Fax:03-2095 7043
Principal Bankers
Bumiputra-Commerce Bank BerhadAM Merchant Bank BerhadNordea Bank
Share Registrar
Mega Corporate Services Sdn BhdLevel 15-2, Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel: 03-2691 4271Fax:03-2732 5388
Solicitors
Zul Rafique & PartnersFoley HoagKing & Spalding
Registered Office
Sapura @ MinesNo.7, Jalan TasikThe Mines Resort City43300 Seri KembanganSelangor Darul EhsanTel: 03-8659 8800Fax:03-8659 8811
Stock Exchange Listing
The Second Board of Bursa Malaysia
Poh Phei Ling (MAICSA 7035146)
Company Secretary
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We set high standards of
professional conduct in all our
interactions. As a Group, we will
strive to exceed expectations
through a commitment to quality
and constant improvement.
Professional
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new shares of SapuraCrest at the conversion price ofRM1.4514 per SapuraCrest share.
The Bonds mark the Group's maiden venture into the USD
bond market and the proceeds from the issuance are
earmarked to be utilised for the construction cost of the
HLV, the acquisition cost of TMT and for general working
capital.
Employee Share Option Scheme
SapuraCrest recognises that our people form the foundation
of our company and is an asset that drives and ensures the
sustainability of the Company’s success. And it is in our
people that we find the commitment, passion and
resourcefulness to transform our ideas, goals and values
into reality. Hence, the Company continually spurs its
employees towards greater achievements by establishing
rewards and incentives in addition to training and skill
development. On this footing, SapuraCrest established and
launched an employees' share option scheme ("ESOS") on
the 8th of November 2004. In place for the next 5 years, up
to 10% of the issued and paid up share capital of the
Company may be utilised for the ESOS. A total of 13,522,600
options were offered to employees at the inauguration of
the ESOS.
Expanding Our Strength
In recent times, the most visible trend in the offshore oil and
gas industry has been the greater emphasis placed on the
development of deepwater fields. Global turnover for the
year 2004 in respect of marine installation and de-
commissioning activities amounted to USD4.806 billion, of
which 26.63% or USD1.28 billion was spent on deepwater
operations. Between 2004 to 2008, a total of 185 deepwater
fields are expected to be developed as compared to 81
fields over the period of 1999 to 2003. Further, it is
estimated that from the year 2015, 25% of offshore oil will
originate from deepwater fields.
This growing trend is evident in Malaysia as well. In recent
years there were a number of significant deepwater
discoveries such as the Kikeh, Gemusut, Kakap, Senangin,
Malikai and Belud fields. These deepwater discoveries are
estimated to have cumulative reserves in excess of 1 billion
barrels. The Kikeh field is expected to produce first oil by the
year 2007 with a project price tag of US$1.4 billion.
Against this landscape of change, the Group concentrated its
efforts in expanding its strengths and augmenting its
competencies to better prepare the Group for future
industry requirements and ensuring long term business
sustainability. We are cognisant of the need to establish and
fortify deepwater capabilities in order that we broaden our
future earnings base while consolidating our presentbusiness. This proactive approach forms the core rationale
underpinning the TMT acquisition and the HLV construction.
Total Marine Technology
On 26 January 2005, the Company announced the
acquisition of an 80% stake in TMT. Completed on 14 April
2005, it marks the Group's first foreign acquisition.
TMT is an Australian company based in Perth. It specialises
in the design, manufacture and operation of Remote-
Operated Vehicles ("ROVs") and has 9 ROVs in its asset base.
ROVs are robots which operate underwater and are
primarily used to support offshore oil and gas exploration,
drilling, development and production. Amongst its many
uses, ROVs are utilised for :-
(a) deepwater works at depths inaccessible by a human
diver;
(b) performance of heavy underwater works; and
(c) inspection works where a continuous recording of the
condition of an item is required, e.g. pipeline survey.
TMT has a novel and innovative design methodology. The
ROVs that it designs and manufactures are based on amodular concept allowing the ROVs to be effortlessly and
seamlessly configured to suit the requirements of specific jobs.
The acquisition of TMT is an attractive proposition as the
Group currently leases ROVs from third parties for the
Group's offshore oil & gas drilling, IPF and marine services
sectors. With the acquisition, we would have better control
of ROV-related costs and reduce reliance on third party
ROVs in the execution of our projects.
Additionally, the acquisition paves the way for the Group to
establish its foothold in the regional market given that TMToperates and has established a name among a number of
international clients in the oil and gas industry in the Asia
Pacific region.
I take this opportunity to welcome TMT and its staff to the
SapuraCrest family.
The construction of the HLV
The year saw the Company embarking on the construction
of the HLV. The HLV is being constructed by a consortium
comprising Huisman Special Lifting Equipment B.V. and
Sembawang Shipyard Pte Ltd.
Huisman is an established company with substantial
experience in the design, engineering and construction of
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offshore construction vessels, particularly offshore liftingequipment while Sembawang is an established shipyard
with substantial experience in offshore conversion and ship
repair.
The HLV is a specially designed vessel with a combined
capability of undertaking offshore heavy lift work of a load
of up to 3000 short tonnes and pipe laying capability of
between 3 to 5 kilometres per day. To be constructed at a
cost of approximately USD150 million, the Vessel is capable
of both deep and shallow water operations as it is equipped
with dynamic positioning technology.
With an expected delivery date in the final quarter of 2006,
the Vessel is anticipated to have an encouraging market
entry. With its very specific technical capabilities, possessed
by very few other vessels, various opportunities for work for
the Vessel are created, both geographically and technically.
As such, the Vessel is capable of and is intended to be
operating in South East Asia, India, Australia and China for
both deep and shallow water operations.
The wide geographical operability of the Vessel significantly
contributes to enhancing its utilisation rate as it would be
capable of continuing operations in geographical locations
not affected by unfavourable weather conditions prevailingat other locations at specific times of the year.
A key consideration driving the decision to construct the
HLV has been the Group’s frequent utilisation of an asset of
this nature. A good example of such utilisation is in the
Company’s current performance of the 2004-2006
Transportation and Installation of Offshore Facilities works
(“OIC Project”) for Petronas Carigali Sdn Bhd (“Petronas
Carigali”), Sabah Shell Petroleum Company Limited/Sarawak
Shell Bhd (“Sabah and Sarawak Shell”) and ExxonMobil
Exploration & Production Malaysia Inc (“EMEPMI”).
At present, such critical assets are leased from third parties.
A variety of risks presents itself from such contracting
practices. These include the risk of unavailability of a vessel
of the required capability, inability to deploy during the
required period and costs that may make our bids
uncompetitive.
We believe that in the long term, ownership of a vessel that
is capable of the performance contractually required under
contract with clients would be highly beneficial to the
Company. As stated earlier, we believe that future industry
trend would require our ability to deploy assets that is
capable of operating in deep waters. Thus, the ownership of
a vessel with such capabilities would position the Company
competitively in line with the direction of the industry.
The Vessel is intended to be utilised in the IPF division of the
Company. The IPF division is mainly involved in the
transportation and offshore installation of platforms and
pipelines via the Company’s subsidiary, TL Offshore Sdn Bhd.
Operational Highlights
Installation of Pipelines and Facilities
The IPF Division was kept busy throughout the year fulfilling
its contractual obligations under the OIC Project. Awarded in
March 2004 by Petronas Carigali, Sabah and Sarawak Shell
and EMEPMI, the OIC Project saw a year dominated by
activities comprising the erection of a total of 4 platforms and
the laying of 8 subsea pipelines measuring a length of 71kms.
As a direct result of the works under the OIC Project, the IPF
Division posted operating results of RM20.5 million on the
back of a turnover of RM414.1 million.
In the year under review, the IPF Division also notched its
first foreign contract win by securing a contract with Brunei
Shell Petroleum Company Sendirian Berhad ("BSB") for BSB's
Champion West Phase 3 and Egret Oil Acceleration Project.
The value of the contract is a significant USD38 million andinvolves, amongst others, the transportation and installation
of jackets, topsides, helideck, pipelines and submarine cables.
The award of the BSB contract represents the division’s
maiden success in securing offshore installation works in
international bidding and is a reflection of the Group's
continuing concerted efforts to diversify its client base with
a keen focus on the international market.
Marine Services
For the year under review, the Marine Services division
continued to strengthen its foothold in internationaloperations. The soil and survey division secured work in
Australia, Iran, Thailand and India. Opportunities arising
locally are nevertheless not overlooked and this is borne
out by successful extensions of soil investigation contracts
with Sabah and Sarawak Shell, EMEPMI and Murphy Oil.
The marine engineering sub-division comprising the Sarku
Group of Companies concluded various major contractual
obligations during the year under review. Major
underwater inspection and maintenance services were
successfully concluded for Sabah and Sarawak Shell and
Petronas Carigali.
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The sub-division also concluded for Sabah and SarawakShell major maintenance, hook-up and commissioning and
construction works.
For the 12 months ended 31 January 2005, the Marine
Services division posted operating results of RM37.9 million
on a turnover of RM377.4 million.
Offshore Oil & Gas Drilling
4 Self–Erecting Tender Rigs (SETR) continue to form the
cornerstone of the offshore oil & gas drilling division. The
T3, T6 and Teknik Berkat SETRs continued their work for
Petronas Carigali across Malaysian waters as well as in
Myanmar. The latest addition to the fleet, the T9 took over
the work for EMEPMI previously performed by the now
decommissioned T2.
On 11 August 2004, T6 set a historical record by drilling the
longest well drilled in Malaysia. The well, situated at
Petronas Carigali’s Angsi-A field, measures a total length of
6,339 metres and was drilled over the course of just 44 days.
The offshore oil & gas drilling division notched operating
results of RM35.2 million on a turnover of RM192.4 million
for the year under review.
Operations and Maintenance
The division focused its attention during the year to
consolidating its operations. The industrial gas turbines sub-
division continued its repair work for EMEPMI with the
award of an additional 4 Rolls-Royce RB211 engines to add
to 3 engines awarded since 2003.
The heavy industrial turbines sub-division situated in an
advanced workshop in Bukit Raja, Klang was awarded ISO
Certification 9000-2000 in July 2004 and continue to
enhance its capabilities by seeking to develop component
repair capabilities into rotating machinery andsophisticated coating services.
During the year under review, the Asset Maintenance sub-
division successfully completed Carigali-Triton Operating
Company’s de-preservation works at the Malaysian-
Thailand Joint Development Area.
For the year under review, the division posted a turnover of
RM50.9 million while registering operating results of RM3.2
million.
SafetyThe Group continues to focus and emphasise on the
important area of Health, Safety and Environment. We
believe that the sustainability of our business is reliant on
an excellent HSE culture within our organisation and we are
determined to do all that is necessary to continually
improve in this area.
In the course of the year and as recognition to our
commitment to safety, we are proud to have received from
Petronas Carigali, a safety award for the safety record of our
SETR, the T6. Awarded on 10 December 2004, the accolade
lauds the T6’s 5 year absence of Lost Time Accidents (LTA).
Our combined HSE key performance indicators for 2004 is
set out below:-
Manhours worked Achieved Total
w ithout L ost Time R ecor dable Case
Incidents Frequency (TRCF)/
million manhours
Installation of
Pipelines and
Facilities 175,124 1.14Marine Services
•Soil & Survey
sub-division 5,612,539 0
•Marine
Engineering
sub-division 3,873,342 1.44
Offshore Oil &
Gas Drilling 987,250 2.34
Operations &
Maintenance 323,760 0
The Company recognises that safely performing any work is
a major component to its successful completion. We are
therefore fully committed to upholding the utmost safety
standards in our work places and work practices.
Human Resource Development and Training
Human resource development and training continues to be
a key HR agenda for the year under review. Following from
the acquisition of SESB, the Group's current workforce
numbers close to 700. This has presented the Group with the
services of a wider talent pool of skilled offshore marine,
technical and engineering staff.
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The Group subscribes to and practises on-the-job trainingand in-house skill upgrading in its HR development
philosophy. Under this learning framework, senior
experienced personnel are paired with junior staff to
ensure that the latter receives on site hands-on job
guidance. This mentoring framework ensures that
knowledge and experience is institutionalised and
adequately disseminated within the Group. Formal training
courses on Project Management, Contract and Procurement
Administration and specialised technical courses and
seminars continue to be provided to staff throughout the
year to ensure exposure to work knowledge and new trends
in the industry.
The Group will continue managing its talent from resources
acquired and developed through the existing internal talent
pool and from the continuous programme of structured and
formal staff development training.
Industry Outlook
Industry Growth
Demand for offshore oilfield services is variable in nature and
depends substantially on the condition of the oil and gas
industry and its willingness to spend capital on the exploration,
development and production of oil and natural gas.
Global offshore oil & gas production is forecasted to grow
from 39 million barrels of oil equivalent (“BOE”) per day in
2004 to 55 million BOE by 2015. From providing around
34% of global oil production and 28% of global gas
production in 2004, offshore oil and gas are forecasted to
reach 39% and 34 % respectively by 2015.
The full costs to explore, develop and operate offshore oil
and gas fields, presently some USD111 billion per year, is
forecasted to total USD1,440 billion over the next decade.
During this time it is estimated that 200 billion BOE will beproduced.
On the local front, Petronas has targeted domestic
production to grow at 3% per annum for at least the next
five years. Exploration & Production spending is expected to
climb at a compounded annual growth rate of 14% over the
same period. This means that annual capital expenditure
could rise from the RM 10 billion level in 2003 and 2004 to
nearly RM 20 billion by 2008.
Deep Water Emphasis
The continuing importance played by the deep water
(depths between 200m to 1,500m) and ultra-deep water
(depths in excess of 1,500m) fields continues to grow. It is
expected that nearly 25% of offshore oil will come from
deep water fields in 2015 compared with 10% in 2004. After
2010, almost all global offshore oil production growth will
be from deep water fields, compensating for declining
shallow water output.
The deep water sector has grown as a major segment of the
offshore market since projects in water depths over 1,000 ft
(300 metres) were undertaken in 1985. The market grew an
average of 65% per year in the first decade, evenly split
between Northwest Europe, Brazil, and the Gulf of Mexico. In
the second 10-year period, the development of West Africa
drove growth and is reflected by West African projects
making up 51% of the deep water market in 2005.
Beyond 2009-2010, the potential development of deep
water reserves in Mexico and stranded deep water gas
reserves in Asia, West Africa, and Russia all provide ample
opportunity for further growth in the sector.
In Malaysia, a third of the 600,000 square km explorationacreage is in deep water fields.
The first deep water field in Malaysia was discovered in
2002. This increased to 5 deep water fields discovered in
2004 with estimated cumulative reserves in excess of 1
billion barrels. Kikeh, one of the fields earlier discovered
will come on stream in 2007 with a project cost of USD1.4
billion. Petronas’ plans indicate that it will launch 6 new
deep water and ultra-deep water blocks offshore Sabah and
Sarawak in 2005.
The outlook for the oil and gas industry is very encouragingwith continued expenditure growth year on year. The growing
emphasis on deep water is clearly evident. The Group
constantly pays heed to the industry’s expected needs so that
opportunit ies may be taken up on a timely basis. The outlook
of the industry and its growing trends is also the key driver to
the Group’s enhancement of its deep water capabilities by the
acquisition of TMT and the construction of the HLV.
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AppreciationOn behalf of the Board of Directors, I extend my deep
appreciation to all staff and the management team for their
continued hard work, dedication and commitment.
My sincere thanks to all our shareholders, clients, business
associates, financiers and government authorities and
agencies for their support and confidence shown towards us.
On behalf of the Board, I would also like to record our
gratitude and appreciation to Dato’ Zainal Abidin Ibrahim,
who resigned from the Board on 31 October 2004, for his
invaluable contributions. We wish him good health and
success in all his present and future undertakings.
In the course of the year which has been characterised and
dominated by a string of firsts, we have proven our ability and
desire to attain and bring to fruition our goals and targets
which we have set for ourselves while realising value for
shareholders. This motivates and galvanises us towards
greater achievements and lays the foundation and challenge
for a better performance in the current and future years.
Thank you.
Dato’ Hamzah Bakar
Chairman
The sources for selected portions of the Chairman’s Statement are as
follows:
(i) The Petroleum Finance Company,
Oil & Gas Journal Online, December 2004
(ii) Business Times, 27 September 2004
(iii) The Edge, 27 December, 2004(iv) Rigzone, September 2004
(v) Offshore Shipping Online, December 2004
(vi) Deepwater Growth for 2005 specific to region,
Offshore Magazine, December 2004
(vii) Asian Oil & Gas, 1 August 2004
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Resourceful
We are resourceful in developing
the best solutions for our customers
by constantly learning, collaborating
and sharing information to
make full use of our Group’s
capabilities – both inside and
outside of our business.
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comprises Dato’ Hamzah Bakar as Chairman, together withTan Sri Datuk Amar (Dr.) Hamid Bugo and Encik Mohamed
Rashdi Mohamed Ghazalli as members of the Committee.
Although the actual decision as to who shall be appointed as
Director lies ultimately with the Board as a whole, the
Nomination Committee is responsible for proposing new
nominees to the Board, and to assess Directors on an on-
going basis. Based on the Committee’s recommendation,
the Board has agreed on a set of guiding principles to assist
the Board with regard to evaluating the Board’s mix of skills
and experience, as well as the assessment of the size of the
Board in relation to its effectiveness.
The Company’s Board Charter provides for newly appointed
Directors to receive the benefit of an induction programme
aimed at deepening their understanding of the Company.
All Non-Executive Directors appointed to the Board have
gone through such a programme. To enhance their
knowledge and as stipulated by the Listing Requirements,
the Directors have, throughout the year, also attended
various Continuing Education Programmes conducted by
various organisations.
The Code has recommended that all Directors submit
themselves for re-election at regular intervals, and at leastonce every three years. Article 95 of the Company’s Articles
of Association has incorporated this principle and provided
for the retirement of one-third of the Directors at every
Annual General Meeting (“AGM”). If the number involved is
not three or in multiples of three, then the number closest to
one-third shall retire from office. All retiring Directors are
eligible for re-election.
In addition to the above, Article 96 stipulates that the
Directors to retire shall be those who, being subject to
retirement by rotation, have been longest in office since
their last election or appointment.
In compliance with Articles 95 and 96 of the Articles of
Association, Datuk Shahril Shamsuddin and Tan Sri Datuk
Amar (Dr.) Hamid Bugo shall retire at the Twenty-Sixth AGM.
Being eligible, they have offered themselves for re-election.
Article 100 of the Articles of Association provides that any
additional Director appointed during the year shall hold
office until the next AGM of the Company. The Director
appointed, however, is eligible for re-election at the said
AGM. There were no Directors appointed during the year
under the review.
Board meetings were held by the Company on a regularbasis. During the financial year ended 31 January 2005, a
total of 8 Board meetings were held. Agenda items
discussed at the Board meetings included, among others,
reviews of the operational and financial performance,
major issues and activities, and opportunities relating to the
Company.
The Chairman is primarily responsible for organising the
flow of information at Board meetings. During the financial
year ended 31 January 2005, he was assisted by Senior
Management and the Company Secretary to set the Agenda
for each meeting and to ensure that relevant items were
placed on the Agenda for the Board’s information. To
further facilitate productive discussions at Board meetings,
notices of meetings and board papers were provided to the
Members in a timely manner.
Details of attendance at meetings held for financial year
ended 31 January 2005 are as follows:
Maximum
possible
Name of Meetings meetings to
Directors attended attend %
Dato’ Hamzah Bakar
Non Independent
Non-Executive Chairman 7 8 87.5
Datuk Shahril Shamsuddin
Executive Vice-Chairman 7 8 87.5
Dato’ Fauziah Dato’ Ismail
Independent Non-Executive
Director 7 8 87.5
Ms Gee Siew YoongIndependent Non-Executive
Director 8 8 100.0
Tan Sri Datuk Amar (Dr.)
Hamid Bugo
Independent Non-Executive
Director 8 8 100.0
Encik Mohamed Rashdi
Mohamed Ghazalli
Independent Non-Executive
Director 7 8 87.5
Corporate Governance Statement
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Statement on Internal Control
In accordance with Part One of the Malaysian Code on
Corporate Governance (“the Code”), and as embodied in the
Company’s Board Charter, the Board acknowledges its
responsibility for the Company’s system of internal cont rol to
safeguard shareholders’ investment and Company’s assets.
It should be noted that the system of internal control is
designed to manage rather than eliminate risks of failure in
achieving business objectives, and that they can only
provide reasonable and not absolute assurance against
material misstatement or loss or the occurrence of
unforeseeable circumstances.
Limits of Authority
The year under review saw the introduction of a new
authority manual to replace the Discretionary Authority
Limits (“DAL”). The new authority manual, called the Limits
of Authority (“LoA”), was formulated following changes to
the shareholding and management structure of the Group
and also the acquisition of the Sapura Energy Sdn BhdGroup of Companies in December 2003.
As the changes had brought about new members to the
Group and new positions such as the Executive Vice-
Chairman, the LoA was introduced as a replacement to the
DAL. The LoA has been formulated to address the changing
business landscape while at the same time seeking to
preserve the essence of the provisions of the DAL to ensure
continuity and acceptable levels of control and risk
management.
The LoA is applicable throughout the SapuraCrest Group
and as the DAL, deals with the authority limits on areas of
corporate, operational, financial, human resource and
project matters. The LoA prescribes limits of authority and
prohibits unfettered power within the various levels of
management and company group members.
The LoA, as had the DAL, may be reviewed by the Board
upon the recommendation of Management, to ensure its
provisions are effective in managing risks and is practical
for implementation.
Finance and Administrative Services Manual
The activities of the finance, human resource and
administrative functions of the SapuraCrest Group are
centralised at the holding company level, and are governed
by the Finance and Administrative Services Manual
(“FASM”), which contains standardised policies &
procedures of administration.
The FASM which was initially developed in 1998, has been
adopted to streamline practices of the above activities within
the Group. It covers areas, which include expenditure,
revenue, fixed assets, claims and advances, and stock control.
Approved Vendor & Tender Administration Procedure
Since September 1998, a Tender Administration Procedure
has been in place, laying down guidelines for the award of
contracts for the supply of general goods and services.
During the year under review, an Approved Vendor &Tender Administration Procedure (“TAP”) was introduced
with the aim of enhancing the essential provisions of the
Tender Administration Procedures while simplifying its
application and procedures.
The new governing TAP, as its predecessor Tender
Administration Procedures, continues to act as the primary
manual governing the award of sub-contracts, supply
contracts and general services in the SapuraCrest Group of
Companies and in addition also establishes the maintenance
of an approved vendor list. It governs by its procedural
guidelines which deal, amongst others, with the
establishment of a Tender Committee, the tender bidding
process, the evaluation of bids and the subsequent award to
successful bidders.
Internal Audit Department
The Internal Audit Department monitors the compliance of
the measures mentioned above on a regular basis. The
department also assists from time to time, in reviewing the
adequacy and integrity of these measures and compliance
with applicable laws, rules and guidelines. In addition the
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Terms of Reference
The Terms of Reference of the Audit Committee (“Terms of
Reference”) outlines and incorporates the roles and
responsibilities of the Audit Committee (“Committee”) as
prescribed under the Listing Requirements (“Listing
Requirements”) of the Bursa Malaysia Securities Berhad
(“Bursa Malaysia”) and the Malaysian Code on Corporate
Governance (“the Code”).
1.0 Objectives Of The Committee
1.1 The Committee shall assist the Board of Directors (“Board”)
of SapuraCrest Petroleum Berhad (“SapuraCrest” or
“Company”):
1.1.1 In complying with specified accounting
standards and required disclosure as
administered by Bursa Malaysia, relevant
accounting standards bodies, and any other laws
and regulations as amended from time to time;
1.1.2 In presenting a balanced and understandable
assessment of the Company’s positions and
prospects;
1.1.3 In establishing a formal and transparent
arrangement for maintaining an appropriate
relationship with the Company’s auditors; and
1.1.4 In maintaining a sound system of internal
control to safeguard shareholders’ investment
and the Company’s assets.
2.0 Powers Of The Committee
2.1 In carrying out its duties and responsibilities, the
Committee shall have the following rights:
2.1.1 Have explicit authority to investigate any
matter within the Terms of Reference;
2.1.2 Have access to the resources which are
required to perform its duties;
2.1.3 Have full, free and unrestricted access to anyinformation, records, properties and personnel
of SapuraCrest Group;
2.1.4 Have direct communication channels with the
external auditors and persons carrying out the
internal audit function;
2.1.5 Be able to obtain independent professional or
other advice and to invite outsiders with
relevant experience to attend the Committee’s
meetings, if required, and to brief the
Committee thereof;
2.1.6 Be able to convene meetings with external
auditors, and excluding the attendance of the
executive members of the Committee,
whenever deemed necessary;
2.1.7 Upon the request of the external auditor, the
Chairman of the Committee shall convene a
meeting of the Committee to consider any
matter the external auditor believes should be
brought to the attention of the directors or
shareholders; and
2.1.8 Promptly report to the Bursa Malaysia where a
matter reported by the Committee to the Board
has not been satisfactorily resolved resulting in
a breach of the Listing Requirements.
2.2 The attendance of any particular Committee meeting by
other Directors and employees of the SapuraCrest
Group shall be at the Committee’s invitation and
discretion, and specific to that relevant meeting only.
3.0 Composition Of The Committee
3.1 The Committee is to be appointed by the Board from
among their numbers, which shall comprise the
following:
3.1.1 A minimum of three (3) members;
3.1.2 A majority of the Committee members shall be
Independent Directors;
3.1.3 At least one (1) Member of the Committee must
be a member of the Malaysian Institute of
Accountants (“MIA”) or a person who fulfils therequirements as stated in para 15.10(1)(c)(ii)
of the Listing Requirements;
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3.1.4 The Members of the Committee shall elect aChairman from among themselves who shall
be an Independent Director;
3.1.5 All Members of the Committee shall hold office
only for so long as they serve as directors of the
Company;
3.1.6 No alternate director shall be appointed as a
Member of the Committee; and
3.1.7 In the event of any vacancy resulting in non-
compliance of the minimum of three (3)
Members, the Board shall upon the
recommendation of the Nomination
Committee, appoint such number of directors
within three (3) months of the event to fill up
such vacancies.
4.0 Duties And Responsibilities
4.1 The duties and responsibilities of the Committee are as
follows:
4.1.1 Nominate and recommend the external
auditor for appointment, to consider theadequacy of experience, resources, audit fee
and any issue regarding resignation or
dismissal of the external auditor;
4.1.2 Review with the external auditor the nature
and scope of the audit before the audit
commences and report the same to the Board;
4.1.3 Ensure co-ordination when more than one
audit firm is involved in the audit;
4.1.4 Review with the external auditor his auditreport and report the same to the Board;
4.1.5 Review with the external auditor his evaluation
of the system of internal controls and report
the same to the Board;
4.1.6 Review the assistance given by the employees
of the SapuraCrest Group to the external
auditor and report the same to the Board;
4.1.7 To do the following where an internal audit
function exists:
(a) Review and report the same to the Board
on the adequacy of the scope, functions
and resources of the internal audit
functions, and that it has the necessaryauthority to carry out its work;
(b) Review and report the same to the Board on
the internal audit programme, processes,
the results of the internal audit programme,
processes or investigation undertaken and
whether or not appropriate action is taken
on the recommendations of the internal
audit function;
(c) Where necessary, ensure that appropriate
action is taken on the recommendations of
the internal audit functions;
(d) Review any appraisal or assessment of the
performance of members of the internal
audit function;
(e) Approve any appointment or termination
of senior staff members of the internal
audit function; and
(f) Inform itself of resignations of internal
audit staff members and provide the
resigning staff member an opportunity tosubmit his reasons for resigning.
4.1.8 Prior to the approval of the Board, review the
quarterly and year end financial statements
and report the same to the Board, focusing
particularly on:
(a) Any changes in accounting policies and
practices;
(b) Significant adjustments arising from the audit;
(c) The going concern assumption; and
(d) Compliance with accounting standards
and other statutory requirements.
4.1.9 Review any related party transactions and
conflict of interest situation that may arise
within the SapuraCrest Group including any
transaction, procedure or course of conduct
that raises questions of management integrity
and report the same to the Board;
4.1.10 Review any letter of resignation from the
external auditor and report the same to the
Board;
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Material Contracts
Save as disclosed below, there have been no material
contracts involving Directors’ and Major Shareholders’
interests, either still subsisting at the end of the financial
year 31 January 2005 or, if not then subsisting, entered into
since the end of the previous financial year:
(1) The following Technical Services Agreements were
entered into between Tioman Drilling Company SdnBhd (Tioman Drilling), a 51% subsidiary of SapuraCrest
held through SapuraCrest’s wholly-owned subsidiary,
Probadi Sdn Bhd (“Probadi”) with Smedvig Asia Limited
(“Smedvig Asia”):
(a) Technical Services Agreement dated 15 January
1991 for the rig, T3;
(b) Technical Services Agreement dated 15 January
1991 for the rig, T6;
(c) Technical Services Agreement dated 28 March
1994 for the rig, T2 (ceased as of 9 July 2004);
(d) Technical Services Agreement dated 18 December
2003 for the rig, Teknik Berkat; and
(e) Technical Services Agreement dated 31 March
2004 for the rig, T9.
Smedvig Asia is a major shareholder of Tioman Drilling
and the services to be provided by Smedvig Asia to
Tioman Drilling under the Technical Services
Agreements encompasses the provision of engineering
services, rig maintenance and rig material services to
the respective rigs. The consideration payable to
Smedvig Asia is at the specified daily rate of
USD2,022.00 (RM7,683.60) per rig and is adjustable in
accordance with the Average Hourly Earnings Index for
the Oil and Gas Field Services published by the United
States Department of Labour Bureau of Labour Statistics
in the “Employment and Earnings Bulletin”.
(2) On 18 December 2003 Crest Tender Rigs Pte Ltd (“CTR”), a
Labuan incorporated wholly-owned subsidiary of Varia
Perdana Sdn Bhd (“Varia Perdana”) and Smedvig Rig AS
entered into a memorandum of agreement for the
acquisition by CTR of a drilling rig, the T-9 from SmedvigRig AS for USD70 million. Smedvig Asia, a related company
to Smedvig Rig AS, is a major shareholder of Varia Perdana.
The acquisition was completed on 18 May 2004.
Imposition of Sanctions and/or Penalties
During the financial year ended 31 January 2005, no
sanctions and/or penalties were imposed on the Company
and its subsidiaries, Directors or management by the
relevant regulatory bodies.
Non-Audit Fees
The amount of non-audit fees paid to the external auditors
of the Company and its subsidiaries for the financial year
ended 31 January 2005 was RM234,134.00.
Utilisation of Proceeds raised from the issue of
Convertible Bonds (“CB”)
On 15 December 2005, the Company via its wholly-owned
subsidiary, SapuraCrest Dana SPV Pte Ltd, issued USD80
Million CB at a nominal value of USD50,000.00 each for the
purposes of capital expenditure, investment and working
capital.
The registered holders of the CB will have the option at any
time during the conversion period i.e, a period from and
including 25 January 2005 up to and including 5 December
2009 to convert the CB into new ordinary shares of RM0.20
each (“Share”) in the Company.
The conversion price for the CB shall be RM1.4514 per
share, which will be subject to adjustment for, among other
things, subdivision, consolidation or reclassification of
Shares, capitalisation, capital distribution, bonus issues,
rights issues and certain other events.
The CB bears interest at the rate of 2.5% per annum which is
payable semi-annually in arrears on 15 June and 15
December in each year commencing 15 December 2004.
As at 31 May 2005, the status of utilisation of the CB
proceeds are as follows:
RM'000
Gross proceeds (USD80 million) 304,000
CB issue expenses (8,472)
Vessel construction (46,108)
Acquisition of a subsidiary company (32,820)
Repayment of borrowings (19,000)
Working capital (27,572)
170,028
Additional Compliance InformationPursuant to Paragraph 9.25 of the Listing Requirements of Bursa Malaysia
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Share Buybacks
The Company did not undertake any share buybacks during
the financial year ended 31 January 2005.
Options, Warrants or Convertible Securities
Employee Share Option Scheme
The SapuraCrest Group Employee Share Option Scheme
2004 (“ESOS”) is governed by the by-laws approved by the
shareholders at the Extraordinary General Meeting held on
19 February 2005. The actual date of offer was made on 8
November 2004 with a total of 13,522,600 ordinary shares
of RM0.20 each pursuant to the ESOS was offered to the
eligible employees. The amount of ESOS effectively
accepted as at the closing date was 13,158,800, whereby a
total of 93,400 of ESOS was exercised as at 31 January 2005.
Warrants
On 19 April 2004, the Company issued 14,195 new ordinary
shares of RM1.00 each in the Company pursuant to the
exercise of warrants at an exercise price of RM3.51 per
share. The share premium arising from the exercise of
warrants of RM35,629.00 has been credited to the sharepremium account.
Redeemable Cumulative Convertible Preference Shares
No Redeemable Cumulative Convertible Preference Shares were
exercised during the financial year ended 31 January 2005.
American Depository Receipt (“ADR”) or GlobalDepository Receipt (“GDR”)
The Company did not sponsor any ADR or GDR during the
financial year ended 31 January 2005.
Results Variation
There was no material variation between the audited results
for the financial year ended 31 January 2005 and the
unaudited results previously announced.
Profit Guarantee
The Company gave no profit guarantee during the financial
year ended 31 January 2005.
List of Properties and Revaluation Policy on Landed
Properties
The Company does not own any landed properties.
Accordingly, it has not adopted a policy on revaluation of
landed properties during the financial year ended 31
January 2005.
Additional Compliance Information
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