Realising Potential in

Transcription

1 Scomi Marine Bhd ( A) 5th Floor, Wisma Chase Perdana Off Jalan Semantan, Damansara Heights Kuala Lumpur, Malaysia Tel: Fax: Scomi Marine Bhd Annual Report 2008 Realising Potential in us Annual Report 2008 Scomi Marine Bhd ( A)

2 13th Annual General Meeting Ballroom 1, First Floor Sime Darby Convention Centre 1A, Jalan Bukit Kiara Kuala Lumpur 5 June 2009, Friday, 10 a.m.

3 2 SCOMI MARINE BHD ANNUAL REPORT 2008 KEY FINANCIAL HIGHLIGHTS Total Assets (RM Million) 2008 RM1,806.2 mil 2007: RM1,595 mil / 2006: RM1,764.8 mil Earnings per Share (Basic) sen 2007: 7.41 sen / 2006: sen Revenue (RM Million) Net Tangible Assets (RM Million) RM526.6 mil 2007: RM454.0 mil / 2006: RM451.6 mil Profit before Tax (RM Million) Shareholders Fund (RM Million) RM972.5 mil 2007: RM878.1 mil / 2006: RM903.8 mil Patami (RM Million) Net Assets per Share (Attributable to equity holders of the parent) RM : RM1.20 / 2006: RM1.23 Notes 2005 Includes financial results of the Energy Logistics business in 4th quarter Revenue and profit before taxation excludes the jewellery business, which was disposed off during the financial year 2006.

4 SCOMI MARINE BHD ANNUAL REPORT SCOMI MARINE CORPORATE LEGAL STRUCTURE as at 31 March 2009 SCOMI MARINE BHD 51% 51% 100% 100% GEMINI SPRINT SDN BHD Labuan MARINECO LIMITED EMERALD LOGISTICS SDN BHD SCOMI MARINE SERVICES PTE LTD 49% British Virgin Islands King Bridge Enterprise Limited 40% TRANS ADVANTAGE SDN BHD 100% Singapore Grundtvig Marine Pte Ltd 95% Indonesia PT Batuah Abadi Lines 20% SOUTHERN PETROLEUM TRANSPORTATION JOINT STOCK CORPORATION 1 100% Singapore CH Ship Management Pte Ltd 100% Singapore Goldship Pte Ltd 100% Singapore CH Logistics Ltd 100% Singapore Sea Master Pte Ltd % Singapore CH Offshore Ltd % Indonesia PT Rig Tenders Indonesia Tbk Notes Save as otherwise indicated, all companies are incorporated in Malaysia. 1 Acquired on 21 May Acquired the remaining 49% interest on 26 December This corporate structure does not include the subsidiaries of CH Offshore Ltd. Public Listed Entity.

5 OUR CORPORATE STATEMENT With a presence in 68 locations across 31 countries, the Scomi group of companies is a global technology enterprise in the energy and logistics industries.

6 We are a global technology enterprise. Our global reach, capabilities and talent provide us with the necessary resources to develop and own new technology in all areas of our business. We focus on Energy & Logistics. All of our 4 business units are focused in the Energy and/or Logistics sectors with the ability to compete globally. All of us in the Scomi family should remember that any new initiatives we undertake will focus on these areas of business. We provide innovative solutions. We innovate to respond to an evolving environment. Our products and operations meet today s needs while anticipating tomorrow s. We are committed to developing competitive and innovative solutions to create efficiency, add value and grow with our customers to shape our future. We aim to realise potential for our stakeholders. Our customers: We will develop and offer customers innovative and competitive products and services that help them grow their business. Our shareholders: We are committed to providing long-term superior returns to our shareholders. Our people: We aim to provide our employees with developmental opportunities so they can succeed on personal and professional levels. Our suppliers: We will treat our suppliers as our partners in the mutual interest of business growth. Our society / environment: As a good corporate citizen, we will give back to the communities we operate in worldwide.

7 6 SCOMI MARINE BHD ANNUAL REPORT 2008 CORPORATE INFORMATION DIRECTORS Tan Sri Nik Mohamed Bin Nik Yaacob (Chairman) Vice Admiral Dato Haron Bin Dato (Dr) Mohd Salleh (Rtd) Dato Haris Onn Bin Tun Hussein Dato Meer Sadik Bin Habib Mohamed Mok Yuen Lok Lim Kwee Siah Cheak Boon Heng Shah Shahzanim Bin Zain Loong Chun Nee (Alternate to Shah Shahzanim Bin Zain) AUDIT & RISK MANAGEMENT COMMITTEE Mok Yuen Lok (Chairman) Dato Haris Onn Bin Tun Hussein Dato Meer Sadik Bin Habib Mohamed Vice Admiral Dato Haron Bin Dato (Dr) Mohd Salleh (Rtd) OPTIONS COMMITTEE Vice Admiral Dato Haron Bin Dato (Dr) Mohd Salleh (Rtd) (Chairman) Lim Kwee Siah Shah Shahzanim Bin Zain NOMINATION & REMUNERATION COMMITTEE Tan Sri Nik Mohamed Bin Nik Yaacob (Chairman) Mok Yuen Lok Cheak Boon Heng REGISTERED OFFICE Suite 5.03, 5th Floor Wisma Chase Perdana Off Jalan Semantan Damansara Heights Kuala Lumpur, Malaysia Tel: Fax: ADMINISTRATIVE & CORRESPONDENCE ADDRESS Suite 503, 5th Floor Wisma Chase Perdana Off Jalan Semantan Damansara Heights Kuala Lumpur, Malaysia Tel: Fax: info@scomimarine.com.my REGISTRAR Symphony Share Registrars Sdn Bhd Level 26, Menara Multi-Purpose Capital Square No. 8, Jalan Munshi Abdullah Kuala Lumpur, Malaysia Tel: Fax: / 31 ADVOCATES & SOLICITORS Albar & Partners Advocates & Solicitors 6th Floor, Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur, Malaysia COMPANY SECRETARIES Lee Phuay Soo (LS ) Nor Azita Binti Sarip (MAICSA ) AUDITORS Deloitte & Touche (AF: 0834) Chartered Accountants Level 19, Uptown 1 1, Jalan SS 21 / 58 Damansara Uptown Petaling Jaya, Malaysia PRINCIPAL BANKERS OCBC Bank (Malaysia) Berhad 18th Floor, Menara OCBC 18, Jalan Tun Perak Kuala Lumpur, Malaysia Overseas-Chinese Banking Corporation Ltd 65, Chulia Street, # OCBC Centre Singapore United Overseas Bank (Limited) 1, Raffles Place, # OUB Centre Singapore PT Bank OCBC Indonesia Wisma GKBI, Suite 2201 Jl. Jend. Sudirman No. 28, Jakarta Indonesia STOCK EXCHANGE LISTING Main Board of Bursa Malaysia Securities Berhad Stock Name: Scomimr Stock Code: 7045 CURRENCY Ringgit Malaysia (RM)

8 SCOMI MARINE BHD ANNUAL REPORT PROFILE OF DIRECTORS Tan Sri Nik Mohamed Bin Nik Yaacob Chairman, Non-Independent / Non-Executive Director Vice Admiral Dato Haron Bin Dato (Dr) Mohd Salleh (Rtd) Independent Non-Executive Director YBhg Tan Sri Nik Mohamed, 59, a Malaysian, is a Non-Independent Non-Executive Director and the Chairman of the Company. He was appointed to the Board on 23 September YBhg Vice Admiral Dato Haron, 66, a Malaysian, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 23 September YBhg Tan Sri Nik Mohamed holds an Engineering Degree from the Monash University and a Master in Business Management from the Asian Institute of Management. He served as the Group Chief Executive of Sime Darby Berhad from 1993 until his retirement in June 2004, and also served on the Board of many of the Sime Darby Group companies during this time. Other Malaysian public companies in which he is a Director are Perbadanan Nasional Berhad, GuocoLand (Malaysia) Berhad, Bolton Berhad, Scomi Group Bhd and Kencana Petroleum Bhd. He is also the Executive Director of Yayasan Kepimpinan Perdana (Perdana Leadership Foundation). YBhg Tan Sri Nik Mohamed chairs the Nomination & Remuneration Committee. He attended all of the 6 Board meetings held in the year ended 31 December YBhg Vice Admiral Dato Haron began his Basic Cadet Training at the Federation Military College Malaysia and continued his training as Naval Officer at the Britannia Royal Navy College, United Kingdom and the Royal Navy. He has held various senior positions in the Royal Malaysian Navy including Fleet Operations Commander in the rank of Rear Admiral, Deputy Chief of Navy and Assistant Chief of Staff of the Malaysian Armed Forces HQ, and was promoted to the rank of Vice Admiral on assuming the position of Chief of Staff, Malaysian Armed Forces HQ in 1994 before retiring from the Royal Malaysian Navy in December Other Malaysian public company in which he is a Director is Yayasan Scomi. YBhg Vice Admiral Dato Haron chairs the Options Committee, and is also a member of the Audit & Risk Management Committee. He attended all of the 6 Board meetings held in the year ended 31 December 2008.

9 8 SCOMI MARINE BHD ANNUAL REPORT 2008 PROFILE OF DIRECTORS cont d Dato Haris Onn Bin Tun Hussein Independent Non-Executive Director Dato Meer Sadik Bin Habib Mohamed Non-Independent Non-Executive Director Dato Haris Onn, 43, a Malaysian, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 5 April Dato Haris Onn graduated from the Cambridge University, United Kingdom, with a Bachelor of Art Degree in Economics. He started his working career with Touche Ross & Co, London, an accounting firm, in In 1992, he returned to Malaysia to work with D & C Sakura Merchant Bankers Berhad (now known as RHB Investment Bank Berhad) and subsequently joined Rohas Sdn Bhd as the General Manager. He then became a Director of Bell & Order Berhad (now known as Scomi Engineering Bhd) in Currently, he is the Managing Director of Konsortium Lebuhraya Utara-Timur KL Sdn Bhd and the Chairman of Lembah Sari Sdn Bhd. Other Malaysian public company in which he is a Director is Shangri-La Hotels (Malaysia) Berhad. Dato Haris Onn is a member of the Audit & Risk Management Committee. He attended 5 out of the 6 Board meetings held in the year ended 31 December Dato Meer Sadik Habib, 46, a Malaysian, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 19 November 1997 following the corporate exercise in which he played an instrumental role. Dato Meer graduated from the Wichita State University, United States of America, with a Degree in Business Administration, and later qualified as a gemmologist from the Gemmological Institute of America. He was responsible for the development of the jewellery business previously undertaken by the Company and for its listing on the Main Board of Bursa Malaysia Securities Berhad. He is a Past President of the Young Entrepreneurs Organisation and was the Governor of the Alice Smith School. He was appointed as Honorary Secretary of Malaysian Retailers Association in Other Malaysian public company in which he is a Director is Yayasan Habib. Dato Meer is a member of the Audit & Risk Management Committee. He attended 5 out of the 6 Board meetings held in the year ended 31 December 2008.

10 SCOMI MARINE BHD ANNUAL REPORT Mok Yuen Lok Independent Non-Executive Director Lim Kwee Siah Non-Independent Non-Executive Director Mr Mok, 48, a Malaysian, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 29 March Mr Lim, 56, a Singaporean, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 23 September Mr Mok graduated in 1981 with a Bachelor of Science from the Heriot Watt University, Edinburgh, and joined Ernst & Whinney (now Ernst & Young) in 1982, where he trained and qualified as a Chartered Accountant. Currently, he is the Regional Executive Director of Horwath International for the Asia Pacific region overseeing 22 countries, and Country Managing Partner for Horwath in Malaysia, a professional firm which he co-founded in He is also the Chairman of the Audit Committee of another public listed company. He is an active member of the Young Presidents Organisation and Entrepreneurs Organisation, Malaysian Chapters, where he has served various Board positions. He is also the Hon. Secretary of Hospis Malaysia, a charitable organisation which renders free palliative care to residents in the Klang Valley diagnosed with life-limiting conditions. Mr Lim graduated from the then University of Singapore with a Bachelor of Accountancy Degree in 1976, and is also a Fellow member of the Institute of Certified Public Accountants of Singapore. He was an Executive Director of Chuan Hup Holdings Limited ( CHH ), a public listed company on the Stock Exchange of Singapore, from November 1989 to November He oversaw the Finance and Accounting functions of the CHH Group and was a member of the Audit Committee during his term. He is currently a Non-Executive Director of PCI Limited, another public listed company on the Stock Exchange of Singapore. Mr Lim is a member of the Options Committee. He attended 5 out of the 6 Board meetings held in the year ended 31 December Mr Mok chairs the Audit & Risk Management Committee, and is also a member of the Nomination & Remuneration Committee. He attended 5 out of the 6 Board meetings held in the year ended 31 December 2008.

11 10 SCOMI MARINE BHD ANNUAL REPORT 2008 PROFILE OF DIRECTORS cont d Cheak Boon Heng Independent Non-Executive Director Shah Shahzanim Bin Zain Group Chief Executive Officer / Non-Independent Executive Director Mr Cheak, 66, a Malaysian, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 7 December Encik Shah Hakim, 44, a Malaysian, is the Group Chief Executive Officer / Non-Independent Executive Director of the Company. He was appointed to the Board on 23 September Mr Cheak graduated from the University of Western Australia with a Bachelor Degree in Economics. He joined Chuan Hup Holdings Limited ( CHH ) in 1973 and was an Executive Director of CHH from 1981 until February As an Executive Director, he was responsible for the marketing and business development of the CHH Group. He was appointed as an Executive Director of CH Offshore Ltd ( CHO ) in 1991, and became the Executive Vice Chairman from 1 July 2004 to 1 February 2005 and later the Executive Chairman from 1 February 2005 to 17 October As the Executive Chairman, he was responsible for charting the strategic development and long term direction of the CHO Group. He started his career as an Auditor with Ernst & Young and was subsequently promoted as a Consulting Manager, responsible for servicing large corporations. He went on to be appointed as the Executive Director of a regional packaging manufacturer in 1992, with direct operational responsibility. He currently sits on the Board of Sapura Industrial Berhad, Scomi Group Bhd, Scomi Engineering Bhd and KMCOB Capital Berhad. Encik Shah Hakim is a member of the Options Committee. He attended 4 out of the 6 Board meetings held in the year ended 31 December He is now a Non-Executive Director of CHO. Mr Cheak is a member of the Nomination & Remuneration Committee. He attended 4 out of the 6 Board meetings held in the year 31 December 2008.

12 SCOMI MARINE BHD ANNUAL REPORT Loong Chun Nee Non-Independent Non-Executive Director, Alternate Director to Encik Shah Shahzanim Bin Zain Madam Loong Chun Nee, 51, a Malaysian, is a Non-Independent Non-Executive Director of the Company. She was appointed as Alternate Director to Encik Shah Shahzanim bin Zain on 27 February Madam Loong was previously with the Renong Group of companies for a total of 11 years covering companies including Projek Lebuhraya Utara-Selatan Berhad ( ) and United Engineers (Malaysia) Berhad ( , ). She left the Renong Group in late 1999 to join YBhg Tan Sri Dato (Dr) Rozali Ismail as Financial Advisor under a financial consultancy company, Jendela Permai Sdn Bhd ( ). She then joined Scomi Group Bhd as Senior Vice President Corporate Finance / Chief Financial Officer of Scomi Marine Bhd since July Thereafter, she was transferred to Scomi Group Bhd as Group Chief Financial Officer in August In early 2008, she was re-designated as Group Chief Investment & Performance Officer. Mdm Loong has vast experience in financial advisory matters specialising in the areas of corporate debt restructuring, corporate finance and project financing for privatisation projects. Other Malaysian public company in which she is a Director are CIMB- Principal Asset Management Berhad and KMCOB Capital Berhad. Notes None of the Directors have any family relationship with any other Director and/or major shareholder of Scomi Marine Bhd. None of the Directors have any conflict of interest with Scomi Marine Bhd. None of the Directors have been convicted for offences within the past ten years (other than traffic offences, if any).

13 12 SCOMI MARINE BHD ANNUAL REPORT 2008 KEY MANAGEMENT TEAM 1 2 3

14 SCOMI MARINE BHD ANNUAL REPORT Mukhnizam Mahmud President Scomi Marine Bhd 2. Gary Koh Chief Executive Officer CH Offshore Ltd 3. Wan Ruzlan Iskandar Wan Salaidin Vice President Marine Vessel Transportation 5. S C Chin General Manager Marine Logistics 6. Capt. Azmi Baki General Manager PT Rig Tenders 7. Lee Phuay Soo General Manager Corporate Services 4. Abdul Razak Abdul Rahman Chief Financial Officer Scomi Marine Bhd

15 14 SCOMI MARINE BHD ANNUAL REPORT 2008 CHAIRMAN S STATEMENT TAN SRI NIK MOHAMED BIN NIK YAACOB Chairman

16 SCOMI MARINE BHD ANNUAL REPORT Dear stakeholder, To say 2008 was a challenging year would be an understatement. Rocked by the global financial crisis that originated from the US property collapse, it was unprecedented in its scale as the global banking system contracted. It resulted in massive deleveraging and contraction in credit, leading to a sharp decline in world trade volume. Even with the coordinated efforts of the central banks of the US and major European nations to avert total collapse of the banking system, the state of the world s economy is still precarious, which has experts comparing it to the Great Depression of the 1920s and 30s. Amidst the turmoil, the financial year ended 31 December 2008 was a reasonably good year for Scomi Marine Bhd ( Scomi Marine, the Group or the Company ). We have focused on optimising asset utilisation, operational efficiencies and prudent cash management, which should get us through this uncertain period while preparing ourselves for the economic recovery. In addition, Formula 2011, a 3-year group initiative was introduced and is now being implemented. The initiative defines the Group s goals and strategy in achieving its objectives faster and more efficiently in an increasingly competitive global race. The initiative is in recognition of the importance of people and process optimisation in defining and executing the strategies that will help us achieve our long-term goal of becoming a global technology enterprise in the energy and logistics sector. In other words, the initiative has been designed to equip us for survival and prepare us to cope better with the multiple challenges we face today as well as in the future. ECONOMIC AND INDUSTRY ENVIRONMENT The coal logistics business remains sustainable in the long term as demand for coal in Indonesia and other Asia-Pacific nations continue. Prices have dropped as the global downturn crimps economic growth affecting current demand of the commodity. Nevertheless, fuel energy requirements in these countries remain, with coal still the feedstock of choice for most of the existing or planned power plants in the Asia-Pacific region. According to the US-based Energy Information Administration in its International Energy Outlook 2008, China and India together will account for 79% of the projected increase in world coal consumption from 2005 to Strong economic growth is projected for both countries (averaging 6.4% per year in China and 5.8% per year in India from 2005 to 2030), and much of the increase in their demand for energy, particularly in the power generation and industrial sectors is expected to be met by coal. Significant growth in coal consumption is also projected in economies such as Taiwan, Vietnam, Indonesia, and Malaysia, where ample new coal-fired generating capacity is either on the drawing board or in the pipeline. As economic conditions worsen, consumption levels might fall short of earlier projections, but the basic market for coal remains intact. Coal prices may have dropped but should stabilise after coming off their recent high during the commodities rally saw crude oil prices reaching a high of USD147 per barrel in July before plummeting down to USD35, affecting exploration and production ( E&P ) activities. While the lower prices benefited the consumer and retail sectors, the oil and gas industry suffered, affecting the exploration and production activities. This had an effect on vessel charter rates, especially in the North Sea where average charter rates have decreased by more than 50% from a year ago. We expect the E&P activities to be affected in the South East Asia region but not on the scale of the North Sea and demand for offshore support vessels should still be ample.

17 16 SCOMI MARINE BHD ANNUAL REPORT 2008 CHAIRMAN S STATEMENT cont d FINANCIAL PERFORMANCE Revenue For the financial year ended 31 December 2008, we achieved a revenue of RM467.1 million, a slight improvement from RM462 million in the previous corresponding period. Contribution was principally from our Marine Logistics division, which focuses on the coal logistics business and accounted for 81% of Scomi Marine s total revenue while the offshore support vessel ( OSV ) division made up the remaining 19%. With our emphasis in growing the OSV division, the revenue contribution from this division has improved from the 14% it achieved in the last financial year. Profit Group net profit rose 10.6% to RM65 million for the year ended 31 December 2008 from RM54.3 million for the previous corresponding period. This was achieved on the back of a higher profit contribution by the OSV division s strong operating performance from an associate company and a RM10 million gain on disposal of vessels under the fleet renewal programme. Dividend Scomi Marine declared an interim tax-exempt dividend of RM1.40 sen per share in November 2008 which amounted to RM million for financial year KEY DEVELOPMENTS Fleet Composition Despite the grim economic outlook, Scomi Marine believes that opportunities abound in terms of addition to the current fleet. As values of vessels have declined significantly, it offers Scomi Marine the opportunity to acquire them much lower than what they were previously. With banks being selective and credit difficult, only companies with a healthy balance sheet would have the ability to take advantage of buying opportunities. We are currently considering to acquire two Anchor Handling Tug Supply ( AHTS ) vessels through our Indonesian subsidiary, PT Rig Tenders Tbk while awaiting the delivery of our Accomodation Barge in May Our associate company, CH Offshore Limited expects to take delivery of another deepwater AHTS in November 2009, bringing its deepwater fleet to six. We have also invested in a 30,000 DWT product tanker through our associate company in Vietnam, PV Southern Petro. While all the planned acquisitions are on schedule, we are also disposing our ageing vessels, particularly our OSV vessels in Indonesia as requirements by the customers change and they are near the end of their useful life. TNB Contract of Affreightment In July, Scomi Marine was awarded a Contract of Affreightment by TNB Fuel Services Sdn Bhd to supply shipping services for the transportation of bulk coal for years. The estimated 3-year contract will provide assurance of income for the said period. PROSPECTS As global economies fall into recession and the outlook gloomy, Scomi Marine will strengthen its resources while looking to exploit opportunities in the market. Our Formula 2011 initiative sets our 3 year blueprint for business transformation, intended to guide our future growth and ensure business sustainability even amidst weakening global economic conditions. With our long term charter contracts, both for the coal and offshore support divisions we are asssured of a reasonable revenue stream over the next three years. Notwithstanding unforeseen events, the majority of our vessels will be working for charterers until This provides us with a strong base in which to either continue to grow or sustain ourselves over this period of economic uncertainty. Our major challenge shall be to maximise returns on existing projects under the difficult economic backdrop. As mentioned earlier, our emphasis will be asset utilisation, operational improvements and prudent cash management. Our aim is to ensure that utilisation of vessels are maximised for optimal revenue generation. We are embarking on operational improvements to contain our operational costs, extract benefits from our economies of scale for resources and to streamline processes. We are to maintain a healthy cash level to ensure adequate working capital and fund our capital expenditure. Diversification and Regional Expansion Concurrent with our planned acquisition of vessels, we are keen to diversify our sources of revenue and will seek opportunities to leverage our vast experience and expertise into other markets and related operations. Our JV in Vietnam is an initial step in this direction; Scomi Marine holds a 20 % stake in Southern Petroleum Transportation

18 SCOMI MARINE BHD ANNUAL REPORT Joint Stock Company (PV Trans Petro), the main clean petrol product transporter for the three proposed refineries being constructed by PetroVietnam in Vietnam, the first of which is targeted for completion in financial year Developing a Progressive Workforce Even the best strategies would falter without the commitment and professionalism of all the employees to execute. Hence, Formula 2011 places significant emphasis on the people who have been entrusted to execute the strategies in place. Our employees are the lifeblood of the organisation, and we will continue to invest in the various talent development programmes. Team building is a critical component of Formula 2011, and we have designed several initiatives to inspire esprit de corps, such as Project Pyramid, where teams work together on CSR projects for the benefit of various communities and stakeholders. Importantly, we aim to groom and promote future leaders from within Scomi s ranks as recognition of their capabilities and to improve the succession pipeline. GLOBAL ECONOMIC OUTLOOK Our people in particular must be singled out for mention; without the dedication, creativity and perseverance of our employees who have embraced the commitment to change and improve, we would not be able to deliver such positive results in the face of tremendous adversity. With the continuing support and commitment of all our stakeholders, I trust that Scomi Marine Bhd will be able to optimise its resources in order to capitalise on the potential opportunities that emerge in times of crisis. Thank you. Sincerely, TAN SRI NIK MOHAMED BIN NIK YAACOB Chairman The world is facing its first global recession since 1982, (with the World Bank projecting global GDP growth to decline to 0.9% in 2009 from 2.5% in 2008), leading to higher unemployment, lower corporate revenue, and decreased trade in most nations. This will be compounded further by the expected decline in global trade to 2.1% in 2009, its first drop since 1982 on the back of reduced global demand and export credits. Notwithstanding this, we believe that we have the right strategies in place to ensure that Scomi Marine will be able to weather the storm and continue with its growth projections for the year ahead. ACKNOWLEDGEMENTS On behalf of the Board, I would like to thank our diverse stakeholders encompassing shareholders, customers, business partners, financiers, regulators and in particular our people for their continuing support and confidence in Scomi Marine Bhd. Many thanks are also due to my fellow Directors for their support and expert counsel as well as to the Management team for their courage and innovation in steering the Company through difficult conditions.

19 PRESIDENT S REVIEW OF OPERATIONS

20 Scomi Marine together with Scomi Group implemented several key strategic initiatives to better cope with the multiple challenges now and going forward. Our focus is on process, people and brand which includes the emphasis on operational efficiency and prudent cash management. Two important initiatives were Project BEST ( Business Excellence for Scomi s Transformation ) and Formula MUKHNIZAM MAHMUD President, Scomi Marine Bhd

21 20 SCOMI MARINE BHD ANNUAL REPORT 2008 MUKHNIZAM MAHMUD President