Mermaid Maritime : Annual Report 2023 (Ebook)

ANNUAL REPORT

2023

Financial Highlights

(Consolidated numbers)

Unit	Year Ended 31 December
2021	2022	2023
Revenue from rendering of services	Thousand USD	111,592	223,935	275,402
EBITDA	Thousand USD	964	21,069	38,013
Net profits (losses)	Thousand USD	(15,671)	338	9,664
Book value per share	USD	0.11	0.11	0.12
Return on shareholders' equity	%	(9.27)	0.21	5.83
Net profits (losses) margin	%	(14.04)	0.15	3.51
Total debt to total capitalisation	times	0.24	0.20	0.32
Net gearing	%	20.32	15.71	21.06

Message from the Chairman

DEAR VALUE SHAREHOLDERS,

I am delighted to present to you the detailed annual report for the fiscal year 2023, marking a year of significant challenges and remarkable triumphs within our industry. The global subsea market has displayed extraordinary resilience in navigating the short-term disruptions caused by the COVID-19 pandemic and the Russia-Ukraine war. Despite the volatility stemming from supply and shipping disruptions, global energy prices have adjusted, offering a stable outlook for the future, contingent upon unforeseen black swan events.

MR. PRASERT BUNSUMPUN CHAIRMAN OF THE BOARD

REGIONAL SUBSEA MARKET GROWTH TRAJECTORIES:

Our optimism for the industry is rooted in the remarkable growth trajectories witnessed in regional subsea markets. In 2022, the Middle East and Africa subsea market attained a valuation of US$7.086 billion, projecting a compound annual growth rate (CAGR) of 23.4% between 2023 and 2030, with an ambitious target of reaching US$37.290 billion by 2030. Similarly, the Asia Pacific subsea market, valued at US$6.738 billion in 2022, anticipates a CAGR of 18.7%, aiming to reach US$26.141 billion by 2030. The European Subsea market, valued at US$6.165 billion in 2022, is poised for a CAGR of 8.7%, targeting US$11.858 billion by 20301.

REGIONAL HIGHLIGHTS:

Saudi Arabia aims to execute 110 enhanced capacity new development projects from 2024 to 2026, rumored to be worth hundreds of billions of US dollars2. These projects encompass 67 in oil, gas, and petrochemicals, 20 in pipelines, and 23 in infrastructure, which highlights the country's investment prospects. Saudi Aramco plans to maintain capacity at 12 million barrels per day. Analysts have said that the change in production plans for Saudi Aramco will not hit the demand for oilfield services and equipment in the kingdom.

Qatar, with 18 projects currently in capacity expansion development and an estimated CAPEX of US$60.2 billion, maintains its status as the leading global exporter of liquefied natural gas (LNG). Furthermore, the West African market has allocated budgets exceeding US$100 billion for the Subsea Sector, accompanied by Mozambique's commitment of US$40 billion for Subsea Projects.

• 1 DataM Intelligence 4Market Research, GLOBAL SUBSEA MARKET 2023-2030

  EXPANDING MARKET CAPACITY AND DECOMMISSIONING:

  Within the UK, our market capacity is expanding with the entry of new competitors, fostering healthy competition. Additionally, the anticipated Plug and Abandonment (P&A) decommissioning spend is expected to reach US$20+ billion by 2030, averaging US$2 billion annually for the decommissioning of 150-200 wells.

  KEY ACHIEVEMENTS:

  The successful steering of the company back to profitability has resulted in a significant and long-awaited upturn in our share price. Mermaid Maritime Public Company Limited (MML), a prominent international subsea services company, announced that its subsidiaries have secured numerous new offshore project awards totaling approximately US$485 million in Thailand, the Middle East, Western Sub Sahara, and the United Kingdom. With the addition of these new awards to existing ones, Mermaid has accumulated a substantial order backlog of US$734 million.

  The project awards encompass cable laying, IRM (inspection, repair, and maintenance), T&I (Transportation and Installation), decommissioning, and a range of related services set to commence in 2023 and anticipated to conclude in 2025.

  Over the past two years on our level of the value chain, Mermaid has positioned itself as one of the world's fastest-growing companies. This highlighted by the establishment of new business units in the UK, South Africa, and West Africa. In the Asian market, the growing demand for energy has resulted in expanded potential work volume. Mermaid has capitalized on this opportunity by enhancing its business unit capabilities to cover the entire life cycle of offshore Oil and Gas operations, from field development to retirement. This strategic move has significantly bolstered Mermaid's backlog in the Southeast Asia region.

  MARKET POSITION AND DIVERSIFICATION:

  Our aggressive business development strategies in key global markets (UK, West Africa, East Africa, Middle East, Asia Pacific) have not only increased our market share but also elevated us one tier in the value chain.

• 2 Staff Writer, Zawya Projects, Saudi Aramco plans 110 projects in 2024-2026,https://www.zawya.com/en/projects/oil-and-gas/saudi-aramco-plans-110-projects-in-2024-2026-i8yy4qub

DIVERSIFIED SERVICE PORTFOLIO:

Our service offerings have significantly expanded, encompassing key services and value-adding activities such as IRM, Cable & Flex Lay, ROV, Survey, Renewables, P&A, Decom, Ports, and Terminals.

PROJECT AWARDS:

Noteworthy Lump Sum Turnkey Project Awards, particularly in Cable & Flex Lay, have further strengthened our position in the industry.

GLOBAL EXPANSION:

The expansion of our global footprint, particularly in the UK, Africa, and Asia Pacific, has complemented our improved service offerings.

FINANCIAL STRATEGY:

Prudent financial management, including securing third-party tonnage at market prices, has successfully boosted revenue while maintaining a robust balance sheet.

COST OPTIMIZATION:

Despite challenges, we have demonstrated effective cost optimization and comparatively lowered our cost base while doubling turnover.

CLIENT ENGAGEMENT:

Reengaging with old customers and establishing new customer relationships have been pivotal in our business revival.

STRATEGIC FOCUS ON ASIA PACIFIC:

Extensive focus on Asia Pacific operations has played a key role in reviving our business and strengthening our market position.

ASSET UTILIZATION:

Our owned assets have consistently enjoyed prominent levels of utilization, and strategic chartering of assets continues to support our growth targets.

FUTURE OUTLOOK AND STRATEGIC INITIATIVES:

A commitment to raising our group's profile in the public domain is aimed at further elevating our share price. Plans are underway to organically deploy into new markets, reducing dependence on specificregions. Our goal is to become an integral part of our clients' bidding processes, positioning ourselves as part of their solution. In relation to Risk Mitigation and Talent Acquisition: Identifying and hiring catalysts within our industry will create self-sustaining "silos," reducing risk and enhancing shareholder security. Retaining and reinforcing our position on the value chain as a subcontractor is pivotal for sustained growth and success. Focused deployment of assets aims to meet growth targets and seize opportunities in key regions such as Qatar, the UK, and Africa. Efforts are underway to rebuild our support services infrastructure, ensuring it is fit for business and well-positioned for the anticipated growth cycle based on significant project awards achieved in 2021-2023.

CORE BUSINESS FOCUS AND NEW MARKETS:

The Cable Division and key personnel remain significant drivers of business turnaround in the short term. The sales backlog for 2023/2024/2025 in the Middle East is secured, and the revived business in Asia Pacific is pivotal for shareholder value. Continued focus on IRM, re-bidding, increased emphasis on Saudi Arabia & Qatar markets, and geographic expansion into the UK and Africa with service offering upgrades, including Ports and Terminals. The bidding strategy is currently focused on projects with defendable profit margins aligned with business development efforts.

REGAINING MARKET COVERAGE:

Expansion in the Middle East, with Cable Lay leading the charge, is in full swing and delivering above expectations. The extensive focus on Asia Pacific to revive business is paying dividends, with encouraging project awards reinvigorating momentum. Mermaid's expansion into West Africa is showing early success, with long-term project awards in Angola already achieved. Mermaid's expansion into the mature UK oil province has been vindicated with early project awards and significant opportunities ahead. The Dubai office is now the hub for all general management and business development in the Western region.

MAINTAINING OPERATIONAL EXCELLENCE:

We maintain an excellent operational and safety record. The Mermaid Asiana, Millennium 3, and Endurer continue to operate in the Middle East and will remain in the region for the foreseeable future. Expectations for considerably higher utilization throughout 2024-2026, with all three vessels currently

deployed. Actively engaged in contracts in Asia, Africa, and the UK, vessel mobility is viewed as a key vehicle towards achieving organic growth. A healthier forward book has been built, and continuous monitoring of the need for appropriate tonnage is in place, with proactive reactions to establish exclusive partnerships in the bidding arena.

EXPANDING MARKET CAPACITY AND DECOMMISSIONING:

FISCAL DISCIPLINE AND INVESTMENT STRATEGY:

A significant increase in focus and understanding of Direct Project Costs is planned, with budgeting protocols to be strictly adhered to. Focus on sources of finance and availability of cash or instruments is a priority to meet the working capital requirements of upcoming projects. The disposal of non-performing assets, including Mermaid Commander, is underway, and a review of other non-performing assets, such as older ROVs and Mobile SAT Spreads, is in progress. Aligning financial and operational moments aims to enable the highest levels of utilization of key vessels or assets with minimal acceptable impact on downtime and risk to life.

INVESTMENT STRATEGY:

To achieve greater stability and more consistent returns on deployed capital, a focus on medium- and long-term contracts is paramount. The objective is to render value for money at a world-class level through excellence in commercial oil field diving and associated vessel deployment and relevant ancillary services.

Our market capacity is expanding with the entry of new competitors, fostering healthy competition. Additionally, the well Plug and Abandonment (P&A) decommissioning spend is anticipated to reach US$20+ billion by 2030, averaging US$2 billion per annum for the decommissioning of 150-200 wells.

Looking ahead, we anticipate a significant increase in Opex and Capex budgets in the intermediate term. This expectation aligns with current market trends, reinforcing the positive momentum we are witnessing.

In conclusion, I want to express my sincere gratitude to our dedicated team, valued shareholders, and esteemed stakeholders for their unwavering support. Despite the challenges faced, our industry has demonstrated resilience and adaptability. I am confident that our strategic initiatives and the promising market outlook will contribute to sustained growth and success in the years to come.

Thank you for your continued support.

Yours Sincerely,

Mr. Prasert Bunsumpun

Chairman of the Board

Mermaid Profile

is a leading international subsea and offshore services company which mainly providing Inspection, Repair and Maintenance service ("IRM"), Transportation and Installation ("T&I")" and cable laying service. Our corporate headquarter is in Asia (Thailand), and we are listed on Singapore Stock Exchange ("SGX"). We have operational bases in the Middle East, UK, Africa, and South East Asia.

We provide full turnkey services to oil and gas majors operating offshore through our diversified portfolio of subsea vessels, specialized diving equipment and remotely operated vehicles. We have been in the offshore business for over 40 years and we are today present in five geographical regions with a team of over 1,000 professional divers, technicians, surveyors, management and support staff. Our visions are to be a premium service provider to the offshore oil and gas industry, to expand our business by types and regions to serve more customers demand and to constantly deliver enhanced return to our shareholders.

Honorary Adviser Statement

"To ensure success in any venture, it is crucial to have the right group of executives who are passionate and share a common vision. As stakeholders, we must have the wisdom, judgment, and the foresight to select the right leader to drive the organization's corporate vision."

PRAYUDH MAHAGITSIRI

HONORARY ADVISER

The Board of Directors

The Board of Directors ("Board") is responsible for the overall management and strategic direction of Mermaid. The Board is required to meet on a quarterly basis to review and monitor our financial position and operations and to, among other things, approve adequacy of internal controls, risk management, financial reporting, corporate governance and compliance matters. Ad-hoc meetings are also called to discuss other major issues, such as establishment and capital increases of new subsidiaries, significant asset investments, strategy and annual budget approvals. The Board consists of not fewer than five (5) Directors as per the Articles of Association.

Mr. Prasert Bunsumpun brings to Mermaid 30 years of experience in the oil and gas industry. Besides his role in Mermaid, he serves as Chairman of other boards, including Thoresen Thai Agencies Plc., Clover Power Plc., SVI Plc., and AIRA Capital Plc., and as a director on the board of Major Cineplex Group Plc., and T.K.S. Technologies Plc. He also previously served as Chairman of Nok Airlines Plc., PTT Global Chemical Plc., PTT Exploration and Production Plc., PTT Chemical Plc., IRPC Plc., Intouch Holdings Plc., Thaicom Plc., and Thai Lube Base Plc., and as Executive Chairman of Krungthai Bank Plc. He was President and CEO of PTT Plc. for over eight years. In addition, he served as a director of PTT Global Chemical Plc., PTT Plc., IRPC Plc., PTT Chemical Plc., PTT Exploration and Production Plc., PTT Aromatic and Refinery Plc., Thai Oil Plc., and Bangchak Petroleum Plc. Mr. Prasert holds a Master in Business Administration (M.B.A.) from Utah State University, U.S.A., a Bachelor of Engineering in Civil Engineering (B.Eng.) from Chulalongkorn University in Thailand, and has a number of Honorary Doctorates from renowned universities in Thailand. He also completed his Certificate in Advanced Management Program (AMP 155) from Harvard Business School, U.S.A. He also completed the Role of the Chairman Program No. 28/2012 and Director Accreditation Program No. 26/2004 from the Thai Institute of Directors Association (IOD), and Certificate in Capital Market Academy Leadership Program Class 3/2006 from the Capital Market Academy, Personal Data Protection Act, Regnar Corporation Company Limited 2022 and Cybersecurity Awareness Session, CloudSec Asia Co., Ltd, 2023.

Mr. Chalermchai Mahagitsiri brings a proven track record of successfully managing and growing a variety of businesses through his service as Chief Executive Officer of PM Group Co. Ltd., Director of Quality Coffee Products Co. Ltd., Director of Posco-Thainox Public Co. Ltd., Chief Executive Officer of Thai Future Incorporation Public Company Limited and Managing Director of Lakewood Country Club Co. Ltd. He also serves as Executive Vice Chairman and President and CEO of Thoresen Thai Agencies Plc., Chairman of PM Thoresen Asia Holdings Plc. and Chairman of Unique Mining Services Plc. Mr. Chalermchai holds a Master of Science (M.Sc.) in Finance from Boston University and a Bachelor of Science (B.Sc.) in Finance from Suffolk University, both in the U.S.A. He also completed the Director Certification Program No. 53/2005 and the Director Accreditation Program No. 30/2004 from the Thai Institute of Directors Association (IOD), the Capital Market Academy Leadership Program Class 17/2013 from the Capital Market Academy (CMA), and the Academy of Business Creativity (ABC) Class 4/2016 and Digital Edge Fusion (DEF) Class 1/2017 from Sripatum University and Personal Data Protection Act, Regnar Corporation Company Limited 2022.

Mr. Paul Burger Whiley was appointed to the Mermaid Board on the 20th of November 2021. He is a co-founder of Mermaid's existing business unit in the Middle East, and to the largest extent, together with his team, spearheaded our unrivalled positioning there. He resigned at the end of 2016 due to family reasons but has rejoined Mermaid, working as the Chief Operating Officer. Mr. Whiley's track record speaks for itself, and is unprecedented in this segment of the offshore space. His ability to leverage forward book, and create business momentum has already paid substantial dividends, the proof of which is evident in our pipeline reporting for 2021 and beyond. Mr. Whiley studied English and Law at the University of Natal, and also read Sociology at UNISA. He has a significant Saturation diving background, which followed naturally post his time in the Military, where he in fact become the most decorated Navy Diver in South African military history [Bravery - HC Gold].