Prospectus Registration document
DOF ASA (a public limited liability company organized under the laws of the Kingdom of Norway) Business Registration number 935 349 230.
Listing on Oslo Børs
Manager
26 November 2010
This Registration Document does not constitute an offer to buy, subscribe or sell the securities described herein. This Registration Document combined with relevant Securities Document serve as a listing Prospectus as required by applicable laws and no securities are being offered or sold pursuant to this Prospectus.
IMPORTANT NOTICE This Registration Document (the “Registration Document”) has been prepared by DOF ASA (“DOF” or the “Company”) for use in connection with the listing of Company’s bonds.on Oslo Børs (the “Listing”) The Registration Document combined with the relevant Securities Note constitute the Prospectus (the “Prospectus”). For the definitions of terms used throughout this Registration Document, see Section 12 “Definitions and Glossary”. This Registration Document has been prepared to comply with chapter 7 of the Norwegian Securities Trading Act of 29 June 2007 No. 75 (Nw: Verdipapirhandelloven) (“Norwegian Securities Trading Act”) and related secondary legislation including the Prospectus Directive (EC Commission Regulation EC/809/2004).The Financial Supervisory Authority of Norway (Nw: Finanstilsynet) (“NFSA”) has reviewed and approved this Registration Document in accordance with Section 7-7 and 7-8 of the Norwegian Securities Trading Act. The Registration Document has been prepared in the English language only. The information contained herein is as of the date of this Registration Document and subject to change, completion or amendment without notice. In accordance with Section 7-15 of the Norwegian Securities Trading Act, any new factor, significant error or inaccuracy that might have an effect on the assessment of the Bond Issue contemplated hereby and emerges between the time of publication of the Registration Document and the Listing, will be included in a supplement to the Registration Document. Neither the publication nor distribution or use of this Registration Document shall under any circumstances create any implication that the information herein is correct as of any date subsequent to the date of the Registration Document. All inquiries relating to this Registration Document should be directed to Pareto Securities AS (the “Manager”) or the Company. No other person has been authorized to give any information about, or make any representation on behalf of, the Company in connection with the Listing and, if given or made, such other information or representation must not be relied upon as having been authorized by the Company or the Manager. Unless otherwise indicated, the source of the information in this Registration Document is the Company. The contents of this Registration Document are not to be construed as legal, business or tax advice. Each reader of the Registration Document should consult with its own professional advisors for legal, business and tax advice. If you are in any doubt about the contents of this Registration Document, you should consult your stockbroker, bank manager, lawyer, accountant or other professional advisor. An investment in bonds involves inherent risks. Prospective investors in Bonds issued by the Company should carefully consider the risks associated with the investment when reading the information contained in this Registration Document, and be aware of the risk of losing such investment in its entirety, before deciding to invest. Certain risk factors are set out in Section 2 “Risk Factors”. However, prospective investors should read the entire Registration Document before making any investment decision. In the ordinary course of their respective businesses, the Manager and certain of its affiliates have engaged, and may in the future engage, in investment banking and commercial banking transactions with the Company. Cutionary note regarding forward-looking statements Certain statements contained in this Registration Document that are not statements of historical fact, may constitute “forward-looking statements”. Often, but not always, forward-looking statements can be identified by the use of words such as “may”, “will”, “could”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other equivalent or comparable words. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which could cause the actual results, performance or achievements of the Company to be materially different from the historical results or from any future results, performances or achievements expressed or implied by such forward- looking statements. In evaluating these statements, prospective investors should specifically consider various factors, including the risks outlined in Section 2 “Risk Factors” below. These factors may cause the actual results to differ materially from any forward-looking statement. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement. Except as may be required by applicable law or stock exchange regulations, the Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances, after the date of this Registration Document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements. Offering restrictions The distribution of this Registration Document may in certain jurisdictions be restricted by law (including, but not limited to, the United States, Canada, Australia, Japan and South Africa). Persons in possession of
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this Registration Document are required to inform themselves about and to observe any such restrictions. This Registration Document does not constitute an offer of, or an invitation to subscribe or purchase, any bonds or other securities The securities described in this Registration Document have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S of the U.S. Securities Act). Furthermore, the bonds may not be offered or sold in or into Canada, Japan, the Republic of South Africa or Australia. In relation to the United Kingdom, this Registration Document is only directed at, and may only be distributed to, persons who fall within the scope of Article 19 (Investment Professionals) and 49 (High Net Worth Companies, Unincorporated Associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) or who are persons to whom the document may otherwise be lawfully distributed. This Registration Document may only be distributed in circumstances which do not result in an offer to the public in the United Kingdom within the meaning of Public Offers of Securities Regulations 1995 (as amended). The distribution (which term shall include any form of communication) of this Registration Document may be restricted pursuant to Section 21 (Restrictions on Financial Promotion) of the Financial Services and Markets Act 2000 (as amended). For certain restrictions on resale, see section 1.1.12 “Transfer restrictions”. Except for the approval by NFSA as described above, no action has been taken or will be taken in any jurisdiction by the Company or the Manager that would permit a public offering of Bonds issued by the Company, or the possession or distribution of any documents relating to the Listing, or any amendment or supplement thereto, hereunder but not limited to this Registration Document, in any country or jurisdiction where specific action for that purpose is required. Any person receiving this Registration Document is required by the Company and the Manager to inform themselves about and to observe such restrictions. The restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations that are not known or identified by the Company or the Manager at the date of this Registration Document may apply in various jurisdictions as they relate to the Listing and the Registration Document. This Registration Document is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Listing or this Registration Document is subject to the exclusive jurisdiction of the Norwegian courts, with Bergen District Court as exclusive venue.
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Table of contents
1 Risk Factors...... 2
2 Responsibility Statement...... 6
3 Company Overview ...... 7
4 Market overview ...... 14
5 Board, Management and Employees...... 20
6 Corporate Governance ...... 29
7 Legal Matters ...... 30
8 Financial Information...... 32
9 Share Capital and Shareholder Matters...... 38
10 Tax Issues...... 43
11 Additional Information ...... 44
12 Definitions and Glossary ...... 46
Appendices Appendix 1: Articles of Association for DOF ASA...... A 1 Appendix 2: Annual Report 2009 DOF ASA...... A 2 Appendix 3: Report for H1 2010 DOF ASA...... A 3
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1 RISK FACTORS Investing in Bonds issued by the Company involves inherent risks. Prospective investors should carefully consider the following risk factors, in addition to the other information presented in this Registration document and in the Securities Document, collectively referred to as the Prospectus, before making an investment decision. The risks discussed below are not the only ones that may affect the Company’s business or the value of the Company’s securities. Additional risks not presently known to the Company or that the Company currently considers immaterial, may also impair the Company’s business operations and prospects. If any of the following risks occur, potential investors could lose the entire value of their investment in the Company’s securities.
A prospective investor should consider carefully the factors set forth below, and elsewhere in the Registration Document, and should consult his or her own expert advisors as to the suitability of an investment in the Shares. An investment in the Bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. Such information is presented as of the date hereof and is subject to change, completion or amendment without notice.
• Financial risk factors
1.1.1 Financing risk The DOF Group will be financed with both equity and debt. The DOF Group is therefore exposed to the risks associated with debt financing. Payments required for servicing debt could adversely affect the DOF Group; reduce or postpone investments and/or at unforeseen times and/or at unattractive conditions require the DOF Group to sell assets and activities, issue equity or restructure debt. There is no guarantee that such initiatives will (i) succeed, (ii) be sufficient to refinance or restructure debt and other commitments as they come due, or (iii) not affect the competitive ability of the DOF Group. The DOF Group may require additional capital in the future due to unforeseen liabilities or in order to take advantage of business opportunities. There can be no assurance that the DOF Group will be able to obtain necessary financing in a timely manner on acceptable terms. 1.1.2 Credit risk The DOF Group has significant economic exposure against its customers and can be negatively affected if a customer experiences financial difficulties, becomes insolvent or goes bankrupt. 1.1.3 Currency risk DOF has NOK as its functional and reporting currency. The DOF Group’s revenues are denominated mainly in NOK, USD and GBP whereas the main operating expenses are in NOK. However, purchases from subcontractors and deliveries to the customer are to some extent made in other currencies than NOK. Fluctuating foreign exchange rates can have an effect on the results of the operations. The Company does not use hedge accounting and changes in fair value of interest rate swaps and currency swaps are recognized as a financial income/expense in the profit and loss statement. 1.1.4 Changes in effective tax rate Certain of the Companies in the DOF Group ares subject to the special tax rules for ship owners in the Taxation Act (§ 8-10 - § 8-20). There have been, and still are, political discussion to modify these tax rules. Further, such special tax rules stipulate certain requirements which will have to be met in order to qualify for taxation pursuant to such rules. No assurance can be given that the DOF Group will meet such requirements in the future. A failure to meet such requirements may have an adverse effect on the effective tax rate of the DOF Group.
1.1.5 Other risks The DOF Group has subsidiaries in many different countries, and political changes may adversely impact the DOF Group’s ability to move funds and vessels between countries, thus impairing the financial flexibility and earnings of the DOF Group. All investments in interest bearing securities, such as the Bonds, have risks associated with them, such as risks related to the general volatility in the market for such securities, varying liquidity in a single bond issue as well as company specific risk factors. There are three main risk factors that sum up the investors’ total risk exposure when investing in interest bearing securities: liquidity risk, interest rate risk and market risk (both in general and issuer specific).
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• Commercial Risks 1.1.6 Charter rate risks Historically, the rates in the offshore shipping markets have been cyclical, with significant fluctuations in charter rates. Factors such as those listed below influence the offshore markets: - General offshore activity world-wide and especially in the North Sea
- Oil prices
- Net growth in the supply of vessels
- A lower than expected net growth in the number of rigs
- Political changes related to regulatory framework
- Competition
An adverse development in the charter rates will have a negative effect on the operating results and financial condition of the Company. 1.1.7 Supply vessel demand Demand for supply vessel services in connection with exploration, development and production in the offshore oil and gas industry is particularly sensitive to oil and gas price fluctuations, low production levels and disappointing exploration results as well as possible political incidents. Investments in exploration, development and production are partly based on the oil and gas companies’ assessment of the long-term oil price. The development of new oil and gas fields is expected to correlate with the development in the oil price and the costs associated with the development, operations and maintenance of new fields. A long-term drop in oil prices will affect the profitability of new offshore fields, which likely would reduce the market for the products and services offered by the DOF Group. 1.1.8 New capacity entering the market It typically takes approximately 12-24 months from a supply vessel is ordered until it is delivered, depending on its complexity and the order backlog at the ship yards. The strong market outlook may be counterbalanced by too high newbuilding activity, which may even lead to a stronger growth in supply of vessels than in the demand for vessels. This may negatively affect the results and asset values of the DOF Group. 1.1.9 Increase in cost The operating expenses of the DOF Group’s vessels depend on a variety of factors including crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, many of which are beyond DOF’s control. 1.1.10 Fluctuations in vessel values Because the market value of vessels may fluctuate, ship owning companies may incur losses when vessels are sold. Market values of vessels may be affected by factors such as: - General offshore activity world wide;
- Net growth in the supply of vessels;
- The cost of building new ships;
- Competition from other shipping companies;
- Changes in demand for various types and sizes of vessels;
- Age limitations from oil companies;
- Changes in charter rates;
- Political changes related to regulatory framework; and
- Technological advances.
If the DOF Group sells a vessel at a time when vessel secondhand prices have fallen, the sale may be at less than the vessel’s book value in financial statements, with the result that a loss and a corresponding reduction in earnings is incurred. In addition, if it is determined that there is a need for impairment of vessel values; this could result in a charge
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against earnings and a corresponding reduction of the Company's shareholders’ equity. It is possible that the market value of the vessels will decline in the future.
• Operational Risks 1.1.11 Dependency on key employees The development of the DOF Group is dependent on the ability of the senior management to manage the current project portfolio and obtaining new and profitable orders. Although no single person is instrumental to reaching the Company’s business objectives, a departure by key members of the management of the DOF Group may have a material negative effect on the DOF Group’s operations and ability to achive its strategic goals. 1.1.12 Organizational development The increase in operational activity demands a continued development of the DOF Group’s organisation. A successful development is dependent on the DOF Group being able to attract and keep personnel and management with the right competence and commitment. The labour market in Norway, where the DOF Group has a significant portion of its operations, still is pressed for skilled labour in many industries, with several companies stating lack of available qualified applicants as their main concern for future development of their business. The DOF Group will have to compete in a fiercely competitive market to attract the human resources needed in the future. 1.1.13 Integration of newbuilds With 16 newbuilding orders of and the subsequent delivery of these vessels, the scale of the DOF Group’s operations will increase substantially. There is a risk that the process of integrating the new vessels into the DOF Group will provoke challenges not foreseen or not effectively manageable by the organization. The spread delivery schedule of the new vessels offsets this risk to a certain degree, but there is no guarantee that the organization will operate as efficiently with a fleet of 67 vessels as with the current fleet of 51. 1.1.14 Delivery of acquired newbuilds The construction process of a modern AHTS, PSV or Subsea vessel is associated with numerous risks. Among the most critical risk factors in relations to the 16 newbuildings the DOF Group has on order, is the risk of not receiving the vessels on time and on budget. However, part of cost increases relative to budget comes as a result of client requests and in such cases the DOF Group is normally compensated for increased capex through higher dayrates. Of the newbuildings, 14 are being built at STX Europe’s yards in Norway, Brazil and Vietnam. STX Europe’s yards in Norway have a proven track-record as builders of modern supply and subsea vessels. However, there is a risk that the yards may experience financial or operational difficulties resulting in bankruptcy or otherwise adversely affecting the construction process. STX Europe’s yard in Vietnam, building 5 of the newbuildings, is a new yard established in 2007 and there are risks related to these vessels being the first to be delivered from this yard. The remaining vessel is being built at ST Marine, Singapore (1 vessel). Of the 16 newbuildings in the DOF Group, 5 are being built for Aker DOF Deepwater (owned 50%), 2 for DOF Subsea (owned 51%), 2 for DOF Installer (owned 78.5% by DOF Subsea), and the remaining 7 for the Company or wholly owned subsidiaries. 1.1.15 Redeployment risk The DOF group has entered into time charter contracts for several of its vessels. When the contracts expire the DOF Group may encounter difficulties redeploying the units at existing rate levels, or even redeploying the units at all. The cancellation or postponement of one or more contracts or the failure to obtain new contracts on attractive terms can have a material adverse impact on the earnings and financial position of the DOF Group. 1.1.16 Charter contract risk The DOF Group has a strategy of operating some of its vessels in the spot market, which is highly volatile. There can be no guarantee that the DOF Group will be able to secure contracts at such rates and utilization levels that are needed to service its operating expenses and debt etc. In addition, the DOF Group may experience significant off-hires between charters. Furthermore, disputes under the charter parties may occur, which can result in responsibility and losses for the ship owning subsidiaries. 1.1.17 Service life and technical and operational risks The service life of modern AHTS, PSV and Subsea vessels is generally considered to exceed thirty years, but may ultimately depend on its efficiency and demand for such equipment as well as the requirements from customers and authorities. There can be no guarantee that the current and future vessels of the DOF Group will have a long service life. The vessels may have particular unforeseen technical problems or deficiencies, new environmental requirements may be enforced, or new technical solutions or vessels may be introduced that are more in demand than the DOF Group vessels, causing less demand and use of these vessels. It may, however, be possible to upgrade vessels to counteract some of these effects that may occur. This may have a negative effect on the operating results and financial condition of the DOF Group.
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1.1.18 Possible liabilities Offshore supply and anchor handling operations are associated with considerable risks and responsibilities, including technical, operational, commercial and political risks. In addition, offshore operations may be affected by harsh weather and other conditions beyond the DOF Group’s control. The DOF Group intends to obtain insurances in line with industry practice. It is, however, possible that such insurances will not cover all possible damages, incidents, risks and liabilities. Note also that the DOF Group may not be sufficiently insured for gross negligence caused by the DOF Group or its employees or vessel personnel. If a member of the DOF Group is held liable for pollution or environmental damage, it may not be able to recover through insurance coverage. 1.1.19 Operational and insurance risks in the respect of vessel operations The DOF Group owns vessels that are exposed to the risks associated with shipping, including bad weather, capsizing, groundings, collision, engine problems, technical problems, navigation errors etc. These risks can individually result in inter alia (i) damage or destruction of vessel or equipment, (ii) personal injury, (iii) operating disruption, and/or (iv) environmental damages. Such risks can also result in the termination of the charter for the vessel. The vessels are insured if possible and when commercially practical. There can be no assurance that such insurances will be available in the future or at an acceptable price. Also, insurance will not cover all risks or geographical areas. In addition the business may experience interruptions due to mechanical failure, human error, war, political actions, labour strikes or adverse weather conditions. 1.1.20 Political risk Changes in the legislative and fiscal framework governing the activities of oil and gas business could have material impact on exploration and development activities, or affect the DOF Group’s operations or financial results directly. Changes in political regimes may constitute a material risk factor for the operations in foreign countries. The DOF Group has operations in several countries and its operations may include projects and investments in countries that are unsafe and politically unstable. Activities in such countries will often involve greater risk than the DOF Group typically experiences, including unfavourable changes in tax laws and other laws, partly or full expropriation, currency volatility and restrictions on currency transfer, disruption of operations because of labour disputes or political riots, riots or wars, and some individual countries’ requirement for some local ownership interests. Through its wholly owned subsidiary Norskan, the DOF Group has a leading position in Brazil. This leading position has to a large extent been established due to DOF / Norskan’s focus on ordering Brazilian built vessels at an early stage. These vessels have benefitted from national Brazilian legislation protecting Brazilian flagged vessels in the local market, by partly protecting Brazilian flagged vessels from competition from international vessels and favoring local flagged vessels for certain contract awards in the Brazilian sector. If these regulations should chang, it may result in a weakening of the DOF Group’s position in Brazil due to increased competition. The DOF Group is subject to laws, regulations and supervisory rules in the country where the activity is performed. The operations of the DOF Group can be affected by changes in environmental laws and other regulations that can result in large expenses in, for example, modification of vessels and changes in the operation of vessels. 1.1.21 Environmental risks The DOF Group’s operations involve the use and handling of materials that can be environmentally hazardous. Environmental legislation has in general become stricter. These laws and regulations might expose the DOF Group to liability due to events caused by others or by the companies themselves, even though the actions were consistent with existing laws at the time. The DOF Group would expect to get some contractual compensation from its customers through contractual regulation of events such as pollution and other environmental damages. However, there can be no assurance that the compensation achieved in such events, if achieved at all, will cover losses inflicted on them.
• Other risk factors
1.1.22 Control by major shareholders Substantial share ownership is concentrated in the hands of certain shareholders, with Møgster Offshore AS owning more than 50% of the share capital.
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3 COMPANY OVERVIEW
• Incorporation, registered office and registration number DOF is a Norwegian public limited liability company (Nw: “allmennaksjeselskap”) organised under the laws of the Kingdom of Norway and the Norwegian Public Limited Companies Act. The Company was incorporated as a public limited company under the name District Offshore AS in 1981. The Company’s business registration number with the Norwegian Register of Business Enterprises is 935 349 230. DOF is the parent company of the DOF Group. The Company’s main purpose is to own shares in its shipowning and operational subsidiaries (wholly or partly owned), but the parent Company may also own such assets directly. The parent company is responsible for the Group’s worldwide operational and investment activities and is generally responsible for the overall management of the DOF Group and sets out the DOF Group’s goals and strategy.
According to the Articles of Association, the Company’s and the principal place of business is in Austevoll county and its registered office is at Alfabygget, N-5392 Storebø, Norway. The Company’s telephone number is +47 56 18 10 00, telefax number +47 56 18 10 06. The Company’s web site is www.dof.no. The DOF Group also has offices in Norway, UK, Brazil, Singapore, Australia, US and Angola.
• Company overview and history The history of DOF can be summarised as follows: DOF was founded in 1981 and has since it was established worked in the offshore service market providing vessels and management services. The first two vessels (PSVs) were delivered in 1983 and are still part of the DOF fleet. The fleet gradually increased during the next years and when DOF was listed on the Oslo Børs in 1997, the fleet consisted of eleven vessels including 4 under construction. In 2001, DOF entered into the Brazilian market and signed an agreement for an incorporated joint venture, Norskan Offshore Ltda, with Solstad Offshore AS. DOF has since November 2006 controlled Norskan Offshore Ltda 100% via the Company’s wholly-owned subsidiary Norskan AS. In 2005 DOF established Geo ASA after acquisition of Geo Group, and listed Geo ASA on Oslo Børs the same year. Geo ASA was renamed to DOF Subsea in 2007. DOF Subsea has proven a substantial growth, acquiring vessels and companies since 2005 and has enabled DOF as a group to enter in to new markets and operations. In 2007, DOF Installer ASA and Aker DOF Supply AS were founded and positioned the Group as a supplier of large AHTS vessels. In 2008, DOF and an affiliate of the private equity group First Reserve Corporation established DOF Subsea Holding AS which acquired 100% ownership in DOF Subsea and DOF Subsea was taken private. DOF owns 51% of the shares in DOF Subsea Holding AS, while an affiliate of First Reserve Corporation owns the remaining 49%. Later the same year, Aker DOF Supply AS was renamed Aker DOF Deepwater AS. In 2009, DOF sold its shares in Aker Oilfield Services and issued 8.27 million shares at NOK 29.5 per share, raising approximately NOK 240 million in cash equity. DOF further acquired the vessel Skandi Vega from DOF Installer and Skandi Olympia from FMV (an unrelated 3rd party). In 2010, DOF announced their intention to spin off their subsidiary Norskan AS and list it separately on the Bovespa Stock Exchange in Sao Paulo, Brazil. The company has filed a listing application and at the date of this Registration Document, the process is still ongoing. By end of August 2010, the DOF Group’s operations consisted of a total fleet of 66 vessels, including 17 vessels under construction, and engineering activities in Europe, U.S., South –America and South East Asia.
• Goals and strategy The Company is the parent company of the DOF Group, which today is an international group of companies which owns and operates a modern fleet of offshore and subsea vessels and engineering capacity to service the subsea market. The main objectives for the Group are to:
• engage in long-term, industry-related offshore activities
• further develop its position as a leading supplier of offshore services with a focus on high quality and cost- effective operations
• achieve its objectives by means of a balanced chartering strategy with emphasis on long-term contract coverage, in order to ensure a conservative risk profile and satisfactory cash flow
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• continue to focus on the environment and initiatives towards technical systems for environmentally-friendly vessel concepts
• 3.1 Corporate structure
• The figure below sets forth the corporate structure of the DOF Group.
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• Overview of the DOF Group’s main business areas The DOF Group operates within three different segments in relation to strategic types of activities and vessel types.
• Platform Supply Vessel (PSV)
• Anchor Handling Tug Supply Vessel (AHTS)
• Construction Support Vessel/Subsea ROV Vessel (CSV) The DOF Group’s technical diversified fleet consists of innovative vessels specialized for their operational purpose. DOF Management AS was founded in 2005 and provides ship management for the total fleet. DOF Management employs highly skilled people who perform ship management services for the vessels owned by the DOF Group and has the experience and knowledge to operate the vessels according to the owners’ and the clients’ demands. By systematic development of the DOF Group’s expertise and services the DOF Group expects to remain the preferred supplier to the major operators within the DOF Group’s market segments. DOF has a strong focus on Quality, Health, Safety and Environment, and DOF Management is an ISO 9001:2000 and ISO 14001:2004 certified company. DOF Management AS is based at Storebø and in Bergen with part of its management operated from Aberdeen through DOF UK. Ltd.
• 3.2 Description of the Vessels The DOF Group owns and operates a total fleet of 67 vessels, including 16 vessels under construction. The DOF Group’s fleet is owned by the following companies:
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ROV / OCSV / (No. of vessels) PSV AHTS DSV / Seismic Total fleet DOF 13 3 2 18 NORSKAN OFFSHORE 7 11 2 20 DOF SUBSEA 0 0 21 21 DOF INSTALLER 0 3 0 3 AKER DOF DEEPWATER 0 5 0 5 Total owned fleet 20 22 25 67
Included above is 1 PSV that is owned by a 92% owned partnership (“AS/IS company”). The above figure does not include 1 PSV that is agreed sold but where the agreement is subject to certain conditions.
• 3.3 Vessels under construction The DOF Group has 13 supply vessels and 4 subsea vessels under constructions. See table below for an overview: Expected Name Type Delivery Yard Owner
Supply vessels
Skandi TBN (hull 82) Aker PSV 09 CD Q4 2010 Cochin Shipyard, India DOF Skandi TBN (hull 738) Aker PSV 06 LNG Q1 2011 Aker Yards AS DOF Skandi TBN (hull 25) Aker AH 05 Q4 2010 Aker Yards Promar, Brazil Norskan Skandi TBN (hull 26) Aker AH 12 Q3 2011 Aker Yards Promar, Brazil Norskan Skandi TBN (hull 27) Aker AH 12 Q4 2011 Aker Yards Promar, Brazil Norskan Skandi TBN (AH11 #1) Aker AH 11 Q4 2012 Aker Yards Promar, Brazil Norskan Skandi TBN (AH11 #1) Aker AH 11 Q2 2013 Aker Yards Promar, Brazil Norskan Skandi TBN (hull 02) Aker AH 08 Q4 2010 Aker Yards, Vietnam Aker DOF Deepwater Skandi TBN (hull 03) Aker AH 08 Q2 2011 Aker Yards, Vietnam Aker DOF Deepwater Skandi TBN (hull 04) Aker AH 08 Q4 2011 Aker Yards, Vietnam Aker DOF Deepwater Skandi TBN (hull 05) Aker AH 08 Q2 2012 Aker Yards, Vietnam Aker DOF Deepwater Skandi TBN (hull 06) Aker AH 08 Q4 2012 Aker Yards, Vietnam Aker DOF Deepwater
Subsea vessels Skandi Niteroi Aker OSCV 06 Q4 2010 Aker Promar, Brazil DOF Subsea Skandi Singapore Aker DSV 06 Q1 2011 STI Marine Singapore DOF Subsea Skandi TBN (hull 722) Aker AH 04 Q4 2010 Aker Yards AS DOF Installer Skandi TBN (hull 723) Aker AH 04 Q2 2011 Aker Yards AS DOF Installer
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• 3.4 Business overview Below is an overview of the business structure of the DOF Group, by segments and area of operations (not identical to the legal structure). Overview of the business structure of the DOF Group
Source: DOF *Plus one 47%-owned vessel not included in overview above.
• DOF Subsea “DOF Subsea” is the Subsea business area of the DOF Group. The business is conducted by the 51% owned company DOF Subsea Holding and its subsidiaries. The main business area is subsea inspection, maintenance and repair work in additiont o owning and operating subsea construction support vessels (“CSVs”).
• Norskan Norskan is the Brazilian supply vessel operations of DOF.
• “DOF Norway” “DOF Norway” is not a legal entitiy, but denotes the operations not included in the two areas above – meaning supply vessel operations outside Brazil. These operations are generally directed out from the headquarter in Norway. The vessels may however operate world-wide depending on contracts.
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• The DOF Group’s business operations The DOF Group’s long-term goal is to be the leading global supplier of services related to offshore supply, survey, IRM and construction support. During 2009 and 2010, the DOF Group took several steps in the right direction towards this goal. At the date of this Registration Document, DOF Group had an order backlog of NOK 34 billion, including NOK 15 billion in options and NOK 19 billion in firm contracts. Quality, health, safety and environment (QHSE). Since 1995 DOF Management AS has been certified according to International Safety Management (ISM) Code. From summer 2002, DOF have been certified to the NS-EN ISO 9001 and NS-EN ISO 14001 standards (latest editions), in addition to the ISM code. The International Ship- and Port Facility Security (ISPS) Code, was implemented on board all vessels in 2004. DOF Management AS control all activities related to QHSE according to the goals established: to achieve zero occupational injuries, control of environmental aspects and sustain high regularity for operations.
• 3.5 Organisational Structure
• Organisational structure DOF ASA is the parent company in the DOF Group. DOF ASA is generally responsible for the overall management of the DOF Group and sets out the DOF Group’s goals and strategy. DOF ASA’s main assets are shares in shipowning and operating subsidiaries. DOF ASA also owns two vessels and one newbuild themselves, but all operations are carried out by operational subsidiaries. For loans issued directly to ship-owning subsidiaries of DOF ASA, a parent company guarantee has been issued for the nominal amount of the loans in addition to interest accrued at any given time. DOF ASA has however not given guarantees for any loans issued by DOF Subsea AS or its subsidiaries. Due to being a holding company with very limited operational activity, DOF ASA is dependent on cash flow from its operating and vessel owning subsidiaries in order to serve debt at the parent company level, including bond loans. The last audited accounts of the parent company shows parent company revenues of NOK 74 million for the year 2009 and operating result of negative NOK 19 million. Year-end 2009 debt at the parent company level was NOK 1,153 million in bond debt and NOK 379 million in debt to credit institutions.
The table below sets forth the Company’s significant subsidiaries (direct and indirect).
DOF Group ownership subsidiaries per 30 September 2010
SHARES IN SUBSIDIARIES
Registered Ownership Owner office interest
Direct subsidiaries DOF Subsea Holding AS Bergen 51% DOF ASA DOF Rederi AS Austevoll 100% DOF ASA DOF Management AS Austevoll 100% DOF ASA/Geoconsult AS DOF UK Ltd Aberdeen, UK 100% DOF ASA DOF Egypt Egypt 100% DOF ASA Marin IT AS Austevoll 75% DOF ASA Norskan AS Austevoll 100% DOF ASA DOF Holding Pte Singapore 100% DOF ASA
Indirect subsidiaries DOF Installer ASA Austevoll 66.87% DOF Subsea AS DOF Geo UK Ltd. Aberdeen, UK 100% DOF Subsea AS
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DOFCON AS Bergen 100% DOF Subsea AS Geo Rederi AS Bergen 100% DOF Subsea AS Geo Rederi II AS Bergen 100% DOF Subsea AS Geoconsult. AS Bergen 100% DOF Subsea AS Semar AS Oslo 50% DOF Subsea AS DOF Subsea Pte. Singapore 100% DOF Subsea AS DOF Sub UK Holding Ltd Aberdeen, UK 100% DOF Subsea AS DOF Subsea Rederi II AS Bergen 100% DOF Subsea AS DOF Subsea Asia/Pacific Pte. Ltd. Singapore 100% DOF Subsea Pte. DOF Subsea Australia Pty. Perth, Australia 100% DOF Subsea Pte. PT DOF Subsea Indonesia Indonesia 95% DOF Subsea Pte. SWG Offshore Pty Perth, Australia 100% DOF Subsea Australia Pty CSL US Inc Houston, USA 100% Construction Specialists Ltd. CSL Norge AS Bergen 100% Construction Specialists Ltd. Construction Specialists Ltd. (CSL) Aberdeen, UK 100% DOF Sub UK Holding Ltd Geofjord Shipping AS Bergen 100% Geo Rederi AS Geograph Shipping AS Bergen 100% Geo Rederi AS DOF Subsea Norway AS Bergen 100% Geoconsult. AS Geosund AS Bergen 100% Geoconsult. AS Anoma AS Austevoll 90% DOF ASA/DOF Subsea AS DOF Subsea Angola Lda Angola 90% DOF ASA/DOF Subsea AS DOF Subsea Congo SA Congo 90% DOF ASA/DOF Subsea AS Norskan AS/DOF Subsea Norskan Offshore SA Brasil 100% AS DOF Subsea Brasil Servicos Ltda Brasil 100% Norskan Offshore SA Norskan Offshore Ltda Brasil 100% Norskan Offshore SA DOF Navegacao Lda Brasil 100% Norskan Offshore SA Norskan GmbH Østerrike 100% Norskan Offshore SA Norskan II GmbH Østerrike 100% Norskan GmbH Norskan Norway AS Austevoll 100% Norskan II GmbH DOF Rederi II AS Austevoll 100% Norskan II GmbH Norskan Holding AS Austevoll 100% Norskan II GmbH Waveney AS /Waveney IS Austevoll 93% Norskan Holding AS DOF Subsea Rederi AS Bergen 100% Norskan II GmbH Skandi Neptun AS Bergen 100% DOF Subsea Rederi AS DOF Subsea ROV AS Bergen 100% DOF Subsea Rederi AS Geoholm AS Bergen 100% DOF Subsea Rederi AS DOF Subsea Shipowning AS Bergen 100% DOF Subsea Rederi AS Geograph Shipping II AS Bergen 100% DOF Subsea Rederi AS DOF Subsea UK Ltd. Aberdeen, UK 100% DOF Subsea Rederi AS DOF Subsea USA Inc. Houston, USA 100% DOF Subsea UK Ltd. DOF Subsea Canada Corp. St. Johns, Canada 100% DOF Subsea US inc DOF Subsea SA de CV Mexico. Mexico 100% DOF Subsea US inc DOF Sjø AS Austevoll 100% DOF Management AS DOF Argentina Argentina 100% DOF Management AS DOF Management Pte Singapore 100% DOF Management AS
Joint venture companies Aker DOF Deepwater AS Austevoll 50% Norskan II GmbH
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DOFTECH DA Austevoll 50% DOFCON AS TECHDOF DA Bergen 50% DOF Subsea Rederi AS DOFCON Brasil AS Bergen 50% TECHDOF DA Rio de Janeiro, DOFCON Navegacao Brasil Ltda Brazil 50% DOFCON Brasil AS DOF Subsea Arctic Russland 49% DOF Subsea Norway AS Mashhor DOF Subsea Sdn Brunei 50% DOF Subsea Australia Pty Greatship DOF Subsea Ltd India 50% DOF Subsea Pte.
Associated companies Master & Commander Oslo 20% DOF Subsea AS
The DOF Group is organised with DOF ASA as the parent company and with the key subsidiaries, incorporated or to be incorporated, as illustrated in the organisational structure set out in Section 4.1.1. The DOF Group structure may be further developed or adjusted from time to time.
NORWAY DOF ASA (Norway) The parent company, DOF ASA (reg. no.: 935 349 230), a public limited company incorporated in Norway, is located at Storebø, Norway. The parent company is responsible for the DOF Group’s worldwide operational and investment activities. As of the date of this Registration Document, the DOF Group has approximately 3,000 employees. DOF ASA’s main assets are shares in subsidiaries, including shipowning companies and management companies. Only two of the Group’s vessels plus one newbuild is, as per the date of this Registration Document, owned by DOF ASA directly. DOF ASA is generally responsible for the overall management of the DOF Group and sets out the DOF Group’s goals and strategy. Norskan AS (Norway) The wholly owned subsidiary, Norskan AS (reg. no.: 985 916 039), is a private limited company incorporated in Norway, is located at Storebø, Norway. The company and its subsidiaries are responsible for the DOF Group’s operations in Brazil, through wholly owned Norwegian and Brazilian operational subsidaries. As of the date of this Registration Document, Norskan AS and subsidiaries have approximately 500 employees.
DOF Subsea AS (Norway) DOF Subsea AS (reg. no.: 988 263 419), is a private limited company incorporated in Norway, located in Bergen, Norway. DOF Subsea AS is a wholly-owned subsidiary of DOF Subsea Holding AS, a company in which DOF owns 51% of the shares and affiliates of First Reserve Corporation own the remaining 49%. DOF Subsea AS has the overall responsibility for the DOF Subsea group’s operations. As of the date of this Registration Document, DOF Subsea with subsidiaries has approximately 1,100 employees.
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4 MARKET OVERVIEW
• Overview Offshore vessels perform a wide range of services related to construction and decommissioning work, pipe laying, support of drilling rigs and floating and fixed installations. Offshore service vessels can be divided into two main groups: Supply vessels and Subsea vessels.
• 4.1 General energy market overview - demand Over the past couple of years there have been large upheavals in world energy markets. The global financial crisis and ensuing recession have had a dramatic impact on the outlook for energy markets, particularly for the next few years. According to the International Energy Agency’s (“IEA”) “World Energy Outlook” (source: IEA “World Energy Outlook”, November 2009. Reference scenario), global energy use was set to fall in 2009, for the first time since 1981. However, with current policies, energy use is expected to quickly resume its long-term upward trend once economic recovery is underway. In IEA’s base case scenario (“Reference Scenario”), world primary energy demand is projected to increase by 1.5% per year between 2007 and 2030, from just over 12,000 million tonnes of oil equivalent (Mtoe) to 16,800 Mtoe, which represents an overall increase of 40%. Developing Asian countries are expected to be the main drivers of this growth, followed by the Middle East. On average, demand is expected to decline marginally in 2007-2010. Demand growth is expected to rebound thereafter, averaging 2.5% per year in 2010-2015. The pace of demand growth is expected to decrease progressively after 2015, as emerging economies mature and global population growth slows.
Oil overview and demand Fossil fuels remain the dominant sources of primary energy worldwide in IEA’s Reference Scenario, accounting for more than three-quarters of the overall increase in energy use between 2007 and 2030. In absolute terms, coal is expected to see the biggest increase in demand over the projection period, followed by gas and oil. Still, oil is expected to remain the single largest fuel in the primary fuel mix in 2030, even though its share drops from 34% now to 30%. Oil demand (excluding biofuels) is projected to grow by 1% per year on average over the projection period, from 85 million barrels per day in 2008 to 105 million barrels per day in 2030. All the growth is expected to come from non- OECD countries. For OECD countries demand is expected to fall. For 2010 the global oil demand is estimated to 86.6 mbpd and 87.9 mbpd in 2011 (The International Energy Agency, Oil Market Report, August 2010).
Figure 4-1: Primary oil demand* by region (mb/d)
120 105,2
100 88,4 84,7
80 76,5 64,8 International bunkers 60
mb/d Non-OECD OECD 40
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0 1980 2000 2008 2015 2030
Source: IEA “World Energy Outlook”, November 2009. Reference scenario * Excludes biofuels demand, which is projected to rise from 0.8 mb/d in 2008 to 1.6 mb/d in 2015 and to 2.7 mb/d in 2030.
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The oil price is high Despite a significant drop from the all-time-high prices seen during 2007 and 2008, oil and gas prices are still at high levels in a historical context. Over the recent months, prices have rebounded significantly and at the date of this Registration Document are in the range of USD 70 - 80. This underpins estimates for high long term oil price, something that seems to have reignited exploration and production activity. Also, most oil companies have production below target production. In the other direction, the volatility in the oil price combined with the recent financial crisis has led to a postponement of some exploration activities, especially by the smaller oil companies. This activity is currently showing clear signs of revival. The long-term picture remains that oil consumption is increasing over time and the oil companies still struggle to replace their reserves. The oil companies’ efforts to increase their oil and gas production are expected to continue to increase the demand for both rigs and supply vessels.
The figure below illustrates historical crude oil prices in real (constant) money:
Figure 4-2: Historical oil price in constant money
Oil price in constant money (2009 US dollars) 120.0
100.0
80.0
60.0
40.0
20.0
0.0
6 0 1 61 75 9 1 24 38 52 66 0 8 8 9 1 1868 1 1882 1889 18 1903 19 1917 19 1931 19 1945 19 1959 1 1973 1980 1987 1994 20 2008
Source: Data from BP (“BP Statistical Review of World Energy 2010”, June 2010, http://www.bp.com/statisticalreview), , year-to-date average price is Pareto Securities Corporate Finance estimate. Graph is prepared by Pareto Securities Corporate Finance
4.1.1 Oil companies reserve replacement rates are falling While the volatility in oil prices combined with the general economic downturn caused oil prices to drop significantly during 2008 and 2009, such fluctuations are not expected to make any significant changes in the activity levels over time. The underlying fact seems to be that oil companies are facing falling production and they need to replace their production by making new discoveries. The increased exploration activity is global and the markets for all modern vessels are good in all large offshore regions.
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Figure 4-3: Organic Reserve Replacement Ratios (3 years rolling)
Source: Pareto Securities Equity Research (“Pareto E&P Survey”, 10 August 2010)
• The offshore vessel market The offshore service vessel market can be divided into several categories and segments. The main categories are supply vessels, subsea vessels and seismic vessels. DOF owns and operates vessels within all these main categories with focus on supply and subsea.
• 4.2 Supply vessels Supply vessels are further divided into Platform Supply Vessels (PSV) and Anchor Handling Tug Supply vessels (AHTS). Platform supply vessels PSVs are specially designed for transport of supplies to and from offshore installations. On deck the vessels carry containers, equipment and pipes (the latter applies mostly for larger PSVs). Under deck the vessels transport a variety of different fluids in separate tanks, like mud & brine, cements or other dry bulk, water, fuel and drill-cut. Furthermore, some vessels have tanks for special fluids like methanol as well. PSVs are classified according to their carrying capacities: • Size of free deck space • Total carrying capacity in dwt (dead weight tons) • Type and capacity of special tanks carrying mud & brine, fuel, dry bulk, methanol etc Historically, PSVs with more than 2,000 dwt have been considered large. However, as the trend continues towards larger and larger vessels, PSVs with dwt between 3,000 and 4,000 are now considered medium-sized and vessels with a carrying capacity above 4,000 dwt are considered large vessels. Classified by deck area this corresponds to approximately 600-800 m2 for medium-sized vessels, and above 800 m2 for large vessels. The next figure shows the building year of the world fleet of PSVs. It is expected that the fleet will consist of 797 PSVs larger than 2,000 dwt at the end of 2013, of which 47 were delivered before 1990, and including 172 that are scheduled for delivery in the period from 2010 to 2013, not reflecting potential delivery delays. The growth in the PSV fleet, being specialized cargo vessels, has been accelerated by an increased degree of specialization in the supply vessel market. As vessels have become larger, more powerful and more expensive, one wishes to use the other, more expensive vessels for the tasks for which they are specialized, and leave the cargo duties primarily to the PSVs.
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DOF has 19 PSVs including newbuilds with an average age of 8 years including newbuilds. These have 95% contract coverage for 2010 and 59% for 2011.
Figure4-4: Building year for PSV
Source: ODS-Petrodata, June 2010
Anchor handling tug/supply vessels AHTS vessels are specially designed for towing and anchoring of rigs and other offshore installations. Furthermore, the vessels are often equipped for fire fighting (FiFi), rescue operations and oil recovery. The vessels also have supply capacities like the PSVs but to a smaller extent (eg. less free deck space and fewer tanks). As oil activity has moved into deeper waterers, the main focus has been on the vessels’ winch and engine capacities, in order to offer the oil companies a safe and efficient operation in the challenging conditions of the deepwater area. AHTS vessels are classified mainly according to their towing capacity, but other parameters are also considered: • Bollard pull (tons)
• Engine (break horse power)
• Winch capacities (tons)
• Cargo carrying capacity (tanks and deck space)
• Dynamic positioning systems, Rescue characteristics and Fire-fighting and oil recovery capabilities
Break Horse Power (BHP) is the most common yardstick for categorising of AHTS vessels. The AHTS fleet is normally divided into vessels with less than 10,000 BHP (small), between 10,000 and 20,000 BHP (medium-sized) and above 20,000 BHP (large). Norwegian players mostly focus on vessels with above 15,000 BHP. The following figure shows the building year of the world fleet of AHTS’. According to this, the fleet will consist of 553 AHTS larger than 10,000 BHP at the end of 2013, of which 83 are delivered before 1990, and 126 are expected to be delivered in the period from 2010 to 2013.
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Figure 4-5: Building year for AHTS vessels
Source: Pareto Securities based on ODS-Petrodata, June 2010
As can be seen from the chart, a large portion of the current world-wide AHTS fleet was built during the period 1980-1984. These vessels are now between 23 and 27 years, and are not suited for deep water activity. As can be seen above, the newbuilding activity has consitently shifted toward gradually larger vessels. The normal lifetime of an AHTS vessel is generally considered to be around 30 years. The average fleet age for AHTS > 10,000 BHP was 10.2 years at the end of 2008, compared to 21 years for AHTS all sizes.
DOF and subsidiaries own 22 AHTS vessels including newbuilds, with an average age of 3 years including newbuilds. These have contract coverage of 93% of available vessel days in 2010 and 73% in 2011.
• 4.3 Subsea vessels ‘Subsea vessels’ is the common term for offshore construction and construction support vessels. These are mainly utilized in the installation, inspection and maintenance of subsea equipment related to the offshore oil and gas production, as well as related offshore structures such as platforms and buoys. They are further involved in laying of pipe, installation of mooring systems and construction of offshore structures as well as removal of same. The vessels are also engaged in work related to other offshore installations such as offshore windmills and electrical cables. The main element in the segment is Offshore Construction Vessels that generally large vessels specialized for pipelaying, installation, removal and construction work using specialized pipelaying systems, large cranes, lifiting equipment (A-frames) and large deck space. A subsegment is the Construction Support Vessels, that are generally smaller and more generic, with a considerable portion of the fleet being supply vessels that have been upgraded with extra accommodation, cranes or similar. The market can be divided into the following sub-categories:
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Offshore Construction Vessels: Construction Support Vessels: • Pipelaying Vessels • Survey Vessels • Diving Support Vessels (DSV) • Remotely Operated Vehicle Support Vessel (ROVSV) • Heavylift/Derrick Barges • Multipurpose Supply Vessel (MPSV/MSV) • Offshore Construction Vessels
• Well-intervention Vessel
The subsea vessel fleet Subsea vessels are often chartered out to subsea contractors on long-term contracts, where the ship owner supplies vessel and marine crew, while the contractors provide the remaining crew and equipment. Key assets are often modified to meet the contractor’s requirements, and are usually owned or chartered in on long contracts (up to 10 years), while the smaller and more generic assets can often be charted to the contractors on a job-to-job basis. DOF has mainly been chartering out vessels to major subsea contractors on long-term contracts, providing vessel and marine crew. Their 51%-owned subsidiary DOF Subsea is also operating as an independent subsea contractor, offering the vessels with full crew and all equipment directly to the oil companies. The Subsea vessel fleet is expected to grow significantly the coming years as a consequence of high newbuilding activity. The new vessels will have to be absorbed partly by demand growth and for some segments replacement of an old existing fleet. DOF and subsidiaries own 25 subsea including newbuilds, with an average age of 7 years including newbuilds. These have contract coverage of 77% of available vessel days in 2010 and 61% in 2011.
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5 BOARD, MANAGEMENT AND EMPLOYEES
• 5.1 Description of the Board
The table below sets forth the Company’s current Board: Name Position Has served since Term expires Helge Møgster Chairman of the Board 2000 2012 Helge Singelstad Member of the Board 2008 2012 Oddvar Stangeland Member of the Board 2004 2012 Britt Mjellem Member of the Board 2005 2011 Wenche Kjølås Member of the Board 2006 2012 The Board is responsible for the Company’s affairs and for ensuring that the Company’s operations are organized in a satisfactory manner. The Company’s registered business address and postal address is, Alfabygget, 5392 Storebø, Norway, serves as c/o addresses for the members of the Company’s Board in relation to their directorship of the Company. Helge Møgster (born 1953), Chairman of the Board Mr. Møgster is one of the main owners in Laco AS, the main shareholder of i.a. DOF ASA’s largest shareholder, Møgster Offshore AS, and Austevoll Seafood ASA. Mr Møgster has long experience from both the offshore supply and fishery industry. He is holding board positions in several companies, including being a board member for DOF Subsea AS. Mr. Møgster is a Norwegian citizen with residence in Austevoll, Norway. Mr. Møgster has been on the board of DOF since 1997 Helge Singelstad (born 1963), Board member Mr. Singelstad is the general manager of Laco AS. Mr. Singelstad is educated in engineering from Bergen Ingeniørhøgskole, and he holds a business school graduate degree from the Norwegian School of Economics and Business Administration. Mr. Singelstad has experience from different types of businesses: oil companies, ship equipment and the seafood sector. Prior to joining Laco AS, he was the CEO of Lerøy Seafood Group ASA. Mr. Singelstad is a Norwegian citizen with residence in Bergen, Norway. Oddvar Stangeland (born 1944), Board member Mr Stangeland started his career with DOF in 1982 as a technical manager before becoming the CEO in 1985. He stepped down as CEO in 2005 handing over his position to Mons Aase. Mr. Stangeland is now the general manager and owner of Kanabus AS. Mr. Stangeland/Kanabus AS has had assignments for the Company as technical advisor in various new-building/ and re-building projects, and may have assignments for the Company also in the future. Mr Stangeland holds a degree in Marine Engineering and Naval Architecture (MSc) from the Norwegian Institute of Technology. Mr. Stangeland is a Norwegian citizen with residence in Austevoll, Norway.
Britt Mjellem (born 1961), Board member Ms Mjellem is Managing Director of Amesto People in Bergen. Prior to that, she was the Chief Portfolio Manager & Advisor for Bergen Banking ASA. She holds a degree in Economics and Business Administration from Germany. Coming from both the investment banking sector and the shipbuilding industry, Ms Mjellem has over 25 years experience from the interest rates and currency markets. Ms Mjellem has comprehensive experience from various boards of directors within real-estate and other commercial markets. Ms Mjellem is a Norwegian citizen with residence in Bergen, Norway. Wenche Kjølås (born 1962), Board member Mrs. Kjølås is the CEO of Grieg Maturitas. Prior to that, she was CFO in Grieg Logistics, Bergen, since 2006. She has vast experience from various industries in Norway, and also serves as a board member in numerous companies. She holds a business graduate degree from the Norwegian School of Economics and Business Administration. Mrs. Kjølås is a Norwegian citizen with residence in Bergen, Norway.
• 5.2 The group senior management The group executive management is responsible for the daily management and the operations of the Company. The Company’s registered business address and postal address is: Alfabygget, 5392 Storebø, Norway, serves as c/o address in relation to the senior managements’ employment in the Company.
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Mons Aase, (born 1966), CEO Mr. Aase has been part of the DOF team since 1998, first as CFO and Deputy Managing Director, before becoming the CEO in 2005. His past experiences from the finance and ship-brokering industries have been valuable to the company. He holds a MSc from the Norwegian Institute of Technology, and a Cand. Merc. from the Norwegian School of Economics and Business Administration. Mr. Aase is a Norwegian citizen with residence in Bergen, Norway. Hilde Drønen, (born 1961), Chief Financial Officer (CFO) Mrs. Drønen joined DOF ASA as CFO in 2004. Her previous experience includes being Director of Finance with Bergen Yards AS (2003-2004), and Group Controller for the Møgster Group (1995-2003). She holds a Business Administration degree and a Business Management degree from the Norwegian School of Management. Mrs. Drønen is a Norwegian citizen with residence in Austevoll, Norway. Tore R. Mohn, (born 1950), Director of legal affairs Mr. Mohn has worked in DOF since 1997, since 2000 as Director of Legal Affairs for the Møgster Group of companies (Laco AS subsidiaries) including the DOF Group. Mr Mohn holds a law degree from the University of Bergen and is a member of the Norwegian Bar Association. Mr Mohn has former experience from the legal departments of Finansbanken and Nordbanken. Mr. Mohn is a Norwegian citizen with residence in Bergen, Norway. Anders A. Waage, (born 1950), COO Mr. Waage joined DOF ASA as COO in 2007. He started his career with DOF in 1983 as a captain of "Skandi Fjord". Since 1991 he has held different managerial positions with DOF Management AS eventually becoming the CEO in 2007. He is educated as Master Mariner with additional education in insurance/average adjustment. Mr. Waage is a Norwegian citizen with residence in Austevoll, Norway. Arnstein Kløverud, (born 1971), CTO Mr. Kløverud joined DOF ASA as CTO in 2007. He started his career with DOF Management AS in 2001 as Vessel Manager, and had positions as project manager and head of project department, before starting as CTO in 2007. His previous experience includes working in DNV and in the shipbuilding industry. Mr Kløverud holds a MSc in naval architecture from Norwegian Institute of Technology. Mr. Kløverud is a Norwegian citizen with residence at Sotra, Norway.
5.3 Conflict of interests etc. Except for the Chairman Helge Møgster, the Deputy Chairman Helge Singelstad and Oddvar Stangeland, the other members of the Board are independent of the Company`s major shareholders, the Company`s management and the Company`s main business relations. Related party transactions are described in Section 7.2 of this Registration Document. The Company complies with the Norwegian code of practice for corporate governance Section 8, regarding the composition and independence of board members; see Section 6 in this Registration Document. There are no other potential conflict of interests between the management’s and the directors’ duties to the Company, and their private interests and/or other duties.
5.4 General During the last five years preceding the date of this Registration Document, no member of the Board or the senior management has been subject to any convictions in relation to indictable offences or convictions in relation to fraudulent offences, nor has any member of the Board or the senior management received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company. No member of the Board or the senior management has been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his capacity as a founder, Director or senior Managers of a company.
• 5.5 Directorships and positions Over the five years preceding the date of this Registration Document, the members of the Board and the senior management hold or have held the following directorships (apart from their directorships of the Company) or leading positions (apart from their positions in the Company). For directorships the denominations “C” and “BM” states the position as either Chairman of the Board (“C”) or ordinary Board Member (“BM”) in the relevant companies:
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Previous Directorships/positions Board of Directors: Current Directorships/positions (last 5 years)
Helge Møgster Directorships: Directorships: AUMUR AS (BM) LERØY VEST AS (BM) AUSTEVOLL SEAFOOD (BM) SEIVÅG SHIPPING AS (BM) BR BIRKELAND AS ( BM) BRAVO TUG AS (C) BR BIRKELAND FISKEBÅTREDERI AS ( BM) GEO REDERI II AS (BM) BJÅNESØY EIENDOM AS ( BM) BOREA NOTERTE BOREA HOLDING AS (BM) MANAGEMENT AS (BM) BOREA NOTERTE I AS (BM) DOFCON AS (BM) DOF ASA (C) DOFCON BRASIL AS (BM) DOF REDERI AS (C) BOREA AS (BM) DOF REDERI II AS (BM) DOF INSTALLER ASA (C) DOF SUBSEA AS (C) WELCON AS (BM) DOF SUBSEA HOLDING 2 AS (C) MURMAN FISHING COMPANY DOF SUBSEA HOLDING AS (C) LTD (contact) DOF SUBSEA REDERI AS (C) DOF SUBSEA SHIPOWNING AS (C) EIKELIE AS (C) Positions: EIKELIE INVEST EIENDOM AS (C) [None] EIKELIE INVEST EIENDOM II AS (C) EPAX AS (BM) EPAX HOLDING AS (BM) EPAX LIPRO AS (BM) FITJAR MEKANISKE VERKSTED AS (C) GEOGRAPH SHIPPING II AS (C) GEOHOLM AS (C) KOBBEVIK OG FURUHOLMEN OPPDRETT AS (BM) LACO AS (BM) LAFJORD AS (C) MOGSTEIN AS (C) MOH EIENDOM 1 AS (BM) MV MARMON ANS (responsible participant) MØGSTER HAVFISKE AS (BM) MØGSTER MANAGEMENT AS (C) MØGSTER OFFSHORE AS (C) NORSKAN AS (C) NORSKAN HOLDING AS (BM) NORSKAN NORWAY AS (C) PACPRO NORGE AS (C) PARTREDERIET JM GISKE ANS (responsible participant) SENTRUM EIENDOM AS (BM) TALBOR AS (BM) WAVENEY AS (deputy BM) WELCON INVEST AS (deputy BM)
Positions: AUMUR AS (contact) AUSTEVOLL FISK AS (contact) EIKELIE AS (contact) EIKELIE INVEST EIENDOM AS (contact) EIKELIE INVEST EIENDOM II AS (GM) LAFJORD AS (contact) MOH EIENDOM 1 AS (GM) MØGSTER HAVFISKE AS (GM) VESTERLIE AS (contact)
Helge Singelstad Directorships: Directorships: Hallvard Lerøy AS (C) Sigerfjord Fisk AS (C)
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Lerøy Hydrotech AS (BM) Lerøy Vest AS (C) Lerøy Midnor AS (BM) Lerøy Fossen AS (C) Lerøy Aurora AS (BM) Sjørøye AS (C) Laco Iv AS (C) Egersund Seafood AS (BM) Atlantic Pelagic AS (BM) Lerøy Hydrotech AS (C) A-Fish AS (BM) Egersund Nor AS (BM) Austevoll Fiskeindustri AS (BM) Egersund Fisk AS (BM) Austevoll Fisk AS (C) Norskott Havbruk AS (BM) Austevoll Eiendom AS (C) Lerøy Midnor AS (C) Dof ASA (BM) Lerøy Aurora AS (C) Lerøy Vest AS (BM) Lerøy Quality Group AS (Deputy Welcon Invest AS ( BM) BM)Lerøy Austevoll Holding AS AUSTEVOLL SEAFOOD ASA (C) (C) BJÅNESØY EIENDOM AS (C) Lerøy Alfheim AS (C) BR. BIRKELAND AS (C) Lerøy Quality Group AS (C) BR BIRKELAND FISKEBÅTREDERI AS (C) Lerøy Fisker'N AS (C) DOF SUBSEA AS (BM) Lerøy Sjømatgruppen AS (C) DOF SUBSEA HOLDING AS (BM) Lerøy Trondheim AS (C) DOF SUBSEA HOLDING 2 AS (BM) Lerøy Delico AS (C) FITJAR MEK VERKSTED AS (BM) Sigerfjord Aqua AS (BM) KOBBEVIK & FURUHOLMEN OPPDRETT AS Sjørøye AS (BM) (C) Lerøy Fossen AS (BM) LERØY SEAFOOD GROUP ASA (C) Sea Star International AS (BM) MOGSTEIN AS (BM) Lerøy Austevoll Holding AS (BM) MØGSTER HAVFISKE AS (BM) Norskott Havbruk AS (BM) MØGSTER MANAGEMENT AS (BM) MØGSTER OFFSHORE AS (BM) NORSKOTT HAVBRUK AS (BM) PACPRO NORGE AS (BM) TALBOR AS (C)
Positions: Laco AS (GM) Møgster Offshore AS (GM) PACPRO NORGE AS (GM) Positions: Lerøy Seafood Group ASA (GM)
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Oddvar Stangeland Directorships: Directorships: AKER DOF DEEPWATER AS (BM) BERGEN YARDS AS (BM) AUSTEVOLL ASV AS (C) BERGEN GROUP KIMEK AS BERGEN GROUP ASA (deputy BM) (deputy BM) BERGEN GROUP SHIPDESIGN AS (BM) DOF ASA (BM) AUSTEVOLL KRAFTLAG BA DOFCON BRASIL AS (C) (C) DOF REDERI AS (BM) BERGEN GROUP HALSNØY AS DOFTECH DA (C) HARDSJØ MARINE AS (BM) (BM) KANABUS AS (C) DEEPOCEAN AS (BM) KONTORSENTERET AUSTEVOLL AS (C) LIONS CLUB AUSTEVOLL (BM) BERGEN GROUP MARITIME MØGSTER OFFSHORE AS (BM) SERVICES AS (BM) NORSKAN AS (BM) AUSTEVOLL VATN OG AVLØP STANGELAND GJESTEGÅRD AS (C) BA (deputy C) STOLMEN INDUSTRI AS (BM) TECHDOF DA (BM) DOF OILFIELD SERVICES AS (deputy BM) Positions: BERGEN GROUP ASA (BM) DOFTECH DA (contact) HAVLYS (GM) ANOMA AS (C) KANABUS AS (GM) FEDJE SIKKERHETSSENTER AS STANGELAND GJESTEGÅRD AS (C) (BM) HAVLYS (C)
Positions:
Britt Mjellem Directorships: Directorships: DOF ASA (BM) [None] ESPEN BERNHARDSEN CONSULTING AS (deputy BM) Positions: CONADI AS (deputy BM) BOREA FX AS (GM) FISH POOL AS (BM) IMH INVEST AS (deputy BM) MJELLEM INVEST AS (C) SEABED SERVICES AS (BM)
Positions: Amesto People (Man Dir) MJELLEM INVEST AS (contact)
Wenche Kjølås Directorships: Directorships: AS NESTUN ULDVAREFABRIKK (BM) GRIEG LOGISTICS AS (deputy CSG15 AS (BM) BM) DOF ASA (BM) MOSJØEN GRIEG GAARDEN KS (BM) INDUSTRITERMINAL AS GRIEG GREEN (BM) (deputy C) GRIEG GROUP RESOURCES AS (C) PETROLEUM GEO-SERVICES GRIEG LOGISTICS AS (BM) ASA (BM) GRIEG PROPERTY AS (BM) GRIEG SEAFOOD ASA (BM) Positions: JAWENDEL AS (BM) JAWENDEL AS (GM) NORWIND AS (BM) NORDWIND INSTALLLER AS (BM) OCEANWIND AS (BM) Positions: GRIEG GAARDEN AS (GM) GRIEG MATURITAS AS (GM)
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Previous Directorships/positions Management: Current Directorships/positions (last 5 years)
Mons Aase Directorships: Directorships: AKER DOF DEEPWATER AS (BM) GEOFJORD AS (BM) AS C. SUNDSGT 54 (BM) DOF BOA AS (Deputy C) ANOMA AS (C) GEOSHIPPING AS (BM) CONSTRUCTA AS (BM) DOFCON BRASIL AS (C) CONSTRUCTA ENTREPRENØR AS (BM) Positions: CSL NORGE AS (C) DOF SUBSEA AS (GM) DOF INSTALLER ASA (C) DOFCON BRASIL AS (GM) DOF MANAGEMENT AS (C) DOF OILFIELD SERVICES DOF REDERI AS (BM) AS (BM) DOF REDERI II AS (C) JANTZENS FOND TIL DOF SUBSEA AS (BM) FREMME AV DOF SUBSEA HOLDING 2 AS (BM) SJØRETTSFORSKNING DOF SUBSEA HOLDING AS (BM) (BM) DOF SUBSEA NORWAY AS (C) NORDISK DOF SUBSEA REDERI AS (BM) SKIBSREDERFORENING DOF SUBSEA REDERI II AS (C) (BM) DOF SUBSEA ROV AS (C) DOF INSTALLER ASA DOF SUBSEA SHIPOWNING AS (BM) (GM) DOFCON AS (C) GEOFJORD SHIPPING AS DOFCON BRASIL AS (BM) (GM) DOFTECH DA (BM) GEOGRAPH SHIPPING II AS (BM) GEOHOLM AS (BM) GEO REDERI AS (C) GEO REDERI II AS (C) GEOCONSULT. AS (C) GEOFJORD SHIPPING AS (C) GEOGRAPH SHIPPING AS (C) GEOSUND AS (C) MOCO AS (C) MOCO FRITIDSEIENDOM AS (C) MOCO HOLDING AS (C) MOH EIENDOM 1 AS (C) NORSKAN AS (BM) NORSKAN HOLDING AS (C) NORSKAN NORWAY AS (BM) PACPRO NORGE AS (BM) SEMAR AS (BM) SKANDI NEPTUN AS (C) AS SLETTEBAKKVEIEN 104 (C) SVENDAL-AASE EIENDOM AS (BM) TECHDOF DA (BM) WAVENEY AS (C) Positions: DOF ASA (GM) AKER DOF DEEPWATER AS (GM) DOF OILFIELD SERVICES AS (GM) DOFCON BRASIL AS (contact) DOF REDERI AS (GM) DOF SUBSEA AS (GM) DOF SUBSEA HOLDING 2 AS (GM) DOF SUBSEA HOLDING AS (GM) DOF SUBSEA REDERI AS (GM) DOF SUBSEA SHIPOWNING AS (GM) GEOGRAPH SHIPPING II AS (GM) GEOHOLM AS (GM) MOCO AS (contact) MOCO FRITIDSEIENDOM AS (GM)
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MOCO HOLDING AS (contact) NORSKAN AS (GM) NORSKAN NORWAY AS (GM) AS SLETTEBAKKVEIEN 104 (GM) TECHDOF DA (contact)
Hilde Drønen Directorships: Directorships: ANOMA AS (BM) Geoshipping AS (BM) DOF REDERI AS (BM) Geo Group AS (BM) DOF REDERI II AS (BM) Gode Sirklar AS (BM) DOF SUBSEA AS (BM) DOF Sjø I AS (C) DOF SUBSEA HOLDING AS (BM) Tide ASA (BM) DOF SUBSEA HOLDING 2 AS (BM) DOF Boa AS (BM) DOF SUBSEA REDERI AS (BM) DOF Installer AS (BM) DOF SUBSEA ROV AS (BM) Handelsbanken DOF SUBSEA REDERI II (BM) Fondsforvaltning AS DOF SUBSEA SHIPOWNING AS (BM) (Dep.BM) DOF Osm Marine Services AS (BM) Djupedalen AS (C) Positions: GEOCONSULT. AS (BM) None GEOFJORD SHIPPING AS (BM) GEOHOLM AS (BM) Geo Rederi AS (BM) Geo Rederi II AS (BM) GEOGRAPH SHIPPING (BM) Geograph Shipping AS II (BM) GEOSUND AS (BM) Norskan AS (BM) Norskan Norway AS (BM) Norskan Holdning AS (BM) DOFCON AS (BM) DOF Installer ASA (BM) DOF Sjø AS (C) DOF Management AS (BM) MARIN IT AS (C) Møgster Management AS (deputy BM) SEVAN MARINE ASA (BM) SKANDI NEPTUNE AS (BM) WAVENEY AS (BM)
Positions: DJUPEDALEN AS (contact)DOF ASA (CFO) DOFCON AS (GM) DOF REDERI II (GM) DOF SJØ AS (contact) DOF SUBSEA ROV AS (contact) GEOCONSULT. AS (contact) GEOFJORD AS (GM) GEO REDERI AS (GM) GEO REDERI II AS (GM) GEOSUND AS (GM) NORSKAN HOLDING (GM) NORSKAN NORWAY (contact)Norskan AS (GM) SKANDI NEPTUNE AS (contact)
Tore R. Mohn Positions: Positions: [None] [None]
Directorships: Directorships: Kanabus AS (Deputy BM) Bergen Mek. Verksted (BM) Dof Sjø AS (Deputy BM) Bergen Group Kimek AS Stangeland Gjestegård AS (deputy BM) (BM) Bravo Tug AS (BM)
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Aker DOF Deepwater AS (BM) DOF Sjø I AS (Deputy BM) District Supply Vii AS (BM) Dof Oilfield Services AS (C)
Anders A. Waage Directorships: Directorships: DOF OSM MARINE SERVICES AS (BM) DOF BOA AS (BM) HAVBLIKK AUSTEVOLL AS (C) DOF INSTALLER AS (BM) MARIN IT AS (BM) Positions: [None] Positions: DOF MANAGEMENT AS (GM) HAVBLIKK AUSTEVOLL AS (GM)
Arnstein Kløvrud Directorships: Directorships: [None] [None]
Positions: Positions: [None] [None]
• Remuneration and benefits
5.6 Remuneration The remuneration of the Directors of the Board shall be determined on an annual basis by the Company’s shareholders in its annual general meeting in accordance with section 3 of the Company’s Corporate Governance Policy. The directors may also be reimbursed for, inter alia, travelling, hotel and other expenses incurred by them in attending meetings of the directors or in connection with the business of the Company. A director who has been given a special assignment, besides his normal duties as a director of the Board, in relation to the business of the Company may be paid such extra remuneration as the directors may determine. Up to and including 2010, no remuneration has been paid to the Board. The costs of auditing have been covered in accordance with invoices received. The Board of Directors of the Company has signed declaration in respect of salaries and other renumeration applicable to leading personnel. The main principle for stipulation of renumeration for leading personnel of the Company is that leading personnel shall be offered competitive terms and conditions, with salaries, other benefits, bonus and pensions arrangements being appraised together. The company offers a lever o renumeration which reflects a comparable level with similar companies and considering the company`s requirements for highly qualifies personnel at all levels. Executive manangement may be entitled to a bonus in addition to basic salary. The bonus (if any) to the CEO is determined by the Chairman of the Board. Bonus to other members of the executive management is determined by the CEO after consultation with the Chairman of the Board. Executive management participate in standard pension ans insurance schemes, applicable to all employees in the Company. The company practice standard employment contracts and standard terms and conditons regarding notice period for its executive management. The company does not offer share option programmes to any employees. The CEO had a compensation in 2009 of NOK 5 890 000. In addition the CEO receives car allowance and the Company covers the cost of mobile and home telephone as well as the cost of newspapers and pension, group life, travel and holiday insurance. If the CEO resigns from his position, he has the right to an extra compensation corresponding to 12 months’ salary. Retirement age is 67 years with a pension of up to 70% of salary (12 times the National Insurance base amount) upon retirement.The CEO has no other compensations.
The CFO had a compensation in 2009 of NOK 2 460 000. In addition the CFO receives car allowance and the Company covers the cost of mobile and home telephone as well as the cost of pension, group life, travel and holiday insurance. The CFO has no other compensations. None of the members of the administrative, management or supervisory bodies’ service contracts with the Company or any of its subsidiaries provide for benefits upon termination of employment.
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• 5.7 Bonus and incentive program The CEO has the right to a bonus of 0.5% of the group’s annual result. The amount of any bonus to the CEO shall be set by the Chairman of the Board. Senior employees shall only receive remuneration in addition to the basic salary in form of a bonus. The amount of any bonus to the senior management shall be set by the CEO in consultation with the Chairman of the Board.
• 5.8 Loans and guarantees Company has not granted any loans, guarantees or other commitments to any member of the Board, nor the Management and there are no unusual agreements regarding extraordinary bonuses to any member of the Board.
• Pension scheme The Company has a general group pension scheme for the employees. The defined benefit pension scheme (NW: “ytelsesbasert pensjonsforliktelser”) were closed for new employees from 2007 and in this scheme the employee is entitled to a pension amounting to 70% of the salary from the retirement age of 67 years. Of the total of 606 employees 504 persons are member of the defined benefit pension scheme (NW: ytelsesbasert pensjonsordning] and 63 persons are member of the defined contribution scheme (NW: innskuddsbasert pensjonsordning). The company has set aside approx. NOK 12 mill in 2009 to cover future pension liabilities.
• Shareholdings and stock options The following table sets forth, as of the date of this Registration Document, the number of Shares beneficially owned by each of the Company’s directors and senior management, and the number of options held by such persons: Name Position Holding Company Shares Options Directors Helge Møgster Chairman of the Board Laco AS, 46 446 980 0 Møgster Offshore AS Helge Singelstad Member of the Board 0 0 Oddvar Stangeland Member of the Board Kanabus 28 000 0 Britt Mjellem Member of the Board Mjellem Invest 1 000 0 Wenche Kjølås Member of the Board Jawendel AS 3 000 0
Group executive management Mons Aase CEO Moco AS 498 100 0 Hilde Drønen CFO Djupedalen AS 30 675 0 Tore R. Mohn Director of legal affairs 0 0 Anders A. Waage COO 1 675 0 Arnstein Kløverud CTO 0 0 Total 47009430 0 * Shares controlled directly and indirectly through Laco AS. endre tekst?Laco is owned indirectly 40% by Helge Møgster and his family. • 5.9 Employees Employees 2006 2007 2008 2009 DOF Group 1,800 2,200 2,350 3,048
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6 CORPORATE GOVERNANCE 6.1 Compliance with Corporate Governance Recommendations The Company is a public limited company organized under Norwegian law with a governance structure based on Norwegian corporate law. The Company’s shares are listed on the Oslo Stock Exchange. The Company has developed its governance structure through cooperation between the corporate management and the other governance bodies to secure compliance with relevant laws and regulations and to reflect business needs. Further development is a continuous process. The Company and the Board has adopted and implemented corporate governance principles that are based on the Norwegian Code of Practice for Corporate Governance (the “Code of Practice”) issued by the Norwegian Corporate Governance Board, as last issued on 21 October 2010. The Company has disclosed its corporate governance principles in its annual report and on its web page www.dof.no. The Code of Practice is a “comply or explain” guideline and the Board will state and explain any deviation from the recommended guidelines in the annual report. The Company’s principles for corporate governance correspond in all material respect with the Code of Practice except for a deviation from Section 12 of the Code of Practice; the Company has not yet established guidelines for the Company’s contact with shareholders other than that all shareholders should be treated equally. 6.2 Committees The Company has established a nomination committee consisting of three members appointed by the general meeting. Currently, the members of the nomination committee are Harald Eikesdal (chairperson), Roy Reite and Kristine Herrebrøden. The nomination committee nominates candidates to the Board, and proposes the remuneration to the Board. The Company has an audited committee who has responsibilities relating to financial reporting, the independent auditor and risk management. The independent auditor usually attends the meetings. The CEO and other directors are entitled to attend if they so desire. The committee currently has three members:Wenche Kjølås (Chairman), Britt Mjellem and Helge Singelstad.
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7 LEGAL MATTERS
• 7.1 Legal and arbitration proceedings The Company and its subsidiaries may from time to time be involved in disputes in the ordinary course of its business activities, c.f. Chapter 1 “Risk Factors” above. The Company is not involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) which may have significant effects of the Company’s financial position or profitability, nor has the Company been involved in any such proceedings during the previous 12 months.
• 7.2 Related party transactions All transactions with close associates have been carried out at arms-length prices and are settled on a regular basis and according to the Norwegian Public Limited Liability Companies Act. There are no other agreements or transactions between the Company and its officers and key employees, except for ordinary employment agreements and consultancy agreements and transactions described herein. The following lists below provide an overview of material agreements which the Company have entered into with related parties since 1 January 2006 and to the date of this Registration Document: 7.2.1 Long term agreements: The Company have the following long term agreements with related parties, all of which, in the opinion of the Company, are made on market terms: • Møgster Offshore AS owns 50.76% of the shares in DOF ASA. Laco AS is the main shareholder of Møgster Offshore AS. Møgster Management AS provides administrative intragroup services to DOF ASA. Møgster Management AS is owned by Laco AS. • Austevoll Eiendom AS is a subsidiary of Austevoll Seafood ASA, which in turn is a subsidiary of Laco. DOF ASA leases premises from Austevoll Eiendom AS. • DOF Management AS supplies administrative services to certain Group companies, including DOF Subsea AS. • DOF Subsea AS leases two holiday homes from Mons Aase, Board member in DOF Subsea AS and CEO of DOF ASA. The lease cost in 2009 totalled NOK 400,000. • Norskan Offshore Ltda. in Brazil provides accounting services to DOF Subsea Brasil Ltda. Furthermore, Norskan Offshore Ltda. hires personnel and equipment from DOF Subsea Brasil Ltda. Norskan Offshore Ltda. has signed management agreements for vessels owned by DOF Subsea and DOF Rederi. 7.2.2 Other agreements and transactions In 2010, the Company had the following related party transactions, all of which, in the opinion of the Company, were made on market terms: • Moco AS is owned by the CEO of DOF ASA. Moco AS has participated in joint investments with DOF ASA, including the investment in IS Waveny where Moco owns 10%. Two employees of DOF Management and Chairman of the Board Helge Møgster have shareholdings in the same company, at 1.5%, 10% and 10% respectively. All these shares have been sold to DOF ASA in 2010 at cost price plus interest. IS Waveny owns the vessel Skandi Waveney. • DOF Rederi AS: Until 1 April, DOF Rederi AS has leased the vessel Skandi Waveney on a bareboat charter from Waveney IS. Waveney IS is an internal partnership in which DOF ASA on a group basis owns 47%. • In addition to the above-mentioned transactions of an operating nature, there are financial transactions and intragroup accounts between companies in the DOF Group. In 2009, the Company had the following related party transactions, all of which, in the opinion of the Company, were made on market terms: • Møgster Management AS delivers administrative services such as IT, legal advice, catering, secretary and accounting, to the Company. Møgster Management AS is owned by Laco AS. Laco AS is the main shareholder of Møgster Offshore AS which in turn owns 50.76% of DOF. In 2008, the Company had the following related party transactions, all of which, in the opinion of the Company, were made on market terms:
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• Møgster Management AS delivered administrative services such as IT, legal advice, catering, secretary and accounting, to the Company. • Board member Oddvar Stangeland and his wholly-owned company Kanabus AS, had assignments for the Company as technical advisor in various new-building/ and re-building projects. • The Company purchased shares in DOF Installer AS from Moco AS (owner: Mons Aase), Kanabus AS (owner: Oddvar Stangeland), Djupedalen AS (owner: Hilde Drønen) and Havblikk Austevoll AS (owner: Anders A. Waage) for a consideration of NOK 5,000,000, NOK 1,875,000, NOK 1,250,000 and NOK 1,875,000, respectively. • DOF Rederi AS leases the vessel Skandi Waveney on a bareboat charterparty from Waveney IS. Waveney IS an internal partnership where the DOF Group owns 47%.
In 2007, the Company had the following related party transactions, all of which, in the opinion of the Company, were made on market terms: • Møgster Management AS delivered administrative services such as IT, legal advice, catering, secretary and accounting, to the Company. • DOF Subsea AS had an office rent agreement with Åstveit Mølle AS, a company controlled by Hans Gravdal, then a member of the Board of Directors of DOF Subsea AS. Further, DOF Subsea AS acquired a vessel constructed by Fjellstrand AS, a company controlled by Hans Gravdal. • Board member Oddvar Stangeland and his wholly-owned company Kanabus AS, had assignments for the Company as technical advisor in various new-building/ and re-building projects.
In 2006, the Company had the following related party transactions, all of which, in the opinion of the Company, were made on market terms:
• Møgster Management AS delivered administrative services such as IT, legal advice, catering, secretary and accounting, to the Company.
• Board member Oddvar Stangeland and his wholly-owned company Kanabus AS, had assignments for the Company as technical advisor in various new-building/ and re-building projects.
7.3 Material contracts outside ordinary course of business Neither the Company, nor any other company within the DOF Group, has entered into any material contracts other than in the ordinary course of business for the two years preceding publication of this Registration Document.
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8 FINANCIAL INFORMATION
8.1.1 Financial information and accounting policies
• Historical financial information on DOF and summary of the Company’s accounting policies The historical consolidated financial information for the Company is prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. The Company’s audited annual report for 2009, including an overview of the Company’s accounting policies, explanatory notes and auditor’s report, is attached as Appendix A-2 to this Registration Document. The Company’s audited annual report for 2008 is incorporated by reference hereto (see Chapter 11). The annual report for 2009 is enclosed as Appendix A-2, and can also be found at http://www.dof.no/Admin/Public/DWSDownload.aspx?File=%2fFiles%2fFiler%2fDOF%2fPDF%2ffinancial_info%2f Q1Q4+09+Report%2fDOF09(E)_spread_web.pdf . The annual report for 2008 can be found at http://www.dof.no/Admin/Public/DWSDownload.aspx?File=%2fFiles%2fFiler%2fDOF%2fPDF%2ffinancial_info%2f Q1Q4+08+Report%2fDOF08(E)_web.pdf .
The Company’s financial statements for H1 2010 are enclosed as Appendix A-3. Company reports may be found at the Company’s website www.dof.no and information published after 1998 at www.newsweb.no under the ticker “DOF”. The financial statements for 2009, 2008 and 2007 have been audited by DOFs’ statutory auditor, PricewaterhouseCoopers AS.
• Auditing of historical annual information and the Company’s Auditor PricewaterhouseCoopers AS has audited the annual financial statements for the Company for the years ended 31 December 2007, 2008, and 2009 in accordance with the Norwegian Standards of Auditing, and has been included as Appendix 2 (2009 report only) and incorporated by reference (see Chapter 11). PricewaterhouseCoopers AS has been the Company’s auditor since its incorporation. Their address is Dronning Eufemiasgate 8, 0191 Oslo, Norway. Telephone number: +47 23 16 00 00, telefax number: +47 24 06 27 79, web site: www.pwc.no. The audit partners of PricewaterhouseCoopers are members of the Norwegian Institute of Public Accountants. No other information in this Registration Document has been audited.
• Interim financial information The Company has released financial information for the six months financial periods ended 30 June 2010, with comparative statements for the three months financial periods ended 30 June 2009. The interim financial information has been prepared according to IAS 34 and has not been audited. The Company’s financial statements for the six months financial periods ended 30 June 2010 are attached as Appendix A-3.
• Historical financial information The following Sections (8.1.2-8.1.6) are a summary of the Company’s statements as set out in Appendicies A-2 and A- 3 in this Registration Document.
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8.1.2 Consolidated income statement for the Company Set out below are the condensed consolidated income statements for the Company for the years ended 31 December 2009, 2008 and 2007, and the six month periods ended 30 June 2010 and 2009: The year The year The year 6 months 6 months ended ended ended ended ended Operating Income 31.12.2009 31.12.2008 31.12.2007 H1 2010 H1 2009 All figures in NOK millions Audited Audited Audited Unaudited Unaudited Operating revenues 4 327 4 340 3 454 2 650 2 046 Operating expenses (3 094) (2 784) (2 225) (1 828) (1 483) Operating profit before depreciation 1 234 1 556 1 229 823 564 Depreciations ( 837) ( 643) ( 530) ( 524) ( 351) Write-downs ( 179) - - - Operating profit 218 912 699 299 212 Associated companies 192 125 43 2 172 Net financial expenses ( 163) ( 505) ( 202) ( 222) ( 246) Unrealized profit/loss on currencies 758 ( 655) 123 ( 340) 405 Pre-tax profit 1 005 ( 123) 663 ( 261) 543 Result for the period 803 100 222 ( 281) 393 Whereof minority interests 201 35 48 ( 85) ( 162) Whereof majority's interest 602 65 174 ( 196) 555 T The audited figures are derived from the Company’s annual financial statements for 2009 and 2008. The unaudited figures are derived from with the Company’s interim financial report for H1 2010.
8.1.3 Consolidated balance sheet for the Company Set out below is the condensed consolidated balance sheet for the Company as of 31 December 2009, 2008 and 2007, and for the interim periods ended 30 June 2010 and 2009: Balance sheet 31.12.2009 31.12.2008 31.12.2007 30.06.2010 30.06.2009 All figures in NOK million Audited Audited Audited Unaudited Unaudited Vessels and other non-current assets 17 827 15 563 13 829 20 069 17 041 Other current assets 3 957 4 269 2 913 3 545 4 068 Total assets 21 785 19 831 16 742 23 614 21 109
Equity 6 809 5 499 4 555 6 525 6 410 Long-term liabilities 11 973 11 330 10 563 11 539 13 643 Short-term liabilities 3 002 3 002 1 624 5 550 1 056 Total liabilities and equity 21 785 19 831 16 742 23 614 21 109
The audited figures are derived from the Company’s annual financial statements for 2009 and 2008. The unaudited figures are derived from with the Company’s interim financial report for H1 2010.
8.1.4 Consolidated cash-flow statement for the Company Set out below are the condensed consolidated cash flow statements for the Company for the years ended 31 December 2009, 2008 and 2007, and the six month periods ended 30 June 2010 and 2009: Cash flow 31.12.2009 31.12.2008 31.12.2007 H1 2010 H1 2009 All figures in NOK million Audited Audited Audited Unaudited Unaudited
Opening cash balance 2 832 1 859 1 552 2 214 2 832
Net cash flow from operational activities 599 719 793 660 383 Net cash flow from investment activities (3 264) (1 650) (4 642) (2 572) (1 613) Net cash flow from financing activities 2 048 1 903 4 156 1 534 867
Ending cash balance 2 214 2 832 1 859 1 835 2 468
The audited figures are derived from the Company’s annual financial statements for 2009 and 2008. The unaudited figures are derived from with the Company’s interim financial report for H1 2010.
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• Comments to the financial statements First half 2010 (H1) The company's operation of the supply fleet has been steady, with close to 100% utilisation during the period. One supply vessel, the Skandi Admiral, has operated on the spot market throughout the quarter and the degree of utilisation and rate level have both been good compared with the previous quarter. One newbuilding, the Skandi Vega, started a 5- year contract for Statoil at the end of May and the Skandi Captain started its 3-year contract in Brazil in June having undergone a minor reconstruction. One ship, the Skandi Emerald, was sold during this period, generating a gain of approx. NOK 15 million.
The subsea fleet had an average degree of utilisation of approx. 90% in Q2 compared with a degree of utilisation of 85% in Q1. DOF Subsea also had full effect from the operation of two newbuildings, the Skandi Aker and the Skandi Santos that were delivered in the first quarter.
Financial result and tax Norskan uses a functional currency in BRL and major fluctuations against USD produce a high accounting effect even though Norskan has a limited degree of exposure to foreign exchange as all long-term contracts are hedged in the same currencies as the operating and financial costs. DOF Subsea has included extra tax costs of NOK 50 mill to enter into new tonnage tax regulation.
Balance sheet The Group’s net interest-bearing liabilities total NOK 13,157 million as of 30 June 2010 as against NOK 11,073 million at year-end. The increase in net interest-bearing liabilities represents new long-term loans taken out in connection with the delivery of new vessels. One ship was delivered in Q2.
As of 30 June 2010, cash reserves totalled approx. NOK 1,835 million, of which NOK 966 million is non-distributable cash in connection with long-term liabilities.
Net cash flow from investing activities in the period was NOK – 2 572million (negative at NOK - 1,613 million) and net cash flow from financing activities was NOK 1 534 million (NOK 867 million). Financing and capital structure
In July, DOF ASA issued a new 3-year unsecured bond loan of NOK 950 million, and bought back main outstanding of bond loan maturing in June 2011 (NOK 662 million). The net cash effect from this transaction amounted to approx. NOK 225 million and the group’s liquidity position has improved by NOK 950 mill in the period from 2011-2013. In accounting terms, this refinancing will be taken into account as of the third quarter.
During the period, Norskan has agreed favourable terms with BNDES for 3 newbuildings in Brazil and secured approx. 80-90% financing of the building costs for these two ships. Norskan has also received an undertaking from MMF (Merchant Marine Fund) for another 2 newbuildings in Brazil.
Per 30 June 2010, the group’s remaining capex on vessels under construction was approx NOK 8 400 mill and represents deliveries in the period from 2010-2013. Planned new financing on these vessels is NOK 7 400 mill of which approx 80% is secured.
By end of June the group’s short term portion of long term debt amounted to NOK 4 257 mill, of which NOK 3 800 mill are long-term debt with maturity within 12 months. The group has pr August agreed refinancing of approx NOK 1 000 mill of this debt and is in process to refinance additional NOK 2 200 by end of 2010.
In April 2010, DOF Installer carried out a share issue of NOK 150 million with the issue of 7,500,000 shares. Another share issue of NOK 200 million was carried out with the issue of 10,000,000 shares in November 2010. After these transactions, DOF Subsea owns approx. 78.5% of DOF Installer.
During the period, the DOF Group completed restructuring within the Group as preparation for a potential stock exchange listing of Norskan in Brazil. Norskan Offshore SA has also been approved as a public company in Brazil. As of the date of this Prospctus, the potential listing has been placed on hold.
The fleet/activities In May, DOF ASA took delivery of the Skandi Vega, which has started a 5-year contract for Statoil.
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In June 2010, the Skandi Emerald, which is owned by Aker DOF Deepwater, was sold to a new owner, Vietsopetro, at a price of USD 65 million. The DOF Group owns 50% of Aker DOF Deepwater.
In June, DOF Subsea, Australia, acquired the subsea engineering company SWG Offshore. This company has approx. 40 employees specialised in subsea engineering and construction. This acquisition is an important step for the further growth of DOF Subsea in this region. SWG will be fully integrated into DOF Subsea's service activities in Australia.
In July, DOF issued a new NOK 950 million bond with maturity July 2013. The purpose of this bond was to refinance existing bond debt and general corporate purpose.
In July an agreement was entered into for the sale of two newbuilding contracts at Cochin Shipyard in India for a price of USD 54 million per ship. The sale of one ship was conditional on the buyer having secured long-term financing before the end of August 2010. Per the date of this Registration Document, the condition has not been met and the second newbuilding contract is therefore still in DOF’s fleet.
In July, DOF Installer took delivery of the Skandi Skolten, which has started on its first job for Atlantic Resources, after which it will work for Conoco Phillips.
In August, Norskan contracted two anchor handling tug support vessels at STX Promar in Brazil. Both ships were of the AH 11 design, with 23,000 bhp. The vessels are scheduled for delivery in 2012 and 2013. Eight-year contracts with Petrobras have been secured for both the ships.
In October, DOF’s subsidiaries Norskan Offshore and DOF Subsea Brazil announced three long-term charter contracts with Petrobras. The companies were awarded three 5 years contracts with Petrobras for ROV Support vessel Geograph and two other vessels will be utilized for these contracts. Expected commencement for the contracts will be firstt half 2011 for two vessels and 2nd half 2011 for the last vessel. The contracts have a gross value of approx. NOK 2 billion.
In Ocotber, the 51% owned subsidiary DOF Subsea AS successfully completed the issuance of a NOK 750 million bond in the Norwegian bond market. Final maturity date is 14 April 2014.
In November, DOF issued a new NOK 600 million bond with maturity March 2015 to refinance existing bond debt with shorter maturity and for general corporate purpose.
The Financial Year 2009 Operating revenue DOF group’s revenue in 2009 amounted to MNOK 4,327.3 compared to MNOK 4,339.7 in 2008. Adjusted with gain/loss from sales of assets the revenue is MNOK 4,335.2 (MNOK 4,021.9 mill) The growth in revenue is more vessels in operation in 2009. The group took delivery of 3 vessels in 2009, of which two vessels were large and complex construction support vessels. One of these vessels is owned by 50%. None vessels were sold in 2009 compared to three vessels sold in 2008. Based on average number of vessels in operation in 2009 the group operated 2 more vessels compared to 2008. Total revenues from vessel and ROV operations in 2009 were MNOK 4,098.80 and total revenues from engineering activities were MNOK 228.5.
Operating costs Total salary and operating costs were MNOK 3,093.6 in 2009 compared to MNOK 2,784.3 in 2008 which is an cost increase of approx 11%. The increase in costs is driven by operation of more vessels. Total depreciation costs increased from MNOK 643.3 in 2008 to MNOK 837.2 in 2009. In addition total write offs of MNOK 178.5 has been done in 2009 and represents basically write downs of excess values in one subsidiary.
Operating profit before depreciation (EBITDA) amounting to MNOK 1,233.7 (MNOK 1,555.7). Ebitda excluding gain/ loss from sale of assets is MNOK 1,141.5 (MNOK 1,237.9). Margins have partially been effected by currency fluctuations. Approx. 70% of the group’s revenues are other currency than NOK.
Result of the year Net financial result totalled MNOK 786.9 (MNOK (1,035.6)). Net financial result has been effected by unrealized gain on foreign currencies, total MNOK 757.5 (MNOK (655.4)) and represents high NOK and R$ to USD. For the Brazilian operation R$ is used as the functional currency and represents approx 50% of the unrealized currency gain in 2009 and respectively a loss in 2008. The operations in Brazil is however cash wise less exposed to currency fluctuations based on that the the revenue is split in R$ for the operational part and USD for the financial part. All long term debt for the operations in Brazil is in USD. As the Brazilian operations use R$ as functional currency the effects on the accounts have been substantial. Net financial income for associated companies was MNOK 191.7 (MNOK 124.8). The result
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both in 2009 and 2008 basically represent gain from sale of shares in Aker Oilfield Services AS and in DeepOcean respectively.
Tax costs/revenue are in total - MNOK 201.5 (MNOK 223.0). Included in the tax costs for 2009 approx MNOK 260 represent reversal of extra tax for the tonnage tax companies based on ruling in the Supreme court in Norway.
Comments to balance sheet Assets The Group assets increased from MNOK 21,784.7 which is an increase of approx 10% from year end 2008. The asset growth can be mainly be explained by investments in vessels and equipment. DOFSUB sold its shares in Aker Oilfield Services and the cash effect was approx MNOK 300. The Group has an extensive new-building program and paid installments and unemployed capital per 31 December 2009 is MNOK 4,594.7. This number represents basically installments on new builds and ROV’s with expected delivery in period from 2010-2012. Included in the number is also one vessel delivered in December that did not generate any revenue in 2009.
Equity The Group total equity increased from MNOK 5,498.8 to MNOK 6,809.1 of which minority interest amounted to MNOK 2,777.4. MNOK 803.0 of the equity growth is derived from profit and MNOK 103.2 from currency effects. In addition a capital increase of MNOK 240 and MNOK 305 has been completed in DOF ASA and in DOF Subsea respectively. The equity to assets ratio was approx 31% at year end 2009 compared to 28% in 2008. The equity ratio based on fair market value of the fleet and assets was approx. 48%.
Liabilities The Group’s net-interest bearing debt amounted to MNOK 11,073.4 as of 31.12.2009 compared to MNOK 9,710.7 at year end 2008. The Group’s liabilities have increased as result of delivery of new vessels and equipment. Short term of long term debt, MNOK 2,128.3 include four loans and one bond with maturity in 2010. Loan with maturity in 2010 represents MNOK 1,125 and three of these loans have been refinanced per April 2010 approx MNOK 780.
The debt/equity ratio was 2,20 calculated on 31.12.09 and 2,61 year end 2008.
Comments to the cash flow The net cash flow from operations in 2009 was MNOK 598.9 (MNOK 719.5). Investments in activities show a net negative cash flow effect of MNOK (3,264) vs. (MNOK (1,649.8)), whereof MNOK 83.1 are cash flows from sale of assets and MNOK (3,539.3) investments in fixed assets and that represents deliveries of three new-builds and installments on new-builds to be delivered in 2010-2012.
Financing activities show a positive cash flow effect of MNOK 2,047.5 (MNOK 1,903.1) whereof MNOK 4,915.5 is new long term debt and MNOK (3,317.8) are down payments on long term debt. MNOK 449.50 are cash effects from capial increases.
Working capital is MNOK 1,953 (MNOK 1,878.6). Total cash is MNOK 2,213.7 (MNOK 2,831) of which MNOK 1,131 ( MNOK 1,183) is restricted cash and represents deposits for long term debt with Eksportfinans for three vessels
8.1.5 Major events subsequent to 30 June 2010 In August 2010, Norskan was awarded four 8-year contracts for Petrobras for large AHTS vessels. It is expected that the contracts will begin in the period 2011-2013 and they represent a total value of approx. NOK 5.2 billion. For the DOF Group, these agreements represent the largest total contract ever awarded by one customer.
DOF placed an order for two new AHTS vessels of design AH11 with STX Europe’s yard in Brazil. The total building cost is approximately USD 261million. The vessel will be used to serve the abovementioned contract. DOF announced a new Memorandum of Understanding for a long term time charter contract with Total Austral S.A. in Argentina (Total) in respect of the vessel "Skandi Patagonia". The vessel has been on time charter with Total since the 2000 and will continue on the new time charter contract for 15 years from 1 January, 2011. Estimated total contract value is approx. NOK 1.5 billion.
In July 2010, DOF raised a new NOK 950 million bond with maturity July 2013.
DOF Subsea AS, owned 51% by the Company, issued a NOK 750 million senior unsecured bond with three years and six months duration.
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In November 2010, DOF raised a new NOK 600 million bond with maturity March 2015.
Other those described above, the Company has not experienced any significant change in the financial or trading position of the group since the date of the most recent audited report (31 December 2009), and the date of this Registration Document. There has been no material adverse change in the prospects of the issuer since the date of its last published audited financial statements, 31 December 2009, The Company is not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s prospects for the current financial year other than those described elsewhere in the Registration Document.
8.1.6 Ongoing investments The capital expenditure commitments for the Group relates to the construction of new vessels. Total commitments amount to NOKbn 8.4 per the date of this Registration Document, using a USD/NOK exchange rate of 6.0. Of this, NOKbn 5.2 relates to DOF and its wholly owned subsidiaries, including their 50% share of Aker DOF Deepwater capex. Further NOKbn 1.5 relates to the 51% owned DOF Subsea while NOKbn 1.6 relates to DOF Installer (owned 78.5% by DOF Subsea). The Group had undrawn debt funding of NOKbn 6.2 per 1 August 2010. Approximately NOKbn 1.6 of this funding is subject to letters of credit from commercial banks. Further debt financing is being sought to fund investments.
Principal future investments There are no planned investments other than the ordinary business maintenance and capital expenditures in the Company.
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9 SHARE CAPITAL AND SHAREHOLDER MATTERS
9.1.1 Share capital The Company’s share capital as of the date of this Registration Document is NOK 182,075,950, consisting of 91,037,975 ordinary shares, with a par value of NOK 2.00 per share. There is one class of shares. The shares are equal in all respects, and each share carries one vote at the Company’s general meeting.
• Type, class and ISIN number of the Shares The Company has one class of shares. The shares are created under the laws of Norway. The Company’s shares are in registered form, and are registered in book-entry form with the VPS under the securities identification code ISIN NO 001 0070063. The Company’s account operator is Nordea Bank Norge ASA, Middelthunsgt. 17, 0368 Oslo, Norway.
9.1.2 Major shareholders As of 23 August 2010, DOF had a total of 4,227 registered shareholders in the VPS, of whom 4,121 were Norwegian and 106 were foreign shareholders. Shareholders holding 5% or more of the Company’s shares have an interest in the Company’s share capital which is notifiable according to the Norwegian Securities Trading Act (for a description of the notification threshold etc, see Section 11.1.8 below). The table below shows the 20 largest shareholders in the Company as appear in the VPS on 23 August 2010: Shareholder Number of % Shares 1 MØGSTER OFFSHORE AS 46,210,050 50.76% 2 ODIN NORGE 6,152,000 6.76% 3 SKAGEN VEKST 4,954,800 5.44% 4 PARETO AKSJE NORGE 4,747,707 5.22% 5 PARETO AKTIV 2,253,300 2.48% 6 MP PENSJON 1,845,600 2.03% 7 ODIN OFFSHORE 1,751,900 1.92% 8 SKANDINAVISKA ENSKILDA BANKEN 1,061,114 1.17% 9 VESTERFJORD AS 873,650 0.96% 10 NORDEA BANK NORGE ASA MARKETS MARKET-MAKING 803,431 0.88% 11 PARETO VERDI VPF 799,198 0.88% 12 DNB NOR SMB VPF 737,084 0.81% 13 MUSTAD INDUSTRIER AS 590,000 0.65% 14 HOLBERG NORGE 545,500 0.60% 15 MOCO AS 498,100 0.55% 16 PACTUM AS 370,000 0.41% 17 FORSVARETS PERSONELLSERVICE 356,200 0.39% 18 ODIN MARITIM 339,800 0.37% 19 POSH AS 282,600 0.31% 20 ODIN NORGE II 266,700 0.29% Total 20 largest shareholders ...... 75,438,734 82.87 % Other shareholders ...... 15,599,241 17.13 % Total shareholding ...... 91,037,975 100.00% * Registered as nominee shareholder with VPS. To the knowledge of the Company, the Company is not for purposes of Norwegian law, directly or indirectly, controlled by another corporation or by any foreign government.
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• Authorisations
9.1.3 Authorisation to issue shares The Board of Directors was on the General Meeting of the Company on 27 May 2010 authorized to increase by up to NOK 91,000,000 by by issuing up to 45,500,000 new shares. The Company’s shareholders’ preferential rights to subscribe shares may be set aside and the authorisation comprises also issuance of shares against contribution in kind. The autorization is valid until the ordinary General Geeting of the Company in 2011, however no longer than until 30 June 2011.
9.1.4 Options, warrants etc. The company has no option or warrant schemes, and no options or warrants outstanding.
9.1.5 Authorisation to acquire own Shares At the date of this Registration Document the Company does not own any shares in the Company. The Board of Directors was on the General Meeting of the Company on 27 May 2010 authorised to acquire up to 10 per cent of the Company’s shares with a maximum aggregate nominal value of NOK 18,207,595, pursuant to the provisions of chapter 9 in the Norwegian Public Limited Companies Act, at a price no lower than NOK 20 per share and no higher than NOK 100 per share. The authorisation is valid until the next ordinary general meeting of the Company, however no longer than until 30 June 2011.
9.1.6 Shareholder agreements To the Company’s knowledge, the shareholders of the Company are not parties to any shareholders’ agreements relating to the shares in DOF.
• General meetings Under Norwegian law, a company’s shareholders exercise supreme authority in the company through the general meeting. A shareholder may attend the general meeting either in person or by proxy. Although Norwegian law does not currently require the Company to send proxy forms to its shareholders for general meetings, the Company plans to include a proxy form with notices of general meetings. In accordance with Norwegian law, the annual general meeting of the Company’s shareholders is required to be held each year on or prior to June 30. The following items must be transacted and decided at the annual general meeting:
• approval of the annual accounts and annual report, including the distribution of any dividend; and
• any other business to be transacted at the general meeting by law or in accordance with the Company’s articles of association. Norwegian law requires that written notice of general meetings are sent to all shareholders whose addresses are known at least two weeks prior to the date of the meeting, unless a company’s articles of association stipulate a longer period. The Articles of Association do not contain provisions governing the manner in which annual general meetings are called. The notice must set forth the time and date of the meeting and specify the agenda of the meeting. It must also name the person appointed by the Board to open the meeting. All shareholders who are registered in the register of shareholders maintained by the VPS as of the date of the general meeting, or have otherwise reported and proved an acquisition of Shares, are entitled to admission without any requirement for pre-registration. A shareholder is entitled to have an issue discussed at a general meeting if such shareholder provides the Board with notice of the issue so that it can be included in the written notice of the general meeting. In addition to the annual general meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the Company’s Board. An extraordinary general meeting must also be convened for the consideration of specific matters at the written request of the Company’s auditors or shareholders representing a total of at least 5% of the share capital. Voting Rights Subject to the terms of a company’s Articles of Association, Norwegian law provides that each outstanding share shall represent a right to one vote. All of the Company’s shares have an equal right to vote at general meetings. No voting rights can be exercised with respect to any treasury shares held by a company. In general, decisions that shareholders are entitled to make under Norwegian law or the Company’s Articles of Association may be made by a simple majority of the votes cast. In the case of elections, the persons who obtain the most votes cast are elected. However, certain decisions, including, but not limited to, resolutions to:
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• increase or reduce the Company’s share capital;
• waive preferential rights in connection with any share issue;
• approve a merger or demerger; and
• amend the Company’s Articles of Association, must receive the approval of at least two-thirds of the aggregate number of votes cast at the general meeting at which any such action is before the shareholders for approval, as well as at least two-thirds of the share capital represented at the meeting. There are no quorum requirements for general meetings. In general, in order to be entitled to vote, a shareholder must be registered as the owner of shares in the share register kept by the VPS, or, alternatively, report and show evidence of the shareholder’s share acquisition to the Company prior to the general meeting. Under Norwegian law, a beneficial owner of Shares registered through a VPS-registered nominee is not able to vote for the beneficial owner’s shares unless ownership is re-registered in the name of the beneficial owner prior to the relevant general meeting.
• Articles of Association The Articles of Association, in the form which will be in force upon approval of this Registration Document, are set out in Appendix 1 to this Registration Document.
• Shareholder rights
9.1.7 Share classes and voting rights All shares in the Company are ordinary shares with 1 vote each.
9.1.8 Dividend rights and dividend policy All shares in the Company have equal rights to dividends. The Company’s long-term primary objective is to yield a competitive return of invested capital to the shareholders through a combination of dividends and share price development, as a minimum equal to alternative investments with a comparable risk profile. The return shall preferably be made in the form of a cash dividend in addition to increased value of the shares. In evaluating the dividend amount, the Board shall prioritize stable development, the Company's dividend capacity, and the requirements for sound equity capital as well as for adequate financial resources to enable future growth. The Company should normally be expected to propose to the shareholders to pay limited or no dividends in the foreseeable future, as a result of the Company’s development and growth strategy.
9.1.9 Pre Emptive rights In connection with an increase in the Company’s share capital by a subscription for shares against cash contributions, Norwegian law provides the Company’s shareholders with a pre-emptive right to subscribe the new shares on a pro rata basis in accordance with their then-current shareholdings in the Company. The shareholders in the Company’s preferential rights to subscribe new shares may be set aside by a resolution in a general meeting passed by a two-thirds majority of the votes cast at a general meeting of shareholders required to approve amendments to the Company’s Articles of Association.
• Offer restrictions To issue shares to shareholders in the Company shares who are citizens or residents of the United States, the Company may be required to file a registration statement in the United States under U.S. securities laws. If the Company decides not to file a registration statement, these holders may not be able to exercise their preferential rights to subscribe new shares in the Company.
• Power of attorney to issue shares The general meeting may by a two-thirds majority of the votes cast at a general meeting of shareholders authorize the Board to issue new shares. Such authorization may be effective for a maximum of two years, and the par value of the shares to be issued may not exceed 50% of the nominal share capital as at the time the authorization was granted. The shareholders’ preferential rights to subscribe new shares may be set aside by the Board only if the authorization includes such possibility for the Board.
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• Bonus issues Under Norwegian law, bonus shares may be issued, subject to shareholder approval and provided that, amongst other requirements, the company does not have an uncovered loss from a previous accounting year, by transfer from the Company’s distributable equity or from the Company’s share premium reserve. Any bonus issues may be affected either by issuing shares or by increasing the par value of the shares outstanding. If the increase in share capital is to take place by new shares being issued, these new shares must be allotted to the shareholders of the Company in proportion to their current shareholdings in the Company.
• Disclosure obligations A person, close associates or consolidated group acting in concert that acquires shares, options for shares or other rights to shares resulting in its beneficial ownership, directly or indirectly, in the aggregate reaching or exceeding the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 and 90% of the share capital or the voting rights in the Company has an obligation under Norwegian law to notify Oslo Børs immediately. The same applies to disposal of shares (but not options or other rights to shares) resulting in a beneficial ownership, directly or indirectly, in the aggregate falling below said thresholds. Equivalent to shares and/or rights to shares are voting rights that may be exercised with a basis in a proxy not containing instructions from the shareholder, and borrowing of shares and return of shares to the lender is regarded as acquisition and disposal. A change in ownership due to other circumstances (i.e. other than acquisition or disposal) will also trigger the notification obligations when the said thresholds are passed.
• Insider trading Under Norwegian law subscription for, purchase, sale or exchange of financial instruments which are listed, or incitement to such dispositions, must not be undertaken by anyone who has precise information about the financial instruments, the company or other matters which are suited to influence the price of the financial instruments or related financial instruments noticeably, and which are not publicly available or commonly known in the market. The same applies to entry into, purchase, sale or exchange of option or futures/forward contracts or equivalent rights connected with such financial instruments or incitement to such disposition.
• Mandatory bid Pursuant to Norwegian Securities Trading Act chapter 6, any person, entity or a consolidated group that becomes the owner of shares representing more than 1/3 of the voting rights of a Norwegian company whose shares are listed on Oslo Børs, is obliged to make an unconditional general offer without undue delay and at the latest four weeks after the mandatory offer obligation was triggered for the purchase of the remaining shares in the company. This obligation is repeated when the purchaser becomes the owner of shares representing more than 40% and 50% of the voting rights. When a mandatory offer obligation is activated, the person subject to such obligation shall immediately notify Oslo Børs and the company accordingly. The offer and the offer document required are subject to an approval by Oslo Børs before submission of the offer to the shareholders is made or published. The offer price per share must be at least as high as the highest payment the acquirer has made or agreed in the period six months prior to the date the mandatory offer thresholds were exceeded. However, if it is clear that the market price was higher when the mandatory offer obligation was triggered, such market price shall be made as an offer. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate his bid at such higher price. A mandatory offer must be in cash and the settlement shall be subject to a guarantee issued by a financial institution licensed to issue such a guarantee in Norway. An offer may nonetheless give the shareholders the right to accept an alternative to cash. In case of failure to make a mandatory offer within four weeks, the obligation ceases to apply if sale is undertaken, i.e. by reducing the ownership to a level below the mandatory offer thresholds. Otherwise, Oslo Børs may force the acquirer to sell the shares exceeding the mandatory offer limit by public auction. Moreover, an acquirer who fails to make an offer, may not, as long as the mandatory obligation remain in force, exercise rights in the company, such as voting on the shareholders meeting. However, the shareholder may exercise the right to dividend and pre-emption rights in the event of a share capital increase, without the consent of a majority of the remaining shareholders. If the shareholder neglects his duties to make a mandatory offer, Oslo Børs may impose a cumulative daily fine which runs until the circumstance has been rectified.
• Mandatory filing requirements under the Norwegian Competition Act The Norwegian Competition Act stipulates a mandatory filing requirement for certain mergers and transactions involving acquisition of control of another undertaking.
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All mergers and transactions involving acquisition of control must be notified to the the Norwegian Competition Authority if the undertakings involved in the transaction have a combined annual turnover in Norway of NOK 50 million or more. However, if only one of the undertakings involved in the transaction has an annual turnover in Norway exceeding NOK 20 million, the transaction need not be notified. Notwithstanding the above, the filing requirements under the Norwegian Competition Act do not apply to concentrations that are within the turnover thresholds of the EC Merger Regulation or equivalent thresholds in the EEA Agreement. Accordingly, the principle of one-stop-merger control applies. As of 1 July 2008 there is no longer any deadline for filing, due to amendments to the Competition Act As long as the transaction is not implemented, it is left to the parties’ discretion when to submit the initial standardised notification. However, the Norwegian Competition Act allows for voluntary filing at an earlier stage, as long as the content requirements can be fulfilled. The obligation to notify the transaction to the Norwegian Competition Authority is imposed on the parties to the merger or on the acquirer(s) of an undertaking. The mandatory filing requirement under the Competition Act imposes an obligation to submit a simplified notification. If the Norwegian Competition Authority finds reason to consider the transaction more closely, the Norwegian Competition Authority may require that the parties to the merger/the acquirer(s) submit(s) a complete notification. The Norwegian Competition Authority must make such a requirement within 15 working days after they have received the simplified notification. If this is not done, the Norwegian Competition Authority cannot intervene against the transaction after this deadline has expired. The parties may also voluntarily submit a complete notification without having received instructions from the Norwegian Competition Authority. Following amendments to the Competition Act effective from 1 July 2008, automatic suspension applies to all concentrations that are subject to notification to the Norwegian Competition Authority. If the transaction is not cleared during phase 1, the suspension will automatically be extended until 25 working days after the submission of a Complete Notification. After this date, there is no longer any automatic suspension in effect, but the Norwegian Competition Authority will extend the suspension or reinforce it if the Norwegian Competition Authority suspects that the parties are considering implementing the transaction before clearance is obtained. The same applies if a complete notification is submitted voluntarily. The suspension period lasts for 25 working days calculated from the time the Norwegian Competition Authority has received the complete notification. It is within this time limit that the NCA must decide whether to investigate the transaction further. If the Norwegian Competition Authority decides to investigate the transaction further, i.e. beyond the above mentioned 25 working days period, the Norwegian Competition Authority must provide a reasoned draft decision of intervention no later than 70 working days as from the receipt of the complete notification. The parties will then have 15 working days to submit their comments to the draft decision. The Norwegian Competition Authority must reach a final decision no later than 15 working days after the receipt of such comments. If the parties have submitted a proposal for commitments, they can request that an additional 25 working days are added to Norwegian Competition Authority 's deadline to reach a final decision.
• Compulsory acquisition Pursuant to the Norwegian Public Limited Companies Act, if a shareholder, directly or indirectly or via subsidiaries, acquires shares representing more than 90 percent of the total issued shares in the Company or voting rights attached to such shares, then such majority shareholders would have the right (and each remaining minority shareholder of the Company would have the right to require such majority shareholder) to effect a compulsory acquisition for cash of any shares not already owned by such majority shareholder. Such compulsory acquisition implies that the majority shareholder becomes the owner of all shares held by minority shareholders with immediate effect. Upon effecting the compulsory acquisition, the majority shareholder shall offer the minority shareholders a specific price per share, the determination of which price would be at the discretion of the majority shareholder. Should any minority shareholder not accept the offered price, such minority shareholder may, within specified deadline not to be of less than two months’ duration, object to the pricing being offered. Absent such request or other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the two months deadline. If an objection is made, and absent amicable settlement, each of the majority shareholders and the objecting minority shareholders may request that the price be set by Norwegian courts. According to the Norwegian Supreme Court the price shall reflect the real (actual) value of the shares, i.e. that the price shall be based on the underlying values in the company taking into consideration that all shares of the same class have equal value. Which valuation method (substance value, return value, stock market price etc.) are best suited to determine the underlying value, depends on a concrete evaluation. The cost of such court procedure would, as a general rule, be for the account of the majority shareholder, and the courts would have full discretion in respect of the valuation of the shares as per the effectuation of the compulsory acquisition.
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10 TAX ISSUES Norwegian taxation This Section describes certain tax consequences in Norway for bondholders who are resident in Norway for tax purposes, (“Norwegian Bondholders”) and for bondholders who are not resident in Norway for tax purposes (“Non- resident Bondholders”). The statements herein regarding taxation are based on the laws in force in Norway as of the date of this Registration Document and are subject to any changes in law occurring after such date, which changes could be made on a retrospective basis. The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of bonds. Bondholders who wish to clarify their own tax situation should consult with and rely upon their own tax advisers. Bondholders resident in jurisdictions other than Norway should consult with and rely upon local tax advisors with respect to the tax position in their country of residence.
• Norwegian Bondholders
10.1.1 Income tax Interests derived from bonds by Norwegian Bondholders are taxable as ordinary income at a flat rate of 28%. Sale, redemption or other disposal of Bonds is considered a realisation for Norwegian tax purposes. Gains related to the realisation of bonds are taxable and losses are tax deductable for Norwegian Bondholders. Such capital gain or loss is included in or deducted from the Norwegian Bondholder’s ordinary income in the year of realisation.
10.1.2 Net wealth tax The value of Bonds is included in the basis for the computation of wealth tax imposed on Norwegian Bondholders who are individuals (“Norwegian Personal Bondholders”). Norwegian Bondholders who are limited companies (“Norwegian Corporate Bondholders”) are not subject to net wealth tax. The value for assessment purposes is the listed value of the bond as of January 1 in the year of assessment. Currently, the marginal wealth tax rate is 1.1% of the value assessed.
• Taxation on Non-resident Bondholders
10.1.3 Income tax Interests derived from bonds, and gains related to the realisation of bonds are not taxable in Norway for Non-resident Bondholders, and losses are not tax deductible. However, if a Non-resident Bondholder is carrying on business activities in Norway and the relevant bonds are effectively connected with such activities, the Non-resident Bondholder will be subject to the same taxation as a Norwegian Bondholder, as described in section 13.1.1 above.
10.1.4 Net Wealth tax Non-resident Bondholders are not subject to Norwegian net wealth tax. Non-resident Bondholders who are individuals (“Non-resident Personal Bondholders”) can however be taxable in Norway if bonds are held in connection with the Non-Resident Bondholder’s conduct of a trade or business in Norway.
• Transfer taxes etc. VAT No transfer taxes, stamp duty or similar taxes are currently imposed in Norway on purchase, disposal or redemption of bonds. There is no Norwegian VAT imposed on the transfer of bonds.
• Inheritance tax When bonds are transferred either through inheritance or as a gift, such transfer may give rise to inheritance or gift tax in Norway if the decedent, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway, or if the bonds are effectively connected with a business carried out through a permanent establishment in Norway. However, in the case of inheritance tax, if the decedent was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax or a similar tax is levied by the decedent’s country of residence. The basis for the computation of inheritance tax is in general the market value at the time the transfer takes place. The rate is progressive from 0-15%. For inheritance and gifts from parents to children, the maximum rate is 10%.
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11 ADDITIONAL INFORMATION
• Third party information Market and industry data used throughout this Registration Document was obtained from various publicly available or independent third party sources. Although the Company believes that these independent sources are generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and the limitations and uncertainties inherent in any statistical survey of market size or consumer demand. References in this Registration Document to research reports or articles should not be construed as depicting the complete findings of the entire referenced report or article. The information in each report or article is not incorporated by reference into this Registration Document. The information in this Registration Document that has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading.
• Documents on display For the life of this Registration Document following documents (or copies thereof) may be inspected at www.dof.no or at the Company’s business address: i. the Memorandum of Association and Articles of Association of the Company; ii. historical financial information for the Company’s annual accounts for 2007, 2008 and 2009 and interim report for the first half ended 30 June 2010; and iii. stock exchange notices, including quarterly reports, distributed by the Company through Oslo Børs’ information system after the submission of the application for listing. iv. The loan agreements for the bonds issued by the Company and listed at any stock exchange at that time.
• Incorporation by reference The information incorporated by reference in this Registration Document shall be read in connection with the cross- reference list as set out in the table below. Except as provided in this Section, no other information is incorporated by reference into this Registration Document. The Company incorporates its interim financial reports for the six months ended 30 June 2010 and 2009 and the consolidated annual reports for the financial years ended 31 December 2009, 2008 and 2007.
Disclosure Section in this requirements of Registration the Registration Document Document Reference document and link
Section 1, 8, 10 Audited historical DOF – Consolidated Annual Report 2009: and 11 financial http://www.dof.no/Reports---Presentations-120.aspx information
(Annex I, Section 20.1) DOF – Consolidated Annual Report 2008: Section 1, 8, 10 Audited historical and 11 financial http://www.dof.no/Reports---Presentations-120.aspx information (Annex I, Section 20.1) DOF – Consolidated Annual Report 2007: Section 1, 8, 10 Audited historical and 11 financial http://www.dof.no/Reports---Presentations-120.aspx information (Annex I, Section 20.1)
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Disclosure Section in this requirements of Registration the Registration Document Document Reference document and link DOF – Unaudited Interim Report H1 2010: Section 1, 8, 10 Unaudited and 11 historical http://www.dof.no/Reports---Presentations-120.aspx financial information (Annex I, Section 20.1) DOF – Unaudited Interim Report H1 2009: Section 1, 8, 10 Unaudited and 11 historical http://www.dof.no/Reports---Presentations-120.aspx financial information
(Annex I, Section 20.1)
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12 DEFINITIONS AND GLOSSARY The following definitions and glossary apply in this Registration Document unless dictated otherwise by the context, including the foregoing pages of this Registration Document.
• Definitions Articles of Association:...... The Articles of Association of the Company. Banking Day: ...... A day when the Norwegian Central Bank’s Settlement System is open and when Norwegian banks can settle foreign currency transactions. BNDES The Development Bank of Brazil (Banco Nacional de Desenvolvimento Economico e Social) Board:...... The Board of Directors of DOF. Bond Agreement The bond agreements related to the Bonds issued by DOF and made between DOF and the Bond Trustee Bondholders: ...... The holders of Bonds issued by the Issuer Bonds Bonds issued by the Issuer Bond Trustee Norsk Tillitsmann ASA BRL Brazilian Reals, the lawful currency of the Republic of Brazil. DOF Group: ...... DOF together with its subsidiaries. DOF: ...... DOF ASA, business registration number 935 349 230. EEA:...... European Economic Area IFRS:...... International Financial Reporting Standards, issued by the IASB. IPO:...... Initial Public Offering. Listing: ...... The Listing of the Company’s shares on Oslo Børs. Managers:...... Pareto Securities AS and Nordea Markets. Money Laundering Act: ...... The Money Laundering Act of June 20 2003 no. 41 (“Hvitvaskingsloven”). NOK:...... Norwegian Kroner, the lawful currency of the Kingdom of Norway. Non-resident Bondholders: ...... Bondholders who are not resident in Norway for tax purposes Norwegian Bondholders: ...... Bondholders who are resident in Norway for tax purposes. Norwegian Corporate Shareholders who are limited liability companies (or similar entities) resident in Shareholders:...... Norway for tax purposes Norwegian Personal Shareholders who are individuals resident in Norway for tax purposes Shareholders:...... Norwegian Public Limited The Norwegian Public Limited Companies Act of 13 June 1997 no. 45 Companies Act:...... (“Allmennaksjeloven”). Norwegian Securities Trading The Securities Trading Act of 19 June 1997 no. 79 (“Verdipapirhandelloven”). Act:...... Norwegian Stock Exchange The Stock Exchange Regulations of 17 January 1994 no. 30, last amended by Regulations: ...... Regulation of 9 December 2005 nr. 1427 (“Børsforskriften”). Oslo Børs: ...... Oslo Børs ASA (translated “the Oslo Stock Exchange”). Prospectus: ...... This Registration Document and the Securities Document for the relevant bond loan. Registration Document...... This Registration Document dated 26 November 2010, first time prepared in connection with the application for Listing. Securities Document ...... A Securities Document may be issued for each bond loan issued by the Company, and should be read in connection with the Registration Document. Remaining Loan:...... The aggregate principal amount of all Bonds outstanding in the 2013 Bond Issue less the principal amount of the Bonds redeemed by the Borrower and discharged through the VPS.
The Company:...... DOF. TNOK: ...... NOK 1,000.
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USD: ...... United States Dollars. VPS account:...... An account with VPS for the registration of holdings of securities. VPS: ...... Verdipapirsentralen (Norwegian Central Securities Depository), which organizes the Norwegian paperless securities registration system.
• Glossary of Terms Terms and expressions used in the industry and technical terms used in the description of the Company is set out below. AHTS ...... Anchor-handling tug & supply vessel. BHP...... Brake horsepower. CEO: ...... Chief Executive Officer. CFO:...... Chief Financial Officer. CSV: Construction support vessel. dwt ...... Deadweight tonnage, a measure of much a ship can carry EBITDA:...... Earnings, before interest, tax, depreciation and amortization. H1 First half. HSE:...... Health, security and environment. km: ...... Kilometres. Mt:...... Metric tonnes. NAV Net asset value, the market value of vessels plus book value of paid instalments on newbuild plus book value of other operating assets less net interest bearing debt PSV Platform supply vessel. Q1:...... First quarter. Q2:...... Second quarter. Q3:...... Third quarter. Q4:...... Forth quarter. QHSE:...... Quality, health, security and environment. SSB: ...... Central Bureau of Statistics. Tcf:...... Thousand cubic feet.
47
Appendix 1: Articles of Association1
ARTICLES OF ASSOCIATION (per the date of this Registration Document) DOF ASA
Article 1 The company’s name is DOF ASA. The company is a public limited liability company.
Article 2 The object of the company is to engage in trading and shipping business and other offshorerelated activity, including participation in other companies with the same or similar objects.
The company’s shares shall be registered in the Norwegian Central Securities Depository.
Article 3 The company’s registered office is in the municipality of Austevoll.
Article 4 The company’s share capital is NOK 182,075,950.00 divided between 91,037,975 shares, each with a nominal value of NOK 2, fully paid up and registered.
Article 5 The company’s board of directors consists of 4 –7 members, the precise number to be decided by the general meeting. The chairman of the board of directors is elected by the general meeting.
The chairman of the board of directors alone or two directors jointly may sign for the company. The board of directors may appoint a general manager and grant him/her power of procuration.
The Company shall have an Election Committee which shall make proposals for election of Board Members to the General Meeting of Shareholders. The Election Committee shall consist of 3 members, who shall be elected by the General Meeting of Shareholders with a service period of 2 years.
1 Unofficial translation from Norwegian
A 1
Article 6 The following is the business of the ordinary general meeting:
1. Adoption of the annual accounts and balance sheet, including the distribution of dividend.
2. Election of the board of directors and auditor.
3. Other matters which, pursuant to statutory provisions, are the business of the general meeting.
Article 7 Shareholders who wish to attend the company’s general meeting shall notify the company in writing or verbally within the deadline stipulated in the notice of meeting, which deadline may not expire earlier than 5 days prior to the general meeting. If a shareholder has not given notice of attendance within the deadline, he/she may be denied access to the meeting. Notice of the general meeting must be sent at the latest two weeks prior to the general meeting being held.
Article 8 The legislation concerning public limited liability companies in force from time to time shall otherwise be applicable.
Article 9. Electronic publication of documents
It is not necessary to send documents which apply to items to be discussed by the general meetingby post to the shareholders provided the documents are made available on the company’s web site. The same applies to documents which legally are to be included in or enclosed with the notice of the general meeting. However, shareholders have the right to demand receipt by post of documents relating to issues to be discussed during the general meeting.
*****
A 2
Appendix 2: Annual Report for 2009
A 3 Annual Report 2009 DOF ASA
WWW.DOF.NO DOF’s business concept: DOF’s business concept is to be actively involved in long-term and industrial offshore activities, via the ownership and operation of modern offshore vessels and by providing high quality services to customers.
DOF’s vision: DOF aims to be the preferred supplier of offshore and subsea services to the global oil and gas industry.
Bergen Austevoll St Petersburg
Aberdeen NORTH ATLANTIC REGION Saint John
Cairo
Houston Manila
Brunei Singapore
Pointe-Noire Jakarta Luanda ASIA PASIFIC REGION Perth
Macaé SOUTH Rio de Janeiro ATLANTIC DOF’s focus areas: - Focus on high quality and cost effective operations in REGION order to further develop our position Buenos Aires as a leading global supplier of offshore services. - Focus on human resources through recruitment and training of highly skilled employees. - Focus on the environment and initiatives towards technical systems for environmentally- friendly vessel concepts. - Focus on a balanced chartering strategy with an emphasis on long-term contract coverage, in order to ensure a conservative risk profile and satisfactory cash flow.
2 3 INDEX KEY FIGURES DOF ASA
Amount in NOK mill 2009 2008
From comprehensive Income
Operating income 4 327 4 340 Operating cost -3 094 -2 784 Operating profit/loss before depreciation and write offs - EBITDA 1 234 1 556 Depreciation -837 -643 Write downs -179 Operating profit/loss - EBIT 218 912 Net finance costs 29 -380 Unrealized gain/loss on currency 758 -655 Profit/loss before taxes 1 005 -123 Profit for the year 803 100 Minority 201 35
From the Balance
Key Figures Page 05 Statement of changes in equity Page 66 Vessels and other non-current assets 17 827 15 563 Highlights Page 06 Statement of cashflows Page 68 Current assets 3 957 4 268 CEO Page 08 Notes to the accounts Page 69 Total assets 21 785 19 831 This is DOF ASA Page 10 Confirmation from the Board of Directors and CEO Page 112 Equity 6 809 5 499 North Atlantic region Page 12 Auditor’s report Page 113 Long term liabilities 11 973 11 330 The North Atlantic fleet Page 15 Contact info Page 115 Short term liabilities 3 002 3 002 South Atlantic region Page 16 Total equity and liabilities 21 785 19 831 The South Atlantic fleet Page 23 Asia-Pacific region Page 24 Key figures The Asia-Pacific fleet Page 27 HSEQ Page 28 Published by: DOF ASA Net cash flow 1 1 263 1 176 Newbuildings Page 32 Concept, art direction and presentation: Oktan Bergen Current ratio 2 1,32 1,42 Newbuildings and estimated delivery Page 35 Print: Molvik Grafisk AS Equity ratio 3 31 % 28 % The Market Page 36 Paper: G-print 250g/G-print 130g Shareholders information Page 40 Circulation: 2 500 Operation margin 4 29 % 36 % Analytical information Page 44 Return of equiry 5 12 % 2 % Corporate Governance Page 48 Average number of shares 87 730 811 82 767 975 The Board Page 56 Earnings per share 6 6,87 0,79 Directors report 2009 Page 57 Photos and illustrations: Net cash flow per share 7 14,39 14,20 Accounts Page 62 DOF ASA Statement of comprehensive income Page 63 Tom Haga 1) Profit/loss before taxes + depreciation and write downs +/- unrealized gain/loss on currency Statement of financial position Page 64 Harald M. Walderhaug 2) Current assets/Short term liabilities 3) Equity/Total capital 4) Operating result before depreciation and write offs/Operating income 5) Profit for the year/Booked equity 6) Majority share of profit for the year/Average number of shares 7) Cash flow item 1/Average number of shares
4 5 highlights 2009 highlights
1st quarter 2009 DOF took delivery of a PSV, Skandi Flora, in February. The vessel started on a 5 yrs contract with Statoil after delivery. DOFTECH (JV DOV Subsea/Technip) took delivery of Skandi Arctic, a state of the art diving vessel, which started on an 8 years contract in May. Skandi Salvador started on a long term contract with Chevron in Brazil at the end of March.
2nd quarter 2009 DOF Subsea sold its shares in Aker Oilfield Services at 1st of April. In May DOF issued 8,270,000 new shares at a price of NOK 29,50 per share. In June DOF placed of a bond totaling NOK 975 million DOF Subsea cancelled one new-building contract at Tebma Shipyard.
3rd quarter 2009 DOF Subsea placed a bond loan totalling NOK 500 million in August. DOF Subsea cancelled additional two new-building contracts at Tebma Shipyard. Mons Aase was appointed CEO in DOF Subsea. Skandi Møgster sailed to Brazil to start on a long term contract with OGX. Skandi Hav completed a rebuilding to FSO Handling vessel and sailed to Brazil for a 5 yrs contract with Petrobras. Skandi Chieftain completed a rebuilding to RSV vessel and started a 3 yrs contract for Petrobras in Brazil in July. DOF and FRC carried out a share issue in DOF Subsea totaling NOK 400 million. DOF Installer carried out a share issue of 800.000 shares, totaling NOK 40 million.
4th quarter 2009 Skandi Waveney started on a contract for Statoil in Brazil in November. DOF Subsea took delivery of Skandi Santos. After delivery the vessel sailed to Brazil for a 5 yrs contract for Aker Oilfield Services in Brazil. DOF agreed to buy Skandi Vega from DOF Installer and Skandi Olympia from FMV. Both vessels will be delivered in 2010 and will start on contract for Statoil and Fugro-Rovtech respectively. Skandi Stolmen and Skandi Captain were awarded two 3-yrs contracts with Petrobras in November. DOF Subsea agreed refinancing of 5 vessels in the DOFCON fleet, a total financing of NOK 4 000 mill.
1st quarter 2010 In January DOF Subsea took delivery of Skandi Aker, which started a 5 yrs contract with Aker Oilfield Services after delivery. Based on the judgment at the Supreme Court a tax provision of NOK 260 mill related to the transition to new tonnage tax was reversed. DOF Subsea sold Geo Challenger in February 2010. Aker DOF Deepwater signed a LOI with OGX for Skandi Emerald. The vessel is expected to be delivered from STX in Vietnam in May. DOF subsidiary in Brazil Norskan Offshore applied for a listing on the Stock Exchange in Sao Paulo in March.
6 7 CEO Global growth and human resources
2009 has been a turbulent year for companies within our of which a large share of the newbuildings comprises major industry. construction support vessels and large AHTS vessels. The average age of the fleet is around 6 years. I can confidently The global financial crisis generated significant problems for claim that DOF’s fleet is one of the most forward-looking on the financial markets during the first half of the year. The the market. We believe there is growth to be found in deep-sea second half, however, saw a marked improvement on these segments, an area which requires larger and more advanced markets. For DOF, we are practically back to normal in terms vessels. This is reflected in our newbuilding program. of ship financing, although still at considerably higher prices than before the crisis struck. We have developed a group of companies with offices in all parts of the world, each of which is staffed by expert In general, the markets for our services have been weak in personnel. We are all currently facing significant challenges for 2009. The spot market for supply vessels in the North Sea the future. Our employees are our most important resource. has been characterised by low degrees of utilisation and rates Our staff of skilled employees, both at sea and on land, helps which have been lower than operating costs for ships at DOF continue to win important contracts. With the market times. Several shipowning companies have consequently had trends evident in 2009 and projected for 2010, our new to lay up vessels. The weak spot marked in turn has placed an offices abroad are more important than ever before. As we increased pressure on the rates for long-term contracts. expect the North Sea market to be very weak in 2010, DOF’s results are reliant on our performance outside the North Sea. We expect to see a weak North Sea market for both supply and subsea in 2010, but have identified a slight increase in I believe 2010 will prove to be a very challenging year. However, activities in West Africa and Asia. In Brazil, we expect our I also believe that we will get through 2010 and come out of current growth to continue in 2010. A number of DOF vessels the year in a much stronger position. The key to our success in have left the North Sea and sailed mainly to Brazil on contract 2010 remains unchanged - our employees. in 2009. We expect this trend to continue in 2010. In order to keep our ships on hire, we have to increase our exposure to markets outside the North Sea.
DOF remains the leading company in terms of quality, health, safety and the environment, according to our customers. This impressive track record we have developed is invaluable when competing for new contracts. The hard work behind such an achievement has primarily been carried out by our seafarers. Mons S. Aase We now control a fleet of 67 vessels (including newbuildings), CEO
8 9 DOF ASA
THIS IS DOF ASA
Norskan DOF Subsea Holding Ship owning company 100% 51% 50-100%
Modern fleet Modern fleet 31.03.2010 PSV AHTS ROV/OCSV Total fleet 8 AHTS’s 10 AHTS’s DSV/ 3 PSV’s 18 PSV’s SEISMIC 2 CSV 2 CSV DOF ASA 18 4 2 24 NORSKAN OFFSHORE 3 8 2 13 DOF Installer DOF Subsea DOF SUBSEA AS 0 0 21 21 53,5% 100% DOF INSTALLER ASA 0 3 0 3 3 state of the art Modern fleet & Equipment AKER DOF DEEPWATER 0 6 0 6 installation AHTS 21 CSV/ROV vessels Total fleet 21 21 25 67 vessels 33 ROV’s + 1 AUV Leading Subsea Contractor
DOF ASA was founded in 1981 and is today DOF has offices all over the world, close to all DOF ASA Group companies The company provides a diversified range of an international group of companies which major oil and gas regions. During the last decade, services through three key business lines; vessel owns and operates a modern fleet of supply the company has invested in key regions such DOF Management AS chartering, subsea projects and engineering. and subsea vessels in addition to engineering as the South Atlantic, Asia Pacific and Africa. In DOF Management AS provides ship manage- capacity to service the subsea market. The a time of challenging financial markets, these ment for the total fleet in the DOF ASA group. The company is ISO 9001, ISO 14001 and OSHAS company operates worldwide and offers services investments have allowed the company access The company has a crew of highly skilled 18001 certified. to the global oil and gas industry. The DOF fleet to new and profitable markets such as Brazil professionals both onshore and offshore to comprises 67 vessels, including newbuildings and and the Indian Ocean. The company is of course perform the tasks of ship-management, ship- Norskan Offshore Ltda ships operated by subsidiaries. DOF ASA is the still heavily represented in the North Sea. operation and the services delivered to the Norskan Offshore Ltda. represents the DOF holding company for DOF Subsea AS, Norskan customers. group’s activity in Brazil. The company was Offshore Ltda and DOF Management AS. DOF strives to be the leader in the field of quality, established in 2001 due to a strong believe in the health, safety and the environment (HSEQ) The company is certified according to the ISM future for this region and market. Today Norskan The company operates within three different and systematically promotes these areas in the code, followed by the ISO 9001 and ISO 14001 is the largest Norwegian capital company in its segments in relation to strategic types of activities execution of all activities and operations. The certifications. segment in Brazil. and vessel types: PSV (Platform Supply Vessels), company is the market leader when it comes to AHTS (Anchor Handling Tug Supply Vessels) and new and innovative vessel design and efficient DOF Subsea AS Norskan owns and operates one of the largest CSV (Construction Support Vessels). The subsea and environmental-friendly operations. DOF Subsea was established in 2005, and has and most diversified fleets of state-of-the-art engineering activities mainly comprise survey grown to become a leading provider of subsea Brazilian-flagged vessels. The fleet is considered and IRM services, construction support and DOF has a total, multi-national workforce of services with an established capability in all the to be the most technologically advanced in the diving services. about 3,000. The DOF team is comprised of a major oil and gas production areas around the Brazilian offshore industry. family of top professionals within their indivi- world. The DOF fleet is one of the most modern in the dual areas of expertise. The company under- Norskan is certified according to the ISM code, market, with an average age of 6 years. The stands that it is the people who are the key and according to the ISO 9001, ISO 14001, OSHAS total fleet (including newbuildings) currently to success, and therefore follows a detailed 18001 and ISPS code. consists of 21 PSVs, 21 AHTS vessels and 25 CSVs. strategy for promoting career opportunities and In addition, DOF also owns and operates a fleet employees’ health and well being. of highly sophisticated ROVs.
10 11 NORTH Atlantic Region NORTH Atlantic Region
DOF’s activities: North Atlantic Ocean, North Sea, Mediterranean Sea and Gulf of Mexico DOF’s offices: Norway (Storebø and Bergen), UK (Aberdeen), USA (Houston), Canada (St. John’s), Egypt (Cairo) and Russia (St. Petersburg).
DOF Management AS
DOF Management AS has continued to focus on the company’s In order to deliver this and meet our objectives, DOF has focused original main objectives: on the long term, applying innovative thinking to deliver the • To engage in long-term offshore vessel supply and most environmentally friendly, efficient and highest quality management vessel designs to the market. We also target innovations in the • To continue to develop our position as a leading supplier of field of quality, health, safety and the environment and our main offshore services focusing on high quality and cost effective objective is to ensure zero injuries. solutions • To meet our objectives via a balanced chartering strategy, By maintaining a continual focus on the above, we will be able focus on long-term contract coverage to ensure to continue sailing at the forefront of our market. conservative risk profile • To continue to focus on the environment and initiatives High quality employees are key to success towards technical solutions for environmentally-friendly Meeting such ambitious objectives would be impossible without vessel concepts the DOF team. DOF recognises that the company’s most valuable • To develop long-term client relationships and be the vessel asset is their people. The international team, made up of both provider of choice. shore based personnel and vessel crews, comprises dedicated, expert and professional persons who are key to delivering and DOF’s business concept has always been to provide the market maintaining the current and future success of the organisation. with a modern fleet of offshore vessels, and to engage the vessels on long-term contracts, providing the highest quality The group’s newbuild program still covers delivery of a number and safe services to our clients. of vessels, so DOF will continue to require many new high quality crew members to man these vessels whilst continuing to offer
12 13 promotion opportunities to our current crew members. We We believe the lows experienced by the North Sea market in have maintained extensive training programs for Norwegian, 2009 are now behind us and that 2010 should be a little better British and Philippine cadets to ensure the best training and with a return to normality in 2011. development for the future requirements of the company and the industry. DOF Subsea AS International management In support of DOF Subsea’s vision “to be the Preferred Provider THE NORTH ATLANTIC FLEET The international fleet of vessels is managed from 4 locations; of Integrated Subsea Services”, our focus within this region Storebø, Bergen and Aberdeen manage vessels operated remains the continuous improvement of our ‘Subsea Projects’. internationally and our Singapore office handles the vessels in We continue to build our project management and engineering the Asia-Pacific market. capability which allows us to deliver so much more in the way of integrated services. The development of such intellectual capital The company has a strong focus on Quality, Health, Safety is wholly complementary to the state-of-the-art equipment in and Environment and has ISO 9001:2000 and 14001:2004 which DOF Subsea continues to invest. certification. Skandi Barra PSV Skandi Buchan PSV Skandi Caledonia PSV From vessel provider The past year to provider of integrated subsea services 2009 has been a tough year for the offshore vessel market in the DOF Subsea is now a company that can offer integrated Northern Atlantic with PSV spot rates reaching as low as £2,500 subsea services. We know this is the case when our customers per day. The reduced demand has been further affected by the say: “What we like about DOF Subsea is that we can get the number of new builds entering the market. This was especially Skandi Captain PSV Skandi Commander PSV Skandi Flora PSV complete package from you”. apparent in the smaller PSV and AHTS segments. However, we have seen a slight improvement in demand for larger PSVs. When we listen to our customers across the region from Houston to Luanda to Russia, they all have the view that having the New build order placements have all but dried up. However, equipment is only half the story. Very quickly, their focus turns there are still a number to be delivered throughout 2010 and to the supplier’s project management and engineering delivery 2011 and these will have an affect on the market. capability. Customers find great reassurance in our common Skandi Foula PSV Skandi Marstein PSV Skandi Mongstad PSV and robust approach to projects and HSE for all aspects of our During 2009, DOF had relatively little exposure to the spot services. market. DOF’s strategy of engaging in long-term contracts has sheltered us from the market during the year. While we possess the finest deepwater fleet and subsea equipment in the world, capable of accessing all major deepwater A number of our fleet’s long-term contracts have closed and, markets, it is via our ‘Subsea Project’ business that we gain Skandi Rona PSV Skandi Sotra PSV Skandi Texel PSV due to the prolonged depressed market in the North Sea, we access to the best opportunities for utilising such equipment. have taken this opportunity to deliver vessels to our Brazilian Combined with a strong focus on business acquisition, this subsidiary, Norskan, to satisfy their new Brazilian contract capability allows us to deliver bespoke solutions to a vast range awards and a growing demand for high spec and specialised of customers in varied international markets. It enables us to tonnage. win and execute a wide spectrum of small to large contracts with a broad variety of content. Skandi Admiral AHTS Skandi Stord AHTS Geosounder CSV Future outlook The market in the North Atlantic for 2010 will continue to be We can now supply a full range of services: from our core tight. However, there are some indications of improvement with business of providing deepwater vessels with all the subsea spot rates for both PSVs and AHTS averages on the rise. As services onboard for several months, to hire of third-party vessels previously mentioned, the supply side for large PSVs performed with various specialist equipment spreads onboard. All of this is better than others during 2009, so improved utilisation for evident in the wide range of new projects we have executed Geosund CSV Skandi Achiever CSV Skandi Aker CSV these vessels is expected to continue in 2010, especially with throughout the region in the last 12 months. the increased pipe-laying activity planned for this year. The AHTS segment, which suffered most in 2009, shows some signs of Investments in process and systems recovery due to increased demands in other areas of the world Via our project management and engineering capability, we have - which could potentially eliminate some of the over supply in witnessed the growth of the company from a vessel provider, the North Sea. Demand for MPSVs is also predicted to increase to subsea services provider, to provider of integrated services. Skandi Arctic CSV Skandi Bergen CSV Skandi Carla CSV towards the end of 2010 with the increase in construction This growth continues: Within the region today we have many projects. ongoing global strategic projects which will further improve our project delivery capability; for example the Global BMS project, Although these improvements are only minor, they still represent the next phase of Agresso - our new financial system, our global an encouraging sign. However, with the number of newbuild Competency scheme, our OCS HR management system and our vessel deliveries still in the pipeline, we could see supply wwDPR reporting tool to mention just a few. These are all major outweighing demand and consequently driving the market Skandi Fjord CSV Skandi Inspector CSV Skandi Neptune CSV investments in process and systems and will, when completed, back. We are therefore not overly optimistic about market provide continuous improvement of our ‘Subsea Projects’ outlook for 2010. business and generate real added value in the years to come. In the coming year, we will maintain a firm focus on building our On a positive note, the drilling rig market is busy with a healthy ‘Subsea Projects’ capability as this offers us the best opportunity number of rig fixtures and fresh requirements arising, and oil to utilise our assets with the highest return. Moreover, this prices are stable in the region of US$ 80. Skandi Olympia CSV Skandi Seven CSV represents the complete package our customers want.
14 15 South Atlantic Region South Atlantic Region
DOF’s activities: South Atlantic Ocean (Brazil, Argentina and West-Africa) DOF’s offices: Brazil (Rio de Janeiro and Macaé), Argentina (Buenos Aires), Angola (Luanda) and Kongo (Pointe-Noire).
Norskan Offshore Ltda raw materials. Multinational energy companies, including Shell and ExxonMobil, plan to spend billions of dollars in E&P Norskan was established in Brazil in 2001 due to the bright activities in Brazil. outlook forecasted for the Brazilian offshore oil and gas industry. Today Norskan and the DOF group own and operate In March 2009, ExxonMobil announced that it had discovered one of the largest and most diversified fleets of state-of-the- oil off the coast of Brazil. This newly discovered oil field could art Brazilian-flagged vessels. The fleet is considered tobe potentially hold 8 billion barrels of recoverable crude oil, the most technologically advanced in the Brazilian offshore which would make it the largest oil discovery in the Western industry. Hemisphere in the last 30 years.
Since the founding of Norskan, DOF has invested over one Also, new Brazilian players such as OGX and consortia billion US$ in vessels, equipment and the people working in the formed by Brazilian infrastructure companies have acquired company. This has resulted in a significant growth in business recently-auctioned offshore blocks and, in some cases, with long-term contracts for several major customers such as announced significant discoveries. This continued emphasis Petrobras, Shell, Chevron, British Gas, OGX and Statoil. on exploration and production in the region will likely result in a corresponding increase in demand for offshore support The Brazilian market services. Currently, Petrobras controls the market of petroleum activity in Brazil, being responsible for almost all Brazilian offshore Market survey oil and gas production. However, significant players in the oil According to the ABEAM, there are 81 companies authorized and gas sector already have activity in Brazil, some of them by ANTAQ to provide offshore support services in the Brazilian already extracting and others involved in the prospecting of sector. There are 159 vessels rendering services to Petrobras
16 17 Ship charters by Segment in Brazil (US$ millions)
2500
2000
Offshore support 1500 Norskan/DOF´s market position in Brazil Tug long Course 1000 Companies operating in Brazil owning PSVs ≥ 3 000 dwt, AHTS ≥ 10 000 bhp Port Support
500
0 2003 2004 2005 2006 2007 2008
Year
Source:ANTAQ
in the offshore support industry, of which 48% are Brazilian most powerful and modern offshore support vessels in Brazil, Number of jobs Generated by the Offshore Support Industry
vessels, 8% operate under the REB regime and the remaining we are confident that we are strategically positioned to 5000
43% are foreign vessels. The average age of these vessels is compete for these charters. 4000 Norskan activity 2009 17.3 years. The Brazilian vessels have an average age of 15 Companies operating in Brazil owning CSVs 3000 years while the foreign vessels have an average age of 22 Furthermore, major oil and gas companies have announced Norskan has continued to grow in 2009 and the years. plans to explore and develop the Brazilian potential pre-salt 2000 company has taken over management for another
1000 basin reserves. In 2008 for example, Petrobras, one of our five vessels during the year. Production at Brazilian shipyards has increased resulting from principal customers, announced a 5-year capital expenditure 0 1990 1995 2002 2005 2007 2010 (Projected) the significant increase in the demand for Brazilian vessels, program from 2009 to 2013 of approximately US$ 174 billion, Skandi Waveney: mainly due to the combined effect of (1) Brazilian foreign fleet of which approximately US$ 105 million is to be devoted to Year After several years for Shell UK and Marathon in the North Sea the vessel will operate on the Peregrino substitution policies, (2) increased E&P activities in offshore E&P activities focusing on the development of the recently Source:ANTAQ Brazil, and (3) deterioration of the existing fleet. This increase discovered Brazilian pre-salt basin and other deepwater field for Statoil for a two years contract with extention option for two more years. may change the current profile of the Brazilian fleet, so that potential reserves, such as the Tupi cluster. It is expected that Brazilian vessels will continue to increase in relation to the 83% of Petrobras’s E&P expenditures from 2008 to 2010 will Main charter features total number of vessels. be in Brazil. As a result of this expected increase in E&P activities A unique characteristic of the Brazilian offshore support Skandi Møgster: in offshore Brazil, a large numberShip charters of new by Segment offshore in Brazil drilling (US$ millions)rigs industry is that charters are usually awarded for longer terms The vessel started a two years contract for OGX in May 2009. and platforms2500 are being built, and these developments are than those in the offshore support industry in other regions expected to continue. around the world. While many offshore support markets, such 2000 Skandi Ipanema/Sanko Bay: Offshore support as in the North Sea, suffer from an over-supply of offshore Norskan/DOF´s market position in Brazil 1500 Sanko Bay started as frontrunner for Skandi Ipanema In mid-October 2009, Petrobras launched the third phase of Tug support vessels and are in turn characterised by spot or short- long Course on a two years contract for OGX with an extention its deepwater1000 rig expansion program, which called for the term contracts, the Brazilian offshore support industry benefits Companies operating in Brazil owning PSVs ≥ 3 000 dwt, AHTS ≥ 10 000 bhp Port Support option period of one year. construction500 of 28 new deepwater rigs. This 28-rig tender from a much longer average charter term. According to the is additional to Petrobras’ prior orders for 54 deepwater rigs ABEAM, some of these charter contracts run for eight years. 0 Skandi Hav: between 2005 and2003 2008.2004 Petrobras2005 has 2006 also announced2007 2008 a Skandi Hav was delivered after a major conversion demand for 45 platforms by 2020. Additionally, many of the Brazilian offshore oil and gas reserves Year from a PSV to a OSRV in august 2009. The vessel has are located in deep waters, which require more powerful and served as PSV and Cablelayer for DOF since 1983 and On average, we believe every new deepwater rig that is placed Source:ANTAQ technologically advanced vessels for their exploration and started a 5 years contract for Petrobras with six years
into operation will require approximately two to two and a development. Because these vessels (1) are more costly to extention option period. half offshore support vessels to properly support their full- operate, (2) require better trained crew and (3) carry more
Number of jobs Generated by the Offshore Support Industry scale deepwater drilling operations. As a result, we believe sophisticated equipment, daily rates to charter them are also Skandi Santos:
these newbuilding5000 rig orders will likely generate significantly usually higher. The combination of longer charter terms and In November 2009 Skandi Santos was delivered from increased demand for our offshore support vessels and more attractive daily charter rates tend to make the Brazilian 4000 STX Aukra in Norway and after several sea trails and
services. offshore support industry particularly attractive for owners of tests the vessel headed for Brazil late December 2009. Companies operating in Brazil owning CSVs 3000 sophisticated and powerful vessels, such as Norskan. The vessel started a five years contract for AKOFS/ In addition, according2000 to data published by ABEAM in 2008, Petrobras.
Petrobras had the 1000need for 146 offshore support vessels to Current Brazilian regulations require that charters for offshore replace foreign-flagged vessels and to meet the expected support services first be offered to Brazilian-flagged vessels In addition Norskan has closed the following 0 increased in demand for 1990offshore1995 support2002 services2005 associated2007 2010 before being awarded to a foreign-flagged vessel. Even after contracts: (Projected) with the E&P activities to be conducted in the Brazilian pre-salt being awarded to a foreign-flagged vessel, and regardless basin. Such vessels must be built in BrazilianYear shipyards and of their remaining term, such charters must be reoffered Skandi Stolmen: must be delivered by 2015. generally on a yearly basis to Brazilian operators to check the A three year contract with Petrobras. Source:ANTAQ availability of any Brazilian-flagged vessel capable of taking up Signs of growth in the industry the contract. Furthermore, Brazilian minimum local content Skandi Captain: Our source of chartering revenue in Brazil has seen a steady requirements imposed on oil and gas companies conducting A three year contract with Petrobras. growth, as shown by the graph below. E&P activities in Brazil indirectly encourage those companies Perspectives to seek vessels that are high in local content such as ours. Skandi Peregrino: As a result of recent major discoveries, potential oil and gas A two year contract with Statoil with extention option reserves in offshore Brazil, particularly in its pre-salt basin, are We believe that our large and diversified fleet of high-tech, for two more years. Ship charters by Segment in Brazil (US$ millions) now recognised as some of the largest in the world. These Brazilian-flagged vessels uniquely positions us to benefit from new discoveries are expected to contain significant volumes 2500 the expected growth in demand for offshore support vessels Skandi Rio: of oil and gas, offering opportunities for economies of scale 2000 and services in Brazil, and to take advantage of Brazilian foreign The contract with Petrobras has been extended for Offshore support 1500 another four years (IDC with the existing contract). in explorationNorskan/DOF´s and market production position in Brazil after the initial required capital Tug fleet substitution policies that require oil and gas companies long Course expenditures. However, because many of these reserves are 1000 to give priority to Brazilian-flagged vessels with high Brazilian Companies operating in Brazil owning PSVs ≥ 3 000 dwt, AHTS ≥ 10 000 bhp Port Support Norskan will take over more vessels in 2010 and located in deep waters that are expected to present significant 500 content such as ours. the total fleet will be minimum 21 vessels at the end challenges for their exploration and development, more 0 powerful and technologically-advanced vessels will be required 2003 2004 2005 2006 2007 2008 of 2010. This increase, not only in the total number of vessels, but also the complexity of the fleet will to provide offshore support services in Brazil. Accordingly, it is Year require a good organization and administration. With expected that a large number of higher-paying charters for Source:ANTAQ the experience Norskan has achieved for operating more powerful and modern offshore supply, support and various types of offshore vessels we should be well construction vessels will be auctioned by oil and gas E&P Increase in total demand for offshore support services in Number of jobs Generated by the Offshore Support Industry prepared for the years ahead. companies increasing their activities in offshore Brazil. As the Brazil is also evidenced by the significant growth in jobs in the
5000 owner and operator of some of the industry during the past decade. The graph on the next page 4000 illustrates this point. Companies operating in Brazil owning CSVs 3000
2000
1000
0 1990 1995 2002 2005 2007 2010 (Projected) 18 19 Year
Source:ANTAQ
DOF Subsea Brazil Ltda It is the nature of our business to work under pressure, the and have made changes to the onshore management team to Brazil Ltda listens to its clients and reacts appropriately to any pressure of great depths, pressure of uncompromising quality streamline and improve performance. concerns that the client may have. We believe our clients Brazil is the fastest growing region in the DOF Subsea group; demands and the pressure of timelines that allow no room for recognise and appreciate this. it has grown from 0 contracts and 0 employees in 2006 to 4 indecision. DOF Subsea Brazil’s management is committed to Our ongoing goal is to build on our ability to become a project- Personnel have been and will always be the most valuable long-term contracts and 190 employees in 2009. DOF Subsea working as a team to ensure project and client requirements oriented organisation delivering a full range of project related resource within DOF Subsea Brazil and the company’s success Brazil is still growing with delivery to AKOF´s of a new vessel, are dealt with in a professional and timely manner; our success services to clients in accordance with their needs and in line is totally dependent on having people who really know how Skandi Santos, in February 2010 for a 5-year contact plus in Brazil is closely linked to our good relationship with our with their corporate QHSE philosophies and proposed scope to do their job and enjoy working for the company. 5-year option for Petrobras. We are also awaiting the result sister company Norskan, which has been of great importance of work. We aim to deliver these services in line with agreed of several promising tenders for long-term contracts. since DOF started activities in Brazil. The close cooperation schedules and within agreed budgets to the full satisfaction One challenge faced by DOF Subsea Brazil Ltda for the coming between the two companies and our mutual understanding of the client. All projects will be performed according to years is the lack of qualified subsea personnel available in of roles and dependencies have generated good results. the standards and policies of DOF Subsea Brazil Ltda and Brazil. In order to address this situation, we have established monitored to provide positive performance indicators upon and implemented comprehensive training programs for
Skandi Santos
“My job as General Manager of DOF Subsea Brazil Ltda Over the last year, DOF Subsea Brazil grown from being a which we can build and improve our corporate performance onshore and offshore personnel. We need to keep these is to ensure that DOF Subsea Brazil Ltda has a highly supplier of ROV services on third-party vessels to a company and services. people and to attract new employees to join the company. To skilled team onshore and offshore to deliver our vision delivering complex construction vessels to demanding clients. achieve this, we continually review the process of reinforcing which is to be the preferred integrated subsea service Over the coming year, we will have to refocus on changing the In order to achieve these goals, Project Managers and all a DOF Subsea Brazil culture based on ensuring a safe work provider in Brazil”. company from being a service supplier to becoming a more line departments will focus on measurement of personnel place, competitive salary, good working environment, career project-oriented organisation. In 2009, DOF Subsea Brazil performance, identification of additional training requirements opportunities, training and long-term secure jobs. Eirik Tørressen operated two long-term ROV contracts and one RSV vessel required to meet the diverse requirements of a project- General Manager, DOF Subsea Brazil contract for Petrobras onboard Norskan Botafogo, Skandi based organisation and motivational activities to generate a By so doing and ensuring that we remain committed to our Fluminence and Skandi Chieftain which went on hire in June desire to learn and self improve within our workforce. We values of “Integrity”, “Respect”, “Teamwork” “Excellence” DOF Subsea Brazil is totally committed to its HSE policies and 2009. In addition, DOF Subsea Brazil operates one long- will also sustain our level of dialogue with our workforce to and “Safety”, we believe we will be successful in keeping our will ensure, through education and communication, that all term construction vessel contract with Skandi Salvador for demonstrate management commitment and support for their employees working for us and attracting the best qualified DOF Subsea Brazil Ltda employees clearly understand the Chevron providing subsea support services for installation and activities. people available. We will also continue our internal training meaning of these policies and the company’s commitment to commissioning support for the Frade subsea developments. program to achieve our goal. them. Safety is a culture whereby the top management of the A key factor in maintaining and improving the quality of company communicates to all employees that DOF Subsea DOF Subsea Brazil’s long-term goal is to be the leading supplier service we provide to our clients is customer feedback. To this DOF Subsea Brazil is and will remain very focused on Brazil Ltda is fully committed to its safety culture and that no of project services related to survey, IMR and construction end, DOF Subsea Brazil maintains regular contact with clients consistently providing an extremely high standard of services compromise will be acceptable. The DOF senior management support in Brazil. In 2009, we have taken several steps in during weekly and monthly project meetings were potential to our clients, and working closely with clients to solve their team displays a clear commitment to all our employees to the right direction toward this goal, we have seen significant problems can be flagged at an early stage and the appropriate subsea challenges. always put safety first. improvements in stabilisation and in our offshore workforce steps taken to mitigate any potential problems. DOF Subsea
20 21 DOF Management Argentina DOF Subsea Angola signed its first long term contract with BP in 2009 (5 years) for provision of Positioning and Verification THE SOUTH ATLANTIC FLEET In Argentina Skandi Patagonia has been under charter to Total services at block 31, one of the new deep water blocks in Austral SA for the last 9 years, performing duties as a terminal Angola. tender, diving support vessel, stand by vessel and other services. Unlike the operation in the Brazilian sector, there is no The same year a 3 years contract for positioning services was availability of other vessels in the area of operation, Latitude entered into with ENI. In addition DOF Subsea conducted a 52 South. The vessel spends an average of 350 days at sea geotechnical survey for TOTAL on block 18, CLOV. This project on location. was done as a joint operation with Benthic, bringing state of the art technology to West Africa for collecting seabed samples with a deployable drilling rig at 1800 meters depth. DOF Subsea Angola Ltd DOF Subsea entered into a MOU with Sonangol for survey and IMR work in 2009. This was delayed and will be conducted in Angola oil production dates back to the 20th century, both 2010. onshore and offshore. During the long lasting civil war, that ended in 2002, all oil production went offshore. In recent years Currently DOF Subsea is running for several small, medium Skandi Flamengo PSV Skandi Leblon PSV Skandi Stolmen PSV the offshore industry has moved into deep water areas. This and large projects in Angola, and is offering a total of 6 new move has shown very successful and several large deepwater builds to different projects and operators. discoveries has been made during the last ten years, resulting in Angola today being the largest producer of raw oil in West- As per today DOF Subsea Angola has 17 employees. The main Africa. The prospects are promising and many large deepwater office is located in Miramar, in the center of Luanda, close to Skandi Waveney PSV Skandi Yare PSV Skandi Botafogo AHTS projects are being implemented while others are still being the operators and to the Sonils offshore base. The company is planned. New discoveries are being made, last one on block moving into new offices in May 2010. 15/06 by ENI, announced on the 10th of April 2010, where DOF Subsea Angola is providing positioning services. DOF Subsea Angola has today an agreement with Aker Solutions for utilization of their base facilities at Sonils Base. However as the portfolio is growing there is a need to establish DOF Subsea Angola was established in 2006 in order to Skandi Copacabana AHTS Skandi Fluminence AHTS Skandi Giant AHTS respond to this new development and capture new business own base facilities, for which the Sonils base in Luanda and opportunities in the fast growing Angolan and WA offshore the Kwanda Base in Soyo are currently being evaluated. market.
Skandi Møgster AHTS Skandi Rio AHTS Geograph CSV
Skandi Acergy CSV Skandi Chieftain CSV Skandi Hav CSV
Skandi Patagonia CSV Skandi Salvador CSV Skandi Santos CSV
Skandi Patagonia
22 23 ASIA-PAcIFIC Region ASIA-PAcIFIC Region
DOF’s activities: Indian Ocean and Pacific Ocean. DOF’s offices: Australia (Perth) and Singapore, Indonesia (Jakarta), Brunei and Philippines (Manila).
DOF Subsea Asia Pacific The other factors contributing to our success in 2009 included developing key strategic partnerships and ensuring DOF Subsea Asia Pacific has been operating in the region for we concentrated our efforts on the most lucrative markets. five years. In 2009, we continued to generate a steady growth This allowed us to sustain asset utilisation, further enhance in profit despite the impact of the Global Financial Crisis and a our revenues from subsea intervention services and ensure general slowdown of activity in the oil and gas sector. progress towards our overall strategic goals.
It was our location and our mix of subsea intervention services It is crucial to keep a clear grasp of the macro environment - that enabled us to continue to develop revenue streams and ‘the bigger picture’ - especially when prevailing conditions are deliver a positive growth in a difficult trading environment. challenging. And in 2009 we continued our strategic path of transition for the business. The evolution will become even Whilst we maintained reasonable vessel utilisation in 2009, more evident in 2010 and into 2011 as we bring some of our it was the maximisation of our “value added” services new group assets into the region. which underpinned our performance. We have established a reputation for Saturation and Air Diving operations as well as Analysts’ projections for the subsea sector in the Asia Pacific ROV operations in the region and we capitalised on this and region indicate strong growth over the next five years. The our Project Management and Engineering services. development of a number of substantial natural gas resource projects in Australia adds strength to the Asian growth
24 25 THE ASIA-PACIFIC FLEET
Skandi Falcon PSV
Geobay CSV
Geoholm CSV
Geosea CSV story and we expect the Asia Pacific business unit to deliver and will be relocating other group assets during the second profitable growth for the group throughout this period. half of 2010. Our new build and fleet relocations for our Dive Support Vessel, Skandi Singapore, coincide with the planned Our vessels, the Geosea and Geobay, will continue to maximise increase in investment in the subsea sea sector in this region. the full range of their operational capacity and to offer integrated subsea services. In order to emphasise the flexibility But none of this would be possible without a fantastic team of these vessels and our ability to participate in the full life of dedicated professionals at DOF Subsea Asia Pacific. Even of an oil and gas project, Geobay was recently converted to with increased activity, we achieved a 2-year HSE milestone undertake geotechnical coring for Chevron’s Wheatstone gas of 2 million man hours and no lost time injuries. This is true development. testimony to a team who already has 2010 underway and on target. With the increase in activity in the region, our strategy ensures we respond to the developing needs of our clients and we will be equipped to do so. We will take delivery of a new build diving support vessel – the Skandi Singapore – in January 2011
26 27 HSEQ Health, Safety, Environment & Quality
HSE Performance 2006 - 2009 (Based on 12 hours/man/day)
The DOF group new set of revised policies and guidelines will be implemented during 2010. These new policies will set a standard for a common way of operating through the entire group as a General Overview: whole, from vessels to upper management. Throughout the group there are in the region of fifty HSE and Quality professionals whom are consistently engaged within daily operations to ensure sustainable high level of HSE and Management Systems: Quality. The group has in past times been working within In 2009 a strategy for merging all management systems for the entire group on the same platform was decided. “Docmap” different organisationalLost time injury frequency structures Total and recordable leadership. case frequency During 2009 new structures and directions from top management has been identified as being the tool able to achieve this have been implemented thus allowing these professionals as it is designed specifically for handling documentation environments where they can work closer together. required within the safety management system and incident HSE Performance 2005 - 2009 reporting. The above changes and(Based directions on 12 hours/man/day) are based upon an overall principle that HSE and Quality is and must remain a core value of the DOF group. On all occasions possible HSEQ shall be on External environment the top of all agendas and decisions made within the group. All regions and vessels are operating according to the ISO 14001 standards. DOF has one of the most modern fleets in the The overall safety statistic of the DOF group during the last market. We claim this fact by making it our primary standard four years shows a significant reduction of frequencies both to focus in utilizing the most up-to date and environmentally to lost time incidents - and recordable injuries. friendly technology available for our new buildings. New generations of low resistance hull lines are designed for HSE performance DOF group – last 5 years: speed and low fuel consumption and the vessels are also built (Figures areLost based time injury on frequency 12 hrs/man/day.)Total recordable case frequency environmental friendly design, clean design (DNV).
HSE Performance 2005 - 2009 DOF Subsea (Based on 12 hours/man/day)
2009: In 2009 we sustained one lost time incidents (LTI) which occurred onboard one of our own offshore assets (Geosund). A deck rigger broke his finger during a routine lifting operation. Despite this unfortunate incident, the overall results for the year are impressive with an LTI frequency of “0.3 per million man-hours worked”.
Lost time injury frequency Total recordable case frequency Another positive aspect was the reporting of safety observations as this is regarded to be one of our strongest measures to keep a high and robust Safety Culture within the company.
Code of Business Conduct: Almost 6 000 reports were submitted and logged during During the year a new Code of Business Conduct has been 2009: developed and introduced throughout the DOF group. The
28 29 12,00
10,00
8,00
6,00
4,00
2,00
0,00 2005 2006 2007 2008 2009
Lost time injury frequency Total recordable case frequency
with standard processes that require minimal variation Focus areas: • Increased Total Recordable Case Frequency (TRCF), from irrespective of locations. • A new Management System under implementation 0,68 in 2008 to 1,03 in 2009. The cause for this increase Safety observations per month (Docmap), a joint project with DOF Subsea. may be due to an increase in the fleet from 7 to 12 800 • Crisis Manager – new tool for effective handling of vessels, including many new employees. 700 ISO 9001-14001 and OSHAS 18001: emergencyHSE situations. Performance 2006 - 2009 The consequence of this is that the HSEQ culture must be At this precise time DOF Subsea is currently operating under 7 • Revised format of(Based the HSEQon 12 hours/man/day) Plan – focus on KPIs for all implemented by training and education. 600 different business management system certified towards the departments and regular meetings to monitor • Norskan fleet achieved 98,71 % of operational reliability 500 ISO 9001 standard. With support from a global consulting performance. in 2009. The reasons for off-hire in 2009 were machine group, DOF Subsea aim to have implemented a global Business • Increased cooperation with DOF Subsea and Norskan, problems and delays during periods at the yards. 400 Management System certified according to ISO 9001, 14001 with the purpose to align HSE procedures and implement • In 2007 and 2008 Norskan won the Best Offshore 300 and OHSAS 18001 in 2010. A global contract has been issued common systems for the DOF ASA group. Supplier HSE award from Petrobras. The quality of 200 and signed with DnV, Det norske Veritas, to perform the Norskan’s services at sea is demonstrated monthly certification process globally. by evaluations performed by Petrobras onboard vessels 100 HSE performance DOF Management – last 5 years: managed by Norskan. 0 Producing more than just the project deliveries, the project will (Figures include DOF Management Pte. Ltd. and are based on • In 2007, 2008 & 2009, Norskan ranked first place on two also increase global morale and mutual understanding as the 12 hrs/man/day.) categories of Petrobras Award. In one of these categories, Jan Jun Oct Sep Feb Apr Dec July Nov Mar Aug May individual DOF Subsea companies have and will continue to Lost time injury frequency Total recordable case frequency Norskan has become Petrobras best supplier against Observations work together crossing cultures, religion, regions and borders other Offshore Supply companies (a program called to attain our ultimate goal. PEOTRAM with 33 participating companies) and on the other category (this case only 2007 & 2008 – 2009 there Furthermore, DOF Subsea will be recognised as a global player HSE Performance 2005 - 2009 was no award in this category), first place against (Based on 12 hours/man/day) LTI and Recordable Frequencies 2005 - 2009 in the offshore subsea market by international oil companies, almost 75 companies of various segments regarding the (Figures are based on 12 hrs/man/day.) thus creating access to new markets. Management System of HSEQ.
12,00 IMCA Training 2009: Focus areas: DOF Subsea has during the year introduced IMCA, International • Decreasing waste generation and increase of waste 10,00 Marine Contractors Association, competence scheme. segregation. IMCA set the guidelines which we follow for competence • Training programs and seminars on Management and 8,00 and training. IMCA is the preferred industry competence Safety for all of the employees. framework within our line of business to follow. IMCA works • Social responsibility is taken by participation and 6,00 through and on behalf of its members world-wide promoting Lost time injury frequency Total recordable case frequency implementation of varies social programs both internally offshore safety, addressing technical matters and on a variety and externally. of other issues. 4,00 HSE performance Norskan – last 4 years: The IMCA guidelines for competence assurance scheme HSE Performance 2005 - 2009 (Figures are based on 12 hrs/man/day. 2,00 (Based on 12 hours/man/day) consist of 3 different levels: NORSKAN 0,00 • Part 1 – Internal Trainer & Assessor Package HSE Performance 2006 - 2009 2005 2006 2007 2008 2009 • Part 2 – Record of Competence Booklet Overall (Based on 12 hours/man/day) • Part 3 – Certification Norskan has the management responsibility of vessels owned Lost time injury frequency Total recordable case frequency by the DOF group and other ship owning companies. Since 2004, Norskan has been certified according to the ISM Code DOF Management: and according to the ISO 9001, ISO 14001, OSHAS 18001 and ISPS Code.
Lost time injury frequency Total recordable case frequency HSEQ Achievements 2009 Overall A “Unique” safety behaviour program was rolled out during DOF Management has the management responsibility of HSEQ Performance 2009: the 2009. The overall objective of the programme was to vessels owned by the DOF group and other ship owning • Zero LTIF, Norskan has never registered a Lost Time Injury create a positiveSafety safety observations culture. per month companies. Since 1995, DOF Management AS has certified Frequency (LTIF). Lost time injury frequency Total recordable case frequency according to the ISM code, followed by the ISO 9001- and ISO 800 We achieved this goal by following/implementing Demings 14001 certifications in 2002. Theory700 of ’Plann-Do-Check-Act’ cycle of awareness, assessment and action, predicated upon a consistency of HSE Performance 2005 - 2009 600 (Based on 12 hours/man/day) focus, purpose and execution. HSEQ Performance 2009: 500 • Approx. 50% reduction in personnel injury frequencies 400 (LTIF and TRCF) compared to 2008. • Increased use of Safety Observations and reporting of System300 Development: To support and align with the corporate vision of DOF Subsea Near Misses. “To200 be a world class integrated Subsea Company delivering • Reduction in offhire days due to un-planned technical solutions100 responsibility, without risk, together – every day”, a breakdown (99,2% vessel reliability). • Implementation of Environmental Accounting System. global0 business management system project has been initiated to develop a robust and unique management system that will • Time-Out-For-Safety (TOFS) programme carried out on
Jan board several vessels. Jun Oct Feb Sep Apr Dec July Nov be utilised globally.Mar The new BMS will provide the company Aug May Lost time injury frequency Total recordable case frequency Observations
30 31 HSE Performance 2005 - 2009 (Based on 12 hours/man/day)
Lost time injury frequency Total recordable case frequency NEWBUILDINGs DOF’S NEWBUILDING PROGRAMME
DOF still has an extensive newbuilding program with a correspondingly high level of activity in the newbuilding group. The total number of newbuildings in the company is presently 19. Three newbuildings were delivered in 2009.
Our newbuilding deliveries last year were all highly advanced vessels, also incorporating new technology. They were built with a high focus on environmental friendly solutions and comfort for all personnel onboard, in line with our previous newbuildings in recent years.
In 2009, we took delivery of the supply vessel Skandi Flora for delivery in April 2010 from STX Aukra. We certainly look and the offshore construction vessels Skandi Arctic and Skandi forward to seeing this vessel in operation in 2010. Santos, all delivered by STX shipyards in Norway. Our newbuilding program also includes vessels built at Skandi Arctic, a joint venture project with Technip, is on long- shipyards in Brazil and the Far East: term charter for Technip and Statoil. The vessel is arranged with a “state of art” 24-man twin bell dive system, with heave compensated bells and 6 chambers. In addition, the vessel is Newbuildings, Brazil: fitted with a 400-ton offshore crane and facilities for a wide DOF has a long history of cooperation with STX and their range of construction support services. She is the largest and Promar shipyard in Brazil. Our cooperation with this shipyard one of the most advanced diving vessels presently in operation has grown and improved, in line with the complexity of the worldwide. vessels they have built for DOF. Presently, a number of highly advanced vessels, including 2 OSCVs and 3 anchor handlers, Skandi Santos is arranged with specialised deck equipment, are under construction for DOF at this shipyard. Several of including a module handling tower and deck skidding system, these newbuildings are planned for delivery in 2010, e.g. optimised for efficient handling and maintenance of subsea Skandi Vitoria. This is a huge offshore construction vessel of modules (e.g. Xmas trees). The vessel is quite unique in this STX OSCV 06 design, with overall length 142 m and beam respect and operates on a long-term contract to Aker Oilfield 27 m, fitted with a 250-ton offshore crane and advanced Services for Petrobras in Brazil. flexible pipe laying equipment. This is a joint venture project with Technip. The vessel is in its final outfitting stage, with A major part of our remaining newbuilding program represents scheduled delivery in spring 2010. She is an impressive vessel, “high-end” AHTS vessels that are built at shipyards in Norway, with a complexity in line with the most advanced vessels in Brazil and Vietnam. Among these are our series of 4 vessels our fleet. of STX AH-04 design, under construction at Aukra shipyard in Norway. Newbuildings, Far East: These are fitted with the most modern anchor handling deck Our newbuildings in the Far East include a series of 6 medium- equipment available and provide a combination of extreme size anchor handlers built at the STX Vungtau shipyard/ size, bollard pull and winch capacity that ensures these vessels Vietnam, two supply vessels at the Cochin shipyard/India are prepared for future demanding deep-sea anchor handling and one construction/diving vessel at the ST Marine shipyard/ operations. The vessels are also prepared for offshore Singapore. These shipyards are new to DOF but we have construction work, by use of offshore crane and ROV systems. already established a good partnership with the yards and They are arranged with “Clean Design” class, SCR catalyst sent skilled teams on site. We are very satisfied with their system, low resistant hull lines and fuel efficient hybrid performance to date. propulsion concept, in order to reduce fuel consumption and emissions of NOx and CO2. The first vessel of this design, We have been particularly impressed by the achievements of Skandi Vega, on long-term charter to Statoil, is scheduled STX in their brand new shipyard in Vungtau/Vietnam. In the
32 33 space of only a few years, the shipyard has been fitted with The vessel is arranged with an 18-man SAT dive system, single new and modern shipbuilding facilities. bell with heave compensation and 3 chambers. NEWBUILDINGS AND ESTIMATED DELIVERY
The first two anchor handlers of STX OSCV 08 design, Skandi Furthermore, the vessel is arranged with a 140-ton offshore Emerald and Skandi Peregrino, are both scheduled for delivery crane and heavy-duty WROV & LARS systems, ensuring that from STX Vungtau shipyard in 2010. the vessel is prepared for a wide range of offshore and subsea support operations. Delivery of the first vessel from the Cochin shipyard in India is expected at the end of 2010. We are confident that this high level activity for the DOF newbuilding group will continue in 2010, and we look forward Skandi Singapore is a DOF Subsea construction & diving vessel to challenging and interesting tasks in the years to come. of STX DSV 06 design, built at ST Marine, Singapore.
Name: Skandi TBN Name: Skandi Vega Design: PSV 09 Design: AH 04 Delivery: 2010 Delivery: 2010 Name: Skandi TBN Name: Skandi Skolten Design: PSV 09 Design: AH 04 Delivery: 2011 Delivery: 2010 Aker PSV 09 CD x 2 Aker AH04 x 2
Name: Skandi Singapore Name: Skandi Hercules Design: DSV 06 Design: AH 04 Delivery: 2011 Delivery: 2010 Name: Skandi TBN Design: AH 04 Delivery: 2011 Aker OSCV 06L DSV Aker AH04 x 2
Name: Skandi Vitoria Name: Skandi Gamma Design: OSCV 06 Design: PSV 06 LNG Delivery: 2010 Delivery: 2011 Name: Skandi Niteroi Design: OSCV 06 Delivery: 2010 Aker OSCV 06 x 2 Aker PSV 06 LNG
Name: Skandi Ipanema Name: Skandi Emerald Design: AH 05 Design: AH 08 Delivery: 2010 Delivery: 2010 Name: Skandi Peregrino Design: AH 08 Delivery: 2010 Aker AH05 Aker AH08 x 6 Name: Skandi TBN ( x 2) Name: Skandi Amazonas Design: AH 08 Design: AH 12 Delivery: 2011 Delivery: 2011 Name: Skandi TBN ( x 2) Name: Skandi Iginazu Design: AH 08 Design: AH 12 Delivery: 2012 Delivery: 2011 Aker AH12 x 2
Skandi Singapore
34 35 THE MARKET THE OFFSHORE SUPPORT VESSEL MARKET: THE TIDAL WAVE OF NEWBUILDINGS
In line with exploration and production spending cuts and a weaker drilling rig market, the offshore support vessel (OSV) market has been in decline since about January 2009 when we first noted a decrease in term charter rates for all segments of tonnage worldwide. This was the first major decrease in rates registered since the OSV market started rallying in autumn 2004. The decrease in term charter rates for supply tonnage from peak levels at the end of 2008 has been approximately 40-50 percent, so far, as owners fight to secure work for their vessels. While newbuilding and sale and purchase activity was markedly still in 2009, the newbuilding delivery pace reached record high levels in 2009 as the tidal wave of newbuildings began to hit the market. According to our records, the anchor handling tug supply (AHTS) fleet is scheduled to expand from 1,400 ships to close to 1,800 ships by the end of 2012. Similarly, the platform supply vessel (PSV) fleet will increase from about 1,000 ships to about 1,200 ships in the same timeframe. Finally, the high end construction fleet is projected to grow from about 240 ships to 340 ships. To sum up: about 700 newbuilding deliveries in the next three years.
Despite the current challenging market conditions, the long heading into a period of intensive newbuilding deliveries for term demand for OSV seems intact. According to the IEA, oil the next three years. Brazil will be a focus area as ship owners demand is expected to grow from about 85 to over 100 million fight for a piece of Petrobras’ aggressive offshore development barrels per day by 2030. In addition, the portion of offshore program. Other niche areas will include Arctic/icebreaking oil production is steadily increasing relative to onshore oil vessels, offshore wind related vessels and vessels for countries production and it is projected to grow to about one third of such as the US which are protected by strict cabotage laws. total production by 2020. These trends together represent a Rather than subsidize struggling shipyards directly, we also long term requirement for all types of offshore support vessel see the possibility for more government orders for military, (OSV). According to our model, although demand for OSV has coastguard and research vessels to keep domestic shipyards weakened since the beginning of 2009, the current downturn busy. in the market has its roots in oversupply. In the short term, we are expecting a further decline in the OSV market in 2010 We noted 17 cancellations of medium and large supply vessels with a possible start on recovery in 2011. in 2009 due to a variety of reasons such as shipyards going bankrupt, lack of financing and on mutual agreement to create Newbuildings some slack in delivery schedules. Most of the cancellations Newbuilding activity almost came to a complete standstill in were announced about mid-2009 and the main focus was on 2009. We registered 34 medium and large supply ship orders the AHTS segment representing 13 cancellations. Although in 2009, which represents a 60 percent decrease in activity there have been a few official cancellations announced in compared with 2008. On the other hand, delivery momentum 2009, we don’t expect this to materially impact the supply of picked up even more in 2009 with the delivery of 137 vessels. vessels because most of the projects have been successfully This equates to a yard capacity increase of 36 percent over resold so far. last year’s 40 percent increase. Newbuilding prices remained relatively stable in 2009. In our view, decreases in equipment A more important factor affecting fleet development is the package prices and pressure for shipyards to fill dwindling increasing trend for delivery delays. In line with last year, about order books after a dry year will generate some niche market 35 percent of 2009 deliveries were rolled over into 2010 at newbuilding orders in 2010. Newbuilding price reductions are year-end. Last year, we predicted that about only 120 medium expected to be around 10-15 percent in line with reductions and large vessels would be delivered in 2009 with the rest in equipment package prices. rolling over into 2010. Our prediction was on target with the 2010 will be the year for placing newbuilding contracts for actual delivery of 137 during the year. With further delays in niche markets as the market is already oversupplied and delivery schedules, as well as the challenge of finding work for
36 37 Skandi Arctic NO. OF VESSELS AHTS DELIVERY SCHEDULE 30 28 16,000+ BHP 10-15,999 BHP 26 24 22 11 the newbuildings in prevailing market conditions, we expect a to 15 percent over the course of 2010. On the other hand, 20 18 16 modest increase in deliveries this year up to about 150 ships. the supply fleet expanded 14 percent in 2009 and is expected 14 12 10 4 to grow an additional 18 percent in 2010. Considering the 17 7 4 8 4 11 6 2 4 8 3 4 2 4 6 7 2 Sale & purchase expanding supply figures in the context of lagging demand, 5 5 3 1 3 2 2 2 3 2 2 3 2 1 2 2 2 1 3 2 0 1 1 1 1 1 1 1 1 1 1 1 In 2009, well-positioned owners were waiting expectantly rates in 2010 are expected to remain relatively depressed J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O to make acquisitions of distressed assets from over-exposed and possibly even deteriorate more with a possible start to 2010 2011 2012 owners. Despite the downturn in term charter rates making recovery in 2011. speculative newbuilding projects without secure financing even more vulnerable, 2009 was still too early for distress Construction market sales on a large scale. The gap between buyers’ willingness to In the short term, demand for construction vessels is expected spend and sellers’ price expectations resulted in fewer deals to stay low in 2010 but may pick up in 2011 in line with concluded. Market players put a higher value on retaining the increase in offshore construction company order intake. assets and accumulating equity than on investing in new assets Despite a possible pickup in demand in 2011, the high NO. OF VESSELS PSV DELIVERY SCHEDULE in 2009. In addition, limited availability of debt financing and end construction vessel fleet is developing at a rate that is 26 24 4,000+ DWT 2-3,999 DWT 22 the dim short-term outlook for the OSV market contributed to expected to outstrip demand and leave a lot of vessels without 20 18 11 fewer and lower value transactions during the year. work and possibly laid up in 2010. In 2009, the construction 16 14 12 vessel fleet increased 13 percent versus 14 percent in 2008. 6 10 5 8 4 4 According to our records, asset values decreased up to 30 However, in 2010 alone, there are 77 vessels scheduled for 6 13 3 4 7 4 5 4 8 5 2 7 5 5 2 2 1 percent during the course of 2009 depending on the tonnage delivery, and this equates to an annual fleet growth rate of 2 5 5 5 2 1 2 3 5 1 2 1 1 3 2 2 3 3 3 2 3 2 2 2 2 2 3 1 2 2 1 1 2 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 type. For 2010, we expect fewer transactions and further 33 percent. In addition to the core construction vessel fleet, J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J depreciated second hand values, at least through the first some large AHTS newbuildings are being fitted with large 2010 2011 2012 2013 half of 2010, due to buyers betting on deteriorating market cranes in order to compete for subsea jobs and adding to the conditions. Later in 2010, we expect some owners to start competition. In our view, there could be an excess of up to struggling with too much debt and not enough revenue, 50 light construction vessels in the market towards the end which will kick off industry consolidation and restructuring on of 2010 putting pressure on utilizations and rates. Regaining a larger scale. market balance by 2011/12 will be dependent on laying up NORTH SEA TONNAGE old vessels, more cancellations and scrapping. In summary, PSV AVERAGE TERM FIXTURE RATES GBP/DAY (Estimated & Reported) USD/DAY
Rates as with the supply market, the main challenge facing the 30 000 60 000 After a rally that began in autumn 2004, the term chartering construction vessel market is absorbing the tidal wave of 25 000 50 000 market started to decline in January 2009. Term charter rates newbuildings into the market. have declined on average 40-50 percent for contracts with 20 000 40 000 about a one-year firm period. At the same time, spot rates Conclusion 15 000 30 000 in the North Sea were on average 65 percent lower than Based mainly on the tidal wave of supply and subsea 10 000 20 000 the previous year. The main factors for the decrease in rates newbuildings to be absorbed into the market, and lagging are fewer requirements issued by oil companies, drilling rig growth in OSV demand, we expect utilization of the 5 000 10 000 operators that have been cancelling and delaying offshore worldwide supply and subsea fleets to decrease in 2010 with 0 0 development programs and an oversupply of ships due to corresponding impact on rates. The main uncertainties in the 2000 2002 2004 2006 2008 the tidal wave of newbuilding deliveries. Overall, ship owners analysis are the extent of delivery delays and the speed at 2,200+ DWT 2,200 - 3,099 DWT 3,100+ DWT 500-749 m2 deck area 750-899 m2 deck area 900+ m2 deck area have been vigorously competing to keep their vessels on which offshore activity level will bolster demand in 2010, but charter in the short term and this has contributed to pushing still it seems unavoidable that supply will outstrip demand and rates down. 2010 will be a tough year for owners. NORTH SEA TONNAGE AHTS AVERAGE TERM FIXTURE RATES GBP/DAY (Estimated & Reported) USD/DAY
On the worldwide market, we estimate that demand for AHTS 45 000 70 000 and PSV decreased about 3 percent in 2009 in the wake of 40 000 60 000 the financial crisis. Despite last year’s dip, demand for supply 35 000 50 000 vessels in 2010 is expected to increase. Drilling support will be 30 000 the main driver for supply tonnage demand in 2010, which 25 000 40 000 is related to the immense deliveries of drilling rigs expected 20 000 30 000 next year. Assuming the jack up utilization picks up in 2010, 15 000 20 000 we can expect demand in the supply market to increase up Source: RS Platou 10 000 10 000 5 000
0 0 2000 2002 2004 2006 2008
10,001+ BHP 8-10,000 BHP 10-15,999 BHP 16,000+ BHP 20,000+ BHP
Graphs: RS Platou
38 39 SHAREHOLDERS SHAREHOLDERS INFORMATION
Shareholder structure As of 31.12.09 the 20 largest shareholders owned approx 80% of the Company’s shares. The Table below shows the 20 largest shareholders 31.12.09:
Name No. shares Shareholding MØGSTER OFFSHORE AS 46 210 050 50,76% ODIN NORGE 6 235 400 6,85% SKAGEN VEKST 4 954 800 5,44% PARETO AKSJE NORGE 4 492 100 4,93% SKANDINAVISKA ENSKILDA BANKEN 2 361 183 2,59% PARETO AKTIV 2 288 000 2,51% MP PENSJON 1 845 600 2,03% ODIN OFFSHORE 1 798 900 1,98% VESTERFJORD AS 873 650 0,96% PARETO VERDI 608 500 0,67% MUSTAD INDUSTRIER AS 591 800 0,65% HOLBERG NORGE 545 500 0,60% DNB NOR SMB 510 000 0,56% MOCO AS 498 100 0,55% ODIN MARITIM 369 800 0,41% FORSVARETS PERSONELLSERVICE 344 100 0,38% PACTUM AS 300 000 0,33% POSH AS 282 600 0,31% WARRENWICKLUND NORGE 239 000 0,26% VPF NORDEA SMB 237 894 0,26% Total 20 largest 75 586 977 83,03% Other shareholders 15 450 998 16,97% Total 91 037 975 100,00%
40 41 Shareholder policy Development of share price since listing due account of the principle of equanimity whereby no- DOF ASA shall at all times provide its shareholders, the Oslo The Figure on the next page illustrates the development one shall derive particular or special advantage from such FINANCIAL CALENDAR 2010 Stock Exchange and the finance market in general (through of the share price, and OSBEX from date January 1st to acquisitions. Preliminary dates for the publishing of the company’s the Oslo Stock Exchange information system) timely and December 31st. results are: exact information. Such information will be given in the The Power of Attorney is valid until the ordinary general form of annual reports, quarterly reports, press releases, Dividend Policy meeting in 2010, no later however than 30 June 2010. 19 May 2010: 1st quarter 2010 stock exchange notifications and investor presentations, DOF’s objective is to provide a competitive return on the 27 May 2010: Ordinary General Meeting as appropriate. The Company will strive to clarify its long- shareholders’ invested capital through payment of a dividend The justification for the proposal is that it may be financially 19 August 2010: 2nd quarter 2010 term potential, including strategy, value drivers and risk and appreciation of the share price. In considering the scope advantageous for the Company to possess own shares. The 03 November 2010: 3rd quarter 2010 factors. The Company will have an open and active policy of the dividend, the Board emphasizes safety, predictability possession of own shares can generate a profit through Ultimo Feb 2011: 4th quarter 2010/results 2010 in its approach to investor relations and will make regular and stability, as well as the Company’s dividend capacity, own-account trading, and the shares can be used in presentations in connection with annual and preliminary the need to have a healthy and optimal level of equity, and payment for possible acquisitions of other companies and for results. also adequate financial resources in order to pave the way similar purposes. for future growth and investment, and the wish to minimise In general, DOF will present all inside information. In capital costs. any event, the Company will provide information about individual events, such as resolutions adopted by the Board DOF ASA has paid dividend regularly and intend to pay and the AGM concerning dividends, mergers/demergers or dividend annually in the coming years. changes in share capital, the issue of subscription rights, convertible loans and all agreements of significance between Power of Attorney to the Board of Directors Group companies or related parties. Increase of the share Capital In the General Meeting 27 May 2009, the Directors were The Chairman and the other Board members shall be given a Power of Attorney to increase the Company’s share available for discussions with major shareholders in order capital up by up to NOK 75.000.000 through the issue of to achieve a balanced understanding of these shareholders’ up to 37.500.000 shares, each with a nominal value of viewpoints and focus, but under due care of the regulations NOK 2.00. The Power of Attorney is valid until the ordinary in ASAL, VPHL and BØRSREG. The Chairman shall ensure General Meeting in 2010. that the shareholders’ views are communicated to the entire Board. The Board shall consider the interests of all The Power of Attorney includes a right to deviate from the shareholders and treat all shareholders equitably. shareholders preemptive right by law to subscribe for new shares. Further, the Power of Attorney includes a right to All transactions that are not of minor significance between increase the Company’s share capital in return for non-cash the Company and a shareholder, a board member or contributions. The Power of Attorney does not include a a senior employee (or related parties) shall be subject decision on a merger pursuant to the Norwegian Public to value assessment by an independent third party. If Limited Companies Act, Section 13-5. the consideration exceed 5% of DOF’s share capital, such transactions shall be subject to the approval of the DOF has on 20 May 2009 completed a private placement for shareholders at the AGM, in so far as this is required by a total of 8,270,000 new shares. The subscription was set to ASAL, section 3-8. NOK 29.50 per share. Holding Shareholders Shares % share
Board members and senior employees shall inform the Board Acquisition of own shares 1-1 000 3.204 1.486.697 1,6% if they have any significant interest in a transaction to which In the General meeting 27 May 2009, the Directors were the Company is a party. given a Power of Attorney to acquire up to 10 % of the 1 001-10 000 1.099 3.482.601 3,8% Company’s shares, pursuant to the provisions of chapter 9. II 10 001-100 001 229 6.319.221 6,9% There are no restrictions in the trade of shares in DOF, and in the Norwegian Public Limited Companies Act. 100 001-1 000 000 37 9.563.423 10,5% DOF shall not establish mechanisms designed to prevent or >1 000 001 8 70.186.033 77,1% repel takeover bids, unless this has been approved by the The highest nominal value of shares that may be acquired general meeting with a two thirds majority (of votes cast and pursuant to this power of attorney is NOK 16,553,595.00. 4.577 91.037.975 100,0% of the share capital represented). However, in the event of The lowest amount that can be paid is NOK 10 per share and a takeover bid, the Board may take steps that are clearly in the highest amount NOK 100 per share. Foreign Ownership 4.218.862 4,6% the best interest of the shareholders, for example by offering Within the limits of the law, the Board of Directors are Norwegian Ownership 86.819.113 95,4% the shareholders advice on the offer, or, where relevant, by granted Power of Attorney to decide the manner in which finding an alternative buyer (”white knight”). the purchase and sale of own shares can take place, taking
42 43 ANALYTICAL ANALYTICAL INFORMATION
The DOF group operates within three different business segments related to types of vessels and activities. The majority of all revenues are based on day rates. The result and cash flow for the group can be influenced by a number of variable factors and variance in types of business segments and in particular the activity from subsea. The company policy is to manage all risks and to reduce the major risks which are related to changes in currency rates, interest rates and utilization of vessels and equipment. Our intention is to monitor and understand the impact of changing market conditions on our results and cash flow and to initiate actions to reduce the effects of such changes.
Segments Operating costs The group earnings structure are divided in three segments; PSV Total salary and operating costs were MNOK 3,093.6 in 2009 (Platform Supply Vessel), AHTS (Anchor Handling Tug Supply compared to MNOK 2,784.3 in 2008 which is an cost increase Vessel) and CSV (Construction Support Vessel). In addition the of approx 11%. The increase in costs is driven by operation of group earning structure can be divided into two categories: more vessels. Total depreciation costs increased from MNOK 1) Vessels operating on firm time charter agreements where 643.3 in 2008 to MNOK 837.2 in 2009. In addition total write the revenue reflects vessel- and marine costs and offs of MNOK 178.5 has been done in 2009 and represents 2) Vessels operating on contracts where the revenue basically write downs of excess values in one subsidiary. reflects engineering services in addition to vessel- and marine costs. Operating profit before depreciation (EBITDA) amounting to MNOK 1,233.7 ( MNOK 1,555.7). Ebitda excluding gain/ Vessels under category one are basically PSV and AHTS. loss from sale of assets is MNOK 1,141.5 (MNOK 1,237.9). The CSV’s work under both category one and two and the Margins have partially been effected by currency fluctuations. majority of these vessels are owned by DOF Subsea. Earnings Approx. 70% of the group’s revenues are other currency than from these vessels are firm contracts and project contracts NOK. and earnings can vary based on utilization of the vessels and scope of the project. The subsea vessels (CSV) are used as Result of the year operating vehicles which serve as platforms for a range of Net financial result totalled MNOK 786.9 (-MNOK equipment and personnel needed for various services offered 1,035.6). Net financial result has been effected by by DOF Subsea. DOF Subsea also owns and operates a large unrealized gain on foreign currencies, total MNOK 757.5 fleet of ROV’s included in their vessel operations. A minor part (-MNOK 655.4) and represents high NOK and R$ to USD. of DOF Subsea’s business are revenues which do not include own vessels. Margins from these projects are lower than vessel For the Brazilian operation R$ is used as the functional operations. currency and represents a approx 50% of the unrealized currency gain in 2009 and respectively a loss in 2008. The operations in Brazil is however cash wise less exposed to Comments to operating result currency fluctuations based on that the the revenue is split in R$ for the operational part and USD for the financial part. All Operating revenue long term debt for the operations in Brazil is in USD. As the DOF group’s revenue in 2009 amounted to MNOK 4,327.3 Brazilian operations use R$ as functional currency the effects compared to MNOK 4,339.7 in 2008. Adjusted with gain/loss on the accounts have been substantial. from sales of assets the revenue is MNOK 4,335.2 (MNOK 4,021.9 mill) The growth in revenue is more vessels in operation Net financial income for associated companies was MNOK in 2009. The group took delivery of 3 vessels in 2009, of which 191.7 (MNOK 124.8). The result both in 2009 and 2008 two vessels were large and complex construction support basically represent gain from sale of shares in Aker Oilfield vessels. One of these vessels is owned by 50%. None vessels Services AS and in DeepOcean respectively. were sold in 2009 compared to three vessels sold in 2008. Based on average number of vessels in operation in 2009 Tax costs/revenue are in total - MNOK 201.5 (MNOK 223.0). the group operated 2 more vessels compared to 2008. Total Included in the tax costs for 2009 approx MNOK 260 represent revenues from vessel and ROV operations in 2009 were MNOK reversal of extra tax for the tonnage tax companies based on 4,098.80 and total revenues from engineering activities were judgment in the Supreme court in Norway. MNOK 228.5.
44 45 Comments to balance sheet EBITDA per segment 31.12.2009
Assets The Group assets increased from MNOK 21,784.7 which is an increase of approx 10% from year end 2008. The asset growth PSV can be mainly be explained by investments in vessels and equipment. DOFSUB sold its shares in Aker Oilfield Services CSV and the cash effect was approx MNOK 300. The Group has AHTS an extensive new-building program and paid installments and unemployed capital per 31 December 2009 is MNOK 4,594.7. This number represents basically installments on new builds and ROV’s with expected delivery in period from 2010- 2012. Included in the number is also one vessel delivered in December that did not generate any revenue in 2009. EBITDA Quarterly 500 000 Equity 450 000 The Group total equity increased from MNOK 5,498.8 to 400 000 MNOK 6,809.1 of which minority interest amounted to MNOK 350 000 2,777.4. MNOK 803.0 of the equity growth is derived from 300 000 profit and MNOK 103.2 from currency effects. In addition 250 000 a capital increase of MNOK 240 and MNOK 305 has been 200 000 completed in DOF ASA and in DOF Subsea respectively. 150 000 100 000 The equity to assets ratio was approx 31% at year end 2009 50 000 compared to 28% in 2008. The equity ratio based on fair 0 Q1 Q2 Q3 Q4 market value of the fleet and assets was approx. 48%. 2009 2008 Liabilities The Group’s net-interest bearing debt amounted to MNOK 11,073.4 as of 31.12.2009 compared to MNOK 9,710.7 at year end 2008. The Group’s liabilities have increased as result of delivery of new vessels and equipment. Short term of long term debt, MNOK 2,128.3 include four loans and one bond REVENUE per segment 31.12.2009 with maturity in 2010. Loan with maturity in 2010 represents MNOK 1,125 and three of these loans have been refinanced per April 2010 approx MNOK 780. PSV
The debt/equity ratio was 2,20 calculated on 31.12.09 and CSV AHTS 2,61 year end 2008.
Comments to the cash flow
The net cash flow from operations in 2009 was MNOK 598.9 Revenue Quarterly (MNOK 719.5). 1 400 000
1 200 000 Investments in activities show a net negative cash flow effect of - MNOK 3,264 (-MNOK 1,649.8), whereof MNOK 83.1 1 000 000 are cash flows from sale of assets and - MNOK 3,539.3 800 000 investments in fixed assets and that represents deliveries of three new-builds and installments on new-builds to be 600 000 delivered in 2010-2012. 400 000
Financing activities show a positive cash flow effect of MNOK 200 000 2,047.5 (MNOK 1,903.1) whereof MNOK 4,915.5 is new 0 long term debt and MNOK 3,317.8 are down payments on Q1 Q2 Q3 Q4 long term debt. MNOK 449.50 are cash effects from capial 2009 2008 increases.
Working capital is MNOK 1,953 (MNOK 1,878.6). Total cash is MNOK 2,213.7 (MNOK 2,831) of which MNOK 1,131 ( MNOK 1,183) is restricted cash and represents deposits for long term debt with Eksportfinans for three vessels.
46 47 The Company shall aim at securing and developing the Capital Increase: CORPORATE GOVERNANCE Company’s position as a leading actor within its business The Board has the authority until the ordinary general meeting activities, to the benefit of its owners, and based on strategies in 2010 to increase the share capital by issuing 37 500 000 founded on ethical behaviour within applicable laws and shares. regulations. Purchase of treasury shares: 1.0 INTRODUCTION and overall success, and investment return for its shareholders. The annual report should include the objectives clause from The Board has the authority, until the ordinary general meeting The development and improvement of the Company’s the Articles of Association and contain descriptions of the in 2010, to purchase treasury shares in DOF ASA limited to Corporate Governance is a continuous and important process, Company’s principal objectives and strategies. 10% of the Company’s share capital. Shares may not be which the Board of Directors and the Executive Management purchased for less than NOK 10 per share, and no more than keep a keen focus on. The objective of the Company is to be engaged trading and NOK 100 per share. shipping business and other offshore related activity, including participation in other companies with the same or similar At 31 December 2009, the Group owned no treasury shares. 1.1 Background 1.3 Rules and regulations objects.
DOF ASA (“DOF” or the “Company”), is the parent company in The Company is a Norwegian public limited company listed These statements appear in §2 of DOF ASA’s Articles of 4.0 Equal treatment of shareholders and DOF’s group of companies (”The Group”), it is established and on the Oslo Stock Exchange. In that respect the Company is Associations. transactions with close associates registered in Norway and subject to Norwegian law, hereunder subject to the corporate governance regulations contained in corporate and other laws and regulations. The Company’s the Public Limited Companies Act 1997 (asal.), the Securities The Company shall only have one class of shares. aim is to observe all relevant laws and regulations, and the Trading Act 2007 (vhpl), the Stock Exchange Act with 3.0 Equity and dividends Norwegian recommendation for corporate governance. This regulations (børsreg) and other applicable legislation. Any decision to waive the pre-emption right of existing also applies for all other companies within the Group, and The Company shall have an equity capital at a level appropriate shareholders to subscribe for shares in the event of an increase consequently this document applies to the extent reasonable to its objectives, strategy and risk profile. in share capital must be justified. for all companies therein. 1.4 Management of the Company The aim of the Company is to produce a competitive return Any transactions the Company carries out in its own shares The Company’s Board of Directors adopted in its meeting Management of and control over the Company is divided on the investment of its shareholders, through distribution of shall be carried out either through the stock exchange or at held on 29 August 2006 a document which largely and between the shareholders, represented through the general dividends and increase in share prices. The Board of Directors prevailing stock exchange prices if carried out in any other in principle adhered to the then applicable Corporate meeting of the shareholders, the Board of Directors and shall in its assessment of the scope and volumes of dividend way. Governance standard, with a few deviations. The Board of the Managing Director (CEO) in accordance with applicable emphasize security, predictability and stability, dividend Directors examined a revised version of the current Corporate legislation. The Company has an external and independent capacity of the Company, the requirement for healthy and In the event of any not immaterial transactions between Governance standard, published by the Norwegian Committee auditor. optimal equity as well as adequate financial resources to create the Company and shareholders, members of the Board of for Corporate Governance (NUES) on 4 December, 2007. The a basis for future growth and investment, and considering the Directors, members of the Executive Management or close Board has thereafter, in January, 2008, approved and adopted wish to minimize capital costs. associates of any such parties, the Board shall arrange for its current Corporate Governance Policy to reflect the will of 1.5 Implementation and reporting on Corporate valuation to be obtained from an independent third party. This DOF to fully comply with the current corporate governance Governance Mandates granted to the Board of Directors to increase the will not apply if the transaction requires the approval of the standards recommendations from NUES. Company’s share capital shall be subject to defined purposes general meeting pursuant to the requirements of the Public The Board of Directors must ensure that the Company and frames and shall be limited in time to no later than Limited Companies Act. Independent valuation should also The Company will act in compliance with laws and regulations implements sound corporate governance. the date of the next annual general meeting. If the general be arranged in respect of transactions between companies in as applicable from time to time in respect of handling and meeting is to consider mandates to the Board of Directors the same group where any of the companies involved have control of insider trading rules and information to the The Board of Directors must provide a report on the Company’s for the issue of shares for different purposes, each mandate minority shareholders. shareholders and the market. On 21 October, 2009, new corporate governance in the annual report. The report must should be considered separately by the meeting. This should Corporate Governance guidelines from NUES were published. cover every section of the Corporate Governance Code of also apply to mandates granted to the Board for the Company Members of the Board of Directors and the Executive On 22 February, 2010, the Company’s Board of Directors Practice. If the company does not fully comply with this Code to purchase own shares. Management are obliged to notify the Board if they have any approved and adopted the revised NUES guidelines without of Practice, this must be explained in the report. material direct or indirect interest in any transaction entered reservations. This review fully reflects the Board’s approval of Equity: into by the Company. the revised guidelines, and thereby the Company’s current The Board of Directors should define the Company’s The Board of Directors considers consolidated equity to be Corporate Governance Policy document. basic corporate values and formulate ethical guidelines in satisfactory. The Company’s need for financial strength is Class of shares: accordance with these values. considered at any time in the light of its objective, strategy DOF ASA has only one class of shares. The Articles of and risk profile. Associations place no restrictions on voting rights. All shares 1.2 Objective The Group has drawn up a separate policy for corporate are equal. governance, and the Board has decided to follow the The Dividend policy: This governing document contains measures, which have been Norwegian Recommendation for Corporate Governance. The Board of Directors shall in its assessment of the scope and Trading in treasury shares: and will be implemented to secure efficient management and volumes of dividend emphasize security, predictability and The Board’s authorisation to acquire treasury shares is based control of the activities of the Company. The main objective 2.0 Business stability, dividend capacity of the Company, the requirement on the assumption that the acquisition will take place in the is to establish and maintain systems for communication, for healthy and optimal equity as well as adequate financial open market. Acquired shares may be disposed in the market surveillance and incentives which will increase and maximize The Company’s business shall be clearly defined in its Articles resources to create a basis for future growth and investment, or used as payments for acquisitions. the financial results of the Company, its long term soundness of Association. and considering the wish to minimize capital costs.
48 49 Transactions between related parties: See note 30 for related • nominate a person who will be available to vote on behalf The members of the nomination committee should be selected 8.0 Board of Directors: COMPOSITION AND party transactions. of shareholders as their proxy to take into account the interest of shareholders in general. INDEPENDENCE The majority of the committee should be independent of the • to the extent possible prepare a form for the appointment Board of Directors and the Executive Management. No more The composition of the Board of Directors should ensure 5.0 Freely negotiable shares of a proxy, which allows separate voting instructions to be than one member of the nomination that the Board can attend to the common interests of all given for each matter to be considered by the meeting and committee should be a member of the Board of Directors, shareholders and meets the Company’s need for expertise, Shares in listed companies must, in principle, be freely for each of the candidates nominated for election and any such member should not offer him/herself for re- capacity and diversity. Attention should be paid to ensuring negotiable. Therefore, no form of restriction on negotiability election. The nomination committee should not include the that the Board can function effectively as a collegiate body. of the Company’s shares shall be included in the Company’s The Company should, at the earliest possible opportunity, Company’s CEO or any other member of the Company’s Articles of Association. make available on its website: Executive Management. The composition of the Board of Directors should ensure that it can operate independently of any special interest. The The Articles of Association place no restrictions on negotiability. • information on the right of shareholders to propose matters The nomination committee’s duties are to propose candidates majority of the shareholder-elected members of the Board of The shares are freely negotiable. to be considered by the general meeting for election to the Board of Directors and to propose Directors should be independent of the Company’s Executive remuneration to be paid to members of these bodies. Management and material business contacts. At least two of • proposals for resolutions to be considered by the general the members of the Board of Directors elected by shareholders 6.0 General meetings meeting, alternatively comments on matters where no The nominations committee shall give arguments for its should be independent of the Company’s main shareholder(s). resolution is proposed recommendations. In the assessment of independency the following criteria shall Exercising rights. be considered: The Board of Directors should take steps to ensure that as • a form for appointing a proxy The Company should provide information on the membership • whether the relevant person has been employed with the many shareholders as possible may exercise their rights by of the committee and any deadlines for submitting proposals Company during the foregoing three years participating in general meetings of the Company, and that By virtue of the Annual General Meeting, the shareholders are to the committee. general meetings are an effective forum for the views of guaranteed participation in the Groups supreme governing • whether the relevant person has received or is receiving shareholders and the board. Such steps should include: body. The following matters shall be discussed and resolved According to the Articles of Association § 6 the company shall other kinds of remuneration from the Company other than at the annual general meeting: have a nomination committee. The nomination committee the Director’s remuneration, or participates in a share option • making the notice calling the meeting and the support shall issue a proposal to the general meeting regarding program or result based remuneration arrangement information on the resolutions to be considered at the general • Adoption of the annual financial statement and the annual the election of shareholder elected Board members. The meeting, including the recommendations of the nomination report, including distribution of dividends. nomination committee shall consist of three members. The • whether the relevant person has had major business relation committee, available on the Company’s website no later than members of the committee shall be elected by the Company’s with the Company over the three foregoing years. 21 days prior to the date of the general meeting • Any other matters which by virtue of law or the articles annual general meeting, which also appoints the committee’s The Board of Directors shall not include representatives of the pertain to the general meeting Chairman. The members of the nomination committee are Company’s Executive Management. With a view to effective • ensuring that the resolutions and supporting information elected by the general meeting for terms of two years at a group management, representatives from the Executive distributed are sufficiently detailed and comprehensive to allow Notification: time. The general meeting determines the remuneration of Management may however serve as Directors in group shareholders to form a view on all matters to be considered at The annual general meeting shall be held each year no later the committee’s members. subsidiaries. the meeting than six months after the end of each financial year. The 2010 AGM is scheduled May 27th. Notification is sent out within the Composition: The Chairman of the Board of Directors shall be elected by the • setting any deadline for shareholders to give notice of their deadlines in the Code of practice and relevant documentation The current committee was elected on the AGM on May 27th general meeting. intention to attend the meeting as close to the date of the is available on the Group’s website at least 21 days prior to the 2009 and consists of: meeting as possible general meeting. The Financial Calendar is published on the Members of the Board of Directors shall not be elected for internet and through a notification to Oslo Stock Exchange. Kristine Herrebrøden. Mrs. Herrebrøden is corporate lawyer more than two years at a time. • If the general meeting is to consider mandates to the Board at Thommessen law firm and has worked as lawyer since of Directors for the issue of shares for different purposes, each Participation: 2004. She has extensive experience in financial and corporate The annual report shall provide information to illustrate mandate should be considered separately by the meeting It is possible to register by post, telefax or e-mail. Shareholders transactions. the expertise and capacity of the members of the Board of who cannot attend the meeting can authorise a proxy, and Directors and identify which members are considered to be • ensuring that the members of the Board of Directors and the system facilitates the use of proxies on each individual Roy Reite. Mr. Reite is President, Offshore & Specialized independent. the nomination committee and the auditor are present at the item for discussion. Vessels at STX Europe. He has been in charge of the Offshore general meeting & Specialized Vessels business area in STX Europe since 2001. Members of the Board of Directors shall be encouraged to Previously, he was yard director of STX Europe, Søviknes. own shares in the Company. • making arrangements to ensure an independent Chairman 7.0 Nomination committee for the general meeting Mr. Ole R. Møgster, elected in 2009, passed away on 23 Composition of Board of Directors: The Company shall have a nomination committee, and the February, 2010. According to the Articles of Association § 5 The Company’s • Shareholders who cannot attend the meeting in person general meeting should elect the chairperson and members Board of Directors shall consist of 4 - 7 directors elected by the should be given the opportunity to vote. The Company shall of the nomination committee and should determine the Mrs. Herrebrøden and Mr. Reite are independent of DOF ASA’s shareholders. DOF ASA has endeavoured to adapt directors’ provide information on the procedure for representation at committee’s remuneration. main shareholder(s) and the Executive Management. backgrounds, competence, capacity and affiliation to the the meeting through a proxy, including a form to appoint a Group’s business activities and its need for diversity. proxy The nomination committee shall be included in the Company’s Articles of Association.
50 51 The Board of Directors consists of the following 9.0 THE WORK OF THE Board of Directors Use of Board committees: 11.0 REMUNERATION OF THE Board of Directors persons: The use of Nomination Committee is stipulated in the The Board of Directors shall produce an annual schedule for Articles of Association. Moreover, the Board set up an Audit The remuneration of the Board of Directors should reflect the Helge Møgster, Chairman. Mr. Møgster is one of the main its work, with particular emphasis on objectives, strategy and Committee by the end of 2008. The committee prepare items Board’s responsibility, expertise, time commitment and the owners in Laco AS, the main shareholder of DOF ASA and implementation. for consideration by the Board. They are solely responsible complexity of the Company’s activities. Austevoll Seafood ASA. He has long experience from both to the full corporate Board and their authority is limited to the offshore supply and fishery industry. He is holding board The Board of Directors shall from time to time issue instructions making recommendations to the Board. The remuneration of the Board of Directors should not be positions in several companies. for its own work as well as for the Executive Management linked to the Company’s performance. The Company should with particular emphasis on clear internal allocation of Audit committee: not grant share options to members of its Board. Helge Singelstad. Mr. Singelstad is CEO in Laco AS and responsibilities and duties. The CEO, CFO and Director of Legal The Audit committee has responsibilities related to financial the Chairman of the Board of Lerøy Seafood Group ASA. Affairs/Counsel of the Company shall have an obligation and reporting, the independent auditor and risk management and Members of the Board of Directors and/or companies Mr. Singelstad is educated in engineering from Bergen a right to participate in the meetings of the Board of Directors consists of two Board members. The independent auditor with which they are associated should not take on specific Ingeniørskole, he is business school graduate from NHH, as long as anything to the contrary has been decided. usually attends the meetings. The CEO and other directors are assignments for the Company in addition to their appointment and he has a degree from the first year of law school at UIB. entitled to attend if they so desire. as a member of the Board. If they do nonetheless take on such Singelstad has experience from different types of businesses: In order to ensure a more independent consideration of assignments this should be disclosed to the full Board. The oil companies, ship equipment and the seafood sector. matters of a material character in which the Chairman of Members: Wenche Kjølås, Chairman, Britt Mjellem and Helge remuneration for such additional duties should be approved the board is, or has been, personally involved, the Board of Singelstad. by the Board. Wenche Kjølås. Mrs. Kjølås is Managing Director in Grieg Directors’ consideration of such matters should be chaired by Maturitas AS since 2009. She has vast experience from various some other member of the Board. The Board’s self-evaluation: The annual report should provide information on all industries in Norway. She holds a business graduate degree Each year, a special Board meeting shall be organised on remuneration paid to each member of the Board of Directors. from the Norwegian School of Economics and Business A deputy Chairman should be elected for the purpose of topics related to the Groups operations and the Board’s duties Any remuneration in addition to normal Directors’ fees should Administration from NHH. chairing the Board in the event that the Chairman cannot or and working methods. The Board’s working methods and be specifically identified. should not lead the work of the Board. interaction are discussed on an ongoing basis. Britt Mjellem. Mrs. Mjellem is Department Manager in The Directors fees are decided by the AGM. The Directors’ fee Amesto People AS. Coming from both the investment banking The Company shall have an audit committee. The entire Board are not linked to the Company’s performance. sector and the shipbuilding industry, Britt has over 20 years of Directors should not act as audit committee. The majority 10.0 RISK MANAGEMENT AND INTERNAL CONTROL experience from the monetary exchange markets. of the members of the committee shall be independent. Oddvar Stangeland has had assignments for the Company as The Board of Directors must ensure that the Company has a technical advisor in various new-building/ and re-building Oddvar Stangeland. Mr. Stangeland started his career with The Board of Directors should also consider appointing a sound internal control and systems for risk management that projects. None of the other Board members have during DOF back in 1982 as a Technical Manager before becoming remuneration committee in order to help ensure thorough and are appropriate in relation to the extent and nature of the 2009 had assignments for the Company in addition to being the CEO in 1985. He stepped down as CEO in 2005 handing independent preparation of matters relating to compensation Company’s activities. Internal control and the systems should members of the Board. over his position to Mons Aase. He holds a degree in Marine paid to the executive personnel. Membership of such a also encompass the Company’s corporate values and ethical Engineering and Naval Architecture (MSc) from the Norwegian committee should be restricted to members of the Board who guidelines. Institute of Technology. are independent of the Company’s executive personnel. 12.0 REMUNERATION OF THE Executive Management The Board of Directors should carry out an annual review of The Boards autonomy: The Board of Directors shall provide details in the annual the Company’s most important areas of exposure to risk and The Board of Directors is required by law to establish guidelines Except for the Chairman Helge Møgster, Helge Singelstad and report of any board committees appointed. its internal control arrangements. for the remuneration of the members of the Executive Oddvar Stangeland, all members of the Board are independent Management. These guidelines shall be communicated to the of the Company’s major shareholders, the Company’s The Board of Directors shall evaluate its performance and The Board of Directors should provide an account in the annual meeting. management and the Company’s main business relations. expertise annually. annual report of the main features of the Company’s internal There are no conflicts of interest between any duties to the control and risk management systems as they relate to the The guidelines for the remuneration of the Executive Company of the members of the Board or the Company’s Board responsibilities: Company’s financial reporting. Management shall set out the main principles applied management, and their private interests or other duties. Norwegian law lays down the tasks and responsibilities of the in determining the salary and other remuneration of the Board of Directors. These include overall management and The Board of Directors and internal control: Executive Management. The guidelines should help to No members of Group management are directors. supervision for the Company. Towards the end of each year the The Board of Directors regularly receives reports that cover ensure convergence of the financial interests of the Executive Directors are elected by the general meeting for a term of Board adopts a detailed plan for the following financial year. financial status and important KPI for the operating companies Management and the shareholders. two years. This plan covers the follow-up of the Company’s operations, within the Group. The quarterly financial statements and internal control, strategy development and other issues. The management reports are also subject to review at quarterly Performance-related remuneration of the Executive Directors’ ownership of shares: Company complies with the deadlines issued by Oslo Stock Board meetings. Management in the form of share options, bonus programmes Helge Møgster owns directly 236 930 shares and indirectly Exchange with regards to interim reports. or the like should be linked to value creation for shareholders through Laco AS 46 210 050 shares in the Company The Board’s annual review: or the Company’s earnings performance over time. Such Oddvar Stangeland owns, directly 20 000 shares and indirectly Instructions to the Board of Directors: The Board holds a yearly meeting with the auditor where the arrangements, including share option arrangements, should though Kanabus AS 8 000 shares in the Company. The Board’s instructions are extensive and were last revised auditor gives an assessment on important internal control incentivise performance and be based on quantifiable factors Britt Mjellem, owns 1 000 shares in the Company. on 28.03.2008. The instructions cover the following points: areas. The directors present a review of the Company’s over which the employee in question can have influence. Wenche Kjølås, owns indirectly, through Jawendel AS, 3000 the Boards responsibly and obligations, CEO’s information financial status in the Directors report. shares in the Company. requirement to the Board, the Board’s procedures. The remuneration policy for the Executive Management is determined by the Board of Directors and communicated to
52 53 the annual general meeting. The guidelines regarding the or pass any resolutions with the intention of obstructing the member of the Executive Management is present. The auditor attends several of the Board meetings during the remuneration are approved by the AGM. See note 12 for take-over bid unless this is approved by the general meeting The Board of Directors shall establish guidelines in respect year. At the meeting in the autumn the auditor presents risk guidelines for remuneration to Executive Management. following announcement of the bid. of the use of the auditor by the Company’s Executive areas and an evaluation of the Company’s internal control The existion remuneration policy, approved on the 2009 Management for services other than the audit. routines. The Board of Directors have not yet held a meeting AGM, aloves performance- related remuneration. The If an offer is made for a Company’s shares, the Company’s with the auditor at which neither the Chief Executive nor any Executive Management has currently no performance-related Board of Directors shall issue a statement evaluating the offer The Board of Directors must report the remuneration paid to other member of the Executive Management are present. remuneration. and making a recommendation as to whether shareholders the auditor at the annual general meeting, including details The audit committee has held a meeting with the auditor at should or should not accept the offer. If the Board finds itself of the fee paid for audit work and any fees paid for other which neither the Chief Executive nor any other member of unable to give a recommendation to shareholders on whether specific assignments, provided such information is available at the Executive Management were present. 13.0 INFORMATION AND COMMUNICATION or not to accept the offer, it should explain the background for the time of the general meeting. not making such a recommendation. The Board’s statement In addition to ordinary audit, the auditing company has provided The Board of Directors shall establish guidelines for the on a bid should make it clear whether the views expressed The auditor will each autumn prepare a plan for auditing consultancy services related to accounting. Reference is made Company’s reporting of financial and other information based are unanimous, and if this is not the case it should explain the activities in the coming year. to the notes to the consolidated financial statements. on openness and taking into account the requirement for basis on which specific members of the Board have excluded equal treatment of all participants in the securities market. themselves from the Board’s statement. The Board should consider whether to arrange a valuation from an independent The Company should publish an overview each year of the expert. If any member of the dates for major events such as its annual general meeting, Board or Executive Management, or close associates of such publication of interim reports, public presentations, dividend individuals, or anyone who has recently held such position, is payment date if appropriate etc. either the bidder or has a particular personal interest in the bid, the Board should arrange an independent valuation in any All information distributed to the Company’s shareholders case. This shall also apply if the bidder is a major shareholder. should be published on the Company’s web site at the same Any such valuation should be either appended to the Board’s time as it is sent to shareholders. statement, be reproduced in the statement or be referred to in the statement. The Board of Directors should establish guidelines for the Company’s contact with shareholders other than through Any transaction that is in effect a disposal of the Company’s general meetings. activities should be decided by a general meeting.
A calendar of most important dates is published on the Oslo DOF ASA’s Articles of Association contain no limitation with Stock Exchange and the Company’s website. Information to regard to share acquisition. The shares are freely transferable. the Company’s shareholders is distributed via the Oslo Stock Transparency and equal treatment of shareholders is a Exchange and the Company’s website on an ongoing basis, fundamental policy. When a bid is made for the Company, immediately after decisions have been made. the Board of Directors will make a well-grounded evaluation of the bid.
14.0 TAKE-OVERS 15.0 AUDITOR The Board of Directors should establish guiding principles for how it will act in the event of a take-over bid. The auditor should submit the main features of the plan for the audit of the Company to the audit committee annually. During the course of a take-over process, the Board of Directors and Management of both party making the offer The auditors should participate in meetings of the Board and the target company have an independent responsibility of Directors that deal with the annual accounts. At these to help ensure that shareholders in the target company are meetings the auditor should review any material changes in treated equally, and that the target company’s business the Company’s account principles, comment on any material activities are not disrupted unnecessarily. The Board of the estimated accounting figures and report all material matters target company has a particular responsibility to ensure that on which there has been disagreement between the auditor shareholders are given sufficient information and time to form and the Executive Management of the Company. view of the offer. The auditor should at least once a year present to the audit The Board of Directors should not seek to hinder or obstruct committee a review of the Company’s internal control take-over bids for the Company’s activities or shares unless procedures, including identified weaknesses and proposals there are particular reasons for this. for improvement.
In the event of a take-over bid for the Company’s shares, the The Board of Directors shall hold a meeting with the auditor Skandi Santos Company’s Board of Directors should not exercise mandates at least once a year at which neither the CEO nor any other
54 55 THE BOARD DIRECTOR’S REPORT 2009
Helge Møgster Helge Singelstad Britt Mjellem Chairman Board member Board member
Born 1953. Helge Møgster Born 1963. Helge Singelstad is Born 1961. Britt Mjellem is is a main owner in Laco AS, CEO in Laco AS and Chairman Department Manager in Amesto which is the main shareholder of the Board in Lerøy Seafood People AS. Her background is of DOF ASA. Mr. Møgster has Group ASA. Singelstad has from the shipbuilding industry long experience from the experience from different types and she has more than 20 years DOF ASA (the Company) owns and operates offshore In February, DOF Supply received delivery of one PSV, “Skandi offshore supply market and fish of businesses: oil companies, experience from investment vessels and provides engineering and service activities Flora”. This vessel started on a long-term contract for Statoil harvesting. He is the Chairman of ship equipment and the seafood management in the foreign related to subsea operations. The DOF Group (the Group) upon delivery. Several of DOF Supply’s vessels have been DOF ASA and he chairs and serves sector. He serves a numerous exchange market. She serves a divides its activities into three principal segments: PSV awarded contracts throughout the year in Brazil. One of on numerous Boards of Directors. Boards of Directors. numerous Boards of Directors. (platform supply vessels), AHTS (anchor handling tug these vessels, “Skandi Chieftain”, was reconstructed to an support vessels) and CSV (construction support and ROV support vessel for a contract with Petrobras. This vessel subsea vessels). All the Group’s PSVs and the main was sold in December to the associated company Norskan share of the AHTS fleet are owned via wholly-owned Norway AS. In December, DOF Supply signed an agreement subsidiaries in Norway and in Brazil, while the main for the take-over of “Skandi Olympia” and the take-over was share of the CSV fleet and all engineering business is executed in March 2010. In April, DOF Supply took over a owned via the subsidiary DOF Subsea Holding AS. newbuilding contract (building no. 082) at Cochin Shipyard in India from Aker DOF Deepwater AS. The vessel is scheduled As of 31 December 2009, the Group’s fleet comprised the for delivery in 2011. DOF will subsequently own 24 vessels following vessels and newbuildings: (including newbuildings).
• 21 platform supply vessels (PSV) The Norskan Group has experienced significant growth • 21 anchor handling tug supply vessels (AHTS) throughout the year, via both ownership and operating • 26 subsea/construction vessels (CSV/ROV) supervision of new vessels. By year-end, the company was responsible for operation of 21 vessels, of which 13 vessels are The Group has offices on all five continents and is the main/ owned by Norskan. In 2009, a reconstruction was completed part owner of 6 service/engineering companies with specialised for one of Norskan’s vessels, “Skandi Hav”. At year-end, both expertise related to subsea operations. The head office is Norskan and DOF Supply had all vessels on fixed contracts by located on the island of Storebø in Austevoll municipality. year end and had 6 newbuildings on order, one of which is scheduled for delivery in 2010. Oddvar Stangeland Wenche Kjølås Mons S. Aase Board member Board member CEO The Group’s business concept is to be involved in long-term and industrial offshore activities and to be an international supplier Aker DOF Deepwater AS has 6 newbuildings (AHTS) on order Born 1944. Oddvar Stangeland Born 1962. Wenche Kjølås is Born 1966. Mr. Aase has been part of offshore services by maintaining a focus on recruiting and from STX in Vietnam with delivery in 2010, 2011 and 2012 started his career with DOF in Managing Director in Grieg of the management team since retaining highly qualified personnel. The Group operates with respectively. The vessels due for delivery in 2010 have been 1982 as technical manager, and Maturitas AS since 2009, 1998, first as CFO and Deputy a balanced affreightment strategy which centres on long-term secured long-term contracts with OGX and Statoil in Brazil. served as the company’s CEO before then she was CFO in Managing Director, CEO in DOF contractual coverage for the main share of business. Long-term financing has also been established for both 1985 – 2005. Prior experience Grieg Logistic since 2006. She ASA from 2005. Mr. Aase has vessels. from international maritime has experience from various various experiences from the construction and shipping. industries in Norway and finance and shipbroker industry. Group activities in 2009 Subsea - CSV He serves a numerous Boards of international. She serves a He serves a numerous Boards of The company owns 51% of the shares in DOF Subsea Holding Directors. numerous Boards of Directors. Directors. Supply PSV - AHTS AS (DOFSUB) which, at year-end, had control of 22 vessels, The supply fleet is owned by the subsidiaries DOF Rederi AS/ a large ROV fleet and a number of engineering companies. DOF UK Ltd. (DOF Supply) and Norskan AS and via a 50% DOFSUB’s engineering business is mainly located in Norway, joint venture with Aker DOF Deepwater AS. the UK, USA, Australia and Brazil.
56 57 DOFSUB’s vessels provide services related to survey, high regularity for operations. Since 1995, DOF Management Working environment Consolidated accounts construction, IRM (Inspection, Repair and Maintenance) and has had certification according to the ISM code, in addition to diving etc. DOFSUB has two 50/50 joint ventures with Technip; ISO 9001 and ISO 14001 since June 2002. Norskan has had The Group had in total 3,048 employees and hired-in The consolidated accounts are prepared in accordance with “Skandi Arctic” and “Skandi Vitoria”. The former vessel was certification according to the ISM code, ISO 9001, ISO 14001, personnel at year-end. The average sick leave rate in 2009 was the International Financial Reporting Standards (IFRS) and delivered in March 2009, and is the largest diving support OSHAS 18001 and the ISPS Code. 4.2% for the Group. Sick leave among the employees in DOF the accounting report is based on current IFRS standards and vessel built of its type and the latter vessel is a pipe-laying Sjø/DOF Management in 2009 was 5.5%, a minor increase interpretation. Amendments in standards and interpretations vessel under construction in Brazil. Long-term contracts have In 2009, DOF Management noticed a marked reduction in lost in comparison with 2008 when sick leave was at 5.0%. may result in changes to the figures presented. The same been secured for both vessels. DOFSUB received delivery of time injury frequency (number of personal injuries resulting Sick leave for the subsidiaries, DOF Subsea AS and Norskan accounting principles and calculation methods applied in the two vessels, “Skandi Salvador” and “Skandi Santos” in 2009. in absence per 1,000,000 exposed working hours, LTIF) from Offshore Ltda. amounted to 2.02% and 2.9% respectively. last annual accounts have been applied to this document. The former vessel is DOFSUB’s first newbuilding in Brazil. Both 2.2 in 2008 to 0.92 in 2009. The company also reported a The level of activity on the offshore market in the North Sea vessels have started on long-term contracts in Brazilian waters reduction in total recordable case frequency (TRCF) from 3.11 has been low in 2009, resulting in an improvement in crew Consolidated income in 2009 was NOK 4,327.3 million (NOK after delivery, for Chevron and Aker Oilfield Services. to 1.93. Since the company started, Norskan has recorded zero availability in this region when compared with previous years. 4,339.7 million), of which gain/loss on sales totalled - NOK lost time injuries (LTI). 2009 saw an increase in total recordable However, the market for offshore vessels in Brazil is strong 7.9 million (NOK 317.8 million). The net increase in operating In 2009, DOFSUB cancelled 3 building contracts with the Tebma case frequency (TRCF) from 0.68 in 2008 to 1.03 in 2009. and competition for the same manpower is difficult in this income (excl. gain on sales) totalled NOK 313.3 million and this Shipyard in India. The main reason for these cancellations was region. This trend is expected to continue in 2010. increase represents a growth in activities due to the increase the considerable delay in deliveries. Our zero injury goal is definite and the company continues to in number vessels on hire as compared to 2008. Operating DOFSUB has a significant newbuilding program and has work on the long-term measures established in recent years The Group has a goal to prevent all forms of discrimination at result before depreciation (EBITDA) amounted to NOK 1,233.7 strengthened its financial position throughout the year by which focus on management involvement and the individual work. The company is in the process of preparing a new Code million (NOK 1,555.7 million), with an operating result of NOK refinancing a bond loan in September. The company also employee’s impact on the HSE results. There was a 30% of Business Conduct which will apply for the entire Group and 217.9 million (NOK 912.5 million). The operating result is received new capital in June totalling NOK 400 million from increase in the number of incident reports in 2009 when which will cover requirements related to the Norwegian Anti- lower in 2009 compared to last year based on a higher rate DOF and FRC. Moreover, DOFSUB completed refinancing of 5 compared with 2008 in addition to a 15% increase in the discrimination and Accessibility Act. of gain on sales in 2008 and higher depreciation and write- vessels in the DOFCON fleet. number of Safety Observations. downs in 2009. Depreciation saw an increase from NOK 643.2 million to NOK 837.2 million. In addition to this, write- At year-end, DOFSUB owned 53% of the shares in DOF Installer When viewed in terms of non-scheduled operational Equal opportunities downs totalling NOK 178.5 million were carried out in 2009, ASA (DOFI), which owns 4 newbuilding contracts comprising disruption, over 100 offhire days have been recorded, of which the main share was write-downs of investments in some of the largest AHTS vessels on the market. In December, representing a total regularity of 99.2% for the fleet. This is The Group aims to ensure equal opportunities between DOF Installer. DOFI decided to sell its first newbuilding, “Skandi Vega”, to an improvement on previous years. Operating regularity for women and men at work. Traditionally, the number of female DOF. The actual sale was completed in 2010. DOFI carried out the Norskan fleet in 2009 was 98.71%. employees on the vessels has been low. However, the company Net financial items for 2009 were positive at NOK 786.6 in the third quarter a share issue of NOK 40 million by issuing has a goal to gradually increase the female ratio of seafarers. For million (negative NOK 1,035.6 million). Currency exchange 800,000 shares in the company. DOFI has in 2010 completed the shore-based administration in DOF Management, gender rates have been extremely volatile throughout the year, and an additional share issue of NOK 150 million and decided to External environment distribution is 40% women and 60% men as of year-end. the NOK and R$ in particular have strengthened against the sell vessel no. 3 to DOFSUB. The Board of Directors is made up of 3 men and 2 women. USD while the opposite was the case in 2008. This resulted In relation to the external environment, one significant in a significant unrealised gain on foreign exchange of NOK In April, DOFSUB sold its shares in Aker Oilfield Services, incident was reported in 2009. This incident resulted in the 757.6 million compared with an unrealised loss in 2008 of generating a gain of approx. NOK 170 million. discharge of 1,500 litres of diesel in Aberdeen harbour during Salary and other remuneration NOK 655.4 million. Unrealised loss/gain on foreign exchange a refuelling operation. to management for Norskan represented approximately 50% of this total Holding (DOF ASA) figure for both years. Norskan’s currency exposure is limited The company has reinforced its financial position by taking In 2009, DOF Management has further developed its NOx The Chairman of the Board stipulates management salaries. as the main share of earnings from its long-term contracts are out a new bond loan of NOK 975 million in June. Moreover, database to allow registration of consumption/waste. By the Pursuant to Norwegian company legislation, the Board adapted to operating costs in R$ and financial costs in USD. the company carried out a share issue of 8,270,000 shares at end of 2010, the database will be able to produce reports on of Directors has compiled a personal statement regarding All long term debt in Norskan is nominated in USD. Norskan a price of NOK 29.50 per share. consumption and waste for the entire fleet. salary and other remuneration to management which will makes use of R$ as functional currency, which has had a be presented and discussed during the Ordinary General considerable impact on the accounts. In 2010, DOF Management aims to cooperate with DOF Meeting. We refer to the notes to the accounts for more Health, safety and the environment Subsea to further develop the new management system detailed information on remuneration to management. In February 2010, the extra tax charged in connection with (Docmap). The level of cooperation between the companies the transition to the new tax scheme for shipping companies The majority of the group employees are employed by DOF in the DOF Group will also be increased with relation to shared was ruled as unconstitutional in a Norwegian Supreme Court Management AS, Norskan Offshore Ltda and DOF Subsea AS. procedures and systems. A new system will be implemented Shareholders judgement. This has resulted in repayment of NOK 260 In 2009, the Group has continued to control its activities related for handling emergencies (Crisis Manager) which will cover million in tax to the Group. Subsequent to the judgement, to Quality, Health, Safety and the Environment according to the entire DOF Group. The Company is listed on the Oslo Stock Exchange. At year- the Norwegian Government published a new proposal for the goals to achieve zero occupational injuries and illness, end, the Company had 4,577 shareholders. The company’s voluntary entry into the new tonnage tax regime. maintain a good working environment, raise consciousness main shareholder is Møgster Offshore AS. and maintain control of environmental aspects and sustain
58 59 The result for the year amounted to NOK 803.0 million the 9 vessels to be delivered in 2010. Remaining capex for Corporate governance Outlook (NOK 99.9 million). Cash flow for the year (pre-tax result, the Group in the period from 2011 to 2012 totals approx. unrealised loss on foreign exchange and depreciation) totalled NOK 4,500 million, of which NOK 2,450 million is secured The Company applies those principles contained in the The Group has a high contractual coverage for the fleet (83% NOK 1,263.0 million (NOK 1,175.5 million). The result excl. long-term financing. Norwegian recommendation for corporate governance, in 2010 and 57% in 2011). All these contracts have been minority interest totalled NOK 602.5 million (NOK 6.87 per published 21 October 2009. For a detailed description of entered into with financially strong customers, including oil share) compared with NOK 65.2 million (NOK 0.79 per share) The Group’s earnings are mainly denominated in USD, NOK corporate governance, please see the annual report. companies and the major subsea engineering companies. in 2008. and partly in GBP and the Group therefore has exposure to The spot market in the North Sea was weak in 2009 and this changes in foreign exchange rates, particular USD. The Group trend is expected to continue throughout the current year. The consolidated balance sheet at year-end 2009 totalled NOK attempts to reduce this risk by entering into forward contracts Allocation of annual result 21,784.7 million (NOK 19,830.8 million). The increase in the and adapting long-term liabilities to earnings in the same To date in 2010, the Group has received delivery of 2 consolidated balance sheet is related to the addition of new currency. The parent company annual accounts have returned a profit newbuildings, “Skandi Aker” and “Skandi Olympia”, both vessels. The Group received delivery of 4 newbuilds in 2009. of NOK 333.8 million. The Board of Directors proposes which have started on long-term contracts. One vessel, “Geo The Group is exposed to changes in interest rates as the main transferring this figure to other equity. After the above- Challenger”, was sold in February 2010. The Group’s net interest-bearing liabilities totalled NOK share of the company’s liabilities has a floating rate of interest. mentioned allocation, the Company’s free equity totals NOK 11,073.4 million as of 31 December 2009 (NOK 9,710.7 The long-term liabilities for the vessels built in Brazil have a 3,113.5 million. The market in Brazil remained strong throughout 2009 and is million). Group liabilities have seen an increase due to the limited exposure to changes in interest rates as a fixed rate expected to stay strong in the years to come. Consequently, take-over of newbuildings. Unemployed capital as of 31 of interest has been established for the entire duration of The consolidated accounts have returned a profit of NOK the Group has reorganised the operating area for a number December 2009 totals approx. NOK 4,595.0 million (NOK the loan for this portfolio. This is relevant for financing from 803.4 million, of which NOK 200.6 million is transferred to of its vessels from the North Sea to Brazil both in 2009 and 3,940.8 million) and represents paid instalments on newbuilds BNDES in Brazil, where a fixed rate of interest has been agreed minority interests and NOK 602.9 million is transferred to to date in 2010. The company’s subsidiary, Norskan, has built plus one vessel which was delivered at year-end. for the duration of the loan which is 17 years on average. other equity. up a unique position in Brazil over time. On these grounds, BNDES funding constitutes a substantial portion of future the Board of Directors has decided to implement the process The total cash flow from operating activities for the Group was financing. towards application for stock exchange listing for Norskan, NOK 593.1 million. Net cash flow from investment activities to allow the company to play a larger role in the growth was negative at NOK 3.277,0 million. From financial activities, The Group’s credit risk is considered to be low as the Company’s projected for Brazil. the cash flow totalled NOK 2,047.5 million. customers traditionally have sufficient financial capability to meet their obligations. Historically, the Company has had a The Group’s subsidiary, DOFSUB, has a strong position in South As of 31 December 2009, the Group’s cash holding totalled NOK low level of bad debts. Total provisions for bad debts in 2009 East Asia/Australia, and this region is expected to witness 2,213.7 million, of which NOK 1,131 million was non-distributable were approx. NOK 8 million. further growth in the near future. liquidity in relation to long-term financing. The short-term share of the long-term liabilities due for payment in 2010 totalled NOK The Group is exposed to changes in prices for newbuilds 2,128.3 million. Of this figure, approx. NOK 1,125 million is loans and delayed delivery of newbuilds. The Group attempts to maturing in 2010, of which approx. NOK 780 million has been reduce this exposure by making use of fixed price contracts refinanced as of April 2010. and entering into contracts with suppliers with the necessary Storebø, 20th April 2010 financial strength and expertise. Board of Directors DOF ASA
Risk The Group is exposed to market fluctuations which may result in a lower degree of utilisation for the Group’s fleet. Attempts The global financial crisis which emerged in 2008, resulting are made to reduce this risk by securing long-term charters for in the economic downturn in 2009, has had an impact on the main part of the fleet. the Group’s earnings, mainly as a result of lower rates for The Group is exposed to difficulties in recruiting qualified vessels and a lower degree of utilisation for those vessels not personnel, as competition on the labour markets for the Helge Møgster Oddvar Stangeland Wenche Kjølås on long-term contracts. Moreover, the economic downturn Group is difficult in a number of regions. Attempts are made (Chairman) may present major difficulties when financing the company’s to reduce this risk by implementing measures to ensure good newbuilds and re-financing the existing fleet. The company staff stability and recruitment of new personnel. has signed agreements for refinancing of three loans which mature in 2010. The Group has planned to take delivery of 9 Britt Mjellem Helge Singelstad Mons Aase vessels in 2010 and has secured long term financing for 7 of Going concern (CEO) these newbuildings, while there are on-going negotiations for the long-term financing of the last two vessels. Total planned The Group has a satisfactory economical and financial position investments in 2010 are approx. NOK 5,500 million, of which which provides the grounds for continued operations and NOK 4,600 million represents secured long-term financing. further development of the company, section 3-3a of the The Group has secured long-term charter contracts for 7 of Accounting Act. The Company aims to sustain its strategy for securing long-term occupation for the main part of its fleet.
60 61 Statement of Comprehensive Income
DOF ASA Amounts in NOK 1 000 GROUP
ACCOUNTS 2009 2008 Note 2009 2008
72 199 62 572 Sales income 5, 8 4 258 507 3 969 672 1 790 66 892 Other operating income 5 68 769 370 050 73 989 129 464 Operating income 4, 29 4 327 276 4 339 722
10 883 3 382 Payroll expenses 17, 28 1 960 483 1 636 825 70 855 71 695 Other operating expenses 28, 29 1 133 137 1 147 178 81 738 75 077 Operating expenses 3 093 620 2 784 003
-7 749 54 387 Operating profit/loss 4 1 233 656 1 555 719
11 590 7 739 Depreciation 6, 7 837 214 643 265 Write offs 6, 7 178 501
-19 339 46 648 Operating profit/loss 4 217 941 912 454
218 152 773 024 Investments in subsidiaries/affiliated companies 10 191 749 124 834 194 434 52 403 Finance income 27 485 122 479 719 121 317 -187 710 Unrealized gain/loss on currencies 27 757 611 -655 382 -133 557 -212 864 Finance costs 27 -647 904 -984 747 400 346 424 853 Net financial items 27 786 578 -1 035 575
381 007 471 501 Profit before taxes 1 004 519 -123 121
47 191 -77 597 Taxes 18 201 478 -222 983
333 816 549 098 Profit for the year 803 041 99 862
Other comprehensive income Currency translation differences 86 771 842 Other income and costs -16 405 122 300 Other comprehensive income 70 366 123 142
333 816 549 098 Total comprehensive income for the year 873 407 223 004
Profit attributable to Minority 200 577 34 711 Majority 602 464 65 151
Total comprehensive income attributable to Minority 151 827 34 711 Majority 721 580 188 293
Earnings and diluted earning per share (NOK) 25 6,87 0,79
62 63 STATEMENT OF FINANCIAL POSITION STATEMENT OF FINANCIAL POSITION BALANCE BALANCE
DOF ASA Amounts in TNOK GROUP DOF ASA Amounts in TNOK GROUP
31.12.2009 31.12.2008 Note 31.12.2009 31.12.2008 31.12.2009 31.12.2008 Note 31.12.2009 31.12.2008
Assets Equity and liabilities 78 051 Deferred tax assets 18 123 330 182 076 165 536 Share capital 16 182 076 165 536 Goodwill 3,6 441 839 499 661 678 340 454 453 Share premium fund 678 340 454 453 Other intangible assets 6 34 193 5 500 3 113 524 2 441 118 Other equity 3 171 288 2 449 709 78 051 Intangible assets 476 032 628 490 Minority interests 2 777 372 2 429 121 3 973 940 3 061 106 Equity 16 6 809 076 5 498 819 157 834 167 445 Vessels 7 11 218 599 10 057 764 68 406 30 827 Newbuildings 7 4 594 689 3 940 763 146 744 Deferred tax 18, 27 513 472 353 438 2 144 - Machine and other operating equipment 7 1 449 291 789 813 Other long term provisions 17, 27 11 955 20 141 228 384 198 273 Tangible assets 7, 19 17 262 579 14 788 340 77 202 Other provisions and commitments 20, 27 77 202 228 820 223 946 Provisions for commitments 602 628 602 399 4 499 025 3 360 465 Investments in subsidiaries 9, 27 46 625 46 631 Investments in affiliated companies and joint-ventures 9, 10, 27 77 170 139 696 1 153 321 744 893 Bond loan 19, 27 2 149 321 1 470 654 8 376 Investments in shares and units 11, 27 8 910 5 999 249 500 Debt to credit institutions 15, 19, 27 8 724 597 8 920 720 524 093 706 434 Other long-term receivables 14, 24, 27 2 721 269 Long-term liabilities 18, 27 173 967 5 078 119 4 113 530 Financial assets 88 801 145 963 84 633 907 499 Other long-term liabilities 19-21, 24, 27 496 856 162 357 1 237 954 1 901 892 Other long-term liabilities 11 370 774 10 727 698 5 306 503 4 389 854 Non-current assets 17 827 411 15 562 793 379 194 50 500 Debt to credit institutions 19, 27 2 128 284 1 795 407 Inventory 12 16 116 13 441 60 696 21 139 Accounts payable 24, 27 216 373 419 924 592 Tax payable 18, 27 164 914 86 841 120 470 98 745 Accounts receivables 13, 24, 27 1 235 287 1 151 004 356 474 Public duties payable 72 319 98 170 154 489 423 506 Other receivables 14, 24, 27 492 128 272 025 14 068 141 145 Other short-term liabilities 23, 24, 27 420 317 601 507 274 959 522 251 Receivables 1 727 415 1 423 029 454 906 213 258 Short-term liabilities 3 002 206 3 001 849
309 283 264 152 Cash and cash equivalents 15, 27 2 213 742 2 831 502 1 916 806 2 115 150 Total liabilities 4 14 975 608 14 331 946
584 242 786 403 Current assets 3 957 273 4 267 972 5 890 745 5 176 257 Total equity and liabilities 21 784 685 19 830 765
5 890 745 5 176 257 Total assets 21 784 685 19 830 765
Storebø, 20 April 2010 The Board of Directors for DOF ASA
Helge Møgster Oddvar Stangeland Wenche Kjølås (Chairman)
Britt Mjellem Helge Singelstad Mons Aase (CEO)
64 65 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY
Group Amounts in TNOK DOF ASA Amounts in TNOK
Attributable to owners of the parent Share capital Share Retained Total equity premium fund earnings Share Share Retained Currency Total Minority Total equity capital premium earnings translation interests fund differences Balance at 01.01.2008 165 536 454 452 2 021 523 2 641 512
Balance at 01.01.2008 165 536 454 452 2 237 908 210 502 3 068 399 1 486 387 4 554 786 Profit/loss for the year 549 097 549 097 Other gains/losses charged directly to equity -5 350 -5 350 Profit/loss for the year 65 151 65 151 34 711 99 862 Total recognised income for the period 543 747 543 747 Conversion differences 842 842 842 Other gains/losses charged directly to equity -5 948 -5 948 -5 948 Dividend payment -124 152 -124 152 Effect of transition from affiliated companies to 65 406 65 406 62 842 128 248 Total transactions with owners -124 152 -124 152 consolidation Total comprehensive income for the year 124 609 842 125 451 97 553 223 004 Balance at 31.12.2008 165 536 454 452 2 441 118 3 061 106
Capital increase in subsidiaries 545 181 545 181 Balance at 01.01.2009 165 536 454 452 2 441 118 3 061 106 Changes in minorities 300 000 300 000 Dividend payment -124 152 -124 152 -124 152 Profit/loss for the year 333 816 333 816 Total transactions with owners -124 152 -124 152 845 181 721 029 Other gains/losses charged directly to equity Total recognised income for the period 333 816 333 816 Balance at 31.12.2008 165 536 454 452 2 238 365 211 344 3 069 698 2 429 121 5 498 819
Share issues 16 540 223 887 240 427 Balance at 01.01.2009 165 536 454 452 619 989 2 238 365 211 344 2 429 121 5 498 819 Mergers with subsidiaries 338 590 338 590 Total transactions with owners 16 540 223 887 338 590 338 590 Profit/loss for the year 602 464 602 464 200 577 803 041 Conversion differences 141 950 141 950 -55 179 86 771 Balance at 31.12.2009 182 076 678 340 3 113 524 3 973 940 Other gains/losses charged directly to equity -22 834 -22 834 6 429 -16 405 Total comprehensive income for the year 602 464 119 116 721 580 151 827 873 407
Share issues 16 540 223 887 240 427 240 427 Share issuues in subsidiaries 207 424 207 424 Changes in minorities -11 000 -11 000 Total transactions with owners 16 540 223 887 240 427 196 424 436 851
Balance at 31.12.2009 182 076 678 339 2 840 829 330 460 4 031 705 2 777 372 6 809 077
66 67 Statement of cashflowS NOTEs
DOF ASA Amounts in TNOK Group 1 General
DOF ASA is a public limited company registered in Norway. The head office is The group’s activities comprise three segments, as specified in note 4. 2009 2008 2009 2008 located on the island of Storebø in the municipality of Austevoll, Norway. The Annual Accounts were approved for publication by the Board of Directors 381 007 471 501 Pre-tax profit/loss 1 004 519 -123 121 DOF ASA is the parent company of a number of companies, as specified in on 20 April 2010. note 9. -56 284 Gain on sale of assets 7 887 -317 780 All amounts in the notes are stated in NOK thousand. 11 590 7 739 Depreciation of fixed assets 837 214 643 265 Write offs of fixed assets 178 501 -21 7w25 -70 843 Change in accounts receivables -84 283 -431 118 2 Accounting principles 39 557 20 716 Change in accounts payable -203 551 146 424 Difference between pensions charged against income and payments made/received 5 332 Main principles Subsidiaries/associated companies The Financial Statements for the Group has been prepared in accordance with For the parent company, subsidiaries and associated companies are valued 30 301 271 658 Impact of changes in rate of exchange -744 447 681 590 the International Financial Reporting Standards (IFRS) as adopted by the EU. according to the cost method. The investment is valued at original cost unless 212 572 -320 130 Change in other accrual items (working capital) -164 380 278 721 write-down is required. Dividends and other distributions are reported as income The Financial Statements of the parent company have been prepared in once the decision to pay dividends has been reached by a valid body within -151 618 228 820 Items without impact on cash flow accordance with Norwegian accounting act § 3-9 and Finance Ministry’s the subsidiary/associated company. Should the dividend or other distribution -331 197 Gain on sale of shares -175 933 -126 292 prescribed regulations from January 21, 2008 on simplified IFRS. Principally received exceed the share of retained earnings for the ownership period, the this means that recognition and measurement complies with International surplus amount is reported on the accounts as repayment of invested capital, Income when applying the straight line/equity method -20 582 1 458 accounting standards (IFRS) and presentation and notes disclosure in accordance and charged as a reduction of the investment on the balance sheet. Tax paid for the period -36 006 -38 987 with Norwegian accounting act and generally accepted accounting principles Jointly controlled companies 501 684 221 980 Net cash from operating activities 598 939 719 492 The preparation of financial statements in conformity with IFRS requires the Jointly controlled companies are economic activities regulated by an agreement use of certain critical accounting estimates. It also requires management to between two or more parties, so that these parties have joint control over the 97 886 Payments received for sale of fixed assets 1 163 344 exercise its judgement in the process of applying the group’s accounting activities. Participation in jointly controlled companies is recognised according policies. The areas involving a higher degree of judgement or complexity, or to proportionate consolidation. According to this method, each participant -41 702 -9 351 Disbursement for purchase of fixed assets -3 539 271 -3 890 443 areas where assumptions and estimates are significant to the consolidated reports on their accounts their share of income, costs, assets and liabilities. 2 419 708 Payments received for sale of shares and units 283 100 1 126 540 financial statements are disclosed in note 30. Associated companies -742 379 -1 856 359 Disbursements for purchase of share and units -84 146 The accounting year is the same as the calendar year. The items in the accounts Associated companies are all entities over which the group has significant 245 599 Payments received for sale of shares 1 817 962 are ordered according to type. influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associated companies -8 470 -6 467 Disbursements for purchase of shares -8 058 -1 769 032 Changes in accounting principles and errors are accounted for using the equity method of accounting and are initially Net cashflow acquisitions -18 769 The effects of changes in accounting principles and correction of significant recognised at cost. The group’s investment in associated companies includes errors in previous annual accounts are reported directly against equity. goodwill identified on acquisition, net of any subsequent write-downs. 182 341 209 258 Net change in long-term intragroup balances Comparison figures are revised accordingly. Payments received on long-term receivables 4 736 The group’s share of profit or loss from associated companies is recognised on the profit & loss account along with the balance sheet value of the investments -610 210 1 100 274 Net cash used in investing activities -3 264 229 -1 649 808 Consolidation principles The consolidated accounts include DOF ASA and companies over which DOF and the share of changes to equity not recognised on the profit & loss account. 941 836 Payments received on opening new long-term liabilities 4 915 543 4 243 807 ASA has controlling interest. Controlling interest is normally achieved when The group does not recognise its share of losses when this would result in -1 078 561 -1 290 574 Disburesements on downpayment of long-term liabilities -3 317 812 -2 891 083 the group owns, either directly or indirectly, more than 50% of the shares in a negative balance sheet value for the investment (including unsecured the company, and the group has the capacity to exercise actual control over receivables for the entity), unless the group has taken on a commitment or Payments received from subsidiaries -171 000 the company. Minority interests are included in the group’s equity. Subsidiaries issued guarantees for the obligations of the associated company. Equity payments received are consolidated from the date upon which control is transferred to the group. Consolidation ends on the date upon which the group no longer has control. Unrealised gains on transactions between the group and its associated 240 428 -124 152 Dividends 449 799 845 550 companies are eliminated to the extent of the group’s interest in the associated Payments provision lease -124 152 The purchase method of accounting is used to account for the acquisition of companies. Unrealised losses are also eliminated unless the transaction provides subsidiaries by the group. Companies which have been acquired or sold in evidence of an impairment of the asset transferred. 103 703 -1 414 726 Net cash flow from financing activities 2 047 530 1 903 122 the year in question are consolidated from/to the date for execution of the acquisition/sale. Conversion of foreign currency a) Functional and presentation currency -4 824 -92 472 Net change in cash and cash equivalents -617 760 972 806 Intragroup transactions and intragroup balances, including internal profit Items included in the financial statements of each of the group’s entities are and unrealised gain and loss are eliminated. Unrealised gain generated from measured using the currency of the primary economic environment in which 264 153 356 624 Cash and cash equivalents at the start of the period 2 831 502 1 545 131 transactions with associated companies is eliminated with the group’s holding the entity operates (‘the functional currency’). The consolidated financial in the associated company. Unrealised loss is eliminated in the same manner, statements are presented in Norwegian Kroner (NOK), which is the parent 49 953 Mergers with subsidiaries but on the condition that there is no indication of impairment in the asset sold company’s functional and presentation currency. First time consolidation of subsidiaries 313 566 within the group. The consolidated accounts are prepared on the assumption that uniform b) Transactions and balances accounting principles are applied to similar transactions and other incidents Foreign currency transactions are translated into the functional currency using 309 283 264 153 Cash and cash equivalents at the end of the period 2 213 742 2 831 502 with similar conditions. Accounting principles in the subsidiaries are amended the exchange rates prevailing at the dates of the transactions. Foreign exchange when necessary to bring them in line with the group’s accounting principles. gains and losses resulting from the settlement of such transactions and from the conversion at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement
68 69 c) Group companies When assets are sold or disposed of, the cost price and accumulated depreciation payments which are lower than the market price. In such an event, the gain/ Contingent liabilities arising from purchases of activities are reported at fair The results and financial position of all the group entities that have a functional are reversed in the accounts, and any loss or gain from the disposal reported on loss is amortised for the duration of the lease period. If, however, the sales value, even if the liability is not probable. The assessment of probability and currency which differs from the presentation currency are converted into the the profit and loss account. price exceeds fair value, the overcharge is amortised for an estimated period fair value is a continuous process. Changes in fair value are recognised on the presentation currency as follows: of use for the asset. profit and loss account. Depreciation of assets is calculated using the straight-line method based on a) assets and liabilities presented at consolidation are converted to presentation their estimated useful lives and residual value. Each part of a tangible asset Goodwill Equity currency at the foreign exchange rate on the date of the balance sheet, which has a significant value of the total cost price is depreciated separately Added value from the acquisition of a company which cannot be attributed Ordinary shares are classified as equity. b) income and expenses are converted using the average rate of exchange, using the straight-line method over their estimated useful lives. Components to identifiable assets or liabilities on the date of the acquisition is classified and with similar useful lives are depreciated as one component. Estimated useful as goodwill on the balance sheet. For investments in associated companies, Transaction costs related to equity transactions, including tax effect of c) all resulting exchange differences are recognised as a separate component life for a tangible asset and the method of depreciation are reviewed on an goodwill is included in the cost price of the investment. transaction costs, are directly charged against equity. Only transaction costs of equity. annual basis to ensure that the method and period applied are in accordance which are directly related to equity transactions are charged to equity. with economic reality for the tangible asset. The same applies to scrap value. The identifiable assets and liabilities on transaction date are reported at fair Foreign exchange differences in the equity are recognised on disposal of value on transaction date. The minority share of identifiable assets and liabilities Currency translation differences that occur as a result of changes in exchange foreign business activities. Scrap value for a vessel is established as 50% of the acquisition cost. The Board is calculated on the basis of the minority share of fair value of identifiable rates on consolidation of foreign entities are recognised directly against equity. of Directors in DOF ASA has reached a decision whereby the group’s intention assets and liabilities. Exchange rate changes related to monetary items (receivables and debt), Classification of assets and liabilities is not to own a vessel which is older than 20 years. The Board is of the opinion which in reality are a part of the company’s net investment in foreign entities, Assets are classified as current assets when: that 50% of the steel value is validly recoverable after 20 years and this is When allocating the costs of a merger, should new information emerge after are treated as currency translation differences and consequently recognised • the asset forms part of the unit’s service cycle, and is expected to be established as residual value. If however a vessel is not sold by the time it has a purchase which involves the fair value of assets and liabilities at the time of directly against equity. On the sale of foreign activities, the accumulated realised or consumed over the course of the unit’s normal production reached 20 years, the residual value is depreciated over the next 10 years. transaction, the allocation may be changed until the first set of accounts has translation differences relating to the sold entity are reversed, and the time; been presented or on expiry of a 12 month period. translation differences subsequently reported together with the gain or loss • the asset is held for trading; The company monitors transactions with vessels on the market and carries from the sale. • the asset is expected to be realised within 12 months of balance sheet out an annual re-assessment of residual value and useful life of its fleet of Goodwill is not subject to amortisation but there is an annual assessment of date; vessels. the extent to which the reported value can be justified with regard to future Minority interests • the asset is cash or cash equivalents, with the exception of when there are earnings. In the case of indications of a requirement to write-down goodwill, Minority interests include the share held by minority interests of the balance restrictions for exchange or use to repay debts within 12 months of Plants under construction are classified as tangible assets and are recognised at the company shall assess the extent to which discounted cash flow related sheet value of subsidiaries including the share of identifiable added value at balance sheet date. incurred costs related to the tangible asset. Plants under construction are not to the goodwill exceeds the reported value of the goodwill. If the discounted the time of acquisition. depreciated before the tangible asset is in use. cash flow is lower than the reported value, the goodwill will be written down All other assets are classified as non-current assets. to fair value. A loss from a consolidated subsidiary which can be attributed to the minority Tangible assets are assessed for write-down on each balance sheet date. If interest must not exceed the minority interests’ share of equity in the Liabilities are classified as short-term when: tangible assets have a higher book value than fair value, these are written Negative goodwill consolidated subsidiary. Any excessive loss amount is charged to the majority - the liability forms part of the unit’s service cycle, and is expected to be settled down to minimum fair value. This write-down may be reversed with up to a Negative goodwill in the case of company acquisitions is reported as income interests’ share of the subsidiary to the extent that the minority interests are in the course of normal production time; corresponding amount for the write-down if the book value is lower than fair after a re-identification and re-valuation of the transferred assets and not committed and can accept their share of the loss. If the subsidiary starts to - the liability is held for trading; value. commitments has been carried out, in order to ensure that negative goodwill is return a profit, the majority interests’ share of the subsidiary’s equity is adjusted - settlement of the liability has been agreed upon within 12 months of the not attributed to erroneous valuation of assets or commitments. so that the minority interests’ share of the previous loss has been covered. balance sheet date; Periodic maintenance - the entity does not have an unconditional right to postpone settlement of the Periodic maintenance is reported on the balance sheet as a part of the Currency Principles for recognising income liability until at least 12 months after balance sheet date. vessel, and straight line depreciated over the period until the next periodic Monetary items and debt in foreign currency are converted to Norwegian The group recognises income when it is probable that future economic All other liabilities are classified as long-term. maintenance, normally after 30 months. On the purchase of new vessels, a kroner (NOK) according to the exchange rate on balance sheet date. Foreign benefits will flow to the entity and when the amount of income can be reliably ratio of the cost price is valuated as periodic maintenance. exchange gain and loss are recognised on the profit and loss account and measured. Cash and cash equivalents classified as financial items. The amount of income is not considered to be reliably measurable until all Cash and cash equivalents include cash in hand, deposits held at call with Financial lease contracts contingencies relating to the sale have been resolved. banks, other short-term highly liquid investments with original maturities of The group presents financial lease contracts in the accounts as assets and Borrowings three months or less, and bank overdrafts. Bank overdrafts are recognised as liabilities, quoted at cost price or, if lower, the present value of the cash Borrowings are recognised at fair value, net of transaction costs incurred, The mobilisation fee is invoiced specifically to the charterer and recognised borrowings under short-term liabilities on the balance sheet. flow to the lease contract. When calculating the present value of the lease when the loan is paid out. Borrowings are subsequently stated at amortised as income during the mobilisation period in rare cases where the vessel does contract, the implicit interest cost in the lease contract is used, when this can cost using the effective interest method. not have a fixed contract and there is a long period of mobilisation. In certain Accounts receivable be determined. If this is not possible, the company’s marginal rate of interest cases, the mobilisation fee is included in the day rate; and is then recognised as Accounts receivables are recognised initially at fair value and subsequently on loans on the market is used instead. Direct costs connected with the lease To the extent that borrowing costs are directly attributable to the construction income throughout the contractual period. measured at amortised cost. The interest factor is ignored if insignificant. A contract are included in the cost price of the asset. Monthly lease payments are of new fixed assets, the costs are recognised on the balance sheet as a part of provision for loss is made when there is objective evidence that the group separated into an interest factor and a downpayment factor. The interest cost is the cost price for the fixed asset. Interest expenses related to the borrowing Sales income is shown net of value-added tax and discounts. will not be able to collect all amounts due according to the original terms of allocated to different periods so that the interest cost for the outstanding debt are recognised on the balance sheet when the borrowing costs accrue during the receivables. Significant financial difficulties of the debtor, probability that is identical for different periods. the construction period for the fixed asset. Borrowing costs are recognised Sales within the group are eliminated. the debtor will enter bankruptcy or financial reorganisation, and default or consecutively until the time the fixed asset has been delivered and is ready for delinquency in payments are considered indicators that the accounts receivable The asset involved in a financial lease contract is depreciated. The depreciation utilisation. Write-down is required if the cost price exceeds the fair value of a) Sale of services are impaired. The amount of the provision is the difference between the period is consistent with that for similar assets owned by the group. If it is not the fixed asset. The group’s operational vessels are leased out on charter parties. Customers asset’s nominal value and the recoverable value, which is the present value of certain that the company will take over the asset on expiry of the lease contract, lease vessels, crew inclusive. The charterer determines (within the contractual estimated future cash flows, discounted at the original effective interest rate. the asset is depreciated over the shortest of the lease contract’s maturity and Borrowing is classified as short-term liabilities unless the borrowing involves limits) how the vessel is to be utilised. There is no time charter revenue when Changes to this provision are recognised under other operating costs. the deprecation period for similar assets owned by the group. an unconditional right to postpone payment of the liabilities for more than 12 the vessels are off hire, for example during periodic maintenance. months from balance sheet date. When a trade receivable is uncollectible, it is written off against the provision If a sale - lease back transaction results in a financial lease contract, any gains In addition to the lease of vessels, the company has a number of agreements for trade receivables. on such transactions will be deferred and recognised over the contract period. Unsecured obligations and accounting provisions for lease of room on vessels (hotel), provisions and extra crews. Unsecured obligations and provisions are recognised when, and only when, a Tangible assets Operational lease contracts company faces a lawful obligation (legal or constructive) as a result of a past The group has evaluated “IFRIC interpretation 4 Determination whether an Tangible assets, with the exception of investment assets, are valuated at cost Lease contracts where the significant share of the risk is carried by the lessor event and it is probable (more than 50%) that a settlement will be required for arrangement contains a lease” and has concluded that the time charters (TC) price minus accumulated depreciation and write-down. The cost price for the are classified as operational lease contracts. Lease payments are classified as the obligation, and that a reliable estimate can be made of the amount of the represent lease of assets and are therefore subject to IAS 17. tangible assets is the purchase price including duties/tax and direct purchasing operating expenses, and are recognised on the profit and loss account for the obligation. Unsecured obligations and provisions are reviewed at each balance costs connected to implementing the tangible asset. entire contractual period. sheet date and adjusted to the best estimate. When timing is insignificant, the b) Interest income liability is reported at the estimated cost of release from the liability. Interest income is recognised on a time-proportion basis using the effective Expenses incurred after the tangible asset has been implemented, such as In cases where a “sale and leaseback” transaction results in an operational interest method. When a receivable is impaired, the group reduces the carrying repair and maintenance, are charged against income as normal. When it can lease contract, and it becomes clear that the transaction has been performed Otherwise, when timing is significant for the amount of the obligation, it is amount to its recoverable amount, being the estimated future cash flow be proven that repair/maintenance has generated increased earnings, the at fair value, any gain or loss is recognised on the profit and loss account on recognised at current value. Every increase in the amount of the obligation over discounted at the original effective interest rate. After write-down, the interest expenses will be recognised as addition of tangible assets. completion of the transaction. Should the sales price be under the fair value, time is reported as interest costs. income is recognised on the basis of the original effective interest rate. any gain or loss will be recognised directly, unless this results in future lease
70 71 c) Dividend income More detailed information on how the company handled the provision related account were too high. However, there is no reversal if the balance sheet included in current assets, except for maturities greater than 12 months Dividend income is recognised when the right to receive payment is to the settlement account, environmental fund and correction income is value is higher than what it would have been if normal depreciation had been after the balance sheet date. These are classified as fixed assets. Loans and established. provided in note 18 to the accounts. applied. receivables are classified as “accounts receivable and other receivables”, and as cash and cash equivalents on the balance sheet. Current and deferred income tax: Employee benefits Other assets valued at amortised cost are written down when it becomes The current income tax charge is calculated on the basis of the tax laws a) Pensions and pension obligations probable that the company will not receive full settlement in relation to the c) Available-for-sale financial assets enacted or substantively enacted at the balance sheet date in the countries Group companies operate various pension schemes. The schemes are generally contractual instalments for loans, receivables or hold to maturity investments. Available-for-sale financial assets are non-derivatives that are either designated where the company’s subsidiaries and associated companies operate and funded through payments to insurance companies or trustee-administered Write-downs are charged to income. Reversal of write-downs from previous in this category or not classified in any of the other categories. They are included generate taxable income. Management periodically evaluates positions taken funds, determined by periodic actuarial calculations. The group has both years is recognised once events indicate that the causes for the write-down in fixed assets unless management intends to dispose of the investment within in tax returns with respect to situations in which applicable tax regulation is defined benefit and defined contribution plans. A defined contribution plan is no longer exist. Reversals of previous write-downs are recognised as income. 12 months of the balance sheet date. subject to interpretation and establishes provisions where appropriate on the a pension plan under which the group pays fixed contributions into a separate However, reversals of previous write-downs are only carried out until the basis of amounts expected to be paid to the tax authorities. entity. The group has no legal or constructive obligations to pay further balance sheet value is the same as the amount which would have applied if the Regular purchases and sales of financial assets are recognised on the trade- contributions if the fund does not hold sufficient assets to pay all employees write-down had not been carried out before. date – the date on which the group commits to purchase or sell the asset. Deferred income tax is provided in full, using the liability method, on temporary the benefits relating to employee service in the current and prior periods. Investments are initially recognised at fair value plus transaction costs for all differences arising between the tax bases of assets and liabilities and their Hedging financial assets not carried at fair value through profit or loss. Financial assets carrying amounts in the consolidated accounts. Deferred income tax is A defined benefit plan is a pension plan that is not a defined contribution plan. Monetary items and debts in foreign currency are converted to Norwegian carried at fair value through profit or loss are initially recognised at fair value and determined using tax rates (and laws) that have been enacted or substantially Typically, defined benefit plans define an amount of pension benefit that an kroner (NOK) based on the balance sheet date exchange rate. As the group has transaction costs are expensed in the profit & loss account. Financial assets are enacted by the balance sheet date and are expected to apply when the related employee will receive on retirement, usually dependent on one or more factors comprehensive international activities, it is exposed to fluctuations in exchange derecognised when the rights to receive cash flows from the investments have deferred income tax asset is realised or the deferred income tax liability is such as age, years of service and salary. rates. The group’s currency strategy involves balancing fixed future income expired or have been transferred and the group has transferred substantially all settled. (freight income) and liabilities in foreign currency. As of 31.12.08, the group risks and rewards of ownership. Available-for-sale financial assets and financial The liability recognised in the balance sheet in respect of defined benefit had one hedging contract. assets at fair value through profit or loss are subsequently carried at fair value. Deferred income tax assets are recognised on the balance sheet to the extent pension plans is the present value of the defined benefit obligation at the Loans and receivables are carried at amortised cost. it is probable that the future taxable profit will be available against which the balance sheet date less the fair value of plan assets, together with adjustments Segments temporary differences can be utilised. for unrecognised actuarial gains and losses and past service costs. The defined A business segment is a group of assets and operations (area of activity) Gains or losses arising from changes in the fair value of the “financial assets benefit obligation is calculated annually by independent actuaries using engaged in providing products or services that are subject to risks and returns at fair value through profit or loss” category, including interest income and Deferred tax is calculated on the basis of provisional differences from investments the projected unit credit method. The present value of the defined benefit that are different from those of other business segments. dividends, are presented on the profit & loss account within “other (losses)/ in subsidiaries and associated companies, with the exception of when the obligation is determined by discounting the estimated future cash outflows gains – net” in the period in which they arise. Dividend income from financial company has control of the time for reversal of the provisional differences, and using interest rates for high-quality corporate bonds that are denominated in A geographical segment is engaged in providing products and/or services within assets at fair value through profit or loss is recognised on the profit &loss it is probable that reversal will not take place in the foreseeable future. the currency in which the benefits will be paid and that have terms to maturity a particular economic environment that are subject to risks and returns that are account as part of other income when the group’s right to receive payments similar to the terms of the related pension liability. different from those of segments operating in other economic environments. is established. The fair values of quoted investments are based on current Both tax payable and deferred tax are recognised directly in equity, to the bid prices. If the market for a financial asset is not active (and for unlisted extent they relate to items recognised directly in equity. Actuarial gains and losses arising from experience adjustments and changes The group’s primary reporting format is determined by business segment, and securities), the group establishes fair value by using valuation techniques. in actuarial assumptions in excess of the greater of 10% of the value of plan the group operates within three business segments: Companies under the shipping company tax regime: assets or 10% of the defined benefit obligation are charged or credited to 1) PSV (Platform Supply vessel) The group assesses at each balance sheet date whether there is objective Parts of the Group’s business is organised according to the specific regulations income over the employees’ expected average remaining working lives. 2) AHTS (Anchor Handling Tug Supply Vessel) evidence that a financial asset or a group of financial assets is impaired. See for taxation of shipowning companies (the tax scheme for shipping companies). 3) CSV (Construction Supply Vessel) separate paragraph in the note regarding accounts receivable. According to these regulations and up to and including 2006, the tax basis only Past-service costs are recognised immediately in income, unless the changes to comprised net financial items. In addition, the shipping companies reported the pension plan are conditional on the employees remaining in service for a The secondary reporting format is defined by the geographical segments and Events after balance sheet date tonnage tax on their accounts. This tonnage tax was presented as an operating specified period of time (the contribution period). In this case, the past-service the group’s business is divided between a number of geographical areas: The New information regarding the group’s financial standing on balance sheet expense. costs are amortised on a straight-line basis over the contribution period. North Sea, Mediterranean/South-East Asia, West Africa and America. date is included in the accounts. Events occurring after balance sheet date, which do not impact the group’s financial standing on balance sheet date, but Up to and including year-end 2006, no provisions were made for deferred tax For defined contribution plans, the group pays contributions to publicly or Contingent liabilities: which have a significant impact on future periods, are presented in the notes in Group companies taxed according to the shipping company scheme, as the privately administered pension insurance plans on a mandatory, contractual Contingent liabilities are defined as: to the accounts. companies had no intention of paying dividends in excess of taxed capital in or voluntary basis. The group has no further payment obligations once the (I) possible liabilities resulting from past events, but where their existence relies the foreseeable future. The estimated tax rate was therefore established as 0% contributions have been paid. The contributions are recognised as salary costs on future events; Use of estimates for the companies involved in the shipping company taxation scheme. when they are due. Prepaid contributions are recognised as an asset to the (II) liabilities which are not reported on the accounts because it is improbable The management has applied estimates and premises which have an impact on extent that a cash refund or a reduction in the future payments is available. that the commitment will result in an outflow of resources; assets, liabilities, income, costs and information on potential obligations. This The regulations regarding taxation of shipping companies were amended with (III) liabilities which cannot be measured to a sufficient degree of reliability. applies in particular to depreciation of fixed assets, write-down assessments, effect from and including 1 January 2007. This required companies to withdraw b) Bonus plans and severance pay Contingent liabilities are not reported on the accounts, with the exception pension commitments and tax. Future events may result in changes to these from the old scheme and enter the new scheme, with a subsequent withdrawal Certain contracts of employment include the right to receive a bonus in relation of contingent liabilities which originate from the acquisition of activities. estimates. Estimates and their underlying premises are assessed on an ongoing and entrance taxation. After entrance to the scheme, normal income was to be to the fulfilment of defined financial criteria and agreements which provide Significant contingent liabilities are presented in the notes to the accounts, basis. Changes in accounting estimates are recognised for the period in which free of tax. Tonnage tax would continue to be reported. the right for severance pay upon termination of the working relationship. except for contingent liabilities with a very low probability of existence. they occurred. If the changes also apply to future periods, the effect of the Provisions are made in those cases where the company has a commitment to change is distributed over current and future periods. See also note 30. The companies involved in the former shipping company scheme chose to make payment of such. A contingent asset is not recognised on the accounts, but is disclosed in the enter into the new scheme with effect from and including 1 January 2007. The notes to the accounts if there is a certain degree of probability that the group Statement of cash flow transition regulations for entrance to the new scheme resulted in taxation of Write-down of assets will benefit economically from the asset. The statement of cash flow presents the total cash flow divided into operating 2/3 of the untaxed income earned under the former shipping company taxation Depreciable, non-financial assets are tested for impairment whenever there activities, investment activities and financing activities. The statement shows scheme. The remaining 1/3 was to be exempt from taxation, provided that are indications of a fall in the value of the asset. If the balance sheet value of Financial assets: the impact of the individual activities on cash reserves. The statement of cash this figure was utilised for investment in measures to promote environmental an asset is higher than the recoverable amount, a write-down is recognised on The group classifies its financial assets in the following categories: atfair flow is prepared in accordance with the indirect model. Re-evaluation of long- protection. the profit & loss account. The recoverable amount is the higher of an asset’s value through profit or loss, loans and receivables, and available-for-sale. The term liabilities has been re-classified from financing to cash flow from operating fair value less costs to sell and current value based on future utilisation of the classification depends on the purpose for which the financial assets were activities as this reporting of income has no impact on cash. Comparison figures On 12 February 2010, a Supreme Court judgement concluded that the asset. acquired. Management determines the classification of its financial assets at have been amended accordingly. transition regulations in the Act dated 14 December 2007 no. 107, paragraph initial recognition. X were at variance with the prohibition on retroactive effect for legislation Fair value reduced by estimated sales costs is the amount achievable on sale Earnings per share in section 97 of the Norwegian Constitution. As a result of this judgement, to an independent third party, minus sales expenses. The recoverable amount a) Financial assets at fair value through profit or loss Earnings per share are calculated by dividing the majority share of the profit/ the Norwegian government’s Inland Revenue office was obliged to reverse the is established individually for all assets. However, if this is not possible, the Financial assets at fair value through profit or loss are financial assets held for loss for the period by a time-weighted average of the number of ordinary posting of income according to the transition regulations for financial years recoverable amount is calculated together with the entity to which the asset trading. A financial asset is classified in this category if acquired principally for shares for the same period. 2007 and 2008. Repayment of the tax charged in 2007 and 2008 is expected belongs. the purpose of profiting from short-term price fluctuations. Derivatives are also in 2010 and is reported as a short-term liability. categorised as held for trading unless they are designated as hedges. Assets in Government grants Write-downs which are reported on the profit and loss account for previous this category are classified as current assets. Grants relating to the net wages scheme and the refund scheme for seafarers periods are reversed when information shows there was no requirement for are recognised as a reduction of wage costs. the write-down, or that previous write-down amounts on the profit and loss b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
72 73 3 Significant acquisitions in the year and proforma information None of the acquisitions made in 2008 had an impact on the consolidated accounts for DOF ASA. Below is more detailed information on acquisitions/new companies founded in 2008:
Norskan Norway AS: The company was founded at the end of October 2008 with shareholder’s capital of TNOK 100. The company is owned by Norskan AS The entire business of the acquired companies is continued subsequent to In 2009, DOF Installer carried out a capital expansion and DOF Subsea Holding acquisition. The formation of the Group is in principal accounted in accordance increased its ownership share from 50.5% to 53.5% after the share issue was which is a subsidiary of DOF ASA. with the acquisition method. Identified added value presented by the analysis completed. of added value is displayed below for significant acquisitions in 2009. Payment Norskan Holding AS: The company was founded at the end of October 2008. The company is owned by Norskan AS which is a subsidiary of DOF ASA. for acquisitions was in the form of cash and shares. DOF ASA: In 2009, the company merged three subsidiaries into the Group; DOF Boa AS, DOF Installer AS and District Supply VII AS. Acquisitions in 2009 DOF Installer AS: DOF ASA purchased 8% of the company in 2008 for TNOK 10 000. The company is now a wholly-owned subsidiary of DOF ASA. There were no acquisitions in 2009 which had an impact on DOF ASA’s Aker Oilfield Services AS: Up until April 2009, DOF Subsea AS owned 21% consolidated accounts. of the company. These shares have now been sold. DOF Holding Pte: The company was founded in 2008, with its head office in Singapore. Paid-in equity for the foundation of the company totalled Below is more detailed information regarding acquisitions/foundation of DOF Subsea Holding 2 AS: The company carried out two capital expansions TNOK 2 956. companies in 2009: in 2009 totalling NOK 400 million, in which DOF and FRC took part with their respective shares. DOF Installer ASA: In 2008, DOF Subsea Holding AS took over DOF’s Waveney AS: The company was founded at the end of 2007. DOF ASA owns 100 % of the company. share of the company in connection with the transaction with First Reserve Marin IT AS: The company was founded in November 2009. Its object is the Corporation. sale of IT services. DOF ASA owns 75% of the shares in the new company, DOF Subsea Holding 2 AS: On 28 October 2008, DOF ASA made a bid to purchase the shares in DOF Subsea AS. On 2 December 2008, DOF acquired while Austevoll Seafood ASA owns the remaining 25%. 49,581,790 shares in DOF Subsea AS, corresponding to 41.41% of the shares, at a price of NOK 36 per share. After the acquisition, the total shareholding was 118,037,781 shares in DOF Subsea AS, corresponding to 98.58% of the share capital in DOF Subsea AS. DOF ASA subsequently transferred 118,037,781 shares in DOF Subsea AS, corresponding to 98.58% of the share capital in DOF Subsea AS to DOF Subsea Holding AS, a company where DOF ASA owns 51% of the Acquisitions in 2008 shares after a transfer. DOF ASA received payment comprising (i) TNOK 2 311 149 in cash and (ii) 61 063 992 shares in DOF Subsea Holding AS. After this transfer, DOF ASA no longer owns shares in DOF Subsea AS, with the exception of indirect ownership via DOF Subsea Holding AS. In connection with payment for DOF’s bid, mentioned above, DOF ASA transferred 2 845 500 shares, corresponding to 50.5% of the share capital in DOF Installer ASA to DOF Subsea Holding AS Group acquisitions of companies in 2008 Method of Date of Share of Added value Added value Payment/ acquirement acquisition/ voting capital goodwill identifiable capital and received payment in shares in DOF Subsea Holding AS. DOF ASA also transferred its rights and obligations under three shipbuilding contracts with Tebma consolidation assets contribution Shipyards Limited to DOF Subsea Holding AS and received payment for this in the form of shares in DOF Subsea Holding AS. DOF Installer ASA Acquisition 2008 51% 128 248 262 590 Acquisition cost 31.12 128 248 262 590 DOF Subsea AS was a consolidated subsidiary in 2007, and based on the fact that DOF ASA remains a majority shareholder, the company is still consolidated. The above-mentioned transactions therefore have no impact on the total operating income or result for the group. The acquisition analysis is reflected in the accounts for the DOF Subsea AS group. For more detailed information, please see these accounts.
DOF Installer ASA
Book value Fair value Construction contracts 510 341 638 589 Current assets 81 591 81 591 Total assets 591 932 720 180
Equity 589 491 717 739
Long-term liabilities Deferred tax 1 346 1 346 Short-term liabilities 1 095 1 095 Total equity and liabilities 591 932 720 180
Result for period after acquisitions 2 907 *Deferred tax is reported at nominal value pursuant to IFRS
74 75 4 Segment information 5 Operating income
Amounts Business segment Geographical segment in TNOK The DOF Group operates within three business segments in terms of strategic The Group divides its business activities over 3 geographical regions, based on areas of operation and vessel types. The three different business segments are: the location of customers; Europe/West Africa, Australasia and the America/ DOF ASA DOF ASA Group group PSV (Platform Supply Vessel), AHTS (Anchor Handling Tug Supply Vessel) and Worldwide. CSV (Construction Support Vessel). The subsidiary DOF Subsea is represented 2009 2008 Operating income comprises: 2009 2008 as one business segment (CSV). DOF ASA has not reported the balance sheet value of segment assets in the 72 199 62 572 Freight income 4 258 507 3 969 672 secondary segment as vessels are owned and controlled via Norway, but are utilised worldwide. DOF ASA is therefore of the opinion that the distribution 72 199 62 572 Total sales income 4 258 507 3 969 672 of assets according to geographical segment would not provide meaningful information. 56 284 Gain/loss on sale of fixed assets -7 887 317 780 1 790 10 608 Other operating income 76 656 52 269 Business segment PSV AHTS CSV Group 1 790 66 892 Total other operating income 68 769 370 050
TNOK 2009 2008 2009 2008 2009 2008 2009 2008 73 989 129 464 Total operating income 4 327 276 4 339 722 Operating income 708 954 703 546 710 995 679 657 2 907 327 2 956 519 4 327 276 4 339 722
EBITDA 230 506 261 455 291 542 405 726 711 608 888 538 1 233 656 1 555 719 Gain on sale of fixed assets in 2008 comprises gain on sale of vessels Skandi Navica, Skandi Hercules and Geofjord. Depreciation 186 073 155 376 166 214 113 661 484 927 374 228 837 214 643 265 Write down 0 0 178 501 178 501 EBIT 44 433 106 079 125 328 292 065 48 180 514 310 217 941 912 454 Net financial items 786 578 -1 035 575 6 Intangible assets Taxes -201 478 222 983 Annual result 803 041 99 862 2009 2008 Amounts in TNOK Assets 3 494 383 3 694 170 3 139 465 2 456 294 14 178 357 13 586 938 20 812 205 19 737 402 Group: PSV AHTS CSV Sum PSV AHTS CSV Sum Jointly controlled companies 19 300 16 749 196 354 76 614 756 826 972 480 93 363 Goodwill Total assets 3 513 683 3 710 919 3 335 819 2 532 908 14 935 183 13 586 938 21 784 685 19 830 765 Acquisition cost at 01.01 2 867 2 867 510 825 516 559 2 867 2 867 510 825 516 559 Additions Liabilities 2 834 562 3 078 309 2 293 190 2 053 351 9 847 756 9 200 286 14 975 508 14 331 946 Disposals Acquisition cost at 31.12 2 867 2 867 510 825 516 559 2 867 2 867 510 825 516 559 Europe/West Africa Australasia America/World wide Group Write-down at 01.01 -16 898 -16 898 Write down for the year -41 501 -41 501 TNOK 2009 2008 2009 2008 2009 2008 2009 2008 Accumulated conversion Operating income 2 229 886 2 238 641 661 712 789 426 1 435 678 1 311 655 4 327 276 4 339 722 differences -16 322 -16 322 -16 898 -16 898 Write-downs 31.12. -74 721 -74 721 -16 898 -16 898
Book value 31.12. 2 867 2 867 436 104 441 838 2 867 2 867 493 927 499 661
Goodwill relates to the acquisition of subsidiaries. Goodwill comprises the not include any incvestments unless the investments is committed. Cash flow difference between nominal and discounted amounts in terms of deferred tax, beyond budget period is expected to grow in line with the inflation rates - synergy effects, organisational value, brandname and key personnel and their estimated to 2,5%. The financial costs in 2008/2009 have caused a significant expertise. The group has estimated recoverable value to be fair value minus change to come of the affiliates. Based on such estimate, it have been decided sales costs for the sale of CGU (cash generating units). For goodwill classified to initiate a write down of the goodwill related to CSL Ltd with MNOK 41,5. under the CSV segment above, which is attributable to the DOF Subsea AS group, the recoverable value is based on the transaction where DOF Subsea Sensitivity AS was removed from the Oslo Stock Exchange on 1 December 2008. The The major assumptions for the impairment recognized in CSL are the WACC transaction was carried out between independent parties. (9,5% after tax) and the cash flow from operations. If the company decreases the expected cash flow with 10% and increases WACC with 10%, the Group Goodwill is not depreciated., but the Group performs an annual impairment needs to preform additional write downs related to the goodwill of MNOK test to determine any write downs requirements . The group has estimated 21,6. recoverable amount as value in use of the cash generating unit, discounting expected cash flows from operations with a weighted average cost of capital In addition the company has other intangible assets in the amount of TNOK (WACC). Cash flows are based on budget approved of the board, and does 34,193, mainly related to investments in software in DOF Subsea Holding AS.
76 77 7 Tangible assets
Capitalised interest costs are based on projected future earnings, cost levels and discount rate. There Amounts in In 2009, capitalization of interest costs totalled TNOK 59,000. These interest is a certain level of uncertainty connected with these estimates. Changes in TNOK costs were related to newbuilding loans which are directly linked to the parameters will result in amended results for the write-down assessment. A Group: 2009 Vessels Periodic New- Operating Total 2009 construction of newbuildings. WACC (weighted average cost of capital) of 8-9% was applied as discount maintenance buildings equipment rate in the calculations. Each vessel is considered as a separate unit capable of Write-down assessment generating cash flow. Acquisition cost as of 31.12.08 11 609 154 310 432 3 940 763 915 117 16 775 466 Write-down assessments have been carried out for all vessels and newbuildings Additions 687 716 177 726 1 823 054 854 912 3 543 407 as of 31 December 2009. The Group has requisitioned independent broker The write-down assessment resulted in the write-down of the following valuations and adjusted these to include estimated added/decreased value in vessels/newbuildings: Vessels completed from newbuildings 837 703 7 000 -844 703 0 affreightment contracts. In instances where the book value has been higher Disposals 150 4 625 278 329 47 913 331 017 than the broker valuations, taking into account the estimated current value of Geosounder TNOK 9,000 contracts, a write-down has been carried out. The current value calculations Newbuilding DOF Installer TNOK 128,000 Currency translation differences 141 708 -1 992 81 904 -48 094 173 525 Acquisition cost as of 31.12.09 13 276 131 488 542 4 722 689 1 674 021 20 161 382 Depreciation as of 01.01.09 1 729 832 131 990 125 304 1 987 126 As of 31.12.09, the group has 20 vessels under construction. The downpayment structure for future commitments related to these newbuildings is presented Depreciation for the year 602 634 119 365 115 214 837 214 below Depreciation on disposals for the year 44 588 2 161 15 788 62 537 Depreciation 31.12.09 2 287 879 249 194 224 730 2 761 803 Group 2010 2011 2012 Remaining Total Write-down 01.01.09 Newbuildings 5 492 560 4 226 523 263 525 9 982 608 Write-down / reversals for the year 9 000 128 000 137 000 Write-down 31.12.09 9 000 128 000 137 000 Of which financed as of 31.12 4 576 078 2 476 542 7 052 620
Book value 31.12.09 10 979 252 239 347 4 594 689 1 449 291 17 262 579 * Of the total amount of financing secured for 2010 and 2011, a figure og approx. MNOK 3,800 presents funding from Norwegian and Brazilian Government. Depreciation rates 3,33 - 6,67% 40% 10 - 20% This financing requires bank guarantees from GIEK or a commercial bank. See also note 32. Depreciation method Straight line Straight line Straight line
Group: 2008 Vessels Periodic New- Operating Total 2008 maintenance buildings equipment
Acquisition cost as of 31.12.08 10 686 928 254 648 2 202 224 847 891 13 991 691 Re-classification -303 285 303 285 Acquisition cost as of 01.01.08 10 383 643 254 648 2 505 509 847 891 13 991 691 Additions 1 182 411 146 345 2 547 636 130 147 4 006 539 Additions from acquisitions (see note 3) 638 589 638 589 Vessels completed from newbuildings 1 774 315 -1 774 315 Disposals 1 669 095 93 327 77 268 1 839 690 Currency translation differences -62 120 2 766 23 344 14 347 -21 663 Acquisition cost at 31.12.08 11 609 154 310 432 3 940 763 915 117 16 775 466 Depreciation at 01.01.08 * 1 898 476 97 165 115 442 2 111 083 Depreciation for the year 505 129 81 549 56 588 643 266 Depreciation on disposals in the year 673 773 46 724 46 726 767 223 Depreciation at 31.12.08 1 729 832 131 990 125 304 1 987 126 Write-down at 01.01.08 Write-down/reversal during the year Write-down at 31.12.08
Book value at 31.12.08 9 879 322 178 442 3 940 763 789 813 14 788 340 Depreciation rates 3,33 - 6,67% 40% 10 - 20% Depreciation method Straight line Straight line Straight line
78 79 DOF ASA Vessel Periodic Newbuilding Operating TOTAL 9 Investments in subsidiaries 2009 maintenance equipment 2009
Acquisition cost as of 01.01.08 204 561 10 609 30 828 245 998 Group Additions 28 1 951 37 579 2 145 41 702 Directly owned Owner Main Nationality Registered Share Ownership Result for Equity 31.12 subsidiaries business office capital and voting the year (100%) Disposals share (bus. reg.) Acquisition cost as of 31.12.08 204 589 12 560 68 407 2 145 287 700
Depreciation as of 01.01.08 46 117 1 608 47 725 DOF Subsea Holding AS DOF ASA Shipowning/ Norway Austevoll 172 878 51% 35 724 5 496 486 Depreciation for the year 7 058 4 532 11 590 subsea eng. Depreciation on disposals for the year DOF Rederi AS DOF ASA Shipowning Norway Austevoll 123 900 100% 297 297 631 074 Depreciation 31.12.08 53 175 6 140 59 315 DOF Management AS DOF ASA/ Shipowning Norway Austevoll 38 316 100% -9 417 84 027 DOF Subsea AS Write-downs / reversals for the year DOF UK Ltd. DOF ASA Shipowning/ Scotland Aberdeen 13 100% 9 022 95 990 Write-downs 31.12.08 management DOF Egypt DOF ASA Shipowning Egypt Kairo 3 499 100% -626 11 423 Book value 31.12.08 151 414 6 420 68 407 2 145 228 385 Waveney AS DOF ASA Shipowning Norway Oslo 100 100% 0 100 Depreciation rates 3,33 - 6,67% 40% Norskan AS DOF ASA Shipowning/ Norway Austevoll 322 037 100% 26 784 1 415 994 Depreciation method Straight line Straight line management Norskan Holding Pte DOF ASA Shipowning Singapore Singapore 100%
DOF ASA Vessel Periodic Newbuilding Operating TOTAL Marin IT AS DOF ASA/ IT services Norway Austevoll 1 000 75% 0 1 000 2008 maintenance equipment 2008 Austevoll Seafood ASA
Acquisition cost as of 01.01.07 204 561 1 681 72 430 278 672 DOF Boa AS, DOF Installer AS and District Supply VII AS have been merged with DOF ASA in 2009. Additions 9 351 9 351 Disposals 423 41 602 42 025 Acquisition cost as of 31.12.07 204 561 10 609 30 828 245 998 Depreciation as of 01.01.07 39 067 1 258 40 325 Depreciation for the year 7 050 689 7 739 Jointly controlled companies Owner Registered Share Ownership Result for Equity 31.12 office capital and voting the year (100%) Depreciation on disposals for the year 339 339 share (bus. reg.) Depreciation 31.12.07 46 117 1 608 47 725
Aker DOF Deepwater AS DOF ASA/Aker Solutions ASA Austevoll 60 000 50% 3 992 63 934 Book value 31.12.07 158 444 9 001 30 828 198 273 DOFTECH DA DOFCON AS/Technip Norge AS Austevoll 350 000 50% 59 940 376 687 Depreciation rates 3,33 - 6,67% 40% Depreciation method Straight line Straight line
Associated companies Owner Registered Share Ownership Result for Equity 31.12 office capital and voting the year (100%) share (bus. reg.)
8 Operational lease agreements - leasing of vessels Master & Commander DOF Subsea AS Oslo 100 20% 88 337 169 259 Waveney IS* DOF ASA Austevoll 36 000 47% 6 202 41 382
Parts of the group’s operational fleet are leased out on time charter. The 4 (with effect from 01.01.06) does not constitute any change in the reporting group has analysed the “IFRIC interpretation 4 Determination of whether of income compared with previous years. In Q2 2009, DOF Subsea AS sold its shareholding in Aker Oilfield Services AS to Aker Solution ASA for TNOK 277,000. The gain on the sale booked to the an arrangement contains a lease” and concluded that a time charter (TC) accounts is TNOK 171,167. The cooperation between DOF and Aker Oilfield Services will continue. represents the lease of an asset and consequently is covered by IAS 17. Lease The table below shows the minimum future lease payments related to non- income from lease of vessels is therefore reported to the profit and loss terminable operational lease agreements (TC contracts). The amounts are *) General partnership, capital not called TNOK 18,800. account on a straight line basis for the duration of the lease period. The lease nominal and stated in NOK 1 000. These amounts include lease of vessels. period starts from the time the vessel is put at the disposal of the lessee and Future payments are adjusted to include the estimated increase in the consumer terminates on the agreed date for return of the vessel. The application of IFRIC price index of 2,5% per year.
Amounts in TNOK 2009 2008 Operational lease agreements 1 year 2 966 003 2 823 260 Due between 2 and 5 years 8 876 884 7 034 669 Due later than 5 years 225 115 169 352 TOTAL 12 068 003 10 027 282
80 81 Tier subsidiaries Owner Registered Share Ownership DOF ASA office capital and voting Directly owned subsidiaries Owner Acquisition share cost
DOF Geo UK Ltd DOF Subsea AS Aberdeen, UK 100% DOF Subsea Holding AS DOF ASA 2 798 498 DOF Subsea Pte DOF Subsea AS Singapore 134 007 100% DOF Rederi AS DOF ASA 123 900 DOF Subsea UK Ltd DOF Subsea AS Aberdeen, UK 25 946 100% DOF Management AS DOF ASA 58 408 DOFCON AS DOF Subsea AS Bergen 13 360 100% DOF UK Ltd. DOF ASA 11 Geo Rederi AS DOF Subsea AS Bergen 17 400 100% DOF Egypt DOF ASA 3 498 Geo Rederi II AS DOF Subsea AS Bergen 26 400 100% Marin IT AS DOF ASA 758 Geoconsult AS DOF Subsea AS Bergen 600 100% Norskan AS DOF ASA 1 510 896 Semar AS DOF Subsea AS Oslo 117 50% Waveney AS DOF ASA 100 DOF Subsea Brasil Ltda DOF Subsea AS Macaè 461 924 100% DOF Holding Pte DOF ASA 2 956 DOF Subsea Holding II AS DOF Subsea Holding AS Bergen 119 864 100% DOF Installer ASA DOF Subsea Holding II AS Austevoll 6 431 53% Total acquisition cost of subsidiaries 4 499 025 DOF Subsea AS DOF Subsea Holding II AS Bergen 598 668 100% DOF Subsea Asia/Pacific Pte. Ltd. DOF Subsea Pte Singapore 100% For information about registered office and ownership, please see above. DOF Subsea Australian Pty. DOF Subsea Pte Perth 23 691 100% DOF Subsea Canada Corp DOF Subsea Uk Ltd. St. Johns, Canada 7 100% DOF Subsea USA Inc DOF Subsea Uk Ltd. Houston, USA 6 775 100% Contruction Specialists Ltd (CRL) DOF Subsea AS Aberdeen, UK 1 100% DOFCON Brasil AS DOFCON AS Bergen 2 000 100% DOFCON Navegacao Ltda. DOFCON AS Macae, Brasil 617 613 100% 10 Investments in associated companies and jointly controlled companies Geofjord Shipping AS Geo Rederi AS Bergen 10 000 100% Geograph Shipping AS Geo Rederi AS Bergen 100 100% Associated companies - Group Aker Oilfield Master and Waveney IS (3) Total DOF Subsea Norway AS Geoconsult AS Bergen 112 100% Services AS (1) Commander (2) DOF Subsea ROV AS Geoconsult AS Bergen 100 100% Balance sheet value 01.01.2009 83 108 40 203 16 385 139 696 Geosund AS Geoconsult AS Bergen 100 100%
Skandi Neptun AS Geoconsult AS Bergen 100 100% Additions/disposals 2009 -83 108 -83 108 Norskan Offshore Ltda. Norskan AS/Norskan Holding AS Rio, Brasil 304 435 100% Share of result 2009 17 667 2 915 20 582 Norskan Norway AS Norskan AS Austevoll 100 100% Dividend/conversion differences 2008 0 0 Norskan Holding AS Norskan AS Austevoll 100 100% Balance sheet value 31.12. 0 57 870 19 300 77 170 DOF Navegacão Ltda. Norskan AS/Norskan Offshore Ltda. Rio, Brasil 712 006 100%
DOF Argentina DOF Management AS Buenos Aires 65 100% Share of result 20 582 DOF Sjø AS DOF Management AS Austevoll 100 100% Gain on sale of shares 171 167 Anoma AS DOF ASA /DOF Subsea AS Austevoll 600 90% Profit from investments in affiliated companies 191 749 DOF Subsea Angola DOF ASA /DOF Subsea AS Angola 90%
Anoma Congo DOF ASA /DOF Subsea AS Kongo 90% 1) DOF Subsea and Aker founded Aker Oilfield Services Ltd. in March 2007. In Q2 2009, DOF Subsea AS sold its shareholding in Aker Oilfield Services AS to DOF Management Pte. DOF Management AS Singapore 513 100% Aker Solutions ASA for TNOK 277,000. The gain from the sale totals TNOK 171,167. Cooperation between DOF and Aker Oilfield Services will continue.
2) Master and Commander AS was founded in December 2006. The company owns 2 vessels.
3) Internal partnership founded in 2008. DOF ASA owns 47% of the shares, while a group of investors owns the remaining shares. The partnership owns the vessel Skandi Waveney. The vessel is on a B/B contract for Norskan Norway AS.
82 83 The group’s share of profit/loss, assets (incl. added value) and liabilities of associated companies: 11 Other investments
Name Registered Assets Liabilities Turnover Result Ownership 2009 office Amounts in TNOK Group: 2009 2008
Master and Commander AS* Oslo 120 685 86 833 29 828 17 667 20,0% Waveney IS Austevoll 69 252 49 802 9 362 2 915 47,0% Primary capital certificates 534 484 189 937 136 635 39 190 20 582 Other investments* 8 376 5 515 Other investments 31.12. 8 910 5 999
* Master and Commander AS operates with USD as functional currency in the group, but presents its accounts with NOK as functional currency, thus the difference in the group’s share of result. Other investments comprise an investment in Borea Noterte. Unrealised loss related to this investment was TNOK 2 861 in 2009.
Jointly controlled companies - Group Jointly controlled companies represent investments in companies where the group along with others can exercise decisive influence. Cooperation is based on an agreement which regulates key aspects of the collaboration between the parties. In relation to accounting practice, the group posts its share of the jointly 12 Inventory controlled company’s income, assets, liabilities and cash flow on a pro rata basis in the consolidated accounts.
As of 31.12.2009, the group has two major investments in jointly controlled companies: Aker DOF Deepwater AS and Doftech DA. Amounts in TNOK Group: 2009 2008 Fuel reserves 16 116 13 441 Fuel reserves 31.12. 16 116 13 441
Aker DOF Aker DOF Doftech DA Doftech DA Write-down of stock as of 31.12 Deepwater Deepwater 2009 2008 2009 2008 Current assets 40 761 2 279 67 761 1 718 Fixed assets 351 947 186 612 1 330 150 196 146 Short-term liabilities 28 326 1 322 123 258 8 692 13 Accounts receivable Long-term liabilities 300 448 127 627 897 967 0 Amounts in TNOK Income 4 062 0 120 037 82 DOF ASA DOF ASA Group Group Costs 70 141 60 097 46 2009 2008 2009 2008 120 470 98 745 Accounts receivable at nominal value 1 078 927 1 151 743 The figures above represent 100% of the companies' accounting figures Not invoiced accounts receivables 164 545 Aker DOF Deepwater AS was earlier Aker DOF Supply AS. - Provision for bad debts -8 185 -739 120 470 98 745 Accounts receivable at 31.12 1 235 287 1 151 004
Accounts receivable as of 31 December 2009 include TNOK 230.000 as a receivable from Aker Oilfield Services in relation to the newbuildings Skandi Aker DOF ASA and Skandi Santos. As of January 2010 the receivable is paid. Group accounts receivable relate mainly to major international oil companies. The Group has an historically low level of bad debts, and the credit risk is considered to be minor. Associated companies (AC) and Jointly controlled 2009 2008 companies (JCC) Cost price Write- Book value Cost price Write- Book value down down As of 31.12, the company had the following accounts receivable which had matured, but not been paid. Aker DOF Deepwater AS (FKV) 30 065 30 065 30 065 30 065 Total associated companies 30 065 0 30 065 30 065 0 30 065 Group Total Not matured < 30 d 30-60d 60-90d > 90d 1 078 927 742 209 142 047 50 538 19 029 125 104 On the consolidated accounts, associated companies are recognised according to the equity method, and jointly controlled companies according to the proportional consolidation method.
DOF ASA Total Not matured < 30 d 30-60d 60-90d > 90d 120 470 78 805 16 544 3 145 422 21 554
84 85 14 Other receivables 16 Share capital and share information
Amounts in TNOK Share capital: The share capital in DOF ASA as of 31.12.2009 was NOK 182,075,950 distributed between 91,037,975 shares, each with a nominal value of DOF ASA DOF ASA Other short-term receivables Group Group NOK 2.00. There has been one share issue in 2009 with 8,270,000 new shares. 2009 2008 2009 2008 Share issue authorisation: The Annual General Meeting has allocated authorisation to the Board of Directors for a capital increase of up to 37,500,000 shares at a nominal value of NOK 2.00. This authorisation expires on the Annual General Meeting in 2010. 2 650 Public fees receivable -26 972 Shareholders: The 20 largest shareholders of DOF ASA and shares owned by management and board members including shareholdings held by closely related Pre-paid expenses 51 075 219 736 persons and companies at 31 December 2009 were as follows: 135 480 350 252 Short-term intragroup receivables Currency adjustments -4 088 185 486 Accrued interest income 4 361 486 Shareholders at 31.12.2009 No of shares Shareholding 13 223 60 433 Unrealised gain/loss forward contracts 27 726 61 134 7 072 Short-term receivables from employees 7 072 MØGSTER OFFSHORE AS 46 210 050 50,76% 5 601 2 613 Other short-term receivables 408 967 14 657 ODIN NORGE 6 235 400 6,85% 154 489 423 506 Other short-term receivables at 31.12. 492 128 272 025 SKAGEN VEKST 4 954 800 5,44% PARETO AKSJE NORGE 4 492 100 4,93% Other long-term receivables SKANDINAVISKA ENSKILDA BANKEN 2 361 183 2,59% PARETO AKTIV 2 288 000 2,51% 364 066 706 434 Intragroup long-term receivables MP PENSJON 1 845 600 2,03% 364 066 706 434 Other long-term receivables at 31.12. ODIN OFFSHORE 1 798 900 1,98% VESTERFJORD AS 873 650 0,96% PARETO VERDI 608 500 0,67% MUSTAD INDUSTRIER AS 591 800 0,65% 15 Cash and cash equivalents HOLBERG NORGE 545 500 0,60% DNB NOR SMB 510 000 0,56% MOCO AS 498 100 0,55% Amounts in TNOK ODIN MARITIM 369 800 0,41% DOF ASA DOF ASA Group Group 2009 2008 2009 2008 FORSVARETS PERSONELLSERVICE 344 100 0,38% Cash 3 308 309 PACTUM AS 300 000 0,33% 309 283 264 152 Bank deposits 2 210 434 2 831 193 POSH AS 282 600 0,31% 309 283 264 152 Cash and cash equivalents at 31.12 2 213 742 2 831 502 WARRENWICKLUND NORGE 239 000 0,26% VPF NORDEA SMB 237 894 0,26% 41 616 376 Of which non-dist. funds 1 131 044 1 100 190 Total 75 586 977 83,03% Other shareholders 15 450 998 16,97% 3,13% 6,42% Effective interest rate on bank deposits 3,06% 4,10% Total 91 037 975 100,00%
* Of consolidated non-distributable funds, MNOK 895,8 is attributable to governmental financing of export for one vessel being built at a Norwegian yard. The figure is committed to a financial institution which provides the necessary guarantees for the loan and is responsible for payment of the loan. The impact of the loan has been recognised as gross.
86 87 Shareholders per 31.12.09 No of shares Shareholding Net Pension costs 2009 2008 NPV value of pensions during the period 20 620 17 140 Board of Directors Capital costs previous earned pensions 5 428 4 570 Helge Møgster Chairman of the Board 236 930 0,26% Estimated return on pension capital (5 707) (4 174) Helge Singelstad Board member Adminstration costs 948 1 090 Oddvar Stangeland Board member 28 000 0,03% Estimated variance 1 717 1 450 Wenche Kjølås * Shares owned via Jawendel AS Board member 3 000 0,003% payroll taxes during the period 2 965 2 599 Britt Mjellem * Shares owned via Mjellem Invest AS Board member 1 000 0,001% Net pension cost incl. Pay roll taxes 31.12. 25 970 22 675
Via Laco AS, Helge Møgster and his family have indirect control of 94.65% of the shares in Møgster Offshore AS, the main shareholder of DOF ASA. Net Pension commitments Total 2009 Total 2008 Oddvar Stangeland owns 3.01 % of Møgster Offshore AS via Kanabus AS. He also owns 8,000 shares directly via Kanabus AS. Estimated Pension benefit obligation 122 616 135 521 Estimated pension capital (105 198) (83 590) Estimated variances not included in P&L (10 011) (38 289) DOF ASA Payroll taxes during the period 2 354 6 499
Management group : Net Pension commitments 31.12. 9 761 20 141 Mons S. Aase *Shares owned via Moco AS CEO 498 100 0,55% Mons Melingen VP Marine 25 0,000% Net pension comittments is classfied as follows in the balance sheet 31.12. Gary Kennedy COO Pension capital 31.12. 2 194 Hilde Drønen * Shares owned directly and through Djupedalen AS CFO 30 675 0,03% Pension commitments 31.12. 11 955 20 141 Arnstein Kløvrud CTO Total shares owned by Board members and management 797 730 0,88% Economic assumptions 31.12.2009 31.12.2008 01.01.2008 Discount rate 4,40% 4,3%/3,8 % 4,70% Mons Mellingen and Gary Kennedy entered their positions in 2010. They came from positions in subsidiaries of DOF. Estimated return on plan assets 5,60% 6,3%/5,8 % 5,75% Estimated rise in salaries 4,25% 4%/4,5% 4,50% Estimated rise in pensions 0%/1,30% 4,25%/2,8%/1,5 % 2,00% Estimated rise in basic amount under the national 4,25% 4,25% 4,25% insurance Turnover 0%/3 % 0%/3% 0,00% National insurance contribution 14,10% 14,10% 14,10% 17 Pensions and pension commitments Anticipated CPA acceptance rate 62-67 years of age 0,00% 0,00% 0,00%
DOF ASA has a company pension scheme with the life insurance company Nordea Liv Norge ASA. In 2008, this scheme comprised 795 active members and Reconciliation, opening and closing balance: 54 pensioners. The scheme covers life-long retirement pension from the age of 67. It also includes disability pension and child pension. The Group also has an uninsured pension scheme for three former offshore employees which is financed from the company’s operations. There is also a defined contribution scheme for Net pension comittments 01.01. 14 302 61 employees in DOF Management AS for which the pension costs totalled Diviation compared with equity 0 TNOK 1 931 in 2009. All shore-based employees have obligatory occupational pension schemes. Offshore employees are not included in this scheme. Net pension cost for the year inc.nat.ins.cont 25 970 Seafaring employees have a separate pension scheme. Pension age is 60 and pension payments are made from the company’s pension scheme until the age of Pension payments CPA/uninsured incl.nat.cont 0 67. From 67, the retirement pension is paid under the National Insurance Scheme. The group pension scheme is coordinated with the pension insurance scheme (Pensjonstrygden for sjømenn) for seafarers, and constitutes 60% of the pensionable income after 30 years of qualifying service. This scheme is insured. The Investment in plan assets etc. incl.nat.cont (30 511) calculations comply with IFRS (IAS 19). Net pension comm. At 31.12. 9 761 Estimate deviations and the impact of changed assumptions are amortised over an average expected remaining period of service. The company’s legal commitments are not affected by the accounting treatment of the pension commitments Reconsiliation of pension commitment, opening and closing balance: The average expected remaining period of service for shore based employees is 21.92 years and for seafarers 24.77 years Present value of accrued pension commitment at 01.01. 129 682 Outgoing commitments for 2008 and 2009 are based on table K2005. The pension funds are placed in a portfolio of investments by an external insurance company. The insurance company administers all transactions related to the Gross pension cost for the year 26 048 pension scheme. Estimated return on pension funds is based on market prices on balance sheet date and projected development during the period in which the Pension payment for the year (2 237) pension scheme is valid. Deviation (change in assumptions/experience) (30 876) Estimated present value accrued pension commitment at 31.12. 122 616
88 89 Reconsoliation of plan assets, opening and closing balance: 2009 2008 Basis of deferred tax 2009 2008 Plan assets at 01.01. 83 590 87 035 83 311 Fixed assets -2 680 171 -1 480 822 Anticipated return on plan assets 5 707 Current assets -18 393 -98 345 Administrative expenses (1 217) 499 113 27 030 Other differences -511 131 -253 705 Pension payments for the year (2 237) -2 000 Liabilities -293 305 -1 515 Investment in plan assets etc 26 652 584 148 110 341 Total temporary differences -3 503 000 -1 834 387 Deviation (changes in assumptions/experience) (7 297) Estimated present value of pension plan assets at 31.12. 105 197 163 561 30 895 Deferred tax (-) / deferred tax assets (28%) -980 840 -513 628
At 31. December 2009 2008 60 062 389 093 Tax deficit 1 731 470 1 074 120 Present value of contribution-based pension commitment 122 616 135 521 Fair value of pension fund assets 105 198 83 590 -524 086 278 752 Basis for calculation of deferred tax (-) / deferred tax assets -1 771 530 -760 267 Deficit/surplus 17 418 51 931 -146 744 78 051 Total deferred tax (-) / deferred tax assets -513 472 -230 108
-146 744 Gross deferred tax ***) -513 472 -353 438 18 Tax 78 051 Gross deferred tax assets **) 123 330
Amounts in TNOK DOF ASA DOF ASA Group Group 2009 2008 Tax consists of: 2009 2008 *) Transition regulations for entry to the new taxation scheme for shipping companies adopted by the Norwegian Government in 2007 and which DOF Rederi AS - 30 Tax payable in Norway*) -92 476 entered with effect of 1 January 2007 resulted in taxation of 2/3 of the untaxed funds earned within the former taxation scheme for shipping companies. This income was transferred to a settlement account and was to be taxed over a ten-year period. The remaining 1/3 was to be exempt from taxation, provided that Tax payable related to changes in shipping tax scheme -149 548 this figure was utilised for investment in measures to promote environmental protection. Tax payable foreign activity 46 065 26 027 47 191 -77 627 Change in deferred tax Norway 125 139 -36 953 On 12 February 2010, a Supreme Court judgement concluded that the transition regulations in the Act dated 14 December 2007 no. 107, paragraph X were Change in deferred tax foreign activity 179 822 -117 398 at variance with the prohibition on retroactive effect for legislation in section 97 of the Norwegian Constitution. As a result of this judgement, the Norwegian Estimate deviations from previous years -2 183 government’s Inland Revenue office was obliged to reverse the posting of income according to the transition regulations for financial years 2007 and 2008. 47 191 -77 597 Tax cost/income 201 478 -222 983 Repayment of the tax charged in 2007 and 2008 is expected in 2010. This figure is therefore accounted as a short-term receivable.
Reconciliation of nominal and effective tax rate The provision related to the settlement account has been reversed as of 31 December 2009. However, the Norwegian government has stated that it intends to evaluate alternative methods of collecting tax related to the settlement account. It is not possible to predict the consequences of such an evaluation. No provisions 381 007 471 501 Profit before tax 1 004 519 -123 121 have therefore been made for the settlement account as of 31 December 2009. Neither have there been any amendments to the way in which the provision for Estimated tax cost (28%) 106 682 132 020 281 265 -34 474 the environmental fund is handled, as it is currently unclear how the Supreme Court judgement will affect this part of the transition regulations.
-59 491 -209 617 Deviation between actual and estimated tax cost -79 787 -188 509 It is also uncertain how to account for paid dividends in the new scheme, including the calculation of correction income. The company has been notified that there will be an amendment to the tax assessment for 2008 in relation to correction income for the year. The company disagrees with the basis for calculation Reason for difference between actual tax cost and estimated tax cost of correction income and will wholly or partly dispute this amendment. As a result of the uncertainty related to these items, the company has decided to make a provision for tax payable in accordance with best estimate. -59 491 -209 617 Tax effect of non-taxable income and non tax-deductible costs 61 455 -14 854
Change in value of market-based current assets 49 980 On 26 March 2010, the Norwegian government notified their intention to propose an amendment to the Taxation Act which implies that untaxed profits from Estimate deviations from previous years 17 208 former taxation schemes for shipping companies can be settled as a one-time payment. If this proposal is made and adopted as notified, this will imply that the Effect of shipping tax regime tax settlement on transition to new scheme -200 258 -104 291 company may have to pay a tax obligation of NOK 106,975,000. The corresponding tax figure on the accounts is NOK 0. The company will assess whether to Effect of shipping tax -71 059 -77 957 make use of the scheme for a one-time payment once it has been adopted. Foreign tax rate deviation 60 383 -8 616 Unrecognized deferred tax asset 19 712 -59 491 -209 617 Deviation from estimated tax cost -79 787 -188 510
Deferred tax Below is a specification of the temporary differences between the accounting and tax values, and the calculation of deferred tax/deferred tax assets at the end of the year.
90 91 19 Other long-term liabilities DOF ASA DOF ASA Group Group 2009 2008 Liabilities secured by mortgage 2009 2008
Bond loans DOF ASA has three bond loans with maturity in 2010 and 2011. DOF Subsea The most important financial covenants for DOF Subsea Holding AS’ fleet are 975 000 Bond loan 975 000 has two bond loans with maturity in 2011 and 2012. See figures below. The as follows: 91 827 249 500 Liabilities to credit institutions incl. leasing liabilities 10 951 411 10 949 968 trustee acting on behalf of the bond loan owners is Norsk Tillitsmann ASA. The Group shall at all times have cash reserves of NOK 400 million. Nordea Bank Norge ASA is the account operator. The terms and conditions The ratio between the Group’s EBITDA and net interest costs shall not be lower 1 066 827 249 500 Total liabilities 11 926 411 10 949 968 for the bond loans comprise a floating rate of interest, 3 month NIBOR + than 2:1. (200bp – 1150 bp). Quarterly interest rate regulations are carried out for all Book equity ratio shall be minimum 25%. the bond loans. A bond loan totalling NOK 975 million in DOF ASA is secured Assets provided as security by a mortgage in the shares in Norskan AS. DOF ASA is free to purchase its In addition to the above-mentioned financial covenants, the following terms own bonds. and conditions also apply to a number of loan agreements: 157 834 198 273 Fixed assets 12 451 483 10 847 577 • Full insurance for the Group’s assets. 1 510 896 Investment in subsidiaries 1 510 896 Long-term liabilities to credit institutions • No changes to classification, management or ownership of the vessels The main share of the Group’s fleet is financed via mortgage loans, in particular without prior written consent from the banks. 1 668 730 198 273 Total assets provided as security 13 962 379 10 847 577 maritime mortgages. A set of shared covenants has been established for the • DOF ASA shall own minimum 50% of the shares in DOF Subsea Holding maritime mortgage in DOF ASA and the maritime mortgage in DOF Subsea AS, and Møgster Offshore shall own minimum 33% of the shares in AS. DOF ASA. 6,69% 7,50% Average rate of interest 5,66% 6,20% • The Group does not have the right to carry out mergers, demergers or sell For DOF ASA, the most important financial covenants are as follows: businesses without the prior written consent of the banks. Value-adjusted capital shall be higher than 30% or higher than 20% if • DOF ASA shall be listed on the Oslo Stock Exchange. In addition, the For loans issued directly to ship-owning subsidiaries of DOF ASA and DOF Subsea AS, a parent company guarantee has been issued for the nominal amount of contractual coverage for the maritime mortgage is higher than 70%. normal terms and conditions for this type of loan apply. the loans in addition to interest accrued at any given time. The Group shall at all times have cash reserves of NOK 500 million.
Fair value of long-term loans The price of the company’s bond loans at 31.12.2009 was as follows: Loans Price Outstanding 31.12.09 Amounts in TNOK DOF ASA 07/10 98,35 72 000 DOF ASA DOF ASA Group Group DOF ASA 06/11 90,63 196 000 2009 2008 Overview of long-term liabilities 2009 2008 DOF ASA 09/11 102,70 975 000 1 153 221 744 893 Bond loans 2 149 321 1 470 654 DOF Subsea 07/11 90,35 500 000 249 500 Liabilities to credit institutions 8 724 597 8 920 720 DOF Subsea 09/12 103,43 500 000 Long-term tax liabilities 0 173 967 84 633 907 499 Other long-term liabilities 496 856 162 357 Other long-term liabilities, with the exception of long-term loans, have nominal value equivalent to fair value of the liability. 1 237 854 1 901 892 Total liabilities (excl. instalments 2010) 11 370 774 10 727 698
Group: Installment profile - long-term liabilities 20 Other provisions for commitments
Group 2010* 2011 2012 2013 2014 Subsequent Total * The 5 vessels previously financed as “UK lease” were released from their lease contracts in 2008. Bond loans 72 000 1 667 000 500 000 2 239 000 Remaining leasing commitment related to these vessels is NOK 0. Mortgage loans/maritime loans 2 032 832 1 167 837 1 010 846 1 343 762 238 293 4 451 001 10 244 571 There may be risk related to the tax commitment existing for the former UK leases, but this is considered to be so low that it has not been reported on the accounts. See note 21 for description of the UK lease. Long-term leasing liabilities 23 451 20 803 21 403 22 133 7 194 101 006 195 990 Other long-term liabilities 0 Total 2 128 283 2 855 640 1 532 249 1 365 895 245 487 4 552 007 12 679 561 21 Other long-term liabilities - lease
In 2010 regular installments are TNOK 1,003,545 and ballon are TNOK 1,124,738, hereof are amount TNOK 780,000 refinanced per April 2010.
Traditional lease DOF ASA 2010* 2011 2012 2013 2014 Subsequent Total * As of 31 December 2009, one traditional lease for a vessel remains, namely Skandi Caledonia. The lease for Skandi Caledonia is carried on DOF ASA’s balance sheet under long-term liabilities at a figure of NOK 110 million. Bond loans 72 000 1 171 000 1 243 000 Financial lease combined with tax advantage Unsecured loan 300 000 300 000 Five of the group’s vessels have previously been financed as “UK-lease”. This implies that the vessels are formally owned by separate British holding companies Lease liabilities 7 194 7 194 7 194 7 194 7 194 74 121 110 091 outside the group, which charter the vessels on B/B charter to the group’s subsidiary, DOF UK Ltd. DOF Rederi AS has covered DOF UK Ltd’s obligation to cover the financing of these vessels for a minimum period of 6 years via a charter party. After 6 years, the owner can demand that the shipowning company take over Total 379 194 1 178 194 7 194 7 194 7 194 74 121 1 653 091 all assets of the British holding company at a price of approx. 75% of the original cost of the vessels. For accounting purposes, it is assumed that the owner will demand that DOF Rederi purchases the share in the British holding companies, and consequently the vessels.
In 2010 regular installments are TNOK 7,194 and ballon are TNOK 372,000, hereof are TNOK 300,000 refinanced per April 2010. The five above-mentioned vessels were released from their lease contracts in 2008 and all the group’s UK leases were settled in 2008. The remaining lease com- mitment for UK leases as of 31.12.09 is therefore NOK 0.
There is a certain risk of a tax liability related to the former UK leases, but this is deemed to be so low that it has not been presented in the accounts. The issue has been submitted to a lawyer for evaluation and his statement supports the above-mentioned conclusion. In connection with the termination of these leases in 2008, DOF was obliged to settle a number of tax bills/structural accounts.
92 93 22 Guarantee commitments 25 Earnings per share
The parent company has provided a counter-guarantee to DnBNOR in The parent company has provided a guarantee (surety) to DVB Bank in Ordinary earnings per share are calculated as the relationship between the There are no instrument that allow the possibility of dilution. connection with the bank guarantee issued by the bank to BNDES in Brazil connection with the financing of one vessel owned by Norskan Norway AS. As annual result payable to the shareholders and the weighted average of for the financing of 4 vessels owned by Norskan. Parent company guarantees of 31 December 2009, the nominal value of the loan was USD 17 million. outstanding ordinary shares throughout the financial year. have also been issued for BNDES in connection with the financing of two other vessels owned by Norskan in Brazil. In total, these guarantee commitments for The parent company has also issued guarantees for maritime mortgages/loans BNDES amounted to USD 155 million as of 31 December 2009. for wholly owned subsidiaries.
23 Other short-term liabilities Amounts in TNOK Group: Basis of calculation of earnings per share 2009 2008
Amounts in TNOK Profit for the year after minority interests 602 464 65 151 DOF ASA DOF ASA Specification of other short-term liabilities Group Group Average outstanding number of shares 87 730 811 82 767 975 2009 2008 2009 2008 Earnings and diluted earnings per share for parent company shareholders (NOK) 6,87 0,79 2 900 2 516 Income invoiced unaccrued 6 798 3 941 8 089 4 166 Accrued interest 122 441 76 072 649 837 Costs payable 104 834 214 227 2 430 7 786 Other short-term liabilities 179 251 248 530 125 840 Intragroup liabilities Unrealised loss on forward contracts 6 992 58 737 14 068 141 145 Other short-term liabilities 420 316 601 507
24 Intra-group loans and balances
Amounts in TNOK DOF ASA DOF ASA Specification of intra-group balances 2009 2008
524 033 706 434 Long-term receivables from companies in the same group and JV* 135 480 350 251 Short-term receivables from companies in the same group and JV 57 033 79 088 Accounts receivable from group companies 716 546 1 135 773 Receivables from group companies
557 838 Long-term loans from group companies* 125 840 Short-term loans from group companies 58 983 21 139 Accounts payable to group companies 58 983 704 817 Liabilities to group companies
657 562 430 956 Net intra-group balances
* Loans to companies within the same group and loans from companies within the same group are interest-bearing. Interest on loans is as for market rates and terms.
94 95 26 Lease contracts 27 Financial instruments
Operational lease contracts: This note is splitted in following grouplevel; With the exception of the lease of office premises and the vessel Skandi year. Austevoll Eiendom AS is a subsidiary of Austevoll Seafood ASA. Austevoll Caledonia the Group has no significant contracts for lease of fixed assets Seafood ASA is a subsidiary of Laco AS. See note 30. DOF Subsea AS leases 27A Financial income and costs which are not carried on the balance sheet. The main office is leased from premises located in Marineholmen in Bergen. Austevoll Eiendom AS for NOK 2,900,000 per 27B Financial assets and commitments: Information on the balance sheet 27C Financial assets and commitments: Information on the fair value Overview of future minimum lease: 27D Hedging activities Group 0-12 1-5 Total 27E Qualitative and quantitative risk information months years 27F Financial market risk Minimum lease - vessels 51 969 58 525 110 493 Lease of head office 4 730 18 920 23 650 Total 56 699 77 445 134 143 27A Financial income and costs: information on the profit & loss account
Amounts in Financial lease contracts: TNOK The group’s assets under financial lease contracts include 1 vessels, several ROVs, machines and operating equipment. In addition to these lease payments, the Group has commitments related to maintenance and insurance of the assets. DOF 2009 DOF 2008 Group 2009 Group 2008 218 152 441 827 Income from other investments 20 582 43 Assets under financial lease contracts are as follows: 23 252 41 928 Interest income from companies in the same group 52 468 19 926 Other interest income 120 685 96 248 DOF ASA 2009 2008 Group 2009 2008 4 882 331 197 Gain on realisation of shares 171 167 124 791 Vessels 215 170 215 170 Vessels 215 170 445 284 121 317 56 595 Unrealised foreign exchange gain 757 611 166 738 ROVs ROVs 70 993 21 840 7 977 -9 451 Realised foreign exchange gain 166 012 265 254 Machinery and operating equipment 3 247 Machinery and operating equipment 18 153 50 559 Net gain/loss on currency forward contracts 73 475 -5 624 Total acquisition cost 218 417 215 170 Total acquisition cost 304 316 517 683 105 856 Other financial income 124 950 123 842 Accumulated depreciation at 01.01 48 176 40 326 Accumulated depreciation at 01.01 113 873 85 281 -7 498 -15 977 Interest paid to companies in the same group Depreciation 11 590 7 850 Depreciation 17 480 28 592 -105 091 -138 422 Interest cost on mortgage -566 118 -633 010 Net balance sheet value 158 651 166 994 Net balance sheet value 172 963 403 810 -2 050 -21 902 Loss on sale of shares -2 050 -244 306 Unrealised loss on foreign exchange -822 121 -4 011 Realised loss on foreign exchange -76 885
Overview of future minimum lease: -18 918 -32 552 Other financial costs -79 736 -274 852 Group 0-12 1-5 Total 400 346 424 852 Result of financial items 786 878 -1 035 576 months years Minimum lease, financial lease contracts maturing: 23 451 73 735 97 186 Gain/loss on currency is presented net in 2009.
Overview of future minimum lease: DOF ASA 0-12 1-5 Total months years Minimum lease, financial lease contracts maturing: 7 194 20 983 28 177
96 97 27B Financial assets and commitments: Information on the balance sheet
Amounts in TNOK Amounts in TNOK 31.12.2009 Financial assets at fair Held to Loans and Available Financial commitments at Financial Other Total 31.12.2008 Financial assets at fair Held to Loans and Available Financial commitments Financial Other Total value maturity receivables for sale fair value commit- financial value maturity receivables for sale at fair value commit- financial ments commit- ments commit- Held for sale Earmarked Held for sale Earmarked measured ments Held for sale Earmarked Held for sale Earmarked measured ments re. IAS 39 at initial re. IAS 39 at initial at amor- re. IAS 39 at initial re. IAS 39 at initial at amor- recognition recognition tised cost recognition recognition tised cost Assets Assets Financial invest- Financial invest- ments 8 910 2 721 11 631 ments 5 999 5 999 Accounts Accounts receivable 1 235 287 1 235 287 receivable 1 151 004 1 151 004 Derivatives 26 687 26 687 Other short- term receiva- Other short- bles 272 025 272 025 term receiva- 465 441 465 441 bles Cash and cash equivalents Cash and cash 2 831 502 2 831 502 equivalents 2 213 742 2 213 742 Total financial assets 5 999 0 0 4 254 531 0 0 0 0 0 4 260 530 Total financial assets 8 910 0 0 3 917 191 0 26 687 0 0 3 952 788 0 Commitments Interest-bearing 0 10 337 501 10 337 501 Commitments long-term liabilities Interest-bearing long-term 10 873 918 10 873 918 Financial lease 216 229 216 229 liabilities Derivatives 226 426 226 426 Financial lease 195 990 195 990 Interest-bearing Derivatives 77 202 77 202 short-term 1 795 407 1 795 407 loans Interest-bearing short-term 2 128 284 2 128 284 Accounts pay- loans able and other short-term 419 924 419 924 Accounts pay- liabilities able and other short-term 873 923 873 923 Total financial liabilities commitments 0 0 0 0 0 226 426 0 12 769 061 0 12 995 487 Total financial commitments 0 0 0 0 0 77 202 0 14 072 115 0 14 148 317
27C Financial assets and commitments: Information on fair value
The fair value of financial assets classified as “held for sale” and “held for calculated by using listed market prices or interest rate terms for debts with a trade” are established with reference to the market price on balance sheet corresponding maturity and credit risk. date. For financial assets not listed in the accounts, the fair value has been estimated using valuation techniques based on assumptions which are not The fair value of “held to maturity” investments (with the exception of deposits substantiated by observable market prices. The fair value of currency forward as mentioned above) is established by making use of available market prices. contracts is based on the forward exchange rate on balance sheet date. The Below is a comparison of balance sheet values and fair value for the Group’s fair value of currency swaps is calculated by looking at the current value of financial instruments. The fair value of the debt component for preference future cash flows. For all the above-mentioned derivatives, the fair value is shares has been based on the market interest rate for similar convertible confirmed by the financial institution with which the company has signed an bonds. agreement. The fair value of interest-bearing liabilities is presented as if currently settled Of the company’s financial instruments, the following have not been valued in whole and represented at nominal value for bank loans and last observable at fair value: Cash and cash equivalents, accounts receivable, other short- transaction prices for bonds. Due to the general market conditions resulting term receivables, overdraft facility, long-term liabilities and “held to maturity from the financial crisis, the margins are now generally higher than when the investments”. loans were taken out. The company has not calculated fair value on the basis of recent changes in market conditions, due to the lack of a suitable discount The balance sheet value of cash, cash equivalents and overdraft facilities is rate. If the Group were to refinance its entire debt portfolio on the dayof approximately the same as the fair value, as these instruments have a short writing, there would be an increase in margin of 1 to 1.5%. maturity. Similarly, the balance sheet value of accounts receivable and accounts . payable are practically the same as fair value as they have “normal” terms and conditions. The fair value of non-interest bearing long-term liabilities is
98 99 2009 2008 27E Qualitative and quantitative risk information Value/amor- Fair value Value/amor- Fair value tised cost on tised cost on balance sheet balance sheet Financial risk factors Market risk Financial assets The Group’s activities carry various types of financial risk: Market risk (including currency risk, fair value interest rate risk, floating interest rate risk and price (i) Currency risk Cash 2 213 742 2 213 742 2 831 502 2 831 502 risk, credit risk and liquidity risk). The principal risk management plan for the The Group’s activities carry various types of financial risk: Market risk (including Accounts receivable 1 235 287 1 235 287 1 151 004 1 151 004 Group focuses on the unpredictability of the capital market and attempts to currency risk, fair value interest rate risk, floating interest rate risk and price minimise any potential negative impact on the Group’s financial results. The risk, credit risk and liquidity risk). The principal risk management plan for the Forward currency contracts 23 766 23 766 2 394 2 394 Group makes use of financial derivatives in order to hedge against certain types Group focuses on the unpredictability of the capital market and attempts to Interest swap contracts 2 921 2 921 of risk. minimise any potential negative impact on the Group’s financial results. The Group makes use of financial derivatives in order to hedge against certain types Other long-term receivables 2 721 2 721 272 025 272 025 Risk management for the Group is governed by guidelines approved by the of risk. Board of Directors. The Group identifies, evaluates and hedges against financial risk. The Board of Directors prepares a written set of principles for general Risk management for the Group is governed by guidelines approved by the Financial liabilities risk management and provides written guidelines for specific areas such as Board of Directors. The Group identifies, evaluates and hedges against financial currency risk, interest rate risk, credit risk, use of financial derivatives and other risk. The Board of Directors prepares a written set of principles for general Overdraft facility 53 438 53 438 13 980 13 980 financial instruments in addition to investment of surplus liquidity. risk management and provides written guidelines for specific areas such as Accounts payable 216 373 216 373 419 924 419 924 currency risk, interest rate risk, credit risk, use of financial derivatives and other financial instruments in addition to investment of surplus liquidity.
Interest-bearing liabilities: Bank loans and bonds 12 978 750 12 986 100 12 083 153 11 965 961 Commitments re. financial lease contracts 177 726 177 726 216 229 216 229 Forward currency contracts 77 202 77 202 228 820 228 820 Overdraft facilities 53 438 53 438 13 980 13 980 The table below shows potential figures for the group’s operating income and operating result as if there had been a change in the exchange rate between the Norwegian Kroner (NOK), and USD and GBP.
Change in NOK exchange rate Operating income Operating result 27D Hedging activities USD GBP USD GBP 2009 +5% 4 371 132 4 370 049 226 796 254 550 -5% 4 283 620 4 284 701 209 286 181 530 As of 31 December 2009, the Group had 34 forward contracts to hedge future sales to customers in USD and GBP, and the purchase of USD. Forward contracts are utilised to hedge currency risk related to projected future sales. The company does not make use of cash flow hedging pursuant to IAS 39. Furthermore, the 2008 +5% 4 410 000 4 392 000 941 000 949 000 Group had a forward contract which was utilised to hedge fair value. The table below displays the contractual maturities for the contracts and the fair value of -5% 4 273 000 4 291 000 888 000 881 000 obligations and rights as of 31 December 2009.
Amounts in Due date Currency Added value NOK 1000 purchased
(II) Floating and fixed interest risk Upon the basis of the Group’s interest-bearing liabilities as of 31 December Forward contracts at fair value over result As the Group does not have any significant interest-bearing assets, the result 2009, a 1% increase/reduction in the basic interest rate would represent an and cash flow from operations is not in principal affected by changes in the increase/reduction in interest costs of NOK 132 million. FX Forward 236 737 2010 NOK 17 202 market interest rate. Forward contracts utilised to hedge fair value (b) Credit risk The Group’s interest rate risk is related to long-term liabilities. Loans with Credit risk arises mainly from transactions involving derivatives, accounts FX Forward 752 500 2011 NOK -77 202 floating interest rates represent an interest rate risk on the Group’s cash receivable and prepaid instalments for newbuildings to shipyards and Currency option flow. The Group makes limited use of interest rate hedging for its long-term subcontractors. The Group’s customers are oil companies with a high credit liabilities. Attempts are made to reduce the financial risk by nominating the rating and payments to shipyards are secured by bank guarantees or parent Curr. Option 126 540 2010 NOK 6 564 Group’s loans in the same currency as long-term contracts. A fixed interest rate company guarantees. has been agreed upon for the main share of the long-term liabilities taken out Interest swap by the business in Brazil, for the entire period of the loan. (c) Liquidity risk Interest swap 420 017 2012 NOK 2 921 Cautious management of liquidity risk requires maintenance of a sufficient The Group manages parts of its floating interest rate risk by making use of reserve of liquid funds and marketable securities, having financing opportunities floating-to-fixed interest rate swaps. With these types of interest rate swaps, a in the form of a sufficient number of secure drawing rights and the capacity Total -50 515 loan with a floating rate of interest is converted to a loan with a fixed rate of to close market positions. The Group sustains a flexible level of financing by interest. Historically, the Group has normally taken out long-term liabilities with ensuring constant accessibility to secured drawing rights. a floating rate of interest. Hereof classified as current assets 26 687 Hereof classified as provisions for commitments 77 202
The group has a shipbuilding contract in Brazil to be settled in USD and NOK. The group has chosen to enter into a forward contract for the NOK element to eliminate NOK exposure for activities in Brazil. Unrealised loss on the forward contract is included as a part of the construction cost and at year-end totalled NOK 77 million.
100 101 31.12.2009 Remaining period 27F Financial market risk 0-12 months 1-2 years 2-3 years 3-4 years More than 5 Total years Financial commitments (not derivatives) 1 år The Group has income mainly in USD, GBP and NOK, while a major share Attempts are made to reduce the financial risk by nominating the Group’s of operating costs is in NOK. The Group is exposed to changes in foreign loans in the same currency as long-term contracts. Mortgage 2 032 832 1 167 837 1 010 846 1 343 762 4 689 294 10 244 571 exchange rates, particularly in USD and GBP. The Group attempts to reduce this Share of loan in jointly controlled company 0 risk by entering into forward contracts and adapting the long-term liabilities to The Group has a significant newbuilding program and is exposed to earnings in the same currency. The company is exposed to changes in interest commitments for newbuildings. The Group’s capacity for own financing of Financial lease contract 23 451 20 803 21 403 22 133 108 200 195 990 rates as the main share of the Company’s liabilities has a floating rate of investments is deemed satisfactory. Overdraft facility 53 438 53 438 interest. The Group has no direct exposure to changes in raw material prices. The Group’s credit risk is considered to be low as the Group’s customers Derivatives Interest rate risk is incurred in the short-term and medium to long-term as a traditionally have had sufficient financial capability to meet their obligations. Currency forward contracts -363 277 -752 500 -1 115 777 result of the floating interest rate for the company’s liabilities. Historically, the Group has had a low level of bad debts.
- Outgoing cash flow 387 042 675 298 1 062 340 The Group makes use of financial instruments related to ordinary business such Below is a presentation of the Group’s turnover, accounts receivable, accounts - Incoming cash flow as accounts receivable, accounts payable and the like, by taking out forward payable and long-term liabilities to credit institutions etc. converted to cover for future income and commitments. The Group makes limited use of Norwegian kroner on balance sheet date: Total 2 205 487 2 778 439 1 532 249 1 365 895 4 797 493 12 679 563 interest rate hedging for its long-term liabilities. :
2009 2008 31.12.2008 Remaining period Group Currency NOK 1000 Ratio % Currency NOK 1000 Ratio % (000) (000) 0-12 months 1-2 years 2-3 years 3-4 years More than 5 Total years Financial commitments (not derivatives) Turnover: Mortgage 1 340 768 1 977 296 947 848 1 019 393 5 430 822 10 716 127 USD 150 572 875 112 20% 201 059 1 407 196 30% Bond loan 304 500 298 154 397 000 471 000 1 470 654 NOK 1 559 431 1 559 431 36% 1 312 350 1 477 527 30% Financial lease contract 122 179 7 796 7 796 7 796 90 953 236 520 GBP 85 297 853 423 20% 102 221 1 034 588 29% Overdraft facility 13 980 13 980 Other currencies ( mainly BRL and AUD) 1 039 410 24% 420 411 11% Derivatives Total 4 327 376 100% 4 339 722 100% Currency forward contracts - Outgoing cash flow -1 894 744 -197 992 -1 002 273 -3 095 OO9 Accounts receivable: - Incoming cash flow 1 826 024 234 033 752 500 2 812 557 USD 25 531 146 938 12% 70 311 492 097 29% Total 1 712 707 2 319 287 1 102 871 1 498 189 5 521 775 12 154 829 NOK 505 810 505 810 41% 631 160 631 160 49% GBP 18 706 174 611 14% 2 053 20 778 21% Other currencies ( mainly BRL and AUD) 407 926 33% 6 971 2% Total 1 235 285 100% 1 151 005 100%
Capital structure and equity the economic conditions under which operations take place and the short and The main purpose of the Group’s management of its capital structure is to medium to long term outlook. Accounts payable: ensure that the Group is able to sustain a good credit rating and thereby USD 6 174 35 533 16% 46 619 326 279 38% achieve good terms and conditions for loans which are suitable for the The Group also monitors its capital structure by evaluating the debt ratio, company’s operations. Over time, the Group intends to adapt activities. By which is defined as net interest-bearing liabilities divided by equity plus net NOK 94 843 44% 49 053 49 053 31% ensuring a favourable ratio between equity and liabilities, the Group will be interest-bearing liabilities. The Group policy is to maintain financing of liabilities GBP 450 4 201 2% 3 489 35 314 20% able to support all operations and maximise the value of the Group’s shares. corresponding to 75-80% of newbuildings, and to secure a high contractual coverage for the main share of newbuildings. Net interest-bearing liabilities are Other currencies ( mainly BRL and AUD) 81 796 38% 9 279 11% The Group manages its own capital structure and carries out all necessary defined as interest-bearing liabilities (short and long term) minus cash. Equity amendments to the capital structure, based on a continuous assessment of comprises majority equity, subscribed equity and retained earnings. Total 216 373 100% 419 924 100%
Bond loans, liabilities to credit institutions and financial lease
2009 2008 USD 499 745 2 876 177 22% 455 168 3 185 672 18% Interest-bearing liabilities 13 287 116 12 542 182 NOK 9 511 084 9 511 084 72% 6 964 381 6 964 381 62% Cash 2 213 742 2 831 502 GBP 76 440 713 529 5% 197 341 1 997 286 19% Net liabilities 11 073 374 9 710 680 Other currencies 184 504 1% 187 818 0,5% Equity 6 809 077 5 498 819 Total 13 285 294 100% 12 335 157 100% Total equity and net liabilities 17 882 451 15 209 499 Debt ratio 61,9% 63,8%
102 103 28 Payroll costs, fees, number of employees etc. DOF ASA DOF ASA Group Group 2009 2008 Specification of auditor's fee 2009 2008 720 545 Audit of the annual accounts 6 697 3 073 Amounts in TNOK 1 189 1 073 Fee for other confirmatory services 1 709 1 236 DOF ASA DOF ASA Group Group 5 Tax consultation 316 95 2009 2008 2009 2008 Fee for other services 400 403 11 825 7 928 Salary and holiday pay 1 697 702 1 353 953 1 909 1 623 Total 9 122 4 807 3 689 117 Hired personnel 166 557 64 940 Fees to the auditor are specified ex VAT. Fee for other services ralate mainly to assistance in connection with restructing of the group. 31 1 260 Employer's national insurance contributions 59 472 62 284 -7 938 -8 110 Reinvoiced salary costs 2008 and prev. 34 Pension costs 36 598 30 839 3 241 2 187 Other personnel costs 154 124 809 10 882 3 382 Total 1 960 483 1 636 825 Guidelines for determination of salary and other remuneration to the CEO and senior employees of DOF ASA 3 2 No. man-years employed in financial year 2 722 2 300 in 2009
The guiding principle of DOF ASA’s senior management salary policy is to offer senior employees terms of employment that are competitive in relation to salary, benefits in kind, bonus and pension scheme, taken together. The company shall offer a salary level that is comparable with corresponding companies and activities, and taking account of the company’s need to have well qualified personnel at all levels. As of 31 December 2009, the Group had 3,048 employees, including hired in personnel. The average number of man-years in 2009 was 2,722. The determination of salary and other remuneration to senior employees at any given time shall be in accordance with the above guiding principle. Government grants related to the net salary scheme for vessels are reported as a reduction in payroll costs of NOK 61,966,000 (NOK 6,556,000 in 2008). Pension costs are described in detail in note 17. Senior employees shall only receive remuneration in addition to the basic salary in the form of a bonus. The amount of any bonus to the CEO shall be set by the Chairman of the Board. The bonus to other senior employees shall be set by the CEO in consultation with the Chairman of the Board.
DOF ASA has no schemes for the allocation of options for the purchase of shares in the company. Total payments for salary, pension premium and other remuneration to CEO and other corporate management employees are as follows: The senior employees are members of the company’s group pension schemes which guarantee pension benefits not exceeding 12 times the national insurance base amount per year. DOF ASA Group 2009 2009 Senior employees have agreements whereby they are entitled to a free car and free business telephone. Apart from this, there are no other benefits in kind.
Where the employment of senior employees is terminated by the company, they have no agreements entitling them to severance pay except for salary in the CEO COO CFO CTO SUM period of notice for the number of months provided for in the Working Environment Act. The contract of employment of 2005 for the CEO contains provisions 7 972 Salary 5 766 1 385 2 206 1 119 10 476 providing for severance pay. 262 Pension premium 109 176 154 66 505 117 Other remuneration 16 119 101 92 327 8 351 TOTAL 5 890 1 680 2 460 1 277 11 308
CEO= Mons Svendal Aase, COO=Anders Arve Waage, CFO=Hilde Drønen, CTO= Arnstein Kløvrud
DOF ASA Group 2008 2008
CEO COO CFO CTO SUM 6 264 Salary 4 649 1 266 1 616 1 008 8 538 266 Pension premium 103 178 163 63 507 100 Other remuneration 17 122 82 110 332 6 630 TOTAL 4 769 1 566 1 861 1 181 9 376
CEO= Mons Svendal Aase, COO=Anders Arve Waage, CFO=Hilde Drønen, CTO= Arnstein Kløvrud
The CFO of the subsidiary, DOF Subsea AS, has been granted a loan of NOK The CEO has the right to a bonus payment of 0.5% of the Group’s annual 2,000,000 by the company. The loan has normal market terms and conditions. result. The term of notice for the CEO is 6 months. If the CEO resigns from A loan has been granted to the HR Manager at Norskan Offshore Ltda. The his position, he has the right to an extra compensation corresponding to 12 amount of the loan is BRL 80,000 or NOK 243,000 as of 31 December 2009. months’ salary. Retirement age is 67 years with a pension of up to 70% of It is due for payment in 2011 and the company is paid 0.5% interest per salary (12 times the National Insurance base amount) upon retirement. month. Board fees in 2009 totalled NOK 936,000. This comprises NOK 180,000 to No other loans or guarantees have been provided to the CEO, Board members, the Chairman of the Board and NOK 150,000 each to the Board members. members of the Group management or their closely related parties. In addition, a fee of NOK 156,000 has been paid in other compensation for meetings.
104 105 29 Closely related parties 30 Accounting estimates and assessments
When preparing the annual accounts in accordance with IFRS, the company Economic lifetime of investments on docking Amounts in management has applied estimates based on best judgement and premises Investments in connection with periodic maintenance are depreciated over the TNOK considered to be realistic. Situations or changes may occur in the markets period until the next docking. The length of this period is estimated and is used which may result in changes to the estimates, thereby impacting the company’s to calculate the depreciation charge. This interval is calculated on the basis of Operating costs assets, liabilities, equity and result. the estimated average based on experience from previous periods. Group 2009 2008 Assessments, estimates and assumptions which have a significant effect on the Pension commitments Møgster Management AS 36 647 28 538 accounts are summarised below: Net pension commitments are established on the basis of actuarial calculations built upon premises related to factors such as discount rate, future growth Kanabus AS (Company owned by Board member in DOF ASA) 1 115 1 026 Vessels: in salary, pension regulations, estimated return on pension funds and Total 37 762 29 564 The balance sheet value of the group’s fleet makes up 66.5% of total assets. demographic factors of disability and death. The premises are established Principles and estimates related to the fleet significantly affect the Group’s on the basis of observable market prices and historical development in the accounts. Regardless of the fair value, the vessels are depreciated on the company and society at large. Changes in these premises will have a significant basis of a stipulated depreciation method. Depreciation methods for vessels impact on the calculated pension commitment/cost. were amended on 1 January 2008 in that the scrap value for vessels is now In addition to the Board members and parent company management at DOF ASA, other companies in the Group, their Board members and management will be established as 50% of acquisition cost. The company has decided that the The discount rate is the economic assumption that has the greatest effect on regarded as closely related parties. Transactions with closely related parties are governed by market terms and conditions in accordance with the “arm’s length group is not to own vessels which are older than 20 years. They believe that it is the calculation of pension commitments. principle”. possible to gain 50% of the steel value after a period of 20 years, and therefore use this as the residual value. If, however, a vessel is not sold by the time it is 20 The discount rate is set on the basis of the 10-year government bond rate and years old, the residual value will be depreciated over the next 10 years. taking account of the term of the commitments. See note 17.
DOF ASA Economic lifetime of vessels Deferred tax assets Company structure The depreciation amount depends on the estimated economic lifetime of the Deferred tax assets are recorded in the balance sheet based on the utilisation Dec 2009 vessels and this is based on experience from previous periods and a knowledge of tax losses carried by reversing taxable temporary differences and taking of the type of vessels which make up the company fleet. In addition, there account of future earnings. See note 18. is always some risk of the total loss of older vessels which can reduce the estimated economic lifetime. Write-down DOF ASA Assessments are made to determine whether the need for a write-down is Residual value of vessels indicated. If there are such indications, the recoverable amount is estimated The depreciation amount also depends on the calculated residual value at and the book value is brought into line with the recoverable amount.
100% 100% 66% 100% 100% 51% 50% 45% year-end. The assumptions used to calculate the residual value are based on a knowledge of the second-hand market and the vessels’ scrap value. Market Lease contracts
DOF DOF DOF DOF DOF SUBSEA AKER DOF developments are decisive for the residual value. Determining whether the lease of a vessel is to be classified as operational or NORSKAN AS ANOMA AS EGYPT MANAGEMENT AS REDERI AS UK LTD HOLDING DEEPWATER AS financial depends on several assumptions, in line with IAS17.
34% 45% NORSKAN 100% 100% 23,96% NORWAY AS DOF SUBSEA 100% 100% HOLDING 2
NORSKAN 100% 100% DOF DOF HOLDING AS ARGENTINA SJØ AS 53% 31 Contingencies 0,04% DOF DOF SUBSEA DOF SUBSEA AS INSTALLER ASA ANGOLA NORSKAN 99,96% OFFSHORE LTDA 100% DOF The Group and its companies are not involved in any ongoing court cases as of 31 December 2009. One subsidiary is involved in arbitration proceedings related 76,04% MANAGEMENT PTE to final settlement for a reconstruction assignment. DOF NAVEGACÃO
Below is a detailed description of significant transactions between closely Individual transactions: related parties: DOF ASA Long-term agreements: Moco AS is owned by the CEO of DOF ASA. Moco AS has participated in Møgster Offshore AS owns 50.76% of the shares in DOF ASA. Laco AS is the joint investments with DOF ASA, including the investment in IS Waveny where main shareholder of Møgster Offshore AS. Moco owns 10%. Two employees of DOF Management and Chairman of the Møgster Management AS provides administrative intragroup services to DOF Board Helge Møgster have shareholdings in the same company, at 1.5%, 10% ASA. Møgster Management AS is owned by Laco AS. and 10% respectively. All these shares have been sold to DOF ASA in 2010 at cost price plus interest. IS Waveny owns the vessel Skandi Waveney. Austevoll Eiendom AS is a subsidiary of Austevoll Seafood ASA, which in turn is a subsidiary of Laco. DOF ASA leases premises from Austevoll Eiendom AS. DOF Rederi AS Until 1 April, DOF Rederi AS has leased the vessel Skandi Waveney as bareboat DOF Management AS supplies administrative services to certain Group from Waveney IS. Waveney IS is an internal partnership in which DOF ASA on companies, including DOF Subsea AS. a group basis owns 47%.
DOF Subsea AS leases two holiday homes from Mons Aase, Board member In addition to the above-mentioned transactions of an operating nature, there in DOF Subsea AS and CEO of DOF ASA. The lease cost in 2009 totalled NOK are financial transactions and intragroup accounts between companies in 400,000. the DOF ASA Group. Market terms and conditions are applied to all these transactions. Norskan Offshore Ltda. in Brazil provides accounting services to DOF Subsea Brasil Ltda. Furthermore, Norskan Offshore Ltda. hires personnel and equipment from DOF Subsea Brasil Ltda. Norskan Offshore Ltda. has signed management agreements for vessels owned by DOF Subsea and DOF Rederi.
106 107 32 Commitments 34 Post-balance sheet events
The Group has 20 vessels under construction as of 31 December 2009. Commitments related to future investments in vessels amounts to NOK 9,982 million. New contracts Other significant events For the Group in total, a figure for newbuildings of NOK 7,053 million has been financed as of April 2010. For those vessels due for delivery in 2010, 7 Aker DOF Deepwater AS has signed a LOI for a 1+2 year contract with OGX for The Norwegian Supreme Court passed a judgement in February regarding vessels have been secured long-term contracts, ref. the report of the Board of Directors. Please also see notes 19, 21 and 22. the newbuilding Skandi Emerald. the Norwegian government’s amendments to tonnage tax, defining the
amendment as unconstitutional. This has had an impact on the Group’s companies organised in accordance with the tonnage tax regulations. See New vessels note 18. Vessels under construction as of 31.12.09 are listed below: In March, DOF Rederi AS took over Skandi Olympia which started on contract for Fugro Rovtech after delivery. Outlook 2010 The Group has a high contractual coverage for the fleet (83% in 2010 and Design vessel No vessels Completion DOF Rederi AS/DOF ASA has agreed to postpone delivery of building no. 081 57% in 2011). All these contracts have been entered into with financially Aker AH 08 6 2010-2012 and building no. 082 from Cochin Shipyard until 2011. strong customers, including oil companies and the major subsea engineering DOFCON AS, a subsidiary of DOF Subsea AS, took delivery of a construction companies. The spot market in the North Sea in 2009 has been weak and this Aker AH 04 4 2010-2011 support vessel, Skandi Aker, in January. The vessel started on a 5-year contract trend is expected to continue to date in 2010. Aker AH 05 1 2010 for Aker Oilfield Services after delivery. In 2010, DOF ASA increased its shareholding in IS Waveny from 47% to 92%. The market in Brazil remained strong throughout 2009 and is expected to stay Aker AH 12 2 2011 This shareholding was then sold on to Norskan Holding AS. strong in the years to come. Consequently, the Group has reorganised the operating area for a number of its vessels from the North Sea to Brazil both Aker OSCV 06 2 2010 in 2009 and to date in 2010. The company’s subsidiary, Norskan, has built Aker PSV 06 LNG 1 2011 Sale of vessels up a unique position in Brazil over time. The Board of Directors has therefore DOF Subsea AS sold Geo Challenger in February. decided to implement the process towards Stock Exchange listing for Norskan, Aker PSV 09 CD 2 2010-2011 to allow the company to increase its participation in the projected growth in Aker ROV DSV 1 2011 Brazil. Financing Aker OSCV 06 L 1 2010 The Group’s subsidiary, DOF Subsea, has a strong position in South East Asia/ DOF Subsea AS carried out the last part of the refinancing of the DOFCON Australia, and this region is expected to witness further growth in the near fleet in January in connection with the delivery of Skandi Aker andthe future. refinancing of Skandi Acergy, with a loan of NOK 1,000 million and NOK 775 33 Quality, Health, Safety and the Environment million respectively. For up-to-date information on significant events in the DOF ASA Group, go to DOF Subsea AS has carried out refinancing of a loan of NOK 300 million. www.dof.no. DOF Subsea Holding AS has agreed upon refinancing of a holding loan originally totalling NOK 660 million which has been replaced with a revolving credit facility of NOK 360 million. DOF Management AS, responsible for management and administration of In order to achieve the main goals, a number of sub-goals are regularly defined Norskan Norway AS has completed refinancing of a loan for Norskan Norway the Group companies, has achieved ISO 9001:2000 and ISO 14001:2004 and measures implemented to achieve these. The company has a number of AS, totalling USD 57.5 million. certification. systems in place which ensure that incidents are reported and analysed and DOF ASA and DOF Rederi AS have completed refinancing of an unsecured that there is distribution of experience from incidents and the implementation loan of NOK 300 million and a maritime mortgage of NOK 420 million. DOF has ambitious goals related to Quality, Health, Safety and the Environment. of best practice to prevent the re-occurrence of incidents. The management The following main goals have been established: carries out regular reviews of these systems in order to monitor them and take corrective action where necessary as part of the continuous process of • Quality: No unscheduled operational disruptions. As a minimum, improvement related to Quality, Health, Safety and the Environment. the company shall satisfy the contracts and commitments in relation to customers. • Health: DOF shall have a reputation for having a good working environment, and occupational injuries/illnesses shall be avoided. • The environment: The company shall continuously strive to reduce its impact on the external environment, beyond statutory requirements. 35 Foreign exchange rates • Safety: There shall be no injuries or illnesses as a result of working for DOF.
DOF ASA bases its accounting on the reference exchange rates applied by Norges Bank.
As of 31.12, the following exchange rates were applied: 2009 2008
US Dollar 5 755 6 999 Euro 8 288 9 865 GBP 9 335 10 121 AUS Dollar 5 177 4 850 Brazilian Real 3 305 3 002 Singapore dollar, SGD 5 192 4 873 Danish kroner, DKK 111 730 132 380
108 109 36 Changes in IFRS standards and interpretation
Changes in accounting principles During 2009, the Group used the following new and amended IFRS and IFRIC interpretations. These amendments have not had any material impact on the profit and loss account but more detailed information is given in the notes.
IAS 1 (Revision) – Presentation of Financial Statements. The revised standard requires changes in the presentation of the Financial Statement, especially the changes in equity, where a statement of non-owners transactions shall be included in the note Changes in Equity. The Group has used IAS 1 (R) from January 1st, 2009.
IAS 19 (Addition) – Employee benefits. The appendix to this standard refers to the result of changes to defined benefit pension plans. Changes to pension plans involving the exclusion of or limits to, future wage increases in the calculation of pension benefits shall be considered a curtailment of benefits whilst any amendment to pension benefits attributable to past service will have a negative cost in respect of previously earned pension benefit if this results in a reduction of the current value of the defined pension liability. This appendix does not have a material effect on the Group’s financial statement.
IAS 36 (Addition) – Impairment of assets. This appendix states that if discounted cash flows are used to estimate actual value, more information must be provided regarding the selected discounted rate. This is in addition to the current requirement to use a discounted rate when estimating the residual value of the asset. This amendment was implemented on 1st January 2009, but has not had any material effect on the Group’s financial statement.
IAS 38 (Addition) – Intangible assets. This appendix states that a prepayment shall only be posted if the payment results in the right to receive goods or services. This change is effective in the accounts from 1st January 2009. No material effect is noted in the Group’s financial statement.
IFRS 8 – Operating Segments has, with effect from January 1st 2009, replaced IAS 14 – Segment Reporting. The information in segment reporting in the financial statement shall, according to IFRS 8, be the same the Group uses internally to evaluate the results from the different segments. Furthermore, the basis for the preparation of segment information must be disclosed. The Group has implemented these changes from 1st January 2009. This change has not had any material effect on the Group’s financial statement.
Approved IFRS and IFRIC interpretations that are not yet implemented.
IAS 1 (Revision) – Presentation of Financial Statements. This revised standard provides clarification that the classification (short or long-term) of a liability should not be affected by whether or not the liability can be settled by the issue of equity. This change is effective from January 1st 2010.
IAS 27 (Revision) – Consolidated and separate Financial Statements. Compared to the current IAS 27 the new, revised standard includes further guidelines for accounting for changes in shares in subsidiaries and disposal of subsidiaries. Furthermore, the current rules for apportionment of losses between majority and minorities have been amended and any deficit shall be charged to the minority even if it is negative. The Group plan to implement IAS 27 (R) from 1st January 2010.
IFRS 3 (Revision) – Business consolidation. This revised standard states that all payments relating to the acquisition of a business shall be recorded as the fair value at the acquisition date. Contingent payments shall be classified as debt with any subsequent evaluation recorded through profit and loss. All acquisition costs shall be expensed. These changes will come into effect for acquisitions after July 1st, 2009.
IFRS 5 (Addition) – Fixed assets held-for-sale. This revision to the standard means that all the assets and debts of a subsidiary should be classified as held-for- sale if a planned partial sale results in the loss of controlling interests in the subsidiary. This change is effective from July 1st, 2009.
110 111 Confirmation from the Board of Directors and CEO
We confirm that, to the best of our knowledge, that the financial statements for the period from 1 January to 31 December 2009 has been prepared in accordance with approved accounting standards, and gives a true and fair view of the Group and the Company’s consolidated assets, liabilities, financial position and results of operations and that the Report of the Board of Directors provides a true and fair view of the development and performance of the business and the position of the Group and the Company together with a description of the key risks and uncertainty factors that the Company is facing.
Storebø, 20 April 2010
Helge Møgster Helge Singelstad Oddvar Stangeland (Chairman)
Wenche Kjølås Britt Mjellem Mons Aase (CEO)
112 113 Contact info
Head Office: Branch Offices:
DOF ASA DOF Subsea AS DOF Management Pte Ltd Phone: +47 56 18 10 00 Phone: +47 55 25 22 00 Phone: +65 6560 2338 Fax: +47 56 18 10 06 Fax: +47 55 25 22 01 Fax: +65 6561 2431 [email protected] [email protected] Address: Address: www.dofsubsea.com 460 Alexandra Road Alfabygget Address: #15-02 PSA Building 5392 Storebø Thormøhlens gate 53C Singapore 119963 NORWAY N-5006 Bergen SINGAPORE NORWAY www.dof.no Norskan Offshore Ltda DOF Management AS Phone: +55 21 21 03 57 00 (Austevoll) Fax: +55 21 21 03 57 07 Phone: +47 56 18 10 00 www.norskan.com.br Fax: +47 56 18 10 06 Address: [email protected] Rua Lauro Müller, 116 - Sala 1105 www.dofman.no Torre do Rio Sul Address: 22290-160 Botafogo Alfabygget Rio de Janeiro, R.J. 5392 Storebø BRAZIL NORWAY DOF Argentina S.A. DOF Management AS Phone: +54 11 43 13 18 68 (Bergen) Fax: +54 11 43 13 18 68 Phone: +47 56 18 10 00 [email protected] Fax: +47 56 18 10 06 Address: [email protected] TUCUMÁN 255 www.dofman.no Piso 3ero (3rd floor) Address: Oficina “C” (office “C”) Thormøhlens gate 53C Zip Code: C1049AAE N-5006 Bergen Ciudad Autónoma de Buenos Aires NORWAY ARGENTINA
DOF (UK) Ltd DOF Egypt Phone: +44 12 24 58 66 44 Phone: + 20 26 70 2140/42 Fax: +44 12 24 58 65 55 Fax: +20 26 70 2144 [email protected] [email protected] Address: Address: Voyager House, 75 Waterloo Quay P.O. Box 9626, Nasr City Aberdeen AB11 5 DE Public Free Zone, Area 7A, Block J SCOTLAND Cairo EGYPT
114 115 WWW.DOF.NO
Appendix 3: Interim report for H1 2010
A 4
DOF ASA Q2 2010
INTERIM REPORT Q2 2010
Group income in the second quarter was NOK 1,521 million (NOK 1,083 million) and the operating result before depreciation (EBITDA) was NOK 485 million (NOK 333 million). Main items in the interim accounts for Q2
Operating income amounted to NOK 1,521 million (NOK 1,082.5 million) DOF ASA is an international group that owns and Operating result before depreciation and operates a fleet of supply and subsea vessels, as well amortisation (EBITDA) totalled NOK 485 as engineering companies that provide services million (NOK 333 million) within the subsea market. The Group has a modern The operating result (EBIT) was NOK 198 fleet with an average age of 6.5 years. As of August million (NOK 145 million) the fleet comprised 67 ships (including The net interest costs amounted to NOK -106 newbuildings), with fleet composition as follows: 23 million (NOK - 106 million) AHTSs, 20 PSVs and 25 CSVs. In addition, the Group Result from associated companies amounted owns 36 ROVs. to NOK 1 (NOK 172 mill) Unrealised gain/loss on foreign exchange DOF ASA has a long-term and industrial strategy for totalled NOK -252 million (a loss of NOK 197 its operations, and most of its fleet is on long-term million). contracts. As of August, the financial value of the The pre-tax result was NOK - 159 million contracts (excluding options) was approx. NOK 19.5 (NOK 405 million) billion. Contractual coverage is 95% in 2010 and Net interest-bearing liabilities as of 30 June approx 70% in 2011. 2010 were NOK 13,157 million (NOK 10,615 million) Paid instalments on vessels under Significant events after the first quarter construction as of 30 June 2010 was NOK The DOF Group has renewed a number of charter 3,354 million (NOK 4,095 million) contracts and entered into new long-term contracts, Book equity at 30 June 2010 NOK 6,525 including four 8-year contracts for Petrobras. The million (NOK 6,411 million). total gross value of contracts entered into during this period is approx. NOK 6 billion. Comments on operations in Q2
During the period, the Group sold one ship and two The company's operation of the supply fleet has been newbuildings. steady, with close to 100% utilisation during the period. One supply vessel, the Skandi Admiral, has The subsidiary Norskan has contracted two operated on the spot market throughout the quarter newbuildings from STX Promar in Brazil, with delivery and the degree of utilisation and rate level have both in 2012 and 2013. Long-term contracts have been been good compared with the previous quarter. One secured for these ships with Petrobras. newbuilding, the Skandi Vega, started a 5-year contract for Statoil at the end of May and the Skandi DOF ASA has issued a new 3-year bond loan of NOK Captain started its 3-year contract in Brazil in June 950 million. This new loan has been used for the having undergone a minor reconstruction. One ship, repurchase of most of a bond loan which matures in the Skandi Emerald, was sold during this period, 2011. generating a gain of approx. NOK 15 million.
During this period, the subsidiary company DOF The subsea fleet had an average degree of utilisation Subsea acquired SWG Offshore, an engineering of approx. 90% in Q2 compared with a degree of company in Australia. utilisation of 85% in Q1. DOF Subsea also had full effect from the operation of two newbuildings, the DOF took delivery of the Skandi Vega in May. The Skandi Aker and the Skandi Santos, which were Skandi Skolten was delivered to DOF Installer from delivered in the first quarter. the yard in July.
INTERIM REPORT Q2 2010
Financial result and tax new financing on these vessels is NOK 7 400 mill of which approx 80% is secured. Norskan uses a functional currency in BRL and major fluctuations against USD produce a high accounting By end of June the group’s short term portion of long effect even though Norskan has a limited degree of term debt amounted to NOK 4 257 mill, of which NOK exposure to foreign exchange as all long-term 3 800 mill are long-term debt with maturity within 12 contracts are hedged in the same currencies as the months. The group has pr August agreed refinancing of operating and financial costs. approx NOK 1 000 mill of this debt and is in process to
refinance additional NOK 2 200 by end of 2010. DOF Subsea has included extra tax costs of NOK 50 mill to enter into new tonnage tax regulation. In April, DOF Installer carried out a share issue of NOK
150 million with the issue of 7,500,000 shares. DOF Balance sheet Subsea owns approx. 67% of the company as a The Group’s net interest-bearing liabilities total consequence of this transaction. NOK 13,157 million as of 30 June 2010 as against NOK 11,073 million at year-end. The increase in net During the period, the DOF Group completed interest-bearing liabilities represents new long-term restructuring within the Group as preparation for a loans taken out in connection with the delivery of potential stock exchange listing of Norskan in Brazil. new vessels. One ship was delivered in Q2. Norskan Offshore SA has also been approved as a public company in Brazil. As of 30 June 2010, cash reserves totalled approx. NOK 1,835 million, of which NOK 966 million is non- Shareholders distributable cash in connection with long-term There were no significant changes in the company's liabilities. ownership structure during the period. As of 30 June,
there were 4,239 shareholders in the company. The Net cash flow from investing activities in the period share price as of 30 June 2010 was NOK 42.30. was NOK – 2 572million (negative at NOK - 1,613 million) and net cash flow from financing activities was NOK 1 534 million (NOK 867 million). The fleet/activities
In June, the Skandi Emerald, which is owned by Aker Financing and capital structure DOF Deepwater, was sold to a new owner, Vietsopetro, at a price of USD 65 million. The DOF In July, DOF ASA issued a new 3-year unsecured bond Group owns 50% of Aker DOF Deepwater. loan of NOK 950 million, and bought back main outstanding of bond loan maturing in June 2011 (NOK In July an agreement was entered into for the sale of 662 million). The net cash effect from this transaction two newbuilding contracts at Cochin Shipyard in India amounted to approx. NOK 225 million and the for a price of USD 54 million per ship. The sale of one group’s liquidity position has improved by NOK 950 ship was conditional on the buyer having secured long- mill in the period from 2011-2013. In accounting term financing before the end of August 2010. Both terms, this refinancing will be taken into account as sales will be completed on delivery of the ships in the of the third quarter. first quarter of 2011.
During the period, Norskan has agreed favourable In August, Norskan contracted two anchor handling terms with BNDES for 3 newbuildings in Brazil and tug support vessels at STX Promar in Brazil. Both ships secured approx. 80-90% financing of the building were of the AH 11 design, with 23,000 bhp. The vessels costs for these two ships. Norskan has also received are scheduled for delivery in 2012 and 2013. Eight- an undertaking from MMF (Merchant Marine Fund) year contracts with Petrobras have been secured for for another 2 newbuildings in Brazil. both the ships.
The group’s remaining capex on vessels under In May, DOF ASA took delivery of the Skandi Vega, construction is approx NOK 8 400 mill and represents which has started a 5-year contract for Statoil. deliveries in the period from 2010-2013. Planned
INTERIM REPORT Q2 2010
In July, DOF Installer took delivery of the Skandi previous quarter. The market however continues to be Skolten, which has started on its first job for Atlantic volatile, with a fluctuating rate level and degree of Resources, after which it will work for Conoco utilisation. At the end of June there were 253 ships Phillips. operating in the North Sea, of which 67 were on the In June, DOF Subsea, Australia, acquired the subsea spot market. There has been a slight fall in the number engineering company SWG Offshore. This company of spot ships compared with last year. has approx. 40 employees specialised in subsea Outlook engineering and construction. This acquisition is an important step for the further growth of DOF Subsea The company has a high contractual coverage for its in this region. SWG will be fully integrated into DOF supply fleet and has had a limited degree of exposure Subsea's service activities in Australia. on the spot market. Uncertainty with regard to earnings in the second half of the year is therefore low The market/new contracts for this segment. Delivery is planned of 2 supply ships In May, DOF Subsea entered into a bareboat contract in the second half of the year, and long-term contracts with Seaforce Pty. in Australia for the Skandi Bergen, have been secured for both vessels. and the ship started on this as part of the contract in May. The contract will run for 4.5 years, with 2 The subsea market in the North Sea was good in the annual options. second quarter, and this is expected to continue in the third quarter. Activities in Asia were somewhat quieter In June, DOF Subsea agreed an extension to a towards the end of the second quarter and into the contract with Subsea7 with 3 year + 3 x 1 yearly third quarter, due to the winter season in the region. options for the Skandi Neptune. The market is expected to pick up in the fourth quarter. DOF Subsea has entered into several contracts during the period, including a general contract with Conoco So far this year the market in Brazil has been strong, Phillips with a duration of 1 year and 2 x 2 annual and this trend is expected to continue throughout the options. This contract entails a broad range of subsea second half of the year. services in the Ekofisk field and nearby areas.
Confirmation from the Board of Directors and the In June, Norskan was awarded two 4-year contracts CEO with Petrobras for the Skandi Giant and the Skandi Admiral starting in September 2010. We declare that, to the best of our knowledge, the half-yearly accounts for the period 1 January to 30 In August, Norskan was awarded four 8-year June 2010, have been prepared in accordance with IAS contracts for Petrobras for large AHTS vessels. It is 34 Interim Reporting, and that the information in the expected that the contracts will begin in the period accounts provides a true and fair view of the 2011-2013 and they represent a total value of company's assets, liabilities, financial position and approx. NOK 5.2 billion. For the DOF Group, these result as a whole. We also declare that, to the best of agreements represent the largest total contract ever our knowledge, the half-yearly report provides a true awarded by one customer. and fair overview of significant events during the accounting period and their impact on the half-yearly The Group’s fleet operates mainly in the North Sea, accounts, the most central risk and uncertainty factors Brazil and South East Asia. faced by the Group during the next accounting period and of significant transactions with closely related The spot market for supply vessels in the North Sea parties. was better in the second quarter compared with the
INTERIM REPORT Q2 2010
The Board of Directors of DOF ASA, 17 August 2010
Helge Møgster Helge Singelstad Oddvar Stangeland (Chairman of the Board)
Wenche Kjølås Britt Mjellem Mons Aase (CEO)
INTERIM REPORT Q2 2010
THE GROUPS SUMMARIZED PROFIT AND LOSS ACCOUNT (MNOK) Note 2010 2009 2010 2009 2009 Q2 Q2 YTD YTD Operating income 1.521 1.083 2.650 2.046 4.327 Total operating income 2 1.521 1.083 2.650 2.046 4.327 operating expenses vessels 1.036 750 1.828 1.483 3.094 Total operating expenses 1.036 750 1.828 1.483 3.094
Operating profit before depreciation EBITDA 2 485 333 823 564 1.234 - - - - - Depreciation 287 188 524 351 837 Write-down - - - - 179 Operating profit - EBIT 198 145 299 212 218 - - - - - Net profit from associated companies 1 169 2 172 192 other financial Items -106 -106 -222 -246 -163 Unralized profit/ loss on currencies -252 197 -340 405 758 Net financial costs -357 259 -560 330 787
Pre-tax profit -159 405 -261 543 1.005 Taxes 7 50 - 20 149 201 Result -208 405 -281 393 803
Currency translation differences -88 203 -38 171 87 Other income and costs -1 7 -1 7 -16 Other comprehensive income -88 210 -38 178 70 Total comprehensive income -297 615 -320 571 873
Profit attributable to Minority -58 123 -85 162 201 Majority -150 138 -196 232 602
Total comprehensive income attrubutable to Minority -78 114 -75 162 152 Majority -219 - 357- -160 - 410- 722- Profit per share ex minority interest -1,11 3,40 -1,93 4,61 9,16 Profit per share ex. unrealized gain/loss 0,48 2,52 0,65 -0,14 0,52
Key Figures
2010 2009 2010 2009 2009 Q2 Q2 YTD YTD Profit per share ex. minority interest 1) -1,11 3,40 -1,93 4,61 9,16 Profit per share ex. unrealized loss/gain 2) 0,48 2,52 0,65 -0,14 0,52 Cashflow per share 3) 3,63 4,78 6,40 4,11 12,10 - - - - - Ebitda margin 4) 32 % 31 % 31 % 28 % 29 % Ebit margin 5) 13 % 13 % 11 % 10 % 5 % Return on net capital 6) -3 % 6 % -4 % 6 % 12 % Equity ratio 7) 28 % 30 % 28 % 30 % 31 % Net interest bearing debt 13.157 10.615 13.157 10.615 11.073 Net interest bearing debt ex. unemployed capital 9.803 6.520 9.803 6.520 6.478 No of shares 91.037.975 82.767.975 91.037.975 82.767.975 87.730.811 Face value per share 2 2 2 2 2
1 (Result ex minority share)/average no. of shares 4 (Operating profit before depreciation in percent of operating income) 2 (Result before taxes + depreciation + unrealized loss on currencies + 5 (Operating profit in percent of operating income) minority)/average no of shares 3 (Result incl. minority share ex unrealized gain/loss on currencies/average no 6 (Profit after taxes in percent of booked equity) of shares) 7 (Equity/total capital)
INTERIM REPORT Q2 2010
THE GROUPS'S SUMMARIZED BALANCE SHEET (MNOK) Note 30.06.2010 30.06.2009 31.12.2009 ASSETS Intangible assets 483 690 476 Fixed assets 19.373 16.311 17.263 Financial assets 213 40 89 Total non current assets 20.069 17.041 17.827 Receivables 1.710 1.600 1.744 Cash and cash equivalents 4 1.835 2.468 2.214 Total current assets 3.545 4.068 3.957 Total Assets 23.614 21.109 21.785 EQUITY AND LIABILITIES Subscribed equity 860 860 860 Retained earnings 2.938 2.859 3.171 Minority interest 2.726 2.691 2.777 Total Equity 6.525 6.411 6.809 Provisions for commitment 522 381 603 Other long-term liabilities 11.017 11.548 11.371 Total long-term liabilities 11.539 11.929 11.973 Debt to credit institutions 6 4.257 1.713 2.128 Other short term liabilities 1.293 1.056 874 Total short term liablilities 5.550 2.769 3.002 Total liability and equity 23.614 21.109 21.785
SUMMARIZED CASH FLOW STATEMENT (MNOK) 2010 2009 2009 Q2 YTD Q2 YTD Cash flow from operation activity 660 383 599 Cash flow from investment activity -2.572 -1.613 -3.264 Cash from financial activity 1.534 867 2.048 Changes in cash over the period -378 -363 -618 Liquid assets at the beginning of the period 2.214 2.832 2.832 Liquid assets at the end of the period 1.835 2.468 2.214
INTERIM REPORT Q2 2010
STATEMENT OF CHANGES IN EQUITY
Subscribed Currency Retained equity Total retained Minority Total equity equity Differences equity interests
Balance 01.01.2009 620 - 2.450 2.450 2.429 5.499
Net earnings in the period - - 232 232 162 393 Other comprehensive income - 178 - 178 - 178 Transaction with minority - - - - 100 100
Balance 31.03.2009 860 178 2682 2859 2691 6.411
Balance 01-01-2010 860 - 3.171 3.171 2.777 6.809
Net earnings in the period - - -223 -223 -58 -281 Other comprehensive income - -68 - -68 30 -38 Capital increase ------Capital from minority - - - - 35 35
Balance 31.03.2010 860 -68 2948 2880 2785 6.525
SHARE CAPITAL AND SHAREHOLDERS
Largest shareholders as of 30.06.10 Name No. shares Shareholding Voting shares
MØGSTER OFFSHORE AS 46.210.050 50,76 % 50,76 % ODIN NORGE 6.152.000 6,76 % 6,76 % SKAGEN VEKST 4.954.800 5,44 % 5,44 % PARETO AKSJE NORGE 4.667.407 5,13 % 5,13 % PARETO AKTIV 2.208.300 2,43 % 2,43 % MP PENSJON 1.845.600 2,03 % 2,03 % ODIN OFFSHORE 1.751.900 1,92 % 1,92 % SKANDINAVISKA ENSKILDA BANKEN 1.388.942 1,53 % 1,53 % VESTERFJORD AS 873.650 0,96 % 0,96 % PARETO VERDI 748.700 0,82 % 0,82 % DNB NOR SMB 737.084 0,81 % 0,81 % MUSTAD INDUSTRIER AS 590.000 0,65 % 0,65 % ABG SUNDAL COLLIER NORGE ASA 550.200 0,60 % 0,60 % HOLBERG NORGE 545.500 0,60 % 0,60 % MOCO AS 498.100 0,55 % 0,55 % FORSVARETS PERSONELLSERVICE 356.200 0,39 % 0,39 % ODIN MARITIM 339.800 0,37 % 0,37 % PACTUM AS 300.000 0,33 % 0,33 % POSH AS 282.600 0,31 % 0,31 % WARRENWICKLUND NORGE 277.296 0,30 % 0,30 % Total 75.278.129 82,69 % 82,69 % Total other shareholders 15.759.846 17,31 % 17,31 % Total no of shares 91.037.975 100,00 % 100,00 %
INTERIM REPORT Q2 2010
Notes to the Condensed Financial statements
Note 1 General
This interim report has been prepared in accordance with the standard for interim reporting (IAS34). Amendments to the standards and their interpretation may result in amended figures. The accounting principles and calculation methods applied for the last annual accounts published have been applied to this document. The interim report has not been audited and should be read in the context of the annual report for 2009. The Financial statement are unaudited.
Note 2 Segment information
Operating income and EBITDA per segment
Operating Income Q2 2010 Q2 2009 2010 YTD 2009 YTD 2009 PSV 216 175 393 339 709 AHTS 270 164 452 329 711 CSV 1.035 738 1.805 1.353 2.907 Not allocated - 6 - 25 - Total 1.521 1.083 2.650 2.046 4.327
EBITDA Q2 2010 Q2 2009 2010 YTD 2009 YTD 2009 PSV 70 65 132 130 231 AHTS 114 74 194 164 292 CSV 301 192 497 290 712 Not allocated - 2 - -21 - Total 485 333 823 564 1.234
Note 3 Events after balance sheet date There have been no significant events after balance sheet date with any effect on the accounts
Note 4 Cash and cash equivalent 30.06.2010 30.06.2009 Cash and cash equivalent 1.835 2.468 Of which is restricted cash -966 -1.106
870 1.362 Free cash and cash equivalent
Note 5 Transaction with related parties There have been no significant transactions with related parties.
Note 6 Short-Term of long-term debt
Short-term of Long-term debt amount to MNOK 4 257 as of 30.06.2010. Of this MNOK 975 relates to a bond loan refinanced in July 2010 with final maturity date in 2013. Other remaining debt with maturity within 12 months will be refinanced according to the company's financing plan.
Note 7 Taxes
Taxes pr 30.06.2010 are based on an estimate
IR contact persons: Mons S Aase, CEO +47 91661012 [email protected] Hilde Drønen, CFO +47 91661009 [email protected] DOF ASA, NO5392 Storebø, Norway, www.dof.no
DOF ASA Alfabygget N-5392 Storebø Norway
Tel: +47 56 18 10 00 Fax: +47 56 18 10 06 www.dof.no
Pareto Securities AS Dronning Maudsgate 3 P.O.Box 1411 Vika N-0115 Oslo Norway
Tel: +47 22 87 87 00 Fax: +47 22 87 87 10 www.pareto.no