ANNUAL REPORT 2016 2 AKER ASA ANNUAL REPORT 2016 CONTENT 1. CONTENT 2 2. THIS IS AKER 4 Highlights 2016 6 Key performance indicators 7 Changes in net asset value 8 3. LETTER FROM THE PRESIDENT AND CEO 10 4. SHAREHOLDER INFORMATION 16 5. INVESTMENT OVERVIEW 18 Industrial holdings 19 Financial investments 26 Alternative Performance Measures 27 6. BOARD OF DIRECTORS’ REPORT 2016 28 7. ANNUAL ACCOUNTS 40 Aker Group 40 Aker ASA 94 Aker ASA and holding companies 1 14 8. BOARD OF DIRECTORS 124 9. MANAGEMENT 127 FINANCIAL CALENDAR 2017 Aker reserves the right to revise the dates. Annual General Meeting 2017: 21 April Presentation of 1Q 2017: 11 May Presentation of 2Q 2017: 18 July Presentation of 3Q 2017: 23 November AKER ASA ANNUAL REPORT 2016 3 4 AKER ASA ANNUAL REPORT 2016 THIS IS AKER THIS IS AKER For the past 175 years, Aker has driven forward the development of internationally focused, knowledge-based industry in Norway. AKERS MEK IS FIRST STEAMSHIP FOUNDED The steamship Færdesmanden Akers Mekaniske sets out on lake Mjøsa. It is the Verksted is founded first steamship built in Norway. by commander Peter S. Steenstrup by Akerselva in Oslo. 1841 1856 1853 1873 KVAERNER IS FOUNDED KVAERNER’S FIRST TURBINE Kvaerner Brug is found- Kvaerner delivers its first hydroelectric ed by Oluf Onsum in turbine, and establishes itself shortly after Lodalen, Oslo. as a special workshop for turbines. THIS IS AKER AKER ASA ANNUAL REPORT 2016 5 Aker ASA is an industrial investment The industrial holdings are strategic in Net asset value (NAV) growth is a key company that exercises active own- nature and are managed with a long- performance indicator for Aker ASA. As ership to create value. Aker combines term perspective. They comprise Aker’s at 31 December 2016, NAV amounted industrial expertise with knowledge ownership interests in Aker BP, Aker to NOK 34.3 billion, compared to NOK of the capital markets and financial Solutions, Akastor, Kvaerner, Ocean 20.9 billion the previous year. In addi- strength. In its capacity as owner, Aker Yield and Aker BioMarine. tion, a dividend of NOK 0.7 billion was helps to develop and strengthen its paid in 2016. portfolio. Aker works to drive strategy The financial investments comprise development, operational improve- cash and liquid assets, real estate de- OWNERSHIP ments, financing, restructuring and in- velopment projects and other assets Since re-listing on Oslo Stock Exchange dustrial transactions forward. managed with a shorter, opportunistic on 8 September 2004, Aker has gen- ownership perspective. erated an average annual share return Aker’s ownership interests are concen- of 27.1 per cent, including dividends. trated in the oil and gas, maritime assets SIZE At the beginning of 2017, the company and marine biotechnology sectors. The Aker is the largest shareholder, directly had approximately 13 000 sharehold- investments consist of two portfolios: or indirectly, in eight companies listed ers. Aker’s main shareholders are Anne on Oslo Stock Exchange. Collectively, Grete Eidsvig and Kjell Inge Røkke, who the Aker group had a turnover of ap- own 68.2 per cent of Aker stock through proximately NOK 44 billion in 2016, as their company TRG. CEO Øyvind Eriksen well as a workforce of 20 753 direct owns 0.2 per cent of the B-shares in TRG employees, including 9 697 in Norway. through a private company. Eriksen also In total, Aker’s portfolio companies em- owns 219 072 shares in Aker ASA. ploy more than 30 000 staff and oper- ate in more than 60 countries. NEW OWNERSHIP Kjell Inge Røkke becomes Aker’s main shareholder NEW HEADOFFICES and a driving force in the company’s development Aker moves to Fornebu, outside when RGI purchases enough Aker shares to be- Oslo. come Aker’s largest shareholder; the two compa- nies subsequently merge. 1996 2015 1967 2009 THE FIRST NORWEGIAN OIL FIELD INDUSTRIAL INVESTMENT COMPANY Aker builds the floating drilling plat- Aker is streamlined as an industrial investment form Ocean Viking. In 1969 Ocean company to participate actively in structural Viking findsEkofisk , the first eco- processes and the execution of industrial nomically viable oil field on the NCS. transactions, mergers, and acquisitions. 6 AKER ASA ANNUAL REPORT 2016 THIS IS AKER | Highlights 2016 Highlights 2016 Shareholder value Less fish, Aker BP doubled. more oil. powers ahead. Aker celebrated its 175th anniversary in During 2016, Aker divested all its shares The merger between Det norske oljesel- 2016 – a good year for shareholders as in Havfisk and Norway Seafoods. Aker skap and BP Norway in 2016 has cre- illustrated by value growth and a 106 had been an industrial owner in the ated a leading, independent European per cent return in terms of share price Norwegian white fish sector since 1996. exploration and production company. growth plus distributed dividends. This The companies are now parts of Lerøy Aker BP has become a significant actor is the result of focused and systematic Seafood Group. The sale of the shares in on the Norwegian continental shelf. The efforts over many years. Havfisk and Norway Seafoods released share price rose 180 per cent in 2016, NOK 2.3 billion in 2016. and Aker BP paid its first dividend in The net asset value of Aker and holding the fourth quarter of the year. The com- companies totalled NOK 34.3 billion as Aker also invested approximately NOK pany will continue to pay predictable at year-end 2016. This equates to NOK 2.6 billion in Aker BP shares in connection dividends going forward. 462 per share, compared with NOK with the merger between Det norske 282 per share at the end of 2015. The oljeselskap and BP Norway. Oil and Aker and Aker BP have invested discount of Aker’s share price to net gas-related investments accounted for counter-cyclically in oil. Aker BP is asset value was at 30 per cent as at 31 65 per cent of Aker’s value at year-end targeting growth both from the existing December 2016, compared to 42 per 2016, compared to 38 per cent per year licence portfolio and through value- cent one year earlier. end 2015. generating transactions. Aker intends to help make the Norwegian continental shelf an international benchmark for safe, profitable and sustainable offshore petroleum production. DISTRIBUTION OF AKER’S NOK 43.1 BILLION GROSS ASSET VALUE AS OF 31 DECEMBER 2016 NOK billion Listed financial investments1.1 Kvaerner 0.9 Aker BioMarine 1.4 Real Estate 0.4 Other financial investment1.6 Akastor 1.6 Aker Solutions 3.9 Cash and liquid fund investments 4.9 Aker BP 20.9 Ocean Yield 6.4 THIS IS AKER | Key performance indicators AKER ASA ANNUAL REPORT 2016 7 Key performance indicators Aker’s key performance indicators are net asset value, the company’s cash balance and shareholder returns (share price and dividends). To understand value creation at Aker, it is tool for monitoring value creation than for the company’s dividend policy (two important to analyse the value adjusted the balance sheet of the parent com- to four per cent of NAV per year). NAV is balance sheets of the holding companies. pany alone or the Aker group accounts. calculated based on the market value of Nevertheless, Aker’s Annual Report pre- listed shares and the book value of other The companies in the Aker ASA and sents all three sets of accounts. assets. holding company structure are pure holding companies. The balance sheets Net asset value (NAV) expresses Aker’s of these companies are a more relevant underlying value, and provides the basis NAV PER SHARE ALLOCATED DIVIDEND GROSS ASSETS PER GROSS ASSET BEFORE DIVIDEND PER SHARE BUSINESS SEGMENT PER SECTOR NOK per share NOK per share and NOK billion NOK billion per cent of NAV 490 21 42 42 420 18 36 36 350 15 30 30 280 12 24 24 210 9 18 18 140 6 12 12 70 3 6 6 0 0 0 0 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 n NAV n Allocated dividend n Industrial holdings n Oil services n Dividend (NOK) n Financial investments n E&P n Share price n Per cent of NAV n Seafood & marine before dividend biotech n Maritime assets n Cash and liquid fund investments n Other financial assets 8 AKER ASA ANNUAL REPORT 2016 THIS IS AKER | Changes in net asset value Changes in net asset value In 2016, net asset value (NAV) rose from NOK 20 878 million to NOK 34 335 million before allocations for dividends. This represents an increase in NAV-per-share from NOK 282 to NOK 462. The following tables show Aker’s investments and NAV per Aker ASA share. NET ASSET VALUE DEVELOPMENT – AKER ASA AND HOLDING COMPANIES NOK million 2016 2015 2014 Dividends received 1 430 1 340 844 Operating expenses (198) (219) (223) Other financial expenses (480) (632) (490) Tax expense - - (6) Total 752 489 125 Dividend payments (742) (723) (940) Sale/(purchase) treasury shares 11 288 5 Value changes 1) 13 435 3 146 (5 514) Change in net asset value 13 457 3 199 (6 324) Net asset value before dividend allocation 34 335 20 878 17 679 1) Value changes include depreciation and write-downs of fixed assets, and sales gains. CHANGE IN NET ASSET VALUE NOK billion 37 12.9 34.3 35 33 31 29 27 25 1.1 20.9 (0.8) (0.7) 0.5 23 (0.4) 0.2 0.3 0.4 21 19 17 15 13 31.12.15 Other Dividend Financial OCY KVAER AKA HFISK AKSO AKERBP 31.12.16 investments THIS IS AKER | Changes in net asset value AKER ASA ANNUAL REPORT 2016 9 NET ASSET VALUE As at 31.12.2016 As at 31.12.2015 NOK NOK NOK NOK Ownership per share million per share million INDUSTRIAL HOLDINGS Aker BP 40.0 % 281 20 873 75 5 596 Aker Solutions 34.8 % 53 3 912 39 2 865 Akastor 36.7 % 22 1 629 16 1 207 Kvaerner 28.7 % 13 935 9 635 Aker BioMarine 99.5