Registration Document
AKER ASA Senior Unsecured Bond Issue 2015/2020
ISIN: NO 0010737158
Date: 30 June 2015
Joint Lead Managers:
DNB Markets Nordea Markets Pareto Securities
Registration Document
IMPORTANT INFORMATION
The Registration Document has been prepared in connection with listing of the bonds at Oslo Børs.
This Registration Document is subject to the general business terms of the Lead Managers. Confidentiality rules and internal rules restricting the exchange of information between different parts of the Lead Managers may prevent employees of the Lead Managers who are preparing this document from utilizing or being aware of information available to the Lead Managers and/or affiliated companies and which may be relevant to the recipient's decisions.
The Lead Managers and/or affiliated companies and/or officers, directors and employees may be a market maker or hold a position in any instrument or related instrument discussed in this Registration Document, and may perform or seek to perform financial advisory or banking services related to such instruments. The Lead Managers’ corporate finance department may act as manager or co-manager for the Company in private and/or public placement and/or resale not publicly available or commonly known.
Copies of this Registration Document are not being mailed or otherwise distributed or sent in or into or made available in the United States. Persons receiving this document (including custodians, nominees and trustees) must not distribute or send such documents or any related documents in or into the United States.
Other than in compliance with applicable United States securities laws, no solicitations are being made or will be made, directly or indirectly, in the United States. Securities will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The distribution of the Registration Document may be limited by law also in other jurisdictions, for example in the United Kingdom. Verification and approval of the Registration Document by the Financial Supervisory Authority of Norway (“Finanstilsynet”) implies that the Registration Document may be used in any EEA country. No other measures have been taken to obtain authorisation to distribute the Registration Document in any jurisdiction where such action is required.
Unless otherwise stated, the Prospectus is subject to Norwegian law. In the event of any dispute regarding the Prospectus, Norwegian law will apply.
The Financial Supervisory Authority of Norway has examined and approved the Registration Document pursuant to Section 7-7 of the Securities Trading Act. The examination and approval by the Financial Supervisory Authority of Norway relate exclusively to the Company having included descriptions pursuant to a pre-defined list of content requirements. Consequently, the Financial Supervisory Authority of Norway has not examined or approved the correctness or completeness of the information disclosed in the Registration Document. Nor has the Financial Supervisory Authority of Norway performed any form of examination or approval of company law aspects described in, or encompassed by, the Registration Document.
This Registration Document is not an offer to sell or a request to buy bonds.
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The content of the Prospectus does not constitute legal, financial or tax advice and bond owners should seek legal, financial and/or tax advice.
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DEFINITIONS
Articles of Association The Company’s articles of association
IFRS International Financial Reporting Standards
NAV Net asset value
OSEBX Oslo Stock Exchange Benchmark Index
Prospectus The Registration Document, Securities Note and Summary
Registration Document This document dated 30 June 2015
Securities Note The Securities Note dated 30 June 2015
Summary The Summary dated 30 June 2015
The Group / Aker Aker ASA with subsidiaries
The Parent / Issuer / the Company Aker ASA
USD United States dollar, the lawful currency of the United States
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Contents
1 RISK FACTORS 7
1.1 RISK ASSOCIATED TO ASSETS 7 1.2 RISK ASSOCIATED TO RECEIVABLES WITHIN THE AKER GROUP 8 1.3 RISK ASSOCIATED TO OPERATIONS IN FOREIGN CURRENCIES 8 1.4 FINANCIAL RISK AND EXPOSURE 8 1.5 RISK ASSOCIATED TO GUARANTEES 8 1.6 RISK ASSOCIATED TO REFINANCING AND COST OF DEBT 8
2 PERSONS RESPONSIBLE 9
2.1 PERSONS RESPONSIBLE FOR THE INFORMATION 9 2.2 DECLARATION BY PERSONS RESPONSIBLE 9
3 STATUTORY AUDITORS 10
3.1 NAMES AND ADDRESSES 10
4 INFORMATION ABOUT THE COMPANY 11
4.1 LEGAL AND COMMERCIAL NAME 11 4.2 PLACE OF REGISTRATION AND REGISTRATION NUMBER 11 4.3 DATE OF INCORPORATION 11 4.4 DOMICILE AND LEGAL FORM 11 4.5 CONTACT INFORMATION 11 4.6 RECENT EVENTS RELEVANT TO EVALUATION OF SOLVENCY 11 4.7 MEMORANDUM AND ARTICLES OF ASSOCIATION 11
5 BUSINESS OVERVIEW 12
5.1 INTRODUCTION TO AKER ASA 12 5.2 AKER ASA AND HOLDING COMPANIES 12 5.3 INVESTMENTS 12 5.4 INVESTMENT STRATEGY 13
6 ORGANISATIONAL STRUCTURE 14
6.1 DESCRIPTION OF GROUP 14 6.1.1 Legal structure 14 6.2 DEPENDENCE UPON OTHER ENTITIES 16
7 TREND INFORMATION 16
7.1 STATEMENT OF NO MATERIAL ADVERSE CHANGE 16
8 PROFIT FORECASTS OR ESTIMATES 16
9 ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES 16
9.1 INFORMATION ABOUT PERSONS 16 9.1.1 Management of the Issuer 16 9.1.2 Board of Directors of the Issuer 16 9.2 CONFLICTS OF INTEREST 17
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10 BOARD PRACTICES 17
11 MAJOR SHAREHOLDERS 18
11.1 OWNERSHIP - MAJORITY SHAREHOLDER 18 11.2 CHANGE IN CONTROL OF THE ISSUER 19 11.3 SHARE CAPITAL 19
12 SELECTED FINANCIAL INFORMATION 20
12.1 DEBT DISTRIBUTION 20 12.2 INSTALLMENT SCHEDULE 20 13 SELECTED FINANCIAL INFORMATION CONCERNING THE COMPANY'S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES 20
13.1 INCOME STATEMENT, BALANCE SHEET AND CASH FLOW STATEMENT 20 13.2 FINANCIAL STATEMENTS 21 13.3 AUDITING OF HISTORICAL ANNUAL FINANCIAL INFORMATION 21 13.4 AGE OF LATEST FINANCIAL INFORMATION 21 13.5 LEGAL AND ARBITRATION PROCEEDINGS 21 13.6 SIGNIFICANT CHANGE IN THE ISSUER’S FINANCIAL OR TRADING POSITION 21
14 MATERIAL CONTRACTS 21
15 DOCUMENTS ON DISPLAY 22
16 JOINT LEAD MANAGER’S DISCLAIMER 22
17 ATTACHMENTS: 23
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1 RISK FACTORS Aker ASA (“Aker”) is an active industrial investment company with exposure both in terms of its ownership and its receivables towards companies that operate within the energy sector, oil service, fisheries and biotechnology, and marine assets. As such, Aker’s risk is financially driven and connected to the underlying development of the companies Aker is exposed to either through value changes of the listed assets, dividend distribution or through repayment of debt. Aker may enter into hedge positions as part of Aker’s risk management system primarily by hedging its foreign currency and interest rate risk exposure. In this matter, Aker will be exposed to fluctuations in these markets as well as counterparty risk. Aker’s operational risk is limited provided that Aker is an investment company with a rather predictable cost base.
1.1 Risk associated to assets
The main risks that Aker is exposed to are related to the value changes of the listed assets due to market price fluctuations. The development of the global economy, and energy prices in particular, are important variables in assessing near-term market fluctuations. As an industrial holding company, Aker is dependent on ensuring adequate liquidity through upstream cash and dividends from portfolio companies. The market situation will also affect the ability of the underlying companies to pay dividend as well as operations and opportunities for new investments and divestments. Aker’s investments are further described in section 5.3.
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1.2 Risk associated to receivables within the Aker Group Aker also has receivables primarily towards companies that Aker directly or indirectly holds an ownership stake in. No assurance can be made that such receivables will be paid. Aker is as such subject to counterparty risk which may affect the Company’s earnings and ability to meet its obligations.
1.3 Risk associated to operations in foreign currencies Aker is an investment company primarily exposed to Norwegian companies and consequently with limited exposure towards operations. The companies that Aker is invested in have operations in international markets which lead to various types of currency exposure. Currency risks arise through ordinary, future business transactions, capitalised assets and liabilities, and when such transactions involve cash flows in a currency other than the functional currency of the respective company. In addition, currency risk may arise from investments in foreign subsidiaries. The Group is mainly exposed to the US dollar (USD). Management of operational risk primarily takes place at the underlying operating companies with established hedging policies in order to reduce exposure and fluctuations in foreign currencies.
1.4 Financial risk and exposure The Company is exposed to several types of financial risk, the most significant of which are liquidity, foreign exchange and interest rate.
Liquidity risk is associated with Aker being unable to meet its financial obligations as they fall due. As an industrial holding company, Aker is largely dependent on ensuring adequate liquidity through upstream cash and dividends from portfolio companies.
Aker will from time to time secure certain predictable cash flows through hedging activities in the foreign exchange market in connection with mergers and acquisitions, sale of assets, dividend or other predictable cash flows in foreign currencies. Through this activity, Aker is consequently exposed to counterparty risk to Norwegian and international banks and other financial institutions.
Aker’s interest rate risk arises from long-term borrowings and receivables. Borrowings and receivables issued at variable rates expose the Company to cash flow interest rate risk. Securities issued at fixed rates expose the Group to fair value interest risk.
1.5 Risk associated to guarantees Aker will from time to time issue guarantees on behalf of its subsidiaries. If the Company’s subsidiaries are unable to fulfil their contractual obligations, it may have a material impact on Aker’s earnings. Current guarantees are limited compared to Aker’s balance sheet and Aker is targeting to reduce this exposure in the future.
1.6 Risk associated to refinancing and cost of debt Aker’s financing strategy includes both use of bond and bank as sources of financing. In connection to this, Aker is exposed to refinancing risk in the bond and bank markets. In addition, and dependent on the prevailing market conditions if and when Aker engages in refinancing activities, the company is exposed to fluctuating interest rates and margins which may be below or above current cost of debt levels.
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2 PERSONS RESPONSIBLE
2.1 Persons responsible for the information Persons responsible for the information given in the Registration Document are as follows:
Aker ASA,
Fjordalleén 16, Aker Brygge, 0250 Oslo, Norway.
Postal address: PB 1423 Vika, 0115 Oslo, Norway.
2.2 Declaration by persons responsible This Registration Document has been prepared on behalf of Aker ASA. The Company confirms that, having taken all reasonable care to ensure that such is the case, the information contained in this Registration Document is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.
Oslo, 30 June 2015
Aker ASA
______
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3 STATUTORY AUDITORS
3.1 Names and addresses
The Company's independent auditor is KPMG AS which has their registered address at Sørkedalsveien 6, 0369 Oslo, Norway. KPMG AS has been the Company’s independent auditors since 2004.
Contact information:
KPMG AS Sørkedalsveien 6 PB 7000 Majorstuen NO-0306 Oslo
Telephone: +47 04063 Telefax: +47 22 60 96 01 www.kpmg.no
Org. no. 935 174 627 MVA
KPMG AS is a member of The Norwegian Institute of Public Accountants (Nw. Den Norske Revisorforening).
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4 INFORMATION ABOUT THE COMPANY
4.1 Legal and commercial name The Company’s legal name is Aker ASA and commercial name Aker.
4.2 Place of registration and registration number The Issuer is registered in the Brønnøysund Register Center with the organisation number 886 581 432.
4.3 Date of incorporation The Company was incorporated on 13 February 2004.
4.4 Domicile and legal form Aker ASA is a Norwegian public limited liability company (Nw. allmennaksjeselskap or ASA), incorporated under the laws of Norway and in accordance with the Norwegian Public Limited Liability Companies Act.
4.5 Contact information The Company’s contact information is:
Aker ASA Fjordalléen 16. P.O. Box 1423 Vika, N-0115 Oslo, Norway
Phone: +47 24 13 00 00 Fax: +47 24 13 01 01
4.6 Recent events relevant to evaluation of solvency None.
4.7 Memorandum and Articles of Association The objectives of the Company are to own and carry out industrial and other associated businesses, capital management and other functions for the Group, as well as participation in or acquisition of other businesses. The Company’s objects and purposes can be found in § 2 in the Articles of Association.
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5 BUSINESS OVERVIEW
5.1 Introduction to Aker ASA Aker ASA is a Norwegian industrial investment company that aims to create shareholder value through active ownership. The Company’s ownership interests are concentrated on key Norwegian industries that are international in scope and of which the Company considers to have in-depth knowledge: oil and gas, marine assets, seafood & marine biotechnology, and real estate. The Company has no significant operational activities other than its investments. Aker was listed on Oslo Stock Exchange in September 2004. Since listing, the Company’s shares have generated an average annual return of 26 per cent, including dividends, compared to an average of OSEBX of 11 per cent. As per 31 March 2015, the Company had 13,436 shareholders and a market capitalisation of NOK 12.8 billion. The Company’s main shareholders are the Chairman of the Company’s Board of Directors, Kjell Inge Røkke, and Anne Grete Eidsvig, which control 67.8 per cent of Aker through their company TRG. The Group has an organisation of approximately 30,000 employees and is headquartered in Oslo, Norway.
5.2 Aker ASA and Holding Companies In addition to the consolidated group accounts, Aker ASA also prepares a set of combined financial statements for Aker ASA and holding companies (“Aker ASA and Holding Companies”), which include Aker ASA and all subordinate administrative service and holding companies that are wholly-owned by Aker and have balance sheets containing only investments, bank deposits and debt. Aker ASA and Holding Companies comprise of the Industrial Holdings; Det norske, Aker Solutions, Akastor, Kvaerner, Ocean Yield, Aker BioMarine, Havfisk and the Financial Investments; Investments held by Converto Capital Fund AS (“Converto”), Norron Target and Norron Select, Fornebuporten Holding AS (“Fornebuporten”), Trygg Pharma Group AS and other equity investments. The balance sheet and income statement for Aker ASA and Holding Companies constitute the basis for Aker ASA and Holdings Companies’ net asset value (“NAV”), which expresses the underlying value of Aker ASA and Holding Companies, and is a key determinant of the Company’s dividend policy. NAV is based on the market value for listed shares and the book value for the other assets of Aker ASA and Holding Companies. Gross asset value is determined by applying the market value of exchange-listed shares, while book value is used for other assets. NAV is gross asset value less liabilities.
5.3 Investments The Company’s portfolio of investments amounted to NOK 26.3 billion as of 31 March 2015. The Company’s portfolio comprises of 72 per cent investments in listed companies, 12 per cent cash and liquid fund investments and 16 per cent in other assets. Aker organises its business activities in two segments; Industrial Holdings and Financial Investments. The table below shows an overview of the Industrial Holdings and Financial Investments in Aker ASA and Holding Companies as of 31 March 2015.
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1) Owned partly through Aker Kvaerner Holding in which the Company has a 70% ownership interest. Additionally, Aker ASA also has a direct ownership interest in Aker Solutions and Akastor.
2) Reflected at bookvalue.
Industrial Holdings comprise the investments in Det norske, Aker Solutions, Akastor, Kvaerner, Ocean Yield, Aker BioMarine and Havfisk. In each of these companies, the Company holds a significant stake, and has an ownership agenda for strengthening the business and adding long and short-term value.
As of 31 March 2015, the total value of the Company’s Industrial Holdings was NOK 18.6 billion, equal to 71 per cent of the Company’s gross asset value. The largest share of these investments was related to Ocean Yield, Det norske and Aker Solutions.
Financial Investments comprise all of the Company’s assets other than Industrial Holdings. This includes cash, liquid fund investments, other public investments, real estate development (Fornebuporten) and other financial investments. The financial investments provide the Company with financial strength and flexibility. The value of the Company’s financial investments amounted to NOK 7.7 billion as of 31 March 2015, equal to 29 per cent of the Company’s gross asset value.
5.4 Investment Strategy The Company’s investments are concentrated on the business sectors: exploration and production, oil services, maritime assets, seafood & marine biotechnology and real estate. Aker is focused on global sectors where Norway and the Company play a leading role, and the current sector exposure gives the Company an opportunity to leverage its position and reputation created through more than 170 years of industry history.
The table below shows Aker ASA and Holding Companies’ exposure by industry as of 31 March 2015.
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6 ORGANISATIONAL STRUCTURE
6.1 Description of group 6.1.1 Legal structure The Issuer is the holding company of the Group. The structure of the Group is outlined below.
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6.2 Dependence upon other entities The Issuer is an investment company and is dependent upon the performance of its investments.
7 TREND INFORMATION
7.1 Statement of no material adverse change
There has been no material adverse change in the prospects of the Issuer since the date of its last published audited financial statements. Please read Section 13.6
8 PROFIT FORECASTS OR ESTIMATES
Neither a profit forecast nor a profit estimate is included in this Registration Document.
9 ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES
9.1 Information about persons
9.1.1 Management of the Issuer
Name Title Address (business)
Øyvind Eriksen President and CEO Fjordalléen 16, 0250 Oslo, Norway
Trond Brandsrud CFO Fjordalléen 16, 0250 Oslo, Norway
9.1.2 Board of Directors of the Issuer
Name Title Address (business)
Fjordalléen 16, 0250 Oslo, Kjell Inge Røkke Chairman Norway
Fjordalléen 16, 0250 Oslo, Finn Berg Jacobsen Deputy Chair Norway
Fjordalléen 16, 0250 Oslo, Karen Simon Director Norway
Fjordalléen 16, 0250 Oslo, Kristin Krohn Devold Director Norway
Leif O. Høegh Director Fjordalléen 16, 0250 Oslo,
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Norway
Fjordalléen 16, 0250 Oslo, Anne Marie Cannon Director Norway
Director, elected by the Fjordalléen 16, 0250 Oslo, Atle Tranøy employees Norway
Director, elected by the Fjordalléen 16, 0250 Oslo, Amran Hadida employees Norway
Director, elected by the Fjordalléen 16, 0250 Oslo, Arnfinn Stensø employees Norway
Director, elected by the Fjordalléen 16, 0250 Oslo, Inger Elise Karlsen employees Norway
9.2 Conflicts of interest There are no potential conflicts of interests between any duties to the Group of the persons referred to in item 9.1 and their private interests and or other duties.
10 BOARD PRACTICES The Company has an audit committee, the members of which as of the date of this Registration Document are Finn Berg Jacobsen (chair), Atle Tranøy and Kristin Krohn Devold, all members of the Board of Directors. The primary purposes of the audit committee are to:
- assist the Board of Directors in discharging its duties relating to the safeguarding of assets; the operation of adequate system and internal controls; control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements, corporate governance and accounting standards; and
- provide support to the board of directors on the risk profile and risk management of the Company.
The audit committee reports and makes recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations. Finn Berg Jacobsen has the necessary qualifications within accounting/auditing.
The Company’s corporate governance principles are based on, and comply with, the Norwegian Code of Practice, with the following exceptions:
- In connection with voting by proxy at Aker’s general meetings, the Company does not appoint an independent proxy to vote on behalf of the shareholders as recommended in item 6 of the Norwegian Code of Practice. The Company considers that the shareholders’ interests are adequately safeguarded by the option of participation via an appointed proxy and the option of authorising the meeting chair/Chairman of the Board to vote according to specific proxy instructions.
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- Pursuant to the Company’s Articles of Association, the general meetings of Aker is chaired by the Chairman of the Board or an individual appointed by the Chairman. Aker deviates from the Norwegian Code of Practice item 6 in this regard, as in the Company’s experience, its procedures for the chairmanship and execution of general meetings have worked well.
- The general meeting is requested to vote for a complete set of proposed board members, and shareholders cannot vote in advance for individual candidates. The Company deviates from the recommendation in the Norwegian Code of Practice item 6, which states that the general meeting shall be given an opportunity to vote on each individual candidate nominated for an appointment to a company body. The reason for this is that the Nomination Committee of the Company focuses on composing a Board of Directors that works optionally as a team and on ensuring that board members’ experience and qualifications complement each other and that statutory gender representation requirements are met.
- Kjell Inge Røkke, Chairman of the Board, also serves as chair of the Company’s nomination committee. The Company is therefore in conflict with the recommendation in the Norwegian Code of Practice item 7 which states that board members who are also members of the company’s nomination committee not should stand as candidates for reappointment of the board. However, it is the Company’s assessment that this recommendation is based on considerations that are less applicable to a situation where a single shareholder, in this case Kjell Inge Røkke himself, controls more than 2/3 of the Company’s shares and thus already have positive control of the Company’s general meeting.
- The Company does not have separate guidelines on how to respond in the event of a take-over bid, as recommended in the Norwegian Code of Practice item 14. Through TRG, Kjell Inge Røkke controls a total of 67.8 per cent of Aker’s shares. Kjell Inge Røkke has committed to retaining control of Aker for a minimum of 10 years from June 2007. In view of this undertaking, the Board of Directors has deemed the adoption of separate take-over guidelines as recommended by the Norwegian Code of Practice as unnecessary.
11 MAJOR SHAREHOLDERS
11.1 Ownership - majority shareholder As of 18.06.2015, which was the latest practicable date prior to the date of this Registration Document, and insofar as known to the Company, the following persons had, directly or indirectly, interest in 5 per cent or more of the issued share capital of the Company (which constitutes a notifiable holding under the Norwegian Securities Trading Act):
Number of Shares Holding (%)
TRG Holding AS 49,785,635 66.99(1)
(1) TRG Holding AS is owned by The Resource Group TRG AS, which owns 1.19 per cent of Aker ASA directly. The Resource Group TRG AS, owned by Kjell Inge Røkke and Anne Grete Eidsvig, accordingly controls 68.2 per cent of the Company’s Shares.
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None of the major shareholders have different voting rights than the other shareholders of the Company.
As a result of its shareholding in the Company, TRG has the ability to significantly influence the matters submitted for vote of the shareholders of the Company, and can vote through matters that require more than 2/3 of the votes to be passed upon the Company’s General Meetings.
All agreements with related parties, including the Company’s largest shareholder, must be concluded on commercial terms, and are subject to review by the audit committee or Board of Directors. Any material transaction involving the Company and a related party, including the Company’s largest shareholder is subject to review and approval by the Board of Directors on a case-by-case basis. An external independent valuation may be obtained as a basis for the Board of Directors’ decision.
11.2 Change in control of the Issuer There are no arrangements, known to the Issuer, the operation of which may at a subsequent date result in a change in control of the Issuer.
11.3 Share Capital As of the date of this Registration Document, the Company's share capital is NOK 2,081,012,136 divided into 74,321,862 shares, fully paid and each share having a par value of NOK 28. There is one class of shares. The Company has not had any changes in its share capital in the years 2013 and 2014, but had a share capital increase of 1,947,134 shares in connection with the dividend issue in June 2015. As of 22 June 2015, the Company owns 17,477 own shares. For more information regarding the share capital, please see § 3 of the Articles of Association.
In accordance with the Norwegian Public Limited Liability Companies Act, each share carries one vote at a general meeting. For more information, please see the Norwegian Public Limited Liability Companies Act, in particular Chapter 5.
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12 SELECTED FINANCIAL INFORMATION
12.1 Debt distribution
12.2 Installment schedule
13 SELECTED FINANCIAL INFORMATION CONCERNING THE COMPANY'S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES
13.1 Income statement, balance sheet and cash flow statement Aker has prepared its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and associated interpretations as determined by the EU as at 31 December 2014 and Norwegian disclosure requirements pursuant to the Norwegian accounting act as at 31 December 2014.
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Aker ASA (Pages) Q1 2015 Q1 2014 2014 AR 2013 AR
Consolidated income 12 12 111 119 statement
Consolidated balance 13 13 112 120 sheets
Consolidated cash flow 14 13 113 121 statement
Notes to the 16-18 15-24 114-123 122-131 consolidated financial statements
13.2 Financial statements Please read Section 17. The Company’s financial statements are attached to this document.
13.3 Auditing of historical annual financial information The historical financial information for 2014 and 2013 for the Company has been audited. The historical financial information for the interim reports has not been audited.
No other information in this Registration Document has been audited.
13.4 Age of latest financial information The first quarter interim report covers the period 1 January 2015-31 March 2015.
13.5 Legal and arbitration proceedings The Issuer is not involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) which may have significant effects on the Issuer and/or group’s financial position or profitability, nor has the Issuer been involved in any such proceedings during the previous 12 months.
13.6 Significant change in the Issuer’s financial or trading position There has been no significant change in the financial or trading position of the Group since the end of the last financial period.
14 MATERIAL CONTRACTS There are no material contracts that are entered into in the ordinary course of the issuer’s business, which could result in any group member being under obligation or entitlement that is material to the issuer’s ability to meet its obligation to security holders in respect of the securities being issued.
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15 DOCUMENTS ON DISPLAY The following documents (or copies thereof) may be inspected for the life of the Registration Document at the headquarters of the Issuer, Fjordalléen 16, 0250 Oslo, Norway.
(a) memorandum of incorporation and articles of association
(b) all reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company's request, any part of which is included or referred to in the Registration Document; and
(c) the historical consolidated financial information of the Company for each of the two financial years preceding the publication of the Registration Document.
16 JOINT LEAD MANAGER’S DISCLAIMER Pareto Securities AS, DNB Markets and Nordea Markets, the Joint Lead Managers, have assisted the Company in preparing the Registration Document. The Joint Lead Managers have not verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and the Joint Lead Managers expressly disclaims any legal or financial liability as to the accuracy or completeness of the information contained in this Registration Document or any other information supplied in connection with the issuance or distribution of bonds by Aker ASA.
Each person receiving this Registration Document acknowledges that such person has not relied on the Joint Lead Managers, nor on any person affiliated with it in connection with its investigation of the accuracy of such information or its investment decision.
Oslo, 30 June 2015
Joint Lead Managers
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17 ATTACHMENTS:
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First-quarter results 2015 Aker ASA First-quarter results 2015 2
First-quarter 2015 highlights
Financial key figures Key portfolio events (Aker ASA and holding companies) nn On 13 February 2015, Det norske, together with its partners, nn The net asset value of Aker ASA and holding companies (“Aker”) submitted the Plan for Development and Operation for the increased 8.1 per cent in the first quarter to NOK 19.1 billion. Johan Sverdrup field. Det norske did not succeed in reaching Per-share net asset value (“NAV”) amounted to NOK 264 as of 31 an agreement about the unitization with the other partners. The March 2015, compared to NOK 244 as per 31 December 2014. Ministry of Petroleum and Energy’s decision is expected before nn Cash and liquid fund investments were NOK 3.2 billion as of 31 the summer this year. March 2015, on par with year-end 2014. Of this, NOK 2.8 billion nn On 4 March 2015, Havfisk’s appeal was heard by Iceland’s was cash holdings as per 31 March 2015. Supreme Court and judgement was given on 12 March. The court nn The value of Aker’s Industrial Holdings portfolio increased to NOK ruled in favour of Havfisk. The accounting consequences were 18.6 billion in the quarter, up from NOK 17.4 billion in the prior incorporated in the annual accounts for 2014. quarter. Aker’s Financial Investments portfolio amounted to NOK 7.7 billion, up from NOK 7.6 billion as of 31 December 2014. nn The value-adjusted equity ratio was 73 per cent, up from 71 per cent as of year end 2014. nn The Aker share increased 7.3 per cent in the first quarter. This compares to 7.5 per cent increase in the Oslo Stock Exchange’s benchmark index (“OSEBX”). nn Aker’s Annual General Meeting approved on 17 April 2015 the distribution of NOK 10 per-share ordinary dividend for 2014, of which half with optional settlement in new Aker shares at a 10 per cent discount. There will be a subscription period of two weeks for the dividend issue, which is expected to start on or about 15 May 2015. The dividend/shares will be distributed approximately one week after the expiry of the subscription period.
Main contributors to gross asset value (NOK billion) Ocean Yield Representing 76 per cent of total gross asset value Det norske of NOK 26.3 billion
Aker Solutions
Havfisk
Akastor
Cash and liquid fund investments
0 1 2 3 4 5 6
Net asset value and share price (NOK per share) 350
300
250 Dividend 200 NAV per share Share price The balance sheet and income statement for Aker ASA and holding 150 companies (Aker) have been prepared to show the financial position as a Share price (dividend adj.) holding company. Net asset value (NAV) is a core performance indicator at 100 Aker ASA. NAV expresses Aker’s underlying value and is a key determinant of the company’s dividend policy (annual dividend payments of 2-4 per cent 50 of NAV). Gross asset value is determined by applying the market value of exchange-listed shares, while book value is used for other assets. The same valuation principles apply to fund investments. Net asset value is gross asset 0 value less liabilities. 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 Aker ASA First-quarter results 2015 3
Letter from the CEO
Dear fellow shareholders,
First quarter 2015 offered a favourable performance in most of Aker’s of debt capital. The company´s unique portfolio of high quality assets underlying share prices and values. Net asset value increased by 8.1 on the NCS seems to be just as attractive to debt providers as for long per cent to 19.1 billion, primarily due to a value increase of NOK 1.4 term equity investors like Aker. billion in our Industrial Holdings portfolio. Ocean Yield and Havfisk were the frontrunners, but also Det norske developed favourably benefitting Ocean Yield continues to deliver good returns to us and other from less volatile oil prices in the quarter, as well as increased market shareholders with a share price return of 20 per cent in the first quarter confidence in the company’s ability to obtain a solid and diversified including a quarterly dividend of USD 0.1425. The recipe is, once funding structure. The favourable share price developments have again, to stick to its mandate and plan with a high degree of discipline. continued into the second quarter. The portfolio of assets was further diversified in the quarter by the acquisition of eight newbuilding chemical tankers. That transaction secured further EBITDA growth and earnings visibility. Ocean Yield Expectations expressed by customers about improved also proved its quality name and reputation in the capital market by efficiency and lower costs should inspire rather than the issuance of a NOK 1 billion bond overnight – at a competitive yield threaten our operational management teams. and substantially oversubscribed. Havfisk continued its favourable development in the first quarter, now being Aker’s fourth largest investments after more than quadruplicating On the other hand, if we look at the overall market fundamentals in in value since 2012. That tells us a lot about the benefit of focusing the the oil and gas sector, the headlines remain the same as when I wrote business model in order to enable continous operational improvements my last letter. Oil companies are cutting costs even more fiercely, by hands on and capable management. The positive and final ruling and the level of activity in exploration, new field developments and in the Glitnir lawsuit was an additional value trigger in the first quarter. modification projects continue to drop. This fact makes further And now, the company is set to start paying dividend. restructurings inevitable. For Aker, as a long term industrial investor, the balancing act remains to implement capacity adjustments without jeopardising the capability and competence required throughout different business cycles. At the same time, a downturn cycle like this When combining an attractive portfolio of investments with could create opportunities to build even stronger and more valuable our financial strength, optionality and M&A capabilities, I businesses when the markets normalise. This is our focus and priority strongly believe we offer a unique investment proposition as principle shareholder in companies like Aker Solutions, Akastor, to our shareholders. Kvaerner and Det norske.
Strategic directions Aker BioMarine is a growth investment. With its inherent operational leverage, the name of the game for the company is to build and expand For our oil services businesses, this is the time to further strengthen the markets for its products and hence the top line. Unfortunately, long term customer relationships. The only sustainable way to do Aker BioMarine does not get much help from from overall markets in so is through enhanced and consistent operational excellence. which it operates. Expectations expressed by customers about improved efficiency and lower costs should inspire rather than threaten our operational management teams. At the same time, it is our task and responsibility Outlook and opportunities to make it clear how customers can facilitate a more effective Overall, I am pleased by the steps and directions our portfolio companies collaboration by changing their own method of operations. Without are taking. When combining an attractive portfolio of investments with making improvements a joint effort, it is hard to see how the industry our financial strength, optionality and M&A capabilities, I strongly can achieve permanent and structural savings. believe we offer a unique investment proposition to our shareholders. In our portfolio of oil services activities, Aker Solutions’ MMO and In April, Aker’s Annual General Meeting approved the distribution Akastor’s MHWirth are the two businesses mostly exposed to the of NOK 10 per-share ordinary dividend for 2014, of which half with downturn cycle so far. As MMO has adjusted capacity proactively optional settlement in new Aker shares at a 10 per cent discount. This to the lower level of activities, MHWirth has been lagging somewhat provides our shareholders with an option to receive the full amount behind. A lesson learned is that even we sitting close to the market in cash or to reinvest half of it back in Aker at a discount. There will have a tendency to underestimate the initial indications of a softer be a subscription period of two weeks for the dividend issue, which market. is expected to start on or about 15 May 2015. Kjell Inge and I have decided to choose the partial settlement by shares. Kvaerner is in a different and even more crucial situation. The ongoing tenders, and primarily the second Johan Sverdrup topside contract, Summarized, the message from Aker remains to be focused on cost will define the future level of activity, capacity and competency at reductions, operational improvements, capacity adjustments and the the Stord yard. We are working hard and the support from our labour optimization of our financial structures across the portfolio. In parallel, unions and other stakeholders are amazing. By the end of the summer pursue opportunistically the M&A opportunities that the market we should have more clarity with regards to the future. turmoil may generate in order to strengthen our portfolio of industrial investment throughout different business cycles. The key focus in Det norske is currently to put in place a robust, long- term financing arrangement. The amendments to the outstanding bond, was an important step and created value for both bondholders and shareholders. Aker continues to support Det norske’s management in establishing an optimized funding that will take the company through Øyvind Eriksen the current development phase and create financial headroom for President and CEO further expansions. Regardless of the weak oil and gas sentiment, it is encouraging to see that Det norske has identified alternative sources Aker ASA First-quarter results 2015 4
Aker ASA and holding companies Assets and net assets value
Net asset value (NAV) composition - Aker ASA and holding companies
31.12.2014 31.03.2015 NOK/share NOK million NOK/share NOK million Industrial Holdings 240 17 360 257 18 619 Financial Investments 104 7 554 107 7 724 Gross assets 344 24 914 364 26 343 Total liabilities (before dividend allocations) (100) (7 235) (100) (7 240) NAV (before dividend allocations) 244 17 679 264 19 103 Net interest-bearing receivables/(liabilities) (3 426) (3 506) Number of shares outstanding (million) 72.35 72.35
Gross assets 35 (NOK billion) 30
25
20
Financial Investments 15 Industrial Holdings 10
5
0 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15
Gross assets per sector 35 (NOK billion)
30
25 Cash and liquid fund investments
20 Other financial assets Real estate 15 Seafood & marine biotech Maritime assets 10 Oil services 5 E&P
0 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15
Net asset value (“NAV”) is a core performance indicator at Aker ASA. NAV expresses Aker’s underlying value and is a key determinant of the company’s dividend policy (annual dividend payments of 2-4 per cent of NAV). Net asset value is determined by applying the market value of exchange-listed shares, while book value is used for other assets. The same valuation principles apply to fund investments. Aker’s assets (Aker ASA and holding companies) consist largely of equity investments in the Industrial Holdings segment, and of cash, receivables and fund investments in the Financial Investments segment. Other assets consist mainly of intangibles and tangible fixed assets. The chart above to the right shows the composition of Aker’s assets. The business segments are discussed in greater detail on pages 5-7 of this report. Aker ASA First-quarter results 2015 5
Aker – Segment information Industrial Holdings
NOK billion Share of Aker’s assets 25 Havfisk 20 Aker BioMarine
15 Ocean Yield
71% Kvaerner 10 Akastor 5 Aker Solutions
0 Det norske oljeselskap 3Q 2014 4Q 2014 1Q 2015 31.12.2014 1Q 15 31.03.2015 Ownership Net Received Other V a l u e Amounts in NOK million in % Value investments dividends changes change Value Det norske 50.0 4 038 466 4 504 Aker Solutions 34.8 3 929 40 3 969 Akastor 34.5 2 043 (510) 1 533 Kvaerner 28.7 687 (223) 463 Ocean Yield 73.0 4 323 (113) 875 5 084 Aker BioMarine* 99.0 1 398 1 398 Havfisk 73.2 942 725 1 668 Total Industrial Holdings 17 360 (113) 1 373 18 619
*Reflected at book value
The total value of Aker’s Industrial Holdings increased by NOK 1.3 Aker Solutions billion in the first quarter 2015 to NOK 18.6 billion. The increase is Aker Solutions is a global oil services company providing services, explained by a value change of NOK 1.4 billion, which was partly offset technologies, and product solutions within subsea and field design. by NOK 113 million in dividends received. The company operates in niches with high barriers to entry and is set up to generate an attractive return on capital. Despite a strong balance The NOK 1.4 billion net value change in the first quarter was explained sheet and a healthy backlog, Aker Solutions is not shielded from the by Ocean Yield representing NOK 875 million, Havfisk NOK 725 million, downturn in the oilfield services segment. The management therefore Det norske NOK 466 million and Aker Solutions NOK 40 million. This needs to continue to focus on operational improvement initiatives, was, however, partly offset by a value decrease of NOK 510 million cost reductions and standardisations. In the quarter, the company and NOK 223 million in Akastor and Kvaerner, respectively. continued a major push to improve quality in execution, including stepping up initiatives to develop new best practices. Aker Solutions is The book value of Aker’s non-listed holding, Aker BioMarine, remained also working with customers to achieve operational and cost savings at NOK 1.4 billion as per 31 March 2015. improvements at projects. The company reported a solid order intake of NOK 9 billion in the quarter, resulting in a total order backlog of Det norske more than NOK 48 billion as of 31 March 2015. Det norske is an integrated E&P company with activities within exploration, development and production on the Norwegian continental Akastor shelf. During the first quarter 2015, Det norske produced 64.9 kboepd, Akastor is an oilfield services investment company with a flexible up from 63.0 kboepd in the previous quarter. The increase was driven mandate for long-term value creation. The company, through its by the production start-up of the Bøyla field, a subsea tie back to portfolio companies, is exposed to the challenging oilfield service the Alvheim FPSO. In February, the PDO for the Johan Sverdrup field market and in particular to the new build drilling rig segment. The key was submitted to the MPE (“Minister of Petroleum and Energy”). Det areas of focus for management are to adjust the cost base to reflect norske did however not succeed in reaching an agreement about the the new market realities and to develop and implement value creation unitization with the other partners. It is now up the MPE to decide and plans for the portfolio companies. The largest company, MHWirth, is their decision is expected before the summer this year. With regards in the process of a work force reduction of 750 people, which has led to financing, Det norske called for a bondholder meeting to remove the to both restructuring cost and a lower productivity in the first quarter equity covenant in the NOK 1.9 billion bond, which was later approved of the year. Most of the rest of the portfolio companies reported in line by the bondholders in April. Going forward, Det norske will maintain with market expectations in the first quarter. The weak Akastor share its focus on the operations of its core assets (Alvheim, Ivar Aasen and price performance this year has been influenced by the headwinds Johan Sverdrup) and continue to work on the funding structure to faced by MHWirth. improve the financial robustness and flexibility. Aker ASA First-quarter results 2015 6
Kvaerner Aker BioMarine Kvaerner is a specialised oil and gas related EPC company. The activity Aker BioMarine is the leading supplier of krill-derived products to the level in the first quarter was good with important milestones reached. consumer health and wellness and animal nutrition markets. Harvesting An example is the recent completion of the Edvard Grieg topside, performed well during the first quarter with stable performance. again proving Kvaerner’s ability to deliver complex EPC projects Contracts have been entered into for the majority of the expected 2015 according to plan. However, the importance of improving Kvaerner’s production of Qrill™ Aqua, but sales were lower in the first quarter competitiveness was highlighted during the quarter by the loss of the than in the previous quarter due to a combination of seasonal effects first Johan Sverdrup drilling topside tender. The company is working and the strong dollar. Superba™ Krill Oil sales are still influenced by a diligently to develop its delivery model and improving efficiency. As weak market sentiment and the company reports sales in line with the a consequence, further cost reductions and capacity adjustments previous quarters. The Houston factory is in the process of ramping were announced during the quarter. Kvaerner’s priority is to win new up production and the company is also in the process of updating the contracts at sound margins, while extracting value from the backlog of technologies to facilitate the next generation of krill products. Aker NOK 15.8 billion by delivering its projects on schedule and according BioMarine has established a platform for continued growth and is to clients’ specifications. positioned to expand globally with its strong supply chain, innovative product pipeline, and long-term client relationships. Ocean Yield Havfisk Ocean Yield is a maritime assets company with long-term contracts. The company’s mandate is to build a diversified portfolio of maritime Havfisk is Norway’s largest white fish harvesting company. The assets within oil service and industrial shipping, targeting long-term company operates 29.6 cod licenses, which represent about 10 per bareboat charters to credit-worthy counterparties. On 1 April, Ocean cent of the national cod quotas. The company is working on increasing Yield agreed to acquire eight newbuilding chemical tankers for a total its capability of full deployment of quota volumes, improving harvesting consideration of USD 307 million in combination with 15-year bareboat efficiency and enhancing operational flexibility. Catch efficiency and charters to Navig8 Chemical Tankers Inc. Following this transaction, white fish prices are the company’s key value drivers. White fish the company’s estimated EBITDA contract backlog stood at USD 2.7 prices remain strong, partially driven by the weakening of the NOK billion and the average remaining contract tenor (weighted by EBITDA) against other currencies. In the quarter, Havfisk’s appeal was heard by was 10.2 years as per the end of the fourth quarter. The company Iceland’s Supreme Court and judgement was given on 12 March. The aims to deliver competitive returns to shareholders through share court ruled in favour of Havfisk. The company announced a dividend price return and predictable and growing cash dividends, supported payment of NOK 63 million for the fiscal year 2014. by once again declaring an increase in its quarterly dividend payment for the first quarter.
Results and Returns for Industrial Holdings1)
Det norske (USD) Aker Solutions (NOK) Akastor (NOK) Kvaerner (NOK) Amounts in million 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 Revenue 26 324 7 482 8 500 4 997 4 546 3 489 3 525 EBITDA2) 18 271 666 591 391 177 170 101 EBITDA margin (%) 69.7 83.4 8.9 7.0 7.8 3.9 4.9 2.9 Net profit continued operations (3) 2 283 220 30 (251) 95 53 Closing share price (NOK/share) 62.70 44.47 N/A 41.97 N/A 16.21 12.80 6.00 Quarterly return (%)3) (6.0) 11.5 N/A 1.0 N/A (25.0) 11.3 (32.5)
Ocean Yield (USD) Aker BioMarine (USD) Havfisk (NOK) Amounts in million 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 Revenue 60 63 23 21 214 247 EBITDA2) 53 55 7 8 68 90 EBITDA margin (%) 89.1 88.2 29.2 37.7 32.0 36.5 Net profit continued operations 29 28 0 4 11 33 Closing share price (NOK/share) 36.70 51.75 N/A N/A 9.90 26.90 Quarterly return (%)3) 7.9 20.1 N/A N/A (16.1) 77.0
1) The figures refer to the full results reported by the companies. Reference is made to the respective companies’ quarterly reports for further details. 2) For Det norske, EBITDAX is used. EBITDAX is Earnings before interest, taxes, depreciation, amortisation and exploration expenses. 3) The figures refer to total shareholder return, i.e. share price development and dividend payments. Aker ASA First-quarter results 2015 7
Aker – Segment information Financial Investments
NOK billion Share of Aker’s assets 8
6 Other private investments 29% 4 Real estate development (Fornebuporten)
Other public investments 2 Cash and liquid fund investments
0 3Q 2014 4Q 2014 1Q 2015
31.12.2014 31.03.2015 NOK/share1) NOK million NOK/ share1) NOK million Cash 39 2 857 39 2 816 Liquid fund investments 5 362 5 370 Other public investments 20 1 476 24 1 753 Real estate development (Fornebuporten) 10 736 10 736 Other financial investments 29 2 123 28 2 049 Total Financial Investments 104 7 554 107 7 724
1) The investment’s contribution to Aker’s per share NAV.
Financial Investments comprise all of Aker’s assets – other than Other financial investments amounted to NOK 2.0 billion as of 31 Industrial Holdings – including cash, liquid fund investments, other March 2015, slightly down from NOK 2.1 billion in the fourth quarter public investments, real estate development (Fornebuporten) and 2014. The decrease in the first quarter is primarily due to a write-down other financial investments. The value of Aker’s financial investments and agio effets related to the Setanta Energy receivable of net minus amounted to NOK 7.7 billion as of 31 March 2015, up from NOK 7.6 NOK 85 million. billion as of 31 December 2014. Other financial investments consist of equity investments, internal and Aker’s Cash holdings were stable at NOK 2.8 billion in the first quarter external receivables and other assets, of which the largest contributors 2015. In the period, Aker received NOK 113 million in dividend payments are the investments in Align, Navigator Marine, Trygg Pharma, Setanta from Ocean Yield. Energy and Ocean Harvest, in addition to intangible, fixed and non- interest-bearing assets. Aker held NOK 370 million in Liquid fund investments at the end of the first quarter 2015, on par with prior quarter.
The value of Other public investments was NOK 1.8 billion as of 31 March 2015, up from NOK 1.5 billion in the fourth quarter 2014. The value of Aker’s investment in Aker Philadelphia Shipyard increased to NOK 1 057 million, compared to NOK 711 million in the prior quarter. The value of Aker’s direct and indirect exposure to American Shipping Company decreased to NOK 696 million, compared to NOK 765 million in the previous quarter.
Aker’s investment in Real estate development (Fornebuporten) was unchanged at NOK 736 million in the first quarter 2015. Construction of the office buildings at Fornebuporten is progressing according to plan. As of the end of first quarter, the total leased area stood at 58 350 square meters out of a total of 67 600 square meters. Subsequent to the first quarter, Fornebuporten has signed additional contracts for approximately 2 300 square meters. Aker ASA First-quarter results 2015 8
Aker ASA and holding companies Combined balance sheet
Amounts in NOK million 31.12.2014 31.03.2015 Intangible, fixed, and non-interest-bearing assets 262 267 Interest-bearing fixed assets 285 182 Investments1) 14 742 15 128 Non-interest-bearing short-term receivables 19 22 Interest-bearing short-term receivables 133 170 Cash 2 857 2 816 Assets 18 299 18 585 Equity 10 341 10 621 Non-interest-bearing debt 1 257 1 290 Interest-bearing debt to subsidiaries 5 - Interest-bearing debt, external 6 696 6 673 Equity and liabilities 18 299 18 585 Net interest-bearing receivables (debt) (3 426) (3 506) Equity ratio (%) 57 57
1) Aker ASA and holding companies prepares and presents its accounts in accordance with the Norwegian Accounting Act and generally accepted accounting practices (GAAP), to the extent applicable. Accordingly, exchange-listed shares owned by Aker ASA and holding companies are recorded in the balance sheet at the lower of market value and cost price. In accordance with Aker ASA and holding companies’ accounting principles, acquisitions and disposals of companies are a part of the ordinary business. Consequently gains from sales of shares are classified as operating revenues in the combined profit and loss statement of the accounts. Gains and losses are only recognized to the extent assets are sold to third parties. Accounting principles are presented in Aker’s 2014 annual report.
The total book value of assets increased in the first quarter 2015 by Equity stood at NOK 10.6 billion at the end of the first quarter, NOK 0.3 billion to NOK 18.6 billion. compared to NOK 10.3 billion as per 31 December 2014. The increase in the first quarter is due to Aker posting a net profit before tax of NOK Intangible, fixed and non-interest-bearing assets stood at NOK 267 277 million in the quarter. million, compared to NOK 262 million as per year-end 2014. The main items in the category are fixtures, an aircraft and deferred tax assets. Non-interest-bearing debt stood at NOK 1.3 billion at the end of the first quarter, on par with the prior quarter. Interest-bearing fixed assets fell by NOK 103 million to NOK 182 million in the first quarter, primarily due to a write-down and agio effets Interest-bearing debt, external remained stable at NOK 6.7 billion in related to the Setanta Energy receivable of net minus NOK 85 million. the first quarter.
Investments increased by NOK 0.4 billion to NOK 15.1 billion as of 31 March 2015, primarily due a NOK 466 million value increase of the share investment in Det norske. However, this was partly offset by a NOK 93 million value decrease of the directly-owned share investment in Akastor. Investments stood at NOK 14.7 billion as per year-end 2014.
Aker’s Cash holdings were stable at NOK 2.8 billion in the first quarter 2015. In the quarter, Aker received NOK 113 million in dividend payments from Ocean Yield. Aker ASA First-quarter results 2015 9
Aker ASA and holding companies Combined income statement
Amounts in NOK million 1Q 14 4Q 14 1Q 15 2014 Operating expenses (58) (52) (51) (223) EBITDA1) (58) (52) (51) (223) Depreciation and amortisation (4) (4) (4) (15) Non recurring operating items (37) 38 - 1 Value change (257) (1 142) 385 (1 432) Net other financial items (48) (85) (53) 354 Profit/(loss) before tax (403) (1 246) 277 (1 316)
1) EBITDA = Earnings before interest, tax, depreciation and amortisation.
The income statement for Aker ASA and holding companies shows a Treasury shares and number of shares pre-tax profit of NOK 277 million for the first quarter of 2015, compared to a NOK 1 246 million loss in the prior quarter. As in previous periods, As per 31 March 2015 and 12 May 2015, the total number of shares in the income statement is mainly affected by value changes in share Aker amounted to 72 374 728 and the number of outstanding shares investments and dividends received. was 72 345 912. As per the same dates, Aker ASA held 28 816 own shares. Operating expenses in the quarter were NOK 51 million compared to NOK 52 million in the prior quarter. Group consolidated accounts Value change in the first quarter was positive NOK 385 million, mainly The Aker Group’s consolidated accounts are presented from page 12 reflecting the increased value in Aker’s holdings in Det norske and onwards. Detailed information on revenues and pre-tax profit for each the decreased value in Aker’s direct holding in Akastor. The positive of Aker’s operating segments is included in note 8 on page 17 of this value change compares to a NOK 1.2 billion value decrease in the report. prior quarter.
Net other financial items in the first quarter amounted to minus NOK 53 million, compared to minus NOK 85 million in the prior quarter. The increase is primarily due to higher dividends received in the period and net currency effects. Aker ASA First-quarter results 2015 10
Risks Outlook Aker ASA and each Aker company are exposed to various forms of Investments in listed shares comprised some 72 per cent of the market, operational, and financial risks. Rather than diversifying risk company’s assets as at 31 March 2015. About 42 per cent of Aker’s by spreading investments across many different industries, Aker asset value was associated with the oil and gas sector. Maritime is focused on sectors in which the company possesses special assets represented 22 per cent, seafood and marine biotechnology expertise. The company has established a model for risk management, 15 per cent, cash and liquid fund investments 12 per cent, real estate based upon identifying, assessing and monitoring major financial, development 3 per cent, while other assets amounted to 6 per cent. strategic and operational risks in each business segment, drawing up Aker’s NAV will thus be influenced by fluctuations in commodity prices, contingency plans for those risks and attending to the implementation foreign currencies and developments on the Oslo Stock Exchange. and supervision. The identified risks and how they are managed are reported to the Aker Board on a regular basis. Aker continuously work The decline in offshore exploration and production spending, driven to improve its risk management process. by E&P companies’ increased focus on capital discipline and free cash flow, combined with a significant drop in oil prices, have resulted in The main risks that Aker ASA and holding companies are exposed less market visibility and considerably more uncertainty in the oil and to are related to the value changes of the listed assets due to market gas sector short to medium term. Globally, Aker forecasts continued price fluctuations, and unexpected developments in the companies’ long-term growth, mainly driven by the subsea and deepwater market capital expenditures. The development of the global economy, and segments. Aker therefore has a positive long-term view on the E&P energy prices in particular, as well as currency fluctuations, are and offshore oil services sectors, while acknowledging the short to important variables in assessing near-term market fluctuations. medium term slowdown in activity, marked by delayed or cancelled investment decisions, greater focus on cost-effective solutions and The companies in Aker’s portfolio are, like Aker, exposed to commercial intensified competition. risks, financial risks and market risks. In addition these companies, through their business activities within their respective sectors, are The market for white fish is still favourable, led by solid demand for also exposed to legal/regulatory risks and political risks, for example cod, and the biomass availability for white fish is expected to remain political decisions on petroleum taxes and environmental regulations. good. The sales of omega-3 ingredients to the human market are still influenced by a soft market sentiment, while demand in the animal Aker’s risk management, risks and uncertainties are described in the feed ingredient segment is developing favourably. Annual Report for 2014. Aside from changes in current macroeconomic conditions, commodity prices, currency rates and related risks, no Aker’s strong balance sheet ensures that the company is capable other significant changes have occurred subsequent to the publishing of facing unforeseen operational challenges and short-term market of the Annual Report for 2014. fluctuations. As an industrial investment company, Aker will useits resources and competences primarily to promote and support the Key events after the balance sheet date development of the companies in its portfolio, but also to consider new investment opportunities. After the close of the first quarter 2015, the following events occurred that affect Aker and the company’s investments: Oslo, 12 May 2015 Board of Directors and President and CEO nn On 1 April 2015, a bondholders meeting in Det norske’s bond, DETNOR02, approved certain amendments to the bond agreement to harmonise the financial covenants with the company’s bank facility (RBL) agreement. As compensation, bondholders were offered among other factors a one-time consent fee of 2.00 percent of the face value of the bonds and increased coupon by 1.50 percent per annum to 3-month NIBOR plus 6.50 percent per annum. nn On 1 April 2015, Ocean Yield agreed to acquire eight newbuilding chemical tankers for a total consideration of USD 307 million in combination with 15-year bareboat charters to Navig8 Chemical Tankers Inc. Further, on 21 April 2015, Ocean Yield completed a new unsecured bond issue of NOK 1,000 million with maturity date in April 2020, carrying a coupon of 3 months NIBOR + 4.00% p.a. with quarterly interest payments. The net proceeds from the bond issue will be used to finance future growth and for general corporate purposes. Aker ASA First-quarter results 2015 11
Financial calendar 2015 17 July Presentation of 2Q 2015 18 November Presentation of 3Q 2015
For more information: Lars Kristian Kildahl Head of Investor Relations Office: +47 24 13 00 61 E-mail: [email protected]
Address: Fjordalléen 16, P O Box 1423 Vika, 0115, Oslo, Norway Phone: +47 24 13 00 00 Fax: + 47 24 13 01 01 www.akerasa.com
Ticker codes: AKER NO in Bloomberg AKER.OL in Reuters
This report was released for publication at 07:00 CET on 13 May 2015. The report and additional information is available on: www.akerasa.com 12
Aker ASA First-quarter results 2015 12
Aker Group Condensed consolidated financial statements for the first quarter 2015
Consolidated income statement
1Q 1Q Year Amounts in NOK million Note 2015 2014 2014
Operating revenues 8 19 757 15 976 70 782 Operating expenses (16 367) (14 328) (63 058) Operating profit before depreciation and amortization 3 390 1 648 7 725 Depreciation and amortization 9 (1 672) (698) (3 594) Impairment changes 9,10 (504) - (4 091) Operating profit 1 215 950 39 Net financial items (232) (415) (1 478) Share of earnings in associated companies (27) 323 (3) Profit before tax 8 956 859 (1 442) Income tax expense (734) 7 (187) Net profit/loss from continuing operations 222 866 (1 629)
Discontinued operations: Profit and gain on sale from discontinued operations, net of tax 84 2 805 2 650 Profit for the period 306 3 670 1 021
Equity holders of the parent 145 1 428 (39) Minority interests 161 2 242 1 060
Average number of shares outstanding (million) 6 72,3 72,3 72,3
Basic earnings and diluted earnings per share continuing business (NOK) 1,67 6,90 (12,69) Basic earnings and diluted earnings per share (NOK) 2,00 19,74 (0,54)
Consolidated statement of comprehensive income
1Q 1Q Year Amounts in NOK million 2015 2014 2014
Profit for the period 306 3 670 1 021
Other comprehensive income, net of income tax:
Items that will not be reclassified to income statement: Defined benefit plan actuarial gains (losses) - (1) (364) Defined benefit plan actuarial gains (losses) in associated companies - (1) - Items that will not be reclassified to income statement - (2) (364)
Items that may be reclassified subsequently to income statement: Changes in fair value of financial assets (67) 8 (81) Changes in fair value cash flow hedges (627) (101) (1 823) Reclassified to profit or loss: changes in fair value of available-for-sale financial assets, translation and cash flow hedges 9 21 418 Currency translation differences 1 404 (203) 4 099 Change in other comprehensive income from associated companies 7 - 47 Items that may be reclassified subsequently to income statement 727 (275) 2 660 Other comprehensive income, net of income tax 727 (277) 2 296 Total comprehensive income for the period 1 032 3 392 3 316
Attributable to: Equity holders of the parent 665 1 386 1 163 Minority interests 367 2 006 2 154 Total comprehensive income for the period 1 032 3 392 3 316
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Aker ASA First-quarter results 2015 13
Consolidated balance sheet At 31.03 At 31.03 At 31.12 Amounts in NOK million Note 2015 2014 2014
Assets Non-current assets Property, plant & equipment 9 50 852 27 278 45 901 Intangible assets 9 32 034 16 851 30 850 Deferred tax assets 941 1 978 912 Investment in equity accounted companies 1 377 1 637 1 502 Other shares 1 189 1 846 1 267 Interest-bearing long-term receivables 1 911 1 885 1 809 Calculated tax receivable - 148 - Other non-current assets 316 446 360 Total non-current assets 88 620 52 069 82 600
Current assets Inventory, trade and other receivables 32 936 26 747 32 633 Calculated tax receivable 308 1 757 185 Interest-bearing short-term receivables 482 553 588 Cash and bank deposits 12 634 11 070 12 000 Total current assets 46 360 40 126 45 406 Assets classified as held for sale 567 884 906 Total assets 135 546 93 079 128 912
Equity and liabilities Paid in capital 2 026 2 025 2 026 Retained earnings and other reserve 7 363 7 965 6 697 Total equity attributable to equity holders of the parent 6 9 390 9 991 8 723 Minority interest 22 985 22 296 22 669 Total equity 32 374 32 286 31 392
Non-current liabilities Interest-bearing loans 7 43 614 25 595 38 918 Deferred tax liability 13 265 3 522 11 845 Provisions and other long-term liabilities 6 631 3 089 6 186 Total non-current liabilities 63 510 32 207 56 949
Current liabilities Short-term interest-bearing debt 7 5 376 3 835 4 898 Tax payable, trade and other payables 34 240 24 603 35 623 Total current liabilities 39 616 28 438 40 521 Total liabilities 103 126 60 645 97 470 Liabilities classified as held for sale 46 148 51 Total equity and liabilities 135 546 93 079 128 912
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Aker ASA First-quarter results 2015 14
Consolidated cash flow statement 1Q 1Q Year Amounts in NOK million Note 2015 2014 2014
Profit before tax 956 859 (1 442) Depreciation and amortization 1 672 698 3 594 Other items and changes in other operating assets and liabilities (1 862) (3 010) 3 154 Net cash flow from operating activities 765 (1 454) 5 306
Proceeds from sales of property, plant and equipment 9 361 4 237 Proceeds from sale of shares and other equity investments 56 - 528 Disposals of subsidiary, net of cash disposed - 5 371 7 071 Acquisition of subsidiary, net of cash acquired (42) (80) (10 228) Acquisition of property, plant and equipment 9 (3 651) (1 796) (11 299) Acquisition of equity investments in other companies - (123) (187) Net cash flow from other investments 175 375 541 Net cash flow from investing activities (3 100) 3 751 (13 336)
Proceeds from issuance of interest-bearing debt 7 3 309 3 196 28 532 Repayment of interest-bearing debt 7 (644) (4 498) (19 012) New equity 16 395 1 940 Own shares 1 - (157) Dividends paid (67) (27) (2 151) Net cash flow from financing activities 2 616 (934) 9 152
Net change in cash and cash equivalents 281 1 364 1 122 Effects of changes in exchange rates on cash 353 (18) 1 154 Cash and cash equivalents at the beginning of the period 12 000 9 724 9 724 Cash and cash equivalents at end of period 12 634 11 070 12 000
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Aker ASA First-quarter results 2015 15
Consolidated statement of changes in equity
Total Total equity translation of equity Total paid-in and other Retained holders of Minority Amounts in NOK million capital reserves earnings the parent interests Total equity Balance as at 31 December 2013 2 025 401 6 167 8 593 19 910 28 503 Profit for the year 2014 - - (39) (39) 1 060 1 021 Other comprehensive income - 1 389 (187) 1 202 1 094 2 296 Total comprehensive income - 1 389 (226) 1 163 2 154 3 316 Dividends - - (940) (940) (1 211) (2 151) Own shares - - 4 5 - 5 Total contributions and distributions - - (936) (936) (1 211) (2 146) Acquisition and sale of minority - - (89) (89) (140) (229) Issuance of shares in subsidiary - - (8) (8) 1 956 1 948 Total changes in ownership without a change of control - - (97) (97) 1 816 1 719 Balance as at 31 December 2014 2 026 1 790 4 908 8 723 22 669 31 392
Profit for the period Jan - Mar 2015 - - 145 145 161 306 Other comprehensive income - 520 - 520 206 727 Total comprehensive income - 520 145 665 367 1 032 Dividends - - - - (67) (67) Share-based payment transactions - - 1 1 - 1 Total contributions and distributions - - 1 1 (67) (65) Issuance of shares in subsidiary - - - - 16 16 Total changes in ownership without change of control - - - - 16 16 Balance as at 31 March 2015 2 026 2 310 5 054 9 390 22 985 32 374
Balance as at 31 December 2013 2 025 401 6 167 8 593 19 910 28 503 Profit for the period Jan - Mar 2014 1 428 1 428 2 242 3 670 Other comprehensive income - (41) (2) (42) (236) (278) Total comprehensive income - (41) 1 427 1 386 2 006 3 392 Dividends - - - (27) (27) Share-based payment transactions - 2 2 - 2 Total contributions and distributions - - 2 2 (27) (26) Acquisition and sale of minority - - 4 4 12 16 Issuing shares in subsidiary - 6 6 395 401 Total changes in ownership without change of control - - 10 10 407 417 Balance as at 31 March 2014 2 025 360 7 605 9 991 22 296 32 286
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Aker ASA First-quarter results 2015 16
Notes to the Aker condensed consolidated financial statements for the first quarter 2015 1. Introduction – Aker ASA - The implementation of IFRS 9 Financial Instruments Aker ASA is a company domiciled in Norway. The condensed (mandatory from 1 January 2018) may result in certain consolidated interim financial statements for the first quarter of amendments to the measurement and classification of 2015, ended 31 March 2015, comprise Aker ASA and its financial instruments. subsidiaries (together referred to as the “Group”) and the Group’s interests in associates and jointly controlled entities. 3. Significant accounting principles
The consolidated financial statements of the Group as at and for The accounting policies applied by the group in these condensed the year ended 31 December 2014 and quarterly reports are consolidated interim financial statements are the same as those available at www.akerasa.com. applied by the group in its consolidated financial statements as at and for the year ended 31 December 2014. The group’s accounting principles are described in the Aker ASA annual 2. Statement of compliance financial statements for 2014.
The condensed consolidated interim financial statements have 4. Estimates been prepared in accordance with IAS 34 Interim Financial Reporting as endorsed by EU, and the additional requirements in The preparation of interim financial statements requires the Norwegian Securities Trading Act. They do not include all of management to make judgments, estimates and assumptions that the information required for full annual financial statements, and affect the application of accounting policies and the reported should be read in conjunction with the consolidated financial amounts of assets and liabilities, income and expense. Actual statements of the Group as at and for the year ended 31 results may differ from these estimates. December 2014. The most significant judgments made by management in preparing These condensed consolidated interim financial statements were these condensed consolidated interim financial statements in approved by the Board of Directors on 12 May 2015. applying the Group’s accounting policies, and the key sources of estimate uncertainty, are the same as those applied to the A number of standards, amendments to standards and consolidated financial statements as at and for the year ended 31 interpretations are not yet effective for the period ended 31 March December 2014. 2015, and have not been applied in preparing these consolidated 5. Pension, tax and contingencies financial statements: Calculation of pension cost and liability is done annually by - Implementation of IFRS 15 Revenue from Contracts with actuaries. In the interim financial reporting, pension costs and Customers is mandatory from 1 January 2017. The new liabilities are based on the actuarial forecasts. Income tax expense standard is expected to impact Aker’s financial statements, is recognized in each interim period based on the best estimate of but the extent to which the standard will impact the revenue the expected annual income tax rates. recognition has not yet been assessed. The core principle of the new Standard is for companies to recognise revenue to 6. Share capital and equity depict the transfer of goods or services to customers in As of 31 March 2015 Aker ASA had issued 72 374 728 ordinary amounts that reflect the consideration (that is, payment) to shares at a par value of NOK 28 per share. Total own shares were which the company expects to be entitled in exchange for 28 816. Average outstanding number of shares is used in the those goods or services. The new Standard will also result in calculation of earnings per share in all periods in 2014 and 2015. enhanced disclosures about revenue, provide guidance for At year-end 2014, the board of directors suggested a dividend of transactions that were not previously addressed NOK 10.00 per share for 2014, a total of NOK 723 million. The comprehensively (for example, service revenue and contract dividend distribution was approved at the Annual General Meeting modifications) and improve guidance for multiple-element in April 2015. Half of the dividend (NOK 5.00 per share) is with an arrangements. optional settlement in new Aker shares at 10 per cent discount to the prevailing share price.
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Aker ASA First-quarter results 2015 17
7. Interest-bearing debt
Material changes in interest-bearing debt (short term and long term) during 2015:
Long-term Short-term Amounts in NOK million loan loan Total
Balance at 1 January 2015 38 918 4 898 43 816 Drawn Reserve Based Lending Facility in Det norske 775 - 775 Drawn bank facility in Akastor 1 766 - 1 766 Establishment fee, other new loans and change in credit facilities 584 184 768 Total funds from issuance of long-term and short-term debt (excl. construction loans) 3 125 184 3 309 Repayment of Ocean Yield bank loan (335) - (335) Other repayments (309) - (309) Total repayments of long-term and short-term debt (excl. construction loan) (644) - (644) Exchange rates differences and other changes 2 215 294 2 509 Balance at end of period 43 614 5 376 48 990
8. Operating segments Aker identifies segments based on the group's management and internal reporting structure. Aker’s investment portfolio is comprised of two segments: Industrial Holdings and Financial Investments.
Recognition and measurement applied in the segment reporting are consistent with the accounting policies in the condensed consolidated interim financial statements.
Operating revenues 1Q 1Q Year Amounts in NOK million 2015 2014 2014
Industrial holdings Aker Solutions 8 500 7 482 32 971 Akastor 4 546 4 997 21 432 Det norske oljeselskap 2 513 158 3 162 Ocean Yield 486 364 1 570 Aker BioMarine 165 140 703 Kvaerner 3 525 3 489 13 945 Havfisk 247 214 1 049 Eliminations and restatements (1 767) (1 925) (7 681) Total industrial holdings 18 214 14 919 67 151
Financial investments Converto Capital Fund 1) 1 195 990 3 653 Financial investments, other assets and eliminations 348 67 (22) Total financial investments 1 543 1 057 3 631
Aker group 19 757 15 976 70 782
Profit before tax 1Q 1Q Year Amounts in NOK million 2015 2014 2014
Industrial holdings Aker Solutions 338 391 1 817 Akastor (237) 71 (1 653) Det norske oljeselskap 629 (328) (2 711) Ocean Yield 218 195 652 Aker BioMarine 28 (4) (109) Kvaerner 77 135 329 Havfisk 45 15 260 Eliminations and restatements (4) 123 (618) Total industrial holdings 1 095 598 (2 032)
Financial investments Converto Capital Fund 1) 25 455 489 Financial investments, other assets and eliminations (165) (195) 100 Total financial investments (140) 260 590
Aker group 956 859 (1 442)
1) Consolidated companies owned by Converto Capital Fund.
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Aker ASA First-quarter results 2015 18
9. Property, plant and equipment and intangible assets
Material changes in property, plant and equipment and intangible assets during 2015:
Property, plant and Intangible Amounts in NOK million equipment assets Total
Balance at 1 January 2015 45 901 30 850 76 751 Other proceeds from sales of property plant and equipment (361) - (361) Total proceeds (361) - (361) Acquisition of property, plant and equipment in Det norske 1 807 - 1 807 Acquisition of exploration expenses and other intangibles in Det norske - 146 146 Acquisition in Akastor 1 205 155 1 359 Other acquisitions 262 15 277 Acquisition of property, plant and intangible assets 1) 3 273 316 3 589 Aquisition and sale of subsidiaries 590 - 590 Depreciation and amortization (1 446) (226) (1 672) Impairment - (504) (504) Expensed capitalised wells - (2) (2) Exchange rates differences and other changes 2 895 1 600 4 495 Balance at end of period 50 852 32 034 82 887
1) Including capitalized interest, license swaps effects in Det norske, removal and decommissioning costs in Det norske and other accruals (43) (18) (62)
10. Impairment charges
Impairment charges and non-recurring items in 2015 amount to NOK 504 million.
In the first quarter Det norske oljeselskap wrote down technical goodwill related to the acquisition of Marathon Oil Norge AS with NOK 409 million. The main reason for the impairment charge is the impact from the decrease in deferred tax, together with an update of assumptions (oil and gas prices and currency rates). Deferred tax on the asset values recognized in relation to the acquisition, decreased during the first quarter as a result of depreciation of these assets. In the impairment test performed, carrying value is adjusted by the remaining part of deferred tax from which the technical goodwill arose. When deferred tax from the initial recognition decreases, more goodwill is exposed for impairment. Hence, Det norske oljeselskap expects additional impairment charges going forward, as a result of the depreciation of the asset values on Alvheim cash generating unit.
11. Transactions with related parties
There have been no significant transactions with related parties in the quarter. See also note 35 in the group annual accounts for 2014.
12. Events after the balance sheet date
No material events have occurred after the balance sheet date.
Aker ASA First-quarter results 2014 1
First-quarter 2014 highlights
Financial key figures (Aker ASA and holding companies) Main contributors to Aker’s NOK 30 billion gross asset value as of 31 March 2014
The net asset value of Aker ASA and holding companies (Aker) declined 4.6 per cent in the first quarter to NOK 22.9 billion. Per-share net asset value (NAV) amounted to NOK 317 as of 31 March Aker Solutions 2014, before allocated dividend, compared to NOK 332 as per 31 December 2013.
Det norske Cash holdings rose by NOK 1.1 billion to NOK 3.5 billion in the first quarter, primarily due to the
issuing of a SEK 1.5 billion bond in January that resulted in net proceeds of NOK 1.4 billion. OceanYield
The value of Aker’s Industrial Holdings portfolio fell to NOK 20.1 billion in the quarter, from NOK 21.6 Cash billion as of 31 December 2013. Aker’s Financial Investments portfolio amounted to NOK 9.9 billion,
compared to NOK 8.1 billion as of 31 December 2013. Converto Capital Fund
The value-adjusted equity ratio was 76 per cent, down from 81 per cent as per year-end 2013, prior Aker BioMarine* to the distribution of dividend. Fornebuporten (receiv. and invest.)* The Aker share declined 13 per cent during the first quarter to NOK 193.5, compared to a 2.4 per cent gain in the Oslo Stock Exchange’s benchmark index (OSEBX). 2 4 6 8 10 *Reflected in Net Asset Value at book value NOK billion Aker received NOK 71 million in dividend payments from Ocean Yield in the quarter. Aker expects to receive over NOK 950 million in dividend payments from its portfolio investments in 2014, compared Net Asset Value (NAV) per share and share price in NOK to NOK 852 million in 2013. The company is therefore in 2014 matching upstream cashflow with total dividend payments to shareholders. 350
Aker’s Annual General Meeting approved on 11 April the payment of NOK 13 per share ordinary 300 dividend for 2013 to shareholders, which represents 3.9 per cent of NAV as per year-end 2013. In Dividend total, NOK 940 million was distributed on 25 April. 250 NAV per share (NOK) Share price 200
150
100
50
0 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14
The balance sheet and income statement for Aker ASA and holding companies (Aker) have been prepared to show the financial position as a holding company. Net asset value (NAV) is a core performance indicator at Aker ASA. NAV expresses Aker’s underlying value and is a key determinant of the company’s dividend policy (annual dividend payments of 2-4 per cent of NAV). Gross asset value is determined by applying the market value of exchange-listed shares, while book value is used for other assets. The same valuation principles apply to fund investments. Net asset value is gross asset value less liabilities. Aker ASA First-quarter results 2014 2 Letter from the CEO
Dear fellow shareholders,
2014 is revealing itself to be a transformational year for Aker. The first indication of this came on 30 April “The split announced two weeks ago was the natural next with the announcement of the split of Aker Solutions into two separate entities. Aker’s largest and most valuable investment took a major step towards dealing with its structural complexities, reducing costs step in the process of streamlining, focusing and derisking and enhancing competitiveness. Next in line is Det norske, Aker’s second-biggest investment, for which robust financing strategies to develop the Johan Sverdrup oil field are being explored. Add to this list the the portfolio.” divestment of assets from the Financial Investments portfolio and a possible U.S. listing of Aker BioMar- ine, and you’ll see some of the value potential in Aker going forward. Building sound organisational structures is a central component of Aker’s value creation plan and one which we’ve dedicated much time to with regards to Aker Solutions. Over the past few years we’ve Aker’s performance assembled an expert international Board of Directors. We’ve diversified management and brought in While the performance so far in the second quarter has been great, the first quarter of this year was new talents, including some from Aker Solutions’ key competitors. As the company moves into this next somewhat volatile. Aker’s net asset value fell 4.6 per cent in the first quarter to NOK 22.9 billion, due to phase, we’ve chosen four outstanding internal candidates from the Aker family - two CEOs and two a NOK 1.5 billion decline in the value of our Industrial Holdings portfolio to NOK 20.1 billion. This decline CFOs - with whom we will continue to build new Aker Solutions and Akastor. Luis Araujo has over 30 was primarily due to a NOK 1.4 billion drop in the Aker Solutions share investment. Financial Investments years of international experience from the industry and proved his mettle during the execution challenges rose by NOK 1.8 billion. This was led by a NOK 1.1 billion increase in cash holdings and a NOK 524 mil- encountered by Subsea in Brazil in 2011. His mandate is to stabilise operational performance and deliver lion gain in Converto Capital Fund’s assets under management, partly on the back of the Aker Philadel- on execution, so as to grow values and ensure that we meet our profitability and return targets. Frank phia Shipyard’s share price rally. O. Reite was chosen for his solid track record in developing and strengthening businesses, and will run Akastor as an investment company, much on the same model as Aker. Aker, through Kjell Inge Røkke and In April, Aker settled with the Norwegian National Authority for Investigation and Prosecution of Economic myself, will remain closely involved in the strategic development of both new Aker Solutions and Akastor. and Environmental Crime (Oekokrim), in the case involving a total return swap (TRS) agreement entered Developing the significant industrial relations we’ve built over four years at the helm of Aker Solutions by Aker in 2013 with financial exposure to Aker Solutions shares. We’ve learnt the hard way that TRSes will also be important, both on behalf of the two companies and Aker, whose portfolio is over 50 per cent are ill-suited financial instruments for the type of long-term investments that constitute our Industrial Hold- exposed to oil and gas. ings. Hence our decision not to roll over the agreement upon its expiry on 2 May, but acquire the 891 762 underlying Aker Solutions shares. Luis and Frank will assume their CEO positions at a time of heightened uncertainty in the oil service sec- tor. The oil companies’ increased focus on capital discipline and cost optimisation requires that suppliers Industrial Investments – a milestone in Aker Solutions’ journey come up with cost effective solutions, standardising and simplifying delivery models, and enhancing Aker Solutions has been on a transformational journey since the merger between Aker Maritime and productivity. Aker Solutions’ recently announced subsea production alliance with Baker Hughes was Kvaerner in 2002, which serves as a good illustration of Aker’s active ownership in practice. The great- partly a response to this. But uncertainty comes at a price. Several Norwegian suppliers have in recent er the restructuring demands of our assets, the more involved we get in unlocking the underlying value months been forced to downsize their workforce. At Aker Solutions, the marked slowdown in Mainte- potential. Since listing in 2004, Aker Solutions has generated 22.1 per cent average return to share- nance, Modifications and Operations activity in Norway has resulted in the reallocation of resources to holders. NOK 12 billion in assets have been divested since 2011. The split announced two weeks ago other business areas, but a time will come when we too may have to adjust capacity. Oil and gas is a was the natural next step in the process of streamlining, focusing and derisking the portfolio. The new knowledge-intensive business. In order to retain our experts and attract more top talents to make our Aker Solutions will become an integrated oil services provider specialising in subsea developments and industry their career choice, predictable and long-term opportunities are obviously important. Regardless offshore field design. The new Akastor will become an oil services investment company with a unique of the recent uncertainties, our outlook for oil and gas remains prosperous. On that basis, we continue to portfolio of stand-alone businesses like Drilling Technology, Process Systems and Business Solutions build and invest in strong teams. We believe in that strategy, although I appreciate that the capital market (shared services). By reducing complexity and costs, I firmly believe that the division will prove to be value sometimes would prefer a more shortsighted and opportunistic approach. However I firmly believe that as accretive for shareholders. long as the fundamentals are in place for long-term growth, that’s not the right measure to adopt to build strong teams that can help our customers boost production and drive down costs. Aker ASA First-quarter results 2014 3
“Oil and gas is a knowledge-intensive business. To retain our experts and attract more top talents to make our industry their career choice, predictable and long-term opportunities are obviously important.”
Det norske’s work on establishing funding for the Johan Sverdrup development is well underway, and the objective is to have a solid financing strategy in place by year-end. In our view, Det norske should actively manage the assets in its portfolio as a potential funding source and seek to utilise the company’s tax loss carry forward generated from its significant capital expenditures. The unique quality of the Johan Sverdrup asset is such that it offers considerable optionality in terms of financing and lends itself to a variety of credit structures. Furthermore, the challenge in seeking financing has been moderated by the recent positive developments in the credit markets. All alternatives are being explored. An equity issue will be inevitable sooner or later and in Aker’s opinion, it should be open to all shareholders.
Aker’s remaining Industrial portfolio continues to develop in a satisfactory manner. Kvaerner delivered the Edvard Grieg and Martin Linge steel jackets on time, on specification and with sound margins, proving that the Verdal yard is up to the challenge of competing for the Johan Sverdrup contracts. Ocean Yield contin- ues to deliver on its strategy of expanding its portfolio and generating competitive returns to shareholders through predictable and growing cash dividends. Aker BioMarine is working towards a potential U.S. listing.
Financial Investments – steadily simplifying the portfolio Aker’s NOK 3 billion realisation programme for its Financial Investments is progressing as planned, and is a first step towards the eventual full exit of the assets in this portfolio. As of the first quarter, our fund holdings in Oslo Asset Management and Norron have been classified as “liquid fund investments” to reflect their cash equivalent nature. Both fund managers are adeptly managing our capital and thus realising these invest- ments is not on the agenda, however they are a source of liquidity should Aker be in need of immediate funding for its Industrial Holdings.
Aker’s portfolio is undergoing changes and exciting opportunities remain ahead of us. We at Aker continue to work hard, every day, to grow our net asset value and pay a steadily rising dividend to our shareholders. Since listing in 2004, Aker has on average generated a total annual return, including dividend, of 27 per cent. I am confident that our portfolio of solid companies will allow us to uphold competitive total returns going forward.
Øyvind Eriksen President and CEO Aker ASA First-quarter results 2014 4
Aker ASA and holding companies Assets and net assets value
Net asset value (NAV) composition - Aker ASA and holding companies
As of 31.03.2014 As of 31.12.2013 NOK/ share NOK million NOK/ share NOK million Industrial Holdings 278 20 096 299 21 635 Financial Investments 137 9 921 113 8 149 Gross assets 415 30 017 412 29 784 Total liabilities before allocated dividend (98) (7 119) (80) (5 780) NAV (before dividend allocations) 317 22 898 332 24 003 Net interest-bearing receivables/(liabilities) (2 469) (2 321) Number of shares outstanding (million) 72 330 72 330
Gross assets Gross assets per sector (NOK billion) (NOK billion)
30 30
24 24
18 Financial Investments 18 Other Industrial Holdings Maritime Assets Cash 12 12 Seafood and marine biotechnology Oil-related 6 6
0 0 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14
Net asset value (NAV) is a core performance indicator at Aker ASA. NAV expresses Aker’s underlying value and is a key determinant of the company’s dividend policy (annual dividend payments of 2-4 per cent of NAV). Net asset value is determined by applying the market value of exchange-listed shares, while book value is used for other assets. The same valuation principles apply to fund investments. Aker’s assets (Aker ASA and holding companies) consist largely of equity investments in the Industrial Holdings segment, and of cash, receivables and fund investments in the Financial Investments segment. Other assets consist mainly of intangibles and tangible fixed assets. The chart above shows the composition of Aker’s assets. Business segments are discussed in greater detail on pages 5-7 of this report. Aker ASA First-quarter results 2014 5
Aker – Segment information Industrial Holdings
The total value of Aker’s Industrial investments was NOK 20.1 billion as of 31 March 2014, compared with Grieg and Martin Linge jackets on time, respectively in April and May 2014, were positive in this regard. NOK 21.6 billion as of 31 December 2013. Maintaining a sustainable dividend with an attractive yield remains a priority for Kvaerner.
Aker’s five listed holdings accounted for NOK 18.4 billion, compared to NOK 19.9 billion in the previous Det norske quarter. Share investments in Aker Solutions fell NOK 1.4 billion, while Det norske declined by NOK 281 Det norske is developing as an E&P company with operatorship of the Jette and Ivar Aasen projects, million and Havfisk by NOK 118 million. Investments in Kvaerner rose by NOK 100 million and Ocean Yield and a stake in the Johan Sverdrup oil field. Det norske will be facing important funding needs and is by NOK 196 million. Aker’s ownership stake in Ocean Yield was reduced to 73.2 per cent in the quarter working on establishing robust capital structures and an optimal financing plan that takes into account following the issue of 408 597 new shares to the management of the company, as part of the company’s the interests of all shareholders. In Aker’s view, Det norske should actively pursue portfolio initiatives incentive scheme. as a potential funding source. The unique quality of the Johan Sverdrup asset is such that it offers considerable optionality in terms of financing and lends itself to a variety of credit structures, all of The book value of Aker’s non-listed holding, Aker BioMarine, was reduced to NOK 1.74 billion from NOK which are being actively assessed. Aker is working closely with Det norske to ensure that the company’s 1.76 billion as per 31 March 2014, after a share sale to company management. interests are secured as the unitisation negotiations for Johan Sverdrup get underway. From an operational perspective, ensuring that the Ivar Aasen project is kept on schedule and delivered on budget Below is a summary of Aker’s view on each of its Industrial holdings. is the company’s main priority.
Aker Solutions Share of Aker assets Akers Industrial Holdings Aker Solutions reached another milestone in the process of restructuring and streamlining the portfolio, (NOK billion) with the announcement of the splitting of the company into two separate entities. The split will create 25 a growth-biased company with a subsea and field design focus - new Aker Solutions - and an oilfield services investment company named Akastor that provides a structure where businesses such as Drilling Technologies and Aker Oilfield Services can develop as independent entities. The split is scheduled to be 20 in effect as of the end of September 2014, and both companies will be listed on Oslo Stock Exchange. The move will deal with the strategic challenges posed by the diversity of Aker Solutions’ business 15 Aker BioMarine areas, reduce costs and enhance competitiveness. New Aker Solutions and Akastor should thus be well Ocean Yield Det norske oljeselskap positioned to handle the uncertainty that marks the oil service sector in the short-term, as oil companies 67% 10 Kvaerner moderate E&P spending and place greater emphasis on capital discipline and cost optimisation. The Aker Solutions slowdown in activity affected Aker Solutions’ first-quarter results, with margin deterioration in the Drilling 5 Technologies and Maintenance, Modifications and Operations segments. However order intake remains healthy in most of Aker Solutions’ core markets and the company’s solid NOK 55.6 billon order backlog 0 provides future revenue visibility. Continued focus on operational excellence to improve the company’s 31.03.13 31.12.13 31.03.14 execution record will be crucial to unlock the full value potential going forward.
Kvaerner 31.12.13 1Q 2014 31.03.14 Kvaerner is taking action to recover its position on the Norwegian continental shelf. Strategic initiatives Ownership Net Declared Value include enhancing productivity at the yards, developing alternative, low-cost delivery models, cutting Amounts in NOK million in % Value investments dividends change Value the cost base for the EPC value chain by 15 per cent, resolving legacy projects and divesting non-core Aker Solutions 34.2 10 154 - - (1 419) 8 735 assets. The global EPC market remains active, despite the postponements of certain projects with Kvaerner 28.7 888 - - 100 989 marginal economics and limited contract award opportunities in the short term in target markets. In the Det norske 50.0 4 692 - - (281) 4 410 medium term, the Johan Sverdrup development carries the greatest strategic importance for Kvaerner on the NCS. Exploration activity in the Arctic region is expected to provide Kvaerner with further Ocean Yield 73.2 3 409 - (71) 268 3 606 opportunities as the leading expert in concrete gravity-based structures. Whilst waiting for the next round Aker BioMarine* 99.0 1 760 (16) - (1) 1 743 of tenders, the company is focused on extracting value from a high backlog of NOK 19.7 billion and Havfisk 73.2 732 - - (118) 614 delivering its projects on schedule and according to clients’ specifications. The delivery of the Edvard Total Industrial Holdings 21 635 (16) (71) (1 452) 20 096 *Reflected in net asset value at book value Aker ASA First-quarter results 2014 6
Aker BioMarine and three Liquefied Ethylene Gas (LEG) carriers and two PCTCs for approximately USD 333 million in Aker BioMarine is an integrated biotechnology company that develops, markets and sells krill-derived total, as announced in May 2014. The latest contracts raised the company’s estimated EBITDA contract ingredients for applications ranging from fish feed to dietary supplements. While the long-term market backlog to approximately USD 2.1 billion and the average remaining contract tenor (weighted by EBITDA) outlook for Aker BioMarine’s core products remains favourable, the general weakness in U.S. retail to 7.3 years, providing good revenue visibility. While competition in the sale and leaseback market has omega-3 sales contributed to Superba™ Krill first-quarter sales declining 19 per cent year-on-year on intensified, demand remains healthy, providing continued opportunities for new transactions generating a volume basis. Qrill® demand is robust and prices continue to gain; however, sales in the first quarter double-digit returns. Ocean Yield’s financial flexibility was strengthened in the first quarter with the issue were somewhat lower than last year because of periodisation between quarters. The 2014 krill harvesting of an unsecured bond of NOK 600 million with maturity in March 2019. The company aims to deliver season is off to a good start, with record volumes harvested in the first quarter due to vessel upgrades competitive returns to shareholders through predictable and growing cash dividends, and introduced conducted in the fourth quarter 2013 and favourable harvesting conditions. The new Superba™ Krill quarterly dividends in the fourth quarter 2013. factory in Houston is expected to start commercial production in the second half of 2014. Aker BioMarine has established a solid platform for future growth and is well positioned to expand globally with its strong Havfisk supply chain, innovative product pipeline, and stable long-term client relationships. Aker BioMarine’s Havfisk is Norway’s largest white fish harvesting company, with 10 trawlers in operation and 29.6 cod Trygg Pharma Group, jointly owned with Lindsay Goldberg, includes a product candidate for the treatment licences, representing around 10 per cent of the national cod quotas. The company is working on of severe hypertriglyceridemia named AKR 963. On 23 April, the FDA approved AKR 963 as a branded increasing its capability of full deployment of quota volumes capacity, improving harvesting efficiency and product, which is a necessary and important step towards its commercialisation in the U.S. The value enhancing operational flexibility. Catch efficiency and white fish prices are the most important factors for of the investment in Trygg Pharma Group depends on Trygg’s ability to successfully launch the product, the company’s bottom line. Havfisk has renewed its fleet and in March took delivery of the third of three alone or with a partner. new trawlers. All three vessels are performing well and contributed to 20 per cent higher catch volumes year-on-year in the first quarter. Record harvesting volumes, higher prices and a higher number of Ocean Yield operating days contributed to boosting first-quarter earnings. The Norwegian Ministry of Trade, Industry Ocean Yield’s mandate is to build a diversified portfolio of maritime assets within oil service and industrial and Fisheries has issued a proposal to increase the quota ceiling from three to four quotas per vessel. If shipping, with a focus on long-term charters to counterparties with solid credit ratings. The company approved, this would enable further fleet optimisation. Total fishing quotas for cod set for 2014 are on par targets about USD 350 million in annual accretive acquisitions. Since its IPO in July 2013, Ocean Yield with 2013 levels and the market is developing positively, with white fish prices firming up. has contracted two Pure Car Truck Carriers (PCTC) for approximately USD 137 million in August 2013,
Results and Returns Industrial Holdings1)
Aker Solutions Kvaerner Det norske Ocean Yield Aker BioMarine Havfisk (NOK) (NOK) (NOK) (USD) (USD) (NOK) Amounts in million 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 Revenue 11 229 10 312 3 489 2 663 158 80 60 57 23 27 214 172 EBITDA2) 1 047 767 170 110 98 18 53 49 7 10 68 41 EBITDA margin (%) 9.3 7.4 4.9 4.1 61.9 22.4 89.1 86.2 28.7 34.6 32.0 23.8 Net profit 306 250 95 46 21 (20) 29 17 (3) 1 11 3 Closing share price (NOK/share) 93.25 108.60 12.80 12.10 62.70 90.05 36.70 N/A N/A N/A 9.90 5.95 Quarterly return (%)3) (14.0) (3.7) 11.3 (25.3) (6.0) 9.2 7.9 N/A N/A N/A (16.1) 1.2
1) The figures refer to the full results reported by the companies. Reference is made to the respective companies’ quarterly reports for further details. 2) For Det norske, EBITDAX is used. EBITDAX is Earnings before interest, taxes, depreciation, amortisation and exploration expenses. 3) The figures refer to total shareholder return, i.e. share price development and dividend payments. Aker ASA First-quarter results 2014 7
Aker – Segment information Financial Investments
Financial Investments comprise all of Aker’s (Aker ASA and holding companies) assets – other than Converto Capital Fund’s total assets under management rose to NOK 3.3 billion in the first quarter, Industrial Holdings – including cash, receivables, shares and investments in funds. The value of Aker’s from NOK 2.8 billion as at 31 December 2013, primarily due to a substantial value gain in the share financial investments amounted to NOK 9.9 billion as of 31 March 2014, compared with NOK 8.1 billion investments in Aker Philadelphia Shipyard. The shipyard raised approximately USD 65 million in equity as of 31 December 2013. through a successful private placement and subsequent retail offering of its shares, and sold its profit sharing interests in two product tankers to Crowley in March for USD 40 million. The company has Aker’s Cash holding increased from NOK 2.5 billion to NOK 3.5 billion in the first quarter, primarily due proposed to pay a dividend of NOK 17.50 per share in May 2014. Payment of the proceeds from the to the issue of a SEK 1.5 billion bond in January, with net proceeds of NOK 1.4 billion. Additionally, Aker Stream sale was delayed from the first quarter to the second quarter 2014. received NOK 71 million in quarterly dividend from Ocean Yield. Aker contributed NOK 304 million in net funding to Fornebuporten in the quarter, of which NOK 135 million was a repayment of a short-term loan. Share of Aker’s assets Aker’s Financial Investments Aker held NOK 708 million in liquid fund investments in the first quarter, on par with levels as per year- (NOK billion) end 2013. The value of Aker’s investment in AAM Absolute Return Fund fell to NOK 365 million as of 31 March 2014, compared with NOK 370 million at year-end 2013. The value of Aker’s investments in the Norron Target and Norron Select funds totalled NOK 344 million as of 31 March 2014, up from NOK 338 10 million as of 31 December 2013.
8 Aker held NOK 463 million in Receivables (excl. Fornebuporten) as of 31 March 2014, most of which were interest-bearing receivables from subsidiaries. This compares to NOK 432 million as of year-end Converto Capital Fund 2013. The change is primarily due to a NOK 60 million loan facility extended to Aker BioMarine, of 33% 6 Equity investments and other which NOK 30 million was drawn in the first quarter. Fornebuporten (receivables and invest.) 4 Receivables excl. Fornebuporten Aker’s total exposure to Fornebuporten stood at NOK 1.4 billion as of 31 March 2014, of which NOK Liquid fund investment 1.2 billion represented equity investments and NOK 188 million receivables. Construction of the office 2 Cash and retail buildings at Fornebuporten is progressing according to plan and discussions with potential tenants are ongoing. Following a 3 000 square meters contract signed with Eureka in February, the total 0 remaining vacancy stands at approximately 21 000 square meters, which represents one-third of the 31.03.13 31.12.13 31.03.2014 project.
Construction of the 291 apartments at Fornebuporten Bolig in partnership with Profier is also on As of 31.03.2014 As of 31.12.2013 schedule, with final handover expected in the second half of 2015. The residential real estate market in NOK/ share1) NOK million NOK/ share1) NOK million Oslo is showing signs of a recovery after a slow-down in the second half of 2013 and Fornebuporten has recorded new sales year-to-date, bringing the number of pre-sold apartments to 272 out of 291. Cash 49 3 519 34 2 459 Fornebuporten has secured external financing for about 85 per cent of the project. Liquid fund investments 10 708 10 707 Receivables excl. Fornebuporten 6 463 6 432 Phase one of the Aberdeen business park project, which consists of three office buildings, is progressing Fornebuporten (receivables and invest.) 19 1 407 17 1 238 according to plan. Fornebuporten is in advanced dialogue as regards to the occupancy of these Equity investments and other 7 525 7 535 buildings and expects a contract to be in place by the end of the second quarter 2014. The sales process Converto Capital Fund 46 3 300 38 2 776 of phase one has been initiated and Fornebuporten expects to realise the Aberdeen buildings through a Total financial investments 137 9 921 113 8 149 forward sale to an institutional buyer in 2014. 1) The investment’s contribution to Aker’s per share NAV. Equity investments excluding Fornebuporten and Other financial investmentsamounted to NOK 240 million and NOK 285 million respectively, compared to NOK 240 million and NOK 295 million as of 31 December 2013. Aker ASA First-quarter results 2014 8
Aker ASA and holding companies Combined balance sheet
Amounts in NOK million 31.03.13 30.06.13 30.09.13 31.12.13 31.03.14 Intangible, fixed, and non-interest-bearing assets 263 270 267 237 243 Interest-bearing fixed assets 1 872 2 040 1 662 605 598 Investments1) 12 256 12 520 12 466 15 762 15 621 Non-interest-bearing short-term receivables 79 56 38 59 41 Interest-bearing short-term receivables 115 153 31 15 53 Cash 2 782 4 109 4 751 2 459 3 519 Assets 17 367 19 149 19 214 19 137 20 075
Equity 12 644 13 341 13 415 12 417 12 015 Non-interest-bearing debt 1 252 410 399 1 320 1 422 Interest-bearing debt to subsidiaries - - - 135 - Interest-bearing debt, external 3 471 5 398 5 401 5 266 6 638 Equity and liabilities 17 367 19 149 19 214 19 137 20 075
Net interest-bearing receivables (debt) 1 298 904 1 043 (2 321) (2 469) Equity ratio (%) 73 70 70 65 60
1) Aker ASA and holding companies prepares and presents its accounts in accordance with the Norwegian Accounting Act and generally accepted accounting practices (GAAP), to the extent applicable. Accordingly, exchange-listed shares owned by Aker ASA and holding companies are recorded in the balance sheet at the lower of market value or cost price. In accordance with Aker ASA and holding companies’ accounting principles, acquisitions and disposals of companies are a part of the ordinary business. Consequently gains on sales of shares are classified as operating revenues in the income statement of the accounts. Gains and losses are only recognised to the extent assets are sold to third parties. Accounting principles are presented in Aker’s 2013 annual report.
The total book value of assets rose in the first quarter by NOK 938 million to NOK 20.1 billion, compared Equity stood at NOK 12.0 billion by the end of the first quarter, compared to NOK 12.4 billion as per 31 to NOK 19.1 billion as of 31 December 2013. December 2013. The decrease is due to Aker posting a net loss after tax of NOK 403 million in the quarter.
Intangible, fixed and non-interest-bearing assetsstood at NOK 243 million, compared to NOK 237 Non-interest-bearing debt stood at NOK 1.4 billion at the end of the first quarter, compared to NOK million at year-end 2013. The main items in the category are fixtures, an airplane and deferred tax assets. 1.3 billion in the prior quarter. The quarterly change is due to a NOK 51 million currency swap liability related to the new Swedish kronor-denominated bond and a NOK 51 million penalty notice issued by the Interest-bearing fixed assets fell to NOK 598 million from NOK 605 million during the first quarter. Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Oekokrim) for alleged violation of insider trading rules. The case relates to a total return swap agreement Investments fell by NOK 141 million to NOK 15.6 billion as of 31 March 2014, primarily due to a NOK 249 with financial exposure to Aker Solutions shares, renewed by Aker in November 2013. million decline in the value of the directly-owned share investments in Aker Solutions. This was partly compensated by a NOK 169 million equity investment in Fornebuporten. Investments stood at NOK 15.8 Interest-bearing debt, external amounted to NOK 6.6 billion in the first quarter, compared to NOK billion as per year-end 2013. 5.3 billion in the prior quarter. In January, Aker issued a senior unsecured bond of SEK 1.5 billion, with maturity date on 24 July 2019. Aker’s Cash holding climbed from NOK 2.5 billion to NOK 3.5 billion during the first quarter. The increase is mainly due to the issue of a SEK 1.5 billion bond by Aker in January, with net proceeds of NOK 1.4 billion. Aker also received NOK 71 million in quarterly dividend from Ocean Yield. Aker repaid a NOK 135 million loan to Fornebuporten in the quarter, and invested NOK 169 million in equity, which reduced Aker’s cash position in the period. Aker ASA First-quarter results 2014 9
Aker ASA and holding companies Combined income statement
Year Treasury shares and number of shares Amounts in NOK million 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2013 As per 31 March 2014, the total number of shares in Aker amounted to 72 374 728 and the number of outstanding shares was 72 329 923. As per 14 May 2014, Aker held 44 805 own shares. Operating expenses (52) (57) (57) (70) (58) (236) EBITDA1) (52) (57) (57) (70) (58) (236) Depreciation and amortisation (4) (4) (4) (4) (4) (14) Group consolidated accounts The Aker Group’s consolidated accounts are presented from page 12 onwards. As of the first quarter of Non recurring opearting items - - - - (37) - 2014, Aker Solutions and Kvaerner are treated as subsidiaries in Aker’s consolidated financial statements Value change 128 281 (29) (128) (257) 252 following the implementation of IFRS 10. Detailed information is included in note 4 on page 16. Detailed information on revenues and pre-tax profit for each of Aker’s operating segments is included in Net other financial items 21 477 167 158 (48) 822 note 9 on page 22 of this report. Profit/(loss) before tax 93 697 77 (43) (403) 825
1) EBITDA = Earnings before interest, tax, depreciation and amortisation.
The income statement for Aker ASA and holding companies shows a pre-tax loss of NOK 403 million for the first quarter of 2014, compared to a NOK 43 million loss in the prior quarter. As in previous periods, the income statement is mainly affected by value changes in the share investments.
There were no sales gains recorded in the first quarter.
Operating expenses in the quarter were NOK 58 million, down from NOK 70 million in the fourth quarter.
Non-recurring operating items consists of the NOK 34 million fine issued by Oekokrim in relation to the TRS case. The NOK 17 million in theoretical gain made on the TRS agreement in November 2013 that was confiscated is classified under net other financial items.
Value change in the first quarter was negative NOK 257 million, compared to a value change of negative NOK 128 million in the fourth quarter. The change reflects primarily the NOK 249 million value change in Aker’s 6 per cent direct holding in Aker Solutions.
Net other financial itemsduring the first quarter amounted to negative NOK 48 million, compared to NOK 158 million in the prior quarter. Aker expensed NOK 61 million in net interest in the quarter, NOK 17 million in theoretical gains from the TRS agreement confiscated and NOK 23 million in value reduction for the same TRS agreement. A NOK 71 million dividend from Ocean Yield affected net other financial items positively. Aker ASA First-quarter results 2014 10
Risks Aker ASA and each Aker company are exposed to various forms of market, operational, and financial Processing Systems, Oilfield and Marine Assets, Surface Products and Business Solutions. The risks. Rather than diversifying risk by spreading investments across many different industries, Aker is demerger is scheduled to be completed in September and both companies will be listed on the Oslo focused on sectors in which the company possesses special expertise. The company has established a Stock Exchange. model for risk management, based upon identifying, assessing and monitoring major financial, strategic and operational risks in each business segment, drawing up contingency plans for those risks and On 2 May 2014, Aker acquired 891 762 shares in Aker Solutions at a price of NOK 97.75 per share, attending to the implementation and supervision of their management. The identified risks and how they following the expiration of a TRS agreement with exposure to the equivalent number of Aker Solutions are managed are reported to the Aker Board on a regular basis. shares. Following the acquisition, Aker ASA owns directely 17 331 762 shares in Aker Solutions, representing 6.3 per cent of the outstanding shares. The main risks that the group and the Parent Company are exposed to are related to the value changes of the listed assets due to market price fluctuations, and unexpected developments in the companies’ On 8 May 2014, Ocean Yield announced that the company had invested approximately USD 243 capital expenditures. The development of the global economy, and energy prices in particular, are million in newbuilding contracts for three Liquefied Ethylene Gas carriers. The vessels are scheduled important variables in assessing near-term market fluctuations. for delivery in 2016 and will be chartered on 15-year "hell and high water" bareboat charters to the Hartmann Group. The company also announced the acquisition of two Pure Car Truck Carriers that The companies in Aker’s Industrial Holdings are, like Aker, exposed to commercial risks, financial risks will be chartered to Höegh Autoliners for a period of eight years. and market risks. In addition these companies, through their business activities within their respective sectors, are also exposed to legal/regulatory risks and political risks, for example political decisions on Outlook petroleum taxes and environmental regulations. Investments in listed shares comprised some 70 per cent of the company’s assets as per 31 March 2014. About 50 per cent of Aker’s asset value was associated with the oil and gas sector. Maritime assets repre- Aker’s risk management, risks and uncertainties are described in the Annual Report for 2013. No sented 16 per cent, seafood and marine biotechnology 8 per cent, cash 12 per cent, real estate develop- significant changes have occurred subsequently, aside from changes in current macroeconomic ment 5 per cent, while other assets amounted to 9 per cent. Aker’s growth and development will thus be conditions and related risks. influenced primarily by fluctuations in crude oil prices and developments on the Oslo Stock Exchange.
Dividend payment The companies in Aker’s portfolio are well positioned to benefit from the expected long-term growth in On 11 April, the Annual General Meeting in Aker ASA approved the distribution of a dividend of NOK 13 demand for seafood, omega-3 based products and energy. The market for white fish is strengthening, led per share, which accrued to registered shareholders as of 11 April 2014. The share was quoted ex- by strong demand for haddock and saithe. The biomass availability for white fish is expected to remain dividend on 14 April 2014 and Aker paid out NOK 940 million in dividend on 25 April 2014. good, as indicated by the high catch rates for cod in recent quarters. Despite recent volatility in omega-3 ingredients sales, Aker’s long-term outlook for the market remains positive. Key events after the balance sheet date After the close of the first quarter of 2014, the following events occurred that affect Aker and the Exploration and production activity on the Norwegian Continental Shelf remains at historically high levels, company’s investments: with petroleum investments projected to reach a record NOK 224 billion in 2014, according to Statistics Norway (SSB). Norway remains the foundation of Aker’s energy exposure. Aker expects global spending On 4 April 2014, Aker reached an agreement with the Norwegian National Authority for Investigation on offshore exploration and production to flatten in the short-term, albeit at high levels. In the longer and Prosecution of Economic and Environmental Crime (Oekokrim) following an investigation term, Aker forecasts annual growth rates of 8–10 per cent, driven by the subsea and deepwater market into a total return swap agreement entered by Aker with exposure to Aker Solutions shares. Aker segments. Aker therefore has a positive view on the oil and offshore oil services sector long-term, while cooperated with Oekokrim in the investigation and chose to settle the case, accepting a penalty positioning itself to weather short-term slowdown in activity, marked by lower E&P spending, delayed or notice amounting to NOK 51 million. This was composed of the confiscation of NOK 17 million in cancelled investment decisions, greater focus on cost-effective solutions and intensifying competition. theoretical gains made on the TRS agreement in November 2013, and a fine based on twice the gains. Aker provided for the penalty in the first quarter. Aker’s strong balance sheet ensures that the company is capable of responding to unforeseen operational challenges and short-term market fluctuations. As an industrial investment company, Aker will use its On 22 April 2014, Aker Solutions announced that it had entered into a strategic non-incorporated resources and competences both to promote the development of the companies in its portfolio and to alliance with Baker Hughes. The objective is to create a strategic alliance which combines the consider new investment opportunities. subsurface competence of Baker Hughes with the subsea competence of Aker Solutions. Oslo, 14 May 2014 On 30 April 2014, Aker Solutions announced the splitting of the company into two: new Aker Board of Directors and President and CEO Solutions and Akastor. New Aker Solutions will comprise Subsea, Engineering, Maintenance, Modifications and Operations and Umbilicals. Akastor will be composed of Drilling Technologies, Aker ASA First-quarter results 2014 11
Financial calendar 2014 18 July Presentation of 2Q 2014 14 November Presentation of 3Q 2014
For more information: Marianne Stigset Head of Investor Relations Office: +47 24 13 00 66 E-mail: [email protected]
Atle Kigen Head of Corporate Communication Office: +47 24 13 00 08 E-mail: [email protected]
Address: Fjordalléen 16, P O Box 1423 Vika, 0115 Oslo, Norway Phone: +47 24 13 00 00 Fax: + 47 24 13 01 01 www.akerasa.com
Ticker codes: AKER NO in Bloomberg AKER.OL in Reuters
This report was released for publication at 07:00 CET on 15 May 2014. The report and additional information is available on www.akerasa.com Aker ASA First-quarter results 2014 12
Aker group Condensed consolidated financial statements for the first quarter 2014
Consolidated income statement Consolidated statement of comprehensive income 1Q 1Q Year 1Q 1Q Year 2014 2013 2013 2014 2013 2013 Amounts in NOK million Note Restated* Restated* Amounts in NOK million Restated* Restated*
Operating revenues 9 15 976 14 593 61 382 Profit for the period 3 670 331 1 734 Operating expenses (14 328) (13 514) (57 099) Operating profit before depreciation and Other comprehensive income, net of income tax: amortisation 1 648 1 079 4 283 Items that will not be reclassified to income statement: Depreciation and amortisation 10 (698) (536) (2 722) Defined benefit plan actuarial gains (losses) (1) - (6) Impairment changes and non-recurring items - (8) (1 218) Defined benefit plan actuarial gains (losses) in (1) - 3 Operating profit 950 534 343 associated companies Items that will not be reclassified to income statement (2) - (3) Net financial items (415) (316) (867) Share of earnings in associated companies 323 (20) 177 Items that may be reclassified subsequently to income statement: Profit before tax 9 859 198 (347) Changes in fair value of financial assets Income tax expense 7 122 1 613 8 42 395 Changes in fair value cash flow hedges Net profit/loss from continuing operations 866 321 1 266 (101) 56 269 Change in fair value of available for sale financial assets transferred to profit and loss 21 (1) (145) Discontinued operations: Currency translation differences (203) 433 1 508 Profit and gain on sale from discontinued operations, Change in other comprehensive income from net of tax 11 2 805 10 468 associated companies - 1 - Profit for the period 3 670 331 1 734 Items that may be reclassified subsequently to income statement (276) 531 2 027 Equity holders of the parent 1 428 109 759 Other comprehensive income, net of income tax (278) 531 2 024 Minority interest 2 242 222 975 Total comprehensive income for the period 3 392 861 3 757
Average number of shares outstanding (million) 7 72.3 72.3 72.3 Attributable to: Basic earnings and diluted earnings per share Equity holders of the parent continuing business (NOK) 6.90 1.43 8.64 1 386 390 1 714 Minority interests Basic earnings and diluted earnings per share (NOK) 19.74 1.51 10.49 2 006 472 2 043 Total comprehensive income for the period 3 392 861 3 757
*) See Note 4 Aker ASA First-quarter results 2014 13
Consolidated cash flow statement Consolidated balance sheet
1Q 1Q Year At 31.03 At 31.03 At 31.12 At 01.01 2014 2013 2013 2014 2013 2013 2013 Amounts in NOK million Note Restated* Restated* Amounts in NOK million Note Restated* Restated* Restated*
Profit before tax 859 198 (347) Assets Depreciation and amortisation 698 536 2 722 Non-current assets Other items and changes in other operating Property, plant & equipment 10 27 278 25 058 25 874 23 167 assets and liabilities (3 010) (2 840) 3 360 Intangible assets 10 16 851 17 592 17 289 16 254 Net cash flow from operating activities (1 454) (2 105) 5 735 Deferred tax assets 1 978 1 248 2 082 1 256 Investment in equity accounted companies 1 637 1 018 1 321 1 119 Proceeds from sales of property, plant and 10 Other shares 1 846 1 649 1 491 1 363 equipment 4 (6) 1 341 Interest-bearing long-term receivables 1 885 2 275 2 066 2 206 Proceeds from sale of shares and other equity Calculated tax receivable 148 261 - - investments - 32 308 Other non-current assets 446 407 265 305 Disposals of subsidiary, net of cash disposed 5 371 12 4 Total non-current assets 52 069 49 509 50 389 45 670 Acquisition of subsidiary, net of cash acquired (80) (1 046) (1 241) Acquisition of property, plant and equipment 10 (1 796) (2 249) (9 608) Current assets Acquisition of equity investments in other Inventory, trade and other receivables 26 747 26 756 26 633 23 704 companies (123) (111) (2 035) Calculated tax receivable 1 757 1 466 1 647 1 442 Net cash flow from other investments 375 (58) 222 Interest-bearing short-term receivables 553 271 934 449 Net cash flow from investing activities 3 751 (3 427) (11 009) Cash and bank deposits 11 070 7 631 9 724 7 754 Total current assets 40 126 36 125 38 938 33 349 Proceeds from issuance of interest-bearing debt 8 3 196 5 529 14 733 Assets classified as held for sale 11 884 - 4 417 - Repayment of interest-bearing debt 8 (4 498) (198) (6 625) Total assets 93 079 85 633 93 743 79 019 New equity 395 1 878 Own shares - - 81 Equity and liabilities Dividends paid (27) - (1 946) Paid in capital 2 025 2 024 2 025 2 001 Net cash flow from financing activities (934) 5 332 7 120 Retained earnings and other reserve 7 965 7 008 6 568 6 508 Total equity attributable to equity holders of the parent 7 9 991 9 032 8 593 8 509 Net change in cash and cash equivalents 1 364 (200) 1 846 Minority interest 22 296 19 454 19 910 19 122 Effects of changes in exchange rates on cash (18) 78 125 Total equity 32 286 28 486 28 503 27 631 Cash and cash equivalents at the beginning of the period 9 724 7 754 7 754 Non-current liabilities Cash and cash equivalents at end of period 11 070 7 631 9 724 Interest-bearing loans 8 25 595 24 047 25 214 18 416 Deferred tax liability 3 522 3 587 3 554 3 481 *) See Note 4 Provisions and other long-term liabilities 3 089 3 345 3 114 3 214 Total non-current liabilities 32 207 30 979 31 881 25 111
Current liabilities Short-term interest-bearing debt 8 3 835 3 327 5 564 3 299 Tax payable, trade and other payables 24 603 22 842 26 620 22 978 Total current liabilities 28 438 26 168 32 184 26 277 Total liabilities 60 645 57 147 64 065 51 388 Liabilities classified as held for sale 11 148 - 1 176 - Total equity and liabilities 93 079 85 633 93 743 79 019 Aker ASA First-quarter results 2014 14
Consolidated statement of changes in equity Total transla- Total equity of Total paid-in Translation Fair value Hedging tion and other Retained equity holders Minority Amounts in NOK million capital reserve reserves reserves reserves earnings of the parent interests Total equity
Balance as at 31 December 2012 - as previously reported 2 001 (758) 207 (14) (565) 8 024 9 460 9 350 18 810 Impact of changes in accounting policies - - - - - (951) (951) 9 772 8 821 Balance as at 1 January 2013 - restated 2 001 (758) 207 (14) (565) 7 073 8 509 19 122 27 631 Profit for the year - 759 759 975 1 734 Other comprehensive income - 674 202 90 966 (11) 955 1 069 2 024 Total comprehensive income - 674 202 90 966 748 1 714 2 043 3 757 Transactions with owners, recognised directly in equity: Dividends - (868) (868) (1 078) (1 946) Own shares 1 - 3 4 - 4 Share-based payment transactions - (6) (6) - (6) Associated companies’ acquisition of own shares and new equity - 34 34 43 77 Total transactions with owners, recognised directly in equity 1 - (837) (836) (1 035) (1 871) Changes in ownership in subsidiaries without loss of control: New minority, acquisition of minority 23 - (795) (772) (1 080) (1 852) Issuance of shares in subsidiary - (22) (22) 898 877 Total changes in ownership of subsidiaries without loss of control 23 - (817) (793) (181) (975) Downward sale of shares in subsidiaries - - - (41) (41) Balance as at 31 December 2013 2 025 (84) 409 76 401 6 167 8 593 19 910 28 503 Profit for the period - 1 428 1 428 2 242 3 670 Other comprehensive income - (103) 86 (24) (41) (2) (42) (236) (278) Total comprehensive income - (103) 86 (24) (41) 1 427 1 386 2 006 3 392 Transactions with owners, recognised directly in equity: Dividends - - - (27) (27) Share-based payment transactions - 2 2 - 2 Total transactions with owners, recognised directly in equity - - 2 2 (27) (26) Change in ownership of subsidiary without loss of control: New minority, acquisition of minority - - 4 4 12 16 Issuance of shares in subsidiary - 6 6 395 401 Total changes in ownership of subsidiaries without loss of control 0 - 10 10 407 417 Balance as at 31 March 2014 2 025 (187) 495 52 360 7 605 9 991 22 296 32 286
Balance as at 31 December 2012 - as previously reported 2 001 (758) 207 (14) (565) 8 024 9 460 9 350 18 810 Impact of changes in accounting policies - - - - - (951) (951) 9 772 8 821 Balance as at 1 January 2013 - restated 2 001 (758) 207 (14) (565) 7 073 8 509 19 122 27 631 Profit for the period 109 109 222 331 Other comprehensive income - 233 30 16 279 1 280 250 531 Total comprehensive income - 233 30 16 279 110 390 472 861 Transactions with owners, recognized directly in equity: Share-based payment transactions - (6) (6) - (6) Total transactions with owners, recognized directly in equity - - - - - (6) (6) - (6) Changes in ownership share in subsidiaries without loss of control: New minority, acquisition of minority 23 - 117 140 (140) - New minority, acquisition of minority in associated company - (1) (1) - (1) Total changes in ownership of subsidiaries without loss of control 23 - - - 117 140 (140) - Balance as at 31 March 2013 2 024 (525) 237 2 (286) 7 294 9 032 19 454 28 486 Aker ASA First-quarter results 2014 15
Notes to the Aker condensed consolidated financial statements for the first quarter 2014
1. Introduction – Aker ASA Aker ASA is a company domiciled in Norway. The condensed consolidated interim financial statements of the business in Aker Solutions and Kvaerner, some accounting principles have been described in more for the first quarter of 2014, ended 31 March 2014, comprise Aker ASA and its subsidiaries (together detail. Updated descriptions of these accounting principles are provided below. referred to as the “Group”) and the Group’s interests in associates and jointly controlled entities. As a consequence of the implementation of IFRS 10, Aker Solutions and Kvaerner are now included as Presentation of investments in associates and jointly controlled entities subsidiaries. See more about the change in the notes below, especially note 4. The purpose of the investment determines where the profits and losses arising from the investment are presented in the income statement. When entities are formed to share risk in executing a project or are The consolidated financial statements of the Group as at and for the year ended 31 December 2013 and closely related to Aker’s operating activities, the share of the profit or loss is reported as part of Other quarterly reports are available at www.akerasa.com. income in operating profit. Share of the profit and loss of financial investments is reported as part of Financial items. 2. Statement of compliance The condensed consolidated interim financial statements have been prepared in accordance with Assets held for sale or distribution IAS 34 Interim Financial Reporting as endorsed by EU, and the Norwegian additional requirements in Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be the Securities Trading Act. They do not include all of the information required for full annual financial recovered primarily through sale or distribution rather than through continuing use, are classified as statements, and should be read in conjunction with the consolidated financial statements of the Group as held for sale or distribution. This condition is regarded as met only when the sale is highly probable at and for the year ended 31 December 2013. Please note that in those consolidated financial statements, and the asset or disposal group is available for immediate sale or distribution in its present condition. Aker Solutions and Kvaerner were considered associates under IAS 27 and hence not consolidated. Management must be committed to the sale or distribution, which should be expected to qualify for recognition as a completed sale or distribution within one year from the date of classification. Due to the consequences of the implementation of IFRS 10 described in note 4, some information Non-current assets and disposal groups classified as held for sale or distribution are measured at relevant in regard to Aker Solutions and Kvaerner has been provided in the notes below as the information the lower of their carrying amount and fair value less costs to sell. Property, plant and equipment and was not provided in the Aker ASA annual financial statements for 2013. intangible assets once classified as held for sale or distribution are not depreciated or amortized, but are considered in the overall impairment testing of the disposal group. These condensed consolidated interim financial statements were approved by the Board of Directors on No reclassifications are made for years prior to the year a business is first classified as a held for sale or 14 May 2014. distribution.
A number of standards, amendments to standards and interpretations are not yet effective for the period Revenue recognition for construction contracts ended 31 March 2014, and have not been applied in preparing these consolidated financial statements: Construction contract revenues are recognized using the percentage of completion method. Stage of completion is determined by the method that measures reliably the work performed. Depending on the The implementation of IFRS 9 Financial Instruments may result in certain amendments to the nature of the contract, the two main methods used by Aker to assess stage of completion are technical measurement and classification of financial instruments. completion, or contract costs incurred to date compared to estimated total contract costs. When the final outcome of a contract cannot be reliably estimated, contract revenue is recognized only The time of implementation for IFRS 9 is postponed indefinitely (is expected to be set to 1 January to the extent of costs incurred that are expected to be recoverable. The revenue recognized in one period 2017 or 2018 during 2014). will be the revenues attributable to the period’s progress and the progress to date effect of any changes to the estimated final outcome. Losses on contracts are fully recognized when identified. Contract revenues 3. Significant accounting principles include variation orders and incentive bonuses when it is probable that they will result in revenue that The group has of 1 January 2014 implemented IFRS 10 Consolidated Financial statements, IFRS 11 can be measured reliably. Disputed amounts and claims are only recognized when negotiations have Joint Arrangements and IFRS 12 Disclosures of Interests in Other Entities, in addition amendments to reached an advanced stage, customer acceptance is highly likely and the amounts can be measured the standards IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint reliably. Options for additional assets are included in the contract when exercised by the buyer. In the rare Ventures. See note 4 for description. circumstances that the option is a loss contract, the full loss is recognized when it is probable that the options will be exercised. The group’s accounting principles are described in the Aker ASA annual financial statements for 2013. The implementation of IFRS 10 (see note 4) and the consolidation of Aker Solutions and Kvaerner has not Other income resulted in any material changes to the group’s other accounting principles. However, due to the nature Gains and losses resulting from acquisition and disposal of businesses which do not represent Aker ASA First-quarter results 2014 16
discontinued operations are included in Other income within operating profit. Such gains may result be taken into consideration. In October 2005, the IASB issued a statement clarifying that IAS 27 is, in from the remeasurement of a previously held interest in the acquired entity. Changes in the fair value of principle, intended to include de facto control. The statement is the only one the IASB has ever issued in the contingent consideration from acquisition of a subsidiary or non-controlling interest are recognised this form, and is marked by the haste that surrounded the implementation of IFRS in Europe at that time. in Other income as gains or losses. Share of profit from associated companies and jointly controlled Since plans already existed at the time to issue an entirely new standard on consolidation (IFRS 10), the operations, to the extent that these investments are related to the group’s operating activities, are IASB statement was not followed by specific guidance. The statement was criticised, and in the autumn included in Other income within operating profit, as well as gains and losses related to the sale of of 2006 the Federation of European Accountants (FEE) asked the interpretation body IFRIC to provide operating assets. Other income also includes lease income from investment property. concrete guidance to facilitate consistent practice in the area. No such interpretation was given.
Investment property Accordingly, during the period 2005 to 2013, companies have had to deal with the fact that the concept Investment property is carried at its cost less accumulated depreciation and impairment losses of de facto control exists under IAS 27, but have had great freedom to define their own accounting practice to implement this term. Practice has shown that very few companies have concluded that de facto control exists in cases involving an ownership interest smaller than 48% to 49%. In accordance with 4. Changes in accounting policies this practice, Aker’s accounting principle has been that de facto control is deemed to exist only in highly marginal cases where the ownership interest is just below 50% and ownership is otherwise dispersed. IFRS 11 Joint Arrangements This principle has led to the conclusion that the increase in Aker’s ownership interest in AKSO to 46.3% Assessments based on the current activities indicate that implementation of IFRS 11 will not have a as from the end of November 2013 does not imply de facto control in 2013 pursuant to IAS 27. material effect. Accounting under IFRS 10 IFRS12 Disclosures of Interests in Other Entities Unlike the practice under IAS 27, IFRS 10 is more focused on the financial realities than the size of the The group expects to expand the note on subsidiaries, jointly controlled entities and associated legal ownership interest. IFRS 10 contains a new definition of control, which must be applied when companies with additional information. an investor is to assess whether an investment must be consolidated in the consolidated financial statements. Control requires three elements: IFRS 10 Consolidated Financial Statements – consolidation of Aker Solutions and Kvaerner As at the end of 2006, Aker ASA (“Aker”) owned 50.1% of Aker Kværner ASA (now Aker Solutions ASA – 1) ownership interests give the investor power to direct the relevant activities of the investee, “AKSO”), and the company was fully consolidated in Aker’s consolidated financial statements for 2006. In 2) the investor is exposed to variable returns from the investee, and January 2007, Aker reduced its ownership interest from 50.1% to 40.1%, and AKSO was therefore treated 3) decision-making power allows the investor to affect its variable returns from the investee. as an associated company and recorded in Aker’s consolidated financial statements in accordance with the equity method as from this date. In December 2007, the ownership interest in AKSO was transferred The board and management of Aker have considered whether the company’s indirect ownership interest to Aker Holding AS (now Aker Kværner Holding AS –“AKH”), and 40% of the shares in AKH were sold in AKSO and Kvaerner is sufficient to give it de facto control under IFRS 10. The primary consideration to the Norwegian State (30%) and SAAB/Investor (10%). In 2011, Aker purchased 10% of the shares in has been whether Aker is able to control the outcome of voting at the companies’ general meetings. AKH from SAAB/Investor, and since then has owned 70% of AKH, while the Norwegian State owns the After careful consideration of this question based on both the absolute and relative ownership interests remaining 30%. AKH is treated as a subsidiary in Aker’s consolidated financial statements. Since the and attendance at previous general meetings of AKSO/Kvaerner and comparable companies, Aker has demerger of Kvaerner from AKSO in 2011, AKH has owned 40.3% of the shares in AKSO and 41.0% of concluded that such control exists. the shares in Kværner ASA (Kvaerner). Following a transaction in November 2013, Aker also owns 6% of AKSO directly, giving Aker a “consolidated” ownership interest in AKSO of 46.3% as at 31 December Consideration has also been given to all other relevant factors mentioned in IFRS 10 that may help 2013. to illuminate the question of control further. Factors indicating that Aker has control include Aker’s representation on the nomination committees, the fact that leading employees have previously worked Accounting under IAS 27 for Aker, the fact that the companies themselves consider Aker an active owner, etc. The fact that Øyvind The investments in AKSO and Kvaerner were treated as associated companies, and pursuant to IAS 27 Eriksen is the executive board chairman of AKSO is a further argument in favour of Aker having de facto were recorded in accordance with the equity method in Aker’s consolidated financial statements for 2013. control over AKSO. On the other hand, in isolation, the shareholder’s agreement with the Norwegian State relating to the holding company Aker Kværner Holding AS is a factor in favour of Aker not having control. Since the implementation of IFRS in Europe in 2005, uncertainty has remained about whether the control assessment under IAS 27 shall be based on existing legal rights or whether “de facto control” must also Based on an overall assessment, the conclusion is that Aker does have de facto control over both AKSO Aker ASA First-quarter results 2014 17
and Kvaerner. Further, Aker has concluded that, based on an IFRS 10 assessment, this de facto control structural quotas have a specified lifetime and must be depreciated. has existed since before the reduction in ownership in 2007. Accordingly, AKSO and Kvaerner are treated The board and management of Havfisk consider the previous practice to better reflect the underlying as subsidiaries in Aker’s consolidated financial statements following implementation of IFRS 10 on 1 reality. However, the company accepts that the Financial Supervisory Authority and Expert Committee January 2014. In accordance with the transition requirements of IFRS 10, the consolidated financial has come to a different conclusion. As a consequence, Havfisk has changed its accounting principles statements for 2014 contains comparative figures for 2013 that are restated as though control has existed for intangible assets in the form of depreciation of structural quotas. Aker has restated the consolidated since before the previously discussed reduction in ownership in 2007. accounts for 2013 accordingly. The yearly depreciation increases by approximately NOK 18 million due to the change. As a result of the change, the opening balance of intangible assets at 1 January 2013 is Change of accounting principles for intangible assets – fishing licenses reduced with NOK 87 million compared to what is reported in the annual accounts for 2013. As part of its supervision of listed companies, the Financial Supervisory Authority of Norway in 2013 performed a review of the subsidiary Havfisk. The effect on Aker’s consolidated financial statements The consolidation of AKSO and Kvaerner has a considerable effect on Aker’s consolidated financial Havfisk owns fishing licenses subject to time limits of 20 to 25 years due to structuring. No depreciation statements. In addition the corrections from Havfisk described above are included in Aker’s restated has previously been made on the structured quotas, as it is expected that Havfisk at the end of the figures. The main effects on Aker’s group figures for Q1 2013 and the year 2013 are given below. structuring period will maintain approximately the same catch capacity as before the restructuring. Since quotas that are not structured are defined as “perpetual” quotas, i.e. are unlimited in time, these quotas have not been depreciated. According to the Financial Supervisory Authority of Norway’s assessment, the
Income Statement 1st Quarter 2013 Year 2013 As previously Changes in As previously Changes in Amounts in NOK million reported principles Restated reported principles Restated
Operating revenues 2 181 12 412 14 593 8 086 53 296 61 382 Operating expenses (1 944) (11 570) (13 514) (7 801) (49 298) (57 099) Operating profit before depreciation and amortisation 237 842 1 079 284 3 999 4 283 Depreciation and amortisation (251) (285) (536) (1 415) (1 307) (2 722) Impairment changes and non-recurring items (8) - (8) (836) (382) (1 218) Operating profit (22) 556 534 (1 967) 2 310 343 Net financial items (149) (167) (316) (310) (557) (867) Share of earnings in associated companies 120 (140) (20) 979 (802) 177 Profit before tax (51) 249 198 (1 297) 950 (347) Income tax expense 227 (105) 122 2 129 (516) 1 613 Net profit/loss from continuing operations 176 144 321 832 434 1 266
Discontinued operations: Profit and gain on sale from discontinued operations, net of tax - 10 10 - 468 468 Profit for the period 176 154 331 832 902 1 734
Equity holders of the parent 117 (8) 109 791 (32) 759 Minority interest 59 162 222 41 934 975
Average number of shares outstanding (million) 72.3 72.3 72.3 72.3 72.3 72.3
Basic earnings and diluted earnings per share continuing business (NOK) 1.62 (0.19) 1.43 10.94 (2.30) 8.64 Basic earnings and diluted earnings per share (NOK) 1.62 (0.11) 1.51 10.94 (0.45) 10.49 Aker ASA First-quarter results 2014 18
Statement of comprehensive income 1st Quarter 2013 Year 2013
As previously Changes in As previously Changes in Amounts in NOK million reported principles Restated reported principles Restated
Profit for the period 176 154 331 832 902 1 734
Other comprehensive income, net of income tax: Items that will not be reclassified to income statement: Defined benefit plan actuarial gains (losses) - - - (19) 13 (6) Defined benefit plan actuarial gains (losses) in associated companies - - - 9 (6) 3 Items that will not be reclassified to income statement - - - (10) 7 (3)
Items that may be reclassified subsequently to income statement: Changes in fair value of financial assets 27 15 42 346 49 395 Changes in fair value cash flow hedges - 56 56 (22) 291 269 Change in fair value of available for sale financial assets transferred to profit and loss (1) - (1) (145) - (145) Currency translation differences 167 266 433 372 1 136 1 508 Change in other comprehensive income from associated companies 135 (134) 1 632 (633) - Items that may be reclassified subsequently to income statement 328 202 531 1 184 843 2 027 Other comprehensive income, net of income tax 328 202 531 1 174 850 2 024 Total comprehensive income for the period 505 356 861 2 006 1 752 3 757
Attributable to: Equity holders of the parent 398 (8) 390 1 746 (32) 1 714 Minority interests 107 364 472 260 1 784 2 043 Aker ASA First-quarter results 2014 19
Balance sheet 31.03.2013 31.12.2013 01.01.2013
As previously Changes in As previously Changes in As previously Changes in Amounts in NOK million reported principles Restated reported principles Restated reported principles Restated
ASSETS Property, plant and equipment 14 068 10 990 25 058 15 394 10 480 25 874 12 562 10 605 23 167 Intangible assets 7 896 9 696 17 592 7 637 9 652 17 289 7 802 8 451 16 254 Deferred tax assets 342 906 1 248 1 167 915 2 082 347 909 1 256 Investment in equity accounted companies 6 809 (5 791) 1 018 9 135 (7 814) 1 321 6 442 (5 323) 1 119 Other shares and funds 789 860 1 649 837 654 1 491 787 576 1 363 Interest-bearing long-term receivables 1 529 746 2 275 1 904 162 2 066 1 483 723 2 206 Calculated tax receivable 261 - 261 ------Other non-current assets 316 91 407 228 37 265 279 26 305 Total non-current assets 32 010 17 499 49 509 36 303 14 086 50 389 29 702 15 968 45 670
Inventory, trade and other receivables 1 916 24 840 26 756 2 249 24 383 26 633 2 089 21 614 23 704 Calculated tax receivable 1 288 178 1 466 1 448 199 1 647 1 283 159 1 442 Interest-bearing short-term receivables 28 243 271 423 511 934 28 421 449 Cash and cash equivalents 4 759 2 872 7 631 5 834 3 890 9 724 5 471 2 283 7 754 Total current assets 7 991 28 134 36 125 9 955 28 983 38 938 8 871 24 478 33 349 Assets held for sale - - - - 4 417 4 417 - - - Total assets 40 001 45 632 85 633 46 257 47 486 93 743 38 573 40 446 79 019
EQUITY AND LIABILITIES Total paid-in capital 2 024 - 2 024 2 025 - 2 025 2 001 - 2 001 Retained earnings and other reserves 7 967 (959) 7 008 8 433 (1 865) 6 568 7 459 (951) 6 508 Total equity attributable to equity holders of the parent 9 991 (959) 9 032 10 458 (1 865) 8 593 9 460 (951) 8 509 Minority interests 9 318 10 136 19 454 10 119 9 791 19 910 9 350 9 772 19 122 Total equity 19 309 9 177 28 486 20 577 7 926 28 503 18 810 8 821 27 631
Interest-bearing loans 12 360 11 687 24 047 17 315 7 899 25 214 11 264 7 152 18 416 Deferred tax liabilities 1 680 1 907 3 587 1 478 2 076 3 554 1 652 1 829 3 481 Provisions and other long-term liabilities 2 055 1 290 3 345 1 994 1 120 3 114 2 019 1 195 3 214 Total non-current liabilities 16 095 14 884 30 979 20 786 11 095 31 881 14 935 10 176 25 111
Short-term interest-bearing debt 2 229 1 098 3 327 1 668 3 896 5 564 2 291 1 008 3 299 Tax payable, trade and other payables 2 369 20 473 22 842 3 226 23 394 26 620 2 537 20 441 22 978 Total current liabilities 4 598 21 571 26 168 4 894 27 290 32 184 4 828 21 449 26 277 Total liabilities 20 692 36 455 57 147 25 680 38 385 64 065 19 763 31 625 51 388 Liabilities held for sale - - - - 1 176 1 176 - - - Total equity and liabilities 40 001 45 632 85 633 46 257 47 486 93 743 38 573 40 446 79 019 Aker ASA First-quarter results 2014 20
Cashflow statement 1st Quarter 2013 Year 2013
As previously Changes in As previously Changes in Amounts in NOK million reported principles Restated reported principles Restated
Profit before tax (51) 249 198 (1 297) 950 (347) Depreciation and amortisation 251 285 536 1 415 1 307 2 722 Other items and changes in other operating assets and liabilities 53 (2 893) (2 840) 2 553 807 3 360 Net cash flow from operating activities 253 (2 358) (2 105) 2 671 3 064 5 735
Proceeds from sales of property, plant and equipment 1 (7) (6) 926 415 1 341 Proceeds from sale of shares and other equity investments 32 - 32 259 49 308 Disposals of subsidiary, net of cash disposed - 12 12 4 - 4 Acquisition of subsidiary, net of cash acquired - (1 046) (1 046) (105) (1 136) (1 241) Acquisition of property, plant and equipment (1 751) (498) (2 249) (5 972) (3 636) (9 608) Acquisition of equity investments in other companies (111) - (111) (2 035) - (2 035) Net cash flow from other investments (11) (47) (58) (43) 264 222 Net cash flow from investing activities (1 840) (1 587) (3 427) (6 965) (4 044) (11 009)
Net proceeds from issuance of interest-bearing debt 844 4 487 5 331 4 827 3 281 8 108 New equity - 1 1 877 1 878 Own shares - - - (2) 83 81 Dividends paid - - - (1 127) (820) (1 946) Net cash flow from financing activities 844 4 488 5 332 4 575 2 545 7 120
Net change in cash and cash equivalents (743) 543 (200) 280 1 565 1 846 Effects of changes in exchange rates on cash 32 46 78 83 42 125 Cash and cash equivalents at the beginning of the period 5 471 2 283 7 754 5 471 2 283 7 754 Cash and cash equivalents at end of period 4 759 2 872 7 631 5 834 3 890 9 724 Aker ASA First-quarter results 2014 21
5. Estimates Warranties The preparation of interim financial statements requires management to make judgments, estimates and A provision is made for expected warranty expenditures. The warranty period is normally two years. assumptions that affect the application of accounting policies and the reported amounts of assets and Based on experience, the provision is often set at one percent of the contract value, but can also be a liabilities, income and expense. Actual results may differ from these estimates. higher or lower amount following a specific evaluation of the actual circumstances for each contract. Both the general one percent provision and the evaluation of project specific circumstances are based on The most significant judgments made by management in preparing these condensed consolidated interim experience from earlier projects. Factors that could affect the estimated warranty cost include the group’s financial statements in applying the Group’s accounting policies, and the key sources of estimation uncer- quality initiatives nd project execution model. tainty, are the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2013. Property, plant and equipment and intangible assets At every balance sheet date, the group considers whether there are indications of impairment on the book Due to the implementation of IFRS 10 (see note 4) and the consolidation of Aker Solutions and Kvaerner, values of long-term assets. If such indications exist, a valuation is performed to assess whether or not the some additional significant judgments and key sources of estimation uncertainty are described below that asset should be written down for impairment. Such valuations will often have to be based on estimates of was not described in Aker’s annual financial statements for 2013. future results for a number of cash generating units.
Revenue recognition Fair value measurement of contingent and deferred consideration The percentage-of-completion method is used to account for construction contracts. This method Contingent and deferred consideration resulting from business combinations, is valued at fair value at the requires estimates of the final revenue and costs of the contract, as well as measurement of progress acquisition date as part of the business combination. When the deferred and contingent consideration achieved to date as a proportion of the total work to be performed. meets the definition of a derivative and thus, a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cashflows. The key The main uncertainty when assessing contract revenue is related to recoverable amounts from variation assumptions take into consideration the probability of meeting each performance target and the discount orders, claims and incentive payments which are recognized when, in the group’s judgment, it is probable factor. that they will result in revenue and are measurable. This assessment is adjusted by management’s evalu- ation of liquidated damages to be imposed by customers typically relating to contractual delivery terms. 6. Pension, tax and contingencies In many projects there are frequent changes in scope of work resulting in a number of variation orders. Calculation of pension cost and liability is done annually by actuaries. In the interim financial reporting, Normally the contracts with customers include procedures for presentation of an agreement of variation pension costs and liabilities are based on the actuarial forecasts. Income tax expense is recognized in orders. At any point in time, there will be unapproved variation orders and claims included in the project each interim period based on the best estimate of the expected annual income tax rates. revenue where recovery is assessed as probable and other criteria are met. Even though management has During the second quarter of 2012, Det norske oljeselskap ASA announced that it had received a notice extensive experience in assessing the outcome of such negotiations, uncertainties exist. of reassessment from the Norwegian Oil Taxation Office (OTO) in respect of 2009 and 2010. At the end of the third quarter 2012, the company responded to the notice of reassessment by submitting detailed Remaining project costs depend on productivity factors and the cost of inputs. Weather con comments. ditions, the performance of subcontractors and others with an impact on schedules, commodity prices and currency rates can all affect cost estimates. Experience, systematic use of the project execution 7. Share capital and equity model and focus on core competencies reduce, but do not eliminate, the risk that estimates may change As of 31 March 2014 Aker ASA had issued 72 374 728 ordinary shares at a par value of NOK 28 per significantly. A risk contingency is included in project cost based on the risk register that is prepared for share. Total own shares were 44 805. Average outstanding number of shares is used in the calculation of every project. earnings per share in all periods in 2013 and 2014. At year-end 2013, the board of directors suggested a dividend of NOK 13.00 per share for 2013, a total of NOK 940 million. The dividend distribution was Progress measurement based on costs has an inherent risk related to the cost estimate as described approved at the Annual General Meeting in April and was paid in the same month 2014. above. In situations where cost is not seen to properly reflect actual progress, alternative measures such as hours or physical progress are used to achieve more precise revenue recognition. The estimation un- certainty during the early stages of a contract is mitigated by a policy of normally not recognizing revenue in excess of costs on large lump sum projects before the contract reaches 20 percent completion. How- ever, management can on a project-by-project basis give approval of earlier recognition if cost estimates are certain, typically in situations of repeat projects, proven technology or proven execution model. Aker ASA First-quarter results 2014 22
8. Interest-bearing debt Operating revenues Material changes in interest-bearing debt (short term and long term) during 2014: 1Q 1Q Year Amounts in NOK million 2014 2013 2013
Amounts in NOK million Long-term Short-term At 1st Quarter Industrial holdings Balance at 1 January 2014 17 315 1 668 18 983 Aker Solutions 11 229 10 312 42 900 Kvaerner 3 489 2 663 12 960 Aker Solutions and Kvaerner 7 899 3 896 11 795 Det norske oljeselskap 158 80 944 Balance at 1 January 2014 - Restated 25 214 5 564 30 778 Aker BioMarine 140 155 662 Bond loans in Ocean Yield ASA 600 - 600 Ocean Yield 364 319 1 404 Drawn exploration facility in NOK in Det norske - 200 200 Havfisk 214 172 779 Drawn revolving credit facility in Det norske 404 - 404 Eliminations (675) (563) (2 564) Bond loan in SEK in Aker ASA and holding companies 1 427 - 1 427 Total industrial holdings 14 919 13 137 57 085 Other new loans and change in credit facilities 456 109 565 Financial investments Total funds from issuance of long-term and short-term Converto Capital Fund1) 990 1 325 3 964 debt (excl. construction loans) 2 887 309 3 196 Financial investments, other assets and Repayment revolving credit facility in Det norske (290) - (290) eliminations 67 130 333 Repayment of loans in Aker Solutions (1 600) (1 888) (3 488) Total financial investments 1 057 1 456 4 297 Repayment of bond loan in Ocean Yield (467) - (467) Aker group 15 976 14 593 61 382 Repayment of Aker Floating Production bank loan (195) - (195) Other repayments (58) - (58) Profit before tax Total repayments of long-term and short-term debt (excl. 1Q 1Q Year construction loan) (2 610) (1 888) (4 498) Amounts in NOK million 2014 2013 2013 Exchange rates differences and other changes 104 (150) (46) Industrial holdings Balance at end of period 25 595 3 835 29 431 Aker Solutions 452 339 1 398 Kvaerner 135 72 399 Det norske oljeselskap (161) (283) (2 545) Aker BioMarine (19) 6 89 9. Operating segments Ocean Yield 195 101 464 Aker identifies segments based on the group’s management and internal reporting structure. Havfisk 15 5 (103) Aker’s investment portfolio is comprised of two segments: Industrial Holdings and Financial Investments. Eliminations (34) (33) (130) Total industrial holdings 583 206 (429) Recognition and measurement applied in the segment reporting are consistent with the accounting policies in the condensed consolidated interim financial statements. Financial investments Converto Capital Fund1) 455 102 451 Financial investments, other assets and (180) (110) (369) eliminations Total financial investments 275 (7) 82
Aker group 859 198 (347)
1) Consolidated companies owned by Converto Capital Fund. Aker ASA First-quarter results 2014 23
10. Property, plant and equipment and intangible assets 11. Discontinued operations Material changes in property, plant and equipment and intangible assets during 2014: Aker Solutions Mooring and loading systems business Property, plant On 30 October 2013, Aker Solutions sold its mooring and loading systems business (MLS) to Cargotec. Amounts in NOK million and equipment Intangible assets Total The unit, known for the Pusnes brand name, provides mooring equipment, loading and offloading Balance at 1 January 2014 15 394 7 637 23 031 systems, as well as deck machinery for the global offshore and shipping markets. The division employs Effect consolidation Aker Solutions and Kvaerner 10 480 9 756 20 236 about 370 people in Europe, Asia and the Americas and has its main office in Arendal, Norway. The transaction was completed on January 30, 2014, and a net gain of NOK 1,05 billion is recognized in the Effect Havfisk - (105) (105) income statement per Q1 2014, included in Net profit from discontinued operations. Balance at 1 January 2014 - Restated 25 874 17 289 43 163 Other proceeds from sales of property plant and equipment (3) - (3) Well-intervention services businesses Proceeds from sales of intangible assets - (2) (2) On 22 November 2013, Aker Solutions agreed to sell its well intervention services businesses (WIS) to Total proceeds (3) (2) (4) EQT. The business provides services that optimize flows from oil reservoirs and its main markets are in Acquisition of property, plant and equipment in Det norske 590 - 590 the UK and Norway. The division has about 1,500 employees in Europe, Asia, the US and the Middle East. Acquisition of exploration expenses and other intangibles in The transaction was completed on January 9, 2014, and a net gain of NOK 1,85 billion is recognized in Det norske - 115 115 the income statement per Q1 2014, included in Net profit from discontinued operations. Acquisition in Aker Solutions 227 176 403 Other acquisitions 756 8 764 The agreement includes an earn-out provision where Aker Solutions will receive 25 percent of any internal Total acquisition 1) 1 573 299 1 872 rate of return exceeding 12 percent a year on EQT’s equity investment. An earn-out of NOK 120 million has been recognised in the accounts, and represents estimated fair value at transaction date. Depreciation and amortisation (625) (72) (698) Impairment (1) - (1) Kvaerner Reclassification 542 (542) - In December 2013, Kvaerner sold its onshore construction business in North America to Matrix Service Expensed capitalised wells - (74) (74) Company. Following the sale, Kvaerner will not have any remaining operations in the US within the Exchange rates differences and other changes (82) (46) (128) Downstream & Industrial segment, and the remaining legacies within the segment are presented as Balance at end of period 27 278 16 851 44 129 discontinued operations. 1) Including capitalized interest, removal and decommissioning costs in 75 - 75 Det norske and other accruals
Results from discontinued operations 1Q 2014 1Q 2013 Year 2013 Amounts in NOK million Aker Solutions Kvaerner Eliminations Total Aker Solutions Kvaerner Total Aker Solutions Kvaerner Total
Operating revenues 131 1 - 132 749 244 993 3 438 1 666 5 104 Operating expenses (116) (33) (149) (719) (253) (972) (3 058) (1 670) (4 728) Financial items ------(10) (32) (42) Profit before tax 15 (32) - (17) 30 (9) 21 370 (37) 333 Tax expense (4) - - (4) (11) - (11) (108) (29) (137) Net profit from operating activities 11 (32) - (21) 19 (9) 10 262 (66) 196 Gain on sale of discontinued operations 2 900 - (64) 2 836 - - - - 272 272 Tax expense on gain on sale of discontinued operations (10) - - (10) ------Net gain from discontinued operations 2 890 - (64) 2 826 - - - - 272 272 Net profit from discontinued operations 2 901 (32) (64) 2 805 19 (9) 10 262 206 468 Aker ASA First-quarter results 2014 24
Earnings per share of discontinued operations
Year Amounts in NOK million 1Q 2014 1Q 2013 2013
Basic earnings per share from discontinued operations 12.84 0.08 1.85 Diluted earnings per share from discontinued operations 12.84 0.08 1.85
Cash flow from discontinued operations
1Q 2014 1Q 2013 Year 2013 Amounts in NOK million Aker Solutions Kvaerner Total Aker Solutions Kvaerner Total Aker Solutions Kvaerner Total
Net cash from operating activates (67) (121) (188) 34 83 117 469 45 514 Net cash from investing/financing 5 479 88 5 567 (49) 14 (35) (300) (317) (617) Effect on cash flow 5 412 (33) 5 379 (15) 97 82 169 (272) (103)
Consideration received, settled in cash 5 718 - 5 718 - - - - 599 599 Cash and cash equivalents disposed of (258) - (258) - - - - (223) (223) Net cash inflow 5 460 - 5 460 - - - - 376 376
12. Transactions and agreements with related parties There have not been any significant transactions with related parties in the quarter. See also note 37 in the group annual accounts for 2013.
13. Transactions with minority interests In the first quarter 2014 Aker Philadelphia Shipyard issued 2.41 million new shares priced as NOK 165 per shares, raising proceeds of approximately USD 65 million. Aker did not participate in the share issue. The transaction increased minority interest with NOK 382 million.
14. Events after the balance sheet date There have been no material events that have an impact on the accounts after the balance sheet date. Aker ASA Aker ASA AnnualÅrsrapport report 20142012 Beskjæres 76 mm fra venstre før trykk >> Aker ASA annual report 2014 3
Financial calendar 2015 Contents
Annual general meeting: 17 April 4 This is Aker Interim report Q1 2015: 13 May 4 Aker in brief Interim report Q2 2015: 17 July 5 2014 at a glance Interim report Q3 2015: 18 November 6 Key performance indicators Beskjæres 76 mm fra venstre før trykk >> 7 Aker ASA and holding companies Aker reserves the right to revise the dates. 8 Shareholder information
8 Letter from the President and CEO 12 Dialogue builds trust 15 Analytical information 16 Operations
16 Investment overview 17 Industrial holdings 25 Financial investments 26 Board of directors’ report
36 Annual accounts
37 Aker group 110 Aker ASA 126 Aker ASA and holding companies 134 Board and management
134 Board of directors 136 Management and key personnel 137 Contact information
Other documents available via www.akerasa.com:
– CSR report – NUES report 4 Aker ASA annual report 2014 This is Aker
Aker in brief
Aker ASA is an industrial investment company that exercises active ownership to create value.
Aker combines industrial expertise, knowl- Aker’s business activities are Size Ownership edge of the capital markets and financial organised into two segments: Aker is the largest shareholder, directly or Aker was listed on the Oslo Stock strength. indirectly, in eight companies listed on the Exchange on 8 September 2004. Since list- As an active owner, Aker develops and ■■ The Industrial holdings are strategic Oslo Stock Exchange. Collectively, the ing, the company’s shares have generated strengthens the companies in its portfolio in nature and managed with a long- Aker-owned companies had annual turno- an average annual return of 25.4 per cent, Beskjæres 76 mm fra venstre før trykk >> of Industrial holdings and Financial invest- term perspective. They comprise Aker’s ver of approximately NOK 71 billion in including dividends. At the beginning of ments. Aker works through the boards of ownership interests in Det norske 2014, a workforce numbering approxi- 2015, the company had 13 419 sharehold- the Aker-owned companies to drive opera- oljeselskap, Aker Solutions, Akastor, mately 40 000 people, and operations in ers. Aker’s main shareholders are Anne tional improvements, strategy, financing, Kvaerner, Ocean Yield, Aker BioMarine more than 60 countries. Aker employs 29 Grete Eidsvig and Kjell Inge Røkke, who restructuring and industrial transactions and Havfisk. 000 people, where of 15 700 in Norway. own 67.8 per cent of Aker stock through forward, with close follow-up by Aker’s ■■ The Financial investments comprise The net asset value (NAV) growth is a their company TRG. CEO Øyvind Eriksen investment teams. cash and liquid assets, as well as key performance indicator for Aker ASA. As owns 0.2 per cent of the B shares in TRG Aker’s ownership interests are concen- other assets held by Aker (Aker ASA at 31 December 2014, NAV amounted to through a private company. Eriksen also trated in the oil and gas, maritime assets, and holding companies) with a shorter NOK 17.7 billion, compared to NOK 24.0 owns 100 000 shares in Aker ASA. Some seafood/marine biotechnology and real term ownership perspective and an billion the previous year. 39 of Aker ASA’s 47 employees own shares estate sectors. These are key Norwegian opportunistic management approach in in the company. industries with international customer mind. bases.
1850 1900 1950 2000
Kvaerner 1853
Peter Steenstrup Olaf A. Onsum Kjell Inge Røkke Founded Aker in Founded Aker’s main 1841. Kvaerner in RGI owner since 1853. 1996.
JM Johansen 1876 – Fisheries
Norcem 1892 – Offshore and cement
Aker 1841 1987 1996 2001 Aker ASA annual report 2014 5 This is Aker
2014 at a glance
Beskjæres 76 mm fra venstre før trykk >> JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Milestones reached Falling oil prices Financial strength
Aker passed several important milestones in 2014. Aker The first half of 2014 was marked by strong profitability Aker enjoys a strong financial position, and has the Solutions became two listed companies: the “new” and growth in the portfolio companies. However, the flexibility and capacity to exploit opportunities in Aker Solutions, which is being streamlined as a global second half of the year saw a downturn as oil prices volatile markets. Aker’s value adjusted equity ratio was leader in the Subsea and Field Design sectors, and dropped by more than 50 per cent and Aker’s oil- 71 per cent at the end of 2014. Cash holdings totalled Akastor, an oil-service investment company with a related investments – not least Det norske oljeselskap, NOK 2.9 billion, and NOK 3.2 billion including liquid portfolio of wholly-owned subsidiaries. Det norske Aker Solutions, Akastor and Kvaerner – suffered fund investments. oljeselskap’s acquisition of Marathon Oil Norway was a considerable falls in value. further significant event. Aker received NOK 1 040 million in upstream cash Aker’s net asset value declined by 23 per cent, flow from its portfolio companies in 2014, and paid Ocean Yield continued to grow and diversify its adjusted for dividend, to NOK 17.7 billion, while the dividends totalling NOK 940 million to its shareholders. portfolio. Aker BioMarine implemented a restructuring group’s oil-related investments fell by NOK 6.3 billion. The sale of a real estate project released NOK 1 billion and continues to streamline its krill business. Havfisk On the other hand, the value of Ocean Yield and to Aker during the year. delivered record profits. Havfisk increased by NOK 1.4 billion. 6 Aker ASA annual report 2014 This is Aker
Key performance indicators
Aker’s key performance indicators are Distribution of Aker’s NOK 24.9 billion gross asset value as of 31 December 2014 net asset value, shareholder dividends (NOK billion) and the company’s cash balance. Ocean Yield To understand value creation at Aker, it is impor- tant to examine the balance sheet of Aker ASA Det norske oljeselskap and holding companies. Aker Solutions The Aker ASA and holding company structure Beskjæres 76 mm fra venstre før trykk >> encompasses pure holding companies and Cash and liquid fund investments companies that supply services to the group. Other financial investments The holding structure’s balance sheets is a more relevant tool for monitoring value creation than Akastor the balance sheet of the parent company or of Other public investments the Aker group. Nevertheless, Aker’s Annual Report contains all three types of accounts. Aker BioMarine Net asset value (NAV) expresses Aker’s Havfisk underlying value, and is a key determinant of the company’s dividend policy (two to four per cent Real estate development (Fornebuporten) of NAV per year). Net asset value is based on market value for listed shares and book value* Kvaerner
for other assets. 0 1 2 3 4 5
**) At Converto Capital Fund, the value of the unlisted shares for the Align and Ocean Harvest companies is measured based on the valuation principles in “International Private Equity and Venture Capital Valuation Guidelines.”
NAV per share before dividend Allocated dividend per share Gross assets per business segment Gross asset per sector (NOK per share) (NOK per share / per cent of NAV) (NOK billion) (NOK billion) ■ NAV ■ Allocated dividend (NOK) ■ Industrial holdings ■ E&P ■ Oil services ■ Maritime assets ■ Dividend ■ Per cent of NAV before dividend ■ Financial investments ■ Seafood & marine biotech ■ Real estate ■ Share price ■ Other financial assets ■ Cash and liquid fund investments
360 18 30 30
300 15 25 25
240 12 20 20
180 9 15 15
120 6 10 10
60 3 5 5
0 0 0 0 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 Aker ASA annual report 2014 7 This is Aker
Aker ASA and holding companies
In 2014, net asset value (NAV) decreased from NOK 24 003 million to NOK 17 679 million before allocations for dividends to shareholders. This represents a decrease in NAV-per-share from NOK 332 kroner to NOK 244. The following tables show Aker’s investments and NAV per Aker ASA share.
Net asset value development – Aker ASA and holding companies Net asset value (NAV) As at As at Beskjæres 76 mm fra venstre før trykk >> Amounts in NOK million 2014 2013 2012 31 Dec. 2014 31 Dec. 2013
Dividends received 844 852 461 Owner NOK per NOK NOK per NOK Operating expenses (223) (236) (235) ship share million share million Other financial expenses (490) (30) (152) Tax expense (6) (13) (22) Industrial holdings: Total 125 573 52 Det norske 50.0% 56 4 038 65 4 692 Dividend payments (940) (868) (794) Aker Solutions 34.8% 54 3 929 - - Sale/(purchase) treasury shares 5 150 (179) Akastor 34.5% 28 2 043 140 10 154 Value changes 1) (5 514) 1215 4 422 Kvaerner 28.7% 9 687 12 888 Change in net asset value (6 324) 1070 3 501 Aker BioMarine 99.0% 19 1 398 24 1 760 Havfisk 73.2% 13 942 10 732 Net asset value before dividend 17 679 24 003 22 933 Ocean Yield 73.2% 60 4 323 47 3 409
1*) Value changes include depreciation and write-downs of fixed assets, and sales gains. Total Industrial holdings 240 17 360 299 21 635
Financial investments: Cash 39 2 857 34 2 459 Liquid fund investments 5 362 10 707 Other public investments 20 1 476 22 1 609 Real estate development (Fornebuporten) 10 736 17 1 238 Change in net asset value Other financial investments 29 2 123 30 2 135 (NOK billion) Total Financial investments 104 7 554 113 8 149
25 24.0 (2.5) Total value-adjusted assets 344 24 914 412 29 784
23 External interest-bearing liabilities (93) (6 696) (73) (5 266) (2.2) Internal interest-bearing liabilities - (5) (2) (135)
21 Interest-free liabilities before allocated dividend (7) (534) (5) (380)
(1.4) Total liabilities before allocated dividend (100) (7 235) (80) (5 780) 19 (0.9) 1.2 17.7 NAV before allocated dividend 244 17 679 332 24 003 (0.8) 17 0.2 Net interest-bearing debt (3 426) (2 321)
15
31.12.13 Aker Solutions Det norske Akastor Paid dividend Other Havfisk Ocean Yield 31.12.14 8 Aker ASA annual report 2014 Letter from the President and CEO
Dear shareholders
2014 was one of the busiest and most eventful years of my professional career. As planned, we implemented a number of important transactions, but still saw a substantial decline in Aker’s asset values. While this may disappoint those who have a short-term perspective, stakeholders with a long-term view will recognise that we have taken vital steps.
Let us begin with a diagram showing the fall in Aker’s net asset value in 2014:
Beskjæres 76 mm fra venstre før trykk >> Change in net asset value (NOK billion)
25 24.0 (2.5)
23 (2.2)
21
(1.4) 19 (0.9) 1.2 17.7 (0.8) 17 0.2
15 President & CEO Øyvind Eriksen. 31.12.13 Aker Solutions Det norske Akastor Paid dividend Other Havfisk Ocean Yield 31.12.14
Given that more than half of Aker’s invest- dend capacity. According to analyst esti- Operating revenues1 EBITDA1 Dividend to Aker ments are directly exposed to the oil mates gathered by Bloomberg, this trend is (pro-rata, NOK billion) (pro-rata, NOK billion) (NOK billion)
and gas industry, a drop in oil prices of set to continue in 2015. The figures in the 36 8 1.35 32 7 1.20 around 50 per cent was bound to impact graphs to the right communicate a clear 1.0 28 26.8 6 1.05 us. Market sentiment is difficult to influ- message. 24 21.4 5 0.90 0.9 20.2 ence. Combined with sales, purchases, 20 4 3.5 0.75 16 3 0.60 1.6 0.5 Uncertain times truly test the quality of restructuring, refinancing and reinforcement 12 2 1.6 0.45 our active ownership model, and our pro- of the management teams, the robust per- 8 1 0.30 portion of portfolio-company sales, profits formance of the portfolio companies gave 4 0 0.15 0 -1 0.00 and dividends is an indicator in this regard. Aker, despite the value decrease, a stronger 2012 2013 2014 2015E 2012 2013 2014 2015E 2012 2013 2014 2015E Aker’s share of such value creation grew foundation at the end of 2014 than at the ■ Financial investments ■ Industrial holdings ■ Bloomberg 2015 estimates2 significantly in 2014. beginning of the year. Overall, the Aker-owned companies are There are no indications that suggest 1) Based on pro-rata consolidation 2) Assumes pro-rata Bloomberg 2015 consensus estimates as of 11 March 2015 for the six listed Industrial holdings improving earnings and have good divi- that oil prices will recover substantially in and 2014 numbers for the rest of the portfolio Aker ASA annual report 2014 9 Letter from the President and CEO
the near future. We are prepared for pro- executive chairman of Aker Solutions. I am “In 2014, Aker received more than longed low prices, and for more volatile proud of the massive changes made during oil-prices than in recent years. Aker has this period, which produced some of the NOK 1 billion in dividend payments and upstream been operating in the oil sector for 50 strongest technologies and knowledge cash from portfolio companies, and paid dividends years, and has historically dealt success- enterprises ever seen in the Norwegian oil fully with the price variability inherent in and gas industry. Personally, I have gained totalling NOK 940 million to its shareholders.” this cyclical industry. To Aker, volatility knowledge, experience and contacts which means opportunity. Knowledge, patience should help Aker to be an even better and dynamism will now be crucial in owner going forward. I could not have done cent and NOK 1.5 billion) in Det norske’s tionary considerations. Aker’s high equity exploiting the uncertainty to further my job without the support of many highly share issue linked to the financing of the ratio and considerable cash holdings give it strengthen Aker. skilled colleagues – thank you all for your Marathon Oil Norway acquisition. Aker’s substantial lifting capacity going forward. excellent work! cash holdings increased from NOK 2.5 Beskjæres 76 mm fra venstre før trykk >> Aker is an active owner with a Aker provided Det norske oljeselskap billion to NOK 2.9 billion in 2014. Aker also In the current economic climate, mandate to maximise shareholder with financial backing, competence and has NOK 400 million invested in liquid Aker’s financial and industrial position value. support to facilitate its acquisition of Mara- fund investments. In 2014, Aker received offers interesting, profitable thon Oil Norway. The deal allowed Det nor- more than NOK 1 billion in dividend pay- investment opportunities. If we ignore recent months’ share price ske to become a fully-integrated operator ments and upstream cash from portfolio developments for a moment and focus on the Norwegian continental shelf. The companies for the first time, and paid divi- Along with many other companies, Aker instead on Aker and the portfolio compa- transformation of the small-scale operator dends totalling NOK 940 million to its failed to foresee such a rapid and signifi- nies, we can see clear changes and Aker Exploration into one of Europe’s larg- shareholders. cant drop in oil prices. However, in early improvements. est independent oil companies in just a few In 2015, Aker expects to receive mini- 2014, we saw clear indications that oil Aker played an active role in the years would never have occurred without mum NOK 700 million in dividends from the companies were tightening their belts and demerger of old Aker Solutions. While the Aker as an active majority shareholder. portfolio companies. The board of directors that the supplier industry was facing a “new” Aker Solutions is being streamlined While some may claim that the Marathon has proposed a dividend of NOK 10 per period of lower activity levels. as a leading Subsea and Field Design Oil acquisition was badly timed, the figures share, half of which may be taken as divi- It all began with warnings by some oil company, Akastor is mandated to crystal- show that the transaction strengthened Det dend shares at a 10 per cent discount. Nei- companies of plans to cut costs and invest- lise values in the oil service sector. Prior to norske financially, even with halved oil ther Kjell Inge nor I hesitated in opting for ment budgets to free up cash flow for the demerger, we divested businesses for prices. This illustrates the importance of dividend shares. future dividend payments to shareholders. close to NOK 6 billion, leaving Aker Solu- having revenues in the Norwegian tax sys- Aker continues to receive larger The cuts hit the Norwegian continental tions almost net debt-free at end of 2014. tem when billions are to be invested in upstream dividends than we pay out to our shelf first. most offshore regions have deliv- We expected the companies to be re- developing the Ivar Aasen and Johan Sver- shareholders. This year, Aker will disburse ered disappointing exploration results for priced, but market sentiment in the oil ser- drup fields. 4.1 per cent of net asset value as per 31 the past three years. vice sector has been a challenge. Contin- Aker possesses a unique combination of December 2014 to shareholders. This is In terms of share prices, oil-related com- ued robust operations, margin improve- a long industrial tradition and extensive consistent with Aker’s dividend policy of panies accounted for 62 per cent of Aker’s ments and capital discipline should, over expertise on the one hand, and financial distributing between two and four per cent industrial investments at the end of 2014. time, raise the companies’ valuations to a and transaction skills on the other. Aker of net asset value to shareholders annually. From a portfolio perspective, Det norske, level approaching that of their strongest performs best when it can combine long- However, for the first time since 2009, Aker Solutions, Akastor and Kvaerner con- competitors. The managements of Aker term industrial development with quick-wit- Aker’s dividends have not increased nomi- stitute an attractive “oil painting”. As Nor- Solutions and Akastor are now focusing ted transactional implementation. 2014 nally on a year-on-year basis. way’s largest private oil-industry stake- on operational and profitability improve- offered many examples in this regard. The reasons for this are the decline in holder, Aker will continue to engage actively ments. Aker has retained substantial flexibility, net asset value and the fact that current in the portfolio companies. I have not seen On a personal note, the demerger financial strength and strategic optionality macroeconomic and market conditions this many transactional and structural marked the end of my four-year term as even after its pro rata participation (50 per necessitate a focus on solidity and precau- opportunities for a long time. 10 Aker ASA annual report 2014 Letter from the President and CEO
“Ocean Yield is a prime first EPC contract for the construction of the The ship-owning company is a prime Johan Sverdrup drilling platform. On the example of a “yield investment”. Aker example of a ‘yield investment’.” other hand, the yard at Verdal has won launched Ocean Yield as a wholly-owned important Johan Sverdrup contracts for the subsidiary in 2012, and listed the company construction of platform sub-structures. on the Oslo Stock Exchange in July 2013. Kvaerner’s order reserve of NOK 16.5 billion Initially, the company held a portfolio of represents a sound level of base activity, Aker-owned ships and maritime assets, but but the company faces a painful restructur- has subsequently also invested in vessels At Aker, we classify our investments to simplify its structure with a focus on cap- ing process. Kvaerner’s competitiveness leased to third parties on long-term char- as “growth investments” or “yield ital discipline, cost reductions and syner- needs to be strengthened. Since Kvaerner ters. investments”. Our oil-industry gies. While Aker Solutions’ MMO operation represents less than three per cent of Aker’s Since the formation of Ocean Yield three investments all fall into the growth experienced a difficult year, their Subsea assets, our downside is limited. years ago, the company has paid Aker Beskjæres 76 mm fra venstre før trykk >> category short to medium term. business dominated the global market in Aker BioMarine, which has now been NOK 634 million in dividends and helped to terms of the number of contracts won. The split into two, represents a larger industrial boost net asset value by NOK 2.5 billion. As mentioned above, Det norske is significant growth of the Subsea business investment. The krill business is being The company has delivered a return includ- stronger with Marathon Oil Norway than in recent years has greatly increased streamlined and forms part of Aker’s future ing dividend to its shareholders of almost without it. The companies complement one awareness of Aker Solutions among both industrial plans, while the non-krill business 80 per cent since the listing in 2013. Ocean another in terms of production profile, customers and competitors. I am proud of is being held as a financial investment. Aker Yield has become both Aker’s largest expertise and tax position. In future, Aker the quantum leaps made by Aker Solutions BioMarine, which is changing its name to investment in terms of value and its largest will invest even more time and resources in in recent years, and expectant as regards Superba ASA, is being retained in Aker’s source of dividend revenues. The company Det norske. The value potential for a long- to the further development of this position portfolio as a growth company. Its value currently has an EBITDA order reserve of term owner like Aker is substantial. by the company’s new management. The drivers are increased sales and continued USD 2.2 billion, promising predictable rev- Even at current oil prices, Det norske is key is continued operational improvement. investments in building and expanding the enues in the next few years. generating strong cash flows through its A more focused, simplified company market for krill-based products, ingredients American Shipping Company (AMSC) – ownership of the Alvheim field. The compa- should be well-positioned to achieve this. and applications. Recent growth has not part of Aker’s financial portfolio – has expe- ny’s future depends on oil prices and pro- Akastor holds a portfolio of companies matched expectations, and Aker has there- rienced a substantial share price rise on the duction from the Ivar Aasen and Johan representing a broad range of oil-related fore adopted a more opportunistic Oslo Stock Exchange the last years. The Sverdrup fields. Det norske’s highest priori- services – ranging from drilling technology approach to crystallising value through US shale-oil boom has transformed the ties are to deliver Ivar Aasen on time and to service provision and the leasing of real Superba. financial foundation of this US-based ship- on budget, the unitisation of the Johan estate to oil-related businesses. Akastor is The fish-harvesting company Havfisk ping company, turning the AMSC share into Sverdrup field, securing robust long-term run as a private equity system, and each has developed favourably over the past a dividend share. financing and making cost adjustments. company in the portfolio is being devel- year. Seafood is a growth industry. The Realistically, Det norske can be expected to oped to generate shareholder value. In its company is improving profits, and has been Fornebuporten may be sold or turned begin paying dividends, once production capacity as Akastor’s largest shareholder, a leading performer on the Oslo Stock into a real-estate yield investment. from Johan Sverdrup begins. Aker adopts an opportunistic approach to Exchange in recent months. With the deliv- Aker Solutions is starting 2015 with a developing and crystallising value in Akas- ery of three modern trawlers, Havfisk has Aker has released NOK 2.6 billion from its solid order reserve of NOK 48 billion. How- tor’s portfolio companies. completed a profitable investment pro- financial investments in two years. The ever, this does not exempt the parts of the Kvaerner faces a new reality after being gramme and is now finally in a position to objective of NOK 3 billion over three years business from adjusting capacity to reflect the leading yard and a competent supplier pay dividends to shareholders. ending in 2015 will be achieved. In retro- reduced activity levels. This applies particu- on the Norwegian continental shelf for more spect, we can ask whether we should have larly to maintenance, modification and than 40 years. Time may be running out for Ocean Yield is a dividend machine, been even more ambitious by aiming to operational (MMO) services. With Aker’s the construction of platform decks at making payments to shareholders four release a larger amount over a shorter active backing, Aker Solutions is continuing Kvaerner Stord – the company also lost the times a year. period. Aker ASA annual report 2014 11 Letter from the President and CEO
The financial portfolio gives us flexibility. Even though it may take time to return to variations between companies. Activity lev- change of main sponsor. This decision will It includes both cash and liquid fund invest- old highs, Aker’s long-term confidence in els are more uncertain than they have been reduce Aker’s costs by close to NOK 20 ments, and gives us the financial strength oil remains strong. Going forward, there for a long time. A continuing downturn will million annually. Aker has also sold a 50 per not only to make opportunistic investments may be portfolio adjustments, but the main also expose our businesses to new, painful cent stake in the company jet, reducing in our core sectors, but also to grasp exit sectors will remain unchanged. restructuring processes. If we are required Aker’s flying costs by NOK 10–15 million a opportunities and invest in companies that As an active owner of its portfolio com- to take such steps, we will show respect for year. will produce both dividends and growth. panies, Aker concentrates its efforts and the core expertise and capacity developed These two measures alone will reduce Let me illustrate this with an example: resources on factors which it can influence by our supplier companies over decades. Aker’s costs by approximately 15 per cent Fornebuporten owns 67,000 square metres and act on. Aker monitors the markets and Extensive change processes cannot be per year. Reflecting Aker’s results in 2014, of office space due to be completed in its companies closely. We regularly ask our- led solely from the front. Aker determines bonus payments have been reduced com- 2015 and 2016, of which 90 per cent has selves whether the portfolio companies are the direction and ambitions, but implemen- pared to 2013. Employees with salaries already been leased out under long-term properly positioned for the future, and tation is most effective when the organisa- exceeding NOK 1.5 million have not been Beskjæres 76 mm fra venstre før trykk >> contracts. The next phase of the develop- whether enough is being done to adapt the tion accepts and adopts the change pro- awarded pay increases, while other staff ment of this attractive site at Fornebu, just businesses in the short and long term. cess. Effective change may well depend on have received an inflation increase of two outside Oslo, encompasses an additional In my view, Aker and the portfolio com- making the switch from leading from the per cent. The board of directors has pro- 120,000 square metres. Aberdeen Interna- panies have the right teams to tackle the front to leading from the back. In the past posed a freeze on board remuneration. tional Business Park still has future poten- tasks they face and generate future share- year, Aker Solutions and Det norske have These decisions constitute financial man- tial, even after the release of NOK 1 billion holder value. Aker is the largest shareholder provided particularly good examples of agement signals to the Aker-owned com- to Aker through the sale of the first phase in in eight listed companies, six of which have this. panies. 2014. welcomed new CEOs in 2014: Kalle Hersvik Aker is a centre of expertise on owner- We focus on costs, operational improve- Fornebuporten gives Aker options. We at Det norske, Luis Araujo at Aker Solu- ship, strategic, financial and transactional ments, capacity adjustments and the opti- can sell the office buildings at Fornebu in a tions, Frank O. Reite at Akastor, Webjørn matters. It serves the entire Aker group, misation of our financial structures in all our strong property market to free up large Barstad at Havfisk, Steinar Nerbøvik at and is expected to generate surplus value projects. However, we are also proactive sums and crystallise a profit. Or would it be Aker Philadelphia Shipyard and Pål L. Mag- far exceeding its administrative costs. At and open for new transactions and oppor- more profitable to develop Fornebuporten nussen at American Shipping Company. the end of 2014, Aker was managing assets tunistic investments. Aker and the portfolio as a yield investment? These management changes have been valued at NOK 25 billion. The company’s companies are building on the group’s This question is raised on the back of thoroughly planned, and been implemented administrative costs totalled NOK 223 mil- strong points and potential. In other words, the success of Ocean Yield. Aker has the swiftly. Four of the six positions were filled lion in 2014, a somewhat lower figure than we are playing to our strengths. opportunity and building blocks to build an by internal candidates. This shows that we in 2013. onshore dividend company, a real-estate have also made important progress in Administrative costs must be reduced yield investment. Although we have not yet terms of developing our leaders and organi- further. On 1 May of this year, Aker will con- With friendly shareholder greetings, concluded on the way forward, Fornebu- sations – a priority for Aker. clude its collaboration with the Norwegian porten should offer financial upside what- cross-country ski teams. During its five ever we decide. Regardless of how the point is years as the main sponsor of Norway’s formulated: parts of the oil service national sport and the country’s most pop- The combination of investment in market will present challenges going ular sporting heroes and role models, Aker growth and dividend instruments forward. has been part of a team that won 29 Olym- facilitates diversification in volatile, pic and world championship gold medals. Øyvind Eriksen cyclical markets. Our portfolio companies in the oil and gas The collaboration has intensified Aker’s President and CEO sector have a combined order reserve of performance culture, strengthened its ties Aker’s portfolio of investments is diversi- more than NOK 100 billion at the beginning with the portfolio companies and made it fied, and the significant exposure to the oil of 2015. This may sound impressive, but one of Norway’s most highly respected industry is a deliberate strategic choice. the reality is that there are considerable industrial players. The time has come for a 12 Aker ASA annual report 2014 Shareholder information
Dialogue builds trust
Aker ASA is committed to maintaining an open dialogue with shareholders, investors, analysts and the financial community in general.
Aker ASA works to ensure that its share Shares and share capital price reflects its underlying values by mak- Aker ASA has 72 374 728 ordinary shares, ing all price-sensitive information available each with a par value of NOK 28 (see Note to the market. 10 to the parent company’s accounts). Aker Beskjæres 76 mm fra venstre før trykk >> Aker ASA’s goal is to create value for the ASA has a single share class, and each company’s shareholders through dividends share is entitled to one vote. The company and share price growth over time. In Febru- held 28 788 of its own (treasury) shares as ary 2006, the company’s board adopted at 31 December 2014. No share issues the following dividend policy: took place in 2014. “Aker ASA’s dividend policy supports As at 31 December 2014, the company the company’s intention to maintain a had 13 419 shareholders. Kjell Inge Røkke solid balance sheet and liquidity reserves and members of his family are Aker’s main adequate to handle future obligations. The shareholders. Through their privately held company’s objective is to pay dividends companies, organised under The Resource annually that amount to 2-4 per cent of Group (TRG), the family holds 67.85 per the company’s net asset value. In deter- cent of Aker ASA shares. Non-Norwegian mining net asset value, the share prices of shareholders held 18.30 per cent of the Aker’s exchange-listed investments are company’s shares as at 31 December 2014. applied.” Aker ASA seeks to maintain an open and direct dialogue. The board proposes that a per-share Stock-exchange listing dividend of NOK 10 for the 2014 account- Aker ASA was listed on Oslo Stock ing year of which half would be with Exchange (OSE) on 8 September 2004 in shares. The per-share purchase price Investor relations optional settlement in new Aker shares at a (ticker: AKER). Aker ASA’s shares are regis- may not be less than NOK 4 nor exceed Aker ASA seeks to maintain an open and 10 per cent discount. tered in the Norwegian Central Securities NOK 800. The board is free to decide the direct dialogue with shareholders, debt Depository with the registration number method for acquiring or disposing of own holders, financial analysts, and the financial ISIN NO 0010234552. DNB ASA is the (treasury) shares. The authorisation is valid community in general. In addition to hold- Dividend Dividend company’s registrar. until the 2015 annual general meeting, ing an annual capital markets day, the com- Year paid (NOK) in % of NAV though no longer than to 30 June 2015. pany arranges regular presentations for and 2008 18.50 4.0% Current board authorisations In the period 11 April 2014 to 10 March meetings with shareholders, analysts and 2009 5.00 2.0% At the annual general meeting on 11 April 2015, the company did not acquire any of investors in major financial centres in 2010 8.00 3.0% 2014, Aker ASA’s shareholders authorised its own (treasury) shares. Europe and the North America. 2011 10.00 3.9% the board to acquire up to 7 237 472 Aker All Aker ASA press releases, stock 2012 11.00 4.1% ASA shares with a total par value of NOK Share option plans exchange notices and investor relations (IR) 2013 12.00 3.7% 202 649 216. The authorisation also pro- Aker ASA had no share option plans as at publications are available on the company’s 2014 13.00 3.9% vided for the acquisition of agreement liens 31 December 2014. website: www.akerasa.com. This online Aker ASA annual report 2014 13 Shareholder information
resource offers access to the company’s Annual general meeting 2014 share data Geographical distribution of quarterly and annual reports, prospectuses, Aker ASA’s annual general meeting is held As at 31 December 2014, the company’s ownership as at 31 December 2014: corporate presentations, Articles of Associ- in April. Written notification is sent to all total market capitalisation was NOK 11.9 Percentage ation, the financial calendar, and Investor shareholders and shareholder nominees. billion. During 2014, a total of 13 433 106 Number of of share Relations and Corporate Governance poli- Meeting notices and attendance regis- Aker ASA shares were traded, correspond- Nationality shares held capital cies, along with other information. tration forms are sent to shareholders by ing to 0.19 times the company’s total out- Shareholders can contact the company the deadlines laid down in Norway’s Public standing shares. The Aker share was Non-norwegian by email ([email protected]), or by Limited Liability Companies Act, and made traded on all of Oslo Stock Exchange’s shareholders 13 247 363 18.30% direct request to Lars Kristian Kildahl, available on the company’s website and trading days. The Aker ASA share was Norwegian shareholders 59 127 365 81.70% Aker’s Investor Relations Director at e-mail through the OSE distribution service. The included in Oslo Stock Exchange’s OSEBX Total 72 374 728 100.00% [email protected] or tele- annual report and other enclosures to the index in November 2011. phone number +47 24 13 00 61. meeting notice are made available solely Beskjæres 76 mm fra venstre før trykk >> via the company’s website and the OSE Electronic quarterly and annual distribution service. Shareholders who wish reports to receive the enclosures by post must Aker ASA’s annual reports are published on contact the company. the company’s website at the same time as In 2011, the board decided that share- they are released via the OSE distribution holders who are unable to attend the gen- Analytic coverage service: www.newsweb.no (ticker: AKER). eral meeting should have the option of vot- The following securities brokers provide analytic coverage of Annual reports are also distributed to inter- ing directly on individual agenda items via Aker ASA as at 31 December 2014: ested shareholders by email in PDF format. electronic voting during the pre-meeting Recom Quarterly reports, which are generally registration period. This service is available mendation Brokerage Analyst Contact information 31.12.2014 only distributed electronically, are available on Aker’s website. Shareholders may from the company’s website and other change their votes or opt to attend the ABG Sundal Collier Haakon Amundsen [email protected] sources. Shareholders who are unable to meeting in person throughout the registra- +47 22 01 60 25 Buy receive the electronic versions of quarterly or tion period. Arctic Securities ASA Christian Yggeseth [email protected] annual reports may receive the printed ver- As in the past, shareholders who are +47 21 01 32 22 Buy sions by contacting Aker ASA’s investor rela- unable to attend a meeting may vote by Carnegie Frederik H Lunde [email protected] tions staff. proxy. The company has prepared proxy +47 22 00 93 79 Buy forms that allow shareholders to vote on DnB Markets Eirik Ronold Mathisen [email protected] +47 22 94 89 97 Hold Nomination committee individual issues. Eva Dimensions Neil Fonseca [email protected] The company’s nomination committee Procedures for electronic voting and +1 212 645 8400 Sell comprises Leif-Arne Langøy (chairman), using proxies with instructions are provided Handelsbanken Anne Gjøen [email protected] Gerhard Heiberg and Kjetil Kristiansen. along with the meeting notice, and are +47 22 39 70 22 Accumlate Shareholders who wish to contact the available on Aker’s website. Nordea Equity Anne Schult Ulriksen [email protected] nomination committee may do so using the The company does not appoint an inde- Research +47 22 48 68 67 Buy following email address: pendent proxy to vote on behalf of share- SEB Equities Terje Fatnes [email protected] [email protected]. holders. Aker considers that shareholders’ +47 21 00 85 00 Not rated interests are adequately safeguarded by SpareBank1 Christopher Møllerløkken [email protected] Markets AS +47 95 73 98 34 Buy Audit committee permitting the participation of an appointed Swedbank Peter Hermanrud [email protected] The company’s audit committee is com- proxy or authorisation of the meeting chair/ +47 23 23 82 53 Buy posed of Finn Berg Jacobsen (chairman), board chairman to vote according to spe- UBS David Hallden [email protected] Stine Bosse and Atle Tranøy. cific instructions. +46 70 306 73 30 Neutral 14 Aker ASA annual report 2014 Shareholder information
Ownership structure as at 31 December 2014 2014 share data
Number of Per cent of Shares held shareholders share capital Highest traded NOK 245.50 1 – 100 8 492 0.29% Lowest traded NOK 142.00 101 – 1 000 3 987 1.76% Share price as at 31 December NOK 164.50 1 001 – 10 000 752 2.94% Number of shares issued as at 31 December 72 374 728 10 001 – 100 000 143 7.29% Number of own (treasury) shares as at 31 December 28 788 100 001 – 500 000 35 10.12% Number of shares issued and outstanding as at 31 December 72 345 940 Over 500 000 10 77.60% Market capitalisation as at 31 December NOK million 11 906 Total 13 419 100.00% Proposed share dividend for 2014 NOK per share 10.00
Beskjæres 76 mm fra venstre før trykk >>
20 largest shareholders as at 31 December 2014 Share price development 2014 Number of ■ Aker ASA ■ OSEBX (rebased) Shareholder shares Per cent 260 TRG Holding AS 1) 48 245 048 66.7% 246 J.P. Morgan Chase Bank N.A. London 1 870 449 2.6% Folketrygdfondet 1 016 690 1.4% 232 The Resource Group TRG AS 1) 860 466 1.2% 218 Morgan Stanley & Co. International 802 075 1.1% Torstein Ingvald Tvenge 800 000 1.1% 204 State Street Bank & Trust Company 737 527 1.0% 190 KBC Securities NV 678 363 0.9% Citibank, N.A. 625 934 0.9% 176
KBC Securities NV 520 903 0.7% 162 UBS (Luxenbourg) S.A. 445 423 0.6% Oslo Pensjonsforsikring AS PM 445 200 0.6% 148
Fondsfinans Spar 375 000 0.5% 134 KLP Aksje Norge VPF 354 368 0.5% Fidelity Funds-Nordic Fund/Sicav 353 928 0.5% 120 31.12. 01.02. 01.03. 01.04. 01.05. 01.06. 01.07. 01.08. 01.09. 01.10. 01.11. 31.12. J.P. Morgen Chase Bank N.A. London 340 842 0.5% 2013 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 Morgan Stanley & Co. International 331 596 0.5% The Bank of New York Mellon SA/NV 298 872 0.4% Citibank, N.A. 292 492 0.4% Skandinaviska Enskilda Banken AB 270 104 0.4% Total 59 665 280 82.4%
1*) Kjell Inge Røkke controls 67.8 per cent of the shares in Aker ASA through TRG Holding AS and TRG AS. Aker ASA annual report 2014 15 Shareholder information
Analytical information
Aker ASA including holding companies – key figures 2012–2014. See also page 7.
2014 2013 2012
Book value Value adjusted Book value Value adjusted Book value Value adjusted
Equity investments NOK million 14 742 21 357 15 762 26 408 12 034 21 738 Other assets/liabilities NOK million (4 401) (4 401) (3 345) (3 345) 327 327 Equity including dividend allocation NOK million 10 341 16 956 12 417 23 063 12 361 22 066 Beskjæres 76 mm fra venstre før trykk >> Equity before dividend allocation NOK million 11 064 17 679 13 357 24 003 13 228 22 933 Net asset value per share before dividend allocation NOK 152.94 244.37 184.67 331.86 185.06 320.82
Development in dividend, share price and NAV per share
2014 2013 2012
Share price at the end of the year (NOK) 164.5 222 212 Net asset value (NAV) per share (NOK) 244 332 321 Allocated dividend per share (NOK) 10 13 12 Dividend in per cent of NAV 4% 4% 4% Dividend in per cent of share price at the end of the year 6% 6% 6%
Share price development (not dividend adjusted) ■ Share price (NOK) ■ NAV (NOK per share)
600
500
400
300
200
100
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 16 Aker ASA annual report 2014 Operations
Investment overview
Aker’s portfolio comprises 70% listed shares 13% cash and liquid fund investments and 17% other investments. Aker’s total investments amounts to:
Exploration and oil production 17%
Oil service 28%
Maritime assets 21% Beskjæres 76 mm fra venstre før trykk >> 24.9 Seafood and marine biotechnology 13% NOK billion Real estate 3% Other 5% The investments comprise Industrial holdings and Cash and liquid fund investments 13% Financial investments, and are exposed in sectors as illustrated in the chart to the right. 0% 5% 10% 15% 20% 25% 30%
Industrial holdings: Financial investments:
Aker’s Industrial holdings Aker’s Financial investments represent 70 per cent of Aker’s represents 30 per cent of Aker’s total investments, and comprise: total investments, and comprise:
70% ■■ Det norske oljeselskap ■■ Cash ■■ Aker Solutions ■■ Liquid fund investments ■■ Akastor ■■ Other public investments: ■■ Kvaerner Aker Philadelphia Shipyard and ■■ Ocean Yield American Shipping Company ■■ Aker BioMarine ■■ Real estate development ■■ Havfisk (Fornebuporten) ■■ Other financial investments Read more on page 17. 30% Read more on page 25. Aker ASA annual report 2014 17 Operations
Industrial holdings
Aker’s Industrial holdings totalled NOK 17.4 billion at the end of 2014. This equates to 70 per cent of the total net asset value of Aker ASA and its holding companies.
The Industrial holdings business segment Ownership is exercised primarily in the rience and a track-record of creating value. organisational structures, profitable opera- comprises the investments in Det norske, board rooms of the individual companies. Since listing in September 2004, Aker has tions, growth, optimal capital structures Aker Solutions, Akastor, Kvaerner, Ocean Aker also functions as a knowledge centre, provided investors with an average annual and industrial measures. Acquisitions, Yield, Aker BioMarine and Havfisk. Aker as its staff have valuable industrial and stra- return of 25.4 per cent, including dividends. mergers and transactions are typically con- Beskjæres 76 mm fra venstre før trykk >> has a long-term investment horizon for tegic know-how and cutting-edge expertise By exercising active ownership, Aker ducted through Aker’s industrial portfolio these companies, and will remain invested in areas such as capital market operations, promotes the independence and robust- companies. for as long as it believes that it can gener- financing, restructuring, transactions, com- ness of each company in its industrial port- ate greater shareholder value through its munications/investor relations and legal. folio. In terms of financing, Aker invests in Developments in 2014 ownership than alternative owners could. These resources are available not only to the shares of the underlying companies, The total market value of Aker’s Industrial Aker is actively involved in the develop- the investment teams in their continuous which in turn obtain loan capital from exter- holdings was NOK 17.4 billion at the end of ment of its seven industrial portfolio com- follow-up of the operational companies, but nal sources. 2014, compared to NOK 21.6 billion one panies, cooperating closely with each com- also to each individual company. As an active owner of companies with year previously. In 2014, Aker invested NOK pany’s board and management. Every excellent value and return potential, Aker’s 1.5 billion in the NOK 3 billion share issue investment is monitored by a dedicated Industrial strategy agenda is to contribute to robust returns implemented by Det norske in connection investment team, and Aker has representa- Aker invests in companies that operate in for all shareholders. The company’s focus with its takeover of Marathon Oil Norway. tives on the various company boards. industries in which Aker has expertise, expe- is on skilful management, appropriate Developments in 2014 were strongly impacted by falling oil prices and a change of mood in the oil service sector in general. Drops in the share prices of the oil-related Key figures Industrial holdings: companies Aker Solutions, Akastor, 31.12.12 31.12.13 Changes in 2014 31.12.14 Kvaerner and Det norske reduced Aker’s net asset value by NOK 6.2 billion in 2014. Ownership Net Dividends Other Value Amounts in NOK million in % Value Value investments received changes change Value Collectively, Ocean Yield and Havfisk boosted Aker’s net asset value by NOK 1.4 Det norske 50.0 5 803 4 692 1 501 - (2 154) 4 038 billion. Aker BioMarine is the only unlisted Aker Solutions1 34.8 - - 57 (246) 6 579 (2 461) 3 929 company in the industrial portfolio, and has Ocean Yield 73.2 2 532 3 409 - (316) - 1 230 4 323 been valued at book value, as in 2013. Divi- Akastor1 34.5 8 712 10 154 31 (134) (6 579) (1 429) 2 043 dends from the companies in the industrial Aker BioMarine2 99.0 1 361 1 760 (16) (345) - 1 398 portfolio totalled NOK 790 million in 2014, Kvaerner 28.7 1 251 888 - (94) - (108) 687 compared to NOK 788 million in 2013. Havfisk 73.2 365 732 - - 211 942 Total Industrial holdings - 20 023 21 635 1 573 (790) (345) (4 713) 17 360 Read more in the Board of directors’ report on 2014, page 27. 1*) Demerger based on share capital split ratio according to the demerger plan. In the Demerger 35.2 per cent of the share capital was allocated to Akastor and 64.8 per cent to Aker Solutions. 2*) Reflected in net asset value at book value. 18 Aker ASA annual report 2014 Operations
Key figures 2014 2013
Revenues USD million 464 161 EBITDAX USD million 365 93 Profit after tax USD million (279) (93) Exploration expenses USD million 158 279 Share price NOK 39.87 60.29 Earnings per share USD (1.68) (0.66) 16% Number of employees 507 230
Beskjæres 76 mm fra venstre før trykk >> Det norske oljeselskap ASA
Det norske oljeselskap is an integrated strong portfolio of oil-producing assets with exploration and production company oper- limited investment obligations and high ating on the Norwegian continental shelf. production volumes. These features fit well The acquisition of Marathon Oil Norway has with planned production start-up in Ivar given Det norske considerable reserves and Aasen and the development of the Johan oil production operations. Sverdrup field. Det norske paid USD 2.1 billion in cash Board chairman: Sverre Skogen for Marathon Oil Norway. In connection Managing director: Karl Johnny Hersvik with the acquisition, Det norske imple- Aker investment director: Edward Ross mented a refinancing which incorporated a share rights issue totalling NOK 3 billion. Developments in 2014 Aker subscribed for half of the new shares. Det norske’s share price dropped in 2014, Det norske has an RBL (reserve-based from NOK 60.29 to NOK 39.87 at the end of lending) facility – a seven-year secured loan the year. The decline is linked to the dramatic facility totalling USD 3 billion which also fall in oil prices in the second half of 2014. includes a non-binding drawing right of The acquisition of Marathon Oil Norway USD 1 billion. The acquisition of Marathon Oil Norway is a “company maker” for Det norske. is a “company maker” for Det norske. Mar- Karl Johnny Hersvik took up the post of athon Oil Norway possesses operational managing director in May 2014. A new Aker’s ownership agenda prolonged low oil prices; deliver the Ivar expertise and generated cash flow from oil management group has been implemented The market for oil is cyclical, and oil prices Aasen development on time and budget; production totalling about 65 000 barrels and the process of integrating Marathon Oil are volatile. Nevertheless, Aker believes ownership of the Johan Sverdrup field devel- per day in 2014. The acquisition was also Norway and Det norske is well underway. that demand for oil and gas will remain opment project; active management of the an important step in terms of addressing robust in the long term, and has great con- company’s licence portfolio and the evalua- Det norske’s funding needs linked to the Aker’s engagement fidence in Det norske’s long-term value tion of long-term opportunities to strengthen development of the Ivar Aasen and Johan Aker owns 49.99 per cent of the shares in potential. Det norske further. Sverdrup fields. Det norske, and its shareholding was val- The short-term ownership agenda can be Through Marathon Oil Norway, Det nor- ued at NOK 4.0 billion as at 31 December summarised as follows: maintain safe, effi- Read more in the Board of directors’ report ske has secured access to operational 2014. Kjell Inge Røkke represents Aker on cient and profitable oil production; build a on page 29, and on www.detnor.no. experience from the Alvheim field, a very Det norske’s board of directors. capital structure that is robust in the face of Aker ASA annual report 2014 19 Operations
Key figures 2014 2013
Revenues NOK million 32 971 29 058 EBITDA NOK million 2 675 2 079 EBITDA margin Per cent 8.1 7.2 Backlog NOK million 48 289 41 185 Order intake NOK million 37 135 44 370 Share price NOK 41.55 N/A 16% Earnings per share NOK 4.71 4.31 Number of employees 16 694 15 968
Beskjæres 76 mm fra venstre før trykk >> Aker Solutions ASA
Aker Solutions is a global oil service company tions/Akastor share price reduced Aker’s and leading supplier of Subsea and Field net asset value by NOK 3.9 billion in 2014. Design technologies, products, solutions and The Aker Solutions share was valued at services for offshore oil and gas fields. NOK 41.55 at the end of 2014. Aker received dividends totalling NOK Board chairman: Øyvind Eriksen 380 million on the Aker Solutions/Akastor President and CEO: Luis Araujo shares in 2014, compared to NOK 308 mil- Aker investment director: Edward Ross lion in 2013. The oil industry is experiencing a change Developments in 2014 of mood following a dramatic decline in oil On 29 September 2014, Aker Solutions was prices in the second half of 2014. This has split into two companies. The “new” Aker naturally impacted the prices of oil-related Solutions will concentrate on the Subsea shares in general. Nevertheless, splitting and Field Design segments – encompassing Aker Solutions into two companies was an After the split in 2015, new Aker Solutions concentrates on the Subsea and Field Design segments. engineering and maintenance, modification important milestone and has allowed Aker and offshore (MMO) services – while the Solutions to emerge as an asset light, high 40.6 per cent of the shares in Aker Solu- quence of the oil price decline, Aker Solu- remainder of the business was spun out into return business focused on attractive seg- tions, giving Aker an equity interest equiva- tions is well positioned in markets with long the new company Akastor. The combined ments like subsea and field design. Luis lent to 28.4 per cent in Aker Solutions. Aker term growth potential such as subsea and share price of the two companies totalled Araujo took up the post of group chief exec- also owns 6.4 per cent of the shares in Aker offshore oil and gas engineering. Aker’s NOK 63.15 at the end of 2014, compared to utive in July 2014, at the same time as Svein Solutions directly, bringing its total stake to ownership agenda for Aker Solutions is to Aker Solutions’ share price of NOK 108.40 Oskar Stoknes took over as chief financial 34.8 per cent. Aker’s ownership interest focus on operational excellence, improved at the end of 2013. In April 2014, a dividend officer. Both have extensive knowledge of was valued at NOK 3.9 billion as at margins and capital discipline and through of NOK 4.10 per Aker Solutions share was the oil service sector and executive experi- 31 December 2014. Øyvind Eriksen and that create shareholder value. paid for the year 2013, compared to NOK ence from Aker Solutions. Øyvind Eriksen Kjell Inge Røkke represent Aker on Aker 4.00 one year previously. The total return in remains chairman of the board of directors. Solutions’ board of directors. Read more in the Board of directors’ 2014, including dividends, was minus 38 report on page 27, and on per cent, compared to close to zero in 2013 Aker’s engagement Aker’s ownership agenda www.akersolutions.com. and 87 per cent in 2012. Aker owns 70 per cent of the shares in Aker Aker believes that despite the headwinds The drop in the combined Aker Solu- Kværner Holding AS, which in turn owns faced by the oil services sector as a conse- 20 Aker ASA annual report 2014 Operations
Key figures 2014 2013
Revenues NOK million 21 432 18 448 EBITDA NOK million 1 380 1 355 EBITDA margin Per cent 6.4 7.3 Backlog NOK million 21 555 17 025 Order intake NOK million 25 254 18 011 Share price NOK 21.60 N/A 8% Earnings per share NOK 9.13 4.11 Number of employees 6 544 -
Beskjæres 76 mm fra venstre før trykk >> Akastor ASA
Akastor is an oil service investment com- ■■ MHWirth: Provides drilling solutions and so will generate greater shareholder value value in accordance with Akastor’s strategic pany engaged in the development of a services. than an alternative owner could. plans. This is more important than paying portfolio of attractive industrial companies, ■■ AKOFS Offshore: Owns and operates Frank O. Reite has taken up the position dividends in the short term. Aker’s owner- as well as financial investments in real well intervention and subsea equipment of CEO, joining Akastor from his previous ship agenda for Akastor primarily involves estate and other investments. Akastor has installation vessels. position in Aker’s private equity fund, Con- combining operational improvements with a flexible mandate to engage in active own- ■■ Fjords Processing: Provides processing verto, which he led. Reite has held execu- transactions in the portfolio companies. ership and promote long-term value crea- technology and equipment for oil and tive positions in Aker companies for many Capital discipline and optimising the capital tion for its shareholders. gas installations. years. Leif Borge is Akastor’s chief financial structures of the individual operational com- ■■ KOP Surface Products: Surface officer, and previously held a corresponding panies are also priorities on the agenda. Board chairman: Øyvind Eriksen Products: Specialised technology position at Aker Solutions. President and CEO: Frank O. Reite company delivering flow control Read more in the Board of directors’ report Aker investment director: Edward Ross equipment to the oil and gas industry, Aker’s engagement on page 28, and on www.akastor.com. offshore and onshore. Aker owns 70 per cent of the shares in Aker Developments in 2014 ■■ Frontica Business Solutions: A provider Kværner Holding AS, which in turn owns Akastor represents the continuation of the of corporate services such as financial, 40.3 per cent of the shares in Akastor, giv- companies and businesses from the “for- IT, HR, recruitment/restructuring and ing Aker an equity interest equivalent to mer” Aker Solutions that were not an other administrative support. 28.2 per cent in Akastor. Aker also owns active player in the Subsea and Field 6.3 per cent of the shares in Akastor Design segments. Akastor was established Each of the companies operates as inde- directly, bringing its total stake to 34.5 per as a new company name and individually pendent companies with individual manage- cent. Aker’s ownership interest was valued listed company on 29 September 2014. ment and board of directors, and has its at NOK 2.0 billion as at 31 December 2014. The decline in the combined Akastor/Aker own business plan to improve operations, Øyvind Eriksen and Kjell Inge Røkke repre- Solutions share price reduced Aker’s net project implementation, competitiveness, sent Aker on Akastor’s board of directors. asset value by NOK 3.9 billion in 2014. The margins and market share. In its capacity as Akastor share was priced at NOK 21.60 at an active owner, Akastor drives these efforts Aker’s ownership agenda the end of 2014. forward to generate shareholder value. Aker sees considerable potential for value Akastor is the owner of the following Akastor adopts an opportunistic approach growth in Akastor’s industrial portfolio. The portfolio companies: in its active ownership, holding onto com- priority is to develop and improve the indi- panies for as long as it believes that doing vidual companies to generate and crystallise Akastor generates shareholder value. Aker ASA annual report 2014 21 Operations
Key figures 2014 2013
Revenues NOK million 13 945 12 960 EBITDA NOK million 828 636 EBITDA margin Per cent 5.9 4.9 Backlog NOK million 16 451 22 809 Order intake NOK million 10 718 18 615 Share price NOK 8.89 11.50 3% Earnings per share NOK (0.26) 1.66 Number of employees 3 049 2 832
Beskjæres 76 mm fra venstre før trykk >> Kværner ASA
Kvaerner is a specialised EPC company cost base by 15 per cent. When Kvaerner that plans and executes large, complex Verdal was awarded both a long term frame offshore projects. EPC is the acronym agreement for platform substructures, as for Engineering, Procurement and Con- well as an agreement for delivery of two struction. complete steel sub-structures for the Johan Sverdrup field, it confirmed that Board chairman: Leif-Arne Langøy Kvaerner Verdal has managed to improve President and CEO: Jan Arve Haugan its competitiveness. Aker investment director: Edward Ross Aker’s engagement Developments in 2014 Aker owns 70 per cent of the shares in The Kvaerner share price fell from NOK Aker Kværner Holding AS, which in turn 11.50 to NOK 8.89 in 2014. Kvaerner paid owns 41 per cent of the shares in a dividend of NOK 0.61 per share in April Kvaerner. Aker thus indirectly owns 28.7 2014, and a further dividend of NOK 0.64 per cent of Kvaerner, and the sharehold- in October. Including dividends, the share ing was valued at NOK 687 million as at produced a return of minus 11.8 per cent 31 December 2014. Kjell Inge Røkke rep- in 2014, compared to minus 22 per cent in resents Aker on Kvaerner’s board of 2013. directors. Kvaerner reduced Aker’s net asset value by NOK 108 million in 2014. Aker received Aker’s ownership agenda Edvard Grieg, EPC for jacket, delivered by Kvaerner’s yard at Verdal, Norway in 2014. dividends totalling NOK 94 million, com- In September 2014, Kvaerner informed the pared to NOK 87 million in 2013. market of a process to review strategic Aker wants Kvaerner to win contracts on NOK 16.5 billion per year end 2014 accord- Kvaerner’s systematic, focused efforts to opportunities for further strenghtening the the Norwegian continental shelf. The Johan ing to the customers’ expectations and in increase productivity and cut costs both company. However, in the current volatile Sverdrup development offers opportunities line with own ambitions for increased mar- through the company’s own organisation as market, Kvaerner’s primary focus in the in this regard, and is critically important to gins and improved productivity. well as in its value chain continued in short term will not be on opportunities the Norwegian offshore industry. In the 2014. During the past year, the company which may involve large new investments short term, the top priority for Kvaerner is Read more in the Board of directors’ report implemented its programme to reduce its or changes to ownership. to execute the current order backlog of on page 28, and on www.kvaerner.com. 22 Aker ASA annual report 2014 Operations
Key figures 2014 2013
Revenues USD million 249 239 EBITDA USD million 217 208 EBITDA margin Per cent 86.9 86.9 EBITDA backlog USD million 2 248 1 737 Share price NOK 44.00 34.70 Earnings per share USD 0.75 0.71 17% Number of employees 18 19
Beskjæres 76 mm fra venstre før trykk >> Ocean Yield ASA
Ocean Yield is a ship owning company with made investment commitments totalling investments within industrial shipping and USD 1 350 million. Operational risk and oil-service. The Company focuses on mod- financial exposure are limited through long- ern assets with long-term charters to solid term bareboat charters with robust, credit- counterparties and has a significant contract worthy customers. backlog, which offers visibility with respect to Ocean Yield’s EBITDA order reserve future earnings and dividend capacity. totals USD 2.2 billion. The average con- tract length is 9.5 years, up from 7.1 years Board chairman: Trond Brandsrud at the end of 2013. This means predictable Managing director: Lars Solbakken long-term dividends for Ocean Yield’s Aker investment director: Trond Brandsrud shareholders. Aker received dividends totalling NOK Developments in 2014 316 million from the company in 2014, Ocean Yield’s share price rose from NOK compared to NOK 318 million in 2013. 34.70 to NOK 44.00 in 2014. The company Ocean Yield’s ambition is to pay attractive, also paid quarterly dividends during the year, increasing dividends to shareholders. Ocean Yield continued to expand its fleet in 2014. which totalled USD 0.515 per share, result- Ocean Yield strengthened its organisa- ing in a total return of 36 per cent in 2014. tion in 2014. Moreover, the subsidiary Aker Røkke and Trond Brandsrud represent Aker robust return and offers limited risk expo- The rise in Ocean Yield’s share price Floating Production has a competent on Ocean Yield’s board of directors. sure. Aker’s ownership agenda is for Ocean boosted Aker’s net asset value by NOK 1.2 organisation responsible for the operation Yield to continue expanding and diversify- million. The company has shown strong of the FPSO unit Dhirubhai-1. The other Aker’s ownership agenda ing its portfolio by concluding long-term growth since being listed on Oslo Stock vessels are on bareboat contracts, where Aker’s view on the market and the pros- contracts, and for the company to build an Exchange in July 2013, and was the most the operations are handled by the charterer. pects of the ship and maritime asset sale/ even stronger order reserve with focus on valuable company in Aker’s portfolio of leaseback sector remains positive. As increasing quarterly dividends for the com- Industrial holdings at the end of 2014. Aker’s engagement planned, Ocean Yield is developing into a pany’s shareholders. Ensuring an optimal Ocean Yield continued to expand its Aker owns 73.2 per cent of the shares in substantial contributor to Aker’s net asset capital structure is also a priority. fleet in 2014, committing to new invest- Ocean Yield, which were valued at NOK 4.3 value and dividend receipts. Aker will con- ments totalling USD 580 million. Since its billion as at 31 December 2014, up from tinue to develop Ocean Yield’s clear profile Read more in the Board of directors’ report launch in March 2012, Ocean Yield has NOK 3.4 billion at the end of 2013. Kjell Inge as an attractive investment that produces a on page 29, and on www.oceanyield.no. Aker ASA annual report 2014 23 Operations
Key figures 2014 2013
Revenues USD million 112 117 EBITDA USD million 5 4 Profit after tax USD million (17) (19) Net interest-bearing debt USD million 144 134 Earnings per share USD (0.25) (0.29) Number of employees 222 216 6%
Beskjæres 76 mm fra venstre før trykk >> Aker BioMarine AS (to be renamed Superba ASA)
Aker BioMarine is an integrated biotechnol- The global omega-3 market faced head- ogy company that develops, markets and winds in 2014, which also resulted in softer sells high-quality krill-based ingredients for demand for krill-based phospholipid- a varied range of applications. The krill-har- bound omega-3 products. Aker BioMarine vesting operation is certified by the Marine has strengthened its position, and its Stewardship Council (MSC) in accordance branded ingredient, Superba™ Krill Oil, is with its standards for effectively managed the global market leader. The completion and sustainable fishing. of Aker BioMarine and its partner Naturex’s jointly-owned production facility in Hou- Board chairman: Ola Snøve ston, Texas, USA, in the second half of President and CEO: Hallvard Muri 2014 has substantially increased the com- Aker investment director: Ola Snøve pany’s production capacity. Demand for Qrill™ Aqua remains Developments in 2014 strong. The measurable benefits of using Aker BioMarine is the only unlisted com- specialised feed supplements have been Aker BioMarines brand-name ingredient Superba™ Krill Oil is a global market leader. pany among Aker’s Industrial holdings. In demonstrated to customers in the aqua- 2014, Aker BioMarine’s group management culture industry. Aker BioMarine also purchased 0.98 per cent of the company. received regulatory approvals for its Aker’s ownership agenda strengthen the company’s position and Aker BioMarine paid no dividends to Aker Qrill™ Pet products in 2014 and the com- Aker BioMarine has built a strong platform build and expand the market for krill-based in 2014. pany expects that customers will launch for growth in the krill segment, which has products, ingredients and applications. In 2014, Aker’s non-krill related activities products containing Qrill™ Pet to con- the potential to contribute to growth in As of end 2014, Aker’s ownership of the were separated from Aker BioMarine to sumers in 2015. Aker’s net asset value, as well as dividends Trygg Pharma Group has been classified as prepare for a potential public listing, over time. Aker BioMarine controls the a financial investment. Together with its although no decision has been made as to Aker’s engagement entire supply chain, from sustainable krill partner Lindsay Golberg, Aker will optimise whether or when this will happen at pre- Aker owns 99.02 per cent of the shares in harvesting by two vessels to innovative the value of the underlying assets. sent. The non-krill business – Trygg Aker BioMarine. The shares are carried at product development, production, logistics Pharma Group (50 per cent of the shares) book value. Ola Snøve and Gabriella Bas- and long-term collaboration agreements Read more in the Board of directors’ – has been transferred into a subsidiary tiani represent Aker on the company’s with global consumer product and brand report on page 30, and on owned by Aker ASA. board of directors. leaders. Aker’s top ownership priority is to www.akerbiomarine.com. 24 Aker ASA annual report 2014 Operations
Key figures 2014 2013
Revenues NOK million 1 049 779 EBITDA NOK million 299 211 EBITDA margin Per cent 28.5 27.1 Share price NOK 15.20 11.80 Earnings per share NOK 2.32 (0.85) Number of employees 390 382 3%
Beskjæres 76 mm fra venstre før trykk >> Havfisk ASA
Havfisk is Norway’s leading white fish (cod, Havfisk to deliver its best result ever. saithe and haddock) harvesting company, In 2013, Reykjavik District Court on Ice- with 10 trawlers. It owns 29.6 cod trawler land handed down a judgment stating that licences, corresponding to around 11 per Havfisk was not entitled to terminate a cent of the total Norwegian cod quota. Most swap agreement with Glitnir in 2008. of Havfisk’s fresh fish is delivered to Norway Havfisk was of the opinion that the judge- Seafoods. ment was incorrect and appealed the ver- dict to the Icelandic Supreme Court. On 12 Board chairman: Frank O. Reite March 2015, the Court concluded that President and CEO: Webjørn Barstad Havfisk had the right to terminate the swap Aker investment director: Ola Snøve agreement in 2008. Havfisk was acquitted from the entire Glitnir claim and was Developments in 2014 awarded legal costs at ISK 3 million. The Increased quotas will increase the efficiency of fishing and catch value per day of operation. The Havfisk share price rose from NOK Court’s ruling is final. 11.80 to NOK 15.20 in 2014. This repre- Webjørn Barstad took up the post of sents an increase of 29 per cent, and Havfisk President and CEO on 1 January Aker’s engagement shareholders. Aker’s ownership agenda helped to increase Aker’s net asset value 2015. Barstad has extensive knowledge Aker owns 73.2 per cent of the shares in remains the same: ongoing operational by NOK 211 million. Havfisk has been in an and experience of the fisheries industry. His Havfisk, a stake valued at NOK 942 million improvement; higher profitability; optimisa- investment phase, and has not paid divi- objective is to continue the development of as at 31 December 2014. Ola Snøve repre- tion of the fleet/quotas; and the payment of dends to shareholders thus far. Norway’s leading trawler fleet in collabora- sents Aker on the company’s board of annual dividends. The Ministry of Trade, Havfisk has invested NOK 780 million in tion with employees, partners and owners. directors. Industry and Fisheries has decided to three new trawlers, the last of which was Cod stocks in the Barents Sea are very increase the maximum number of quotas delivered in the spring of 2014. One of the strong. To ensure continued sustainable Aker’s ownership agenda from three to four per vessel from January older vessels in the fleet has been sold. The management, the total Barents Sea cod Focused efforts in recent years have 2015. This provides further opportunities to modernisation of the fleet has helped to quota has been cut by 10 per cent in 2015, strengthened Havfisk’s financial foundation. increase the efficiency of fishing and catch improve harvesting efficiency, quota utilisa- from the high level seen in 2014. Demand Norway’s largest trawler fleet has helped to value per day of operation. tion and operational flexibility. Further, for white fish in general, and cod in particu- grow Aker’s net asset value in the past two white fish prices rose by an average of 25 lar, has been strong, a trend that appears years, and Havfisk is now approaching the Read more in the Board of directors’ report per cent in 2014. Overall, this allowed likely to continue in 2015. point where it can begin paying dividends to on page 30, and on www.havfisk.no. Aker ASA annual report 2014 25 Operations
Financial investments
Financial investments totalled NOK 7.6 billion at the end of 2014, including NOK 2.9 billion in cash. This equates to 30 per cent of the total asset value of Aker ASA and holding companies.
The Financial investments segment encom- received just over NOK 1 billion in divi- (including cash deposits related to the Oslo and Aberdeen International Business passes cash, liquid fund investments, other dends and upstream cash flow from port AMSC total return swap). Through Con- Park right next to Aberdeen Airport. public investments, the real estate develop- folio companies during 2014. verto, Aker has initiated a process to evalu- Other financial investments totalled NOK ment company Fornebuporten and other In 2014, Aker issued bonds for a total ate strategic opportunities for the two com- 2.1 billion at the end of 2014. This figure Beskjæres 76 mm fra venstre før trykk >> financial investments. Aker’s financial of SEK 1.5 billion. Although this increased panies in the US Jones Act market. includes interest-bearing receivables, inclu- investments are managed by its central its cash holdings, Aker also invested NOK Aker’s investment in the real estate sive loans to subsidiaries and associated finance function, under the direction of 1.5 billion in shares in Det norske olje- development company Fornebuporten companies of NOK 418 million, as well as Aker’s CFO and an investment director with selskap, and paid a dividend totalling NOK totalled NOK 736 million at the end of 2014. equity investments in unlisted companies. day-to-day responsibility for the adminis- 940 million to Aker’s shareholders. In the At the Fornebu site, Fornebuporten is con- Aker is making strong progress on the tration of the portfolio. The mandate is to second half of the year, Aker sold its structing approximately 67 000 square target announced in November 2012 of develop, maximise and realise investments. investment in the hedge fund AAM Abso- metres of office space and 16 000 square releasing NOK 3 billion in capital from Cash reserves of NOK 2.9 billion and lute Return Fund for NOK 362 million. metres of residential property. The two financial investments by the end of 2015. liquid fund investments of NOK 0.4 billion Aker’s private equity fund, Converto, has office buildings will be completed in the give Aker financial flexibility. Fornebupor- sold its stake in Stream. summer of 2015 and summer of 2016, and Read more in the Board of directors’ report ten’s sale of three office buildings as part of The financial investments in the listed approximately 90 per cent of the offices on page 31. the first phase of Aberdeen International companies American Shipping Company have been let. Fornebuporten also owns Business Park in Scotland released approx- and Aker Philadelphia Shipyard were val- valuable building plots for use in the next imately NOK 1 billion for Aker. Aker also ued at NOK 1.5 billion at the end of 2014 phases of development at Fornebu outside
Key figures Financial investments
31.12.2012 31.12.2013 31.12.2014 NOK/ NOK NOK/ NOK NOK/ NOK Amounts in NOK million share1 million share1 million share1 million
Cash 43 3 106 34 2 459 39 2 857 Liquid fund investments 8 607 10 707 5 362 Other public investments 3 183 22 1 609 20 1 476 Real estate development (Fornebuporten) 10 686 17 1 238 10 736 Other financial investments 30 2 166 30 2 135 29 2 123 Total Financial investments 94 6 748 113 8 149 104 7 554
1*) The investment’s contribution to Aker’s per share NAV. 26 Aker ASA annual report 2014 Board of directors’ report
Board of directors’ report 2014
Aker* achieved several important milestones in 2014, including the tors to Aker’s NAV decline in 2014 were Business operations and location demerger of Aker Solutions and Det norske oljeselskap’s acquisition of Mar- Aker Solutions and Akastor with NOK 3.9 Aker is an industrial investment company athon Oil Norway. The first half of 2014 was characterised by strong perfor- billion, Det norske with NOK 2.2 billion, with traditions dating back to 1841. Based mance and favourable developments in valuations of the portfolio compa- Kvaerner with NOK 0.1 billion and dividend on shipbuilding and mechanical production nies. However, the second half of 2014 was impacted by a sharp drop in oil payments of NOK 0.9 billion. NAV was pos- for the maritime trades and Norway’s pri- prices resulting in significant decline in the valuation of the overall portfolio. itively impacted by the value increases in mary industries, Aker grew throughout the As a consequence, the net asset value (“NAV) year-over-year declined 23.3 Ocean Yield and Havfisk of NOK 1.2 billion 1900s into one of the country’s largest per cent, adjusted for dividend, to NOK 17.7 billion in 2014. The company’s and NOK 0.2 billion, respectively. industrial groups. Beskjæres 76 mm fra venstre før trykk >> market value decreased 20 per cent in the period, including dividend, com- Aker enhanced its financial strength by As per year-end 2014, Aker had 47 pared to a 5 per cent increase in the Oslo Stock Exchange Benchmark Index increasing the upstream cash flow from its employees working at the company head- (“OSEBX”) and a 50 per cent decline in the oil price. On the other hand, cash operating companies and Financial invest- quarters in Oslo. Aker’s shares trade on the holdings increased during the year to NOK 2.9 billion (NOK 3.2 billion includ- ments by 22 per cent to NOK 1 040 million in Oslo Stock Exchange and the company ing liquid funds). Aker remains financially strong with financial capacity and 2014. Aker’s book equity ratio was 57 per had 13 419 shareholders as at 31 Decem- optionality to take advantage of more volatile markets. cent, while cash and liquid fund investments ber 2014. Just over two-thirds of the shares stood at NOK 3.2 billion. Gross interest- are held by companies controlled by Kjell As an active owner and equity investor, Aker of divesting NOK 3 billion in Financial bearing debt as at year-end 2014 amounted Inge Røkke and his family. develops its portfolio through mergers, investments, through Fornebuporten’s sale to NOK 6.7 billion and net interest-bearing Aker was directly or indirectly the largest acquisitions, divestments and adjustments of offices in Aberdeen and the exit from liabilities amounted to NOK 3.4 billion. shareholder in companies that combined to its ownership stakes among its Industrial AAM Absolute Return Fund. The board of directors of Aker Solutions had approximately 29 000 employees (not holdings and Financial investments. A Aker ASA* employs its financial and proposed a dividend of NOK 1.45 for the including hired-ins) in 34 countries. Eight of demerger of Aker Solutions into two sepa- industrial expertise to develop the operat- 2014 fiscal year, while the Board of these companies were listed on the Oslo rate listed entities was announced in May ing companies in its portfolio. The NAV of Kvaerner proposed a semi-annual dividend Stock Exchange. Aker’s investments are and completed in September 2014. Det nor- Aker and holding companies amounted to of NOK 0.67 and the Board of Ocean Yield divided into two portfolios: Industrial hold- ske oljeselskap (“Det norske”) acquired NOK 17.7 billion as at year-end 2014, com- proposed a quarterly dividend of USD ings and Financial investments. Marathon Norway in October 2014, trans- pared with NOK 24.0 billion a year earlier. 0.1425 for the fourth quarter 2014. Industrial holdings comprises Aker’s forming the company from a pure play NAV stood at NOK 244 per share, com- Aker’s board of directors recommended ownership interests in the exploration and exploration company into a fully integrated pared with NOK 332 per share at year-end a payment of NOK 10 per-share ordinary production company Det norske; the oil E&P company. Ocean Yield continued to 2013, before dividend. NAV is a core per- dividend for 2014, of which half would be service company Aker Solutions; the oilfield grow and diversify its portfolio adding USD formance indicator at Aker and is deter- with optional settlement in new Aker shares services investment company Akastor; the 0.7 billion to its EBITDA backlog in 2014. mined by applying the market value of at a 10 per cent discount. The proposal cor- engineering, procurement and construction Aker BioMarine was restructured during the exchange-listed shares and book value* for responds to a 6.1 per cent yield to the share (“EPC”) company Kvaerner; the ship-lease year in order to streamline the krill business. other assets. It expresses Aker’s underlying price at the close of 2014, and represents company Ocean Yield; the marine biotech- In addition, Aker continued to deliver on its value and is a key determinant of the com- 4.1 per cent of NAV, which is in the highest nology company Aker BioMarine and the three-year plan initiated in November 2012 pany’s dividend policy. The main contribu- end of the range of Aker’s dividend policy. white fish harvesting company Havfisk. Financial investments comprises cash
**) Aker ASA” refers to the parent company. and liquid fund investments, other public “Aker” refers to Aker ASA and holding companies, as listed in Note 1 for the annual accounts of Aker ASA and holding companies, page 129. investments, real estate developments “Aker Group” refers to Aker ASA and subsidiaries consolidated into the Group accounts, as listed in Note 9 for the annual accounts of Aker Group, page 63. “Group consolidated accounts” include the financial statements of the parent company Aker ASA, its subsidiaries, and interests in associated companies and jointly controlled entities. (Fornebuporten) and other financial invest- At Converto Capital Fund, the value of the unlisted shares for the Align and Ocean Harvest companies is measured based on the valuation principles in “International Private Equity and Venture Capital Valuation Guidelines.” ments. Aker ASA annual report 2014 27 Board of directors’ report
Key events in 2014 Autoliners. Total considerations for the “Aker ASA employs its financial and The first half of 2014 was characterised by contracts were USD 333 million. Ocean industrial expertise to develop the operating strong performance and favourable devel- Yield also took delivery of its first new- opment in Aker ASA and the portfolio com- building car carrier, the “Höegh Jackson- companies in its portfolio.” panies. However, the second half of 2014 ville” in April. Kvaerner delivered the was impacted by a sharp drop in oil prices Edvard Grieg and Martin Linge jackets and resulting in significant decline in the valua- was awarded a frame agreement and Let- tion of the overall portfolio. ter of Intent with Statoil for two Johan and improved efficiency. Webjørn Barstad billion at year-end 2013. The decline was In the first quarter of 2014, Havfisk took Sverdrup jackets with estimated value of was appointed new CEO of the company primarily caused by a net value decrease of delivery of the third of the three new trawl- NOK 3 billion. In the second quarter, Aker effective 1 January 2015. NOK 4.7 billion and dividends paid to Aker ers in March, all of which are performing paid NOK 940 million in dividend to its In the fourth quarter of 2014, Det norske of NOK 0.8 billion. The decline was partly well and have contributed to higher catch shareholders. reported the closing of the USD 2.1 billion offset by a NOK 1.5 billion equity contribu- Beskjæres 76 mm fra venstre før trykk >> volumes. Aker Philadelphia Shipyard raised In the third quarter of 2014, Det norske Marathon Oil Norway acquisition. Ocean tion through Det norske’s rights issue in approximately USD 65 million in equity signed a new USD 3.0 billion reserve-based Yield agreed to acquire the diving support July 2014. through a successful private placement, lending (“RBL”) facility. Further, the com- and offshore construction vessel “SBM The NOK 4.7 billion net value decrease which reduced Aker’s ownership in the pany completed a NOK 3.0 billion equity Installer” from SBM with a long-term bare- in 2014 was due to Aker Solutions and company to 57.6 per cent. In January, Aker rights issue, in which Aker participated with boat charter back to SBM for a fixed period Akastor declining NOK 3.9 billion, Det nor- successfully issued an unsecured SEK 1.5 its pro-rata share of NOK 1.5 billion. In late of 12 years. In November, Fornebuporten ske NOK 2.2 billion and Kvaerner NOK 0.1 billion bond that resulted in net proceeds of September, the previously announced AS, a subsidiary of Aker, agreed to sell the billion. This was, however, partly offset by a NOK 1.4 billion. demerger of Aker Solutions into two inde- first phase development at Aberdeen Inter- value increase of NOK 1.2 billion and NOK In the second quarter of 2014, Aker pendent companies, new Aker Solutions national Business Park, constituting three 0.2 billion in Ocean Yield and Havfisk, Solutions announced the demerger of the and Akastor, became effective. All share- office buildings, to the UK pension fund respectively. company. The rationale for the split was to holders of old Aker Solutions (renamed Legal & General. The transaction was Following the restructuring of Aker Bio- to create more streamlined companies with Akastor) received the same number of closed early November and resulted in a Marine, the non-krill related assets previ- targeted strategies. The company was also shares in new Aker Solutions. Both compa- cash release to Aker ASA of approximately ously owned by the company, primarily rewarded a NOK 14 billion contract by nies started trading on Oslo Stock NOK 1.0 billion. In the fourth quarter, Det Trygg Pharma Group, have been reclassi- Total to supply subsea production systems Exchange as of the same date. Luis Araujo norske incurred a non-cash net impairment fied to Financial investments. As a conse- for the Kaombo development in Angola. and Svein Oskar Stoknes assumed the charge of USD 319 million, due to the sig- quence, and based on fair value considera- The MMO division was impacted by a positions as CEO and CFO in new Aker nificant drop in oil prices following the tions, NOK 348 million in value has been weaker market in Norway and the Oilfield Solutions, while Frank O. Reite and Leif acquisition of Marathon Oil Norway. reclassified to Financial investments. Services & Marine Assets received a can- Borge assumed the same positions in cellation by Total of the AKOFS Seafarer Akastor. Aker Oilfield Services (AKOFS), a Industrial holdings Aker Solutions (previously named Skandi Aker) contract. subsidiary of Akastor, was awarded a five Industrial holdings is one of Aker’s two 2014 was a transformational year for Aker In Det Norske, Karl Johnny Hersvik took year contract with Petrobras to provide business segments and comprises the Solutions. During the recent years, the office as new CEO in May and in June the subsea intervention services offshore Brazil company’s long-term investments. The company has been moving towards a more company announced the acquisition of from the Aker Wayfarer vessel, which also number of investments in the Industrial focused asset-light high-return business Marathon Oil Norway for a cash considera- resulted in a corresponding extension of holdings portfolio increased to seven fol- model through the spin-off of Kvaerner, the tion of USD 2.1 billion. Ocean Yield the bareboat charter towards Ocean Yield. lowing the demerger of Aker Solutions in divestments of P&C and later the divest- entered into newbuilding contracts for The latter company also took delivery of its September 2014. The total value of Aker’s ments of the MLS and WIS business areas. three Liquefied Ethylene Gas carriers with second newbuilding carrier, the “Höegh Industrial holdings amounted to NOK 17.4 The split of Aker Solutions in 2014 marked 15-year bareboat charters to the Hartmann Jeddah”. Havfisk reported a record high billion as at 31 December 2014, which rep- an important milestone. While the more Group and agreed to acquire two car carri- third quarter result based on rising white resented 70 per cent of Aker’s value- asset-heavy business areas were set to be ers with 8-year bareboat charters to Höegh fish prices, increased harvesting volumes adjusted total assets, down from NOK 21.6 developed in the investment company 28 Aker ASA annual report 2014 Board of directors’ report
Akastor, the new Aker Solutions stood out tions and artificial-lift technology to deliver oped as separate companies with separate The company had operating revenues of as a more focused company with opera- reliable, integrated in-well and subsea pro- strategies and identities. Akastor is set up NOK 21.4 billion in 2014, compared to NOK tional focus and excellence as the main duction solutions that will help mitigate risk, as an oil services investment company 18.4 billion in 2013 on a like for like basis. mandate. accelerate output and extend the life of with a flexible mandate for long-term value EBITDA was NOK 1.4 billion, compared The split coincided with the sharp drop subsea fields. creation. with NOK 1.4 billion a year prior, resulting in in the oil price and cut-backs in global off- While 2014 ended as a year with several MHWirth is the largest investment in an EBITDA margin of 6.4 per cent com- shore exploration and production spending, important milestones achieved, Aker Solu- Akastor’s portfolio and one of two leading pared to 7.3 per cent in 2013. which has delayed the anticipated re-valua- tions needs to look forward and be pre- producers of drilling packages to floaters, Akastor’s shares closed the year at NOK tion of the company. However, the Board pared for a potentially pro-longed down- jack ups and fixed installations. The com- 21.60, down from NOK 25.71 at the first believes that over time the market will grow turn. The company must proactively seek pany has an installed base of close to 80 day of trading following the demerger. to appreciate the strengths of the company to balance the need for cost reductions and units globally, enabling the expected earn- as it demonstrates improved operational simplifications with the expectations from ings of the company to be fairly stable over Kvaerner Beskjæres 76 mm fra venstre før trykk >> performance and more predictable financial the customers to deliver projects on time the coming periods, even if there should be Kvaerner is a specialised oil and gas- results combined with high returns on capi- and on cost. few new drilling packages in the market related EPC company. The company deliv- tal. An important factor in achieving this is Aker Solutions on a like for like basis place near term. The company has pro- ers its projects from four business plat- an improved capital discipline. grew revenue by 13 per cent to NOK 33.0 actively adjusted capacity to reflect a new forms: Concrete Solutions, Jackets, Top- Aker Solutions won several key con- billion in 2014 while EBITDA grew by 29 per demand environment, but is also investing sides and Onshore. Examples of deliveries tracts during 2014, demonstrating the com- cent to NOK 2.7 billion, which corresponds into R&D developments to come stronger include topside facilities, floating facilities, pany’s strong position in the global offshore to an EBITDA margin of 8.1 per cent, com- out of this downturn. concrete and steel substructures, and market. Key highlight was the NOK 14 bil- pared with 7.2 per cent in 2013. The com- AKOFS Offshore saw a mixed 2014. onshore facilities. lion contract awarded in April to deliver a pany’s performance was negatively Aker Wayfarer secured a contract with Kvaerner is working consistently to subsea production system to Total’s impacted by the headwinds in the Norwe- Petrobras and Skandi Santos was awarded enhance production efficiency at its yards Kaombo development in Angola. Kaombo gian continental shelf MMO market, but a five-year contract extension on the back and to develop its delivery models, targeted is one of the world’s largest subsea devel- strong performance in particular in Subsea of continued good performance by the ves- at continuous reductions of the cost base opments, located in block 32 about 150 and Engineering helped offset the MMO sel for Petrobras in Brazil. On the other and increased competitiveness. The con- kilometres off the coast. It was the second slowdown. hand, AKOFS Seafarer’s (previously named tract signing for the first Johan Sverdrup major subsea contract awarded from Total Aker Solutions’ shares closed the year at Skandi Aker) contract with Total was can- steel jacket substructure marked an impor- in Angola, following the Moho Nord project NOK 41.55, down from NOK 65.35 at the celled in the early summer of 2014. One of tant milestone in the company’s ambitions in the Republic of Congo, valued at approx- first day of trading as the new Aker Solu- Akastor’s key priorities is securing new to enhance competitiveness, while the KBR imately NOK 4.9 billion. tions. The board of Aker Solutions has pro- work for this vessel. partnership announced in August is an In total, the backlog of Aker Solutions posed a dividend payment of NOK 1.45 per Frontica, KOP Surface and Fjords Pro- example of strong new delivery models. was NOK 48.3 billion per year end 2014 or share for the 2014 fiscal year. Accordingly, cessing are all new names to the general Despite general market uncertainty on 1.5 times the revenue in 2014. This pro- Aker will receive approximately NOK 112 public, but have long been part of the old the back of lower oil price, the EPC market vides comfort and a strong platform in a million through its ownership interest in Aker Solutions’ portfolio and represent remains active with several large Johan more uncertain environment over the next Aker Kvaerner Holding and NOK 25 million interesting opportunities ahead. Sverdrup contracts to be awarded in 2015. few years. through its direct ownership stake. In total, Akastor owns a group of busi- There will also be ample opportunities over One of the drivers for continued order nesses with a substantial value potential the next years within completion, hook-up intake going forward, will be the Subsea Akastor that can be released through either organic and onshore projects. Kvaerner’s focus is Production Alliance formed with Baker Akastor became a new name in Aker’s growth or, M&A. Looking forward, the key to win new contracts at sound margins, Hughes in April 2014. The alliance will com- industrial portfolio in 2014. The company focus in Akastor and its portfolio is to while extracting value from its backlog of bine Aker Solutions’ strengths in subsea contains businesses that have long been decide how to develop each of the busi- NOK 16.5 billion by delivering its projects at production and processing systems with part of old Aker Solutions, but are now run nesses and to adapt to a more uncertain cost, on schedule and according to clients’ Baker Hughes’ expertise in well comple- with a new mandate and are being devel- outlook. specification. Aker ASA annual report 2014 29 Board of directors’ report
Kvaerner completed several significant Det norske oljeselskap “Aker Solutions won several key contracts projects in 2014, including the delivery of Det norske is an integrated E&P company during 2014, demonstrating the company’s strong the Edvard Grieg and Martin Linge jackets with activities within exploration, develop- and the Eldfisk topside. In June 2014, ment and production on the Norwegian position in the global offshore market.” Kvaerner entered into a frame-agreement continental shelf. In 2014, the company for the delivery of steel jacket substructures announced and completed the acquisition to Statoil-operated fields, including a Letter of Marathon Oil Norway, transforming Det of Intent to deliver two jackets to the Johan norske from a pure exploration company Det norske has made significant pro- senior positions in Statoil. The company Sverdrup development and signed in Janu- into a fully integrated E&P company. gress on the Ivar Aasen (operator and 34.8 has further strengthened their organisation ary 2015 the final contract for the riser plat- The transaction represented an excellent per cent ownership) project in 2014. In in 2014 and announced in July a new man- form, the first steel jacket substructure. The strategic fit for Det norske; a portfolio with June, the company announced completion agement team. contract value was approximately NOK 2 limited capital expenditure commitments, of the unitisation negotiations and At the end of 2014, the company had Beskjæres 76 mm fra venstre før trykk >> billion. low historic tax balances and high near- increased reserves. Total reserves for the third-party certified proven and probable The company is working on bringing to a term production complementing Det nor- project is now estimated to be 210 mboe (P50) reserves of 206 million barrels of oil satisfactory conclusion the ongoing arbitra- ske’s capex program. The transaction also gross, up from the PDO estimate of 150 equivalents. The PDO for Johan Sverdrup tions related to legacy projects. In January offered a highly competent organisation mboe, significantly improving the econom- was submitted in February 2015. Reserves 2015, Kvaerner reached a settlement with with operational experience from the ics of the field. After the acquisitions of from Johan Sverdrup was thus not included Longview Power LLC and others and will Alvheim fields, which is complimentary to interests in the neighbouring license PL457, at year-end 2014.. The inclusion of the receive an aggregate amount of USD 48 Det norske’s exploration and development Det norske will have 34.8 per cent interest Johan Sverdrup reserves will more than million. The company will continue the arbi- capabilities. In 2014, combined production in the project (up from about 30 per cent). double year-end 2014 reserves. tration proceedings against Amec Foster from the two companies amounted to The project has continued to move forward The company had operating revenues of Wheeler North America Corp. approximately 67 000 barrels of oil equiva- in line with expectations, with construction USD 464 million in 2014, compared to USD The company had operating revenues of lents per day, making Det norske one of the of the topside in Singapore and the steel 161 million in 2013. EBITDAX was USD 365 NOK 13.9 billion in 2014, compared to NOK largest listed independent E&P companies jacket in Sardinia progressing well. The million, compared with USD 93 million a year 13.0 billion in 2013. EBITDA was NOK 0.8 in Europe. Maersk Interceptor jack-up rig arrived in prior, resulting in an EBITDAX margin of 79 billion, compared with NOK 0.6 billion a Johan Sverdrup is the key development Norway in October. The project is on per cent compared to 58 per cent in 2013. year prior, resulting in an EBITDA margin of asset in Det norske’s portfolio and in Febru- schedule for first oil in late 2016. Det norske’s shares closed at NOK 5.9 per cent compared to 4.9 per cent in ary 2015, Det norske, together with its part- During 2014, Det norske participated in 39.87 as per 31 December 2014, compared 2013. ners, submitted the Plan for Development 10 exploration wells. Of these, two wells with NOK 60.29 at the end of 2013. Kvaerner’s shares closed at NOK 8.89 and Operation (“PDO”) for the Johan Sver- have been successful; the Askja discovery as per 31 December 2014, compared with drup field. The PDO confirmed first oil -tar (part of the Krafla license) and the Garanti- Ocean Yield NOK 11.50 as at end of 2013. A NOK 0.61 get in late 2019 and estimated gross capex ana appraisal well (completed in 2015). Ocean Yield is a ship owning company with per-share dividend was paid out in the first of NOK 170-220 billion for the full field Among the disappointments was the Gei- a portfolio within oil service and industrial half of 2014 and NOK 0.64 per-share was development. Det norske did not succeed tungen appraisal well (Johan Sverdrup) shipping. The company owns modern paid out in the second half, compared with in reaching an agreement about the unitisa- drilled in PL265. The Gotha appraisal well assets with long-term charters to solid a total dividend of NOK 1.13 per-share dis- tion with the other partners. Thus, the Min- (in the Barents Sea) was non-conclusive counterparties and has a significant con- tributed in 2013. istry of Petroleum and Energy will conclude and did not lead to any change in the tract backlog, which offers visibility with The board of Kvaerner has proposed a on the final unitisation of Johan Sverdrup. resource estimate published earlier at respect to future earnings and dividend semi-annual dividend payment of NOK 0.67 Until this conclusion is made, the Ministry between 105-235 mboe gross. capacity. per share to be paid in April 2015. Accord- decided that Statoil’s recommendation will Karl Johnny Hersvik assumed the posi- The company grew and successfully ingly, Aker will receive approximately NOK be used as a basis, resulting in a prelimi- tion as chief executive officer of Det norske diversified its portfolio in 2014. In May, 52 million through its ownership interest in nary ownership interest of 11.9 per cent for in May 2014. Hersvik has wide experience Ocean Yield entered into newbuilding con- Aker Kvaerner Holding. Det norske. within the E&P sector from a number of tracts for three Liquefied Ethylene Gas car- 30 Aker ASA annual report 2014 Board of directors’ report
“Ocean Yields’ long-term charters and significant in recent years, 2014 was challenging and Total fishing quotas for cod set for 2015 contract backlog offers visibility with respect to future the reported sales of Superba™ Krill Oil are about 10 per cent lower than that of was somewhat lower than in 2013. Con- 2014, whereas cod prices have improved earnings and dividend capacity.” struction of a new krill oil manufacturing significantly throughout 2014. White fish facility in Houston, which is organised as a prices remain on an upward trend, partially joint venture between Aker BioMarine and driven by the weakening of the NOK Naturex, is now ramping up production. against other currencies and catch effi- riers with 15-year bareboat charters to the paid a total dividend of USD 0.515 per Aker BioMarine has established a solid ciency are improving. Hartmann Group and agreed to acquire two share in quarterly dividends during 2014. platform for future growth and is well posi- On 30 December 2013, Havfisk received car carriers with 8-year bareboat charters The board of Ocean Yield has proposed tioned to succeed in global growth markets a negative ruling in a lawsuit brought by the to Höegh Autoliners. In September, the a dividend payment of USD 0.1425 per with its strong supply chain, an innovative administration committee of Glitnir, in a company extended the bareboat charter for share for the fourth quarter of product pipeline, and stable long-term part- case concerning an interest rate and cur- Beskjæres 76 mm fra venstre før trykk >> the vessel Aker Wayfarer from 2020 to 2014. Accordingly, Aker will receive nerships. rency swap agreement entered into in 2027, and in December Ocean Yield agreed approximately USD 14 million through its Aker BioMarine reported 2014 total rev- 2008. In accordance with IFRS, a provision to acquire the diving support and offshore 73.2 per cent direct ownership interest in enues and other income of USD 112 mil- in line with the verdict, including accrued construction vessel “SBM Installer” from Ocean Yield. lion, compared to USD 117 million in 2013. interests, was made in the financial SBM with a long-term bareboat charter EBITDA amounted to USD 5 million, up accounts. The company was of the opinion back to SBM for a fixed period of 12 years. Aker BioMarine from USD 4 million in the previous year. The that the judgement was incorrect and Ocean Yield also took delivery of the new- (to be renamed “Superba ASA”) Company’s USD 105 million loan facility, of appealed the verdict to the Icelandic building car carriers, the “Höegh Jackson- Aker BioMarine is the leading supplier of which NOK 305 million is guaranteed by Supreme Court. Havfisk’s appeal was ruled ville” and the “Höegh Jeddah” in 2014. krill-derived products to the consumer Aker, matures in the second quarter 2016. in the Supreme Court of Iceland 4 March The outlook for Ocean Yield remains health and wellness and animal nutrition Aker BioMarine was delisted from Oslo 2015, and judgement fell on 12 March strong. The company’s estimated EBITDA markets. The company develops, markets, Stock Exchange in January 2013 and 2015. The Court concluded that Havfisk contract backlog stood at USD 2.2 billion and sells krill-derived ingredients for appli- became a privately owned subsidiary of had the right to terminate the swap agree- and the average remaining contract tenor cations ranging from fish feed to dietary Aker. ment in 2008. Havfisk is acquitted from the (weighted by EBITDA) was 9.5 years as per supplements. The company comprises the entire claim from Glitnir, and is awarded the end of 2014. With this earnings visibil- core krill business, as well as Aker BioP- Havfisk legal costs at ISK 3 million. The Court`s rul- ity, Aker believes Ocean Yield is well posi- harma that was merged into Aker BioMa- Havfisk is Norway’s largest white fish har- ing is final. tioned to continue to pay attractive and rine to strengthen the company’s general vesting company, with currently 10 trawlers In 2014, Webjørn Barstad was increasing quarterly dividends innovation capabilities during 2014. and 29.6 cod licences, representing around announced as new Chief Executive Officer The company had operating revenues of Aker BioMarine’s core products are 10 per cent of the national cod quotas. The starting 1 January 2015. Barstad holds USD 249 million in 2014, compared to USD Qrill™ Aqua, a value-added ingredient for company specialises in cod, saithe and solid experience from and an extensive net- 239 million in 2013. EBITDA was USD 217 the aquaculture industry, and Superba™ haddock harvesting. Catch efficiency and work in the fishing industry. million, compared with USD 208 million a Krill Oil, a phospholipid-based omega-3 white fish prices are the company’s key The company had operating revenues year prior, resulting in an EBITDA margin of dietary supplement ingredient. The market value drivers. of NOK 1.05 billion in 2014, compared to 87 per cent in line with the 2013 level. All for Qrill™ products continued to develop The company is working on increasing NOK 0.78 billion in 2013. EBITDA was projects performed according to budget favourably during 2014 with year-over-year its capability of full deployment of quota NOK 299 million, compared with NOK 211 during the year. The FPSO Dhirubhai-1 revenue growth for Qrill™ of nearly 20 per volumes, improving harvesting efficiency million a year prior, resulting in an EBITDA recorded an utilisation rate of 99.5 per cent cent and represented approximately one and enhancing operational flexibility. In line margin of 28 per cent compared to 27 per per cent for the year 2014. third of total revenues in 2014. Since the fall with this strategy, Havfisk completed its cent in 2013. Ocean Yield’s shares stood at NOK of 2013, the U.S. omega-3 market has newbuild program by taking delivery of its Havfisk’s share price closed at NOK 44.00 as at 31 December 2014, up from been challenging. While krill oil has taken third newbuild in 2014, whereas the two 15.20 as at year-end 2014, up from NOK NOK 34.70 as at end 2013. Ocean Yield market share in the overall omega-3 market others were delivered in 2013. 11.80 as at 31 December 2013. Aker ASA annual report 2014 31 Board of directors’ report
Financial investments tives for its two US Jones Act investments. addition to intangible, fixed and non-inter- This combined balance sheet shows the Financial investments comprise all of Aker’s As a major shareholder in both companies, est-bearing assets. aggregate financial position of the compa- assets – other than Industrial holdings – Aker will work together with management nies in the holding company structure, including cash, liquid fund investments, and the board of directors of AMSC and Net interest-bearing liabilities including total available liquidity and net other public investments, real estate devel- AKPS to evaluate and execute potential Gross interest-bearing liabilities rose to debt relative to the investments in the opment (Fornebuporten) and other financial strategic initiatives to maximise shareholder NOK 6.7 billion, up from NOK 5.4 billion a underlying operational companies. NAV for investments. The value of Aker’s Financial value. This could include M&A and financial year earlier, following the issuance of a sen- Aker ASA and holding companies forms the investments amounted to NOK 7.6 billion restructuring of AMSC and AKPS, as well ior unsecured bond of SEK 1.5 billion in basis for Aker ASA’s dividend policy. as at 31 December 2014, which repre- as assessing potential joint strategic alter- January 2014, with maturity date in July sented 30 per cent of Aker’s value-adjusted natives for the two companies. 2019. Total loans at market terms to sub- Going concern assumption total assets, and down from NOK 8.1 billion Aker’s total exposure to real estate sidiaries and associated companies were Pursuant to section 3-3a of the Norwegian in 2013. development (Fornebuporten) decreased reduced to NOK 0.4 billion as at 31 Decem- Accounting Act, it is confirmed that the Beskjæres 76 mm fra venstre før trykk >> Aker’s cash holdings increased to NOK by net NOK 502 million during the year to ber 2014, down from NOK 0.6 billion as at annual accounts have been prepared 2.9 billion as per year end 2014, up from NOK 736 million as of 31 December 2014, 31 December 2013. This is primarily due to based on the assumption that Aker is a NOK 2.5 billion end of 2013. The increase following the divestment of the first phase the repayment of the NOK 188 million loan going concern and the Board confirms that was primarily due to the issue of a SEK 1.5 development at Aberdeen International to Fornebuporten following the sale of the this assumption continues to apply. billion bond, NOK 1.0 billion in cash release Business Park (“AIBP”). The transaction Aberdeen offices in 2014. to Aker following Fornebuporten’s sale of closed early November 2014 and resulted Net interest-bearing liabilities increased Group consolidated accounts the Aberdeen offices and NOK 0.8 billion in in a cash release to Aker of NOK 953 mil- to NOK 3.4 billion as per year end 2014, up The main companies included in Aker’s dividend income in 2014. The increase was lion, of which NOK 188 million was repay- from NOK 2.3 billion as per end 2013. consolidated accounts are the following: partly offset by the NOK 1.5 billion equity ment of the receivable and NOK 20 million Det norske, Aker Solutions, Akastor, contribution to Det norske and the NOK 0.9 accrued interests on the same receivable. Presentation of annual accounts Kvaerner, Ocean Yield, Aker BioMarine and billion dividends paid to the shareholders in Construction of the office buildings at Aker ASA’s consolidated group financial Havfisk, which are all part of Aker’s Indus- 2014. Fornebuporten is progressing according to statements have been prepared and pre- trial holdings. The most material other sub- Aker held NOK 362 million in liquid fund plan. At the end of 2014, the total leased sented in accordance with International sidiaries are Fornebuporten, Aker Philadel- investments as of 31 December 2014, area stood at approximately 55 600 square Financial Reporting Standards (IFRS), phia Shipyard, Norway Seafoods and down from NOK 707 million in the previous meters out of a total of 67 560 square adopted by the EU. The financial state- Ocean Harvest. year. The reduction was mainly due to NOK meters. Subsequent to the year-end 2014, ments of the parent company Aker ASA As a consequence of the implementa- 362 million in redemptions from AAM Abso- Fornebuporten has signed additional con- have been prepared and presented in tion of the new accounting standard for lute Return Fund and a total underlying tracts for approximately 2 750 square accordance with the Norwegian Accounting consolidation (IFRS 10 Consolidated Finan- value increase of NOK 17 million. meters. In 2014, Fornebuporten also pre- Act and generally accepted accounting cial Statements), Aker Solutions, Akastor The value of other public investments sented its plans for a 120 000 square meter practices in Norway. In addition, a com- and Kvaerner are now considered as sub- was NOK 1.5 billion as of 31 December phase II development in the area for regula- bined income statement and a combined sidiaries for accounting purposes. For more 2014, down from NOK 1.6 billion in 2013. tory approval. balance sheet for Aker ASA and holding information about this change and the The value of Aker’s investment in Aker Phila- Other financial investments amounted companies have been prepared. These effects of the change, see note 3 to the delphia Shipyard (“AKPS”) fell to NOK 711 to NOK 2.1 billion as of 31 December have been prepared and presented in consolidated financial statements. million, compared to NOK 1 017 million in 2014, on par with levels as of 31 Decem- accordance with the Norwegian Accounting 2013. The value of Aker’s direct and indirect ber 2013. Other financial investments con- Act and generally accepted accounting Income statement equity exposure to American Shipping Com- sist of equity investments, internal and practices in Norway to the extent they were The Aker Group’s revenues are largely pany (“AMSC”) increased to NOK 765 mil- external receivables and other assets, of deemed relevant. attributable to the Industrial holdings com- lion, compared to NOK 588 million in 2013. which the largest contributors are the The combined balance sheet of Aker panies and the subsidiaries in the Financial In September 2014, Aker announced investments in Align, Trygg Pharma, ASA and holding companies is highlighted investments portfolio. Other companies that it will be evaluating strategic alterna- Setanta Energy and Ocean Harvest, in in Aker’s internal and external reporting. have only modest revenues or they are 32 Aker ASA annual report 2014 Board of directors’ report
associated – or joint venture companies, for compared with NOK 93.7 billion as at year- Cash flow statement Aker ASA’s shareholders and NOK 1.2 bil- which Aker records its share of the compa- end 2013. The increase is primarily due to As at 31 December 2014, the group had lion to non-controlling shareholders. nies’ after-tax profit. The Aker group had Det norske’s acquisition of Marathon Oil cash of NOK 12.0 billion, up from NOK 9.7 operating revenues of NOK 70.8 billion in Norway in the fourth quarter of 2014. Total billion in 2013. Aker ASA 2014, compared to NOK 61.4 billion a year non-current assets were NOK 82.6 billion The group’s net cash flow from opera- The parent company Aker ASA had a loss prior. Total operating expenses came in at as at 31 December 2014, compared with tions amounted to NOK 5.3 billion in 2014, for the year of NOK 4.7 billion, compared NOK 63.1 billion in 2014, compared to NOK NOK 50.4 billion at year-end 2013. The down from NOK 5.7 billion in 2013. In 2014, with a loss of NOK 0.4 billion in 2013. The 57.1 billion in 2013. Operating revenues group’s total intangible assets increased to the NOK 2.4 billion difference between 2014 loss is primarily attributable to the mainly increased due to Det norske’s NOK 30.9 billion as at 31 December 2014; operating profit before depreciation and negative development in the share invest- acquisition of Marathon Oil Norway in the the corresponding 2013 figure was NOK amortisation and net cash flow from opera- ments in Aker Solutions, Akastor, Kvaerner fourth quarter 2014, as well as generally 17.3 billion. Of this, goodwill amounted to tions is largely attributable to NOK 1.7 bil- and Det norske, which was partly compen- higher activity levels in the companies NOK 18.5 billion at year-end 2014, com- lion in net interest paid and NOK 1.3 billion sated by dividends received. Exchange- Beskjæres 76 mm fra venstre før trykk >> within the Industrial holdings portfolio. The pared to NOK 9.8 billion as at 31 December in tax reimbursements tied to exploration listed shares are recorded in the balance change in expenses is primarily as result of 2013 primarily as a consequence of the on the NCS and expensed exploration sheet at the lower of market value and cost the generally higher activity level in the acquisition of Marathon Oil Norway. Good- costs linked to dry wells previously capital- price. Market values for Ocean Yield and portfolio companies and the acquisition of will has been tested for impairment and ised at NOK 0.6 billion. In addition, taxes Havfisk are higher than cost and this year’s Marathon Oil Norway. NOK 2.9 billion in write-downs were made paid and increased working capital contrib- positive value change does not affect the Depreciation and amortisation in 2014 during 2014. Current assets were NOK 45.4 uted with NOK 1.4 billion and NOK 1.3 bil- financial statements. was NOK 3.6 billion, compared to NOK 2.7 billion as at 31 December 2014, up from lion, respectively. The Aker Group received Information on salary and other remuner- billion a year prior. Impairment charges in NOK 38.9 billion from the year prior. NOK 0.6 billion in dividend payments from ation to executive management and com- 2014 amounted to NOK 4.1 billion, primarily Current liabilities amounted to NOK 40.5 its associates and joint ventures in 2014, pensation guidelines is presented in Note due to impairment charges related to Mara- billion and long-term liabilities totalled NOK down from NOK 0.7 billion in 2013. 36 in the consolidated financial statements. thon Oil Norway and the vessel AKOFS 56.9 billion at year-end 2014; the corre- Net cash flow from investment activities Assets totalled NOK 26.8 billion as at 31 Seafarer. Net financial expenses were NOK sponding 2013 figures were NOK 32.2 bil- were minus NOK 13.3 billion in 2014, com- December 2014, compared with NOK 31.6 1.5 billion in 2014, compared NOK 0.9 bil- lion and NOK 31.9 billion, respectively. The pared to minus NOK 11.0 billion in 2013. billion at year-end 2013. The decrease is lion in 2013. The increase in net financial group’s interest-bearing debt amounted to Cash flow for 2014 comprises mainly invest- primarily attributable to changes in the value expenses was primarily due to value NOK 43.8 billion as at 31 December 2014, ments in Marathon Oil Norway NOK 10 bil- of the share portfolio. Equity amounted to changes related to the total return swap compared with NOK 30.8 billion at year-end lion, fields under development at NOK 3.7 NOK 12.2 billion at the end of 2014, com- agreements in American Shipping Com- 2013. The NOK 13 billion increase in inter- billion, capitalised oil and gas exploration pared with NOK 17.7 billion as at 31 pany. est-bearing debt is primarily due to Det expenses of NOK 1.0 billion, acquisition and December 2013. This results in an equity Loss before tax came in at NOK 1.4 bil- norske raising its debt by NOK 12 billion, investments related to acquisition and con- ratio of 46 per cent at the end of 2014. lion in 2014, compared to a loss before tax Ocean Yield by NOK 2.1 billion and Aker struction of vessels for NOK 2.7 billion. Dis- of NOK 0.3 billion in 2013. Tax expenses in ASA and holding companies by NOK 1.4 posals of shares, property, plant and equip- Research and development 2014 were NOK 0.2 billion, resulting in a billion. The increase was partly offset by the ment and subsidiary totalled NOK 7.8 billion. The parent company had no research and net loss from continuing operations of NOK 4.0 billion repayment in Akastor/Old Net cash flow from financing activities development activities in 2014. Group R&D NOK 1.6 billion. In 2013, the tax expense Aker Solutions. Interest-bearing debt as at amounted to NOK 9.2 billion in 2014, com- activities are presented in the annual was positive NOK 1.6 billion, resulting in year-end 2014 included secured loans of pared to NOK 7.1 billion in 2013. Cash flow reports of the respective operating subsidi- profit from continuing operations for 2013 NOK 25.8 billion and unsecured loans and for the year from financing activities is aries. of NOK 1.3 billion. other interest-bearing liabilities of NOK 18.0 largely attributable to a net increase in debt billion. of NOK 9.5 billion, dividend disbursement Aker ASA and holding companies Balance sheet The group’s equity ratio was 24 per cent of NOK 2.2 billion and new equity in sub- Combined income statement Total assets of the Aker Group amounted to at year-end 2014, compared to 30 per cent sidiary companies of NOK 1.9 billion. Divi- The combined profit and loss account for NOK 128.9 billion as at 31 December 2014, at the end of 2013. dend is composed of NOK 0.9 billion to Aker ASA and holding companies (Aker) Aker ASA annual report 2014 33 Board of directors’ report
shows a pre-tax loss of NOK 1.3 billion for billion in 2014. Aggregate lending on mar- “Aker’s goal is to be an attractive employer and 2014. The corresponding 2013 figure was a ket terms to Aker subsidiaries and associ- a preferred partner for business associates, as well profit of NOK 0.8 billion. Operating reve- ated companies decreased from NOK 0.6 nues were nil in 2014, same as in the previ- billion at year-end 2013 to NOK 0.4 billion as a well-respected member of society.” ous year. Operating expenses amounted to as at 31 December 2014. The changes are NOK 223 million in 2014, compared with discussed in the Financial investments sec- NOK 236 million in 2013. Ordinary depreci- tion above in the board of directors’ report. ation was NOK 15 million, on par with 2013 a foundation for long-term value creation pany Aker ASA have negligible effect on the levels. Debt and net asset value and to ensure good control mechanisms. external environment. Net other financial items (including divi- Gross interest-bearing debt amounted to The board of directors has approved the The Aker Group’s operating companies dend received but excluding value NOK 6.7 billion as at 31 December 2014, Code of Conduct, which applies to all report individually on their impact on the changes) amounted to NOK 354 million in up from NOK 5.4 billion a year earlier. employees, as well as to board members, external environment. The new section 3-3c Beskjæres 76 mm fra venstre før trykk >> 2014, down from NOK 822 million a year NAV and cash holdings are key perfor- hired personnel and others acting on behalf in the Norwegian Accounting Act requires prior. Dividends received amounted to NOK mance indicators at Aker and play an of Aker. The code addresses compliance that as of 1 June 2013, large companies 844 million, while net interest income, important role in assessing Aker’s financial with laws and other matters such as han- account for their efforts to integrate corpo- write-downs on receivables and other pro- position. The company’s dividend policy is dling of conflicts of interest, a commitment rate social responsibility in their business visions amounted to minus NOK 490 mil- based on the NAV of Aker. to equal opportunities for all employees and strategies and day-to–day operations. Aker lion. The net value change on shares Aker’s NAV as at 31 December 2014 compliance with anti-corruption legislation. ASA has complied with this requirement in amounted to minus NOK 1.4 billion. This is was NOK 17.7 billion, compared with NOK Aker follows the Norwegian Code of a separate document approved by the largely due to the decreased value in Aker’s 24.0 billion at year-end 2013. In calculating Practice for Corporate Governance of board of directors and published on its holdings in Det norske, as well as Aker’s NAV, the market value for exchange-listed October 2014. The company’s practice website under “Corporate Responsibility in direct holdings in Aker Solutions and Akas- shares is applied. At Converto Capital largely complies with the Code’s recom- Aker”. The assessment encompasses Aker tor. Tax expense for the year amounted to Fund, the value of the unlisted shares for mendations. Reference is made to the ASA and subsidiaries consolidated into the NOK 6 million. the Align and Ocean Harvest companies is report on corporate governance. The report Group accounts. measured based on the valuation principles is available on the company’s website: Gross assets in “International Private Equity and Venture www.akerasa.com. Our employees The value-adjusted assets of Aker ASA and Capital Valuation Guidelines.” Book value is Aker ASA had a total of 47 employees as at holding companies were NOK 24.9 billion used for other assets. Business and society 31 December 2014. The company supports as at 31 December 2014. The correspond- Aker’s goal is to be an attractive employer diversity and prioritises equal treatment of ing 2013 figure was NOK 29.8 billion. Management model and corporate and a preferred partner for business associ- men and women, ethnic minorities, seniors, The value of Aker’s Industrial holdings governance ates, as well as a well-respected member of and individuals with disabilities. Of the was NOK 17.4 billion as at 31 December Aker’s principal shareholder TRG, through society. Aker’s most important contribution to company’s employees, 22 were women (47 2014, compared with NOK 21.6 billion at its main owner Kjell Inge Røkke, partici- society is to create value and build forward- per cent). The company endeavours to pro- year-end 2013. The change is attributable pates actively in Aker’s development. Mr. looking companies that operate in environ- vide flexible working conditions so that to a number of transactions and portfolio Røkke is Aker’s Chairman of the Board and mentally, ethically and socially responsible Aker employment offers opportunities for a value development, discussed above in the constitutes, along with the company’s Pres- manners. Profitability is an important factor in good work-life balance through every Industrial holdings section of the board of ident and CEO, and CFO Aker ASA’s top achieving these objectives. career phase. directors’ report. management. As a significant shareholder in many As at 31 December 2014, the number of The value of Aker’s Financial invest- Aker is a public limited company organ- companies, Aker works to promote respon- employees in companies where Aker ments amounted to NOK 7.6 billion as of ised under Norwegian law with a govern- sible businesses that are committed to sus- directly or indirectly was the main share- year-end 2014, compared with NOK 8.1 ance structure based on Norwegian corpo- tainable economic development and high holder, totalled approximately 29 000 (not billion as at 31 December 2013. Cash rate law. The company’s corporate govern- standards of corporate and social responsi- including hired-ins), of about 15 700 increased from NOK 2.5 billion to NOK 2.9 ance model has been designed to provide bility. The operations of the parent com- worked in Norway. 34 Aker ASA annual report 2014 Board of directors’ report
“Employee representatives participate in key ordinary dividend of NOK 10 per share for has adapted to market changes and com- decision-making processes, including 2014, of which half would be with optional pany-specific issues in its portfolio. As pre- settlement in new Aker shares at a 10 per sented in their respective notes to the through board representation.” cent discount. The proposed dividend cor- financial statements, Aker ASA, the Aker responds to approximately 4.1 per cent of Group, and Aker ASA and holding compa- NAV, which is at the highest end of the nies are exposed to share price risk, oil range of Aker’s dividend policy. When price, currency and interest rate risk, mar- About 22 per cent of Aker Group tees at each main company. deciding the annual dividend level, the ket risk, credit risk, and operational risk at employees are women. Many companies in Aker meets Norwegian regulations with board of directors take into consideration the underlying company level. which Aker has a major shareholding are respect to gender representation on the expected cash flows, financing require- Risk management in Aker is based on cornerstones of their local communities boards of directors. Through dialogue with ments and needs for appropriate financial the principle that risk evaluation is an inte- that recruit locally and play an important nomination committee members and its vot- flexibility. In 2013, the ordinary dividend gral part of all business activities. Conse- Beskjæres 76 mm fra venstre før trykk >> role in integrating non-ethnic Norwegians ing at general shareholders’ meetings, Aker was NOK 13 per share, an aggregate total quently, management of operational risk into society. seeks to ensure that companies owned by of NOK 0.9 billion. lies primarily with the underlying operating Aker has an international framework Aker adhere to the same standards. Transfer from other equity amounts to companies, but Aker actively supervises agreement with Norwegian United Federa- The sick-leave rate among Aker employ- NOK 5.4 billion to cover loss for the year risk management through its participation tion of Trade Unions (Fellesforbundet), ees was at 2.4 per cent in 2014, which cor- and NOK 0.7 billion in proposed dividend. on the board of directors of each company. IndustriALL Global Union, NITO and Tekna. responds to 288 sick-leave days. This com- Aker‘s main strategy for mitigating risk The international framework agreement pares to 3.4 per cent in 2013. The corre- Key events after the 31 December related to short-term value fluctuations is to sets out fundamental labour rights and sponding figure for sick-leave in the Aker 2014 balance sheet date maintain a solid financial position and contains references to standards relating to Group was 3.0 per cent in 2014, compared On 13 February 2015, Det norske, together strong creditworthiness. Aker has estab- environment, health and safety (EHS) work, to 2.8 per cent in 2013. with its partners, submitted the Plan for lished clear financial guidelines that further pay, working time and employment condi- There were 104 reported accidents that Development and Operation for the Johan regulate monitoring and follow-up of finan- tions. The agreement commits Aker to led to absence from work at the Aker Sverdrup field. The partnership, consisting cial risk issues. Key performance targets respect and support fundamental human Group in 2014, compared with 112 such of Statoil, Lundin Norway, Petoro, Det nor- have been identified and are monitored rights and union rights in the societies in accidents in 2013. Accidents are described ske and Maersk Oil, recommended Statoil closely. A finance committee has been which the company operates. These princi- in the reports of the operating entities. as the operator for the field. Det norske did appointed to focus particularly on issues ples are delineated in the United Nations’ not succeed in reaching an agreement and decisions related to financial invest- Universal Declaration of Human Rights, Board activities about the unitisation with the other part- ments. For further information on the com- OECD guidelines for multinational corpora- The board of directors held four meetings ners. Thus, the Ministry of Petroleum and pany’s risk management, see the report on tions, and the ILO’s Declaration on Funda- in 2014 with an average attendance of 95 Energy will to conclude on the final unitisa- corporate governance available on the mental Principles and Rights at Work. per cent. The audit committee held six tion of Johan Sverdrup. Until this conclu- company’s website. For generations, Aker has cooperated meetings. sion is made, the Ministry decided that Sta- Financial market exposures, including closely with employee organisations. Chairman Kjell Inge Røkke, Deputy toil’s recommendation will be used as a currency, interest, and liquidity risks, are Employee representatives participate in key Chairman Finn Berg Jacobsen and Leif O. basis: Statoil 40.0267 per cent, Lundin Nor- discussed in greater detail in Note 6 in the decision-making processes, including Høegh were re-elected as board members way 22.12 per cent, Petoro 17.84 per cent, consolidated financial statements. through board representation. Aker ASA for two years at Aker’s annual general Det norske 11.8933 per cent and Maersk has partnered with its employees and those meeting held on 11 April 2014. Oil 8.12 per cent. Risks of its relevant operating companies to Aker ASA and each Aker company are establish a European Works Council. In Allocation of profit and dividend in Financial and risk management exposed to various forms of market, opera- addition, the company’s Norwegian trade Aker ASA Aker has a long-standing tradition of indus- tional, and financial risks. Rather than unions hold annual union representatives’ The board of directors has proposed for trial risk taking. The company has evolved diversifying risk by spreading investments conferences and maintain working commit- approval at the annual general meeting an with the economic cycles and its strategy across many different industries, Aker is Aker ASA annual report 2014 35 Board of directors’ report
focused on sectors in which the company addition these companies, through their and liquid fund investments 13 per cent, focus on cost-effective solutions and inten- possesses special expertise. The company business activities within their respective real estate development 3 per cent, while sified competition. has established a model for risk manage- sectors, are also exposed to legal/regula- other assets amounted to 5 per cent. The market for white fish continues to ment, based upon identifying, assessing tory and political risks, for example political Growth of Aker’s NAV will thus be influ- improve, led by solid demand for cod, and and monitoring major financial, strategic decisions on petroleum taxes and environ- enced by fluctuations in commodity prices, the biomass availability for white fish is and operational risks in each business seg- mental regulations. omega-3 prices, foreign currencies and expected to remain good. The sales of ment, drawing up contingency plans for In 2014, the oil price decreased signifi- developments on the Oslo Stock omega-3 ingredients to the human market those risks and attending to the implemen- cantly resulting in increased uncertainty in Exchange. are still influenced by a soft market senti- tation and supervision. The identified risks the oil and gas sector. The lower oil price The recent decline in offshore explora- ment, while demand in the animal feed and how they are managed are reported to led to an impairment charge in Det norske tion and production spending, driven by ingredient segment is developing favour- the Aker Board on a regular basis. Aker and the company reported an equity ratio E&P companies’ increased focus on capital ably. continuously work to improve its risk man- of 12.1 per cent at the end of 2014. This discipline and free cash flow, combined Aker’s strong balance sheet ensures that Beskjæres 76 mm fra venstre før trykk >> agement process. increases the funding risk for the company. with a significant drop in oil prices, have the company is capable of responding to The main risks that Aker ASA and hold- For further information on the Aker’s risk resulted in less market visibility and consid- unforeseen operational challenges and ing companies are exposed to are related management, see the report on corporate erably more uncertainty in the oil and gas short-term market fluctuations. The reduc- to the value changes of the listed assets governance available on the company’s sector short to medium term. As a result, tion in proposed dividend, though at the due to market price fluctuations, and unex- website. Aker is preparing for a period with lower highest end of the dividend policy range, is pected developments in the companies’ and more volatile oil prices. Globally, Aker also a measure to further strengthening capital expenditures. The development of Outlook forecasts continued long-term growth, Aker’s financial flexibility in more volatile the global economy, and energy prices in Investments in listed shares comprised mainly driven by the subsea and deepwater markets. As an industrial investment com- particular, as well as currency fluctuations, some 70 per cent of the company’s assets market segments. Aker therefore has a pany, Aker will use its resources and com- are important variables in assessing near- as at 31 December 2014. About 45 per positive long-term view on the E&P and petences primarily to promote and support term market fluctuations. cent of Aker’s asset value was associated offshore oil services sectors, while the development of the companies in its The companies in Aker’s Industrial hold- with the oil and gas sector. Maritime assets acknowledging the short to medium term portfolio, but also to consider new invest- ings are, like Aker, exposed to commercial represented 21 per cent, seafood and slowdown in activity, marked by delayed or ment opportunities within the current sec- risks, financial risks and market risks. In marine biotechnology 13 per cent, cash cancelled investment decisions, greater tors it is exposed to.
Oslo, 20 March 2015 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO 36 Aker ASA annual report 2014 Annual accounts
Contents – Annual accounts
Aker group Aker ASA Aker ASA and holding companies
Income statement and total Note 24 Earnings per share and dividend Contents – Aker ASA 110 Introduction 127 comprehensive income 37 per share and paid-in equity 90 Income statement 111 Combined income statement 127 Balance sheet at 31 December 38 Note 25 Minority interests 91 Balance sheet as at 31 December 112 Combined balance sheet as at Consolidated statement of Note 26 Other comprehensive income 92 Cash flow statement 113 31 December 128 changes in equity 39 Notes to the financial statements Notes to the financial statements Note 27 Interest-bearing loans and Cash flow statement 40 liabilities 93 for Aker ASA 114 for Aker ASA and holding companies 129 Notes to the financial statemets 41 Note 28 Pension expenses and pension Note 1 Accounting principles 114 Note 1 Accounting principles and basis Beskjæres 76 mm fra venstre før trykk >> Note 1 Corporate information 41 liabilities 98 Note 2 Salaries and other personnel for preparation 129 Note 2 Basis for preparation 41 Note 29 Other interest-free long-term expenses 115 Note 2 Non-recurring operating items 129 Note 3 Changes in accounting policies 42 liabilities 100 Note 3 Gain/loss on sale of shares 116 Note 3 Dividends received 129 Note 4 New standards and interpretations Note 30 Provisions 100 Note 4 Fixed operating assets 116 Note 4 Other financial items 129 not yet adopted 46 Note 31 Mortgage and guarantee Note 5 Shares in subsidiaries 117 Note 5 Value changes 130 liabilities 101 Note 5 Accounting principles 46 Note 6 Investments in associates, joint Note 6 Tax 130 Note 32 Trade and other payables 101 Note 6 Financial risk and exposure 54 ventures and other long-term Note 7 Long-term equity investments 130 Note 33 Financial instruments 102 investments in shares 117 Note 7 Acquisition of subsidiaries Note 8 Interest-free long-term receivables and transactions with minority Note 34 Contingencies and legal claims 103 Note 7 Receivables and other long-term and other 131 interests 58 financial assets 118 Note 35 Transactions and agreements Note 9 Other interest-bearing current Note 8 Sale of subsidiaries and with related parties 104 Note 8 Reversal/impairment of shares, assets and long-term receivables 131 discontinued operations 60 receivables, etc. 118 Note 36 Salary and other remuneration Note 10 Cash and cash equivalents 131 Note 9 Operating segments and to the board of directors, Note 9 Cash and cash equivalents 118 Note 11 Equity 131 significant subsidiaries 62 nomination committee, CEO Note 10 Shareholders’ equity 119 Note 12 Interest-free debt and liabilities 132 Note 10 Operating revenue 67 and other senior executive at Note 11 Deferred tax 120 Aker ASA 105 Note 13 Interest-bearing debt 132 Note 11 Wages, personnel expenses Note 12 Pension cost and pension Note 37 Shares owned by the Board and other operating expenses 68 liabilities 120 Note 14 Risk 132 of Directors, CEO and other Note 12 Impairment changes and non- Note 13 Debt and other liabilities to employees in the Executive team 106 Independent auditor’s report 133 recurring items 70 subsidiaries 121 Note 38 Classification of reserves and Note 13 Financial income and financial contingent resources (unaudited) 107 Note 14 External debt and other liabilities 122 expenses 71 Note 39 Events after the balance sheet Note 15 Mortgages and guarantee 122 Note 14 Tax 72 date 109 Note 16 Financial market risk 123 Note 15 Property, Plant and Equipment 75 Note 17 Shares owned by board Note 16 Intangible assets 78 members/executives 123 Note 17 Investments in associates and Note 18 Salary and other remuneration joint ventures 84 to the Board of Directors, Note 18 Other shares and funds 87 nomination committee, the President and CEO, and other Note 19 Financial interest-bearing assets 88 senior executives in Aker ASA 123 Note 20 Other non-current assets 89 Note 19 Legal disputes and contingent Note 21 Inventory and biological assets 89 liabilities 123 Note 22 Trade and other short-term Note 20 Events after the balance sheet interest-free receivables 89 date 123 Note 23 Cash and cash equivalents 89 Directors’ responsibility statement 124 Independent auditor’s report 125 Aker ASA annual report 2014 37 Annual accounts – Aker group
Income statement and total comprehensive income
Income statement Total comprehensive income
2013 2013 Amounts in NOK million Note 2014 restated* Amounts in NOK million Note 2014 restated*
Continuing operations Result for the year 1 021 1 734 Operating revenue 9, 10 70 782 61 382 Cost of goods and changes in inventory (31 744) (30 330) Other comprehensive income, net of income tax Wages and other personnel expenses 11 (19 802) (17 844) Items that will not be reclassified to income statement: Beskjæres 76 mm fra venstre før trykk >> Other operating expenses 11 (11 512) (8 925) Defined benefit plan actuarial gains (losses) 28 (364) (6) Operating profit before depreciation and amortisation 9 7 725 4 283 Defined benefit plan actuarial gains (losses) in associates and joint ventures Depreciation and amortisation 15, 16 (3 594) (2 722) - 3 Impairment changes and other non-recurring items 12, 15, 16 (4 091) (1 218) Items that will not be reclassified to income statement (364) (3) Operating profit 9 39 343 Financial income 13 1 401 964 Items that subsequently may be reclassified to income Financial expenses 13 (2 879) (1 831) statement: Share of profit of associated companies 17 (3) 177 Changes in fair value of available for sale financial assets (81) 395 Profit before tax 9 (1 442) (347) Changes in fair value of cash flow hedges (1 823) 351 Income tax expense 14 (187) 1 613 Reclassified to profit or loss: changes in fair value of Profit for the year continued operations 9 (1 629) 1 266 available-for-sale financial assets, translation and cash flow hedges 418 (227) Currency translation differences 4 099 1 508 Discontinued operations Changes in other comprehensive income associates and Profit for the period from discontinued operations net of tax 8 2 650 468 joint ventures 47 - Result for the year 1 021 1 734 Items that subsequently may be reclassified to income statement 2 660 2 027 Attributable to: Change in other comprehensive income, net of tax 13, 14, 26 2 296 2 024 Equity holders of the parent (39) 759 Minority interests 25 1 060 975 Total comprehensive income for the year 3 316 3 757 Result for the year 1 021 1 734 Attributable to: Equity holders of the parent 1 163 1 714 Average number of shares 24 72 335 746 72 320 121 Minority interests 2 154 2 043 Earnings per share 1) 24 Total comprehensive income for the year 3 316 3 757 Earnings per share continuing business (12.69) 8.64 Earnings per share discontinued business 12.15 1.85 Earnings per share (0.54) 10.49
1*) Profit attributable to equity holders of the parent/average number of shares. **) Comparative figures for 2013 have been restated following the adoption of IFRS 10 - see note 3. Unless otherwise stated, the 2013 references in this annual report refer to the restated 2013 figures. 38 Aker ASA annual report 2014 Annual accounts – Aker group
Balance sheet at 31 December
1 january 1 January 2013 2013 2013 2013 Amounts in NOK million Note 2014 restated* restated* Amounts in NOK million Note 2014 restated* restated*
ASSETS EQUITY AND LIABILITIES Property, plant and equipment 15 45 901 25 874 23 167 Share capital 24 2 026 2 026 2 026 Intangible assets 16 30 850 17 289 16 254 Own shares (1) (1) (25) Deferred tax assets 14 912 2 082 1 256 Total paid-in capital 24 2 026 2 025 2 001 Investment in equity accounted companies 17 1 502 1 321 1 119 Translation and other reserves 26 1 790 401 (565) Beskjæres 76 mm fra venstre før trykk >> Other shares and funds 18 1 267 1 491 1 363 Retained earnings 4 908 6 167 7 073 Interest-bearing long-term receivables 6.19 1 809 2 066 2 206 Total equity attributable to equity holders of the parent 8 723 8 593 8 509 Pension assets 28 4 18 27 Other non-current assets 20 356 247 278 Minority interests 25 22 669 19 910 19 122 Total non-current assets 82 600 50 389 45 670 Total equity 31 392 28 503 27 631
Inventories 21 3 222 2 880 2 798 Interest-bearing loans 6, 27 38 918 25 214 18 416 Trade receivables and other interest-free receivables 22 26 021 22 197 20 440 Deferred tax liabilities 14 11 845 3 554 3 481 Calculated tax receivable 14 185 1 647 1 442 Pension liabilities 28 1 555 1 178 1 239 Derivatives 33 3 391 1 556 466 Other interest-free long-term liabilities 29 732 995 1 049 Interest-bearing short-term receivables 19 588 934 449 Non-current provisions 30 3 899 941 926 Cash and cash equivalents 6.23 12 000 9 724 7 754 Total non-current liabilities 56 949 31 881 25 111 Total current assets 45 406 38 938 33 349 Interest-bearing short-term debt 6.27 4 898 5 564 3 299 Assets classified as held for sale 8 906 4 417 - Trade and other payables 32 27 550 23 894 20 965 Income tax payable 14 1 877 227 108 Total assets 9 128 912 93 743 79 019 Derivatives 33 5 041 987 367 Current provisions 30 1 154 1 512 1 538 **) Comparative figures for 2013 have been restated following the adoption of IFRS 10 - see note 3. Unless otherwise stated, the 2013 references in this annual report refer to the restated 2013 figures. Total current liabilities 40 521 32 184 26 277
Total liabilities 97 470 64 065 51 388 Liabilities classified as held for sale 8 51 1 176 - Total equity and liabilities 9 128 912 93 743 79 019
Oslo, 20 March 2015 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2014 39 Annual accounts – Aker group
Consolidated statement of changes in equity
Total Total equity of translation equity Total paid- Translation Fair value Hedging and other Retained holders of Minority Total Amounts in NOK million Note in capital reserve reserves reserves reserves earnings the parent interests equity
Balance as at 31 December 2012 - as previously reported 2 001 (758) 207 (14) (565) 8 024 9 460 9 350 18 810 Impact of changes in accounting policies *) - - - - - (951) (951) 9 772 8 821 Balance as at 1 January 2013 - restated 24-26 2 001 (758) 207 (14) (565) 7 073 8 509 19 122 27 631 Beskjæres 76 mm fra venstre før trykk >> Profit for the year 2013 - 759 759 975 1 734 Other comprehensive income 26 - 674 202 90 966 (11) 955 1 069 2 024 Total comprehensive income - 674 202 90 966 748 1 714 2 043 3 757 Dividends - - (868) (868) (1 078) (1 946) Own shares 1 - 3 4 - 4 Share-based payment transactions - - (6) (6) - (6) Subsidiary companies' acquisition and sale of own shares - - 34 34 43 77 Total contributions and distributions 1 - - - - (837) (836) (1 035) (1 871) New minority, acquisition and sale of minority 7, 25 23 - (795) (772) (1 080) (1 852) Issuance of shares in subsidiary 25 - - (22) (22) 898 877 Total changes in ownership without a change of control 23 - - - - (817) (793) (181) (975) Downward sale of shares in subsidiaries - - - (41) (41) Balance as at 31 December 2013 24-26 2 025 (84) 409 76 401 6 167 8 593 19 910 28 503
Profit for the year 2014 - (39) (39) 1 060 1 021 Other comprehensive income - 1 995 (209) (397) 1 389 (187) 1 202 1 094 2 296 Total comprehensive income - 1 995 (209) (397) 1 389 (226) 1 163 2 154 3 316 Dividends - (940) (940) (1 211) (2 151) Own shares - - 4 5 - 5 Subsidiary companies' acquisition and sale of own shares - (63) (63) (99) (162) Total contributions and distributions - - - - - (999) (998) (1 310) (2 308) New minority, acquisition and sale of minority 7, 25 - - (27) (27) (41) (67) Issuance of shares in subsidiary 25 - (8) (8) 1 956 1 948 Total changes in ownership without change of control - - - - - (35) (35) 1 915 1 881 Balance as at 31 December 2014 24-26 2 026 1 911 200 (321) 1 790 4 908 8 723 22 669 31 392
**) Comparative figures for 2013 have been restated following the adoption of IFRS 10 - see note 3. Unless otherwise stated, the 2013 references in this annual report refer to the restated 2013 figures. 40 Aker ASA annual report 2014 Annual accounts – Aker group
Cash flow statement
Amounts in NOK million Note 2014 2013
Profit before tax (1 442) (347) Net interest expenses (+) 13 1 529 1 342 Sales losses/gains (-) and write-downs 10, 12 3 825 1 098 Unrealised foreign exchange gain/loss and other non-cash items 13 37 (671) Depreciation and amortisation 15, 16 3 594 2 722 Share of earnings in associated and joint venture companies 17 (342) (540) Dividend received from associated and joint venture companies 17 600 681 Beskjæres 76 mm fra venstre før trykk >> Expensed dry wells previously capitalised 16 624 1 151 Changes in other net operating assets and liabilities 32 (1 299) 1 003 Cash flow from operating activities before interest and tax 7 125 6 439 Interest paid 13 (1 985) (1 726) Interest received 13 275 276 Taxes refunded 14 1 309 1 318 Taxes paid 14 (1 417) (571) Net cash flow from operating activities 9 5 306 5 735 Proceeds from sales of property, plant and equipment 15 237 1 341 Proceeds from sales of shares and other equity investments 17, 18 528 308 Disposals of subsidiaries, net of cash disposed 8 7 071 4 Acquisition of subsidiaries, net of cash acquired 7 (10 228) (3 141) Acquisitions of property, plant and equipment 15, 16 (11 299) (9 608) Acquisitions of shares and equity investments in other companies 17, 18 (187) (135) Net cash flow from other investments 19 541 222 Net cash flow from investing activities 9 (13 336) (11 009) Proceeds from issue of interest-bearing debt 27 28 532 14 733 Repayment of interest-bearing debt 27 (19 012) (6 625) Net repayment and issue of interest-bearing debt 9 520 8 108 New equity 25 1 940 878 Own shares 24, 25 (157) 81 Dividends paid 24, 25 (2 151) (1 946) Net cash flow from transactions with owners (368) (988) Net cash flow from financing activities 9 9 152 7 120 Net change in cash and cash equivalents 1 122 1 846 Effects of changes in exchange rates on cash 1 154 125 Cash and cash equivalents as at 1 January 9 724 7 754 Cash and cash equivalents as at 31 December 23 12 000 9 724
**) Comparative figures for 2013 have been restated following the adoption of IFRS 10 - see note 3. Unless otherwise stated, the 2013 references in this annual report refer to the restated 2013 figures. Aker ASA annual report 2014 41 Annual accounts – Aker group
Notes to the financial statemets
Note 1 Corporate information The project costs depend on productivity factors (e*) Tax and the cost of inputs. Weather conditions, the per- The group is subject to income taxes in numerous formance of subcontractors and others with an jurisdictions. Significant judgment is required to Aker ASA is a Norwegian company, domiciled in 10, Aker Solutions, Akastor and Kvaerner are now impact on schedules, commodity prices and cur- determine provisions for income taxes worldwide. Norway. Aker’s 2014 consolidated financial state- included as subsidiaries. Comparative figures have rency rates can all affect cost estimates. Although Aker incurs an income-tax payable and/or earns ments include the financial statements of the par- been changed accordingly. Unless otherwise stated, experience, systematic use of the project execution a considerable tax receivable. The group also rec- ent company, Aker ASA, its subsidiaries, and inter- any reference to 2013 figures refers to the restated model and focus on core competencies reduce the ognises changes in deferred tax or deferred tax ests in associated companies and jointly controlled figures. See more about the change in note 3. risk, there will always be uncertainty related to such benefits. These figures are based on management’s entities. Aker ASA is listed on the Oslo stock exchange assessments. interpretation of applicable laws and regulations, As a consequence of the implementation of IFRS with the ticker “AKER”. In situations where cost is not seen to properly and relevant court decisions. The quality of these Beskjæres 76 mm fra venstre før trykk >> reflect actual progress, alternative measures such estimates are largely dependent on management’s as hours or physical progress are used to achieve ability to apply what is sometimes a very complex Note 2 Basis for preparation more precise revenue recognition. The estimation set of rules, its ability to identify changes to existing uncertainty during the early stages of a contract is rules and, in the case of deferred tax benefits, its 2.1. Statement of compliance are based on historical experience, consultations mitigated by a policy of normally not recognising ability to project future earnings from which a loss Aker has prepared its consolidated financial state- with experts, trends and other methods which revenue in excess of costs on large lump sum pro- carry-forward may be deducted for tax purposes. ments in accordance with International Financial management considers reasonable under the cir- jects before the contract reaches 20 per cent com- See Note 14. Reporting Standards (IFRS) and associated inter- cumstances. Changes to accounting estimates are pletion. However, management can on a project-by- pretations as determined by the EU as at 31 recognised in the period in which the estimates are project basis give approval of earlier recognition if (f*) Pension obligations December 2014 and Norwegian disclosure require- revised and in any future periods that are affected. the uncertainties of cost estimates are low. This is The present value of pension obligations depends ments pursuant to the Norwegian accounting act Areas in which, in applying the group’s account- typically in situations of repeat projects, proven on a number of factors that are determined on an as at 31 December 2014. ing principles, there tends to be uncertainty as to technology or proven execution model. See Note 9 actuarial basis using several actuarial assumptions. The consolidated financial statements have material estimations and critical assumptions and and 10. Any changes in these assumptions will impact the been prepared on a historical cost basis, with a few assessments, are described in the following para- calculated pension obligations. The assumptions exceptions described in section 2.5. graphs and in relevant notes to the accounts. Esti- (c*) Warranty provisions used in determining net pension costs and income, The consolidated financial statements for the mates and their underlying assumptions are At the completion of a project, a provision is made include an applicable discount rate. The group 2014 accounting year were approved by the Board assessed continuously. The group’s operational for expected warranty expenditures. Based on determines the appropriate discount rate at the of directors on 20 March 2015. The annual accounts companies operate in different markets, and are experience, the provision is often set at one per end of each year. This is the interest rate that is to will be submitted to Aker’s annual general meeting thus affected differently by the uncertainties that cent of the contract value, but can also be a higher be used to determine the present value of esti- on 17 April 2015 for final approval. characterise the different markets at year-end. or lower amount following a specific evaluation of mated future cash outflows expected to be the actual circumstances for each contract. Both required to fulfil the pension obligations. In deter- 2.2. Functional currency and presentation (a*) Consolidation the general one per cent provision and the evalua- mining the appropriate discount rate, the group currency Assessment whether the Group has control over an tion of project specific circumstances are based on considers the interest rates of high-quality corpo- The consolidated financial statements are pre- investee. See note 3 and 9. experience from earlier projects. Factors that could rate bonds denominated in the currency in which sented Norwegian kroner and in millions (NOK mil- affect the estimated warranty cost include the the benefits are payable and that have terms to lion). The Norwegian krone (NOK) is the functional (b*) Revenue recognition group’s quality initiatives and project execution maturity approximating the terms of the related currency of the parent company. As a result of The percentage-of-completion method is used to model. Provisions are presented in Note 30. pension liability. The discount rate and other key rounding differences, amounts and percentages account for construction contracts. This method assumptions for determining the pension obliga- may not add up to the total. requires estimates of the final revenue and costs of (d*) Impairment testing of goodwill and intangible tions are disclosed in Note 28. the contract, as well as measurement of progress assets with indefinite useful lives. 2.3. Use of estimates and assumptions achieved to date as a proportion of the total work In accordance with applicable accounting princi- (g*) Financial instruments The preparation of annual financial statements in to be performed. ples, the group performs annual impairment tests The group is exposed to the following risks result- conformity with IFRS requires management to For contract revenue, there are uncertainties to determine whether goodwill and intangible ing from its use of financial instruments: make judgments, estimates and assumptions that related to recoverable amounts from variation assets recorded in the balance sheet have suffered affect both the application of accounting principles orders, claims and incentive payments. These are any impairment. The estimated recoverable ■■ Credit risk and the reported amounts of assets and liabilities, recognised when it is deemed probable that they will amount for the cash-generating unit is determined ■■ Liquidity risk income and expenses. Actual results may differ result in reliably measurable revenues. This assess- based on the present value of budgeted cash flows ■■ Market risk (including currency- and interest from amounts arrived at based on these assump- ment is adjusted by management’s evaluation of or estimated sales value less cost to sell if higher. risk). tions. Estimates and underlying assumptions are liquidated damages to be imposed by customers See Note 16. reviewed and assessed on an on-going basis, and typically relating to contractual delivery terms. 42 Aker ASA annual report 2014 Annual accounts – Aker group
Note 6 and Note 33 present information about the (k*) Decommissioning and removal obligations For the purpose of fair value disclosures, the ■■ Derivative financial instruments are measured at group’s exposure to each of the risk above, the Aker’s subsidiary Det norske oljeselskap has obli- group has determined asset and liability classes fair value group’s objectives, the principles and processes gations relating to decommissioning and removal based on the nature, characteristics and risks asso- ■■ Financial instruments at fair value through profit for measuring and managing risk, and the group’s of offshore installations at the end of production ciated with each asset or liability and the applicable and loss are measured at fair value capital management. periods. Obligations associated with decommis- level within the fair value hierarchy. See Note 33. ■■ Available-for-sale financial assets are measured sioning and removals of long-term assets are rec- at fair value (h*) Contingent assets and liabilities ognised at fair value on the date they are incurred. 2.5. Basis of measurement ■■ Contingent consideration assumed in business As a result of their extensive worldwide operations, At the initial recognition of an obligation, the The consolidated financial statements have been combinations are measured at fair value group companies sometimes become involved in expense is capitalised as production plant and prepared on a historical cost basis, with except for ■■ Net defined benefit (asset) liability is recognised legal disputes. Provisions have been made to cover depreciated over the useful life of the asset. It is the following items: at fair value of plan assets less the present the expected outcomes of the disputes where neg- difficult to estimate the expenses of decommis- value of the defined benefit obligation ative outcomes are likely and reliable estimates can sioning and removal, which are based on applica- be prepared. However, the final outcome of these ble laws and regulations, and dependent on tech- cases will always be subject to uncertainties and nological developments. Many decommissioning resulting liabilities may deviate from booked provi- and removal activities will take place in the distant sions. See Note 34. future, and the technology and related expenses Note 3 Changes in accounting policies Beskjæres 76 mm fra venstre før trykk >> are constantly changing. The estimates include (i*) Proven and probable oil and gas reserves costs based on expected removal concepts and 3.1. IFRS 11 Joint Arrangements Kværner ASA (Kvaerner). Following a transaction in Oil and gas reserves are estimated by the group’s estimated expenses of maritime operations, hiring Implementering av IFRS 11 medførte ingen vesen- November 2013, Aker also owned 6 per cent of experts in accordance with industry standards. In of heavy-lift barges and of drilling rigs. Significantly tlig endring av regnskapsføringen av felleskon- (Old) AKSO directly, giving Aker a “consolidated” addition, reserves are certified by an independent changes in estimates could affect future financial trollerte ordninger. ownership interest in AKSO of 46.3 per cent as at third party. Proven and probable oil and gas reserves results. See Note 30. 31 December 2013. In addition, Aker ASA in May consist of the estimated quantities of crude oil, natu- 3.2. IFRS12 Disclosures of Interests in Other 2014 acquired 0.3 per cent in (Old) AKSO, bringing ral gas and condensates shown by geological and (l*) Rig contracts Entities the “consolidated” ownership interest up to 46.6 technical data to be recoverable with reasonable Aker’s subsidiary Det norske oljeselskap has obli- The group has expanded the note information on per cent as at end of the second quarter of 2014. certainty from known reservoirs under existing eco- gations relating to rig contracts. Rig contracts are subsidiaries, jointly controlled entities and associ- In the third quarter of 2014, (Old) AKSO was split nomic and operational conditions, i.e. on the date subject to impairment tests based on change in ated companies. into two companies: new Aker Solutions (“AKSO”) that the estimates are prepared. future rig rates and utilisation. See Note 11. and Akastor (“AKA”). All shareholders of (Old) AKSO Proven and probable reserves are used to esti- 3.3. IFRS 10 Consolidated Financial (which was renamed to Akastor) received the same mate production volumes, which is used as the 2.4. Fair value measurement Statements – consolidation of Aker number of shares in new Aker Solutions. Due to the basis for depreciation calculations. Reserve esti- The Group uses valuation techniques that are Solutions, Akastor and Kvaerner treasury shares in (Old) AKSO, the ownership inter- mates are also used as the basis for impairment appropriate in the circumstances and for which As at the end of 2006, Aker ASA (“Aker”) owned ests for Aker in the two companies differ slightly. testing of licence-related assets. Changes in petro- sufficient data are available to measure fair value, 50.1 per cent of Aker Kværner ASA (later renamed This difference in ownership interests is so small leum prices and cost estimates may change reserve maximising the use of relevant observable inputs to Aker Solutions ASA – “(Old) AKSO”), and the that it does not change the conclusion of control estimates and, accordingly, economic cut-off. and minimising the use of unobservable inputs. company was fully consolidated in Aker’s consoli- under IFRS 10. Neither is there any other factors Changes to reserve estimates may also be caused All assets and liabilities for which fair value is dated financial statements for 2006. In January influencing the IFRS 10 assessment that are materi- by updated production and reservoir information. measured or disclosed in the financial statements are 2007, Aker reduced its ownership interest from ally different between the two companies. The Future changes to proven and probable oil and gas categorised within the fair value hierarchy, described 50.1 per cent to 40.1 per cent, and (Old) AKSO was assessment described below therefore refers to reserves may have a material effect on depreciation, below, based on the lowest level input that is signifi- therefore treated as an associated company and both companies. life of field, impairment of licence-related assets, cant to the fair value measurement as a whole: recorded in Aker’s consolidated financial state- IFRS 10 contains a new definition of control, and operating results. See Note 15 and Note 16. ments in accordance with the equity method as which must be applied when an investor is to ■■ Level 1: Quoted (unadjusted) market prices in from that date. In December 2007, the ownership assess whether an investment must be consoli- (j*) Acquisition costs - exploration active markets for identical assets or liabilities. interest in (Old) AKSO was transferred to Aker dated in the consolidated financial statements. The accounting policy of Aker’s subsidiary Det nor- ■■ Level 2: Valuation techniques for which the Holding AS (now Aker Kværner Holding AS Control requires three elements: ske oljeselskap is to temporarily recognise lowest level input that is significant to the fair –“AKH”), and 40 per cent of the shares in AKH expenses relating to the drilling of exploration wells value measurement is directly or indirectly were sold to the Norwegian State (30 per cent) and 1. ownership interests give the investor power to in the balance sheet pending an evaluation of observable. SAAB/Investor (10 per cent). In 2011, Aker pur- direct the relevant activities of the investee, potential oil and gas discoveries (successful efforts ■■ Level 3: Valuation techniques for which the chased 10 per cent of the shares in AKH from 2. the investor is exposed to variable returns from method). If no reserves are discovered, or if recov- lowest level input that is significant to the fair SAAB/Investor, and since then has owned 70 per the investee, and ery of the reserves is considered technically or value measurement is unobservable. cent of AKH, while the Norwegian State owns the 3. decision-making power allows the investor to commercially unviable, the costs of exploration remaining 30 per cent. AKH is treated as a subsidi- affect its variable returns from the investee. wells are expensed. Decisions as to whether this The Group determines whether transfers have ary in Aker’s consolidated financial statements. expenditure should remain capitalised or expensed occurred between levels in the hierarchy by re- Since the demerger of Kvaerner from (Old) AKSO in The board and management of Aker have consid- in the period may have a material effect on the assessing categorisation at the end of each report- 2011, AKH has owned 40.3 per cent of the shares ered whether the company’s indirect ownership operating result for the period. See Note 16. ing period. in AKSO and 41.0 per cent of the shares in interest in AKSO, AKA and Kvaerner is sufficient to Aker ASA annual report 2014 43 Annual accounts – Aker group
give it control under IFRS 10. The primary consid- be depreciated. As a consequence, Havfisk Income statement Year 2013 eration has been whether Aker is able to control changed its accounting principles for intangible the outcome of voting at the companies’ general assets in the form of depreciation of structural quo- As Changes meetings. After careful consideration of this ques- tas with effect from 1 January 2013. Aker has previously in tion based on both the absolute and relative own- restated the consolidated accounts for 2013 Amounts in NOK million reported principles Restated ership interests and attendance at previous general accordingly. The yearly depreciation increased by meetings of AKSO, AKA, Kvaerner and comparable approximately NOK 18 million due to the change. Operating revenues 8 086 53 296 61 382 companies, Aker has concluded that such control As a result of the change, the opening balance of Operating expenses (7 801) (49 298) (57 099) exists. intangible assets at 1 January 2013 was reduced Operating profit before depreciation and amortisation 284 3 999 4 283 Consideration has also been given to all other with NOK 87 million compared to what was relevant factors mentioned in IFRS 10 that may help reported in the annual accounts for 2013. Depreciation and amortisation (1 415) (1 307) (2 722) to illuminate the question of control further. Factors Impairment changes and non-recurring items (836) (382) (1 218) indicating that Aker has control include Aker’s rep- 3.5. The effect on Aker’s consolidated financial Operating profit (1 967) 2 310 343 resentation on the nomination committees, the fact statements Net financial items (310) (557) (867) that leading employees have previously worked for The consolidation of AKSO, AKA and Kvaerner has Aker, the fact that the companies themselves con- a considerable effect on Aker’s consolidated finan- Share of earnings in associated companies 979 (802) 177 Beskjæres 76 mm fra venstre før trykk >> sider Aker an active owner, etc. On the other hand, cial statements. In addition the corrections from Profit before tax (1 297) 950 (347) in isolation, the shareholder’s agreement with the Havfisk described above are included in Aker’s Income tax expense 2 129 (516) 1 613 Norwegian State relating to the holding company restated figures. The main effects on Aker’s group Net profit/loss from continuing operations 832 434 1 266 Aker Kværner Holding AS is a factor in favour of figures for the year 2013 are given below. Aker not having control. Based on an overall assessment, the conclusion Discontinued operations: is that Aker does have control over both AKSO, Profit and gain on sale from discontinued operations, net of tax - 468 468 AKA and Kvaerner. Further, Aker has concluded Profit for the period 832 902 1 734 that, based on an IFRS 10 assessment, this control has existed since before the reduction in ownership Equity holders of the parent 791 (32) 759 in 2007. Accordingly, AKSO, AKA and Kvaerner are Minority interests 41 934 975 treated as subsidiaries in Aker’s consolidated finan- Average number of shares outstanding (million) 72.3 72.3 72.3 cial statements following implementation of IFRS 10 on 1 January 2014. In accordance with the transi- tion requirements of IFRS 10, the consolidated Basic earnings and diluted earnings per share continuing financial statements for 2014 contains comparative business (NOK) 10.94 (2.30) 8.64 figures for 2013 that are restated as though control Basic earnings and diluted earnings per share (NOK) 10.94 (0.45) 10.49 has existed since before the previously discussed reduction in ownership in 2007.
3.4. Change of accounting principles for intangible assets – fishing licenses As part of its supervision of listed companies, the Financial Supervisory Authority of Norway in performed a review of 2012 financial statements of the subsidiary Havfisk. Havfisk owns both fishing licences without time limits, and fishing licenses subject to time limits of 20 to 25 years due to structuring (“structured quo- tas”). Havfisk also owns quotas that are not part of the structuring process. Since these quotas are unlimited in time, they have not been depreciated. Neither has any depreciation previously been made on the structured quotas, as it is expected that Havfisk at the end of the structuring period will maintain approximately the same catch capacity as before the structuring. According to the Financial Supervisory Authority of Norway’s assessment, the structural quotas have a specified lifetime and must 44 Aker ASA annual report 2014 Annual accounts – Aker group
Statement of comprehensive income Year 2013 As Changes previously in Amounts in NOK million reported principles Restated
Profit for the period 832 902 1 734
Other comprehensive income, net of income tax: Items that will not be reclassified to income statement: Defined benefit plan actuarial gains (losses) (19) 13 (6) Defined benefit plan actuarial gains (losses) in associated companies 9 (6) 3 Items that will not be reclassified to income statement (10) 7 (3)
Beskjæres 76 mm fra venstre før trykk >> Items that may be reclassified subsequently to income statement: Changes in fair value of financial assets 346 49 395 Changes in fair value cash flow hedges (22) 373 351 Change in fair value of available for sale financial assets transferred to profit and loss (145) (82) (227) Currency translation differences 372 1 136 1 508 Change in other comprehensive income from associated companies 632 (633) - Items that may be reclassified subsequently to income statement 1 184 843 2 027 Other comprehensive income, net of income tax 1 174 850 2 024 Total comprehensive income for the period 2 006 1 752 3 757
Attributable to: Equity holders of the parent 1 746 (32) 1 714 Minority interests 260 1 784 2 043 Aker ASA annual report 2014 45 Annual accounts – Aker group
Balance sheet 31.12.2013 01.01.2013
Amounts in NOK million As previously reported Changes in principles Restated As previously reported Changes in principles Restated
ASSETS Property, plant and equipment 15 394 10 480 25 874 12 562 10 605 23 167 Intangible assets 7 637 9 652 17 289 7 802 8 451 16 254 Deferred tax assets 1 167 915 2 082 347 909 1 256 Investment in equity accounted companies 9 135 (7 814) 1 321 6 442 (5 323) 1 119 Other shares and funds 837 654 1 491 787 576 1 363 Interest-bearing long-term receivables 1 904 162 2 066 1 483 723 2 206 Other non-current assets 228 37 265 279 26 305 Beskjæres 76 mm fra venstre før trykk >> Total non-current assets 36 303 14 086 50 389 29 702 15 968 45 670
Inventory, trade and other receivables 2 249 24 383 26 633 2 089 21 614 23 704 Calculated tax receivable 1 448 199 1 647 1 283 159 1 442 Interest-bearing short-term receivables 423 511 934 28 421 449 Cash and cash equivalents 5 834 3 890 9 724 5 471 2 283 7 754 Total current assets 9 955 28 983 38 938 8 871 24 478 33 349 Assets held for sale - 4 417 4 417 - - - Total assets 46 257 47 486 93 743 38 573 40 446 79 019
EQUITY AND LIABILITIES Total paid-in capital 2 025 - 2 025 2 001 - 2 001 Retained earnings and other reserves 8 433 (1 865) 6 568 7 459 (951) 6 508 Total equity attributable to equity holders of the parent 10 458 (1 865) 8 593 9 460 (951) 8 509 Minority interests 10 119 9 791 19 910 9 350 9 772 19 122 Total equity 20 577 7 926 28 503 18 810 8 821 27 631
Interest-bearing loans 17 315 7 899 25 214 11 264 7 152 18 416 Deferred tax liabilities 1 478 2 076 3 554 1 652 1 829 3 481 Provisions and other long-term liabilities 1 994 1 120 3 114 2 019 1 195 3 214 Total non-current liabilities 20 786 11 095 31 881 14 935 10 176 25 111
Short-term interest-bearing debt 1 668 3 896 5 564 2 291 1 008 3 299 Tax payable, trade and other payables 3 226 23 394 26 620 2 537 20 441 22 978 Total current liabilities 4 894 27 290 32 184 4 828 21 449 26 277 Total liabilities 25 680 38 385 64 065 19 763 31 625 51 388 Liabilities held for sale - 1 176 1 176 - - - Total equity and liabilities 46 257 47 486 93 743 38 573 40 446 79 019 46 Aker ASA annual report 2014 Annual accounts – Aker group
Cash flow statement Note 4 New standards and interpretations not yet adopted Year 2013 A number of standards, amendments to stand- effective for annual reporting periods beginning on As ards and interpretations are not yet effective for or after January 1, 2018, while early application is previously Changes in the period ended 31 December 2014, and have permitted. The European Financial Reporting Amounts in NOK million reported principles Restated not been applied in preparing these consolidated Advisory Group postponed its endorsement financial statements. None of these is expected advice on IFRS 9. The Aker group has not yet Profit before tax (1 297) 950 (347) to have a significant effect on the consolidated completed its assessment of the full impact of Depreciation and amortisation 1 415 1 307 2 722 financial statements of the Group, except the IFRS 9 on the consolidated financial statements. Other items and changes in other operating assets and following set out below. Implementation of IFRS 15 Revenue from Con- liabilities 2 553 807 3 360 IFRS 9 Financial instruments address the clas- tracts with Customers is mandatory from 1 Janu- Net cash flow from operating activities 2 671 3 064 5 735 sification, measurement and recognition of finan- ary 2017. IFRS 15 deals with revenue recognition cial assets and financial liabilities. The complete and establishes principles for reporting useful Proceeds from sales of property, plant and equipment 926 415 1 341 version of IFRS 9 was issued in July 2014. It information to users of financial statements about replaces the guidance in IAS 39 that relates to the the nature, amount, timing and uncertainty of rev- Proceeds from sale of shares and other equity investments 259 49 308 Beskjæres 76 mm fra venstre før trykk >> classification and measurement of financial instru- enue and cash flows arising from the entity’s con- Disposals of subsidiary, net of cash disposed 4 - 4 ments. IFRS 9 introduce a single approach for the tracts with customers. Revenue is recognised Acquisition of subsidiary, net of cash acquired (105) (3 036) (3 141) classification and measurement of financial assets when a customer obtains control of a good or Acquisition of property, plant and equipment (5 972) (3 636) (9 608) according to their cash flow characteristics and service and thus has the ability to direct the use Acquisition of equity investments in other companies (2 035) 1 900 (135) the business model they are managed in, and and obtain the benefits from the good or service. Net cash flow from other investments (43) 264 222 provides a new impairment model based on The standard replaces IAS 18 Revenue and IAS 11 Net cash flow from investing activities (6 965) (4 044) (11 009) expected credit losses. IFRS 9 also includes new Construction contracts and related interpretations. regulations regarding the application of hedge The new standard is expected to impact Aker’s accounting to better reflect an entity’s risk man- financial statements, but the assessment of the Net changes of interest-bearing debt 4 827 3 281 8 108 agement activities especially with regard to man- extent of the impact has not yet been completed. New equity 877 1 878 aging non-financial risk. The new standard is Own shares (2) 83 81 Dividends paid (1 127) (820) (1 946) Net cash flow from financing activities 4 575 2 545 7 120 Note 5 Accounting principles Net change in cash and cash equivalents 280 1 565 1 846 Effects of changes in exchange rates on cash 83 42 125 The accounting principles presented below have until control ceases. Wherever necessary, subsid- Cash and cash equivalents at the beginning of the period 5 471 2 283 7 754 been applied consistently for all periods and iaries’ principles for financial statement prepara- companies that are presented in the consolidated tion are adjusted to ensure compatibility with the Cash and cash equivalents at end of period 5 834 3 890 9 724 financial statements. Comparative figures have group accounting principles. been restated in accordance with this year’s Acquisitions of companies that meet the defi- presentation. nition of a business combination are recognised using the acquisition method. See further descrip- 5.1. Group accounting and consolidation tion in the section on Intangible assets. Acquisi- principles tions of companies which are not defined as busi- 5.1.1. Subsidiaries ness combinations are recorded as asset acquisi- Subsidiaries are companies controlled by Aker. tions. The cost of such purchases is allocated Control requires three elements: between the individual identifiable assets and liabilities acquired based on their fair value on the a) ownership interests that give the investor acquisition date. Goodwill is not recognised in power to direct the relevant activities of the connection with such acquisitions, nor is deferred investee, tax recognised in connection with differences aris- b) that the investor is exposed to variable returns ing in the recognition of such assets. from the investee, and that c) decision-making power allows the investor to 5.1.2. Investments in associates affect its variable returns from the investee. The group’s investment in an associate is accounted for using the equity method of Subsidiaries are included in the consolidated accounting, and is initially recognised at cost. An accounts from the day control is achieved and associate is defined as a company over which Aker ASA annual report 2014 47 Annual accounts – Aker group
the group has significant influence but which is not 5.1.4. Minority interests functional currency, i.e. the currency that best gain or loss on the sale. Foreign exchange gains or a subsidiary or a joint arrangement. Significant Minority interests have been disclosed separately reflects the economic substance of the underlying losses on receivables from and liabilities payable to influence is the power to participate in the financial from the parent company owners’ equity and liabil- events and circumstances relevant to that subsidi- a foreign entity are recognised in the profit and loss, and operating policy decisions of the investee but ities in the balance sheet, and are recorded as a ary. The consolidated financial statements are pre- except when settlement is neither planned nor likely is not control or joint control of those policies. separate item in the consolidated profit and loss sented in Norwegian kroner (NOK), the functional to occur in the foreseeable future. Such foreign Investments include goodwill upon acquisition account. Acquisitions of minority interests are currency of the parent company. exchange gains and losses are considered to form less accumulated impairment losses. The consoli- accounted for as transactions with equity holders Following the acquisition of Marathon Oil Norge part of the net investment in the foreign activity, and dated financial statements reflect the group’s share in their capacity as equity holders and therefore no AS, Det norske oljeselskap made an assessment of are recognised in other comprehensive income as of profits/losses on the operations of the associate, goodwill, gains or losses are recognised as a result the requirements in IAS 21 regarding functional cur- translation differences. its share of costs and its share of equity changes – of such transactions. rency and decided to change its functional currency after restatement to comply with the group’s to USD with effect from October 15, 2014. Going 5.1.9.4. Transactions with related parties accounting principles – from the time significant 5.1.5. EBITDA forward, the majority of Det norske oljeselskap’s All transactions, agreements, and business deal- influence is established until such influence ceases. Aker defines EBITDA as operating profit before revenues will be denominated in USD. ings with related parties are conducted on normal When the group’s share of losses exceeds the bal- depreciation, amortisation, impairment changes, market terms. ance sheet value of the investment, the group’s bal- and non-recurring items, as presented in the con- 5.1.9.2. Transactions and balances ance sheet value is reduced to zero and additional solidated profit and loss account. Foreign currency transactions are translated into 5.2. Discontinued operations Beskjæres 76 mm fra venstre før trykk >> losses are not recognised unless the group has the functional currency of the respective group A discontinued operation is a component of the incurred or guaranteed obligations with respect to 5.1.6. Impairment changes and non-recurring companies using the exchange rates prevailing on group’s business operations that represents a sep- the associate. If control is achieved by step acquisi- items the date of each transaction. Receivables and lia- arate, major line of business or a geographical area tion, goodwill is measured on the date of acquisition, Impairment changes and non-recurring items bilities in foreign currencies are translated into the of operations that has been disposed of or is held and any changes in the value of previously held include write-downs of goodwill, significant write- functional currency using the exchange rate on the for sale. Classification as a discontinued operation equity interests are recognised as profits or losses. downs and reversals of write-downs on real estate, balance sheet date. Foreign currency exchange occurs at the earlier of disposal or when the opera- facilities, and equipment, significant losses and gains and losses resulting from the settlement of tion meets the criteria to be classified as held for 5.1.3. Interests in joint arrangements gains on the sale of operating assets, restructuring such transactions and from the translation of mon- sale. A joint arrangement is a contractual arrangement costs, and other material items that are not etary assets and liabilities denominated in foreign Profits or losses from discontinued operations whereby two or more parties undertake an eco- deemed to be of a recurring nature. Operating currencies are recognised in the profit and loss (after tax), are reclassified and presented as a sepa- nomic activity that is subject to joint control. A joint profit includes the amount arrived at for impairment account. Foreign currency exchange differences rate line item in the financial statements. The com- arrangement is either a joint venture or a joint oper- changes and non-recurring items. arising through the translation of operating items parative income statement is restated accordingly. ation. The classification of a joint arrangement as a are included in operating profit in the profit and joint venture or a joint operation depends upon the 5.1.7. Dividends received from associates and loss account, while those arising through the trans- 5.3. Principles for revenue recognition rights and obligations of the parties to the arrange- joint ventures lation of financial assets and liabilities are recorded Revenue is recognised only if it is probable that ment. A joint venture is a joint arrangement Dividends received from associates and joint ven- net as a financial item in the profit and loss future economic benefits will flow to Aker, and that whereby the parties that have joint control of the tures are presented as part of net cash flow from account. these benefits can be measured reliably. Revenue arrangement have rights to the net assets of the operating activities in the cash flow statement. includes gross inflows of economic benefits that arrangement. A joint operation is a joint arrange- Received dividends are recognised as a reduction 5.1.9.3. Group companies Aker receives for its own account. ment whereby the parties that have joint control of of the book value of the investment. Financial statements of group companies whose the arrangement have rights to the assets, and functional currencies are different from the presen- 5.3.1. Construction contracts obligations for the liabilities, relating to the arrange- 5.1.8. Elimination of transactions upon tation currency (NOK) are translated into NOK in Construction contract revenues are recognised ment. consolidation the following way: using the percentage of completion method. Stage Intragroup balances and transactions, and any unre- of completion is determined by the method that Jointly ventures: alised gains and losses or revenues and expenses ■■ Balance sheet items are translated using the measures reliably the work performed. Depending Jointly ventures are accounted for using the equity arising from intragroup transactions, are eliminated exchange rates on the balance sheet date on the nature of the contract, the two main meth- method and the acquisition cost is recognised as in preparing the consolidated financial statements. ■■ Profit or loss items are translated using the ods used by Aker to assess stage of completion the initial value. Unrealised gains arising from transactions with average exchange rates for the period (if the are technical completion, or contract costs equity accounted investees are eliminated against average exchange rates for the period do not incurred to date compared to estimated total con- Joint operations: the investment to the extent of the group’s interest in provide a fair estimate of the transaction rate, tract costs. When the final outcome of a contract Aker has interests in licenses that do not constitute the investee. Unrealised losses are eliminated in the the actual transaction rate is used). cannot be reliably estimated, contract revenue is separate companies. All of these interests relate to same way as unrealised gains, but only to the extent recognised only to the extent of costs incurred that licenses on the Norwegian continental shelf that that there is no evidence of impairment. Translation differences arising from the transla- are expected to be recoverable. The revenue rec- are defined as joint operations pursuant to IFRS tion of net investments in foreign activities and from ognised in one period will be the revenues attribut- 11. The group recognises investments in joint oper- 5.1.9. Foreign currency translations and related hedging objects are specified as translation able to the period’s progress and the progress to ations (oil and gas licenses) by reporting its share transactions differences in other comprehensive income, and are date effect of any changes to the estimated final of related revenues, expenses, assets, liabilities 5.1.9.1. Functional currency specified under shareholders’ equity. When a for- outcome. Any projected losses on future work and cash flows under the respective items in the Items are initially recorded in the financial state- eign entity is sold, translation differences are recog- under existing contracts are fully recognised when group’s financial statements. ments of each group subsidiary in the subsidiary’s nised in the profit and loss account as part of the identified, and classified as accrued costs/provi- 48 Aker ASA annual report 2014 Annual accounts – Aker group
sions in the balance sheet under current provisions. during the period, regardless of actual sales (the actuaries, and is measured as the present value of the total lease expense over the term of the lease. Tender costs are capitalised when it is probable entitlement method). estimated future cash outflows. The cost of provid- In financial leases, minimum lease payments for that the contract will be won. If balance sheet rec- The excess of product sold during the period ing pensions is charged to the profit and loss the contract period are apportioned between finan- ognition requirements are not met, the tender cost over the participant’s ownership share of production account so as to spread the cost over the service cial expenses and a reduction in the outstanding is expensed as other operating expenses. from the property is recognised by the overlift party lives of employees. Actuarial gains and losses aris- liability. The finance expense is allocated to each Contract revenues include variation orders and as a liability (deferred revenue) and not as revenue. ing from experience adjustments, changes in actu- period of the lease term, so as to produce a con- incentive bonuses when it is probable that they will Conversely, the underlift party would recognise an arial assumptions, and amendments to pension stant periodic interest rate on the remaining balance result in revenue that can be measured reliably. Dis- underlift asset (receivable) and report corresponding plans are recognised in other comprehensive of the liability. puted amounts and claims are only recognised revenue. income (OCI). The net interest expense for the Contingent lease payments are accounted for when negotiations have reached an advanced Differences between oil lifted and sold (Petro- period is calculated by applying the discount rate to by revising the minimum lease payments over the stage, customer acceptance is highly likely and the leum overlifts) are presented as current liabilities, the net defined benefit liability (asset). Thus, the net remaining term of the lease, when the contingencies amounts can be measured reliably. Options for while petroleum underlifts are presented as short- interest cost comprises interest on the liability and of the variable lease have been met and the adjust- additional works are included in the contract when term receivables. The value of overlift/underlift is set the return on the pension plan assets, both calcu- ment amount is known. exercised by the buyer. In the rare circumstances at the estimated sales value, minus estimated sales lated using the discount rate. Changes in net pen- that the option is a loss contract, the full loss is rec- costs. sion liabilities due to premium payments and pen- 5.6.2. Financial income and expenses ognised when it is probable that the options will be sion benefits are taken into consideration. The dif- Finance income comprises interest income on Beskjæres 76 mm fra venstre før trykk >> exercised. Project costs include costs directly 5.3.5. Income from charter agreements ference between the actual return on the pension funds invested (including available-for-sale finan- related to the specific contract and indirect costs Revenues related to vessel bareboat charter agree- plan assets and the recognised return is recognised cial assets), dividend income, gains on the disposal attributable to the contract. Project revenue is clas- ments are recognised over the charter period. against the OCI on an ongoing basis. of available-for-sale financial assets, changes in sified as operating revenue in the profit and loss Time-charter agreements may include a revenue- For defined contribution plans, contributions are the fair value of financial assets at fair value account. Work in progress is classified as projects sharing agreement with the charterer. Revenue paid into pension insurance plans. Once the contri- through profit or loss, and gains on hedging instru- under construction in the balance sheet. Advances related to profit sharing agreements is recognised butions have been paid, there are no further pay- ments that are recognised in profit or loss. Interest from customers are deducted from the value of when the amount can be reliably estimated. ment obligations. Contributions to defined contribu- income is recognised as it accrues in profit or loss, work in progress under the specific contract or, if tion plans are charged to the profit and loss account using the effective-interest method. advances exceed this value, are recorded as cus- 5.3.6. Other income in the period to which the contributions relate. Dividend income is recognised in profit or loss tomer advances. Customer advances that exceed Gains and losses resulting from acquisition and on the date that the group’s right to receive pay- said contract offsets are classified as trade and disposal of businesses which do not represent 5.4.2. Share-based payments ment is established, which in the case of quoted other payables. discontinued operations are included in Other Share-based payments are accounted for in securities is the ex-dividend date. Bidding costs are capitalised when it is deemed income within operating profit. In case of acquisi- accordance with IFRS 2 Share-based Payment. Finance costs comprise interest expense on probable that the contract will be awarded. If the tions in stages, such gains may come from the Share-based payment expense is measured at fair borrowings, unwinding of the discount on provi- criteria for capitalisation no longer is fulfilled, capi- remeasurement of the previously held interest in value over the service period. All changes in fair sions, changes in the fair value of financial assets at talised bidding costs are expensed as other operat- the acquired entity. Changes in the fair value of the value are recognised in the income statement. fair value through profit or loss, impairment losses ing expenses. contingent consideration from acquisition of a sub- recognised on financial assets, and losses on hedg- sidiary or non-controlling interest are recognised in 5.5. Government grants ing instruments that are recognised in profit or loss. 5.3.2. Rendering of services Other income as gains or losses. An unconditional government grant is recognised Borrowing costs that are not directly attributable to Revenue from services rendered is recognised in Share of profit from associates and jointly con- in the profit and loss account when the group is the acquisition, construction or production of a the income statement in proportion to the stage of trolled operations, to the extent that these invest- entitled to receiving the funding. Other public fund- qualifying asset are recognised in profit or loss completion of the transaction at the balance sheet ments are related to the group’s operating activities, ing is initially recognised in the balance sheet as using the effective-interest method. date or is invoiced based on hours performed at are included in Other income within operating profit, deferred revenues when it is reasonably certain Foreign currency gains and losses are reported agreed rates. The stage of completion is normally as well as gains and losses related to the sale of that the funding will be received and that the terms on a net basis. assessed based on the proportion of costs operating assets. and conditions associated with the funding will be incurred for work performed to date compared to Other income also includes lease income from met. Grants that compensate for incurred 5.6.3. Income tax the estimated total contract costs. No revenue is investment property. expenses are recognised in the profit and loss Income tax comprises current and deferred tax. An recognised if there is significant uncertainty regard- account on a systematic basis in the same periods income tax expense is recognised in the profit and ing recovery of consideration due. 5.4. Employee benefits in which the expenses are incurred. Funding that loss account unless it relates to items recognised 5.4.1. Short-term benefits and pension obligations compensates for the acquisition cost of an asset is directly in equity, in which case it is recognised in 5.3.3. Sale of goods Short-term employee benefits, such as wages, are recognised in the profit and loss account on a sys- the equity. Revenue from the sale of goods is recognised measured on an undiscounted basis and are tematic basis over the asset’s useful life. Current tax is the expected tax payable on the when Aker has transferred the significant risks and expensed as the related service is provided. taxable income for the year, using tax rates enacted rewards of ownership to the buyer, and no longer The group has both defined benefit and defined 5.6. Expenses or substantively enacted as at the balance sheet has control over the goods. contribution plans. For defined benefit plans, the lia- 5.6.1. Lease payments date, and any adjustments to tax payable in respect bility recognised is the present value of the defined Lease payments under operating leases are recog- of previous years. Deferred tax is calculated based 5.3.4. Revenues from petroleum products benefit obligation as at the balance sheet date, nised in the profit and loss account on a straight- on the temporary differences between the balance Revenues from petroleum products are recognised minus the fair value of plan assets. The defined line basis over the lease period. Any lease incen- sheet values and the taxation values of assets and based on the group’s ideal share of production benefit obligation is calculated by independent tives received are recognised as an integral part of liabilities. Aker ASA annual report 2014 49 Annual accounts – Aker group
Deferred tax is not recognised for the following hedging of foreign currency purchases. 5.8.3. Depreciation resources are discovered, or if recovery of the temporary differences: Net realisable value is the estimated selling price Depreciation is recognised in profit and loss on a resources is considered technically or commer- in the ordinary course of business, less the costs of straight-line basis over the estimated useful life of cially unviable, expenses relating to the drilling of ■■ initial recognition of assets or liabilities in a completion and selling expenses. each major component of an item of property, exploration wells are charged to expense. transaction that is not a business combination plant and equipment. Leased assets are depreci- Acquired licence rights are recognised as and that affects neither accounting nor taxable 5.8. Property, plant, and equipment ated over the shorter of the lease term or the intangible assets at the time of acquisition. profit. 5.8.1. Recognition and measurement asset’s useful life, unless it is reasonably certain Acquired licence rights related to fields in the ■■ differences relating to investments in subsidiar- The acquisition costs of an item of property, plant that the group will acquire ownership at the end exploration phase remain as intangible assets also ies and jointly controlled entities, if it is probable and equipment is recognised as an asset if it is of the lease term. Land is not depreciated. when the related fields enter the development or that they will not reverse in the foreseeable probable that the future economic benefits associ- Estimated useful lives for the current and com- production phase future. ated with the assets will flow to the group, and its parative periods are as follows: ■■ tax-increasing temporary differences upon ini- cost can be reliably measured. 5.10.2. Depreciation of oil and gas fields tial recognition of goodwill. Property, plant and equipment are measured at ■■ Rigs, vessels, airplanes, etc. 10-30 years Expenses relating to drilling and equipment for acquisition cost less accumulated depreciation and ■■ Machinery and transportation vehicles 3-20 exploration wells where proved and probable Deferred tax is measured at the tax rates that are accumulated impairment losses. years reserves are discovered are capitalised and expected to be applied to the temporary differ- Acquisition cost includes expenditures directly ■■ Buildings and residences 10-50 years depreciated using the unit-of-production method Beskjæres 76 mm fra venstre før trykk >> ences when they reverse. attributable to the asset’s acquisition. The acquisi- based on proved and probable reserves Deferred tax assets and liabilities are offset if: tion cost of self-constructed assets includes the Depreciation methods, useful lives, and residual expected to be recovered from the well. Develop- cost of materials and direct labour, any other costs values, are reviewed as at each balance sheet ment costs relating to construction, installation ■■ there is a legally enforceable right to offset cur- directly attributable to bringing the asset to a work- date. and completion of infrastructure such as plat- rent tax liabilities and assets ing condition for its intended use, and the costs of forms, pipelines and the drilling of production ■■ they relate to income taxes levied by the same dismantling and removing the items and restoring 5.9. Investment property wells are capitalised as producing oil and gas tax authority on the same taxable entity, or on the site on which they are located. Borrowing costs Investment property is carried at its cost less fields. They are depreciated using the unit-of-pro- different taxable entities that intend to settle associated with loans to finance the construction of accumulated depreciation and impairment duction method based on proven and probable current tax liabilities and assets on a net basis, property, plant and equipment is capitalised over losses. developed reserves expected to be recovered or to realise their tax assets and liabilities simul- the period necessary to complete an asset and from the area during the license or contract taneously. make it ready for its intended use. Other borrowing 5.10. Operating assets related to petroleum period. Acquired assets used for the recovery costs are expensed. When significant parts of an activities and production of petroleum deposits, including A deferred tax asset will be recognised if it is prob- item of property, plant, and equipment have differ- 5.10.1. Exploration and development costs license rights, are depreciated using the unit-of- able that future taxable profits will be available ent useful lives, major components are accounted relating to oil and gas fields production method based on proven and prob- against which the temporary difference can be for as separate items of property, plant, and equip- Capitalised exploration costs are classified as able reserves. The reserve basis used for depre- utilised. ment. intangible assets and reclassified as tangible ciation purposes is updated at least once a year. Aker’s subsidiary Det norske oljeselskap is sub- A gain or loss on the disposal of an item of prop- assets at the start of the development. For Any changes in the reserves affecting unit-of-pro- ject to the special provisions of the Petroleum Taxa- erty, plant and equipment is determined by compar- accounting purposes, the field is considered to duction calculations are reflected prospectively. tion Act. Revenues from activities on the Norwegian ing the disposal proceeds with the carrying amount enter the development phase when the technical continental shelf are liable to ordinary corporation of that item; the result is included in operating profit feasibility and commercial viability of extracting 5.11. Acquisitions, sales, license swaps and tax and surtax (51 per cent). The company may before depreciation and amortisation. If the amount hydrocarbons from the field are demonstrable, unitisations claim a refund from the state of the tax value of is material and is not deemed to be of a recurring normally at the time of concept selection. All costs On acquisition of a license that involves the right exploration expenses incurred, provided that these nature, the amount is presented under Impairment relating to the development of commercial oil and/ to explore for and produce petroleum resources, do not exceed the year’s tax-related loss allocated changes and non-recurring items. or gas fields are recognised as tangible assets. it is considered in each case whether the acquisi- to the offshore activities. The refund is included in An assets that will be disposed of and is classi- Pre-operational costs are expensed as they incur. tion should be treated as a business combination the calculated tax receivable line in the balance fied as held-for-sale, will be recorded at the lower of The group employs the “successful efforts” or an asset purchase. As a rule, purchases of sheet. its carrying amount and its fair value less selling method to account for exploration and develop- licenses during a development or production costs. ment costs. All exploration costs (including seis- phase will be regarded as a business combina- 5.7. Inventory mic shooting, seismic studies and “own time”), tion. Other license purchases will be regarded as Inventory is stated at the lower of cost or net realis- 5.8.2. Subsequent costs with the exception of the acquisition costs of asset purchases. able value. Cost is determined by the first-in, first- The cost of replacing part of an item of property, licenses and drilling costs for exploration wells, out (FIFO) method. The cost of finished goods and plant and equipment is recognised in the carrying are charged to expenses as incurred. 5.11.1. Oil and gas production licenses work in progress comprises raw materials, direct amount of the item if it is probable that future eco- Drilling cost for exploration wells are temporar- For oil and gas-producing assets and licenses in labour and other direct costs, and related produc- nomic benefits associated with the asset will flow ily capitalised pending the evaluation of potential a development phase, the acquisition cost is tion overhead (based on normal operating capac- to the group and its cost can be measured reliably. discoveries of oil and gas resources. Such costs allocated between capitalised exploration ity), but excludes borrowing costs. The carrying amount of the replaced part is can remain capitalised for more than one year. The expenses, license rights, production plant, and The acquisition cost of inventory may also derecognised. The costs of day-to-day mainte- main criteria are that there must be definite plans deferred tax. include elements transferred from equity. The latter nance of property, plant and equipment are recog- for future drilling in the licence or that a develop- When entering into agreements regarding the may be gains or losses associated with cash flow nised in profit and loss as incurred. ment decision is expected in the near future. If no purchase/swap of assets, the parties agree on an 50 Aker ASA annual report 2014 Annual accounts – Aker group
effective date for the takeover of the net cash flow fair value often is difficult to measure. This gives no between the acquisition cost and the transferred 5.14. Assets held for sale or distribution (usually 1 January of the calendar year). In the recognition in the profit and loss. In the case of uni- depreciation base for tax purposes. The offsetting Non-current assets, or disposal groups compris- period between the effective date and the comple- tisations involving licences outside the exploration entry to this deferred tax is goodwill. Hence, ing assets and liabilities, that are expected to be tion date, the seller will include its purchased share phase, consideration is given to whether the trans- goodwill arises as a technical effect of deferred recovered primarily through sale or distribution of the license in its financial statements. Pursuant to action has a commercial content. If so, the unitisa- tax. rather than through continuing use, are classified the purchase agreement, the net cash flow from the tion is recognised at fair value. In such cases the as held for sale or distribution. This condition is asset during the period from the effective date to gain or loss compared to historical cost is recog- 5.12.2. Research and development regarded as met only when the sale is highly the completion date is settled with the seller (pro nised in profit and loss. Expenditure on research activities undertaken to probable and the asset or disposal group is avail- and contra settlement). The pro and contra settle- gain new scientific or technical knowledge and able for immediate sale or distribution in its pre- ment will be adjusted to reflect the seller’s losses/ 5.12. Intangible assets understanding is recognised in profit and loss in sent condition. Management must be committed gains and the assets for the purchaser, in that the 5.12.1. Goodwill the period it is incurred. to the sale or distribution, which should be settlement (after a tax reduction), is deemed to be All business combinations in the group are recog- Development expenditure that applies expected to qualify for recognition as a com- part of the consideration paid as part of the trans- nised using the acquisition method. Goodwill rep- research findings to a plan or design for the pro- pleted sale or distribution within one year from action. The purchaser’s revenues and expenses are resents values arising from the acquisitions of sub- duction of a new or substantially improved prod- the date of classification. included as from the transaction date. sidiaries, associates, and jointly controlled entities. uct or process is capitalised if the product or pro- Non-current assets and disposal groups clas- For tax purposes, the purchaser will include the Goodwill is allocated to cash-generating units and cess is technically and commercially feasible and sified as held for sale or distribution are measured Beskjæres 76 mm fra venstre før trykk >> net cash flow (pro and contra), and any other is tested annually for impairment. For associates, the group has sufficient resources to complete at the lower of their carrying amount and fair value income and costs as from the effective date. When the carrying amount of goodwill is included in the development. The capitalised amount includes the less costs to sell. Property, plant and equipment acquiring licenses that are defined as assets, no carrying amount of the investment in the associ- cost of materials, direct labour expenses and an and intangible assets once classified as held for provision is made for deferred tax. ates. Negative goodwill arising on an acquisition is appropriate proportion of overhead expenses. sale or distribution are not depreciated or amor- recognised directly in the profit and loss account. Other development expenditure is recognised in tised, but are considered in the overall impairment 5.11.2. Farm-in agreements Minority interests can be measured at the net the profit and loss account as an expense in the testing of the disposal group. Farm-in agreements are usually entered into during value of identifiable assets and liabilities in the period in which it occurs. Non-current asset classified as held for sale the exploration phase, and are characterised by the acquired company or at fair-value, including a Capitalised development expenditures is rec- and the assets of a disposal group classified as seller waiving future financial benefits, in the form goodwill element. The method of measurement is ognised at cost less accumulated amortisation held for sale are presented separately from other of reserves, in exchange for reduced future financ- decided individually for each acquisition. and impairment losses. assets in the statement of financial position. Lia- ing obligations. For example, a license interest may Goodwill in accordance with IFRS 3 is measured bilities of a disposal group classified as held for be taken over in return for a share of the seller’s as a residual at the acquisition date and constitutes 5.12.3. Other intangible assets sale shall be presented separately from other lia- expenses relating to the drilling of a well. During the sum of: Other acquired intangible assets (patents, trade- bilities in the statement of financial position. The the exploration phase, the group normally accounts marks and other rights), are recognised in the balance sheet for prior periods is not reclassified for farm-in agreements on a historical cost basis, ■■ total consideration transferred in connection balance sheet at cost less accumulated amortisa- to reflect the classification in the balance sheet for as the fair value is often difficult to determine. with the business combination tion and impairment losses. Expenditure on inter- the latest period presented. ■■ the carrying amount of the minority interests nally generated goodwill and brand names is 5.11.3. Swaps ■■ the fair value of the previous ownership interest recognised in profit and loss in the period in 5.15. Financial instruments Swaps of assets are calculated at the fair value of in the acquired company at the time of acquisi- which it is incurred. 5.15.1. Non-derivative financial assets the asset being surrendered, unless the transaction tion, less the net recognised amount (normally Amortisation is charged to the income state- The group initially recognises loans and receiva- lacks commercial substance or neither the fair fair value) of the identifiable assets acquired ment on a straight-line basis over the estimated bles and deposits on the date that they originate. value of the asset received nor the fair value of the and liabilities assumed. useful lives of intangible assets unless such lives All other financial assets (including assets desig- asset surrendered can be measured effectively. are indefinite. Intangible assets are amortised from nated at fair value through profit or loss), are ini- During the exploration phase the group normally Acquisitions of minority interests are accounted for the date they are available for use. tially recognised on the trade date on which the recognises swaps based on historical cost, as the as transactions with equity holders in their capacity group becomes a party to the contractual provi- fair value is often difficult to measure. as equity holders, and therefore no goodwill is rec- ■■ Fishing licences: Structural quotas are amor- sions of the instrument. The group derecognises ognised as a result of such transactions. In subse- tised over the structural period. Estimated a financial asset when the contractual rights to 5.11.4. Unitisations quent measurements, goodwill is valued at acquisi- useful lifetime for structural quotas is 20 – 25 the cash flows from the asset expire, or it trans- According to Norwegian law, an unitisation is tion cost, less accumulated impairment losses. years. Basic quotas have an indefinite useful fers the rights to receive the contractual cash required if a petroleum deposit extends over sev- The valuation at fair value of licenses (oil and lifetime and are not depreciated; they are flows from the financial asset in a transaction in eral production licenses and those production gas) is based on cash flows after tax. This is however tested annually for impairment. which substantially all the risks and rewards of licenses have different ownership representation. because these licenses are only sold in an after-tax ■■ Other Intangible assets with finite useful lives ownership of the financial asset are transferred. Consensus must be reached regarding the most market based on decisions made by the Norwegian are amortised over the expected economic Any interest in transferred financial assets that is rational coordination of the joint development and Ministry of Finance pursuant to section 10 of the life, ranging between 1-10 years. created or retained by the group is recognised as ownership distribution of the petroleum deposit. An Petroleum Taxation Act. The purchaser therefore a separate asset or liability. Financial assets and unitisation agreement requires approval from the cannot claim a deduction of the consideration with liabilities are offset and the net amount presented Ministry of Petroleum and Energy. tax effect through depreciations. In accordance with 5.13. Construction contracts in the balance sheet when, and only when, the The group recognises unitisations during the sections 15 and 24 of IAS 12, a provision is made See section 5.3.1 above. group has a legal right to offset the amounts and exploration phase based on historical cost, as the for deferred tax corresponding to the difference intends either to settle on a net basis or to realise Aker ASA annual report 2014 51 Annual accounts – Aker group
the asset and settle the liability simultaneously. The to initial recognition, they are measured at fair nised in profit or loss. On conversion, the financial profit or loss, the effective portion of changes in group has the following non-derivative financial value, with the exception of equity investments liability is reclassified to equity; no gain or loss is the fair value of the derivative is recognised in assets: financial assets at fair value through profit without quoted prices whose fair value cannot be recognised on conversion. other comprehensive income and presented in the or loss, loans and receivables and available for sale reliably measured, which are measured at costs. hedging reserve in equity. The amount recognised financial assets. The group has no held-to-maturity Changes in fair value are recognised in other com- 5.15.4. Derivative financial instruments, including in other comprehensive income is removed and financial assets. The principles used in the recogni- prehensive income, and are presented as a fair hedge accounting included in profit or loss in the same period as the tion of financial income and expenses are value reserve within equity. This does not apply to The group holds derivative financial instruments hedged cash flows affect profit or loss under the described in a separate paragraph. impairment losses (see separate paragraph). When to hedge its foreign currency and interest rate risk same line item in the statement of comprehensive an investment is derecognised, the cumulative gain exposures. Derivatives are initially recognised at income as the hedged item. Any ineffective por- 5.15.1.1. Financial assets at fair value through or loss in the fair value reserve is transferred to fair value, and attributable transaction costs are tion of changes in the fair value of the derivative is profit or loss profit or loss. recognised in profit or loss as incurred. Subse- recognised immediately in profit or loss. A financial asset is classified at fair value through quent to initial recognition, derivatives are meas- If the hedging instrument no longer meets the profit or loss if it is classified as held for trading or 5.15.2. Non-derivative financial liabilities ured at fair value, and changes therein are criteria for hedge accounting, expires or is sold, is designated as such upon initial recognition. The group has the following non-derivative finan- accounted for as described below. terminated, exercised, or the designation is Financial assets are designated at fair value cial liabilities: loans and borrowings, bank over- On initial designation of the hedge, the group revoked, then hedge accounting is discontinued through profit or loss if the group manages such drafts, and trade and other payables. Such finan- formally documents the relationship between the prospectively. The cumulative gain or loss previ- Beskjæres 76 mm fra venstre før trykk >> investments and makes purchase and sale deci- cial liabilities are initially recognised at fair value hedging instrument(s) and hedged item(s), includ- ously recognised in other comprehensive income sions based on their fair value in accordance with plus any directly attributable transaction costs. ing the risk management objectives and strategy and presented in the hedging reserve in equity the group’s documented risk management or Subsequent to initial recognition, these financial in undertaking the hedge transaction, together remains there until the forecast transaction affects investment strategy. Attributable transaction costs liabilities are measured at amortised cost using the with the methods that will be used to assess the profit or loss. When the hedged item is a non- are recognised in profit or loss as incurred upon effective-interest method. effectiveness of the hedging relationship. The financial asset, the amount recognised in other initial recognition. Financial assets at fair value The group initially recognises issued debt secu- group assesses, both at the inception of the comprehensive income is transferred to the carry- through profit or loss are measured at fair value, rities and subordinated liabilities on their origination hedge relationship and on an on-going basis, ing amount of the asset when the asset is recog- and changes therein are recognised in profit or date. All other financial liabilities are initially recog- whether the hedging instruments are expected to nised. If the forecast transaction is no longer loss. nised on the trade date on which the group be effective in offsetting the changes in the fair expected to occur, then the balance in other com- becomes a party to the contractual provisions of the value or cash flows of the respective hedged prehensive income is recognised immediately in 5.15.1.2. Loans and receivables instrument. The group derecognises a financial lia- items during the period for which the hedge is profit or loss. In other cases the amount recog- Loans and receivables are financial assets with bility when its contractual obligations are dis- designated, and whether the actual results of each nised in other comprehensive income is trans- fixed or determinable payments that are not quoted charged, cancelled or expire. hedge are within a range of 80-125 per cent. For a ferred to profit or loss in the same period that the in an active market. Such assets are initially recog- Financial assets and liabilities are offset and the cash flow hedge of a forecast transaction, the hedged item affects profit or loss. nised at fair value plus any directly attributable net amount presented in the statement of financial transaction should be probable to occur and transaction costs. Subsequent to initial recognition, position when, and only when, the group has a legal should present an exposure to variations in cash 5.15.4.3. Fair value hedges loans and receivables are measured at amortised right to offset the amounts and intends either to flows that could ultimately affect reported net Changes in the fair value of derivatives desig- cost using the effective interest method, less any settle on a net basis or to realise the asset and set- income. nated as fair value hedges are recognised in impairment losses. tle the liability simultaneously. profit or loss. The hedged object is valued at fair Loans and receivables comprise trade and other 5.15.4.1. Embedded derivatives value with respect to the risk that is hedged. receivables. Cash and cash equivalents comprise 5.15.3. Compound financial instruments Embedded derivatives are separated from the Gains or losses attributable to the hedged risk cash balances and call deposits with original matur- Convertible bonds host contract and accounted for separately if the are recognised in profit and loss and the hedged ities of three months or less. The liability component of a compound financial economic characteristics and risks of the host object’s carried amount is adjusted. instrument is initially recognised at the fair value of contract and the embedded derivative are not 5.15.1.3. Held-to-maturity financial assets a similar liability that does not include an equity closely related, a separate instrument with the 5.15.4.4. Economic hedge – derivatives not part If the group has the positive intent and ability to conversion option. The equity component is initially same terms as the embedded derivative would of hedge accounting hold debt securities to maturity, then such financial recognised as the difference between the fair value meet the definition of a derivative, and the com- These derivatives are measured at fair value and assets are classified as held-to-maturity. Held-to- of the compound financial instrument as a whole bined instrument is not measured at fair value all changes in value are recognised in profit and maturity financial assets are measured at amor- and the fair value of the liability component. Any through profit or loss. Changes in the fair value of loss. tised cost using the effective interest method, less directly attributable transaction costs are allocated embedded derivatives that can be separated any impairment losses. to the liability and equity components in proportion from the host contract are recognised immedi- 5.15.4.5. Hedging of net investments in foreign to their initial carrying amounts. ately in profit and loss. operations 5.15.1.4. Available-for-sale financial assets Subsequent to initial recognition, the liability Foreign currency differences arising from the Available-for-sale financial assets are non-deriva- component of a compound financial instrument is 5.15.4.2. Cash flow hedges translation of a financial liability designated as a tive financial assets that are designated as availa- measured at amortised cost using the effective- When a derivative is designated as the hedging hedge of a net investment in a foreign operation ble-for-sale and not classified in any of the previ- interest method. The equity component of a com- instrument in a hedge of the variability in cash are recognised in other comprehensive income to ous categories. The group’s investments in equity pound financial instrument is not re-measured sub- flows attributable to a particular risk associated the extent that the hedge is effective, and are securities and certain debt securities are classified sequent to initial recognition. Interest and gains and with a recognised asset or liability or a highly presented within equity in the translation reserve. as available-for-sale financial assets. Subsequent losses relating to the financial liability are recog- probable forecast transaction that could affect To the extent that the hedge is ineffective, such 52 Aker ASA annual report 2014 Annual accounts – Aker group
differences are recognised in profit or loss. When impaired if objective evidence indicates that a loss For the purpose of impairment testing, assets 5.18.3. Contract losses the hedged part of a net investment is disposed of, event has occurred after the initial recognition of are grouped together into the smallest group of Provisions for contract losses are recognised when the relevant amount in the translation reserve is the asset and that the loss event had a negative assets that generates cash inflows from continuing the expected revenues from a contract are lower transferred to profit or loss as part of the profit or effect on the estimated future cash flows from the use that are largely independent of the cash inflows than the cost of meeting the contractual obliga- loss on disposal. asset that can be estimated reliably. of other assets or groups of assets (the “cash-gen- tions. Before provisions are made, all impairment An impairment loss in respect of a financial erating unit”, or CGU). losses on assets associated with the contract are 5.16. Share capital asset measured at amortised cost is calculated as Goodwill acquired in a business combination is recognised. 5.16.1. Ordinary shares the difference between its carrying amount and the allocated to the groups of CGUs that are expected Ordinary shares are classified as equity. Incremen- present value of the estimated future cash flows to benefit from the synergies of the combination. 5.18.4. Decommissioning and removal costs tal costs directly attributable to the issue of ordi- discounted using the asset’s original effective inter- An impairment loss is recognised if the carrying In accordance with the terms and conditions of the nary shares and share options are recognised as a est rate. When a subsequent event causes the amount of an asset or its CGU exceeds its esti- licenses in which the group participates, the Nor- deduction from equity, net of any tax effects. amount of the impairment loss to decrease, the mated recoverable amount. Impairment losses are wegian state, at the end of production or on the decrease in the impairment loss is reversed through recognised in profit or loss. Impairment losses rec- expiration of the license period, can require license 5.16.2. Repurchase of share capital (treasury profit or loss. ognised in respect of CGUs are allocated first to owners to remove the installation in whole or in shares*) Impairment losses on available-for-sale invest- reduce the carrying amount of any goodwill allo- part. In the initial recognition of the decommission- When share capital recognised as equity is repur- ment securities are recognised by transferring the cated to the units, and then to reduce the carrying ing and removal obligations, the group provides for Beskjæres 76 mm fra venstre før trykk >> chased, the amount of the consideration paid, cumulative loss that has been recognised in other amounts of the other assets in the unit (or group of the net present value of future expenses related to which includes directly attributable costs, net of comprehensive income, and presented in the fair units), on a pro rata basis. decommissioning and removal. A corresponding any tax effects, is recognised as a deduction from value reserve in equity, to profit or loss. The cumu- An impairment loss in respect of goodwill is not asset is capitalised as a tangible fixed asset, and equity. Repurchased shares are classified as treas- lative loss that is removed from other comprehen- reversed. In respect of other assets, impairment depreciated using the unit of production method. ury shares and are presented as a deduction from sive income and recognised in profit or loss is the losses recognised in prior periods are assessed as Changes in the time value (net present value), of total equity. When treasury shares are sold or reis- difference between the acquisition cost, net of any at each reporting date as to any indications that the the decommissioning and removal obligation are sued subsequently, the amount received is recog- principal repayment and amortisation, and the cur- loss has decreased or no longer exists. An impair- charged to income as financial expenses, and nised as an increase in equity, and the surplus or rent fair value, less any impairment loss previously ment loss is reversed if there has been a change in increase the liabilities related to future decommis- deficit resulting from the transaction is transferred recognised in profit or loss. Changes in impairment the estimates used to determine the recoverable sioning and removal expenses. Changes in esti- to/from retained earnings. provisions attributable to time value are reflected as amount. mates of expenses related to decommissioning a component of interest income. An impairment loss is reversed only to the extent and removal are adjusted to the liability and the 5.16.3. Translation reserve If, in a subsequent period, the fair value of an that the asset’s carrying amount does not exceed tangible fixed asset. The discount rate used in cal- The translation reserve comprises all foreign cur- impaired available-for-sale debt security increases the carrying amount that would have been deter- culating the fair value of the decommissioning and rency differences arising from the translation of the and the increase can be related objectively to an mined, net of depreciation and amortisation, if no removal obligation is the risk-free rate with the financial statements of foreign operations, as well event occurring after the impairment loss was rec- impairment loss had been recognised. addition of a credit risk element. as from the translation of liabilities that hedge the ognised in profit or loss, the impairment loss is group’s net investment in a foreign subsidiary. reversed and the amount of the reversal is recog- 5.18. Provisions 5.19. Leasing agreements (as lessee) nised in profit or loss. However, any subsequent A provision is recognised when the group has a Leases of property, plant and equipment under 5.16.4. Hedging reserve recovery in the fair value of an impaired available- present legal or constructive obligation as a result which the group has substantially all the risks and The hedging reserve applies to cash flow hedges for-sale equity security is recognised in other com- of a past event, it is probable that payments or rewards of ownership, are classified as financial entered into in order to hedge against changes in prehensive income. other outflow of economic benefits will be required leases. income and expenses that may arise from to settle the obligation, and a reliable estimate can Financial leases are capitalised at the inception exchange rate fluctuations. The profit or loss effect 5.17.2. Non-financial assets be made of the amount of the obligation. Provi- of the lease at the lower of the fair value of the of such transactions is included in the profit and The carrying amounts of the group’s non-financial sions are determined as the present value of leased property or the present value of the minimum loss account upon recognition of project revenues assets are reviewed as at each reporting date to expected future cash flows, discounted by a mar- lease payments. Following initial capitalisation, the and expenses according to progress based on an determine whether there is any indication of impair- ket based pre-tax discount rate. same accounting principle that applies to the corre- updated total calculation for the project. The hedg- ment. If any such indication exists, the asset’s sponding asset is used. Lease payments are appor- ing reserve represents the value of such hedging recoverable amount is estimated. For goodwill and 5.18.1. Guarantees tioned between financial expenses and the reduc- instruments that are not yet recognised in the intangible assets that have indefinite useful lives or Guarantee provisions are recognised when the tion in the lease liability. Finance expenses are rec- income statement. The fair value reserve com- that are not yet available for use, the recoverable underlying products or services have been sold. ognised as finance costs in profit or loss. Leases prises the cumulative net change in the fair value of amount is estimated each year as at balance sheet Provisions are made based on historic data and a under which a significant proportion of the risks and available-for-sale financial assets until the invest- date. weighting of all possible outcomes against their rewards of ownership are retained by the lessor are ments are derecognised or impaired. The recoverable amount of an asset or cash- associated probabilities. classified as operating leases. Payments made generating unit is the greater of its value in use and under operating leases, net of any incentives 5.17. Impairment its fair value less costs to sell. In assessing value in 5.18.2. Restructuring received from the lessor, are charged to the profit 5.17.1. Financial assets use, the estimated future cash flows are discounted A provision for restructuring is recognised when an and loss account on a straight-line basis over the A financial asset is assessed as at each reporting to their present value using a pre-tax discount rate approved, detailed and formal restructuring plan period of the lease, such that a constant periodic date to determine whether there is objective evi- that reflects current market assessments of the time exists, and the restructuring has either begun or interest rate is calculated on the remaining balance dence that it is impaired. A financial asset is value of money and the risks specific to the asset. has been announced to the affected parties. sheet liability. Aker ASA annual report 2014 53 Annual accounts – Aker group
5.20. Dividends 5.23. Segment reporting Dividends are recorded in the group’s financial Aker defines operating segments based on the statements in the period in which the dividends group’s internal management- and reporting are approved by the general assemblies of the structure. The group’s chief operating decision distributing companies. maker, responsible for the allocation of resources and assessment of the performance in the differ- 5.21. Earnings per share ent operating segments, is defined as the board The calculation of ordinary earnings per share is of directors, the group president and CEO and based on the profit attributable to ordinary shares the CFO. using the weighted average number of shares Aker’s investment portfolio comprises two seg- outstanding during the reporting period, after ments: Industrial holdings and Financial invest- deduction of the average number of treasury ments. shares held over the period. The recognition and measurement applied in The calculation of diluted earnings per share is segment reporting are consistent with the consistent with the calculation of ordinary earn- accounting principles applied when preparing the ings per share, and gives effect to all ordinary financial statements. Transactions between seg- Beskjæres 76 mm fra venstre før trykk >> shares with dilutive potential that were outstand- ments are conducted on market terms and condi- ing during the period. tions. Comparative segment information is usually re-presented for changes in reporting segments. 5.22. Comparative figures See note 9 Operating segments. When necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. 54 Aker ASA annual report 2014 Annual accounts – Aker group
Note 6 Financial risk and exposure the relationship between cash and interest-bearing debt, as well as the capital structure. The ratios work as guidelines in investment activities and capital allocation. The governing principle of Aker ASA’s dividend policy is that the company should at all times have a Financial risk solid balance sheet and liquid reserves sufficient to deal with future liabilities. The company aims to pay The Aker Group consists of various operations and companies that are exposed to different types of finan- annual dividends corresponding to 2-4 per cent of net asset value (value-adjusted). The market price of cial risks, including credit-, liquidity- and market risk (e.g. interest- and currency risk). The purpose of risk listed companies is used in calculating net asset value, while book value is used for other assets. management is to measure and manage financial risk in a reliable manner, thereby increasing predictability Aker has also issued bonds in the Norwegian capital market. and reducing negative effects on Aker’s financial results. The Group uses different financial instruments to manage its financial exposure actively. Credit risk Aker ASA has developed policies on how financial risks are monitored. Risks are monitored continuously The managements of the main companies have developed their own policies and guidelines on credit risk. and reported at least quarterly. The main companies in the Group have developed similar policies and Exposure to credit risk is monitored on an ongoing basis. guidelines based on each individual company’s exposure to the different kinds of financial risks. The Group’s principal financial assets are bank deposits and cash, trade and other receivables, deriva- tives, and investments in shares. The Group’s exposure to credit risk is mainly related to external receiva- Capital management bles. For large projects, the assessment of credit risk related to customers and subcontractors is an impor- The overall objectives of Aker’s capital management policy are to maintain a strong capital base so as to tant requirement in the bid phase and throughout the contract period. Revenues related to large and long- retain investor, creditor and market confidence, to ensure financial flexibility for the seizure of opportunities term projects are closely followed up in terms of payments up front and in accordance with agreed mile- as they arise, and to maintain a capital structure that minimises the company’s cost of capital. Aker pur- Beskjæres 76 mm fra venstre før trykk >> stones. sues a conservative investment strategy with minimal risk. The investments need to be liquid. Trade receivables presented in the balance sheet are net of provision for bad debts, which are estimated Aker ASA’s “Treasury” business area has been cultivated to focus on the liability side, and is responsible by the Group’s management based on prior experience in addition to specific assessments for some of the for borrowing, interest and foreign currencies. A separate “Financial Investments” business area focuses on receivables. Credit assessments are performed on all customers requesting credit exceeding a certain all financial assets including cash, receivables and funds. Aker aims to make each company in the portfolio amount. independent and robust through active ownership. Financially, this implies that Aker will only seek to invest Transactions involving derivative financial instruments are with counterparties with sound credit-ratings in the shares of companies included in Industrial holdings, and that each underlying company in this portfo- and with whom the Group has signed a netting agreement. Given their sound credit ratings, management lio must secure funding from external sources whenever they are ready and mature enough to do so. Aker does not expect any counterparty to fail to meet its obligations. aims to cultivate its profile as owner by gradually withdrawing from debt funding. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, The target rate of return for the Industrial holdings is 12 per cent. The target return for the Financial including derivative financial instruments, in the balance sheet. The maximum exposure to credit risk as at investments portfolio depends on the composition of the portfolio, including the size of cash deposits and the reporting date was: the risk profile of the receivables. In addition, Aker has defined financial target indicators (FTIs) that regulate
2014 Maximum exposure to credit risk Designated at Derivatives Classified as fair value Available for Receivables qualified for Investments Cash held for through profit sale financial at amortised hedge held until and bank Amounts in NOK million Note trading and loss assets cost accounting maturity deposits Total
Financial interest-bearing non-current assets 19 - - 3 1 592 - - 214 1 809 Other non-current assets including long-term derivatives 20 - 12 1 310 - - - 324 Projects under construction 10, 22 - - - 8 411 - - - 8 411 Trade receivables, other interest-free short-term receivables 22 - - - 15 052 - - - 15 052 Current derivatives 33 96 - - - 3 294 - - 3 391 Interest-bearing short-term receivables 19 - 116 - 472 - - - 588 Cash and cash equivalents 23 ------12 000 12 000 Total 96 128 4 25 838 3 294 - 12 214 41 574 Aker ASA annual report 2014 55 Annual accounts – Aker group
2014 Maximum exposure to credit risk Designated at Derivatives Classified as fair value Available for Receivables qualified for Investments Cash held for through sale financial at amortised hedge held until and bank Amounts in NOK million Note trading profit and loss assets cost accounting maturity deposits Total
Financial interest-bearing non-current assets 19 - - 1 021 529 - - 516 2 066 Other non-current assets including long-term derivatives 20 - 28 - 183 - - - 211 Projects under construction 10, 22 - - - 6 472 - - - 6 472 Trade receivables, other interest-free short-term receivables 22 - 16 - 15 434 - - - 15 450 Current derivatives 33 1 507 - - - 49 - - 1 556 Interest-bearing short-term receivables 19 - 24 - 910 - - - 934 Cash and cash equivalents 23 ------9 724 9 724 Total 1 507 68 1 021 23 527 49 - 10 240 36 412 Beskjæres 76 mm fra venstre før trykk >>
Trade receivables are allocated by company as follows: Aging trade receivables and provisions for impairment loss: Amounts in NOK million 2014 2013 Gross trade Provision for Gross trade Provision for Industrial holdings: receivables impairment receivables impairment Aker Solutions 4 078 - Amounts in NOK million 2014 loss 2014 2013 loss 2013 Akastor 2 998 6 364 Det norske oljeselskap 1 382 134 Not past due 7 021 (1) 5 519 - Kvaerner 947 796 Past due 0-30 days 1 699 (4) 1 412 - Ocean Yield 98 73 Past due 31-120 days 747 - 561 (2) Aker BioMarine 118 94 Past due 121-365 days 556 (45) 485 (29) Havfisk 41 49 Past due more than one year 157 (99) 107 (107) Total trade receivables 10 180 (149) 8 084 (138) Financial Investments: Recognised impairment loss (63) (63) Aker Philadelphia Shipyard 62 126 Norway Seafoods 250 282 The recognised impairment loss on trade receivables is included in other operating expenses in the Ocean Harvest 47 16 income statement. Other companies 11 13 Total trade receivables 10 031 7 946 56 Aker ASA annual report 2014 Annual accounts – Aker group
Liquidity risk Liquidity risk is the risk that the Group will be unable to meet its financial obligations as they fall due. The Group’s approach to managing liquidity risk is to ensure that it always has sufficient liquidity to meet its liabilities as they fall due.
Overview of contractual maturities of financial liabilities, including estimated interest payments specified by category of interest-bearing liabilities:
2014 Contractual cash flows including estimated interest payments Amounts in NOK million Carrying amount Contractual cash flow 6 months or less 6-12 months 1-2 years 2-5 years Over 5 years
Secured loans 25 800 (30 972) (1 416) (2 925) (2 685) (5 915) (18 030) Unsecured bank loans 5 816 (6 431) (1 137) (686) (1 206) (3 243) (158) Unsecured bond issues 11 573 (14 590) (333) (1 138) (614) (8 663) (3 841) Finance lease liabilities 7 (7) - (2) (2) (4) - Other long-term liabilities 84 (101) (1) (1) (94) (4) - Beskjæres 76 mm fra venstre før trykk >> Credit facilities 133 (133) (117) (16) - - - Other short-term liabilities 402 (403) (105) (298) - - - Total contractual cash flows for interest-bearing liabilities 43 816 (52 637) (3 109) (5 067) (4 602) (17 829) (22 029)
Short-term derivative financial liabilities 5 041 (5 257) (2 028) (1 055) (1 267) (853) (53) Long term derivative financial liabilities 82 (82) - - (75) (7) - Total contractual cash flows for interest-bearing liabilities and derivative 48 940 (57 976) (5 137) (6 122) (5 944) (18 689) (22 082) Trade and other payables 30 581 Long-term interest-free liabilities 17 949 Total liabilities 97 470
Long-term interest-free liabilities include NOK 11 845 million in deferred tax Other items expected to be paid in during the next year include tax receivables liabilities and NOK 250 million in deferred revenue. of NOK 185 million. In addition, the group has interest-bearing assets of NOK The Group’s liquidity requirements are expected to be met through the bal- 2 397 million (see Note 19), and other equity investments of NOK 1 267 million ances of liquid assets and cash flow from operating activities. As at 31 Decem- (see Note 18). ber 2014, the group had cash and cash equivalents of NOK 12 000 million. 2013 Contractual cash flows including estimated interest payments Amounts in NOK million Carrying amount Contractual cash flow 6 months or less 6-12 months 1-2 years 2-5 years Over 5 years
Secured loans 9 984 (11 751) (686) (577) (1 965) (6 625) (1 898) Unsecured bank loans 7 731 (8 306) (2 883) (859) (2 976) (1 588) - Unsecured bond issues 12 331 (15 630) (2 325) (329) (1 419) (5 876) (5 681) Finance lease liabilities 7 (9) (1) (1) (2) (5) - Other long-term liabilities 35 (35) - (35) - - - Credit facilities 85 (85) (80) (5) - - - Other short-term liabilities 605 (606) (143) (463) - - - Total contractual cash flows for interest-bearing liabilities 30 778 (36 422) (6 118) (2 269) (6 362) (14 094) (7 579)
Short-term derivative financial liabilities 987 Long-term derivative financial liabilities 50 Trade and other payables 25 633 Long-term interest-free liabilities 6 617 Total liabilities 64 065 Aker ASA annual report 2014 57 Annual accounts – Aker group
Oil price risk Below is a description of the currency risks facing the main companies in the Aker group. Det norske oljeselskap’s revenues are derived from the sale of petroleum products, and the revenue flow is therefore exposed to oil and gas price fluctuations. As part of the risk management process it is Industrial holdings: continuously considered to hedge the oil and gas price. Aker Solutions Currency risk The presentation currency of Aker Solutions is NOK. The group operates internationally and is exposed Aker’s operation in the international market results in various types of currency exposure for the group. to currency risk on commercial transactions, recognised assets and liabilities and net investments in Currency risks arise through ordinary, future business transactions, capitalised assets and liabilities, foreign operations. The group’s exposure to currency risk is primarily to USD, EUR, and GBP but also and when such transactions involve payment in a currency other than the functional currency of the several other currencies. The Aker Solutions policy requires business units to mitigate currency expo- respective company. In addition, currency risk may arise from investments in foreign subsidiaries. The sure in any project. More than 80 per cent of the exposure value either qualify for hedge accounting or group is mainly exposed to the USD, EUR and GBP. are embedded derivatives. The net value of the currency contracts was NOK -1 289 million as at 31 In Aker’s consolidated accounts, the following exchange rates have been applied in translating the December 2014. accounts of foreign subsidiaries and associated companies. Akastor The presentation currency of Akastor is NOK. The group operates internationally and is exposed to Average Rate at Average Rate at currency risk on commercial transactions, recognised assets and liabilities and net investments in for- rate 31 Dec. rate 31 Dec. Beskjæres 76 mm fra venstre før trykk >> eign operations. The group’s exposure to currency risk is primarily to USD, EUR, GBP and BRL but also Country Currency 2014 2014 2013 2013 several other currencies. The Akastor policy requires business units to mitigate currency exposure in any project. More than 80 per cent of the exposure value either qualify for hedge accounting or are Great Britain GBP 1 10.37 11.53 9.19 10.02 embedded derivatives. The net value of the currency contracts was NOK 338 million as at 31 December USA USD 1 6.30 7.41 5.88 6.07 2014. Denmark DKK 100 112.11 120.78 104.67 111.99 Sweden SEK 100 91.90 95.35 90.22 94.23 Det norske oljeselskap The European Union EUR 1 8.36 9.01 7.81 8.36 The Company changed its functional currency from NOK to USD 15 October 2014. Revenues from sale of petroleum and gas are in USD and GBP, while expenditures are mainly in NOK, USD, SGD, EUR, GBP, CHF and DKK. Exchange rate fluctuations and oil prices involve both direct and indirect financial The average rate and rate as at 31 December have been applied when translating the income state- risk exposure for the company, but because a portion of the expenses are in USD, this risk is mitigated. ment and balance sheet items, respectively. If the average exchange rate for the period does not pro- Currency derivatives may be used. Currency positions are only used to reduce the currency risk relating vide a fair estimate of the transaction rate, the actual transaction rate is used. to the company’s ordinary operations. Liquid assets consist of NOK, USD, SGD, EUR, GBP, CHF and The table below illustrates the Group’s sensitivity to foreign currency rate fluctuations. If the Norwe- DKK. All bank deposits shall be placed in accounts with interest rates and prices denominated in NOK, gian krone had been 10 per cent stronger in 2014, the effects on the consolidated financial statements EUR or USD. The value of the currency contracts was USD -25 million as at 31 December 2014. would have been as shown below. The sensitivity analysis does not take into account other effects of a stronger currency, such as competiveness, change in the value of derivatives etc. Kvaerner The presentation currency of Kvaerner is NOK. Kvaerner operates internationally and is exposed to currency risk on commercial transactions, recognised assets and liabilities. The group’s exposure to Operating Profit currency risk is primarily related to USD, GBP, CAD, and EUR. The purpose of the group’s hedging pol- Amounts in NOK million revenue before tax Equity icy is generally to secure that entities hedge their entire contractually bidding currency risk exposure in any project using forward contracts. The net value of the currency contracts was NOK -39 million as at USD 13 630 (1 832) 17 726 31 December 2014. Other currencies 17 966 608 10 509 NOK 39 186 (219) 3 157 Ocean Yield Total 70 782 (1 442) 31 392 The presentation currency of Ocean Yield is USD. The operating companies in the Ocean Yield group have prepared guidelines for the management of currency risks. The currency policy defines levels for Change if NOK 10% stronger (3 160) 122 (2 823) the hedging of expected future cash flows. The company may utilise currency forward contracts and When NOK 10% stronger 67 623 (1 320) 28 568 currency option contracts from time to time to reduce currency exposure. The group faces currency risks in connection with sales, purchases and loans in currencies other than USD. Its currency risk is mainly related to NOK. The value of the currency contracts was USD -27 million as at 31 December The operational companies in the group have prepared guidelines on the management of currency 2014. risks. Aker ASA’s currency policy defines levels for the hedging of expected future cash flows, and is monitored by the company’s treasury department. The company uses currency forward contracts and Aker BioMarine currency option contracts to reduce currency exposure. The presentation currency of Aker BioMarine is USD. Aker BioMarine operates in the international mar- ket and is exposed to foreign exchange risk, primarily through fluctuations in USD, EUR and NOK, as a result of commercial transactions in other currencies than the entity’s functional currency. The company has NOK denominated financial instruments, thus the balance sheet is exposed to changes in NOK/USD exchange rate. Aker BioMarine seeks to maintain the greatest possible natural 58 Aker ASA annual report 2014 Annual accounts – Aker group
foreign currency hedging by keeping revenues and expenses in the same currency. Aker BioMarine had Amounts in NOK million 2014 2013 no currency derivatives as at 31 December 2014.
Havfisk Fixed rate instruments: The presentation currency of Havfisk is NOK. The company is not directly exposed to fluctuations in Financial assets 187 194 other currencies as Havfisk does not have any foreign subsidiaries and all sales are in NOK. Financial liabilities (10 062) (8 148) Net fixed rate instruments (9 874) (7 953)
Financial investments (subsidiaries): Variable rate instruments: Financial assets 14 210 12 530 Aker Philadelphia Shipyard Financial liabilities (33 754) (22 630) The presentation currency of Aker Philadelphia Shipyard is USD. The company faces currency risks related to sales, purchases and loans in currencies other than USD. Currency risk is mainly related to Net variable rate instruments (19 545) (10 101) EUR, NOK and KRW (South Korean won). As at 31 December 2014, Aker Philadelphia Shipyard had Net interest-bearing debt (-) / assets (+) (29 419) (18 054) currency contracts for the purchase of KRW totalling USD 54 million and EUR totalling USD 2 million. The value of the currency contracts was USD -1.9 million as at 31 December 2014. Beskjæres 76 mm fra venstre før trykk >> Fair value sensitivity analysis for fixed-rate instruments Norway Seafoods The Group does not recognise any fixed rate financial assets and liabilities at fair value through profit or The presentation currency of Norway Seafoods is NOK. The group incurs currency risk on sales loss. denominated in currencies other than NOK. The group’s exposure is mainly related to EUR, GBP, DKK Fair value of interest rate swaps which are designated as hedges for part of debt is NOK -146 million. and USD. Approximately 50 per cent of all receivables in EUR and GBP are hedged, and approximately A change in interest rates as at the reporting date would not affect profit or loss, but would appear as a 50 per cent of anticipated sales in the next 12 months are also hedged at all times The value of the change in the fair value of the cash flow hedge in the Group’s comprehensive income. hedging contracts was NOK -10 million as at 31 December 2014. Other interest rate derivatives are not designated as hedges, and hence a change in the interest rate would affect profit or loss with respect to these instruments. In 2014, the Aker Group incurred an Ocean Harvest expense of NOK 197 million related to interest rate derivatives. Ocean Harvest incurs currency risk on sales denominated in currencies other than NOK. The company is mainly exposed to USD. A subsidiary has ARS (Argentine peso) as its functional currency, and is exposed to fluctuations in the NOK/ARS exchange rate. Ocean Harvest had no currency derivatives as at 31 December 2014. Note 7 Acquisition of subsidiaries and transactions with minority interests Fornebuporten Fornebuporten incurs currency risk on purchases and sales denominated in currencies other than NOK. Acquisition of subsidiaries in 2014 The company is mainly exposed to GBP. Fornebuporten had no currency derivatives as at 31 Decem- On 15 October 2014, Aker’s subsidiary Det norske oljeselskap finalised the acquisition of 100 per cent ber 2014. of the shares in Marathon Oil Norge AS. The transaction was announced on 2 June 2014, and Det nor- ske oljeselskap paid a cash consideration of NOK 13.9 billion (USD 2.1 billion). The acquisition was Aker ASA financed through a combination of equity and debt, by issuing NOK 3 billion in new equity and securing Aker ASA hedges its net exposure from foreign currency cash flows, but does not generally hedge its a reserve-based lending facility of USD 3 billion. Aker participated with NOK 1.5 billion in the equity balance sheet positions. The cash flows, including identified structural transactions and any debt in issue. The main reasons for the acquisition were to diversify the asset base by getting access to pro- foreign currency, are hedged at fixed intervals. In total Aker ASA has hedged USD 61 million net by duction and cash flow and create a strong platform for future organic growth. The portfolio of licences means of forward contracts and options (European). In addition Aker ASA has an interest- and foreign from Marathon Oil Norge AS comes with limited capital expenditure commitments and high near-term currency agreement of SEK 1 150 million. As at 31 December 2014 the accounts shows an unrealised production that complement the planned production start of Det norske’s Ivar Aasen and Johan Sver- loss of NOK 75 million on all foreign exchange agreements. drup developments. The acquisition date for accounting purposes corresponds to the finalisation of the acquisition on 15 October 2014. For tax purposes the effective date was 1 January 2014. The acquisition is regarded as a Interest rate risk business combination and has been accounted for using the acquisition method of accounting in The group’s interest rate risk arises from long-term borrowings and receivables. Borrowings and receiv- accordance with IFRS 3. A purchase price allocation (PPA) has been performed to allocate the cash ables issued at variable rates expose the group to cash flow interest rate risk. Securities issued at fixed consideration to fair value of assets and liabilities from Marathon Oil Norge AS. The PPA is performed as rates expose the group to fair value interest rate risk. of the accounting date 15 October 2014. Each identifiable asset and liability is measured at its acquisition date fair value based on guidance in Exposure to interest rate risk IFRS 13. The standard defines fair value as the price that would be received to sell an asset or paid to As at 31 December 2014, the interest rate profile of the group’s interest-bearing financial instruments transfer a liability in an orderly transaction between market participants at the measurement date. When was as follows: measuring fair value, the company uses the assumptions that market participants would use when pric- ing the asset or liability under current market conditions, including assumptions about risk. Acquired property, plant and equipment have been valued using the cost approach (replacement cost), while intangible assets have been valued based on estimated future cash flows. Aker ASA annual report 2014 59 Annual accounts – Aker group
Accounts receivable are recognised at gross contractual amounts due, as they relate to large and 1. The ability to capture synergies that can be realised from managing a portfolio of both acquired and credit worthy customers. Historically, there has been no significant uncollectible accounts receivable in existing fields on the Norwegian Continental Shelf. The synergies are mainly related to the utilisation Marathon Oil Norge AS. of Det norske oljeselskap’s loss carried forward against tax payable in Marathon Oil Norge AS, as well as synergies from the workforce in the two organisations (“residual goodwill”). The recognised amounts of assets and liabilities assumed as at the date of the acquisition were as follows: 2. The requirement to recognise deferred tax assets and liabilities for the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed in a business com- Amounts in NOK million 15.10.2014 bination. Licences under development and licences in production can only be sold in a market after Capitalised oil and gas exploration expenses 251 tax, based on decision made by Ministry of Finance pursuant to the Petroleum Taxation Act Section Other intangible assets 3 414 10. The assessment of fair value of such licences is therefore based on cash flows after tax. Never- theless, in accordance with IAS 12 Sections 15 and 19, a provision is made for deferred tax corre- Property, plant, and equipment 10 858 sponding to the tax rate multiplied with the difference between the acquisition cost and the tax base. The offsetting entry to this deferred tax is goodwill. Hence, goodwill arises as a technical Inventories 117 effect of deferred tax (“technical goodwill”). Trade receivables 550 Other short-term receivables 473 Reconciliation of goodwill: Beskjæres 76 mm fra venstre før trykk >> Cash and cash equivalents 3 898 Amounts in NOK million 15.10.2014 Total assets 19 560 Goodwill as a result of deferred tax - technical Pension liabilities 80 goodwill 7 916 Deferred tax liabilities 6 030 Goodwill related to synergies - residual goodwill 1 916 Long-term abandonment provision 2 225 Total goodwill before impairment charges 9 832 Provision for other liabilities 154 Impairment charges, see note 12 and 16 (2 524) Trade creditors 17 Net goodwill as at 31 December 2014 7 308 Accrued public charges and indirect taxes 19 Short-term abandonment provision 31 None of the goodwill recognised will be deductible for income tax purposes. Other current liabilities 814 Short-term derivatives 89 In addition, Aker paid NOK 126 million for other acquisitions of subsidiaries. The amount includes deferred payment related to acquisitions for earlier years. Tax payable 6 023 Total liabilities 15 481 Transactions with minority interests in 2014 In 2014, the net purchase of minority interests was NOK 72 million. This led to a decrease in minority Total identifiable net assets at fair value 4 080 interests of NOK 41 million and a decrease in majority interests of NOK 27 million, recognised directly in Goodwill arising on acquisition 9 832 equity and attributed to the equity holders in the parent company. In addition, subsidiaries acquired Total consideration paid on acquisition 13 912 own shares for NOK 162 million, it led to a decrease in minority interests of NOK 99 million and a decrease of majority interests of NOK 63 million. See also Note 25. Less cash and cash equivalents acquired (3 898) Acquisition, net of cash acquired 10 014 Main transactions: In the first quarter 2014 Aker Philadelphia Shipyard issued 2.41 million new shares priced at NOK 165 The above valuation is based on currently available information about fair values as of the acquisition per share, raising proceeds of approximately USD 65 million. Aker did not participate in the share issue. date. If new information becomes available within 12 months from the acquisition date, the company The transaction increased minority interest with NOK 382 million. In May 2014, Aker ASA acquired may change the fair value assessment in the PPA, in accordance with guidance in IFRS 3. 891 762 shares in Aker Solutions ASA for NOK 87 million. The transaction increased the direct ownership From the date of acquisition (15 October 2014) to 31 December 2014, the activity of the acquired in Aker Solutions from 6.0 per cent to 6.3 per cent and reduced minority interests with NOK 58 million. businesses contributed NOK 2.3 billion (USD 338 million) to group operating revenue and NOK 543 mil- In the third quarter 2014 Det norske oljeselskap completed a NOK 3 003 million equity rights issue, lion (USD 79 million) to group profit (before impairment of USD 340 million related to the acquisition, see increasing the number of outstanding shares to 202.6 million. Aker participated with its pro-rata share of Note 12 and 16). If the acquisition had taken place at the beginning of the year, group operating revenue NOK 1 501 million. The transaction increased minority interest with NOK 1 488 million (after transaction and profit for the year 2014 would have been NOK 82.2 billion and NOK 2.6 billion, respectively. The costs). acquisition has no impact on other comprehensive income for 2014. In the third and fourth quarter 2014 Aker Philadelphia Shipyard purchased own shares reducing The goodwill of NOK 9.8 billion (USD 1 486 million) arises principally because of the following fac- minority interests with NOK 48 million. Also in the fourth quarter, Ocean Yield acquired the diving sup- tors: port and offshore construction vessel SMB Installer. The vessel, which was built in 2013, was delivered in December 2014 and is chartered back to SBM Holding (“SBM”) for a period of 12 years. Ocean Yield has established a single purpose company for the ownership of the vessel, in which SBM owns 25 per cent. The transaction increased minority interests with NOK 73 million. 60 Aker ASA annual report 2014 Annual accounts – Aker group
The total purchase price of subsidiaries and minority interests in 2014 is NOK 10 228 million. Total Ocean Yield issued 33.5 million shares priced at NOK 27 per share in an initial public offering in June, sales of minority interests and subsidiaries (see Note 8), were NOK 7 071 million in 2014. Purchase raising gross proceeds (received in July), of NOK 904 million. The shares began trading on Oslo Stock prices and sales prices are stated net of cash acquired and disposed. Exchange on 5 July 2013. On 5 August 2013, the over-allotment option in the Ocean Yield share issue was exercised. This Acquisition of subsidiaries in 2013 involved a total of 1 757 425 shares in Ocean Yield ASA. Following the sale of these shares by Aker ASA In 2013 Aker acquired several minor companies. In February 2013, Aker Solutions entered into an to the Joint Bookrunners, Aker ASA held 98 242 575 shares in Ocean Yield, equal to 73.46 per cent of agreement to allow it to acquire 100 per cent of the shares and voting rights of Enovate Systems Ltd. the shares and votes in the company. The exercise price equalled the offer price, i.e. NOK 27 per share. GBP 71.4 million was paid in consideration for the shares. Also in February 2013, Aker Solutions The transaction increased minority interests by NOK 47 million. Following a share issue to employees in acquired 100 per cent of the shares and voting rights of Managed Pressure Operations International Ltd December 2013, Aker’s shareholding is 73.43 per cent. (MPO). USD 67.8 million was paid in consideration for the shares and repayment of debt at the transac- In November 2013, Aker ASA purchased 16.44 million shares in Aker Solutions ASA (6 per cent) for tion date. In August 2013, Aker Solutions acquired 100 per cent of the shares and voting rights of Opus NOK 1 900 million. The transaction reduced minority interests with NOK 761 million. Maxim Ltd (Opus). GBP 12.8 million was paid in consideration for the shares. In addition comes a The total purchase price of subsidiaries and minority interests in 2013 is NOK 3 141 million. Total deferred payment of maximum GBP 1 million over three years tied to profitability of the stand-alone sales of minority interests and subsidiaries (see Note 8), were NOK 4 million in 2013. Purchase prices business (calculated as 3 per cent of accumulated revenue). In October, Aker purchased the company and sales prices are stated net of cash acquired and disposed. Bekkestua Syd AS for NOK 108 million. The purchase is related to Aker’s property project Fornebupor- ten. The acquisition of the real estate company is recognised as an asset acquisition. Beskjæres 76 mm fra venstre før trykk >> The total recognised amounts of assets and liabilities assumed as at the dates of the acquisitions were as follows: Note 8 Sale of subsidiaries and discontinued operations Amounts in NOK million 2013 Sale of subsidiaries in 2014 On 21 May 2014, Akastor sold the 93 per cent shareholding in K2 Hotellbygg AS. The consideration Property, plant and equipment 376 was NOK 175 million and resulted in a gain of NOK 113 million. In November 2014, Fornebuporten sold Intangible assets 386 a subsidiary related to a sale of three office buildings at Aberdeen International Business Park. The con- Inventory, trade and other receivables 163 sideration was NOK 1.2 billion and resulted in a gain of NOK 148 million. The disposals do not repre- Cash and bank deposits 56 sent a separate major line of business, and is not presented as discontinued operations. Total assets 981 Discontinued operations Akastor Interest-bearing loans 135 Mooring and loading systems business Deferred tax liability 110 On 30 October 2013, Akastor sold its mooring and loading systems business (MLS) to Cargotec. The Provisions and other long-term liabilities 29 unit, known for the Pusnes brand name, provides mooring equipment, loading and offloading systems, Tax payable, trade and other payables 167 as well as deck machinery for the global offshore and shipping markets. The division employs about 370 people in Europe, Asia and the Americas and has its main office in Arendal, Norway. The transac- Total assets 441 tion was completed on 30 January, 2014.
Total identifiable net assets at fair value 539 Well-intervention services businesses Goodwill arising on acquisition 724 On 22 November 2013, Akastor agreed to sell its well intervention services businesses (WIS) to EQT. Total consideration paid and contingent consideration (earn-out) 1 263 The business provides services that optimise flows from oil reservoirs and its main markets are in the Less cash and cash equivalents acquired (56) UK and Norway. The division has about 1 500 employees in Europe, Asia, the US and the Middle East. Less contingent consideration (earn-out) (17) The transaction was completed on 9 January, 2014. The agreement includes an earn-out provision where Akastor will receive 25 per cent of any internal rate of return exceeding 12 per cent a year on Acquisitions, net of cash acquired 1 190 EQT’s equity investment. An earn-out of NOK 120 million has been recognised in the accounts, and represents estimated fair value at transaction date. Transactions with minority interests in 2013 In 2013, Aker net purchased minority interests for NOK 1 852 million. In addition, the minority interests New Aker Solutions in Aker BioMarine were purchased using shares in Aker ASA as consideration; see description below. On 28 September, 2014, the demerger of Aker Solutions was completed and Aker Solutions Holding This led to a decrease in minority interests of NOK 1 080 million and an decrease in majority interests of ASA (“New Aker Solutions”), a subsidiary of Akastor ASA established for the purposes of the demerger, NOK 795 million, recognised directly in equity and attributed to the equity holders in the parent com- was listed on the Oslo Stock Exchange. The demerger is eliminated in the Aker group accounts as pany. See also Note 25. shown in the table below. In September 2012, Aker proposed a merger between its wholly-owned subsidiary Aker Seafoods Holding and Aker BioMarine. The merger was structured as a triangular merger, whereby minority share- Kvaerner holders in Aker BioMarine were offered shares in Aker as consideration. The proposal was approved in In December 2013, Kvaerner sold its onshore construction business in North America to Matrix Service November 2012, and the merger was completed in January 2013. Aker BioMarine was subsequently del- Company. Following the sale, Kvaerner will not have any remaining operations in the US within the isted from Oslo Stock Exchange. Aker contributed 816 860 shares from its own treasury stock holding as Downstream & Industrial segment, and the remaining legacies within the segment are presented as consideration shares for the merger. The transaction reduced minority interests by NOK 140 million. discontinued operations Aker ASA annual report 2014 61 Annual accounts – Aker group
Results from discontinued operations 2014 2013
Amounts in NOK million Akastor Kvaerner Eliminations Total Akastor Kvaerner Eliminations Total
Operating revenues 24 007 4 (23 876) 135 32 403 1 362 (28 965) 4 800 Operating expenses (22 432) (121) 22 313 (240) (30 536) (1 398) 27 478 (4 456) Financial items (118) - 118 - (23) - 13 (10) Profit before tax 1 457 (117) (1 445) (105) 1 844 (37) (1 474) 333 Tax expense (429) 21 429 21 (482) (29) 374 (137) Profit for the period 1 028 (96) (1 016) (83) 1 362 (66) (1 100) 196 Gain on sale of discontinued operations 2 852 - (118) 2 734 - 272 - 272 Net gain from discontinued operations 2 852 - (118) 2 734 - 272 - 272 Beskjæres 76 mm fra venstre før trykk >> Net profit from discontinued operations 3 880 (96) (1 134) 2 650 1 362 206 (1 100) 468
Earnings per share of discontinued operations 2014 2013
Basic earnings per share from discontinued operations (NOK) 12.15 1.85 Diluted earnings per share from discontinued operations (NOK) 12.15 1.85
Cash flow from discontinued operations 2014 2013
Amounts in NOK million Akastor Kvaerner Eliminations Total Akastor Kvaerner Eliminations Total
Net cash from operating activates 589 (154) (588) (153) 3 070 45 (2 601) 514 Net cash from investing/financing 4 716 122 882 5 720 (2 278) (317) 1 868 (727) Total 5 305 (32) 294 5 567 792 (272) (733) (213)
Consideration received and cash demerger 5 140 - 1 064 6 204 - 599 - 599 Cash and cash equivalents disposed of (256) - - (256) - (223) - (223) Net cash inflow 4 884 - 1 064 5 948 - 376 - 376 62 Aker ASA annual report 2014 Annual accounts – Aker group
Note 9 Operating segments and significant subsidiaries Financial investments
Operating segments are identified based on the Group’s internal management- and reporting struc- Converto Capital Fund Investment fund, managed by Converto. ture. The Group’s chief operating decision makers, who are responsible for the allocation of resources Ownership interest 99.8 per cent. and assessment of performance in the different operating segments, are defined as the board of Main companies in Aker Philadelphia Shipyard directors, the CEO and the CFO. Converto Capital Fund Design and construction of vessels. Aker’s investment portfolio comprises two segments: Industrial holdings and Financial investments. Ownership interest 57.6 per cent. The primary focus for businesses within Industrial holdings is long-term value creation. Businesses within Financial investments are managed as a portfolio with focus on financial and strategic opportu- Norway Seafoods nities. Processing and sales of seafood. Recognition and measurement applied to segment reporting are consistent with the accounting Ownership interest 73.6 per cent. principles applied when preparing the financial statements. Transactions between segments are con- Align ducted on market terms and conditions. Operational revenues from geographical segments are based Leading provider of process and safety- critical products, solutions and on customers’ geographical locations, while segment assets are based on the geographical location of services to the oil and gas industry. Ownership interest 38.8 per cent. companies. The company is defined as an associated company in the Aker Group, Beskjæres 76 mm fra venstre før trykk >> and is accounted for using the equity method. An overview of operating segments: Other and eliminations Aker ASA and holding companies Cash, other financial investments and other assets. Industrial holdings Companies included are listed in Note 1 in annual accounts of Aker ASA and holding companies. Aker Solutions Leading global supplier of products, systems and services for the oil Other and gas industry. Other companies and eliminations. The Aker Group’s ownership interest is 46.93 per cent. Aker ASA indi- See next section for overview of group entities. rectly owns 34.8 per cent. Aker Kværner Holding AS owns 40.56 per cent of Aker Solutions ASA. Aker ASA owns 70 per cent of Aker Kværner Holding AS. In addition, Aker ASA owns directly 6.37 per cent Subsidiaries of Aker Solutions. Aker Solutions, Akastor and Kvaerner Akastor Akastor is an oil-services investment company with a portfolio of indus- See note 3 regarding the assessment of control of Aker Solutions, Akastor and Kvaerner. trial holdings, real estate and other investments. The Aker Group’s own- ership interest is 46.60. Aker ASA indirectly owns 34.5 per cent. Aker Det norske oljeselskap (“Det norske”*) Kværner Holding AS owns 40.27 per cent of Akastor ASA. Aker ASA Although the Aker Group owns less than half of the shares in Det norske (49.99 per cent), it is con- owns 70 per cent of Aker Kværner Holding AS. In addition, Aker ASA cluded that the Group has control of the company. This is due to the remaining ownership in Det nor- owns directly 6.33 per cent of Akastor. ske being dispersed on a large number of shareholders, historical attendances at Det norske’s general assemblies demonstrate that Aker have had the ability to control the outcome of the votings, and that Det norske oljeselskap Oil company. Exploration and production on the Norwegian continental there are no indications that the remaining shareholders coordinate their exercise of shareholder influ- shelf. ence. Ownership interest 49.99 per cent. Kvaerner Leading global provider of engineering and construction services to the energy and process industry. The Aker Group’s ownership interest is 41.02 per cent. The company is defined as an associated company in the Aker Group, and is accounted for using the equity method. Aker ASA indirectly owns 28.7 per cent. Aker Kværner Holding AS owns 41.02 per cent of Kværner ASA. Aker ASA owns 70 per cent of Aker Kværner Holding AS. Ocean Yield Owns, operates and charters vessels. Ownership interest 73.21 per cent. Aker BioMarine Biotechnology company. Harvesting of krill, production and sale. Ownership interest 99.02%.The group will be renamed «Superba». Havfisk Harvesting of white fish. Ownership interest 73.25 per cent. Aker ASA annual report 2014 63 Annual accounts – Aker group
Significant subsidiaries in the Aker group accounts are presented in the table below. Companies owned directly by Aker ASA are highlighted. Group’s ownership in per cent and Group’s share of votes in per cent are equal if nothing else is indicated.
Business address Business address Group’s Group’s ownership ownership in% City location Country in% City location Country
Havfisk ASA (HFISK) 73.25 Ålesund Norway Aker Kværner Holding AS (AKH) 70.00 Oslo Norway Hammerfest Industrifiske AS 60.00 Hammerfest Norway Aker Solutions ASA (AKSO) 40.562 Fornebu Norway Finmark Havfiske AS 98.00 Melbu Norway Aker Engineering & Technology AS 100.00 Fornebu Norway Nordland Havfiske AS 100.00 Stamsund Norway Aker Solutions MMO AS 100.00 Stavanger Norway Converto Capital Fund 99.80 Oslo Norway Aker Subsea AS 100.00 Fornebu Norway Beskjæres 76 mm fra venstre før trykk >> Norway Seafoods Group ASA 73.63 Oslo Norway Aker Subsea Ltd 100.00 Maidenhead United Kingdom Aker Philadelphia Shipyard ASA 57.56 Oslo Norway Akastor ASA (AKA) 40.273 Fornebu Norway Ocean Harvest AS 100.00 Oslo Norway MHWirth GmbH 100.00 Erkelenz Germany Superba ASA (former Aker BioMarine) 99.02 Oslo Norway MHWirth AS 100.00 Kristiansand Norway Aker BioMarine Antarctic AS 100.00 Oslo Norway MHWirth Inc 100.00 Houston USA Aker BioMarine Antarctic Services AS 100.00 Oslo Norway Frontica AS 100.00 Fornebu Norway Aker BioMarine Antarctic US Inc 100.00 Issaquah USA Frontica Advantage AS 100.00 Bergen Norway Aker BioMarine Antarctic Pty Ltd 100.00 Melbourne Australia AKOFS Offshore Servicos de Petroleo Norron Asset Management AB 48.18 Stockholm Sweden e Gas do Brazil Ltda5 100.00 Rio de Janeiro Brasil Aker Capital AS 100.00 Oslo Norway AKOFS 1 AS 100.00 Oslo Norway Det norske oljeselskap ASA 49.99 Trondheim Norway AKOFS 2 AS 100.00 Oslo Norway Aker Holding Start 2 AS 100.00 Oslo Norway AKOFS 3 AS 100.00 Oslo Norway Aker US Services LLC 100.00 Seattle USA AKOFS Offshore AS 100.00 Oslo Norway Navigator Marine AS 100.00 Oslo Norway AKOFS Wayfarer AS 100.00 Fornebu Norway Setanta Energy Group BV 81.10 Amsterdam Netherlands Fjords Processing AS 100.00 Fornebu Norway Fornebuporten Holding AS1 99.99 Oslo Norway KOP Surface Products Pte Ltd 100.00 Singapore Singapore Aker Achievement AS 100.00 Oslo Norway Akastor Real Estate AS 100.00 Fornebu Norway Aker Maritime Finance AS 100.00 Oslo Norway Step Oiltools BV (voting rights 100 %) 76.00 Amsterdam Netherlands Old Kværner Invest AS 100.00 Oslo Norway KværnerASA (KVAER) 41.02 Oslo Norway Sea Launch Holding AS 100.00 Oslo Norway Kværner Engineering AS 100.00 Oslo Norway Ocean Yield ASA (OCY) 73.21 Oslo Norway Kværner Stord AS 100.00 Stord Norway New Pollock LP, Inc 100.00 Seattle USA Kværner Verdal AS 100.00 Verdal Norway Aker ShipLease AS 100.00 Oslo Norway Aker Floating Production ASA (AFP) 100.00 Oslo Norway Connector 1 Holding AS 100.00 Oslo Norway 1*) In accordance with UK Companies Act 2006, the Fornebuporten Holding subsidiaries Abstract (Aberdeen 2*) Limited (reg. no. 08271923*) and Abstract International Business Park Limited (reg. no. 08361458*) are exempt from audit of accounts LH Shiplease AS 100.00 Oslo Norway under section 479A. F-Shiplease Holding AS 100.00 Oslo Norway 2*) In addition, Aker ASA owns 6.37 per cent direct Ocean Holding AS 100.00 Oslo Norway 3*) In addition, Aker ASA owns 6.33 per cent direct OCY Albany 100.00 Oslo Norway **) Ownership percentage shown is percentage ownership of the relevant entity’s parent. OCY Severn 100.00 Oslo Norway OCY Thelon 100.00 Oslo Norway OS Installer 75.00 Oslo Norway 64 Aker ASA annual report 2014 Annual accounts – Aker group
2014 - Operating segments Compa- Det nies in Other Total norske Total financial and financial Aker olje- Ocean Aker Elimi industrial invest- elimi invest- Amounts in NOK million Solutions1 Akastor1 selskap Kvaerner Yield BioMarine Havfisk nations1 holdings ments nations ments Total
External operating revenues 30 332 16 836 3 162 13 711 1 358 703 1 049 - 67 151 3 652 (21) 3 631 70 782 Inter-segment revenues 2 639 4 596 - 234 213 - - (7 681) - 15 (15) - - Operating revenues 32 971 21 432 3 162 13 945 1 570 703 1 049 (7 681) 67 151 3 667 (36) 3 631 70 782 EBITDA 2 675 1 380 1 435 828 1 365 40 299 (430) 7 592 155 (22) 133 7 725 Depreciation and amortisation (591) (915) (1 088) (70) (608) (110) (130) 25 (3 485) (116) 7 (109) (3 594) Impairment changes and non-recurring items (74) (1 171) (2 547) (266) (24) (20) - (270) (4 372) (2) 283 281 (4 091) Operating profit 2 010 (706) (2 199) 492 734 (90) 169 (675) (265) 37 267 305 39 Beskjæres 76 mm fra venstre før trykk >> Share of earnings in associates and joint ventures - (126) - (59) - (9) - - (194) 74 117 191 (3) Interest income 55 52 47 8 118 1 10 (5) 287 23 44 68 354 Interest expense (187) (406) (564) (55) (215) (43) (73) 62 (1 482) (82) (319) (401) (1 883) Other financial items (62) (467) 6 (59) 16 33 154 1 (377) 268 160 427 50 Profit before tax 1 817 (1 653) (2 711) 329 652 (109) 260 (617) (2 032) 320 270 590 (1 442) Tax expense (516) 266 618 (301) (18) (1) (64) (107) (124) (118) 55 (63) (187) Profit for the year from continuing operations 1 300 (1 387) (2 093) 27 635 (110) 197 (724) (2 155) 202 325 526 (1 629) Result from discontinued operations (net of tax) - 3 880 - (96) - - - (1 070) 2 714 - (64) (64) 2 650 Profit for the year 1 300 2 493 (2 093) (69) 635 (110) 197 (1 794) 559 202 260 462 1 021 Profit for the year to equity holders of the parent2 148 801 (1 046) (17) 464 (110) 143 (846) (463) 164 260 424 (39) Dividends received by Aker ASA and holding companies - 379 - 95 316 - - - 790 54 - 54 844
Property, plant, equipment, intangibles and interest-free fixed assets 9 750 11 203 34 717 1 711 10 061 1 364 2 020 (453) 70 373 3 939 3 710 7 650 78 023 Shares and investments in associated companies - 264 - 288 - 33 - - 584 943 (26) 917 1 502 Other shares 13 347 14 9 - - - - 383 347 537 884 1 267 External interest-bearing fixed assets 9 131 13 2 1 493 44 3 - 1 695 100 14 114 1 809 Interest-free current assets 14 197 11 205 2 935 4 206 116 397 120 (848) 32 328 1 477 (81) 1 396 33 724 External interest-bearing current assets - 142 24 - - 35 - - 201 386 - 386 588 Internal interest-bearing receivables 82 63 - - 1 183 - 215 (1 328) 215 5 (220) (215) - Cash and cash equivalents 3 339 1 075 2 195 1 208 566 18 146 - 8 547 589 2 864 3 453 12 000 Total assets 27 391 24 430 39 898 7 424 13 419 1 891 2 504 (2 629) 114 327 7 787 6 798 14 585 128 912 Equity 5 677 9 378 4 829 2 337 5 247 558 872 (267) 28 631 3 392 (23 300) (19 908) 8 723 Minority 216 - - - 78 - 4 (164) 134 1 22 533 22 535 22 669 Non interest-bearing debt 17 670 10 024 18 097 4 599 724 170 340 (675) 50 949 1 087 1 669 2 756 53 705 Internal interest-bearing debt 64 1 458 - - - 100 - (1 522) 100 700 (800) (100) - External interest-bearing debt 3 764 3 570 16 972 487 7 370 1 063 1 288 - 34 514 2 606 6 696 9 302 43 816 Total assets and liabilities 27 391 24 430 39 898 7 424 13 419 1 891 2 504 (2 629) 114 327 7 787 6 798 14 585 128 912
Impairment and sales losses (74) (1 171) (2 547) (266) (24) (20) - (270) (4 372) (2) 283 281 (4 091) Investments3 1 382 1 904 29 365 130 2 047 73 292 (483) 34 710 1 586 - 1 586 36 296 Aker ASA annual report 2014 65 Annual accounts – Aker group
2013 - Operating segments Det Other Total Other Total norske indus- indus- Converto and financial Aker olje- Ocean Aker trial trial hol- Capital elimi invest- Amounts in NOK million Solutions Akastor selskap Kvaerner Yield BioMarine Havfisk holdings dings Fund3 nations ments Total
External operating revenues 29 058 18 448 944 12 960 1 404 689 779 (7 197) 57 085 4 310 (13) 4 297 61 382 Inter-segment revenues ------11 (11) - - Operating revenues 29 058 18 448 944 12 960 1 404 689 779 (7 197) 57 085 4 321 (24) 4 297 61 382 EBITDA 2 079 1 355 (1 091) 636 1 220 21 211 (203) 4 228 301 (246) 55 4 283 Depreciation and amortisation (486) (749) (471) (63) (597) (96) (105) (24) (2 591) (136) 5 (131) (2 722) Impairment changes and non-recurring items (13) (370) (666) - - (5) - (74) (1 128) (90) - (90) (1 218) Operating profit 1 580 235 (2 227) 573 623 (80) 106 (301) 509 75 (241) (166) 343 Beskjæres 76 mm fra venstre før trykk >> Share of earnings in associates and joint ventures - (25) - (78) - (1) - 241 137 33 7 40 177 Interest income 48 37 41 6 105 1 11 (14) 235 73 33 106 341 Interest expense (211) (529) (302) (63) (156) (60) (59) 8 (1 372) (209) (101) (310) (1 682) Other financial items 160 40 (57) (39) (108) 29 (161) (44) (180) 539 116 655 475 Profit before tax 1 577 (242) (2 545) 399 464 (111) (103) (110) (671) 511 (186) 325 (347) Tax expense (397) 4 1 997 (160) 15 (3) 32 234 1 722 (62) (47) (109) 1 613 Profit for the year from continuing operations 1 181 (238) (549) 239 479 (114) (72) 124 1 051 449 (233) 216 1 266 Result from discontinued operations (net of tax) - 1 362 - 206 - - - (1 100) 468 (8) 8 - 468 Profit for the year 1 181 1 124 (549) 445 479 (114) (72) (976) 1 519 441 (225) 216 1 734 Profit for the year to equity holders of the parent - 369 (274) 128 413 (114) (52) - 469 1 554 (1 264) 290 759 Dividends received by Aker ASA and holding companies - 308 - 87 318 76 - - 789 64 - 64 852
Property, plant, equipment, intangibles and interest-free fixed assets - 18 819 6 324 2 005 8 061 1 151 2 075 (144) 38 291 3 767 3 452 7 219 45 510 Shares and investments in associated companies and joint venture - 440 - 132 - 36 - - 608 857 (144) 713 1 321 Other shares - 645 - 9 - - - - 654 22 815 837 1 491 External interest-bearing fixed assets - 159 273 3 1 170 41 - - 1 646 351 69 420 2 066 Interest-free current assets - 25 022 2 211 4 131 100 305 202 (202) 31 769 876 53 929 32 697 External interest-bearing current assets - 511 24 - - 8 - - 543 376 15 391 934 Interest-bearing claims ------197 - 197 257 (454) (197) - Cash and cash equivalents - 2 345 1 709 1 545 806 42 24 - 6 471 790 2 463 3 253 9 724 Total assets - 47 941 10 541 7 825 10 137 1 581 2 498 (346) 80 177 7 297 6 268 13 566 93 743
Equity - 13 214 3 188 2 511 4 261 520 710 (72) 24 332 4 037 (19 776) (15 739) 8 593 Minority - 161 - - - - 4 - 165 (111) 19 856 19 745 19 910 Non interest-bearing debt - 23 250 2 364 4 836 587 161 561 (274) 31 485 1 189 1 788 2 977 34 463 Internal interest-bearing debt ------866 (866) - - External interest-bearing debt - 11 316 4 989 479 5 289 900 1 223 - 24 196 1 316 5 266 6 582 30 778 Total assets and liabilities - 47 941 10 541 7 825 10 137 1 581 2 498 (346) 80 177 7 297 6 268 13 566 93 743
Impairment and sales losses (13) (370) (666) - - (5) - (74) (1 128) (90) - (90) (1 218) Investments 3) - 4 608 2 891 164 1 471 294 563 - 9 991 1 153 2 1 155 11 146 66 Aker ASA annual report 2014 Annual accounts – Aker group
Geographical segments Cash flow by segment Total property, plants, Cash flow is allocated to the different companies as follows: Operating revenue based on equipment and intangibles by company location company location Debt Equity Amounts in NOK million 2014 2013 2014 2013 Operating Investing financing financing Amounts in NOK million activities activities activities activities Total Norway 38 897 32 996 66 492 34 364 Industrial holdings: EU 13 867 6 418 4 249 4 543 Aker Solutions 2 645 (1 368) 34 238 1 549 The Americas 9 446 8 229 2 395 2 061 Akastor 488 4 499 (4 193) (1 143) (349) Asia 6 515 8 961 2 014 1 880 Kvaerner 193 (171) (46) (324) (348) Other areas 2 057 4 777 1 600 316 Det norske oljeselskap 1 828 (14 664) 9 717 2 966 (154) Total 70 782 61 382 76 751 43 163 Ocean Yield 1 142 (2 340) 1 203 (354) (349) Aker BioMarine (70) (90) 135 - (26) 1*) Aker Solutions, Akastor and Aker BioMarine have corrected previous period figures. Aker group has booked the corrections Beskjæres 76 mm fra venstre før trykk >> in 2014 as part of the eliminations columns. Havfisk 245 (185) 62 (1) 121 Total change for profit for the year from continuing operations is NOK -247 million. Elimination (258) 869 372 (372) 611 2*) Figure for Aker Solutions is profit to the equity holders of the parent in the period after the demerger from Akastor Total industrial holdings 6 213 (13 450) 7 284 1 010 1 056 3*) Investments include acquisitions of property, plant and equipment and intangibles (including increases due to business combinations*). Financial investments: Aker ASA and holding companies 271 (360) 1 427 (940) 398 Income statement and balance sheet by currency Other companies and elimination (1 178) 474 809 (438) (333) Aker ASA has subsidiaries reporting in currencies other than the Norwegian kroner (NOK), where value Total 5 306 (13 336) 9 520 (368) 1 122 is exposed to currency fluctuations. The table below shows the consolidated financial statements by currency. For sensitivity with respect to operating revenue, equity, fixed assets and interest-bearing liabilities, see Note 6, Note 15 and Note 27. Cash flow from operating activities is allocated to the different companies as follows: Cash flow Other Net Paid/ from USD in currencies Aker in interest received operating Amounts in million USD NOK in NOK NOK NOK Amounts in NOK million EBITDA paid tax Other activities
Revenue 2 164 13 630 17 966 39 186 70 782 Industrial holdings: EBITDA 482 3 039 1 110 3 576 7 725 Aker Solutions 2 675 (230) (307) 507 2 645 Profit before tax (291) (1 832) 608 (219) (1 442) Akastor 1 380 (560) (312) (20) 488 Kvaerner 828 (38) (16) (581) 193 Fixed assets 6 756 50 064 2 744 23 943 76 751 Det norske oljeselskap 1 435 (452) 539 306 1 828 Cash 568 4 208 3 515 4 277 12 000 Ocean Yield 1 365 (137) (3) (83) 1 142 Other assets 2 034 15 072 14 615 10 474 40 161 Aker BioMarine 40 (40) (1) (69) (70) Havfisk 299 (69) (9) 24 245 Total assets 9 358 69 344 20 874 38 694 128 912 Elimination (430) 173 - - (258) Equity 2 381 17 640 10 301 (19 218) 8 723 Total industrial holdings 7 592 (1 354) (109) 84 6 213 Minority interests 12 86 208 22 375 22 669 Interest-bearing liabilities external 3 296 24 421 1 067 18 328 43 816 Financial investments: Interest-bearing liabilities internal 332 2 460 343 (2 803) - Aker ASA and holding companies (223) (312) 14 792 271 Interest-free liabilities 3 338 24 737 8 956 20 012 53 705 Other companies and elimination 356 (45) (12) (1 477) (1 178) Total equity and liabilities 9 358 69 344 20 874 38 694 128 912 Total 7 725 (1 710) (108) (600) 5 306
Aker ASA annual report 2014 67 Annual accounts – Aker group
Cash flow from operating activities amounted to NOK 5 306 million in 2014. The difference of NOK Leasing agreements signed and other backlog at end of 2014 2 419 million compared to EBITDA is primarily due to net interest paid of NOK 1 694 million, tax paid Aker of NOK 108 million, taking into account a tax rebate linked to exploration activity on the Norwegian Ocean Aker Philadelphia continental shelf, and other items totalling - NOK 616 million. Amounts in NOK million Yield Solutions Akastor Kvaerner Shipyard Total Other items relating to Det norske oljeselskap are primarily linked to the expensing of previously capitalised exploration costs and increases in accrued costs. Other items related to Aker Solutions and Kvaerner are primarily linked to changes in working capital. Other items related to Aker ASA and Duration of less than one year 1 472 - 676 - - 2 148 holding companies are primarily linked to dividends received of NOK 844 million. Duration of between one and five years 6 131 - 2 537 - - 8 668 Duration of more than five years 5 694 - 475 - - 6 169 Total leasing agreements 13 297 - 3 688 - - 16 985 Note 10 Operating revenue Other order backlog 596 48 289 17 867 16 451 7 506 90 708 Total 13 893 48 289 21 555 16 451 7 506 107 693 Analysis of operating revenues by category Amounts in NOK million 2014 2013 Beskjæres 76 mm fra venstre før trykk >> Ocean Yield Order backlog at end of 2014 amounted to NOK 13 893 million of which NOK 13 297 million are leasing Construction contract revenue 41 789 37 441 contracts. The vessel Aker Wayfarer has a leasing contract with Akastor and from October 1st 2014, Revenue from services 16 407 13 254 these contracts was recognized as finance lease and not included in the order backlog. Leasing income 2 769 2 758 The company owns 15 vessels including 5 newbuildings, with an average remaining contract tenor of Sales of oilfield products 2 111 1 845 9.5 years at the end of 2014, including the contracts of Aker Wayfarer. Petroleum revenues 2 806 933 Other sales of goods 3 904 3 897 Aker Solutions Other 998 1 254 Order backlog at end of 2014 amounted to NOK 48 289 million, an increase in excess of NOK 7 billion during 2014. Order intake amounted to NOK 37 135 million. About two thirds of the backlog was from Total 70 782 61 382 projects to be delivered outside Norway.
Akastor Important customer The order intake was NOK 25 254 million in 2014 and an order backlog of NOK 21 555 million at the Aker has one customer that have been invoiced approximately NOK 9 500 million and thus accounts end of 2014. The increase in order intake from 2013 to 2014 can be among other explained by the five for more than 10 per cent of group revenues in 2014. year extension of the contract with Petrobras for Skandi Santos, and a five year contract for Aker Way- farer with the same client. Order backlog construction contracts and other contracts The activities of Aker Solutions, Akastor, Kvaerner, Ocean Yield and Aker Philadelphia Shipyard are Kvaerner largely based on deliveries in accordance with customer contracts. The order backlog represents an Order intake in 2014 NOK 10 718 million, including scope of work of jointly controlled entities. Esti- obligation to deliver goods and services not yet produced, as well as Aker’s contractual entitlement to mated scheduling for the order backlog is approximately 50 per cent for execution in 2015, with remain- make future deliveries ing 50 per cent for execution in 2016 and later. The main projects at work at the end of 2014 are Nyhamn onshore for Shell with delivery in 2018, Order intake and order backlog for the companies in the Aker Group as at year-end 2014 and 2013: Hebron project for ExxonMobil with delivery in 2017 and Edvard Grieg topside for Lundin with delivery (Figures are unaudited, and internal order backlog and order intake are not eliminated) in 2015.
Aker Philadelphia Shipyard Order Order At the end of 2014, the company had five vessels under construction, one for SeaRiver (Hull 020) and backlog Order backlog Order four for the AKPS-Crowley joint venture (Hull 021-024). Hull 020 is expected to be delivered to SeaRiver Amounts in NOK million 31 Dec. 2014 intake 2014 31 Dec. 2013 intake 2013 in March 2015.
Aker Solutions 48 289 37 135 41 185 44 370 Akastor 21 555 25 254 17 025 18 011 Kvaerner 16 451 10 718 22 809 18 615 Aker Philadelphia Shipyard 7 506 1 631 6 174 5 341 Ocean Yield 13 893 3 602 10 887 2 794 Total 107 693 78 340 98 080 89 131 68 Aker ASA annual report 2014 Annual accounts – Aker group
Construction contract revenue Petroleum revenues Construction contract revenue in 2014 NOK 41 789 million and aggregate amount of cost incurred Amounts in NOK million 2014 2013 and recognised profits (less losses) for project at progress at 31 December 2014 totalled NOK 76 941 million. Recognised income oil 2 509 791 Recognised income gas 270 118 Amounts in NOK million 2014 2013 Tariff income 26 24 Total 2 806 933 Construction revenue in the period 41 789 37 441 Breakdown of produced volumes Amounts due from customers for contract work 8 411 6 472 Figures in 1000 barrel of oil equivalents 2014 2013 Amounts due to customers for contract work (8 190) (5 107) Construction contracts in progress, net position 221 1 365 Oil 4 800 1 264 Gas 904 365 Construction contracts in progress at the end of the reporting period: Total 5 705 1 629 Beskjæres 76 mm fra venstre før trykk >> Aggregate amount of cost incurred and recognised profits (less losses) 76 941 59 278 Advances from customers 4 781 4 334 Other sales of goods Retentions 119 113 Other sales of goods of NOK 3 904 million in 2014 consists mainly of NOK 689 million in sales of krill products by Aker BioMarine, NOK 1 187 million in harvesting revenues generated by Havfisk and Revenue from services Ocean Harvest and NOK 1 692 million in sales of whitefish products by Norway Seafoods. Amounts in NOK million 2014 2013
Aker Solutions 12 619 - Akastor 8 832 13 706 Note 11 Wages, personnel expenses and other operating expenses Kvaerner 10 158 Other and eliminations (5 054) (610) Wages and personnel expenses consist of the following: Total 16 407 13 254 Amounts in NOK million 2014 2013
Leasing income Wages 16 670 14 990 Amounts in NOK million 2014 2013 Social security contributions 2 179 2 020 Pension costs 798 801 Akastor 1 450 1 600 Other expenses 958 632 Ocean Yield 1 571 1 404 Capitalised personnel expenses1 (803) (600) Other and eliminations (252) (246) Total 19 802 17 844 Total 2 769 2 758 Average number of employees 28 195 26 975 Sales of oilfield products Number of employees at year-end 28 998 27 392 Amounts in NOK million 2014 2013
Aker Solutions 121 - Akastor 2 024 1 845 Elimination (34) - Total 2 111 1 845 Aker ASA annual report 2014 69 Annual accounts – Aker group
Geographical split of number of employees by region: Rig contracts and other lease obligations pertaining to ownership interests in licenses: 2014 2013 Det norske oljeselskap has a lease agreement until 2016 for Transocean Winner, which is currently drilling in the Greater Alvheim Area. In addition, the company had a lease agreement for Transocean Barents which expired in July 2014. The rig contract was used for exploration drilling in the compa- Norway 15 694 15 357 ny’s licences or was sublet to other companies. There are no remaining lease obligations related to EU 3 804 3 483 Transocean Barents at 31 December 2014. As at 31.December 2013, the future lease obligation due Asia 1 951 1 873 within 1 year was USD 105.0 million. North America 5 251 4 602 On behalf of the partners in Ivar Aasen, the company signed an agreement in 2013 with Maersk Other regions 2 298 2 077 Drilling for the delivery of a jack-up rig for the development project on the Ivar Aasen field. The rig will Total 28 998 27 392 be used to drill production wells on the Ivar Aasen field. The contract period is five years, with options for up to seven years 1*) Capitalised personnel expenses in 2014 consist of NOK 603 million related to reimbursable licence expenses and research-, The Group’s share of operational lease liabilities and other long-term liabilities pertaining to its own- development- and production expenses in Det norske oljeselskap (2013: NOK 406 million*) and NOK 200 million related to ership interests in oil and gas fields is shown in the table above. capitalised construction expenses in Aker Philadelphia Shipyard (2013: 185 million*). Other agreements Beskjæres 76 mm fra venstre før trykk >> Other operating expenses consist of the following: Akers other operational lease costs and commitments relate mainly to rent of office facilities, IT servi- Amounts in NOK million 2014 2013 ces and ships, the majority of these relates to agreements in Aker Solutions with NOK 5 287 million, Akastor with NOK 4 145 million, Kvaerner NOK 444 million and Det norske oljeselskap 390 million. Rent and leasing expenses 1 969 1 808 The contracts relate to leasing of buildings and locations around the world, typical lease periods are 12-15 years with options for renewal at market value. The lease contracts regarding IT services, vehi- Exploration expenses oil and gas 1 057 1 637 cles and equipment have an average lease term of 3-5 years. Production cost oil and gas 421 250 Other operating expenses 8 066 5 230 Sublease Total 11 512 8 925 Estimated minimum rent receivable under subletting agreements related non-terminable operating leases at December 31 2014 is NOK 2 388 million. Most of expected minimum rent relates to vessels Operating leases in Akastor and subleases regarding buildings, premises and equipment. Lease and sublease payments recognised in the income statement Exploration expenses oil and gas
Minimum Amounts in NOK million 2014 2013 lease Sublease Amounts in NOK million payments income 2014 2013 Seismic, well data, field studies and other exploration expenses 167 313 Recharged rig costs (74) (119) Buildings and vessel 1 917 - 1 917 912 Share of exploration expenses from licence participation, incl. seismic 188 151 Machinery and equipment 42 - 42 300 Expensing of exploration wells capitalised in previous years 269 553 Other agreements 10 - 10 597 Expensing of exploration wells capitalised this year 395 597 Leasing agreements as part of operating expenses 1 969 - 1 969 1 808 Share of payroll and other operating expenses classified as exploration 95 122 Research and development costs related to exploration activities 17 20 Part of production and exploration expenses 313 (67) 246 260 Total 1 057 1 637 Total 2 282 (67) 2 215 2 068 Production cost oil and gas Irrevocable operating leases where the Group is the lessee, are payable as follows: Production costs of NOK 421 million in 2014 (250 million in 2013) include costs associated with leas- ing, operation and maintenance of subsea installations, modifications, production vessels, platforms/
FPSO, well intervention and workover activities, environmental tax, etc. Production cost also includes Part of oil Part of oil provision for future losses. The share of payroll and administration expenses that can be ascribed to production Other production Other operations is reclassified and shown as a production cost. and explora- agree- and explora- agree- Amounts in NOK million tion expenses ments 2014 tion expenses ments 2013
Less than one year 1 040 637 1 677 804 1 288 2 092 Between one and five years 2 162 4 350 6 513 662 3 736 4 397 More than five years - 5 567 5 567 865 3 783 4 647 Total 3 202 10 555 13 757 2 331 8 806 11 137
70 Aker ASA annual report 2014 Annual accounts – Aker group
Other operating expenses by company Note 12 Impairment changes and non-recurring items Amounts in NOK million 2014 2013 Impairment changes and non-recurring items include write-downs of goodwill, impairment losses and Aker Solutions 4 926 2 831 reversal of impairment losses on property, plant and equipment, major losses on the sale of operating Akastor 1 068 1 065 assets, restructuring costs and other material matters not expected to be of a recurring nature.
Det norske oljeselskap 230 74 Kvaerner 542 422 Impairment changes and non-recurring items are as follows: Ocean Yield 53 45 Amounts in NOK million 2014 2013 Aker BioMarine 523 565 Havfisk 281 225 Impairment losses on intangible assets (Note 16) (3 079) (222) Other companies and eliminations 443 4 Tax on write-downs of technical goodwill (Note 14) 42 90 Total 8 066 5 230 Impairment losses on property, plant and equipment (Note 15) (1 091) (1 086) Reversal of impairment losses on property, plant and equipment (Note 15) 38 - Other operating expenses include, among others operation and maintenance of properties, office Total (4 091) (1 218) Beskjæres 76 mm fra venstre før trykk >> equipment, legal and other consultancy, travel expenses, bunkers and other costs related to the fleet. Costs related to leases are not included in other operating expenses but shown separately above. Impairment losses on intangible assets of NOK 3 079 million in 2014 are mainly attributable Det nor- ske oljeselskap with NOK 2 644 million and Kvaerner of NOK 266 million. The impairment in Det nor- Fees to auditors of the Aker group are included in other operating expenses. ske oljeselskap relates to technical goodwill, the main reason for the impairment charge is the They are distributed as follows: decreased oil price assumptions from the acquisition date to 31 December 2014 The impairment loss in Kvaerner relate to goodwill concerning the Contractors International business area. Ordinary Consulting Impairment loss on property, plant and equipment of NOK 1 091 million in 2014 are mainly attribut- Amounts in NOK million auditing services Total 2014 2013 able to Akastor and is related to the vessel AKOFS Seafarer (previously called “Skandi Aker”). The impairment of AKOFS Seafarer is based on revised business case after Total Angola cancelled its two- year contract in June 2014 as well as generally lower market activity. Aker ASA 2 1 3 4 Impairment losses on property, plant and equipment and intangible assets in 2013 totalling NOK Subsidiaries 50 63 113 56 1 218 million are mainly attributable to Det norske oljeselskap with NOK 666 million and Aker Solutions Total 52 64 116 59 with NOK 382 million. The loss in Det norske oljeselskap relate to four of the producing fields which have been impaired as a result of reduced estimates of recoverable reserves and increased abandon- Fees in 2014 regarding ordinary auditing totalled NOK 51.7 million (NOK 41.0 million in 2013). ment cost estimates. Impairment losses were also recorded for exploration licences and licences that Consulting services of NOK 64.1 million consist of NOK 43.4 million in other assurance services, NOK have been, or are in the process of being, returned. 5.0 million in tax advisory services and NOK 15.7 million in other non-audit services. The impairment in Aker Solutions relates to Category-B rig under construction in accordance with an agreement signed in 2012 between Aker Solutions and Statoil aiming to perform well- intervention and drilling services. Construction of the rig proved to be technological more challenging than antici- pated and the parties agreed to terminate the contract in June 2013.
See also Note 15 Property, plant and equipment and Note 16 Intangible assets Aker ASA annual report 2014 71 Annual accounts – Aker group
Note 13 Financial income and financial expenses Net gains and changes in the fair value of financial assets available for sale in 2013 of NOK 166 million comprised primarily of gains and changes in the fair value of Aker American Shipping shares by 136 million. The net change in fair value of financial assets at fair value through profit and loss of NOK Net financial items recognised in profit and loss: 429 million is mainly related to the total return swap ( TRS ) agreements with the underlying American Amounts in NOK million 2014 2013 Shipping Company and Aker Solutions shares , of NOK 374 million and NOK 54 million, respectively. Other financial income comprised of NOK 13 million related to the expected achievement of mile- Interest income on impaired investments available for sale - 101 stones set in Aker BioMarine’s sales agreement with Lindsay Goldberg in 2010 and a gain on the Interest income on bank deposits and receivables at amortised cost 354 240 demerger of Oslo Asset Management Holding AS of NOK 8 million. Net other financial expenses of NOK -324 million in 2013 refer mainly to a provision at 31 December 2013 for losses by Havfisk related Dividends on available for sale financial assets 52 2 to an interest and currency swap against Glitnir of NOK -158 million, warranties in Ocean Yield of NOK Net gain and change in fair value on available for sale financial assets 165 166 39 million, a loss on the demerger of Molde Football AS of NOK -27 million, net interest expenses pen- Net change in fair value of financial assets at fair value through profit and loss - 429 sion -30 million and various bank charges. Net foreign exchange gain 494 - Other financial income 335 26 Paid interest is split as follows: Total financial income 1 401 964 Amounts in NOK million 2014 2013 Beskjæres 76 mm fra venstre før trykk >> Interest expense on financial liabilities measured at amortised cost (1 875) (1 670) Paid interest recognised in profit and loss (1 610) (1 565) Interest expense on financial liabilities measured at fair value (8) (13) Paid interest capitalised (375) (161) Net foreign exchange loss - (13) Total paid interest (1 985) (1 726) Foreign exchange loss from hedge instruments (566) 259 Net gain from interest rate swaps (197) (71) Received interest is split as follows: Net change in fair value of financial assets at fair value through profit and loss (101) - Net other financial expenses (132) (324) Amounts in NOK million 2014 2013 Total financial expenses (2 879) (1 831) Interest income on bank deposits 218 209 Net financial items (1 478) (867) Interest income on investments 136 132 Hereof added to principal (79) (129) The financial income and expenses above include the following interest Discontinuing operation and other changes - 64 income and expense in respect of assets (liabilities) not recognised at fair value through profit and loss: Total interest received 275 276 Total interest income on financial assets 354 341 Interest added to principal is mainly related to interest converted into American Shipping Company Total interest expense on financial liabilities (1 875) (1 670) bonds.
Net gains and changes in the fair value of financial assets available for sale in 2014 of NOK 165 million comprised primarily of value change reclassified from Other comprehensive income related to AAM Absolute Return Fund and a bond investment in American Shipping Company totally NOK 262 million, in addition a write-down of a share investment in Ezra Holding Ltd with NOK 97 million. Other financial income comprised among other of a gain on sale of a subsidiary in Fornebuporten of NOK 148 million which included a sale of three office buildings at Aberdeen International Business Park, and a reversal of provision for loss by Havfisk related to an interest and currency swap against Glitnir of NOK 158 million. The net change in fair value of financial assets at fair value through profit and loss of NOK -101 million is mainly related to the total return swap ( TRS ) agreements with the underlying American Shipping Company and Aker Solutions shares , of NOK -71 million and NOK -25 million, respectively. Net other financial expenses of NOK -132 million in 2014 refer mainly to expensed capitalised bond fees related to a refinancing in Ocean Yield of NOK -85 million, net interest expenses pension -47 mil- lion and various bank charges. 72 Aker ASA annual report 2014 Annual accounts – Aker group
Note 14 Tax Reconciliation of effective tax rate Amounts in NOK million 2014 2013 The Aker’s net tax expenses amounts to NOK 187 million and is attributable to change in deferred tax NOK – 3 371 million and current tax income NOK 3 184 million of which expected refunds from the Profit before tax (1 442) (347) Norwegian state linked to the tax value of exploration expenses incurred in Det norske oljeselskap amounts to NOK 3 665 million. Nominal tax rate in Norway 27% (28% in 2013) 389 96 As and oil production company Det norske oljeselskap is subject to specific provisions of the 51% surrate in Norway under petroleum tax legislation (50% in 2013) 589 1 273 Petroleum Taxation Act. Revenues from offshore activities are liable to ordinary corporation tax (27 per Tax rate differences in Norway and abroad 36 40 cent) and surtax (51 per cent). The company may require refunds from the state corresponding to the Permanent differences (1 478) 109 tax value of its incurred exploration costs, provided that these do not exceed the taxable loss allo- cated to the offshore activities. Utilisation of previously unrecognised tax losses 195 305 Tax losses for which no deferred income tax asset was recognised (363) (264) (Tax expense)/tax income Tax effect of associated companies 49 151 Tax effect of uplift oil (free income) 325 165
Deferred tax on current year's impairment booked directly to balance sheet (42) (90) Amounts in NOK million 2014 2013 Beskjæres 76 mm fra venstre før trykk >> Other differences 114 (172) Total income tax expenses in income statement (187) 1 613 Recognised in income statement: This year net tax receivable (+) and payable (-) (480) (565) Tax receivable under Norwegian petroleum tax legislation 3 665 1 413 Petroleum Tax in Norway - 51 per cent surtax Adjustment prior year - 41 In 2014, the 51 per cent net surtax income on exploration expenses and revenues from offshore acti- Total current tax expense 3 184 888 vities incurred by Det norske oljeselskap amounted to NOK 589 million. In 2013, the surtax rate was 50 per cent. Deferred tax expense: Origination and reversal of temporary differences (3 566) 422 Tax rate differences between Norway and abroad Change in tax rate - 37 Foreign companies with different tax rates than 27 per cent include the company’s businesses in, Utilisation of previously unrecognised tax losses 195 261 among others, North and South America and Asia Total deferred tax expense (3 371) 720 Permanent differences Tax on foreign exchange gains/losses - 4 Permanent differences mainly arrived from impairment of goodwill in Det norske oljeselskap and on Deferred tax expense in income statement (3 371) 724 sale of shares and equity derivatives. Income tax (187) 1 613 Utilisation of previously unrecognised tax losses
Based on the positive development among others in Ocean Yield some of previously unrecognised tax losses were utilised in 2014.
Cost of unrecognised tax losses carried forward Based on an estimate on expected future taxable income, Aker ASA and holding companies and some of the Akers operations cannot justify capitalising the tax-losses carried forward in full.
Tax effect of uplift oil The tax-free allowance is a special income tax allowance applied when calculating the surtax in Det norske oljeselskap. The tax-free income is calculated on basis of investments in pipelines and pro- duction facilities, and can be considered as an additional depreciation in the surtax basis. The allo- wance represents 7.5 per cent in four years, totalling 22 per cent of the investment. The income is recognised in the year it is deductible in corporate tax return and thus affect the current tax in the same way as a permanent difference.
Deferred tax on net impairment losses recognised directly in the balance sheet Upon the sale of a license where Det norske oljeselskap has accounted for deferred tax and goodwill in a business combination, both goodwill and deferred taxes will be included in of gains and losses. When such licenses are impaired as a result of impairment tests, a similar assumption is used and goodwill and deferred tax are assessed together with the corresponding license. Aker ASA annual report 2014 73 Annual accounts – Aker group
Tax recognised in other comprehensive income Amounts in NOK million 2014 2013
Remeasurement of defined benefit liabilities 140 2 Changes in fair value of available for sale financial assets - (18) Changes in fair value of cash flow hedges 455 (96) Total tax expenses other comprehensive income 594 (112)
Deferred tax assets are allocated as follows: Amounts in NOK million 2014 2013
Industrial holdings: Beskjæres 76 mm fra venstre før trykk >> Aker Solutions 380 - Akastor 214 600 Det norske oljeselskap - 630 Kvaerner 123 193 Ocean Yield 85 56 Aker BioMarine - 204 Havfisk - 190
Financial investments: Aker ASA and holding companies 9 12 Other companies 101 197 Total 912 2 082
Deferred tax assets refer to NOK 1 989 million in loss carried forward and NOK – 1 077 million in tem- porary differences. The loss carry forward was reduced by NOK 1 551 million in 2014. The total non-recognised tax assets are NOK 3 558 million at year-end 2014. 74 Aker ASA annual report 2014 Annual accounts – Aker group
Movements in net deferred tax liabilities 2014 are as follows: Property, Oil- and gas plant and exploration Intangible Projects under Abandonment Tax losses Amounts in NOK million equipment expenses assets construction provision carry forward Other Total
At 1 January 2014 (284) (1 501) (2 020) (2 728) 761 3 540 762 (1 471) Exchange rate differences (453) (305) (847) - 366 251 221 (766) Acquisitions and sales of subsidiaries (1 528) (196) (6 356) - 1 759 - 290 (6 030) Change in deferred tax directly to balance sheet - 111 - - - - - 111 Deferred tax (charged) / credited to income statement (1 286) (1 257) (329) (262) (60) (1 803) 1 626 (3 371) Deferred tax expenses in other comprehensive income ------594 594 At 31 December 2014 (3 550) (3 147) (9 552) (2 990) 2 827 1 989 3 492 (10 933)
Allocated between deferred assets and liabilities as follows: Beskjæres 76 mm fra venstre før trykk >> Deferred assets (119) - (201) (1 445) - 1 989 689 912 Deferred liabilities (3 431) (3 147) (9 351) (1 545) 2 827 - 2 804 (11 845)
Movements in net deferred tax liabilities 2013 are as follows: Property, Oil- and gas plant and exploration Intangible Projects under Abandonment Tax losses Amounts in NOK million equipment expenses assets construction provision carry forward Other Total
At 1 January 2013 (295) (1 697) (2 127) (1 995) 622 2 086 1 179 (2 227) Exchange rate differences (6) - (8) - - 12 4 1 Acquisitions and sales of subsidiaries (18) - (80) (3) - (53) 35 (119) Change in deferred tax deducted from impairment loss on intangible assets (see Note 16) - - 90 - - - - 90 Change in deferred tax directly to balance sheet - 103 (3) - - - - 100 Deferred tax (charged) / credited to income statement (23) 93 94 (796) 139 1 514 (296) 724 Deferred tax expenses in other comprehensive income ------(112) (112) Reclassification to held for sale 58 - 15 66 - (19) (49) 71 At 31 December 2013 (284) (1 501) (2 020) (2 728) 761 3 540 762 (1 471)
Allocated between deferred assets and liabilities as follows: Deferred assets 451 (1 501) (309) (687) 761 3 487 (120) 2 082 Deferred liabilities (735) - (1 711) (2 041) - 53 881 (3 554)
Technical goodwill (part of Intangible assets) Tax payable and income tax receivable The fair value valuation of licenses is based on cash flows after tax. This is due to licenses only being sold Tax payable amounts to NOK 1 877 million, of which NOK 1 401 is attributable to the Det norske olje- in an after tax market based on decisions made by the Norwegian Ministry of Finance pursuant to section selskap. 10 of the Petroleum Taxation Act. The purchaser can therefore not claim a deduction of the consideration The acquisition of Marathon Oil Norge AS was conducted with tax continuity. The exploration tax refund with tax effect through depreciations. In accordance IAS sections 12.15 and 12.9, a provision is made for previously recognised in Det norske is deducted against the tax payable balance acquired from Marathon deferred tax corresponding to the difference between the acquisition cost and the transferred tax base Oil Norge AS. depreciation. The offsetting entry to this deferred tax is goodwill. Hence, goodwill arises as a technical Tax receivable amount to NOK 185 million. The 2014 figures are based on preliminary estimates of non- effect of deferred tax (technical goodwill). taxable income, non-tax deductible items and temporary differences between the financial accounts and the tax accounts. The final result will be calculated based on the tax return, and may differ from the esti- mates above. Aker ASA annual report 2014 75 Annual accounts – Aker group
Note 15 Property, Plant and Equipment
Movements in property, plant and equipment for 2014 are shown below: Oil fields Oil production Ships and Machinery, Land and Assets under under plants, Amounts in NOK million airplanes vehicles buildings construction development including wells Total
Acquisition cost balance at 1 January 2014 17 637 8 735 5 475 2 649 1 647 4 038 40 180 Acquisitions through business combinations - 29 - - 2 860 7 973 10 863 Other acquisitions1 2 704 641 279 2 469 3 690 (84) 9 698 Sales of operations - - (384) (1 009) - - (1 393) Other disposals (375) (195) (128) 5 - - (694) Reclassification from intangible assets and from assets under construction (84) 630 236 (782) 561 (2) 559 Effects of movements in foreign exchange rates 2 993 798 381 171 1 057 1 376 6 776 Beskjæres 76 mm fra venstre før trykk >> Cost balance at 31 December 2014 22 874 10 637 5 860 3 503 9 815 13 301 65 989
Accumulated depreciation and impairment losses at 1 January 2014 (4 557) (4 531) (1 670) (459) - (3 090) (14 306) Depreciation charge for the year (1 062) (1 095) (96) (2) - (937) (3 192) Impairments (1 024) (61) (16) (46) - 56 (1 091) Reversals of impairments 38 - - - - - 38 Reclassifications 92 64 (156) - - - - Other disposals 273 75 130 1 - - 480 Effects of movements in foreign exchange rates (992) (380) (145) (106) - (393) (2 016) Accumulated depreciation and impairment losses at 31 December 2014 (7 231) (5 928) (1 953) (612) - (4 364) (20 088) Carrying amount at 31 December 2014 15 644 4 708 3 907 2 891 9 815 8 937 45 901 Payments beyond this year acquisitions cost ------80 Book value of leasing agreements recorded in the balance sheet - 25 152 - - - 176 1*) Capitalised interest in 2014 amounted to NOK 375 million.
Specification by company at 31 December 2014: Oil fields Oil production Ships and Machinery, Land and Assets under under plants, Amounts in NOK million airplanes vehicles buildings construction development including wells Total
Industrial holdings: Aker Solutions - 1 949 906 748 - - 3 603 Akastor 3 542 1 669 766 492 - - 6 469 Det norske oljeselskap - 138 - - 9 815 8 937 18 890 Kvaerner - 386 350 - - - 736 Ocean Yield 9 683 10 - - - - 9 692 Aker BioMarine 574 237 - 11 - - 822 Havfisk 1 112 2 104 - - - 1 218 Eliminations 151 157 485 61 - - 854 Total industrial holdings 15 063 4 547 2 611 1 312 9 815 8 937 42 285
Financial investments: Aker ASA and holding companies 167 12 14 - - - 193 Other operations and eliminations 414 149 1 282 1 579 - - 3 423 Carrying amount at 31 December 2014 15 644 4 708 3 907 2 891 9 815 8 937 45 901 76 Aker ASA annual report 2014 Annual accounts – Aker group
Introduction Assets under construction Carrying amount at the end of 2014 amount to NOK 45 901 million, an increase of NOK 20 027 million Sales of operation include NOK 1 009 million in building in Aberdeen, which was sold in the 4th quarter during the year, hereof NOK 10 858 million related to Det norske oljeselskap’s acquisition of Marathon of 2014. Of remaining assets under construction NOK 1 579 million relates to Fornebuporten, the rest Oil Norge AS. Akastor and Aker Solutions. Ships and airplane totalling NOK 15 644 million at the end of 2014 can mainly be attributed to ship owned by companies within the business areas Ocean Yield, Akastor and Havfisk with NOK 9 683 mil- Field development lion, NOK 3 546 million and NOK 1 112 million respectively. The changes of NOK 2 564 million during the Field development in Det norske oljeselskap includes NOK 2 860 million from the acquisition of year are mainly attributable to investments in ships in Ocean Yield and Havfisk, partly offset by net of Marathon Oil Norge AS. This year’s investments constitute NOK 3 690 million. depreciation, amortisation and foreign exchange fluctuations. Machinery and transportation totalling NOK 4 708 million comprises NOK 1 951 million in Aker Solu- Production facilities, including wells tions and NOK 1 666 million in Akastor. In addition it includes marine equipment in Aker BioMarine and Increase in production plant in Det norske oljeselskap is mainly related to NOK 7 973 million from acqui- Havfisk, equipment in Det norske oljeselskap and the Converto Capital Funds subsidiaries Aker Phila- sition of Marathon Oil Norge AS. delphia Shipyard and Norway Seafoods. Change from 2013 constitute of NOK 504 million. Buildings and land totalling NOK 3 907 million is attributable to buildings and land at Fornebu with Effect of exchange rate changes on property, plant and equipment NOK 922 million as well as buildings in Aker Solutions of NOK 905 million, Akastor NOK 766 million, Effects from exchange rate fluctuations represent NOK 4 760 million and are mainly attributable to Kvaerner NOK 350 million and otherwise Aker Philadelphia Shipyard and fish processing facilities in Nor- movements in the USD/NOK in Ocean Yield, Det norske oljeselskap, Akastor, Aker Solutions, Aker Bio- Beskjæres 76 mm fra venstre før trykk >> way. Investment in 2014 of NOK 279 million includes investment in land at Fornebuporten. Marine and Aker Philadelphia Shipyard. Based on Balance sheet values at 31 December 2014, a Det norske oljeselskap has fields under development and production plants, including wells, of NOK decrease of USD rate of 10 per cent will reduce assets by about NOK 3.4 billion. 9 815 million and NOK 8 937 million, respectively. Of the increase in 2014 totalling NOK 16 157 million, NOK 10 858 million is attributable to acquisition of Marathon Oil Norge AS, NOK 3 606 million in new investments, NOK 559 million from reclassification of intangible assets and in addition net from depreci- ation, provisions for impairment losses and exchange rate changes. Aker Solutions has at the end of 2014 entered into contracts on investments in real estate and plants of NOK 540 million in total; this is mainly related to new subsea facility in Brazil. Akastor has signed con- tracts for NOK 163 million, mainly related to a plant under construction in Brazil. This year’s depreciation of NOK 3 192 million is in total attributable to continuing operations. Depre- ciation in 2013 of NOK 2 718 million kroner are allocated between the continuing operations by NOK 2 461 million and discontinued operations with NOK 257 million kroner.
Ships and planes Investments in vessels in 2014 of NOK 2 704 million mainly relate to Ocean Yield of NOK 2 301 million and NOK 279 million in Havfisk. Ocean Yield investments comprise of ships for the oil service industry of USD 150 million and USD 178 million in car carriers while Havfisk’s investments relates to renewal of the trawler fleet. Impairment losses in 2014 of NOK 1 024 million relates to the vessels Aker Wayfarer with NOK 267 million, Atlantic Navigator with NOK 59 million and in addition NOK 698 million in Akastor for essentially the vessel AKOFS Seafarer. Depreciation is NOK 1 062 million. The hulls are depreciated over a period of between 20 and 25 years, while machinery and equipment on board is depreciated over a period of between 5 and 10 years.
Machinery, vehicles Investment in machinery and transport equipment in 2014 of NOK 641 million is mainly attributable to investments made in the subsidiaries Akastor and Aker Solutions. Depreciation is NOK 1 095 million, also related mainly to Akastor and Aker Solutions.
Buildings and land Investment in buildings and land in 2014 totalling NOK 279 million relates to NOK 197 million in build- ings in Akastor, Aker Solutions and Kvaerner and NOK 82 million in investment in land at Fornebupor- ten. Disposal totalling NOK 512 million is mainly attributable to NOK 384 million from the sale of opera- tions in Akastor and NOK 93 million from the sale of property in Aker Solutions. Land is not depreciated. Buildings are depreciated over a period between 20 to 50 years. Aker ASA annual report 2014 77 Annual accounts – Aker group
Movements in property, plant and equipment for 2013 are shown below: Oil fields Oil production Rigs, ships Machinery, Land and Assets under under plants, Amounts in NOK million and airplanes vehicles buildings construction development including wells Total
Cost balance at 1 January 2013 14 139 9 250 5 839 1 971 3 164 871 35 234 Acquisitions through business combination - 80 13 283 - - 376 Other acquisitions1 2 598 1 219 454 1 801 1 358 279 7 709 Sales of operations - (16) (255) (53) - - (325) Other disposals (3) (406) (793) (14) - - (1 216) Reclassification from intangible assets and from work in process (see Note 16) 187 948 214 (1 388) (2 875) 2 888 (26) Effects of movements in foreign exchange rates 715 400 97 91 - - 1 305 Reclassified to Assets Held for Sale - (2 741) (94) (43) - - (2 878) Cost balance at 31 December 2013 17 637 8 735 5 475 2 649 1 647 4 038 40 180 Beskjæres 76 mm fra venstre før trykk >> Accumulated depreciation and impairment losses at 1 January 2013 (3 226) (5 074) (1 579) (96) (1 800) (294) (12 067) Depreciation charge of the year (1 046) (1 049) (190) (1) - (432) (2 718) Impairments (69) (4) (78) (370) - (565) (1 086) Sales / disposals of operations - 15 92 32 - - 139 Other disposals 2 283 108 - - - 393 Reclassifications from work in process (3) 77 - 1 1 800 (1 800) 74 Effects of movements in foreign exchange rates (215) (195) (49) (25) - - (484) Reclassified to Assets Held for Sale - 1 416 26 - - - 1 442 Accumulated depreciation and impairment losses at 31 December 2013 (4 557) (4 531) (1 670) (459) - (3 090) (14 306) Carrying amount at 31 December 2013 13 080 4 204 3 806 2 190 1 647 948 25 874
1*) Capitalised interest in 2013 amounted to NOK 161 million
Specification by company at 31 December 2013: Oil fields Oil production Rigs, ships Machinery, Land and Assets under under plants, Amounts in NOK million and airplanes vehicles buildings construction development including wells Total
Industrial holdings: Det norske oljeselskap - 62 - - 1 647 948 2 657 Ocean Yield 7 765 7 - - - - 7 772 Aker BioMarine 482 244 - 10 - - 736 Havfisk 965 2 133 - - - 1 100 Aker Solutions 3 316 3 360 2 179 960 - - 9 815 Kvaerner - 398 312 4 - - 713 Total industrial holdings 12 528 4 073 2 624 974 1 647 948 22 793
Financial investments: Converto Capital Fund 299 163 294 14 - - 770 Aker ASA and holding companies 139 11 14 - - - 163 Other operations and eliminations 114 (42) 874 1 203 - - 2 149 Carrying amount at 31 December 2013 13 080 4 204 3 806 2 190 1 647 948 25 874 78 Aker ASA annual report 2014 Annual accounts – Aker group
Note 16 Intangible assets
Movements in intangible assets in 2014 are shown below: Capitalised oil- and gas Capitalised Oil- and gas exploration development Fishing Amounts in NOK million licenses Goodwill expenses costs licenses Other Total
Balance at 1 January 2014 2 273 9 827 2 243 1 724 539 682 17 289 Acquisitions through business combinations 3 414 9 832 251 - - - 13 497 Other acquisitions 412 - 964 839 - 23 2 238 Sales / disposals of subsidiaries and operations - - - - - 43 43 Other disposals - - (134) - - - (134) Expensed dry wells - - (624) - - - (624) Reclassifications to property, plant and equipment (see Note 15) - - (581) (76) - 97 (559) Beskjæres 76 mm fra venstre før trykk >> Amortisation for the year (130) - - (175) (18) (79) (403) Impairment losses recognised in income statement (55) (2 873) - (151) - - (3 079) Effects of movements in foreign exchange rates 508 1 736 277 162 (10) (91) 2 582 Balance at 31 December 2014 6 422 18 522 2 395 2 323 511 676 30 850
Movements in intangible assets in 2013 are shown below: Capitalised oil- and gas Capitalised Oil- and gas exploration development Fishing Amounts in NOK million licenses Goodwill expenses costs licenses Other Total
Cost balance at 1 January 2013 2 293 9 641 2 326 1 060 557 377 16 254 Acquisitions through business combinations - 724 - - - 386 1 110 Capitalised development costs - - - 804 - - 804 Other acquisitions 122 - 1 286 - - 42 1 450 Other disposals - - (219) - - - (219) Expensed dry wells - (89) (1 151) - - - (1 240) Reclassifications to property, plant and equipment (see Note 15) - (11) (13) - - (1) (24) Reclassifications to Assets held for sale - (717) - (54) - (64) (835) Amortisation for the year (17) - - (144) (18) (97) (276) Impairment losses recognised in income statement (125) (74) - (12) - (12) (222) Effects of movements in foreign exchange rates - 353 14 70 - 51 488 Cost balance at 31 December 2013 2 273 9 827 2 243 1 724 539 682 17 289 Aker ASA annual report 2014 79 Annual accounts – Aker group
Introduction Oil- and gas licenses and technical goodwill Oil and gas licences totalling NOK 6 442 million at the end of 2014 are attributable to Det norske olje- Allocation of oil- and gas licenses and technical goodwill: selskap. NOK 3 414 million of this total are attributable to the acquisition of Marathon Oil Norge AS. Capitalised exploration costs total NOK 2 395 million. The change in capitalised exploration costs of Oil- and gas Technical NOK 152 million in 2014 is primarily attributable to the acquisition of Marathon Oil Norway AS (NOK 251 Amounts in NOK million licenses goodwill Total million), investments (NOK 964 million), charges resulting from the drilling of dry wells (NOK 624 million) and reclassification to Fields under development. Goodwill amounted to NOK 18 522 million at the end of 2014. Of this sum, NOK 10 066 million is Carrying amounts in Det norske oljeselskap 4 790 8 793 13 583 attributable to Det norske oljeselskap, including NOK 9 832 million relating to the acquisition of Mara- Purchase of Det norske oljeselskap in 2011 1 632 1 273 2 905 thon Oil Norway AS. The latter was counteracted somewhat by net losses from impairments and cur- Total 6 422 10 066 16 488 rency effects. Other goodwill as at 31 December 2014 relates to Aker Solutions (NOK 4 556 million), Akastor (NOK The valuation units used when assessing impairments are determined by the lowest level at which it is 1 838 million), Kvaerner (NOK 1 126 million), Aker BioMarine (NOK 483 million), Ocean Yield (Aker Float- possible to identify cash flows independent of cash flows from other groups of fixed assets. In the case ing Production) (NOK 284 million) and Aker’s fisheries business (NOK 168 million). of oil and gas assets, this is done at field or licence level. Goodwill linked to Aker Solutions, Akastor and Kvaerner derives from various acquisitions and other Impairment testing is conducted when market prices for oil and gas fall significantly. Two types of transactions over time. impairment test have been used: Beskjæres 76 mm fra venstre før trykk >> Goodwill for Aker Floating Production stems from the acquisition of Aker Contracting FP ASA in 2006, which had developed the Aker S.M.A.R.T. for the construction of a generic, cost-effective FPSO. ■■ impairment test on fixed assets and related intangible assets, excluding goodwill The Aker BioMarine goodwill arose in connection with Aker’s purchase of Natural and the establishment ■■ impairment test on goodwill. of the Aker BioMarine group in December 2006. The entire goodwill has been allocated to the krill busi- ness. Impairment is recognised in the profit and loss account when the balance-sheet value of an asset or Development costs of NOK 2 323 million primarily relate to Aker Solutions (NOK 1 579 million), cash-generating unit exceeds the recoverable amount. The recoverable amount is the higher of the Akastor (NOK 690 million) and Kvaerner (NOK 44 million). asset’s net sale value and value in use. The impairment tests conducted in 2014 were based on value in Fishing licences are attributable to Havfisk (NOK 801 million), less deferred Aker income of NOK 290 use. When assessing value in use, the expected future cash flow is discounted to prevent value using a million connected to the establishment of Havfisk in 2006. At the end of 2014, Havfisk owned 29.6 cod post-tax discount rate which reflects current market assessments of the time value and specific risk and haddock trawler licences, 31.9 saithe trawler licences, eight shrimp trawler licences and three silver associated with the asset. smelt licences in Norway. The licences, expect for basic quotas are depreciated over 20–25 years, In the case of producing licences and licences in a development phase, the recoverable amount is depending on the type of licence. Basic quotas are unlimited in time and are not depreciated. calculated by discounting future post-tax cash flows. Future cash flows are determined by comparing The balance-sheet value of other intangible assets as at the end of 2014 (NOK 676 million) primarily the expected production profile to anticipated actual and probable remaining reserves. relates to Akastor (NOK 410 million) and Aker Solutions (NOK 208 million). The following assumptions have been made: The amortisation and impairment charge are recognised in the following lines in the income statement: ■■ nominal post-tax discount rate of 9.1 per cent, based on WACC (2013: 10.7 per cent) ■■ anticipated long-term inflation of 2.5 per cent Amounts in NOK million 2014 2013 ■■ oil prices based on forward prices for the period 2015–2019. From 2020, the price expectation is based on management’s long-term price assumptions. Amortisation (403) (276) Amortisations reclassified to discontinued operations - 15 The following nominal oil price expectations have been applied, based on forward graphs: Depreciation and amortisation continuing operations (403) (261) Non-recurring items (3 079) (223) Year Average in USD Total (3 482) (483) 2015 61.73 Amortisation in ongoing operations of NOK 403 million in 2014 (NOK 261 million in 2013), is attributable 2016 68.85 to Akastor (NOK 235 million), Det norske (NOK 131 million), Aker Solutions (NOK 98 million), Havfisk 2017 72.84 (NOK 28 million) and Aker BioMarine (NOK 13 million). 2018 75.49 Impairments of intangible assets totalling NOK 3 079 million in 2014 are primarily attributable to the 2019 77.51 impairment of technical goodwill by Det norske oljeselskap (NOK 2 524 million), other goodwill (NOK 349 million), oil licences held by Det norske oljeselskap (NOK 55 million) and expensed development costs 2020 (in real terms) 85.00 which did not qualify for capitalisation (NOK 151 million). The main reason for the impairment of technical goodwill by Det norske was reduced price expecta- Since Det norske oljeselskap changed its operating currency from NOK to USD as of 15 October 2014, tions between the Marathon Oil Norge AS acquisition date and 31 December 2014. In addition, deferred the company is not exposed to currency risk from cash flows in USD. On the other hand, there are cash tax calculated on the assets purchased through the acquisition was reduced in the fourth quarter due to flows in NOK, including a proportion of future capital expenditure and operating costs and all tax pay- the depreciation of these assets; see a more detailed account below. ments to the Norwegian State. As in the case of future oil prices, forward graphs were used for 80 Aker ASA annual report 2014 Annual accounts – Aker group
exchange rates from 2015 to the end of 2019, and thereafter the company’s long-term expectations for Capitalised exploration costs the period 2020 onwards. Accordingly, the following exchange rates were used in the 2014 impairment Capitalised exploration costs total NOK 2 395 million, whereof NOK 2 161 million relates to Det norske tests: oljeselskap and NOK 234 million to Setanta. NOK 964 million of the exploration cost in Det norske oljeselskap were capitalised in 2014 and NOK 251 million relate to the acquisition of Marathon Oil Norge AS. Year NOK/USD In the case of exploration costs recognised in the balance sheet, each well is tested for impairment. Det norske oljeselskap employs the “successful efforts” method in its accounting treatment of explora- 2015 7.48 tion and development costs. All exploration costs (including seismic procurements, seismic studies, 2016 7.47 investment of own time), except for costs linked to the acquisition of licences and the drilling of explora- 2017 7.38 tory wells, are charged as expenses on an ongoing basis. Costs linked to the drilling of exploratory wells 2018 7.31 are temporarily recognised in the balance sheet pending an evaluation of potential oil and gas reserve 2019 7.22 discoveries. If no reserves are found, or if the discoveries are deemed technically or commercially unvi- 2020 7.00 able, the drilling costs linked to the exploratory wells are charged as expenses. Such charges may be recorded in the balance sheet for more than one year. The main criteria are that there are either fixed Impairment tests were carried out for assets other than goodwill before the annual goodwill impairment plans for future drilling under the licence or that a development decision is expected in the near future. Based on the completed assessments, NOK 0.6 billion was charged as an expense in 2014, while Beskjæres 76 mm fra venstre før trykk >> test. When one of these assets is deemed to have suffered impairment, the asset is impaired before the goodwill impairment test is conducted. The book value of the assets is the sum total of fixed assets and NOK 0.6 billion was reclassified to Fields under development. intangible assets on the valuation date. In the fourth quarter, the removal estimates for several fields were reduced. Some of these fields had previously been impaired to zero, the reduction in the removal Other goodwill costs thus had an immediate impact on the profit and loss account in the form of reversed impairment. Allocation of other goodwill: The effect of reduced removal estimates was counteracted by reduced prices and other changes in assumptions made in previous impairment tests. The book value of some fields also includes an intan- Amounts in NOK million 2014 2013 gible asset (licence right) from previous business combinations. The deferred tax effect linked to these assets has been netted against the impairment, and is not presented as a tax expense in the profit and loss account. Net impairment of oil licences amounted to NOK 55 million in 2014. Aker Solutions 4 556 - In 2014, pre-impairment goodwill acquired through business combinations has been allocated as Akastor 1 838 6 059 follows for impairment purposes: Kvaerner 1 126 1 392 Ocean Yield 284 233 Aker BioMarine 483 339 Goodwill NOK million Other 168 210
Technical goodwill from the acquisition of Marathon Oil Norge AS 7 916 Total 8 455 8 233
Ordinary goodwill from the acquisition of Marathon Oil Norge AS 1 916 Technical goodwill from previous business combinations 360 Determination of recoverable amounts
The group tests other goodwill for impairment annually, or more frequently if there is indications that impairment has occurred. The test is carried out at year-end. Impairment losses are recognised in the Technical goodwill has been allocated to each individual cash-generating unit (CGU) as a basis for profit and loss account if the calculated recoverable amount, taking sensitivity analyses into account, is impairment tests. All fields tied into the Alvheim FPSO have been treated as part of the same CGU lower than the carrying value of the asset or the cash-generating unit. (Alvheim CGU), meaning that all producing fields owned by the former Marathon Oil Norge AS have Goodwill related to the companies Aker Solutions, Akastor and Kvaerner stems from a number of been included in a CGU. Ordinary goodwill from the acquisition has been allocated to a group of CGUs historical transactions. The group has been reorganised several times, including through mergers and encompassing both fields acquired from Marathon Oil Norge AS and existing Det norske fields, since demergers of various companies, and as a result it is impossible to identify individual units pre-dating these primarily relate to tax and workforce synergies. Technical goodwill from previous business combi- the acquisitions for the purpose of allocating goodwill to individual companies. As a result, the business nations has primarily been allocated to Johan Sverdrup and Ivar Aasen. areas have been identified as the smallest identifiable cash-generating unit for this purpose. The total recoverable amount of ordinary goodwill exceeds the book value by a substantial margin, The goodwill of Ocean Yield’s subsidiary Aker Floating Productions relates to the FPSO contract for and ordinary goodwill has therefore not been impaired. Dhirubhai-1. Aker BioMarine’s goodwill has been allocated to the krill business. Miscellaneous goodwill As regards technical goodwill, an impairment charge of NOK 2.5 billion (USD 341 million) has been of NOK 168 million is attributable to fishing licences in Aker prior to the establishment of Havfisk. made. The primary reason for this is the reduced oil price expectations applicable from the takeover The recoverable amounts for the individual companies have been found by calculating value in use. date to 31 December 2014. Due to depreciation charges, deferred tax on the assets recognised in con- The calculations are based on future cash flows based on budgets and strategic objectives. The group nection with the acquisition was also reduced in the fourth quarter. Deferred tax (as of the takeover strives for consistency over time in the assumptions applied when calculating losses due to impairment. date), which has formed the basis for technical goodwill, reduces the net pre-impairment balance-sheet Where changes to such assumptions have been necessary, the reason for the changes is explained. value. When deferred tax from the original recognition is reduced, more goodwill becomes subject to The discount rate is estimated on the basis of a weighted average of the required rate of return on impairment. Going forward, the depreciation of assets from the purchase price allocation will reduce the equity and the expected cost of debt. The cost of debt is based on a risk-free interest rate in the currency deferred tax liability. in which the loan is denominated, plus a mark-up reflecting the long-term interest margin. The discount rate is set for each cash-generating unit, and may thus vary between group companies. Accordingly, the Aker ASA annual report 2014 81 Annual accounts – Aker group
utilised weighted required rate of return is influenced by differences in the cost of debt linked to differing AKOFS Offshore interest margins and risk-free interest rates resulting from the use of the 10-year Norwegian government In the second quarter 2014, an impairment loss was recognized in Akastor. The impairment is a result of bond rate rather than the 10-year US treasury bond rate, as well as difference in equity ratios. the revised business case for AKOFS Seafarer following the cancellation by Total in Angola of a two- year contract as well as the market outlook in general for the two vessels AKOFS Seafarer and Aker Aker Solutions Wayfarer. The impairment is to a large extent eliminated on Aker group level due to different book val- Carrying amount of goodwill totalled NOK 4 556 million as at 31 December 2014. No impairment losses ues in the Aker group, resulting in a net impairment of NOK 19 million in the Aker group. were recognised in 2014 or 2013. Following the impairment loss recognised in the second quarter 2014, the recoverable amount was Impairment of goodwill is tested annually in the fourth quarter (once the budgeting process has been equal to the carrying amount. Therefore, any adverse movement in a key assumption would lead to fur- completed) or if there are indicators of impairment. The following assumptions have been applied: ther impairment. The goodwill has been re-tested for impairment as of 31 December 2014 showing that the estimated recoverable amount exceeds its carrying amount by approximately NOK 380 million. ■■ Five-year cash flow as calculated in the 2014 budget and strategy process has been applied as the The values assigned to key assumptions represent management’s assessments of future trends in future cash flow estimate. Although oil prices were at USD 70–80 per barrel when the budget was the business and are based on data from both external and internal sources. The cash flow projections finalised, and prices have subsequently fallen substantially, the budget assumptions remain consist- reflect vessel-specific rates as reflected in charter-agreements and, for periods when the vessels are ent with management’s long-term expectations. operating in the spot market, rates achieved in most recent charter agreements. ■■ The WACC pre-tax used is10.5 per cent (8.6 per cent post-tax) for Field Design, 9.2 per cent (7.8 The value-in-use analysis for AKOFS Seafarer has been made with different probability weighted per cent post-tax) for Subsea and 10.6 per cent (8.6 per cent post-tax). The rates differ due to the scenarios covering the variation in day rates and utilisation. Management has identified that reasonable Beskjæres 76 mm fra venstre før trykk >> use of different betas in three industry segments. possible changes in WACC as well as utilisation and day rates related to AKOFS Seafarer vessel could ■■ A growth rate of 2.5 per cent has been used to calculate terminal value after the five-year period. cause the carrying amount to exceed the recoverable amount. The recoverable amount will be lower ■■ Budgeted cash flow has been adjusted for new investments which are not yet under contract, and than book value if WACC is increased by more than 1.4 per cent. Sensitivities in day rates and utilisation the cash flows therefore only reflect organic growth. are both short term (in the spot market) and long term (in the light well intervention market). In addition, a critical assumption is the timing for when the vessel will enter the light well intervention market (LWI). In Several sensitivity analyses have been run in 2014 to address the increased uncertainty in the market. the base case, this is assumed to happen in 2017. The recoverable amounts in the various scenarios exceed book value with a considerable amount for all cash-generating units. Kvaerner Carrying amount of goodwill totalled NOK 1 126 million as at 31 December 2014. Akastor Goodwill was allocated to the five business areas, based on relative fair value estimates of the busi- Carrying amount of goodwill totalled NOK 1 838 million as at 31 December 2014. nesses at the time of demerger from Aker Solutions in 2011. Management monitors goodwill impairment at the portfolio company level (segment) which is also The group performs an impairment test annually to ensure that the recoverable amount related to considered to be the cash-generating units (CGU) due to the level of integration within the CGU’s. recorded goodwill exceeds the related carrying value. Recoverable amounts are based on value in use calculations. For all CGU’s except AKOFS Offshore Recoverable amounts are based on value in use calculations. Management’s approach to determine the calculations use cash flow projections based on the budgets and strategic forecasts for the periods the values that are assigned to each key assumption reflect past experience and are as follows: 2015-2019 and an annual growth of 2 per cent for subsequent periods. For AKOFS Offshore, see below. ■■ Cash flow projections based on budgets and strategic forecasts for the period 2015-2018. These projections include both current on-going projects and assumed project wins. Prior years’ forecasts WACC assumptions used in impairment testing WACC, post-tax WACC, pre-tax have been assessed with regards to actual wins, and main deviation has been related to assumed international project wins. MHWirth 8.2% 9.4% ■■ An annual growth rate of 1.5 per cent for subsequent periods Frontica 6.1% 7.4% ■■ The pre-tax discount rate (weighted average cost of capital) used is calculated based on the post- AKOFS Offshore1 7.1% 7.1% tax rate using an iterative process that gives the same net present value of cash flows pre- and Fjords Processing 8.1% 8.7% post-tax. The post-tax discount rate applied in the testing is 9.9 per cent, and pre-tax discount rates KOP Surface Products 9.3% 10.1% range from 12.5 per cent to 13.0 per cent for the different business areas. Step Oiltools 8.2% 9.2% Based on the impairment test performed in 2014 and accounting judgements following adverse market 1*) Vektet avkastningskrav før skatt og vektet avkastningskrav etter skatt for AKOFS Offshore er likt på grunn av antagelsen om at developments, a goodwill impairment loss of NOK 266 million was recognised in the fourth quarter både AKOFS Seafarer og Skandi Santos vil komme inn under tonnasjeskattreglene i Norge i nærmeste fremtid. related to business area Contractors International.
The risk free interest rate used in the discount rate is based on the 10 year state treasury bond rate of For the business areas Contractors Norway, Jackets and Concrete Solutions the recoverable amount 1.61 per cent at the time of the impairment testing. Optimal debt leverage was estimated for each port- for the recorded goodwill exceeds the related carrying values, and consequently the analysis indicates folio company. that no impairment is required. There is considerable headroom compared to the carrying amount for For all portfolio companies except AKOFS Offshore, the recoverable amounts are higher than the these business areas. carrying amounts and consequently the analysis indicates that no impairment is required. The key For Kvaerner, assumed project awards is an essential element in the impairment testing. The group’s assumptions used in the calculation of recoverable amounts are discount rates, terminal value growth business development organisation is reviewing and considering market prospects and selecting target rates and EBITDA-margins. Reasonable changes to the key assumptions do not give grounds to impair- projects. Assumed project wins reflect past experience, strategic considerations and Kvaerner’s capac- ment for any of these portfolio companies. ity to execute projects. Cash flow estimates are sensitive to changes in volume, margin (projects) and discount rate assump- 82 Aker ASA annual report 2014 Annual accounts – Aker group
tions. No reasonable change in any of these parameters, isolated one at the time, would lead to required Aker BioMarine: additional impairment of goodwill. There is room for the following combination of adverse changes The company’s carrying amount of goodwill of NOK 483 million has been allocated to the krill business before addition impairment is required: Revenue reduction of 50 per cent, EBIT margin reduction of 5 in its entirety, with the exception of the CLA/Tonalin contracts. The recoverable amount in respect of the percentage points and increase in post-tax discount rate of two percentage points. krill business has been estimated based on the value in use. No impairment losses were recognised in 2014 or 2013. Ocean Yield (Aker Floating Production): The calculated value in use is based on discounted future cash flows. The following assumptions Goodwill related to Aker Floating Production amounted to NOK 284 million at the end of 2014. No were applied in 2014: impairment charge was made in 2014 or 2013. The increase from 2013 to 2014 is due to currency effects. Goodwill stems from the acquisition of Aker Contracting FP ASA in 2006, the company which ■■ Anticipated cash flows are based on the board-approved budget and business plan for the krill busi- had developed the Aker S.M.A.R.T. concept for the construction of generic, cost-effective FPSO. ness for the next five-year period. The budget is based on detailed budgets from the different divi- When testing for losses due to the impairment of goodwill attributable to the FPSO contract for sions of the krill business. For subsequent periods, the model is based on estimated terminal growth Dhirubhai-1, the recoverable amount is set as the value in use when discounted contractual cash flows of 2.0 per cent. are estimated. The value is determined by discounting the contractual cash flow. The calculation is ■■ In the budget for the period 2015–2017, first-year revenues are based on contracts concluded for based on future cash flows, budgets and strategic objectives. 2015, as well as a management assessment and external information on the potential for new con- The FPSO has been chartered to Reliance Industries Ltd under a contract due to expire in Septem- tracts. Annual growth in operating revenue in the next two years is based on management’s market ber 2018. The expected cash flow used in the calculations covers the period until the end of the con- assessments based on information available from external sources and long-term market plans. Beskjæres 76 mm fra venstre før trykk >> tract, and is based on Aker Floating Production’s long-term budget. The cash flow represents manage- ■■ The budgeted operating margin is in line with management forecasts based on the scalability of the ment’s best estimates and reflects the organisation’s experience from current operations. business model. A large proportion of the group’s operating costs are independent of production The expected cash flows have been estimated using day rates as defined in the charter and opera- volumes, and higher sales will therefore help boost the operating margin. tion and maintenance contracts. The day rates under the operation and maintenance contract increase ■■ The terminal value in the model for calculating value in use is based on an expected operating mar- by five per cent a year. A bonus based on the estimated FPSO downtime is included. The estimated gin in 2019. Further, the investment level has been set equal to expected depreciation to maintain downtime includes planned stoppages in connection with maintenance in 2016 and 2018, as well as sales and production capacity. estimated downtime with a reduction in the bonus at specific intervals each year. The achieved uptime ■■ When calculating the recoverable amount, a pre-tax discount rate of 10.9 per cent has been used figure for 2014 is 99.46 per cent. (2013: 12.5 per cent). Operating costs have been included, and are estimated to increase by between three and five per ■■ The discount rate has been estimated based on a weighted average of the required rate of return on cent a year. Equipment maintenance has also been included. Other indirect costs are estimated to equity and the expected cost of debt, assuming an anticipated equity proportion of 50 per cent increase by two per cent a year. The 2018 option price of USD 255 million has been used as the terminal (2013: 50 per cent). The required rate of return on equity has been estimated using the capital asset value. The cash flow has been adjusted to reflect estimated tax costs. pricing model (CAPM), and then been adjusted from post-tax to pre-tax. The cost of debt is based Cash flows have been estimated post-tax. Cash flows have therefore been discounted using a post- on a risk-free interest rate (10-year US treasury bonds), plus a mark-up reflecting the long-term tax discount rate of 6.37 per cent, equating to a pre-tax discount rate of 9.79 per cent. The discount rate funding cost and the company’s risk profile. Further, peer group analysis has been used to calculate has been calculated as the weighted average of the required rate of return on equity and expected bor- beta. rowing costs, as well as an anticipated long-term equity proportion of 35 per cent (35 per cent in 2013). ■■ The sensitivity of value in use has been tested using simulations of different combinations of the The capital asset pricing model for a peer group of sector companies has been used when calculating discount rate and terminal value growth. WACC. The cost of debt is based on a five-year USD swap rate with a margin reflecting long-term fund- ing in the current market. No combination of these factors resulted in a value in use lower that the carrying value as at The calculation of value in use incorporates subjective estimates which may fluctuate over time. A 31 December 2014. sensitivity analysis has been undertaken based on two key scenarios deemed by management to be the most obvious and relevant to the company’s risk profile: Miscellaneous goodwill: Miscellaneous goodwill of NOK 169 million relates to Havfisk. The fishing licences have a lower book A) an increase in the required rate of return (WACC) of 50 per cent value in the Aker group accounts than the accounts of Havfisk. This is linked to the establishment of B) an increase in downtime to 5 per cent during the period, i.e. no bonus achievement during the Havfisk in its present form and the fact that added value was primarily allocated to fishing licences at period. the time of establishment. The added value of the fishing licences means that there is no basis for impairment of goodwill related to Havfisk in Aker’s group accounts. Neither scenario A nor scenario B entailed impairment losses. Fishing licences At the end of 2014, Havfisk owned 29.6 cod and haddock trawler licences, 31.9 saithe trawler licences, eight shrimp trawler licences and three silver smelt licences in Norway. The licences are owned through the subsidiaries Nordland Havfiske AS, Finnmark Havfiske AS and Hammerfest Industrifiske AS. No quotas/rights were purchased or sold in 2014. However, a letter of intent was signed in December 2013 concerning the sale of 1.35 cod and haddock quota units and 1.38 quota units saithe. These sales were not completed because the fisheries authorities failed to give their approval before the expiry of the contractual deadline. A license for cod, haddock and saithe is a license giving rights to trawl for white fish north of the 62nd parallel as well as in the North Sea during parts of the year. Correspondingly, shrimp and silver smelt licences grant rights to fish for shrimp and silver smelt. In 2014, each vessel was allowed to hold Aker ASA annual report 2014 83 Annual accounts – Aker group
up to three licence units. On 23 January 2015, it was decided by Royal Decree that the number of licence Other intangible assets units per vessel should be increased from three to four. The Ministry of Trade, Industry and Fisheries deter- Amounts in NOK million 2014 2013 mines the quota size of each license unit annually. In addition, licenses may be transferred between differ- ent vessel groups during the course of the year if any of the vessel groups are unable to fill their share of the quota. This is referred to as “re-assignment”. In 2014, a cod licence conferred the right to catch 1 658 Aker Solutions 1 787 - tonnes of cod, 368 tonnes of haddock and 344 tonnes of saithe north of the 62nd parallel. Compared to Akastor 1 100 2 297 2013, this represents a two per cent increase for cod and cuts of nine and 21 per cent for haddock and Kvaerner 44 9 saithe, respectively. Unlike in previous years, there were no re-assignments during the year. The shrimp and Aker BioMarine 47 78 silver smelt licences are not limited by quantity. Other 21 23 There are delivery commitments tied to the regions to which the licenses relate, i.e. Finnmark and Nord- Total 2 999 2 407 land. This means that buyers in the relevant region have preferential rights to purchase caught fish. Havfisk also has so-called “industry commitments” in Stamsund, Melbu, Hammerfest, Båtsfjord, Honningsvåg and Kjøllefjord. This means that the license is tied to the operation of facilities at the respective sites. However, Capitalised development costs and other intangible assets of Aker Solutions total NOK 1 787 million, Havfisk has leased these facilities to third parties, who are responsible for maintaining operations. the majority of which comprises capitalised costs. All development projects are tested quarterly for In 2014, Havfisk employed a valuation model utilising a method for calculating recoverable amounts impairment. This testing takes into account technical market developments, accrued costs compared based on the discounting of future cash flows. Future cash flows are based on budgets and forecasts for Beskjæres 76 mm fra venstre før trykk >> to budgets and other factors with the potential to reduce book value. In the case of uncompleted pro- vessels that use associated quotas as the smallest identifiable asset. The model incorporates a separate jects, a full test for impairment is undertaken annually by reviewing and updating the original business DCF (discounted cash flow) for each individual unit, i.e. the individual vessel being tested against the book case for each project to ensure that future cash flow is revalued and a new present value calculated. value of quotas and vessels. The quota development included in the model is based on forecasts prepared Impairment losses are recognised when the net present value of future cash flows from a project are by ICES (the International Council for the Exploration of the Sea) and the Institute of Marine Research. lower than the expected booked, capitalised amount at project end. Impairment losses totalling NOK Expected price changes on fished quantities are linked to the expected increase/reduction in quotas for the 61 million were recognised in 2014 – NOK 22 million linked to subsea and NOK 39 million to Field different species of fish. Design. Inflation has been estimated at 2.5 per cent, in line with Norges Bank’s inflation target. The discount rate Capitalised development costs and other intangible assets held by Akastor total NOK 1 100 million. used is 8.19 per cent (pre-tax) and 7.41 per cent (post-tax). The discount rate has been estimated based on NOK 640 million was capitalised in 2014 in connection with development projects, while NOK 112 mil- a weighted average of the required rate of return on equity and the expected cost of debt, assuming an lion was expensed during the course of the year because the capitalisation criterion was not met. Intan- anticipated equity proportion of 45 per cent. The cost of debt is based on a risk-free interest rate (10-year gible assets with a limited expected operating life are depreciated over five to 10 years. government bonds), plus a mark-up reflecting the long-term interest margin. The discount rate has initially Capitalised development costs and other intangible assets of Kvaerner total NOK 44 million, includ- been estimated post-tax and then converted to a pre-tax rate using the iterative method. ing NOK 23 million relating to the development of a model for estimating costs and NOK 12 million There was no indication of impairment during testing in connection with the 2014 annual report and linked to IT projects. NOK 11 million has been expensed in respect of projects that failed to meet the accounts. capitalisation criteria. Intangible assets other than goodwill with a limited operating life are depreciated over their expected operating life, i.e. five to 10 years. Sensitivity analysis of fishing quotas and licenses Aker BioMarine’s licence agreements/production technology amount to NOK 37 million. This total Change in Change in primarily relates to existing licence agreements expiring in four to six years. Capitalised development Amounts in NOK million turnover EBITDA costs total NOK 10 million. The licence agreements are depreciated on a linear basis, and are tested for impairment when impairment is indicated. A 10% change in the price of cod will lead to the following changes 56 35 A 10% change in the quantity of cod will lead to the following changes 56 17 A 10% change in the quantity of cod, saithe and haddock will lead to the following changes 90 27
A 10 per cent reduction in the price of cod will reduce turnover by 10 per cent, while the EBITDA impact in NOK is expected to be somewhat smaller. Short-term changes in price and quotas are not expected to have any material impact on the valuation as the structural quotas is evaluated based on a time horizon up to 25 years. A lasting reduction in price, given unchanged quota volumes, is expected to affect the value of quotas and licenses due to reduced EBITDA- and cash flow contributions. A sustained reduction in quotas without corresponding increase in prices would have a similar effect. 84 Aker ASA annual report 2014 Annual accounts – Aker group
Note 17 Investments in associates and joint ventures Amounts in NOK million 2014 2013
At 1 January 1 321 1 119 The Aker Group has interests in several associates and joint ventures (“JV”), of which the most important Effects of acqusitions (-) or disposals (+) of subsidiaries in stages - 27 ones are: Align AS (38.8 per cent, associate), Philly Tankers AS (53.7 per cent, JV), Trygg Pharma Group Acquisitions / disposals (104) 115 AS (50 per cent, JV), Aker BioMarine Manufacturing LLC (50 per cent, JV), Aker BioMarine Financing LLC Share of losses / profits 342 540 (50 per cent, JV), DOF Deepwater (50 per cent, JV), Kiewit- Kvaerner Contractors (50 per cent, JV), Exchange differences and cash flow hedges 47 (2) Kvaerner Caspian B.V (50 per cent, JV), and Fornebuporten Boligutvikling AS (50 per cent, JV). Dividends received (600) (681) Align AS is a supplier of technical safety and total fire-fighting solutions for the global oil and Other equity movements 495 202 gas market. At 31 December 1 502 1 321
Philly Tankers AS was established in 2014 to provide pure play exposure toward Jones Act shipping market with firm contracts for two eco-design product tanker newbuilds and options for two additional Allocated between associates and joint venture are as follows: vessels. The vessels will be built by Aker Philadelphia Shipyard with deliveries of the initial two vessels in Q4 2016 and Q1 2017 and deliveries of the two option vessels in Q3 2017 and Q4 2017. Beskjæres 76 mm fra venstre før trykk >> Associates 203 304 Joint ventures 1 298 1 017 Trygg Pharma Group AS is a Norwegian late-stage biotechnology company developing marine based omega-3 fatty acids for pharmaceutical applications. The company is jointly owned with Lindsay Gold- At 31 December 1 502 1 321 berg LLC, a US-based private investment firm.
Aker BioMarine Manufacturing LLC is a joint venture with Naturex S.A. for a krilloil production plan under construction in Houston, USA. The financing of the production plan are facilitated through Aker BioMarine Financing LLC, also a joint venture with Naturex S.A.
DOF Deepwater AS operates in the marine sector. The company owns a series of six anchor-handling (AHTS) vessels.
Kiewit-Kvaerner Contractors is a partnership between Peter Kiewit Infrastructure Co and Kvaerner. The partnership was established with the purpose of delivery of the contract awarded by ExxonMobil for the Hebron Project gravity based structure (GBS) offshore Newfoundland, Canada.
Kvaerner Caspian BV is a joint venture between Kvaerner and the Kazakh company KGNT Holding LLP. The joint venture has been targeting offshore EPC and onshore module fabrication projects in the Kazakhstan sector of the Caspian Sea. There is currently an on-going process to close down the joint venture, and the investment has therefore been written down to zero in 2014.
Fornebuporten Boligutvikling AS, a joint venture with Aker and Profier AS, is involved in housing con- struction at Fornebu outside Oslo, Norway.
The associated companies and joint venture are accounted for by using the equity method. Aker ASA annual report 2014 85 Annual accounts – Aker group
Summary of financial information and the Group’s ownership in major associates and joint ventures is as follows:
Aker BioMarine Manufac- turing/ Kiewit-Kvaerner Philly Align AS Trygg Pharma Group AS Financing1 DOF Deepwater AS Contractors Tankers AS2
Amounts in NOK million 2014 2014 2013 2014 2014 2013 2014 2013 2014
Country Norway Norway Norway USA Norway Norway Canada Canada Norway Ownership and voting rights 38.8% 50% 50% 50% 50% 50% 50% 50% 53.7%
Operating revenues 1 483 - 675 9 246 230 7 823 6 765 - Beskjæres 76 mm fra venstre før trykk >> Operating expenses (1 402) (88) (202) (29) (152) (152) (7 119) (6 156) - Financial items (41) 26 10 2 (181) (118) - 1 Net profit (100%) 33 (62) 483 (19) (89) (41) 704 609 1 Share of net profit result 13 (31) 242 (9) (45) (21) 352 305 1 Elimination of urealised sales gain and profit discontinuing business 310 7 (3) Impairment - (244) ------Share of earnings 323 (275) 242 (9) (38) (24) 352 305 1 Fixed assets 305 408 743 254 1 697 1 738 - - 228 Current assets 464 333 521 43 151 108 615 342 609 Total assets 769 741 1 264 297 1 848 1 846 615 342 837 Long-term liabilities (49) - (18) (145) (1 157) (1 175) - - - Short-term liabilities (401) (12) (26) (86) (243) (133) (74) (238) (1) Net assets (100%) 319 729 1 220 65 449 537 541 105 837 Share of net assets 124 365 610 33 225 269 271 54 449 Elimination of unrealised gains and losses - (10) (5) - (20) (26) - (35) Balance end of period 124 355 605 33 205 243 271 54 415 Dividends received 399 429 165 251 -
1*) Aker BioMarine Manufacturing LLC and Aker BioMarine Financing LLC can be viewed as cohesive entities, as they together will constitute a krill oil manufacturing facility in Houston, Texas, U.S.A. and the related financing of the facility. 2*) As of 31 December 2014, Aker Philadelphia Shipyard owns 53.7 per cent of the outstanding shares of Philly Tankers AS. The Company has performed an analysis of its ownership interests and voting rights in Philly Tankers and due to a shareholder agreement concluded that it has joint control. The Group therefore accounts for Philly Tankers as a joint venture. 86 Aker ASA annual report 2014 Annual accounts – Aker group
Shares and investments in associated companies and joint venture are allocated as follows:
2014 Changes due to Book value at Acquisitions and Share of profits exchange differences Other changes Book value at Amounts in NOK million 1 January disposals /losses and hedges Dividends received in equity 31 December
Align AS/ Bokn Invest AS 1) 200 - 323 - (399) - 124 Trygg Pharma Group AS 2) 605 3 (275) 22 - - 355 Aker BioMarine Manufacturing/Financing 2) 36 - (9) - - 6 33 DOF Deepwater AS 2) 243 - (38) - - - 205 Kiewit-Kvaerner Contractors 2) 54 - 352 30 (165) - 271 Kvaerner Caspian B.V. 2) 58 - (57) (2) - - - Philly Tankers AS 2) - 3 1 - - 411 415 Beskjæres 76 mm fra venstre før trykk >> Other entities 125 (110) 46 (3) (36) 78 101 Total 1 321 (104) 342 47 (600) 495 1 502
1) Associates 304 (110) 369 (3) (435) 78 203 2) Joint ventures 1 017 6 (27) 50 (165) 417 1 298 Total 1 321 (104) 342 47 (600) 495 1 502
Acquisitions and disposals Dividends received Net acquisitions and disposals of NOK 104 million are mainly related to disposal of the investments in The associate Bokn Invest was liquidated in 2014. As part of the liquidation, a subsidiary of Aker ASA Hinna Park Invest AS and Oslo Asset Management Holding AS. received 38.8 per cent of the shares in Align AS as well as a cash proceed of NOK 399 million as capital distribution. This includes NOK 41 million that is expected to be received in 2015. Share of profits/losses Dividend received from Kiewit-Kvaerner Contractors was NOK 165 million in 2014. Shares of profits/losses from associates and joint ventures are based on the companies’ net profit including profit/loss from discontinued operations. The purpose of the investment determines where its Other changes in equity results are presented in the income statement. When entities are formed to share risk in executing pro- In July 2014, Aker Philadelphia completed a USD 65 million private placement for Philly Tankers with a ject or are closely related to the operating activities, the shares of the profits and losses are reported as subsequent listing on the Norwegian OTC. Prior to the Philly Tankers private placement, the company part of other income in the operating profit. Shares of profits or losses from financial investments are contributed a promissory note with a book value of USD 55.3 million (NOK 338 million) in return for reported as part of financial items. 62 475 shares in Philly Tankers. Book value of the share at the end of 2014 was USD 55.9 million, Share of profits/losses for 2014 is allocated with NOK 345 million as other income and NOK -3 mil- resulting in an exchange rate adjustment in the Aker group of NOK 73 million at the end of 2014, part of lion as share of profit/loss from associates and joint ventures as part of financial items. other changes in equity. Share of losses from Trygg Pharma Group includes an impairment of NOK 244 million as result of the negative outcome for the product AKR963 from U.S. Food and Drug Administration FDA. AKR 963 is a product candidate for the treatment of severe hypertriglyceridemia. Share of profit from Bokn Invest AS includes a gain of NOK 310 million in connection with the sale of the company Stream in 2014. Aker ASA annual report 2014 87 Annual accounts – Aker group
Shares and investments in associated companies and joint venture have been allocated as follows:
2013 Effects of acquisitions (-) or Changes due to disposals (+) of exchange Book value at subsidiaries in Acquisitions Share of profits differences and Dividends Other changes Book value at Amounts in NOK million 1 January stages and disposals /losses hedges received in equity 31 December
Bokn Invest AS 184 - - 14 1 - 1 200 Trygg Pharma Group AS 689 - 100 242 - (429) 3 605 Aker BioMarine Manufacturing/Financing - - 35 (1) - - 1 36 DOF Deepwater AS 68 - - (24) - - 200 243 Kiewit-Kvaerner Contractors - - - 305 - (251) - 54 Beskjæres 76 mm fra venstre før trykk >> Kvaerner Caspian B.V. 77 - - (16) (3) - - 58 Other companies 102 27 (20) 20 - (1) (4) 125 Total 1 119 27 115 540 (2) (681) 202 1 321
Acquisitions, disposals and other changes Note 18 Other shares and funds Trygg Pharma Holding and Aker BioMarine Manufacturing received equity contribution of NOK 100 mil- lion and NOK 35 million, respectively, from Aker BioMarine in 2013. Amounts in NOK million 2014 2013 Share of losses/profits Share of profits for 2013 is allocated with NOK 363 million as other income and NOK 177 million as Ezra Holdings Ltd 222 480 share of profit/loss from associates and joint ventures as part of financial items. AAM Absolute Return Fund - 369 Norron fondene 388 338 Received dividend Aker Pensjonskasse AS 123 120 Received dividend from Trygg Pharma Holding relates to dividend of NOK 429 million received in con- American Shipping Company ASA 433 61 nection with the sale of the Epax business. NBT AS 55 55 From Kiewit-Kvaerner Contractors, Kvaerner received 251 million in dividends in 2013. Shares in other companies 46 68 Total 1 267 1 491 Other changes in equity
DOF Deepwater other changes in equity is attributable to the conversion of part of its debt to Aker Solutions to equity. Outstanding loans at the end of 2013 to DOF Deepwater totaled NOK 83 million. Aker’s ownership interest in Ezra Holding Ltd. amounted to 7.4 per cent and the share is listed at Singa- pore stock exchange. The Ezra share price was significantly reduced in 2014, resulting in a negative change in fair value of - NOK 185 million recognised in other comprehensive income, and an impair- ment loss of NOK 97 million recognised in financial items. Aker owns 11 per cent of the Norron Target capital of SEK 2 161 million, 50 per cent of the Norron Select capital of SEK 272 million and 1.5 per cent of the Norron Preserve capital of SEK 1 817 million. Aker’s ownership interests in Aker Pensjonskasse amounted to 96 per cent and are owned through Akastor with 93.4 per cent and 2.6 per cent by Aker ASA. Although Aker owns 96 per cent of Aker Pens- jonskasse the ownership does not constitute control since Aker does not have the power to govern the financial and operating policies so as to obtain benefits from the activities in this entity. Aker’s ownership interest in American Shipping Company amounted to 19.1 per cent at the end of 2014 following a participating in the equity issue and the conversion of debt to equity in January 2014. 88 Aker ASA annual report 2014 Annual accounts – Aker group
The change in other shares in 2014 relates to: per cent of the interests will be payable in cash as from 24 months after such refinancing has taken place. Until the refinancing of the senior secured bank facility, AMSC will have an option to extend the Amounts in NOK million 2014 maturity date of the Bonds from 28th February 2018 to 28th February 2021. If this extension option is exercised the margin of the bonds will increase by 2.5 per cent p.a. In addition the margin will increase At 1 January 2014 1 491 by 0.5 per cent p.a. for every 12-month period the bond is outstanding after the extension option is Acquisitions 151 exercised. Changes in fair value reserve (98) The amendments to the bond loan agreement had effect from 3 January 2014. Due to the significant Proceeds from disposals (388) changes in terms the bonds under the amended bond loan agreement is considered to be a new loan, Conversion of debt to equity 179 and the bonds under the old terms have thus been derecognised. The bonds have been classified as Sales gains and write-downs (69) loans and receivables. At 31 December 2014 1 267
Interest-bearing short-term receivables The carrying amount at the end of 2014 was NOK 1 267 million, reduced by NOK 224 million during the Amounts in NOK million 2014 2013 year. Beskjæres 76 mm fra venstre før trykk >> In January 2014 Aker participating in the offering in American Shipping Company with NOK 123 mil- Portfoilio of bonds and certificates in Aker Insurance AS 91 119 lion and converted a debt of NOK 179 million. Convertible loan Ezra Holding Ltd - 347 The group invested NOK 25 million in the fund Norron Preserve during 2014. During 2014, Aker’s interest in AAM Absolute Return Fund was sold for NOK 362 million. Loans to related Parties 35 9 The total change in fair value reserves is negative with NOK 98 million and is mainly attributable to Other interest-bearing short-term receivables 461 459 shares in American Shipping Company by NOK 70 million, the Norron funds by NOK 24 million, the AAM Total 588 934 Absolute Return Fund until time of disposal with NOK - 7 million, and Ezra Holding with NOK -185 million. The change in interest-bearing receivables in 2014 can be allocated as follows:
Note 19 Financial interest-bearing assets Convertible Restricted Other Amounts in NOK million Bonds bonds funds loans Total
Interest-bearing long-term receivables: At 1 January 2014 1 021 347 516 1 116 3 000 Amounts in NOK million 2014 2013 Accrued interest 79 - - - 79 Change in fair value reserve (131) - - - (131) Restricted deposits 214 516 Repayments of loans and bonds - (352) - (229) (581) Loans to employees 13 8 New loans and bonds - - - 39 39 Loans to related parties 141 147 Translation and other changes 371 5 (302) (83) (9) Long-term bonds 1 340 1 021 At 31 December 2014 1 340 - 214 844 2 397 Other interest-bearing long-term receivables 100 374 Net repayment loans and bonds Total 1 809 2 066 (see cash flow) - 352 - 189 541
Restricted deposits mainly relates to loan agreements in Ocean Yield of NOK 149 million and in Det Repayment loans and bonds norske oljeselskap of NOK 13 million. In addition Aker Philadelphia Shipyard has deposits related to a Repayment of convertible debt can be attributed to Ezra Holding Ltd, the repayment of other loans of construction contract totalling NOK 52 million. NOK 229 million can partly be attributed to NOK 60 million withdrawals of deposit account linked to the Interest-bearing long-term receivables to related parties are attributable to loans granted to joint ven- TRS agreement with American Shipping Company shares. The remaining repayments are a number of tures DOF Deepwater, with NOK 82 million, Aker BioMarine Manufacturing NOK 44 million and Fornebu items that collectively comprise 169 million. Boligutvikling NOK 16 million. Long-term bonds of NOK 1 340 million consists of Ocean Yield’s 93.05 per cent ownership interest of the unsecured bonds American Shipping Company ASA 07/18, with maturity in 2018 (the “Bonds”). In December 2013 AMSC carried out a recapitalisation of the company where the bond loan agreement was amended. In the amended bond loan agreement the bond loan is denominated in USD with an interest of LIBOR + 6.00% (previously denominated in NOK with an interest of NIBOR + 4.75%). The structure of the loan was changed from an all-PIK-interest structure to 50/50 PIK/cash interest. The cash interest portion will further increase to 70 per cent as from the refinancing of AMSC’s external bank debt (which matures in June 2016), and to 90 per cent as from 12 months after such refinancing. Finally, 100 Aker ASA annual report 2014 89 Annual accounts – Aker group
Note 20 Other non-current assets Note 22 Trade and other short-term interest-free receivables
Other non-current assets consist of the following items: Trade and other short-term interest-free receivables comprise of the following items:
Amounts in NOK million 2014 2013 Amounts in NOK million 2014 2013
Interest-free long term receivables on related parties 2 - Trade receivables 10 031 7 946 Other interest-free long-term receivables 355 247 Amount due to from customers for construction work 8 411 6 472 Total 356 247 Other short-term interest-free receivables 7 579 7 778 Total 26 021 22 197 Other interest-free long-term receivables in 2014 includes NOK 78 million in long-term VAT receiva- bles at Fornebuporten, NOK 91 million in miscellaneous receivables in Akastor and NOK 65 million In 2014, the group recorded impairment of trade receivables of NOK 63 million. In 2013 the loss was related to deferred volume at Atla field in Det norske oljeselskap. also NOK 63 million. The loss has been included in the other operating expenses in the income state- Beskjæres 76 mm fra venstre før trykk >> Other interest-free long-term receivables in 2013 include prepayments of NOK 65 million by ment. Havfisk for trawlers under constructions and NOK 71 million in long-term VAT receivables due to Other short-term receivables in 2014 includes receivables under operator licenses (Det norske olje- Fornebuporten. selskap), accrued operating revenue from service contracts (Aker Solutions), and advance payments to suppliers. See also Note 6 Financial risk and exposure.
Note 21 Inventory and biological assets Note 23 Cash and cash equivalents Inventory and biological assets comprises the following items: Amounts in NOK million 2014 2013 Cash and cash equivalents are allocated to the different companies as follows: Amounts in NOK million 2014 2013 Raw materials 1 921 1 367 Work in progress 275 429 Industrial holdings: Finished goods 1 026 1 085 Aker Solutions 3 339 - Total 3 222 2 880 Akastor 1 075 2 345 Det norske oljeselskap 2 195 1 709 Impairment of inventory recognised as expense during the period 140 136 Kvaerner 1 208 1 545 Reversal of impairment recognised as an expense reduction during the Ocean Yield 566 806 period 27 - Aker Biomarine 18 42 Carrying amount of inventory pledged as security for liabilities 343 309 Havfisk 146 24 Total industrial holdings 8 547 6 471 Of the total value of Aker Group’s inventory as of 31 December 2014, NOK 1 696 million has been measured at fair value less cost to sell. Finansielle investeringer: Converto Capital Fund 454 732 Øvrige selskaper 142 62 Aker ASA and holding companies 2 857 2 459 Total 12 000 9 724
There are restrictions on the cash transfers between Aker ASA and holding companies and subsidiaries. Restricted cash totals NOK 464 million, NOK 227 million in Aker Solutions, NOK 76 million in Kvaerner, 52 million in Converto Capital Fund, 39 million in Akastor, NOK 36 million in Det norske olje- selskap and NOK 34 million in other companies within the group. 90 Aker ASA annual report 2014 Annual accounts – Aker group
Note 24 Earnings per share and dividend per share and paid-in equity Paid-in capital At 31 December 2014, Aker ASA’s share capital consisted of the following: Earnings per share Calculation of profit from continued and discontinued operations to equity holders of the parent: Shares Shares issued Own shares outstanding Amounts in NOK million 2014 2013 Number of ordinary shares 72 374 728 28 788 72 345 940 Par value (NOK) 28 28 28 Continued operations: Net profit (loss) from continued operations (1 629) 1 266 Total par value (NOK million) 2 026 1 2 026 Minority interests (711) 973 Share premium reserve - - - Profit from continued operations attributable to equity holders of Other paid in capital - - - the Parent (918) 293 Total paid in capital 2 026 1 2 026
Beskjæres 76 mm fra venstre før trykk >> Discontinued operations All shares have equal voting rights and are entitled to dividends. Aker ASA has no voting rights for its Net profit (loss) from discontinued operations 2 650 468 own shares. Minority interests 1 771 2 Profit from discontinued operations attributable to equity holders of the parent 879 466 The 20 largest shareholders as of 31 December 2014 Total profit attributable to equity holders of the parent (39) 759 Number of Shareholders shares Per cent Shares outstanding at 1 January 72 329 923 71 483 047 Changes in own shares held 16 017 846 876 TRG Holding AS1 48 245 048 66.7% Total shares outstanding at 31 December 72 345 940 72 329 923 J.P. Morgan Chase BANK N.A. London 1 870 449 2.6% Folketrygdfondet 1 016 690 1.4% 1 Allocation: The Resource Group TRG AS 860 466 1.2% Issued shares at 31 December 72 374 728 72 374 728 Morgan Stanley & Co LLC 802 075 1.1% Own shares held (28 788) (44 805) Tvenge, Torstein Ingvald 800 000 1.1% State Street Bank & Trust Company 737 527 1.0% Total shares outstanding at 31 December 72 345 940 72 329 923 KBC Securities NV 678 363 0.9% Weighted average number of shares at 31 December 72 335 746 72 320 121 Citibank, N.A. 625 934 0.9% KBC Securities NV 520 903 0.7% Diluted earnings per share UBS (Luxembourg) S.A. 445 423 0.6% No instruments with a potential dilution effect were outstanding at 31 December 2014 or 31 Decem- Oslo Pensjonsforsikring AS PM 445 200 0.6% ber 2013. Fondsfinans Spar 375 000 0.5%
KLP Aksje Norge VPF 354 368 0.5% Dividend Fidelity Funds-Nordic Fund/SICAV 353 928 0.5% Dividends paid in 2014 and 2013 totalled NOK 940 million (NOK 13.00 per share) and NOK 868 mil- J.P. Morgan Chase BANK N.A. London 340 842 0.5% lion (NOK 12.00 per share), respectively. A dividend of NOK 10.00 per share, totally NOK 723 million Morgan Stanley & Co LLC International 331 596 0.5% will be proposed at the Annual General Meeting on 17 April 2015, of which half (NOK 5.00 per share) is proposed to be with an optional settlement in new Aker shares at 10 per cent discount to the pre- The Bank of New York Mellon SA/NV 298 872 0.4% vailing share price. In accordance with IFRS, no provision has been made in the group accounts for Citibank, N.A. 292 492 0.4% the proposed dividend. Skandinaviske Enskilda Banken AB 270 104 0.4% Other 12 709 448 17.6% Total 72 374 728 100%
1*) Kjell Inge Røkke controls 67.8 per cent of the shares in Aker ASA through TRG Holding AS and TRG AS. Aker ASA annual report 2014 91 Annual accounts – Aker group
Note 25 Minority interests
The Aker Group includes several subsidiaries of which Aker ASA and holding companies own less than 100 per cent. See Note 9 Operating segments and significant subsidiaries for key figures for some of these companies.
The change in minority interests in 2014 can be attributed to the following companies:
Per cent minority- Other New minority, Share Other interests as at Balance at Profit for comprehensive release of issue by changes Balance at Amounts in NOK million 31 December 1 January the year income Dividend minority subsidiary in equity 31 December
Aker Solutions 65.24 - 204 171 - (25) - 8 989 9 339 Beskjæres 76 mm fra venstre før trykk >> Akastor 65.49 13 044 1 692 92 (729) (72) - (8 989) 5 038 Det norske oljeselskap 50.01 2 482 (1 047) 379 - - 1 488 - 3 302 Kvaerner 71.29 2 799 (51) 165 (239) - - - 2 673 Ocean Yield 26.79 1 004 170 211 (117) (5) 86 - 1 351 Aker BioMarine 0.98 - - - - 11 - - 11 Havfisk 26.75 298 53 (9) (1) - - - 341 Aker Philadelphia Shipyard 42.44 206 40 78 (110) (48) 382 - 548 Norway Seafoods 26.41 71 (19) 7 - - - - 59 Other companies - 6 17 - (16) - - - 8 Total 19 910 1 060 1 094 (1 211) (140) 1 956 - 22 669
Minority interest in Aker Kværner Holding Share issue by subsidiary The minority interest in Aker Kværner Holding of NOK 6 215 million at 31 December 2014 is broken down In July Det norske oljeselskap completed a NOK 3 003 million equity rights issue. Aker participated with its in the table above on the companies where Aker Kværner Holding has ownership interests. The specifica- pro-rata share of NOK 1 501 million. The transaction increased minority interest with NOK 1 488 million tion per company at 31 December 2014 are; Aker Solutions NOK 3 391 million, Akastor NOK 1 842 million (after transaction costs). and Kvaerner NOK 982 million. In January, a share issue in Ocean Yield increased minority interests with NOK 14 million and in Decem- ber a share issue in a subsidiary of Ocean Yield increased minority interests with NOK 73 million. New minority, release of minority In the first quarter, share issues in Aker Philadelphia Shipyard raised proceeds of approximately USD 65 In May, Aker ASA acquired 891 762 shares in Aker Solutions ASA (renamed Akastor) for NOK 87 million. million. Aker did not participate in the share issues. The transactions increased minority interest with NOK The transaction increased the direct ownership in Aker Solutions from 6.0 per cent to 6.3 per cent and 382 million. reduced minority interests with NOK 58 million. In addition subsidiaries of Aker has purchased own shares and thereby reducing minority interests with NOK 99 million. Various other smaller transactions in 2014 Other changes in equity increased the minority interests with NOK 17 million. See also Note 7. Other changes in equity in Aker Solutions and Akastor consist of split of minority interests following the demerger of Akastor (old Aker Solutions). 92 Aker ASA annual report 2014 Annual accounts – Aker group
Note 26 Other comprehensive income
Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of operations with functional currency other than NOK, and the translation of liabili- ties that hedge the group’s net investment in a foreign subsidiary. The main subsidiaries with functional currencies other than NOK are Det norske oljeselskap (USD), Aker Philadelphia Shipyard (USD), Ocean Yield (USD), and Aker BioMarine (USD). In addition, several of the foreign businesses within Aker Solu- tion, Akastor and Kværner have functional currencies other than NOK.
Fair value reserve The fair value reserve includes the cumulative net change in the fair value of available-for-sale invest- ments until the investment is derecognised.
Hedging reserve Beskjæres 76 mm fra venstre før trykk >> The hedge reserve relates to cash flow hedges of future revenues and expenses against exchange rate fluctuations. The income statement effects of such instruments are recognised in accordance with the progress of the underlying construction contract as part of revenues or expenses as appropriate. The hedge reserve represents the value of such hedge instruments that are not yet recognised in the income statement. The underlying nature of a hedge is that a positive value on a hedge instrument exists to cover a negative value on the hedged position.
Allocation of other comprehensive income to equity holders of the parent and to minority interests Total translation Translation Fair value Hedging and other Retained Minority Total Amounts in NOK million reserve reserves reserves reserves earnings Total interests equity
2014 Defined benefit plan actuarial gains (losses) - - - - (187) (187) (177) (364) Items that will not be reclassified to income statement - - - - (187) (187) (177) (364) Changes in fair value of available-for-sale financial assets - 39 - 39 - 39 (121) (81) Changes in fair value of cash flow hedges - - (768) (768) - (768) (1 055) (1 823) Reclassified to profit or loss: changes in fair value of available for sale financial assets, translation differences and cash flow hedges (1) (248) 370 121 - 121 297 418 Currency translation differences 1 949 - - 1 949 - 1 949 2 150 4 099 Changes in other comprehensive income from associated and joint venture companies 47 - - 47 - 47 - 47 Items that may be reclassified to income statement subsequently 1 995 (209) (397) 1 389 - 1 389 1 271 2 660 Other comprehensive income 2014 1 995 (209) (397) 1 389 (187) 1 202 1 094 2 296 Aker ASA annual report 2014 93 Annual accounts – Aker group
Total translation Translation Fair value Hedging and other Retained Minority Total Amounts in NOK million reserve reserves reserves reserves earnings Total interests equity
2013 Defined benefit plan actuarial gains (losses) - - - - (7) (7) 1 (6) Defined benefit plan actuarial gains (losses) in associated companies - - - - (5) (5) 8 3 Items that will not be reclassified to income statement - - - - (11) (11) 9 (3) Changes in fair value of available-for-sale financial assets - 347 - 347 - 347 48 395 Changes in fair value of cash flow hedges - - 172 172 - 172 178 351 Reclassified to profit or loss: changes in fair value of available-for-sale financial assets, translation differences and cash flow hedges 1 (145) (82) (227) - (227) - (227) Currency translation differences 673 - - 673 - 673 834 1 508 Beskjæres 76 mm fra venstre før trykk >> Items that may be reclassified to income statement subsequently 674 202 90 966 - 966 1 061 2 027 Other comprehensive income 2013 674 202 90 966 (11) 955 1 069 2 024
Note 27 Interest-bearing loans and liabilities
This note provides information on the contractual terms of the Group’s interest-bearing loans and borrowings.
Interest-bearing short-term and long-term debt and liabilities are as follow: Interest-bearing liabilities are allocated to the companies within the Group as follows: Amounts in NOK million 2014 2013 Amounts in NOK million 2014 2013 Non-current liabilities Secured bank loans 10 704 9 984 Industrial holdings: Unsecured bank loans 5 816 7 731 Aker Solutions 3 764 - Unsecured bond issues 11 574 12 331 Akastor 3 570 11 316 Reserve-base lending facility 15 096 - Det norske oljeselskap 16 972 4 989 Finance lease liabilities 7 7 Kvaerner 487 479 Overdraft facilities 133 85 Ocean Yield 7 370 5 289 Exploration facilities - 478 Aker BioMarine 1 063 900 Other interest-bearing liabilities 485 162 Havfisk 1 288 1 223 Total interest-bearing liabilities 43 816 30 778 Total industrial holdings 34 514 24 196
Recorded as follows: Financial investments: Current liabilities 4 898 5 564 Converto Capital Fund 643 287 Current liabilities 38 918 25 214 Fornebuporten and other companies 1 964 1 029 Total interest-bearing liabilities 43 816 30 778 Aker ASA and holding companies 6 696 5 266
Total interest-bearing liabilities 43 816 30 778
94 Aker ASA annual report 2014 Annual accounts – Aker group
The contractual terms of interest-bearing liabilities as at 31 December 2014 are as follows: Nominal in currency Carrying amount Amounts in NOK million Currency Nominal interest rate Maturity value (millions) NOK million
INDUSTRIAL HOLDINGS: Aker Solutions Unsecured bonds: Bond 2017 NOK 3 mths Nibor + 4.25% June 2017 1 500 1 500 Bond 2019 NOK 3 mths Nibor + 4.20% October 2019 1 000 1 005 Brazilian Development Bank EXIM loan Itau BRL 5.50% July 2016 145 405 HSBC BRL 5.50% August 2016 50 141 Itau BRL 8.00% July 2015 155 433 HSBC BRL 8.00% July 2015 50 140 Beskjæres 76 mm fra venstre før trykk >> Other loans BRL 50 140 Total Aker Solutions 3 764
Akastor Credit facilities: Revolving credit facility (NOK 2 000 million) NOK Ibor + Margin June 2019 1 000 987 Unsecured bank loan: Term loan NOK 3 mths Ibor + margin June 2017 2 500 2 485 Other loans 98 Total Akastor 3 570
Det norske oljeselskap Unsecured bond loans Bond 2020 NOK 3 mths Nibor + 5% July 2020 1 894 1 876 Secured loans: Reserve-based lending facility USD Libor + 2.75% + provision 2021 2 037 15 096 Total Det norske oljeselskap 16 972
Kvaerner Unsecured bond loans Term loan NOK Nibor + 2.5% May 2016 500 487 Total Kvaerner 487 Aker ASA annual report 2014 95 Annual accounts – Aker group
Nominal in currency Carrying amount Amounts in NOK million Currency Nominal interest rate Maturity value (millions) NOK million
Ocean Yield Secured loans: Eksportkreditt/GIEK/DNB (Aker Shiplease) NOK Nibor + 1.05% + provision October 2022 822 822 DNB syndicated (Aker Floating Production) USD Libor + 1.5% 2018 196 1 453 Eksportkreditt/GIEK/DNB (Connector) USD Libor + 1.38% + provision 2024 169 1 254 DNB syndicated (Connector) USD Libor + 1.5% 2024 16 117 Eksportkreditt/GIEK/Swedbank (F-Shiplease) NOK 3.69% + provision March 2025 819 819 DNB/ING Bank N.V (OS Installer) USD Libor + 1.5% 2019 109 807 Nordea Bank syndicate (Ocean Yield ASA) USD Libor + 2.25% 2021 156 1 101 Unsecured bond loans: Bond 14/19 FRN (Ocean Yield ASA) NOK Nibor + 3.9% 2019 1 000 997 Beskjæres 76 mm fra venstre før trykk >> Total Ocean Yield 7 370
Aker BioMarine Secured bank loans: DNB USD Libor + 3.4% 2016 105 776 Caterpillar Financial Services Corporation USD 6 mths Libor + 1.89% March 2017 8 61 Innovation Norway AS - 1 NOK 5.20% June 2026 124 124 Innovation Norway AS - 2 NOK 5.75% floating June 2023 15 14 Overdraft facilities NOK 89 89 Total Aker BioMarine 1 063
Havfisk Secured bank loan in NOK - DNB/Nordea NOK 3 mths Nibor + 1.85% September 2018 1 275 1 275 Secured bank loan in NOK - Innovation Norway NOK 2019 13 13 Total Havfisk 1 288 1 288
FINANCIAL INVESTMENTS: Aker ASA and holding companies Unsecured bonds: FRN Aker ASA Senior Unsecured Bond Issue 2010/2015 NOK Nibor + 5% November 2015 808 808 FRN Aker ASA Senior Unsecured Bond Issue 2012/2017 NOK Nibor + 4% April 2017 500 500 FRN Aker ASA Senior Unsecured Bond Issue 2013/2018 NOK Nibor + 3.5% June 2018 1 300 1 300 FRN Aker ASA Senior Unsecured Bond Issue 2012/2019 NOK Nibor + 5% January 2019 500 500 FRN Aker ASA Senior Unsecured Bond Issue 2014/2019 SEK Stibor + 3.25% July 2019 1 500 1 430 FRN Aker ASA Senior Unsecured Bond Issue 2013/2020 SEK Nibor + 4% June 2020 1 700 700 FRN Aker ASA Senior Unsecured Bond Issue 2012/2022 NOK Nibor + 5% September 2022 1 000 1 000 Unsecured bank loans: Sparebank 1 SMN NOK Nibor +3.75% Mai 2017 500 500 Loan fees - (42) Total Aker ASA and holding companies 6 696 96 Aker ASA annual report 2014 Annual accounts – Aker group
Nominal in currency Carrying amount Amounts in NOK million Currency Nominal interest rate Maturity value (millions) NOK million
Fornebuporten Construction loan - Handelsbanken NOK At completion 1 226 1 226 Land mortgage- Handelsbanken NOK 2017 136 136 Mortgage loan - DNB NOK 2015 54 54 Mortgage loan - Pareto Bank NOK 2016 200 200 Mortgage loan - Storebrand Bank ASA NOK 2017 126 126 Construction loan - DNB NOK At completion 222 222 Total Fornebuporten 1 964 1 964 Converto Capital Fund - 643 Total other companies 2 607 Beskjæres 76 mm fra venstre før trykk >> Total interest-bearing liabilities 43 816
Aker Solutions will be determined twice a year from the value of the Company’s borrowing base assets based on cer- Unsecured bond: tain assumptions. Subject to certain conditions the RBL may be expanded to USD 4.0 billion. All bonds are denominated in Norwegian kroner and are issued in the Norwegian bond market. The Financial covenants under the RBL facility include, inter alia, a leverage ratio covenant (Net debt / EBIT- bonds are issued based on a floating interest rate plus a predefined margin. The bonds are issued with DAX) and an interest cover ratio (EBITDA/Interest expense) as well as short and long-term liquidity tests. Norsk Tillitsmann as trustee and the loan agreements are based on Norsk Tillitsmann’s standard loan One of the covenant requirements for the unsecured bond is the adjusted equity ratio which shall be agreement for such bonds. The bonds are unsecured on a negative pledge basis and include no divi- maintained at minimum 25 per cent. A default only exists when the ratio is below 25 per cent on two con- dend restrictions.All bonds issued are listed on the Oslo Stock Exchange. secutive quarter dates and the covenant breach is not remedied within the following quarter reporting date.
Bank loans: Kvaerner The terms and conditions of Brazilian Development Bank EXIM loan include restrictions which are cus- The loan agreement of NOK 3 000 million is split in two tranches; a term loan of NOK 500 million and a tomary for this kind of facility. revolving credit facility of NOK 2 500 million, both maturing in May 2016. The facilities are provided by Aker Solutions’ strategy is to have between 30-50 per cent of borrowings at fixed interest rates. To a syndicate of high quality international banks. The term loan was fully drawn per end of year 2014 the extent that this is not reflected in the loan agreements, swap transactions are entered into. whilst the revolving credit facility was undrawn per same. The terms and conditions include restric- tions which are customary for this kind of facilities, including inter alia negative pledge provisions and Akastor restrictions related to acquisitions, disposals and mergers. There are also certain provisions of change All facilities are provided by a bank syndicate consisting of high quality Nordic and international banks. of control included in the agreement. There are no restrictions for dividend payments. The facilities are The terms and conditions include restrictions which are customary for this kind of facility, including inter unsecured. alia negative pledge provisions and restrictions on acquisitions, disposals and mergers. There are also The financial covenants are based on three sets of key financial ratios; an equity ratio based on consoli- certain changes of control provisions included. The facility includes no dividend restrictions and is dated total borrowings/consolidated total equity, a cash covenant calculated by consolidated total borrow- unsecured. ings less consolidated net current operating assets and consolidated cash and cash equivalent assets and The financial covenants are based on two sets of key financial ratios; a gearing ratio based on net an interest coverage ratio based on consolidated EBITDA/consolidated finance costs. The financial cove- debt/equity and an interest coverage ratio based on EBITDA/net finance costs. The financial covenants nants are tested on a quarterly basis. As of 31 December 2014 the company is in compliance with all cov- are tested on a quarterly basis. The margin applicable to the facility is based on a price grid determined enants. The margin applicable to the facility is based on a price grid determined by the gearing ratio. by the gearing ratio and level of utilisation. Ocean Yield Det norske oljeselskap Aker Ship Lease: The mortgage loans are secured in the vessel Aker Wayfarer, guaranteed by GIEK and Unsecured bond: DNB. The loan has a floating interest rate plus a guarantee provision. Instalments and interest are paid The bond 2020 runs from July 2013 to July 2020. The principal falls due on July 2020 and interest is semi-annually, with the first payment being made on 1 April 2011. The bank loan matures on 1 October paid on a quarterly basis. The loan is unsecured. 2022, but the guarantee has to be renewed after five years, in 2015.
Reserve-base lending facility: Aker Floating Production: The mortgage loan is secured in Dhirubhai-1, and the payment period corre- Det norske oljeselskap has a reserve-based borrowing facility (“RBL”) of USD 3 billion. The RBL is a sponds to the leasing period of the vessel. In addition, 50 per cent of net cash flow is paid by way of seven year facility with a bank consortium consisting of 17 banks. The RBL facility is secured by a extraordinary instalments. security package consisting of a pledge over the Company’s interests in development and production licenses in Norway. The loan carries an interest of LIBOR plus a margin of 2.75 per cent per annum, Connector: The mortgage loans are secured in the vessel Lewek Connector. plus an utilisation fee up to 0.50 per cent. The available amount under the USD 3.0 billion RBL facility The loan from Eksportkreditt Norge has a floating interest rate plus a guarantee provision. The loan is guaranteed by DNB and GIEK. The loan from DNB Livsforsikring has a floating interest rate. Instalments Aker ASA annual report 2014 97 Annual accounts – Aker group
for both loans are paid semi-annually, and the loans mature in 2024. The guarantee has to be renewed Overdraft facility: in 2017. Interest is paid quarterly. Havfisk has an overdraft facility comprises an operating facility of NOK 87 million and guarantee facility of NOK 13 million. Unused operating facility credit totals NOK 87 million. F-Shiplease: The mortgage loans are secured in the vessels Far Senator and Far Statesman. Bank loans, credit facilities and other short-term loans totalling NOK 1 228 million are secured in The loan from Eksportkreditt has a fixed interest rate plus a guarantee provision. Instalments and inter- fixed assets, inventory and receivables with a book value of NOK 1 555 million. est are paid semi-annually, and the loans mature in 2025. The loans are guaranteed by Swedbank, Sparebanken Møre and GIEK. The guarantees are subject to renewal after five years from the delivery Aker ASA and holding companies of the respective vessel. Senior unsecured bonds: The principal falls due on the maturity date as shown above and interest is payable quarterly until maturity OS-Installer: The mortgage loans are secured in the vessels SBM Installer. Instalments and interest are paid quarterly, and the loans mature in 2019. Unsecured bank loan: The loan matures in May 2017 and interest is payable quarterly until maturity. Ocean Yield ASA - Mortgage loan: There are several conditions associated with Aker ASA and holding companies loans, including debt In June 2014, Ocean Yield signed a credit facility with a group of banks in a total loan amount of USD ratio and total internal loans and guarantees in relation to Aker ASA and holding companies net asset 250 million. value. The loan comprise of three facilities; a Term Loan Facility of USD 54.75 million, a Revolving Credit Aker ASA has fulfilled all the conditions of the loan agreement by the end of 2014 Beskjæres 76 mm fra venstre før trykk >> Facility of USD 54.75 million and a Newbuilding Facility of USD 140.5 million The loan is secured in the vessels Höegh Xiamen, Höegh Beijing, Höegh Jacksonville and Höegh Fornebuporten Jeddah and the newbuildings XS1462E and XS1462F that will be delivered in 2016. Construction loan – Handelsbanken As of 31 December 2014, USD 156 million, of the total of USD 250 million has been drawn under the The loan has a variable rate. The loan will mature upon completion of each construction phase, Facility. expected in June 2015 and June 2016. The Term Loan Facility and the Newbuilding facility are repaid in quarterly consecutive instalments, with the final maturity date falling five years from the last vessel delivery, but no later than 31 August Building plot loan – Handelsbanken 2021.Interests are paid quarterly. The Revolving Credit Facility shall be repaid at the final maturity date The loan has a variable rate. It must be repaid pro rata in proportion to the size of the mortgaged plot falling five years from the last vessel delivery, but no later than 31August 2021. when parts of the plot are sold or transferred by means of demerger, although the principal sum must The Company has used interest rate derivatives in order to the final maturity date falling five years be reduced to at least NOK 240 million by 31 March 2015 and NOK 140 million by 31 March 2016. The from the last vessel delivery, but no later than 31 August 2021 remaining balance must be repaid within five years of the disbursement date.
Ocean Yield ASA - Unsecured bond: Mortgage loan – DNB The senior unsecured bond issue listed on Oslo Stock Exchange has a maturity date of 6 July 2019. The loan has a floating interest rate. Interest is payable quarterly until maturity, at 30 June 2015. The bonds have a floating interest, which is paid quarterly. Mortgage loan – Pareto Bank Aker BioMarine The loan has a floating interest rate and matures in 2016. Interest and instalment are payable quarterly Secured loans: until maturity. The mortgage loan from DNB has a floating interest rate of Libor + 3.4%. The loans mature in 2016 and instalments and interest are paid semi-annually. Mortgage loan – Storebrand Bank ASA The mortgage from Caterpillar of USD 8.2 million denominated in USD will fall due in March 2017 The loan has a floating interest rate and matures in 2017. Interest and instalment are payable quarterly and has an interest rate of 6 month Libor + 1.89%. The first mortgage from Innovation Norway has a until maturity. payment exemption until 2016 while the second has a payment exemption until 2014. The mortgages and overdraft facility, totalling NOK 1 063 million in total, are secured in ships and other assets with book Construction loan – DNB values of NOK 1 099 million. The loan has a floating interest rate and matures in 2015. Interest and instalment are payable quarterly As of 31 December 2014, the Company was in breach with the loan covenant. However, pursuant to until maturity. the loan agreement, Aker ASA injected a cure investment of USD 4 million on 17 February 2015. Follow- ing the cure investment, the Company is compliant with all loan covenants Converto Capital Fund Companies owned by Converto Capital Fund have a total interest bearing debt of NOK 643 million at Havfisk the end of 2014. Fixed assets and inventory totalling NOK 381 million have been pledged as security for Secured loans: a mortgage loan of NOK 105 million. An overdraft facility of NOK 44 million comprises an operating The mortgage of NOK 1 275 million is primarily secured in the trawler fleet and shares in harvesting facility and guarantee facility. Unused operating facility credit totals NOK 51 million subsidiaries. The loan matures in 2018. The loan agreement includes covenants relating to the minimum In July 2014, Aker Philadelphia completed a USD 65 million private placement in Philly Tankers with a equity ratios of the harvesting subsidiaries. The mortgage of NOK 13 million is secured in shares and subsequent listing on the Norwegian OTC. Prior to the Philly Tankers private placement, the Company customer receivables. contributed a promissory note with a book value of USD 55,3 million (NOK 338 million) in return for 62 475 shares in the joint venture company Philly Tankers. By the end of 2014, the loan book to US 56.3 million. 98 Aker ASA annual report 2014 Annual accounts – Aker group
Changes in the group’s interest-bearing liabilities in 2014: Net interest-bearing debt Amounts in NOK million Long-term Short-term Total Net interest-bearing debt comprises the following items:
Interest-bearing liabilities as at 1 January 2014 25 214 5 564 30 778 Amounts in NOK million 2014 2013 Mortgage loan Fornebuporten 745 - 745 Det norske oljeselskap RBL facilities 17 532 - 17 532 Cash and cash equivalents 12 000 9 724 DNB mortgage loan to Havfisk 140 - 140 Financial interest-bearing non-current assets 1 809 2 066 Bond in Ocean Yield ASA 1 001 - 1 001 Interest-bearing short-term receivables 588 934 Ocean Yield bank facilities 1 783 - 1 783 Total interest-bearing assets 14 397 12 724 Det norske oljeselskap exploration facility in NOK - 700 700 Interest-bearing long-term debt (38 918) (25 214) Det norske oljeselskap revolving credit facility 1 663 - 1 663 Interest-bearing short-term debt including construction loans (4 898) (5 564) Aker ASA and holding companies issue of new bond loans 1 427 - 1 427 Total interest-bearing debt (43 816) (30 778) New loans in Akastor 3 770 3 770 Net interest-bearing debt (-) / assets (+) (29 419) (18 054) Other new loans 173 - 173 Beskjæres 76 mm fra venstre før trykk >> Change in credit facilities - 51 51 Loan fees and establishment costs (452) - (452) Total payment from new short-term and long-term loans Note 28 Pension expenses and pension liabilities (excluding construction loans) 27 782 751 28 532 Det norske oljeselskap repayment of bond (600) - (600) Det norske oljeselskap repayment of RBL facilities (4 063) - (4 063) The Aker Group’s Norwegian companies mainly cover their pension liabilities through group pension Det norske oljeselskap repayment of exploration facility - (1 200) (1 200) plans managed by life insurance companies. Under IAS 19, employee benefit plans have been Det norske oljeselskap revolving credit facility (3 870) - (3 870) treated, for accounting purposes, as defined benefit plans. The Norwegian companies in the Group Repayment of loans in Akastor (5 708) (1 888) (7 596) are subject to the Norwegian Act relating to mandatory occupational pensions, and the Group meets Repayment of bond loans in Ocean Yield (644) - (644) the requirements of this legislation. Repayment of bank loan in Aker Floating Production (484) - (484) In addition the Norwegian business is a member of an agreement-based early retirement plan ( Other repayments (555) - (555) AFP). The schemes provide a large proportion of the Norwegian employees the opportunity to retire Total repayment of short-term and long-term loans (15 924) (3 088) (19 012) before the general retirement age in Norway on 67 years. Employees who choose will retain a lifelong benefit from the age of 62 years. Loan Philly Tankers (note 17) - 338 338 The Group’s companies outside Norway have pension plans based on local practice and regulations. Reclassification / first year instalments (1 312) 1 312 - Most of the companies have pension plans under which the employer makes an agreed contribu- Currency translation and other changes 3 158 21 3 179 tion that is managed in a separate pension savings plan, or makes a contribution that is included in a Interest-bearing liabilities as at 31 December 2014 38 918 4 898 43 816 joint plan with other employers. The contributions are recorded as pension expenses for the period. The Group also has uninsured pension liabilities for which provisions have been made. Currency adjustments total NOK 3.2 billion and are mainly attributable to the USD loans described The discount rate used in 2014 and 2013 is based on the Norwegian high-quality corporate bond rate. above. Loans denominated in USD at the end of the year totalled USD 2.9 billion. A 10 per cent Actuarial calculations have been performed to determine pension liabilities and pension expenses decrease in the USD exchange rate compared to the rate of 7.41 on the balance sheet date would in connection with the Group’s defined benefit plans. The following assumptions have been made have caused a reduction in debt expressed in NOK of NOK 2.1 billion. when calculating liabilities and expenses in Norway:
Profit/loss 2014 Balance 2014 and balance 2013
Expected return 2.5% 4.0% Discount rate 2.5% 3.8% Wage growth 3.3% 3.5% Pension adjustment 2.5% 1.9% Mortality table K2013 K2013
Aker ASA annual report 2014 99 Annual accounts – Aker group
Pension expense recognised in profit and loss: Net defined-benefit obligations recognised in the balance sheet: Amounts in NOK million 2014 2013 Amounts in NOK million 2014 2013
Expense related to benefits earned during the period 175 190 Pension liabilities as at 31 December (3 734) (3 431) Interest expense accrued on pension liabilities 86 99 Fair value of pension funds as at 31 December 2 183 2 272 Expected return on pension funds (39) (70) Net liability for benefit-based pension liabilities as at 31 December (1 551) (1 159) Service costs 2 2 Pension funds 4 18 Curtailment / settlement - 13 Pension liabilities 31 December (1 555) (1 178) Pension expense recognised from defined benefit plans 224 234 Net liabilities for benefit based pension liabilities as at 31 December (1 551) (1 159) Contribution plans (employer's contribution) 621 597 Total pension expense recognised in profit and loss 845 831 Plan assets per category: Allocation in income statement: Pension funds related to the defined benefit plans are measured at fair value at 31 December 2014 Beskjæres 76 mm fra venstre før trykk >> Pension cost part of Wages and other personal expenses 798 801 and 2013, and divided into different categories as follows: Interest expenses and expected return part of net financial items 47 30 Total pension expense recognised in profit and loss 845 831 Amounts in NOK million 2014 2013
Equity securities: Remeasurement loss (gain) included in other comprehensive income: Oil and gas and oilfield services 46 57 Other equity securities 14 41 Change in discount rate and other financial assumptions 526 (85) Total equity securities 60 98 Change in mortality table - 113 Change in other assumptions (22) (20) Bonds: Other comprehensive income - loss/(gain) before tax 504 8 Government 69 37 Tax (140) (2) Finance 189 40 Other comprehensive income - loss/(gain) after tax 364 6 Private and Government enterprise 436 472 Municipalities 1 384 1 534 Total bonds 2 078 2 083 Changes in net present value of benefit-based pension liabilities: Amounts in NOK million 2014 2013 Other 44 91 Total 2 183 2 272 Net pension liabilities as at 1 January 1 159 1 214 In 2014, 100 per cent of the equity securities and 98 per cent of the bonds had quoted prices in an Expenses related to benefit earned during the period 175 190 active market (level 1). Aker has no equity securities or bonds that are classified in level 3. Property is Administration 2 2 classified in level 3. For the definition of the different levels, see Note 2.4. Net financial items 47 30 Curtailment / settlement - 13 Pension expense recognised from defined benefit plans 224 234
Acquisitions and disposals (55) (71) Pension payments (173) (80) Payments received (116) (172) Change in payroll tax - 16 Remeasurements included in other comprehensive income 504 8 Effects of movements in exchange rates 8 10 Net pension liabilities at 31 December 1 551 1 159 100 Aker ASA annual report 2014 Annual accounts – Aker group
Financial assumptions (Norwegian plans): Note 30 Provisions In the table below, the effect on pension expenses and pension liabilities is depicted given a 1%-point
increase or decrease in the discount rate. The effect of a 1%-point increase or reduction in wage growth is also shown. 2014 Abandonment Amounts in NOK million Warranties provision Other Total 1%-point 1%-point Amounts in NOK million increase reduction Balance as at 1 January 949 976 529 2 453 Discount rate: 5.1% 3.1% Acquired subsidiary 29 2 255 (109) 2 175 Pension liabilities (316) 378 Provisions made during the year 305 8 467 779 Provisions used during the year (117) (89) (281) (487) Wage growth: 4.8% 2.8% Provisions reversed during the year (162) - (293) (455) Pension liabilities 50 (47) Currency exchange adjustment 2 473 114 589 Balance as at 31 December 1 005 3 623 425 5 053 Beskjæres 76 mm fra venstre før trykk >> Long-term liabilities 134 3 581 184 3 899 Note 29 Other interest-free long-term liabilities Short-term liabilities 871 42 241 1 154 Balance as at 31 December 1 005 3 623 425 5 053 Other long-term debt and liabilities comprise the following items: Amounts in NOK million 2014 2013 2013 Abandonment Derivates 82 50 Amounts in NOK million Warranties provision Other Total Deferred and contingent considerations 44 198 Deferred revenue 250 296 Balance as at 1 January 820 798 846 2 464 Other interest-free long-term debt 356 450 Provisions made during the year 397 215 213 824 Total 732 995 Provisions used during the year (149) (37) (51) (237)
Provisions reversed during the year (141) - (98) (240) At 31 December 2014 interest-free long-term debt comprises NOK 82 million in derivatives, whereof Reclassifications - - (396) (396) NOK 42 million in interest rate swaps in Det norske oljeselskap and NOK 40 million in currency con- Currency exchange adjustment 23 - 15 38 tracts in Aker ASA, NOK 44 million in contingent provisions in Akastor related to acquisitions where final consideration is deferred and can depend to a certain degree on future earnings in the acquired Balance as at 31 December 949 976 529 2 453 companies. The deferred and contingent considerations as of December 31, 2014 relates mainly to the acquisition of Step Oiltools in 2011. NOK 249 million relates to deferred income in Aker Floating Long-term liabilities 79 829 33 941 Production. Other long-term interest-free debt include 53 million related to deferred real estate tax in Short-term liabilities 870 147 495 1 512 Aker Philadelphia Shipyard, 55 million in prepaid charter in Ocean Yield for PCTC vessels Höegh Xia- Balance as at 31 December 949 976 529 2 453 men and Höegh Beijing, as well as other long-term interest-free debt in Akastor and Det norske olje- selskap, 84 million and 89 million, respectively. At 31 December 2013, interest-free long-term debt comprised NOK 198 million in contingent provi- Warranties sions in Aker Solutions related to acquisitions where final consideration is deferred and can depend to The provision for warranties mainly relates to the possibility that Aker, based on contractual agree- a certain degree on future earnings in the acquired companies, NOK 296 million related to deferred ments, may have to perform guarantee work related to products and services delivered to customers. income in mainly Aker Floating Production. Other long-term interest-free debt consisted partly of NOK The provision is based on Aker’s contractual obligations and empirical estimates of the frequency and 46 million in derivatives in Det norske oljeselskap, NOK 47 million in deferred real estate taxes in Aker cost of work that may need to be done. The warranty period is normally two years and any cash Philadelphia Shipyard and NOK 158 million in obligations in Aker Insurance, of which 49 million in pro- effects will arise during this period. visions for incurred, not settled damages. NOK 538 million has been provisioned for warranties in Aker Solutions, NOK 242 million in Akastor, NOK 80 million in Kvaerner and NOK 134 million has been made with respect to pensions in the former Kvaerner US operation (see also Note 34). The remainder of the warranty provision relates to product tankers (Hull 016-019) delivered by Aker Philadelphia Shipyard. Aker ASA annual report 2014 101 Annual accounts – Aker group
Removal and decommissioning liabilities Note 32 Trade and other payables The main part of Det norske oljeselskap’s removal and decommissioning liabilities relate to the producing fields. The estimate is based on executing a concept for abandonment in accordance with the Petroleum Activities Act and international regulations and guidelines. The calculations assume an inflation rate of Trade and other payables comprise the following items: 2.5 per cent and a nominal discount rate before tax of between 3.89 per cent and 5.66 per cent. Amounts in NOK million 2014 2013
Other provisions Trade accounts payable 5 540 5 053 Other provisions mainly relate to lease agreements in Akastor. Amount due to customers for contract work and advances 8 190 5 107 Accrual of operating- and financial costs 8 117 9 588 Other short-term interest-free liabilities 5 704 4 147 Total 27 550 23 894 Note 31 Mortgage and guarantee liabilities
Mortgages Other current liabilities include liabilities under operator licenses (Det norske oljeselskap), VAT, payroll In the course of ordinary operations, completion guarantees are issued and advance payments are tax and tax withholding and reserves for unpaid wages and holiday payments. Beskjæres 76 mm fra venstre før trykk >> received from customers. Guarantees are typically issued to the customer by a financial institution. Col- lateral of NOK 25.9 billion, allocated between reserve-base lending facilities (RB) NOK 15.1 billion and secured loans and overdraft facilities NOK 10.8 billion has been provided for interest-bearing long-term Specification of net working capital: debt. The lenders of the RBL have security in form of pledge in all current licences (exploration, devel- Amounts in NOK million 2014 2013 opment and producing assets), insurance policies, floating charge and accounts receivable. The book value of assets used as collateral for secured loans and overdraft facilities is NOK 18.9 billion. Biological assets, inventory, work in progress, other trade and interest- free receivables 29 243 25 077 Liability for damage/insurance Like other licensees on the Norwegian continental shelf, Det norske oljeselskap has unlimited liability for Trade and other payables (27 550) (23 894) damage, including pollution damage. Like other oil companies, Det norske oljeselskap has insured it’s Current provisions (1 154) (1 512) pro rata liability on the Norwegian continental shelf. Installations and liability are covered by an opera- Total operational assets and debt 539 (329) tional liability insurance policy. Derivatives (1 732) 519 Pension assets and other non-current assets 360 266 Guarantees Pension liabilities, other interest-free long-term liabilities and non-cur- Akastor ASA has issued financial guarantees in favour of financial institutions for DOF Deepwater. The rent provisions (6 105) (3 064) guarantee was NOK 582 million at end of 2014 Total working capital (6 939) (2 608) Contractual commitments Ocean Yield has entered contractual obligations on purchase of vessels, currently under construction, of USD 393.5 million in total during 2015 and 2016. On behalf of the partners in the Ivar Aasen licence, Det norske oljeselskap has signed several com- mitments related to the development of the Ivar Aasen field. Excluding the rig contract with Maersk Drill- ing, Det norske oljeselskap’s commitments are USD 624 million in total. In addition, the company has entered into future capital commitments (other than leases) on the Alvheim fields amounting to approxi- mately USD 234 million at year end. See also Note 11.
Uncertain liabilities In the normal course of its business, the Group will be involved in disputes, and there are currently some unresolved claims. The Group has made provision in the financial statements for probable liabili- ties related to litigation and for claims arising from IFRS, based on the Group’s best assessment. The Group does not expect its financial position, operational results or cash flows to be materially affected by the resolution of these disputes. 102 Aker ASA annual report 2014 Annual accounts – Aker group
Note 33 Financial instruments
See also Note 6 Financial risk and exposure.
Fair value and carrying amounts The estimates of fair value and the carrying amounts shown in the balance sheet are as follows: 2014 2013
Amounts in NOK million Carrying amount Fair value Carrying amount Fair value
Financial assets carried at fair value Available for sale financial assets 1 270 1 270 2 485 2 485 Financial assets at fair value through profit and loss (including derivatives) 96 96 159 159 Beskjæres 76 mm fra venstre før trykk >> Financial assets designated at fair value through profit and loss 128 128 68 68 Interest rate swaps - hedging accounting - - 37 37 Foreign exchange contracts - hedge accounting 3 294 3 294 1 387 1 387 Total financial assets carried at fair value 4 789 4 789 4 136 4 136
Financial assets carried at amortised cost Loans and receivables 25 838 25 838 22 836 22 836 Cash and cash equivalents (including long-term restricted deposits, see Note 19) 12 214 12 214 10 240 10 240 Total financial assets carried at amortised cost 38 052 38 052 33 076 33 076
Financial liabilities carried at fair value Interest rate swaps - hedge accounting 146 146 73 73 Foreign exchange contracts - hedge accounting 4 049 4 049 41 41 Derivative contracts - not hedge accounting 928 928 923 923 Total financial assets carried at fair value 5 123 5 123 1 036 1 036
Financial liabilities carried at amortised cost Bonds and convertible loans 11 574 11 372 12 331 12 548 Other interest-bearing debt 32 242 32 278 18 447 18 447 Interest-free long-term financial liabilities 375 375 697 697 Interest-free short-term financial liabilities 19 062 19 062 19 641 19 641 Total financial liabilities carried at amortised cost 63 252 63 086 51 116 51 333
NOK 7.6 billion of financial liabilities classified as fixed rate in the interest profile table (Note 6) are liabilities that pursuant to contract have floating interest rates but have been swapped to fixed rates using interest rate swaps. In the table above, the changes in the fair value of these derivatives due to interest rate changes is shown on the line Interest rate swaps-hedge accounting and the line Derivative contracts-not hedge accounting. Aker ASA annual report 2014 103 Annual accounts – Aker group
Fair value hierarchy Transfer from level 3 in 2014 consisted of AMSC bonds in Ocean Yield totalling NOK 1 021 million. In The table below analyses financial instruments carried at fair value, by valuation method. See Note 5 December 2013 AMSC carried out a recapitalisation of the company where the bond loan agreement Accounting principles for definitions of the different levels in the fair value hierarchy. was amended with effect from 3 January 2014. Due to the significant changes in terms the bonds under the amended bond loan agreement is considered to be a new loan, and the bonds under the old terms have thus been derecognised on 3 January 2014. The bonds under the amended agreement have been 2014 classified as loans and receivables and carried at amortised cost. The gain and losses recognised in the income statement and in other comprehensive income in 2014 are mainly related to derecognition of the Amounts in NOK million Level 1 Level 2 Level 3 AMSC bond. In addition, in 2014, Aker Philadelphia Shipyard’s profit sharing asset was sold. Financial assets carried at fair value Available for sale financial assets 680 389 200 Financial assets at fair value through profit and loss (including Note 34 Contingencies and legal claims derivatives) - 96 - Financial assets designated at fair value through profit and loss 24 104 - Project risk and uncertainty Foreign exchange contracts used for hedging - 3 294 - The group engages in projects based on long-term contracts, some of which are fixed-price turnkey Beskjæres 76 mm fra venstre før trykk >> Total 705 3 883 200 contracts won through competitive tenders. Inability to meeting delivery deadlines or performance guarantees, and increases in project costs, may generate costs which are irrecoverable and exceed the revenue produced by the relevant project. Where a project is identified as loss-making, provisions are Financial liabilities carried at fair value made to cover future losses. The accounting treatment is based on available information and recom- Interest rate swaps used for hedging - 146 - mendations. Circumstances and information may change in subsequent periods, and the final outcome Foreign exchange contracts used for hedging - 4 049 - may therefore be better or worse than indicated by the assessments made at the time the accounts are Other derivative contracts - liability - 928 - prepared. Total - 5 123 - Legal disputes Interest-bearing financial liabilities carried at amortised cost Through their activities, Aker group companies are involved in various disputes all over the world. Provi- sions are made to cover expected losses resulting from such disputes if a negative outcome is likely Bonds and convertible loans 8 868 2 504 - and a reliable estimate can be prepared. However, the final decision in such cases will always be asso- Other interest-bearing debt - 31 794 484 ciated with uncertainty, and a liability may thus exceed the provision made in the accounts. Total 8 868 34 298 484 Tax Aker group companies are regularly involved in matters under consideration by the local tax authorities The following table presents the changes in instruments classified as level 3 as at 31 December: in the countries in which the group operates. In accordance with good accounting practice, the group treats matters which have not been finally resolved in accordance with the information available at the 2014 2013 time the annual accounts are issued. Financial Financial Amounts in NOK million assets assets Det norske oljeselskap Liability in damages/insurance Like other rights holders on the Norwegian continental shelf, the company has unlimited liability for Carrying amount as at 1 January 1 263 222 damage it causes, including pollution. Like other oil companies, the company has insured its pro rata Transfer to level 3 3 897 liability on the Norwegian continental shelf. Its facilities and liability are covered by an operational liabil- Transfer from level 3 (1 021) - ity insurance policy. Total gains or losses for the period recognised in the income statement 143 104 Total gains or losses recognised in other comprehensive income (134) 65 Uncertain liabilities Sales (53) (25) Through its operations, the company will be involved in disputes, including tax disputes. Any tax demands relating to the taxable income of Marathon Oil Norge AS before 1 January 2014 will be Carrying amount as at 31 December 200 1 263 refunded by the Marathon Group. The company makes provisions in its accounts in respect of likely liabilities based on the company’s best estimates and in accordance with IAS 37. Management is of the The amount of gains or losses for the period included in profit and loss opinion that no disputes will impose material liabilities on the company. and other comprehensive income that is attributable to gains or losses related to assets and liabilities at level 3 still held at the end of the Kvaerner reporting period - 166 Longview project
In 2011, arbitration was initiated against Longview and Amec Foster Wheeler North America Corp. (Fos- ter Wheeler) related to the Longview project delivered in 2011. The initial claim was USD 240 million in damages, exclusive of interest, of which USD 150 million was related to steam generation equipment 104 Aker ASA annual report 2014 Annual accounts – Aker group
provided by Foster Wheeler. Kvaerner’s claim is substantial and intended to recover excess construc- Note 35 Transactions and agreements with related parties tion costs and other damages incurred by Kvaerner North American Construction, Inc. (KNAC) in exe- cution of the project. Counter and cross claims against KNAC have been presented by the other parties Aker ASA’s main shareholder is TRG Holding AS, controlled by Kjell Inge Røkke and his family through in the arbitration process. The Resource Group REF AS (TRG AS). The Aker Group treats all companies controlled by Kjell Inge In early January 2015, settlement agreements were reached with Longview Power, LLC and others, Røkke as related parties. resulting in an aggregate amount of USD 48 million received from the various parties in February 2015. Remaining claims to be resolved in arbitration after this settlement is between KNAC and Foster Transactions with Kjell Inge Røkke and family Wheeler. KNAC will continue the arbitration proceedings against Foster Wheeler for the remaining claim. Aker has no material outstanding accounts, nor have there been any transactions with Kjell Inge Røkke, This process is expected to continue until third quarter 2015. except for remuneration for his work as chairman of the board (see Note 36). When Aker employees perform services for Kjell Inge Røkke or other related parties, Aker’s expenses are billed. In 2014, Kjell Nordsee Ost project Inge Røkke paid NOK 1.3 million plus value added tax for services and rental of premises (NOK 3.1 In 2012, arbitration related to the Nordsee Ost project was filed. The last wind jackets for the project million in 2013). TRG AS and Kjell Inge Røkke have provided services to Aker for NOK 1.7 million in were delivered in October 2013. The arbitration process for the project will take more time than earlier 2014 (NOK 1.5 million in 2013). Aker owns an aircraft which is operated by Sundt Air Management. The anticipated due to high complexity and resolution has been delayed. It is currently not possible to esti- users of the airplane are charged according to use. mate when the arbitration will be finalised. Kristian Monsen Røkke, as President and CEO until 9 April 2014 and as Executive Chairman of Aker Philadelphia Shipyard, received in total of USD 506 365 in 2014 (USD 369 528 in 2013) in salary and Beskjæres 76 mm fra venstre før trykk >> TH Global other remuneration from the company. Aker ASA has concluded a guarantee agreement with Kvaerner US Inc. (a subsidiary of TH Global), relating to the US pension fund Kvaerner Consolidated Retirement Plan. The purpose of the agreement Transaction with Höegh Autoliners is to enable Kvaerner US Inc to make its annual or quarterly minimum premium payments into the pen- In September 2013, Ocean Yield AS entered into newbuild contracts for two pure car truck carriers sion fund. Responsibility for the pension payments is split between Kvaerner US Inc. (two-thirds, with a (PCTCs) with Xiamen Shipbuilding Industry Co. Ltd (Xiamen). The vessels will be delivered in January guarantee from Aker ASA), and Aker Kvaerner Willfab Inc. and Aker Subsea Inc. (one-third, with a guar- and April 2016, and will then be chartered to Höegh Autoliners on 12-year “hell and high water” bare- antee from Akastor ASA). As at 31 December 2014, the group has made a provision of NOK 201 million boat charter contracts. under other long-term liabilities (see also Note 30). In September 2013, Ocean Yield AS entered into newbuild contracts for two pure car truck carriers (PCTCs) with Xiamen Shipbuilding Industry Co. Ltd (Xiamen). The vessels will be delivered in January and April 2016, and will then be chartered to Höegh Autoliners on 12-year “hell and high water” bare- boat charter contracts. The agreements were concluded by the board of Ocean Yield. The agreements were concluded by the board of Ocean Yield. Leif O. Høegh, a director of Aker ASA, also serves as the chairman of Höegh Autoliners.
Grants to employee representatives’ collective fund Aker ASA has signed an agreement with its employee representatives regulating the use of grants from Aker ASA for activities related to continuing professional development. In 2014, the grant totalled NOK 690 000 (2013: NOK 665 000).
Transaction with employees In February 2014, Aker ASA sold 0.98 per cent of the shares in Aker BioMarine to the management of the company for NOK 16 million.
Transactions with associated companies K2 Property and Hinna Park Invest AS Companies within the Aker group have had some transactions with K2 Property and Hinna Park Invest AS. Akastor signed a twelve-year-lease with both K2 Property and Hinna Park Invest AS for a new office building. Akastor owned 25 per cent of both companies until the end of 2014, when most of the shares were sold. 17 per cent stake in K2 Property AS remaining by the end of 2014.
Oslo Asset Management Holding AS At the beginning of the year, Aker owned 45 per cent of the shares in Oslo Asset Management Holding, the parent company of Oslo Asset Management ASA. On 2 December 2014 Akers 45 percentage was sold. Aker received full cost refund through the current billing for services rendered for Oslo Asset Man- agement / Oslo Asset Management Holding. In addition Aker ASA has billed the company for renting premises. Aker ASA annual report 2014 105 Annual accounts – Aker group
Transactions with joint ventures Note 36 Salary and other remuneration to the board of directors, nomination Trygg Pharma Holding AS Trygg Pharma Holding received equity contributions of NOK 100 million from Aker BioMarine in 2013. committee, CEO and other senior executive at Aker ASA
Aker BioMarine Manufacturing LLC and Aker BioMarine Financing LLC Remuneration to the board of directors Aker BioMarine Manufacturing received equity contributions of NOK 35 million from Aker BioMarine in Amounts in NOK 2014 2013 2013. In addition, Aker BioMarine has funded Aker BioMarine Financing LLC by means of loan. At the end of 2014, the loan is USD 10.6 million (NOK 78 million). Kjell Inge Røkke (Chairman of the Board) 560 000 551 667 Finn Berg Jacobsen (Deputy Chairman) 388 333 383 333 Fornebuporten Boligutvikling AS Kristin Krohn Devold (Director) 338 333 333 333 Fornebuporten Boligutikling rents premises from Fornebuporten. When employees of Aker or related Stine Bosse (Director) 338 333 333 333 parties perform services for Fornebuporten Boligutvikling, Aker’s expenses are billed. Karen Simon (Director since 17 April 2013) 338 333 220 000 Leif O. Høegh (Director) 338 333 333 333 DOF Deepwater AS Anne Marie Cannon (Director to 17 April 2013) - 113 333 In 2014, a loan of NOK 82 million (NOK 83 million in 2013) was given to DOF Deepwater. In 2013, NOK Atle Tranøy (Employee representative) 169 167 166 667 Beskjæres 76 mm fra venstre før trykk >> 200 million were converted to equity. Tommy Angeltveit (Employee representative) 169 167 166 667 Nina Hanssen (Employee representative since 17 April 2013) 169 167 110 000 Philly Tankers AS In July 2014, Aker Philadelphia completed a USD 65 million private placement in Philly Tankers with a Arnfinn Stensø (Employee representative since 17 April 2013) 169 167 110 000 subsequent listing on the Norwegian OTC. Prior to the Philly Tankers private placement, the Company Harald Magne Bjørnsen (Employee representative until 17 April 2013) - 56 667 contributed a promissory note with a book value of USD 55,3 million (NOK 338 million) in return for Bjarne Kristiansen (Employee representative until 17 April 2013) - 56 667 62 475 shares in the joint venture company Philly Tankers. Total 2 978 333 2 935 000 By the end of 2014, the loan is booked to US 56.3 million (NOK 417 million).
Renumeration to the audit committee Total assets and liabilities involving related parties in 2014 and 2013 Amounts in NOK 2014 2013 Amounts in NOK million 2014 2013 Finn Berg Jacobsen (Chairman of the Audit Committee) 171 667 168 333 Income statement: Atle Tranøy 116 667 113 333 Operating revenues 245 219 Stine Bosse 116 667 113 333 Operating expenses (153) (203) Total 405 000 395 000 Net financial items 6 13 Profit before tax 98 29 Renumeration to the nomination committee Balance sheet: Amounts in NOK 2013 Interest-bearing receivable 176 156 2014 Trade receivable and other interest-free current assets 19 27 Leif-Arne Langøy (Chairman of the nomination committee) 55 000 54 000 Total assets 195 183 Gerhard Heiberg 55 000 54 000 Trade liabilities and other interest-free current liabilities (27) (54) Kjeld Rimberg (until 17 April 2013) - 17 333 Interest bearing debt (417) - Total 110 000 125 333 Net exposure (249) 129 All amounts specify remuneration vested during the year. Where amounts have not been paid by the end of the year, provisions have been made in accordance with best estimates. In 2014, Chairman of the Board Kjell Inge Røkke earned NOK 560 000 in board remuneration from Aker ASA (NOK 551 667 in 2013), through The Resource Group AS (TRG). He also earned board remu- neration from other Aker-owned companies totalling NOK 1 521 538 through TRG in 2014 (NOK 1 081 981 in 2013) (see also Note 34 Transactions and agreements with related parties). Some board members also hold directorships in other Aker-associated companies. These board members earned no payments from Aker ASA in 2014 or 2013 except as described above. 106 Aker ASA annual report 2014 Annual accounts – Aker group
Aker’s organisational structure Senior executive receive no remuneration for directorships or membership of nomination committees Aker ASA’s numerous operational companies are organised into two portfolios; one industrial and one of other Aker companies. In 2014, Aker ASA earned a total of NOK 3 809 237 in respect of Øyvind Erik- financial. As a consequence of this organisational structure, Aker ASA does not have a group executive sen’s directorships, including NOK 3 350 000 relating to his directorship and former role as Executive team in its traditional form. At the end of 2014, Aker’s executive team consisted of President and CEO Chairman of Aker Solutions. Aker ASA earned NOK 538 583 in respect of Trond Brandsrud’s director- Øyvind Eriksen and CFO Trond Brandsrud. ships of other Aker companies in 2014. The President and CEO and other senior executives receive no other remuneration than described Principles for remuneration of the CEO and senior company executives above. Accordingly, their employment conditions include no loans, guarantees or stock option rights. Guiding principles The total remuneration package for executives consists of a fixed salary, standard employee pension and insurance coverage and a variable salary element. The main purpose of the system is to stimulate a strong and enduring profit-oriented culture that ensures share price growth. Senior executives partici- pate in a collective pension and insurance scheme open to all employees. The collective pension and Note 37 Shares owned by the Board of Directors, CEO and other employees in the insurance scheme applies for salaries up to 12G. The CEO and others in the executive team are offered Executive team standard employment contracts and standard employment conditions with respect to notice periods and severance pay. The employment contracts of senior executives can be terminated on three Shares owned by members of the board, the President and CEO and other senior executives months’ notice. If the company terminates a contract, the executive is entitled to between three and six and their related parties in Aker ASA as of 31 December 2014. Beskjæres 76 mm fra venstre før trykk >> months’ pay after the end of the notice period. Aker ASA Binding principles The intention of the variable salary element is to promote the achievement of good financial results Board of directors: and leadership in accordance with the company’s values and business ethics. The variable salary ele- Kjell Inge Røkke (Chairman of the Board)1 49 105 514 ment has three main components: a bonus calculated on the basis of value-adjusted equity, a payment Finn Berg Jacobsen (Deputy chairman) 5 000 calculated on the basis of the dividend on the company’s shares, and a payment based on personal Kristin Krohn Devold (Director) - achievement, in addition to a bonus-share award scheme including an option to buy Aker ASA shares at Stine Bosse (Director) 400 a discount for some senior company executive (see Note 2 to the Aker ASA separate financial state- Karen Simon (Director) - ment). Work on special projects may entitle an employee to an additional bonus. The company does not Leif O. Høegh (Director)2 135 000 offer stock option programmes for its employees. Atle Tranøy (Employee representative) - Nina Hanssen (Employee representative) - Remuneration of senior executives Øyvind Eriksen’s appointment as President and CEO can be terminated by either party on three Arnfinn Stensø (Employee representative) - months’ notice. If his contract is terminated by the company, Øyvind Eriksen is entitled to three months’ Tommy Angeltveit (Employee representative) - notice and three months’ salary from the date of termination. This amount will not be paid if he contin- ues to work for another company in the Aker Group. The remuneration plan for Øyvind Eriksen includes Executive team: a fixed salary, standard employee pension and insurance coverage and a variable salary element. The Øyvind Eriksen President and CEO3 100 000 variable salary element may total up to two-thirds of the fixed salary. In 2014, Øyvind Eriksen earned a Trond Brandsrud (CFO)4 39 736 salary of NOK 14 218 452 (NOK 14 893 951 in 2013), and variable pay of NOK 43 478 (NOK 9 168 621 in 2013). The value of additional remuneration was NOK 17 391 in 2014 (NOK 13 976 in 2013), while the 1*) Owns 100 per cent of The Resource Group TRG AS (TRG AS*) with his wife Anne Grete Eidsvig. TRG AS owns 99.45 per cent net pension expense for Øyvind Eriksen was NOK 250 812 (NOK 238 306 in 2013). of TRG Holding AS, which owns 66.66 per cent of Aker ASA. TRG AS also owns 1.19 per cent of Aker ASA directly. Group CFO Trond Brandsrud’s appointment can be terminated by either party on three months’ 2*) Leif O. Høegh has an indirect ownership interest in 135 000 Aker ASA shares. notice. If his contract is terminated by the company, Trond Brandsrud is entitled to six months’ salary 3*) Owned through the wholly-owned company Erøy AS, which also owns 100 000 b-shares (0.2 per cent*) in TRG Holding AS. from the date of termination. This amount will not be paid if he continues to work for another company in 4*) Of these, 13 810 shares are owned through the wholly-owned company Nordbrand Invest AS. In addition Norbrand Invest AS the Aker Group. owns 37 037 shares in Ocean Yield ASA. 11 190 shares in Aker Solutions ASA and Akastor ASA are also owned by a related The remuneration plan for Trond Brandsrud includes a fixed salary, standard employee pension and party to Trond Brandsrud. insurance coverage and a variable salary element. Trond Brandsrud’s variable salary may total up to 140 per cent of his fixed salary. Trond Brandsrud’s variable salary also includes a bonus-share award scheme including an option to buy Aker ASA shares at a discount (see Aker ASA Note 2 for a descrip- tion of the scheme). In 2014, Trond Brandsrud purchased 5 630 discounted shares in Aker ASA through the company Nordbrand Invest AS (2 500 shares in 2013). Trond Brandsrud earned a fixed salary of NOK 4 870 433 in 2014 (NOK 4 774 125 in 2013), as well as variable pay of NOK 2 812 133 (NOK 5 450 525 in 2013). Trond Brandsrud was not allocated any bonus shares for 2014 (and no bonus shares for 2013). The value of additional remuneration was NOK 17 439 in 2014 (NOK 18 822 in 2013), while the net pension expense for Trond Brandsrud was NOK 262 682 in 2014 (NOK 260 304 in 2013). Aker ASA annual report 2014 107 Annual accounts – Aker group
Note 38 Classification of reserves and contingent resources (unaudited)
Aker’s oil- and gas reserves and contingent resources are attributable to the subsidiary Det norske olje- selskap ASA (“Det norske”), an E&P company focused on the Norwegian Continental Shelf (NCS). Det norske publishes an annual reserve report in line the requirements of Oslo Stock Exchange on which the Det norske’s shares are listed. The reserve and contingent resource volumes have been classified in accordance with the SPE clas- sification system “Petroleum Resources Management System” and meet Oslo Stock Exchange’s requirements regarding the disclosure of hydrocarbon reserves and contingent resources. The classifica- tion is based on the probability of commerciality. Publicly listed companies must exercise caution when reporting reserves and contingent resources. Accordingly a conservative estimate of recoverable volumes is reported as the P90 estimate which has a 90 per cent probability of increasing when more information is available. These reserves are referred to as Proven reserves (1P). An unbiased estimate (P50), which has a 50 per cent probability of increasing and a 50 per cent probability of decreasing in size, is also reported. These reserves are referred to as Beskjæres 76 mm fra venstre før trykk >> Proven and Probable reserves (2P). Possible reserves (3P) are not reported. Det norske ASA has a working interest in 14 fields/projects containing reserves, see Table 1. Out of these fields/projects, eight are in the sub-class “On Production”, six are in the sub-class “Approved for Development”. Note that parts of the Alvheim Field are classified as “Justified for Production”. The Rea- son being that these reserves represent a planned infill well drilling campaign. Note also that Boa is a part of the Alvheim Field. The reason that this part is reported separately is that this part extends into the UK Continental shelf. An unitisation agreement with the UK parties has resulted in a net share of 57.622 per cent (65*0.8865) to Det norske. The share for the rest of Alvheim is 65.0 per cent. Det norske’s shares in the various fields/projects are as follows (share and operator in brackets):
■■ Sub-class “On Production”: Varg (5%, Talisman), Jotun (7%, Exxon Mobil), Atla (10%, Total), Jette (70%, Det norske), Alvheim (65%, Det norske), Boa (57.623%, Det norske), Vilje (46.907%, Det norske), Volund (65%, Det nor- ske)
■■ Sub-class “Approved for Development”: Enoch (2%, Talisman), Ivar Aasen-prosjektet (34.7862%, Det norske), Hanz (35%, Det norske), Gina Krog (3.3%, Statoil), Viper/Kobra (65%, Det norske), Bøyla (65%, Det norske)
■■ Sub-class “Justified for Development“: Alvheim Kameleon Phase 3 (65%, Det norske, Alvheim East Kam 4 (65%, Det norske), Alvheim Kneler 1 (65%, Det norske), Alvheim Boa Kam North (64.4178%, Det norske)
As at 31 December 2014 Det norske’s total net proven reserves (P90/1P) were estimated at 142.95 mil- lion barrels of oil equivalents. The total net proven plus probable reserves (P50/2P) were estimated at 205.64 million barrels of oil equivalents. The distribution between liquid and gas and between the differ- ent sub-categories is shown in Table 1. Changes from 2013 are shown in Table 2. The main reason for increased net reserve estimate is the acquisition of Marathon Oil Norge AS. The reserves associated with this accusation represent 84 per cent and 90 per cent of the reserve increase for proven (1P/P90) and proven plus probable reserves (2P/P50) respectively. In 2014 parts of the former Ivar Aasen Field has been unitised. In the 2013 report, the Ivar Aasen Field included the Ivar Aasen (Former Draupne) discovery, the West Cable discovery and the Hanz dis- covery. In this year’s report Hanz is reported separately. The reason being that the PL001B licence (Ivar Aasen discovery) in 2014 has been unitised with PL457 and PL338 BS. Also the West Cable (PL242) was included in the unitisation agreement forming the Ivar Aasen unit with a net share to Det norske of 34.7862 per cent. 108 Aker ASA annual report 2014 Annual accounts – Aker group
Table 1 – Reserves by field:
On Production 1P / P90 (low estimate) 2P / P50 (best estimate) Liquids Total million Net million Liquids Total million Net million (million Gross Gas barrels of oil barrels of oil (million Brutto NGL Gross barrels of oil barrels of oil As at 31.12.2014 Interest% barrels) NGL Mton (bcm) equivalents equivalents barrels) Mton NGL Mton equivalents equivalents
Varg 5% - - - - - 1.47 0.02 0.16 2.70 0.14 Jotun Unit 7% ------Atla 10% 0.45 - 0.70 4.85 0.48 0.51 - 0.79 5.49 0.55 Jette 70% 0.28 - - 0.28 0.20 0.36 - - 0.36 0.25 Alvheim 65% 39.39 - 0.26 41.05 26.68 62.45 1.19 69.95 45.47 Boa 58% 13.51 - 0.24 14.99 8.64 18.84 0.33 20.93 12.06 Vilje 47% 12.89 - - 12.89 6.05 22.37 - 22.37 10.49 Beskjæres 76 mm fra venstre før trykk >> Volund 65% 11.58 - 0.11 12.24 7.96 16.76 0.20 18.03 11.72 Total 50.01 80.68
Approved for Development 1P / P90 (low estimate) 2P / P50 (best estimate) Liquids Total million Net million Liquids Total million Net million (million Gross Gas barrels of oil barrels of oil (million Brutto NGL Gross barrels of oil barrels of oil As at 31.12.2014 Interest% barrels) NGL Mton (bcm) equivalents equivalents barrels) Mton NGL Mton equivalents equivalents
Enoch Unit 2% 1.71 - - 1.71 0.03 2.61 - - 2.61 0.05 Ivar Asen 35% 113.15 0.81 4.51 151.22 52.60 144.59 0.85 4.71 184.42 64.15 Hanz 35% 12.11 0.05 0.26 14.34 5.02 16.14 0.07 0.36 19.28 6.75 Gina Krog 3% 82.33 2.61 9.59 173.84 5.74 106.63 3.30 12.43 224.17 7.40 Viper/Kobra 65% 4.60 - 0.07 5.04 3.28 7.82 - 0.12 8.58 5.58 Bøyla 65% 11.70 - 0.09 12.27 7.98 21.32 - 0.19 22.54 14.65 Total 74.65 98.58
Justified for Development 1P / P90 (low estimate) 2P / P50 (best estimate) Liquids Total million Net million Liquids Total million Net million (million Gross Gas barrels of oil barrels of oil (million Brutto NGL Gross barrels of oil barrels of oil As at 31.12.2014 Interest% barrels) NGL Mton (bcm) equivalents equivalents barrels) Mton NGL Mton equivalents equivalents
Alvheim Kam Phase 3 65% - - 3.01 18.96 12.32 - - 3.30 20.73 13.48 Alvheim East Kam L4 65% 2.32 - 0.06 2.67 1.73 4.07 - 0.10 4.67 3.04 Alvheim Kneler 1 65% 2.30 - 0.03 4.47 1.60 5.18 - 0.06 5.55 3.61 Alvheim Boa Kam North 62% 3.81 - 0.06 4.22 2.63 9.06 - 0.15 10.02 6.26 Total 18.29 26.38
Total Reserves 31.12.2014 142.95 205.64 Aker ASA annual report 2014 109 Annual accounts – Aker group
Tabell 2 – Aggregated reserves and changes during 2014:
Net attributed million barrels of oil equivalents On production Approved for Development Justified for Development 1P / P90 2P / P50 1P / P90 2P / P50 1P / P90 2P / P50
Balance as at 31.12.2013 1.37 3.57 47.18 62.25 - - Production (4.06) (4.06) - - - - Acquisitions/disposals 49.33 79.74 11.26 20.23 18.29 26.38 Extensions and discoveries ------New developments ------Revisions of previous estimates 3.37 1.43 16.21 16.10 - - Balance as at 31.12.2014 50.01 80.68 74.65 98.58 18.29 26.38 Delta 48.64 77.11 27.47 36.33 18.29 26.38 Beskjæres 76 mm fra venstre før trykk >>
Note 39 Events after the balance sheet date
Johan Sverdrup update On 13 February 2015, the plan for development and operation (PDO) for Phase 1 and two plans for installation and operation (PIOs) were submitted to the Ministry of Petroleum and Energy. Planned production start-up is late 2019 and estimated gross capital expenditure for the first phase is NOK 117 billion (2015 value). Det norske oljeselskap has not succeeded in reaching an agreement regard- ing the unitisation with the other Johan Sverdrup partners. Thus, the Ministry of Petroleum and Energy will conclude on the final unitisation of Johan Sverdrup. Until this conclusion is made, the Ministry has decided that the operator’s recommendation of ownership shall be used as a preliminary basis. This gives Det norske oljeselskap 11.8933 per cent share in the Johan Sverdrup unit. 110 Aker ASA annual report 2014 Annual accounts – Aker ASA
Contents – Aker ASA
Aker ASA
Contents – Aker ASA 110 Income statement 111 Beskjæres 76 mm fra venstre før trykk >> Balance sheet as at 31 December 112 Cash flow statement 113 Notes to the financial statements for Aker ASA 114 Note 1 Accounting principles 114 Note 2 Salaries and other personnel expenses 115 Note 3 Gain/loss on sale of shares 116 Note 4 Fixed operating assets 116 Note 5 Shares in subsidiaries 117 Note 6 Investments in associates, joint ventures and other long-term investments in shares 117 Note 7 Receivables and other long-term financial assets 118 Note 8 Reversal/impairment of shares, receivables, etc. 118 Note 9 Cash and cash equivalents 118 Note 10 Shareholders’ equity 119 Note 11 Deferred tax 120 Note 12 Pension cost and pension liabilities 120 Note 13 Debt and other liabilities to subsidiaries 121 Note 14 External debt and other liabilities 122 Note 15 Mortgages and guarantee 122 Note 16 Financial market risk 123 Note 17 Shares owned by board members/executives 123 Note 18 Salary and other remuneration to the Board of Directors, nomination committee, the President and CEO, and other senior executives in Aker ASA 123 Note 19 Legal disputes and contingent liabilities 123 Note 20 Events after the balance sheet date 123
Directors’ responsibility statement 124 Independent auditor’s report 125 Aker ASA annual report 2014 111 Annual accounts – Aker ASA
Income statement
Amounts in NOK million Note 2014 2013
Salaries and other personnel related expenses 2, 12, 18 (125) (131) Depreciation/reversal write-off fixed assets 4 23 (15) Other operating costs 2 (108) (85) Operating profit (loss) (210) (231)
Interest income from subsidiaries 7 181 343 Other interest income 7, 9 53 75 Beskjæres 76 mm fra venstre før trykk >> Reversal of earlier years impairment of shares, receivables, etc. 8 - 38 Dividends from subsidiaries 5 753 850 Dividends from other companies 6 90 2 Foreign exchange gain 39 51 Gain on sale of shares 3 21 33 Other financial income 15 94 Total financial income 1 152 1 486 Interest expense to subsidiaries 13 (185) (250) Other interest expenses 14 (371) (288) Impairment of shares, receivables etc. 8 (4 852) (899) Foreign exchange loss (16) (127) Loss on sale of shares 3 - (3) Other financial expenses 16 (224) (32) Total financial expenses (5 648) (1 599) Net financial items (4 496) (113) Profit before tax (4 706) (344)
Tax 11 (7) (16) Profit after tax (4 713) (360)
Allocation of profit/loss for the year: Profit (+) / loss (-) (4 713) (360) Dividend (723) (940) Transferred from (+) / allocated to (-) other equity 5 436 1 300 Total 10 - - 112 Aker ASA annual report 2014 Annual accounts – Aker ASA
Balance sheet as at 31 December
Amounts in NOK million Note 2014 2013 Amounts in NOK million Note 2014 2013
ASSETS EQUITY AND LIABILITIES Deferred tax assets 11 - - Share capital 2 026 2 026 Other intangible assets - 4 Own shares (1) (1) Total intangible assets - 4 Total paid-in equity 2 026 2 025 Art, equipment, cars and fixtures 40 38 Other equity 10 201 15 667 Airplane 167 138 Total retained earnings 10 201 15 667 Property, buildings and housing 7 7 Beskjæres 76 mm fra venstre før trykk >> Total equity 10 12 226 17 693 Total tangible fixed assets 4 214 183 Pension obligations 12 171 147 Shares in subsidiaries 5, 8 16 638 21 235 Other long-term provisions 15 134 79 Other long-term investments in shares 6 1 098 1 782 Total provisions 305 226 Investments in associates and joint venture companies 6 10 2 Long-term liabilities to subsidiaries 13 88 979 Long-term receivables from subsidiaries 7 6 034 5 993 Long-term subordinated debt to subsidiaries 13 6 601 6 418 Long-term receivables from associates 7 - 10 Other long-term liabilities 14 6 735 5 266 Other long-term financial assets 7 14 60 Total other long-term liabilities 13 424 12 663 Total financial fixed assets 23 794 29 082 Allocated dividend 13 723 940 Total non-current assets 24 008 29 269 Tax payable 11 7 - Short-term receivables from subsidiaries 7 106 2 Short-term debt to subsidiaries 2 - Other short-term receivables 12 59 Other short-term liabilities 14 132 98 Cash and cash equivalents 9 2 693 2 290 Total current liabilities 864 1 038 Total current assets 2 811 2 351 Total equity and liabilities 26 819 31 620 Total assets 26 819 31 620
Oslo, 20 March 2015 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2014 113 Annual accounts – Aker ASA
Cash flow statement
Amounts in NOK million Note 2014 2013
Profit before tax (4 706) (344) Gain/-loss on sales of fixed assets and write-down/reversals 8, 3 4 831 831 Unrealised foreign exchange gain/-loss 1 76 Depreciation/reversal write downs 4 (23) 15 Change in other short-term items, etc. 400 (231) Cash flow from operating activities 503 347
Beskjæres 76 mm fra venstre før trykk >> Acquisition/sale of non-current assets 4 (7) (2) Acquisition of shares and other equity investments 5, 6 (222) (2 290) Payments on long-term interest-bearing receivables 7 (1 152) (849) Sale of shares and other equity disposals 5, 6 637 143 Cash flow from other investments/disposals 7 250 559 Cash flow from investment activities (494) (2 439)
Issue of long-term debt 14 1 427 2 000 Repayment of long-term debt 14 (11) (217) Change in short-term interest-bearing receivables 7 (85) 393 Dividend and Group contributions paid/received and other changes in equity 10 (937) (866) Cash flow from financing activities 394 1 310
Cash flow for the year 403 (782) Cash and cash equivalents as at 1 January 9 2 290 3 072 Cash and cash equivalents as at 31 December 9 2 693 2 290 114 Aker ASA annual report 2014 Annual accounts – Aker ASA
Notes to the financial statements for Aker ASA
Note 1 Accounting principles
The financial statements are prepared and pre- increase in the book value of the investment, with Non-current assets The use of estimates sented in Norwegian kroner (NOK). The financial the result that the net effect on the investment is Non-current assets are recognised and depreciated Preparation of the annual accounts in accordance statements have been prepared in accordance with zero. This reflects the fact that, overall, the “circular over their estimated useful life. Direct maintenance with generally accepted accounting principles the applicable statutory provisions and generally group contribution” has not constituted a transfer of of operating assets is expensed on an ongoing requires management to make judgments, esti- accepted accounting principles in Norway as at 31 value between Aker ASA and the subsidiary. basis as operating costs, while improvements and mates and assumptions that affect the application December 2014. enhancements are added to the acquisition cost of of accounting principles, as well as the reported Classification and assessment of balance sheet the operating asset and depreciated in line with the amounts of assets and liabilities, income and Subsidiaries/associates items asset. If the recoverable amount of the operating expenses. The estimates and underlying assump- Beskjæres 76 mm fra venstre før trykk >> A subsidiary is a company in which Aker ASA has Current assets and short-term liabilities comprise asset is less than its carrying value, the recoverable tions are reviewed and assessed on an ongoing control. This normally means an ownership interest items that fall due within one year of acquisition. amount is impaired. The recoverable amount is the basis, and are based on historical experience and of more than 50 per cent, and that the investment Other items are classified as non-current assets/ higher of net sales value and value-in-use. Value- various other factors considered to be reasonable. is long-term and of a strategic nature. An associate long-term liabilities. in-use is the present value of the future cash flows Changes to the accounting estimates are recog- is a company in which Aker ASA has major influ- Current assets are valued at the lower of acqui- that the asset will generate. nised in the profit and loss account in the same ence, but not control. This is normally the case sition cost or fair value. Short-term debt is recog- period as the one in which the estimates are when Aker ASA holds between 20 per cent and 50 nised at its nominal value at the time it was Pensions revised, unless deferred allocations are prescribed per cent of the voting shares in the company. recorded. Pension costs and pension liabilities are calculated by generally accepted accounting principles. In the balance sheet, subsidiaries and associ- Non-current assets are valued at acquisition according to linear vesting based on expected final ates are assessed using the cost method. A write- cost but written down to fair value whenever impair- salary. The calculation is based on a number of down to fair value is made whenever impairment is ment is deemed to be non-transient. Long-term assumptions such as the discount rate, future sal- due to causes that are assumed to be non-transient debt is recognised at its nominal value at the time it ary increases, pensions and other social benefits and a write-down is thus required pursuant to gen- was established. Fixed interest rate bonds are val- from the Norwegian national insurance system erally accepted accounting principles. A reversal is ued at amortised cost. (Folketrygden), future returns on pension funds and made whenever the impairment is no longer pre- actuarial assumptions regarding mortality and vol- sent. Receivables untary retirement. Pension funds are recognised at After acquisition, whenever a dividend exceeds Trade receivables and other receivables are fair value. the share of retained profits, the excess represents recorded at par value after the subtraction of a a refund of invested capital, and the dividend is provision for expected losses. Provisions are made Tax subtracted from the value of the investment in the for losses based on individual assessments of each The tax cost in the income statement includes both balance sheet. Received dividends are accounted receivable. the tax payable for the period and changes in for as a financial income when the dividends are deferred tax. Deferred tax is calculated at a nomi- approved. Foreign currency nal value rate based on the temporary differences A group contribution received from a subsidiary Transactions in foreign currencies are translated that exist between accounting and tax values, and after acquisition that is considered to exceed Aker into NOK using the exchange rates applicable at tax losses carried forward at the end of the ASA’s share of retained profits is booked as a the time of each transaction. Monetary items in accounting year. Tax increasing and tax decreasing deduction from the book value of the investment, foreign currencies are translated into NOK using temporary differences which reverse or can be with a corresponding deduction of the deferred tax the exchange rates applicable on the balance reversed in the same period are offset. Net deferred asset (or an increase in deferred tax). In cases sheet date. Non-monetary items that are measured tax assets are recognised to the extent that it is where no deferred tax asset is booked and an at historic cost in a foreign currency are translated probable that they can be utilised. amount equal to the Group contribution is trans- into NOK using the exchange rates applicable on ferred back to the subsidiary as a group contribu- the balance sheet date. Non-monetary items that Cash flow statement tion without tax effect, the entire received group are measured at fair value in a foreign currency are The cash flow statement is prepared according to contribution will be recorded as a deduction from translated into NOK using the exchange rates the indirect method. Cash and cash equivalents the book value of the investment (without any corre- applicable on the date of measurement. Valuation consist of cash, bank deposits and other current, sponding entry with respect to deferred tax assets/ changes due to exchange rate fluctuations are liquid investments. deferred tax). The group contribution without tax recorded on a continuous basis under other finan- effect is then correspondingly recorded as an cial items. Aker ASA annual report 2014 115 Annual accounts – Aker ASA
Note 2 Salaries and other personnel expenses Bonus ceiling Dividends and personal bonuses are paid in cash in the year after the vesting year. Participants can achieve a total bonus equal to a defined percentage of fixed salary (bonus ceiling), split into a dividend Salaries and other personnel expenses consist of the following: bonus and a personal bonus. Amounts in NOK million 2014 2013 Dividend bonus The dividend bonus is linked to dividends paid for the vesting year. A defined number of shadow shares Salaries 80 83 are used as the basis for calculating the dividend bonus. The calculation of the shadow shares is based Social security contributions 13 16 on the target yield for net asset value and the target dividend for the vesting year. Participants receive a Pension costs (see note 12) 13 11 dividend bonus (cash) equal to the dividend per share proposed by the board of directors multiplied by Other benefits 19 21 the number of shadow shares. Total 125 131 Average number of employees 49 51 Personal bonus The personal bonus is linked to the achievement of personal results and goals, and is set based on an Average number of man years 49 47 overall evaluation covering each participant’s personal achievements and development, the results and development of the company and the unit to which the participant belong, and the participant’s contri- Beskjæres 76 mm fra venstre før trykk >> bution to the Aker-community. Audit fee is included in other expenses and consists of the following: Amounts in NOK million 2014 2013 Bonus shares Participants may be awarded shares in the company if the company achieves an increase in net asset Ordinary auditing 1.9 2.0 value of more than 10 per cent in the relevant year. The number of potential bonus shares cannot be determined before allocation takes place, as the final number is based on the share price on the deter- Attestation services 0.3 0.2 mination date and the participant’s salary as at 31 December of the vesting year. An allocation range is Tax services 0.5 0.8 calculated for the award of bonus shares at the beginning of the vesting year, equal to 50 per cent of Other services 0.4 0.6 the range for the dividend bonus. The fixed allocation range is a gross range. The participant’s esti- Total 3.1 3.6 mated tax on the free bonus shares is deducted from this gross range, as the company pays this amount in by way of advance tax deduction. Deduction of tax leaves a net range as a basis for calculat- Amounts exclusive VAT according to Aker ASA VAT key. ing the number of bonus shares. The value of the bonus shares equals the share price on the vesting date minus a deduction to take into the account the lock-in period (20 per cent). The lock-in period is three years from the date the bonus shares are received. The limitations on the right of participants to Remuneration to/from Group and related parties consist of the following: dispose of the discounted shares freely are registered in VPS as a restriction in favour of the company. If a participant leaves the company during the lock-in period, 50 per cent of the distributed bonus Amounts in NOK million 2014 2013 shares are returned to the company without compensation to the participant.
Invoiced for services and office rent within the Group 30.9 24.9 Option to purchase of shares at a discount but subject to a lock-in period Invoiced for services technology project within the Group - 2.0 Participants may purchase shares in the company at a price equal to 80 per cent of the share price at Acquisition of services from The Resource Group TRG/Kjell Inge Røkke (1.7) (1.5) the time the shares are purchased. The number of shares that can be bought during the vesting year is Board fee to The Resource Group TRG AS excluding payroll tax (0.6) (0.6) calculated based on the estimated number of bonus shares the participant may theoretically receive at Invoiced for services to The Resource Group TRG AS 1.3 1.1 the end of the earning year if he/she achieves the maximum bonus. Participants choose how many shares they want to buy within their allocation range. A lock-in period of three years applies from the Total 29.9 25.9 date the shares are received. The limitations on the right of participants to dispose of the discounted shares freely are registered in VPS as a restriction in favour of the company. The lock-in period contin- See Note 35 to the group accounts for other transactions with related parties. ues to apply if the participant leaves the company during the lock-in period, unless the company and the participant agree otherwise. Incentive programme for employees (excluding the President and CEO) Aker ASA has adopted an incentive programme to promote the company’s goals and give employees Dividend bonuses and personal bonuses are recorded as salary expenses. An allocation of NOK 25 the same motivation as shareholders. In 2014, the incentive programme had the following elements: million has been made under other short-term debt as at 31 December 2014 in respect of dividend bonuses and personal bonuses including holiday pay and payroll tax. ■■ a dividend bonus, based on the Aker ASA dividend ■■ a personal bonus, based on personal goals Bonus shares and shares purchased at a discount have a three-year lock-in period. The accrual of ■■ bonus shares, allocated on the basis of on an agreed increase in net asset value bonus shares is recorded as a salary expense in the income statement distributed over the lock-in ■■ an option to purchase Aker ASA shares at a discount but subject to a lock-in period. period. The contra entry is other equity. There were no accruals related to 2014 and 2013 bonus shares since the target related to bonus shares was not achieved in 2014 and 2013. See note 36 to the group accounts regarding the incentive programme for the President and CEO. 116 Aker ASA annual report 2014 Annual accounts – Aker ASA
Note 3 Gain/loss on sale of shares
Gains and losses on shares are as follows: Amounts in NOK million 2014 2013
Aker BioMarine AS 7 - Molde Fotball AS - 4 Oslo Asset Management Holding AS 14 1 Sparbebank 1 SMN - 28 Total gain 21 33 RGI Inc - (3) Total loss - (3)
Beskjæres 76 mm fra venstre før trykk >>
Note 4 Fixed operating assets
The change in fixed operating assets is shown below:
Equipment/ Property/ Capitalised cars/ Buildings/ Amounts in NOK million expenses1 Airplane Art fixtures Housing Total
Acquisition cost as at 1 January - 241 28 117 14 399 New acquisition 5 - - 2 - 7 Acquisition cost as at 31 December 5 241 28 119 14 406 Accumulated depreciation and impairment - (74) - (112) (7) (193) Book value as at 31 December 5 167 28 7 7 214 Depreciation for the year - (10) - (5) - (15) Impairment for the year - 38 - - - 38
Useful life 25 years 4-8 years 50 years Not Not Depreciation plan depreciated Linear depreciated Linear Linear
1*) Capitalised expenses relate to Aker ASA moving to Fornebu in 2015 and will be depreciated from relocation date. Depreciation of improvements / enhancements according to expected life of asset. Aker ASA annual report 2014 117 Annual accounts – Aker ASA
Note 5 Shares in subsidiaries
Shares in subsidiaries included the following companies as at 31 December 2014: Equity as at Profit before Dividend Book Amounts in NOK million Ownership in %1 Location, city 31 Dec. 20142 tax 20142 received value
Ocean Yield ASA 73.4 Oslo 5 176 344 316 3 242 Intellectual Property Holdings AS 100.0 Oslo 9 - - 8 Aker Maritime Finance AS 100.0 Oslo 1 271 169 - 1 146 Aker Capital AS 100.0 Oslo 4 931 (565) - 4 931 Aker Kværner Holding AS 70.0 Oslo 7 951 (4 696) 406 5 566 Converto Capital Fund IS 98.0 Oslo 1 574 876 - 316 Converto Capital Fund AS 90.0 Oslo 56 57 18 6 Beskjæres 76 mm fra venstre før trykk >> Norron AB 48.2 Stockholm 35 35 13 46 Aker Achievements AS 100.0 Oslo 3 1 - - Aker BioMarine AS 99.0 Oslo - - - - Cork Oak Holding AS 100.0 Oslo - - - - Resource Group International AS 100.0 Oslo 68 1 - 64 Havfisk ASA 73.2 Ålesund 571 (43) - 402 Superba ASA 99.0 Oslo 1 579 (63) - 732 Aker Pharma Holdco AS 100.0 Oslo 348 - - 179 Total 753 16 638
1*) 1*) The shareholder’s agreement for Norron AB gives Aker ASA the right to elect two out of four board members, including the chairman of the board. For all other companies, Aker ASA’s ownership and share of votes are the same. 2*) 100 per cent of the company’s equity before dividends and group contributions as at 31 December and profit before tax in 2014.
The investments are recorded at the lowest of fair value and cost price.
Note 6 Investments in associates, joint ventures and other long-term investments in shares
Investments in associates and joint ventures: Investments in other shares: Cost Accum. Book value Book value Cost Accum. Book Book value Amounts in NOK million price write-down 2014 2013 Amounts in NOK million price write-down value 2014 2013
Oslo Asset Management Holding AS (associate) - - - 2 Akastor ASA (previously called Aker Solutions ASA*)1 700 (325) 375 1 782 Akerhallen AS (associate) 1 -1 - - Aker Solutions ASA 2 1 288 (568) 720 - G&A Air AS (joint venture) 10 - 10 - Aker Pensjonskasse 3 - 3 - Total 11 -1 10 2 Total 1 991 (893) 1 098 1 782
The company has received dividend from Oslo Asset Management Holding AS of NOK 23 million in 2014. 1*) 6.3 per cent ownership. In addition Aker ASA owns 40.3 per cent through Aker Kværner Holding AS. Aker ASA has received The investments are recorded at the lowest of fair value and cost price. NOK 67 million in dividend from the company in 2014. 2*) 6.4 per cent ownership. In addition Aker ASA owns 40.6 per cent through Aker Kværner Holding AS.
The investments are recorded at the lowest of market value and cost price. 118 Aker ASA annual report 2014 Annual accounts – Aker ASA
Note 7 Receivables and other long-term financial assets Note 8 Reversal/impairment of shares, receivables, etc.
Receivables and other long-term financial assets consist of the following items: Reversals/impairments of shares, receivables, etc. are as follows: Amounts in NOK million 2014 2013 Amounts in NOK million 2014 2013
Other long-term receivables 5 52 Havfisk ASA - 38 Long-term loans to employees 7 7 Total reversals of shares - 38 Capitalised expenses, etc. 2 1 Total reversals of shares, receivables, etc. - 38 Total other long-term assets 14 60 Aker Kværner Holding AS (3 694) (705) Akastor ASA (284) (118) Long-term receivables from subsidiaries consist of: Aker Solutions ASA (491) - Amounts in NOK million 2014 2013 Aker Capital AS (384) - Beskjæres 76 mm fra venstre før trykk >> Other shares - (11) Fornebuporten Bolig Holding AS - 198 Total impairment shares (4 852) (834) Aker Capital AS 5 665 5 427 Navigator Marine AS - (65) Aker BioMarine AS - 10 Total impairments of receivables, etc. - (65) Krill Pharma AS 2 - Total impairments of shares, receivables, etc. (4 852) (899) Converto Capital Fund AS - 10 Aker Maritime Finance AS 313 337 The company has tested its investments for impairment as at 31 December 2014. Investments in Navigator Marine AS 12 - listed shares are adjusted according to the lower of cost price and market price. Other investments Aker Pharma Holdco AS 2 - are valued based on other available information/best estimate. Long-term items are adjusted to the Superba ASA 26 - lower of cost price and fair value. Ocean Harvest AS 16 11 Total 6 034 5 993
The receivables have a maturity of more than one year. Note 9 Cash and cash equivalents Interest terms on the receivables reflect market terms. Cash and cash equivalents are distributed as follows:
Long-term receivables from associates consist of: Amounts in NOK million 2014 2013 Amounts in NOK million 2014 2013 Restricted cash 12 67 Unrestricted cash 2 681 2 223 Oslo Asset Management Holding AS - 10 Total 2 693 2 290 Total - 10
Short-term receivables from subsidiaries consist of: Amounts in NOK million 2014 2013
Superba ASA 106 - Aker BioMarine AS - 1 Other - 1 Total 106 2
Aker ASA annual report 2014 119 Annual accounts – Aker ASA
Note 10 Shareholders’ equity The 20 largest shareholders as at 31 December 2014: Number of As at 31 December 2014, Aker ASA’s share capital is as follows: shares Per cent Total 1 nominal value TRG Holding AS 48 245 048 66.7% Number for issued J.P. Morgan Chase BANK N.A. London 1 870 449 2.6% Shares of treasury Shares Nominal shares Folketrygdfondet 1 016 690 1.4% issued shares outstanding value (NOK) (NOK million) The Resource Group TRG AS1 860 466 1.2% Morgan Stanley & Co LLC 802 075 1.1% Ordinary shares 72 374 728 (28 788) 72 345 940 28 2 026 Tvenge, Torstein Ingvald 800 000 1.1% Total share capital 72 374 728 (28 788) 72 345 940 2 026 State Street Bank & Trust Company 737 527 1.0% KBC Securities NV 678 363 0.9% Treasury shares (1) Citibank, N.A. 625 934 0.9% Share premium reserve - KBC Securities NV 520 903 0.7% Other paid-in capital - Beskjæres 76 mm fra venstre før trykk >> UBS (Luxembourg) S.A. 445 423 0.6% Total paid-in capital 2 026 Oslo Pensjonsforsikring AS PM 445 200 0.6% Fondsfinans Spar 375 000 0.5% All shares have equal voting rights and are entitled to dividends. Aker ASA has no voting rights for its KLP Aksje Norge VPF 354 368 0.5% own shares. Fidelity Funds-Nordic Fund/SICAV 353 928 0.5% Treasury shares: J.P. Morgan Chase BANK N.A. London 340 842 0.5% In 2014, the company has acquired 566 treasury shares. The company has sold/distributed 16 583 Morgan Stanley & Co LLC International 331 596 0.5% treasury shares for net NOK 5 million. The Bank of New York Mellon SA/NV 298 872 0.4% Citibank, N.A. 292 492 0.4% Skandinaviske Enskilda Banken AB 270 104 0.4% Changes in shareholders’ equity in 2014 are shown below: Others 12 709 448 17.6% Trea- Total Re- Total 72 374 728 100% Share sury paid-in Other tained Total Amounts in NOK million capital shares capital equity earnings equity 1*) Kjell Inge Røkke controls 67.8 per cent of the shares in Aker ASA through TRG Holding AS and TRG AS.
Equity as at 1 January 2 026 (1) 2 025 15 667 15 667 17 693 Purchased/sold/bonus treasury shares - - - 5 5 5 Pension directly against the equity - - - (35) (35) (35) Dividend provisions - - - (723) (723) (723) Profit for the year - - - (4 713) (4 713) (4 713) Equity as at 31 December 2 026 (1) 2 026 10 201 10 201 12 226 120 Aker ASA annual report 2014 Annual accounts – Aker ASA
Note 11 Deferred tax Income tax expense / income: Amounts in NOK million 2014 2013 The table below shows the difference between accounting and tax values at the end of 2014 and 2013 respectively, changes in these differences, deferred tax assets at the end of each year and the Tax payable in the profit and loss account - - change in deferred tax assets. Tax payable in the profit and loss account other (7) - Write-down deferred tax pension against equity - (16) Amounts in NOK million 2014 2013 Change in deferred tax - - Total tax expense (7) (16) Differences in accruals (87) (1) Fixed asset differences 56 19 The 2014 figures above are based on estimates of different non-deductible taxable income, non- Net pension liability (305) (227) deductible items and differences between accounting and tax items. The final calculations will be Capital gains and loss reserve 5 6 made in the income-tax return and may differ from estimates above. Total differences (331) (203) Beskjæres 76 mm fra venstre før trykk >> Tax losses carried forward (2 104) (1 617) Reconciliation of effective tax per cent in the profit and loss account: Cut-off interest deduction carried forward (3) - Amounts in NOK million 2014 2013 Total deferred tax basis (2 438) (1 820) Net deferred tax 27% (658) (491) 27%/28% tax on profit before tax 1 271 97 Deferred tax assets 658 491 27%/28% tax on permanent differences (1 104) 24 Recognised deferred tax assets - - Change in tax rate deferred tax 28% vs 27% - (18) Tax payable other (7) - Deferred tax asset is incorporated in the balance sheet if budgets indicate that the asset will be uti- 27% tax on unrecognised deferred tax asset (167) (119) lised in the future. Estimated tax expense (7) (16) Effective tax rate (tax expense compared with profit / loss before tax 0% 5% The deferred tax assets have been written down to 0 as of 31.12.14.
Note 12 Pension cost and pension liabilities Estimated taxable profit Amounts in NOK million 2014 2013 According to the Norwegian Occupational Pensions Act (Lov om tjenestepensjon), the company is required to provide a pension plan for all its employees. The company’s pension plans meets the stat- Profit before tax (4 706) (344) utory requirements. Permanent differences in net non-taxable income (-) / expenses (+) 4 091 (86) Aker ASA primarily covers its pension liabilities through a group pension plan provided by a life Change in temporary differences 128 (1) insurance company. For accounting purposes, the plan has been treated as a defined benefit plan. Utilisation of accumulated tax losses - - Aker ASA also has uninsured pension liabilities. The schemes provide defined future benefits. These benefits depend mainly on the number of Estimated taxable income (487) (431) years the individual has been a member of the plan, the level of salary at the time of retirement and the Tax payable (27%/28%) in the profit and loss account - - level of benefits provided by the Norwegian national insurance scheme. Tax payable 27%/28% (in the balance sheet) - - Actuarial calculations have been undertaken based on the following assumptions:
2014 2013
Discount rate 2.5% 4.1% Wage increases 3.3% 3.8% Social security base adjustment / inflation 3.0% 3.5% Pension adjustment 1.3% 1.9%
These actuarial assumptions are based on the assumptions that are commonly used in the life insur- ance industry with respect to demographic factors. The discount rate is based on the Norwegian high-quality corporate bond rate. Aker ASA annual report 2014 121 Annual accounts – Aker ASA
Percentage composition of pension assets and reconciliation of actual return: Note 13 Debt and other liabilities to subsidiaries
2014 2013 Long-term liabilities to subsidiaries consist of the following: Amounts in NOK million 2014 2013 Bonds 95.2% 80.4% Money market 2.2% 11.7% Resource Group International AS 52 19 Shares 2.8% 5.5% Aker Floating Holding AS - 50 Property/other (0.2%) 2.7% A-S Norway AS 19 727 Aker Holding Start 2 AS 12 183 Intellectual Property Holding AS 5 - Amounts in NOK million 2014 2013 Total 88 979 Expected return on pension assets 3 2 Long-term liabilities to subsidiaries have a maturity on demand, which implies a maturity of more than Beskjæres 76 mm fra venstre før trykk >> Actual return on pension assets 3 2 five years and interest set on market terms. See below for subordinated loans.
Pension expenses Amounts in NOK million 2014 2013 Subordinated debt is as follows: Amounts in NOK million 2014 2013 Present value of this year's pension accruals (6) (6) Interest expense on accrued pension liabilities (6) (7) Aker Capital AS 4 980 4 841 Expected return on pension funds - 2 Aker Maritime Finance AS 1 621 1 577 Change in social security contributions (1) - Total subordinated debt 6 601 6 418 Net pension expenses (-) (13) (11) The loans are subordinate to all other liabilities of Aker ASA and have contractual maturity dates fall- Net pension liabilities / assets as at 31 December: ing after those of all Aker ASA external liabilities. The loans have an interest rate of 12 month NIBOR + 1%. Amounts in NOK million 20141 20131
Allocated dividend as following: Present value of accrued pension liabilities (238) (211) Calculated pension liabilities (238) (211) Amounts in NOK million Per aksje 2014 Value of pension funds 67 65 Allocated as at 31.December 10 723 Calculated net pension funds / liabilities (171) (146) Total 10 723 Net pension funds/liabilities recognised in balance sheet1 (171) (147) Number of individuals covered 126 126 A dividend of NOK 10.00 per share, totally NOK 723 million will be proposed at the Annual General The agreements include 47 active and 76 retired persons. Meeting on 17 April 2015, of which half (NOK 5.00 per share) is proposed to be with an optional set- tlement in new Aker shares at 10 per cent discount to the prevailing share price. 1*) Aker ASA had only underfunded plans in 2014 and 2013, i.e. plans where the value of the pension liabilities exceeds the value of the pension funds. 2*) Provision has been made for social security contributions on contracts with net pension liabilities.
Aker ASA’s net pension liability is recognised in the balance sheet as an interest-free long-term liabil- ity. Pension funds are invested in accordance with the general guidelines for life insurance compa- nies. Recorded pension liabilities are calculated on the basis of estimated future pension liabilities and accrued in accordance with generally accepted accounting principles. The pension liability recorded in the accounts is not the same as the vested pension rights as at 31 December. 122 Aker ASA annual report 2014 Annual accounts – Aker ASA
Note 14 External debt and other liabilities Other current liabilities consist of the following: Amounts in NOK million 2014 2013 Long-term interest-bearing liabilities are distributed as follows: Accrued interest external 36 26 Incurred costs 37 43 Amounts in NOK million Interest Maturity 2014 2013 Foreign exchange derivatives 35 1 Other 24 28 Unsecured bond loans: Total 132 98 FRN Aker ASA Senior Unsecured Bond Issue Nibor November 2010/2015 + 5% 2015 850 850 Own bonds Nibor November + 5% 2015 (43) (43) Note 15 Mortgages and guarantee FRN Aker ASA Senior Unsecured Bond Issue Nibor 2012/2017 + 4% April 2017 500 500 Guarantee obligations are as follows: Beskjæres 76 mm fra venstre før trykk >> FRN Aker ASA Senior Unsecured Bond Issue Nibor 2013/2018 + 3.5% June 2018 1 300 1 300 Amounts in NOK million 2014 2013 FRN Aker ASA Senior Unsecured Bond Issue Nibor January 2012/2019 + 5% 2019 500 500 Loan guarantees 458 469 FRN Aker ASA Senior Unsecured Bond Issue Stibor Completion/payment guarantees 134 154 2014/2019 + 3.25% July 2019 1 430 - Total guarantee obligations 592 623 FRN Aker ASA Senior Unsecured Bond Issue Nibor 2013/2020 + 4% June 2020 700 700 Loan guarantees as at 31 December 2014 consisted mainly of guarantees related to Superba ASA NOK 305 million, Fornebuporten AS NOK 150 million and NORO Fotball AS NOK 3 million. FRN Aker ASA Senior Unsecured Bond Issue Nibor September Aker ASA has a guarantee commitment to Kvaerner US Inc. relating to the US pension fund 2012/2022 + 5% 2022 1 000 1 000 Kvaerner Consolidated Retirement Plan. The purpose of the agreement is to enable Kvaerner US Inc. Loan expenses (41) (39) to make its annual and quarterly minimum premium payments into the pension fund. Responsibility for Total unsecured bond loans 6 196 4 768 payment of the premiums into the pension fund is split between Kvaerner US Inc. (two-thirds, with a guarantee from Aker ASA), and Aker Kvaerner Willfab Inc. and Aker Subsea Inc. (one-third, with a guarantee from Akastor ASA). As at 31 December 2014, Aker ASA has made a long-term provision of Unsecured bank loans: NOK 134 million. Nibor Sparebank1 SMN + 3.75% May 2017 500 500 Capitalised borrowing expenses (1) (2) Total unsecured bank loans 499 498
Unrealised loss on foreign exchange derivatives 40 - Total 6 735 5 266
The loans are recorded at amortised cost. As at 31 December capitalised borrowing expenses of NOK -42 million were spread across the remaining time to maturity. The loans in the table are all denominated in NOK, except from the Bond Issue 2014/2019 which is in SEK. The company has covenants related to long-term debt (debt/equity ratio etc.). The company is in no breaches to these covenants as of 31.12.2014. Aker ASA annual report 2014 123 Annual accounts – Aker ASA
Note 16 Financial market risk
The company is exposed to several types of financial risk, the most significant of which are credit, liquidity, foreign exchange and interest rate risk. The purpose of risk management is to measure and manage financial risks in a reliable manner, in order to increase predictability and simultaneously mini- mise any negative impacts on Aker’s financial results. Aker ASA has loan and guarantee commitments that contain equity covenants. At the end of 31 December 2014, Aker ASA was in compliance with all such covenants. Also see Note 6 to the group accounts. Aker ASA secures net exposure in cash flow in foreign exchange and normally not balance items. Cash flow, including detectable structural transactions and possible loans in foreign exchange are secured within fixed intervals. In total Aker ASA has hedged USD 61 million net by means of forward contracts and options (Euro- pean). In addition Aker ASA has an interest- and foreign currency agreement of SEK 1 150 million. As at 31 December 2014 the accounts show an unrealised loss of NOK 75 million on all foreign exchange Beskjæres 76 mm fra venstre før trykk >> agreement. The amount is included in other financial items in the profit and loss accounts. In the bal- ance sheet the amount is included in other short-term debt and other long-term debt. See note 14.
Note 17 Shares owned by board members/executives
See Note 37 to the financial statements of the Group.
Note 18 Salary and other remuneration to the Board of Directors, nomination committee, the President and CEO, and other senior executives in Aker ASA
See Note 36 to the financial statements of the Group.
Note 19 Legal disputes and contingent liabilities
There are no major legal disputes or contingent liabilities as at 31.12.
Note 20 Events after the balance sheet date
There have not been any major events after the balance sheet date. Also see Note 39 in the financial statements of the Group. 124 Aker ASA annual report 2014 Annual accounts – Aker ASA
Directors’ responsibility statement
Today, the board of directors and the president and chief executive officer reviewed and approved the board of direc- tors’ report and the consolidated and separate annual finan- cial statements of Aker ASA, consolidated and parent com- pany for the year ending and as of 31 December 2014.
Aker ASA’s consolidated financial statements have been prepared in accordance with IFRSs and IFRICs adopted by the EU as well as additional disclosure requirements in the Norwegian Accounting Act and as such are to be applied Beskjæres 76 mm fra venstre før trykk >> per 31 December 2014. The separate financial statements of Aker ASA and the parent company have been prepared in accordance with the Norwegian Accounting Act and Norwe- gian accounting standards as at 31 December 2014. The board of directors’ report for the group and the parent com- pany satisfy with the requirements of the Norwegian Accounting Act and Norwegian accounting standard no. 16, as at 31 December 2014.
To the best of our knowledge: ■■ The consolidated and separate annual financial statements for 2014 have been prepared in accordance with applicable accounting standards. ■■ The consolidated and separate annual financial statements give a true and fair overall view of the assets, liabilities, financial position and profit/loss of the group and for the parent company as of 31 December. ■■ The board of directors’ report provides a true and fair review of the – development and performance of the business and the Aker ASA’s board of directors: (from left*) Tommy Angelveit, Kristin Krohn Devold, Nina Hanssen, Arnfinn Stensø, Karen Simon, Finn Berg position of the group and the parent company, Jacobsen, Atle Tranøy, Stine Bosse, Øyvind Eriksen, Kjell Inge Røkke and Leif O. Høegh. – the principal risks and uncertainties the group and the parent company may face.
Oslo, 20 March 2015 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2014 125 Annual accounts – Aker ASA
Independent auditor’s report
To the Annual Shareholders’ Meeting of Aker ASA
Report on the Financial Statements An audit involves performing procedures to obtain Report on Other Legal and Regulatory We have audited the accompanying financial state- audit evidence about the amounts and disclosures Requirements ments of Aker ASA, which comprise the financial in the financial statements. The procedures selected Opinion on the Board of Directors’ report and statements of the parent company Aker ASA and the depend on the auditor’s judgment, including the the statements on Corporate Governance and KPMG AS Sørkedalsveien 6 consolidated financial statements of Aker ASA and assessment of the risks of material misstatement of Corporate Social Responsibility PB 7000 Majorstuen Beskjæres 76 mm fra venstre før trykk >> its subsidiaries. The parent company’s financial the financial statements, whether due to fraud or Based on our audit of the financial statements NO-0306 Oslo statements comprise the balance sheet as at 31 error. In making those risk assessments, the auditor as described above, it is our opinion that the infor- December 2014, the income statement and cash flow considers internal control relevant to the entity’s mation presented in the Board of Directors’ report Telephone +47 04063 statement for the year then ended, and a summary of preparation and fair presentation of the financial and in the statements on Corporate Governance Telefax +47 22 60 96 01 www.kpmg.no significant accounting policies and other explanatory statements in order to design audit procedures that and Corporate Social Responsibility concerning the information. The consolidated financial statements are appropriate in the circumstances, but not for financial statements, the going concern assumption Org. no. 935 174 627 MVA comprise the balance sheet as at 31 December 2014, the purpose of expressing an opinion on the effec- and the coverage of the loss is consistent with the and the income statement and the statement of total tiveness of the entity’s internal control. An audit financial statements and complies with the law and KPMG AS, a Norwegian mem- comprehensive income, statement of changes in also includes evaluating the appropriateness of regulations. ber firm of the KPMG network equity and cash flow statement for the year then accounting policies used and the reasonableness of independent member firms ended, and a summary of significant accounting of accounting estimates made by management, Opinion on Accounting Registration and affiliated with KPMG Interna- policies and other explanatory information. as well as evaluating the overall presentation of the Documentation tional Cooperative (“KPMG International”*), a Swiss entity. financial statements. Based on our audit of the financial statements The Board of Directors and the Managing Director’s as described above, and control procedures we Statsautoriserte revisorer - Responsibility for the Financial Statements We believe that the audit evidence we have have considered necessary in accordance with the medlemmer av Den norske The Board of Directors and the Managing Director obtained is sufficient and appropriate to provide a International Standard on Assurance Engagements Revisorforening. are responsible for the preparation and fair presen- basis for our audit opinion. (ISAE) 3000, «Assurance Engagements Other than Offices in: tation of the parent company financial statements Audits or Reviews of Historical Financial Informa- Oslo in accordance with the Norwegian Accounting Act Opinion on the separate financial statements tion», it is our opinion that the management has Alta and accounting standards and practices generally In our opinion, the parent company’s financial fulfilled its duty to produce a proper and clearly Arendal accepted in Norway and for the consolidated finan- statements are prepared in accordance with the set out registration and documentation of the Bergen cial statements in accordance with International law and regulations and give a true and fair view company’s accounting information in accordance Bodø Financial Reporting Standards as adopted by the of the financial position of Aker ASA as at 31 with the law and bookkeeping standards and Elverum Finnsnes EU, and for such internal control as the Board of December 2014, and of its financial performance practices generally accepted in Norway. Grimstad Directors and the Managing Director determine is and its cash flows for the year then ended in Hamar necessary to enable the preparation of financial accordance with the Norwegian Accounting Act Haugesund statements that are free from material misstate- and accounting standards and practices generally Kristiansand Larvik ment, whether due to fraud or error. accepted in Norway. Oslo, 20 March 2015 Mo i Rana KPMG AS Molde Auditor’s Responsibility Opinion on the consolidated financial statements Narvik Our responsibility is to express an opinion on In our opinion, the consolidated financial state- Arve Gevoll (sign) Røros Sandefjord these financial statements based on our audit. ments are prepared in accordance with the law State Authorised Public Accountant Sandnessjøen We conducted our audit in accordance with laws, and regulations and give a true and fair view of the Stavanger regulations, and auditing standards and practices financial position of Aker ASA and its subsidiaries Stord generally accepted in Norway, including Inter as at 31 December 2014, and of its financial per Tromsø national Standards on Auditing. Those standards formance and its cash flows for the year then Trondheim Tønsberg require that we comply with ethical requirements ended in accordance with International Financial Ålesund and plan and perform the audit to obtain reasona- Reporting Standards as adopted by the EU. ble assurance about whether the financial state- Translation has been made for ments are free from material misstatement. information purposes only. 126 Aker ASA annual report 2014 Annual accounts – Aker ASA and holding companies
Contents – Aker ASA and holding companies
Aker ASA and holding companies
Introduction 127 Combined income statement 127 Beskjæres 76 mm fra venstre før trykk >> Combined balance sheet as at 31 December 128 Notes to the financial statements for Aker ASA and holding companies 129 Note 1 Accounting principles and basis for preparation 129 Note 2 Non-recurring operating items 129 Note 3 Dividends received 129 Note 4 Other financial items 129 Note 5 Value changes 130 Note 6 Tax 130 Note 7 Long-term equity investments 130 Note 8 Interest-free long-term receivables and other 131 Note 9 Other interest-bearing current assets and long-term receivables 131 Note 10 Cash and cash equivalents 131 Note 11 Equity 131 Note 12 Interest-free debt and liabilities 132 Note 13 Interest-bearing debt 132 Note 14 Risk 132
Independent auditor’s report 133 Aker ASA annual report 2014 127 Annual accounts – Aker ASA and holding companies
Introduction
The combined financial statements of Aker ASA and holding companies have been prepared to present the financial position as if the companies had been one single unit. See note 1 for further description.
Beskjæres 76 mm fra venstre før trykk >> Combined income statement
Amounts in NOK million Note 2014 2013
Operating expenses (223) (236) Depreciation and amortisation (15) (14) Non-recurring operating items 2 1 - Operating profit (238) (250)
Dividends received 3 844 852 Other financial items 4 (490) (30) Value changes 5 (1 432) 252 Profit before tax (1 316) 825 Tax 6 (6) (13) Profit for the year (1 322) 812 128 Aker ASA annual report 2014 Annual accounts – Aker ASA and holding companies
Combined balance sheet as at 31 December
Amounts in NOK million Note 2014 2013 Amounts in NOK million Note 2014 2013
ASSETS SHAREHOLDERS' EQUITY AND LIABILITIES Intangible assets 8 9 12 Paid-in capital 11 2 026 2 025 Tangible fixed assets 8 226 196 Retained earnings 8 315 10 392 Total intangible and tangible fixed assets 235 208 Total equity 10 341 12 417 Financial interest-bearing fixed assets 9 285 605 Financial interest-free fixed assets 8 27 28 Provisions and other interest-free long-term liabilities 12 391 278 Long-term equity investments and interests 7 14 742 15 762 Long-term interest-bearing liabilities 13 5 895 5 266 Beskjæres 76 mm fra venstre før trykk >> Total financial fixed assets 15 055 16 396 Total long-term liabilities 6 285 5 544 Total fixed assets 15 290 16 604 Short-term interest-free liabilities 12 867 1 042 Short-term interest-bearing liabilities 13 806 135 Short-term interest-free receivables 19 59 Short-term interest-bearing receivables 9 133 15 Total short-term liabilities 1 673 1 177 Cash and cash equivalents 10 2 857 2 459 Total equity and liabilities 18 299 19 137 Total current assets 3 009 2 533 Total assets 18 299 19 137
Oslo, 20 March 2015 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2014 129 Annual accounts – Aker ASA and holding companies
Notes to the financial statements for Aker ASA and holding companies
Note 1 Accounting principles and basis for preparation Note 2 Non-recurring operating items
The combined financial statements of Aker ASA and holding companies have been prepared to present Non-recurring operating items are allocated as follows: Aker’s financial position as a parent holding company. The traditional financial statement of the parent company has been extended to include all subordinate administrative service and holding companies Amounts in NOK million 2014 2013 that are wholly-owned by Aker ASA and have balance sheets containing only investments, bank depos- Beskjæres 76 mm fra venstre før trykk >> its and debt. The combined balance sheet thus shows a net debt in relation to holding companies’ Penalty related to renewal of Total Return Swap in Nov 2013 - Aker Solutions (34) - investments. Environmental liability (3) - To the extent applicable, the accounting principles of Aker ASA and holding companies are based on Reversal write-down of airplane 38 - the same accounting principles as Aker ASA. A key principle is that listed shares are valued at the lower Total non-recurring operating items 1 - of market price and cost. Other items are recorded at the lower of fair value and cost. See accounting principles of Aker ASA on page 114. One exception from Aker ASA’s accounting principles is that the acquisition and disposal of companies is part of the ordinary business of Aker ASA and holding compa- nies. Consequently, gains on sales of shares are classified as operating revenues in the combined Note 3 Dividends received income statement. Gains and losses are only recognised when assets are sold to third parties. This is one reason why the accounts of Aker ASA and holding companies may show different historical cost for Dividends received consist of the following: share investments than the company accounts of the underlying companies included in the combined financial statements. Amounts in NOK million 2014 2013
The companies that have been combined are as follows: Aker Kværner Holding 406 395 Ocean Yield 316 318 ■■ Aker ASA Aker BioMarine (now Superba ASA) - 76 ■■ Aker Maritime Finance AS Aker Solutions (direct ownership) 67 - ■■ Resource Group International AS Other 54 63 ■■ Aker Holding Start 2 AS ■■ Aker Capital AS Total dividends received 844 852
■■ Kvaerner Sea Launch Ltd ■■ Sea Launch Holding AS ■■ Old Kvaerner Invest AS Note 4 Other financial items ■■ A-S Norway AS ■■ Aker US Services LLC Other financial items consist of the following: ■■ Kvaerner US Sea Launch Inc ■■ Aker Pharma Holdco AS Amounts in NOK million 2014 2013
The companies included in the combined financial statements have changed in 2014 due to the merger Interest income from companies within the Group 44 130 between Aker Floating Holding AS and Resource Group International AS. In addition, Aker ASA Other interest income (318) (212) acquired a new company, Aker Pharma Holdco AS, who again own the companies Aker Seafoods US Other financial items (216) 51 Inc and Trygg Pharma Group AS (50 per cent) through contributions in kind from Aker ASA. Total other financial items (490) (30)
Other financial items in 2014 included a write-down of an internal receivable from Setanta totalling NOK 170 million, and a loss on total return swap (TRS) agreements of NOK 43 million. Other financial items in 2013 included a write-down of an internal receivable from Navigator Marine totalling NOK 51 million, gains on currency and currency forward contracts of NOK 47 million and a gain on total return swap (TRS) agreements of NOK 54 million. 130 Aker ASA annual report 2014 Annual accounts – Aker ASA and holding companies
Note 5 Value changes Note 6 Tax
Value changes consist of the following: Amounts in NOK million 2014 2013 Amounts in NOK million 2014 2013 Tax payable: Change in value of Aker BioMarine (now Superba ASA) shares (1) 300 Norway (7) - Change in value of Havfisk shares - 38 Abroad 1 (4) Aker Capital - Profit from AAM Fund sale 131 - Total tax payable (6) (4) Aker Capital - Change in value of Det norske oljeselskap shares (735) - Change in value of Aker Solutions shares (directly owned) (491) (118) Change in deferred tax: Change in value of Akastor shares (directly owned) (284) - Norway - - Change in value of Navigator shares (60) - Abroad - (1) Other changes in value of shares 8 33 Total change in deferred tax - (1) Beskjæres 76 mm fra venstre før trykk >> Total value changes (1 432) 252 Tax on Group contributions - (8) Total (6) (13)
Note 7 Long-term equity investments
Book value Market price per share Market value4 Per 31. desember 2014 Ownership in% Number of shares (NOK million) (NOK) 31 Dec. 2014 (NOK million) 31 Dec. 2014
Industrial Holdings Aker Solutions ASA1 28.39 77 233 531 41.55 3 209 Akastor ASA2 28.19 77 233 531 21.60 1 668 Kværner ASA3 28.71 77 233 531 8.89 687 Aker Kværner Holding AS 70.00 3 460 5 564 Aker Solutions ASA1 6.37 17 331 762 720 41.55 720 Akastor AS2 6.33 17 331 762 374 21.60 374 Aker BioMarine (now Superba ASA) 99.02 68 375 935 1 398 - 1 398 Det norske oljeselskap ASA 49.99 101 289 038 4 038 39.87 4 038 Havfisk ASA 73.25 62 001 793 402 15.20 942 Ocean Yield ASA 73.21 98 242 575 2 487 44.00 4 323 Total industrial investments 12 880 17 360
Financial Investments Converto Capital Fund 322 Norron Target/Select 269 Fornebuporten Holding 736 Trygg Pharma Group AS 346 Other equity investments 190 Total shares and long-term equity investments 14 742
Stock exchange-listed shares are valued at lower of market price and cost. Other items are recorded at the lower of fair value and cost.
1*) Aker Kværner Holding owns 40.56 per cent of Aker Solutions ASA. Aker ASA owns 70 per cent of Aker Kværner Holding. In addition, Aker ASA owns 6.37 per cent of Aker Solutions. Total indirect and direct shareholding in Aker Solutions for Aker is 34.76 per cent. 2*) Aker Kværner Holding owns 40.27 per cent of Akastor ASA. Aker ASA owns 70 per cent of Aker Kværner Holding AS. In addition, Aker ASA owns 6.33 per cent of Akastor. Total indirect and direct shareholding in Akastor for Aker is 34.51 per cent. 3*) Aker Kværner Holding owns 41.02 per cent of Kværner ASA. Aker ASA owns 70 per cent of Aker Kværner Holding AS. Aker thus indirectly owns 28.71 per cent of Kværner ASA. 4*) See Note 14. Aker ASA annual report 2014 131 Annual accounts – Aker ASA and holding companies
Note 8 Interest-free long-term receivables and other Receivables from subsidiaries: Interest- Interest- Total Total Interest-free long-term receivables and other assets are distributed as follows: bearing bearing interest- Interest- receivables current long-term bearing free from Amounts in NOK million assets assets 2014 receivables subsidiaries Other Total Total Amounts in NOK million Receivables assets 2014 2013 Setanta Energy 32 242 274 26 300 Deferred tax assets 9 - 12 9 Aker BioMarine (now Superba ASA) 100 - 100 2 102 Pension funds 2 - 4 2 Ocean Harvest - 16 16 - 16 Long-term receivables from subsidiaries 26 - 21 26 Navigator Marine - 12 12 - 12 Other - 226 200 226 Other companies 1 1 2 1 3 36 226 237 Total 262 Total 133 271 404 29 433
Beskjæres 76 mm fra venstre før trykk >> In 2014 and 2013 other assets included an airplane valued at NOK 167 million and NOK 138 million respectively.
Note 10 Cash and cash equivalents Note 9 Other interest-bearing current assets and long-term receivables Cash and cash equivalents amounted to NOK 2 857 million as at the end of 2014. Of this total, NOK 12 million were restricted deposits. Other interest-bearing current assets and long-term receivables from subsidiaries and from external companies are shown below: Current Long-term Amounts in NOK million assets assets Total 2014 Total 2013
Receivables from subsidiaries 133 271 404 536 External receivables - 14 14 84 Total 133 285 418 620
Note 11 Equity
As at 31 December 2014, Aker ASA’s share capital consisted of the following share classes: Total par value NOK (million) Shares issued Number of own shares Shares outstanding Par value (NOK) Shares issued Shares outstanding
Ordinary shares 72 374 728 28 788 72 345 940 28 2 026 2 026 Total share capital 72 374 728 28 788 72 345 940 2 026 2 026 Share premium reserve - - Other paid-in equity - - Total paid-in equity 2 026 2 026
All shares have equal voting rights and are entitled to dividends. Aker ASA has no voting rights for its own shares. 132 Aker ASA annual report 2014 Annual accounts – Aker ASA and holding companies
The following dividend was proposed by the board of directors after the balance sheet date: Instalment schedule for external interest-bearing debt, by type:
Amounts in NOK million 2014 Other debt, Amounts in NOK million Bonds Bank loans accrued fees Total Dividend of NOK 10 per share 723 Year A dividend of NOK 10.00 per share, totally NOK 723 million will be proposed at the Annual General 2015 808 - (2) 806 Meeting on 17 April 2015, of which half (NOK 5.00 per share) is proposed to be with an optional set- 2016 - - - - tlement in new Aker shares at 10 per cent discount to the prevailing share price. The amount is 2017 500 500 (4) 996 included in the short-term interest-free liability item in the balance sheet. 2018 1 300 - (9) 1 291 2019 1 930 - (11) 1 918 After 2019 1 700 - (16) 1 684 Total 6 237 500 (42) 6 696 Note 12 Interest-free debt and liabilities Beskjæres 76 mm fra venstre før trykk >> Interest-free debt and liabilities are presented below: Note 14 Risk Amounts in NOK million Short-term Long-term Total 2014 Total 2013 The balance sheet of Aker ASA and holding companies is split into two segments: Tax liabilities 7 9 16 12 Pension liabilities - 205 205 183 Per cent 2014 2013 Dividend 723 - 723 940 Other debt 136 177 313 184 Industrial investments 70% 69% Total 867 391 1 257 1 320 Financial investments 30% 31%
Specification financial investments: Funds- and equity investments 10% 14% Note 13 Interest-bearing debt Cash 16% 13% Interest-bearing receivables Interest-bearing debt is distributed among subsidiaries and external creditors as shown below: Fixed assets, deferred tax assets and interest-free receivables 2% 2%
Amounts in NOK million Short-term Long-term Total 2014 Total 2013 The businesses within each category are exposed to macro-development in their respective market segments. Debt to subsidiaries - 5 5 135 The total book value of the assets of Aker ASA and holding companies are NOK 18 299 million Debt to external creditors 806 5 890 6 696 5 266 including the book value for Industrial investments of NOK 12 880 million. The book value and market Total 806 5 895 6 701 5 401 value of each investment included in Industrial investments are specified in note 7. The total market value of the Industrial investments, NOK 17 360 million, is significantly higher than the book value. The book value of the unlisted company Aker BioMarine (now Superba ASA) is included in the total market Interest-bearing debt to external creditors is shown below: value. In the case of Aker ASA’s direct investment in the listed company Aker Solutions (6.37 per cent ownership interest) and Akastor (6.33 per cent ownership interest), the book value is equal to the mar- ket value. This is also the case of Aker’s investment in Det norske oljeselskap. Amounts in NOK million 2014 2013 The book value of Financial investments is NOK 5 419 million. Cash represents 16 per cent of the book value of total assets and 52 per cent of Financial investments. Bonds 6 237 4 808 Unsecured bank loans 500 500 Other external debt and capitalised fees (42) (42) Total 6 696 5 266 Aker ASA annual report 2014 133 Annual accounts – Aker ASA and holding companies
Independent auditor’s report
To the board of Aker ASA
We have audited the accompanying combined material misstatement of the financial statements, Other Matter financial statements of Aker ASA and holding whether due to fraud or error. In making those Aker ASA has for the year ended 31 December companies, which comprise the balance sheet as risk assessments, the auditor considers internal 2014 prepared a separate set of statutory at 31 December 2014, the income statement, a control relevant to the entity’s preparation and fair accounts comprising consolidated financial KPMG AS Sørkedalsveien 6 summary of key assumptions used as basis for presentation of the financial statements in order to statements and parent financial statements on PB 7000 Majorstuen Beskjæres 76 mm fra venstre før trykk >> preparation and other explanatory information. design audit procedures that are appropriate in the which we issued separate auditor’s reports to the NO-0306 Oslo circumstances, but not for the purpose of express- shareholders of Aker ASA dated 20 March 2015. Management’s Responsibility for the Financial ing an opinion on the effectiveness of the entity’s Telephone +47 04063 Statements internal control. An audit also includes evaluating Telefax +47 22 60 96 01 www.kpmg.no Management is responsible for the preparation the appropriateness of accounting policies used Oslo, 20 March 2015 and fair presentation of the combined financial and the reasonableness of accounting estimates KPMG AS Org. no. 935 174 627 MVA statements of Aker ASA and holding companies in made by management, as well as evaluating the accordance with the basis for preparation of the overall presentation of the combined financial Arve Gevoll (sign) KPMG AS, a Norwegian mem- financial reporting, defined in the introduction of statements. State Authorised Public Accountant ber firm of the KPMG network the combined financial statements, and for such of independent member firms internal control as management determines is We believe that the audit evidence we have affiliated with KPMG Interna- necessary to enable the preparation of financial obtained is sufficient and appropriate to provide tional Cooperative (“KPMG International”*), a Swiss entity. statements that are free from material misstate- a basis for our audit opinion. ment, whether due to fraud or error. Statsautoriserte revisorer - Opinion medlemmer av Den norske Auditor’s Responsibility In our opinion, the combined financial statements Translation has been made for Revisorforening. Our responsibility is to express an opinion on give a true and fair view of the financial position information purposes only. Offices in: these combined financial statements based on of Aker ASA and holding companies, as at 31 Oslo our audit. We conducted our audit in accordance December 2014, and of its financial performance Alta with International Standards on Auditing. Those for the year then ended in accordance with the Arendal standards require that we comply with ethical basis for preparation of the financial reporting, Bergen requirements and plan and perform the audit to defined in the introduction of the combined Bodø obtain reasonable assurance about whether the financial statements. Elverum Finnsnes financial statements are free from material mis- Grimstad statement. Basis of Accounting Hamar Without modifying our opinion, we draw attention to Haugesund An audit involves performing procedures to the basis for preparation of the financial reporting, Kristiansand Larvik obtain audit evidence about the amounts and defined in the introduction of the combined financial Mo i Rana disclosures in the combined financial statements. statements, which describes the basis of account- Molde The procedures selected depend on the auditor’s ing. As a result, the combined financial statements Narvik judgment, including the assessment of the risks of may not be suitable for another purpose. Røros Sandefjord Sandnessjøen Stavanger Stord Tromsø Trondheim Tønsberg Ålesund 134 Aker ASA annual report 2014 Board and management
Board of directors
Beskjæres 76 mm fra venstre før trykk >> Kjell Inge Røkke Finn Berg Jacobsen Stine Bosse Kristin Krohn Devold Leif O. Høegh Karen Simon Atle Tranøy Chairman Deputy chairman Director Director Director Director Director Elected by the Kjell Inge Røkke (born Finn Berg Jacobsen (born Stine (Christine) Bosse Kristin Krohn Devold Leif O. Høegh (born Karen Simon has over 30 employees 1958), Aker ASA’s main 1940) holds an MBA de- (born 1960) holds a Mas- (born 1961) was a Mem- 1963) holds a master’s years of experience in owner, has been a driving gree from Harvard Busi- ter of Law from the Uni- ber of the Norwegian degree in economics banking with JP Morgan Atle Tranøy (born 1957) is force in the development ness School and is a state versity of Copenhagen Parliament for the Con- from the University of and is currently a Vice trained as a pipe fitter of Aker since the 1990s. authorised auditor. He has and has completed train- servative Party from 1993 Cambridge and an MBA Chairman in the Invest- and has been an employ- Mr. Røkke launched his held various positions with ing programs at INSEAD, to 2005. She was Minis- from Harvard Business ment Bank based in New ee of Kværner Stord AS business career with the Arthur Andersen & Co, and Wharton and Harvard. ter of Defense from 2001 School. Mr. Høegh has York. During her career since 1976. Mr. Tranøy purchase of a 69-foot worked as Regional Man- She was the CEO of Tryg- to 2005. Ms. Krohn previously worked for with JP Morgan she has has been a fulltime em- trawler in the United aging Partner from 1983 to vesta from 2001 to 2011. Devold is currently the McKinsey & Company held various positions in ployee representative States in 1982, and grad- 1999. From 2001 to 2005, She currently serves as management director of and the Royal Bank of the Investment Bank in- since 1983. Mr. Tranøy is ually built a leading world- Mr. Berg Jacobsen worked chair of The Royal Danish the Norwegian Hospital- Canada Group, and is cluding global co-head of also the chairperson of wide fisheries business. In as CFO and Chief of Staff Theater, CONCITO, ity Association (NHO currently chairman of the Financial Sponsors the European Works 1996, the Røkke con- at Aker Kvaerner. He is Børnefonden, and Co- Reiseliv) and director of Höegh Autoliners and group covering private Council in Aker. trolled company, RGI, currently working as a con- penhagen Art Festival. several companies, Deputy Chairman of equity firms and a number purchased enough Aker sultant within corporate She serves as chair of including Aker Kværner Höegh LNG. He is also a of positions in the Oil & As at 31 December 2014, shares to become Aker’s governance and corporate TDC and Allianz. In 2010, Holding AS and the Terra director of Höegh Capital Gas and Debt Capital Mr. Tranøy holds no largest shareholder, and finance. He is director and she was appointed Advo- group. She has a MSc Partners, Höegh Eien- Markets teams in both the shares in Aker ASA, and later merged RGI with chairman of the audit com- cate for the Millennium degree from the Norwe- dom, and Rift Valley U.S. and the UK. Ms. has no stock options. Mr. Aker. Mr. Røkke is cur- mittee in several compa- Development Goals. gian School of Econom- Holdings. Mr. Høegh is a Simon lived in London for Tranøy is a Norwegian rently director of Aker nies. Mr. Berg Jacobsen ics (NHH) and has a member of the Corporate 20 years where she also citizen. He has been Solutions, Akastor, Det has served on the board, As at 31 December 2014, bachelor degree in soci- Assembly of Det norske. served on JP Morgan’s elected for the period norske, Kvaerner and supervisory committees Ms. Bosse holds 400 ology from the University EMEA Debt Underwriting 2013-2015. Ocean Yield. and task forces of several shares in Aker ASA, and of Bergen. As at 31 December 2014, committee, the Reputa- associations and organisa- has no stock options. Ms. Mr. Høegh has an indirect tional Risk committee and As at 31 December 2014, tions. He has been award- Bosse is a Danish citizen. As at 31 December 2014, ownership interest in the EMEA Management Mr. Røkke holds 49 105 ed the Royal Order of St. She has been elected for Ms. Krohn Devold holds 135 000 Aker ASA committee. 514 shares (67.8 per cent) Olav for his contributions the period 2013-2015. no shares in Aker ASA, shares. He is a Norwe- in Aker ASA through his to the advancement of and has no stock gian citizen. He has been As at 31 December 2014, investment company TRG auditing and accounting. options. Ms. Krohn elected for the period Ms. Simon holds no AS and its subsidiaries, Devold is a Norwegian 2014-2016. shares in Aker ASA, and which he co-owns with As at 31 December 2014, citizen. She has been has no stock options. She his wife, Anne Grete Eids- Mr. Berg Jacobsen holds elected for the period is a dual UK and US citi- vig, and has no stock 5 000 shares in Aker ASA, 2013-2015. zen. She has been elect- options. Mr. Røkke is a and has no stock options. ed for the period 2013- Norwegian citizen. He has Mr. Berg Jacobsen is a 2015. been elected for the pe- Norwegian citizen. He has riod 2014-2016. been elected for the period 2014-2016. Aker ASA annual report 2014 135 Board and management
Beskjæres 76 mm fra venstre før trykk >> Tommy Angeltveit Arnfinn Stensø Nina Hanssen Director Director Director Elected by the Elected by the Elected by the employees employees employees
Tommy Angeltveit (born Arnfinn Stensø (born Nina Hanssen (born 1965) has worked as a 1957) has been 1971) has been work- mechanic at the Con- employed by Aker ing in the fishing indus- trols division in Aker Solutions (former Aker try since 1992. She is Subsea since 2003. Mr. Offshore Partner) in the chief union repre- Angeltveit has occupa- Stavanger since 1998. sentative as well as an tional education as a He is educated electri- employee representa- service electronics cal engineer. Mr. tive to the board of engineer. Tommy Stensø is member of Norway Seafoods. Ms. Angeltveit is also an the negotiating com- Hanssen is a Norwe- employee representa- mittee in NITO (Norwe- gian citzen. tive at the Board of gian Engineers and Aker Subsea. Mr. technologist organisa- As at 31 December Angeltveit is full time tion) and of the liaison 2014, Ms. Hanssen employee representa- committee NITO – holds no shares in Aker tive and manager for NHO. ASA and has no stock Industry Energy section options. Ms. Hanssen 47. As at 31 December is Norwegian citizen. 2014, Mr. Stensø holds She has been elected As of 31 December no shares in Aker ASA for the period 2013- 2014, Mr. Angeltveit and has no stock 2015. holds no shares in Aker options. Mr. Stensø is ASA, and has no stock Norwegian citizen. He options. Tommy has been elected for Angeltveit is a Norwe- the period 2013-2015. gian citizen. He has been elected for the period 2013-2015. 136 Aker ASA annual report 2014 Board and management
Management Other key personnel
Beskjæres 76 mm fra venstre før trykk >> Øyvind Eriksen Trond Brandsrud Atle Kigen Audun Stensvold Edward Ross Ola Snøve President and CEO CFO Head of communication Investment director Investment director Investment director Responsible for the Responsible for the Responsible for the Øyvind Eriksen (born Trond Brandsrud (born Atle Kigen (born 1958) follow-up of Financial follow-up of Aker follow-up of Aker 1964) joined Aker ASA 1958) joined Aker ASA in joined Aker ASA in Octo- investments Solutions, Det norske BioMarine and Havfisk in January 2009. Mr. April 2010 after three ber 2006, and has been and Kvaerner Eriksen holds a law de- years as CFO in Seadrill in charge of communica- Audun Stensvold (born Ola Snøve (born 1977) is gree from the University Limited. Prior to joining tions since March 2010. 1972) joined Aker ASA in Edward Ross (born 1973) Investment Director of of Oslo. He joined Nor- Seadrill in 2007, Mr. He holds a degree in 2006. Prior to his ap- joined Aker ASA in Sep- Aker ASA. Mr. Snøve was wegian law firm BA-HR Brandsrud worked for business administration pointment as an invest- tember 2013. Edward is a previously President & in 1990, where he be- Royal Dutch Shell for and marketing, and has ment director, he was Chartered Accountant CEO of Epax – a joint came a partner in 1996 more than 20 years. At extensive corporate CFO and Investment (PWC) and holds a MBA venture between Aker and a director/chairman Shell, he held several key communication and jour- Director for Converto, from Columbia Business and Lindsay Goldberg from 2003. At BA-HR, finance positions in Nor- nalism experience. Mr. which manages the Aker- School (NYC) as well as that was divested to FMC Mr. Eriksen worked way as well as interna- Kigen has previously owned Converto Capital an MA from Oxford Uni- Corp. Prior to joining closely with Aker and tionally. He also has ex- worked as head of com- Fund. He has also served versity. Previous to Aker Epax, Mr. Snøve had Aker’s main shareholder, tensive experience from munication at Kværner as Vice President of Ak- ASA Edward held numer- been with Aker since Kjell Inge Røkke. Mr. major offshore field de- ASA, and CEO of the PR er’s M&A and Business ous positions at Fidelity January 2008. He is cur- Eriksen is chairman of velopment projects and agency GCI Monsen. He Development team. Be- Investments International rently Chairman of Aker Aker Solutions ASA, held several senior man- has been editor in chief fore joining Aker, Mr including the leader of the BioMarine. Mr. Snøve Akastor ASA and Aker agement roles in Shell’s of the Norwegian busi- Stensvold worked as a Natural Resources and holds M.Sc. and Ph.D. Kværner Holding AS, upstream and down- ness magazine Økono- strategy and finance Utilities team and the degrees from the Norwe- and a director of several stream sectors. Mr. misk Rapport, business consultant for Selmer, Energy and Oil Field ser- gian University of Science companies, including Brandsrud has a MSc and economy editor at and as a financial analyst vice Analyst. and Technology, as well The Resource Group degree from the Norwe- Aftenposten, a leading for DnB NOR. Mr Stens- as an MBA (Dist.) from TRG AS, TRG Holding gian School of Econom- daily, and NRK Nyheter, vold holds a Masters As of 31 December 2014, INSEAD. AS and Reitangruppen ics (NHH). the national broadcast- degree in Business and Mr Ross holds 74 844 AS. er’s news bureau. Mr. Economics from the Nor- shares in Aker ASA and As of 31 December 2014, As of 31 December 2014, Kigen has also been a wegian School of Eco- has no stock options. Mr. Mr. Snøve holds 106 439 As of 31 December Mr. Brandsrud holds journalist in Norway’s nomics (NHH). Ross is a British citizen. shares in Aker ASA 2013, Mr. Eriksen holds 39 736 shares in Aker leading business daily through his wholly owned 100 000 shares in Aker ASA, of which 13 810 Dagens Næringsliv. As of 31 December 2014, company Storbrea AS, ASA, and has no stock shares are held through Mr Stensvold holds 3 294 and has no stock options. options. Mr. Eriksen Nordbrand Invest AS, As of 31 December 2014, shares in Aker ASA, and Mr. Snøve is a Norwegian holds, through a private- and has no stock op- Mr. Kigen holds 5 276 has no stock options. Mr citizen. ly owned company, 0.20 tions. Mr. Brandsrud is a shares in Aker ASA, and Stensvold is a Norwegian per cent of the B-shares Norwegian citizen. has no stock options. Mr. citizen. in TRG Holding AS. Mr. Kigen is a Norwegian Eriksen is a Norwegian citizen. citizen. Aker ASA annual report 2014 137 Contact information
Contact information
Aker ASA Kværner ASA Havfisk ASA Converto AS Fjordalléen 16, 0250 Oslo Drammensveien 264, 0283 Oslo Løvenvoldg. 11, 6002 Ålesund Fjordalléen 16, 0250 Oslo P.O. Box 1423 Vika P.O. Box 74 P.O. Box 876 P.O. Box 1423 Vika, NO-0115 Oslo NO-1325 Lysaker NO-6001 Ålesund NO-0115 Oslo Norway Norway Norway Telephone: +47 24 13 00 00 Telephone: +47 24 13 00 00 Telephone: +47 21 08 90 00 Telephone: +47 70 11 86 00 Telefax: +47 24 13 01 01 Telefax: +47 24 13 01 01 Telefax: +47 21 08 99 99 Telefax: +47 70 11 86 80 Beskjæres 76 mm fra venstre før trykk >> [email protected] [email protected] [email protected] [email protected] www.converto.no www.akerasa.com www.kvaerner.com www.havfisk.no
Aker Solutions ASA Det norske oljeselskap ASA Ocean Yield AS Snarøyveien 36, 1364 Fornebu Føniks Fjordalléen 16, 0250 Oslo P.O. Box 169 Munkegata 26 P.O. Box 1423 Vika NO-1325 Lysaker NO-7011 Trondheim NO-0115 Oslo Norway Norway Norway
Telephone: +47 67 51 30 00 Telephone: +47 90 70 60 00 Telephone: +47 24 13 00 00 Telefax: +47 67 51 30 10 Telefax: +47 73 53 05 00 Telefax: +47 24 13 01 01
[email protected] [email protected] www.oceanyield.no www.akersolutions.com www.detnor.no
Akastor ASA Aker BioMarine ASA Norron AB Fjordalléen 16, 0250 Oslo Fjordalléen 16, 0250 Oslo Oxtorgsgatan 4, 2tr Postboks 124 P.O. Box 1423 Vika SE-111 57 Stockholm NO-1325 Lysaker NO-0115 Oslo Sweden Norway Norway
Telephone: +47 21 52 58 00 Telephone: +47 24 13 00 00 Telephone: +46 (0) 722 35 24 92 Telefax: +47 24 13 01 10 Telefax: +46 (0) 8 555 069 45 www.akastor.com [email protected] [email protected] www.akerbiomarine.com www.norron.com
Design: Haugvar AS Photos and illustrations: Aker and Aker-owned companies, Aker Solutions / Ole Walter Jacobsen, Havfisk / Peder Otto Dybvik, Fornebuporten / Ann Cathrin Buchardt, Kvaerner and MHWirth, Photographer Ørnelund AS and Shutterstock Print: Konsis Grafisk AS
Aker ASA Fjordalléen 16 P.O. Box 1423 Vika NO-0115 Oslo Norway
Telephone: +47 24 13 00 00 E-mail: [email protected] www.akerasa.com Aker ASA Annual report 2013 Beskjæres 76 mm fra venstre før trykk >> Aker ASA annual report 2013 3
Financial calendar 2014
Annual general meeting 11 April Interim report Q1 2014 15 May Contents Interim report Q2 2014 18 July Interim report Q3 2014 14 November
Aker reserves the right to revise the dates.
Beskjæres 76 mm fra venstre før trykk >> 4 This is Aker
4 Aker in brief 5 Highlights 2013 6 Key performance indicators 7 Aker ASA and holding companies 8 Letter from the chairman
18 Letter from the president and CEO
22 Operations
22 Investment overview 23 Industrial holdings 38 Financial investments 40 Board of directors’ report
52 Annual accounts
53 Aker group 118 Aker ASA 134 Aker ASA and holding companies 143 Shareholder information
143 Dialogue builds trust 146 Analytical information 147 Board and management
147 Board of directors 149 Management and key personnel 150 Contact information President and CEO Øyvind Eriksen presents at Aker’s 2013 Capital Markets Day in Oslo. 4 Aker ASA annual report 2013 This is Aker
Aker in brief
Aker ASA is an industrial investment company that exercises active ownership.
Aker combines industrial expertise, know has an ownership agenda for each of December 2013, NAV amounted to NOK Ownership ledge of the capital markets and financial these companies that strengthens the 24.0 billion, compared with NOK 22.9 bil Aker was listed on the Oslo Stock strength. business and creates value. lion at the close of 2012.The company’s Exchange on 8 September 2004. Since list As an active owner, Aker develops and ■■ The financial investments comprise dividend policy is to pay annual dividends ing, the company’s shares have generated strengthens the companies in its portfolio, cash, real estate, investments in of between two and four per cent of NAV to an average annual return of 29 per cent, Beskjæres 76 mm fra venstre før trykk >> working through the boards of the opera funds and other financial assets of shareholders, and the intention is to including dividends. In 2013, Aker ASA’s tional entities and ensuring close follow-up Aker ASA and holding companies, increase the dividend on a yearly basis. share price rose by 10 per cent, including a by Aker’s investment teams. Aker drives with the exception of industrial equity dividend per share of NOK 12. At the operational improvements, strategy, financ investments. Investment strategy beginning of 2014, the company had ing, restructuring and industrial transac Aker’s ownership interests are concen 14 064 shareholders. Aker’s main share tions forward. Size trated in the oil and gas, fisheries/marine holders are Anne Grete Eidsvig and Kjell Aker organises its business activities in At the end of February 2014, Aker was the biotechnology , maritime assets and Inge Røkke, who own 67.8 per cent of Aker two segments: largest shareholder, directly or indirectly, in finance sectors – all key Norwegian indus stock through their company TRG. Øyvind seven listed companies. The companies tries that are international in scope. Each Eriksen owns 0.2 per cent of the B shares ■■ The industrial holdings comprise Aker’s employ approximately 27 900 people in 29 company in Aker’s investment portfolio is in TRG through a private company. Eriksen ownership interests in Aker Solutions, countries, including 15 900 in Norway. well positioned to benefit from continued also owns 100 000 shares in Aker ASA. Kvaerner, Det norske oljeselskap, Ocean Net asset value (NAV) is a key perfor growth in demand for sustainable produc Some 43 of Aker ASA’s 51 employees own Yield, Aker BioMarine and Havfisk. Aker mance indicator for Aker ASA. As at 31 tion of energy and seafood. shares in the company.
1850 1900 1950 2000
Kvaerner 1853
Peter Steenstrup Olaf A. Onsum Kjell Inge Røkke Founded Aker in Founded Aker’s main 1841. Kvaerner in RGI owner since 1996. 1853.
JM Johansen 1876 – Fisheries
Norcem 1892 – Offshore and cement
Aker 1841 1987 1996 2001 Aker ASA annual report 2013 5 This is Aker
Highlights 2013
Value and dividend growth Great confidence in the Norwegian continental shelf
The net asset value of Aker ASA and holding compa At the end of 2013, the oil and gas sector accounted for nies – jointly referred to as Aker – increased by 4.7 approximately 56 per cent of the value of Aker’s assets. per cent in 2013, to NOK 24 billion. This corresponds The Norwegian and UK continental shelves constitute to NOK 332 per share, up from NOK 321 per share at the world’s largest offshore oil and gas market. Beskjæres 76 mm fra venstre før trykk >> the end of 2012, before dividend payments. According to Statistics Norway, investments on the In April 2013, a dividend of NOK 12 per share was Norwegian continental shelf alone are expected to paid, up from NOK 11 one year previously. A divi reach a new all-time high in 2014 – NOK 223 billion. dend of NOK 13 per share has been proposed for Maritime assets represented 14 per cent of Aker’s the financial year 2013. assets at the end of 2013. Marine biotechnology and The dividends received from Aker’s portfolio com seafood totalled 9 per cent, cash holdings 8 per cent panies totalled NOK 852 million in 2013, representing and property development 4 per cent. Other assets an increase of 85 per cent on 2012. accounted for 9 per cent in total.
Companies are being streamlined Adjusting the financial portfolio
The Aker-owned portfolio companies are being stream Aker is on schedule as regards its plan to free up at lined and focused on selected core areas. Aker Solu least NOK 3 billion from the financial investments tions is being further refined as a technology and portfolio by the end of 2015. Thus far, NOK 800 mil knowledge company. In 2013, it sold two business lion has been released. areas: Mooring and Loadings System and Well-Inter Converto Capital Fund accounts for a considera vention Services. ble proportion of Aker’s financial investments. In In 2013, Kvaerner sold its onshore construction busi 2013, the fund contributed NOK 1.4 billion in growth ness in North America. Aker BioMarine sold its stake in to Aker’s net asset value, primarily driven by Epax, and is now focused on refining its krill business. increases in the values of Aker Philadelphia Shipyard Aker’s industrial portfolio also includes Det norske and American Shipping Company. oljeselskap, Ocean Yield and Havfisk. Det norske is Aker Philadelphia Shipyard and American Ship concentrating on the Norwegian continental shelf. ping Company have been refinanced, while Stream Ocean Yield leases ships to solid counterparties on has been sold. long-term contracts. Havfisk is engaged in the harvest ing of white fish. 6 Aker ASA annual report 2013 This is Aker
Key performance indicators
Aker’s key performance indicators are net asset value, NAV per share before dividend Allocated dividend per share shareholder dividends and the company’s cash balance. (NOK) ■ Allocated dividend (NOK) ■ NAV ■ Share price ■ Dividend ■ Per cent of NAV before dividend To understand value creation at Aker, it is Net asset value (NAV) expresses Aker’s 360 18 important to examine the balance sheet of underlying value, and is a key determinant 300 15 Aker ASA and holding companies. of the company’s dividend policy (two to 240 12
The Aker ASA and holding company four per cent of NAV per year). Net asset 180 9
structure encompasses pure holding com value is based on market value for listed 120 6
Beskjæres 76 mm fra venstre før trykk >> panies and companies that supply services shares and book value for other assets. 60 3
to the group. The holding structure’s bal 0 0 ance sheets is a more relevant tool for 2011 2012 2013 2011 2012 2013 monitoring value creation than the balance sheet of the parent company or of the Aker Gross assets per business segment group. Nevertheless, Aker’s Annual Report (NOK billion) contains all three types of accounts. ■ Financial Investments ■ Industrial Holdings
30 Distribution of Aker’s NOK 29.8 billion gross asset value as of 31 December 2013 25 (NOK billion) 20 15
10 Other financial investments 5
Receivables and bonds 0 2011 2012 2013 Havfisk
Kvaerner Gross asset per sector (NOK billion) Equity investments ■ Other ■ Aker BioMarine Cash ■ Seafood, dietary supplements and nutrition ■ Cash Oil-industry related 30 OceanYield 25
Funds 20 15 Det norske 10 Aker Solutions 5 0 0 2 4 6 8 10 12 2011 2012 2013 Aker ASA annual report 2013 7 This is Aker
Aker ASA and holding companies
In 2013, net asset value (NAV) increased from NOK 22 933 million to NOK Net asset value (NAV) 24 003 million before allocations for dividends to shareholders. This represents As at As at an increase in NAV-per-share from NOK 321 to NOK 332. The following tables 31 December 31 December show Aker’s investments and NAV per Aker ASA share. 2013 2012
Owner NOK NOK NOK NOK ship per share million per share million
Industrial Holdings: Beskjæres 76 mm fra venstre før trykk >> Net asset value development – Aker ASA and holding companies Aker Solutions 34.2% 140 10 154 122 8 712 Kvaerner 28.7% 12 888 18 1 251 In NOK million 2013 2012 2011 Aker BioMarine 100.0% 24 1 760 19 1 361 Det norske 50.0% 65 4 692 81 5 803 Havfisk 73.2% 10 732 5 365 Dividends received 852 461 191 Ocean Yield 73.4% 47 3 409 35 2 532 Operating expenses (236) (235) (225) Total Industrial holdings 299 21 635 280 20 023 Other financial expenses (30) (152) (162) Tax expense (13) (22) (22) Financial investments: Total 573 52 (218) Cash 34 2 459 43 3 106 Dividend payments (868) (794) (724) Interest-bearing receivables Sale/(purchase) treasury shares 150 (179) - subsidiaries and associates 8 548 22 1 565 Value changes 1) 1 215 4 422 2 008 Bonds and other interest-bearing Change in net asset value 1 070 3 501 1 066 receivables 1 73 1 41 Converto Capital Fund 99.8% 38 2 776 13 896 Net asset value before dividend 24 003 22 933 19 432 AAM Absolute Return Fund 13.6% 5 370 5 343 Norron 8.1% 5 338 4 264 1) Value changes include depreciation and write-downs of fixed assets, and sales gains. Equity investments 18 1 290 3 212 Interest-free current- and long- term financial assets 2 120 2 122 Change in net asset value Intangible and fixed assets 2 175 3 198 Total financial investments 113 8 149 94 6 748 (NOK billion)
0.9 (0.9) 25 Total value-adjusted assets 412 29 784 375 26 771 1.5 (0.1) 24.0
22.9 (0.5) External interest-bearing liabilities (73) (5 266) (49) (3 469) 23 (0.4) 0.9 (1.1) Internal interest-bearing liabilities (2) (135) - - 0.3 0.4 Interest-free liabilities before 21 allocated dividend (5) (380) (5) (368) Total liabilities before allocated dividend (80) (5 780) (54) (3 838) 19 NAV before allocated dividend 332 24 003 321 22 933 17 Net interest-bearing assets (2 321) 1 243
15
31.12.12 Aker Kværner Det norske Havfisk Aker Ocean Funds Other Received Paid 31.12.13 Solutions oljeselskap Biomarine Yield dividend dividend 8
Personal reflections
In 2013, we – the shareholders in Aker – became NOK 2 billion richer, measured in net asset value and paid dividends. My goal was to double Aker’s net asset value, including dividends, in five years. The result was a 50 percent increase in the period from 1 January 2009 to 31 December 2013.
Aker grew on average by 8.8 per cent per year period. The OSEBX achieved 18 the OSEBX companies. During the same main Oslo Stock Exchange index. However, year during the period, while my target was per cent. period, Aker’s net asset value increased the performance behind the figures varies 15 per cent. ■■ The development of our share price from NOK 250 to NOK 332 per share and considerably. I can only quote cross-country skier Pet this past year: In 2013 alone, the Aker dividends totalling NOK 46 per share were Aker Solutions has been the strongest Beskjæres 76 mm fra venstre før trykk >> ter Northug Jr. who, after failing to win a share generated a return of 10 per cent, paid. My aim was to exceed NOK 500 per value driver during the period: the return on medal at the Sochi Winter Olympics, com while OSEBX rose by 24 per cent. Net share, including dividends, in five years. Aker’s holdings in Aker Solutions shares mented: “I felt I was in good shape, but I asset value per share increased by 3.5 In other words, in five years, NOK 250 of has on average increased by 40 per cent didn’t win the gold.” per cent in 2013, and dividends paid to shareholder value in Aker has been turned annually (IRR). The holdings in Converto shareholders equalled 3.7 per cent of into NOK 378, whereas investing in an Capital Fund have posted an IRR of 29.5 If we take a close look, we find we net asset value at the beginning of 2013. index fund would have produced NOK 543. per cent, while Det norske oljeselskap have much to be satisfied with, and The difference is NOK 165 per share. To achieved 16.5 per cent and Ocean Yield even more to reflect upon. The The graph below illustrates the situation at keep up with the index, Aker would have 12.5 per cent. Kvaerner, Aker BioMarine picture is complex. the beginning of 2014. had to create NOK 12 billion more in net and Havfisk had disappointing results com asset value and dividends paid to share pared to Aker’s required return on equity, as ■■ The development of our net asset Development of shareholder value holders. This is something to reflect over. did Aker Drilling, which was sold in 2011. value over the past 10 years: Aker’s (NOK) At the beginning of 2009, Aker’s share The other half of the January 2009 port shareholder value has increased by ■ Aker holdings totalled NOK 8.7 billion and folio comprised cash, interest-bearing ■ OSEBX twice as much as the Oslo Stock accounted for less than half of Aker’s net receivables from Aker-owned companies Exchange benchmark OSEBX 600 asset value. The other half of Aker’s capital and assets other than investments in index since the company’s listing in 500 and assets was almost dormant at the shares. September 2004 and up until the end of 400 beginning of 2009. I will comment on the We have written down NOK 1.8 billion 2013. During this period, net asset value 300 main features of the portfolio. worth of assets. Guarantees related to the has grown by an average of 22.7 per 200 Aker’s share holdings have appreciated rocket-launching company Sea Launch cent per year. OSEBX has risen by an 100 from NOK 8.7 billion to NOK 26.4 billion in have cost Aker NOK 0.8 billion. We have average of 11 per cent annually. 0 the period 2009–2013. Aker Solutions, Det financed subsidiaries at a lower interest Net asset value Dividend Net asset value ■■ The development of our share price per share 2009–2013 per share norske oljeselskap and Kvaerner accounted rate than Aker’s required rate of return. over the past five years: Aker’s share 1 January 2009 31 December 2013 for NOK 13.7 billion of this increase, includ Aker has borrowed money to build up a price on the Oslo Stock Exchange, ing NOK 6.2 billion in new investments. cash buffer. This was a deliberate choice. including dividends, has almost If we in Aker had invested the company’s Aker Drilling was sold at a loss of NOK 0.8 The return on the cash holdings and inter doubled in five years, from NOK 137 net asset value in an index fund that billion, but released NOK 3.3 billion in cash. est-bearing receivables has averaged to NOK 222 plus dividends of NOK 46 tracked OSEBX on 1 January 2009, the An additional NOK 2.1 billion in assets was approximately 4 per cent per year. as of the end of 2013. The Aker share NOK 250 would have increased to NOK divested. In short: half of Aker’s portfolio was gen has generated an average annual 510 by the end of 2013. In addition, the In total, Aker achieved an average erating low returns. The balance sheet has return to shareholders of 16 per cent, index fund would have paid NOK 33 in divi annual return of 18 per cent on its portfolio now been normalised, and we have again including dividends, during this five- dends, based on average dividends paid by in the period 2009–2013, on par with the put more of our capital to work. 9
My good partner chief executive oil and gas sector in general, and in Aker Øyvind Eriksen and I remind each Solutions and Det norske in particular. other that Aker has achieved a lot in Despite the fact that the increase in the past five years. shareholder value was less than I had aimed for, and less than the OSEBX, I am Aker’s foundation has become stronger, pleased with Aker’s progress. How can I and our latitude and flexibility have say something so self-contradictory? increased. Some of the results achieved since 2009 can be summed in the following The share prices reflect the stock five points: market’s view. They do not necessarily give us the right picture ■■ The risk exposure of the investment of Aker’s ability to generate and Beskjæres 76 mm fra venstre før trykk >> portfolio has been reduced, and the deliver value in the future. balance sheet has gradually become healthier and stronger. Aker and the portfolio companies have ■■ Upstream cash flow has increased, improved during Øyvind Eriksen’s five-year giving us greater flexibility. tenure as chief executive. Aker ASA is com ■■ The operating companies have posed of 51 talented employees who make streamlined their activities to focus on us a professional and highly competent core areas. investment company. Our investment team ■■ Our position in the oil and gas sector manages assets worth NOK 30 billion, and in general, and on the Norwegian includes leading experts on industry, continental shelf in particular, has been investments, the capital market, funding, strengthened. finance, accounting, office administration, ■■ The organisational structures of Aker IT, HR, IR and communications. and most Aker-owned companies In Aker we work hard and focused to have been further refined, establishing generate long-term shareholder value. At positive, clear role models. the beginning of 2014 the oil and gas sec tor accounted for 56 per cent of the value We have become Det norske oljeselskap’s of Aker’s assets. Now that Ocean Yield has largest and leading owner. Our ownership been listed, maritime assets account for 14 interest in Aker Solutions was increased per cent of Aker’s value. Seafood and through the direct purchase of 6 per cent of marine biotechnology represent 9 per cent, the company’s share capital in 2013. Det cash holdings 8 per cent and property norske and Aker Solutions together development 4 per cent. Other assets account for more than 50 per cent of Aker’s account for a total of 9 per cent. total investments. I see growth potential in this portfolio. At a time when investors are taking a The trend over the past five years shows wait-and-see attitude towards the oil ser underlying progress, and that makes me vice sector and oil companies, Aker has more optimistic for the future. chosen to go against the flow. When we While I rarely make statements to the have done so in the past, our shareholders media, not a day goes by without the Nor have benefited. Aker has a firm belief in the wegian media mentioning me. In 2013 I 10
made only one public statement. That Interest in the Norwegian continental At Aker Solutions, Øyvind and his manage the exploration company Norwegian Oil requires some discipline, dear shareholders. shelf is high after several exploration ment team have redesigned complex struc Consortium (NOCO) almost 50 years ago. successes. There is an exciting tures. The company is now better organ In the 1990’s I was involved in efforts to This letter to our shareholders is my future ahead for both the Norwegian ised and, through Øyvind’s eyes, Aker has open the Norwegian Continental Shelf to channel for communicating views and continental shelf and Det norske. acquired a far broader and deeper insight new market participants. With great ambi reflections that I consider important ■■ Ocean Yield is a new addition to the into Aker Solutions. We are focused on tions, I had nurtured an oil dream for many and relevant. family, with a large dividend potential. strengthening and refining the company’s years before we finally established Aker This ship-owning company has delivered core operations. Energy, and the company was prequalified I have admitted mistakes openly and hon strong returns to shareholders since its There are still measures to implement in as a licensee on the Norwegian continental estly, expressed my opinions and shared listing on Oslo Stock Exchange in the Aker Solutions before our goals are shelf in 1999. reflections. Both in the past and present, I summer of 2013. Thus far, Ocean Yield reached. The company is undergoing a In February 2002, we made a bet on the believe I have communicated matters and has concluded long-term contracts that transformation and a renewal, and is no Agat field, located 65 kilometres northwest Beskjæres 76 mm fra venstre før trykk >> topics important to Aker and its sharehold will generate NOK 10 billion in EBITDA longer a victim of Newton’s first law – the of Florø and slightly north of the Gjøa oil ers. My letters to the shareholders chronicle over the next 7-8 years. The company law of inertia – where an object will remain field. The German oil company RWE-DEA a journey. has a solid platform for further growth. stationary or maintain a constant speed if owned 51 per cent of the field, while Aker Looking back we see that the portfolio ■■ Aker BioMarine is a rapidly growing no external force is applied to it, or if the Energy owned 49 per cent. The well was companies have gradually become more company and the world’s leading sum of the applied forces is zero. dry, and Aker’s pockets were almost as streamlined and more robust. The journey supplier of krill-based ingredients. Aker Solutions’ customer base includes empty as Agat due to the financial chal tells us much about the future direction of Superba™ Krill Oil contains omega-3 the world’s leading oil companies, and their lenges that arose in the aftermath of our Aker and the operational companies. fatty acids in phospholipid form. interests determine the company’s priorities Kvaerner takeover. In the autumn of 2003 Every day, there are 4.7 million people and development. Aker Solutions’ cus Aker Energy was sold, together with a loss ■■ Aker Solutions has increasingly who take the red capsule with its tomer focus has given us access to net carry-forward, to Lundin Petroleum. specialised on selected areas such as documented health benefits. Aker works and circles that were previously inac In 2006 we made a fresh start with the engineering and subsea. The company BioMarine is a wholly-owned “wild card” cessible. Today, we have a seat at the table exploration company Aker Exploration and is among the global leaders in subsea in Aker’s portfolio. when major oil and gas industry issues are later we began to buy shares in Det norske. control systems and technology. The final ■■ Havfisk is being focused as a trawler discussed. The two companies merged on 22 Decem pieces are about to fall into place for an company, and owns 10-11 per cent of In Det norske, executive chairman Sverre ber 2009, and since then Aker has been even more streamlined Aker Solutions. Norwegian cod quotas. The company Skogen is leading the charge after both the Det norske oljeselskap’s principal active ■■ Kvaerner has been revived after a accounts for 2 per cent of Aker’s value. CEO and the board chairman stepped down shareholder. demerger from Aker Solutions. The ■■ The financial investments portfolio has last year. Sverre’s most important task has company has more than 40 years turned challenges into billion-kroner been to recruit a new CEO for Det norske. Det norske won’t pay dividends to of track record on the Norwegian gains. In 2009 Aker gathered 12 non- We now look forward to Karl Johnny Hersvik shareholders until 2020 at the earliest. continental shelf, and together Kvaerner/ core companies into the Converto fund. taking over as Det norske’s new chief exec This means that it will have taken Aker Solutions have participated in Assets worth NOK 1.6 billion have since utive by 1 May. Hersvik, 41 years old, has more than 20 years from Aker plowed more than 80 per cent of the field grown to NOK 3.7 billion, including 15 years of management experience from new grounds, until we reap the fruits developments on the NCS. In addition, divestments. The Converto team has Statoil and Hydro, and will join Det norske of what we sowed. Kvaerner is the world’s leading provider created substantial shareholder value from his current position as Senior Vice of offshore concrete structures. from high-risk investments. President of Statoil’s Research and Devel The oil business is for long-term investors, ■■ Aker Exploration has merged with Det opment division. not impatient ones. I become patient when norske, putting Aker in the driver’s seat Øyvind continues to streamline Aker Aker has played a part in the Norwegian I sit down and calculate Det norske’s value of a company holding 80 licenses on Solutions with the aim of making it a oil adventure since the very beginning. The and its potential future cash flow. The the Norwegian continental shelf at the leading provider in the area of Subsea company’s history shows that it was one of Johan Sverdrup field will be the company’s end of 2013, including 33 operatorships. Factory and Field Design. the pioneers behind the establishment of cornerstone for decades to come. 11
Statoil, the operator, expects Johan The experts will argue about whether a Johan Sverdrup production and value over time* Sverdrup to produce oil for 50 years after 70 per cent recovery factor is too low or too (Figures in NOK million) production starts in late 2019. The field is high. I am a technology optimist. This, currently estimated to contain Stock Tank combined with the field’s high reservoir Time value of cash flows Production Original Oil In Place (STOOIP) totalling 4 bil quality, makes me believe that the potential Future value of NOK 1 billion Current value of future income Share of Sverdrup lion barrels of oil equivalents. recovery factor will exceed 70 per cent. As invested today of NOK 1 billion reserves produced NOK 1 billion invested today is worth Accrued Current value, discounted 70 per cent recovery rate, A recovery factor of 60 per cent will they say, “Time will tell.” NOK 200 billion in 2070, given an income using 10 per cent annual 2.8 billion barrels result in a total production of 2.4 billion bar annual return of 10 per cent undiscounted interest rate rels. Based on an oil price of USD 100 per Historically speaking, large fields Year barrel and the current NOK exchange rate, tend to become larger. The quality of the potential revenue stream will total the Johan Sverdrup field makes it a 2070 200 000 1 000 5 100 % almost NOK 1 500 billion and, of course, “world-class asset”. Beskjæres 76 mm fra venstre før trykk >> substantially more if one believes in a cor 2060 80 000 1 000 10 95 % relation between oil prices and inflation. Just look at what Ekofisk and Statfjord The expected plateau production of have become compared to the initial fore 2050 31 000 1 000 30 85 % 600 000 barrels of oil equivalents per day is casts. The two fields have built oil compa likely to generate more than NOK 130 bil nies and generated shareholder values that 2040 10% annual 12 000 1 000 100 80 % lion in annual revenues. Even after operat few believed to be possible. As an active return ing expenses and capital costs, and after owner of Det norske, Aker is focused on the State has gotten its share through the contributing to a robust long-term funding 2030 5 000 1 000 200 60 % 78 per cent tax rate, the licence partners solution for Det norske that does not will benefit from a strong long-term cash involve undue commitments of equity. 2020 2 000 1 000 600 flow. The Johan Sverdrup diagram puts me in A 60 per cent recovery rate will still leave a good mood on behalf of Det norske and 2014 1.6 billion barrels of oil in the ground. If the Aker’s shareholders, and it warrants a 1 000 1 000 1 000 recovery factor rises to 70 per cent, Johan closer study. In the interest of simplicity, I Sverdrup may increase its reserves by an have used a nominal annual return of 10 *Johan Sverdrup production estimated by Aker ASA, based on public data. additional 400 million barrels. This corre per cent. In this model an investment of sponds to more than two large field devel NOK 1 billion in Johan Sverdrup in 2014 will opments on the Norwegian continental be worth NOK 5 billion in 2030 and NOK and expect oil prices to stay relatively high during which prices will rise above or fall shelf. By comparison, the Ivar Aasen field is 200 billion in 2070, after 50 years of oil pro in future, we get a relatively inexpensive below this level. This view forms the foun estimated to contain approximately 150 duction. Correspondingly, the accrued option to potentially generate large cash dation of our sector outlook, and investors million barrels of oil equivalents. income of NOK 1 billion in 2030 is worth flows in the future. are free to disagree or agree with it. Today, an additional 400 million barrels only NOK 200 million, if the amount is dis The profitability of Johan Sverdrup will Irrespective of how Johan Sverdrup’s means an additional value of NOK 240 bil counted to current value. The Johan Sver be affected by investments, operating potential is calculated, the field is a robust lion. It will require investments in new wells, drup will continue to generate substantial costs, the recovery rate and the production project and a value generator. For Det nor technology and equipment, but these bar cash flow from 2030 onwards. This cash profile. These are factors which we to some ske, participation in the field is a “com rels are highly profitable. Nevertheless, flow is assigned only a marginal value at degree can influence, while we obviously pany-maker.” I‘m not concerned that Johan these barrels will be assigned a low value in present. Given a recovery factor of 70 per have no say on what oil prices over the next Sverdrup will fail to deliver considerable a cash flow analysis because production cent, some 40 per cent will remain in 2030. 50 years will be. At Aker we maintain the shareholder value. As a shareholder, I am will occur later in the lifetime of the field Views will differ as to what the figures in view that, over the long term, oil prices will more concerned about how Det norske and much of the value will thus will be dis the diagram tell us. If you, like me, believe remain stable above USD 90–100 per barrel spends the money generated by Johan counted away. in the potential of a greater recovery rate in 2014 dollars, although there will be cycles Sverdrup. 12
Johan Sverdrup is also crucial for have long remained stable above USD 100 The investments in Converto, Ocean Yield, Aker Solutions and Det norske’s ability Kvaerner’s offshore yards at Verdal per barrel. It is alarming to hear oil compa Aker BioMarine and Havfisk grew by NOK to generate shareholder value has and Stord. nies say that it is unprofitable to develop 3.1 billion, while a decline in the share increased. Given that Aker has increased fields at this price level. Not long ago, oil prices of Det norske, Aker Solutions and its shareholding in Aker Solutions, our view In last year’s letter, I gave considerable companies assumed USD 20 per barrel in Kvaerner totalled NOK 2 billion. Value has on this is clear. The company has never attention to Kvaerner and the competition their long-term development forecasts and been created in the Converto portfolio, been in better shape than it is today. I am from Asian yards. My analysis remains made money at that level. where we feared that value had been lost. no less optimistic with respect to Det nor unchanged. I have become even more con The supplier industry also has a respon On paper, the value of Aker’s oil-related ske’s future. As regards Kvaerner, there are vinced that ordering from Norwegian yards sibility to help reduce costs. One of the investments declined in 2013, however we many positive developments within the reduces the risk of cost overruns and most important things suppliers can do to see considerable potential for value growth company, but I understand why the market delays compared to placing orders in Asia. reduce costs is to successfully implement in the sector. is questioning what the future will bring. This applies particularly to smaller opera more efficient and robust execution mod When I look back on the development in When Jan Arve Haugan reads this, in his Beskjæres 76 mm fra venstre før trykk >> tors and larger oil companies lacking exten els. The interaction between developers the share prices of Det norske, Aker Solu capacity as Kvaerner’s chief executive, I do sive experience with developments on the and builders can be improved, and the tions and Kvaerner, I must ask myself: “Have hope that he will be inspired to prove that Norwegian continental shelf. coordination of the engineering and con the companies’ ability to generate share the company can deliver better results than Delivering engineering, procurement and struction phases can be optimised. holder value been reduced?” If so, value has the market fears. construction work bundled together in a I am convinced that the Norwegian sup of course been eroded, and those who have The companies that contributed to the single contract – referred to as an EPC con plier industry will remain an important part sold their shares did the right thing. increase in Aker’s shareholder value in 2013 tract for complex offshore assignments – is ner for oil companies in the future. My con Aker’s share investments in Det norske, have in common that most of their CEOs a demanding task, particularly due to the viction rests on the tremendous knowledge Aker Solutions and Kvaerner had a total are from the Sunnmøre district in Norway. NORSOK standard. Norwegian yards have base that has been built up by Norwegian value of NOK 15.7 billion at the end of This is not easy for someone from neigh more than 40 years’ knowledge and experi specialised industry clusters. 2013, following share price declines total bouring Romsdal to admit, but Frank O. ence of developments on the Norwegian Right on our doorstep we have what will ling NOK 2 billion. Based on Aker’s required Reite, Lars Solbakken, Hallvard Muri and continental shelf. remain one of the world’s largest offshore rate of return of 12 per cent per year, the Olav Holst-Dyrnes deserve considerable Lundin awarded Kvaerner the EPC con markets for many decades to come: the share investments in these three compa praise on behalf of their respective teams. tract for the construction of the Edvard Grieg Norwegian and UK continental shelves. To nies should have a value of close to NOK Let me begin with Frank O. Reite, who field in 2012. It is natural that some oil com address future challenges, the entire indus 20 billion. has worked almost half his life for me and panies turn to Asia, but the scale of the trend try needs the injection of new knowledge Does this mean that Aker has had a loss Aker. Under Frank’s leadership and with his and the way it occurred surprised me. Edvard and top talent able to help boost recovery of NOK 4 billion? I don’t think so, but I inspiration, Converto has not only rescued, Grieg will be a reference project as regards rates, reduce environmental impacts and don’t expect everyone to agree with me. In but also generated values worth billions for what is optimal in terms of cost, timetable implement projects more quickly and cost- industrial terms, the three companies are Aker’s shareholders. Frank and his seven and quality. In my opinion, the Lundiners effectively. My ambition is that the Aker developing in line with our plans and objec highly competent colleagues deserve credit have a highly experienced and competent family will continue to make an important tives. The dividend payments Aker receives for their efforts, as do individuals in Con team, and the Edvard Grieg project is being contribution to raising the level of knowl from Aker Solutions and Kvaerner are gen verto Fund’s operational companies. developed in an exemplary fashion. edge in the oil industry. erally consistent with our expectations. Over the past year Kvaerner has restruc Share prices in the oil service, oil pro Two companies in Converto have tured its business model, preparing for the Oil accounts for well over half of duction and exploration sectors have gen accounted for by far the largest value next wave of tenders that will come with Aker’s investments and value, but in erally fallen in the past year. In my view, the increase in the last few years: Johan Sverdrup. In the meantime, Kvaern 2013 the greatest growth was seen in long-term trend is continued growth. I’ve American Shipping Company and er’s order backlog and impetus are suffi other areas. experienced many a downturn since I Aker Philadelphia Shipyard. cient to allow it to make adjustments. entered the oil and gas business in 1996. In The general cost inflation in the offshore The figures show that Aker’s net asset my experience, these create more opportu The total value of Aker’s investments in the sector provides food for thought. Oil prices value increased by NOK 1.1 billion in 2013. nities than challenges. two companies has increased from NOK 59 13
million as of 30 June 2012 to NOK 2.5 bil make it there, I’m sure you can make it any- opment company. General Manager Tor Southern Ocean are crewed by a total of lion in January 2014. Yes, the two compa where.” stein Storækre has recruited a strong team 330 hardened fishermen, researchers, tech nies have indeed benefited from the shale- Kristian has passed the test with flying of highly-skilled professionals with knowl nologists and inspectors. Hallvard is a team oil boom and optimism in the US Jones Act colours. The yard has completed a suc edge and experience in real estate devel player leading an international team. market. American Shipping Company has cessful turnaround, and is now well-posi opment and sales. We are engaged in a Superba™ Krill Oil is the ingredient in the completed a demanding, but successful tioned for further growth. Kristian is the first positive dialogue with Bærum municipality top selling nutritional supplement in the refinancing. So has Aker Philadelphia Ship member of our family to be educated at an regarding the optimisation of the area, and U.S., sold under the MegaRed brand name. yard, which has also succeeded in rebuild Ivy League university. When he receives his Fornebuporten will have its own station In the spring of 2014 the brand-name giant ing a motivated team following a period of MBA degree from the University of Penn when the new metro line is completed. Reckitt Benckiser Group will enter the major downsizing and the possible closure sylvania Wharton School on 17 May, I’ll be It is satisfying to see the buildings rising European market with MegaRed and the of the yard. Today, the yard has an order sitting in the audience. His accomplishment from the ground at Fornebu. The first two ingredient Superba™. reserve totalling NOK 6 billion and a deliv makes a dyslexic, uneducated fisherman office buildings – which are due to be com It is clear that Möller’s Tran is intimi Beskjæres 76 mm fra venstre før trykk >> ery schedule stretching to the end of 2018. who moved to the U.S. in 1980, very proud. pleted in the summer of 2015 and the sum dated, and is therefore running ad cam Both companies have excellent operational Kristian will now take on a new role as mer of 2016, respectively – will total 67 000 paigns in the Norwegian market challeng management teams. executive chairman of Aker Philadelphia square metres, and are currently being filled ing MegaRed and Superba™ Krill Oil. American Shipping Company and Aker Shipyard, and new assignments are waiting with tenants. In addition, 271 of 290 apart Möller’s Tran is comparing the price per Philadelphia Shipyard were the two winners for him in Aker and Aker-owned compa ments in the first phase of the residential gram of fish oil with the price per gram of on the Oslo Stock Exchange last year. The nies, if he so wishes. project – which is due to be completed in krill oil. To me as a former cross-country two companies have the oldest and young the second half of 2015 – have been sold. skier from Molde who was active when the est chief executive, respectively, of all the And now back to the people from The collaboration with my childhood friend first fibreglass skis came on the market, companies listed on OSE. Sunnmøre: Ocean Yield chief Lars and former Aker head Bjørn Rune Gjelsten this is like comparing fiberglass skis with Dag Fasmer Wittusen turns 70 in June. I Solbakken holds the unofficial and his company Profier, works well. traditional wooden skis. Möller’s Tran first met him in 1987. Dag was one of the Norwegian national record for Fornebuporten has also invested in argues that you should buy the largest and founders of Orkla Finans, and played a cru dividend capacity and EBITDA per Aberdeen International Business Park, heaviest skis because they give you the cial role in funding the F/T American employee in a listed company. located in an area that is benefiting from most weight for your money and thus have Empress, which I constructed at Langsten the growth in the UK oil and gas industry. the greatest effect in the trail. Many scep yard in Tomrefjord. That was a major step Lars and his efficient team, which is being Thus far, 30 000 square metres are under tics held onto their wooden skis for a long for a 29-year-old fisherman. The project expanded to five employees as the com development, but this is expected to time, but we all know the fate of the ski had a value of NOK 238 million. I had lim pany grows, have an order backlog in increase to 100 000 square metres. manufacturers who wouldn’t let go of ited access to equity and credit financing, terms of EBITDA of NOK 2 billion per wooden skis. but Dag helped me find the way. employee. Ocean Yield has a clear and Almost two billion daily doses of Möller’s Tran is like an old wooden ski, In 1995 Dag was hired by my company straightforward business model. Superba™ Krill Oil have been sold in while MegaRed is like a speedmax racing RGI. Since then, he has been a key figure The company is as easy to understand the past year. ski made of fiberglass. The last cross-coun at Aker and Aker-related companies. In as Lars himself. No-nonsense, combined try world champion on wooden skis was 2011 he was appointed chief executive of with astuteness and good instincts, and a I continue to be impressed by Aker Bio Magne Myrmo in 1974. American Shipping Company. Age is no board loaded with knowledge and experi Marine’s achievements under the leader Superba™ Krill Oil contains omega-3 barrier to success. Perhaps the opposite is ence. The framework is ship shape. The ship of Hallvard Muri. The company is fatty acids in phospholipid form, and has true. According to Warren Buffett, a 70-year most important thing now is to put the cap growing rapidly, and now has a highly com documented health benefits. All cells in the old man is just a “spring chicken.” ital that Ocean Yield has at its disposal to petent staff from 11 nations, including more body have membranes containing phos My eldest son Kristian, aged 31, was good use. than 50 employees at Aker Brygge. It has pholipids. In order for the body to utilise entrusted with the leadership of Aker Phila Fornebuporten is putting its capital to also opened offices in the U.S., China and omega-3 fatty acids, these first have to delphia Shipyard by the company board in work, and Aker has converted NOK 1 billion Australia. pass through the cell membranes. The March 2011. At that time, I said: “If you can from loans to equity in the property devel The two krill-harvesting vessels in the phospholipids in Superba™ Krill Oil act like 14 Aker ASA annual report 2013 Letter from the chairman
a door opener. Other forms of omega-3 find shareholders have had a negative return of Aker would not have invested in fish. Fortunately, as a fisherman, I can still it far harder to penetrate the cell mem more than 50 per cent since the company Aker’s ownership and investments in take pleasure in the fact that we have brane. That is why you need smaller doses was listed in May 2005. Olav Holst-Dyrnes Havfisk and Norway Seafoods engage developed the Norwegian krill-harvesting of Superba Krill Oil than Møller’s Tran. and the Havfisk crew are in the process of many people. If decibels and column industry from practically nothing into a Moreover, you don’t have the discomfort of putting the trawler company right, and the inches were the measures of success, world-leading, environmentally friendly, burping Møller’s Tran, because the phos three Gadus trawlers have had a good Aker’s investment in whitefish would be an sustainable industry while cooperating pholipids in Superba™ Krill Oil mix well in start, although profitability must improve to absolute triumph. In reality, the opposite is closely with WWF Norway. We will krill on. the stomach, whereas Möller’s Tran floats justify the trawler investments. unfortunately true. on top like oil on water. In Norway Seafoods, Thomas Farstad is For 18 years we have tried to create prof In the newsroom of the Norwegian Aker BioMarine is cooperating with facing a tough task turning losses into prof itability throughout the value chain, from har daily business newspaper DN, it is WWF Norway on the sustainable harvesting its, experiencing “lots of pain and no gain”. vesting to processing and sale. Overall, the believed that Elvis is still alive and of krill resources in the world’s cleanest Last year the loss was NOK 56 million, a vessels and the filleting industry have lost that pigs can fly. Beskjæres 76 mm fra venstre før trykk >> waters. The krill-fishing operation is envi slight improvement over 2012. Thomas, money during this period, and every time we ronmentally certified by the Marine Stew who is also from Sunnmøre, has long since try to make adjustments in response to eco The fishing industry has attracted much ardship Council (MSC), the world’s most concluded that it is impossible to earn nomic realities, we are met with loud pro media attention in northern Norway, but respected environmental certification money given current regulations and pro tests and egregious accusations. nothing has astounded me more than DN’s organisation for seafood. Every bottle of the duction structures. This view has the unani articles in 2013/2014 on the Aker Wayfarer product can be traced back to the vessel mous support of the board, employee rep As we say at Aker: Be careful what transaction back in 2009. that harvested the krill and its exact posi resentatives, owners and the Norwegian you demand or wish for because you DN’s series of articles remind me of the tion in the Southern Ocean. Möller’s Tran is Confederation of Trade Unions (LO). may end up getting it. TV series “Dead Famous DNA” and the not marked for such tracing. The OTC market currently prices Norway program’s analysis of Elvis Presley and a The number of daily consumers of the Seafoods at NOK 42 million, a group that in Certain politicians have accused me of strand of hair from the King of Rock ‘n’ nutritional supplement Superba™ Krill Oil is 2013 sold processed fish for NOK 1.7 bil being, among other things, a pirate, a rob Roll’s black mane. To my mind, the pro approaching five million, while Möller’s lion to Norwegian and European grocery ber and a short-sighted egotist. I have gram makes it easier to understand how Tran, which was established in 1854, only chains. Norway’s whitefish industry flagship received death threats from anonymous the media can spin the strangest tales. has a fraction of this. Superba™ Krill Oil is is listing. Thomas is the right man to bring senders. I can to a certain extent live with According to a doctor – a so-called expert approaching two billion daily doses per the Norwegian whitefish industry back on these things, but Aker’s shareholders do – the DNA test result indicated that it was year. This is, quite simply, a mind-boggling track, but he cannot do so unless he is not deserve to have capital stuck on death not Presley’s lifestyle that led to his death, figure, and the number of consumers is allowed to implement some unpopular row in the fisheries businesses indefinitely. but rather a genetic muscular disease. The increasing every month. decisions. When it comes to our involvement in the reporter concluded that Presley had a DNA whitefish sector, I am tempted to quote the defect and, according to the Norwegian In comparison, our fish-processing Fish harvesting and processing American author Jessamyn West, who said national daily newspaper VG, stated that: businesses delivered approximately account for only a tiny share of Aker’s of sex: “Groan, and forget it.” “I am absolutely certain that it’s Elvis’ DNA, 110 million meals in 2013. investments, but have been important Unfortunately, things are not that simple. but I can’t prove it. I cannot guarantee to to me. Even in the eye of a storm, we have a duty you 100% that it’s Elvis’ DNA. That This winter, Havfisk took delivery of the last to remain calm and behave constructively, wouldn’t be possible.” of three modern trawlers currently ordered. I devoted considerable attention to our for the sake of the employees, customers, The media publish the strangest stories The Gadus series of efficient, environmen whitefish investments in last year’s letter, society and, not least, our shareholders. and allegations, irrespective of how shaky tally-friendly trawlers is setting a new but won’t do so this year. Last year I tried I have much to say about fish, but I do the factual grounds may be. Prejudiced standard for fisheries and trawler compa to provide insight into what some of our not wish to burden the shareholders here. journalists and experts with access to nies operating in harsh weather conditions. shareholders’ money is invested in. Instead I intend to expand on my views media are a dangerous combination, yet Although the Havfisk share doubled in It is I who have been the driving force later, for those who are particularly inter they garner attention and generate stories. value on Oslo Stock Exchange in 2013, here. Had I not been the main shareholder, ested in the whitefish industry. Under the heading “The Aker Wayfarer Aker ASA annual report 2013 15 Letter from the chairman
transaction,” DN and three professors have If DN’s allegations contained even a purchase a contract for the construction of went for a TRS, and that proved to be alleged that value was unlawfully trans shred of truth, I would have first had to a specialised ship at book value. On the problematic. ferred from Aker Solutions to Aker through convince Aker’s management that the com same day, Aker Solutions’ subsidiary AMC The extension of the TRS agreement on procedures that breached the Limited Lia pany should commit a financial fraud on International signed a 10-year agreement to 1 November 2013 was scheduled to take bility Companies Act. All of this was repudi Aker Solutions in the spring of 2009. I lease the ship (Aker Wayfarer), from the place automatically. At the time of the ated in 2009, and repudiated again this would then have duped Aker’s board and autumn of 2010. Both the purchase of the extension, Aker’s management and myself year by means of thorough, comprehensive misled highly competent directors with construction contract and the lease agree had insider information regarding the accounts from Aker Solutions, Aker and the extensive commercial, financial and politi ment were concluded at the market prices upcoming sale of one of Aker Solutions’ board of Aker Kvaerner Holding. cal experience. applicable at the time. DNB Markets con business areas. Insider lists had been Untruths in DN do not become truths no Thereafter, I would have manipulated the ducted a separate valuation for Aker Solu established by both Aker Solutions and matter how many times they are repeated administration of Aker Solutions, withheld tions in March 2009. The conclusion was Aker. Unfortunately, this was not taken into and spread across more than 30 newspaper information from financial advisers, com that the agreements were sound in relation consideration when the TRS agreement was Beskjæres 76 mm fra venstre før trykk >> pages. In Aker’s view, the case was con pletely fooled legal advisers from three of to comparable prices and transactions in extended. The extension was conducted in structed by a journalist who became intoxi Norway’s largest law firms and brain the market. accordance with the correct procedures, in cated by his own calculations and theories. washed the independent members of Aker Aker has said all that it has to say about that a stock exchange notice was immedi In other words, it was a news story as Solutions’ board. the Aker Wayfarer transaction. DN is free to ately published. The oversight resided in the far-fetched as the one involving a strand of In short, I would have pulled on hidden believe, think and write what it wishes, fact that no connection was made between hair from the King of Rock ‘n’ Roll’s head, strings and forced about 50 managers, including that Elvis is still alive. I have the insider list and the TRS extension. and was about as true as that Elvis Presley board members and advisers to act as my accepted that Elvis Presley died on 16 The Norwegian National Authority for is still alive. puppets, solely to increase my taxable net August 1977. Investigation and Prosecution of Economic The essence of DN’s articles and allega wealth by one or two per cent. and Environmental Crime (Oekokrim) tions is that Aker “robbed” Aker Solutions The story does not end there. According In the TRS case, DN asked critical recently concluded that the extension of of NOK 300 million, and that I am behind a to DN, I blocked the annulment of the Aker and relevant questions, something for the TRS agreement was in breach of insider conspiracy implemented by an alliance of Wayfarer transaction in 2010 because the which it deserves credit. trading rules. Oekokrim served Aker a pen people from Aker’s management and the price was too low. Aker Solutions took the alty of NOK 51 million, composed of the boards of both Aker and Aker Solutions, initiative to buy the vessel because the Like many other participants in the capital confiscation of NOK 17 million in theoretical ably assisted by legal and financial advis market for high-end offshore services and market, Aker and I have regarded total gains made on the TRS agreement in ers. DN’s spreadsheets produce figures bank financing had improved since the win return swap (TRS) agreements as a long- November 2013, together with a fine based based on given assumptions, and these ter of 2009. Aker Solutions and Aker agreed term instrument to facilitate funding and on twice the gains. amounts have been interpreted as suspi to annul the transaction at book value. financial exposure to shares. In April 2013 To put the extension in an economic cious indicators. The professors have used Apparently, I once again used my supernat Aker entered a TRS agreement with finan context: On 29 April 2013 Aker entered a them to claim that unlawful and immoral ural powers and made the board of Aker cial exposure to 1.5 million shares in Aker TRS agreement with an economic exposure acts have been committed. The matter is Kvaerner Holding block the annulment Solutions. of NOK 125 million. When the agreement personified using my name and picture, because I wanted a higher price. In other Aker had three options to increase its was extended on 1 November, the swap claiming that I, as the owner of two-thirds words, I overrode the agreement between exposure to Aker Solutions. Firstly, we price stood at NOK 82 per underlying Aker of the shares in Aker, have robbed Aker Aker Solutions and Aker in some mystical could have used Aker’s cash holding to Solutions share, the same as when the Solutions of NOK 200 million. and invisible manner. This is nonsense from acquire Aker Solutions shares. Another agreement was entered into six months beginning to end. Certain journalists at DN alternative would have been to borrow prior. Approximately three weeks later, sub As I have previously said, I feel like a think they can make pigs fly, if they use money and buy Aker Solutions stock with sequent to Aker Solutions’ announcement combination of a clairvoyant and Don enough pink newspaper and ink. collateral in the shares. The third option of the sale of a business area, Oekokrim Corleone when I read the media’s A quick reminder of the facts: On 1 April was to enter a TRS agreement with a bro calculated a theoretical gain for Aker of representations of my supernatural 2009, Aker/Aker Ship Lease signed an kerage firm. The first two alternatives NOK 17 million as a result of Aker Solu abilities. agreement with Aker Oilfield Services to would not have created any problems. We tions’ share price gain. The unrealised gain 16
is at the same level today. Later in Novem Today Aker manages assets with a total Wiser by experience, I will not be of the company’s total assets. Aker’s buffer ber, Aker acquired 16.44 million shares in value of NOK 30 billion, and NOK 26.4 bil making new predictions as to Aker’s capital enables it to act quickly when oppor Aker Solutions in the market for NOK 1.9 lion of this amount is invested in shares. In value in five years’ time. tunities arise, and allows Aker’s manage billion. Aker has today an unrealised loss of five years, the share proportion has ment, and me, to sleep better at night. NOK 325 million on this acquisition. increased from under 50 per cent to almost Before you decide whether to sell, hold or The amount puts what the stock market The penalty of NOK 51 million should be 90 per cent of Aker’s gross asset value. buy stock in Aker, I would like to share calls the “Røkke discount” into perspective. evaluated against the realities and conse The majority of Aker’s capital has been some reflections. TRG does not intend to Investors in Aker currently get Aker BioMa quences we were confronted with. Whether put to work in solid companies, but we sell any of its Aker shares. In my view, Aker rine, Fornebuporten, our investments in the the amount is correct or not I leave for oth should not be blinded by current balance will over time meet TRG’s return and risk Norron fund and Oslo Asset Management ers to decide. Based on an evaluation of sheets. Aker must allocate capital with a profile requirements. as well as cash holdings of NOK 2.5 billion the alternatives, Aker concluded that it was firmer hand. Today, too much remains tied up Over 70 per cent of Aker’s gross asset for free when they buy Aker shares. sensible to reach an agreement with in sub-optimal investments and structures. value comprises listed shares that investors In recent years, the Aker share has Beskjæres 76 mm fra venstre før trykk >> Oekokrim and accept the penalty. This has At Aker we must become more con can acquire directly in the market. Cash traded at a price that is 30 to 40 per cent not been an easy decision. We at Aker have scious of the fact that capital has no other holdings total 8 per cent of Aker’s assets. lower than the value of the underlying always acknowledged the facts of the case purpose than to serve the shareholder Two wholly-owned subsidiaries – the bio assets. At the beginning of 2014, the dis and we have chosen to take the conse community. In other words, special local, technology company Aker BioMarine and count was 33 per cent. quences of Oekokrim’s finding. Giving regional or national interests should not be the property development company To understand the future, you have to excuses will not correct the error. We take among our investment criteria. Fornebuporten – account for over half of know the past. The graph on the next page responsibility for our actions and we learn Havfisk and Norway Seafoods are the remaining 19 per cent of Aker’s assets. is interesting. Øyvind and I have spent time from them, even when it is painful. examples of investments where Aker has Aker BioMarine and Fornebuporten are analysing Aker’s assets, notably to evaluate On behalf of Aker, I can only apologise invested in my nostalgia. Aker Kvaerner reported in the NAV at book price. whether the composition of the balance to shareholders and all other stakeholders, Holding is not an optimal ownership model Aker’s operating costs totalled NOK 236 sheet is optimal. The picture shows the and say that this is a case of “Good inten for Aker’s interests in Aker Solutions and million in 2013, corresponding to 0.8 per development of Aker’s total assets from the tions, bad execution.” From my perspec Kvaerner. Previously we have learned that cent of Aker’s total net asset value. Looking company’s listing in 2004 until the end of tive, the TRS case is one of the most dis carbon capture and Aker Clean Carbon – a forward, we hope to gradually reduce our 2013. mal incidents I have experienced at Aker, venture developed at the interface of poli operating costs as a percentage of asset A positive aspect is that Aker has man aside from accidents that have resulted in tics, public administration, business and value. aged to recoup some of the value I had injury or the loss of human life. technology development – incurred losses To ensure that we have the latitude and thought to be lost. American Shipping This is a case where DN’s journalist of NOK 400 million for Aker. flexibility we want, Aker maintains a cash Company and Aker Philadelphia Shipyard asked the right questions, and we at Aker Public debate centering on my persona buffer. Aker has NOK 5.4 billion in interest- have largely regained lost ground, while must take the uncomfortable conse should not affect Aker’s investments. If I wish bearing liabilities, cash holdings totalling Aker BioMarine is at book value. quences. One is not remembered for the to enter into sub-optimal transactions and NOK 2.5 billion, interest-bearing receivables The British author Evelyn Waugh aptly headlines – that is not what defines one. It is investments, I would do so through our fam of NOK 0.6 billion and an equal amount of wrote, “Sometimes, I feel the past and the how one deals with the headlines that does. ily company, TRG, not through Aker. My aim shares in funds. A portion of this, approxi future pressing so hard on either side that We now put this case behind us and is to distinguish more clearly between Aker mately NOK 2-3 billion, was considered there’s no room for the present at all.” look ahead. and Aker-owned companies on the one hand “buffer capital” at the start of 2014. At cur This is a fitting observation with which to and myself as a private individual on the rent interest levels, Aker is paying approxi end a long letter to the shareholders. Aker’s If you don’t acknowledge and accept other. Øyvind Eriksen and Aker’s board of mately 3 percentage points on its “buffer core is healthy, but we will benefit from where you come from, and you don’t directors are also focused on this, and Head capital.” That is the delta between the inter avoiding investing capital in sub-optimal have any objectives for what you wish of Corporate Communication Atle Kigen has ests on our outstanding bonds and our bank investments and structures. I believe that to achieve or avoid in the future, you an important role to play in ensuring that deposits. This expense, which amounts to Aker has put together a good portfolio of cannot make the right decisions in investors, politicians and the general public NOK 60-90 million per year, can be viewed investments. The portfolio and the portfolio the present. perceive and understand the difference. as an insurance premium of 0.2-0.3 per cent companies will provide opportunities and 17
flexibility going forward, and we have the face exciting times ahead. As a technology Aker share could well become a transac right team of talented people on board to and knowledge company, Aker Solutions is tional currency used for growth. We’re exploit these opportunities. All of our main well-positioned for profitable growth. nowhere near this today due to the gap sectors – energy, seafood, marine biotech The present is now. One krone in net between Aker’s underlying values and the nology and maritime assets – are being asset value trades today at 0.6-0.7 krone share price on Oslo Stock Exchange. I’ll driven by growing demand. on the stock exchange. This is the reality leave the topic as food for thought for the Aker has gone against the flow, invest more than 14 000 Aker shareholders face time being, but can ensure you that Aker ing even more heavily in oil and gas. Energy today, and the discount is a topic our larg continues to work on crystallising and needs will continue to rise, and hydrocar est investors bring up regularly. Aker’s 20 developing the values in the company port bons will remain the dominant energy biggest shareholders own over 82 per cent folio in a way that benefits our shareholder source for decades to come. Aker Solu of the company. community. tions has reported that, in the long term, I often ask myself questions such as: Along with my colleagues at Aker, the Beskjæres 76 mm fra venstre før trykk >> demand for its core products will grow by How can investors obtain more for every employee representatives and the boards an average of 8 to 10 per cent per year, krone in Aker’s net asset value? How can of Aker and Aker-owned companies, I look while annual growth in the subsea segment shareholders get greater access to the val forward to seeing what the future will bring. is estimated at 15 to 20 per cent. ues they own, but that are not priced by the At the same time, I would remind you of Our view assumes that oil prices will, in stock market? what I said three years ago: the longer term, remain stable above USD These are some of the questions that I provide no guarantees. If you want a 90–100 per barrel in 2014 dollars. The Nor we’ve addressed, but have not found good guarantee, buy a toaster. wegian continental shelf and Det norske answers to. I’ve previously written that the Kjell Inge Røkke On behalf of the family
Equity balance development in Aker ■ Debt ■ Interest bearing receivables ■ Investments ■ Other ■ Cash
50 000
PS: As in previous years, I would like to 40 000 thank my wife and fellow shareholder Anne Grete for her help with the writing, form, 30 000 content and spelling of this year’s letter to the shareholders.
20 000 Aker Brygge, 7 April 2014
10 000
0
-10 000 September December December December December December December December December December December 2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 18 Aker ASA annual report 2013 Letter from the President and CEO
Dear shareholders
Aker ASA enhanced its room for manoeuvre in 2013, giving us greater strategic flexibility and financial strength. The question is: “How can we make the best possible use of this mandate looking forward?”
Today, Aker is an entirely different com My stated ambition when I became pany and group than when I took over as executive chairman five years ago was CEO in January 2009. Aker has gone from to develop Aker into a well-defined being the parent company in an industrial and more demanding owner of Beskjæres 76 mm fra venstre før trykk >> conglomerate to being an industrial invest independent, operational businesses. ment company that exercises active own We are on the right track. Aker’s ownership ership. In five years, the Aker share, role is being streamlined and developed in including dividends, has almost doubled such a way that active ownership is in value. becoming a profession in itself. Aker’s At the end of 2008/beginning of 2009, loans to subsidiaries and associated com we were in the midst of an escalating finan panies have been reduced from NOK 7 bil cial crisis. Several countries had plunged lion in 2009 to NOK 600 million today. We into recession, commodity prices were fall have reversed the direction of our cash ing and demand for manufactured goods flow. Last year, Aker received NOK 852 mil was on the decline. Global trade was expe lion in dividends from its portfolio compa riencing a significant slowdown, and share nies. This was more than six times the fig prices were plummeting. ure for 2009. The harsh economic environment The market has certainly helped Aker impacted Aker’s new industrial ventures and Aker-owned companies in recent within marine biotechnology, advanced years. Our external drivers are rising energy rigs for Arctic regions, floating production, demand, increased demand for maritime storage and offloading vessels (FPSO) for assets and strong growth in the consump Indian waters, oil exploration on the Nor tion of seafood and omega-3. Our internal wegian Continental Shelf and off the drivers are the highly competent and, coast of Africa, the US Jones Act market adaptable staff working for Aker and the for construction and ownership of product portfolio companies. tankers, global carbon capture technol More than half of Aker’s NOK 30 billion ogy and well interventions in ultra deep assets are invested in the oil and gas waters off the coast of Brazil. Aker aimed industry. We have experienced a boom in high and diversified its portfolio as it ven activity levels in the oil-service sector. Oil tured into new companies and business companies have demonstrated great will areas. Five years ago, Aker acted as an ingness and ability to invest in exploration, internal bank for venture-type start-up production and large offshore field develop companies. ments. Oil prices have remained stable at over USD 100 per barrel for a prolonged Aker ASA annual report 2013 19 Letter from the President and CEO
period. In addition, stock prices in general A quick review of the high-risk compa Sverdrup discovery. Aker’s seafood group the objective of a nominal increase every soared right up to New Year’s Eve 2013. nies that were Aker’s portfolio in the spring has been split into two, with Havfisk being year, continues to apply. of 2009: streamlined as one of Europe’s leading In the five years from 1 January 2009 white fish harvesting companies. Aker Bio 2013 can be summarised as follows: to 1 January 2014, Aker’s shareholders ■■ The rig company Aker Drilling was listed Marine was delisted and became a wholly- improved solidity and greater room for have almost doubled their money. and sold to Transocean for a solid profit. owned subsidiary of Aker in 2013. Ocean manoeuvre. This applies to both Aker During this period, Aker’s share price has ■■ Although the shares in the carbon Yield has been transformed from a wholly- and the portfolio companies. risen from NOK 137 to NOK 222, and divi capture and storage company Aker owned ship-owning Aker subsidiary into a Aker is in an even stronger position at the dends of NOK 46 per share have been Clean Carbon were written down to highly attractive dividend machine on Oslo beginning of 2014 than 12 months ago. paid. The Aker share has generated an zero, the company’s expertise and Stock Exchange. The companies in Aker’s industrial and average annual return of 16 per cent in the technology resources live on in Aker Looking at Aker’s financial portfolio also financial portfolios all hold strong market past five years. By way of comparison, the Solutions. lifts my spirits, particularly when I consider positions in their core areas, and have Beskjæres 76 mm fra venstre før trykk >> primary Oslo Stock Exchange index ■■ The FPSO company Aker Floating Converto Capital Fund’s development. This established robust financial platforms for (OSEBX), rose by an average of 18 per cent Production become a part of the ship- ownership fund was established in July growth. The strategy of the portfolio com per year, while the Morgan Stanley global owning company Ocean Yield. 2009 with a strong team to tackle Aker’s panies has become clearer. Summarised in index achieved an annual growth rate of 15 ■■ The exploration company Aker challenging investments in 12 companies. just a few words, Aker’s ownership agenda per cent. Exploration merged with Det norske The cost price of the fund’s assets at the is as follows: In 2013, the share price rose from NOK oljeselskap. time was NOK 1.6 billion. Their value has 212 to NOK 222, while net asset value per ■■ Aker-controlled oil exploration grown to NOK 3.7 billion, including realisa ■■ Aker Solutions will be streamlined share increased from NOK 321 to NOK companies in Ghana and Gabon have tions, in the past three-and-a-half years. further as a technology and knowledge 332. In addition, a dividend of NOK 12 per been sold or are in the process of being company. share was paid. sold. Aker’s mandate is to generate value ■■ Det norske’s future lies in Ivar Aasen Although the return on the Aker share in ■■ Aker Philadelphia Shipyard and for its shareholders. and Johan Sverdrup’s hands, and in a 2013 and in the past five years suggests American Shipping Company are well- We will be assessed based on the develop focused, successful exploration strategy. that the company has underperformed positioned in the growing US shale- ment of our share price, net asset value ■■ Kvaerner will concentrate on fabrication against the OSEBX, Aker’s position is oil market, and are key players in the and dividends to shareholders. Aker’s and field developments on the stronger than what the numbers may indi attractive US Jones Act market. robust value and dividend platform was Norwegian continental shelf, as well as cate. Aker has undergone an extreme ■■ Aker BioMarine is growing rapidly and further strengthened in 2013. The compa concrete solutions for the international transformation, and is today a rock-solid, making profits on its krill business. nies in the industrial and financial portfolios market. expert and professional owner. The opera have generated shareholder value. Moreo ■■ Ocean Yield will grow as a company, tional companies have successfully built a A study of our portfolio companies ver, dividends from the Aker-owned com and be developed further as an solid financial foundation, and Aker is exer reveals Aker’s transformation has a panies continue to grow. attractive dividend share. cising active industrial ownership. forward-looking component. Since 2009, the dividends received by ■■ Aker BioMarine will focus on its The story of the last five years is one of Aker from the portfolio companies have core area of krill, with the aim of The reality tells a story I am starting to important industrial steps and transactions. increased more than six-fold from NOK 137 revealing substantial values for Aker’s be proud of. I like the trend of things. Aker Solutions has sold non-core compa million in 2009 to NOK 852 million in 2013. shareholders. Some of Aker’s industrial venture-type nies and assets totalling NOK 13 billion. We are on schedule to meet our objective: ■■ Havfisk will be streamlined as a leading start-ups have developed into established The large field development (EPC contract) to receive dividend and cash flows from our white fish harvesting company (cod, industry players. Other start-ups have been business was spun off to Aker Solutions’ operational businesses that exceed the saithe and haddock). sold or wound up. Uncertainty has been shareholders and listed under the strong sum total of Aker’s dividends paid, operat removed, and the risk exposure of Aker’s traditional industrial name of Kvaerner. Det ing costs and net financial expenses. The These are strategic directions that give the portfolio companies has been gradually norske oljeselskap has stepped up to the dividend policy of distributing between 2–4 companies a great deal of optionality, reduced over the past five years. big leagues following the major Johan per cent of net asset value annually, with including acquisitions, divestments, merg 20 Aker ASA annual report 2013 Letter from the President and CEO
ers, demergers and structural measures. the end of 2015. This objective is less years. In the longer term, we forecast highly qualified Norwegian boards to expert Each company possesses building blocks ambitious than I thought just a year ago. annual growth rates of 8–10 per cent, while international boards. Five years ago, the relevant for the construction of its future Thus far, NOK 800 million has been subsea – the company’s largest and most board of Aker Solutions was composed under Aker’s active ownership. released. important market – is estimated to grow solely of Norwegians. Today, five of the 15–20 per cent per year. seven shareholder-elected board members In addition, the increase in the value of The mandate for 2014 and the years The second main industry in which Aker are foreigners: two hold British passports, Aker’s financial portfolio has opened ahead is to create and reveal invests is fisheries and marine biotechnol one is a South African, another is an Aus up new opportunities. underlying values for shareholders in ogy. The primary value driver in this indus tralian and one is from Denmark. The four One example in this regard is the US Jones Aker and Aker-owned companies. try is demand for krill-based ingredients employee-elected representatives are Act market, to which we’re exposed This is primarily about building strong busi and products. According to Aker BioMarine Norwegian. through our ownership of Aker Philadelphia nesses characterised by quality and tal and independent growth estimates, the The management groups have also Shipyard and American Shipping Company. ented employees. We will continue to make market is growing by more than 30 per cent increased their international content and Beskjæres 76 mm fra venstre før trykk >> The US Jones Act requires all vessels systematic, targeted efforts to achieve prof per year. diversity. Interaction with employee repre transporting goods between US ports to be itability and share prices for the portfolio Although the prospects are good, no sentatives, trade unions and union repre constructed in the US, sail under the US companies that are on a par with the top one can expect linear growth in the future. sentatives continues to play a constructive flag and be operated by US nationals. The performers in the respective industry seg This will obviously be the case for as long and important role in the development of rapid growth in the production of shale oil ments. as Aker is primarily invested in cyclical sec the companies. This has impressed me in the USA has boosted demand for prod tors such as energy and maritime assets. from my very first day at Aker. Although we uct tankers and new-builds. The motto for Aker and our follow-up may engage in tough and challenging The US Jones Act market is still experi of Aker-owned companies is clear: In the long term, I believe that Aker negotiations, Aker has a long tradition of encing good growth. Both Aker Philadel greater capital discipline and higher has the potential to generate greater finding solutions that have full staff support. phia Shipyard and American Shipping returns on invested capital. shareholder value than we have seen The quality of Aker’s active ownership is Company conducted successful share This describes the focus of our work going on average in the past five years. entirely dependent on the quality of the issues in the past year, and attracted a new forward. Some will probably say that our Our room for manoeuvre has increased people working for Aker and Aker-owned shareholder base. Previously, short-term motto sounds simplistic and banal, but gradually, and the range of options open to companies. This is our inheritance and our Norwegian investors caused fluctuations in industrial owners could benefit from being both Aker and the portfolio companies has future, and vital for building strong busi the share prices of the two companies. reminded that the simple can also be the increased. Aker’s ownership agenda stakes nesses, attracting talent and generating Now, large funds and institutional investors best. Our motto has a disciplining effect. In out our course, and I can promise adjust shareholder value. based in the US have chosen to invest. its capacity as an owner, Aker was a driving ments and changes to the industrial and Aker has a controlling stake in Aker Phil force behind Aker Solutions’ sale of two financial portfolios. With friendly shareholder greetings, adelphia Shipyard, which together with the business areas in 2013. This helped to Aker’s largest shareholder, Kjell Inge US company Crowley has established a streamline Aker Solutions and halved the Røkke, is a source of inspiration and energy new product-tanker company for the trans company’s interest-bearing debt. in the development of the Aker-owned portation of oil. Aker also owns a strategic Aker has invested in companies operat companies. The boards of directors of Aker minority stake in American Shipping Com ing in growth markets. Although oil compa and the Aker-owned companies also play pany. In summary, Aker holds key positions nies are announcing cuts to capital an active role, and in the course of just a Øyvind Eriksen ahead of the likely consolidation in the US expenditure budgets to improve cash flow, few years we have filled our boardrooms President and CEO Jones Act market. there will continue to be underlying growth with new expertise, valuable experience Aker has previously announced a plan to in the offshore oil services market. Experts and relevant backgrounds from industry, free up at least NOK 3 billion from the disagree on what the growth rate will be. In finance, different markets and all parts of financial portfolio, which also includes Aker Solutions’ core areas, we expect the world. funds and projects owned by the property slightly lower growth rates for the next one In recent years, the boards of both Aker development company Fornebuporten, by to two years, after solid growth in previous and Aker Solutions have evolved from Aker ASA annual report 2013 21 Letter from the President and CEO
Beskjæres 76 mm fra venstre før trykk >>
In June 2013, Aker Solutions delivered the steel frame for the world’s first subsea gas compression facility to be installed at the Statoil-operated Åsgard field. 22 Aker ASA annual report 2013 Operations
Investment overview
Aker’s industrial holdings Share of assets*
Aker’s industrial investments comprise the following: ■■ Aker Solutions ■■ Kvaerner ■ Beskjæres 76 mm fra venstre før trykk >> ■ Det norske oljeselskap ■■ Ocean Yield ■■ Aker BioMarine ■■ Havfisk 73% Objective: Long and short-term value creation The annual increase in the value of the equity investment in each portfolio company shall exceed 12 per cent, including dividends. Read more on page 23.
Aker’s overarching objective is long-term value creation for all shareholders.
Aker’s financial investments Share of assets*
Aker’s financial investments comprise the following: ■■ Cash ■■ Interest-bearing receivables ■■ The real estate development company Fornebuporten ■■ Equity investments ■■ Shares in funds (Converto, Oslo Asset Management og Norron) ■■ Other investments
Objective: Financial strength and flexibility 27% Equity investments are subject to the same required rate of return as the industrial investments. The return on interest-bearing items must exceed NIBOR. Read more on page 38.
Fornebuporten, one of Aker’s financial investments.
** Gross asset value of Aker ASA and companies in its holding company structure: NOK 29.8 billion. The value of the shareholdings in listed companies is based on closing share prices as at 31 December 2013. Aker ASA annual report 2013 23 Operations
Industrial holdings
Aker’s industrial holdings totalled NOK 21.6 billion at the end of 2013. This equates to 73 per cent of the total gross asset value of Aker ASA and its holding companies.
The industrial holdings business segment Aker has an ownership agenda for each comprises the investments in Aker Solu company. The aim is to create value for tions, Kvaerner, Det norske oljeselskap, shareholders in the form of share price Ocean Yield, Aker BioMarine and Havfisk growth and dividends, thereby also increas Beskjæres 76 mm fra venstre før trykk >> (formerly Aker Seafoods). ing Aker’s net asset value. Dividends from Aker is actively involved in the develop the operational industrial companies pro ment of its six industrial portfolio compa vide Aker with a stable, predictable cash nies, cooperating closely with each compa flow. ny’s board and management. The invest ments are managed by a dedicated invest Developments in 2013 ment team, and Aker has representatives The total market value of Aker’s industrial on the various company boards. holdings was NOK 21.6 billion at the end of Ownership is exercised primarily in the 2013, compared with NOK 20.0 billion in board rooms of the individual companies. 2012. This increase includes Aker’s acquisi Aker also functions as a knowledge centre, tion of 6 per cent of the outstanding shares in as its staff have valuable industrial and Aker Solutions for a total of NOK 1.9 billion. strategic know-how and cutting-edge Dividends received from the companies expertise in capital markets, financing, in the industrial portfolio totalled NOK 788 restructuring, transactions, organisational million in 2013, up from the NOK 413 mil and leadership development (HR), and lion received from Aker Kvaerner Holding in communications/investor relations. These 2012. In 2013, Aker Kvaerner Holding paid resources are available not only to the out NOK 395 million to Aker, while Ocean investment teams in their continuous fol Yield contributed NOK 318 million and Aker low-up of the operational companies, but BioMarine NOK 76 million. also to each individual company. As an active owner, Aker is focused on Aker invests in companies in which Aker has expertise, experience and a track-record of creating values. increasing the dividend capacity of and div Value creation idends paid out by the portfolio companies. Aker’s overarching objective is to ensure Since 2009, dividends from Aker’s opera shareholders. through Aker Kvaerner Holding. Aker long-term value creation for all sharehold tional companies have increased six-fold. These are the most important portfolio has also entered into a TRS (Total ers. While Aker continues to develop and From 2012 to 2013, dividends grew by changes in 2013: Return Swap) agreement with exposure strengthen its companies with a long-term more than 90 per cent. Aker’s objective is to 891 762 shares in Aker Solutions. investment perspective, this approach does to ensure that, by 2019, dividends and ■■ Aker increased its shareholding in Aker The value of the share investment was not prevent Aker from selling companies in upstream cash flow from the portfolio com Solutions by investing NOK 1.9 billion. NOK 10.2 billion at the end of 2013, its industrial investment portfolio when they panies exceed the sum of Aker’s operating Aker owns 6 per cent of Aker Solutions compared with NOK 8.7 billion in can grow better under new owners. costs, interest costs and dividends to directly, and 28.2 per cent indirectly 2012. Aker received NOK 308 million in 24 Aker ASA annual report 2013 Operations
Beskjæres 76 mm fra venstre før trykk >>
The Hebron field will be developed using a stand-alone concrete gravity based structure built by Kvaerner. The oil field is located offshore 350 kilometres southeast of St. John’s. Aker ASA annual report 2013 25 Operations
“As an active owner of companies with excellent value and return potential, Aker’s agenda is to contribute to long-term, solid returns for all shareholders.”
Beskjæres 76 mm fra venstre før trykk >> dividend income from Aker Solutions Aker BioMarine share was delisted cessing of marine resources and ingredi Aker’s industrial holdings through Aker Kvaerner Holding in 2013. from Oslo Stock Exchange. Aker ents derived from krill. These hare primarily (NOK billion) ■■ The value of Aker’s share investment in subsequently injected a further NOK 100 industries in which Norway has an advan Kvaerner fell by 29 per cent to NOK 888 million of equity into Aker BioMarine. tage given its natural resources and exper 24 million. Aker received NOK 87 million in The value of Aker’s share investment in tise, i.e. within oil and gas, fishing and 22 dividend income from Kvaerner through Aker BioMarine is NOK 1.8 billion, up marine biotechnology. 20 Aker Kvaerner Holding in 2013. from NOK 1.4 billion. This increase is Through active ownership, Aker works ■■ The value of Aker’s share investment due to positive share price development on forming companies in its industrial port 18
in Det norske oljeselskap fell by 19 per prior to de-listing, a NOK 100 million folio that are independent and robust. In 16 cent to NOK 4.7 billion. share issue and the gain made by Aker terms of financing, Aker invests in equity in 14 ■■ Aker reduced its ownership interest in BioMarine on the sale of its ownership the underlying companies, which in turn Ocean Yield from 100 per cent to 73 interest in Epax. obtain credit financing from external 12
per cent through a share issue to new ■■ The value of Aker’s share investment in sources. 10 investors and subsequent listing on Havfisk rose from NOK 365 million to Aker will continue to develop its role as 8 Oslo Stock Exchange in July 2013. The NOK 732 million due to an increase of an equity investor, thereby generating ■ Havfisk value of Aker’s share investment in the 100 per cent in the Havfisk share price attractive long-term returns. Aker has the 6 ■ Aker BioMarine ship-owning company, which has an on Oslo Stock Exchange in 2013. financial resources, industrial experience ■ Ocean Yield 4 attractive dividend yield, increased from and capital markets expertise it requires to ■ Det norske oljeselskap NOK 2.5 billion to NOK 3.4 billion. Aker Industrial strategy continue developing the portfolio and the 2 ■ Kvaerner
received dividends, and sold shares in Aker invests in companies that operate in individual companies. 0 ■ Aker Solutions Ocean Yield for NOK 365 million in 2013. industries in which Aker has expertise, As an active owner of companies with 31.12.11 31.12.12 31.12.13 ■■ Aker increased its ownership interest in experience and a track-record of creating excellent value and dividend potential, Aker BioMarine from 89.25 per cent to value. Since listing in September 2004, Aker’s objective is to contribute to long- 100 per cent through a merger between Aker has provided investors with an annual term, solid returns for all shareholders. The Aker’s wholly-owned subsidiary Aker average return of 29 per cent, including div company’s focus is on skilful management, Seafoods Holding and Aker BioMarine. idends. appropriate organisational structures, prof The transaction took the form of a Aker is a significant shareholder and has itable operations, growth, optimal capital three-way merger in which the minority strategic influence in companies that are structures and industrial measures. Acqui shareholders in Aker BioMarine were leaders or potential leaders in their fields. sitions, mergers and transactions are typi offered Aker shares. The merger was Its focus is on the energy market, sustain cally conducted through Aker’s industrial completed in January 2013, and the able fisheries management, and the pro portfolio companies. 26 Aker ASA annual report 2013 Operations
Key figures 2013 2012
Revenues NOK million 42 900 41 632 EBITDA NOK million 3 503 4 171 EBITDA margin Per cent 8.2 10.0 Backlog NOK million 58 132 53 445 Order intake NOK million 57 865 56 815 Share price NOK 108.40 112.80 34% Earnings per share NOK 4.63 8.33 Numer of employees 22 083 19 077
Beskjæres 76 mm fra venstre før trykk >> Aker Solutions ASA lion expresses Aker’s confidence in the has also purchased 6 per cent of the shares Aker’s view of Aker Solutions future of Aker Solutions. in Aker Solutions on the open market. The oil service industry is continuing to Aker Solutions is a leading global supplier Aker plays an active, key role in Aker Aker’s stake was valued at NOK 10.2 billion grow. In Aker Solutions’ core areas, we of products, systems and services for the Solutions. Aker’s President and CEO as at 31 December 2013. In the last five expect slightly lower growth rates for the oil and gas industry. The company’s exper Øyvind Eriksen has been Aker Solutions’ years (2009–2013), Aker Solutions has gen next one to two years. In the longer term, tise and technology cover the entire pro Executive Chairman since June 2010. Dur erated an average annual return of 30 per we forecast annual growth rates of 8–10 duction chain from reservoir development ing this period, Aker Solutions has fine- cent for its shareholders, including divi per cent, while subsea – the company’s to on-stream production, and the entire tuned its strategy, and the company is in dends. Øyvind Eriksen and Kjell Inge Røkke largest and most important market – is esti field lifecycle. streamlining process to become a focused represent Aker on Aker Solutions’ board of mated to grow 15–20 per cent per year. The asset-light high-return oil service com directors. company has strong engineering expertise Executive chairman: Øyvind Eriksen pany. Two important milestones on that Aker investment director: Edward Ross journey were achieved in 2013 as Aker Solutions sold the non-core mooring and Aker Solutions in 2013 loading (MLS) and well-intervention (WIS) The Aker Solutions share price fell from business segments for a total considera NOK 112.80 to NOK 108.40 in 2013. In tion total enterprise value of NOK 5.4 bil April 2013, Aker Solutions paid a dividend lion. of NOK 4.00 per share for 2012, compared At the company’s capital markets day in with NOK 3.90 the previous year. Including December 2013, management emphasised dividends, the return on the Aker Solutions the need to increase profit margins, exert share was approximately zero in 2013, greater capital discipline and improve compared with 87 per cent in 2012. return on equity. The company has The dividend of NOK 308 million increased the required rate of return on received from Aker Solutions in 2013 con equity to 15 per cent. stituted 39 per cent of Aker’s total dividend revenues from the operating companies in Aker’s engagement its industrial portfolio. In November 2013, Aker owns 70 per cent of the shares in Aker Aker purchased 16.44 million shares in Aker Kvaerner Holding AS, which in turn owns Solutions, corresponding to 6 per cent of 40.3 per cent of the shares in Aker Solu the company, at a market price of NOK 115 tions, giving Aker an equity interest equiva per share. This investment of NOK 1.9 bil lent to 28.2 per cent in Aker Solutions. Aker Aker Solutions became a world leading supplier of subsea x-mas trees and subsea controls in 2013. Aker ASA annual report 2013 27 Operations
“Aker Solutions is expected to generate a long-term return in line with Aker’s minimum requirement of 12 per cent per year for industrial investments.”
Beskjæres 76 mm fra venstre før trykk >> The company still faces certain chal pany already holds strong market positions. lenges as regards project execution, which Improving the return on capital through impacted profits in 2013. Aker Solutions is stronger capital discipline will also be an also hampered by capital-intensive assets important value driver for the company that are generating below-par profitability. going forward. Aker Solutions is undervalued relative to Profitable growth is more important than peers, based on different pricing multiples. growth in operating revenue. As a share Aker sees considerable potential in Aker holder in Aker Solutions, Aker will give pri Solutions, both in terms of share price ority to conditions for profitability, improve development and in terms of the dividend ments, predictability of delivery and struc level and the resulting contribution to tural opportunities, and thereby create and growth in Aker’s net asset value. crystallize value for all shareholders. This can be achieved by focusing on operations, Aker’s plan for value creation management and organisational develop Aker’s ownership agenda for Aker Solutions ment, project execution, investment deci can be summarised in four points. The sions, working capital, organic growth, objective is to help Aker Solutions to acquisitions, divestments and cooperation Aker Solutions has 50 years’ experience of subsea design, manufacturing and installation activity. achieve: with other companies. Aker Solutions is expected to generate a ■■ a leading position in the global subsea long-term return in line with Aker’s mini and a strong position as a supplier of tech Aker Solutions is well positioned to cre market mum requirement of 12 per cent per year nologies and products for oil and gas pro ate shareholder value and give sharehold ■■ higher returns on equity for industrial investments. The company’s duction in deepwater fields and harsh envi ers an attractive return in future. Since ■■ improved operations and project dividend policy is to pay out 30 to 50 per ronments. 2009, the company has developed from an execution cent of its net result to shareholders every The Norwegian continental shelf will oil-service conglomerate into a streamlined ■■ a focus on growing regions and year. Aker expects dividends from Aker remain the world’s largest offshore market operation focused on growth sectors. Aker segments. Solutions to grow in the years ahead. measured by investment volume. Solutions is working to develop the ”sub Statistics Norway has estimated that sea factory”. In 2013, it became the world’s In its capacity as an active owner, Aker will See also www.akersolutions.com. petroleum investment on the Norwegian leading supplier, in terms of delivery vol encourage a further focusing of Aker Solu continental shelf will total approximately umes, of subsea trees and subsea control tions on engineering services and product NOK 223 billion in 2014. systems for the first time. and technology fields in which the com 28 Aker ASA annual report 2013 Operations
Key figures 2013 2012
Revenues NOK million 12 960 8 867 EBITDA NOK million 636 417 EBITDA margin Per cent 4.9 4.7 Backlog NOK million 22 809 20 223 Order intake NOK million 18 615 21 235 Share price NOK 11.50 16.20 3% Earnings per share NOK 1.66 0.88 Number of employees 2 832 2 966
Beskjæres 76 mm fra venstre før trykk >> Kvaerner ASA enterprise value of USD 80.6 million for the North American business. Kvaerner is a specialised EPC company 2013 was a disappointing and demand that plans and executes large, complex off ing year, since the company was not shore projects. EPC is the acronym for awarded important contracts on the Nor Engineering, Procurement and Construc wegian and British continental shelf. tion. Kvaerner is currently adjusting its business model to ensure that it is better positioned Board chairman: Leif-Arne Langøy to win new contracts in the next major President and CEO: Jan Arve Haugan domestic award round. Nevertheless, Aker investment director: Edward Ross Kvaerner had a satisfactory order reserve of NOK 22.8 billion at the end of 2013. Kvaerner in 2013 The Kvaerner share price fell from NOK Aker’s engagement 16.20 to NOK 11.50 in 2013. Kvaerner paid Aker indirectly owns 28.7 per cent of a dividend of NOK 0.55 per share in April Kvaerner, and the shareholding was valued 2013, and a further dividend of NOK 0.58 in at NOK 888 million as at 31 December October. Including dividends, the share pro 2013. duced a return of minus 22 per cent in 2013. Kjell Inge Røkke represents Aker on Kvaerner provides steel jacket substructures for the offshore oil and gas industry. Kvaerner reduced Aker’s net asset value Kvaerner’s board of directors. Aker exer by NOK 276 million in 2013, including divi cises its ownership of Kvaerner through dends received. The dividend payments Aker Kvaerner Holding, which is owned by eral contracts in 2013 has shown, Kvaerner jects, usually based on an EPC contract with totalling NOK 87 million accounted for 11 Aker (70 per cent) and the Norwegian State must boost its competitiveness. the customer. Kvaerner is the world’s leading per cent of Aker’s total dividend revenues (30 per cent). Aker Kvaerner Holding owns Kvaerner has more than 40 years’ expe supplier of offshore concrete substructures from the operating companies in the indus 41 per cent of Kvaerner. rience of challenging offshore field develop for oil and gas production. The company has trial portfolio. ments on the Norwegian continental shelf, cutting-edge expertise in engineering, pro In December 2013, Kvaerner completed Aker’s view of Kvaerner and delivers topside facilities, floating facili curement, construction and project manage the sale of its onshore construction busi Although the market for offshore fabrication ties, concrete and steel substructures, and ment. Projects are performed using a ness Kvaerner North American Construc projects is growing, there is increasing onshore facilities. resource base comprising Kvaerner employ tion Inc. to Matric Service Company in the competition from other market participants, The company’s core expertise is the ees, partners and sub-contractors. Aker US. The transaction was settled with an particularly Asian yards. As the loss of sev implementation of complex fabrication pro Solutions supplies engineering services to Aker ASA annual report 2013 29 Operations
“Kvaerner has taken steps to adjust the company’s business model, focusing on core activities and improved profit margins.”
Beskjæres 76 mm fra venstre før trykk >> Kvaerner on selected projects. ■■ Adapt and focus the company’s Kvaerner’s has initiated cooperation with business model sub-contracting partners in Poland and ■■ Efficient operation and first-class project China. Aker is open for evaluation of part performance nerships with other yards as well. The ■■ Full focus on the Norwegian continental objective is to cut costs and regain com shelf and the international concrete petitiveness. This will require continual substructures market. improvement in project implementation and risk management, to ensure that deliveries Kvaerner’s profit margins are too low maintain a high level of quality and are compared to peers. Aker believes that the made on time and on budget. The next company can deliver EBITDA margins of major tendering round on the Norwegian 7–8 per cent over a given period. Aker is continental shelf will relate to the Johan prepared for results to fluctuate from quar Sverdrup field development. ter to quarter and year to year, as is natural for an EPC business. Profits and margins Aker’s plan for value creation will fluctuate in accordance with project Kvaerner has taken steps to adjust the phases and the composition of the project company’s business model, focusing on portfolio. core activities and improved profit margins. Aker expects Kvaerner to produce a The company’s operation in North America, long-term average return to shareholders of which concentrated on the delivery of more than 12 per cent per year, including onshore facilities, has been sold. Coopera dividends, despite the company not having tion has been initiated with shipyards in been able to deliver such returns thus far. Finland, China, Poland and Russia. Kvaern Kvaerner’s dividend policy has as stated er’s cost base has become more flexible. intention to increase the nominal dividend The aim is to create value for shareholders by 10 per cent per year. The company pays by meeting customer expectations and dividends semi-annually. specifications. Aker’s ownership agenda for creating See also www.kvaerner.com. value for Kvaerner shareholders has three main components: The new crane in Stord, Norway lifts up to 800 tonnes. 30 Aker ASA annual report 2013 Operations
Key figures 2013 2012
Revenues NOK million 944 332 Loss after tax NOK million (549) (957) Exploration expenses NOK million 1 637 1 609 Share price NOK 66.70 82.50 Earnings per share NOK (3.90) (7.44) Number of employees 230 214 16%
Beskjæres 76 mm fra venstre før trykk >> Det norske oljeselskap ASA the partners have continued with the discovery in neighboring license PL457, uncommitted accordion option of USD 1 appraisal program that is now coming to an which improves the field’s economics. Det billion, potentially increasing the facility to Det norske oljeselskap (Det norske) is an end. The project scope and timeline has norske currently holds a 35 per cent inter USD 2 billion. integrated E&P company focused on the also matured further and studies have been est in the field, but this is likely to be On the organisational side, a new board Norwegian Continental Shelf (NCS). Det performed for the concept selection pro reduced following the unitisation with of directors was elected in May, with Sverre norske participated in the Johan Sverdrup cess occured in mid-February 2014. The license PL457. Ivar Aasen will be unitised Skogen as Executive Chairman and Kjell discovery, one of the largest oil discoveries partners now plan to submit the PDO in with PL457 by June 2014. Inge Røkke as a board member. The man made in Norway to date. Together with Ivar early 2015, with approval in the second In May 2013, Det norske started produc agement team will be further strengthened Aasen, Det norske’s first major develop quarter of 2015. First oil is targeted for end tion from the Jette field (Det norske 70 per this year, with Karl Johnny Hersvik taking ment project as an operator, Johan Sver of 2019. Gross recoverable resources are cent interest), the company’s first operated on the position of CEO in May 2014 and drup will transform Det norske from into a now estimated to be between 1.8 and 2.9 development project. This marked an Gro Haatvedt as Senior Vice President for company with a solid production base. billion barrels of oil equivalents (mid-point important milestone for the company, Exploration in August 2014, at the latest. 2.35 billion boe). The unitisation process although the project overall has experi Mr Hersvik has wide experience within the Board chairman: Sverre Skogen will continue throughout 2014 and will need enced technical challenges and cost over E&P sector from Statoil, and last held the Managing director: Karl Johnny Hersvik to be concluded ahead of PDO submission. runs, making it less profitable. position of managing director for Statoil’s (as of 1 May 2014) The Ivar Aasen project is an opportunity Det norske participated in 11 exploration research centre in Trondheim. Haatvedt Aker investment director: Edward Ross for Det norske to develop into a fully inte wells in 2013 and four of these were drilled was until 1 January 2014 senior vice presi grated E&P company. The project will ena on the Johan Sverdrup field. Of the remain dent for exploration on the NCS at Statoil. ble Det norske to build competence as a ing seven, two oil discoveries were made, Det norske in 2013 development and production operator, one in the Barents Sea (Gohta, which is Aker’s engagement Det norske reached several operational and extending the business model and improv operated by Lundin and where Det norske Aker owns 49.99 per cent of the shares in financial milestones during 2013 (outlined in ing opportunities in future licensing rounds. holds a 40 per cent stake) and one in the Det norske and Aker’s shareholding was more detail below). Det norske’s share price During 2013, the Ivar Aasen project has North Sea (Askja, which is operated by Sta valued at NOK 4.7 billion as of 31 Decem development has been disappointing, seen significant progress and according to toil and where Det norske holds a 25 per ber 2013. Kjell Inge Røkke represents Aker declining from NOK 82.50 to NOK 66.70 the company, the project is reported to be cent stake). on Det norske’s board of directors. during 2013, mainly as a result of news on schedule and cost so far. During 2013, Det norske strengthened related to the Johan Sverdrup development When the Ivar Aasen PDO was submit its financial position considerably. In June, Aker’s view of Det norske communicated to the market by Statoil and ted at the end of 2012, the field was esti the company issued a NOK 1.9 billion sen Det norske has established a strong posi Det norske in December 2013. mated to contain 150 million barrels of oil ior unsecured bond. In September, Det nor tion on the NCS and Aker continues to view The Johan Sverdrup discovery is the equivalents. However, this resource esti ske entered into a USD 1 billion revolving the region as highly attractive as it offers core value of the Det norske. During 2013, mate is expected to increase following a credit facility agreement, including an significant exploration potential and good Aker ASA annual report 2013 31 Operations
“Aker sees good opportunities for further gearing of Det norske due Det norske’s high quality asset base and the favourable tax system in Norway.”
Beskjæres 76 mm fra venstre før trykk >> access to acreage. The NCS has also a his tion projects. With support from Aker, the tory of providing a stable framework and company should continue to leverage its fiscal regime, and incentives for the indus competence and capabilities. try (APA rounds and cash back on explora tion costs). Aker’s plan for value creation Going forward, Aker believes Det norske As the principal shareholder who strongly should focus on its core asset Johan Sver believes in the value potential of Det nor drup and the ambition should be to partici ske, Aker will focus on: pate in the project with an undiluted inter est. The Johan Sverdrup unitisation pro ■■ Committed and involved ownership cess will be a key activity for the company ■■ Capital allocation and risk exposure in 2014. With regards to the Ivar Aasen pro ■■ Establishing a robust financing plan with ject, keeping to the schedule and delivering an attractive cost of capital on cost is Aker’s primary concerns and ■■ Setting a strategic direction and clearly what we are closely following as owners. communicate this to the market Det norske should continue to be an ■■ The introduction of an annual dividend active explorer on the NCS, with a focused following production start at Johan and value-driven approach, possibly at a Sverdrup somewhat reduced activity level compared to recent years. Aker is constantly considering new ways Det norske requires significant funding in to create and crystallise value for all share the years to come and building a solid holders in Det norske. In Aker’s view, Det financial platform for the company is on top norske’s ownership interests in Johan Sver of Aker’s agenda. Aker sees good opportu drup and the exploration portfolio consti nities for further gearing of Det norske due tute substantial future values, far beyond Det norske’s high quality asset base and what is reflected in the current share price. the favourable tax system in Norway. A key success factor for the Det norske See also www.detnor.no. is organisational capacity. It is the know how of the people that will result in explora tion success and delivery of huge execu Karl Johnny Hersvik will take the position as CEO in Det norske as of May 2014. 32 Aker ASA annual report 2013 Operations
Key figures 2013 2012
Revenues USD million 239 188 EBITDA USD million 208 151 EBITDA margin Per cent 86.9 80.5 Share price NOK 34.70 - Earnings per share USD 0.71 - Number of employees 19 19 11%
Beskjæres 76 mm fra venstre før trykk >> Ocean Yield ASA USD 0.12 per share for the third quarter 2013. The dividend payments totalling USD Ocean Yield is a ship owning company with 51.8 million received from the company in a portfolio within oil service and industrial 2013 accounted for 40 per cent of Aker’s shipping. The company focuses on modern total dividend revenues from the operating assets with long-term charters to solid companies in the industrial portfolio. counterparties and has a significant con Ocean Yield has expanded its fleet of tract backlog, which offers visibility with diversified vessels. Operational risk and respect to future earnings and dividend financial exposure has been limited by capacity. Ocean Yield has an ambition to entering long-term bareboat contracts with pay attractive and growing dividends to its solid, creditworthy customers. In 2013, the shareholders. fleet was expanded with two anchor-han dling vessels, both on 12-year contracts Board chairman: Trond Brandsrud with Farstad Shipping. An agreement has President and CEO: Lars Solbakken also been signed for two new car carriers due to be delivered in 2016. Both ships will begin 12-year bareboat contracts with Ocean Yield in 2013 Höegh Autoliners on the delivery date. Ocean Yield was listed on Oslo Stock Ocean Yield has previously concluded con Exchange on 5 July 2013 after completing tracts for two other car carriers with the Ocean Yield was listed on the Oslo Stock Exchange in July 2013. an issue of 33.5 million shares at a price of same shipping company. These vessels, NOK 27 per share. The share issue secured which will be delivered in 2014, are also on NOK 904 million in equity for the company. 12-year bareboat contracts. (two car carriers to be delivered in 2014 Company has leased 10 product tankers to Aker did not participate in the capital Ocean Yield’s fleet thus comprises the and two in 2016). Ocean Yield also holds the US shipping company OSG until increase. In connection with the listing, FPSO unit Dhirubhai-1, the offshore con 93 per cent of senior unsecured bonds December 2019. OSG has filed for Chapter Aker reduced its ownership interest from struction vessel Aker Wayfarer, the con issued by American Shipping Company 11 bankruptcy protection, but according to 100 per cent to 73.5 per cent. struction and cable-laying vessel Lewek (AMSC 07/18 FRN C). The bonds, which AMSC this is not expected to have nega Ocean Yield’s share price rose to NOK Connector, the anchor-handling vessels mature in February 2018, pay an interest tive financial effects on the company’s rev 34.70 by the end of 2013, up 28.5 per cent FAR Senator and FAR Stateman, and the rate of LIBOR + 6 per cent per annum. enues from the charter contracts, as all compared with the issue price in July. In seismic vessel Geco Triton, in addition to The value of the AMSC bonds is approx vessels are sub-chartered to oil majors on addition, Ocean Yield paid a dividend of new-build contracts for four car carriers imately NOK 1 billion. American Shipping medium to long-term contracts. AMSC has Aker ASA annual report 2013 33 Operations
“The company is developing in line with its objective of making a significant contribution to Aker’s net asset value and producing significant dividends in future.”
Beskjæres 76 mm fra venstre før trykk >> ated a return of 31 per cent, including divi ratings, limited operational risk and moder dends. Kjell Inge Røkke and Trond Brand ate residual risk linked to the assets at the srud represent Aker on Ocean Yield’s board end of their leases. Ocean Yield aims to of directors. fund around 70 per cent of its projects with bank loans and 30 per cent with equity. Aker’s view of Ocean Yield Ocean Yield has a strong order backlog Aker’s plan for value creation and high dividend capacity. At the end of Aker will continue to develop Ocean Yield 2013, the company had an order backlog with the aim of building a strong profile as equivalent to total EBITDA of USD 1.7 bil an attractive investment object that pro lion. The average remaining contract period duces good returns and has limited risk for the ships in the portfolio is 7.1 years. exposure. Aker’s ownership agenda com Ocean Yield has had a good start on prises three main points: Oslo Stock Exchange, and is considered an attractive dividend-generating share for both ■■ continue to develop a company with institutional investors and retail investors. high dividend capacity The company is developing in line with ■■ grow through the acquisition of new its objective of making a significant contri assets, diversifying the portfolio bution to Aker’s net asset value and ■■ ensure an optimal capital structure The anchor-handling vessel FAR Stateman is on a 12-year bareboat contract with Farstad. upstream cash flow going forward. Ocean Yield will continue to expand its Aker will develop Ocean Yield into a portfolio with long-term contracts and with company that delivers predictable, increas also strengthened its balance sheet sub come, and will continue its development a focus on high quarterly dividend pay ing dividends to its shareholders. Ocean stantially by completing a private place through additional investments in assets on ments to shareholders. The outlook for the Yield will be an important source of divi ment totalling USD 120 million in December long-term contracts. leasing market for ships and marine assets dends for Aker in future. 2013, in addition to a conversion of USD 29 for the oil industry and other selected sec million of loans into equity. This reduces the Aker’s engagement tors is strong. Ocean Yield’s investment See also www.oceanyield.no. counterparty risk for Ocean Yield and Aker owns 73.4 per cent of the shares in strategy is to grow by building a diversified improves the value of the bond. Ocean Yield, which were valued at NOK 3.4 portfolio characterised by modern assets, Ocean Yield has laid a good foundation billion as at 31 December 2013. Since list bareboat or time-charter contracts of 5–15 for the payment of dividends in the years to ing in July 2013, Ocean Yield has gener years to counterparties with good credit 34 Aker ASA annual report 2013 Operations
Key figures 2013 2012
Revenues USD million 113 81 EBITDA USD million 16 11 Profit after tax USD million 48 (13) Net interest-bearing debt USD million 134 167 Share price NOK - 1.30 Earnings per share USD 0.70 (0.18) 6% Number of employees 216 111
Beskjæres 76 mm fra venstre før trykk >> Aker BioMarine ASA ship interest in Epax to FMC in July 2013. Epax was a subsidiary of Trygg Pharma Aker BioMarine is an integrated biotechnol Group, which is a 50/50 joint venture with ogy company that develops, markets, and an affiliate of Lindsay Goldberg. sells differentiated high-quality krill-derived During 2013, Aker BioMarine refinanced ingredients for a range of applications. Aker NOK 305 million of outstanding bonds with BioMarine’s harvesting operations have bank debt totalling NOK 700 million, of been certified in accordance with the which NOK 305 million is guaranteed by Marine Stewardship Council’s standards for Aker. Following the sale of Epax and the well-managed and sustainable fishery. refinancing, Aker BioMarine made a divi dend payment of NOK 76 million and Board chairman: Ola Snøve repaid a NOK 300 million loan from Aker. President and CEO: Hallvard Muri Aker BioMarine’s branded ingredients ® Aker investment director: Ola Snøve Superba™ and Qrill , contain phospholipid- bound omega-3 fatty acids with docu Aker BioMarine in 2013 mented benefits to human and animal In 2013, Aker BioMarine became a wholly- health. The markets for the products con owned subsidiary of Aker. The merger tinue to develop favourably. Superba™ Krill between Aker BioMarine and Aker Sea Oil sales grew in both existing and new foods Holding, a wholly-owned subsidiary markets and Aker BioMarine continuously of Aker, was completed on 15 January works on new products and applications for 2013. As part of the transaction, the minor krill-derived ingredients in human markets. ity shareholders in Aker BioMarine received Qrill® demand is strong following several settlement in the form of Aker shares. successful projects where large customers Aker BioMarine’s modern krill vessels ensure access to high-quality raw materials at predictable prices. The value of Aker’s share investment in have demonstrated tangible benefits of this Aker BioMarine is NOK 1.8 billion, up from product line in specialised aquaculture NOK 1.4 billion at year-end 2012. This diets. Furthermore, customised products Aker BioMarine and Naturex entered into ity for Superba™ products to about 2 000 increase is due to positive share price within the same product line have been a joint venture to build a new production tons. The supply of krill has increased given development prior to de-listing, the NOK launched in the pet food market, which is facility in Houston, Texas. Starting in the that Aker BioMarine now has two modern 100 million share issue and the gain made also expected to significantly contribute to second half of 2014, the new facility will krill vessels with each its license to harvest by Aker BioMarine on the sale of its owner additional demand for Qrill®. double Aker BioMarine’s production capac krill, which ensures proprietary and sustain Aker ASA annual report 2013 35 Operations
“Fundamentally, marine fat and protein are increasingly becoming scarce, which also supports the value of Aker BioMarine’s platform.”
Beskjæres 76 mm fra venstre før trykk >> able access to high-quality raw materials at health and lifestyle trends are gaining trac predictable prices. tion, which contribute to the growing Following successful pilot work, Aker demand for Aker BioMarine’s products. BioMarine established a new subsidiary to Marine fat and protein are increasingly develop krill-derived ingredients for becoming scarce, which also supports the advanced technical and pharmaceutical value and importance of Aker BioMarine’s applications. In addition, Trygg Pharma products. Group has developed AKR 963, which is a hypertriglyceridemia drug. Aker’s plan for value creation Aker BioMarine is expected to remain a Aker’s engagement core part of Aker’s investment portfolio. Aker owns 100 per cent of the shares in Aker’s ownership agenda comprises four Aker BioMarine. The shares were valued at main points: NOK 1.8 billion at the end of 2013. Ola Snøve and Lars Kristian Kildahl represent ■■ Maintain focus on the krill oil business, Aker on the company’s board of directors. expanding production capacity to meet growing demand Aker’s view of Aker BioMarine ■■ Continue to build and expand the Aker BioMarine delivered strong growth in market for krill-based products, 2013, which was driven by strong demand ingredients and applications for both the Superba™ and Qrill® product ■■ Pursue the development and lines. The company has established a gradually realise the values within the strong platform for future growth and is well pharmaceutical portfolio Aker’s various positioned to succeed in global growth pharmaceutical assets markets with its strong supply chain, an ■■ Generate upstream cash flow to Aker. innovative product pipeline, and stable long-term partnerships. See also www.akerbiomarine.com. Aker has confidence in the global mar ket growth that Aker BioMarine is directly and indirectly exposed to. Healthcare costs are escalating in most western nations, and Aker BioMarine’s branded ingredients contain omega-3 with documented health benefits. 36 Aker ASA annual report 2013 Operations
Key figures 2013 2012
Revenues NOK million 779 774 EBITDA NOK million 211 183 EBITDA margin Per cent 27.1 23.6 Share price NOK 11.80 5.88 Earnings per share NOK (0.59) 0.73 Number of employees 382 338 2%
Beskjæres 76 mm fra venstre før trykk >> Havfisk ASA of 2014. The vessels’ hull design will reduce fuel consumption and increase Havfisk (formerly Aker Seafoods) is Nor catch capacity. Important steps have thus way’s leading white fish (cod, saithe and been taken towards more environmentally- haddock) harvesting company, with 11 friendly and profitable white-fish harvesting. trawlers. It owns approximately one-third of In December 2013, Havfisk signed an the trawler licences issued in Norway, cor agreement regarding sale of a trawler and responding to around 10 per cent of the quotas. The sale is subjected to approval total cod quota. Most of Havfisk’s fresh fish from Norwegian authorities. Havfisk has is delivered to Norway Seafoods. crystallised values for its shareholders through the agreement of asset sales. The Board chairman: Frank O. Reite trawler Jergul and 1.35 cod and haddock President and CEO: Olav Holst-Dyrnes quota units will be sold for NOK 113 million, Aker’s investment Converto, represented by of which 41-year-old vessel was valued at adviser: Frank O. Reite NOK 1.6 million. The transaction priced one cod and haddock quota unit at around Havfisk in 2013 NOK 84 million. Each of Havfisk’s cod and The Havfisk share rose 100 per cent, from haddock quota units has a book value of NOK 5.88 at the end of 2012 to NOK 11.80 NOK 35 million, and Havfisk will own 28.26 at the end of 2013. cod and haddock quota units after the sale. In 2013, Havfisk utilised its quotas bet The sale of quotas is part of the company’s ter, increased its catch efficiency and ongoing efforts to crystallise values and In March 2014, Havfisk launched the third trawler in the Gadus series after christening it “Gadus Neptun.” improved its operational flexibility. Catch optimise its fleet and quota structure. revenue per operating day was 8.8 per cent On 30 December 2013 Reykjavik District higher than in 2012. Increased catch vol Court ruled in the case concerning claim per 31 December 2013 is about NOK Aker’s engagement ume per day, higher prices, especially for Havfisk`s interest-, inflation- and currency 158 million. The judgment is not binding as Aker owns 73.2 per cent of the shares in haddock, and a revised product mix swap agreement signed with Glitnir. The yet, and will be appealed to the Supreme Havfisk, a stake valued at NOK 732 million boosted the catch value per operating day. Court concluded that Havfisk did not have Court of Iceland for a final ruling. The as at 31 December 2013. Board Chairman In the past year, Havfisk took delivery of the right to terminate the swap agreement Supreme Court is not expected to hear the Frank O. Reite and Trond Brandsrud repre two new trawlers, and one additional in 2008. Based on official exchange rates case before the autumn of 2014, at the ear sent Aker on the company’s board of direc trawler will be delivered in the first quarter from the Central Bank of Iceland, the total liest. tors. Aker ASA annual report 2013 37 Operations
“As Norway’s leading white fish harvesting company, Havfisk is dependent on a healthy processing industry in Northern Norway.”
Beskjæres 76 mm fra venstre før trykk >> Aker’s view of Havfisk As Norway’s leading white fish harvest Aker has engaged Converto to act as ing company, Havfisk is dependent on a Aker’s investment adviser with regard to healthy processing industry in Northern Havfisk. The company has developed posi Norway. The Aker-controlled processing tively under Converto’s management in company Norway Seafoods, which is also recent years. managed by Converto, has struggled with New trawlers and access to sufficient weak results due to low capacity utilisation resources will help to improve operations for years. Norway Seafoods is Havfisk’s and profits. Havfisk will be streamlined as a largest customer and partner, and leases harvesting company. Cod and haddock production facilities and equipment from stocks are satisfactory, while saithe stocks the company. It is therefore very important are more limited. The Barents Sea fishing for Havfisk that Norway Seafoods’ profita industry is being administered in a sustain bility improves. The current framework con able manner. Cod stocks have grown, ditions for the white fish industry cause resulting in plentiful harvests in recent Aker to doubt whether satisfactory results years. Cod quotas will in 2014 be at same can be achieved. level as 2013. Aker’s minimum required return on Uncertainty remains about future price industrial investments is 12 per cent per trends, particularly in the case of cod. This year. This also applies to Havfisk. Aker will is due to the European financial crisis, consider options for realising value for which has impacted important markets Havfisk’s shareholders. The sale of the such as France, Spain and Portugal. trawler Jergul and its quota rights is one example in this regard. Havfisk will not be Aker’s plan for value creation in a position to make dividend payments to Aker’s ownership agenda for Havfisk shareholders until 2015, at the earliest. encompasses three main points: See also www.havfisk.no. ■■ Optimise the vessel and quota portfolio ■■ Achieve better profitability ■■ Provide Aker and shareholders with upstream cash flow. On board one of Havfisk’s trawlers. 38 Aker ASA annual report 2013 Operations
Financial investments
Financial investments totalled NOK 8.1 billion at the end of 2013, including NOK 2.5 billion in cash. This equates to 27 per cent of the total gross asset value of Aker ASA and holding companies.
The financial investments segment encom Fornebuporten has invested a total of square metres, is planned for the second Aker’s financial investments passes cash, interest-bearing receivables, NOK 800 million in commercial real estate half of 2015. Some 269 of a total of 290 (NOK billion) the real estate development company and an attractive site of some 90 000 flats in the residential project were sold as Fornebuporten, equity investments, invest square metres at Fornebu in Bærum, just at 31 December 2013. Fornebuporten has 12 Beskjæres 76 mm fra venstre før trykk >> ments in funds and other investments. outside Oslo. GBP 17 million has been also invested in two late-stage residential 11 Aker’s financial investments are managed invested in Aberdeen International Busi projects in the Oslo region, and the first 10 by its central finance function under the ness Park development in Scotland. was sold profitably in 2013. direction of Aker’s CFO and an investment Fornebuporten develops property, and will The Aberdeen project was an opportun 9
director with day-to-day responsibility for now begin selling projects to release capital istic investment in a real estate market pos 8 the portfolio management. to Aker. itively impacted by the expansion in the UK 7 Cash reserves of NOK 2.5 billion – com At the Fornebu site, approximately oil and gas industry. Aberdeen International pared with NOK 3.1 billion as at 31 Decem 67 000 square metres of office space and Business Park is centrally located, close to 6
ber 2012 – give Aker financial flexibility. In 16 000 square metres of residential prop the airport. To date, construction of 46 000 5 2013, Aker issued bonds for a total of NOK erty are being built. Completion of the first square metres of commercial space has 4 2.0 billion, increasing its cash holdings. commercial building of 35 000 square been approved on the site, however this is ■ Other financial investments However, Aker also invested NOK 1.9 bil metres is planned for June 2015. At the end expected to increase to as much as 3 ■ Fund investments lion in Aker Solutions shares and paid divi of 2013, long-term leases (12–20 years with 100 000 square metres. Along with its Brit 2 ■ Equity investments dends of NOK 868 million. an option to extend), had been concluded ish property development partner, Fornebu ■ Long-term interest- Receivables are mainly loans to subsidi with solid tenants for around one-third of porten is currently constructing 30 000 1 bearing receivables
aries and associated companies on market the space. The second building of 32 000 square metres of commercial space, 0 ■ Cash terms, and totalled NOK 0.6 billion at the square metres is to be completed in June spread across three buildings. The total 31.12.11 31.12.12 31.12.13 end of 2013, down from NOK 1.6 billion at 2016. The entire building has been leased investment is estimated at GPB 80 million. year end 2012. The reduction is mainly due to Aker Solutions for a period of 12 years, Aker’s investments in funds are adminis to the conversion of loans to equity with an option to extend for twice for five tered by the three management companies towards the end of 2013, of which approxi years. The total cost of constructing the Converto, Oslo Asset Management and mately NOK 1.0 billion relates to Fornebu two commercial buildings is approximately Norron. Fund investments totalled NOK 3.5 porten. NOK 2.5 billion. At the end of 2013, leases billion at the end of 2013, up NOK 2.0 bil As a result of the above-mentioned loan had been signed for two-thirds of the two lion from the end of 2012. conversions, Aker’s financial equity invest commercial buildings, generating total The value of Converto Capital Fund ments totalled NOK 1.3 billion at the end of rental revenue of more than NOK 100 mil accounted for NOK 2.8 billion of this total, 2013, compared to NOK 200 million the lion per year. having tripled in value in the past year. The year before. Fornebuporten accounts for Fornebuporten has entered into a 50/50 increase in the fund’s value is linked to NOK 1.0 billion, while other equity invest joint venture with Profier for the residential strong increases in the share prices of the ments include Navigator Marine and NBT development, and completion of the first two US Jones Act-exposed companies AS. phase, measuring approximately 16 000 Aker Philadelphia Shipyard and American Aker ASA annual report 2013 39 Operations
“Aker aims to release at least NOK 3 billion from the financial investments portfolio by the end of 2015.”
Shipping Company. In December 2013, Norron in Stockholm manages Norron Converto announced the sale of Stream AS Target (a Nordic multi-strategy fund), Nor with proceeds to the fund of approximately ron Select (a Nordic hedge fund), Norron NOK 400 million, to be received in 2014. Preserve (a Nordic interest and bond fund), Beskjæres 76 mm fra venstre før trykk >> Converto Capital Fund was established Norron Premium (a Nordic interest fund) as a private equity fund in 2009, and is and Norron Active (an actively managed used to restructure companies in Aker’s share fund). Aker has invested a total of portfolio. The fund is actively managed. NOK 269 million in Norron Target and Nor Since its establishment, the fund has real ron Select. At the end of 2013, this invest ised profits of NOK 852 million through ment was valued at NOK 338 million. In share sales. 2013, Norron Target achieved a return of The fund’s largest investments at the 12.5 per cent, while Norron Select achieved beginning of 2014 were Aker Philadelphia 22.8 per cent. Norron had a total of SEK Shipyard (71 per cent), American Shipping 4.4 billion under management at the end of Company (19.1 per cent after share issues in 2013, up from SEK 2.8 billion at the end of January 2014, plus an economical exposure 2012. through a Total Return Swap agreement), Aker owns 48 per cent of Norron in Bokn Invest (40 per cent, the holding com Stockholm, while the partners in the com pany for Align), Norway Seafoods (73 per pany own the remaining 52 per cent. Read cent) and Ocean Harvest (100 per cent). Aker more at www.norron.com. owns 99.8 per cent of the fund’s capital. Read more about the fund at www.converto.no. Aker’s agenda Oslo Asset Management has managed Aker aims to release at least NOK 3 billion the AAM Absolute Return Fund since its from the financial investments portfolio by Aker Philadelphia Shipyard was one of the top performers on Oslo Stock Exchange in 2013. establishment in December 2005. The the end of 2015. This will primarily be hedge fund achieved a return of 4.7 per achieved through the realisation of Aker’s cent in its NOK tranche in 2013, compared fund investments and the real estate pro One of Aker’s financial objectives is that Other financial investments will be real to 1.0 per cent in 2012. At the end of 2013, jects developed by Fornebuporten. As of the sum total of loans and loan guarantees ised gradually. This is consistent with Aker owned 13.6 per cent of the AAM 2013, approximately NOK 400 million was falling due in the next 36 months should developments in recent years. Since 2009, Absolute Return Fund’s total capital of USD released through Aker Philadelphia Ship normally amount to less than half of the financial investments excluding cash have 442 million. yard’s loan repayment to Aker, Converto’s company’s cash holdings, and Aker will been reduced from more than NOK 10 bil Aker owns 45 per cent of Oslo Asset sale of Naxys and sale of shares in Spare therefore continue to maintain substantial lion to NOK 5.7 billion. The increase in Management, while the employees of the bank1 SMN. In addition, the sale of Stream, cash reserves to ensure financial flexibility, Aker’s financial investments during 2013 is company own 55 per cent. Read more at will provide additional proceeds of approxi build a robust balance sheet and lay a solid explained by value increases and not new www.osloam.com. mately NOK 400 million in 2014. foundation for predictable future dividends. investments. 40 Aker ASA annual report 2013 Board of directors’ report
Board of directors’ report 2013
Aker* achieved important strategic objectives at the portfolio level in Investments, Aker had divested NOK 0.8 employees working at the company head 2013, including the streamlining of Aker Solutions’ portfolio and the listing billion as at year-end 2013 (including the quarters in Oslo. Aker’s shares trade on the of Ocean Yield. Net asset value (NAV) rose 4.7 per cent to NOK 24 billion. sale of Stream, which closed on 6 January Oslo Stock Exchange and the company The company’s market value increased 10 per cent in the period, including 2014). Aker’s book equity ratio was 65 per had 14 064 shareholders as at 31 Decem dividend, trailing a 24 per cent increase in the Oslo Stock Exchange cent, while cash stood at NOK 2.5 billion, ber 2013. Just over two-thirds of the shares Benchmark Index (OSEBX). providing the company with financial solid are held by companies controlled by Kjell ity and flexibility. Gross interest-bearing Inge Røkke and his family. debt as at year-end 2013 amounted to Aker was directly or indirectly the largest Beskjæres 76 mm fra venstre før trykk >> As an active owner and equity investor, pared with NOK 321 per share at year-end NOK 5.4 billion and net interest-bearing shareholder in companies that combined Aker developed its portfolio through merg 2012, before dividend. NAV is a core per liabilities amounted to NOK 2.3 billion. had approximately 27 900 employees in 29 ers, acquisitions, divestments and adjust formance indicator at Aker and is deter The Board of Directors of Aker Solutions countries. Seven of these companies were ments to its ownership stakes among its mined by applying the market value of have proposed a dividend of NOK 4.1 for exchange-listed. Aker’s investments are Industrial Holdings and Financial Invest exchange-listed shares and book value for the 2013 fiscal year, while the Board of divided into two portfolios: Industrial Hold ments. A merger between Aker BioMarine other assets. It expresses Aker’s underlying Kvaerner proposed a semi-annual dividend ings and Financial Investments. and Aker Seafoods Holding, a wholly- value and is a key determinant of the com of NOK 0.61 and the Board of Ocean Yield Industrial Holdings comprises Aker’s owned Aker subsidiary, was completed as pany’s dividend. The main contributors to proposed a quarterly dividend of USD ownership interests in the oil service com scheduled in January 2013. Aker BioMarine Aker’s NAV growth in 2013 were Converto 0.1225. As a result, Aker’s dividend income pany Aker Solutions; the engineering, pro went on to successfully refinance its loan Capital Fund with NOK 1.4 billion, Ocean is forecast to reach approximately NOK 0.8 curement and construction (EPC) company portfolio and divest the Trygg Pharma sub Yield, which contributed NOK 1.2 billion, billion in 2014. Kvaerner; the exploration and production sidiary Epax, at a price significantly above and Aker BioMarine, which contributed Aker’s Board recommends a payment of company Det norske oljeselskap; the book value. Ocean Yield was listed on the NOK 0.4 billion. NAV was negatively NOK 13 per-share ordinary dividend for marine biotechnology company Aker Bio Oslo Stock Exchange according to plan in impacted by the value declines in Det nor 2013. The proposed dividend pay-out cor Marine; the white fish harvesting company July 2013 and posted a 31 per cent return ske oljeselskap (Det norske), Aker Solutions responds to 3.9 per cent of NAV and a Havfisk and the ship-lease company Ocean as at year-end, including dividend. Aker and Kvaerner of NOK 1.1 billion kroner, direct yield of 5.9 per cent relative to Aker’s Yield. Solutions and Kvaerner made significant NOK 0.5 billion and NOK 0.4 billion respec 31 December 2013 share price. Financial Investments comprises cash, progress in their plans to streamline their tively. receivables, equity investments, invest portfolios, with value-accretive divestments Aker enhanced its financial strength by Business operations and location ments in funds and all other assets man of three business units in total. increasing the upstream cash flow from its Aker is an industrial investment company aged by Aker, with the exception of indus Aker ASA* employs its financial and operating companies and Financial Invest with traditions dating back to 1841. Based trial equity investments. Aker’s fund invest industrial expertise to develop the operat ments by 85 per cent to NOK 852 million in on shipbuilding and mechanical production ments include interests in Converto Capital ing companies in its portfolio. The NAV of 2013. Four out of six Industrial Holdings for the maritime trades and Norway’s pri Fund (a private equity fund), AAM Absolute Aker and holding companies amounted to companies paid out dividend to Aker, in mary industries, Aker grew throughout the Return Fund (a hedge fund), Norron Target NOK 24 billion as at year-end 2013, com addition to one of the funds. As part of a 1900s into one of the country’s largest (a Nordic multi-strategy fund), and Norron pared with NOK 22.9 billion a year earlier. three-year plan initiated in November 2012 industrial groups. Select (a Nordic hedge fund), which are NAV stood at NOK 332 per share, com of divesting NOK 3 billion in Financial As per year-end 2013, Aker had 51 managed respectively by Converto, Oslo Asset Management and Norron. ** “Aker ASA” refers to the parent company. “Aker” refers to Aker ASA and holding companies, as listed in Note 1 for the annual accounts of Aker ASA and holding companies, page 137. “Aker Group” refers to Aker ASA and subsidiaries consolidated into the Group accounts, as listed in Note 8 for the annual accounts of Aker Group, page 72. Key events in 2013 “Group consolidated accounts” include the financial statements of the parent company Aker ASA, its subsidiaries, and interests in associated companies and jointly controlled entities. In the first quarter of 2013, the merger Aker ASA annual report 2013 41 Board of directors’ report
between Aker BioMarine and Aker Sea bond of NOK 1.3 billion and a seven-year “Aker’s Board recommends a payment of NOK 13 foods Holding, a wholly-owned subsidiary bond of NOK 0.7 billion. Det norske made per-share ordinary dividend for 2013. The proposed of Aker, was implemented and Aker BioMa progress covering its financing needs for rine was delisted from Oslo Stock the Ivar Aasen and Johan Sverdrup field dividend pay-out corresponds to 3.9 per cent of NAV Exchange on 15 January. The minority developments by completing a NOK 1.9 and a direct yield of 5.9 per cent.” shareholders in Aker BioMarine received billion bond placement. The company sub shares in Aker ASA as consideration. Aker sequently doubled an existing revolving increased its receivable to Fornebuporten credit facility to USD 1 billion, extending it by NOK 220 million to fund the acquisition by three years to 2018, and added an holds a 40 per cent interest. The discovery Industrial Holdings and development of land adjacent to Dyce uncommitted USD 1 billion accordion is estimated to contain between 113 and Industrial Holdings is one of Aker’s two airport in Aberdeen, with the potential to option. Aker Solutions agreed with Statoil 239 million barrels of oil equivalents. business segments and comprises the build a business park of 60 000 square to cancel a contract for delivery of a semi- In the fourth quarter, Aker Solutions company’s long-term investments. The Beskjæres 76 mm fra venstre før trykk >> meters. Aker Philadelphia Shipyard deliv submersible rig capable of year-round well- divested its Mooring and Loading Systems market value of Aker’s Industrial Holdings ered the second of two product tankers intervention services on the Norwegian (MLS) and Well-Intervention Services (WIS) was NOK 21.6 billion as at 31 December sold, securing the repayment of USD 31.5 continental shelf (NCS), the so-called Cat business areas at an enterprise value of 2013, compared with NOK 20 billion at million in construction financing to Aker and egory B rig. Ocean Yield raised gross pro NOK 1.4 billion and NOK 4 billion respec year-end 2012. The change is attributable substantially reducing Aker’s risk exposure ceeds of NOK 0.9 billion in an initial public tively, in line with the company’s strategy of to the adjustments in ownership stakes in through the expiration of its performance offering that diluted Aker’s ownership stake focusing the portfolio further. Aker the companies and portfolio value develop guarantees. Ocean Yield acquired two to 74 per cent. Trading of the shares on the extended its six-month TRS agreement ment. Anchor Handling Tug Supply (AHTS) ves Oslo Stock Exchange began on 5 July with financial exposure to Aker Solutions Aker’s share investment in Aker Solu sels with 12-year bareboat charters to 2013. shares on 1 November. Aker later reduced tions rose to NOK 10.2 billion as at 31 Farstad Supply. Working operator Statoil In the third quarter of 2013, Trygg the exposure from 1.5 million shares to December 2013, from NOK 8.7 billion a confirmed in March that the Johan Sver Pharma Group, a 50-50 joint venture 891 762 shares when it acquired 16.44 mil year earlier after Aker’s direct and indirect drup field extended into PL 502, where Det between Aker BioMarine and private-equity lion shares (approximately 6 per cent of the ownership stake in Aker Solutions was norske holds 22.2 percent. Kvaerner lost fund Lindsay Goldberg, sold its omega-3 share capital) in the oil service company. increased to 34.2 per cent from 28.2 per several tenders for platform topsides and production business Epax to FMC Corpo Kvaerner sold its onshore construction cent in the period. The value of the jackets on the Norwegian and British conti ration at an enterprise value of approxi business in North America for an enterprise Kvaerner investments declined to NOK 0.9 nental shelves against yards based in mately USD 345 million. Havfisk signed a value of USD 80.3 million. The divestment billion from NOK 1.3 billion. South East Asia and Europe. letter of intent to sell the oldest trawler in its enables Kvaerner to focus its efforts on fur Aker’s equity investment in Det norske In the second quarter of 2013, Aker fleet along with fishing quotas. Aker Phila ther developing its upstream oil and gas was valued at NOK 4.7 billion on 31 Solutions issued a warning that first-quarter delphia Shipyard announced plans to con business. The partners in the Johan Sver December 2013, compared with NOK 5.8 results would considerably lag consensus struct four new product tankers with deliv drup development announced that the pro billion a year earlier. estimates. The stock declined 21 per cent. eries in 2015 and 2016 for Crowley Mari duction start-up of the field would be Aker BioMarine had a value of NOK 1.8 Aker subsequently entered a six-month time Corporation, with the option to build delayed by one year to late 2019. Statoil billion as at 31 December 2013, compared total return swap (TRS) agreement with four additional tankers. The parties will has estimated the full field gross contingent with NOK 1.4 billion at year-end 2012. The exposure to 1.5 million shares in Aker Solu share in the economics of the operation resources in the range of 1.8 to 2.9 billion increase is due to positive share price tions. Aker BioMarine successfully refi and chartering of the new vessels. Ocean barrels of oil equivalents. Aker Solutions development prior to de-listing, a NOK 100 nanced its debt through a USD 105 million Yield acquired two newbuilding Pure Car won a framework contract to provide engi million share issue conducted in January, three-year revolving credit facility and a Truck Carriers (PCTCs) on long-term char neering services, procurement and man and the gain made by Aker BioMarine on NOK 100 million credit line. As part of the ters to Höegh Autoliners. Det norske and its agement assistance (EPma) for Johan Sver the sale of its ownership interest in Epax in refinancing, Aker extended a NOK 305 mil partners in the PL 492 license in the Bar drup for as many as 10 years, which July 2013. lion guarantee for Aker BioMarine’s new ents Sea made an oil and gas discovery in included front-end engineering design The value of Ocean Yield rose to NOK 3.4 loan facility. In June, Aker issued a five-year the Gohta prospect, where Det norske (FEED) work valued to NOK 650 million. billion as at year-end 2013, up from NOK 2.5 42 Aker ASA annual report 2013 Board of directors’ report
billion at year end 2012, after listing on the primarily be achieved organically, with record order intake of NOK 57.9 billion in been entered into, enabling enhanced cost Oslo Stock Exchange on 5 July 2013. Aker’s select bolt-on technology acquisitions to 2013, bringing the order backlog at the competitiveness and a more flexible cost share investment in Havfisk stood at NOK enhance its technology portfolio and prod close of the year at NOK 58.1 billion, an base. The objective is to position Kvaerner 0.7 billion on 31 December 2013, compared ucts capabilities. The company is investing increase of NOK 4.7 billion or 8.8 per cent for the next wave of EPC contracts, among to NOK 0.4 billion a year prior. in building a state-of-the-art subsea plant from the end of 2012. The backlog reflects which the Johan Sverdrup development to double production capacity in Brazil, a the strong demand for the company’s deliv carries the greatest strategic importance in Aker Solutions new multi-purpose service and production erables and the solid market growth in its the medium term. There are also opportuni Aker Solutions is being developed as a site for drilling equipment in Brazil, and the operating segments, led by Subsea. ties for completion and hook-up projects. leading global supplier of products, sys build-up of engineering hubs in Houston Aker Solutions’ shares closed the year at Within concrete substructures, there are tems, and services to the oil and gas indus and London. NOK 108.40, down from NOK 112.80 a prospects in the Arctic areas of Greenland, try, specialised in deep water and harsh After a challenging start to the year, Aker year earlier. A NOK 4 per-share dividend Kara Sea, Russia, Canada and Alaska. environments. The company is moving Solutions’ performance improved in the was paid in April 2013 for the 2012 fiscal Kvaerner holds a unique position within this Beskjæres 76 mm fra venstre før trykk >> towards a more asset light, high return on second half of 2013. Increased focus on year, compared with NOK 3.90 the previous market on a global level. investment business model, with a stream execution, delivery of key projects and year. In anticipation of the next round of ten lined portfolio. Two important milestones major contract wins resulted in solid fourth- The board of Aker Solutions has pro ders, the company is focused on extracting were reached as part of this strategy in quarter earnings that exceeded market posed a dividend payment of NOK 1.1 bil value from its substantial backlog and 2013 with the divestments of the MLS and expectations. Revenues grew by 3 per cent lion for the 2013 fiscal year. Aker will delivering its projects at cost, on schedule WIS business areas for a total enterprise to NOK 42.9 billion in 2013, of which Prod receive NOK 317 million of this through its and according to clients’ specification. The value of NOK 5.4 billion. uct Solutions generated NOK 27.3 billion, ownership interest in Aker Kvaerner Hold company is also working on bringing to a These sales will enable the company to Field Life Solutions NOK 12 billion and ing and NOK 67 million through its direct satisfactory conclusion the ongoing arbitra reduce its net interest bearing debt sub Engineering Solutions NOK 3.9 billion. ownership stake. tion procedures related to legacy projects. stantially, enhancing financial flexibility. To EBITDA for the year decreased by 16 per 2013 was a challenging year for further strengthen the balance sheet, Aker cent to NOK 3.5 billion from NOK 4.1 bil Kvaerner Kvaerner after the company lost a series of Solutions is working on reducing its work lion, which corresponds to an EBITDA mar Kvaerner is a specialised EPC company that topside and jacket contracts awarded on ing capital to 7-8 per cent of revenues and gin of 8.2 per cent, compared with 10 per plans and executes large, complex projects. the NCS and British continental shelf aims to keep maintenance capex and cent in 2012. The company’s performance As of the fourth quarter 2013, the company around the beginning of the year. research and development at around 3 per was negatively impacted in the first half of had four business areas: Contractors Nor The company had operating revenues of cent of revenues. At the company’s capital the year by increased costs and operational way, Contractors International, Jackets and NOK 13 billion in 2013, compared to NOK markets day in December 2013, it was challenges on certain projects, operational Concrete Solutions. Kvaerner delivers top 8.9 billion in 2012. EBITDA was NOK 0.6 announced that the hurdle rate for new challenges in the Umbilicals area, delayed side facilities, floating facilities, concrete billion, compared with NOK 417 million a investments would be raised to 15 per cent or cancelled contract awards and low and steel substructures, and onshore facili year prior, resulting in an EBITDA margin of from 10 per cent. The need for tighter capi capacity utilisation in the Engineering and ties. Projects are executed using a resource 4.9 per cent compared to 4.7 per cent in tal discipline was emphasised, in order to Oilfield Services and Marine Assets units. base comprising company employees, part 2012. improve return on equity and increase profit Several important contracts were ners and suppliers. The company sold its Kvaerner completed a few significant margins. Aker Solutions aims for dividend entered into in 2013, including the award of onshore construction business in North projects in 2013, including the delivery of payments to amount to 30-50 per cent of a subsea production system contract for America in December 2013. the two Clair Ridge jackets for BP and the net profit over time, and has opened up for the Moho Nord project in the Republic of Kvaerner is taking steps to adjust its last wind-jackets for the North Sea Ost pro the possibility of using share repurchases in the Congo, valued at approximately NOK business model, focusing on core activities ject. The company’s order backlog stood at addition to cash dividend. 4.9 billion, and the framework agreement to and improved margins. Measures to NOK 22.8 billion as at year-end 2013, up Aker Solutions is expanding its capacity provide EPma at the Johan Sverdrup devel enhance yard productivity and reduce from NOK 20.2 billion in 2012. In March and distribution network to meet project opment, which confirmed the company’s costs across the value chain have been 2013, Kvaerner and its partner Kiewit- demand, forecast to grow 8-10 per cent per position as a leading engineering contrac initiated, and partnerships with low-cost Kvaerner Contractors were awarded the year in the offshore markets. Growth will tor on the NCS. Aker Solutions posted a yards in Eastern Europe and China have EPC services contract for ExxonMobil Can Aker ASA annual report 2013 43 Board of directors’ report
ada Properties’ Hebron Project gravity Johan Sverdrup is the key asset in Det “Det norske made progress in establishing a solid based structure (GBS). The contract value norske’s portfolio and the company owns a financial foundation for the development of its core for Kvaerner’s share of the full EPC con 20 per cent stake in license PL 265, one of tract is approximately USD 1.5 billion, two licenses that initially formed the Sver assets, Johan Sverdrup and Ivar Aasen, in 2013.” including work conducted to date on the drup discovery. In the first quarter of 2013 Hebron project. In April 2013, Norske Shell an exploration well proved that the south increased the scope of Kvaerner’s work on ern part of Sverdrup extends into PL 502, in the onshore Nyhamna Expansion Project. which Det norske holds a 22.22 per cent The value of the framework agreement was interest. Pre-unit operator Statoil which proved an extension of the Ivar tion resources are invested in exploration in increased by approximately NOK 5 billion, announced in December 2013 that the Aasen field to the east. A pre-unitisation less mature areas, so-called “frontier areas”. giving an estimated total contract value of field’s full gross contingent resources are agreement was signed between the part In 2013, Det norske participated in one sig NOK 11 billion. estimated in the range of 1.8 to 2.9 billion ners in the first quarter of 2013, with a final nificant discovery with the oil and gas find Beskjæres 76 mm fra venstre før trykk >> Kvaerner ASA’s shares closed at NOK barrels of oil equivalents. The Sverdrup field agreement set to be reached by June 2014. on the Gohta prospect in the Barents Sea, 11.50 as per 31 December 2013, compared partners announced in February 2014 the This will reduce Det norske’s total owner estimated to hold between 113 and 239 mil with NOK 16.20 as at end of 2012. A NOK concept selection for the first phase of the ship in the enlarged field, but will decrease lion barrels of oil equivalents. In 2013, total 0.55 per-share dividend was paid out in the development, which will consist of four costs and extend the life of the field. The exploration spending amounted to approxi first half of 2013 and NOK 0.58 per-share installations and power from shore. Early PDO for the Gina Krog field was also mately NOK 1.6 billion, on par with 2012 was paid out in the second half, compared estimates indicate total investments in the approved in May 2013, and first oil is levels. Det norske is planning to participate with a total dividend of NOK 1.53 per-share range of NOK 100 to 120 billion for the first scheduled for the first quarter of 2017. in around 10 exploration and appraisal wells distributed in 2012. phase of the development, including con Production at Det norske operated Jette in 2014, compared to 11 in 2013. The board of Kvaerner has proposed a tingencies and estimated future price esca commenced in May 2013. As of year-end Karl Johnny Hersvik has been appointed semi-annual dividend payment of NOK 0.61 lation. The field partners will work on a uni 2013, Det norske had participating interests chief executive officer of Det norske. He will per share to be paid in April 2014. Aker will tisation agreement in 2014 and expect the in four producing fields: Atla (10 per cent take up his position in May 2014. Hersvik receive NOK 47 million of this through its Plan for Development and Operations stake), Jette (70 per cent stake), Jotun (7 previously held the position of senior vice ownership interest in Aker Kvaerner Hold (PDO) to be approved by the Norwegian per cent stake) and Varg (5 per cent stake), president of Statoil’s research and develop ing. Aker Kvaerner Holding has a 41 per Parliament in the first half 2015. Production resulting in a total average production of ment division, and has wide experience cent shareholding in Kvaerner. Accordingly, start-up is scheduled for the end of 2019. 4 463 boepd, up from 1 493 boepd the year within the E&P sector from a number of Aker has approximately 29 per cent indirect At plateau, the field is estimated to produce prior. The Enoch field (2 per cent stake) has senior positions in Statoil. ownership interest in Kvaerner. up to 650 000 barrels of oil equivalents per not been in production since the first quar Det norske made progress in establish day (boepd), accounting for more than 25 ter of 2012 due to technical problems. Pro ing a solid financial foundation for the Det norske oljeselskap per cent of the NCS’ oil production. duction at Jette is slowly declining. The development of its core assets, Johan Det norske is developing into a fully- 2013 was also an important year for Det field’s resources have been revised down Sverdrup and Ivar Aasen, in 2013. The fledged exploration and production com norske as an operator and a producer. The and accordingly, Det norske made an company signed a new USD 1 billion credit pany on the NCS, as operator of 33 PDO for Ivar Aasen, where Det norske is impairment charge of NOK 349 million in facility with maturity in September 2018, licenses out of a total of 80 and with 11 operator with a 35 percent ownership inter the fourth quarter. which includes an additional USD 1 billion exploration wells drilled in 2013. Confi est, was approved by the Norwegian Parlia Det norske is one of the most active uncommitted accordion option, and com dence in the future of the Norwegian shelf ment in May 2013. The field development exploration companies on the Norwegian pleted a NOK 1.9 billion bond offering with – one of the world’s most attractive off project is progressing according to plan, shelf and has adopted a two-fold explora maturity in July 2020. Det norske will con shore oil and gas provinces – runs high with first oil scheduled for the fourth quarter tion strategy. Approximately two thirds of tinue to develop a financing strategy, after a strong exploration year in 2011, of 2016 at a rate (net to Det norske) of the company’s exploration resources are including optimising its field and license which included the major Johan Sverdrup about 16 000 boepd. The project econom spent in mature areas in the North Sea, portfolio, to ensure a robust funding of its oil discovery in the central part of the North ics for Ivar Aasen are set to improve follow where the infrastructure is good and the dis stake in the Johan Sverdrup development Sea. ing a discovery in the adjacent PL 457, covery rate still high. The remaining explora at an attractive cost of capital. 44 Aker ASA annual report 2013 Board of directors’ report
“Aker BioMarine has established a solid performed according to budget during the orders from certain customers due to platform for future growth and is well positioned year. The FPSO Dhirubhai-1, recorded a inventory build-up in the first half of the utilisation rate of 99.9 per cent per cent for year. In 2012 Aker BioMarine and Naturex to succeed in global growth markets …” the year 2013. entered into a joint venture to build a new Ocean Yield’s shares stood at NOK production facility in Houston, Texas. Start 34.70 as at 31 December 2013, up from ing in the second half of 2014, the new NOK 27 listing price on 5 July 2013. Ocean facility will double Aker BioMarine’s pro Yield paid Aker a total of USD 40 million in duction capacity for Superba™ products to Det norske had operating revenues of Ocean Yield’s financial strength and divi semi-annual dividends for the year 2012. about 2 000 tons. NOK 0.9 billion in 2013, compared to NOK dend capacity was further enhanced by the Additionally, the company introduced quar Qrill® demand is good, with sales rising 332 million in 2012. The net loss for the refinancing of American Shipping Company terly dividend payment in November 2013, 32 per cent to 15 155 tons in 2013. period narrowed to NOK 0.5 billion, from (AMSC) in December 2013. This will nota disbursing USD 0.12 per share for the third Following successful pilot work, Aker Beskjæres 76 mm fra venstre før trykk >> NOK 0.9 billion in 2012. bly result in AMSC paying 50 per cent of quarter. BioPharma was established in 2013 as a Det norske’s shares stood at NOK 66.70 the interest in cash on its bonds as of 2014, The board of Ocean Yield has proposed new subsidiary to develop krill-derived as per 31 December 2013, down from NOK while the remaining 50 per cent will con a dividend payment of USD 0.1225 per ingredients for advanced technical and 82.50 per share at year-end 2012, which tinue to be paid as payment-in-kind (so- share for the fourth quarter of 2013. Aker pharmaceutical applications. In addition, corresponds to a 19 per cent decline. Aker called PIK interest). AMSC also success will receive approximately USD 12 million of Trygg Pharma Group has developed AKR has a 49.99 per cent direct ownership in fully conducted an equity issue as part of this through its 73.2 per cent direct owner 963, which is a hypertriglyceridemia drug. Det norske. the refinancing, strengthening its balance ship interest in Ocean Yield. Aker BioMarine has established a solid sheet and thereby reducing Ocean Yield’s platform for future growth and is well posi Ocean Yield risk exposure. Aker BioMarine tioned to succeed in global growth markets Ocean Yield was established in March The company grew and successfully Aker BioMarine is an integrated biotechnol with its strong supply chain, an innovative 2012 with a portfolio consisting of the diversified its portfolio in 2013. In March, ogy company that develops, markets, and product pipeline, and stable long-term part FPSO Dhirubhai-1, the offshore construc Ocean Yield acquired two newbuilding sells krill-derived ingredients for applica nerships. The company has a healthy bal tion vessel Aker Wayfarer, the seismic sur Anchor Handling Tug Supply vessels with tions ranging from fish feed to dietary sup ance sheet after raising NOK 100 million in vey vessel Geco Triton and 93 per cent of 12-year bareboat charters to Farstad Sup plements. The Aker BioMarine Group is proceeds from a share issue conducted American Shipping Company’s bond ply for a total consideration of approxi comprised of the core krill business, which towards Aker in January of 2013, and AMSC 07/18 FRN C. It added two new mately NOK 1.2 billion. In September the produces Superba™ Krill and Qrill®, and obtaining a USD 105 million, three-year building PCTCs on charter to Höegh Auto company entered into newbuilding con three pharmaceutical ventures, Aker Bio revolving credit facility and a NOK 100 mil liners and an offshore construction vessel tracts for two PCTCs with Xiamen Ship Pharma, Trygg Pharma and Inspirion Deliv lion credit line in April. NOK 305 million of chartered to Ezra Holdings to its fleet in building Industry, which will be chartered ery Technologies (IDT). the new loan facility is guaranteed by Aker. 2012. on 12-year bareboat charter contracts to The markets for Aker BioMarine’s core Additionally, Trygg Pharma divested its The company’s mandate is to build a Höegh Autoliners upon delivery. The oper products are developing favourably. The omega-3 production business Epax in July diversified portfolio of marine assets pre ating risk and construction risk for the new U.S. shows continued strong interest in 2013 at an enterprise value of approxi dominantly within the oil service industry buildings is carried by the charterer. krill-based products, while the company mately USD 345 million. Following these and industrial shipping, with focus on long- Current charter backlog as of end of experienced growth in demand from the transactions, Aker BioMarine made a divi term charters of five to 15 years tenor to fourth quarter of 2013 stood at USD 1.88 European region. After solid growth in dend payment of NOK 76 million to Aker counterparties with solid credit ratings. In billion and the company’s average remain 2012, the Asia-Pacific markets levelled out and repaid its NOK 300 million loan to Aker. June 2013 Ocean Yield issued 33.5 million ing contract tenor (weighted by EBITDA) in 2013. Sales of Superba™ Krill Oil grew to In December 2013, Aker BioMarine con shares priced at NOK 27 per share in an was 7.1 years as at end of 2013. 488 metric tons in 2013 from 363 tons in cluded a patent conflict with Neptune Tech initial public offering, raising proceeds of Ocean Yield had operating revenues of 2012, while prices remained stable from the nologies & Bioressources through an agree NOK 0.9 billion, to enable growth through USD 239.0 million in 2013; while EBITDA year prior. Sales were negatively impacted ment that gives the company full freedom new investments. amounted to USD 207.7 million. All projects in the second half of 2013 by a reduction in to operate in the U.S. and across all other Aker ASA annual report 2013 45 Board of directors’ report
geographical regions. Costs related to the On 30 December 2013 Havfisk lost a “Fornebuporten entered into several significant settlement with Neptune, in addition to lawsuit brought by the administration com increased harvesting, onshore and SG&A mittee of Glitnir, in a case concerning an lease agreements with new tenants for costs, and decreased gross profit, interest rate and currency swap agreement the office and retail spaces in 2013.” impacted the company’s results negatively entered into in 2008. Havfisk was ordered in the fourth quarter. to pay a total of about NOK 158 million in Aker BioMarine reported 2013 operating damages and penalty interests to Glitnir. revenues of USD 112.7 million, compared The company is of the opinion that the to USD 80.6 million in 2012; EBITDA judgement is incorrect and will appeal the dividends in 2013 and issued two bonds for NOK 320 million as at the end of 2012. amounted to USD 15.8 million, up from verdict to Iceland’s Supreme Court for final a total value of NOK 2 billion. Aker’s wholly-owned real estate devel USD 11.4 million a year prior. ruling. In accordance with IFRS, a provision Gross interest-bearing debt rose to NOK opment investment Fornebuporten com Aker BioMarine was delisted from Oslo for the verdict was made in the accounts 5.4 billion, from NOK 3.5 billion a year ear menced construction of the office and retail Beskjæres 76 mm fra venstre før trykk >> Stock Exchange in January 2013 and for 2013, which resulted in the company lier, following the issuance of two bonds buildings in Fornebu outside Oslo in the became a wholly-owned subsidiary of Aker. posting a net loss in the fourth quarter. with tenure of five and seven years for a first quarter. Construction is progressing Havfisk had 2013 operating revenues of total value of NOK 2 billion in May 2013. A according to plan, with the first building Havfisk (formerly Aker Seafoods) NOK 0.8 billion; EBITDA amounted to NOK total of NOK 200 million in loans were scheduled for completion in June 2015 and Havfisk is Norway’s largest white fish har 211 million. In 2012, operating revenues repaid during the year. In January 2014 the second in June 2016. The construction vesting company, with currently 11 trawlers were NOK 0.8 billion and EBITDA Aker expanded its Nordic creditor base by of the two buildings is fully financed. and 29.6 cod licences, representing around amounted to NOK 183 million. tapping into the Swedish kronor-denomi Fornebuporten entered into several signifi 10 per cent of the national cod quotas. The Havfisk’s share price doubled to NOK nated debt market for the first time, cant lease agreements with new tenants for company specialises in cod, saithe and 11.80 as at year-end 2013, up from to NOK prompted by high investor demand for the office and retail spaces in 2013, includ haddock harvesting. 5.88 as at 31 December 2012. quality BB credit bonds. The SEK 1.5 billion ing a rental agreement for 32 000 square The company is working on increasing its bond issue not only brought down Aker’s meters of office space to Aker Solutions. capability of full deployment of quota vol Financial Investments cost of debt, but also tightened the yield As per year-end 2013, approximately two- umes, improving harvesting efficiency and Financial Investments includes cash, spreads between Aker’s bonds. thirds of the space had been leased out. enhancing operational flexibility. In line with receivables, equity and other financial Total loans at market terms to subsidiar Negotiations with potential new tenants are this strategy Havfisk is renewing its fleet investments, and fund holdings. ies and associated companies were underway. and in November took delivery of the sec Financial investments amounted to NOK reduced from NOK 1.6 billion to NOK 0.6 The first housing project of Fornebupor ond of three new trawlers commissioned, 8.1 billion as at 31 December 2013, which billion as at 31 December 2013. This is pri ten Bolig, developed in partnership with which contributed to record harvesting vol represents 27 per cent of Aker’s value- marily due to the conversion of receivables Profier, went on the market in January 2013 umes achieved in the quarter. A third new adjusted total assets. This is up from NOK into equity in the fourth quarter of 2013 fol and 269 residential units out of a total of build is being added to the fleet in 2014. 6.7 billion in 2012. The increase was pri lowing the introduction of new tax rules in 291 residential units had been sold by year- In December Havfisk agreed to sell addi marily due to a substantial gain in the value Norway that place a limit on the deduction end. The housing market in the Oslo area tional fishing quotas for cod, haddock and of Aker’s fund assets invested in the U.S. of interest on related party debt, with effect slowed down in 2013, with prices soften saithe as part of a previously-agreed sale of Jones Act market. from 1 January 2014. Aker’s equity invest ing. The apartments are expected to be the “Jergul” vessel, with associated quotas. Aker’s cash holdings fell to NOK 2.5 bil ment in Fornebuporten thus increased by handed over in the second half of 2015. The transaction priced a quota unit at lion as per year end 2013, from NOK 3.1 approximately NOK 1.1 billion in the fourth Phase one of the Aberdeen business park about NOK 84 million, a significant pre billion end of 2012. This is mainly due to quarter, with a corresponding reduction in project, which consists of three office build mium to book value. the acquisition of 16.44 million shares in receivables. Equity and other financial ings, is progressing according to plan and Total fishing quotas for cod set for 2014 Aker Solutions for approximately NOK 1.9 investments amounted to NOK 1.3 billion discussions with potential tenants are under are on par with 2013 levels and the market billion and the disbursement of close to (including Fornebuporten) and NOK 295 way. The commercial property market in is developing positively, with cod prices NOK 0.9 billion in dividend to Aker’s share million respectively as at 31 December Aberdeen is strong, fuelled by high levels of firming up. holders. Aker received NOK 0.9 billion in 2013, compared to NOK 212 million and activity in the North Sea oil and gas industry. 46 Aker ASA annual report 2013 Board of directors’ report
“The recapitalisation leaves AMSC well prepared totalling SEK 4.4 billion, of which Aker’s Going concern assumption to act on potential accretive transactions share represented 8 per cent as at end of Pursuant to section 3-3a of the Norwegian 2013. The Norron funds posted a strong Accounting Act, it is confirmed that the and industry consolidation opportunities …” performance in 2013. Norron Target posted annual accounts have been prepared returns of 12.5 per cent and Norron Select based on the assumption that Aker is a 22.8 per cent in 2013. Aker owns 48.2 per going concern and the Board confirms that cent of Norron. this assumption continues to apply.
Aker had NOK 3.5 billion invested in ties, and enables the company to initiate Presentation of annual accounts Group consolidated accounts Converto Capital Fund, AAM Absolute quarterly dividend payments as of the sec Aker ASA’s annual accounts comprise the The main companies included in Aker’s con Return Fund, Norron Target and Norron ond quarter of 2014. In the fourth quarter of following main parts: income statement, solidated accounts are the following: Aker Select as at year-end 2013, compared to 2013, Bokn Invest, an investment company balance sheet, and cash flow statement for Solutions, Kvaerner, Det norske, Aker Bio Beskjæres 76 mm fra venstre før trykk >> NOK 1.5 billion as per 31 December 2012. jointly owned by Converto Capital Fund the Aker Group and its parent company Marine, Havfisk and Ocean Yield, which are Converto manages Converto Capital and HitecVision V, agreed to sell Stream to Aker ASA. In addition, a combined income all part of Aker’s Industrial Holdings. Aker Fund, which holds a portfolio composed of MRC Global for an enterprise value of NOK statement and a combined balance sheet Solutions and Kvaerner are associated com Norway Seafoods, Aker Philadelphia Ship 1.6 billion. The transaction value was in line for Aker ASA and holding companies have panies. In addition, the following companies yard, American Shipping Company (AMSC), with that reported in Aker’s NAV in the third been prepared. Aker ASA’s consolidated are included as subsidiaries: Fornebuporten, Bokn Invest (that owns the company Align quarter of 2013, and Aker will through its group financial statements have been pre Aker Philadelphia Shipyard, Norway Sea with HitecVision) and Ocean Harvest. Total 99.8 per cent ownership of Converto Capi pared and presented in accordance with foods and Ocean Harvest, of which the three assets under management rose to NOK 2.8 tal Fund receive proceeds from the transac International Financial Reporting Standards latter are part of Converto Capital Fund. billion as per year end, from NOK 0.9 billion tion of about NOK 400 million in the first (IFRS), adopted by the EU. The financial Aker is required to implement the new a year prior, due to a substantial value gain quarter of 2014. statements of the parent company Aker accounting standard for consolidation in the share investments in AMSC and Aker Oslo Asset Management manages AAM ASA have been prepared and presented in (IFRS 10 Consolidated Financial State Philadelphia Shipyard. The two companies Absolute Return Fund, a hedge fund estab accordance with the Norwegian Accounting ments) with effect from 1 January 2014. are benefiting from the strong trend in lished in December 2005. The fund posted a Act and generally accepted accounting Aker Solutions and Kvaerner will be demand for product tankers in the U.S. return of 4.73 per cent in 2013 in its NOK practices in Norway. The combined finan regarded as subsidiaries subsequent to the Jones Act market for oil and related prod tranche and 3.61 per cent in its dollar cial statements of Aker ASA and holding implementation of the standard. For more ucts as a result of the U.S. shale oil boom. tranche, compared with 0.96 per cent and companies have been prepared and pre information about this change and the In the third quarter Aker Philadelphia Ship 0.03 per cent respectively in 2012. Aker’s sented in accordance with the Norwegian effects of the change, see note 3 to the yard entered a joint partnership with Crow investment represented 13.6 per cent of the Accounting Act and generally accepted consolidated financial statements. ley Maritime Corporation for the construc fund’s USD 442 million capital under man accounting practices in Norway to the tion of four product tankers and the sharing agement at the end of the quarter. Aker owns extent they were deemed relevant. Income statement of the economics and chartering of the ves 45 per cent of Oslo Asset Management. The combined balance sheet of Aker The Aker Group’s revenues are largely sels. In addition Aker Philadelphia Shipyard The funds Norron Target (Nordic multi- ASA and holding companies is highlighted attributable to Det norske oljeselskap, signed a contract with Matson to construct strategy fund), Norron Select (Nordic hedge in Aker’s internal and external reporting. Havfisk, Ocean Yield, Aker BioMarine and two containerships for delivery in 2018. fund), Norron Preserve (Nordic interest and This combined balance sheet shows the companies consolidated under Converto AMSC successfully completed a recapitali bond fund), and Norron Active (actively aggregate financial position of the compa Capital Fund. Other companies have only sation in January 2014, raising a total of managed share fund) were established in nies in the holding company structure, modest revenues or they are associated USD 132 million in gross proceeds from a 2011. In 2012, Norron established Norron including total available liquidity and net companies (Aker Solutions and Kvaerner), private placement and subsequent offering. Premium which invests in Nordic corporate debt relative to the investments in the for which Aker records its share of the The recapitalisation leaves AMSC well pre bonds. Aker has invested a total of SEK underlying operational companies. NAV for companies’ after-tax profit. The Aker group pared to act on potential accretive transac 300 million in Norron Target and Norron Aker ASA and holding companies forms the had operating revenues of NOK 8.1 billion tions and industry consolidation opportuni Select. The Norron funds manage assets basis for Aker ASA’s dividend policy. in 2013, compared to NOK 6 billion a year Aker ASA annual report 2013 47 Board of directors’ report
prior. Total operating expenses came in at lion as at 31 December 2012. Goodwill has tied to exploration on the NCS and December 2013, compared with NOK 30.6 NOK 7.8 billion in 2013, compared to NOK been tested for impairment and NOK 7 mil expensed exploration costs linked to dry billion at year-end 2012. The increase is pri 6.5 billion in 2012. Operating revenues lion in write-downs were made. wells. The costs were previously capitalised marily attributable to changes in the value of mainly increased due to higher activity lev Current assets were NOK 10 billion as at at NOK 1.2 billion. Aker received NOK 1 the share portfolio. Equity amounted to els at Aker Philadelphia Shipyard and Det 31 December 2013, up NOK 1.1 billion from billion in dividend payments in 2013, up NOK 17.7 billion at the end of 2013, com norske, and increased revenues in Ocean the year prior. The gain was mainly due to from NOK 0.7 billion in 2012. pared with NOK 18.9 billion as at 31 Yield due to new vessels in operation. The the NOK 0.4 billion increase in cash and Net cash flow from investment activities December 2012. This results in an equity change in expenses is primarily related to NOK 0.4 billion due to increased activities were minus NOK 7 billion in 2013, com ratio of 56 per cent at the end of 2013. higher activities at Aker Philadelphia Ship in Det norske. pared to minus NOK 6.2 billion in 2012. yard and Det norske oljeselskap. Current liabilities amounted to NOK 4.9 Cash flow for 2013 comprises mainly Research and development Depreciations and amortisations in 2013 billion and long-term liabilities totalled NOK investments in fields under development at The parent company had no research and was NOK 1.4 billion, compared to NOK 0.9 20.8 billion at year-end 2013; the corre NOK 1.4 billion, capitalised oil and gas development activities in 2013. Group R&D Beskjæres 76 mm fra venstre før trykk >> billion a year prior. sponding 2012 figures were NOK 4.8 billion exploration expenses of NOK 1.3 billion, activities are presented in the annual reports The increase is primarily due to invest and NOK 14.9 billion, respectively. The acquisition of Aker Solutions shares of NOK of the respective operating subsidiaries. ments and new vessels in Ocean Yield, and group’s interest-bearing debt amounted to 1.9 billion and investments related to acqui increased depreciation of Det norske olje NOK 19 billion as at 31 December 2013, sition and construction of vessels for NOK Aker ASA and holding companies selskap’s production facilities. Impairment compared with NOK 13.6 billion at year-end 2.2 billion. Combined income statement charges in 2013 amounted to NOK 0.8 bil 2012. The NOK 5.4 billion increase in inter Net cash flow from financing activities The combined profit and loss account for lion. Net financial items posted an income est-bearing debt is primarily due to Det amounted to NOK 4.6 billion in 2013, com Aker ASA and holding companies (Aker) of NOK 0.7 billion kroner in 2013, on par norske raising its debt by NOK 2.5 billion, pared to NOK 3.4 billion in 2012. Cash flow shows a pre-tax profit of NOK 0.8 billion for with 2012 levels. Ocean Yield by NOK 0.5 billion, Aker Bio for the year from financing activities is 2013. The corresponding 2012 figure was a Loss before tax came in at NOK 1.3 bil Marine by NOK 340 million, Havfisk by largely attributable to a net increase in debt profit NOK 89 million. Operating revenues lion in 2013, compared to a loss before tax NOK 325 million, and Aker ASA and hold of NOK 4.8 billion, dividend disbursement were nil in 2013, compared with NOK 47 of NOK 3.1 billion in 2012. ing companies by NOK 1.8 billion. Interest- of NOK 1.1 billion and new equity in sub million in the previous year. Operating Tax expenses in 2013 were positive NOK bearing debt as at year-end 2013 includes sidiary companies of NOK 0.9 billion. Divi expenses amounted to NOK 236 million in 2.1 billion, resulting in an annual profit of mortgage loans of NOK 10.4 billion, unse dend is composed of NOK 0.9 billion to 2013, compared with NOK 235 million in NOK 0.8 billion. In 2012, the tax expense cured bond issues of NOK 7.8 billion and a Aker ASA’s shareholders and NOK 258 mil 2012. Ordinary depreciation was NOK 14 was positive NOK 3 billion, resulting in loss bank loan of NOK 0.5 billion. lion to minority shareholders. million, compared with NOK 15 million in for the year of NOK 0.1 billion. The group’s equity ratio was 44 per cent 2012. at year-end 2013, compared to 49 per cent Aker ASA Net financial items amounted to NOK Balance sheet a year prior. The parent company Aker ASA had a loss 0.8 billion in 2013, up from NOK 309 million Total assets of the Aker Group amounted to for the year of NOK 0.4 billion, compared a year prior. Dividends received amounted NOK 46.3 billion as at 31 December 2013, Cash flow statement with a profit of NOK 4.3 billion in 2012. The to NOK 0.9 billion, while net interest compared with NOK 38.6 billion as at year- As at 31 December 2013, the group had 2013 loss is primarily attributable to the income, write-downs on receivables and end 2012. Total non-current assets were cash of NOK 5.8 billion, up from NOK 5.5 negative development in the share invest other provisions amounted to minus NOK NOK 36.3 billion as at 31 December 2013, billion in 2012. ments in Aker Solutions and Kvaerner, 30 million. The net value change on shares compared with NOK 29.7 billion at year-end The group’s net cash flow from opera which was partly compensated by divi amounted to NOK 252 million. This is 2012. The group’s total intangible assets tions amounted to NOK 2.7 billion in 2013, dends received. largely attributable to the increase in value decreased to NOK 7.6 billion as at 31 the same level as 2012. The NOK 2.4 billion Information on salary and other remuner of Aker’s investment in Aker BioMarine of December 2013; the corresponding year- difference between operating profit before ation to executive management and com NOK 300 million, including the reversal of a earlier figure was NOK 7.8 billion. Of this, depreciation and amortisation and net cash pensation guidelines is presented in Note NOK 250 million impairment. goodwill amounted to NOK 0.8 billion at flow from operations is largely attributable 38 in the consolidated financial statements. Tax expense for the year amounted to year-end 2013, compared to NOK 0.8 bil to NOK 1.3 billion in tax reimbursements Assets totalled NOK 31.6 billion as at 31 NOK 13 million. 48 Aker ASA annual report 2013 Board of directors’ report
Gross assets measured based on the valuation principles with the economic cycles and its strategy contribution to society is to create value The value-adjusted assets of Aker ASA and in “International Private Equity and Venture has adapted to market changes and com and build forward-looking companies that holding companies was NOK 29.8 billion as Capital Valuation Guidelines.” Book value is pany-specific issues in its portfolio. As pre operate in environmentally, ethically and at 31 December 2013. The corresponding used for other assets. sented in their respective notes to the socially responsible manners. Profitability is 2012 figure was NOK 26.8 billion. financial statements, Aker ASA, the Aker an important factor in achieving these The value of Aker’s Industrial Holdings Management model and corporate Group, and Aker ASA and holding compa objectives. was NOK 21.6 billion as at 31 December governance nies are exposed to share price risk, cur As a significant shareholder in many 2013, compared with NOK 20 billion at Aker’s principal shareholder TRG, through rency and interest rate risk, market risk, companies, Aker works to promote respon year-end 2012. The change is attributable its main owner Kjell Inge Røkke, partici credit risk, and operational risk at the sible businesses that are committed to sus to a number of transactions and portfolio pates actively in Aker’s development. Mr. underlying company level. tainable economic development and high value development, discussed above in the Røkke is Aker’s Chairman of the Board and Risk management in Aker is based on standards of corporate and social responsi Industrial Holdings section of the Board of constitutes, along with the company’s Pres the principle that risk evaluation is an inte bility. The operations of the parent com Beskjæres 76 mm fra venstre før trykk >> Directors’ report. ident and CEO, and CFO Aker ASA’s top gral part of all business activities. Conse pany Aker ASA have negligible effect on the The value of Aker’s financial investments management. quently, management of operational risk external environment. The company oper amounted to NOK 8.1 billion as of year-end Aker is a public limited company organ lies primarily with the underlying operating ates from its headquarters in Oslo. 2013, compared with NOK 6.7 billion as at ised under Norwegian law with a govern companies, but Aker actively supervises The Aker Group’s operating companies 31 December 2012. Cash declined from ance structure based on Norwegian corpo risk management through its participation report individually on their impact on the NOK 3.1 billion to NOK 2.5 billion in 2013. rate law. The company’s corporate govern on the board of directors of each company. external environment. The new section 3-3c Aggregate lending on market terms to Aker ance model has been designed to provide Aker‘s main strategy for mitigating risk in the Norwegian Accounting Act requires subsidiaries and associated companies a foundation for long-term value creation related to short-term value fluctuations is to that as of 1 June 2013, large companies decreased from NOK 1.6 billion at year-end and to ensure good control mechanisms. maintain a solid financial position and account for their efforts to integrate corpo 2012 to NOK 0.6 billion as at 31 December The board of directors has approved our strong creditworthiness. Aker has estab rate social responsibility in their business 2013. The changes are discussed in the Code of Conduct, which applies to all our lished clear financial guidelines that further strategies and day-to–day operations. Aker Financial Investments section above in the employees, as well as to our board mem regulate monitoring and follow-up of finan ASA has chosen to report on its efforts to Board of Directors’ report. bers, hired personnel and others acting on cial risk issues. Key performance targets integrate human rights, labour standards, behalf of Aker. The code addresses compli have been identified and are monitored the environment and anti-corruption meas Debt and net asset value ance with laws and other matters such as closely. A finance committee has been ures in a separate document approved by Gross interest-bearing debt amounted to handling of conflicts of interest, a commit appointed to focus particularly on issues the Board of Directors and published on its NOK 5.4 billion as at 31 December 2013, ment to equal opportunities for all employ and decisions related to financial invest website under “Corporate Responsibility in up from NOK 3.5 billion a year earlier. ees and compliance with anti-corruption ments. For further information on the com Aker”. The assessment encompasses Aker NAV and cash holdings are key perfor legislation. pany’s risk management, see the report on ASA and subsidiaries consolidated into the mance indicators at Aker and play an Aker follows the Norwegian Code of corporate governance available on the Group accounts. important role in assessing Aker’s financial Practice for Corporate Governance of company’s website. position. The company’s dividend policy is October 2012. The company’s practice Financial market exposure, including Our employees based on the NAV of Aker and on dividend largely complies with the Code’s recom currency, interest, and liquidity risks are Aker ASA had a total of 51 employees as at capacity. mendations. Reference is made to the discussed in greater detail in Note 5 in the 31 December 2013. The company supports Aker’s NAV as at 31 December 2013 report on corporate governance. The report consolidated financial statements. diversity and prioritises equal treatment of was NOK 24 billion, compared with NOK is available on the company’s website: men and women, ethnic minorities, seniors, 22.9 billion at year-end 2012. In calculating www.akerasa.com. Business and society and individuals with disabilities. Of the NAV, the market value for exchange-listed Aker’s goal is to be an attractive employer company’s employees, 25 are women (49 shares is applied. At Converto Capital Financial and risk management and preferred partner for employees and per cent). The company endeavours to pro Fund, the value of the unlisted shares for Aker has a long-standing tradition of indus business associates, and a well-respected vide flexible working conditions so that the Align and Ocean Harvest companies is trial risk taking. The company has evolved member of society. Aker’s most important Aker employment offers opportunities for a Aker ASA annual report 2013 49 Board of directors’ report
good work-life balance through every addition, the company’s Norwegian trade “Employee representatives participate in career phase. unions hold annual union representatives’ key decision-making processes, including As at 31 December 2013, the number of conferences and maintain working commit employees in companies where Aker tees at each main company. through board representation.” directly or indirectly was the main share Aker meets Norwegian regulations per holder, totalled approximately 27 900, of taining to gender equality on boards of whom about 15 900 worked in Norway. The directors. Through dialogue with nomina corresponding figures for the Aker Group is tion committee members and its voting at 2 477 employees, of whom 1 461 worked in general shareholders’ meetings, Aker seeks annual dividend level, the Board of Direc ment phase of the Johan Sverdrup field. Norway. About 26 per cent of Aker Group to ensure that companies owned by Aker tors take into consideration expected cash The partners, including Det norske, have employees are women. Many companies in adhere to the same standards. flows, financing requirements and needs for agreed on a field centre consisting of four which Aker has a major shareholding are The sick-leave rate among Aker employ appropriate financial flexibility. In 2012, the installations and power from shore. Invest Beskjæres 76 mm fra venstre før trykk >> cornerstones of their local communities ees was at 3.4 per cent in 2013, which cor ordinary dividend was NOK 12 per share, ments in the first phase are estimated at that recruit locally and play an important responds to 403 sick-leave days. This com an aggregate total of NOK 0.9 billion. between NOK 100-120 billion. role in integrating non-ethnic Norwegians pares to 2.5 per cent in 2012. The corre Transfer from other equity amounts to into society. sponding figure for sick-leave in the Aker NOK 1.3 billion to cover loss for the year Risks In January 2013 Aker renewed an interna Group was 4.6 per cent. and NOK 0.9 billion in proposed dividend. Aker ASA and each Aker company are tional framework agreement with Norwegian There were 112 reported accidents that exposed to various forms of market, opera United Federation of Trade Unions (Fellesfor led to absence from work at the Aker Key events after the 31 December tional, and financial risks. Rather than bundet), IndustriALL Global Union, NITO and Group in 2013, compared with 139 such 2013 balance sheet date diversifying risk by spreading investments Tekna. The international framework agree accidents in 2012. Accidents are described In the first quarter of 2014, Aker issued SEK across many different industries, Aker is ment sets out fundamental labour rights and in the reports of the operating entities. 1.5 billion in senior unsecured bond with focused on sectors in which the company contains references to standards relating to expected maturity date on 24 July 2019, in possesses special expertise. The company environment, health and safety (EHS) work, Board activities a placement that was substantially over has established a model for risk manage pay, working time and employment condi The board of directors held seven meetings subscribed. ment, based upon identifying, assessing tions. The agreement, first signed in 2008 in 2013 with an average attendance of 96 On 24 January 2014, the Norwegian and monitoring major financial, strategic and renewed in 2010, commits Aker to per cent. The audit committee held five Financial Supervisory Authority informed and operational risks in each business seg respect and support fundamental human meetings. Aker that a case involving the TRS agree ment, drawing up contingency plans for rights and union rights in the societies in Karen Simon was elected new board ment entered into by Aker with exposure to those risks and attending to the implemen which the company operates. These princi member for two years at Aker’s annual gen shares in Aker Solutions had been turned tation and supervision of their manage ples are delineated in the United Nations’ eral meeting held on 17 April 2013, while over to the economic and environmental ment. The identified risks and how they are Universal Declaration of Human Rights, Kristin Krohn Devold and Stine Bosse were crimes authority (Oekokrim) on the grounds managed are reported to the Aker Board on OECD guidelines for multinational corpora re-elected for two years. of potential violation of insider trading rules. a regular basis. tions, and the ILO’s Declaration on Funda On 10 February 2014, Aker Philadelphia The main risks that the group and the mental Principles and Rights at Work. Allocation of profit and dividend in Shipyard announced the completion of a Parent Company are exposed to are related For generations, Aker has cooperated Aker ASA private placement of 2.25 million new to the value changes of the listed assets closely with employee organisations. The Board of Directors proposes for shares, raising gross proceeds of NOK 371 due to market price fluctuations, and unex Employee representatives participate in key approval at the annual general meeting an million. Converto Capital Fund did not par pected developments in the companies’ decision-making processes, including ordinary dividend of NOK 13 per share for ticipate in the placement and thus its own capital expenditures. The development of through board representation. Aker ASA 2013, an aggregate total of NOK 0.9 billion. ership stake in Aker Philadelphia Shipyard the global economy, and energy prices in has partnered with its employees and those This corresponds to approximately 3.9 per was diluted to 57 per cent from 71 per cent. particular, are important variables in of its relevant operating companies to cent of NAV and thus is within the range of On 13 February 2014, Statoil announced assessing near-term market fluctuations. establish a European Works Council. In Aker’s dividend policy. When deciding the the concept selection for the first develop The companies in Aker’s Industrial Hold 50 Aker ASA annual report 2013 Board of directors’ report
ings are, like Aker, exposed to commercial the FDA approval process. well positioned to benefit from the next five years. Deep water developments risks, financial risks and market risks. In For further information on the Aker’s risk expected long-term growth in demand for remain competitive in comparison with addition these companies, through their management, see the report on corporate seafood, omega-3 based products and unconventional resources and an oil price business activities within their respective governance available on the company’s energy. The market for white fish is above USD 80 a barrel ensures that most sectors, are also exposed to legal/regula website. strengthening, with cod prices are firming projected offshore capex is viable. These tory risks and political risks, for example up. The global omega-3 ingredient market are segments in which Aker’s companies political decisions on petroleum taxes and Outlook is estimated to grow by approximately 12 have extensive experience and expertise. environmental regulations. Investments in listed shares comprised per cent annually from USD 1.8 billion in Aker therefore has a positive view on the oil In 2013, the risk exposure of Aker’s port some 73 per cent of the company’s assets 2011 to USD 3.2 billion in 2016, according and offshore oil services sector long-term, folio related to American Shipping Com as at 31 December 2013. About 56 per to research by the consulting firm Frost and while positioning itself to weather short- pany and Aker Philadelphia Shipyard was cent of Aker’s asset value was associated Sullivan. term slowdown in activity, lower E&P substantially diminished as a result of the with the oil and gas sector. Maritime assets Exploration and production activity on spending and intensifying competition. Beskjæres 76 mm fra venstre før trykk >> strengthening of the U.S. Jones Act market. represented 14 per cent, seafood and the Norwegian Continental Shelf remains at Aker’s strong balance sheet ensures that The Trygg Pharma Group includes AKR marine biotechnology 9 per cent, cash 8 historically high levels, with petroleum the company is capable of responding to 963, which is a product candidate for the per cent, real estate development 4 per investments projected to reach a record unforeseen operational challenges and treatment of severe hypertriglyceridemia. cent, while other assets amounted to 9 per NOK 223 billion in 2014, according to Sta short-term market fluctuations. As an AKR 963 is awaiting approval from the U.S. cent. Accordingly, Aker’s growth and devel tistics Norway (SSB). Norway remains the industrial investment company, Aker will Food and Drug Administration (FDA) on its opment will be mainly influenced by fluctu foundation of Aker’s energy exposure. use its resources and competences both to New Drug Application. The value of the ations in crude oil prices and developments Activity levels in global offshore markets, promote the development of the compa investment in Trygg Pharma Group could on the Oslo Stock Exchange. Aker’s main segment, are projected to grow nies in its portfolio and to consider new be impacted by a negative outcome from The companies in Aker’s portfolio are by as much as 10 per cent annually for the investment opportunities.
Oslo, 27 February 2014 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2013 51 Board of directors’ report
Beskjæres 76 mm fra venstre før trykk >>
Fornebuporten has entered into several significant lease agreements and at the end of 2013, leases had been concluded for two-thirds of the commercial buildings. 52 Aker ASA annual report 2013 Annual accounts
Contents – annual accounts
Aker group Aker ASA Aker ASA and holding companies
Income statement and total Note 23 Interest-bearing short-term Contents – Aker ASA 118 Contents – Aker ASA and holding comprehensive income 53 receivables 95 Income statement 119 companies 134 Balance sheet as at 31 December 54 Note 24 Cash and cash equivalents 95 Balance sheet as at 31 December 120 Introduction 135 Statement of changes in equity 55 Note 25 Earnings per share and dividend Cash flow statement 121 Combined income statement 135 Cash flow statement 56 per share and paid-in equity 96 Notes to the financial statements Combined balance sheet as at Notes to the financial statements 57 Note 26 Minority interests 98 for Aker ASA 122 31 December 136 Notes to the financial statements for Note 1 Corporate information 57 Note 27 Other comprehensive income 99 Note 1 Accounting principles 122 Aker ASA and holding companies 137 Beskjæres 76 mm fra venstre før trykk >> Note 2 Basis for preparation and Note 28 Interest-bearing loans and Note 2 Salaries and other personnel changes in accounting policies 57 liabilities 101 expenses 123 Note 1 Accounting principles and basis for preparation 137 Note 3 New standards and interpretations Note 29 Operating leases 106 Note 3 Gain/loss on sale of shares 124 not yet adopted 59 Note 2 Operating revenues 137 Note 30 Pension expenses and pension Note 4 Fixed operating assets 124 Note 4 Accounting principles 60 liabilities 106 Note 5 Shares in subsidiaries 125 Note 3 Dividends received 137 Note 5 Financial risk and exposure 66 Note 31 Other interest-free long-term Note 6 Investments in associated Note 4 Other financial items 137 Note 6 Acquisition of subsidiaries and liabilities 108 companies and other long-term Note 5 Value changes and exceptional transactions with minority interests 70 Note 32 Provisions 108 investments in shares 126 financial items 138 Note 7 Sales of subsidiaries and Note 33 Mortgage and guarantee Note 7 Receivables and other long-term Note 6 Tax 138 discontinued operations 71 liabilities 109 financial assets 126 Note 7 Long-term equity investments 139 Note 8 Operating segments and significant Note 34 Trade and other payables 109 Note 8 Reversal/impairment of shares, Note 8 Interest-free long-term receivables subsidiaries 72 receivables, etc. 127 Note 35 Financial instruments 110 and other assets 140 Note 9 Wages, personnel expenses and Note 9 Cash and cash equivalents 127 Note 36 Contingencies and legal claims 111 Note 9 Other interest-bearing current other operating expenses 77 Note 10 Shareholders’ equity 127 assets and long-term receivables 140 Note 37 Transactions and agreements Note 10 Impairment changes and non- with related parties 112 Note 11 Deferred tax 128 Note 10 Cash and cash equivalents 140 recurring items 78 Note 38 Salary and other remuneration Note 12 Pension cost and pension Note 11 Equity 140 Note 11 Financial income and financial to the board of directors, liabilities 129 expenses 78 Note 12 Interest-free debt and liabilities 141 nomination committee, CEO Note 13 Debt and other liabilities to Note 13 Interest-bearing debt 141 Note 12 Tax 79 and other senior executive at Group companies 130 Aker ASA 114 Note 14 Risk 141 Note 13 Property, Plant and Equipment 83 Note 14 External debt and other liabilities 130 Note 39 Shares owned by the Board Note 14 Intangible assets 85 Note 15 Mortgages and guarantee Independent auditor’s report 142 of Directors, CEO and other Note 15 Shares and investments in obligations 131 employees in the Executive team 115 associated companies 89 Note 16 Financial market risk 131 Note 40 Government grants 115 Note 16 Investments in joint ventures 91 Note 17 Shares owned by board Note 41 Classification of reserves and Note 17 Other shares and funds 92 members/executives 131 contingent resources (unaudited) 115 Note 18 Interest-bearing long-term Note 18 Salary and other remuneration Note 42 Events after the balance sheet receivables 93 to the Board of Directors, date 117 Note 19 Other non-current assets 93 nomination committee, the President and CEO, and other Note 20 Inventory and biological assets 94 senior executives in Aker ASA 131 Note 21 Order backlog construction Note 19 Legal disputes 131 contracts and other contracts 94 Note 20 Events after the balance sheet Note 22 Trade and other short-term date 131 interest-free receivables 95 Directors’ responsibility statement 132 Independent auditor’s report 133 Aker ASA annual report 2013 53 Annual accounts – Aker group
Income statement and total comprehensive income
Income statement Total comprehensive income
Amounts in NOK million Note 2013 2012 Amounts in NOK million Note 2013 2012
Continuing operations Result for the year 832 (137) Operating revenue 8 8 086 5 952 Cost of goods and changes in inventory (3 172) (2 406) Other comprehensive income, net of income tax Wages and other personnel expenses 9 (1 305) (1 290) Items that will not be reclassified to income statement: Beskjæres 76 mm fra venstre før trykk >> Other operating expenses 9 (3 325) (2 776) Defined benefit plan actuarial gains (losses) 30 (19) 11 Operating profit before depreciation and amortisation 284 (519) Defined benefit plan actuarial gains (losses) in associates and joint ventures 9 68 Depreciation and amortisation 13,14 (1 415) (896) Impairment changes and other non-recurring items 10,13,14 (836) (2 337) Items that will not be reclassified to income statement (10) 79
Operating profit 8 (1 967) (3 752) Items that subsequently may be reclassified to income Financial income 11 916 330 statement: Financial expenses 11 (1 226) (830) Changes in fair value of available for sale financial assets 346 (11) Share of profit of associated companies 15,16 979 1 146 Changes in fair value of cash flow hedges (22) (22) Profit before tax 8 (1 297) (3 106) Changes in fair value of available for sale financial assets Income tax expense 12 2 129 2 969 transferred to profit and loss (145) 1 Profit for the year continued operations 8 832 (137) Currency translation differences 372 (238) Changes in other comprehensive income associates and joint ventures 632 (161) Discontinued operations Loss for the period from discontinued operations net of Items that subsequently may be reclassified to income tax 7 - - statement 1 184 (432) Result for the year 832 (137) Change in other comprehensive income, net of tax 11,12,27 1 174 (353) Total comprehensive income for the year 2 006 (490) Attributable to: Equity holders of the parent 791 3 Attributable to: Minority interests 26 41 (140) Equity holders of the parent 1 746 (298) Result for the year 832 (137) Minority interests 260 (193) Total comprehensive income for the year 2 006 (490) Average number of shares 25 72 320 121 72 126 991
Earnings per share 1) 25 Earnings per share continuing business 10.94 0.04 Earnings per share discontinued business - - Earnings per share 10.94 0.04
1) Profit attributable to equity holders of the parent/average number of shares. 54 Aker ASA annual report 2013 Annual accounts – Aker group
Balance sheet as at 31 December
Amounts in NOK million Note 2013 2012 Amounts in NOK million Note 2013 2012
ASSETS EQUITY AND LIABILITIES Property, plant and equipment 13 15 394 12 562 Share capital 25 2 026 2 026 Intangible assets 14 7 637 7 802 Own shares (1) (25) Deferred tax assets 12 1 167 347 Total paid-in capital 25 2 025 2 001 Shares and investments in associated companies 15 8 472 5 753 Translation and other reserves 27 401 (565) Investments in joint ventures 16 663 689 Retained earnings 8 032 8 024 Other shares and funds 17 837 787 Total equity attributable to equity holders of the parent 10 458 9 460 Beskjæres 76 mm fra venstre før trykk >> Interest-bearing long-term receivables 5,18 1 904 1 483 Pension assets 30 4 15 Minority interests 26 10 119 9 350 Other non-current assets 19 224 264 Total equity 20 577 18 810 Total non-current assets 36 303 29 702 Interest-bearing loans 5,28 17 315 11 264 Deferred tax liabilities 12 1 478 1 652 Inventories and biological assets 20 388 438 Pension liabilities 30 260 263 Projects under construction 21 65 378 Other interest-free long-term liabilities 31 792 829 Trade receivables and other interest-free receivables 22 1 791 1 267 Non-current provisions 32 941 926 Calculated tax receivable 12 1 448 1 283 Total non-current liabilities 20 786 14 935 Derivatives 35 6 6 Interest-bearing short-term debt 5,28 1 668 2 291 Interest-bearing short-term receivables 23 423 28 Trade and other payables 34 2 642 2 413 Cash and cash equivalents 5,24 5 834 5 471 Income tax payable 12 133 43 Total current assets 9 955 8 871 Derivatives 35 141 54 Total assets 8 46 257 38 573 Current provisions 32 310 27 Total current liabilities 4 894 4 828 Total liabilities 25 680 19 763 Total equity and liabilities 8 46 257 38 573
Oslo, 27 February 2014 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2013 55 Annual accounts – Aker group
Statement of changes in equity
Total Total equity of translation equity Total paid- Translation Fair value Hedging and other Retained holders of Minority Total Amounts in NOK million Note in capital reserve reserves reserves reserves earnings the parent interests equity
Balance as at 31 December 2011 - as previously reported 2 026 (396) 186 4 (207) 9 125 10 945 9 206 20 151 Implementation effect of revised IAS 19 - - - - - (170) (170) (49) (219) Balance as at 1 January 2012 - restated 25-27 2 026 (396) 186 4 (207) 8 956 10 775 9 157 19 932 Beskjæres 76 mm fra venstre før trykk >> Profit for the year - 3 3 (140) (137) Other comprehensive income - (362) 21 (18) (359) 58 (300) (53) (353) Total comprehensive income - (362) 21 (18) (359) 61 (298) (193) (490) Transactions with owners, recognised directly in equity: Dividends - (794) (794) (204) (998) Own shares (25) - (154) (179) - (179) Share-based payment transactions - (2) (2) - (2) Associated companies' acquisition of own shares and new equity - 10 10 3 13 Total transactions with owners, recognised directly in equity (25) - (940) (965) (201) (1 166) Changes in ownership in subsidiaries without loss of control: New minority, acquisition of minority 6,26 - (43) (43) 43 - Issuance of shares in subsidiary 27 - (9) (9) 544 535 Total changes in ownership of subsidiaries without loss of control - (52) (52) 587 535 Balance as at 31 December 2012 25-27 2 001 (758) 207 (14) (565) 8 024 9 460 9 350 18 810 Profit for the year - 791 791 41 832 Other comprehensive income - 674 202 90 966 (12) 954 220 1 174 Total comprehensive income - 674 202 90 966 780 1 746 260 2 006 Transactions with owners, recognised directly in equity: Dividends - (868) (868) (258) (1 126) Own shares 1 - 3 4 - 4 Share-based payment transactions - (6) (6) - (6) Associated companies' acquisition of own shares and new equity - 3 3 1 5 Total transactions with owners, recognised directly in equity 1 - (867) (866) (256) (1 123) Change in ownership of subsidiary without loss of control: New minority, acquisition of minority (including own shares) 6,26 23 - 118 141 (93) 48 Issuance of shares in subsidiary 26 - (22) (22) 898 877 Total changes in ownership of subsidiaries without loss of control 23 - 96 119 805 925 Sale of shares in subsidiaries 7 - - - (41) (41) Balance as at 31 December 2013 25-27 2 025 (84) 409 76 401 8 032 10 458 10 119 20 577 56 Aker ASA annual report 2013 Annual accounts – Aker group
Cash flow statement
Amounts in NOK million Note 2013 2012
Profit before tax (1 297) (3 106) Net interest expenses (+) 11 616 326 Sales losses/gains (-) and write-downs 10,13,14 758 2 337 Unrealised foreign exchange gain/loss and other non-cash items 11 (409) (6) Depreciation and amortisation 13,14 1 415 896 Share of earnings in associated and joint venture companies 15,16 (979) (1 146) Dividend received from associated and joint venture companies 15,16 994 739 Beskjæres 76 mm fra venstre før trykk >> Expensed dry wells previously capitalised 14 1 151 1 116 Changes in other net operating assets and liabilities 34 (12) 816 Cash flow from operating activities before interest and tax 2 236 1 974 Interest paid 11 (877) (709) Interest received 11 122 188 Taxes refunded 12 1 318 1 443 Taxes paid 12 (127) (96) Net cash flow from operating activities 8 2 671 2 801
Proceeds from sales of property, plant and equipment 13 928 578 Proceeds from sales of shares and other equity investments 15,17 259 5 Disposals of subsidiaries, net of cash disposed 7 4 95 Acquisition of subsidiaries, net of cash acquired 6 (105) (267) Acquisitions of property, plant and equipment 13,14 (5 972) (6 426) Acquisitions of shares and equity investments in other companies 15,16,17 (2 035) (97) Net cash flow from other investments 18,23 (43) (49) Net cash flow from investing activities 8 (6 965) (6 160)
Proceeds from issue of long-term interest-bearing debt 28 9 066 5 967 Proceeds from issue of short-term interest-bearing debt 28 1 485 2 179 Repayment of long-term interest-bearing debt 28 (3 259) (1 129) Repayment of short-term interest-bearing debt 28 (2 465) (2 964) Net repayment and issue of interest-bearing debt 4 826 4 053 New equity 26 877 535 Own shares 25 (2) (179) Dividends paid 25,26 (1 126) (998) Net cash flow from transactions with owners (251) (642) Net cash flow from financing activities 8 4 575 3 411
Net change in cash and cash equivalents 280 52 Effects of changes in exchange rates on cash 83 (44) Cash and cash equivalents as at 1 January 5 471 5 463 Cash and cash equivalents as at 31 December 24 5 834 5 471 Aker ASA annual report 2013 57 Annual accounts – Aker group
Notes to the financial statements
Note 1 Corporate information ples, the group performs annual impairment tests to group’s objectives, the principles and processes for determine whether goodwill and intangible assets measuring and managing risk, and the group’s capi Aker ASA is a Norwegian company, domiciled in ests in associated companies and jointly controlled recorded in the balance sheet have suffered any tal management. Norway. Aker’s 2013 consolidated financial state entities. impairment. The estimated recoverable amount for ments include the financial statements of the par Aker ASA is listed on the Oslo stock exchange the cash-generating unit is determined based on (g) Contingent assets and liabilities ent company, Aker ASA, its subsidiaries, and inter with the ticker “AKER”. the present value of budgeted cash flows or esti As a result of their extensive worldwide operations, mated sales value less cost to sell if higher. See group companies sometimes become involved in Note 14. legal disputes. Provisions have been made to cover the expected outcomes of the disputes where neg Note 2 Basis for preparation and changes in accounting policies (d) Tax ative outcomes are likely and reliable estimates can Beskjæres 76 mm fra venstre før trykk >> The group is subject to income taxes in numerous be prepared. However, the final outcome of these Statement of compliance recognised in the period in which the estimates are jurisdictions. Significant judgment is required to cases will always be subject to uncertainties and Aker has prepared its consolidated financial state revised and in any future periods that are affected. determine provisions for income taxes worldwide. resulting liabilities may deviate from booked provi ments in accordance with International Financial A number of the group’s accounting policies and In the course of ordinary operations there are many sions. See Note 36. Reporting Standards (IFRS) and associated inter disclosures require the measurement of fair values. transactions and calculations for which the ultimate pretations as determined by the EU as at 31 The operative companies in the group have their tax determination is uncertain. See Note 12. (h) Proven and probable oil and gas reserves December 2013 and Norwegian disclosure require own guidelines for fair value measurement. Valua Oil and gas reserves are estimated by the group’s ments pursuant to the Norwegian accounting act tions from third parties are used when appropriate. (e) Pension obligations experts in accordance with industry standards. The as at 31 December 2013. In Aker ASA, fair value measurements are regularly The present value of pension obligations depends estimates are based on the subsidiary Det norske The consolidated financial statements have reviewed by Investment directors and CFO. See on a number of factors that are determined on an oljeselskap’s own assessments of internal informa been prepared on a historical cost basis, with a few also Note 4 and Note 35. actuarial basis using several actuarial assumptions. tion and information received from the operators. In exceptions described in Note 4. Areas in which, in applying the group’s account The assumptions used in determining net pension addition, reserves are certified by an independent The consolidated financial statements for the ing principles, there tends to be uncertainty as to costs and income, include an applicable discount third party. Proven and probable oil and gas 2013 accounting year were approved by the Board material estimations and critical assumptions and rate. Any changes in these assumptions will impact reserves consist of the estimated quantities of of directors on 27 February 2014. The annual assessments, are described in the following para the calculated pension obligations. crude oil, natural gas and condensates shown by accounts will be submitted to Aker’s annual general graphs and in relevant notes to the accounts. Esti The group determines the appropriate discount geological and technical data to be recoverable meeting on 11 April 2014 for final approval. mates and their underlying assumptions are rate at the end of each year. This is the interest rate with reasonable certainty from known reservoirs assessed continuously. The group’s operational that is to be used to determine the present value of under existing economic and operational condi Functional currency and presentation currency companies operate in different markets, and are estimated future cash outflows expected to be tions, i.e. on the date that the estimates are pre The consolidated financial statements are pre thus affected differently by the uncertainties that required to fulfil the pension obligations. In deter pared. Current market prices are used in the esti sented Norwegian kroner and in millions (NOK mil characterise the different markets at year-end. mining the appropriate discount rate, the group mates, except for existing contractual future price lion). The Norwegian krone (NOK) is the functional considers the interest rates of high-quality corpo changes. currency of the parent company. As a result of (a) Revenue recognition rate bonds denominated in the currency in which Proven and probable reserves are used to esti rounding differences, amounts and percentages The group applies the percentage-of-completion the benefits are payable and that have terms to mate production volumes, which is used as the may not add up to the total. method in accounting for its construction con maturity approximating the terms of the related basis for depreciation calculations. Reserve esti tracts. A significant uncertainty is the expected pension liability. The discount rate and other key mates are also used as the basis for impairment Use of estimates and assumptions total project profit. Use of the percentage-of-com assumptions for determining the pension obliga testing of licence-related assets. Changes in petro The preparation of annual financial statements in pletion method requires the group to estimate the tions are disclosed in Note 30. leum prices and cost estimates may change reserve conformity with IFRS requires management to construction performed to date as a proportion of estimates and, accordingly, economic cut-off. make judgments, estimates and assumptions that the total construction to be performed. See Note (f) Financial instruments Changes to reserve estimates may also be caused affect both the application of accounting principles 21. The group is exposed to the following risks result by updated production and reservoir information. and the reported amounts of assets and liabilities, ing from its use of financial instruments: Future changes to proven and probable oil and gas income and expenses. Actual results may differ (b) Warranty provisions reserves may have a material effect on depreciation, from amounts arrived at based on these assump Based on past experience, the group has made ■■ Credit risk life of field, impairment of licence-related assets, tions. Estimates and underlying assumptions are warranty reserve provisions on completed con ■■ Liquidity risk and operating results. See Note 13 and Note 14. reviewed and assessed on an on-going basis, and tracts. Provisions are presented in Note 32. ■■ Market risk (including currency- and interest risk). are based on historical experience, consultations (i) Acquisition costs - exploration with experts, trends and other methods which (c) Impairment testing of goodwill and intangible Note 5 and Note 35 present information about The accounting policy of Aker’s subsidiary Det management considers reasonable under the cir assets with indefinite useful lives. the group’s exposure to each of the risk above, the norske oljeselskap is to temporarily recognise cumstances. Changes to accounting estimates are In accordance with applicable accounting princi 58 Aker ASA annual report 2013 Annual accounts – Aker group
expenses relating to the drilling of exploration (l) Rig contracts losses. In accordance with IAS 19R, all actuarial Thus, the net interest cost comprises the inter wells in the balance sheet pending an evaluation Aker’s subsidiary Det norske oljeselskap has obli gains and losses are to be recognised in other est on the liability and the return on the pension of potential oil and gas discoveries (successful gations relating to rig contracts. Rig contracts are comprehensive income (OCI). Returns on pension plan assets, both calculated using the discount efforts method). If no reserves are discovered, or subject to impairment tests based on change in plan assets were previously calculated on the rate. Changes in net pension liabilities due to pre if recovery of the reserves is considered techni future rig rates and utilisation. See Note 29. basis of a long-term expected return on the pen mium payments and pension benefits are taken cally or commercially unviable, the costs of explo sion plan assets. The amendments to IAS 19 into consideration. The difference between the ration wells are expensed. Decisions as to Changes in accounting policies Employee benefits have upon adoption replaced actual return on the pension plan assets and the whether this expenditure should remain capital As from 1 January 2013, the group has imple interest cost and expected return on plan assets recognised return is recognised against OCI on an ised or expensed in the period may have a mate mented revised IAS 19 Employee benefits, IFRS 13 of defined benefit plans with a net interest ongoing basis. The changes in IAS 19R are made rial effect on the operating result for the period. Fair Value Measurement and amendments to IAS 1 amount which is calculated by applying the dis with retrospective application. The main changes See Note 14. Presentation of Financial Statements. In December count rate to the net defined benefit liability to previously reported figures are shown in the 2013, the group early adopted changes in IAS 36 (asset). tables below. (j) Decommissioning and removal obligations Impairment of assets. Aker’s subsidiary Det norske oljeselskap has obli gations relating to decommissioning and removal Adopting IFRS 13 Fair value measurement: Income statement of offshore installations at the end of production IFRS 13 establishes a single framework for meas Beskjæres 76 mm fra venstre før trykk >> periods. Obligations associated with decommis uring fair value and making disclosures about fair Amounts in NOK million 2012 sioning and removals of long-term assets are rec value measurements when such measurements are ognised at fair value on the date they are incurred. required or permitted by other IFRSs. It unifies the At the initial recognition of an obligation, the definition of fair value as the price that would be Wages and other personnel expenses 5 expense is capitalised as production plant and received to sell an asset or paid to transfer a liabil Share of earnings in associated companies 40 depreciated over the useful life of the asset. It is ity in an orderly transaction between market partici Income tax expense 2 difficult to estimate the expenses of decommis pants at the measurement date. It replaces and Profit for the period 46 sioning and removal, which are based on applica expands the disclosure requirements about fair ble laws and regulations, and dependent on tech value measurements in other IFRSs, including IFRS Other comprehensive income, net of income tax nological developments. Many decommissioning 7. As a result, the Group has included additional Defined benefit plan actuarial gains (losses) 11 and removal activities will take place in the distant disclosures in this regard (see Note 35). Defined benefit plan actuarial gains (losses) in associated companies 68 future, and the technology and related expenses In accordance with the transitional provisions of are constantly changing. The estimates include IFRS 13, the group has applied the new fair value Other comprehensive income, net of income tax 79 costs based on expected removal concepts and measurement guidance prospectively, and has not estimated expenses of maritime operations, hiring provided any comparative information on new dis Balance sheet of heavy-lift barges and of drilling rigs. As a result, closures. Notwithstanding the above, the change the initial recognition of the obligation in the had no significant impact on the measurements of Amounts in NOK million 01.01.2012 31.12.2012 accounts, the related expenses capitalized in the the Group’s assets and liabilities. balance sheet for decommissioning and removal Investments in associated companies (167) (60) and subsequent adjustment of these items involve Amendments to IAS 1 Presentation of Financial careful consideration. Significantly changes in esti Statements: Deferred tax assets 23 21 mates could affect future financial results. See The presentation of other comprehensive income Total assets (144) (38) Note 32. (OCI) items has changed. Items that may be reclas sified to profit and loss are presented separately Total equity attributable to equity holders of the parent (170) (77) (k) Income tax from those that would never be reclassified to profit Aker incurs an income-tax payable and/or earns a and loss. Minority interests (49) (18) considerable tax receivable. The group also recog Total equity (219) (94) nises changes in deferred tax or deferred tax ben Amendments to IAS 36 Impairment of Assets: Pension liabilities 76 56 efits. These figures are based on management’s This amendment removed certain disclosures of Total equity and liabilities (144) (38) interpretation of applicable laws and regulations, the recoverable amount of CGUs which had been and relevant court decisions. The quality of these included in IAS 36 by the issue of IFRS 13. estimates are largely dependent on management’s Although the amendment will not become manda ability to apply what is sometimes a very complex tory for the group until 1January 2014, the group set of rules, its ability to identify changes to exist has decided to adopt the amendment as of 1 Janu ing rules and, in the case of deferred tax benefits, ary 2013. its ability to project future earnings from which a loss carry-forward may be deducted for tax pur Revised IAS 19 Employee benefits: poses. See Note 12. The Group has previously employed the ”corridor” method of accounting for actuarial gains and Aker ASA annual report 2013 59 Annual accounts – Aker group
Note 3 New standards and interpretations not yet adopted 2) the investor is exposed to variable returns from hand, in isolation, the shareholder’s agreement with the investee, and the Norwegian State relating to the holding com A number of standards, amendments to standards as associated companies, and pursuant to IAS 27 3) decision-making power allows the investor to pany Aker Kvaerner Holding AS is a factor indicat and interpretations are not yet effective for the are recorded in accordance with the equity method affect its variable returns from the investee. ing that Aker does not have control. period ended 31 December 2013, and have not in Aker’s consolidated financial statements for Based on an overall assessment, the conclusion been applied in preparing these consolidated finan 2013. See Note 15 for financial information on In 2013, the board and management of Aker have is that Aker does have de facto control over both cial statements. associated companies. considered whether the company’s indirect owner AKSO and Kvaerner. Further, Aker has concluded The implementation of IFRS 9 Financial Instru Since the implementation of IFRS in Europe in ship interest in AKSO and Kvaerner is sufficient to that, based on an IFRS 10 assessment, this de ments may result in some amendments to the 2005, uncertainty has remained about whether the give it de facto control under IFRS 10. The primary facto control has existed since before the reduction measurement and classification of financial instru control assessment under IAS 27 must be based on consideration has been whether Aker is able to in ownership in 2007. Accordingly, AKSO and ments. The implementation date for IFRS 9 has existing legal rights or whether “de facto control” control the outcome of voting at the companies’ Kvaerner will be treated as subsidiaries in Aker’s been postponed indefinitely (but is expected to be must also be taken into consideration. In October general meetings. After careful consideration of this consolidated financial statements following imple set to 1 January 2017 or 2018 during 2014). 2005, the IASB issued a statement clarifying that question based on both the absolute and relative mentation of IFRS 10 on 1 January 2014. In accord IFRS 10 Consolidated Financial Statements, IAS 27 is, in principle, intended to include de facto ownership interests and attendance at previous ance with the transitional requirements of IFRS 10, IFRS 11 Joint Arrangements and IFRS 12 Disclo control. The statement is the only one the IASB has general meetings of AKSO/Kvaerner and compara the consolidated financial statements for 2014 will ble companies, it might be claimed that such con contain comparative figures for 2013 that are Beskjæres 76 mm fra venstre før trykk >> sures of Interests in Other Entities, as well as ever issued in this form, and is marked by the haste amendments to the standards IAS 27 Separate associated with the implementation of IFRS in trol exists. restated as though control has existed since before Financial Statements and IAS 28 Investments in Europe at that time. Since plans already existed at Consideration has also been given to all other the previously discussed reduction in ownership in Associates and Joint Ventures, will take effect on the time to issue an entirely new standard on con relevant factors mentioned in IFRS 10 that may help 2007. 1 January 2014. See description below. solidation (IFRS 10), the IASB statement was not to illuminate the question of control further. Factors followed by specific guidance. The statement was indicating that Aker has control include Aker’s rep The effect on Aker’s consolidated financial state- Implementation of IFRS 10 Consolidated Finan- criticised, and in the autumn of 2006 the Federation resentation on the nomination committees, the fact ments cial Statements – consolidation of Aker Solu- of European Accountants (FEE) asked the interpre that leading employees have previously worked for The consolidation of AKSO and Kvaerner will have tions and Kvaerner tation body IFRIC to provide concrete guidance to Aker, the fact that the companies themselves con a considerable effect on Aker’s consolidated finan As at the end of 2006, Aker ASA (“Aker”) owned facilitate consistent practice in the area. No such sider Aker an active owner, etc. The fact that Aker cial statements. Estimates of some of the main 50.1 per cent of Aker Kvaerner ASA (now Aker interpretation was given. ASA’s CEO, Øyvind Eriksen, is the executive board effects on Aker’s group figures for 2013 are given Solutions ASA – “AKSO”), and the company was Accordingly, in the period 2005 to 2013, compa chairman of AKSO is a further argument for Aker below. fully consolidated in Aker’s consolidated financial nies have had to deal with the fact that the concept having de facto control over AKSO. On the other statements for 2006. In January 2007, Aker of de facto control exists under IAS 27, but have reduced its ownership interest from 50.1 per cent had great freedom to define their own accounting 2013 2013 to 40.1 per cent, and AKSO was therefore treated practice to implement this term. Practice has shown Amounts in NOK billions IAS 27 IFRS 10 Amendment as an associated company and recorded in Aker’s that very few companies have concluded that de consolidated financial statements in accordance facto control exists in cases involving an ownership Operating income 8.1 61.5 + 53.4 with the equity method as from this date. In interest smaller than 48 per cent to 49 per cent. In Operating profit before depreciation and amortisation 0.3 4.2 +3.9 December 2007, the ownership interest in AKSO accordance with this practice, Aker’s accounting Profit for the year 0.8 1.2 +0.4 was transferred to Aker Holding AS (now Aker principle has been that de facto control is deemed Kvaerner Holding AS –“AKH”), and 40 per cent of to exist only in highly marginal cases where the the shares in AKH were sold to the Norwegian ownership interest is just below 50 per cent and Total assets 46.3 94.1 +47.8 State (30 per cent) and SAAB/Investor (10 per ownership is otherwise dispersed. This principle has Total equity attributable to equity holders of the parent 10.5 8.6 -1.8 cent). In 2011, Aker purchased 10 per cent of the led to the conclusion that the increase in Aker’s Minority interests 10.1 20.2 +10.1 shares in AKH from SAAB/Investor, and since then ownership interest in AKSO to 46.3 per cent as from has owned 70 per cent of AKH, while the Norwe the end of November 2013 does not imply de facto gian State owns the remaining 30 per cent. AKH is control in 2013 pursuant to IAS 27. No need has been identified for material changes mentation of IFRS 11 will not have a material effect. treated as a subsidiary in Aker’s consolidated to the accounting principles of Aker, AKSO or financial statements. Since the demerger of Future accounting under IFRS 10 Kvaerner as a result of the future consolidation of IFRS12 Disclosures of Interests in Other Entities Kvaerner from AKSO in 2011, AKH has owned 40.3 Unlike the practice under IAS 27, IFRS 10 is more the companies. The group expects to expand the note on subsidi per cent of the shares in AKSO and 41.0 per cent focused on the financial realities than the size of aries, jointly controlled entities and associated of the shares in Kvaerner ASA (Kvaerner). Follow the legal ownership interest. IFRS 10 contains a IFRS 11 Joint Arrangements companies with additional information. ing a transaction in November 2013, Aker also new definition of control, which must be applied Preliminary assessments based on the current owns 6 per cent of AKSO directly, giving Aker a when an investor is to assess whether an invest activities of the undertaking indicate that imple “consolidated” ownership interest in AKSO of 46.3 ment must be consolidated in the consolidated per cent as at 31 December 2013. financial statements. Control has three elements:
The current system of accounting under IAS 27 1) ownership interests give the investor power to The investments in AKSO and Kvaerner are treated direct the relevant activities of the investee, 60 Aker ASA annual report 2013 Annual accounts – Aker group
Note 4 Accounting principles profit includes the amount arrived at for impairment ■■ Profit or loss items are translated using the changes and non-recurring items. average exchange rates for the period (if the The accounting principles presented below have the group’s balance sheet value is reduced to zero average exchange rates for the period do not been applied consistently for all periods and com and additional losses are not recognised unless the Dividends received from associated companies provide a fair estimate of the transaction rate, panies that are presented in the consolidated finan group has incurred or guaranteed obligations with Dividends received from associated companies are the actual transaction rate is used). cial statements. Comparative figures have been respect to the associated company. If control is presented as part of net cash flow from operating Translation differences arising from the transla reclassified in accordance with this year’s presen achieved by step acquisition, goodwill is measured activities in the cash flow statement. tion of net investments in foreign activities and from tation. on the date of acquisition, and any changes in the related hedging objects are specified as translation value of previously held equity interests are recog Elimination of transactions upon consolidation differences in other comprehensive income, and are Group accounting and consolidation principles nised as profits or losses. Intragroup balances and transactions, and any specified under shareholders’ equity. When a for Subsidiaries unrealised gains and losses or revenues and eign entity is sold, translation differences are recog Subsidiaries are companies where Aker controls Interests in joint ventures expenses arising from intragroup transactions, are nised in the profit and loss account as part of the operating and financial policies. Potential voting A joint venture is a contractual arrangement eliminated in preparing the consolidated financial gain or loss on the sale. Foreign exchange gains or rights that may be exercised are considered when whereby two or more parties undertake an eco statements. Unrealised gains arising from transac losses on receivables from and liabilities payable to assessing whether an entity is controlled. Subsidi nomic activity that is subject to joint control. tions with equity accounted investees are elimi a foreign entity are recognised in the profit and loss, nated against the investment to the extent of the except when settlement is neither planned nor likely Beskjæres 76 mm fra venstre før trykk >> aries are included in the consolidated accounts Jointly controlled entities are accounted for from the day control is achieved and until control using the equity method and the acquisition cost is group’s interest in the investee. Unrealised losses to occur in the foreseeable future. Such foreign ceases. Wherever necessary, subsidiaries’ princi recognised as the initial value. are eliminated in the same way as unrealised gains, exchange gains and losses are considered to form ples for financial statement preparation are Aker has interests in licenses that do not consti but only to the extent that there is no evidence of part of the net investment in the foreign activity, and adjusted to ensure compatibility with the group tute separate companies. All of these interests impairment. are recognised in other comprehensive income as accounting principles. relate to licenses on the Norwegian continental shelf translation differences. Acquisitions of companies that meet the defini that are defined as jointly controlled assets pursuant Foreign currency translations and transactions tion of a business combination are recognised using to IAS 31. The group recognises investments in Functional currency: Items are initially recorded in Transactions with related parties the acquisition method. See further description in jointly controlled assets (oil and gas licenses) by the financial statements of each group subsidiary in All transactions, agreements, and business deal the section on Intangible assets. Acquisitions of proportionate consolidation, by reporting its share the subsidiary’s functional currency, i.e. the cur ings with related parties are conducted on normal companies which are not defined as business com of related revenues, expenses, assets, liabilities and rency that best reflects the economic substance of market terms. binations are recorded as asset acquisitions. The cash flows under the respective items in the group’s the underlying events and circumstances relevant cost of such purchases is allocated between the financial statements. to that subsidiary. The consolidated financial state Fair value measurement individual identifiable assets and liabilities acquired ments are presented in Norwegian kroner (NOK), Fair value is the price that would be received to sell based on their fair value on the acquisition date. Minority interests the functional currency of the parent company. an asset or paid to transfer a liability in an orderly Goodwill is not recognised in connection with such Minority interests have been disclosed separately Transactions and balances: Foreign currency transaction between market participants on the acquisitions, nor is deferred tax recognised in con from the parent company owners’ equity and liabili transactions are translated into the functional cur measurement date. The fair value measurement is nection with differences arising in the recognition of ties in the balance sheet, and are recorded as a rency of the respective group companies using the based on the presumption that the transaction to such assets. separate item in the consolidated profit and loss exchange rates prevailing on the date of each trans sell the asset or transfer the liability takes place account. Acquisitions of minority interests are action. Receivables and liabilities in foreign curren either: Investments in associated companies accounted for as transactions with equity holders cies are translated into the functional currency using ■ The group’s investment in an associated company is in their capacity as equity holders and therefore no the exchange rate on the balance sheet date. For ■ In the principal market for the asset or liability, accounted for using the equity method of account goodwill, gains or losses are recognised as a result eign currency exchange gains and losses resulting or ■ ing, and is initially recognised at cost. An associated of such transactions. from the settlement of such transactions and from ■ In the absence of a principal market, in the company is defined as a company over which the the translation of monetary assets and liabilities most advantageous market for the asset or group has significant influence but which is not a EBITDA denominated in foreign currencies are recognised in liability subsidiary or a jointly controlled enterprise. Potential Aker defines EBITDA as operating profit before the profit and loss account. Foreign currency voting rights that may be exercised are considered depreciation, amortisation, impairment changes, exchange differences arising through the translation The principal or the most advantageous market when assessing whether an entity is under signifi and non-recurring items, as presented in the con of operating items are included in operating profit in must be accessible to the Group. cant influence. Investments include goodwill upon solidated profit and loss account. the profit and loss account, while those arising The fair value of an asset or a liability is meas acquisition less accumulated impairment losses. The through the translation of financial assets and liabili ured using the assumptions that market participants consolidated financial statements reflect the group’s Impairment changes and non-recurring items ties are recorded net as a financial item in the profit would use when pricing the asset or liability, assum share of profits/losses on the operations of the asso Impairment changes and non-recurring items and loss account. ing that market participants act in their economic ciated company, its share of costs and its share of include write-downs of goodwill, significant write- Group companies: Financial statements of group best interest. equity changes – after restatement to comply with downs and reversals of write-downs on real estate, companies whose functional currencies are different A fair value measurement of a non-financial the group’s accounting principles – from the time facilities, and equipment, significant losses and from the presentation currency (NOK) are translated asset takes into account a market participant’s abil significant influence is established until such influ gains on the sale of operating assets, restructuring into NOK in the following way: ity to generate economic benefits by using the asset ence ceases. When the group’s share of losses costs, and other material items that are not in its highest and best use or by selling it to another ■ exceeds the balance sheet value of the investment, deemed to be of a recurring nature. Operating ■ Balance sheet items are translated using the market participant that would use the asset in its exchange rates on the balance sheet date highest and best use. Aker ASA annual report 2013 61 Annual accounts – Aker group
The Group uses valuation techniques that are amounts and intends either to settle on a net basis to initial recognition, they are measured at fair nised in profit or loss. On conversion, the financial appropriate in the circumstances and for which or to realize the asset and settle the liability simul value, with the exception of equity investments liability is reclassified to equity; no gain or loss is sufficient data are available to measure fair value, taneously. The group has the following non-deriva without quoted prices whose fair value cannot be recognised on conversion. maximising the use of relevant observable inputs tive financial assets: financial assets at fair value reliably measured, which are measured at costs. and minimising the use of unobservable inputs. through profit or loss, loans and receivables and Changes in fair value are recognised in other com Derivative financial instruments, including All assets and liabilities for which fair value is available for sale financial assets. The group has no prehensive income, and are presented as a fair hedge accounting measured or disclosed in the financial statements held-to-maturity financial assets. The principles value reserve within equity. This does not apply to The group holds derivative financial instruments to are categorised within the fair value hierarchy, used in the recognition of financial income and impairment losses (see separate paragraph). When hedge its foreign currency and interest rate risk described below, based on the lowest level input expenses are described in a separate paragraph. an investment is derecognised, the cumulative gain exposures. Derivatives are initially recognised at that is significant to the fair value measurement as a or loss in the fair value reserve is transferred to fair value, and attributable transaction costs are whole: Financial assets at fair value through profit or loss profit or loss. recognised in profit or loss as incurred. Subse A financial asset is classified at fair value through quent to initial recognition, derivatives are meas ■■ Level 1 Quoted (unadjusted) market prices in profit or loss if it is classified as held for trading or is Non-derivative financial liabilities ured at fair value, and changes therein are active markets for identical assets or liabilities. designated as such upon initial recognition. Finan The group initially recognises issued debt securi accounted for as described below. ■■ Level 2 Valuation techniques for which the low cial assets are designated at fair value through ties and subordinated liabilities on their origination On initial designation of the hedge, the group est level input that is significant to the fair value profit or loss if the group manages such invest date. All other financial liabilities are initially recog formally documents the relationship between the Beskjæres 76 mm fra venstre før trykk >> measurement is directly or indirectly observa ments and makes purchase and sale decisions nised on the trade date on which the group hedging instrument(s) and hedged item(s), including ble. based on their fair value in accordance with the becomes a party to the contractual provisions of the risk management objectives and strategy in ■■ Level 3 Valuation techniques for which the low group’s documented risk management or invest the instrument. The group derecognises a financial undertaking the hedge transaction, together with est level input that is significant to the fair value ment strategy. Attributable transaction costs are liability when its contractual obligations are dis the methods that will be used to assess the effec measurement is unobservable. recognised in profit or loss as incurred upon initial charged, cancelled or expire. tiveness of the hedging relationship. The group recognition. Financial assets at fair value through Financial assets and liabilities are offset and the assesses, both at the inception of the hedge rela As regards assets and liabilities that are recognised profit or loss are measured at fair value, and net amount presented in the statement of financial tionship and on an on-going basis, whether the in the financial statements on a recurring basis, the changes therein are recognised in profit or loss. position when, and only when, the group has a legal hedging instruments are expected to be effective in Group determines whether transfers have occurred right to offset the amounts and intends either to offsetting the changes in the fair value or cash flows between levels in the hierarchy by re-assessing Loans and receivables settle on a net basis or to realise the asset and set of the respective hedged items during the period for categorisation (based on the lowest level input that Loans and receivables are financial assets with tle the liability simultaneously. which the hedge is designated, and whether the is significant to the fair value measurement as a fixed or determinable payments that are not quoted The group has the following non-derivative actual results of each hedge are within a range of whole) at the end of each reporting period. in an active market. Such assets are initially recog financial liabilities: loans and borrowings, bank over 80-125 percent. For a cash flow hedge of a forecast For the purpose of fair value disclosures, the nised at fair value plus any directly attributable drafts, and trade and other payables. Such financial transaction, the transaction should be probable to group has determined asset and liability classes transaction costs. Subsequent to initial recognition, liabilities are initially recognised at fair value plus occur and should present an exposure to variations based on the nature, characteristics and risks asso loans and receivables are measured at amortised any directly attributable transaction costs. Subse in cash flows that could ultimately affect reported ciated with each asset or liability and the applicable cost using the effective interest method, less any quent to initial recognition, these financial liabilities net income. level within the fair value hierarchy. See Note 35. impairment losses. are measured at amortised cost using the effective- Loans and receivables comprise trade and other interest method. Embedded derivatives Financial instruments receivables. Cash and cash equivalents comprise Embedded derivatives are separated from the host Non-derivative financial assets cash balances and call deposits with original matur Compound financial instruments contract and accounted for separately if the eco The group initially recognises loans and receivables ities of three months or less. Convertible bonds nomic characteristics and risks of the host contract and deposits on the date that they originate. All The liability component of a compound financial and the embedded derivative are not closely other financial assets (including assets designated Held-to-maturity financial assets instrument is initially recognised at the fair value of related, a separate instrument with the same terms at fair value through profit or loss), are initially rec The group has no held-to-maturity financial assets a similar liability that does not include an equity as the embedded derivative would meet the defini ognised on the trade date on which the group at year-end. If the group has the positive intent and conversion option. The equity component is initially tion of a derivative, and the combined instrument is becomes a party to the contractual provisions of ability to hold debt securities to maturity, then such recognised as the difference between the fair value not measured at fair value through profit or loss. the instrument. The group derecognises a financial financial assets are classified as held-to-maturity. of the compound financial instrument as a whole Changes in the fair value of embedded derivatives asset when the contractual rights to the cash flows Held-to-maturity financial assets are measured at and the fair value of the liability component. Any that can be separated from the host contract are from the asset expire, or it transfers the rights to amortised cost using the effective interest method, directly attributable transaction costs are allocated recognised immediately in profit and loss. receive the contractual cash flows from the finan less any impairment losses. to the liability and equity components in proportion cial asset in a transaction in which substantially all to their initial carrying amounts. Cash flow hedges the risks and rewards of ownership of the financial Available-for-sale financial assets Subsequent to initial recognition, the liability When a derivative is designated as the hedging asset are transferred. Any interest in transferred Available-for-sale financial assets are non-deriva component of a compound financial instrument is instrument in a hedge of the variability in cash financial assets that is created or retained by the tive financial assets that are designated as availa measured at amortised cost using the effective- flows attributable to a particular risk associated group is recognised as a separate asset or liability. ble-for-sale and not classified in any of the previ interest method. The equity component of a com with a recognised asset or liability or a highly prob Financial assets and liabilities are offset and the net ous categories. The group’s investments in equity pound financial instrument is not re-measured sub able forecast transaction that could affect profit or amount presented in the balance sheet when, and securities and certain debt securities are classified sequent to initial recognition. Interest and gains and loss, the effective portion of changes in the fair only when, the group has a legal right to offset the as available-for-sale financial assets. Subsequent losses relating to the financial liability are recog value of the derivative is recognised in other com 62 Aker ASA annual report 2013 Annual accounts – Aker group
prehensive income and presented in the hedging Share capital tion cost of self-constructed assets includes the Depreciation methods, useful lives, and residual reserve in equity. The amount recognised in other Ordinary shares cost of materials and direct labour, any other costs values, are reviewed as at each balance sheet comprehensive income is removed and included in Ordinary shares are classified as equity. Incremen directly attributable to bringing the asset to a work date. profit or loss in the same period as the hedged tal costs directly attributable to the issue of ordi ing condition for its intended use, and the costs of cash flows affect profit or loss under the same line nary shares and share options are recognised as a dismantling and removing the items and restoring Operating assets related to petroleum activities item in the statement of comprehensive income as deduction from equity, net of any tax effects. the site on which they are located. Borrowing costs Exploration and development costs relating to oil the hedged item. Any ineffective portion of associated with loans to finance the construction of and gas fields changes in the fair value of the derivative is recog Repurchase of share capital (treasury shares) property, plant and equipment is capitalised over Capitalised exploration costs are classified as nised immediately in profit or loss. When share capital recognised as equity is repur the period necessary to complete an asset and intangible assets and reclassified as tangible If the hedging instrument no longer meets the chased, the amount of the consideration paid, make it ready for its intended use. Other borrowing assets at the start of the development. For criteria for hedge accounting, expires or is sold, which includes directly attributable costs, net of costs are expensed. When significant parts of an accounting purposes, the field is considered to terminated, exercised, or the designation is any tax effects, is recognised as a deduction from item of property, plant, and equipment have differ enter the development phase when the licensees revoked, then hedge accounting is discontinued equity. Repurchased shares are classified as treas ent useful lives, major components are accounted have decided that recovery of the field’s resources prospectively. The cumulative gain or loss previ ury shares and are presented as a deduction from for as separate items of property, plant, and equip is commercially viable, or when the field has ously recognised in other comprehensive income total equity. When treasury shares are sold or reis ment. matured to a corresponding level. All costs relating and presented in the hedging reserve in equity sued subsequently, the amount received is recog A gain or loss on the disposal of an item of prop to the development of commercial oil and/or gas Beskjæres 76 mm fra venstre før trykk >> remains there until the forecast transaction affects nised as an increase in equity, and the surplus or erty, plant and equipment is determined by compar fields are recognised as tangible assets. Pre-opera profit or loss. When the hedged item is a non-finan deficit resulting from the transaction is transferred ing the disposal proceeds with the carrying amount tional costs are expensed as they incur. cial asset, the amount recognised in other compre to/from retained earnings. of that item; the result is included in operating profit The group employs the “successful efforts” hensive income is transferred to the carrying before depreciation and amortisation. If the amount method to account for exploration and development amount of the asset when the asset is recognised. If Translation reserve is material and is not deemed to be of a recurring costs. All exploration costs (including seismic the forecast transaction is no longer expected to The translation reserve comprises all foreign cur nature, the amount is presented under Impairment shooting, seismic studies and “own time”), with the occur, then the balance in other comprehensive rency differences arising from the translation of the changes and non-recurring items. exception of the acquisition costs of licenses and income is recognised immediately in profit or loss. financial statements of foreign operations, as well An assets that will be disposed of and is classi drilling costs for exploration wells, are charged to In other cases the amount recognised in other com as from the translation of liabilities that hedge the fied as held-for-sale, will be recorded at the lower of expenses as incurred. prehensive income is transferred to profit or loss in group’s net investment in a foreign subsidiary. its carrying amount and its fair value less selling Drilling cost for exploration wells are temporarily the same period that the hedged item affects profit costs. capitalised pending the evaluation of potential dis or loss. Hedging reserve coveries of oil and gas reserves. If no reserves are The hedging reserve applies to cash flow hedges Subsequent costs discovered, or if recovery of the reserves is consid Fair value hedges entered into in order to hedge against changes in The cost of replacing part of an item of property, ered technically or commercially unviable, expenses Changes in the fair value of derivatives designated income and expenses that may arise from plant and equipment is recognised in the carrying relating to the drilling of exploration wells are as fair value hedges are recognised in profit or loss. exchange rate fluctuations. The profit or loss effect amount of the item if it is probable that future eco charged to income. Such costs can remain capital The hedged object is valued at fair value with of such transactions is included in the profit and nomic benefits associated with the asset will flow ised for more than one year. The main criteria are respect to the risk that is hedged. Gains or losses loss account upon recognition of project revenues to the group and its cost can be measured reliably. that there must be definite plans for future drilling in attributable to the hedged risk are recognised in and expenses according to progress based on an The carrying amount of the replaced part is the license, or that a development decision is profit and loss and the hedged object’s carried updated total calculation for the project. The hedg derecognised. The costs of day-to-day mainte expected in the near future. amount is adjusted. ing reserve represents the value of such hedging nance of property, plant and equipment are recog For acquired exploration licenses, an assess instruments that are not yet recognised in the nised in profit and loss as incurred. ment as described above is performed; assessment Economic hedge – derivatives not part of hedge income statement. The fair value reserve com if established plans for further activity exists or eval accounting prises the cumulative net change in the fair value of Depreciation uation if development will be decided in near future. These derivatives are measured at fair value and all available-for-sale financial assets until the invest Depreciation is recognised in profit and loss on a The measurement of recognised prospects/explora changes in value are recognised in profit and loss. ments are derecognised or impaired. straight-line basis over the estimated useful life of tion licenses is then based on a net sales value con each major component of an item of property, plant sideration, based on multiples per barrel. The value Hedging of net investments in foreign operations Property, plant, and equipment and equipment. Leased assets are depreciated per license is calculated by multiplying risked Foreign currency differences arising from the trans Recognition and measurement over the shorter of the lease term or the asset’s resources with an estimated value per barrel based lation of a financial liability designated as a hedge of The acquisition costs of an item of property, plant useful life, unless it is reasonably certain that the on an average of several analyst assessments. a net investment in a foreign operation are recog and equipment is recognised as an asset if it is group will acquire ownership at the end of the nised in other comprehensive income to the extent probable that the future economic benefits associ lease term. Land is not depreciated. Depreciation of oil and gas fields that the hedge is effective, and are presented within ated with the assets will flow to the group, and its Estimated useful lives for the current and com Expenses relating to drilling and equipment for equity in the translation reserve. To the extent that cost can be reliably measured. parative periods are as follows: exploration wells where proved and probable the hedge is ineffective, such differences are recog Property, plant and equipment are measured at reserves are discovered are capitalised and nised in profit or loss. When the hedged part of a acquisition cost less accumulated depreciation and Rigs, vessels, airplanes, etc. 10-30 years depreciated using the unit-of-production method net investment is disposed of, the relevant amount accumulated impairment losses. Machinery and transportation vehicles 3-20 years based on proved and probable reserves expected in the translation reserve is transferred to profit or Acquisition cost includes expenditures directly Buildings and residences 10-50 years to be recovered from the well. Development costs loss as part of the profit or loss on disposal. attributable to the asset’s acquisition. The acquisi relating to construction, installation and comple Aker ASA annual report 2013 63 Annual accounts – Aker group
tion of infrastructure such as platforms, pipelines because these licenses are only sold in an after- For oil and gas-producing assets and licenses in a ment and the distribution of ownership of the and the drilling of production wells are capitalised tax market based on decisions made by the Nor development phase, the acquisition cost is allo petroleum deposit. An unitisation agreement as producing oil and gas fields. They are depreci wegian Ministry of Finance pursuant to section 10 cated between capitalised exploration expenses, requires approval from the Ministry of Petroleum ated using the unit-of-production method based of the Petroleum Taxation Act. The purchaser license rights, production plant, and deferred tax. and Energy. The group recognises unitisations dur on proven and probable developed reserves therefore cannot claim a deduction of the consid When entering into agreements regarding the ing the exploration phase based on historical cost, expected to be recovered from the area during eration with tax effect through depreciations. In purchase/swap of assets, the parties agree on an as the fair value is often difficult to measure. In the the license or contract period. Acquired assets accordance with sections 15 and 24 of IAS 12, a effective date for the takeover of the net cash flow case of unitisations involving licences outside the used for the recovery and production of petro provision is made for deferred tax corresponding (usually 1 January of the calendar year). In the exploration phase, consideration is given to leum deposits, including license rights, are depre to the difference between the acquisition cost and period between the effective date and the comple whether the transaction has a commercial content. ciated using the unit-of-production method based the transferred depreciation base for tax purposes. tion date, the seller will include its purchased share If so, the unitisation is recognised at fair value. on proven and probable reserves. The reserve The offsetting entry to this deferred tax is goodwill. of the license in its financial statements. Pursuant to basis used for depreciation purposes is updated Hence, goodwill arises as a technical effect of the purchase agreement, the net cash flow from the Leasing agreements (as lessee) at least once a year. Any changes in the reserves deferred tax. asset during the period from the effective date to Leases of property, plant and equipment under affecting unit-of-production calculations are the completion date is settled with the seller (pro which the group has substantially all the risks and reflected prospectively. Research and development and contra settlement). The pro and contra settle rewards of ownership, are classified as financial Expenditure on research activities undertaken to ment will be adjusted to reflect the seller’s losses/ leases. Beskjæres 76 mm fra venstre før trykk >> Intangible assets gain new scientific or technical knowledge and gains and the assets for the purchaser, in that the Financial leases are capitalised at the inception Goodwill understanding is recognised in profit and loss in settlement (after a tax reduction), is deemed to be of the lease at the lower of the fair value of the All business combinations in the group are recog the period it is incurred. part of the consideration paid as part of the trans leased property or the present value of the minimum nised using the acquisition method. Goodwill rep Development expenditure that applies research action. The purchaser’s revenues and expenses are lease payments. Following initial capitalisation, the resents values arising from the acquisitions of sub findings to a plan or design for the production of a included as from the transaction date. same accounting principle that applies to the corre sidiaries, associates, and jointly controlled entities. new or substantially improved product or process is For tax purposes, the purchaser will include the sponding asset is used. Lease payments are appor Goodwill is allocated to cash-generating units and capitalised if the product or process is technically net cash flow (pro and contra), and any other tioned between financial expenses and the reduc is tested annually for impairment. For associated and commercially feasible and the group has suffi income and costs as from the effective date. When tion in the lease liability. Finance expenses are rec companies, the carrying amount of goodwill is cient resources to complete development. The capi acquiring licenses that are defined as assets, no ognised as finance costs in profit or loss. Leases included in the carrying amount of the investment talised amount includes the cost of materials, direct provision is made for deferred tax. under which a significant proportion of the risks and in the associated company. Negative goodwill aris labour expenses and an appropriate proportion of rewards of ownership are retained by the lessor are ing on an acquisition is recognised directly in the overhead expenses. Other development expendi Farm-in agreements classified as operating leases. Payments made profit and loss account. ture is recognised in the profit and loss account as Farm-in agreements are usually entered into during under operating leases, net of any incentives Minority interests can be measured at the net an expense in the period in which it occurs. the exploration phase, and are characterised by the received from the lessor, are charged to the profit value of identifiable assets and liabilities in the Capitalised development expenditures is recog seller waiving future financial benefits, in the form and loss account on a straight-line basis over the acquired company or at fair-value, including a nised at cost less accumulated amortisation and of reserves, in exchange for reduced future financ period of the lease, such that a constant periodic goodwill element. The method of measurement is impairment losses. ing obligations. For example, a license interest may interest rate is calculated on the remaining balance decided individually for each acquisition. be taken over in return for a share of the seller’s sheet liability. Goodwill in accordance with IFRS 3 is measured Other intangible assets expenses relating to the drilling of a well. During as a residual at the acquisition date and constitutes Other acquired intangible assets (patents, trade the exploration phase, the group normally accounts Biological assets the sum of: marks and other rights), are recognised in the bal for farm-in agreements on a historical cost basis, Biological assets (live fish), are normally carried in ance sheet at cost less accumulated amortisation as the fair value is often difficult to determine. the balance sheet at fair-value less realisation ■■ total consideration transferred in connection and impairment losses. Expenditure on internally costs. with the business combination generated goodwill and brand names is recognised Swaps ■■ the carrying amount of the minority interests in profit and loss in the period in which it is Swaps of assets are calculated at the fair value of Inventory ■■ the fair value of the previous ownership interest incurred. the asset being surrendered, unless the transaction Inventory is stated at the lower of cost or net realis in the acquired company at the time of acquisi lacks commercial substance or neither the fair able value. Cost is determined by the first-in, first- tion, less the net recognised amount (normally Acquisitions, sales, license swaps and value of the asset received nor the fair value of the out (FIFO) method. The cost of finished goods and fair value) of the identifiable assets acquired unitisations asset surrendered can be measured effectively. work in progress comprises raw materials, direct and liabilities assumed. On acquisition of a license that involves the right to During the exploration phase the group normally labour and other direct costs, and related produc explore for and produce petroleum resources, it is recognises swaps based on historical cost, as the tion overhead (based on normal operating capac Acquisitions of minority interests are accounted for considered in each case whether the acquisition fair value is often difficult to measure. ity), but excludes borrowing costs. as transactions with equity holders in their capacity should be treated as a business combination or an The acquisition cost of inventory may also as equity holders, and therefore no goodwill is rec asset purchase. As a rule, purchases of licenses Unitisations include elements transferred from equity. The latter ognised as a result of such transactions. In subse during a development or production phase will be Under Norwegian law, an unitisation is required if a may be gains or losses associated with cash flow quent measurements, goodwill is valued at acquisi regarded as a business combination. Other license petroleum deposit extends over several production hedging of foreign currency purchases. tion cost, less accumulated impairment losses. purchases will be regarded as asset purchases. licenses and those production licenses have differ Net realisable value is the estimated selling price The valuation at fair value of licenses (oil and ent owners. Consensus must be reached regarding in the ordinary course of business, less the costs of gas) is based on cash flows after tax. This is Oil and gas production licenses the most rational coordination of the joint develop completion and selling expenses. 64 Aker ASA annual report 2013 Annual accounts – Aker group
Construction contracts tive loss that is removed from other comprehensive An impairment loss in respect of goodwill is not value over the service period. All changes in fair Revenues related to construction contracts are income and recognised in profit or loss is the differ reversed. In respect of other assets, impairment value are recognised in the income statement. recognised using the percentage-of-completion ence between the acquisition cost, net of any prin losses recognised in prior periods are assessed as method, based primarily on contract costs incurred cipal repayment and amortisation, and the current at each reporting date as to any indications that the Provisions to date, compared to estimated overall contract fair value, less any impairment loss previously rec loss has decreased or no longer exists. An impair A provision is recognised when the group has a costs. ognised in profit or loss. Changes in impairment ment loss is reversed if there has been a change in present legal or constructive obligation as a result If the final outcome of a contract cannot be esti provisions attributable to time value are reflected as the estimates used to determine the recoverable of a past event, it is probable that payments or mated reliably, contract revenue is recognised only a component of interest income. amount. other outflow of economic benefits will be required to the extent that costs incurred are expected to be If, in a subsequent period, the fair value of an An impairment loss is reversed only to the extent to settle the obligation, and a reliable estimate can recovered. Any projected losses on future work impaired available-for-sale debt security increases that the asset’s carrying amount does not exceed be made of the amount of the obligation. Provisions under existing contracts are expensed and classi and the increase can be related objectively to an the carrying amount that would have been deter are determined as the present value of expected fied as accrued costs/provisions in the balance event occurring after the impairment loss was rec mined, net of depreciation and amortisation, if no future cash flows, discounted by a market based sheet under current provisions. ognised in profit or loss, the impairment loss is impairment loss had been recognised. pre-tax discount rate. The interest rate applied Losses on contracts are recognised in full when reversed and the amount of the reversal is recog reflects current market assessments of the time identified. Recognised contract profit includes profit nised in profit or loss. However, any subsequent Employee benefits value of money and the risks specific to the liability. derived from change orders and disputed amounts recovery in the fair value of an impaired available- Short-term benefits and pension obligations Beskjæres 76 mm fra venstre før trykk >> when, in management’s assessment, realisation is for-sale equity security is recognised in other com Short-term employee benefits, such as wages, are Guarantees probable and reasonable estimates can be made. prehensive income. measured on an undiscounted basis and are Guarantee provisions are recognised when the Project costs include costs directly related to the expensed as the related service is provided. underlying products or services have been sold. specific contract and indirect costs attributable to Non-financial assets The group has both defined benefit and defined Provisions are made based on historic data and a the contract. The carrying amounts of the group’s non-financial contribution plans. For defined benefit plans, the lia weighting of all possible outcomes against their Project revenue is classified as operating reve assets, other than biological assets, inventory and bility recognised is the present value of the defined associated probabilities. nue in the profit and loss account. Work in progress deferred tax assets, are reviewed as at each report benefit obligation as at the balance sheet date, is classified as projects under construction in the ing date to determine whether there is any indica minus the fair value of plan assets. The defined Restructuring balance sheet. Advances from customers are tion of impairment. If any such indication exists, the benefit obligation is calculated by independent A provision for restructuring is recognised when the deducted from the value of work in progress under asset’s recoverable amount is estimated. For good actuaries, and is measured as the present value of group has approved a detailed and formal restruc the specific contract or, if advances exceed this will and intangible assets that have indefinite useful estimated future cash outflows. The cost of provid turing plan, and the restructuring has either begun value, are recorded as customer advances. Cus lives or that are not yet available for use, the recov ing pensions is charged to the profit and loss or has been announced to the affected parties. tomer advances that exceed said contract offsets erable amount is estimated each year as at balance account so as to spread the cost over the service are classified as trade and other payables. sheet date. lives of employees. Actuarial gains and losses aris Contract losses The recoverable amount of an asset or cash- ing from experience adjustments, changes in actu Provisions for contract losses are recognised when Impairment generating unit is the greater of its value in use and arial assumptions, and amendments to pension the expected revenues from a contract are lower Financial assets its fair value less costs to sell. In assessing value in plans are recognised in other comprehensive than the cost of meeting the contractual obliga A financial asset is assessed as at each reporting use, the estimated future cash flows are discounted income (OCI). The net interest expense for the tions. Estimated provisions constitute the lower of date to determine whether there is objective evi to their present value using a pre-tax discount rate period is calculated by applying the discount rate to the present value of the expected costs of termi dence that it is impaired. A financial asset is that reflects current market assessments of the time the net defined benefit liability (asset). Thus, the net nating the contract and the expected net loss on impaired if objective evidence indicates that a loss value of money and the risks specific to the asset. interest cost comprises interest on the liability and fulfilling the contract. Before provisions are made, event has occurred after the initial recognition of For the purpose of impairment testing, assets the return on the pension plan assets, both calcu all impairment losses on assets associated with the the asset and that the loss event had a negative are grouped together into the smallest group of lated using the discount rate. Changes in net pen contract are recognised. effect on the estimated future cash flows from the assets that generates cash inflows from continuing sion liabilities due to premium payments and pen asset that can be estimated reliably. use that are largely independent of the cash inflows sion benefits are taken into consideration. The dif Decommissioning and removal costs An impairment loss in respect of a financial of other assets or groups of assets (the “cash-gen ference between the actual return on the pension In accordance with the terms and conditions of the asset measured at amortised cost is calculated as erating unit”, or CGU). plan assets and the recognised return is recognised licenses in which the group participates, the Nor the difference between its carrying amount and the Goodwill acquired in a business combination is against the OCI on an ongoing basis. wegian state, at the end of production or on the present value of the estimated future cash flows allocated to the groups of CGUs that are expected For defined contribution plans, contributions are expiration of the license period, can require license discounted using the asset’s original effective inter to benefit from the synergies of the combination. paid into pension insurance plans. Once the contri owners to remove the installation in whole or in est rate. When a subsequent event causes the An impairment loss is recognised if the carrying butions have been paid, there are no further pay part. In the initial recognition of the decommission amount of the impairment loss to decrease, the amount of an asset or its CGU exceeds its esti ment obligations. Contributions to defined contribu ing and removal obligations, the group provides for decrease in the impairment loss is reversed through mated recoverable amount. Impairment losses are tion plans are charged to the profit and loss account the net present value of future expenses related to profit or loss. recognised in profit or loss. Impairment losses rec in the period to which the contributions relate. decommissioning and removal. A corresponding Impairment losses on available-for-sale invest ognised in respect of CGUs are allocated first to asset is capitalised as a tangible fixed asset, and ment securities are recognised by transferring the reduce the carrying amount of any goodwill allo Share-based payments depreciated using the unit of production method. cumulative loss that has been recognised in other cated to the units, and then to reduce the carrying Share-based payments are accounted for in Changes in the time value (net present value), of comprehensive income, and presented in the fair amounts of the other assets in the unit (or group of accordance with IFRS 2 Share-based Payment. the decommissioning and removal obligation are value reserve in equity, to profit or loss. The cumula units), on a pro rata basis. Share-based payment expense is measured at fair charged to income as financial expenses, and Aker ASA annual report 2013 65 Annual accounts – Aker group
increase the liabilities related to future decommis Government grants Borrowing costs that are not directly attributable to sions of the Petroleum Taxation Act. Revenues from sioning and removal expenses. Changes in esti An unconditional government grant is recognised the acquisition, construction or production of a activities on the Norwegian continental shelf are mates of expenses related to decommissioning in the profit and loss account when the group is qualifying asset are recognised in profit or loss liable to ordinary corporation tax and surtax (cur and removal are adjusted to the liability and the entitled to receiving the funding. Other public fund using the effective-interest method. rently 50 per cent but increasing to 51 per cent on 1 tangible fixed asset. The discount rate used in cal ing is initially recognised in the balance sheet as Foreign currency gains and losses are reported January 2014). The company may claim a refund culating the fair value of the decommissioning and deferred revenues when it is reasonably certain on a net basis. from the state of the tax value of exploration removal obligation is the risk-free rate with the that the funding will be received and that the terms expenses incurred, provided that these do not addition of a credit risk element. and conditions associated with the funding will be Income tax exceed the year’s tax-related loss allocated to the met. Grants that compensate for incurred Income tax comprises current and deferred tax. An offshore activities. The refund is included in the cal Principles for revenue recognition expenses are recognised in the profit and loss income tax expense is recognised in the profit and culated tax receivable line in the balance sheet. Revenue is recognised only if it is probable that account on a systematic basis in the same periods loss account unless it relates to items recognised future economic benefits will flow to Aker, and that in which the expenses are incurred. Funding that directly in equity, in which case it is recognised in Discontinued operations these benefits can be measured reliably. Revenue compensates for the acquisition cost of an asset is the equity. A discontinued operation is a component of the includes gross inflows of economic benefits that recognised in the profit and loss account on a sys Current tax is the expected tax payable on the group’s business operations that represents a sep Aker receives for its own account. tematic basis over the asset’s useful life. taxable income for the year, using tax rates enacted arate, major line of business or a geographical area or substantively enacted as at the balance sheet of operations that has been disposed of or is held Beskjæres 76 mm fra venstre før trykk >> Sale of goods Expenses date, and any adjustments to tax payable in respect for sale. It may also be a subsidiary acquired for Revenue from the sale of goods is recognised Lease payments of previous years. Deferred tax is calculated based the sole purpose of resale. Classification as a dis when Aker has transferred the significant risks and Lease payments under operating leases are recog on the temporary differences between the balance continued operation occurs at the earlier of dis rewards of ownership to the buyer, and no longer nised in the profit and loss account on a straight- sheet values and the taxation values of assets and posal or when the operation meets the criteria to has control over or managerial involvement with line basis over the lease period. Any lease incen liabilities. be classified as held for sale. the goods. tives received are recognised as an integral part of Deferred tax is not recognised for the following Profits or losses from discontinued operations Havfisk’s revenues from the sale of wild-caught the total lease expense over the term of the lease. temporary differences: (after tax), are reclassified and presented as a sepa fish are strictly regulated by legislation and regula In financial leases, minimum lease payments are rate line item in the financial statements. The com tions. In accordance with the Raw Fish Act and apportioned between financial expenses and a ■■ initial recognition of assets or liabilities in a parative income statement is restated accordingly. accompanying regulations, all first-hand revenues reduction in the outstanding liability. The finance transaction that is not a business combination from wild-caught fish in Norway shall be obtained expense is allocated to each period of the lease and that affects neither accounting nor taxable Dividends through the fish-sales organisations. term, so as to produce a constant periodic interest profit. Dividends are recorded in the group’s financial rate on the remaining balance of the liability. ■■ differences relating to investments in subsidiar statements in the period in which they are Revenues from petroleum products Contingent lease payments are accounted for by ies and jointly controlled entities, if it is probable approved by the group’s shareholders. Revenues from petroleum products are recognised revising the minimum lease payments over the that they will not reverse in the foreseeable based on the group’s ideal share of production remaining term of the lease, when the contingencies future. Earnings per share during the period, regardless of actual sales (the of the variable lease have been met and the adjust ■■ tax-increasing temporary differences upon ini The calculation of ordinary earnings per share is entitlement method). ment amount is known. tial recognition of goodwill. based on the profit attributable to ordinary shares using the weighted average number of shares out Rendering of services and construction contracts Financial income and expenses Deferred tax is measured at the tax rates that are standing during the reporting period, after deduc Revenue from providing services and from con Finance income comprises interest income on expected to be applied to the temporary differ tion of the average number of treasury shares held struction contracts is recognised in the profit and funds invested (including available-for-sale financial ences when they reverse. over the period. loss account in proportion to the degree of com assets), dividend income, gains on the disposal of Deferred tax assets and liabilities are offset if: The calculation of diluted earnings per share is pletion of the transaction as at the balance sheet available-for-sale financial assets, changes in the consistent with the calculation of ordinary earnings date. As soon as the outcome of a contract can be fair value of financial assets at fair value through ■■ there is a legally enforceable right to offset cur per share, and gives effect to all ordinary shares reliably estimated, contract revenues and costs are profit or loss, and gains on hedging instruments rent tax liabilities and assets with dilutive potential that were outstanding during recognised in the profit and loss account in propor that are recognised in profit or loss. Interest income ■■ they relate to income taxes levied by the same the period. In other words, the net profit for the tion to the contract’s degree of completion. The is recognised as it accrues in profit or loss, using tax authority on the same taxable entity, or on period attributable to ordinary shares is increased stage of completion is assessed based on surveys the effective-interest method. different taxable entities that intend to settle by the post-tax amount of dividends and interest of work performed. Expected contract losses are Dividend income is recognised in profit or loss current tax liabilities and assets on a net basis, recognised during the period in respect of the ordi recognised directly in the profit and loss account. on the date that the group’s right to receive pay or to realise their tax assets and liabilities simul nary shares with dilutive potential, and adjusted for ment is established, which in the case of quoted taneously. any other changes in income or expenses that Income from charter agreements securities is the ex-dividend date. would result from the conversion of the ordinary Revenues related to vessel bareboat charter agree Finance costs comprise interest expense on A deferred tax asset will be recognised if it is prob shares with dilutive potential. Assuming the conver ments are recognised over the charter period. borrowings, unwinding of the discount on provi able that future taxable profits will be available sion of all ordinary shares with dilutive potential, the Time-charter agreements may include a revenue- sions, changes in the fair value of financial assets at against which the temporary difference can be weighted average number of additional ordinary sharing agreement with the charterer. Revenue fair value through profit or loss, impairment losses utilised. shares that would have been outstanding increases related to profit sharing agreements is recognised recognised on financial assets, and losses on hedg As a production company, Aker’s subsidiary Det the weighted average number of ordinary shares when the amount can be reliably estimated. ing instruments that are recognised in profit or loss. norske oljeselskap is subject to the special provi outstanding. 66 Aker ASA annual report 2013 Annual accounts – Aker group
Comparative figures the CFO. ble for borrowing, interest and foreign currencies. A separate “Financial Investments” business area When necessary, comparative figures have been Aker’s investment portfolio comprises two seg focuses on all financial assets including cash, receivables and funds. Aker aims to make each company in adjusted to conform to changes in presentation in ments: Industrial holdings and Financial invest the portfolio independent and robust through active ownership. Financially, this implies that Aker will only the current year. ments. seek to invest in the shares of companies included in Industrial holdings, and that each underlying com The recognition and measurement applied in pany in this portfolio must secure funding from external sources whenever they are ready and mature Segment reporting segment reporting are consistent with the enough to do so. Aker aims to cultivate its profile as owner by gradually withdrawing from debt funding. Aker defines operating segments based on the accounting principles applied when preparing the The target rate of return for the industrial holdings is 12 percent. The target return for the financial group’s internal management- and reporting financial statements. Transactions between seg investments portfolio depends on the composition of the portfolio, including the size of cash deposits structure. The group’s chief operating decision ments are conducted on market terms and condi and the risk profile of the receivables. In addition, Aker has defined financial target indicators (FTIs) that maker, responsible for the allocation of resources tions. Comparative segment information is usually regulate the relationship between cash and interest-bearing debt, as well as the capital structure. The and assessment of the performance in the differ re-presented for changes in reporting segments. ratios work as guidelines in investment activities and capital allocation. ent operating segments, is defined as the board See note 8 Operating segments. The governing principle of Aker ASA’s dividend policy is that the company should at all times have a of directors, the group president and CEO and solid balance sheet and liquid reserves sufficient to deal with future liabilities. The company aims to pay annual dividends corresponding to 2-4 percent of net asset value (value-adjusted). The market price of listed companies is used, in calculating asset value, while book value is used for other assets. The same valuation principles apply to fund investments. Beskjæres 76 mm fra venstre før trykk >> Note 5 Financial risk and exposure Aker has also issued bonds in the Norwegian capital market. There have been no material changes in Aker’s capital management strategy in 2013. Financial risk Credit risk The Aker Group consists of various operations and companies that are exposed to different types of The managements of the main companies have developed their own policies and guidelines on credit financial risks, including credit-, liquidity- and market risk (e.g. interest- and currency risk). The purpose risk. Exposure to credit risk is monitored on an ongoing basis under Group guidelines. of risk management is to measure and manage financial risk in a reliable manner, thereby increasing The Group’s principal financial assets are bank deposits and cash, trade and other receivables, predictability and reducing negative effects on Aker’s financial results. The Group uses different finan derivatives and investments in shares. The Group’s exposure to credit risk is mainly related to trade cial instruments to manage its financial exposure actively. receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, Aker ASA has developed a policy on how financial risks are monitored. Risks are monitored continu which are estimated by the Group’s management based on prior experience and assessments of the ously and reported at least quarterly. The main companies in the Group have developed similar policies current economic climate. Credit assessments are performed on all customers requesting credit over a and guidelines based on the individual companies’ exposure to the different kinds of financial risks. certain amount. Transactions involving derivative financial instruments are with counterparties with sound credit-rat Capital management ings and with which the Group has signed a netting agreement. Given their high credit ratings, manage The overall objectives of Aker’s capital management policy are to maintain a strong capital base so as ment does not expect any counterparty to fail to meet its obligations. to retain investor, creditor and market confidence, to ensure financial flexibility for the seizure of oppor The maximum exposure to credit risk is represented by the carrying amount of each financial asset, tunities as they arise, and to maintain a capital structure that minimises the company’s cost of capital. including derivative financial instruments, in the balance sheet. The maximum exposure to credit risk as Aker pursues a conservative investment strategy with minimal risk. The investments need to be liquid. at the reporting date was: Aker ASA’s “Treasury” business area has been cultivated to focus on the liability side, and is responsi
2013 Maximum exposure to credit risk
Designated at Derivatives Classified fair value Available for Receivables at qualified Investments as held for through profit sale financial amortised for hedge held until Cash and Amounts in NOK million Note trading and loss assets cost accounting maturity bank deposits Total
Financial interest-bearing non-current assets 18 - - 1 021 367 - - 516 1 904 Other non-current assets including long-term derivatives 19 - 28 - 160 - - - 188 Projects under construction 21 - - - 65 - - - 65 Trade receivables, other interest-free short-term receivables 22 - 16 - 1 431 - - - 1 447 Current derivatives 35 - - - - 6 - - 6 Interest-bearing short-term receivables 23 - 24 - 399 - - - 423 Cash and cash equivalents 24 ------5 834 5 834 Total - 68 1 021 2 422 6 - 6 350 9 867 Aker ASA annual report 2013 67 Annual accounts – Aker group
2012 Maximum exposure to credit risk
Designated at Derivatives Classified as fair value Available for Receivables at qualified Investments held for through profit sale financial amortised for hedge held until Cash and Amounts in NOK million Note trading and loss assets cost accounting maturity bank deposits Total
Financial interest-bearing non-current assets 18 - - 847 219 - - 417 1 483 Other non-current assets including long-term derivatives 19 8 - - 225 - - - 233 Projects under construction 21 - - - 378 - - - 378 Trade receivables, other interest-free short-term receivables 22 - - - 1 226 - - - 1 226 Current derivatives 35 - - - - 6 - - 6 Interest-bearing short-term receivables 23 23 - - 5 - - - 28 Cash and cash equivalents 24 ------5 471 5 471 Beskjæres 76 mm fra venstre før trykk >> Total 32 - 847 2 052 6 - 5 888 8 825
Trade receivables are allocated by company as follows: Aging trade receivables and provisions for impairment loss:
Amounts in NOK million 2013 2012 Gross trade Provision for Gross trade Provision for receivables impairment receivables impairment Industrial holdings: Amounts in NOK million 2013 loss 2013 2012 loss 2012 Det norske oljeselskap 134 102 Aker BioMarine 94 82 Not past due 418 - 565 (2) Ocean Yield 73 39 Past due 0-30 days 327 - 117 - Havfisk 49 5 Past due 31-120 days 41 (2) 18 (1) Past due 121-365 days 20 (18) 7 (3) Financial Investments: Past due more than one year 18 (18) 9 (9) Aker Philadelphia Shipyard 126 89 Total trade receivables 824 (38) 717 (14) Norway Seafoods 282 264 Recognised impairment loss (16) (10) Ocean Harvest 16 16 Other companies 13 106 The recognised impairment loss on trade receivables is included in other operating expenses in the Total trade receivables 786 702 income statement.
Norway Seafoods enters into credit insurance agreements for most customers with credit limits above NOK 100 000. Norway Seafoods’s bad debt expense as a percentage of sales was 0.9 and 0.6 in 2013 and 2012, respectively.
Maximum exposure to credit risk – trade receivables as at reporting date, by type of customer:
Net trade Net trade receivables receivables Amounts in NOK million 2013 2012
Industrial customers 344 239 Wholesale customers 273 221 Retail customers 156 231 End-user customers 13 10 Other - 1 Total trade receivables 786 702 68 Aker ASA annual report 2013 Annual accounts – Aker group
Liquidity risk Liquidity risk is the risk that the Group will be unable to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure that it always has sufficient liquidity to meet its liabili ties as they fall due.
Overview of contractual maturities of financial liabilities, including estimated interest payments specified by category of interest-bearing liabilities:
2013 Contractual cash flows including estimated interest payments Contractual Amounts in NOK million Carrying amount cash flow 6 months or less 6-12 months 1-2 years 2-5 years Over 5 years
Secured loans 9 952 (11 718) (682) (574) (1 959) (6 610) (1 893) Unsecured bank loans 500 (596) (14) (14) (28) (539) - Unsecured bond issues 7 832 (10 489) (258) (256) (1 271) (4 067) (4 637) Beskjæres 76 mm fra venstre før trykk >> Finance lease liabilities 8 (8) (1) (1) (2) (5) - Other long-term liabilities 1 (1) - (1) - - - Credit facilities 85 (85) (80) (5) - - - Other short-term liabilities 605 (640) (143) (497) - - - Total contractual cash flows for interest-bearing liabilities 18 983 (23 537) (1 179) (1 348) (3 259) (11 221) (6 530) Short-term derivative financial liabilities 141 Trade and other payables 3 085 Long term derivative financial liabilities 49 Long-term interest-free liabilities 3 422 Total liabilities 25 680
Long-term interest-free liabilities include NOK 1478 million in deferred tax liabilities and NOK 413 million in cash and cash equivalents of NOK 5 834 million. Other items expected to be paid in during the next year deferred revenue. Short-term derivative financial liabilities in 2013 consist of NOK 41 million in currency include tax receivables of NOK 1 448 million. In addition, the group has interest-bearing assets of NOK contracts and NOK 99 million in interest rate swaps. NOK 28 million of the interest rate swap agreements 1 904 million (see Note 18), and other equity investments of NOK 837 million (see Note 17). are related to hedge accounting. The Group’s liquidity requirements are expected to be met through the balances of liquid assets and cash flow from operating activities. As at 31 December 2013, the group had 2012 Contractual cash flows including estimated interest payments Contractual Amounts in NOK million Carrying amount cash flow 6 months or less 6-12 months 1-2 years 2-5 years Over 5 years
Secured loans 7 750 (8 789) (977) (437) (1 093) (4 179) (2 104) Unsecured bank loans 507 (573) (12) (15) (30) (514) - Unsecured bond issues 4 455 (6 022) (432) (126) (302) (3 311) (1 853) Finance lease liabilities 26 (29) (2) (2) (5) (13) (7) Other long-term liabilities 9 (10) (1) (1) (2) (5) (1) Credit facilities 97 (97) (76) (22) - - - Other short-term liabilities 712 (752) (128) (624) - - - Total contractual cash flows for interest-bearing liabilities 13 555 (16 272) (1 627) (1 227) (1 432) (8 022) (3 964) Short-term derivative financial liabilities 54 Trade and other payables 2 483 Long-term interest-free liabilities 3 670 Total liabilities 19 763
Long-term interest-free liabilities include NOK 1 652 million in deferred tax liabilities and NOK 484 million in tracts to hedge the price of bunkers, NOK 1 million in currency contracts and NOK 48 million in interest deferred revenue. Short-term derivative financial liabilities in 2012 consist of NOK 5 million in forward con rate swaps. NOK 32 million of the interest rate swap agreements relate to hedge accounting. Aker ASA annual report 2013 69 Annual accounts – Aker group
Currency risk Aker BioMarine Aker’s operation in the international market results in various types of currency exposure for the group. Aker BioMarine operates in the international market and is exposed to foreign exchange risk, primarily Currency risks arise through ordinary, future business transactions, capitalised assets and liabilities, through fluctuations in USD, EUR and NOK, as a result of commercial transactions in other currencies and when such transactions involve payment in a currency other than the functional currency of the than the entity’s functional currency. respective company. In addition, currency risk may arise from investments in foreign subsidiaries. The In addition, the group has operations with exposure to local currencies in Uruguay, Australia and group is mainly exposed to the US dollar (USD). China, but these exposures are regarded as minimal. The AKBM group has USD as its reporting currency In Aker’s consolidated accounts, the following exchange rates have been applied in translating the and functional currency for the main group companies, as a majority of revenues and expenses are USD- accounts of foreign subsidiaries and associated companies: denominated. The AKBM group’s balance sheet is also predominantly in USD. However, since the parent company Aker BioMarine AS uses NOK as its functional currency and Aker BioMarine Antarctic AS has Average Average one material NOK-denominated loan, the group balance sheet is exposed to changes in the NOK/USD rate Rate at 31 rate Rate at 31 exchange rate. Aker BioMarine seeks to maintain the greatest possible natural foreign currency hedging Country Currency 2013 Dec 2013 2012 Dec 2012 by keeping revenues and expenses in the same currency. Future cash flows are estimated and offset. The company continuously assesses the need for foreign currency hedging. Entering into foreign currency derivative contracts is generally subject to board approval. Aker BioMarine manages currency risk at an Great Britain GBP 1 9.19 10.02 9.22 9.01 overall group level. In 2013, Aker BioMarine did not use hedge accounting pursuant to IAS 39 Financial USA USD 1 5.88 6.07 5.82 5.58 Instruments. Foreign currency fluctuations will affect the translation of income statement and balance Beskjæres 76 mm fra venstre før trykk >> Denmark DKK 100 104.67 111.99 100.50 98.51 sheet items associated with foreign business units and other financial instruments in foreign currencies, Sweden SEK 100 90.22 94.23 85.90 85.30 such as cash, receivables, liabilities, and derivatives. As a general policy, Aker BioMarine will not enter The European Union EUR 1 7.81 8.36 7.48 7.36 into foreign exchange contracts for speculative purposes, but should ideally hedge any currency position that represents a risk to the group’s USD cash flow. No balance sheet positions should be hedged. Aker The average rate and rate as at 31 December have been applied when translating the income state BioMarine had no currency derivatives as at 31 December 2013 or 31 December 2012. ment and balance sheet items, respectively. If the average exchange rate for the period does not pro vide a fair estimate of the transaction rate, the actual transaction rate is used. Ocean Yield The table below illustrates the Group’s sensitivity to translation differences. If the Norwegian krone The operating companies in the Ocean Yield group have prepared guidelines for the management of had been 10% stronger in 2013, the effects on the consolidated financial statements would have been currency risks. The currency policy defines levels for the hedging of expected future cash flows. The as shown below. The sensitivity analysis does not take into account other effects of a stronger currency, company may utilise currency forward contracts and currency option contracts from time to time to such as competiveness, change in the value of derivatives etc. reduce currency exposure. The presentation currency of Ocean Yield is USD. The group faces currency risks in connection with sales, purchases and loans in currencies other than USD. Its currency risk is Amounts in NOK million Operating revenue Profit before tax Equity mainly related to NOK. As at 31 December 2013, Ocean Yield had an interest and currency swap with maturing in July 2016. As at 31 December 2012, it had no exchange rate derivatives. USD 3 420 328 4 825 Havfisk Other currencies 1 327 16 (68) The functional currency of Havfisk is NOK. The company is not directly exposed to fluctuations in other NOK 3 339 (1 640) 15 820 currencies as Havfisk does not have any foreign subsidiaries and all sales are in NOK. Total 8 086 (1 297) 20 577 Change if NOK 10% stronger (475) (34) (476) Financial investments (subsidiaries): Aker Philadelphia Shipyard When NOK 10% stronger 7 611 (1 331) 20 101 The functional currency of Aker Philadelphia Shipyard is USD. The company faces currency risks related to sales, purchases and loans in currencies other than USD. Currency risk is mainly related to EUR, NOK and KRW (South Korean won). As at 31 December 2013, Aker Philadelphia Shipyard had The operational companies in the group have prepared guidelines on the management of currency currency contracts for the purchase of KRW totalling USD 18 million and EUR totalling USD 5 million. risks. Aker ASA’s currency policy defines levels for the hedging of expected future cash flows, and is The value of the currency contracts was USD 57 thousand as at 31 December 2013. monitored by the company’s treasury department. The company uses currency forward contracts and currency option contracts to reduce currency exposure. Norway Seafoods Below is a description of the currency risks facing the main companies in the Aker group. The group incurs currency risk on sales denominated in currencies other than NOK. The group’s expo sure is mainly related to EUR, GBP, DKK and USD. Approximately 50 per cent of all receivables in EUR Industrial holdings: and GBP are hedged, and approximately 50 per cent of anticipated sales in the next 12 months are also Det norske oljeselskap hedged at all times. Forward foreign exchange contracts are used to hedge the foreign currency risks. The functional currency of Det norske oljeselskap is NOK. The company faces currency risks in connec All forward foreign exchange contracts expire less than one year after the balance sheet date. The tion with sales, purchases and loans in currencies other than NOK. Revenues from the sale of petro group ensures that the net exposure linked to other monetary assets and liabilities denominated in a leum and gas are in USD, while expenditures are mainly in NOK, USD, SGD, EUR, GBP and DKK. foreign currency is kept at an acceptable level by buying and selling foreign currency at the spot rate Exchange rate fluctuations and oil prices expose the company to both direct and indirect financial risk, when necessary to manage a short- term imbalance. As at 31 December 2013, Norway Seafoods had but as some of the expenses are denominated in USD, the risks are somewhat reduced. Foreign cur currency contracts for the purchase of USD 1 million, the purchase of NOK 67 million, the sale of EUR rency positions are only used to reduce the currency risk associated with the company’s ordinary oper 49 million, the sale of GBP 11 million and the sale of USD 1 million. The value of the hedging contracts ations. As at 31 December 2013, the company had no currency derivatives. was NOK -31 million as at 31 December 2013. 70 Aker ASA annual report 2013 Annual accounts – Aker group
Ocean Harvest Note 6 Acquisition of subsidiaries and transactions with minority interests Ocean Harvest incurs currency risk on sales denominated in currencies other than NOK. The company is mainly exposed to USD. A subsidiary has ARS (Argentine peso) as its functional currency, and is Acquisition of subsidiaries in 2013: exposed to fluctuations in the NOK/ARS exchange rate. Ocean Harvest had no currency derivatives as In October, Aker purchased the company Bekkestua Syd AS for NOK 108 million. The purchase is at 31 December 2013 or 31 December 2012. related to Aker’s property project Fornebuporten. The acquisition of the real estate company is recog nised as an asset acquisition. Fornebuporten Fornebuporten incurs currency risk on purchases and sales denominated in currencies other than NOK. The provisionally determined values of assets acquired and liabilities assumed are shown below. The company is mainly exposed to GBP. As at 31 December 2013, Fornebuporten had currency con tracts for the sale of GBP 28 million. The value of the currency contracts was NOK -10 million as at 31 December 2013. Recognised by the Fair value Recognised Aker ASA Amounts in NOK million companies adjustment by Aker Aker ASA hedges its net exposure from foreign currency cash flows, but does not generally hedge its balance sheet positions. The cash flows, including identified structural transactions, are hedged at fixed Property, plant and equipment 216 50 266 intervals using a rolling three-year window. Any net exposure from foreign-currency loans is swapped Beskjæres 76 mm fra venstre før trykk >> Inventory, trade and other receivables 54 54 back to NOK. In total, Aker ASA has hedged USD 47 million net by means of forward contracts and Cash and bank deposits 3 3 options (European). The accounts showed an unrealised loss on all foreign exchange agreements of NOK 0.5 million at 31 December 2013. Interest-bearing loans (135) (135) Deferred tax liability (16) (16) Interest rate risk The group’s interest rate risk arises from long-term borrowings and receivables. Borrowings and receiv Tax payable, trade and other payables (63) (63) ables issued at variable rates expose the group to cash flow interest rate risk. Securities issued at fixed Identifiable net assets 58 50 108 rates expose the group to fair value interest rate risk. Consideration transferred 108 As at 31 December 2013, the interest rate profile of the group’s interest-bearing financial instruments Cash acquired (3) was as follows: Total paid on acquisition of subsidiaries 105
Amounts in NOK million 2013 2012 Transactions with minority interests in 2013: Fixed rate instruments: In 2013, Aker sold minority interests for NOK 48 million. In addition, the minority interests in Aker Bio Financial assets 194 184 Marine were purchased using shares in Aker ASA as consideration; see description below. This led to a Financial liabilities (4 825) (3 027) decrease in minority interests of NOK 93 million and an increase in majority interests of NOK 141 mil lion, recognised directly in equity and attributed to the equity holders in the parent company. See also Net fixed rate instruments (4 630) (2 843) Note 26. In September 2012, Aker proposed a merger between its wholly-owned subsidiary Aker Seafoods Variable rate instruments: Holding and Aker BioMarine. The merger was structured as a triangular merger, whereby minority share Financial assets 7 967 6 807 holders in Aker BioMarine were offered shares in Aker as consideration. The proposal was approved in Financial liabilities (14 158) (10 537) November 2012, and the merger was completed in January 2013. Aker BioMarine was subsequently Net variable rate instruments (6 191) (3 730) delisted from Oslo Stock Exchange. Aker contributed 816 860 shares from its own treasury stock hold ing as consideration shares for the merger. The transaction reduced minority interests by NOK 140 mil Net interest-bearing debt (-) / assets (+) (10 822) (6 573) lion. Ocean Yield issued 33.5 million shares priced at NOK 27 per share in an initial public offering in June, raising gross proceeds (received in July), of NOK 904 million. The shares began trading on Oslo Stock Fair value sensitivity analysis for fixed-rate instruments Exchange on 5 July 2013. The Group does not recognise any fixed rate financial assets and liabilities at fair value through profit or On 5 August 2013, the over-allotment option in the Ocean Yield share issue was exercised. This loss. Havfisk has designated an interest rate swap (fair value NOK -28 million), as a hedge for part of involved a total of 1 757 425 shares in Ocean Yield ASA. Following the sale of these shares by Aker ASA the secured bank loan. Norway Seafoods has designated an interest rate swap (fair value NOK -1 mil to the Joint Bookrunners, Aker ASA held 98 242 575 shares in Ocean Yield, equal to 73.46 per cent of lion), as a hedge for part of the debt. A change in interest rates as at the reporting date would not affect the shares and votes in the company. The exercise price equalled the offer price, i.e. NOK 27 per share. profit or loss, but would appear as a change in the fair value of the cash flow hedge in the Group’s com The transaction increased minority interests by NOK 47 million. Following a share issue to employees in prehensive income. December 2013, Aker’s shareholding is 73.43 per cent. Other interest rate derivatives are not designated as hedges, and hence a change in the interest rate The total purchase price of subsidiaries and minority interests in 2013 is NOK 105 million. Total sales would affect profit or loss with respect to these instruments. In 2013, the Aker Group incurred an of minority interests and subsidiaries (see Note 7), were NOK 4 million in 2012. Purchase prices and expense of NOK 76 million related to interest rate derivatives. In 2012, Aker Group incurred an expense sales prices are stated net of cash acquired and disposed. of NOK 59 million related to interest rate derivatives. Aker ASA annual report 2013 71 Annual accounts – Aker group
Acquisition of subsidiaries in 2012: Note 7 Sales of subsidiaries and discontinued operations In March, Aker increased its ownership interest in Aker Encore from 50 percent to 100 percent. The shares were purchased from TRG AS for NOK 16 million. In March, Aker also purchased the company Sale of subsidiaries in 2013 Widerøeveien 5 for NOK 55 million. In December, Aker purchased the company Maries vei 20 for NOK In January, Aker sold its 100% ownership interest in Molde Fotball AS for NOK 3.5 million. The trans 145 million. The latter two purchases are related to Aker’s property project Fornebuporten. The acquisi ferred assets and liabilities totalled NOK 55 million and NOK 19 million, respectively. The realised loss tions of the two real estate companies were recognised as asset acquisitions. amounted to NOK 32 million. The net payment received upon sale less NOK 2 million in liquid assets sold equals NOK -2 million. The determined values of assets acquired and liabilities assumed are shown below. In December, Aker sold 5.1% of its shares in Oslo Asset Management Holding AS for NOK 1.4 mil lion. The sale reduced the ownership interest from 50.1% to 45%, and consequently led to loss of con Recognised trol. Since December, the company therefore has been defined as an associated company. The trans by the Fair value Recognised ferred assets and liabilities totalled NOK 97 million and NOK 36 million, respectively. The transaction Amounts in NOK million companies adjustment by Aker reduced minority interests by NOK 41 million. The gain upon sale totalled NOK 8 million. The net pay ment received upon sale less NOK 42 million in liquid assets sold equals NOK -41million. Property, plant and equipment 714 103 816 As regards other companies sold, the transferred assets and liabilities totalled NOK 153 million and NOK 153 million, respectively. The net payments received upon sale less NOK 1 million in liquid assets Inventory, trade and other receivables 95 95 sold equal NOK -1 million. Beskjæres 76 mm fra venstre før trykk >> Cash and bank deposits 48 48 Sale of subsidiaries in 2012 Interest-bearing loans (131) (131) In July Aker sold its 90 percent share in Converto to Fausken Invest for NOK 4 million. Assets and liabil Deferred tax liability (79) (79) ities transferred were NOK 9 million and NOK 2 million. The sales loss for the Group was NOK 2 million. Short-term interest-bearing debt (425) (425) Net proceeds from the sale less cash sold of NOK 8 million were NOK -4 million. Tax payable, trade and other payables (91) (91) Identifiable net assets 130 103 233
Consideration transferred 216 Cash acquired (48) Total paid on acquisition of subsidiaries 168
Transactions with minority interests in 2012: In 2012, Aker purchased shares from minority interests for NOK 99 million and sold minority interests for NOK 99 million. This led to an increase in minority interests of NOK 43 million and a decrease in majority interests of NOK 43 million, recognised directly in equity and attributed to the equity holders in the parent company. See also Note 26. In the first quarter of 2012, Aker increased its ownership interest in Aker Floating Production from 72.3 percent to 100 percent. The purchase price was NOK 22 million. Also in the first quarter of 2012, Aker sold 1.05 million shares in Det norske for NOK 92 million, reducing its ownership interest from 50.81 percent to 49.99 percent. In July 2012, Converto Capital Fund (99.8 per cent owned by Aker), sold 1.1 million shares in Havfisk for NOK 7 million. The ownership interest in Havfisk was thus reduced from 73.6 per cent to 72.3 per cent. Also in July, Havfisk purchased 3.54 per cent of the shares in Nordland Havfiske AS for NOK 24 million. After the purchase Nordland Havfiske is a wholly owned subsidiary of Havfisk. In November 2012, Aker increased its ownership interest in Havfisk from 72.3 percent to 73.2 percent. The purchase price was NOK 4.5 million. Also in November 2012, Aker increased its ownership interest in Aker BioMarine from 86.1 percent to 89.2 percent. The purchase price was NOK 48 million. The total purchase price of subsidiaries and minority interests was NOK 267 million in 2012. Sales of minority interests and subsidiaries (see Note 7), totalled NOK 95 million in 2012. 72 Aker ASA annual report 2013 Annual accounts – Aker group
Note 8 Operating segments and significant subsidiaries
Operating segments are identified based on the Group’s internal management- and reporting structure. The Group’s chief operating decision makers, who are responsible for the allocation of resources and assessment of performance in the different operating segments, are defined as the board of directors, the CEO and the CFO. Aker’s investment portfolio comprises two segments: Industrial holdings and Financial investments. The primary focus for businesses within Industrial holdings is long-term value creation. Businesses within Financial investments are managed as a portfolio with focus on financial and strategic opportuni ties. Recognition and measurement applied to segment reporting are consistent with the accounting prin ciples applied when preparing the financial statements. Transactions between segments are conducted on market terms and conditions. Operational revenues from geographical segments is based on cus tomers’ geographical locations, while segment assets are based on the geographical location of compa nies. Beskjæres 76 mm fra venstre før trykk >>
An overview of operating segments:
Industrial holdings Financial investments Aker Solutions Leading global supplier of products, systems and services for Converto Capital Fund Investment fund, managed by Converto. Ownership interest the oil and gas industry. The Aker Group’s ownership interest is 99.8%. Main companies in Converto Capital Fund: 46.27%. The company is defined as an associated company in Aker Philadelphia Shipyard: the Aker Group, and is accounted for using the equity method. Design and construction of vessels. Ownership interest 71.2%. Aker ASA indirectly owns 34.2%. Aker Kvaerner Holding AS Norway Seafoods: owns 40.27% of Aker Solutions ASA. Aker ASA owns 70% of Processing and sales of seafood. Ownership interest 73.6%. Aker Kvaerner Holding AS. In addition, Aker ASA owns directly 6% of Aker Solutions. Bokn Invest: Investment company. Owns oil service companies Align and Stream (sold in first quarter 2014). Ownership interest Kvaerner Leading global provider of engineering and construction ser 39.9%. The company is defined as an associated company in vices to the energy and process industry. The Aker Group’s the Aker Group, and is accounted for using the equity method. ownership interest is 41.02%. The company is defined as an associated company in the Aker Group, and is accounted for using the equity method. Aker ASA indirectly owns 28.7%. Aker Other funds AAM Absolute Return Fund: Hedge fund, managed by Oslo Kvaerner Holding AS owns 41.02% of Kvaerner ASA. Aker ASA Asset Management AS. owns 70% of Aker Kvaerner Holding AS. Norron Fond: Fund, managed by Norron Asset Management AB. Det norske oljeselskap Oil company. Exploration and production on the Norwegian continental shelf.Ownership interest 49.99%. Ocean Yield Owns, operates and charters vessels. Ownership interest 73.43%. Other and eliminations Aker ASA and holding companies Aker BioMarine Biotechnology company. Harvesting of krill, production and Cash, other financial investments and other assets. Companies sale. Ownership interest 100%. included are listed in Note 1 in annual accounts of Aker ASA and holding companies. Havfisk Harvesting of white fish. Ownership interest 73.25%.
Other Other companies and eliminations. See next section for over view of group entities. Aker ASA annual report 2013 73 Annual accounts – Aker group
Significant subsidiaries in the Aker group accounts are presented in the table below. Companies owned directly by Aker ASA are highlighted. Group’s ownership in % and Group’s share of votes in % are equal if nothing else is indicated.
Business address Business address Group’s Group’s ownership ownership in % City location Country in % City location Country
Havfisk ASA (HFISK) 73.25 Ålesund Norway Fornebuporten Holding AS 99.99 Oslo Norway Aker Seafoods Finnmark AS 73.25 Hammerfest Norway Fornebuporten AS 99.99 Fornebu Norway Aker Seafoods Melbu AS 73.25 Melbu Norway Fornebuporten Næring AS (3 selskaper) 99.99 Fornebu Norway Aker Seafoods JM Johansen AS 73.25 Stamsund Norway Bekkestua Syd AS 99.99 Fornebu Norway Hammerfest Industrifiske AS 60% av HFISK Hammerfest Norway Aker Encore AS 99.99 Oslo Norway Beskjæres 76 mm fra venstre før trykk >> Nordland Havfiske AS 73.25 Stamsund Norway Widerøeveien 5 AS 99.99 Oslo Norway Finnmark Havfiske AS 98% av HFISK Hammerfest Norway Maries Vei 20 AS 99.99 Fornebu Norway Aker Seafoods Båtsfjord AS 73.25 Båtsfjord Norway Fornebuporten utvikling AS 99.99 Oslo Norway Aker Seafoods Nordkyn AS 73.25 Kjøllefjord Norway Fornebuporten Parkering AS 99.99 Fornebu Norway Aker Seafoods Harvesting Finmark AS 73.25 Hammerfest Norway Fornebuporten Bolig Holding AS 99.99 Fornebu Norway Converto Capital Fund 99.80 Oslo Norway Fornebuporten UK AS 99.99 Fornebu Norway Norway Seafoods Group AS 73.63 Oslo Norway Abstract Cornwall Ltd 99.99 Aberdeen Scotland Norway Seafoods A/S (Denmark) 73.63 Grenå Denmark Abstract Cornwall 2 Ltd 99.99 Aberdeen Scotland Norway Seafoods UK Ltd. 73.63 Grimsby England Aker Achievement AS 100.00 Oslo Norway Norway Seafoods Sweden AB 73.63 Kungshamn Sweden Aker Maritime Finance AS 100.00 Oslo Norway Norway Seafoods France S.A 73.63 Castets France Old Kvaerner Invest AS 100.00 Oslo Norway Norway Seafoods AS 73.63 Oslo Norway Sea Launch Holding AS 100.00 Oslo Norway Aker Philadelphia Shipyard ASA 71.20 Oslo Norway Ocean Yield ASA 73.43 Oslo Norway Aker Philadelphia Shipyard Inc 71.20 Philadelphia USA Aker Invest AS 73.43 Oslo Norway Ocean Harvest AS 100.00 Oslo Norway Aker Invest II KS 73.43 Oslo Norway Ocean Maritime Ltd 100.00 Cayman Islands Cayman Islands American Champion, Inc 73.43 Seattle USA EstreMar S.A. 95.00 Buenos Aires Argentina New Pollock LP, Inc 73.43 Seattle USA Aker BioMarine AS 100.00 Oslo Norway Aker ShipLease AS 73.43 Oslo Norway Aker BioMarine Antarctic AS 100.00 Oslo Norway Aker ShipLease 1 AS 73.43 Oslo Norway Aker BioMarine Antarctic Services AS 100.00 Oslo Norway Aker Floating Production ASA (AFP) 73.43 Oslo Norway Aker BioMarine Antarctic US Inc 100.00 Issaquah USA Aker Contracting FP ASA 73.43 Oslo Norway Aker BioMarine Antarctic S.A. 100.00 Nueva Palmira Uruguay AFP Operations AS 73.43 Oslo Norway Aker Kvaerner Holding AS 70.00 Oslo Norway Aker Smart FP AS 73.43 Oslo Norway Norron Asset Management AB 48.18 Stockholm Sweden Connector 1 Holding AS 73.43 Oslo Norway Aker Floating Holding AS 100.00 Oslo Norway Connector 1 AS 73.43 Oslo Norway Aker Capital AS 100.00 Oslo Norway LH Shiplease AS 73.43 Oslo Norway Det norske oljeselskap ASA 49.99 Trondheim Norway LH Shiplease 1 AS 73.43 Oslo Norway Aker Holding Start 2 AS 100.00 Oslo Norway Ocean Holding AS 73.43 Oslo Norway Aker US Services LLC 100.00 Seattle USA F-Shiplease Holding AS 73.43 Oslo Norway Navigator Marine AS 100.00 Oslo Norway F Shiplease AS 73.43 Oslo Norway Setanta Energy Group BV 81.10 Amsterdam Netherlands 74 Aker ASA annual report 2013 Annual accounts – Aker group
2013 - Operating segments Det Total norske Total Converto Other and financial Aker olje- Ocean Aker industrial Capital Other elimin- invest- Amounts in NOK million Solutions 1) Kvaerner 1) selskap Yield BioMarine Havfisk holdings Fund 3) funds ations ments Total
External operating revenues - - 944 1 404 662 779 3 789 3 958 - 339 4 297 8 086 Inter-segment revenues ------7 - (7) - - Operating revenues - - 944 1 404 662 779 3 789 3 964 - 333 4 297 8 086 EBITDA - - (1 091) 1 220 93 211 433 87 - (236) (149) 284 Depreciation and amortisation - - (471) (597) (111) (77) (1 255) (137) - (23) (160) (1 415) Impairment changes and non-recurring items - - (666) - (60) - (726) (37) - (73) (110) (836) Operating profit - - (2 227) 623 (78) 134 (1 548) (87) - (332) (419) (1 967) Share of earnings in associates and joint ventures 522 183 - - 241 - 946 14 - 19 34 979 Beskjæres 76 mm fra venstre før trykk >> Interest income - - 41 105 1 11 156 33 - 74 107 264 Interest expense - - (302) (156) (52) (59) (569) (59) - (251) (310) (879) Other financial items - - (57) (108) (22) (161) (348) 550 - 105 654 306 Profit before tax 522 183 (2 545) 464 89 (75) (1 363) 451 - (385) 66 (1 297) Tax expense - - 1 997 15 194 25 2 230 (41) - (61) (102) 2 129 Profit for the year from continuing operations 522 183 (549) 479 283 (50) 868 410 - (446) (36) 832 Result from discontinued operations (net of tax) ------Profit for the year 522 183 (549) 479 283 (50) 868 410 - (446) (36) 832 Profit for the year to equity holders of the parent 369 128 (274) 413 283 (37) 881 401 - (491) (90) 791 Dividends received by Aker ASA and holding companies 308 87 - 318 76 - 788 - - 64 64 852
Property, plant, equipment, intangibles and interest-free fixed assets - - 6 324 8 061 1 358 2 304 18 045 891 - 5 490 6 381 24 426 Shares and investments in associated companies 7 229 1 015 - - - - 8 244 203 - 24 228 8 472 Investments in joint ventures - - - - 640 - 640 - - 23 23 663 Other shares - - - - 2 - 2 20 707 108 835 837 External interest-bearing fixed assets - - 273 1 170 41 - 1 485 338 - 82 420 1 904 Interest-free current assets - - 2 211 100 349 131 2 791 747 - 159 907 3 697 External interest-bearing current assets - - 24 - - - 24 375 - 24 399 423 Internal interest-bearing receivables - - - - - 202 202 - - (202) (202) - Cash and cash equivalents - - 1 709 806 42 24 2 581 732 - 2 522 3 253 5 834 Total assets 7 229 1 015 10 541 10 136 2 432 2 661 34 014 3 306 707 8 230 12 243 46 257 Equity 7 229 1 015 3 188 4 261 1 395 828 17 917 1 995 707 (10 161) (7 459) 10 458 Minority - - - - - 5 5 1 - 10 113 10 114 10 119 Non interest-bearing debt - - 2 364 586 137 605 3 692 799 - 2 206 3 005 6 697 Internal interest-bearing debt ------224 - (224) - - External interest-bearing debt - - 4 989 5 289 900 1 223 12 401 287 - 6 295 6 582 18 983 Total assets and liabilities 7 229 1 015 10 541 10 136 2 432 2 661 34 014 3 306 707 8 230 12 243 46 257
Impairment and sales losses - - (666) - (12) - (678) (25) - (134) (158) (836) Investments 4) - - 2 891 1 471 294 563 5 219 144 - 1 011 1 155 6 374 Aker ASA annual report 2013 75 Annual accounts – Aker group
2012 - Operating segments Det Total norske Total Converto Other and financial Aker olje- Ocean Aker industrial Capital Other elimin- invest- Amounts in NOK million Solutions 1) Kvaerner 1) selskap Yield 2) BioMarine Havfisk holdings Fund 3) funds ations ments Total
External operating revenues - - 332 1 094 469 774 2 670 3 134 - 149 3 283 5 952 Inter-segment revenues ------4 - (4) - - Operating revenues - - 332 1 094 469 774 2 670 3 138 - 144 3 283 5 952 EBITDA - - (1 582) 881 66 183 (452) 85 - (153) (67) (519) Depreciation and amortisation - - (112) (500) (81) (82) (774) (99) - (23) (122) (896) Impairment changes and non-recurring items - - (2 150) (34) (20) 33 (2 171) (79) - (87) (166) (2 337) Operating profit - - (3 843) 347 (35) 134 (3 397) (93) - (263) (355) (3 752) Beskjæres 76 mm fra venstre før trykk >> Share of earnings in associates and joint ventures 917 98 - - (10) - 1 005 142 - (1) 141 1 146 Interest income - - 55 50 - 13 119 36 - 97 132 251 Interest expense - - (128) (73) (31) (59) (291) (74) - (122) (196) (487) Other financial items - - (33) (65) 11 (3) (90) 9 - (183) (174) (264) Profit before tax 917 98 (3 949) 260 (64) 85 (2 653) 20 - (473) (453) (3 106) Tax expense - - 2 992 - (2) (23) 2 967 (50) - 52 2 2 969 Profit for the year from continuing operations 917 98 (957) 260 (66) 62 314 (30) - (421) (451) (137) Result from discontinued operations (net of tax) ------Profit for the year 917 98 (957) 260 (66) 62 314 (30) - (421) (451) (137)
Property, plant, equipment, intangibles and interest-free fixed assets - - 5 230 6 729 1 097 1 866 14 921 924 - 5 145 6 069 20 990 Shares and investments in associated companies 4 676 886 - - - - 5 562 193 - (2) 191 5 753 Investments in joint ventures - - - - 689 - 689 - - - - 689 Other shares ------19 607 160 787 787 External interest-bearing fixed assets - - 194 959 - 1 1 153 287 - 43 330 1 483 Interest-free current assets - - 1 771 88 296 73 2 228 1 073 - 71 1 143 3 372 External interest-bearing current assets - - 23 - - - 23 5 - - 5 28 Interest-bearing claims - - - - - 194 194 - - (194) (194) - Cash and cash equivalents - - 1 154 583 5 52 1 794 369 - 3 308 3 677 5 471 Net assets held for distribution ------Total assets 4 676 886 8 372 8 359 2 086 2 186 26 565 2 870 607 8 532 12 008 38 573
Equity 4 676 886 3 736 2 973 1 296 866 14 433 1 088 607 (6 668) (4 974) 9 460 Minority - - - - - 5 5 1 - 9 344 9 345 9 350 Non interest-bearing debt - - 2 180 597 137 416 3 330 883 - 1 995 2 878 6 208 Internal interest-bearing debt - - - - 93 - 93 525 - (618) (93) - External interest-bearing debt - - 2 456 4 789 560 898 8 703 373 - 4 479 4 852 13 555 Total assets and liabilities 4 676 886 8 372 8 359 2 086 2 186 26 565 2 870 607 8 532 12 008 38 573
Impairment and sales losses - - (2 150) (34) (18) - (2 202) (67) - (68) (135) (2 337) Investments 4) - - 4 484 1 905 250 80 6 719 129 - 946 1 075 7 794
1) Share of profits of associated company. 2) Pro forma figures for Ocean Yield. 3) Consolidated companies owned by Converto Capital Fund. 4) Investments include acquisitions of property, plant and equipment and intangibles (including increases due to business combinations). 76 Aker ASA annual report 2013 Annual accounts – Aker group
Geographical segments Other Total property, plants, curren Operating revenue based on equipment and intangibles by USD in cies Aker in location of customer company location Amounts in million USD NOK in NOK NOK NOK Amounts in NOK million 2013 2012 2013 2012 Revenue 582 3 420 1 327 3 339 8 086 Norway 2 953 1 732 21 543 19 302 EBITDA 190 1 119 56 (890) 284 EU 2 111 2 026 488 201 Profit before tax 56 328 16 (1 640) (1 297) The Americas 2 021 1 163 737 850 Asia 862 895 77 - Fixed assets 1 207 7 324 674 15 033 23 031 Other areas 138 137 187 11 Cash 185 1 120 59 4 654 5 834 Total 8 086 5 952 23 031 20 364 Other assets 300 1 818 245 15 330 17 392 Total assets 1 692 10 262 978 35 017 46 257
Beskjæres 76 mm fra venstre før trykk >> Equity 795 4 825 (68) 5 702 10 458 Analysis of operating revenues by category Minority interests - - - 10 119 10 119 Interest-bearing liabilities external 637 3 866 35 15 081 18 983 Amounts in NOK million 2013 2012 Interest-bearing liabilities internal 69 420 751 (1 171) - Interest-free liabilities 190 1 151 260 5 286 6 697 Construction contract revenue 1 620 277 Total equity and liabilities 1 692 10 262 978 35 017 46 257 Sales of goods 4 830 4 367 Revenue from services 125 30 Leasing income 1 413 1 101 Cash flow by segment Other 97 177 Total 8 086 5 952 Cash flow is allocated to the different companies as follows:
Debt Equity Revenue by category Operating Investing financing financing Cash Sales revenues of NOK 4 830 million in 2013 consists mainly of NOK 643 million in sales of krill prod Amounts in NOK million activities activities activities activities flow ucts by Aker BioMarine, NOK 831 million in harvesting revenues generated by Havfisk and Ocean Har vest, NOK 2 231 million in whitefish products sales by Norway Seafoods and NOK 944 million from oil Industrial holdings: and gas deliveries by Det norske oljeselskap. Det norske oljeselskap 916 (2 805) 2 444 - 555 Important customer Ocean Yield 895 (1 471) 232 517 173 Aker has two customers that have been invoiced approximately NOK 1 910 million and thus accounts Aker BioMarine 374 (294) (71) 27 36 for more than 10% of group revenues in 2013. Havfisk 143 (495) 324 - (28) Total industrial holdings 2 329 (5 065) 2 929 543 736 Earnings and balance sheet by currency Aker ASA has subsidiaries reporting in currencies other than the Norwegian kroner (NOK), where value Financial investments: is exposed to currency fluctuations. The table below shows the consolidated financial statements by Aker ASA and holding companies 386 (1 971) 1 804 (867) (649) currency. For sensitivity with respect to operating revenue, equity, fixed assets and interest-bearing Other companies and reclassifications (44) 71 94 73 193 liabilities, see Note 5, Note 13 and Note 28. Total 2 671 (6 965) 4 826 (251) 280
Aker ASA annual report 2013 77 Annual accounts – Aker group
Cash flow from operating activities is allocated to the different companies as follows: Note 9 Wages, personnel expenses and other operating expenses Cash flow Net Paid/ from Wages and personnel expenses consist of the following: interest received operating Amounts in NOK million EBITDA paid tax Other activities Amounts in NOK million 2013 2012
Industrial holdings: Wages 1 551 1 479 Det norske oljeselskap (1 091) (266) 1 292 981 916 Social security contributions 147 127 Ocean Yield 1 220 (158) (1) (166) 895 Pension costs 81 74 Aker BioMarine 93 (47) (3) 332 374 Other expenses 125 130 Havfisk 211 (48) (7) (13) 143 Capitalised personnel expenses 1) (600) (521) Total industrial holdings 433 (520) 1 281 1 134 2 329 Total 1 305 1 290
Financial investments: Average number of employees 2 604 2 638 Beskjæres 76 mm fra venstre før trykk >> Aker ASA and holding companies (236) (270) (21) 912 386 Other companies and reclassifications 87 34 (70) (94) (44) Number of employees at year-end 2 477 2 731
Total 284 (756) 1 191 1 952 2 671 Geographical split of number of employees by region: Norway 1 461 1 331 Cash flow from operating activities amounted to NOK 2 671 million in 2013. The difference of NOK EU 242 520 2 386 million compared to EBITDA is primarily due to net interest paid of NOK 756 million, net tax North America 594 553 received of NOK 1 191 million, taking into account a tax rebate linked to exploration activity on the Nor Other regions 180 327 wegian continental shelf, and other items totalling NOK 1 952 million. Total 2 477 2 731 Other items relating to Det norske oljeselskap are primarily linked to the expensing of previously cap italised exploration costs and increases in accrued costs. Other items related to Aker BioMarine are pri 1) Capitalised personnel expenses in 2013 mainly consist of NOK 406 million related to reimbursable licence expenses and marily linked to dividend received from Trygg Pharma Group of NOK 429 million. Other items related to research-, development- and production expenses in Det norske oljeselskap (2012: NOK 360 million) and NOK 185 million Aker ASA and holding companies are primarily linked to dividends received of NOK 852 million. related to capitalised construction expenses in Aker Philadelphia Shipyard.
Other operating expenses consist of the following:
Amounts in NOK million 2013 2012
Rent and leasing expenses 78 87 Impairment loss on trade receivables 16 10 Exploration expenses oil and gas 1 637 1 609 Production cost oil and gas 250 211 Other operating expenses 1 345 859 Total 3 325 2 776
Other operating expenses consist of the following items: Hired services (workforce) 58 61 External consultants and services other than audit (see below) 155 68 Bunkers for the fleet 251 202 Other operating expenses related to the fleet 84 121 Other 797 407 Total 1 345 859
Hired services consist of expenses for personnel without an employment contract and who are not sub contractors. 78 Aker ASA annual report 2013 Annual accounts – Aker group
Fees to auditors of the Aker group are included in other operating expenses. Note 11 Financial income and financial expenses They are distributed as follows: Net financial items recognised in profit and loss: Ordinary Consulting Amounts in NOK million auditing services Total 2013 2012 Amounts in NOK million 2013 2012
Aker ASA 2 2 4 2 Interest income on unimpaired investments available for sale - 21 Subsidiaries 9 5 15 13 Interest income on impaired investments available for sale 101 49 Total 11 7 18 15 Interest income on bank deposits and receivables at amortised cost 162 200 Dividends on available for sale financial assets 2 3 Consulting services of NOK 7.4 million consist of NOK 1.8 million in other assurance services, NOK Net gain and change in fair value on available for sale financial assets 166 - 2.9 million in tax advisory services and NOK 2.7 million in other non-audit services. Net change in fair value of financial assets at fair value through profit and loss 429 7 Net foreign exchange gain 35 - Beskjæres 76 mm fra venstre før trykk >> Foreign exchange gain from hedge instruments - 6 Note 10 Impairment changes and non-recurring items Other financial income 21 43 Total financial income 916 330 Impairment changes and non-recurring items include write-downs of goodwill, impairment losses and reversal of impairment losses on property, plant and equipment, major losses on the sale of operating assets, restructuring costs and other material matters not expected to be of a recurring nature. Interest expense on financial obligations measured at amortised cost (879) (597) Net foreign exchange loss - (54) Impairment changes and non-recurring items are as follows: Foreign exchange gain loss from hedge instruments (5) - Net gain from interest rate swaps (71) (54) Amounts in NOK million 2013 2012 Net loss and impairment on available for sale financial assets - (2) Net other financial expenses (271) (123)
Impairment losses on intangible assets (Note 14) (211) (397) Total financial expenses (1 226) (830) Tax on write-downs of technical goodwill (Note 12) 90 175 Net financial items (310) (500) Impairment losses on property, plant and equipment (Note 13) (715) (2 115) Total (836) (2 337) The financial income and expenses above include the following interest income and expense in respect of assets (liabilities) not recognised at fair value through profit and loss:
Impairment losses on plant and intangible assets totalling NOK 836 million in 2013 are related to Det Total interest income on financial assets 264 270 norske oljeselskap (NOK 666 million). This amount is relates to four of Det norske oljeselskaps produc Total interest expense on financial liabilities (879) (597) ing fields which have been impaired as a result of reduced estimates of recoverable reserves and increased abandonment cost estimates. Impairment losses were also recorded for exploration licences Net gains and changes in the fair value of financial assets available for sale in 2013 of NOK 166 million and licences that have been, or are in the process of being, returned. comprised primarily of gains and changes in the fair value of Aker American Shipping shares by 136 The impairment losses on plant and intangible assets of NOK 2 337 million in 2012 is mainly related million. The net change in fair value of financial assets at fair value through profit and loss of NOK 429 to Det norske oljeselskap. The impairment losses were primarily due to impairments of production facili million is mainly related to the total return swap ( TRS ) agreements with the underlying American Ship ties and wells totalling NOK 1 881 million and increases in abandonment provisions estimates. ping Company and Aker Solutions shares , of NOK 374 million and NOK 54 million, respectively. Other financial income comprised of NOK 13 million related to the expected achievement of milestones set in Aker BioMarine’s sales agreement with Lindsay Goldberg in 2010 and a gain on the demerger of Oslo Asset Management Holding AS of NOK 8 million. Net other financial expenses of NOK -271 million in 2013 refer mainly to a provision for losses by Havfisk related to an interest and currency swap against Glitnir of NOK -158 million, warranties in Ocean Yield of NOK 39 million, a loss on the demerger of Molde Football AS of NOK -27 million and various bank charges. The net change in fair value of financial assets measured at fair value through profit and loss in 2012, NOK 7 million, is mainly related to the total return swap (TRS) agreement with American Shipping Com pany shares. NOK 43 million in other financial income related to the expected achievement of Mile stones IV and V by Aker BioMarine pursuant to the sales agreement with Lindsay Goldberg from 2010. Other financial expenses of NOK -123 million in 2012 are among other related to increased liability linked to expected payments to TH Global of NOK -44 million (see Note 36), guarantee expenses in Ocean Yield of NOK -24 million and bank charges.
Aker ASA annual report 2013 79 Annual accounts – Aker group
Financial items in other comprehensive income consist of the following: Received interest is split as follows:
Amounts in NOK million 2013 2012 Amounts in NOK million 2013 2012
Foreign currency differences related to foreign subsidiaries 372 (238) Interest income on bank deposits 135 200 Change in fair value of cash flow hedges (22) (22) Interest income on investments 129 70 Change in fair value reserve 346 (11) Hereof added to principal (129) (82) Reclassified to profit or loss: fair value and currency differences (145) 1 Hereof added to receivables (13) - Total 551 (271) Total interest received 122 188
Items included in other comprehensive income are split between the majority and Interest added to principal is mainly related to interest converted into American Shipping Company minority shares as follows: bonds.
Amounts in NOK million 2013 2012 Beskjæres 76 mm fra venstre før trykk >> Note 12 Tax Majority share 514 (246) Minority share 37 (25) Aker’s net tax income amounts to NOK 2 129 million and is mainly attributable to expected refunds Total 551 (271) from the Norwegian state linked to the tax value of exploration expenses incurred in Det norske olje selskap of NOK 1 413 million. In the equity the majority share is distributed between exchange differences, As and oil production company Det norske oljeselskap is subject to specific provisions of the Petro value changes and cash flow hedges: leum Taxation Act. Revenues from offshore activities are liable to ordinary corporation tax (28 per cent) and surtax (50 per cent). The company may require refunds from the state corresponding to the tax Amounts in NOK million 2013 2012 value of its incurred exploration costs, provided that these do not exceed the taxable loss allocated to the offshore activities. Exchange differences related to foreign subsidiaries 342 (219) Change in fair value of cash flow hedges (16) (16) (Tax expense)/tax income Change in fair value reserve 333 (11) Amounts in NOK million 2013 Restated 2012 Reclassified to profit or loss: fair value and currency differences (145) 1 Total 514 (246) Recognised in income statement: This year net tax receivable (+) and payable (-) (123) (95) Tax receivable under Norwegian petroleum tax legislation 1 413 1 300 Paid interest is split as follows: Adjustment prior year 17 18 Total current tax expense 1 306 1 223 Amounts in NOK million 2013 2012 Deferred tax expense: Paid interest recognised in profit and loss (723) (580) Origination and reversal of temporary differences 554 1 737 Paid interest capitalised (154) (128) Utilisation of previously unrecognised tax losses 264 67 Total paid interest (877) (709) Total deferred tax expense 818 1 804 Deferred tax recorded against exploration expenses - (57) Tax on foreign exchange gains/losses 4 - Deferred tax expense in income statement 822 1 746 Income tax 2 129 2 969
Income tax expenses divided between the petroleum tax legislation and ordinary tax legislation: Petroleum tax legislation 50% surtax 1 273 1 974 Ordinary tax legislation 856 995 Total income tax expense in income statement 2 129 2 969 80 Aker ASA annual report 2013 Annual accounts – Aker group
Reconciliation of effective tax rate Tax effect of uplift oil The tax-free allowance is a special income tax allowance applied when calculating the surtax in Det norske oljeselskap. The tax-free income is calculated on basis of investments in pipelines and produc Amounts in NOK million 2013 2012 tion facilities, and can be considered as an additional depreciation in the surtax basis. The allowance represents 7.5 percent in four years, totalling 30 percent of the investment. The income is recognised in Profit before tax (1 297) (3 106) the year it is deductible in corporate tax return and thus affect the current tax in the same way as a per manent difference. Nominal tax rate in Norway 28% 363 870 50% surrate in Norway under petroleum tax legislation 1 273 1 974 Deferred tax on net impairment losses recognised directly in the balance sheet Tax rate differences in Norway and abroad (9) (48) Upon the sale of a license where Det norske oljeselskap has accounted for deferred tax and goodwill in Income not subject to tax 195 36 a business combination, both goodwill and deferred taxes will be included in of gains and losses. When Expenses not deductible for tax purposes (54) (61) such licenses are impaired as a result of impairment tests, a similar assumption is used and goodwill Utilisation of previously unrecognised tax losses 264 67 and deferred tax are assessed together with the corresponding license Tax losses for which no deferred income tax asset was recognised (214) (168) Tax effect of associated companies 274 320 Beskjæres 76 mm fra venstre før trykk >> Tax effect of uplift oil (free income) 165 110 Deferred tax on current year's impairment booked directly to balance sheet (90) (179) Other differences (38) 49 Total income tax expenses in income statement 2 129 2 969
Petroleum Tax in Norway - 50 percent surtax In 2013, the 50 percent surtax on exploration expenses incurred by Det norske oljeselskap amounted to NOK 1 273 million. From 2014, the surtax rate will be 51 percent.
Tax rate differences between Norway and abroad Foreign companies with different tax rates than 28 percent include the company’s businesses in, among others, the USA, Ireland and Argentina. The total tax expense abroad amounted to NOK 30 mil lion, of which NOK 22 million is payable. The tax payable abroad is attributable to the United States with NOK 8 million, Sweden with NOK 7 million and Ireland with NOK 6 million. Net tax liability abroad amounts to NOK 10 million.
Income not subject to tax Tax-free revenue is mainly attributable to permanent differences on sale of shares and equity deriva tives.
Utilisation of previously unrecognised tax losses Based on the positive development of Aker BioMarine and Ocean Yield some of previously unrecog nised tax losses were utilised in 2013.
Cost of unrecognised tax losses carried forward Based on expected future taxable income, Aker ASA and holding companies and some of the Akers operations cannot justify capitalising the tax-losses carried forward in full.
Tax effect of associated companies Results from associates are recognised after tax, and therefore do not impact the Group’s tax expenses. Aker ASA annual report 2013 81 Annual accounts – Aker group
Tax recognised in other comprehensive income 2013 Restated 2012
Compre- Compre- Compre- Compre- hensive hensive hensive hensive income income income income Amounts in NOK million before tax Tax after tax before tax Tax after tax
Remeasurement of defined benefit liabilities (26) 7 (19) 15 (4) 11 Remeasurement of defined benefit liabilities in associated companies 9 - 9 68 - 68 Changes in fair value of available for sale financial assets 364 (18) 346 (11) - (11) Changes in fair value of cash flow hedges (22) - (22) (22) - (22) Changes in fair value of available for sale financial assets transferred to profit and loss (145) - (145) 1 - 1 Currency translation differences 372 - 372 (238) - (238) Beskjæres 76 mm fra venstre før trykk >> Changes in other items from associated companies 632 - 632 (161) - (161) Total tax expenses other comprehensive income 1 185 (11) 1 174 (349) (4) (353)
Deferred tax assets are allocated as follows: Det norske oljeselskap Companies subject to surtax may, without time limitations, carry forward losses with the addition of interest. A corresponding rule also applies to unused uplift. The tax position can be transferred upon Amounts in NOK million 2013 Restated 2012 the realisation of the company or a merger. Alternatively, disbursement of the tax value can be claimed from the state. Industrial holdings: Det norske oljeselskap 630 - Aker BioMarine Ocean Yield 56 54 Based on the positive development of Aker BioMarine some of previously unrecognised tax losses have Aker BioMarine 204 - been utilised in 2013. Havfisk 146 124 Ocean Yield Financial investments: The Board of Directors expects that deferred tax assets will be utilised against taxable income in the future. Converto Capital Fund 57 65 Aker ASA and holding companies 12 37 Havfisk Other companies 62 66 Havfisk’s deferred tax assets refer to NOK 113 million in loss carried forward and NOK 33 million in Total 1 167 347 temporary differences. The loss carry forward was reduced by NOK 11 million in 2013 and the Board of Directors expects an increase in taxable profit and a utilisation of the loss carry forward within five to seven years.
Converto Capital Fund Deferred tax assets of NOK 57 million refer mainly to the subsidiary Norway Seafoods with NOK 51 million. Norway Seafoods’ deferred tax assets refer to loss carried forward of NOK 31 million and NOK 20 million in temporary differences. The Board of Directors expects an increase in taxable profits in the future and thus utilisation of the loss carry forward.
Aker ASA and holding companies The deferred tax asset in Aker ASA and holding companies is NOK 12 million. Aker continuously evalu ates the companies’ possibilities in utilisation of the loss carry-forward, and has reduced the amount over the past few years. Total deferred tax assets of Aker ASA and holding companies of NOK 1 393 million are not accounted for in the balance sheet. The total non-recognised tax assets of the Aker ASA group are NOK 2 372 million at year-end 2013. 82 Aker ASA annual report 2013 Annual accounts – Aker group
Movements in net deferred tax liabilities in 2013 are as follows: Property, Oil- and gas Tax Other Aban- Tax losses plant and exploration technical intangible donment carry Amounts in NOK million equipment expenses goodwill assets provision forward Other Total
At 1 January 2013 185 (1 697) (1 600) (335) 622 1 253 265 (1 306) Exchange rate differences (5) - - - - 13 5 12 Acquisitions and sales of subsidiaries (20) - - - - (42) 49 (13) Change in deferred tax deducted from impairment loss on intangible assets (see Note 14) - - 66 23 - - - 90 Change in deferred tax directly to balance sheet - 103 - (3) - - - 100 Deferred tax (charged) / credited to income statement 77 93 - 107 139 724 (321) 818 Deferred tax expenses in other comprehensive income ------(11) (11) At 31 December 2013 237 (1 501) (1 534) (208) 761 1 948 (13) (310)
Beskjæres 76 mm fra venstre før trykk >> Allocated between deferred assets and liabilities as follows: Deferred assets 362 (1 501) (261) (92) 761 1 895 3 1 167 Deferred liabilities (125) - (1 273) (116) - 53 (16) (1 478)
Movements in net deferred tax liabilities in 2012 are as follows: Property, Oil- and gas Tax Other Aban- Tax losses plant and exploration technical intangible donment carry Total Amounts in NOK million equipment expenses goodwill assets provision forward Other restated
At 1 January 2012 (412) (1 862) (1 775) (345) 222 524 448 (3 200) Exchange rate differences 4 ------4 Acquisitions and sales of subsidiaries (3) - - - - (3) (79) (84) Change in deferred tax deducted from impairment loss on intangible assets (see Note 14) - - 175 - - - - 175 Deferred tax (charged) / credited to income statement 596 165 - 10 400 732 (99) 1 804 Deferred tax expenses in other comprehensive income ------(4) (4) At 31 December 2012 185 (1 697) (1 600) (335) 622 1 253 265 (1 306)
Allocated between deferred assets and liabilities as follows: Deferred assets (40) - - - - 274 113 347 Deferred liabilities 225 (1 697) (1 600) (335) 622 979 154 (1 652)
Tax technical goodwill Tax payable and income tax receivable The fair value valuation of licenses is based on cash flows after tax. This is due to licenses only being Tax payable amounts to NOK 133 million and tax receivable amount to NOK 37 million. The 2013 fig sold in an after tax market based on decisions made by the Norwegian Ministry of Finance pursuant to ures are based on preliminary estimates of non-taxable income, non-tax deductible items and tempo section 10 of the Petroleum Taxation Act. The purchaser can therefore not claim a deduction of the rary differences between the financial accounts and the tax accounts. The final result will be calculated consideration with tax effect through depreciations. In accordance with sections 15 and 19 of IAS 12, a based on the tax return, and may differ from the estimates above. provision is made for deferred tax corresponding to the difference between the acquisition cost and the transferred tax base depreciation. The offsetting entry to this deferred tax is goodwill. Hence, goodwill Petroleum taxation act arises as a technical effect of deferred tax (see also Note 14). Det norske oljeselskap may claim a refund from the Norwegian State of the tax value of exploration expenses incurred insofar as these do not exceed the year’s tax-related loss allocated to the offshore activities. The refund is included in the line calculated tax receivable of NOK 1 411 million. In late 2013 the Det norske oljeselskap received a refund of NOK 1 318 million from the Norwegian State for the year 2012. Aker ASA annual report 2013 83 Annual accounts – Aker group
Note 13 Property, Plant and Equipment
Movements in property, plant and equipment for 2013 are shown below: Production Ships and Machinery, Project under Fields under plant, includ Amounts in NOK million airplanes vehicles Buildings Land construction development ing wells Total
Cost balance at 1 January 2013 10 706 1 448 1 844 937 290 3 164 871 19 260 Acquisitions through business combination - - - - 266 - - 266 Other acquisitions 1) 2 172 116 91 65 885 1 358 279 4 967 Sales of operations - (16) (52) (203) (53) - - (325) Other disposals (1) (89) (759) (8) (14) - - (871) Reclassification from intangible assets and from under construction 187 (172) 1 45 (114) (2 875) 2 888 (40) Effects of movements in foreign exchange 715 79 46 13 46 - - 900 Beskjæres 76 mm fra venstre før trykk >> Cost balance at 31 December 2013 13 779 1 367 1 171 848 1 306 1 647 4 038 24 157
Accumulated depreciation and impairment losses at 1 January 2013 (2 953) (879) (638) (40) (96) (1 800) (294) (6 699) Depreciation charge for the year (782) (110) (39) (5) (1) - (432) (1 368) Impairment (64) - (1) (77) (9) - (565) (715) Sales / disposals of operations - 15 15 77 32 - - 139 Reclassification (3) 77 - - 1 1 800 (1 800) 74 Other disposals 1 71 37 - - - - 110 Effects of movements in foreign exchange (215) (50) (29) (5) (6) - - (304) Accumulated depreciation and impairment losses at 31 December 2013 (4 016) (876) (654) (49) (79) - (3 090) (8 763) Carrying amount at 31 December 2013 9 763 491 518 799 1 228 1 647 948 15 394 Investments not paid 67 - 42 - - - 172 281 Book value of leasing agreements recorded in the balance sheet ------
1) Capitalised interest in 2013 amounted to NOK 154 million.
Specification by company at 31 December 2013: Production Ships and Machinery, Project under Fields under plant, includ Amounts in NOK million airplanes vehicles Buildings Land construction development ing wells Total
Industrial holdings: Det norske oljeselskap - 62 - - - 1 647 948 2 658 Ocean Yield 7 765 7 - - - - - 7 772 Aker BioMarine 482 244 - - 10 - - 736 Havfisk 965 2 131 2 - - - 1 099 Total industrial holdings 9 211 316 131 2 10 1 647 948 12 265 Financial investments: Converto Capital Fund Aker ASA and holding companies 299 163 218 76 14 - - 770 Other operations and eliminations 139 11 12 2 - - - 163 Carrying amount at 31 December 2013 115 2 156 720 1 203 - - 2 195 Balanseført verdi per 31. desember 2013 9 763 491 518 799 1 228 1 647 948 15 394 84 Aker ASA annual report 2013 Annual accounts – Aker group
Introduction Machinery, vehicles Total property, plant and equipment amounted to NOK 15 394 million at end of 2013, a change of NOK Investment in machinery and vehicles of NOK 116 million is mainly attributable to investments made by 2 833 million from end of 2012. Aker Philadelphia Shipyard of NOK 36 million and smaller investments made by Aker BioMarine, Nor Ships and airplanes totalling NOK 9 763 million at end of 2013, can mainly be attributed to ships owned way Seafoods and Det norske oljeselskap. by the companies within the business segments Ocean Yield, Aker BioMarine, Havfisk and Converto Capi Depreciation in 2013 of NOK 110 million primarily comprised NOK 33 million in Aker BioMarine, NOK tal Fund (Ocean Harvest) totalling NOK 7 765 million, NOK 482 million, NOK 965 million and NOK 299 mil 20 million in Det norske oljeselskap and NOK 50 million in companies owned by Converto Capital Fund. lion, respectively. In addition, the book value of Antarctic Navigator was NOK 121 million at end of 2013. The changes of NOK 2 010 million in 2013, stem from investments in ships by Ocean Yield and Land and buildings Havfisk, offset by depreciation. Investment in land and building totalling NOK 156 million is mainly attributable to real estate investment Land totalling NOK 799 million at end of 2013 is mainly located on Fornebu and in Aberdeen. by Fornebuporten. Changes in 2013 amounted to NOK -98 million. Other disposals of NOK 767 million are mainly attributable to the handover of apartments in Maries vei. The buildings total of NOK 518 million is attributable to buildings owned by Converto Capital Fund’s Land is not depreciated, while buildings depreciation plan is between 20 and 50 year. subsidiary Aker Philadelphia Shipyard’s facility in Philadelphia, fish processing facilities in Norway and buildings owned by Fornebuporten. Under construction The change in 2013 of NOK -688 million is primarily attributable to the purchase of buildings by The acquisition of subsidiary Bekkestua Syd and this year’s investment are NOK 1 151 million and are Fornebuporten. mainly attributable to investments by Fornebuporten. Beskjæres 76 mm fra venstre før trykk >> Det norske oljeselskap has fields under development and production plant including wells of NOK 1 647 million and NOK 948 million respectively. The change in 2013 is attributable to investments that Fields under development offset some of the sales and write-downs. Fields under development in Det norske oljeselskap is Jette, and this year’s investment is NOK 1 358 Machinery and vehicles totalling NOK 491 million comprise primarily of fishing equipment in Aker million. BioMarine and Havfisk and equipment in Converto Capital Fund’s subsidiaries Aker Philadelphia and Norway Seafoods. Change in 2013 is NOK -79 million. Production plant, including wells Production plant in Det norske oljeselskap can mainly be attributed to the Jotun and Jette field. Ships and airplane The impairment of production plant, including wells of NOK 565 million is mainly related to Jette, Varg, The investment in ships of NOK 2 172 million is mainly attributable to Ocean Yields purchase of FAR Jotun and Glitne due to reduction in reserves and increase in the estimate of the abandonment provision. Senator and FAR Statement for NOK 1 223 million and NOK 559 million in Havfisk. The impairment loss in 2013 of NOK 64 million is primarily attributable to the impairment of Antarctic Effect of exchange rate fluctuations Navigator by NOK 46 million to NOK 121 million (USD 20 million) and the impairment of a vessel owned The effect of exchange rate fluctuations accounts for NOK -304 million and is mainly attributable to the by Ocean Harvest by NOK 18 million to the expected sales price. fluctuations in the USD/NOK ratio for the subsidiaries Ocean Yield, Aker BioMarine and Aker Philadel Depreciation in 2013 was NOK 782 million. The hull depreciation plan has a period between 20 and phia Shipyard. Based on the value recognised in the balance on 31 December 2013 a 10 percent 25 years, while the plan for machinery and equipment on board has a period between 5 and 10 years. decline of the USD exchange rate will amount to a reduction in the value of property, plant and equip ment of NOK 0.7 billion.
Movements in property, plant and equipment for 2012 are shown below: Rigs, Projects Production ships and Machinery, under Fields under plant, includ Amounts in NOK million airplanes vehicles Buildings Land construction development ing wells Total
Cost balance at 1 January 2012 9 527 1 234 1 069 925 351 803 95 14 005 Acquisitions through business combination 1 2 783 33 - - - 819 Other acquisitions 1) 2 004 113 13 1 265 2 576 776 5 747 Other disposals (405) (21) - - - (418) - (844) Reclassification from intangible assets and from under construction 142 171 15 (13) (315) 202 - 202 Effects of movements in foreign exchange (562) (51) (35) (8) (10) - - (668) Cost balance at 31 December 2012 10 706 1 448 1 844 937 290 3 164 871 19 261
Accumulated depreciation and impairment losses at 1 January 2012 (2 691) (804) (576) (38) (75) - (47) (4 231) Depreciation charge of the year (633) (127) (37) (4) 30 - (82) (854) Impairment (83) - (44) - (25) (1 800) (164) (2 115) Other disposals 292 19 - - (30) - - 281 Effects of movements in foreign exchange 162 33 19 2 4 - - 220 Accumulated depreciation and impairment losses at 31 December 2012 (2 953) (879) (638) (40) (96) (1 800) (294) (6 699) Carrying amount at 31 December 2012 7 754 570 1 206 897 194 1 364 577 12 562 Book value of leasing agreements recorded in the balance sheet ------
1) Capitalised interest in 2012 amounted to NOK 13 million Aker ASA annual report 2013 85 Annual accounts – Aker group
Specification by company at 31 December 2012: Production Rigs, Projects plant, ships and Machinery, under Fields under including Amounts in NOK million airplanes vehicles Buildings Land construction development wells Total
Industrial holdings: Det norske oljeselskap - 52 - - - 1 364 577 1 993 Ocean Yield 6 389 1 - - 69 - - 6 459 Aker BioMarine 423 230 - - - - - 652 Havfisk 371 103 137 2 - - - 614 Total industrial holdings 7 183 385 137 2 69 1 364 577 9 718
Financial investments: Beskjæres 76 mm fra venstre før trykk >> Converto Capital Fund 294 170 234 74 24 - - 796 Aker ASA and holding companies 148 13 13 2 - - - 176 Other operations and eliminations 128 2 822 819 101 - - 1 872 Carrying amount at 31 December 2012 7 754 570 1 206 897 194 1 364 577 12 562
Note 14 Intangible assets
Movements in intangible assets in 2013 are shown below: Capitalised oil- Oil- and Technical and gas explo Other Fishing Amounts in NOK million gas licenses goodwill ration expenses goodwill licenses Other Total
Cost balance at 1 January 2013 2 652 1 823 2 327 1 171 654 448 9 075 Other acquisitions 122 - 1 286 - - 33 1 441 Expensed dry wells - - (1 151) - - - (1 151) Sales / disposals of subsidiaries and operations - - - - - (43) (43) Other disposals - - (219) - - - (219) Reclassification to property, plant and equipment (see Note 13) - - (13) (11) - (1) (24) Reclassification between cost and amortisation (213) (213) Effects of movements in foreign exchange - - 14 80 - 11 105 Cost balance at 31 December 2013 2 560 1 823 2 244 1 241 654 448 8 970
Accumulated amortisation and impairment losses at 1 January 2013 (358) (163) (1) (399) (10) (342) (1 273) Amortisation for the year (17) - - - - (30) (47) Impairment losses recognised in income statement (125) (66) - (7) - (12) (211) Sales / disposals of subsidiaries and operations - - - - - 43 43 Reclassification between cost and amortisation 213 213 Effects of movements in foreign exchange - - - (52) - (6) (58) Accumulated amortisation and impairment losses at 31 December 2013 (286) (229) (1) (458) (10) (347) (1 332) Carrying amount at 31 December 2013 2 273 1 594 2 243 782 644 101 7 637 86 Aker ASA annual report 2013 Annual accounts – Aker group
Movements in intangible assets in 2012 are shown below: Capitalised oil- Oil- and Technical and gas explo Other Fishing Amounts in NOK million gas licenses goodwill ration expenses goodwill licenses Other Total
Cost balance at 1 January 2012 2 656 1 826 2 509 1 232 654 421 9 297 Other acquisitions - - 1 151 - - 35 1 187 Expensed dry wells - - (1 121) - - - (1 121) Disposals (5) (3) - - - - (8) Reclassification to property, plant and equipment (see Note 13) - - (203) - - - (203) Effects of movements in foreign exchange - - (10) (60) - (8) (78) Cost balance at 31 December 2012 2 652 1 823 2 327 1 171 654 448 9 075 Accumulated amortisation and impairment losses per 1 January 2012 (124) (28) (1) (407) (10) (311) (881) Amortisation for the year (8) - - - - (34) (42) Impairment losses recognised in income statement (226) (135) - (33) - (4) (397) Beskjæres 76 mm fra venstre før trykk >> Effects of movements in foreign exchange - - - 41 - 6 47 Accumulated amortisation and impairment losses at 31 December 2012 (358) (163) (1) (399) (10) (342) (1 273) Carrying amount at 31 December 2012 2 293 1 660 2 326 772 644 106 7 802
Introduction Oil and gas licenses of NOK 2 273 million and technical goodwill of NOK 1 594 million amounted to a In 2013, the amortisation from continued operations of NOK 47 million (NOK 42 million in 2012) is attrib total of NOK 3 867 million at the end of 2013. This amount can be attributed to the Det norske olje utable to Aker BioMarine. The excess value of NOK 26 million relates to license agreements with a selskap. maturity of between four and six years while another NOK 19 million relates to amortisation in Det nor The change in capitalised exploration expenditures in 2013 of NOK - 83 million is primarily attributable ske oljeselskap. to investments of NOK 1.3 billion and the expensing of NOK 1.2 billion as a result of drilling dry wells. The impairment losses of NOK 211 million, recognised as non-recurring items in 2013, can primarily The carrying value of other goodwill was NOK 782 million at the end of 2013, a change of NOK 10 be attributed to Det norske oljeselskap. million attributable to currency fluctuations and impairment losses. Goodwill is capitalised as a consequence of the requirement in IFRS 3 to make provision for deferred As at 31 December 2013, other goodwill was split between the subsidiaries Aker BioMarine (NOK tax in connection with a business combination, even if the transactions are made on an “after-tax” basis 339 million) and Ocean Yield (Aker Floating Production) (NOK 232 million), and the establishment of fish as a result of a decision under section 10 of the Petroleum Taxation Act. The offsetting entry to deferred ing operations by Aker (NOK 169 million). tax is goodwill. Goodwill related to Aker Floating Production originates from the acquisition of Aker Contracting FP ASA in 2006, which had developed the AKER S.M.A.R.T concept for constructing a generic, cost effec Oil- and gas licenses and technical goodwill tive FPSO. Allocation of oil- and gas licenses and technical goodwill: Goodwill in Aker BioMarine is entirely related to its krill operations, and was booked in connection with Aker’s purchase of Natural and the establishment of the Aker BioMarine group in 2006. Oil- and gas Technical The fishing licenses are attributable to Havfisk and are carried at NOK 993 million, less deferred Amounts in NOK million licenses goodwill Total income of NOK 349 million related to Aker’s establishment of Havfisk in 2006. At the end of 2013 Havfisk owned 29.6 cod and haddock trawl licenses, 31.9 saithe trawl licenses, eight shrimp trawl Carrying amounts in Det norske oljeselskap 641 321 962 licenses and three silver smelt licenses in Norway. Norway Seafoods’ rights to farm trout at six locations Purchase of Det norske oljeselskap in 2011 1 632 1 273 2 905 are also recognised as intangible assets. The carrying value of other intangible assets of NOK 101 million at the end of 2013 comprises, Total 2 273 1 594 3 867 among other things, NOK 78 million attributable to Aker BioMarine in connection with licenses/produc tion development with a maturity of between four to six years. The valuation unit used to assess impairment will depend on the lowest level at which it is possible to The amortisation and impairment charge are recognized in the following lines in the income statement: identify cash flows that are independent of cash flows from other groups of fixed assets. For oil and gas assets, this is carried out at the field or licence level. The loss of value of capitalised exploration costs is Amounts in NOK million 2013 2012 assessed for each well. Impairment is recognised when the book value of an asset or a cash generating unit exceeds the recoverable amount. The recoverable amount is the higher of the asset’s net sales Depreciation and amortisation (47) (42) value and value in use. In the assessment of the value in use, the expected future cash flow is dis Depreciation and amortisation continuing operations (47) (42) counted to the net present value by applying a discount rate after tax that reflects the current market valuation of the time value and the specific risk related to the asset. Non-recurring items (211) (397) For producing licences and licences in the development phase, the recoverable amount is estimated Total (257) (439) based on discounted future after tax cash flows. Future cash flows are calculated on the basis of Aker ASA annual report 2013 87 Annual accounts – Aker group
expected production profiles and estimated proven and probable remaining reserves. The following The main objective for the Aker Group when undertaking impairment calculations is to ensure con assumptions have been applied: sistency in the assumptions being used. Any changes in the assumptions from prior periods are explained. ■■ discount rate of 10.7 percent nominal after tax based on WACC The discount rate is estimated based on a weighted average of the required return on equity and ■■ a long-term inflation of 2.5 percent expected borrowing costs. The borrowing costs are based on a risk-free rate in the currency in which ■■ a long-term exchange rate of NOK/USD 6.00 the loans are denominated, and a margin that reflects the long-term financial costs. ■■ oil prices are based on forward prices, and it is expected that 2017 will be the final year of produc The discount rate used may vary between the different companies, as it is set for each of the cash tion for fields that are currently under production. generating unit individually. Differences can stem from expected liability costs due to differences that arise in interest margins and estimated interest-free rates when using a 10-year Norwegian government The following nominal oil price assumptions are applied: bond or 10-year US government bond, as well as differences in equity ratios between industries.
Year Average in USD Ocean Yield (Aker Floating Production): At the end of 2013 goodwill related to Aker Floating Production is NOK 232 million. No write-downs were made in 2013 or 2012. The goodwill originates from the acquisition of Aker Contracting FP ASA in 2014 106 2006, which had developed the AKER S.M.A.R.T concept for constructing a generic, cost effective 2015 98 FPSO. Beskjæres 76 mm fra venstre før trykk >> 2016 90 The recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to 2017 84 sell and its value in use. In the case of Aker Floating Production the recoverable amount has been found by calculating the value in use. This has been determined by estimating the contractual discounted cash The above prices arebased on the forward prices. Source: ICE Brent Crude 31.12.2013. flows. The calculations are based on future cash flows, budgets and strategic objectives. Currently the FPSO is on a contract with Reliance Industries Ltd. that expires in September 2018. The projected cash Oil- and gas exploration expenses flows used in the calculations covers the period until this contract expires, and is based on Aker Floating Det norske oljeselskap recognises expenses exploration and development expenses using the “suc Productions long term budget. The cash flows represents management’s best estimate and reflects the cessful efforts” method. All exploration costs (including seismic acquisition, seismic studies and use of organisation’s experience with current operations. own time), with the exception of the costs of acquiring licenses and drilling of exploration wells, are Projected cash flows are estimated using day rates as defined by the charter and the operation and expensed as incurred. Costs associated with the drilling of exploration wells are temporarily capitalised maintenance contracts, where the day rates from the operation and maintenance contract are increased pending the evaluation of potential discoveries of oil and gas reserves. If no reserves are discovered, or annually by five percent. A bonus has been included based on estimated FPSO downtime. The esti if the recovery of the reserves is considered to be technically or commercially unviable, the costs of the mated FPSO downtime includes planned shutdowns for maintenance in 2014 and 2016 and additional exploration wells are expensed. Such expenses may be capitalised in the balance sheet for more than estimated shutdowns with a reduction in bonus payments at specific intervals every year. The achieved one year. The main criteria are that there must be definite plans for future drilling under the license, or uptime in 2013 was 99.9 per cent. The average uptime since the final acceptance certificate was issued that a development decision is expected to be made in the near future. In 2013, based on these on 1st July 2009 has been 99.2 per cent. assessments, expensed dry wells was NOK 1.2 billion. Operating expenses have been included with an annual increase of three to five percent. Expenses due to the aging of equipment have also been included. Other indirect expenses are estimated with an Other goodwill annual increase of two per cent. As a terminal value, the purchase option price in 2018 of USD 255 mil Allocation of other goodwill: lion is used. Cash flow is adjusted with estimated tax expenses. The cash flows used in the calculations is after tax. Thus, the applied discount rate is also after tax. Amounts in NOK million 2013 2012 The discount rate used is 6.51 per cent, which equals a pre tax rate of 7.34 per cent. The discount rate is estimated as a weighted average of the required return on equity and expected borrowing costs, at an expected long-term equity ratio of 35 per cent. The equity ratio has been increased from 30 per cent in Ocean Yield 232 214 2012. The capital asset pricing model for a peer group of companies in the sector has been applied Aker BioMarine 339 339 when calculating the weighted average cost of capital (WACC). A five year USD swap rate has been Diverse 211 219 used as the debt cost, with a margin that reflects long term financing in the current market. Total 782 772 Calculating the value in use, by estimating the contractual discounted cash flows requires subjective judgments. The calculation is also subject to estimates that may fluctuate. A sensitivity analysis is per formed based on two key scenarios that management considers to be the most obvious and relevant to Determination of recoverable amount: show how changes in the base assumptions influence the value in use: Aker is reviewing goodwill for impairment on a yearly basis or more frequently if circumstances indicate impairment. The test is performed at year- end. An impairment loss is recognised if the estimated A) An increase in the discount rate of 50 percent recoverable amount, taking sensitivity analyses into account, is lower than the carrying value of the B) An increase in downtime to 5% throughout the period i.e. bonus is not payable any months in the asset or the cash-generating unit. period Goodwill related to Aker Floating Production at the beginning of the year was linked to the FPSO contract for Dhirubhai-1. Aker BioMarine’s goodwill is allocated to the krill operations of the business. Neither scenario A nor scenario B caused any impairment. Other goodwill of NOK 211 million is primarily attributable to Havfisk. The recoverable amount for Consequently, the remaining goodwill of USD 38 million (NOK 232 million) is adequately supported Aker BioMarine, Havfisk and the Aker Floating Production FPSO contract were found by calculating the by the projected cash flows from the FPSO Dhirubhai-1 contract. value-in-use, based on future cash flows, budgets and strategic objectives. 88 Aker ASA annual report 2013 Annual accounts – Aker group
Aker BioMarine: A license for cod, haddock and saithe is a license giving rights to trawl for ground fish north of the The company’s carrying value of NOK 339 million for goodwill is entirely allocated to “Nutra”, which 62nd latitude as well as in the North Sea during parts of the year. The current regulations allow every represents all business operations of the Group as of 31 December 2013, with the exception of the vessel to obtain up to three licenses. The Ministry of Fisheries and Coastal Affairs determines the quota CLA/Tonalin licensing agreements, the holding company activities of the parent company and the size of each license annually. In addition, licenses can be transferred between different vessel groups if “Pharma” segment. any of the vessel groups are unable to fulfil their share of the quota, referred to as “re-assigning”. The recoverable amount for the Nutra business is estimated on the basis of its value in use. No At the beginning of 2013, a cod license entitled the holder to catch 1.626 tonnes of cod, 406 tonnes impairment losses on goodwill were recognised in 2013 (2012: NOK 0). of haddock and 438 tonnes of saithe north of the 62nd latitude. Compared to 2012, this represented an The estimated value in use is based on discounted future cash flows. The following assumptions increase of 31% for cod and decreases of 49% and 16% for haddock and saithe respectively. During were applied in 2013: 2013, re-allocations were made regarding all three quotas. As a result, the cod quota was increased by 241 tonnes per licensing unit, while the quota for saithe was increased by 193 tonnes. In 2013, addi ■■ Projected cash flows are based on the managements best estimates of the budget and business tional quotas for the delivery of fresh cod of 115 tonnes per vessel were allocated, referred to as “fresh plan for the Nutra business for the period 2014 to 2016. The budget is based on detailed budgets fish bonus”. Licenses for shrimp and silver smelt are not limited by quantity. prepared by the various departments in the Nutra business. For subsequent periods, the model is There are delivery commitments tied to the regions to which the licenses relate, i.e. Finnmark and based on estimated terminal growth of 2.0 per cent, which is in line with long-term forecasts for the Nordland. As a result, buyers in the relevant region have preferential rights to purchase the catch. The omega-3 industry. buyer is specified in the license conditions applicable to the individual license unit. The buyer may be a ■■ In the budget for the period 2014 to 2016, revenue projections for the first year are based on agree whole region or a specific buyer. Pricing is determined based on the average price achieved for the rel Beskjæres 76 mm fra venstre før trykk >> ments entered into for 2014, along with a management evaluation and information from external evant species of fish in the last 14 days, taking into consideration the condition, size and quality. Havfisk sources as to the potential for new agreements. Annual operating revenue growth for the two follow also has a so-called “industry commitment” in Stamsund, Melbu, Hammerfest, Båtsfjord, Honningsvåg ing years is based on a management evaluation with a lower level of detail. and Kjøllefjord. This means that the license is tied to the operation of the facilities at the respective sites. ■■ The budgeted operating margin (EBITDA margin) for the period 2014 to 2016 is expected to increase Havfisk, however, has leased these locations to a tenant, which is responsible for maintaining opera in the short term view. This is based on the scalability of the business model. The fact that a large tions. If the tenant ceases operations, the terms in the license conditions oblige Havfisk to maintain proportion of the Group’s operating expenses are independent of production volumes means that operations at the locations. These existing commitments have been taken into account when valuing increased sales levels extent contribute to higher operating margins to some degree. the licenses. ■■ The terminal value in the model used to calculate value in use is based on a stable operating margin In order to increase the profitability of fishing activities and to reduce the number of vessels in opera which is on a par with the projected operating margin for 2016. Investment levels have also been set tion, the fisheries authorities have introduced a scheme permitting up to three quotas per vessel. In at the same level as projected depreciation to maintain sales and production capacity. return, the vessels giving up their quotas have to be permanently removed from the fishing register. Fish ■■ A 13.7 per cent discount rate before tax has been applied to calculate the recoverable amount ing quotas that have been structured are subject to a time limit of 20 to 25 years, depending on what (2012: 13.2 per cent). The discount rate is estimated based on a weighted average of equity return regulations applied at the time structuring occurred. At the end of the structure period, the entire Norwe requirements and expected costs of debt, assuming a projected debt-to-equity ratio of 50 percent gian quota will be distributed among the remaining quotas in the same vessel group. (2012: 50 per cent). The equity return requirement is estimated using the capital asset pricing model Havfisk owns fishing licenses subject to time limits of 20 to 25 years due to structuring. No deprecia (CAPM) and accordingly adjusted from post- to pre-tax. The cost of debt is based on risk-free inter tion has been made on the structured quotas. It is thus expected that Havfisk will maintain approxi est rates (10-year U.S. treasury government bonds), adjusted upwards to reflect long-term financing mately the same catch capacity as before the restructuring. Since quotas that are not structured are costs and the company’s risk profile. Furthermore, a peer group analysis has been conducted in defined as “perpetual” quotas, i.e. are unlimited in time, these quotas have not been depreciated either. 2013 to provide an average unlevered equity beta. According to the Financial Supervisory Authority of Norway’s preliminary assessment, the structural ■■ The sensitivity of the value in use has been tested using simulations of various combinations of dis quotas have a specified lifetime and must be depreciated. The Financial Supervisory Authority of Nor count rates and terminal value growth. No combination of these factors, within a 10 per cent to 17 way also asks question about the choice of cash generating units. Any changes will not be material for per cent discount rate and 0 per cent to 5 per cent growth in terminal value, respectively, results in a the Aker Group. value in use lower than the value recognised in the balance sheet as of 31 December 2013. In 2013, Havfisk used a valuation model to estimate recoverable amounts based on discounted future cash flows. Future cash flows are based on budgets and forecasts that use vessels and associ Miscellaneous other goodwill: ated licenses as the identified cash generating unit. The model is based on separate discounted cash Miscellaneous other goodwill of NOK 211 million can primarily be attributed to Havfisk. The book value flow (DCF) for each unit, i.e. the individual vessel being tested against the carrying value of quotas and of fishing licenses is recognised at a lower value in the Aker group accounts than those of Havfisk. This vessels. Quota Developments used in the model are based on forecasts from International Council for is due to the establishment of Havfisk in its current form and the fact that, the at the time of establish the Exploration of Seas ( ICES) and the Institute of Marine Research. Expected price changes on fished ment , the excess value was primarily allocated to the fishing licenses. The added value of the fishing quantity are related to the expected increases / decreases in quotas of the different fish species. The licenses as described below implies that there is no basis for impairment of goodwill related to Havfisk. expected inflation rate used is 2.5 per cent, which is consistent with Norges Bank’s inflation target. A discount rate of 6.65 per cent after tax and 8.94 per cent before tax is used. The discount rate is initially Fishing licenses estimated after tax, and converted to a pre-tax rate using the “iterative method “. There is no indication At the end of 2013, Havfisk held 29.6 cod and haddock trawl licenses, 31.9 saithe trawl licenses, 8 of impairment. shrimp trawl licenses and 3 silver smelt licenses in Norway. In 2013, Havfisk agreed to sell 1.35 quota units of cod and haddock, 1.38 quota units of saithe north of the 62nd Latitude and 1.0 unit pollock quota south of the 62nd Latitude. The vessel “Jergul” was part of the sale. The sale is planned exe cuted in 1st quarter of 2014 subject to approval from the Norwegian authorities. No other purchases or sales of licenses occurred in 2013. Aker ASA annual report 2013 89 Annual accounts – Aker group
Sensitivity analysis of fishing quotas and licenses Change in Change in Amounts in NOK million turnover EBITDA
A 10% change in the price of cod will lead to the following changes 46 28 A 10% change in the quantity of cod will lead to the following changes 46 14 A 10% change in the quantity of cod, saithe and haddock will lead to the following changes 78 19
A 10% reduction in the price of cod will reduce turnover by 10%, while the EBITDA impact in NOK is expected to be somewhat smaller. A lasting reduction in price, given unchanged quota volumes, is expected to affect the value of quotas and licenses due to reduced EBITDA- and cash flow contribu tions.
Other intangible assets Beskjæres 76 mm fra venstre før trykk >> Allocation of other intangible assets
Amounts in NOK million 2013 2012
Development of production technology Aker BioMarine 36 57 License agreements and production technology Aker BioMarine 42 48 Other 23 1 Total 101 106
In 2013, Aker BioMarine capitalised NOK 6 million (2012: NOK 23 million) of costs related to the devel opment of a manufacturing process for krill oil and general product development costs. Impairment in 2013 is NOK 12 million. The carrying amount in respect of license agreements/production technology of NOK 42 million (2012: NOK 48 million) is primarily related to existing license agreements with a maturity of between six and eight years. Based on this year’s income under the current license agreements and future expecta tions, no further indications of impairment have been identified with respect to licensing/production technology as at the end of 2013 (2012: NOK 0 million).
Note 15 Shares and investments in associated companies
Restated Amounts in NOK million 2013 2012
At 1 January 5 753 5 412 Acquisitions in stages, downward sales and sales of subsidiaries 27 - Acquisitions /disposals 1 900 2 Share of losses / profits 716 1 158 Exchange differences and cash flow hedges 637 41 Received dividend (566) (739) Other equity movements 5 (120) At 31 December 8 472 5 753 90 Aker ASA annual report 2013 Annual accounts – Aker group
Shares and investments in associated companies are allocated as follows:
2013 Acquisitions in stages, downward Changes due to Book value at sales and sales of Acquisitions Share of exchange differences Dividend Other changes Book value at Amounts in NOK million 1 January subsidiaries and disposals profits /losses and hedges received in equity 31 December
Aker Solutions ASA 4 677 - 1 900 522 563 (441) 9 7 230 Kvaerner ASA 886 - - 183 73 (125) (2) 1 015 Bokn Invest AS 184 - - 14 1 - 1 200 Oslo Asset Management Holding AS - 27 - (3) - - - 24 Other companies 7 - - - - - (3) 4 Total 5 753 27 1 900 716 637 (566) 5 8 472
Beskjæres 76 mm fra venstre før trykk >> Acquisitions and sales Aker ASA purchased 16.44 million shares (6 per cent) in Aker Solutions in November 2013 at NOK 115 per share, for a total of NOK 1.9 billion. After the transaction Aker owns 46 per cent in Aker Solution, whereof 40 per cent through Akers 70 per cent ownership of Aker Kvaerner Holding. The purchase price of NOK 1.9 billion was NOK 1.1 billion higher than 6 per cent of Aker Solutions equity at the time of the transaction. The excess value is preliminary recorded as goodwill.
Share of losses/profits The share of the losses/profits of associated companies is based on the companies’ annual profits, including part of discontinued operations. Aker’s share of Aker Solutions and Kvaerner’s profits from discontinued operations is NOK 108 million and NOK 84 million, in 2013 respectively.
Dividends received Dividends received from Aker Solutions in 2013 NOK 441 million (NOK 4.00 per share). From Kvaerner, Aker received in first half 2013 NOK 61 million and NOK 64 million in the second half, NOK 125 million in total (NOK 1.13 per share).
Other equity movements Other equity movements, mainly comprises purchase and sale of treasury shares.
Shares and investments in associated companies have been allocated as follows:
2012 Acquisitions in stages, Changes Restated downward sales due to exchange Pension Restated Book value at and sales of Acquisitions Share of differences actuarial Other changes Book value at Amounts in NOK million 1 January subsidiaries and disposals profits / losses and hedges gains/losses in equity 31 December
Aker Solutions ASA 4 256 - - 918 - 51 (548) 4 677 Kvaerner ASA 968 - - 98 (27) 18 (171) 886 Bokn Invest AS 180 - 2 142 - - (140) 184 Other companies 7 ------7 Total 5 412 - 2 1 158 (27) 68 (859) 5 753 Aker ASA annual report 2013 91 Annual accounts – Aker group
Acquisitions and sales Note 16 Investments in joint ventures In 2012, Bokn Invest received an equity contribution of NOK 2 million from Aker ASA’s subsidiary Con verto Capital Fund. The Aker Group has interests in joint ventures as follows; 50 per cent in Trygg Pharma Holding, Aker BioMarine Manufacturing LLC, Aker BioMarine Financing LLC, Hofseth Melbu AS and Fornebu Boligut Share of losses/profits vikling AS. Trygg Pharma Holding’s wholly-owned subsidiaries Epax – one of the world’s leading com The share of the losses/profits of associated companies is based on the companies’ annual profits. panies in the production of highly concentrated omega-3 oils, was sold in 3rd Quarter 2013. In 2013 Aker BioMarine Antarctic AS and Naturex S.A. agreed to invest in a factory for the extraction of krill oil Other equity movements in Houston, USA, and is expected to become operational in 2nd Quarter 2014. Aker BioMarine Financ Other equity movements in Aker Solutions include dividend received of NOK 430 million and part of the ing LLC will facilitate the financing of the factory. Fornebu Boligutvikling are involved in housing con effects of purchasing and selling treasury shares. Other equity movements in Kvaerner include received struction at Fornebu. dividends of NOK 169 million and part of the effects of purchasing and selling treasury shares. Other The joint venture companies are accounted for by using the equity method. equity movements in Bokn Invest can be linked to a repayment of capital totalling NOK 140 million.
Pension effect of actuarial gains and losses Investments in joint ventures are allocated as follows: IAS 19R Aker has previously applied the corridor method for actuarial gains and losses. Under IAS 19R actuarial Beskjæres 76 mm fra venstre før trykk >> gains and losses are recognised in other comprehensive income. Comparative figures have been 2013 restated. The difference compared to previously reported figures for associates at the end of 2012 were Book Acquisi Other Book minus NOK 60 million. The negative impact is allocated between NOK 167 million at the beginning of value at tions and Share of changes value at 2012, a positive change in share of profit of NOK 40 million and 2012 actuarial gains and losses of in Amounts in NOK million 1 January disposals profit in equity 31 December total NOK 68 million. Trygg Pharma Holding 689 100 242 (426) 605 Summary of financial information for associated companies and the Group’s ownership inter- Fornebu Boligutvikling - - 22 - 22 ests in major associates is as follows: Aker BioMarine Manufacturing - 35 (1) 1 36 Aker Solutions ASA and Kvaerner ASA are listed companies. Shown below are the share prices and Total 689 135 263 (425) 663 market values of Aker Group’s share in Aker Solutions ASA and Kvaerner ASA:
Number of Market Acquisitions, disposals and other changes shares in Quoted price Book value in capitalisation in Trygg Pharma Holding and Aker BioMarine Manufacturing received equity contribution of NOK 100 mil At 31 December 2013 million in NOK NOK million NOK million lion and NOK 35 million, respectively, from Aker BioMarine in 2013.
Aker Solutions ASA 126.8 108.40 7 230 13 742 Other changes Kvaerner ASA 110.3 11.50 1 015 1 269 Other changes in Trygg Pharma Holding mainly related to dividend of NOK 429 million received in con nection with the sale of the Epax business. 2013 Trygg Pharma Holding Profit The Trygg Pharma Group includes AKR 963, which is a product candidate for the treatment of severe Operating for the Ownership hypertriglyceridemia. AKR 963 is awaiting approval from the U.S. Food and Drug Administration (FDA) Amounts in NOK million Country Assets Liabilities revenue year interest % on its New Drug Application. The value of the investment in Trygg Pharma Group could be significantly impacted by a negative outcome from FDA. If the filing is denied or adversely affected by the granted Aker Solutions ASA Norway 49 967 36 142 42 900 1 267 46.3 1) claims, labelling, and/or other approval/marketing related details of the drug candidate, the investment Kvaerner ASA Norway 7 825 5 315 12 960 445 41.0 1) could be exposed to possible write-downs of up to approx. NOK 320 million. However, the current Bokn Invest AS Norway 553 26 - 1 39.9 assessment of the most likely outcome from the FDA application indicates that no write-downs will be necessary. 2012 Profit Operating for the Ownership Amounts in NOK million Country Assets Liabilities revenue year interest %
Aker Solutions ASA Norway 40 215 28 235 41 632 2 260 40.3 1) Kvaerner ASA Norway 6 039 3 844 8 867 237 41.0 1) Bokn Invest AS Norway 530 4 - 331 39.9
1) Not considered own shares. 92 Aker ASA annual report 2013 Annual accounts – Aker group
Investments in joint ventures are allocated as follows: Note 17 Other shares and funds
2012 Amounts in NOK million Ownership share % 2013 2012 Book Acquisi Other Book value value at tions and Share of changes at 31 Decem- AAM Absolute Return Fund 13.6 369 343 Amounts in NOK million 1 January disposals profit in equity ber Norron funds 8.1 338 264
American Shipping Company 5.4 61 11 Trygg Pharma Holding 617 82 (10) - 689 SpareBank 1 SMN equity certificate - 68 Aker Encore 17 - (1) (16) - NBT 10.0 55 55 Total 634 82 (11) (16) 689 Shares in other companies 14 46 Total 837 787 Acquisitions, disposals and other changes Trygg Pharma Holding received an equity contribution of NOK 82 million from Aker BioMarine in 2012. Aker purchased 50% of Aker Encore for NOK 16 million and now owns 100% of the company. The AAM Absolute Return Fund comprises NOK 142 million (USD 23.4 million) in USD Class A and Beskjæres 76 mm fra venstre før trykk >> NOK 228 million in Class B. The total fund consists of USD 272 million in Class A and NOK 890 million in Class B. Aker’s interest in NOK Class B is 25.6 per cent and the interest in USD Class A is 8.6 per A summary of financial information relating to joint ventures and an overview of the Aker cent. The funds Norron Target (Nordic multi-strategy fund) and Norron Select (Nordic hedge fund) were Group’s ownership interest in significant joint ventures follows below: established in February 2011. Aker owns 17.4 per cent of the Norron Target capital of SEK 1 360 million and 90.5 per cent of the Norron Select capital of SEK 135 million. 2013 2012 Aker’s ownership interest in American Shipping Company amounted to 5.4 per cent at the end of Trygg Aker Trygg 2013 following the sale of 4 million shares in December 2013, but prior to an increase in American Ship Pharma BioMarine Fornebuporten Pharma ping Company’s capital in January 2014. After participating in the offering and the conversion of debt on Amounts in NOK million Group Manufacturing Boligutvikling Group 3 January 2014 and taking into account the subsequent offering on 6 January Aker increased its owner ship interest in the company to 19.1 per cent. Country Norway USA Norway Norway Ownership share and share The change in other shares in 2013 relates to: of votes 50% 50% 50% 50% Amounts in NOK million Revenue 675 - 171 448 Cost (191) (1) (126) (464) At 1 January 2013 787 Profit (+) / Loss (-) 483 (1) 45 (16) Acquisitions - Change in fair value reserve 152 Fixed assets 743 126 149 1 758 Total sales amount (259) Current assets 521 113 160 414 Sales of subsidiaries (8) Total assets 1 265 239 309 2 172 Sales gains and write downs 166 Equity 1 220 25 45 1 382 At 31 December 2013 837 Long-term liabilities 18 53 3 93 Short-term liabilities 26 161 261 697 The carrying amount at the end of 2013 was NOK 837 million, an increase of NOK 50 million during the year. Total debt and equity 1 265 239 309 2 172 Sparebank 1 SMN has been sold for NOK 94 million with a profit of NOK 28 million. 4 million shares in American Shipping Company, of a total of 5,5 million shares at the beginning of the year, were sold for Aker BioMarine Financing LLC USA, is mainly finance by a long-term loan of USD 6 million from both NOK 140 million with a profit of NOK135 million. Aker BioMarine AS and Naturex S.A. The total change in fair value reserve is NOK 152 million and is mainly attributable to the remaining American Shipping Company’s shares by NOK 55 million, the Norron funds by NOK 73 million and the AAM Absolute Return Fund with NOK 26 million.
Aker ASA annual report 2013 93 Annual accounts – Aker group
Note 18 Interest-bearing long-term receivables The change in interest-bearing long-term receivables in 2013 can be allocated as follows:
Amounts in NOK million 2013 2012 Restricted Other Amounts in NOK million Bonds funds loans Total
Restricted deposits 516 417 Loans to employees 8 - At 1 January 2013 847 417 219 1 483 Long-term bonds 1 021 847 Accrued interest 107 - 19 126 Other interest-bearing long-term receivables 359 219 Change in fair value reserve 68 - - 68 Interest-bearing loans, sales of subsidiaries - - 147 147 Total 1 904 1 483 Repayments of loans and bonds - (13) (140) (153) New loans and bonds - 105 84 188 Restricted deposits mainly relates to loan agreements with Aker Floating Production of NOK 122 million Impairment and sales gains - - (4) (4) and with Det norske oljeselskap of NOK 273 million. In addition Aker Philadelphia Shipyard has depos Translation and other changes - 8 42 50 its related to a construction contract totalling NOK121 million. At 31 December 2013 1 021 516 367 1 904 Other Interest-bearing long-term receivables include NOK 63 million in loans to related parties. Beskjæres 76 mm fra venstre før trykk >> Net repayment loans and bonds (see Long-term bonds of NOK 1 021 million consists of Ocean Yield’s 93,05 per cent ownership interest in cash flow) - (91) 56 (35) the unsecured bonds issued by American Shipping Company ASA (AMSC) 07/18, (ISIN NO0010356512), which mature in 2018. The bonds carry interest at NIBOR + 4.75 per cent p.a. and AMSC may choose to pay interest by Payment in Kind (“PIK”), whereby accrued interest is added to the Interest-bearing loans, sales of subsidiaries principal outstanding each quarter. The change of NOK 147 million is mainly attributable to Fornebuporten Boligutvikling. In December 2013, AMSC carried out a recapitalisation of the company as part of which the bond loan agreement was amended. In the amended bond loan agreement the bond loan is denominated in USD Repayments of loans and bonds with an interest rate of LIBOR + 6.00 per cent. The structure of the loan was changed from an all-PIK- A change in other loans of NOK 140 million is primarily attributable to Fornebuporten Boligutvikling. interest structure to 50/50 PIK/cash interest. The cash interest portion will increase further to 70 per cent as from the refinancing of AMSC’s external bank debt (which matures in June 2016), and to 90 per New loans and bonds cent as from 12 months after the refinancing. Finally, 100 per cent of interest will be payable in cash as The change in restricted funds of NOK 105 million is mainly derived from terms in external financing from 24 months after such refinancing has taken place. Until the refinancing of external bank debt, agreements in Det norske oljeselskap. AMSC will have an option to extend the maturity date of the Bonds from 28th February 2018 to 28th A change in other loans of NOK 84 million in bonds is primarily attributable to a loan from Aker BioMa February 2021. If this extension option is exercised, the margin of the bonds will increase by 2.5 per rine to the joint venture company Aker BioMarine Financing LLC with NOK 39 million. cent p.a. In addition the margin will increase by 0.5 per cent p.a. for every 12-month period the bond is outstanding after the extension option is exercised. The amendments to the bond loan agreement take effect on 3 January 2014. The bonds have been classified as an available-for-sale financial asset, presented at fair value in the balance sheet. As there are limited observable prices for the bonds the fair value has been calculated by Note 19 Other non-current assets discounting the estimated cash flows using an applicable discount rate. The estimated cash flows used in the calculations reflects the amendments to the bond loan agreement. The three months forward Other non-current assets consist of the following items: LIBOR curve has been applied in the calculations. Further, it has been assumed that the cash interest portions will increases to 70 per cent in September 2016. The extension option described above has not Amounts in NOK million 2013 2012 been included in the estimated cash flows. If this option is exercised the interest margin will increase by
250 basis points and all interest will be payable in cash. The estimated cash flows have been discounted using a discount rate of 11 per cent. This gives a fair value of USD 168.3 million, which equals 89.6 per Derivatives (Note 5 and Note 35) - 8 cent of the amount outstanding as of 31 December 2013. Other interest-free long-term receivables 224 255 Total 224 264
Other interest-free long-term receivables in 2013 include prepayments of NOK 65 million by Havfisk for trawlers under constructions (NOK 135 million in 2012) and NOK 71 million in long-term VAT receivables in Fornebuporten. 94 Aker ASA annual report 2013 Annual accounts – Aker group
Note 20 Inventory and biological assets Leasing agreements signed and other backlog
Inventory and biological assets comprises the following items: Aker Philadelphia Amounts in NOK million Ocean Yield Shipyard Sum Amounts in NOK million 2013 2012 Duration of less than one year 1 285 - 1 285 Biological assets - 53 Duration of between one and five years 5 303 - 5 303 Raw materials 67 88 Duration of more than five years 3 662 - 3 662 Work in progress 15 22 Total leasing agreements 10 250 - 10 250 Finished goods 307 274 Other order backlog 637 6 174 6 811 Total 388 438 Total 10 887 6 174 17 061
Aker’s biological assets in 2012 related to Norway Seafood’s companies in France. The farming activities were sold in 3rd quarter 2013. Ocean Yield’s subsidiary Aker Floating Production has concluded a time charter and service contract Beskjæres 76 mm fra venstre før trykk >> with Reliance Industries Ltd for the lease of Dhirubhai-1 for a 10-year period that started in September 2008. Reliance has an option to purchase the FPSO. The option may be exercised during the entire Amounts in NOK million 2012 2013 contract period. Ocean Yield’s subsidiary Aker Ship Lease delivered the vessel Aker Wayfarer in October 2010. This Impairment of inventory recognised as expense during the period 7 19 subsea, construction vessel is operating on a 10-year bareboat charter to a wholly-owned subsidiary of Carrying value of inventory pledged as security for liabilities 309 293 Aker Solutions ASA. The charter expires in 2020. Ocean Yield’s subsidiary Connector 1 AS acquired the offshore construction vessel and cable-laying vessel Lewek Connector in October 2012, and entered into a 10-year bareboat charter with EMAS AMC Of the total value of Aker Group’s inventory as of 31 December 2013, NOK 103 million has been AS, a wholly-owned subsidiary of Ezra Holdings Ltd. The bareboat charter is fully guaranteed by Ezra. measured at fair value less cost to sell. In March 2013, Ocean Yield acquired two newbuilding Anchor Handling Tug Supply (“AHTS”) ves sels, Far Senator and Far Statesman, with 12-year bareboat charters to Farstad Supply AS. Farstad Supply holds options to acquire the vessels during the charter period, with the first options being exer cisable after five years Note 21 Order backlog construction contracts and other contracts The seismic vessel Geco Triton, owned by New Pollock Inc., a wholly owned subsidiary of Ocean Yield ASA, is chartered to the Schlumberger subsidiary Western Geco until December 2015. In 2012, LH Shiplease 1 AS, a wholly owned subsidiary of Ocean Yield AS entered into newbuilding The activities of Ocean Yield and Aker Philadelphia Shipyard are largely based on deliveries in accord contracts with Daewoo Shipbuilding & Marine Engineering’s (“DSME”) for two Pure Car Truck Carriers ance with customer contracts. The order backlog represents an obligation to deliver goods and ser (PCTC) with car capacity of 6 500. The vessels will be built at DSME’s shipyard in Mangalia, Romania vices not yet produced, as well as Aker’s contractual entitlement to make future deliveries. If projected and be delivered in April and August 2014 respectively. After delivery they will be chartered to Höegh costs are higher than projected income, the total projected loss on the contract is recorded in the Autoliners on 12-year bareboat contracts. income statement. In September 2013, Ocean Yield entered into newbuilding contracts for two Pure Car Truck Carriers (PCTC) with a car capacity of 8 500 with Xiamen Shipbuilding Industry Co. Ltd. The vessels will be deliv Order intake and order backlog 2013 and 2012: ered in January and April 2016 respectively, and will after delivery be chartered to Höegh Autoliners on 12-year bareboat charter contracts. Höegh will have certain options to acquire the vessels during the Figures are unaudited bareboat charter period, with the first option being exercisable after five years. Order backlog Order intake Order backlog Order intake Aker Philadelphia Shipyard (APSI) has concluded a contract with SeaRiver Maritime, Inc. (SeaRiver) Amounts in NOK million 31 Dec. 2013 2013 31 Dec. 2012 2012 for the construction of two Aframax tankers. SeaRiver is Exxon Mobil Corporation’s U.S. marine affiliate. The vessels are intended to transport Alaskan North Slope crude oil from Prince William Sound to the
U.S. west coast. Construction of the first vessel started in March 2013, and construction of the second Aker Philadelphia Shipyard 6 174 5 341 1 890 84 in December 2013. The remaining contract value is USD 110 million. Both vessels are scheduled for Ocean Yield 10 887 2 794 8 330 2 689 delivery in 2014. Total 17 061 8 134 10 220 2 773 In 2013, APSI and Crowley Maritime Corporation have signed shipbuilding contracts for four product tankers to be delivered to a company owned jointly with Crowley Maritime Corporation (CMC) and cer tain of its affiliates relating to the ownership, operation and chartering of four product tankers. The value of the contracts is approximately USD 490 million. Construction of the first vessel starts in January 2014. The vessels will be delivered in 2015 and 2016. APSI and CMC will own approximately 49.9 per cent and 50.1 per cent, respectively. Crowley will have control over the ownership, technical and com mercial management of the vessels. It is expected that APSI will have invested approximately USD 115 million by the time all four ships are delivered, depending on the total capital costs and financing. Aker ASA annual report 2013 95 Annual accounts – Aker group
Approximately 49.9 per cent of the gross profits generated by the ships built will be treated as deferred Note 23 Interest-bearing short-term receivables and recognised pro rata over the ships lifetime after delivery. APSI has signed a contract with Matson Navigation Company (Matson) to construct two 3 600 TEU Interest-bearing short-term receivables consist of the following items: containerships. The contract value is approximately USD 418 million. The vessels will be delivered in 2018.
Construction contracts Amounts in NOK million 2013 2012 Any foreseeable loss on signed construction contracts is expensed. Amounts recoverable on work in progress are written down before a provision for contract losses is recognised. Aker has not made any Interest-bearing short-term receivables related parties 9 - losses on construction contracts during 2013 and 2012. Other interest-bearing short-term receivables 414 28 Work-in-progress of NOK 1 257 million (USD 214 million) at 31 December 2013 represents accumu Total 423 28 lated costs on vessels-under-construction in Aker Philadelphia Shipyard Inc. (Hull 019 and 020). Cus tomer advances totalled NOK 205 million (USD 33.8 million), and represents customer milestone pay Other interest-bearing short-term receivables mainly relate to Det norske oljeselskap (NOK 24 million) ments net of work-in-progress and earned profit. and deposits account NOK 368 million made as part of the TRS agreement relating to American Shipping Company shares.
Beskjæres 76 mm fra venstre før trykk >> The change in interest-bearing short-term receivables of NOK 395 million can be allocated as follows: Note 22 Trade and other short-term interest-free receivables
Amounts in NOK million 2013 Trade and other short-term interest-free receivables comprise of the following items:
At 1 January 28 Amounts in NOK million 2013 2012 Accrued interest 3 New loans and repayments 8 Trade receivables 786 702 Impairments and sales gains 382 Other short-term interest-free receivables 1 004 566 Translation and other changes 2 Total 1 791 1 267 At 31 December 423 In 2013, the group recorded impairment of trade receivables of NOK 16 million. In 2012 the loss was NOK 10 million. The loss has been included in the other operating expenses in the income statement. Other short-term receivables in 2013 mainly consisted of receivables under operator licenses, inter Note 24 Cash and cash equivalents est earned but not yet received, VAT receivables and advance payments to suppliers. The increase of NOK 439 million kroner from 2012 is related to increased receivables on licenses and receivables related to deferred volume in the Atla Field.” See also Note 5 Financial risk and exposure. Cash and cash equivalents comprise of the following items:
Amounts in NOK million 2013 2012
Cash and bank deposits 5 834 5 471 Short-term investments with maturities less than three months - - Cash and cash equivalents 5 834 5 471
Short-term investments consist of certificates and other investments with maturities of between one day and three months, depending on the cash requirements of the Group. The interest on the short- term investments varies with the respective maturities. 96 Aker ASA annual report 2013 Annual accounts – Aker group
Cash and cash equivalents are allocated to the different companies as follows: Note 25 Earnings per share and dividend per share and paid-in equity
Amounts in NOK million 2013 2012 Earnings per share Calculation of profit from continued and discontinued operations to equity holders of the parent: Industrial holdings: Det norske oljeselskap 1 709 1 154 Amounts in NOK million 2013 2012 Ocean Yield 806 583 Aker BioMarine 42 5 Continued operations: Havfisk 24 52 Net profit (loss) from continued operations 832 (137) Total industrial holdings 2 581 1 794 Minority interests 41 (140) Profit from continued operations attributable to equity holders Financial investments: of the Parent 791 3 Converto Capital Fund 732 369 Other companies 62 202 Discontinued operations Beskjæres 76 mm fra venstre før trykk >> Aker ASA and holding companies 2 459 3 106 Net profit (loss) from discontinued operations - - Total 5 834 5 471 Minority interests - - Profit from discontinued operations attributable to equity hold- ers of the parent - - There are restrictions on the cash transfers between Aker ASA and holding companies and subsidiaries. Restricted cash totals NOK 208 million, NOK 67 million in Aker ASA and holding companies, NOK 121 Total profit attributable to equity holders of the parent 791 3 million in Aker Philadelphia Shipyard, NOK 16 million in Det norske oljeselskap, NOK 1 million in Havfisk, NOK 2 million in Aker BioMarine and NOK 1 million in Norway Seafoods. Shares outstanding at 1 January 71 483 047 72 365 302 Changes in own shares held 846 876 (882 255) Total shares outstanding at 31 December 72 329 923 71 483 047
Allocation: Issued shares at 31 December 72 374 728 72 374 728 Own shares held (44 805) (891 681) Total shares outstanding at 31 December 72 329 923 71 483 047 Weighted average number of shares at 31 December 72 320 121 72 126 991
Diluted earnings per share No instruments with a potential dilution effect were outstanding at 31 December 2013 or 31 December 2012.
Dividend per share Dividends paid in 2013 and 2012 totalled NOK 868 million (NOK 12.00 per share) and NOK 794 million (NOK 11.00 per share), respectively. A dividend of NOK 13 per share will be proposed at the Annual General Meeting on 11 April 2014. Aker ASA annual report 2013 97 Annual accounts – Aker group
Paid-in capital The 20 largest shareholders as of 31 December 2013 At 31 December 2013, Aker ASA’s share capital consisted of the following: Number of Shares issued Own shares Shares outstanding Shareholder shares Per cent
Number of ordinary shares 72 374 728 44 805 72 329 923 TRG Holding AS 1) 48 245 048 66.7% Par value (NOK) 28 28 28 J.P. Morgan Chase Bank N.A. London, Nordea 1 777 072 2.5% Total par value (NOK million) 2 026 1 2 025 Goldman Sachs & Co Equity Segregat 1 168 179 1.6% Morgan Stanley & Co LLC 960 067 1.3% Share premium reserve - - - The Resource Group TRG AS 1) 860 466 1.2% Other paid in capital - - - State Street Bank & Trust Company 794 855 1.1% Total paid in capital 2 026 1 2 025 Tvenge 700 000 1.0%
All shares have equal voting rights and are entitled to dividends. Aker ASA has no voting rights for its Odin Norden 676 043 0.9% own shares. J.P. Morgan Chase Bank N.A. London 611 230 0.8% Beskjæres 76 mm fra venstre før trykk >> Citibank, N.A. 565 430 0.8% Dividends Skandinaviske Enskilda Banken AB 494 050 0.7% A dividend as shown below has been proposed for distribution after the balance sheet date. KBC Securities NV 485 243 0.7% No provision has been made for the dividend, and there are no tax effects. Oslo Pensjonsforsikring AS PM 445 200 0.6% KBC Securities NV 426 640 0.6% Amounts in NOK million Fondsfinans Spar 375 000 0.5% Fidelity Funds-Nordic Fund/SICAV 332 400 0.5%
KLP Aksje Norge VPF 304 368 0.4% Proposed dividend in 2013 NOK 13.00 per share 940 Citibank, N.A. 300 728 0.4% Estimated dividends paid in 2014 940 Folketrygdefondet 284 561 0.4% Pagano AS 218 500 0.3% Other 12 349 648 17.1% Total 72 374 728 100%
1) Kjell Inge Røkke controls 67.8 per cent of the shares in Aker ASA through TRG Holding AS and TRG AS. 98 Aker ASA annual report 2013 Annual accounts – Aker group
Note 26 Minority interests
The Aker Group includes several subsidiaries of which Aker ASA and holding companies own less than 100 per cent. Significant companies with minority shareholders as at 31 December 2013 are Det norske oljeselskap 50.01 per cent, Ocean Yield 26.6 per cent, Aker Philadelphia Shipyard 28.8 per cent, Havfisk 26.8 per cent, Norway Seafoods 26.4 per cent and Aker Kvaerner Holding 30 per cent. See Note 8 for key figures for some of these companies.
The change in minority interests in 2013 can be attributed to the following companies:
Restated balance Other compre New minority, Share issue by Other changes in Balance at 31 Amounts in NOK million at 1 January Profit for the year hensive income Dividend release of minority subsidiary equity December
Beskjæres 76 mm fra venstre før trykk >> Havfisk 334 (13) 4 - - - - 325 Norway Seafoods 88 (17) (2) - - - - 70 Aker Philadelphia Shipyard 165 27 15 - - - - 206 Aker BioMarine 140 - - - (140) - - - Ocean Yield - 67 19 (26) 47 898 - 1 004 Aker Kvaerner Holding 5 798 208 183 (169) - - 1 6 020 Det norske oljeselskap 2 756 (274) - - - - - 2 482 Other companies 70 44 1 (63) (40) 1 - 12 Total 9 350 41 220 (258) (134) 898 1 10 119
New minority, release of minority In 2013, Aker sold minority interests for NOK 48 million. In addition the minority interests in Aker BioMa rine were purchased using shares in Aker ASA as consideration, NOK 140 million in total. This resulted in a decrease in minority interests of NOK 93 million and an increase in majority interests of NOK 141 million, recognised directly in equity and attributed to the equity holders in the parent company. See Note 6. In addition, minority interests were reduced by NOK 41 million through the loss of control of a subsidiary. See Note 7.
Share issue by subsidiary Ocean Yield received NOK 905 million through share issues in June and December. The increase in minority interests after the deduction of the minority share of transactions costs was NOK 898 million. A share increase in Norron AB increased minority interests by NOK 0.6 million. Aker ASA annual report 2013 99 Annual accounts – Aker group
Note 27 Other comprehensive income
Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the finan Hedging reserve cial statements of foreign operations and the translation of liabilities that hedge the group’s net investment The hedging reserve refers to cash flow hedges entered into to hedge revenues and expenses connected in a foreign subsidiary. The main subsidiaries reporting in other currencies than NOK are Aker Philadelphia to ongoing construction contracts against fluctuations in exchange rates and interest rate changes. The Shipyard (USD), Ocean Yield (USD), Aker BioMarine (USD), Norway Seafoods Denmark (DKK) and Estremar income statement effect of such instruments is recognised in accordance with progress made as part of Argentina (USD). The share of the translation differences in the associated companies, like Aker Solutions recognition of revenues and expenses related to the construction contracts. The hedging reserve repre and Kvaerner, is also included. sents the value of such hedging instruments that are not yet recognised in the income statement. Be aware of the underlying nature of a hedge; i.e. that an unrecognised gain on a hedging instrument is there to Fair value reserve cover an unrecognised loss on the hedged position. The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments until the investment is derecognised.
Allocation of other comprehensive income to equity holders of the parent and to minority interests Beskjæres 76 mm fra venstre før trykk >> Total trans lation and Translation Fair value Hedging other Retained Minority Total Amounts in NOK million reserve reserves reserves reserves earnings Total interests equity
2013 Defined benefit plan actuarial gains (losses) - - - - (19) (19) 1 (19) Defined benefit plan actuarial gains (losses) in associated companies - - - - 8 8 2 9 Items that will not be reclassified to income statement - - - - (12) (12) 2 (10) Changes in fair value of available-for-sale financial assets - 333 - 333 - 333 13 346 Changes in fair value of cash flow hedges - - (16) (16) - (16) (6) (22) Reclassified to profit or loss: changes in fair value of available for sale financial assets, translation differences and cash flow hedges 1 (145) - (145) - (145) - (145) Currency translation differences 342 - - 342 - 342 29 372 Changes in other comprehensive income from associated and joint venture companies 331 14 107 452 - 452 181 632 Items that may be reclassified to income statement subsequently 674 202 90 966 - 966 217 1 184 Other comprehensive income 2013 674 202 90 966 (12) 954 220 1 174
Total trans lation and Translation Fair value Hedging other Retained Minority Total Amounts in NOK million reserve reserves reserves reserves earnings Total interests equity
2012 Defined benefit plan actuarial gains (losses) - - - - 11 11 - 11 Defined benefit plan actuarial gains (losses) in associated companies - - - - 47 47 20 68 Items that will not be reclassified to income statement - - - - 58 58 20 79 Changes in fair value of available-for-sale financial assets - (11) - (11) - (11) - (11) Changes in fair value of cash flow hedges - - (16) (16) - (16) (6) (22) Reclassified to profit or loss: changes in fair value of available-for-sale financial assets, translation differences and cash flow hedges - 1 - 1 - 1 - 1 Currency translation differences (219) - - (219) - (219) (19) (238) Changes in other comprehensive income from associated and joint venture companies (143) 32 (1) (113) - (113) (48) (161) Items that may be reclassified to income statement subsequently (362) 21 (18) (359) - (359) (73) (432) Other comprehensive income 2012 (362) 21 (18) (359) 58 (300) (53) (353) 100 Aker ASA annual report 2013 Annual accounts – Aker group
Translation reserve Balance as at Comprehensive Comprehensive Balance at Amounts in NOK million Functional currency 1) 1 January income before tax Tax income after tax 31 December
Aker Philadelphia Shipyard USD (86) 35 - 35 (51) Aker BioMarine USD (10) 70 - 70 60 Ocean Yield USD (157) 214 - 214 57 Norway Seafoods DKK 37 21 - 21 58 Ocean Harvest USD (114) (5) - (5) (118) Other companies 26 9 - 9 34 Total (303) 343 - 343 40 Share from associated and joint venture companies (455) 331 - 331 (124) Total (758) 674 - 674 (84)
Beskjæres 76 mm fra venstre før trykk >> 1) These subsidiaries own significant companies with other functional currencies than NOK.
Fair value reserve Balance as at Comprehensive Comprehensive Balance at Amounts in NOK million 1 January income before tax Tax income after tax 31 December
Long-term bond loans (see note 18) 57 50 (13) 36 93 Other shares (see note 17) 118 152 - 152 270 Total 175 202 (13) 188 363 Share from associated and joint venture companies 32 14 - 14 46 Total 207 216 (13) 202 409
Hedging reserve Balance as at Comprehensive Comprehensive Balance at Amounts in NOK million 1 January income before tax Tax income after tax 31 December
Norway Seafoods (1) (27) - (27) (28) Havfisk (37) 11 - 11 (26) Total (37) (16) - (16) (54) Share from associated and joint venture companies 23 107 - 107 130 Total (14) 90 - 90 76
Change in other comprehensive income from associated and joint venture companies Balance as at Comprehensive Comprehensive Balance at Amounts in NOK million 1 January income before tax Tax income after tax 31 December
Translation reserve (455) 331 - 331 (124) Fair value reserve 32 14 - 14 46 Hedging reserve 23 107 - 107 130 Total (400) 452 - 452 52 Aker ASA annual report 2013 101 Annual accounts – Aker group
Note 28 Interest-bearing loans and liabilities
This note provides information on the contractual terms of the Group’s interest-bearing loans and borrowings.
Interest-bearing short-term and long-term debt and liabilities are as follow:
Amounts in NOK million 2013 2012
Non-current liabilities Secured bank loans 8 976 6 580 Unsecured bank loans 500 505 Unsecured bond issues 7 832 4 150 Beskjæres 76 mm fra venstre før trykk >> Finance lease liabilities 6 22 Other long-term liabilities 1 7 Total non-current interest-bearing liabilities 17 315 11 264
Current liabilities Current portion of secured bank loans 976 1 169 Current portion of unsecured bank loans - 2 Current portion of unsecured bond issues - 305 Current portion of finance lease liabilities 1 4 Current portion of other long-term liabilities 1 2 Overdraft facilities 85 97 Exploration facilities 478 567 Other short-term liabilities 127 145 Total current interest-bearing liabilities 1 668 2 291 Total interest-bearing liabilities 18 983 13 555
Interest-bearing liabilities are allocated to the companies within the Group as follows:
Amounts in NOK million 2013 2012
Industrial holdings Det norske oljeselskap 4 989 2 456 Ocean Yield 5 289 4 789 Aker BioMarine 900 560 Havfisk 1 223 898 Total industrial holdings 12 401 8 703
Financial investments Converto Capital Fund 287 373 Fornebuporten and other companies 1 029 1 009 Aker ASA and holding companies 5 266 3 469 Total interest-bearing liabilities 18 983 13 555
102 Aker ASA annual report 2013 Annual accounts – Aker group
The contractual terms of interest-bearing liabilities as at 31 December 2013 are as follows:
Carrying amount in nominal currency Carrying amount Amounts in NOK million Currency Nominal interest rate Maturity million NOK million
Industrial holdings:
Det norske oljeselskap: Unsecured bond loans Bond 2016 NOK 3 mths Nibor + 6,75% January 2016 592 592 Bond 2020 NOK 3 mths Nibor + 5,0% July 2020 1 882 1 882 Secured bank loans: Beskjæres 76 mm fra venstre før trykk >> Revolving creditfacility in USD USD 1-6 mths Nibor/Libor + 3,0% + provision September 2018 336 2 037 Exploration facility in NOK NOK Nibor + 1,75% + provision December 2016 478 478 Total Det norske oljeselskap 4 989
Ocean Yield: Secured loans: Eksportkredit/GIEK/DNB (Aker ShipLease) NOK Nibor + 1.05% + fee October 2022 928 928 Loan fee (Aker ShipLease) NOK (4) (4) DNB syndicated loan (Aker Floating Productions) USD Libor + 1.50% 2018 273 1 653 Eksportkreditt/GIEK/DNB (Connector) USD Libor + 1,38% + fee 2024 188 1 141 DNB Livsforsikring (Connector) - Libor + 1,5% - 17 106 Loan fee (Connector) (1) (6) Eksportkreditt/GIEK/Swedbank (F-Shiplease) NOK 3.69% + fee March 2025 879 879 Unsecured bond loans: Bond 12/17 FRN (Ocean Yield AS) NOK 3 mths Nibor + 6,5% July 2017 600 600 Loan fee (Ocean Yield AS) NOK (9) (9) Total Ocean Yield 5 289
Aker BioMarine: Secured bank loans: DNB USD Libor + 3,4% 2016 105 634 Caterpillar Financial Services Corporation USD 6 mths Libor + 1,89% March 2017 10 61 Innovation Norway AS - 1 NOK 5.20% June 2026 124 124 Innovation Norway AS - 2 NOK 6.00% June 2023 15 15 Overdraft facilities NOK 66 66 Total Aker BioMarine 900
Havfisk: Secured bank loan in NOK - DNB/Nordea NOK 3 mths Nibor + 1,85% September 2018 1 214 1 214 Secured bank loan in NOK - Innovasjon Norge NOK 2019 17 17 Loan fee NOK (8) (8) Total Havfisk 1 223 1 223 Aker ASA annual report 2013 103 Annual accounts – Aker group
Financial investments: Carrying amount in nominal currency Carrying amount Amounts in NOK million Currency Nominal interest rate Maturity million NOK million
Converto Capital Fund: Secured bank loan in NOK (Norway Seafoods) NOK 3 mths Nibor + 2,25 % October 2015 5 5 Overdraft facilities (Norway Seafoods) NOK 18 18 Other short-term and long-term liabilities (Norway Seafoods) NOK 72 72 Other short-term and long-term liabilities (Norway Seafoods) EUR 1 10 Secured loan Philadelphia Ind. Development Authority (AKPS) USD 3.75 % October 2015 3 19 Secured loan Philadelphia Local Development Corp (AKPS) USD 3.75 % October 2015 1 8 Finance lease liabilities (AKPS) USD 1 7 Secured loan Caterpillar Fin. Serv. Corp/2016 (Ocean Harvest) USD Libor + 2.75 % November 2016 8 50 Beskjæres 76 mm fra venstre før trykk >> Secured loan Caterpillar Fin. Serv. Corp/2020 (Ocean Harvest) USD Libor + 4.45 % November 2020 11 65 Loan fees (Ocean Harvest) (3) (16) Other short-term liabilities, Galicia Bank (Ocean Harvest) USD 15% 8 49 Other loans Converto Capital Fund - 1 Total Converto Capital Fund 287
Aker ASA and holding companies: Unsecured bonds: FRN Aker ASA Senior Unsecured Bond Issue 2010/2015 NOK Nibor + 5 % November 2015 808 808 FRN Aker ASA Senior Unsecured Bond Issue 2012/2017 NOK Nibor + 4 % April 2017 500 500 FRN Aker ASA Senior Unsecured Bond Issue 2013/2018 NOK Nibor + 3.5 % June 2018 1 300 1 300 FRN Aker ASA Senior Unsecured Bond Issue 2012/2019 NOK Nibor +5 % January 2019 500 500 FRN Aker ASA Senior Unsecured Bond Issue 2013/2020 NOK Nibor +4 % June 2020 700 700 FRN Aker ASA Senior Unsecured Bond Issue 2012/2022 NOK Nibor +5 % September 2022 1 000 1 000 Unsecured bank loans: Sparebank 1 SMN NOK Nibor +3.75 % May 2017 500 500 Loan fees NOK (42) (42) Total Aker ASA and holding companies 5 266 5 266
Fornebuporten: Construction loan - Handelsbanken NOK At completion 458 458 Land mortgage- Handelsbanken NOK 2017 136 136 Mortgage loan - DNB NOK 2015 54 54 Mortgage loan - Pareto Bank NOK 2016 135 135 Mortgage loan - Storebrand Bank ASA NOK 2017 127 127 Construction loan - DNB NOK At completion 119 119 Total Fornebuporten 1 029 1 029 Total interest-bearing liabilities 18 983 104 Aker ASA annual report 2013 Annual accounts – Aker group
Det norske oljeselskap Aker BioMarine Unsecured bond: Secured loans: The bond 2016 runs from 28 January 2011 to 28 January 2016 at an interest rate of 3 mths Nibor The mortgage loan from DNB has a floating interest rate of Libor + 3.4%. The loans mature in 2016 and +6.75%. The principal falls due on 28 January 2016 and interest is paid on a quarterly basis. The loan is instalments and interest are paid semi-annually. unsecured. The bond 2020 runs from July 2013 to July 2020 and carries an interest rate of 3 month The mortgage from Caterpillar of USD 10.1 million denominated in USD will fall due in March 2017 and NIBOR + 5 percent. The principal falls due on July 2020 and interest is paid on a quarterly basis. The has an interest rate of 6 month Libor + 1.89%. The first mortgage from Innovation Norway has a pay loan is unsecured. ment exemption until 2016 while the second has a payment exemption until 2014. The mortgages and overdraft facility, totalling NOK 900 million in total, are secured in ships and other assets with book val Exploration facility, DNB: ues of NOK 999 million. Det norske oljeselskap has renewed its exploration facility totalling NOK 3 500 million with a group of banks. The current facility was established in December 2012, and the company can draw on the facil Havfisk ity until 31 December 2015. The final repayment date is in December 2016. The maximum utilisation Secured loans: including interest is limited to 95 percent of the tax refund related to exploration expenses. The interest The mortgage of NOK 1 214 million is primarily secured in the trawler fleet and shares in harvesting rate is 3 mths NIBOR plus a margin of 1.75 percent. An utilisation fee of 0.25 percent is payable for subsidiaries. The loan matures in 2018. The loan agreement includes covenants relating to the minimum used credit up to NOK 2 750 million, rising to 0.5 percent if the utilised credit exceeds NOK 2 750 mil equity ratios of the harvesting subsidiaries. The mortgage of NOK 17 million is secured in shares and lion. In addition, a commitment fee of 0.7 percent is payable on unused credit. customer receivables. Beskjæres 76 mm fra venstre før trykk >> In September 2013, Det norske oljeselskap entered into a USD 1 billion revolving credit facility with a group of Nordic and international banks. The revolving credit facility may be increased by USD 1 billion if Overdraft facility: certain future conditions are met. The company may draw on the facility until September 2018. The final The overdraft facility comprises an operating facility of NOK 87 million and guarantee facility of NOK 13 repayment date is also September 2018. The facility replaced the USD 500 million facility of the com million. Unused operating facility credit totals NOK 87 million. Bank loans, credit facilities and other pany, which originally matured on 31 December 2015. The interest rate on the revolving credit facility is short-term loans totalling NOK 1 223 million are secured in fixed assets, inventory and receivables with 1–6 mths NIBOR/LIBOR plus a margin of 3 percent, plus a utilisation fee of 0.5 percent or 0.75 percent a book value of NOK 1 478 million. depending on the amount drawn down under the facility. In addition, a commitment fee of 1.20 percent is payable on unused credit. Converto Capital Fund:
Ocean Yield: Norway Seafoods The overdraft facility is an operating- and guarantee facility. Unused credit totals NOK 75 million. Bank Aker ShipLease loans, the overdraft facility and other short-term loans total NOK 93 million and are secured in fixed The mortgage loans are secured in the vessel Aker Wayfarer. The loan has a floating interest rate of assets, inventory and receivables with a book value of NOK 282 million. Nibor + 1.05% plus a guarantee provision. Instalments and interest are paid semi-annually, with the first payment being made on 1 April 2011. The bank loan matures on 1 October 2022, but the guarantee has Aker Philadelphia Shipyard to be renewed after five years, in 2015. Secured loans: The loans have a fixed interest rate until maturity. The payment schedule is fixed with monthly pay Aker Floating Production ments until maturity. Property, plant and equipment with a book value of NOK 332 million (USD 54.8 The mortgage loan is secured in Dhirubhai-1, and the payment period corresponds to the leasing million) has been pledged as security for the mortgage loans. period of the vessel. In addition, 50% of net cash flow is paid by way of extraordinary instalments. Ocean Harvest Connector Secured loans: The mortgage loans are secured in the vessel Lewek Connector. The loan from Eksportkreditt Norge The Caterpillar/2016 loan has a floating interest rate of Libor + 2.75%. The loan has a fixed repayment plan. has a floating interest rate of Libor + 1.38% plus a guarantee provision. The loan is guaranteed by DNB The Caterpillar/2020 loan has a floating interest rate of Libor + 4.45%. Instalments and interest are paid and GIEK. The loan from DNB Livsforsikring has a floating interest rate of Libor + 1.5%. Instalments for quarterly. Fixed assets and inventory totalling NOK 517 million have been pledged as security for the loan. both loans are paid semi-annually, and the loans mature in 2024, but the guarantee has to be renewed in 2017. Interest is paid quarterly. Aker ASA and holding companies Senior unsecured bonds: F-Shiplease The bonds have a floating interest rate of Nibor with plus a margin. The principal falls due on the matu The mortgage loans are secured in the vessels Far Senator and Far Statesman. The loan from Eksport rity date as shown above and interest is payable quarterly until maturity kreditt has a fixed interest rate of 3.69% plus a guarantee provision. Instalments and interest are paid semi-annually, and the loans mature in 2025. The loans are guaranteed by Swedbank, Sparebanken Møre and GIEK. The guarantees are subject to renewal after five years from the delivery of the respec tive vessel.
Ocean Yield AS The senior unsecured bond issue of NOK 600 million listed on Oslo Stock Exchange has a maturity date of 6 July 2017. The bonds have a floating coupon of 3 month NIBOR + 6.50%, which is paid quarterly. Aker ASA annual report 2013 105 Annual accounts – Aker group
Unsecured bank loan: Changes in the Group’s interest-bearing liabilities in 2013: The loan has a floating interest rate of Nibor + 3.75%. It matures in May 2017 and interest is payable quarterly until maturity. Amounts in NOK million Long-term Short-term Total Fornebuporten Secured loans: Interest-bearing liabilities as at 1 January 2013 11 264 2 291 13 555 Construction loan – Handelsbanken Mortgage loan Fornebuporten 351 - 351 The loan has a variable rate. The loan will mature upon completion of each construction phase, Det norske oljeselskap issue of new bond loan 1 900 - 1 900 expected in June 2015 and June 2016. DNB mortgage loan to Havfisk 400 - 400 Swedbank to Ocean Yield 916 - 916 Building plot loan – Handelsbanken Det norske oljeselskap exploration facility in NOK - 1 400 1 400 The loan has a variable rate. It must be repaid pro rata in proportion to the size of the mortgaged plot Det norske oljeselskap revolving credit facility 2 772 - 2 772 when parts of the plot are sold or transferred by means of demerger, although the principal sum must Aker ASA and holding companies issue of new bond loans 2 000 - 2 000 be reduced to at least NOK 340 million by 31 March 2014, NOK 240 million by 31 March 2015 and NOK Mortgage loan Aker BioMarine 614 - 614 140 million by 31 March 2016. The remaining balance must be repaid within five years of the disburse Other new loans 160 97 257 ment date. Beskjæres 76 mm fra venstre før trykk >> Change in credit facilities - (12) (12) Mortgage loan – DNB Loan fees and establishment costs (47) - (47) The loan has a floating interest rate. Interest is payable quarterly until maturity. Total payment from new short-term and long-term loans (excluding construction loans) 9 066 1 485 10 551 Mortgage loan – Pareto Bank Det norske oljeselskap exploration facility with DNB - (1 500) (1 500) The loan has a floating interest rate and matures in 2016. Interest and instalment are payable quarterly Aker ASA and holding companies repayment of bond loans (144) - (144) until maturity. Aker ASA and holding companies acquisitionof own bond (58) - (58) Mortgage loan – Storebrand Bank ASA Det norske oljeselskap revolving credit facility (2 185) (2 185) The loan has a floating interest rate and matures in 2017. Interest and instalment are payable quarterly Repayment bond loan in Aker BioMarine - (305) (305) until maturity. Mortgage loan in Fornebuporten ( Maries vei) - (489) (489) Aker Floating Production loan from DNB repayment (427) (97) (524) Construction loan- DNB Other repayments (445) (74) (519) The loan has a floating interest rate and matures in 2015. Interest and instalment are payable quarterly Total repayment of short-term and long-term loans (3 259) (2 465) (5 724) until maturity. Acquisition of Bekkestua Syd 86 50 136
Other acquisitions /disposals of subsidiaries (14) - (14) Total conversion and acquisitions of subsidiaries with no cash effect 72 50 122 Reclassification / first year instalments (326) 326 - Currency translation and other changes 499 (19) 480 Interest-bearing liabilities as at 31 December 2013 17 315 1 668 18 983
Currency adjustments total NOK 480 million and are attributable to the USD loans described above. Loans denominated in USD at the end of the year totalled USD 957 million, an increase of USD 108 million during 2013. A 10% decrease in the USD exchange rate compared to the rate of 6.07 on the balance sheet date would have caused a reduction in debt expressed in NOK of NOK 0.6 billion.
106 Aker ASA annual report 2013 Annual accounts – Aker group
Net interest-bearing debt The above leased rigs will be used to conduct exploration drilling under the company’s licenses in Net interest-bearing debt comprises the following items: current and future license portfolios. The minimum lease obligation cannot be determined with certainty, since it will depend on Det norske oljeselskap’s ownership interest in the respective licenses under which a given rig is actually used. The table above shows the company’s total lease obligations related Amounts in NOK million 2013 2012 to these leases. The total obligation will be reduced by the contributions paid by the various partners in the respective licenses. Cash and cash equivalents 5 834 5 471 Det norske oljeselskap, on behalf of the partnership in Ivar Aasen (previously named Draupne), has Financial interest-bearing non-current assets 1 904 1 483 signed an agreement (Letter of Award) with Maersk Drilling for the delivery of a jack-up rig for use in the Interest-bearing short-term receivables 423 28 development of the Ivar Aasen field. The rig will be used to drill production wells on the field. The con Total interest-bearing assets 8 161 6 982 tract is for a period of three years with an option to extend for up to seven years Interest-bearing long-term debt (17 315) (11 264) Lease obligations pertaining to ownership interests in licenses: Interest-bearing short-term debt including construction loans (1 668) (2 291) The Group’s share of operational lease liabilities and other long-term liabilities pertaining to its owner Total interest-bearing debt (18 983) (13 555) ship interests in oil and gas fields is shown in the table above. Net interest-bearing debt (-) / assets (+) (10 822) (6 573) Other agreements: Beskjæres 76 mm fra venstre før trykk >> Other operational lease costs and commitments relate to the leasing of office facilities and IT equip Finance lease liabilities ment. The majority, NOK 525 million, relates to contracts concluded by Det norske oljeselskap. Det norske oljeselskap has two leases for office premises in Oslo and two in Trondheim. The longest of the Finance lease liabilities are payable as follows: lease in Oslo expires in 2018 and the longest in Trondheim in 2020. Det norske oljeselskap signed a
new contract in 2012 for IT services with a non-terminable lease period of five years. Minimum Instal- Minimum Instal lease Interest ment lease Interest ment Sub-leases: Amounts in NOK million 2013 2013 2013 2012 2012 2012 The estimated minimum rent receivable under subletting agreements related to non-terminable opera tional leases totalled NOK 710 million as at 31 December 2012. The majority of the estimated minimum Less than one year 2 - 1 5 1 4 rent relates to rig contracts concluded by Det norske oljeselskap. Between one and five years 6 1 6 19 3 17 More than five years - - - 5 - 5 Total 8 1 7 30 4 26 Note 30 Pension expenses and pension liabilities
The Aker Group’s Norwegian companies mainly cover their pension liabilities through group pension Note 29 Operating leases plans managed by life insurance companies. Under IAS 19, employee benefit plans have been treated, for accounting purposes, as defined benefit plans. The Norwegian companies in the Group are subject to the Norwegian Act relating to mandatory occupational pensions, and the Group meets the require Irrevocable operating leases where the Group is the lessee, are payable as follows: ments of this legislation. The Group’s companies outside Norway have pension plans based on local practice and regulations. Ownership Certain companies have pension plans under which the employer makes an agreed contribution that Rig interest in Other is managed in a separate pension savings plan, or makes a contribution that is included in a joint plan Amounts in NOK million contracts licenses agreements 2013 2012 with other employers. The contributions are recorded as pension expenses for the period. The Group also has uninsured pension liabilities for which provisions have been made. Less than one year 639 165 107 911 1 550 The discount rate used in 2013 and 2012 is based on the Norwegian high-quality corporate bond Between one and five years - 662 368 1 030 1 377 rate. The assumptions used are consistent with the recommendations of the Norwegian Accounting Standards Board. More than five years - 865 130 995 118 The Group has previously employed the”corridor” method of accounting for actuarial gains and Total 639 1 692 605 2 936 3 045 losses. In accordance with IAS 19R, all actuarial gains and losses are to be recognised in other compre hensive income (OCI).The changes in IAS 19R have retrospective application. Actuarial calculations have been performed to determine pension liabilities and pension expenses in Rig contracts: connection with the Group’s defined benefit plans. The following assumptions have been made when Det norske oljeselskap ASA has signed a lease agreement for the rig Transocean Barents which runs to calculating liabilities and expenses in Norway: July 2014. Det norske oljeselskap has signed a lease for the rig Maersk Giant with Maersk Giant Norge for a period of 150 days to drill two wells, one of which was drilled in 2013. Det norske oljeselskap has also signed a contract with Dolphin Drilling AS for lease of the rig Borgland Dolphin for a period of 60 days to drill the prospect Kvitvola i PL553 Aker ASA annual report 2013 107 Annual accounts – Aker group
Profit/loss 2013 Change in fair value of pension funds: Balance 2013 and balance 2012 Amounts in NOK million 2013 Restated 2012
Expected return 4.1% 4.0% Fair value of pension funds at 1 January 250 224 Discount rate 4.1% 3.8% Expected return on pension funds 9 15 Wage growth 3.5% 3.5% Administration (1) (4) Pension adjustment 1.9% 1.9% Payments received 48 33 Payments made (23) (18) Pension expense recognised in profit and loss: Acquisitions of subsidiaries (7) - Restated Remeasurement included in other comprehensive income 2 - Amounts in NOK million 2013 2012 Effects of movements in exchange rates 1 (1) Fair value of pension funds as at 31 December 280 250 Expense related to benefits earned during the period 46 39 Interest expense accrued on pension liabilities 17 16 Beskjæres 76 mm fra venstre før trykk >> Expected return on pension funds (9) (8) Net defined-benefit obligations recognised in the balance sheet: Service costs 1 4 Amounts in NOK million 2013 Restated 2012 Social security contributions - 6 Pension expense recognised from defined benefit plans 54 56 Pension liabilities as at 31 December (536) (499) Contribution plans (employer's contribution) 27 18 Fair value of pension funds as at 31 December 280 250 Total pension expense recognised in profit and loss 81 74 Net liability for benefit-based pension liabilities as at 31 December (256) (248) Pension funds 4 15 Pension liabilities 31 December (260) (263) Remeasurement loss (gain) included in other comprehensive income: Net liabilities for benefit based pension liabilities as at Restated 31 December (256) (248) Amounts in NOK million 2013 2012
Change in discount rate (17) 4 Pension assets by main category as a percentage of total pension funds: Change in other financial assumptions (18) - Change in mortality table 32 - Per cent 2013 2012 Change in other assumptions in pension liabilities 24 11 Change in other assumptions in pension funds (3) - Debt instruments 70.7% 76.8% Investment and management cost 6 - Equity instruments 6.7% 7.7% Other comprehensive income - loss/(gain) 26 15 Money market funds 15.6% 9.2% Other 7.0% 6.2% Total 100.0% 100.0% Changes in present value of benefit-based pension liabilities: Restated Amounts in NOK million 2013 2012
Pension liabilities as at 1 January 499 507 Expenses related to pensions vested during the period 46 39 Interest expense on pension liabilities 17 16 Acquisitions and disposals (8) (1) Pension payments (43) (35) Remeasurements included in other comprehensive income 28 (26) Effects of movements in exchange rates (2) (1) Pension liabilities at 31 December 536 499 108 Aker ASA annual report 2013 Annual accounts – Aker group
Financial assumptions (Norwegian plans): Note 32 Provisions In the table below, the effect on pension expenses and pension liabilities is depicted given a 1%-point increase or decrease in the discount rate. The effect of a 1%-point increase or reduction in wage 2013 growth is also shown. Abandonment Amounts in NOK million Warranties provision Other Total 1%-point 1%-point
Amounts in NOK million increase reduction Balance as at 1 January 120 798 35 953
Provisions made during the year 11 215 185 410 Discount rate: 5.1% 3.1% Provisions used during the year (34) (37) (13) (84) Pension expenses (9) 10 Provisions reversed during the year (13) - (18) (32) Pension liabilities (61) 70 Currency exchange adjustment 1 - 2 3
Balance as at 31 December 84 976 191 1 251 Wage growth: 4.8% 2.8%
Pension expenses 1 (2) Long-term liabilities 79 829 33 941 Beskjæres 76 mm fra venstre før trykk >> Pension liabilities 8 (14) Short-term liabilities 5 147 158 310 Balance as at 31 December 84 976 191 1 251
Note 31 Other interest-free long-term liabilities 2012 Abandonment Other long-term debt and liabilities comprise the following items: Amounts in NOK million Warranties provision Other Total
Amounts in NOK million 2013 2012 Balance as at 1 January 225 285 30 540 Provisions made during the year 22 514 10 546 Interest-free long-term debt to related party 154 196 Provisions used during the year (126) (1) (3) (130) Other interest-free long-term debt 638 634 Currency exchange adjustment (1) - (1) (2) Total 792 829 Balance as at 31 December 120 798 35 953
Long-term liabilities 104 798 24 926 In 2013, long-term interest-free debt to related parties comprised the remainder of a prepayment from Short-term liabilities 16 - 11 27 a subsidiary of Aker Solutions to Aker ASA’s subsidiary Aker ShipLease in connection with a lease of Balance as at 31 December 120 798 35 953 the vessel Aker Wayfarer totalling NOK 154 million. Other interest-free long-term debt includes NOK 258 million in deferred income in Aker Floating Production, NOK 49 million in derivatives in Det norske oljeselskap and NOK 47 million related to real estate tax in Aker Philadelphia Shipyard. Warranties In 2012, long-term interest-free debt to related parties comprised the remainder of a prepayment The provision for warranties mainly relates to the possibility that Aker, based on contractual agree from a subsidiary of Aker Solutions to Aker ASA’s subsidiary Aker ShipLease in connection with a lease ments, may have to perform guarantee work related to products and services delivered to customers. of the vessel Aker Wayfarer. Other interest-free long-term debt included NOK 288 million in deferred The provision is based on Aker’s contractual obligations and empirical estimates of the frequency and income in Aker Floating Production and NOK 46 million in derivatives in Det norske oljeselskap. cost of work that may need to be done. The warranty period is normally two years and any cash effects will arise during this period. A provision of NOK 79 million has been made with respect to pensions in the former Kvaerner US operation (see also Note 36). The remainder of the warranty provision relates to product tankers delivered by Aker Philadelphia Shipyard.
Removal and decommissioning liabilities Det norske oljeselskap’s removal and decommissioning liabilities relate to the fields Jette, Glitne, Varg, Atla, Enoch and Jotun. Removal is expected to occur in 2018 for Jette, 2014-2016 for Glitne, 2016- 2018 for Varg, 2018-2020 for Atla, 2017 for Enoch and 2018-2021 for Jotun. This is based on an imple mentation concept designed in accordance with the Petroleum Activities Act and international regula tions and guidelines.
Other provisions Other provisions mainly relates to ongoing legal proceedings between Havfisk and Glitnir, see Note 36. Aker ASA annual report 2013 109 Annual accounts – Aker group
Note 33 Mortgage and guarantee liabilities Note 34 Trade and other payables
Mortgages Trade and other payables comprise the following items: In the course of ordinary operations, completion guarantees are issued and advance payments are received from customers. Guarantees are typically issued to the customer by a financial institution. Col Amounts in NOK million 2013 2012 lateral of NOK 10.4 billion has been provided for interest-bearing long-term debt. The book value of assets used as collateral is NOK 18.9 billion. Trade accounts payable 982 640 Liability for damage/insurance Accrual of operating- and financial costs 356 239 Like other licensees on the Norwegian continental shelf, Det norske oljeselskap has unlimited liability for Other short-term interest-free liabilities 1 305 1 534 damage, including pollution damage. Like other oil companies, Det norske oljeselskap has insured it’s Total 2 642 2 413 pro rata liability on the Norwegian continental shelf. Installations and liability are covered by an opera tional liability insurance policy. Other current liabilities relates to NOK 92 million in VAT, payroll tax and tax withholding (2012: NOK 111 million), NOK 256 million in advances from customers (2012: NOK 337 million) and NOK 957 million in Guarantees reserves for unpaid wages, holiday payments and other expense accruals (2012: NOK 1 080 million). Beskjæres 76 mm fra venstre før trykk >> Det norske oljeselskap has established a loan scheme whereby permanent employees can borrow up to 30 percent of their gross annual salary at the standard interest rate prescribed for tax purposes. The Specification of net working capital: company covers the difference at any given time between the market interest rate and the standard prescribed rate. The lender is a savings bank, and the company acts as guarantor for the employees’ Restated loans. Guarantees furnished by the company for employees totalled NOK 33 million as at 31 December Amounts in NOK million 2013 2012 2013. Det norske oljeselskap has also issued a rent guarantee totalling NOK 13 million to the lessor of the company’s premises at Aker Brygge. Biological assets, inventory, work in progress, other trade and interest- free receivables 2 244 2 083 Contractual commitments Trade and other payables (2 642) (2 413) On behalf of the partners in the Ivar Aasen licence, Det norske oljeselskap has signed several commit Current provisions (310) (27) ments related to the development of the Ivar Aasen field. Excluding the rig contract, Det norske olje Total operational assets and debt (708) (357) selskap’s commitments are NOK 2.6 billion in total. See also Note 29. Derivatives (185) (85) Uncertain liabilities Pension assets and other non-current assets 228 271 In the normal course of its business, the Group will be involved in disputes, and there are currently Pension liabilities, other interest-free long-term liabilities and non-current some unresolved claims. The Group has made provision in the financial statements for probable liabili provisions (1 944) (1 974) ties related to litigation and for claims arising from IFRS, based on the Group’s best assessment. The Total working capital (2 608) (2 145) Group does not expect its financial position, operational results or cash flows to be materially affected by the resolution of these disputes. Changes in net working capital
Restated Amounts in NOK million 2013 2012
Working capital as at 1 January (2 145) (874) Acquisition of Maries vei 20 and Widerøeveien 5 - 8 Acquisition of Bekkestua Syd (9) - Sale of subsidiaries (9) - Change in working capital related to investment activities (see Note 13) (281) (508) Change in IAS 19 recorded directly against equity - (56) Change in working capital in cash flow 12 (821) Exchange rate differences and other (176) 106 Working capital as at 31 December (2 608) (2 145) 110 Aker ASA annual report 2013 Annual accounts – Aker group
Note 35 Financial instruments
See also Note 5 Financial risk and exposure.
Fair value and carrying amounts The estimates of fair value and the carrying amounts shown in the balance sheet are as follows:
2013 2012 Amounts in NOK million Carrying amount Fair value Carrying amount Fair value
Financial assets carried at fair value Available for sale financial assets 1 858 1 858 1 634 1 634 Financial assets at fair value through profit and loss (including derivatives) 5 5 8 8 Financial assets designated at fair value through profit and loss 68 68 23 23 Beskjæres 76 mm fra venstre før trykk >> Foreign exchange contracts - hedge accounting 1 1 6 6 Total financial assets carried at fair value 1 932 1 932 1 672 1 672
Financial assets carried at amortised cost Loans and receivables 2 426 2 426 2 052 2 052 Cash and cash equivalents (including long-term restricted deposits, see Note 18) 6 346 6 346 5 888 5 888 Total financial assets carried at amortised cost 8 772 8 772 7 940 7 940
Financial liabilities carried at fair value Interest rate swaps - hedge accounting 29 29 32 32 Foreign exchange contracts - hedge accounting 31 31 - - Derivative contracts - not hedge accounting 131 131 68 68 Total financial assets carried at fair value 190 190 100 100
Financial liabilities carried at amortised cost Bonds and convertible loans 7 832 8 036 4 150 4 305 Other interest-bearing debt 11 151 11 151 9 405 9 412 Interest-free long-term financial liabilities 495 495 783 783 Interest-free short-term financial liabilities 2 294 2 294 1 959 1 959 Total financial liabilities carried at amortised cost 21 772 21 976 16 298 16 459
The NOK 4 757 million of financial liabilities classified as fixed rate in the interest profile table (Note 5) are liabilities that pursuant to contract have floating interest rates but have been swapped to fixed rates using interest rate swaps. In the table above, the changes in the fair value of these derivatives due to interest rate changes is shown on the line Interest rate swaps-hedge accounting and the line Derivative contracts-not hedge accounting. Aker ASA annual report 2013 111 Annual accounts – Aker group
Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. See Note 4 ■■ Discount rates (2013:11 per cent, 2012: 12 per cent) Accounting principles for definitions of the different levels in the fair value hierarchy. ■■ Forecasted cash flows do not include an extension from February 2018 to February 2021.
2013 The inter-relationship between significant unobservable inputs and fair value measurement is as follows: The estimated fair value will increase (decrease) if:
Amounts in NOK million Level 1 Level 2 Level 3 ■■ The discount rates are lower (higher) ■■ AMSC exercises the option to extend the bond loan agreement to February 2021 Financial assets carried at fair value Available for sale financial assets 65 713 1 080 In addition, in 2013, Aker Philadelphia Shipyard’s profit sharing asset was reclassified to fair value from Financial assets at fair value through profit and loss (including amortised cost with NOK 44 million in total. derivatives) - 5 - Transfers to level 3 in 2012 were related to a reconsideration of the method used to calculate the fair Financial assets designated at fair value through profit and loss - 24 44 value of certain unlisted securities. Foreign exchange contracts used for hedging - 1 - Beskjæres 76 mm fra venstre før trykk >> Total 65 743 1 124 Note 36 Contingencies and legal claims Financial liabilities carried at fair value Interest rate swaps used for hedging - 29 - Project risks and uncertainties Foreign exchange contracts used for hedging - 31 - The Group’s operations are to a large extent governed by long-term contracts, some of which are fixed- Other derivative contracts - liability - 131 - price, turnkey contracts that are awarded on a competitive bidding basis. Failure to meet schedule or Total - 190 - performance guarantees or increases in contract costs can result in non-recoverable costs, which may exceed revenues realised from the applicable project. Where a project is identified as loss-making, for ward loss provisions are made. The accounting treatment is based on the information and advice avail The following table presents the changes in instruments classified as level 3 as at 31 December: able. Inevitably, such circumstances and information may be subject to change in subsequent periods, and thus the eventual outcome may be better or worse than the assessments made in preparing peri 2013 2012 odical financial reports. Financial Financial Legal proceedings Amounts in NOK million assets assets In their extensive worldwide operations, Group companies become involved in legal disputes. Provi sions have been made to cover the expected outcomes of disputes where negative outcomes are likely Carrying amount as at 1 January 80 100 and reliable estimates can be made. However, the final outcomes of such cases will always be subject Transfer to level 3 897 3 to uncertainty and resulting liabilities may exceed booked provisions. Transfer from level 3 - - Total gains or losses for the period recognised in the income statement 104 2 Tax Total gains or losses recognised in other comprehensive income 68 (3) Companies in the Aker Group have some issues that are under consideration by local tax authorities in Sales (25) (22) certain countries in which the Group has operations. In accordance with generally accepted accounting practices, Aker has treated issues pending final determination in accordance with the information avail 80 Carrying amount as at 31 December 1 124 able at the end of the accounting period.
The amount of gains or losses for the period included in profit and loss Det norske oljeselskap and other comprehensive income that is attributable to gains or losses Liability for damages/insurance related to assets and liabilities at level 3 still held at the end of the Like other licensees on the Norwegian continental shelf, Det norske oljeselskap has unlimited liability for reporting period 169 - damage, including pollution damage, and has therefore taken out appropriate pro rata insurance. Instal lations and liability are covered by an operational liability insurance policy.
Uncertain commitments Transfer to level 3 in 2013 consisted mainly of AMSC bonds in Ocean Yield totalling NOK 852 million. In the normal course of its business, Det norske will be involved in disputes, and there are currently The bond was categorised as falling into level 2 of the fair value hierarchy in 2012. A reassessment of some unresolved claims. The company has made provisions in its financial statements for probable this classification has placed the fair value calculation of the bonds at level 3.The fair value has been liabilities related to litigation and claims, based on its best estimate. Det norske does not expect its calculated by discounting the estimated cash flows using an applicable discount rate. The fair value financial position, results of operations or cash flows to be materially affected by the resolution of these calculation is based on few observable inputs, and the bonds are thus allocated to level 3. disputes. The most significant unobservable inputs used in the fair value calculation are as follows: Following a tax audit carried out by the Oil Taxation Office, Det norske oljeselskap has received 112 Aker ASA annual report 2013 Annual accounts – Aker group
notice of reassessment for the tax years 2009 and 2010. The notice relates to the drilling contract relat Note 37 Transactions and agreements with related parties ing to Aker Barents. At the end of Q3 2012, the company responded to the notice of reassessment with detailed comments. Aker ASA’s main shareholder is TRG Holding AS, controlled by Kjell Inge Røkke and his family through The Resource Group REF AS (TRG AS). The Aker Group treats all companies controlled by Kjell Inge Aker BioMarine Røkke as related parties. In 2013, Aker BioMarine Antarctic AS, the owner of the vessel F/V Antarctic Sea, was sued for damages in the District Court of the Western District of Washington at Seattle by a worker, employed by a sub- Transactions with Kjell Inge Røkke and family contractor, who was severely injured during repair of the vessel. Aker BioMarine has recently moved for Aker has no material outstanding accounts, nor have there been any transactions with Kjell Inge Røkke, an order to dismiss the complaint for lack of personal jurisdiction. Aker BioMarine has an insurance except for remuneration for his work as chairman of the board (see Note 38). When Aker employees policy covering any liability for damages in the lawsuit. perform services for Kjell Inge Røkke or other related parties, Aker’s expenses are billed. In 2013, Kjell Inge Røkke paid NOK 3.1 million plus value added tax for services and rental of premises (NOK 1.5 Havfisk million in 2012). TRG AS has provided services to Aker for NOK 1.5 million in 2013 (NOK 1.4 million in Nordland Havfiske is engaged in legal proceedings relating to a claim for damages of up to NOK 6.9 2012). Aker’s aircraft are operated by Sundt Air Management and charged for according to use. million for breach of patent rights related to the sale of Vesttind in 2007. Nordland Havfiske won the In 2012, Aker purchased TRG AS’s 50 percent share in the company Aker Encore for NOK 16 million. case at first instance in 2010, and was awarded costs, but the ruling was appealed. The case was Kristian Monsen Røkke, President and CEO of Aker Philadelphia Shipyard, received a total of USD scheduled to be heard by the Supreme Court in May 2012, but was postponed due to the illness of the 369 528 in salary and other remuneration from the company. Beskjæres 76 mm fra venstre før trykk >> counterparty. The case has been repeatedly postponed in 2013, but a new hearing is now scheduled for June 2014. Transaction with Fausken Invest In 2013, Havfisk received a claim totalling NOK 105 million from the administration committee of Fausken Invest is controlled by Frank Reite, Managing Partner of Converto (formerly Converto Capital Glitnir on Iceland regarding an interest rate and currency swap agreement concluded in 2005. The swap Management). agreement was terminated by Havfisk in 2008 based on the opinion that the company was entitled to do In 2012, Aker sold its 90 percent holding in Converto Capital Management (CCM) to Fausken Invest. so under Icelandic law. Havfisk had previously (in 2011), received a summons from Glitnir setting out the Havfisk was moved from Converto Capital Fund to direct ownership by Aker ASA through the purchase claim, which Havfisk disputes. of 61.2 million shares in Havfisk at a price of NOK 6.50 per share. CCM acquired 1.1 million shares in On 30 December 2013, Reykjavik District Court pronounced judgment in the case, and concluded Havfisk from Converto Capital Fund, corresponding to 1.3 percent of the outstanding shares. A two-year that Havfisk had no right to terminate the agreement in 2008. Havfisk was thus ordered to pay ISK agreement was signed for CCM to act as investment advisor for Aker’s ownership interest in Havfisk. 1 897 563 144 in damages to Glitnir, with the addition of ISK 1 081 391 516 in interest. Applying the offi cial exchange rate, the total claim amounted to approximately NOK 158 million as at 31 December 2013. Transaction with Höegh Autoliners A provision for the amount has been made in the 2013 annual accounts. The ruling is being appealed. In September 2013, Ocean Yield AS, a subsidiary of Aker ASA (73.4%), entered into newbuild contracts In 2012, the Norwegian Directorate of Fisheries ordered the vessels Jergul, Skaidi and Stamsund to for two pure car truck carriers (PCTCs) with Xiamen Shipbuilding Industry Co. Ltd (Xiamen). The vessels be withdrawn from operations for three months (Jergul and Skaidi), and one month (Stamsund), with will be delivered in January and April 2016, and will then be chartered to Höegh Autoliners on 12-year effect from 1 November 2012 for alleged violations of their delivery obligations in 2011. Havfisk has “hell and high water” bareboat charter contracts. The agreements were concluded by the board of appealed the decision, which has been suspended until a ruling is made on the appeal. Ocean Yield. In Q3 2012, Ocean Yield AS, then a wholly-owned subsidiary of Aker ASA, signed a newbuild con TH Global tract for two PCTCs with Daewoo Shipbuilding & Marine Engineering. The vessels will be delivered in Aker ASA has a guarantee commitment relating to the US pension fund Kvaerner Consolidated Retire April and August 2014, respectively, and will then be chartered to Höegh Autoliners on 12-year “hell and ment Plan of Kvaerner US Inc. The purpose of the agreement is to enable Kvaerner US Inc (a subsidiary high water” bareboat charter contracts. The agreements were entered into by the board of Ocean Yield of TH Global), to make its annual or quarterly minimum premium payments into the pension fund. Leif O. Høegh, a director of Aker ASA, also serves as the chairman of Höegh Autoliners. Responsibility for payment of the premium into the pension fund is split between Kvaerner US Inc. (two- thirds, with a guarantee from Aker ASA), and Aker Kvaerner Willfab Inc. and Aker Subsea Inc. (one- Grants to employee representatives’ collective fund third, with a guarantee from Aker Solutions ASA). As at 31 December 2013, Aker ASA has made a long- Aker ASA has signed an agreement with its employee representatives regulating the use of grants from term provision of NOK 79 million (see also Note 32). Aker ASA for activities related to continuing professional development. In 2013, the grant totalled NOK 665.000 (2012: NOK 630.000). Recourse claim against Sea Launch’s former Russian and Ukrainian partners Sea Launch, a company offering spacecraft launch services for satellites, filed for bankruptcy protec Acquisition of shares in associated company tion under chapter 11 of the US Bankruptcy Code in June 2009. As a shareholder in Sea Launch, Aker Aker ASA purchased 16.44 million Aker Solutions shares (6 percent), in November 2013 at NOK 115 per had guaranteed a total of USD 122 million to Sea Launch’s creditors. Aker negotiated agreements share, for a total of NOK 1.9 billion. The Aker Group now owns 46% of Aker Solutions, including 40 resulting in a total payment of NOK 776million under the guarantees. percent through Aker Kvaerner Holding. Aker is of the opinion that, as a result of the guarantee payments, the Group has a recourse claim against its former Russian and Ukrainian partners which would have reduced the guarantee payment by Transactions with associated companies approximately USD 32 million at time of payment. The Russian and Ukrainian partners have opposed Aker Solutions ASA Aker’s claim thus far. Aker continues to pursue the recourse claim, and other claims against the same Companies in the Aker Group have been involved in some transactions with Aker Solutions: parties, through ongoing legal proceedings in California and in the Swedish courts. Both sets of pro ceedings are being conducted in close cooperation with former partner and co-guarantor The Boeing Company. Aker ASA annual report 2013 113 Annual accounts – Aker group
Aker Clean Carbon AS in 2012 Oslo Asset Management AS In March 2012, Aker agreed to sell its 50 percent ownership interest in Aker Clean Carbon to Aker Solu Aker Insurance, a subsidiary of Aker Solutions, received investment management services from Oslo tions. The transaction included a cash element of NOK 0 (zero) at the time of the takeover, and an agree Asset Management (a subsidiary of Aker until 2 December 2013, see below). The annual fee is based ment between the parties under which the acquirer would pay an amount to the seller based on earnings on the average total capital managed. from new technology agreements over the next 10 years. Aker’s entitlement to financial compensation was capped at the amount of Aker’s total investment in Aker Clean Carbon – NOK 147 million – plus 12 Kvaerner ASA percent per annum. The fair value of the consideration in the transaction is estimated to be NOK 0 (zero). The companies in the Aker Group had no significant transactions with Kvaerner in 2013 or 2012, with the exception of an agreement with Fornebuporten AS. Det norske oljeselskap ASA Kvaerner signed an agreement with Fornebuporten AS, a subsidiary of Aker ASA, for a long-term Det norske oljeselskap has entered into agreements with Aker Solutions related to development pro lease of Kvaerner’s new headquarters at Fornebu, scheduled for completion in Q2 2015. The lease jects in the Jette and Ivar Aasen fields. In 2013, Aker Solutions invoiced the partners in the licences agreement relates to approximately 8 000 square metres, and has been concluded on market terms. The NOK 96 million (NOK 208 million in 2012). Det norske’s share based on its share in the licenses totalled lease period is 12 years, although Kvaerner has two five-year extension options. The board of Aker NOK 53 million (NOK 98 million in 2012). Kværner Holding has approved the transaction in accordance with the current shareholder agreement.
Fornebuporten AS Oslo Asset Management Holding AS In October 2013, Fornebuporten AS, a subsidiary of Aker ASA, signed a long-term lease agreement On 2 December 2013, Aker ASA reduced its ownership interest in Oslo Asset Management Holding Beskjæres 76 mm fra venstre før trykk >> with Aker Solutions ASA, commencing in 2016, for offices to be built at Fornebu, near Oslo. The agree from 50.1 percent to 45 percent. Oslo Asset Management Holding is the parent company of Oslo Asset ment relates to approximately 32 000 square metres of office and common space. The lease term is 12 Management. When Aker employees perform services for the company, Aker’s expenses are billed. The years, although the lease also includes two five-year extension options. The building is scheduled for company also rents premises from Aker ASA. completion in June 2016. The board of Aker Kværner Holding has approved the transaction in accord ance with the current shareholder agreement. Transactions with joint ventures Intellectual Property Holding AS Aker Solutions has an agreement with Intellectual Property Holding, which holds all rights, titles and Trygg Pharma Holding AS, Aker BioMarine Manufacturing LLC and Aker BioMarine Financing LLC interests in registered trademarks and domain names containing “Aker”. Under the agreement, Aker Trygg Pharma Holding and Aker BioMarine Manufacturing received equity contributions of NOK 100 Solutions has acquired the right to use the “Aker” name in combination with “Solutions”. million and NOK 35 million, respectively, from Aker BioMarine in 2013 (Trygg Pharma Holding AS received NOK 82 million in 2012). In addition, Aker BioMarine has funded Aker BioMarine Financing Ocean Yield ASA LLC by means of a long-term loan of USD 6 million (NOK 39 million). In 2012, Ocean Yield, then a wholly-owned subsidiary of Aker ASA, entered into an agreement to acquire the offshore construction and cable lay vessel Lewek Connector from AMC Connector AS for a Fornebuporten Boligutvikling AS total consideration of USD 315 million. The seller of the vessel, AMC Connector AS, is a 50/50 joint Fornebuporten Boligutikling rents premises from Fornebuporten. When employees of Aker or related venture between Emas Offshore Limited and Aker Solutions ASA. Aker ASA indirectly owns 28 percent parties perform services for Fornebuporten Boligutvikling, Aker’s expenses are billed. of Aker Solutions ASA through Aker Kvaerner Holding AS. The board of Aker Kvaerner Holding has approved the transaction in accordance with the current shareholder agreement. Total assets and liabilities involving related parties in 2013 and 2012 In 2013, Aker’s total related-party assets totalled NOK 72 million, while its related-party liabilities Aker ShipLease AS (a subsidiary of Ocean Yield ASA) totalled NOK 154 million. In 2009, Aker and Aker Solutions entered into a 10-year bareboat charter contract for the vessel Aker Wayfarer. Aker Wayfarer is an offshore construction vessel designed for ultra-deep water and containing state-of-the-art equipment. The total contract value was NOK 2.4 billion, and the ship was delivered in Amounts in NOK million 2013 2012 October 2010. A lease prepayment was paid in 2009 and is included in other interest-free long-term liabilities in the balance sheet, in the sum of NOK 154 million (NOK 196 million in 2012). Interest-bearing long-term receivables 63 - Aker ASA Other assets 1 - Aker Subsea Inc. and Aker Kvaerner Wilfab Inc., both subsidiaries of Aker Solutions, are sponsoring Interest-bearing short-term receivables 9 employers of the Kvaerner Consolidated Retirement Plan in the USA. The principal sponsor of the plan Total assets 72 - is Kvaerner U.S. Inc., a subsidiary of TH Global plc. Aker ASA has provided a guarantee in case TH Global is unable to pay the plan contributions, and issued a guarantee to Aker Solutions in case Aker Solutions becomes liable for more than one-third of the underfunded element of the plan. Other long-term liabilities 154 196 The board of directors of Aker Solutions ASA has agreed that, for as long as Øyvind Eriksen is the acting executive chairman of the company, the position should be remunerated with the salary of the Total liabilities 154 196 company’s former chief executive. Accordingly, Aker ASA received NOK 6 000 000 in 2013 in respect of Øyvind Eriksen’s work for Aker Solutions (NOK 6 634 147 in 2012). 114 Aker ASA annual report 2013 Annual accounts – Aker group
Note 38 Salary and other remuneration to the board of directors, nomination are offered standard employment contracts and standard employment conditions with respect to notice committee, CEO and other senior executive at Aker ASA periods and severance pay. The company does not offer stock option programs to the employees. The intention of the variable salary element is to promote the achievement of good financial results and leadership in accordance with the company’s values and business ethics. The variable salary element Remuneration to the board of directors has three main components; a bonus calculated on the basis of value adjusted equity, a payment cal culated on the basis of the dividend on the company’s shares and a payment based on personal Amounts in NOK 2013 2012 achievement (see Aker ASA Note 2). Work on special projects may entitle to an additional bonus in addition to the above. The employment contracts of the senior executives can be terminated with three Kjell Inge Røkke (Chairman of the Board) 550 000 530 000 months’ notice. If the company terminates a contract, the executive is entitled to between three and six months’ pay after the end of the notice period. Finn Berg Jacobsen (Deputy Chairman) 382 500 365 000 Kristin Krohn Devold (Director) 332 500 315 000 Remuneration to the CEO and CFO Stine Bosse (Director) 332 500 315 000 CEO Øyvind Eriksen appointment can be terminated by either party with three months’ notice. If the Karen Simon (Director since 17 April 2013) 162 500 - contract is terminated by the company, Øyvind Eriksen will be entitled to three months’ notice and three Leif O. Høegh (Director since 14 April 2012) 332 500 155 000 months’ salary from the date of termination. This salary will not be paid if he continues to work for Anne Marie Cannon (Director to 17 April 2013) 170 000 315 000 another company in the Aker Group. The remuneration plan for Øyvind Eriksen includes a fixed salary, Beskjæres 76 mm fra venstre før trykk >> Atle Tranøy (Employee representative) 166 250 157 500 standard pension- and insurance terms for employees and a variable salary element. In 2013 Øyvind Tommy Angeltveit (Employee representative) 166 250 157 500 Eriksen received a salary of NOK 14 807 181 (NOK 14 307 553 in 2012) and a variable pay of NOK Nina Hanssen (Employee representative since 17 April 2013) 81 250 - 9 168 621 (NOK 8 861 201 in 2012). The value of additional remuneration was NOK 13 976 in 2013 Arnfinn Stensø (Employee representative since 17 April 2013) 81 250 - (NOK 42 397 in 2012) while the net pension expense for Øyvind Eriksen was NOK 271 907 (NOK 271 401 in 2012). Harald Magne Bjørnsen (Employee representative until 17 April 2013) 85 000 157 500 Group director (CFO) Trond Brandsrud appointment can be terminated by either party with three Bjarne Kristiansen (Employee representative until 17 April 2013) 85 000 157 500 months’ notice. If the contract is terminated by the company, Trond Brandsrud is entitled to three Total 2 927 500 2 625 000 months’ notice and six months’ salary from the date of termination. This salary will not be paid if he con tinues to work for another company within the Aker group. The remuneration plan for Trond Brandsrud includes a fixed salary, standard pension- and insurance In addition to the board remuneration the members of the audit committee received a total remunera term for employees and a variable salary element. Trond Brandsrud’s variable salary may total up to tion of NOK 392 500 in 2013 NOK 380 000 in 2012). Finn Berg Jacobsen received NOK 167 500 (NOK 140% of the value of his fixed salary. Trond Brandsrud’s variable pay also includes bonus shares and the 165 000 in 2012), Stine Bosse received NOK 112 500 (NOK 107 500 in 2012) and Atle Tranøy received option to buy Aker ASA shares at a discount (see Aker ASA Note 2). In 2013 Trond Brandsrud purchased NOK 112 500 in remuneration for 2013 (NOK 107 500 in 2012). 2 500 shares in Aker ASA through the company Nordbrand Invest AS at a discount (5 680 shares in In 2013 The Chairman of the Board Kjell Inge Røkke received, through The Resource Group (TRG) 2012). In 2013 CFO Trond Brandsrud received a fixed salary of NOK 4 739 275 (NOK 4 414 687 in 2012) AS, NOK 550 000 in board remuneration from Aker ASA (NOK 530 000 in 2012). In addition Kjell Inge and a variable pay element, including bonus shares of NOK 5 767 740 (NOK 5 551 390 in 2012). Trond Røkke has received a total board remuneration from other Aker owned companies of NOK 1 656 107 Brandsrud has been allocated 4 663 bonus shares for 2013 (5 275 bonus shares for 2012). The value of through TRG in 2013 (NOK 1 677 727 in 2012) (see Note 37 Transactions and agreements with related additional remuneration was NOK 18 822 in 2013(NOK 18 176 in 2012) while the net pension expense parties). for Trond Brandsrud was NOK 297 007 in 2013 (NOK 306 983 in 2012). Some board members also have directorships in other Aker associated companies. The board mem The Senior executive receives no remuneration for directorships or as a member of nomination com bers have received no payments from Aker ASA in 2013 or 2012 other than the ones described above. mittee in other Aker companies. Aker ASA received NOK 6 364 638 for Øyvind Eriksen in 2013, Øyvind Eriksen’s directorship of Aker Solution accounted for NOK 6 000 00. Aker ASA received NOK 104 000 Remuneration to the nomination committee for Trond Brandsrud’s directorship of Havfisk in 2013. The members of nomination committee Leif-Arne Langøy, Gerhard Heiberg and Kjeld Rimberg each received NOK 50 000 in 2013. The total remuneration paid by Aker ASA was NOK 150 000 in 2013 (NOK 150 000 in 2012).
Aker’s organizational structure Aker ASA’s numerous operational companies are organised into an industrial and a financial portfolio. As a consequence of this organisational structure, Aker ASA does not have a group executive team in its traditional form. At the end of 2013 Aker’s executive team consisted of CEO Øyvind Eriksen and CFO Trond Brandsrud.
Directive for remuneration of the CEO and the company’s senior executives The total remuneration paid to the executives consists of a fixed salary, standard pension- and insur ance terms for employees and a variable salary element. The main purpose of the system is to stimu late a strong and enduring profit-oriented culture that ensures share price growth. Senior Executives participate in a collective pension and insurance scheme available to all employees. The collective pen sion and insurance scheme applies for salaries up to 12G. The CEO and others in the Executive team Aker ASA annual report 2013 115 Annual accounts – Aker group
Note 39 Shares owned by the Board of Directors, CEO and other employees in the Aker BioMarine Executive team In 2013, the subsidiary Aker BioMarine Antarctic AS received a refund of NOK 2 million (NOK 2 million in 2012) under the Norwegian government’s “Skattefunnordningen” tax plan and from the Norwegian Research Council. Nearly all of the NOK 2 million received in 2013 has been deducted from the acquisi Shares owned by members of the board, the President and CEO and other senior executives and tion cost of capitalised development projects their related parties in Aker ASA, Aker Solutions ASA, Kvaerner ASA and Ocean Yield ASA as of 31 December 2013. Aker Solutions Aker ASA ASA Kvaerner ASA Note 41 Classification of reserves and contingent resources (unaudited)
Board of directors: Aker’s oil- and gas reserves and contingent resources are attributable to the subsidiary Det norske olje Kjell Inge Røkke (Chairman of the Board) 1) 49 105 514 - - selskap ASA (Det norske), an E&P company focused on the Norwegian Continental Shelf (NCS). Det Finn Berg Jacobsen (Deputy chairman) 5 000 - - norske publishes an annual reserve report in line the requirements of Oslo Stock Exchange on which Stine Bosse (Director) 400 - - the Det norske’s shares are listed. Leif O. Høegh (Director) 2) 135 000 - - The reserve and contingent resource volumes have been classified in accordance with the SPE clas Beskjæres 76 mm fra venstre før trykk >> Atle Tranøy (Employee representative) - 460 10 106 sification system “Petroleum Resources Management System” and meet Oslo Stock Exchange’s Arnfinn Stensø (Employee representative) - 2 454 447 requirements regarding the disclosure of hydrocarbon reserves and contingent resources. A simple overview of the reserves- and resource classes is provided in Figure 1 below. Tommy Angeltveit (Employee representative) - 2 453 447
Figure 1 – SPE resource classification system: Executive team: Øyvind Eriksen President and CEO 3) 100 000 - - Production Project maturity sub-classes Trond Brandsrud (CFO) 34 106 4) 11 190 5) - Reserves On production
1P 2P 3P Increasing change of commerciality 1) Owns 100% of The Resource Group TRG AS (TRG AS) with his wife Anne Grete Eidsvig. TRG AS owns 99.45% of TRG Approved for development Commercial Holding AS, which owns 66.66% of Aker ASA. TRG AS also owns 1.19% of Aker ASA directly. Proved Probable Possible Justified for development 2) Leif O. Høegh has an indirect ownership interest in 135 000 Aker ASA shares. Contingent resources Development pending 3) Owned through the wholly-owned company Erøy AS, which also owns 100 000 b-shares (0.2%) in TRG Holding AS.
Discovered PIIP Discovered Development unclarified or on hold 4) Of these, 8 150 shares are owned through the wholly-owned company Nordbrand Invest AS. In addition Norbrand Invest AS 1C 2C 3C owns 37 037 shares in Ocean Yield ASA. Development not viable 5) Owns by related party to Trond Brandsrud. Sub-commercial
Prospective resources Prospect The CEO and other senior executives receive no other remuneration than described above. Accord Lead ingly, their employment conditions include no loans, guarantees or stock option rights. initially in place (PIIP) petroleum Total Low estimate Best estimate High estimate
PIIP Play
Undicovered Unrecoverable Note 40 Government grants Range of uncertainty Amounts in NOK million 2013 2012 Publicly listed companies must exercise caution when reporting reserves and contingent resources. Accordingly a conservative estimate of recoverable volumes is reported as the P90 estimate which has Research and development 2 2 a 90 per cent probability of increasing when more information is available. These reserves are referred Other 2 13 to as Proven reserves (1P). An unbiased estimate (P50), which has a 50 per cent probability of increas Total 4 15 ing and a 50 percent probability of decreasing in size, is also reported. These reserves are referred to as Proven and Probable reserves (2P). Possible reserves (3P) are not reported. Aker Philadelphia Shipyard Det norske oljeselskap has a working interest in eight fields/projects containing reserves, see Table For the year end 31 December 2013, the shipyard received reimbursements totalling USD 0,4 million 1. Of these fields/projects, four are in the sub-class “On Production”; four are in the sub-class (USD 2.2 million in 2012) relating to employee training costs from various governmental agencies and “Approved for Development”. Note that Varg has reserves in both “On Production” and in “Approved for grant funds for capital and infrastructure improvements under the Small Shipyard Grant Program. All Development”. grants were recognised as a reduction in expenses or asset cost. 116 Aker ASA annual report 2013 Annual accounts – Aker group
Det norske’s shares in the various fields/projects are as follows (share in brackets):
Sub-class “On Production”: Varg (5%) Operated by Talisman Jotun (7%) Operated by ExxonMobil Atla (10%) Operated by Total Jette (70%) Operated by Det norske
Sub-class “Approved for Development”: Enoch (2%) Operated by Talisman Ivar Aasen project (35%) Operated by Det norske Gina Krog (3,3%) Operated by Statoil Varg gas project (5%) Operated by Talisman
Beskjæres 76 mm fra venstre før trykk >> Sub-class “Justified for Development”: No fields/projects as at 31 December 2013
As at 31 December 2013 Det norske’s total net proven reserves (P90/1P) were estimated at 48.5 million barrels of oil equivalents. The total net proven plus probable reserves (P50/2P) were estimated at 65.8 million barrels of oil equivalents. The distribution between liquid and gas and between the different sub- categories is shown in Table 1. Changes from 2012 are shown in Table 2.
Table 1 – Reserves by field: On Production 1P / P90 (low estimate) 2P / P50 (best estimate) Liquids Total million Net million Liquids Total million Net million (million Gross NGL Gas barrels of oil barrels of oil (million Gross NGL Gas barrels of oil barrels of oil As at 31.12.2013 Interest % barrels) Mton (bcm) equivalents equivalents barrels) Mton (bcm) equivalents equivalents Varg 5% 1.43 - - 1.43 0.07 2.42 - - 2.42 0.12 Jotun Unit 7% 3.29 - - 3.29 0.23 3.57 - - 3.57 0.25 Atla 10% 0.57 - 0.61 4.38 0.44 0.77 - 0.95 6.77 0.68 Jette (moved from AfD) 70% 0.77 - - 0.77 0.54 3.24 - - 3.24 2.27 Total 1.28 3.32
Approved for Development 1P / P90 (low estimate) 2P / P50 (best estimate) Liquids Total million Net million Liquids Total million Net million (million Gross NGL Gas barrels of oil barrels of oil (million Gross NGL Gas barrels of oil barrels of oil As at 31.12.2013 Interest % barrels) Mton (bcm) equivalents equivalents barrels) Mton (bcm) equivalents equivalents Enoch Unit 2% 1.71 - - 1.71 0.03 2.61 - - 2.61 0.05 Jette (moved to OP) 70% ------Ivar Asen (moved from JfD) 35% 88.46 0.87 3.87 119.25 41.74 115.49 1.06 4.67 157.56 55.15 Gina Krog (moved from JfD) 3% 80.79 2.48 8.49 163.82 5.41 104.79 3.15 11.33 213.67 7.05 Varg gas (moved from JfD) 5% 0.04 0.04 0.15 1.48 0.07 0.23 0.10 0.39 3.88 0.19 Total 47.25 62.44 Aker ASA annual report 2013 117 Annual accounts – Aker group
Justified for Development 1P / P90 (low estimate) 2P / P50 (best estimate) Liquids Total million Net million Liquids Total million Net million (million Gross NGL Gas barrels of oil barrels of oil (million Gross NGL Gas barrels of oil barrels of oil As at 31.12.2013 Interest % barrels) Mton (bcm) equivalents equivalents barrels) Mton (bcm) equivalents equivalents Ivar Asen (moved to AfD) 35% ------Gina Krog (moved to GfU) 3,3% ------Varg gass (moved to AfD) 5% ------Total - - Total Reserves 31.12.2013 48,53 65,76
Tabell 2 – Aggregated reserves and changes during 2013: Beskjæres 76 mm fra venstre før trykk >> Net attributed million barrels of oil equivalents On production Approved for Development Justified for Development 1P / P90 2P / P50 1P / P90 2P / P50 1P / P90 2P / P50 Balance as at 31.12.2012 0.92 1.60 2.72 4.53 38.81 59.17 Production (1.63) (1.63) - - - - Acquisitions/disposals ------Extensions and discoveries ------New developments ------Revisions of previous estimates 1.98 3.34 44.53 57.91 (38.81) (59.17) Balance as at 31.12.2013 1.28 3.32 47.25 62.44 - - Delta 0.36 1.72 44.53 57.91 (38.81) (59.17)
Note 42 Events after the balance sheet date
No material events have occurred after the balance sheet date. 118 Aker ASA annual report 2013 Annual accounts – Aker ASA
Contents – Aker ASA
Income statement 119 Balance sheet as at 31 December 120 Cash flow statement 121 Notes to the financial statements for Aker ASA 122 Beskjæres 76 mm fra venstre før trykk >> Note 1 Accounting principles 122 Note 2 Salaries and other personnel expenses 123 Note 3 Gain/loss on sale of shares 124 Note 4 Fixed operating assets 124 Note 5 Shares in subsidiaries 125 Note 6 Investments in associated companies and other long-term investments in shares 126 Note 7 Receivables and other long-term financial assets 126 Note 8 Reversal/impairment of shares, receivables, etc. 127 Note 9 Cash and cash equivalents 127 Note 10 Shareholders’ equity 127 Note 11 Deferred tax 128 Note 12 Pension cost and pension liabilities 129 Note 13 Debt and other liabilities to Group companies 130 Note 14 External debt and other liabilities 130 Note 15 Mortgages and guarantee obligations 131 Note 16 Financial market risk 131 Note 17 Shares owned by board members/executives 131 Note 18 Salary and other remuneration to the Board of Directors, nomination committee, the President and CEO, and other senior executives in Aker ASA 131 Note 19 Legal disputes 131 Note 20 Events after the balance sheet date 131
Directors’ responsibility statement 132 Independent auditor’s report 133 Aker ASA annual report 2013 119 Annual accounts – Aker ASA
Income statement
Amounts in NOK million Note 2013 2012
Salaries and other personnel related expenses 2,12,18 (131) (130) Depreciation fixed assets 4 (15) (15) Other operating costs 2 (85) (92) Operating profit (loss) (231) (237)
Interest income from companies within the Group 7 343 380 Other interest income 7,9 75 113 Beskjæres 76 mm fra venstre før trykk >> Reversal of earlier years impairment of shares, receivables, etc. 8 38 4 405 Dividends from subsidiaries 5 850 458 Dividends from other companies 6 2 3 Foreign exchange gain 51 101 Gain on sale of shares 3 33 3 Other financial income 94 31 Total financial income 1 486 5 494 Interest expense to companies within the Group 13 (250) (335) Other interest expenses 14 (288) (214) Impairment of shares, receivables etc. 8 (899) (198) Foreign exchange loss (127) (84) Loss on sale of shares 3 (3) - Other financial expenses (32) (90) Total financial expenses (1 599) (921) Net financial items (113) 4 573 Profit before tax (344) 4 336
Tax 11 (16) - Profit after tax (360) 4 336
Allocation of profit/loss for the year:
Profit (+) / loss (-) (360) 4 336 Dividend (940) (868) Transferred from (+) / allocated to (-) other equity 1 300 (3 468) Total 10 - - 120 Aker ASA annual report 2013 Annual accounts – Aker ASA
Balance sheet as at 31 December
Amounts in NOK million Note 2013 2012 Amounts in NOK million Note 2013 2012
ASSETS EQUITY AND LIABILITIES Deferred tax assets 11 - - Share capital 2 026 2 026 Other intangible assets 4 4 Own shares (1) (25) Total intangible assets 4 4 Total paid-in equity 2 025 2 001 Art, equipment, cars and fixtures 38 41 Other equity 15 667 16 884 Airplane 138 148 Total retained earnings 15 667 16 884 Property, buildings and housing 7 7 Total equity 10 17 693 18 886 Beskjæres 76 mm fra venstre før trykk >> Total tangible fixed assets 4 183 196 Pension obligations 12 147 100 Shares in subsidiaries 5,8 21 235 19 225 Other long-term provisions 15 79 104 Other long-term investments in shares 6 1 782 66 Total provisions 226 204 Investments in associated companies 6 2 2 Long-term liabilities to Group companies 13 979 953 Long-term receivables from Group companies 7 5 993 7 617 Long-term subordinated debt to Group companies 13 6 418 6 085 Long-term receivables from associated companies 7 10 - Other long-term liabilities 14 5 266 3 469 Other long-term financial assets 7 60 44 Total other long-term liabilities 12 663 10 507 Total financial fixed assets 29 082 26 954 Allocated dividend 13 940 868 Total non-current assets 29 269 27 154 Other short-term liabilities 14 98 102 Short-term receivables from Group companies 7 2 332 Total current liabilities 1 038 970 Other short-term receivables 16 59 9 Cash and cash equivalents 9 2 290 3 072 Total equity and liabilities 31 620 30 567 Total current assets 2 351 3 413 Total assets 31 620 30 567
Oslo, 27 February 2014 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2013 121 Annual accounts – Aker ASA
Cash flow statement
Amounts in NOK million Note 2013 2012
Profit before tax (344) 4 336 Gain/-loss on sales of fixed assets and write-down/reversals 8,3 831 (4 167) Unrealised foreign exchange gain/-loss 76 (6) Depreciation/write downs 4 15 15 Change in other short-term items, etc. (231) 80 Cash flow from operating activities 347 258
Beskjæres 76 mm fra venstre før trykk >> Acquisition/sale of non-current assets 4 (2) (1) Acquisition of shares and other equity investments 5,6 (2 290) (221) Payments on long-term interest-bearing receivables 7 (849) (1 174) Sale of shares and other equity disposals 5,6 143 140 Cash flow from other investments/disposals 7 559 462 Cash flow from investment activities (2 439) (794)
Issue of long-term debt 14 2 000 2 588 Repayment of long-term debt 14 (217) (1 647) Change in short-term interest-bearing receivables 14 393 (177) Dividend and Group contributions paid/received and other changes in equity 10 (866) (976) Cash flow from financing activities 1 310 (212)
Cash flow for the year (782) (748) Cash and cash equivalents as at 1 January 9 3 072 3 821 Cash and cash equivalents as at 31 December 9 2 290 3 072 122 Aker ASA annual report 2013 Annual accounts – Aker ASA
Notes to the financial statements for Aker ASA
Note 1 Accounting principles
The financial statements are prepared and pre contribution will be recorded as a deduction from applicable on the date of measurement. Valuation reversed in the same period are offset. Net deferred sented in Norwegian kroner (NOK). The financial the book value of the investment (without any corre changes due to exchange rate fluctuations are tax assets are recognised to the extent that it is statements have been prepared in accordance with sponding entry with respect to deferred tax assets/ recorded on a continuous basis under other finan probable that they can be utilised. the applicable statutory provisions and generally deferred tax). The group contribution without tax cial items. accepted accounting principles in Norway as at 31 effect is then correspondingly recorded as an Cash flow statement December 2013. increase in the book value of the investment, with Short-term investments The cash flow statement is prepared according to the result that the net effect on the investment is Short-term investments (in shares and certificates the indirect method. Cash and cash equivalents Beskjæres 76 mm fra venstre før trykk >> Information about new accounting standards zero. This reflects the fact that, overall, the “circular classified as current assets), are carried at fair consist of cash, bank deposits and other current, The Norwegian Accounting Standards Board has group contribution” has not constituted a transfer of value on the balance sheet date. Dividends and liquid investments. made some changes to its standards, effective as value between Aker ASA and the subsidiary. other distributions received from these investments of 1 January 2014. A preliminary assessment by are recognised as financial income. The use of estimates Aker ASA indicates that the new standards will Classification and assessment of balance sheet Preparation of the annual accounts in accordance have no major effects. items Non-current assets with generally accepted accounting principles Current assets and short-term liabilities comprise Non-current assets are recognised and depreciated requires management to make judgments, esti Subsidiaries/associated companies items that fall due within one year of acquisition. over their estimated useful life. Direct maintenance mates and assumptions that affect the application In the balance sheet, subsidiaries and associated Other items are classified as non-current assets/ of operating assets is expensed on an ongoing of accounting principles, as well as the reported companies are assessed using the cost method. long-term liabilities. basis as operating costs, while improvements and amounts of assets and liabilities, income and Investments are recognised at share acquisition Current assets are valued at the lower of acqui enhancements are added to the acquisition cost of expenses. The estimates and underlying assump cost. A write-down to fair value is made whenever sition cost or fair value. Short-term debt is recog the operating asset and depreciated in line with the tions are reviewed and assessed on an ongoing impairment is due to causes that are assumed to nised at its nominal value at the time it was asset. If the recoverable amount of the operating basis, and are based on historical experience and be non-transient and a write-down is thus required recorded. asset is less than its carrying value, the recoverable various other factors considered to be reasonable. pursuant to generally accepted accounting princi Non-current assets are valued at acquisition amount is impaired. The recoverable amount is the Changes to the accounting estimates are recog ples. A reversal is made whenever the impairment cost but written down to fair value whenever impair higher of net sales value and in-use value. In-use nised in the profit and loss account in the same is no longer present. ment is deemed to be non-transient. Long-term value is the present value of the future cash flows period as the one in which the estimates are After acquisition, whenever a dividend exceeds debt is recognised at its nominal value at the time it that the asset will generate. revised, unless deferred allocations are prescribed the share of retained profits, the excess represents was established. Fixed interest rate bonds are val by generally accepted accounting principles. a refund of invested capital, and the dividend is ued at amortised cost. Pensions subtracted from the value of the investment in the Pension costs and pension liabilities are calculated balance sheet. Receivables according to linear vesting based on expected final A subsidiary is a company in which Aker ASA Trade receivables and other receivables are salary. The calculation is based on a number of has determining influence. This normally means an recorded at par value after the subtraction of a assumptions such as the discount rate, future sal ownership interest of more than 50%, and that the provision for expected losses. Provisions are made ary increases, pensions and other social benefits investment is long-term and of a strategic nature. for losses based on individual assessments of each from the Norwegian national insurance system An associated company is a company in which Aker receivable. (Folketrygden), future returns on pension funds and ASA has major influence. This is normally the case actuarial assumptions regarding mortality and vol when Aker ASA holds between 20% and 50% of Foreign currency untary retirement. Pension funds are recognised at the voting shares in the company. Transactions in foreign currencies are translated fair value. A group contribution received from a subsidiary into NOK using the exchange rates applicable at after acquisition that is considered to exceed Aker the time of each transaction. Monetary items in Tax ASA’s share of retained profits is booked as a foreign currencies are translated into NOK using The tax cost in the income statement includes both deduction from the book value of the investment, the exchange rates applicable on the balance the tax payable for the period and changes in with a corresponding deduction of the deferred tax sheet date. Non-monetary items that are measured deferred tax. Deferred tax is calculated at a nomi asset (or an increase in deferred tax). In cases at historic cost in a foreign currency are translated nal value rate based on the temporary differences where no deferred tax asset is booked and an into NOK using the exchange rates applicable on that exist between accounting and tax values, and amount equal to the Group contribution is trans the balance sheet date. Non-monetary items that tax losses carried forward at the end of the ferred back to the subsidiary as a group contribu are measured at fair value in a foreign currency are accounting year. Tax increasing and tax decreasing tion without tax effect, the entire received group translated into NOK using the exchange rates temporary differences which reverse or can be Aker ASA annual report 2013 123 Annual accounts – Aker ASA
Note 2 Salaries and other personnel expenses Bonus ceiling Dividends and personal bonuses are paid in cash in the year after the vesting year. Participants can achieve a total bonus equal to a defined percentage of fixed salary (bonus ceiling), split into a dividend Salaries and other personnel expenses consist of the following: bonus and a personal bonus.
Amounts in NOK million 2013 2012 Dividend bonus The dividend bonus is linked to dividends paid for the vesting year. A defined number of shadow shares Salaries 83 86 are used as the basis for calculating the dividend bonus. The calculation of the shadow shares is based Social security contributions 16 16 on the target yield for net asset value and the target dividend for the vesting year. Participants receive a Pension costs (see note 12) 11 21 dividend bonus (cash) equal to the dividend per share proposed by the board of directors multiplied by the number of shadow shares. Other benefits 21 7 Total 131 130 Personal bonus Average number of employees 51 49 The personal bonus is linked to the achievement of personal results and goals, and is set based on an Average number of man years 47 44 overall evaluation covering each participant’s personal achievements and development, the results and development of the company and the unit to which the participant belong, and the participant’s contri Beskjæres 76 mm fra venstre før trykk >> Audit fee is included in other expenses and consists of the following: bution to the Aker community.
Bonus shares Amounts in NOK million 2013 2012 Participants may be awarded shares in the company if the company achieves an increase in net asset value of more than 10 percent in the relevant year. The number of potential bonus shares cannot be Ordinary auditing 2.0 1.4 determined before allocation takes place, as the final number is based on the share price on the deter Attestation services 0.2 - mination date and the participant’s salary as at 31 December of the vesting year. An allocation range is Tax services 0.8 0.9 calculated for the award of bonus shares at the beginning of the vesting year, equal to 50 percent of the Other services 0.6 0.1 range for the dividend bonus. The fixed allocation range is a gross range. The participant’s estimated tax on the free bonus shares is deducted from this gross range, as the company pays this amount in by Total 3.6 2.4 way of advance tax deduction. Deduction of tax leaves a net range as a basis for calculating the num ber of bonus shares. The value of the bonus shares equals the share price on the vesting date minus a Remuneration to / from Group and related parties consist of the following: deduction to take into the account the lock-in period (20 percent). The lock-in period is three years from the date the bonus shares are received. The limitations on the right of participants to dispose of the Amounts in NOK million 2013 2012 discounted shares freely are registered in VPS as a restriction in favour of the company. If a participant leaves the company during the lock-in period, 50 percent of the distributed bonus shares are returned Invoiced for services and renting of offices within the Group 17.4 17.6 to the company without compensation to the participant. Invoiced for services technology project within the Group 2.0 - Option to purchase of shares at a discount but subject to a lock-in period Acquisition of services from the The Resource Group TRG (1.5) (1.4) Participants may purchase shares in the company at a price equal to 80 percent of the share price at Board fee to The Resource Group TRG AS excluding payroll tax (0.6) (0.5) the time the shares are purchased. The number of shares that can be bought during the vesting year is Invoiced for services to the The Resource Group TRG AS 1.1 1.0 calculated based on the estimated number of bonus shares the participant may theoretically receive at Invoiced for services to Kjell Inge Røkke - 0.6 the end of the earning year if he/she achieves the maximum bonus. Participants choose how many Total 18.4 17.3 shares they want to buy within their allocation range. A lock-in period of three years applies from the date the shares are received. The limitations on the right of participants to dispose of the discounted See Note 37 to the group accounts for other transactions with related parties. shares freely are registered in VPS as a restriction in favour of the company. The lock-in period contin ues to apply if the participant leaves the company during the lock-in period, unless the company and Incentive programme for employees (excluding the President and CEO) the participant agree otherwise. Aker ASA has adopted an incentive programme to promote the company’s goals and give employees Dividend bonuses and personal bonuses are recorded as salary expenses. An allocation of NOK 21 the same motivation as shareholders. In 2013, the incentive programme had the following elements: million has been made under other short-term debt as at 31 December 2013 in respect of dividend bonuses and personal bonuses including holiday pay and payroll tax. ■■ a dividend bonus, based on the Aker ASA dividend Bonus shares and shares purchased at a discount have a three-year lock-in period. The accrual of ■■ a personal bonus, based on personal goals bonus shares is recorded as a salary expense in the income statement distributed over the lock-in ■■ bonus shares, allocated on the basis of on an agreed increase in net asset value period. The contra entry is other equity. There were no accruals related to 2013 bonus shares since the ■■ an option to purchase Aker ASA shares at a discount but subject to a lock-in period. target related to bonus shares was not achieved in 2013.
See note 38 to the group accounts regarding the incentive programme for the President and CEO. 124 Aker ASA annual report 2013 Annual accounts – Aker ASA
Note 3 Gain/loss on sale of shares
Gains and losses on shares are as follows:
Amounts in NOK million 2013 2012
Converto Capital Management AS - 3 Molde Fotball AS 4 - Oslo Asset Management Holding AS 1 - Sparbebank 1 SMN 28 - Total gain 33 3 RGI Inc (3) - Total loss (3) - Beskjæres 76 mm fra venstre før trykk >>
Note 4 Fixed operating assets
The change in fixed operating assets is shown below:
Equipment/ Property/ Air cars/ Buildings/ Amounts in NOK million plane Art fixtures Housing Total
Acquisition cost as at 1 January 241 29 115 14 398 New acquisition - - 2 - 2 Disposal at acquisition cost - (1) - - (1) Acquisition cost as at 31 December 241 28 117 14 399 Accumulated depreciation and impairment (103) - (107) (7) (217) Book value as at 31 December 138 28 10 7 183 Depreciation for the year (10) - (4) - (14) Impairment for the year - - - (1) (1)
Useful life 25 years 4-8 years 50 years Not Depreciation plan Linear depreciated Linear Linear
Depreciation of improvements / enhancements according to expected life of asset. Aker ASA annual report 2013 125 Annual accounts – Aker ASA
Note 5 Shares in subsidiaries
Shares in subsidiaries included the following companies as at 31 December 2013:
Ownership Equity as at Profit before Dividend Book Amounts in NOK million in % 1) Location, city 31 Dec. 2013 2) tax 2013 2) received value
Ocean Yield ASA 73.4 Oslo 4 458 335 318 3 242 Intellectual Property Holdings AS 100.0 Oslo - (1) - 8 Aker Maritime Finance AS 100.0 Oslo 1 148 (56) - 1 146 Aker Capital AS 100.0 Oslo 5 497 103 - 5 315 Aker Kvaerner Holding AS 70.0 Oslo 13 227 (439) 395 9 259 Converto Capital Fund IS 98.0 Oslo 1 258 349 - 803 Converto Capital Fund AS 90.1 Oslo 19 - - 6 Beskjæres 76 mm fra venstre før trykk >> Norron AB 48.2 Stockholm 25 30 - 46 Aker Achievements AS 100.0 Oslo 2 1 - - Aker BioMarine AS 100.0 Oslo 1 917 124 76 917 Aker Floating Holding AS 100.0 Oslo 52 2 - 50 Cork Oak Holding AS 100.0 Oslo - - - - Resource Group International AS 100.0 Oslo 34 - - 40 Havfisk ASA 73.2 Ålesund 608 (169) - 402 Total 789 21 235 Oslo Asset Management Holding AS 3) 62 Total received dividend from subsidiaries 850
1) The shareholder’s agreement for Norron AB gives Aker ASA with the right to elect two of four board members, including the chairman of the board. For all other companies, Aker ASA’s ownership and share of votes are the same. 2) 100% of the company’s equity before dividends and group contributions as at 31 December and profit before tax in 2013. 3) The company was reclassified as an associated company in November 2013 following a sell-down. Dividends were received before the reclassification. 126 Aker ASA annual report 2013 Annual accounts – Aker ASA
Note 6 Investments in associated companies and other long-term investments in Long-term receivables from Group companies consist of: shares Amounts in NOK million 2013 2012 Investments in associated companies: Oslo Asset Management Holding AS - 10 Fornebuporten Bolig Holding AS 198 - Book value Book value Aker Capital AS 5 427 6 010 Amounts in NOK million Cost price Write-down 2013 2012 Aker BioMarine AS 10 134 Fornebuporten AS - 542 Oslo Asset Management Holding AS 2 - 2 - Fornebuporten Holding AS - 156 Noro Fotball AS - - - 2 Converto Capital Fund 10 148 Akerhallen AS 1 (1 ) - - Aker Maritime Finance AS 337 282 Total 3 (1 ) 2 2 Navigator Marine AS - 167 RGI Inc - 161 Beskjæres 76 mm fra venstre før trykk >> The investments are recorded at the lowest of fair value and cost price. Ocean Harvest AS 11 8 Total 5 993 7 617 Investments in other shares: The receivables have a maturity of more than one year. Book value Book value Interest terms on the receivables reflect market terms. Amounts in NOK million Cost price Write-down 2013 2012
Aker Solutions ASA 1) 1 900 (118 ) 1 782 - Long-term receivables from associated companies consist of: Total 1 900 (118 ) 1 782 - Amounts in NOK million 2013 2012 1) 6% ownership. In addition Aker ASA owns 40,27% through Aker Kvaerner Holidng AS. Oslo Asset Management Holding AS 10 - The company has sold its investment in Sparebank 1 SMN and has received dividends of NOK 1,9 Total 10 - million in 2013.
The investments are recorded at the lowest of market value and cost price. Short-term receivables from Group companies consist of:
Amounts in NOK million 2013 2012
Note 7 Receivables and other long-term financial assets Fornebuporten Holding AS - 1 Aker BioMarine AS 1 135 Converto Capital Fund - 1 Receivables and other long-term financial assets consist of the following items: Molde Fotball AS - 17
Aker Philadelphia Shipyard Inc - 175 Amounts in NOK million 2013 2012 Other 1 3
Total 2 332 Other long-term receivables 52 43
Long-term loans to employees 7 - Capitalised expenses, etc. 1 1 Total other long-term assets 60 44
Aker ASA annual report 2013 127 Annual accounts – Aker ASA
Note 8 Reversal/impairment of shares, receivables, etc. Note 10 Shareholders’ equity
Reversals/impairments of shares, receivables, etc. are as follows: As at 31 December 2013, Aker ASAs share capital consists of the following share classes:
Amounts in NOK million 2013 2012 Total nomi- nal value Havfisk ASA 38 - in NOK Number of million for Aker Kvaerner Holding AS - 4 349 Shares treasury Shares out Nominal shares Total reversals of shares 38 4 349 issued shares standing value (NOK) issued American Shipping Company bond 07/18 - 56 Total reversals of receivables - 56 Ordinary shares 72 374 728 (44 805) 72 329 923 28 2 026 Total reversals of shares, receivables, etc. 38 4 405 Total share capital 72 374 728 (44 805) 72 329 923 2 026 Treasury shares (1) Beskjæres 76 mm fra venstre før trykk >> Aker Kvaerner Holding AS (705) - Share premium reserve - Aker Solutions ASA (118) - Other paid-in capital - Molde Fotball AS - (25) Total paid-in capital 2 025 Havfisk ASA - (38) Other shares (11) - All shares have equal voting rights and are entitled to dividends. Aker ASA has no voting rights for its Total impairment shares (834) (63) own shares. Ocean Harvest AS - (1) Treasury shares: Navigator Marine AS (65) (132) In 2013, the company has not purchased any treasury shares. The company has sold/distributed Other receivables, etc. - (2) 846 876 treasury shares for NOK 156 million. 816 860 of the shares are distributed in connection witt Total impairments of receivables, etc. (65) (135) the merger between Aker Seafoods Holding and Aker BioMarine ASA. Total impairments of shares, receivables, etc. (899) (198) Changes in shareholders’ equity in 2013 are shown below: The company has revalued its investments as at 31 December 2013. Investments in listed shares are adjusted according to the lower of cost price and market price. Other investments are valued based on Total other available information/best estimate. Long-term items are adjusted to the lower of cost price and Share Treasury paid-in Other Retained Total fair value. Amounts in NOK million capital shares capital equity earnings equity
Equity as at 1 January 2 026 (25) 2 001 16 884 16 884 18 886 Purchased/sold/bonus treasury shares - 24 24 126 126 150 Note 9 Cash and cash equivalents Change in acc. principle for pension - - - (42) (42) (42) Dividend provisions - - (940) (940) (940) Cash and cash equivalents are distributed as follows: Profit for the year - - (360) (360) (360) Equity as at 31 December 2 026 (1) 2 025 15 667 15 667 17 693 Amounts in NOK million 2013 2012
Restricted cash 67 62 Unrestricted cash 2 223 3 010 Total 2 290 3 072 128 Aker ASA annual report 2013 Annual accounts – Aker ASA
The 20 largest shareholders as at 31 December 2013: Note 11 Deferred tax
Number of The table below shows the difference between accounting and tax values at the end of 2013 and 2012 Shareholder shares Percent respectively, changes in these differences, deferred tax assets at the end of each year and the change in deferred tax assets. TRG Holding AS 1) 48 245 048 66.7% J.P. Morgan Chase BANK N.A. London, Nordea 1 777 072 2.5% Amounts in NOK million 2013 2012 Goldman Sachs & Co Equity Segregat 1 168 179 1.6% Morgan Stanley & Co LLC 960 067 1.3% Differences in accruals (1) - The Resource Group TRG AS 1) 860 466 1.2% Differences in receivables - (23) State Street Bank & Trust Company 794 855 1.1% Fixed asset differences 19 17 Tvenge 700 000 1.0% Net pension liability (227) (204) Odin Norden 676 043 0.9% Capital gains and loss reserve 6 7 J.P. Morgan Chase BANK N.A. London 611 230 0.8% Total differences (203) (203) Beskjæres 76 mm fra venstre før trykk >> Citibank, N.A. 565 430 0.8% Tax losses carried forward (1 617) (1 171) Skandinaviske Enskilda Banken AB 494 050 0.7% Total deferred tax basis (1 820) (1 374) KBC Securities NV 485 243 0.7% Oslo Pensjonsforsikring AS PM 445 200 0.6% Net deferred tax 27% / 28% (491) (385) KBC Securities NV 426 640 0.6% Deferred tax assets 491 385 Fondsfinans Spar 375 000 0.5% Recognised deferred tax assets - - Fidelity Funds-Nordic Fund/SICAV 332 400 0.5% KLP Aksje Norge VPF 304 368 0.4% Deferred tax asset is incorporated in the balance sheet if budgets indicate that the asset will be uti Citibank, N.A. 300 728 0.4% lised in the future. The deferred tax assets has been written down to 0 as of 31.12.13. Folketrygdefondet 284 561 0.4% Pagano AS 218 500 0.3% Other 12 349 648 17.1% Estimated taxable profit Total 72 374 728 100% Amounts in NOK million 2013 2012 1) Kjell Inge Røkke controls 67.8 per cent of the shares in Aker ASA through TRG Holding AS and TRG AS. Profit before tax (344) 4 336 Permanent differences in net non-taxable income (-) / expenses (+) (86) (4 570) Change in temporary differences (1) (70) Estimated taxable income (431) (304)
Income tax expense / income: Write-down deferred tax pension against equity (16) - Total tax expense (16) -
The 2013 figures above are based on estimates of different non-deductible taxable income, non- deductible items and differences between accounting and tax items. The final calculations will be made in the income-tax return and may differ from estimates above.
Aker ASA annual report 2013 129 Annual accounts – Aker ASA
Reconciliation of effective tax per cent in the profit and loss account: Percentage composition of pension assets and reconciliation of actual return:
Amounts in NOK million 2013 2012 2013 2012
28% tax on profit before tax (97) 1 214 Bonds 80.4% 83.1% 28% tax on permanent differences (24) (1 280) Money market 11.7% 6.1% Change in tax rate deferred tax 28% vs 27% 18 - Shares 5.5% 8.1% 28% tax on unrecognised deferred tax asset 119 65 Property/other 2.7% 2.7% Estimated tax expense 16 0 Effective tax rate (tax expense compared with profit / loss before tax (5%) 0% Amounts in NOK million 2013 2012
Expected return on pension assets 2 3 Actual return on pension assets 2 3 Note 12 Pension cost and pension liabilities Beskjæres 76 mm fra venstre før trykk >> According to the Norwegian Occupational Pensions Act (Lov om tjenestepensjon), the company is Pension expenses required to provide a pension plan for all its employees. The company’s pension plans meets the statu tory requirements. Amounts in NOK million 2013 2012 Aker ASA primarily covers its pension liabilities through a group pension plan provided by a life insur ance company. For accounting purposes, the plan has been treated as a defined benefit plan. Aker ASA also has uninsured pension liabilities. Present value of this year's pension accruals (6) (7) The schemes provides defined future benefits. These benefits depend mainly on the number of years Interest expense on accrued pension liabilities (7) (6) the individual has been a member of the plan, the level of salary at the time of retirement and the level of Expected return on pension funds 2 3 benefits provided by the Norwegian national insurance scheme. Allocated effect of change in estimates and pension plans - (10) Change in social security contributions - (1) Net pension expenses (-) (11) (21) Actuarial calculations have been undertaken based on the following assumptions:
2013 2012 Net pension liabilities / assets as at 31 December:
Discount rate 4.1% 3.8% Amounts in NOK million 2013 1) 2012 1) Wage increases 3.8% 3.5% Social security base adjustment / inflation 3.5% 3.3% Present value of accrued pension liabilities (211) (189) Pension adjustment 1.9% 1.9% Calculated pension liabilities (211) (189)
Value of pension funds 65 61 These actuarial assumptions are based on the assumptions that are commonly used in the life insur ance industry with respect to demographic factors. Calculated net pension funds / liabilities (146) (128) Amortisation 2) - 35 The discount rate is based on the Norwegian high-quality corporate bond rate. The assumptions used Social security contributions (1) (7) are consistent with the recommendations of the Norwegian Accounting Standards Board. Net pension funds/liabilities recognised in balance sheet 3) (147) (100) Number of individuals covered 126 139
The agreements include 50 active and 76 retired persons.
1) Aker ASA only had underfunded plans in 2013 and 2012, i.e plans where the value of the pension liabilities exceeds the value of the pension funds. 2) Amortisation: the effect of changes in estimates and pension plans that are not recorded in the income statement in 2012. 3) Provision has been made for social security contributions on contracts with net pension liabilities. 130 Aker ASA annual report 2013 Annual accounts – Aker ASA
Aker ASA’s net pension liability is recognised in the balance sheet as an interest-free long-term liability. Note 14 External debt and other liabilities Net pension funds are recognised as interest-free long-term receivables. Pension funds are invested in accordance with the general guidelines for life insurance companies. Recorded pension liabilities are Long-term interest-bearing liabilities are distributed as follows: calculated on the basis of estimated future pension liabilities and accrued in accordance with generally accepted accounting principles. The pension liability recorded in the accounts is not the same as the vested pension rights as at 31 December. Net pension funds are included in other long-term invest Amounts in NOK million Interest Maturity 2013 2012 ments in the balance sheet. Unsecured bond loans: FRN Aker ASA Senior Unsecured Bond Issue Nibor + November 2010/2015 5% 2015 850 850 Note 13 Debt and other liabilities to Group companies 8.375 percent Aker ASA Senior Unsecured Bond November Issue 2010/2015 8.38% 2015 - 150 Long-term liabilities to Group companies consist of the following: Nibor + November Purchased Aker ASA bond 5% 2015 (43) - Amounts in NOK million 2013 2012 Beskjæres 76 mm fra venstre før trykk >> FRN Aker ASA Senior Unsecured Bond Issue Nibor + 2012/2017 4% April 2017 500 500 Resource Group International AS 19 19 FRN Aker ASA Senior Unsecured Bond Issue Nibor + Aker Floating Holding AS 50 49 2013/2018 3,5% June 2018 1 300 - A-S Norway AS 727 703 FRN Aker ASA Senior Unsecured Bond Issue Nibor + January Aker Maritime Finance AS - - 2012/2019 5% 2019 500 500 Aker Holding Start 2 AS 183 182 FRN Aker ASA Senior Unsecured Bond Issue Nibor + Intellectual Property Holding AS - - 2013/2020 4% June 2020 700 - Total 979 953 FRN Aker ASA Senior Unsecured Bond Issue Nibor + September 2012/2022 5% 2022 1 000 1 000 Long-term liabilities to Group companies have a maturity on demand, which implies a maturity of Loan expenses (39) (28) more than five years and interest set on market terms. See below for subordinated loans. Total unsecured bond loans 4 768 2 972
Subordinated debt is as follows: Unsecured bank loans: Nibor Amounts in NOK million 2013 2012 Sparebank1 SMN +3,75% May 2017 500 500 Capitalised borrowing expenses (2) (3)
Aker Capital AS 4 841 3 270 Total loans 5 266 3 469 RGI Inc - 1 290 Aker Maritime Finance AS 1 577 1 525 The loans are recorded at amortised cost. As at 31 December capitalised borrowing expenses of NOK 41 million were spread across the remaining time to maturity. The loans in the table are all denomi Total subordinated debt 6 418 6 085 nated in NOK.
The loans are subordinate to all other liabilities of Aker ASA and have contractual maturity dates falling Other current liabilities consist of the following: after those of all Aker ASA external liabilities. The loans have an interest rate of 12 month NIBOR + 1%.
Amounts in NOK million 2013 2012 Allocated dividend as following:
Accrued interest external 26 22 Amounts in NOK million Per share 2013 Incurred costs 43 44
Other 29 36 Allocated as at 31.December 13 940 Total 98 102 Total 13 940 Aker ASA annual report 2013 131 Annual accounts – Aker ASA
Note 15 Mortgages and guarantee obligations Note 18 Salary and other remuneration to the Board of Directors, nomination committee, the President and CEO, and other senior executives in Aker ASA Guarantee obligations are as follows: See Note 38 to the financial statements of the Group. Amounts in NOK million 2013 2012
Loan guarantees 469 372 Completion/payment guarantees 154 286 Note 19 Legal disputes Total guarantee obligations 623 658 There are no major legal disputes as at 31 December 2013.
Loan guarantees as at 31 December 2013 consisted mainly of guarantees related to Aker BioMarine ASA (NOK 305 million), Converto Capital Fund (NOK 11 million), Fornebuporten AS (NOK 150 million) and NORO Fotball AS (NOK 3 million). Completion guarantees as at 31 December 2013 consisted of Note 20 Events after the balance sheet date Beskjæres 76 mm fra venstre før trykk >> guarantees relating to TH Global (NOK 79 million) and Aker BioMarine AS (75 million). Aker ASA has a guarantee commitment to Kvaerner US Inc. relating to the US pension fund Kvaerner There has not been any major events after 31.12. Consolidated Retirement Plan. The purpose of the agreement is to enable Kvaerner US Inc. to make its annual and quarterly minimum premium payments into the pension fund. Responsibility for payment of the premiums into the pension fund is split between Kvaerner US Inc. (two-thirds, with a guarantee from Aker ASA), and Aker Kvaerner Willfab Inc. and Aker Subsea Inc. (one-third, with a guarantee from Aker Solutions ASA). As at 31 December 2013, Aker ASA has made a long-term provision of NOK 79 million.
Note 16 Financial market risk
The company is exposed to several types of financial risk, the most significant of which are credit, liquidity, foreign exchange and interest rate risk. The purpose of risk management is to measure and manage financial risks in a reliable manner, in order to increase predictability and simultaneously mini mise any negative impacts on Aker’s financial results. Aker ASA has loan and guarantee commitments that contain equity covenants. At the end of 31 December 2013, Aker ASA was in compliance with all such covenants. Also see Note 5 to the group accounts. Aker ASA hedges its net exposure from foreign currency cash flows, but does not generally hedge its balance sheet positions. The cash flows, including identified structural transactions, are hedged at fixed intervals using a rolling three-year window. Any net exposure from foreign-currency loans is swapped back to NOK. In total, Aker ASA has hedged USD 47 million net by means of forward contracts and options (European). As at 31 December 2013 the accounts show an unrealised loss of NOK 0.5 million on all foreign exchange agreement.
Note 17 Shares owned by board members/executives
See Note 39 to the financial statements of the Group.
132 Aker ASA annual report 2013 Annual accounts – Aker ASA
Directors’ responsibility statement
Today, the board of directors and the president and chief execu tive officer reviewed and approved the board of directors’ report and the consolidated and separate annual financial statements of Aker ASA, consolidated and parent company for the year end ing and as of 31 December 2013.
Aker ASA’s consolidated financial statements have been pre pared in accordance with IFRSs and IFRICs adopted by the EU as well as additional disclosure requirements in the Norwegian Accounting Act and as such are to be applied per 31 December Beskjæres 76 mm fra venstre før trykk >> 2013. The separate financial statements of Aker ASA and the parent company have been prepared in accordance with the Norwegian Accounting Act and Norwegian accounting standards as at 31 December 2013. The board of directors’ report for the group and the parent company satisfy with the requirements of the Norwegian Accounting Act and Norwegian accounting standard no. 16, as at 31 December 2013.
To the best of our knowledge: ■■ The consolidated and separate annual financial statements for 2013 have been prepared in accordance with applicable accounting standards. ■■ The consolidated and separate annual financial statements give a true and fair overall view of the assets, liabilities, finan cial position and profit/loss of the group and for the parent company as of 31 December. ■■ The board of directors’ report provides a true and fair review of the – development and performance of the business and the position of the group and the parent company, – the principal risks and uncertainties the group and the Aker ASA’s board of directors: (from left) Tommy Angelveit, Kristin Krohn Devold, Nina Hanssen, Arnfinn Stensø, Karen Simon, Finn Berg parent company may face. Jacobsen, Atle Tranøy, Stine Bosse, Øyvind Eriksen, Kjell Inge Røkke and Leif O. Høegh.
Oslo, 27 February 2014 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2013 133 Annual accounts – Aker ASA
Independent auditor’s report
To the Annual Shareholders’ Meeting of Aker ASA
Report on the financial statements An audit involves performing procedures to obtain Report on other legal and regulatory We have audited the accompanying financial state audit evidence about the amounts and disclosures requirements ments of Aker ASA, which comprise the financial in the financial statements. The procedures selected Opinion on the Board of directors’ report and the statements of the parent company Aker ASA and depend on the auditor’s judgment, including the statements on corporate governance and corporate the consolidated financial statements of Aker ASA assessment of the risks of material misstatement of social responsibility KPMG AS and its subsidiaries. The parent company’s finan the financial statements, whether due to fraud or Based on our audit of the financial statements as Sørkedalsveien 6 cial statements comprise the balance sheet as at error. In making those risk assessments, the auditor described above, it is our opinion that the informa PB 7000 Majorstuen NO-0306 Oslo Beskjæres 76 mm fra venstre før trykk >> 31 December 2013, the income statement and considers internal control relevant to the entity’s tion presented in the Board of Directors’ report and cash flow statement for the year then ended, and a preparation and fair presentation of the financial in the statements on Corporate Governance and Telephone +47 04063 summary of significant accounting policies and statements in order to design audit procedures that Corporate Social Responsibility concerning the Telefax +47 22 60 96 01 other explanatory information. The consolidated are appropriate in the circumstances, but not for the financial statements, the going concern assump www.kpmg.no financial statements comprise the balance sheet as purpose of expressing an opinion on the effective tion and the coverage of the loss is consistent with Org. no. 935 174 627 MVA at 31 December 2013, and the income statement ness of the entity’s internal control. An audit also the financial statements and complies with the law and the statement of other comprehensive income, includes evaluating the appropriateness of account and regulations. statement of changes in equity and cash flow ing policies used and the reasonableness of KPMG AS, a Norwegian member firm of the KPMG statement for the year then ended, and a summary accounting estimates made by management, as Opinion on accounting registration and network of independent of significant accounting policies and other explan well as evaluating the overall presentation of the Documentation member firms affiliated with atory information. financial statements. Based on our audit of the financial statements as KPMG International Coopera- described above, and control procedures we have tive (“KPMG International”), a The Board of directors and the managing director’s We believe that the audit evidence we have considered necessary in accordance with the Inter Swiss entity. responsibility for the financial statements obtained is sufficient and appropriate to provide a national Standard on Assurance Engagements Statsautoriserte revisorer - The Board of Directors and the Managing Director basis for our audit opinion. (ISAE) 3000, «Assurance Engagements Other than medlemmer av Den norske are responsible for the preparation and fair presen Audits or Reviews of Historical Financial Informa Revisorforening. tation of the parent company financial statements Opinion on the separate financial statements tion», it is our opinion that the management has Offices in: in accordance with the Norwegian Accounting Act In our opinion, the parent company’s financial fulfilled its duty to produce a proper and clearly set and accounting standards and practices generally statements are prepared in accordance with the out registration and documentation of the compa Oslo Alta accepted in Norway and for the consolidated finan law and regulations and give a true and fair view ny’s accounting information in accordance with the Arendal cial statements in accordance with International of the financial position of Aker ASA as at 31 law and bookkeeping standards and practices gen Bergen Financial Reporting Standards as adopted by the December 2013, and of its financial performance erally accepted in Norway. Bodø EU, and for such internal control as the Board of and its cash flows for the year then ended in Elverum Finnsnes Directors and the Managing Director determine is accordance with the Norwegian Accounting Act Grimstad necessary to enable the preparation of financial and accounting standards and practices generally Hamar statements that are free from material misstate accepted in Norway. Oslo, 27 February 2014 Haugesund ment, whether due to fraud or error. Kristiansand Larvik Opinion on the consolidated financial statements KPMG AS Mo i Rana Auditor’s responsibility In our opinion, the consolidated financial state Molde Our responsibility is to express an opinion on these ments are prepared in accordance with the law and Arve Gevoll (sign) Narvik financial statements based on our audit. We con regulations and give a true and fair view of the State authorised public accountant Røros ducted our audit in accordance with laws, regula financial position of Aker ASA and its subsidiaries Sandefjord Sandnessjøen tions, and auditing standards and practices gener as at 31 December 2013, and of its financial perfor Stavanger ally accepted in Norway, including International mance and its cash flows for the year then ended Stord Standards on Auditing. Those standards require in accordance with International Financial Report Tromsø that we comply with ethical requirements and plan ing Standards as adopted by the EU. Translation has been made for Trondheim Tønsberg and perform the audit to obtain reasonable assur information purposes only. Ålesund ance about whether the financial statements are free from material misstatement. 134 Aker ASA annual report 2013 Annual accounts – Aker ASA and holding companies
Contents – Aker ASA and holding companies
Introduction 135 Combined income statement 135 Combined balance sheet as at 31 December 136 Notes to the financial statements for Aker ASA and holding companies 137 Beskjæres 76 mm fra venstre før trykk >> Note 1 Accounting principles and basis for preparation 137 Note 2 Operating revenues 137 Note 3 Dividends received 137 Note 4 Other financial items 137 Note 5 Value changes and exceptional financial items 138 Note 6 Tax 138 Note 7 Long-term equity investments 139 Note 8 Interest-free long-term receivables and other assets 140 Note 9 Other interest-bearing current assets and long-term receivables 140 Note 10 Cash and cash equivalents 140 Note 11 Equity 140 Note 12 Interest-free debt and liabilities 141 Note 13 Interest-bearing debt 141 Note 14 Risk 141
Independent auditor’s report 142 Aker ASA annual report 2013 135 Annual accounts – Aker ASA and holding companies
Introduction
The combined financial statements of Aker ASA and holding companies have been prepared to present the financial position as if they together constituted a holding company. See note 1 for further description.
Beskjæres 76 mm fra venstre før trykk >> Combined income statement
Amounts in NOK million Note 2013 2012
Operating revenues 2 - 47
Operating expenses (236) (235) Depreciation and amortisation (14) (15) Operating profit (250) (203)
Dividends received 3 852 461 Other financial items 4 (30) (152) Value changes and exceptional financial items 5 252 (17) Profit before tax 825 89 Tax 6 (13) (22) Profit for the year 812 67 136 Aker ASA annual report 2013 Annual accounts – Aker ASA and holding companies
Combined balance sheet as at 31 December
Amounts in NOK million Note 2013 2012 Amounts in NOK million Note 2013 2012
ASSETS SHAREHOLDERS' EQUITY AND LIABILITIES Intangible assets 8 12 22 Paid-in capital 11 2 025 2 001 Tangible fixed assets 8 163 176 Retained earnings 10 392 10 360 Total intangible and tangible fixed assets 175 198 Total equity 12 417 12 361 Financial interest-bearing fixed assets 9 605 1 321 Financial interest-free fixed assets 8 61 66 Provisions and other interest-free long-term liabilities 12 278 258 Long-term equity investments and interests 7 15 762 12 034 Long-term interest-bearing liabilities 13 5 266 3 469 Beskjæres 76 mm fra venstre før trykk >> Total financial fixed assets 16 429 13 420 Total long-term liabilities 5 544 3 727
Total fixed assets 16 604 13 618 Short-term interest-free liabilities 12 1 042 978
Short-term interest-bearing liabilities 13 135 - Short-term interest-free receivables 59 56 Short-term interest-bearing receivables 9 15 285 Total short-term liabilities 1 177 978 Cash and cash equivalents 10 2 459 3 106 Total equity and liabilities 19 137 17 066 Total current assets 2 533 3 448 Total assets 19 137 17 066
Oslo, 27 February 2014 Aker ASA
Kjell Inge Røkke (sign.) Finn Berg Jacobsen (sign.) Stine Bosse (sign.) Karen Simon (sign.) Kristin Krohn Devold (sign.) Leif O. Høegh (sign.) Chairman Deputy chairman Director Director Director Director
Atle Tranøy (sign.) Arnfinn Stensø (sign.) Nina Hanssen (sign.) Tommy Angeltveit (sign.) Øyvind Eriksen (sign.) Director Director Director Director President and CEO Aker ASA annual report 2013 137 Annual accounts – Aker ASA and holding companies
Notes to the financial statements for Aker ASA and holding companies
Note 1 Accounting principles and basis for preparation Note 2 Operating revenues
The combined financial statements of Aker ASA and holding companies have been prepared to present Operating revenues are allocated as follows: Aker’s financial position as a parent holding company. The traditional financial statement of the parent
company has been extended to include all subordinate administrative service and holding companies Beskjæres 76 mm fra venstre før trykk >> that are wholly-owned by Aker ASA and have balance sheets containing only investments, bank depos Amounts in NOK million 2013 2012 its and debt. The combined balance sheet thus shows a net debt in relation to holding companies’ investments. Gain on sale of shares in Det norske oljeselskap - 47 To the extent applicable the accounting principles of Aker ASA and holding companies are based on Total - 47 the same accounting principles as Aker ASA. A key principle is that stock exchange-listed shares are valued at the lower of market price and cost. Other items are recorded at the lower of fair value and cost. See accounting principles of Aker ASA on page 122. One exception from Aker ASA’s accounting principles is that the acquisition and disposal of companies is part of the ordinary business of Aker ASA Note 3 Dividends received and holding companies. Consequently, gains on sales of shares are classified as operating revenues in the combined income statement. Gains and losses are only recognised when assets are sold to third parties. This is one reason why the accounts of Aker ASA and holding companies may show different Dividends received consist of the following: historical cost for share investments than the company accounts of the underlying companies included in the combined financial statements. Amounts in NOK million 2013 2012 The companies that have been combined are as follows:
Aker Kvaerner Holding AS 395 413 ■■ Aker ASA ■■ Aker Maritime Finance AS Ocean Yield 318 - ■■ Resource Group International AS Aker BioMarine 76 - ■■ Aker Holding Start 2 AS Other 63 48 ■■ Aker Capital AS Total dividends received 852 461 ■■ Kvaerner Sea Launch Ltd ■■ Sea Launch Holding AS ■■ Old Kvaerner Invest AS ■■ A-S Norway AS Note 4 Other financial items ■■ Aker Floating Holding AS ■■ Aker US Services LLC ■■ Kvaerner US Sea Launch Inc Other financial items consist of the following:
The companies included in the combined financial statements have changed in 2013 due to the merger Amounts in NOK million 2013 2012 between Aker Seafoods Holding AS and Aker BioMarine ASA. In addition, Aker US Services LLC was established through a merger of the companies RGI Invest Inc, RGI Inc, Resource Group Inc, RGI Hold Interest income from companies within the Group 130 176 ings Inc, Rebecca Ann Fisheries Inc and Legend Properties Inc. Other interest income (212) (147) Other financial items 51 (180) Total other financial items (30) (152) 138 Aker ASA annual report 2013 Annual accounts – Aker ASA and holding companies
Other financial items in 2013 included a write-down of an internal receivable from Navigator Marine totalling NOK 51 million, gains on currency and currency forward contracts of NOK 47 million and a gain on total return swap (TRS) agreements of NOK 54 million. Other financial items in 2012 included a write-down of an internal receivable from Navigator Marine totalling NOK 132 million, increased pension commitments related to former Kvaerner employees in the USA of NOK 44 million, losses on currency and currency-forward contracts of NOK 63 million and received guarantee commission of NOK 18 million.
Note 5 Value changes and exceptional financial items
Value changes and exceptional financial items consist of the following:
Amounts in NOK million 2013 2012 Beskjæres 76 mm fra venstre før trykk >>
Change in value of Aker BioMarine shares 300 44 Change in value of Havfisk shares 38 (38) Change in value of Aker Solutions shares (directly owned) (118) - Other changes in value of shares 33 (23) Total value changes and exceptional financial items 252 (17)
Note 6 Tax
Amounts in NOK million 2013 2012
Tax payable: Norway - - Abroad (4) (22) Total tax payable (4) (22)
Change in deferred tax: Norway - - Abroad (1) - Total change in deferred tax (1) - Tax on Group contributions (8) - Total (13) (22) Aker ASA annual report 2013 139 Annual accounts – Aker ASA and holding companies
Note 7 Long-term equity investments
Market price Market value 3) Book value per share (NOK) (NOK million) As at 31 December 2013 Ownership in % Number of shares (NOK million) 31 Dec. 2013 31 Dec. 2013
Industrial Holdings Aker Solutions ASA 1) 28.20 77 233 531 108.40 8 372 Kvaerner ASA 2) 28.70 77 233 531 11.50 888 Aker Kvaerner Holding AS 70.00 3 460 9 260 Aker Solutions ASA 1) 6.00 16 440 000 1 782 108.40 1 782 Aker BioMarine AS 100.00 69 053 544 1 760 - 1 760 Det norske oljeselskap ASA 49.99 70 339 610 3 272 66.70 4 692 Havfisk ASA 73.25 62 001 793 402 11.80 732 Beskjæres 76 mm fra venstre før trykk >> Ocean Yield ASA 73.43 98 242 575 2 487 34.70 3 409 Total industrial investments 13 164 21 635
Financial Investments Funds: Converto Capital Fund 809 AAM Absolute Fund 231 Norron Target/Select 268 Total funds 1 308 Fornebuporten Holding 1 050 Other equity investments (included in Financial investments) 240 Total shares and long-term equity investments 15 762
Stock exchange-listed shares are valued at lower of market price and cost. Other items are recorded at the lower of fair value and cost.
1) Aker Kvaerner Holding owns 40.27% of Aker Solutions ASA (AKSO). Aker ASA owns 70% of Aker Kvaerner Holding AS. In addition, Aker ASA owns 6% of AKSO. Total indirectly and directly shareholding in AKSO for Aker is 34.2%. 2) Aker Kvaerner Holding owns 41.02% of Kvaerner ASA. Aker ASA owns 70% of Aker Kvaerner Holding AS. Aker indirectly owns 28.7% of Kvaerner ASA. 3) See Note 14. 140 Aker ASA annual report 2013 Annual accounts – Aker ASA and holding companies
Note 8 Interest-free long-term receivables and other assets Receivables from companies in the Group:
Interest-free long-term receivables and other assets are distributed as follows: Total receivables Interest- Interest- Total from Other Total Total bearing bearing interest- Interest- companies Amounts in NOK million Receivables assets 2013 2012 current long-term bearing free within the Amounts in NOK million assets assets 2013 receivables group Deferred tax assets 12 - 12 22
Pension funds 4 - 4 15 Setanta Energy - 328 328 - 328 Long-term receivables from companies within the Group 21 - 21 12 Aker BioMarine - - - 11 11 Other 37 163 200 215 Fornebuporten - 188 188 10 198 Total 74 163 237 264 Converto Capital Fund - 10 10 - 10 Other companies - 11 11 1 12 In 2013 and 2012 other assets included an airplane valued at NOK 138 million and NOK 148 million Total - 536 536 23 559 Beskjæres 76 mm fra venstre før trykk >> respectively.
Note 10 Cash and cash equivalents Note 9 Other interest-bearing current assets and long-term receivables Cash and cash equivalents amounted to NOK 2 459 million as at the end of 2013. Other interest-bearing current assets and long-term receivables from companies in Of this total, NOK 67 million were restricted deposits. the Group and from external companies are shown below:
Long- Current term Total Total Amounts in NOK million assets assets 2013 2012
Receivables from companies in the Group - 536 536 1 565 External receivables 15 69 84 41 Total 15 605 620 1 606
Note 11 Equity
As at 31 December 2013, Aker ASA’s share capital consisted of the following share classes: Total par value NOK (million) Shares Number of Shares issued own shares outstanding Par value (NOK) Shares issued Shares outstanding
Ordinary shares 72 374 728 44 805 72 329 923 28 2 026 2 025 Total share capital 72 374 728 44 805 72 329 923 2 026 2 025 Share premium reserve - - Other paid-in equity - - Total paid-in equity 2 026 2 025
All shares have equal voting rights and are entitled to dividends. Aker ASA has no voting rights for its own shares. Aker ASA annual report 2013 141 Annual accounts – Aker ASA and holding companies
The following dividend was proposed by the board of directors after the balance sheet date: Installment schedule for interest-bearing debt, by type: Other debt, Amounts in NOK million 2013 Amounts in NOK million Bonds Bank loans accrued fees Total
Dividend of NOK 13 per share 940 Year Expected dividend payment in 2014 from Aker ASA 940 2014 - - - - 2015 808 - (3) 805 The amount is included in the short-term interest-free liability item in the balance sheet. 2016 - - - - 2017 500 500 (6) 994 2018 1 300 - (11) 1 289 After 2018 2 200 - (21) 2 179 Note 12 Interest-free debt and liabilities Total 4 808 500 (42) 5 266
Interest-free debt and liabilities are presented below: Beskjæres 76 mm fra venstre før trykk >> Amounts in NOK million Short-term Long-term Total 2013 Total 2012 Note 14 Risk
Tax liabilities - 12 12 26 The balance sheet of Aker ASA and holding companies is split into two segments: Pension liabilities - 183 183 129 Dividend 940 - 940 868 Percent 2013 2012 Debt to companies within the Group - - - 12 Other debt 102 83 184 201 Industrial investments 69% 64% Total 1 042 278 1 320 1 236 Financial investments 31% 36%
Specification financial investments: Funds- and equity investments 14% 6% Note 13 Interest-bearing debt Cash 13% 18% Interest-bearing receivables 3% 9% Interest-bearing debt is distributed among companies in the Group Fixed assets, deferred tax assets and interest-free receivables 2% 2% and external creditors as shown below:
The businesses within each category are exposed to macro-development in their respective market Amounts in NOK million Short-term Long-term Total 2013 Total 2012 segments. The total book value of the assets of Aker ASA and holding companies are NOK 19 137 million Debt to companies within the Group 135 - 135 - including the book value for Industrial investments of NOK 13 164 million. The book value and market Debt to external creditors - 5 266 5 266 3 469 value of each investment included in Industrial investments are specified in note 7. The total market Total 135 5 266 5 401 3 469 value of the Industrial investments, NOK 21 635 million, is significantly higher than the book value. The book value of the unlisted company Aker BioMarine is included in the total market value. In the case of
Aker ASA’s direct investment in the listed company Aker Solutions (6 percent ownership interest), the
book value is equal to the market value. Interest-bearing debt to external creditors is shown below: The book value of Financial investments are NOK 5 973 million. Cash represents 13 percent of the book value of total assets and 41 percent of Financial investments. Amounts in NOK million 2013 2012
Bonds 4 808 3 000 Unsecured bank loans 500 500 Other external debt and capitalised fees (42) (31) Total 5 266 3 469 142 Aker ASA annual report 2013 Annual accounts – Aker ASA and holding companies
Independent auditor’s report
To the board of Aker ASA
We have audited the accompanying combined dures selected depend on the auditor’s judgment, accounting. As a result, the combined financial financial statements of Aker ASA and holding com including the assessment of the risks of material statements may not be suitable for another pur panies, which comprise the balance sheet as at 31 misstatement of the financial statements, whether pose. December 2013, the income statement, a summary due to fraud or error. In making those risk assess of significant accounting policies and other explan ments, the auditor considers internal control rele Other Matter KPMG AS atory information. vant to the entity’s preparation and fair presenta Aker ASA has for the year ended 31 December Sørkedalsveien 6 tion of the financial statements in order to design PB 7000 Majorstuen 2013 prepared a separate set of statutory accounts NO-0306 Oslo Beskjæres 76 mm fra venstre før trykk >> Management’s Responsibility for the Financial audit procedures that are appropriate in the cir comprising consolidated financial statements and Statements cumstances, but not for the purpose of expressing parent financial statements on which we issued Telephone +47 04063 Management is responsible for the preparation and an opinion on the effectiveness of the entity’s inter separate auditor’s reports to the shareholders of Telefax +47 22 60 96 01 fair presentation of the combined financial state nal control. An audit also includes evaluating the Aker ASA dated 27 February 2014. www.kpmg.no ments of Aker ASA and holding companies in appropriateness of accounting policies used and Org. no. 935 174 627 MVA accordance with the basis for preparation of the the reasonableness of accounting estimates made financial reporting, defined in the introduction of by management, as well as evaluating the overall the combined financial statements, and for such presentation of the combined financial statements. Oslo, 27 February 2014 KPMG AS, a Norwegian member firm of the KPMG internal control as management determines is nec We believe that the audit evidence we have network of independent essary to enable the preparation of financial state obtained is sufficient and appropriate to provide a KPMG AS member firms affiliated with ments that are free from material misstatement, basis for our audit opinion. KPMG International Coopera- whether due to fraud or error. Opinion Arve Gevoll (sign) tive (“KPMG International”), a Swiss entity. In our opinion, the combined financial statements State Authorised Public Accountant Auditor’s Responsibility give a true and fair view of the financial position of Statsautoriserte revisorer - Our responsibility is to express an opinion on these Aker ASA and holding companies, as at 31 Decem medlemmer av Den norske combined financial statements based on our audit. ber 2013, and of its financial performance for the Revisorforening. We conducted our audit in accordance with Inter year then ended in accordance with the basis for Offices in: national Standards on Auditing. Those standards preparation of the financial reporting, defined in the require that we comply with ethical requirements introduction of the combined financial statements. Oslo Alta and plan and perform the audit to obtain reason Translation has been made for Arendal able assurance about whether the financial state Basis of Accounting information purposes only. Bergen ments are free from material misstatement. Without modifying our opinion, we draw attention Bodø An audit involves performing procedures to obtain to the basis for preparation of the financial report Elverum Finnsnes audit evidence about the amounts and disclosures ing, defined in the introduction of the combined Grimstad in the combined financial statements. The proce financial statements, which describes the basis of Hamar Haugesund Kristiansand Larvik Mo i Rana Molde Narvik Røros Sandefjord Sandnessjøen Stavanger Stord Tromsø Trondheim Tønsberg Ålesund Aker ASA annual report 2013 143 Shareholder information
Dialogue builds trust
Aker ASA is committed to maintaining an open dialogue with shareholders, investors, analysts and the financial community in general.
Shares and share capital in shares. The per-share purchase price may Aker ASA has 72 374 728 ordinary shares, not be less than NOK 4 nor exceed NOK each with a par value of NOK 28 (see Note 800. The board is free to decide the method 10 to the parent company’s accounts). Aker for acquiring or disposing of own (treasury) Beskjæres 76 mm fra venstre før trykk >> ASA has a single share class, and each shares. The authorisation is valid until the share is entitled to one vote. The company 2014 annual general meeting, though no held 44 805 of its own (treasury) shares as longer than to 30 June 2014. at 31 December 2013. No share issues In the period 17 April 2013 to 27 February took place in 2013. 2014, the company did not acquire any of its As at 31 December 2013, the company own (treasury) shares. As of 27 February had 14 064 shareholders. Kjell Inge Røkke 2014, Aker held 44 805 company shares. and members of his family are Aker’s main shareholders. Through their privately held Share option plans companies, organised under The Resource Aker ASA had no share option plans as at Group (TRG), the family holds 67.85 per 31 December 2013. cent of Aker ASA shares. Non-Norwegian Aker arranges regular presentations for shareholders, analysts and investors. shareholders held 18.54 per cent of the Investor relations company’s shares as at 31 December 2013. Aker ASA seeks to maintain an open and direct dialogue with shareholders, debt Aker ASA works to ensure that its share mining net asset value, the share prices of Stock-exchange listing holders, financial analysts, and the financial price reflects its underlying values by mak Aker’s exchange-listed investments are Aker ASA was listed on Oslo Stock community in general. In addition to holding ing all price-sensitive information available applied.” Exchange (OSE) on 2 September 2004 an annual capital markets day, the company to the market. The board proposes that a per-share (ticker: AKER). Aker ASA’s shares are regis arranges regular presentations for and meet Aker ASA’s goal is to create value for the dividend of NOK 13 be paid for the 2013 tered in the Norwegian Central Securities ings with shareholders, analysts and inves company’s shareholders through dividends accounting year. Depository with the registration number tors in major financial centres in Europe and and share price growth over time. In Febru ISIN NO 0010234552. DNB ASA is the the North America. ary 2006, the company’s board adopted Dividend paid Dividend company’s registrar. All Aker ASA press releases, stock the following dividend policy: Year (NOK) in % of NAV exchange notices and investor relations (IR) “Aker ASA’s dividend policy supports 2008 18.50 4.0% Current board authorisations publications are available on the company’s the company’s intention to maintain a 2009 5.00 2.0% At the annual general meeting on 17 April website: www.akerasa.com. This online solid balance sheet and liquidity reserves 2010 8.00 3.0% 2013, Aker ASA’s shareholders authorised resource offers access to the company’s adequate to handle future obligations. The 2011 10.00 3.9% the board to acquire up to 7 237 472 Aker quarterly and annual reports, prospectuses, company’s objective is to pay dividends 2012 11.00 4.1% ASA shares with a total par value of NOK corporate presentations, Articles of Associa annually that amount to 2–4 per cent of 2013 12.00 3.7% 202 649 216. The authorisation also pro tion, the financial calendar, and Investor the company’s net asset value. In deter vided for the acquisition of agreement liens Relations and Corporate Governance poli 144 Aker ASA annual report 2013 Shareholder information
“Aker ASA seeks to maintain an open and direct cies, along with other information. Annual general meeting Procedures for electronic voting and 2013 share data dialogue with shareholders, financial analysts, and the Shareholders can contact the company Aker ASA’s annual general meeting is nor using proxies with instructions are provided As at 31 December 2013, the company’s by email ([email protected]), or by mally held in early April. Written notification along with the meeting notice, and are total market capitalisation was NOK 16.1 financial market in general.” direct request to Marianne Stigset, Aker’s is sent to all shareholders and shareholder available on Aker’s website. billion. During 2013, a total of 10 643 109 Investor Relations Director at e-mail mari nominees. The company does not appoint an inde Aker ASA shares were traded, correspond [email protected] or telephone pendent proxy to vote on behalf of share ing to 0.15 times the company’s freely number +47 24 13 00 66. Geographical distribution of holders. Aker considers that shareholders’ tradeable stock. The Aker share was traded ownership as at 31 December 2013: interests are adequately safeguarded by on all of Oslo Stock Exchange’s trading Electronic quarterly and annual Number of Percentage of permitting the participation of an appointed days. The Aker ASA share was included in reports Nationality shares held share capital proxy or authorisation of the meeting chair/ Oslo Stock Exchange’s OSEBX index in Aker ASA encourages all stakeholders to board chairman to vote according to spe November 2011. use the electronic versions of annual Non-norwegian cific instructions. Beskjæres 76 mm fra venstre før trykk >> reports. Annual reports are published on shareholders 13 417 629 18.54% the company’s website at the same time as Norwegian Analytic coverage they are released via the OSE distribution shareholders 58 957 099 81.46% The following securities brokers provide analytic coverage of Aker ASA service: www.newsweb.no (ticker: AKER). Total 72 374 728 100.00% as at 31 December 2013: Annual reports are also distributed to inter Recom ested shareholders by email in PDF format. Meeting notices and attendance registra mendation Quarterly reports, which are generally tion forms are sent to shareholders by the Brokerage Analyst Contact information 31.12.2013 only distributed electronically, are available deadlines laid down in Norway’s Public from the company’s website and other Limited Liability Companies Act, and made ABG Sundal Collier Haakon Amundsen [email protected] sources. Shareholders who are unable to available on the company’s website and +47 22 01 60 25 Hold receive the electronic versions of quarterly through the OSE distribution service. The Arctic Securities Christian Yggeseth [email protected] +47 21 01 32 22 Buy or annual reports may receive the printed annual report and other enclosures to the DnB Markets Eirik Ronold Mathisen [email protected] versions by contacting Aker ASA’s investor meeting notice are made available solely +47 24 16 91 91 Hold relations staff. via the company’s website and the OSE Eva Dimensions Craig Sterling [email protected] distribution service. Shareholders who wish +1 212-201-2334 Sell Nomination committee to receive the enclosures by post must Goldman Sachs Markus Iwar [email protected] The company’s nomination committee contact the company. + 44 20 7552 1264 Hold comprises Leif-Arne Langøy, Gerhard In 2011, the board decided that share Handelsbanken Anne Gjøen [email protected] Heiberg and Kjetil Kristiansen. holders who are unable to attend the general +47 22 39 70 22 Buy Shareholders who wish to contact meeting should have the option of voting Nordea Markets Anne Schult Ulriksen [email protected] +47 22 48 68 67 Buy the nomination committee may do so directly on individual agenda items via elec Pareto Securities Andreas Stubsrud [email protected] using the following email address: tronic voting during the pre-meeting registra +47 24 13 21 16 [email protected]. tion period. This service is available on Erik Strømsø Thomassen [email protected] Aker’s website. Shareholders may change +47 24 13 21 65 Buy Audit committee their votes or opt to attend the meeting in RS Platou Markets Terje Mauer [email protected] The company’s audit committee is com person throughout the registration period. +47 22 01 63 24 Buy posed of: As in the past, shareholders who are Sparebank1 Markets Christopher Møllerløkken [email protected] +47 95 73 98 34 Buy unable to attend a meeting may vote by Swedbank First Peter Hermanrud [email protected] ■■ Finn Berg Jacobsen (chairman) proxy. The company has prepared proxy Securities +47 23 23 82 53 Buy ■■ Stine Bosse forms that allow shareholders to vote on UBS Equity Research David Hallden [email protected] ■■ Atle Tranøy individual issues. +46 70 306 73 30 Hold Aker ASA annual report 2013 145 Shareholder information
Ownership structure as at 31 December 2013 2013 share data
Number of Per cent of Shares held shareholders share capital
1 – 100 8 935 0.32% Highest traded NOK 240 101 – 1 000 4 186 1.83% Lowest traded NOK 167 1 001 – 10 000 750 2.80% Share price as at 31 December NOK 222 10 001 – 100 000 145 6.70% Number of shares issued as at 31 December 72 374 728 100 001 – 500 000 38 10.48% Number of own (treasury) shares as at 31 December 44 805 Over 500 000 10 77.87% Number of shares issued and outstanding as at 31 December 72 329 923 Total 14 064 100% Market capitalisation as at 31 December NOK million 16 067 Proposed share dividend for 2013 NOK per share 13 Beskjæres 76 mm fra venstre før trykk >>
20 largest shareholders as at 31 December 2013 Share price development 2013 Number of ■ Aker ASA ■ OSEBX (rebased) Shareholder shares Per cent 280 TRG Holding AS 1) 48 245 048 66.7% J.P. Morgan Chase Bank N.A. London, Nordea 1 777 072 2.5% 265 Goldman Sachs & Co Equity Segregat 1 168 179 1.6% Morgan Stanley & Co LLC 960 067 1.3% 250 The Resource Group TRG AS 1) 860 466 1.2% 235 State Street Bank & Trust Company 794 855 1.1% Tvenge 700 000 1.0% 220 Odin Norden 676 043 0.9%
J.P. Morgan Chase Bank N.A. London 611 230 0.8% 205 Citibank, N.A. 565 430 0.8%
Skandinaviske Enskilda Banken AB 494 050 0.7% 190 KBC Securities NV 485 243 0.7% Oslo Pensjonsforsikring AS PM 445 200 0.6% 175 KBC Securities NV 426 640 0.6% Fondsfinans Spar 375 000 0.5% 160 Fidelity Funds-Nordic Fund/SICAV 332 400 0.5% 01.01. 01.02. 01.03. 01.04. 01.05. 01.06. 01.07. 01.08. 01.09. 01.10. 01.11. 31.12. 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 KLP Aksje Norge VPF 304 368 0.4% Citibank, N.A. 300 728 0.4% Folketrygdefondet 284 561 0.4% Pagano AS 218 500 0.3% Other 12 349 648 17.1% Total 72 374 728 100%
1) Kjell Inge Røkke controls 67.8 per cent of the shares in Aker ASA through TRG Holding AS and TRG AS. 146 Aker ASA annual report 2013 Shareholder information
Analytical information
Aker ASA including holding companies – key figures 2011–2013. See also page 7.
2013 2012 2011
Book value Value adjusted Book value Value adjusted Book value Value adjusted
Shares NOK million 15 762 26 408 12 034 21 738 9 049 14 359 Other assets/liabilities NOK million (3 345) (3 345) 327 327 4 277 4 277 Beskjæres 76 mm fra venstre før trykk >> Equity including dividend allocation NOK million 12 417 23 063 12 361 22 066 13 326 18 636 Equity before dividend allocation NOK million 13 357 24 003 13 228 22 933 14 122 19 432 Net asset value per share before dividend allocation NOK 184.67 331.86 185.06 320.82 195.14 268.53
Development in dividend, share price and NAV per share
2013 2012 2011
Share price at the end of the year (NOK) 222 212 155 Net asset value (NAV) per share (NOK) 332 321 269 Allocated dividend per share (NOK) 13 12 11 Dividend in per cent of NAV 4% 4% 4% Dividend in per cent of share price at the end of the year 6% 6% 7%
Share price development ■ Share price (NOK) ■ NAV (NOK per share)
600
500
400
300
200
100
0 30.09.04 31.12.04 31.03.05 30.06.05 30.09.05 31.12.05 31.03.06 30.06.06 30.09.06 31.12.06 31.03.07 30.06.07 30.09.07 31.12.07 31.03.08 30.06.08 30.09.08 31.12.08 31.03.09 30.06.09 30.09.09 31.12.09 31.03.10 30.06.10 30.09.10 31.12.10 31.03.11 30.06.11 30.09.11 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 31.03.13 30.06.13 30.09.13 31.12.13 Aker ASA annual report 2013 147 Corporate governance
Board of directors
Beskjæres 76 mm fra venstre før trykk >> Kjell Inge Røkke Finn Berg Jacobsen Stine Bosse Karen Simon Kristin Krohn Devold Leif O. Høegh Atle Tranøy Chairman Deputy chairman Director Director Director Director Director Elected by the Kjell Inge Røkke (born Finn Berg Jacobsen (born Stine (Christine) Bosse Karen Simon has 30 Kristin Krohn Devold Leif O. Høegh (born employees 1958), Aker ASA’s main 1940) holds an MBA de (born 1960) holds a years of investment (born 1961) was a Mem 1963) holds a master’s owner, has been a driv gree from Harvard Busi Master of Law from the banking experience with ber of the Norwegian degree in economics Atle Tranøy (born 1957) ing force in the develop ness School and is a state University of Copenha JP Morgan and is cur Parliament for the Con from the University of is trained as a pipe fitter ment of Aker since the authorized auditor. He has gen and has completed rently head of financial servative Party from Cambridge and an MBA and has been an em 1990s. Mr. Røkke held various positions with training programs at sponsor coverage busi 1993 to 2005. She was from Harvard Business ployee of Kværner Stord launched his business Arthur Andersen & Co, and INSEAD, Wharton and ness in the US and Vice Minister of Defense from School. Mr. Høegh has AS since 1976. Mr. career with the purchase worked as Regional Man Harvard. She was the Chairman of the invest 2001 to 2005. Ms. previously worked for Tranøy has been a full- of a 69-foot trawler in the aging Partner from 1983– CEO of Trygvesta from ment bank. During her Krohn Devold is current McKinsey & Company time employee repre United States in 1982, 1999. From 2001–2005, Mr. 2001 to 2011. She cur career with JP Morgan ly the management di and the Royal Bank of sentative since 1983. and gradually built a Berg Jacobsen worked as rently serves as chair of she has held a number of rector of the Norwegian Canada Group, and is Mr. Tranøy is also the leading worldwide fisher CFO and Chief of Staff at Flügger Denmark, The positions in the oil & gas Hospitality Association currently chairman of chairperson of the Euro ies business. In 1996, the Aker Kvaerner. He is cur Royal Danish Theater, team in both the US and (NHO Reiseliv) and di Höegh Autoliners and pean Works Council in Røkke controlled com rently working as a consult CONCITO, Børnefond the UK including head of rector of several compa Deputy Chairman of Aker. As at 31 Decem pany, RGI, purchased ant within corporate gov en, and Copenhagen Art the EMEA energy team nies, including Aker Höegh LNG. He is also a ber 2013, Mr. Tranøy enough Aker shares to ernance and corporate Festival. She serves as during the 1990’s. From Kværner Holding AS, director of Höegh Capi holds no shares in Aker become Aker’s largest finance. He is director and vice chair of ChildFund 2000 onwards Ms. Si Hexagon ASA, Sølvtrans tal Partners, Höegh ASA, and has no stock shareholder, and later chairman of the audit com Alliance and a director mon was co-head of the ASA and the Terra Eiendom, and Rift Valley options. Mr. Tranøy is a merged RGI with Aker. mittee in several compa of among others TDC EMEA debt capital mar group. She has a MSc Holdings. Mr. Høegh is a Norwegian citizen. He Mr. Røkke is currently nies. Mr. Berg Jacobsen and Allianz. In 2010, she kets group and global degree from the Norwe member of the Corpo has been elected for the director of Aker Solu has served on the board, was appointed Advo co-head of private equity gian School of Econom rate Assembly of Det period 2013–2015. tions, Det norske olje supervisory committees cate for the Millennium investment banking from ics (NHH) and has a norske. As at 31 De selskap, Kvaerner and and task forces of several Development Goals by 2007 to 2012. Ms Simon bachelor degree in soci cember 2013, Mr. Ocean Yield. As at 31 associations and organiza the UN Secretary Gen served on the EMEA ology from the Universi Høegh has an indirect December 2013, Mr. tions. He has been award eral. As at 31 December debt underwriting and ty of Bergen. As at 31 ownership interest in Røkke holds 49 105 514 ed the Royal Order of St. 2013, Ms. Bosse holds reputational risk commit December 2013, Ms. 135 000 Aker ASA shares (67.8 per cent) in Olav for his contributions to 400 shares in Aker ASA, tees as well as a member Krohn Devold holds no shares. He is a Norwe Aker ASA through his the advancement of audit and has no stock op of the EMEA manage shares in Aker ASA, and gian citizen. He has investment company ing and accounting. As at tions. Ms. Bosse is a ment team. As at 31 has no stock options. been elected for the TRG AS and its subsidi 31 December 2013, Mr. Danish citizen. She has December 2013, Ms. Ms. Krohn Devold is a period 2012–2014. aries, which he co-owns Berg Jacobsen holds 5 000 been elected for the Simon holds no shares in Norwegian citizen. She with his wife, Anne Grete shares in Aker ASA, and period 2013–2015. Aker ASA, and has no has been elected for the Eidsvig, and has no has no stock options. Mr. stock options. She is a period 2013–2015. stock options. Mr. Røkke Berg Jacobsen is a Norwe dual UK and US citizen. is a Norwegian citizen. gian citizen. He has been She has been elected for He has been elected for elected for the period the period 2013–2015. the period 2012–2014. 2012–2014. 148 Aker ASA annual report 2013 Corporate governance
Beskjæres 76 mm fra venstre før trykk >> Nina Hanssen Arnfinn Stensø Tommy Angeltveit Director Director Director Elected by the Elected by the Elected by the employees employees employees
Nina Hanssen (born Arnfinn Stensø (born Tommy Angeltveit (born 1971) has been work 1957) has been 1965) has worked as a ing in the fishing indus employed by Aker mechanic at the Con try since 1992. She is Solutions (former Aker trols division in Aker the chief union repre Offshore Partner) in Subsea since 2003. Mr. sentative as well as an Stavanger since 1998. Angeltveit has occupa employee representa He is educated electri tional education as a tive to the board of cal engineer. Mr. service electronics Norway Seafoods. As Stensø is member of engineer. Mr. Angeltveit at 31. December 2013 the negotiating com is also an employee Ms. Hanssen holds no mittee in NITO (Norwe representative at the shares in Aker ASA, gian Engineers and Board of Aker Subsea. and has no stock technologist organiza Mr. Angeltveit is full options. Ms. Hanssen tion). Mr. Stensø is time employee repre is a Norwegian citzen. member in liaison com sentative and manager She has been elected mittee NITO – NHO. As for Industry Energy for the period 2013– at 31. December 2013 section 47. As at 31 2015. Mr. Stensø holds no December 2013 Mr. shares in Aker ASA, Angeltveit holds no and has no stock shares in Aker ASA, options. Arnfinn Stensø and has no stock is Norwegian citizen. options. Tommy He has been elected Angeltveit is a Norwe for the period 2013– gian citizen. He has 2015 been elected for the period 2013–2015.
CFO Trond Brandsrud presenting at Aker’s Capital Markets Day in November 2013. Aker ASA annual report 2013 149 Corporate governance
Management Other key personnel
Beskjæres 76 mm fra venstre før trykk >> Øyvind Eriksen Trond Brandsrud Atle Kigen Edward Ross Ola Snøve Audun Stensvold President and CEO CFO Head of communication Investment director Investment director Investment director Responsible for the Responsible for the Responsible for the Øyvind Eriksen (born Trond Brandsrud (born Atle Kigen (born 1958) follow-up of Aker follow-up of Aker follow-up of financial 1964) joined Aker ASA 1958) joined Aker ASA joined Aker ASA in Solutions, Det norske BioMarine investments in January 2009. Mr. in April 2010 after three October 2006. He holds and Kvaerner Eriksen holds a law de years as CFO in Seadrill a degree in business Ola Snøve (born 1977) is Audun Stensvold (born gree from the University Limited. Prior to joining administration and mar Edward Ross (born Investment Director of 1972) joined Aker ASA of Oslo. He joined Nor Seadrill in 2007, Mr. keting, and has exten 1973) joined Aker ASA Aker ASA. Mr. Snøve in 2006. Prior to his ap wegian law firm BA-HR Brandsrud worked for sive corporate commu in September 2013. was previously Presi pointment as an invest in 1990, where he be Royal Dutch Shell for nication and journalism Edward is a Chartered dent & CEO of Epax – a ment director, he was came a partner in 1996 more than 20 years. At experience. Mr. Kigen Accountant (PWC) and joint venture between CFO and Investment and a director/chairman Shell, he held several has previously worked holds a MBA from Co Aker and Lindsay Gold Director for Converto from 2003. At BA-HR, key finance positions in as head of communica lumbia Business School berg that was divested Capital Management, Mr. Eriksen worked Norway as well as inter tion at Kværner ASA, (NYC) as well as an MA to FMC Corp. Prior to which administers the closely with Aker and nationally. He also has and CEO of the PR from Oxford University. joining Epax, Mr. Snøve Aker-owned Converto Aker’s main shareholder, extensive experience agency GCI Monsen. Previous to Aker ASA had been with Aker Capital Fund. He has Kjell Inge Røkke. Mr. from major offshore field He has been editor in Edward held numerous since January 2008. He also served as Vice Eriksen is executive development projects chief of the Norwegian positions at Fidelity In is currently Chairman of President of Aker’s M&A chairman of Aker Solu and held several senior business magazine vestments International Aker BioMarine. Mr. and Business Develop tions ASA and Aker management roles in Økonomisk Rapport, including the leader of Snøve holds M.Sc. and ment team. Before join Kværner Holding AS, Shell’s upstream and business and economy the Natural Resources Ph.D. degrees from the ing Aker, Mr Stensvold and a director of several downstream sectors. editor at Aftenposten, a and Utilities team and Norwegian University of worked as a strategy companies, including Mr. Brandsrud has a leading daily, and NRK the Energy and Oil Field Science and Technolo and finance consultant The Resource Group MSc degree from the Nyheter, the national service Analyst. As at 31 gy, as well as an MBA for Selmer, and as a TRG AS, TRG Holding Norwegian School of broadcaster’s news Desember 2013 Mr. (Dist.) from INSEAD. As financial analyst for DnB AS and Reitangruppen Economics (NHH). As at bureau. As at 31 De Ross holds 74 844 at 31 December 2013, NOR. Mr. Stensvold AS. As at 31 December 31 December 2013, Mr. cember 2013, Mr. Kigen shares in Aker ASA and Mr. Snøve holds 79 275 holds a Masters degree 2013, Mr. Eriksen holds Brandsrud holds 34 106 holds 4 349 shares in has no stock options. shares in Aker ASA, and in Business and Eco 100 000 shares in Aker shares in Aker ASA. Aker ASA, and has no Mr. Ross is a British has no stock options. nomics from the Norwe ASA, and has no stock Brandsrud has no stock stock options. Mr. Kigen citizen Mr. Snøve is a Norwe gian School of Econom options. Mr. Eriksen options and is a Norwe is a Norwegian citizen. gian citizen. ics (NHH). As at 31 De holds, through a private gian citizen. cember 2013, Mr. ly owned company, 0.20 Stensvold holds 2 294 percent of the B-shares shares in Aker, and has in TRG Holding AS. Mr. no stock options. Mr. Eriksen is a Norwegian Stensvold is a Norwe citizen. gian citizen. 150 Aker ASA annual report 2013 Contact information
Contact information
Aker ASA Det norske oljeselskap ASA Ocean Yield AS Converto AS Fjordalléen 16, 0250 Oslo Føniks Fjordalléen 16, 0250 Oslo Fjordalléen 16, 0250 Oslo P.O. Box 1423 Vika Munkegata 26 P.O. Box 1423 Vika P.O. Box 1423 Vika, NO-0115 Oslo NO-7011 Trondheim NO-0115 Oslo NO-0115 Oslo Norway Norway Norway Telephone: +47 24 13 00 00 Telephone: +47 24 13 00 00 Telephone: +47 90 70 60 00 Telephone: +47 24 13 00 00 Telefax: +47 24 13 01 01 Telefax: +47 24 13 01 01 Telefax: +47 73 53 05 00 Telefax: +47 24 13 01 01 Beskjæres 76 mm fra venstre før trykk >> [email protected] [email protected] [email protected] www.oceanyield.no www.converto.no www.akerasa.com www.detnor.no
Aker Solutions ASA Aker BioMarine ASA Oslo Asset Management ASA Snarøyveien 36, 1364 Fornebu Fjordalléen 16, 0250 Oslo Fjordalléen 16, 0250 Oslo P.O. Box 169 P.O. Box 1423 Vika P.O. Box 1423 Vika NO-1325 Lysaker NO-0115 Oslo NO-0115 Oslo Norway Norway Norway
Telephone: +47 67 51 30 00 Telephone: +47 24 13 00 00 Telephone: +47 24 13 00 00 Telefax: +47 67 51 30 10 Telefax: +47 24 13 01 10 Telefax: +47 24 13 01 01
[email protected] [email protected] [email protected] www.akersolutions.com www.akerbiomarine.com
Kvaerner ASA Havfisk ASA Norron AB Drammensveien 264, 0283 Oslo Løvenvoldg. 11, 6002 Ålesund Oxtorgsgatan 4, 2tr P.O. Box 74 P.O. Box 876 SE-111 57 Stockholm NO-1325 Lysaker NO-6001 Ålesund Sweden Norway Norway Telephone: +46 (0) 722 35 24 92 Telephone: +47 21 08 90 00 Telephone: +47 70 11 86 00 Telefax: +46 (0) 8 555 069 45 Telefax: +47 21 08 99 99 Telefax: +47 70 11 86 80 [email protected] [email protected] [email protected] www.norron.com www.kvaerner.com www.havfisk.no
Design: Haugvar AS Photos and illustrations: Aker and Aker owned companies, Rolf Estensen, Fotografen AS, Oslo Børs, ExxonMobil, Shell, Fotograf Ørnelund AS and Jo Michael. Print: Konsis Grafisk AS
Aker ASA Fjordalléen 16 P.O. Box 1423 Vika NO-0115 Oslo Norway
Telephone: +47 24 13 00 00 E-mail: [email protected] www.akerasa.com