2 011 Annual report 2 Aker Solutions annual report 2011 Contents Contents Key figures 2011 3 Letter to shareholders 4 Board of directors’ report 5 Summary 5 Business overview 5 Strategic priorities 6 Research and development (R&D) 6 Report for 2011 7 Presentation of the accounts 7 Segment reviews 8 Corporate governance and risk management 10 Corporate responsibility 11 Environment 12 Health, safety and working environment 12 People and teams 13 Annual accounts 15 Declaration by the Board of Directors and President & CFO 15 Aker Solutions Group 16 Aker Solutions ASA 67 Auditor’s report 77 Share and shareholder information 78 Share and shareholder information 78 Analytical information 82 Corporate governance 83 Corporate governance 83 Board of directors 90 Executive chairman and President 92 Aker Solutions annual report 2011 Business management 92 Corporate centre functions 94 Regional management 95 Company information 96 Aker Solutions annual report 2011 3 Key figures 2011 Key figures 2011 (Continuing operations only) Orders and results 2011 2010 Order backlog 31 December NOK mill 41 449 38 528 Order intake NOK mill 41 327 38 773 Operating revenues NOK mill 36 474 33 365 EBITDA NOK mill 3 445 3 308 EBITDA-margin Per cent 9.4% 9.9% Net profit NOK mill 1 591 1 334 Cash flow Net cash from operating activities NOK mill 3 827 2 131 Balance sheet Borrowings NOK mill 6 000 8 224 Equity ratio Per cent 33.2% 25.9% Return on equity Per cent 17.9% 19.6% Return on captial employed1 Per cent 13.1% 12.1% Share Share price 31 December NOK 62.95 99.25 Dividend per share2 NOK 3.90 2.75 Basic earnings per share (NOK) NOK 5.77 4.76 Diluted earnings per share (NOK) NOK 5.76 4.75 Employees Employees 31 December Full time equivalents 18 397 16 967 HSE Lost Time Incident Frequency Per million worked hours 0.66 0.83 Total recordable incident frequency Per million worked hours 2.29 2.62 Sick leave rate Per cent of worked hours 2.17 2.04 1) Adjusted for gain on discontinued and demerged operations. 2) Proposed dividends for 2011. 4 Aker Solutions annual report 2011 Letter to shareholders Letter to shareholders In the past few years we have made signi­ Develop and grow fully, this will continue to make us the pre­ for each individual and team in their daily ficant changes and improvements to Aker Two words sum up our ambitions for the ferred partner for some of the world’s most operation and behaviour. Solutions. I believe the basics are in place. coming years: development and growth. sophisticated customers. Now it is time to make Aker Solutions We believe the company has the poten­ Preferred investment develop and grow. In order to succeed, we tial to grow its revenues by 9­15 per cent Preferred employer It is our belief that all these efforts to need to attract and inspire the best talents per year and improve profit margins by 3­4 As our industry continues to experience high devel op and grow Aker Solutions will result in the industry and to build a strong per­ per cent points by 2015 compared to 2010. activity in almost every corner of the world, in increased shareholder values. Last year formance culture on the basis of the Aker Demand for our services is strong, and we the ability to retain and attract talent and started well in this respect, but unfortunate Solutions core values. The potential is un­ expect near term revenue growth to be at experience is crucial to a company’s suc­ quality issues that came to the surface mid­ disputed – and we have just started! least in the high end of the range in 2012. cess. Our vision to be the preferred partner year reversed the positive trend. These We have spent the time wisely. We have The growth will not come by itself. We are also describes our relation to employees. specific issues in our Subsea business area scrutinised ourselves and our markets and prepared to make significant investments in We seek to attract people who want to reduced our earnings before interest tax and arrived at a more honest understanding of increased engineering, manu facturing and work with the best, and with people who depreciation (EBITDA) with NOK 0.6 billion our current position, with all of its strengths service capacity. And we will continue to want to become among the best in our in­ in 2011. – and weaknesses. On this insight, we have pursue acquisition candidates and opportu­ dustry. We seek people who want to share Revenues increased by 9.3 per cent from hammered out a new direction for the years nities for strategic alliances. and learn, people who want to have the best 2010 to NOK 36.5 billion in 2011, and we ahead. At the same time, we will continue to experts available and be able to share with increased the net profit from NOK 2 billion to In 2011, we took the first few steps develop our company’s performance. Our them and learn from them. We seek people NOK 5.3 billion, mainly due to gains from the down this path. We strengthened the team vision is to be the preferred partner for who share our company’s values and who sale of businesses and demerger from the with approximately 6 000 new colleagues; solutions in the oil and gas industry. To want to work with other people – and in a EPC business Kvaerner. The board has pro­ we changed the company structure in order achieve this we need to continually improve company – that care. posed to pay NOK 3.90 per share in dividend. to get closer to the markets and customers; our customer focus, our technologies, our Our commitment to be the preferred em­ The market responded well to our full­ we insisted on transparency and more people and teams and our ability to deliver ployer has led Aker Solutions to invest in year results and outlook for the coming discipline in the performance; we re­ consistently top quality. world­class training, competence and lead­ years. The Aker Solutions stock gained 54 emphasised the importance of high and ership development programmes; know­ per cent in the first two months of 2012. consistent ethical behaviour; we separated Preferred partner ledge sharing initiatives; HSE and employee This is an inspiration for all of us to con­ from businesses which we considered non­ It is our experience that our customers too, welfare programmes as well as widely avail­ tinue the work to develop and grow Aker core to our future; we put in place a new are looking for ways to develop and grow able share purchase programmes, which Solutions. Aker Solutions should be the pre­ executive team in order to get better their business. Unlike many other oilfield aligns the employees’ interests with those of ferred partner for the world’s most sophisti­ leadership and role models; and we products, systems and services companies, the shareholders. cated customers, the preferred employer for established a frame work of improved Aker Solutions’ capabilities span the entire A strong and unified culture is a pre­ highly skilled and competent people, and management processes. upstream value chain from reservoir to pro­ requisite for consistent quality in per­ our preferred investment. Much good was achieved in 2011, but duction, and through the life of the field. This formance. The nature of the Aker Solutions we also failed severely. Three people were broad range of competence gives us a deep culture is summed up by our core values: The potential is undisputed – and we have killed while they were working for Aker understanding of our customers’ needs. HSE mind­set, open and direct dialogue, just started! Solutions. My thoughts and prayers go out In Aker Solutions we bring together customer drive, delivering results, people to the families, friends and colleagues of engineering capacity and knowledge, and and team, hands on management. the three men. we create and use the best of technologies These core values are not only nice to provide the customers’ solutions. Hope­ words on paper. They are guiding principles Øyvind Eriksen, Executive Chairman Aker Solutions annual report 2011 5 Board of directors’ report Board of directors’ report Summary change and relates mainly to an accounting for the period 2011 to 2015 are within Oslo Stock Exchange. In 2011 Aker Solutions completed trans- gain from the Kvaerner demerger and the reach. In 2011 Aker Solutions had three main actions and organisational changes accord- sale of Process & Construction. Net profit According to these targets revenue reporting segments and nine business ing to the strategy and plans presented to from continuing operations in 2011 was growth in the period should be in the 9–15 areas. These business areas are described shareholders at the end of 2010. The com- NOK 1.6 billion in 2011, up 19.3 per cent per cent per year range and EBITDA margin below in the “Presentation of the 2011 pany is now concentrating on further devel- compared to the previous year. should increase by 3–4 per cent points. accounts” section. opment and growth, which is required to Earnings before interest, tax and depre- Near term opportunities are strong and rev- fulfil its ambitions for the longer term. ciation (EBITDA) also increased, while the enue increase could therefore be in the high Markets Despite continuous efforts to avoid seri- EBITDA margin was reduced from 9.9 per end of the range in 2012. It will be more Demand for Aker Solutions’ technology, ous incidents, three lives were lost in 2011 cent in 2010 to 9.4 per cent in 2011.