annual report 2012 · 2013-04-02 · 04 / about us / vard / annual report 2012 about us / vard /...

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02 / about us / vard / Annual Report 2012

Contents 02 About Us

10 CEO Letter

12 Chairman’s Statement

14 Board of Directors

16 Executive Management

18 Shareholding and Corporate Structure

20 Financial Highlights

24 Core Products and Services

34 Operational Review

40 Significant Events

42 Deliveries

44 Order Book

46 Risk Management

48 Sustainability and Social Responsibility

52 Investor Relations

54 Outlook

56 Corporate Governance Report

64 Corporate Information

66 Statutory Financial Reports

134 Statistics of Shareholdings

136 Notice of Annual General Meeting

142 Contact Information

vard is the new brand name adopted by the STX OSV group of companies. Following the sale by STX Europe of its 50.75% stake in the shares of STX OSV Holdings Limited, the Company is no longer part of STX Business Group. Following a rebranding and renaming process that is currently ongoing, VARD will also replace STX OSV in the names of all subsidiaries of STX OSV Holdings Limited. A resolution to rename the Company itself to Vard Holdings Limited will be tabled at the Annual General Meeting on 23 April 2013.

The new brand name VARD is used in this report wherever applicable. Only in the Statutory Financial Reports, the names valid as of 31 December 2012 have been retained.

This is the Annual Report of STX OSV Holdings Limited.

VArD has always been built on trust. For generations, trust has been the very foundation of our business, and it has always been the key to our success.

A continuous line of people, working together, handing down experience from one to the next is the root of our culture.

our craftsmanship and determination to always look for new horizons is what will carry this heritage onwards for generations to come.

the future lies with our people, and our core values:

Craftsmanship – Fellowship – Salesmanship

about us / vard / Annual report 2012 / 0302 / about us / vard / Annual report 2012

04 / about us / vard / Annual report 2012


As a leading global shipbuilder, innovation and close cooperation with our customers is core to our business. We continuously seek improvements

and share best practices in order to keep pushing the boundaries. We aim to empower our employees to deliver groundbreaking technological

solutions to our customers, thereby enabling them to stay ahead in a highly competitive and constantly changing market.


our local strength builds global competitiveness. Small but important learnings made each and every day accumulate to become our collective experience.

the exchange of know-how builds the competence of our organization and strengthens our fellowship. no matter where in the world our over 9,500

employees are located, we are one team that shares the same goals.

our global presence provides us with great opportunities to serve our customers, but also commits us to deliver according to consistently high standards of products and services. For each and every one of us, in any department, in any shipyard, in any country, true salesmanship

means focusing on customer needs in everything we do.

VArD – built on trust


Dear shareholDers,

>> We remain committed to our core values and customer promise - “Built on trust”.

roy reiteChief executive officer and executive Director

10 / ceo letter / vard / Annual report 2012

the past year has been an eventful and rewarding one for VarD. Despite the various challenges brought about by rapidly shifting market conditions and a demanding operating environment in parts of the organization, I am pleased to report that we have delivered a stable performance for 2012, both financially and operationally.

Year in review

the year started out with a record first-half in terms of order intake, most importantly driven by a burgeoning demand for offshore subsea Construction Vessels (osCV), but also expectations for a rebound in the market for anchor handling tug supply vessels (ahts). as expectations for the latter dissipated in the second half, the offshore vessel market became increasingly competitive, not in the

Dear shareholDers,

10 / ceo letter / vard / Annual report 2012 ceo letter / vard / Annual report 2012 / 11

least as a result of low activity in other parts of the global shipbuilding industry. still, we were able to secure new orders for 16 vessels, and a combined order intake value of noK 9.5 billion. With 48 vessels scheduled for delivery between 2013 and 2016, the Company has a solid order reserve for the coming years.

In 2012 the majority of our yards experienced continued stable operations and efficient project execution. only Brazil faced a very challenging operational environment. Demonstrating our resilience, we successfully delivered 22 vessels, recorded revenues in excess of noK 11 billion and achieved a respectable eBItDa margin of 13.2%, the second best in the Company’s history after an exceptional 2011.

also in 2012, we saw good progress in the development of our new shipyard in Brazil, which will assume operations this summer. We laid the foundations for continued competitiveness through investments in romania, and invested in r&D and new technology that will help us maintain our position as a preferred partner for clients seeking technologically advanced solutions for their shipbuilding needs. these investments are beginning to bear fruit, as demonstrated by a strong start into the new year in terms of order intake in the first quarter of 2013.

Foundations built on trust

our healthy results against the backdrop of a volatile environment serve as testament to the dedication of our people across the Company, from the naval architects in our design center in norway to steel workers, pipe fitters and electricians in Vietnam, from engineers in romania to the team developing our new yard in Brazil. notwithstanding the complexity of our global presence across ten yards in three continents, we remain indebted to our strong traditions and heritage, to which we owe our solid foundation, current success and future opportunities. Indeed, we have come a long way from what began as a builder of fishing vessels for the needs of the local community to what is today one of the world’s major designers and shipbuilders of advanced and complex offshore and specialized vessels.

although VarD has experienced its fair share of transformation, we have stayed the course and remained steadfast in our core values of Craftsmanship, Fellowship and salesmanship. they represent a focus on delivering quality products and developing new solutions, respect for people and the societies in which we operate, and on always putting the customer first. this has served us well in our approach to business. echoing our customer promise

“Built on trust”, we are proud to saythat many of our clients have chosen to stay with us through countless market cycles, by virtue of the strength of our long-term relationships.

acknowledgements

as we look back on 2012, I would like to extend, on behalf of the Company, my gratitude to those who have pledged their commitment and channeled their unwavering support towards all that we have achieved in the past 12 months.

and as we have moved into a new year, I look forward to working constructively with our new majority shareholder Fincantieri in continuing to develop VarD. though still early in the process, I am excited about discovering the opportunities that this new strategic owner may bring, and convinced that it will be to the benefit of all stakeholders.

sincerely,

roy reiteChief executive officer and executive Director

Dear ValueD shareholDers,

12 / chairman’s statement / vard / Annual report 2012

the year just ended has been marked

by significant changes in our Company.

on 23rd January 2013, following the

agreement signed on 21st December

2012, Fincantieri - Cantieri navali

Italiani s.p.a., through its wholly

owned subsidiary Fincantieri oil & Gas

s.p.a., has successfully completed the

acquisition of the majority stake in the

Company from stX europe as.

this acquisition, which represents

a strategic long-term investment

for the Fincantieri Group, marks

Fincantieri’s entry into a market

segment complementary to its current

ones and enhances the position of

the Fincantieri Group as a leading

international player. With 21 shipyards

in 3 different continents and nearly

20,000 employees, the enlarged

Fincantieri Group becomes one of the

top five shipbuilders worldwide and the

leading western producer capable of

competing with its asian peers.

Compared with the other four top

producers, the enlarged Fincantieri

Group boasts a leadership position in

all the maritime high-tech sectors,

pursuing a strategy of diversification,

both in terms of the geographical

footprint and network specialization,

and development in order to retain a

long-term competitiveness.

leveraging on the constant

commitment of the management

team and all employees, we are

keen to develop further the strong

relationships we enjoy with our key

customers and build equally strong

relationship with new clients, aiming

to maintain a leading position in the

global competitive landscape and

striving to satisfy our customers with

cutting edge solutions.

on behalf of the Board of Directors,

I would like to express my sincere

appreciation to our shareholders

and customers for the confidence

and support given to us, and our

commitment to carry on the existing

business of VarD continuing to work

for the interest of all our shareholders.

sincerely,

giuseppe bono

Chairman of the Board

chairman’s statement / vard / Annual report 2012 / 13

Dear ValueD shareholDers,

12 / chairman’s statement / vard / Annual report 2012

giuseppe bonoChairman of the Board

>> this acquisition represents a strategic long-term investment for the Fincantieri Group.

I would like to express my sincere appreciation to our shareholdersand customers for the confidence and support given to us.

Mr. roy reite is the chief executive officer and serves as executive director of the Company. Mr. reite has served as the president of VarD since 2001.

Prior to that, he was yard director at Vard søviknes from 1999 to 2001, and assumed various positions as project manager, production manager and technical manager from 1990 to 1995. Mr. reite was also a business consultant at Intentia International as from 1995 to 1999.

he is presently a non-executive director of sparebanken Møre, a norway-based regional bank.

Mr. reite holds a Master of science degree from the norwegian university of science and technology.

Mr. sung hyon sok serves as an independent director of the Company. Mr. sok is also chief executiveofficer of summerstone lsl Pte. ltd.,and executive director of aon 21singapore Pte. ltd.

Mr. sok started his career in Goodmorning shinhan securities Co. ltd. between 1987 and 1998. thereafter, he was vice president of ICaP (singapore) Pte. ltd. before joining reFCo (singapore) Pte. ltd. in 2005. additionally, Mr. sok was president of World hawk eyes advisor Pte. ltd. from 2005 to 2007 and senior vice president of aM Fraser securities Pte. ltd. from 2007 to 2009.

Mr. sok holds a Master of science in Finance degree from the university of lancaster, united Kingdom, and a Master of Business administration degree from the university of hull, united Kingdom.

Mr. Fabrizio Palermo serves as non-executive director of the Company. Mr. Palermo is deputy general manager and chief financial officer of Fincantieri s.p.a and also serves as director of Fincantieri usa Inc.

Mr. Palermo joined the Fincantieri Group in 2005 as head of business development and corporate finance and was appointed chief financial officer in 2006 and deputy general manager in 2011.

Prior to that, he was a strategic consultant with McKinsey & Co. in Milan from 1998 to 2005, specializing in business combinations, restructuring and reorganizations for major Italian and european industrial and financial groups.

Mr. Palermo started his career in 1995 as a financial analyst in london in the Investment Banking Division of Morgan stanley.

Mr. Palermo graduated in Businesseconomics with honors at la sapienzauniversity of rome, Italy.

roY reite Chief executive officer and executive Director

sung hYon sok Independent Director

Fabrizio Palermo non-executive Director

14 / board oF directors / vard / Annual report 2012

board oF directors / vard / Annual report 2012 / 15

giusePPe bono Chairman of the Board and non-executive Director

keen whYe lee Independent Director

Pier Francesco ragni non-executive Director

14 / board oF directors / vard / Annual report 2012

Mr. Giuseppe Bono serves as chairman of the board and non-executive director of the Company. Mr. Bono has been chief executive officer of Fincantieri s.p.a. since 2002.

From 1993 to 2002 Mr. Bono held senior positions at Finmeccanica, where he was appointed general manager and interim head of alenia Difesa and ansaldo (Finmeccanica Group) in 1997. In 2000 he was appointed Ceo and general manager of the group.

From 1971 to 1993 he worked in eFIM where he held a number of key-roles with increased responsibility until his appointment as general manager in 1991. From 1963 to 1971, he worked in omeca (Fiat – Finmeccanica Group; taken over by eFIM in 1968) as head ofadministration, planning and control.

since 2012 he has been president of Confindustria Gorizia.

Mr. Bono holds a degree in Business and economics, and an honorary degree in naval engineering.

Mr. Keen Whye lee serves as an independent director of the Company. Mr. lee is the managing director of strategic alliance Capital Pte. ltd., a venture capital and investment management advisory company.

Prior to joining strategic alliance Capital Pte. ltd. in 1997, Mr. lee was managing director of rothschild Venture asia Pte. ltd. from 1990 to 1997, and associate director of Kay hian James Capel Pte. ltd. from 1987 to 1990.

Mr. lee is also a director of various companies, including public companies listed on the sGX-st such as aFor limited, oniontech limited and santak holdings limited.

Mr. lee holds a Master in Business administration degree from the harvard Graduate school of Business administration.

Mr. Pier Francesco ragni serves as non-executive director of the Company. Mr. ragni is deputy chief financial officer and head of business development of Fincantieri s.p.a. and also serves as director of several subsidiaries of Fincantieri s.p.a.

Mr. ragni joined the Fincantieri Group in 2005 and was appointed head of business development in 2006 and deputy chief financial officer in 2011.

Prior to joining the Fincantieri Group he was an investment banker with Banca nazionale del lavoro and Banca IMI, focusing on mergers & acquisitions and equity capital market transactions, and a financial analyst in the corporate finance department of PricewaterhouseCoopers, Milan.

Mr. ragni graduated in Business economics at l. Bocconi university of Milan, Italy.

roY reite Chief executive officer and executive Director

Mr. roy reite is the chief executive officer and serves as executive directorof VarD. he has served as president of the Company since 2001.

Prior to that, he was yard director at Vard søviknes from 1999 to 2001, and assumed various positions as project manager, production manager and technical manager from 1990 to 1995. Mr. reite was also a business consultant at Intentia International as from 1995 to 1999.

he is presently a non-executive director of sparebanken Møre, a norway-based regional bank.

Mr. reite holds a Master of science degree from the norwegian university of science and technology.

stig bjørkedal head of Business Development and strategy

Mr. stig Bjørkedal serves as the head of business development and strategy of VarD. he has held this position since 2006. Prior to that, he was the vice president of deck machinery at rolls-royce Marine as in norway, from 2001 to 2006.

Mr. Bjørkedal has extensive project management experience, having served in this position in various maritime companies from 1993 to 2000, including at Vard Piping, skipsteknisk as and ulstein Brattvaag as.

Mr. Bjørkedal holds a Bachelor’s degree in naval architecture from university of Møre og romsdal in Ålesund, norway, and a Master of Management degree from BI executive school in oslo, norway.

jan ivar nielsen Chief Financial officer

Mr. Jan Ivar nielsen is the chief financial officer of VarD. he joined the Company in 2007 as vice president of finance for the VarD’s operations in Brazil.

Previously, Mr. nielsen was chief financial officer and head of investor relations for aker american shipping asa from 2005 to 2007, and its predecessor aker Philadelphia shipyard Inc. from 2002 to 2005. From 1998 to 2002 he was CFo for Kværner shipbuilding in london, and had CFo assignments for Kværner Masa Yards In Finland and Warnow Werft in Germany. Mr. nielsen held various finance positions in the process industry from 1990 to 1997.

Mr. nielsen holds a Master of science in Business degree from Bodø Graduate school of Business and an executive MBa degree from temple university in the united states.

16 / executive management / vard / Annual report 2012

magne håberg head of Marketing and sales

Mr. Magne håberg heads marketing and sales in VarD. Mr. håberg first joined as a project manager at Vard langsten in 2001, and became senior vice president overseeing the sales and marketing department in VarD in 2004. Between 1995 and 2001, Mr. håberg held several positions as senior project engineer at aker Maritime, where he was responsible for different projects within the offshore oil and gas industry.

Prior to that, Mr. håberg acquired a wealth of experience within the offshore oil and gas business, having taken on key engineering roles in smedvig Drilling as from 1990 to 1994, and with Wilh. Wilhelmsen from 1982 to 1989.

Mr. håberg holds a diploma in engineering from the Ålesund Maritime College.

knut ola tverdal head of strategy Implementation

Mr. Knut ola tverdal is the head of strategy implementation at VarD. he also oversees the shipyard operation in Brazil. he joined the Company in 2000 and has extensive experience in the shipbuilding industry having served as yard director at Vard aukra from 2005 to 2010.

Prior to that, Mr. tverdal was vice president of production at aker Philadelphia shipyard from 2003 to 2005, as well as project manager from 2002 to 2003 and production manager from 2000 to 2002 at VarD.

Mr. tverdal holds a Master of science degree from the norwegian university of science and technology in trondheim.

magne o. bakke Chief operating officer

Mr. Magne Bakke is the head of shipyard operations at VarD and oversees the norway, romania and Vietnam operations. Previously, Mr. Bakke was director at the Vard søviknes yard from 2005 to 2009. Between 1984 and 2005, Mr. Bakke gained in-depth and broad experience in different positions in the aker Group including offshore oil and Gas Field Development Project and Drilling.

Mr. Bakke holds a Bachelor of science in Marine technology degree from the aust-agder state College of engineering in norway.

ceo letter / stx osv / Annual report 2012 / 17executive management / vard / Annual report 2012 / 1716 / executive management / vard / Annual report 2012

shareholDInG anD CorPorate struCture

18 / shareholding and corPorate structure / vard / Annual report 2012

44.37%

100% 55.63%Fincantieri oil & Gas S.p.A.

Fincantieri - Cantieri navali

Italiani S.p.A.

other shareholders

Fintecna S.p.A.99.36%

70%

30%

other shareholders

0.64%

Cassa Depositi e prestiti S.p.A.

Italian Bank Foundations

Ministry of the economy and Finance of the republic of Italy 100%

Vard Niterói SA (Brazil)

Vard Electro AS (Norway)

Vard Piping AS (Norway)

Vard Accommodation AS

(Norway)

Vard Brevik Holding AS (Norway)

Seaonics AS(Norway)

Vard Promar SA

(Brazil)

100%

100%

100%

100%

51%

100%

VardVung Tau Ltd.

(Vietnam)

Vard Holdings Limited1)

(Singapore)Vard Group AS

(Norway)

100%

100%

50.50%

Vard Braila SA (Romania)

Vard Tulcea SA (Romania)

5.88%

99.99%

94.12%

100%

100%

100%

Vard Design Liburna Ltd.

(Croatia)

Vard RO Holding SRL (Romania)

Vard Singapore Pte Ltd.

(Singapore)

Vard Design AS (Norway)

51%

shareholding and corPorate structure / vard / Annual report 2012 / 1918 / shareholding and corPorate structure / vard / Annual report 2012

1) Tentative name. As of 18 March 2013, the rebranding and renaming process from STX OSV to VARD is still ongoing.The above names have been reserved and or applied for, but confirmation of formal registration is still outstanding for some entities and jurisdictions. A resolution to rename the Company itself to Vard Holdings Limited will be tabled at the Annual General Meeting on 23 April 2013.

Shareholding structure as of 18 March 2013.

VarD reported revenues of noK 11.1 billion for the 2012 financial year, a decrease of 10% from noK 12.4 billion in 2011, predominantly due to temporarily lower activity at some yards.

our full-year eBItDa margin was down from an exceptionally high base of 19% in FY2011 to a still healthy 13.2% despite some challenges in 2012, in particular in the fourth quarter.

this good margin reflects generally stable operations, particularly in norway, romania and Vietnam.

operating margin (operating profit to total revenues) came in at 11.7% for the full year 2012, two-thirds of what was registered the year before. against a superior FY2011 performance, this margin is considered healthy.

Vietnam saw excellent project execution for most of 2012, but too low activity levels in the fourth quarter. norway experienced temporarily lower utilization levels at some yards during 2012. the niterói shipyard in Brazil was still affecting group performance negatively by the end of 2012.

amounts in nok million 2012 2011

revenue 11,129 12,401

Materials, subcontract costs and others (7,154) (7,597)

Salaries and related costs (1,953) (1,899)

other operating expenses (549) (550)

ebitda 1,473 2,355

Depreciation, impairment and amortization (168) (148)

operating profit 1,305 2,207

Financial income 129 123

Financial costs (111) (127)

Share of results of associates , net of tax - 10

Profit before tax 1,323 2,213

Income tax expense (434) (611)

Profit for the year 889 1,602

Year ended 31 December 2012

stateMent oF InCoMe

suMMarY stateMent oF InCoMe

20 / Financial highlights / vard / Annual report 2012

ebitda and ebitda marginrevenue (nok million)

2011

12,401

2008

11,370

2009

11,895

2010

11,881

2,000

4,000

6,000

8,000

10,000

12,000

14,000

02012

11,129

300

600

900

1,200

1,500

0

-300

2%

4%

6%

8%

10%

0%

-2%

12%1,800

2011

-1.8%-201

2009 2010

EBITDA (NOK million) EBITDA margin (%)

2,400

2,700

2,100 14%

16%

18%

648

2008

5.4%

11.2%1,330

2,355

2012

13.2%1,473

19%

suMMarY stateMent oF InCoMe

Financial highlights / vard / Annual report 2012 / 2120 / Financial highlights / vard / Annual report 2012

total assets of noK 12.8 billion at year end 2012 were at the same level as at year end 2011 at noK 12.8 billion.

Mainly as a result of dividend payments of 23 singapore cents in total during the second and third quarter of 2012, total equity decreased by 9.2% year-on-year to noK 3.2 billion. the special interim dividend of 13 singapore cents paid out in FY2012 represented a dividend payout ratio of about 77.5% of distributable profits for the full year. Construction loans are taken on in lieu of progress payment from our customers, and represent the majority financing of the vessel under

construction until vessel delivery.We ended FY2011 with a low level of construction loans due to the delivery of ten vessels in the fourth quarter alone. With just three vessel deliveries in the fourth quarter of 2012, we saw construction loans increase by 40.9% year-on-year to noK 3.4 billion in FY2012.

trade and other payables decreased by 17.4% to noK 2.8 billion. total interest-bearing liabilities, excluding construction loans, amounted to noK 579 million at 31 December 2012, around twice the level at year end 2011. this increase is related to the ongoing construction of the new shipyard in Brazil.

our cash position remained strong, with cash and cash equivalents of noK 2.4 billion as at 31 December 2012, which is after a total dividend pay-out of 23 singapore cents per share during the year, as well as increased investments in plant, property and equipment in romania, for the construction of the new yard in Brazil and other investments. of the total cash and bank deposits as of 31 December 2012, noK 19 million relates to restricted bank accounts for employees’ tax deduction compared to noK 29 million a year before.

BalanCe sheet

suMMarY BalanCe sheet

Cash flows from operating activities decreased by about 18% year-on-year, to noK 992 million for the full year 2012.

Cash flows used for investing activities amounted to noK 630 million for the year, up from noK 220 million a year before. Major contributors to this increase were higher investments

in property, plant and equipment for productivity enhancements in romania and the construction of the new yard in Brazil. additional equity participation in other investments amounted to noK 129 million, and the issuance of non-current interest bearing receivables amounted to noK 81 million.

Cash flows from financing activities for the year amounted to noK 956 million. this was mainly related to dividend payments of noK 1.3 billion and net proceeds from loans and borrowings of noK 321 million.

Cash FloWs

As at 31 December 2012

amounts in nok million 2012 2011assets property, plant and equipment 1,384 1,011Intangible assets 374 415Interest-bearing receivables 82 1other non-current assets 570 361total non-current assets 2,410 1,788Inventories 380 356Construction work in progress 5,587 5,768trade and other receivables 1,920 1,830Interest-bearing receivables 80 1Cash and cash equivalents 2,437 3,064total current assets 10,404 11,019total assets 12,814 12,807

equity and liabilities total equity 3,227 3,553loans and borrowings 545 231other non-current liabilities 242 209total non-current liabilities 787 440loans and borrowings 3,385 2,407Construction work in progress 1,518 1,480trade and other payables 2,801 3,391other current liabilities 1,096 1,536total current liabilities 8,800 8,814total liabilities 9,587 9,254total equity and liabilities 12,814 12,807

22 / Financial highlights / vard / Annual report 2012

suMMarY BalanCe sheet

Cash FloWs

amounts in nok million 2012 2011 Cash flows from operating activites 992 1,210

Cash flows used in investing activities (630) (220)

Cash flows from financing activities (956) (506)

net change in cash and cash equivalents (594) 484 Cash and cash equivalents at the beginning of financial year 3,035 2,551

effects of currency translation differences (23) -

Cash and cash equivalents excluding restricted cash

at the end of financial year 2,418 3,035

restricted cash at the end of financial year 19 29

cash and cash equivalents at the end of financial year 2,437 3,064

Year ended 31 December 2012

2,000

1,500

500

1,000

0

2,500

3,000

2011

3,064

2008

809

2009

1,393

2010

2,851

Restricted cash Non-restricted cash

2012

2,437

cash and cash equivalents (nok million)

2,000

1,500

500

1,000

0

2,500

2012

1,858

3,000

2010

2,541

2009

987

2011

2,805

2008

74

net cash1) (nok million)

1) Cash and cash equivalents less sum of short-term and long-term interest bearing liabilities, excluding construction financing.

suMMarY stateMent oF Cash FloWs

Financial highlights / vard / Annual report 2012 / 2322 / Financial highlights / vard / Annual report 2012

AHTS24 / c ore Products and services / vard / Annual report 2012

AHTS for Iceman

Skandi Iguaçu

anChor hanDlInG tuG suPPlY Vessels

We design and build technologically advanced anchor handling tug supply vessels (ahts) that are capable of operations in the harshest environments. ahts vessels mainly perform anchor handling duties and towage of offshore drilling units and floating production units. as ahts vessels generally have free deck area, and some of them have tanks under deck, they can also supply cargo and bulk. Due to their large and heavy duty deck area, the ahts vessels can be used to transport large chains, anchors and other equipment. some ahts vessels are equipped with additional equipment such as launch and recovery systems for remote operated Vehicles (roV), and cranes for light construction work. additionally, if equipped for, ahts vessels can do firefighting, rescue operations and oil recovery.

designed For arctic challenges

In 2012, we secured a contract for the design and construction of a unique ahts for Iceman. this ahts is of ah 12 design, and is one of few that is highly equipped for multi role operations in harsh

environments and arctic regions. the vessel will be built according to ice class, and will have a wide beam measuring 24 meters and an overall length of 94 meters. Delivery is scheduled in mid-2013.

<<< name of vessel: normand Prosper operation: Windmill installation Place: Irish sea

c ore Products and services / vard / Annual report 2012 / 2524 / c ore Products and services / vard / Annual report 2012

PSV

26 / c ore Products and services / vard / Annual report 2012

Far Scotsman

Normand Arctic

PlatForM suPPlY Vessels

We design and build a complete range of Platform supply Vessels (PsV). PsVs are commonly referred to as the “trucks of the sea”, as they are designed to transport cargo to and from offshore oil rigs and platforms. PsVs are able to perform a variety of tasks to support offshore operations; our PsVs are designed with focus on cargo-carrying capacity and excellent maneuvering capabilities combined with low fuel consumption. the design allows for flexible configuration with respect to liquid and bulk cargo. equally important to loading capacity and maneuverability are crew comfort, low noise levels and safe working environments. our designers have optimized the PsV Clean Design-hulls to a maximum cargo capacity-to-deadweight ratio.

eco-FriendlY vessels

In May 2012, we successfully delivered

the olympic energy from Vard aukra in

norway. this PsV was customized to be

environmentally friendly, with the hull

shape designed for high speed and low fuel

consumption. the vessel is of PsV 06 lnG

design, and is being used for worldwide

operations and transport of general cargo

for the offshore industry.

<<< name of vessel: olympic energy operation: on sea trial Place: outside northwest coast of norway


challenging the limits

In June 2012, we secured contracts to design

and build two PsVs for Farstad shipping. Both

vessels are of VarD’s new and innovative

PsV 07 design, which complies with DnV’s

strictest “Clean Design” class notation

requirements to reduce environmental

impact. Vessels certified under this class

are also designed for effective and safe

operations in harsh conditions. the two

PsVs will be delivered from Vard langsten

and Vard Vung tau in 2014.


OSCV

OSCV for Ocean Installer /Solstad Offshore

OSCV for DOF

oFFshore suBsea ConstruCtIon Vessels

We design and build highly advanced offshore subsea Construction Vessels (osCV) for the oil and gas industry. these highly complex vessels perform subsea operations and maintenance work, and include pipelaying vessels, subsea construction vessels, diving support vessels, roV support vessels, well intervention vessels, as well as ice-classed offshore vessels designed to operate in arctic areas.

seven new orders secured

During 2012, we secured new contracts for seven osCVs, compared to only one in 2010 and none in 2011. the subsea construction vessel market is not only growing by numbers, but also by complexity of vessels. the range of osCVs currently under construction at VarD yards spans from a subsea support vessel of less than 100 meters length, to highly complex construction vessels of more than 150 meters length. siem offshore alone ordered four vessels during the year, with one each being contracted by Island offshore, DoF and ocean Installer / solstad offshore.

<<< name of vessel: lewek Connector (formerly aMC Connector) operation: ready for operation Place: Baltic sea


leading the waY

the largest vessel contracted during 2012 was an osCV 06l for ocean Installer and solstad offshore. at almost 160 meters length and 27 meters width, it is one of the most advanced vessels ever designed and built by VarD, featuring a Vertical lay system (Vls), remotely operated Vehicles (roV) in hangars launched through moonpools, and two ahC offshore cranes (400t and 100t) which both can operate down to depths of 3,000 meters.

In February 2013, we were awarded a contract to design and build an osCV for Farstad shipping. this vessel, of osCV 07 design, is intended to conduct subsea and Inspection, Maintenance and repair (IMr) operations. the vessel will be equipped with two offshore cranes, and is arranged for three roVs.

Other


leveraging our technologY

We are in the process of developing a

truly innovative vessel design called the

large extent oil recovery (leor). the

leor is specially designed for combating

oil spills several times more effectively

than existing ships, using revolutionary

oil-water separation technology

coupled with ergonomic design that is

characteristic of VarD’s ships.

Stern trawler for Aker Seafoods

Large Extent Oil Recovery Vessel (LEOR)

We also design and build other special vessels like research and coast guard vessels, special purpose cable layers, seismic vessels, fishing vessels like stern trawlers, forrage carriers, icebreakers, as well as conventional and lnG-powered car and passenger ferries. We deliver different types of vessels and ship designs of both standardized and highly advanced vessels with significant customer-specific adaptations.

<<< name of vessel: Mangystau-5 operation: During ice-breaking test Place: Caspian sea


our clients’ success is our success

the icebreaking tugboats Mangystau-4 and

Mangystau-5 were rebuilt to not only operate

in the danger zones of the Caspian sea,

where oilfields contain harmful sulfur gases,

but also to do rescue and repair jobs after

a potential outbreak of sulfur gases. the

rebuilding required expensive equipment,

but this is being compensated by increased

safety and efficiency in operations. Vard

Braila’s efforts to deliver on time was crucial

to the customer.

other sPeCIalIzeD Vessels

shiP design

Vard Design develops designs for both standard vessel types and one-offs with highly advanced adaptations according to customer requirements. Close cooperation with the yards, ship owners, operators, and suppliers is a key factor in the process of designing specialized vessels. the designs are developed with an emphasis on safety, cost optimization, functionality, fuel economy and environmental performance.

research and development is central to our business strategy. this has improved the vessels’ characteristics and has brought new and improved products to the market. We are constantly in search of new and improved solutions in partnership with our clients.

electrical engineering, Power and automation

Vard electro develops, produces and supports advanced marine electronics and turnkey electrical systems for the global maritime and offshore industries. the company’s product portfolio includes a range of seamlessly integrated power, control and bridge systems, bespoke propulsion systems, a full range of switchboards, and navCom packages.

Vard electro also offers a comprehensive set of services during the entire lifetime of a vessel, from engineering through installation, integration testing and commissioning, to remote diagnostics, conversions and hands- on field services. service personnel are available around the clock for assignments at shipyards and on board en-route vessels worldwide.

PiPe sYstems and services

Vard Piping produces pipes and installs piping systems for shipbuilding projects. Modern offshore vessels can have up to ten kilometers of pipes installed on board for handling fuels, chemicals, gases, fresh and waste water, and liquid cargo.

the company specializes in turnkey solutions and innovative products in this important part of the shipbuilding process. It also delivers a wide range of special services, such as camera inspection, heating treatment and high pressure testing.

sPeCIalIzeD serVICes


design and equiPment Packages

Vard trading offers trading packages to third-party shipyards, bundling basic and detailed design with major equipment like main engines, propulsion systems, switchboards, deck machinery and other key components. In order to uphold a high standard of VarD-designed vessels, our own designs are only being offered as a trading package, and third-party yards are carefully selected to ensure high-quality implementation. We coordinate all activities and deliveries of components and services both in-house and from sub-suppliers.

oFFshore handling sYstems

established in 2011 and jointly owned between VarD (51%) and Industrial Control Design as (49%), seaonics is a high-end provider of integrated equipment and solutions for subsea construction and deck handling operations for the marine and offshore industry. seaonics focuses on development of systems in the segments of reservoir exploration, subsea construction, offshore supply, and ocean trawling. Its products, among others, include hydraulic and/or electric driven winches, active heave Compensated (ahC) cranes, Module handling systems (Mhs) with tower, and launch and recovery systems (lars).

interior solutions and technical sYstems

Vard accommodation is a turnkey contractor for delivery and installation of complete accommodation and hVaC packages for all types of vessels. the company also installs all forms of insulation on the vessels, from fire insulation, comfort and sound insulation to pipe and exhaust insulation. Vard accommodation was established in 2010 and has delivered several successful projects within VarD. It focuses on innovation and delivery of high quality services, in development according to the customer’s needs. high-quality accommodation is becoming increasingly important as standards for health, safety and well-being of the crew evolve constantly.


our GloBal oPeratIons

With ten strategically located shipyards across four countries and three continents, and various entities supporting the shipbuilding process with products and services along the value chain, VarD has developed integrated project management capabilities which enable us to operate as a truly global team and allow for cross-border sharing of knowledge and experience.

our yards have had much success functioning seamlessly as an integrated production system that taps into the strengths of each region, to deliver the best products to our customers with the greatest flexibility. every newbuilding project is run by a dedicated project management team responsible for the entire project across countries and disciplines.

During 2012, we demonstrated sustained strong operational performance in most parts of the organization, benefitting from improvements in productivity and quality as well as key health, safety and environment (hse) indicators.

norwaY

Vard Group (headquarters) Vard aukra Vard Brattvaag Vard Brevik Vard langsten Vard søviknes Vard Design Vard electro Vard Piping Vard accommodation Vard trading Vard engineering Vard offshore Brevik seaonics

our headquarters, design center and five outfitting yards are located in norway. In addition, our main specialized companies supplying products and services along the value chain are domiciled there, such as Vard electro for electrical engineering and power and automation systems, Vard Piping as a specialist supplier of pipe systems and services, and Vard accommodation for the interior outfitting of vessels, including heating, ventilation and air conditioning (hVaC) systems.

the Brevik yard is located approximately 160 kilometers southwest of norway’s capital oslo, while the remaining four yards are located along the northwestern coast of norway, all within an approximately 50 kilometers radius and close to VarD headquarters in Ålesund. the northwestern coast of norway is a well-known maritime

>> Helping customers innovate is always exciting. Seeing satisfied customers return is always rewarding.

svein arne ræstadProject ManagerVard langsten

34 / oPerational review / vard / Annual report 2012

oPerational review / vard / Annual report 2012 / 35

norway1,598 employees

romania5,630 employees

brazil1,618 employees

india9 employees

vietnam650 employeessingapore

7 employees

croatia17 employees

9529employees

Number of employees as of 31 December 2012.

our GloBal oPeratIons

cluster, serving as the base of several leading shipowners as well as world-class companies in the offshore marine design, equipment manufacturing, shipbuilding, and oil services industries. all of our yards in norway have been in operation for over 60 years and have long traditions building various types of specialized vessels for customers worldwide.

Being located in the middle of the maritime cluster in the northwest is the main reason why many innovations originate from norway, and why we choose to carry out many of the more advanced stages of the shipbuilding process at our norwegian yards. the feedback from clients and technology partners, as well as from the production process itself, is directly fed back into the design and development of new and improved features and functions for the ships we build.

During 2012, 18 vessels were successfully delivered from our norwegian yards, including very challenging projects like an offshore subsea construction vessel that was delivered less than a year and a half from the date of contract signing. at the end of the year, we experienced periods of lower utilization at some of our norwegian yards, largely stemming from an uneven order intake in the preceding year, and resulting in fluctuations in work load.

over the last year, a trend towards fewer and larger vessels being contracted has manifested itself, and this will be a key theme for the norwegian yards and specialized subsidiaries going forward. Investments in r&D and new technologies and solutions are opening up new market opportunities, but place also high demands on the

organization to successfully implement and deliver. Projects become more and more complex, and as a shipbuilder we are increasingly taking over turnkey responsibility for projects, including highly specialized equipment. In this environment, more and more focus is also placed on design and engineering capabilities, an area where we are seeing growth in our norwegian operations.


>> new technologieswill make us moreeffective and productive,but we still have to focuson training our employeesat all levels – humanresources are at the endof the day our mostimportant resource.

romania

Vard tulcea Vard Braila Vard electro tulcea Vard electro Braila Vard Piping tulcea Vard accommodation tulcea Vard ship repair Braila

the tulcea and Braila yards in romania, which have been part of VarD since 2000 and 2003 respectively, specialize in hull manufacturing and early stage outfitting of vessels. upon completion of a partially outfitted hull, it is towed from romania to norway – a process that takes about three to four weeks. Despite their current role as center of hull manufacturing for VarD, both romanian shipyards have long and proud shipbuilding traditions going back many decades. Building on this experience, certain vessel types are being delivered fully outfitted from romania.

the flexible allocation of activities between the yards in romania and norway allows VarD to realize the full benefit of cost-efficiency for man-hour intensive activities in romania, while at the same time operating an integrated project organization. the romanian shipyards are involved in the planning and engineering work prior to a contract being awarded, and the project is structured around the work allocation, focusing on the strengths of each location. Vard electro is present in romania with its own subsidiaries for the manufacture of electrical components and for electrical installation services, and Vard Piping and Vard accommodation also maintain own units operating in romania. an increasing share of engineering work is also performed in romania. as part of a significant investment program initiated in 2012 tulcea will gradually implement several productivity improvement measures with the introduction of a brand new

painting and sandblasting facility comprising five halls with capacity to handle blocks up to 1,200 tons. a fully automated production line is up and running, with welding robots and 28 brand new semiautomatic welding tractors installed. this equipment upgrade provides us with the potential of a significant increase in efficiency and quality compared to manual welding, in addition to improvements in hse.

these investments come at a time when our romanian operations have enjoyed overall stable operations, but face periods of lower activity and periods of peak load in rapid succession, reflecting a volatile market and order intake. Due to a relatively high activity level and limited availability of additional capacity in the entire region, swings in demand need to be absorbed internally, requiring flexible and efficient operations.

ivan FirsaVice President human resourcesVard tulcea


9529employees

Further investments are being made to continuously improve the quality and efficiency of the yard in tulcea, and position it for higher output. For example, plans for an automated pipe spool factory have already been approved. additionally, plans for a fully automated cutting center and two steel unit assembly lines are in the works, and these are scheduled to be rolled out during 2013.

brazil

Vard niterói Vard Promar Vard electro Brazil

We have operated in Brazil since 2001, and were one of the first foreign offshore shipbuilders to enter the market. our long track record has allowed us to build a strong position in Brazil. In addition to operating one wholly owned shipyard in niterói in the

vicinity of rio de Janeiro, together with local partners we are building a second shipyard further north in the country, in suape in the state of Pernambuco.

the existing shipyard in niterói is capable of manufacturing the most advanced vessels, from the construction of steel hulls to outfitting and final delivery to customers. It is supported by a local subsidiary of Vard electro, which manufactures electrical components and carries out electrical installation services. During 2012, the yard delivered two highly complex vessels – one ultra-large ahts and one large PsV. at the end of the year, five vessels remained in the order book, for delivery between 2013 and 2014.Due to a challenging business environment and very high activity level, the niterói yard has been under pressure especially during the second half of 2012. Constraints in the sub-supplier market and high staff turnover have impacted productivity

at the yard and resulted in delays. We are closely monitoring the situation at the yard, and have taken measures to secure delivery of the projects in the orderbook. In order to alleviate operational pressure and mitigate the risk of further delays, we have, for instance, sub-contracted parts of the steel work and even complete hulls to other shipyards in the region, and we focus on securing more capacity from external suppliers. We are also strengthening our own organization in Brazil by tapping into our international competence base.

the construction of our second Brazilian yard, Vard Promar, is progressing as planned and was about 65% complete as at the end of 2012. the project has now moved from shipyard construction to building the permanent shipbuilding organization required to take up manufacturing operations in mid-2013.

ingebjørg klausenGeneral Director Vard accommodation

oPerational review / vard / Annual report 2012 / 3736 / oPerational review / vard / Annual report 2012

>> Always working in close cooperation with ship designers and our customers, we combine our expertise to create holistic solutions for insulation, accommodation, and HVAC systems.

runar vågnesVice PresidentVard electro

>> our international growth and client focus will also make us a better supplier for the Company.

recruitment and training enjoy a high priority in preparation of production start, and initiatives in this field are carried out in close cooperation with local, regional and federal authorities. the surrounding municipalities are supporting some of the basic training programs. the yard is also cooperating with the local technical schools and universities for development of relevant professional skills, and a trainee program for graduates is being established in cooperation with Vard niterói in rio de Janeiro.

VarD has a strong tradition of knowledge exchange between our yards. this ensures technical expertise in the initial launch phase and support for the new yard in delivering vessels of a level of quality and at an efficiency that is consistent with our other yards.

vietnam

Vard Vung tau

our Vietnam yard, located in Vung tau, is a fully integrated shipyard, capable of building complete vessels from hull construction to final delivery to customers. Between the start of manufacturing operations in 2008 and the end of last year, the yard has delivered seven vessels, including two during 2012. reflecting the excellent performance of the yard, both vessels were delivered ahead of the contractually agreed schedule.

Vard Vung tau is well-equipped to handle complex project management that lives up to the same standards as our more established yards within VarD. the adaptation of lean planning within our organization has resulted in a motivated workforce that is keen on learning. While the yard

enjoyed strong support from VarD’s european operations initially, more and more responsibility has now been placed in the hands of locally-trained staff. During 2012, we focused on training and transferring knowledge within the technical department and amongst project coordinators. today, the yard possesses a strong core team with local competence in most key disciplines.

We continue to invest in and develop the Vietnam operations. Currently, the quay and floating dock are being lengthened in order to make the yard ready for larger projects. this is considered a crucial step towards securing a more steady order flow for the yard, which experienced a period of too low activity in the second half of 2012. With its ongoing good track record of timely vessel deliveries and supported by positive feedback from customers, Vard Vung tau is proving

>> the feedback from our customers has been very positive, but we always seek improvements.

roger vassdalGeneral DirectorVard Vung tau


its capability and is a case study for the successful implementation of VarD’s high shipbuilding standards in a new environment.

singaPore

Vard holdings Vard singapore

our singapore companies include the holding company, listed on the singapore exchange, as well as a sales office to support the asia-Pacific market. through our presence in singapore, we aim to establish relations with offshore vessel owners in the region in order to take advantage of the growth potential in asia. Vard singapore also functions as a holding company for our shipyard in Vietnam, Vard Vung tau.

india

Vard electrical Installation & engineering

We maintain an electrical installation and engineering subsidiary in Cochin, to support our clients in India as well as other customers in the region. this company provides an important foothold for us in asia, providing supervision and services related to electrical engineering, power and automation.

croatia

Vard Design liburna early in 2012, in a move to strengthen our design and engineering capacity, we acquired a 51% interest in an engineering company located in rijeka, specializing in ship design with a main focus on offshore vessels. at the end of the year, the company, renamed Vard Design liburna, employed 17 people. the steady growth throughout 2012 is due to a constant high demand for design and engineering services within VarD and from external clients.

>> the purpose of our investment program is not only to dramatically improve productivity and quality, but also to find new ways to satisfy our customers’ ever-increasing requirements.

jan emblemsvågsenior Vice President Innovation and Process ManagementVarD

9529employees

oPerational review / vard / Annual report 2012 / 3938 / oPerational review / vard / Annual report 2012

40 / signiFicant events / vard / Annual report 2012

2012januarY - FebruarY the significant investment program at Vard tulcea started in January 2012 when the plan for new blasting and painting halls were finalized. the ground preparation started in February 2012, and operation in the new and modern facilities commenced in 2013. expected benefits are more efficient and cost saving operations, including a more environmentally friendly process with lower emissions.

aPrilWe witnessed the naming ceremony of the new lnG-powered vessel olympic energy, which was delivered from our yard Vard aukra in norway. the ceremony took place in Ålesund in the presence of olympic shipping, the training office of Maritime studies and VarD. More than 1,500 visitors took the opportunity to come onboard for a sightseeing on the vessel.

maYIsland Crusader, the first lnG-powered PsV with lean burn engines and ut 776 CDG design, was delivered to Island offshore from our yard in Brevik. another similar vessel was delivered in september.

julY Vard electro secured a new contract with universal shipbuilding Corporation for the delivery of six integrated diesel-electric propulsion packages for a series of ships under construction for swire Pacific offshore.

sePtemberthe Far solitaire, a ship built by Vard langsten in norway for owners Farstad shipping, was elected ship of the Year 2012 by major norwegian shipping magazine skipsrevyen. the technologically advanced vessel was the first PsV of its kind ever built, and was delivered in october.

the Vung tau yard in Vietnam delivered its first PsV, Far skimmer (PsV 08) to Farstad shipping. Including this vessel,

the yard in Vietnam had by end of 2012 delivered seven vessels, of which five were delivered ahead of time and two were delivered on time.

novemberVard langsten received the Inclusive Workplace award 2012 (IW award) for the county of Møre og romsdal in recognition of its commitments towards reducing sick leave and cultivating an inclusive workplace for its employees there. sick leave recorded in 2011 was more than halved to 3.1% from 6.8% in 2008, and Vard langsten was commended for working closely with employees during their sick leave and prioritize preventive initiatives. the IW concept originated from collaboration between the norwegian government and major labor market partners.

Vard niterói was awarded the “2nd shipping award of Quality and sustainability”. this was in recognition of its recently implemented Career Plan for Production employees.

sIGnIFICant eVents

Olympic Energy in the harbour of Ålesund. VARD employees celebrating the new name.

signiFicant events / vard / Annual report 2012 / 4140 / signiFicant events / vard / Annual report 2012

december By the end of December 2012, the new shipyard in Brazil, Vard Promar, was approximately 65% complete, with all major buildings erected and civil construction works finished. a kick-off ceremony was hosted at the new yard, attended by officials such as Pernambuco state Governor eduardo Campos and transpetro President sergio Machado.

also undergoing infrastructure enhancements is Vard søviknes in norway, which is expanding the main building at the yard. this is expected to free up space for more offices, meeting rooms and the technical department.

We successfully set up a new engineering department in Ålesund, norway. the main purpose of this engineering department is to provide detailed engineering support to our yards and to ensure that consistent methods, procedures and technical drawings and deliverables are provided to the projects.

on 21 December Fincantieri oil & Gas announced that it had entered into an agreement with stX europe to acquire its majority stake of 50.75% in the Company.

during 2012Vard accommodation delivered 19 complete heating, ventilation and air conditioning (hVaC) systems.

Vard Vung tau in Vietnam received sa8000, ohsas18001 and Iso14001 certifications. these were attained in record time within six months, and all three certificates represent the yard’s high commitment towards keeping its employees motivated.

Vard Braila successfully completed conversions of two of the icebreaking tugs delivered in 2011. the conversion, performed in a short time period and under technically challenging conditions, ensured that the vessels fulfill requirements for operating at a “normally unmanned Island” as a support and escape vessel, and provide certified automated h2s response in relation to 0-500 PPM for up to 322 persons for a minimum of four hours.

2013januarYFincantieri’s acquisition of the majority stake in the Company was completed on 23 January.

march We announced our new brand name, VarD, on 5 March following the change in majority ownership.

a new Chairman of the Board of Directors, Mr. Giuseppe Bono, was appointed with effect from 15 March. Mr. Fabrizio Palermo and Mr. Pier Francesco ragni were appointed Directors.

the mandatory cash offer by Fincantieri was officially concluded on 13 March, resulting in Fincantieri controlling 55.63% of the shares of the Company.

VARD employees celebrating the new name. Far Solitaire - Ship of the year 2012. Naming ceremony of Skandi Hugen, delivered from Vard Aukra.

island contender

normand arctic

viking Fighter

ocean shield

stril Polar

skandi iguaçu

rem supporter

Far skimmer

42 / deliveries / vard / Annual report 2012

Far solitaire

PlatForm suPPlY vessels (Psv)

normand arctic Yard no. 755 solstad offshore PsV 12 lnG Vard langstenrem supporter Yard no. 754 rem offshore PsV 06 Vard langstenstril Polar Yard no. 748 simon Møkster shipping PsV 09l Vard søviknesisland captain Yard no. 721 Island offshore ut 776 CD Vard Brevikskandi kvitsøy Yard no. 759 DoF PsV 09 Vard aukraolympic energy Yard no. 764 olympic shipping PsV 06 lnG Vard aukraisland crusader Yard no. 765 Island offshore ut 776 CDG (lnG) Vard Brevik troms sirius Yard no. 773 troms offshore PsV 09 Vard søviknesFar scotsman Yard no. 749 Farstad shipping PsV 08 Vard langstenviking Fighter Yard no. 783 norsea Group PsV 08 Vard Brattvaagskandi aukra Yard no. 775 DoF PsV 09 Vard aukrasea brasil Yard no. Pro 28 Deep sea supply PsV 09 Vard niteróiFar skimmer Yard no. 750 Farstad shipping PsV 08 Vard Vung tauisland contender Yard no. 766 Island offshore ut 776 CDG (lnG) Vard BrevikFar solitaire Yard no. 767 Farstad shipping ut 754 WP Vard langstenskandi nova Yard no. 778 DoF MrV 05 Vard aukraskandi marøy Yard no. 779 DoF MrV 05 Vard Brattvaag

oFFshore subsea construction vessels (oscv)

ocean shield Yard no. 771 sold from DoF subsea to osCV 11 Vard søviknes the Commonwealth of australia

anchor handling tug suPPlY vessels (ahts)

skandi atlantic Yard no. 6 aker DoF Deepwater ah 08 Vard Vung tauskandi iguaçu Yard no. Pro 27 DoF ah 12 Vard niterói

other sPecialized vessels

tbn Yard no. 746 undisclosed other Vard Brattvaag tbn Yard no. 747 undisclosed other Vard Brattvaag

Vessels DelIVereD In 2012

deliveries / vard / Annual report 2012 / 4342 / deliveries / vard / Annual report 2012

5,000

10,000

15,000

02009

4,458

8vessels

2012

9,501

16vessels

2010

12,555

27vessels

11,117

2011

28vessels

2008

5,692

4vessels

order intake (nok million)

at the end of 2012, our order book comprised 48 vessels for delivery between 2013 and 2016. More than half of these – 27 – will be of VarD’s own design. the order book amounted to about noK 15.1 billion, compared with noK 16.7 billion at the end of 2011.

Following a record new order intake in the first half of 2012, order conversion slowed down towards the end of the year. the order intake for the year was for 16 vessels and a total of noK 9.5 billion. the order book and order intake values include the contract value of variation orders as well as the sale of design and equipment packages to third parties.

During 2012, we delivered 22 vessels globally, of which the large majority – 18 – were delivered from norway. two vessels each were delivered from Brazil and Vietnam. In terms of vessel types, deliveries were dominated by PsVs, which accounted for 17 of the 22 vessels, reflecting the previous year’s strong order intake in that segment. two ahts, one osCV and two “other” vessels were also delivered during the year.

the new order intake in 2012 was diversified, with three ahts vessels, five PsVs, seven osCVs and one other vessel coming new into the portfolio.

this development is also reflected in the year-end order book, which was less skewed towards PsVs than one year earlier. In addition to contracts for three large ahts secured during the first half of the year, seven osCVs contracted as a result of the robust subsea support and construction vessel market signaled a significant shift in the order book mix. While the total number of vessels contracted fell short of expectations, the average value per vessel in the order book increased during the year as a result of larger and more complex projects secured.

5,000

10,000

15,000

20,000

25,000

0

15,096

20122009

16,411 16,675

20112010

17,031

2008

22,389

order book (nok million)

orDer BooK DeVeloPMent

44 / order book / vard / Annual report 2012

order book develoPment

order book deliveries order intake order book

by country 31 dec. 2011 2012 2012 31 dec. 2012

norway/romania 35 18 15 32

Brazil 15 2 - 13

Vietnam 4 2 1 3

total 54 22 16 48

order book deliveries order intake order book

by vessel type 31 dec. 2011 2012 2012 31 dec. 2012

ahts 7 2 3 8

PsV (incl. MrV) 30 17 5 18

osCV 1 1 7 7

other 16 2 1 15

total 54 22 16 48

order book deliverY schedule as oF 31 december 2012 (number oF vessels)

0 10 20

2014-16

2014

2013

2012

30

8 LPG carriers to be delivered from new yard in Brazil

8

14

26

22 Delivered

order book / vard / Annual report 2012 / 4544 / order book / vard / Annual report 2012

risk manifests itself in many forms and managing them is a challenging and essential part of any business. at VarD, we continue to adopt a proactive approach to maintaining the Company’s risk profile through constant monitoring, assessment and management of those risks associated with our business.

MARkET RiSk

We are exposed to market risk originating from the global economic climate, oil prices, and investment in oil and gas exploration and production.

these and other market risk factors influence our customers’ incentives and ability to order new offshore and specialized vessels. For several reasons, including the eurozone debt crisis, tightening of credit, and the generally uncertain economic climate, the global shipping and shipbuilding industries faced challenges in 2012. In spite of this, we experienced an acceptable order intake during the year, mainly credited to our strong fundamentals, innovative solutions,

strong client base and presence in new markets.

as part of our risk management strategy, we aim to stabilize the order book at a length that gives us sufficient visibility and take into account fluctuations in the business cycle.

OPERATiONAL RiSk

the majority of our shipbuilding projects are fixed price contracts, typically entered into up to three years prior to the scheduled delivery of a vessel. under these contracts, we are responsible for delivering according to specifications in the contract. While we make every effort to take into account estimated increases in costs of labor, materials, equipment and machinery in our bids on fixed price contracts, it is difficult to accurately gauge these, especially for contracts with prolonged delivery times. to mitigate such risks, we normally secure approximately 60% of procurement at the time of contract signing. this usually accounts for core components such as main engines, winch systems and propulsion

systems, which are procured on a fixed price basis at the time of entering into the contract.

From a project execution standpoint, we always strive to maintain flexibility in our cost structure by engaging our preferred subcontractors to cover periods of high activity in the production cycle of a vessel. Project risk management is an integrated and critical part of our project management and execution processes, where we have increased our focus and efforts over the last few years.

FiNANCE AND iNVESTMENT RiSk

We require significant working capital during the vessel construction phase. Going by standard european shipbuilding payment structures, customers generally only furnish about 20% of the full contract price during construction, and the remainder upon vessel delivery. Because of this, we take on a significant amount of construction loans with our main banks in order to offer our customers suitable financing solutions.

FoCus on rIsK ManaGeMent

46 / risk management / vard / Annual report 2012

each loan is approved on a project-by-project basis, drawn according to costs incurred, and matures upon delivery to the customer.

We evaluate all contracts and clients carefully before contract signing, and put in place mechanisms that minimize the risk of not receiving the contractual payments during construction and at delivery, and we monitor our exposure on an ongoing basis.

From time to time, we are involved in investments in special purpose entities and associates where we participate with minority stakes in our shipbuilding projects, and can also for specific projects offer sellers credit for a smaller portion of the takeout financing. We will typically have an exit option or an intention to exit such arrangements within one to three years from the time of delivery.

as a significant part of our operations take place in countries other than norway, such as romania, singapore, Vietnam and Brazil, our financial performance can be affected, especially by movements in the

eur/noK and usD/noK currency rates, as well as the local currency in each operating entity versus foreign currencies. Where contract prices and costs are in the same foreign currency, there is a natural economic hedge and the currency exposure of such contracts is relatively low. We utilize forward foreign currency contracts to hedge currency risk for contracts in foreign currencies where exposure is significant. these forward contracts are used purely as a hedging tool and never for trading purposes.

HuMAN RESOuRCE RiSk

our business depends greatly upon highly-skilled personnel with industry know-how. our human resource (hr) department closely monitors the business cycle in order to identify and handle any hr risk elements.

a strong employer brand in the geographical areas where we operate helps our ability to retain a skilled workforce and recruit personnel where needed. the industry in which we operate has experienced high activity

and impressive growth over the past years, which has put pressure on access to key competencies.

to ease the pressure and continually attract talent, we strive to strengthen our position as the employer-of-choice in the regions we operate in. the Company is also implementing a company-wide succession planning process with the aim to identify replacement candidates for all key positions as well as identify candidates with potential to grow into key positions.

We have a highly unionized workforce and the unions work proactively with management via formal and informal channels. through early involvement and open access to relevant information, we continually develop and maintain good relationships with the unions.

risk management / vard / Annual report 2012 / 4746 / risk management / vard / Annual report 2012

VarD has always kept a long-term perspective on preserving the integrity of our business and the places in which we operate. We believe it is not possible to separate a business from the spaces it inhabits, and in order to co-exist in a mutually beneficial way, development and adoption of sustainable business practices that benefits society and company alike, are crucial.

With a focus on the safety and well-being of our workforce, our goal is to run a sustainable operation with the ability to benefit the resident communities, and leave as light a footprint on the environment as possible. our commitment is articulated not only through consistent health, safety and environment (hse) assessments and reporting, but also in our purposeful support for talent and social causes, as well as providing opportunities for employee development.

OuR APPROACH

VarD is arguably as dependent on society and local communities as they are on us. sustainability for us is not just about maintaining our business as an entity in itself, but also striking the right balance between our needs and those of our stakeholders, so as to yield mutual benefits in the long-run.

our ambition is to operate in a manner that exceeds the financial, social, ethical, environmental and legal expectations society has towards

us. and through our experience, we believe there is much to be gained at both sides by honouring a shared responsibility and cultivating a meaningful two-way relationship.

as part of our sustainability framework, we have established a robust set of guidelines and principles to guide all our activities: We are in the process of

implementing the social accountability 8000 (sa 8000) throughout our company, which builds on the Ilo labour conventions as well as key international human rights declarations.

We are in the process of implementing the Iso 14001 (environmental Management) and Iso 9001 (Quality Management) standards across all major business units.

We have a robust code of conduct and recently renewed a set of corporate values.

We promote and actively participate in open dialogues with all key stakeholders and use the feedback to improve our practices.

above all, we have a culture, a process and a system that actively involves management in navigating key sustainability and corporate responsibility issues. such issues are at the core of our business planning process, are included in our monthly reporting and are subject to scrutiny in regular business reviews.

ENViRONMENTAL SuSTAiNABiLiTy

throughout our history, VarD has always been conscious of the environment’s role in our business, and how our business in turn impacts the environment.

With that in mind, our operations are grounded in minimizing impact and strain on the environment. We have invested substantial resources, and adopted policies and procedures to enhance our overall environmental performance.

this includes the voluntary aforementioned implementation of the internationally recognized Iso 14001:2004 and Iso 9001:2008 quality standards through which we aim to continually strengthen our resources efficiency and waste management efforts across the network.

recycling of waste from shipbuilding and maintenance is a key environmental priority. In 2011, we introduced a comprehensive waste management framework, involving all yards. this has increased the level of recycling. In 2012, the total recycling percentage across all yards increased from 63% to 66%.

a possible source of water pollution is the discharge of ballast water from foreign seas. Ballast water is used to stabilize hulls for towing. From an environmental point of view, it is better to use fresh water, as it has been documented that fresh water

our aPProaCh to sustaInaBIlItY anD soCIal resPonsIBIlItY

48 / sustainabilitY and social resPonsibilitY / vard / Annual report 2012

organisms do not survive when they are flushed out into the sea. Beginning from 2011, we have always used fresh water from the public water supply for this purpose.

the governmental initiative to map pollution at norwegian industrial sites and in coastal waters which we are a part of, will continue its progress with further actions and plans undertaken in close cooperation with the national authorities in 2013.

In tulcea, romania, we are in the midst of constructing a water treatment plant to continually monitor and process waste water from the activities at the shipyard. at the same time, we are working on reducing the impacts from use of chemicals. We have invested in five sandblasting and painting halls in tulcea. these would allow us to significantly cut down wastage by enabling us to recycle the abrasives used, but also further protect the environment by

confining the impact of sandblast dust within a reusable, isolated and man-made space.

HuMAN SuSTAiNABiLiTy

our employees are at the heart of our success, and we understand that our long-term success depends, to a large degree, on maintaining an engaged, skilled and motivated workforce. We continually strive to improve existing policies that protect the well-being of our employees. In addition, we are proud to uphold a culture of transparency, openness and fairness which has led us to be recognized as an employer of choice, enabling us to attract and pursue the best talents.

recognizing that much of the labor involved in manufacturing our vessels carries health and safety risks, it has always been our top priority to encourage a culture of

applicable knowledge about safe working practices and behaviors across all our yards. Coupled with a more proactive approach toward hse assessments in 2012, the number of safety observations reported and handled across our yards increased 13% from 2011. Compared against a 17% decrease in actual accidents from 2011, this reflects that VarD continues to step up efforts towards timely reporting of potential work-related accidents, and has improved on its ability to prevent more of them from happening. this improvement is reflected in the number of lost time Injuries (ltI), of which we recorded an all-time low of 2.1 for 2012. In addition to a continued focus on safety throughout our network, we aim to further reduce the number of injuries and lost time incidents through particular emphasis on implementing best practices at the lower performing sites and subsidiary companies.

lti FrequencY (number oF lost time injuries Per million hours work)

6

2

4

02012

2,1

2011

2,2

2010

3,2

2009

3,9

2008

4,8

sick leave

4%

3%

1%

2%

0

5%

2012

3,0%

2011

3,0%

2010

3,1%

2009

3,8%

2008

4,2%

sustainabilitY and social resPonsibilitY / vard / Annual report 2012 / 4948 / sustainabilitY and social resPonsibilitY / vard / Annual report 2012

In February 2012, a fatality occurredas a result of non-compliance with standard operating procedure relating to piping works. since the incident, routine procedural tests have been incorporated into the monthly hse induction to remind all workers of its importance.

We have done well to maintain our low sick leave statistic, at an average of 3% in 2012. this was achieved through our continued effort in handling sick leave individually and at an early stage. this includes the flexibility to adjust an employee’s work intensity and scope of work, as well as to adapt the work place as an alternative to sick leave.

our human sustainability efforts extend past ensuring the physical safety of our employees. We invest in the skills of our employees to help them realize their maximum potential. We work with local and national authorities and institutions to ensure development of adequate education and training. In Vietnam and Brazil we have established local schools and training schemes, where we train local staff from the ground up. these schemes, which were critical in the start-up phase of the yards, have now become permanent institutions, serving as models for how we will approach training and recruitment needs in other parts of the world.

In recognition of our compliance with best practice labor standards, in 2012 we were awarded the social accountability 8000 (sa 8000) certification for our shipyard in

Vung tau, Vietnam. some of the considerations for the certification include providing for a non-discriminating environment, fair working hours, fair remuneration and freedom of association. In tulcea, romania, we received 18001:2007 (occupational health and safety standard) certification in January 2012 in recognition of our compliance with this standard.

SOCiAL RESPONSiBiLiTy

VarD has a global footprint and is a major employer in most of the locations where we operate. according to estimates, for each person directly employed at our shipyards in norway, an additional five jobs directly or indirectly depend on us. In other words, we have a responsibility beyond our direct employees and customers in everything that we do.

aside from the economic impact through job creation and knowledge transfer, we are also purposefully engaged in supporting causes related to education, health, sports development and other community services.

In tulcea, romania, we sponsored the acquisition of special beds in the resuscitation department of the Country emergency hospital, which serves a population of about 250,000 within the vicinity of our shipyard. In promoting scholarly excellence, we have also granted scholarships for the top twelve final year university students belonging to faculties with shipbuilding profiles.

one example of our local initiatives is the Dream learn Work (DlW) program, of which we are a founder. Dream learn Work is an organization that offers technical education to underprivileged youths in rio de Janeiro. the organization cooperates with “Bola Pra Frente” in the neighborhood of Guadalupe, rio de Janeiro, and offers tailor-made support in education, sports, arts and other activities, thus enabling these young people to regularly attend school.after passing through this special schooling arrangement, the youngsters are offered a variety of technical courses, equipping them with qualifications in areas that Brazil has a huge demand for. the courses offer a diverse range of opportunities in being trained as electricians, crew members, web designers and welders. Following strong support from the DlW sponsors and other potential future employers, special courses for health, safety, environment, Quality (hseQ) technicians and safety courses have been arranged for future batches of students.

this, together with more focus on improved english skills, will hopefully increase the number of young people trained through Dream learn Work that will attain gainful employment. there are currently 72 students attending various DlW courses, and 64 DlW graduates who are currently working in companies like VarD, BW Group, Farstad shipping, estaleiro Maua, norskan offshore, solstad offshore and teekay shipping.


sustainabilitY and social resPonsibilitY / vard / Annual report 2012 / 51

PROMAR – SuSTAiNABiLiTy iN PRACTiCE

In Brazil, we have been steadily developing a new yard, Vard Promar, which was approximately 65% completed by the end of 2012. this yard will employ 1,500 persons by the time it is fully operational by mid-2014.

the project serves as a good example of how we work with our stakeholders to ensure that we become a contributing force for sustainable development of the local community.

some activities we are undertaking include: training and recruiting the yard’s

workforce is ongoing, and we are in close cooperation with local and federal authorities. six surrounding municipalities are supporting some of our basic training programs.

We are cooperating with the local technical schools and tertiary institutions for the development of relevant professional skills for our employees.

a trainee program for graduates is being established in cooperation with Vard niterói in the state of rio de Janeiro.

as part of our Corporate social responsibility policy, Vard Promar is also participating in a tax Incentive Program with the host municipality Ipojuca, and funding some social activities in the area.

an attractive welfare program is being initiated to recruit and retain the best professionals to this new shipyard.

In line with our policy and environmental regulations, Vard Promar is developing a comprehensive program to comply with the strictest requirements in Brazil for environment protection.


Sandblasting and painting hall in Tulcea. New yard in Brazil, Vard Promar.

A CHALLENGiNG yEAR FOR iNVESTORS

For investors, 2012 was a year of uncertainty: uncertainty due to a volatile macroeconomic environment affected financial markets globally. uncertainty concerning the Company’s market outlook was prompted by a record first half year - both in terms of financial results presented, new orders reported, and share price development - followed by a softer second half. and finally, uncertainty persisted throughout the year concerning a potential change in the Company’s majority shareholder, following stX europe’s announcement in January that it was exploring a sale of its shares.

From an Investor relations perspective, our main objective during 2012 was

to provide timely communication and accurate information to the investment community about the Company’s state of affairs and the factors affecting its business prospects, thereby providing a solid basis for investment decisions in the face of these uncertainties.

CONTiNuED PROFESSiONALizATiON OF OuR iR PLATFORM

In 2012, the number of equity research analysts covering the Company stabilized at 14, representing a broad range of singaporean, regional and international brokerages and research houses. Good relations and frequent contact with analysts enable the Company to smoothly and efficiently reach out to institutional and private investors alike.

serving the needs of the institutional investment community, we frequently met with investors on non-deal roadshows and investor conferences in singapore, hong Kong, Kuala lumpur, london, new York and oslo. In addition, during the year we hosted investors at our shipyards in Vietnam, Brazil and norway, in order to provide them with a first-hand impression of our operations. We actively encourage investors to make contact in order to better understand our business.

Working with the media to ensure coverage of important events in the life of the Company is one of the most important channels we employ in order to reach out to private investors. our retail shareholder base is primarily domiciled in singapore, where we focus on the local press in addition to international newswires and financial media. In this aspect, we are supported by a team of dedicated investor relations advisors in singapore, who also act as a first point of contact for any inquiries from investors, the media or other interested parties.our company website, www.vard.com, is another key channel used to disseminate information broadly. all our press releases, along with financial reports, information on our order book and other useful facts are presented in a compact and easily accessible format. all corporate press releases and announcements are also posted via singapore exchange’s online portal, sGXnet.

52 / investor relations / vard / Annual report 2012

enGaGInG the InVestor CoMMunItY

>>our main objective is to provide timely communication and accurate information to the investment community.

holger dillinghead of Investor relations

52 / investor relations / vard / Annual report 2012 investor relations / vard / Annual report 2012 / 53

For investors wishing to meet representatives of the Company in person, the annual General Meeting is an important occasion, allowing shareholders to directly address their questions and concerns to management and the Board. In april 2012, we hosted a well-attended meeting, not only enabling investors to meet the Company but also providing the Company with valuable first-hand feedback from shareholders.

EVOLuTiON OF THE SHAREHOLDER BASE

as a result of the Company becoming more well-known and established during its second year as a listed company in singapore, we saw a further diversification and globalization of our institutional shareholder base. During the year, north america came to be the region with the highest concentration of professional investors, accounting for almost half of institutional shareholdings (excluding substantial shareholders). at the same time, free float in the Company’s shares increased to over 37%, as a result of the second-largest shareholder, och-ziff, gradually reducing its stake during the second half. Finally, at the very end of the year, the uncertainty concerning stX europe’s shareholding was removed, with the announcement on 21 December 2012 that

Fincantieri oil & Gas had entered into an agreement to acquire the majority of shares in the Company.

CHANGE AND CONTiNuiTy

after the end of the financial year, Fincantieri’s acquisition of the majority stake in the Company was completed, triggering a mandatory general offer which was completed on 13 March 2013. Following the offer, Fincantieri oil & Gas controls 55.63% of the share capital, providing the Company with a strong and stable new major shareholder. at the same time, liquidity in the shares is improved, with the highest free float since the listing of the Company in 2010.

as a direct consequence of the stake sale to Fincantieri, the Company changed its brand name to VarD in March 2013. a resolution to rename the listed entity stX osV holdings limited itself to Vard holdings limited will be tabled at the annual General Meeting. subsequently, the trading counter is expected to change as well.

Despite the numerous changes, one aspect will not change: the Company and management are committed to maintaining high standards of investor communication, providing timely access to information for the benefit of shareholders, both small and large. We are grateful for our investors’

support, and look forward to a continued fruitful dialogue with the investment community as the Company enters a new phase in its history.

80

60

31.12.2011 31.12.2012

20

40

0

100 2.6%6.6%

20.0%

20.0%

50.8%

Other

InstitutionalOch-ZiffSTX Europe

Private and small investor

1)

Investment funds affiliated with OZ Management LP

1)

2.7%13.7%

20.9%

11.9%

50.8%

total shareholder comPosition

Rest of the worldNorth America

80

60

31.12.2011

20

40

0

100 2.9%

22.6%

3.2%

26.1%

23.6%

SingaporeHong Kong

Other Asia & Australia

United KingdomOther Europe

12.5%

9.1%

31.12.2012

1.9%

46.1%

10.7%

8.5%

12.0%

11.8%

9.0%

institutional shares bY geograPhY

Despite a turbulent macroeconomic environment, oil prices held steady throughout 2012, with prices sustained above usD 110 per barrel (Brent). Global e&P spending is estimated to have increased by up to 15% in 2012, and according to Barclays Capital, it is expected to rise by a further 7% in 20131). there was a succession of major offshore discoveries during 2012, and activity levels in offshore exploration in general, and for deepwater developments in particular, remain strong. against this backdrop, rs Platou expects global osV demand to continue to grow by between 8 and 10% in 2013, and the growth in demand for subsea construction vessels to accelerate in the years to come2).

notwithstanding the overall strength of the offshore e&P and oil services sectors, the outlook for offshore support and subsea construction vessels varies greatly between vessel types, driven by the supply and demand dynamics in each segment.

MiXED OuTLOOk FOR THE PSV AND AHTS MARkET

the market for large, high-end PsV deteriorated in the second half of 2012, and day rates and utilization rates declined year-over-year. In the north sea, this was a result of a significant number of vessels entering the market, while demand growth was limited. at the same time, demand for international vessels from Brazil was lower than in previous years, exacerbating the market imbalance. With a continued influx of new vessels in the north sea market scheduled for 2013, new ordering activity is currently low, with limited upside in the near term.

the segment of large ahts disappointed in 2012, with vessel utilization on the decline at a time when many industry insiders had anticipated a turnaround in the market. additional rig capacity that was expected to enter the north sea market was delayed, fewer wells were drilled, and as a consequence, the number of rig moves was lower than expected. In addition, with an ample

supply of PsVs available, less ahts were utilized for cargo runs. there are few large ahts in the world wide orderbook though, and fundamentally the market is set for a recovery once demand picks up.

In the medium to long term, a rise in ultra deepwater floating production units entering the market will be a potential catalyst for change. these units generally require a high vessel-to-rig ratio, due to distances from shore to offshore locations being further. as additional deepwater activity in regions such as West and east africa develops, global demand for larger and more sophisticated offshore support vessels is expected to rise.

STRONG REBOuND iN DEMAND FOR OFFSHORE SuBSEA CONSTRuCTiON VESSELS

With increased e&P spending and high oil prices, global oil and gas companies are expected to take on more new projects and increase activity in the subsea construction

1)Source: Barclays Capital, “Global 2013 E&P Spending Outlook”, December 2012 2) Source: RS Platou,“The Platou Report 2013”, February 2013

outlooK

54 / outlook / vard / Annual report 2012

market. In addition, more and more deepwater projects are entering into a development phase that demands large subsea structures and more complex installations operations. together, these trends have spurred a wave of new orders for offshore construction vessels, with 17 vessels over 80 meters length having been contracted in 20122).

as the trend for more and more equipment being put on the sea floor continues, the market will need even larger and more sophisticated vessels. strong development in the subsea and floating production installation market in the next few years make for increasing day rates and a positive outlook. the subsea construction vessel market is not only growing by numbers, but also by complexity of vessels. While increasing complexity bodes well for designers and yards positioned at the high end of the market, such as VarD competition is intensifying especially for the very largest vessels. as other parts of the shipbuilding industry suffer from a prolonged downturn, some of the most

proficient builders of commercial vessels are increasingly looking to the offshore segment to boost their dwindling order books.

CHALLENGES AND OPPORTuNiTiES AHEAD FOR VARD

For VarD, 2013 will be all about navigating a volatile market and reasserting its position as a leading provider of high-end offshore support and subsea construction vessels. as the market continues to be soft in two core segments, PsVs and ahts, the Company will have to master a dual challenge: Improve competitiveness to defend against increasingly aggressive new and old competitors, and at the same time extend the order book to increase visibility and regain growth momentum.

three new contracts for sophisticated osCVs secured from long-standing, repeat clients early in the first quarter of 2013 are encouraging signs. Meanwhile, significant investments are

being made, particularly in romania, to secure continuous improvements in productivity, and investments in r&D and new technology are opening up new market opportunities. our performance in Brazil will be particularly important in 2013. as operations at the existing shipyard in niterói still require attention, a successful start of shipbuilding activities at the new yard in suape is crucial for the long-term prospects of the Company in this important growth market.

Finally, being part of the Fincantieri Group since early 2013 potentially opens up new opportunities that have yet to be explored. With the backing of a new main shareholder that is eager to support the development of the Company, the dedicated work of our staff around the globe, and the support of our long-term clients and partners, VarD is confident that the Company will manifest its position as a preferred supplier of complex and advanced solutions for the offshore industry.

outlook / vard / Annual report 2012 / 5554 / outlook / vard / Annual report 2012

the directors and management of stX osV holdings limited (the “Company”) are committed to high standards of corporate governance and have adopted the principles set out in the Code of Corporate Governance (the “Code”) which forms part of the Continuing obligations of the listing Manual of the singapore exchange securities trading limited (“sGX-st”). Where there are deviations from the Code, appropriate explanations are provided.

the board’s conduct oF aFFairs

the principal functions of the Board are:1) providing entrepreneurial leadership and approving board policies, corporate strategies, key operational initiatives, financial

objectives of the Group and monitoring the performance of management;2) overseeing the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance;3) ensuring the Group’s compliance with laws, regulations, policies, directives, guidelines and internal code of conduct;4) approving the nomination of directors and appointment of key personnel;5) approving annual budgets, major funding, investments, divestment proposals and monitoring operations; 6) approving the remuneration packages for the Board and key executives;7) ensuring accurate, adequate and timely reporting to, and communication with shareholders; and8) assuming the role for the satisfactory fulfilment of social responsibilities of the Group.

the Board has adopted a charter setting out rules and procedures for its self governance. Certain functions have been delegated by the Board to three main sub-committees (audit, nominating and remuneration Committees), which operate under clearly defined terms of reference. the Chairman of the respective committees reports the outcome of committee meetings to the Board.

Matters that are specifically reserved for the full Board to decide are those involving a conflict of interest for a substantial shareholder or a director, material acquisitions and disposal of assets, corporate or financial restructuring and share issuances, dividends and other returns to shareholders and matters that require Board approval.

the Board conducts scheduled meetings on a quarterly basis. ad-hoc meetings are held where necessary, to address significant issues. Where expedient, board meetings are held by way of teleconference, which is permitted by the articles of association of the Company. the attendance of the directors at meetings of the Board and Board Committees for FY2012 is as follows:

audit remuneration nominatingname of directors board committee committee committee no. of atten- no. of atten- no. of atten- no. of atten- meetings dance meetings dance meetings dance meetings danceKyung Jin hong 5 5 n/a n/a n/a n/a 1 1roy reite 5 5 n/a n/a n/a n/a n/a n/aho nam Yi 5 5 n/a n/a 2 2 n/a n/aByung ryoon Woo 5 5 5 4 n/a n/a n/a n/asung hyon sok 5 5 5 5 2 2 1 1Keen Whye lee 5 5 5 5 2 2 1 1

N/A: Not Applicable

56 / c orPorate governance rePort / vard / Annual report 2012

upon joining the Board, a director is provided with an orientation to familiarize him with the Group’s business, operations and the relevant regulations and governance requirements.

the Company adopts a policy whereby directors are encouraged to request further explanation, briefings or informal discussion on any aspect of the Group’s operations or business issues from management. the directors are also briefed on new updates in the requirements of the sGX-st, Companies act or other regulations/statutory requirements from time to time. they are encouraged to participate in seminars and training programmes in connection with their duties, funded by the Company. the directors have open invitations to visit and have visited some of the Group’s operating facilities to enable them to obtain a better perspective of the business and to enhance their understanding of the Group’s operations.

CorPorate GoVernanCe rePort

board comPosition and guidance

During the financial year under review, the Board comprised the following directors:

Mr. Kyung Jin hong (Chairman and non-executive Director)Mr. roy reite (Chief executive officer and executive Director)Mr. ho nam Yi (non-executive Director)Mr. Byung ryoon Woo (non-executive Director)Mr. Keen Whye lee (Independent Director)Mr. sung hyon sok (Independent Director)

the Board of Directors was re-constituted on 15 March 2013 and now comprises the following directors:

Mr. Giuseppe Bono (Chairman and non-executive Director)Mr. roy reite (Chief executive officer and executive Director)Mr. Fabrizio Palermo (non-executive Director)Mr. Pier Francesco ragni (non-executive Director)Mr. Keen Whye lee (Independent Director)Mr. sung hyon sok (Independent Director)

the current Board comprises six directors, five of whom are non-executive directors. two of the six directors are independent. the background of each director is set out on pages 14 to 15. Mr. roy reite, the Chief executive officer, is the only executive director. the Board comprises directors with a broad range of commercial experience including expertise in shipbuilding industry. together, they bring a wide range of expertise, technical skills and relevant experience to the Group. there is sufficient independent element on the Board. this is to ensure that there is effective representation for shareholders and issues of strategy, performance and resources are fully discussed and examined to take into account long-term interest of shareholders, employees, customers, suppliers and the industry in which the Group conducts its business.

chairman and chieF executive oFFicer

the roles of the Chairman and the Chief executive officer (“Ceo”) are separate and the positions are held by separate persons who are not related. there is a division of responsibility between the Chairman and the Ceo. the Chairman leads the Board and bears responsibility for the workings of the Board of Directors, the governance process of the Board of Directors, scheduling Board meetings and setting the Board meeting agenda in consultation with the Ceo. the Chairman reviews most Board papers before they are presented to the Board of Directors and ensures that Board members are provided with adequate and timely information.

the Ceo is the most senior executive in the Group and is responsible for strategic goals and day-to-day management of the Group.

board membershiP

During the financial year under review, the nominating Committee (“nC”) comprised three directors, namely, Mr. Kyung Jin hong, Mr. sung hyon sok and Mr. Keen Whye lee. Mr. sung hyon sok (Chairman of the nC) and Mr. Keen Whye lee are independent directors. subsequent to the financial year end, the nC was re-constituted on 15 March 2013 and comprises the following:

Mr. sung hyon sok (Chairman and Independent Director)Mr. Keen Whye lee (Independent Director)Mr. Giuseppe Bono (non-executive Director)

the scope and responsibilities of the nC include:1) identifying, reviewing and recommending candidates for nomination for appointment and reappointment of directors, senior executive staff and the members of the various committees;2) reviewing the Board structure, size and composition and making recommendations to the Board with regard to any adjustments that are deemed necessary;3) reviewing the strength and assessing the effectiveness of the Board as a whole;4) determining on an annual basis the independent status of directors;

c orPorate governance rePort / vard / Annual report 2012 / 5756 / c orPorate governance rePort / vard / Annual report 2012

CorPorate GoVernanCe rePort

5) making recommendations to the Board for the continuation (or otherwise) in services of any director who has reached the age of seventy;6) deciding whether or not a director is able to and has been adequately carrying out his duties as a director of the Company, particularly when he has multiple board representations; 7) overseeing the management, development and succession planning of the Group; and8) identifying training and professional development programs for directors.

the nC considered and recommended the appointment of Mr. Giuseppe Bono, Mr. Fabrizio Palermo and Mr. Pier Francesco ragni to the Board as non-independent and non-executive directors. the Board accepted the nC’s recommendation.

the nC assessed and recommended to the Board, the directors to be re-elected pursuant to the Company’s articles of association at the annual General Meeting.

the nC determines the independence of directors annually in accordance with the guidelines set out in the Code and is of the opinion that the Board is able to exercise objective judgment on corporate affairs independently and that the Board’s decision-making process is not dominated by any individual or small group of individuals. although the Directors have multiple listed-company Board representations and/or other principal commitments, the nC has considered and is satisfied that each of them is able to and has adequately carried out his duties as a director of the Company.

board PerFormance

the nC evaluates the Board’s performance annually based on objective performance criteria. the performance evaluation is aimed at giving directors an opportunity to gauge their effectiveness individually and collectively. It also helps to ensure continual improvement in the Board’s decision-making process as it provides a benchmark by which future performance can be measured. a Board evaluation was conducted for the financial year 2012.

access to inFormation

Management provides all directors with Board/Board Committee reports prior to the respective meetings. as a general rule, papers on specific subjects are sent to the Board in advance and are issued, where possible, in a timely manner to enable the directors to obtain further explanations where necessary so that they are adequately informed prior to the meetings. amongst others, the report provides information on the Company’s performance, financial position and prospects.

the Company secretary attends all Board and Board Committee meetings. the Company secretary is responsible for ensuring that procedures are followed and that the Company has complied with the requirements of the Companies act and all other rules and regulations that are applicable to the Company. Directors have independent access to the Company secretary at all times.

Procedures For develoPing remuneration Policies

level and mix oF remuneration

During the financial year under review, the remuneration Committee (“rC”) comprised three members, namely Mr. sung hyon sok, Mr. Keen Whye lee and Mr. ho nam Yi. Mr. sung hyon sok (Chairman of the rC) and Mr. Keen Whye lee are independent directors. the rC was re-constituted on 15 March 2013. the members of the rC are:

Mr. sung hyon sok (Chairman and Independent Director)Mr. Keen Whye lee (Independent Director)Mr. Fabrizio Palermo (non-executive Director)

the rC’s responsibilities include:1) recommending a framework of executive remuneration for the Board and key executives; and2) reviewing and recommending to the Board the remuneration packages and terms of employment of the Ceo and senior executives of the Group.

there is a formal and transparent procedure for fixing the remuneration packages of individual directors. no director is involved in deciding his own remuneration. In addition to the rC’s responsibilities as stated above, the rC is also responsible for reviewing and recommending to the Board, the remuneration packages for all directors, taking into account the current market circumstances and the need to attract directors of experience and good standing.


name of director remuneration1) Fees2) (%) salary3) (%) bonus3) (%) other benefits4) (%) total (%) roy reite5) s$1,315,000 - 66% 28% 6% 100%Keen Whye lee s$72,000 100% - - - 100%sung hyon sok s$60,000 100% - - - 100%

1) rounded off to the nearest thousand dollars.2) these fees are subject to approval by shareholders as a lump sum at the aGM.3) salary relates to FY2012. Bonus disclosed in relation to FY2011 paid in 2012.4) other benefits are inclusive of allowances and pensions.5) In addition to the total remuneration above, options for 4,500,000 shares were granted to Mr. roy reite on 9 May 2011. Details of the share options are disclosed in the Directors’ report.

the rC ensures that the remuneration package of employees related to executive directors and controlling shareholders of the Group are in line with the Group’s staff remuneration guidelines and commensurate with their respective job scope and level of responsibilities. the aim of the rC is to motivate and retain such executives and ensure that the Group is able to attract the best talent in the market in order to maximize shareholders’ value.

the table below shows the range of gross remuneration (in percentage terms) of the top five executives (executives who are not directors) (the “top Five executives”): remuneration band & name of executives salarya) (%) bonusa) (%) other benefitsb) (%) totalc) (%) s$500,000 to s$749,999Jan Ivar nielsen 65% 31% 4% 100% Magne Bakke 64% 31% 5% 100% Magne håberg 65% 31% 4% 100% stig Bjørkedal 65% 31% 4% 100% Knut ola tverdal 65% 31% 4% 100%

a) salary relates to FY2012. Bonus disclosed in relation to FY2011 paid in 2012.b) other benefits are inclusive of allowances and pensions.c) In addition to remuneration disclosed above, share options were granted on 9 May 2011 (Jan Ivar nielsen: 1,200,000 share options; Magne Bakke: 1,200,000 share options; Magne håberg: 1,200,000 share options; stig Bjørkedal: 1,200,000 share options; Knut ola tverdal: 1,200,000 share options).

as part of its review, the rC will cover all aspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonuses, shares and benefits-in-kind.

the rC and the Board are of the view that the remuneration of the directors is adequate but not excessive in order to attract, retain and motivate them to run the Company successfully.

non-executive directors including the Chairman have no service contracts. the Ceo’s contract, which commenced on 1 october 2010, has no fixed term. his service contract contains non-competition and non-solicitation clauses, which are binding on him for a period of 6 months and 12 months respectively after the cessation of his employment with the Company.

the Ceo’s remuneration package includes pension contributions. It also includes a discretionary bonus to be determined by the rC and recommended to the Board.

the Company has also adopted the stX osV share option scheme. It provides the Company with the means to use share options as part of a compensation plan for attracting quality employees as well as promoting staff retention by providing an opportunity for eligible Group employees to participate in the equity of the Company. the scheme is administered by the rC. Details on the scheme are provided in the Directors’ report.

disclosure oF remuneration Paid to directors and keY executivesa breakdown showing the level and mix of each individual director’s remuneration paid/payable for FY2012 (in percentage terms) is as follows:


the aggregate amount of termination, retirement and post-employment benefits that may be granted to the Ceo and the top Five executives is s$3,035,000. Directors (other than the Ceo) are not entitled to such benefits. the total remuneration paid to the top Five executives in FY2012 amounted to s$4,660,000.

Mr. Magne reite, father of Mr. roy reite, Chief executive officer and executive Director of the Company, is an employee of the Group, whose remuneration exceeded s$50,000 during the financial year ended 31 December 2012. his remuneration was in the band of s$250,000 to s$300,000.

accountabilitY

the results and other relevant information on the Company, are disseminated via sGXnet and are also available on the Company’s website at www.vard.com.

In presenting the periodic announcement of the results, the Board aims to provide shareholders with a balanced and comprehensible assessment of the Group’s performance, financial positions and prospects on a quarterly basis.

to enable the Board to fulfill its responsibilities, management reports are made available regularly to all the directors that include updates on the performance of the Company and all its subsidiaries. the management is accountable to the Board and the Board is accountable to shareholders.

audit committee

During the financial year under review, the audit Committee (“aC”) comprised three members, namely Mr. Keen Whye lee, Mr. sung hyon sok and Mr. Byung ryoon Woo. Mr. Keen Whye lee (Chairman of the aC) and Mr. sung hyon sok are independent directors. after the financial year end, the aC was re-constituted on 15 March 2013 and now comprises:

Mr. Keen Whye lee (Chairman and Independent Director)Mr. sung hyon sok (Independent Director)Mr. Pier Francesco ragni (non-executive Director)

the principal responsibilities of the aC include:1) recommending to the Board of Directors the external auditors to be nominated, and approving the compensation of the external auditors. It also reviews the scope and results of the audit, its cost-effectiveness, and the independence and objectivity of the external auditors;2) reviewing with management, the significant risks or exposures that exist and the steps management have taken to manage such risks to the Company, and with the external auditors the audit plan and areas of audit focus;3) reviewing with the Chief Financial officer and external auditors at the completion of the full year financial results of the Group: a) any significant findings and recommendations of the external auditors together with management’s responses thereto; b) the external auditors’ evaluation of the system of internal controls; c) the external auditors’ reports; d) the assistance given by management and the staff of the Company to the external auditors, including any concerns encountered during the course of audit; e) interested person transactions (“IPts”) falling within the scope of Chapter 9 of the listing Manual;4) reviewing quarterly and full year financial statements for submission to the Board for its approval; 5) considering legal and regulatory matters that may have a material impact on the financial statements, related exchange compliance policies and reports received from regulators.

Minutes of the aC meetings are submitted to the Board for its information and review. to create an environment for open discussion on audit matters, the aC meets with the external auditors, without the presence of Management, at least once a year.

the aC had reviewed all non-audit services provided by KPMG llP and is of the view that fees for non-audit services provided are immaterial and would not affect the independence of the external auditors.


internal controls and internal audit

the Board believes in the importance of maintaining a sound system of internal controls to safeguard the interests of shareholders and the Company’s assets. the Board has approved a set of internal controls that set out approval limits for expenditure and transactions to be incurred in the ordinary course of business including hedge transactions.

In performing its functions, the aC:a) had full access to and assistance of the management and the discretion to invite any director and executive officer to attend its meetings;b) had been given reasonable resources to enable it to discharge its functions properly; andc) had the express powers to conduct or authorize investigation into any matters within its terms of reference.

the Board, in concurrence of the aC, is of the view that the existing internal controls are adequate and effective in addressing financial, operational, compliance and information technology risks. In addition, the Board recognizes that no cost effective internal control system will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement and loss.

risk management and evaluation takes place as an integral part of the Company’s strategic planning process. the Board is cognizant of the necessity to set up an internal audit function, and is currently reviewing the scope and roles and responsibilities of the internal auditors.

For the financial year under review, the Chief executive officer and the Chief Financial officer have provided assurance to the Board that the financial records of the Company have been properly maintained and the financial statements give a true and fair view of the operations and finances and that an effective risk management and internal control system has been put in place.

whistle-blowing PolicYManagement has put in place a whistle-blowing policy, whereby employees may, in confidence, raise concerns about possible improprieties on matters of financial reporting or other matters. the objective for such arrangement is to ensure independent investigation of such matters and for appropriate follow-up action.

communication with shareholders

greater shareholder ParticiPation

Major developments on the Company and its business operations are communicated to shareholders via sGXnet and are also available on the Company’s website at www.vard.com. the Company does not practise selective disclosure. Price sensitive information is first publicly released before the Company meets with any group of investors or analysts.

Quarterly and annual results are released on sGXnet within the mandatory period.

all shareholders of the Company will receive the annual report of the Company and notice of aGM within the mandatory period. the notice of aGM is also advertised in a prominent newspaper. the articles of the Company permit a shareholder to appoint one or two proxies to attend and vote in his stead. the Company has not amended its articles to provide for absentee voting methods, which call for elaborate and costly implementation of a foolproof system, the need for which does not arise presently. as recommended by the Code, all resolutions at general meetings will be voted by poll.

each item of special business included in the notice of the general meetings is accompanied, where appropriate, by an explanation for the proposed resolution. separate resolutions are proposed for each separate issue at the meeting.

the Chairmen of the Board Committees are present and available to address questions relating to the work of their respective Board Committees at general meetings. shareholders are given the opportunity to air their views and ask directors, management and external auditors questions regarding the Company.


aggregate value of all interested person transactions during the aggregate value of all financial year under review interested person (excluding transactions transactions conducted less than s$100,000 and under shareholders’ transactions conducted mandate pursuant under shareholders’ to rule 920 (excluding mandate pursuant to transactions less than rule 920) s$100,000)

nok nokstx corporation group Purchase of raw materials, shipbuilding parts and ancillary equipment from stX Corporation Group- steel - 7,133,919 annual Brand Fee royalties to stX Corporation Group 11,129,000 - sub-total 11,129,000 7,133,919

stx europe groupCommission fees paid to stX europe Group - 3,125,879Joint sourcing office in shanghai - 1,495,082Management service agreement with stX norway Florø as 1,535,376sub-total - 6,156,337total 11,129,000 13,290,256

dealings in securities

the Company has adopted an internal Code of Best Practices on securities transactions (“Code”) to provide guidance to its officers with regard to dealings in the securities of the Company in compliance with principles of rule 1207(19) of the listing Manual of the sGX-st.

In general, officers are encouraged to hold shares in the Company but the listed issuer and its officers are prohibited from dealing in shares:

• intheperiodcommencingtwoweeksbeforetheannouncementofthequarterlyfinancialresultsoronemonthbefore the announcement of the financial statements of the financial year, as the case may be, and ending on the dates of the announcement of the relevant results.

• atanytimewhileinpossessionofprice-sensitiveinformation.

Directors and employees are expected not to deal in the Company’s securities on short-term considerations and to observe insider trading laws at all times. all senior managers of the Company are required to notify their dealings in the Company’s shares within two market days of transaction.

interested Person transactions (“iPts”)

the Company has adopted an internal policy in respect of any transaction with interested person and has set out the procedures for review and approval of the Company’s IPts.

the aggregate value of the transactions conducted during the financial year are as follows:


material contracts

there were no material contracts involving the interests of any director or controlling shareholder of the Company, not being contracts entered into in the ordinary course of business, entered into by the Company during the period under review, except as disclosed in the audited accounts.

use oF Proceeds

the Company raised total net proceeds of noK 606 million from the issuance of 180,000,000 new ordinary shares at s$0.79 each from the IPo in 2010. the Company utilized the proceeds as follows:

amount amount amount amount utilized utilized utilized allocated in 2010 in 2011 in 2012 balance (nok (nok (nok (nok (nokuse of proceeds million) million) million) million) million)

Construction of a second shipyard in Brazil 84 - 35 39 10expansion of yard capabilities in norway 19 - 19 - -Improvement of manufacturing capacity and equipment at Vung tau (Vietnam) and tulcea (romania) 227 - 10 99 118expansion of power and automation capabilities at Vard electro as, including potential acquisitions 65 - 5 - 60Investments in emerging markets, including potential acquisitions 65 30 - 2 33r&D, including potential acquisitions of design / engineering companies 61 - 8 22 31General corporate purposes and working capital 85 - 85 - -total net proceeds 606 30 162 162 252

the total amount utilized as at 31 December 2012 is noK 354 million. the utilization is in accordance with the intended use of proceeds of the initial public offering and in accordance with the amounts allocated, as stated in the Prospectus.

others

the Company and its singapore-incorporated subsidiary are audited by KPMG llP. significant foreign-incorporated subsidiaries are audited by other member firms of KPMG International.

associated companies are audited by KPMG as, PwC as and BDo as as disclosed on page 98 of this annual report.

the Company is in compliance with rules 712 and 716 of the listing Manual.


board of directorsGiuseppe Bono, Chairman and non-executive Director (appointed on 15 March 2013) roy reite, Chief executive officer and executive Directorsung hyon sok, Independent DirectorKeen Whye lee, Independent DirectorFabrizio Palermo, non-executive Director(appointed on 15 March 2013)Pier Francesco ragni, non-executive Director (appointed on 15 March 2013)

audit committeeKeen Whye lee, Chairmansung hyon sokPier Francesco ragni (appointed on 15 March 2013)

nominating committeesung hyon sok, ChairmanKeen Whye lee Giuseppe Bono (appointed on 15 March 2013)

remuneration committeesung hyon sok, ChairmanKeen Whye leeFabrizio Palermo (appointed on 15 March 2013)

secretaryelizabeth Krishnan

registered office50 raffles Place #32-01 singapore land towersingapore 048623telephone: +65 6536 5355Fax: +65 6536 1360

head officeP.o. Box 76, no-6001 Ålesund, norwaytelephone: +47 70 21 06 00Fax: +47 23 50 23 [email protected]

Visiting address:Molovegen 6, no-6004 Ålesund, norway

share registrar/share transfer agentBoardroom Corporate & advisory services Pte. ltd. 50 raffles Place #32-01 singapore land towersingapore 048623telephone: +65 6536 5355Fax: +65 6536 1360

auditorsKPMG llP16 raffles Quay #22-00hong leong Buildingsingapore 048581

audit Partner-in-charge Kenny tan Choon Wah (appointed in 2011)

investor relations advisorsKreab Gavin anderson 24 raffles Place#21-05 Clifford Centresingapore 048621telephone: +65 6339 9110Fax: +65 6339 9578

64 / c orPorate inFormation / vard / Annual report 2012

CorPorate InForMatIon

vard / Annual report 2012 / 6564 / c orPorate inFormation / vard / Annual report 2012

CorPorate InForMatIon

66 / statutory financial reports / VarD / Annual Report 2012

The Directors present this report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2012. The consolidated financial statements have been presented on the basis described in note 1 to the audited financial statements.

1. DirectorsThe directors in office at the date of this report are as follows: Mr. Roy Reite, Chief Executive Officer and Executive Director Mr. Keen Whye Lee, Independent Director Mr. Sung Hyon Sok, Independent Director 2. Directors’ interests in shares anD Debentures According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the “Act”), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows: name of Directors and corporation holdings at beginning holdings atin which interests are held of the year end of the year

Mr. Kyung Jin hong (resigned on 13 March 2013) STX OSV Holdings Ltd.– ordinary shares nil nil – interests held nil nil – deemed interests nil nilSTX Corporation Co., Ltd., Ultimate Holding Company– ordinary shares of KRW 2,500 each 36,351 36,351

Mr. byung ryoon Woo (resigned on 13 March 2013)STX OSV Holdings Ltd.– ordinary shares nil nil – interests held nil nil – deemed interests nil nilSTX Pan Ocean Co., Ltd., Related Corporation– ordinary shares of KRW 1,000 each 11,302 11,302

Mr. ho nam yi (resigned on 13 March 2013)STX OSV Holdings Ltd. - ordinary shares nil nil - interests held nil nil - deemed interests nil nilSTX Corporation Co., Ltd., Ultimate Holding Company - ordinary shares of KRW 2,500 each 13,333 13,333

Mr. roy reiteSTX OSV Holdings Ltd. - options to subscribe for ordinary shares of the company 4,500,000 4,500,000

For the financial year ended 31 December 2012

DIRECTORS’ REPORT

66 / statutory financial reports / VarD / Annual Report 2012 statutory financial reports / VarD / Annual Report 2012 / 67

2. Directors’ interest in shares anD Debentures (continueD)Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year.

There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2013. 3. arrangeMent to enable Directors to acquire shares anD DebenturesNeither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. 4. Directors’ contractual benefitsSince the end of the previous financial year, no director has received or become entitled to receive, a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements or in this report.

5. share optionsAt the Extraordinary General Meeting held on 27 April 2011, the STX OSV Share Option Scheme (the “Scheme”) for employees (including the Chief Executive Officer) of the Company and its subsidiaries, was approved by the shareholders.

During FY2012, the Scheme was administered by the Remuneration Committee (the “Committee”) comprising Mr. Sung Hyon Sok, Mr. Keen Whye Lee and Mr. Ho Nam Yi.

On 9 May 2011, the Company granted 17,070,000 options to a number of employees out of the total 17,700,000 options available under the Scheme. This included 4,500,000 options to Mr. Roy Reite, Executive Director. In accordance with the Scheme, options may be exercised by the participants, in accordance with a vesting schedule and at exercise prices determined by the Committee. No options were granted at a discount.

No options were granted during FY2012. However the exercise price of the options was adjusted by the Committee. The options outstanding as at 31 December 2012 have an exercise price in the range of SGD 0.89 to SGD 1.29 and a weighted average contractual life of 2 years. No options were exercised during 2012.

Participants other than directors, controlling shareholders and their associates, who have received 5% or more of the total number of options available under the Scheme are as follows:

aggregate options granted aggregate options exercised aggregate options options granted since commencement of the since commencement of the outstanding as at name of participant during fy2012 scheme to 31 December 2012 scheme to 31 December 2012 31 December 2012

Jan Ivar Nielsen Nil 1,200,000 Nil 1,200,000 Magne Bakke Nil 1,200,000 Nil 1,200,000Stig Bjørkedal Nil 1,200,000 Nil 1,200,000Knut Ola Tverdal Nil 1,200,000 Nil 1,200,000Magne Håberg Nil 1,200,000 Nil 1,200,000

No options were granted to directors or employees of the parent company and its subsidiaries or to controlling shareholders and their associates.

DIRECTORS’ REPORT

6. auDit coMMitteeThe members of the Audit Committee during the year were: • Mr. Keen Whye Lee (Chairman), Independent Director • Mr. Sung Hyon Sok, Independent Director • Mr. Byung-Ryoon Woo, Non-Executive Director

The Audit Committee as at the date of this report comprises Mr. Keen Whye Lee and Mr. Sung Hyon Sok. The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code of Corporate Governance.

In performing its functions, the Audit Committee met with the Company’s auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.

The Audit Committee also reviewed the following: • assistance provided by the Company’s officers to the external auditors; • quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and • interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated as auditors at the forthcoming Annual General Meeting of the Company. 7. inDepenDent auDitorsThe auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

____________________Mr. Keen Whye LeeIndependent Director

____________________Mr. Roy ReiteChief Executive Officer and Executive Director

15 March 2013


in our opinion: a) the financial statements set out on pages 71 to 133 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The Board of Directors has, on the date of this statement, authorized these financial statements for issue.

On behalf of the Board of Directors

____________________Mr. Keen Whye LeeIndependent Director

____________________Mr. Roy Reite Chief Executive Officer and Executive Director 15 March 2013

STATEMENT BY DIRECTORS


report on the financial stateMents We have audited the accompa nying financial statements of STX OSV Holdings Limited (the Company) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Company as at 31 December 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 71 to 133.

ManageMent’s responsibility for the financial stateMentsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition; and transactions are properly authorized and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

auditors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s prepa ration of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appro priate to provide a basis for our audit opinion.

opinionIn our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results, changes in equity and cash flows of the Group for the year ended on that date.

report on other legal anD regulatory requireMentsIn our opinion, the accounting and other records required by the Act to be kept by the Company and by the subsidiary incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KpMg llpPublic Accountants and Certified Public Accountants Singapore 15 March 2013

MeMbers of the CoMpany stX osV holdings liMited

INDEPENDENT AUDITORS’ REPORT


STATEMENT OF FINANCIAL POSITION

group company note 2012 2011 2012 2011assets non-current assets Property, plant and equipment 4 1,384 1,011 - - Intangible assets 5 374 415 - - Investment in subsidiary 6 - - 2,140 2,130 Investment in associates 7 114 98 - - Other investments 8 316 187 - - Interest-bearing receivables 9 82 1 600 - Other receivables 10 18 5 - - Deferred tax assets 11 121 70 - - Employee benefits 12 1 1 - - total non-current assets 2,410 1,788 2,740 2,130 current assets Inventories 14 380 356 - - Construction work in progress 15 5,587 5,768 - - Trade and other receivables 16 1,920 1,830 50 29 Interest-bearing receivables 9 80 1 - - Cash and cash equivalents 17 2,437 3,064 24 653 total current assets 10,404 11,019 74 682 total assets 12,814 12,807 2,814 2,812

equity anD liabilities equity Paid up capital 18 4,138 4,138 4,138 4,138 Restructuring reserve 18 (3,190) (3,190) (1,411) (1,411)Other reserves 18 (161) (97) 17 7 Retained earnings 18 2,375 2,659 60 39 total equity attributable to equity holders of the company 3,162 3,510 2,804 2,773 Non-controlling interests 18 65 43 - - total equity 3,227 3,553 2,804 2,773 non-current liabilities Loans and borrowings 19 545 231 - - Deferred tax liabilities 11 85 122 - - Employee benefits 12 25 28 - - Other payables 20 5 4 - - Provisions 21 127 55 - - total non-current liabilities 787 440 - - current liabilities Loans and borrowings 19 3,385 2,407 - - Construction work in progress 15 1,518 1,480 - - Trade and other payables 22 2,801 3,391 4 15 Income tax payable 437 680 5 24 Provisions 21 652 693 - - Other current liabilities 23 7 163 1 - total current liabilities 8,800 8,814 10 39 total liabilities 9,587 9,254 10 39 total equity and liabilities 12,814 12,807 2,814 2,812

The accompanying notes form an integral part of these financial statements.

(All amounts in NOK millions unless otherwise stated)

INDEPENDENT AUDITORS’ REPORT


group note 2012 2011Revenue 24 11,129 12,401 Materials, subcontract costs and others (7,154) (7,597)Salaries and related costs 25 (1,953) (1,899)Depreciation, impairment and amortization 4,5 (168) (148)Other operating expenses 26 (549) (550)operating profit 1,305 2,207

Financial income 27 129 123 Financial costs 27 (111) (127)net 18 (4) Share of results of associates, net of tax 7 - 10 profit before tax 1,323 2,213

Income tax expense 28 (434) (611)profit for the year 889 1,602

other comprehensive income Exchange differences on translation of foreign operations and loans extended to foreign operations (77) (22)Net fair value changes of available-for-sale financial assets - (1)Income tax on other comprehensive income 28 1 - other comprehensive expense for the year, net of income tax (76) (23)total comprehensive income for the year 813 1,579

profit for the year attributable to: Equity holders of the Company 902 1,594Non-controlling interests (13) 8 profit for the year 889 1,602 total comprehensive income attributable to: Equity holders of the Company 826 1,571 Non-controlling interests (13) 8 total comprehensive income for the year 813 1,579 earnings per share (expressed in noK) Attributable to Equity holders of the Company Basic 29 0,76 1,35Diluted 29 0,76 1,35



STATEMENT OF COMPREHENSIVE INCOME



total equity attributable currency fair share to equity non- paid up restructuring translation value option retained holders of controlling totalgroup capital reserve reserve reserve reserve earnings the company interests equity

at 1 January 2011 4,138 (3,190) (79) (2) - 1,511 2,378 40 2,418 comprehensive income Profit for the year - - - - - 1,594 1,594 8 1,602 other comprehensive income: Exchange differences on translation of foreign operations and loans extended to foreign operations - - (22) - - - (22) - (22)Net fair value changes of available-for-sale financial assets - - - (1) - - (1) - (1)total other comprehensive income - - (22) (1) - - (23) - (23)total comprehensive income for the year - - (22) (1) - 1,594 1,571 8 1,579 transactions with owners Cost of share-based payments - - - - 7 - 7 - 7 Final dividend paid in respect of the previous financial year ended 31 December 2010 - - - - - (157) (157) (27) (184)Special dividend paid for FY2011 - - - - - (267) (267) - (267)Changes in non-controlling interests - - - - - (22) (22) 22 - total transactions with owners - - - - 7 (446) (439) (5) (444)at 31 December 2011 4,138 (3,190) (101) (3) 7 2,659 3,510 43 3,553


STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CHANGES IN EqUITY


total equity attributable currency fair share to equity non- paid up restructuring translation value option retained holders of controlling totalgroup capital reserve reserve reserve reserve earnings the company interests equity

at 1 January 2012 4,138 (3,190) (101) (3) 7 2,659 3,510 43 3,553comprehensive income Profit for the year - - - - - 902 902 (13) 889

other comprehensive income: Exchange differences on translation of foreign operations and loans extended to foreign operations - - (77) - - - (77) - (77)Income tax on other comprehensive income - - 1 - - - 1 - 1 total other comprehensive income - - (76) - - - (76) - (76)total comprehensive income for the year - - (76) - - 902 826 (13) 813

transactions with owners Cost of share-based payments - - - - 12 - 12 - 12 Final dividends paid in respect of the previous financial year ended 31.12.2011 - - - - - (548) (548) (3) (551)Special dividend paid for FY2012 - - - - - (729) (729) - (729)Other adjustments - - - - - 79 79 - 79 Cash subscribed by non-controlling shareholders - - - - - - - 50 50 Changes in non-controlling interests - - - - - 12 12 (12) - total transactions with owners - - - - 12 (1,186) (1,174) 35 (1,139)at 31 December 2012 4,138 (3,190) (177) (3) 19 2,375 3,162 65 3,227



STATEMENT OF CHANGES IN EqUITY


STATEMENT OF CASH FLOWS

group note 2012 2011operating activities Profit before tax 1,323 2,213 Adjustments for: Net interest income (40) (28)(Gain)/loss on disposal of property, plant and equipment, net (2) 8 Unrealized foreign exchange loss 8 15 Depreciation, impairment and amortization 168 148 Change in pension assets and liabilities (3) 2 Share-based payment expenses 12 7 Share of results of associates, net of tax - (10)operating cash flows before movements in working capital 1,466 2,355 Inventories (24) (46)Construction work in progress 1,189 (1,813)Trade and other receivables (177) 309 Trade and other payables (746) 500 Provisions 30 247 cash generated from operations 1,738 1,552

Interest received 30 44 Interest paid (10) (20)Income tax paid (766) (366)cash flows from operating activities 992 1,210 investing activities Proceeds from disposal of property, plant and equipment 5 2 Purchase of property, plant and equipment (403) (119)Purchase of intangible assets - (1)Issuance of new non-current interest bearing receivables (81) -Acquisition of subsidiary, net of cash acquired 32 (5) (4)Aquisition of additional equity interest in existing associates (2) (99)Acquisition of equity interest in associates (15) - Changes in other investments (129) 1 cash flows used in investing activities (630) (220) financing activities Proceeds from loans and borrowings 393 12 Repayment of loans and borrowings (72) (58)Cash subscribed by non-controlling shareholders 50 - Purchase of non-controlling interest in subsidiary (1) (10)Dividends paid, net of withholding tax (1,278) (450)Change in other financial liabilities (48) - cash flows from financing activities (956) (506)

net increase in cash and cash equivalents (594) 484 Effects of currency translation difference on cash and cash equivalents (23) - Cash and cash equivalents at beginning of financial year 3,035 2,551

cash and cash equivalents excluding restricted cash at end of financial year 2,418 3,035 Restricted cash at end of financial year 19 29 cash and cash equivalents at end of financial year 17 2,437 3,064



STATEMENT OF CHANGES IN EqUITY


These notes form an integral part of and should be read in conjunction with the accompanying consolidated financial statements.All amounts in these notes are in NOK millions unless otherwise stated.

The financial statements were authorised for issue by the Board of Directors on 15 March 2013.

1 Corporate inforMation

general inforMationThe Company (Registration No. 201012504K) is a company incorporated in Singapore. The address of its registered office is at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623. The financial statements of the Group as at and for the year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates. The principal activities of the Company during the financial year are mainly that of an investment holding company. The Company also provides support services to its subsidiaries, including the provision of performance and repayment guarantees on the construction contracts. The principal activities of its subsidiaries are described in Note 36 to the financial statements.

2 basis of preparation

(a) stateMent of coMpliance The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards (FRS). (b) basis of MeasureMent The financial statements have been prepared on the historical cost basis except as otherwise described in the notes below. (c) functional anD presentation currency The Company’s functional currency is the Norwegian Kroner (NOK). The financial statements of the Group and the statement of financial position of the Company are presented in Norwegian Kroner (NOK) and all amounts have been rounded to the nearest million, unless otherwise stated. (D) use of estiMates anD JuDgeMents The preparation of financial statements in conformity with FRSs requires the management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may ultimately differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are accounted for in the period in which the estimates are revised and any future periods affected. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes: revenue recognition The Group uses the percentage-of-completion (POC) method to account for construction work in progress. The use of this method requires the Group to estimate the stage of completion of contract activity and also estimate the outcome of a contract at

NOTES



each reporting date. Revenue recognition depends on variables such as development in steel prices, cost of other factor inputs, extent of calculated contingencies, developments in projects and shipyard capacity. The scope of variation orders and acceptance of claims by customers may affect revenue estimates. Uncertainties about revenue estimates will also be affected by the Group’s previous experience from similar construction projects. Generally, there are greater uncertainties related to revenue estimates of new constructions, new designs and new yards. Events, changes in assumptions and management’s judgement will affect recognition of revenue in the current period. impairment assessment of goodwill In accordance with FRS, goodwill is tested annually for impairment or more frequently when there is an indication of a possible impairment. The recoverable amount of a cash generating unit is estimated each year at the same time. The recoverable amount of a cash generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows of the cash generating unit are discounted to their present value. The calculations require the use of estimates and assumptions relating to cash flows and discount rates. Generally, there will be uncertainties related to cash flow estimates. The degree of uncertainty will depend on certainty of the order backlog and market development, uncertainties in prices related to different factor inputs and to what extent the prices are hedged. Events, changes in assumptions and the management’s judgement will affect the evaluation of the recoverable amounts of the cash-generating units. The carrying amount of goodwill is disclosed in Note 5 to the financial statements. income taxes The Group is subject to income tax in several jurisdictions. Considerable judgement is required when determining the global allocation of income taxes. The Group has many transactions and calculations where the final outcome may be uncertain. The Group accounts for its expected tax liabilities based on estimates. When final outcomes differ from the original estimations, the deviations in the estimations will affect the tax expense and provision in the period in which the re-estimation is made. Deferred tax assets relating to losses carried forward are recognized when it is probable that the losses carried forward may be utilized. The evaluation of probability is based on historical earnings, expected future margins and the size of order backlog for the relevant entity. Any deviations in the probability evaluation will affect the deferred tax asset amount. post-employment benefits The present value of defined benefit pension plans depends on several factors which include actuarial and financial assumption. Any changes in assumptions affects calculations of the present value of the obligations and future pension costs.

The Group estimates the discount rate at the end of each year. The rate is used to discount future cash flows related to future defined benefit obligations. The discount rate is determined by reference to government bonds or market yields on high quality corporate bonds at the reporting date. The currency and term of the bonds shall be consistent with the currency and estimated term of the post-employment benefit obligations. Other assumptions by management used in the calculation of the present value of defined benefit plans are based on market values and best estimates. Assumptions related to turnover and salary increase reflect the management’s historical experience with operations. provisions The provision for warranties is based on estimates from known and expected warranty work and contractual obligations for further work to be performed after completion. The warranty expense incurred could be higher or lower than the provision made. The carrying amount and movements in provision for warranties are detailed in Note 21.

Other significant provisions relate to project risks and uncertainties, legal proceedings and clean-up costs whose bases of the estimates and movements are detailed in Note 38 and Note 21, respectively.

NOTES



property, plant and equipment The Group reviews the residual values and useful lives of property, plant and equipment at each reporting date in accordance with the accounting policy in Note 3(d). The estimation of the residual amount and useful lives involves significant judgement. During the year, there were no revisions made to the useful lives and residual values of the Group’s property, plant and equipment. (e) changes in accounting policies With effect from 1 January 2012, the Group and the Company have adopted all the new and revised FRSs and INT FRSs that are mandatory for financial year beginning on or after 1 January 2012. The adoption of the new or revised FRSs and INT FRSs does not result in any significant changes to the accounting policies of the Group and the Company, and has no material effect on the amounts reported for the current or prior periods.

3 signifiCant aCCounting poliCies

The accounting policies described below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities, except as explained in Note 2(e), which addresses changes in accounting policies. (a) basis of consoliDation business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The Group measures goodwill at the acquisition date as: - the fair value of the consideration transferred; plus- the recognized amount of any non-controlling interests in the acquiree; plus- if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree, over the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

Any contingent consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognized in profit or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards are included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidiation are measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets, at the acquisition date. The measurement basis taken is elected

NOTES



on a transaction-by-transaction basis. All other non-controlling interests are measured at acquisition-date fair value or, when applicable, on the basis specified in another standard. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

acquisition of non-controlling interests Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognized as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary. subsidiariesSubsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. acquisition from entities under common control Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognized at the carrying amounts recognized previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and any gain/loss arising is recognized directly in equity. loss of control Upon the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognized in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

investments in associates (equity-accounted investees) Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies of these entities. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Investments in associates are accounted for using the equity method (equity-accounted investees) and are recognized initially at cost. The cost of the investments includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity-accounted investees, after adjustments to align the accounting policies of the equity-accounted investees with those of the Group, from the date that significant influence or joint control commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, together with any long-term interest that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation to fund the investee’s operations or has made payments on behalf of the investee.

NOTES



transactions eliminated on consolidation Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

subsidiaries and associates in the separate financial statementsInvestments in subsidiaries and associates are stated in the Company’s statement of financial position at cost less accumulated impairment losses. (b) foreign currency translation anD transactions foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. The functional currencies of the significant subsidiaries are NOK, USD, RON and BRL. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognized in profit or loss, except for the following differences which are recognized in other comprehensive income arising on the retranslation of: - available-for-sale equity instruments (except on impairment in which case foreign currency diferences that have been recognized in other comprehensive income are reclassified to profit or loss);- a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or - qualifying cash flow hedges to the extent the hedge is effective. foreign operations The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on acquisition, are translated to NOK at exchange rates at the end of the reporting period. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to NOK at the weighted average exchange rate for the period. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the exchange rates at the end of the reporting period. Foreign currency differences are recognized in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or jointly controlled entity that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item that are considered to form part of a net investment in a foreign operation are recognized in other comprehensive income, and are presented in the translation reserve in equity.

NOTES



(c) financial instruMents non-derivative financial assets The Group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognized initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.

Financial assets at fair value through profit or loss A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable transaction costs are recognized in profit or loss as incurred. Financial assets designated at fair value through profit or loss are measured at fair value, and changes therein, which takes into account any dividend income, are recognized in profit or loss.

Financial assets designated at fair value through profit or loss comprise equity securities that otherwise would have been classified as available for sale.

There are no financial assets at fair value through profit or loss at the reporting date.

Held-to-maturity financial assets If the Group has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortized cost using the effective interest method, less any impairment losses. Any sale or reclassification of a more than insignificant amount of held-to-maturity investments not close to their maturity would result in the reclassification of all held-to-maturity investments as available for sale. It would also prevent the Group from classifying investment securities as held-to-maturity for the current and the following two financial years.

There are no held-to-maturity financial assets at the reporting date.

Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents and trade and other receivables (excluding advances to suppliers and derivative financial instruments).

NOTES



Cash and cash equivalents Cash and cash equivalents comprise cash balances and short-term deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. For the purpose of the statement of cash-flows, pledged deposits are excluded whilst bank overdrafts that are repayable on demand and that form an integral part of the Group’s cash management are included in cash and cash equivalents. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Available-for-sale financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognized in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognized, the gain or loss accumulated in equity is reclassified to profit or loss. Available-for-sale financial assets comprise equity securities.

non-derivative financial liabilities The Group initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. Financial liabilities for contingent consideration payable in a business combination are recognized at the acquisition date. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognized initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.

Financial liabilities for contingent consideration payable in a business combination are initially measured at fair value. Subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

Financial assets and liabilities are offset and the net amount presented on the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables.

share capital Ordinary shares Ordinary shares are classified as paid-up capital in equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity, net of any tax effects.

derivative financial instruments, including hedge accounting The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risk of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

NOTES



On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship between the hedging instrument and the hedged item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80% to 125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flow that could ultimately affect reported profit or loss. Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Fair value hedges The Group has entered into currency forwards that are fair value hedges for currency risk arising from contractual commitments (firm commitments) with respect to values of construction contracts or costs related to contracts in foreign currencies (hedged item). The fair value changes on the hedged item resulting from currency risk are recognized in profit or loss. The fair value changes on the effective portion of currency forwards designated as fair value hedges are recognized in profit or loss within the same line item as the fair value changes from the hedged item. The fair value changes on the ineffective portion of currency forwards are recognized separately in profit or loss.

Currency risk arising from construction contracts is evaluated for each contract. The hedge is accounted for under the concept of a firm commitment. This implies that a percentage-of-completion contract is a firm commitment until the asset under construction is completed and transferred to the customer.

Cash flow hedges The Group can enter into currency forwards that qualify as cash flow hedges against probable forecasted transactions in foreign currencies. The fair value changes on the effective portion of the currency forwards designated as cash flow hedges are recognized in the hedging reserve in equity and transferred to either the cost of a hedged non-monetary asset upon acquisition or profit or loss when the hedged forecast transactions are recognized.

The fair value changes on the ineffective portion are recognized immediately in profit or loss. When a forecasted transaction is no longer expected to occur, the gains and losses that were previously recognized in the hedging reserve are reclassified to profit or loss immediately.

intra-group financial guarantees in the separate financial statemements Financial guarantees are financial instruments issued by the Company that require the issuer to make specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantees are recognized initially at fair value and are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortization and the amount that would be recognized if they were accounted for as contingent liabilities. When financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantee is transferred to profit or loss.

NOTES



(D) property, plant anD equipMent recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes: - the cost of materials and direct labour;- any other costs directly attributable to bringing the assets to a working condition for their intended use;- when the Group has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and- capitalized borrowing costs. Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognized net within other income/other expenses in profit or loss. subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognized as an expense in profit or loss on a straight line basis over the estimated useful lives of each component of an item of property, plant and equipment, unless it is included in the carrying amount of another asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Depreciation is recognized from the date that the property, plant and equipment are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.

The estimated useful lives for the current and comparative years are as follows:

• Machinery and vehicles 3-20 years • Buildings 20-50 years • Leasehold land Lease period of 4 - 40 years • Quays/docks 33-50 years Depreciation methods, useful lives and residual values are reviewed at the end of each reporting date and adjusted if appropriate.

NOTES



(e) intangible assets goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial recognition, see Note 3(a) “Business combinations”. Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the associates. research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and capitalized borrowing costs. Other development expenditure is recognized in profit or loss as incurred.

Capitalized development expenditure is measured at cost less accumulated amortization and impairment losses.

other intangible assets Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. subsequent expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred. amortization Amortization is calculated based on the cost of the asset, less its residual value.

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative years are as follows:

• Other intangible assets 4-10 years

Other intangible assets comprises sundry licenses and patents, as well as a beneficial lease agreement acquired through the acquisition of Aakre Eigendom AS in 2011.

Amortization methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate.

NOTES



(f) leaseD assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and are not recognized in the Group’s statement of financial position. (g) inVentories Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out (FIFO) principle and includes expenditure in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and an appropriate share of production overheads based on normal operating capacity. Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of inventories. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. (h) construction contracts in progress A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognized as revenue and expenses, respectively, by reference to the stage of completion of the contract activity at the reporting date (percentage-of-completion method). When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that are likely to be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract as well as variation orders and claims that can be measured reliably. A variation order or a claim is only included in contract revenue when it is probable that the customer will approve the variation order or negotiations have reached an advanced stage such that it is probable that the customer will accept the claim. The stage of completion is measured generally by reference to the ratio of contract costs incurred to date to the estimated total costs for the contract. Costs incurred during the financial year in connection with future activity on a contract are excluded from the costs incurred to date when determining the stage of completion of a contract. Such costs are shown as construction contract work in progress on the statement of financial position unless it is not probable that such contract costs are recoverable from the customers, in which case, such costs are recognized as an expense immediately. At the reporting date, the aggregated costs incurred plus recognized profit (less recognized losses) on each contract is compared against the progress billings. Where the cumulative costs incurred plus the recognized profits (less recognized losses) exceed progress billings, the balance is presented as due from customers on construction contracts. Where progress billings exceed the cumulative costs incurred plus recognized profits (less recognized losses), the balance is presented as due to customers on construction contracts.

Progress billings not yet paid by customers are included within “trade receivables.” Advances received are included within “construction work in progress” (liabilities).

(i) iMpairMent non-derivative financial assets A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine

NOTES



whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearence of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

loans and receivables The Group considers evidence of impairment for loans and receivables at a specific asset level. All individually significant loans and receivables are assessed for specific impairment. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against loans and receivables or securities. Interest on the impaired asset continues to be recognized. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. available-for-sale financial assets Impairment losses on available-for-sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss recognized previously in profit or loss. Changes in cumulative impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed. The amount of the reversal is recognized in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income.

non-financial assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or its related cash- generating unit (CGU) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using an after tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

The Group’s corporate assets do not generate separate cash inflows and are utilized by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.

NOTES



Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Goodwill that forms part of the carrying amount of an investment in an associate is not recognized separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired. (J) non-current assets helD for sale Non-current asssets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets or components of a disposal group, are generally measured in accordance with the Group’s accounting policies. Thereafter, the assets, or disposal group, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred taxes and employee benefit assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss. Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortized or depreciated. In addition, equity accounting of associates ceases once classified as held for sale or distribution. (K) eMployee benefits The Group has both defined contribution plans and benefit plans.

defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees.

defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. Actuarial gains and losses are caused by deviations between estimated and actual events, changes in actuarial and financial assumptions and changes in plans. Actuarial gains and losses are recognized in profit or loss when the cumulative unrecognized actuarial gains and losses for each individual plan at the end of the previous reporting year exceeded 10% of the higher of the defined benefit obligation and

NOTES



the fair value of plan assets at that date. These gains are recognized over the expected remaining working lives of the employees participating in the plans. The defined benefit liability is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not recognized reduced by the fair value of plan assets out of which the obligations are to be settled directly. The benefit obligation is calculated by the actuary and measures the net present value of estimated future cash flows. The pension cost is recognized in the profit or loss over the remaining working lives of the employees. termination benefits Termination benefits are recognized as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value. short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

share-based payment transactions The grant date fair value of share-based payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. (l) proVisions A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Warranties A provision for warranties is recognized when the underlying products or services are sold. The provision is recognized for completed contracts based on past experience and industry averages for defective products, over the applicable warranty periods. restructuring A provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for.

site restoration In accordance with applicable legal requirements, a provision for site restoration in respect of contaminated land and seabed, and the related expense, is recognized when the land and seabed is contaminated.

NOTES



(M) reVenue Revenue comprises the fair value of the consideration received or receivable for the rendering of services and the sale of goods in the ordinary course of the Group’s activities. Revenue is presented, net of value-added tax, rebates and discounts, and after eliminating transactions within the Group. Revenue is recognized as follows:

revenue from construction contracts Contract revenue is recognized by reference to the stage of completion of the contract activity at the reporting date. The stage of completion is measured generally by reference to the contract costs incurred to date, as compared to the estimated total costs for the contract.

Please refer to Note 3(h) “Construction Contracts” for the elaboration of accounting policy for revenue from construction contracts.

interest income Interest income arising from financial instruments is recognized on a time-proportion basis using the effective interest method.

revenue from sales of goods Sale of goods primarily relates to the sale of automated systems by a subsidiary group.

Upon the sale of design and equipment packages, an assessment is made of the accrued value creation and the remaining work. If a significant proportion of the value creation has already taken place, income is recognized immediately, and the rest of the income is recognized over the period of the project’s completion.

rendering of servicesRevenue from rendering of services is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. (n) goVernMent grants Government grants are recognized initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. These grants are then recognized in profit or loss on a systematic basis over the useful life of the asset for grants related to assets. Grants that compensate the Group for expenses incurred are recognized in profit or loss on a systematic basis in the same periods in which the expenses are recognized.

(o) lease payMents lease payments Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. This will be the case if the following two criteria are met:- the fulfilment of the arrangement is dependent on the use of a specified asset or assets; and - the arrangement contains a right to use the asset(s)

NOTES



NOTES


At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset. Subsequently, the liability is reduced as payments are made and an imputed finance charge on the liability is recognized using the Group’s incremental borrowing rate. (p) finance incoMe anD finance costs Finance income comprises foreign exchange gains, interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets, fair value gains on financial assets at fair value through profit or loss, gains on the re-measurement to fair value of any pre-existing interest in an acquiree, gains on hedging instruments that are recognized in profit or loss and reclassifications of net gains previously recognized in other comprehensive income. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the Group’s right to receive payment is established.

Finance costs comprise foreign exchange losses, interest expense on borrowings, unwinding of the discount on provisions and deferred consideration, losses on disposal of available-for-sale financial assets, dividends on preference shares classified as liabilities, fair value losses on financial assets at fair value through profit or loss and contingent consideration, impairment losses recognized on financial assets (other than trade receivables), losses on hedging instruments that are recognized in profit or loss and reclassifications of net losses previously recognized in other comprehensive income.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.

(q) tax Tax expense comprises current and deferred tax. Current tax and deferred tax is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and

that affects neither accounting nor taxable profit or loss;• temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the

foreseeable future; and• taxable temporary differences arising on the initial recognition of goodwill.

The measurement of deferred taxes reflects the tax consequenses that would follow the manner in which the Group expects, at the end of the reporting period. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.



In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. (r) earnings per share The Group presents basic and dilluted earnings per share data for it’s ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for any own shares held. Dilluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dillutive potential ordinary shares, which comprise share options granted to employees.

(s) segMent reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s CEO (the Chief Operating Decision Maker) to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Group’s CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill. (t) neW stanDarDs anD interpretations not aDopteD A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2012, and have not been applied in preparing these financial statements. Those new standards, amendments to standards and interpretations that are expected to have a significant effect on the financial statements of the Group and the Company in future financial periods are set out below. applicable for the group’s 2013 financial statements frs 113 Fair value Measurement, which replaces the existing guidance on fair value measurement in different FRSs with a single definition of fair value. The standard also establishes a framework for measuring fair values and sets out the disclosure requirements for fair value measurements. The adoption of this standard will require the Group to re-assess the bases used for determining the fair values computed for both measurement and disclosure purposes and would result in more extensive disclosures on fair value measurements. On initial application of the standard the Group does not expect substantial changes to the bases used for fair values. In accordance with the transitional provisions, the Group will apply FRS 113 prospectively as of 1 January 2013. As a result, prior periods in the Groups’s 2013 financial statements will not be restated for any adjustments arising from the changes in valuation bases as set out above, any such adjustments will be recorded in the income statement in 2013.

applicable for the group’s 2014 financial statementsfrs 110 Consolidated Financial Statements, which changes the definition of control such that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those

NOTES(All amounts in NOK millions unless otherwise stated)


returns through its power with the investee. FRS 110 introduces a single control model with a series of indicators to assess control.

The Group may need to change its consolidation conclusion in respect of its investees, which may lead to changes in the current accounting for these investees. The group has yet to assess FRS 110’s full Impact, however the standard is not expected to have a material impact.

frs 112 Disclosures of interest in Other Entities, which sets out the disclosures required to be made in respect of all forms of an entity’s interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The adoption of this standard would result in more extensive disclosures being made in the Group’s financial statements in respect of its interests in other entities; as FRS 112 is primarily a disclosure standard, there will be no financial impact on the results and financial position of the Group and the Company upon adoption of this standard by the Group and the Company in 2014. The Group will during 2013 collate the information of the additional disclosures required.

(u) coMparatiVe figuresDuring the year the Group re-assessed the investments in several investees previously classified as “investments in associates” and concluded that a number of these where in fact Special Purpose Entities (SPE’s). None of these SPE’s were considered to be controlled by the Group when considering shareholders’ rights and obligations. As a result, these SPE’s were reclassified to “other investments” (available-for-sale financial assets). Changes to fair value will be recognized through “other comprehen-sive income”. The reclassification did not have an effect on equity or profit or loss as the Group had not yet recognized any profit or loss from these investments. Correspondingly, Notes 7 and 8 are changed to reflect this reclassification. Comparative accounts were reclassified for consistency, which resulted in NOK 180 million being relocated from “investments in associates” to “other investments” in the Statement of Financial Position for the year ended 2011.

2011 2011 2011 as previously reported reclassification as restatedInvestment in associates 278 (180) 98Other investments 7 180 187total 285 0 285

The following table presents the two line items, had the reclassification been done as at 1.1.2011: as previously reported reclassification as restatedInvestment in associates 169 (83) 86Other investments 8 83 91total 177 0 177


statutory financial reports / VarD / Annual Report 2012 / 93

94 / statutory / VarD / Annual Report 2012

Machinery quays/ assets undergroup and vehicles buildings land docks construction totalcostAt 1 January 2011 834 877 57 170 6 1,944 Additions 73 36 - 1 28 138 Acquisitions through business combinations (Note 32) 2 - 1 - - 3 Disposals (8) (4) - - - (12)Reclassifications (2) (1) - - 3 - Currency translation differences (19) - - (1) - (20)at 31 December 2011 880 908 58 170 37 2,053 At 1 January 2012 880 908 58 170 37 2,053 Additions 72 27 2 4 438 543 Disposals (111) (95) - (1) - (207)Reclassifications - (40) - 40 - - Currency translation differences (92) (33) (3) (7) (4) (139)at 31 December 2012 749 767 57 206 471 2,250

accumulated depreciation At 1 January 2011 517 384 1 30 - 932 Depreciation charge for the year 86 31 - 6 - 123 Disposals (2) 1 - - - (1)Currency translation differences (9) (2) - (1) - (12)at 31 December 2011 592 414 1 35 - 1,042 At 1 January 2012 592 414 1 35 - 1,042 Depreciation charge for the year 79 30 - 10 - 119 Disposals (108) (94) - (1) - (203)Currency translation differences (71) (18) - (3) - (92)at 31 December 2012 492 332 1 41 - 866

carrying amounts at 1 January 2011 317 493 56 140 6 1,012 at 31 December 2011 288 494 57 135 37 1,011 at 31 December 2012 257 435 56 165 471 1,384

As at the reporting dates, the Company did not have property, plant and equipment (PPE).

property, plant anD equipMent unDer construction - groupAt 31 December 2012, PPE of the Group with the carrying amount of NOK 481 million (2011: NOK 477 million) are pledged as security to secure the Group’s borrowings (see Note 19). This involves all categories of PPE for the Norwegian yards as well as machinery and vehicles for the Brazilian yards.

4 property, plant and equipMent (ppe)


94 / statutory / VarD / Annual Report 2012 statutory financial reports / VarD / Annual Report 2012 / 95


othergroup goodwill intangibles totalcostAt 1 January 2011 373 33 406 Additions acquired separately - 1 1 Acquisition of subsidiaries 88 1 89 Disposals and other adjustments 4 (2) 2 Currency translation differences - (1) (1)at 31 December 2011 465 32 497 At 1 January 2012 465 32 497 Additions acquired separately - 2 2 Acquisition of subsidiaries 5 - 5 Currency translation differences - (2) (2)at 31 December 2012 470 32 502 accumulated amortization and impairment losses At 1 January 2011 35 23 58 Amortization for the year - 1 1 Impairment loss 23 - 23 at 31 December 2011 58 24 82 At 1 January 2012 58 24 82 Amortization for the year - 2 2 Impairment loss 47 - 47 Currency translation differences (1) (2) (3)at 31 December 2012 104 24 128

carrying amounts at 1 January 2011 338 10 348 at 31 December 2011 407 8 415 at 31 December 2012 366 8 374 The carrying amounts of goodwill are allocated to the following CGUs:

currency balance at other impairment translation balance at business entities cgu: 01.01.12 additions adjustments loss differences 31.12.12STX OSV AS including the Romanian sub-group CGU 1 290 5 - - - 295 STX OSV Niterói SA CGU 2 117 - - (47) 1 71 total 407 5 - (47) 1 366

5 intangible assets

currency balance at other impairment translation balance at business entities cgu: 01.01.11 additions adjustments loss differences 31.12.11STX OSV AS including the Romanian sub-group CGU 1 309 - 4 (23) - 290 STX OSV Niterói SA CGU 2 29 88 - - - 117 total 338 88 4 (23) - 407

acquisitions of subsiDiariesThe increase in goodwill during FY2012 results from the acquisition of shares in STX OSV Design Liburna Ltd and STX OSV Brevik Engineering AS. The total consideration paid was NOK 2.1 million and 3.8 million respectively. Refer also Note 32 for additional information.

iMpairMent loss fy2012 In 2012, the impairment loss of NOK 47 million represents impairment loss of goodwill in the subsidiary STX OSV Niterói SA, a wholly owned subsidiary of STX OSV AS. The impairment loss is considered appropriate based on financial performance in 2012 and the limited remaining operational period for the yard due to the expiry of the lease (and expected consolidation of Brazil activities at the new yard). The impairment loss was determined based on the deficit between the carrying amount and the recoverable amount using the fair value less costs to sell approach. The write-down was identified when performing the annual impairment test of goodwill at year end.

fy2011In 2011, the impairment loss of NOK 23 million was the total effect of two separate write-downs of goodwill during FY2011:

NOK 2 million relates to the liquidation of STX OSV Scanyard SRL, a 100 percent-owned subsidiary of STX OSV RO Holding SRL. The reason for the liquidation was that the company became dormant and no longer served a purpose to the Group and the recoverable amount of this cash-generating unit (CGU) is deemed to be nil.

NOK 21 million represents impairment loss of goodwill in the sub-group of STX OSV Brevik Holding AS, a wholly owned subsidiary of STX OSV AS. The sub-group companies are not part of the core value chain within the Group but offer piping, HVAC and related services to the land-based market. The impairment loss is considered appropriate based on poor financial performance in recent years, and the sub-group is undergoing a restructuring of the business. The impairment loss was determined based on the deficit between the carrying amount and the recoverable amount using the fair value less costs to sell approach. The write-down was taken during the year, and prior to the annual impairment test performed at year end (described below). For presentation purposes this CGU is not presented separately due to the fact that it is not individually material. Hence, it is included as a sub-component within CGU 1 which is defined below. iMpairMent tests for gooDWill The Group has defined two CGUs with goodwill which are its shipyards in Norway and Romania (CGU 1) and the shipyards in Brazil (CGU 2), and all goodwill relates to these CGUs. With regards to CGU 1: All of these shipyards have the same management, who is central in the allocation of contracts. As shipyards in Romania are mainly hull producers, there is a high degree of dependency between these shipyards and the outfitting shipyards in Norway. Accordingly, shipyards at different locations are not defined as separate CGUs. STX OSV Design Liburna Ltd. and STX OSV Engineering Brevik AS, are included as a sub-component of CGU 1 as they are not considered individually material.

An impairment test has been performed for the CGUs at 31 December 2012 and 31 December 2011 to assess whether impairment existed. Based on the calculations performed, there is no impairment in the value of goodwill for CGU 1 and an impairment of NOK 46 million for CGU 2 has been recognized.

The recoverable amount of the entities within the CGUs has been determined based on value in use calculations. Value in use is calculated based on cash flow projections derived from financial budgets, business plans and strategical figures approved by





senior management covering the period of 2013 to 2017 (2011: 2012 to 2016). The determination of budget and strategical figures are based on long term construction contracts and their expected margins, and expectations of new contracts. This is reflected in the budget and business plan figures. The discount rates for CGU 1 and 2, which are based on the respective CGU’s weighted average cost of capital (WACC), applied to cash flows for the impairment test at 31 December 2012 are 10% and 15.8% for CGU 1 and 2 respectively. Terminal values are based on long term strategical figures, however adjusted for cyclical fluctuations, and using a growth rate of 2.0% in the terminal year for CGU 1 and zero percent for CGU 2. The assumptions related to the impairment test at 31 December 2011 were 15.5% discount rate and 2.0% growth rate in the terminal year. Unless a long lasting situation occurs with low capacity utilisation or significantly lower margins than what has been assumed for the period after 2012, realistic sensitivity calculations do not indicate any additional significant impairment in value of goodwill.

6 inVestMent in subsidiary company 2012 2011unquoted shares, at cost At 1 January 2012 2,130 2,123 Increased investment in subsidiary due to stock option plan (Note 13) 12 7 Other adjustments due to roundings (2) - at end of financial year 2,140 2,130

7 inVestMent in assoCiates group 2012 2011Unquoted shares at cost 103 87 Share of post acquisition reserves 11 11 total 114 98

Included in the unquoted shares at cost there is goodwill in the amount of NOK 14 million (2011: NOK 0 million) resulting from the 23% investment in Castor Drilling Solution AS in May 2012.

2012 balance as of acquisitions share of balance as ofMovements of investment in associates 1 January and disposals profit/(loss) 31 DecemberCastor Drilling Solution AS - 14 (2) 12 Olympic Subsea KS 96 - 3 99 Bridge Eiendom AS 2 1 (1) 2 Brevik Technology AS - 1 - 1 total 98 16 - 114

2011 balance as of acquisitions share of balance as ofMovements of investment in associates 1 January and disposals profit/(loss) 31 DecemberOlympic Subsea KS 84 - 12 96 Bridge Eiendom AS 1 2 (1) 2 total 85 2 11 98

For newly incorporated subsidiaries during the year, as well as aquisitions of subsidiaries and non-controlling interests, refer to Note 32. Details of the Group’s significant subsidiaries are set out in Note 36.

2012 % profit/ associates and reporting name of principal interest total total (loss) forcountry of incorporation date auditor activity held** assets* liabilities* revenue* the year* Offshore Castor Drilling Solution AS drilling (Norway) 31/12/2012 PwC AS technology 23% 17 2 1 (5) Olympic Subsea KS (Norway) 31/12/2012 BDO AS Shipping 35% 509 297 82 13 Bridge Eiendom AS (Norway) 31/12/2012 KPMG AS Real estate 50% 71 69 3 (2) Holding of technology Brevik Technology AS (Norway) 31/12/2012 KPMG AS rights 34% 1 1 - - total 598 369 86 6

2011 % profit/ associates and reporting name of principal interest total total (loss) forcountry of incorporation date auditor activity held** assets* liabilities* revenue* the year*

Olympic Subsea KS (Norway) 31/12/2011 BDO AS Shipping 35% 527 327 90 21Bridge Eiendom AS (Norway) 31/12/2011 KPMG AS Real estate 50% 72 71 4 (2)total 599 398 94 19

* The financial information provided in the table above is not adjusted for the percentage ownership held by the Group, is unaudited and is estimates provided by management of each entity. As a result of this, the profit/loss figures reported in the Statement of Comprehensive Income, as our share of profit in associates, will consist of this year’s estimates +/- any deviations between prior period estimate and actual figures reported by the associated companies for that same period. ** The percentage interest held shows direct ownership in the associated company.

8 other inVestMents

groupnon-current investments 2012 2011available for sale financial assets: – Equity securities 316 187 total 316 187

share % 2012 share % 2011Moldekraft AS 8% 5 8% 5 Møkster Supply AS 40% 5 40% 5 Møkster Supply KS 36% 43 36% 25 Island Offshore LNG AS 30% 8 30% 2 Island Offshore LNG KS 27% 70 27% 18 Rem Supply AS 49% 128 49% 103 Olympic Green Energy KS 30% 38 30% 26 DOF Iceman AS 50% 12 0% - Klosterøya Vest Holding AS 6% 3 0% - Shares in other companies n/m 4 n/m 3 total 316 187

The equity securities have been subject to a fair value assessment and no significant changes to fair values were identified.





9 interest-bearing reCeiVables

group 2012 2011 lowest highest interest interest interest rate rate amounts rate amountsnon-currentInterest–bearing receivables due from: NIBOR NIBOR-Related parties + 2% + 3% 37 n/m - NIBOR NIBOR-Third parties + 2% + 3% 45 2,5% 1total 82 1

currentInterest–bearing receivables due from: -Related parties n/m n/m - 0.9% 1 NIBOR NIBOR-Third parties + 2% + 7,5% 80 n/m -total 80 1 These interest-bearing receivables are non-trade in nature and are unsecured. The non-current receivables are not expected to be repaid within the next 12 months.

company 2012 2011 interest interest rate amounts rate amountsnon-currentInterest–bearing receivables due from 3m NIBOR STX OSV AS + 2% 600 n/m - The non-current interest-bearing receivables consists of a loan that is repayable based on 3 months written notice. The loan is not expected to be repaid in 2013.

10 other reCeiVables

group 2012 2011Prepayments 8 1 Interest-free loans 4 4 Deposits 3 - Other receivables 3 - total 18 5

This is not applicable for the Company.

11 deferred taX assets and liabilities

(a) recognizeD DeferreD tax assets anD DeferreD tax liabilities Deferred tax assets and deferred tax liabilities are related to the following items: group assets liabilities 2012 2011 2012 2011Property, plant and equipment 10 9 (6) (7)Employee benefits 5 7 - 1 Projects under construction (67) (94) (18) (41)Tax losses 9 3 (1) 5 Accounts receivable 1 7 1 2 Provisions 154 111 7 4 Others 9 27 (68) (86)total 121 70 (85) (122)

(b) MoVeMent in teMporary Differences During the year

property, construction plant and employee work in trade group equipment benefits progress tax losses receivables provisions others totalAt 1 January 2012 2 8 (135) 8 9 115 (59) (52)(Charged)/credited to profit or loss 2 (3) 50 - (7) 46 1 89 Currency translation differences - - - - - - (1) (1)at 31 December 2012 4 5 (85) 8 2 161 (59) 36

At 1 January 2011 (3) 6 (183) - 6 114 (70) (130)(Charged)/credited to profit or loss 5 2 51 8 3 1 (1) 69 Acquisition and disposal of subsidiaries - - (3) - - - 2 (1)Reclassifications - - - - - - 10 10 at 31 December 2011 2 8 (135) 8 9 115 (59) (52)





(c) unrecognizeD DeferreD tax assets

Deferred tax assets have not been recognized in respect of the following unrecognized tax losses which will expire in the following years:

group 2012 2011After 1 year - 2 After 2 years - 29After 3 years - 11 After 4 years - 7 After 5 years - 100 After 6 years - - After 7 years - - No expiry date 48 18 total 48 167

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profits in certain of the Group’s subsidiaries will be available against which the Group can utilize the benefit therefrom. The tax losses are subject to agreement by the tax authorities and compliance with the tax regulations in the respective countries in which the entities of the Group operate.

12 eMployee benefits

STX OSV Holdings Limited has no employees, and hence no pension arrangements. The Group’s Norwegian companies mainly cover their pensions through group pension plans in life insurance companies. The pension plans are either defined benefit plans or group contribution plans. The defined benefit plans are accounted for according to FRS 19 Employee Benefits. The Group’s companies outside Norway have pension plans based on local practice and regulations. The Group also has uninsured pension liabilities for which provisions have been made. Actuarial calculations have been made to determine pension liabilities and pension expenses in connection with the Group’s defined benefit plans.

The following assumptions have been used in the calculations:

groupassumptions 2012 2011Expected return 3.60% 4.10%Discount rate 2.20% 2.60%Wage growth 3.25% 3.50%Social security base adjustment 3.00% 3.25%Pension adjustment 0.00% 0.10%

expected remaining lifetime age Men Women 20 62 65 40 42 45 60 24 26 80 9 10

group expenses recognized in profit or loss 2012 2011Current service cost 3 4 Interest cost 1 1 Expected return on pension funds (1) (1)Amortization of actuarial gains and losses 1 1 Curtailment / Settlement (3) 1 Amortization of past service cost - 3 net pension expenses 1 9 Contribution plans (employer’s contribution) 41 32 total net pension expenses 42 41 Actual return on plan assets in 2012 was positive with NOK 1 million (2011: positive of NOK 1 million).

groupnet pension funds and liabilities 2012 2011Defined benefit obligation funded plans 58 50 Defined benefit obligation unfunded plans - 8 Fair value of plan assets (26) (22)present value of net obligations 32 36 Unrecognized actuarial gains and losses (10) (11)Social security tax 2 2 net liability recognized on statement of financial position 24 27 presented as:Non-current asset 1 1 Non-current liability (25) (28)total (24) (27)





groupMovements in the fair value of plan assets 2012 2011Fair value of plan assets as of 1 January 22 22 Expected return 1 1 Paid in premium 3 (2)Actuarial gain and losses - (2)Effect of settlement 1 - Benefit paid (1) 3 fair value of plan assets as of 31 December 26 22

changes in net liability recognized on the groupstatement of financial position are as follows: 2012 2011Net liability as of 1 January 27 25 Net expense recognized 1 9 Pension contribution (4) (7)net liability as of 31 December 24 27

the major categories of plan assets as a grouppercentage of total plan assets are as follows: 2012 2011Bonds 53% 47%Money market 19% 22%Equity instruments and shares 9% 10%Property 18% 19%Others 1% 2%total 100% 100%

13 share-based payMent arrangeMents

Description of the share-baseD payMent arrangeMentsAt 31 December 2012, the Group has the following share-based payment arrangements:

share option programme (equity-settled)The share option scheme (Scheme) for employees of STX OSV, approved on the AGM held on 27 April 2011 is equity-settled and should be accounted for according to FRS 102. On 9 May 2011, the Company granted 17,070,000 options to a number of employees out of the total 17,700,000 options available within the Scheme. In accordance with the Scheme, holders of vested options are entitled to purchase shares at the exercise price of the shares at the date of grant.

grant date/ number employees entitled of instruments

Option grant to key management on 9 May 2011 * 5,690,000



total share options 17,070,000

Vesting contractual conditions life of options

(i) 1/3rd of 17,070,000 of the options granted, exercisable after 2 years from the date of grant, at an exercise price of S$1.20.

(ii) 1/3rd of 17,070,000 of the options granted, exercisable after 3 years from the date of grant, at an exercise price of S$1.40.

(iii) 1/3rd of 17,070,000 of the options granted, exercisable after 4 years from the date of grant, at an exercise price of S$1.60.

3 years

2 years

1 year

terMs anD conDitions of share option prograMMe The terms and conditions relating to the grants of the share option programme are as tabled below.

* A total of 4,500,000 options were granted to an Executive Director.

adjustments to excercise price on 10 september 2012 1/3rd 1/3rd 1/3rdExercise price at grant date 1.20 1.40 1.60 Dividends paid since inception of option programme 0.31 0.31 0.31 new excercise price 0.89 1.09 1.29

Disclosure of share option prograMMe The number and weighted average exercise prices of share options are as follows:

Weighted Weighted average number of average number of exercise options exercise options price (sgD) (in thousand) price (sgD) (in thousand) 2012 2012 2011 2011Outstanding at 1 January 1.09 17,070 - - Forfeited during the year - - - - Exercised during the year - - - - Granted during the year - - 1.40 17,070 outstanding at 31 December 1.09 17,070 1.40 17,070 exercisable at 31 December - - - -

The options outstanding at 31 December 2012 have an exercise price in the range of SGD 0.89 to SGD 1.29 and a weighted average contractual life of two years. No options were exercised during 2012.





inputs for MeasureMent of grant Date fair ValuesThe valuation has been performed using the Black Scholes option pricing model. Expected volatility is estimated by considering historic average share price volatility of comparable companies over a six year period and weekly data. The inputs used in the measurement of the fair values at grant date of the share-based payment plan are as follows:

fair value of share options and assumptions 2012 2011Fair value at grant date (SGD) n/a 0.36 Share price at grant date (SGD) n/a 1.16 Exercise price (SGD) n/a 1.40 Expected volatility (weighted average volatility) n/a 45.9%Option life (expected weighted average life) n/a 5 years Risk-free interest rate (based on government bonds) n/a 0.89%

Expected dividends: If dividend is paid during the vesting period, the exercise price will be reduced by a similar amount to compensate. This effectively is equal to the employees under the scheme being eligible to dividend.

employee expenses 2012 2011Equity-settled share-based payment: Share options 12 7 total employee expenses 12 7

14 inVentories groupinventories comprise the following items: 2012 2011Raw materials 324 315 Work in progress 52 8 Finished goods 4 33 total 380 356 Raw materials comprise mainly steel plates and steel profiles, pipes and pipe fittings, tools and consumables which are used in the Group’s construction projects.

15 ConstruCtion work in progress

group 2012 2011Aggregate costs incurred and attributable profits recognized (less losses recognized) to-date 9,084 8,901 Progress billings (5,015) (4,613)total 4,069 4,288 presented as: Current asset 5,587 5,768 Current liability (1,518) (1,480)total 4,069 4,288 Advances received on construction contracts 2,862 2,795 Provisions for loss on contracts (Note 21) (261) (92)

No retention sums are included in progress billings. This is not applicable for the Company.

16 trade and other reCeiVables

Trade and other receivables consist of the following items: group 2012 2011Trade receivables (a) 322 536 Allowance for impairment of trade receivables (29) (35)total 293 501 Advances to suppliers 1,055 807 VAT and tax receivables 237 189 Receivables from related parties (b) - 47 Derivative financial instruments 199 148 Other receivables (c) 136 138 total 1,920 1,830

For the Company, trade and other receivables consists of short term intercompany receivables towards STX OSV AS and STX OSV Singapore Pte Ltd of NOK 50 million (2011: NOK 29 million).

(a) At 31 December 2012, trade receivables for the Group did not include any retention sums relating to construction work in progress or completed contracts. (b) The amounts due from related parties are interest-free, unsecured and repayable on demand. (c) Other receivables contain sundry receivables owing from external parties.





Of the total cash and bank balances as of 31 December 2012, an amount of NOK 19 million (2011: NOK 29 million) is held in fully restricted escrow accounts, which is mainly security for guarantees made to customers on prepaid installments and restricted bank accounts for employees’ tax deductions.

The ordinary shares issued by the Company have no par value and carry equal rights to voting, distribution of profits and dividends and to the residual assets of the Company in liquidation. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. issue of ordinary shares There were no ordinary shares issued in FY2012. There are no treasury shares. The Group issued share options in FY2011 (see Note 13). No shares or share options were issued and no share options were exercised during FY2012.

group currency translation reserve The currency translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of monetary items that form part of the Group’s net investment in a foreign operation. fair value reserve The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognized or impaired. restructuring reserve The restructuring reserve as presented in the Group’s consolidated financial statements for FY2012 and FY2011 represents the difference between the cost of the acquisition for the restructuring and the amount of share capital of STX OSV AS at the date of acquisition.

17 Cash and Cash equiValents

group company 2012 2011 2012 2011Short-term investments with maturity less than three months 137 381 - - Cash and bank deposits 2,300 2,683 24 653 cash and cash equivalents 2,437 3,064 24 653

18 Capital and reserVes

ordinary shares 2012 2011group and company no. of shares amount (noK no. of shares amount (noK

(millions) millions) (millions) millions)

on 1 January and 31 December 1,180 4,138 1,180 4,138

The following tax exempt (one-tier) dividends were declared and paid by the Group and Company:

2012 2011group and company amount (noK amount (noK millions) millions)paid by the company to owners of the companyFinal dividend paid for prior financial year (a): 548 157 Special dividend paid for current financial year (b): 729 267 total 1,277 424

paid by a subsidiary to non-controlling interests Paid by a subsidiary to non-controlling interests (c): 3 27 total 3 27

(a) 10.0 Singapore cents per qualifying share in FY2012 (3.0 Singapore cents per qualifying share in FY2011) (b) 13.0 Singapore cents per qualifying share in FY2012 (5.0 Singapore cents per qualifying share in FY2011) (c) Various dividends paid to minorities in subsidiary companies.



share option reserve Share option reserve represents the equity-settled share options. The reserve is made up of the cumulative value of services received from employees relating to such awards. coMpany restructuring reserve The restructuring reserve presented in the Company’s statement of financial position at 31 December 2012 comprises the difference between the cost of acquisition of the STX OSV AS combined group recorded in accordance with FRS 27.38B, and the paid up capital of the Company issued for the acquisition. dividends In total, the Company paid dividends to owners of the Company in FY2012 of NOK 1,277 million (NOK 424 million in FY2011). The Directors have not recommended a payment of a dividend in FY2012 except for the special interim dividend paid in q3 2012 of NOK 729 million.



(a) terM loan facilities innoVation norWay STX OSV AS has six secured loans with Innovation Norway as of 31 December 2012 (2011: six). The three most material loans are NOK 40 million, NOK 40 million and NOK 24 million and mature respectively in 2025, 2024 and 2020. Five of the loans, totalling NOK 131 million (2011: NOK 147 million), have fixed interest rates, and one loan, amounting to NOK 11 million (2011: NOK 12 million), is at floating rate. The fixed rate loans carry rates between 4% and 5%. Floating interest rates were also between 4% and 5% at the reporting date (2011: 4% to 5%). All Innovation Norway loans are considered low risk secured loans. The loans are secured by investments, fixed assets such as property and plant as well as the dock at the Langsten yard. All Innovation Norway loans have covenants requiring working capital to be greater than NOK 600 million, equity greater than NOK 1,300 million and book equity greater than 2/3.

After the respective reporting dates, the following exempt (one-tier) dividends were proposed by the directors. These exempt (one-tier) dividends have not been provided for.

2012 2011company amount (noK amount (noK millions) millions)

Proposed dividend for current FY: (10.0 Singapore cents per qualifying share in FY 2011) - 544

non-controlling interests This relates to the non-controlling interests in those subsidiaries (refer Note 36) where the Group owns less than 100% of the equity shares.

19 loans and borrowings

This note provides information about the contractual terms of the Group’s interest–bearing loans and borrowings. For more information about the Group’s exposure to interest rates and foreign currency risks, see Note 31.

groupcurrent 2012 2011Construction loan facilities (B) 3,351 2,379 Term loan facilities (A) 34 28 total 3,385 2,407

groupnon-current 2012 2011Term loan facilities (A) 545 231 total 545 231


non-current current term loan facilities 2012 2011 2012 2011- Innovation Norway 123 140 19 19 - Nordea 50 72 8 - - Brazil 372 19 7 9 total 545 231 34 28



norDea The long term Nordea credit facility agreement is a USD 15 million investment facility to STX OSV Singapore Pte. Ltd. The loan was used towards financing of investments with the purpose of building the Vietnam shipyard. The loan is secured by pledge of shares and a parent guarantee issued by the Company, and matures in late 2014 and interest rate is LIBOR + 1.125% p.a. brazil With the purpose of modernization of the shipyard in Niterói, the Brazilian entity has a USD 1.9 million loan from BNDES. A USD 0.9 million loan from Finame is used for equipment investments. The final installments of the loans mature in 2016. The entity also has an import finance facility agreement with Itau Bank of USD 0.5 million maturing in 2013. These facilities carry interest rates between 3.5% and 10.0%, and are secured by fiduciary of shipyard equipment and machines.

Also, Estaleiro Promar SA has a long term financing agreement of BRL 154 million maturing in 2028 (interest rate is 3.5% for local content and 4.5% on imported items). At 31 December 2012 there was BRL 125 million drawn from this facility. The loan will be secured by mortgage and statutory lien of ownership of machinery and equipment. (b) construction loan facilities

construction loan facilities 2012 2011-STX OSV AS 1,863 1,023-STX OSV Niteroi SA 1,387 1,311-Estaleiro Promar SA 92 --STX OSV Singapore/Vietnam 9 45total 3,351 2,379

construction loan facilities interest rates 2012 2012 2011 lowest highest Fixed rates 3.50% 4.50% 1,480 1,311Variable rates 2.50% 3.60% 1,871 1,068total 3,351 2,379

Construction loan facilities are project specific and these borrowings are secured by the vessels under construction. The facilities are drawn down as the construction of the projects progresses. The loans will be fully repaid from the proceeds received from the client upon the delivery of the completed vessels. More specifically, the Group’s construction loan facilities consist of the following (by entity): stx osV as STX OSV Holdings Ltd Group’s Norwegian shipyards have established framework agreements with a Norwegian bank stipulating loan terms, conditions, and structures. Construction financing for projects is established on a project-by-project basis within the agreed-upon frameworks. The Romanian yards are largely financed via the Group’s Norwegian yards in the form of partial payments on hull building contracts. Nordea Bank Norge ASA was per year end 2012 the provider of all construction financing to the Norwegian shipyards. As of 31 December 2012 the Nordea facility consisted of a construction facility, a guarantee facility and a flexible facility (e.g. to bridge financing pending approval of a construction loan) of NOK 3,392, NOK 500 and NOK 150 million, respectively. The NOK 500 million facility includes guarantees in connection with sale of design and equipment packages in the aggregate amount of up to NOK 200 million. In addition to the maximum drawdown within the NOK 4,042 million frame, restrictions to minimum working capital of NOK 900 million and minimum equity of NOK 2,100 million apply per 31 December 2012. Each construction loan is due at delivery of the vessel.

stx osV niterói sa STX OSV Niteroi SA has construction financing with BNDES and Banco do Brasil on a project-by-project basis. STX Europe AS and STX OSV Holdings Ltd provide guarantees related to these agreements. As of 31 December 2012, the BNDES construction



financing applies to the shipbuilding projects 30, 31 and 33 in addition to shipyard modernization. Also and correspondingly, other facilities regarding shipbuilding project number 29 and 32 in addition to shipyard investment, is entered into with Banco do Brasil. The construction loans are due at delivery of the vessel. At 31 December 2012, the BNDES and Banco do Brasil project financing facilities were limited to USD 250 million and USD 125 million respectively.

stx osV Vung tau ltD STX OSV Vung Tau Ltd. has a construction financing agreement with Nordea Bank in Singapore established by the holding company STX OSV Singapore Pte. Ltd. STX OSV Holdings Ltd and STX OSV AS provides guarantees related to this agreement. This construction facility works more like a working capital facility and for specific projects being the shipbuilding projects in STX OSV Vung Tau Ltd. This is a revolving multi-currency facility subject to approval by Nordea and limited to USD 30 million as of 31 December 2012.

estaleiro promar sa Estaleiro Promar SA has construction financing with Banco do Brasil on a project-by-project basis. STX OSV Holdings Limited will provide guarantees related to this agreement. As of 31 December 2012, the Banco do Brasil construction financing applies to the shipbuilding of eight vessels (EP-01 to EP-08). At 31 December 2012, Banco do Brasil project financing facilities were limited to USD 238 million.

The fair values of the loans and borrowings are disclosed in Note 31. The carrying amounts of current borrowings and non-current borrowings bearing variable market rates approximate their fair values.

20 other payables (non-Current)

Other non-current payables consists mainly of supplier guarantees and receivables against employees. The other payables owing from third-parties are unsecured, interest free, and no payment is expected within the next 12 months.

21 proVisions

Warrantiesgroup (note a) others totalAt 1 January 2012 348 400 748 Provisions made during the year 226 287 513 Provisions utilized during the year (124) (155) (279)Provisions reversed during the year (164) (28) (192)Currency translation differences (5) (6) (11)at 31 December 2012 281 498 779 Representing: Non–current 38 89 127 Current 243 409 652 total 281 498 779

Warranties group (note a) others totalAt 1 January 2011 156 338 494 Acquisition of subsidiaries 7 - 7 Provisions made during the year 235 225 460 Provisions utilized during the year (43) (137) (180)Provisions reversed during the year (9) (31) (40)Currency translation differences 2 5 7 at 31 December 2011 348 400 748 Representing: Non–current 41 14 55 Current 307 386 693 total 348 400 748 Other provisions include environmental clean-up costs of NOK 75 million (2011: NOK 75 million) and legal claims of NOK 62 million (2011: NOK 58 million), as well as several other liabilities faced during the normal course of business, and provided for according to FRS 37, totalling NOK 361 million (2011: NOK 263 million).

(a) WarrantiesProvisions for warranties relate to completed contracts and possible guarantee work after vessel delivery. The warranty period is normally one to two years, but some of the provisions may relate to a longer period. Provisions for warranties are regognized based on past observable data for corresponding projects and experience analysis.



proVisions for loss on contracts group 2012 2011At 1 January 92 11 Additional provisions 297 92 Amounts used (73) (4)Unused amounts reversed during the period (55) (7)at 31 December 261 92

The provision amounts are recorded as reduction of “construction in progress” in the statement of financial position.

This is not applicable for the Company

22 trade and other payables group company 2012 2011 2012 2011Trade payables 1,540 2,007 - - Accrued expenses 684 825 - - Salary and social costs 160 140 - - VAT 139 150 - - Derivative financial instruments 96 93 - - Other financial liabilities 182 176 4 15 total 2,801 3,391 4 15



23 other Current liabilities

At 31 December 2012, other current liabilities of NOK 7 million relate to NOK 3 million payable to STX Europe AS and NOK 4 million payable to STX Corporation Co., Ltd, which are unsecured and repayable on demand. At 31 December 2011 other current liabilities were mainly in relation to the purchase of the remaining 49% of the shares in STX OSV Niterói SA.

24 reVenue group 2012 2011Construction contract revenue 10,700 12,004 Sale of goods 108 107 Rendering of services 321 290 total 11,129 12,401

25 salaries and related Costs group 2012 2011Salaries and wages 1,477 1,400 Social security contributions 303 297 Pension costs (Note 12) 42 41 Other expenses 131 161 total 1,953 1,899

Directors fees amounting to NOK 0.6 million are included in salaries and related costs paid to directors of the Company during the financial year (2011: NOK 0.7 million). Remuneration to key management personnel are disclosed in Note 35.

26 other operating eXpenses

Other operating expenses include: group 2012 2011Auditors’ remuneration: - auditors of the Company 1 1 - other auditors1) 6 6 Non-audit fees: - auditors of the Company -2) 3) -2) 3) - other auditors1) 3 -3) Rent and leasing expenses (Note 34) 38 38 Office expenses 66 43 Travel expenses 50 41 Repair and maintenance 58 46 Other items below 10% of total other operating expenses 327 375 total 549 550

1) Included in remuneration to “other auditors” is NOK 9 million (2011 NOK 6 million) to other KPMG affiliated firms. 2) Applicable to KPMG Singapore 3) Less than NOK 1 million

Other operating expenses are mainly related to expenses incurred by STX OSV AS (46% in FY2012 and 35% in FY2011).



27 finanCial inCoMe and finanCial Costs

group 2012 2011financial income Interest income on loan and receivables, including bank deposits 53 45 Dividend income - 2 Foreign exchange gain 72 68 Net change in fair value of unqualified hedge instruments and embedded derivatives - 3 Other financial income 4 5 total 129 123 financial costs Interest expense on loans and borrowings (13) (16)Foreign exchange loss (57) (80)Other financial expenses (41) (31)total (111) (127)net financial items 18 (4)

28 inCoMe taX eXpenses

The Group is subject to income tax on an entity basis on profit arising or derived from the tax jurisdictions in which the Group entities are domiciled and operate. (a) incoMe tax recognizeD in profit or loss group 2012 2011current tax expense:Current year (532) (689)Under provision in respect of prior years 9 9 total (523) (680) Deferred tax expense: Originating and reversal of temporary differences 91 77 Over provision in respect of prior years (2) (14)Changes in recognized tax losses - 6 total 89 69 total income tax expense (434) (611)



(b) incoMe tax recognizeD in other coMprehensiVe incoMe

2012 2011 tax tax before (expense)/ net before (expense)/ netgroup tax benefit of tax tax benefit of taxother comprehensive incomeExchange differences on translation of foreign operations (19) - (19) (13) - (13)Income tax on translation exchange difference on monetary items considered as part of the Group’s net investment in foreign subsidiary (58) 1 (57) (10) - (10)Net fair value changes of available-for-sale financial assets - - - - - - total (77) 1 (76) (23) - (23)

(c) reconciliation of effectiVe tax rate

2012 2011 % amount % amountprofit before tax 1,323 2,213 Tax at the domestic rates applicable to profits in the countries where the Group operates 24.0% 318 27.3% 604 Under provision in respect of prior years 0.7% 9 -0.4% (9)Income not subject to tax -0.4% (5) -1.1% (24)Non deductible expenses 1.3% 18 1.5% 33 Utilization of previously unrecognized tax assets -1.5% (20) -0.8% (17)Tax losses for which no deferred income tax asset was recognized 3.6% 48 0.0% - Withholding tax 5.0% 66 1.1% 24 total income tax expense in profit or loss 32.7% 434 27.6% 611

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.



29 earnings per share

The Group’s basic and diluted earnings per share are calculated as follows: group 2012 2011net profit attributable to ordinary shareholders of the company 902 1,594 Weighted average number of shares (million) 1,180 1,180 Basic earnings per share (NOK per share) 0.76 1.35 basic earnings per share (sgD cents per share) 16.78 29.30

Adjusted weighted average number of shares (million) 1,182 1,180 Diluted earnings per share (NOK per share) 0.76 1.35 Diluted earnings per share (sgD cents per share) 16.75 29.30 Exchange rates: 31/12/12 31/12/11SGD/NOK 4.5565 4.6100

The SGD amounts are translated from NOK based on the exchange rates prevailing at the reporting date as shown above.

30 operating segMents

(a) reportable segMentsThe application of FRS 108 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, which for the Group is the CEO, to make decisions about resource allocation and performance assessment. The main business activity and core business of the Group is design and construction of offshore and specialized vessels. This segment comprises all vessels that traditionally have been built within the Group. This is the core business of the Group and the Group is neither actively pursuing nor engaging in other areas of business. Therefore, management is of the view that the Group has only one single reportable segment. (b) geographical inforMation The Group has activity in seven (2011: six) countries and principally in Norway. In presenting geographical information, segmental revenue is based on the geographical location of companies. Segmental assets are based on the geographical location of the assets and the expenditure incurred.



31 finanCial risk ManageMent objeCtiVes and poliCies oVerVieW The main risks arising from the Group’s financial instruments are credit risk, market risk (mainly interest rate risk and foreign currency risk) and liquidity risk. The Group enters into derivative transactions, primarily forward foreign currency contracts, to manage the Group’s exposure risks arising from its operations and sources of finance. It is the Group´s policy that no trading of derivatives shall be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks.

creDit risK Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s loans and receivables.

The Group has an established process to evaluate the creditworthiness of its prospective customers. An internal credit review and rating is carried out on the prospective customers prior to contract signing. The Group requires customers to have the necessary funding in place at signing of the shipbuilding contract. In instances where the customer’s funding is not in place, the Group would, where appropriate, obtain collaterals, including bank guarantees and letters of credit, from customers.

There is no significant concentration of credit risk on outstanding financial instruments as at the reporting date.

revenue non-current assets 2012 2011 2012 2011Norway 9,229 8,813 1,274 1,068 Romania* - 619 382 285 Singapore 534 990 166 180 Brazil 1,366 1,979 588 255 total 11,129 12,401 2,410 1,788 * Related only to vessels completed and delivered from Romania.

(c) MaJor custoMersThe Group has a few single customers which have generated revenue amounting to 10 percent or more of the Group’s total revenue:

% 2012 % 2011Customer 1 26% 2,844 21% 2,663 Customer 2 19% 2,075 5% 630 total 4,919 3,293


NOTES


The Group´s maximum exposure to credit risk is represented by the carrying values of each financial asset, including derivative financial instruments with positive fair values, as follows:


group company 2012 2011 2012 2011Interest-bearing receivables (Note 9) 162 2 600 - Other receivables 18 5 - - Trade and other receivables less derivative financial instruments (Note 16) 1,721 1,682 50 29 Derivative financial instruments (Note 16) 199 148 - - Cash and cash equivalents (Note 17) 2,437 3,064 24 653 total 4,537 4,901 674 682 Cash and cash equivalents are placed in banks and financial institutions which are regulated. Trade and other receivables that are not past due are with counterparties with good collection track record and credit rating with the Group.

The age analysis of trade receivables that are not impaired is as follows: group 2012 2011Not due 84 15 0-30 days 66 249 31-120 days 100 205 121-365 days 43 32 More than 365 days - - total 293 501 This is not applicable for the Company.

Allowances for impairment losses for trade receivables: group 2012 2011Gross amount 322 536 Less: Allowance for impairment losses (29) (35)total 293 501 At 1 January 35 25 Allowance (written back)/made (2) 12 Utilized (4) (2)at 31 December 29 35


NOTES


Trade receivables that are individually determined to be impaired at the reporting date relate to non-shipbuilding receivables.

Based on historic defaults rates, the Group believes that, apart from the above impaired receivables, no impairment allowance is necessary in respect of trade receivables not past due and past due due to the good credit records of the Group’s customers.

interest rate risK Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group´s exposure to fluctuations in interest rate relates primarily to construction loan facilities. Interest rate risk is managed on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. Normally the Group will enter into construction loans with floating rates in Norway and Singapore/Vietnam and fixed rate construction loans in Brazil (as fixed rate is the most common facility offered in the Brazilian market).

No derivative financial instruments are entered into to manage the interest rate risks of the Group.

At the reporting date, the interest rate profile of the Group’s interest bearing financial instruments was: group company 2012 2011 2012 2011fixed rate instrumentsFinancial assets (cash and cash equivalents) 292 375 - - Financial liabilities (loans and borrowings) 1,989 1,486 - -

Variable rate instruments Financial assets (cash and cash equivalents) 2,145 2,689 24 653 Financial assets (Interest bearing receivables) 162 2 600 - Financial liabilities (loans and borrowings) 1,940 1,152 - -

sensitivity analysisA change of 50 basis points (“bp”) in interest rates at reporting date would have increased/(decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. group company profit and loss profit and loss 50bp 50bp 50bp 50bp increase decrease increase decrease31 December 2012 Variable rate instruments (net) 1 (1) 2 (2)Cash flow sensitivity (net) 1 (1) 2 (2)31 December 2011Variable rate instruments (net) 6 (6) 2 (2)Cash flow sensitivity (net) 6 (6) 2 (2)

foreign currency risKAs a significant part of the operations take place in countries other than Norway (such as Romania, Singapore, Vietnam and Brazil), the Group’s financial performance can be affected, especially by movements in the EUR/NOK and USD/NOK currency rates as well as local (functional) currency versus foreign currencies. Where contract prices and costs are in the same foreign currency, there is an economic hedge and the currency exposure of such contracts is relatively small.



The Group utilizes forward foreign currency contracts to hedge its currency risk for contracts in foreign currencies where exposure is significant. The Group uses forward contracts purely as a hedging tool and does not use forward foreign currency contracts for trading purposes.

The Group’s and Company’s exposure to foreign currency risk, in millions of foreign currency units, when compared to functional currencies, are as follows:

31 December 2012 31 December 2011 group eur usD sgD eur usD sgDfinancial assetsTrade and other receivables 29 8 - 40 196 - Cash and cash equivalents 77 3 1 82 - 3 total financial assets 106 11 1 122 196 3 financial liabilities Loans and borrowings - (267) - - (228) - Trade and other payables (22) - - (23) (213) - total financial liabilities (22) (267) - (23) (441) - net financial assets / (liabilities) 84 (256) 1 99 (245) 3

A significant portion of the net USD liability is naturally hedged against the foreign exchange from anticipated USD sale transactions. 31 December 2012 31 December 2011 company eur usD sgD eur usD sgDfinancial assetsCash and cash equivalents - - 1 - - 3 total financial assets - - 1 - - 3

The assessment of the foreign currency exposure is based on the Group´s and Company´s monetary items. The construction work in progress (asset/liability), since it is a non monetary item, is not dealt with above. This is managed as part of each construction contract.

sensitivity analysisA strengthening of the following foreign currencies as indicated below against the functional currencies of the Company and its subsidiaries at the reporting date for the Group’s and Company’s monetary items, including forward foreign currency contracts, would have increased/(decreased) profit and loss by the amounts shown below. This analysis is based on foreign exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis also assumes that all other variables remain constant. group 2012 2011USD (5% strengthening) (111) (126)EUR (5% strengthening) 33 59 SGD (5% strengthening) -* -* total (78) (67)

* Less than NOK 1 million




total carrying contractual Within Withingroup amount cash flow 1 year 1-5 years >5 yearsat 31 December 2012non–derivative financial liabilitiesTrade and other payables (Note 22) (2,705) (2,705) (2,705) - - Construction loans (Note 19) (3,351) (3,351) (3,351) - - Loans and borrowings (Note 19) (579) (751) (54) (237) (460) Other current liabilities (Note 23) (7) (7) (7) - -

Derivative financial liabilities Forward exchange contracts used for hedging: - Outflow (Note 22) (96) (2,070) (1,829) (241) - - Inflow - 1,974 1,742 232 -

Derivative financial assets Forward exchange contracts used for hedging: - Outflow - (2,722) (1,121) (1,601) - - Inflow (Note 16) 199 2,921 1,199 1,722 - total (6,539) (6,711) (6,126) (125) (460)

at 31 December 2011non–derivative financial liabilitiesTrade and other payables (Note 22) (3,298) (3,298) (3,298) - - Construction Loans (Note 19) (2,379) (2,379) (2,379) - - Loans and borrowings (Note 19) (259) (279) (42) (152) (84)Other current liabilities (Note 23) (163) (163) (163) - -

Derivative financial liabilities Forward exchange contracts used for hedging: - Outflow (Note 22) (93) (2,629) (1,923) (707) - - Inflow - 2,537 1,847 689 -

Derivative financial assets Forward exchange contracts used for hedging: - Outflow - (2,252) (1,171) (1,080) - - Inflow (Note 16) 148 2,400 1,253 1,147 - total (6,044) (6,063) (5,876) (103) (84)

A weakening of the above foreign currencies against the functional currencies of the Company and its subsidiaries at the reporting date would have equal but opposite effects on the above currencies to the amounts shown above, on the basis that all other variables remain constant. liquiDity risK Liquidity risk is the risk that the Group will encounter in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group monitors its net operating cash flows based on individual construction contracts. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of available credit facilities and construction financing. The table below analyses the maturity profile of the Group’s and Company’s financial liabilities (including derivative financial instruments) based on the gross contractual undiscounted cash flow:



total carrying contractual Within Withincompany amount cash flow 1 year 1-5 years >5 yearsat 31 December 2012non–derivative financial liabilitiesTrade and other payables (Note 22) (4) (4) (4) - - Other current liabilities (Note 23) (1) (1) (1) - -total (5) (5) (5) - -

at 31 December 2011non–derivative financial liabilitiesTrade and other payables (Note 22) (15) (15) (15) - -

The Company has issued financial guarantees in relation to certain of the Group´s activities which involves advance payment guarantees (customers, suppliers), foreign exchange guarantees, construction loan guarantees and minor performance bonds. However, based on materiality, none of these have been recognized and included in the above table, given that the counterparties are not gaining access to a new asset pool or significant enhanced creditworthiness.



accounting classification and fair valuesfair value disclosuresThe fair values of financial assets and financial liabilities, together with the carrying amounts shown in the statement of financial position, are as follows: fair fair amortized amortized value – value – cost – cost – total hedging available- loans and financial carrying fairgroup note instruments for-sale receivables liabilities amount value

31 December 2012financial assetsOther investments 8 - 316 - - 316 316 Non-current interest-bearing receivables 9 - - 82 - 82 82 Other non-current receivables 10 - - 18 - 18 17 Trade and other receivables 16 199 - 1,721 - 1,920 1,920 Interest-bearing receivables 9 - - 80 - 80 80 Cash and cash equivalents 17 - - 2,437 - 2,437 2,437 total 199 316 4,338 - 4,853 4,852

financial liabilities Non-current loans and borrowings 19 - - - (545) (545) (515)Other non-current payables 20 - - - (5) (5) (5)Trade and other payables 22 (96) - - (2,705) (2,801) (2,801)Current loans and borrowings 19 - - - (3,385) (3,385) (3,385)Other current liabilities 23 - - - (7) (7) (7)total (96) - - (6,647) (6,743) (6,713)



31 December 2011financial assetsOther investments 8 - 187 - - 187 187 Non-current interest-bearing receivables 9 - - 1 - 1 1 Other non-current receivables 10 - - 5 - 5 5 Trade and other receivables 16 148 - 1,682 - 1,830 1,830 Interest-bearing receivables 9 - - 1 - 1 1 Cash and cash equivalents 17 - - 3,064 - 3,064 3,064 total financial assets 148 187 4,753 - 5,088 5,088

financial liabilities Non-current loans and borrowings 19 - - - (231) (231) (216)Other non-current payables 20 - - - (4) (4) (4)Trade and other payables 22 (93) - - (3,298) (3,391) (3,391)Current loans and borrowings 19 - - - (2,407) (2,407) (2,407)Other current liabilities 23 - - - (163) (163) (163)total financial liabilities (93) - - (6,103) (6,196) (6,181)

interest rates used for determining fair valueThe interest rates used to discount estimated cash flows, when applicable, are based on management´s best estimates and the discount rates are the market interest rates for a similar instrument at the reporting date. The discount rates used for non- current loans and borrowings for both years were 2%-6%.



group level 1 level 2 level 3 totalat 31 December 2012AssetsAvailable-for-sale financial assets - - 316 316 Forward contracts used for hedging - 199 - 199 total assets - 199 316 515 Liabilities Forward contracts used for hedging - (96) - (96)total liabilities - (96) - (96)total - 103 316 419

at 31 December 2011 Assets Available-for-sale financial assets - - 187 187 Forward contracts used for hedging - 148 - 148total assets - 148 187 335 Liabilities Forward contracts used for hedging - (93) - (93)total liabilities - (93) - (93)total - 55 187 242

The Company has no financial assets or liabilities carried at fair value.

The different levels of the fair value hierarchy are as follows: • Level 1 – Fair values are measured based on quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 – Fair values are measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3 – Fair values are measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

fair Value hierarchyThe table below analyses financial instruments carried out at fair value, by valuation methods as at 31 December 2012 and 2011.

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy: available for sale 31 December 2012 2012 2011At 1 January 187 91 Purchases 129 96 Total gains and losses recognized in: - profit or loss - - - other comprehensive income - (1)at 31 December 316 187

DeterMination of fair Values securitiesThe fair value of the available-for-sale equity instruments cannot be fair valued based on observable market data, since the equity instruments held by the Group are not traded in an active market. Hence, the equity instruments are included in level 3.

derivativesFair value of forward foreign currency contracts is determined using the forward exchange rates at the reporting date.



32 aCquisition of subsidiary and non-Controlling interests

acquisition of subsiDiaries in 2012stx osV Design liburna ltD (liburna).On 13 January 2012, the Group acquired 51% of Liburna Inzenjering d.o.o. (Liburna Engineering Ltd), a company incorporated in Croatia. The new subsidiary is based in Rijeka and has 11 employees. Consequent to the acquisition, Liburna became a subsidiary of STX OSV Design AS, which is wholly-owned by STX OSV AS, a 100% held subsidiary of the Company. Liburna is an engineering company specializing in ship design, mainly focusing on offshore vessels. Liburna is a long-time subcontractor of STX OSV Design AS and the acquisition is in line with the Group’s strategy of increasing its engineering capacity. Liburna was renamed as STX OSV Design Liburna Ltd.

consideration transferred The consideration for the transaction was NOK 2.1 million, fully paid at closing, The consideration was satisfied in cash.

identifiable assets acquired and liabilities assumed* note 2012Property, plant and equipment 4 - Trade and other receivables - Cash and cash equivalents - Trade and other payables -total identifiable net assets -

*No separate line item amounts to more than NOK 0.5 million, and hence is rounded down to zero.

purchase price allocationAn intangible asset was recognized as a result of the acquisition as follows: note 2012Total consideration transferred 2 Fair value of identifable net assets -intangible asset 5 2 The intangible asset is attributable mainly to the skills and talents of Liburnas workforce, which cannot be separately valued, and hence allocated to goodwill, representing future economic benefits accruing to the Group. None of the goodwill recognized is expected to be deductible for tax purposes.

cash flows 2012Total consideration for acquisition of subsidiary 2 Cash acquired -net cash outflows 2

stx osV engineering breViK as On 15 May 2012, the Group aquired 70% of Brevik Partners AS, a company incorporated in Norway, The new subsidiary is based in Brevik and has four employees. Consequent to the acquisition, Brevik Partners AS became a subsidiary of STX OSV Brevik Holding AS, which is wholly owned by STX OSV AS, a 100% held subsidiary of the Company. Brevik Partners AS is an engineering company specializing in offshore technology and equipment. The investment in the company, which was renamed STX OSV Engineering Brevik AS, is expected to stregthen STX OSV’s ability to develop new concepts and integrated solutions for offshore and specialized vessels.

consideration transferredThe consideration for the transaction was NOK 3.8 million, fully paid at closing, the consideration was satisfied in cash.



identifiable assets acquired and liabilities assumed 2012Trade and other receivables 2 Cash and cash equivalents 1 Trade and other payables (2)total identifiable net assets 1

purchase price allocationAn intangible asset was recognized as a result of the acquisition as follows: note 2012Total consideration transferred 4 Fair value of identifable net assets (1)intangible asset 5 3 The intangible asset is attributable mainly to the competence and knowhow of the company’s employees, which cannot be separately valued, and hence allocated to goodwill, representing future economic benefits accruing to the Group. None of the goodwill recognized is expected to be deductible for tax purposes.

cash flows 2012Total consideration for acquisition of subsidiary 4 Cash acquired (1)net cash outflows 3

The effect on the consolidated revenue and the consolidated profit attributed to shareholders arising from these acquisitions are insignificant.

acquisition of subsiDiaries in 2011 aaKre eigenDoM asOn 30 June 2011, The Group acquired the entire shareholding interest in Aakre Eigendom AS (Aakre) from an unrelated party. Consequent to the acquisition, Aakre became a wholly-owned subsidiary of STX OSV AS, a 100% held subsidiary of the Company.

Aakre is located in the nearby vicinity of the shipyard in Søviknes, and provides housing facilities to subcontractor personnel working at the shipyard. The investment is expected to save rental costs to the Group.

consideration transferredThe consideration for the transaction was NOK 4.6 million, fully paid at closing, and then a contingent consideration amounting up to NOK 1 million, payable at 31 December 2011. The latter was dependent on reaching an agreement on an adjusted balance sheet as of the transaction date which in all material aspects did not deviate from the values presented in the table below. As of 31 December 2011 the contingent consideration was estimated to be NOK 500 thousand, however settlement was postponed until second quarter of 2012.

The contingent consideration was settled during 2012 by NOK 756 thousand. The deviation between the provision and actual settlement have been realized through profit or loss.

Both initial and contingent consideration was satisfied in cash. identifiable assets acquired and liabilities assumed note 2011Property, plant and equipment 4 3 Trade and other receivables 1 Cash and cash equivalents 1 Trade and other payables (1)total identifiable net assets 4



purchase price allocation An intangible asset was recognized as a result of the acquisition as follows: note 2011Total consideration transferred (including contingent consideration) 5 Fair value of identifable net assets (4)intangible asset 5 1

The intangible asset is attributable mainly to the lease contract on housing facilities and will be amortized over the remaning period of the lease contract.

cash flows 2011Total consideration for acquisition of subsidiary 5 Cash acquired (1)net cash outflows 4

The effect on the consolidated revenue and the consolidated profit attributed to shareholders arising from this acquisition is insignificant.

acquisition-related costsThe Group only incurred an insignificant amount of acquisition-related costs and this is included in other operating expenses in the Group’s statement of comprehensive income.

neWly incorporateD subsiDiaries During the yearThe following subsidiaries have been incorporated during FY2012:

stx osV offshore breViK asOn 1 November 2012, the Group, through STX OSV Brevik Holding AS (100%), established STX OSV Offshore Brevik AS, with the purpose of delivering offshore industrial services and installations. The company is located in Brevik, Norway with a share capital of NOK 100 thousand.

acquisition of non-controlling interestsThroughout 2012 the Group continued to acquire minority shares in STX OSV Tulcea SA (Tulcea). In total an additional 0.18% interest in STX OSV Tulcea SA (“Tulcea”) was aquired for a total of NOK 1 million in cash, increasing the ownership from 99.26% to 99.44%. The shares were acquired at a fixed price of RON 5 per share.

33 Capital ManageMent

The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios so as to maintain investors’, creditors’ and market confidence and to support and sustain future development of the business. The Group seeks to maintain a healthy balance between higher returns that might be possible with higher levels of borrowings, and the advantages and security afforded by a sound capital position. All companies in the Group shall have net working capital that is sufficient to finance construction projects during a normal to high level activity period. Financing of major investments and acquisitions shall as far as possible be done by long term debt, with a maturity profile that corresponds to the useful life of the investment.

Capital consists of paid up capital, other reserves, retained earnings and non-controlling interests of the Group. The Board of Directors monitors the return of capital as well as the level of dividends to the shareholders. There were no changes in the Group’s approach to capital management during the year.



35 related parties

(a) parent anD ultiMate holDing coMpany At the reporting date, STX Europe AS is the immediate holding company of the Company. The ultimate holding company is STX Corporation Co., Ltd, incorporated in South Korea. (b) transactions With Key ManageMent personnelKey management personnel compensation The Group’s principles relating to remuneration to the Group’s key management personnel are to cultivate a performance-based corporate culture based on the Group’s values, and to motivate contribution to good financial performance and greater value creation for the shareholders of the Group. The Group’s key management personnel participate in the Group’s collective pension plan, under which all employees are entitled to a pension contribution amounting to 2.5% of salary up to 12 times the social security base amount. In addition, the Group’s executive management team and other senior managers have an additional 2.5% salary pension contribution. During FY2011, the Group established a stock option scheme for the key management in the Group (see Note 13).

Remuneration to key management personnel of the Group during the year is as follows:

groupNumbers in NOK thousand 2012 2011Base salary 14,132 12,625 Variable pay 6,550 7,250 Other benefits 268 213 Pension benefit 747 606 total 21,697 20,694

34 operational lease CoMMitMents Non-cancellable operating lease rentals are payable as follows:

group 2012 2011Within one year 32 30 Between one and five years 90 120 More than five years 25 25 total 147 175

STX OSV Holdings Limited did not have any lease commitments as of 31 December 2012. The Group’s non-cancellable operating lease relate primarily to yard lease which has a remaining lease period of five years. The subsidiary STX OSV Brevik Holding AS leases yard and office premises and the lease has a non-cancellable remaining period of five years. The leases have options for renewal. During the financial year, an amount of NOK 38 million was recognized as an expense in profit or loss in respect of operational leases (NOK 38 million in FY2011).

Except from covenant requirements as described in Note 19, neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. There are no breach of covenants as of 31 December 2012.



The purchases defined as other operating expenses from parent company and other related parties are related to administration services.

Commission fees relating to financial guarantees provided by STX Europe AS are classified as other operating expenses.

Other related parties refer to companies which are owned by STX Europe AS but are not part of the Group, and entities which are controlled or significantly influenced by the Group’s key management personnel and their close family members.

Outstanding balances receivable from/payable to related parties are disclosed in Notes 9, 16, 19 and 20 accordingly.

The holding company, STX Europe AS, has during the financial year guaranteed various corporate loans, construction loans, advance payment bonds and suppliers on behalf of the Group. As of the reporting date, these guarantees amounted to NOK 26 million (2011: NOK 1,839 million).

During the year, the remaining prepayment installments pursuant to the shipbuilding contracts for three projects (amounting to NOK 57.6 million) were assigned from STX Pan Ocean Co.Ltd. to STX Europe AS. Payment was received from STX Europe AS as part of the settlement between STX Europe AS and Fincantieri Oil & Gas S.p.A in connection with STX Europe AS’s sale of its majority stake in STX OSV Holdings Limited.

(c) other relateD party transactionsThe following transactions took place between the Group and related parties, who are not members of the Group, during the financial year on terms agreed between the parties concerned:

transactions anD agreeMents With relateD parties

sales of goods and services 2012 2011Sales of construction contracts and engineering services to other related parties 2 33 total sales of goods and services 2 33

purchases of goods and services 2012 2011Cost of goods, other related parties (19) (48)Other operating expenses, parent company (3) (13)Other operating expenses, other related parties (2) (13)total purchases of goods and services (24) (74)



36 group of CoMpanies

The subsidiaries included in the STX OSV Holdings Limited Group at 31 December 2012 were as follows: effective equity held by the group place of incorporation 2012 2011name of the company and business principal activities % %STX OSV AS Norway Shipbuilding 100 100subsidiaries of stx osV asSTX OSV Electro AS Norway Electrical/automation installation 100 100STX OSV RO Holding SRL Romania Holding company 100 100STX OSV Niterói SA Brazil Shipbuilding 100 100Estaleiro Promar SA Brazil Shipbuilding 51 51Estaleiro quissamã Ltda Brazil Project development 51 51STX OSV Representação Ltda1) Brazil Electrical installation n/a 100STX OSV Singapore Pte. Ltd. Singapore Sales, trading and engineering 100 100STX OSV Design AS Norway Project development and ship design 100 100STX OSV Accommodation AS Norway Accommodation installation 100 100STX OSV Piping AS Norway Pipe installation 100 100STX OSV Brevik Holding AS Norway Holding company 100 100Seaonics AS Norway Ship automation systems 51 51Aakre Eigendom AS Norway Accommodation facilities 100 100subsidiaries of stx osV piping asSTX OSV Piping SRL Romania Pipe installation 100 100subsidiaries of stx osV Design as STX OSV Design Liburna Ltd Croatia Ship design 51 n/asubsidiaries of stx osV electro asSTX OSV Electro Tulcea SRL2) Romania Electrical installation 100 100STX OSV Electro Niterói Ltda3) Brazil Electrical installation 100 100STX OSV Electro Braila SRL Romania Electrical installation 100 100STX Electrical Installation and Engineering (India) Private Limited4) India Electrical installation 100 100Emil Langva AS5) Norway Electrical installation n/a 100STX Brevik Philadelphia USA Dormant 100 100subsidiaries of stx osV ro holding srlSTX OSV Tulcea SA Romania Shipbuilding 99 99- STX OSV Scanyard SRL Romania Shipbuilding Liquidated 100STX OSV Braila SA6) Romania Shipbuilding 100 100 - Braila Ship Repair SA7) Romania Ship repair and maintenance 100 100 - AJA Ship Design SA Romania Ship engineering 60 60subsidiaries of stx osV singapore pte. ltd.STX OSV Vung Tau Ltd. Vietnam Shipbuilding 100 100subsidiary of stx osV accommodation asSTX OSV Accommodation Tulcea SRL Romania Accommodation installation 100 100subsidiaries of stx osV brevik holding asSTX Grenland Industri AS Norway Onshore industrial services and install. 100 100- Brevik Elektro AS Norway Electrical installation 100 100- Hjallum AS8) Norway Pipe installation n/a 100STX Brevik Support AS Norway Ship services 100 100STX OSV Engineering Brevik AS Norway Engineering 70 n/aSTX OSV Offshore Brevik AS Norway Offshore industrial services and install. 100 n/aRonor AS Norway Dormant 100 100- Noryards AS 9) Norway Dormant 100 100- Scanrom SRL Romania Dormant 100 100

KPMG LLP are the auditors of the Singapore-incorporated subsidiary. Other member firms of KPMG International are auditors of all significant foreign-incorporated subsidiaries except where auditors need not be appointed.

1 ) Merged into Estaleiro Quissamã Ldta during FY2012 2) STX OSV Electro AS 99.73%, STX OSV Accommodation Tulcea 0.23% 3) STX OSV Electro AS 99%, STX OSV AS 1% 4) STX OSV Electro AS 99%, STX OSV Electro Tulcea SRL 1% 5) Emil Langva was merged into the parent company during FY2012

6) STX OSV RO Holding SRL 94.12%, STX OSV AS 5.88% 7) STX OSV Braila SA 68.58%, STX OSV Brevik Holding AS 31.42% 8) Hjallum AS was sold in FY2012 9) Noryards AS was merged into the parent company Ronor AS during FY2012

37 post balanCe sheet eVents new owners of the group On 21 December 2012, Fincantieri Oil & Gas S.p.A. a direct wholly-owned subsidiary of Fincantieri – Cantieri Navali Italiani S.p.A., entered into a share purchase agreement with STX Europe AS to buy their 50.75 interest in the Company. The transaction was formally closed on 23 January 2013. Following the transaction Fincantieri Oil & Gas S.p.A. and Cassa Depositi e Prestiti S.p.A. became the immediate and the ultimate holding companies of the Company. Both companies are incorporated in Italy.

new name of the group On 5 March 2013, the Company announced that the name of the group companies are changed from STX OSV to VARD. The new name of the Group is Vard Group and the rebranding process is a result of the new Italian ownership. For STX OSV Holdings Limited, the name change to Vard Holdings Limited is still pending approval at the AGM to be held on 23 April 2013.

38 ContingenCies and Capital CoMMitMents

guarantee obligations As part of its ordinary operations, completion guarantees and guarantees for advance payments from customers (refundment guarantees) are issued. Such guarantees typically involve a financial institution that writes the guarantee vis-à-vis the customer.

project risks and uncertainties The Group’s operations are subject to long term contracts, many of which are fixed-price, turnkey contracts that are awarded on a competitive bidding basis. Failure to meet schedule or performance guarantees or increases in contract costs can result in non-recoverable costs, which could exceed revenues realized from the applicable project. Where a project is identified as loss-making, foreseeable loss provisions are made. The accounting treatment is based on experience, events and management’s best judgement. 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 drawing up periodical financial reports.

legal proceedings With its extensive worldwide operations, companies included in the Group are in the course of its activities involved in numerous legal disputes. Provisions have been made to cover the expected outcome of the disputes to the extent that negative outcomes are likely and reliable estimates can be made. However, the final outcome of these cases will always be subject to uncertainties and resulting liabilities may exceed booked provisions. As of the reporting date, the Group is not part of any major ongoing legal dispute, which could have a material impact on the financial statements, and not already provided for.

capital commitments In relation to the participation of minority stakes in various of its own shipbuilding projects (Note 8), the Group is committed to additional equity participation. Some construction contracts contain a commitment to provide seller credit. In relation to the construction of the new shipyard through the subsidiary Estaleiro Promar SA, the Group has an additional capital commitment. The total capital commitments are summarized in the table below:

capital commitments 2013 2014Equity participation 43 - Seller credit 154 175 Capital commitment related to construction of new shipyard in Suape, Brazil 50 - total capital commitments 247 175

In relation to equity participation, the intention is to exit within one to three years from the time of delivery.





clean-up costs The Group’s operations are subject to numerous national and supra-national environmental regulations, including removal and clean-up of environmental contamination. Although there have to date been no indications that the Group have failed to comply with applicable environmental rules, regulations or permits, current concentration limits for hazardous material will apply to historical contamination, and any further studies or changes in concentration limits may result in further clean-up operations or protective measures being imposed in the future. The costs related to such clean-up or protective measures may be significant and could have a material adverse effect on our business, financial condition and results of operations. Although the cost related to this can be material, the Group expects that the potential cost related to this can be covered within existing provisions and normal operations without any material negative impact.

as at 18 March 2013

class of equity securities number of equity securities Voting rightsOrdinary shares 1,180,000,000 One vote for each share

Distribution of shareholdings

size of shareholdings number of shareholders % number of shares %1 - 999 7 0.09 1,463 0.001,000 - 10,000 5,302 66.67 32,875,376 2.7910,001 - 1,000,000 2,619 32.93 101,119,000 8.571,000,001 and above 25 0.31 1,046,004,161 88.64total 7,953 100.00 1,180,000,000 100.00

substantial shareholders(As recorded in the Register of Substantial Shareholders) Direct interest % Deemed interest %Fincantieri Oil & Gas S.p.A. (1) 599,091,000 50.77 57,380,268 4.86Fincantieri – Cantieri Navali Italiani S.p.A. (2) - - 656,471,268 55.63Fintecna S.p.A. (2) - - 656,471,268 55.63Cassa Depositi e Prestiti S.p.A. (2) - - 656,471,268 55.63OZ Management, L.P. (3) - - 68,466,000 5.80Och-Ziff Holding Corporation (3) - - 68,466,000 5.80Och-Ziff Capital Management Group, LLC (3) - - 68,466,000 5.80Daniel Saul Och (3) - - 68,466,000 5.80

notes:(1) 57,620,268 shares in the Company were tendered in acceptance of the mandatory unconditional cash offer by Credit Suisse

(Singapore) Limited and Nomura Singapore Limited, for and on behalf of Fincantieri Oil & Gas S.p.A., in the period from 13 February 2013 to 13 March 2013, of which 240,000 shares have been settled and transferred to Fincantieri Oil & Gas S.p.A.. Pending settlement of the consideration due in respect of the remaining 57,380,268 shares and the transfer of such 57,380,268 shares to Fincantieri Oil & Gas S.p.A., Fincantieri Oil & Gas S.p.A. is deemed to have an interest in respect of 57,380,268 shares.

(2) By virtue of Section 4 of the Securities and Futures Act, Chapter 289 of Singapore, these entities are deemed to be interested in the shares held by Fincantieri Oil & Gas S.p.A. in the Company. The relationship of the said entities is as follows:

(i) Fincantieri – Cantieri Navali Italiani S.p.A. is the immediate holding company of Fincantieri Oil & Gas S.p.A. (ii) Fintecna S.p.A. holds 99.4% of Fincantieri – Cantieri Navali Italiani S.p.A. (iii) Cassa Depositi e Prestiti S.p.A. is the immediate holding company of Fintecna S.p.A.

(3) Deemed interest arises as follows:

(i) OZ Management, L.P. (“OZM”) manages, directly or indirectly, the investments of a group of funds (collectively, “OZ Funds”) that hold shares in the Company and has a deemed interest in all the 68,466,000 shares held by the OZ Funds in the share capital of the Company.

(ii) Och-Ziff Holding Corporation (“OZH”), the sole general partner of OZM, is authorized to manage and represent OZM and is therefore deemed to be interested in the abovementioned shares. OZH is wholly owned by Och-Ziff Capital Management Group, LLC (“OZCM”). Daniel Saul Och holds not less than 20% of voting rights in OZCM. OZCM and Daniel Saul Och are therefore deemed to be interested in the abovementioned shares.

134 / statistics of shareholDings / VarD / Annual Report 2012

STATISTICS OF SHAREHOLDINGS

twenty largest shareholders

no. name of shareholders number of shares %1. HSBC (SINGAPORE) NOMINEES PTE LTD 645,430,198 54.702. CITIBANK NOMINEES SINGAPORE PTE LTD 112,887,469 9.573. DBS NOMINEES PTE LTD 80,866,955 6.854. THE CENTRAL DEPOSITORY PTE LIMITED 56,763,470 4.815. RAFFLES NOMINEES (PTE) LIMITED 46,957,878 3.986. DBSN SERVICES PTE LTD 33,216,200 2.817. UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 13,348,770 1.138. DB NOMINEES (SINGAPORE) PTE LTD 10,000,861 0.859. OCBC SECURITIES PTE LTD 8,914,000 0.7610. UOB KAY HIAN PRIVATE LIMITED 6,578,000 0.5611. MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 4,026,131 0.3412. DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 3,118,000 0.2613. MAYBANK KIM ENG SECURITIES PTE LTD 2,966,000 0.2514. PHILLIP SECURITIES PTE LTD 2,905,180 0.2515. CIMB SECURITIES (SINGAPORE) PTE LTD 2,510,009 0.2116. MERRILL LYNCH (SINGAPORE) PTE LTD 2,142,440 0.1817. BNP PARIBAS SECURITIES SERVICES SINGAPORE BRANCH 2,130,600 0.1818. OCBC NOMINEES SINGAPORE PRIVATE LIMITED 1,854,000 0.1619. HL BANK NOMINEES (S) PTE LTD 1,600,000 0.1420. MACqUARIE CAPITAL SECURITIES (SINGAPORE) PTE LIMITED 1,531,000 0.13 total 1,039,747,161 88.12

percentage of shareholding in public’s handsApproximately, 38.56% of the Company’s shares are held in the hands of the Public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST.

134 / statistics of shareholDings / VarD / Annual Report 2012 statistics of shareholDings / VarD / Annual Report 2012 / 135

STATISTICS OF SHAREHOLDINGS

NOTICE IS HEREBY GIVEN that the Annual General Meeting of STX OSV Holdings Limited (the “Company”) will be held at Pan Pacific Singapore, Pacific 2 Meeting Room, 7 Raffles Boulevard, Marina Square, Singapore 039595, on Tuesday, 23 April 2013 at 10:00 a.m. for the following purposes:

as ordinary business

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the financial year ended 31 December 2012 together with the Auditors’ Report thereon. (resolution 1)

2. To re-elect the following Directors of the Company retiring pursuant to the Articles of Association of the Company:

Mr. Roy Reite (Article 94) (resolution 2a)Mr. Sung Hyon Sok (Article 94) (resolution 2b)Mr. Giuseppe Bono (Article 100) (resolution 2c)Mr. Fabrizio Palermo (Article 100) (resolution 2d)Mr. Pier Francesco Ragni (Article 100) (resolution 2e)

Mr. Roy Reite will, upon re-election as a Director of the Company, remain as the Chief Executive Officer of the Company and will be considered non-independent.

Mr. Sung Hyon Sok will, upon re-election as a Director of the Company, remain as the Chairman of the Nominating Committee and the Remuneration Committee and a member of the Audit Committee, and will be considered independent.

Mr. Giuseppe Bono will, upon re-election as a Director of the Company, remain as the Chairman of the Board of Directors and a member of the Nominating Committee and will be considered non-independent.

Mr. Fabrizio Palermo will, upon re-election as a Director of the Company, remain as a member of the Remuneration Committee and will be considered non-independent.

Mr. Pier Francesco Ragni will, upon re-election as a Director of the Company, remain as a member of the Audit Committee and will be considered non-independent.

3. To approve the payment of Directors’ fees of S$200,000 for the financial year ending 31 December 2013, to be paid quarterly in arrears. (2012: S$200,000.) (resolution 3)

4. To re-appoint KPMG LLP as the Auditors of the Company and to authorize the Directors of the Company to fix their remuneration. (resolution 4) 5. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

136 / notice of annual general Meeting / VarD / Annual Report 2012

NOTICE OF ANNUAL GENERAL MEETING

as speCial business

To consider and if thought fit, to pass the following resolution as an Ordinary Resolution, with or without any modifications: 6. authority to issue shares

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors of the Company be authorized and empowered to:

(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to

be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force,

provided that:

(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the percentage of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:

(a) new shares arising from the conversion or exercise of any convertible securities; (b) new shares arising from exer cising share options or vesting of share awards which are outstanding or subsisting at

the time of the passing of this Resolution; and

(c) any subsequent bonus issue, consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and

(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.

[See Explanatory Note (i)] (resolution 5)

136 / notice of annual general Meeting / VarD / Annual Report 2012 notice of annual general Meeting / VarD / Annual Report 2012 / 137

NOTICE OF ANNUAL GENERAL MEETING

To consider and if thought fit, to pass the following resolution as a Special Resolution, with or without any modifications:

7. the proposed change of name

That:

(a) approval be and is hereby given for the name of the Company “STX OSV Holdings Limited” to be changed to “Vard Holdings Limited” and that the name “Vard Holdings Limited” be substituted for “STX OSV Holdings Limited” wherever the latter name appears in the Memorandum and Articles of Association; and

(b) the Directors (or any one of them) be and are hereby authorized to complete and do all such acts and things (including executing all such documents and approving any amendments, alterations or modifications to any document and affixing the common seal of the Company to any such documents (if necessary)) in connection with the Proposed Change of Name

as they may consider necessary, desirable or expedient to give effect to this Special Resolution as they may deem fit.

[See Explanatory Note (ii)] (resolution 6)

By Order of the Board

Elizabeth KrishnanCompany SecretarySingapore, 1 April 2013

explanatory notes:

(i) The Ordinary Resolution 5 in item 6 above, if passed, will empower the Directors of the Company, effective until the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible into shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders.

For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.

(ii) Kindly refer to the Appendix to the Notice of Annual General Meeting dated 1 April 2013, for details. notes:

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 50 Raffles Place, #32-01

Singapore Land Tower, Singapore 048623 not less than forty-eight (48) hours before the time appointed for holding the Meeting.

138 / notice of annual general Meeting / VarD / Annual Report 2012

138 / notice of annual general Meeting / VarD / Annual Report 2012 VarD / Annual Report 2012 / 139

140 / VarD / Annual Report 2012

VarD / Annual Report 2012 / 141

Design: I&M Kommunikasjon AS Circulation: 10,000Printed by: Equal Brand Design

Photos/3D: VARD, Sigve Aspelund/Tinagent.no, Ocean Visuals, Harald M. Valderhaug, Johan Holmquist, Fincantieri, Ole Walter Jacobsen, Peder Otto Dybvik, Shutterstock, Solstad Offshore, EMAS, JSC Circle Marine Invest.

140 / VarD / Annual Report 2012

ship builDing

Vard aukraNerbøvegen 102NO-6480 Aukra, NorwayTel: + 47 70 21 06 [email protected]

Vard brattvaagStrandgata 74NO-6270 Brattvåg, NorwayTel: + 47 70 21 06 [email protected]

Vard brevikP.O. Box 15NO-3991 Brevik, NorwayTel: + 47 35 51 87 [email protected]

Visiting address:Strømtangveien 17 DNO-3950 Brevik, Norway

Vard langstenNO-6393 Tomrefjord, NorwayTel: + 47 70 21 06 [email protected]

Vard søviknesNO-6280 Søvik, NorwayTel: + 47 70 21 06 [email protected]

Vard braila saCeluozei Street 1ARO-810282 Braila, RomaniaTel: + 40 239 607 [email protected]

Vard tulcea sa22, Ing. Dumitru Ivanov StreetRO-820242 Tulcea, RomaniaTel: + 40 240 534 [email protected]

Vard Vung tau ltd.No. 6, Dong Xuyen IP, Rach Dua Ward,VN-76999 Vung Tau, VietnamTel: + 84 (0)64 3615 [email protected]

Vard niterói saPraça Alcides Pereira1 - Parte Ilha da Conceiçâo- Niterói - RJCEP: 24.050-350, BrazilTel: + 55 212 7189 [email protected]

Vard promar saAE Zona Industrial Portuária ZIPIlha de Tatuoca, SNIpojuca, PEBR- Zip: 55590-000BrazilTel: + 55 81 [email protected]

electrical engineering,installation, poWer & autoMation

Vard electro asKeiser Wilhelms gt. 22NO-6003 Ålesund, NorwayTel: + 47 70 21 06 [email protected]

Vard electro asNO-6280 Søvik, NorwayTel: + 47 70 21 07 [email protected]

Vard electro brazil ltda.Rua José Figueiredo, 5- Centro24030-055 Niterói-Rf, BrazilTel: + 5521 3628 [email protected]

Vard electro braila srlCeluozei Street 1ARO-810282 Braila, RomaniaTel: + 40 239 607 [email protected]

Vard electro tulcea srl22, Ing. Dumitru Ivanov StreetElectrical SectionRO-820242 Tulcea, RomaniaTel: + 40 240 534 [email protected]

Vard group asP.O. Box 76, NO-6001 ÅlesundNorway

Visiting address:Molovegen 6, NO-6004 ÅlesundNorwayTel: + 47 70 21 06 [email protected]

142 / contact inforMation / VarD / Annual Report 2012

As of 18 March 2013, the rebranding and renaming process from STX OSV to VARD is still ongoing. The above names have been reserved and or applied for, but confirmation of formal registration is still outstanding for some entities and jurisdictions. A resolution to rename the Company itself to Vard Holdings Limited will be tabled at the Annual General Meeting on 23 April 2013.

CONTACT INFORMATION

Vard electrical installation andengineering (india) private limited3-B, 3rd FloorKG Oxford Business Centre39/4609, Sreekandath RoadRavipuram, ErnakulamKochi-682 016, IndiaTel: + 91 484 2355 [email protected]

Design & engineering

Vard Design asP.O. Box 76NO-6001 Ålesund, Norway

Visiting address:Brunholmgt. 1BNO-6004 Ålesund, NorwayTel: + 47 70 21 06 [email protected]

Vard Design liburna ltd.Fiorella La Guardie51000 Rijeka, CroatiaTel: + 385 51 344 [email protected]

Vard engineering ÅlesundP.O. Box 76NO-6001 Ålesund, Norway

Visiting address:Molovn. 5NO-6004 Ålesund, NorwayTel: + 47 70 21 06 [email protected]

Vard engineering brevik asStrømtangvn. 19NO-3950 Brevik, NorwayTel: + 47 35 51 87 [email protected]

accoMMoDation

Vard accommodation asJohangarden NæringsparkNO-6264 Tennfjord, NorwayTel: + 47 70 21 06 [email protected]

Vard accommodation tulcea srl22, Ing. Dumitru Ivanov StreetRO-820 242 Tulcea, RomaniaTel: + 40 240 534 [email protected]

traDing anD afterMarKet

Vard tradingP.O. Box 76NO-6001 Ålesund, Norway

Visiting address:Brunholmgt. 1BNO-6004 Ålesund, NorwayTel: + 47 70 21 06 [email protected]

Vard aftermarketStrandgata 74NO-6270 Brattvåg, NorwayTel: + 47 70 21 06 [email protected]

pipe systeMs anD serVices

Vard piping asJohangarden NæringsparkNO-6264 Tennfjord, NorwayTel: + 47 70 21 06 [email protected]

Vard piping tulcea srl22, ing Dumitru Ivanov StreetRO-820 242 Tulcea, RomaniaTel: + 40 240 506 [email protected]

hanDling systeMs

seaonics asNedre Strandgt. 29NO-6004 Ålesund, NorwayTel: + 47 71 39 16 [email protected]

aDDitional actiVities

Vard singapore pte. ltd 3 Temasek Avenue#20-07 Centennial TowerSingapore 039190Tel: + 65 [email protected]

Vard brevik holding asP.O. Box 15NO-3991 Brevik, NorwayTel: + 47 35 51 87 00

Visiting address:Strømtangvn. 21NO-3950 Brevik, Norway

Vard offshore brevik asIndustrivn. 12NO-3940 Porsgrunn, NorwayTel: + 47 35 93 20 [email protected]

Vard grenland industri asHavneveien 31NO-3739 Skien, NorwayTel: + 47 35 56 93 [email protected]

142 / contact inforMation / VarD / Annual Report 2012 contact inforMation / VarD / Annual Report 2012 / 143

CONTACT INFORMATION

www.vard.com

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