DOF ASA FINANCIAL REPORT Q1 2016

Transcription

1 DOF ASA FINANCIAL REPORT Q1 2016

2 Management reporting - accounts Q RESULT (MNOK) Q Q Operating income Operating expenses Net profit from associated and jont ventures Net gain on sale of tangible assets Operating profit before depreciation EBITDA Depreciation Impairment Operating profit - EBIT Financial income Financial costs Net realised gain/loss on currencies Profit before unrealised finance costs Unrealised finance costs Profit (loss) before taxes Taxes Profit (loss) BALANCE (MNOK) ASSETS Intangible assets Tangible assets Non-current financial assets Total non-current assets Receivables Cash and cash equivalents Total current assets Asset held for sale Total current assets incl. asset held for sale Total assets EQUITY AND LIABILITIES Equity Non-current provisions and commitments Non-current liabilities Current liabilities Total liabilities Liabilities held for sale Total liabilities incl liabilities held for sale Total equity and liabilities Net interest bearing liabilities CASH FLOW (MNOK) Q Q Net cash from operation activities Net cash from investing activities Net cash from financing activities Net changes in cash and cash equivalents Cash and cash equivalents at start of the period Exchange gain/loss on cash and cash equivalents Cash and cash equivalents at the end of the period

3 Index Financial report Q Accounts Q Income statement 10 Statement of comprehensive income 10 Statement of financial position 11 Statement of equity and key figures 12 Statement of cash flow 13 Notes to the Accounts 14 Note 1 General 14 Note 2 Management reporting 15 Note 3 Segment information - management reporting 16 Note 4 Hedges 16 Note 5 Tangible assets 17 Note 6 Investment in associated and Joint Ventures 18 Note 7 Cash and cash equivalent 18 Note 8 Interest bearing liabilities 19 Note 9 Events after balance date 20 Note 10 Transaction with related parties 20 Note 11 Taxes 20 Note 12 Share capital and shareholders 20

4 Financial Report Q DOF ASA Financial report Q Group operating income for Q1 based on management reporting totals NOK 2,182 million (NOK 2,521 million) and operating profit before depreciation and amortisation (EBITDA) totals NOK 733 million (NOK 767 million). EBITDA including gain from sale of assets totals NOK 803 million (NOK 992 million). Operating profit (EBIT) is NOK 205 million (NOK 723 million), of which NOK 330 million is impairment loss during Q1. Q1 operational result per segment is as follows: MNOK PSV AHTS CSV Sum Operating income Gain on sale of tangible assets Operating result before depreciation and impairment (EBITDA) Depreciation Impairment Operating result (EBIT) EBITDA margin 39% 36% 37% 37% EBIT margin 0% 1% 13% 9% The average utilisation of the Group s fleet during Q1 was 83%. The utilisation of the subsea fleet was 82%, the AHTS fleet 76% and the PSV fleet 90%. The Group operated during Q1 two (minority owned) vessels in the North Sea spot market, and had four vessels partially in lay-up. Towards the end of the period all vessels were in operation or mobilising for operation. The average contract coverage for the fleet excluding options for the remainder of 2016 is 73%; 82% for the PSV fleet, 73% for the AHTS fleet and 68% for the Subsea fleet. DOF Subsea had nine vessels operating in the subsea project market during the period, with a utilisation for this part of the fleet of 79%. Two vessels within this segment are chartered from external owners. The subsidiary DOF Subsea sold Skandi Protector to the Commonwealth of Australia in January. DOF Subsea and Technip took, through a joint venture company, delivery of a PLSV in April, the vessel is secured an 8-year contract with Petrobras. The subsidiary Norskan took delivery of an AHTS in April, the vessel has started on a 4-year contract with Petrobras. The Group has secured a one-year contract with Statoil, a three months contract with Maersk Oil and an 18-months contract with Nexen Petroleum in the North Sea. Additionally, two vessels have extended their contracts with Total in Argentina with 8 months, while one RSV vessels has entered into an 18 months contract with Petrobras in Brazil. The company has further entered into two 120 days contracts in India for two of the company s AHTS vessels with commencement mid-may. DOF ASA is an international Group of companies owning and operating a fleet of PSVs, AHTS and Subsea vessels in addition to several engineering companies offering services to the subsea market. As of May the fleet comprises 67 vessels (wholly and partly owned), of which three vessels are under construction due for delivery in the period The fleet includes vessels within the following segments: 20 AHTS, 19 PSVs and 28 Subsea. Further, the Group owns a fleet of 62 ROVs, in addition to five ROVs under construction. The Group operates the majority of its fleet on long-term contracts. As of 31 March 2016 the nominal value of these contracts totals approx. NOK 29.8 billion, and in addition options valued at approx. NOK 33.3 billion. Q1 Operations The main part of the Group s PSV and AHTS fleet operates on firm contracts, while the Subsea fleet partly operates on firm contracts and partly on subsea project contracts. In the project market the utilisation of the vessels is affected by the market and seasonal fluctuations. The project revenues represent 44% of the Group s total revenues during the period. PSV The PSV fleet includes 19 vessels, out of which one vessel is partly owned. The majority of the fleet operated during the period in the North Sea on firm contracts. In addition, the subsidiary Norskan Offshore Ltda. operates four vessels for external owners in Brazil. This segment has had high contract coverage and steady operation during the quarter. One vessel, Skandi Gamma, finalized a contract in February and completed its 5-year class docking in March. During the period, one vessel operated in the spot market in the North Sea. AHTS The AHTS fleet includes 19 vessels in operation, in addition to one newbuild, which was delivered in April. 12 vessels operated on contracts in South America during the period; three vessels operated in the North Sea/ Mediterranean and three vessels

5 DOF ASA Financial Report Q operated in Asia. Five of the vessels are 50% owned through DOF Deepwater AS and one vessel is owned through a minority share in Iceman AS. One vessel is currently on a rig move from Latin America to India. In addition, Norskan Offshore Ltda. operates one vessel for external owners in Brazil. The vessels in Asia were laid-up in Singapore until March, and started mobilisation for new contracts towards the end of the quarter. One vessel was in lay-up in the Mediterranean before leaving for Argentina, replacing vessels which were off-hire due to dockings. The vessels operating in Brazil are all holding Brazilian flag vessels, and all vessels operated on firm contracts during the period. One vessel has operated in the North Sea spot market, at variable utilisation and rates. venture company together with Technip. One of the PLSVs has operated outside Angola for Technip during 1st quarter. One RSV vessels finished her contract in February and has thereafter experienced low utilisation. The Group s subsea vessels on time charter contracts experienced steady operation during the quarter with average utilisation of 93%. Average utilisation of the Fleet SUBSEA The Group owns a fleet of 24 subsea vessels in operation, in addition to four vessels under construction. One of the newbuilds was delivered in April. The revenues from the subsea operation include revenues from both project contracts and firm contracts, of which the revenue from the project contracts constitute NOK 904 million. The Group s project activity is operated by the regions North Atlantic, Asia Pacific, North- and South America. The aggregate utilisation of the project fleet during the period was 79%. The utilisation was low during Q1, especially in the Atlantic region mainly due to low season and several vessels at yards for planned class dockings during the period. One of the project vessels operating in Brazil had low utilisation. The Asia Pacific region had three vessels operating in the project market, two vessels operated on firm IMR contracts (inspection, maintenance and repair); one for Shell in the Philippines and one for Chevron in Australia. One vessel started on a contract for OMV in New Zealand. In the North Sea DOF Subsea had three vessels conducting survey and construction work for Eni, Maersk and Statoil. One vessel was partly off hire between contracts. In North America, DOF Subsea had two vessels in operation, conducting survey- and construction work for Freeport McMoran, Chevron and HMC. The subsea operation in Brazil is partly based on firm contracts including lease of both vessels and ROVs, and partly on project contracts. The Group owns and operates nine subsea vessels in Brazil, including five RSV vessels, two construction vessels and two pipe laying vessels. The two pipe laying vessels carry Brazilian flag and are owned and operated through a joint PSV AHTS CSV / Subsea Main Items Interim Accounts Q1 Financial Reporting Operating income totals NOK 2,075 million (NOK 2,388 million). Operating profit before depreciation and amortisation (EBITDA) totals NOK 726 million (NOK 859 million). Gain from sale of assets totals NOK 70 million (NOK 225 million) Operating profit (EBIT) totals NOK 190 million (NOK 612 million). Total depreciation and impairment amount to NOK 536 million (NOK 247 million) of which NOK 280 million (NOK 0 million) is impairment loss. Net financial costs before unrealised gain/loss on foreign exchange and financial instruments totals NOK -394 million (NOK -399 million). Unrealised gain/loss on foreign exchange and change in fair value of financial instruments totals NOK 519 million (NOK -298 million). Pre-tax profit totals NOK 315 million (NOK -84 million). Net interest bearing debt as of 31 March totals NOK 20,666 million (NOK 21,470 million). Net interest bearing debt excluding capital not employed as of 31 March totals NOK 20,541 million (NOK 19,280 million). Book equity including minority interests as of 31 March totals NOK 5,803 million (NOK 6,239 million). The Group uses hedge accounting for parts of the revenues 5

6 Financial Report Q DOF ASA 6 related to the Brazil operation. This operation is based on long-term charter contracts in USD secured with debt in corresponding currency. Tax expense is based on best estimate. Total balance as of 31 March is NOK 30,304 million (NOK 31,626 million), of which vessels, newbuilds and subsea equipment amounts to NOK 22,943 million (NOK 24,048 million). Unemployed capital of NOK 125 million (NOK 2,190 million) relates to one newbuild, Skandi Paraty, delivered in April. Prepaid instalments on the remaining newbuilds are included in investments in associated companies and long term receivables. Cash flow from operational activity after payment of interest is NOK 328 million (NOK 44 million) during Q1. Net cash flow from investing activities is NOK 71 million (NOK -789 million). Cash flow from financing activities totals NOK -754 million (NOK -508 million). Cash flow Q vessels under construction in Norway and in Brazil. Long term financing with BNDES is secured for the Brazilian built vessels. The Group sold one vessel during Q1, with a net liquidity effect from the sale of NOK 275 million. In addition, DOF Subsea has refinanced a fleet loan comprising four vessels during Q1. The Group s short-term portion of long-term debt as of 31 March is NOK 3,598 million (NOK 5,696 million), of which NOK 1,060 million are bond loans with maturity in April 2016 and February The first loan, DOFSUB05, outstanding NOK 360 million was repaid on 29 April. The remaining part of short-term portion of long-term debt, NOK 2,538 million, comprises balloon payments of NOK 278 million, and normal amortisation and drawn credit facilities. There has been an appreciation of NOK and BRL against USD during Q1; however unrealised currency losses still have a considerable effect on the Group s balance sheet and solidity. Unrealised currency losses represent a negative effect which is booked to equity of approximately NOK -1,800 million over the last 12 months. The Group book equity is 19% (20%) as per March Net interest bearing debt has been reduced from NOK 21,470 million to NOK 20,666 million. The portion of long-term debt secured with fixed rate of interest is approximately 67% of total debt and includes debt with fixed interest in BNDES. Interest bearing debt Financing and Capital Structure As of 31 March the Group s remaining commitment for the five vessels under construction totals approx. USD 440 million. This includes the Group s share of commitments related to newbuilds owned through JVs. All vessels under construction are secured on long-term contracts. Two newbuilds were delivered in April. Skandi Paraty, 100% owned, was delivered from the yard in Brazil in April, and has started on a 4-year contract with Petrobras. Skandi Acu, owned 50/50 by DOF Subsea and Technip was delivered from the Norwegian yard in January, and completed as a PLSV from the Dutch yard in April. Skandi Acu is currently mobilising for an 8-year contract with Petrobras in Brazil. The DOF Subsea and Technip JV owns additionally three Vessels and subsea equipment constitute approx. 76% of the Group s total assets. Based on broker estimates received as per March 2016, the market values of the Group s vessels are down with approx. 7% compared to the estimates received in December.

7 DOF ASA Financial Report Q The Group s main financial covenants in existing loan agreements are based upon minimum value adjusted equity ratio of 30% or minimum 20% if the Group s contract coverage is 70% or higher, and a minimum cash covenant of NOK 500 million. As of 31 March, value adjusted equity ratio is 31.7%, and the Group reported free liquidity of NOK 1,216 million. The contract coverage as defined in the loan agreements is above 70% for the coming 12 months. The Group is thus in compliance with its financial covenants as of 31 March 2016, see note 8. Shareholders There were no significant changes in the shareholders structure during the period. As of 31 March the company had 3,302 shareholders. The share price as of 31 March was NOK 3.94 per share, which is a small weakening from year-end. Newbuildings Vessel Yard Delivery Type Contract Financing Skandi Buzios * (NB 824) Skandi Olinda * (EP 09) Skandi Recife * (EP10) *) 50 % ownership Vard Norway 2016 PLSV Vard Norway 2017 PLSV Vard Brazil 2017 PLSV 8 yrs Petrobras 8 yrs Petrobras 8 yrs Petrobras Loan agreement signed with BNDES Loan agreement signed with BNDES DOF Subsea has per end of March two vessels hired in from external owners; Harvey Deep-Sea until August 2017 and Normand Reach until June The vessels are utilised for the DOF Subsea project activity in North America and the Atlantic Region. Employees The Group employed as of 31 March 4,383 people included hired staff, which is a reduction of approximately 400 people since year-end. The offshore marine personnel counts 2,614 people, while 1,468 people are employed within the subsea segment and 301 are employed onshore within the ship management organisation. Quality, health and safety There was not identified any significant HSE issues during Q1. Fleet As per March the Group owns a total fleet of 67 vessels (wholly/partly owned) and the Group had at the end of March five vessels under construction. The vessels under construction were one AHTS and four PLSVs (owned 50% with Technip). A JV owned by DOF Subsea and Technip owns four pipe-laying vessels, of which two are built in Norway and two in Brazil. As mentioned above, the first PLSV was delivered in April. The vessels will be equipped to operate on ultra-deep water. The Norwegian built vessels are equipped with 650 ton pipe-laying towers, while the Brazilian built vessels will be equipped with 350 ton towers. New contracts The Group s fleet operates world-wide, with the most important operational areas being the North Sea, Africa, Brazil and Asia/Australia. DOF Rederi has during the period secured an 18-month contract with Nexen Petroleum UK for Skandi Marstein, with start-up in May and a three months contract with Maersk Oil for Skandi Gamma, with start-up in April. The contracts for Skandi Møgster and Skandi Saigon with Total in Argentina have been extended until October Skandi Vega has entered into a 1-year contract with Statoil, securing the vessel on a firm contract until May DOF Subsea entered into an 18-month contract for Geograph with Petrobras in April. This contract is in direct continuation with the existing contract on which the vessel has operated since DOF Subsea has secured several project contracts at a value of NOK 500 million in Asia-Pacific, the Atlantic and North America regions. DOF is also awarded two 120-day contracts +1x5 weeks options for two AHTSs for an Indian client, with expected start-up in May. Contract coverage per Norskan took delivery of its newbuild Skandi Paraty in April which was the last vessel in a series of three vessels all built at Vard Brazil.

8 Financial Report Q DOF ASA Outlook The trend in the market is still strongly negative with low tender activity in several regions. The market is expected to be demanding throughout 2016 with increased counterparty risk for the Group s fleet of vessels. The Group maintains its strategy to secure the fleet on long-term contracts, and is actively working on securing and increasing firm employment of as much of the fleet as possible. The Group continues its work to reduce costs, including increasing the efficiency of work processes. 8 The Group concluded several sales of assets during the last 12 month period and has a contract coverage of 73% for the remainder of All vessels under construction are secured firm contracts. The negative market development has however considerably increased the risk of lower utilisation and reduced earnings for the Group s vessels which are not secured on long-term contracts at the start of 2016 and vessels which are up for renewal during 2016 and onwards. The uncertainty related to evaluation of the market development is considerably higher than normal and the value of the Group s vessels, equipment and investments in joint venture may be challenged if the negative market trend continues. This may in turn influence the Group s liquidity situation and compliance with financial covenants. Based on an expectation of a continued weak market and consequently increased future risk related to the Group s financial standing, the Board of Directors and management have started on an overall refinancing plan which will secure the company with satisfactory financing and liquidity throughout an expected demanding period. This plan includes dialogue with the Group s lenders, bond holders and the largest shareholders, where all stakeholders are expected to contribute to such an overall solution. The company s Q1 financial report has been prepared under the going concern assumption, for supplementary information; please see presented annual accounts for The Board of Directors expects the operational EBITDA for Q2 to be in line with, or slightly below the operational EBITDA for Q1. Board of Directors DOF ASA, May 12 th, 2016 Helge Møgster Chairman Helge Singelstad Karoline Møgster Kristian Falnes Nina G. Sandnes Mons S. Aase CEO IR Contacts: Mons S. Aase, CEO , msa@dof.no Hilde Drønen, CFO , hdr@dof.no DOF ASA 5392 Storebø

9 DOF ASA Financial Report Q

10 Financial Report Q DOF ASA Accounts Q Income statement (MNOK) Note Q Q Operating income Operating expenses Net profit from associated and joint ventures Net gain on sale of tangible assets Operating profit before depreciation EBITDA Depreciation Impairment Operating profit - EBIT Financial income Financial costs Net realised gain/loss on currencies Net unrealised gain/loss on currencies Net changes in fair value of financial instruments Net financial costs Profit (loss) before taxes Taxes Profit (loss) for the period Profit attributable to Non-controlling interest Controlling interest Profit and diluted profit per share ex non-controlling interest Statement of comprehensive income (MNOK) Q Q Profit (loss) for the period Items that will be subsequently reclassified to profit or loss Currency translation differences Cash flow hedge Share of other comprehensive income of joint ventures Items that not will be reclassified to profit or loss Defined benefit plan actuarial gain (loss) Other comprehensive income/loss net of tax Total comprehensive income/loss Non-controlling interest Controlling interest

11 DOF ASA Financial Report Q Statement of financial position (MNOK) Note ASSETS Deferred tax assets Goodwill Intangible assets Vessels ROV Newbuildings Machinery and other equipment Tangible assets Investment in associated and joint ventures Other non-current receivables Non-current financial assets Total non-current assets Trade receivables Other receivables Current receivables Restricted deposits Cash and cash equivalents Cash and cash equivalents incl. restricted deposits Current assets Asset held for sale Total current asset incl. Asset held for sale Total Assets EQUITY AND LIABILITIES Paid in equity Other equity Non-controlling interests Total equity Deferred taxes Pensions Non-current provisions and commitments Bond loan Debt to credit institutions 4, Derivatives Other non-current liabilities Non-current liabilities Current part of bond loan and debt to credit institutions Accounts payable Other current liabilities Current liabilities Liabilites held for sale Total current liabilities incl Liabilities held for sale Total liabilities Total equity and liabilities

12 Financial Report Q DOF ASA Statement of equity (MNOK) Paid-in capital Retained earnings Currency translation differences Total Non-controlling interest Total equity Balance at Total comprehensive income/loss Transaction with non-controlling interests Balance at Balance at Total comprehensive income/loss Transaction with non-controlling interests Balance at Key figures Q Q EBITDA margin ex net gain on sale of vessel 1 32 % 27 % 29 % EBITDA margin 2 35 % 36 % 33 % EBIT margin 3 9 % 26 % 18 % Cashflow per share (controlling interest) Profit per share (controlling interest) *) Profit per share ex. unrealised gain/loss on currencies and changes fair value of financial instruments (controlling interest) Return on net capital 7 5 % 0 % -6 % Equity ratio 8 19 % 20 % 16 % Value adjusted equity 9 32 % 34 % 33 % Net interest bearing debt Net interest bearing debt ex. unemployed capital No of shares Outstanding number of shares *) Diluted number of share is the same as number of shares 1) Operating profit before net gain on sale of vessel and depreciation in percent of operating income. 2) Operating profit before depreciation in percent of operating income. 3) Operating profit in percent of operating income. 4) Pre-tax result + depreciation and impairment +/- unrealised gain/loss on currencies +/- net changes in fair value of financial instruments/average no of shares. 5) Result /average no. of shares. 6) Result + net unrealised currency gain/loss + net changes fair value of financial instruments)/average no of shares. 7) Result incl non-controlling interest/total equity 8) Total equity/total balance 9) Equity adjusted for excess values from broker valuation/total assets adjusted for excess values from brokers valuation.

13 DOF ASA Financial Report Q Statement of cash flow (MNOK) Q Q Operating result Depreciation and impairment Gain/loss on disposal of tangible assets Share of profit/loss from associates and joint ventures Changes in accounts receivables Changes in accounts payable Changes in other working capital Exchange rate effects on operating activities Cash from operating activities Interest received Interest paid Taxes paid Net cash from operating activities Payments received for sale of tangible assets Purchase of tangible assets Payments received for sale of shares Purchase of shares Received dividend Other investments Net cash from investing activities Proceeds from borrowings Repayment of borrowings Payments to non-controlling interests Net cash from financing activities Net changes in cash and cash equivalents Cash and cash equivalents at the start of the period Exchange gain/loss on cash and cash equivalents Cash and cash equivalents at the end of the period

14 Financial Report Q DOF ASA Notes to the Accounts Note 1 General DOF ASA (the Company ) and its subsidiaries (together, the Group ) own and operate a fleet of PSV, AHTS, subsea vessels and service companies offering services to the subsea market worldwide. The Company is a public limited company, which is listed on the Oslo Stock Exchange and incorporated and domiciled in Norway. The head office is located at Storebø in the municipality of Austevoll, Norway. These condensed interim financial statements were approved for issue on 12 May These condensed interim financial statements have not been audited. Basis of preparation These condensed interim financial statements have been prepared in accordance with IAS 34, Interim financial reporting. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with IFRS. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. 14 In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015, with the exception of changes in estimates that are required in determining the provision for income taxes.

15 DOF ASA Financial Report Q Note 2 Management reporting RESULT Q Q (MNOK) Management reporting Reconciliation to equity method Financial reporting Management reporting Reconciliation to equity method Financial reporting Operating income Operating expenses Net profit from associated and Joint Ventures Net gain on sale of tangible assets Operating profit before depreciation EBITDA Depreciation Impairment Operating profit - EBIT Financial income Financial costs Net realised gain/loss on currencies Net unrealised gain/loss on currencies Net changes in fair value of financial instruments Net financial costs Profit (loss) before taxes Taxes Profit (loss) BALANCE (MNOK) Management reporting Reconciliation to equity method Financial reporting Management reporting Reconciliation to equity method Financial reporting ASSETS Intangible assets Tangible assets Non-current financial assets Total non-current assets Receivables Cash and cash equivalents Total current assets Asset held for sale Total current assets incl. asset held for sale Total assets EQUITY AND LIABILITIES Equity Non-current provisions and commitments Non-current liabilities Current liabilities Total liabilities Liabilities held for sale Total liabilities incl. liabilities held for sale Total equity and liabilities Net interest bearing liabilities

16 Financial Report Q DOF ASA Note 3 Segment information - management reporting PSV AHTS CSV Total 1 Quarter 2016 Operating income Gain on sale of tangeble assets Operating result before depreciation and impairment - EBITDA Depreciation Impairment Operation result - EBIT Quarter 2015 Operating income Gain on sale of tangeble assets Operating result before depreciation and impairment - EBITDA Depreciation Impairment Operation result - EBIT Note 4 Hedges The Group applies cash flow hedge accounting related to foreign exchange rate risk on expected highly probable income in USD, using a non derivative financial hedging instrument. This hedging relationship is described below. Cash flow hedge involving future highly probable income The Group applies hedge accounting related to the cash flow hedging of expected highly probable income in USD, from its operations in Brazil. The cash flow hedges hedge a portion of the foreign currency risk arising from highly probable income in USD relating to time charter contracts on vessels owned by the companies Norskan Offshore Ltda and DOF Subsea Navagacao Ltda. The hedging instruments are portions of the companies long term debt denominated in USD. The risk being hedged in each hedging relationship is the spot element of the forward currency rate of USD/BRL. The future highly probable income has a significant exposure to the spot element as the spot element is the main part of the forward rate. The long term debt is translated from USD to BRL at spot rate on the balance sheet date every reporting period. The effective portion of changes in fair value of the instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are reclassified to profit or loss in the periods when the expected income is recognised.

17 DOF ASA Financial Report Q Note 5 Tangible assets 2016 Vessel and periodical maintenance ROV Newbuilds Operating equipment Total Book value at Addition Vessel completed Disposal Reclassification Depreciation Impairment loss Currency translation differences Book value at Vessel and periodical maintenance ROV Newbuilds Operating equipment Total Book value at Addition Vessel completed Disposal Reclassification Depreciation Currency translation differences Book value at Asset held for sale At the vessel Skandi Protector was classified as assets held for sale. The vessel was delivered to new owner in January Impairment Due to impairment indicators related to the Group s activity in general, impairment testing has been performed in order to calculate the recoverable amount for the Group s vessels. Each vessel constitutes a separate cash generating unit, which is tested separately for impairment. The recoverable amount is tested against each vessel s book value. In the event that the calculated recoverable amount is lower than book value of the vessel, impairment is made to reflect recoverable amount. The Group has prepared value in use calculations to substantiate the received brokers estimates. The value in use calculations are based on estimated discounted cash flows before financial items and tax. Estimated cash flows are based on the Group s budgets per vessel for 2016, and forecasted earnings going forward. The cash flows per vessels are calculated based on the vessels remaining useful lifetime. Historical income rates, operational -and capital expenditure related to periodical maintenance, in addition to corresponding rate and expenditure levels for comparable vessels form the basis for the estimated cash flows. The market is expected to remain weak during the next three years, and thereafter to normalise. For vessels on firm contracts it is assumed that the vessels are employed on charter parties up until expiry of the contracts, and that rate levels thereafter are reduced. Options have not been assigned any added value in the value in use calculations. The cash flows used in the value in use calculations are discounted using a nominal average cost of capital after tax (WACC) ranging from 6.10% %. The value in use calculations are based on best estimate, and due to the current weak market, there is a high level of uncertainty related to the estimates. The impairment tests have resulted in impairment of vessels and equipment totaling NOK 280 million in 1st quarter. The impairments are spread on 13 vessels. In addition the impairment tests have resulted in impairment of vessel in joint ventures with NOK 50 mill in 1st quarter (50% share). The impairments are spread on 5 vessels, all owned by DOF Deepwater AS.

18 Financial Report Q DOF ASA Note 6 Investment in associated and Joint Ventures The Company s investment in associates and joint ventures as of ; Joint Ventures Ownership DOFCON Brasil AS with subsidiaries 50 % DOF Deepwater AS 50 % DOF Iceman AS 50 % Associated companies Master & Commander 20 % PSV Invest II AS (Skandi Aukra) 15 % Iceman AS (Skandi Iceman) 20 % DOF OSM Services AS 50 % Canadian Subsea Shipping Company Ltd 40 % Effect of application of IFRS 11 on investments in Joint Ventures; Opening balance Profit (loss) -14 Profit (loss) through OCI 98 Other -3 Closing balanse See Note 2 regarding the presentation of the implementation of IFRS 11. Note 7 Cash and cash equivalent Restricted cash *) Cash and cash equivalent Total cash and cash equivalent *) Including restricted cash related to non-current loan from Eksportfinans.

19 DOF ASA Financial Report Q Note 8 Interest bearing liabilities Non-current interest bearing liabilities Bond loan Debt to credit institutions Total non-current interest bearing liabilites Current interest bearing liabilities Bond loan Debt to credit institutions Utilised credit facilities Liabilities held for sale Total current interest bearing liabilities Total interest bearing liabilities Net interest bearing liabilities Cash and cash equivalents **) Total net interest bearing liabilities *) * ) Derivatives are not included in the net interest bearing liabilities. Comparable figures are restated. ** ) A non-current loan has been provided by Eksportfinans and is invested as a restricted deposit in DNB. The loan is fully repaid in The cash deposit is included in restricted deposits. Out of current debt to credit institutions of NOK 2,255 million, the balloon payments amounts to NOK 278 million and normal amortization amounts to NOK 1,977 million (exluded accrued interest). The balloon is related to DOF Subsea and due date is at the end of Current part of bond loan is related to DOF Subsea AS NOK 360 million with maturity in April 2016 and DOF ASA NOK 700 million with maturity in February Installment- and balloon profile *) Q Q Q Q Total current debt Q2-Q Subsequent Total Bond Debt to credit institutions Overdraft facilities Total * ) Amortised costs are excluded in the figures above. Loan divided on currency and fixed interest Share fixed interest Balance NOK 67 % USD 28 % 482 GBP 50 % Total 57 % Covenants regarding non-current liabilities to credit institutions: - The Group net asset value should be higher than 30% or higher than 20% if the contract coverage for the fleet is greather than 70%. - The Group shall have available cash of least NOK 500 million at all times. Per 31 March 2016 the value adjusted eguity ratio is 31,7%, free liquidity is NOK million and contract coverage is above 70% the next 12 months. The Group is in compliance with it s financial covenants as of 31 March Based on an expectation of a continued weak market and consequently increased future risk related to the Group s financial standing, the board of directors and management have started on an overall refinancing plan which will secure the company with satisfactory financing and liquidity throughout an expected demanding period. This plan includes dialogue with the Group s lenders, bond holders and the largest shareholders, where all stakeholders are expected to contribute to such an overall solution.

20 Financial Report Q DOF ASA Note 9 Events after balance date The subsidiary DOF Rederi AS has signed an agreement with Total Austral for an extention of the vessels Skandi Møgster and Skandi Saigon. The vessels are firm until 15 October 2016 DOF Rederi AS has signed an agreement with Nexen Petroleum UK for Skandi Marstein. The contract will start in May 2016 and is firm until end DOF Rederi has signed a 3 months contract + options with Maersk Oil North Sea UK Ltd for Skandi Gamma with start up in April DOF Subsea has been awarded several IMR and subsea installation contracts with a total contract value in excess of NOK 500 million. Petrobras has extended the RSV contract for the vessel Geograph for 18 months. Skandi Paraty, owned by Norskan Offshore Ltda has been delivered from the yard and went on-hire on a four years contract with Petrobras. Skandi Paraty is an AHTS, Vard AH11 design, and is the last vessel in a series of three, all built at Vard Niteroi in Brazil. DOF's subsidiary DOF Management Australia Pty Ltd has signed two contracts with Schlumberger Asia Services Ltd for Skandi Emerald and Skandi Giant. The contracts will start in May and have duration of 120 days + 1 x 5 weeks option. Note 10 Transaction with related parties 20 Transactions with related parties are governed by market terms and conditions in accordance with the "arm's length principle". The transactions are described in the Annual report for There are no major changes in the type of transactions between related parties. Note 11 Taxes Taxes per 31 March 2016 are a preliminary estimate.

21 DOF ASA Financial Report Q Note 12 Share capital and shareholders Largest shareholders as of Name No. shares Shareholding Voting shares MØGSTER OFFSHORE AS % % PARETO AKSJE NORGE % 9.09 % SKAGEN VEKST % 5.19 % MP PENSJON PK % 1.65 % MOCO AS % 0.99 % VESTERFJORD AS % 0.93 % KANABUS AS % 0.90 % FORSVARETS PERSONELLSERVICE % 0.90 % PARETO AS % 0.90 % THE NORTHERN TRUST CO % 0.73 % EIKA NORGE % 0.60 % VERDIPAPIRFONDET ALFRED BERG NORGE % 0.57 % SKANDINAVISKA ENSKILDA BANKEN AB % 0.53 % ENERGY INVESTORS AS % 0.48 % LISE AS % 0.45 % FLU AS % 0.41 % DNB NOR BANK ASA % 0.41 % IMAGINE CAPITAL AS % 0.38 % BKK PENSJONSKASSE % 0.37 % HOFSTAD % 0.33 % 21 Total % % Total other shareholders % % Total no of shares % 100 %

22 DOF ASA Alfabygget 5392 Storebø NORWAY Phone: Fax: NORWAY ARGENTINA DOF Management Argentina S.A. Peron 315, piso 1, Oficina 6-b Buenos Aires ARGENTINA Phone: dofargentina@surnav.com AUSTRALIA SINGAPORE DOF Subsea Asia Pacific Pte Ltd 460 Alexandra Road # PSA Building, SINGAPORE Phone: Fax: asia-pacific@dofsubsea.com DOF Subsea AS Thormøhlensgate 53 C 5006 Bergen NORWAY Phone: Fax: info@dofsubsea.com DOF Subsea Norway AS Thormøhlensgate 53 C 5006 Bergen NORWAY Phone: Fax: info@dofsubsea.com DOF Management AS Alfabygget 5392 Storebø NORWAY Thormøhlensgate 53 C 5006 Bergen NORWAY Phone: Fax: management@dof.no ANGOLA DOF Subsea Angola Rua Ndumduma 56/58 Caixa postal 2469, Miramar Luanda, Republic of Angola Phone/Fax: Mobile: angola@dofsubsea.com DOF Management Australia Level 1, 441 South Road Bentleigh, Vic AUSTRALIA Phone: Mobile: DOF Subsea Australia Pty Ltd 5th Floor, 181 St. Georges Tce Perth, Wa 6000 AUSTRALIA Phone: Fax: asia-pacific@dofsubsea.com BRAZIL NorSkan Offshore Ltda Rua Lauro Müller, Offices 2802 to Botafogo - Rio de Janeiro - RJ BRAZIL - CEP: Phone: Fax: office@norskan.com.br DOF Subsea Brasil Serviços Ltda Rua Fiscal Juca, 330 Q: W2 L: 0001 Loteamento Novo Cavaleiros Vale Encantado Macaé/RJ BRAZIL - CEP: Phone: Fax: brasil@dofsubsea.com CANADA DOF Subsea Canada 26 Allston Street, Unit 2 Mount Pearl, Newfoundland CANADA, A1N 0A4 Phone: Fax: can@dofsubsea.com DOF Management Pte Ltd 460 Alexandra Road # PSA Building, SINGAPORE Phone: Fax: UNITED KINGDOM DOF Subsea UK Ltd Horizons House Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOM Phone: Fax: uk@dofsubsea.com DOF (UK) Ltd Horizons House Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOM Phone: Fax: info@dofman.co.uk USA DOF Subsea USA Inc 5365 W. Sam Houston Parkway N Suite 400, Houston Texas USA Phone: Fax: info@dofsubsea.us

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24 DOF ASA Alfabygget 5392 Storebø NORWAY