Third Quarter Report 2013

Transcription

1 Third Quarter Report 2013

2 This is Siem Offshore Inc. The Company s vision is to become the leading provider and the most attractive employer offering marine services to the offshore energy service industry. The Company shall deliver quality and reliable contracted services in a timely manner by executing cost-efficient solutions developed in active collaboration and cooperation with our customers. Siem Offshore owns and operates one of the world s most modern fleet of offshore support vessels, equipped to meet the increased requirements from clients and demands from operation in the most harsh environments. Siem Offshore had 42 vessels in operation and ten vessels under construction at end of the third quarter Vessels in operation included two anchor handling, tug, supply vessels operated on behalf of a pool partner. The total fleet, including vessels under construction, comprised 39 fully owned vessels and eleven partly owned vessels, including, among others, fifteen Platform Supply Vessels (PSVs), two Multi-Role Support Vessels (MRSVs), four Offshore Subsea Construction Vessels (OSCVs) and eight Anchor Handling, Tug, Supply vessels (AHTS vessels). The fleet provides a broad spectrum of services offered by a highly experienced and competent crew with a strong focus on Health, Safety, Environment and Quality. The Company s vision is to become the leading provider and the most attractive employer offering marine services to the offshore energy service industry. The Company shall deliver quality and reliable contracted services in a timely manner by executing cost-efficient solutions developed in active collaboration and cooperation with our customers. Siem Offshore commenced operations with effect from 1 July The Company is registered in the Cayman Islands and is listed on the Oslo Stock Exchange (OSE Symbol: SIOFF). The Company s headquarters is located in Kristiansand, Norway and additional subsidiary offices are located in Brazil, Germany, the Netherlands, Ghana, USA and India. Siem Offshore Inc. is tax resident in Norway. Our core values are: Caring Committed Competitive 2

3 REPORT FOR THE THIRD QUARTER October 2013 Siem Offshore Inc. (the Company ; Oslo Stock Exchange: SIOFF) reports results for the third quarter and nine months ended 30 September Selected Financial Information Q 3Q Jan-Sep Jan-Sep Full Year (Amounts in USD million) Unaudited Unaudited Unaudited Unaudited Audited Operating revenues Operating margin Operating margin, % 46 % 38 % 35 % 35 % 30 % Operating profit Profit before taxes Net profit Net profit attributable to shareholders Highlights third quarter Results and Finance: Revenue and utilisation for the Offshore fleet continued an upward trend. Increased activity positively influenced the OSV market in the North Sea. Agreed new loan facilities of approximately USD 110 million for the long-term debt financing of one cable- laying vessel and one installation support vessel. Contracts: Acquired 50% of the shares in Secunda Canada LP, owner and operator of six offshore support vessels on Canada s East Coast. Agreed a 5-year firm contract with two yearly options for the second of the four offshore subsea construction vessels ( OSCV ) under construction, to be delivered from the yard in fourth quarter Agreed a contract for the AHTS vessel Siem Aquamarine for a firm period of 4 wells with option for four additional wells for operations offshore Morocco. Agreed a contract for the PSV Sophie Siem for a firm period of 18 months with options for 2 x 3 months for operation offshore Equatorial Guinea. Siem WIS entered into additional contract with M-I Swaco for the supply of its pressure control device ( PCD ) services to be used during operations for Statoil on the Romeo and Julius project in the North Sea commencing in second quarter Subsequent Events The planned operations for the PCD of Siem WIS on Gullfaks B has been put on-hold by the client due to new data on well pressure. 3

4 Results Results for the Third Quarter 2013 The operating revenues for the quarter were USD 96.7 million (2012: USD million). The operating margin was USD 44.1 million (2012: USD 39.2 million) and the operating margin as a percentage of revenues was 46% (2012: 38%). Operating profit was USD 33.1 million (2012: USD 22.6 million) after depreciation and amortisation of USD 18.8 million (2012: USD 20.5 million). Net currency exchange gains of USD 7.7 million (2012: USD 5.7 million) were recorded on currency forward contracts of which USD 5.2 million is unrealised. Net financial items were USD (9.3) million (2012: USD (1.4) million) and includes a net revaluation gain(loss) of non-usd currency items of USD (0.8) million (2012: USD 9.0 million) due to changes in the rate of exchange during the quarter. Non-USD currency items are held to match short- and long-term liabilities, including off-balance sheet liabilities, in similar currency. The financial expenses of USD 10.3 million include a net unrealised gain of USD 0.4 million for interest swap agreements (mark-to-market adjustment) which were entered into for hedging long-term interest rate exposure on floating rate borrowing. The net profit attributable to shareholders was USD 22.4 million, or USD 0.06 per share (2012: USD 18.2 million, or USD 0.05 per share). The Company had twelve PSVs in operation at the end of the quarter (2012: eleven). Six PSVs operated on long-term contracts, of which one was on a bareboat contract and a second vessel had completed a contract and commenced a five-year class docking. One PSV was operated in the North Sea spot market. The remaining five PSVs were operated on short-term contracts outside West Africa and Brazil, of which one entered an upgrade and mobilisation phase for a long-term contract in Brazil with commencement in September The PSV fleet earned operating revenues of USD 25.4 million and had 83% utilisation (2012: USD 21.2 million and 88%). The operating margin for the PSV fleet was USD 12.0 million, (2012: USD 9.7 million) and the operating margin as a percentage of revenue was 47% (2012: 47%). The Company had three OSCVs in operation at the end of the quarter (2012: three) of which one was delivered during August. The three OSCVs operated on long-term contracts. The OSCV fleet earned operating revenues of USD 10.3 million and had 100% utilisation (2012: USD 12.2 million and 100%). The operating margin for the OSCV fleet was USD 6.1 million (2012: USD 7.2 million) and the operating margin as a percentage of revenue was 59% (2012: 59%). The Company had ten AHTS vessels in operation at the end of the quarter (2012: ten), of which two are owned by a pool partner. During the quarter, five AHTS vessels operated on long-term contracts in Brazil and two AHTS vessels operated on short-term contracts in the Baltic Sea and outside Canada. The remaining three AHTS vessels operated in the North Sea spot market. The revenue and utilization for the AHTS vessels in the North Sea spot market has improved compared to previous quarter, but remains very volatile. The AHTS fleet earned operating revenues of USD 41.4 million and had 91% utilisation (2012: USD 31.3 million and 86%). The operating margin for the AHTS fleet was USD 25.3 million (2012: USD 16.0 million) and the operating margin as a percentage of revenue was 61% (2012: 52%). The Company had a fleet of nine smaller Brazilian-flagged vessels (fast supply and crew boats and oil spill recovery vessels) in operation at the end of the quarter (2012: eleven), of which nine vessels operated on term contracts. The fleet earned operating revenues of USD 4.9 million and had 89% utilisation (2012: USD 7.5 million and 87%). The operating margin for the fleet was USD 3.1 million (2012: USD 1.8 million) and the operating margin as a percentage of revenue was 63% (2012: 24%). A provision for a potential contract price adjustment which is now finished was reverted with a positive impact in P&L of USD 2,4 million. The scientific core-drilling vessel, JOIDES Resolution, recorded operating revenues of USD 10.3 million (2012: USD 25.9 million) with an operating margin of USD 5.9 million (2012: USD 12.7 million) and the operating margin as a percentage of revenue was 57% (2012: 40%). The charterer of the vessel has declared the first of ten yearly options with effect from 1st October Results for the Nine Months Ended 30 September 2013 The operating revenues for the first nine months were USD million (2012: USD million). The operating margin was USD 95.4 million (2012: USD million) and the operating margin as a percent of revenue was 35% (2012: 35%). Operating profit was USD 63.2 million (2012: USD 62.3 million) and includes depreciation and amortisation of USD 55.7 million (2012: USD 62.2 million). Net currency exchange gain(losse) of USD (5.3) million (2012: USD 9.3 million) were recorded on currency forward contracts, of which USD 13.0 million is unrealised. The net gain on 4

5 sale of vessels was USD 28.4 million (2012: USD 13.7 million). Net financial items were USD (36.1) million (2012: USD (33.3) million) and includes a revaluation gain(loss) of non- USD currency items of USD (16.0) million (2012: USD (0.8) million) due to stronger USD during the period. Non-USD currency items are held to match short- and longterm liabilities, including off-balance sheet liabilities, in similar currency. The financial expenses of USD 25.6 million include an unrealised gain of USD 6.8 million related to interest swap agreements (mark-to-market adjustment) which were entered into for hedging long-term interest rate exposure on floating rate borrowing. The net profit attributable to shareholders was USD 25.8 million, or USD 0.07 per share (2012: USD 25.8 million, or USD 0.07 per share). The PSV fleet earned operating revenues of USD 70.7 million and had 82% utilisation (2012: USD 69.0 million and 94%). The operating margin for the PSV fleet was USD 30.2 million (2012: USD 34.3 million) and the operating margin as a percentage of revenue was 43% (2012: 50%). The OSCV fleet earned operating revenues of USD 25.1 million and had 100% utilisation (2012: USD 40.8 million and 100%). The operating margin for the OSCV fleet was USD 16.1 million (2012: USD 22.7 million) and the operating margin as a percentage of revenue was 64% (2012: 56%). The AHTS fleet earned operating revenues of USD 99.3 million and had 85% utilisation (2012: USD 89.4 and 79% utilization). The operating margin for the AHTS fleet was USD 50.4 million (2012: USD 41.4 million) and the operating margin as a percentage of revenue was 51% (2012: 46%). The fleet of smaller Brazilian-flagged vessels earned operating revenue of USD 18.7 million and had 94% utilisation (2012: USD 22.7 million and 83%). The operating margin for the fleet was USD 7.1 million (2012: USD 6.4 million) and the operating margin as a percentage of revenue was 38% (2012: 28%). The Joides Resolution recorded operating revenues of USD 30.5 million (2012: USD 46.1 million) with an operating margin of USD 16.9 million (2012: USD 22.8 million) and the operating margin as a percentage of revenue was 55% (2012: 50%). Newbuilding Program Total future yard instalments for vessels under construction in Brazil, Poland and Norway were equivalent to USD 558 million at the end of the quarter. These instalments fall due with USD 107 million in 2013, USD 336 million in 2014 and USD 115 million in Vessels under Construction The Company had seven vessels under construction in Norway and Poland at the end of the quarter, which includes three OSCVs, one ISV, two dual-fuel PSVs and one CLV. The Company has secured long-term employment for one of the OSCVs and for the two dual-fuel PSVs. The CLV and ISV will be used by the Company s wholly-owned subsidiary, Siem Offshore Contractors, for project work within the submarine power cable installation, repair and maintenance segment. The Company is in discussions for long-term contracts for the remaining two OSCVs. The Company had three vessels under construction in Brazil at the end of the quarter, which includes two oil spill recovery vessels ( OSRVs ) and one largesize PSV. The two OSRVs are scheduled for delivery in fourth quarter 2013 and first quarter Both vessels shall commence eight-year firm contracts for Petrobras with options for additional eight-year periods. The large-size PSV is scheduled for delivery in second quarter of Longterm employment for the vessel is under discussion with charterers in Brazil. Financing And Capital Structure Cash and Equity Net cash flow from operations for the first nine months was USD 26.5 million and the cash position at 30 September 2013 was USD million. The purchase of the 50% share in Secunda Canada LP was paid in cash. Shareholders book equity was USD million at 30 September 2013, equivalent to USD 1.96 per share. The Company has acquired 1,799,897 shares under the current buy-back program, which commenced in May The current program expires on the date of the annual general meeting of the Company in Debt Financing The balance sheet included gross interestbearing debt in equivalent of USD million. The Company made total drawings in the equivalent of USD million under credit facilities during the first nine months. The weighted average cost of debt for the Company was approximately 4.5% at the end of the quarter, including the effect of interest rate swaps. The Company paid debt instalments in the equivalent of USD million during the first nine months, of which USD 40.6 million represents proceeds from the sale of the MRSV Seven Sisters. The Company had 10 vessels under construction at end of the quarter and has currently secured debt-financing for 5

6 nine of these vessels. Fleet Employment And Contract Backlog The majority of the fleet is on long-term contracts. The contract backlog at 30 September 2013 for the PSV fleet was 60% for 2013, 34% for 2014 and 27% for The contract backlog for the OSCV fleet was 100% for 2013 and 76% for The contract backlog for the AHTS fleet was 60% for 2013, 49% for 2014 and 10% for The contract backlog for the fleet of smaller Brazilian-flagged vessels was 67% for 2013, 67% for 2014 and 44% for The total contract backlog of firm contracts for all vessels at 30 September 2013 was USD 952 million, including the one year option for the JOIDES Resolution, the 41%-ownership in the Big Orange XVIII, the 50% ownership in Secunda Canada LP and vessels under construction. The total contract backlog is allocated with USD 88 million in 2013, USD 288 million in 2014 and USD 576 million in 2015 and thereafter. The total contract backlog within the submarine power cable segment was USD million at 30 September, of which USD 7.3 million refers to 2013 and USD refers to QHSE The good QHSE performance continued in the third quarter with no serious incidents throughout the fleet. The safety records for the first nine months report no serious injury to personnel or discharges to the environment Submarine Power Cable Activities During the third quarter 2013, Siem Offshore Contractors ( SOC ) agreed a revised schedule with its client, EnBW, incorporating the shift in start date from 2013 to 2014 on the Baltic 2 Offshore Wind Farm ( OWF ) project due to delays related to the installation of the wind turbine generator foundations by others. Planning and preparation works continued on schedule. SOC has secured the resources for both the E.ON Amrumbank West OWF inner array grid project and the TenneT Innogy Nordsee 1 export cable system project. The project preparations are on schedule with offshore works scheduled to start in May The projects are scheduled to run consecutively through to November In addition, SOC is progressing with various tenders for renewable energy projects with offshore inner array grid cable installations scheduled for 2015 and 2016 including final tender negotiations for certain projects. SOC also tender other prospects in the renewable industry for both medium and high voltage transmission systems. The projects are accounted for using the percentage-of-completion method and no margin is yet recorded as projects are still in an early phase. Technology Investment Siem WIS has signed back-to-back contracts with M-I Swaco, a Schlumberger company, for the MPD operations at Statoil s Gudrun, Valemon, Romeo, and Julius fields in the North Sea. The offshore operations are scheduled to commence in second quarter The new PCD 5000 systems will be mobilized and used for the planned operations. With this latest contract, both the PCD 5000 systems are on contracts for next year. Planning and preparation work has started for all the upcoming projects. The planned operations on Gullfaks B for the PCD 3000 has been put on hold by Statoil due to new data of the pore pressure prognosis. The best estimate to resume the planned drilling is January 2015 after the Gullfaks B rig up-grade. Market And Outlook The improved balance in the North Sea spot markets for large PSVs and high-end AHTS vessel has continued from the second quarter through third quarter of Seasonally increased activity supported utilization and spot market fixture rates for high-end AHTS vessels in the North Sea during most of the third quarter of As a result of more rigs working in the North Sea and more high-end AHTS vessel being occupied on term contracts, the spot market fixture rates and utilization increased yearon-year. During the quarter, several highend AHTS vessels entered into shorter term contracts outside the North Sea market. The North Sea market for large PSVs continued its positive trend from the second quarter into the third quarter of 2013 resulting in improved spot market fixture rates and utilization during the quarter. Yearon-year, the market balance in the North Sea for large PSVs has been supported by increased term demand for production support activity which have contributed to absorb additional supply from new vessels entering the North Sea market. Uncertainty still remains with respect to the market s ability to absorb additional large PSVs under construction at Norwegian and international yards which could enter the North Sea in the next 6 to 12 months. The global demand for OSCVs is expected to increase based on a favourable development of market drivers. However, firm vessel orders at yards indicate that the global fleet of larger OSCVs (>120m length) is also set to grow going forward. A majority of the current OSCVs under construction are 6

7 scheduled to be delivered in 2014 and The outlook for demand of high-end offshore support vessels remains favourable. There are an increasing number of rigs working in the North Sea, Brazil, West Africa and the Gulf of Mexico. Activity in harsh and / or remote areas (Barents Sea, Greenland, Canada, US Alaska, Santos Basin Brazil) is picking up and will create incremental demand for high-end PSVs and AHTS vessels going forward. Based on long-term demand drivers related to new and existing subsea projects, an increased demand for OSCVs to support subsea activity is expected. On behalf of the Board of Directors of Siem Offshore Inc. 24 October 2013 Eystein Eriksrud Chairman Terje Sørensen Chief Executive Officer 7

8 Consolidated Income Statements Note (Amounts in USD 1 000) 3Q 3Q Jan-Sep Jan-Sep Jan-Dec Unaudited Unaudited Unaudited Unaudited Audited Operating revenues 4 96, , , , ,213 Operating expenses -41,750-54, , , ,798 Administration expenses -10,789-10,652-31,426-31,578-47,066 Operating margin 44,141 39,208 95, , ,348 Depreciation and amortisation 4-18,835-20,542-55,717-62,166-82,749 Gain (loss) on sales of fixed assets 17-1,861 28,443 13,683 13,692 Gain of sale of interest rate derivatives (CIRR) Gain (loss) on currency exchange forward contracts 7,655 5,699-5,280 9,296 12,479 Operating profit 4 33,071 22,596 63,157 62,340 54,138 Financial revenues 1, ,318 1,997 4,161 Financial expenses -10,252-11,495-25,640-34,065-42,302 Result from associated companies , Net currency gain (loss) ,968-16, ,916 Net financial items -9,330-1,400-36,135-33,301-34,762 Profit/(loss) before taxes 23,741 21,196 27,022 29,039 19,376 Tax benefit / (expense) ,006-1,805-4,462-4,016 Net profit/(loss) 23,329 18,190 25,217 24,577 15,360 Net profit/ (loss) attributable to non-controlling interest ,245-1,900 Net profit/ (loss) attributable to shareholders 22,416 18,221 25,790 25,823 17,260 Weighted average number of shares outstanding ('000) 387, , , , ,665 Earnings(loss) per share (basic and diluted) COMPREHENSIVE INCOME STATEMENTS (Amounts in USD 1,000) 3Q 3Q Jan-Sep Jan-Sep Jan-Dec Unaudited Unaudited Unaudited Unaudited Audited Net profit/(loss) 23,329 18,190 25,217 24,577 15,360 Other comprehensive income (expense) Currency translation differences 1, ,564-1, Total comprehensive income for the period 25,014 17,235 18,653 23,224 16,003 Net profit/ (loss) attributable to non-controlling interest ,519 Net profit/ (loss) attributable to shareholders 24,102 17,319 19,145 24,052 17,522 8

9 Consolidated Statements of Financial Position (Amounts in USD 1 000) Note Unaudited Unaudited Audited Non-current assets Vessels and equipment 5 1,370,918 1,326,009 1,260,118 Vessels under construction ,186 93, ,430 Capitalised project cost 5 11,554 13,524 12,153 Investment in associates and other long-term receivables 26,749 12,818 11,332 CIRR loan deposit 1) 45,763 55,663 53,194 Deferred tax asset 6,202 6,144 6,256 Intangible assets 5 29,671 29,754 30,020 Total non-current assets 1,610,043 1,537,600 1,481,502 Debtors, prepayments and other current assets 5 95, , ,887 Cash and cash equivalents 8 135, , ,068 Total current assets 230, , ,955 Total assets 1,840,514 1,770,175 1,738,457 Equity Paid-in capital 526, , ,964 Other reserves -18,011-13,398-11,366 Retained earnings 251, , ,937 Shareholders equity 759, , ,535 Non-controlling interest 36,483 36,947 36,976 Total equity 796, , ,510 Liabilities Borrowings 835, , ,699 CIRR loan 1) 45,763 55,663 53,194 Other non-current liabilities 29,381 29,462 24,314 Total non-current liabilities 910, , ,207 Borrowings 78,524 77,834 82,287 Accounts payable and other current liabilities 54,996 76,066 77,453 Total current liabilities 133, , ,740 Total liabilities 1,044, , ,947 Total equity and liabilities 1,840,514 1,770,175 1,738,457 1) Commercial Interest Refference Rate 9

10 Consolidated Statements of Cash Flows (Amounts in USD 1 000) Jan-Sep Jan-Sep Jan-Dec Unaudited Unaudited Audited Cash flow from operations Profit before taxes, excluding interest 49,545 51,086 47,943 Interest paid -25,023-28,104-36,653 Taxes paid -5,362-6,920-13,871 Results from associated companies -1, Loss/(gain) on sale of assets -28,443-13,683-13,692 Depreciation and amortisation 55,717 62,166 82,749 Effect of unreal. currency exchange forward contracts 7,271-4,901-6,864 Change in short-term receivables and payables -29,012 4,108 22,690 CIRR Other changes 3,298-5,756-10,931 Net cash flow from operations 26,523 58,156 70,538 Cash flow from investing activities Interest received 4,231 1,988 4,293 Investments in fixed assets -203,363-35,442-53,367 Proceeds from sale of fixed assets 84,072 87,590 87,618 Dividend from associated companies Investment in associated companies -15, Cash flow from investing activities -130,536 53,465 39,386 Cashflow from financing activities Buyback of shares -8, ,700 Contribution from non-controlling interests of consolidated subsidiaries - 2,737 3,456 Proceeds from bank overdraft 955-2,566 Proceeds from new long-term borrowing 245,570 8,058 8,755 Repayment of long-term borrowing -104, , ,829 Cash flow from financing activities 132, , ,753 Effect of exchange rate differences ,487 10,260 Net change in cash 28,270-8,454-29,567 Cash at bank start of period 107, , ,635 Cash at bank end of period 135, , ,068 10

11 Notes to the Financial Information Note 1 - Basis of Preparation The consolidated financial information for the period 1 January to 30 September 2013 has been prepared in accordance with IAS 34, Interim financial reporting. The consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2012 which have been prepared in accordance with IFRSs. Note 2 - Accounting Policies The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December With effect from 1 January 2013 new standards, amendment to standards and interpretations have become effective. The adoption of these amendments has had no material impact on the reported income or net assets of the Company. Note 3 - Financial Risks Interest risk The Company is exposed to changes in interest rates as approximately 39% of the long-term interest bearing debt was subject to floating interest rates at the end of third quarter The remaining part of the debt is subject to fixed interest rates Currency risk The Company is exposed to currency risk as revenue and costs are denominated in various currencies. The Company is also exposed to currency risk due to future yard instalments in relation to shipbuilding contracts and long-term debt in various currencies. Forward exchange contracts are entered into in order to reduce the currency risk related to future cash flows Liquidity risk The Company is financed by debt and equity. If the Company fails to repay or refinance its credit facilities, additional equity financing may be required. There can be no assurance that the Company will be able to repay its debts or extend the debt repayment schedule through re-financing of credit facilities. There is no assurance that the Company will not experience cash flow shortfalls exceeding the Company s available funding sources or to remain in compliance with minimum cash requirements. Further, there is no assurance that the Company will be able to raise new equity or arrange new credit facilities on favourable terms and in amounts necessary to conduct its ongoing and future operations should this be required Yard risk The process for construction of new vessels is associated with numerous risks. Among the most critical risk factors in relations to such construction is the risk of not receiving the vessels on time, at budget and with agreed specifications. In addition, there is the risk of yards experiencing financial or operational difficulties resulting in bankruptcy or otherwise adversely affecting the construction process. The Company has obtained certain guarantees of financial compensation including refund guarantees in case of delays and non-delivery. Further, the Company has the right to cancel contracts if delivery of vessels is significantly delayed. However, no assurance can be given that all risks have been fully covered. 11

12 Note 4 - Segment Reporting by Business Area (Amounts in USD 1 000) 3Q 3Q Jan-Sep Jan-Sep Jan - Dec Unaudited Unaudited Unaudited Unaudited Audited Operating revenue by business area Platform Supply Vessels 25,450 21,237 70,668 68,957 91,433 Multi Role Support Vessels 10,280 12,201 25,146 40,819 49,758 Anchor Handling Tug Supply Vessels 41,420 31,303 99,349 89, ,978 Other vessels in Brazil 4,916 7,451 18,659 22,654 29,084 Combat Management Systems 1,300 2,204 6,700 5,847 8,321 Submarine Power Cable Installation 1,860 2,083 15,054 7,212 7,818 Sientific Core Drilling 10,307 25,919 30,524 46,132 59,070 Other 1,147 2,045 2,841 5,224 7,751 Total operating revenue 96, , , , ,213 Depreciation and amortisation by business area Platform Supply Vessels 5,301 5,437 15,625 15,861 21,713 Multi Role Support Vessels 1,767 2,102 4,334 6,558 8,648 Anchor Handling Tug Supply Vessels 9,661 10,481 29,425 31,673 41,795 Other vessels in Brazil 716 1,352 2,353 2,773 3,896 Submarine Power Cable Installation ,127 2,231 Sientific Core Drilling ,400 2,285 3,086 Other , ,381 Total depreciation and amortisation 18,835 20,542 55,717 62,166 82,749 Operating profit by business area Platform Supply Vessels 6,732 4,300 14,603 18,428 16,270 Multi Role Support Vessels 4,317 5,122 11,739 16,173 18,148 Anchor Handling Tug Supply Vessels 15,684 5,522 20,939 9,778 6,544 Other vessels in Brazil 2, ,704 3,621 1,838 Combat Management Systems ,202 1,508 2,222 Submarine Power Cable Installation 1, ,245-3,524-3,990 Sientific Core Drilling 5,051 11,863 14,535 20,475 27,318 Other -2,649-4,864-6,810-4,118-14,213 Total operating profit 33,071 22,596 63,157 62,340 54,138 12

13 Note 5 - Vessels Under Construction and Vessels and Equipment (Amounts in USD 1 000) Land and buildings Vessels and equipment Vessels under construction Capitalised project costs Balance on 1 January ,069 1,526, ,430 24,433 1,664,137 Investments - 60, ,477 2, ,147 Movement between groups Delivery of vessels - 121, , The year's disposal at cost - -4, ,348-7,703 Effect of exchange rate differences ,499-7, ,179 Purchace cost on 30 Sep ,696 1,680, ,186 23,962 1,828,454 Total Accumulated depreciation on 1 January , , ,436 Movement between groups The year's ordinary depreciation , ,476-54,961 The year's disposal of accumulated depreciation - 4,590-3,348 7,938 Effect of exchange rate differences 26 3, ,682 Accumulated depreciation on 30 Sep , , ,796 Net book value on 30 Sep ,308 1,366, ,186 11,554 1,501,658 Economic life years The balance of capitalised project costs relates to specific contracts. The costs are amortised over the term of the specific charter contracts. Intangible assets (Amounts in USD 1 000) Goodwill Resarch and develeopment Trademarks and licences Balance on 1 January ,787 3,354 9,865 32,006 Movement between groups Investments Effect of exchange rate differences Purchace cost on 30 Sep ,239 3,320 9,788 32,347 Total Accumulated depreciation on 1 January ,103-1,986 The year's ordinary depreciation Effect of exchange rate differences Accumulated depreciation on 30 Sep ,517-1,158-2,676 Net book value on 30 Sep ,239 1,803 8,630 29,671 Goodwill was recorded following Siem Offshore s purchase of Siem Offshore Contractors. Trademarks and licences refer to Siem WIS AS patented technology for the drilling industry. The figures include assets under development and developed assets, and the depreciation refers to developed assets that are not yet commercialized. 13

14 Note 6 - Consolidated Statement of Changes in Equity (Amounts in USD 1 000) Total no. of shares Share capital Share premium reserves Other reserves Equity on 1 January ,924,836 3, ,025-11,366 Net profit to shareholders Other comprehensive income -6,645 Total comprehensive income / (expense) ,645 Share issues in partially owned subsidiaries Buy back of shares -6,333, ,664 Equity on 30 Sep ,591,380 3, ,360-18,011 Equity on 1 January ,951,640 3, ,704-11,627 Net profit to shareholders Other comprehensive income 261 Total comprehensive income / (expense) Share issues in partially owned subsidiaries Buy back of shares -2,026, ,679 Equity on 31 December ,924,836 3, ,025-11,366 (Amounts in USD 1 000) Retained earnings Shareholders' equity Non- Controlling interest Total equity Equity on 1 January , ,536 36, ,510 Net profit to shareholders 25,790 25, ,217 Other comprehensive income -6, ,564 Total comprehensive income / (expense) 25,790 19, ,653 Share issues in partially owned subsidiaries Buy back of shares -8,728-8,728 Equity on 30 Sep , ,952 36, ,435 Equity on 1 January , ,714 35, ,751 Net profit to shareholders 17,260 17,260-1,900 15,360 Other comprehensive income Total comprehensive income / (expense) 17,260 17,522-1,519 16,003 Share issues in partially owned subsidiaries - 3,456 3,456 Buy back of shares -2,700-2,700 Equity on 31 December , ,536 36, ,510 14

15 Note 7 - Long-term Debt Currency Total facility Committed total facility Drawn amount currency Balance USD Interest rate Maturity USD 223, , ,000 93,263 Floating 2017 USD 112, , ,000 74,478 Fixed/Floating 2021 USD 28,000 28,000 28,000 22,400 Floating 2019 USD 23,162 23,162 17,309 17,309 Fixed 2027 USD 116, ,107 61,059 61,059 Fixed 2027 USD 58,879 58,879 47,314 47,314 Fixed 2031 NOK 2,520,000 2,160, ,740 Floating 2015 NOK 427, ,000 50,113 Floating 2022 NOK 7,500 7,500 7, Fixed 2017 NOK 871, , , ,529 Fixed/Floating 2023 NOK 600, , ,000 99,865 Floating 2018 NOK 1,901,250 1,511,250-72, Capitalized bank charges -7,858 Total Borrowings 913,938 NOK 296, ,100 49,283 Total borrowings include USD 7.8 million in capitalised bank charges to be amortised during the term of the respective loan facilities. The Company has entered into fixed interest swap agreements for part of its long term borrowings. Unearned CIRR Beginning of year 2,523 2,891 Reorganized in the profit and loss account Paid for buy back of CIRR options - - End of period 2,247 2,523 15

16 Note 8 - Net Interest-Bearing Debt (Amount in USD 1 000) Unaudited Audited Cash and cash equivalents 135, ,068 Total cash 135, ,068 Short-term interest bearing-debt -78,524-82,287 Long-term interest bearing-debt -835, ,699 Total interest-bearing debt -913, ,986 Net interest-bearing debt -778, ,918 Note 9 - Commitments Committed capital expenses to be paid in future periods: (Amount in USD 1 000) Combined contract value and of period for the vessels 677, ,132 Instalments paid 119, ,430 Unpaid instalments 558, ,702 Instalments falling due over the next years (Amount in USD 1 000) USD , , ,236 Total 558,349 The Company had a remaining newbuilding program for two OSRVs and one large-size PSV at Brazilian yards, three OSCVs, one dual fuel PSV and one ISV at Norwegian yards and one CLV and one dual fuel PSV at a Polish yard at the end of third quarter

17 Note 10 - Taxes (Amounts in USD 1 000) Liability tonnage tax regime Tax liability 1 Janaury Tax expense 10 Paid -949 Effect of exchange rate differences -14 Tax liability, new tonnage tax legislation on 30 Sep Tax liabilities (Amounts in USD 1 000) Tonnage tax regime Other tax regime Total tax liabilities Long term tax liabilities falling due after 1 year - 6,918 6,918 Payable taxes falling due within 1 year 10 6,590 6,600 Tax liabilities on 30 Sep ,509 13,519 Tax expense (Amounts in USD 1 000) Tonnage tax regime Other tax regime Total tax expense Taxes -10-2,714-2,724 Change in deffered tax/deffered tax asset Over / under provisions in previous year Total tax expense on 30 Sep ,795-1,805 The tax cost for the period relates to corporate tax, witholding tax for operating both in Norway and other jurisdictions. 17

18 Siem Offshore Inc c/o Siem Offshore AS Markensgate Kristiansand Norway Postal address: P.O. Box 425 N-4664 Kristiansand S, Norway Telephone: Telefax: siemoffshore@siemoffshore.com Innoventi