Annual Report S i e m O f f s h o r e I n c., A n n u a l R e p o r t

Transcription

1 Annual Report

2 Contents Key Figures 3 This is Siem Offshore Inc. 6 Board of Director s Report 10 Corporate Governance 16 Income Statements 22 Statements of Cash Flows 23 Statements of Financial Position Assets 24 Statements of Financial Position Equity and Liabilities 25 Statements of Changes In Equity 26 Notes to the Accounts 30 Auditor s Report 98 Responsibility Statement 100 Board of Directors 101 Fleet List March Financial Calendar 104

3 KEY FIGURES (Amounts in USD 1,000) CONSOLIDATED Income Statements Ref Operating revenue 340, ,302 Operating margin (1) 122,952 74,641 Operating margin, % 36% 33% Operating profit (2) 43,497 17,213 Operating profit margin, % 13% 8% Net profit/(loss) attributable to shareholders -7,291 10,162 Net profit margin, % -2% 4% Statements of Financial Position Working capital (3) 62,170 73,912 Total assets 1,860,531 1,711,483 Shareholders equity 734, ,320 Non-current liabilities 929, ,686 Statements of Cash Flows Net cash flow from operations 86,273 39,401 Key Figures Weighted average no. of outstanding shares (1,000) 395, ,417 Net cash flow (4) 21,451 24,097 Earnings per share (USD) Cash flow per share in USD (5) Share price per year end (USD) Share price per year end (NOK) Price/earnings per share (P/E) (6) Price/cash flow per share (P/CF) (7) Book shareholders' equity per share (USD) (8) Operating margin share (9) Book equity ratio (10) Liquidity ratio (11) Definitions (1) Earnings before interests, tax, depreciation and amortization (EBIDA) (2) Earnings before interests and taxes (EBIT) (3) Total current assets less total current liabilities (4) Profit/(loss) before taxes plus depreciation plus balance sheet adjust ments less taxes payable (5) Net cash flow from operation divided on weighted average number of shares outstanding (6) Stock Exchange price on December 31 divided on earnings per share (7) Stock Exchange price on December 31 divided on cash flow per share (8) Shareholders equity divided on number of outstanding shares (9) Operating margin divided on weighted average number of outstanding shares (10) Book equity divided on total assets (11) Current assets divided on current liabilities 3

4 Highlights FROM THE PAST YEAR Revenue USD K Profit before tax USD K Employees 1073 Supported Capricorn s drilling campaign west of Greenland with two AHTS vessels and three PSV vessels during April to December Delivery of the second AHTS vessel, the Siem Opal, owned by the pool partner and placed in the pool of similar vessels. Delivery of the first of two fast crew vessels from Brazilian shipyard and commencement of an eight years contract with Petrobras. Acquisition and delivery of the large-size PSV, the Siddis Mariner, and commencement of a one year contract with Statoil Petroleum AS. Agreed a one year extension for the employment of the MRSV Siem Marlin offshore Nigeria. Entered the business for submarine power cable installation, repair and maintenance projects, through the acquisition of Five Ocean Services GmbH, subsequently renamed to Siem Offshore Contractors GmbH. Delivery of the eighth AHTS vessel, the Siem Amethyst, owned by the Company and placed in a pool of total ten similar vessels. Agreed a two years contract for the large-size PSV Siem Sailor with Statoil Petroleum AS. Agreed a two year contract for the large-size PSV Siem Pilot with Statoil Petroleum AS. Agreed a one year contract for the medium-size PSV Siddis Skipper with Statoil Petroleum AS. Increased the ownership from 50% to 100% in Overseas Drilling Limited, with commercial and technical operation of the vessel JOIDES Resolution from 1 August Delivery of the first of two fast supply vessels from Brazilian shipyard and commencement of an eight years contract with Petrobras. 4

5 Vessels 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ total Newbuildings Vessels in operation 32 total 34 total 42 total 44 total 40 total 45 total Ownership 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ total 42 total 44 total 40 total 32 total 34 total 27 total 0-51% 100%

6 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 oil and gas 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 its customers. 6

7 The Company s headquarters are located in Kristiansand, Norway. The Company also has offices in Brazil, Germany, the Netherlands, USA and India and has representation in Nigeria. Siem Offshore was founded in July 2005 and has become a significant owner and operator of modern offshore support vessels. The Company s vision is to become the leading provider and the most attractive employer offering marine services to the offshore oil and gas 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 its customers. REVENUE Amounts in USD 1, The Company 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 new geographical areas, including harsh environments. 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. Operating Margin Siem Offshore had 39 vessels in operation and six vessels under construction by year-end Vessels in operation included two anchor handling, tug, supply vessels operated on behalf of a pool partner By end March 2012, the total fleet comprised 41 fully owned vessels, including, among others, eleven platform supply vessels ( PSVs ), four multi-role support vessels ( MRSVs ) and eight anchor handling, tug, supply vessels ( AHTS vessels ). During first quarter 2012, two crew vessels were sold. Amounts in USD 1,000 employees The Company s headquarters are located in Kristiansand, Norway. The Company also has offices in Brazil, Germany, the Netherlands, USA and India and has representation in Nigeria. The Company s shares are listed on the Oslo Stock Exchange (ticker SIOFF). Our core values are: Caring Committed Competitive

8 LOCATIONS Kristiansand Norway 6 AHTS 5 PSV s 1 WSV Leer Germany total Employees MRSV Houston USA 1 SCDV VESSELS IN OPERATION 39 Aracaju Brazil Natal Brazil 3 MRSV s 2 PSV s TOTAL VESSELS 45 4 AHTS 1 PSV 2 OSRV s 3 FSV s 6 FCV s Under construction 1 FSV 1 FCV 2 OSRV s 2 PSV s Rio Brazil Macaé Brazil Office Vessel(s) in operation in this area Norway 80 onshore employees 485 offshore employees Germany 17 onshore employees 8

9 Groningen Netherlands 1 CLV 1 PSV Mumbai India 2 PSV s Netherlands Brazil USA India 3 onshore employees 67 offshore employees 113 onshore employees 305 offshore employees 3 onshore employees no employees 9

10 Board of Directors Report The Board of Directors of Siem Offshore Inc. (the Board ) presents its report for the year ended 31 December 2011 together with the audited consolidated financial statements and the audited financial statements for the parent company. The financial statements and related notes were authorised for issue by the Board on 28 March 2012 and will be presented to the shareholders for approval at the Annual General Meeting (the AGM ) to be held 7 May The Company All references to Siem Offshore and the Company shall mean Siem Offshore Inc. and its subsidiaries and associates unless the context indicates otherwise. All references to Parent shall mean Siem Offshore Inc. as the parent company only. 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 offices are located in Brazil, Germany, the Netherlands, USA and India. The Company is tax resident in Norway. The Company s primary activity is to own and operate offshore support vessels ( OSVs ) for the offshore oil and gas service industry. The OSV fleet comprises platform supply vessels ( PSVs ), anchor handling tug supply vessels ( AHTS vessels ), multi-role support vessels ( MRSVs ) and a variety of other service vessel. The Company had ownership in 43 vessels of which 6 vessels were under construction at year-end The Company also operates two AHTS vessels on behalf of a partner. These two AHTS vessels are sister vessels to eight similar vessels owned by the Company, and all ten vessels are operated in a pool. During 2011, the total fleet of OSVs conducted operations in the North Sea, West Africa, Middle East, India, U.S. Gulf and Brazil. During 2011, Siem Offshore increased its ownership from 50% to 100% in the company Overseas Drilling Limited ( ODL ), which owns the scientific ocean drillship JOIDES Resolution. The commercial and technical operation of the vessel was taken over by the Company from 1 August The JOIDES Resolution is one of the primary research vessels used to drill core samples in the ocean floor for an international research program. During 2011, the Company entered the submarine power cable installation, repair and maintenance business through the acquisition of Five Ocean Services GmbH (subsequently renamed to Siem Offshore Contractors GmbH). The gross investment was approximately USD 8 million as consideration for shares and injection of working capital. The transaction combines the marine operating capacities of Siem Offshore with the engineering capabilities and project execution expertise of Siem Offshore Contractors GmbH, and forms a strong entity to meet the forecasted market growth and customer requirements within the submarine power cable installation, repair and maintenance market. The Company holds a 60% ownership in the subsidiary Siem WIS AS. Siem WIS develops applications for managed pressure drilling ( MPD ) based on a patented sealing technology. In addition to the ownership and operations of OSVs, the Brazilian subsidiary, Siem Offshore do Brasil S.A., provides specialized engineering to develop and implement combat management systems for vessels in the Brazilian navy. The activities were part of Siem Offshore do Brasil when it was initially acquired by the Company. Financial Results, Position and Risks IFRS The financial statements for the Company and the Parent are prepared in accordance with the International Financial Reporting Standards ( IFRS ) as adopted by the European Union. Going concern The financial statements have been prepared under the assumption that the Company and the Parent are goingconcerns. This assumption is based on the Company s level of cash and cash equivalents at year end, forecasted cash-flows, available credit facilities and the market value of its assets. Income Statement The Company s activities increased throughout 2011 following the delivery of two additional AHTS vessels. In addition, the Company took delivery of one large PSV, one fast supply vessel and one fast crew vessel. The Company had 39 offshore vessels in operation at year-end, including two AHTS vessel owned by the Company s pool partner. The increased fleet and activity had a profound impact on operating revenue and expenses and the debt-financing for such vessels led to increased financial 10

11 expenses. In 2011, the Company recorded operating revenue of USD million and a net loss attributable to shareholders of USD (7.3) million, or USD (0.02) per share, compared to operating revenue of USD million and a net profit attributable to shareholders of USD 10.2 million, or USD 0.03 per share, in The Company s operating margin for 2011 was USD million compared to USD 74.6 million in Net operating margins as a percentage of operating revenue was 36.1% in 2011 compared to 32.7% in The Company s operating profit for 2011 was USD 43.5 million compared to USD 17.2 million in 2010 and includes depreciation and amortisation of USD 81.4 million (2010: USD 59.3 million). Net currency exchange gain (losses) of USD 1.5 million (2010: USD (4.8) million) were recorded on forward contracts, of which USD (1.4) million is unrealised. Net financial items were net expenses of USD (49.7) million (2010: USD (16.9) million) and includes a revaluation gain (loss) of non-usd currency items of USD (10.6) million (2010: USD 3.0 million) due to the stronger USD during the period. Non-USD currency items are held to match short- and long-term liabilities, including off-balance sheet liabilities, in similar currency. The result from associated companies was USD 2.4 million and includes, among others, net results of USD 4.1 million for the JOIDES Resolution during the period of 50% ownership until 1 August 2011 and USD (1.7) million for the 35%-owned limited partnership KS Ocean Commander. The net result from the 41%-ownership in the wellstimulation vessel Big Orange XVIII was zero. The Board proposes that the net loss of the Parent of USD (4.9) million for 2011 be allocated to retained earnings and that no dividend be paid for As of 31 December 2011, the Parent`s retained earnings were USD million. Financial Position and Cash-Flows Total equity for the Company was USD 770 million at year-end 2011 (2010: USD 769 million), and the equity ratio was 41% (2010: 45%). Shareholders equity was USD 735 million (2010: 745 million), equivalent to USD 1.86 per share (2010: USD 1.88 per share). There were 395,951,640 shares issued and outstanding at year-end The cash position at year-end was USD 137 million (2010: USD 115 million) and the working capital was USD 62 million (2010: USD 74 million). The Company recorded USD 208 million as gross investments in fixed assets during 2011, of which USD 113 million relates to vessels under construction or delivered from yards, and USD 95 million relates to project related investments in vessels and capitalised dry-dockings. The Company has during 2011 secured debt-financing for two large-size PSVs, including one newbuild through the 51%-owned subsidiary Siem Meling DA and one large-size PSV previously financed with equity. A new loan facility was obtained for debt-financing of the vessel JOIDES Resolution. Further, the existing USD 220 million loan and guarantee facility was increased by 80 million. The Company had the equivalent of USD 147 million as undrawn debt facilities at year-end 2011, including debt facilities for all vessels under construction in Brazil. In total, the Company raised a gross amount of USD 327 million in new longterm debt during 2011 and repaid USD 191 million during the same period. The Company s gross interest-bearing debt at 31 December 2011 was USD 935 million. The gross project cost for the remaining newbuilding program was USD 161 million at year-end Approximately USD 93 million of such future yard instalments are scheduled for payment during 2012 and USD 68 million is scheduled for payment during The Company s cash-flows are primarily denominated in USD, NOK and BRL. During 2011, the USD strengthened by 2.3% to the NOK and 12.6% to the BRL. The average recorded exchange rates were USD/NOK 5.59 and USD/ BRL The majority of the Company s interestbearing debt is at floating interest rates and primarily nominated in USD and NOK. The average 3-month USD LIBOR was 0.34% during 2011 (0.34% in 2010) and the average 3-month NIBOR was 2.75% during 2011 (2.51% in 2010). The Company entered into interest swap agreements for hedging long-term interest rate exposure on floating debt during The Company held USD 243 million in IRS agreements at yearend. The Company s average cost of debt for 2011 was around 4%. Financial Risks Interest risk The Company is exposed to changes 1 Currency exchange contracts have been entered into in order to hedge the future NOK instalments for vessels under construction at Norwegian yards. The Company held USD 40 million in such currency exchange contracts at year-end at an average contract price of USDNOK

12 Board of Directors Report in interest rates as approximately 60% of the long-term interest bearing debt was subject to floating interest rates at the end of The remaining portion 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 obligations for future yard instalments in relation to shipbuilding contracts and repayment of long-term debt in various currencies. Forward exchange contracts are entered 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 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 which result in bankruptcy or which otherwise adversely affects 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. Operations Fleet, Performance and Employment The Company had ownership interests in 43 vessels at year-end, including six vessels under construction. The fleet includes eleven PSVs, four MRSVs, eight AHTS vessels, a fleet of eleven crew/ supply boats operated in Brazil, one well-stimulation vessel and one scientific core drilling vessel. The majority of the vessels are 100% owned by the Company and the majority of the vessels are on long-term contracts. In addition, the Company operated two AHTS vessels for a pool partner. The PSV fleet had 96% utilisation (2010: 91%). The PSV fleet recorded 146 days off-hire related to dry-dockings or contract mobilisation and demobilisation (2010: 165 days). The contract cover at year-end for the PSV fleet was 79% for 2012, 35% for 2013 and 1% for The MRSV fleet had 100% utilisation (2010: 96%). The MRSV fleet recorded 2 days off-hire related to dry-dockings or contract mobilisation and demobilisation (2010: 14 days). The contract cover at year-end for the MRSV fleet was 76% for 2012, 70% for 2013 and 45% for The AHTS fleet had 88% utilisation. The AHTS fleet recorded 75 days off-hire related to dry-dockings or contract mobilisation and demobilisation (2010: 261 days). The contract cover at yearend for the AHTS vessels was 43% for 2012, 40% for 2013 and 35% for The Brazilian vessels had 75% utilisation. The Brazilian vessels recorded 65 days off-hire related to dry-dockings or contract mobilisation (2010: 73 days). The contract cover at year-end for the Brazilian vessels was 76% for 2012, 70% for 2013 and 45% for The total backlog of firm contracts at year-end was USD 737 million for all vessels, including the 100%-ownership in the scientific core drilling vessel JOIDES Resolution, the 41%-ownership in the well stimulation vessel Big Orange XVIII and firm contracts for vessels under construction. The backlog is split with USD 269 million for 2012 and USD 184 million for 2013 and USD 284 in 2014 and thereafter. Newbuilding Program The Company had six vessels under construction at year-end 2011, all in Brazil. This includes one fast crew vessel and one fast supply vessel which was delivered in first quarter 2012, two oil spill recovery vessels scheduled for delivery in 2012, and two large-size PSV scheduled for delivery in 2012 and All of the vessels, except for the two large-size PSVs, shall commence firm contracts with fixed terms of eight years. QHSE The Company s overall goals include zero personal injuries, no damage to the natural environment and no damage to or loss of equipment and property. To support this aim, the Company operates integrated Business Management Systems according to a 12

13 certification scope that includes the ISM Code, ISO 9001, ISO and OSHAS Further, the systems are designed to meet the requirements imposed by national authorities and relevant international rules and regulations. In order to strengthen the Company s environmental focus, the Company has, in co-operation with six other ship-owners in the offshore segment, started a Joint Industry Project on Energy Efficiency with Det Norske Veritas ( DnV ) as project manager. The objective of the project is to identify, assess and describe opportunities for the offshore vessel industry to operate with improved energy efficiency and lower emissions. The motivation behind the project is to reduce negative impact on the environment resulting from the Company s operations, and by improving energy efficiency on the Company s vessels, an important step is taken towards greener operations. The Board is pleased with the QHSE records for 2011 during which period there was no serious injury to personnel, environmental pollution or damage to, or loss of, equipment and property. Siem WIS Siem WIS has designed and developed applications to improve managed pressure drilling ( MPD ). Global energy demand growth, combined with the need for increased oil recovery and increased number of deep sea and high pressure high temperature ( HPHT ) reservoirs, and greater emphasis on safety management will lead to increased demand for MPD services. The targeted applications include the pressure control device ( PCD ), the riser pressure control device ( RPCD ) and the continuous circulation device ( CircSub ). The PCD is for use on fixed installations whereas the RPCD isolates the riser annulus below the slip joint to provide a closed loop and to enable MPD operations on floaters for subsea wells. The main focus for Siem WIS in 2011 was to successfully complete all technology development and testing of the PCD system and make it ready for full commercial use. Siem WIS performed its first offshore assignment using the PCD for Statoil ASA on the Gullfaks field in The operation was successful and Siem WIS gained the necessary knowledge and experience to further improve the system. Siem WIS has made good progress on the PCD qualification, which is an extended API (American Petroleum Institute) test. Siem WIS completed the enhanced qualification program for the PCD system during This achievement exceeds the highest standards required by any major customer and qualifies the PCD system to be used in the most demanding and challenging drilling operations requiring MPD mode. Siem WIS will build latest versions of the PCD MKII units for deployment in operations in 2012 and expects to be in operation with one or more PCD systems in second half Siem Offshore s accumulated investment in Siem WIS totals USD 15.3 million whereof USD 8.5 million is recorded as intangible assets in the consolidated accounts. Siem Offshore Contractors Siem Offshore Contractors ( SOC ), previously Five Oceans Services GmbH, was acquired by the Company effective 1 April SOC is an experienced contractor for installation of submarine power cables and associated services, both with respect to infield and landfall cables in the offshore oil and gas industry (mainly Middle East region). SOC is also focusing on installation of inter-array as well as export cables in the offshore renewable energy market (mainly Northern Europe region). The rationale for the acquisition was to combine the marine operating capacities of the Company with the engineering capabilities and project execution expertise of SOC and in order to form a strong entity to meet customer requirements. SOC has successfully completed more than 20 installation and repair projects of submarine cables and employs approximately 50 people, including a project engineering and installation team. The present Middle East market has experienced a slow recovery, and will most likely stay volatile for some time. SOC is currently bidding for and pursuing a number of projects in the market for installation of submarine cables for European offshore windfarms. The installation campaigns for these projects will be for the years 2014 to Shareholders and corporate covernance Shareholder Information The Company s authorised share capital is USD 5,500, divided into 550,000,000 ordinary shares of a nominal value of USD 0.01 each. The issued share capital at 28 March 2012 is USD 3,959, divided into 395,951,640 shares. The shares of the Company are listed on the Oslo Stock Exchange with the ticker symbol SIOFF. The largest shareholder of the Company is Siem Industries Inc., which held 34% of the shares at 28 March During 2011, the closing share price reached a high of NOK 12.75, a low of NOK 7.65, and closed at NOK 8.30 at year-end. 13

14 Board of Directors Report Corporate Governance The Company has implemented guidelines for corporate governance based on the recommendations and guidelines given by the Oslo Stock Exchange. The purpose of these guidelines is to clarify the division of roles between shareholders, the General Meeting, Board of Directors and day-today management beyond what follows from the legislation. A detailed summary of our corporate governance principles may be found in a separate section of the annual report. The Working Environment And The Employees The Company had 1,073 employees at year-end 2011, of which 216 were onshore employees and 857 were employed on vessels. The Company seeks to provide a workplace with equal opportunities. The Company seeks to fairly treat current and prospective employees with respect to salaries, promotions and recruiting. The Company offers its employees a sound working environment with possibilities for professional development where men and women are treated equally and where there is no discrimination. The sick leave for the onshore and offshore employees was 2.3% and 4.5%, respectively. No incidents or work-related accidents resulted in significant material damage or personal injury occurred during the year. The development of the onshore and offshore organisations continues in order to prepare for increased future activities. The knowledge of the crew is vital for a safe and secure operation of any vessel. Such knowledge includes good seamanship and understanding of the demanding assignments to be executed, knowledge of capabilities and limitations of the vessel and equipment, extensive experience, and understanding and respect of circumstances that may affect safe the execution of tasks. The Company contributes to the reinforcement of good training in the industry and supports the development of suitable training concepts. The long-term collaboration with Offshore Simulator Centre and Ålesund University College Norway is an initiative to safeguard both. Outlook The Board expressed in the 2010 Annual Report that the Company s plan of operations for the years ahead were based on the assumption that the oil price would remain at an average of around USD 80 per barrel or above. Recent cost inflation, location and complexity of certain reservoirs in the oil and offshore sector in general might even require a slightly higher oil price to spur further growth in oil companies exploration and development activities. The Board further emphasised a belief in certain market improvements for the offshore supply vessel sector, although newbuilding activity and high number of vessels still to be delivered to the market presents a certain risk, especially in certain vessel segments. During the year 2011, the Brent crude oil price remained within the range of USD 90 to USD 125 per barrel and ended the year around USD 110. The oil price has increased again in early 2012 and is currently in excess of USD 125. The overall market for OSVs in total has improved somewhat during 2011 and the North Sea spot market day-rates for AHTS vessels were in average 70% higher as compared to 2010, with an improvement especially seen in the second half of the year. However, day-rates are still well below those recorded during In Brazilian market, both demand and day-rates continued to move up for AHTS vessels. The North Sea spot market for PSVs turned out to be on average equal to the year In the PSV segment, demand for larger vessels continued to increase in Brazil. There was also a significant rise in demand for PSVs in West Africa and in the US GoM in the second half of the year on the back of increased drilling activity. Industry consensus remains that the long term demand for global energy will increase and that there will be a continued need to drill for both new and existing oil and gas projects and to develop offshore production. This is confirmed by the increased activity level seen during 2011 and first quarter The current high oil price supports the further development of offshore oil and gas fields. The uncertainty in the global economy since the summer 2011 and the rising geopolitical tensions has lead to an increase in the oil price in the first quarter of These two factors are likely to cause continued volatility in the oil price in the year ahead. The consensus indicates an oil price on average of USD 100 or more during The increased cost for the consumer may eventually have a negative impact on the forecasted development in demand for oil. The long-term trend of increased activity within the offshore service industry remains intact. Whereas Brazil in previous years has announced major offshore oil and gas discoveries, the North Sea and West Africa kept pace in 2011 and in the beginning of In the North Sea, more than 3 billion barrels of energy were added through exploration in This is the 14

15 highest annual hydrocarbon reserve addition since the early 1980s. These new discoveries bode well for future offshore oil and gas activities. The market for offshore support vessels experienced a supply/demand imbalance during the past few years, partly due to decreased activity in the offshore oil and gas industry following the financial crisis and partly due to the additional number of new vessels delivered from yards. Demand for offshore support vessels in most regions is now recovering, and the newbuilding order book has come down for most vessel segments with the exception of the PSV segment. This would normally leads to improved market conditions. The newbuilding and ordering activity for PSVs has continued at a high level and the outstanding number of newbuilds for this segment is around 50% of the current fleet. The market s ability to absorb all these newbuild vessels represents a risk. We expect the market conditions in the North Sea to continue an upward trend for vessel owners on the back of increased demand in the region, especially spurred by increased rig activity both in Norway and UK. At the same time, only a handful of vessels will be delivered from yards in the region in coming years, none in We also continue to see vessels leaving for other geographic areas and these factors together are likely to improve day-rates for AHTS vessels in addition to the North Sea, the Arctic regions and Brazil, West Africa represents an interesting frontier for the vessel segment of the Company. 28 March 2012 Kristian Siem Michael Delouche Richard England Director Chairman Director (Sign.) (Sign.) (Sign.) Bjørn Johansen David Mullen Eystein Eriksrud Director Director Director (Sign.) (Sign.) (Sign.) Terje Sørensen Chief Executive Officer (Sign.) 15

16 corporate governance 1. Statement of Policy on Corporate Governance The principles for corporate governance adopted by the Company are based on the Norwegian Recommendation for Corporate Governance issued on the 20th October 2011, which is a revised version of the recommendation issued on the 21st October As a company incorporated in the Cayman Islands, Siem Offshore Inc. is subject to Cayman Island laws and regulations with respect to corporate governance. Cayman Islands corporate law is to a great extent based on English Law. In addition, due to the Company s listing on the Oslo Stock Exchange, certain aspects of Norwegian Securities law apply to the Company and there is a requirement to adhere to the Norwegian Code of Practice for Corporate Governance. The Norwegian Code of Practice for Corporate Governance is publicly available at Due to new provisions implemented in the Norwegian Accounting Act, compliance with the regulations for Corporate Governance reporting is now a legal requirement. The Company endeavours to maintain high standards of corporate governance and is committed to ensuring that all shareholders of the Company are treated equally and the same information is communicated to all shareholders at the same time. Corporate Governance is subject to annual assessment and review by the Board of Directors. The Board of Directors has reviewed this chapter. It is the opinion of the Board of Directors that the Company complies with the Norwegian Code of Practice for Corporate Governance. This chapter is structured in accordance with The Norwegian Code of Practice for Corporate Governance. 2. Business Cayman Islands laws and regulation do not require the objects clause of the Companies Memorandum and Articles of Association to be clearly defined. The Company has however adopted clear objectives and strategies for its business. Siem Offshore aims to grow the company within offshore support vessels, both organically and through combination with other operators, in order to achieve economies of scale and stronger presence in the market. Siem Offshore aims to become a preferred supplier of marine services to the oil and gas industry based on quality and reliability and to provide cost-efficient solutions to its customers by understanding their operation and applying technology and experience. The Company builds its business around a motivated workforce with the appropriate technical solutions. This create sustainable value for all shareholders. Reference is made to the Board of Directors report for detailed information. 3. Equity and Dividends The priorities for the use of Company funds are determined by the Board of Directors and recommendations of Management influenced by existing condi- 16

17 tions. At present, firstly the investment opportunities in the business, secondly the repayment of debt and thirdly the return of capital to the shareholders in form of dividends or share buy-back. The Board s mandate to increase the Company s share capital is limited only to the extent of the authorized share capital of the Company but with preemption rights for shareholders and in accordance with the Company s Memorandum and Articles of Association which comply with Cayman Island law. Under the Articles of Association, the Board can issue new shares, convertible bonds or warrants at any time within the limits of the authorized capital without the consent of the general meeting but with pre-emption rights for shareholders. A General Meeting has further authorized the Board to issue new shares without pre-emption rights to all shareholders up to a limit of 50% of Siem Offshore shares at the time the authorization was given. The Board holds authorization from the Annual General Meeting held on 10 May 2010 to issue 154,248,360 new shares. The authority gives the Board flexibility to finance investments, acquisitions and other business combinations on short notice through the issue of shares or certain other equity instruments in the Company. Furthermore the Board considers the granting of a new standing authority at the time of holding an Annual General Meeting rather than convening an Extraordinary General Meeting at some future time to be in the best interests of the Company, as this will result in cost savings and more effective time management for both the Company s senior management and its Shareholders. 4. Equal Treatment of Shareholders, Freely Tradable Shares and Transactions with Related Parties The Company is committed to ensuring that all shareholders of the Company are treated equally and all the issued shares in Siem Offshore, at nominal value US$ 0.01 each, are freely tradable and carry equal rights with no restrictions on voting. Siem Industries Inc,, which owns 33,7% of the Company, is represented by its Chairman, Kristian Siem, Deputy CEO, Eystein Eriksrud and President, Michael Delouche, on the Board of Directors. The Company pays an annual fee to Siem Industries as compensation for directorships, provision of an office and presence in the Cayman Islands, and other services. The fee is adopted by the annual general meeting based on a recommendation from the independent Board Members. Related party transactions are disclosed in the notes to the accounts. 5. Freely Negotiable Shares All of the shares in the Company carry equal rights and are freely negotiable. The shares are traded according to normal market practice and no special limitations on transactions have been laid down in the Articles of Associations. 6. General Meetings The annual general meeting of the Company will be held at the registered office of the Company on the Cayman Islands, 7 May, 2012 at 9:30am Cayman Islands local time and Shareholders can be represented by proxy. Notices of general meetings and related documents are made available to shareholders at the latest 14 days prior to meeting date. Notice of attendance by proxy is to be provided to either (1) the offices of Siem Offshore AS at Markensgate 8, P.O. Box 425, Kristiansand 4664, Norway, telefax no or (2) the Company s office at P.O. Box 10597, George Town, Grand Cayman KY1-1005, CAYMAN ISLANDS, telefax no , no less than 24 hours prior to the stated time of the annual general meeting. Shareholders are given the possibility to vote on the election of board members. 7. Nomination Committee The appointment of a nomination committee is not a requirement under Cayman Islands Law. 8. Corporate Assembly and Board of Directors; Composition and Independence In the nominations to the Board of Directors, the Board consults with the Company s major shareholders and ensures that the board is constituted by Directors with the necessary expertise and capacity. There is no requirement under Cayman Islands Law for the Company to establish a corporate assembly. Each Board member is elected for a term of 2 years or such shorter term as shall be specified in the ordinary resolution pursuant to which the director shall be appointed. Representatives of the executive management are not presently members of the Company s Board of Directors. The Board of Directors as a group has extensive experience in areas which are important to Siem Offshore, including offshore services, international shipping, ship broking, finance and corporate governance and restructuring. 17

18 9. Work of the Board of Directors The Board monitors the performance of management through regular meetings and reporting. The Company has a Compensation Committee and an Audit Committee. The Compensation Committee consists of two Directors. The mandate of the committee is to review and approve the compensation of the CEO and any bonuses to all executive personnel. Reference is also made to section 12, Remuneration of the Executive Personnel. The Audit Committee consists of two Directors. The composition of the committee meets the requirements of the Norwegian Code of Practice for Corporate Governance as regards independence. The committee s mandate can be summarized as follows: Ascertain that the internal and exter nal accounting reporting process are organized appropriately and carried out efficiently, and are of high profes sional quality. Monitor and assess the quality of the statutory audit of the Company s finan cial statements. Ensure the independence of the exter nal auditor, including any additional services provided by the external auditor. 10. Risk Management and Internal Control Internal control A prerequisite for the Company s system of decentralized responsibility is that the activities in every part of the Company meet general financial and non-financial requirements, and are carried out in accordance with the Company s common norms and values. The executive management of each subsidiary is responsible for risk management and internal control in the subsidiary with a view to ensuring 1) optimalisation of business opportunities, 2) targeted, safe, highquality and cost-effective operations, 3) reliable financial reporting, 4) compliance with current legislation and regulations and 5) operations in accordance with the Company s governing documents, including ethical and social responsibility standards. The Company s risk management system is fundamental to the achievement of these goals. Financial reporting process The Company prepares and presents its financial statements in accordance with current IAS/IFRS rules. Financial information from subsidiaries is received each month in a reporting package in a standard format accommodated necessary information for preparing the consolidated financial statement for the Company. The reporting from the subsidiaries is extended in the yearend reporting process to meet various requirements for supplementary information. There are established routines to check the financial data in the received reporting packages to ensure the best quality for the consolidated figures for the Company. Training and further development of accounting experience within the Company is provided locally by participating on various external courses on a regular basis. 11. Remuneration of Board of Directors The remuneration of the Board members reflect their experience and responsibilities, and is adopted by the annual general meeting based on the recommendation from the Board. The Board members do not have share options or profit-based remuneration. The responsibility statement of the Board of Directors in this report and the notes to the accounts include information about the remuneration of the Board of Directors. 12. Remuneration of the Executive Management The Company has a Compensation Committee which reviews and approves the compensation of the CEO and the bonuses to all executive personnel. The Articles of Association of the Company permit the Board to approve the granting of share options to employees. Currently, there are no option programs in force. The remuneration of the CEO is disclosed in the notes to the accounts. 13. Information and Communication The Company has a policy of treating all its shareholders and other market participants equally, and communicates relevant and objective information on significant developments which impact the Company in a timely manner. The Company also seeks to ensure that its accounting and financial reporting are to the standards of our investors, and the Company presents its financial statements in accordance with the International Financial Reporting Standards (IFRS). The Audit Committee of the Board of Directors monitors the company s reporting on behalf of the Board. Notices to the Oslo Stock Exchange and placements of notices and other information, including quarterly and annual reports, may be found on the Company s website ( The 18

19 financial calendar for 2012 may be found on the Company s website under Investor Relations. 14. Take-overs The shares in the Company are freely tradable and the Articles of Association of the Company does not hold specific defence mechanisms against take-over situations. In a take-over situation, the Board of Directors will comply with relevant legislation. 15. Auditor The Auditor of the Company is elected at the annual general meeting which also approves its remuneration. Details of the Company s remuneration of the external auditor are given in the notes to the accounts. The auditor reports to the Audit Committee twice a year. During the letter half of the year, the external auditor presents to the Audit Committee his assessment of risks, internal controls, risk areas and improvement potential in control systems and his audit plan for the following year. The second report to the Audit Committee is the presentation of Year-End Audit. The external auditor presents a summary of the audit process including comments on audited internal control procedures and key issue in the financial reporting. The Audit Committee also receives an annual independence reporting from the external auditor, confirming the external auditor s independence with respect to the Company, within the meaning of the Norwegian Act on Auditing and Auditors. The confirmation also includes services delivered to the Company other than mandatory audit. 19

20 Seven Sisters - Steaming towards Las Palmas 20

21 Photo: Andreas Linningsvoll 21

22 INCOME STATEMENTS PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Note ,026 30,399 Operating revenue 4,23 340, ,302-19,331-35,242 Operating expenses 8,18,19,20,23-217, ,660-6,305-4,843 Operating margin 122,952 74, Depreciation and amortization 4,5-81,348-59, ,070 Gain/(loss) on sale of assets , Gain on sale of interest rate derivatives (CIRR) Gain/(loss) on currency exchange forward contracts 28 1,450-4,789-6,600 1,509 Operating profit 4 43,497 17,213 FINANCIAL INCOME AND EXPENSES 3,676 7,509 Financial income 21 5,719 8,130-1, Financial expenses 21-44,785-28, ,158 Net currency gain/(loss) 21-10,624 2,962 2,241 1,589 Net financial items -49,691-16, Result from associated companies 7 2,367 10,036-4,359 3,098 Profit /(loss) before taxes -3,827 10, ,463 Tax benefit/(expense) 11-2, ,858 5,562 Net profit/(loss) -6,480 9, Attributable to non-controlling interest ,858 5,562 Attributable to shareholders of the Company -7,291 10,162 Weighted average number of outstanding shares (1,000) 395, ,417 Earnings per share: Basic and Diluted COMPREHENSIVE INCOME STATEMENT PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Note ,858 5,562 Net profit/(loss) -6,480 9,692 Other comprehensive income (expense): - - Currency translation differences -5, ,858 5,562 Total comprehensive income for the year -11,602 10, Attributable to non controlling-interest ,858 5,562 Attributable to shareholders of the Company -11,059 10,949 22

23 STATEMENTS OF CASH FLOWS PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Note CASH FLOW FROM OPERATIONS -7, Profit/(loss) before taxes, excluding interest 30 34,841 29, Interest paid -29,128-19,968-11,509 - Taxes paid -2, Result from associated companies 7-2,367-10, ,070 Gain/(loss) on sale of assets , Depreciation and amortization 5 81,348 59, Effect of unreal. currency exchange forward contracts 28 1,449-3,512 61,281-52,155 Changes in short-term receivables and payables 5,502-10, CIRR ,880-2,048 Other changes -2,504 1,763 9,393-61,201 Net cash flow from operations 86,273 39,401 CASH FLOW FROM INVESTMENT ACTIVITIES 110 1,546 Interest received 1,662 4, ,288 Investment in fixed assets 4-208, ,281-26,317 Loan repayment by shipyard 9-26, Proceeds from sale of fixed assets 25 1,214 31,645-7,168-25,039 Investments in subsidiaries -22, Dividend from associated companies 7 5,000 6, Investments in associated companies 7 3, ,880 1,536 Net cash flow from investment activities -219, ,452 CASH FLOW FROM FINANCING ACTIVITIES ,515 Proceeds from issue of new equity 12,284 55, Proceeds from new long-term borrowing , , Repayment of long-term borrowing , , ,515 Net cash flow from financing activities 148, ,806-1,758 1,401 Effect of exchange rate differences 5,622 5, ,749 Net change in cash 21,451 24,097 3,296 7,045 Cash at bank as of 1 January 115,185 91,088 3,502 3,296 Cash at bank as of 31 December 136, ,185 23

24 Statements of Financial Position Assets PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) Note 12/31/ /31/2010 NON-CURRENT INTANGIBLE ASSETS - - Deferred tax asset 11 6,254 6, Intangible assets 5 29,441 8, Total non-current intangibles assets 35,695 15,157 NON-CURRENT TANGIBLE ASSETS - - Vessels under construction 5,17 105, ,991 1,180 1,202 Vessels and equipment 5 1,414,548 1,268, Capitalized project costs 5 13,570 19,102 1,180 1,202 Total non-current tangibles assets 1,533,318 1,393,892 NON-CURRENT FINANCIAL ASSETS 688, ,870 Investment in subsidiaries Investment in associated companies 7 4,218 28,591 56,469 65,006 CIRR Loan deposit 12 56,469 65,006 93,183 52,559 Long-term receivables 9,29 7,674 9, , ,435 Total non-current financial assets 68, , , ,637 Total non-current assets 1,637,373 1,511,843 CURRENT ASSETS 3,520 18,933 Accounts receivable 2,29 46,544 53,290 71, ,071 Other short-term receivables 9,14, 23,29 30,730 23, Inventories 9,249 4, Non-current asset held for sale 24,25, Derivative financial instruments 15,28,29-3,731 3,502 3,296 Cash 2,10,29 136, ,185 79, ,618 Total current assets 223, , , ,255 Total assets 1,860,531 1,711,483 24

25 Statements of Financial Position Equity and Liabilities PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) Note 12/31/ /31/2010 EQUITY 537, ,212 Paid-in capital 537, ,212-22,302-22,302 Other reserves -11,628-7, , ,266 Retained earnings 208, , , ,175 Shareholders' equity , , Non-controlling interest 35,038 23, , ,175 Total equity 769, ,070 LIABILITIES Non-current liabilities - - Borrowings 2,12,14 839, ,095 56,469 65,006 CIRR Loan 12 56,469 65,006 9,769 - Tax liabilities 11 13,337 1,936 2,891 3,259 Deferred CIRR 12 2,891 3, Pension liabilities Other non-current liabilities 14 17,865 6,878 69,129 68,265 Total non-current liabilities 929, ,686 Current liabilities Accounts payable 2 7,311 7, Borrowings 2,12,14 95,472 71, Derivative financial instruments 15,28,29 10,171-1,516 13,025 Taxes payable 11 3,160 14, Other current liabilities 13,14,23 44,874 32,528 2,181 13,815 Total current liabilities 160, ,727 71,310 82,080 Total liabilities 1,090, , , ,255 Total equity and liabilities 1,860,531 1,711, Secured debt , , Guarantees 16 6,948 6,831 25

26 Statements of changes in equity (Amounts in USD 1,000) Total no. of shares Share capital Share premium reserves Exchange rate differences Equity as of December 31, ,774,219 3, ,099 20,129 Net profit to shareholders Comprehensive income 787 Share issues in partially owned subsidiaries Share issue July ,977, ,535 Share issue costs -379 Equity as of December 31, ,751,640 3, ,254 20,916 Net profit to shareholders Comprehensive income -3,768 Share issues in partially owned subsidiaries Share issue April , Share issue costs Equity as of December 31, ,951,640 3, ,704 17,147 Share issues in partially owned subsidiaries Minority share of new equity Siem Offshore Meling DA Minority share of new equity Siem WIS AS Total PARENT COMPANY Equity as of December 31, ,774,219 3, , Net profit Comprehensive income - Share issue July ,977, ,535 Share issue costs -379 Effect of exchange rate differences Equity as of December 31, ,751,640 3, , Other items Net profit Comprehensive income Share issue April , Share issue costs Effect of exchange rate differences Equity as of December 31, ,951,640 3, ,

27 CONSOLIDATED Other reserves Retained earnings Shareholders' equity Non-controlling interest Total equity -28, , ,855 22, ,728 10,162 10, , ,461 1,461 54,895 54, , , ,320 23, ,070-7,291-7, ,480-3,768-1,354-5,122-11,832 11, , , ,714 35, , ,887 1,461 2,945 1,461 11,832-22, , ,098 5,562 5,562-54, , , ,176 2,926 2,926-4,858-4, , , ,695 27

28 Seven Sisters - Crane Operation 28

29 Photo: Andreas Linningsvoll 29

30 NOTES TO THE ACCOUNTS Note 1 - Accounting Principles 1.1 General Siem Offshore Inc. was established on July 1, Siem Offshore Inc. is registered in the Cayman Islands and is listed on the Oslo Stock Exchange. All references to Siem Offshore Inc. and the Company shall mean Siem Offshore Inc. and its subsidiaries and associates unless the context indicates otherwise. All references to Parent shall mean Siem Offshore Inc. as a parent company only. 30

31 1.2 Basis of preperation The consolidated and parent company financial statements are prepared in accordance with International Financial Reporting Standards ( IFRS ) and IFRS Interpretations Committee ( IFRIC ) interpretations, endorsed by the European Union and the regulations of the Oslo Stock Exchange. As of December 31, 2011, there were no differences relevant to the Company between these standards and International Financial Reporting Standards ( IFRS ), as issued by the International Accounting Standards Board, and the policies adopted by the Company. The consolidated financial statements have been prepared under the historical cost convention, as modified by fair value of non-current assets held for sale, and financial assets, including derivative instruments at fair value through profit or loss. The financial statements have been prepared under the assumption that the Company is a going-concern. A summary of the principal accounting policies applied in the preparation of these financial statements are set out below. The financial statements are presented at and for the years ended December 31. All figures are in USD thousands unless otherwise clearly stated. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company s accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed under Critical accounting estimates and judgments presented below. 1.3 Accounting policies (a) New and amended standards adopted by the Company There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2011 that would be expected to have a material impact on the Company. (b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2011 and not early adopted. IAS 19, Employee Benefits was amended in June The impact on the Company will be as follows: to eliminate the corridor approach and recognise all actuarial gains and losses in OCI as they occur; to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). The Company is yet to assess the full impact of the amendments. IFRS 9, Financial Instruments, addresses the ciassification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October It replaces the parts of IAS 39 that relate to the ciassification and measurement of financial instruments. IFRS 9 requires financial assets to be ciassified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The ciassification depends on the entity s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Company is yet to assess IFRS 9 s full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January IFRS 10, Consolidated Financial Statements builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Company is yet to assess IFRS 10 s full impact and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 January IFRS 12, Disclosures of Interests in Other Entities includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Company is yet to assess IFRS 12 s full impact and intends to adopt IFRS 12 no later than the accounting period beginning on or after 1 January IFRS 13, Fair Value Measurement, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are 31

32 NOTES TO THE ACCOUNTS largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. The Company is yet to assess IFRS 13 s full impact and intends to adopt IFRS 13 no later than the accounting period beginning on or after 1 January There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company. 1.4 Consolidation a) Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Company has the power to govern the financial and operating policies by controlling more than one half of the voting rights in the relevant entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. The Company also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Company s voting rights relative to the size and dispersion of holdings of other shareholders gives the Company the power to govern the financial and operating policies, etc. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. The Company applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred and the liabilities assumed from the former owners of the acquiree and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Company recognises any non-controlling interest in the acquiree on an acquisition-byacquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquirer s identifiable net assets. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the fair value of the acquirer s previously-held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the Company is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. Inter-transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intertransactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company. b) Associated companies Associates are all entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost. The Company s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition. The share of earnings recorded in the consolidated financial statements are based on the after tax-earnings of the associates. In the income statement, the share of earnings from associates is shown as a financial item. The Company s share of its associates post-acquisition profits or losses is recognized in the income statement and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Company s share of losses 32

33 in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses unless it has incurred obligations or made payments on behalf of the associate. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been reconciled where necessary to ensure consistency with the policies adopted by the Company. 1.5 Classification of items in the financial statements Assets designated for long-term ownership or use and receivables due later than one year after drawdown have been recorded as non-current assets. Other assets are classified as current assets. Receivables are stated at par value less provision for doubtful accounts. Liabilities due later than one year after the end of the accounting year are posted as non-current liabilities. Other liabilities are classified as current liabilities. The Company is organized into eight different segments, platform supply vessels ( PSVs ), multirole support vessels ( MRSVs ), anchor-handling tug supply vessels ( AHTS vessels ), Brazilian vessels (consisting of fast crew vessels ( FCVs ), fast supply vessels ( FSVs ) and oil spill recovery vessels ( OSRVs )), combat management systems ( CMS ), Cable installation, Scientific core-drilling and Other, in which the Company operates. 1.7 Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Company s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency ). The consolidated financial statements are presented in USD, which is the Company s functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. (c) Group companies The results and financial position of all the group entities (none of which have the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities for each reporting presented are translated at the closing rate at the date of that statement of financial position; (ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and 1.6 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions. The following exchange rates are used in 2011: Average 12/31/2011 NOK (Norwegian krone) EUR (Euros) GBP (Pound Sterling) REAS (Brazilian Reals)

34 NOTES TO THE ACCOUNTS (iii) all resulting exchange differences are recognized as a separate component of equity. In consolidation, exchange differences arising from the translation of the net investment in foreign operations and from borrowings and other currency instruments designated as hedges of such investments are taken to shareholders equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. 1.8 Fixed assets and maintenance costs Vessels are measured in the consolidated statement of financial position at cost less accumulated depreciation and impairment loss. Depreciation is on a straight-line basis and determined by an estimate of the remaining useful economic life of the asset. Estimated scrap value is taken into account and reassessed on December 31 each year. The vessels presently owned by the Company are considered to have an economic life of 30 years. Some components of the vessels have a shorter economic life than 30 years. The vessels are decomposed into different components and amortized over estimated economic life time. For further information, see Note 5. Other fixed assets are depreciated on a straight-line basis over the anticipated useful life. Each part of a fixed asset that is significant to the total cost of the asset is separately identified and depreciated over that component s useful lifetime. Components with similar useful lives will be included in one component. The Company has identified 5 significant components relating to its different types of vessels. In accordance with IAS 16 and the cost model, dry-dock costs are considered a separate component of the ship s cost at purchase with a different pattern of benefits and, therefore, need to be amortized separately. Day-to-day maintenance costs are charged to the income statement during the financial period in which they are incurred. The cost of major renovations and periodic maintenance of vessels is capitalized and depreciated over the useful lifetime of the parts replaced. The useful life of the regular vessels docking expenses will be the period until the next docking, normally from 2 to 3 years. The residual value and expected useful lifetime assumptions of fixed assets are reviewed at each reporting date and, where they differ significantly from previous estimates, depreciation charges are changed accordingly. Certain vessel contracts require an investment prior to commencing the contract to fulfil requirements set by the charterer. These investments are capitalized as project cost and are amortized over the term of the specific charter contracts. Vessels in the same operating segments, as defined in IAS 14 Segment Reporting, are treated as one cash-generating unit ( CGU )when determining the recoverable amount. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in operating profit. 1.9 Newbuild contracts Instalments on newbuild contracts are recorded as non-current assets. Costs related to the on-site supervision and other pre-delivery construction costs are capitalized per vessel. Borrowing costs related to newbuilding contracts commenced before December 31, 2009 are recognized as an expense immediately. For newbuilding contracts where the commencement date for capitalization is on or after January 1, 2010, the Company capitalizes borrowing costs directly attributable to the construction as a part of the cost of the asset Impairment of fixed assets Non-current assets are reviewed for potential impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The asset s cash generating ability either through use or sale is reviewed and compared to the asset s carrying amount in the statement of financial position. If the carrying amount is higher, the difference must be written off as an impairment loss. Fair value reduced by estimated sales costs is the amount achievable on sale to an independent third party. The recoverable amount is established individually for all assets. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time and the risk specific to the asset that is considered impaired. 34

35 A previously recognized impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Reversal of previously recognized impairment is limited to the amount that the carrying value of the asset would have been had the initial impairment charge not taken place Intangible assets Intangible assets that are acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is recognized at fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internallygenerated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is charged against profits in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or infinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method are reviewed at least at each financial yearend. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as a change in accounting estimate. The amortization expense on intangible assets with finite lives is recognized in the income statement in the expense category consistent with the function of the intangible asset. Intangible assets with infinite useful lives are tested for impairment annually either individually or at the cashgenerating unit level. Such intangibles are not amortized. The useful life of an intangible asset with an infinite life is reviewed annually to determine whether the infinite life assessment continues to be supportable. If not, the change in the useful life assessment from infinite to finite is made on a prospective basis. Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Company s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in equity Financial assets The Company classifies its financial assets in the following categories: Financial assets at fair value through profit or loss, Loans and receivables, and Available for sale Financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current. (b) Loans and receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. (c) Available for sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose 35

36 NOTES TO THE ACCOUNTS of the investment at a time greater than 12 months from the reporting date. Purchases and sales of financial assets are recognized on the trade-date, the date on which the Company commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or been transferred and the Company has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest method. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the income statement within net gains (losses) in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement as part of other income when the Company s right to receive payment is established. The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired Inventories Lubricating oil and bunkers inventories are valued at the lower of historical cost and market value applying the FIFO (first-in, first-out) principle. The Company makes inventory provisions based on an assessment of excess and obsolete inventories Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position Accounts receivable Accounts receivable are reported at amortized cost. The interest factor is ignored if insignificant. In the case of objective evidence of a fall in value, the difference between reported value and the present value of the future cash flow is discounted with the original effective interest rate for the receivable and reported as a loss. Provisions for losses are recognized when there are objective indicators that the Company will not receive settlement in accordance with the original terms. Significant financial problems facing the customer, probability that the customer will go bankrupt or undergo financial restructuring, postponements and nonpayment are regarded as indicators that the receivables from customers must be written-down Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. When the Company purchases its own shares, the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted as appropriate from share capital and share premium reserve and the shares are cancelled Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred and are subsequently stated at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date Commercial Interest Reference Rate (CIRR) loan The Company has applied for three Commercial Interest Reference Rate (CIRR) loans from the Norwegian Export Credit Agency. The duration of the loans is 12 years and the cash proceeds from the loans have been deposited in fixed deposit accounts with a Norwegian bank at the same interest rate as the loans. The agreed periods of the deposits are identical with the periods of the loans Taxation Tax expense/benefit includes current taxes and the change in deferred taxes. Deferred income tax is provided 36

37 for all temporary differences between the book value and the tax basis of assets and liabilities and for tax losses carried forward. Deferred tax assets made probable through prospective earnings that can be utilized against the tax reducing temporary differences are recognized as intangible assets. Deferred tax assets and deferred tax liabilities are recognized independently of when the differences will be reversed and, as a rule, at nominal value. Deferred tax assets and tax liabilities are measured on the basis of estimated future tax rate. Part of the Company s activities under the Norwegian subsidiaries are structured to be in compliance with the regulations for the Norwegian Tonnage Tax Regime. The Company has estimated a tax rate of 0% for the companies subject to Norwegian Tonnage Tax Regime. Financial income within the regime is taxable at a rate of 28%. For companies not included in the tonnage tax regime, the Company applies a tax rate of 28%. The tax expense consists of tax payable and changes in deferred tax assets/liabilities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax assets are recognized to the extent it is probable that future taxable profits will be generated to utilize the temporary differences forming basis for the deferred tax assets Pension costs and obligations The Company has a defined benefit plan for its employees in Norway. The pension scheme is financed through contributions to insurance companies or pension funds. A defined benefit plan defines the amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized on the statement of financial position relating to defined benefit plans is the net present value for the defined benefits on the reporting date less the fair value of the pension fund assets adjusted for unrecognized estimate deviations and costs relating to pension benefits earned from prior periods. The pension obligations are calculated annually by an independent actuary on the basis of a linear model. The net present value of the defined benefits is determined by discounting the estimated future payments based on the interest rate for Norwegian government bonds. Since Norwegian government bonds are not issued for terms exceeding 10 years, a supplement to this bond rate is calculated by means of estimation techniques to establish a discount rate that is approximately the same as the term of the pension obligation. Estimated deviations due to new information or changes in the actuarial assumptions in excess of 10% of the value of the pension fund assets or 10% of the pension obligations will be recognized in the profit and loss account over a period that corresponds to the employees expected remaining service lifetime. Changes in the pension plan s benefits are entered as an expense or income on a current basis in the profit and loss account, unless the rights in accordance with the new pension plan are contingent on the employee remaining in service for a period of time (accrual period). In this case the cost related to the change in benefits is amortized linearly over the accrual period Contingent liabilities and provisions The Company recognizes provisions for any environmental improvements and legal requirements when there is a legal or self-imposed obligation to do so as a result of earlier events, there is a preponderance of evidence that the obligation will be settled by a transfer of economic resources and the size of the obligation can be estimated with an adequate degree of reliability. In cases where there are additional obligations of the same nature, the probability that the litigation will be settled will be assessed for the Company as a whole. Provisions for the Company are recognized even if the probability for settlement related to the Company s individual elements may be low. Provisions are measured as the net present value of the expected payments to redeem the obligation. A pre-tax discount rate is used that reflects the current market situation and risk specific to the obligation. An increase in the obligation as the result of a change in the time value is recognized as an interest cost. At year-end 2011, no contingent liabilities or provisions are recognized in the Statements of Financial Position Financial derivatives The Company enters into derivative instruments, primarily foreign currency contracts, to hedge the foreign currency rates. The criteria for qualifying as a hedge under IFRS are strict. The Company s foreign currency contracts 37

38 NOTES TO THE ACCOUNTS Seven Sisters - Sunrise at Aasgard A Photo: Andreas Linningsvoll do not qualify as hedging. The fair market value of these contracts is recorded as a receivable or liability and any change in the valuation is recognized in the profit and loss as operating expenses Revenue recognition The Company s activity is to employ different types of offshore support vessels, including PSVs, MRSVs, AHTS vessels, OSRVs, standby vessels and crew-boats. In addition, the Company holds interest in one limited liability with ownership in one scientific core-drilling vessel for part of 2011 before it became a wholly-owned subsidiary, and interest in one limited liability partnership with ownership in one well-stimulation vessel. In one of the subsidiaries of the Company, revenues are partly generated from income from construction contracts. Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Company s activities. Revenue is shown net of value-added tax, withholding tax, returns, rebates and discounts and after elimination of sales within the Company. Revenue is recognized as follows: Charter rate contracts The Company s operational vessels are leased out on time charter parties. The Company has evaluated IFRIC 4 Determination whether an arrangement contains a lease and has concluded that the time charters represent lease of assets and are therefore subjected to IAS 17. IFRIC 4 involves no change in the revenue recognition principle. Revenue derived from charter hire contracts or other service contracts is recognized in the period that services are rendered at rates established in the relevant contracts. Certain contracts include mobilization fees payable at the start of the contract. In cases where the fee covers specific upgrades or equipment specific to the contract, the mobilization fees are recognized as revenue over the estimated contract period. The related investment is depreciated over the estimated contract period. In cases where the fee covers specific operating expenses at the start of the contract, the fees are recognized in the same period as the expenses. Vessels without signed contracts in place at discharge have no revenue before a new contract is signed. Charter-related expenses incurred for vessels in the idle time are expensed. Construction contracts The Company follows the generally accepted practice of accounting for long-term construction, engineering and project management contracts on the percentage-of-completion basis as costs are incurred. Under this method, revenue and income is recognized as work progresses on the contract. For all contracts, no profit is recognized before the outcome of the contract can be measured reliably and, generally, this will mean no profit is recognized until progress has reached at least 20% of completion. The estimated cost used to determine profit at completion reflects all facts or occurrences expected to affect the final cost of the contract; therefore, the entire amount of any estimated contract loss is recognized when it first becomes evident. For projects that are assumed to result 38

39 in a loss, the total estimated loss is recognized immediately. Interest income Interest income is recognized using the effective interest method. When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, which is determined as the estimated future cash flow discounted at original effective interest rate of the instrument and continues unwinding the discount as interest income. Interest income on impaired loans is recognized using the original effective interest rate. Dividend income Dividend income is recognized when the right to receive payment is established. Rendering of services Service revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the service has been provided, the fee is fixed or determinable and collection of resulting receivables is reasonably assured. Other services are recognized on percentage-ofcompletion basis Use of estimates Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities. Further information is set out in Note 3. instruments such as stock options. The impact of share equivalents is computed using the treasury stock method for share options Statements of Cash Flows The Statements of Cash Flows are prepared in accordance with the indirect method Related party transactions All transactions, agreements and business activities with related parties are determined on an arm s length basis in a manner similar to transactions with third parties Events after reporting date New information regarding the Company s financial position on the reporting date is included in the accounts. Events occurring after the reporting date which do not impact the Company s standing on the reporting date, but which have a significant impact on future periods, are presented in the notes to the accounts Government grants Grants relating to net wages arrangement in Norway are recognized as a reduction of wage cost Operating leases Leases for which most of the risk and return associated with the ownership of the asset have not been transferred to the Company are classified as operating leases. Lease payments are classified as operating costs and recognized in the income statement in a straight line during the contract period Earnings per share Earnings per share are calculated by dividing the net profit/loss for shareholders of the Company by the weighted average number of outstanding shares over the period in question. Diluted earnings per share include the effect of the assumed conversion of potentially dilutive 1.30 Exchange gain/ loss related to account receivables and account payable All foreign exchange gains and losses related to account receivables and account payable are recognized in the income statement under net currency items. 39

40 Siem Amethyst - anchor on deck 40

41 Gulf of Mexico - Siem Swordfish Photo: Burgos Oscar Daily life on deck Photo: Jan Oskar Veiseth Photo: Jan Oskar Veiseth Lunch buffet on board 41

42 NOTES TO THE ACCOUNTS Note 2 - Financial Risk Management 2.1 Financial risk factors The Company is exposed to a variety of financial risks through its ordinary operations and debt financing. Such risks include foreign exchange risk, interest rate risk, credit risk and liquidity risk. To manage these risks, management reviews and assesses its primary financial and market risks. Once risks are identified, appropriate action is taken to mitigate the identified risk. The Company s risk management is exercised in line with guidelines approved by the Board. 2.2 Foreign exchange risks USD is the functional and reporting currency for the Company. The Company operates internationally and is exposed to foreign exchange risks arising from various currency exposures primary with respect to NOK, GBP, EUR and BRL. Foreign exchange risks can be divided into transaction risk from paying and receiving foreign currency and translation risk due to recognizing assets and liabilities in USD. The Company had in 2011 and 2010 mainly USD, NOK, GBP, EUR and BRL revenues, and mainly USD, CONSOLIDATED Foreign exchange risk rate 10% (Amounts in USD 1,000) +10% movements -10% movements December 31, 2011 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 136,635 3,744 3,744-3,744-3,744 Derivatives Accounts receivable 46,544 2,151 2,151-2,151-2,151 Impact on financial assets before tax 183,179 5,895 5,895-5,895-5,895 Financial liabilities Accounts payable 7, Derivatives 10,171 4,543 4,543-6,191-6,191 Borrowings 934,503-30,517-30,517 30,517 30,517 Impact on financial liabilities before tax 951,985-26,660-26,660 25,012 25,012 Income statement Operating revenue 340,628 14,071 14,071-14,071-14,071 Operating expenses 217,676-19,105-19,105 19,105 19,105 Impact on operating result before tax 122,952-5,034-5,034 5,034 5,034 Total increase/decrease before tax -25,798-25,798 24,150 24,150 Allocation per currency NOK -22,573-22,573 20,925 20,925 EUR GBP 2,547 2,547-2,547-2,547 BRL -4,869-4,869 4,869 4,869 Total increase/decrease before tax -25,798-25,798 24,150 24,150 Derivatives in the sensitivity table typically include path-dependent options which include features related to situations where the underlying reaches or fluctuates within specific barrier levels. If the underlying reaches or fluctuates above or below a pre-determined barrier level the impact on the Company s profit can diverge. 42

43 NOK and BRL expenses. At year end, the Company had shipbuilding contracts with Brazilian yards for the construction of one FCV, one FSV, two OSRVs and two large-size PSVs. The contracts with Brazilian yards are in USD, BRL and NOK. Further information regarding these contracts is set out in Note 2.5 and Note 17. The Company is exposed to foreign exchange risk of its subsidiaries, including the development of the Brazilian Real. The following sensitivity table demonstrates the impact on the Company s profit and equity before tax from potential changes to the exchange rates, all other variables held constant. CONSOLIDATED Foreign exchange risk rate 10% (Amounts in USD 1,000) +10% movements -10% movements December 31, 2010 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 115,185 2,190 2,190-2,190-2,190 Derivatives 3,731 7,553 7,553-1,093-1,093 Accounts receivable 53,290 3,254 3,254-3,254-3,254 Impact on financial assets before tax 172,206 12,997 12,997-6,538-6,538 Financial liabilities Accounts payable 7, Derivatives Borrowings 810,220-10,469-10,469 10,469 10,469 Impact on financial liabilities before tax 817,339-11,150-11,150 11,150 11,150 Income statement Operating revenue 228,302 9,743 9,743-9,743-9,743 Operating expenses 153,660-13,557-13,557 13,557 13,557 Impact on operating result before tax 74,641-3,814-3,814 3,814 3,814 Total increase/decrease before tax -1,967-1,967 8,426 8,426 Allocation per currency NOK -6,042-6,042 12,502 12,502 EUR 3,061 3,061-3,061-3,061 GBP BRL Total increase/ decrease before tax -1,967-1,967 8,426 8,426 43

44 NOTES TO THE ACCOUNTS PARENT COMPANY Foreign exchange risk rate 10% (Amounts in USD 1,000) +10% movements -10% movements December 31, 2011 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 3, Accounts receivable 3, Impact on financial assets before tax 7, Financial liabilities Accounts payable Derivatives Borrowings Impact on financial liabilities before tax Income statement Operating revenue 13, Operating expenses 19,331-1,384-1,384 1,384 1,384 Impact on operating result before tax -6,305-1,383-1,383 1,383 1,383 Total increase/decrease before tax -1,398 1,398 1,398 1,398 Allocation per currency NOK -1,402-1,402 1,402 1,402 EUR GBP Total increase/decrease before tax -1,398-1,398 1,398 1,398 44

45 PARENT COMPANY Foreign exchange risk rate 10% (Amounts in USD 1,000) +10% movements -10% movements December 31, 2010 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 3, Accounts receivable 18,933 1,602 1,602-1,602-1,602 Impact on financial assets before tax 22,229 1,669 1,669-1,669-1,669 Financial liabilities Accounts payable Derivatives Borrowings Impact on financial liabilities before tax Income statement Operating revenue 30,399 1,567 1,567-1,567-1,567 Operating expenses 35,242-1,624-1,624 1,624 1,624 Impact on operating result before tax -4, Total increase/decrease before tax 1,580 1,580-1,580-1,580 Allocation per currency NOK EUR 1,712 1,712-1,712-1,712 GBP Total increase/decrease before tax 1,580 1,580-1,580-1,580 45

46 NOTES TO THE ACCOUNTS 2.3 Credit risks Concentration risks The Company s credit risk is primarily attributable to its trade and other short-term receivables. The exposure to credit risk is measured on an ongoing basis and credit evaluations are performed for customers identified to be risky. The Company s debtors are mainly major oil companies and offshore service companies, which are considered to be creditworthy third parties. Historically, the loss percentage has been low. Ongoing provisions are made and, on December 31, 2011 the provision for certain accounts receivables which may not be paid in full was USD 12.3 million for the Company and USD 31K for the Parent. The table below presents the concentration risks for 2011 and PARENT COMPANY CONSOLIDATED USD % of total (Amounts in USD 1.000) USD % of total Receivables on December 31, , % 1 to 5 largest 18, % % 6 to 10 largest 12, % % Others 15, % 3, % Total accounts receivables 46, % USD % of total (Amounts in USD 1,000) USD % of total Receivables on December 31, , % 1 to 5 largest 35, % % 6 to 10 largest 14, % % Others 3, % 18, % Total accounts receivables 53, % 46

47 Trade and receivables The table below presents an aging analysis of the outstanding receivables at year end 2011 and Overdue receivables are followed up continually by Management. The Management considers the outstanding amounts to be recoverable. PARENT COMPANY CONSOLIDATED USD % of total (Amounts in USD 1,000) USD % of total Aging on December 31, , % Not due 29, % 1, % Due up to 1 month 11, % % Due 1-4 months 3, % % Due more than 4 months 2, % 3, % Total accounts receivables 46, % USD % of total (Amounts in USD 1,000) USD % of total Aging on December 31, , % Not due 24, % 2, % Due up to 1 month 12, % 4, % Due 1-4 months 8, % 10, % Due more than 4 months 8, % 18, % Total accounts receivables 53, % The carrying amounts of the Company s and Parent s accounts receivables are denominated in the following currencies: PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Currency 3,520 2,908 USD 25,033 20, NOK 7,328 9,857-15,989 EUR 1,073 15, GBP 6, BRL 6,956 6,226 3,520 18,933 46,544 53,290 The maximum exposure to credit risk at the reporting date is the carrying value of each class of accounts receivables mentioned above. 47

48 NOTES TO THE ACCOUNTS 2.4 Cash flow, interest risk, fair value The Company is financed by debt and equity. If the Company fails to repay or refinance its loan facilities, additional equity financing may be required. There can be no assurance that the Company will be able to repay its debts or extend re-payment schedules through re-financing of its loan agreements or avoid net cash flow shortfalls exceeding the Company s available funding sources or comply with minimum cash requirements. Further, there can be no assurance that the Company will be able to raise new equity, or arrange new borrowing facilities, on favourable terms and in amounts necessary to conduct its ongoing and future operations, should this be required. In the event of insolvency, liquidation or similar event relating to a subsidiary of the Company, all creditors of such subsidiary would be entitled to payment in full out of the assets of such subsidiary before the Company, as a shareholder, would be entitled to any payments. Defaults by, or the insolvency of, a subsidiary of the Company could result in the obligation of the Company to make payments under parent CONSOLIDATED (Amounts in USD 1,000) Interest rate risk (IR) -1% movements +1% movements December 31, 2011 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 136,635-1,366-1,366 1,366 1,366 Impact on financial assets before tax 136,635-1,366-1,366 1,366 1,366 Financial liabilities Borrowings 787, ,301 3,301 Impact on financial liabilities before tax 787, ,301 3,301 Total increase/decrease before tax -2,290-2,290 4,667 4,667 CONSOLIDATED (Amounts in USD 1,000) Interest rate risk (IR) -1% movements +1% movements December 31, 2010 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 115,185-1,152-1,152 1,152 1,152 Impact on financial assets before tax 115,185-1,152-1,152 1,152 1,152 Financial liabilities Borrowings 741,821 7,418 7,418-7,418-7,418 Impact on financial liabilities before tax 741,821 7,418 7,418-7,418-7,418 Total increase/decrease before tax 6,266 6,266-6,266-6,266 Borrowings in the tables above (both for 2011 and 2010) include only borrowings with floating interest. For more details, see Note 12. For 2011, the movements include the effect of interest rate swaps entered into in order to hedge the floating interest risk. Market to market effects in relation to the interest rate swaps impacts the profit and loss following a change of +/- 1% in the interest rate. 48

49 company guarantees issued in favour of such subsidiary. The Company is moreover exposed to changes in interest rates, which may affect the Company s financial results. These risks are mainly related to the Company s long term borrowings with floating interest rates. Further details of the Company s borrowings are set out in Note 12. The Company has no significant interest-bearing assets other than cash and cash equivalents and therefore the Company s income and operating cash flows are substantially independent of changes in market interest rates. Cash and cash equivalents are invested for short maturity periods, generally from 1 day to 3 months, which mitigates the potential interest rate risk. The following sensitivity tables demonstrate the impact on the Company s profit before tax and equity from a potential shift in interest rates, all other variables held constant. PARENT COMPANY (Amounts in USD 1,000) Interest rate risk (IR) -1% movements +1% movements December 31, 2011 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 3, Impact on financial assets before tax 3, Financial liabilities Borrowings Impact on financial liabilities before tax Total increase/decrease before tax PARENT COMPANY (Amounts in USD 1,000) Interest rate risk (IR) -1% movements +1% movements December 31, 2010 Carrying amount Profit/(loss) Equity Profit/(loss) Equity Financial assets Cash and cash equivalent 3, Impact on financial assets before tax 3, Financial liabilities Borrowings Impact on financial liabilities before tax Total increase/decrease before tax

50 NOTES TO THE ACCOUNTS The Company s financial assets are classified into the categories: loans and receivables, assets at fair value through the profit and loss, and available for sale. Financial liabilities are classified as liabilities at fair value through the profit and loss, and other financial liabilities. For further information about comparison by category, see Note 29. The value of forward exchange contracts is set by comparing forward exchange rate and the rate on the reporting date. The Company s following financial instruments are not evaluated at fair value: Accounts receivable, cash and cash equivalents, other short -term receivables, accounts payable and long term liabilities with floating interest. Because of the short term to maturity, the value of cash and cash equivalents entered into the Statements of Financial Position is almost the same as the fair value of these. Accordingly, the values of accounts receivables and accounts payables are almost the same as their fair values since they are entered on normal conditions. The fair value of the Company s noncurrent liabilities subjected to fixed interest rates is calculated by comparing the Company s terms and market terms for liabilities with the same terms to maturity and credit risk. The following tables display the booked value and the fair value of financial assets and obligations. CONSOLIDATED (Amounts in USD 1,000) 12/31/ /31/2010 Book value Fair value Book value Fair value Financial assets CIRR loan deposit 56,469 56,577 65,006 62,840 Long-term receivables 7,674 7,674 9,167 9,167 Accounts receivables 46,544 46,544 53,290 53,290 Other short-term receivables 30,730 30,730 23,035 23,035 Derivative financial instruments - - 3,731 3,731 Cash and cash equivalents 136, , , ,185 Total 278, , , ,248 Financial liabilities Borrowings 934, , , ,891 CIRR loan 56,469 56,577 65,006 62,840 Other non-current liabilities 17,865 17,865 6,878 6,878 Accounts payable 7,311 7,311 7,119 7,119 Derivative financial instruments 10,171 10, Other current liabilities 44,894 44,894 30,593 30,593 Total 1,071,213 1,091, , ,321 50

51 Siem Amethyst - September evening light Niklas A. Opsund PARENT COMPANY (Amounts in USD 1,000) 12/31/ /31/2010 Book value Fair value Book value Fair value Financial assets CIRR loan deposit 56,469 56,577 65,006 62,840 Long-term loan 93,183 93,183 52,559 52,559 Accounts receivable 3,520 3,520 18,933 18,933 Other short-term receivables 71,400 71, , ,071 Cash and cash equivalents 3,502 3,502 3,296 3,296 Total 228, , , ,699 Financial liabilities CIRR loan 56,469 56,577 65,006 62,840 Accounts payable 94 57, Other current liabilities Total 57, ,820 65,796 63,630 51

52 NOTES TO THE ACCOUNTS 2.5 Liquidity risk The Company monitors its cash flow from operations closely and optimizes the working capital level of the individual companies and the Company as a whole. The Company funds are used for investment opportunities in the business, yard instalments, scheduled repayments and repayments of debt and to general working capital purposes. The Company seeks to fix the majority of its fleet on long-term contracts. Vessels not fixed on long-term contracts are exposed to the volatility in the North Sea spot market. The average rate in this market was, at times, below operating expenses during The Company will from time to time require additional capital to take advantage of business opportunities. Historically the Company has managed to obtain necessary financing in a timely manner on acceptable terms when needed. The tables below summarize the maturity profile of the Company s financial liabilities, and future commitments to the newbuilding program. CONSOLIDATED Less than 3 months 3 to 12 months 1 to 5 years Thereafter Total December 31, 2011 Interest bearing loans and borrowings 41,626 60, , , ,900 Trade and other payables 7,311 7,311 Total 48,938 60, , ,054 1,004,212 December 31, 2010 Interest bearing loans and borrowings 15,070 63, , , ,240 Trade and other payables 7,119 7,119 Total 22,189 63, , , ,359 Yard instalments falling due over the next 5 years December 31, 2011 Yard instalments falling due 13,278 79,830 67, ,482 December 31, 2010 Yard instalments falling due 15, , , ,024 52

53 Siem Garnet PARENT COMPANY Less than 3 months 3 to 12 months 1 to 5 years Thereafter Total December 31, 2011 Interest bearing loans and borrowings - 7,058 28,234 21,178 56,469 Trade and other payables Total 94 7,058 28,234 21,178 56,563 December 31, 2010 Interest bearing loans and borrowings - 7,223 28,892 28,892 65,006 Trade and other payables Total 82 7,223 28,892 28,892 65,088 Yard instalments falling due over the next 5 years December 31, 2011 Yard instalments falling due December 31, 2010 Yard instalments falling due

54 NOTES TO THE ACCOUNTS 2.6 Capital risk management The Company seeks to obtain long-term financing supported by long-term contracts, in order to reduce the frequency and risk associated with the refinancing of loans. Long-term charter parties will also enable a higher degree of debtfinancing. The Company has secured debt financing for all vessels under construction in Brazil. The wholly-owned Brazilian subsidiary, Siem Offshore do Brasil SA, has six vessels under construction in Brazil at year-end. Siem Offshore do Brasil SA has secured debt facilities for a total of USD 24 million for the two FSVs and the two FCVs, of which USD 22.7 million was drawn at year-end One FSV and one FCV remained under construction at year-end Siem Offshore do Brasil SA has secured debt facilities for a total of USD 59 million for the two OSRV s, of which USD 37.8 million was drawn at year-end For the two large PSVs under construction at a Brazilian yard, Siem Offshore do Brasil SA has secured debt-financing of USD 125 million of which no amount under this facility was drawn at year-end Siem Offshore do Brasil SA has paid 20% of the cost price for the two PSVs under construction, 10% at contract signing and further 10% during The remaining 80% will be paid at delivery of the vessels, scheduled in 2012 and 2013, respectively. 2.7 Risks related to loan agreements, restrictions on dividends and distribution The Company s loan agreements include terms, conditions and covenants which impose restrictions on the operations of the Company. These restrictions may negatively affect the Company s operations including, but not limited to, the Company s ability to meet the fierce competition in the market in which it operates. 2.8 Risks related to possible tax liabilities The Company seeks to optimize its tax structure to minimize withholding taxes when operating vessels abroad, avoiding double taxation, and minimizing corporate tax paid by making optimal use of the shipping taxation rules that apply. It is, however, a challenging task to optimize taxation and there is always a risk that the Company may end up paying more taxes than the theoretical minimum, which may in turn affect the financial results negatively. 54

55 Note 3 - Critical Accounting Estimates and Judgements IFRS requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as information on contingent assets and latent obligations on the reporting date, including income and expenses for the reported period. The final outcomes may deviate from the estimates. Certain amounts included in, or that have an effect on, the accounts and the associated notes require estimation, which in turn entails that the Company must make assessments related to values and circumstances that are not known at the point in time when the accounts are prepared. A significant accounting estimate can be defined as an estimate that is important to provide a correct picture of the Company s financial position, which at the same time is the result of difficult, subjective and complex assessments performed by the management. Such estimates are often uncertain by nature. Management evaluates such estimates continuously based on historical data and experience, consultation with experts, trend analysis and other methods that are considered relevant for the individual estimate. Estimates and assessments that can have a significant impact on the accounts are listed below. Vessels Economic life The level of depreciation is dependent upon the estimated economic life of the vessels. The estimate is based on historical data and experience related to the vessels that are included in the Company. The estimate is reassessed annually. A change in the estimates will affect depreciation in future periods. Residual value at the end of the economic life The level of depreciation is dependent on the estimated residual value on the reporting date. The anticipated residual value is based on knowledge of the scrap value of vessels. The scrap value estimates are dependent on the price of steel. The scrap value estimates is subject to an annual reassessment. Write-downs On the reporting date, the Company has assessed whether there are any indications that it may be necessary to write down a vessel. When such indications exist, the recoverable value of the vessel is estimated, and the vessel s value is written down to the recoverable amount. The recoverable amount for vessels is estimated by means of broker estimates. If a vessel is fixed on a long contract, the broker also estimates an excess value of the charter party and this value is discounted based on an estimated discount rate. For vessels fixed on long contract, the recoverable amount constitutes of brokers estimates and discounted excess value. Estimated impairment of goodwill and intangible assets The Company tests annually whether goodwill and intangible assets have suffered any impairment, in accordance with the accounting policy stated in Note The recoverable amounts of cash-generating unit have been determined based on value-in-use calculation. This calculation requires the use of estimates (Note 5). Market value of derivatives and financial assets available for sale All derivatives, including financial assets available for sale, are recognized in the statement of financial position at market value. The market value of derivatives is typically based on an expected future performance and is calculated by means of complicated valuation models. The estimates are based on the information available on the reporting date and will be influenced by changes in the interest rates, foreign currency exchange rates and other input for the calculations. Recognition of purchase cost for new buildings in the statement of financial position Only purchase costs that are directly related to the asset under construction may be recognized in the statement of financial position. The term directly related to requires the use of judgement for several costs that are relevant to construction to determine whether costs shall be recognized in the statement of financial position or as an expense. Consolidated accounts All significant investments in shares and units must be classified as a subsidiary, joint venture or associated company in order to prepare the consolidated accounts. This classification is linked to the degree of control that the Company has over the individual company. An evaluation of the degree of control requires the use of judgment for a number of parameters. Tax legislation Tax legislation is subject to varying interpretations. Further information is set out in Note

56 NOTES TO THE ACCOUNTS 56

57 57

58 NOTES TO THE ACCOUNTS Note 4 - Segment Reporting CONSOLIDATED (Amounts in USD 1,000) Operating revenue by business area PSV 96,668 98,214 MRSV 57,502 61,621 AHTS Vessels 127,461 34,968 Brazilian Vessels 25,291 22,704 Combat Management Systems 10,060 8,447 Cable Installation 4,780 - Scientific Core-Drilling 16,892 - Other 1,974 2,347 Total 340, ,302 Depreciation and amortisation by business area PSV 23,009 25,191 MRSV 9,069 9,490 AHTS Vessels 41,026 21,414 Brazilian Vessels 1,796 1,913 Cable Installation 3,387 - Scientific Core-Drilling 1,237 - Other 1,823 1,280 Total 81,348 59,286 Operating profit/(loss) by business area PSV 27,500 28,391 MRSV 24,347 26,229 AHTS Vessels 21,531-18,738 Brazilian Vessels 541 3,285 Combat Management Systems 2,249 1,253 Cable Installation -6,963 - Scientific Core-Drilling 7,463 - Other -33,172-23,206 Total 43,497 17,213 Other operating profit/(loss) includes, among others, gain of sale of interest rate derivatives (CIRR), gain/(loss) on currency exchange forward contracts and general and administration expenses. Capital expenditures by business area PSV 72,046 16,078 MRSV 2,599 1,992 AHTS Vessels (1) 92, ,340 Brazilian Vessels 37,729 52,982 Combat Management Systems - Cable Installation 1,060 - Scientific Core-Drilling Other 1,652 1,888 Total 208, ,280 (1) Includes capitalized project cost. 58

59 Note 5 - Vessels, Equipment, Project Cost and Intangible Assets PARENT COMPANY CONSOLIDATED Vessels under construction Vessels and equipment (Amounts in USD 1,000) Land and buildings Vessels under construction Vessels and equipment Drydocking Drydocking Capitalised project cost - 167,888 - Purchase cost on January 1, , , ,888 13,698 1, ,288 Capital expenditure ,776 8,059 8,456 21, Vessels delivered in , , ,888 - The year's disposal at cost , Effect of exchange rate differences , ,288 Purchase cost on December 31, , ,991 1,377,611 21,730 22, ,994 - Accumulated depreciation on January 1, ,111-8, The year's depreciation ,354-5,104-2,441-22,994 - The year's disposal of acc. depreciation - - 3, Effect of exchange rate differences Acc. depreciation on December 31, ,999-13,829-3, ,202 Net book value on December 31, , ,991 1,256,613 7,900 19, ,288 Purchase cost on January 1, , ,991 1,377,611 21,730 22, Capital expenditure ,661 82,748 13, Additons from acquisition of companies , Move from vessel and equipment to intangible assets Vessels delivered in , , The year's disposal at cost , Effect of exchange rate differences , ,110 Purchase cost on December 31, , ,199 1,585,828 34,782 21, Accumulated depreciation on January 1, ,999-13,829-3, The year's depreciation ,655-8,333-4, Move from vessel and equipment to intangible assets The year's disposal of acc. depreciation Effect of exchange rate differences Acc. depreciation on December 31, ,230-22,162-7, ,180 Net book value on December 31, , ,199 1,397,598 12,620 13,570 The balance of capitalized project costs relate to specific contracts. The costs are amortized over the term of the specific charter contracts. 59

60 NOTES TO THE ACCOUNTS Vessels owned by the Company are considered to have an economic life of 30 years. The vessels are divided into the following components and economical lives: Component: Percentage of total Economic life Hull 27.00% 30 years Cargo equipment 17.00% 30 years Marine equipment 10.00% 15 years Crew equipment 9.00% 15 years Engine 18.00% 30 years Engine system 6.00% 30 years Combined sewerage system 13.00% 30 years Docking 2.5 years Equipment 3 years On December 31, 2011, the Company assessed, by means of broker estimates, the recoverable vessel values compared to the carrying amounts in the statement of financial position. The assessment provides support that there is no impairment loss for the vessels. Intangible assets (Amounts in USD 1,000) Goodwill Research and development Trademarks and licences Total Balance on January 1, ,232 9,232 Investments Effect of exchange rate differences Purchase cost on December 31, ,232 9,232 Accumulated depreciation on January 1, The year's ordinary depreciation Accumulated depreciation on December 31, Net book value on December 31, ,903 8,903 60

61 Intangible assets (Amounts in USD 1,000) Goodwill Research and development Trademarks and licences Total Balance on January 1, ,232 9,232 Moved from Vessel and equipment Investments 20,239 2, ,640 Effect of exchange rate differences -1, ,799 Purchase cost on December 31, ,433 2,363 9,728 30,524 Accumulated depreciation on January 1, Moved from Vessel and equipment The year's ordinary depreciation Accumulated depreciation on December 31, ,083 Net book value on December 31, ,433 2,226 8,782 29,441 Goodwill was recorded following the Company s purchase of Five Ocean Services, subsequently renamed Siem Offshore Contractors. Se also Note 31 for further information regarding the acquisition. 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. Share issue in Siem WIS completed in January 2012 appreciate the Company s 60% owner-share to USD 16,076. This value indicates that there is no impairment loss for the capitalized trademarks and licences. Impairment tests for goodwill Management reviews the business performance based on type of business and the segments are presented in Note 4. Goodwill is monitored by the Management at the operating segment level. All goodwill on 31 December is related to Siem Offshore Contractors, the cable installation segment. The recoverable amount of Siem Offshore Contractors (the cash generating unit) has been based on value-in use calculation. The calculation is based on a 5-year budget period, approved by Management, which includes the units projected operating cash flows after tax. Cash flows beyond the budget period are included in a terminal value calculation based on a perpetuity growth model where a growth rate of 1% is applied. The projected cash flows are discounted with a discount rate of 12%. Budgeted margin in the budget period is determined by Management based on their experience from the oil and gas part of the cable installation segment and expectations on market development, particularly in the renewables market. If the discount rate is increase with 2% from 12% to 14% the calculated recoverable amount would decrease by USD 13,951. Calculated recoverable amount will still exceed carrying value. The recoverable amount from Siem Offshore Contractors performed by Management supports no impairment loss on the goodwill. 61

62 NOTES TO THE ACCOUNTS Note 6 - Investment in Subsidiaries Company Registered office Ownership and voting share Revenue Siem Offshore AS Kristiansand, Norway 100% 17,614 Siem Offshore Invest AS Kristiansand, Norway 100% 5,251 Siem Offshore Rederi AS Kristiansand, Norway 100% 160,334 Siem Offshore do Brasil SA Rio de Janeiro, Brazil 100% 59,313 Siem Offshore US Inc Delaware, USA 100% 16,163 Siem Supply Inc Cayman Islands 100% - Siem AHTS Pool Inc Cayman Islands 100% - Siem AHTS Pool AS Kristiansand, Norway 100% 136,025 DSND Subsea Ltd London, England 100% - Arcade Offshore BV Amsterdam, The Netherlands 100% - Siem Offshore Services AS Kristiansand, Norway 100% 7,941 Siem Offshore Management AS Kristiansand, Norway 100% - Siem Offshore Management (US) Inc Texas, USA 100% - Siem Offshore Crewing (CI) Inc Cayman Islands 100% 141 Total value recorded in the statement of financial position of the parent company The book value in Siem Offshore do Brasil SA increased by USD 9,14 million during 2011, when debt was converted to equity. The above companies are owned by the Parent. In addition, the subsidiaries own the following companies: Company Registered office Share and voting rights Norsul Offshore Inc Panama City, Panama 100% Consub Delaware LLC Delaware, USA 100% Aracaju Serviços Auxiliares Ltda Rio de Janeiro, Brazil 100% Siem Offshore Crewing AS Vanylven, Norway 100% Siem Shipping AS Kristiansand, Norway 100% Siem Meling Offshore DA Stavanger, Norway 51% Næringsbygg Indrettsveien 13 DA Fjell, Norway 95% Siem WIS AS Bergen, Norway 60% Siem Offshore Maritime Personnel AS Kristiansand, Norway 100% Siem Offshore Contractors GmbH Leer, Germany 100% Siem Offshore Contractors EPS BV Glimmen, The Netherlands 100% AHMTEC GmbH Leer, Germany 100% Overseas Drilling Ltd Groningen, The Netherlands 100% 62

63 Net profit Share capital Book equity Cost price Book value ,237 1,022 1, ,501 52,907 52,907 16,503 6, , , ,396-14,782 53,239 33,697 50,664 50, , , , , ,106 63

64 NOTES TO THE ACCOUNTS Note 7 - Investment in Associated Companies Figures for associated companies included in the consolidated accounts based on the equity accounting. December 31, 2011 (Amounts in USD 1,000) Company name Overseas Drilling Ltd. Wellcem AS Profit and loss account The year's net profit after tax 8,179 - Siem Offshore s share of net profit 4,089 - Share of net result not included Adjustments consolidated accounts This year`s share of net profit after tax 4, Statement of financial position Total assets - - Equity - - Total liabilities - - Total equity and liabilities - - Siem Offshore's share of booked equity - - Added/reduced in the period Change of ownership% or sale Adjustments IFRS and fair value in excess of book value for vessel and goodwill as of Net book value in Siem Offshore as of December Ownership interest 50.00% 33.99% Specification of changes net book value in Siem Offshore s accounts Net book value as of January 1 19,104 2,725 Investment in associated companies - - This year's share of net profit 4, Adjustments consolidated accounts - - Change of ownership% or sale -8,693-2,617 Dividends -14,500 - Effect of exchange rate differences - 33 Net book value as of December Of which: Adjustments IFRS and fair value in excess of book value for vessel and goodwill as of January 1-2,156 Excess value - -2,156 Adjustment for depreciation IFRS - - Amortisation of fair value in excess of book value for vessels and goodwill - - Effect of exchange rate differences - - Fair value in excess of book value for vessels and goodwill as of

65 PR Tracer Offshore ANS KS Big Orange XVIII Ocean Commander KS Rovde Ind.park AS Sentosa Offshore DIS Total 1, ,367 11, , , , , ,367 4,991 1,077-2,878 35,807 44,753 3,497 1, ,990 11,472 1, ,945 29,817 33,281 4,991 1,077-2,878 35,807 44,753 1, , ,571 2, , % 41.33% 35.00% 50.00% 5.00% 3, , , , , , , , , ,218 1, , , , , , ,571 65

66 NOTES TO THE ACCOUNTS The Company sold its shares in Wellcem AS in January The sales price was equal to cost. Ocean Commander KS was liquidated on 26 May The Company acquired the remaining 50% of Overseas Drilling Limited and has full ownership as of 1 August The recorded amount in This year of net profit, refers to the period between 1 January and 31 July From 1 August 2011, Overseas Drilling Limited has been a subsidiary of the Company. For further reference, please see note 6. The Company bought 5% of Sentosa Offshore DIS in December 2011 and has recorded This year of net profit based on the period of ownership. Company name Registered office Consolidated as PR Tracer Offshore ANS Lysaker, Norway Equity accounting KS Big Orange XVIII Lysaker, Norway Equity accounting Rovde Industripark AS Vanylven, Norway Equity accounting Sentosa Offshore DIS Oslo, Norway Equity accounting Total December 31, 2010 (Amounts in USD 1,000) Company name Overseas Drilling Ltd. Wellcem AS Profit and loss account The year s net profit after tax 16,024-1,176 Siem Offshore s share of net profit 8, Adjustments consolidated accounts - - This year`s share of net profit after tax 8, Booked Equity 38,207 1,676 Siem Offshore's share of booked equity 19, Added/reduced in the period Adjustments IFRS and fair value in excess of book value for vessel and goodwill as of ,156 Net book value in Siem Offshore as of ,104 2,725 Ownership interest % % Specification of changes net book value in Siem Offshore s accounts Net book value as of January 1 11,092 2,754 Investment in associated companies This year's share of net profit 8, Adjustments consolidated accounts - - Dividends - - Effect of exchange rate differences - 13 Net book value as of December 31 19,104 2,725 66

67 Owner interest Voting rights Paid in capital Issued, not paid in capital % % 3, % % % % % 5.00 % 7,514-11,248 5 PR Tracer Offshore ANS KS Big Orange XVIII Ocean Commander KS Rovde Ind.park AS Total -1, , , , , , ,036 4, , ,569 1, ,435 1, , ,156 3, , , % % % % 861 3,147 6, ,352 2,830-2, , , , , , , ,591 67

68 NOTES TO THE ACCOUNTS Note 8 - Pension Costs and Obligations CONSOLIDATED (Amounts in USD 1,000) The amount recognized in the income statement is as follows: Service cost 2,540 1,933 Interest cost Expected return on plan assets Administration cost Social contribution Amortization of net actuarial loss/(gain) Net periodic pension cost (see Note 19) 3,128 2,316 The development in the defined benefit obligation is as follows: Beginning of year 9,137 7,670 Current service cost 2,540 1,933 Interest cost Actuarial loss/(gain) 1, Benefits paid Exchange differences End of year 12,951 9,137 The development in the fair value of plan assets is as follows: Beginning of year 5,561 5,195 Expected return on plan assets Actuarial loss/(gain) ,427 Administration cost Employer contribution 3,016 1,723 Benefits paid Exchange differences End of year 7,706 5,561 68

69 CONSOLIDATED (Amounts in USD 1,000) Present value of funded obligations 12,576 8,561 Fair value of plan assets -7,706-5,561 Social contribution Unrecognized net actuarial loss/(gain) -5,733-3,388 Present value of funded obligations Present value of unfunded obligations Liability in the statement of financial position Financial assumptions: Discount rate 4.00% 4.00% Expected wage adjustment 4.00% 4.05% Expected pension increase 1.30% 1.30% Adj. of the basic National Insurance amount 3.75% 4.25% Expected return on funds 5.40% 5.70% Development last five years , December 31 Present value of defined benefit obligation 13,485 8,873 7,403 4,686 5,133 Fair value of plan assets 7,706 5,561 5,195 2,988 4,044 Deficit in the plan 5,779 3,311 2,208 1,698 1,090 Experience adjustments on plan liabilities, gain/(loss) -1, Experience adjustments on plan assets, gain/(loss) , ,

70 NOTES TO THE ACCOUNTS Note 9 - Receivables PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) 12/31/ /31/2010 LONG-TERM RECEIVABLES - - Deposits ,387 4,722 Employee loans, see Note 19 4,350 5,354 86,744 45,822 Intercompany receivables - - 2,052 2,014 Other long term receivables 2,920 3,475 93,183 52,559 Total long-term receivables 7,674 9,197 OTHER SHORT-TERM RECEIVABLES Prepaid expenses 16,204 4, ,258 Unbilled revenue 5,067 5, Outstanding insurance claims Prepaid income taxes and other taxes 4,310 4, Accrued government grant - seamen 1,540 1,538 71, ,711 Intercompany receivables Other short-term receivables 3,249 5,450 71, ,071 Total other short-term receivables 30,730 23,035 Note 10 - Restricted Cash USD 12,203 of the Company s cash balance was restricted funds of which USD 2,977 was for tax withholdings and USD 9,226 represented security for bank guarantees and loans. USD 1,100 of the Parent s cash balance represented security for bank guarantees. 70

71 Note 11 - Taxes (Amounts in USD 1,000) CONSOLIDATED Temporary differences Deferred tax Time frame Participation in limited liability companies Long - -1,830 Operating assets Long Special tax account Long ,288 Pension funds/obligations Long Other short-term differences Short Other long-term differences Long - - Net temporary differences as of December ,389 Tax loss carried forward -20,734-15,971 Basis for deferred tax (tax asset) -21,425-21,360 Deferred tax (tax asset) (28%) Norway -4,802-4,700 Deferred tax (tax asset) (34%) Brazil -1,452-1,554 Deferred tax (tax asset) -6,254-6,254 Deferred tax asset recognized in statement of financial position as of December 31-6,254-6,254 There are no tax assets in the parent company. Deferred tax assets are recognized as intangible assets as it is probable through prospective earnings that it can be utilized. The Company is subject to taxes in several jurisdictions, where significant judgment is required in calculating the tax provision for the Company. There are several transactions for which the ultimate tax cost is uncertain and for which the Company makes provisions based on an assessment of internal estimates, tax treaties and tax regulations in countries of operation, and appropriate external advice. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact the tax charge in the period in which the outcome is determined. 71

72 NOTES TO THE ACCOUNTS Tonnage tax regime in subsidiaries, as of January 1 2,803-1,544 Tax charge -18 2,809 Paid ,402 Effect of exchange rate differences Total tonnage tax in subsidiaries, as of December 31 1,760 2,803 Total tax consolidated 12/31/2011 (Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax liabilities Long term tax liabilities falling due after 1 year ,457 13,337 Payable taxes falling due within 1 year 880 2,280 3,160 Tax liabilities 1,760 14,737 16,496 Tax expense 2011 (Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense Taxes payable -18 2,787 2,769 Change in deferred tax/deferred tax asset Over/under provisions in previous year Total -18 2,671 2,653 72

73 Total tax consolidated 12/31/2010 (Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax liabilities Long term tax liabilities falling due after 1 year 1, ,936 Payable taxes falling due within 1 year ,977 14,955 Tax liabilities 2,803 14,088 16,890 Tax expense 2010 (Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense Taxes payable Change in deferred tax/deferred tax asset 1,825 1,366 3,191 Over/under provisions in previous year - -3,301-3,301 Total 2,809-2, Total tax parent company 12/31/ /31/2010 (Amounts in USD 1,000) Other tax regime Other tax regime Long term tax liabilities falling due after 1 year 9,769 - Payable taxes falling due within 1 year 1,516 13,025 Tax liabilities 11,285 13,025 Tax expense Taxes payable 499-2,463 Total 499-2,463 73

74 NOTES TO THE ACCOUNTS Note 12 - Borrowings PARENT COMPANY (Amounts in USD 1,000) December 31, 2011 CONSOLIDATED 2011 (USD) Creditor / guarantor Currency Facility amount Drawn amount currency Drawn amount USD - Syndicate / HSH Nordbank AG as agent USD 223, , ,000 - Eksportfinans / GIEK / HSH Nordbank AG USD 90,791 (1) 90,791 90,791 - Eksportfinans / GIEK / Sparebank1 SR-Bank / ABN AMRO NOK 1,944, , ,424 Eksportfinans / GIEK / SpareBank1 SR-Bank NOK 358,704-59,857 DvB Bank N.V. Nordic Branch GBP 7,050 7,050 10,921 - Danish Ship Finance USD 28,000 28,000 28,000 - HSH Nordbank AG USD 25,000 25,000 17,222 - Banco do Brasil USD 24,037 24,037 22,716 - Banco Nacional Development Social USD 58,986 37,773 37,773 - Eksportfinans / SpareBank1 SR-Bank NOK 750, , ,268 - Total secured debt 939,972 - Banco Nacional Development Social USD ,469 Eksportfinans (CIRR loan) NOK 338, ,400 56,469 56,469 Total USD 996,900 - Fees and expenses USD -5,928 56,469 Total long-term debt including fees and expenses USD 990,972 (1) Under the USD 91 million facility, part of the loan (USD 44.2 million) is fixed for a 10-year term to average interest rate of 8.08%. PARENT COMPANY (Amounts in USD 1,000) December 31, 2010 CONSOLIDATED 2010 (USD) Creditor / guarantor Currency Facility amount Drawn amount currency Drawn amount USD - Syndicate / HSH Nordbank AG as agent USD 150, , ,505 - Eksportfinans / GIEK / HSH Nordbank AG USD 100, , ,124 Eksportfinans / GIEK / Sparebank1 SR-Bank / ABN AMRO NOK 2,470,434 (1) - 302,594 - Eksportfinans / GIEK / SpareBank1 SR-Bank NOK 418,104-65,425 - DvB Bank N.V. Nordic Branch GBP 8,090 8,090 12,527 - Banco do Brasil USD 24,737 22,134 22,134 - Eksportfinans / SpareBank1 SR-Bank NOK 539, ,733 92,161 - Siem Industries Inc USD 90,000 67,385 67,385 - Total secured debt 812,855 - Banco Nacional Development Social USD 1,379 1,379 1,379 65,006 Eksportfinans (CIRR loan) NOK 380, ,700 65,006 65,006 Total USD 879,240 - Fees and expenses USD -4,014 65,006 Total long-term debt including fees and expenses USD 875,226 (1) Under the USD 100 million facility, part of the loan (USD 48.9 million) is fixed for a 11-year term to average interest rate of 8.08%. 74

75 Fair value Interest rate Duration Instalments 223,000 Floating 2017 Quarterly 100,064 Fixed and floating 2021 Semi annually 324,424 Floating 2015 Semi annually 59,857 Floating 2022 Quarterly 10,921 Floating 2013 Semi annually 28,000 Floating 2019 Semi annually 17,222 Floating 2013 Revolving credit facility 22,610 Fixed 2027 Monthly 41,359 Fixed 2031 Monthly 126,811 Fixed and floating 2022 Semi annually 954, Fixed 2012 Semi annually 56,577 Fixed 2019 Semi annually 1,011,326-5,928 1,005,397 Fair value Interest rate Duration Instalments 150,505 Floating 2015 Quarterly 108,264 Fixed and floating 2021 Semi annually 302,594 Floating 2015 Semi annually 65,425 Floating 2022 Quarterly 12,527 Floating 2013 Semi annually 21,576 Fixed 2027 Monthly 92,161 Floating 2022 Semi annually 67,385 Floating 2012 Revolving credit facility 820,437 1,469 Fixed 2012 Semi annually 62,840 Fixed 2019 Semi annually 884,746-4, ,731 75

76 Siem Marlin - alongside an FPSO Photo: Andreas Linningsvoll 76

77 PARENT COMPANY CONSOLIDATED USD Instalments per December 31, 2011 falling due over the next 5 years Mortgage debt Other interest bearing debt Total , , , , ,280-90, ,280-90, ,280-90,280 - Thereafter 473, ,878 - Total 939, ,431 The book value of mortgaged assets consist of non-current assets and accounts receivables and amounts to USD 1,580 million at year end. There are various financial covenants related to the Company s debt agreements. The main prevailing covenants are: - equity ratio to total assets in excess of 25% - positive working capital - certain amount of freely available cash and bank deposit balance The Company and parent company are in compliance with the financial covenants as per December 31, CIRR loan (Both consolidated and parent company) 12/31/ /31/2010 Total CIRR loan commitment 56,469 65,006 CIRR loan drawn at December 31 56,469 65,006 Commitment as of December Prior to ordering vessels from Norwegian yards, the Company applied for fixed 12-year interest rate options related to the long-term financing of such vessels. The Company was granted such options for each of the relevant vessel by the Norwegian Export Credit Agency. The Company made certain sale of the right to exercise such options to a first class international bank (the Bank ). Longterm loans drawn from the Norwegian Export Credit Agency are placed as corresponding deposits in the Bank as financial security for the loans drawn. Recognition of the gain, related to each option, is recorded over the term of any drawn loans. Unearned CIRR Beginning of the year 3,259 3,627 Recognized in the profit and loss account Paid-back CIRR - - Net unearned CIRR as of December 31 2,891 3,259 77

78 NOTES TO THE ACCOUNTS Note 13 - Other Current Liabilities PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) 12/31/ /31/ Non-interest-bearing short-term liabilities - 9, Social security etc. 4,548 5, Unearned income 10, Accrued interest 4,319 4, Other accrued cost, mainly regarding operating expenses vessels 12,816 12, Other current liabilities 12, Total other current liabilities 44,874 32,528 Other accrued cost include costs as accrued commission, salary and other. Note 14 - Related Party Transactions The Company s largest shareholder is Siem Industries Inc, with a holding of 33.66%, and is defined as a related party. The Company is obligated to the main shareholder, Siem Industries Inc., for a fee of USD 300 for This fee is the remuneration for the services of the Chairman and one of the Board members. This fee also covers office in the Cayman Islands and administrative costs. Details related to transactions, loans and remuneration to the executive Management and the board of directors are set out in Note 19. For Parent, all subsidiaries in Note 6 are also defined as related parties. For other related parties, the following transactions were carried out: CONSLIDATED (Amounts in USD 1,000) Service from related parties 12,796 10,507 Service from entity where director has ownership Total 12,796 10,507 Service delivered from related parties is mainly cost for technical management, corporate management and delivered crew. The service is supported to Siem Meling Offshore DA, 51% owned by the Company, and is delivered by its partner in Siem Meling Offshore DA. 78

79 CONSLIDATED (Amounts in USD 1,000) Purchase of vessel 61,477 - Purchase of shares 22,500 - Total 83,977 - Siem Meling Offshore DA acquired the vessel Siddis Mariner from the partner in Siem Meling DA during first quarter The terms agreed were on arms length. Siem Offshore Invest owned 50% of the shares in Overseas Drilling Ltd. ( ODL ) at the beginning of the year. On 1 August 2011 the remaining 50% of the ownership interest in ODL was acquired from Sedco Forex Internatioinal Inc. for an amount of USD 22.5 million. The terms agreed were on arms length. Further information related to this transaction is set out in Note 31. Loans to related parties: CONSLIDATED (Amounts in USD 1,000) Loan to associates: At January ,192 Drawings - - Instalments Interest charged Interest received Exchange rate variations 9-24 At December The Company hold a long term loan to Rovde Industripark AS. Siem Offshore Invest AS, 100% subsidiary of the Company, owns 50% of Rovde Industripark AS Liability to related parties: CONSLIDATED (Amounts in USD 1,000) Liability to related parties At January 1 74,265 1,772 Drawings - 77,184 Instalments -67,386-9,798 Interest expenses 2,887 2,348 Interest paid -2,851-2,047 Exchange rate variations ,807 At December 31 6,756 74,265 79

80 NOTES TO THE ACCOUNTS Siem Offshore Rederi AS, 100% subsidiary of the Company, had at the beginning of the year drawn USD 67,385 under a borrowing facility of total USD 90,000 given by Siem Industries Inc. The loan is repaid during the year. Siem Meling Offshore DA, 51% owned by the Company, held USD 6,756 as a long term-liability from its partner in Siem Offshore Meling DA at 31 December Both borrowing facilities were on market terms of interest. Following transactions with related parties were carried out for the parent company: PARENT COMPANY (Amounts in USD 1,000) Service from subsidiaries 4,232 4,243 Service from associates 5,409 5,553 Total 9,641 9,797 Service from subsidiaries consist of administrative and corporate services provided by Siem Offshore AS and hire of vessels. The parent company hired two vessels on bareboat from Siem Offshore Rederi AS. The vessels are Siem Sasha and Siem Hanne, and the bareboat agreements expire in July The costs of hiring these vessels were USD 3,650. Services provided from associates are related to cost for hired crew. The services are delivered by companies owned by subsidiaries of the Company. All terms used for above transactions are at arms length. PARENT COMPANY (Amounts in USD 1,000) Sale of assets - 147,882 Total - 147,882 Year-end balances arising from sales and purchases PARENT COMPANY (Amounts in USD 1,000) Receivables from related parties Subsidiaries 57,598 99,223 Associates 13,709 9,488 Total 71, ,711 80

81 Loans to related parties: PARENT COMPANY (Amounts in USD 1,000) Loan to subsidiaries: At January 1 45,822 43,846 Drawings 40,917 - Converted to shares -9,140 - Instalments -9,788 - Interest charged 2,944 1,976 Interest received Exchange rate variations 95 - At December 31 70,638 45,822 Loan to associates: At January Drawings 15,883 - Converted to shares - - Instalments - - Interest charged Interest received - - Exchange rate variations At December 31 16, Total loans to related parties At January 1 46,112 44,141 Drawings 56,801 - Converted to shares -9,140 - Instalments -9,788 - Interest charged 3,522 1,976 Interest received Exchange rate variations At December 31 87,073 46,112 The drawing of USD 40,917 under loan to subsidiaries includes a reclassification of USD 33,117 from short-term receivables to long-term receivables. For 2010, the amount was included in receivables from subsidiaries. The loan is held against Siem Offshore do Brasil SA and amounts to USD 22,563 on 31 December The remaining part of the loan to subsidiaries on 31 December 2011, USD 48,075, is held against Siem Offshore Invest AS. Drawing under loan provided to associates is held against Siem Offshore Contractors, a company owned 100% by the subsidiary Siem Offshore Invest AS. On 31 December the loan amounts to USD 16,106. All loans are on market terms of interest. 81

82 NOTES TO THE ACCOUNTS Note 15 - Derivative Financial Instruments Assets (Liabilities) PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) 12/31/ /31/ Currency derivatives -1,449 3, Interest rate swaps -8, Total derivative financial instruments -10,171 3,731 Unrealized gain/(loss) appears as current assets/(current liabilities) in the Statement of Financial Position. For further information regarding profit and loss effect on derivative financial instruments, please see Note 28. Forward currency contracts: The nominal principal amount of the outstanding forward currency contracts on 31 December 2011 were USD 1.8 million ( million). The forward currency contracts have been entered into in order to hedge future cash flow. Currency options: Currency options have been entered into in order to hedge operational currency exposure. These options are typically path-dependent options which include features related to situations where the underlying reaches or fluctuates within specific barrier levels. This enables the Company to hedge a range in the underlying currency rather than simply a level. Interest rate swaps: The nominal amounts of the outstanding interest rate swaps contracts on 31 December 2011 were USD million. No interest rate swap contracts were entered into on 31 December On 31 December 2011, the fixed rates entered into varied from 1.38% to 2.69%. The floating rate leg of the interest rate swaps are LIBOR and NIBOR. Gains and losses are recognised over the profit and loss. Unrealized gain/(loss) appears as current assets/(current liabilities) in the Statements of Financial Position. For further information regarding profit and loss effect on derivative financial instruments, please see Note

83 Note 16 - Guarantees PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) 12/31/ /31/ Contractual guarantees to Brazilian Navy (1) 4,372 5, Contractual guarantees other 2,577 1, Total guarantees 6,948 6,831 (1) Guarantees issued by Siem Offshore do Brasil SA Note 17 - Commitments Capital expenditures contracted for at the reporting date but not yet paid is as follows: PARENT COMPANY CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) 12/31/ /31/ Shipbuilding contracts with variation orders 265, , Instalments paid 105, , Unpaid instalments 160, ,024 PARENT COMPANY Instalments falling due over the next 3 years CONSOLIDATED 12/31/ /31/2010 (Amounts in USD 1,000) 12/31/ /31/ , ,107 78, ,374 65, Total 160, ,024 The Company s subsidiary, Siem Offshore do Brasil SA, has contracts for the building of one FSV, one FCV, two OSRVs and two large-size PSVs at year end

84 NOTES TO THE ACCOUNTS Newbuildings contracts On December 31, 2011 the following ships are under construction: (Amounts in USD 1,000) New build contracts Owner Delivery Contract price Paid instalment Siem share FSV - UT 4000 Siem Offshore do Brasil SA 1Q-12 9,067 8, % FCV - P2 Siem Offshore do Brasil SA 1Q-12 5,857 5, % OSRV Siem Offshore do Brasil SA 2Q-12 36,867 27, % OSRV Siem Offshore do Brasil SA 3Q-12 36,867 18, % PSV Siem Offshore do Brasil SA 3Q-12 80,014 15, % PSV Siem Offshore do Brasil SA 3Q-13 83,350 15, % Total newbuild contracts 252,022 91,540 FSV - UT 4000 Siem Offshore do Brasil SA Delivered ,659 8, % FCV - P2 Siem Offshore do Brasil SA Delivered ,000 5, % Total included vessels delivered , ,199 Instalments paid for the two vessels delivered in 2011 are included in total instalment paid for vessels under construction on 31 December These payments will be reclassified to Vessels and equipment 1 January Note 18 - Operating Expenses PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) ,195 5,410 Vessel crew expenses 108,927 73,707 7,349 23,759 Other vessel operating expenses 73,534 53,929 6,787 6,073 General and administration 35,215 26,024 19,331 35,242 Total operating expenses 217, ,660 84

85 Note 19 - Salaries and Wages, Number of Employees, etc. CONSOLIDATED (Amounts in USD 1,000) Personnel expenses (1) Salaries and wages 95,788 68,103 Government grants - net wages arrangement in Norway -9,550-8,675 Payroll tax 18,986 12,434 Pension costs, see Note 8 3,128 2,316 Other benefit 6,990 6,728 Total personnel expenses 115,341 80,906 (1) Personnel expenses includes vessel crew expenses and part of general and administrative expenses, see Note 18. Government grants is a special Norwegian seaman payroll and tax refund given to Norwegian shipping companies. The average number of employees in the Company was 958 for 2011, including onshore and offshore employees. No employees are employed in the parent company. Payroll registered to the executive management: (Amounts in USD 1,000) Salary and other short term compensation 2,130 1,583 Total 2,130 1,583 Employees included in the above payroll in 2011 was 6 (2010: 5). Shares in the Company held by members of corporate management in 2011 were 2,534,161 (2010: 2,789,803). Loan to executive management: (Amounts in USD 1,000) Balance January 1 5,001 3,757 Changes in executive management ,128 New loan raised 41 2,331 Instalments - - Effect of currency differences Balance December 31 4,350 5,001 Loan on December 31, 2011: (Amounts in USD 1,000) Amount Interest Terms Loan to executive management 4,350 - Part due in 2012, rest share loan (1). Total 4,350 Loan on December 31, 2010: (Amounts in USD 1,000) Amount Interest Terms Loan to executive management 5,001 - Part due 2011 and 2014, rest Share loan (1). Total 5,001 85

86 NOTES TO THE ACCOUNTS (1) Share loan: The loans are repayable by the employee when the employee s shares in the company are realized or if the employee leaves the Company. Loans equivalent to USD 4 million are secured by pledges in relevant shares. The Remuneration paid to the Board of Directors in 2011 was USD 437K (2010: USD 420K). Auditor s remuneration PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Audit Fee Audit Fee Other Tax/Legal Assistance Other consultants, Fees Total auditor s remuneration Note 20 - Operating Leases as Lessee The Company has entered into different operating leases for office premises, office machines, cars and communication satellite equipment for the vessels. The lease period for the lease agreements varies and most of the leases contains an option for extension. The operating leases in the Parent for 2011 are related to charter of vessels and satellite equipment. The Parent has chartered the vessels Siem Sasha and Siem Hanne on bareboat agreements from the subsidiary Siem Offshore Rederi AS. The lease costs were as follows: PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) ,738 5,658 Annual lease payment on operational leases 1,817 5,518 As of 31 December 2011 the Company had some commitments relating to lease agreements which fall due as follows. PARENT COMPANY CONSOLIDATED , , and thereafter 1,204 1,992 Total 4,564 Net present value of future commitments relating to lease agreements are calculated to be USD 4,171 for the Company and USD 1,897 for the Parent. The discount rate in the calculation of net present value is 5%. 86

87 Note 21 - Financial Items PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Financial income 3,616 3,745 Interest income 1,939 4, ,764 Other financial income 3,780 3,224 3,676 7,509 Total financial income 5,719 8,130 Financial expenses Interest expenses -40,607-24,210-1,135 - Loss intercompany closure Other financial expenses -4,178-3,817-1, Total financial expenses -44,785-28,027 Other financial items ,158 Net currency gain/(loss) -10,624 2, ,158 Total other financial items -10,624 2,962 2,241 1,589 Net financial items -49,691-16,935 The net currency gain/(loss) for the Parent of USD 265 includes an intercompany currency gain of USD 1,000. Note 22 - Earnings per Share (Amounts in USD 1,000) Earnings per share Weighted average number of shares outstanding 395, ,417 Result attributable to shareholders -7,291 10,162 Earnings per share attributable to equity shareholders There are no options or other dilutive instruments outstanding. 87

88 NOTES TO THE ACCOUNTS Note 23 - Contracts in Progress CONSOLIDATED (Amounts in USD 1,000) Recognized 2011 Accumulated per 12/31/2011 Total project on 12/31/2011 Revenue 10,707 28,356 46,690 Cost 8,347 21,366 34,511 Total 2,360 6,990 12,179 Assets / liabilities December 31, 2011 Accrued project cost Unbilled revenue Revenue - 2,151 Cost 2,183 - Total 2,183 2,151 (Amounts in USD 1,000) Recognized 2010 Accumulated per 12/31/2010 Total project on 12/31/2010 Revenue 8,447 15,316 41,922 Cost 7,194 11,777 31,200 Total 1,253 3,539 10,722 Assets / liabilities December 31, 2010 Accrued project cost Unearned income Revenue - 2,797 Cost 1,303 - Total 1,303 2,797 Contracts in progress refer to the Combat Management Systems and cable installation, see Note 4. At year-end 2011, there are five projects in progress. The degree of completion varies from 25% to 99%. All projects in progress at year-end 2011 are estimated to generate a positive contribution over the total project period. There are no contracts in progress in the Parent. 88

89 Note 24 - Asset Held for Sale CONSOLIDATED (Amounts in USD 1,000) Purchase cost per Capital expenditure - - The year's disposal at cost Effect of exchange rate differences - - Purchase cost per December There is no asset held for sale on December 31, Note 25 - Other Gain/(Loss) on Sale of Assets PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Gain/(loss) on sale of assets, net 75 6,281-6,070 Gain/(loss) on sale of assets intercompany ,070 Total 75 6,281 The net gain for the Company on sale of assets of USD 75 includes a loss related to sale of other assets during the year. The gain in the parent company refers to repayment from supplier regarding prior recorded loss on crane. 89

90 NOTES TO THE ACCOUNTS Note 26 - Listing of the 20 Largest Shareholders as of 31 December 2011 SHAREHOLDER NUMBER OF SHARES OWNER INTEREST Siem Industries Inc. 133,279, % Ace Crown International Ltd. 76,780, % Verdipapirfondet Handelsbanken 10,650, % MP Pensjon PK 9,096, % Skagen Kon-Tiki 9,007, % Skagen Vekst 8,036, % Fondsfinans Spar 5,400, % Nordea Bank Norge ASA 5,390, % Ojada AS 5,213, % Rovdefrakt AS 4,637, % JP Morgan Clearing Corp. 4,457, % Holberg Norge 4,150, % Barclays Capital Securities Ltd. 3,900, % SHB Stockholm Clients Account 3,727, % Rovde Invest AS 3,229, % Pumpøs AS 3,017, % DNB NOR SMB 3,000, % Danske Invest Norske Aksjer 2,876, % Knardal Invest AS 2,859, % Waterman Holding Ltd. 2,535, % Total 20 largest shareholders 301,243, % Other shareholders 94,708, % Total number of outstanding shares 395,951, % Siem Industries Inc. is the main shareholder of Siem Offshore Inc. and is controlled by a trust whose potential beneficiaries include members of Kristian Siem s immediate family. Kristian Siem, who is Director of the Company, is also the chairman of Siem Industries Inc. Terje Sørensen is CEO of the Company and held 1,874,000 shares on December 31,

91 Seven Sisters - Personnel transfer Photo: Andreas Linningsvoll Siem Marlin - Personnel transfer Photo: Andreas Linningsvoll 91

92 NOTES TO THE ACCOUNTS Note 27 Subsequent Events New charter contract Siem Offshore and the Petrobras Board of Directors have agreed on a four year term contract for the AHTS vessel, Siem Ruby. There is an option to extend the charters for additional four years, upon terms to be mutually agreed. The contract for the firm period is approximately USD 100 million. The vessel shall commence operations in Brazil latest within June Note 28 - Gain/(Loss) on Currency Exchange Forward Contracts PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) Unrealized gain/(loss) -1,449 3, Realised gain/(loss) 2,899-8, Total 1,450-4,789 Further details related to the currency exchange forward contracts are set out in Note 15. Note 29 - Financial Instrument by Category Below is a comparison by category for carrying amounts and fair values of all of the Company s financial instruments. CONSOLIDATED (Amounts in USD 1,000) December 31, 2011 Loans and receivables Assets at fair value through the profit and loss Available for sale Total Assets as per statement of financial position Financial assets held for sale Derivative financial instruments Trade and other instruments (1) 120, ,903 Cash and cash equivalents 136, ,635 Total 257, (1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD 20,514, see Note 9. 92

93 Liabilities at fair value through the profit and loss Other financial liabilities Total Liabilities as per statement of financial position Borrowings (1) - 1,056,494 1,056,494 Derivative financial instruments 10,171-10,171 Total 10,171 1,056,494 1,066,665 (1) Non-financial liabilities do not qualify as a financial instrument and are not included in above amount. Excluded liabilities amount to USD 4,548, see Note 13. CONSOLIDATED (Amounts in USD 1,000) December 31, 2010 Loans and receivables Assets at fair value through the profit and loss Available for sale Total Assets as per statement of financial position Financial assets held for sale Derivative financial instruments - 3,731-3,731 Trade and other instruments (1) 140, ,949 Cash and cash equivalents 115, ,185 Total 256,134 3, ,865 (1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD 9,578, see Note 9. Liabilities at fair value through the profit and loss Other financial liabilities Total Liabilities as per statement of financial position Borrowings (1) - 913, ,862 Derivative financial instruments Total - 913, ,862 (1) Non-financial liabilities do not qualify as a financial instrument and are not included in above amount. Excluded liabilities amount to USD 5,954, see Note

94 NOTES TO THE ACCOUNTS PARENT COMPANY (Amounts in USD 1,000) December 31, 2011 Loans and receivables Assets at fair value through the profit and loss Available for sale Total Assets as per statement of financial position Derivative financial instruments Trade and other instruments (1) 224, ,657 Cash and cash equivalents 3, ,502 Total 228, ,159 (1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD 85, see Note 9. Liabilities at fair value through the profit and loss Other financial liabilities Total Liabilities as per statement of financial position Borrowings - 57,135 57,135 Derivative financial instruments Total - 57,135 57,135 94

95 PARENT COMPANY (Amounts in USD 1,000) December 31, 2010 Loans and receivables Assets at fair value through the profit and loss Available for sale Total Assets as per statement of financial position Derivative financial instruments Trade and other instruments (1) 246, ,467 Cash and cash equivalents 3, ,296 Total 249, ,763 (1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD 102, see Note 9. Liabilities at fair value through the profit and loss Other financial liabilities Total Liabilities as per statement of financial position Borrowings - 65,796 65,796 Derivative financial instruments Total - 65,796 65,796 Note 30 Profit Before Taxes, Excluding Interests Reconciliation of net profit for the financial year to profit/(loss) before taxes, excluding interest. PARENT COMPANY CONSOLIDATED (Amounts in USD 1,000) ,858 5,562 Net profit/(loss) -6,480 9, Interest expenses 40,607 24,210-3,616-3,745 Interest income -1,939-4, ,463 Tax expense 2, , Profit before taxes, excluding interest 34,841 29,618 95

96 NOTES TO THE ACCOUNTS Note 31 - Business Combinations The Company made two acquisitions in On 1 April 2011, the Company acquired 100% of the shares in Five Oceans Services GmbH ( FOS ). FOS was subsequently renamed Siem Offshore Contractors. Through the acquisition, the Company entered a new segment, cable installation. The installation of submarine cables and associated services are identified to be an emerging growing market, both with respect to field and landfall cables in the offshore oil an gas industry and with respect to inter-array as well as export cables in the offshore renewable energy market. The goodwill of USD 20,239 arising from the acquisition is attributable to a dedicated, experienced and professional organisation recognised in the market, as well as analysis made by management identifying the cable installation as an emerging growing market. The following table summarises the consideration paid for Siem Offshore Contractors, the fair value of assets and liabilities acquired. Consideration at 1 April 2011 (Amounts in USD 1,000) Amount Equity instruments (200,000 ordinary shares) 452 Total consideration 452 Recognised amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents 1,172 Property, plant and equipment (Note 5) 923 Inventories 292 Trade and other receivables 8,434 Trade and other payables -10,952 Borrowings -19,656 Total identifiable net assets -19,787 Goodwill (Note 5) 20,239 Total 452 The fair value of the 200,000 ordinary shares issued as payment for 100% of the shares in Siem Offshore Contractors was based on the published share price on Oslo Stock Exchange 1 April The revenue included in the consolidated statement since 1 April contributed by Siem Offshore Contractors was USD 4,780, and net loss for the same period was USD 6,963. If Siem Offshore Contractors had been consolidated from 1 January 2011, the consolidated statement of income would show revenue of USD 9,023, and a loss of USD 5,

97 On 1 August 2011, the Company acquired the remaining 50% of the shares of Overseas Drilling Ldt ( ODL ). The Company controls 100% of the shares in ODL after the acquisition. The 50% ownership was previously included in the consolidated accounts based on equity accounting. After the acquisition, ODL is consolidated 100% in the consolidated accounts and, consolidated figures are reported in a new segment, scientific core drilling. ODL has a contract with the client Texas A&M Research Foundation ( TAMRF ) for the use of the JOIDES Resolution for the integrated Ocean Drilling Program s Phase ll. The vessel operates worldwide recovering core samples from the ocean floor which are analyzed onboard by scientists and technicians. The acquisition of the remaining 50% in ODL was considered as acquiring an asset and the excess value USD 13,807 arising form the acquisition is allocated on JOIDES Resolution. The following table summarises the consideration paid for ODL, the fair value of assets and liabilities acquired. Consideration at 1 August 2011 (Amounts in USD 1,000) Amount Recognised value first 50% 8,692 Cash paid for remaining 50% 22,500 Total consideration 31,192 Recognised amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents 8,071 Property, plant and equipment (Note 5) 19,591 Long term receivables 11,460 Trade and other receivables 5,727 Trade and other payables -15,457 Long-term liabilities -12,006 Total identifiable net assets 17,385 Excess value JOIDES Resolution (Note 5) 13,807 Total 31,192 The revenue included in the consolidated statement since 1 August contributed by ODL was USD 16,892, and net profit for the same period was USD 7,019. Had ODL been consolidated from 1 January 2011, the consolidated statement of income would show revenue of USD 40,575, and a profit of USD 15,

98 NOTES TO THE ACCOUNTS 98

99 99

100 responsibility statement We confirm, to the best of our knowledge that the financial statements for the period 1 January to 31 December 2011 have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that the Board of Directors Report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group. 28 March 2012 Michael Delouche Kristian Siem Richard England Chairman Director Director (Sign.) (Sign.) (Sign.) Bjørn Johansen David Mullen Eystein Eriksrud Director Director Director (Sign.) (Sign.) (Sign.) Terje Sørensen Chief Executive Officer (Sign.) 100

101 board of directors Pursuant to the Company s Articles of Association, the Board of Directors of Siem Offshore shall have from three to seven shareholder-elected members. Michael Delouche (born 1957), Chairman of the Board Bjørn Johansen (born 1932), Board member David Mullen (born 1958), Board member Mr. Delouche is the president and the secretary of Siem Industries Inc. and is in charge of the Company s operations at the head office in George Town, Cayman Islands. He is a director of STAR Reefers Inc. and a former director of Subsea 7 Inc. Mr. Delouche received degrees in civil engineering (structural) and business and was previously an audit manager with KPMG Peat Marwick LLP. Mr. Delouche is a US citizen. Kristian Siem (born 1949), Board member Mr. Siem is chairman of Siem Industries Inc., Subsea 7 Inc., and Siem Industrikapital AB and a director of Star Reefers Inc. and North Atlantic Smaller Companies Investment Trust plc. Mr. Siem is a Norwegian citizen. Richard England (born 1931), Board member Mr. England was a professional officer in the Royal Navy, specialising in submarines including command. Subsequently he has had wide experience in the offshore industry, including Managing Director designate of Overseas Towage Salvage Co, CEO of both International Offshore Services Ltd and OSA Ltd; followed by, as Managing Director of Vickers Offshore Engineering Group, a member of Vickers Ltd Executive Committee. Mr. England is a UK citizen. Mr. Johansen is an educated business economist and has been employed at Fred. Olsen & Co., Oslo, for about 50 years. He has had central positions in Fred. Olsen s tanker engagement and in the offshore sector from the start in 1971 up to his retirement. Mr. Johansen has served as chairman and board member of several Olsen companies and also as a board member of ASO/Norwegian Ship-owners association for about 12 years. From 1998 to 2003 he was appointed expert judge by Stavanger City Court in the Balder case between Norsk Esso and Smedvig. Mr. Johansen is a Norwegian citizen. Eystein Eriksrud (born 1970), Board member Mr. Eriksrud is the Deputy CEO of Siem Industries Inc., the Company s main shareholder. Prior to joining Siem Industries in October 2011, he was partner of the Norwegian law firm Wiersholm Mellbye & Bech since 2005 working as a business lawyer with an internationally oriented practice in mergers and acquisitions, company law and securities law, particularly in the shipping, offshore and oil service sectors. He was Group Company Secretary of the Kvaerner Group from and served as Group General Counsel of the Siem Industries Group from He has served on the boards of Privatbanken ASA and Tinfos AS as well as a number of other boards. Eriksrud is a Norwegian citizen. Mr. Mullen served as the Chief Executive Officer for Wellstream Holdings PLC until March 2011 following the acquisition of the company by General Electric. Prior Wellstream he was the Chief Executive officer of Ocean Rig ASA and prior to working at Ocean Rig, he was the Senior Vice President of Transocean Inc. where he was responsible for the worldwide marketing, corporate strategy and mergers and acquisitions activities. Between 2001 and 2004, Mr. Mullen was the president of Schlumberger Oilfield Services, North and SouthAmerica. Prior to this, Mr. Mullen served as vice president of Human Resources for Transocean Sedco Forex, Inc. He has also been the director of personnel for Geco-Prakla, managing director of Schlumberger (Nigeria) Ltd., and the district manager for Eastern Venezuela, Wireline & Testing. Mr. Mullen began his carreer with Schlumberger in Mr. Mullen holds a degree in geology from Trinity College, Dublin, and a master degree in geophysics from the University College Galway, Ireland. Mr. Mullen is an Irish citizen. The remuneration of the Board for 2011 is proposed as USD 30,000 per year per Director. Remuneration for the services of the Chairman and Mr. Siem is included to the fixed fee of USD 300,000 p.a. to Siem Industries. This fee also covers office and administrative costs. The remuneration is subject to approval by the shareholders at the annual general meeting of the Company to be held on May 7,

102 Fleet list march 2012 Platform Support Vessels (PSV) Mid-size PSVs Siem Hanne Siem Danis Siem Louisa Sophie Siem Siem Sasha Siddis Skipper Built: Design: VS 470 MK II VS 470 MK II VS 470 MK II VS 470 MK II VS 470 MK II VS 470 MK II Dp Class: LOA: 73,40 m 73,40 m 73,40 m 73,40 m 73,40 m 73,40 m Breadth: 16,60 m 16,60 m 16,60 m 16,60 m 16,60 m 16,60 m Draught: 6,42 m 6,42 m 6,42 m 6,42 m 6,42 m 6,42 m Dwt: 3570 T 3570 T 3570 T 3570 T 3570 T 3500 T Accommodation: Cargo Deck Area: 680 m 2 usable 680 m 2 usable 680 m 2 usable 680 m 2 usable 680 m 2 usable 680 m 2 usable Ownership: 100% 100% 100% 100% 100% 51% Anchor Handling Tug Supply Vessels (AHTS) Siem Amethyst Siem Opal Siem Garnet Siem Sapphire Siem Aquamarine Built: Design: VS 491 CD VS 491 CD VS 491 CD VS 491 CD VS 491 CD Dp Class: LOA: 91,00 m 91,00 m 91,00 m 91,00 m 91,00 m Breadth: 22,00 m 22,00 m 22,00 m 22,00 m 22,00 m Draught: 7,95 m 7,95 m 7,95 m 7,95 m 7,95 m Dwt: 3800 T 3800 T 3800 T 3800 T 3800 T Accommodation: Cargo Deck Area: 800 m m m m m 2 BHP: Bollard Pull: 297 Te 297 Te 282 Te 301 Te 284 Te Ownership: 100% 0% 0% 100% 100% Multi Role Support Vessels (MRSV) Cable Lay Vessel (CLV) Siem Marlin Adams Vision Seven Sisters Siem Swordfish Built: Design: MT 6017 MK II MT 6017 MK II MT 6016 L MT 6016 L Dp Class: LOA: 93,60 m 93,60 m 103,70 m 103,70 m Breadth: 19,70 m 19,70 m 19,70 m 19,70 m Draught: 6,30 m 6,30 m 6,20 m 6,20 m Dwt: 4500 T 4500 T 4500 T 4500 T Accommodation: Cargo Deck Area: 1046 m m m m 2 Crane: 100 ts Offshore/Subsea crane 100 ts Offshore/Subsea crane 1x150 ts Offshore/Subsea crane 1x150 ts Offshore/Subsea crane Ownership: 100% 100% 100% 100% Siem Carrier Built: 1996 Design: VS 483 Dp Class: 2 LOA: 82,85 m Breadth: 19,00 m Draught: 6,30 m Dwt: 4679 T Accommodation: 23 Cargo Deck Area: 840 m 2 Ownership: 100% 102

103 Large-size PSVs Siddis Mariner Siem Pilot Siem Sailor Hugin Explorer Siem Supplier VS 485 VS 485 VS 485 CD MT 6000 MK II MT m 88.3 m 85,00 m 86,20 m 83,70 m 20 m 20 m 20,00 m 19,70 m 17,70 m approx 7.0 m approx 7.0 m 7,00 m 6,18 m 6,10 m 4500 T 4500 T 5000 T 3236 T 4250 T m m m m m 2 51% 51% 51% 100% 100% Siem Topaz Siem Ruby Siem Diamond Siem Pearl Siem Emerald VS 491 CD VS 490 CD VS 491 CD VS 491 CD VS 491 CD ,00 m 91,00 m 91,00 m 91,00 m 91,00 m 22,00 m 22,00 m 22,00 m 22,00 m 22,00 m 7,95 m 7,95 m 7,95 m 7,95 m 7,95 m 3800 T 3800 T 3800 T 3800 T 3800 T m m m m m Te 310 Te 284 Te 285 Te 281 Te 100% 100% 100% 100% 100% Other Vessels under construction: Vessel Delivery Ownership One PSV STX % BRAZIL Fleet of 11 vessels - 6 Vessels under construction JOIDES RESOLUTION BIG ORANGE XVIII One PSV STX % Two OSRVs % One FSV % One FCV % EERV / PSV / CREW Scientific Core Drilling Vessel Well Stimulation Vessel (SCDV) (WSV) 100% owned 100% owned 41.3% owned 103

104 financial calendar 2012 Q Q Q Q Thursday 23 February Tuesday 8 May Thursday 23 August Thursday 25 October 104

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106 innoventi 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