Aker Solutions — Interim / Quarterly Report 2019

Jul 17, 2019

Vision. Building on almost 200 years of technological and engineering excellence Aker Solutions is at the forefront in forging a sustainable future for the energy industry and the world it serves. A spirit of collaboration and openness is at the heart of this effort as we set new standards and solve new challenges.

Key Figures

Amounts in NOK million	1H 20191	1H 2018
Revenue	14,781	11,737
EBITDA	1,257	864
EBITDA margin	8.5%	7.4%
EBITDA ex. special items2	1,266	825
EBITDA margin ex. special items2	8.6%	7.1%
Depreciation, amortization and impairments	-834	-384
EBIT	423	480
EBIT margin	2.9%	4.1%
EBIT ex. special items2	655	455
EBIT margin ex. special items2	4.4%	3.9%
Net financial items	-208	-133
FX on disqualified hedging instruments	-8	-16
Income before tax	206	331
Income tax	-68	-110
Net income	137	222
Basic earnings per share (NOK)	0.43	0.80
Basic earnings per share ex. special items (NOK)2	1.13	0.78

1) The numbers for the first half of 2019 include effects of IFRS 16 and comparative figures have not been re-stated.

2) Excludes special items, including impairments, restructuring charges, gain/loss on sale of PPE and impact of currency derivatives not qualifying for hedge accounting. For more information on special items see section on alternative performance measures on page 24.

Projects

Amounts in NOK million	1H 20191	1H 2018
Revenue	11,967	9,101
EBITDA	947	636
EBITDA margin	7.9%	7.0%
EBITDA ex. special items2	953	650
EBITDA margin ex. special items2	8.0%	7.1%
Order intake	6,343	11,419
Order backlog	19,311	27,286

Services

Amounts in NOK million	1H 20191	1H 2018
Revenue	2,802	2,496
EBITDA	391	307
EBITDA margin	14.0%	12.3%
EBITDA ex. special items2	397	309
EBITDA margin ex. special items2	14.2%	12.4%
Order intake	2,877	2,896
Order backlog	10,275	9,802

Key Developments

Key Financial Developments

Aker Solutions' revenue increased to NOK 14.8 billion in the first half of 2019 from NOK 11.7 billion a year earlier. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to NOK 1,257 million in the period from NOK 864 million a year earlier. The numbers for the first half of 2019 include effects of IFRS 16 and comparative figures have not been re-stated. The EBITDA margin widened to 8.5 percent in the first half from 7.4 percent a year earlier. Excluding special items, EBITDA was NOK 1,266 million in the first half compared with NOK 825 million a year earlier and the EBITDA margin was 8.6 percent versus 7.1 percent. An impairment of NOK 216 million of the right-of-use leasing asset was recognized in the first half of 2019 relating to leased buildings that are or will be vacated by Aker Solutions. Earnings per share (EPS) were NOK 0.43 in the period compared with NOK 0.80 a year earlier. Excluding special items, the EPS was NOK 1.13 in the first half compared to NOK 0.78 in the same period in 2018.

The company has two reporting segments: Projects and Services. Revenue in Projects increased to NOK 12 billion in the first half from NOK 9.1 billion a year earlier amid generally higher market activity. The EBITDA margin was 7.9 percent in the period compared with 7.0 percent a year earlier. Revenue in Services increased to NOK 2.8 billion in the first half from NOK 2.5 billion a year earlier, primarily driven by higher activity. The EBITDA margin increased to 14.0 percent in the period from 12.3 percent a year earlier, due to a changing activity mix, somewhat mitigated by strong operational performance. The EBITDA margin for projects and services in the first half of 2019 include effects of IFRS 16 and comparative figures have not been re-stated.

The company's order intake was NOK 9.3 billion in the first half, compared with NOK 14.3 billion a year earlier. This brought the order backlog to NOK 29.5 billion at the end of June against NOK 37 billion a year earlier, reflecting the timing of new awards. The backlog is based on the value of signed contracts and the estimated value of firm periods in framework agreements and service contracts. The estimated value of options is not included.

Aker Solutions secured a FEED award from Chevron, together with ExxonMobil and Shell as partners, for subsea gas compression in the Jansz field offshore Australia. This was the breakthrough of this promising technology outside the Norwegian Continental Shelf. In Norway, Aker Solutions' newly formed software house, named ix3, secured an order from Wintershall Dea to build a digital replica of the Nova subsea production system. For Equinor a contract was signed for umbilicals in the second phase of the Johan Sverdrup development. In Brazil, the company signed an extension of the subsea service frame agreement and secured a contract to maintain storage tanks services from Petrobras. The company signed several new umbilical contracts that will be delivered from the two manufacturing plants in Moss, Norway, and Mobile, USA. In the Netherlands, the company secured a contract for delivery of carbon capture and utilization at Twence's waste-to-energy plant. This is a breakthrough for the company's technology, using the new modular system, Just Catch.

Aker Solutions continued to experience strong demand for

its front-end engineering capabilities, winning 74 study awards in the first half.

Aker Solutions continued to experience a strong demand for its front-end engineering capabilities, winning 74 study awards in the first half for projects in Norway, the UK, the US, Brazil, Australia and Malaysia. During the first half of 2018 there were 73 study awards.

The company's liquidity reserves were strong at the end of June with cash and bank deposits of NOK 2.2 billion. Undrawn and committed long-term revolving bank credit facilities were NOK 5 billion and the total liquidity buffer was NOK 7.2 billion. The company issued a NOK 1 billion bond in the first half. Net current operating assets were NOK 731 million at the end of June versus a negative NOK 1,415 million a year earlier. The company's working capital is expected to gradually trend toward a more normalized 4 percent of group revenue over the next two to three quarters.

Key Operational Developments

Aker Solutions continued to deliver strong execution on major projects and services globally in the first half of 2019. The company's global improvement program is progressing as planned and has a new target of an additional five percent yearon-year cost-efficiency improvement. There is a strong focus on standardizing products and services as well as boosting efficiency through innovation and digital technologies.

In May, Aker Solutions launched a new brand identity for its software house called ix3. The software house was established in late 2017 to accelerate the digital transformation of both Aker Solutions and its customer base. Since that time, it has progressed as planned and brings together the work on digital twins, engineering automation, intelligent products, asset performance and integrity. ix3 is named after its core offerings: integrated, innovative and insight.

The company has set a new target for its sustainability focus. This development is a natural strategic move for the company as its technology and products can be used or developed for new energy needs. Right after the quarter, the company increased its investment in the offshore floating wind power technology company Principle Power Inc. to 23 percent.

The focus on low carbon solutions is reinforced by a clear increase in the number of studies where CO2 reduction is either part of the scope or the main purpose of the study. With the number of studies with this focus going up from 20 percent in 1Q to above 30 percent by end June.

Carbon capture, utilization and storage continue to be a key focus area. Aker Solutions is currently conducting studies for Norcem in Brevik and the CO2 injection system for Northern Lights in the North Sea, both being part of the Norwegian carbon capture storage demonstration project. The company is also exploring the use of CO2 for enhanced oil recovery in the Brage field together with Wintershall Dea. The recently won project, Twence waste-to-energy plant in the Netherlands, is progressing as planned.

In May, Aker Solutions signed an important joint industry project to explore the feasibility to carry out bulk separation of CO2 from well streams with polymer membranes. The joint industry project has Equinor, Pertamina, Total, CCP-alliance and SINTEF as partners.

Corporations face increasing expectations from external and internal stakeholders to have an adequate human and labor rights system in place. Aker Solutions has committed to respect and support human rights through its UN Global Compact

membership. From a legal perspective, human rights regulations are moving from soft law towards hard law in several jurisdictions. Internally, the company has to comply to its own requirements as set out in the code of conduct and the business integrity policy.

In the first half of 2019 the company responded to the increased expectations by establishing a cross-functional human rights committee. The mandate of the committee is to ensure a common understanding of risk, assignment of responsibilities and enable prioritization and alignment of initiatives and improvements to be implemented at Aker Solutions. The committee is authorized by the CEO and reports to the CEO on a quarterly basis.

In the first half of 2019, Aker Solutions made changes to the executive management team. Maria Peralta, coming from the role as country manager for Brazil, was appointed as head of Products, replacing Egil Bøyum who now leads Greenfield Projects.

The company increased its permanent workforce compared with the same period a year earlier, with the number of own employees about 16,000 at the end of June. Aker Solutions increased the number of contractors hired to about 5,500. Maintaining a flexible workforce protects permanent employees as project requirements fluctuate.

Health, Safety, Security and Environment

Aker Solutions is committed to a goal of zero harm to people, assets and the environment. The cornerstone of this objective is a strong, structured and company-wide HSSE system, setting clear standards for HSSE management and leadership. Regular audits aim to identify, isolate and help address potential shortcomings. Aker Solutions is focused on continuous improvement and learning throughout the organization and the HSSE system is a key enabler in the quest for ever more stringent standards. At Aker Solutions, the HSSE culture is founded on the principle that HSSE is the personal responsibility of every employee. The company investigates all incidents at a level appropriate to their actual or potential outcome in order to learn and improve.

The company had 33 recordable injuries in the first half of 2019. This is down from 38 in the same period last year. Most of the cases were related to movement, construction and manual handling aspects resulting in cuts, pinches, strains or foreign objects in the eye. The total recordable injury frequency (TRIF) increased to 1.95 from 1.70 the first half compared to the same period a year earlier. During the first six months of 2019, eight serious incidents occurred in operations, resulting in a serious incident frequency (SIF) of 0.57 compared to 0.23 in June last year. Dropped objects continues to be the main contributing

* Starting from 2018, Aker Solutions has begun to use the serious incident frequency (SIF) to focus on the occurrence of high-risk incidents. These are incidents where the actual or potential consequence is high or extreme.

event. Both frequencies are 12-month rolling and per million worked hours, which means the number of incidents in the second half of 2018 affects the frequency number of the first half of 2019. The numbers include subcontractors under our direct management. Sick leave remained stable at 2.6 percent. Sick leave is calculated 12 month rolling.

To strengthen the culture further and improve the company's HSSE performance, Aker Solutions has adopted and implemented the new standardized International Association of Oil & Gas Producers (IOGP) Lifesaving Rules in the first half of 2019. The company will work to further standardize the HSSE toolbox with the Safe Working Essentials from Step Change in Safety to ensure consistent and safe execution in all operations worldwide.

In the first half of the year, the company continued activities under its HSSE mindset program, launched in 2017. The program aims to raise employee awareness about key HSSE issues and to promote behavior that enhances safety. In the period, the program focused on the implementation of Life-Saving Rules, environmental compliance and sustainable solutions. In the second half of the year, Aker Solutions will focus on occupational health and security vulnerabilities.

The company communicates on a regular basis to its global workforce on HSSE information on personal zero targets and risk awareness. The company continuously works to identify, analyze and mitigate intentional security threats to personnel and assets. The company did not experience any serious security incidents in the first half of 2019.

Aker Solutions also measures the company's CO2 emission intensity. As of end June, the key performance indicator was at 815 tonnes CO2 per million man hours (12 month rolling average), which is below the target of 890.

Market Outlook

The oil and gas market is expected to have reached its lowest point and the market is showing increasing signs of recovery. Operators are more resilient despite volatility of oil prices and demand for major equipment and services is increasing. The continued growth depends on reduction of costs and increased efficiency in project execution.

The sanctioning of new projects was lower in the first six months of 2019 compared to the first half of 2018. The majority of projects have been shallow-water brownfield expansions and subsea tie-backs projects. As the market continues to increase, Aker Solutions expects to see more projects sanctioned in the second half of 2019.

This market is currently undergoing a transition and renewables are rapidly becoming an essential part of the future global energy mix. The company expects to meet the development in the energy industry with steps in offshore floating wind and carbon capture, utilization and storage.

Tendering is steady and Aker Solutions is bidding for contracts totaling about NOK 55 billion compared to about NOK 50 billion a year ago. The majority of these are in the subsea area where the company expects further key projects to be awarded this year.

Improved operations, cost reductions and a generally higher market activity helped support margins in the first half of the year. These efforts are expected to continue supporting margins for the rest of 2019. The company sees overall revenue in 2019 up around 10 percent from the prior year. Revenue is expected to grow in both Projects and Services and across sub-segments.

The company maintains its outlook for full-year underlying EBITDA margin to be up year-on-year including the effects of IFRS 16. Excluding the effects of IFRS 16, the company expects full-year EBITDA margin around current levels.

This market is currently undergoing a transition and renewables are rapidly becoming an essential part of the future global energy mix. The company expects to meet the development in the energy industry with steps in offshore floating wind and carbon capture, utilization and storage.

Risk Factors

Aker Solutions' global footprint, operations and exposure to energy markets provide both opportunities and risks that may affect the company's operations, performance, finances, reputation and share price.

Financial results are affected by project execution, customers' behavior and market developments, including fluctuations in energy prices. The company's performance and financial results are also impacted by cost and capacity constraints across the value chain and its inherent complexity.

Through its business, Aker Solutions is exposed to legal, regulatory and political risks, such as tax changes, decisions on environmental regulation and international sanctions that impact supply and demand, as well as risks associated with unethical and criminal behavior. The company is exposed to a range of cyber-security threats. Attacks of this nature could lead to system downtime or significant loss of intellectual property, and is mitigated through awareness campaigns and utilization of various protection technologies.

The company is also exposed to risks and opportunities stemming from climate change and the energy transition to renewables and a lower carbon economy. This includes changes in global demand, energy prices and environmental requirements that could increase costs, reduce demand for the company's products, reduce revenue and limit certain growth opportunities. Risks are mitigated or turned into opportunities by investing in or transforming existing technology and services into sustainable energy such as floating offshore wind and technology to capture emissions such as carbon capture and storage. Aker Solutions is also exposed to financial market risks, including changes in currency rates, interest rates, credit and counterparty risks, as well as risks associated with access to and terms of financing.

The annual report for 2018 provides more information on risks and uncertainties.

Fornebu, July 16, 2019 The Board of Directors and CEO of Aker Solutions ASA

Integrity is at the core of our values. Wherever we operate. It guides how we connect with our customers and our health, safety, security and environment mindset.

Declaration by the Board of Directors and CEO

The board and CEO have today considered and approved the condensed, consolidated financial statements for the six months ending June 30, 2019 for the Aker Solutions group.

This declaration is based on information received by the board through reports and statements from the CEO, CFO and/or on the results of the Aker Solutions group's business as well as other information essential to assess the group's position.

To the best of our knowledge:

n The condensed, consolidated financial statements for the six months ending June 30, 2019 for the Aker Solutions group have been prepared in accordance with all applicable accounting standards.

• n The information provided in the condensed, consolidated financial statements gives a true and fair view of the Aker Solutions group's assets, liabilities, financial position and results taken as a whole as of June 30, 2019.
• n Aker Solutions' report and condensed, consolidated financial statements for the six months ending June 30, 2019 provide a true and fair overview of:
• the development, performance and financial position of the Aker Solutions group taken as a whole.
• important events that have occurred during the accounting period and their impact on the financial statements as well as a description of the most significant risks and uncertainties facing the Aker Solutions group for the remaining six months of the financial year.

Fornebu, July 16, 2019 Board of Directors and CEO of Aker Solutions ASA

Hilde Karlsen

Øyvind Eriksen Chairman

Koosum Kalyan Director

Kristian Røkke Director

Birgit Aagaard-Svendsen Director

Henrik O. Madsen Director Director

Atle Teigland Director

Audun Bråthen Director

Luis Araujo

Chief Executive Officer

Figures and Notes

Aker Solutions Group

The subtotals and totals in some of the tables may not equal the sum of the amounts shown due to rounding. The periodic figures are not audited, except the annual 2018 figures that have been derived from the audited financial statements.

Income Statement

Condensed consolidated income statement

NOK million. Unaudited.	Note	1H 2019	1H 2018	2018
Revenue	4, 5	14,781	11,737	25,232
Operating expenses		-13,524	-10,872	-23,422
Operating income before depreciation, amortization and impairment	5	1,257	864	1,810
Depreciation, amortization and impairment	8, 9, 10	-834	-384	-761
Operating income	5	423	480	1,049
Net financial items	6	-217	-149	-258
Income before tax		206	331	792
Income tax		-68	-110	-238
Net income		137	222	554
Net income attributable to:
Equity holders of the parent company		118	217	511
Non-controlling interests		19	4	43
Net income		137	222	554
Earnings per share in NOK (basic and diluted)	12	0.43	0.80	1.88

Other Comprehensive Income (OCI)

Condensed consolidated statement of other comprehensive income

NOK million. Unaudited.	1H 2019	1H 2018	2018
Net income for the period	137	222	554
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Cashflow hedges, effective portion of changes in fair value	58	-27	8
Cashflow hedges, reclassification to income statement	-77	-33	3
Cashflow hedges, deferred tax	4	15	-2
Translation differences - foreign operations	-177	-462	-69
Total	-192	-508	-60
Items that will not be reclassified to profit or loss:
Remeasurements of defined pension obligations	0	0	-71
Remeasurements of defined pension obligations, deferred tax asset	0	0	12
Change in fair value of equity investments	0	9	12
Total	0	9	-48
Total comprehensive income (loss)	-55	-277	446
Total comprehensive income attributable to:
Equity holders of the parent company	-72	-279	400
Non-controlling interests	17	1	47
Total comprehensive income (loss)	-55	-277	446

Balance Sheet

Condensed consolidated balance sheet

NOK million. Unaudited.	Note	June 30, 2019	June 30, 2018	December 31, 2018
Property, plant and equipment	8	2,916	2,977	3,044
Intangible assets	9	5,578	5,646	5,686
Right-of-use assets	10	3,848	0	0
Deferred tax asset		751	644	663
Lease receivables	10	665	0	0
Other investments	15	157	97	79
Other non-current assets		168	87	84
Total non-current assets		14,084	9,451	9,556
Current tax assets		92	134	109
Inventories		353	308	326
Customer contract assets and receivables		8,210	6,414	6,887
Prepayments		1,918	1,394	1,348
Derivative financial instruments	13	86	209	218
Interest-bearing receivables		122	103	47
Cash and cash equivalents		2,228	2,440	2,473
Total current assets		13,009	11,001	11,408
Total assets		27,092	20,452	20,964

NOK million. Unaudited.	Note	June 30, 2019	June 30, 2018	December 31, 2018
Total equity attributable to the parent	12	7,044	6,828	7,502
Non-controlling interests	12	123	28	106
Total equity		7,167	6,856	7,608
Non-current borrowings	11, 13, 14	2,714	2,703	1,788
Non-current lease liabilities	10	5,029	0	0
Pension obligations		562	538	572
Deferred tax liabilities		211	227	266
Other non-current liabilities		14	83	10
Total non-current liabilities		8,530	3,551	2,636
Current tax liabilities		79	37	68
Current borrowings	11, 13, 14	865	118	1,125
Current lease liabilities	10	556	0	0
Provisions		582	962	906
Trade and other payables		8,451	7,981	7,741
Customer contract liabilities		730	685	709
Derivative financial instruments	13	132	262	172
Total current liabilities		11,396	10,045	10,721
Total liabilities and equity		27,092	20,452	20,964

Cashflow

Condensed consolidated statement of cashflow

NOK million. Unaudited.	Note	1H 2019	1H 2018	2018
Income before tax	8, 9, 10	834	384	761
Depreciation, amortization and impairment		-1,288	135	-632
Other cashflow from operating activities		-248	851	921
Net cashflow from operating activities		-248	851	921
Acquisition of property, plant and equipment	8	-184	-130	-331
Payments for capitalized development	9	-79	-71	-174
Proceeds from sale of property, plant and equipment		2	88	104
Change in interest-bearing receivables		-57	-11	38
Acquisition/sale of shares and funds		-94	47	66
Cash collection from lease receivables		62	0	0
Net cashflow from investing activities		-351	-77	-297
Proceeds from borrowings	11	1,001	1,502	1,617
Repayment of borrowings	11	-326	-1,685	-1,716
Payment of lease liabilities	10	-270	0	0
Other financing activities		0	1	0
Net cashflow from financing activities		405	-182	-99
Effect of exchange rate changes on cash and cash equivalents		-51	-130	-30
Net increase (decrease) in cash and cash equivalents		-245	462	495
Cash and cash equivalents as at the beginning of the period		2,473	1,978	1,978
Cash and cash equivalents as at the end of the period		2,228	2,440	2,473

Equity

Condensed consolidated statement of changes in equity

NOK million. Unaudited.	Contributed equity and retained earnings	Other reserves	Total equity attributable to the parent's equity holders	Non controlling interest	Total equity
Equity as of December 31, 2017	5,866	1,115	6,981	67	7,047
Effect of implementing IFRS 9 Financial Instruments	0	181	181	0	181
Effect of implementing IFRS 15 Revenue from Customer Contracts	-55	0	-55	-40	-95
Equity as of January 1, 2018	5,811	1,296	7,107	26	7,133
Total comprehensive income	217	-496	-279	1	-277
Equity as of June 30, 2018	6,028	800	6,828	28	6,856
Equity as of December 31, 2018	6,341	1,161	7,502	106	7,608
Effect of implementing IFRS 16 Leasing	-355	0	-355	0	-355
Equity as of January 1, 2019	5,986	1,161	7,147	106	7,253
Total comprehensive income	118	-190	-72	17	-55
Other changes to equity	-31	0	-31	0	-31
Equity as of June 30, 2019	6,074	971	7,044	123	7,167

Notes

Note 1 General

Aker Solutions is global provider of products, systems and services to the oil and gas industry. The group employs about 16,000 people with operations in 25 countries world-wide, with head office based in Fornebu, Norway. The parent company, Aker Solutions ASA, is a Norwegian limited liability company listed on the Oslo Stock Exchange under the ticker AKSO.

The consolidated financial statements of Aker Solutions ASA incorporate the financial statements of the company and its subsidiaries collectively referred to as "the group" or "the company" and separately as group companies. The parent company Aker ASA publishes consolidated financial statements. The Resource Group TRG AS is the ultimate parent company of Aker Solutions ASA. The interim financial statements are unaudited.

Note 2 Basis for Preparation

Statement of Compliance

Aker Solutions' interim financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union and their interpretations adopted by the International Accounting Standards Board (IASB). The condensed consolidated interim financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. As the interim condensed consolidated financial statements do not include all the information and disclosures required in the annual report, they should be read in conjunction with the 2018 Annual Report available at www.akersolutions.com.

Changes in accounting policies

The accounting principles adopted in these interim financial statements are consistent with those described in the 2018 Annual Report, with the exception of IFRS 16 Leasing which was effective from January 1, 2019. See description in note 10.

Note 3 Judgments, Estimates and Assumptions

The preparation of consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions each reporting period with effect on the income statement and balance sheet. The accounting estimates will by definition seldom fully match actual results. The judgments and estimates are based on historical experience or other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes to accounting estimates are recognized in the period in which the estimate is revised and any subsequent periods the change relates to.

In preparing these interim financial statements, significant judgments made by management in applying the group's accounting policies and the key sources of uncertainty in the estimates were consistent with those described in the 2018 Annual Report available on www.akersolutions.com.

Note 4 Revenue

The following tables show the revenue from customer contracts by type and per country. Revenue figures per country include only external revenues and are based on location of the selling company.

Amounts in NOK million	1H 2019	1H 2018	2018
Projects - Subsea	4,782	4,040	8,162
Projects - Field Design	7,192	5,094	11,814
Intra-group revenue	-7	-33	-57
Sum Projects	11,967	9,101	19,920
Services	2,802	2,496	5,096
Total revenue from customer contracts	14,769	11,596	25,016
Other and eliminations	12	140	216
Total revenue	14,781	11,737	25,232

Amounts in NOK million	1H 2019	1H 2018	2018
Norway	8,837	6,948	15,367
UK	1,931	1,658	3,695
Malaysia	1,200	424	907
Brazil	942	938	1,755
USA	615	463	829
Angola	457	402	890
Brunei	394	348	711
Congo	42	126	225
Other countries	362	429	853
Total revenue	14,781	11,737	25,232

Note 5 Operating Segments

Aker Solutions' operations are managed through value-chain based delivery centers. Early customer engagement and project execution are reported in the "Projects" segment whereas life-of-field offerings are reported in "Services."

Projects

The Projects segment provides subsea equipment and systems, engineering and procurement in addition to frame agreements for brownfield maintenance, modifications and hook-up. The objective of the segment is to deliver world-class project execution by building excellence in project management, engineering, fabrication and offshore construction.

Services

The Services segment provides subsea lifecycle services (SLS) and production asset services (PAS). The objective of the segment is to grow a focused service business and position Aker Solutions as a key partner of choice for customers.

Other

The "other" segment includes unallocated corporate costs, leasing of property shared across segments and the effect of hedges not qualifying for hedge accounting.

Accounting principles

The accounting principles of the operating segments are generally the same as described in the annual report. The IFRS 16 effects on the income statement are included in the "projects" or "services" segment for property and other assets according to usage. Figures for 2018 do not include IFRS 16 effects, refer to note 10.

As noted in the annual report, the operating segments apply hedge accounting independently of whether the hedge qualifies for hedge accounting or not in accordance with IFRS. When contract revenues and contract costs are denominated in a foreign currency, the subsidiary hedges the exposure against corporate treasury. A correction for the non-qualifying hedges and elimination of internal transactions are made in the consolidated financial statements. This means that the group's segment report reflects both internal and external hedges before any adjustment for non-qualifying hedges and before internal transactions are eliminated in the "other" segment.

Segment performance

Amounts in NOK million	1H 2019	1H 2018	2018
Income statement
Revenue
Projects	11,967	9,101	19,920
Services	2,802	2,496	5,096
Total operating segments	14,769	11,596	25,016
Other and eliminations	12	140	216
Total	14,781	11,737	25,232
Operating income before depreciation, amortization and impairment
Projects	947	636	1,354
Services	391	307	678
Total operating segments	1,338	944	2,032
Other	-82	-79	-222
Total	1,257	864	1,810
Operating income
Projects	469	374	843
Services	242	225	511
Total operating segments	711	599	1,354
Other	-288	-119	-305
Total	423	480	1,049

Amounts in NOK million	1H 2019	1H 2018	2018
Balance Sheet
Net current operating assets (NCOA)
Projects	-66	-1,540	-1,141
Services	936	646	693
Total operating segments	870	-894	-448
Other	-139	-521	-306
Total	731	-1,415	-753

The NCOA consists of current operating assets, current tax assets, current operating liabilities and current tax liabilities. Refer to alternative performance measure for further information.

Note 6 Finance Income and Expenses

Amounts in NOK million	1H 2019	1H 2018	2018
Interest income on lease receivables	17	0	0
Other interest income	10	15	39
Interest income	28	15	39
Interest expense on lease liabilities	-120	0	0
Interest expense on other financial liabilities measured at amortized cost	-116	-127	-236
Interest expense on financial liabilities measured at fair value	-8	-16	-32
Interest expenses	-244	-142	-268
Net foreign exchange gain (loss)	-4	-8	-30
Profit (loss) on foreign currency forward contracts	-8	-16	-16
Other financial income	18	11	27
Other financial expenses	-6	-8	-9
Net other financial items	0	-21	-28
Net financial items	-217	-149	-258

Note 7 Provisions

Amounts in NOK million	Warranties	Onerous contracts	Restructuring	Other	Total
Balance as of December 31, 2018	551	237	5	113	906
Effect of implementing IFRS 16 Leasing	0	-119	0	0	-119
Balance as of January 1, 2019	551	118	5	113	788
Change in the period	-135	-37	2	-42	-212
Currency translation	7	0	0	-1	6
Balance as of June 30, 2019	424	81	7	70	582

The provision for warranties relates to expected re-work and improvements for products and services delivered to customers in the normal course of business. The warranty period is normally two years. The provision is based on the historical average warranty expenses for each type of contract and an assessment of the value of delivered products and services currently in the warranty period.

The restructuring provision relates to expected remaining employee termination costs for permanent and temporary employees that have or will be laid-off. The provision is sensitive to changes in the assumptions used related to number of employees, salary levels, notice period, severance pay and idle time assumed during notice period.

The onerous contracts provision mainly relate to provisions for expected losses for customer contracts. The provision is sensitive to changes in the assumptions used related to expected future revenue and expense on the customer contract. The provision for onerous lease contracts has been reclassified from provisions to impairment of right-of-use assets when implementing IFRS 16 as of January 1, 2019. Refer to note 10.

Other provisions relate to other liabilities with uncertain timing or amount. This includes provisions for claims, leasehold dilapidations and certain employee provisions.

Amounts in NOK million	Buildings and sites	Machinery and equipment	Under construction	Total
Balance as of December 31, 2018	1,206	1,553	285	3,044
Effect of implementing IFRS 16 Leasing1	-34	0	0	-34
Balance as of January 1, 2019	1,173	1,553	285	3,010
Additions	2	52	130	184
Transfer from assets under construction	13	86	-99	0
Depreciation	-26	-205	0	-231
Impairment	-5	0	0	-5
Disposals	0	-1	0	-1
Currency translation differences	-12	-24	-4	-40
Balance as of June 30, 2019	1,145	1,459	312	2,916

Note 8 Property, Plant and Equipment

1) The IFRS 16 adjustment relate to dilapidations that are reclassified from property, plant and equipment to ROU assets upon implementing IFRS 16.

Note 9 Intangible Assets

Amounts in NOK million	Goodwill	Development	Other intangible assets	Total
Balance as of January 1, 2019	4,258	1,323	105	5,686
Capitalized development	0	79	0	79
Amortization	0	-126	-18	-144
Impairment	0	-2	0	-2
Currency translation differences	-34	-6	-1	-41
Balance as of June 30, 2019	4,224	1,268	86	5,578

Intangible assets are reviewed each quarter for impairment indicators, including market changes, technological development, order backlog and other changes that might potentially reduce the value of the assets. For goodwill and ongoing development projects, impairment tests are performed annually or when impairment indicators are identified. The goodwill is tested using the value-in-use approach determined by discounting expected future cashflows. Impairment loss is recognized when the value-in-use is lower than book value.

Note 10 Leasing

Financial Reporting Principles

IFRS 16 Leasing effective January 1, 2019 has significantly changed how the company accounts for its lease contracts. The company leases a number of office buildings in addition to manufacturing and service sites. The company also leases machines and vehicles. Before the adoption of IFRS 16, all lease contracts were classified as operating leases. IFRS 16 requires all contracts that contain a lease to be recognized on the balance sheet as a right-of-use asset and lease liability. Only certain short-term and low-value leases are exempt.

The right-of-use asset is depreciated over the lease term and is subject to impairment testing. The lease payments previously included as operating expense in the income statement are reported as depreciation and financial expense under IFRS 16. This results in an improvement of EBITDA, refer to ""special items and IFRS 16 effects"" section to see the impact of IFRS 16 on the performance measures of the operating segments. The lease liability represents the net present value of the lease payments to be made over the remaining lease period. The cash outflows for leases under IFRS 16 is presented as repayment of interest-bearing liabilities within financing activities in the cash flow statement. Interest paid is still classified as cash outflows within operating activities.

All sub-leases were previously classified as operating leases with lease payments recognized as revenue. Under IFRS 16, some sub-leases covering the major part of the lease term in the head-lease are classified as finance sub-leases. The portion of the right-of-use asset subject to sub-lease is de-recognized and a sub-lease receivable is recognized in the balance sheet when the sub-lease commences. The sub-lease will result in interest income and lower right-of-use depreciation under IFRS 16, rather than lease revenue as under IAS 17.

The company has implemented the leasing standard using a modified retrospective method with the cumulative impact recognized in retained earnings on January 1, 2019. Comparative figures are not restated. IFRS 16 Leasing replaced former leasing guidance, including IAS 17 Leases and IFRIC 4, SIC 15 and SIC 27. According to the company's loan agreements, the new leasing standard will not impact the current debt covenants.

Judgments and Estimates

The company has applied significant judgment when determining impairment of the right-of-use asset. Impairment is assessed for separable parts of leased buildings that have been or will be vacated in the near future. The impairment is sensitive to changes in estimated future expected sub-lease income and sub-lease period. Judgment is also involved when determining whether sub-lease contracts are financial or operational, as well as when determining lease term for contracts that has extention or termination options.

Recognition and Measurement Approach on Transition

The company has elected to use the recognition exemptions in the standard for short-term leases and leases of low value items such as computers and office equipment. The company also applied the recognition exemption for leases that expire in 2019. The company adjusted the right-of-use asset on January 1, 2019 with the provision for onerous leases on December 31, 2018. The company has elected to exclude the initial direct costs from the measurement of right-of-use asset on implementation. The right-of-use asset for selected leases has been measured as if IFRS 16 had always been applied (using the incremental borrowing rate per January 1, 2019).

The discount rate has been determined for each leased asset according to the incremental borrowing rate at the date of implementation (January 1, 2019). On January 1, 2019, the discount rate applied varied between 2.0 and 11.5 percent giving a weighted-average rate of 4.4 percent. The non-cancellable lease period is basis for the lease commitment. Periods covered by extension or termination options are included when it is reasonably certain that the lease period will be extended. Non-lease components such as electricity, insurance and other property-related expenses paid to the landlord are excluded from the lease commitment for offices and manufacturing sites, but included when renting apartments and vehicles if included in the agreed lease amount. Future index or rate adjustments of lease payments are only included in the lease liability when a minimum adjustment has been contractually agreed and is in-substance fixed. Certain sub-leases that were operational under IAS 17 became financial under IFRS 16.

Implementation effects

The effect of implementing IFRS 16 as of January 1, 2019 was as follows:

Amounts in NOK million	January 1, 2019
Assets
Property, plant and equipment	-34
Right-of-use assets	4,150
Lease receivables (non-current)	734
Interest bearing receivables (current lease receivables)	112
Deferred tax asset	90
Current operating assets (prepaid lease)	-32
Adjustments to assets	5,021

Amounts in NOK million	January 1, 2019
Liabilities
Current lease liabilities	546
Non-current lease liabilities	5,183
Current operating liabilities (provisions)	-119
Trade and other payables	-234
Adjustments to liabilities	5,376
Equity
Retained earnings	-355
Adjustments to equity	-355

Reconciliation of Lease Commitment and Lease Liability

Amounts in NOK million	January 1, 2019
Operating lease commitment as at December 31, 2018	6,862
Relief option for short-term leases	-172
Relief option for leases of low-value assets	-8
In-substance fixed lease payments not included in lease commitments	200
Undiscounted lease liability	6,883
Effect of discounting lease commitment to net present value	-1,154
Lease liability as at January 1, 2019	5,729

Right-of-Use Assets and Lease Liabilities

The movement in the right-of-use assets and lease liabilities since implementation is summarized below.

Amounts in NOK million	Land and building	Machinery and vehicles	Others	Right-of-use assets	Lease liabilities
Balance as of January 1, 2019	4,118	26	6	4,150	5,729
Additions	161	1	2	164	164
Remeasurement	25	0	0	25	25
Depreciation expense	-228	-6	-2	-236	n/a
Impairments	-216	0	0	-216	n/a
Interest expense	n/a	n/a	n/a	n/a	120
Lease payments	n/a	n/a	n/a	n/a	-390
Currency translation differences	-39	0	0	-39	-64
Balance as of June 30, 2019	3,822	21	5	3,848	5,585

Lease payments of NOK 390 million consist of lease installments of NOK 270 million and interest expense of NOK 120 million. The impairment of right-of-use for land and buildings in the first-half 2019 mainly relates to buildings that are, or will be, vacated by Aker Solutions and update of market value of potential sub-leases.

Effects on operating segments and income statement from IFRS 16

		1H 2018
Amounts in NOK million	As reported IFRS 16	1H 2019 Effect of IFRS 16	Adjusted IAS 17	As reported IAS 17
Projects	11,967	0	11,967	9,101
Services	2,802	0	2,802	2,496
Other and eliminations	12	67	80	140
Revenue	14,781	67	14,848	11,737
Projects	947	-199	748	636
Services	391	-55	336	307
Other	-82	-31	-112	-79
Impairments/onerous lease	0	-216	-216	0
EBITDA	1,257	-501	756	864
EBITDA excluding special items1	1,266	-285	981	825
Projects	7.9%		6.3%	7.0%
Services	14.0%		12.0%	12.3%
EBITDA margin	8.5%		5.1%	7.4%
EBITDA margin excluding special items1	8.6%		6.6%	7.0%

			1H 2018
Amounts in NOK million	As reported IFRS 16	Effect of IFRS 16	Adjusted IAS 17	As reported IAS 17
Projects	469	-48	421	374
Services	242	-5	237	225
Other and eliminations	-288	2	-286	-119
EBIT	423	-51	371	480
Projects	3.9%		3.5%	4.1%
Services	8.6%		8.5%	9.0%
EBIT margin	2.9%		2.5%	4.1%
Income before tax	206	49	255	331
Net income	137	33	170	222

1) Refer to alternative performance measures for overview of special items

Note 11 Borrowings

Interest bearing borrowings are recognized initially at fair value less transaction costs and subsequent at amortized cost.

Amounts in NOK million	Maturity	June 30, 2019	June 30, 2018	Dec 31, 2018
Bond - ISIN NO 0010661051	October 2019	732	1,009	1,011
Bond - ISIN NO 0010814213	July 2022	1,500	1,494	1,497
Bond - ISIN NO 0010853286	June 2024	992	0	0
Brazilian Development Bank EXIM and capex loans	Within one year	114	90	96
Brazilian Development Bank EXIM and capex loans	More than one year	262	251	329
Revolving Credit Facility1	March 2023	-22	-29	-25
Other loans and amortization effects		2	5	5
Total borrowings		3,579	2,822	2,913
Current borrowings		865	118	1,125
Non-current borrowings		2,714	2,703	1,788
Total borrowings		3,579	2,822	2,913

1) The carrying amount includes fees for establishing the credit facility which is deferred according to the amortized cost method

Aker Solutions completed in June 2019 a NOK 1,000 million unsecured bond issue with maturity in June 2024. The bond has a coupon of 3 month Nibor plus 3 percent per annum and is listed on the Oslo stock exchange. NOK 277 million of the bond of NOK 1,000 million expiring in October 2019 was repurchased in June 2019 at a price of 101.31 Norwegian kroner. The remaining balance will be repaid at maturity.

Note 12 Share Capital and Equity

Aker Solutions ASA was founded May 23, 2014 with a nominal share capital of NOK 293,807,940. The total outstanding shares are 272,044,389 shares at par value NOK 1.08 per share at June 30, 2019. All issued shares are fully paid.

Aker Solutions ASA holds 511,801 treasury shares at June 30, 2019. Treasury shares are not included in the weighted average number of ordinary shares. Earnings per share have been calculated based on an average of 271,532,588 shares outstanding June 30, 2019.

The General Meeting on April 10, 2019 decided that no dividend payment is made for 2018 as it was deemed prudent to exercise caution and conserve cash amid continued uncertainty about the market outlook.

Note 13 Financial Instruments

The financial instruments measured at fair value per June 30, 2019 include the following:

• n Derivative financial instruments consist mainly of forward foreign exchange contracts. The fair values are derived from observable market rates for foreign currency forward contracts. The group also has certain interest rate swaps where fair values are derived from observable market interest rates.
• n Current and non-current borrowings include three bonds issued in the Norwegian bond market in addition to other borrowings. Bonds and borrowings are measured at amortized cost, and interest rate variations will not affect the valuation as they are held to maturity. The fair value of bonds and borrowings was NOK 3,615 million per June 30, 2019, compared to carrying amount of NOK 3,579 million. The fair value per December 31, 2018 was NOK 2,937 million compared to carrying amount of NOK 2,913 million.

The fair values of other investments are described in note 15.

Note 14 Related Parties

Related parties relationships are defined to be entities outside the Aker Solutions group that are under control (either directly or indirectly), joint control or significant influence by the owners of Aker Solutions. Related parties are in a position to enter into transactions with the company that would potentially not be undertaken between unrelated parties. Aker Solutions has adopted related party transaction procedures to ensure that all transactions and other relations with such entities shall be premised on commercial terms and structured in line with the arm's length principle, see further description in the corporate governance report available on www.akersolutions.com.

The largest shareholder of Aker Solutions is Aker Kværner Holding AS which is controlled by Aker ASA (70 percent). Aker ASA is controlled by The Resource Group TRG AS, a company controlled by Kjell Inge Røkke. The Resource Group TRG AS is the ultimate parent company of Aker Solutions ASA. In this respect, all entities owned by Aker ASA and entities which Kjell Inge Røkke and his close family controls through The Resource Group TRG AS are considered related parties to Aker Solutions. These entities include companies like Akastor ASA, Aker BP ASA, Kværner ASA and Cognite AS and are referred to as Aker entities in this note.

Below is a summary of transactions and balances between Aker Solutions group and its related parties.

Related Party Transactions Included in Income statement

Amounts in NOK million	1H 2019	1H 2018	2018
Operating revenues	2,202	1,339	3,360
Operating expenses	-63	-49	-315
Depreciation and impairment of ROU assets	-140	0	0
Net financial items	-27	0	0

Related Party Transactions Included in Balance Sheet

Amounts in NOK million	June 30, 2019	June 30, 2018	December 31, 2018
Right-of-use (ROU) assets	1,292	0	0
Lease receivable, long term	220	0	0
Trade receivables	584	345	594
Non-current interest-bearing receivables	121	29	45
Lease receivable, short term	60	0	0
Non-current leasing liabilities	-1,366	0	0
Trade payables	-57	-55	-75
Current borrowings	-1	-1	-1
Current leasing liabilities	-121	0	0

Aker Solutions has several transactions with related parties on a recurring basis as part of normal business such as commercial customer contracts, sub-supplier contracts and hire of technical and project personnel between Aker Solutions, Aker BP and Kvaerner. Aker Solutions is also leasing property from and to related parties. Lease contracts with related parties are reported according to IFRS 16 from January 1, 2019, refer to further information in note 10.

Note 15 Other Investments

Amounts in NOK million	June 30, 2019	June 30, 2018	December 31, 2018
Equity securities in unlisted companies	157	79	79
Total other investments	157	97	79

Other investments include investments in entities in which the company does not have significant influence. This is usually entities where the company holds less than twenty percent of the voting power. The investments are measured at fair value through other comprehensive income (FVOCI) as they represent long-term strategic investments. Investments in unlisted shares are measured at cost less impairment. Cost is best estimate of fair value and therefore used when there are no quated market prices and there is no other information available to measure fair value.

Note 16 Subsequent Events

In July 2019, Aker Solutions made further acquitisions of Principle Power Inc. and increased its ownership from 11 to 23 percent. The investment will be reported as an equity accounted investment from this date.

Alternative Performance Measures

Aker Solutions discloses alternative performance measures in addition to those normally required by IFRS as such performance measures are frequently used by securities analysts, investors and other interested parties. Alternative performance measures are meant to provide an enhanced insight into the operations, financing and future prospects of the company. Figures for 2019 include the effects of IFRS 16, whereas comparative figures for 2018 do not. Refer to note 10 in the half-year report and section "Special items and IFRS 16 effects" for the effects on the profit per segment.

Profit Measures

EBITDA and EBIT terms are presented as they are used by financial analysts and investors. Special items are excluded from EBITDA and EBIT as alternative measures to provide enhanced insight into the financial development of the business operations and to improve comparability between different periods.

• EBITDA is short for earnings before interest, taxes, depreciation and amortization. EBITDA corresponds to the "operating income before depreciation, amortization and impairment" in the consolidated income statement in the annual report.
• EBIT is short for earnings before interest and taxes. EBIT corresponds to "operating income" in the consolidated income statement in the annual report.
• Margins such as EBITDA margin and EBIT margin are used to compare relative profit between periods. EBITDA margin and EBIT margin are calculated as EBITDA or EBIT divided by revenue.
• Special items may not be indicative of the ongoing operating result of cash flows of the company. Profit measure excluding special items is presented as an alternative measures to improve comparability of the underlying business performance between the periods.

Amounts in NOK million		Projects			Services			Other / eliminations			Aker Solutions group
	2Q 2019	2Q 2018	1H 2019	1H 2018	2Q 2019	2Q 2018	1H 2019	1H 2018	2Q 2019	2Q 2018	1H 2019	1H 2018	2Q 2019	2Q 2018	1H 2019	1H 2018
Revenue	6,015	4,862	11,967	9,101	1,503	1,337	2,802	2,496	8	55	12	140	7,525	6,254	14,781	11,737
Non-qualifying hedges	0	0	0	0	0	0	0	0	0	-6	1	1	0	-6	1	1
(Gain)loss sale of PPE	0	0	0	0	0	0	0	0	0	0	0	-50	0	0	0	-50
Sum of special items excluded from revenue	0	0	0	0	0	0	0	0	0	-6	1	-49	0	-6	1	-49
Revenue ex. special items	6,015	4,862	11,967	9,101	1,503	1,337	2,802	2,496	8	49	13	92	7,525	6,248	14,782	11,688
EBITDA	470	325	947	636	205	172	391	307	-52	-58	-82	-79	623	439	1,257	864
Restructuring cost	5	3	6	10	6	1	6	1	0	-0	1	0	10	5	13	12
Non-qualifying hedges	0	0	0	0	0	0	0	0	-4	-4	-6	-6	-4	-4	-6	-6
(Gain)loss sale of PPE	0	0	0	0	0	0	0	0	0	0	0	-50	0	0	0	-50
Other	0	0	0	4	0	0	0	0	0	1	2	2	0	1	2	6
Sum of special items excluded from EBITDA	5	3	6	14	6	1	6	1	-4	-3	-3	-55	6	2	9	-39
EBITDA ex. special items	475	328	953	650	210	173	397	309	(56)	-60	(85)	-134	629	441	1,266	825
EBITDA margin	7.8%	6.7%	7.9%	7.0%	13.6%	12.9%	14.0%	12.3%					8.3%	7.0%	8.5%	7.4%
EBITDA margin ex. special items	7.9%	6.7%	8.0%	7.1%	14.0%	13.0%	14.2%	12.4%					8.4%	7.1%	8.6%	7.1%
EBIT	189	201	469	374	122	131	242	225	-213	-78	-288	-119	98	254	423	480
Sum of special items excluded from EBITDA	5	3	6	14	6	1	6	1	-4	-3	-3	-55	6	2	9	-39
Impairments	76	-1	76	15	19	0	19	-1	126	1	128	0	221	0	223	15
Sum of special items excluded from EBIT	80	2	82	29	25	1	25	1	122	-2	125	-54	228	2	232	-25
EBIT ex. special items	270	203	550	403	147	132	267	225	-91	-79	-163	-173	325	256	655	455
EBIT margin	3.1%	4.1%	3.9%	4.1%	8.1%	9.8%	8.6%	9.0%					1.3%	4.1%	2.9%	4.1%
EBIT margin ex. special items	4.5%	4.2%	4.6%	4.4%	9.8%	9.9%	9.5%	9.0%					4.3%	4.1%	4.4%	3.9%

Amounts in NOK million	Aker Solutions group
	2Q 2019	2Q 2018	1H 2019	1H 2018
Net income	-11	117	137	222
Sum of special items excluded from EBIT	228	2	232	-25
Non-qualifying hedges	5	18	8	16
Tax effects on special items	-52	-5	-50	5
Net income ex. special items	169	132	327	217
Net income to non-controlling interests	-18	-2	-19	-4
Net income ex. non-controlling interests	151	130	308	213
Average number of shares (in 1,000)	271,533	271,533	271,533	271,533
Earnings per share1	-0.11	0.42	0.43	0.80
Earnings per share ex. special items2	0.56	0.48	1.13	0.78

1) Earnings per share is calculated using net income, adjusted for non-controlling interests, divided by average number of shares 2) Earnings per share ex. special items is calculated using net income ex. special items, adjusted for non-controlling interests, divided by average number of shares

Order Intake Measures

Order intake, order backlog and book-to-bill ratios are presented as alternative performance measures. They are indicators of the company's revenues and operations in the future.

Order intake includes new signed contracts in the period in addition to expansion of existing contracts. For construction contracts, the order intake is based on the signed contract value excluding potential options and change orders. For service contracts, the order intake is based on the estimated value of firm periods in the contracts.

Order backlog represents the estimated value of remaining work on signed contracts.

Book-to-bill ratio is calculated as order intake divided by revenue in the period. A book-to-bill ratio higher than 1 means that the company has secured more contracts in the period than volume executed in the same period.

	2Q 2019			2Q 2018
Amounts in NOK million	Order intake	Revenue	Book-to-bill	Order intake	Revenue	Book-to-bill
Projects - Subsea	1,846	2,343	0.8	1,123	2,084	0.5
Projects - Field Design	999	3,680	0.3	3,867	2,810	1.4
Other/eliminations	15	-8		-31	-32
Projects	2,860	6,015	0.5	4,959	4,862	1.0
Services	902	1,503	0.6	691	1,337	0.5
Other/eliminations	60	8		23	55
Aker Solutions	3,822	7,525	0.5	5,673	6,254	0.9

Financing Measures

Alternative financing and equity measures are presented as they are indicators of the company's ability to obtain financing and service its debt.

Net current operating assets (NCOA) or working capital

is a measure of the current capital necessary to maintain operations. Working capital includes trade receivables, trade payables, accruals, provisions and current tax assets and liabilities. IFRS 16 effects are included in the figures for 2019, but not in the 2018 figures.

		Projects	Services		Aker Solutions
Amounts in NOK million	2Q 2019	2Q 2018	2Q 2019	2Q 2018	2Q 2019	2Q 2018
Inventory	175	181	177	125	353	308
Trade and other receivables	6,754	5,288	3,991	3,518	10,147	7,808
Current tax assets	43	34	1	2	92	134
Trade and other payables	-6,555	-6,179	-3,174	-2,868	-9,401	-8,666
Provisions	-545	-862	-37	-108	-880	-962
Current tax liabilities	0	-2	-66	-22	-79	-37
Net current operating assets (NCOA) ex. IFRS 16	-129	-1,540	891	646	231	-1,415
Effect from IFRS 161	62	0	46	0	500	0
Net current operating assets (NCOA)	-66	-1,540	936	646	731	-1,415

1) Reclassification of onerous lease provisions and lease accruals for rent-free periods previously reported as part of NCOA. Starting from January 1, 2019 these amounts are reported as part of ROU asset under IFRS 16.

Liquidity buffer is a measure of available cash and is calculated by adding together the cash and cash equivalents and the unused credit facility.

Amounts in NOK million	2Q 2019	2Q 2018
Cash and cash equivalents	2,228	2,440
Credit facility (unused)	5,000	5,000
Liquidity buffer	7,228	7,440

Gross and net interest-bearing debt (NIBD)

are measures that show the overall debt situtation. Net debt is calculated by netting the value of a company's liabilities and debts with its cash and other similar short-term financial assets. Gross and net interest-bearing debt measures do not include the effects of IFRS 16 Leasing.

Net debt to EBITDA (leverage ratio) is a key financial measure that is used by management to assess the borrowing capacity of a company. The ratio shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant. The ratio is one of the debt covenants of the company. The ratio is calculated as net debt (total principal debt outstanding less unrestricted cash) divided by EBITDA excluding certain special items (as defined in loan agreements) for the last twelve month period. If a company has more cash than debt, the ratio can be negative. The leverage ratio does not include the effects of IFRS 16 Leasing, as covenants are based on frozen GAAP.

Amounts in NOK million	2Q 2019	2Q 2018
Current borrowings	865	118
Non-current borrowings	2,714	2,703
Gross interest bearing debt1	3,579	2,822
Current interest-bearing receivables	-9	-103
Non-current interest-bearing receivables	-124	-31
Cash and cash equivalents	-2,228	-2,440
Net interest-bearing debt1	1,219	247

1) Excluding the effects of IFRS 16

Amounts in NOK million	2Q 2019	2Q 2018
Gross interest bearing debt	3,579	2,822
Cash and cash equivalents	-2,228	-2,440
Net debt	1,351	381
EBITDA last twelve months	1,702	1,723
Restructuring cost and other special items	41	17
Adjusted EBITDA last twelve months	1,742	1,741
Net debt to EBITDA (leverage ratio)	0.78	0.22

COPYRIGHT AND LEGAL NOTICE

Copyright in all published material including photographs, drawings and images in this publication remains vested in Aker Solutions and third party contributors to this publication as appropriate. Accordingly, neither the whole nor any part of this publication can be reproduced in any form without express prior permission. Articles and opinions appearing in this publication do not necessarily represent the views of Aker Solutions. While all steps have been taken to ensure the accuracy of the published contents, Aker Solutions does not accept any responsibility for any errors or resulting loss or damage whatsoever caused and readers have the responsibility to thoroughly check these aspects for themselves. Enquiries about reproduction of content from this publication should be directed to Aker Solutions.