Solstad Offshore ASA — Annual Report 2013

Mar 3, 2014

Annual Report Boa Offshore AS Group 2013

Org.nr. 926 265 156

BOA OFFSHORE AS GROUP

BOARD'S ANNUAL REPORT FOR 2013

Nature and location of activities:

Boa Offshore AS is the management company of the Boa holding Group and the parent company of the Boa Offshore Group ("Group"). The company also invests in the shipping and offshore related companies. The Group comprises several ship owning companies within the following segments; tugboat, barge and offshore vessels. The tugboat activity, including salvaging, operates along the Norwegian coast and the North Sea. The barge fleet consists of larger barges, and the offshore department manages supply vessels within construction and oil exploration, operating worldwide. The management is located in Trondheim. An office in Houston has been established, currently engaged in the Gulf of Mexico operating chartered construction vessels in addition to the Group's vessels.

Work environment:

At year-end the Group had approx. 355 employees and, in the opinion of the Board, a good work environment. The total absenteeism rate for the year was around 3 %.

Equal opportunity:

The Group operates within a sector that has historically been dominated by men. This is also the case among our staff, in which men form the majority of the maritime crew.

The company aims to ensure that any discrimination based on gender, religion or nationality is subject to immediate follow-up by the managing staff onboard the vessels and onshore ensuring conditions guarantees equal opportunity.

The gender ratio in administration onshore is approx. 30 % women and 70 % men. For the company in total the ratio of women is approx. 20%. There are two top positions in the Group management held by a woman.

For the Group, the distribution among the employees is about 19 % women and about 81 % men.

Health, safety, the environment and quality:

The goal of the Group's health, safety, the environment and quality policy is 'zero tolerance' when it comes to injury to persons, damage to ships, work-related illness and environmental damage. Company aims to achieve this goal by establishing a good work environment and work routines both onboard the vessels and onshore. The risk factors linked to the company's operations are continuously identified and the necessary risk-reducing measures implemented. The Group has established procedures for dealing with accidents and other emergency situations and meets international requirements concerning safeguards against acts of terrorism. The Group aims to be known in the market for providing high-quality services and in accordance with national and international laws and regulations.

To achieve these goals, the Group has established an integrated health, safety, environment and quality control system that is used by both the onshore organisations and crew on board the vessels. The system meets all relevant requirements with regard to international standards as well as requirements and guidelines developed by branch organisations within the offshore and shipping sectors. The system undergoes continuous improvements based on reports from users and annual reviews by customers, authorities and the organisation itself.

The goal for the future with regard to the integrated health, safety, the environment and quality system is to achieve combined certification pursuant to the requirements of the ISM code and ISO 9001:2000 quality standard.

Over the last vear it has been one serious work-related injury among employees and contracted personnel. The Group is continuously working to reduce the number of work related injuries.

External environment:

The machinery on the vessels run on fuel and, apart from the emissions from this machinery, the Board does not believe that the ships pollute the external environment beyond what is normal for this type of maritime activity. The Group is continuously working to reduce any discharge to sea and air.

Continued operations:

Boa Offshore AS (parent company) has positive equity as per December 31, 2013. The company's shareholdings in subsidiaries, in the board's opinion, have significant higher value relative to the book values. The annual accounts for 2013 for the Group were drawn up under the assumption of continued operations.

Review of annual accounts:

The operating profit for the Group in 2013 was MNOK 288,3 compared to MNOK 242,1 in 2012.

Net financial items were MNOK-216.9 compared to MNOK-140.1 in 2012. The main part of the increase from 2012 is non recurring costs from refinancing and raising new loans.

The tax expenses for 2013 were MNOK 2,7.

The final result was a profit of MNOK 68,7 compared to MNOK 100,2 in 2012.

Total year end assets were MNOK 4 969,3 compared to MNOK 3 969,2 the previous year. The percentage of shareholder's equity on December 31, 2013 was 29,9 % compared with 34,3 % on December 31, 2012.

Financial risk:

Market risk:

The Group is susceptible to changes in currency rates considering the Group's earnings and long-term financing is partly in foreign currency. However, the currency risk is reduced somewhat since the operating costs of the Group are in the same currency. The Group continously considers entering into forward contracts and other agreements in order to reduce the currency risk. By December 31, 2013 the total of the group's interest holding debt was MNOK 2 880 whereof MNOK 600 is secured by interest rate swap agreements.

Credit risk:

The risk that the other contracting party will not have the financial means to meet its obligations is considered low. Agreements have not been made for set-offs or other financial tools to minimise the Group's credit risk.

Liquidity risk:

The group's liquidity position is significantly improved throughout 2013. There has been refinancing of vessels and raised new loans in order to secure both short-term construction loans and long-term financing for the initiated new-building program. The parent company has 2 bonds of a total of MNOK 559,2 listed at Oslo Stock Exchange ABN. The bond has maturity date in 2015 (MNOK 59,2) and 2018 (MNOK 500). The total of outstanding bonds as of December 31, 2013 was MNOK 1 961,7.

Appropriation of profits:

The year-end result of the parent company, Boa Offshore AS, was MNOK 17,4. The Board proposes the following distribution:

Transferred to other equity	$MNOK$ 5,2
Group contribution	MNOK 12,2

Events after the balance sheet date:

No events have taken place after the end of the financial year that would materially affect the evaluation of the Group's profit and loss account or balance sheet as per December 31, 2013.

Future Development:

Boa Offshore has over the last few years experienced a solid increase in operating profit and a significant improvement in its liquidity situation on the balance sheet. The former as a result of a more focused and streamlined operational strategy, and partly as a result of improved market conditions. This together with refinancing of outstanding debt has improved the liquidity situation of the company. Furthermore, the initiated newbuilding program for Boa Offshore is fully financed.

The Board of Directors keeps its long-term positive fundamental view of the offshore markets it operates within, and expects a stable to growing demand for its fleet and services in the years ahead. Although several oil companies have announced reduced growth in their investment plans in the short to medium term, in a historical view the level of investments is still high. Part of the reason for the announced moderated growth relates to escalating costs within several offshore services segments, not necessarily linked to the segments Boa Offshore operates within. A number of large offshore projects have already commenced the development phase or have been sanctioned, which will ensure stable and good activity in the coming years. Assuming the oil price remains above the current level (ref above USD100/bl) and that the global oil demand continues to increase, the long-term outlook for the offshore industry remains promising.

The Group's strategy remains to focus on a modern fleet of large offshore vessels adapting to new demands from customers and the increased activity in offshore developments. The Group seeks to balance the contract portfolio between spot and long-term contracts.

le T. Bjørnevik

Chairman of the Board

Eskil Brørnevik

Member of the Board

Trondheim, 27.02.2014

Oddvar Sørtømme Member of the Board

Marita Bjørnevik Member of the Board

Svein Berg

Member of the Board

Income statement

Boa Offshore AS

Figures in 1 000 NOK

Parent company

Group

2013	2012	Operating income and operating expenses	Note	2013	2012
$\bf{0}$	$\bf{0}$	Operating income	$\overline{2}$	1 214 980	1 026 784
215 124	168 445	Other operating income	16	32 218	11 137
215 124	168 445	Total operating income		1247198	1 037 921
8 5 7 3	5895	Operating cost ships		534 821	362 725
152 650	134 436	Payroll expenses	3, 9, 16	243 987	249 342
2559	2686	Depreciation	4	141 283	140 731
5	$\boldsymbol{0}$	Write down fixed assets	$\overline{\mathbf{4}}$	5	$\bf{0}$
26 674	21 809	Other operating expenses	3,16	38 772	43 0 35
190 462	164826	Total operating expenses		958 869	795833
24 662	3619	Operating result		288 329	242 087
		Financial income and expenses
39 3 28	30 975	Income from subsidiaries		$\pmb{0}$	$\bf{0}$
$\bf{0}$	$\pmb{0}$	Income from associates	$\overline{\mathbf{5}}$	$\bf{0}$	52
70 896	68 271	Interest income from group companies	16	7805	17112
500	309	Other interest income		4 1 1 5	6514
3 9 4 3	2 2 9 6	Other financial income		36 995	42 9 94
8 1 0 1	73 275	Depreciation of other financial fixed assets		$\bf{0}$	$\mathbf{0}$
69 656	64 561	Interest expense to group companies	16	1 0 7 2	5 0 7 1
14 041	1669	Other interest expenses		185 978	158 826
20 513	3614	Other financial expenses		78 780	42 828
2 3 5 7	$-41268$	Financial result		$-216915$	$-140053$
27 019	$-37649$	Result before tax		71 413	102 034
9669	3 0 6 6	Tax on ordinary result	12	2687	1830
				68727	100 204
17350	$-40716$	Profit for the year
$\pmb{0}$	0	Minority share		93	$\bf{0}$
12 167	$\boldsymbol{0}$	Group contribution	8	12 167	11 133
5 1 8 3	$\mathbf{0}$	To other equity	8	56 560	89 072
$\bf{0}$	40716	From other equity	8	0	$\overline{\mathbf{0}}$
17350	$-40716$	Net brought forward		68727	100 204

Balance sheet

Boa Offshore AS

Figures in 1 000 NOK

Parent company

Group

2013	2012		Note	2013	2012
		Fixed assets
		Intangible assets
206 707	214 553	Deferred tax asset	12	177 335	161 442
206 707	214 553	Total intangible assets		177 335	161 442
		Tangible fixed assets
1 4 4 7	1447	Buildings and land	4	1447	1447
10 067	14 4 05	Vessels	$\overline{\bf{4}}$	1976 156	2 049 622
1475	493	Fictures and fitting etc.	$\overline{\mathbf{4}}$	3 2 9 8	2001
$\bf{0}$	$\mathbf{0}$	Newbuilding contracts	4	1417040	1 181 697
12988	16 3 45	Total tangible fixed assets		3 3 9 7 9 4 1	3 234 766
		Financial fixed assets
297 125	295 195	Investments in subsidiaries	5	$\bf{0}$	$\bf{0}$
1 096 946	818334	Loans to group companies	6, 11	144 175	113 156
160	160	Investments in shares	5	410	410
5928	11 608	Other receivables	6,9	191 496	16 194
1400159	1 1 2 5 2 9 8	Total financial fixed assets		336 081	129 761
1619855	1356196	Total fixed assets		3 911 356	3 5 2 5 9 6 9
		Current assets
209	101	Inventories		2709	3 4 2 1
		Receivables
8 1 7 9	2650	Trade receivables		246 224	158 170
55 418	47308	Loans to group companies	11	2 2 7 5	324
11 3 9 6	3735	Other receivables		58 197	61 389
74 992	53 693	Total receivables		306 696	219884
		Investments
$\overline{0}$	$\bf{0}$	Other financial instruments		340	334
$\overline{0}$	$\bf{0}$	Total investments		340	334
393 375	56 273	Cash and bank deposits	14	748 201	219 597
468 577	110 067	Total current assets		1057946	443 237
2 088 431	1466263	Total assets		4969303	3 969 206

Balance sheet

Boa Offshore AS

Figures in 1 000 NOK

2013	2012	Equity and liabilities	Note	2013	2012
		Restricted equity
2 500	2 500	Share capital	7,8	2500	2.500
74 447	74 447	Share premium	8	74 447	74 447
3 106	3 106	Other restricted equity	$\bf{8}$	3 106	3 106
80 053	80053	Total restricted equity		80 053	80 053
		Retained earnings
233 102	227919	Other equity	8	1407159	1283315
233 102	227919	Total retained earnings		1 407 159	1 283 315
313 154	307972	Total equity		1487211	1363368
$\boldsymbol{0}$	$\pmb{0}$	Minority share		63 769	$\boldsymbol{0}$
		Liabilities
		Provisions
528	326	Other provisions	15	79310	64 398
528	326	Total provisions		79 310	64 398
		Other long term liabilities
559 200	0	Bonds	10,13	1961700	1 087 500
15 022	100 939	Liabilities to financial institutions	10,13	912380	889 999
1161199	1 037 254	Liabilities to subsidiaries	$\blacksquare$	11 474	25 4 85
0	0	Other long term liabilities	10,13	5 9 2 5	6 8 25
1735 421	1 138 192	Total other long term liabilities		2891479	2009809
		Current liabilities
$\mathbf 0$	$\bf{0}$	Liabilities to financial institutions		1234	3450
4 4 3 7	5 0 4 6	Trade creditors		386 302	428 177
13729	1 1 1 4	Liabilities to subsidiaries	11	12 227	$\Omega$
0	0	Taxpayable	12	15 604	19553
7008	5848	Public duties payable		7943	6782
14 154	7764	Other short term liabilities		87992	73 669
39 328	19772	Total short term liabilities		511 303	531 631
1775277	1 158 291	Total liabilities		3 482 092	2 605 838
2088431	1466263	Total liabilities and equity		4969303	3969206

Autor Setter Little
Ole T. Blotnevik
Chairman of the board $\overline{\mathbb{R}}$

$\bar{z}$

Svein O Berg
Member of the toard

Trondheim, 27.02.2014 For the board of Boa Offshore AS

$625$ O. Oddvar N Sørtømme

Member of the board

Luy Helpinevik
IEski Bjømevik
Member of the board

Supllanta Formerik
Siw Marita Bornevik
Member of the board Add elsk lelge Kvalvik

Note 1 Accounting principles

The annual accounts are established in accordance with the Norwegian Accounting Act of 1998 and generally accepted accounting principles.

Consolidation principles

The consolidated financial statement comprises Boa Offshore AS and subsidiaries, where the company has controlling interest as a result of legal or actual control. The consolidated accounts are established in accordance with uniform accounting principles for similar transactions within all companies included in the consolidated financial statement. All essential transactions and outstanding accounts between companies within the group are eliminated. Investments in companies in which the group has considerable influence (associates and joint ventures) are valued in the consolidated financial statement in accordance with the equity method. Considerable influence generally means that the group owns 20 to 50 percent of the voting capital.

Principle rule for recording and categorising assets and debts

Assets intended for long-term ownership or usage are categorised as fixed assets. Other assets are categorised as current assets. Debts to be paid back within a year are also categorised as current assets. Similar criteria are used to categorise short-term and long-term debts.

Fixed assets are valued at purchase cost, and depreciated over the economic lifetime. If the actual value of the fixed assets is lower than the booked value and the decrease in value is not expected to be temporary, devaluation to the actual value is carried out. Fixed assets are depreciated linearly.

Current assets are recorded at the lowest of historical cost and net realisable value.

Other long-term and short-term debts are recognised at nominal value.

Assets and debt in foreign currency

Money items in foreign currency are converted at the rate applicable on the balance sheet date.

Capitalised interests

Interest related to ships under construction are capitalized.

Shares in associates, joint ventures and subsidiaries

Investments in subsidiaries are valued according to the cost method and written down at the actual value if the decrease in value is not temporary, and it is considered necessary in accordance with generally accepted accounting principles. Dividend from subsidiaries are recorded as other financial income. The same applies to investments in associates and joint ventures.

Other shares classified as fixed assets

Shares and investments in general partnerships and limited partnerships in which the company does not have considerable influence are valued according to the cost method. Investments are written down at the actual value if the decrease in value is not expected to be temporary. Profits received from the companies are recognised as other financial income.

Bonds classified as fixed assets

Bonds are recognised at purchase cost. Bonds are written down at the actual value if the decrease in value is not expected to be temporary.

Investments classified as floating assets

Market-based financial instruments, including shares included in a trading portfolio, are recognised at the actual value on the balance sheet date.

Receivables

Accounts receivable and other receivables are entered at nominal value after deducting the provision for expected losses. The provision for losses is based on an individual assessment of the separate claims.

Bank deposits, cash, etc.

This category includes cash, bank deposits and other forms of payment with an expiration date that is shorter than three months from purchase.

Revenue

Revenues from the sale of services are recognised in the income statement according to the project's level of completion. Revenues are booked at the net sales value at the time of the transaction.

Expenses

Expenses are recognised in the same period as the related revenues. In those instances in which there is no clear connection between expenses and revenues, the distribution is determined based on discretionary criteria. Other exceptions from the classification principle are disclosed when relevant.

Pensions

Contribution pension plan

The company has a contribution-based obligatory company pension scheme for onshore personnel. This is expensed at date of payment.

Performance-based scheme

The company also has a performance-based company pension scheme for maritime personnel. The liability is valued annually and the balance is classified as long-term provisions (receivables) in the balance sheet.

Government subsidies

The group receives a subsidy from the Norwegian Maritime Directorate in connection with the employment of Norwegian maritime personnel. The subsidy is entered as a reduction under the group's salary costs.

Taxes

Tax expenses are grouped with operating profit before tax. Taxes are recognised directly in equity to the extent that they relate to equity transactions.

The Ship Owning companies is taxed by the Norwegian shipowning tax regime as of 01.01.2007.

Tax cost includes taxes payable (tax on this years taxable income and interest surplus), tonnage tax and change in net deferred taxes.

Deferred tax and deferred tax benefits are entered in net amounts on the balance sheet.

Miscellaneous

All figures in the notes are quoted in NOK 1 000.

Segments Note 2

	OCV	Seismic		Other /
	vessels	vessels	Barges	elimination	Total
Operating income	425 368	125 206	125 663	570961	1 247 198
EBITDA	277 440	55 4 62	94 375	2 3 3 5	429 612
EBIT	213 228	23 0 73	65 086	(13058)	288 329

Personnel compensation, number of employees and loans to employees Note 3 etc.

	Parent company		Group
	2013	2012	2013	2012
Salaries	129 232	114 347	164 791	182 463
Subsidies from Norwegian maritime Directora	0	0	0	0
Employer's national incurance contribution	12 350	10430	14 300	12 622
Pension contribution	5 2 0 6	3804	6 3 3 1	5 2 1 5
Other personnel expenses	4 7 7 4	4 7 3 9	6 1 3 2	$-641$
Hired in staff	1089	1 1 1 6	52 433	49 683
Total personnel costs	152 650	134 436	243 986	249 342
Number of man-labour years employed	261	257	346	351

Management remuneration	Salary Pension cost	Other
CEO	2 3 5 8	438
Board of Directors	parent company	150
	aroup	150

Loan and securities to shareholders, management personnel and employees	Amount	Interest rate	Securities
Employees	2 0 0 5		0 - 5 % Security in fixed assets
Auditor Audit fee for 2013 to Deloitte AS was NOK			Parent company 244	Group 927
Fee for audit related services was NOK			3	113
Fee paid to Deloitte Advokatfirma AS was NOK Fee paid to Deloitte Tax LLP was NOK			265 303	265 303

Note 4 Fixed assets Parent company

	Vessels	Property	Vehicles	Sum
Acquisition cost on 01.01	28 219	1446	1 1 2 3	30 789
Additions			1634	1634
Disposals	$-6076$		$-1123$	$-7199$
Acquisition cost on 31.12	22 143	1446	1634	25 2 23
Accumulated depreciation 01.01	13814	0	630	14 4 44
Acc. depreciation disposals	$-3996$		$-773$	-4769
Acc. Write-down disposals				0
Depreciation this year	2 2 5 8		301	2 5 5 9
Accum. depreciation 31.12.	12 077	0	158	12 235
Book value	10 067	1446	1475	12 989
Economic life	10-16 years		5 years
Depreciation schedule	Linear		Linear

Annual lease amount on fixed assets not included on the balance sheet

554

Group
			Ships under Fictures and
		Vessels construction	fitting	Property	Sum
Acquisition cost on 01.01	2 706 293	1 233 101	8653		1446 3949494
Additions	137 722	588 190	2891	0	728 803
Disposals	$-94820$	-356 851	-1485	0	-453 155
Acquisition cost on 31.12	2749196	1464440	10 059	1446	4 2 2 5 1 4 1
Accumulated depreciation 01.01	646 146	47 400	6553	0	700 099
Acc. depreciation disposals	$-13595$	0	-885	0	$-14.480$
Depreciation this year	140 493	0	1092	0	141 585
Accum. depreciation 31.12.	773 043	47 400	6760	$\mathbf 0$	827 203
Book value	1976 156	1 417 040	3 2 9 8		1446 3397941
Economic life	$10-16$ years	N/A		5 years
Depreciation schedule	Linear	N/A		Linear
Annual lease amount on fixed assets not included on the balance sheet				283 453
Leases included in aquisition cost				5 5 3 0
Book value of financial leases ships (liabilities)				4 3 7 8

Shareholdings in subsidiaries, associated companies and joint ventures Note 5

Group

	Year of	Office		Equity	Results
	aqui-sition address			Share Dec. 31 2013	2013
Subsidiaries (Norwegian)
Boa Shipping AS		2000 Trondheim	100 %	344 911	-68 012
Boa OCV AS		2002 Trondheim	100 %	932 117	186 226
Boa SBL AS		2008 Trondheim	100 %	197 547	$-28566$
T.A. Kittilsen Shipping AS		1998 Brevik	100 %	8033	977
Nye Kystlink AS		2012 Trondheim	100 %	-1857	$-1902$
Det Nordenfjeldske Dampskibss		2012 Trondheim	100 %	2643	$-37$
Tier subsidiaries (Norwegian)
Taubåtkompaniet AS		2008 Trondheim	100 %	48 334	$-16628$
Boa Barges AS		2008 Trondheim	100 %	259 561	33 571
Boa PSV AS		2011 Trondheim	100 %	103 332	$-12332$
NFDS Offshore 1 AS		2012 Trondheim	77 %	268 104	243
Subsidiaries (foreign)
Boa Marine S.A		2006 Gdynia, Poland	100 %	-96	$-22$
Rederi AB		2005 Sweden	100 %	1048	78
Boa Tugs AB		2011 Sweden	100 %	177	$-4208$
Boa Offshore LLC		2011 USA	100 %	$-7018$	$-1526$
Tier subsidiaries (foreign)
Boa Marine Services Inc.		2009 USA	100 %	27 648	13 3 8 2

Fixed assets

Parent company

Company	Share			Acq. costs Book value Market value
Midnor Bestik (foundation)	0,50%	10	10
Newtron Line AS		90
Såkorn Invest Midt-Norge AS	7 %	625		0
EMGS ASA		135	135	8
Nio Inc.		10	10	0
Afjord Utvikling AS	3%	6	6	o
Sum		875	160

Group

Company	Share			Acq. costs Book value Market value
Midnor Bestik (foundation)	0,50%	10	10
Såkorn Invest Midt-Norge AS	7 %	625
EMGS ASA		135	135	8
Nio Inc.		10	10	0
Åfjord Utvikling AS	3%	6
Taklift AS	10 %	250	250	250
Sum		1 1 2 5	410	258

$\overline{1}$

Long-term receivables Note 6

	Parent company		Group
	2013	2012	2013	2012
Receivables against associated companies
Receivables from group companies	1 096 946	817844	144 175	113 172
Other long-term receivables	5928	11 608	191496	16 194
Sum	1 102 874	829 452	335 671	129 366

Shareholder information Note 7

	Shares	Equity share Voting share
Boa Holding AS	2000	100.00%	100.00%
Total number of shares	2000	100,00 %	100,00%

The company's share capital is NOK 2 500 000, distributed among 2 000 shares of par value NOK 1 250.

The company has only one class of shares.

The company Boa Offshore AS and its subsidiaries is a part of the group Boa Holding AS. The groups financial statement can be distributed from the office in Trondheim.

Shareholder's equity Note 8

Parent company		Share	Other restricted
	Share capital	premium	equity	Other equity	SUM
Equity 01.01.	2 500	74 447	3 106	227 919	307 971
Profit of the year				17 350	17 350
Dividend				$-12.167$	$-12$ 167
Equity 31.12.	2 500	74 447	3 1 0 6	233 101	313 154

Group This years change in equity
Book equity on Jan. 1	1 363 368
Year result	68727
Dividends	$-12.167$
Currency differences subsidiaries	857
Subsidiaries	3424
Paid in capital	63 000
Book equity on Dec. 31	1 487 211

Parent company			Other
		Share	restricted
	Share capital	premium	equity	Other equity	SUM
Equity 01.01.	2 500	74 447	3 10 6	1 283 314	1 363 367
Paid in capital				63 000	63 000
Profit of the year				68727	68727
Dividends				$-12$ 167	$-12,167$
Adjustments to equity				4 2 8 5	4 2 8 5
Equity 31.12.	2 500	74 447	3 1 0 6	1407159	487 211

Pension costs and net pension liabilities Note 9

The company is obliged to have a company pension scheme in accordance with the Norwegian Pension Act. for all employees.

The company has performance-based pension schemes for a total of 53 persons. These schemes entitle the employee to certain future payments. This primarily depends on the number of years of employment, the salary level upon reaching retirement age and the size of the contribution from the National Insurance. These obligations are covered through an insurance company.

Pension cost
	2013	2012
Net present value of pension build-up this yer	882	916
Interest costs for pension obligation	267	215
Return on pension funds	$-257$	$-204$
Estimated deviation recorded	250	273
Administrative costs	107	100
Accrued employer's contribution	141	145
Net costs after employer's contribution	1389	1444
Pension obligation
	2013	2012
Pension obligation	$-6928$	$-6470$
Pension funds (at market value)	6270	5480
Accrued employer's contribution	$-93$	$-140$
Deferred obligation for (losses)/profits	4 6 2 3	3 8 0 6
Net pension funds	3872	2678
Financial assumptions	2013	2012
Interest rate	4,0%	4,2%
Expected return	4,4 %	4,0%
Salary increase	3,8%	3,5%
G-regulation	3,50 %	3,25%
Regulation of continuous pension	0,60%	0,20%
Employer's contribution rate	14,1 %	14,1 %
Voluntary resignation before the age of 40	$0\%$	0 %
Voluntary resignation after the age of 40	$0\%$	$0\%$

Actuary predictions for demographic factors and resignations are based on commonly used assumptions within the insurance industry.

Note 10 Long-term debts

Parent company

Instalments of debt falling due more than 5 years from the balance date:

	2014	2015	2016	2017	2018
Instalments	251 $\sim$	200 $\sim$			000 500

Group

Instalments of debt falling due more than 5 years from the balance date:

	2014	2015	2016	2017	2018
Instalments	116 656	190 000	935 472	70 275	863798	358 016

A MNOK 173 loan in Boa PSV AS and a MNOK 232 loan in NFDS Offshore 1 AS are both a combined construction- and Long term loan, and as such not included in the above table.

Parent company	Long term liabilities		Short term liabilities
	2013	2012	2013	2012
Boa Holding AS			12 167
Boa OCV AS	1 019 752	958 656
Boa SBL AS	94 481
Boa Eiendom AS		14 352	60
Boa Barges AS	46 925	60989
T.A.Kittilsen Shipping AS				28
Boa Marine Services SA.			315
Boa Marine Services Inc.		3 2 5 7		236
Boa Offshore LLC
Boa Tugs AB			1 1 8 7	850
Rederi AB	40
Sum	1 161 199	1 037 254	13729	1 1 1 4

Outstanding accounts with companies within the same group Note 11

	Long term receivables		Short term receivables
	2013	2012	2013	2012
Boa SBL AS	59 389	55 750	4 4 0 4	$-1427$
Boa Holding AS	133 454	113 172
Boa OCV AS			42 628	27 982
Boa Shipping AS	792 039	593 812
Boa Eiendom AS	10721		250	324
Boa Barges AS			$-162$	950
Taubåtkompaniet AS	17814	20 067	76
Boa Tugs AB		0
Boa PSV AS	32 511	5 3 0 9		12657
T. A. Kittilsen Shipping AS	16 264	5791	2083	5404
Ship Management TBK	-16	$-16$
Boa Marine Services Inc	6 189		3 4 3 2	1418
Boa Offshore LLC	26 163	24 449
Nye Kystlink AS	2410
NFDS AS	7
NFDS Offshore 1 AS			432
Boa Investment AS			2 2 7 5
Sum	1 096 946	818 334	55 418	47 308

Group	Long term liabilities		Short term liabilities
	2013	2012	2013	2012
Boa Holding AS	133 454	113 156
Boa Eiendom AS	10 721			324
Boa Investment AS			2 2 7 5
Sum	144 175	113 156	2 2 7 5	324
Group	Long term debt		Short term debt
	2013	2012	2013	2012
Boa Eiendom AS		14 3 5 2	60
Boa Holding AS	11 474	11 133	12 167
Sum	11 474	25 4 85	12 227	0

Note 12 Tax

Parent company

This years tax:	2013	2012
Changes in deferred tax	7847	3174
Tax payable Norway	1727	$-202$
Tax payable US	96	94
This years tax expense	9669	3 0 66
This years tax basis:	2013	2012
Result before tax	27 019	$-37649$
Permanent differences	10 908	74 586
Changes in timing differences	-25 386	$-27204$
Group contribution	$-37245$	$-25600$
This years tax basis	$-24704$	$-15868$
Tax payable in balance:	2013	2012
This year's tax on profit
Tax on group contribution
Tax paid in US
SkatteFUNN tax deduction	$-990$	$-202$
Tax payable in balance	$-990$	$-202$
Temporary differences:	2013	2012
Tangible fixed assets	2 4 6 7	2829
Receivables		$-2798$
Profit and loss account	$-87631$	$-109661$
Provisions	$-528$	$-326$
Short term liabilities	3922	2800
Tax losses carried forward	-683 810	$-659$ 106
Net temporary differences	$-765560$	$-766261$
Net deferred tax	-206 707	-214 553

Group:

This years tax:	2013	2012
Changes in deferred tax	$-15978$	$-17613$
Tax payable Norway	15 905	18401
Tonnage tax	141	53
Tax payable US	2620	989
This years tax expense	2687	1830
This years tax basis, ordinary taxation:	2013	2012
Result before tax	28 30 2	$-26661$
Permanent differences	10830	43 300
Changes in timing differences	$-23642$	-32 999
Group contribution
This years tax basis	15 489	$-16360$
Calculation of tax base for the year	2013	2012
Profit and loss account	52 964	66 204
Financial result	1 200
Loss carried forward used	$-3350$
Tax base for the year	50 814	66 204
Tax payable in balance:	2013	2012
Calculated tonnage tax	141	$\overline{90}$
Taxes payable	15 4 64	19 462
Tax payable in balance	15 604	19551
	2013	2012
Temporary differences:
Tangible fixed assets	7825	7789
Receivables	$-965$	$-3606$
Profit and loss account	124 535	155 547
Provisions	$-2.347$	$-1.397$
Short term liabilities	3922	2800

Net deferred tax	-177 335	-161 442
Net temporary differences	-656 796	-576 579
Tax losses carried forward	-789 766	-737 711
______

The shipowning companies in the group are taxed in accordance with the Norwegian shipowning tax regime.

i.

Pledges and guarantees, etc. Note 13

Parent company:
Book debt secured by pledge:	2013	2012
Debts to credit institutions	15 0 22	25 939
Accrued interest	312	298
Total	15 3 34	26 237
Book value of pledged assets:	2013	2012
Cash deposits	3 0 2 4	2646
Vessels	5698	7017
Total	8722	9664
Book value of assets mortgaged for debt
for group companies:	2013	2012
Shares	280 344	280 344
Vessels	5698	7 017

----	.
286 042	287 361
2013	2012
2934	2579

Boa Offshore AS is the guarantor for the fulfillment of loan obligations in Boa Barges AS, Boa PSV AS, Taubåtkompaniet AS and NFDS Offshore 1 AS.

Group:
Book debt secured by pledge:	2013	2012
Debts to credit institutions	2 320 805	1 902 499
Accrued interest	16723	21 283
Total	2 337 528	1923782
Book value of pledged assets:	2013	2012
Cash deposits	304 941	151 626
Accounts receivables	90 588	61 038
Vessels	2883931	2 144 360
Shares/bonds	327439	Ω
Group receivables	1 019 752	958 656
Inventories	O	n
Total	4 626 651	3 315 680
Guarantee liabilities	84	112

Note 14 Bank deposits

	Parent company	Group
Restricted deposits	2013	2012	2013	2012
Employees' tax deduction	4 181	3412	4481	3412
Other restricted deposits	3020	2643	11 997	2643
Total	7 201	6055	16 478	6 0 5 5

Note 15 Other appropriations for liabilities

The company is making allocations for class costs. The allocations have been made based on estimated time for next periodic class survey. Changes in estimates is spread over the remaining period up to the next drydocking.

Intercompany transactions Note 16

The owner of the company is Boa Holding AS, with 100 % of the shares. Ole T Bjørnevik is controlling Boa Holding AS.

Management remunerations are mentioned in note 3, and the outstanding accounts with group companies are mentioned in note 9. Mortages and guarantees are mentioned in note 11.

Operating transactions:	2013	2012
Income
- Mother company	18	18
- Subsidiary	194 616	153 929
- Other group companies	2 2 8 2	2411
Total revenue from operating transactions	196916	156 358
Services
- Subsidiary	6 0 0 7	314
- Other group companies	84
Total expenses from operating transactions	6091	314
Investing transactions:	2013	2012
Shareholder contribution
- Other group companies	4 5 4 7
Non-cash contributions
- Other group companies		31 971
Sale of shares / transfer of receivable
- Other group companies	10 098	549
Total investing transactions	14 645	31 971
Finance transactions:	2013	2012
Interest income
- Mother company	7793	16 622
- Subsidiary	52 194	37 434
- Other group companies	12
Income from guarantee commission
- Subsidiary	10 475	13 645
Total income from finance transactions	70 473	67700
Interest expense
- Subsidiary	68 929	63 323
- Other group company	577	945
Guarantee commission
- Mother company	149	294
Total expenses from finance transactions	69 655	64 561

Service to group companies are priced at the same conditions as for external parts. Services to group companies are management and crew hire. These services are priced at cost + 2,5% to 10%. Financial transactions are priced at the same conditions as for external parts.

Group:

Operating transactions:	2013	2012
Income
- Mother company	18	18
- Other group companies	2 2 8 2	2411
Total revenue from operating transactions	2 3 0 0	2429
Services
- Other group companies	84
Total expenses from operating transactions	84	0
Finance transactions:	2013	2012
Interest income
- Mother company	7793	16 622
- Other group companies	12
Total income from finance transactions	7805	16 622
Interest expense - Mother company
- Other group companies	577	945
Guaratee commission
- Mother company	149
Total expenses from finance transactions	727	945

Service to group companies are priced at the same conditions as for external parts. Services to group companies are management and crew hire. These services are priced at cost + 2,5% to 10%. Financial transactions are priced at the same conditions as for external parts.

$\tilde{C}$

Boa Offshore AS

Cash flow statement

Figures in 1 000 NOK

Parent company				Group
2012	2013	Cash flow from operating activities		2013	2012
-37 649	27 019	Profit before income taxes		71 413	102 034
-30 975	$-39328$	Gain on investments in subsidiaries		0
	-96	Income tax payable		$-19553$	$-23735$
2686	2 5 6 5	Depreciation and write-down		141 288	140 731
	759	Gain on sale of tangible fixed assets		-4 179	$-11281$
$-1$		Gain on sale of financial fixed assets
73 275	8 1 0 1	Write-down of financial fixed assets
		Currency gain/-loss		10 994	$-17547$
$-23$	$-108$	Changes in inventories		712	$-773$
15887	$-5529$	Changes in trade receivables		-88 054	$-35853$
10 0 25	$-1116$	Changes in other receivables		3 1 9 2	$-14268$
-699	$-609$	Changes in trade creditors		-41799	$-30663$
$-39312$	$-166$ 143	Changes in receivables from subsidiaries		$-34754$	$-22999$
$-5648$	7 5 21	Changes in other short-term liabilities		9629	$-36$ 111
$-12434$	$-166965$	Net cash flow from operating activities	A	48889	49 535
		Cash flow from investing activities
18 080	3 170	Sale of tangible fixed assets		321 999	154 772
$-496$	$-1634$	Purchase of tangible fixed assets		$-617414$	$-243410$
450		Sale of financial fixed assets		0	450
$-33186$	$-1930$	Purchase of financial fixed assets		0	200
		Changes in other investments		-175 302	17930
$-15152$	$-394$	Net cash flow from investing activities	в	-470 716	-70 058
		Cash flow from financing activities
75 000	625 000	Raised long term liabilities		1466623	128 500
$-36648$	$-151717$	Paid in long term liabilities		-581 935	$-177861$
$-679$	201	Changes in liabilities		14912	24 642
32 000	30 975	Group contribution		$-12167$	$-111133$
		Paid in share capital		63 000
69 673	504 460	Net cash flow from financing activities	C	950 432	$-35852$
42 087	337 101	Net changes in cash and cash equivalents	$A + B + C$	528 604	-56 375
14 186	56 273	Cash and cash equivalent at 01.01		219 597	275 972
56 273	393 374	Cash and cash equivalents at 31.12		748 201	219 597

Deloitte AS Postboks 5670 Sluppen
NO-7485 Trondheim Norway

Besøksadresse: Dyre Halses gate 1A

Tlf.: +47 73 87 69 00 www.deloitte.no Translation from the original Norwegian version

To the Annual Shareholders' Meeting of Boa Offshore AS

INDEPENDENT AUDITOR'S REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of Boa Offshore AS, which comprise the financial statements of the parent company, showing a profit of NOK 17.350.000,-, and the financial statements of the group, showing a profit of NOK 68.727.000,-. The financial statements of the parent company and the financial statements of the group comprise the balance sheet as at 31.12.13, and the income statement and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

The Board of Directors and the Managing Director's Responsibility for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these financial statements in accordance with the Norwegian accounting act and accounting standards and practices generally accepted in Norway, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinion

In our opinion, the financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Boa Offshore AS and of the group as at 31.12.13, and of

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of members firms, each of which is a legally separate and independent entity. Please see www.delpitte.com/no/omoss.for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Page 2 Independent Auditor's Report to the Annual Shareholders' Meeting of Boa Offshore AS

its financial performance and its cash flows for the year then ended in accordance with the Norwegian accounting act and accounting standards and practices generally accepted in Norway.

Report on Other Legal and Regulatory Requirements

Opinion on the Board of Directors' report

Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.

Opinion on Registration and Documentation

Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.

Trondheim, 28th of February 2014 Deloitte AS

Jon Biørnaas (signed) State Authorised Public Accountant (Norway)

[Translation has been made for information purposes only]