Solstad Offshore ASA — Annual Report 2020

Apr 29, 2021

Annual Report 2020

Propelling global energy markets. Into the future.

The Contents

Le t ter fro t he C E O m	0 4
T he Bo d 's An l Re t ar nu a p or	1 2
E S G Re t p or	2 2
Co Go te rp ora ve rna nc e	3 0
Gr Ac ts ou p co un	3 4
Pa Ac t ts ren co un	8 8

Financial Calendar

Preliminary dates for quarterly reports and ordinary General Meeting in Solstad are:

Ann ual Rep ort 202 0:	Apr il 29 th, 2 021
Res ult 1 arte r 20 21: . qu	May 25t h, 2 021
Ord inar y G ral M eeti ene ng:	May 25t h, 2 021
Res ult 2 arte r 20 21: . qu	Aug ust 24th , 20 21
Res ult 3 arte rly 2 021 . qu :	Nov emb er 2 5th, 202 1
Pre limi ult 2 021 nary res :	Feb y, 2 022 ruar

Our vision

is to be the reliable world leading shipping company, acknowledged by our clients, employees and other stakeholders by delivering high quality services to the global Oil & Gas and Renewable Energy markets.

Frontpage photo: Lukasz Grodz

Annual Report 2020 Letter from the CEO

When summarizing 2020, there are some major events that characterized Solstad and the industry we are a part of:

• Solstad retains its role as a signifi cant player in the offshore market. The successful completion of the restructuring process was secured in October 2020. The result - a restructured balance sheet, strengthened cash position, positive equity and a simplifi ed legal structure – this position the company for the future.
• COVID-19 highlight the importance of resilience. The COVID-19 pandemic challenged us in how we run operations both onshore and offshore. I am pleased that we avoided any major disruptions. The importance of a resilient organization that can handle the unprecedented has never been made clearer. We remain conscious of the strides that our crew must endure and call on authorities to recognize seafarers as key workers and ensure safe crew change logistics.
• Overcapacity made a tough market worse. The pandemic also had us revisit our optimistic market outlook at the beginning of 2020. Decline in demand in combination with the pervasive overcapacity in the market was a challenge throughout the year.
• Renewables continued to grow in signifi cance. We are encouraged that we were able to grow the share of revenue from renewable projects and expect this trend to continue.

Looking into 2021, I am encouraged to see that the activity in our markets is slowly picking up. There is increased tender activity in Brazil, and we are mobilizing vessels for new contracts in Australia. In the UK, we are activating several PSV's from lay-up for new contracts. The entire CSV fl eet, except for one vessel, is now on contracts around the globe. Rate levels have yet to catch up with the uptick in activity levels, but increased demand and vessel utilization is normally followed by improved rates.

To reach the goal of the Paris Agreement to limit global warming to well below 2 degrees, increased energy production from offshore wind is a key. In that regard 2020 was a year marked by positive developments: it was a record-setting year for the offshore wind industry in terms of investments and installed capacity. The activity grows year by year and in Solstad we work actively to increase our market share in this segment. In 2020 about 10% of our revenue came from renewables. Working directly with the windfarm owners and with the contractors, we see many opportunities emerging in the coming years.

Many of our clients are investing in both renewable energy and in oil & gas. We also have this dual focus, as oil & gas will likely continue to be the most important energy sources for a long time still. Market developments point to careful optimism regarding activity levels and vessel demand in the years to come.

No matter the segment or where in the world we operate, it is our responsibility to have a constant focus on improving our sustainability performance. We know this matter for our clients, our wider community and of course, the climate. In Solstad we have worked actively with this for many years and we started our Green Operations program already in 2009. Today, all our vessels working out of Norway have either battery-hybrid solution and/or shore power connection installed.

On the road to zero emissions in 2050, there are important goal posts. In 2030 the goal is a 50% GHG emissions reduction compared to 2008. We are on track by achieving the goal for 2020, 20% reduction compared to 2008. However, to achieve the target of zero emissions by 2050, we have to develop new technology, test alternative fuels, and continuously improve operational effi ciency. This requires collaboration between shipowners, equipment suppliers, clients, authorities and others. Solstad looks forward to playing an active role in the transition.

Entering 2020, we had an optimistic view of the year ahead. The pandemic dramatically altered the outlook. In 2021 we once again see early signs of increased demand. Supported by very few newbuilds and an unlikely return of most the vessels currently in lay-up across the sector, there might be brighter times ahead.

Lars Peder Solstad CEO

Key fi gures

• Successful restructuring of the Company was approved by an extraordinary general meeting on 20 October 2020
• This report is refl ecting the changes to the Company following the closing of the restructuring.
• Equity strengthen with MNOK 8,078 compared to 2019 and booked equity end of year of MNOK 4,243
• Liquidity strengthen with MNOK 1,278 compared to 2019 and year end cash position of MNOK 2,412
• The effects of a lower oil price are that E&P companies are re- scrutinizing their spending plans and postponing or canceling projects resulting in reduced utilization in 2020
• EBITDA adjusted for 2020 was MNOK 1,282 vs MNOK 1,411 in 2019
• The COVID-19 pandemic and the decline in the offshore activity will affect the Company's revenues, utilization and increased cost.

Key Financials

(MN OK)	202 0 01.0 1-31 .12	201 9 01.0 1-31 .12	201 8 01.0 1-31 .12
Rev enu e	5,02 6	5,24 5	4,91 0
EBIT DA A djus ted	1,28 2	1,41 1	1,00 5
EBIT	-2,1 85	-1,1 96	-3,9 87
Profi t be fore Tax	7,25 0	-2,9 71	-5,8 42
Cas h an d eq uiva lent s	2,41 2	1,13 4	1,35 1
Net king ital wor cap	-80 3	-26, 264	-24, 654
Equ ity	4,24 3	-3,8 35	-85 1
Net inte rest bea ring deb t*	-18, 219	-30 ,983	-28, 727
Ord er b ack log	5,20 0	8,20 0	6,80 0

*Including recognized debt relating to IFRS 16 Leases

Financial Summary References and defi nitions 1. Operating result before depreciation and impairment in percentages of total

(MN OK)	202 0	201 9	201 8	201 7	Re f
PRO FIT AND LO SS
Frei ght inco me	4,84 4	5,01 6	4,67 3	3,62 6
Oth ting inc er o pera ome	182	228	237	151
Ope ratin sult befo re d ciat ion and imp airm ent g re epre	1,03 2	1,27 4	422	654
Ope ratin sult g re	-2,2 26	-1,2 37	-3,9 87	694
Net fi na ncia l item s	9,47 7	-1,7 34	-1,8 55	-1,0 24
Ord inar sult befo re ta y re x	7,25 0	-2,9 71	-5,8 42	-33 0
Net lt fo r the resu yea r	7,25 4	-3,1 29	-5,8 88	-34 5
eof Her maj ority 's sh are	7,24 1	-3,1 30	-5,8 58	-314
ANC E S BAL HEE T
Defe red tax et ass	6	-	2	-
Lon g te sset rm a s	22,2 04	27,0 03	28,5 99	32,2 95
Cur rent ets ass	3,86 9	2,83 0	3,01 5	3,62 8
Tota l ass ets	26,0 69	29,8 33	31,6 15	36,1 11
Equ ity	4,24 3	-3,8 35	-85 1	4,96 2
Defe rred tax	-	17	-	-
Lon g-te rm l iabi lities and visio pro ns	17,1 81	4,57 4	4,79 6	29,1 28
Cur rent liab ilitie s	4,64 5	29,0 94	27,6 69	2,02 1
Inte rest bea ring liab ilitie s	20,6 31	32,1 17	29,9 80	28,8 40	8
Ban k ov erdr aft	-	-	-	-
Free and trict ed b ank dep osit res s	2,41 2	1,13 4	1,35 1	1,87 5
Net inte rest -bea ring liab ilitie s	18,2 19	30,9 83	28,6 29	26,9 65	9
PRO FITA BIL ITY
Ope ratin argi g m n	21 %	24 %	9 %	17 %	1
Earn ing quit on e y	3,55 7 %	128 %	-286 %	-8 %	2
LIQ UID ITY
Liqu id a sset s	2,41 2	1,13 4	1,35 1	1,87 5	6
Wor king ital cap	-80 3	-26, 264	-24, 654	1,60 7	7
Adju sted EB ITDA	1,28 2	1,41 1	1,00 5	925	3
Cur rati rent o	0.8	0.1	0.1	1.8	4
CAP ITA L
Tota l ass ets	26,0 69	29,8 83	31,6 51	36,1 11
Equ ity	4,24 3	-3,8 35	-85 1	4,96 2
Equ ity r atio	16 %	-13 %	-3 %	14 %	5

• operating income.
• 1. Result before tax, in percentage of average equity including non-controlling interests
• 1. Operating result before depreciation and impairmen adjusted for Joint Ventures, excess values charter parties from mergers, operating leases and other non-cash related items
• 1. Current assets divided by current liabilities
• 1. Booked equity including non-controlling interests in percentage of total assets.
• 1. Cash and bank deposits (free and restricted)
• 1. Total current assets less total current liabilities (including current interest bearing liabilities)
• 1. Interest bearing liabilities is the total of the accounting lines "Interest bearing liabilities", "Current interest bearing liabilities" and "Leasing obligations"
• 1. Net interest bearing liabilities is interest bearing liabilities (8) less cash and bank deposits (6)

Solstad Offshore ASA has included the above Alternative Performance Measures (APM), which are commonly used in the business, as they are used internally by management to understand the Group's fi nancial performance. Hence, it is deemed that the APM's also will provide useful information to the reader. For further defi nitions, refer to page 86.

The Board of Directors

HARALD ESPEDAL(b. 1972)

Harald Espedal is a graduate from The Norwegian School of Economics (NHH) in economics with additional studies in auditing. Today he is the Chairman of Lyse AS, Sandnes Sparebank, Espedal & CO AS, Deputy Chair in Stavanger Concert Hall, and Board member in Aaspelin Ramm and The Norwegian National Opera & Ballet.

Espedal has a long career within the Finance and Investment industry including as CEO and Investor Director for SKAGEN and Investment Director for Vesta.

SHARES IN SOLSTAD OFFSHORE ASA: 656 687

FRANK O. REITE(b. 1970)

Frank O. Reite first joined Aker in 1995 and was CFO in Aker ASA from August 2015 until August 2019. He came from the position of President & CEO of Akastor and has previously held a variety of executive positions in the Aker group, including overseeing and developing Aker's investments in Converto Capital Fund AS, Havfisk AS, Norway Seafoods AS and Aker Yards ASA. Frank O. Reite has experience from banking and has served as Director in Paine & Partners. Frank O. Reite holds a B.A. in business administration from Handelshøyskolen BI in Oslo.

SHARES IN SOLSTAD OFFSHORE ASA: 0

INGRID KYLSTAD(b. 1985)

Ingrid Kylstad is Sustainability Lead in ZeroLab by Torvald Klaveness. Before joining Klaveness in 2021, Kylstad was COO in Katapult Ocean, a seed stage investor within ocean technology. Prior to that she worked for the Norwegian Shipowners Association and spent several years in Brussels working on policy and regulatory issues.

Kylstad holds an MSc in European Studies from London School of Economics and Political Science and a BSc in Liberal Arts from Maastricht University. She has also completed a management program at the Solvay Brussels School of Economics and Management.

SHARES IN SOLSTAD OFFSHORE ASA: 0

ELLEN SOLSTAD(b. 1974)

Mrs. Solstad holds a bachelor's degree from BI. She has previous work experience from R.G Hagland AS and Solstad Offshore UK Ltd. Mrs. Solstad is currently Chairman of Solstad Family Office and a board member of Wilson ASA, Solvang ASA and Karmsund Interkommunale Havnevesen IKS.

SHARES IN SOLSTAD OFFSHORE ASA: 0

THORHILD WIDVEY (b. 1956) Thorhild Widvey was Minister of culture from 2013 to 2015 and Minister of Petroleum and Energy from 2004 to 2005. Ms Widvey was state secretary in the Norwegian Ministry of Foreign Affairs from 2003 to 2004 and in the Norwegian Ministry of Fisheries from 2002 to 2003. Prior to this she was a Member of Parliament (Stortinget) from 1989 to 1997, representing Høyre (the Conservative Party of Norway). Ms Widvey is chair of the Board in Statkraft AS; and has previous held a number of board positions both in privately and stock listed companies, including e.g. Hitec Vision AS (2006 to 2015); ENI Norway AS (2007 to 2015), Aker Drilling ASA (2005 to 2006), Oslo Havn KF (2012 to 2015) and Aker Philadelphia Shipyard AS (2011 to 2015) and Sjømannskirken (Norwegian Church Abroad) (2006 to 2015). She was a board member of Kværner ASA (2016-2020) and continue as member of the board of Aker Solutions after the merger with Kværner (2020-).

SHARES IN SOLSTAD OFFSHORE ASA: 0

PEDER SORTLAND(b. 1963)

Peder Sortland, currently the CEO North Sea Infrastructure AS (NSI), has almost 30 years' experience from the oil & gas industry. Prior to NSI, Sortland held roles as the CEO of Global Maritime Group, Apply Group and Ross Offshore/Subsea Technology Group and as Regional Vice President for Subsea 7 in Norway. Sortland spent 18 years in Equinor up to Senior Vice President level, predominantly in areas of business development, commercial negotiations and strategy work. Sortland has a business education on MBA level from University of Wyoming and is a Fullbright Scholar.

SHARES IN SOLSTAD OFFSHORE ASA: 0

The Board's Annual Report

Solstad Offshore ASA ("The Company", "The Group" or "Solstad") is a world leading owner and operator of offshore service vessels (OSVs), offering maritime services to the global offshore and renewable energy industry.

The Company owns and operates a fl eet of PSV's (platform supply vessels), AHTS (anchor handling tug support vessels) and CSVs (construction and subsea vessels). The supply vessels (AHTS and PSVs) support oil fi elds in production as well as development and exploration activities. The Group's CSVs fl eet is supporting subsea and renewable energy projects world-wide and is partly working on long-term contracts and partly utilized for seasonal activities. The CSVs on long-term contracts are serving the IMR (Inspection, Maintenance & Repair) and the SURF (Subsea, Umbilicals, Risers & Flowlines) markets or supporting installation and maintenance work related to the renewable energy industry offshore.

The market within the offshore industry continued to be challenging throughout 2020 affected by the general, overcapacity of OSVs. The year started with an optimistic view of an improvement in activity level and rates in our key markets. However, negative impact from the COVID-19 pandemic and the drop in the oil price, did impact the Company's business and market outlook negatively. Despite a growing renewable energy market, the decline in the oil and gas activity gave an overall negative growth in 2020. The Company has been through a comprehensive restructuring, which was completed 20. October 2020. This unables the Company's ongoing operations, while also enabling us to take part in the growing Renewable energy activities. The measures taken throughout the restructuring also allow us to reduce overall vessel-capacity while retaining core assets, expertise and competencies, giving us the fl exibility to adapt as the oil and gas market begins to recover.

The operating revenues decreased by about 4%, from MNOK 5,245 in 2019 to MNOK 5,026 in 2020. Operational cost in 2020 was MNOK 3,994 (MNOK 3,971 in 2019) adjusted for extraordinary restructuring cost of MNOK 109 the reduction of Operational cost amounts to 2%. EBITDA Adjusted for the year was MNOK 1,282 compared to MNOK

1,411 in 2019. The Company made impairments of the book value of the fl eet of MNOK 1,895 (MNOK 1,032 in 2019) for 2020. The result after tax was MNOK 7,254 compared to MNOK -3,129 in 2019, and the booked equity is positive with MNOK 4,243.

1. Vision and values

Solstad's vision is to be a reliable world leading shipping company, acknowledged by our clients, employees and other stakeholders by delivering high quality services to the global oil & gas and renewable energy markets. Our four core values are Safe – Reliable – Competent – Responsible. These values are tools to create a common culture and defi ne how we operate and how we interact with our clients, suppliers, partners and each other.

2. The Company's activities

Solstad activities are primarily directed towards the offshore market for oil & gas and renewable energy. During the year, the operation has been organized in two business areas; Global PSV & AHTS market and Subsea Construction and Renewable Energy worldwide. The Company's headquarter is located in Skudeneshavn, Norway with offi ces in Ålesund, Aberdeen, Rio de Janeiro, Macae, Perth, Singapore, Manila and Odessa.

The Company's operating income in 2020 was divided into 49% (47%) from CSVs and 51% (53%) from AHTS and PSVs. Furthermore, the regional split of the revenues was 45% (45%) from the North Sea, 9% (15%) from South America, 5% (4%) from Africa, 5% (3%) from North and Central America, 18% (18%) from the Mediterranean part of Europe, 13% (9%) from Australia and 5% (6%) from Asia.

Utilization for the operational fl eet of vessels in 2020 (excluding vessels in layup):

Subsea construction and renewable energy

The CSV segment includes 26 vessels, whereof 3 vessels were in layup at year-end 2020. The Solstad CSV fl eet is versatile, and the vessels are designed and equipped to support a wide range of offshore services within oil & gas and renewable energy projects.

During 2020 the fl eet has successfully been involved in projects both within Renewable energy and Oil & gas, such as; geotechnical work, Walk to Work services, grouting, SURF operations, deep-sea mining, cable laying and repair, trenching and burial, ROV support, installation of subsea equipment, survey work, IMR operations, node seismic operations, diving and topside maintenance work.

Geographical areas of operation include Asia, South America, West Africa, North Africa, Europe and Gulf of Mexico. The company has also signed new contracts for the CSV segment in most of the mentioned areas.

The client portfolio for the CSV fl eet includes a mix of energy companies, subsea construction companies, wind turbine manufacturers, cable companies and seismic companies.

The Derrick Lay Barge Norce Endeavour was sold and successfully delivered to new owner, while the Normand Energy and Normand Fortress was

activated from layup to commence new contracts.

AHTS & PSV

The AHTS fl eet includes 38 vessels, whereof 17 vessels are operational. The PSV fl eet includes 51 vessels, with 32 vessels in operation. Strategic regions are Australia, Brazil and North Sea and the majority of the vessels are located in these regions. Most of the operating vessels was on term contracts and during 2020 we signed long term contracts with companies such as Chevron, Petrobras, Equinor and Total.

The size of the fl eet has proven its fl exibility as we have been able to relocate vessels to be awarded favorable contracts such as two big AHTSs participated in Totals successful campaign in South Africa and another AHTS where relocated from Australia to Brazil to commence a long term charter for Petrobras.

Covid-19

COVID-19 has been a challenge for the majority of 2020 as it has affected both the market and the operational aspect of our industry, crew changes have in some cases been impacted signifi cantly due to travel restrictions and in some cases; marine crew on vessels have been affected by the virus which has caused down time and subsequent cost for crew changes and cleaning, the impact has been limited to a minimum as the Company has proactively worked on preventive measures since the early start of the pandemic.

Vessel divestment in 2020

During the year we have divested several vessels, this is mostly related to the smallest and less modern vessels. In the year we have divested 1 Derrick Lay Barge, 3 PSV's and 3 AHTS's in line with the restructuring plan for the company.

3. The Market

Oil & Gas

Last year we expected a gradual return of the oil price however this was heavily affected by emergence of the Covid-19 pandemic. The year started with an oil price of USD 65 per barrel but stated to weaken in fi rst quarter of the year. Along with the spread of the Covid-19 pandemic and the general concerns about the impact of the pandemic the oil price was under preassure. The combination of OPEC and Russia overfl owing the market with oil and the substantially reduced demand for oil and oil products following economic "shutdowns" in many countries due to the outbreak of COVID-19 resulted in a market in serious imbalance. This led to a dramatic fall in oil prices and also signifi cant fall in the indexes on stock markets globally. The global pandemic is assumed to affect the markets going forward.

Operations within Oil & Gas will continue to be the main activity for Solstad for many years to come and with its fl eet of about 85 modern offshore vessels (not included the non-strategic vessels to be divested), the Company are particularly well positioned in its Strategic markets the North Sea, Australia and Brazil.

Renewable Energy

Despite the challenging macroenvironment, the renewable market, and in particular offshore wind, continued its growth in 2020. This are forecasts of strong, long-term growth in demand for renewable energy, driven by increasing social and political pressure to reduce carbon emissions, as well as the continued reduction in the development cost of offshore wind power. Activity in well established markets in Europe such as the UK, Germany and the Netherlands remained high, while activity in newer markets such as Taiwan also increased. During the year oil majors and other large entities invested into offshore-wind projects, giving a more diversifi ed Client base going forward.

Solstad are well positioned to take an active part in the energy transition. Many of the Company's vessels are well suited for work within Offshorewind projects and in 2020, about 10% of the revenue came from this segment.

The EU aim for 60GW offshore wind within 2030 and 360GW within 2050 which estimatesrequired investments of nearly EUR 800bn to meet the 2050 target Note 1) based on EU objectives for EUR 800bn and 300GW between now and 2050 Source: Rystad Energy & European Commission

Annual Report 2020 4. Corporate particulars As of 31.12.2020, the number of shareholders was 7,773 whereof total international shareholding was approximately 25 %. The largest shareholders, Aker Capital AS, DNB Bank ASA and Hemen Holding Ltd, hold 24,96%, 11,14 % and 9,20 %, respectively

5. Corporate Governance and Management

Solstad Offshore ASA's governance and management are based on the Company's vision and values. The Company is listed on the Oslo Stock Exchange and is subject to the Norwegian companies act, accounting act and stock exchange listing and securities trading legislation. Solstad Offshore ASA adheres to the Norwegian Code of Practice for Corporate Governance dated 17th October 2018. More information on corporate governance is given in the separate chapter regarding Corporate Governance in the annual report and on www.solstad.com.

6. Financial position and development - The Group

The fi nancial statements for the Company for 2020 are prepared in accordance with International Financial Reporting Standards "IFRS", as adopted by the European Union.

Operating income in 2020 was MNOK 5,026 compared to MNOK 5,245 in 2020. The decrease compared to 2019 is mainly driven from campaigns fi nalizing earlier than plan.

Operating expenses in 2020 amounted to MNOK 3,994 compared to MNOK 3,971 in 2019. The increase is mainly related to extraordinary cost related to the restructuring of the Company (MNOK 109).

EBITDA Adjusted for the year was MNOK 1,282 compared to MNOK 1,411 in 2019.

Operating result before fi nancial items and tax was MNOK -2,226 compared to MNOK 1,237 in 2019, including impairments of fi xed assets of MNOK 1,895 compared to MNOK 1,032 in 2019. The main reasons for the impairments in 2020 are slower

recovery of the market than expected. A large part of the impairments is related to the oldest and smallest vessels in the fl eet, where the Company is uncertain about these vessels' earnings capacity. The Company has collected independent valuations of vessels and other assets. Value-inuse calculations have been the basis for impairment testing for all vessels with book value exceeding 65% of the average market value set by three reputable, independent brokers. Vessels that the Company have identifi ed as scrapping candidates have been impaired on the basis of scrapping price assumptions, and vessels that are assumed to be sold have been written down to what the Company consider as a realistic sales price.

Group result after tax for 2020 was MNOK 7,254 (MNOK -3,129 in 2019). Net fi nancial items for 2020 was MNOK 9,477 (MNOK -1,734 in 2019), mainly effects from the fi nancial restructuring of the Company. A MNOK 1,300 reduction of Other current liabilities due to lease liabilities and interest relief converted to equity. A net MNOK 9,400 reduction of Debt to credit institutions due to de-recognition of existing debt and recognition of reinstated debt based on nominal values.

As part of the successful restructuring of the Company the majority of the Company's old debt was refinanced. About one third of the previous debt was converted to equity, while two thirds returned as reinstated debt. Derecognition of old debt and recognition of new debt have been handled in accordance with IFRS 9. At initial recognition new debt is measured at fair value, which is lower than nominal value. This results in a gain (financial income, MNOK 1,066) at initial recognition and will be offset by increase in interest expenses over the loan period. The gain will be amortized and presented as interest expenses over the period until final maturity of the loans. Over the loan period, the effect on P&L and equity is zero.

Net earnings per share were NOK 29.13 (NOK -10.73 in 2019).

Operating result before depreciation and impairment amounted to 21% of revenues compared to 24% in 2019. Booked equity per 31.12.2020 was MNOK 4,243 (MNOK -3,835 in 2019) i.e. NOK 56.7 per share (NOK -13.2 per share in 2019).

Interest bearing debt as of 31.12.2020 was MNOK 20,631 (MNOK 32,117 in 2019), whereof MNOK 3,500 (MNOK 27,633 in 2019) is classifi ed as current liabilities. The interest bearing debt has the following currency split, 33% NOK and 67% in USD. Overview and details of amounts, interest rates, maturity and main covenants are included in the account notes 4 and 5.

At year-end, the Group held MNOK 2,412 in cash deposits (MNOK 1,134 at year-end 2019). The cash at year-end includes a MNOK 1.473 Working Capital Facility provided as a part of the restructuring agreement.

7. Restructuring process

The Company fi nalized a successful restructuring approved by an extraordinary general meeting October 20th, 2020. The key highlights form the restructuring;

• Simplifying the Company structure with collapse of the former "silo" structure to secure free fl ow of liquidity
• Maintain the support from the industrial owners like Aker, Hemen and Solstad family
• Approval to dispose the vessels of less strategic importance
• A NOK 0.6 billion reduction of Right-of use assets due to termination of vessels recognized according to IFRS 16.
• A net NOK 9.6 billion reduction of Debt to credit institutions due to de-recognition of existing debt and recognition of reinstated debt based on nominal values.
• An additional NOK 1.1 billion reduction of Debt to credit institutions due to Fair value measurement of recognized debt according to IFRS 9.
• A NOK 0.2 billion reduction of Debt to credit institutions due Fair value measurement of Associated Subscription Rights (Warrants)
• A NOK 1.3 billion reduction of Other current liabilities due to lease liabilities and interest relief converted to equity.
• A NOK 1.5 billion increase in deposits, cash, etc relating to new equity and Working Capital Facility.
• The total effect on equity is NOK 11.6 billion.

8. Health, Environment, safety and quality assurance

The Company operates in accordance with international regulations and standards and is certifi ed to ISM, ISO 14001:2015, ISO 9001:2015, ISO 45001:2018, ISO 50001:2018 , MLC (Maritime Labor Convention) and ISPS (International Ship and Port Facility Security). The crews are trained according to the Company's procedures and approved pursuant to the requirements of the STCW 10 (Seafarers Training, Certifi cation and Watchkeeping Code). Internal audits are carried out on all ships and offi ces on an annual basis.

The common management system (Solstad Internal Management System - SIMS) includes overall objectives and policies for the Company. Further, it describes the various processes and activities to be performed and each employee's responsibilities/ roles related to these.

A vital part in order to understand and improve safety is to focus on preventative measures to avoid injuries and operational accidents or interruptions. In 2020, approximately 31,710 HSE reports were recorded and processed at different levels in the organization. Conclusions from analysis are used as basis for further preventative measures to avoid future accidents.

Overall, the Company had three work-related lost-time injuries that provide an TRCF (Total Recordable Case Frequency, recordable injuries per 1 million working hours) of 1.26 for 2020 (1.64 in 2019). The goal of no incidents is maintained for 2021, and the Company focuses on the evaluation, facilitation, planning and preventative work to avoid all kinds of personnel-related injuries and incidents with adverse effect on the environment.

In 2019 th Company implemented the safety behavior and culture program "Solstad Incident Free Operations" (SIFO). This program was developed over a period of 4 years by the DLB Norce Endeavour operations team together with the client and other partners. Over the period that the program was implemented the number of small and major incidents was considerably reduced by involving the crew and increasing their focus on safety in their daily work. A variation of the program has now been implemented throughout the Solstad fl eet. SIFO is a long-term program and

Annual Report 2020 it will realistically take 2-3 years to get properly implemented. The fl eet had 349 liters of emissions of various types of oil products to sea in 2020. The Company has a program for sorting and reporting of all waste, and the program covers both ship and onshore organizations.

Since 2009, Solstad Green Operations has been the Company's environmental program that aims to save the environment from CO2 emissions through reduced fuel consumption. About 18,700 Green Operations were performed in 2019 alone, resulting in 38,400 tons of fuel saved which prevented release of 122,000 tons of CO2 emissions into the atmosphere.

The Company's Corporate Social Responsibility report (CSR) is available on www.solstad.com.

The Group administration consists of 181 men (56%) and 141 women (44%). Out of a total of 2,961 marine crew at year-end, only 147 were women.

The Group has focus on diversity and strives to create equal opportunities for all employees, regardless of their ethnic background, nationality, descent, colour, language, religion, lifestyle or gender. The Group will select and appoint the most suitable person for a position based on their attitude, skills and qualifi cations.

The Company takes part in recruitment and training of cadets/trainees and participates in measures towards encouraging young people to involve in maritime education.

10. Market outlook

18

With the oil price back to USD 60 level, Oil & Gas companies have slowly started to increase their activity again after they put the brakes on last year. This might give an increased activity effect already in 2021. At least in some areas, like the North Sea. The offshore-wind operators and contractors continue to increase their activity, which have a positive effect on demand for part of the CSV fl eet.

In total, it is expected an increased demand for vessels, but still with a fi erce competition between a large number of Owners. Resulting in rate levels below or close to breakeven rates.

Globally, a large number of vessels are still in layup. Very few of them are candidates for contracts with the recognized operators due to age, fuel consumption and activation cost. Solstad will sell around 35 of its vessels, in mentioned categories, to recycling and/or markets whit limited access for International owners.

It is expected that very few new vessels will enter the market in coming years and in combination with an increased activity level, this could give sustainable rate levels at one point.

11. Risk

The Company is exposed to market, commercial, operational and financial risks that affect the assets, liabilities, available liquidity and future cash flows. Given the difficult market situation within the offshore industry the last years, the Company considers that these risks have increased compared to previous years. There is established a risk mitigation framework based on identifying, assessing and managing risks. The Board monitors the overall risk factors for the Group.

Market and operational risks are changes in demand for and prices of the services provided by the Company, and potential adverse effects of the provision of such services. The market has further deteriorated with the impact of COVID-19 virus and affecting oil prices in all regions where the Group operates and has negatively impacted the earnings and utilisation of the Group's fleet. A continuing postponement of a recovery of the market will impact future earnings and utilisation of the Group's fleet going forward. Also, the counter-party risk has increased, and contracts may be cancelled or not renewed if a sustained challenging market situation continues. The Company has implemented a wide range of measures to minimize the risk to people and operations from the COVID-19 pandemic, including social distancing, travel restrictions, excessive testing of marine crew and working from home. The company has so far avoided significant disruption COVID-19 related to its operations and will continue to enforce proper measures to minimize the risk level. The Company continually evaluates measures to reduce risk exposure as mentioned above.

The global economy remains impacted by the unprecedented health and economic crisis following the outbreak of the Covid-19 pandemic. The Company continues to monitor the potential operational, market and fi nancial impacts to the Group including the mitigating impacts of the vaccination roll-out in 2021.

The Company is exposed to interest rate and currency risk, primarily through fi nancing and contracts. interest rate risk is to a certain extent mitigated by hedging contracts and currency risk is reduced by having debt in the same currency as charter agreements.

As advised in our 4Q 2020 report there is a dispute with Saipem om payment of the termination fee amounting to USD 44,3 million related to the early termination of the time charter for "Normand Maximus". As a consequence of the early termination, Saipem were to pay a termination fee in the amount of USD 44,3 million in December 2020. Saipem has forwarded a counterclaim, and the termination fee due from Saipem to Normand Maximus Operations Limited has not been paid to date. Normand Maximus Operations Limited is pursuing the full claim for the termination fee legally. The termination fee has not been recognized in 2020. Normand Maximus Limited as bareboat charterer of the vessel, has since the termination of the time charter with Saipem, been in dialogue with Maximus Limited as owner of "Normand Maximus" and Maximus Limited's financiers, to find a long term solution for the lease financing of Normand Maximus following Saipem's early termination of the time charter, and solve liquidity issues resulting from the non-payment of the termination fee. On 3 March 2021, the fi nanciers of Maximus Limited enforced their share pledge over the shares in Maximus Limited, and the shares are thus now controlled by a syndicate of banks. The discussions with Maximus Limited for a solution have been ongoing for some time and are continuing notwithstanding the change of ownership to the shares in Maximus Limited. The Company believes there are good prospects that the discussions will lead to an agreement. The lease financing has customary default provisions for lease financings. These i.a entitles Maximus Limited to require Normand Maximus Limited to buy the vessel and/ or exercise other rights and remedies under the lease financing if a solution is not found. Absent a solution, there is a risk in the current markets that Normand Maximus Limited as bareboat charterer of the Normand Maximus will not be able to finance such a purchase or other claims from Maximus Limited. As all obligations of Normand Maximus

Limited are guaranteed by Solstad Offshore ASA, this could have a material adverse effect on Solstad Offshore ASA's financial situation

12. Finance - Parent company

The result for Solstad Offshore ASA in 2020 was MNOK 822 (MNOK -744 in 2019). Net fi nancial result of MNOK 917 (MNOK -720 in 2019) is mainly effects from the fi nancial restructuring of the Company. Operating result was of MNOK -95 (MNOK -24 in 2019).

The Company's assets are mainly related to the value of shares in subsidiaries. Booked equity at year end was MNOK 328 (MNOK -744 in 2019). The debt at the same date was MNOK 2 (MNOK 1,371 in 2019), of which MNOK 0 in bond loan (MNOK 1,142 in 2019).

13. Going concern

The Consolidated Financial Statements have been prepared on the going concern basis. After the completion of the fi nancial restructuring, the Company and the Group's fi nancial situation have improved resulting in positive equity and strengthened liquidity. Following the completion of the restructuring, the Company simplifi ed its legal structure through a collapse of the old "silo" structure and thereby secured free fl oat of liquidity in the restructured Group. The borrowing facilities in the restructured group has been combined into one new fl eet loan, with repayment terms that refl ects the current market conditions. In addition, the Company has strengthened its liquidity by MNOK 1,500 in a new working capital facility. The Company is in a process to reduce the vessels of less strategic importance, this will reduce its cost base and increase the focus towards the key assets. All fi nancial leased vessels in the restructured group have been redelivered and interest-bearing debt has been reduced with MNOK 9,600. Equity has in total been strengthen with MNOK 11,600 at year end 2020.

Given the prevailing market conditions, the covenant with greatest associated uncertainty over the prevailing next 12 month period, is the collateral vessels fair market values tested against the underlying vessel debt. Remedies are however

-Contents

Annual Report 2020 available for borrowers through partial down payment of relevant loan trances. Both the Group's working capital- and liquidity status was stabilized during the restructuring of 2020. The going concern assumption is based on the

level of cash and cash equivalents at year end, terms and conditions of the banking and borrowing facilities, the forecasted cash fl ow prognosis for the Group and the backlog position at 31 December 2020.

Based on the information given on "Normand Maximus" related to the bareboat charter, the Board of Directors needs to point out that there is uncertainty related to the going concern assumption of Solstad Offshore ASA. For further information, please see Note 1, Note 2, Note 5 and

the prospectus in relation with capital increase.

14. Subsequent events

The Company has sold the PSVs Sea Angler, Sea Bass, Sea Turbot and Sea Witch and the AHTS Lady Astrid and Lady Caroline. Delivery of the vessels to the new owner took place in 1Q 2021.

15. Profi t & loss allocation

The Board proposed that the following distribution is made:Transfer to other equity NOK 821,992,764 Net applie/transferred NOK 821,992,764

Affi rmation by the Board and Managing Director

We hereby affi rm that, to the best of understanding, the Annual Accounts for the period 1st January to 31st December 2020 have been prepared in accordance with current accounting standards; and that the information in the accounts represents a true and fair view of the Company's and the consolidated group's assets, liabilities, fi nancial position and overall performance. We further affi rm that the Annual Report provides a true and fair view of the development, earnings and standing of the Company and the consolidated group; outlining the most important risk factors and uncertainties facing the group.

Board of Director in Solstad Offshore ASASkudeneshavn April 29, 2021

Harald Espedal Chairman

Frank O. ReiteDirector

Peder Sortland Director

Thorhild Widvey Director

Ingrid Kylstad

Director

Ellen Solstad Director

Lars Peder Solstad CEO

ESG Report

Solstad assesses environmental, social and corporate governance issues in its business decisions, operation and fi nancial reporting.

Solstad's governance and management systems are based on the Company's vision and values. The Company is listed on the Oslo Stock Exchange part of our day to day operations. The company acknowledges that sustainability is

and comply in accordance with the Norwegian Accounting Act, International Financial Reporting Standards (IFRS) and interpretations by the International Accounting Standards Board (IASB) which is approved by the European Union (EU). The Company adheres to the Norwegian Code of Practice for Corporate Governance dated 17th October 2018. More information on corporate governance is given in the separate chapter regarding Corporate Governance in the annual

Sustainable Operations at Solstad is about integrating sustainability into our business activities and product lines within our core areas of operations. Together with employees, clients, suppliers and partners Solstad aims to adapt to a sustainable future. The company is constantly facing global challenges, in relation to our business it means that we need to work with environmental, social and governance (ESG) issues in relevant fi elds. We also engage with our stakeholders to promote and suggest sustainability initiatives as

report and on www.solstad.com.

a vital prerequisite for Solstad to be a profi table and responsible player in the industry and society at large. With an aim to continue increasing transparency, the company therefore issues and publishes environmental and other related reports according to recognized international sustainability guidelines and standards.

Solstad participates actively in various working groups to identify, promote, fi nance and develop/ utilize technologies that enables the shipping business to become more sustainable.

Materality assessment

The company has assessed and identifi ed environmental, social and governance issues and matters that could affect the company's business, and/or stakeholders (Materiality assessment). This is published on the company's website. The UN Sustainable Development Goals (SDG) is now actively used by the company to align Solstad's commitments to these principles throughout its

operations. The company has evaluated and selected 3 main SDGs that will be important for the company to follow up: SDG number 8 – Decent Work and Economic Growth, number 13 – Climate Action and number 14 – Life below Water. Solstad Solstad is from 2021 also publishing it's ESG leading indicators openly. We believe in ESG transparency and openness around these issues.

Environmental

The high carbon intensity of shipping applies also to Solstad. The CO2 climate gas emissions for 2020 was 691,511 tons or about 8002 tons operating vessel on average (down from 8007 tons per operatin vessel in 2019).

The long-term goal for Solstad is to reduce emission to zero. We aim to reach the goal by 2050. By 2030 our goal is a 50% reduction compared to 2008.

From 2008 to 2019 a 17% reduction has been achieved through the operational measures (Solstad Green Operations – see below). The goal for 2020 was a further 3% reduction which was achieved. Every year going forward we plan to reduce our emissions through a range of measures. One of these is to install battery-hybrid systems and electrical shore power systems. Solstad is a leader on this area with soon 8 battery systems in place. Several new installations are planned for.

Solstad also recognize that the transformation to a zero emission future can not be achieved alone. Membership in the cluster associations 'MaritimeCleantech' and 'Getting To Zero Coalition'.

8 VESSELS

INSTALLED BATTERY-HYBRID SYSTEM

Solstad Green Operations®

Since 2009, Solstad Green Operations (SGO) has been the Company's environmental program that aims to reduce CO2 emissions through reduced fuel consumption in the fl eet. About 18,714 Green Operations were performed in 2020 alone, resulting in 38,384 tons of fuel saved which prevented release of 122,000 tons of CO2 emissions into the atmosphere. This is a little better than 2019 where we had about 18.000 SGO's and 34,500 tons of fuel saved (108,000 tons of CO2 avoided).

The SGO program's effi ciency has been certifi ed by DNV and a ISO 50001 Energy Management certifi cation has been achieved in 2020. This was a major milestone for Solstad's effi ciency program. Solstad is one of a few shipping companies in the world to be certifi ed according to this standard.

Energy management certifi ed

Solstad is one of very few shipping companies in the world that is ISO50001 Energy Management certifi ed. This shows our commitment to managing our energy use and thereby reducing emissions and cost. Through the program Solstad Green Operations® we have reduced fl eet fuel consumption and emission of about 20% over the last 12 years.

From the fl eet we had a total of 349 litres of various oil spills to sea in 2020 which is a little higher than previous year (113 litres in 2019). Even with an increasing fl eet size there has been an overall decreasing trend in oils pills over the last 10 years due to targeted projects related to technical maintenance. Our goal is always zero spill to sea.

The Company has a program for sorting and reporting of all waste, and the program covers both ship and onshore organizations. Total amount of waste produced during the year was 2.837 tons.

Social

The working environment, onshore as well as onboard the ships, is considered satisfactory. Sick leave onshore was 1.6% in 2020, down from 2.0% in 2019 (all locations).

The Group administration consists of 181 men (56%) and 141 women (44%). Out of a total of 2,961 marine crew at year-end, only 147 were women. This has now put into focus and an internal team consisting of female leaders has now started to work on promoting 'Women at Sea'.

The Group has focus on diversity and strives to create equal opportunities for all employees, regardless of their ethnic background, nationality, descent, colour, language, religion, lifestyle or gender. The Group will select and appoint the most suitable person for a position based on their competence, attitude, skills and qualifi cations.

The Company takes part in recruitment and training of cadets/trainees and participates in measures towards encouraging young people to involve in maritime education. As SDG number 8 - Decent Work and Economic Growth has become one of our top priorities we need to explore new economic growth models for sustainable development and decent work.

Overall, the Company had three work-related lost-time incidents (LTI) in 2020 and the Total Recordable Frequency Factor (TRCF - recordable injuries per 1 million working hours) was 1.28. It

should be noted that this result is the lowest number in the company's recorded HSE history. The goal to have no lost-time injuries is maintained for 2021, and the Company focuses on the evaluation,

facilitation, planning and preventative work to avoid all kinds of personnel-related injuries and incidents with adverse effect on the environment.

Solstad Incident Free Operations

The safety behaviour and culture program Solstad Incident Free Operations (SIFO) introduced in 2019 is fully implemented and in use throughout the company's operations. This program is fundamental to our operations.

Governance

The Company operates in accordance with international regulations and standards and is certifi ed to ISM (International Safety Management code), ISO 14001:2015, ISO 9001:2015, ISO 45001:2018, ISO 50001:2018, MLC (Maritime Labour Convention) and ISPS (International Ship and Port Facility Security).

The crews are trained according to the Company's procedures and approved pursuant to the requirements of the STCW 10 (Seafarers Training, Certifi cation and Watchkeeping Code). Over the past year a range of internal digital courses and self-training programmes has been rolled out to all relevant employees. Internal audits are carried out on all ships and offi ces on an annual basis. The company had a total of 672 audits in 2020 (all offi ces and vessels / internal and external audits) with just minor fi ndings.

The common Solstad management system (SIMS - Solstad Integrated Management System) includes overall objectives and policies for the Company. Further, it describes the various processes and activities to be performed and each employee's responsibilities/roles related to these.

A vital part in order to understand and improve safety is to focus on preventative measures to avoid injuries and operational accidents or interruptions. In 2020, 31,710 HSE reports were recorded and processed at different levels in the organization. Conclusions from analysis are used as basis for further preventative measures to avoid future accidents.

In 2020 the company implemented a 'Whistleblower' arrangement to ensure all employees can be heard if needed. This arrangement is linked to the top management and is intended to assist individuals who believe they have discovered malpractice or impropriety. In addition, cases linked to bribery, corruption and fraud is also handled through same channels. In 2020 the company received one report which was followed up and had no signifi cant effect on the company. Reported cases will be included as part of ESG leading indicators according to recognized standards going forward.

Ann ual rt repo
	Un it	Ta t rge	20 20	20 19	20 18	GR I *
En vir nt on me
CO e 1 (ow ctiv ity ) 2, s cop n a	tCO 2	-3 % *	696 888 ,	801 ,57 8	714 ,7 22	305 -1
CO ( ) ** e 2 Pu rch d e lec tric ity 2, s cop ase	tCO 2	-	203	214	156	305 -2
m S e 1 d 2 Ene tion rgy co nsu mp su cop an	MW h	-	2, 721 186 ,	3, 005 373 ,	2,5 76, 754	302 -1
NO mis sio x e n	tNO x	-3 %	9, 601	11, 329	10, 089	305 -7
SO mis sio x e n	tSO x	-3 %	457	532	512	305 -7
Nu mb f O il s ills ero p	No	0	12	14	13	30 6-3
Oil ill li tres sp	Litr es	0	349	113	679	306 -3
Fin for lian of e nvi nta l re lati es non e-c om p ce ron me gu ons	No	0	0	0	0	419 -1
Sin le u las tic ter bot tles bo ard ls g se p wa on ou r ve sse	No	0	145 200 ,	184 450 ,	N/A	30 5-1
So cia l
Pe t em loy rma nen p ees	%	-	97 %	96 %	96 %	40 1-2
Ge nde r di sity a ( Tar t 10 % f ale w b 202 5) ver se ge em cre y	%	6 %	5 %	-	-	102 -8
Ge nde r di sity offi ent lev el ( Tar t 35 % fem ale ver ce ma nag em ge 25) by 20 ma nag ers	%	25 %	23 %	21 %	15 %	102 -8
Re ten tion rat ffsh e o ore cre w	%	90 %	97 %	96 %	97 %	40 1-1
Re ten tion rat nsh loy e o ore em p ees	%	90 %	96 %	90 %	93 %	40 1-1
CF ( 12- le C ) *** TR nth lling - T ota l Re dab Fr mo s ro cor ase equ enc y	No	1.1 0	1.2 8	1.6 5	1.8 6	403 -9
Fra ctio f al l em loy cei ved ina bilit inin ** sta tra n o p ees re su y g	%	100 %	43 %	-	-	404 -2
Go ver nan ce
Ge nde r di sity Bo ard of Dir ect ver ors	%	50 %	50 %	40 %	50 %	102
Inc ide nts late d to Co tion d B ribe re rru p an ry	No	0	0	0	0	205 -3
Sh of Rev e fr Re abl nt ( oil d g as) are enu om new e e ner gy reg me non an	%	-	% 10	5 %	7 %	20 1-2

* increased fl eet fuel effi ciency

** Offi ce locations 2020 (10) - 2019 (11) - 2018 (13)

*** per 1,000,000 hour

**** Training started 21.12.2020

***** GRI (Global Reporting Initiative as guidance only

SDG: UN Sustainable Development Goals

Annual Report 2020 Corporate governance

Corporate governance in Solstad Offshore ASA is based on the Norwegian Code of Practice for Corporate Governance of 17th October 2018 (the Code). The Company is listed on the Oslo Stock Exchange (OSE) and is subject to Norwegian corporate, accounting, exchange listing and securities trading legislation.

Implementation and reporting

It is of importance to the Company to regulate the division or roles between Shareholders, the Board of Directors and the Executive Management. Hence, the Company has adhered to the principles of the Code.

Business

Solstad Offshore ASA´s objective as set out in the Articles of Association, is to conduct integrated shipping operations with advanced vessels in its market segments, utilizing owned or chartered vessels. The operations are primarily the provision of maritime services to the oil and gas and renewable energy. The Company´s Articles are available online at www.solstad.com. More details about the Company´s objective and strategy are set out in the Annual Report.

Solstad Offshore ASA maintains its guidelines for ethical conduct and social responsibility aimed at securing values and corporate culture in the organization, in order to provide a basis for value creation, safe and green operations, workplace satisfaction, positive reputation and innovation.

Equity and dividends

At year-end 2020, the Company's equity amounted to MNOK 4,247. In a longer perspective, the Company aims is to give the Shareholders an attractive return on invested capital, by increased share price and dividends.

Due to the current market situation and certain restrictions of the fi nancial agreements with the Company´s lenders, it is not expected that the Company will pay dividends for 2020 or for the coming years.

On the General Meeting, held on June 26th 2020, no authorization was given to the Board of Directors in respect of increasing of the share capital.

Equal treatment of shareholders and transations with close associates

Equal treatment of shareholders and transactions with close associates

Solstad Offshore ASA has one class of shares. All shares have equal rights.

An authorization to the Board of Directors to acquire treasury shares is normally contingent to take place at Oslo Stock Exchange.

During 2020 there were no transactions between the Company and its Shareholders, the Board of Directors or the Executive Management and their close associates, except as reported in relevant notes of the fi nancial statements.

Freely tradable shares

The shares in Solstad Offshore ASA are freely tradable. The Articles of Association set no limitations on transactions.

General meeting and nomination committee

The Annual General Meeting is held in the month of May or June. According to the Articles of Association, the notice and related documents are posted on the Company's website no later than three weeks in advance. The Company endeavors to ensure that the documents contain all necessary information to enable Shareholders to vote on all matters. The Chairman of the Board takes part in the General Meeting, as does the Company Auditor. The Board aims for as many Shareholders as possible to attend. Shareholders who cannot attend, may be represented by proxy and the procedures for voting by proxy are described in the notice. The proxy authorization form is designed to allow Shareholders to vote on individual items and individual candidates for election/re-election. The agenda is determined by the Board of Directors, according to the article 6 of the Articles of Association. The Chairman of the Board opens the General Meeting and a chairperson for the meeting is elected. The minutes of the General Meeting are published as a Stock Exchange notice, as well as on the Company's website.

Nomination committee

The Articles of Association states that the Company shall have a Nomination Committee of 2-3 members, the fi nal number to be decided by the General Meeting. The Nomination Committee shall propose candidates to the Board of Directors and to the nomination committee, and also propose remuneration of the Board of Directors and members of the nomination committee. The General Meeting will elect the members of the nomination committee, including the chairperson, and set their remuneration. The guidelines for the nomination committee and their contact details are published on the Company website.

Board of Directors, composition and independence

The nomination committee's primary goal is to propose candidates who will ensure that the Company has a Board of Directors with the most relevant expertise, capacity and diversity. The Board should be composed of Directors to act independently of special interests, and the majority of the Directors should be independent of any major Shareholder. The composition should also refl ect gender equality, with at least 40% of the Directors being female. Directors are elected for a two-year term of offi ce.

Work of the Board of Directors

Annually there are six to eight scheduled Board Meetings, augmented by telephone conferences as needed. Instructions for the Board and Executive Management are in place. Procedures for internal control is exercised according to the adopted guidelines and reviewed with the auditor and Board on an annual basis. The Board receives a monthly fi nancial report. The Board elects one of the directors to chair the meeting in the absence of the Chairman. An audit committee consists of three independent directors, elected by the Board of Directors.

The Company maintains rules to ensure that the Board of Directors and Executive Management

Annual Report 2020 report to the Board in case of any direct or indirect material interest in any contract signed by the Company.

Risk Management and internal control

The Board seeks through its work to ensure that the Company maintains good standards of internal control and appropriate systems of risk management, in light of the scope and nature of the Company's business, and the provisions that govern the business. The Company has established a system of operation and administration that relies on work procedures and job descriptions. The system also covers social responsibility and ethical guidelines. There is a commitment to quality assurance. The Board receives information about operational, administrative and fi nancial developments in monthly reports. Each year the Board reviews corporate strategy and the business plan, including analysis of the Company's risk exposure. Exposure is monitored monthly through the reports from the Administration.

Remuneration of Directors

The remuneration of the Board of Directors is in line with comparable Companies in the industry. The amounts involved are reported in the fi nancial statements. The Directors do not have share options. In cases where members of the Board should undertake signifi cant additional work for the Company all Directors are informed, fees to be approved by the Board and reported in the fi nancial statements. The fees are reported in the fi nancial statements. All transactions between Directors or employees (or companies that they represent or are associated with) on the one hand, and the Company on the other, are implemented in accordance with the arm's length doctrine.

Apart from the details included in the notes regarding remuneration of the Directors, companies that they represent or are associated with, the Company has no other obligations. Remuneration of the Directors is considered to refl ect market conditions.

Remuneration to Executive Management

The remuneration of the Managing Director is determined by the Board. Other elements of the remuneration are reported in the notes to the fi nancial statements. The guidelines for remuneration of the Executive Management are presented to the General Meeting.

Information and communication

The Company has a policy of treating all its shareholders and other market participants equally, and communicates relevant information on signifi cant developments of the Company´s business and standing in a timely manner.

Presentation of the fi nancial reports is made according to the fi nancial calendar posted on the Company website, and fi led as a notice with the OSE. Furthermore, frequent briefi ngs and discussions are held with analysts and investors. Information is disclosed through stock exchange notices, discussions with analysts, and general briefi ngs for investors, as well as special briefi ngs for stockbrokers and investors. The Company adheres to the recommendations of the OSE regarding Investor Relations reporting.

Take-overs

The shares in the Company are freely tradable, and the Articles of Association does not hold specifi c defense mechanisms against take-over situations. In a potential bid-situation, the Board will work to inform Shareholders and allow time to decide on the offer. Furthermore, the Board will issue a statement to the Shareholders with an assessment of the bid and a recommendation of whether to accept it or not.

Auditor

The Auditor of the Company is elected at the Annual General Meeting, which also approves its remuneration. Each year the Auditor sets out the highlights of the audit plan to the audit committee. The auditor also presents a report about his views and observations regarding the accounting principles, risk areas, internal control routines, and other aspects. Furthermore, the Auditor will each year deliver a written report to affi rm his compliance with certain impartiality and objectivity standards. The Auditor attends Board Meetings to discuss the fi nancial statements for the year and the Annual General Meeting.

Important consultancy work performed by the Auditor requires prior approval by the Directors. The remuneration to the auditor is reported in the fi nancial statements. Once a year, the Board of Directors meets with the Auditor for discussions without the Managing Director or other representatives from the administration present.

Consolidated statement of comprehensive income

Group accounts (NOK 1,000)

	202 0 01.0 1-31 .12	201 9 01.0 1-31 .12	No te
Frei ght inco me	4,84 4,02 7	5,01 6,38 7	3,27
Oth ting inc er o pera ome	181, 603	228 ,495	3
Tota l Op erat ing inco me	5,02 5,63 0	5,24 4,88 1
Pers el co sts onn	-2,0 25,2 50	-2,0 96,1 65	9,18
Adm inist rativ e ex pen ses	-476 ,829	-417 ,962
Oth ting er o pera exp ens es	-1,4 91,6 71	-1,4 56,9 16	9
Tota l Op erat ing exp ens es	-3,9 93,7 50	-3,9 71,0 43
Ope rati lt be fore dep reci atio d im pair t ng r esu n an men	1,03 1,88 0	1,27 3,83 8
Dep reci atio n	-1,0 76,1 14	-1,1 85,5 95	6
Dep reci atio pita lised iodic inte n ca per ma nan ce	-282 ,231	-260 ,921	6
Imp airm ent fi xe d as sets	-1,8 95,0 40	-1,0 31,9 02	6
Net gain /los sal e of ets s on ass	-28, 896	12,7 84	2,6
Inco from inv estm ent in jo int v entu me res	23,9 75	-44 ,787	12
Ope rati lt ng r esu	-2,2 26,4 27	-1,2 36,5 85
Inco from inv estm ents in a ciat ed c anie me sso omp s	41,4 23	40,7 66	12
Inte rest inc ome	6,37 3	14,8 27
Oth er fi cial inco nan me	12,3 45,7 24	56,8 09
Inte rest cha rges	-1,4 37,6 19	-1,6 44,5 10
Oth er fi cial cost nan s	-1,4 79,1 25	-202 ,052
Net fi na ncia l ite ms	9,47 6,77 6	-1,7 34,1 60	8
Ord inar sult bef taxe y re ore s	7,25 0,34 9	-2,9 70,7 45
Tax ordi ult on nary res	3,51 7	-158 ,549	17
Net lt resu	7,25 3,86 6	-3,1 29,2 94
Com preh ive i ens nco me:
Tran slat ion adju stm ents fore ign curr enc y	580 ,397	54,0 87
Com hen sive inc tha t ma y be clas sifi e d in sub t pe riod pre ome cre seq uen s	580 ,397	54,0 87
Actu rial gain /(lo ss)	-5,9 21	42,1 65	18
Com hen sive inc tha t ma t be lass ifi ed in s ubs ent iods pre ome y no rec equ per	-5,9 21	42,1 65
Com hen cive inc pre ome	7,82 8,34 2	-3,0 33,0 42
Net lt at trib utab le to resu :
Non troll ing inte rest -con s	13,1 22	264
Equ ity h olde f the ent rs o par	7,24 0,74 3	-3,1 29,5 58
Com hen sive inc att ribu tab le to pre ome :
Non troll ing inte rest -con s	13,1 22	264
Equ ity h olde f the ent rs o par	7,81 5,21 9	-3,0 33,3 06
Earn ings sha re (N OK) per	29.1 3	-10. 73	15

Consolidated statement of fi nancial position

(NOK 1,000)

	202 0 31.1 2	201 9 31.1 2	No te
AS SE TS
LON G-T ERM AS SET S:
NGI ASS ETS INTA BLE FIX ED :
Defe rred tax ets ass	5,58 1	-	17
Con trac ts	7,49 9	69,9 61	27
TOT AL INTA GIB LE F IXE D A SSE TS	13,0 79	69,9 61
LON G-T ERM FIX ED ASS ETS :
Ves sels and bui ld co ntra cts new	18,7 16,1 31	21,8 24,3 14	2,6
Righ t-of ets use -ass	2,45 7,32 2	3,77 1,90 6	7,28
Cap italiz ed p erio dic mai nten anc e	760 ,223	666 ,179	6
Oth le fi x er ta ngib ed a sset s	33,2 65	111 ,144	6
TOT AL LON G-T ERM FIX ED A SSE TS	21,9 66,9 41	26,3 73,5 44
NCI ASS ETS FINA AL :
Inve stm ent in jo int v entu res	109 ,904	92,5 59	12
Loa ns to ocia ted ies a nd j oint ture ass com pan ven s	45,9 61	47,1 61	16
Inve stm ents in a ciat ed c anie sso omp s	1,12 8	293 ,846	12
Inve stm ents in s hare s	2,99 1	5,76 9	12
Oth er lo ng-t eiva bles erm rec	60,1 95	120 ,223	22
TOT AL FINA NCI AL ASS ETS	220 ,179	559 ,558
TOT AL LON G-T ERM AS SET S	22,2 00,1 99	27,0 03,0 62
CUR REN T A SSE TS:
Inve ntor y	165 ,330	177 ,226	24
Rec eiva bles :
Acc t rec eiva bles oun	839 ,628	889 ,032	4,23
Oth hort -ter ceiv able er s m re s	414 ,011	621 ,546	23
Tota l rec eiva bles	1,25 3,63 9	1,51 0,57 7
Inve stm ents :
Mar ket bas ed s hare s	11,1 00	8,21 5	12
Ban k de its a nd c ash ivale nts pos equ	2,41 1,90 5	1,13 4,02 8	19
TOT CUR SSE TS AL REN T A	3,84 1,97 4	2,83 0,04 6
Ass ets held for sal e	26,8 03	-	6
TO SS S TA L A ET	26,0 68,9 76	29,8 33,1 08

Consolidated statement of fi nancial position

(NOK 1,000)

	202 0 31.1 2	201 9 31.1 2	No te
EQ UIT Y & LIA BIL ITIE S:
EQU ITY :
PAI D-IN EQ UIT Y:
Sha al (7 1,-) apit 4,87 2,68 2 a re c	74,8 73	583 ,065	14
Trea sha sury res	-	-281	14
Oth aid- in ca pita l er p	-	321 ,648
Sha ium re p rem	175 ,572	3,69 8,35 0
TOT AL PAI D-IN EQ UIT Y	250 ,445	4,60 2,78 2
RET AIN ED EAR NIN GS:
Oth quit er e y	3,97 6,81 6	-8,4 40,8 94
TOT AL RET AIN ED EQU ITY	3,97 6,81 6	-8,4 40,8 94
Non troll ing inte rest -con s	15,8 14	2,69 1
Tota l Eq uity	4,24 3,07 5	-3,8 35,4 20
LIA BIL ITIE S LON G-T ERM PR OVI SIO NS:
Defe rred tax	-	16,6 37	17
Defe rred inc ome	-	34,7 10	27
Pen sion obl igat ions	25,0 15	26,5 91	18
Oth er fi cial liab ilitie nan s	12,8 69	-	4
TOT AL LON G-T ERM PR OVI SIO NS	37,8 85	77,9 39
OTH ER LON G-T ERM LIA BIL ITIE S:
Oth er lo ng-t liab ilitie erm s	12,3 72	12,1 72	4,5
Inte bea ring liab ilitie rest s	16,8 75,3 60	685 ,031	4,5
Lea sing obl igat ions	255 ,288	3,79 9,29 8	4,5
TOT AL LON G-T ERM LIA BIL ITIE S	17,1 43,0 21	4,49 6,50 1
CUR REN T L IAB ILIT IES
Acc ts p ble oun aya	532 ,405	339 ,227	4
Tax ble es p aya	168 ,016	187 ,196	17
Oth nt fi cial liab ilitie er c urre nan s	-	170 ,211	4
Oth nt lia biliti er c urre es	444 ,678	764 ,927	25
Cur rent inte rest bea ring liab ilitie s	940 ,944	27,1 47,5 43	4,5
Cur rent lea sing obl igat ions	2,55 8,95 3	484 ,985	4,5
TOT AL CUR REN T LI ABI LITI ES	4,64 4,99 6	29,0 94,0 89
TOT AL LIA BIL ITIE S	21,8 25,9 02	33,6 68,5 29
TO QU IES TA L E ITY AN D L IAB ILIT	26,0 68,9 76	29,8 33,1 08

Board of Director in Solstad Offshore ASASkudeneshavn April 29, 2021

Harald Espedal Chairman

Thorhild Widvey

Director

Frank O. ReiteDirector

Director

Director

Peder Sortland CEO

Ingrid Kylstad

Lars Peder Solstad

Solstad Offshore ASA | Annual Report 2020 Propelling global energy markets. Into the future. Solstad.com

Ellen Solstad Director

0 02 2 t or p		Sha re capi tal	Trea sury shar es	Sha re prem ium	Othe r paid -in capi tal	Othe r chan ges	Othe uity r eq	l majo Tota irty shar es	Non - cont rolli ng inte rest s	Tota l equ ity
e R al u	Equ ity 0 1.01 .202 0	583 ,065	-281	3,69 8,35 0	321 ,648	401 ,259	-8,8 42,1 52	-3,8 38,1 11	2,69 1	-3,8 35,4 20
n n A	Res ult Actu aria l ga in/ loss (-)	- -	- -	- -	- -	- -	7,24 0,74 3 -5,9 21	7,24 0,74 3 -5,9 21	13,1 22 -	7,25 3,86 6 -5,9 21
	Tran slat ion adju stm ents	-	-	-	-	580 ,397	-	580 ,397	-	580 ,397
C l i d d t o n s o a e	Oth er hen sive com pre inco me	0	0	0	0	580 ,397	7,23 4,82 2	7,81 5,21 9	13,1 22	7,82 8,34 2
	Sha apit al re c dec reas e	-582 ,773	281	-	-	-	582 ,492	0	-	0
t t t s a e m e n	Tran sfer of p aid- in ital cap	-	-	-3,6 98,3 50	-32 1,64 8	-	4,01 9,99 9	0	-	0
	Sha apit al re c incr e by eas vert ion of d ebt con	48,0 75	-	131 ,723	-	-	-	179 ,798	-	179 ,798
f h o c a n g e s	Sha apit al p riva t re c plac nt eme	26,5 06	-	43,8 49	-	-	-	70,3 55	-	70,3 55
	Equ ity 3 1.12 .202 0	74,8 73	0	175 ,572	0	981 ,656	2,99 5,16 1	4,22 7,26 1	15,8 14	4,24 3,07 5
i i t n e q u y	Equ ity 3 1.12 .201 8	583 ,065	-281	3,69 8,35 0	321 ,648	347 ,172	-5,8 03,0 53	-85 3,09 9	2,42 7	-85 0,67 2
	IFRS 16 imp lem tion enta effe ct	-	-	-	-	-	37,2 69	37,2 69	-	37,2 69
( N O K 1, 0 0 0 )	Equ ity 0 1.01 .201 9	583 ,065	-281	3,69 8,35 0	321 ,648	347 ,172	-5,7 65,7 84	-815 ,83	2,42 7	-813 ,403
	Res ult Actu aria l ga in/ loss (-)	- -	- -	- -	- -	-	-3,1 29,5 58 42,1 65	-3,1 29,5 58 42,1 65	264 -	-3,1 29,2 94 42,1 65
	Tran slat ion adju stm ents	-	-	-	-	54,0 87	-	54,0 87	-	54,0 87
	Oth er hen sive com pre inco me	0	0	0	0	54,0 87	-3,0 87,3 93	-3,0 33,3 06	264	-3,0 33,0 42
	Oth djus tme nts er a Equ ity 3 1.12 .201 9	- 583 ,065	- -281	- 3,69 8,35 0	- 321 ,648	- 401 ,259	11,0 25 -8,8 42,1 52	11,0 25 -3,8 38,1 11	- 2,69 1	11,0 25 -3,8 35,4 20

Consolidated statement of cash fl ow

(NOK 1,000)

0 02 2 t or p			202 0 31.1 2	201 9 31.1 2
e R al		CA SH FL OW FR OM OP ER AT ION S
u n n		Res ult b efor e ta x	7,25 0,34 9	-2,9 70,7 45
A		Tax ble es p aya	-35, 649	-35 ,634
		Ord inar y de iatio d w rite dow prec n an ns	3,25 3,38 6	2,47 8,41 9
		Gai n (-) / los s lo ng-t ets erm ass	321 ,975	50,2 76
	C l i d d t	Inte rest inc ome	-6,3 73	-14, 827
	o n s o a e	Inte rest exp ens e	1,43 7,61 9	1,64 4,51 0
		Term inat ed l eas es	439 ,559	0
		fi na effe Non h re cts -cas nce	-11,7 13,2 86	0
	t t t s a e m e n	Effe f ch e in sion ct o ets ang pen ass	7,69 5	-38 ,304
		Cha in v alue of fi cial inst ents nge nan rum	-170 ,239	-107 ,062
		Unr eali sed in/ - loss cur renc y ga	140 ,113	125 ,283
		Cha in s hort -ter ceiv able d pa yab les nge m re s an	212 ,570	272 ,565
	f f l h o c a s o w	Cha in o ther rual nge acc s	-361 ,760	-394 ,414
		Net h fl o w fr rati cas om ope ons	775 ,960	1,01 0,06 7

CASH FLOW FROM INVESTMENTS

Inve stm ent in ta ngib le fi x ed a sset s	-57, 385	-48 ,471
Pay t of peri odic inte men ma nan ce	-406 ,800	-36 3,66 2
Con side ratio le of fi xe d as sets (ve ls) n sa sse	1,01 4,17 0	73,6 4
Pay t of long -ter ceiv able men m re s	64,0 06	28,4 29
Rec eive d in tere sts	6,24 3	8,50 5
Rea lizat ion of s hare d ho lding s an s	36	0
h fl o w fr Net inve stm ents cas om	620 ,270	-30 1,55 9

CASH FLOW FROM FINANCING

Paid -in c apit al	70,3 55	-
Lea se i nter ests pai d	-241 ,442	-282 ,931
Lea se i lme nsta nts	-220 ,335	-207 ,775
Paid inte rest s	-157 ,973	-165 ,790
Draw dow n lo ng-t deb t erm	1,46 7,96 2	972 ,972
Rep ent of lo ng-t deb t aym erm	-1,0 77,1 55	-1,2 44,8 16
Net h fl o w fr fi na ncin cas om g	-158 ,588	-92 8,34 0
Effe ct o f ch es i n fo reig cha rate ang n ex nge s	40,2 36	2,51 4
Net cha in c ash nge	1,23 7,64 2	-219 ,832
Cas h at 01. 01	1,13 4,02 8	1,35 1,34 6
Cas h at bal e sh eet date anc	2,41 1,90 5	1,13 4,02 8

Note 1 - Accounting Principles

Annual Report 2020 The Group, Solstad Offshore ASA ("SOFF" or "the Company"), operates a shipping business from its head offi ce in Nesavegen 39, 4280 Skudeneshavn, Norway, and its main activities are the operation of offshore service and construction vessels. The Group is listed on Oslo Stock Exchange. The fi nancial statements were approved by the Board of Directors on April 29, 2021, and will be presented for approval in the Annual General Meeting.

Statement of Compliance and basis for preparation

The consolidated fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and interpretations by the International Accounting Standards Board (IASB) which have been approved by the European Union (EU).

The consolidated fi nancial statements have been prepared on a historical cost basis, except for derivative fi nancial instruments and shares that have been measured at fair value, and are presented in Norwegian Kroner. Throughout the Notes all fi gures are stated in NOK thousand unless clearly stated otherwise.

The Consolidated Financial Statements have been prepared on the going concern basis. After the completion of the fi nancial restructuring, the Company and the Group's fi nancial situation have improved resulting in positive equity and strengthened liquidity. Following the completion of the restructuring, the Company simplifi ed its legal structure through a collapse of the old "silo" structure and thereby secured free fl oat of liquidity in the restructured Group. The borrowing facilities in the restructured group has been combined into one new fl eet loan, with repayment terms that refl ects the current market conditions. In addition, the Company has strengthened its liquidity by MNOK 1,500 in a new working capital facility. The Company is in a process to reduce the vessels of less strategic importance, this will reduce its cost base and increase the focus towards the key assets. All fi nancial leased vessels in the restructured group have been redelivered and interest-bearing debt has been reduced with MNOK 9,600. Equity has in total been strengthen with MNOK 11,600 at year end 2020. The going concern assumption is based on the level of cash and cash equivalents at year end, terms and conditions of the banking and borrowing facilities, the forecasted cash fl ow prognosis for the Group and the backlog position at 31 December 2020.

Based on the information given on "Normand Maximus" related to the bareboat charter there is uncertainty related to the going concern assumption of Solstad Offshore ASA. For further information, please see Note 2, Note 5 and the prospectus in relation with capital increase.

Changes in accounting principles

The Group has not implemented any new accounting standards or otherwise made any signifi cant changes to account principles during 2020.

Approved IFRS and IFRIC interpretations not yet implemented

None of the issued, not yet effective, accounting standards or amendments to such standards are expected to have signifi cant effect for the Group's fi nancial reporting. Nor does issued IFRIC interpretations expect to signifi cantly change the Group's accounting policies or practices.

Consolidation

The consolidated fi nancial statements comprise of the fi nancial statements of Solstad Offshore ASA and its subsidiaries as at 31st December each year. Any deviating accounting principles are adjusted for in this consolidation.

The Group accounts present the total profi t & loss and fi nancial position of Solstad Offshore ASA and its subsidiaries as one. The consolidated accounts include companies in which Solstad Offshore ASA has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Generally, there is a presumption that ownership of more than 50% of the voting shares results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether is has power over an investee, including: contractual arrangements with other vote holders of the investee, rights arising from other contractual arrangements, and the Group's voting rights and potential voting rights.

Subsidiaries are consolidated 100% line by line in the group accounts.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Acquisitions of subsidiaries are accounted for using the acquisition method of accounting. The purchase price is allocated to identifi able assets and liabilities from the subsidiary and is recognized at fair value in the consolidated accounts at the acquisition date. Any excess cost of acquisition over the fair value of the net identifi able assets of the subsidiary acquired calculated at the date of handover, will be recognized as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired calculated at the date of handover, a dayone-gain will be recognized as income.

All inter-company transactions, receivables, liabilities and unrealized profi ts, as well as intra-group profi t distributions, are eliminated. In the consolidation, the profi t and loss accounts of foreign subsidiaries, not using NOK as functional currency, are translated using the exchange rate on the day of transaction.

Notes

Notes to condensed statement of comprehensive income and statement of fi nancial position

(NOK 1,000)

Annual Report 2020The balance sheet is translated using the balance sheet date exchange rate. The exchange differences arising on translation for consolidation are recognized in other comprehensive income (OCI). The non-controlling interest in equity is reported separately in the consolidated fi nancial statements.

Investment in associates and joint ventures

The Group's investment in its associates and joint ventures are accounted for under the equity method of accounting. An associate is an entity in which the Group has signifi cant infl uence, but which is not a subsidiary. A joint venture is an entity in which the Group has joint control through entering into an agreement of joint control, requiring unanimous consent in strategic decisions (decisions relating to relevant activities).

The reporting dates of the associates, joint venture and the Group are the same and the same accounting principles are applied.

Investments in an associate and joint ventures are recorded in the balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associate or joint venture, less any impairment in value. The profi t and loss for the Group refl ects the associates' or joint ventures' share of profi ts under operating costs. Changes recorded directly in the associates' or joint ventures' comprehensive income or equity, are recognized pro-rata in the Group accounts, and are, where applicable, presented in OCI.

Financial instruments

A fi nancial instrument is any contract that gives rise to a fi nancial asset of one entity and a fi nancial liability or equity instrument of another entity.

Financial assets

The Group's fi nancial assets are derivatives, trade- and lease receivables and cash and cash equivalents. The classifi cation of fi nancial assets at initial recognition depends on the fi nancial asset's contractual cash fl ow characteristics and the Group's business model for managing them. Except for trade receivables that do not contain a signifi cant fi nancing component, the Group initially measures a fi nancial asset at its fair value plus, (in the case of a fi nancial asset not at fair value through profi t or loss), transaction costs. Trade receivables that do not contain a signifi cant fi nancing component are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers.

The Group classifi es its fi nancial assets in two categories:

• Financial assets at amortized cost
• Financial assets at fair value through profi t or loss (FVTPL)

Financial assets at amortized cost The Group measures fi nancial assets at amortized cost if both of

the following conditions are met:

• The fi nancial asset is held within a business model with the objective to hold fi nancial assets in order to collect contractual cash fl ows

• The contractual terms of the fi nancial asset give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest on the principal amount outstanding

Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profi t or loss when the asset is derecognized, modifi ed or impaired.

The Groups fi nancial assets at amortized cost includes trade and other receivables, lease receivables and other non-current assets.

Financial assets at fair value through profi t or loss Derivatives at fair value are carried in the statement of fi nancial position at fair value with net changes in fair value through profi t or loss. The category includes foreign exchange contracts and interest rate swaps.

Derecognition of fi nancial assets

A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is primarily derecognized when:

• The rights to receive cash fl ows from the asset have expired, or
• The Group has transferred its rights to receive cash fl ows from the asset or has assumed an obligation to pay the received cash fl ows in full without material delay to a third party under a 'pass-through' arrangement; and either

a. the Group has transferred substantially all the risks and rewards of the asset, or

b. the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

Impairment of fi nancial assets

For trade and other receivables, lease receivables and other non-current assets, the Group applies a simplifi ed approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime Estimated Credit Losses (ECLs) at each reporting date, based on its historical credit loss experience.

The Group considers a fi nancial asset in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A fi nancial asset is written off when the Group has no reasonable expectations of recovering the contractual cash fl ows. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. This assessment is based on historical experience of recoveries of similar assets. The Group expects no signifi cant recovery from the amount written off. However, fi nancial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

Financial liabilities

Financial liabilities are initially recognized at fair value and subsequently measured at amortized cost except for fi nancial liabilities at fair value through profi t of loss (FVTPL). Such liabilities, including derivatives that are liabilities shall be subsequently measured at fair value. Other fi nancial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense is recognized in profi t or loss. Any gain or loss on derecognition is also recognized in profi t or loss.

Derivatives are fi nancial liabilities when the fair value is negative, accounted for similarly as derivatives as assets.

Derecognition of fi nancial liabilities

The Group derecognizes a fi nancial liability when its contractual obligations are discharged or cancelled or expired. The Group also derecognizes a fi nancial liability when its terms are modifi ed, and the cash fl ows of the modifi ed liability are substantially different in which case a new fi nancial liability based on the modifi ed terms is recognized at fair value. The difference between the carrying amount and the consideration paid is recognized in profi t or loss.

Classifi cation of items in the balance sheet

Current assets and short-term debt are items which mature within one year of the balance sheet date as well as any items relating to the normal operating cycle. The short-term portion of the long-term debt and other liabilities for which there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period are classifi ed as current liabilities. Investments in shares hold for trading, not considered as strategic, or are expected to be sold are classifi ed as current assets. Cash and cash equivalents are classifi ed as current assets, unless restricted from being used during the following 12 months. All other assets and liabilities are classifi ed as long-term assets and liabilities.

Foreign currency translation

The functional and presentation currency of Solstad Offshore ASA is Norwegian Kroner (NOK). Transactions in foreign currencies are recorded at the currency rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the balance sheet date. Non-monetary items such as vessels that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of initial transaction. Nonmonetary items in companies where the functional currency deviates from the reporting currency are measured at the exchange rate at the date of the balance sheet. Any translation adjustments are included in comprehensive income.

The Group's most used currencies had the following exchange rates at the balance sheet date:

	GBP	USD	EUR	BRL	AUD
Per 31.1 2.19	11.5 94	8.78 0	9.86 4	2.18 4	6.16 7
Per 31.1 2.20	11.6 46	8.53 3	10.4 70	1.64 3	6.58 7

Segment information

The Group reports internally on operating- and geographical segments. The operating segments are divided into the following two segments:

• Anchor Handling-(AHTS) and Platform
• Supply vessels (PSV)
• Construction Service vessels (CSV)

Any other activities, including vessels under construction, are included in a separate segment. Overhead costs are apportioned between the segments based on the share of operating expenses. All accounting policies applied in the segment reporting are the same as used in the Group reporting.

The Group presents activities by geographical markets in the segment note based on the location of the Group's vessels and operations throughout the year.

Property, plant and equipment – impairment charges and depreciation

Property, plant and equipment acquired by Group companies are stated at historical cost, except the assets of acquired subsidiaries that are stated at the fair value at the date of acquisition. Depreciation is calculated on a straight-line basis and adjusted for residual value and impairment, if any. Residual value is the current estimated amount that would be obtained from disposal of the asset, after deducting the estimated costs of disposal, as if the asset were already of the age and in the condition anticipated at the end of its useful lifespan. The book value of the property, plant and equipment on the balance sheet represents the cost less accumulated depreciation and any impairment.

Each part of a fi xed asset that is signifi cant to the total cost of the item are separately identifi ed and depreciated over that component's useful lifetime. The ships are divided into the following components: hull, anchor handling, loading and unloading equipment, thrusters, DP and lifting equipment and other equipment. Based on the Group's periodic maintenance program and running replacement the vessels vital parts, the expected lifetime of the assets is set to 20 years for all of the components, except for planned periodic maintenance.

The residual value and expected useful lifetime assumptions of long-lived assets are reviewed at each balance sheet date, and where they differ signifi cantly from previous estimates, depreciation charges are amended accordingly.

Ordinary repairs and maintenance costs are charged to the income statement in the period in which they are incurred. The cost of major conversions and periodic maintenance of vessels is capitalized and depreciated over the useful lifespan of the parts replaced. The useful lifespan of periodic maintenance will

Annual Report 2020normally be the period until the next interim- or main classifi cation of the vessel, which usually is 5 years. The book values of plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the booked value may not be recoverable. If any such indications exist and where the book value exceeds the estimated recoverable amount, the asset or cash-generating units are depreciated to their recoverable amount. The recoverable amount of plant and equipment is the greater of the net selling price and the value in use. When determining value in use, estimated future cash fl ows are discounted to their current value using a pre-tax discount rate that refl ects current market assessments of the monetary value and the specifi c risk to the asset. For an asset that does not generate cash infl ow, a recoverable amount is calculated for the cash-generating unit to which the asset belongs. Any previously calculated and recognized impairment write-downs are reversed if there are any changes to the estimates of recoverable amount. Reversals of previous impairments are limited to the book value of the asset if its value had not been impaired.

The business segments are the Group's strategic units of control. However, while calculating the recoverable amount, each vessel is treated as one cash-generating unit.

Gains and losses on disposal are determined by comparing the disposal proceeds with the book value and any profi t or loss is included in operating profi t.

New build contracts

Installments on new build contracts are recorded in the balance sheet as fi xed assets. Costs related to the on-site supervision and other pre-delivery construction costs including construction loan interest are capitalized per vessel. The depreciation starts from when a new build is delivered from the yard.

Leases

Right-of-use-assets

Right-of-use-assets are recognized at cost, less depreciation and impairment losses at the commencement of the lease. The cost of the assets includes the recognized lease liabilities, initial direct costs, and lease payments made prior to commencement. Straight-line depreciations over the lease term are used, unless the Company is reasonably certain to obtain ownership of the vessel at the end of the leasing period, in which case straight-line depreciations over the estimated economic life of the vessels are used. The assets are subject to impairment assessments under the same principles as other assets.

The Group primarily leases vessels, but also has lease contracts related to various offi ces used in its operations.

Lease liabilities

Lease liabilities are recognized at the commencement of the lease measured at the present value of lease payments over the lease period. The lease payments include both fi xed and variable lease payments. If a purchase option is likely to be exercised, the option price is included. Variable lease payments that do not depend on an index are recognized as expense in the period

when the payment trigger occurs.

When calculating present value of the lease the incremental borrowing rate at the beginning of the lease is used, if the implicit rate is unavailable. Subsequently, the amount of the lease liability is increased to refl ect the accretion of interest and reduced for lease payments made. The liability is remeasured if modifi cations or changes to the lease terms occur.

Contracts with renewal options

The Company determines the lease term as the non-cancellable part of the lease. In addition, any periods covered by an option for extended lease that is reasonably certain to be exercised are included.

Operating leases

Any leases where a signifi cant amount of the risks and rewards of ownership are retained by the lessor, are classifi ed as operating leases. Payments made under operating leases net of any incentives received from the lessor are charged to profi t and loss on a straight-line basis over the period of the lease.

Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand, shortterm deposits and other short-term highly liquid investments with maturity dates of less than three months. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.

Restricted bank deposits are funds on separate bank accounts for tax deductions.

Assets held for sale

Non-current assets held for sale consist of vessels that have been decided to be disposed of, by sale or otherwise. Noncurrent assets classifi ed as held for sale are measured at the lower of their previous carrying amount and their fair value less costs of disposal. Any excess of the carrying amount over the fair value less cost of disposal is recognized as an impairment loss. Depreciation of such assets is discontinued as from their classifi cation as held for sale.

Treasury shares

The nominal value of treasury shares held is deducted from registered share capital. Any differences between the nominal value and the acquisition price of treasury shares, together with any gains or losses on transactions therein, are recorded directly to reserves.

Provisions

Provisions are made in the fi nancial statements if the Group considers it more likely than not, based on the legal provisions or business liabilities of past events, that an outfl ow of resources will be required to cover its liabilities and if the amount can be accurately estimated. All provisions are reviewed at balance sheet date and adjusted, if necessary, to refl ect best estimate. In instances where the timeframe may be of signifi cance, a provision is made for the current value of future payments to cover liabilities.

Excess values contracts

Identifi ed excess values in charter contracts acquired through business combinations are classifi ed as intangible fi xed assets and are amortized over the remaining duration of each charter contract.

Tax

Tax consists of tax payable and changes in deferred tax.

Tax payable is based on taxable profi t for the year and calculated using tax rates (22%) that have been enacted as of the balance sheet date.

Operations on foreign continental shelves are, in a number of cases, taxable to the state of operation. In such cases the tax is computed according to the tax legislation of the current state, combined with any double taxation avoidance agreement between the state where the ship owner is registered and the state where the operation is performed. Income tax based on a net result is classifi ed as income tax. Other taxes are classifi ed as contract related expenses.

Deferred tax is calculated using the liability method at 22% of all temporary differences between the taxable value of assets and liabilities and their booked amounts at the end of the accounting year. Any temporary differences that may increase or decrease tax are offset and recorded as a net fi gure.

Deferred tax is calculated for assets and liabilities for which future realization will lead to tax payable.

The recognized amount of deferred tax assets is reviewed at each balance sheet date. If it is no longer likely that adequate taxable profi t will be generated, then the deferred tax asset will be reduced. Anticipated utilization of tax losses are not discounted when calculating the deferred tax asset.

Pension obligations

The Group has a defi ned benefi t plan for seafarers and administrative personnel, and a contribution plan for administrative personnel hired after 1.1.2007, which is recognized in profi t and loss when incurred. The liability of the defi ned benefi t pension plan is the present value of the defi ned benefi t liability at the balance sheet date minus the fair value of plan assets. The defi ned benefi t liability is calculated by independent actuaries using the projected unit credit method and is measured as the present value of the estimated future cash outfl ows using interest rates of government securities that have terms maturing at the same time as the liability.

The cost of providing pensions is charged to profi t and loss to spread the regular cost over the working lives of the employees. Actuarial gains and losses are recognized in comprehensive income in the period they occur.

Revenue from contracts with customer - charter and rental income

Revenue and expenses relating to charter contracts are apportioned according to the number of days for each contract

occurring before and after the end of the accounting period. The contract begins when the vessel is "delivered" to the charterer and ends when the vessel is "redelivered". Freight revenue is recorded net after deduction for direct, contract-related freight costs. Any loss on contracts is accrued when a loss is probable. Revenue from bareboat agreements are regulated by IFRS 16. The time charter contracts contains both a lease component that is regulated by IFRS 16 and a service component that is regulated by IFRS 15. Both the lease component and the service component are recognized together as income in operating income (ref. note 3 for split). Leases, in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor, are classifi ed as operating leases. Lease income for the leasing of vessels are recognized as operating leases and recognized in the income statement on a straight-line basis over the lease period. The lease period commences from the time the ship is made available to the tenant and terminates upon agreed return.

Dividends

Dividends are recognized when the shareholder's right to receive the payment is established (by resolution at the general meeting).

Other income

Other income, such as commissions and management fees, are recognized in the period in which the performance obligations are being satisfi ed.

Government grants

Grants related to the net tax agreement and crew subsidiaries are recorded as a reduction in cost.

Insurance claims

For damage and averages on the Group's vessels and equipment, resulting in payments from insurance companies, compensation is presented net with the corresponding expense. Reimbursable and expenses are recognized and classifi ed in accordance with the type of cost, while compensation is presented separately as a reduction in costs.

Related party transactions

All transactions and agreements with related parties are on an "arm's length" basis in the same way as transactions with third parties.

Inventories

Inventories consists mainly of bunkers onboard the vessels. Inventories are valued at the lower of cost price and fair value. First-in-fi rst-out method is used.

Earnings per share

The calculation of basic earnings per share is based on the majority's share of the result using number of shares outstanding at the end of the year after deduction of the average number of treasury shares held over the period.

Cash Flow

The Group applies the indirect method. Investment in shares and other liquid assets with maturity over three months are not included under cash equivalents.

Annual Report 2020Critical accounting judgement and estimates uncertainty Reference is made to assumption of going concern in introduction section Note 1 The preparation of fi nancial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the fi nancial statements, and the reported amounts of revenues, expenses and fi nancial items during the reporting periods. Accounting estimates are employed in the fi nancial statements to determine reported amounts. Useful lifespan and residual value of vessels, impairment, contingent liabilities and taxes are items where the use of estimates may have signifi cant impact on reported amounts.

Useful lives of vessels affect the ordinary depreciation. Useful life of the vessel's different components is based on the condition and experience of wear and tear of each group of components.

Residual value of vessels will affect ordinary depreciation. The vessels market values are used as basis for the residual value. Market values, less any sales related expenses, are multiplied with a percentage dependent on the age of the vessel. The factor is 50% for a newbuild, increasing to 100% for a 20 years old vessel.

Financial liabilities are initially recognized at fair value. The methodologies applied for fair value calculations include assessments and estimations based on available market data, such as the level of interest rates, interest rate margins and credit spreads at the date of recognition. These estimates are based on

Management's knowledge combined with advice obtained from professional external specialists. Please also refer to Note 8.

A certain part of the Group's fi nancial liability is linked to vessels deemed to be "non core". Warrants are issued for this debt and the warrants are measured to fair value at each accounting period. Estimated value for the warrants is affected by the expected sales price for the vessels and the share price at the end of the accounting period.

Accruals for bad debt is based on historical losses, current available information regarding customers and Management's expectations for each receivable.

Provision for contingent liabilities and taxes is based on collating information on a case by case basis. The probability of a contingent liability occurring which would affect the provision is evaluated. The discounting rate used for liabilities is based on a risk-free interest rate, adjusted to the maturity date.

Impairment testing is based on numerous estimates. Main elements are future revenues (rates), expected prolonging of existing contracts, level of running costs, expected return on equity, general marked prospects and useful life of fi xed assets. Relating to fi nancial assets, measurements are based on observable marked prices, public accounting information and general and specifi c marked prospects relevant to the certain fi nancial asset.

Although these estimates are based on Management's best knowledge at the time of submitting the accounts, actual fi gures may differ from the estimates.

Note 2 - Major transactions / events

Major transactions / events in 2020

Successful restructuring

The Company fi nalized a successful restructuring approved by an Extraordinary General Meeting October 20th, 2020. The main accounting effects from the restructuring was:

• A NOK 0.6 billion reduction of Right-of use assets due to termination of vessels recognized according to IFRS 16.
• A net NOK 9.6 billion reduction of Debt to credit institutions due to de-recognition of existing debt and
• recognition of reinstated debt based on nominal values. • An additional NOK 1.1 billion reduction of Debt to
• credit institutions due to Fair value measurement of recognized debt according to IFRS 9. • A NOK 0.2 billion reduction of Debt to credit
• institutions due Fair value measurement of Associated Subscription Rights (Warrants)
• A NOK 1.3 billion reduction of Other current liabilities due to lease liabilities and interest relief converted to equity.
• A NOK 1.5 billion increase in deposits, cash, etc relating to new equity and Working Capital Facility.
• The total effect on equity is NOK 11.6 billion.

A restructuring cost of total MNOK 109 has been recognized as cost in the accounts for 2020. In addition MNOK 100 was recognized as capitalized borrowing cost.

Sale of vessels

In the fi rst quarter Saipem Portugal Commercio Maritimo Ltd exercised a purchase option for the DLB Norce Endeavour, and the delivery of the barge took place in April 2020.

The vessel former named Normand Skude owned by a subsidiary Group company Sofo Skude AS was sold to a third party in May 2020. All debt relating to the vessel has been repaid in full.

Normand Maximus

In September 2020, Saipem gave notice of an early termination the time charter for "Normand Maximus". Further reference is made to Note 5 Mortage Debt and Other Long-term Liabilities.

Covid-19

COVID-19 has been a challenge for the majority of 2020 as it has affected both the market and the operational aspect of our industry, crew changes have in some cases been impacted signifi cantly due to travel restrictions and in some cases; vessels have been infected by the virus which has caused down time and subsequent cost for crew changes and cleaning, the impact has been limited to a minimum as the Company has proactively worked on preventive measures since the early start of the pandemic.

Exit Norwegian tonnage tax regime

Exit from the Norwegian tonnage tax regime was performed in 2020. The exit had effect from January 1st, 2016. An unrecovered loss carry forward of NOK 10 billion was claimed.

Major transactions / events in 2019

The Group have since Q3 2018 worked with their creditors towards a consensual fi nancial restructuring. In third quarter the Group entered into an agreement with the majority of fi nancial creditors to suspend and defer payments of principal and interest extended until October 2020.

The Group sold the PSV Lady Melinda in the fi rst quarter. The vessel were delivered to new owner in the second quarter.

Further, the PSV Far Star and the AHTS Far Saltire were sold and delivered to new owner in the third quarter. The PSV Far Swift were sold and delivered to to new owner in the fourth quarter.

In the fourth quarter the Group entered into an agreement to sell its remaining shares (approx. 20%) in part owned DESS Aquaculture Shipping AS (DESS Aqua) to a company affi liated with Hemen Holding Ltd.

Note 3 - Operating income, Reporting by segments and geographical markets

Operating income

	202 0	201 9
Serv ice e leme nt fr cont ract s wi th d ate om ay r	2,03 2,59 8	2,05 0,88 7
Man t fee age men s	27,2 68	27,6 16
Vict ualli ng	93,1 11	116 ,828
Proj ect t man age men	3,32 9	4,25 3
Add ition al cr nd o ther vice ew a ser s	57,8 96	79,7 98
Rev e fro ntra cts w ith c usto enu m co mer s	2,21 4,20 2	2,27 9,38 1
Lea leme nt fr cont ract s wi th d ate se e om ay r	2,81 1,42 9	2,96 5,50 0
Tota l ope ratin g in com e	5,02 5,63 0	5,24 4,88 1
Con trac t ba lanc es:
Trad ceiv able s fro hart (Not e 4) e re m c ers	839 ,628	889 ,032
Con trac t as sets	-	-
Con trac t lia biliti es ( Note 27)	-	34,7 10

For the majority of contracts, payment is generally due within 30-60 days after the end of each month or 30-60 days after the service is completed. Payment terms for all other services is normally 30 days after services is invoiced.

Revenue recognised in 2020 that was included in the contract liability balance at the beginning of the year amounts to MNOK 34.7 (MNOK 0 in 2019).

The Group had no customer with more than 10% of total revenue in 2020.

The Group had one customer with more than 10% of total revenue in 2019. Not disclosed customer.

EBITDA

				202 0	20 19
Op t ing inc era om e			Frei ght inco me	4,84 4,02 7	5,01 6,38 7
The Gro up's ainl y de rive s fro ffer ing sels and ritim rev enu es m m o ves ma e pe rson	nel to c usto orld wid e. B mer s w	asic ally all c ontr acts	Oth ting inco er o pera me	181 ,603	228 ,495
with tom trac ts w ith d ate. Co ntra cts with day rate is c ontr acts wh cus ers are con ay r	inco is e ared a da ere me on	y-by -day bas is, b d ase	Tota l op erat ing inco me	5,02 5,63 0	5,24 4,88 1
reed day rat ith t he c usto . Re ue f trac ts w ith d ate on a n ag e w mer ven rom con ay r	is re nize d ac cord ingl cog y.
			Pers el co sts onn	-2,0 25,2 50	-2,0 96,1 65
The reed da te is div ided into ervi lem ent and a l lem ent. Th ag y ra a s ce e eas e e	rvic lem ent incl ude s th e se e e	ariti ices e m me serv	Adm inist rativ e ex pen ses	-476 ,829	-417 ,962
ided to igat e th l ac cord ing to t he c usto quir nts, wh ile t prov nav e ve sse mer s re eme	he leas lem ent is th e e e e	stim ated tal o f th ren e	Oth ting er o pera exp ens es	-1,4 91,6 71	-1,4 56,9 16
sel (equ ipm ent) ves			Tota l op erat ing ts cos	-3,9 93,7 50	-3,9 71,0 43
Som e of the trac ts a lso incl ude s vi ctua and hore	nt. V ictu allin als and bed	vide d to the	Ope ratin sult bef dep reci atio nd i irme nt g re ore ns a mpa	1,03 1,88 0	1,27 3,83 8
lling ject con ons pro ma nag eme e G tom el o nbo ard the sel. Th als rovi des ord inar	g is me ent ices ch a	ding pro s te chn ical ices
cus ers pers onn ves roup o p y m for v e G inc nd c erci al m ent els not ed b	ana gem serv , su . Re rvic	serv , tion ed a bov	Lea ses	6,46 5	-
ing, y th crew uran ce a omm ana gem ess own ed o time the form e ob tion is s atis fi ed r tim	roup ven ue o n se es,	men e, a re	Acc rued loss Acc ts re ceiv able on oun s	7,11 5	2,41 6
gniz liga reco ver , as per anc ove e.			Res truc turin st g co	108 ,887	-
			Exc and less val freig th c ontr acts ess ues	62,4 62	138 ,461
			Res ult J oint Ven ture s	23,9 75	-44, 787
	202 0	201 9	Res ult a iated ies ssoc com pan	41,4 23	40,7 66
Serv ice e leme nt fr cont ract s wi th d ate om ay r	2,03 2,59 8	2,05 0,88 7	EBI TDA adj uste d	1,28 2,20 8	1,41 0,69 4

Operating lease

Some of the Group's vessels are rented out on long-term charter parties. Revenue from these vessels is recognized as operational leases.

	31. 12.	202 0	31 .12 .20 19
	Min imu m t pay men	Pres ent valu e min imu ent m p aym	Min imu m t pay men	Pres ent valu e min imu nt m p ame
Nex t ye ar	3,17 8,15 4	3,10 0,63 8	3,83 2,50 7	3,73 9,03 2
Yea r 2	1,27 2,89 6	1,21 1,56 1	2,00 1,77 3	1,90 5,31 7
Yea r 3	622 ,587	578 ,134	1,26 4,16 4	1,17 3,90 2
Yea r 4	78,3 46	70,9 77	673 ,579	610 ,229
Yea r 5	69,0 40	61,0 21	385 ,422	340 ,657
Ove r 5 y ears	15,0 03	12,9 37	-	-
Fina cost nce	-	200 ,757	-	388 ,309
Tota l mi nim leas t um pay men	5,23 6,02 6	5,23 6,02 6	8,15 7,44 5	8,15 7,44 5

• Annual Report 2020Reporting by segments and geographical markets The Group's main activity is to offer ships and maritime personnel in all geographical regions. The operations were in 2020 and 2019 divided into two segments based on the different types of vessels: Anchor-Handling Vessels (AHTS) delivering services related to rig moves and anchoring of rigs and other devices at sea and Platform Supply Vessels (PSV) delivering services relating to transportation of material to offshore installations.
• Construction Service Vessels (CSV) delivering services relating to development of both sub sea and fl oating installations.

	AH TS	/ P SV	Su bse Re abl new	a / e E ner gy	Tot al
	202 0	20 19	202 0	20 19	202 0	20 19
Rev e fro ontr acts wit h cu stom enu m c ers	1,23 6,35 1	1,37 5,51 3	977 ,851	903 ,869	2,21 4,20 2	2,27 9,38 1
Lea lem ent from trac ts w ith d ate se e con ay r	1,31 6,50 2	1,42 1,95 9	1,49 4,92 7	1,54 3,54 1	2,81 1,42 9	2,96 5,50 0
Tota l op erat ing inco me	2,55 2,85 2	2,79 7,47 2	2,47 2,77 8	2,44 7,41 0	5,02 5,63 0	5,24 4,88 1
Crew exp ens es	1,36 4,05 7	1,52 0,21 5	662 ,114	748 ,245	2,02 6,17 1	2,26 8,46 0
Oth er e xpe nse s	940 ,871	911 ,511	877 ,326	646 ,443	1,81 8,19 7	1,55 7,95 4
Tota l op erat ing exp ens es	2,30 4,92 7	2,43 1,72 6	1,53 9,44 0	1,39 4,68 8	3,84 4,36 7	3,82 6,41 4
Bun kers	89,6 73	78,4 63	59,7 10	66,3 46	149 ,383	144 ,629
Ope rati lt be fore dep reci atio ng r esu ns	158 ,252	287 ,463	873 ,628	986 ,375	1,03 1,88 0	1,27 3,83 8
Ass ets and liab ilitie s
Fixe d as sets	10,7 52,6 48	13,1 86,1 25	10,9 36,5 60	12,8 25,6 77	21,6 89,2 08	26,0 11,8 03
Inve stm ents in J V an d as iate d co nies soc mpa	-	-	111 ,032	386 ,405	111 ,032	386 ,405
Una lloca ted ets ass	-	-	-	-	4,27 2,75 6	3,43 4,90 1
Tota l as sets	10,7 52,6 48	13,1 86,1 25	11,0 47,5 92	13,2 12,0 82	26,0 72,9 96	29,8 33,1 08
Seg t lia biliti men es	10,6 93,5 65	16,6 20,5 98	8,47 0,74 7	11,9 42,0 04	19,1 64,3 13	28,5 62,6 02
Una lloca ted liab ilitie s	-	-	-	-	2,66 1,58 9	5,10 5,92 6
Tota l lia bilit ies	10,6 93,5 65	16,6 20,5 98	8,47 0,74 7	11,9 42,0 04	21,8 25,9 02	33,6 68,5 29
Oth ent info tion er s egm rma
Inve in ta ngib le fi x ed a stm ent sset s	43,2 80	35,6 47	14,1 05	10,9 22	57,3 85	46,5 68
Add ition of p erio dic mai nten anc e	123 ,344	237 ,331	283 ,455	137 ,202	406 ,800	374 ,533
n (1 ) Dep reci atio d w rite- dow n an	1,74 8,83 9	1,22 1,67 0	1,43 2,64 4	1,20 4,11 2	3,18 1,48 3	2,42 5,78 2

(1) The segment result is presented exclusive gain/ loss sale of assets, interests, currency gain/ loss and other fi nancial items.

(2) Depreciation includes both ordinary depreciation and depreciation of periodic maintenance.

The Group's vessels operate in several geographical areas during a year. Allocation between the different areas is based on freight income.

Freigth income is allocated to the following areas:

	202	0	20 19
Nort h Se a	45 %	2,25 5,50 9	45 %	2,36 9,70 7
Nort h- a nd C entr al A ica mer	5 %	227 ,141	3 %	169 ,066
Med iterr an / ainin rt of Eur ane rem g pa ope	18 %	910 ,039	18 %	955 ,119
Afric a	5 %	250 ,754	4 %	217 ,840
Sou th A ica mer	9 %	459 ,455	15 %	770 ,469
Aus trali a	13 %	652 ,298	9 %	468 ,352
Asia	5 %	270 ,435	6 %	294 ,328
Tota l	100 %	5,02 5,63 0	100 %	5,24 4,88 1

The Group's vessels may operate in more than one geographic region during the year. Therefore assets cannot be allocated per segment in accordance with IFRS 8.

Note 4 - Financial market risk, fi nancial instruments

General

The Group is exposed to several types of fi nancial risks through its operations. Financial market risks, such as currency rates, interest rates and freight rates, infl uence the value of the Group's fi nancial assets, liabilities and future cash fl ows.

Management monitors the fi nancial market risks. When a risk factor is identifi ed, action is taken to reduce this risk. The main strategy to reduce fi nancial market risk is the use of fi nancial derivatives, both for the specifi c exposure and for the net exposure of the Group. Where fi nancial derivatives are appropriate, only conventional derivatives are used. Given its current fi nancial position, the Group has limited possibility to enter into new fi nancial derivatives.

Derivatives are only used to manage the risk to fl uctuations in interest and currency rates. The Group does not use fi nancial derivatives to achieve fi nancial income if no underlying exposure exists.

Management performs a continuous evaluation of the effect of fi nancial instruments on the accounts with a view to hedge accounting. Based on this evaluation, hedge accounting is not used. The use of fi nancial instruments is not signifi cant when compared to the Group's level of activity, revenues and equity.

Credit risk

Due to the downturn in the business the Group's exposure to losses on trade and lease receivables has increased. The counter party exposure is deemed to be higher. However, no material losses have been recognized the last two years. Status for accounts receivables is shown in the table below. The Group is also exposed to losses if a counter party in a fi nancial derivative contract fails to fulfi ll their payment obligations on the settlement date. Non-fulfi llment of such contracts is not anticipated as the Group only uses well known conventional derivatives with recognized fi nancial institutions.

The Group is also exposed through guarantees issued on behalf of subsidiaries, joint ventures and associated companies. As the value of the assets placed as security for the guaranteed mortgages exceeds the loans, the credit risk related to the guarantees is considered to be acceptable. However, a potential forced sale situation could have a signifi cant impact on the value of the mortgaged vessels. For further details refer to note 5.

0	The foll owi ng t able sho the ing of a ws age cco	unt ivab les: rece
02 2 t or p	31.1 2.20 20 per	Not yet due	0 -1 nth mo ove r due	1 - 3 nths mo ove r du e	Olde r tha n 3 mon ths	Tota l
e R	Acc t rec eiva bles oun	598 ,036	157 ,932	33,9 69	49,6 90	839 ,628
al u n n A	Th e to p 10 tom unt to 4 8% of to tal a cus ers amo	unt ivab cco rece	les in 2 020

31.1 2.20 19 per	Not yet due	0 -1 nth mo ove r due	1 - 3 nths mo ove r du e	Olde r tha n 3 mon ths	Tota l
Acc t rec eiva bles oun	665 ,973	109 ,256	72,5 19	41,2 84	889 ,032

The top 10 customers amount to 50% of total account receivables in 2019.

The following table shows the accruals of bad debt:

31.1 2.20 19 per	95,6 42
Acc rued in t he p erio d	8,66 2
Tran slat ion adju stm ent	783
31.1 2.20 20 per	105 ,086

Interest risk

The Group's exposure to changes in interest rates relates primarily to the Group's long-term loans and leasing obligations with fl oating interest rates. To mitigate exposure to interest rate fl uctuations the Group previously entered into fi xed interest rate contracts for parts of the long-term liabilities.

As of 31.12.2020 there is no fi xed-interest contracts. Per 31.12.2019, the Group had one fi xed-interest swap of MNOK 180 with maturity 27.07.2020.

Following the restructuring of the Group in 2020, the majority of its loan agreements with fi xed interest rates through CIRR fi nancing was refi nanced through a new senior reinstated multicurrency term loan facility. As per 31.12.2020 3% of the of the Group's loan agreements consisted of fi xed interest rates through CIRR fi nancing. As per 31.12.2019 this represented approximately 18% of the Group debt. The remaining debt had fl oating interest rates. Per 31.12.2020 the Group had no exposure in neither interest swaps nor currency swap agreements. As of 31.12.2019 interest swaps had an overall negative value of about MNOK 1,6, further the Group had two currency swaps with a negative value of MNOK 168.

The following table shows the sensitivity of the Group's result before taxes at a reasonable change in the interest rate, while all other variables are unchanged:

Incr e / d eas ecre ase in b asis poi nts		Effe ct o sult n re befo re ta x
+ / - 100	202 0	+ / - 184 ,737
+ / - 100	201 9	+ / - 322 ,766

Foreign currency risk

56

The Group's presentation currency is NOK. Revenues are earned in NOK, USD, BRL, AUD, GBP and EUR. The Group's future freight revenues are partly hedged using foreign currency loans. This hedging reduces the effect of fl uctuation in currency rates on the profi t and loss account.

The following table shows the sensitivity of the Group's profi t and loss before tax due to changes in USD, GBP, AUD, EUR and BRL versus NOK. All other variables remain unchanged. These variations are mainly due to changes in the Group's freight income.

	Effe ct
202 0	+ / - 420 ,774
201 9	+ / - 498 ,778
	Effe ct
202 0	+ / - 20 5,81 9
201 9	+ / - 255 ,389
	Effe ct
202 0	+ / - 52 ,751
201 9	+ / - 88, 149
	Effe ct
202 0	+ / - 77 ,770
201 9	+ / - 49, 591
	Effe ct
	+ / - 66 ,572
201 9	+ / - 31, 884
	Effe ct
202 0	+ / - 17 ,862
201 9	+ / - 3,7 64
	202 0

The Group's long-term debt has the following allocation as at December 31, 2020; NOK 33% and USD 67%. The corresponding allocation for 2019 was NOK 43%, USD 52%, GBP 3% and AUD 2%. With a reasonable change in the currency of USD versus NOK of 10 % the effect on result before tax would have been MNOK 1,194 in 2020 (MNOK 1,447 in 2019).

Except for translation adjustments relating to foreign entities in foreign currency, further effect on equity is considered immaterial.

Liquidity risk:

Liquidity risk is the risk that the Group will be unable to fulfi ll its operational- and fi nancial obligations as they fall due. Liquidity risk has been reduced after the fi nancial restructuring of the Company was completed. Following restructuring interest-bearing debt has been signifi cantly reduced, among others amortization relief has been given for a period of time and the Company has in place a working capital facility up to MNOK 1,500 The offshore shipping business is currently in a severe downturn, which has major impact on operating cash generation. The Group monitors its available cash through a continued evaluation of its liquidity position combined with a rolling medium and long term cash fl ow forecast of its operational activities.

In light of a challenging market situation and the diffi cult fi nancial situation, the Company has over a period of time been in discussions with its fi nancial creditors with a view to establish a long-term fi nancial platform. On 8 May 2020 the Company signed a Restructuring Implementation Agreement for a restructuring of the Group and this was effectuated 20th October 2020.

Pursuant to a senior secured facilities agreement that refi nanced the restructured Group, certain banks made an additional super senior term loan facility up to NOK MNOK 1,500 available to Solstad Shipholding AS for general corporate and working capital purposes ("Super senior term loan"). This has super senior status to all other liabilities under the facility and represents a nonamortizing bullet loan with maturity 31.03.2024. As per 31.12.2020 this facility was undrawn. The funds made available under the "Super senior term loan" facility is freely available for the restructured part of the Group subject that free cash in this group of companies is minimum MNOK 600.

The following table shows the maturity of the Group's fi nancial obligations based on contractual, undiscounted cash fl ows, ref also Note 1:

0 02 2	Not e 1:
t or p e R	31.1 2.20 20 per	Less tha n 3 m onth s	12 mon 3 to ths	2 to 3 yea rs	4 to 5 yea rs	Ove r 5 yea rs	Tota l
al u	Inte rest bea ring liab ilitie s	129 ,354	1,00 7,09 9	1,84 0,41 4	15,4 05,8 60	781 ,586	19,1 64,3 13
n n	Lea bliga tion s (1 ) se o	93,0 32	284 ,415	755 ,517	1,54 8,19 2	154 ,753	2,83 5,90 9
A	Oth er lo liab ilitie ng-t erm s	-	2,15 8	-	-	10,2 15	12,3 72
	Acc t pa yab les oun	532 ,405	-	-	-	-	532 ,405
	Inte rest ts pay men	133 ,401	399 ,206	1,01 9,38 8	177 ,733	50,9 63	1,78 0,69 1
		888 ,193	1,69 2,87 7	3,61 5,31 9	17,1 31,7 85	997 ,517	24,3 25,6 90

31.1 2.20 19 per	Less tha n 3 m onth s	3 to 12 ths mon	2 to 3 yea rs	4 to 5 yea rs	Ove r 5 yea rs	Tota l
Inte rest bea ring liab ilitie s (2 )	-107 ,909	3,23 7,37 2	16,4 37,5 49	5,18 5,05 4	2,93 0,41 2	27,6 82,4 78
Lea bliga tion se o s	181 ,556	405 ,779	1,14 7,77 1	1,31 4,45 9	1,26 2,83 5	4,31 2,39 9
Oth er lo ng-t liab ilitie erm s	-	-	1,95 7	-	10,2 15	12,1 72
Acc t pa yab les oun	339 ,227	-	-	-	-	339 ,227
Inte rest ts pay men	148 ,839	509 ,153	569 ,165	224 ,846	114 ,889	1,56 6,89 2
	561 ,712	4,15 2,30 3	18,1 56,4 43	6,72 4,35 9	4,31 8,35 1	33,9 13,1 68

Reclassifi cation of long-term liabilities to current liabilities

(1) Lease obligation for Normand Maximus of MNOK 2,534 is reclassifi ed to current portion of long term debt, due to a contractual default with a covenant waiver less than 12 months.

(2) In the 2019 comparative fi gures long term debt of about MNOK 21,500 was in accordance with IFRS classifi ed as Current portion of long term debt, due to the standstill agreements with the banks and bond holders where the covenant waiver period was less than 12 months.

Capital structure and equity

The governing principle for the Group is that the company should have a solid balance sheet and liquidity reserves suffi cient to support its business, future liabilities and maximize shareholder value at all times. The 2-3 years prior to the restructuring of the Company the equity ratio was at a very critical level. After the successful restructuring the equity ratio has improved, as a result of the debt conversion.

	31.1 2.20 20	31.1 2.20 19
Tota	4,24	-3,8
l eq	3,07	35,4
uity	5	20
Tota	26,0	29,8
l ass	68,9	33,1
ets	76	08
Equ ity r atio	16 %	-13 %

Fair value

Estimated market values on fi nancial instruments nominated in other currencies than NOK are determined using the currency rate at the balance sheet date. Fair value of the Groups interest- and interest-/currency swaps are determined using the currency - and interest rate at the balance sheet date. Nominal value of cash and loan obligations is a reasonable estimate of the items' market value. The fair value of long-term debt (mortgage loans) is calculated by determining the net present value of estimated cash fl ows applying an assumed estimated market rate for the Group. The assumed market rate has been determined by observing publicly available terms and conditions of relevant peers' for similar loans (obtained primarily from fi nancial statements, stock exchange notifi cations and quotes for listed loans, together with statistics and bank reports) and adjusted for assumed differences from the Group's agreed loan facility terms, as well as the Group's capital situation and assumed value of main assets. As the basis for this estimated market rate, which is a signifi cant value driver for the loans, is not based on observable market data, the valuation of the loans are level 3 estimates.The fair value of the shares in a non registered organisation is estimated on the organisations latest fi nancial report, focusing on the Group's share of booked equity, and therefore a thorough evaluation is required prior to estimating the market value.

Interest rate risk:

The following table shows the book value and maturity of the Group's fi nancial instruments exposed to changes in interest rates.

Fixe d ra te c ont ract s	Nom inal valu e	Yea rly latio regu n	Cur renc y	Inte rest rate	Mat urity	Valu e at 31.1 2.20 20	Valu e at 31.1 2.20 19
Con trac t 1	180 ,000	11,5 81	NO K	2,78 %	27.0 7.20 20	-	-1,6 64
						-	-1,6 64
Inte rest d cu - an rren cy ntra cts swa p co		Nom inal valu e	Yea rly latio regu n	Cur renc y	Mat urity	Valu e at 31.1 2.20 20	Valu e at 31.1 2.20 19
Sols tad Red eri A S / N orm	and Sev en	45,0 00	45,0 00	NO K	31.0 3.20 20	-	-19, 868
Fars tad Sup ply A S / F ar S	igm a	300 ,375	40,0 50	NO K	31.0 3.20 20	-	-148 ,679
						-	-168 ,547

Financing risk:

The following table shows the total mortgage loan based on existing financing and their maturity dates as per 31.12.2020:

Loa n	Draw n	Mat urity inte rval		Inte rest inte	rval	Ave rage inte rest
Loa n, fi x ed i nter est	690 ,577	10.1 2.20 26	10.0 4.20 31	3.64 %	6.10 %	5.42 %
n, fl Loa oati ng i nter est	18,4 73,7 36	31.0 3.20 21	07.0 3.20 29	% 2.32	8 % 10.9	% 3.21

The following table shows the total mortgage loan based on existing financing and their maturity dates as per 31.12.2019:

Loa n	Draw n	Mat urity	inte rval	Inte rest inte	rval	Ave rage inte rest
Loa n, fi x ed i nter est	7,39 7,58 2	01.0 4.20 20	10.0 4.20 31	2.79 %	7.92 %	5.14 %
n, fl Loa oati ng i nter est	19,6 25,8 69	01.0 4.20 20	07.0 3.20 29	% 0.99	3 % 12.4	% 4.99
Bon d lo ans	1,28 3,31 7	24.0 6.20 21	09.1 2.20 24	5.00 %	5.32 %	5.16 %

Fair Value:

The following table shows the booked and fair value of financial assets and obligations.

Fina ncia l as sets		202 0		20 19
	Note	Boo ked valu e	Fair val ue	Boo ked valu e	Fair val ue
Cas h to ban k	5, 1 9	2,41 1,90 5	2,41 1,90 5	1,13 4,02 8	1,13 4,02 8
Inve stm ents in s hare s (lo ng-t ) erm	12	4,11 9	4,11 9	299 ,615	299 ,615
Oth er lo ng-t eiva bles erm rec		60,1 95	60,1 95	120 ,223	120 ,223
Tota l fi n ial a ts anc sse		2,47 6,21 9	2,47 6,21 9	1,55 3,86 6	1,55 3,86 6

Fina ncia l lia bilit ies		202 0				20 19
	Note	Boo ked valu e	Fair val ue	Boo ked valu e	Fair val ue
Mor tgag e lo ith fl oati ng i nter ests an w	5	17,1 25,7 27	17,1 25,7 27	19,1 51,6 75	18,9 83,1 28
ith fi Mor tgag e lo xed inte rest an w s	5	690 ,577	690 ,577	7,39 7,58 2	7,39 5,91 8
Bon d lo an	5	-	-	1,28 3,31 7	85,2 13
Lea sing obl igat ions wit h fl o atin g in tere st	5	2,81 4,24 2	2,81 4,24 2	4,28 4,28 3	4,28 4,28 3
Tota l fi na ncia l liab ilitie s		20,6 30,5 45	20,6 30,5 45	32,1 16,8 57	30,7 48,5 42
Her of c nt p art o f lon g-te rm d ebt urre		3,49 9,89 7	3,49 9,89 7	27,6 32,5 28	27,4 62,3 17

Fair value hierarchy:

The Group use the following hierarchy for valuation and presentation of financial instruments:

Level 1: quoted prices in active markets for identical assets or liabilities

• Level 2: other techniques for which all inputs which have significant effect on the recorded fair value are observable, either directly or indirectly
• Level 3: techniques which use inputs which have significant effect on the recorded fair value that are not based on observable market data

Level 1 includes shares in listed companies, refer to note 12 for further details.

Level 2 includes fixed interest contracts, interest and currency swap contracts, currency contracts and mortgage debt, refer above for further details.

Level 3 includes non-registered shares, refer to note 12 for further details.

The following table shows the book value of financial instruments according to the hierarchy above:

		202 0			20 19
Cur rent fi na ncia l ass ets	Leve l 1	Lev el 2	Lev el 3	Lev el 1	Lev el 2	Lev el 3
Sha res	11,1 00	-	-	8,21 5	-	-
Tota l pe r lev el	11,1 00	-	-	8,21 5	-	-
Tota l all lev els	11,1 00			8,21 5
Fixe d in tere sts c ontr act	-	-	-	-	1,84 3	-
Tota l pe r lev el	-	-	-	-	1,84 3	-
Tota l all lev els	-			1,84 3

		202 0			20 19
Non fi na ncia l ass rent ets cur	Leve l 1	Lev el 2	Lev el 3	Lev el 1	Lev el 2	Lev el 3
Sha res	-	-	2,99 1	-	-	5,76 9
Tota l pe r lev el	-	-	2,99 1	-	-	5,76 9
Tota l all lev els	2,99 1			5,76 9
Fixe d in tere sts c ontr act	-	-	-	-	1,84 3	-
Tota l pe r lev el	-	-	-	-	1,84 3	-
Tota l all lev els	-			1,84 3

		202 0			20 19
Cur fi na ncia l liab ilitie rent s	Leve l 1	Lev el 2	Lev el 3	Lev el 1	Lev el 2	Lev el 3
Fixe d in tere st co ntra cts	-	-	-	-	1,66 4	-
Deb t to cred it ins titut ions	-	-	940 ,944	-	-	27,1 47,5 43
Lea sing liab ility	-	-	2,55 8,95 3	-	-	484 ,985
Cur ontr acts renc y sw ap c	-	-	-	-	168 ,547	-
Tota l pe r lev el	-	-	3,49 9,89 7	-	170 ,211	27,6 32,5 28
Tota l all lev els	3,49 9,89 7			27,8 02,7 39

		202 0			20 19
Non rent fi na ncia l liab ilitie cur s	Leve l 1	Lev el 2	Lev el 3	Lev el 1	Lev el 2	Lev el 3
Deb t to cred it ins titut ions	-	-	16,8 75,3 60	-	-	685 ,031
Lea sing liab ilitie s	-	-	255 ,288	-	-	3,79 9,29 8
Tota l pe r lev el	-	-	17,1 30,6 48	-	-	4,48 4,32 9
Tota l all lev els	17,1 30,6 48			4,48 4,32 9

Note 5 - Mortgage debt and other liabilities

	202 0	20 19
Mor tgag e	16,8 75,3 60	685 ,031
Oth er li abil ities	12,3 72	12,1 72
Lea sing obl igat ions	255 ,288	3,79 9,29 8
Tota l lon g-te rm d ebt	17,1 43,0 21	4,49 6,50 1
Sho rt-te ortio n of lon g-te rm d ebt rm p	3,49 9,89 7	25,8 8,72 2

For maturity profile reference is made to Note 4,

Reclassification of long-term liabilities to current liabilities

Current portion of long term debt includes MNOK 2,534 reclassification of lease obligation for Normand Maximus, due to a contractual default with a covenant waiver less than 12 months. Short term portion of long term debt includes a MNOK 658 loan trance for non-core vessels. These vessels will be circulated for sale. Any proceeds from the sales will reduce the loan trance. There are warrants issued for the loan trance. Any unsettled remaining debt after sale of the vessels will be converted to equity in accordance with the warrants. In the 2019 comparative figures long term debt of about MNOK 21,500 was in accordance with IFRS classified as Current portion of long term debt, due to the standstill agreements with the banks and bond holders where the covenant waiver period was less than 12 months.

of p Boo k va lue ledg ed a sset s:	202 0	201 9
Ban k de its a nd c ash ivale nts pos equ	2,41 1,90 5	110 ,702
Acc t rec eiva bles oun	839 ,628	889 ,032
Ves sels	19,4 76,3 54	22,4 90,4 94
Tota l bo oke d va lue	22,7 27,8 87	23,4 90,2 28

All owned vessels are placed as security for the mortgages.

Bor ing t an d in tere st r elie f: row cos	202 0	201 9
Cap italiz atio n bo ing cost rrow	122 ,570	75,6 13
Cap italiz ed i nter est relie f		93,3 72

Borrowing cost is presented net with the loans and is amortized until maturity of the loan.

Other long-term liabilities

Other long-term liabilities of NOK 12 million (NOK 12 million in 2019) are mainly loan from minority interests.

Parent Company Guarantee

Solstad Offshore ASA has issued a Parent Company Guarantee of MNOK 20,826, hereof lease guarantee of MNOK 2,556.

Changes in liabilities arising from fi nancing activities

	1 Ja nua ry 202 0	Refi nan ce effe ct	Fair val ue adju stm ent	Cas h fl o ws	Oth er	31 D mbe ece r 202 0
Cur rent inte rest bea ring liab ilitie s	27,1 47,5 43	-9,8 52,4 83	-	-1,0 77,1 55	-15, 276 ,961	940 ,944
Non rent inte rest bea ring liab ilitie -cur s	685 ,031	-	-1,0 12,0 25	1,46 7,96 2	15,7 34,3 91	16,8 75,3 60
Cur rent lea sing obl igat ions	484 ,985	-1,0 16,2 68	-	-220 ,335	3,31 0,57 2	2,55 8,95 3
Non rent lea sing obl igat ions -cur	3,79 9,29 8	-302 ,781	-	-	-3,2 41,2 29	255 ,288
Oth er lo ng-t liab ilitie erm s	12,1 72	-	-	201	-	12,3 72
Tota l liab ilitie s fro m fi cing ivitie act nan s	32,1 29,0 29	-11, 171 ,532	-1,0 12,0 25	170 ,673	526 ,773	20,6 42,9 18

	31 D mbe ece r 201 8	IFRS 16	1 Ja nua ry 201 9	Cas h fl o ws	Oth er	31 D mbe ece r 201 9
Cur rent inte rest bea ring liab ilitie s	25,8 88,7 22	-	25,8 88,7 22	-271 ,844	1,53 0,66 5	27,1 47,5 43
Non rent inte rest bea ring liab ilitie -cur s	1,08 1,10 1	-	1,08 1,10 1	-	-39 6,07 0	685 ,031
Cur rent lea sing obl igat ions	-	-	-	-207 ,775	692 ,760	484 ,985
Non rent lea sing obl igat ions -cur	3,01 0,55 0	1,41 6,71 0	4,42 7,26 0	-	-62 7,96 2	3,79 9,29 8
Oth er lo liab ilitie ng-t erm s	97,7 79	-	97,7 79	-7,4 11	-78, 197	12,1 72
Tota l liab ilitie s fro m fi cing ivitie act nan s	30,0 78,1 52	1,41 6,71 0	31,4 94,8 62	-487 ,030	1,12 1,19 6	32,1 29,0 29

The category other includes transfer from non-current liabilities to current portion and current effects.

Covenants:

Solstad Offshore ASA is subject to various financial covenants under its prevailing financing agreements. These are divided into two structures; one common set of covenants for the reinstated multicurrency term loan facility (including the "Super senior term loan") that was subject to the restructuring in 2020, with Solstad Shipholding AS as the registered borrower ("Solstad Shipholding") and separate covenants applicable to the remaining vessel owning companies in the Group.

In connection with the restructuring in 2020, the Group completed an organizational corporate restructuring with a view to dissolve the former silo structure of the Group, which was a result of the combinations with the REM Offshore, Farstad Shipping AS and Deep Sea Supply groups during recent years. The purpose of the corporate restructuring was to create a new simplified group structure, which also reflects the requirements under the Group's new financing structure. The restructuring also reduced the complexity in the daily operations and cash management in the Group. There is free float of liquidity between the companies in the structure that was subject to debt-to-equity conversion in the restructuring. Solstad Shipholding AS is the registered borrower for this reinstated debt. Cash flow in the remaining part of the Group is subject to ring-fencing within each borrower entity. There are restrictions in the Solstad Shipholding AS loan agreement to provide financial support the other ship owning entities in the Group. Vessels owned by both Normand Ships AS and Far Superior AS was subject to refinancing during the restructuring process with amended terms and conditions including extension of maturity dates to correspond to the term of the reinstated fleet loan facility in Solstad Shipholding AS, March 2024. Termination date for the underlying vessel financing in SOFO Tonjer AS and NISA Ltd is Sept 2021 and Feb. 2023 respectfully. The Group's financing of four vessels financed with the Brazilian development bank, BNDES, was not part of the restructuring, but amendments to these financings to meet the market conditions are ongoing. A preliminary deferral of installments under these agreements is agreed to end Aug. 2021. The exposure under these loan agreements is not guaranteed by the Company.

The loan agreements include customary security provisions including cross-collateralized mortgaged over relevant vessels, assignment of insurances and earnings, pledges over shares, assignment of any relevant intra-group loans, assignment over any

monetary claims under any hedging agreements (if relevant), pledge over bank accounts, step-in rights/direct agreements with respect to management agreements and such other security as reasonably required by the banks. Of the Groups senior secured facilities, the loan agreements in Solstad Shipholding AS and Far Superior AS are guaranteed by the Company. The loan agreements entered into in subsidiaries of Solstad Brasil Holding AS, Farstad Shipping Ltda and Deep Sea Navegacao Maritimos Ltda, is guaranteed by Farstad Shipping AS and Solship Invest 3 AS respectfully. The loan agreements in SOFO Tonjer AS, Normand Ships AS and NISA Ltd is not guaranteed.

As advised in our 4Q 2020 report there is a dispute with Saipem om payment of the termination fee amounting to USD 44,3 million related to the early termination of the time charter for "Normand Maximus". As a consequence of the early termination, Saipem were to pay a termination fee in the amount of USD 44,3 million in December 2020. Saipem has forwarded a counterclaim, and the termination fee due from Saipem to Normand Maximus Operations Limited has not been paid to date. Normand Maximus Operations Limited is pursuing the full claim for the termination fee legally. The termination fee has not been recognized in 2020. Normand Maximus Limited as bareboat charterer of the vessel, has since the termination of the time charter with Saipem, been in dialogue with Maximus Limited as owner of "Normand Maximus" and Maximus Limited's financiers, to find a long term solution for the lease financing of Normand Maximus following Saipem's early termination of the time charter, and solve liquidity issues resulting from the non-payment of the termination fee. On 3 March 2021, the fi nanciers of Maximus Limited enforced their share pledge over the shares in Maximus Limited, and the shares are thus now controlled by a syndicate of banks. The discussions with Maximus Limited for a solution have been ongoing for some time and are continuing notwithstanding the change of ownership to the shares in Maximus Limited. The Company believes there are good prospects that the discussions will lead to an agreement. The lease financing has customary default provisions for lease financings. These i.a entitles Maximus Limited to require Normand Maximus Limited to buy the vessel and/or exercise other rights and remedies under the lease financing if a solution is not found. Absent a solution, there is a risk in the current markets that Normand Maximus Limited as bareboat charterer of the Normand Maximus will not be able to finance such a purchase or other claims from Maximus Limited. As all obligations of Normand Maximus Limited are guaranteed by Solstad Offshore ASA, this could have a material adverse effect on Solstad Offshore ASA's financial situation.

The prevailing financial covenants for Solstad Offshore ASA are mainly summarized as follows:

Sol d S hip hol din g A S sta	Nor d S hips AS man
1. P osit ive king ital wor cap	1. P osit ive king ital wor cap
2. M in fr ee l iqui dity : Av aila ble Cas h m in M NO K 50 0	2. M in fr ee l iqui dity MN OK 10
3. In tere st C rat io > 1.0 x (a ppli cab le fr ove rage om 01.0 7.20 22 a nd f irst test ed 3 0.09 .202 2).	3. P osit ive MVC
MVC 4. P osit ive	SO FO Ton jer AS
	1. M in fr ee l iqui dity > M NO K 10
Far Sup erio r AS	2. M VC > 13 0%
1. P osit ive king ital wor cap
2. M in fr ee l iqui dity MN OK 5 (fr 01.0 1.20 22) om and MN OK 15 f 01. 07.2 022 rom	Nor d M axim us L imit ed ( BB Cha rter er) man
3. P osit ive MVC	Com y to nt th at S olst ad S hiph oldi ng A S m aint ains pan cov ena :
	1. P osit ive king ital wor cap
NIS td ( %) A L 50,1	in fr Cas NO 2. M ee l iqui dity : Av aila ble h m in M K 50 0
1. P osit ive king ital wor cap	3. In st C io > 1.0 x (a ppli cab le fr tere rat ove rage om 01.0 7.20 22 a nd f irst test ed 3 0.09 .202
2. M in fr ee l iqui dity MU SD 0,25	2).
3. M in M VC 200 %	Dee p S ea N ao M arit imo s Lt da ave gac

Farstad Shipping Ltda

1. No applicable financial covenants

Given the prevailing market conditions, the covenant with greatest associated uncertainty over the prevailing next 12 month period, is the collateral vessels fair market values tested against the underlying vessel debt. Remedies are however available for borrowers through partial down payment of relevant loan trances. Both the Group's working capital- and liquidity status was stabilized during the restructuring of 2020.

In addition to the financial covenants the loan agreements include customary provisions related to operational aspects related to acceptable ship registries, bareboat registrations, class requirements, information undertakings, sanctions provisions and such other requirements as reasonably required under bank financing agreements.

1. No applicable financial covenants

The Company is in compliance with all the covenants related to bank loan agreements at year end 2020.

	Ves sel	Fixt ure	Tota
Cos t pri ce 0 1.01 .202 0	35,1 91,3 17	267 ,797	35,4 59,1 14
Acc . de iatio ns / writ e do 01. 01.2 020 prec wns	-13, 367 ,002	-156 ,653	-13, 523 ,656
Boo k va lue 01.0 1.20 20	21,8 24,3 14	111 ,144	21,9 35,4 59
Add ition s	38,4 14	-	38,4 14
Disp ls osa	-3,0 10,7 94	-	-3,0 10,7 94
Tran sfer red	16,0 03	-41, 909	-25, 906
Tran sfer to a sset hel d fo le r sa	-10, 666	-16, 138	-26, 803
Disp ls of . de iatio ns / writ e do osa acc prec wns	1,90 3,09 4	-	1,90 3,09
Tran slat ion adju stm ent	53,4 18	-4,4 96	48,9 22
Cos t pri ce 3 1.12 .202 0	32,2 77,6 92	205 ,255	32,4 82,9 47
Acc . de iatio ns / writ e do 31. 12.2 020 prec wns	-13, 561 ,561	-171 ,990	-13, 733 ,551
Boo k va lue 31.1 2.20 20	18,7 16,1 31	33,2 65	18,7 49,3 96
Dep reci atio t pe riod n cu rren	-905 ,928	-12, 979	-918 ,907
Writ e do peri od ent wn curr	-1,1 91,7 25	-2,3 58	-1,1 94,0 82
	Ves sel	Fixt ure	Tota
Cos t pri ce 3 1.12 .201 8	38,8 28,7 50	266 ,826	39,0 95,5 75
Acc . de iatio ns / writ e do 31. 12.2 018 prec wns	-12, 025 ,112	-133 ,484	-12, 158 ,596
Cos t pri ce t ferre d to Rig ht-o f-us stes rans e as	-3,5 74,4 00	-	-3,5 74,4 00
Acc . de iatio n tra nsfe rred to R ight- of-u sset prec se a s	496 ,110	-	496 ,110
Cos t pri ce 0 1.01 .201 9	35,2 54,3 49	266 ,826	35,5 21,1 75
n / w n 01 .01. 201 9 Acc . de iatio rite dow prec	-11, 529 ,003	-133 ,484	-11, 662 ,486
Boo k va lue 01.0 1.20 19	23,7 25,3 47	133 ,342	23,8 58,6 88
Add ition s	55,0 07	2,94 4	57,9 51
Disp ls osa	-204 ,429	-	-204 ,429
Disp ls of . de iatio ns / writ e do osa acc prec wns	143 ,776	-	143 ,776
Tran slat ion adju stm ent	86,3 90	-1,9 72	84,4 18
Cos t pri ce 3 1.12 .201 9	35,1 91,3 17	267 ,797	35,4 59,1 14
Acc . de iatio ns / writ e do 31. 12.2 019 prec wns	-13, 367 ,002	-156 ,653	-13, 523 ,656
Boo k va lue 31.1 2.20 19	21,8 24,3 14	111 ,144	21,9 35,4 59
Dep reci atio t pe riod n cu rren	-954 ,775	-18, 267	-973 ,043
Writ e do ent peri od wn curr	-1,0 27,0 00	-4,9 02	-1,0 31,9 02
Cap italiz ed p erio dic mai nten anc e Cap italiz ed p erio dic mai nten e at 01. 01 anc		202 0 666 ,179	20 19 579 ,100
Add ition s th is ye ar		406 ,800	362 ,842
Disp l this osa yea r		-8,7 39
Dep reci atio n of pla d pe riod ic m aint this nne ena nce yea r		-280 ,983	-260 ,921
		-958
Writ e do wn t his y ear Tran slat ion adju stm ent		-22, 077	-14, 842

The vessels are divided into the following categories; hull, anchor-handling-, loading- and unloading equipment, main- auxiliary engine, thruster, DP and cranes and other equipment. Assumed physical lifetime for all categories are 30 years, while estimated useful life is 20 years. Estimation of residual value are based on marked values/ brokers values in the beginning of the year. The brokers values, sales related expenses deducted, are multiplied with a factor dependent on the vessels age. The factor is 50% for a new built, increasing to 100% for a 20 year old vessel.

Periodic maintenance is depreciated over the period until the next planned interim- and main docking takes place, respectively. The normal interval is 5 years for both interims- and main docking.

The depreciation rate for other equipment is 15-25%.

Vessels with a book value of MNOK 19,476 (MNOK 22,655 in 2019) are held as a guarantee for the Group's loans, see note 5.

There is no capitalized interest in 2020 or 2019.

IMPAIRMENT VALUATION OF FIXED ASSETS

Once a quarter, the Group assess whether there is any impairment indicators of the fixed assets. Indicators such as slow market recovery and declining third-party broker valuations indicate need for revaluation of the assets.

Impairment testing (value-in-use-calculation) was performed for all vessels where book value exceeds 65% of broker value. Broker value is set as an average of 3 acknowledged, independent brokers. Each vessel is considered a separate cash generating unit. The value-in-use-calculations are based on an updated long-term forecast for 2021-2024. The current market, and few sales of vessels on normal market terms, makes valuation of vessels uncertain.

Discounting Rate

The discounting rate is based on a weighted average cost of capital (WACC) for the Group. The cost of equity is derived from the 10-year interest rate for state bonds (risk-free interest rate), the Groups own market risk premium and an unlevered beta (Damodaran for Western Europe). The debt element of the discounting rate is based on the risk-free interest rate, plus the Group's average margin for secured debt, as well as a premium equivalent to the difference between risk-free interest rate and the bank's lending rates. The discounting rate used for 2020 is 9 %.

REVENUE ASSUMPTIONS

For vessels having firm contracts, revenue is based on the current contracts. For vessels without firm contracts, and for vessels where the firm contract expires during the period, revenue is based on budget and long term forecast. For the first period it is expected that the day rates for the PSV- and AHTS segment will remain low. From 2025 to 2027 it is assumed a gradual increase of revenue to a level which correspond to the average rates for the past 7-10 years. It is expected that the markets are normalized within 2027.

INFLATION

Escalation of revenue is expected to be marginal for the coming year. Hence, it is used a low (<1%) or no inflation of revenue in 2021. Operating cost is adjusted for inflation by 2%. Inflation of revenue correspond to cost from 2025.

RESIDUAL VALUES

Estimated residual values used in the value in use calculations are set using the same principle as for the ordinally depreciations. Initially the value is set to 50% of cost price, expected cost of sale deducted, and adjusted according to changes in broker valuations. The assumption is that the broker values decline by 2,5% per year, until the vessel is 20 years old. It is assumed that the vessels are sold after 20 years in operation.

IMPAIRMENT TESTING

Based on the impairment test 47 vessels were written down by MNOK 1,193 in 2020. The impairment was divided on segments as follows (remaining recoverable amount in parentheses): PSV MNOK 566 (MNOK 6,117), AHTS MNOK 552 (MNOK 4,622) and CSV MNOK 74 (MNOK 8,737).

SENSITIVITY CALCULATIONS

The sensitivity of the value-in-use-calculations for the vessels with write-downs is analyzed by altering the key assumptions; discounting rate, cost escalation, utilization and day rates. A change of discounting rate by 1% point and 2% points would have resulted in a changed impairment of MNOK 150 and MNOK 710, respectively. A reduction in dayrates or utilization bringing the revenue down by 3-6%, will increase the write-down by MNOK 150-540. With an inflation of cost of 5% points higher, the write-down would increase by approximately MNOK 70.

ASSETS HELD FOR SALE

In Q1 2021 the Company have sold tree PSV's the assets is classified as held-for-sale in the Statement of Financial Position. The book value is MNOK 10.7.

The Company has in Q1 2021 sold an onshore training facility. The asset is classified as held-for-sale in Statement of Financial Position. Total book value is MNOK 16.

Note 7 - Right-of-use assets

	Righ t-of- asst use es
	Ves sels	Offi ce	Tota l	Lea se liab ilitie s
Bala 01.0 1.20 20 nce	3,52 1,30 9	250 ,597	3,77 1,90 6	4,28 4,28 3
Oth djus tme nts er a	-	22,6 13	22,6 13	-
Add ition s	3,39 3	-	3,39 3	-
Disp ls osa	-551 ,297	-	-551 ,297	-1,3 19,0 49
Tran slat ion adju stm ent	49,0 00	-15, 819	33,1 81	69,3 43
Dep reci atio n	-109 ,552	-12, 924	-122 ,475	-
Imp airm ent	-700 ,000	-	-700 ,000	-
Inte rest exp ens e	-	-	-	241 ,442
Lea sing t pay men	-	-	-	-461 ,777
Clos ing bala 31.1 2.20 20 nce	2,21 2,85 4	244 ,468	2,45 7,32 2	2,81 4,24 2

	Righ t-of- asst use es
	Ves sels	Offi ce	Tota l	Lea se liab ilitie s
Bala 31.1 2.20 18 nce	0	0	0	0
Lea se l iabi lity r gniz ed a t ad opti f IFR S 16 eco on o	595 ,000	269 ,141	864 ,141	1,41 6,71 0
sfer from fi na Tran leas itme nts nce e co mm	3,07 8,29 1	-	3,07 8,29 1	3,01 0,55 0
Ope ning bal e 01 .01. 201 9 anc	3,67 3,29 1	269 ,141	3,94 2,43 2	4,42 7,26 0
Tran slat ion adju stm ent	36,1 74	4,45 7	40,6 31	59,4 21
Add ition s	-	10,5 49	10,5 49	10,5 49
Oth djus tme nts er a	-	-5,1 72	-5,1 72	-5,1 72
Dep reci atio n	-188 ,156	-28, 377	-216 ,534	-
Inte rest exp ens e	-	-	-	282 ,931
Lea sing t pay men	-	-	-	-490 ,706
Clos ing bala 31.1 2.20 19 nce	3,52 1,30 9	250 ,597	3,77 1,90 6	4,28 4,28 3

Impairment testing of Right-of-use assets

Based on value-in-use-calculations the impairment was MNOK 700 in 2020 (MNOK 0 in 2019). Further reference is made to Note 6 Tangible Fixed Assets.

Guarantee

Vessel lease liability is guaranteed by the Parent Company with MNOK 2,556, for further reference is made to Note 5 Mortage Debt and Other Long-term Liabilities and Note 2 Major Transactions/Events.

The Parent Company has also guaranteed for a put option related to the leased vessel. The put is valued at MUSD 323 as of 31.12.2020.

Annual Report 2020Default put option The lease agreement for Normand Maximus includes a default put option. Year end 2020 the Company is in a contractual default. As the default was effective within the non-cancellable period and was not exercised at the end of 2020, the effect is not recognized in the balanse sheet. Further reference is made to Note 2 Major Transactions/Events. Variable lease payments The Company has two vessels on lease with variable lease payments. The total payments for 2020 was MNOK 6.5 (MNOK 0 in 2019).

Note 8 - Financial items

Fina ncia l item s	202 0	20 19
Inte rest exp ens es	-1,4 37,6 19	1,64 4,51 0
Inte rest inc ome	6,37 3	14,8 27
Net loss curr ency	-420 ,456	-137 ,978
Inco from inv estm ent in as iate d co nies me soc mpa	41,4 23	40,7 66
Gai le sh n sa ares	155	53,2 66
Gain / los s (-) fi na ncia l de rivat ives	-17, 084	3,19 3
of s Imp arim ent hare s	-294 ,745	-200
Divi den ds	-	350
Oth er fi cial inco / -ex ce ( -) nan me pen	-68 805	-63, 874
Res truc turi ffec ts: ng e
Der gnit ion of c apit alize d bo ing cost d in tere st re lief eco rrow s an	-127 ,085	-
Term inat ion of R ight -of- ets (IFR S 16 ) use -ass	-550 ,950	-
Gai n de bt c erte d to ity onv equ	9,64 4,36 3	-
Gai rcha f ow n de bt n pu se o	942 ,343	-
Gai n fa ir va lue gnit ion of d ebt reco	1,06 6,63 9	-
Gai n fa ir va lue w nts arra	177 ,950	-
Inte rest reli ef re fi na ncin g	514 ,275	-
Net fi na ncia l ite ms	9,47 6,77 6	-1,7 34,1 60

Currency gain and -loss is mainly relating unrealized currency gain and -loss on assets and liabilities in foreign currency, change in currency rates in the period from posting of invoices and actual timing of payments and realised currency gain and -loss related to refi nancing og loan.

Restructuring effects:

Derecognition of capitalized borrowing costs and interest relief includes all remaining balances relating to refi nanced loans and obligations scheduled to be amortized over previously agreed maturity period.

Termination of Right-of-use-assets relates to 6 vessels accounted for as IFRS 16-leases. The 6 vessels were hired on long-term leasing contracts with related parties (Ocean Yield and Ship Finance International). The cost represent the remaing book value of the vessels at the time of termination. The corresponding remaining lease obligations for the vessel is included in the debt converted to equity.

Gain debt converterted to equity represent the book value of loans and obligations at March 31st, 2020 being converted to equity by issuing shares in Solstad Offshore ASA.

Annual Report 2020Gain purchase of own debt relates to a pre-convertion of debt to equity process where about MNOK 966 of the debt was re-purchased. Gain fair value recognition of debt represents the calculated difference between face value an fair value for the refi nanced debt at initial recognition. The difference will be amortized and presented as interest expense over the period until fi nal maturity of the loan. Gain fair value of warrants relates to the part of the refi nanced debt specifi cally allocated to the non-core part of the fl eet. Warrants are issued for this debt. The warrants are measured at the end of each accounting period.

Interest relief refi nancing represent the calculated interest for the period between March 31st and October 20th, 2020. Interest for this period was calculated and recogniced during 2020. At effective date for the refi nancing the calculated interests for this period was reliefed.

Note 9 - Other expenses, wages, employees and distinctive controbutions

Oth ting er o pera exp ens es:	202 0	20 19
Tec hnic al co st	569 ,457	534 ,909
Bun ker and lub e oi l	181 ,152	177 ,147
Insu ranc e	106 ,186	85,3 66
IT, c unic atio nd o ther ts omm ns a cos	634 ,876	659 ,494
Tota l oth ting er o pera exp ens es	1,49 1,67 1	1,45 6,91 6
Wag nd p l co sts: es a erso nne
Emp loye sels es, ves	2,02 5,67 5	2,09 6,16 5
Emp loye adm inist ratio es, n	304 ,531	323 ,507
Tota l em ploy ost ee c	2,33 0,20 6	2,41 9,67 2
Wag nd e mpl st: es a oye e co
Wag es	1,74 8,73 7	1,72 6,32 5
Soc ial s rity ecu	193 ,903	254 ,815
Pen sion ts cos	12,0 75	19,1 44
Oth er b fi ts ene	42,3 47	62,9 67
Trav elin sts, and oth l cos ts g co cou rses er p erso nne	333 ,144	356 ,421
Tota l em ploy ost ee c	2,33 0,20 6	2,41 9,67 2
Ave ber of m rage num an-y ears	3,52 8	3,54 9

Renumeration to Directors, Managing director and Auditors

202 0	Wag es	Bon us	Oth er b fi ts ene	Pen sion t cos
Lars Ped er S olst ad ( CEO )	2,31 2	2,28 9	155	107
Kjet il Ra mst ad ( CFO )	1,77 9	1,56 2	155	103
Tor Inge Da le (C OO)	1,89 2	703	11	107
Han s Kn ut S kår (EV P Su bsea & R wab le E y) ene nerg	1,89 2	703	11	114
Ken neth Lan de ( EVP AH TS / PS V)	1,89 2	703	11	109
	9,76 7	5,96 0	345	540

201 9	Wag es	Bon us	Oth er b fi ts ene	Pen sion t cos
Lars Ped er S olst ad	2,25 4	-	154	104
Sve n St akke stad (De CE O) puty	1,89 4	-	100	351
And Hall Jom (CF O) ers aas	2,05 0	-	11	101
Han s Kn ut S kår (EV P Su bsea Co nstr uctio ns)	1,84 5	-	11	104
Ken neth Lan de ( EVP AH TS / PS V)	1,84 5	-	11	109
Tor Inge Da le (C OO)	1,84 5	-	11	105
	11,7 34	-	297	874

There are no distinctive agreements regarding remuneration for the Chairman of the Board and neither are there any distinctive bonus or option programmes for any Board Member. No loans have been given to the company management.

The Chief Executive Offi cer has an agreement securing 12 months salary and in addition a right to subscribe 5,038,187 shares in the Company with a nominal value of NOK 1 per share.

At year-end 2019, the Group established certain discretionary incentive schemes for key executives, the outcome of which was contingent on the refi nancing process and continued employment. The amounts to be paid under these schemes was linked to the base salary of the respective employees and could maximum, for certain executives, be 12 months of salary.

Boa rd o f Di rect fee: ors	202 0	20 19
Har ald Esp eda l	676	401
Tori l Eid ik esv	443	278
Fran k O. Re ite	376	240
Elle n So lstad	370	278
Har ald Tho rste in	390	240
Mer ete Hau gli	383	240
And Ona rhei ers m	25	25

Aud itor s EY	202 0	20 19
Aud it - s tatu tory ts acc oun	13,1 51	12,5 71
Oth ttes tatio rvic er a n se es	50	82
Tax rela ted ices serv	5,80 6	2,15 0
Oth ervi er s ces	10,8 83	1,06 6
Tota l	29,8 90	15,8 69

Audit fees relates to statutory audit of accounts. Fee for tax advice is mainly assistance related to tax reporting to authorities in other countries. For 2020 and 2019 these services are mainly realted to crew, and hence, they are viewed as compliance services. Auditor-related services include consultancy, reports and assistance on accounting matters and the restructuring process.

Note 10 - Government grants

	202 0	20 19
Net sch at N OR- sels pay eme ves	206 ,973	177 ,466
Gov ent ts to red uctio n of roll ernm gran pay exp ens es	206 ,973	177 ,466

Solstad Offshore Crewing Services Pte Ltd

Solstad Offshore Crewing Services Philippines Inc (25 %)

Partrederiet International Offshore ANS

50 %

50 %

Pioneer Offshore Ltd

Pioneer Offshore LP

Nor Offshore Labuan Pte Ltd

Farstad Shipping Ltd

Deep Sea Supply Mgmt (Ghana) Ltd) (90 %)

Deep Sea Supply Crew Cyprus Ltd

DeepSea S upply M (Gh )

Rem Crewing AS

Rem

Rem Norway AS

Contents

Farstad Subsea AS

Farstad Afrika AS

Farstad

SOFO Tonjer AS

55 %

SOFO Tonjer IS (56 %)

1 %

72

Contents

Annual Report 2020Note 12 - Share in Joint Ventures, Associated companies and other investments The Group accounts consists of the following shares in joint ventures (JV) and associated companies (AC):

		Plac e of Bus ines s	Ow hip ners	of Date Fina ncia l stat nt eme
ler S A (N ISA ) Nor d In stal man	JV	ly, S Mar veits	50%	31.1 2.20 20
Sols tad Offs hore Cre wing Ser vice s Ph ilipp ines (SO CS)	AC	Man ila, P hilip pine s	25 %	31.1 2.20 20
Max imu s Li mite d (M AXL )	AC	Geo rgeT , Ca n Is land own yma s	25 %	31.1 2.20 20
DES S A cult Ship ping AS (AQ UA) qua ure	AC	Grim stad	26.5 3 % *	31.1 2.20 19

* Sold in 2019

Normand Installer SA owns one contruction service vessel hired on time charter to a company associated with the other part of the joint venture.

Solstad Offshore Crewing Services Philippines deliver crewing services to the Group.

Maximus Limited is the legal owner of the vessel Normand Maximus which the Group has on fi nancial lease.

All the above investments are strategic for the Group.

DESS Aquaculture Shipping AS is engaged to build, own and operate aquaculture vessels.

Join t ve ntu re N ISA :	202 0	20 19
Cos ce 0 1.01 t pri	1,63 1	1,63 1
Acc ult a nd a djus tme nts res	90,9 28	134 ,361
Boo k va lue 01.0 1.	92,5 59	135 ,992
Sha f res ult re o	23,9 75	-44 ,787
Oth djus tme nts er a	-6,6 30	1,35 4
Boo k va lue 31.1 2.	109 ,904	92,5 59
Bala she et: nce
Ban k de it an d ca sh e quiv alen ts pos	39,4 96	30,9 41
Cur rent ets ass	33,4 24	23,1 13
Lon g-te sset rm a s	504 ,000	565 ,000
Sho rm l iabi lities rt-te	-50, 067	-152 ,966
rm fi Lon g-te cial liab ilitie nan s	-322 ,148	-280 ,970
Net Ass ets	204 ,704	185 ,118
Sha f ba lanc e sh eet: re o	102 ,352	92,5 59
Rev d pr ofi t: enu e an
Rev enu es	202 ,429	148 ,767
Ope ratin g ex pen ses	-82, 492	-69 ,933
Dep reci atio ns	-15, 947	-18, 225
Imp airm ent	-30, 617	-119 ,188
Fina ncia l inc ome	2,14 6
Inte rest exp ens e	-27, 535	-30 ,992
Reu slt b efor e ta x	47,9 83	-89, 571
Tax es	-33	-4
Res ult	47,9 50	-89, 575
Sha f rev d pr ofi t: re o enu e an	23,9 75	-44 ,787

Ass ocia ted ies com pan	202 0
	SOC S	MA XL		Tota l
Cos t pri ce 0 1.01	385	250 ,853		251 ,239
Acc ult a nd a djus tme nts res	949	41,6 58		42,6 07
Boo k va lue 01.0 1.	1,33 5	292 ,511		293 ,846
Sha f res ult re o	-169	41,5 92		41,4 23
Imp airm ent of in vest t (1) men		-294 ,745
Oth djus tme nts er a	-38	-39, 358		-39 ,396
Boo k va lue 31.1 2.	1,12 8	-		1,12 7
Sha f ba lanc e sh eet: re o
Cur rent ets ass	4,88 6	38,6 13		43,4 99
Lon g-te sset rm a s	601	688 ,651		689 ,251
Sho rt-te rm l iabi lities	-5,0 68	-11, 964		-17, 032
Lon g-te rm fi cial liab ilitie nan s	-5	-413 ,231		-413 ,236
Net Ass ets	414	302 ,069		302 ,483
Sha f rev d pr ofi t: re o enu e an
Rev enu es	2,57 3	92,3 41		94,9 14
Ope ratin g ex pen ses	-2,7 57	-29, 502		-32 ,259
Fina ncia l exp ens e	104	-21, 247		-21, 143
Reu slt b efor e ta x	-81	41,5 92		41,5 11
Tax es	-62			-62
Res ult	-143	41,5 92		41,4 49

(1) The investment in Maximus Limited is writen down to zero in 2020.

Ass ocia ted ies com pan	201 9
	SOC S	MA XL	AQU A	Tota l
Cos t pri ce 0 1.01	385	250 ,853	225 ,041	476 ,280
Acc ult a nd a djus tme nts res	1,42 6	35,7 94	-3,3 41	33,8 78
Boo k va lue 01.0 1.	1,81 1	286 ,647	221 ,700	510 ,158
Sha f res ult re o	-49 5	39,0 71	2,19 0	40,7 66
Oth djus tme nts er a	19	-33, 207	-223 ,889	-257 ,078
Boo k va lue 31.1 2.	1,33 5	292 ,511		293 ,846
Sha f ba lanc e sh eet: re o
Cur rent ets ass	4,98 7	36,6 92		41,6 79
Lon g-te sset rm a s	921	738 ,890		739 ,811
Sho rt-te rm l iabi lities	-5,1 01	-12, 384		-17, 485
Lon g-te rm fi cial liab ilitie nan s	-18	-46 7,60 4		-46 7,62 2
Net Ass ets	789	295 ,594		296 ,383
Sha f rev d pr ofi t: re o enu e an
Rev enu es	2,52 8	99,8 64		102 ,393
Ope ratin g ex pen ses	-3,2 43	-30 ,403		-33 ,646
Fina ncia l exp ens e	432	-30 ,390		-29, 958
Reu slt b efor e ta x	-283	39,0 71		38,7 89
Tax es	-55			-55
Res ult	-338	39,0 71		38,7 34

0 02 2 t	Fina ncia l as sets at a tize d mor t - lo ng t cos erm	202 0		201	9
or p e	Unli sted sha res	Sha re	Boo k va lue	Sha re	Boo k va lue
R al	Blei vik S IM H oldi ng A S	29.5 4 %	2,99 1	29.5 4 %	2,99 1
u n	Soln ør G aard Go ldba ne A S	0.00 %	-	6.43 %	1,66 5
n A	Offs hore Sim ulat or C ente r	0.00 %	-	25.0 0 %	910
	Sun re G old AS nmø	0.00 %	-	0.94 %	203
	Hafa st A S	2.64 %	-	2.64 %	-
			2,99 1		5,76 9

Based on, amongst others, no board representation, the Group does not have signifi cant infl uence on the above mentioned companies.

The shares in Hafast AS was written down to NOK 1 in 2019.

Fina ncia l as sets at f air v alue thr h pr ofi t and los nt oug s - c urre			202 0			20 19
Liste d sh ares	Cos t pri ce	Sha re	Boo k va lue	Cos t pri ce	Sha re	Boo k va lue
Rea ch S ubs ea A SA	10,0 00	5.48 %	11,1 00	10,0 00	5.48 %	7.95 0
Tea m T ank Inte iona l Ltd rnat ers	5,00 0	0.03 %	-	5,00 0	0.03 %	265
			11,1 00			8.21 5

Investments available for sale are shares which have no fi xed maturity or return.

Share in listed companies are valued at fair value at year end. Fair value of shares in unlisted companies is based on the companies' latest fi nancial report.

Subsidaries with signifi cant non-controlling interests

The Group have four subsidaries with signifi cant non-controlling interests (NCI) as of 31st December 2020. Information regarding these is as follows (NOK 1,000):

202 0 Nam e	Cou ntry	NC I	Res ult allo cate d to NCI	Acc late d umu NCI	Paid div iden d
SOF O F s AS alne	Nor way	4 %	233	-2,6 40	-
Rem Sup ply A S	Nor way	27 %	5,37 9	-21, 521	-
SOF O To njer IS	Nor way	44 %	6,32 2	39,9 75	-

201 9 Nam e	Cou ntry	NC I	Res ult allo d to cate NCI	Acc late d umu NCI	Paid div iden d
SOF O F alne s AS	Nor way	4 %	-575	-2,8 73	-
SOF O S e AS kud	Nor way	7 %	-504	-1,18 9	-
Rem Sup ply A S	Nor way	27 %	-2,7 53	-26 ,900	-
SOF O To njer IS	Nor way	44 %	4,09 6	33,6 53	-

2020

Con den sed fi na ncia l sta tem ent	SOF O F alne s AS	Rem Sup ply A S	SOF O To njer IS
Non rent ets -cur ass	-	229 ,341	176 ,331
Cur rent ets ass	15,7 05	70,8 55	37,3 15
Tota l as sets	15,7 05	300 ,195	213 ,646
Lon g te rm l iabi lities	10,2 15	355 ,372	99,9 92
Sho rt te rm d ebt	73,6 64	26,0 69	23,1 05
Tota l lia bilit ies	83,8 79	381 ,441	123 ,096
Rev enu e	30 8 43	77,2 99	57,5 62
Res ult a fter tax	6,01 2	20,1 74	14,3 69

2019

Con den sed fi na ncia l sta tem ent	SOF O F alne s AS	SOF O S kud e AS	Rem Sup ply A S	SOF O To njer IS
Non rent ets -cur ass	176 ,722	201 ,403	235 ,005	191 ,338
Cur rent ets ass	23,2 52	24,5 10	20,8 95	60,7 13
Tota l as sets	199 ,974	225 ,912	255 ,900	252 ,051
Lon g te rm l iabil ities	236 ,738	234 ,369	338 ,627	162 ,690
Sho rt te rm d ebt	37,2 83	10,4 82	18,1 93	12,8 78
Tota l lia bilit ies	274 ,022	244 ,851	356 ,821	175 ,568
Rev enu e	25,8 65	36,6 24	69,7 48	64,0 37
Res ult a fter tax	-14, 824	-7,7 50	-10, 325	9,30 9

Note 13 - Insurance settlements

When damages occur to vessels or equipment that are reported as insurance cases, the Group pays for the repairs in advance. The following compensation has been received from the insurance companies:

	202 0	20 19
Rec eive d co tion mpe nsa	69,8 45	47,2 73

Insurance deductible per damage is included in Other operating expenses.

Freight revenue includes recognition of Loss of Hire-revenues of MNOK 29 and MNOK 40 for the two last years respectively.

N 1 4 S h i l, t t o e a r e c a p a s -	h h l d a r e o e r	s
d h t a n r e a s r s a r e s u y
	Sha res	Sha apit al re c
01.0 1.20 20	291 ,532 ,299	583 ,065
Sha apit al d re c ecre ase	-29 1,24 0,76 7	-582 ,773
Sha apit al in se b rtion of d ebt re c crea y co nve	48,0 74,6 88	48,0 75
Sha apit al p riva t pla ent re c cem	26,5 06,4 62	26,5 06
31.1 2.20 20	74,8 72,6 82	74,8 73
01.0 1.20 19	291 ,532 ,299	583 ,065
31.1 2.20 19	291 ,532 ,299	583 ,065

At 31.12.19 the Company's share capital represents 291,532,299 shares at NOK 2.

In an Extra Ordinary General Meeting on 20.10.20 the share capital was decreased by 291,240,767 shares. Subsequently, in the same meeting, the share capital was increased by 48,074,688 and 26,506,462 shares through convertion of debt and a private placement.

At 31.12.20 the Company's share capital represents 74,872,682 shares at NOK 1.

As at 31.12.2020 the Group had 139 treasury shares with cost price of MNOK 9.6. As at 31.12.2019 the Group had 140,522 treasury shares with cost price of MNOK 9,6.

Note 15 - Earnings per share

Earnings per share are calculated by dividing the Group result by the weighted average number of shares for the period, adjusted for treasury shares. There are no instruments that prevents the possibility of dilution.

	202 0	20 19
Maj ority ult f net fi t fo r the res rom pro yea r	7,24 0,74 3	-3,1 29,5 58
Res ult f net fi t fo r the rom pro yea r	7,25 3,86 6	-3,1 29,2 94
Ave ber of s hare rage num s	249 ,041 ,851	291 ,532 ,299
Ave ber of T sha rage num reas ury res	112, 830	140 ,522
Ave ber of s hare calc ulat rnin hare s to rage num e ea gs p er s	248 ,929 ,021	291 ,391 ,777
re (N OK) Earn ings sha ajor ity per - m	29.0 9	-10. 74
Earn ings sha re (N OK) per	29.1 3	-10. 73

Note 16 - Transactions with related parties

In addition to general management services, the Group has the following transactions with related parties:

	Inco	me	Exp	ens es	Rec eiva	bles	Pay	able s
	202 0	201 9	202 0	201 9	202 0	201 9	202 0	201 9
Join t ve ntu anie re c omp s
Nor d In stal ler S A man	131	2,81 8		45,8 30	47,1 61
Oth elat ed p arti er r es
Ivan Eie ndo m			10,5 66	9,71 7
Oce an Y ield			35,3 15	72,5 06			871 ,400
Ship Fin e In tern atio nal anc			16,4 21	65,7 37			634 ,548

The Group's affi liation with related parties:

Normand Installer SA is a joint venture company in which the Group has a 50% share. Receivable relates to a shareholders loan. Income is interests.

The Group leases offi ces and a warehose at market price from Ivan Eiendom, a company controlled by a related party.

In 2019 the Group had two vessel on lease from Ocean Yield (company controlled by one of the larger shareholders). Further, the Group leased fi ve vessels from Ship Finance International (company controlled by one of the larger shareholders). During 2020 all seven leases were terminated. The two vessels from Ocean Yield were subsequently hired on bareboat.

From time to time the Group has business relationship with Aker BP ASA, a company affi liated with one of the larger shareholders.

Board Members and the Company's Management are considered as related parties. There are no management agreements with related parties outside the Group that charge management fees.

Transactions with related parties are completed at normal market prices. Interests are not calculated on outstanding balances with related parties considered to be normal accounts receivable or payable. Current assets are included in the ordinary evaluation of bad debt.

	202 0
Tax able pay	16,3 13
Und er/o rual of t ble ver acc ax p aya	8,15 4
Cha in d efer red taxe d nge	-27, 984
Tax ordi ult on nary res	-3,5 17
App orti of ta ord inar sult ent onm x on y re :
Nor ian t ord inar weg ax - y	5,46 2
Fore ign t ax	-8,9 79
Tota l tax	-3,5 17
Tem diff por ary eren ces :
Fixe d as sets (ve ls an d ot her rent ets) sse non -cur ass	1,39 4,91 2
(cu ) Rec eiva bles t as sets rren	-2,5 60,6 94
Oth nt a sset er c urre s	69,9 02
Pen sion	-25, 015
Tax ition rela ted to s old ets pos ass	-193 ,601
Inte rest ded uctio arrie d fo rd ns c rwa	-2,2 02,2 54
Unr d lo arrie d fo rd eco vere ss c rwa	-15, 203 ,545
iffer Tota l tem ry d pora enc es	-18, 720 ,295
Tax eff ect on t ry d iffe ora renc es:
emp Fixe d as sets (ve ls an d ot her rent ets) sse non -cur ass	306 ,881
Rec eiva bles (cu t as sets ) rren	-56 3,35 3
Oth nt a sset er c urre s	15,3 78
Pen sion	-5,5 03
Tax ition rela ted to s old ets pos ass	-42 ,592
Inte rest ded uctio arrie d fo rd ns c rwa	-48 4,49 6
Unr d lo arrie d fo rd eco vere ss c rwa	-3,3 44,7 80
Defe rred tax ets not gnis ed ass reco	4,11 2,88 4
Net defe rred / de ferre d ta (-) tax set x as	81 -5,5
Cha in d efer red tax in th e ba lanc e sh eet:
nge Ope ning bal e de ferre d ta anc x	16,6 37
Boo ked to p rofi t and los s	-27, 984
Cha d to ity ( cha sion ) nge equ nge pen	-1,7 74
Tran slat ion adju stm ent	7,54 0
ferre x / d efer et (- ) End bal e de d ta red tax anc ass	-5,5 81
Pay able tax in t he b alan hee t co nsis t of ce s :
Oth ble orat ion t er p aya corp ax	168 ,016
Tota l pay able tax in t he b alan hee t ce s	168 ,016
Ton e ta x is clas sifi e d as ratio nal ens es
nag ope exp
Ana lysi s of eff ecti ve t ate: ax r
22 % of p re-ta sult x re	1,59 5,07 7
Effe ct o f de ferre d ta set gnis ed x as nor reco	481 ,787
Cor rect ion of p revi ous yea rs	-23, 772
Diffe rent ial in tax rate s fo reig titie n en s	-1,7 47
Perm nt d iffer es/ Ship ping Tax Re gim ane enc e	-2,0 54,8 61
Esti mat ed t ax	-3,5 17

Deferred tax asset is based on a tax rate of 22%.

Deferred tax on deviating values in associated companies with foreign partnerships has been included in the Group accounts. Further, deferred tax is calculated on scenarios where a future realization will lead to a tax liability.

Deferred tax assets from losses carried forward are recognized under the assumption that companies under the ordinary tax regime will have taxable income in the future. This taxable income is related to ordinary income, gain from sale of fi xed assets and taxable fi nancial income.

The Group has an international business. The taxable treatment of transactions, operations and structures in foreign countries may be challenged by local tax authorities, and may result in future tax obligations. Contingent liabilities are recognized in the accounts if they are more likely than not to occur. At the end of the year the Group has included an MNOK 160 accural for expected taxes related to operations in foreign waters. The accounts refl ect the Groups best estimate for contingent liabilities at the end of the year.

Exit from the Norwegian tonnage tax regime was performed in 2020. The exit had effect from January 1st, 2016. An unrecovered loss carry forward of NOK 10 billion was claimed for the period from 2016 to 2018.

Note 18 - Pension

The Group has defi ned benefi t pension plans for seafaring personnel in United Kingdom, for some of the seafaring personnel in Norway, and for some of the administrative personnel. The pension plans are insurance based. As at December 31, 2020, the pension plans have 16 actives and 98 pensioners as members.

The Group has a contribution plan for the majority of the seafaring personnel in Norway and administrative staff. The Group's pension scheme meets the requirements of the Norwegian law of Occupational pension.

The fol low ing tion ed: ass ump s ar e us	UK 202 0	UK 201 9	NO RW AY 202 0	NO RW AY 201 9
Disc ted inte rest oun	1.10 %	2.00 %	1.70 %	2.30 %
Exp ecte d re turn			1.70 %	2.30 %
Reg ulat ion of s alar ies	3.90 %	4.00 %	2.25 %	2.25 %
Reg ulat ion of b unt ase amo			2.00 %	2.00 %
Reg ulat ion of p ion ens	2.40 %	2.50 %	1.50 %	1.50 %
Cha s in sion ob liga tion nge pen :			202 0	201 9
Esti mat ed l iabi lity a t be ginn ing of th e ye ar			434 ,975	635 ,476
Inte rest exp ens e			11,5 98	15,7 70
Ann ual sion ning pen ear s			9,06 6	34,4 41
Cur tailm / se ttlem ent ent			-196 ,928	-131 ,531
Pay roll tax loye ntrib utio sset emp r co n, a s			-1,3 87	-5,5 26
Ben efi ts pai d			-13, 528	-32 ,228
Pas t se rvic st e co			47	-
Actu aria l (ga in) / loss the obli gati on on			12,7 38	-81, 427
Esti ed l iabi lity a nd mat t ye ar e			256 ,580	434 ,975
Cha s in pla sets nge n as :
Ope ning val f pla sets ue o n as			408 ,384	516 ,218
Exp ecte d re turn			8,53 1	13,2 86
Cur tailm ent / se ttlem ent			-189 ,916	-104 ,170
Pay roll tax of e mpl ntrib utio sset oye r co n, a s			-59 1	-872
Con tribu tion s by ploy em er			11,0 28	40,9 17
efi ts Ben pai d			-10, 914	-29, 570
Actu aria l ga in / (los s)			5,04 3	-27, 425
Esti mat ed p lan ets at y end ass ear			231 ,565	408 ,384

		202 0	201 9
t or	Net plan ets/ liab ilitie ass s:
p	Pen sion liab ilitie s	256 ,580	434 ,975
R al	Plan ets ass	231 ,565	408 ,384
	Net plan ets/ (lia biliti es) incl ial s rity ass soc ecu	-25, 015	-26, 591
	Soc ial s rity ecu	-3,0 91	-3,1 41
	Pen sion t: cos
	Pres ent valu e of sion obl igat ion pen	11,2 60	34,1 05
	Inte n ob ligat ion rest exp ens es o	9,06 6	15,7 70
	Exp ecte d re turn plan ets on ass	-8,5 31	-13, 286
	Adm inist ratio n ex pen se	929	1,20 8
	Rec ition of p ast ice c ost ogn serv	47	-
	Sett lem ent/ curt ailm f ne t ob ligat ion en o	-7,0 13	-27, 361
	Pen sion t cos	5,75 8	10,4 37
	Pay tribu tion pla t on men con n	6,31 7	8,70 8
	Tota l pe nsio st n co	12,0 75	19,1 44
	Actu al re turn plan ets on ass	13,5 74	-14, 138
	Act uria l ga in a nd l (-) oss
	Tota l act uria l ga in / loss	-7,7 00	53,8 87
	Cur renc y	5	115
	Tax effe ct	1,77 4	-11, 837
	Actu rial gain / lo ss b ook ed o n Ot her preh ive i com ens nco me	-5,9 21	42,1 65

Expected contribution by employer in 2021 is NOK 3.9 million.

Pension liability for 2020 and 2019 is based on table K2013 for Norway and S2IA for UK.

Individual pension agreements

From the merger with Farstad the Group has an individual pension obligation for four former employees and one former Chairman of the Board. A total liability of NOK 6.1 million is included in the net liability above (NOK 8.7 million in 2019). Plan assets are invested in a wide portfolio by an external insurance company. The insurance company is responsible for total administration of the pension plan.

For both years the "Norwegian Covered Bonds Market"-interest rate is used as basis for determination of the discounting rate.

Note 19 - Bank deposits

The Group's tied deposits total NOK 40.1 million (NOK 37.6 million in 2019) on which is employee tax withheld. As part of the restructuring of the Group's debt effective from October 20th, 2020, the total bank deposits are pledged. A total of NOK 111 million of deposits were pledged at year end 2019.

Through the refi nancing a MNOK 1,500 Super Senior Credit Facility (SSCF) was made available for the Group. Per December 31, 2020 drawn amount was MNOK 1,467. The SSCF is classifi ed as an ordinary bank deposit. The SSCF can only be drawn upon if Group's available cash is less than MNOK 600.

The Group can not be in any event of continuing default before, or as a result of, a draw from the SSCF.

The group had two Commercial Interest Reference Rate (CIRR) loans from the Norwegian Export Credit Agency. The maturity for the loans was 2020, and the cash proceeds from the loans was deposited in a fi xed deposit account with a Norwegian bank earning a higher interest rate than the interest payable under loans. The agreed period of the deposits was identical with the one of the loans. The loans and the interest thereof was repaid from the deposit accounts and the difference has been recognised as deferred gain and is amortised over the period of the life of the deposit. Both the loan and the deposit was denominated in NOK.

The balance of the CIRR loan and CIRR deposit as at December 31, 2020 is zero (NOK 23 million in 2019).

Note 20 - Environmental conditions

The company's vessels comply with current environmental requirements. In 2020, none of the company's vessels had conditions imposed on them for upgrading or improving technical equipment or any other measures necessary to satisfy current environmental standards.

The company's HSE and ISPS system complies with international regulations (IMO's International Safety Management Code). All vessels and our administration hold ISM certifi cation from Det Norske Veritas or relevant Flag State. The company's Quality Assurance system is certifi ed in accordance to NS-EN ISO 9001:2000.

Note 21 - Paid out and proposed dividend

	202 0	20 19	20 18
App d an d pa id o ut d urin g th rove e ye ar:
Ord inar y div iden d	-	-	-
Pro ed d ivid end ral m eeti at g pos ene ng:
Ord inar y div iden d	-	-	-
Per sha re (N OK)	-	-	-

Note 22 - Other long-term assets

	202 0	20 19
Sell cred it ers	-	34,9 72
Loa ocia ted ies n to ass com pan	-	23,0 59
Loa n to oth anie er c omp s	14,1 28	14,2 60
Oth ceiv able er re s	46,0 67	47,9 32
Tota l oth er lo ng-t ets erm ass	60,1 95	120 ,223

Other receivables consist of advance travel card deposits and deposits for public taxes.

N t 2 3 A t i b l o e c c o u n s r e c e v a -	d e a n
t h h t- t i b l o e r s o r e r m r e c e v a e s
	202 0	20
Acc t rec eiva bles oun	832 ,655	859
Rec eiva ble f ocia ted and join t ve ntur ies rom ass e co man	6,97 3	29,3
Tota l acc ceiv able ts re oun	839 ,628	889
Prep aid exp ens es	32,8 77	39,3
Earn ed, not invo iced rev enu e	79,2 08	98,6
VAT eiva ble rec	96,4 08	137
Oth hort ceiv able -ter er s m re s	205 ,518	338
ble f Rec eiva ocia ted and join t ve ntur e ci nies rom ass mpa	-	7,64
Tota l sho rt-te ivab les rm r ece	414 ,011	621

Other short-term receivables are mainly refundable insurance claims, government grants and prepaid docking expenses.

Note 24 - Inventory

	202 0	20 19
Bun kers	80,0 39	152 ,022
Lub e oi l	36,6 38	14,0 50
Oth er	48,6 53	11,1 63
Tota l inv ento ry	165 ,330	177 ,226

Note 25 - Other current liabilities

	202 0	20 19
Acc rued sal arie late d ta and VAT able s, re xes pay	275 ,714	254 ,543
Oth nt lia biliti er c urre es	168 ,964	510 ,384
Tota l sho rt-te rm l iabi lities	444 ,678	764 ,927

Other current liabilities consist mainly of incurred operational expenses and performed planned periodic maintenance not yet invoiced at year end.

Note 26 - Contingent liabilities, assets and provisions

Tax claims in Brazil:

Chartering of non-Brazilian built tonnage in Brazil require application for tax exemption for temporary importation of vessels and spare parts through Brazilian Oil & Gas tax regime (REPETRO). There are several cases where Brazilian Tax Authorities claim to have identifi ed procedural error, and where large fi nes are imposed.

The Company's subsidiaries in Brazil; Farstad Shipping Ltda., Deep Sea Supply Navegacão Marítima Ltda. and Solstad Offshore Ltda. have all received claims ralated to importation of vessels and spare parts during the period 2008-2018. The claims relates to customs duties, notices of infringement and fi nes. The claims are annually adjusted according to market interest rate.

All claims are handled by the Company's lawyers in Brazil. The majority of the claims are rejected and chances to succeed are considered high. Although most claims are rejected, they represent liabilities which, in Management's assessment, can lead to release of fi nancial resources in the future, or may need a legal deposit if the case goes to Judicial level. Management also believes some liabilities can be measured and estimated realiably.

The total potential claim amounts to approximately MNOK 240 (MNOK 300). The reduction in 2020 is due to currency MNOK 40 and cases closed with favourable outcome. Based on an individual assessment of each case the Group's total recognized accrual is MNOK 15.1 (MNOK 31.4 in 2019). Legal fees are expensed as incurred.

Note 27 - Deferred income and excess value contracts

Deferred income

Balance of Deferred income of MNOK 35 in 2019 relates to advance invoiced freight revenue for one of the Group's vessels.

No advance invoicing was recognized per year end 2020.

Excess values contracts

As a part of the purchase price allocation from the mergers of Rem Offshore, Farstad Shipping and Deep Sea Supply, long-term charter contracts with excess values, contracted versus current market day rates, were identifi ed.

The excess values are classifi ed as intangble fi xed assets, and are amortised over the remaining duration of each charter contract.

	202 0	20 19
Boo k va lue er 0 1.01 as p	69,9 61	208 ,422
Amo rtise d	-62, 462	-138 ,461
Boo k va lue a r 31 .12. s pe	7,49 9	69,9 61

The amortization is recognized as a reduction to Freight income. At the end of 2020 the future amortization schedule is:

202 1	202 2
7,49 9	-

Note 28 - Subsequent events

The Company has sold the PSVs Sea Angler, Sea Bass, Sea Turbot and Sea Witch and the AHTS Lady Astrid and Lady Caroline. Delivery of the vessels to the new owner took place in 1Q 2021.

Annual Report 2020 In addition to reporting measures required under IFRS, the Company also use the following alternative performance measures in the interim- and annual reports Operating margin - Operating result before depreciation and impairment in percentages of total operating income

EBITDA - Operating result before depreciation and impairment adjusted for excess values charter parties from mergers and operating leases

EBITDA adjusted - Operating result before depreciation and impairment adjusted excess values charter parties from mergers, operating leases and other non-cash related items

Adjusted Operating result before depreciations - Operating result before depreciation and impairment adjusted excess values charter parties from mergers, operating leases and net result from Joint Ventures

Earning on equity - Result before tax, in percentage of average equity, including minority interests

Earning on capital employed - Operating result plus interest income and result from associated company divided by average book shareholders' equity and interest-bearing debt

Current ratio - Current assets divided by current liabilities

Equity ratio - Booked equity including minority interests in percentage of total assets

Earnings per share - Result for the period for the Group divided by weighted average number of shares for the reporting period, adjusted for treasury shares

Comprehensive income per share – Comprehensive income for the period for the Group divided by weighted average number of shares at the end of the reporting period, adjusted for treasury shares

Equity per share - Shareholders' equity divided by outstanding number of shares at the end of the reporting period

Working capital – Current assets less current liabilities, including current portion of long-term debt

Interest-bearing debt – Current and long-term interest-bearing liabilities

Net interest-bearing debt – Interest-bearing liabilities less bank deposits

Corporate accounts for Solstad Offshore ASA

Parent company (NOK 1,000)

PR OF IT O R L OS S A CC OU NT	202 0 01.0 1-31 .12	201 9 01.0 1-31 .12	No te
Oth ting inc er o pera ome	77,1 72	13,9 58
Tota l op erat ing inco me	77,1 72	13,9 58
Pers el co sts onn	-10, 055	-7,9 13	4
Oth ting er o pera exp ens es	-162 ,553	-30 ,465	4
Tota l op erat ing exp ens es	-172 ,608	-38 ,378
Ope rati ng l oss	-95, 436	-24 ,420
Inte rest inc from ies i n th e G ome com pan roup	-	29,3 09	9
Oth er in tere st in com e	3	3,39 0
Oth er fi cial inco nan me	1,50 2,19 2	-	5
Inte ts fr ies i n th e G rest cos om com pan roup	-	-5,9 47	9
Oth er in tere st c harg es	-5,3 81	-69 ,928
Oth er fi cial cha nan rges	-579 ,385	-676 ,649	5
Net fi na ncia l ite ms	917, 429	-719 ,825
Ord inar sult bef taxe y re ore s	821 ,993	-744 ,245
Tax ordi ult on nary res	-	-	10
Net lt fo r th resu e ye ar	821 ,993	-744 ,245
Tran sfer and dis able inc pos ome
Tran sfer to/f oth quit rom er e y	821 ,993	-744 ,245	11
nsfe Tota l tra d di sab le in r an spo com e	821 ,993	-744 ,245

Balancesheet

Parent company (NOK 1,000)

0 02 2 t or p			202 0 31.1 2	201 9 31.1 2	No te
e R al		AS SE TS
u n n A		ASS ETS FIX ED
		NCI ASS ETS FINA AL FIX ED :
		Inve stm ent in su bsid arie s	457 ,032	563 ,443	6
		Inve stm ent in jo int-o d co nies wne mpa	-	25,0 38	7
		Loa n to join tly-o d co nies wne mpa	-	47,1 61	8
		Oth er lo ng-t eiva bles erm rec	-	12,8 76	8
		TOT AL FINA NCI AL FIX ED ASS ETS	457 ,032	648 ,519
		TOT AL FIX ED ASS ETS	457 ,032	648 ,519
	B l a a n c e	CUR REN T A SSE TS
		REC EIVA BLE S:
		Oth hort -ter ceiv able er s m re s	58,3 59	49,8 57	9
		Tota l rec eiva bles	58,3 59	49,8 57
	h t s e e	Ban k de its a nd c ash ivale nts pos equ	6,55 8	7,26 1
		TOT AL CUR REN T A SSE TS	64,9 17	57,1 19
		TO SS S TA L A ET	521 ,949	705 ,637

Balancesheet

0 02 2 t or p		202 0 31.1 2	201 9 31.1 2	No te
e R al	EQ UIT Y & LIA BIL ITIE S:
u n n	EQU
A	ITY RES TRI CTE D E QUI TY:
	Sha apit al (7 4,87 2,68 2 a 1,-) re c	74,8 73	583 ,065
	Trea sha sury res	-	-250
	Sha red ium prem	175 ,572	1,49 7,18 4
	Oth aid- in ca pita l er p	-	1,00 0,75 5
	TOT AL RES TRI CTE D E QUI TY	250 ,445	3,08 0,75 4	11
	EQ EAR NED UIT Y:
	Oth quit er e y	77,6 06	-3,8 24,8 48	11
	TOT AL EAR NED EQ UIT Y	77,6 06	-3,8 24,8 48
	TOT AL EQU ITY	328 ,051	-744 ,095	11,1 2
	S LIA BIL ITIE
	OTH ER LON G-T ERM LIA BIL ITIE S:
B l	t Gr Deb ies oup com pan Bon d Lo	-	116 ,914 8	9
a a n c e	an Oth er lo liab ilitie ng-t erm s	- 2,15 8	1,14 1,92 111 ,711	16 16
	TOT AL LON G-T ERM LIA BIL ITIE S	2,15 8	1,37 0,55 3
	CUR REN T LI ABI LITI ES:
h t s e e	Acc ts p ble oun aya	189 ,016	67,7 92	9
	Oth nt lia biliti er c urre es	2,72 3	11,3 87
	Tota l cu t lia bilit ies rren	191 ,740	79,1 79
P ( N O K 1, 0 0 0 ) t a r e n c o m p a n y	TOT AL CUR REN T L IAB ILIT IES	193 ,898	1,44 9,73 2
	TO UQ ES TA L E UIT Y A ND LIA BIL ITI	521 ,949	705 ,637

Board of Director in Solstad Offshore ASASkudeneshavn April 29, 2021

Harald Espedal

Chairman

Frank O. ReiteDirector

Ingrid Kylstad Director

Thorhild Widvey

Director

Ellen Solstad

Peder Sortland Director

Lars Peder Solstad

CEO

Director

Statement of cash fl ow

Parent company (NOK 1,000)

		202 0 31.1 2	201 9 31.1 2
p	CA SH FL OW FR OM OP ER AT ION S
	Pro fi t / loss bef taxe ore s	821 993	-744 245
	Writ e-do of fi cial ets wn nan ass	-	675 074
	Inte rest inc ome	-3	-32 699
	Inte rest exp ens e	5 38 1	75 8 75
S t t t	Non h re fi na effe cts -cas nce	-960 971	-
a e m e n	Unr eali sed in/ - loss cur renc y ga	-	-1 6 54
	Cha in s hort -ter ceiv able d pa yab les nge m re s an	121 224	42 6 71
	Cha in o ther rual nge acc s	-58 788	-39 102
f f l h o c a s o w	Net h fl o w fr rati cas om ope ons	-71 164	-24 080
	CA SH FL OW FR OM IN VE ST ME NT S
	Inve stm ents in s hare s	-30	-
( O 1, 0 0 0 ) P t N K a r e n c o m p a n y	Pam t of long -ter ceiv able yne m re s	2 15 8	-
	Dep l of s hare osa s	-	-
	Net h fl o w fr inve stm ents cas om	2 12 8	-
	CA SH OW OM NC ING FL FR FI NA
	Paid -in c apit al	70 3 55	-
	Inte rest reiv eice d	3	9
	Inte rest pai d	-2 0 25	-1 7 95
	New / re t of (-) lo ng-t deb t pay men erm	-	25 8 37
	Net h fl o w fr fi na ncin cas om g	68 3 33	24 0 51
	Net cha in c ash and h eq uiva lent nge cas s	-703	-29
	Cas h an d ca sh e quiv alen ts a t 01 .01	7 26 1	7 29 0
	Cas h an d ca sh e quiv alen ts a t 31 .12	6 55 8	7 26 1

Note 1 - Accounting principles

Annual Report 2020 General The annual accounts have been prepared in accordance with the Accounting Act and best practice accounting principles in Norway. The most important accounting principles are described below.

Use of estimates

In the preparation of the accounts, estimates and assumptions are used which affect the accounts. Actual fi gures may differ slightly from the estimates.

Foreign currency

Monetary items in foreign currency are converted at the exchange rate at the balance sheet date.

The following exchange rates have been used in the accounts:

	GBP	USD	EUR
Per 31.1 2.19	11.5 94	8.78 0	9.86 4
Per 31.1 2.20	11.6 46	8.53 3	10.4 70

Cost of borrowing

The cost of borrowing is capitalized at the time of borrowing and the cost is charged over the maturity period of the loan.

Evaluation and presentation of current assets

Stocks are valued as the lowest of either the acquisition or the estimated sales value. Receivables are ecorded at face value with deduction for anticipated loss.

Financial fi xed assets

Long-term investment in shares and other investments are valued at the lowest of either the acquisition cost or the estimated sales value if the reduction in the sales value is not considered temporary.

Taxes / Deferred tax

Deferred tax/ deferred tax assets are calculated, using the liability method, at 22% based on temporary differences between

the accounting and tax-related values existing at the end of the fi nancial year and any tax defi cits are carried forward.

Temporary tax increases and decreases are recorded in the balance sheet as net fi gures.

Classifi cation of items in the accounts

Assets determined for long-term ownership or use and receivables which are due more than one year after the expiry of the fi nancial year are recorded as fi xed assets. Any remaining assets are classifi ed as current assets.

Liability which is due more than one year after the expiry of the fi nancial year is recorded as long-term debt.

Contingencies

Contingent losses that are probable and quantifi able are recorded to the accounts, whilst contingent gain/income is not.

Shares and holdings in other companies

Short-term investments related to shares are not treated as a trading portfolio and are valued at the lowest of cost price and market value.

Shares in subsidiaries, associated companies and jointly-owned companies

Shares in subsidiaries, associated and jointly-owned companies are recorded in the parent company accounts at cost and written down to the extent that there is a signifi cant defi cit value which is not considered temporary.

Treasury shares

Treasury shares are recorded as a nominal value under the item "share capital". The difference between nominal and acquisition cost is entered as "other equity".

Cash fl ow

The Group applies the indirect method. Investment in shares and other liquid assets with maturity over three months are not included under cash equivalents.

Notes

Notes to condensed statement of comprehensive income and statement of fi nancial position

(NOK 1,000)

Note 2 - Major transactions/events

The Company fi nalized a successful restructuring approved by an Extraordinary General Meeting October 20th, 2020.

Reference is made to Note 2 in the Group Annual Report for further information.

Note 3 - Financial risk

The company is exposed to various fi nancial risks in its activities. Financial risk is the risk incurred from any changes in currency and interest rates together with counter parties ability to pay, and which impacts the value of the company's assets, liabilities and future cash fl ows.

Annual Report 2020Note 4 - Other expenses, wages, employees and distinctive contributions ^{2020 2019} Wages and director fee 8,772 6,359

Emp loye r's N atio nal Insu ranc e	1,03 1	855
Pen sion ts cos	123	455
Oth er b fi ts ene	47	22
Trav ellin sts, and oth l cos ts g co cou rses er p erso nne	83	221
Tota l em ploy ost ee c	10,0 55	7,91 3
Ave ber of m rage num an-y ears	1.75	2

Renumeration to Directors, Managing director and Auditors

202 0	Wag es	Bon us	Oth fi ts er b ene	Pen sion t cos
Lars Ped er S olst ad ( CEO )	2 31 2	2 28 9	155	107
201 9	Wag es	Bon us	Oth er b fi ts ene	Pen sion t cos
Lars Ped er S olst ad	2,25 4	-	154	104
Sve n St akke stad (De puty CE O)	1,89 4	-	100	351

Boa rd o f Di rect fee: ors	202 0	20 19
Har ald Esp eda l	676	401
Tori l Eid ik esv	443	278
k O. Fran Re ite	376	240
n So Elle lstad	370	278
Har ald Tho rste in	390	240
Mer Hau gli ete	383	240
And Ona rhei ers m	25	25

In 2020, NOK 2,673,877 is charged as auditors fees and NOK 10,972,898 relating to other non-audit related services. Both amounts are exclusive VAT. There are no distinctive agreements regarding remuneration for the Chairman of the Board and nor are there any distinctive bonus or or option programmes for any Board Member. No loans have been given to key employees. Bonus for Management Group is related to successful refi nancing of the Company. The Managing Director has an agreement that secures 12 months salary.

The employees are included in the Group's standard pension plan. Pension fund liability is recorded in Solstad Management AS.

Other operating expenses

Other operating expenses of MNOK 163 (MNOK 30 in 2019) is mainly related to lawyer and consultant fee for the restructuring.

Note 5 - Financial items

Other fi nancial income of MNOK 1,502 (zero in 2019) is related to restructuring and consist of gain on sale of shares MNOK 204, debt converted to equity MNOK 1,217 and gain on loan to subsidiary MNOK 82.

Other fi nancial costs of MNOK 579 consist of loss on sale of shares MNOK 541, other cost 25 MNOK and currency loss MNOK 13.

Comparative fi gures for 2019 of MNOK 677 consist of write-down of other long-term receivables MNOK 35, write-down of loan to subsidiary MNOK 29 and currency loss of MNOK 2.

Note 6 - Shares in subsidaries

31.1 2.20 20	e of Plac bus ines s	Own er- / voti hare ng s s	Num of sha ber res	Nom inal valu e	Sha re cap ital	Cos t pri ce / boo k va lue
Sols tad Ship hold ing A S	Sku den esh avn	100 %	30,0 00	6.66	200	457 ,002
Sols hip Inve st 1 AS	Sku den esh avn	100 %	30,0 00	1	30	-
Sols hip Inve st 3 AS	Sku den esh avn	100 %	30,0 00	1	30	-
Fars tad Ship ping AS	Sku den esh avn	100 %	30,0 00	1	30	-
Sols S hip A	Sku den esh avn	% 100	30,0 00	1	30	30
Tota l						457 ,032

All the direct ownership, except of Solship Invest 1 AS, Farstad Shipping AS, Solship Invest 3 AS and Solship AS, was in relation to the restructuring dropped down under the new subsidiary Solstad Shipholding AS.

31.1 2.20 19	Plac e of bus ines s	Own er- / voti hare ng s s	Num of sha ber res	Nom inal valu e	Sha re cap ital	Cos t pri ce / boo k va lue
Sols tad Ship ping AS	Sku den esh avn	100 %	10,0 00	1,00 0	10,0 00	11,9 93
Sols tad Mex ico A S	Sku den esh avn	100 %	100	USD 200	USD 20	169
Sols tad Red eri A S	Sku den esh avn	100 %	71,5 00	100	7,15 0	-
Sols tad Ope ratio ns A S	Sku den esh avn	100 %	30,0 00	1	30	10,0 30
rift A S Nor d D man	Sku den esh avn	% 100	150	1,00 0	150	150
Sols hip A S	Sku den esh avn	100 %	30,0 00	1	30	30
Sols hip Inve st 1 AS	Sku den esh avn	100 %	30,0 00	1	30	-
Nor d M axim us L td man	Abe rdee n	100 %	33,2 69,3 08	1	GB P 33 ,269	33,8 33
Sols tad Offs hore UK Ltd	Abe rdee n	100 %	11,0 00,1 00	1	GB P 11 ,000	-
Sols tad Man t AS age men	Sku den esh avn	100 %	2,00 0	1,00 0	2,00 0	11,0 0
Nor d Sk n AS man arve	Sku den esh avn	100 %	1	950 ,000	950	1,25 0
Trym Tita n AS	Sku den esh avn	100 %	625	100	100	-
Sols il AS tad Bras	Sku den esh avn	% 100	480	1,00 0	480	14,0 06
Sols hip Inve st 3 AS	Sku den esh avn	100 %	30,0 00	1	30	-
Fars tad Ship ping AS	Sku den esh avn	100 %	30,0 00	1	30	-
Nor d Vi sion Ch arte ring AS man	Sku den esh avn	100 %	5,00 0	6	30	-
Sols tad Offs hore Asi a Pa cfi c Ltd	Sing apo re	100 %	20,0 00,0 00,0 00	('*)	USD 175 ,877	178 ,982
Tota l						563 ,443

(*) Singapore shares does not have nominal value.

The shares in subsidiaries Solstad Offshore Asia Pacifi c Ltd and Solship Invest 1 AS was written down by MNOK 611 in 2019. Book values was written down to the company's share of book value of equity, adjusted for eccess values and any currency effects.

Annual Report 2020Note 7 - Shares in jointly owned and associated companies The shares in the jointly owned company Normand Installer SA Inc. was in relation to the restructuring transferred to the Group subsidiary Solstad Subsea Holding AS.

	Plac e of bus ines s	Own er-/ vot ing s hare	Num of sha ber res	Cos t pri ce	Equ ity 3 .19 (100 1.12 %)	Res ult 2 019 (100 %)
NISA Inc . (JV )	Mar ly (S veits )	50 %	501	25,0 38	27,1 90	-26, 379

Note 8 - Other long term assets

Other long-term assets include:

	31.1 2.20 20	31.1 2.20 19	Inte rest
Sha reho lder loa n NI SA SA	-	47,1 61	6 m onth s Lib or + 1,5%
Loa n to Dee p W ell A S	-	12,8 76	5 %

Note 9 - Inter company group

Solstad Offshore ASA had the following debt to companies in the Group:

	31.1 2.20 20	31.1 2.20 19	Inte rest
Sols tad Ship hold ing A S	46,3 35	-
Sols tad Sub Ho lding AS sea	11,7 24	-
Sols S tad Red eri A	300	-
Oth nt a ts er c urre sse	58,3 59	-
			6mn d N IBO R +
ift A S Nor d Dr man	-	41,9 84	% 2,75
			6 m nd L IBO R +
Sols tad Offs hore Asi a Pa cifi c Ltd	-	74,9 30	3,75 %
Inte ny l r co mpa oan s	-	116 ,914
Sols tad Ship ping AS	112 ,896	38,4 81
Sols tad Red eri A S	-	4,13 5
Sols tad Man t AS age men	34,1 36	25,1 76
Nor d D rift A S man	41,9 84	-
Trad nt p ble e ac cou aya	189 ,016	67,7 92

Other short-term receivables of MNOK 49.9 mainly consists of expenses related to the ongoing refi nancing process for the Solstad Offshore group.

Note 10 - Taxes

	202 0	201 9
Tax able inc ome
efor Res ult b e ta x	821 ,993	-744 ,245
Cha s in tem ry d iferr nge poa enc es	-34, 829	13,8 11
Perm nt d iffer ane enc es	-917 ,686	640 ,246
Unr d in tere st eco vere	-	43,1 76
Tran sfer red to/fr loss ry fo rd om car rwa	130 ,522	47,0 12
Tax able inc ome	-	-
Cha in d efer red taxe nge s	-	-
Tax ord inar sult on y re	-	-
Sho rt-te ivab les rm r ece	-2,0 00	-36 ,829
Unr d in tere st c arrie d fo rd eco vere rwa	-43 ,176	-43 ,176
Unr d lo arrie d fo rd eco vere ss c rwa	-280 ,524	-150 ,002
diff Tota l tem art por eren ces	-325 ,700	-230 ,007
Cuc lulat ed d efer red tax et ass	71,6 54	50,6 01
Unr gniz ed p art o f de ferre d ta set eco x as	-71, 654	-50 ,601
Boo ked def d ta set erre x as	-	-
Ana lysi s of eff ecti ve t ate: ax r
22 % of P rofi t bef Tax ore	180 ,838	-163 ,734
Defe rred tax et n ot re nise d ass cog	21,0 52	22,8 80
Tax effe ct o f pe t dif fere rma nen nce s	-20 1,89 1	140 ,854
Est ima ted tax	-	-

Provisions for deferred tax are recorded for accounting position where a future realisation will return in payable taxes.

Note 11 - Equity, shareholders and treasury shares

	Sha apit al re c	Trea sury sha res	Sha re ium prem	Oth aid- in er p ital cap	Oth quity er e	Tota l eq uity
Equ ity 3 1.12 .201 9	583 ,065	-250	1,49 7,18 4	1,00 0,75 5	-3,8 24,8 48	-744 ,095
Cap ital d ecre ase	-582 ,773	250	-	-	582 ,523	-
Tran sfer of p aid- in ca pita l	-	-	-1,4 97,1 84	-1,0 00,7 55	2,49 7,93 9	-
Sha apit al in se b re c crea y ertio n of deb t conv	48,0 75	-	131 ,723	-	-	179 ,798
Sha apit al p rivat pla ent re c cem	26,5 06	-	43,8 49	-	-	70,3 55
Ann ual lt resu	-	-	-	-	821 ,993	821 ,993
Equ ity 3 1.12 .202 0	74,8 73	-	175 ,572	-	77,6 06	328 ,051

At 31.12.19 the Company's share capital represents 291,532,299 shares at NOK 2.

In an Extra Ordinary General Meeting on 20.10.20 the share capital was decreased by 291,24,767 shares. Subsequently, in the same meeting, the share capital was increased by 48,074,688 and 26,506,462 shares through convertion of debt and a private placement. At 31.12.20 the Company's share capital represents 74,872,682 shares at NOK 1.

The number of shareholders at 31.12.20 was 7,773.

Shareholders with more than 1 % holding at 31.12.2020

	Num ber of s hare s	Own ersh ip
Ake r Ca pita l AS	18,6 87,1 50	24.9 6 %
DNB Ban k AS A	8,34 1,86 2	11.1 4 %
Hem en h oldi ng L td	6,88 6,08 6	9,20 %
Nor dea Ban k AB P, F IL	5,39 5,26 4	7,21 %
Swe ban k AB	3,43 9,92 4	4,59 %
Jars tein en A S	3,10 1,70 8	4,14 %
Clea rstre Ban king S.A am	2,32 3,69 7	3,10 %
Deu tsch e Ba nk A ktie sells cha ft nge	1,92 0,10 5	2,56 %
Han dels ban ken	1,88 4,54 2	2,51 %
Spa reeb ank 1 SR -Ba nk A SA	1,59 7,41 6	2,13 %
The Exp ort- Imp ort B ank of C hina	1,13 9,84 2	1,52 %
Spa reba nke n M øre	965 ,728	1,29 %
	55,6 83,3 24	74, 37 %

In accordance with the defi nition in corporate law, the Directors had the following holdings at 31.12.2020

	Num ber of s hare s
Har ald Esp eda l	656 ,687
Fran k Ov e Re ite	0
Elle n So lstad	0
Tho rhild Wid vey	0
Ingr id K ylsta d	0
Ped er S ortla nd	0

The CEO Lars Peder Solstad controlled 3,101,708 shares at 31.12.2020. Board member Frank Ove Reite has through Fausken Invest AS entered into a put/call arrangement with Aker Capital AS for 356,509 shares of the shares subscribed by Aker Capital AS.

The company's auditor does not hold shares in the company.

Pr 31.12.2020 the company had 124 treasure shares at the cost price of MNOK 9.6. Per 31.12.2019 the company had acquired 124,975 treasury shares at a cost price of MNOK 9.6.

Note 12 - Earnings per share

In 2020, earnings per share was NOK 3.30. The equivalent value in 2019 was NOK -2.55.

Earnings per share is calculated by dividing the Group result by the average number of shares, adjusted for the stock of treasury shares.

There are no instruments that prevents the possibility of dilution.

Note 13 - Transactions with related parties

Related parties are considered to be Board Members (including associated companies) and the company management.

There are no management agreements with related parties outside the Group that charge management fees.

Inter-company debt/receivables are interest-bearing.

Note 14 - Guarantees

Solstad Offshore ASA has issued a Parent Company Guarantee of MNOK 20,826, hereof lease guarantee of MNOK 2,556.

Note 15 - Additional information relating to cash fl ow

The Group utilizes the indirect method. Investment in shares with a maturity of more than three months are not included in the cash equivalents.

Note 17 - Bond loan and other long term liabilities

The company has issued the following bond loans:

	Boo k va lue 31.1 2.20 20	Boo k va lue 31.1 2.20 19	Mat urity
Bala gniz ed b wing t nce reco orro cos	-	-3,2 03
SOF F04	-	1,14 5,13 1	09/2 021
	-	1,14 1,92 8

Average interest rate was 5 %.

	Boo k va lue 31.1 2.20 20	Boo k va lue 31.1 2.20 19	Mat urity
Mor tgag e lo an	-	109 ,754	Nibo r + 3 ,4%

Mortgage loan had maturity in full in 2021.

Our Global Footprint

Solstad Offshore ASA

Nesavegen 39 4280 Skudeneshavn Norway

Postal address: P.O. Box 13 4297 Skudeneshavn Norway

Telephone: +47 52 85 65 00 Email: contact@solstad.com

www.solstad.com

Statsautoriserte revisorer Ernst & Young AS

Thormøhlens gate 53 D, NO-5006 Bergen Postboks 6163, NO-5892 Bergen

Foretaksregisteret: NO 976 389 387 MVA Tlf: +47 24 00 24 00

www.ey.no Medlemmer av Den norske revisorforening

INDEPENDENT AUDITOR'S REPORT

To the Annual Shareholders' Meeting of Solstad Offshore ASA

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Solstad Offshore ASA comprising the financial statements of the parent company and the Group. The financial statements of the parent company comprise the balance sheet as at 31 December 2020, the profit or loss account and the statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2020, the consolidated statement of comprehensive income, consolidated statement of cash flows and changes in equity for the year then ended and notes to the financial statements, including a summary of significant accounting policies.

In our opinion,

• ► the financial statements are prepared in accordance with the law and regulations
• ► the financial statements present fairly, in all material respects, the financial position of the parent company as at 31 December 2020, and of 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
• ► the consolidated financial statements present fairly, in all material respects the financial position of the Group as at 31 December 2020 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU

Basis for opinion

We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in Norway, and we have fulfilled our ethical responsibilities as required by law and regulations. We have also complied with our other ethical obligations in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter

We draw attention to note 1 and 5 of the financial statements, which include information on the going concern assumption assessment for Solstad Offshore ASA related to the bareboat charter of Normand Maximus. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements.

Impairment assessment of vessels

The continued challenging market situation with significant oversupply of vessels and pressure on day rates are indicators of impairment of the Group's vessels (includes a right of use asset vessel). Management estimated recoverable amount of the vessels by comparing its carrying amount to the highest of fair value less costs of disposal and value in use. Each individual vessel was assessed as a separate cash generating unit. The estimated fair value less cost of disposal was based on sales transactions, indicative offers or estimated scrap values. When estimating value in use, management applied assumptions regarding future market and economic conditions. Key estimates included future day rates, utilization rates, operating expenses, capital expenditure and discount rate.

As per 31 December 2020 book value of the Group's vessels amounted to NOK 21 689 million, representing 83,2 % of the Group's total assets. The Group recognized an impairment of NOK 1 895 million in 2020 related to vessels. Considering the judgement required and the uncertainty in the estimation of the recoverable amounts, we assess impairment evaluation of vessels a key audit matter.

For fair value less cost of disposal, our audit procedures included comparing estimated net proceeds to actual sales transactions and estimated scrap values to external sources for comparable vessels which had been scrapped.

Our audit procedures related to value in use included, among others, an evaluation of the cash flows projected by management through comparing assumptions for revenue projections and utilization rates to current contracts and long-term expectations applied in the recently completed refinancing process. For operating expenditures, we compared the estimates to budgets approved by the Board of Directors and historical data. We performed an assessment of the reliability of management's forecast through a review of actual performance against previous forecasts and the consistence of valuation methodology applied. We involved an internal valuation specialist in testing of the mathematical accuracy of the value in use calculation, and in the assessment of the discount rate applied. With support from our internal valuation specialist we performed sensitivity analysis of management's assumptions. Furthermore, we compared management's value in use calculations with third-party broker valuation reports obtained by management.

We refer to note 1, section "Critical accounting judgement and estimates uncertainty" and note 6 of the consolidated financial statements.

Fair value of reinstated debt – at initial recognition

The Solstad Group completed its operational and financial restructuring in October 2020. Related to this a majority of the Group's external debt was refinanced. Management identified loans that qualified for extinguishment of existing debt and recognition of new, reinstated debt. Furthermore, management involved an external specialist to assist in the valuation of the debt at the time of initial recognition. Key assumptions applied in the calculation of fair value of debt were estimates of market-based interest rate margins for various debt profiles and levels of collaterals.

At the time of initial recognition, 20th October 2020, the new, reinstated debt was recognized at its fair value. This was lower than face value of the debt and a financial income of NOK 1 066 million was recognized.

Considering the judgement and assessments applied by management in the calculation of fair value of debt, together with its impact on the group's statement of comprehensive income, we evaluated fair value of reinstated debt at initial recognition 20th October 2020 as a key audit matter.

We evaluated management's assessment of loans to be extinguished by comparing terms and conditions in new loan agreements to original loan agreements. Furthermore, we reviewed management's calculation of fair value prepared by the external specialist, and evaluated the competence, objectivity

and independence of the specialist. With support from our internal valuation specialist, we assessed methodologies applied. We performed inquiries to management and the external specialist to understand and evaluate procedures performed to assess relevant market data for interest rate margins. On a sample basis we agreed input in management's fair value calculation to external, observable information for peers. This included, amongst others, details from financial statements, stock exchange notifications and quotes for listed loans. We tested the mathematical accuracy of the fair value calculation.

We refer to note 1 and 8 of the consolidated financial statements.

Other information

Other information consists of the information included in the Company's annual report other than the financial statements and our auditor's report thereon. The Board of Directors and Chief Executive Officer (management) are responsible for the other information. Our opinion on the financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information, and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management for the financial statements

Management is 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 for the financial statements of the parent company and International Financial Reporting Standards as adopted by the EU for the financial statements of the Group, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with law, regulations and generally accepted auditing principles in Norway, including ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also

• ► identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• ► obtain an understanding of internal control relevant to the audit 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 Company's internal control;

• ► evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• ► conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;
• ► evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
• ► obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Opinion on the Board of Directors' report and on the statements on corporate governance and corporate social responsibility

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 and in the statements on corporate governance and corporate social responsibility concerning the financial statements, the going concern assumption, and proposal for the allocation of the result 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 ensure that the Company's accounting information is properly recorded and documented as required by law and bookkeeping standards and practices accepted in Norway.

Bergen, 29 April 2021 ERNST & YOUNG AS

The auditor's report is signed electronically

Øyvind Nore State Authorised Public Accountant (Norway)

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