Solstad Offshore ASA — Interim / Quarterly Report 2021

May 25, 2021

1st Quarter Report 2021

Propelling global energy markets. Into the future.

The Contents

fro C O Le t ter t he E m	0 4
st Qu 1 ter H ig h l ig hts ar	0 6
F ina ia l Su nc mm ary	0 8
Op ion l Up da t te era a	1 4
Ou Ma ke t t loo k r	1 6
Su ta ina b i l ity s	1 8
S ta tm t o f t he Bo d en ar	2 0
F ina ia l S ta tem t nc en	2 2
No tes	3 0
Ou G lo ba l Fo tp int r o r	4 0

The

Company Solstad Group ("the Company") is a world leading owner and operator of offshore service vessels.

As per March 2021 the Company have 3 400 highly skilled employees with 9 offi ces globally and operate a versatile fl eet of modern offshore vessels.

Our vision is to further enhance our postition as a reliable world-leading offshore shipping company acknowledged as a supplier of excellence by our people, clients and other stakeholders.

Targeting zero emission by 2050 we are so far on track with 20% reduction in CO2 emissions achieved since 2008, adjusted for activity level.

Frontpage photo: Arild Arntzen

Letter from the CEO

Our 1st quarter report can be summarized in a few headlines.

• Settlement agreement reached with Saipem on the Normand Maximus termination fee.
• In general, a weak market but with increasing bidding activity and growing optimism.
• A busy quarter with mobilizations and re-activation of vessels.
• Operational issues and cost linked to the Covid-19 pandemic

The last point fi rst. The effects of the Covid-19 pandemic are still very challenging. This is mainly linked to crew changes and quarantine regulations. It is costly, but fi rst of all, it is demanding for our seafarers and their families. Seafarers are recognized as key workers by the UN and we rely on the authorities to ensure safe and effi cient crew change logistics and that reasonable quarantine regulations are in place.

On the commercial side we reached a settlement agreement with Saipem on the Normand Maximus termination-fee on May 20th. We are pleased with reaching an outof-court agreement. The termination fee amount is recognized in our Q1 accounts and has a major positive effect. Normand Maximus is presently working in Gulf of Mexico. Where the journey continues thereafter remains to be seen, but we see interest from clients in several of the most central Oil & Gas regions in the world.

Given our large North Sea exposure, Q1 is normally our weakest quarter. Also this year we saw the winter-season effect, with lower market activity, but with high preparatory activity. At the same time, we have noticed a steep increase in bidding activity both in Oil & Gas and in offshore wind. This is the case in the North Sea, in Brazil and in other regions. When talking with clients and competitors, there seems to be a growing expectation of better times ahead. I support that view and are particularly encouraged by the outlook for the CSV segment which is in demand from both Oil & Gas and offshore wind clients.

As previously communicated, we are adjusting our fl eet to a level of 80-90 vessels. Year to date, we have sold 8 vessels and are in negotiations to sell several more. I expect that by the end of 2021, most of our fl eet that is held for sale is divested. Some for recycling, some for non-Oil & Gas activity and some for geographical areas where we have limited access. At the same time, we activate modern vessels when this can be justifi ed. Year to date we have, or are in the process of, re-activating 8 vessels. Not on speculation, but all 8 based on new fi rm contracts.

We are also continuing to upgrade our fl eet with battery-hybrid systems and other measures to reduce fuel consumption and emissions.

So, in short, we are preparing our fl eet for the future by selling the oldest vessels, re-activating the modern part of the lay-up fl eet and upgrading our vessels to future environmental standards.

Thank you.

Lars Peder Solstad CEO

1st Quarter Highlights

• Revenues for the fi rst quarter of 2021 was MNOK 1,337 vs MNOK 1,203 in 2020, while EBITDA adjusted for the fi rst quarter was MNOK 432 vs MNOK 284 in 2020.
• Full settlement agreed with Saipem on the termination fee for Normand Maximus charter. Total termination fee of MUSD 44,3 booked in 1Q 2021.
• The quarter is affected by seasonal low activity.
• Increased bidding activity within Oil & Gas and Offshore Wind bodes for improved market balance going forward particularly for the CSV-fl eet.
• The active fl eet have been increased from 73 to 75 vessels during the quarter. All reactivations has been done based on new contracts.
• Sold 8 of 37 vessels classifi ed as nonstrategic vessels, year to date

Key Financials

(NO K 1, 000 ,000 )	202 1 01.0 1-31 .03	202 0 01.0 1-31 .03	202 0 01.0 1-31 .12	201 9 01.0 1-31 .12	201 8 01.0 1-31 .12
Rev enu e	1,33 7	1,20 3	5,02 6	5,24 5	4,91 0
EBIT DA adju sted	432	284	1,28 2	1,41 5	1,00 5
EBIT	47	-136	-2,2 50	-1,19 6	-3,9 87
Profi t be fore Tax	-308	-2,2 45	7,25 0	-3,1 29	-5,8 88
Cas h an d eq uiva lent s	2,12 9	987	2,41 2	1,13 4	1,35 1
Net king ital wor cap	-623	-29, 531	-803	-26, 264	-24, 654
Equ ity	3,89 9	-6,3 70	4,24 3	-3,8 35	-851
Net inte rest bea ring deb t*	19,5 36	33,9 55	19,3 65	30,9 90	28,7 27
Ord er b ack log	4,50 0	7,70 0	5,20 0	8,20 0	6,80 0

*Including recognized debt relating to IFRS 16 Leases (Note 9)

Financial Summary

Operating income for 1Q 2021 amounted to MNOK 1,337 compared to MNOK 1,203 in 4Q 2020.

• Operating expenses in 1Q 2021 amounted to MNOK 914 of which MNOK 810 are classified as vessel operating expenses. Compared to 1Q 2020, operating expenses decreased by MNOK 50 including an extraordinary one-off restructuring cost of MNOK 13.
• Administrative expenses for 1Q 2021 was MNOK 104 (MNOK 92 Adjusted for restructuring cost), compared to MNOK 104 for 1Q 2020.
• Adjusted for the extraordinary one-off restructuring cost, both vessel operating cost and administrative expenses decreased compared to 1Q 2020.
• Additional cost related to the COVID-19 pandemic amounted to approximately MNOK 30 in the quarter.
• Operating result before depreciation was MNOK 423 in 1Q 2021 compared to MNOK 239 in 1Q 2020.
• Ordinary result before taxes for 1Q 2021 was negative with MNOK 308 compared to negative MNOK -2,245 for 1Q 2020.
• EBITDA adjusted ended at MNOK 432 in 1Q 2021 compared to MNOK 284 for 1Q 2020.
• One-time termination fee of MNOK 378 related to Saipem termination of Normand Maximus charter booked in the quarter.
• Impairment of MNOK 45 booked in the quarter
• Total booked equity at the end of the quarter was positive MNOK 3,899

During 1Q 2021 the currency exchange rate for USD versus NOK has weakened. This resulted in a negative unrealized currency effect relating to the Company's assets and debt of MNOK 82. In addition we have realized currency loss of MNOK 20 relating to account payable and receivable positions being settled.

Capital Structure

Total current assets at the end of the quarter were MNOK 3,991 (MNOK 2,864 per 1Q 2020), of which cash and cash equivalents amounted to MNOK 2,129 (MNOK 987). This includes the super senior credit facility of MNOK 1,481.

Total current liabilities were NOK 4,614 (MNOK 32,394) including MNOK 3,433 in short term portion of long-term debt, giving net working capital of MNOK -623 (MNOK -29,531).

Total non-current assets at the end of the quarter were MNOK 21,790 (MNOK 27,121). The reduction is explained by ordinary depreciation, divestments and foreign exchange movements.

Net interest-bearing debt was at MNOK 19,536 (MNOK 33,955), with the reduction mainly explained by restructuring effect as described in the restructuring section and in Note 9.

The Group's equity as of 31 March 2021 was MNOK 3,899, which represents 15% of the total balance sheet (-21% per 31 March 2020).

Cash Flow and Cash Position

The overall cash position end of 1Q 2021 for the Company was MNOK 2,129 compared to MNOK 987 in 1Q 2020. The Net cash flow from operations was negative with MNOK 25 for 1Q 2021. Net cash flow from investments was negative by MNOK 39 mainly related to regulatory docking- and installation of battery packages on vessels. Net interest paid to lenders was MNOK 133, and net repayment of long-term debt to lenders were MNOK 69. was nvestments king- an enders s wer

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 of the Group's fleet. A continuing postponement of a recovery of the market will impact future earnings 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 financial 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 financing 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 Annual 2020 report there was 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. Normand Maximus Operations Limited was pursuing the full claim for the termination fee legally. The termination fee has been recognized in 1Q 2021 and we expect payment in June 2021. 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. 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.

For further details, reference is made to section "Finance" and Annual Report 2020 Note 1, 2, 4 and 28 and the risk section of the Prospectus from the Company published on 19 October 2020.

Awards in the quarter

• Signed contract with MHI Vestas for hire of the CSV Normand Fortress to support their W2W operations at the Triton Knoll windfarm in UK.
• Company has signed a contract for the CSV Normand Cutter with Global Marine Group, contract is 120 days plus options thereafter
• Normand Energy will support a project for a Client in the Pacifi c Ocean with an estimated duration of 5 months.
• Normand Jarstein has secured a contract with a Norwegian subsea contractor for a project in West Africa. In addition, Normand Jarstein has been awarded a contract with a UK based oil company.
• PSV Sea Forth awarded a term contract with a UK Operator to support their assets in the UK North SeaThe contract is for an initial one year fi rm period, with two optional years included.
• Normand Ranger relocated to Australia after contract award to psorive support to a major drilling campaign offshore Northwestern Australia with Normand Saracen and Far Senator

Subsequent Events

Sale of vessels

The Company has sold the PSV Far Splendour and AHTS Far Strait resulting in an immaterial accounting effect for 2Q 2021. Delivery of the vessels to the new owners took place in 2Q 2021.

Normand Maximus

As previously communicated to the market, Solstad Offshore ASA's subsidiary Normand Maximus Operations Limited has been pursuing legally the unpaid termination fee and other claims following the early termination by Saipem (Portugal) Comercio Maritimo Sociedade Unipessoal Lda, of the time charter party for "Normand Maximus".

Normand Maximus Operations Limited and Saipem (Portugal) Comercio Maritimo Sociedade Unipessoal Lda, as time charterer of Normand Maximus, and Saipem SPA as time charter guarantor, has May 20th 2021 entered into an agreement for settlement of all claims and counterclaims between the parties related to the time charter for Normand Maximus.

The settlement entitles Normand Maximus Operations Limited to a payment of USD 48,25 million primo June 2021. This equals approximately 96% of Normand Maximus Operations Limited's gross claim.

The dialogue for a long term solution for the leasing arrangements for the Normand Maximus is ongoing, and reference is made to our Annual Report for 2020 for information on this issue.

Contracts after quarter end

• Normand Starling fi rmed up for 2 years till April 2023 for Shell Brazil
• Sea Flyer awarded contract to support TAQA's North Sea assets for two years
• Normand Turmaline awarded contract with Enauta Energia S.A for 18 months fi rm and 2 years oprtion thereafter

Operational Update

The Company is a world leading owner and operator of offshore service vessels.

As per March 2021, the Company owns and/or operates a fl eet of in total 121 vessels. The overall utilization for the operational fl eet in 1Q 2021 was 79% (79% in 2020), the subsea CSV fl eet had a utilization of 73% (76%), AHTS fl eet 73% (67%) and 86% (87%) for the PSV fl eet.

The overall utilization for the fl eet in the fi rst quarter was on average with previous year, however dayrates has on average been lower in the fi rst quarter of the year compared to last year.

Subsea & Renewable Energy

During the quarter, the CSV segment had 25 vessels in operation.

One vessel was re-activated from long-term lay-up and began a contract within offshore-wind.

There has been several relocations of vessels between geographical regions due to new contracts.

Bidding activity has been very high in both oil & gas and offshore-wind.

Around 30% of the CSV revenues came from Renewable energy in the quarter.

Non-strategic fl eet

Solstad are in the process of selling 37 vessels. These are vessels de fi ned as non-strategic and not a part of the future Solstadfl eet.

In general, these are the oldest and smallest vessels in the fl eet. Pr. 31.3.21, 6 of 37 vessels had exited the fl eet.

AHTS & PSV

During the quarter the AHTS/PSV segment had 50 vessels in operation.

Several contracts has been awarded and bidding activity remains high in all key geographical regions.

Two vessels was re-activated from lay-up to commence new contracts.

* excluding vessels in layup

Market Outlook

The activity within Oil & Gas have slowly started to increase. This gives some positive activity effect already in 2021.

Rate levels continue to be negatively infl uenced by the number of vessels and owners in the market. This relates particularly for AHTSs and PSVs.

In the CSV segment we are closer to a more balanced market. Development of windfarms in Europe and South-East Asia continue to give increased activity. This requires a large number of fl oating assets, including CSVs. In combination with increased subsea activity this should be benefi cial for this type of vessels going forward.

The Company's backlog is approximately MNOK 4,500 whereof MNOK 3,100 for the next 12 months.

2025 2026

Sustainability

In Solstad we have Sustainability as one of our top priorities. To us this means involving all employees, key clients and main suppliers to jointly work towards a sustainable future.

Several projects has established under our Sustainability program such as reduction of "single use plastic bottles". The goal is to stop using single use plastic bottles on our vessels by the end of 2021. By Q1 2021 we have reduced the use of this type of plastic bottles with 40% compared to 1Q 2020. 22 of our vessels are already at zero. We are on track, but still a way to go.

Another initiative we would like to highlight is "Women in Solstad". This is a global initiative where the focus is to increase the number of female seafarers and women in senior positions both onshore and offshore. We have many strong role models already in our fl eet and in our offi ces and they are very active to market "life at sea" and what career opportunities there are for women in the company.

To reach our goal, it requires leadership, willingness and targeted work when recruiting and when promoting.

Brazil is where we have the highest number of female seafarers and also in operational and commercial positions onshore. This is a result of dedicated work over a long period and it shows good results. We seek to share the knowledge from Brazil to the other parts of our global organization to learn and improve.

Social

Increasing competency and raise awareness on Sustainability is key. Our internal 3-stage digital training program is ongoing.

The number of recordable incidents is higher than our target. Several initiatives is ongoing to identify root couse for the incidents and to target areas of concern related to HSE.

An internal survey show that Covid-19 related issues affects many employees negatively on various levels. Consequently we are now working on counter measures to reduce impact on our employees.

Quarterly ESG indicators

All indicators available on https://www.solstad.com/sustainability/

	Uni t	Tar get	1Q '21	202 0	201 9	201 8
Env iron t men		202 1
CO e 1 (ow tivit y) 2, s cop n ac	tCO 2	-3 % *	153 ,133	696 ,888	801 ,578	714 ,722
Oil s pill l itres	Litre s	0	25	349	113	679
Fine s fo plia of e nvir l reg ulat ions enta r no ne- com nce onm	No.	0	0	0	0	0
Sing le u last ic w ater bot tles boa rd o els se p on ur v ess	No.	0	30 4 07	145 ,200	184 ,450	N/A
Soc ial
TRC F (1 2-m le C onth lling - To tal R rdab Fre s ro eco ase	)*** No. que ncy	1.10	1.31	1.28	1.65	1.86
Frac tion of a ll em ploy eive d su stai nab ility train ees rec	ing **** %	100 %	50 %	43 %	-	-
Gov ern anc e
Inci den late d to Co tion and Bri bery ts re rrup	No.	0	0	0	0	0
* inc ed fl fue l effi cien p er 1 ,00 0,00 0 ho eet reas cy ur *
** O ffi ce loc atio ns 2 020 (10 ) - 2 019 (11 ) - 2 018 (13 )	Tra inin g st arte	d 21 .12. 202 0

Governance

No major governance incidents have been registered during the period.

Due to Covid-19 related restrictions the majority of audits and inspections are done remotely.

Environment

Solstad has defi ned a pathway towards zero emissions by 2050. So far, we are on track with 20% reduction in CO2 emissions achieved since 2008 (adjusted for activity level).

A range of battery hybrid conversion projects are under consideration for the next 6-12 months. The Norwegian PSV and AHTS fl eet has already been upgraded to have either battery hybrid and/or shore power systems.

Harald Espedal Chairman

Thorhild Widvey Director

Ellen Solstad Director

Ingrid Kylstad Director

Lars Peder Solstad CEO

Peder Sortland Director

Frank O. Reite Director

Solstad Offshore ASA

Skudeneshavn 25.05.2021

Condensed statement of comprehensive income

(NOK 1,000)

202 1 01.0 1-31 .03	202 0 01.0 1-31 .03	202 0 01.0 1-31 .12	No te
1,33 6,77 2	1,20 3,38 6	5,02 5,63 0	2,3, 4
-809 ,649	-860 ,416	-3,5 16,9 21
-104 ,114	-103 ,886	-476 ,829
-913 ,763	-964 ,302	-3,9 93,7 50	4
423 ,009	239 ,084	1,03 1,88 0	3
-319 ,632	-375 ,368	-1,3 58,3 45	5
-45, 049	-	-1,8 95,0 40	5,6
-11, 312	-	-28, 896
47,0 16	-136 ,284	-2,2 50,4 02
-8,7 60	8,51 2	23,9 75	7
122	11,7 03	41,4 23	7
-8,6 38	20,2 15	65,3 98
2,13 0	5,10 7	6,37 3
-20, 273	31,9 01	-240 ,107
-82, 240	-1,3 92,6 70	-180 ,349
-245 ,125	-408 ,433	-1,4 37,6 19
-696	-364 ,847	11,2 87,0 55
-346 ,205	-2,1 28,9 42	9,43 5,35 3
-307 ,827	-2,2 45,0 11	7,25 0,34 9
-2,5 15	-4,7 29	3,51 7	9
-310 ,341	-2,2 49,7 40	7,25 3,86 6
-33, 252	-284 ,961	580 ,397
-	-	5,92 1
-343 ,593	-2,5 34,7 00	7,84 0,18 4
-1,3 23	5,81 2	13,1 22
-309 ,019	-2,2 55,5 52	7,24 0,74 3
-4.1 4	2 -7.7	29.1 3
-1,3 23	5,81 2	13,1 22
-342 ,271	-2,5 40,5 13	7,82 7,06 2
9 -4.5	-8.7 0	31.4 8
432 ,283	283 ,701	1,28 2,20 8	3,4
74,8 73	291 ,407	249 ,042

Ope rati ng i nco me
Ves sel o ting pera exp ens es
Adm inist rativ e ex pen ses
Tota l op erat ing exp ens es
Ope rati lt be fore dep reci atio ng r esu ns
Ord inar y de iatio prec n
Imp airm ent
Net gain / los sal e of ets s on ass
Ope rati lt ng r esu
Res ult f Joi nt V entu rom res
Res ult f ocia ted ies rom ass com pan
Tota l oth er it ems
Inte inc rest ome
Rea lised in/ - loss cur renc y ga
Unr eali sed in/ - loss cur renc y ga
Inte rest cha rges
Net fi na ncia l cha / -in rges com e
Net fi na ncin g
Ord inar sult bef taxe y re ore s
Tax rdin lt es o ary resu
Res ult
Oth rehe nsiv e in er c omp com e:
Exc han ge d iffer n tra nsla ting enc es o fore ign ratio ope ns
Actu aria l ga in/ lo ss
Oth rehe nsiv e in er c omp com e
Res ult a ttrib utab le to :
Non troll ing inte rest -con s
Maj ority sha re
Earn ings sha per re
Oth rehe nsiv e in er c omp com e attri buta ble t o:
Non troll ing inte rest -con s
Maj ority sha re
Oth rehe nsiv e in r sh er c omp com e pe are
EBI TDA adj uste d

Condensed statement of fi nancial position

(NOK 1,000)

ASSETS

Fixed Assets: Intangible assetsTangible fi xed assetsRight-of-use assetsInvestment in assosiated companies and Joint VenturesFinancial fi xed assetsTotal fi xed assetsCurrent Assets: Stocks Accounts receivablesOther receivablesMarket based sharesDeposits, cash, etcTotal current assets Assets held for sale

TOTAL ASSETS

202 1 31.0 3	202 0 31.0 3	202 0 31.1 2	No te
10,2 98	45,5 58	13,0 79
19,1 42,6 45	22,3 31,9 06	19,5 09,6 19	5
2,43 2,01 0	4,08 3,35 1	2,45 7,32 2	6
94,7 67	466 ,441	111, 032	7
110, 723	193 ,701	109 ,147	4
21,7 90,4 43	27,1 20,9 56	22,2 00,1 99
160 ,921	229 ,436	165 ,330
1,19 5,45 7	989 ,894	839 ,628
490 ,042	652 ,724	414 ,011
15,7 00	4,39 2	11,1 00
2,12 8,63 3	987 ,218	2,41 1,90 5	8
3,99 0,75 2	2,86 3,66 3	3,84 1,97 4
-	872 ,319	26,8 03	5
25,7 81,1 95	30,8 56,9 39	26,0 68,9 76
250 ,445	4,60 2,78 2	250 ,445
3,63 4,54 5	-10, 981 ,406	3,97 6,81 6
14,4 91	8,50 4	15,8 14
3,89 9,48 1	-6,3 70,1 21	4,24 3,07 5
28,3 04	82,6 35	37,8 85
12,3 72	12,3 68	12,3 72	8
17,2 27,4 86	4,73 7,75 4	17,1 30,6 48	8
17,2 68,1 62	4,83 2,75 7	17,1 80,9 05
3,43 3,42 0	30,1 92,0 15	3,49 9,89 7	8
1,18 0,13 2	2,20 2,28 8	1,14 5,09 9
4,61 3,55 2	32,3 94,3 03	4,64 4,99 6
21,8 81,7 15	37,2 27,0 60	21,8 25,9 02
25,7 81,1 95	30,8 56,9 39	26,0 68,9 76

EQUITY AND LIABILITIES

Equ ity:
Paid -in e quit y
Oth quit er e y
Non troll ing inte rest -con s
Tota l eq uity
Liab ilitie s:
Lon g-te rovi sion rm p s
Oth er lo ng-t deb t erm
Deb t to cred it ins titut ions
Tota l lon g-te rm d ebt
Cur rent liab ilitie s:
Cur tion of l m d ebt rent -ter por ong
Oth nt lia biliti er c urre es
Tota l cu t lia bilit ies rren

Total liabilities

TOTAL EQUITY AND LIABILITIES

Statement of cash fl ow

(NOK 1,000)

CASH FLOW FROM OPERATIONS

Res ult b efor e ta x
Tax ble es p aya
Ord inar y de iatio d w rite dow prec n an ns
Gai n (-) / los s lo ng-t ets erm ass
Inte rest inc ome
Inte rest exp ens e
Term inat ed l eas es
fi na effe Non h re cts -cas nce
Effe f ch e in sion ct o ets ang pen ass
Cha in v alue of fi cial inst ents nge nan rum
Unr eali sed in/ - loss cur renc y ga
Cha in s hort -ter ceiv able d pa yab les nge m re s an
Cha in o ther rual nge acc s
Net h fl o w fr rati cas om ope ons

CASH FLOW FROM INVESTMENTS

202 1 31.0 3	202 0 31.0 3	202 0 31.1 2
-307 ,827	-2,2 45,0 11	7,25 0,34 9
-183	2,89 3	-35, 649
364 ,680	375 ,368	3,25 3,38 6
15,3 50	-277 ,811	321 ,975
-2,1 30	-5,1 07	-6,3 73
245 ,125	408 ,433	1,43 7,61 9
-	-	439 ,559
-	-	-11,7 13,2 86
-	-526	7,69 5
-	-170 ,224	-170 ,239
90,5 82	1,33 1,53 1	140 ,113
-191 ,105	-264 ,500	212 ,570
-239 ,764	947 ,231	-361 ,760
-25, 270	102 ,277	775 ,960
-14, 018	-4,6 93	385 -57,
-70, 540	-121 ,582	-406 ,800
45,3 80	25,4 77	1,01 4,17 0
-1,5 76	-6,3 64	64,0 06
2,13 0	2,43 2	6,24 3
-	-	36
-38, 624	-104 ,730	620 ,270
-	-	70,3 55
-8,9 34	-123 ,305	-461 ,777
-132 ,896	-36, 598	-157 ,973
-	571 ,072	1,46 7,96 2
-69, 205	-674 ,190	-1,0 77,1 55
-211 ,036	-263 ,021	-158 ,588
42	663	36
-8,3 -274 ,930	118, -265 ,473	40,2 1,23 7,64 2
2,41 1,90 5	1,13 4,02 8	1,13 4,02 8
2,12 8,63 3	987 ,218	2,41 1,90 5

fl ow fro Net h m in tme nts cas ves
Rea lizat ion of s hare d ho lding s an s
Rec eive d in tere sts
t of Pay long -ter ceiv able men m re s
Con le of fi xe (ve ls) side ratio d as sets n sa sse
Pay t of peri odic inte men ma nan ce
Inve stm ent in ta ngib le fi x ed a sset s

CASH FLOW FROM FINANCING

Paid -in c apit al
Paid lea ses
Paid inte rest s
Draw dow n lo ng-t deb t erm
Rep of lo deb ent ng-t t aym erm
Net h fl o w fr fi na ncin cas om g
Effe ct o f ch es i n fo reig cha rate ang n ex nge s
Net cha in c ash nge
Cas h at 01. 01

Cash at balance sheet date

Statement of changes in equity

(NOK 1,000)

	Sha re capi tal	Trea sury shar es	Sha re ium prem	Othe r paid -in capi tal	Othe r chan ges	Othe uity r eq	Tota l majo irty shar es	Non cont rolli ng inte rest s	Tota l equ ity
Equ ity 0 1.01 .202 1	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
Res ult	-	-	-	-	-	-309 ,019	-309 ,019	-1,3 23	-310 ,341
Tran slat ion adju stm ents	-	-	-	-	-33, 252	-	-33, 252	-	-33, 252
Oth er hen sive com pre inco me	0	0	0	0	-33, 252	-309 ,019	-342 ,271	-1,3 23	-343 ,593
Equ ity 3 1.03 .202 1	74,8 73	0	175 ,572	0	948 ,404	2,68 6,14 2	3,88 4,99 1	14,4 91	3,89 9,48 1
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
Res ult	-	-	-	-	-	-2,2 55,5 52	-2,2 55,5 52	5,81 2	-2,2 49,7 40
Tran slat ion adju stm ents	-	-	-	-	-284 ,961	-	-284 ,961	-	-284 ,961
Oth er hen sive com pre inco me	0	0	0	0	-284 ,961	-2,2 55,5 52	-2,5 40,5 13	5,81 2	-2,5 34,7 00
Equ ity 3 1.03 .202 0	583 ,065	-281	3,69 8,35 0	321 ,648	116, 298	-11, 097 ,705	-6,3 78,6 24	8,50 4	-6,3 70,1 21
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
Res ult	-	-	-	-	-	7,24 0,74 3	7,24 0,74 3	13,1 22	7,25 3,86 6
Actu aria l ga in/ loss (-)	-	-	-	-	-	-5,9 21	-5,9 21	-	-5,9 21
Tran slat ion adju stm ents	-	-	-	-	580 ,397	-	580 ,397	-	580 ,397
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
Tran sfer of p aid- in ital cap	-	-	-3,6 98,3 50	-321 ,648	-	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
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

Notes

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

(NOK 1,000)

Note 1 - General

Solstad Offshore ASA (SOFF) has its head offi ce in Skudeneshavn, Norway. The main activities of the company are operation and ownership of offshore service and construction vessels. The Group is listed on Oslo Stock Exchange. The quarterly accounts are prepared using the same accounting principles as last year's accounts and in compliance with IAS 34 Interim Financial Reporting.

The interim accounts are prepared on the assumption of a going concern. The going concern assumption is based on the level of cash and cash equivalents at reporting date, terms and conditions of the banking and borrowing facilities, the forecasted cash fl ow prognosis for the Group and the backlog position. 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.

Note 2 - Operating income

The Group's revenues mainly derives from offering vessels and maritime personnel to customers world wide. Basically all contracts with customers are contracts with day rate. Contract with day rate is contract where income is eared on a day-by-day basis, based on an agreed day rate with the customer. Revenue from contracts with day rate is recognized accordingly.

The agreed day rate is divided into a service element and a lease element. The service element includes the maritime services provided to navigate the vessel according to the customers requirements, while the lease element is the estimated rental of the vessel (equipment).

Some of the contracts also includes victualling and onshore project management. Victualling is meals and bedding provided to the customers personnel onboard the vessel. The Group also provides ordinary management services, such as technical services, crewing, incurance and commercial management for vessels not owned by the Group. Revenue on services, mentioned above, are recognized over time, as the performance obligation is satisfi ed over time.

Other

	202 1 01.0 1-31 .03	202 0 01.0 1-31 .03	202 0 01.0 1-31 .12
Ser vice ele t fro ontr act with day rate men m c	596 ,829	455 ,608	2,03 2,59 8
Man t Fe age men e	2,50 6	14,8 18	27,2 68
Vict uall ing	16,7 05	16,9 08	93,1 11
Proj ect t man age men	-	4,25 3	3,32 9
Oth er	13,1 54	5,83 8	57,8 96
Rev e fro m C ont ract ith c enu s w urso mer s	629 ,193	497 ,425	2,21 4,20 2
from Lea sing trac ts w ith d ate con ay r	707 ,579	705 ,961	2,81 1,42 9
Tota l op erat ing inco me	1,33 6,77 2	1,20 3,38 6	5,02 5,63 0
Con trac t ba lanc e	31.0 3.20 21	31.0 3.20 20	31.1 2.20 20
Trad ceiv able s fro hart e re m c ers	1,19 5,45 7	989 ,894	839 ,628
Con trac t as sets	-	-	-

Contract balance

Trade receivables from chartersContract liabilities

1st Quarter 2021

Note 3 - Reporting per segment

* Total operating income includes termination fee on Normand Maximus of USD 44,3 million.

Internally the Group reports and monitors it's operation in the following segments:

• AHTS, anchorhandling vessels
• PSV, platform supply vessels
• Subsea, construction vessels operating subsea construction contracts
• Renewable, vessels operating renewable contracts

Figures are exclusive share result from Joint Ventures.

Changes in reporting from 2020 Annual Report:

• Reporting on Renewable segment comenced on January 1st 2021
• AHTS and PSV is reported separately from January 1st 2021

Q1 2021

	S AHT	PSV	Sub sea	Ren ble ewa	Tota l
e fro Rev ontr acts wit h cu stom enu m c ers	110, 913	141 ,680	326 ,326	50,2 75	629 ,193
Lea lem ent from trac ts w ith d ate se e con ay r	136 ,382	148 ,598	353 ,172	69,4 27	707 ,579
Tota l op erat ing inco * me	247 ,295	290 ,277	679 ,498	119, 702	1,33 6,77 2
Crew exp ens es	127 ,149	159 ,122	126 ,017	36,4 58	448 ,745
Oth er e xpe nse s	117, 552	109 ,911	176 ,146	44,4 48	448 ,057
Tota l op erat ing exp ens es	244 ,700	269 ,033	302 ,163	80,9 06	896 ,802
Bun kers	7,78 8	5,60 9	3,09 1	473	16,9 61
Ope rati lt be fore ng r esu
dep reci atio ns	-5,1 94	15,6 36	374 ,244	38,3 23	423 ,009
Exc and les lues frei ght trac ts ess s va con	-	-	2,81 2	-	2,81 2
Net lt fro m Jo int V entu resu re	-	-	8,76 0	-	8,76 0
Adj uste d op erat ing lt be fore resu
dep reci atio ns	-5,1 94	15,6 36	385 ,816	38,3 23	434 ,581

Note 4 - EBITDA

	202 1 01.0 1-31 .03	202 0 01.0 1-31 .03	202 0 01.0 1-31 .12
Tota l op erat ing Inco me	1,33 6,77 2	1,20 3,38 6	5,02 5,63 0
Tota l op ing erat exp ens es	-913 ,763	-964 ,302	-3,9 93,7 50
EBI TDA	423 ,009	239 ,084	1,03 1,88 0
Lea ses	2,50 0	-	6,46 5
Res truc turin st g co	12,6 00	-	108 ,887
frei Exc and les lues ght trac ts ess s va con	2,81 2	24,4 02	62,4 62
Net lt fro m Jo int V entu resu re	-8,7 60	8,51 2	23,9 75
Net lt fro ciat ed c anie resu m a sso omp s	122	11,7 03	41,4 23
Acc rual los ivab le nts s ac cou rece	-	-	7,11 5
EBI TDA adj uste d	432 ,283	283 ,701	1,28 2,20 8

In connection with the merger with Rem Offshore, Farstad Shipping and Deep Sea Supply, the purchase price alloction analysis identifi ed several long-term freight contracts where the daily rates were higher or lower than the market rate at the time of acquisition. A part of the purchase price was thus allocated to these excess / less values and capitalized. In line with the fulfi llment and revenue recognition of freight contracts, the capitalized excess / less value is derecognized. The adjustment has no cash effect, and thus comes as an addition to booked freight income when calculating EBITDA.

Note 5 - Fixed assets

		Per iodi c
	Ves sels	mai nten anc e	Oth er	Tota l
Ope ning bal e 01 .01. 202 1 anc	18,7 16,1 31	760 ,223	33,2 65	19,5 09,6 19
Add ition s	14,0 17	70,5 40	-	84,5 57
Ass et h eld for s ale	-	-	-	-14, 402
Disp ls osa	-26, 278	-	-	-26, 278
Tran slat ion adju stm ent	-78, 265	-4,0 79	-920	-83, 264
Dep reci atio n	-226 ,210	-69, 007	-1,7 22	-296 ,939
Imp airm ent	-45, 049	-	-	-45, 049
Clo sing bal e 31 .03. 202 1 anc	18,3 54,3 45	757 ,677	30,6 23	19,1 42,6 45

Vessels are depreciated over 20 years to a residual value equal to 50% of the original cost. Initially residual value is set to 50% of cost price, expected cost of sale deducted, and adjusted for age and changes in broker valuations. The assumption is that the broker values decline by 2.5% per year, until the vessel is 20 years old. Other assets are depreciated at rates of 10-25%.

Q1 2020

	S AHT	PSV	Sub sea	Ren ble ewa	Tota l
e fro Rev ontr acts wit h cu stom enu m c ers	128 ,637	194 ,232	152 ,220	22,3 36	497 ,426
Lea lem ent from trac ts w ith d ate se e con ay r	134 ,527	202 ,799	328 ,865	39,7 70	705 ,961
Tota l op erat ing inco me	263 ,164	397 ,031	481 ,085	62,1 06	1,20 3,38 6
Crew exp ens es	157 ,883	199 ,860	131 ,349	22,2 16	511 ,308
Oth er e xpe nse s	109 ,175	126 ,197	153 ,254	14,4 35	403 ,061
Tota l op erat ing exp ens es	267 ,058	326 ,057	284 ,602	36,6 51	914 ,369
Bun kers	21,3 94	12,2 64	15,8 72	403	49,9 34
Ope rati lt be fore ng r esu
dep reci atio ns	-25, 288	58,7 09	180 ,610	25,0 52	239 ,083
Exc and les lues frei ght trac ts ess s va con	-	17,6 75	6,72 6	-	24,4 02
Net lt fro m Jo int V entu resu re	-	-	8,51 2	-	8,51 2
Adj uste d op erat ing lt be fore resu
dep reci atio ns	-25, 288	76,3 84	195 ,849	25,0 52	271 ,997

Note 5 - Fixed assets (continued)

Impairment testing of vessels

Summary

The Company has performed impairment testing of the fl eet in accordance with IAS 36. Indicators such as slow market recovery and declining price/ book ratio form, according to IAS 36, the need for revaluation of the Company's assets.

Based on value-in-use-calculations the Company has recognized an impairment of MNOK 45 in 1Q 2021.

Impairment testing

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 budget and the long-term forecast for 2021-2024.

The main assumptions used in the computations are charter rates, utilization, escalation of expenses, operational area, interest rate, weighted average cost of capital (WACC) and performance per Q1 2021 compared to forecast.

Discounting rate

The discounting rate is based on a common WACC for the Company. The cost of equity is derived from the 10-year interest rate for state bonds (risk-free interest rate), the Company's own market risk premium and an unlevered beta. The debt element of the discounting rate is based on the risk-free interest rate, plus the Company'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 Q1 2021 is 9%.

Revenue assumptions

For vessels having fi rm contracts, revenue is based on the current contracts. For vessels without fi rm contracts, and for vessels where the fi rm contract expires during the period, revenue is based on historical data. For the fi rst 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.

Infl ation

Escalation of revenue is expected to be marginal for the coming year. Hence, it is used a low (<1%) or no infl ation of revenue in 2021. Operating cost is adjusted for infl ation by 2%. Infl ation 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 ordinary depreciations. Initially the value is set to 50% of cost price, expected cost of sale deducted, and adjusted for age and changes in broker valuations. The assumption is that the broker values decline by 2.5% per year, until the vessel is 20 years old.

Note 6 - Right-of-use assets

	Ves sels	Offi ce	Tota l	Lea se l iabi litie s
Ope ning bal e 01 .01. 202 1 anc	2,21 2,85 4	244 ,467	2,45 7,32 2	2,81 4,24 2
Oth djus tme nts er a	-	-	-	-
Add ition s	-	-	-	-
Disp ls osa	-	-	-	-
Tran slat ion adju stm ent	-1,9 08	-711	-2,6 19	-2,5 08
Dep reci atio n	-15, 711	-6,9 82	-22, 692	-
Imp airm ent	-	-	-	-
Inte rest exp ens e	-	-	-	45,3 72
Lea ents se p aym	-	-	-	-96, 931
Clo sing bal e 31 .03. 202 1 anc	2,19 5,23 6	236 ,774	2,43 2,01 0	2,76 0,18 1,

Impairment testing of Right-of-use assets

Based on value-in-use-calculations the Company has not recognized any impairment of Right-of-use assets. Further reference is made to Note 5 Fixed Assets.

Guarantee

Vessel lease liability is guaranteed by the Parent Company with MNOK 2,507. The Parent Company has also guaranteed for a put option related to the leased vessel. The put is valued at MUSD 323 as of 31.03.2021.

Default put option

The lease agreement for Normand Maximus includes a default put option. Year end 2020 the Company was in a contractual default. As the default was effective within the non-cancellable period and was not exercised at the end of 1Q 2021, the effect is not recognized in the balanse sheet.

Variable lease payments

The Company has two vessels on lease with variable lease payments. The total payments for 1Q 2021 was MNOK 2.5 (MNOK 0).

Note 7 - Investment in Associated Companies and Joint Ventures

The Group had the following shares in joint ventures (JV) and associated companies (AC) at balance sheet date:

AC	JV
Sols tad Offs hore Cre wing Ser vice Phi lipp ines (25 %)	Nor d In stal ler S A (5 0 % ) man
Max imu s Li mite d (2 5 % )

	AC	JV	Tota l
Ope ning bal anc e	1,12 8	113 ,252	114 ,380
Sha f res ult y to d ate re o ear	122	-8,7 60	-8,6 38
Add ition s	-	-	-
Disp ls osa	-	-	-
Imp airm ent	-	-	-
Oth djus tme nts er a	-2	-10, 974	-10, 975
Clo sing Ba lanc e	1,24 9	93,5 18	94,7 67

Other adjustments includes received dividends and currency effects.

Note 8 - Interest bearing debt

The reinstated debt to credit institutions is recognized at its fair value. The interest rate for the refi nanced debt has at initial recognition been compared to current market terms according to IFRS 9. For the reinstated debt the Company concludes that the interest rate is below current market terms. Using the estimated market rate when measuring fair value of the reinstated debt a MNOK 1,066 reduction is observed. The difference between nominal- and fair value will be amortised, and presented as interest expense, over the period until fi nal maturity of the loans. The below table sets out the difference between nominal- and fair value at initial recognition, the amortization for the period and the remaining balance at reporting date.

Initi al re nitio n 20 .10.2 020 cog	-1,0 66,6 39
Amo rtisa tion 4Q 202 0 (*)	54,6 15
Amo rtisa tion 1Q 202 1 (*)	55,5 07
Unr eali sed y lo cur renc ss	73,6 52
Fair val djus nt 3 1.03 .202 1 tme ue a	-882 ,866

*Amortised cost is precented as part of Interest charges in the Comprehensive Income Statements

	202 1 31.0 3	202 0 31.0 3	202 0 31.1 2
Lon rm d ebt g te	17,2 39,8 59	4,75 0,12 2	17,1 43,0 21
Cur of l rent tion term deb t por ong	3,43 3,42 0	30,1 92,0 15	3,49 9,89 7
Fair Val djus tme nt ue a	882 ,866	-	1,01 2,02 5
fi na Bala boo ked cost nce nce	108 ,213	73,0 26	121, 870
Tota l int t be arin g de bt (* ) eres	21,6 64,3 58	34,9 42,1 37	21,7 76,8 13
Ban k de it pos	2,12 8,63 3	987 ,218	2,41 1,90 5
Net inte bea ring deb rest t	19,5 35,7 25	33,9 54,9 19	19,3 64,9 08

Long term debt is divided by 33% NOK and 67% USD. At the end of the quarter, fi xed interest agreement loans were entered into for around 7% of interest bearing debt.

Current portion of long term debt includes MNOK 2,487 reclassifi cation of lease obligation for Normand Maximus.

In 1Q 2020 comparative fi gures long term debt of about MNOK 25,000 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.

*Inclusive recognized debt relating to IFRS 16 Leases MNOK 2,760 (MNOK 4,284), whereof MNOK 0 (MNOK 699) are leases from related parties, and debt to related parties MNOK 0 (MNOK 1,105).

Note 9 - Tax expense

The Group's tonnage taxed companies have decided to exit the Norwegian Tonnage Tax Regime with effect from January 1st 2016. Amended tax returns for the period 2016-2018 have been fi led with Norwegian Tax Authorities. Based on the tax assessments received the Group has a loss carried forward of about NOK 12 billion. The corresponding deferred tax asset is not recognized in the accounts.

Taxes on ordinary result relates to local taxation outside Norway.

Note 10 - Subsequent events

The Company has sold the PSV Far Splendour and AHTS Far Strait resulting in an immaterial accounting effect for 2Q 2021. Delivery of the vessels to the new owners took place in 2Q 2021.

Note 11 - Alternative performance measurement defi nitions

Solstad Offshore ASA has included the below Alternative Performance Measures (APM), which are commonly used in the business, as they are used internally by management to understand the Group's financial performance. Hence, it is deemed that the APM's also will provide useful information to the reader.

Operating margin - Operating result before depreciation in percentages of total operating income

EBITDA - Operating result before depreciation.

EBITDA adjusted - Operating result before depreciation and impairment adjusted for Joint Ventures, Associated Companies, excess values charter parties from mergers, leases and other non-recurring items

Adjusted Operating result before depreciations - Operating result before depreciation adjusted excess values charter parties from mergers and 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 at the end of 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, excluding 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

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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