Annual Report

Annual Report 

2009

Vessel 

Vessel Client Location Status 

African Caribe Saipem/Chevron Cabinda, Angola 20 months, terminates June 2010 

African Fjord Diamond Int/ENI Congo 3 years, terminates May 2011 

African Installer Geocean Libya 6 months, terminates August 2010 

African Worker Total Angola 3 years, terminates February 2013 

African Lifter Sonangol Angola 5 years 

Sarah Sonangol Luanda 10 year backstop in effect 

Karianne Sonangol Ulstein Yard Delivery October 2010, 10 year backstop 

African Challenger Sonangol Yantai Yard Delivery March 2012, 5 year backstop 

Key figures 

In USD 1 000 unless otherwise stated 2009 2008 2007 

Profit & Loss 

Operating revenue 100 654 63 463 0 

Operating profit 3 312 15 349 -7 034 

Adjusted Operating profit 1 13 732 -893 -7 034 

Net profit -41 629 19 979 3 394 

Earnings per share (USD) -0,61 0,28 0,06 

Balance sheet 

Total assets 544 598 398 384 425 307 

Interest bearing debt 456 526 287 276 365 557 

Net interest bearing debt 439 258 246 164 143 279 

1 2008 operating profit adjusted for gain on sale in connection with the sale/leaseback transaction of two barges. 2009 operating profit adjusted for the USD 3 million break fee 

relating to the On&Offshore acquisition and the USD 7,4 million provision for bad debt on the African Installer. 

2 Marine Subsea Annual Report 2009

Content 

Chairman’s Remarks 

Vessel.................................................... 2 

Key figures............................................ 2 

Content................................................. 3 

Chairman’s Remarks............................. 3 

Highlights 2009.................................... 5 

2010 To Date....................................... 5 

Vision, contents.................................... 5 

Board of Directors................................ 6 

Managing Director’s statement............ 7 

Corporate Management....................... 8 

Marine Subsea’s 

Corporate Structure.............................. 9 

Marine Subsea Fleet............................ 12 

Board of Directors Report................... 16 

Share Information................................ 18 

Marine Subsea experienced a remarkable achievement during the difficult 2009 

financial year, and secured that the company is now fully financed. We took delivery 

of 3 more vessels, all in operation on good contracts. Our first Offshore Intervention 

Vessel, “Sarah” completed several offshore tests in the North Sea satisfactory at year 

end. She is now on her way to Angola. 

The company has strengthened the organization considerably, particularly in the 

subsea construction/well intervention business segment. Our UK office has more 

than 30 highly skilled engineers and project managers, capable of 

performing engineering, planning and executing offshore 

projects. 

Our group of partners and team of employees 

have again worked diligently together with the 

board, throughout 2009. 

We were faced with severe challenges, but finally 

achieved the major goals defined for our 

company, and is therefore well positioned 

to continue and service the oil and gas 

industry in West-Africa. 

I am proud to conclude that although 

2009 proved to be an extremely difficult 

year for the industry as a whole, Marine 

Subsea managed to “sail safely through 

these difficult waters.” 

Thank you team. 

Consolidated statement 

of comprehensive income................... 20 


of financial Position............................. 21 

Marten Rød 

Chairman 


of changes in equity............................ 22 


of cash flow......................................... 23 

Notes – 

Marine Subsea Consolidated............... 24 

Income statement................................ 56 

Balance sheet....................................... 57 

Statement of changes in equity.......... 58 

Cash flow statement........................... 59 

Notes – Marine Subsea AS.................. 60 

Auditors’ report................................... 68 

Annual Report 2009 Marine Subsea 3


Highlights 2009 

August 

November 

December 

December 

December 

December 

December 

Acquisition of Marine Subsea UK Ltd. (formerly TS Marine Ltd.) 

Service contract for African Worker secured 

Marine Subsea AS secures financing and the company is fully financed 

Delivery of African Lifter 

Delivery of African Worker 

New charter for African Installer secured 

Delivery of Sarah from the Ulstein Yard 

2010 To Date 

African Worker on Charter for Total in Angola 

African Lifter to go on Charter for Sonangol P&P in Angola (LOI). 

Vision 

Marine Subsea aims to become a leading provider of offshore related services 

to the international offshore oil & gas industry. 


Board of Directors 

1 

2 

1. Mårten Rød (61), Chairman 

Mårten Rød has broad experience from several positions in the oil and gas 

industry in the North Sea, the USA and West Africa. He is co-founder and 

Chairman of Interoil E&P ASA 

2. Gian Angelo Perrucci (66), Board member 

Gian Angelo Perrucci is founder and a large shareholder in Interoil Africa 

and Orlean Invest. He is co-founder and board member of Interoil E&P ASA 

3 

4 

3. Kristen Jakobsen (45) 

Kristen Jakobsen has 20 years of experience from capital markets 

and investment banking. In addition to his board membership, Kristen 

Jakobsen is Financial Advisor in Marine Subsea. 

4. Georgio Reggio (73) 

Georgio Reggio has extensive experience in industrial activities, shipping 

and logistic areas from consultancy work in strategic transactions and 

financial advisory. He is CEO of DS&C Finanza S.r.l. 


Managing Director’s statement 

Marine Subsea was established in late 2006, with the goal of becoming a leading provider of equipment 

and services to the offshore West Africa market. Since then, we have acquired 8 offshore vessels, where 

6 are in operation and 2 to be delivered in 2010 and 2012. We have a suitable organisation with offices 

in Norway, Scotland, Angola and Cyprus. The company managed at the end of the year to raise vessel 

financing resulting in the company now being fully financed with a debt maturity profile that matches 

the long-term nature of its contracts. 

Most of Marine Subsea’s activities are in West Africa with prime focus 

on Angola: Angola is now the largest African oil producer with average 

production of 2 million barrels crude oil per day. The oil reserves are 

approximately 9 billion barrels and the oil sector accounts for 54% of 

GDP, and 80% of Governments tax revenues. Through the owners, 

Marine Subsea draws on 25 years of experience in the region and has 

thus a strong local market network. 

Marine Subsea currently operates in three business segments; Subsea 

Construction & Well Intervention, Offshore Support and Charter/Logistics. 

In the first business segment we have both Sarah, now in operation, and 

her sister vessel, Karianne, which is scheduled for delivery in October 

2010. In the Offshore Support segment, we have 5 Work/Accommodation 

barges, all delivered and on contract, as well as a semisubmersible Crane 

Vessel, scheduled for delivery in first quarter 2012. Through Marine 

Subsea’s Angola subsidiary, we have 7 tugs, anchor handlers and Platform 

Support Vessels on charter in Angola, which makes up the third business 

segment. In addtion, the company has secured a service contract for a 

deepwater drillship and is working to realise the project 

Due to the finance crisis, 2009 was a 

very challenging year for Marine Subsea 

and enormous pressure was put on the 

organisation. Still, we successfully managed 

to achieve our goals and we are in 

a healthy position going forward. Marine 

Subsea is confident that the vessel 

mix and the organisation that we 

now have in place, is a good fit 

for the business segments we are 

in. We view the current market 

as still being challenging, but 

that there are already signs of 

improvements, both in terms of 

charter rates as well as number 

of offshore projects being 

executed. 

December was a hectic month when the company managed to secure the 

financing as well as taking delivery of 3 vessels in addition to securing a 

new charter contract for 1 of the barges. After Sarah was delivered on 

December 16th, she successfully undertook several offshore tests in the 

North Sea. She is managed by Wilhelmsen Ship Management and On & 

Offshore makes up most of the offshore project crew. Sarah is now in 

Angola preparing for the first projects. 

To facilitate our operation, particularly within the Subsea Construction & 

Well Intervention segment, Marine Subsea acquired in August 2009 former 

TS Marine UK, located in Aberdeen, Scotland. Marine Subsea UK Ltd. 

enables us to better access these markets in that we offer experienced engineering, 

management and project execution personnel for the operations 

relevant for Sarah and Karianne, but also for the existing subsea services 

offered in the North Sea by chartering third party vessels. 

After having integrated the Marine Subsea UK management and organisation, 

Marine Subsea no longer has a strategic need to maintain its 

ownership in the subsidiary Lewis Ltd., which specialised in subsea well 

intervention services. As a consequence, and due to Lewis’s uncertain 

market and financial outlook, the board of Lewis Ltd decided to seek 

voluntary liquidation in December 2009. Some of the key individuals of 

the company have however been employed by Marine Subsea UK Ltd and 

thus the skill set within the subsea well intervention is maintained and 

even strengthened. 

Christian Nygaard 

Managing Director 

Marine Subsea AS 


Corporate Management 

1 

2 

1. Christian Nygaard (57), Managing Director 

Christian Nygaard has 30 years of international experience from oil related 

industries. He has had management positions from Teekay Petrojarl, 

Technip (Paris), Spars International Inc. and Aker (Houston). He holds 

degrees in Naval Architecture and Business Administration from the UK 

and the USA, respectively. 

3 

4 

2. Erik Sandøy (33), Financial Director 

Erik Sandøy has previous experience from Goldman Sachs International 

and Bridgehead Corporate Finance. He also holds Business degrees from 

University of British Columbia and Norwegian School of Management BI 

3. Knut E. Harto (52), Director Projects 

Knut E. Harto has 25 years of international managerial experience from 

oil related service industries. Previous positions include Director of Subsea 

Projects in ABB, later Vetco Gray, where his latest projects were in Angola. 

Knut E. Harto has a degree in Industrial Management from the University 

of Wyoming in the USA. 

5 

6 

4. Graham Medhurst (42), Director Operations 

Graham Medhurst has held senior positions in subsea construction, 

intervention, well servicing and project management both onshore and 

offshore. He has extensive upstream experience from previous positions in 

Technip Offshore, Chevron and Schlumberger. 

7 

5. Svein Guldteig (50), Director Technical 

Svein Guldteig has more than 20 years of experience from the international 

shipping and offshore industries. Previous positions include General 

Manager at Wilhelmsen (Technical & Op. Solutions) and at Barber Marine 

Consultants and Vice President at Norwegian Gas Carriers. Svein Guldteig 

is a Master of Business and Administration from BI Norwegian School of 

Management, ESCP-EAP from Paris and a Master of Science in Marine 

Machinery/Ship Management from the Norwegian University of Science 

and Technology in Trondheim. 

6. Petter Hernæs (56), Director HSEQ 

Petter Hernæs has more than 18 years of international managerial 

experience within the oil and gas industry. He has worked with Hempel 

Nutec AS which later became Falck Nutec AS. He holds a degree from 

the Norwegian Royal Naval Academy. 

7. Thomas Fjell (36), Director of Strategic & Legal Affairs 

Thomas J. Fjell has a law degree from the University of Oslo. Prior to 

joining Marine Subsea, Thomas worked as an attorney for 10 years 

advising a variety of global and domestic business clients on legal and 

strategic issues related to corporate restructurings, mergers, acquisitions 

and joint ventures. 


Marine Subsea’s Corporate Structure 

Each of Marine Subsea’s vessels is organized as a single purpose company registered in Cyprus. To 

facilitate the operation of the fleet, Marine Subsea has acquired three companies; Marine Subsea UK Ltd 

(formerly TS Marine Ltd.), Interoil Angola Limitada and Marine Subsea Nigeria Ltd. In addition, Marine 

Subsea has entered into an agreement to acquire all shares in On & Offshore AS subject to financing. 

The final transaction has not yet occurred, and there exists uncertainty whether the option to acquire 

the company will be exercised. 


(Norway) 

Marine Subsea Cyprus 

Holding Ltd (Cyprus) 

Interoil Angola Lda. 

(Angola) 

Marine Subsea 

Worker Ltd. (Cyprus) 

Marine Subsea Worker 

Singapore Pte Ltd (Singapore) 

Marine Subsea Sarah 

Ltd. (Cyprus) 

Marine Subsea Solver 

Ltd. (Cyprus) 

Marine Subsea Nigeria 

Ltd. (Nigeria) 

Marine Subsea Installer 

Ltd. (Cyprus) 

Marine Subsea Fjord 

Ltd. (Cyprus) 

Marine Subsea Karianne 

Ltd. (Cyprus) 

TEN Marine Subsea 

Drilling Ltd. (Cyprus) 

Marine Subsea UK Ltd. 

(Scottland) 

Marine Subsea Lifter 

Ltd. (Cyprus) 

Marine Subsea Caribe 

Ltd. (Cyprus) 

Marine Subsea & 

Consafe Ltd. (Cyprus) 

Marine Subsea Cyprus Holding Ltd. 

MSCH is the Holding company in Cyprus and 100% owner of all 

the Cypriot vessel owning companies. The company employs 

3 people and is responsible for accounting, administration and 

management services relating to the vessels and the vessel 

owning companies. 

Arik Gilad (62), General Manager 

Arik Gilad has more than 30 years experience 

in large scale of marine management, 

crewing, operations, I.T systems, QA 

systems/DPA, and the last 10 years 

managing director of a shipping company 

in Cyprus 


Marine Subsea UK Ltd. 

Marine Subsea formally acquired 60% of Marine Subsea UK 

Ltd (previously TS Marine Ltd) in August 2009. The remaining 

40% are held by management with an agreement that Marine 

Subsea will acquire these shares over a 3 year period from 

2012 to 2014. The Marine Subsea UK management team 

and organisation brings extensive commercial, technical and 

operational experience to the group. Their main business 

segments are; Subsea Installation, Subsea Well Intervention and 

Subsea Decommissioning sectors. The company has efficient 

management systems including a recognized HSEQ in place. 

The organisation is currently very active in the marketing and 

the operation of Sarah as well as continuing to provide subsea 

services in the North Sea by chartering third party vessels and 

equipment. In addition MSUK is managing the engineering and 

manufacturing of a subsea lubricator system to be installed on 

Sarah late summer 2010. 

Alasdair Cowie (42) Managing Director 

Alasdair Cowie has over 20 years 

international experience in the subsea 

sector including senior management 

experience for various contracting entities. 

Former CEO of TSMarine 

Merv New (45) Operations Director 

Merv New has over 20 years international 

experience in the global subsea & telecoms 

sector including senior projects and asset 

management roles with various contracting 

entities 

Keith McGregor (55) 

Business Development & Sales Director 

Keith McGregor has been involved in the subsea 

sector since 1977, having fulfilled senior 

operational, commercial, business & strategic 

development and general management positions 

with a number of privately and publicly 

owned, international contractors. 

Subsea Well Intervention 

Subsea Installation 

Subsea Decommissioning 

Marine Subsea Nigeria Ltd. 

There are numerous market alternatives within Marine Subsea’s 

business segments in Nigeria and Marine Subsea is therefore in 

the process of establishing an office in Lagos, Nigeria. The office 

will be headed by Benoit David, who is already on the payroll. 

Benoit David (37) Business Development 

& Sales Director 

International Master Business School Degree 

in Lyon France specialized with Asia-Africa. 

Four years in West Africa in Import-Export 

negotiations between 1993 and 1997. Over 

12 years in Worldwide Integrated Logistics 

Groups as Route Development Manager 

Asia-Pacific and Business Development 

Manager USA-Europe. Business Development 

and General Manager for Trico Marine 

Group-DeepOcean in Nigeria from 2006 to 

Jan 2010 to manage long term charters of 

12 supply vessels and light intervention-IMR 

Subsea projects to Major Oil companies 

down the West African Coast. 


Marine Subsea’s Corporate Structure 

Interoil Angola Limitada 

Interoil Angola Lda. is an Angolan oil and gas service company 

based in Luanda which was acquired in February 2008. In 

Angola, bids for potential contracts usually have to be submitted 

through a local office, and it was hence necessary to establish 

a presence in the region. A local office is also required as most 

of Marine Subsea’s vessels will operate out of Angola. The 

company offers services related to brokerage, operation and 

management of various vessels, procurements, imports, crew 

changes, etc., and the company will facilitate the operation of 

present and future Marine Subsea vessels in the region. Interoil 

Angola has currently 7 vessels between tug, anchor handlers and 

platform support vessels on charter for Sonangol and Total in 

Angola. There are currently 11 employees, 4 expats and 7 locals. 

This number will grow as Marine Subsea expands its operations 

there. The company will soon change name to comply with the 

mother brand. 

Marco Marini (36) General Manager 

Marco Marini has broad experience in West 

Africa from various positions within the oil 

sector. He held the position as Logistics 

Manager in Orlean Invest Angola as well as 

Personnel, HSEQ and Adm. Mngr. in Intels 

Nigeria. He has also worked in Gabon and 

Cameroon. 

Terminal Tugs 

”Merlin” & ”Macaw” 

5 year Angola/Total 

Line Handler 

”Kamuchiba I” 

5 year Angola/Sonils 

Line Handler 

”Kamuchiba II” 

5 year Sonangol 

Harbor Tug 

”Sertosa 34” 

2+1 year Sonangol PP 

PSV 

”Aries Scout” 

2 year Angola/Total 

Anchor Handling Tug Supply 

”Havila Neptune” 

2+1 year Angola/Total 

On & Offshore AS 

In April 2009, Marine Subsea entered into an agreement to 

acquire On & Offshore AS, a company based in Kristiansand 

Norway with 150 employees that can provide technical and 

operational personnel and services. The agreement gives 

Marine Subsea the right to acquire 92,2% of the outstanding 

shares subject to financing within May 2010. In the meantime, 

both companies have entered into a cooperation agreement. 

Currently Sarah has several offshore project crew from On & 

Offshore onboard. 

Terje Uleberg (52) CEO 

Terje Uleberg has more than 30 years experience 

from offshore work (Norwegian Sector, 

North Sea). He has held offshore positions 

as Operator, Supervisor, Field Engineer, 

Superintendant and Project Manager as well 

as Project Manager in OIS. He has also been 

the General Manager in FIAS. Co and founded 

On & Offshore Services AS in 2003 with Mr. 

Helge Bjorvand. He is today Chief Executive 

Officer of the On & Offshore Group. 


Marine Subsea Fleet 

An overview of the company’s vesses and contractual status is summarised in the Table below: 

Vessel Client Location Status 

African Caribe Saipem/Chevron Cabinda, Angola 20 months, terminates June 2010 

African Fjord Diamond Int/ENI Congo 3 years, terminates May 2011 

African Installer Geocean Libya 6 months, terminates August 2010 

African Worker Total Angola 3 years, terminates February 2013 

African Lifter Sonangol Angola 5 years 

Sarah Sonangol Luanda 10 year backstop in effect 

Karianne Sonangol Ulstein Yard Delivery October 2010, 10 year backstop 

African Challenger Sonangol Yantai Yard Delivery March 2012, 5 year backstop 



Offshore Intervention Vessels 

Key features 

Class: 

Length: 

Width: 

Draft: 

Deck Area: 1 470 m 2 

Accommodation: 

Deadweight: 

Speed: 

Crane capacity: 

Module handling 

tower; 

140 t 

Dynamic 

Positioning: 3 

Intervention depth: 2 500 m 

+ DNV 1A1 R Ship-shaped Well Intervention 

Unit SF LFL* COMF-V(3)C(3) HELDK 

CRANE OPP-F E0 DYNPOS-AUTRO NAUT- 

OSV(A) CLEAN DESIGN DK(+) HL(2.8) 

MODU CODE Safety Certificate 

120,2 m 

25 m 

7–5 m 

100 persons 

40 single & 30 double cabins 

Roll reduction tanks 

Diesel-electric propulsion 

8 700 t 

14,5 knots 

2 Work Class ROV’s, 3 000 m 

140 t 

The two SX121 vessels Sarah and Karianne are designed as state of the 

art Offshore Intervention vessels. Both have multiple usage functions and 

are particularly well suited for subsea construction and well interventions. 

Subsea well intervention, which is regarded as a very promising market, 

entails improving oil recovery from wells that have been in production for 

some time. The operation is typically performed by lowering specialized 

tools through the moon pool of the vessel, into the well. These tools can 

then perform production logging, re-perforation, lubrication etc., with the 

objective of improving oil recovery. Traditionally, these operations have 

been carried out by exploration semi-submersibles. However, with rig rates 

being significantly higher than for vessels, subsea well intervention operations 

can be performed faster and more economically from purpose built 

vessels such as Sarah. 

Both Sarah and Karianne, are practically identical. The vessels have the 

characteristic new X-Bow shape, which enables better fuel efficiency, 

more space for accommodation in the bow of the vessel and better motion 

characteristics. 

The vessels are dynamically positioned (DP3) and hence do not require 

mooring lines when stationed over the object. The vessels are designed 

with a central moon pool in the deck and with a 140 t heave compensated 

tower above. They have also a 140 t heave compensated crane and both 

the tower and crane are rated for 2 500 m water depth 

The hulls of vessels are being built in the Ukraine, while completion and 

commissioning is performed at Ulstein Group’s shipyard in West Norway. 


Work/Accommodation barges 

typical Key features 

Length: 

approx. 100 m 

Width: 

approx. 30 m 

Accommodation: 3–400 persons 

Crane: 

75–300 tons 

Work/Accommodation barges provide support to existing platforms 

or infrastructure during offshore construction or modification and 

maintenance. Flat bottom barges are well suited for the relatively calm 

waters off the coast of West Africa. 

The barges provide accommodation, lifting capacity and large lay-down 

areas. The Work/Accommodation barges are catenary anchored and will 

typically be moored in shallow waters alongside or near the offshore 

platform. African Worker is however moored in 1 500 m water depth in 

Angola. 

Marine Subsea has all 5 barges on contract. 

Marine Subsea has outsourced the management and crewing of African 

Caribe, African Fjord and African Installer to Gesmar CH, while Wilhelmsen 

Ship Management is managing African Worker and African Lifter. 



Semi-Submersible Crane Vessel, SSCV 

Key features 

Length: 

123,75 m 

Beam: 

81 m 

Depth: 

12 m 

Height to 

Main Deck: 39 m 

Deck Box: 

81 m x 81 m x 9 m 

Transit Draught: 10,5 m Crane capacity: 1 200–1 600 tons 

Living Quarter: 618 persons 

Dynamic 

positioning: 2 

The company has a joint-venture (Marine Subsea & Consafe Ltd) with 

Consafe MSV AB and Sonangol. The joint-venture has a service contract 

with Sonangol and a purchase agreement with Consafe and Yantai for a 

semisubmersible crane vessel, Safe Challenger. 

Yantai has informed of their intention to acquire Consafe MSV’s interest 

in the joint-venture. Yantai has further agreed to take delivery of the unit, 

which is to be renamed African Challenger, for its own account and lease 

the unit to Marine Subsea under a 10-year bareboat lease with purchase 

option. The contract will be transferred to a new JV with Sonangol, Yantai 

and Marine Subsea. The terms of the bareboat agreement reflect the cost 

of the unit and the payments made to date. 

This means that the new JV no longer requires financing and the organisational 

model is simplified. The final agreements are expected to be in place by first half 

2010. The rig will be delivered end of first quarter 2012. 

The SSCV, African Challenger (former Safe Challenger), can provide support 

during offshore construction or modification and maintenance, and can also 

serve the Inspection Maintenance Repair (IMR) market. The vessel is DP 2 

and has 3 000 t lifting capacity, 600 accommodation capacity, and can 

provide large lay-down areas. The vessel can be used for heavy lifts, offshore 

mooring and, with minor modifications, for pipe lay. The SSCV, comprises 

a deck structure supported by columns and pontoons. This configuration 

enables very good motion characteristics – far superior to mono-hull vessels. 

Drillship 

Typical Key features 

Length: 

approx. 230 m 

Width: 

approx. 40 m 

Water depth 

capability: 

3 000 m 

Drill depth 

capability: 

13 000 m 

Thruster capacity: 6 FPP thrusters of each 4 500 kW 

The company has secured a 5 year service contract for a state of the art 

Drillship. A Letter of Intent with Tsakos Commerce has been signed whereby a 

Joint Venture company has been established; TEN Marine Subsea Drilling Ltd. 

The JV has completed the technical assessment of the various Drillship alternatives 

and has decided on a preferred alternative. Tsakos is responsible for the 

financing of the Drillship and is actively pursuing this at the current time. 

Exploration and production drilling in deep waters is carried out by either 

semi-submersible rigs or Drillships. Drillships are particularly well suited to 

the benign and deep waters of West Africa. 


Board of Directors Report 

Marine Subsea is an international oil service company with a focus on the 

West African Offshore market. The Group owns a fleet of 6 units in operation 

and 2 under construction, including 2 multipurpose/well intervention 

vessels, 5 offshore support units and 1 semisubmersible crane vessel. 

In addition, the company has secured a service contract for a deepwater 

drillship. 

Marine Subsea AS has its head office at Lysaker in Norway. In addition to 

corporate head office functions such as finance and investor relations, the 

Norwegian organisation provides commercial, technical and operational 

services to the company’s subsidiaries. The company has administrative, 

commercial and technical management functions in Cyprus, a local organisation 

in Luanda, offering fleet management and support services, and a 

leading technical subsea construction/well intervention team in Aberdeen. 

Marine Subsea’s policy is full equality and opportunities between men 

and women. The company bases remuneration on education/training, 

experience and performance. The Oslo office had 12 employees at year 

end, 4 women and 8 men. Including all three subsidiaries, the group has 

a total of 56 employees. 

Financial Overview 

On 16th December 2009, Marine Subsea raised its vessel financing, took 

delivery of the deepwater multipurpose/intervention vessel Sarah and completed 

its financial restructuring. Marine Subsea is now fully financed with a 

debt maturity profile that matches the long-term nature of its contracts. 

Standard Bank Plc and Eksportfinans ASA underwrote a loan of USD 222 

million, of which USD 111 million was drawn-down in connection with 

the delivery payment for Sarah and USD 111 million was committed for 

October 2010 for the delivery of the second multipurpose/intervention 

vessel, Karianne. 

At the same time, Marine Subsea’s three outstanding bonds were 

converted to 2 new bonds with a total value USD 314 million. The new 

bonds have a 10-year maturity date and interest may be accrued in the 

first 2 years. 

The Company had 2 offshore support barges, the African Caribe and the 

African Fjord, in operation and on contract throughout 2009. African 

Installer was put in operation in April 2009 and generated income while 

being towed to Mexico. Since late June, the barge has been generating 

full charter hire. However, the charterer of African Installer defaulted on 

its payment obligations and the Company had to make a provision in the 

amount of USDm 7,4 on bad debt. Marine Subsea is in the process of 

pursuing a claim of USD 9,1 million against the previous charterer. African 

Installer is now being towed to Malta, where it will go on a 6 month 

contract with Geocean. 

Marine Subsea took delivery of its remaining 2 barges upon completion of 

the restructuring process in December 2009. The African Worker arrived 

in Angola in late February 2010 and has commenced a three year contract 

with Total. The African Lifter arrived in Angola in March 2010 and is currently 

tendering for a contract with 5 years duration at market rates. 

The Sarah vessel arrived in Angola in March 2010 and is on a 10 year back 

stop contract with Sonangol. 

For 2009, Marine Subsea recorded operating revenues of USD 100,7 

million and an operating profit of USD 3,3 million. Adjusting for one-off 

items of USD 10,4 million, the underlying operating profit amounted to 

USD 13,7 million. Net financial expenses for the year amounted to USD 

42,9 million, mainly due to non-cash effects resulting from the bond loan 

restructuring and a write-down of the equity in the joint venture with 

Consafe MSV AB and Sonangol. Marine Subsea recorded a net loss for the 

year of USD 41,6 million. 

Total capitalised expenditures for 2009 were USD 167,9 million, mainly 

relating to the Sarah, the African Worker and the African Lifter. Marine 

Subsea’s total assets as at 31st December 2009 were USD 544,6 million, 

while interest bearing debt was USD 456,5 million. 

Book equity for the parent company at 31.12.2009, was USD 59,6 million, 

of which zero was available for dividend payments, according to the 

Norwegian Corporation Law. The Board of Directors proposes that the net 

loss of USD 24,8 million for 2009 is recognized against retained earnings. 

The company worked throughout 2009 to secure financing that was 

necessary to take delivery of the Sarah vessel as well as 2 barges. This 

process was successfully completed in December 2009. However, due to 

substantial expenses relating to the refinancing process and the mobilization 

of the new vessels, the company experienced tight liquidity during the year 

and the Board expects this situation to continue into 2010. 

The Board confirms that the annual accounts are prepared under the 

assumption that Marine Subsea AS will continue as a going concern. However, 

it should be noted that there are uncertainties related to the estimated 

cash flows. 

Financial Risk 

Marine Subsea’s revenues are invoiced to customers in USD, while 

operating expenses are incurred in USD, EUR and NOK. The remaining 

commitment to Ulstein yard for the construction of the Karianne vessel 

is hedged through a forward contract to buy NOK and sell USD. The USD 

will be made available under the Karianne loan facility upon delivery of the 

Karianne. Marine Subsea uses no other derivative financial instruments 

to hedge the currency risk exposure. The Group’s interest expenses arise 

from USD denominated loans. 

The profitability and cash flow of Marine Subsea’s operations will be 

dependent upon the market conditions for construction support vessels 

and well intervention vessels in West Africa. Both intervention vessels are 

currently on long term back-stop contracts with Sonangol, while 4 barges 

are on contracts ranging from 6 months to 3 years. 

Health Safety, Environment and Quality 

Marine Subsea has high focus on Health, Safety, Environment and Quality 

(HSEQ) including Security and has therefore employed a full time Director 

HSEQ on group level, who reports to the Managing Director and is a 

member of the Corporate Management Team. It is our belief that all 

accidents are avoidable and no harm to environment and any harm to 

or loss of assets is achievable. This is one of our core values. 


Board of Directors Report 

The company has implemented a corporate HSEQ program, the Integrated 

Management System, based in the international standards, ISO 9001:2000, 

ISO 14001:2004, OHSAS 18001:1999 and the ISM and ISPS codes. 

Marine Subsea AS had 0,53% sick leave in 2009, compared to 0,024% in 

2008. 

Marine Subsea had no accidents during the year. The company operates 

vessels/barges with emission to air, but they are all new with the latest 

technology installed. There are no other additional emissions or accidental 

releases to report. 

Remuneration of Senior Executives 

The Board of Directors of Marine Subsea AS hereby submits its statement 

on remunerations to management. 

Marine Subsea management: 

Christian Nygaard, Managing Director 

Erik Sandøy, Finance Director 

Knut E. Harto, Director Projects 

Graham Medhurst, Operations Director 

Svein Guldteig, Technical Director 

Petter Hernæs, HSEQ Director 

Thomas Fjell, Director of Strategic & Legal Affairs 

General: 

The guidelines for future stipulation of management remuneration is to 

follow the general salary adjustments in our local markets, while at the 

same time considering the measures necessary to retain key personnel 

and maintain a level of remuneration that enables us to recruit the kind of 

professionals needed to develop the company according to plans. 

Bonus scheme: 

The Board of Directors have approved a bonus based compensation 

programmes in principle where all employees shall have the possibility 

to receive bonus. The programme is based on personal performance, as 

well as on the financial results of the company. The compensation varies 

from 0 to 1,5 times the individual salary and will be paid after year-end. 

An allowance for bonus for 2009 has been recognized, but the individual 

bonuses have not yet been decided on. 

Pension scheme: 

The company has a benefit plan for the Norwegian employees. The benefits 

include retirement pension, disability pension and widows’ pension. 

The retirement pension covers the difference between 66% of salary at the 

time of retirement (age 67), and payments from the national insurance. 

The pension, including the part paid by national insurance, is, however, 

capped at a certain level based on basic amount from the national insurance, 

which at present is approximately USD 10 000. To qualify for full 

pension benefits, 30 years of Marine Subsea employment is required. 

Salary payments after termination of employment: 

No such agreements have been established, except for Mr. Christian 

Nygaard who is entitled to a one year salary payment after termination of 

employment. 

Other: 

All salaries were negotiated on individual basis, and no changes in terms 

have been carried out later. We are of the opinion that all terms and 

conditions have been negotiated on an arm’s length basis at market conditions, 

enabling Marine Subsea to recruit the kind of professionals it needs 

to succeed with its strategy, to the benefit of its stakeholders. 

Outlook 

The Board remains focused on the Company’s objective to deliver a first 

class well intervention operation from Sarah and Karianne combined with 

third party work in the medium term. The Company had all but one of the 

delivered vessels generating income by the end of the first quarter 2010, 

with most of the units on long-term contracts. With the company now 

fully financed, and most vessels on charters and working in West Africa, 

we shall continue to develop our positive relationship with our clients and 

our local partners. 

The Board of Director’s believes that Marine Subsea is well positioned to 

reach our objectives for 2010 and as a result remains cautiously confident 

that Marine Subsea will continue to develop positively. 

Oslo, 21th of April 2010 

Mårten Rød 

Chairman 

Gian Angelo Perrucci 

Board Member 

Georgio Reggio 

Board Member 

Kristen Jakobsen 

Board Member 




Share Information 

The company’s 20 largest investors at 31 December 2009 were: 

JCE GROUP AB SWE 16 250 000 23,84 

EKSPORTCONSULT AS NOR 15 252 000 22,37 

Ugrani Holdings Limi 17 Gr. Xenopoulou CYP 13 253 000 19,44 

MORGAN STANLEY & CO S/A MSCO CLIENT EQUI NOM USA 4 069 733 5,97 

DEUTSCHE BANK AG LON PRIME BROKERAGE FULL NOM GBR 3 523 431 5,17 

CHEYNE GLOBAL CATALY CYM 2 915 698 4,28 

TRAFALGAR AS NOR 2 713 600 3,98 

HARMON TRADING INC. PAN 1 600 000 2,35 

HAVILA AS NOR 1 208 000 1,77 

HAVILA SHIPPING ASA NOR 1 135 455 1,67 

WIECO AS NOR 1 018 000 1,49 

SKIPS AS TUDOR NOR 550 000 0,81 

SKARPEBO INVEST AB SWE 543 000 0,8 

WIECO INVEST AS NOR 518 000 0,76 

FRAM SHIPPING LTD BMU 497 600 0,73 

JPMORGAN CHASE LEHMAN BROTHERS BANK DEU 464 000 0,68 

CABERIAN INVESTMENT PAN 399 000 0,59 

WATERMAN HOLDING INC Roy Mosvold GBJ 389 500 0,57 

PATRONIA AS C/O WIECO AS NOR 318 000 0,47 

MP PENSJON NOR 210 000 0,31 


I 

SARAH 

LIMASSOL 

MARINE SUBSEA 

MAR. 

ULSTEIN SX121 

SX121 

12.12.07 Owner 

GENERAL ARRANGEMENT 

OCV/IMR VESSEL 

updated acc.CO october 

updated acc.owner meeting november 

updated acc.owner comments 

misc.updates -adjusted eq. 

upd. equipment ttop & tweendk. 

upd. misc.equipment & arr. Hangar area 

PRINCIPAL DIMENSIONS: 

L.O.A. ...............APPROX.: 120,2 m 

L.P.P. .............................. : 112,3 m 

BREADTH MOULDED .... : 25,0 m 

DEPTH TO MAIN DECK . : 10,0 m 

SCANTLING DRAUGHT .. : 8,0 m 

DESIGN DRAUGHT ........ : 7,0 m 

20.03.09 KROs I 

17.09.08 KROs H 

13.08.08 KROs G 

12.12.07 HeHu F 

29.11.07 HeHu E 

29.10.07 KROs D 

1:250 

TV 29.11.06 

A0 

283 

U10265 

1/1 


Consolidated statement of comprehensive income 

(All amounts in USD 1 000 if not otherwise stated) Notes 2009 2008 

Sales 26 100 654 47 221 

Gain on sale of assets 26 0 16 242 

Total revenue 100 654 63 463 

Cost of sales 69 500 17 850 

Employee benefit expenses 5, 6, 8 6 998 5 020 

Other operating expenses 9 18 587 17 327 

Impairment 12 0 7 418 

Depreciation and amortisation 12 2 257 499 

Total operating expenses 97 342 48 114 

Net operating profit (loss) 3 312 15 349 

Share of loss of assosiates 13 -1 556 -9 

Financial income 10 5 596 18 891 

Financial expenses 10 -48 493 -9 107 

Net financial income (loss) -42 898 9 784 

Net profit (loss) before income tax -41 142 25 124 

Income tax expenses 11 488 5 145 

Net profit (loss) -41 629 19 979 

Other comprehensive income 10 0 0 

Total comprehensive income for the period -41 629 19 979 

Attributable to: 

Equity holders of the company -41 317 19 984 

Non-controlling interest -312 -5 

-41 629 19 979 

Basic and diluted earnings per share 24 -0,61 0,30 

Attributable to: 

Equity holders of the company -41 317 19 984 


-41 629 19 979 


Consolidated statement of financial position 

As of 31 December 

(All amounts in USD 1 000 if not otherwise stated) Notes 2009 2008 

ASSETS 

Non-current assets 

Property, plant and equipment 12 427 232 252 702 

Intangible assets 12 7 647 16 371 

Investment in joint venture 13 9 784 15 023 

Non-current receivables 14 32 818 50 913 

Total non-current assets 477 481 335 010 

Current assets 

Inventories 28 9 903 

Trade and other receivables 15 49 839 21 360 

Cash and cash equivalents 16 17 268 41 112 

Total current assets 67 117 63 375 

TOTAL ASSETS 544 598 398 384 

EQUITY AND LIABILITIES 

Shareholders’ equity 

Share capital 17 108 108 

Share premium 17 60 207 60 207 

Other reserves 18 841 841 

Retained earnings -18 250 23 290 

Total shareholders equity 42 906 84 447 


Total Equity 42 356 84 442 

Non current liabilities 

Interest bearing-debt 19 392 515 287 276 

Deferred tax liabilities 11 170 4 549 

Retirement benefit obligation 21 46 8 

Non-current liabilities 29 4 998 6 305 

Total non current liabilities 397 730 298 137 

Current liabilities 

Interest bearing-debt 19 64 011 0 

Trade and other payables 23 36 162 14 519 

Income tax liabilities 11 4 340 1 286 

Total current liabilities 104 512 15 805 

TOTAL EQUITY AND LIABILITIES 544 598 398 384 

Oslo, 21 th of April 2010 

Mårten Rød 

Chairman 


Board Member 


Board Member 


Board Member 




Consolidated statement of changes in equity 

(All amounts in USD 1 000 if not otherwise stated) 

Share 

capital 

Share 

premium 

Paid in 

capital 

Retained 

earnings 

IFRS 

Total 

Non-controlling 

interest 

Inception on 16 October 2006 16 16 16 

Net profit/ (loss) for the period -87 -87 -87 

Balance at 31 December 2006 16 0 0 -87 -71 -71 

Total 

Issue of share capital, net of share issuance cost 

January 2007 86 48 822 48 908 


July 2007 2 2 060 2 062 2 062 

Employee share option scheme, value of employee services 841 841 841 

Net profit/ (loss) for the period 3394 3 394 3 394 

Balance at 31 December 2007 104 50 882 841 3 307 55 134 55 134 


August 2008 4 9 325 9 329 9 329 

Net profit/(loss) for the period 19 984 19 984 -5 19 979 

Balance at 31 December 2008 108 60 207 841 23 291 84 447 -5 84 442 

Total comprehensive income for the period -41 317 -41 317 -312 -41 629 

Acquisition of subsidary -223 -223 -234 -457 

Balance at 31 december 2009 108 60 207 841 -18 250 42 906 -551 42 356 


Consolidated statement of cash flow 

Year ended 31 December 

Amounts in USD 1 000 Note 2009 2008 

Cash generated from operations 


Depreciation, amortisation and impairment 12 2 257 7 917 

Amortisation of debt issuance cost 10 17 672 2 567 

Change in fair value – bond loan and convertible bond loan 0 -10 808 

Changes investment in joint venture 13 5 239 -2 528 

Exchange gain / (loss) 7 883 -5 026 

Taxes paid -579 -243 

Changes in assets and liabilities 

Trade and other receivables -9 491 -18 041 

Trade and other payables 20 390 16 607 

Net cash flow from operating activities 2 229 15 569 

Cash flow from investing activities 

Investment in property, plant and equipment 12 -167 930 -141 061 

Net cash flow from investing activities -167 930 -141 061 

Cash flow from financing activities 

Proceeds of issuance from ordinary shares (net of share issuance cost) 0 9 329 

Proceeds from issuance of loans, net of debt issuance cost 456 165 0 

Repayments of loans -313 954 -53 500 

Net cash flows from financing activities 142 211 -44 171 

Cash and cash equivalents at 1 January 16 41 112 222 278 

Exchange (losses)/gains on cash and cash equivalents -355 -11 503 

Net (decrease)/increase in cash and cash equivalents -23 489 -169 663 

Cash and cash equivalents at 31 December 16 17 268 41 112 

Of which is restricted 16 10 000 35 637 

Marine Subsea AS has acquired 60% of Marine Subsea UK during 2009. 

The effect of the acquisitions is reported in each line in the cash flow statement. See further information in the notes. 


Notes – Marine Subsea Consolidated 


Note 1 – General information 

Marine Subsea AS is an international oil service company with a focus on 

the West African Offshore market. The Group owns a fleet of six units 

in operation and two under construction, including two multipurpose/ 

intervention vessels, five offshore support units and one semisubmersible 

crane vessel. In addition, the company has secured a service contract 

for a deepwater drillship. 

Marine Subsea AS was incepted on 9 October 2006. The vessel owning 

companies are owned 100% by the company, except Marine Subsea 

Sarah Ltd, Marine Subsea Karianne Ltd and Marine Subsea Lifter 

Ltd, wich are owned 75%, and Marine Subsea & Consfe Ltd wich the 

company has a 40% share interest in. 

The company is a limited liability company incorporated and domiciled 

in Norway. The address of its registered office is Strandveien 50, 

1366 Lysaker. 

The consolidated financial statements were authorised for issue by the 

board of directors on 21 April 2010. 

Note 2 – Summary of significant accounting policies 

The principal accounting policies applied in the preparation of these 

consolidated financial statements are set out below. These policies have 

been consistently applied to all the years presented. 

2.1 Basis of preparation 

The consolidated financial statements of Marine Subsea AS have been 

prepared in accordance with International Financial Reporting Standards 

as adopted by EU. The consolidated financial statements have been 

prepared under the historical cost convention, except certain financial 

assets and financial liabilities (including derivative instruments) that are 

recogniced at fair value. 

The preparation of financial statements in conformity with IFRS requires 

the use of certain critical accounting estimates. It also requires management 

to exercise its judgment in the process of applying the group’s 

accounting policies. The areas involving a higher degree of judgment or 

complexity, or areas where assumptions and estimates are significant to 

the consolidated financial statements are disclosed in note 4. 

The accounting policies adopted are consistent with those of the 

previous financial year except as follows: 

The Group has adopted the following new and amended IFRS and IFRIC 

interpretations as of 1 January 2009: 

• Amendments to IFRS 1 First-time Adoption of International Financial 

Reporting Standards and lAS 27 

• Consolidated and Separate Financial statements (effective from 

1 January 2009). The amendments to IFRS 1 allows an entity to 

determine the ‘cost’ of investments in subsidiaries, jointly controlled 

entities or associates in its opening IFRS financial statements in 

accordance with lAS 27 or using a deemed cost. The amendment 

to lAS 27 requires all dividends from a subsidiary, jointly controlled 

entity or associate to be recognised in the income statement in the 

separate financial statement. The revision to lAS 27 will have to be 

applied prospectively. The new requirements affect only the parent’s 

separate financial statement and do not have an impact on the 

consolidated financial statements 

• IAS 1; Presentation of financial statement, revised (effective from 

1 January 2009). Key changes regarding this revised standard are the 

following; Changes in equity arising from transactions with owners 

( such as dividends and shares repurchases) and the related tax 

impact are presented in the statement of changes in equity; ‘Nonowner’ 

changes in equity and the related tax impact are presented 

in comprehensive income; Comprehensive income is presented in 

either a single statement or in two statements (an income statement 

and a statement of comprehensive income); Dividends and per share 

amounts are presented in the statement of changes in equity or in 

the notes; A statement of financial position (balance sheet) at the beginning 

of the corresponding period is presented where restatements 

have occurred; and Reclassification adjustments (recycling) and the 

related income tax are disclosed in the comprehensive income. The 

Group has deciced to present one single statement. 

• IFRS 8, ‘Operating segments ‘ (effective from 1 January 2009). IFRS 8 

replaces IAS 14 and aligns segment reporting with the requirements of 

the US standard SFAS 131, ‘Disclosures about segments of an enterprise 

and related information’. The new standard requires a ‘management 

approach’, under which segment information is presented on the same 

basis as that used for internal reporting purposes. The Group has a non 

complex structure of different busienss activities. The more complex the 

group structure , the more likely it is that the segments identified will not 

be the same as those identifeied when applying IAS 14. 

(a) Interpretation early adopted by the group 

No standards, amendments and interpretations to existing standards 

have been early adopted by the Group. 

(b) Standards, amendments and interpretations to existing 

standards that are not yet effective and have not been early 

adopted by the group 

The following standards, amendments and interpretations to existing 

standards have been published and are mandatory for the group’s 

accounting periods beginning on or after 1 January 2010 or later 

periods, but the group has not early adopted them: 

• IFRS 3R Business Combinations and lAS 27R Consolidated and 

Separate Financial Statements (effective from 1 July 2009). 

IFRS 3R introduces a number of changes in the accounting for 

business combinations occurring after this date that will impact the 



amount of goodwill recognised, the reported results in the period that 

an acquisition occurs, and future reported results. lAS 27R requires 

that a change in the ownership interest of a subsidiary (without loss 

of control) is accounted for as an equity transaction. Therefore, such 

transactions will no longer give rise to goodwill, nor will it give rise 

to a gain or loss. Furthermore, the amended standard changes the 

accounting for losses incurred by the subsidiary as well as the loss of 

control of a subsidiary. Other consequential amendments were made 

to lAS 7 statement of Cash Flows, lAS 12 Income Taxes, lAS 21 The 

Effects of Changes in Foreign Exchange Rates, lAS 28 Investment 

in Associates and lAS 31 Interests in Joint Ventures. The changes by 

IFRS 3R and lAS 27R will affect future acquisitions or loss of control 

and transactions with non-controlling interest. The Group expects to 

implement IFRS 3(R) as of 1 January 2010. 

• lAS 32 Financial Instruments: Presentation and lAS 1 Presentation of 

Financial Statements – Puttable Financial Instruments and Obligations 

Arising on Liquidation (effective from 1 February 2010). The revisions 

provide a limited scope exception for puttable instruments to be 

classified as equity if they fulfil a number of specified features. The 

amendments to the standards will have no impact on the financial 

position or performance of the Group, as the Group has not issued 

such instruments. 

• lAS 39 Financial Instruments: Recognition and Measurement – Eligible 

Hedged Items (effective from 1 July 2009). The amendment addresses 

the designation of a one-sided risk in a hedged item, and the 

designation of ihflation as a hedged risk or portion in particular situations. 

It clarifies that an entity is permitted to designate a portion of 

the fair value changes or cash flow variability of a financial instrument 

as hedged item. The Group has concluded that the amendment 

will have no impact on the financial position or performance of the 

Group, as the Group has not entered into any such hedges. 

• IFRIC 16 Hedges of a Net Investment in a Foreign Operation. (effective 

from 1 July 2009). The interpretation is to be applied prospectively. 

IFRIC 16 provides guidance on the accounting for a hedge of 

a net investment. As such it provides guidance on identifying the 

foreign currency risks that qualify for hedge accounting in the hedge 

of a net investment, where within the group the hedging instruments 

can be held in the hedge of a net investment and how an entity 

should determine the amount of foreign currency gain or loss, relating 

to both the net investment and the hedging instrument. to be 

recycled on disposal of the net investment. The changes by IFRIC 16 

will affect future hedges of a net investment in a foreign operation. 

The Group expects to implement IFRIC 16 as of 1 January 2010. 

• Amendments to IFRS 2 Share-based Payments – Group Cash-settled 

Share-based payment Transactions: The amendment to IFRS 2 

provides more guidance on the accounting for group cash-settled 

share-based payment transactions. In addition, the definition of share 

based payment is somewhat modified. This amendment supersedes 

IFRIC 8 and IFRIC 11. This amendment is effective for annual periods 

beginning on or after 1 January 2010, but the amendment is not yet 

approved by the EU. The Group expects to apply the amendment 

as of 1 January 2010. The amendments to the standards will have 

no impact on the financial position or performance of the Group, 

as the Group has no share-based agreements at year end 2009. 

• IFRS 9 Financial Instruments: IFRS 9 replaces the classification and 

measurement rules in IAS 39 Financial Instruments- Recognition and 

measurement for financial instruments. According to IFRS 9 financial 

assets with basic loan features shall be measured at amortised cost, 

unless one opts to measure these assets at fair value. All other financial 

assets shall be measured at fair value. IFRS 9 is effective for annual 

periods beginning on or after 1 January 2013, but the standard is 

not yet approved by the EU. The Group expects to apply IFRS 9 as of 

1 January 2013. The amendments to the standards is not expected 

to have an impact on the financial position or performance of the 

Group. 

• IAS 24 (revised) Related Party Disclosures: The revised IAS 24 clarifies 

and simplifies the definition of a related party, compared to the current 

IAS 24. The revised standard also provides some relief for governmentrelated 

entities to disclose details of all transactions with other 

government-related entities (as well as with the government itself). IAS 

24 (R) is effective for annual periods beginning on or after 1 January 

2011, but the revised standard is not yet approved by the EU. The 

Group expects to implement IAS 24 (R) as of 1 January 2011. 

• IAS 27 (revised) Consolidated and Separate Financial Statements. 

The revised IAS 27 provides more guidance on accounting for 

changes in ownership interest in a subsidiary and the disposal of a 

subsidiary, compared to the current IAS 27. According to the revised 

standard the entity measures the interest retained in a former 

subsidiary at fair value upon loss of control of the subsidiary, and the 

corresponding gain or loss is recognised through profit and loss. The 

revised standard also includes a change in the requirements relating 

to the allocation of losses in a loss-making subsidiary. IAS 27 (R) 

requires total comprehensive income to be allocated between the 

controlling and the non-controlling party, even if this results in the 

non-controlling interest having a deficit balance. IAS 27 (R) is effective 

for annual periods beginning on or after 1 July 2009. The Group 

plans to implement IAS 27 (R) as of 1 January 2010. 

• Amendments to IFRIC 14 IAS 19 The Limit on a Defined Benefit 

Asset, Minimum Funding Requirements and their Interaction – 

Prepayments of a Minimum funding Requirement: The amendment 

to IFRIC 14 intends to correct an unintended consequence of IFRIC 

14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding 

Requirements and their Interaction. This amendment will allow 

entities to recognise a prepayment of pension contributions as an 

asset rather than an expense. The amendment is effective for annual 

periods beginning on or after 1 January 2011, but the amendment 

is not yet approved by the EU. The Group expects to implement the 

amendment as of 1 January 2011. The Group does not expect that 

implementation of IFRIC 14 will have a material effect on the financial 

statement of the Group on the date of implementation. 

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments: 

The interpretation clarifies the accounting treatment of financial 

liabilities that, as a result of a renegotiation of the terms of the 

financial liability, are fully, or partially, extinguished with equity instru- 


ments. The interpretation is effective for annual periods beginning 

on or after 1 July 2010, but the interpretation is not yet approved 

by the EU. The Group expects to implement IFRIC 18 as of 1 January 

2011. The Group does not expect that implementation of IFRIC 19 

will have a material effect on the financial statement of the Group on 

the date of implementation. 

Annual improvements project 

The IASB issued amendments to its standards and the related Basis 

for Conclusions in its annual “improvements to IFRSs”. The improvement 

project is an annual project that provides a mechanism for making 

necessary but non-urgent amendments. These amendments are not yet 

approved by the EU. 

IFRS 2 Share-based Payment: Clarifies that the contribution of a business 

on formation of a joint venture and combinations under common 

control are not within the scope of IFRS 2 even though they are outside 

of scope of IFRS 3 (R). 

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: 

Clarifies that the disclosures required in respect of non-current assets 

or disposal groups classified as held for sale or discontinued operations 

are only those set out in IFRS 5. The disclosure requirements of other 

IFRSs only apply if specifically required for such non-current assets or 

discontinued operations. 

IFRS 8 Operating Segments: Clarifies that segment assets and liabilities 

need only be reported when those assets and liabilities are included in 

measures that are used by the chief operating decision maker. 

IAS 1 Presentation of Financial Statements: The terms of a liability 

that could result, at anytime, in its settlement by the issuance of 

equity instruments at the option of the counterparty do not affect 

its classification. 

IAS 7 Statement of Cash Flow: Explicitly states that only expenditure 

that results in a recognised asset can be classified as a cash flow from 

investing activities. 

IAS 17 Leases: The amendment removes the specific guidance on classifying 

land as a lease so that only the general guidance remains. 

IAS 18 Revenue: More guidance is added to determine whether an entity 

is acting as a principal or as an agent. 

IAS 36 Impairment of Assets: Clarifies that the largest unit permitted for 

allocating goodwill acquired in a business combination is the operating 

segment, as defined in 

IFRS 8 before aggregation for reporting purposes. 

IAS 38 Intangible Assets: Clarifies that if an intangible asset acquired in 

a business combination is identifiable only with another intangible asset, 

the acquirer may recognise the group of intangible assets as a single 

asset provided the individual assets have similar useful lives. 

IAS 39 Financial Instruments – Recognition and Measurement: Clarifies 

that a prepayment option is considered closely related to the host 

contract when the exercise price of a prepayment option reimburses 

the lender up to the approximate present value of lost interest for the 

remaining term of the host contract. Clarifies that the scope exemption 

for contracts between an acquirer and a vendor in a business combination 

to buy or sell an acquiree at a future date, applies only to binding 

forward contracts, and not derivative contracts where future actions by 

either party are still to be taken. Clarifies that gains or losses on cash 

flow hedges of a forecast transaction that subsequently results in the 

recognition of a financial instrument or on cash flow hedges of recognised 

financial instruments should be reclassified in the period that the 

hedged forecast cash flows affect profit or loss. 

IFRIC 9 Reassessment of Embedded Derivatives: The scope paragraph 

is amended to clarify that the interpretation does not apply to possible 

reassessment, at the date of acquisition, to embedded derivatives in 

contracts acquired in a combination between entities or businesses 

under common control or the formation of a joint venture. 

IFRIC 16 Hedges of a Net Investment in a Foreign Operation: The 

amendment states that, in a hedge of a net investment in a foreign 

operation, qualifying hedging instruments may be held by any entity or 

entities within the group, including the foreign operation itself, as long 

as the designation, documentation and effectiveness requirements of 

IAS 39 that relate to a net investment hedge are satisfied. 

The Group does not expect that implementation of the amendments 

listed above will have a material effect on the financial statement of the 

Group on the date of implementation. 

2.2 Consolidation 

(a) Subsidiaries 

Subsidiaries are all entities (including special purpose entities) over which 

the group has the power to govern the financial and operating policies 

generally accompanying a shareholding of more than one half of the 

voting rights. The existence and effect of potential voting rights that 

are currently exercisable or convertible are considered when assessing 

whether the group controls another entity. Subsidiaries are fully consolidated 

from the date on which control is transferred to the group. They 

are de-consolidated from the date that control ceases. 

Inter-company transactions, balances and unrealised gains on transactions 

between group companies are eliminated. Accounting policies of 

subsidiaries have been changed where necessary to ensure consistency 

with the policies adopted by the group. 

(b) Transactions and non-controlling interests 

The group applies a policy of treating transactions and non-controlling 

interests as transactions with parties external to the group. Disposals to 

non-controlling interests result in gains and losses for the group that are 

recorded in the income statement. 

(c) Joint Ventures 

The group has an interest in a joint venture which is a jointly controlled 

entity, whereby the venturers have a contractual arrangement that 



establishes joint control over the economic activities of the entity. 

Investments in joint ventures are accounted for using the equity method 

of accounting and are initially recognised at cost. 

Unrealised gains on transactions between the group and its joint 

ventures are eliminated to the extent of the group’s interest in the joint 

ventures. Unrealised losses are also eliminated unless the transaction 

provides evidence of an impairment of the asset transferred. Accounting 

policies of joint ventures have been changed where necessary to ensure 

consistency with the policies adopted by the group. 

Dilution gains and losses arising in investments in joint ventures are 

recognised in the income statement. 

2.3 Operating segments 

An operating segment is a group of assets and operations engaged in 

providing products or services that are subject to risks and returns that 

are different from those of other operating segments. A geographical 

segment is engaged in providing products or services within a particular 

economic environment that are subject to risks and returns that are 

different from those of segments operating in other economic environments. 

The segment information is presented on the same basis as that 

used for internal reporting purposes. 

2.4 Foreign currency translation 

(a) Functional and presentation currency 

Items included in the financial statements of each of the group’s entities 

are measured using the currency of the primary economic environment 

in which the entity operates (‘the functional currency’). The consolidated 

financial statements are presented in USD. This is also the functional 

currency of all the significant subsidiaries in the Group. 

(b) Transactions and balances 

All transactions in currencies other than USD are included in the 

accounts at exchange rate on the date of the transactions. Foreign 

exchange gains and losses resulting from the settlement of such 

transactions and from the translation at year-end exchange rates of 

monetary assets and liabilities denominated in foreign currencies are 

recognised in the income statement. 

2.5 Vessels, rig and other equipment 

Vessels, rig and other equipment comprise mainly of multipurpose/ 

intervention vessels, work accommodation barge vessels and semi 

submersiable. All vessels, rig and equipment are stated at historical cost 

less depreciation. Historical cost includes expenditure that is directly 

attributable to the acquisition of the assets. 

Subsequent costs are included in the asset’s carrying amount or recognised 

as a separate asset, as appropriate, only when it is probable that 

future economic benefits associated with the item will flow to the group 

and the cost of the item can be measured reliably. The carrying amount 

of the replaced part is derecognised. All other repairs and maintenance 

are charged to the income statement during the period in which they 

are incurred. Dry-docking expenses are capitalised as incurred and 

depreciated over the estimated useful life of the asset, i.e. until the next 

dry-docking. The carrying amount of the replaced part is derecognised. 

All other repairs and maintenance are charged to the income statement 

during the period in which they are incurred. 

Depreciation on assets is calculated using the straight-line method to 

allocate their cost less residual values over their estimated useful lives. 

Borrowing cost directly attributable to the aqusition or construction 

of a qualifying asset is capitalized as part of the cost of that asset. 

(note 2.20) 

The assets’ residual values and useful lives are reviewed, and adjusted if 

appropriate, at each balance sheet date. 

An asset’s carrying amount is written down immediately to its recoverable 

amount if the asset’s carrying amount is greater than its estimated 

recoverable amount (note 2.6). 

Gains and losses on disposals are determined by comparing the proceeds 

with the carrying amount and are recognised within ‘Other (losses)/gains 

– net’ in the income statement. 

2.6 Impairment of non-financial assets 

Goodwill and assets that are subject to amortisation are reviewed for 

impairment whenever events or changes in circumstances indicate that 

the carrying amount may not be recoverable. An impairment loss is recognised 

for the amount by which the asset’s carrying amount exceeds 

its recoverable amount. The recoverable amount is the higher of an 

asset’s fair value less costs to sell and value in use. For the purposes of 

assessing impairment, assets are grouped at the lowest levels for which 

there are separately identifiable cash flows (cash-generating units). 

These groups can not be on a higher level than the operating segments 

are divided into. Non-financial assets other than goodwill that suffered 

impairment are reviewed for possible reversal of the impairment at each 

reporting date. 

2.7 Financial assets 

The group classifies its financial assets in the following categories: at fair 

value through profit or loss, loans and receivables, and available-for-sale. 

The classification depends on the purpose for which the financial assets 

were acquired. Management determines the classification of its financial 

assets at initial recognition. 

(a) Financial assets at fair value through profit or loss 

Derivatives are categorised as held for trading unless they are designated 

as hedges. Assets in this category are classified as current assets. 

(b) Loans and receivables 

Loans and receivables are non-derivative financial assets with fixed or 

determinable payments that are not quoted in an active market. They 

are included in current assets, except for maturities greater than 12 

months after the balance sheet date. These are classified as non-current 

assets. The group’s loans and receivables comprise ‘trade and other 


eceivables’ and cash and cash equivalents in the balance sheet (note 

2.11 and 2.12). 

(c) Financial assets available for sale 

All other financial assets, not included in the above mentioned groups 

2.8 Derivative financial instruments and hedging activities 

Derivatives are initially recognised at fair value on the date a derivative 

contract is entered into and are subsequently remeasured at their fair 

value. The method of recognising the resulting gain or loss depends on 

whether the derivative is designated as a hedging instrument, and if so, 

the nature of the item being hedged. None of the derivative instruments 

do qualify for hedge accounting. The groups derivates consist 

of convertible element on bond financing and early redemption right 

regarding borrowings. Changes in the fair value of any these derivative 

instruments are recognised immediately in the income statement within 

financial income or expense. 

2.9 Inventories 

Inventories are stated at the lowest of cost and net realisable value. 

Cost is determined using the first-in, first-out (FIFO) method. Inventories 

comprise principally fuel and lubricating oils. 

2.10 Trade receivables 

Trade receivables are recognised initially at fair value and subsequently 

measured at amortised cost using the effective interest method, less 

provision for impairment. A provision for impairment of trade receivables 

is established when there is objective evidence that the group will not 

be able to collect all amounts due according to the original terms of the 

receivables. Significant financial difficulties of the debtor, probability 

that the debtor will enter bankruptcy or financial reorganisation, and 

default or delinquency in payments are considered indicators that the 

trade receivable is impaired. The amount of the provision is the difference 

between the receivable’s carrying amount and the present value of 

estimated future cash flows, discounted at the original effective interest 

rate. The receivables amount of the loss is recognised in the income 

statement within ‘other operating expenses’. When a trade receivable 

is uncollectable, it is written off against the allowance account for trade 

receivables. Subsequent recoveries of amounts previously written off are 

credited against ‘administrative expense’ in the income statement. 

2.11 Cash and cash equivalents 

Cash and cash equivalents includes cash in hand, deposits held at call 

with banks, other short-term highly liquid investments with original 

maturities of three months or less. 

2.12 Share capital 

Ordinary shares are classified as equity. 

Incremental costs directly attributable to the issue of new shares or options 

are shown in equity as a deduction, net of tax, from the proceeds. 

Where any group company purchases the company’s equity share 

capital (treasury shares), the consideration paid, including any directly 

attributable incremental costs (net of income taxes) is deducted from 

equity attributable to the company’s equity holders until the shares are 

cancelled or reissued. Where such shares are subsequently reissued, any 

consideration received, net of any directly attributable incremental transaction 

costs and the related income tax effects, is included in equity 

attributable to the company’s equity holders. 

2.13 Trade payables 

Trade payables are recognized initially at fair value and subsequently 

measured at amortised cost using the effective interest method. 

2.14 Borrowings 

Borrowings are recognised initially at fair value, net of transaction costs 

incurred. Borrowings are subsequently stated at amortised cost; any 

difference between the proceeds (net of transaction costs) and the 

redemption value is recognised in the income statement over the period 

of the borrowings using the effective interest method. 

The fair value of the liability portion of a convertible bond is determined 

using a market interest rate for an equivalent non-convertible bond. 

This amount is recorded as a liability on an amortised cost basis until 

extinguished on conversion or maturity of the bonds. The remainder of 

the proceeds is allocated to the conversion option. This is recognised 

and included in shareholders’ equity, net of income tax effects. 

Early redemption rights regarding borrowings are recognised at fair value 

at the date of issuance of the loan. Fair value fluctuations are recognised 

as a financial income/expense. For convertible bond financing that is 

issued with a currency other than the groups functional currency, the 

convertible element is recognised at fair value as liability component based 

on a valuation model. When the group has an early redemption right 

regarding convertible bond financing, the convertible element is fair valued 

by taking this early redemption right into consideration. The remainder 

of the proceeds is allocated to the liability component of the bond. The 

convertible element is recognised at fair value at period end and fair value 

fluctuations are recognised through statement of profit and loss. 

Borrowings are classified as current liabilities unless the group has an 

unconditional right to defer settlement of the liability for at least 12 

months after the balance sheet date. 

2.15 Current and deferred income tax 

The current income tax charge is calculated on the basis of the tax laws 

and rates enacted or substantively enacted at the balance sheet date in the 

countries where the company’s subsidiaries and joint venture operate and 

generate taxable income. Management periodically evaluates positions taken 

in tax returns with respect to situations in which applicable tax regulation 

is subject to interpretation and establishes provisions where appropriate on 

the basis of amounts expected to be paid to the tax authorities. 

Deferred income tax is provided in full, using the liability method, on 

temporary differences arising between the tax bases of assets and 



liabilities and their carrying amounts in the consolidated financial statements. 

However, the deferred income tax is not accounted for if it arises 

from initial recognition of an asset or liability in a transaction other 

than a business combination that at the time of the transaction affects 

neither accounting nor taxable profit or loss. Deferred income tax is determined 

using tax rates (and laws) that have been enacted or substantially 

enacted by the balance sheet date and are expected to apply when 

the related deferred income tax asset is realised or the deferred income 

tax liability is settled. 

Deferred income tax assets are recognised to the extent that it is 

probable that future taxable profit will be available against which the 

temporary differences can be utilised. 

Deferred income tax is provided on temporary differences arising on 

investments in subsidiaries and joint ventures, except where the timing 

of the reversal of the temporary difference is controlled by the group 

and it is probable that the temporary difference will not reverse in the 

foreseeable future. 

2.16 Employee benefits 

(a) Pension obligations 

One of the Group companies operates on a pension scheme. The 

scheme is generally funded through payments to insurance companies 

or trustee-administered funds, determined by periodic actuarial 

calculations. The scheme is a defined benefit plan. A defined benefit 

plan is a pension plan that is not a defined contribution plan. Typically, 

defined benefit plans define an amount of pension benefit that an 

employee will receive on retirement, usually dependent on one or more 

factors such as age, years of service and compensation. 

The liability recognised in the balance sheet in respect of defined benefit 

pension plans is the present value of the defined benefit obligation at 

the balance sheet date less the fair value of plan assets, together with 

adjustments for unrecognised actuarial gains or losses and past service 

costs. The defined benefit obligation is calculated annually by independent 

actuaries using the projected unit credit method. The present value 

of the defined benefit obligation is determined by discounting the 

estimated future cash outflows using interest rates of high-quality corporate 

bonds that are denominated in the currency in which the benefits 

will be paid and that have terms to maturity approximating to the terms 

of the related pension liability. 

Actuarial gains and losses arising from experience adjustments and 

changes in actuarial assumptions in excess of the greater of 10% of the 

value of plan assets or 10% of the defined benefit obligation are charged 

or credited to income over the employees’ expected average remaining 

working lives. 

(b) Share-based compensation 

The group operated an equity-settled, share-based compensation plan 

for one of the Group’s financial advisor. The fair value of these services 

and employee services received in exchange for the grant of the options 

is recognised as an expense. The total amount to be expensed over the 

vesting period is determined by reference to the fair value of the options 

granted. At each balance sheet date, the entity revises its estimates 

of the number of options that are expected to vest. It recognises the 

impact of the revision to original estimates, if any, in the income statement, 

with a corresponding adjustment to equity. The option forefeited 

in August 2009. 

(c) Profit-sharing and bonus plans 

The group recognises a liability and an expense for bonuses and profitsharing, 

based on a formula that takes into consideration the profit 

attributable to the company’s shareholders after certain adjustments. 

The group recognises a provision where contractually obliged or where 

there is a past practice that has created a constructive obligation. 

2.17 Provisions 

Provisions for legal claims and other are recognised when: the group 

has a present legal or constructive obligation as a result of past events; 

it is probable that an outflow of resources will be required to settle the 

obligation; and the amount has been reliably estimated. 

2.18 Revenue recognition 

Revenue comprises the fair value of the consideration received or 

receivable for the sale of goods and services in the ordinary course of 

the group’s activities. Revenue is shown net of value-added tax, returns, 

rebates and discounts and after eliminating sales within the group. 

The group recognises revenue when the amount of revenue can be 

reliably measured, it is probable that future economic benefits will flow 

to the entity and when specific criteria have been met for each of the 

group’s activities as described below. The amount of revenue is not 

considered to be reliably measurable until all contingencies relating to 

the sale have been resolved. The group bases its estimates on historical 

results, taking into consideration the type of customer, the type of 

transaction and the specifics of each arrangement. 

(a) Time Charter revenues 

Time charter revenues are recorded over the term of the charter as a 

service is provided and when the general revenue recognition criteria 

described above have been fulfilled. The fair value of the lease element 

of the contract is recognised on a straight line basis over the lease term. 

Certain contracts include mobilisation fees payable at the start of the 

contract. In cases where the fee covers specific upgrades or equipment 

specific to the contract, the mobilisation fees are recognised as revenue 

over the estimated life of the customer contract period. The related 

investment is depreciated over the estimated useful life of the contract 

period. The fair value of the service element of the contract is recognised 

at the time the service has been rendered. 

(b) Bareboat Charter revenues 

The lease element of the contract is recognised on a straight line basis 

over the lease term. 

2.19 Leases 

Leases in which a significant portion of the risks and rewards of ownership 

are retained by the lessor are classified as operating leases. Payments 

made under operating leases (net of any incentives received from 


the lessor) are charged to the income statement on a straight-line basis 

over the period of the lease. 

Financial leases 

Leases in which the company assumes the better part of the risk and 

dividend associated with ownership of the asset, are financial leases. At 

the beginning of the lease, financial leases are entered at a sum equal to 

market value or the present value of the minimum lease sum, whichever 

is lower, with accumulated depreciation and write-downs deducted. 

When calculating the present value of the lease, the implicit interest rate 

cost in the lease is used, if it can be calculated. If not, the company’s 

marginal loan interest rate is used. Expenses directly connected to the 

establishment of the lease are included in the cost price of the asset. 

The depreciation period is the same as for the company’s other depreciable 

assets. If there is no reasonable certainty of the company assuming 

ownership when the lease expires, the asset is written off over the term 

of the lease or for the asset’s financial service life, whichever is shortest. 

Operational leases 

Lease contracts in which the better part of the risk and dividend in 

associated with ownership of the asset are classified as operational 

lease contracts. Lease payments are classified as operating costs and 

entered using the straight line method over the contract period. 

2.20 Capitalisation of borrowing cost 

Borrowing costs incurred for the construction of any qualifying asset 

are capitalised during the period of time that is required to complete 

and prepare the asset for its intended use. Other borrowing costs are 

expensed. 

Note 3 – Financial risk management 

Financial risk factors 

The Group’s activities are exposed to a variety of financial risks: market 

risk (including currency risk, fair value interest rate risk and price risk) 

and credit risk (trade receivables and liquidity risk). The Group’s overall 

risk management program focuses on the unpredictability of financial 

markets and seeks to minimise potential adverse effects on the Group’s 

financial performance. Risk management is carried out by the Finance 

Director, together with Senior Management. 

Market risk 

Market demand for Marine Subsea’s barges and vessels will be driven 

by, inter alia, global demand for oil prices for crude oil, actions by OPEC, 

worldwide inventory levels, changes in technology, and the availability 

and sustainability of competitive fuels. Furthermoremarket demand 

for Marine Subsea’s barges and vessels could be impacted by the 

actions of competitors, availability of similar vessels, ability of suppliers 

and subcontractors to perform on a timely basis or at all under their 

agreements, political stability and the actions of governments or other 

in the countries and territorial waters of operations. 

i) Interest rate risk 

Interest rate risk is the risk that the fair value of future cash flows of 

a financial instrument will fluctuate because of changes in the market 

interest rates. The Group’s exposure to the risk of changes in the market 

interest rates relates to the Group’s long-term export credit facilities (Sarah 

and Karianne loan) with floating interest rate (e.g. 3 months LIBOR). 

However, the latter exposure is offset by the 12 months LIBOR adjustment 

incorporated in the MS Sarah Ltd and MS Karianne Ltd Service 

Agreements with Sonangol P&P. The exchange bonds are fixed rate. 

ii) Foreign exchange risk 

Foreign currency risk is the risk that the fair value of future cash flows 

of a financial instrument will fluctuate because of changes in foreign 

exchange rates. Foreign exchange risk arises from future commercial 

transactions, recognized assets and liabilities and net investments in 

foreign operations. The Group operates internationally and is exposed to 

foreign exchange risk arising from currency fluctuations, primarily NOK/ 

USD. The future charter income and operating expenses will mainly be 

in USD. The remaining commitment to Ulstein Yard for the construction 

of the Karianne vessel is hedged through a forward contract to buy NOK 

481,8 million and sell USD 83,2 million. The USD will be made available 

under the Karianne loan facility upon delivery of the Karianne. At 31st 

December 2009, the fair value of this forward contract is deemed to 

be of immaterial value. Marine Subsea uses no other derivative financial 

instruments to hedge currency risk exposure. The Group’s interest 

expenses arise from USD denominated loans. 

iii) Commodity price risk 

The Group is affected by the volatility of the marine gas oil (MGO) 

prices in various areas, with emphasis on the Angolan market. The MGO 

prices are historically positively correlated with the oil price. The Group’s 

vessels operating activities require a continuous supply of MGO. These 

costs are directly covered or fully reimbursed by charterer. The Company 

covers the cost of MGO if the vessels go offhire. Currently, the Company 

uses no derivative financial instruments to hedge the above mentioned 

risk exposures. 

iv) Supply rate risk/Contract risk 

The profitability and cash flow of Marine Subsea’s operations will be 

dependent upon the market conditions for construction support vessels 

and well intervention vessels in West Africa. The African Lifter is still 

without contract,and African caribe is on a contract ending June 2010, 

and African Installer is on a 6 month contract ending in September 2010 

without any firm backlog. Current market conditions indicate that the 

barges should secure work at levels similar to African Installer’s current 

contract, but this cannot be guaranteed. 

Credit risk 

With reference to the synopsis on the African Challenger project (Marine 

Subsea & Consafe) in the Annual Report 2008, Yantai has agreed to 

acquire Consafe MSV AB’s interest in the joint-venture. Yantai has 

further agreed to take delivery of African Challenger for its own account 

and lease the unit to the JV under a 10-year bareboat lease with 



purchase option. The terms of the bareboat agreement will reflect the 

cost of the unit and payments made to date. Marine Subsea is highly 

positive to this solution as it means the JV no longer requires financing, 

Yantai has an increased exposure and the organisational model is 

simplified. 

i) Trade receivables 

The company’s three offshore support barges – African Caribe, African 

Fjord and African Installer all generated income in 2009. The Company 

has however had to make a provision in the amount of USD 7,4 million 

on bad debt, as the charterer of African Installer defaulted on its payment 

obligations. The Company is in the process of pursuing a claim 

of USD 9,1 million against the previous charterer. African Installer is 

now being towed to Malta, where it will go on a 6 month contract with 

Geocean. 

Trade receivables 

(all amounts in USD 1 000) December 2009 

Note due 13 462 USD 

Overdue 1–30 days 3 661 USD 

Overdue 30–60 days 223 USD 

Overdue 60–90 days 32 USD 

Overdue over 90 days 57 USD 

Total 17 436 USD 

ii) Liquidity risk 

On 16th December 2009, Marine Subsea raised vessel financing, took 

delivery of the deepwater multipurpose/intervention vessel Sarah and 

completed its financial restructuring. Marine Subsea is now fully financed 

with a debt maturity profile that matches the long-term nature of its 

contracts. Standard Bank Plc and Eksportfinans ASA underwrote a loan 

of USD 222 million, of which USD 111 million was drawn-down in connection 

with the delivery payment for Sarah and USD 111 million was 

committed for October 2010 for the delivery of the second multipurpose/intervention 

vessel, Karianne. At the same time, Marine Subsea’s 

three outstanding bonds were converted to two new bonds with a total 

value USD 314 million. The new bonds have a 10-year maturity date 

and interest may be accrued in the first 2 years. The bond loans are 

structured with cash sweep repayments. 

The table below summaries the maturity profile of the Group’s financial 

liabilities at 31. December 2009 based on contractual undiscounted 

payments: 

2009 Less 

than one 

year 

Between 

1 and 2 

years 

Between 

3 and 5 

years 

Over 5 

years 

Total 

Trade- and 

other payables 36 162 0 0 0 36 162 

Interest-bearing 

loans and 

borrowings 98 879 63 450 248 299 273 157 683 785 

2008 Less 

than one 

year 

Between 

1 and 2 

years 

Between 

3 and 5 

years 

Over 5 

years 

Total 

Trade- and 

other payables 14 519 0 0 0 14 519 

Interest-bearing 

loans and 

borrowings 23 657 23 652 337 012 0 384 321 

The short term interest-bearing debt in 2009 constitute the following: 

• The remaining take-out payment on African Worker to Jaya 

Shipbuilding of USD 17,2 million, where USD 250 thousand is due 

in equal amounts each month from February 2010 until Karianne 

delivery with a bullet at delivery of USD 15,2 million. USD 15,2 is 

to be paid at the latest 31.12.2010. 

• Debt to Ulstein of USD 35 million with regards to Sarah- and 

Karianne delivery. Due on delivery of Karianne in October 2010. 

• Installment of USD 11,1 million under the Sarah facility, and interest 

on the Sarah facility and the 2 bond loans. 

The table below summaries the maturity profile of the Group’s capital 

commitments contracted for at the balance sheet date, but not recognized 

in the financial statements. The USD 85.7 million represents the 

final payment on Karianne. 

2009 Less 

than one 

year 

Between 

1 and 2 

years 

Between 

3 and 5 

years 

Over 5 

years 

Total 

Investments 85 739 0 0 0 85 739 

2008 Less 

than one 

year 

Between 

1 and 2 

years 

Between 

3 and 5 

years 

Over 5 

years 

Total 

Investments 117 280 32 051 0 0 149 331 

Capital Management 

The primary objective of the group’s capital management is to ensure 

the service and repayment of debt, in order to support its business and 

maximize shareholder value. 


(all amounts in USD 1 000) 2009 2008 

Long term interest-bearing debt 393 287 

Short term interest-bearing debt 64 0 

Less cash and short-term deposits -17 -41 

Net debt 439 246 

Equity 43 84 

Equity and Net debt 482 331 

Debt to Equity 10 3 

Events after reporting 

USD 6 million in debt to Leung Kee Holding Limited (Brian Chang). 

Approved by bondholder meeting 18th January 2010. To be repaid in 

equal payment over 6 months, starting the month of April 2010. 

Determination of fair value 

The following of the Group’s financial instruments are not measured 

at fair value: Cash and cash equivalents are categorized as Held-tomaturity 

investments. Non-current and Trade and other receivables are 

categorized as Loans and receivables. The long term portion of Interest 

bearing-debt are categorized as financial liabilities measured at amortized 

cost, while Trade payables and short term portion of Interest bearingdebt 

is categorized as Other financial liabilities. The carrying amount of 

cash and cash equivalents are approximately equal to fair value since 

these instruments have a short term to maturity. Similarly, the carrying 

amount of trade receivables and trade payables is approximately equal 

to fair value as they are entered into on normal terms and conditions. 

The table below shows the categories of financial assets and financial 

liabilities according to IAS 39, cf. IFRS 7.8. All financial- assets and 

liabilities are priced by input based on values not observable in markets: 

Held for 

trading 

Designated as such 

upon intial recognition 

Financial assets at fair value 

Held to 

maturity 

Loans and 

receviables 

Available for sale 

financial assets 

Note 

Total 

31.12.09 

Assets 

Non-current receivables 14 0 0 0 32 818 0 32 818 

Trade and other receivables 15 0 0 0 49 839 0 49 839 

Cash and cash equivalants 16 0 0 17 268 0 0 17 268 

Other assets 28 0 0 9 0 0 9 

Total financial assets 0 0 17 277 82 657 0 99 934 

31.12.08 

Assets 

Non-current receivables 0 0 0 50 913 0 50 913 

Trade and other receivables 0 0 0 21 360 0 21 360 

Cash and cash equivalants 0 0 41 112 0 0 41 112 

Other assets 0 0 903 0 0 903 

Total financial assets 0 0 42 015 72 273 0 114 288 



31.12.09 

Liabilities 

Note 

Financial liabilities at fair value 

Held for 

trading 

Designated as such 

upon intial recognition 

Financial liabilities 

measured at amortised cost 

Other financial 

liabilities 

Interest bearing-debt 19 0 0 392 515 64 011 456 526 

Trade and other payables 23 0 0 0 36 162 36 162 

Other liabilities 11, 21, 29 0 0 0 9 544 9 544 

Total financial liabilities 0 0 392 515 109 717 502 232 

Total 

31.12.08 

Liabilities 

Interest bearing-debt 0 0 287 276 0 287 276 

Trade and other payables 0 0 0 14 519 14 519 

Other liabilities 0 0 0 12 148 12 148 

Total financial liabilities 0 0 287 276 26 667 313 943 

Note 4 – Critical accounting estimates and judgements 

(a) Income taxes 

The Group is subject to income taxes in several jurisdictions. Significant judgement is required in determining the Group’s provision for income taxes. 

The Group recognises deferred tax assets if it is probable that sufficient taxable income will be available in the future against which the temporary 

differences and unused tax losses can be utilised. 

(b) Impairment of vessels, vessels under construction and goodwill 

The Group tests whether vessels, vessels under construction and goodwill has suffered any impairment, in accordance with the accounting policy 

stated in Note 2 The recoverable amounts of cash generating units have been determined based on value-in-use calculations. These calculations 

require the use of estimates. Impairment tests of vessels and goodwill do not indicate impairment for 2009. The Group has recognised impairment of 

goodwill. This is goodwill related to the aqusition of Lewis. 


Note 5 – Related parties 

The financial statements of Marine Subsea includes the following subsidiaries and joint venture listed in the table below: 

Name 

Country of 

% equity interest 

incorporation 

2009 2008 

Marine Subsea Cyprus Holding Ltd Subsidiary Cyprus 100 100 

Marine Subsea Sarah Ltd Subsidiary Cyprus 75 75 

Marine Subsea Karianne Ltd Subsidiary Cyprus 75 100 

Marine Subsea Worker Ltd Subsidiary Cyprus 100 100 

Marine Subsea Installer Ltd Subsidiary Cyprus 100 100 

Marine Subsea Fjord Ltd Subsidiary Cyprus 100 100 

Marine Subsea Caribe Ltd Subsidiary Cyprus 100 100 

Marine Subsea Lifter Ltd Subsidiary Cyprus 75 100 

Marine Subsea Solver Ltd Subsidiary Cyprus 100 100 

Marine Subsea TEN Drilling Ltd Subsidiary Cyprus 100 100 

Marine Subsea Inc Subsidiary Panama 100 100 

Marine Subsea II Inc Subsidiary Panama 0 100 

Interiol Angola Ltd Subsidiary Angola 99 99 

Lewis Ltd Subsidiary Scotland 0 100 

Marine Subsea Nigeria Ltd Subsidiary Nigeria 100 100 

Marine Subsea UK Subsidiary Scotland 60 0 

Marine Subsea Worker Singapore Pte Ltd Subsidiary Singapore 100 0 

Marine Subsea & Consafe MSV Ltd Joint Venture Cyprus 40 40 

The Company’s directors and management as at 31 December 2009 are considered related parties. 

Name 


Erik Sandøy 

Mårten Rød 


Georgio Ercole Francesco Reggio 


Alasdair Cowie 

Position 


Finance Director 

Chairman of the Board of Directors 

Member of the Board of Directors 



Managing Director, Marine Subsea UK 

Reference is made to disclosure note 17 for shares in Marine Subsea AS owned by the Company’s management and Board of Directors 



Management contracts 

Marine Subsea AS has entered into management agreements with separate companies owned by two of the main chareholders, Gian Angelo Perrucci 

and Mårten Rød, who performes all their management services etc. trough these companies. Marine Subsea AS has entered into a consultancy 

agreement with a separate company 50% owned by Kristen Jakobsen who performes all his financial services trough this company. 

Amounts in USD 1 000 

Fees paid to Eksportconsult AS, owned by the chairman of the board Mårten Rød, have been charged as an expense with USD 180 (2008: USD 180) 

Net payable to Eksportconsult AS at 31 December 2009 is USD -30 (2008: USD 15) 

Fees paid to Nicrest Ltd , owned by boardmember Gian Angelo Perrucci, have been charged as an expense with USD 150 (2008: USD 150) 

Net payable to Nicrest Ltd at 31 December 2009 is USD 0 (2008: USD 0) 

Fees paid to JL & Partners AS related to refinancing and consultancy, 50% owned by Kristen Jakobsen, is USD 2 016 (2008: USD 328) 

Net payable to JL & Partners AS at 31 December 2009 is USD 2 054 (2008: USD 0) 

Marine Subsea entered into a cooperation agreement with Altic Shipping Inc in 2007. (Altic). The agreement is crucial in order to obtain contracts for 

the vessels, and to secure the local knowledge and support offshore West-Africa. The shareholders have extensive and long experience for operation, 

logistic support services, and supply base activities. Gian Angelo Perrucci, owner of 25% and board member of Marine Subsea, also owns 15% in Altic. 

The agreement with Altic is primarily related to brokerage assistance in entering into commercial contracts for Marine Subsea’s vessels. Altic has in 

total invoiced Marine Subsea USD 4,4 million (USD 7,5 million -08) related to charter contracts for 4 vessels, (included contract related to joint venture 

entered into for a period from 2–10 years. The USD 4,4 million (USD 7,5 million -08) has been capitalized in the balance sheet and will be amortized 

over the applicable contract periods. Prepayments to Altic Shipping is disclosed in Note 14. 

Alasdair Cowie, the Managing Director and owner of 15% of the shares in Marine Subsea UK has provided a loan to Marine Subsesa UK 

Loan amount is USD 1,3 million. Interest is 2 percent per annum above the base rate of Bank of Scotland. 

The loan will be repayable after June 2011. 

Remuneration to the board of directors 

2009 2008 


Compensation to the chairman of the board 75 50 

Compensation to the members of the board 110 60 

Remuneration to the board of directors 185 110 

Sonangol is considered related party. See group note 29. Sonangol has aquirred 25% of the shares in Marine Subsea Karianne Ltd and Marine Subsea 

Lifter Ltd during 2009. 

Note 6 – Remuneration to senior executives 

Amounts in USD 1 000 2009 2008 

Salary paid to Managing Director 641 1133 

Pension sheme Managing Director: 23 16.3 

Fee to MNL Design, owned by the wife of the Managing Director, was charged as an expense with 1 4.5 

Salary paid to Finance Director, Erik Just Johnsen, January – February 2009 (March–December 2008 ) 59 141 

Pension sheme Finance Director, Erik Just Johnsen, January – February 2009 (March–December 2008 ) 3 15 

Fee to JL & Partners AS – Kristen Jakobsen – Finance Director, February – December 2009 (see note 20) 344 0 

Erik Sandøy was promoted to Finance Director January 12, 2010. 

Managing Director is entitled to 1 years paid salary after termination of employment. 


Note 7 – Segment information 

2009 

Amounts in USD 1 000 Norway Cyprus Angola Scotland 

Unallocated/ 

eliminated 

Total 

Sales 2 760 68 448 35 870 2 753 -9 178 100 654 

Cost of sales 0 43 784 30 731 1 404 -6 419 69 500 

Employee benefit expenses 4 834 394 298 1 472 0 6 998 

Other operating expenses 6 503 13 323 1 532 935 -3 707 18 586 

Depreciation and amortisation 82 9 134 85 1 947 2 257 

Total operating expenses 11 420 57 510 32 696 3 896 -8 179 97 342 

Net operating profit (loss) -8 660 10 939 3 175 -1 143 -999 3 312 

Share of loss of assosiates 0 -1 556 0 0 0 -1 556 

Net financial income (loss) -20 342 -35 158 -261 25 12 837 -42 898 

Net profit (loss) before income tax -29 002 -25 775 2 913 -1 117 11 838 -41 142 

Income tax expense -4 169 4 254 1 156 0 -754 488 

Net profit (loss) -24 833 -30 029 1 757 -1 117 12 592 -41 629 

2008 

Amounts in USD 1 000 Norway Cyprus Angola Scotland 

Unallocated/ 

eliminated 

Total 

Sales 2 575 51 720 14 393 3 798 -9 024 63 463 

Cost of sales 0 11 493 4 688 1 670 0 17 850 

Employee benefit expenses 3 746 0 93 1 179 2 5 020 

Other operating expenses 5 328 12 369 8 075 1 145 -2 171 24 745 

Depreciation and amortisation 51 0 109 50 289 499 

Total operating expenses 9 125 23 862 12 965 4 044 -1 881 48 114 

Net operating profit (loss) -6 550 27 858 1 429 -245 -7 143 15 349 

Share of loss of assosiates 0 -9 0 0 0 -9 

Net financial income (loss) 35 291 -42 655 -30 22 17 156 9 784 

Net profit (loss) before income tax 28 741 -14 806 1 398 -223 10 014 25 124 

Income tax expense 4 169 1 053 530 0 -607 5 145 

Net profit (loss) 24 572 -15 857 869 -223 10 621 19 979 



Note 8 – Employee benefit expenses 

Amounts in USD 1 000 2009 2008 

Salaries and wages employees 4 053 3 893 

Bonus 2008 and 2009 2 000 0 

Payroll tax 269 548 

Pension 302 231 

Other employee benefit expense 374 348 

Total employee benefit 6 998 5 020 

Average number of employees 31 24 

The bonus is based on a combination of individual performance and economic result for the company. 

The Bonus shall have an upward limit equal to 150% of one year salary, but have no minimum limit. 

The bonus shall be suggested by the Managing Director and approved by the Board. 

Note 9 – Other operating expenses 

Amounts in USD 1 000 2009 2008 

Consulting fee Glens Commercial Ltd 0 1 600 

Break fee On&Offshore AS (note 27) 3 000 0 

Bad debt 7 420 0 

Other consultant fees 3 320 8 059 

Other operating expenses 4 846 7 668 

Total other operating expenses 18 587 17 327 

During the fourth quarter of 2009, MS Installer Ltd had to make a provision for bad debt in the amount of USD 7,4 million as the charterer of African 

Installer defaulted on its payment obligations. The company is pursuing a claim of USD 9,1 million against the charterer. 


Note 10 – Financial income and expenses 

Amounts in USD 1 000 2009 2008 

Financial income: 

Interest income 5 038 4 911 

Capititalised interest income (note 4) -443 -3 771 

Changes in fair value – convertible bond loan 0 16 575 

Exchange differences on translating foreign operations 0 1 175 

Currency gain 1 000 0 

Total financial income 5 596 18 891 

Financial expenses: 

Interest expenses 22 682 31 397 

Amortisation of debt issue cost of issued bond loan 17 672 2 567 

Capitalised interest expenses (note 4) -20 147 -30 789 

Currency loss 686 0 

Exchange differences on translating foreign operations 7 883 0 

Changes in fair value – callable option bond loan 0 1 917 

Write down investment in joint venture (note 13) 14 902 0 

Other financial expenses 4 816 4 015 

Total financial expenses 48 493 9 107 

Interest expense of USD 11 896 (2008: USD 14 990) have been capitalised as part of the vessel construction. See note 12 for further information. 

Interest expense of USD 7 809 (2008: USD 5 850) have been capitalised as part of the investment in joint venture. See note 13 for further information. 

Amortisation of debt issuanse cost of USD 13 502 is related to effects from the from the bond restructuring process. 



Note 11 – Taxes 

Amounts in USD 1 000 2009 2008 

Current income tax 

Tax payable 1 889 1 474 

Deferred tax -5 164 3 671 

Witholding tax 1 769 0 

Adjustment for previous years 1 993 0 

Income tax expense reported in the income statement 488 5 145 

Reconciliation of tax expense 

Profit/ (loss) before tax -41 142 25 124 

Tax calculated at domestic tax rates applicable to profits in the country -11 520 7 035 

Adjustment in respect to different tax rates 172 1 725 

Permanent differences net 2 303 -5 309 

Changes in temprary differences 17 791 -1 016 

Defence tax/additional tax 133 237 

Witholding tax 1 769 211 

Relief witholding tax -389 0 

Adjustment for previous years 1 397 -397 

Deffered tax related to acquisition -101 -101 

Tax income not subject to tax -40 0 

Tax losses for which no deferred income tax asset was recognised -4 942 2 761 

Tax loss carried forward -6 573 0 

Tax charge 0 5 146 

The weighted average applicable tax rate was 0% (2008: 20,48%). 

Deferred income tax: 

Deferred tax assets; 

- Deferred tax assets to be recovered after more than 12 months 13 861 -7 374 

Deferred tax liabilities; 

- Deferred tax liability to be recovered after more than 12 months 6 551 11 923 

Deferred tax liabilities (net) -7 310 4 549 

- Less tax losses not recogniced 7 310 0 

Deferred tax liabilities (net) 0 4 549 

The gross movement on deferred income tax account is as follows: 

Beginning of year 4 549 397 

Deffered tax assets regarding pension -13 -2 

Deferred tax assets regarding losses carry forwards -655 -7 771 

Deferred tax liabilities regarding debt financing/receivables -3 881 11 543 

Deffered tax liabilities regarding acqusition of subsidiary 170 380 

Deffered tax liabilities regarding fixed assets 0 2 

End of the year 170 4 549 

Nominal tax rate in Norway: 28%, Cyprs: 10%, Angola: 35% and Scottland: progressive tax rate starting at 21% 


Note 12 – Intangible assets and property plant and equipment 

Amounts in USD 1 000 Goodwill Trademark and licences Total 

Accumulated cost 1 January 2008 

Additions 0 65 65 

Acquisition of subsidiay 22 855 1 231 24 086 

Exchange differences 0 -23 -23 

Impairment -7 418 0 -7 418 

Depreciation and amortisation 0 -339 -339 

Balance as at 31 December 2008 15 437 934 16 371 


Acquisition of subsidiay 0 -152 -152 

Exchange differences 0 35 35 

Disposals and liquidation -8 291 -79 -8 370 

Depreciation and amortisation 0 -285 -285 

Balance as at 31 December2009 7 146 501 7 648 

As at 1 January 2008 

Acquisition cost 22 855 1 273 24 128 

Accumulated depreciation and amortisation -7 418 -339 -7 757 


As at 1 January 2009 0 

Acquisition cost 14 564 1 125 15 689 

Accumulated depreciation and amortisation -7 418 -624 -8 042 


Economic life 3–5 years 3–5 years 

Depreciation method straight line straight line 




Vessels under 

construction 

Vessels 

Machinery 

equipments 

Accumulated cost 1 January 2008 135 774 0 179 135 953 

Additions 155 154 0 956 156 110 

Acquisition of subsidiay 0 0 622 622 

Capitalised borrowing cost 14 990 0 0 14 990 

Exchange differences 0 0 20 20 

Disposals -54 826 0 -6 -54 832 

Depreciation and amortisation 0 0 -160 -160 

Balance as at 31 December 2008 251 092 0 1 611 252 703 

Total 

Additions 14 312 149 828 1 209 165 349 

Acquisition of subsidiay 0 0 238 238 

Capitalised borrowing cost 5 027 6 869 0 11 896 

Exchange differences 0 0 99 99 

Disposals and liquidation 0 0 -1 079 -1 079 

Change of group -131 856 131 856 0 0 

Depreciation and amortisation 0 -1 773 -200 -1 973 

Balance as at 31 December 2009 138 575 286 780 1 878 427 232 

As at 1 January 2008 135 774 0 207 135 981 

Acquisition cost 115 318 0 1 592 116 910 

Accumulated depreciation and amortisation 0 0 -188 -188 

Balance as at 31 December 2008 251 092 0 1 611 252 702 

As at 1 January 2009 251 092 0 1 799 252 891 

Acquisition cost -112 517 288 553 467 176 503 

Accumulated depreciation and amortisation 0 -1 773 -388 -2161 

Balance as at 31 December 2009 138 575 286 780 1 878 427 232 

Economic life 20–30 years 3–5 years 

Depreciation method straight line straight line 

Vessels under construction include capitalized interest in connection with the building of certain assets. Book value of vessels under backstop 

contracts assumes a minimum level of vessel employment. Each vessel is treated as an independent cash generating unit. As the net present value of 

all vessels were higher than their book values,no impairments were made. For impairment tests, only firm contracts were included, as well as broker 

valuations of the market price of each vessel. 15% discount rate applied. Capitalized interest was TUSD 11 896 in 2009 and TUSD 14 990 in 2009. 

Interest rate was from 8,9%–14,6% both years. 


Note 13 – Investments in joint venture 

The Group owns 40% of Marine Subsea & Consafe Ltd (MSC). MSC is a joint venture with Consafe MSV AB (40%) and Sonangol Pesquisa & Producao 

S.A (20%), The joint-venture has a service contract with Sonangol and a purchase agreement with Consafe and Yantai for a semisubmersible crane 

vessel, Safe Challenger. Yantai has informed of their intention to acquire Consafe MSV’s interest in the joint-venture. Yantai has further agreed to 

take delivery of the unit, which is to be renamed African Challenger, for its own account and lease the unit to Marine Subsea under a 10-year bareboat 

lease with purchase option. The contract will be transferred to a new JV with Sonangol, Yantai and Marine Subsea. The terms of the bareboat 

agreement reflect the cost of the unit and the payments made to date. Marine Subsea is highly positive to this solution as it means that the new JV 

no longer requires financing, Yantai has an increased exposure and the organisational model is simplified. The final agreements are expected to be in 

place by the first half of 2010. 

The investment is recognized using the equity method in the Group accounts. Shares in MSC are owned by Marine Subsea Cyprus Holding Ltd. 

The Group has made a shareholders loan to MSC in December 2007 of USD 33 650, and additonal subordinated loans to fund the acitivity in the 

company. See note 15 

Net investment in the group has increased by capitalized borrowing cost during the last years. 

This led to a write down of the investement to reconcile it with the Groups share of the equity in MSC. See note 10. 

The Group’s share of the results of its investments in joint venture, and its share of the assets and liabilities are as follows: 

2009 

Country Assets Liabilities Revenues Profit / (loss) % interest held 

Name 

MSC Cyprus 45 299 35 515 0 -1 556 40% 

Note 14 – Non-current receivables 

Amounts in USD 1 000 2009 2008 

Subordinated loan to Marine Subsea & Consafe Ltd (MSC) 4 143 5 461 

Shareholderloan to Marine Subsea & Consafe Ltd (MSC) 0 33 650 

Prepayments Altic Shipping (note 5) 11 041 11 785 

Borrowing cost Marine Subesea Karianne Ltd (note 19) 8 109 0 

Other receivables (note 29) 9 524 16 

Total non-current receivables 32 818 50 913 

The carrying amount of non-current receivables approximate their fair value. The loans to MSC is subordinated external financing in MSC. The duration 

of the loan is 3 years from date it is given. Marine Subsea has obligation to prolong loans if necessary to achieve the external financing needed for 

MSC. See note 13 and 15. 

Note 15 – Trade and other receivables 

Amounts in USD 1 000 2009 2008 

Trade receivables 17 436 16 449 

Option regarding repurchase of shareholderloan to Marine Subsea & Consafe Ltd 25 000 0 

Witholding tax Interoil Angola Ltd 1 283 856 

Prepayments and accruals 6 120 4 054 

Total trade and other receivables 49 839 21 360 



The carrying amount of trade and other receivables approximate their fair value. 

Shareholderloan to MSC is sold to Yantai Raffles Shipyard for USD 12 500. The group has an option to repurchase the shareholder loan. 

This option is valued to USD 25 000. Net loss related to the option is USD 2 528. 

Expiration date: 1 june 2010, but extension of 9–12 months being discussed with Yantai. See note 14. 

Marine Subsea is in the process of agreeing a new JV structure directly with Yantai and foresees a significantly higher value than the carrying amount. 

Note 16 – Cash and cash equivalents 

Amounts in USD 1 000 2009 2008 

Bank deposits denominated in NOK 404 410 

Bank deposits denominated in USD 6 047 5 065 

Bank deposits denominated in EUR 7 0 

Bank deposits denominated in GBP 607 0 

Restricted bank deposits denominated in NOK 203 25 546 

Restricted bank deposits denominated in USD 10 000 10 091 

Total cash and cash equivalents 17 268 41 112 

Restricted bank deposits for employees tax deduction USD 195 (2008: USD 142) 

Note 17 – Share capital 

Amounts in USD 1 000 Number of shares Share capital Share premium Total 

Inception on 8 October 2006 1 000 16 0 16 

At 31 December 2006 1 000 16 0 16 

Split of shares in the ratio 1:10 000 9 999 000 

Issue of share captital, net of issuance cost 30 January 2007 55 000 000 86 48 822 48 908 

Issue of share captital, net of issuance cost August 2007 1 000 000 2 2 060 2 062 

Total issued at 31 December 2007 66 000 000 104 50 882 50 986 

Total authorised at 31 December 2007 93 000 000 


Total issued at 31 December 2008/2009 68 173 200 108 60 207 60 315 

Total authorised at 31 December 2008/2009 99 600 000 

The total issued number of ordinary shares is 68 173 200 shares (2008: 68 173 200 shares) with a par value of NOK 0,01 per share. All issued shares 

are fully paid. All issued shares have equal voting rights and the right to receive dividend. No dividend has been paid in 2008 and 2009. The Board has 

not proposed any dividend to be paid in 2010. 


20 largest shareholders as at 31 December 2009: Number of shares % shareholding 

JCE Group AB 16 250 000 23,8% 

Eksportconsult AS 15 252 000 22,4% 

Ugrani Holdings Limi 17 Gr Xenopoulou 13 253 000 19,4% 

Morgan Stanley & Co Inc 4 069 733 6,0% 

Deutsche Bank AG Lon Prime Brokerage Full 3 523 431 5,2% 

Cheyne Global Catalyst 2 915 698 4,3% 

Trafalgar AS 2 713 600 4,0% 

Harmon Trading Inc 1 600 000 2,3% 

Havila As 1 208 000 1,8% 

Havila Shipping ASA 1 135 455 1,7% 

Wieco AS 1 018 000 1,5% 

Skips AS Tudor 550 000 0,8% 

Skarpebo Invest AB 543 000 0,8% 

Weico Invest AS 518 000 0,8% 

Fram Shipping Ltd 497 600 0,7% 

JPMorgena Chase Bank 464 000 0,7% 

Caberian Investment 399 000 0,6% 

Waterman Holding Inc 389 500 0,6% 

Patronia AS c/o Weico AS 318 000 0,5% 

MP Pensjon 210 000 0,3% 

Total 20 largest shareholders 66 828 017 98,0% 

Other 1 345 183 2,0% 

Total 68 173 200 100,0% 

Shares owned by the Managing Director, Christian Nygaard 79 000 0,1% 

Eksportconsult AS is owned by the Chairman of the Board, Mårten Rød and his family. Gian Angelo Perrucci controls 2 000 000 shares owned by 

Eksportconsult AS. Urgani Holdings, Harmon Trading Inc and Caberian Investment are owned by Board Member Gian Angelo Perrucci. Trafalgar AS is 

50% owned by Board Member and Financial Director (March–December 2009) Kristen Jakobsen. 

Note 18 – Other paid in capital 

Amounts in USD 1 000 Other paid in capital Total 

At 8 October 2006 (inception) 0 0 

At 31 December 2006 0 0 

Share option scheme, value of services (note 20) 841 841 

At 31 December 2008 841 841 

Other paid in capital (note 20) 0 0 

At 31 December 2009 841 841 



Note 19 – Interest-bearing debt 


Effective yearly 

interest rate % 

Maturity 


2009 2008 

Libor + 6,0% bond loan – face value USD 130 million 9,5 2012 0 107 817 

Libor + 6,0% bond loan – face value USD 170 million 8,9 2012 0 135 062 

Fixed rate 7,5% convertible boan – face value NOK 390 million 14,6 2012 0 44 412 

Series 1: face value USD 246,5 million (2) 12,3 2019 236 065 0 

Series 2: face value USD 67 454 million (3) 12,4 2019 64 597 0 

ECA facility A: face value USD 99,9 million (1) 7,4 2019 92 654 0 

ECA facility B: face value USD 11,1 million (1) 13,5 2016 10 299 0 

Total 403 615 287 291 

Current portion 11 100 0 

Non-current portion 392 515 287 291 

Fair value of embedded conversion right of a convertible bond included in liability amount above 0 0 

Fair value of embedded callable option of a bond loan is included in liability amount above 0 0 

The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows: 



2009 2008 

6 months or less 102 953 0 

6–12 months 0 0 

1–5 years 132 100 287 291 

Over 5 years 168 562 0 

Total 403 615 287 291 

Maturity for non current interest bearing debt are as follows: 

Less than 1 year 45 966 23 657 

Between 1 and 2 years 63 450 23 652 

Between 2 and 5 years 248 299 337 012 

Over 5 years 273 157 0 

Total 630 872 384 321 

The carrying amount and fair value of the non-current borrowings are as follows: 

Year ended 

Carrying amount 


Fair value 


2009 2008 2009 2008 

Bond loans Marine Subsea AS 0 242 879 0 66 512 

Bond loan Marine Subsea Cyprus Holding 300 662 0 122 825 0 

Bank loan 102 953 0 102 953 0 

Convertible bond loan 0 44 412 0 11 492 

Total 403 615 287 291 225 778 78 004 


Amounts in USD 1 000 2009 2008 

Secured debt 403 615 287 291 

Pledged assets 

Vessels and vessels under construction 427 232 251 092 

Bank deposits 17 268 25 418 

Trade and other receivables 82 657 0 

Investments in joint venture 9 784 15 023 

Total 536 941 291 533 

Effects of bond restructuring process see note 10 

(1) USD 111 000 000 senior secured credit facility (Sarah tranche): 

Facility lenders: Eksportfinans 90% / Standard Bank 10% 

Facility guarantees: GIEK 80% / Standard Bank 20% 

Effective Annual Interest: 

90% of the facility has interest rate of 3m Libor + 521 pts 

10% of the facility has interest rate of 3m Libor + 950 pts. 

Repayment of loan: 

90% of the facility has ten year duration with a straight line amortization schedule. 10% has seven year duration with a 10-year straight line amortization 

profile, with a bullet payment in year 7. The lender has the option to extend loan to 10 years. 

Sarah specific securities: 

First priority assignment of MSCH’s shares and assets, including the vessel Sarah, in MS Sarah Ltd. Parent guarantee from Marine Subsea AS and 


USD 111 000 000 senior secured credit facility (Karianne tranche): 

Loan will be made available for drawdown on delivery of Karianne in October 2010 

Karianne specific securities: 

First priority assignment of MSCH’s shares and assets, including the Vessel Karianne in MS Karianne Ltd. Parent guarantee from Marine Subsea AS 

and Marine Subsea Cyprus Holding Ltd. 

2) ISIN NO 001 056160.8 – Marine Subsea Cyprus Holding Ltd Exchange Bond – Series I Bond Issue 2009/2019 

Maturity 16 December 2019 

Outstanding amount: USD 246 500 000 

Interest/Installments: 

9% interest rising to 12% after first two years. The loan is structured with an option to PIK (Pay-in-kind) the first eight quarterly interest payments if 

inability to pay. The “Series I” bond loan has first priority of cash interest payments relative to the “Series II” bond loan. 

The amortization schedule is structured as a semi-annual cash sweep starting in the third quarter of 2011. All available cash as defined in the loan 

documents, less contributions from MS&Consafe Ltd and Marine Subsea UK Ltd, will be used to pay down the loan. 



Security: 

Guarantees from Marine Subsea AS, Marine Subsea Worker Ltd, Marine Subsea Installer Ltd and Marine Subsea Lifter Ltd. 

First priority share pledge in Marine Subsea Caribe Ltd, Marine Subsea Fjord Ltd. 

First priority assignments of Marine Subsea Cyprus Holding’s shares and assets, including the barge, in Marine Subsea Lifter Ltd. 

Second priority assignments of Marine Subsea Cyprus Holding’s shares and assets, including the barges, in Marine Subsea Worker Ltd and Marine 

Subsea Installer Ltd, both to become first priority upon repayment of loans to Jaya and Ulstein shipyards respectively. 

Second mortgage in Sarah 

Residual Proceeds Security Agreement (Any proceeds granted by Marine Subsea Sarah Ltd and Marine Subsea Karianne Ltd in favor of the Trustee 

securing the borrowers payment obligations.) 

(3) ISIN NO 001 056161.6 – Marine Subsea Cyprus Holding Ltd Exchange Bond – Series II Bond Issue 2009/2019 

Maturity 16 Dec 2019 

Outstanding amount USD 67 454 209 

Interest/Installments: 

9% interest rising to 12% after first two years. The loan is structured with an option to PIK (Pay-in-kind) the first eight quarterly interest payments if 

inability to pay. The “Series II” bond loan has second priority of cash interest payments after the “Series I” bond loan. 

The amortization schedule is structured as a semi-annual cash sweep starting in the third quarter of 2011. 

All available cash contributions from MS&Consafe Ltd and Marine Subsea UK Ltd, as defined in the loan documents, will be used to pay down the 

loan. Following the repayment of the “Series I” bond loan, all available cash will be used to repay the “Series II” bond loan. 

Security: 

Guarantee from Marine Subsea AS 

First priority share pledge on Marine Subsea & Consafe Ltd 

First priority share pledge on Marine Subsea UK Ltd 

First assigment of Marine Subsea & Consafe Ltd. shareholder loan if and when this is repurchased 

General 

In the event of default on any financial indebtedness there will be declared cross default between the USD 111 000 000 senior secured credit facility 

(Sarah tranche) and the USD 111 000 000 senior secured credit facility (Karianne tranche), and the exchange bond loans ISIN NO 001 056160.8 – 

Marine Subsea Cyprus Holding Ltd Exchange Bond – Series I Bond Issue 2009/2019 and ISIN NO 001 056161.6 – Marine Subsea Cyprus Holding Ltd 

Exchange Bond – Series II Bond Issue 2009/2019. 

Covenants 

All financing agreements contain financial covenants related to the company’s ability to service its debt. The agreements also contain informationand 

negative covenants and events of default which are customary to a facility of this nature. The negative covenants specifically limits mergers or 

transfers, incurrence of other indebtedness, investments and loans, permitted payments and distribution to shareholders. All covenants must be met 

on a quarterly basis ending March 31st, June 30th, September 30th and December 31st. The group is in compliance with covenants in all financing 

agreements as per 31.12.2009. 


Note 19 – Interest-bearing debt, current liabilities 


Effective yearly 

interest rate % 

Maturity 


2009 2008 

Loan Ulstein Verft, 9,0 2010 35 689 0 

Loan Jaya 8,0 2010 17 224 0 

ECA facility – First year repayment 11 100 0 

Total 64 011 0 

Current portion 64 011 0 

Non-current portion 0 0 

Security Ulstein Verft: 

First mortgage and first assignments of earnings and insurance from African Installer 

Security Jaya: 

First mortgage and first assignments of earnings and insurance from African Worker 

Note 20 – Sharebased compensation 

The Board of Marine Subsea had, in accordance with the approval of the shareholders meeting held on 25 June 2007, granted a total of 1 000 000 

options to Trafalger AS who is financial advisor for the company. The options are free of charge and must be exercised in a 24 months period from 

signing the option agreement, dated 23 August 2007. Marine Subsea shall at its sole discretion have the right to, in lieu of issue shares, pay the difference 

between the exercise price and the market price at the date of the options multiplied with the number of shares comprised by the exercise. 

The fair value of the options granted during the period determined using the Black-Scholes valuation model was TUSD 841 of which TUSD 841 is 

expensed in the accounts ending 31 December 2007 since the options were fully vested on grant date. The significant inputs in the model were share 

price at the grant date, exercise price as presented below, volatility of 32%, risk-free interest rate 4,0%, and expected exercise after 24 months. The 

volatilty is based on a comparison with listed supplyship companies on Oslo Stock Exchange. 


Number of shares 2009 2008 

Outstanding at 1 January 1 000 000 1 000 000 

Granted during the year 0 0 

Forfeited during the year -1 000 000 0 

Exercised during the year 0 0 

Expired during the year 0 0 

Outstanding at 31 December 0 1 000 000 

The exercise price is NOK 12,00 per share for all options. 

Note 21 – Retirement benefit obligation 

The Company is required to have an occupational pension scheme in accordance with the the Norwegian law on required occupational pension 

(“lov om obligatorisk tjenestepensjon”). The Company’s pension scheme meets the requirements of that law. 



The following tables summarise the components of the defined benefit plan: 

Amounts in USD 1 000 2009 2008 

Defined benefit obligation at the end of the year 300 146 

Fair value of plan assets -178 -79 

Unrecognised net acturial loss -76 -74 

Retirement benefit obligation 46 -8 

The movement in the defined benefit obligation over the year is as follows: 

Beginning of the year -9 2 

Current service cost 184 66 

Interest cost 8 1 

Fair value loss/(gain) 0 0 

Contribution by plan participants -136 -75 

Retirement benefit obligation 46 -8 

The amounts recognised in the income statement are as follows: 

Current service cost 184 66 

Interest cost 8 1 

Total defined benefit plan, expense 192 66 

The principal actuarial assumptions use were as follows: 

Discount rate 4.50% 3.80% 

Expected return on plan assets 5.70% 5.80% 

Future salary increases 4.50% 4.00% 

Future pension increases 1.40% 1.50% 

Increase of social security base amount (G) 4.25% 3.75% 

The Group alos has a defined contribution pension shemes in the subsidiaries Marine Subsea UK Ltd and Lewis Ltd. 

The pension cost charge represents contributions payable by the companies to the fund and amounted to USD 115 (2008: USD 88) 

Pension cost charged related to defined contibution pension shemes for expathriates are USD 29 (2008: USD 19) 

Note 22 – Comittments 

Capital commitments contracted for at the balance sheet date, but not recognised in the financial statements are as follows: 

Vessels under contstruction 

Amounts in USD 1 000 Yard Country Delivery Contract cost Remaining expenditure 

“Karianne” – # 287 SX 121 Ulstein Norway Oct 2010 206 000 85 700 

Fixed contract cost and remaining expenditure include yard contract, variation orders and other equipment related to the vessel. Working capital for 

operational start-up is not included. 

Remaining expenditure for Karianne is based on a forward contract entered into in December 2009 with a NOK / USD exchange rate of 5,793. 


The group leases a car. The annual leasing cost is USD 27. The duration of the contract is 3 years and expires in 2010. 

The group also leases office accomodations: 

5 year subcontract with Interoil Exploration and Production ASA – annual rent is USD 105. 

3,5 year and 5 year contracts with Vital – annual rent is USD 79 and 83 

5 year initial lease agreement with Sonils – annual rent is USD 109 

Subject to the terms of the sale and leaseback agreements for the Barges African Fjord and African Caribe, see note 26, the Company has an option 

to buy the barge at the end of the Fixed Period (120 months) or Option Period (120 + 60 months) for a price of USD 20 million after the Fixed Period 

and USD 10 million after the Option Period. The owner has an option to sell the barge to the Company at the expery of month 72 of the Fixed Period 

for USD 15 million or at the expery of the Option Period for USD 2,5 million. 

The lease payment structure is as follows: 


Next 

12 months 

Between 

1–5 years 

After 

5 years 

African Fjord 7 208 21 765 12 680 41 653 

African Caribe 7 208 21 765 12 680 41 653 

Total 

Total comittments related to the sale and leaseback agreements 14 416 43 530 25 360 83 306 

Note 23 – Trade payables and other payables 

Amounts in USD 1 000 2 009 2 008 

Trade payables 23 368 6 413 

Social security and other taxes 561 79 

Accrued interest 5 220 2 625 

Accrued expenses 7 013 5 401 

Total trade and other payables 36 162 14 519 

The carrying amount of trade and other payables is considered to approximate their fair value. 

Note 24 – Earnings per share 

Basic earnings per share is calculated by dividing the profit attibutable to equity holders of the Company by the weighted average number of ordinary 

shares in issue during the year. 


For the 12 months ending 

31 December 

2009 2008 

Profit attributable to equity holders of the Company -41 629 19 979 

Weighted average number of ordinary shares in issue (thousands), adjusted with split of shares in January 68 173 66 724 

Basic earnings (loss) per share (USD per share) -0.61 0.30 



Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive 

potential ordinary shares. The company has two categories of dilutive potential ordinary shares: convertible debt and share options. For the share 

options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual 

market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The 

number of shares calculated as above is compared with the number of share that would have been issued assuming the exercise of the share options. 


For the 12 months ending 

31 December 

2009 2008 

Profit attributable to equity holders of the company -41 629 19 979 

Adjusted profit / (loss) attributable to ordinary equity holders of the parent company -41 629 19 979 

Weighted average number of ordinary shares in issue (thousands) 68 173 66 724 

Weithted average number of shares under option 0 1 000 

Weighted average number of shares that would have been issud at average market price 0 -545 

Weighted average number of ordinary shares for 68 173 67 179 

diluted earnings per share (thousands) 

Diluted earnings (loss) per share (USD per share) -0.61 0.30 

Note 25 – External audit remuneration 

The following table shows total audit and non-audit fees expensed excluding VAT: 

Amounts in USD 1 000 Audit fee Assurance 

services 

2008 

Tax services 

Other nonaudit 

services 

Marine Subsea AS 129 59 0 68 256 

Other Group companies 123 106 0 3 232 

Total 

2009 

Marine Subsea AS 153 69 15 20 257 

Other Group companies 98 0 0 5 103 


Note 26 – Sales 

Amounts in USD 1 000 2009 2008 

Charter revenues (see note 7) 98 729 43 726 

Gain on sale of asset 0 16 242 

Other operating revenues 1 926 3 496 

Total Sales 100 654 63 463 

In 2008 Marine Subsea entered into a 10+5 year sale-lease-back transaction with Parbarge AS set up by Pareto Private Equity AS. 

The transaction includes the two Accommodation Construction Support Barges, African Fjord and African Caribe. 

Total sales price for the barges were MUSD 79 million. Marine Subsea will maintain full operational control of the assets (bareboat). 

The transaction resulted in a gain on sale of asset of MUSD 8,1 for African Fjord and MUSD 8,1 for African Caribe. 

The lease is recognised as an operating lease in the Financial Statements. 

Note 27 – Changes in Group Structure 

In August 2009 Marine Subsea acquired 38% of TS Marine Ltd, later renamed to Marine Subsea UK Ltd. The company was formed trough a 

management buy out of trade and assets from TS Marine Contracting. The acquition cost was £ 700. In November the shares in Marine Subsea UK 

were transferred from Marine Subsea AS to Marine Subsea Cyprus Holding Ltd. On completion of the refinancing process, Marine Subsea paid a 

further £ 1 100 to obtain 60% of the shares. The remaining 40% of the shares of the company will be aquired by an earn out model based on the 

financial results in Marine Subsea UK Ltd in 2011, 2012 and 2013. 

There are no material assets in the company, nor any long term contracts that support a valuation exceeding the purchase price. 

Marine Subsea obtained control over the company in late December. The profit & loss from Marine Subsea UK for 2009 is calculated based on the 

equity method. Net loss is not calculated at year end. The balance at the end of the year is fully consolidated. 

The new company provides a suite of subsea engineering and construction services to leading oil companies and contractors. Their offering spans 

a broad spectrum of oil and gas activities from subsea construction through to decommissioning. The company will thus support and enhance 

operations for Sarah and Karianne. 

In December 2009, Lewis Ltd, a 100% owned subsidiary, announced voluntary liquidation after the business faced financial difficulties as a result of 

the slow-down in the subsea sector. The profit & loss from Lewis Ltd for 2009 is fully consolidated up til the month of December. According to the 

purchase agreement between Drummond Lawson and Marine Subsea AS in 2008, Marine Subsea AS has an obligation to cover certain guarantees. 

Total exposure: USD 191 thousand. No accruals recorded in profit and loss 2009. 

In 2008, Marine Subsea entered into an agreement to acquire On & Offshore AS in May 2010. A USD 3 million break-fee was agreed, should Marine 

Subsea be unwilling or unable to proceed with the transaction. As part of the agreement with bondholders and new lenders, the Company will not 

proceed with the transaction under the original terms. Marine Subsea and On & Offshore have agreed to discuss alternative transaction structures in 

early 2010, with a view to reaching an agreement to acquire the company. A loss of USD 3 million was recorded in 2009. 

25% of the shares in Marine Subsea Karianne Ltd and 25% of the shares in Marine Subsea Lifter are sold to Sonangol during 2009. See note 5. 



Note 28 – Stocks and work in progress 

Amounts in USD 1 000 2009 2 008 

Raw materials and consumeables 9 14 

Long term contracts 0 889 

Total stocks and work in progress 9 903 

Note 29 – Additional information regarding the Sonangol back-stop contract 

Amounts in USD 1 000 2009 2 008 

Subordinated debt to Sonangol included in other non current liabilities 2 687 0 

Under the terms of the back-stop contract between MS Sarah Ltd and Sonangol, Sonangol is obligated to pay a base rate for the vessel for 250 days 

per year for 10 years. If, during the annual 250 days, Sonangol is not using the vessel, or the vessel is chartered by a third party at a rate lower than 

the base rate, the payments from Sonangol will be recognised as subordinated debt to Sonangol. The Sonangol debt can only be repaid with future 

charter hire revenues exceeding the Sonangol base rate. If the Sonangol debt is not repaid within 5 years, Sonangol can convert the debt to equity in 

MS Sarah Ltd. 

For the 4th quarter of 2009, the Sarah vessel did not work for Sonangol or any other charterer, and as such, all payments from Sonangol were 

recognised as debt to Sonangol. Hence, no revenues were recognised in MS Sarah Ltd or in the consolidated Group accounts, even though payments 

were made on a monthly basis in accordance with the Sonangol contract. 

To provide an overview of the actual MS Sarah Ltd contributions to the Group, the table below shows the Group key figures with MS Sarah Ltd on an 

unconsolidated basis (not in accordance with IFRS). 

MS Sarah Ltd has USD 93 million of debt to MS Cyprus Holding Ltd. This debt is serviced with LIBOR+8,5% interest and is senior to the Sonangol debt 

under the back-stop contract. MS Sarah Ltd also pays management fees to MS UK Ltd and MS AS. The interest income and management fees are 

eliminated in the consolidated Group accounts, but included when MS Sarah Ltd is included on an unconsolidated basis. 

Amounts in USD 1 000 Unaudited 2009 

Revenues 

Consolidated 100 654 

Adjustment Consolidated – mgm fees from MS Sarah Ltd 1 207 

MS Sarah Ltd 0 

Adjusted revenues 101 861 

Operating expenditures 



Adjusted operating expenditures 96 683 

Net operating profit (loss) 


Adjustment Consolidated – mgm fees from MS Sarah Ltd 1 207 


Adjusted net operating profit (loss) 5 178 


Amounts in USD 1 000 Unaudited 2009 

Financial items 

Consolidated -42 898 

Adjustment consolidated – int income on internal loan in MS Sarah Ltd 8 455 


Adjusted financial items -34 046 

Net profit (loss) before income tax and associates 

Consolidated -41 142 

Adjustment Consolidated 10 869 

MS Sarah Ltd 1 715 

Adjusted net profit (loss) before income tax -28 558 

Note 30 – Subsequent events 

On January 15, 2010 Leung Kee Holding Ltd (Brian Chang) paid USD 6 million to Marine Subsea Cyprus Holding Ltd as a loan. The loan will be repaid 

in equal payments over 6 months, starting April 2006. 

On March 2, 2010 Brian Chang paid USD 2 million as an advance payment regarding the broker fee to Altic Shipping prepaid by Marine Subsea. 

The amount will be regularized as loan from Brian Chang to Yantai when the Bareboat Charter Agreement for the African Challenger is completed 

and signed. 



Income statement 

(All amounts in USD 1 000 if not otherwise stated) Note 2009 2008 

Sales 2 2 761 2 711 

Total revenue 2 761 2 711 

Employee benefit expenses 3 4 834 3 746 

Other operating expenses 4 6 503 5 328 

Depreciation and amortisation 7 82 51 


Net operating profit (loss) -8 659 -6 414 

Financial income 5 34 248 71 349 

Financial expenses 5 -54 590 -39 886 

Net financial income (loss) -20 342 31 463 


Income tax expense 6 -4 169 4 169 

Net profit (loss) -24 832 20 880 

To retained earnings 20 880 

Basic and diluted earnings per share 13 -0,36 0,31 


Balance sheet 



ASSETS 

Non-current assets 

Property, plant and equipment 7 245 120 

Intangible assets 7 65 13 

Investments in subsidiaries 2 8 508 10 630 

Non-current receivables 8 68 794 358 006 

Total non-current assets 77 612 368 769 

Current assets 

Trade and other receivables 9 469 317 

Receivables from subsidiaries 2 7 626 0 

Cash and cash equivalents 10 733 20 500 

Total current assets 8 828 20 817 

TOTAL ASSETS 86 441 389 586 

EQUITY AND LIABILITIES 

Shareholders’ equity 

Share capital 11 108 108 

Share premium 11 60 207 60 207 

Other reserves 11 841 841 

Retained earnings -1 509 23 323 

Total shareholders equity 59 648 84 480 

Non-current liabilities 

Borrowings 2 10 000 10 000 

Interest bearing-debt 14 0 287 276 

Retirement benefit obligation 3 46 8 

Total non-current liabilities 10 046 297 283 

Current liabilities 

Accounts payables 6 750 300 

Public duties payable 286 137 

Other payables 12 9 711 3 217 

Deferred tax liabilities 6 0 4 169 

Total current liabilities 16 748 7 823 

TOTAL EQUITY AND LIABILITIES 86 441 389 586 

Oslo, 21 th of April 2010 

Mårten Rød 

Chairman 


Board Member 


Board Member 


Board Member 




Statement of changes in equity 


Share capital 

Share 

premium 

IFRS 

Paid in 

capital 

Retained 

earnings 


Total 

Net profit/ (loss) for the period 0 0 0 -87 -87 

Balance at 31 December 2006 16 0 0 -87 -71 

Issue of share capital, net of share issuance cost January 2007 86 48 822 0 0 48 908 

Issue of share capital, net of share issuance cost July 2007 2 2 060 2 062 

Employee share option scheme, value of employee services 841 841 

Net profit/ (loss) for the period 0 0 0 2 530 2 530 

Balance at 31 December 2007 104 50 882 841 2 443 54 270 

Issue of share capital, net of share issuance cost August 2008 4 9 325 9 329 

Net profit/ (loss) for the period 20 880 20 880 

Balance at 31 December 2008 108 60 207 841 23 323 84 480 

Net profit/ (loss) for the period -24 832 -24 832 

Balance at 31 December 2009 108 60 207 841 -1 509 59 648 


Cash flow statement 

Year ended 31 December 


Cash generated from operations 

Profit (loss) for the period -24 832 20 880 

Income tax expense 6 -4 169 4 169 

Depreciation and amortisation 7 82 51 

Amortisation of debt issuance cost 5 17 373 2 567 

Changing in fair value – bond loan and convertible bond loan 0 -10 808 

Exchange gain / (loss) 5 7 848 -6 070 

Taxes paid 0 0 

Changes in assets and liabilities 

Trade and other receivables 281 434 -42 242 

Trade and other payables 13 132 -610 

Net cash flow from operating activities 290 868 -32 063 

Cash flow from investing activities 

Investment in property, plant and equipment 7 -235 -49 

Investment in shares and non-current receiveables 2 2 121 -10 627 

Net cash flows used in investing activities 1 886 -10 676 

Cash flow from financing activities 

Proceeds of issuance of ordinary shares (net of share issuance cost) 11 0 9 329 

Proceed from issuance of borrowings 0 10 000 

Repayment of borrowings -313 954 -53 500 

Net cash flows from financing activities -313 954 -34 171 

Cash and cash equivalents at 1 January 10 20 500 107 835 

Exchange gain/losses) on cash and cash equivalents 1 433 -10 423 

Net increase/(decrease) in cash and cash equivalents -21 200 -76 912 

Cash and cash equivalents at 31 December 10 733 20 500 

Of which is restricted 10 203 15 241 

Marine Subsea AS has acquired Interoil Angola Ltd and Lewis during 2008. 

The effect of the acquisitions is reported in each line in the cash flow statement. See further information in the notes. 


Notes – Marine Subsea AS 


Note 1 – Summary of significant accountiong policies 

The financial statements for Marine Subsea AS are prepared in accordance with simplified IFRS according to the Norwegian accounting Act § 3-9. 

This means that the IFRS measurement rules are used and its accounting principles applied for presentation of the notes. The company’s accounting 

policies are specified in note 2 (Consolidated financial statements). These financial statements are presented in USD, which is the company’s 

functional currency, and rounded up to thousands (1 000). 

Shares in subsidiaries are recorded in accordance with the cost method in the parent company accounts. The investments are rewieved for impairment 

annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. 

Note 2 – Subsidiaries and transactions with related parties 

Name 


Acquisition 

date 

Country of 

incorporation 

Share 

ownership 

Share 

capital 

Number 

of shares 

Book 

value 

Total 

equity 

Total net 

Profit 2009 

Marine Subsea Cyprus Holding Ltd 26.06.07 Cyprus 100 3 1 000 3 37 250 

Marine Subsea Inc 16.11.07 Panama 100 0 100 0 0 315 

Interoil Angola Ltd 06.03.08 Angola 99 0 8 500 3 182 1 711 

Lewis Ltd (see Group note 27) 05.02.08 Scotland 0 100 1 000 0 0 -1112 

Marine Subsea Nigeria Ltd 01.09.08 Nigeria 100 0 6 -6 0 

Owned by Marine Subsea Cyprus Holding Ltd: 

Marine Subsea Sarah Ltd 03.10.07 Cyprus 75 1 1 000 1 -12 437 -3 670 

Marine Subsea Karianne Ltd 28.06.07 Cyprus 75 3 1 000 3 -17 263 -307 

Marine Subsea Worker Ltd 03.10.07 Cyprus 100 1 1 000 1 -2 981 -362 

Marine Subsea Installer Ltd 03.10.07 Cyprus 100 1 1 000 1 -11 085 -7 055 

Marine Subsea Fjord Ltd 08.08.07 Cyprus 100 1 1 000 1 6 072 6 375 

Marine Subsea Caribe Ltd 28.06.07 Cyprus 100 3 1 000 3 4 767 6 474 

Marine Subsea Lifter Ltd 28.06.07 Cyprus 75 3 1 000 3 -2 266 -439 

Marine Subsea Solver Ltd 21.05.08 Cyprus 100 2 1 000 2 1244 1 302 

Marine Subsea Ten Drilling Ltd 16.05.08 Cyprus 100 2 1 000 2 -899 -593 

Marine Subsea Worker Singapore Pte Ltd 12.11.09 Singapore 100 0 100 0 -111 111 

Marine Subsea UK 21.12.09 Scotland 60 5 2 999 5 -461 -466 

Investment by Marine Subsea Cyprus Holding in Joint Venteure 

Marine Subsea & Consafe Ltd 25.10.07 Cyprus 40 3 1 000 3 24 461 -3 881 

Marine Subsea AS has entered into management agreements with the subsidiaries. 

Marine Subsea AS has entered into credit facility agreements with the subsidiaries. 



Name 2009 2008 

(All amounts in USD 1 000 

if not otherwise stated) 

Subordinated 

loan 

Receiveables Interest 

income 

Management 

income 

Subordinated 

loan 

Receiveables Interest 

income 

Management 

income 

MS Caribe Ltd 0 0 0 183 0 0 0 226 

MS Karianne Ltd 0 0 0 276 0 0 0 426 

MS Lifter Ltd 0 0 0 239 0 0 0 182 

MS Cyprus Holding Ltd 10 000 68 794 31 789 0 10 000 333 009 25 733 0 

MS Worker Ltd 0 0 0 183 0 0 0 0 

MSD Installer Ltd 0 0 0 239 0 0 0 293 

MS Sarah Ltd 0 0 0 1 161 0 0 0 681 

MS Fjord Ltd 0 0 0 183 0 0 0 226 

MS Solver Ltd 0 0 0 57 0 0 0 293 

MS Drilling Ltd 0 0 0 239 0 0 0 293 

Marine Subsea II Inc 0 0 0 0 0 8 563 0 

Marine Subsea Inc 0 0 939 0 0 24 272 4 627 0 

Marine Subsesa UK 0 0 0 0 0 0 0 0 

Interoil Angola 0 -20 65 0 0 638 23 0 

Total 10 000 68 774 32 793 2 761 10 000 357 927 30 946 2 620 

The subordinated loan is subordinated to any and all of the Borrower’s present and future obligations to Norsk Tillitsmann ASA 

The subordinated loan is repayable at the end of 2012. 

There is a credit line with maximum amounts between MS Cyprus Holding and the subsidiaries. The loan may be drawn 

in one ore more drawdowns. Repayable on demand. Within the maximum loan amount, repaid amounts may be redrawn. 

Interest is paid according to loan agreement (group note 19): Libor + 6,0% bond loan – face value USD 130 million + margin 2,5% 

Current receivables from subsidiaries at the end of 2009 is TUSD 7 626. This is related to borrowing cost prepaid by Marine Subsea AS. 

Related parties, see group note 5. 

Note 3 – Employee benefit expenses 

Amounts in USD 1 000 2009 2008 

Salaries and wages employees 2 052 2 871 

Accruals according to bonus plans 2 000 0 

Payroll tax 258 412 

Pension 187 140 

Other employee benefit expense 338 324 

Total employee benefit 4 834 3 746 

The average number of employees during the period is 10 

Remuneration to management, see group note 5 

Retirement benefit obligation, see group note 21 

Remuneration to senior executives, see group note 6 

Remunteration to the Board of Directors, see group note 5 


Note 4 – Other operating expenses 

Amounts in USD 1 000 2009 2008 

Consultant fee in Glens Commercial ltd 0 1 600 

Break fee On&Offshore AS 3 000 0 

Other consultant fees 3 470 1 810 

Other operating expenses 33 1 918 


Fees to auditor – see group note 25 

Note 5 – Financial income and expense 

Amounts in USD 1 000 2009 2008 

Financial income: 

Interest income 33 873 33 054 

Currency gain 0 6 070 

Changes in fair value – callable option bond loan 28 12 724 

Group contribution from Marine Subsea I Inc 348 0 

Group contribution from Marine Subsea Cyprus Holding Ltd 0 19 500 

Total financial income 34 248 71 349 

Financial expenses: 

Interest expenses 22 067 31 396 

Amortisation of debt issue cost of issued bond loan 17 373 2 567 

Currency loss 7 848 0 

Changes in fair value – convertible bond loan 0 1 917 

Other financial expenses 7 302 4 007 

Total financial expenses 54 590 39 886 



Note 6 – Taxes 

Amounts in USD 1 000 2009 2008 

Current income tax 

Tax payable 0 0 

Deferred tax -4 169 4 169 

Income tax expense reported in the income statement -4 169 4 169 

Reconciliation of tax expense 

Profit/ (loss) before tax -29 001 20 880 

Tax calculated at domestic tax rates applicable to profits in the country -8 120 5 846 

Permanent differences, net 1 857 -4 369 

Exchange differences -3 621 3 160 

Changes in temporary differences 17 912 -1 167 

Tax losses for which no deferred income tax asset was recognised -5 064 699 

Tax calculated at losses carry forwards -7 133 0 

Tax charge -4 169 4 169 

The weighted average applicable tax rate was 28% (2008: 28%). 

Deferred income tax: 

Deferred tax assets; 

- Deferred tax assets to be recovered after more than 12 months 13 861 7 374 

Deferred tax liabilities; 

- Deferred tax liability to be recovered after more than 12 months 6 551 11 543 

Deferred tax liabilities (net) -7 310 4 169 

- Less tax losses not recogniced 7 310 0 

Deferred tax liabilities (net) 0 4 169 

The gross movement on deferred income tax account is as follows: 

Beginning of year 4 169 0 

Deffered tax assets 

Deferred tax assets regarding losses carry forwards -1 821 (7 372) 

Deferred tax liabilities regarding debt financing -3 041 11 542 

Deffered tax liabilities regarding fixed assets -841 2 

Deffered tax assets regarding pension -13 -2 

Less valuation allowances 1 546 0 

End of the year 0 4 169 


Note 7 – Intangible assets and property plant and equipment 


Intangible 

assets 

Machinery 

equipments 

Additions 207 207 

Depreciation -28 -28 

Balance as at 31 December 2007 179 179 

Total 

Acquisition cost at 31 December 2007 207 207 

Accumulated amortisation and depreciation -28 -28 

Balance as at 31 December 2007 179 179 


Exchange differences -8 -37 -45 

Depreciation -7 -43 -50 

Balance as at 31 December 2008 13 -59 -46 

Acquisition cost at 31 December 2008 28 228 256 

Exchange differences -8 -37 -45 

Accumulated amortisation and depreciation -7 -71 -78 

Balance as at 31 December 2008 13 120 133 


Exchange differences 19 5 24 

Accumulated amortisation and depreciation -16 -66 -82 

Balance as at 31 December 2009 65 245 310 

Depreciation rate: 20–30% 

Note 8 – Non-current receivables 

Amounts in USD 1 000 2009 2008 

Loan to subsidiaries (note 2) 68 794 357 989 

Other receivables 0 16 

Total non-current receivables 68 794 358 006 

The carrying amount of non-current receivables approximate their fair value. See group note 14. 



Note 9 – Trade and other receivables 

Amounts in USD 1 000 2009 2008 

Trade receivables 96 29 

Prepayments and accruals 373 288 

Total trade and other receivables 469 317 

The carrying amount of trade and other receivables approximate their fair value. 

Note 10 – Cash and cash equivalents 

Amounts in USD 1 000 2009 2008 

Bank deposits denominated in NOK 397 410 

Bank deposits denominated in USD 133 4 849 

Restricted bank deposits denominated in NOK 203 5 150 

Restricted bank deposits denominated in USD 0 10 091 

Total cash and cash equivalents 733 20 500 

Note 11 – Share capital 


Number of 

shares 

Share 

capital 

Share 

premium 


Total 

At 31 December 2006 1 000 16 0 16 

Split of shares in the ratio 1:10 000 9 999 000 

Issue of share captital, net of issuance cost 30 January 2007 55 000 000 86 48 822 48 908 


At 31 December 2007 66 000 000 104 50 882 50 986 


At 31 December 2008/2009 68 173 200 108 60 207 60 315 

The total authorised number of ordinary shares is 68 173 200 shares (2008: 68 173 200) with a par value of NOK 0,01 per share. All issued shares 

are fully paid. 

20 largest shareholders, se group note 17 

Other reserves, see group note 18 


Note 12 – Other payables 

Amounts in USD 1 000 2009 2008 

Accrued interest 3 771 2 625 

Accrued expenses 5 748 592 

Other current liabilities 193 0 

Total other current liabilities 9 711 3 217 

The carrying amount of trade and other payable is considered to approximate their fair value. 

Note 13 – Earnings per share 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary 

shares in issue during the year. 

2009 2008 

Profit (loss) attributable to equity holders of the -24 832 20 880 

Company 

Weighted average number of ordinary shares in 68 173 66 724 

issue (thousands), adjusted with split of shares in January 

Basic earnings (loss) per share (USD per share) -0,37 0,3 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive 

potential ordinary shares. The company had in 2008 two categories of dilutive potential ordinary shares: convertible debt and share options. For the 

share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual 

market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The 

number of shares calculated as above is compared with the number of share that would have been issued assuming the exercise of the share options. 

2009 2008 

Profit attributable to equity holders of the company -24 832 20 880 

Adjusted profit / (loss) attributable to ordinary equity holders of the parent company -24 832 20 880 

Weighted average number of ordinary shares in issue (thousands) 68 173 66 724 

Weithted average number of shares under option 0 1 000 

Weighted average number of shares that would have been issud at average market price 0 -545 

Weighted average number of ordinary shares for 68 173 67 179 

diluted earnings per share (thousands) 

Diluted earnings per share (USD per share) -0,36 0,31 



Note 14 – Interest-bearing debt 

Interest-bearing debt, see group note 19 

2 009 2 008 

Secured debt 0 287 276 

Pledged assets: 

Bank deposits 0 15 241 

Investments in subsidiaries 0 3 

Total 0 15 243 

Restricted bank deposits for employees taxdeduction USD 195 (2008 – USD 142) 

All debt are refinaced in 2009 and all new agreements are set in Marine Subsea Cyprus Holding Ltd 

Note 15 – Commitments 

The company leases a car. The annual leasing cost is USD 27. The duration of the contract is 3 years and expires in 2010. 

The company also leases office accomodations: 

5 year subcontract with Interoil Exploration and Production ASA – annual rent is USD 105. 

3,5 year and 5 year contracts with Vital – annual rent is USD 79 and 83 

Regarding the parent company guarantees, refrence is made to note 19 in the Group accounts. 


Auditors’ report 


signatur.no • 100112 

Main Office, Norway 


Strandveien 50 

1366 Lysaker 

Norway 

Phone: +47 67 51 88 50 

Fax: +47 67 51 88 55 

info@marinesubsea.no 

Aberdeen Office, UK 

Marine Subsea UK Ltd 

Regent Centre, Regent Road 

Aberdeen AB11 5NS 

UK 

Phone: +44 (0)1224 574711 

Fax: +44 (0)1224 574712 

info@marinesubsea.com 

London Office, UK 


14 Grosvenor Crescent 

London SWIX 7EE 

UK 

Phone: +44 207 2015650 

Fax: +44 207 2015627 

danila.imbriaco@orleaninvest.co.uk 

Luanda Office, Angola 

Interoil Angola Lda. 

c/o Orlean Invest Angola 

Rua da Cercania do Porto de Luanda – Boavista 

Edifício SGEP, Luanda 

Angola 

Phone: +244 222 311730 

info@marinesubsea.no 

Limassol Office, Cyprus 


P.O. Box 50760 – CY 3609 

67, Spyrou Araouzou Street 

Ulysses House, Office 602 

Limassol 

Cyprus 

Phone: +357 25 028400 

Fax: +357 25 028405 

general@marinesubsea.com.cy

Annual Report

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