SIMON MØKSTER HOLDING AS

Transcription

1 ENVIRONMENTAL AND ANNUAL REPORT 2010 SIMON MØKSTER HOLDING AS YOUR BEST PARTNER 1

2 ALWAYS READY! 2

3 CONTENTS This is Simon Møkster Holding AS... 4 Important events in Year end 2010 Future prospects... 6 Employees... 8 Annual directors report Quality and HSE...14 Environmental reporting Key figures Contract summary as at Fleet summary as at Group income statement Group balance sheet Group cash flow statement...32 Group notes Income statement...41 Balance Cash flow statement Notes...45 Auditor s report

4 Simon Møkster Shipping was established in Stavanger in 1968 by Simon Møkster. During its first decade the company acquired, operated and sold 20 cargo ships. The purchase and sale of vessels was an important part of the company s development. In 1975 the company ventured into offshore activities by ordering two tugboats. In 1981 it took delivery of the first rebuilt standby vessel, Strilmøy. Additional rebuilt standby vessels were delivered in the 80s and 90s. In the last 13 years Simon Møkster Holding has taken delivery of 18 newly built offshore vessels. These include supply, standby, AHTS vessels and subsea ROVs. The group currently operates and partially or wholly owns a fleet of 23 vessels, including newbuilds, comprising three area standby vessels, three field standby vessels, one standby vessel, eight supply vessels, four AHTS vessels, two subsea ROVs and two roll-on/roll-off carriers. Through unity we aim to promote our core values, which are: honesty, a long-term approach, courage, innovation and accountability. The company s focus is on tailor-made solutions, quality, safety and solidity. The company s business idea is to engage in long-term contracts through owning and operating offshore vessels. The company emphasises the importance of skilled personnel on land and at sea in order to further develop the business. As at the company employed 439 people 408 seamen and 31 office staff. Skilled personnel, good seamanship and continuous improvements to staff and vessels will help the company develop. THIS IS SIMON MØKSTER HOLDING AS IMPORTANT EVENTS IN THE PAST YEAR JANUARY Stril Power and Strilmøy extended their contract with ExxonMobil for a further four and five years respectively. Strilhauk is sold. FEBRUARY Newbuild contract with STX for PSV 09L CD is signed. MARCH Stril Mermaid delivered from Simek. First vessel with NOFO 2009 standard. MAY Three-year contract with BP Norway (Stril Odin) and fiveyear contract with Marathon Norway (Stril Mermaid). Newbuild contract with STX for PSV 09L CD is signed. AUGUST Operation of Atlantis Dweller off Nigeria is discontinued day contract with Eni on supporting Polar Pioneer LUNDE Barents Sea. SEPTEMBER Stril Explorer delivered by Westcon OCTOBER 18-month contract with SeaHold for Stril Explorer. NOVEMBER Two-year contract with Eni on supporting Scarabeo 8 GOLIAT Barents Sea. Requires rebuild to DE-ICE. Finally rewarded for working hard to attract assignments in the Barents Sea. 4

5 MR SUBSEA II AS 100% MARINER sp/f 100% TEAM BEREDSKAP sp/f 50% 10% MR SUBSEA KS 45% MR SUBSEA AS 50% SIMON MØKSTER HOLDING AS 100% SM REDERI AS SM SHIPPING AS 100% NORTH SEA SAFETY 100% 10% NORTH SEA SAFETY 40% SUPPLYINVEST AS 100% STRIL OFFSHORE 50% 1% DIS STRIL OFFSHORE 37% 22% MØKSTER SAFETY AS 100% MØKSTER SUPPLY AS 60% 10% MØKSTER SUPPLY KS 54% 5

6 WHERE DO WE STAND, WHAT ARE OUR PROSPECTS, WHERE DO WE GO FROM HERE? The new year poses new opportunities and challenges. It is a very complex world with considerable unrest in many regions. In domestic waters we are well shielded from conflict, natural disasters and other tragedies. We are just extremely fortunate up here in northern waters. Our main focus will therefore be on a demanding shipping market with everything that this entails was a difficult year with overcapacity in the market. This meant that there were more vessels than assignments, along with continued deliveries of large, newly built, advanced vessels in the market. This trend appears to be continuing in 2011 to some extent, although there are signs of improvements in the latter part of 2011/2012. Through unity we aim to promote our core values, which are: honesty, a long-term approach, courage, innovation and accountability. History shows that it is difficult to predict exactly when the market will rebalance itself, and when it happens things can change quickly. Thus, on the whole, I am optimistic about market prospects. There are always battles to be fought on one front or another after all, life is meant to be a challenge. At times we may feel that things are difficult and unfair. It is okay to complain, but we should not wallow in our grief. A well-known business leader always had a standard reply if staff came to him with a complaint about something: Don t come to me with your problems; show me how you re going to solve them. We must be able and willing to work our way out of problems and into good solutions with grit and determination. At Simon Møkster Shipping AS we do our best to solve challenges and find answers and we do so with a smile! Through unity we aim to promote our core values, which are: honesty, a long-term approach, courage, innovation and accountability was a busy and challenging year for Simon Møkster Shipping AS. Two newbuilds have been delivered, and two new ones ordered. A good start is important to everyone, also when launching a new project, new vessel, or in relation to new clients/suppliers. In order to retain existing clients and attract new ones, we must provide what the client wants, both in terms of the product and with regard to QHSE. Everyone is dependent on satisfied clients who come back time and again but it should also be important to clients that we retain a certain level of profit every day in order to develop new products, skills and services. Setting targets, working hard towards them and then reaching them is an ongoing process. There should be a thread linking our strategy to our goals, actions and behaviour. With regard to Health, Safety, Environment and Quality we have set ourselves an undisputable goal of zero injury to personnel, equipment or the environment. All our employees should be able to return home as healthy as when they turned up for work. 6

7 The incidents that the company experienced in 2010 have been reviewed and in some cases investigated. The recurrent theme is that the incident could have been avoided had the relevant rules and procedures been followed. This takes us straight to an important word: compliance. We receive plenty of positive feedback from clients on work carried out to a high standard at sea and on land, and it is important that we acknowledge this we should enjoy what we do and be proud of it. Simon Møkster Shipping AS has a corporate culture whereby it is important to preserve a sense of intimacy, encourage well-being, be innovative and a little different. Each and every ship in our fleet promotes our corporate culture through its day-to-day operations. In order for a company to develop it needs capital/cash and skilled personnel and, as is often proven when something is working well, this is easy. It boils down to issues such as common sense, will, well-being and curiosity. At Simon Møkster Shipping AS we see the importance of preserving a sense of intimacy, as well as encouraging well-being! Nobody is perfect. Nobody can be expected to know everything. We must dare to fail, then learn from our mistakes before moving on. Is it possible to learn from the mistakes of others, or do we have to experience it ourselves before we can learn from it? There is much to suggest that most people do not learn much from other people s errors. Experience exchanges, knowledge transferred from one situation to a fairly similar situation, requires transparency and safety. No question or comment should be considered irrelevant, and in order to develop we must work together to achieve results. In turn this means that we must continue to improve at all levels. Co-operation is a keyword in order to achieve the best possible results. It has been said that people working in an environment that is friendly, that understands that everyone can make mistakes and that has time for everyone also find the best way to do a good job. 7 People who are enthusiastic, curious and hungry for knowledge at sea and on land are a prerequisite for continuing success, and at Møkster long-term thinking is one of our core values. In 2011 the fleet will be expanded with new vessels and new people who will all become part of Møkster. I am looking forward to a great new year, a year that will provide us with new wisdom, learning and understanding as we continue to develop. Everything is connected Anne Jorunn Møkster PHOTO: NORWEGIAN SHIPOWNERS ASSOCIATION

8 PERSONNEL, SICKNESS ABSENCE AND RECRUITMENT During 2010 the company employed an average of 439 people. Of these, 408 worked onboard our vessels sailing under a Norwegian flag, and 31 at our office. We also had 72 employees on the company s Faroese-flagged vessels. As at there were 35 employees in training, 26 apprentices and 9 cadets. Staff numbers have remained stable throughout the year. The company continued to meet its commitments to SURF (the shipping industry s education and recruitment forum) and will continue to invest in new generations of seamen. The collaboration group has been expanded to include DOF, providing us with additional local impact. One of the company s challenges in 2010 was to implement Visma Travel on all vessels. Visma Travel is an internet-based system for submitting sailors travel expenses claims. The system replaces much of a vessel s cash reconciliation system as payments are now made directly to a bank account. Linking Visma Travel to the company s payroll system proved a considerable technical challenge, but most of the problems have now been solved, and the system is working well to all intents and purposes. The level of sickness absence saw a satisfactory drop in The average for 2010 was 4.17% for sailors onboard NOR vessels. This is a significant reduction on last year s figure of 5.56%. Although there was an increase in sickness absence at the end of 2010, the company will continue to focus on our employees health and will work to maintain the positive trend from On the company s FAS vessels the level of sickness absence was 2.19%, a figure that the company is very satisfied with. We continue to work to maintain the positive trend of ever lower levels of sickness absence. The company is continuing its agreement with Alpha Medisinske Senter in Stavanger as an occupational health service for its sailors. The HR department continued to experience a demanding recruitment market in 2010, particularly in terms of high level positions where there have been few available candidates. In this respect the company has benefitted from its investment in training positions onboard our vessels. This has continued to provide the company with internal candidates holding higher qualifications, paving the way for internal promotions of crews that know the fleet and systems well. There was also extensive activity last year in relation to courses and skills training. In particular, the introduction of a new TM master system has meant an above average level of course activity, in addition to ever stricter requirements for formal qualifications from both clients and authorities, and in relation to internal requirements. 8

9 AS AT THERE WERE 35 TRAINING POSITIONS, 26 APPRENTICES AND 9 CADETS. THE COMPANY WILL CONTINUE TO INVEST IN THE NEW GENERATION OF SEAMEN. 9

10 SIMON MØKSTER SHIPPING FOCUSES ON TAILOR-MADE SOLUTIONS, QUALITY, SAFETY AND SOLIDITY. 10

11 ANNUAL DIRECTORS REPORT 2010 In 2010 Simon Møkster Holding AS saw operating reve-nues of NOK million (NOK million in 2009). Profit for the year after tax was NOK 17.5 million (NOK million in 2009). Operating profits before depreciation (EBITDA) in 2010 stood at NOK million (NOK million in 2009). Book equity at the end of the year was NOK 1,289.5 million (NOK 1,256.2 million in 2009). At year end Simon Møkster Holding AS had 20 vessels in operation and three under construction. The group s continued focus on HSE work has paid dividends in terms of its safety record. Work is also underway to reduce pollution and emissions into the external environment. At year end Simon Møkster Holding AS had 20 vessels in operation and three under construction. THE BUSINESS Simon Møkster Holding AS area of business largely involves the ownership and operation of offshore vessels. The group focuses on tailor-made solutions, modern and environmentally friendly vessels and personnel with a high level of maritime expertise. ABOUT THE ANNUAL FINANCIAL STATEMENTS The group s total revenue stood at NOK million (NOK million in 2009). Turnover has increased in recent years due to the acquisition of number of new vessels. Operating costs totalled NOK million (NOK million in 2009). The purchase of new vessels has involved some start-up costs, and operating costs are therefore expected to be somewhat lower in the immediate future. Operating profits after depreciation and before financial costs (EBIT) were NOK million (NOK 117 million in 2009). Net financial items in 2010 totalled NOK 94.2 million (NOK 89.4 million in 2009). Profit before tax came in at NOK 47.7 million (NOK 27.6 million in 2009). In June 2010 transitional rules were introduced to allow untaxed profits from the previous taxation regime for shipping companies to be settled with a one-off payment. The board of Simon Møkster Holding AS resolved to make use of this scheme, and its tax accounts have been debited with a shipping company tax payment of NOK 36.5 million to be paid over a 3-year period. Net estimated tax for 2010 is NOK 30.2 million. Profit after tax was NOK 17.5 million (NOK million in 2009). Profit for the year after minority interest was NOK 8.4 million. All liabilities are in NOK. As at interestbearing secured debts totalled NOK 2,350.0 million (NOK 2,099.8 million in 2009). The group s book equity was NOK 1,289.5 million (NOK 1,256.2 million in 2009), equivalent to an equity ratio of 34%. A broker s valuation has been obtained, showing that the vessels carry significant excess value. Cash flow from operations totalled NOK 191 million compared with NOK 54 million in The accumulation of working capital due to increased activity has limited cash flow somewhat. The company s liquid assets totalled NOK million as at (NOK 294 million in 2009). The company s free liquidity is considered to be good in light of the company s commitments. The parent company is a straightforward holding company with no activity except for remuneration for board directors. Its assets consist of shares and receivables relating to its subsidiaries. The company has no liabilities. The board is of the opinion that the annual financial statements give a true picture of Simon Møkster Holding AS assets and liabilities, its financial position and profit. 11

12 HEALTH, SAFETY AND ENVIRONMENT Health, safety and environment (HSE) are key priorities for the group. The group management is working determinedly to increase focus and understanding amongst all employees. When ordering new vessels focus is on creating a safe and secure place of work, as well as minimal emissions into the atmosphere and the sea. Simon Møkster Holding AS has no employees. At year end 439 people were employed by Simon Møkster Shipping AS, a part of the Møkster Group. Of these, 408 worked onboard vessels and 31 were office staff. The working environment onboard and in the offices is considered to be good. Sickness absence in 2010 was 4.5% for all employees a reduction from 5.6% in Continual efforts are being made to reduce sickness absence. The group works to promote equality and ensure equal opportunities and rights for all employees! The company provides extensive internal training and has around 40 apprentices and cadets employed in various training positions (as at ). The group works SIMON MØKSTER ADMINISTRATION to promote equality and ensure equal opportunities and rights for all employees regardless of ethnic background. The group aims to create a workplace where discrimination does not exist because of reduced functional ability. The company s board and management are conscious of society s expectations with regard to promoting equality and offers equal pay for identical positions regardless of gender. Regrettably, the company experienced two cases of lost time injuries in 2010 there was only one such injury in The company saw an increase in the number of injuries in 2010, and a campaign is being planned in an attempt to reduce this figure in On a positive note, several vessels have operated for 10 years or longer with no lost time injuries. Serious incidents are investigated in order to establish their direct and indirect causes. THE EXTERNAL ENVIRONMENT Simon Møkster Holding AS complies with prevailing regulations and provisions in order to prevent damage to the external environment. Operations onboard its vessels follow strict national and international laws and regulations. The vessels are manned by highly qualified personnel, who work to achieve the best possible operating profile and reduce emissions. A dedicated system has been implemented for measuring and reporting consumption and emissions. In the last few years all bunker fuel consumption and emissions have been recorded, and a dedicated environmental report has been produced. 12

13 FINANCIAL RISK The group has hedged a large part of its loans with fixed interest. At year end 2010, 50% of the group s interestbearing debts were secured with fixed interest. The exchange rate risk is low as only a few contracts and none of the debts are linked to foreign currencies. The credit risk is low because the contracts are linked to the company s clients, which are predominantly large oil companies. The management and board have sustained focus on managing liquidity and liquidity risks. The vessels are enjoying a high level of contract coverage, thus ensuring predictability in terms of interest and capital repayments in the next few years. A high level of contract coverage in the coming years offers certainty in relation to the repayment of debts. The group s three newbuilds have all been financed to a satisfactory level one standby vessel that has entered into a 10-year contract with Statoil and two modern supply vessels currently without contracts. Equity requirements for projects have become stricter in the last year. The company emphasises the importance of sustaining a good and open dialogue with the group s financing partners. MARKET PROSPECTS The supply of vessels outstripped demand in the offshore supply sector in The market has also been affected by the Macondo accident, which resulted in the suspension of deepwater drilling in the Mexico Gulf. The year may be summarised as one in which oil companies have looked to previous drilling and development plans in tandem with rising oil prices. The average price of North Sea oil in 2010 was USD 80.3 per barrel, an increase of 28.5% on the previous year. Møkster was barely affected by the difficult market in 2010 thanks to its long-term contracts and a fleet capable of performing diversified services such as oil recovery, rescue and firefighting in addition to supply and anchor handling. The board expects to see an improvement in offshore activities in 2011, but also market overcapacity in periods. The board takes a positive view of the longterm market prospects for the offshore supply market. With the delivery of two attractive and large new supply SIMON MØKSTER BOARD OF DIRECTORS vessels due in October 2011 and March 2012, as well as an AHTS vessel coming off contract in November 2011, it is the board s opinion that the group is well positioned for meeting the expected increase in demand for attractive offshore vessels. GOING CONCERN In accordance with Section 3-3 of the Norwegian Accounting Act the company confirms that the requirements for the going concern assumption have been satisfied. This assessment is based on profit and liquidity forecasts for the next few years. No events have occurred after the end of the financial year that affect the assessment of the published financial statements. ALLOCATIONS The board of directors proposes that the annual profit of Simon Møkster Holding AS be transferred in full to other equity. Stavanger, 11 April 2011 John Arild Ertvaag Arne Lier Arne L. Økland Chairman Director Director Astrid Simone Møkster Alf Møkster Anne Jorunn Møkster Director Director CEO 13

14 QUALITY, AND HSE! The main activity this year in relation to HSE work has been to follow up on risk evaluation. The company has also focused on the reporting of incidents in general and on improving the reporting process. At the beginning of the year a leaflet was distributed describing the process for reporting incidents. This included categorising incidents and classifying potential injuries. Among the challenges we have faced is the continued focus on our aim of zero injuries. The reporting of incidents and investigations. The number of reported incidents remains similar to 2009, taking into account the size of the fleet. However, the quality and categorising of incident reports have improved. For example, in 2009 we had 40 near misses, 102 safety observations and 236 non-conformity incidents. In 2010 the numbers were 57 near misses, 231 safety observations and 73 non-conformity incidents. This represents a trend that the company is very satisfied with and also shows that the focus on incident reporting has been followed up onboard our vessels. In 2010 the company carried out one investigation: the accident involving Prosper and Edda Fjord in Tananger port on 8 November. The investigation has now been concluded without having uncovered the exact cause of the accident but rather a number of contributing factors. Following the investigation, measures have been implemented both onboard and in the company s governing procedures in order to prevent such an incident from happening again. OFFICERS CONFERENCE This year s conference was held at Quality Airport Hotel, Sola. It was divided into two sessions. The participants were 36 captains and 25 chief engineers 72% of those invited were in attendance. The company is not satisfied with the level of participation and aims to achieve 90% participation at next year s conference. The conference was opened by our CEO, who gave an account of the company s strategy and goals in her opening address. The conference included a joint day, where health, environment and safety, work permits, procurement, planning/co-ordination and follow-up were the key topics along with staffing, market prospects and vessel activity. The first day of the conference concluded with a dinner that was also attended by representatives from the company s offices. On the second day of the conference captains and chief engineers were divided into two groups, and topics relating to technical solutions such as thermography, TM Master and PMS were presented to the chief engineers. The captains were presented with topics such as the Ship Safety and Security Act and the regulations pertaining to this act. QHSE WORK ONBOARD Onboard efforts in respect of QHSE work appear to be making good progress. The QHSE committees have been active on most vessels and continue to focus on safety. Unfortunately, the company has still recorded some personal injuries that could have been prevented with better and correct use of personal protective gear. The issue of personal protective gear was raised with all vessels, and reports at the end of the year showed a positive trend and understanding of the issue. The company received minutes of 305 QHSE committee meetings. Most of the cases raised are solved internally onboard, while some are handled at the company offices. 14

15 AS AT THE COMPANY EMPLOYED 439 PEOPLE 408 SEAMEN AND 31 OFFICE STAFF. SKILLED PERSONNEL, GOOD SEAMANSHIP AND CONTINUOUS IMPROVEMENTS TO STAFF AND VESSELS WILL HELP THE COMPANY DEVELOP. 15

16 HSE STATISTICS Year LTI TRIF Incident reports 1, LTI = Lost Time Incident TRIF = Total Reportable Incident Frequency (12 t working days/ t.) SICKNESS ABSENCE The level of sickness absence fell significantly in Absence fell to 4.7% on NOR vessels in 2010 from 5.65% in This is very encouraging. For Faroeseflagged vessels sickness absence was 2.19% in 2010, and amongst administrative staff it was 1.84%. In light of this the company has set a target for overall sickness absence of 4.5% in CERTIFICATION AND AUDITS The company has held annual DNV-run ISM/ISO audits of its offices. No deviations were identified, but seven observations/proposed improvements were noted. In 2010 the internal audit was held at the office by the company s own staff. The audit was conducted over three days. Some observations were made that have been assessed internally, action has been taken and the cases closed. All vessels have conducted internal audits as planned. It appears that most vessels maintain their management systems in the manner requested by the company. There is still room for improvement, particularly with regard to document control generally. Regulatory audits by DNV revealed only minor dis crepancies. External audits by clients have occasionally proved quite challenging. This is mostly because the auditors have not assessed the material produced in a satisfactory manner and frequently apply their own interpretations of their vetting forms. THE MANAGEMENT SYSTEM On 1 July the first edited version of the ISM code came into force. This involved some revisions of the company s procedures in order to comply. The company carried out 59 procedure revisions in this respect. During 2010 emphasis was therefore placed on our management systems, including the production of information leaflets addressing ISO codes 9001/2008 and 14001/2004. These were issued in order to improve the level of understanding of what these codes entail and their relationship with our management system. The changes to the ISM code have also been communicated to the fleet. In the company s opinion compliance with the systems has shown a positive trend. CHALLENGES FOR 2011 The company believes that its main HSE challenge is to reduce the number of personal injuries. We should continue to strive for our target of zero injuries. This applies to all injuries, not just reportable personal injuries. Another challenge for the company is to increase the level of understanding of our management systems generally. The company is planning to run quarterly campaigns on a number of topics to raise the profile of our QHSE initiatives, increase knowledge about management systems, including understanding and context, as well as the background to these systems by way of information leaflets. 16

17 THE COMPANY BELIEVES THAT ITS MAIN HSE CHALLENGE IS TO REDUCE THE NUMBER OF PERSONAL INJURIES AND CONTINUE TO STRIVE FOR OUR TARGET OF ZERO INJURIES!

18 2010 WAS A BUSY AND CHALLENGING YEAR FOR SIMON MØKSTER SHIPPING AS. TWO NEWBUILDS WERE DELIVERED AND TWO NEW ONES ORDERED. 18

19 In 2010 Simon Møkster Shipping AS had operative responsibility for a fleet of 21 vessels, divided into the following segments: SEGMENT 1 Ordinary standby/rescue vessels (2 vessels): This group comprises ordinary older standby vessels. Stril Tender and Strilhav. These vessels only use azimuth thrusters in the bow section in order to stay in position when in the field. This means that their bunker consumption is low. SEGMENT 2 Advanced standby vessels (Area standby) (2 vessels): This group includes the area standby vessels Stril Poseidon and Stril Herkules. Both ships were in operation throughout the year. SEGMENT 3 Multi-purpose standby vessels (7 vessels): This group includes the AHTS vessels Stril Power, Strilborg, Stril Commander and Stril Challenger along with the multifunction vessels (standby/psv) Stril Neptun, Ranger and Prosper. These vessels offer multiple functions such as anchor handling, supply, standby services, towing, oil pollution protection, etc. Bunker consumption and therefore also emissions will always depend on the nature of the assignment. Ranger and Prosper were laid up in connection with main and medium class vessels for four and three weeks respectively. All other vessels were in full operation. SEGMENT 4 PSVs (6 vessels): This group includes the company s dedicated PSVs. Stril Myster, Stril Pioner, Strilmøy, Stril Odin, Stril Mermaid and Stril Mariner. Stril Myster and Stril Pioner are dedicated PSVs. Strilmøy, Stril Odin and Stril Mariner also have standby certificates but operate as ordinary PSVs for much of the time. Stril Mermaid was delivered in March 2010, and Strilmøy was laid up (main class) in June The other vessels were in normal operation throughout the year. 2010: SIMON MØKSTER ENVIRONMENTAL REPORTING SEGMENT 5 Special vessels (4 vessels): This group includes two vessels owned by Statnett but operated by Simon Møkster Shipping. They are the vessels Elektron and Elektron II. The subsea vessel Stril Explorer was delivered in September and technical operation of Atlantis Dweller was transferred to another company in August. CONSUMPTION AND EMISSIONS CONSUMPTION and EMISSIONS Bunker( MGO): tonnes tonnes LNG: tonnes 2 346,8 tonnes Energy conversion:: 467,1 GWh 434,6 GWh CO2 emissions: tonnes tonnes NOx emissions: 1 502,6 tonnes 1 458,6 tonnes SOx emissions: 161 tonnes 155,3 tonnes The following factors form the basis of the above figures: Emissions Factor Comments (kg/kg olje) CO2 3,17 This factor is applied to all vessels except the gas-operated Stril Pioner (2.74 kg / kg LNG) NOx * *Factor varies from vessel to vessel and is determined on the basis of either readings or standard factors in accordance with requirements of the Norwegian authorities. Sox 0,0046 This factor is applied to all dieseldriven vessels. LNG operation generates no SOx emissions. Energy equivalents: 1 kg MGO fuel = 43,1 kw 1kg LNG fuel = 46,7 kw 19

20 MILL GWh ENERGI EKV (GWh) TONNES TONNES Co ENERGY CONVERSION: The energy equivalents have been calculated on the basis of bunker consumption (mill. kwh). It should be noted that this is a theoretical value based on the theoretical volume of energy of the fuel. Compared with 2009 there has been an increase in the fleet s overall energy conversion of around 7.5%. This is largely due to new tonnage in the form of newbuilds delivered in TONNES BUNKER CONSUMPTION LNG CONSUMPTION CO2 EMISSIONS A reduction in CO2 emissions will largely follow the changes in bunker and LNG consumption. As the figure shows, there has been an increase in CO2 emissions of 5.0% between 2009 and TONNES TONNES NoX TONNES SoX FUEL CONSUMPTION (MGO & LNG): The fleet s overall consumption has been relatively stable in recent years, but due to an expansion of the fleet in both 2008 and 2009, bunker consumption rose sharply between 2008 and This has stabilised somewhat between 2009 and Compared with the previous year there has been a slight increase of 2.9% in LNG consumption because of reduced consumption of MGO by Stril Pioner, compared with NOX AND SOX EMISSIONS NOx emissions rose by 3.0% in the last year. In recent years older tonnage has been replaced by a large number of newer and more modern vessels with modified engines and systems for reducing NOx. This has resulted in a reduction in average NOx emissions relating to bunker consumption. SOx emissions have increased by 3.9%, e.g. similar to the increase in bunker consumption as described above. 20

21 100% 90% 80% 70% 60% 50% 40% 30% 20% SPECIAL VESSELS PSV MULTI-PURPOSE VESSELS AREA STANDBY The company took delivery of two newbuilds in 2010, while one older vessel was sold and the management of another vessel transferred to a different company. The average age of the fleet at the end of 2010 was 12.5 years. 10% ENERGY ENERGI EQUIV. EKV. (MILL. (mkwh) KWH) CO2 (TONNES) (tonn) NOx NOX (TONNES) (tonn) SOx SOX (TONNES) (tonn) ORDINARY STANDBY Newer vessels are equipped with more effective and emission-friendly engines. Most newbuilds also have emission-reducing equipment installed such as waste gas cleaning through the use of SCR systems. CORRESPONDING FIGURES FOR 2010 The figure above gives a graphic presentation of the percentage distribution between the five segments in Fuel consumption (Marine Gas Oil and LNG) has been converted into energy equivalents. These five segments consist of very different types of vessels, and there are also significant differences in respect of engine set-up, consumption and emissions. Bunker oil has been converted into energy equivalents in order to illustrate these differences. ON NOX EMISSIONS IN PARTICULAR As mentioned previously, there was a minor increase in NOx emissions compared with previous years, while bunker consumption has also increased. Despite this, we have managed to reduce NOx emissions per energy unit produced in line with the trend of recent years. NOx emissions this year rose by 3.5%, while the fleet s total energy conversion increased by 7.5%. There are three main reasons for this positive trend: 1. The addition of new and more modern tonnage. 2. The phasing out of older tonnage. 3. The rebuilding of existing tonnage. NOX PER ENERGY UNIT PRODUCED: The following development is indicated by comparing NOx emissions per energy unit produced: 16, , , , , , , , ,00 kg Nox / GWh , ,8 11, , , , , , , ,8 7.8 The figure shows that NOx emissions per GWh produced have fallen sharply since 2001 (percentage fall for the period is around 45%). In its 2009 HSE programme the company identified a target of reducing emissions to a maximum of 7 kg NOx/ GWh by the end of Regrettably, this target has not been achieved. The reasons for this are challenges relating to NOx-reducing systems onboard some of the newbuilds, along with challenges posed by vessels operating in areas with poor or no access to urea. 21

22 A number of steps have been taken in recent years to ensure a continued reduction of NOx. The company has signed up all its vessels to the Business Sector s NOx Fund. This includes a commitment to identify and consider possible NOx measures. The company has reviewed all its vessels and identified a range of possible measures, some of which have already been implemented. Here are a few examples of implemented and planned measures: MEASURES FOR EXISTING TONNAGE IN 2010: PILOT PROJECT EGR SYSTEM STRILMØY: Simon Møkster Shipping has entered into a partnership with PON, Nymo and STT Emtec in order to test and adapt a new EGR system (Exhaust Gas Recirculation) to vessels. A prototype (pilot system) was installed onboard Strilmøy in 2008 for a 1-year test period. This period was further extended in 2009 and Unfortunately, the operation of this system has posed major challenges and has not worked as expected. The EGR system will therefore be demobilised during spring MEASURES FOR NEWBUILDS: 2. STRIL MERKUR To be delivered with both SCR system and hybrid solution for engine/propeller system. 3. STX NEWBUILDS Two PSVs were ordered from STX in 2010 with delivery due in 2011 and Both vessels will be delivered with SCR systems. ENVIRONMENTAL FOCUS AREAS FLEET RENEWAL Continue the replacement of older tonnage with more modern tonnage. Maintain continuous environmental focus in respect of new tonnage. Particular emphasis will be placed on bunker consumption and NOx emissions. NOX EMISSIONS VS. ENERGY PRODUCTION The company s relative NOx emission per GWh produced shall be reduced. Emissions shall be cut to 7 kg NOx/GWh or less in Simon Møkster Shipping is working continuously to reduce the fuel consumption and CO2 emissions of all its vessels! Fuel consumption on all vessels shall be examined with a view to making operation more efficient in order to achieve a lower level of fuel consumption and CO2 emissions. This will, of course, be subject to safety requirements and should be seen in light of any requirements from the charterer in terms of speed. Simon Møkster Shipping is also taking part in ongoing, joint projects with Statoil, Esso and BP in order to identify measures of reducing fuel consumption. PAINT Efforts should be made to use paint with the highest possible dry solids content. This will be achieved by using existing framework agreements. 22

23 THE DRY SOLIDS CONTENT IN PAINT SHOULD BE HIGH IN ORDER TO REDUCE WASTAGE DURING APPLICATION. 23

24 24 PEOPLE WHO ARE ENTHUSIASTIC, CURIOUS AND HUNGRY FOR KNOWLEDGE AT SEA AND ON LAND ARE A PREREQUISITE FOR CONTINUING SUCCESS, AND AT MØKSTER LONG-TERM THINKING IS ONE OF OUR CORE VALUES.

25 KEY FIGURES GROUP (NOK 1 000) Profit and loss accounts Freight income Total operation revenues Operating expenses Operating result before depreciation (EBITDA) Ordinary depreciation Operating result(ebit) Net finance Ordinary result before taxes Tax Result Hereof minority share Hereof majority share Balance sheet Fixed assets Current assets Total assets Equity Long term liabilities Current liabilities Total equity and liabilities Key figures Equity ratio 1) 34,11% 36,44% 43,85% EBITDA 2) 41,91% 41,30% 31,45% EBIT 3) 22,64% 22,01% 15,34% Return on equity 4) 1 % 9 % 6% Current ratio 5) 3,19 3,47 2,43 1) Booked equity in percentage of total assets 2) Operating result before depreciation and write-down adjusted for gain/loss on sale of fixed asset 3) Operating result before depreciation in percentages of total income 4) Result after tax in percentage of booked equity 5) Current assets divided by current liabilities 25

26 GROUP CONTRACT SUMMARY AS AT Name Charterer Contract PSV Stril TBN 748 Spot Stril TBN 729 Spot Stril Mermaid Marathon year opt. Stril Mariner BP x 1 year opt. Stril Odin BP month opt Strilmøy ExxonMobil year opt. Stril Pioner Statoil Stril Myster * BP month opt Stril Neptun BP x 1 year opt. AHTS Stril Challenger Spot/ENI year opt. Stril Commander EDT Strilborg Statoil x 1 week opt. Stril Power ExxonMobil x 2 year opt. OMRÅDEBEREDSKAP/ENKEL BEREDSKAP Stril TBN - Bygg 450 Statoil x 1 year opt Stril Herkules Statoil x 1 year opt. Stril Poseidon Statoil x 2 year opt. Prosper BP x 3 month opt Ranger Talisman x 3 month opt Stril Tender Avløsning SUBSEA Stril Explorer Seahold Geoships Ltd Atlantis Dweller Fugro-RUE Bareboat + opt Fixed contracts 84% Contract coverage Options 94% Contract with option Vessels under construction 71% Contract coverage * Indirect owner through Norsea stake 82% Contract with option % Contract coverage

27 GROUP FLEET SUMMARY AS AT Name Year of Design DWT HP Dekk Bollard Standby FiFi Oil DP constr. m2 pull rec class PSV Stril TBN STX 09L X X X Stril TBN STX 09L X X X Stril Mermaid 2010 Havy 832-PSV/Standby X X X X Stril Mariner 2009 Havy 832-PSV/Standby X X X X Stril Odin 2006 MT 6000 II-PSV/Standby X X X Strilmøy 2005 MT 6000 II-PSV/Standby X X X Stril Pioner 2003 VS 4403-PSV X X Stril Myster * 2003 VS 490-PSV X Stril Neptun 1999 VS 470-PSV/Standby X X X X AHTS Stril Challenger 2009 Havy. 842-AHTS/Standby X X X X Stril Comander 2009 Havy. 842-AHTS/Standby X X X X Strilborg 1998 UT 722-AHTS/Standby X X X X Stril Power 1997 UT 722-AHTS/Standby X X X X AREA STANDBY/ ORDINARY STANDBY Stril TBN/Build VS 482II-Area standby X X X X Stril Herkules 2008 VS 482 II-Area standby X X X X Stril Poseidon 2003 VS 482-Area standby X X X X Prosper 1983 UT 704-PSV/Standby X X X Ranger 1983 UT 704-PSV/Standby X X X Stril Tender 1965/83 Standby X SUBSEA Stril Explorer 2010 MM73-Subsea X Atlantis Dweller 2009 MM66-Subsea X *Indirect owner through NorSea stake 27

28 SIMON MØKSTER HAS IDENTIFIED A TARGET OF MAXIMUM 7 KG NOX/GWH 28 FOTO: ØIVIND RØBECH.

29 GROUP INCOME STATEMENT Operating revenue Note Operating revenue Gains on disposal of vessels Total revenue Operating expenses Operating expenses vessels Payroll/crewing costs Ordinary depreciation 4, Other operating expenses Total operating expenses Operating profit/loss Financial income and expenses Profit/loss on investments in associated companies Interest income Other financial income Interest costs Other financial expenses Net financial items Ordinary profit/loss before tax Tax on ordinary profit Profit/loss for the year Profit/loss attributed to minority interests Profit/loss for the year after minority interests

30 GROUP BALANCE SHEET Assets Note Fixed assets Deferred tax assets Goodwill Tangible fixed assets Accrued class expenses 6, Investments in associated companies Pension assets Other receivables Total fixed assets Current assets Trade receivables Other receivables Bank deposits, cash etc Total current assets Total assets

31 Liabilities and equity Note Equity Paid-in capital Retained earnings Equity before minority interests Minority interests Total equity Long-term liabilities Tax payable Pension liabilities Liabilities to credit institutions Other long-term liabilities Total long-term liabilities Current liabilities Liabilities to credit institutions Trade payables Tax payable Unpaid government charges and taxes Other current liabilities Total current liabilities Total liabilities and equity desember 2010 Stavanger, 11. April 2011 John Arild Ertvaag Alf Møkster Arne Lier Chairman Director Director Arne L. Økland Astrid Simone Møkster Anne Jorunn Møkster Director Director CEO 31

32 GROUP CASH FLOW STATEMENT Cash flow statement Cash flow from operations Ordinary profit/loss before tax Refunded/paid tax in the period (-) Gain/loss on the sale of tangible fixed assets Ordinary depreciation Accrued class expenses Revenue from investments in associated companies Change in recognised pension liabilities Change in trade receivables and trade liabilities Change in other accruals Net cash flow from operations Cash flow from investments Receipts from sale of tangible fixed assets Payments for acquisition of tangible fixed assets Payments for periodic maintenance Receipts from investments in associated companies Payments for investments in associated companies Change in balance between associated companies Net cash flow from investments Cash flow from financing activities Repayments of long-term interest-bearing liabilities Incurrance of long-term interest-bearing liabilities Receipts from/payments to (-) owners Receipts from/payments to (-) minority interests Net cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalents at the start of the period Cash and cash equivalents at the end of the period

33 WAS A BUSY AND CHALLENGING YEAR FOR SIMON MØKSTER SHIPPING AS. TWO NEWBUILDS WERE DELIVERED AND TWO NEW ONES ORDERED.

34 NOTES NOTE 1 ACCOUNTING PRINCIPLES GENERAL The consolidated accounts have been prepared in accordance with the provisions of the Accounting Act and generally accepted accounting practices. The figures provided in the consolidated accounts are all given in NOK 1,000 unless otherwise stated. CONSOLIDATION PRINCIPLES Consolidated accounts The consolidated accounts include those companies where the parent company and subsidiary have a direct or indirect controlling influence. The consolidated accounts show the companies economic standing, the annual result of operations and cash flows as a single economic entity. In principle a controlling influence is defined as direct or indirect ownership of more than 50% of the voting capital. Uniform accounting principles have been applied to all companies forming part of the group. Newly acquired subsidiaries are included from the moment when influence has been achieved. The following companies are part of the group: Simon Møkster Holding AS (parent company) Simon Møkster Shipping AS (100%) Simon Møkster Rederi AS (100%) Møkster Safety AS (100%) Stril Power AS (63,6%) Supplyinvest AS (100%) North Sea Safety AS (100%) MR Subsea II AS (100%) Stril Offshore (internal partnership) (59.5%) Sp/f Mariner, Faroe Islands (100%) Møkster Bemanning AS, being wound up (100%) Møkster Supply AS (60%) Møkster Supply KS (60%) The subsidiary Supplyinvest KS (100%) was wound up on 8 October Elimination of stakes in subsidiaries Stakes in subsidiaries have been eliminated in the consolidated accounts using the acquisition method of accounting. The difference between the cost price of assets and the book value of net assets at the time of acquisition is analysed and allocated to the individual balance sheet items in accordance with their fair value. Any additional excess value due to expectations of future earnings is capitalised as goodwill and depreciated in the income statements in line with underlying circumstances and expected economic life. Elimination of internal transactions All significant transactions and balances between companies in the group have been eliminated. GENERAL PRINCIPLES Use of estimates The preparation of the consolidated accounts in accordance with generally accepted accounting practices requires the group s management to create estimates and make assumptions that affect the value of assets, liabilities on the balance sheet and reported revenues and expenses for the financial year. The ultimate values that are generated may deviate from these estimates. BASIC PRINCIPLE FOR VALUATION AND CLASSIFICATION OF ASSETS AND LIABILITIES Assets intended for long-term ownership or use are classed as fixed assets. Other assets are classed as current assets. Receivables falling due within a year are classed as current assets. Similar criteria have been applied when classifying current and long-term liabilities. Fixed assets are valued at their acquisition cost but are then written down to their fair value if the impairment loss is not deemed to be temporary. Fixed assets with a limited economic life are written down on a straightline basis. Current assets are valued at either acquisition cost or fair value, whichever is lower. Other long-term and current liabilities are valued at their nominal value. Certain items have been valued on the basis of other principles and are described below. TANGIBLE FIXED ASSETS Tangible fixed assets are recognised in the balance sheet at acquisition cost less accumulated depreciation and write-downs. If the fair value of a fixed asset is lower than its book value, and the reasons for this are not deemed to be temporary, the fixed asset will be written down to its fair value. Expenses in connection with ordinary maintenance and repairs are recognised on a current basis. Expenses relating to major replacements and renewals that significantly extend the life of the fixed assets will be capitalised. Periodic classification and maintenance costs normally occur every five years, and the annual cost is included in the operating expenses for vessels in the income statement. 34

35 The cost price of new vessels is broken down into classification costs and written down ordinarily together with other capitalised classification costs. INVESTMENTS IN ASSOCIATED COMPANIES Associated companies are companies in which the group has a stake of 20 50% where the investment is of a longterm and strategic nature and where the group is able to exercise significant influence. Associated companies are valued using the cost method of accounting in the company accounts but are incorporated using the equity method of accounting in the consolidated accounts. The group s share of the profit/loss of an associated company is based on the profit/loss after tax of the associated company less any depreciation of excess value caused by the cost price of the assets being higher than the acquired share of the book equity. The share of the profit/loss of the associated company is classed as a financial item in the income statement. Assets in associated companies are classed as fixed assets in the balance sheet. The group s share of the profit/loss of associated companies that are subject to partner assessment is based on the profit/loss before tax. Tax on the share of the profit/loss is classed together with the group s other tax liabilities. RECEIVABLES Trade receivables and other receivables are recognised at their nominal value less provisions for anticipated losses. Provisions for losses are made on the basis of an individual assessment of each receivable. PENSIONS Defined benefit pension plans are valued at the current value of future pension benefits accrued on the balance sheet day for accounting purposes. Plan assets are valued at their fair value. Changes to defined benefit pension liabilities caused by changes to the pension plans are distributed over the estimated average remaining contribution period. The accumulated effect of changes in estimates and in financial and actuarial assumptions (actuarial gains and losses), lower than 10% of the greater of the defined benefit pension liabilities and the plan assets at the beginning of the year, is not recognised. When the accumulated effect is above 10% the excess is recognised in the income statement over the estimated average remaining contribution period. The net pension cost in the period is classed as payroll and personnel costs. LONG-TERM LOANS Debts to credit institutions are entered at their nondiscounted value. Set-up charges and standby fees are recognised as financial items on a current basis. Building loan interest is capitalised under vessels under construction. FINANCIAL INSTRUMENTS Assets and liabilities linked to interest rate swaps and similar derivatives undertaken for the purposes of hedging are not recognised in the balance sheet. FOREIGN CURRENCY Monetary items in foreign currencies are converted using the exchange rate on the balance sheet day. REVENUE The sale of goods is recognised as income at the time of delivery. Services are recognised as income as and when they are performed. COSTS Generally speaking, costs are recognised in the same period as the associated income. In cases where there is no clear relationship between costs and income the distribution is determined on the basis of discretionary criteria. TAXES Taxes include both payable tax and changes in deferred tax. Companies taxed under the special shipping company tax rules are not taxed on the operating profit. Shipping taxation requires detailed rules to be observed, and voluntary or compulsory withdrawal from the scheme will result in ordinary corporate taxation on the operating profit. Deferred tax/tax assets are calculated on all differences between the book value and taxable value of assets and liabilities. Deferred tax is calculated at a rate of 28% on the basis of the temporary differences between book value and taxable value and on tax loss carryforward at the end of the financial year. Net deferred tax assets are recognised in the balance sheet when it is likely that they will be utilised. The tax payable for the tax year is adjusted for any errors in estimates for previous years. The tonnage tax paid is classed as an operating expense. CASH FLOW STATEMENT The cash flow statements have been prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other current, liquid assets. 35

36 NOTE 2 SEGMENT INFORMATION The group is predominantly a supply, ATHS and standby operator, and its revenues pertain mostly to these activities. Operating revenues can be broken down into the various areas of operation as follows: AHTS PSV Standby Subsea Management fees and construction supervision Other Total operating revenues NOTE 3 PAYROLL COSTS, REMUNERATION, LOANS TO EMPLOYEES ETC. Payroll costs Wages and salaries National Insurance contributions Pension costs Other payroll-related benefits Net wage scheme and educational support Rebilled to other companies Total payroll costs Average number of full-time equivalents AUDITOR S FEES (in whole NOK) Auditor s fees excluding VAT may be broken down as follows: Statutory auditing Other certification services Other assistance Total auditor s remuneration NOTE 4 INTANGIBLE ASSETS Goodwill Historical cost Additions 0 Historical cost Accumulated depreciation Depreciation for the year Accumulated depreciation Book value as at Economic life 5 år NOTE 5 TANGIBLE FIXED ASSETS Vessels Vessels Operating Total under equipm., constr. and fixt. Historical cost Additions REMUNERATION No remuneration has been paid to the CEO of the parent company. The CEO is employed by the subsidiary Simon Møkster Shipping AS and receives a salary from this company. An allocation of NOK 557 has been made for directors fees. NET WAGE SCHEME The group has received funding from the refund scheme for seamen of NOK 61,016 along with educational support of NOK 2,244. These sums have been offset against payroll costs. LOANS TO EMPLOYEES Total loans and security pledged in favour of employees stood at NOK 1,107 as at Loans are subject to interest in accordance with the ordinary interest rate applicable to such loans. Reclassification Historical cost Accumulated depreciation Depreciation for the year Accumulated depreciation Historical cost Economic life 25 years 3-5 years Depreciation schedule Linear Linear 36

37 NOTE 6 CLASSIFICATION AND MAINTENANCE COSTS Book value as at capitalised classification/ maintenance costs for the year Disposals in connection with sale of vessels 0 0 Depreciation for the year Historical cost Periodic classification and maintenance costs are depreciated over 5 years. NOTE 7 INVESTMENTS IN ASSOCIATED COMPANIES KS NORTH SEA SAFETY The limited partnership is jointly owned (50/50) with Torghatten ASA, and its business is the operating of PSVs. The vessel was delivered in March The company s head office is in Brønnøysund. The voting share corresponds to the ownership interest. The group s share of uncalled/unpaid capital in the limited partnership was NOK 520 as at SP/F TEAM BEREDSKAP The company is jointly owned (50/50) with Torghatten ASA, and its business is the operating of standby vessels. Its registered office is in Tórshavn in the Faroe Islands. The voting share corresponds to the ownership interest. STRIL OFFSHORE AS The company s business is to act as a general partner to Stril Offshore DIS, which is consolidated in the group. The company has a stake in the internal partnership of 1%. Its registered office is in Oslo. The group s ownership interest as at is 50%. The voting share corresponds to the ownership interest. MARINER SP/F The company s business is the operating and crewing of PSVs on bareboat charters from Stril Power AS. Its registered office is in the Faroe Islands. The ownership interest as at is 100%. The voting share is also 100%. MR SUBSEA AS/KS MR SUBSEA The companies are jointly owned (50/50) with Fugro N.V., which owns the companies through RUE AS. KS MR Subsea owns a multi-purpose support vessel that was delivered in December Its registered office is in Stavanger. The voting share corresponds to the ownership interest. The group s share of uncalled/unpaid capital in the limited partnership was NOK 14,625 as at KS North Sp/f. Team Stril Off- MRSub- MR Sub- Sea Safety Beredskap shore AS sea AS sea KS Opening balance as at Share of profit/ loss for the year Reduction of capital Capital increase Closing balance as at Opening balance as at Share of profit/loss for the year Reduction of capital Capital increase Closing balance as at NOTE 8 BANK DEPOSITS ETC. The item bank deposits, cash etc. includes restricted tax withholding deposits of NOK 15,833. NOTE 9 SHARE CAPITAL AND SHAREHOLDER INFORMATION Number Nominal Share of shares value capital Share capital as at The shares are held by the following shareholders: Steinsøy Invest AS (Anne Jorunn Møkster, general manager Mokalf AS (Alf Møkster, board member) Moksim AS ( Astrid Simone Møkster, board member) All shares have equal voting rights. 37

38 NOTE 10 PENSION LIABILITIES The company is obliged to operate an occupational pension scheme in accordance with the act relating to compulsory occupational pension. The company s pension schemes satisfy the provisions of this act. DEFINED BENEFIT OCCUPATIONAL PENSION Through its subsidiary Simon Møkster Shipping AS the group operates a defined benefit pension scheme for both seamen and office staff. As at the scheme included 323 working employees and 59 pensioners. The scheme entitles members to defined future benefits. These are largely dependent on the number of years of service, the salary upon reaching retirement age and the size of National Insurance benefits. The pension scheme is financed by accumulated funds organised by an insurance company Current value of pension contributions for the year Interest cost of pension liabilities Return on plan assets Amortisation of actuarial losses 448 National Insurance contributions 896 Net pension costs NOTE 11 LIABILITIES TO CREDIT INSTITUTIONS The table below gives a summary of the maturity profile for the group s interest-bearing debts based on contractual non-discounted cash flows Less than 1 year to 5 years More than 5 years Total interest-bearing loans HEDGING OF INTEREST RATE RISK: 89% of the group s interest-bearing debt is subject to variable interest, 3 months or 6 months NIBOR + margin. The remainder is subject to fixed interest. Variable interest-bearing debt is hedged against changes in interest rates by entering into fixed interest agreements. As at % of the group s interest-bearing debts were fixed rate loans or loans hedged with a fixed interest rate. The fair value of the interest rate swaps implies a liability that the company has elected not to recognise in the balance sheet. The following table describes the unrecognised liability and the maturity dates of the group s financial instruments exposed to changes in interest rates: Pension scheme for seamen: Accrued pension liabilities Market value of plan assets Unrecognised change in actuarial gains/losses National Insurance contributions Net recognised pension liabilities Pension scheme for office staff: Accrued pension liabilities Market value of plan assets Unrecognised change in actuarial gains/losses National Insurance contributions Net recognised plan assets Financial assumptions: Discount rate 3,8% Expected wage inflation/g adjustment 4,0% Expected pension increase 2,8% Expected annual return on plan assets 4,6% The actuarial assumptions are based on assumptions generally applied in the insurance industry with regard to demographic factors. Amount Maturity date The interest rate swaps have been entered into as cash flow hedging of the interest rate risk on long-term debts. Hedge accounting has been used in accordance with the Norwegian Accounting Standards Board s NRS (F) Financial Instruments. The fair value of the unrecognised liabilities is NOK -27,959. Two put options have also been written on interest rate swaps with a principal of NOK 132,000 and maturity date in These do not qualify for hedge accounting and constitute a recognised liability of NOK -4,193. COLLATERAL The group s vessels with associated insurance cover and contracts, operating equipment, trade receivables and bank deposits have been pledged as security. 38

39 NOTE 12 UNRECOGNISED GUARANTEES, LIABILITIES ETC. UNCALLED/UNPAID CAPITAL IN LIMITED/ INTERNAL PARTNERSHIPS The share of uncalled capital in the subsidiary Stril Offshore DIS was NOK 74,375 as at The share of uncalled capital in the subsidiary Møkster Supply KS was NOK 50,534 as at NEWBUILD CONTRACTS As at the group has a newbuild contract for the construction of an area standby vessel by a Spanish shipyard with completion due in Newbuild contracts were also entered into with STX Europe in 2010 for the delivery of two supply vessels with delivery due in 2011 and The total contract sum as at was NOK 1,192,000. NOTE 13 TAX The tax liabilities for the year may be broken down as follows: Tax payable under the Norwegian shipping taxation scheme Adjustment in payable tax based on new shipping taxation scheme Changes in deferred tax Refundable tax payable from previous years Excess/insufficient provision for payable tax in previous years Total tax Summary of temporary differences: Fixed assets Pension liabilities Other liabilities Profit and loss account Loss carryforward Total temporary differences Deferred tax assets, 28% Reconciliation of tax with ordinary profit/loss before tax % tax on profit/loss before tax Effect of shipping taxation scheme Estimated effect of new shipping taxation scheme Excess/insufficient provision for payable tax in previous years Permanent differences Estimated tax Tax payable in the balance sheet: Change to new shipping taxation scheme long-term part Change to new shipping taxation scheme short-term part Tax payable in tax liabilities for the year Tax payable in the balance sheet The group has included companies that are part of the special shipping taxation scheme. Those companies that were subject to the shipping taxation scheme in 2006 and that have elected to adopt the new shipping taxation scheme as of 2007 were obliged to carry out a revenue settlement with taxation of previously exempt revenues in connection with the transition. As a consequence of the Supreme Court s ruling of 12 February 2010, in which the transitional regulations were ruled unconstitutional, a voluntary settlement arrangement was introduced. The settlement is carried out by taking a sum equal to two thirds of the estimated profit at the time of joining the scheme, dividing it by 2.8 and taking it to income with equal portions for the tax years 2010, 2011 and Tax on the remaining third of the profit, on which final exemptions have been dependent on environmental investments, will be waived with definitive effect. The group has elected to apply this arrangement to its subsidiaries Simon Møkster Rederi AS, Møkster Supply AS and Stril Power AS. For these companies the settlement arrangement implies a tax liability of NOK 36,451 payable in equal parts in 2011, 2012 and Liabilities falling due in 2012 and 2013 have been reserved as long-term payable tax. The tonnage tax is classed as other operating expense and reserved as current liabilities in the balance sheet. NOTE 14 EQUITY Share Other Other Total Minority capital paid-in equity equity interests Equity as capital at Minority share of capital increase Dividends to minority interests Profit/loss for the year Equity as at

40 AT SIMON MØKSTER WE DO OUR UTMOST TO SOLVE CHALLENGES AND IDENTIFY ALTERNATIVES!

41 SIMON MØKSTER HOLDING AS INCOME STATEMENT Operating revenue Note Sales revenue Other operating revenue Total operating revenue Operating expenses Payroll costs Other operating expenses Total operating expenses Operating profit/loss Financial income and expenses Income from investments in subsidiaries and associated companies Other financial income 2 32 Other financial expenses Net financial items Ordinary profit/loss before tax Tax on ordinary profit Profit/loss for the year Transfers and allocations Transfers other equity

42 SIMON MØKSTER HOLDING AS BALANCE SHEET Fixed assets Note Intangible assets Deferred tax assets Total intangible assets Financial fixed assets Investments in subsidiaries Total financial fixed assets Total fixed assets Current assets Receivables Other receivables Total receivables Bank deposits, cash etc Total current assets Total assets

43 Equity Note Paid-in capital Share capital Share premium reserve Total paid-in capital Retained earnings Other equity Total retained earnings Total equity Liabilities Current liabilities Other current liabilities Total current liabilities Total liabilities Total equity and liabilities desember 2010 Stavanger, 11. april 2011 John Arild Ertvaag Alf Møkster Arne Lier Chairman Director Director Arne L. Økland Astrid Simone Møkster Anne Jorunn Møkster Director Director CEO 43

44 SIMON MØKSTER HOLDING AS CASH FLOW STATEMENT Note Cash flow from operations Ordinary profit/loss before tax Proceeds from investments in subsidiaries Change in other accruals Net cash flow from operations Cash flow from investments Change in intragroup balances Change in investments in subsidiaries Net cash flow from investments Cash flow from financing activities Net cash flow from financing activities 0 0 Net change in cash and cash equivalents Cash and cash equivalents at the start of the period Cash and cash equivalents at the end of the period

45 NOTE 1 - ACCOUNTING PRINCIPLES The annual financial statements have been prepared in accordance with the provisions of the Accounting Act and generally accepted accounting practices. The figures provided in the income statements are all given in NOK 1,000 unless otherwise stated. CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS Current assets and current liabilities normally include items that fall due within one year of the balance sheet date as well as items linked to the circulation of goods. Other items are classed as fixed assets/long-term liabilities. Current assets are valued at either acquisition cost or fair value, whichever is lower. Current liabilities are recognised at their nominal value at the time they were incurred. INVESTMENTS IN SUBSIDIARIES Shares in subsidiaries are valued using the cost method of accounting. Investments are valued at the acquisition cost of the shares unless depreciation has become necessary. They are depreciated to fair value when the fall in value is due to circumstances that cannot be assumed to be temporary and it is deemed necessary in accordance with generally accepted accounting practices. RECEIVABLES Other receivables are recognised in the balance sheet at their nominal value less provisions for anticipated losses. Provisions for losses are made on the basis of an individual assessment of each receivable. TAX The tax liability in the income statements comprises the tax payable and the change in deferred tax for the period. Temporary differences concerning financial items are offset by calculating deferred tax (assets), which is 28% of the net temporary differences. Accounts entries follow the general valuation rules for balance sheet entries. CASH FLOW STATEMENT The cash flow statements have been prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other current, liquid assets. NOTE 2 - REMUNERATION AND FEES Director s fees National Insurance contributions Payroll costs The company has no employees Directors fees are paid and recognised as an expense by Simon Møkster Shipping. Auditor s fees (in whole NOK) Auditor s fees excluding VAT may be broken down as follows: Statutory auditing Other assistance Total auditor s remuneration NOTE 3 - INVESTMENTS IN SUBSIDIARIES Company Registered Ownership Voting Value in office interest share balance sheet Simon Møkster Rederi AS Stavanger 100 % 100 % Simon Møkster Shipping AS Stavanger 100 % 100 % Totalt NOTE 4 - INTRAGROUP BALANCES Other current receivables Other current liabilities NOTE 5 SHARE CAPITAL AND SHAREHOLDER INFORMATION Number Nominal Share of shares value capital Share capital as at The shares are held by the following shareholders: Steinsøy Invest AS (Anne Jorunn Møkster) Mokalf AS (Alf Møkster) Moksim AS (Astrid Simon Møkster) All shares have equal voting rights NOTE 6 - TAX The tax liabilities for the year may be broken down as follows: Change in deferred tax Total tax Calculation of tax basis for the year: Ordinary profit/loss before tax Permanent differences Loss carryforward/allocated (-) Taxable profit 0 0 Tax payable (28%) 0 0 Summary of temporary differences: Loss carryforward Total Deferred tax assets (28%)

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48 Simon Møkster Holding AS P.O. Box 108, Skogstøstraen 37, N-4001 Stavanger, Norway Telephone: Fax: