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02 / about us / vard / Annual Report 2012

Contents 02 About Us

10 CEO Letter

12 Chairman’s Statement

14 Board of Directors

16 Executive Management

18 Shareholding and Corporate Structure

20 Financial Highlights

24 Core Products and Services

34 Operational Review

40 Significant Events

42 Deliveries

44 Order Book

46 Risk Management

48 Sustainability and Social Responsibility

52 Investor Relations

54 Outlook

56 Corporate Governance Report

64 Corporate Information

66 Statutory Financial Reports

134 Statistics of Shareholdings

136 Notice of Annual General Meeting

142 Contact Information

vard is the new brand name adopted by the STX OSV group of companies. Following the sale by STX Europe of its 50.75% stake in the shares of STX OSV Holdings Limited, the Company is no longer part of STX Business Group. Following a rebranding and renaming process that is currently ongoing, VARD will also replace STX OSV in the names of all subsidiaries of STX OSV Holdings Limited. A resolution to rename the Company itself to Vard Holdings Limited will be tabled at the Annual General Meeting on 23 April 2013.

The new brand name VARD is used in this report wherever applicable. Only in the Statutory Financial Reports, the names valid as of 31 December 2012 have been retained.

This is the Annual Report of STX OSV Holdings Limited.

VArD has always been built on trust. For generations, trust has been the very foundation of our business, and it has always been the key to our success.

A continuous line of people, working together, handing down experience from one to the next is the root of our culture.

our craftsmanship and determination to always look for new horizons is what will carry this heritage onwards for generations to come.

the future lies with our people, and our core values:

Craftsmanship – Fellowship – Salesmanship

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As a leading global shipbuilder, innovation and close cooperation with our customers is core to our business. We continuously seek improvements

and share best practices in order to keep pushing the boundaries. We aim to empower our employees to deliver groundbreaking technological

solutions to our customers, thereby enabling them to stay ahead in a highly competitive and constantly changing market.

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our local strength builds global competitiveness. Small but important learnings made each and every day accumulate to become our collective experience.

the exchange of know-how builds the competence of our organization and strengthens our fellowship. no matter where in the world our over 9,500

employees are located, we are one team that shares the same goals.

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our global presence provides us with great opportunities to serve our customers, but also commits us to deliver according to consistently high standards of products and services. For each and every one of us, in any department, in any shipyard, in any country, true salesmanship

means focusing on customer needs in everything we do.

VArD – built on trust

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Dear shareholDers,

>> We remain committed to our core values and customer promise - “Built on trust”.

roy reite Chief executive officer and executive Director

10 / ceo letter / vard / Annual report 2012

the past year has been an eventful and rewarding one for VarD. Despite the various challenges brought about by rapidly shifting market conditions and a demanding operating environment in parts of the organization, I am pleased to report that we have delivered a stable performance for 2012, both financially and operationally.

Year in review

the year started out with a record first-half in terms of order intake, most importantly driven by a burgeoning demand for offshore subsea Construction Vessels (osCV), but also expectations for a rebound in the market for anchor handling tug supply vessels (ahts). as expectations for the latter dissipated in the second half, the offshore vessel market became increasingly competitive, not in the

Dear shareholDers,

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least as a result of low activity in other parts of the global shipbuilding industry. still, we were able to secure new orders for 16 vessels, and a combined order intake value of noK 9.5 billion. With 48 vessels scheduled for delivery between 2013 and 2016, the Company has a solid order reserve for the coming years.

In 2012 the majority of our yards experienced continued stable operations and efficient project execution. only Brazil faced a very challenging operational environment. Demonstrating our resilience, we successfully delivered 22 vessels, recorded revenues in excess of noK 11 billion and achieved a respectable eBItDa margin of 13.2%, the second best in the Company’s history after an exceptional 2011.

also in 2012, we saw good progress in the development of our new shipyard in Brazil, which will assume operations this summer. We laid the foundations for continued competitiveness through investments in romania, and invested in r&D and new technology that will help us maintain our position as a preferred partner for clients seeking technologically advanced solutions for their shipbuilding needs. these investments are beginning to bear fruit, as demonstrated by a strong start into the new year in terms of order intake in the first quarter of 2013.

Foundations built on trust

our healthy results against the backdrop of a volatile environment serve as testament to the dedication of our people across the Company, from the naval architects in our design center in norway to steel workers, pipe fitters and electricians in Vietnam, from engineers in romania to the team developing our new yard in Brazil. notwithstanding the complexity of our global presence across ten yards in three continents, we remain indebted to our strong traditions and heritage, to which we owe our solid foundation, current success and future opportunities. Indeed, we have come a long way from what began as a builder of fishing vessels for the needs of the local community to what is today one of the world’s major designers and shipbuilders of advanced and complex offshore and specialized vessels.

although VarD has experienced its fair share of transformation, we have stayed the course and remained steadfast in our core values of Craftsmanship, Fellowship and salesmanship. they represent a focus on delivering quality products and developing new solutions, respect for people and the societies in which we operate, and on always putting the customer first. this has served us well in our approach to business. echoing our customer promise

“Built on trust”, we are proud to say that many of our clients have chosen to stay with us through countless market cycles, by virtue of the strength of our long-term relationships.

acknowledgements

as we look back on 2012, I would like to extend, on behalf of the Company, my gratitude to those who have pledged their commitment and channeled their unwavering support towards all that we have achieved in the past 12 months.

and as we have moved into a new year, I look forward to working constructively with our new majority shareholder Fincantieri in continuing to develop VarD. though still early in the process, I am excited about discovering the opportunities that this new strategic owner may bring, and convinced that it will be to the benefit of all stakeholders.

sincerely,

roy reite Chief executive officer and executive Director

Dear ValueD shareholDers,

12 / chairman’s statement / vard / Annual report 2012

the year just ended has been marked

by significant changes in our Company.

on 23rd January 2013, following the

agreement signed on 21st December

2012, Fincantieri - Cantieri navali

Italiani s.p.a., through its wholly

owned subsidiary Fincantieri oil & Gas

s.p.a., has successfully completed the

acquisition of the majority stake in the

Company from stX europe as.

this acquisition, which represents

a strategic long-term investment

for the Fincantieri Group, marks

Fincantieri’s entry into a market

segment complementary to its current

ones and enhances the position of

the Fincantieri Group as a leading

international player. With 21 shipyards

in 3 different cont