FINANCIAL REPORT Q3 2019 - DOF Subsea

FINANCIAL REPORT

Q3 2019

DOF Subsea ASThormøhlens gate 53 C5006 BergenNORWAYwww.dofsubsea.com

IndexFinancial Report 3rd quarter 2019 . . . . . . . . . . . . . . . . . . .4

Financial statements 3rd quarter 2019 . . . . . . . . . . . . . . .8

Consolidated statement of comprehensive income . . . . . . . . . . . 8

Consolidated statement of financial position . . . . . . . . . . . . . . . . . . 9

Consolidated statement of cash flows. . . . . . . . . . . . . . . . . . . . . . . . 11

Consolidated statement of changes in equity . . . . . . . . . . . . . . . . 12

Notes to the financial statements . . . . . . . . . . . . . . . . . . 14

Note 1 Management reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Note 2 Segment information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Note 3 Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Note 4 Financial income and expenses . . . . . . . . . . . . . . . . . . . . . . . 17

Note 5 Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Note 6 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Note 7 Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Note 8 Net interest-bearing debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Note 9 Financial instruments and hedging activities . . . . . . . . 23

Note 10 Transactions with related parties. . . . . . . . . . . . . . . . . . . . 24

Note 11 Investments in associates and joint ventures. . . . . . 24

Note 12 Shareholder information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Note 13 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Note 14 Events after period end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Note 15 Changes in accounting policies 2019 . . . . . . . . . . . . . . 26

Note 16 Performance measurement definitions . . . . . . . . . . . . . 27

Supplemental information . . . . . . . . . . . . . . . . . . . . . . . . . 28

Condensed statement of comprehensive income 5 last quarters 28

Condensed statement of financial position 5 last quarters. 29

Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Financial Report Q3 2019 | DOF SUBSEA GROUP

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Financial Report 3rd quarter 2019

figures are based on total available days, including yard stay days for dry docking, repair and upgrade/conversion, transits and idle time.

Operational events in the quarterAs of 30 September 2019, the number of subsea employees was 1319, and the Group’s fleet comprised of 24 owned vessels, 3 chartered-in vessels and 74 ROVs.

During the 3rd quarter, the Asia Pacific region has conducted IMR and construction work for Shell in the Philippines and in Australia, IMR and survey work for Chevron and PTTEP, and mooring and installation work for Yinson in Malaysia. In the Atlantic region, the Group has executed engineering, survey, IMR and decommissioning work for Shell, Conoco Phillips, Repsol and Equinor in the North Sea, in addition to survey and positioning work for Total in Angola and for the Norwegian Mapping Authority in the North Sea. In the North America region, the Group has conducted IMR and installation work for Husky Energy, Shell, Chevron, Anardarko, Talos and Saipem, in addition to RSV services for Argas in the Middle East. In the Brazil region, the Group has been engaged in AUV, ROV inspection and diving work for Petrobras and Sapura Energy. During the quarter, DOF Subsea Brazil started ROV operations on three long term contracts with Petrobras. In addition, the joint venture with TechnipFMC has provided pipelay services for Petrobras.

In the Long term Chartering segment, Skandi Acergy ended her long term contract in August and is currently operating under a new long term contract where the Group is taking utilisation risk on the vessel until April 2020. Since end August, the vessel has been idle. Skandi Niteroi has started mobilising for a medium term job for TechnipFMC in Brazil. Skandi Vitoria has remained idle for the quarter.

During the quarter, the Group has been awarded several short-term contracts in the Subsea/IMR Projects segment, including the renewable industry.

Utilisation 3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 2018

Long-term Chartering 72 % 77 % 76 % 73 % 75 %

Subsea/IMR Projects 80 % 67 % 63 % 67 % 76 %

Fleet 78 % 70 % 67 % 69 % 75 %

Consolidated statement of comprehensive income and consolidated statement of financial positionThe Group adopted the new accounting standard IFRS 16 Leases 1st of January 2019. The Group has applied the sim-plified transition approach and comparative amounts for the year prior to first adoption are not restated.

In the 3rd quarter of 2019, the Group achieved an operating revenue of NOK 1 150 million compared to an operating revenue of NOK 958 million in the 3rd quarter of 2018. Operating profit before depreciation and impairment (EBITDA) was NOK 338 million (NOK 271 million in 2018). The operating profit after depreciation and impairment (EBIT) was negative with NOK 425 million (NOK 73 million). Depreciation and impairment amounted to NOK 762 million (NOK 197 million), comprising of depreciation of NOK 146 and impairment of tangible assets of NOK 363 million and goodwill of NOK 253

HeadlinesIn the 3rd quarter of 2019, the DOF Subsea Group had an operating revenue of NOK 1 150 million (NOK 958 million in the 3rd quarter of 2018) with an operating profit before depreciation and impairment (EBITDA) of NOK 338 million (NOK 271 million). The operating profit (EBIT) was negative NOK 425 million (NOK 73 million) after depreci-ation and impairment of NOK 762 million (NOK 197 million). The net financial loss was NOK 488 million (loss NOK 159 million), and the loss before tax was NOK 913 million (loss NOK 86 million).

For the first nine months of 2019, the Group had an operating revenue of NOK 2 956 million (NOK 2 797 million) with an operating profit before depreciations and impairment (EBITDA) of NOK 868 million (NOK 820 million). The Operating profit (EBIT) was negative NOK 252 million (NOK 198 million) after depreciation and impairment of NOK 1 120 million (NOK 623 million). The net financial loss for the first nine months was NOK 643 million (loss NOK 380 million) and the loss before tax was NOK 896 million (loss of NOK 182 million).

During the 3rd quarter, the Group has recognised an impairment of tangible assets of NOK 363 million, goodwill of NOK 253 million and deferred tax asset of NOK 162 million, due to continued challenging market for vessel services and uncertainty regarding the long term financial solution. In addition, an impairment on the joint venture vessels Skandi Vitoria and Skandi Niteroi of NOK 120 million has been recognised, affecting the share of net profit of associates and joint venture in the Group’s P&L.

Key figures (NOK million) 3Q 2019 3Q 2018 YTD 2019 YTD 2018

Operating revenue 1 150 958 2 956 2 797

EBITDA 338 271 868 820

EBIT -425 73 -252 198

Net interest-bearing debt 8 951 8 387 8 951 8 387

EBITDA proportional method 545 376 1 356 1 060

The current market conditions have led to challenges with regards to regular rollover of loans and refinancing of vessels. During the 2nd quarter the Group faced difficulties of obtaining a long term refinancing of a vessel and the Group was given extension of this loan until end of November and further to end December. The Management is working on a long term financial solution, however there is still uncertainty if such an agreement will be achieved.

The market conditions within our industry remains challenging with oversupply of subsea vessels, resulting in continued pressure on vessel earnings and challenges with utilisation of both personnel and assets. In the 3rd quarter, the Group has improved the performance in all regions compared to 1st and 2nd quarter, but there is still pressure on rate levels. By the end of the quarter, all vessels within the Subsea/IMR segment were in operation. In the Long-term Charter segment Skandi Acergy and the joint venture PLSV Skandi Vitoria were idle, while Skandi Niteroi was mobilising for a medium term job. The average vessel utilisation in the Subsea/IMR Projects segment were 80 % for the quarter whilst the utilisation of the vessels within Long-term Charter segment were 72 %. For the fleet in total, the utilisation was 78 %. The utilisation

| Financial Report Q3 2019DOF SUBSEA GROUP

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million. In addition, an impairment on the joint venture vessels Skandi Vitoria and Skandi Niteroi of NOK 120 million has been recognised, affecting the share of net profit of associates and joint venture.

Net financial loss was NOK 488 million (loss NOK 159 million). The loss before tax was NOK 913 million (loss NOK 86 million), and the loss for the period was NOK 1 090 million (loss NOK 98 million).

Due to uncertainty in forecasting the amount, timing of future taxable profits and the reversal of temporary differences has increased, Management has revised its estimates of future taxable profits and has recognized a tax cost of NOK 162 million in the period.

NOK million 3Q 2019 3Q 2018 Change %

Operating revenue 1 150 958 20 %

EBITDA 338 271 25 %

EBIT -425 73 -682 %

The Group’s total assets were NOK 15 600 million (NOK 16 129 million), whereas non-current assets amounted to NOK 13 759 million (NOK 14 287 million), including NOK 143 million (NOK 581 million) in intangible assets. Current assets were NOK 1 841 million (NOK 1 841 million), of which NOK 686 million (NOK 748 million) was cash and cash equivalents.

The total equity was NOK 4 719 million (NOK 6 063 million), including non-controlling interests of NOK 182 million (NOK 199 million). Non-current liabilities were NOK 6 824 million (NOK 7 549 million). Current liabilities were NOK 4 057 million (NOK 2 516 million), of which NOK 3 160 million (NOK 1 772 million) was current portion of debt. The Group’s total equity and liabilities were NOK 15 600 million (NOK 16 129 million). The net interest-bearing debt (NIBD) was NOK 8 951 million (NOK 8 387 million). At the end of the 3rd quarter, the book equity ratio was 30%.

NOK million 30 .09 .2019 30 .09 .2018 Change %

Total assets 15 600 16 129 -3 %

Tangible assets 10 755 11 232 -4 %

Cash and cash equivalents 686 748 -8 %

Net interest-bearing debt 8 951 8 387 7 %

Total equity 4 719 6 063 -22 %

Cash and cash equivalents have changed due to operating, investing and financing activities. Net cash flow from operating activities in the 3rd quarter was NOK 19 million (NOK -109 million). Cash flow from investing activities was NOK 228 million (NOK -57 million), of which NOK 43 million (NOK -71 million) was from investment in assets that increase or will increase capacity for the Group. Cash flow from financing activities was NOK -314 million (NOK -104 million), related to proceeds of interest-bearing debt, instalments and repayments on long-term interest-bearing debt. At the end of the 3rd quarter, the Group’s cash and cash equivalents were NOK 686 million (NOK 748 million).

Debt, financing and liquidityThe Group’s interest-bearing debt was NOK 9 875 million (NOK 9 208 million), the current portion of interest-bearing debt at

the end of September was NOK 3 078 million (NOK 1 688 million), including balloons, bond, drawn credit facility and ordinary instalments. During the quarter the Group has paid ordinary instalments and interest. In the joint venture with TechnipFMC, a new loan was drawn on the vessel Skandi Recife.

During 2019, some banks have signalised reluctancy to finance assets within in the OSV industry. In the 2nd quarter, the Group faced difficulties of obtaining a refinancing of a vessel and the Group was given extension of this loan until end of November and further to end December while the Group is working on a long term financial solution.

Financial riskThe Group’s operating income is in NOK, USD, AUD, GBP, CAD and BRL, while the Group’s loans are distributed between NOK, USD and CAD. This exposes the Group to the risk of exchange rate fluctuations. The Group has an active exchange rate policy and uses derivatives to hedge the exchange rate exposure and interest rate exposure.

ShareholdersBy quarter end, the shares in DOF Subsea AS were owned by DOF ASA (64.9%), FRC Lux Holding Limited (30.6%) and Dolphin Invest 2 AS (4.5%). The number of outstanding shares is 167 352 762, with a book equity of NOK 28.2 per share.

During November, a sale purchase agreement between DOF ASA and FRC Lux Holding Limited and Dolphin Invest 2 AS has been reached regarding the transfer of shares from FRC Lux Holding Limited and Dolphin Invest 2 AS to DOF ASA. The transaction is completed and DOF ASA now own 100% of DOF Subsea AS.

EmployeesAt the end of 3rd quarter, the number of employees in the Group was 1 319. The number does not include marine employees that are employed in DOF Management and Norskan and hired in through shipman agreements to operate the Group’s vessels.

The FleetAt the end of 3rd quarter, the Group’s fleet comprised 24 owned vessels, in addition to 3 chartered-in vessels.


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In the Asia Pacific Region, the Group has secured several contracts in the Subsea/IMR Project segment. The contracts include IMR and light construction and the region will utilise Skandi Hercules and Skandi Singapore for a total of 130 vessel days.

The North America Region has secured a 3-year frame agreement for IMR and light construction services in Trinidad. The region will utilise Skandi Neptune, with commencement for the first offshore job in early December. In addition, the region has won a 21-day contract for AUV services in the GoM, utilising Geosea.

The Group has also won a contract for the Hywind Tampen offshore wind farm project, where the Group will deliver marine operations in a 50/50 partnership (joint venture) with Kværner. The scope includes full project management, engineering, assembly site management, mooring system installation, units tow-to-field and installation of the floating wind turbine units at the Tampen area. Several state-of-the-art construction vessels will be deployed from DOF Subsea during project phases.

After period end, the Group has continued its work to secure a long term financial solution. The Group is making progress with its stakeholders, including a constructive dialogue with key banks to adapt bank facilities to the current market envi-ronment. Further, the Group is in discussion with the bondholders, whereas the bondholders in DOFSUB07 has agreed to postpone the maturity of the instalment due 22nd of October to December. In addition, the majority shareholder in DOF Subsea, DOF ASA, has announced that they will support an equity injection in DOF Subsea if a satisfactory refinancing for the DOF Group is achieved (including DOF Subsea). Based on the current dialogue with all stakeholders, the best estimate for reaching an agree-ment on the long term solution is by the end of the year, however no assurance can be given at this stage.

During November, a sale purchase agreement between DOF ASA and FRC Lux Holding Limited and Dolphin Invest 2 AS has been reached regarding the transfer of shares from FRC Lux Holding Limited and Dolphin Invest 2 AS to DOF ASA. After the transaction, DOF ASA will own 100% of DOF Subsea AS.

The BacklogAs at end of 3rd quarter, the firm contract backlog amounted to NOK 13.7 billion. However, the Group is exposed to the short-term market conditions in the Subsea/IMR Projects segment, and the backlog on some of the key assets in this segment are low. In this segment the management is working to increase the backlog and improve the utilisation of personnel and assets.

Contract Backlog** Contract backlog includes DOF Subsea’s share of joint venture vessels but excludes master service agreements (MSAs) within the subsea/IRM Projects segment. Under the MSAs only confirmed POs are accounted for.

Events after period endAfter period end, the Group has been awarded several contracts in the Subsea/IMR Project segment, securing utilisation for both vessels and resources.

In the Atlantic Region, the Group has secured a contract to deliver integrated FSV services, project management and engi-neering in Angola and a mooring refurbishment and installation project in Ghana. Under the contracts, the region will utilise Skandi Seven and Skandi Skansen respectively. In the North Sea, Fugro has extended the contract on Skandi Carla until end of October 2020.

2019 2020 2021 2022 2023 ThereafterOptions Revenue 0,0 0,5 1,0 1,2 1,2 14,8Firm Revenue 1,2 3,1 2,5 1,9 1,7 3,3

0,0

5,0

10,0

15,0

20,0

NOK

billi

on

Firm Revenue Options Revenue


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Bergen, 27 November 2019 The Board of Directors of DOF Subsea AS Contact information:Mons S. Aase, CEO +47 916 61 012Marianne Møgster +47 993 06 916

DOF Subsea ASThormølens gate 53 C5006 Bergenwww.dofsubsea.com

OutlookThe market is expected to remain challenging, with variations between the different regions, still the Board of Directors states that the financial numbers for the first three quarter of the year are according to expectations.

The Group will maintain its strategy to secure the fleet on long-term contracts and is actively working on keeping the firm employment of the fleet as high as possible. The Group will further continue to adapt its cost level and adjust its capacity to the challenging markets.

The majority of the Group’s Long-term Chartering assets are committed on firm contracts and represent the largest portion of the Group’s backlog. A continuing weak market will however increase the risk of lower earnings of the Group’s vessels and combined with an increased financing-/refinancing risk put more pressure on the Group’s liquidity position.

As a result of the continued challenging market situation, the risk of lower utilisation and earnings represents the main operational risk for the Group. As previously reported, the Group has experienced that regular refinancing (rollover) of existing loans are challenging. In the 2nd quarter, the Group was given extension of a rollover of a loan facility until end November and further to December 2019. The Management and the Board of Directors are working on a long term financial solution for the Group. The discussion with the relevant stake-holders have been constructive and the progress is good. However, no assurance can be given that the Group will be successful in this respect. The effect of not being able to obtain a long term financial solution will affect the classification of debt (described in note 6 ‘Net interest bearing debt’ to the quarterly accounts) and may also affect the ‘going concern’ assumption. If the Group cannot be treated as ‘going concern’, the valuation of the Group’s assets must be further revised. The Group has applied for temporary deferral of instalments until 20th December. Approval has been received from the majority of the lenders, however the final outcome is uncertain as discussions are still ongoing. Even though there is uncertainty if a long term financial solution will be achieved, the Board of Directors and Management believes that a solution is obtainable within year end.


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Amounts in NOK million

Financial statements 3rd quarter 2019

Consolidated statement of comprehensive income

Note 3Q 2019 3Q 2018 YTD 2019 YTD 2018 2018

Operating revenue 1, 2, 3 1 150 958 2 956 2 797 3 742

Operating expenses -848 -766 -2 291 -2 278 -3 063Share of net profit / loss of associates and joint ventures 1, 11 32 78 200 300 403Profit from sale of non-current assets 3 - 3 1 1

Operating profit before depreciation and impairment (EBITDA) 1, 2 338 271 868 820 1 085

Depreciation and impairment 5 -762 -197 -1 120 -623 -913

Operating profit (EBIT) -425 73 -252 198 172

Financial income 4, 15 18 15 59 41 96Financial expenses 4, 15 -149 -126 -437 -360 -507Realised net gain / loss on derivative instruments and currency position 4 -46 -59 -72 -91 -168Unrealised net gain / loss on derivative instruments and currency position 4 -312 11 -193 29 -214Net financial income / loss -488 -159 -643 -380 -794

Profit / loss before tax -913 -86 -896 -182 -622Income tax expense -178 -12 -205 -28 -46

Profit / loss for the period -1 090 -98 -1 101 -210 -668

Other comprehensive income net of taxItems that may be subsequently reclassified to profit / lossCurrency translation difference (CTA) -45 3 -29 -39 -19Share of other comprehensive income of associates and joint ventures 11 123 20 114 20 123Other - - - - 1

Other comprehensive income / loss net of tax 78 23 85 -19 105

Total comprehensive income / loss for the period net of tax -1 013 -75 -1 016 -229 -563

Total comprehensive income / loss attributable to:Non-controlling interests -15 -1 -12 4 -2Owners of the parents -997 -74 -1 004 -233 -562


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Consolidated statement of financial position

Assets Note 30 .09 .2019 30 .09 .2018 31 .12 .2018

Tangible assets 5 10 755 11 232 11 100Goodwill 85 359 337Deferred tax asset 58 222 220Investments 1, 11 1 866 1 346 1 553Non-current receivables 9, 15 994 1 128 1 204Total non-current assets 13 759 14 287 14 414

Trade receivables 879 806 631Other current receivables 9 276 288 289Current receivables 1 155 1 094 920

Restricted cash 136 214 223Unrestricted cash and cash equivalents 549 534 919Cash and cash equivalents 8 686 748 1 142

Total current assets 1 841 1 841 2 062

Total assets 15 600 16 129 16 476


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Equity and liabilities Note 30 .09 .2019 30 .09 .2018 31 .12 .2018

Paid-in equity 12 4 344 4 344 4 344Other equity 193 1 520 1 197Non-controlling interests 182 199 194Total equity 4 719 6 063 5 735

Bond loans 8 2 168 1 930 2 480Debt to credit institutions 8 4 292 5 591 5 278Lease liabilities 15 337 10 -Other non-current liabilities 9 27 18 34Total non-current liabilities 6 824 7 549 7 793

Current portion of debt 8 3 160 1 772 2 177Trade payables 531 410 406Other current liabilities 9 366 334 366Total current liabilities 4 057 2 516 2 949

Total liabilities 10 881 10 066 10 742

Total equity and liabilities 15 600 16 129 16 476



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Consolidated statement of cash flows

Note 3Q 2019 3Q 2018 YTD 2019 YTD 2018 2018

Operating profit (EBIT) -425 73 -252 198 172Depreciation and impairment 5 762 197 1 120 623 913Profit from sale of non-current assets -3 - -3 -1 -1Share of net profit / loss of associates and joint ventures 1, 11 -32 -78 -200 -300 -403Change in trade receivables -182 -70 -248 49 223Change in trade payables 111 -29 125 18 14Changes in other working capital -86 -14 -56 97 25Exchange rate effect on operating activities 44 -47 -34 -115 -73Cash flow from operating activities 189 32 453 568 869

Interest received 6 - 43 5 6Interest paid -172 -129 -455 -383 -519Tax paid -4 -12 -19 -16 -32Net cash flow from operating activities 19 -109 23 173 324

Sale of tangible assets 6 - 5 1 1Purchase of tangible assets 5 -43 -71 -163 -193 -267Net cash flows from other non-current receivables 265 14 477 27 27Cash flow from investing activities 228 -57 320 -165 -239

Proceeds on non-current debt - 150 - 632 1 558Instalments on non-current debt -314 -224 -752 -930 -1 524Payments from non-controlling interests - -31 - -31 -31Cash flow from financing activities -314 -104 -752 -328 3

Net change in cash and cash equivalents -67 -270 -410 -320 88

Cash and cash equivalents, including restricted cash, at period start 817 1 017 1 142 1 097 1 097

Exchange rate effect on cash and cash equivalents -65 - -47 -29 -43

Cash and cash equivalents, including restricted cash, at period end 686 748 686 748 1 142

Restricted cash at period end is NOK 136 million (NOK 214 million) and is in included in Cash and cash equivalents. Changes in restricted cash is reflected in the cash flow.


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Consolidated statement of changes in equity

Share

capital

Share

premium

Other paid-in capital

Paid-in equity

Retained earnings

Currency translation

differences

Other equity

Non- controlling

interests

Total

equity

Equity at 01 .01 .2019 1 674 540 2 130 4 344 1 155 42 1 197 194 5 735

Profit / loss for the period - - - - -1 089 - -1 089 -12 -1 101Other comprehensive income for the period - - - - 114 -29 85 - 85Total comprehensive income for the period - - - - -975 -29 -1 004 -12 -1 016

Equity at 30 .09 .2019 1 674 540 2 130 4 344 180 13 193 182 4 719

Equity at 01 .01 .2018 1 674 540 2 130 4 344 1 716 62 1 778 226 6 348

Profit / loss for the period - - - - -214 - -214 4 -210Other comprehensive income for the period - - - - 20 -39 -19 - -19

Total comprehensive income for the period - - - - -194 -39 -233 4 -229

IFRS 9 implementation effect - - - - -25 - -25 - -25

Equity at 30 .09 .2018 1 674 540 2 130 4 344 1 497 23 1 520 199 6 063


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Notes to the financial statements

Note 1 Management reporting

Joint ventures are accounted for by using the equity method of accounting. Under the equity method, the investment is initially recognised at cost and adjusted thereafter to recognise the Group’s share of profits or losses and movements in other comprehensive income in the investee.

In management reporting the Group uses the proportionate consolidation method when accounting for joint ventures. Proportionate consolidation method implies full consolidation for subsidiaries, and consolidation of 50% of the comprehensive income and financial position for the joint ventures. Proportional consolidation method is used to better reflect the operating performance for vessels in the joint ventures and are the basis for management reporting to the Board of Directors.

At the end of the 3rd quarter of 2019 the joint venture owns six PLSVs.

The bridge between the management reporting and the figures reported in the financial statements are presented below:

3Q 2019Consistent with

management reporting

Reconciliation to equity

method 3Q 2019

YTD 2019Consistent with

management reporting

Reconciliation to equity

method YTD 2019

Operating revenue 1 458 -308 1 150 3 818 -862 2 956 Operating expenses -909 61 -848 -2 456 166 -2 291 Share of net income of associates and joint ventures -7 39 32 -10 209 200 Profit from sale of non-current assets 3 - 3 3 - 3 Operating profit before depreciation and impairment (EBITDA) 545 -208 338 1 356 -487 868

Depreciation and impairment -938 176 -762 -1 385 264 -1 120 Operating profit (EBIT) -393 -32 -425 -29 -223 -252

Financial income 6 12 18 19 40 59 Financial expenses -204 55 -149 -596 159 -437 Realised net gain / loss on derivative instruments and currency position -47 2 -46 -76 4 -72 Unrealised net gain / loss on derivative instruments and currency position -340 28 -312 -227 35 -193 Net financial income / loss -585 97 -488 -881 238 -643

Profit / loss before tax -978 65 -913 -910 15 -896 Income tax expense -112 -65 -178 -191 -15 -205

Profit / loss for the period -1 090 - -1 090 -1 101 - -1 101


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Note 1 Management reporting (continued from previous page)


30 .09 .2019Consistent with

management reportingReconciliation

to equity method 30 .09 .2019

Intangible assets 314 -170 144 Tangible assets 17 366 -6 612 10 755 Financial assets 422 2 439 2 861 Total non-current assets 18 102 -4 343 13 759 Other current assets 1 342 -187 1 155 Cash and cash equivalents 1 051 -366 686 Total current assets 2 393 -552 1 841 Total assets 20 495 -4 895 15 600





Total equity 4 719 - 4 719

Non-current liabilities 11 119 -4 295 6 824 Current liabilities 4 657 -600 4 057 Total liabilities 15 776 -4 895 10 881 Total equity and liabilities 20 495 -4 895 15 600

Consolidated statement of cash flows




Net cash flow from operating activities 513 -491 23Cash flow from investing activities -921 1 240 320Cash flow from financing activities 59 -811 -752Net change in cash and cash equivalents -348 -61 -410

Cash and cash equivalent at the beginning of the period 1 430 -288 1 142Exchange rate effect on cash and cash equivalents -61 5 -56Cash and Cash equivalents at the end of the period 1 051 -366 686


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Operating segments are determined based on the information given to the Group’s operating decision-makers for the purposes of allocating resources and assessing performance. Segments are reported to the chief operating decision-makers on a regular basis.

The segment reporting below is presented according to management reporting, with principle as described in note 1, and reconciled to the financial statement.

Note 2 Segment information

The Group’s revenue from contracts with customers has been disaggregated and presented in the tables below:

The Group’s business is divided into two business segments: Subsea/IMR Projects and Long-term Chartering.

The Group has gradually built the Subsea/IMR Projects segment to become a global provider of subsea services with a core focus on IMR. In addition to the IMR market, the Subsea/IMR Projects segment has focused on mooring, light construction and survey work utilising the Group’s core competences and assets.

The Long-term Chartering segment covers letting of vessels to thirdparty charterers and is managed through the Group’s associated company DOF Management AS and Norskan Offshore Ltda. The Long term Chartering segment is built on DOF Subsea’s long standing as an internationally recognised vessel owner and operator of high-end subsea vessels.

Operating revenue consistent with management reporting

3Q 2019

3Q 2018

YTD 2019

YTD 2018

2018

Long-term Chartering 489 397 1 411 1 175 1 574Subsea/IMR Projects 969 787 2 407 2 266 3 033Total consistent with management reporting 1 458 1 184 3 818 3 441 4 607Reconciliation to equity method -308 -226 -862 -644 -865

Total 1 150 958 2 956 2 797 3 742

EBITDA consistent with management reportingLong-term Chartering 364 315 1 058 908 1 203Subsea/IMR Projects 181 61 298 150 199Total consistent with management reporting 545 376 1 356 1 058 1 402

Reconciliation to equity method -208 -105 -487 -238 -317Total 338 271 868 820 1 085

Operating revenue

3Q 2019

3Q 2018

YTD 2019

YTD 2018

2018

Lump sum contracts 131 21 243 59 125Day rate contracts 1 019 938 2 712 2 738 3 617Total operating revenue 1 150 958 2 956 2 797 3 742

Note 3 Operating revenue


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Note 4 Financial income and expenses

Financial income and expenses 3Q 2019 3Q 2018 YTD 2019 YTD 2018 2018

Interest income 17 13 54 37 52Other financial income 1 2 5 5 45Financial income 18 15 59 41 96

Interest expenses -142 -119 -416 -341 -481Other financial expenses -6 -7 -20 -19 -27Financial expenses -149 -126 -437 -360 -507

Realised foreign currency net gain/loss on non-current debt 49 -23 52 -62 -74

Realised foreign currency net gain / loss on current receivables / liabilities -64 -6 -43 -11 -47Realised net gain / loss on financial derivatives -31 -30 -81 -18 -47

Realised net gain / loss on derivative instruments and currency position -46 -59 -72 -91 -168

Unrealised foreign currency net gain / loss on non-current debt -250 -13 -217 -5 -149

Unrealised foreign currency net gain / loss on current receivables / liabilities 11 -7 2 -51 -40

Net change in unrealised gain / loss on financial derivatives -73 31 22 85 -25

Unrealised net gain / loss on derivative instruments and currency position -312 11 -193 29 -214

Net financial income / loss -488 -159 -643 -380 -794


18


Note 5 Tangible assets

30 .09 .2019

Vessels & periodic maintenance

ROVs

Operating equipments

Right-of-use assets

Total

Net booked value 31 .12 .18 10 033 730 338 - 11 100Implementation of IFRS 16 Leases - - - 284 284Net booked value 01 .01 . 10 033 730 338 284 11 384

Additions 107 105 30 6 249Disposal - - - -2 -2Reclassification - 9 -10 - -Depreciation -229 -119 -51 -31 -429Impairment -439 - - - -439Currency translation differences -10 - 2 -1 -9Net booked value 30 .09 . 9 463 725 311 257 10 755

30 .09 .2018 Vessels & periodic

maintenance

ROVsOperating

equipments

Newbuilds

Total

Net booked value 01 .01 . 10 525 856 381 11 11 773Additions 146 3 36 8 193Reclassification - 20 -6 -14 -Depreciation -227 -116 -63 - -406Impairment -216 - -1 - -217Currency translation differences -96 -4 -11 - -111Net booked value 30 .09 . 10 131 760 355 5 11 232

The vessels have been assessed for impairment on an individual basis as separate cash generating units. The impairment testing of the vessels resulted in impairment losses of NOK 363 million in Q3 and NOK 439 million year to date. The weak marked in the estimated future cash flow is prolonged compared to previous periods, including the uncertainty regarding the Group’s financial position.

Accounting PolicyThe Group estimates the vessels recoverable amount. The vessels recoverable amount is the higher of the vessels fair value less costs of disposal and its value in use. Impairment losses are recognised for vessels where the recoverable amount is lower than book value.

In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate. In determining fair value less costs of disposal the Group uses average of brokers’ estimates, taken into account sales commission.

Due to a limited number of vessel transactions in the current market the brokers’ estimates only to a limited extent represent the results of transactions in the market. The Group has sought to substantiate the broker valuations with value in use calculations for all vessels. Broker valuations are used where the Group can substantiate the broker valuations.Value in useValue in use is determined using a discounted cash flow model under the ‘Going concern’ assumption. The estimated future cash flows applied in value in use calculations are based on the Group’s most recently approved long-term forecasts. Management reviews and approve changes in the long-term forecasts on a regular basis, and at least quarterly. Cash flow estimates are established based on the Group’s principles and assumptions and are consistently applied. They are based on historical performance per vessel, in combination with current market situation and future expectations. Due to a prolonged weak marked and risk towards market recovery, the estimated future cash flow has been revised to reflect these risks. While Management believes that estimates of future cash flows are reasonable, changes in assumptions could materially affect value in use calculations.

Net booked value of right-of-use assets at 3rd quarter 2019 consists of property with NOK 250 million and operating equip-ments of NOK 7 million.


19


Note 6 Goodwill

Goodwill is allocated to the Group`s two operating segments; Long term Chartering segment and Subsea/IRM segment. For goodwill in the Subsea/IMR Projects segment, recoverable amount is calculated based on discounted cash flows extracted from next year’s budgets and forecasts covering 5 years. No real growth is expected after 5 years. For the Long-term Chartering segment, value in use is the sum of value in use for all vessels allocated to the segment.

Goodwill is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable.

Continued challenging market situation, low utilisation on vessels, equipment and personnel has resulted in lower earnings and higher risk in both segments for a longer period. Furthermore, market recovery takes longer than previously assumed. To reflect the challenging market situation and delay in market recovery, management has reassessed estimated future cash flows and recognised an impairment of NOK 117 million in Subsea/IRM segment and NOK 136 million in the Long term Chartering segment. After impairment a goodwill of NOK 85 million is recognised. Recongised goodwill is allocated to the Long term Chartering segment.

Impairment losses on goodwill can not be reversed.

For further information about accounting policies for goodwill please refer to Annual Report for 2018.

Note 7 Tax

Deferred tax asset is recognised in the consolidated statement of financial position on the basis of unused tax losses carried forward or deductible temporary differences to the extent that it is probable there will be sufficient future earnings available against which the loss carried forward or deductible can be utilised.

Continued challenging market situation, low utilisation on vessels, equipment and personnel has resulted in lower earnings and increased risk in some tax jurisdictions. In this context the inherent uncertainty in forecasting the amount, timing of future taxable profits and the reversal of temporary differences has increased. As a result of this, management has revised its estimates for future taxable profits and has recognised a tax cost of NOK 162 million in the period.

At end of Q3 2019 the Group has recognised deferred tax asset of NOK 58 million, mainly related to operation in Brazil.

For further information about accounting policies for deferred tax asset and tax loss carried forward please refer to Annual Report for 2018.


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Note 8 Net interest-bearing debt

30 .09 .2019 30 .09 .2018 31 .12 .2018

Non-current interest-bearing debt Bond loans 2 168 1 930 2 480Debt to credit institutions 4 292 5 591 5 278Lease liabilities 337 - -Total non-current interest-bearing debt 6 797 7 521 7 759

Current interest-bearing debtBond loans 467 - 100Debt to credit institutions 2 533 1 688 1 969Lease liabilities 78 - -Total current interest-bearing debt 3 078 1 688 2 069

Total non-current and current interest-bearing debt 9 875 9 208 9 827

Net interest-bearing debtCash and cash equivalent 686 748 1 142Other interest-bearing assets - non-current 238 73 79Total net interest-bearing debt 8 951 8 387 8 606

Current portion of debt in the statement of financial position includes accrued interest expenses. Accrued interest expenses are excluded in the current interest-bearing debt above.

Total net interest-bearing debt is redefined with the implementation of IFRS 16 Leases. Below is the impact as result of the new accounting standard:

31 .12 .2018Implementation of

IFRS 16 Leases 01 .01 .2019

Total non-current interest-bearing debt 7 759 394 8 153Total current interest-bearing debt 2 069 75 2 144

Total non-current and current interest-bearing debt 9 827 470 10 297

Net interest-bearing debtTotal interest-bearing assets 1 221 185 1 406Total net interest-bearing debt 8 606 285 8 891


21


Amortised costs are not included in the repayment profile above.

A non-current loan has been provided by Eksportfinans and is invested as a restricted deposit. The repayment terms on the loan from Eksportfinans are equivalent with the reduction on the deposit. The loan is fully repaid in 2020. The cash deposit is included in restricted deposits.

As a result of the continued challenging market situation, the risk of lower utilisation and earnings represents an increased risk for the Group. As previously reported, the Group has experienced that regular refinancing (rollover) of existing loans are challenging. During the 3rd quarter, the Group was given extension of a rollover until end of December. The management and the Board of Directors are working on a long-term financial solution for the Group.

The effect of not being able to obtain a long-term financial solution, this may result in a reclassification of the Group’s non-current debt to credit institutions and bond loans from non-current debt to current debt. If a reclassification should occur, the consequence will be that the amount of current debt will increase by NOK 6.5 billion at period end.

Debt repayment profileQ4

2019Q1

2020Q2

2020Q3

2020

Total current

debtQ4

2020 2021 2022 2023 Thereafter Total

Bond loan 92 - 375 - 467 - - 1 337 840 - 2 644Debt to credit institutions 477 251 229 216 1 174 305 647 564 483 1 051 4 224Debt to credit institutions, balloons 842 - - 516 1 358 - 328 172 764 - 2 621Total repayment 1 412 251 605 732 3 000 305 974 2 073 2 087 1 0515 9 490

Cash changes Non-cash changes

Interest bearing debtBalance

31 .12 .18Implementation of

IFRS 16 Leases Cash flowsProceed lease

debtAmortised loan

expenseCurrency

adjustmentBalance

30 .09 .19

Bond loans 2 580 - - - -3 59 2 636 Debt to credit institutions 7 247 - -694 82 8 181 6 824 Lease liabilities - 470 -58 - - 4 415

Total interest bearing debt 9 827 470 -752 82 5 244 9 875

Cash and non-cash changes in total borrowingsChanges in total borrowings over a period consists of both cash effects (disbursements and repayments) and non-cash effects (amortisations and currency translation effects). The following is the changes in the Group’s borrowings:

The table below summarises the repayment profile of the Group’s financial liabilities, excluding interests:

Note 8 Interest-bearing debt (continued from previous page)


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Share of debt secured by fixed interest rate:

Fixed rateBalance

30 .09 .2019

NOK 69% 4 432USD 79% 4 669CAD 100% 389Total debt 75% 9 490

Note 8 Interest-bearing debt (continued from previous page)

Financial covenants

The Group’s long-term financing agreements include the following covenants (based on the proportionate consolidation method of accounting for joint ventures): • The Group shall have available cash of at least NOK 500 million at all times*• The Group shall have value-adjusted equity to value-adjusted assets of at least 30%• The Group shall have book equity of at least NOK 3 000 million at all times• The Group shall have positive working capital at all times, excl. current portion of debt to credit institutions• The fair value of the Group’s vessels shall always be at least 110-130% of the outstanding loan amount

In addition to the above mentioned financial covenants, the loan agreements are also subject to the following covenants:• The Group’s assets shall be fully insured• There shall not be any change to classification, flag, management or ownership of the ships without the prior written approval of the lenders• DOF ASA shall be the principal shareholder in DOF Subsea AS, and own a minimum of 50.1 % of the shares• DOF Subsea AS shall not performe merge or demerge activities without the prior written approval of the lenders • DOF Subsea AS shall report financial information to the lenders and Oslo Stock Exchange on a regular basis • The Group’s vessels shall be operated in accordance with applicable laws and regulations

The Group is in compliance with all covenants at period end.

*The NOK 500 million requirement is waived to NOK 400 million for the rest of 2019.


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30.09.2019 30.09.2018Instrument Received Contract amount Contract amountForeign exchange contracts NOK/USD 1 732 1 651Foreign exchange contracts NOK/EUR 500 478Foreign exchange contracts USD/NOK 175 -

Note 9 Financial instruments and hedging activities

30 .09 .2019 30 .09 .2018

Assets Liabilities Assets Liabilities

Non-current and current portionInterest rate swaps 22 7 43 10Foreign exchange contracts 7 89 20 34Total non-current and current 29 96 63 43

Non-current portionInterest rate swaps 22 5 43 7Foreign exchange contracts - 11 3 4Total non-current portion 22 16 47 10

Total current portion 7 80 17 33

As of period end the Group held the following foreign exchange rate derivatives, not qualified for hedge accounting:


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Note 12 Shareholder information

Name No . shares Shareholding Voting shares

DOF ASA 108 683 241 64,9% 64,9%FRC Lux Holding Limited 51 131 358 30,6% 30,6%Dolphin Invest 2 AS 7 538 163 4,5% 4,5%Total 167 352 762 100 % 100 %

During November, a sale purchase agreement between DOF ASA and FRC Lux Holding Limited and Dolphin Invest 2 AS has been reached regarding the transfer of shares from FRC Lux Holding Limited and Dolphin Invest 2 AS to DOF ASA. The transaction is completed and DOF ASA now own 100% of DOF Subsea AS.

Note 10 Transactions with related parties

Description of transactions with related parties is given in the Group’s Annual Report for 2018. There are no major changes in type of transactions between related parties during the third quarter 2019. The Group has receivables and liabilities towards DOF ASA, Norskan, DOF Management and Marin IT related to operations.

Note 11 Investments in associates and joint ventures

The Group has the following investments in associated and joint ventures accounted for using the equity method:

Name of entityPlace of business /

country of incorporation Industry% of ownership

interestNature of

relationshipMeasurement

method

DOFCON Brasil Group Norway Subsea Chartering 50% Joint Venture EquityDOF Management Group Norway Vessel management and operation 34% Associate EquityMarin IT AS Norway IT 35% Associate EquityMaster and Commander AS Norway Seismic Chartering 20% Associate Equity

TotalBooked value of investments 01.01 1 553Share of net profit / loss for the period 200Share of other comprehensive income 114Booked value of investments 30 .09 1 866

Reconciliation of the aggregate carrying amounts in investments:


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Note 14 Events after period end

After period end, the Group has been awarded several contracts in the Subsea/IMR Project segment, securing utilisation for both vessels and resources.

In the Atlantic Region, the Group has secured a contract to deliver integrated FSV services, project management and engineering in Angola and a mooring refurbishment and installation project in Ghana. Under the contracts, the region will utilise Skandi Seven and Skandi Skansen respectively. In the North Sea, Fugro has extended the contract on Skandi Carla until end of October 2020.

In the Asia Pacific Region, the Group has secured several contracts in the Subsea/IMR Project segment. The contracts include IMR and light construction and the region will utilise Skandi Hercules and Skandi Singapore for a total of 130 vessel days.

The North America Region has secured a 3-year frame agreement for IMR and light construction services in Trinidad. The region will utilise Skandi Neptune, with commencement for the first offshore job in early December. In addition, the region has won a 21-day contract for AUV services in the GoM, utilising Geosea.

The Group has also won a contract for the Hywind Tampen offshore wind farm project, where the Group will deliver marine operations in a 50/50 partnership (joint venture) with Kværner. The scope includes full project management, engineering, assembly site management, mooring system installation, units tow-to-field and installation of the floating wind turbine units at the Tampen area. Several state-of-the-art construction vessels will be deployed from DOF Subsea during project phases.

After period end, the Group has continued its work to secure a long term financial solution. The Group is making progress with its stakeholders, including a constructive dialogue with key banks to adapt bank facilities to the current market environment. Further, the Group is in discussion with the bondholders, whereas the bondholders in DOFSUB07 has agreed to postpone the maturity of the instalment due 22nd of October to December. In addition, the majority shareholder in DOF Subsea, DOF ASA, has announced that they will support an equity injection in DOF Subsea if a satisfactory refinancing for the DOF Group is achieved (including DOF Subsea). Based on the current dialogue with all stakeholders, the best estimate for reaching an agreement on the long term solution is by the end of the year, however no assurance can be given at this stage.

During November, a sale purchase agreement between DOF ASA and FRC Lux Holding Limited and Dolphin Invest 2 AS has been reached regarding the transfer of shares from FRC Lux Holding Limited and Dolphin Invest 2 AS to DOF ASA. After the transaction, DOF ASA will own 100% of DOF Subsea AS.

Note 13 General

This Financial Report has been prepared in accordance with the standard for interim reporting (IAS 34). The Financial Report does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s Annual Report for 2018. The Financial Report is unaudited.


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Note 15 Changes in accounting policies 2019

IFRS 16 Leases replaces the current standard IAS 17 Leases and related interpretations. IFRS 16 Leases removes the current distinction between operating and financing leases for lessees, and requires recognition of an asset (the right to use the leased item) and a financial liability representing its obligation to make lease payments. The Group adopted the standard at January 1, 2019.

The Group applied the simplified transition approach and comparative amounts for the year prior to first adoption are not restated.

Reference is made to note 32 ‘Accounting policies’, paragraph Z. in the Group’s annual report 2018 for a detailed description of policy- and transition choices made upon the implementation of the standard. There have been no changes to these elements.

The implementation of the standard has increased the statement of financial position with lease liabilities, net investments and right-of-use assets. The Group’s equity has not been impacted by the implementation of IFRS 16. The following line items in the financial report have been impacted as result of the new accounting standard:

Consolidated statement of financial position 31 .12 .2018Implementation of

IFRS 16 Leases 01 .01 .2019

Tangible assets 11 100 284 11 384 Other non-current receivables 3 314 185 3 499 Total non-current assets 14 414 470 14 884 Total current assets 2 062 - 2 062 Total assets 16 476 470 16 946

Total equity 5 735 - 5 735

Non-current liabilities 7 793 394 8 187 Current liabilities 2 949 75 3 024 Total liabilities 10 742 470 11 212 Total equity and liabilities 16 476 470 16 947

Lease expenses within the scope of the standard are removed and replaced by depreciation of right-of-use assets and interest costs. Lease income within the scope of the standard are removed and replaced by interest income.

Reconciliation of lease commitments to lease liabilities 01 .01 .2019Operating lease commitments (IAS 17) at 31 December 2018 583Practical expedient related to short-term- and low-value leases -76Effect of discounting -77Escalation and amendments to lease agreements 40Lease liabilities recognised at initial application 470

The table below presents a reconciliation of the Group’s operating lease liabilities as reported under IAS 17 Leases per 31 December 2018, and the IFRS 16 lease liability recognised on 1 January 2019.


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Alternative performance measurementsThe Group’s presents alternative performance measurements (APM) that are regularly reviewed by management and aim to enhance the understanding of the Group’s performance. APMS are calculated consistently over time and are based on financial data presented in accordance with IFRS and other operational data as described in the table below.

Measure Description Reason for including

Operating profit before depreciation (EBITDA)

EBITDA is defined as operating profit, including profit from sale of non-current assets, before impairment of tangible and intangible assets, depreciation of tangible assets and amortisation of contract assets. EBITDA represents earnings before interest, tax, depreciation and amortisation, and is a key financial parameter for the Group.

This measure is useful in evaluating operating profitability on a more variable cost basis as it excludes depreciation, impairment and amortisation expenses related primarily to capital expenditures and acquisitions that occurred in the past. EBITDA shows operating profitability regardless of capital structure and tax situations with the purpose of simplifying comparison in the same industry.

EBITDA marginEBITDA margin presented is defined as EBITDA divided by operating revenue.

Enables comparability of profitability relative to operating revenue.

Operating profit (EBIT) EBIT represents earnings before interest and taxEBIT shows operating profitability regardless of capital structure and tax situations.

EBIT marginEBIT margin presented is defined as EBIT divided by operating revenue.

Enables comparability of profitability relative to operating revenue.

Net interest-bearing debt

Net interest-bearing debt consists of both current and non-current interest-bearing liabilities less interest bearing financial assets, cash and cash equivalents. Non-current receivables from joint ventures are not included in net interest-bearing debt. Cash and cash equivalents will include restricted cash. Current interest-bearing debt includes interest-bearing debt related to asset held for sale.

Net interest-bearing debt is a measure of the Group’s net indebtedness that provides an indicator of the overall statement. It measures the Group’s ability to pay all interest-bearing liabilities within available interest bearing financial assets, cash and cash equivalents, if all debt matured on the day of the calculation. It is therefore a measurement of the risk related to the Group’s capital structure.

Working capitalThe working capital position of the Group is equal to current assets less current liabilities.

It is a measure of the Group’s liquidity and efficiency, and demonstrates the Group’s ability to pay its current liabilities.

Return on net capital Profit / loss for the period divided by equity.

Return on net capital represents the total return on equity capital and shows the Group’s ability to turn assets into profits.

Equity ratio Equity divided by assets at the reporting date.Measure capital contributed by shareholders to fund the Group’s assets.

Value-adjusted equity ratio

Value-adjusted equity divided by value-adjusted assets at the reporting date. The market value is used for the vessels.

Measure capital contributed by shareholders to fund the Group’s assets.

Book value equity per share Equity divided by number of shares outstanding.Measures the Group’s net asset value on a per-share basis.

Value-adjusted equity per share

Value-adjusted equity divided by number of shares outstanding. The market value is used for the vessels.

Measures the Group’s net asset value on a per-share basis.

Other definitions

Measure Description

Market valueCalculated average vessel value between several independent brokers’ estimates based on the principle of “willing buyer and willing seller”.

Vessel utilisation

Vessel utilisation is a measure of the Group`s ability to keep vessels in operation and on contract with clients, expressed as a percentage. The vessel utilisation numbers are based on actual available days, including yard-stay days for dry docking, repair and upgrade/conversion, transits and idle time.

Contract backlog

Sum of undiscounted revenue related to secured contracts in the future and optional contract extensions as determined by the client in the future. Contract backlog excludes master service agreements (MSAs) within the Subsea/IMR Projects segment. Under the MSAs only confirmed POs are included.

Firm contract backlogSum of undiscounted revenue related to secured contracts in the future. Secured contracts are contracts signed with clients in the past, covering future delivery of services.

Backlog optionsSum of undiscounted revenue related to optional contract extensions as determined by the client in the future.

Note 16 Performance measurement definitions


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Supplemental information

Condensed statement of comprehensive income 5 last quarters

3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 2018

Operating revenue 1 458 1 257 1 103 1 166 1 184

Operating expenses -909 -809 -738 -824 -810Share of net income of associates and joint ventures -7 -3 - -1 2Profit from sale of non-current assets 3 - - - -Operating profit before depreciation and impairment (EBITDA)

545 445 365 342 376

Depreciation and impairment -938 -238 -209 -343 -235Operating profit (EBIT) -393 207 156 -1 141

Financial income 6 6 6 14 5Financial expenses -204 -193 -200 -194 -177Realised gain / loss on financial instruments -47 27 -56 -78 -59Unrealised gain / loss on financial instruments -340 11 102 -244 10Net financial income / loss -585 -148 -148 -501 -220

Profit / loss before tax -261 59 9 -503 -79Tax expenses -112 -45 -33 44 -19

Profit / loss for the period -1 090 14 -25 -458 -98

The supplemental information below is presented according to management reporting, based on the proportionate consolidation method. Proportionate consolidation method implies full consolidation for subsidiaries, and consolidation of 50% of the comprehensive income and financial position for the joint ventures.


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Condensed statement of financial position 5 last quarters

Assets 3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 2018

Intangible assets 314 651 679 688 628Tangible assets 17 366 17 489 17 707 16 847 16 615Financial assets 422 431 453 283 281Total non-current assets 18 102 18 571 18 840 17 818 17 523

Other current assets 1 342 1 128 1 165 1 101 1 309Cash and cash equivalents 1 051 1 092 1 152 1 430 1 011

Total current assets 2 393 2 219 2 317 2 532 2 320

Total assets 20 495 20 790 21 156 20 350 19 843

Equity and liabilities 3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 2018

Paid in equity 4 344 4 344 4 344 4 344 4 344Other equity 193 1 191 1 170 1 197 1 520Non-controlling interests 182 197 195 194 199Total equity 4 719 5 732 5 708 5 735 6 063

Bond loans 2 168 2 087 2 474 2 480 1 930Debt to credit institutions 8 564 8 664 9 030 8 605 8 833Other non-current liabilities 387 375 412 45 35Total non-current liabilities 11 119 11 126 11 915 11 130 10 798

Current portion of debt to credit institutions 3 618 3 090 2 715 2 554 2 090Other current liabilities 1 039 843 817 930 893Total current liabilities 4 657 3 932 3 533 3 484 2 983

Total liabilities 15 776 15 058 15 448 14 615 13 780

Total equity and liabilities 20 495 20 790 21 156 20 350 19 843

Key figures

3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 2018

Profit per share (NOK) -6.58 0.09 -0.15 -2.74 -0.59EBITDA margin 36 % 35 % 33 % 29 % 32 %EBIT margin -0.76 % 16.49 % 14.19 % -0.12 % 12 %Return on net capital -23.3 % 0.3 % -0.4 % -8 % -2 %Book value equity per share (NOK) 28.20 34.25 34.11 34.27 36.23Value-adjusted equity per share (NOK) 43.85 45.03 45.14 45.81 45.67Net interest-bearing debt (NOK million) 13 280 12 721 12 774 11 983 11 642


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DOF Subsea currently owns one of the largest fleet of high-end construction vessels (including newbuilds) in the world. These assets offer a versatile, new generation of high-powered and purpose-built vessels with broad offshore capabilities.

Owned vessels

Skandi Acergy

Geograph Geoholm Geosea

Geosund

Skandi Carla Skandi Constructor

Skandi Achiever

Skandi Hawk

Skandi Africa Skandi BuziosSkandi Açu

DOF Subsea vessels


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Skandi Skansen

Skandi Patagonia

Skandi Vitoria

Skandi Salvador

Skandi Seven Skandi Singapore

Skandi Neptune Skandi NiteroiSkandi Hercules

Skandi Vinland

Skandi Recife

Skandi Olinda


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Harvey Deep-Sea Harvey Sub-Sea

Chartered-in vessels

DOF Subsea charters in vessels on short and long-term contracts based on operational needs, building greater flexibility and a complementary fleet mix to meet our clients’ subsea challenges.

Skandi Darwin

DOF Subsea vessels (continued)

AUSTRALIA

DOF Subsea Australia Pty Ltd5th Floor, 181 St. Georges TcePerth, Wa 6000 AUSTRALIAPhone: +61 8 9278 8700Fax: +61 8 9278 8799

DOF Management Australia5th Floor, 181 St. Georges TcePerth, Wa 6000 AUSTRALIAPhone: +61 3 9556 5478 Mobile: +61 418 430 939

BRAZIL

DOF Subsea Brasil Serviços LtdaRua Fiscal Juca, 330 Q: W2 – L: 0001 Loteamento Novo Cavaleiros Vale Encantado – Macaé/RJ BRAZIL - CEP 27933-450 Rio address: Rua Lauro Muller 116 – Offices1701 – BotafogoRio de Janeiro – RJBRAZIL – CEP: 22290-160Phone: +55 21 2103-5708

CANADA

DOF Subsea Canada26 Allstone Street, Unit 2Mount Pearl, NewfoundlandCANADA, A1N 0A4Phone: +1 709 576 2033Fax: +1 709 576 2500

SINGAPORE

DOF Subsea Asia Pacific Pte Ltd25 Loyang CrescentBlock 302 TOPS Avenue 1#01-11Singapore 508988Phone: +65 6561 2780Fax: +65 6561 2431

DOF Management Pte Ltd25 Loyang CrescentBlock 302 TOPS Avenue 3#01-11Singapore 508988Phone: +65 6868 1001Fax: +65 6561 2431

GLOBAL HQ

DOF Subsea ASThormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 55 25 22 00Fax: +47 55 25 22 01

NORWAY

DOF Subsea Norway ASThormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 55 25 22 00Fax: +47 55 25 22 01

SEMAR ASOksenøystein 121366 Lysaker NORWAYPhone: +47 67 12 40 06Fax: +47 67 12 40 06

DOF Management ASAlfabygget5392 StorebøNORWAY

Thormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 56 18 10 00Fax: +47 56 18 10 06

ANGOLA

DOF Subsea AngolaBelas Business Park-Talatona Edificio Bengo, 1º AndarSala 106/107, LuandaRepublic of AngolaPhone: +244 222 43 28 58Fax: +244 222 44 40 68Mobile: +244 227 28 00 96 +244 277 28 00 95

UNITED KINGDOM

DOF Subsea UK LtdHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 1224 614 000Fax: +44 1224 614 001

DOF Subsea S&P UK LtdHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 1224 614 000Fax: +44 1224 614 001

CSL EngineeringHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 1224 285 566Fax: +44 1224 285 599

DOF (UK) LtdHorizons House, 81-83 Waterloo Quay Aberdeen, AB11 5DE UNITED KINGDOMPhone: +44 12 24 58 66 44Fax: +44 12 24 58 65 55

USA

DOF Subsea USA Inc5365 W. Sam Houston Parkway Suite 400, Houston, Texas 77041, USAPhone: +1 713 896 2500Fax: +1 713 726 5800

DOF Subsea ASThormøhlens gate 53 C

5006 BergenNORWAY

www.dofsubsea.com

FINANCIAL REPORT Q3 2019 - DOF Subsea

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