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2013 Second Quarter

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QUARTERLY REPORT CONTENTS  

 

Q2 2013 Financial Highlights    3 

Business Overview    4 

Management’s Discussion and Analysis of Financial Condition and Results of Operations    9 

Consolidated Financial Statements  16 

Consolidated Statement of Financial Position  19 

Consolidated Statement of Comprehensive Income  20 

Consolidated Statement of Changes in Equity  21 

Consolidated Statement of Cash Flows  22 

Notes to the Consolidated Financial Statements  23 

Company Details  33 

 

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$69.2  $79.6 

$13.0 

$161.7 $31.4 

$65.2 

$96.6 

6M 2013 2014 2015 + TOTALCustomer Extension Option Fixed Term Contract

$69.2

$110.9

$78.2

$258.3

Q2 2013 FINANCIAL HIGHLIGHTS

Cash & Cash Equivalents2 ($M)

Revenue & Fleet Utilization ($M)

Footnotes: (1) EBITDA is defined as net profit for the applicable period before finance costs, income tax expense, unrealized gain/loss on fair valuation of interest rate 

swap, equity settled C‐grant expense and depreciation of property and equipment. (2) Cash and cash equivalents excludes 1.4 million in restricted cash held on fixed deposit against bank guarantees.  (3) For further details regarding backlog see: “Management’s Discussion and Analysis of Financial Condition and Results of Operations ‐ Other Financial Data ‐ 

Fleet Utilization and Backlog”.    

Revenue increased to $36.3 million, up 7% versus the year ago period, driven by higher 

rental and services revenues.

Increased gross profit from higher revenues drove rising EBITDA versus the year ago 

quarter.

EBITDA1 ($M)

Strong liquidity and cash position underpinned by free cash flow generation and cash retained 

from bond offering

Backlog Breakdown3 ($M)

Total backlog of $258.3 million provides significant visibility into future revenues  

and cash flows

$25.3 $25.7

Q2 2012 Q2 2013

% Margin

74% 71%

$5.2

$44.0

June 30, 2012 June 30, 2013

$34.0 $36.3

Q2 2012 Q2 2013

Fleet Utilisation

100%

# of ASVs in Fleet

6

97%

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BUSINESS OVERVIEW

We are a leading provider of offshore jack-up accommodation service vessels (“ASVs”) to oil and gas as well as engineering, procurement, installation and commission (“EPIC”) companies operating in the Middle East and North Africa (“MENA”) and Asia-Pacific regions.

ASVs are typically used wherever there is a need for additional offshore accommodation to support a workforce that cannot be accommodated on an offshore oil and gas installation’s own facilities. The ASV is usually linked to the host installation by one or two walkways. The facilities for the personnel on board an ASV include bedrooms, bathrooms, dining halls, recreational facilities (such as cinemas, internet cafes, game rooms, gyms), executive offices and conference rooms. ASVs may also have additional equipment and facilities on board that can be used to support ongoing work on the neighboring installation including cranes, open deck areas, workshops, storage areas and client offices.

Demand for ASVs is often greatest during the production and other post-exploration phases of an offshore oil and gas installation’s lifecycle. As installations age, their need for inspection, maintenance and repair increases, with a resulting need for additional accommodation to support such large-scale work. Inspection, maintenance and repair work carried out on an installation during the production phase is essential to maintaining oil and gas production and therefore drives the majority of ASV demand globally.

We own and operate a fleet of six jack-up ASVs, five of which are currently in the MENA region and one of which is currently in the Asia-Pacific region. All of our ASVs are registered in the Republic of the Marshall Islands (“Marshall Islands”). We have historically operated in the MENA region and entered the Asia-Pacific market in early 2012 with the mobilization of Burj, our sixth and newly-converted ASV, for a contract in the offshore region jointly administered by Australia and Timor-Leste (“Australia/Timor”). We believe demand for ASVs in the Asia-Pacific region is growing and that the market remains underserved.

We were founded in 2007 and are headquartered in Ajman (UAE). We have five registered offices in Singapore (Singapore), Darwin (Australia), Doha (Qatar), Alexandria (Egypt) and Dili (Timor-Leste), as well as a representative office in Abu Dhabi (UAE). We also lease a purpose-built yard, workshop and storage area in Ajman (UAE), near the Hamriyah Port in Sharjah.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Information

The financial statements presented herein are the consolidated financial statements and have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All of the financial information in this report is presented in U.S. dollars, except as otherwise indicated.

Non-IFRS Financial Measures

In this report, we present certain financial measures and ratios, including EBITDA and other operating data, including backlog and fleet utilization rate, that are not presented in accordance with IFRS and which are not IFRS measures.

As used in this report:

• EBITDA is defined as net profit for the applicable period before finance costs, income tax expense, unrealized gain/loss on fair valuation of interest rate swap, equity settled C-grant expense and depreciation of property and equipment. For purposes of our calculation of EBITDA, we do not have amortization of intangible assets in the periods being presented.

• EBITDA margin is defined as EBITDA divided by revenue.

• Adjusted net working capital is defined as inventory, trade and other receivables, trade and other payables, amounts due from a related party and amounts due to a related party, less certain insurance claim expenses and the balance under mortgage financing.

• Net debt is defined as total debt (bank borrowings plus deferred consideration in relation to the Burj acquisition plus the outstanding balance on the mortgage in favor of Lamprell Energy Ltd. in respect of the financing for the conversion of Burj (the “Lamprell Mortgage”)) less bank balances and cash.

We present EBITDA because we believe that (i) it is a useful indicator of our ability to incur and service our indebtedness, (ii) it and similar measures are widely used in our industry as useful indicators or supplemental measures of operating performance and (iii) it can assist certain investors, security analysts and other interested parties in evaluating our operations and performance.

EBITDA is not recognized terms under IFRS. Accordingly, it should not be used as indicator of, or alternative to, revenue, operating profit or operating profit margin or other comparable IFRS metrics, as a measure of operating performance, or of cash flow from operating activities as a measure of liquidity. Our presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results reported under IFRS. In particular, you should not consider EBITDA as an alternative to: (a) operating profit or profit for the period (as determined in accordance with IFRS) as a measure of our operating performance; (b) cash flows from operating, investing and financing activities as a measure of our ability to meet our cash needs; or (c) any other measure of performance under generally accepted accounting principles. The limitations of EBITDA as an analytical tool include: (i) EBITDA and does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) EBITDA does not reflect changes in, or cash requirements for our working capital needs; (iii) EBITDA does not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debts; (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future and EBITDA does not

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reflect any cash requirements that would be required for such replacements; and (v) some of the exceptional items that we eliminate in calculating EBITDA reflect cash payments that were made, or will be made in the future. Because our definition of EBITDA may differ from those used by other companies and industries, our presentation of this metrics may not be comparable to other similarly-titled measures used by other companies.

Backlog and fleet utilization rate are not measurements of financial performance under IFRS and should not be considered as alternatives to other indicators of our operating performance, cash flows or any other measure of performance derived in accordance with IFRS. Our management believes that the presentation of backlog and fleet utilization rate is helpful to investors as a measure of our historical operating performance and ability to service debt, and also, in the case of backlog, as an indication of our future revenue.

Backlog

Our backlog reflects the estimated future revenue attributable to the remaining term of our existing fixed term contracts and customer extension options across all of our ASVs. We include new fixed term contracts and extension options in the calculation of our backlog only after we have entered into full contracts with the relevant counterparties. We assume that customer extension options will be exercised at the day rate under the contract.

We consider backlog to be a key performance indicator of our business because it gives an indication of our future revenue. Our contracts normally include two types of terms, (i) a fixed term during which the customer commits to use the ASV and (ii) customer extension options that are exercisable at the discretion of the customer. We calculate backlog as the sum of the following for each ASV:

(charter day rate x remaining days contracted) + ((estimated average PoB x daily messing rate) x remaining days contracted) + contracted remaining mobilization and demobilization fees

We calculate backlog for both the fixed terms of our current contracts and the customer extension options set out in those contracts. The customer extension options do not represent guaranteed commitments from our customers, but they do represent a contractual arrangement with us, and we believe those arrangements provide a reasonable indication of our future activity. Our contracts can be terminated by our customers generally without penalty at notice periods typically ranging from 30 to 60 days, although some notice periods have been significantly shorter and one current contract has a notice period of 180 days, which can affect the usefulness of backlog as an indicator of future revenue. However, we have only experienced one early cancellation in our operating history, which occurred in December 2009 when one of our customers cancelled the Ahmed contract nine months prior to the contracted end date.

Since 2007, 37 out of a total 41 customer extension options have been exercised which gives us a reasonable indication of the probability of future customer extension options included in the backlog being exercised.

Changes in our backlog provide an early indication of future revenue and visibility of cash flows. Before the end of the fixed term contract, our management seeks to identify prospects for our ASVs based on the expressions of interest, requests for quotation and invitations to tender we have received, and ongoing discussions with both existing and potential new customers. Overall market conditions and the competition dynamics in our markets have a direct impact on the number of contracts we have, their duration and the exercise of customer extension options, and therefore our backlog. While our backlog is a key performance indicator of our future business, it may be adjusted up or down depending on any early cancellation of contracts, failure to exercise customer extension options, changes to the scope of work, changes to the applicable day rate and

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differences between our estimated average PoB and actual PoB. In general, our customers are not required to commit to a minimum PoB, and the revenues that we eventually earn from messing and accommodation reflect the actual PoB.

Fleet Utilization

Fleet utilization rate is defined as the percentage of days of the year that an ASV is under contract and in respect of which a customer is paying a day rate for rental of the ASV. Fleet utilization rate is the average of the utilization rates for each of our ASVs.

Certain Terms Used

In this report, “Issuer” refers only to Millennium Offshore Services Superholdings, LLC and not any of its subsidiaries and the terms “we”, “us”, “our”, “MOS”, “Company” and “Group” refer to the Issuer and its consolidated subsidiaries except where the context otherwise requires or as otherwise indicated.

Forward Looking Statements

This report contains forward looking statements within the meaning of the U.S. federal securities laws regarding future financial performance and results and other statements that are not historical facts. The words “believe”, “anticipate”, “plan”, “expect”, “project”, “estimate”, “predict”, “intend”, “target”, “assume”, “may”, “could”, “will” and similar expressions are intended to identify such forward looking statements. Such statements are made on the basis of assumptions and expectations that we believe to be reasonable as of the date of this report, but may prove to be erroneous. Such forward looking statements involve known and unknown risks and uncertainties and other factors which may cause our actual results, business, financial condition, results of operations, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, among others, those more fully described in “Risk Factors” and elsewhere in our annual report for the period ended December 31, 2012. The risks and uncertainties we face going forward which could affect the accuracy of these forward looking statements include, but are not limited to: • our ability to win new contracts and extend existing contracts on favorable terms; • early termination of our ASV contracts by our customers on varying notice periods; • changes to our backlog; • sustained decreases in oil and gas prices, which may impact the level of activity in the oil

and gas industry and demand for our ASVs; • limitations on the contracts for which we can tender; • our reliance on a small number of customers and ASVs; • our status as subcontractor under some of our contracts; • time and cost overruns associated with mobilization and demobilization; • our ability to effectively compete in the event the supply of ASVs in the accommodation

services industry increases or other vessel types enter the ASV market; • fluctuations to our operating and maintenance costs that are not in proportion to changes in

our operating revenue, and economic viability of continued maintenance of our ASVs as they age;

• delay or inability to obtain appropriate third party certifications for our ASVs; • limitations on customers we can service and jurisdictions in which we can operate due to

the age of our fleet; • delays or cost overruns in the construction of new ASVs or the conversion of drilling rigs

into ASVs; • our dependence on contractors and subcontractors for a number of services;

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• adverse economic, social or political conditions in any of the several different countries in which we operate;

• the outbreak of communicable diseases or other public health threats in the regions in which we operate;

• the operating hazards associated with our business, and our ability to insure all potential losses, liabilities and damage related to our activities;

• the costs, liabilities and operational restrictions imposed by applicable law, including in the areas of health and safety and environmental protection;

• our ability to comply with anti-corruption laws; • the outcome of any litigation or threatened litigation; • the tax laws in the countries in which we operate or changes thereto or to our tax profile; • our ability to recruit, retain and develop qualified personnel; and • our dependence on our senior personnel. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, our actual results, business, financial condition, results of operations, performance or achievements or industry results may vary materially from those indicated. We therefore caution investors and prospective investors against relying on any of these forward looking statements. Except as required by law or regulation, we assume no obligation to update such forward looking statements or to update the reasons for which actual results could differ materially from those anticipated in such forward looking statements.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition during the quarter ended June 30, 2013. This discussion contains certain forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report, particularly under “Forward Looking Statements”. This discussion should be read in conjunction with “Presentation of Financial and Other Information”, “Business Overview” and the consolidated financial statements and related notes included elsewhere in this report.

Note: the complete audited IFRS financial results for the year 2012, including cash flow statements and the notes to the financial statements, are available for public access on the company’s corporate website www.mosrigs.net under the investor relations section of the website.

Results of Operations

Quarter Ended June 30, 2013 Compared to Quarter Ended June 30, 2012

The following table sets forth our historical income statement data derived from the unaudited interim condensed consolidated financial statements for the three month and six month periods ended June 30, 2012 and 2013, as well as other financial data.

Three Months ended

June 30

Six Months ended

June 30

(U.S. dollars in millions) 2012 2013 %

change 2012 2013 %

change Revenue .................................................................................... 34.0 36.3 7% 66.3 67.4 2%

Rental of offshore accommodation units .............................. 30.6 31.7 4% 54.5 57.8 6%Service income ...................................................................... 3.4 4.6 35% 11.8 9.6 (19)%

Direct costs ............................................................................... (12.4) (13.6) 10% (28.8) (27.7) (4)%Staff costs .............................................................................. (3.5) (3.0) (14)% (6.2) (6.4) 3%Sub-contract charges ............................................................. (1.5) (1.7) 13% (3.1) (3.0) (3)%Depreciation of property and equipment ............................... (4.9) (4.9) 0% (9.6) (9.8) 2%Other direct expenses ............................................................ (2.5) (3.9) 56% (10.0) (8.5) (15)%

Gross profit ............................................................................. 21.6 22.8 6% 37.5 39.8 6%General and administrative expenses ....................................... (1.4) (1.7) 21% (3.2) (3.3) 3%Unrealized gain on fair valuation of interest rate swap ............ 0.2 0.0 (100)% 0.5 0.0 (100)%Finance costs ............................................................................. (1.8) (5.8) 222% (3.5) (9.3) 166%Other (expenses)/income .......................................................... 0.1 (0.3) (400)% 0.0 (0.3) (1,100)%Profit before tax ...................................................................... 18.6 15.0 (19)% 31.3 26.8 (14)%Income tax expense .................................................................. (1.7) (1.7) 0% (2.6) (2.9) 12%Profit for the period ................................................................ 16.9 13.3 (21)% 28.7 23.9 (17)%

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Revenue

Revenues include (i) rental income from our ASVs and (ii) service income. Rental income is the day rate that we charge for chartering our ASVs, and is the main source of our revenue. Service income includes messing and accommodation income, fees charged for the mobilization and de-mobilization of our ASVs, and any other costs recharged to the customer. Messing and accommodation income is based either on a daily fee per person on board (PoB) or a fee per meal.

Revenues increased by $2.3 million, or 7%, from $34.0 million in the quarter ended June 30, 2012 to $36.3 million in the quarter ended June 30, 2013, primarily due to a $1.1 million increase in rental income combined with a $1.2 million increase in service income as compared to the quarter ended June 30, 2012. Rental income increased $1.1 million in the quarter ended June 30, 2013 versus the year ago quarter due to a higher average fleet day rate from the higher day rates achieved on the Deema and enhancements on existing rental contracts. Service income increased by $1.2 million in the quarter ended June 30, 2013 versus the year ago quarter, primarily due to increased messing and accommodation income from higher client personnel occupancy rates on a number of our contracts during the quarter, in particular the high occupancy shutdown contract for ASV Deema.

Our fleet utilization rate was 97% in the quarter ended June 30, 2013 compared to 100% in the quarter ended June 30, 2012. This was primarily due to ASV Leen being only 81% utilized in the second quarter 2013 due to the anticipated 5 year special survey during the quarter. Day rates for the quarter ended June 30, 2013 were generally stable as compared to the same period in 2012 for the majority of the ASV fleet. As previously, reported, the Deema went on charter from February 16, 2013 at an increased day rate from rates previously achieved for the unit.

Direct Costs

Direct costs include offshore crew costs, including crew and contract labor payroll, uniforms, crew health insurance, medicals, training, accommodation, flights, and visas; sub-contract charges, including only catering costs; depreciation of property and equipment; and other direct expenses, including repair and maintenance, materials and consumables, fuel, rental equipment, ASV insurance, mobilization and demobilization costs, classification costs, tugs and port charges.

Direct costs increased by $1.2 million, or 10%, from $12.4 million in the quarter ended June 30, 2012 to $13.6 million in the quarter ended June 30, 2013, primarily driven by an increase in other direct expenses and sub-contract charges, offset by a reduction in staff costs.

Other direct expenses increased by $1.4 million, or 56%, from $2.5 million in the quarter ended June 30, 2012 to $3.9 million in the quarter ended June 30, 2013, primarily due to the costs associated with the high occupancy shut down contract for Deema and infield rig moves performed during the quarter. Sub-contract charges (catering costs) increased by $0.2 million, or 13%, from $1.5 million in the quarter ended June 30, 2012 to $1.7 million in the quarter ended June 30, 2013 due to higher client personnel occupancy on a number of contracts, including the high occupancy shutdown charter for Deema. Staff costs decreased by $0.5 million, or 14%, from $3.5 million in the quarter ended June 30, 2012 to $3.0 million in the quarter ended June 30, 2013, due to lower crew numbers and associated costs on the Leen during the Special Survey commenced in quarter and reduced training and recruitment costs which were incurred during the initial phase of the Burj charter in the prior year quarter ended June 30, 2012. Direct costs also include depreciation, which remained consistent at $4.9 million in the quarter ended June 30, 2012 compared to $4.9 million in the quarter ended June 30, 2013.

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General and Administrative Expenses

General and administrative expenses include overhead staff costs, legal and professional fees, depreciation of property and equipment, rent, traveling expenses and other items.

General and administrative expenses increased by $0.3 million, or 21%, from $1.4 million in the quarter ended June 30, 2012 to $1.7 million in the quarter ended June 30, 2013, primarily due to additional headcount added to the management and support services structure.

Finance Costs

Finance costs include interest on the $225 million of Senior Secured Notes due 2018 issued on February 14, 2013 (the “Senior Secured Notes”), amortization of Senior Secured Notes issue cost, interest on bank credit facilities and overdraft, interest on Lamprell Mortgage and intercompany interest recharged from Millennium Offshore Services, LLC on the funds contributed for the acquisition of Burj. Interest payable on construction or conversion financing during the period of construction or conversion is capitalized in the cost of the ASV. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the quarter in which they are incurred.

Finance costs increased by $4.0 million, or 22%, from $1.8 million in the quarter ended June 30, 2012 to $5.8 million in the quarter ended June 30, 2013, primarily due to the $5.3 million interest on the $225 million Senior Secured Notes offering issued in the first quarter of 2013, offset by reduced interest on the previous bank revolving credit facility which was repaid in full from the proceeds of the Senior Secured Notes.

The issue costs of the Senior Secured Notes and Revolving Credit Facility ($11.4 million) are being amortized over the term of the notes and facility. Amortized issue costs for the quarter ended June 30, 2013 were $0.4 million.

Income Tax Expense

Income tax expense includes corporate income tax.

Income tax expense remained consistent at $1.7 million in the quarter ended June 30, 2012 compared to $1.7 million in the quarter ended June 30, 2013.

Profit

Profit decreased by $3.6 million, or 21%, from $16.9 million in the quarter ended June 30, 2012 to $13.3 million in the quarter ended June 30, 2013, primarily due to the increased finance costs and other movements described above.

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Income Statement for 12 months ended June 30, 2013

For ease of calculation we have also presented the last twelve month (LTM) income statement below for the period ended June 30, 2013.

LTM ended

June 30, 2013

(U.S. dollars in millions) Revenue………………………………………………… 128.2

Rental of offshore accommodation units…………... 112.8 Service income…………………………………….. 15.4

Direct costs……………………………………………… (53.7) Staff costs………………………………………….. (12.6) Sub-contract charges………………………………. (5.5) Depreciation of property and equipment…………... (19.6) Other direct expenses……………………………… (15.9)

Gross profit…………………………………………….. 74.5 General and administrative expenses…………………… (8.6) Unrealized gain on fair valuation of interest rate swap…. 0.3 Finance costs……………………………………………. (12.3) Other income……………………………………………. (0.5) Profit before tax………………………………………... 53.4 Income tax expense……………………………………... (6.5) Profit/(loss) for the period……………………………... 46.9

Other Financial Data

Fleet Utilization and Backlog

Our revenues and profitability are strongly influenced by our backlog, fleet utilization rate and day rates. Backlog represents the amount of revenue that we expect to realize from the remaining term of our existing fixed term contracts and customer extension options across all of our ASVs, based on the currently contracted day rate. We define fleet utilization rate as the percentage of days in a period that our ASVs are under contract and during which we are receiving a day rate for the rental of our ASVs.

The following table sets out our fleet utilization rate and ASVs for the three month and six month periods as at June 30, 2012 and 2013.

As of and for the three months ended

June 30

As of and for the six months ended

June 30 2012 2013 2012 2013

Fleet utilization rate(1)............ 100% 97% 100% 92%ASVs in fleet.......................... 6 6 6 6

(1) Fleet utilization rate is defined as the percentage of days of the year that an ASV is under contract and in respect of which a customer is paying a day rate for rental of the ASV. Fleet utilization rate is the average of the utilization rates for each of our ASVs.

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Backlog

Our backlog reflects the estimated future revenue attributable to the remaining term of our existing fixed term contracts and customer extension options across all of our ASVs. We include new fixed term contracts and extension options in the calculation of our backlog only after we have entered into full contracts with the relevant counterparties. We assume that customer extension options will be exercised at the day rate under the contract.

As at June 30, 2013, backlog attributed to our fixed term contracts was $161.7 million and backlog attributed to our customer extension options was $96.6 million, totalling $258.3 million.

The following table sets out our backlog breakdown by year as at June 30, 2013.

(U.S. dollars in millions) 6M

2013 2014 2015 2016 TotalFixed term contract (1) .............................................. 69.2 79.6 13.0 0.0 161.7Customer extension options (2) ................................ 0.0 31.4 57.5 7.7 96.6Total ......................................................................... 69.2 110.9 70.5 7.7 258.3

(1) Represents backlog under the fixed term of our existing contracts.

(2) Represents backlog under the extension options available to our customers under our existing contracts.

EBITDA and Other Financial Data The following table sets out our EBITDA and certain other financial data as of and for the three months and six months ended June 30, 2012 and 2013.

As of and for the three months ended

June 30

As of and for the six months ended

June 30 (U.S. dollars in millions) 2012 2013 2012 2013 EBITDA(1)..................................................... 25.3 25.7 44.2 46.0Total debt(2).................................................... 61.3 214.3 61.3 214.3Net debt(3)...................................................... 54.7 168.9 54.7 168.9Capital expenditure(4)..................................... 0.6 4.2 3.8 5.8

ASV acquisition and conversion................. 0.1 0.0 3.1 0.0Maintenance............................................... 0.5 4.2 0.7 5.8

Net working capital(5).................................... 9.5 15.4 9.5 15.4 (1) EBITDA represents earnings before finance costs, income tax expense, unrealized gain/loss on fair valuation of interest rate swap,

equity settled C-grant expense and depreciation of property and equipment. EBITDA-based measures are presented because we believe they are frequently used by securities analysts, investors and other interested parties in evaluating companies. However, other companies may calculate EBITDA-based measures in a manner different from ours. EBITDA-based measures are not a measurement of financial performance under IFRS and should not be considered an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to profit/(loss) on ordinary activities as indicators of operating performance or any other measures of performance derived in accordance with IFRS.

(2) Total debt as of June 30, 2013 includes the Senior Secured Notes before netting off issue costs. See “– Results of Operations – Finance

Costs.” Total debt as of June 30, 2012 includes bank borrowings, deferred consideration in relation to the Burj acquisition and the outstanding balance on the Lamprell Mortgage.

(3) Net debt calculated as total debt less bank balances and cash.

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(4) Maintenance capital expenditure includes capital expenditure relating to surveys, upgrades, general maintenance and headquarters equipment.

(5) Net working capital represents inventory, trade and other receivables, trade and other payables, amounts due from a related party and amounts due to a related party and excluding cash and shipyard finance mortgage balance.

Reconciliation of EBITDA to net profit on a consolidated basis

(1) Includes depreciation of property and equipment recognized in Direct Costs as well as deprecation of certain property and equipment included in our General and Administrative Expenses.

(2) Equity settled C Grant expense refers to the amount provided under IFRS 2 for the expense relating to equity settled employee benefits provided to senior management.

(3) Reconciliation to EBITDA may not add due to rounding.

For the three months ended

June 30

For the six months ended

June 30 (U.S. dollars in millions) 2012 2013 2012 2013 Net profit................................................ 16.9 13.3 28.7 23.9

Depreciation(1)...................................... 5.0 5.0 9.7 9.9Finance costs........................................ 1.8 5.8 3.5 9.3Gain on IRS.......................................... (0.2) 0.0 (0.5) 0.0Equity Settled C Grant Expense(2)........ 0.1 0.0 0.1 0.0Income tax expense.............................. 1.7 1.7 2.6 2.9

EBITDA(3) 25.3 25.7 44.2 46.0

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Material Recent Developments

New Business Wins

Following the previously reported Letter of Intent received from an EPIC contractor for a charter of ASV Deema, on June 18, 2013, the Company signed the charter contract for a 100 day fixed term with a further 60 day extension options, with Hyundai Heavy Industries for a project in Qatar. The Deema completed its previous charter with a national oil company (“NOC”) in Qatar on July 2, 2013 and the newly awarded charter with Hyundai Heavy Industries has an expected start date in October 2013. Trident One ASV – Commenced Work Under 2 Year Charter Shortly after the close of the second quarter of 2013, ASV Trident One began work under a previously reported two year charter with Total ABK in Abu Dhabi on July 1, 2013 at a higher day rate than the prior contract which ended June 30, 2013. MOS Frontier In furtherance of its business plan to expand its fleet and operating capabilities in Asia-Pacific and the Middle East / North Africa Regions, MOS on August 28, 2013 signed a contract to purchase a 300’ Letourneau 116 Cantilever jack-up rig from an offshore drilling company for $25 million. MOS intend to name the new ASV the MOS Frontier and will be owned by the Company’s newly formed Marshall Islands entity “MOS Frontier LLC” which is a 100% subsidiary of MOS Superholdings LLC. The Company has been in discussions with various parties concerning charter contracts for the MOS Frontier upon completion of the retrofit work and expects to have a contract finalized by the end of 2013. As part of those negotiations, the Company has received a non-binding letter of intent from a multi-national oil and gas company for the charter of the new unit in the Asia Pacific region. MOS believes the accommodation unit design will be well-suited for either the Asia-Pacific or Middle East / North Africa markets. The Company is negotiating terms for the conversion contract with a preferred shipyard and expects to enter into a turn-key contract for the work during September 2013. MOS expects to fund the acquisition and conversion of the unit with cash on hand, cash flow from operations and short-term shipyard financing secured solely by the vessel and improvements. The Company remains focused on maintaining financial flexibility and a responsibly capitalized balance sheet.

16

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Review report and consolidated interim financial information for the six months period ended 30 June 2013

17

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Contents Pages Report on review of consolidated interim financial information 16 Condensed consolidated statement of financial position 19 Condensed consolidated statement of comprehensive income (unaudited) 20 Condensed consolidated statement of changes in equity 21 Condensed consolidated statement of cash flows (unaudited) 22 Notes to the condensed consolidated financial statements 23 - 32

18

REPORT ON REVIEW OF CONSOLIDATED INTERIM FINANCIAL INFORMATION The Board of Directors Millennium Offshore Services Superholdings L.L.C. Republic of the Marshall Islands Introduction We have reviewed the accompanying condensed consolidated statement of financial position of Millennium Offshore Services Superholdings L.L.C. and Subsidiaries (together the “Group”), Republic of the Marshall Islands as at 30 June 2013 and the related condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six months period then ended. Management is responsible for the preparation and presentation of this consolidated interim financial information in accordance with International Accounting Standard 34: “Interim Financial Reporting”. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review. Scope of review We conducted our review in accordance with the International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34, “Interim Financial Reporting”. 30 July 2013

19

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Condensed consolidated statement of financial position At 30 June 2013

30 June 31 December Notes 2013 2012 (unaudited) (audited) USD USD ASSETS Non-current assets Property and equipment 4 218,739,966 222,846,390 Current assets Inventories 4,071,818 3,240,637 Trade and other receivables 5 32,553,319 19,657,205 Bank balances and cash 6 45,430,700 19,479,095 Total current assets 82,055,837 42,376,937 Total assets 300,795,803 265,223,327 EQUITY AND LIABILITIES Equity Capital contribution 7 40,866,331 96,705,765 Retained earnings 23,879,253 102,659,373

Total equity 64,745,584 199,365,138

Non-current liabilities Provision for employees’ end of service indemnity 545,542 412,523 Senior secured notes 8 214,309,731 - Derivative financial instrument - 311,728

Total non-current liabilities 214,855,273 724,251

Current liabilities Other financial liabilities 9 - 17,429,500 Bank borrowings 10 - 26,325,326 Due to a related party 11 836,367 7,928,155 Trade and other payables 12 20,358,579 13,450,957 Total current liabilities 21,194,946 65,133,938 Total liabilities 236,050,219 65,858,189 Total equity and liabilities 300,795,803 265,223,327

Managing Director Finance Director

The accompanying notes form an integral part of these condensed consolidated financial statements.

20

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Condensed consolidated statement of comprehensive income (unaudited) for the six months period ended 30 June 2013

Three months period ended

30 June

Six months period ended

30 June 2013 2012 2013 2012 Notes USD USD USD USD Revenue 13 36,320,116 33,986,286 67,431,142 66,335,721

Direct costs 14 (13,552,071) (12,428,098) (27,670,852) (28,832,411)

Gross profit 22,768,045 21,558,188 39,760,290 37,503,310

General and administrative expenses (1,689,573) (1,405,146) (3,349,992) (3,179,740)

Unrealised gain on fair valuation of interest rate swap

-

235,811

-

453,502

Finance costs: - Secured senior notes 8 (5,343,749) - (7,986,263) - - Amortisation of senior secured

notes issue cost 8

(433,887)

-

(661,397)

- - Bank borrowings and trade

payables - Recharged by parent company 11

- -

(755,943)

(1,058,499)

(123,191) (486,049)

(1,565,996) (1,956,033)

Other (expenses)/income (305,712) 58,671 (338,613) 28,158

Profit before tax 14,995,124 18,633,082 26,814,785 31,283,201

Income tax expense (1,662,325) (1,735,004) (2,935,532) (2,564,778)

Profit for the period 13,332,799 16,898,078 23,879,253 28,718,423

Other comprehensive income for the period

-

-

-

-

Total comprehensive income for the period

13,332,799

16,898,078

23,879,253

28,718,423

The accompanying notes form an integral part of these condensed consolidated financial statements.

21

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Condensed consolidated statement of changes in equity for the six months period ended 30 June 2013

Capital

Retained contribution earnings Total USD USD USD Balance at 31 December 2011 (audited) 96,705,765 50,916,814 147,622,579

Total comprehensive income for the period - 28,718,423 28,718,423 Balance at 30 June 2012 (unaudited) 96,705,765 79,635,237 176,341,002

Balance at 31 December 2012 (audited) 96,705,765 102,659,373 199,365,138

Total comprehensive income for the period - 23,879,253 23,879,253

Reduction in capital contribution (Note 7) (55,839,434) - (55,839,434)

Dividends paid (Note 17) - (102,659,373) (102,659,373) Balance at 30 June 2013 (unaudited) 40,866,331 23,879,253 64,745,584 The accompanying notes form an integral part of these condensed consolidated financial statements.

22

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Condensed consolidated statement of cash flows (unaudited) for the six months period ended 30 June 2013 3 months period ended 30 June 6 months period ended 30 June 2013 2012 2013 2012 USD USD USD USD Cash flows from operating activities Profit for the period 13,332,799 16,898,078 23,879,253 28,718,423 Adjustments for: Depreciation of property and equipment 4,972,775 4,962,822 9,939,567 9,715,363 Gain on disposal of property and equipment - (7,089) - (14,692) Unrealised gain on interest rate swap - (235,811) - (453,502) Finance costs 5,777,636 1,814,442 9,256,900 3,522,029 Income tax expenses 1,662,325 1,735,004 2,935,532 2,564,778 Provision for employees end of service benefits 67,236 40,103 133,019 63,776

Operating cash flows before changes in operating assets and liabilities

25,812,771

25,207,549

46,144,271

44,116,175

Increase in inventories (751,950) (362,633) (831,181) (894,612) Increase in trade and other receivables (1,319,842) (3,994,399) (12,896,114) (10,404,789) Decrease in due from a related party - - - 133,633 (Decrease)/increase in trade and other payables (1,182,695) (28,993,251) 45,006 (31,812,047) (Decrease)/increase in due to a related party (449) 1,081,654 (7,091,788) 1,928,696

Net cash generated from/(used in) operating activities 22,557,835 (7,061,080) 25,370,194 3,067,056 Finance costs paid - (1,814,442) (609,240) (3,522,029) Income tax paid (1,669,476) (789,396) (4,720,576) (1,056,816)

Net cash flows generated from/(used in) operating activities

20,888,359

(9,664,918)

20,040,378

(1,511,789)

Cash flows from investing activities Purchase of property and equipment (4,164,558) (624,475) (5,833,143) (3,811,037) Proceeds from disposal of property and equipment - 13,973 - 22,192 Increase in fixed deposits (178) - (26,095) -

Net cash used in investing activities (4,164,736) (610,502) (5,859,238) (3,788,845) Cash flows from financing activities Term loans obtained - 17,010,944 - 17,010,944 Term loans repaid - (3,895,700) (26,305,700) (9,374,100) Decrease in bank overdraft - (1,470,621) (19,626) (310,040) Proceeds from senior secured notes - - 225,000,000 - Payment for senior secured notes issue cost (161,072) - (10,690,269) - Reduction in capital contribution - - (55,839,434) - Dividend paid during the period - - (102,659,373) - Derivative financial instrument settled - - (311,728) - Payment of other financial liabilities - (70,500) (17,429,500) (70,500)

Net cash (used in)/generated from financing activities (161,072) 11,574,123 11,744,370 7,256,304

Net increase in cash and cash equivalents 16,562,551 1,298,703 25,925,510 1,955,670 Cash and cash equivalents at the beginning of the period 27,426,409 3,876,891 18,063,450 3,219,924

Cash and cash equivalents at the end of the period (Note 15)

43,988,960

5,175,594

43,988,960

5,175,594

The accompanying notes form an integral part of these condensed consolidated financial statements.

23

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 1. General Information Millennium Offshore Services Superholdings L.L.C. – Republic of the Marshall Islands (the “Company”) was incorporated on 12 June 2007 under the Limited Liability Company Act 1996 of the Republic of Marshall Islands. The address of the Company’s registered office is Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands (MH 96960). The Group comprises of Millennium Offshore Services Superholdings L.L.C. and Subsidiaries (Note 3.2). Millennium Offshore Services L.L.C. is the “Ultimate Holding Company”. The principal activity of the Company is to invest in stocks and other securities of companies engaged in the business of purchasing, maintaining, operating and investing in floating accommodation units. 2. New and revised International Financial Reporting Standards (IFRSs) in issue but not yet

effective and not early adopted

The Group has not early applied the following new standards, amendments and interpretations that have been issued but not yet effective: New and revised IFRSs

Effective for annual periods beginning on or after

IFRS 9 Financial Instruments (as revised in 2010)

1 January 2015

Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures

1 January 2015

Amendments to IAS 32 Financial Instruments: Presentation relating to application guidance on the Offsetting of financial assets and financial liabilities.

1 January 2014

Amendments to IFRS 10 Consolidated Financial Statements , IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements

1 January 2014

• Amendments to IAS 36 – recoverable amount disclosures The amendments restrict the requirements to disclose the recoverable amount of an asset or CGU to period in which an impairment loss has been recognized or reversed. They also expand and clarify the disclosure requirements applicable when an asset or CGU’s recoverable amount has been determined on the basis of fair value less costs of disposal.

1 January 2014

• IFRIC 21 – Levies Interpretation was developed to address the concerns about how to account for levies that are based on financial data of a period that is different from that in which the activity that give rise to the payment of the levy occurs.

1 January 2014

Management anticipates that these new standards, interpretations and amendments will be adopted in the Group’s consolidated financial statements for the period beginning 1 January 2014 or as and when they are applicable and adoption of these new standards, interpretations and amendments may have no material impact on the consolidated financial statements of the Group in the period of initial application.

24

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 3. Summary of significant accounting policies 3.1 Basis of preparation These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) No. 34 - Interim Financial Reporting issued by the International Accounting Standard Board. These condensed consolidated financial statements are presented in United States Dollars (USD) since that is the currency in which the majority of the Group’s transactions are denominated. These condensed consolidated financial statements are prepared in accordance with the historical cost basis, except for the measurement at fair value of financial instruments. The accounting policies, presentation and methods in these condensed consolidated financial statements are consistent with those used in the audited consolidated financial statements for the year ended 31 December 2012 except for the adoption of the new IFRSs which became effective as of 1 January 2013. These condensed consolidated financial statements do not include all the information required for full annual consolidated financial statements and should be read in conjunction with the Group’s annual audited consolidated financial statements as at and for the year ended 31 December 2012. In addition, results for the six months period ended 30 June 2013 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2013. 3.2 Basis of consolidation These condensed consolidated financial statements of Millennium Offshore Services Superholdings L.L.C. and Subsidiaries (the "Group") incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All significant intra-group transactions, balances, income and expenses are eliminated on consolidation.

25

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 3. Summary of significant accounting policies 3.3 Subsidiaries Details of the Company's subsidiaries at 30 June 2013 are as follows:

Name of subsidiary

Place of incorporation

Proportion of

ownership interest

Principal activity

Millennium Offshore Services

Holdings L.L.C. and Subsidiaries

Republic of the Marshall Islands

100% Management of business of its subsidiaries.

Millennium Offshore Services Management L.L.C. and Subsidiaries

Republic of the Marshall Islands

100% Management of business of its subsidiaries.

Millennium Offshore Services Management PTE

Singapore 100% Management of business of its subsidiaries.

Millennium Offshore Services PTE

Singapore 100% Providing offshore accommodation facilities on rental

Burj L.L.C. Republic of the Marshall Islands

100% Providing offshore accommodation facilities on rental

MOS Frontier L.L.C. Republic of the Marshall Islands

100% Providing offshore accommodation facilities on rental

26

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 4. Property and equipment

Offshore accommodation

Offshore accommodation

Offshore accommodation

Furniture, fixture and

Motor

Capital work-

units units upgrade units equipment office equipment vehicles in-progress Total USD USD USD USD USD USD USD

Cost At 31 December 2011 (audited) 164,387,007 16,170,221 14,268,446 1,751,739 154,658 83,252,773 279,984,844 Additions 2,659,380 - 670,931 131,205 80,643 268,878 3,811,037 Transfers 82,690,772 - 34,000 - - (82,724,772) - Disposals - - - - (41,096) - (41,096) At 30 June 2012 (unaudited) 249,737,159 16,170,221 14,973,377 1,882,944 194,205 796,879 283,754,785 At 31 December 2012 (audited) 252,261,955 13,705,004 19,938,914 1,633,852 246,728 2,372,940 290,159,393 Additions 138,189 640,330 1,152,754 235,085 34,795 3,631,990 5,833,143 Transfers - 1,540,938 (638,615) - - (902,323) - At 30 June 2013 (unaudited) 252,400,144 15,886,272 20,453,053 1,868,937 281,523 5,102,607 295,992,536 Accumulated depreciation At 31 December 2011 (audited) 33,299,142 5,715,116 7,350,752 1,334,830 79,578 - 47,779,418 Charge for the period 6,307,681 1,424,188 1,777,083 161,733 44,678 - 9,715,363 Eliminated on disposals - - - - (33,596) - (33,596) At 30 June 2012 (unaudited) 39,606,823 7,139,304 9,127,835 1,496,563 90,660 - 57,461,185 At 31 December 2012 (audited) 46,324,084 8,344,630 11,118,774 1,426,729 98,786 - 67,313,003 Charge for the period 6,793,920 1,184,130 1,781,297 115,575 64,645 - 9,939,567 Transfers - 6,008 (6,008) - - - - At 30 June 2013 (unaudited) 53,118,004 9,534,768 12,894,063 1,542,304 163,431 - 77,252,570 Carrying amount At 30 June 2013 (unaudited) 199,282,140 6,351,504 7,558,990 326,633 118,092 5,102,607 218,739,966

At 31 December 2012 (audited) 205,937,871 5,360,374 8,820,140 207,123 147,942 2,372,940 222,846,390

Offshore accommodation units with carrying amount of USD 195 million are mortgaged against senior secured notes (Note 8).

27

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 5. Trade and other receivables 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Trade receivables 26,328,396 17,737,749 Prepaid expenses 2,669,289 1,311,256 Other receivables 3,555,634 608,200 32,553,319 19,657,205 6. Bank balances and cash 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Cash on hand 11,615 - Bank balances: Current accounts 43,977,345 18,063,450 Fixed deposits 1,441,740 1,415,645 45,430,700 19,479,095 7. Capital contribution As per ‘Limited Liability Agreement’ dated 12 June 2007, the Company was registered and is wholly owned by Millennium Offshore Services L.L.C. (the “Parent Company”). The Parent Company shall be liable for all the funding requirements of the Company and based on underlying Capital contribution agreement, the Parent Company has funded USD 66,705,765 during the year ended 31 December 2008 and an additional contribution of USD 30,000,000 was made in year 2011. The capital contribution has been authorized and approved by shareholders of the Parent Company. The Capital contributions from the Parent Company are being treated as Equity Instruments whereby the Parent Company will have residual interest in the assets of the Company after deducting all its liabilities. During the six months period ended 30 June 2013, the shareholders of the Company resolved to reduce the capital contribution by USD 55,839,434 and accordingly amount was paid back to the Parent Company.

28

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 8. Senior secured notes 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Proceeds of issue 225,000,000 - Less: unamortised issue cost (10,690,269) - Carrying amount 214,309,731 -

On 14 February 2013, the Company (the “Issuer”) has issued USD 225 million 9.5% per annum senior secured notes (Notes), maturing on 15 February 2018. These are non-convertible bonds and interest will be paid semi-annually in arrears on each 15 February and 15 August. The Notes are listed on the official list of Irish Stock Exchange and admitted for trading on the Global Exchange market. The senior secured notes carrying amount is calculated by using amortised cost method and netting off issue cost of USD 11.4 million. For the six months period ended 30 June 2013 interest of USD 7,986,263 is accrued and USD 661,397 issue cost has been amortised. Senior secured notes include restrictive covenants including among other limitations on incurring additional indebtedness. Securities The Notes are guaranteed by all of the Issuer’s material subsidiaries (Guarantors). The Notes and the Guarantees are secured by first-ranking security over (i) all of the limited liability company interests in the Issuer; (ii) all of the limited liability company interests or capital stock, as the case may be, in each Guarantor; (iii) material bank accounts of the Issuer and each Guarantor (for the avoidance of doubt, excluding any bank accounts in Egypt and Australia existing on the 14 February 2013); (iv) all vessels of the Issuer and each Guarantor; (v) an assignment of insurances of the Issuer and each Guarantor; (vi) the proceeds of customer contracts and the proceeds of any other vessel earnings, in each case, received by the Issuer and each Guarantor; (vii) requisition proceeds of the Issuer and each Guarantor; (viii) equipment, inventory and intercompany receivables of the Issuer and each Guarantor; (ix) any shareholder loans from Millennium Offshore Services, LLC to the Issuer or any Guarantor; and (x) in the case of any Guarantor organized in Singapore, substantially all of the assets of such Guarantor.

29

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 9. Other financial liabilities 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Contingent consideration payable - 17,429,500 The Group has acquired an offshore accommodation unit (the “unit”) and as part of purchase agreement the Group has to pay USD 17,500,000 which is contingent upon the net profit earned by unit as defined in the purchase agreement. The balance outstanding as at 31 December 2012 was after setting off USD 70,500 receivable from vendor. During the six months period ended 30 June 2013, the Group has paid entire amount of USD 17,429,500. 10. Bank borrowings 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Overdraft - 19,626 Term loans - 26,305,700 - 26,325,326 During the six months period ended 30 June 2013, the Group has settled entire term loans and overdraft. USD 1,582,700 was paid as per agreed term loans repayment schedule and remaining term loans amounting to USD 24,723,000 was prepaid. 11. Related party transactions Related parties include the Group’s major Shareholders, Directors and businesses controlled by them and their families over which they exercise significant management influence as well as key management personnel. At the reporting date, amount due to a related party was as follows: 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Due to a related party

Millennium Offshore Services L.L.C. (the “Parent Company”) 836,367 7,928,155 The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given.

30

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 11. Related party transactions (continued) During the period, the Group entered into the following transactions with related parties: Three months period ended

30 JuneSix months period ended

30 June 2013 2012 2013 2012 USD USD USD USD (unaudited) (unaudited) (unaudited) (unaudited) Finance cost recharged by Parent Company - 1,058,499 486,049 1,956,033 Transactions with related parties were carried out on terms agreed with the management. Compensation of directors/key management personnel: Three months period ended

30 JuneSix months period ended

30 June 2013 2012 2013 2012 USD USD USD USD (unaudited) (unaudited) (unaudited) (unaudited) Directors’ remuneration 295,068 250,325 590,136 500,650 12. Trade and other payables 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Trade payables 5,213,518 5,274,604 Accruals and other payables 11,585,430 2,831,678 Provision for income tax 3,559,631 5,344,675 20,358,579 13,450,957 13. Revenue

Three months period ended

30 JuneSix months period ended

30 June 2013 2012 2013 2012 USD USD USD USD (unaudited) (unaudited) (unaudited) (unaudited) Rental of offshore accommodation units 31,730,599 30,570,734 57,829,137 54,497,056 Service income 4,589,517 3,415,552 9,602,005 11,838,665

36,320,116 33,986,286 67,431,142 66,335,721

31

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued) 14. Direct costs

Three months period ended

30 JuneSix months period ended

30 June 2013 2012 2013 2012 USD USD USD USD (unaudited) (unaudited) (unaudited) (unaudited) Staff costs 3,015,019 3,477,730 6,397,539 6,155,362 Sub-contract charges 1,682,678 1,496,944 3,041,829 3,141,611 Depreciation of property and equipment 4,911,037 4,910,759 9,759,348 9,563,293 Other direct expenses 3,943,337 2,542,665 8,472,136 9,972,145

13,552,071 12,428,098 27,670,852 28,832,411

15. Cash and cash equivalents 30 June 30 June 2013 2012 USD USD (unaudited) (unaudited) Bank balances and cash 45,430,700 6,592,536 Short term deposits under lien with original maturities greater than three months

(1,441,740)

(1,416,942)

43,988,960 5,175,594 16. Contingent liabilities 30 June 31 December 2013 2012 USD USD (unaudited) (audited) Letters of guarantee 1,400,000 1,400,000 The above letters of guarantee have been issued by the agent of the Group on behalf of the Group. 17. Dividends During the six months period ended 30 June 2013 cash dividend amounting to USD 102,659,373 was paid to the Shareholders. 18. Seasonality of results No income of seasonal nature was recorded in the condensed consolidated statement of income for the six months period ended 30 June 2013 and 2012.

32

MILLENNIUM OFFSHORE SERVICES SUPERHOLDINGS L.L.C. AND SUBSIDIARIES Notes to the condensed consolidated financial statements for the six months period ended 30 June 2013 (continued)

19. Approval of condensed consolidated financial statements The condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 30 July 2013.

33

COMPANY DETAILS Millennium Offshore Services Superholdings, LLC Trust Company Complex Ajeltake Island Ajeltake Road, Majuro Marshall Islands, MH96960  INDEPENDENT AUDITORS Deloitte & Touche (M.E.) 701 Corniche Plaza 2 P.O. Box 5470 Sharjah, United Arab Emirates  TRUSTEE Citibank, N.A., London Branch Citigroup Centre 25 Canada Square Canary Wharf London E14 5LB United Kingdom  PRINCIPAL PAYING AGENT AND TRANSFER AGENT Citibank, N.A., London Branch Citigroup Centre 25 Canada Square Canary Wharf London E14 5LB United Kingdom  REGISTRAR Citigroup Global Markets Deutschland AG 5th Floor, Reuterweg 16 60323 Frankfurt Germany  INVESTOR RELATIONS Grayling 405 Lexington Avenue, 7th Floor New York, NY 10174 United States

34

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