DOF ASA FINANCIAL REPORT Q1 2016mb.cision.com/Main/1611/2008362/515237.pdf · Financial report Q1 2016 4 Accounts Q1 2016 10 Income statement 10 Statement of comprehensive income

DOF ASA

FINANCIAL REPORT

Q1 2016

Management reporting - accounts Q1 2016

(MNOK) Q1 2016 Q1 2015 2015

Operating income 2 182 2 521 10 809

Operating expenses -1 451 -1 752 -7 439

Net profit from associated and jont ventures 2 -1 -26

Net gain on sale of tangible assets 70 225 375

Operating profit before depreciation EBITDA 803 992 3 719

Depreciation -268 -270 -1 119

Impairment -330 - -531

Operating profit - EBIT 205 723 2 070

Financial income 7 18 88

Financial costs -295 -338 -1 290

Net realised gain/loss on currencies -136 -103 -386

Profit before unrealised finance costs -218 301 481

Unrealised finance costs 547 -387 -816

Profit (loss) before taxes 329 -86 -335

Taxes -61 82 11

Profit (loss) 267 -4 -323

(MNOK) Q1 2016 Q1 2015 2015

Net cash from operation activities 352 112 2 359

Net cash from investing activities -808 -822 -1 766

Net cash from financing activities 70 -564 -1 183

Net changes in cash and cash equivalents -386 -1 274 -590

Cash and cash equivalents at start of the period 2 220 2 695 2 695

Exchange gain/loss on cash and cash equivalents -35 101 114

Cash and cash equivalents at the end of the period 1 799 1 523 2 220

(MNOK) 31.03.2016 31.03.2015 31.12.2015

ASSETSIntangible assets 1 671 1 475 1 941

Tangible assets 26 574 27 356 25 910

Non-current financial assets 620 399 530

Total non-current assets 28 865 29 230 28 381

Receivables 2 491 3 193 2 772

Cash and cash equivalents 1 799 1 523 2 220

Total current assets 4 289 4 715 4 992

Asset held for sale - - 477

Total current assets incl. asset held for sale 4 289 4 715 5 469

Total assets 33 154 33 945 33 850

EQUITY AND LIABILITIESEquity 5 803 6 239 5 172

Non-current provisions and commitments 121 130 121

Non-current liabilities 21 717 19 849 22 946

Current liabilities 5 514 7 728 5 350

Total liabilities 27 352 27 706 28 417

Liabilities held for sale - - 260

Total liabilities incl liabilities held for sale 27 352 27 706 28 678

Total equity and liabilities 33 154 33 945 33 850

Net interest bearing liabilities 23 319 23 669 23 731

RESULT

BALANCE

CASH FLOW

Index

Financial report Q1 2016 4

Accounts Q1 2016 10

Income statement 10

Statement of comprehensive income 10

Statement of financial position 11

Statement of equity and key figures 12

Statement of cash flow 13

Notes to the Accounts 14

Note 1 General 14

Note 2 Management reporting 15

Note 3 Segment information - management reporting 16

Note 4 Hedges 16

Note 5 Tangible assets 17

Note 6 Investment in associated and Joint Ventures 18

Note 7 Cash and cash equivalent 18

Note 8 Interest bearing liabilities 19

Note 9 Events after balance date 20

Note 10 Transaction with related parties 20

Note 11 Taxes 20

Note 12 Share capital and shareholders 20

Financial Report Q1 2016 DOF ASA

4

Group operating income for Q1 based on management reporting totals NOK 2,182 million (NOK 2,521 million) and operating profit before depreciation and amortisation (EBITDA) totals NOK 733 million (NOK 767 million). EBITDA including gain from sale of assets totals NOK 803 million (NOK 992 million). Operating profit (EBIT) is NOK 205 million (NOK 723 million), of which NOK 330 million is impairment loss during Q1.

Q1 operational result per segment is as follows:

The average utilisation of the Group’s fleet during Q1 was 83%. The utilisation of the subsea fleet was 82%, the AHTS fleet 76% and the PSV fleet 90%. The Group operated during Q1 two (minority owned) vessels in the North Sea spot market, and had four vessels partially in lay-up. Towards the end of the period all vessels were in operation or mobilising for operation. The average contract coverage for the fleet excluding options for the remainder of 2016 is 73%; 82% for the PSV fleet, 73% for the AHTS fleet and 68% for the Subsea fleet. DOF Subsea had nine vessels operating in the subsea project market during the period, with a utilisation for this part of the fleet of 79%. Two vessels within this segment are chartered from external owners. The subsidiary DOF Subsea sold Skandi Protector to the Commonwealth of Australia in January. DOF Subsea and Technip took, through a joint venture company, delivery of a PLSV in April, the vessel is secured an 8-year contract with Petrobras. The subsidiary Norskan took delivery of an AHTS in April, the vessel has started on a 4-year contract with Petrobras.

The Group has secured a one-year contract with Statoil,

a three months contract with Maersk Oil and an 18-months contract with Nexen Petroleum in the North Sea. Additionally, two vessels have extended their contracts with Total in Argentina with 8 months, while one RSV vessels has entered into an 18 months contract with Petrobras in Brazil. The company has further entered into two 120 days contracts in India for two of the company’s AHTS vessels with commencement mid-May.

DOF ASA is an international Group of companies owning and operating a fleet of PSVs, AHTS’ and Subsea vessels in addition to several engineering companies offering services to the subsea market. As of May the fleet comprises 67 vessels (wholly and partly owned), of which three vessels are under construction due for delivery in the period 2016-2017. The fleet includes vessels within the following segments: 20 AHTS, 19 PSVs and 28 Subsea. Further, the Group owns a fleet of 62 ROVs, in addition to five ROVs under construction.

The Group operates the majority of its fleet on long-term contracts. As of 31 March 2016 the nominal value of these contracts totals approx. NOK 29.8 billion, and in addition options valued at approx. NOK 33.3 billion.

Q1 OperationsThe main part of the Group’s PSV and AHTS fleet operates on firm contracts, while the Subsea fleet partly operates on firm contracts and partly on subsea project contracts. In the project market the utilisation of the vessels is affected by the market and seasonal fluctuations. The project revenues represent 44% of the Group’s total revenues during the period.

PSVThe PSV fleet includes 19 vessels, out of which one vessel is partly owned. The majority of the fleet operated during the period in the North Sea on firm contracts. In addition, the subsidiary Norskan Offshore Ltda. operates four vessels for external owners in Brazil. This segment has had high contract coverage and steady operation during the quarter. One vessel, Skandi Gamma, finalized a contract in February and completed its 5-year class docking in March. During the period, one vessel operated in the spot market in the North Sea.

AHTSThe AHTS fleet includes 19 vessels in operation, in addition to one newbuild, which was delivered in April. 12 vessels operated on contracts in South America during the period; three vessels operated in the North Sea/ Mediterranean and three vessels

Financial report Q1 2016

MNOK PSV AHTS CSV Sum

Operating income 262 383 1 537 2 183

Gain on sale of tangible assets - - 70 70

Operating result before depreciation

and impairment (EBITDA) 101 136 566 803

Depreciation 45 59 164 269

Impairment 56 73 201 331

Operating result (EBIT) - 4 201 205

EBITDA margin 39% 36% 37% 37%

EBIT margin 0% 1% 13% 9%

Financial Report Q1 2016DOF ASA

5

operated in Asia. Five of the vessels are 50% owned through DOF Deepwater AS and one vessel is owned through a minority share in Iceman AS. One vessel is currently on a rig move from Latin America to India. In addition, Norskan Offshore Ltda. operates one vessel for external owners in Brazil.

The vessels in Asia were laid-up in Singapore until March, and started mobilisation for new contracts towards the end of the quarter. One vessel was in lay-up in the Mediterranean before leaving for Argentina, replacing vessels which were off-hire due to dockings. The vessels operating in Brazil are all holding Brazilian flag vessels, and all vessels operated on firm contracts during the period. One vessel has operated in the North Sea spot market, at variable utilisation and rates.

SUBSEAThe Group owns a fleet of 24 subsea vessels in operation, in addition to four vessels under construction. One of the newbuilds was delivered in April. The revenues from the subsea operation include revenues from both project contracts and firm contracts, of which the revenue from the project contracts constitute NOK 904 million.

The Group’s project activity is operated by the regions North Atlantic, Asia Pacific, North- and South America. The aggregate utilisation of the project fleet during the period was 79%. The utilisation was low during Q1, especially in the Atlantic region mainly due to low season and several vessels at yards for planned class dockings during the period. One of the project vessels operating in Brazil had low utilisation.

The Asia Pacific region had three vessels operating in the project market, two vessels operated on firm IMR contracts (inspection, maintenance and repair); one for Shell in the Philippines and one for Chevron in Australia. One vessel started on a contract for OMV in New Zealand. In the North Sea DOF Subsea had three vessels conducting survey –and construction work for Eni, Maersk and Statoil. One vessel was partly off hire between contracts. In North America, DOF Subsea had two vessels in operation, conducting survey- and construction work for Freeport McMoran, Chevron and HMC.

The subsea operation in Brazil is partly based on firm contracts including lease of both vessels and ROVs, and partly on project contracts. The Group owns and operates nine subsea vessels in Brazil, including five RSV vessels, two construction vessels and two pipe laying vessels. The two pipe laying vessels carry Brazilian flag and are owned and operated through a joint

venture company together with Technip. One of the PLSVs has operated outside Angola for Technip during 1st quarter. One RSV vessels finished her contract in February and has thereafter experienced low utilisation. The Group’s subsea vessels on time charter contracts experienced steady operation during the quarter with average utilisation of 93%.

Main Items Interim Accounts Q1 – Financial Reporting • Operating income totals NOK 2,075 million (NOK 2,388

million). • Operating profit before depreciation and amortisation

(EBITDA) totals NOK 726 million (NOK 859 million).• Gain from sale of assets totals NOK 70 million (NOK 225

million)• Operating profit (EBIT) totals NOK 190 million (NOK

612 million).• Total depreciation and impairment amount to NOK 536

million (NOK 247 million) of which NOK 280 million (NOK 0 million) is impairment loss.

• Net financial costs before unrealised gain/loss on foreign exchange and financial instruments totals NOK -394 million (NOK -399 million).

• Unrealised gain/loss on foreign exchange and change in fair value of financial instruments totals NOK 519 million (NOK -298 million).

• Pre-tax profit totals NOK 315 million (NOK -84 million).• Net interest bearing debt as of 31 March totals NOK

20,666 million (NOK 21,470 million).• Net interest bearing debt excluding capital not employed

as of 31 March totals NOK 20,541 million (NOK 19,280 million).

• Book equity including minority interests as of 31 March totals NOK 5,803 million (NOK 6,239 million).

The Group uses hedge accounting for parts of the revenues

Average utilisation of the Fleet

PSV AHTS CSV / Subsea

Financial Report Q1 2016 DOF ASA

6

related to the Brazil operation. This operation is based on long-term charter contracts in USD secured with debt in corresponding currency.

Tax expense is based on best estimate.

Total balance as of 31 March is NOK 30,304 million (NOK 31,626 million), of which vessels, newbuilds and subsea equipment amounts to NOK 22,943 million (NOK 24,048 million). Unemployed capital of NOK 125 million (NOK 2,190 million) relates to one newbuild, Skandi Paraty, delivered in April. Prepaid instalments on the remaining newbuilds are included in investments in associated companies and long term receivables.

Cash flow from operational activity after payment of interest is NOK 328 million (NOK 44 million) during Q1. Net cash flow from investing activities is NOK 71 million (NOK -789 million). Cash flow from financing activities totals NOK -754 million (NOK -508 million).

Financing and Capital Structure As of 31 March the Group’s remaining commitment for the five vessels under construction totals approx. USD 440 million. This includes the Group’s share of commitments related to newbuilds owned through JVs. All vessels under construction are secured on long-term contracts. Two newbuilds were delivered in April. Skandi Paraty, 100% owned, was delivered from the yard in Brazil in April, and has started on a 4-year contract with Petrobras. Skandi Acu, owned 50/50 by DOF Subsea and Technip was delivered from the Norwegian yard in January, and completed as a PLSV from the Dutch yard in April. Skandi Acu is currently mobilising for an 8-year contract with Petrobras in Brazil.

The DOF Subsea and Technip JV owns additionally three

vessels under construction in Norway and in Brazil. Long term financing with BNDES is secured for the Brazilian built vessels.

The Group sold one vessel during Q1, with a net liquidity effect from the sale of NOK 275 million. In addition, DOF Subsea has refinanced a fleet loan comprising four vessels during Q1.

The Group’s short-term portion of long-term debt as of 31 March is NOK 3,598 million (NOK 5,696 million), of which NOK 1,060 million are bond loans with maturity in April 2016 and February 2017. The first loan, DOFSUB05, outstanding NOK 360 million was repaid on 29 April. The remaining part of short-term portion of long-term debt, NOK 2,538 million, comprises balloon payments of NOK 278 million, and normal amortisation and drawn credit facilities.

There has been an appreciation of NOK and BRL against USD during Q1; however unrealised currency losses still have a considerable effect on the Group’s balance sheet and solidity. Unrealised currency losses represent a negative effect which is booked to equity of approximately NOK -1,800 million over the last 12 months. The Group book equity is 19% (20%) as per March 2016.

Net interest bearing debt has been reduced from NOK 21,470 million to NOK 20,666 million. The portion of long-term debt secured with fixed rate of interest is approximately 67% of total debt and includes debt with fixed interest in BNDES.

Vessels and subsea equipment constitute approx. 76% of the Group’s total assets. Based on broker estimates received as per March 2016, the market values of the Group’s vessels are down with approx. 7% compared to the estimates received in December.

Cash flow Q1 2016

Interest bearing debt 31.12.2015 - 31.03.2016

Financial Report Q1 2016DOF ASA

7

The Group’s main financial covenants in existing loan agree-ments are based upon minimum value adjusted equity ratio of 30% or minimum 20% if the Group’s contract coverage is 70% or higher, and a minimum cash covenant of NOK 500 million. As of 31 March, value adjusted equity ratio is 31.7%, and the Group reported free liquidity of NOK 1,216 million. The contract coverage as defined in the loan agreements is above 70% for the coming 12 months. The Group is thus in compliance with its financial covenants as of 31 March 2016, see note 8.

Shareholders There were no significant changes in the shareholders’ structure during the period. As of 31 March the company had 3,302 shareholders. The share price as of 31 March was NOK 3.94 per share, which is a small weakening from year-end.

Employees The Group employed as of 31 March 4,383 people included hired staff, which is a reduction of approximately 400 people since year-end. The offshore marine personnel counts 2,614 people, while 1,468 people are employed within the subsea segment and 301 are employed onshore within the ship management organisation.

Quality, health and safety There was not identified any significant HSE issues during Q1.

FleetAs per March the Group owns a total fleet of 67 vessels (wholly/partly owned) and the Group had at the end of March five vessels under construction. The vessels under construction were one AHTS and four PLSVs (owned 50% with Technip).

A JV owned by DOF Subsea and Technip owns four pipe-laying vessels, of which two are built in Norway and two in Brazil. As mentioned above, the first PLSV was delivered in April. The vessels will be equipped to operate on ultra-deep water. The Norwegian built vessels are equipped with 650 ton pipe-laying towers, while the Brazilian built vessels will be equipped with 350 ton towers.

Norskan took delivery of its newbuild Skandi Paraty in April which was the last vessel in a series of three vessels all built at Vard Brazil.

DOF Subsea has per end of March two vessels hired in from external owners; Harvey Deep-Sea until August 2017 and Normand Reach until June 2016. The vessels are utilised for the DOF Subsea project activity in North America and the Atlantic Region.

New contractsThe Group’s fleet operates world-wide, with the most important operational areas being the North Sea, Africa, Brazil and Asia/Australia.

DOF Rederi has during the period secured an 18-month contract with Nexen Petroleum UK for Skandi Marstein, with start-up in May and a three months contract with Maersk Oil for Skandi Gamma, with start-up in April. The contracts for Skandi Møgster and Skandi Saigon with Total in Argentina have been extended until October 2016. Skandi Vega has entered into a 1-year contract with Statoil, securing the vessel on a firm contract until May 2017. DOF Subsea entered into an 18-month contract for Geograph with Petrobras in April. This contract is in direct continuation with the existing contract on which the vessel has operated since 2011. DOF Subsea has secured several project contracts at a value of NOK 500 million in Asia-Pacific, the Atlantic and North America regions. DOF is also awarded two 120-day contracts +1x5 weeks options for two AHTSs for an Indian client, with expected start-up in May.

Vessel Yard Delivery Type Contract Financing

Skandi Buzios * (NB 824)

Vard Norway 2016 PLSV

8 yrs Petrobras

Skandi Olinda * (EP 09)

Vard Norway 2017 PLSV

8 yrs Petrobras

Loan agree-ment signed with BNDES

Skandi Recife * (EP10)

Vard Brazil 2017 PLSV

8 yrs Petrobras

Loan agree-ment signed with BNDES

*) 50 % ownership

Newbuildings

Contract coverage per 31.03.2016

Financial Report Q1 2016 DOF ASA

8

OutlookThe trend in the market is still strongly negative with low tender activity in several regions. The market is expected to be demanding throughout 2016 with increased counterparty risk for the Group’s fleet of vessels.

The Group concluded several sales of assets during the last 12 month period and has a contract coverage of 73% for the remainder of 2016. All vessels under construction are secured firm contracts. The negative market development has however considerably increased the risk of lower utilisation and reduced earnings for the Group’s vessels which are not secured on long-term contracts at the start of 2016 and vessels which are up for renewal during 2016 and onwards. The uncertainty related to evaluation of the market development is considerably higher than normal and the value of the Group’s vessels, equipment and investments in joint venture may be challenged if the negative market trend continues. This may in turn influence the Group’s liquidity situation and compliance with financial covenants.

The Group maintains its strategy to secure the fleet on long-term contracts, and is actively working on securing and increasing firm employment of as much of the fleet as possible. The Group continues its work to reduce costs, including increasing the efficiency of work processes.

Based on an expectation of a continued weak market and consequently increased future risk related to the Group’s financial standing, the Board of Directors and management have started on an overall refinancing plan which will secure the company with satisfactory financing and liquidity throughout an expected demanding period. This plan includes dialogue with the Group’s lenders, bond holders and the largest shareholders, where all stakeholders are expected to contribute to such an overall solution. The company’s Q1 financial report has been prepared under the going concern assumption, for supplementary information; please see presented annual accounts for 2015.

The Board of Directors expects the operational EBITDA for Q2 to be in line with, or slightly below the operational EBITDA for Q1.

IR Contacts:

Mons S. Aase, CEO +47 91661012, msa@dof.noHilde Drønen, CFO +47 91661009, hdr@dof.no

DOF ASA5392 Storebø www.dof.no

Board of Directors DOF ASA, May 12th, 2016

Helge SingelstadHelge MøgsterChairman

Karoline Møgster

Kristian Falnes Nina G. Sandnes Mons S. AaseCEO

Financial Report Q1 2016DOF ASA

9

Financial Report Q1 2016 DOF ASA

10

Accounts Q1 2016

Income statement

Statement of comprehensive income

(MNOK) Note Q1 2016 Q1 2015 2015

Operating income 2 075 2 388 10 291

Operating expenses -1 406 -1 728 -7 326

Net profit from associated and joint ventures 6 -14 -26 65

Net gain on sale of tangible assets 70 225 332

Operating profit before depreciation EBITDA 726 859 3 362

Depreciation 5 -256 -247 -1 041

Impairment 5 -280 - -500

Operating profit - EBIT 190 612 1 822

Financial income 12 21 99

Financial costs -286 -320 -1 238

Net realised gain/loss on currencies -120 -100 -332

Net unrealised gain/loss on currencies 337 -429 -869

Net changes in fair value of financial instruments 182 131 108

Net financial costs 125 -696 -2 232

Profit (loss) before taxes 315 -84 -410

Taxes 11 -48 80 87

Profit (loss) for the period 267 -4 -323

Profit attributable to

Non-controlling interest 148 72 120

Controlling interest 119 -76 -443

Profit and diluted profit per share ex non-controlling interest 1.07 -0.69 -4.00

(MNOK) Q1 2016 Q1 2015 2015

Profit (loss) for the period 267 -4 -323

Items that will be subsequently reclassified to profit or loss

Currency translation differences -100 23 89

Cash flow hedge 4 374 -480 -979

Share of other comprehensive income of joint ventures 6 98 -162 -377

Items that not will be reclassified to profit or loss

Defined benefit plan actuarial gain (loss) -8 - 13

Other comprehensive income/loss net of tax 363 -620 -1 253

Total comprehensive income/loss 630 -625 -1 577

Non-controlling interest 175 -14 -60

Controlling interest 455 -610 -1 517

Financial Report Q1 2016DOF ASA

11

Statement of financial position

(MNOK) Note 31.03.2016 31.03.2015 31.12.2015

ASSETS

Deferred tax assets 1 147 935 1 341

Goodwill 419 424 436

Intangible assets 1 566 1 359 1 777

Vessels 5 21 410 20 368 21 604

ROV 5 900 932 943

Newbuildings 5 125 2 190 106

Machinery and other equipment 5 509 559 535

Tangible assets 5 22 943 24 048 23 188

Investment in associated and joint ventures 6 594 1 057 513

Other non-current receivables 1 097 585 905

Non-current financial assets 1 691 1 642 1 418

Total non-current assets 26 201 27 049 26 383

Trade receivables 1 840 2 212 2 112

Other receivables 595 905 589

Current receivables 2 435 3 118 2 701

Restricted deposits 453 572 520

Cash and cash equivalents 1 216 887 1 536

Cash and cash equivalents incl. restricted deposits 7 1 669 1 459 2 056

Current assets 4 103 4 577 4 757

Asset held for sale - - 477

Total current asset incl. Asset held for sale 4 103 4 577 5 234

Total Assets 30 304 31 626 31 617

EQUITY AND LIABILITIES

Paid in equity 1 452 1 452 1 452

Other equity 896 1 345 439

Non-controlling interests 3 455 3 442 3 281

Total equity 5 803 6 239 5 172

Deferred taxes 44 49 42

Pensions 42 53 44

Non-current provisions and commitments 87 102 86

Bond loan 8 2 650 4 126 3 347

Debt to credit institutions 4, 8 16 269 13 287 17 354

Derivatives 8 228 345 244

Other non-current liabilities 25 34 26

Non-current liabilities 19 172 17 791 20 971

Current part of bond loan and debt to credit institutions 8 3 598 5 696 3 034

Accounts payable 1 176 1 067 1 439

Other current liabilities 468 731 654

Current liabilities 5 242 7 493 5 127

Liabilites held for sale 8 - - 260

Total current liabilities incl Liabilities held for sale 5 242 7 493 5 387

Total liabilities 24 501 25 387 26 445

Total equity and liabilities 30 304 31 626 31 617

Financial Report Q1 2016 DOF ASA

12

Statement of equity

(MNOK) Paid-in capital

Retained earnings

Currency translation differences

Total Non-controlling interest

Total equity

Balance at 01.01.2016 1 452 158 282 440 3 281 5 172

Total comprehensive income/loss 556 -100 455 175 630

Transaction with non-controlling interests - - - -

Balance at 31.03.2016 1 452 714 181 895 3 456 5 803

Balance at 01.01.2015 1 452 1 774 182 1 956 3 458 6 866

Total comprehensive income/loss - -634 23 -611 -14 -625

Transaction with non-controlling interests - - - - -2 -2

Balance at 31.03.2015 1 452 1 140 205 1 345 3 442 6 239

Key figures

Q1 2016 Q1 2015 2015

EBITDA margin ex net gain on sale of vessel 1 32 % 27 % 29 %

EBITDA margin 2 35 % 36 % 33 %

EBIT margin 3 9 % 26 % 18 %

Cashflow per share (controlling interest) 4 1.54 2.49 10.17

Profit per share (controlling interest) *) 5 1.07 0.69 0.73

Profit per share ex. unrealised gain/loss on currencies and changes fair value

of financial instruments (controlling interest) 6 -1.72 0.89 4.05

Return on net capital 7 5 % 0 % -6 %

Equity ratio 8 19 % 20 % 16 %

Value adjusted equity 9 32 % 34 % 33 %

Net interest bearing debt 20 666 21 470 21 765

Net interest bearing debt ex. unemployed capital 20 541 19 280 21 659

No of shares 111 051 348 111 051 348 111 051 348

Outstanding number of shares 111 051 348 111 051 348 111 051 348

*) Diluted number of share is the same as number of shares1) Operating profit before net gain on sale of vessel and depreciation in percent of operating income. 2) Operating profit before depreciation in percent of operating income. 3) Operating profit in percent of operating income. 4) Pre-tax result + depreciation and impairment +/- unrealised gain/loss on currencies +/- net changes in fair value of financial instruments/average no of shares.5) Result /average no. of shares. 6) Result + net unrealised currency gain/loss + net changes fair value of financial instruments)/average no of shares. 7) Result incl non-controlling interest/total equity 8) Total equity/total balance 9) Equity adjusted for excess values from broker valuation/total assets adjusted for excess values from brokers valuation.

Financial Report Q1 2016DOF ASA

13

Statement of cash flow

(MNOK) Q1 2016 Q1 2015 2015

Operating result 190 612 1 822

Depreciation and impairment 536 247 1 541

Gain/loss on disposal of tangible assets -70 -225 -332

Share of profit/loss from associates and joint ventures 14 26 -65

Changes in accounts receivables 300 21 219

Changes in accounts payable -263 -114 247

Changes in other working capital -46 -70 208

Exchange rate effects on operating activities -44 -38 -196

Cash from operating activities 616 459 3 444

Interest received 24 13 36

Interest paid -286 -346 -1 248

Taxes paid -25 -82 -215

Net cash from operating activities 328 44 2 016

Payments received for sale of tangible assets 548 1 261 1 953

Purchase of tangible assets -229 -1 978 -3 901

Payments received for sale of shares 3 - 417

Purchase of shares - - -

Received dividend - 3 3

Other investments -249 -75 -431

Net cash from investing activities 71 -789 -1 958

Proceeds from borrowings 807 1 726 6 681

Repayment of borrowings -1 561 -2 234 -7 299

Payments to non-controlling interests - - -117

Net cash from financing activities -754 -508 -735

Net changes in cash and cash equivalents -354 -1 253 -677

Cash and cash equivalents at the start of the period 2 056 2 609 2 609

Exchange gain/loss on cash and cash equivalents -33 103 124

Cash and cash equivalents at the end of the period 1 669 1 459 2 056

Financial Report Q1 2016 DOF ASA

14

Note 1 General

Notes to the Accounts

DOF ASA (the “Company”) and its subsidiaries (together, the “Group”) own and operate a fleet of PSV, AHTS, subsea vessels and service companies offering services to the subsea market worldwide.

The Company is a public limited company, which is listed on the Oslo Stock Exchange and incorporated and domiciled in Norway. The head office is located at Storebø in the municipality of Austevoll, Norway.

These condensed interim financial statements were approved for issue on 12 May 2016. These condensed interim financial statements have not been audited.

Basis of preparationThese condensed interim financial statements have been prepared in accordance with IAS 34, ‘Interim financial reporting’. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with IFRS.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

EstimatesThe preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015, with the exception of changes in estimates that are required in determining the provision for income taxes.

Financial Report Q1 2016DOF ASA

15

Note 2 Management reporting

RESULT Q1 2016 Q1 2015

(MNOK) Management reporting

Reconciliation to equity method

Financial reporting

Management reporting

Reconciliation to equity method

Financial reporting

Operating income 2 182 -107 2 075 2 521 -133 2 388

Operating expenses -1 451 45 -1 406 -1 752 25 -1 728

Net profit from associated and Joint Ventures 2 -15 -14 -1 -25 -26

Net gain on sale of tangible assets 70 - 70 225 - 225

Operating profit before depreciation EBITDA 803 -77 726 992 -133 859

Depreciation -268 12 -256 -270 22 -247

Impairment -330 50 -280 - - -

Operating profit - EBIT 205 -15 190 723 -111 612

Financial income 7 5 12 18 3 21

Financial costs -295 9 -286 -338 18 -320

Net realised gain/loss on currencies -136 16 -120 -103 3 -100

Net unrealised gain/loss on currencies 365 -28 337 -517 89 -429

Net changes in fair value of financial instruments 182 - 182 130 1 131

Net financial costs 123 2 125 -809 113 -696

Profit (loss) before taxes 329 -13 315 -86 2 -84

Taxes -61 13 -48 82 -2 80

Profit (loss) 267 - 267 -4 - -4

BALANCE 31.03.2016 31.03.2015

(MNOK) Management reporting

Reconciliation to equity method

Financial reporting

Management reporting

Reconciliation to equity method

Financial reporting

ASSETSIntangible assets 1 671 -105 1 566 1 475 -116 1 359

Tangible assets 26 574 -3 630 22 943 27 356 -3 308 24 048

Non-current financial assets 620 1 070 1 691 399 1 243 1 642

Total non-current assets 28 865 -2 664 26 201 29 230 -2 181 27 049

Receivables 2 491 -56 2 435 3 193 -75 3 118

Cash and cash equivalents 1 799 -130 1 669 1 523 -63 1 459

Total current assets 4 289 -186 4 103 4 715 -138 4 577

Asset held for sale - - - - - -

Total current assets incl. asset held for sale 4 289 -186 4 103 4 715 -138 4 577

Total assets 33 154 -2 851 30 304 33 945 -2 319 31 626

EQUITY AND LIABILITIESEquity 5 803 - 5 803 6 239 - 6 239

Non-current provisions and commitments 121 -35 87 130 -27 102

Non-current liabilities 21 717 -2 545 19 172 19 849 -2 057 17 791

Current liabilities 5 514 -271 5 242 7 728 -234 7 493

Total liabilities 27 352 -2 851 24 501 27 706 -2 319 25 387

Liabilities held for sale - - - - - -

Total liabilities incl. liabilities held for sale 27 352 -2 851 24 501 27 706 -2 319 25 387

Total equity and liabilities 33 154 -2 851 30 304 33 945 -2 319 31 626

Net interest bearing liabilities 23 319 -2 653 20 666 23 669 -2 199 21 470

Financial Report Q1 2016 DOF ASA

16

Note 4 Hedges

Note 3 Segment information - management reporting

The Group applies cash flow hedge accounting related to foreign exchange rate risk on expected highly probable income in USD, using a non derivative financial hedging instrument. This hedging relationship is described below.

Cash flow hedge involving future highly probable incomeThe Group applies hedge accounting related to the cash flow hedging of expected highly probable income in USD, from its operations in Brazil.

The cash flow hedges hedge a portion of the foreign currency risk arising from highly probable income in USD relating to time charter contracts on vessels owned by the companies Norskan Offshore Ltda and DOF Subsea Navagacao Ltda.

The hedging instruments are portions of the companies’ long term debt denominated in USD. The risk being hedged in each hedging relationship is the spot element of the forward currency rate of USD/BRL. The future highly probable income has a significant exposure to the spot element as the spot element is the main part of the forward rate. The long term debt is translated from USD to BRL at spot rate on the balance sheet date every reporting period.

The effective portion of changes in fair value of the instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the expected income is recognised.

PSV AHTS CSV Total

1 Quarter 2016Operating income 262 383 1 537 2 182

Gain on sale of tangeble assets - - 70 70

Operating result before depreciation and impairment - EBITDA 101 136 566 803

Depreciation 45 59 164 268

Impairment 56 73 201 330

Operation result - EBIT - 4 201 205

1 Quarter 2015Operating income 299 389 1 833 2 521

Gain on sale of tangeble assets 20 - 205 225

Operating result before depreciation and impairment - EBITDA 132 172 688 992

Depreciation -51 -54 -164 -269

Impairment - - - -

Operation result - EBIT 81 118 524 723

Financial Report Q1 2016DOF ASA

17

Asset held for saleAt 31.12.2015 the vessel Skandi Protector was classified as assets held for sale. The vessel was delivered to new owner in January 2016.

Impairment Due to impairment indicators related to the Group’s activity in general, impairment testing has been performed in order to calculate the recoverable amount for the Group’s vessels. Each vessel constitutes a separate cash generating unit, which is tested separately for impairment. The recoverable amount is tested against each vessel’s book value. In the event that the calculated recoverable amount is lower than book value of the vessel, impairment is made to reflect recoverable amount.

The Group has prepared value in use calculations to substantiate the received brokers estimates. The value in use calculations are based on estimated discounted cash flows before financial items and tax. Estimated cash flows are based on the Group’s budgets per vessel for 2016, and forecasted earnings going forward. The cash flows per vessels are calculated based on the vessels remaining useful lifetime. Historical income rates, operational -and capital expenditure related to periodical maintenance, in addition to corresponding rate and expenditure levels for comparable vessels form the basis for the estimated cash flows. The market is expected to remain weak during the next three years, and thereafter to normalise. For vessels on firm contracts it is assumed that the vessels are employed on charter parties up until expiry of the contracts, and that rate levels thereafter are reduced. Options have not been assigned any added value in the value in use calculations. The cash flows used in the value in use calculations are discounted using a nominal average cost of capital after tax (WACC) ranging from 6.10% - 6.85%. The value in use calculations are based on best estimate, and due to the current weak market, there is a high level of uncertainty related to the estimates.

The impairment tests have resulted in impairment of vessels and equipment totaling NOK 280 million in 1st quarter. The impairments are spread on 13 vessels.

In addition the impairment tests have resulted in impairment of vessel in joint ventures with NOK 50 mill in 1st quarter (50% share). The impairments are spread on 5 vessels, all owned by DOF Deepwater AS.

Note 5 Tangible assets

2016 Vessel and periodical maintenance

ROV

Newbuilds

Operating equipment

Total

Book value at 01.01.2016 21 603 943 106 535 23 188

Addition 195 2 16 16 229

Vessel completed - - - - -

Disposal - - - - -

Reclassification - 2 - - 2

Depreciation -176 -47 - -33 -256

Impairment loss -280 - - - -280

Currency translation differences 66 - 3 -9 60

Book value at 31.03.2016 21 408 900 125 509 22 943

2015 Vessel and periodical maintenance

ROV

Newbuilds

Operating equipment

Total

Book value at 01.01.2015 21 887 1 002 483 494 23 866

Addition 159 - 1 714 105 1 978

Vessel completed - - - - -

Disposal -1 019 - - -17 -1 036

Reclassification - -19 19 - -

Depreciation -180 -40 - -27 -247

Currency translation differences -479 -11 -26 4 -512

Book value at 31.03.2015 20 367 932 2 190 559 24 048

Financial Report Q1 2016 DOF ASA

18

Note 7 Cash and cash equivalent31.03.2016 31.03.2015 31.12.2015

Restricted cash *) 453 572 520

Cash and cash equivalent 1 216 887 1 536

Total cash and cash equivalent 1 669 1 459 2 056

*) Including restricted cash related to non-current loan from Eksportfinans.

Effect of application of IFRS 11 on investments in Joint Ventures; 31.03.2016

Opening balance 01.01.2016 513

Profit (loss) -14

Profit (loss) through OCI 98

Other -3

Closing balanse 31.03.2016 594

See Note 2 regarding the presentation of the implementation of IFRS 11.

Joint Ventures Ownership

DOFCON Brasil AS with subsidiaries 50 %

DOF Deepwater AS 50 %

DOF Iceman AS 50 %

Associated companies

Master & Commander 20 %

PSV Invest II AS (Skandi Aukra) 15 %

Iceman AS (Skandi Iceman) 20 %

DOF OSM Services AS 50 %

Canadian Subsea Shipping Company Ltd 40 %

Note 6 Investment in associated and Joint Ventures

The Company’s investment in associates and joint ventures as of 31.03.2016;

Financial Report Q1 2016DOF ASA

19

Note 8 Interest bearing liabilities

31.03.2016 31.03.2015 31.12.2015

Non-current interest bearing liabilities

Bond loan 2 650 4 126 3 347

Debt to credit institutions 16 269 13 287 17 354

Total non-current interest bearing liabilites 18 919 17 413 20 701

Current interest bearing liabilities

Bond loan 1 060 700 422

Debt to credit institutions 2 255 4 326 2 266

Utilised credit facilities 100 491 172

Liabilities held for sale - - 260

Total current interest bearing liabilities 3 415 5 517 3 120

Total interest bearing liabilities 22 334 22 929 23 821

Net interest bearing liabilities

Cash and cash equivalents **) 1 669 1 459 2 056

Total net interest bearing liabilities *) 20 666 21 470 21 765

Installment- and balloon profile *) Q2 2016 Q3 2016 Q4 2016 Q1 2017

Total current debt

Q2-Q4 2017 2 018 2019 2020 Subsequent Total

Bond 360 - - 700 1 060 - 1 965 700 - - 3 725

Debt to credit institutions 459 543 711 543 2 256 1 630 2 030 3 371 3 051 6 250 18 588

Overdraft facilities - - 100 - 100 - - - - - 100

Total 818 543 811 1 243 3 415 1 630 3 995 4 071 3 051 6 250 22 412

* ) Amortised costs are excluded in the figures above.

Loan divided on currency and fixed interest

Share fixed interest

Balance 31.03.2016

NOK 67 % 10 206

USD 28 % 482

GBP 50 % 11 645

Total 57 % 22 334

Covenants regarding non-current liabilities to credit institutions: - The Group net asset value should be higher than 30% or higher than 20% if the contract coverage for the fleet is greather than 70%. - The Group shall have available cash of least NOK 500 million at all times.

Per 31 March 2016 the value adjusted eguity ratio is 31,7% , free liquidity is NOK 1 216 million and contract coverage is above 70% the next 12 months. The Group is in compliance with it’s financial covenants as of 31 March 2016.

Based on an expectation of a continued weak market and consequently increased future risk related to the Group’s financial standing, the board of direc-tors and management have started on an overall refinancing plan which will secure the company with satisfactory financing and liquidity throughout an expected demanding period. This plan includes dialogue with the Group’s lenders, bond holders and the largest shareholders, where all stakeholders are expected to contribute to such an overall solution.

* ) Derivatives are not included in the net interest bearing liabilities. Comparable figures are restated.

** ) A non-current loan has been provided by Eksportfinans and is invested as a restricted deposit in DNB. The loan is fully repaid in 2021. The cash deposit is included in restricted deposits.

Out of current debt to credit institutions of NOK 2,255 million, the balloon payments amounts to NOK 278 million and normal amortization amounts to NOK 1,977 million (exluded accrued interest). The balloon is related to DOF Subsea and due date is at the end of 2016.

Current part of bond loan is related to DOF Subsea AS NOK 360 million with maturity in April 2016 and DOF ASA NOK 700 million with maturity in February 2017.

Financial Report Q1 2016 DOF ASA

20

Note 9 Events after balance date

Note 10 Transaction with related parties

Note 11 Taxes

The subsidiary DOF Rederi AS has signed an agreement with Total Austral for an extention of the vessels Skandi Møgster and Skandi Saigon. The vessels are firm until 15 October 2016

DOF Rederi AS has signed an agreement with Nexen Petroleum UK for Skandi Marstein. The contract will start in May 2016 and is firm until end 2017.

DOF Rederi has signed a 3 months contract + options with Maersk Oil North Sea UK Ltd for Skandi Gamma with start up in April 2016.

DOF Subsea has been awarded several IMR and subsea installation contracts with a total contract value in excess of NOK 500 million.

Petrobras has extended the RSV contract for the vessel Geograph for 18 months.

Skandi Paraty, owned by Norskan Offshore Ltda has been delivered from the yard and went on-hire on a four years contract with Petrobras. Skandi Paraty is an AHTS, Vard AH11 design, and is the last vessel in a series of three, all built at Vard Niteroi in Brazil.

DOF's subsidiary DOF Management Australia Pty Ltd has signed two contracts with Schlumberger Asia Services Ltd for Skandi Emerald and Skandi Giant. The contracts will start in May and have duration of 120 days + 1 x 5 weeks option.

Transactions with related parties are governed by market terms and conditions in accordance with the "arm's length principle". The transactions are described in the Annual report for 2015.

There are no major changes in the type of transactions between related parties.

Taxes per 31 March 2016 are a preliminary estimate.

Financial Report Q1 2016DOF ASA

21

Note 12 Share capital and shareholders

Largest shareholders as of 31.03.2016

Name No. shares Shareholding Voting shares

MØGSTER OFFSHORE AS 56 876 050 51.22 % 51.22 %

PARETO AKSJE NORGE 10 090 268 9.09 % 9.09 %

SKAGEN VEKST 5 762 213 5.19 % 5.19 %

MP PENSJON PK 1 835 503 1.65 % 1.65 %

MOCO AS 1 094 184 0.99 % 0.99 %

VESTERFJORD AS 1 027 650 0.93 % 0.93 %

KANABUS AS 1 004 684 0.90 % 0.90 %

FORSVARETS PERSONELLSERVICE 997 421 0.90 % 0.90 %

PARETO AS 994 000 0.90 % 0.90 %

THE NORTHERN TRUST CO. 807 668 0.73 % 0.73 %

EIKA NORGE 668 612 0.60 % 0.60 %

VERDIPAPIRFONDET ALFRED BERG NORGE 635 758 0.57 % 0.57 %

SKANDINAVISKA ENSKILDA BANKEN AB 586 830 0.53 % 0.53 %

ENERGY INVESTORS AS 529 384 0.48 % 0.48 %

LISE AS 500 000 0.45 % 0.45 %

FLU AS 453 661 0.41 % 0.41 %

DNB NOR BANK ASA 452 865 0.41 % 0.41 %

IMAGINE CAPITAL AS 423 098 0.38 % 0.38 %

BKK PENSJONSKASSE 413 000 0.37 % 0.37 %

HOFSTAD 361 211 0.33 % 0.33 %

Total 85 514 060 77.00 % 77.00 %

Total other shareholders 25 537 288 23.00 % 23.00 %

Total no of shares 111 051 348 100 % 100 %

DOF ASA SINGAPORE

DOF Subsea Asia Pacific Pte Ltd460 Alexandra Road # 15-02PSA Building, 119963SINGAPOREPhone: +65 6561 2780Fax: +65 6561 2431asia-pacific@dofsubsea.com

DOF Management Pte Ltd460 Alexandra Road # 15-02PSA Building, 119963SINGAPOREPhone: +65 6868 1001Fax: +65 6561 2431

UNITED KINGDOM

DOF Subsea UK LtdHorizons House 81-83 Waterloo Quay Aberdeen, AB11 5DEUNITED KINGDOMPhone: +44 1224 614 000Fax: +44 1224 614 001uk@dofsubsea.com

DOF (UK) LtdHorizons House 81-83 Waterloo Quay Aberdeen, AB11 5DEUNITED KINGDOMPhone: +44 12 24 58 66 44Fax: +44 12 24 58 65 55info@dofman.co.uk

USA

DOF Subsea USA Inc5365 W. Sam Houston Parkway N Suite 400, Houston Texas 77041 USAPhone: +1 713 896 2500Fax: +1 713 984 1612info@dofsubsea.us

ARGENTINA

DOF Management Argentina S.A.Peron 315, piso 1, Oficina 6-b1038 - Buenos AiresARGENTINAPhone: +5411 4342 4531dofargentina@surnav.com

AUSTRALIA

DOF Management AustraliaLevel 1, 441 South RoadBentleigh, Vic. 3204AUSTRALIAPhone: +61 3 9556 5478Mobile: +61 418 430 939

DOF Subsea Australia Pty Ltd5th Floor, 181 St. Georges TcePerth, Wa 6000 AUSTRALIAPhone: +61 8 9278 8700Fax: +61 8 9278 8799asia-pacific@dofsubsea.com

BRAZIL

NorSkan Offshore LtdaRua Lauro Müller, 116 - Offices 2802 to 2805 - Botafogo - Rio de Janeiro - RJ BRAZIL - CEP: 22290-160Phone: +55 21 2103-5700Fax: +55 21 2103-5717office@norskan.com.br

DOF Subsea Brasil Serviços LtdaRua Fiscal Juca, 330 Q: W2 – L: 0001 Loteamento Novo Cavaleiros Vale Encantado – Macaé/RJ BRAZIL - CEP: 27933. 450Phone: +55 22 2123-0100Fax: +55 22 2123-0199brasil@dofsubsea.com

CANADA

DOF Subsea Canada26 Allston Street, Unit 2Mount Pearl, NewfoundlandCANADA, A1N 0A4Phone: +1 709 576 2033Fax: +1 709 576 2500can@dofsubsea.com

NORWAY

DOF Subsea ASThormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 55 25 22 00Fax: +47 55 25 22 01info@dofsubsea.com

DOF Subsea Norway ASThormøhlensgate 53 C5006 Bergen NORWAYPhone: +47 55 25 22 00Fax: +47 55 25 22 01info@dofsubsea.com

DOF Management ASAlfabygget5392 StorebøNORWAY

Thormøhlensgate 53 C5006 Bergen NORWAY

Phone: +47 56 18 10 00Fax: +47 56 18 10 06management@dof.no

ANGOLA

DOF Subsea AngolaRua Ndumduma 56/58Caixa postal 2469, MiramarLuanda, Republic of Angola Phone/Fax: +244 222 43 28 58 +244 222 44 40 68Mobile: +244 227 28 00 96 +244 227 28 99 95 E-mail: angola@dofsubsea.com

Alfabygget5392 StorebøNORWAYPhone: +47 56 18 10 00Fax: +47 56 18 10 06management@dof.no

DOF ASA

Alfabygget

5392 Storebø

NORWAY

www.dof.no

Financial report Q1 2016Accounts Q1 2016Income statementStatement of comprehensive incomeStatement of financial positionStatement of equityStatement of cash flow

Notes to the AccountsNote 1 GeneralNote 2 Management reportingNote 3 Segment information - management reportingNote 4 HedgesNote 5 Tangible assetsNote 6 Investment in associated and Joint VenturesNote 7 Cash and cash equivalentNote 8 Interest bearing liabilitiesNote 9 Events after balance dateNote 10 Transaction with related partiesNote 11 TaxesNote 12 Share capital and shareholders