SIMON MØKSTER HOLDING AS

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1 ENVIRONMENTAL AND ANNUAL REPORT 2010

SIMON MØKSTER HOLDING AS

YOUR BEST PART NER

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In 1975 the company ventured into offshore activities by ordering two tugboats. In 1981 it took delivery of the first rebuilt standby vessel, Strilmøy. Additional rebuilt standby vessels were delivered in the 80s and 90s. In the last 13 years Simon Møkster Holding has taken delivery of 18 newly built offshore vessels. These include supply, standby, AHTS vessels and subsea ROVs.

The group currently operates and partially or wholly owns a fleet of 23 vessels, including newbuilds, compris-ing three area standby vessels, three field standby vessels, one standby vessel, eight supply vessels, four AHTS ves-sels, two subsea ROVs and two roll-on/roll-off carriers.

The company’s focus is on tailor-made solutions, qual-ity, safety and solidity. The company’s business idea is to engage in long-term contracts through owning and operating offshore vessels. The company emphasises the importance of skilled personnel on land and at sea in order to further develop the business.

As at 31.12.2010 the company employed 439 people – 408 seamen and 31 office staff. Skilled personnel, good seamanship and continuous improvements to staff and vessels will help the company develop.

IMPORTANT EVENTS IN THE PAST YEAR

JANUARY

Stril Power and Strilmøy extended their contract with ExxonMobil for a further four and five years respective-ly. Strilhauk is sold.

FEBRUARY

Newbuild contract with STX for PSV 09L CD is signed.

MARCH

Stril Mermaid delivered from Simek. First vessel with NOFO 2009 standard.

MAY

Three-year contract with BP Norway (Stril Odin) and five-year contract with Marathon Norway (Stril Mermaid). Newbuild contract with STX for PSV 09L CD is signed.

AUGUST

Operation of Atlantis Dweller off Nigeria is discontinued. 60–80 day contract with Eni on supporting Polar Pioneer LUNDE – Barents Sea.

SEPTEMBER

Stril Explorer delivered by Westcon

OCTOBER

18-month contract with SeaHold for Stril Explorer.

NOVEMBER

Two-year contract with Eni on supporting Scarabeo 8 GOLIAT – Barents Sea. Requires rebuild to DE-ICE. Finally rewarded for working hard to attract assignments in the Barents Sea.

THIS IS

SIMON

MØKSTER

HOLDING AS

Through unity we aim to promote

our core values, which are: honesty,

a long-term approach, courage,

innovation and accountability .

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5 SIMON MØKSTER HOLDING AS

SM REDERI AS

SM SHIPPING AS

MR SUBSEA KS 45% MR SUBSEA II AS 100% TEAM BEREDSKAP sp/f 50% MARINER sp/f 100% MR SUBSEA AS 50% 10% 10% 100%

NORTH SEA SAFETY 100%

NORTH SEA SAFETY 40%

SUPPLYINVEST AS 100%

STRIL OFFSHORE 50%

DIS STRIL OFFSHORE 37%

MØKSTER SAFETY AS 100% MØKSTER SUPPLY AS 60% MØKSTER SUPPLY KS 54% 10% 1% 22% 100%

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The new year poses new opportunities and challenges. It is a very complex world with considerable unrest in many regions. In domestic waters we are well shielded from conflict, natural disasters and other tragedies. We are just extremely fortunate up here in northern waters. Our main focus will therefore be on a demanding ship-ping market with everything that this entails.

2010 was a difficult year with overcapacity in the market. This meant that there were more vessels than assignments, along with continued deliveries of large, newly built, advanced vessels in the market. This trend appears to be continuing in 2011 to some extent, al-though there are signs of improvements in the latter part of 2011/2012.

History shows that it is difficult to predict exactly when the market will rebalance itself, and when it happens things can change quickly. Thus, on the whole, I am opti-mistic about market prospects. There are always battles to be fought on one front or another – after all, life is meant to be a challenge. At times we may feel that things

are difficult and unfair. It is okay to complain, but we should not ‘wallow in our grief’. A well-known business leader always had a standard reply if staff came to him with a complaint about something: “Don’t come to me with your problems; show me how you’re going to solve them.” We must be able and willing to work our way out of problems and into good solutions – with grit and determination.

At Simon Møkster Shipping AS we do our best to solve challenges and find answers – and we do so with a smile! Through unity we aim to promote our core values, which are: honesty, a long-term approach, courage, innovation and accountability.

2010 was a busy and challenging year for Simon Møk-ster Shipping AS. Two newbuilds have been delivered, and two new ones ordered. A good start is important to everyone, also when launching a new project, new vessel, or in relation to new clients/suppliers. In order to retain existing clients and attract new ones, we must provide what the client wants, both in terms of the product and with regard to QHSE.

Everyone is dependent on satisfied clients who come back time and again – but it should also be important to clients that we retain a certain level of profit every day in order to develop new products, skills and services. Setting targets, working hard towards them and then reaching them is an ongoing process. There should be a thread linking our strategy to our goals, actions and behaviour.

With regard to Health, Safety, Environment and Quality we have set ourselves an undisputable goal of zero injury to personnel, equipment or the environment.

All our employees should be able to return home as healthy as when they turned up for work.

WHERE DO

WE STAND,

WHAT ARE OUR

PROSPECTS,

WHERE

DO WE GO

FROM HERE?

Through unity we aim to promote

our core values, which are: honesty,

a long-term approach, courage,

innovation and accountability .

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The incidents that the company experienced in 2010 have been reviewed and in some cases investigated. The recur-rent theme is that the incident could have been avoided had the relevant rules and procedures been followed. This takes us straight to an important word: compliance. We receive plenty of positive feedback from clients on work carried out to a high standard at sea and on land, and it is important that we acknowledge this – we should enjoy what we do and be proud of it.

Nobody is perfect. Nobody can be expected to know everything. We must dare to fail, then learn from our mistakes before moving on. Is it possible to learn from the mistakes of others, or do we have to experience it ourselves before we can learn from it? There is much to suggest that most people do not learn much from other people’s errors. Experience exchanges, knowledge transferred from one situation to a fairly similar situa-tion, requires transparency and safety. No question or comment should be considered irrelevant, and in order to develop we must work together to achieve results. In turn this means that we must continue to improve at all levels. Co-operation is a keyword in order to achieve the best possible results.

It has been said that people working in an environment that is friendly, that understands that everyone can make mistakes and that has time for everyone also find the best way to do a good job.

Simon Møkster Shipping AS has a corporate culture whereby it is important to preserve a sense of intimacy, encourage well-being, be innovative and a little different. Each and every ship in our fleet promotes our corporate culture through its day-to-day operations. In order for a company to develop it needs capital/cash and skilled personnel and, as is often proven when something is working well, this is easy. It boils down to issues such as common sense, will, well-being and curiosity.

People who are enthusiastic, curious and hungry for knowledge at sea and on land are a prerequisite for continuing success, and at Møkster long-term thinking is one of our core values.

In 2011 the fleet will be expanded with new vessels and new people who will all become part of Møkster. I am looking forward to a great new year, a year that will provide us with new wisdom, learning and understanding as we continue to develop. “Everything is connected” Anne Jorunn Møkster 31.03.2011.

At Simon Møkster Shipping AS we

see the importance of preserving

a sense of intimacy, as well as

encouraging well-being!

PHO TO : NOR W EG IA N SH IP OW NER S’ A SS OC IA TION

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PERSONNEL,

SICKNESS ABSENCE

AND RECRUITMENT

During 2010 the company employed an average of 439 people. Of these, 408 worked onboard our vessels sailing under a Norwegian flag, and 31 at our office. We also had 72 employees on the company’s Faroese-flagged vessels. As at 31.12.10 there were 35 employees in train-ing, 26 apprentices and 9 cadets. Staff numbers have remained stable throughout the year.

The company continued to meet its commitments to SURF (the shipping industry’s education and recruitment forum) and will continue to invest in new generations of seamen. The collaboration group has been expanded to include DOF, providing us with additional local impact. One of the company’s challenges in 2010 was to imple-ment Visma Travel on all vessels. Visma Travel is an internet-based system for submitting sailors’ travel expenses claims. The system replaces much of a vessel’s cash reconciliation system as payments are now made directly to a bank account. Linking Visma Travel to the company’s payroll system proved a considerable techni-cal challenge, but most of the problems have now been solved, and the system is working well to all intents and purposes.

The level of sickness absence saw a satisfactory drop in 2010. The average for 2010 was 4.17% for sailors on-board NOR vessels. This is a significant reduction on last

year’s figure of 5.56%. Although there was an increase in sickness absence at the end of 2010, the company will continue to focus on our employees’ health and will work to maintain the positive trend from 2010. On the company’s FAS vessels the level of sickness absence was 2.19%, a figure that the company is very satisfied with.

The company is continuing its agreement with Alpha Medisinske Senter in Stavanger as an occupational health service for its sailors.

The HR department continued to experience a demand-ing recruitment market in 2010, particularly in terms of high level positions where there have been few available candidates. In this respect the company has benefitted from its investment in training positions onboard our vessels. This has continued to provide the company with internal candidates holding higher qualifications, paving the way for internal promotions of crews that know the fleet and systems well.

There was also extensive activity last year in relation to courses and skills training. In particular, the introduc-tion of a new TM master system has meant an above av-erage level of course activity, in addition to ever stricter requirements for formal qualifications from both clients and authorities, and in relation to internal requirements.

We continue to work to maintain

the positive trend of ever lower

levels of sickness absence .

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9 AS AT 31 .12 .10 THERE WERE 35 TRAINING

POSITIONS, 26 APPRENTICES AND 9 CADETS .

THE COMPANY WILL CONTINUE TO INVEST IN

THE NEW GENERATION OF SEAMEN .

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SIMON MØKSTER SHIPPING FOCUSES

ON TAILOR-MADE SOLUTIONS, QUALITY,

SAFETY AND SOLIDITY .

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11

ANNUAL

DIRECTORS’

REPORT 2010

In 2010 Simon Møkster Holding AS saw operating reve-nues of NOK 626.8 million (NOK 531.6 million in 2009). Profit for the year after tax was NOK 17.5 million (NOK 104.7 million in 2009). Operating profits before depreciation (EBITDA) in 2010 stood at NOK 262.7 million (NOK 219.6 million in 2009). Book equity at the end of the year was NOK 1,289.5 million (NOK 1,256.2 million in 2009).

The group’s continued focus on HSE work has paid divi-dends in terms of its safety record. Work is also under-way to reduce pollution and emissions into the external environment. At year end Simon Møkster Holding AS had 20 vessels in operation and three under construction.

THE BUSINESS

Simon Møkster Holding AS’ area of business largely involves the ownership and operation of offshore vessels. The group focuses on tailor-made solutions, modern and environmentally friendly vessels and personnel with a high level of maritime expertise.

ABOUT THE ANNUAL FINANCIAL STATEMENTS

The group’s total revenue stood at NOK 626.8 million (NOK 531.7 million in 2009). Turnover has increased in recent years due to the acquisition of number of new ves-sels. Operating costs totalled NOK 484.8 million (NOK 414.7 million in 2009). The purchase of new vessels has involved some start-up costs, and operating costs are therefore expected to be somewhat lower in the immedi-ate future.

Operating profits after depreciation and before financial costs (EBIT) were NOK 141.9 million (NOK 117 million in 2009). Net financial items in 2010 totalled

NOK 94.2 million (NOK 89.4 million in 2009). Profit before tax came in at NOK 47.7 million (NOK 27.6 million in 2009).

In June 2010 transitional rules were introduced to allow untaxed profits from the previous taxation regime for shipping companies to be settled with a one-off payment. The board of Simon Møkster Holding AS resolved to make use of this scheme, and its tax accounts have been debited with a shipping company tax payment of NOK 36.5 million to be paid over a 3-year period. Net estimat-ed tax for 2010 is NOK 30.2 million. Profit after tax was NOK 17.5 million (NOK 104.7 million in 2009). Profit for the year after minority interest was NOK 8.4 million.

All liabilities are in NOK. As at 31.12.2010 interest-bearing secured debts totalled NOK 2,350.0 million (NOK 2,099.8 million in 2009). The group’s book equity was NOK 1,289.5 million (NOK 1,256.2 million in 2009), equivalent to an equity ratio of 34%.

A broker’s valuation has been obtained, showing that the vessels carry significant excess value.

Cash flow from operations totalled NOK 191 million compared with NOK 54 million in 2009. The accumu-lation of working capital due to increased activity has limited cash flow somewhat. The company’s liquid assets totalled NOK 363.8 million as at 31.12.2010

(NOK 294 million in 2009). The company’s free liquidity is considered to be good in light of the com-pany’s commitments.

The parent company is a straightforward holding com-pany with no activity except for remuneration for board directors. Its assets consist of shares and receivables re-lating to its subsidiaries. The company has no liabilities. The board is of the opinion that the annual financial statements give a true picture of Simon Møkster Holding AS’ assets and liabilities, its financial position and profit.

At year end Simon Møkster Holding

AS had 20 vessels in operation and

three under construction .

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HEALTH, SAFETY AND ENVIRONMENT

Health, safety and environment (HSE) are key priorities for the group. The group management is working deter-minedly to increase focus and understanding amongst all employees.

When ordering new vessels focus is on creating a safe and secure place of work, as well as minimal emissions into the atmosphere and the sea.

Simon Møkster Holding AS has no employees. At year end 439 people were employed by Simon Møkster Ship-ping AS, a part of the Møkster Group. Of these, 408 worked onboard vessels and 31 were office staff. The working environment onboard and in the offices is con-sidered to be good. Sickness absence in 2010 was 4.5% for all employees – a reduction from 5.6% in 2009. Con-tinual efforts are being made to reduce sickness absence.

The company provides extensive internal training and has around 40 apprentices and cadets employed in vari-ous training positions (as at 31.12.10). The group works

to promote equality and ensure equal opportunities and rights for all employees regardless of ethnic background. The group aims to create a workplace where discrimina-tion does not exist because of reduced funcdiscrimina-tional ability. The company’s board and management are conscious of society’s expectations with regard to promoting equality and offers equal pay for identical positions regardless of gender.

Regrettably, the company experienced two cases of lost time injuries in 2010 – there was only one such injury in 2009. The company saw an increase in the number of injuries in 2010, and a campaign is being planned in an attempt to reduce this figure in 2011. On a positive note, several vessels have operated for 10 years or longer with no lost time injuries. Serious incidents are investigated in order to establish their direct and indirect causes.

THE EXTERNAL ENVIRONMENT

Simon Møkster Holding AS complies with prevailing regulations and provisions in order to prevent damage to the external environment. Operations onboard its vessels follow strict national and international laws and regulations. The vessels are manned by highly qualified personnel, who work to achieve the best possible operat-ing profile and reduce emissions. A dedicated system has been implemented for measuring and reporting consump-tion and emissions. In the last few years all bunker fuel consumption and emissions have been recorded, and a dedicated environmental report has been produced.

The group works to promote

equality and ensure equal

opportunities and rights for all

employees!

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John Arild Ertvaag Arne Lier Arne L. Økland Chairman Director Director

Astrid Simone Møkster Alf Møkster Anne Jorunn Møkster

Director Director CEO

SIMON MØKSTER BOARD OF DIRECTORS

FINANCIAL RISK

The group has hedged a large part of its loans with fixed interest. At year end 2010, 50% of the group’s interest-bearing debts were secured with fixed interest. The exchange rate risk is low as only a few contracts and none of the debts are linked to foreign currencies. The credit risk is low because the contracts are linked to the company’s clients, which are predominantly large oil companies.

The management and board have sustained focus on managing liquidity and liquidity risks. The vessels are enjoying a high level of contract coverage, thus ensuring predictability in terms of interest and capital repayments in the next few years. A high level of contract coverage in the coming years offers certainty in relation to the repay-ment of debts. The group’s three newbuilds have all been financed to a satisfactory level – one standby vessel that has entered into a 10-year contract with Statoil and two modern supply vessels currently without contracts. Equity requirements for projects have become stricter in the last year. The company emphasises the importance of sustaining a good and open dialogue with the group’s financing partners.

MARKET PROSPECTS

The supply of vessels outstripped demand in the offshore supply sector in 2010. The market has also been affected by the Macondo accident, which resulted in the suspen-sion of deepwater drilling in the Mexico Gulf. The year may be summarised as one in which oil companies have looked to previous drilling and development plans in tandem with rising oil prices.

The average price of North Sea oil in 2010 was USD 80.3 per barrel, an increase of 28.5% on the previous year. Møkster was barely affected by the difficult market in 2010 thanks to its long-term contracts and a fleet capable of performing diversified services such as oil recovery, rescue and firefighting in addition to supply and anchor handling. The board expects to see an improvement in offshore activities in 2011, but also market overcapacity in periods. The board takes a positive view of the long-term market prospects for the offshore supply market. With the delivery of two attractive and large new supply

vessels due in October 2011 and March 2012, as well as an AHTS vessel coming off contract in November 2011, it is the board’s opinion that the group is well positioned for meeting the expected increase in demand for attrac-tive offshore vessels.

GOING CONCERN

In accordance with Section 3-3 of the Norwegian Ac-counting Act the company confirms that the require-ments for the going concern assumption have been satisfied. This assessment is based on profit and liquidity forecasts for the next few years. No events have occurred after the end of the financial year that affect the assess-ment of the published financial stateassess-ments.

ALLOCATIONS

The board of directors proposes that the annual profit of Simon Møkster Holding AS be transferred in full to other equity.

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The main activity this year in relation to HSE work has been to follow up on risk evaluation. The company has also focused on the reporting of incidents in general and on improving the reporting process. At the beginning of the year a leaflet was distributed describing the process for reporting incidents. This included categorising inci-dents and classifying potential injuries.

The reporting of incidents and investigations. The num-ber of reported incidents remains similar to 2009, taking into account the size of the fleet. However, the quality and categorising of incident reports have improved. For example, in 2009 we had 40 near misses, 102 safety observations and 236 non-conformity incidents. In 2010 the numbers were 57 near misses, 231 safety observa-tions and 73 non-conformity incidents. This represents a trend that the company is very satisfied with and also shows that the focus on incident reporting has been fol-lowed up onboard our vessels.

In 2010 the company carried out one investigation: the accident involving Prosper and Edda Fjord in Tananger port on 8 November. The investigation has now been concluded without having uncovered the exact cause of the accident but rather a number of contributing factors. Following the investigation, measures have been imple-mented both onboard and in the company’s governing procedures in order to prevent such an incident from happening again.

OFFICERS’ CONFERENCE

This year’s conference was held at Quality Airport Hotel, Sola. It was divided into two sessions. The participants were 36 captains and 25 chief engineers – 72% of those invited were in attendance. The company is not satisfied with the level of participation and aims to achieve 90% participation at next year’s conference.

The conference was opened by our CEO, who gave an account of the company’s strategy and goals in her open-ing address. The conference included a joint day, where health, environment and safety, work permits, procure-ment, planning/co-ordination and follow-up were the key topics along with staffing, market prospects and vessel activity. The first day of the conference concluded with a dinner that was also attended by representatives from the company’s offices.

On the second day of the conference captains and chief engineers were divided into two groups, and topics relat-ing to technical solutions such as thermography, TM Master and PMS were presented to the chief engineers. The captains were presented with topics such as the Ship Safety and Security Act and the regulations pertaining to this act.

QHSE WORK ONBOARD

Onboard efforts in respect of QHSE work appear to be making good progress. The QHSE committees have been active on most vessels and continue to focus on safety. Unfortunately, the company has still recorded some per-sonal injuries that could have been prevented with better and correct use of personal protective gear. The issue of personal protective gear was raised with all vessels, and reports at the end of the year showed a positive trend and understanding of the issue. The company received minutes of 305 QHSE committee meetings. Most of the cases raised are solved internally onboard, while some are handled at the company offices.

QUALITY,

AND HSE!

Among the challenges we have

faced is the continued focus on

our aim of zero injuries .

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15 AS AT 31 .12 .2010 THE COMPANY EMPLOYED 439 PEOPLE

408 SEAMEN AND 31 OFFICE STAFF . SKILLED PERSONNEL,

GOOD SEAMANSHIP AND CONTINUOUS IMPROVEMENTS TO

STAFF AND VESSELS WILL HELP THE COMPANY DEVELOP .

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HSE STATISTICS

Year 2007 2008 2009 2010

LTI 1 0 1 2

TRIF 1.321 0.494 0.825 1.113 Incident reports 1,085 744 653 712

LTI = Lost Time Incident

TRIF = Total Reportable Incident Frequency (12 t working days/ 200000t.)

SICKNESS ABSENCE

The level of sickness absence fell significantly in 2010. Absence fell to 4.7% on NOR vessels in 2010 from 5.65% in 2009. This is very encouraging. For Faroese-flagged vessels sickness absence was 2.19% in 2010, and amongst administrative staff it was 1.84%. In light of this the company has set a target for overall sickness absence of 4.5% in 2011.

CERTIFICATION AND AUDITS

The company has held annual DNV-run ISM/ISO audits of its offices. No deviations were identified, but seven ob-servations/proposed improvements were noted. In 2010 the internal audit was held at the office by the company’s own staff. The audit was conducted over three days. Some observations were made that have been assessed internally, action has been taken and the cases closed. All vessels have conducted internal audits as planned. It appears that most vessels maintain their management systems in the manner requested by the company. There is still room for improvement, particularly with regard to document control generally.

Regulatory audits by DNV revealed only minor dis crepancies. External audits by clients have occasion-ally proved quite challenging. This is mostly because the auditors have not assessed the material produced in a satisfactory manner and frequently apply their own interpretations of their vetting forms.

THE MANAGEMENT SYSTEM

On 1 July the first edited version of the ISM code came into force. This involved some revisions of the company’s procedures in order to comply. The company carried out 59 procedure revisions in this respect. During 2010 em-phasis was therefore placed on our management systems, including the production of information leaflets address-ing ISO codes 9001/2008 and 14001/2004. These were issued in order to improve the level of understanding of what these codes entail and their relationship with our management system. The changes to the ISM code have also been communicated to the fleet. In the company’s opinion compliance with the systems has shown a posi-tive trend.

CHALLENGES FOR 2011

The company believes that its main HSE challenge is to reduce the number of personal injuries. We should con-tinue to strive for our target of zero injuries. This applies to all injuries, not just reportable personal injuries. An-other challenge for the company is to increase the level of understanding of our management systems generally. The company is planning to run quarterly campaigns on a number of topics to raise the profile of our QHSE ini-tiatives, increase knowledge about management systems, including understanding and context, as well as the back-ground to these systems by way of information leaflets.

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THE COMPANY BELIEVES THAT ITS MAIN HSE CHALLENGE

IS TO REDUCE THE NUMBER OF PERSONAL INJURIES AND

CONTINUE TO STRIVE FOR OUR TARGET OF ZERO INJURIES!

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2010 WAS A BUSY AND CHALLENGING YEAR FOR SIMON

MØKSTER SHIPPING AS . TWO NEWBUILDS WERE DELIVERED

AND TWO NEW ONES ORDERED .

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In 2010 Simon Møkster Shipping AS had operative res-ponsibility for a fleet of 21 vessels, divided into the fol-lowing segments:

SEGMENT 1

Ordinary standby/rescue vessels (2 vessels): This group comprises ordinary older standby vessels. Stril Tender and Strilhav. These vessels only use azimuth thrusters in the bow section in order to stay in position when in the field. This means that their bunker consumption is low.

SEGMENT 2

Advanced standby vessels (Area standby) (2 vessels): This group includes the area standby vessels Stril Poseidon and Stril Herkules. Both ships were in opera-tion throughout the year.

SEGMENT 3

Multi-purpose standby vessels (7 vessels): This group includes the AHTS vessels Stril Power, Strilborg, Stril Commander and Stril Challenger along with the multi-function vessels (standby/PSV) Stril Neptun, Ranger and Prosper. These vessels offer multiple functions such as anchor handling, supply, standby services, towing, oil pollution protection, etc. Bunker consumption and there-fore also emissions will always depend on the nature of the assignment. Ranger and Prosper were laid up in connection with main and medium class vessels for four and three weeks respectively. All other vessels were in full operation.

SEGMENT 4

PSVs (6 vessels): This group includes the company’s dedicated PSVs. Stril Myster, Stril Pioner, Strilmøy, Stril Odin, Stril Mermaid and Stril Mariner. Stril Myster and Stril Pioner are dedicated PSVs. Strilmøy, Stril Odin and Stril Mariner also have standby certificates but operate as ordinary PSVs for much of the time. Stril Mermaid was delivered in March 2010, and Strilmøy was laid up (main class) in June 2010. The other vessels were in normal operation throughout the year.

SEGMENT 5

Special vessels (4 vessels): This group includes two vessels owned by Statnett but operated by Simon Møkster Ship-ping. They are the vessels Elektron and Elektron II. The subsea vessel Stril Explorer was delivered in September and technical operation of Atlantis Dweller was trans-ferred to another company in August.

CONSUMPTION AND EMISSIONS

CONSUMPTION

and EMISSIONS 2010 2009 Bunker( MGO): 36 399 tonnes 33 759 tonnes LNG: 2 414 tonnes 2 346,8 tonnes Energy conversion:: 467,1 GWh 434,6 GWh CO2 emissions: 118 977 tonnes 113 282 tonnes NOx emissions: 1 502,6 tonnes 1 458,6 tonnes SOx emissions: 161 tonnes 155,3 tonnes The following factors form the basis of the above figures: Emissions Factor Comments

(kg/kg olje)

CO2 3,17 This factor is applied to all ves-sels except the gas-operated Stril Pioner (2.74 kg / kg LNG) NOx * *Factor varies from vessel to

vessel and is determined on the basis of either readings or stan-dard factors in accordance with requirements of the Norwegian authorities.

Sox 0,0046 This factor is applied to all diesel-driven vessels. LNG operation generates no SOx emissions. Energy equivalents: 1 kg MGO fuel = 43,1 kW

1kg LNG fuel = 46,7 kW

2010:

SIMON MØKSTER

ENVIRONMENTAL

REPORTING

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ENERGY CONVERSION:

The energy equivalents have been calculated on the basis of bunker consumption (mill. kWh). It should be noted that this is a theoretical value based on the theoretical volume of energy of the fuel. Compared with 2009 there has been an increase in the fleet’s overall energy conver-sion of around 7.5%. This is largely due to new tonnage in the form of newbuilds delivered in 2010.

FUEL CONSUMPTION (MGO & LNG):

The fleet’s overall consumption has been relatively stable in recent years, but due to an expansion of the fleet in both 2008 and 2009, bunker consumption rose sharply between 2008 and 2009. This has stabilised somewhat between 2009 and 2010. Compared with the previous year there has been a slight increase of 2.9% in LNG consumption because of reduced consumption of MGO by Stril Pioner, compared with 2009.

CO2 EMISSIONS

A reduction in CO2 emissions will largely follow the changes in bunker and LNG consumption. As the figure shows, there has been an increase in CO2 emissions of 5.0% between 2009 and 2010.

NOX AND SOX EMISSIONS

NOx emissions rose by 3.0% in the last year. In recent years older tonnage has been replaced by a large number of newer and more modern vessels with modified engines and systems for reducing NOx. This has resulted in a reduction in average NOx emissions relating to bunker consumption. SOx emissions have increased by 3.9%, e.g. similar to the increase in bunker consumption as described above. 500 450 400 350 300 250 200 150 100 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 120 000 115 000 110 000 105 000 100 000 95 000 90 000 85 000 80 000 75 000 70 000 65 000 60 000 55 000 50 000 45 000 40 000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 35 000 32 500 30 000 27 500 25 000 22 500 20 000 17 500 15 000 12 500 10 000 7 500 5 000 2 500 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1 400 1 200 1 000 800 600 400 200 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TONNES TONNES TONNES MILL GWh BUNKER CONSUMPTION TONNES NoX TONNES Co2 ENERGI EKV (GWh) LNG CONSUMPTION TONNES SoX

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21 CORRESPONDING FIGURES FOR 2010

The figure above gives a graphic presentation of the percentage distribution between the five segments in 2010. Fuel consumption (Marine Gas Oil and LNG) has been converted into energy equivalents. These five segments consist of very different types of vessels, and there are also significant differences in respect of engine set-up, consumption and emissions.

Bunker oil has been converted into energy equivalents in order to illustrate these differences.

ON NOX EMISSIONS IN PARTICULAR

As mentioned previously, there was a minor increase in NOx emissions compared with previous years, while bunker consumption has also increased. Despite this, we have managed to reduce NOx emissions per energy unit produced in line with the trend of recent years. NOx emissions this year rose by 3.5%, while the fleet’s total energy conversion increased by 7.5%. There are three main reasons for this positive trend:

1. The addition of new and more modern tonnage. 2. The phasing out of older tonnage.

3. The rebuilding of existing tonnage.

The company took delivery of two newbuilds in 2010, while one older vessel was sold and the management of another vessel transferred to a different company. The average age of the fleet at the end of 2010 was 12.5 years. Newer vessels are equipped with more effective and emission-friendly engines. Most newbuilds also have emission-reducing equipment installed such as waste gas cleaning through the use of SCR systems.

NOX PER ENERGY UNIT PRODUCED:

The following development is indicated by comparing NOx emissions per energy unit produced:

The figure shows that NOx emissions per GWh produced have fallen sharply since 2001 (percentage fall for the period is around 45%).

In its 2009 HSE programme the company identified a target of reducing emissions to a maximum of 7 kg NOx/ GWh by the end of 2010. Regrettably, this target has not been achieved. The reasons for this are challenges relat-ing to NOx-reducrelat-ing systems onboard some of the new-builds, along with challenges posed by vessels operating in areas with poor or no access to urea.

16,0 14,0 12,0 10,0 2001 13,8 kg Nox / GWh 200212,8 200311,3 200411,7 200511,0 200610,7 200710,3 200810,0 20098,2 20107,8 8,0 6,0 4,0 2,0 0,0 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% ENERGI EKV.

(mkWh) (tonn)CO2 (tonn)NOx (tonn)SOx

SPECIAL VESSELS ENERGY EQUIV . (MILL . KWH) CO2 (TONNES) NOX (TONNES) 16.0 14.0 12.0 10.0 8.0 6.0 4-0 2.0 0 13.8 12.8 11.3 11.7 11.0 10.7 10.3 10.0 8.2 7.8 SOX (TONNES) PSV MULTI-PURPOSE VESSELS AREA STANDBY ORDINARY STANDBY

(22)

A number of steps have been taken in recent years to ensure a continued reduction of NOx.

The company has signed up all its vessels to the Busi-ness Sector’s NOx Fund. This includes a commitment to identify and consider possible NOx measures. The company has reviewed all its vessels and identified a range of possible measures, some of which have already been implemented.

Here are a few examples of implemented and planned measures:

MEASURES FOR EXISTING TONNAGE IN 2010:

PILOT PROJECT EGR SYSTEM STRILMØY:

Simon Møkster Shipping has entered into a partnership with PON, Nymo and STT Emtec in order to test and adapt a new EGR system (Exhaust Gas Recirculation) to vessels. A prototype (pilot system) was installed onboard Strilmøy in 2008 for a 1-year test period. This period was further extended in 2009 and 2010.

Unfortunately, the operation of this system has posed major challenges and has not worked as expected. The EGR system will therefore be demobilised during spring 2011.

MEASURES FOR NEWBUILDS:

2. STRIL MERKUR

To be delivered with both SCR system and hybrid solu-tion for engine/propeller system.

3. STX NEWBUILDS

Two PSVs were ordered from STX in 2010 with delivery due in 2011 and 2012. Both vessels will be delivered with SCR systems.

ENVIRONMENTAL FOCUS AREAS 2010–11

FLEET RENEWAL

Continue the replacement of older tonnage with more modern tonnage. Maintain continuous environmental focus in respect of new tonnage.

Particular emphasis will be placed on bunker consumption and NOx emissions.

NOX EMISSIONS VS . ENERGY PRODUCTION

The company’s relative NOx emission per GWh pro-duced shall be repro-duced. Emissions shall be cut to 7 kg NOx/GWh or less in 2011.

Fuel consumption on all vessels shall be examined with a view to making operation more efficient in order to achieve a lower level of fuel consumption and CO2 emis-sions. This will, of course, be subject to safety require-ments and should be seen in light of any requirerequire-ments from the charterer in terms of speed.

Simon Møkster Shipping is also taking part in ongoing, joint projects with Statoil, Esso and BP in order to iden-tify measures of reducing fuel consumption.

PAINT

Efforts should be made to use paint with the highest pos-sible dry solids content. This will be achieved by using existing framework agreements.

Simon Møkster Shipping

is working continuously to reduce

the fuel consumption and CO2

emissions of all its vessels!

(23)

23 THE DRY SOLIDS CONTENT IN PAINT SHOULD BE HIGH

IN ORDER TO REDUCE WASTAGE DURING APPLICATION .

(24)

PEOPLE WHO ARE ENTHUSIASTIC, CURIOUS AND HUNGRY

FOR KNOWLEDGE AT SEA AND ON LAND ARE A PREREQUISITE

FOR CONTINUING SUCCESS, AND AT MØKSTER LONG-TERM

THINKING IS ONE OF OUR CORE VALUES .

(25)

25

(NOK 1 000)

2010 2009 2008

Profit and loss accounts

Freight income 626 752 531 662 386 580

Total operation revenues 626 752 516 805 386 581

Operating expenses 364 085 312 106 264 992

Operating result before depreciation (EBITDA)

262 667 219 556 121 589

Ordinary depreciation 120 763 102 551 62 290

Operating result(EBIT) 141 904 117 005 59 299

Net finance -94 210 -89 387 -23 299

Ordinary result before taxes 47 694 27 618 36 000

Tax 30 161 -77 095 -30 819

Result 17 533 104 713 66 819

Hereof minority share 9 104 -5 999 2 516

Hereof majority share 8 429 110 712 64 303

Balance sheet

Fixed assets 3 416 701 3 152 864 2 217 729

Current assets 363 783 293 957 340 459

Total assets 3 780 484 3 446 821 2 558 188

Equity 1 289 535 1 256 152 1 121 683

Long term liabilities 2 376 790 2 105 898 1 296 399

Current liabilities 114 159 84 771 140 107

Total equity and liabilities 3 780 484 3 446 821 2 558 188

Key figures Equity ratio 1) 34,11% 36,44% 43,85% EBITDA 2) 41,91% 41,30% 31,45% EBIT 3) 22,64% 22,01% 15,34% Return on equity 4) 1 % 9 % 6% Current ratio 5) 3,19 3,47 2,43

1) Booked equity in percentage of total assets

2) Operating result before depreciation and write-down adjusted for gain/loss on sale of fixed asset 3) Operating result before depreciation in percentages of total income

4) Result after tax in percentage of booked equity 5) Current assets divided by current liabilities

(26)

CONTRACT SUMMARY AS AT 11 .04 .2011

Fixed contracts 84% Contract coverage - 2011 Options 94% Contract with option - 2011 Vessels under construction 71% Contract coverage - 2012 * Indirect owner through Norsea stake 82% Contract with option - 2012

47% Contract coverage - 2013

Name Charterer Contract 2011 2012 2013

PSV

Stril TBN 748 Spot 03. 2012

Stril TBN 729 Spot 10. 2011

Stril Mermaid Marathon 01.06.2015 + 5 + 1 year opt. Stril Mariner BP 04.11.2014 + 2 x 1 year opt. Stril Odin BP 01.08.2013 + 6 month opt Strilmøy ExxonMobil 01.02.2015 + 2 year opt. Stril Pioner Statoil 21-07-13

Stril Myster * BP 22.11.2013 + 6 month opt Stril Neptun BP 07.02.2013 + 2 x 1 year opt.

AHTS

Stril Challenger Spot/ENI 01.09.2013 + 2 year opt. Stril Commander EDT 10-12-11

Strilborg Statoil 31.12.2012 + 8 x 1 week opt. Stril Power ExxonMobil 01.02.2014 + 2 x 2 year opt.

OMRÅDEBEREDSKAP/ENKEL BEREDSKAP

Stril TBN - Bygg 450 Statoil 01.12.2018 + 5 x 1 year opt. 06. 2011 Stril Herkules Statoil 05.12.2018 + 5 x 1 year opt.

Stril Poseidon Statoil 25.07.2011 + 3 x 2 year opt. Prosper BP 22.07.2011 + 4 x 3 month opt Ranger Talisman 22.07.2011 + 4 x 3 month opt Stril Tender Avløsning 31-12-10

SUBSEA

Stril Explorer Seahold Geoships Ltd 01-09-12

Atlantis Dweller Fugro-RUE 15.12.2014 Bareboat + opt

(27)

27

FLEET SUMMARY AS AT 11 .04 .10

*Indirect owner through NorSea stake

GROUP

Name Year of Design DWT HP Dekk Bollard Standby FiFi Oil DP

constr. m2 pull rec class

PSV

Stril TBN 748 2012 STX 09L 4 800 12 748 1 055 65 X X X Stril TBN 729 2011 STX 09L 4 500 12 748 1 055 65 X X X Stril Mermaid 2010 Havy 832-PSV/Standby 3 107 6 400 750 X X X X Stril Mariner 2009 Havy 832-PSV/Standby 3 107 6 200 750 X X X X Stril Odin 2006 MT 6000 II-PSV/Standby 3 350 7 300 940 X X X Strilmøy 2005 MT 6000 II-PSV/Standby 3 350 7 300 940 80 X X X Stril Pioner 2003 VS 4403-PSV 4 000 10 934 1 030 X X Stril Myster * 2003 VS 490-PSV 3 590 12 926 985 X Stril Neptun 1999 VS 470-PSV/Standby 2 423 7 372 580 100 X X X X

AHTS

Stril Challenger 2009 Havy. 842-AHTS/Standby 2 806 16 000 530 208 X X X X Stril Comander 2009 Havy. 842-AHTS/Standby 2 806 16 000 530 200 X X X X Strilborg 1998 UT 722-AHTS/Standby 2 926 16 200 570 161 X X X X Stril Power 1997 UT 722-AHTS/Standby 2 926 16 200 570 161 X X X X

AREA STANDBY/ ORDINARY STANDBY

Stril TBN/Build 450 2011 VS 482II-Area standby 4 500 18 860 350 100 X X X X Stril Herkules 2008 VS 482 II-Area standby 4 500 18 860 350 100 X X X X Stril Poseidon 2003 VS 482-Area standby 4 785 14 000 100 100 X X X X Prosper 1983 UT 704-PSV/Standby 1 636 8 000 520 100 X X X Ranger 1983 UT 704-PSV/Standby 1 502 8 000 400 100 X X X Stril Tender 1965/83 Standby 541 1 850 100 30 X

SUBSEA

Stril Explorer 2010 MM73-Subsea 3 300 7 400 500 X Atlantis Dweller 2009 MM66-Subsea 3 200 7 400 400 X

(28)

SIMON MØKSTER HAS IDENTIFIED A TARGET

OF MAXIMUM 7 KG NOX/GWH

(29)

29

INCOME STATEMENT

Operating revenue Note 2010 2009

Operating revenue 2 626 752 530 310

Gains on disposal of vessels 0 1 352

Total revenue 626 752 531 662

Operating expenses

Operating expenses vessels 6 109 616 89 147

Payroll/crewing costs 3 224 524 209 816

Ordinary depreciation 4,5 120 763 102 551

Other operating expenses 3 29 945 13 143

Total operating expenses 484 848 414 657

Operating profit/loss 141 904 117 005

Financial income and expenses

Profit/loss on investments in associated companies 7 8 148 13 371

Interest income 2 566 3 690

Other financial income 523 4 428

Interest costs 94 049 84 428

Other financial expenses 11 398 26 448

Net financial items -94 210 -89 387

Ordinary profit/loss before tax 47 694 27 618

Tax on ordinary profit 13 30 161 -77 095

Profit/loss for the year 17 533 104 713

Profit/loss attributed to minority interests 9 104 -5 999

Profit/loss for the year after minority interests 8 429 110 712

(30)

BALANCE SHEET

Assets Note 2010 2009

Fixed assets

Deferred tax assets 13 9 765 5 660

Goodwill 4 3 300 6 600

Tangible fixed assets 5 3 186 782 2 939 317 Accrued class expenses 6,12 88 139 103 623 Investments in associated companies 7 124 372 91 324

Pension assets 10 1 418 291

Other receivables 3 2 925 6 049

Total fixed assets 3 416 701 3 152 864

Current assets

Trade receivables 112 062 92 313

Other receivables 76 178 64 892

Bank deposits, cash etc. 8 175 543 136 752

Total current assets 363 783 293 957

Total assets 3 780 484 3 446 821

(31)

31

Liabilities and equity Note 2010 2009

Equity

Paid-in capital 9 114 204 114 204

Retained earnings 1 027 675 1 019 246

Equity before minority interests 1 141 879 1 133 450

Minority interests 147 656 122 702

Total equity 14 1 289 535 1 256 152

Long-term liabilities

Tax payable 13 24 301 3 044

Pension liabilities 10 2 501 1 697

Liabilities to credit institutions 11 2 349 988 2 099 711

Other long-term liabilities 0 1 446

Total long-term liabilities 2 376 790 2 105 898

Current liabilities

Liabilities to credit institutions 1 164 1 667

Trade payables 13 519 11 839

Tax payable 13 12 869 1 935

Unpaid government charges and taxes 31 229 16 390 Other current liabilities 11 55 378 52 940

Total current liabilities 114 159 84 771

Total liabilities and equity 3 780 484 3 446 821

31. desember 2010 Stavanger, 11. April 2011

John Arild Ertvaag Alf Møkster Arne Lier

Chairman Director Director

Arne L. Økland Astrid Simone Møkster Anne Jorunn Møkster Director Director CEO

(32)

CASH FLOW STATEMENT

GROUP

Cash flow statement 2010 2009

Cash flow from operations

Ordinary profit/loss before tax 47 694 27 618 Refunded/paid tax in the period (-) 18 516 -12 831 Gain/loss on the sale of tangible fixed assets 0 -1 352

Ordinary depreciation 120 763 102 551

Accrued class expenses 37 035 29 152

Revenue from investments in associated companies -8 148 -13 371 Change in recognised pension liabilities -323 -8 659 Change in trade receivables and trade liabilities -18 069 -70 858

Change in other accruals -6 614 1 856

Net cash flow from operations 190 854 54 106

Cash flow from investments

Receipts from sale of tangible fixed assets 0 1 352 Payments for acquisition of tangible fixed assets -364 929 -1 036 609 Payments for periodic maintenance -21 551 -49 214 Receipts from investments in associated companies 0 40 000 Payments for investments in associated companies -24 900 0 Change in balance between associated companies 3 881 6 500

Net cash flow from investments -407 499 -1 037 971

Cash flow from financing activities

Repayments of long-term interest-bearing liabilities -149 158 -120 751 Incurrance of long-term interest-bearing liabilities 398 932 997 522 Receipts from/payments to (-) owners -12 009 10 562 Receipts from/payments to (-) minority interests 17 670 20 500

Net cash flow from financing activities 255 435 907 833

Net change in cash and cash equivalents 38 791 -76 032

Cash and cash equivalents at the start of the period 136 753 212 785

(33)

33 2010 WAS A BUSY AND CHALLENGING

YEAR FOR SIMON MØKSTER SHIPPING AS .

TWO NEWBUILDS WERE DELIVERED

AND TWO NEW ONES ORDERED .

(34)

NOTES

NOTE 1 ACCOUNTING PRINCIPLES

GENERAL

The consolidated accounts have been prepared in accordance with the provisions of the Accounting Act and generally accepted accounting practices. The figures provided in the consolidated accounts are all given in NOK 1,000 unless otherwise stated.

CONSOLIDATION PRINCIPLES Consolidated accounts

The consolidated accounts include those companies where the parent company and subsidiary have a direct or indirect controlling influence. The consolidated ac-counts show the companies’ economic standing, the annual result of operations and cash flows as a single economic entity. In principle a controlling influence is defined as direct or indirect ownership of more than 50% of the voting capital. Uniform accounting principles have been applied to all companies forming part of the group.

Newly acquired subsidiaries are included from the moment when influence has been achieved. The following companies are part of the group: Simon Møkster Holding AS (parent company) Simon Møkster Shipping AS (100%)

Simon Møkster Rederi AS (100%) Møkster Safety AS (100%) Stril Power AS (63,6%) Supplyinvest AS (100%) North Sea Safety AS (100%) MR Subsea II AS (100%)

Stril Offshore (internal partnership) (59.5%) Sp/f Mariner, Faroe Islands (100%)

Møkster Bemanning AS, being wound up (100%) Møkster Supply AS (60%)

Møkster Supply KS (60%)

The subsidiary Supplyinvest KS (100%) was wound up on 8 October 2010.

Elimination of stakes in subsidiaries

Stakes in subsidiaries have been eliminated in the con-solidated accounts using the acquisition method of ac-counting. The difference between the cost price of assets and the book value of net assets at the time of acquisition is analysed and allocated to the individual balance sheet items in accordance with their fair value.

Any additional excess value due to expectations of future earnings is capitalised as goodwill and depreciated in the income statements in line with underlying circumstances and expected economic life.

Elimination of internal transactions

All significant transactions and balances between compa-nies in the group have been eliminated.

GENERAL PRINCIPLES Use of estimates

The preparation of the consolidated accounts in ac-cordance with generally accepted accounting practices requires the group’s management to create estimates and make assumptions that affect the value of assets, liabilities on the balance sheet and reported revenues and expenses for the financial year. The ultimate values that are generated may deviate from these estimates.

BASIC PRINCIPLE FOR VALUATION AND CLASSIFICATION OF ASSETS AND LIABILITIES

Assets intended for long-term ownership or use are classed as fixed assets. Other assets are classed as current assets. Receivables falling due within a year are classed as current assets. Similar criteria have been applied when classifying current and long-term liabilities.

Fixed assets are valued at their acquisition cost but are then written down to their fair value if the impairment loss is not deemed to be temporary. Fixed assets with a limited economic life are written down on a straight-line basis. Current assets are valued at either acquisition cost or fair value, whichever is lower. Other long-term and current liabilities are valued at their nominal value. Certain items have been valued on the basis of other principles and are described below.

TANGIBLE FIXED ASSETS

Tangible fixed assets are recognised in the balance sheet at acquisition cost less accumulated depreciation and write-downs. If the fair value of a fixed asset is lower than its book value, and the reasons for this are not deemed to be temporary, the fixed asset will be writ-ten down to its fair value. Expenses in connection with ordinary maintenance and repairs are recognised on a current basis. Expenses relating to major replacements and renewals that significantly extend the life of the fixed assets will be capitalised.

Periodic classification and maintenance costs normally occur every five years, and the annual cost is included in the operating expenses for vessels in the income statement.

(35)

35

The cost price of new vessels is broken down into classi-fication costs and written down ordinarily together with other capitalised classification costs.

INVESTMENTS IN ASSOCIATED COMPANIES

Associated companies are companies in which the group has a stake of 20–50% where the investment is of a long-term and strategic nature and where the group is able to exercise significant influence. Associated companies are valued using the cost method of accounting in the company accounts but are incorporated using the equity method of accounting in the consolidated accounts. The group’s share of the profit/loss of an associated company is based on the profit/loss after tax of the as-sociated company less any depreciation of excess value caused by the cost price of the assets being higher than the acquired share of the book equity.

The share of the profit/loss of the associated company is classed as a financial item in the income statement. As-sets in associated companies are classed as fixed assets in the balance sheet.

The group’s share of the profit/loss of associated

companies that are subject to partner assessment is based on the profit/loss before tax. Tax on the share of the profit/loss is classed together with the group’s other tax liabilities.

RECEIVABLES

Trade receivables and other receivables are recognised at their nominal value less provisions for anticipated losses. Provisions for losses are made on the basis of an indi-vidual assessment of each receivable.

PENSIONS

Defined benefit pension plans are valued at the current value of future pension benefits accrued on the balance sheet day for accounting purposes. Plan assets are valued at their fair value.

Changes to defined benefit pension liabilities caused by changes to the pension plans are distributed over the estimated average remaining contribution period. The accumulated effect of changes in estimates and in financial and actuarial assumptions (actuarial gains and losses), lower than 10% of the greater of the defined benefit pension liabilities and the plan assets at the be-ginning of the year, is not recognised. When the accumu-lated effect is above 10% the excess is recognised in the income statement over the estimated average remaining contribution period. The net pension cost in the period is classed as payroll and personnel costs.

LONG-TERM LOANS

Debts to credit institutions are entered at their non-discounted value. Set-up charges and standby fees are recognised as financial items on a current basis. Building loan interest is capitalised under vessels under construction.

FINANCIAL INSTRUMENTS

Assets and liabilities linked to interest rate swaps and similar derivatives undertaken for the purposes of hedg-ing are not recognised in the balance sheet.

FOREIGN CURRENCY

Monetary items in foreign currencies are converted using the exchange rate on the balance sheet day.

REVENUE

The sale of goods is recognised as income at the time of delivery. Services are recognised as income as and when they are performed.

COSTS

Generally speaking, costs are recognised in the same period as the associated income. In cases where there is no clear relationship between costs and income the distribution is determined on the basis of discretionary criteria.

TAXES

Taxes include both payable tax and changes in deferred tax.

Companies taxed under the special shipping company tax rules are not taxed on the operating profit. Ship-ping taxation requires detailed rules to be observed, and voluntary or compulsory withdrawal from the scheme will result in ordinary corporate taxation on the operat-ing profit.

Deferred tax/tax assets are calculated on all differences between the book value and taxable value of assets and liabilities. Deferred tax is calculated at a rate of 28% on the basis of the temporary differences between book value and taxable value and on tax loss carryforward at the end of the financial year. Net deferred tax assets are recognised in the balance sheet when it is likely that they will be utilised. The tax payable for the tax year is ad-justed for any errors in estimates for previous years. The tonnage tax paid is classed as an operating expense.

CASH FLOW STATEMENT

The cash flow statements have been prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other current, liquid assets.

(36)

NOTE 2 – SEGMENT INFORMATION

The group is predominantly a supply, ATHS and standby operator, and its revenues pertain mostly to these activi-ties. Operating revenues can be broken down into the various areas of operation as follows:

2010 2009

AHTS 230 955 166 994

PSV 225 934 190 717

Standby 143 564 147 917

Subsea 4 013 0

Management fees and construction supervision 21 513 19 761

Other 773 4 921

Total operating revenues 626 752 530 310

NOTE 3 – PAYROLL COSTS, REMUNERATION, LOANS

TO EMPLOYEES ETC .

Payroll costs 2010 2009

Wages and salaries 229 940 199 120

National Insurance contributions 37 866 36 956

Pension costs 7 853 10 787

Other payroll-related benefits 54 553 39 835 Net wage scheme and educational support -63 260 -60 478 Rebilled to other companies -42 428 -16 404

Total payroll costs 224 524 209 816

Average number of full-time equivalents 439 411

REMUNERATION

No remuneration has been paid to the CEO of the parent company. The CEO is employed by the subsidiary Simon Møkster Shipping AS and receives a salary from this company. An allocation of NOK 557 has been made for directors’ fees.

NET WAGE SCHEME

The group has received funding from the refund scheme for seamen of NOK 61,016 along with educational sup-port of NOK 2,244. These sums have been offset against payroll costs.

LOANS TO EMPLOYEES

Total loans and security pledged in favour of employees stood at NOK 1,107 as at 31.12.10. Loans are subject to interest in accordance with the ordinary interest rate

AUDITOR’S FEES (in whole NOK)

Auditor’s fees excluding VAT may be broken down as follows:

Statutory auditing 603 900

Other certification services 44 400

Other assistance 613 580

Total auditor’s remuneration 1 261 880

NOTE 4 – INTANGIBLE ASSETS

Goodwill

Historical cost 01.01 14 417

Additions 0

Historical cost 31.12 14 417

Accumulated depreciation 01.01 7 817

Depreciation for the year 3 300

Accumulated depreciation 31.12 11 117

Book value as at 31.12 3 300

Economic life 5 år

NOTE 5 – TANGIBLE FIXED ASSETS

Vessels Vessels Operating Total under equipm.,

constr. and fixt.

Historical cost 01.01 2 943 541 537 484 16 633 3 497 658 Additions 16 353 348 531 45 364 929 Reclassification 309 849 -309 849 0 0 Historical cost 31.12 3 269 743 576 166 16 678 3 862 587 Accumulated depreciation 01.01. 547 611 0 10 730 558 342 Depreciation

for the year 116 961 0 502 117 463 Accumulated depreciation 31.12 664 572 0 11 233 675 805 Historical cost 31.12 2 605 171 576 166 5 445 3 186 782 Economic life 25 years 3-5 years

(37)

37 NOTE 6 – CLASSIFICATION AND MAINTENANCE COSTS

2010 2009

Book value as at 01.01 103 623 83 560 + capitalised classification/

maintenance costs for the year 21 551 49 214 Disposals in connection with sale of vessels 0 0 Depreciation for the year 37 035 29 152

Historical cost 31.12 88 139 103 623

Periodic classification and maintenance costs are depreciated over 5 years.

NOTE 7 – INVESTMENTS IN ASSOCIATED COMPANIES

KS NORTH SEA SAFETY

The limited partnership is jointly owned (50/50) with Torghatten ASA, and its business is the operating of PSVs. The vessel was delivered in March 2010. The com-pany’s head office is in Brønnøysund. The voting share corresponds to the ownership interest. The group’s share of uncalled/unpaid capital in the limited partnership was NOK 520 as at 31.12.2010.

SP/F TEAM BEREDSKAP

The company is jointly owned (50/50) with Torghatten ASA, and its business is the operating of standby vessels. Its registered office is in Tórshavn in the Faroe Islands. The voting share corresponds to the ownership interest.

STRIL OFFSHORE AS

The company’s business is to act as a general partner to Stril Offshore DIS, which is consolidated in the group. The company has a stake in the internal partnership of 1%. Its registered office is in Oslo. The group’s owner-ship interest as at 31.12.10 is 50%. The voting share corresponds to the ownership interest.

MARINER SP/F

The company’s business is the operating and crewing of PSVs on bareboat charters from Stril Power AS. Its regi-stered office is in the Faroe Islands. The ownership inte-rest as at 31.12.10 is 100%. The voting share is also 100%.

MR SUBSEA AS/KS MR SUBSEA

The companies are jointly owned (50/50) with Fugro N.V., which owns the companies through RUE AS. KS MR Sub-sea owns a multi-purpose support vessel that was delivered in December 2009. Its registered office is in Stavanger. The voting share corresponds to the ownership interest. The group’s share of uncalled/unpaid capital in the limited partnership was NOK 14,625 as at 31.12.2010.

KS North Sp/f. Team Stril Off- MRSub- MR Sub- Sea Safety Beredskap shore AS sea AS sea KS Opening

balance

as at 01.01 28 137 16 263 0 5 712 41 211 Share of profit/

loss for the year 1 527 1 689 17 40 4 875 Reduction of capital 0 0 0 0 0 Capital increase 24 900 0 0 0 0 Closing balance as at 31.12 54 564 17 952 17 5 752 46 086 2010 2009 Opening balance as at 01.01 91 324 117 953 Share of profit/loss for the year 8 148 13 371

Reduction of capital 0 40 000

Capital increase 24 900 0

Closing balance as at 31.12 124 372 91 324

NOTE 8 – BANK DEPOSITS ETC .

The item bank deposits, cash etc. includes restricted tax withholding deposits of NOK 15,833.

NOTE 9 – SHARE CAPITAL

AND SHAREHOLDER INFORMATION

Number Nominal Share of shares value capital

Share capital

as at 31.12.10 100 005 1 000 100 005 000

The shares are held by the

following shareholders:

Steinsøy Invest AS (Anne Jorunn Møkster,

general manager 33 339 Mokalf AS

(Alf Møkster,

board member) 33 333 Moksim AS (

Astrid Simone Møkster,

board member) 33 333

(38)

NOTE 10 – PENSION LIABILITIES

The company is obliged to operate an occupational pension scheme in accordance with the act relating to compulsory occupational pension. The company’s pension schemes satisfy the provisions of this act.

DEFINED BENEFIT OCCUPATIONAL PENSION

Through its subsidiary Simon Møkster Shipping AS the group operates a defined benefit pension scheme for both seamen and office staff. As at 31.12.10 the scheme included 323 working employees and 59 pensioners. The scheme entitles members to defined future benefits. These are largely dependent on the number of years of service, the salary upon reaching retirement age and the size of National Insurance benefits. The pension scheme is financed by accumulated funds organised by an insurance company.

2010

Current value of pension contributions for the year 5 972 Interest cost of pension liabilities 3 051

Return on plan assets -3 117

Amortisation of actuarial losses 448 National Insurance contributions 896

Net pension costs 7 250

Pension scheme for seamen: 2010 2009

Accrued pension liabilities 46 260 37 434 Market value of plan assets 37 753 34 920 Unrecognised change in actuarial gains/losses 7 204 1 171 National Insurance contributions -1 199 -354 Net recognised pension liabilities 2 501 1 697

Pension scheme for office staff: 2010 2009

Accrued pension liabilities 25 431 19 762 Market value of plan assets 20 667 18 349 Unrecognised change in actuarial gains/losses 6 854 1 904 National Insurance contributions -672 -199 Net recognised plan assets 1 418 291

Financial assumptions:

Discount rate 3,8%

Expected wage inflation/G adjustment 4,0% Expected pension increase 2,8% Expected annual return on plan assets 4,6%

The actuarial assumptions are based on assumptions generally applied in the insurance industry with regard to demographic factors.

NOTE 11 – LIABILITIES TO CREDIT INSTITUTIONS

The table below gives a summary of the maturity profile for the group’s interest-bearing debts based on contrac-tual non-discounted cash flows.

2010

Less than 1 year 176 512

1 to 5 years 1 039 392

More than 5 years 1 134 084

Total interest-bearing loans 2 349 988

HEDGING OF INTEREST RATE RISK:

89% of the group’s interest-bearing debt is subject to variable interest, 3 months or 6 months NIBOR + mar-gin. The remainder is subject to fixed interest. Variable interest-bearing debt is hedged against changes in inter-est rates by entering into fixed interinter-est agreements. As at 31.12.10 50% of the group’s interest-bearing debts were fixed rate loans or loans hedged with a fixed interest rate. The fair value of the interest rate swaps implies a liability that the company has elected not to recognise in the bal-ance sheet.

The following table describes the unrecognised liability and the maturity dates of the group’s financial instru-ments exposed to changes in interest rates:

Amount Maturity date

63 750 2011

340 000 2013

221 758 2014

132 000 2016

170 000 2017

The interest rate swaps have been entered into as cash flow hedging of the interest rate risk on long-term debts. Hedge accounting has been used in accordance with the Norwegian Accounting Standards Board’s NRS (F) Fi-nancial Instruments. The fair value of the unrecognised liabilities is NOK -27,959.

Two put options have also been written on interest rate swaps with a principal of NOK 132,000 and maturity date in 2013. These do not qualify for hedge accounting and constitute a recognised liability of NOK -4,193.

COLLATERAL

The group’s vessels with associated insurance cover and contracts, operating equipment, trade receivables and bank deposits have been pledged as security.

SIMON MØKSTER HOLDING AS

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ENVIRONMENTAL AND ANNUAL REPORT 2010