ANNUAL REPORT 2008 - Macro Offshore Financial Reports/Annual...MASTER MARINE ASA I ANNUAL REPORT 2008 5 Oslo, 29 May, 2009 Geir Sandvik Tom Røtjer Rebekka Glasser Herlofsen Bente

ANNUAL REPORT 2008

ANNUAL REPORT 2008

MASTER MARINE ASA I ANNUAL REPORT 2008 1

RepoRt of the bOARd Of dIREcTORS 2fiNANciAL stAtemeNts 2008 6Notes to the AccOUNTS 10AUDitoR’s REPORT 30

coNteNts:

ANNUAL REPORT 2008MASTER MARINE ASA

2 MASTER MARINE ASA I ANNUAL REPORT 2008

RepoRt of the bOARd Of dIREcTORS MASTER MARINE ASA

This is Master Marine ASA

Master Marine ASA, established in 1997, has its main office at Drammensveien 288 in Oslo, Norway. The company specializes in transport and offshore installations of heavy structures for the energy industry. Master Marine’s goal is to become the most reputed and professional supplier of marine transportation, offshore installation and hook-up support services of heavy structures – known for its innovative solutions. Master Marine, with its expe-rienced human capital, it’s safe and environmentally friendly operation, cost efficient and predictable execution and modern marine equipment, shall work to satisfy its customers in order to be their first choice in marine operation.

Through its position as the preferred supplier of marine operations, Master Marine shall create value to its shareholders by maximizing the return on their investment.

Operations

The Company has over several years invested in research and design of an alternative concept for offshore installation, platform modifications, wind turbine installation and transport, thereby provid-ing a safer, more environmentally friendly and cost effective solution for the installation of structures of up to 7200 tons.

The overall activity level in the company during the last year has been very high, and the main focus

has been on securing contracts for the vessels, yard follow up as well as financing of the project. During the last 6 months, the Company has signed firm contracts for both vessels with tier one counter-parts. The total contract backlog for Master Marine is currently in excess of EUR 340 million.

In October 2008, the Company entered into a contract with ConocoPhillips for the use of Service Jack 1 as an accommodation unit (“JackTel”) for the Ekofisk field in the Norwegian sector of the North Sea. The contract is for a firm period of 3 years, with 2x12 month additional options for the client. The total contract value is around EUR 265 million for the fixed term period, commencing in the summer 2010. The company will be compensated with a fixed day rate which reduces the risk exposure.

Service Jack 2 will be delivered according to the original concept as a multipurpose jack-up instal-lation vessel, and was in April 2009 awarded a contract with Scira Offshore Energy Limited, with its 50/50 partners StatoilHydro and Statkraft, for the planning and carrying out of installation of 88 wind turbines and 2 substation modules for the Sheringham Shoal Offshore Wind Farm Project. The contract was awarded to Master Marine after strong competition from other installation contrac-tors, and the award shows Service Jack’s superior capacity to install wind turbines.

Project engineering work for Service Jack 2 will start 2nd quarter 2009 and the installation work will commence in the beginning of 2011. The con-tract value is estimated to be EUR 78 million, based


on an estimated installation time of 7 months. The installation will be compensated with a fi xed day rate which reduces the risk exposure.

Organization, workplace environmentand employees

During 2008 the activity level has increased rapidly in the Company. The number of Company employ-ees has been increased to 14 and there are a signifi -cant number of consultants assisting on the yard and on the ConocoPhillips project.

For 2008 the total sick leave was 1 %. The Company had no serious accidents resulting in personal injury or material damages.

It is the Company’s objective to create a work envi-ronment with equal opportunities for both men and women. The Company does not discriminate on the grounds of sex, race or religion in any area, includ-ing recruitment, pay and promotion. Of the fourteen people employed at the end of the year, three were female. The board of directors consists of three men and two women.

Environmental Reporting

The Company will, when fully operational, have two vessels in operation related to off shore installations and will work to ensure that all sides of its operation is conducted in an environmentally friendly way. During the construction of the vessels the Company is actively monitoring the construction to ensure that all aspects of health, safety and environment industry standards are being followed.

Master Marine is in the process of expanding from an off shore consultancy to an international off shore heavy lift/installation and transportation company, with the ongoing construction of the Service Jack

vessels. As a part of this transition to vessel opera-tor Master Marine has initiated the overhaul and further development of its Integrated Management System (IMS).

As a growing knowledge organization the Company must ensure compliance with both national and international laws and regulations on Quality Assurance, Occupational Health, Safety, Security and Environment.

To meet the specifi c needs, requirements and regulations for Master Marine core business - Shipboard Operations and Project Execution, it is the intention to achieve a DNV certifi cation within 2009. To manage this, the Company is in the process of establishing a work process based framework with basis in the ISO Standard 9001-2008 for Quali-ty Management in the organization. A seamless system which also covers “ISO 14001, Management of Environment” and “OHSAS 18001, Occupational Health and Safety” and the “International Safety Management Code” will be subject to certifi cation. The objective is to identify, review and manage the overall risk elements in the Company’s opera-tions.

Overview of the development and results

2008 has been a hectic year for Master Marine ASA. The building of the two vessels has been a con-tinuing activity at Drydocks World Graha (former Labroy Off shore Ltd) in Batam and a contract with ConocoPhillips was signed in the fall.

In June the Company raised EUR 60 million in a secured bond loan and NOK 258 million in new equity. The convertible bond loan of NOK 420 million issued in May 2007 was re-negotiated to an extended maturity (May 2012) and a new strike price.

service Jack installing a jacket.

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RESulTSThe operating loss for 2008 was EUR 8.5 mil-lion. The financial items including changes in the convertible bond gave a positive contribution of EUR 7.6 million. This resulted in a loss for the year of EUR 0.876 million, compared to a profit of EUR 0.412 million in 2007.

The loss for 2008 is proposed allocated to retained earnings (EUR -0.412 million and share premium EUR -0.465 million). The board of directors has not proposed any dividends for 2008.

As the Company plans a future listing on Oslo Børs, the Company has prepared its financial statements in accordance with international Financial Report-ing Standards (IFRS) and interpretations adopted by the International Accounting Standards Board (IASB) and IFRIC as approved by the European Union, and the additional relevant requirements under the Norwegian Accounting Act. Master Marine ASA has assessed the functional currency to be EURO, which is also the reporting currency.

CASh flow ANd lIquIdITyOperational cash flow in 2008 was EUR -6.1 million. Cash flow from investments was EUR -42.6 million and cash flow from financing was EUR 83.7 million. This gave a net increase in cash and cash equiva-lents in 2008 of EUR 35 million. As a result of this the Company had a cash reserve of EUR 95.5 million at the end of 2008.

The cash reserve is sufficient to finance opera-tions until Q3, 2009. This means that the Company is dependent on additional funding to finalize the construction of the two vessels. The Company is evaluating its options and is currently in discussions with debt providers and investors, and the initial responses have been positive.

financial exposure

The Company is exposed to a number of different financial market risks like the possibility that fluctu-ations in currency exchange rates, interest rates and day rates will affect the value of the Company’s as-sets, liabilities and future cash flows. The Company frequently reviews and assesses its primary financial market risks to reduce and control these risks.

The primary strategy used to reduce our financial market risks is the use of derivatives. Derivatives may be used in order to hedge the Company’s various net exposures, as well as hedges of specific exposures. Only well-understood, conventional derivative instruments like swaps, options and for-ward contracts are used, from highly rated financial institutions. See more information in Note 10.

continued Operations

The Board confirms that the assumption of contin-ued operations forms the basis for the annual ac-counts in accordance with the requirements of the Accounting Act. The basis for this is the Company’s order backlog in excess of EUR 340 million.

The Company is dependent on additional funding to finalize construction of the vessels and remain opti-mistic that such funding can be obtained, based on the order backlog and the positive reception of the jack up construction vessel concept in the market.

future Prospects

Future prospects for the Company depend on the activity in the oil and gas industry, and the number of new installations, modifications and decommis-sioning of offshore installations. Because of the financial crisis the short term market for new oil and gas installations might decrease. However, the design of Service Jack makes it well-equipped to adapt to other markets. This is especially visible through the 3-5 year contract with ConocoPhillips for delivery of an accommodation unit at Ekofisk field, with a contract value of some EUR 265 million for the fixed period. Another important market is the expanding offshore wind turbine installations. The fact that EU has committed itself to massive reductions of CO2 emissions makes this an inter-esting market for the next decade. The contract which the company entered into with Scira Offshore Energy Limited clearly demonstrates the market opportunities within this business area for Master Marine.

With these contracts and ample market opportu-nities for the Service Jacks, the prospects for the company are regarded as good.


Oslo, 29 May, 2009

Geir Sandvik Tom Røtjer Rebekka Glasser Herlofsen Bente Thiis Thornton Jetmund Hanssen Per Johansson Chairman of the board CEO

fixed platform modifi cation done by service Jack.



fiNANciAL stAtemeNts 2008MASTER MARINE ASA

top side installation by skidding.



MASTER MARINE ASA

Master Marine ASA Income statements

1 January - 31 December

Audited Audited Year ended Year ended December 31, December 31,(1.000 eUR) Note 2008 2007 Income 3 203 -TOTAL OPERATING INCOME 203 - Salaryandpersonnelcosts 5 -1923 -631Otheroperatingexpenses 4 -6734 -1154Depreciation 12 -40 -12TOTAL OPERATING EXPENSES - 8 697 - 1 797 OPERATING PROFIT / (LOSS) - 8 494 - 1 797 Financialincome 7 6576 4121Financialexpenses 7 -1852 -22NET FINANCIAL ITEMS 4 724 4 099 Net result before changes in fair value of derivative of convertible bond (CB) - 3 769 2 302 Changesintermsconvbond 7,9 -2219 ChangesinfairvalueofderivativeofCB 7,9 5112 -1890PROFIT/(LOSS) BEFORE TAX - 876 412 Incometaxexpense(benefit) 11 - -NET PROFIT (LOSS) - 876 412 Allocation of profit/(loss) for the year: Otherequity -412 412Sharepremium -464 TOTAL ALLOCATED - 876 412 Earningspershare(EUR)-Basic 16 -0,01 0,01Earningspershare(EUR)-Diluted 16 -0,01 0,01


Audited Audited December 31, December 31, (1.000 eUR) Note 2008 2007

ASSETS Non-current assets: Property,plantandequipment 12 135670 56444Total non-current assets 135 670 56 444

Current assets: Othercurrentassets 14 1986 84Cashandcashequivalents 15 95464 70270Total current assets 97 450 70 354 TOTAL ASSETS 233 120 126 798 EQUITY AND LIABILITIES Equity: Paid in capital: Issuedcapital 17 954 647Sharepremium 17 100029 70284Otherpaidincapital 17 59 -Total paid in capital 101 042 70 932

Other equity: Retainedearnings - 412Total other equity - 412 Total equity 101 042 71 344 Non-current liabilities: Convertiblebond 9 40118 47825Embeddedderivativeconv.bond 9 7629 7207Otherlong-termliabilities 9 58462 Total long-term liabilities 106 209 55 032

Current liabilities: Accountspayable 18 21537 244Othercurrentliabilities 18 4332 178Total current liabilities 25 869 422 Total liabilities 132 078 55 454 TOTAL EQUITY AND LIABILITIES 233 120 126 798

Oslo,29May,2009

GeirSandvik TomRøtjer RebekkaGlasserHerlofsenChairmanoftheboard

BenteThiisThornton JetmundHanssen PerJohansson CEO

Master Marine ASABalance sheets


Share Share Other Retained Total(1.000 eUR) capital premium paid in earnings equity capital

Equity as at January 1, 2007 53 751 - - 804 Shareissues 594 69533 - 70127Profit/(loss)fortheperiod - 412 412Equity as at December 31, 2007 647 70 284 - 412 71 343 Shareissues 306 30209 30515WarrantstoBoardmembers 59 59Profit/(loss)fortheperiod -464 -412 -876Equity as at December 2008 954 100 029 59 - 101 042

Master Marine ASA - Statement of cash flows Audited Audited Year ended Year ended December 31, December 31,(1.000 eUR) Note 2008 2007

Cashflowfromoperatingactivities: Profit/(loss)aftertax -876 412Adjustmenttoreconcileprofit/lossaftertaxtonetcashflows: Non-cashitems: Depreciationandimpairmentofproperty,plantandequipment 12 40 12Financialincome -6576 -4121Financialexpenses 1852 22Changesinfairvalueoffinancialinstruments -5112 1890Changesintermsconvbond 2219

Workingcapitaladjustments: Increaseintradeandotherreceivables -1902 -60Increaseintradeandotherpayables 4233 116Net cash flow from operating activities - 6 122 - 1 729

Cashflowfrominvestingactivities: Proceedsfromsaleofproperty,plantandequipment 31 Purchaseofproperty,plantandequipment,netofcash 12 -49120 -53209Interestsreceived 4272 344Netgainfinancialinvestments 2025Netrealizedagio 2268 2492Net cash flow from investing activities - 42 549 - 48 348

Cashflowfromfinancingactivities: Proceedsfromissueofshares 17 30515 70127Netproceedsfromborrowings 9 58462 49135Repaymentofborrowings - -37Interestpaid -5234Net cash flow from financing activities 83 743 119 225

Netincrease/(decrease)incashandcashequivalents 35073 69148Netcurrencytranslationeffect -9878 39Cashandcashequivalentsatbeginningofperiod 15 70270 1083Cash and cash equivalents at end of period 95 464 70 270

Oslo,29May,2009

GeirSandvik TomRøtjer RebekkaGlasserHerlofsenChairmanoftheboard

BenteThiisThornton JetmundHanssen PerJohansson CEO

Master Marine ASA - Statement of changes in equity


Notes to the AccoUNts 2008MASTER MARINE ASA



MASTER MARINE ASA 1. General information

MasterMarineASA(«MasterMarine»or«theCompany»)isapubliclimitedcompany,incorporatedinNorway.TheheadquarterisinDrammensveien288,0283Oslo.

MasterMarineisanoffshoreservicecompany,specialisingintransportandoffshoreinstallationofheavystructuresfortheenergyindustry.

MasterMarinehassinceMay2007beenlistedontheNorwegianOTC-listmaintainedbytheNorwegianSecuritiesDealersAssociationwiththetickercode«MAMA».

Theaccountswereapprovedbytheboardofdirectors29May2009.

2. Summary of significant accounting policies

2.1 StatementofcomplianceThefinancialstatementsofMasterMarinehavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)andinterpretationsadoptedbytheInternationalAccountingStandardsBoard(IASB)andIFRICasapprovedbytheEuropeanUnion(“EU”),andtheadditionalrelevantrequirementsundertheNorwegianAccountingAct.

2.2BasisofpreparationThefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,modifiedbyfinancialassetsandfinancialliabilities(includingderivativeinstruments)atfairvaluethroughprofitorloss.

Theincomestatementispresentedbynatureofcosts(IAS1).Theprincipalaccountingpoliciesaresetoutbelow.

2.3FunctionalcurrencyandpresentationcurrencyMasterMarinehasfrom2007appliedEuroasreportingcurrencyforitsfinancialstatements,whichisalsothefunctionalcurrencyoftheCompany.

2.4AdoptionofnewandrevisedstandardsandinterpretationsThefollowingstandards,amendmentsandinterpretationstopublishedstandardsaremandatoryforaccount-ingperiodsbeginningonorafter1January2008,butarenotassumedtoberelevanttotheoperations:

IFRIC11GroupandTreasuryShareTransactionsIFRIC12ServiceConcessionArrangementsIFRIC14–IAS19Thelimitonadefinedbenefitasset,minimumfundingrequirementandtheirinteraction

(a) Early adoptions of standards and interpretationsTheCompanyhaselectedtoearlyadoptIFRS8,whichiseffectiveforannualperiodsbeginningonorafter1January2009,in2007.Theadoptionhasnothadanymaterialimpactsonthefinancialstatements.

(b) Standards and interpretations in issue not yet adoptedAtthedateoftheauthorisationofthesefinancialstatements,thefollowinginterpretationswereinissuebutnotyeteffective:

RevisedIAS23BorrowingCostsIFRIC13CustomerLoyaltyProgramsRevisedIAS1PresentationofFinancialStatementsAmendmentstoIAS32FinancialInstrumentsRevisedIFRS3BusinessCombinations

Managementanticipatethattheabovestandardsandinterpretationswillbeadoptedinthefinancialstate-mentswhentheybecomeeffective,andthattheadoptionswillhavenomaterialimpactonthefinancialstate-mentsoftheCompanyintheperiodofinitialapplication.

2.5Significantaccountingjudgments,estimatesandassumptionsThepreparationofthefinancialstatementsrequiresmanagementtomakejudgments,estimatesandas-sumptionsthataffectthereportedamountsofrevenues,expenses,assetsandliabilities,andthedisclosureofcontingentliabilities,atthereportingdate.Managementbasesitsjudgmentsandestimatesonhistoricalexpe-

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rienceandonvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisformakingjudgmentsaboutthecarryingvaluesofassetsandliabilitiesthatarenotread-ilyapparentfromothersources.Uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamountoftheassetorliabilityaffectedinthefuture.Thekeysourcesofjudgementandestimationofuncertaintyatthebalancesheetdate,thathaveasignificantriskforcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.

Estimates and assumptions

Tangiblefixedassets/vesselsDepreciationoftangiblefixedassetsandvesselsisbasedonmanagementestimatesofthefuturelifeoftheassetsandresidualvalues.Estimatesmaychangeduetochangesinscrapvalue,technologicaldevelopment,competitionandenvironmentalandlegalrequirements.Themanagementreviewsthefutureusefullifeoftheassetsandeachcomponentonanongoingbasistakingintoconsiderationtheabovementionedfactors.Incaseofchangesinestimatedusefullivesand/orresidualvalues,thedepreciationoftheassetsisadjustedprospectively.

ImpairmentManagementassesseswhetherthereareanyindicationsofimpairmentforallnon-financialassetsatthereportingdate.Thevesselsaretestedforimpairmentwhenthereareindicationsthatthecarryingvaluesmaynotberecoverable.Whenvalueinusecalculationsareperformed,managementmustestimatetheexpectedfuturecashflowsfromtheassetsorcash-generatingunitandchooseasuitablediscountrateinordertocalculatethepresentvalueofthosecashflows.Thesearebasedonmanagement’sevaluations,includingestimatesoffutureperformance,revenuegeneratingcapacityoftheassets,andassumptionsofthefuturemarketconditions.Changesincircumstancesandinmanagement’sevaluationsandassumptionsmaygiverisetoimpairmentlosses.ThecarryingvalueofthevesselswasTEUR135,432and56,331asof31December2008and2007,respectively.

EmbeddedderivativeofconvertiblebondTheembeddedderivativeoftheconvertiblebondisestimatedatfairvalueoninitialrecognitionandrecog-nisedasaliabilityinthebalancesheet.Theembeddedderivativeisfairvaluedthroughprofitorlossateverybalancesheetdate.Estimatingfairvaluerequiresmanagementtomakeassumptionsaboutanddeterminethemostappropriateinputstoapropervaluationmodel,mainlybasedonmarketconditionsexisting,andhencemaybesubjecttouncertainty.Asof31December2008thefairvalueisTEUR7,629.

Deferredtaxassetsarerecognisedforunusedtaxlossesanddeductibletemporarydifferencestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthelossesandthetemporarydifferencescanbeutilised.Significantmanagementjudgmentisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognised,baseduponthelikelytimingandleveloffuturetaxableprofitstogetherwithfuturetaxplanningstrategies.Pleasebereferredtonote11forfurtherdetails.2.6RevenuerecognitionRevenueisrecognisedatthetimeofthetransactionwhenitisprobablethatthetransactionwillgeneratefutureeconomicbenefitsthatwillflowtotheCompanyandtheamountcanbereliablyestimated.Revenuesarepresentednetofvalueaddedtaxanddiscounts.Leaseincomefromoperatingleasesisrecognisedinincomeonastraight-linebasisovertheleaseterm,unlessanothersystematicbasisismorerepresentativeofthetimepatterninwhichusebenefitderivedfromtheleasedassetisdiminished.Revenuesfromthesaleofservicesandlong-termmanufacturingprojectsarerecognisedintheincomestate-mentaccordingtotheproject’slevelofcompletionprovidedtheoutcomeofthetransactioncanbeestimatedreliably.Progressismeasuredasthenumberofhoursspentcomparedtothetotalnumberofhoursestimated.Whentheoutcomeofthetransactioncannotbereliablyestimated,onlyrevenuesequaltotheprojectcoststhatareincurredisrecognisedasrevenue.Thetotalestimatedlossonacontractwillberecognisedintheincomestatementduringtheperiodwhenitisidentifiedthataprojectwillgeneratealoss.Therevenuein2008emergedfromcommissionwork.TheCompanyhasdecidedtofocusonthevesselsandtheoperationofthemandwillnotfocusoncommissionworkinthefuture.Interestincomeisrecognisedintheincomestatementbasedontheeffectiveinterestratemethodastheincomeisaccrued.


2.7ForeigncurrencyTransactionsinforeigncurrencyaretranslatedattherateapplicableonthetransactiondate.MonetaryitemsinaforeigncurrencyaretranslatedintoEURusingtheexchangerateapplicableonthebalancesheetdate.Non-monetaryitemsthataremeasuredattheirhistoricalpriceexpressedinaforeigncurrencyaretranslatedintoEURusingtheexchangerateapplicableonthetransactiondate.Non-monetaryitemsthataremeasuredattheirfairvalueexpressedinaforeigncurrencyaretranslatedattheexchangerateapplicableonthebalancesheetdate.Changestoexchangeratesarerecognisedintheincomestatementastheyoccurduringtheaccountingperiod.2.8SegmentsTheCompanyhasearlyadoptedIFRS8Operatingsegments.Formanagementpurposes,theCompanywillconductbusinessinoneoperatingsegment,whichistransportandoffshoreinstallationofheavystructuresfortheenergyindustry.

Thisprimaryreportablesegmentwillbebasedonthebusinessbeingperformed,andwillbeusedbythechiefoperationdecision-makersforassessingperformanceandallocatingresources.InadditiontheCompanywillreportOtheroperationsasaseparatesegment.

AstheCompanyatpresentisinthebuildingphaseofthevessels,theCompanyyethastoearnrevenueswithinthesegment,andthushasnoreportablesegmentsasof31December2008.2.9BorrowingcostsBorrowingcostsdirectlyattributabletoacquisition,constructionorproductionofqualifyingassets,whichareassetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,areaddedtothecostofthoseassets,untilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduseorsale.Allconsecutiveinterestexpenseonthebondloanandtheamortizedcostoftheconvertiblebondisaddedtothevessels.Investmentincomeearnedonthetemporaryinvestmentofspecificborrowingspendingtheirexpenditureonqualifyingassetsisdeductedfromtheborrowingcostseligibleforcapitalisation.Allotherborrowingcostsarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.2.10IncometaxThetaxexpenseconsistsofthetaxpayableandchangestodeferredtax.Deferredtax/taxassetsarecalcu-latedonalldifferencesbetweenthebookvalueandtaxvalueofassetsandliabilities,withtheexceptionof:

• temporarydifferenceslinkedtogoodwillthatarenottaxdeductible• temporarydifferencesrelatedtopotentialfutureinvestmentsinsubsidiaries,associatesorjointventures whentheCompanycontrolswhenthetemporarydifferencesaretobereversedandthisisnotexpected totakeplaceintheforeseeablefuture.AstheCompanycurrentlyhasnosubsidiaries,associatesorjoint ventures,thisisnotrelevantatthedateofthefinancialstatements.

DeferredtaxassetsarerecognisedwhenthereisothersconvincingevidenceprovingthattheCompanywillhaveasufficientprofitfortaxpurposesinsubsequentperiodstoutilisethetaxasset.TheCompanyrecognisespreviouslyunrecogniseddeferredtaxassetstotheextentithasbecomeprobablethattheCompanycanutilisethedeferredtaxasset.Similarly,theCompanywillreduceadeferredtaxassettotheextentthattheCompanynolongerregardsitasprobablethatitcanutilisethedeferredtaxasset.

Deferredtaxanddeferredtaxassetsaremeasuredonthebasisoftheexpectedfuturetaxratesapplicable.

Deferredtaxanddeferredtaxassetsarerecognisedattheirnominalvalueandclassifiedasnon-currentassetinvestments(long-termliabilities)inthebalancesheet.

Taxespayableanddeferredtaxesarerecogniseddirectlyinequitytotheextentthattheyrelatetoequitytransactions.

2.11Vesselsunderconstructionandothertangibleassets(non-financial)Vesselsunderconstructionareclassifiedasnon-currentassetsandrecognisedatcostuntiltheproductionordevelopmentprocessiscompleted.Vesselsunderconstructionarenotdepreciateduntiltheassethasbeencompletedandisavailableforuse.

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Tangibleassetsarerecognisedatcostlessaccumulateddepreciationandimpairmentlosses.Whenassetsaresoldordisposedof,thecarryingamountisderecognisedandanygainorlossisrecognisedintheincomestatement.Thecostoftangiblenon-currentassetsisthepurchaseprice,includingtaxes/dutiesandcostsdirectlylinkedtopreparingtheassetreadyforitsintendeduse.Vesselsunderconstructionandothernon-financialtangibleassetsarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingvaluemaynotberecoverable.Animpairmentlossisrecognisedbytheexcessvalueofthecarryingvalueoftheassetandtherecoverableamount,andrecognisedintheincomestatement.Therecover-ableamountisthehigheroftheasset’snetsellingpriceanditsvalueinuse.Thevalueinuseisdeterminedbyreferencetothediscountedfuturenetcashflowsexpectedtobegeneratedbytheasset.Apreviouslyrecognisedimpairmentlossisreversedonlyiftherehasbeenachangeintheestimatesusedtodeterminetherecoverableamount,howeverlimitedbythecarryingvalueifnoimpairmentlosshadbeenrecognisedinprioryears.Depreciationiscalculatedusingthestraight-linemethodoverthefollowingusefullife,takingresidualvaluesintoconsideration.Componentswithdifferenteconomicusefullifearedepreciatedonastraight-linebasis,overthecomponentsusefullife.Thedepreciationperiodandmethodareassessedeachyear.Aresidualvalueisestimatedateachyear-end,andchangestotheestimatedresidualvaluearerecognisedasachangeinanestimate.Ordinaryrepairsandmaintenanceexpensesarerecognisedintheincomestatementinthefinancialperiodinwhichtheyareincurred.Costsrelatedtomajorinspections/classificationarerecognisedinthecarryingvalueofthevesselsifcertainrecognitioncriteriaaresatisfied.Therecognitionismadewhenthedockinghasbeenperformedandisdepreciatedbasedonestimatedtimetothenextinspection.Anyremainingcarryingvalueofthecostofthepreviousinspectionisde-recognised.Theremainingcoststhatdonotmeettherecognitioncriteriaarerecognisedasrepairsandmaintenanceexpenses.2.12LeasedOperatingEquipment/VesselsCosts,includingdepreciation,incurredinearningtheleaseincomearerecognisedasanexpense.Leaseincome(excludingreceiptsforservicesprovidedsuchasinsuranceandmaintenance)isrecognisedonastraight-linebasisovertheleasetermevenifthereceiptsarenotonsuchabasis,unlessanothersystematicbasisismorerepresentativeofthetimepatterninwhichusebenefitderivedfromtheleasedassetisdimin-ished.Initialdirectcostsincurredbylessorsinnegotiatingandarranginganoperatingleaseshallbeaddedtothecarryingamountoftheleasedassetandrecognisedasanexpenseovertheleasetermonthesamebasisastheleaseincome.Leasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.Theevaluationisbasedonthesubstanceofthetransactionratherthantheformofthecontract,andthedeterminationismadewhentheleasingagreementisenteredinto.Financialleasesarerecordedasassetsandliabilities,andtheyearlyleasepaymentsareapportionedbetweenthefinancechargesandreductionoftheleaseliability.CapitalisedleaseassetsaredepreciatedovertheshorteroftheestimatedusefullifeoftheassetandtheleasetermifthereisnoreasonablecertaintythattheCompanywillobtainownershipbytheendoftheleaseterm.Foroperat-ingleases,theleasepayments(i.e.atimecharterhireorbareboathire)arerecordedasordinaryoperatingexpensesorincome,andchargedtoprofitandlossonastraight-linebasisoverthetermoftherelevantlease.Contingentrentsarerecognizedasrevenueintheperiodinwhichtheyareearnedorasexpenseintheperiodinwhichtheyareincurred.2.13InvestmentsandOtherFinancialAssetsTheCompanyclassifiesitsfinancialassetsinthefollowingcategories:financialassetsatfairvaluethroughprofitorloss,loansandreceivablesandavailable-for-salefinancialassets.Theclassificationdependsonthepurposeofwhichtheinvestmentswereacquired.Managementdeterminestheclassificationofitsfinancialassetsatinitialrecognitionandre-evaluatesthisdesignationateveryreportingdate.Whenfinancialassetsarerecognisedinitially,theyaremeasuredatfairvalue,plus,inthecaseofinvestmentsnotatfairvaluethroughprofitorloss,directlyattributabletransactioncosts.Thepurchasesandsalesoffinancialassetsarerecognisedonthetradedate.

1. Financial assets at fair value through profit or loss:Thiscategoryhastwosub-categories:financial assetsheldfortrading,andthosedesignatedatfairvaluethroughprofitorlossatinception.Afinancial assetisclassifiedinthiscategoryifacquiredprincipallyforthepurposesofsellingintheshorttermorifso designatedbymanagement.Derivativesarealsocategorizedasheldfortradingunlesstheyaredesignated ashedges.Gainsorlossesoninvestmentsheldfortradingarerecognisedintheprofitandlossaccount.


2. Loans and receivables:Loansandreceivablesarenon-derivativefinancialassetswithfixedordetermi-nablepaymentsthatarenotquotedinanactivemarket.Loansandreceivablesarecarriedatamortizedcostusingtheeffectiveinterestmethod,lessanyallowanceforimpairment.Gainsandlossesarerecognisedinincomewhentheloansandreceivablesarede-recognisedorimpaired,aswellasthroughtheamortizationprocess.

3. Available-for-sale financial assets:Available-for-salefinancialassetsarenon-derivativesthatareeitherdesignatedinthiscategoryornotclassifiedinanyoftheothercategories.Afterinitialrecognition,available-for-salefinancialassetsaremeasuredatfairvaluewithgainsorlossesbeingrecognisedasaseparatecom-ponentofequityuntiltheinvestmentisderecognised,atwhichtimethecumulativegainorlosspreviouslyreportedinequityisincludedintheincomestatement.Thefairvalueofinvestmentsthatareactivelytradedinorganizedfinancialmarketsisdeterminedbyreferencetoquotedmarketbidpricesatthecloseofbusinessonthebalancesheetdate.Forinvestmentswherethereisnoactivemarket,fairvalueisdeterminedapplyingcommonlyusedvaluationtechniques.

2.14ImpairmentoffinancialassetsAteachbalancesheetdatemanagementassesseswhetherthereareindicationsthatafinancialassetoragroupoffinancialassetswherechangesinvaluearenotrecognizedthroughtheincomestatementareim-paired.Impairmentonlyoccurifthereareobjectiveindicatorsofimpairmentasaresultofoneormoreeventsafterinitialcarryingvalueandtheeventsaffectthefuturecashflowsandthiscanbeestimatedreliably.

Ifsuchimpairmentisindicatedforloanandreceivablescarriedatamortizedcost,theamountofimpairmentlossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows(excludingfuturecreditlossesthathavenotbeenincurred)discountedatthefinancialasset’soriginaleffectiveinterestrate.

Theimpairmentlossisrecognisedinprofitandloss.If,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversed.Anysubsequentreversalofanimpairmentlossisrecognisedintheincomestatement,totheextentthatthecarryingvalueoftheassetdoesnotexceeditsamortizedcostatthereversaldate.

2.15Financialliabilities–BorrowingsBorrowingsareinitiallyrecognisedatthefairvalueoftheconsiderationreceivedlessdirectlyattributabletransactioncosts.Afterinitialrecognition,borrowingsandtherelatedtransactioncostsaresubsequentlymeasuredatamortizedcostusingtheeffectiveinterestmethod.Gainsandlossesarerecognisedinnetprofitorlosswhentheliabilitiesarede-recognisedaswellasthroughtheamortizationprocess.Borrowingscontain-ingprepaymentoptionsareevaluatedtodetermineiftheseoptionsarecloselyrelatedtothecostinstrumentorareembeddedderivatives.Inassessingwhethertheoptioniscloselyrelated,weconsiderwhethertheexer-cisepriceisapproximatelyequaltotheamortizedcostateachexercisedate.Prepaymentoptionsaccountedforasembeddedderivativesarerecordedatfairvalue.

2.16DerecognitionoffinancialassetsandliabilitiesAfinancialassetisderecognisedwhen:- Therightstoreceivecashflowsfromtheassethaveexpired;- TheCompanyretainstherighttoreceivecashflowsfromtheasset,buthasassumedanobligationtopay theminfullwithoutmaterialdelaytoathirdpartyundera‘pass-through’arrangement;or- TheCompanyhastransferreditsrightstoreceivecashflowsfromtheassetandeither(a)hastransferred substantiallyalltherisksandrewardsoftheasset,or(b)hasneithertransferrednorretainedsubstantially alltherisksandrewardsoftheasset,buthastransferredcontroloftheasset.

Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelledorexpires.Whereanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodifi-cationistreatedasaderecognitionoftheoriginalliabilityandtherecognitionofanewliability,andthedifferenceintherespectivecarryingamountsisrecognisedinprofitorloss.

2.17 CashandcashequivalentsCashincludescashinhandandatbank.Cashequivalentsareshort-termliquidinvestmentsthatcanbeimme-diatelyconvertedintoaknownamountofcashandhaveamaximumtermtomaturityofthreemonths.

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2.18Equity

EquityandliabilitiesFinancialinstrumentsareclassifiedasliabilitiesorequityinaccordancewiththeunderlyingeconomicalreali-ties.Interest,dividend,gainsandlossesrelatingtoafinancialinstrumentclassifiedasaliabilityarerecognisedintheincomestatement.Amountsdistributedtoholdersoffinancialinstrumentsthatareclassifiedasequitywillberecogniseddirectlyinequity.Convertiblebondsandsimilarinstrumentsincludingaliabilityand/oranequityelementaredividedintotwocomponentswhenissued,andthesearerecognisedseparatelyasaliabilityorequity.AsthefunctionalcurrencyoftheCompanyisEUR,theconvertiblebondoftheCompanyinNOKconsistingoftheloanandde-rivativeareaccountedforasafinancialliability.UnderIFRSthenetproceedsfromtheissueoftheconvertibleloanissplitbetweentheliabilityelement(thebaseloan)andanembeddedderivative(theoptiontoconvertintoshares).TheembeddedderivativerepresentsthefairvalueoftheembeddedoptiontoconverttheliabilityintoequityoftheCompany.Normallythissplitismadeatinceptionwiththevalueoftheembeddedderivativebeingrecordedtoequity,andthisvalueinequityisnotremeasuredatfuturedates.However,becausethisconversionrightisdenominatedinNOK,theembeddedderivativeisrecognisedasaliability.TreasurysharesWhentreasurysharesarerepurchased,thepurchasepriceincludingdirectlyattributablecostsisrecognisedinequity.Treasurysharesarepresentedasareductioninequity.Lossesorgainsontransactionsinvolvingtreasurysharesarenotrecognisedintheincomestatement.CostsofequitytransactionsTransactioncostsdirectlyrelatedtoanequitytransactionarerecogniseddirectlyinequityafterdeductingtaxexpenses.

2.19Employeebenefits

DefinedcontributionplansTheCompanyhasdefinedcontributionretirementbenefitplans.AdefinedcontributionplanisapensionplanunderwhichtheCompanypaysfixedcontributionsintoaseparateentity,andhasnofurtherobligations.Con-tributionstodefinedcontributionretirementbenefitplansarerecognisedasanexpensewhenemployeeshaverenderedserviceentitlingthentothecontributions.Shareoptions/warrantsTheCompanyhasissuedequity-settledshare-basedpaymentstoboardmembers.Equity-settledshare-basedpaymentsaremeasuredatfairvalue(excludingtheeffectofnonmarket-basedvestingconditions)atthedateofgrant.Thefairvaluedeterminedatthegrantdateoftheequity-settledsharebasedpaymentsisrecognisedasanexpenseoverthevestingperiod,basedontheCompany’sestimateofthesharesthatwilleventuallyvestandadjustedfortheeffectofnonmarket-basedvestingconditions.FairvalueismeasuredusingtheBlack-Scholespricingmodel.Theexpectedlifeusedinthemodelhasbeenadjustedbasedonmanagement’sbestestimate,fortheeffectsofnon-transferability,exerciserestrictionsandbehaviouralconsiderations2.20ProvisionsAprovisionisrecognisedwhentheCompanyhasanobligation(legalorself-imposed)asaresultofapreviousevent,itisprobable(morelikelythannot)thatafinancialsettlementwilltakeplaceasaresultofthisobligationandthesizeoftheamountcanbemeasuredreliably.Iftheeffectisconsiderable,theprovisioniscalculatedbydiscountingestimatedfuturecashflowsusingadiscountratebeforetaxthatreflectsthemar-ket’spricingofthetimevalueofmoneyand,ifrelevant,risksspecificallylinkedtotheobligation.Aprovisionforaguaranteeisrecognisedwhentheunderlyingproductsorservicesaresold.Theprovisionisbasedonhistoricalinformationonguaranteesandaweightingofpossibleoutcomesaccordingtothelikeli-hoodoftheiroccurrence.RestructuringprovisionsarerecognisedwhentheCompanyhasapprovedadetailed,formalrestructuringplanandtherestructuringhaseitherstartedorbeenpubliclyannounced.Provisionsforloss-makingcontractsarerecognisedwhentheCompany’sestimatedrevenuesfromacontractarelowerthanunavoidablecostswhichwereincurredtomeettheobligationspursuanttothecontract.


2.21EarningspershareBasicearningspersharearecalculatedbydividingnetprofit(loss)fortheyearbytheweightedaveragenumberofsharesoutstandingintherelevantperiod.Dilutedearningspersharearecalculatedbasedontheif-convertedmethod;theprofit/(loss)fortheCompany,adjustedbytheinterestcost(aftertax)oftheconvert-iblebond,inadditiontochangesinmarketvalueoftheconversionrightsandfairvalueofshareoptions,dividedbytheaveragenumberofoutstandingsharesweightedovertherelevantperiodandthepotentialnumberofsharesconverted,ifthecriteriaforconversionisfulfilled.

3. Segment Information

TheCompanyhasnoreportablesegmentsasof31December2008and2007.

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Specification auditor’s fee (1.000EUR) 2008 2007Statutoryaudit 32 23Taxrelatedservices 24 0Otherservices 0 0Total auditor’s fee 56 23

VATisnotincludedintheauditfeesspecifiedabove.

4. other operating Expenses

(1.000EUR) 2008 2007Marketing 190 65Repairandmaintenancecosts 1 28Rentalandleasingcosts 101 75Travelcosts 273 122Consultancyfeesandexternalpersonnel 1,363 805Officeandadministrativecosts 91 39Terminationequipmentcontracts* 4,563 0Otheroperatingcosts 152 19Total operating costs 6,734 1,154

*ThecontractwithConocoPhillipsimpliesmodificationsonServiceJack1.Someoftheorderedequipmentwillnotbeinstalled.Basedonananalysisofthevalueofusableequipmentforspareparts(seenote14)therestofthecost(TEUR4,563)hasbeenchargedasanexpense.

5. Salary and personnel expense and management remuneration

(1.000EUR) 2008 2007Salariesandholidaypay 1,739 529Pensioncostsdefinedcontributionplans 17 13Sharebasedcompensation(warrants) 59 0Otherpersonnelcosts 125 89Total salaries and personnel expense 1,923 631Thenumberofman-yearsthathasbeenemployedduringthefinancialyear: 18 4

Pension plan

TheCompanyhasadefinedcontributionplan,covering5%ofthesalarybetween1-6Gand8%ofthesalarybetween6-12G.

ThecontributionsrecognizedasexpensesintheincomestatementequaledTEUR17and13in2008and2007respectively.


Management remunerationThetablebelowshowsthenamesandremunerationsforthemanagementteamandtheboardofdirectors.

1.000EUR Board Salary Benefits Defined Total Options compen- inkind contribution remune- held sation pension ration planManagement - PerM.Johansson(CEO) 247 25 3 275AndersBruun-Olsen(CFO) 190 2 3 195ThorStenersen(MarketingDirector) 166 2 2 170JanIngarKnudsen(OperationManager) 80 1 1 82DagBurgos(EngineeringManager) 40 0 1 41KarlRygh(HSEQManager) 17 0 0 17 Board of directors TomVidarRygh(Chairmanoftheboardfrom23.07to14.05.08) 31.3 -ArneWenger(Chairmanfrom14.05.08–26.09.08) 31.3 500001*GeirSandvik(Chairmanfrom26.09.08) 15.2 TomRøtjer(boardmemberfrom23.11.07) 36.5 - 300000RebekkaGlasserHerlofsen(boardmemberfrom23.11.07) 36.5 - 300000BenteThiisThornton(boardmemberfrom23.07) 36.5 - 300000JetmundHanssen(boardmemberfrom1997) 36.5 300000Total remuneration 223,8 740 30 10 780

*Thesehavebeenforfeited,astheholderisnolongeramemberoftheboard.

Ontheannualgeneralmeetingon14May2008,theboardofdirectorsweregrantedwarrantsinthreediffer-entprograms.Thewarrantsissuedareexercisableby1/3intheyears2010,2011and2012respectively.Theexistingshareholders’pre-emptiverightsshallnotapply.Thewarrantsmustbesubscribedforwithin14dayssubsequenttothedateoftheCompany’snotificationtotheholderofthesubscriptionright(=thesubscriptiondate).Thewarrantsareofferedfreeofcharge.Anyissuanceofsharespursuanttothewarrantsisconditionalupontheholderofthewarrantbeingamemberoftheboardofdirectorsatthetimetheholderexerciseshisrightsunderthewarrant.Sharesmayberequiredissuedduringaperiodfromandincluding1Juneof2010,2011and2012respectively(by1/3).Eachwarrantentitlestheholdertorequesttheissuanceofonenewshare.ThesubscriptionpriceisNOK12.50pershare.Thesharepriceistheequivalentofthevolumeweightedaver-agesharepricefortheCompany’ssharesintheperiodfromandincluding1Juneandwithin1Julyof2010to2012respectively,uptothesubscriptiondate,adjustedforanydividendpaidintheperiodcommencingonthedateoftheresolutionanduptothesubscriptiondate(=theshareprice).Thenumberofwarrantsthatmaybeexercisedfortheissuanceofsharesshallbedeterminedinaccordancewiththefollowing:

• IfthesharePriceistheequivalentofthesubscriptionpricewithanincreaseoflessthan11.99%p.a.,none ofthewarrantsmaybeexercised.• Ifthesharepriceistheequivalentofthesubscriptionpricewithanincreaseof12–15.99%p.a.,25%ofthe warrantsmaybeexercised.• Ifthesharepriceistheequivalentofthesubscriptionpricewithanincreaseof16–19.99%p.a.,50%ofthe warrantsmaybeexercised.• Ifthesharepriceistheequivalentofthesubscriptionpricewithanincreaseof20–23,99%p.a.,75%ofthe warrantsmaybeexercised.• Ifthesharepriceistheequivalentofthesubscriptionpricewithanincreaseofmorethan24%p.a.,allof thewarrantsmaybeexercised.


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ThefairvalueofthewarrantsisestimatedbyapplyingtheBlack-Scholesmodel,usingvolatilityof32%andasharepriceofNOK11onthegrantdate14May2008.Thevolatilityforthesharesappliedisthevolatilitycalculatedforassessmentofthefairvalueoftheembeddedderivativeoftheconvertiblebondasof30June2008,assumedtoberelevantforthisassessment.Withrespecttointerestrate,thesameratewereusedaswell,beingtheswapinterestratefor2yearsasof30June2008,6.41%.

Thefairvaluecalculationsaresubjecttouncertaintyduetonon-quotedmarketpricesandtheuseofavaluationmodel.

Nospecificterminationbenefitsforthemanagementandtheboardofdirectorsareagreed.Pensionsareincluded.

Shares held by management and members of the board as of 3 April 2009:

PerM.Johansson(CEO) 1,226,249AndersBruun-Olsen(CFO) 59,110ThorStenersen(MarketingDirector) 47,916JanIngarKnudsen(OperationManager)DagBurgos(EngineeringManager)KarlRygh(HSEQManager)GeirSandvik(Chairmanoftheboard)TomRøtjer(boardmember)BenteThiisThornton(boardmember)RebekkaGlasserHerlofsen(boardmember)JetmundHanssen(boardmember)Sum 1,333,275

*JetmundHanssenhas19%ofthesharesinLuenAS,whichholds2.18%ofthesharesinMasterMarine.

JetmundHanssen(throughthecompanyLuen),PerJohanssonandAndersBruun-Olsenhavesharewarrantsasinvestors.Seenote17foradditionalinformationaboutthewarrantsprogram.

6. Transactions with related parties

TheCompanyhasaframeworkagreementwithSemarAS(“Semar”)underwhichSemarsuppliesMasterMarinewithmarineengineering,maritimeoperations,managementandadministrativeassistance,atagreedratesperhour.MemberoftheBoardofdirectorsJetmundHanssen,owns19%ofthesharesinthecompanyLuenAS,isemployedwithSemar,andhiredbyMasterMarineasaprojectmanagerundertheframeworkagreement.ThecompanyLuenAS,whichhasbeendemergedfromSemar,owns2.18%ofthesharesinMasterMarineandalsosomeofthesharesinSemar.

Basedontheframeworkagreement,theCompanypurchasedservicesfromSemaroftotalEUR1,058,139in2008(EUR191,668in2007).

TheformerprovideroffinancialservicesforMasterMarineASwasthecompaniesNyrudFinansASandMontBlancAS.NyrudFinansASis100%ownedbyformerChairmanoftheBoard,RogerKristiansen,andMontBlancASis100%ownedbyformerChairmanoftheBoardRogerKristiansenandCEOPerJohanssontogether.TotalpurchasesfromthetwocompanieswererespectivelyEUR8,250(EUR57,439in2007)andEUR0,-(EUR6,561in2007).

Allthetransactionswithrelatedpartiesarecarriedoutatarmslengthprices.


7. financial income and expenses and net effect embedded derivative CB

(1.000EUR) 2008 2007Financial income Interestincome 2,458 1,589Foreignexchangegains 4,118 2,532Total financial income 6,576 4,121 Financial expenses 2008 2007Interestexpense 2 2Foreignexchangelosses 1,850 12Otherfinancialexpenses 0 8Total financial expenses 1,852 22 Changes related to the convertible bond loan ChangesinfairvalueofderivativeofCB 5,112 -1,890Changesinthetermsofthebondloan -2,219 0Net effect embedded derivative CB 2,893 - 1890

Thefinancialincome/expensesrelatedtochangesintermsoftheconvertibleloanandthechangesinfairvalueofthederivativeoftheconvertiblebondareshownseparately.

Foradditionalinformationabouttheconvertiblebondandtheembeddedderivate,seenote9.

8. Investments and other financial instrumentsClassificationoffinancialassetsandliabilitiesasof31December2008:

Financial liabilitiesat fairvalue Loansand throughprofit Otherfinancial(1.000EUR) receivables andloss liabilitiesFinancial assets Othercurrentassets 1,986 Cashandcashequivalents 95,464 Total financial assets 97,450 Financial liabilities Convertiblebond 40,118Embeddedderivativeofconvertiblebond 7,629Otherlongtermliabilities 58,462 Accountspayable 21,537Othercurrentliabilities 4,332Total financial liabilities 58,462 7,629 65,987

Classificationoffinancialassetsandliabilitiesasof31December2007.


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Financial liabilitiesat fairvalue Loansand throughprofit Otherfinancial(1.000EUR) receivables andloss liabilitiesFinancial assets Othercurrentassets 84 Cashandcashequivalents 70,270 Total financial assets 70,354 Financial liabilities Convertiblebond 47,825Embeddedderivativeofconvertiblebond 7,207Accountspayable 244Othercurrentliabilities 198Total financial liabilities 7,207 48,267

9. Bond loans

ConvertiblebondloanTheCompanyissuedaconvertiblebondofNOK420millioninMay2007.InconnectionwiththeshareissueandthenewbondloaninQ2,2008,theconvertiblebondloanwasrenegotiated.Alowerstrikeprice(NOK13.65)andanextensionofthematurityfrom2010to2012resultedinanincreasedmarketvalueoftheconver-sionrights,whichrepresentsafinancialcost.Theextensionofthematurityoftheconvertiblebondgaverisetoareducedamortizedcost.Theneteffectofthesechangesinthetermsofthebondloanisacostofapproxi-matelyEUR2.2million.

EachbondhasanominalvalueofNOK1.Theconvertiblebondhasamaturitydate16May2012withanop-tiontoconverttosharesafter30May2008.Thebondcarriesafixedinterestrateof6%perannum(PIKnote),payableonthematuritydate.Theloanrunswithoutinstalments.

TheconversionpriceisNOK13.65,subjecttoadjustmentintheeventsofnewshareissuesorotherequitytransactions.Hencethebondsareconvertibleonthebasisofoneordinaryshareforevery13.65bondsheld,atotalof33,756,923shares.Theconversionrightisnotseparablefromthebond.TheCompanyshallmaintainanequityratioinexcessof18%,aswellasstandardfinancialcovenants.Thecovenantsarefulfilledasof31December2008.

ThemarketvalueoftheliabilityoftheembeddedderivativewasEUR7.6millionasof31December2008.

AsthefunctionalcurrencyoftheCompanyisEUR,theentireforeigncurrencyconvertiblebondisaccountedforasaliability,comprisingahostforeigncurrencydebtinstrumentthatissubjecttothetranslationrulesofIAS21andanembeddedderivativeliabilitywithequityandforeigncurrencycharacteristicsthatwillbefairvaluedthroughprofitorlossinaccordancewithIAS39.Theinitialcarryingamountofthebond(thehostinstrument)istheresidualamountafterseparatingtheembeddedderivative.

ThefairvalueoftheembeddedderivativeisestimatedbyapplyingtheBlack-Scholesmodel,usingvolatilityof80%on31December2008,andasharepriceofNOK6on31December2008.Theinterestrateappliedinthemodelisthezerocouponinterestrateofanoptionhavingsimilarexpiration,being3.275%asof31December2008.

Thefairvaluecalculationsaresubjecttouncertaintyduetonon-quotedmarketpricesandtheuseofavalua-tionmodel.

Thetablebelowshowsthechangeinfairvalueofthederivativeelementofthebond:

(1.000EUR) 31.12.2008 31.12.2007Fair value 01.01.08/issue date - 7,207 - 5,317Fairvalueadjustment 5,112 -1,890Changesinterms -5,534Fair value on 31 December - 7,629 - 7,207


BondloanEUR60millionwasraisedinJune2008asa3yearseniorsecuredFRNbondloanwithcalloptionsafteryear1and2.TheCompanymayredeempartsortheentireloaninJune2009at105%ofparplusaccruedinterestonredeemedamount,andinJune2010at102.5%ofparplusaccruedinterestonredeemedamount.Thecouponontheloanis3monthsEURIBOR+12percent.

10. financial Instruments and Risk Management

RiskManagementOverviewTheCompanyisexposedtoanumberofdifferentfinancialmarketrisksarisingfromtheCompany’snormalbusinessactivities.Financialmarketriskisthepossibilitythatfluctuationsincurrencyexchangerates,interestratesandtimecharter/bareboatrateswillaffectthevalueoftheCompany’sassets,liabilitiesorfuturecashflows.Toreduceandmanagetheserisks,theCompanyperiodicallyreviewsandassessesitsprimaryfinancialmarketrisks.Oncerisksareidentified,appropriateactionistakentomitigatethespecificrisk.TheprimarystrategyusedtoreducetheCompany’sfinancialmarketrisksistheuseofderivatives,whereappropriate.DerivativesmaybeusedinordertohedgetheCompany’svariousnetexposures,aswellashedgesofspecificexposures.Whentheuseofderivativesisdeemedappropriate,onlywell-understood,conventionalderivativeinstrumentsareused.Thesemayincludeswaps,optionsandforwardcontracts.Itismanagement’spolicytoenterintoderivativefinancialinstrumentswithonlyhighlyratedfinancialinstitutions.TheCompanyusesde-rivativesonlyforthepurposesofmanagingrisksassociatedwiththeinterestrateandcurrency.TheCompanydoesnottradeoruseinstrumentswiththeobjectiveofearningfinancialgainsininterestratefluctuationsalone,nordoesituseinstrumentswheretherearenotunderlyingexposures.TheCompanyaimtominimizethecurrencyriskbybalancingreceivablesandliabilitiesperthecurrenciesrelevanttotheCompany.ItisthepolicyoftheCompanytoholdliquidfundsinEURO,USDandNOK.

OperationalProjectRiskMasterMarineASAstartedin2008toworkforISOcertifications,9000:1,14000:1and18001:1,andplanstocompletethecertificationsduring2009.Severalmitigationstomonitorriskshavebeenestablishedduring2008andtheCompanycontinuestoimprovetheprocesses.Clearlevelsofapprovalhavebeenintroduced,definingdifferentresponsibilitiesinternally.

Alldisciplineshavegonethroughariskidentificationprocess.ThisiscoordinatedbytheRiskmanagerandiscloselyfollowedup.Eachmonththemanagementispresentedtheresultsafterriskidentification,andriskreducingmitigationsaredecidedandimplemented.

MasterMarinesignedacontractwithConocoPhillipsinOctober2008.Thishasresultedintheneedtobuildupasystemtohandleoperationalrisk.ResponsibilityforongoingriskassessmentsrestswiththeRiskManagerandtheprojectteam.

Therearepointedout9specificriskgroupswhicharefollowedup.Theseare:

1. HSErisk2. Contractualrisk3. Schedulerisk4. Resourceconstraintsrisk5. Costcontrolandcostescalationrisk6. People,organizationandprocessrisk7. Marineoperationsrisk8. Compliancerisk9. Financialrisk

TheseriskareasarecloselyfollowedupbytheprojectteamandtheManagementincooperationwiththeClient(ConocoPhillips).Themaingoalistopointoutthesignificantrisksinthedifferentcategoriesandintro-duceriskreducingactivities.

CurrencyRiskThefunctionalcurrencyofMasterMarineisEURO.TheCompanyhastwovesselsunderconstruction,ofwhichthecontractualamountsmainlyareinEuro.TheCompanyhasraisedequityinNOKandhasissuedaconvertibleloaninNOK.TheCompanyassumesthattheoperatingincomeandcostsmainlywillbeinEurowhenthevesselshavebeendelivered,withtheexceptionoftheadministrativeandotheroperatingexpensesthatwillbedenominatedinNOK.TheCompanymayalsodobusinessinUSDdenominatedareas,whereoper-atingincomewillbedenominatedinUSD.ThisexposestheCompanytoamoderateforeignexchangerisk.ThefollowingtableshowsthesensitivitytoareasonablepossiblechangeintheEURexchangerate,withallothervariablesheldconstant,oftheCompany’sprofitbeforetax.


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+/-basispointsininterestrate Effectonprofitbeforetax Effectonequity EUR/NOK (1.000EUR) (1.000EUR)2008 20 - 15 / 17 - 15 / 172007 20 - 544 / 572 - 544 / 572

+/-basispointsininterestrate Effectonprofitbeforetax Effectonequity 2008 50 392 / - 392 392 / - 3922007 50 127 / - 127 127 / - 127

InterestRateRiskTheCompany’sriskrelatedtointerestrateriskisconsideredtobelimited.TheCompanyhasaconvertiblebondwithfixedrates,andinJune2008theCompanysignedaseniorsecuredbondwithfirmcreditspreadinadditiontothefluctuatingEURIBOR.TheCompany’sobjectiverelatedtomanagementofriskistomini-mizetheexposuretovariabilityofcashflowrelatedtochangesininterestrates.

Interestraterisktable:Thefollowingtabledemonstratesthesensitivitytoareasonablepossiblechangeininterestrates,withallothervariablesheldconstant,oftheCompany’sprofitbeforetax:

CreditRiskItistheCompany’spolicyonlytotradewithrecognized,solidthirdparties.Receivablebalancesaremoni-toredonanongoingbasiswiththeresultthattheCompany’sexposuretobaddebtsisnotsignificant.Themaximumexposureisthecarryingamountasdisclosedinnote14.

WithrespecttocreditriskarisingfromtheotherfinancialassetsoftheCompany,comprisingcashandcashequivalentsonlyasat31December2008,theCompany’sexposuretocreditriskarisesfromdefaultofthecounterparty,withthemaximumexposureequaltothecarryingamountoftheseinstruments.However,theCompanydoesnotanticipatenon-performancebyanyofthecounterparties,assuchtransactionsareenteredintowithonlyrecognized,solidthirdparties.

InconnectionwiththeCompany’svesselbuildingprojects,prepaymentsaremadetosuppliersandtheshipyardandtheCompanyhasasmallconcentrationofprepaymentstothesevendors.Theexposureisconsistentlymonitoredandassessed.AllpaymentstotheyardarecoveredbyrefundguaranteesfrombanksapprovedbyMasterMarine.Theriskforasignificantdefaultsituationishenceconsideredsmall.Totalprepaymentsasof31December2008amountedtoEUR135million.

LiquidityRiskTheCompanymonitorsitsrisktoashortageoffundsbycloselymonitoringthematurityofbothitsfinan-cialinvestmentsandfinancialassets,andprojectedcashflowfromoperations.Riskmanagementincludesmaintainingsufficientcash,andtheavailabilityoffundingthroughanadequateamountofcommittedcreditfacilities.Duetothedynamicnatureoftheunderlyingbusiness,theCompanymaintainssufficientcashforitsdailyoperationsviaashorttermcashdepositsatbanks.TheCompanyhasafundingrequirementofaboutEUR200milliontomeetthecontractualobligations.

TheCompanyhascashtomeetitsobligationsuntilthirdquarterof2009.ThereforetheCompanyisworkingtogetabankloaninplaceduringsecondquarter.TheCompanyhasapositivedialogwithalimitednumberofbanksandGIEK/Eksportfinans,andbelievetohavethefirsttrancheinplacebytheendofQ22009.

ThetablebelowsummarizesthematurityprofileoftheCompany’sfinancialliabilitiesbasedoncontractualundiscountedcashflow:

At 31.12.2008 Less than 3 to 12 months 1 to 5 years Over 5 years Total(1.000EUR) 3 months Vesselsunderconstruction 49,033 198,958 106,110 354,101Convertiblebond 68,381 68,381Seniorbond 60,000 60,000Tradeandotherpayables 217 217

At 31.12.2007 Less than 3 to 12 months 1 to 5 years Over 5 years Total(1.000EUR) 3 months Vesselsunderconstruction 148,450 173,606 322,055Convertiblebond 62,850 62,850Tradeandotherpayables 244 244


CapitalManagementTheprimaryobjectiveoftheCompany’smanagementistoensurethatitmaintainsastrongcreditratingandhealthycapitalratiosinordertosupportitsbusinessandmaximizeshareholdervalue.TheCompanymanagesitsexcessliquidityfromloanandequitywithlowriskplacements.PositionsincommercialpapersandmoneymarketfundswhereclosedinApril2008.Afterthis,allfinancialcapitalhasbeeninbankaccounts.

FinancialInstruments,FairValueofFinancialInstrumentsSetoutbelowisacomparisonbycategoryforcarryingamountsandfairvaluesofalloftheCompany’sfinancialinstrumentsthatarecarriedinthefinancialstatements.ThefollowingestimatedfairvalueamountsoftheCompany’sfinancialinstrumentshavebeendeterminedbytheCompany,usingappropriatemarketinformationandvaluationmethodologies.Thecarryingamountofcashandcashequivalentsareareason-ableestimateoftheirfairvalue.TheCompanyhasNOKbondloansasof31December2008.Assumptionsisrequiredtodevelopestimatesoffairvalue,thustheestimatesprovidedhereinarenotnecessarilyindicativeoftheamountthatcouldberealizedinacurrentmarketexchange.

31.12.2008 Fair Carrying (1.000EUR) value valueOthercurrentassets 1,986 1,986Otherfinancialassets 17,009 17,009Cashandcashequivalents 78,455 78,455Total financial assets 97,450 97,450 Convertiblebond -36,231 -40,118Embeddedderivativeofconvertiblebond -7,628 -7,628Accountspayable -21,537 -21,537Othercurrentliabilities -4,332 -4,332Total financial liabilities - 69,728 - 73,615

TheCompanyhassoldNOKandboughtEURspotduring2008,primarilyrelatedtopaymentstotheyard,andboughtSGDandsoldNOKformiscellaneouscostsinSingapore/Batam.

11. Income tax

1.000EUR 2008 2007Taxpayable 0 0Changesindeferredtax 0 0Income tax expense 0 0 Taxpayablefortheyear 0 0Correctionofpreviousyearscurrentincometaxes 0 0Total tax payable 0 0

ReconciliationoftheeffectiverateoftaxandnominaltaxrateapplicabletoMasterMarineAS:

1.000EUR 2008 2007Pre-tax profit/(loss) - 876 412Expectedincometaxesaccordingtoincometaxrate28% -245 115Nondeductableexpenses 10 3Non-taxable income Deferredtaxassetfromlossescarriedforwardnotrecognizedinbalancesheet 2.986 937Other -2,751 -1,055Income tax expense 0 0


12. Property, plant and equipment Vessels Other Total Vessels Other Total under fixed under fixed (1.000EUR) construction assets construction assetsAccumulated cost 1 Jan. 56,331 113 56,444 0 54 54Realisation -31 -31 Additions 79,101 222 79,333 56,331 85 56,416Accumulated cost 31 Dec. 135,432 304 135,746 56,331 139 54,470 Accumulated depreciation 1 Jan. - 26 - 26 - 14 - 14Depreciation -40 -40 -12 -12Accumulated depreciation 31 Dec. - 66 - 66 - 26 - 26Carrying value 31 Dec. 135,432 238 135,670 56,331 113 56,444

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1.000EUR 2008 2007Deferred tax assets Longtermliabilitiesatamortisedcost 140 120Taxlossescarriedforward 5,178 2,193Deferred tax assets - gross 5,318 2,313 Deferred tax liabilities Property,plantandequipment 2.773 681Otherinvestmentsatfairvalue - 97Other 435Deferred tax liabilities - gross 2,773 1,213 Netunrecogniseddeferredtaxassets/(liabilities) 2,545 1,100

AstheCompanyatpresentdoesnothaveappreciableoperatingincome,deferredtaxassetisnotrecognisedinthebalancesheetasof31December2008.

TheCompanyhasatotaltaxlosscarriedforwardofEUR18,492,455asat31December2008(2007:7,833,573)whichneverexpires.

Depreciationofotherassetsisbasedontheenomiclifeoftheasset(5-10years)usingalineardepreciationmethod.Depreciationofthevesselsunderconstructionwillfirststartwhentheyarefinished.

In2007theCompanyenteredintoaconstructioncontractwithDrydocksWorldGraha(formerLabroyOffshoreLtd)forthebuildingoftwoJack-upconstructionvessels.ThetwovesselswillbedeliveredinQ1andQ32010accordingtothecontract.Thevesselswillbedeliveredonaturn-keylumpsumbasis,wherebyDrydocksWorldisresponsibleforengineering,procurement,construction,commissioning,testinganddeliveryofthefirstvesselinQ12010andthesecondvesselsixmonthsthereafter.AlllongleaditemsformingpartoftheOwnersFurnishedEquipment(«OFE»)undertheconstructioncontractsforthetwoJack-upConstructionVesselshavebeendulyorderedbyMasterMarine.TheOFEincludescranesfromHuisman-Itrec,ABB-generators,switchboards,electricalmotorsandtransformers,KongsbergAutomationandDP-IIsystem,Mitab(MitsubishiVolvoPenta)mainenginesandSchottelazimuthpropellers.

Alargeportionoftheadditionsin2008representprepaymentstotheshipyardinagreementwiththeconstructioncontracts.ThesearesubjecttorefundguaranteesfrombanksapprovedbyMasterMarine.

AnotherpartisrelatedtoownerfurnishedequipmentandconstructioncontractsrelatedtothemodificationsoftheoriginalServiceJack1basedontheEkofiskcontract.

The capitalized amounts on the vessels include (1.000 EUR): 2008 2007Constructioncontracts(yardandothers) 67,138 52,375Projectmanagementcosts 2,965 749Financialitems 8,999 3,207Capitalized amounts on the vessels for the year 79,101 56,331


ImpairmentindicatorsAteachreportingdate,asassessmentismadeaccordingtoIAS36.9,onwetherinternalorexternalinforma-tionindicatesafallinthevalueofnon-currentassets.Atyearendsuchindicationsexistsforthevessels:

• Vessel’smarketvaluereportsreceivedfrombrokersonaquarterlybasisdemonstratesadropinmarket valueinthelastquarterof2008• Currentmarketsituationingeneralrequiresimpairmentassessment

ImpairmentvesselsBothvesselsareunderconstructionasofDecember31,2008,butwillatdateofcompletionoperateascashgeneratingunitswiththepurposeofmaximizingrevenuesasatotal.Thevalueassessmentfortherespectofimpairmentisthereforedoneusingthevalueinuseprincipleforbothvessels(IAS36.66).Netcalculatedvalueofthevesselsisgreaterthanthebookvalueasof31.12.2008andnoimpairmentwaschargedthevesselsin2008(IAS36.104).Thecalculationswasdoneusinga14%discountratefactor,andfuturecashflowrepresent-ingmanagementbestestimate,withnogrowthfornon-contractualincome.

SensitivityanalysisAtyear-endasensitivityanalysisisperformedinordertoanalyzetheconsequencesofvarianceinparametersusedinthevalue-in-usecalculation.Whenapplyingadiscountrateof17.5%,valueinuseofvesselsequalsbookvaluevessels.ThebelowmatrixillustratescalculatedimpairmentgivenafallinestimatedDayRateincomeanddifferentdiscountrate.

Sensitivity analysis - Impairment vessels - EUR thousands 13 % 14 % 15 %10%fallinestimatedDayRate - - -20%fallinestimatedDayRate - -7,880 -27,869

SparepartsconsistofusableequipmentorderedforServiceJack1whichwillnotbeinstalledonthevesselduetomodificationsonthevesselfortheEkofiskcontract.Seealsonote4.

TheCompanyhadonlyonetradereceivableasof31December2008withasolidclient,andthereisnoreasonforbaddebtprovision.

14. other current assets

(1.000EUR) 2008 2007Tradedebtors 203 0Pre-paidexpenses 70 19Spareparts 1,252Othercurrentassets 4 3VATrefund 456 63Total other current assets 1,986 84

13. Contractual obligations

ThetabledisclosescontractualobligationsthenextfiveyearsinaccordancewiththeobligationsoftheCompany,mainlyincurredinconnectionwiththevesselsunderconstruction.

(1.000EUR) 2008 20072008 n/a 148,4502009 248,421 104,9542010 106,519 68,6522011 3462012 3482013 350After2013 Total 355,984 322,056


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Restrictedcashin2008amountstoTEUR177andTEUR67in2007.

15. Cash and cash equivalents

Cashandcashequivalentsincludedemanddepositsandallhighlyliquidfinancialinstrumentspurchasedwithmaturitiesofthreemonthsorless.

(1.000EUR) 2008 2007Cash 78,455 17,071Cashequivalents 17,009 53,199Cash and cash equivalents in the balance sheet 95,464 70,270Cash and cash equivalents in the cash flow statement 95,464 70,270

*On19January2007,thegeneralassemblyresolvedasharesplitintherangeof1to10.

Warrantsissued(seenote17fordetails)andtheconvertiblebond(seenote9)arenotin-the-moneyasof31December2008,andassuchnotdilutiveasofthereportingdate,andnotconsideredinthecalculationsofdilutiveearningspershare.

16. Earnings per share

Thebasicearningspersharearecalculatedastheratiooftheprofitfortheyearthatisduetotheshareholdersdividedbytheweightedaveragenumberofordinarysharesoutstanding.

(1.000EUR) 2008 2007Averagenumberofsharesoutstanding 66,423,557 34,111,344Effectofdilutivepotensialordinaryshares: -Convertiblebonds Shareoptions Diluted average number of shares outstanding 66,423,557 34,111,344 Proft/(loss) for the year: - 876,367 411,699 Earnings per share: 2008 2007-Basic -0,01 0,01-Diluted -0,01 0,01

17. Share capital and shareholder information

2008 2007 Total number of shares 77,421,634 52,829,660 Nominal value pr share NOK 0,1 NOK 1

Changestosharecapitalandpremium: No. of Share capital Premium shares (1.000 EUR) (1.000 EUR) 2008 2007 2008 2007 2008 2007Ordinary shares At1January 52,829,660 4,512,300* 647 53 70,284 751Shareissues 24,591,974 48,317,360 306 594 30,209 69,533Lossesallocatedtosharepremium -464 0At31December 77,421,634 52,829,660 954 647 100,029 70,284

*ThenominalvaluepershareisNOK0,1afterasharesplitintherangeof1to10wasresolvedonthegeneralassembly19January,2007.


Allissuedshareshaveequalvotingrightsandtherighttoreceivedividend.Forcalculationofearningsprshareanddilutedearningsprsharepleasebereferredtonote16.

Share Share Other Retained Total capital premium in capital earnings equity

Opening balance 01.01.2007 53 751 0 0 804Shareissue 594 69,533 Netincome(loss) 412

Balance 31.12.2007 647 70,284 0 412 71,344 Shareissue 306 30,209 Issueofwarrants 59 Netincome(loss) -464 -412

Balance 31.12.2008 954 100,029 59 0 101,042

The 20 largest shareholders as of 20 April 2009 are:

Name Account Country of Number of Ownership type origin shares interest

EuroclearBankS.A./25%Clients NOM BLE 37431689 48,35%LabroyMarineLtd SGP 8726400 11,27%ParetoGrowthAS NOR 4285714 5,54%BrownBrothersHarriS/AOppenheimerQue USA 3994100 5,16%GoldmanSachsInt.-SecuritySeparation GBR 2908800 3,76%OdinOffshoreOdinForvaltingAS NOR 2500000 3,23%PensjonskassenStato NOR 1910049 2,47%LuenAS NOR 1684010 2,18%FreyerHoldingAS NOR 1500000 1,94%ABNAmroGlobalCustA/SAAGC/ClientsAcc NOM NLD 1227714 1,59%JohanssonPerMartin NOR 1226249 1,58%BankofNewYorkMelS/AMellonNominee1 NOM USA 1173320 1,52%StatiolForsikringAJPMorganChaseBank NOR 889951 1,15%ClaessenHarald NILD 754578 0,97%KLPLKAksjer NOR 672800 0,87%VerdipapirfondetKLP NOR 482200 0,62%AksjevoldASc/oASNaturbetong NOR 470190 0,61%GMCHoldingAS NOR 436850 0,56%O.JSandvenASv/OlavSandven NOM NOR 430000 0,56%SvenskaHandelsbankenc/oHandelsbankenAS NOM SWE 321000 0,41%Total 20 largest shareholders 73 025 614 94,34 %Other 4396020 5,68%Total shares 77 421 634 100,00 %

In2007theCompanyissuedwarrantstoallshareholdersonaproratabasis,5,925,000intotal,vestingin2010,2011and2012respectively(1/3eachyear).ThesubscriptionpriceisNOK12.50.Theactualnumberofsharesthatmaybesubscribedvariesdependingonthesharepriceincertainintervalspriortothesubscription.Iftheincreaseinsharepriceoverthesubscriptionpriceforthecertainperiodislessthan11.99%,nowarrantscanbeexercised.


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18. Accounts payable and other current liabilities 1.000EUR 2008 2007Tradeaccountspayables 21,537 244Governmenttaxes,taxdeductionsetc. 257 107Othershorttermliabilities 4,075 91Total 25,869 442

19. legal issues

FirstSecuritiesASAinstitutedin2007legalproceedingsagainstKaupthingASAregardingtheterminationofafinancialadvisor’sagreementbetweenthetwopartiesinconnectionwithMasterMarine’sshareandbondofferingsin2007.KaupthinghasrecourseagainstMasterMarineifFirstSecuritiesshouldsucceedinitsclaim.BothKaupthingandMasterMarinedisputetheclaim.Kaupthingiscurrentlyunderadministrationandanyfurtherdevelopmentoftheclaimsituationisuncertain.

20. Events after the balance sheet date

SciraOffshoreEnergyLimited,withits50/50partnersStatoilHydroandStatkraft,awardedinApril2009acontracttoMasterMarineASAfortheplanningandcarryingoutofinstallationof88windturbinesand2substationmodulesfortheSheringhamShoalOffshoreWindFarmProject.Projectengineeringworkwillstart2ndquarter2009andtheinstallationcampaignwillcommenceinthebeginningof2011.ThecontractvalueisestimatedtobeEUR78million,basedonanestimatedinstallationtimeof7months.TotalorderbacklogisnowinexcessofEUR340million.

TheCompanyiscurrentlyworkingwiththethirdandfinalstepofthecompanyfinancing,whichwillbetosecureaEUR200millionbankloanfacility.TheCompanyhasagoodandconstructivedialoguewithalimitednumberofbanks,includingtheNorwegianGuaranteeInstituteforExportCredits(GIEK)andEksportfinans,inordertosecurethisfinancing.GiventhestrongcashflowintheConocoPhillipsandStatoilHydro/StatkraftcontractstheCompanyexpectthatthisfinancingpackagewillbesecuredaccordingtoplan,despitevolatilefinancialmarkets.TheobjectiveistohavesecuredthefirsttrancheofthefinancingduringQ22009.

KaupthingBankwhichownsArionCustodyandsubsequently48.35pct.ofMasterMarinewasputunderadministrationinOctober2008.TheCompanyhastakenaproactiveroleinresolvingtheshareholderissuesto-getherwiththebank’sadministrationboardsandwasinMarch2009informedthattheMasterMarinesharesareapartoftheassetsbelongingtotheUKadministrationboard.ThefinancialadvisortotheUKadministra-tionboard,hasnowappointedaNorwegiansecuritiesfirmtoactasthemanagerintheupcomingsaleoftheshares.TheCompanyexpectsthatthesalewillbeconcludedduringQ22009.MasterMarinemanagementhascommittedtoassistinthisprocess,inordertosupportasmuchaspossiblethevaluesofthevariousstakehold-ersintheCompany.

MasterMarinecontinuestobuildtheorganizationtosecurethatthevesselsaredeliveredaccordingtoschedule,andinpreparationfortheoperationofthevessels.TheOsloofficenowcounts43andthesiteteaminBatam,Indonesia,consistsof32highlyskilledsiteteammembers.51ofthistotalnumberof75arehighlyqualifiedconsultantsorprojectrelatedemploymentswithrequiredcompetence,eitherfortheconstructionoftheunits,orforthepreparationforoperationsaccordingtoemploymentcontract.

AUDitoR’s RepoRt 2008MASTER MARINE ASA

installation of offshore wind turbines.



MASTER MARINE ASA

MASTER MARINE ASA HEAD OFFICEDRAMMENSVEIEN 288PO.BOX 76, NO-1325 LYSAKER NORWAYTEL: +47 67 430 430 - FAX: +47 92 07 37 [email protected]

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Documents

ANNUAL REPORT 2008 - Macro Offshore Financial Reports/Annual...MASTER MARINE ASA I ANNUAL REPORT 2008 5 Oslo, 29 May, 2009 Geir Sandvik Tom Røtjer Rebekka Glasser Herlofsen Bente