annual report 2013 - agr reports/annual report 2013.pdf · 2014. 4. 25. · annual report 2013 2...

Annual Report 2013

Content

Key Figures 1

Annual Report 2013 2

Letter from the CEO 2

Director's Report 2013 4

Consolidated Income Statement 20

Consolidated Statement of Comprehensive Income 21

Consolidated Statement of Financial Position 22

Consolidated Statement of Changes in Equity 24

Consolidated Statement of Cash Flow 26

Notes 28

Income Statement AGR Group ASA 70

Balance Sheet AGR Group ASA 71

Balance Sheet AGR Group ASA 72

Statement of Cash Flow AGR Group ASA 73

Notes 74

Auditor's Report 90

Responsibility Statement 92

AGR Sustainability Report 94

ANNUAL REPORT 2013 1

Key FiguresAGR Group ASA - consolidated (Figures in NOK 1 000)

Profit and Loss Account 2013 2012Operating revenue 1 394 502 1 281 394EBITDA* 174 591 104 917EBIT 155 125 83 469Profit (loss) from continued operations 77 146 60 682

Balance/liquidity/capital** 2013 2012Equity 478 500 681 461Cash and equivalents 125 106 272 683Total Capital 1 324 459 2 170 949Interest-bearing liabilities 524 642 747 657

Key figures per share* 2013 2012Share capital 139 051 251 797Average number of outstanding shares 125 198 977 124 130 169Outstanding shares 31.12. 124 152 393 125 898 308Dividend per share (NOK) - 5.64EBITDA per share (NOK) 1.39 0.83Equity per share (NOK) 3.82 5.41

2013Business segment

Norwayincl. Russia

UK, MEand West

Africa

Asia Pasific UnitedStates

Software Group Elimin. Total

Operating revenue 639 988 449 878 129 632 198 196 9 631 31 349 (64 172) 1 394 502EBITDA 166 168 3 815 6 767 19 510 5 747 (27 415) - 174 592

2012Business segment

Norwayincl. Russia

UK, MEand West

Africa



Operating revenue 487 742 502 286 125 342 209 391 6 627 29 695 (79 689) 1 281 395EBITDA 69 161 53 293 3 990 13 951 3 742 (39 222) - 104 917

*Reported earnings before interest, tax, depreciation, amortisation and asset write-down. Before adjustments for non-recurring items

**Balance Sheet items including Drilling Services in 2012

2ANNUAL REPORT 2013

Annual Report 2013AGR Group ASA Comp. reg. no: 986 922 113.

Åge Landro, CEO AGR

Letter from the CEO

2013 was the first full year under the new organisationalstructure implemented mid 2012 with AGR’s divisionsoperating autonomously and with dedicated managementteams for each of the businesses. In 2013 we took evenfurther steps in separating the business areas so that we wouldensure an even more focused business model going forward.

Early in the year we successfully completed the refinancing ofthe Group with separate financing for AGR PetroleumServices and AGR Enhanced Drilling. Following this, inAugust, a demerger of the company was completed. With thedemerger completed, AGR is now a service companyfocusing on exploration, development and productionservices.

In 2012 we developed a new strategic plan for the companyand since then the business has focused on delivering on thisplan. I believe the performance in 2013 shows that we noware working according to a plan that ensures best possibledevelopment of the business and that the financial resultsclearly demonstrate the potential in AGR as a focused well-and reservoir management business.

Software Solutions was established as a new business line forAGR in 2013. This was one of the key strategic targets forthe year. The division was established mid-2013 and duringthe last six months of the year three new software systemswere launched and successfully commercialised. With thenew software products, AGR now offers a full suite ofsoftware solutions for well planning, cost tracking duringoperations, material and logistics management and efficientexperience transfer. All software systems have been tailor-made for drilling departments within oil companies based onextensive experience from AGR’s Well Management groups

from around the world. It is expected that there will bestrong growth in global drilling activity until 2020 and withshortage of resources already apparent in the industry, Ibelieve there will be a demand for increased efficiency andmore automated work processes in order to utilise availablehuman capacity in the most optimum way in the future. Thisnew business line should therefore be well positioned forstrong future growth, as it enables the end user to plan theirwell projects in a smarter and more efficient way.

- AGR has drilled over 500 wells...

Another key focus for us has been to strengthen our presencewithin production drilling and establish a broaderrelationship with the larger oil companies. AGR has drilledover 500 wells during the last 13 years and the majority ofthese wells have been exploration and appraisal wells for smallExploration and Production (E&P) companies. Despite thisunique track-record, only very few of the wells drilled havebeen production wells. We see a growing demand for ourservices and expertise throughout the value chain of oil andgas and established, based on this increased demand, a planfor growing our market presence within production drilling.This started to pay off in 2013, being the first year in thehistory of the company we delivered as many productionwells as exploration wells.

Health, Safety and the Environment (HSE) remains ournumber one priority and in a year with significant increase inthe activity level and with improved financial performance itis a pleasure to see that we are able to continue to improvethe performance year by year. During 2013 we did not haveany incidents with serious personal injuries or damage toequipment and at end of the year the H-value is down to 3.2.

This year, Annual Report contains the first AGRSustainability Report, ref. Section AGR SustainabilityReport. This first Sustainability Report describes AGRactivities in Norway and UK. It is critically important toAGR to operate and expand our activities being in control ofpossible impact on health and safety of our personnel and tothe environment, and in compliance with:

• laws and regulations wherever we operate• our business code of conduct which is based on

international acknowledged standards .

3ANNUAL REPORT 2013

Our industry leading well- and reservoir managementservices continued to deliver professional performance onsome of the industry’s greatest challenges last year, beatingour own records for deep wells with high pressure and hightemperature as well as several other state of the art projects. Iwas very pleased to see the market continue to accept ourconcept for outsourced well management services, withseveral NOC’s and majors now endorsing it and with Statoilawarding significant Well Management projects to AGR lastyear.

The global demand for rig days is estimated to increase by6 % annually over the next years, so we expect the demandfor our services to continue to grow in 2014. We willcontinue to deliver on an ambitious business plan tocontinue strengthening AGR’s market position globally andfurther improve our business performance and health, safetyand environment (HSE) performance.

4ANNUAL REPORT 2013

Director's Report 2013

Company Overview

AGR Group ASA (AGR) is a leading supplier of services andsoftware to the global oil and gas industry. The Group’s mainoperations are based in Oslo, with other offices around theworld including, Stavanger, Trondheim, Bergen, Aberdeen,Guilford, Houston, Perth, Almaty, Moscow, Dubai, AbuDhabi and Tel Aviv. The company provides expertise andservices to several of the world’s oil and gas fields, with acustomer base comprising several small and medium sizedoperators, as well as a number of the large international oilcompanies and NOCs. At the end of 2013, the Group had 634 professionals, whereof 306 permanent employees, 2project employees, 313 contracted-in staff and 13 associates.The annual turnover was NOK 1 394 million.

Good corporate governance is a key goal of the AGR Boardin order to ensure that its investors and stakeholders can beconfident that the actions taken are in the best long terminterest of the Company. AGR aims to achieve the bestpossible profitability, while maintaining an efficient andviable utilisation of the company’s resources and ensuringadherence to HSE&Q best practice standards. AGR believesthat adhering to the Group’s values will benefit the company’sshareholders, employees and society in general.

Corporate Governance

This Policy was adopted by the Board of Directors on 5November 2007 and has thereafter been regularly updated. Itis predominantly based on the guidelines on CorporateGovernance (Anbefaling for Eierstyring og Selskapsledelse) of21 October 2010 and updated 20 October 2011.

Corporate Governance Policy for AGR

Through its compliance with the policy the company aims tomaintain the shareholders’ trust in the company’s Board andManagement as well as the Group’s reputation. The policylays down principles of transparency in its communicationwith stakeholders, independence of the Board, equaltreatment of shareholders, and control to ensurepredictability and appropriate risk management. In pursuit ofthe Corporate Governance Policy, the company has in place acode on Board Proceedings, a Management Code and anInsider Trading Policy.

The Board of Directors also elected a NominationCommittee at the Annual General Meeting in 2008.

The Board and Management of the Group are continuouslyassessing the company’s risks and its approach to ethics. TheBoard of Directors has evaluated potential conflicts of

interest among the members of the Board and Managementand has concluded that to the knowledge of the Board therewere no such incidents in 2013.

The company has monthly financial reporting which is animportant tool to enable suitable control of the company andto monitor progress towards the achievement of its financialgoals. This reporting enables the company to be confidentthat it is in compliance with statutory and Stock Exchangereporting requirements.

Information about the remuneration of the Group CEO andExecutive Management in 2013 can be found in Note 25Wages, Fees, Number of Employees etc.in the annualaccounts.

After completing the restructuring of the company, AGR istoday a focused on reservoir and well management businesswith a unique global track-record.

Operations

Introduction

AGR delivers a broad service offering within reservoirevaluations, well planning, well operations, well testing andintegrated field management to the upstream oil and gasindustry. Its core competencies include geology, geophysics,petrophysics, reservoir and petroleum engineering, wellconstruction, drilling management, completion design andinstallation, field development planning, risk and economicsevaluation. The business unit also delivers a broad trainingportfolio within these topics, as well as a suite of softwaresolutions for efficient planning and execution of the welldelivery process. The services are offered provincially byregional business centers established in Norway, UnitedKingdom, USA, Russia, United Arab Emirates and Australia.

In 2013 AGR made good progress in implementing itsbusiness plan, resulting in a stronger market presence, bothacross the lifecycle of oil and gas, as well as by establishingrelationships with a number of new clients worldwide.During the year the company has also introduced newproducts and services to the markets such as softwaresolutions business and a new rig management offering.

To position the company for future growth, one key priorityhas been to establish a strong and broad client portfolio. Atthe end of 2013 the company had 360 active contracts withclients around the world.

2013 was yet another year with success in winning importantcontracts. A number of wells for multiple clients in variouslocations were secured during the year. The largest single

5ANNUAL REPORT 2013

contract secured in 2013 was a Total Well Managementcontract for executing, planning, operations and post wellactivity for drilling and well operations for Genel and Medoilfor 10 wells over the next 24 months by using the Noble PaulRomano rig. The duration of the contract was two years or10 wells, whichever is reached first. Planning of the first wellstarted in 2013 and drilling operations are expected tocommence in March 2014. When entering into 2014 AGRhas secured significant work in all regions.

The high activity level in 2013 generated NOK 175 MillionEBITDA, up from NOK 105 million in 2012. Included inthese numbers are also costs related to the demerger of thebusiness and other non-recurring items, meaning that theunderlying operational performance was stronger thanreported. In 2013 the business spudded 21 wells and has intotal spudded 513 wells the last thirteen years.

At the time of the demerger of AGR, the company alsoreduced its ownership in AGR Energy from 100% to 44%.

Norway and Russia

Sjur Talstad, EVP Norway and Russia

AGR in Norway experienced a very high activity level acrossall areas during 2013. The Well Management divisiondelivered Well Management Services on seven different rigsand delivered a total of 18 wells in a safe and efficientmanner to multiple operators during the year. A productiondrilling campaign was executed on the Volve asset for Statoilunder the Total Well Management contract in addition toproduction wells on Oseberg Sør and Vega. The three yearBorgland Dolphin campaign continued during the year andthe new Bredford Dolphin campaign started in September.Exploration drilling for Lundin, Faroe and RWE wasdelivered using a semi, a jack-up rig as well as a drill ship.Two wells for OMV in the northern part of the Barents Seawere also executed successfully. A proactive HSEQ attitudewas secured through heavy involvement from the HSEQServices department in addition to AGR’s Operational HSEdelivering Safety Coaches on several AGR operated rigs andother rigs in Norway and internationally.

The Reservoir Management division experienced a very active

year with exploration, field development and field operationsstudies for several operators and authorities. The organisationwas strengthened during the year both in the Oslo andStavanger offices. Several verification and M&A supportanalyses were performed for several operators. Interest for ourmulti-client studies within exploration remained high. TheMoscow reservoir office was active within their reservoirstudy offering.

The Facilities division supported Lundin in their first fielddevelopment project on Brynhild.

AGR Consultancy secured a renewal of the Consultancycontract for drilling and well personnel with Statoil. Severalextensions and new contracts were also entered into with newoperators.

A dedicated rig team was established to secure new rigcapacity for operators on the NCS. Jorunn Sætre wasappointed head of the rig team in addition to Office Managerfor the growing AGR Stavanger office.

At the start of 2013 AGR commenced the close out anddemobilisation phase of the successful four well deepwaterproject in the Falkland Islands which concluded operationswith the Leiv Eiriksson in December 2012. Also early in theyear the Aphrodite 2 well offshore Israel was successfullycompleted within AFE time and cost. Operations were closedout and equipment demobilised. However, the overall WellManagement activity level was unusually low with only onewell spudded.

UK, West Africa and ME

In May a multi-well management contract was signed withGenel Energy to support Genel operated activity over a twoyear period initially in Malta and Morocco. Later in the yearthe Noble Paul Romano semi-submersible rig was contractedfor the work. This work was scheduled to commence inSeptember 2013 but because of extensive rig upgrades andshipyard delays, commencement of the operations phase isnow expected in April 2014.

Significant well planning, supply-base set up and third partyservices contracting activity took place in 2013 nonetheless.A contract was signed for a one-well programme offshoreGuinea Bissau with Svenska Petroleum to be drilled in thesecond half of 2013 but again due to rig availability issuesthis well was also deferred to a 2014 start. After some timeconducting a search for a suitable rig, AGR was able tobroker a rig sharing arrangement between Ophir, one of ourAPAC clients and STARC for whom we had been contractedto deliver one deep water well.

6ANNUAL REPORT 2013

Ian Burdis, EVP UK & West Africa

With the combined demand of one well in EquatorialGuinea for STARC and one in Ghana for Ophir the StenaDrillmax DP drillship was secured for the work. The well forSTARC was drilled successfully and considerably under AFEtime and cost. In addition to the Full Well Managementcontracts, well design engineering work was undertaken on anumber of projects yet to be executed. A well in Tunisia forCooper Energy was completed and tested in late 2012 andplans were made for a re-entry, sidetrack and further test in2014.

During the year the Reservoir group executed significantprojects for Maersk, Talisman, Premier, National GridCarbon, MOL and BP. Major contracts were signed withGNPC and BP-ADMA for large scale studies which,commencing in 2013, will ensure high utilisation of resourcesthroughout 2014 and beyond. The strategic aim of recruitinggeomechanics expertise was realised and this has proven keyin linking integrated projects involving both Reservoir andWell Management resources which now forms a growingcomponent of the business. The training division of theReservoir group represented the highest growth area for theregion in 2013 carrying out 193 courses in 2013. At the endof the year, 112 courses had already been pre-booked for2014.

2013 has seen AGR strengthen its position in the Asia Pacificmarket. As a result of initiating a strategic developmentprogramme in late 2012, the company has seen significantprogress in several business areas, particularly subsea andsoftware solutions.

Asia Pacific

Throughout 2013, AGR has been planning theabandonment of an offshore field in the region, includingsubsea wells. This project will be completed in 2014 andthese types of activities will remain a key focus in 2014 andbeyond as the company continues to build its subsea teambased on the experience gained from this initial contract.

AGR has developed a comprehensive software offering inrecent years and with the appointment of a BusinessDevelopment Manager in the region, has managed to secureits first software sale in Australia with land operator

“Drillsearch” who have recognised the benefits of utilisingP1™ in the planning and execution of wells in SouthAustralia.

Well Management remains core to the company with severalmajor contracts having been secured over the course of 2013with operators such as Hunt Oil, Minza Petroleum, OttoEnergy and CalEnergy. Regional opportunities have also beenidentified in Vietnam, Malaysia, Philippines, Myanmar andIndia.

Leveraging on the synergies between Well Management,Reservoir Management, Software and Consultancy hasresulted in the establishment of several Master ServiceAgreements with other Engineering groups that lack thesecompetencies within their own local organisations. This is thecase with Wood Group Kenny, Worley Parsons and RPS, allof whom regard AGR as their preferred partner when theyrequire drilling and/or reservoir expertise.

Bruce Roebuck, EVP Asia Pacific

2013 started off with a new management team in place andwas immediately challenged with the task of replacing therevenue from McMoran, who was cutting back on theiractivity, the historical number one revenue generating clientfor AGR Americas for many years. Emphasis on existingcontracts with other top five clients was made top priority inorder to maintain market share. Ongoing ventures thatincluded Karoon Brazil and the placement of a new supportstructure for Karoon Peru will occupy AGR through 2015once drilling commences in both areas of South America. AsADTI shut down all activity in the US, AGR was able toreplace ADTI and is now the primary supplier for the WestAfrica Operations and other areas like Romania. Other newcontracts, like a new contract with Chevron will be finalisedin 2014 and AGR will place emphasis on the land shale playregions in West Texas and the North East. Eagle Ford activityhas stabilised with no significant fluctuations in the overallUS land rig activity in 2013.

Americas

GoM will see increased activity in the deepwater sector withclients like the new FMI (Plains Resources and McMoran

7ANNUAL REPORT 2013

merger), Chevron and other companies like Marubeni O&Gin 2014, but the overall rig count for the GM has remainedrelatively flat throughout 2013.

Patrick McKinley, EVP Americas

Software has grown to be an important element of AGR’sproduct offering. In June 2013 AGR Software Solutions wasmade a separate business unit and Petter Mathisen hired tohead it up. The strategy was to raise awareness of AGR’svarious software tools which include P1™, Cost Tracker(CT™), M²™ and iQ�™. The aim was to increase salesacross all AGR regions and further develop the products tomeet client needs.

Software

Petter Mathisen, VP Software Solutions

Towards the end of July 2013, AGR increased its ownershipin WDO owning the iQ�™ software from 50% to 56% inorder to establish primary control of the product andintegrate it with the AGR Software portfolio.

A marketing strategy was put into place to give all products auniform set of logos and marketing material.

With P1™ being the only sold product by June 2013, a highfocus throughout the year was given to the other products.Towards the end of the year all regions had managed tosecure sales.

AGR E&P

During 2011, AGR established AGR Energy whichdeveloped through 2012 and 2013. AGR is the Operator ofseveral licenses in Israel, holding 5% of each license. Inaddition, through AGR’s 44% ownership in AGR Energy,AGR holds an interest in a deepwater oilfield in Ghana.

Group consists of corporate administration.

Group

AGR was awarded a Well Management contract from theindependent Norwegian E&P company, Noreco. Theagreement includes Well Management Services for threeyears, with the option for Noreco to extend the contractperiod by an additional two years.

2013 Key Events

January:

AGR Petroleum Services Holdings AS, a subsidiary of AGRGroup ASA, successfully completed a secured bond issue inthe amount of NOK 550 million in the Norwegian bondmarket, with maturity in February 2018. Net proceeds fromthe contemplated bond issue was used to refinance existingdebt and for general corporate purposes.

AGR signed a Service Order with Mediterranean Oil & Gasplc. for the provision of full Well Management Services toinclude rig procurement, drilling engineering & planningservices, supply chain management and operations supportfor the drilling of Hagar Qim Well 1.

February:

AGR successfully completed the refinancing of the Group,where the two business areas Petroleum Services and DrillingServices were financed separately. As a part of this work,AGR Group ASA´s Board of Directors contemplated a legaldemerger of the Group's two divisions. Group CEO SverreSkogen elected to stand down after eight years with AGR,but continued in the role as Chairman of AGR Energy. AGRPetroleum Services EVP Åge Landro succeeded Sverre asCEO as AGR Group ASA.

The Board of Directors of AGR approved a demerger planfor the proposed demerger of AGR Group ASA, with theDrilling Services business separated into a new private limitedliability company.

March:

AGR signed an £18million (NOK 180 million) contract withGenel Energy to deliver Well Management Services for GenelEnergy's North/West Africa offshore drilling campaign.

May:

The contract involves provision of Full Well Managementand associated services, including drilling engineering and

8ANNUAL REPORT 2013

planning services, supply chain management and operationssupport for Genel Energy's high impact 10 well drillingcampaign.

AGR was awarded a contract to provide Project ManagementServices to the large independent operator Hunt Oil for thedrilling of one exploration well located in Permit WA-425-Poffshore North Western Australia.

July:

The contract includes provision of Full Well Managementwith the semi-submersible rig Stena Clyde, including drillingengineering, planning, procurement, regulatory requirementsand operational support.

The demerger of AGR Group ASA was completed on 7th August 2013.

August:

AGR signed a contract with Svenska to deliver WellManagement services for Svenska's offshore Guinea Bissaudrilling campaign. The contract involves provision of FullWell Management and associated services, including drillingengineering and planning services, supply chain managementand operations support for the drilling campaign onSvenska's operated Blocks 2 and 5A licences. The program isfor a minimum of one firm well with the option of twoadditional exploration wells dependent on results.

AGR won a major contract to deliver a two-year frameagreement for the Norwegian Petroleum Directorate (NPD).AGR's Norway-based Reservoir Management team willdeliver services within geology and reservoir engineering,including reservoir modelling, petrophysics, reservoirsimulation and increased oil recovery.

A major Frame Agreement for drilling and well technologyconsultancy manpower was awarded by Statoil to AGRConsultancy in Norway. Starting in January 2014, theagreement primarily covers Statoil's operations in Norway,but the services may be performed globally. The five-yearcontract has extension options which could see it extend to10 years in total.

October:

Statoil exercised the first two-year option under the FrameAgreement that was announced in January 2012.

November:

AGR was contracted to drill two exploration wells for RWEDea in the North Sea's Titan area, using the semi-submersible rig Leiv Eiriksson. AGR will deliver WellDelivery Services comprising planning, execution andreporting for the project.

December:

Working Environment and Personnel

Tove Magnussen, SVP HSEQ

A core objective of AGR is to have a safe and healthy workingenvironment and the business is managed in accordance withthe OSHAS 18001:2004 standard. Performance is monitoredcontinuously, and status reported to the ExecutiveManagement team and the Board of Directors on a regularbasis.

The functioning safety organisations and WorkingEnvironment Committees ensure employee involvement inHSE related issues.

During 2013, the company had zero incidents resulting inabsence and zero medical treatment incidents. Hence, thefrequency of lost time injuries and accordingly the frequencyof personnel injuries per million working hours (H-value/H2-value) was zero.

Average illness related absence during 2013 was 1.2%corresponding to 1 120 working days. This is more or less thesame as in 2012 and is considered low. There are somevariations between the regions, Norway 2.4%, UK 0.7%,APAC 0.6%, Moscow 1.2% and Americas 0.6%.

AGR operated 10 rigs in 2013, including facilitation of therig contract, project management and well operation, sevenout of Norway, two out of the UK and one out of the MiddleEast. The frequency of personnel injuries per million workinghours (H2/TRIF-value) was 3.2, based on approximately 1.5million offshore working hours. This is a decrease from 2012.

AGR initiates an annual, worldwide engagement survey,monitoring employee satisfaction, involvement andengagement within the business. The results of this survey areused for further improving of the performance.

People retention and reducing turnover will remain focus areain 2014.


Gender Equality

As of 31 December 2013 the Board of AGR had 6 Board Members of which 3 were women.

AGR aspires to be an attractive employer for people with different backgrounds, regardless of their ethnicity, gender, religionor age. In its policy, the company has implemented conditions to ensure equal opportunities in areas such as salary,promotion and recruitment. The competence principle is decisive in all appointment processes. In a department where onegender is heavily under-represented, gender is taken into account during the appointment process if other qualifications areotherwise equal. In connection with the yearly salary evaluation, attention is shown to possible inequality regarding averagelevel of pay for men and women. The Group provides equal pay for equal work and rewards good results.

Environmental Reporting

All AGR activities that effect the environment are managed by means of well-established systems and processes in order toidentify and eliminate or reduce any negative impact, and to ensure, as a minimum, compliance with legislation andregulations set out by the authorities. The environmental aspects of the activities are identified and managed. AGR aims tofacilitate the continuous environmental improvement in our operations by adopting the principles of ISO 14001:2007, aninternational standard for environmental management, and an increasing part of the AGR business are being certified.Internal control activities are run to verify compliance.

Environmental Performance Summary 2013:

• Energy consumption is at a normal level for AGR’s type of business• Waste management is performed to minimise waste amounts, and to facilitate for reuse and recycling of generated

waste• Chemicals are managed to reduce use and planned discharge of environmentally hazardous chemicals• There were 6 accidental spills from AGR’s operations during 2013, from 10 drilling rigs, all risk rated as low risk.

This is a significant reduction compared to 2012 with higher activity.

For further information, reference is made to the AGR Sustainability Report, given in Section AGR Sustainability Report.

10ANNUAL REPORT 2013

Donations and Charity Contributions

An overview of AGR donations, charity contributions andsponsorships in 2013 is given in the table below.

AGR individuals do not benefit from the receivingorganisations.

In addition to the information mentioned in the table, in2012 AGR sponsored the Norwegian arrangement ‘AGRKraftløpet’ (cross country running race) with NOK 67 000.This covered a three-year cooperation. The profit from therace is further donated to the organization ‘Aktiv mot Kreft’(‘Active against Cancer’). In 2013 this was NOK 30 000.

Id To Type Value Currency Region NOK

1 Hospital Research Foundation Sponsorship 500 AUD APAC 2 705 2 WA Medical Research Sponsorship 250 AUD APAC 1 352 3 Offshore Media Group, Offshore Technology Days Sponsorship 75 000 NOK NOR 75 000 4 SPE Oslo Sponsorship 20 000 NOK NOR 20 000 5 Quitin Milne Rally team Sponsorship 16 000 GBP UK 163 488 6 Black Rock Race Sponsors 9 000 GBP UK 91 251 7 Oil & Gas UK Business Breakfasts Sponsorship of four

breakfasts 28 000 GBP UK 283 892

8 Northsound Energy Schools Challenge with theEnergy Institute

Sponsors 2 650 GBP UK 26 868

9 Childs Online Protection Charity Donation + ad 595 GBP UK 6 033 10 Golf Sponsorship Sponsorship 2 500 GBP UK 25 348 11 Jessica Hope Foundation donation Donation 250 GBP UK 2 535 12 Alan Rankin Sailing Sponsorship Sponsorship 450 GBP UK 4 563 13 Santa Run Donation 60 GBP UK 608 14 Action Medical Research Donation 40 GBP UK 406 15 Whisky donation for Strathconon Highland Games Donation 297,76 GBP UK 3 019

16 Texas National MS Society Sponsorship 168,59 GBP UK 1 709 17 Charity Function 03.10.13 Never Mind the Busin Donation 900 GBP UK 9 125 18 Enquest Charity Golf Event Sponsorship 300 GBP UK 3 065 19 REACT – Crime, Drugs and Road Safety Sponsorship 995 GBP UK 10 167 20 Consultant Charity Event Donation 20 GBP UK 203 21 Petroleum GRP Geomodelling Sponsorship

December 2013 Sponsorship 2 000 GBP UK 20 278

22 Nastional MS Society Sponsorship 100 USD US 614 23 SPE Foundation Contrubution Sponsorship 25 USD US 124 24 Sam Houston Area Council Sponsorship 502 USD US 3 080

AGR Donations, Charity Contributions and Sponsorships during 2013


2014 Operations

AGR’s Board of Directors emphasises that there is always anelement of uncertainty related to the delivery of businessperformance and forward looking projections.

The market outlook for 2014 and beyond is very strong.Market Outlook data used for forward planning of thebusiness indicates a 6% annual growth in number of rig daysuntil the end of 2016, while the core client base of AGR isexpected to increase their activity with 78% by 2020. Thehigh demand for the drilling of wells in combination with ashortage of resources creates a strong foundation forcontinued growth of AGR. The company is the number oneprovider of independent drilling management, and with ourglobal footprint we are well positioned to capture asignificant share of the future growth in drilling activity.

- the core client base of AGR isexpected to increase their activity...

Our expectation is that there will be a high demand for ourservices and software solutions going forward, as drillingefficiency, cost efficiency and safety during drilling operationswill be vital for oil companies to deliver on their explorationplans.

Entering into 2014, the business has an order backlog at thesame level as when entering into 2013, while the activity levelentering into 2014 is high and significantly up from year end2012.

At the General Meeting held on 24 May 2013, Eivind Reitenand Celeste Mackie were reelected for a two year period. Atthe General Meeting held on 13 December 2013 HugoMaurstad, Reynir Indahl, Celeste Mackie and ToveMagnussen stepped down from the Board while Pål Stampe,Mari Thjømøe and Jorunn Sætre were elected as new Boardmembers of the company.

Board composition

Information concerning remuneration of the Board ofDirectors, the Chief Executive Officer and the AGR’sExecutive Management can be found in Note 25 Wages,Fees, Number of Employees etc. to the consolidated financialstatements. The compensation for the AGR’s external auditorcan also be found in Note 25.

Risk Management and Internal Control

Svein Sollund, CFO

Effective controls ensure that the group is not exposed toavoidable risk, that proper accounting records have beenmaintained, that the financial information used within thebusiness is reliable and that the consolidated accountspreparation and financial reporting processes comply with allrelevant regulatory reporting requirements. The dynamics ofthe group and the environment in which it operates arecontinually evolving together with its exposure to risk. Theinternal control system is designed to manage rather thaneliminate the risk of assets being unprotected and to guardagainst their unauthorised use and the failure to achievebusiness objective. Internal controls can only providereasonable and not absolute assurance against materialmisstatement or loss.

Internal control

The directors confirm that there is an ongoing process foridentifying, evaluating and managing the risk faced by thegroup and the operational effectiveness of the relatedcontrols, which has been in place for the year under reviewand up to the date of approval of the annual report andaccounts. They also confirm that they have regularly reviewedthe system of internal control utilising the review process setout below.

AGR has established a Finance Manual laying out the roles,responsibilities and timelines for the accounting proceduresincluding guidelines on the minimum level of internalcontrol that each of the subsidiary companies should exerciseover specified processes. The internal control process has beenformalised and implemented where all subsidiaries arecarrying out a self-assessment of the internal control, andsigning off on an internal control questionnaire.

Standard

The internal control questionnaire is standardised and similarfor all subsidiaries, and includes questions about financialcontrol, IT systems, transfer pricing, inventory, accountsreceivables, fixed assets, cash, accounts payable, revenue


recognition, cost accruals and so on. The questionnaire isbased on the group policy, and provides adequatedocumentation that the policy is implemented.

All companies prepare annual operating plans and budgets,and business strategies are prepared at regional level andapproved by the board. In addition AGR prepares financialforecast that are presented to the board at least two times peryear. Detailed actual financial segment information isprepared monthly; performance compared to budget ismonitored at company and group level. In addition, actualperformance is compared to latest forecast and prior year on amonthly basis including analysis of any significant variances.

Capital expenditure and investment decisions are treated as apart of the budget and forecast processes. Details about whohas right to approve investments are described in anauthorisation matrix. The cash position of the group ismonitored on a daily basis and variances from expected levelsare investigated thoroughly.

An important factor in ensuring accurate financial reportingis good IT controls. There are several IT controls in place toaccess the accounting systems for the year as a whole and atthe year-end these controls have been intensified.

Turnover for AGR increased from NOK 1 281 million in2012 to NOK 1 395 million in 2013. Operating profit forAGR was positive NOK 155 million compared to NOK 83million in 2012. Net profit from continued operations forthe financial year 2013 was positive NOK 77 millioncompared to NOK 61 million in 2012. For moreinformation about the background for the results, see the Operations section.

Results, Cash Flow, Investments, Finance andLiquidity

Accumulated cash flow from AGR’s operational activities wasnegative NOK 90 million. Total investments for AGR wasNOK 12 million (excluding acquisition of operations), andwas mainly related to Software licences.

Cash and cash equivalents for the Group on 31.12.2013 wereNOK 125 million.

AGR’s total interest-bearing debt at year end 2013 was NOK550 million, which represented 42% of AGR’s total assets,compared to 35% at year-end 2012. By year-end 2013, theshort-term interest-bearing debt represented 0% of the totalinterest-bearing debt. The Group’s net interest-bearing debtat the end of 2013 was NOK 400 million.

At the end of the year, total assets amounted to NOK 1 324million, down from NOK 2 171 million the previous year.The equity to total assets ratio at 31.12.2013 was 36%, upfrom 31% at 31.12.2012. The debt to equity ratio per31.12.2013 was 1.8.

Financial Risk

Financial risk factors

AGR’s activities are exposed to a variety of financial risks:market risk (including currency-, interest rate- and pricerisk), credit risk and liquidity risk. AGR’s overall riskmanagement program seeks to reduce potential adverseeffects from financial risks on AGR’s financial performance.AGR uses derivative financial instruments to hedge certainrisk exposures.

Risk management is carried out by a central treasurydepartment (Group Treasury) under policies approved by theboard of directors. AGR Treasury identifies, evaluates andhedges financial risks in co-operation with AGR’s operatingunits. The board provides a financial risk management policycovering foreign exchange risk, interest rate risk, liquidity riskand credit risk.

(i) Foreign exchange risk

Market risk

AGR operates internationally and is exposed to foreignexchange risk arising from various currency exposures,primarily with respect to the US dollar, Australian dollar andthe UK pound. Foreign exchange risk arises from futurecommercial transactions, recognised assets and liabilities andnet investments in foreign operations.

AGR’s Financial risk policy states that 12 month forecastednet currency exposure shall be maximum 60 million in NOKequivalents. Positions are reviewed quarterly. Hedging of thenet currency exposure is conducted by applying currencyderivatives.

(ii) Price risk

AGR has very limited exposure to equity securities price riskdue to especially limited investments held by AGR classifiedon the consolidated balance sheet as fair value through profitor loss.

AGR is indirectly exposed to oil price changes.

(iii) Interest rate risk

AGR’s interest rate risk arises from long-term borrowings.Borrowings issued at variable rates expose AGR to cash flowinterest rate risk. AGR’s policy is that long-term borrowingsshall be based on floating interest rates, however interest ratederivatives could be applied in order to avoid catastrophiclosses due to interest rate changes.

AGR manages its interest rate risk by applying derivativessuch as interest rate collar swaps, in order to establish a capon interest rates in case of significant increase in marketinterest rates. In addition, the group has formerly applied


floating-to-fixed interest rate swaps. Such interest rate swapshave the economic effect of converting borrowings fromfloating rates to fixed rates.

At 31 December 2013 AGR held no interest rate derivativecontracts.

The risk that counterparties fail to fulfill their financialobligations is considered low as AGR’s historical losses relatedto receivables have been low. The majority of the Group'sdebtors are publicly listed Norwegian and international oilcompanies. The Petroleum Services client base consists ofsmall to large oil companies. Some of these customers havemoderate credit risk potential. The AGR policy is to obtainfinancial guarantees from debtors where the credit risk andexposure is considered to be high. In addition, AGR has putin place credit insurance where a majority of AGR’sreceivables are insured in order to reduce credit risk. Theoverall credit risk is thus considered to be low.

Credit risk

Delayed payments from several large customers at the sametime could have a significant impact on AGR´s liquidity.AGR´s management and the individual business units havefocussed highly on working capital management, andcontinuously take action if clients do not settle theirobligations towards AGR in due time. The Group´s policy isto reduce the liquidity risk by having a long term loan facilitycommitted from relationship banks and/or bondholders. TheGroup shall at any time have unused credits at least equal tonext quarter’s interest & amortisation requirements underAGR’s loan facility.

Liquidity risk

At 31 December 2013 the Group had undrawn committedcredit lines amounting to NOK 86 million.

AGR Group ASA is the listed parent company and its mainactivity is to act as the owner of the shares in its subsidiaries.The operating result in 2013 was negative NOK 4 millioncompared to negative NOK 19 million in 2012.

Parent Company

The net result in 2013 was NOK 37 million compared tonegative NOK 55 million for 2012.

Accumulated cash flow from the company’s operations wasnegative NOK 11 million. Total net cash flow was negativeNOK 3 million.

The total assets were NOK 506 million compared to NOK935 million the previous year. The equity to asset ratio was95 % at 31 December 2013. Of the total equity of NOK 481million, share capital accounts for 29 %.

Continued Operation

The Board has considered the factors above in relation tocontinued operations and concluded that in accordance withthe Accounting Act §3-3a, we confirm that the financialstatements have been prepared under the assumption of agoing concern.

The key assumptions made in the impairment test reflect theBoard’s current assessment of AGR’s potential to adapt to andbenefit from trends in the oil services industry. Managementbelieves that the expectations reflected in the forward lookingforecasts used as a basis for the impairment reviews, arereasonable. However, as the impairment valuations are basedon forward looking information, they will involve risk anduncertainty. For more information, please refer to Note 3Critical Accounting Estimates and Judgements.


Annual Result and Allocations

The Board proposes the following allocations of the AGR’s result for the financial year:

NOK 1 000

Profit for the year 80 711Non-controlling interests’ share of profit for the year 4 354Total profit allocated to retained earnings 76 357

The parent company's distributable equity at 31.12.2013 was:

Profit for the year 37 584Total profit allocated to retained earnings 37 584

Oslo, 23 April 2014


Corporate Governance Report 2013

This statement presents a review of AGR’sprinciples for corporate governance andcompliance with the Norwegian Code ofPractice for Corporate Governance of 4December 2007 (Code of Practice) and notesAGR’s actions and where relevant anydeviations from each of the requirements. Ifno deviation is stated then there have been nodeviations from the Code of Practice.

This Policy was adopted by the Board of Directors on 5November 2007 and has thereafter been regularly updated. Itis predominantly based on the guidelines on CorporateGovernance (Anbefaling for Eierstyring og Selskapsledelse) of21 October 2010 and updated 20 October 2011. This isavailable on AGR ’s website (www.agr.com).

Implementation and reporting on corporategovernance

AGR’s principles for corporate governance detail an adequatedivision of the tasks and positions of AGR’s owners, theBoard and the executive management. An adequate divisionof tasks and positions provide for the adoption andimplementation of objectives and strategies, and theachievement of the objectives is subject to evaluation and isfollowed up.

Furthermore, the principles contribute to keeping thebusiness of AGR under appropriate supervision. An adequatedivision of tasks and supervision contributes to the bestpossible long term profitability, to the benefit of theshareholders and other stakeholders.

This statement sets out AGR’s compliance with each sectionof the Code of Practice, and also notes any deviations fromthe Code of Practice and the reasons for such deviation.

AGR will not be issuing an extensive Annual Report for2013. It is not a legal requirement that AGR issue such anannual report and instead, AGR is issuing this statement ofcompliance with the Code of Practice, the Directors Reportand a summary of the 2013 figures together with the fullaudited annual accounts. This approach has been taken as aresult of AGR’s shareholder base, whereby AGR has onemajor shareholder owning 73% of AGR. With fewer retailinvestors this approach is seen as more cost effective andenvironmentally friendly whilst nonetheless providing allshareholders with sufficient information and reporting asrequired by law.

The Board of AGR has laid down AGR’s values and ethicalguidelines. The values of AGR are outlined on AGR’swebsite.

Business

AGR’s objectives are laid down in article 3 of the Articles ofAssociation which reads as follows: The objective, as laiddown in the Articles, outlines the parameters within whichAGR operates, and offers the shareholders certainty withregards to the type of activities which AGR will undertake.AGR’s main objectives and strategies are presented on AGR’swebsite.

“The Company is engaged in trade, industry, real estateinvestments and related activities, including participation inother companies with similar activities as well as investmentsin real property, securities and other assets”

The book equity of AGR as of 31 December 2013 was NOK479 million which represents an equity ratio of 36%. Basedon the company’s objectives, strategies and risk profile, AGRconsiders the equity ratio as satisfactory. It is an objective forAGR to yield a competitive profit from the shareholders’investment. AGR’s dividend profile shall at the same timeensure AGR’s need for stability and development inaccordance with its objectives and strategies. AGR has notdistributed any dividends in the last year.

Equity and Dividens

AGR has one class of shares, and all shares hold equal votingrights in AGR. AGR prioritises the furtherance of theinterests of the shareholders, and equal treatment ofshareholders.

Equal treatment of shareholders and transactions withclose associates

AGR’s Corporate Governance Policy establishes the guidingprinciple that the Board shall act in the best interests of allshareholders. The company does not own any AGR shares.

In the event of transactions, other than immaterialtransactions, between AGR and shareholders, Boardmembers, members of the executive management or anypersons related to these, the Board shall in accordance withits policies, procure that the transaction is based on avaluation prepared by an independent third party. If requiredpursuant to section 3-8 of the Public Limited Companies Actand when the consideration exceeds 5% of AGR’s sharecapital, the transaction will be put to the general meeting forapproval.

AGR’s Corporate Governance Policy establishes principleswhich require members of the Board and the executivemanagement to report to the Board in the event that theyhave any material interest in AGR’s agreements.


Freely negotiable shares

AGR’s shares are listed on the Oslo Stock Exchange and arefreely negotiable. No form of restriction on the negotiabilityof the shares is included in the Articles of Association.

AGR encourages shareholders to attend AGR’s generalmeetings. AGR’s Corporate Governance Policy details, thatnotices for general meetings shall be distributed no later thantwo weeks in advance and placed on its website 21 days inadvance of a general meeting.

General meeting

AGR seeks to ensure that the notice of meeting andaccompanying materials include sufficient information aboutthe items on the agenda. For practical purposes the companyincludes in its notices to general meetings a combined noticeof attendance and proxy form which the shareholders areinvited to use for registering attendance and submittingproxies. However, the Articles of Association of AGR doesnot provide for the use of mandatory prior notices ofattendance at the general meeting and all shareholders whowish to attend will be welcome at the General Meeting.

AGR ensures that those shareholders not able to attend thegeneral meeting in person can vote via proxy and proxy formsare supplied with the notice of meeting.

It is AGR’s preference to have the members of the Board, theNomination Committee and the auditor attend the generalmeeting. A representative of AGR’s auditors, EY, has beenpresent or available at all general meetings during thereporting period.

Proxy forms have been supplied with all notices of a generalmeeting. In accordance with the Public Limited CompaniesAct shareholders may raise items for consideration by themeeting prior to the meeting, provided that such suggestionsare submitted at least two weeks prior to the general meeting.

The notices of meeting issued during the reporting periodnote the address of the AGR web page and note that copiesof the notices of meeting and supporting materials areavailable or referred to on the website. All notices issued sincethis recommendation was included in the Code of Practiceclearly state on which web page the notice and supportingdocuments are made available.

AGR had a copy of the notice of meeting for all generalmeetings held during the period available or referred to on itswebsite and the notices include proxy forms. Each candidatenominated for election was described by the Chairman of theNomination Committee and elected by voting for all, as agroup. AGR did not conduct a vote on each candidate forelection, however, if this had been requested by theshareholders present then this would have been done.

Nomination committee

Pursuant to AGR’s Articles of Association AGR hasestablished a Nomination Committee, which is comprised ofthree members elected by the general meeting.

The remuneration of the members of the NominationCommittee was resolved at the extraordinary general meetingof April 2008. Article 6 of AGR’s Articles of Associationrequires AGR to establish a Nomination Committee.

The current Nomination Committee is comprised of 3members. The Nomination Committee does not include thechief executive officer nor any member of the executive team.The chairman of the Nomination Committee was also aboard member until 13 December 2013.

The Nomination Committee instructions state that thepurpose of the committee is to nominate candidates forelection as Board members, and make recommendations forthe remuneration of the members of the Board. In the noticeof meetings sent during the reporting period the NominationCommittee supplies sufficient information regardingproposed candidates and their background to justify therecommendations made to shareholders.

During the reporting period AGR has provided informationregarding the membership of its Nomination Committeewith the notices of meeting issued for the 2013 AGMs.

There has been no specific mention on the Company’swebsite or in the notices or accompanying documentation tothe effect that the shareholders may propose candidates to theboard of directors. However, this is acknowledged in theNomination Committee Instructions and the NominationCommittee has approached the major shareholders of AGRwhen formulating its recommendations.

AGR does not have a corporate assembly. The Board ofDirectors is elected by the General Meeting.

Corporate assembly and board of directors:composition and independence

Pursuant to the Company’s Articles of Association the Boardshall be comprised of between 3 to 9 members.

The experience of all the board members demonstrates abroad range of experience amongst the individuals on theboard. The skills represented include a range of generalbusiness administration skills, financial markets competenceand industry appropriate operational experience. In selectingthe members of the board, consideration was given to howthe individual members would operate as a collegiate body.

According to AGR’s Corporate Governance Policy a majorityof the members of the board shall be independent of AGR’smanagement and main business partners. Furthermore, at


least two board members shall be independent of thecompany’s major shareholders. This is the case with thecurrent composition of the board.

There are no representatives from the executive managementamong the members of the Board.

Article 5 of AGR’s Articles of Association states that thechairman shall be appointed by the general meeting.

The term of office for the board members is two yearspursuant to the Public Limited Companies Act.

A summary of the expertise and capacity of the boardmembers, noting which members are independent has beenplaced on AGR’s website.

Directors’ shareholdings are noted in Note 17 Share Capitaland Shareholder Information in the Annual Accounts.

The Board has adopted and implemented a code regulatingboard proceedings. The guidelines are evaluated inconnection with the Board’s annual review of its own work.The Board prepares an annual plan for its work, particularlyfocusing on objectives, strategies and implementation, as wellas any other tasks devolved as a consequence of the Board’sby Laws, Regulations, resolutions of the general meeting orthe Stock Exchange Rules.

The work of the Board of Directors

The Board assesses on a continuous basis the need for subcommittees of the Board.

The Board established in 2008 an Audit Committee, headedby Thomas Nilsson. Furthermore a RemunerationCommittee has been established, providing advice to theBoard on CEO compensation, Executive Compensation andoverall guidance on bonus, share awards and remunerationfor the employees of AGR.

AGR’s approach to risk management is described in theDirector’s Report. In addition to monthly operationalreporting the board carries out an annual evaluation of AGR’smajor risks.

Risk management and internal Control

Remuneration of the Board is decided by the general meetingand is believed to reflect the responsibilities, timecommitment and complexity of the company’s activities andexpertise of the board members. The Board’s remuneration isnot linked to AGR’s performance. No member of the Boardhas been granted share options. With the exception of EivindReiten, no Board members of AGR have been engaged in anyspecific assignments for AGR or its associated companies in

Remuneration of the Board of Directors

addition to their appointment to the board. Theremuneration of the board of directors is detailed in theaccounts, which can be viewed on the AGR website.

The Board has set guidelines for remuneration of theexecutive management. The guidelines are presented to theGeneral Meeting for an advisory vote. Although advisory, theguidelines will be binding, and thus subject to the generalmeetings approval, in respect of any remuneration related toshares in the Company. Salary and other remuneration to theCEO are determined by the Board. AGR’s guidelines forremuneration to the executive management are described inthe attachment to the AGM notice and therefore appear onAGR’s website and remuneration to the members of theexecutive management is presented in Note 25 Wages, Fees,Number of Employees etc. in the Annual Accounts. Theexecutive management of AGR has the opportunity to bemembers of AGR’s management share scheme, in whichmanagement can buy shares directly in the business unit.Executive Management of AGR is also entitled to bonuses ofup to 40% of their salary. The bonus scheme is linked tocompany performance. AGR does not offer any other formof remuneration to executives other than where expatriatepackages may require some additional benefits. AGR doesnot have a share option scheme.

Remuneration of the executive Management

AGR has adopted and implemented an Insider Trading Policyand a management code with associated guidelines for thereporting of financial and other information.

Information and communications

It is a paramount principle of AGR that all information andcommunications shall be timely and relevant.

AGR’s financial calendar is available on AGR’s website, andprovides an overview of the dates of major events. Otherinformation is continuously made available to shareholdersvia AGR’s website.

AGR ensures through policy and established practice that allinformation provided to the market or to shareholders is alsoposted on the AGR website to keep all stakeholders informedof AGR’s activities.

The board of directors has established guiding principles forhow it will act in the event of a takeover bid. These guidingprinciples are included in the Corporate Governance Policy.AGR’s Corporate Governance Policy states that the Boardshall not carry out measures to prevent a take-over, unlessotherwise resolved by the general meeting by no less than a2/3 supermajority vote.

Takeovers


Auditor

In compliance with the Code of Practice and pursuant toAGR’s Corporate Governance Policy, AGR’s auditor attendsBoard meetings which deal with the Annual Accounts. Theauditor meets annually with the Board for an evaluation ofthe auditor’s views on the Company’s accounting principles,risk exposures, internal control etc. The Board has met withthe auditor without the CEO or management being present.The Board has adopted a management code which includes,inter alia, guidelines for the management’s use of the auditorfor tasks other than the statutory audit. The auditor has beeninstructed to provide the board with a report annuallydetailing all the work undertaken by EY for AGR in additionto the audit work and to provide confirmation of the auditorscontinued independence. The remuneration to the auditor ispresented in Note 25 Wages, Fees, Number of Employeesetc. in the Annual Accounts.

Main Principles

Board's Statement of Saleries

The main principles for AGR Group ASA’s managementremuneration policy are that executive management shall beoffered competitive compensation, when salaries, benefits inkind, bonuses, share awards and pension arrangements aretaken into consideration.

Salaries and other benefits for executive management to bedetermined in the current year will be in accordance with theabovementioned main principles.

Remuneration Committee

The Board has formed a Remuneration Committee toprovide advice to the Board on CEO compensation,Executive Compensation and overall guidance on bonus,share awards and remuneration for the employees of AGR.Eivind Reiten and Pål Stampe are the current members of theCommittee. No additional compensation is awarded to theCommittee members for their participation in the work ofthe Committee.

Bonuses and other additional benefits

As a guideline, annual bonuses in addition to base salary maybe offered to executive management. Such bonuses shallhowever, be limited to certain percentages of the base salaryand to achievement of certain predetermined objectives.Guidelines for distribution of bonuses shall be determined bythe Board of Directors. Bonuses to the AGR CEO shall bedetermined by the Board of Directors, after consulting withthe company’s Remuneration committee.

Executive management shall as a general rule, be entitled toparticipate in pension schemes that ensure pension benefits

in proportion to their level of salary as employees. Theexecutive management of the company are members of thecompany’s collective pension scheme.

The members of the company’s executive management haveother ordinary benefits in kind, such as free phone,newspapers and trade magazines etc, but do not have othermaterial benefits in kind. Where appropriate, employeesworking under expatriate conditions may also receive a carallowance. As a guideline car allowances shall not be offeredto AGR employees, and existing arrangements will be phasedout when the employment contracts are due forrenegotiation.

In respect of severance payments these will be agreed on anindividual basis. Some of the current members of theexecutive management have rights to severance payment from6 to 12 months base salary, if their employment is terminatedby the company. As a guideline severance payments shall bein accordance with the company’s main principles, i.e. thatthe level of remuneration shall be competitive when allbenefits are seen as a whole.

Share related incentive schemes

AGR does not have a share option scheme for its employeesor other forms of remuneration which are linked to the sharesin the company or the quoted price of the company’s shares.Some employees have, however, invested directly in theholding company owning AGR’s Petroleum Services division.

Please also refer to Note 25 Wages, Fees, Number ofEmployees etc. for AGR ASA’s annual accounts for detailsabout remuneration of the executive management in 2013.


Consolidated Income StatementGROUP NOK 1 000

Year ended 31 December

Continuing operations Note 2013 2012

Revenue 5,6,7,29 1 355 030 1 207 025 Other operating revenue 5,6,7,29 39 472 74 369 Total operating revenue 1 394 502 1 281 394

Goods and consumables used 11,34 651 192 665 274 Payroll expenses 19,25 449 288 387 062 Depreciation, amortisation and impairments 8,9 19 466 21 447 Other operating expenses 25,27,30 119 431 124 141 Total operating expenses 1 239 378 1 197 925

Operating profit 155 125 83 469

Financial income 28 172 292 185 623 Financial expenses 28 187 655 217 989 Share of loss of an associate 10,28 (4 333) - Net financial items (19 697) (32 366)

Profit before income tax 135 428 51 103

Income tax expense 20 58 282 (9 579)

Profit from continued operations 77 146 60 682

Profit (loss) after tax from discontinued operations 36 3 565 (187 585)

Profit (loss) for the year 80 711 (126 903)

Non-controlling interests' share of profit (loss) for the year 4 354 (2 401) Profit (loss) attributable to equity holders 76 357 (124 502)

80 711 (126 903)

Earnings per share from continuing operations (NOK) 0.62 0.49 Earnings per share including discontinuing operations(NOK)

0.64 (1.02)


Consolidated Statement of ComprehensiveIncomeStatement of comprehensive income Twelve months ended 31 December

2013 2012 Profit (loss) for the period 80 711 (126 903) Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Currency translation differences 1 044 4 520 Currency translation differences discontinued operations 5 960 - Net other comprehensive income to be reclassified to profit or loss insubsequent periods

7 004 4 520

Other comprehensive income not to be reclassified to profit or loss in subsequentperiods: Re-measurement gains (losses) on defined benefit plans 6 325 -Income tax effect (1 771) -Net other comprehensive income not to be reclassified to profit or loss insubsequent periods

4 554 -

Total comprehensive income for the period 92 269 (122 383)Profit (loss) attributable to: - owners of the company 87 915 (119 982) - non-controlling interest 4 354 (2 401)

92 269 (122 383)


Consolidated Statement of FinancialPositionGROUP NOK 1 000

As of 31 DecemberNote 2013 2012*

Assets Deferred tax assets 20 72 006 110 027 Other intangibles 4,8 17 435 206 780 Goodwill 4,8 621 019 649 277 Intangible assets 710 461 966 084

Machinery and operating equipment 9 15 016 297 805 Tangible fixed assets 15 016 297 805

Investment in an assosiate 10 2 648 - Long term receivables 38 604 32 387 Financial fixed assets 41 251 32 387

Total non current assets 766 728 1 296 276

Inventories 11 123 23 995

Trade receivables 12,13,16,29

372 574 478 315

Other receivables 14 59 825 99 588 Receivables 432 400 577 903

Financial assets at fair value 16,33 103 92

Cash and cash equivalents 15,16 125 106 272 683

Current assets 557 731 874 673

Total assets 1 324 459 2 170 949

*Balance Sheet items including Drilling Services in 2012


GROUP NOK 1 000

As of 31 DecemberNote 2013 2012*

Equity and liabilities Share capital 17,18 139 051 251 797 Treasury Shares 17,18 - (3 492) Total paid-in equity 139 051 248 305

Retained earnings 313 861 339 071 Non-controlling interest in equity 25 588 94 085

Total equity 478 500 681 461

Pension liabilities 19 1 861 8 596 Deferred tax 20 9 595 988 Provisions 26 357 2 271 Bond loan 21 524 642 - Total non-current liabilities 536 455 11 854

Debt to credit institutions 21 - 744 646 Trade payables 29 152 814 437 627 Tax payable 20 12 904 63 VAT payable and other taxes payable 30 874 74 917 Other current liabilities 22 112 911 220 382 Total current liabilities 309 504 1 477 634

Total liabilities 845 959 1 489 488

Total equity and liabilities 1 324 459 2 170 949

*Balance Sheet items including Drilling Services in 2012

Oslo, 23 April 2014


Consolidated Statement of Changes inEquityGROUP NOK 1 000

Sharecapital

TreasuryShares

Totalpaid-inequity

Translationeffects

Retainedearnings

Total Non-controlling

intrests

Totalequity

Opening balance01.01.12

251 797 (3 631) 248 166 (6 618) 1 145 363 1 386 911 24 558 1 411 469

Dividend payment - - - - (700 219) (700 219) - (700 219) Reduction of TreasureShares

- 139

139 - - 139 - 139

Acquisition ofsubsidiary

- -

- -

- - 90 437 90 437

Acquisition of Non-controlling interest

- -

- - - - (18 510) (18 510)

Capital contribution,Non-controlling interest

- - - - (2 401) (2 401) - (2 401)

Total other equitymovements 2012

- 139 139 - (702 620) (702 481) 71 928 (630 553)

Profit for the period - - - - (101 574) (101 574) (2 401) (103 975) Other comprehensiveincome

- - - 4 520 - 4 520 - 4 520

Total recognised othercomprehensive income2012

- - - 4 520 (101 574) (97 054) (2 401) (99 455)

Adjustment to equityfor 2012

- 139 139 4 520 (804 194) (799 535) 69 527 (730 008)

Closing balance31.12.12

251 797 (3 492) 248 305 (2 098) 341 168 587 375 94 084 681 460

Opening balance01.01.13

251 797 (3 492) 248 305 (2 098) 341 168 587 375 94 084 681 460

Demerger (112 746) - (112 746) - (135 092) (247 838) - (247 838) Reduction of TreasureShares

- 3 492 3 492 - - 3 492 - 3 492

Acquisition of Non-controlling interest

- - - - - - 14 217 14 217

Demerger of Non-controlling interest

- - - - - - (87 067) (87 067)

Capital contribution,Non-controllinginterest

- - - - 21 968 21 968 - 21 968

Total other equitymovements 2013

(112 746) 3 492 (109 254) (113 124) (222 378) (72 850) (295 229)


Profit for the period - - - - 76 357 76 357 4 354 80 711 Other comprehensiveincome

- - - 7 004 4 554 11 558 - 11 558

Total recognised othercomprehensive income2013

- - - 7 004 80 911 87 915 4 354 92 269

Adjustment to equityfor 2013

(112 746) 3 492 (109 254) 7 004 (32 213) (134 463) (68 496) (202 959)

Closing balance31.12.13

139 051 - 139 051 4 906 308 955 452 912 25 588 478 500


Consolidated Statement of Cash FlowGROUP NOK 1 000

Note 2013 2012 Operating activities Profit before taxes from continuing operations 135 429 56 755 Loss before taxes from discontinued operations 36 (2 627) (85 827) Profit before tax 132 802 (29 072) Non-cash adjustments to reconcile profit before tax to net cash flows Depreciation,amortisation and impairment of tangible assets 8,9 19 467 111 681 Loss/(gain) on disposal of property, plant and equipment 8,9 - (822) Loss/(gain) on disposal of discontinued operations 36 - - Finance income 28 (187 568) (238 270) Finance costs 28 207 264 293 126 Other operating income 6,7 - - Pension 19 - - 1) Working capital adjustments: Decrease in trade and other receivables and prepayments 2 339 59 944 Increase in inventory (12) (3 460) Decrease (increase) in trade and other payables (259 175) 157 663 Decrease(increase) in other provisions (1 102) (9 377)

(85 985) 341 413 Interest received 6 034 9 992 Income tax paid (9 801) (51 417) Net cash flow from operational activities (89 752) 299 988 Investing activities Proceeds from sale of property, plant and equipment and intangible assets - 1 125 Capital expenditure for property, plant and equipment and intangible assets 8,9 (10 531) (92 809) Purchase of financial instruments - - Proceeds from sale of financial instruments - - Final earn out payment former acquisition of subsidiary - - Net outflow from acquisition of subsidiary 8 (2 700) (27 604) Net inflow from sale of subsidiary, net of cash disposed - - Receipt of government grant 32 - - Net cash flows used in investing activities (13 231) (119 288) Financing activities Proceeds from borrowings 570 000 100 000 Repayment of borrowings 21 (539 843) (79 785) Interest paid (76 488) (49 502) Dividends paid to equity holders of the parent - (700 219) Net cash flow from (used) in financing activities (46 331) (729 506) Net decrease in cash and cash equivalents (149 314) (548 806) Net foreign exchange differences 1 737 505 Cash and cash equivalents at start of period 15 272 683 820 984 Cash and cash equivalents at end of period 15 125 106 272 683

1) Amounts are exclusive discontinued operations


Notes

Note 1 Accounting Principles

AGR Group ASA (‘the Company’) and its subsidiaries(together ‘the Group’), is a leading supplier of services andsoftware to the oil and gas offshore industry. The Group’smain operations are based in Oslo, with other offices aroundthe world including Stavanger, Straume (Bergen), Aberdeen,Houston, Perth, Almaty, Dubai and Kuala Lumpur.

The company has provided goods and services for several ofthe world’s major oil and gas fields, with a customer basecomprising several small and medium sized operators as wellas a number of the large international oil companies.

The company is a limited liability company incorporated anddomiciled in Norway. The address of its registered office isKarenslyst allé 4, 0213 Oslo .

The Company is listed on the Oslo Stock Exchange.

AGR Group was demerged 7 August 2013 whereby DrillingServices was de-listed from Oslo Stock Exchange. Thedemerger is accounted for using the merger method. Thismeans that the demerger has not been accepted for as atransaction, but a capital decrease based on book values, andthere is no profit and loss effect of the demerger.

The demerger was implemented with effect from 1 January2013.

The Group consolidated financial statements were authorisedfor issue by the Board of Directors on 23 April 2014.

The principal accounting policies applied in the preparationof these consolidated financial statements are set out below.These policies have been consistently applied to all the yearspresented, unless otherwise stated.

Summary of significant accounting policies

The consolidated financial statements of AGR Group ASAhave been prepared in accordance with InternationalFinancial Reporting Standards as adopted by EU (IFRS) andIFRIC Interpretations.

The Group's financial statements have been prepared underthe historical cost convention, with exception of certainitems: Financial assets and financial liabilities (includingderivative instruments), which are reflected at fair valuethrough profit or loss.

The financial year follows the calendar year. Incomestatement items are classified by nature.

The preparation of financial statements in conformity withIFRS requires the use of certain critical accounting estimates.It also requires management to exercise its judgment in theprocess of applying the group’s accounting policies. The areasinvolving a higher degree of judgment or complexity, or areaswhere assumptions and estimates are significant to theconsolidated financial statements are disclosed in note 3.

Subsidiaries are all entities (including special purpose entities)over which the group has the power to govern the financialand operating policies generally accompanying ashareholding of more than one half of the voting rights. Theexistence and effect of potential voting rights that arecurrently exercisable or convertible are considered whenassessing whether the Group controls another entity.Subsidiaries are fully consolidated from the date on whichcontrol is transferred to the Group. They are deconsolidatedfrom the date that control ceases.

Consolidation principles

a) Subsidiaries

The Group uses the acquisition method of accounting toaccount for business combinations. The considerationtransferred for the acquisition of a subsidiary is the fair valuesof the assets transferred, the liabilities incurred and the equityinterests issued by the Group. The consideration transferredincludes the fair value of any asset or liability resulting from acontingent consideration arrangement. Acquisition-relatedcosts are expensed as incurred. Identifiable assets acquiredand liabilities and contingent liabilities assumed in a businesscombination are measured initially at their fair values at theacquisition date. On an acquisition-by-acquisition basis, theGroup recognises any non-controlling interest in theacquisition either at fair value or at the non-controllinginterest’s proportionate share of the acquired net assets.

The excess of the consideration transferred, the amount ofany non-controlling interest in the acquisition and theacquisition-date fair value of any previous equity interest inthe acquisition over the fair value of the Group’s share of theidentifiable net assets acquired is recorded as goodwill. If thisis less than the fair value of the net assets of the subsidiaryacquired in the case of a bargain purchase, the difference isrecognised directly in the statement of comprehensiveincome.

Inter-company transactions, balances and unrealised gains ontransactions between Group companies are eliminated.Unrealised losses are also eliminated. Accounting policies ofsubsidiaries have been changed where necessary to ensureconsistency with the policies adopted by the group.


(b) Transactions and non-controlling interests The Group treats transactions with non-controlling interestsas transactions with equity owners of the Group. Forpurchases from non-controlling interests, the differencebetween any consideration paid and the relevant shareacquired of the carrying value of net assets of the subsidiary isrecorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the Group ceases to have control or significantinfluence, any retained interest in the entity is remeasured toits fair value, with the change in carrying amount recognisedin profit or loss. The fair value is the initial carrying amountfor the purposes of subsequently accounting for the retainedinterest as an associate, joint venture or financial asset. Inaddition, any amounts previously recognised in othercomprehensive income in respect of that entity are accountedfor as if the Group had directly disposed of the related assetsor liabilities. This may mean that amounts previouslyrecognised in other comprehensive income are reclassified toprofit or loss.

Associates are all entities over which the Group hassignificant influence but not control, generally accompanyinga shareholding of between 20% and 50% of the voting rights.Investments in associates are accounted for using the equitymethod of accounting and are initially recognised at cost.The Group’s investment in associates includes goodwillidentified on acquisition, net of any accumulated impairmentloss.

(c) Associates

Operating segments are reported in a manner consistent withthe internal reporting provided to the chief operatingdecision-maker. The chief operating decision-maker, who isresponsible for allocating resources and assessing performanceof the operating segments, has been identified as the steeringcommittee that makes strategic decisions.

Segment reporting

The primary reporting segment is business segment and thesecondary reporting segment is geographical segment.Segment revenues and costs constitute the Group's operatingrevenue and operating costs that can be directly classified asactivities in the segments. Segment assets and liabilities arebalance sheet items that can be directly related to the segmentactivity. Segment revenue and costs include transactionsbetween the different segments (Group-internal transactions).Geographical segment information is presented and isspecified if the region's accumulated external revenues andassets exceed 10 % of total revenue/assets for the regions as awhole. Secondary segment information that fails to satisfy therequirement for specified reporting is presented as otherrevenues. Transactions between segments are made on arm'slength terms.

Functional currency and presentation currency

(a) Functional and presentation currency Items included in the financial statements of each of theGroup’s entities are measured using the currency of theprimary economic environment in which the entity operates(‘the functional currency’). The consolidated financialstatements are presented in Norwegian Kroner (‘NOK’),which is the company’s functional and presentation currency.

Foreign currency transactions are translated into thefunctional currency using the exchange rates prevailing at thedates of the transactions. Foreign exchange gains and lossesresulting from the settlement of such transactions and fromthe translation at year-end exchange rates of monetary assetsand liabilities denominated in foreign currencies arerecognised in the income statement, except when deferred inequity as qualifying cash flow hedges and qualifying netinvestment hedges.

(b) Transactions and balances

Foreign exchange gains and losses that relate to borrowingsand cash and cash equivalents are presented in the incomestatement within ‘finance income or expense’. All otherforeign exchange gains and losses are presented in the incomestatement.

Changes in the fair value of monetary securities denominatedin foreign currency classified as available for sale are analysedbetween translation differences resulting from changes in theamortised cost of the security and other changes in thecarrying amount of the security. Translation differencesrelated to changes in amortised cost are recognised in profitor loss, and other changes in carrying amount are recognisedin equity.

Translation differences on non-monetary financial assets andliabilities such as equities held at fair value through profit orloss are recognised in profit or loss as part of the fair valuegain or loss. Translation differences on non-monetaryfinancial assets such as equities classified as available-for-saleare included in the available-for-sale reserve in equity.

The results and financial position of all the Group entities(none of which has the currency of a hyper-inflationaryeconomy) that have a functional currency different from thepresentation currency are translated into the presentationcurrency as follows:

(c) Group companies

(1) assets and liabilities for each balance sheet presented aretranslated at the closing rate at the date of that balance sheet;

(2) income and expenses for each income statement aretranslated at average exchange rates (unless this average is nota reasonable approximation of the cumulative effect of therates prevailing on the transaction dates, in which caseincome and expenses are translated at the rate on the dates ofthe transactions); and


(3) all resulting exchange differences are recognised as aseparate component of equity.

On consolidation, exchange differences arising from thetranslation of the net investment in foreign operations, andof borrowings and other currency instruments designated ashedges of such investments, are taken to shareholders’ equity.When a foreign operation is partially disposed of or sold,exchange differences that were recorded in equity arerecognised in the income statement as part of the gain or losson sale.

Goodwill and fair value adjustments arising on theacquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the closingrate.

Assets are classified as current assets when:Classification of assets and liabilities

- the asset is a part of the unit's service cycle and is expectedto be realised or used during the course of the unit's normalproduction period;

- the asset is held for trading purposes and is expected to berealised within 12 months of balance sheet date;

- the asset is cash or cash equivalent.

All other assets are classified as non-current.

Liabilities are classified as current liabilities when:

- the liability is a part of the unit's service range, and isexpected to be settled during the course of normalproduction period;

- the liability is kept for trading purposes;

- settlement has been agreed within 12 months after balancesheet date;

- the unit does not have an unconditional right to postponesettlement of the liability until at least 12 months afterbalance sheet date;

All other liabilities are classified as non-current.

Property, plant and equipment, are valued at cost lessaccumulated depreciation and write-downs. When assets aresold or divested, cost and accumulated depreciation arereversed in the financial statements, and any loss or gain onthe disposal is recognised in the income statement.

Property, plant and equipment

The cost of property, plant and equipment comprises thepurchase price, including duties/taxes and direct acquisitioncosts linked to making the asset fit for use. Expenses accruedafter the asset has been taken into use, such as repairs and

maintenance, are normally recognised in the incomestatement. In cases where increased earnings can bedemonstrated as a result of repairs/maintenance, theexpenditure on this will be recognised in the balance sheet asadditions to property, plant and equipment.

Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts totheir residual values over their estimated useful lives, asfollows:

– Machinery 5-10 years

– Vehicles 3-5 years

– Furniture, fittings and equipment 3-8 years

The assets’ residual values and useful lives are reviewed, andadjusted if appropriate, at each balance sheet date.

Assets under construction are classified as property, plantand equipment. Assets under construction are notdepreciated until the asset has been taken into use.

The write-down requirement for fixed assets is assessed ifthere are indications of impairment. If the carrying amountof an asset is higher than the recoverable amount, a write-down is recognised in the income statement. The recoverableamount is the higher of fair value less expected costs to selland value in use.

Fair value less expected costs to sell is the amount which canbe obtained if the asset is sold to an independent third party,less costs to sell. Recoverable amounts are determinedseparately for all assets, but – if impossible – recoverableamount is calculated together with the unit to which the assetbelongs.

Write-downs which have been recognised in the incomestatement in previous periods are reversed if there isinformation to suggest that the write-down no longer exists.However, no reversal is made if the carrying amount is higherthan it would have been if normal depreciation had beenused.

Gains and losses on disposals are determined by comparingthe proceeds with the carrying amount and are recognisedwithin ‘other operating revenue’ in the income statement.

Goodwill represents the excess of the cost of an acquisitionover the fair value of the group’s share of the net identifiableassets of the acquired subsidiary at the date of acquisition.Goodwill on acquisitions of subsidiaries is included in‘intangible assets’. Goodwill is tested annually forimpairment and carried at cost less accumulated impairment

Intangible assets

(a) Goodwill


losses. Impairment losses on goodwill are not reversed. Gainsand losses on the disposal of an entity include the carryingamount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purposeof impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that areexpected to benefit from the business combination.

Separately acquired trademarks and licences are shown athistorical cost. Trademarks and licences acquired in a businesscombination are recognised at fair value at the acquisitiondate. Trademarks and licences have a finite useful life and arecarried at cost less accumulated amortisation. Amortisation iscalculated using the straight-line method to allocate the costof trademarks and licences over their estimated useful lives of15 to 20 years.

(b) Trademarks and licences

Contractual customer relationships acquired in a businesscombination are recognised at fair value at the acquisitiondate. The contractual customer relations have a finite usefullife and are carried at cost less accumulated amortisation.Amortisation is calculated using the straight-line method overthe expected life of the customer relationship (3-8 years)

(c) Contractual customer relationships

Acquired computer software licenses are capitalised on thebasis of the costs incurred to acquire and bring to use thespecific software. These costs are amortised over theirestimated useful lives (3-4 years).

(d) Computer software

Costs associated with maintaining computer software arerecognised as an expense as incurred. Costs that are directlyassociated with the production of identifiable and uniquesoftware products controlled by the Group, and that areprobable to generate economic benefits exceeding costsbeyond one year, are recognised as intangible assets. Directcosts include the software development employee costs andan appropriate portion of relevant overheads.

Computer software development costs recognised as assets areamortised over their estimated useful lives (3-4years).

Expenses relating to research are recognised in the incomestatement when they are incurred. Expenses relating todevelopment are recognised in the income statement whenthey are incurred unless the following criteria are met in full:

(e) Research and development

- ability to measure reliably the expenditure attributable tothe intangible asset during its development;

- the technical feasibility of completing the intangible asset sothat it will be available for use or sale, has been demonstrated;

- the intention and ability to complete the intangible assetand sell it or use it in the company’s operations has beendemonstrated;

- the intangible asset will generate probable future economicbenefits; and

- availability of sufficient technical, financial and otherresources for completing the project are present.

When all the above criteria are met, the costs relating todevelopment start to be recognised in the balance sheet.Costs that have been charged as expenses in previousaccounting periods are not recognised in the balance sheet.

Recognised development costs are depreciated on a straight-line basis over the estimated useful life of the asset (5-8years). The recoverable amount of the development costs willbe estimated when there is an indication of impairment orthat the need for previous periods’ impairment losses nolonger exists and should be reversed to the original cost.

Acquired technology, licenses and customer relationships arecapitalised and carried at cost less accumulated amortisation.

f ) Other intangible assets

Amortisation is calculated using the straight-line method overtheir estimated useful lives.

Assets that have an indefinite useful life, for examplegoodwill, are not subject to amortisation and are testedannually for impairment. Assets that are subject toamortisation are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amountmay not be recoverable. An impairment loss is recognised forthe amount by which the asset’s carrying amount exceeds itsrecoverable amount.

Impairment of non-financial assets

The recoverable amount is the higher of an asset’s fair valueless costs to sell and value in use. For the purposes ofassessing impairment, assets are grouped at the lowest levelsfor which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwillthat suffered impairment are reviewed for possible reversal ofthe impairment at each reporting date.

Non-current assets (or disposal groups) are classified as assetsheld for sale when their carrying amount is to be recoveredprincipally through a sale transaction and a sale is consideredhighly probable. They are stated at the lower of carryingamount and fair value less costs to sell if their carryingamount is to be recovered principally through a saletransaction rather than through continuing use.

Non-current assets (or disposal groups) held for sale

The Group classifies its financial assets in the followingFinancial assets


categories: at fair value through profit or loss, loans andreceivables, and available-for-sale. The classification dependson the purpose for which the financial assets were acquired.Management determines the classification of its financialassets at initial recognition.

Financial assets at fair value through profit or loss arefinancial assets held for trading. A financial asset is classifiedin this category if acquired principally for the purpose ofselling in the short-term. Derivatives are also categorised asheld for trading unless they are designated as hedges. Assetsin this category are classified as current assets.

(a) Financial assets at fair value through profit or loss

Loans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in anactive market. They are included in current assets, except formaturities greater than 12 months after the balance sheetdate. These are classified as non-current assets. The Group’sloans and receivables comprise ‘trade and other receivables’and cash and cash equivalents in the balance sheet

(b) Loans and receivables

Available-for-sale financial assets are non-derivatives that areeither designated in this category or not classified in any ofthe other categories. They are included in non-current assetsunless management intends to dispose of the investmentwithin 12 months of the balance sheet date.

(c) Available-for-sale financial assets

Regular purchases and sales of financial assets are recognisedon the trade-date – the date on which the Group commits topurchase or sell the asset. Investments are initially recognisedat fair value plus transaction costs for all financial assets notcarried at fair value through profit or loss. Financial assetscarried at fair value through profit or loss is initiallyrecognised at fair value and transaction costs are expensed inthe income statement. Financial assets are derecognised whenthe rights to receive cash flows from the investments haveexpired or have been transferred and the group hastransferred substantially all risks and rewards of ownership.Available-for-sale financial assets and financial assets at fairvalue through profit or loss are subsequently carried at fairvalue. Loans and receivables are carried at amortised costusing the effective interest method.

Gains or losses arising from changes in the fair value of the‘financial assets at fair value through profit or loss’ categoryare presented in the income statement.

The Group assesses at the end of each reporting periodwhether there is objective evidence that a financial asset orgroup of financial assets is impaired. A financial asset or agroup of financial assets is impaired and impairment lossesare incurred only if there is objective evidence of impairmentas a result of one or more events that occurred after the initialrecognition of the asset (a ‘loss event’) and that loss event (or

Impairment of financial assets

events) has an impact on the estimated future cash flows ofthe financial asset or group of financial assets that can bereliably estimated.

The criteria that the Group uses to determine that there isobjective evidence of an impairment loss include:

- significant financial difficulty of the issuer or obligor;

- a breach of contract, such as a default or delinquency ininterest or principal payments;

- the Group, for economic or legal reasons relating to theborrower’s financial difficulty, granting to the borrower aconcession that the lender would not otherwise consider;

- it becomes probable that the borrower will enterbankruptcy or other financial reorganisation;

- the disappearance of an active market for that financialasset because of financial difficulties; or

- observable data indicating that there is a measurabledecrease in the estimated future cash flows from a portfolio offinancial assets since the initial recognition of those assets,although the decrease cannot yet be identified with theindividual financial assets in the portfolio, including:

(i) adverse changes in the payment status of borrowers in theportfolio;

(ii) national or local economic conditions that correlate withdefaults on the assets in the portfolio.

The Group first assesses whether objective evidence ofimpairment exists.

The amount of the loss is measured as the difference betweenthe asset’s carrying amount and the present value of estimatedfuture cash flows (excluding future credit losses that have notbeen incurred) discounted at the financial asset’s originaleffective interest rate. The asset’s carrying amount of the assetis reduced and the amount of the loss is recognised in theconsolidated income statement. If a loan or held-to-maturityinvestment has a variable interest rate, the discount rate formeasuring any impairment loss is the current effectiveinterest rate determined under the contract. As a practicalexpedient, the Group may measure impairment on the basisof an instrument’s fair value using an observable marketprice.

If, in a subsequent period, the amount of the impairment lossdecreases and the decrease can be related objectively to anevent occurring after the impairment was recognised (such asan improvement in the debtor’s credit rating), the reversal ofthe previously recognised impairment loss is recognised in theconsolidated income statement.


Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date aderivative contract is entered into and are subsequentlyremeasured at their fair value. The method of recognising theresulting gain or loss depends on whether the derivative isdesignated as a hedging instrument, and if so, the nature ofthe item being hedged. The Group does not use hedgeaccounting according to IAS 39, and all financial derivativesare thus posted at fair value where changes in values areaccounted for in the income statement.

Inventories are stated at the lower of cost and net realisablevalue. Cost is determined using the first-in, first-out (FIFO)method. Net realisable value is the estimated selling price inthe ordinary course of business, less applicable variable sellingexpenses. Costs of inventories include the transfer fromequity of any gains/losses on qualifying cash flow hedgespurchases of raw materials

Inventories

Obsolete inventories have been fully recognised asimpairment losses.

Trade receivables are amounts due from customers formerchandise sold or services performed in the ordinarycourse of business. If collection is expected in one year or less(or in the normal operating cycle of the business if longer),they are classified as current assets. If not, they are presentedas noncurrent assets.

Trade receivables

Trade receivables are recognised initially at fair value andsubsequently measured at amortised cost using the effectiveinterest method, less provision for impairment. Discountingoccurs only if the receivable are significant.

Cash and cash equivalents includes cash in hand, depositsheld at call with banks, other short-term highly liquidinvestments with original maturities of three months or less,and bank overdrafts. Bank overdrafts are shown withinborrowings in current liabilities on the balance sheet.

Cash and cash equivalents

The cash and cash equivalent amount in the cash flowstatement includes overdraft facilities.

Ordinary shares are classified as equity. Incremental costsdirectly attributable to the issue of new shares or options areshown in equity as a deduction, net of tax, from theproceeds.

Share capital

Where any Group company purchases the company’s equityshare capital (treasury shares), the consideration paid,including any directly attributable incremental costs (net ofincome taxes) is deducted from equity attributable to thecompany’s equity holders until the shares are cancelled or

reissued. Where such shares are subsequently reissued, anyconsideration received, net of any directly attributableincremental transaction costs and the related income taxeffects, is included in equity attributable to the company’sequity holders.

Trade payables are obligations to pay for goods or servicesthat have been acquired in the ordinary course of businessfrom suppliers. Accounts payable are classified as currentliabilities if payment is due within one year or less (or in thenormal operating cycle of the business if longer). If not, theyare presented as non-current liabilities.

Trade payables

Trade payables are recognised initially at fair value andsubsequently measured at amortised cost using the effectiveinterest method. Discounting occurs only if the payable aresignificant

Borrowings are recognised initially at fair value, net oftransaction costs incurred. Borrowings are subsequentlystated at amortised cost; any difference between the proceeds(net of transaction costs) and the redemption value isrecognised in the income statement over the period of theborrowings using the effective interest method.

Borrowings

Fees paid on the establishment of loan facilities arerecognised as transaction costs of the loan to the extent that itis probable that some or all of the facility will be drawndown. In this case, the fee is deferred until the draw-downoccurs. To the extent there is no evidence that it is probablethat some or all of the facility will be drawn down, the fee iscapitalised as a pre-payment for liquidity services andamortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless theGroup has an unconditional right to defer settlement of theliability for at least 12 months after the balance sheet date.

The tax expense for the period comprises current anddeferred tax. Tax is recognised in the income statement,except to the extent that it relates to items recognised directlyin equity. In this case, the tax is also recognised in equity,respectively.

Current and deferred income tax

The current income tax charge is calculated on the basis ofthe tax laws enacted or substantively enacted at the balancesheet date in the countries where the company’s subsidiariesand associates operate and generate taxable income.Management periodically evaluates positions taken in taxreturns with respect to situations in which applicable taxregulation is subject to interpretation. It establishesprovisions where appropriate on the basis of amountsexpected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method,on temporary differences arising between the tax bases of


assets and liabilities and their carrying amounts in theconsolidated financial statements. However, the deferredincome tax is not accounted for if it arises from initialrecognition of an asset or liability in a transaction other thana business combination that at the time of the transactionaffects neither accounting nor taxable profit nor loss.Deferred income tax is determined using tax rates (and laws)that have been enacted or substantially enacted by thebalance sheet date and are expected to apply when the relateddeferred income tax asset is realised or the deferred incometax liability is settled.

Deferred income tax assets are recognised only to the extentthat it is probable that future taxable profit will be availableagainst which the temporary differences can be utilised.

Deferred income tax is provided on temporary differencesarising on investments in subsidiaries and associates, exceptwhere the timing of the reversal of the temporary difference iscontrolled by the group and it is probable that the temporarydifference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset whenthere is a legally enforceable right to offset current tax assetsagainst current tax liabilities and when the deferred incometaxes assets and liabilities relate to income taxes levied by thesame taxation authority on either the taxable entity ordifferent taxable entities where there is an intention to settlethe balances on a net basis.

Group companies operate various pension schemes. Theschemes are generally funded through payments to insurancecompanies, determined by periodic actuarial calculations.The Group has both defined benefit and definedcontribution plans. A defined contribution plan is a pensionplan under which the Group pays fixed contributions into aseparate entity. The Group has no legal or constructiveobligations to pay further contributions if the fund does nothold sufficient assets to pay all employees the benefits relatingto employee service in the current and prior periods. Adefined benefit plan is a pension plan that is not a definedcontribution plan. Typically, defined benefit plans define anamount of pension benefit that an employee will receive onretirement, usually dependent on one or more factors such asage, years of service and compensation.

Employee benefits

(a) Pension obligations

The liability recognised in the balance sheet in respect ofdefined benefit pension plans is the present value of thedefined benefit obligation at the balance sheet date less thefair value of plan assets, together with adjustments forunrecognised actuarial gains or losses and past service costs.The defined benefit obligation is calculated annually byindependent actuaries using the projected unit creditmethod. The present value of the defined benefit obligationis determined by discounting the estimated future cashoutflows using interest rates of high-quality corporate bonds

that are denominated in the currency in which the benefitswill be paid and that have terms to maturity approximatingto the terms of the related pension liability.

Actuarial gains and losses arising from experienceadjustments and changes in actuarial assumptions in excess ofthe greater of 10% of the value of plan assets or present valueof the defined benefit obligation at the end of the previousreporting period, are charged or credited to income over theemployees’ expected average remaining working lives.

Past-service costs are recognised immediately in income,unless the changes to the pension plan are conditional on theemployees remaining in service for a specified period of time(the vesting period). In this case, the past-service costs areamortised on a straight-line basis over the vesting period.

For defined contribution plans, the Group pays contributionsto publicly or privately administered pension insurance planson a mandatory, contractual or voluntary basis. The Grouphas no further payment obligations once the contributionshave been paid. The contributions are recognised as employeebenefit expense when they are due. Prepaid contributions arerecognised as an asset to the extent that a cash refund or areduction in the future payments is available.

Termination benefits are payable when employment isterminated by the group before the normal retirement date,or whenever an employee accepts voluntary redundancy inexchange for these benefits. The Group recognisestermination benefits when it is demonstrably committed toeither: terminating the employment of current employeesaccording to a detailed formal plan without possibility ofwithdrawal; or providing termination benefits as a result ofan offer made to encourage voluntary redundancy. Benefitsfalling due more than 12 months after the balance sheet dateare discounted to their present value.

(b) Termination benefits

The Group recognises a provision where contractuallyobliged or where there is a past practice that has created aconstructive obligation.

(c) Bonus plans

Provisions are recognised when, and only when, the companyhas a present liability (legal or constructive) as a result ofevents that have taken place, it is probable that a financialoutflow will take place as a result of this liability, and that thesize of the amount can be estimated reliably. Provisions arereviewed on each balance sheet date and their level reflectsthe best estimate of the liability. When the effect of time isinsignificant, the provisions will be equal to the size of theexpense necessary to be free of the liability. When the effectof time is significant, the provisions will be the present valueof future payments to cover the liability. Any increase in theprovisions due to time is presented as interest costs.

Provisions


Contingent liabilities Contingent liabilities are defined as:

(i) possible obligations resulting from past events whoseexistence depends on future events;

(ii) obligations that are not recognised because it is notprobable that they will lead to an outflow of resources; and

(iii) obligations that cannot be measured with sufficientreliability.

Contingent liabilities are not recognised in the annualfinancial statements, apart from contingent liabilities whichare acquired through the acquisition of an entity. Significantcontingent liabilities are disclosed, with the exception ofcontingent liabilities where the probability of the liabilityoccurring is remote.

Contingent liabilities acquired upon the purchase ofoperations are recognised at fair value even if the liability isnot probable. The assessment of probability and fair value issubject to constant review. Changes in the fair value arerecognised in the income statement.

A contingent asset is not recognised in the annual financialstatement unless deemed virtually certain to give rise to aninflow, but are disclosed where it is deemed probable that abenefit will accrue to the Group.

Revenue comprises the fair value of the considerationreceived or receivable for the sale of goods and services in theordinary course of the group’s activities. Revenue is shownnet of value-added tax, returns, rebates and discounts andafter eliminating sales within the group.

Revenue recognition

Revenue includes only the gross inflows of economic benefitsreceived and receivable by the entity on its own account.Amounts collected on behalf of third parties such as salestaxes, goods and services taxes and value added taxes are noteconomic benefits which flow to the entity and do not resultin increases in equity. Therefore, they are excluded fromrevenue. Similarly, when an agency relationship, the grossinflows of economic benefits include amounts collected onbehalf of the principal and which do not result in increases inequity for the entity. The amounts collected on behalf of theprincipal are not revenue. Instead, revenue is the amount ofcommission.

The Group recognises revenue when the amount of revenuecan be reliably measured, it is probable that future economicbenefits will flow to the entity and when specific criteria havebeen met for each of the group’s activities as described below.The amount of revenue is not considered to be reliablymeasurable until all contingencies relating to the sale havebeen resolved. The Group bases its estimates on historicalresults, taking into consideration the type of customer, thetype of transaction and the specifics of each arrangement.

The Group’s operations mainly consist of services related topersonnel and equipment hire. Consequently, the revenuerecognition is based on daily/monthly rates and actualregistered hours. Revenue is recognised when it is probablethat transactions will generate future economic benefits thatwill flow to the company and the revenue amount can bereliably estimated. Revenues from the sale of goods arerecognised in the income statement once delivery has takenplace, the risk has been transferred and the company hasestablished a receivable due by customer.

Revenues relating to projects are recognised in the incomestatement in line with the project’s progress and when theproject’s results can be reliably estimated. Level of completionis calculated as an incurred cost's percentage of anticipatedtotal cost. For projects expected to generate a loss, the fullestimated loss is recorded as cost immediately.

Interest income is recognised on a time-proportion basisusing the effective interest method. When a receivable isimpaired, the group reduces the carrying amount to itsrecoverable amount, being the estimated future cash flowdiscounted at the original effective interest rate of theinstrument, and continues unwinding the discount as interestincome. Interest income on impaired loans is recognisedusing the original effective interest rate.

Grants received are classified as either income grants orinvestment grants. Income grants are accounted for togetherwith the income as reduction of the costs to which it relates.Investment grants are posted as a pre-tax figure by recordingthe asset at gross acquisition cost and the asset is depreciatedover its usful life. The grant is treated as deferred income, andis accounted for as an adjustment entry for depreciations inline with the depreciation period.

Public grants

The Group receives grants from some of its collaboratingpartners to develop new technology. The grant is treated asdeferred income, and is accounted for as an adjustment entryfor depreciations in line with the depreciation period.

Other grants

Leases in which a significant portion of the risks and rewardsof ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases (netof any incentives received from the lessor) are charged to theincome statement on a straight-line basis over the period ofthe lease.

Leases

Earnings per share are calculated by the majority's share ofthe result for the period being divided by a time-weightedaverage of ordinary shares for the period.

Earnings per share

New information on the company’s positions at the balanceEvents after date of balance sheet


sheet date is taken into account in the annual financialstatements. Events after the balance sheet date that do notaffect the company’s position at the balance sheet date butwhich will affect the company’s position in the future aredisclosed if significant.

The cash flow statement presents the accumulated cash flowfor operational, investment and financial activities. Thestatement outlines the effect each activity has on liquid assets.The cash flow statement has been prepared in line with theindirect model.

Cash Flow Statement

If a significant part of the Group’s operations is divested or adecision has been made to divest it, this business is presentedas “Discontinued operations” on a separate line of the incomestatement and the balance sheet. As a result, all the otherfigures presented are exclusive of the discontinued operations.The comparative figures in the income statement are restatedand presented on a single line with the discontinuedoperations. Comparative figures in the balance sheet are notcorrespondingly restated.

Discontinued operations

The Group applied, for the first time, certain standards andamendments. Due to materiality, none of these requiredrestatement of previous financial statements.

Changes in accounting policy and disclosures

IFRSs implemented

These include IAS 19 Employee Benefits (Revised 2011), IFRS13 Fair Value Measurement and amendments to IAS 1Presentation of Financial Statements.

Several other amendments apply for the first time in 2013.However, they do not impact the annual consolidated

financial statements of the Group or the interim condensedconsolidated financial statements of the Group.

The nature and the impact of each new standards andamendments is described below:

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRSfor all fair value measurements. IFRS 13 does not changewhen an entity is required to use fair value, but ratherprovides guidance on how to measure fair value under IFRS.IFRS 13 defines fair value as an exit price. As a result of theguidance in IFRS 13, the Group re-assessed its policies formeasuring fair values, in particular, its valuation inputs suchas non-performance risk for fair value measurement ofliabilities. IFRS 13 also requires additional disclosures.

Application of IFRS 13 has not materially impacted the fairvalue measurements of the Group. Additional disclosures

where required, are provided in the individual notes relatingto the assets and liabilities whose fair values were determined.

IAS 1 Presentation of Items of Other ComprehensiveIncome – Amendments to IAS 1

The amendments to IAS 1 introduce a grouping of itemspresented in OCI. Items that will be reclassified (‘recycled’)to profit or loss at a future point in time (e.g., net loss or gainon AFS financial assets) have to be presented separately fromitems that will not be reclassified (e.g., revaluation of landand buildings). The amendments affect presentation only andhave no impact on the Group’s financial position orperformance.

IAS 1 Clarification of the requirement for comparativeinformation (Amendment)

These amendments clarify the difference between voluntaryadditional comparative information and the minimum

required comparative information. An entity must includecomparative information in the related notes to the financialstatements when it voluntarily provides comparativeinformation beyond the minimum required comparativeperiod. The amendments clarify that the opening statementof financial position (as at 1 January 2012 in the case of theGroup), presented as a result of retrospective restatement orreclassification of items in financial statements does not haveto be accompanied by comparative information in the relatednotes. As a result, the Group has not included comparativeinformation in respect of the opening statement of financialposition as at 1 January 2012. The amendments affectpresentation only and have no impact on the Group’sfinancial position or performance.

IAS 19 Employee Benefits (Revised 2011)

The Group applied IAS 19 (Revised 2011) retrospectively inthe current period in accordance with the transitional

provisions set out in the revised standard. Due to materialitythe opening statement of financial position of the earliestcomparative period presented (1 January 2012) and thecomparative figures have not been accordingly restated.

IFRS 9 as issued reflects the first phase of the IASBs work onreplacement of IAS 39 and applies to classification andmeasurement of financial assets and financial liabilities asdefined in IAS 39. According to IFRS 9 financial assets withbasic loan features shall be measured at amortised cost, unlessone opts to measure these assets at fair value. All otherfinancial assets shall be measured at fair value. Theclassification and measurement of financial liabilities under

IFRSs and IFRICs issued but not yet effective

IFRS 9 Financial Instruments


IFRS 9 is a continuation from IAS 39, with the exception offinancial liabilities designated at fair value through profit orloss (fair value option), where change in fair value relating toown credit risk shall be separated and shall be presented inother comprehensive income. In subsequent phases, the IASBwill address hedge accounting and impairment of financialassets. IFRS 9 is effective for annual periods beginning on orafter 1 January 2015, but the standard is not yet approved bythe EU. The Group expects to apply IFRS 9 as of 1 January2015.

IFRS 10 replaces the portion of IAS 27 Consolidated andSeparate Financial Statements that addresses the accountingfor consolidated financial statements. It also includes theissues raised in SIC-12 Consolidation —Special PurposeEntities. IFRS 10 establishes a single control model thatapplies to all entities including special purpose entities. Thechanges introduced by IFRS 10 will require management toexercise significant judgement to determine which entities arecontrolled, and therefore, are required to be consolidated by aparent, compared with the requirements that were in IAS 27.The Group is currently assessing the impact that thisstandard will have on the financial position and performance.This standard becomes effective for annual periods beginningon or after 1 January 2014. The Group expects to apply IFRS10 as of 1 January 2014.

IFRS 10 Consolidated Financial Statements

IFRS 11 replaces IAS 31 Interests in Joint Ventures andSIC-13 Jointly-controlled Entities —Non-monetaryContributions by Venturers. IFRS 11 removes the option toaccount for jointly controlled entities (JCEs) usingproportionate consolidation. Instead, JCEs that meet thedefinition of a joint venture must be accounted for using theequity method. The Group is does not expect that the impactthat this standard will have any effect on the financialposition and performance. This standard becomes effectivefor annual periods beginning on or after 1 January 2014. TheGroup expects to apply IFRS 11 as of 1 January 2014.

IFRS 11 Joint Arrangements

IFRS 12 includes all of the disclosures that were previously inIAS 27 related to consolidated financial statements, as well asall of the disclosures that were previously included in IAS 31and IAS 28. These disclosures relate to an entity’s interests insubsidiaries, joint arrangements, associates and structuredentities. A number of new disclosures are also required. Thisstandard becomes effective for annual periods beginning onor after 1 January 2014. The Group expects to apply IFRS 12as of 1 January 2014.

IFRS 12 Disclosure of Involvement with OtherEntities

The amendments clarify and provide further relief intransition guidance. These amendments becomes effective forannual periods beginning on or after 1 January 2013, but are

IFRS 10, IFRS 11 and IFRS 12 Amendments -Transition guidance

not yet approved by the EU which will likely provide aneffective date on or after 1 January 2014. The Group expectsto apply these amendments when it implements IFRS 10,IFRS 11 and IFRS 12.

As a consequence of the new IFRS 10 and IFRS 12, whatremains of IAS 27 is limited to accounting for subsidiaries,jointly controlled entities, and associates in separate financialstatements. This revision will not have an impact on theconsolidated financial statements of the Group. IAS 27 asrevised in 2011 becomes effective for annual periodsbeginning on or after 1 January 2014. The Group expects toimplement the revised IAS 27 as of 1 January 2014.

IAS 27 Separate Financial Statements (as revised in2011)

As a consequence of the new IFRS 11 and IFRS 12, IAS 28has been renamed IAS 28 Investments in Associates and JointVentures, and describes the application of the equity methodto investments in joint ventures in addition to associates. IAS28 as revised in 2011 becomes effective for annual periodsbeginning on or after 1 January 2014. The Group expects toimplement the revised IAS 28 as of 1 January 2014 and doesnot expect the amendment to have an impact on the Group.

IAS 28 Investments in Associates and Joint Ventures(as revised in 2011)

The amendments to IAS 32 clarify the meaning of "currentlyhas a legally enforceable right to set-off" and also clarify theapplication of the IAS 32 offsetting criteria to settlementsystems (such as central clearing house systems) which applygross settlement mechanisms that are not simultaneously. Theamended IAS 32 is effective for annual periods beginning onor after 1 January 2014. The Group expects to implement theamended IAS 32 as of 1 January 2014.

IAS 32 Financial Instruments - Presentation(amendment)


Note 2 Financial Risk Management

Financial risk factors The Group’s activities are exposed to a variety of financial risks. Market risks including currency risk, interest rate risk, creditrisk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial marketsand seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses debt and derivativefinancial instruments to hedge certain risk exposures.

Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the board ofdirectors. Group treasury identifies, evaluates and hedges financial risks in co-operation with the group’s operating units. Theboard provides risk management policies covering specific areas, such as foreign exchange risk, interest rate risk, liquidity riskand credit risk.

(i) Foreign exchange risk(a) Market risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,primarily with respect to the US and Australian Dollar and the British Pound. Foreign exchange risk arises from futurecommercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group´s financial risk policy is that 12 month forecasted net currency exposure shall be maximum 60 million in NOKequivalents. Positions are reviewed quarterly. Hedging is conducted by applying currency derivatives such as forwardexchange rate contracts. The group held no FX derivatives at year end 2013, however new FX derivatives contracts wereentered into in January 2014.

If the NOK currency in 2013 had weakened/strengthened by 10 % against the US Dollar (USD) with all other variablesheld constant, EBIT for the year would have been approximately NOK 4 million higher/lower, mainly as a result of foreignexchange gains/losses on translation of net USD revenues.

If the NOK currency in 2013 had weakened/strengthened by 10 % against the Australian Dollar (AUD) with all othervariables held constant, EBIT for the year would have been approximately NOK 2 million higher/lower, mainly as a result offoreign exchange gains/losses on translation of net AUD revenues.

If the NOK currency had weakened/strengthened 10 % against the British Pound (GBP) with all other variables heldconstant, EBIT for the year would have been approximately NOK 2 million lower/higher, mainly as a result of foreignexchange gains/losses on translation of net GBP costs.

(ii) Price risk

The Group is indirectly exposed to changes in the oil price, however current group policy is to not hedge oil price changes.

(iii) Cash flow and fair value interest rate risk

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantiallyindependent of changes in market interest rates.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cashflow interest rate risk. Group policy is that long-term borrowings shall be based on floating interest rates, however interestrate derivatives could be applied in order to avoid significant losses due to interest rate changes.

The Group manages its interest rate risk by applying derivatives such as interest rate collar swaps, in order to establish a capon interest rates in case of significant increase in market interest rates. In addition, the group has formerly applied floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates tofixed rates. The Group held both interest rate collar swaps and interest rate swaps until Q2 2013, but had no interest ratederivatives at year end 2013.

Based on the risk analysis where a 1 % interest rate increase/decrease is applied, the impact of net interest expenses would benegative NOK 5.5 million and positive NOK 5.5 million respectively.


(b) Credit risk Credit risk is managed on group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments anddeposits with banks, as well as credit exposure to customers, including receivables and committed transactions.

The majority of the Group's debtors are publicly listed Norwegian and international oil companies. AGR´s customersconsist of large, medium and small oil companies. Some of these customers have moderate credit risk potential. The Groupseeks to obtain financial guarantees from debtors where the credit risk and exposure is considered to be high. In addition,majority of the Group´s receivables are credit insured in order to reduce credit risk.

The Group’s main banks at 31 December 2013 is DNB Bank ASA where the majority of group cash is deposited. Inaddition the Group has other local banking relations in countries where DNB does not provide local services.

The table below shows the rating of the Group main cash management bank.

31.12.13 31.12.12 Counterparty Long-term Rating Overdraft

facility limit * Balance Overdraft

facility limit Balance

Moody`s S&P DNB Bank ASA A-1 A+ 50 000 83 608 70 000 (2 780)

* In addition the Group has a Revolving Credit Facility of TNOK 50.000 available for bank guarantees, letter of credits andcash drawings

The Group has a customer portfolio with large, medium and small cap customers. Delayed payments from some of thelargest customers at the same time could have a significant impact on the Group's liquidity situation. Prudent liquidity riskmanagement implies maintaining sufficient cash and the availability of funding through an adequate amount of committedcredit facilities. Due to the dynamic nature of the underlying businesses, group treasury maintains flexibility in funding bymaintaining availability under committed credit lines. At 31 December 2013 the Group had undrawn committed short-term credit lines amounting to NOK 85 million plus cash deposits of NOK 125 million.

(c) Liquidity risk

Management monitors rolling forecasts of the Group’s liquidity reserve and cash and cash equivalents on the basis of short-term and long-term cash flow forecasts.

The table below analyses the group’s financial liabilities and net-settled derivative financial liabilities into relevant maturitygroupings based on the remaining period at the balance sheet to the contractual maturity date.

Figures in NOK 1 000

31.12.13 Less than 1 year Between 1 and 2years

Between 2 and 5years

Over 5 Years

Borrowings (refer to note 21) - - 550 000 - Derivative financial instruments (interest rateswaps & collars)

- - - -

Trade and other payables 152 814 - - -

31.12.12 Less than 1 year Between 1 and 2years

Between 2 and 5years

Over 5 Years

Borrowings (refer to note 21) 747 657 - - -Derivative financial instruments (interest rateswaps & collars)

- 3 618 - -

Trade and other payables 732 989 - - -

The Group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order toprovide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reducethe cost of capital. The Group´s long term target capital structure is an equity ratio of at least 25 %.

Capital risk management


In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders,return capital to shareholders, issue new shares or sell assets to reduce debt. There were no dividends in 2013.

The gearing ratios, defined as net debt to total capital, at 31 December 2013 and 31 December 2012 were as follows:

2013 2012 Total borrowings (excluding capitalized arrangement fees) 550 000 747 657 Less: cash and cash equivalents (125 106) (272 683) Net debt 424 894 474 974 Total equity 482 080 681 461

Total capital 1 461 831 2 170 949

Gearing ratio 29 % 22 %

The fair value of financial instruments traded in active markets (such as trading) is based on quoted market prices at thebalance sheet date. The quoted market price used for financial assets held by the Group is the current bid price.

Fair value estimation

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) isdetermined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based onmarket conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are usedfor long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for theremaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated futurecash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at thebalance sheet date.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows atthe current market interest rate that is available to the Group for similar financial instruments.

The preparation of consolidated financial statements in accordance with IFRSs and applying the chosen accounting policiesrequires management to make judgements, estimates and assumptions that affect the reported amounts of revenues,expenses, assets, liabilities, and the disclosure of contingent liabilities. However, uncertainty about these assumptions andestimates could result in outcomes that require material adjustment to the carrying amount of the asset or liability affected infuture periods. The estimates and associated assumptions are based on historical experience and various other factors that arebelieved to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and theunderlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period inwhich the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if therevision affects both current and future periods. The accounting policies applied by AGR Group in which judgements,estimates and assumptions may significantly differ from actual results are addressed below.

Note 3 Critical Accounting Estimates and Judgements

AGR Group accounts for the impairment of non-current assets in accordance with IAS 36 Impairment of Assets. Under IAS36 AGR Group are required to assess the conditions that could cause an asset to become impairment at least annually, and toperform a recoverability test for potentially impaired assets held by the entity. Impairment exists when the carrying value ofan assets or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less cost to sell and itsvalue to use.

Impairment of non-current assets

Directly observable market prices rarely exist for AGR Groups’ assets, however, fair value may be estimated based on recentobserved transactions on comparable assets, bids or other discussions of potential transaction involving the asset, or internalmodels used by AGR Group for transactions involving the same type of assets. The value in use calculation is based on adiscounted cash flow model. The cash flow are derived from budget for the next five years and do not include restructuringactivities that the Group is not yet committed to or significant future investments that will enhance the asset’s performanceof the cash generating unit being tested. Such estimate are subjects to a number of assumptions including the useful lives ofassets, replacement costs and the timing and amounts of certain future cash flows, which may be dependent on future prices,


future activity, currency rates, and a suitable discount rate in order to calculate present value. While AGR Group believe thatthe assumptions are appropriate, such amounts estimated could differ materially from what will actually occur in the future.Refer to Note 9 Fixed Assets for disclosure of fixed assets.

In accounting for the acquisition of business, AGR Group is required to determine the fair value of assets, liabilities,intangible assets and contingent liabilities at the time of acquisition. In case of business combination achieved in stages,AGR Group must also estimate the fair value of the existing ownership interest when it gains control. Any excess purchaseprice is included in goodwill.

Impairment of goodwill

In the business AGR Group operates, fair values of individual assets and liabilities are normally not readily observable inactive markets, which require AGR Group to estimate the fair value of acquired assets and liabilities through valuationtechniques. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unitsto which goodwill has been allocated. The value in use calculation requires the management to estimate the future cash flowsexpected to arise from cash-generating units. See discussion above regarding impairment of non-current assets.

According to impairment test performed for 2013 and 2012 the recoverable amounts exceed the carrying amount forPetroleum Services. The impairment test of goodwill is not sensitive to an increase of 1 % in the discount rate in 2013 or2012, or a 2 % decrease in margins in 2013 or 2012 compared to management’s estimates.

Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of thebusiness combination. When the contingent consideration meets the definitions of a derivate and, thus a financial liability, itis subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discountedcash flows. The key assumptions take into consideration the probability of meeting each performance target and the discountfactor. Refer to Note 26 Provisions for provisions for business combinations.

Fair value measurement of contingent consideration

Certain development costs are capitalised when it is probable that a development project will generate future economicbenefits and certain criteria, including commercial and technological feasibility, have been met. These costs are thenamortised on a systematic basis over their expected useful lives. During the development stage, management must estimatethe commercial and technological feasibility of these projects as well as their expected useful lives.

Capitalised development costs

Whenever there is an indicator that development costs capitalised for a specific project may be impaired, the recoverableamount of the asset is estimated. See discussion above regarding impairment of non-current assets. Refer to Note 8Intangible Assets for disclosure of capitalised development cost.

Calculation of provision for impairment of trade receivables is based on a number of estimates. Areas including significantfinancial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and defaultor delinquency in payments (more than 30 days overdue) are all considered indicators that the trade receivable is impaired.However, assessing the fair value of the amounts recoverable is highly judgmental and incomplete or incorrect informationcould lead to significant changes in the recoverable amounts. Refer to Note 13 Aging Trade Debtors at Nominal Value foraging and provision for impairment of trade receivables.

Trade receivables

AGR Group calculates income tax expense based on reported income in the different legal entities. Deferred income taxexpense is calculated based on the differences between the assets’ carrying value for financial reporting purposes and theirrespective tax basis that are considered temporary in nature. The total amount of income tax expense and allocation betweencurrent and deferred income tax requires management’s interpretation of complex tax laws and regulations in the many taxjurisdictions where AGR Group operates. Valuation of deferred tax assets is dependent on management’s assessment of futurerecoverability of the deferred benefit. Expected recoverability may result from expected taxable income in the near future,planned transactions or planned tax optimizing measures. Economic conditions may change and lead to a differentconclusion regarding recoverability, and such change may affect the result for each reporting period. Tax authorities indifferent jurisdictions may challenge AGR Group’s calculation of tax payable from prior periods. Such process may lead tochanges to prior periods’ taxable income, resulting in changes to income tax expense in the period of change. During the

Income tax


period when tax authorities may challenge the taxable income, management is required to make estimates of the probabilityand size of possible tax adjustments. Such estimates may change as additional information becomes known. Refer to Note20 Tax disclosure of tax.

During 2013 AGR increased its interest in Well Design Online AS (WDO) to 56 % of the shares. Total purchase price wasNOK 3.5 million. No goodwill or other intangible assets arised from this aquisition, which is considered to be immaterialfor the Group.

Note 4 Business Combinations

Acquisitions in 2013:

The company is included in the Software division.

Acquisitions in 2012:

On 9 May 2012, the Group acquired an 80 % shareholding in Steinsvik & Co AS. Headquartered in Stavanger, Steinsvik &Co supplies safety professionals, including safety coaches and internal control officers (ICO), to drilling rigs in theNorwegian market. The firm also provides HSE training for oil companies and performs safety inspections on rigs operatingboth on the Norwegian sector and internationally.

The acquisition is part of AGR’s strategy to strengthen their HSE product offering. AGR Petroleum Services (PS) haveworked closely with Steinsvik for many years, with Steinsvik now part of the PS product offering, will enhance our wellmanagement operations and help deliver safe and efficient drilling operations for our clients.

On 31 August 2012, the Group acquired 100 % of the share capital in Ocean Riser Systems AS (ORS), which has developedtechnology and intellectual property complementary to AGR’s EDS services. This acquisition is an exciting development forboth companies: AGR EDS-ORS will be at the forefront of the marketplace when it comes to providing the industry withthe next generation of Dual Gradient Drilling and Managed Pressure Drilling solutions. Together, they will provide a trulycomprehensive technology portfolio, reduced risk and a constant R&D capability.

NOK 1 000

Purchase consideration: Steinsvik & Co ORS Cash paid 27 604 70 000 Guaranty amount (Note 26) 1 500 - Total purchase consideration 29 104 70 000

Steinsvik & Co ORS Fair value Acquiree's carrying

amount Fair value Acquiree's carrying

amount Cash and cash equivalents 1 861 1 861 2 050 2 050 Property, plant and equipment(note 9)

84 84 82 82

Financial fixed assets 31 31 - - Contractual customer relationship(included in intangibles) (note 8)

- - - -

Other intangibles (note 8) - - 3 242 3 242 Deferred tax assets (note 20) - - - - Inventories - - - - Trade and other receivables 13 630 13 630 8 840 8 84 Trade and other payables (10 071) (10 071) (2 156) (2 156) Deferred tax liabilities (note 20) (62) (62) - - Fair value of net assets 5 473 5 473 12 058 12 058

The assets and liabilities arising from the acquisition are as follows:


Non-controlling interestmeasured at fair value

(1 094) -

Goodwill (note 8) 24 726 - 57 942 - Total purchase consideration 29 105 70 000

Purchase consideration settled incash

27 604 70 000

Cash and cash equivalents insubsidiary acquired

(1 861) (2 050)

Cash outflow on acquisition 25 743 67 950

The fair value of ORS´s identifiable assets net of liabilities amounts to TNOK 12 058. The remaining TNOK 57 942 of thepurchase price has been allocated to goodwill. The purchase price allocation was preliminary as of 31 December 2012. Theallocation of goodwill is completed in 2013. TNOK 10 501 is allocated to intangible assets. Valuation of technology and ourcomplex international patent portfolio is ongoing. The goodwill arising from the acquisition relates to expected futureearnings of the acquired company, which is supported by synergies expected to be achieved by combining AGR´s and ORSbusinesses.

AGR delivers a broad service offering within reservoir evaluation, well planning, well operations and integrated fieldmanagement to the upstream oil and gas industry. For management purposes, the Group is organised into business unitsbased on regions and has from 2013 sixs reportable segments, as follows:

Note 5 Segment Information

• Norway including Russia• United Kingdom (UK) including Middle East (ME) and West Africa• Asia Pacific• Americas• Software• Group

The Drilling Services business was demerged from AGR Group on 7 August 2013. Based on this, Drilling Services isreported as "Discontinued operations" in the Annual Statement in accordance with IFRS. Segment information for 2012has been amended according to new segment structure.

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions aboutresource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and ismeasured consistently with operating profit or loss in the consolidated financial statements. However, Group financing andincome taxes are managed on a Group basis.

Group segment consist of corporate administration.

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with thirdparties.


NOK 1 000

Business areas Norwayincl. Russia

UK inclME and

West Africa



Profit and Loss Account 2013 External operatingrevenues

630 164 417 223 128 804 198 079 8 322 11 972 (62) 1 394 502

Intercompanyoperating revenues

9 824 32 655 828 117 1 309

19 377 (64 110) -

Project expenses/payroll expenses

(473 820) (446 063) (122 865) (178 686) (3 885) (58 763) 64 172 (1 219 911)

EBITDA1 166 168 3 815 6 767 19 510 5 747 (27 415) - 174 592Depreciation andamortisation

(5 415) (6 044) (309) (3 408) (476) (3 813) - (19 466)

Operating profit(loss)

160 753 (2 230) 6 458 16 102 5 271 (31 228) - 155 126

Net financial items (121 818) (25 000) 6 914 (14 497) (85) 134 790 - (19 696)Tax (11 115) 464 (4 289) (3 475) (6 983) (32 884) - (58 281)

Key figures 2013 Assets 438 131 500 617 95 282 341 420 24 885 2 037 663 (2 113 538) 1 324 459Liabilities 294 955 436 745 18 353 266 376 2 542 1 190 892 (1 363 904) 845 959Investments 7 342 3 144 458 120 1 020 106 12 190Investments ex.acquisition

7 342 3 144 458 120 1 020 106 12 190

Business areas Norwayincl. Russia

UK inclME and

West Africa



Profit and LossAccount 2012 External operatingrevenues

470 567 452 113 123 975 206 766 5 154 22 819 - 1 281 395

Intercompanyoperating revenues

17 175 50 347 1 367 2 625 1 473 6 876 (79 689) -

Project expenses/payroll expenses

(418 580) (448 993) (121 352) (195 440) (2 884) (68 917) 79 689 (1 176 477)

EBITDA1 69 161 53 293 3 990 13 951 3 742 (39 222) - 104 917Depreciation andamortisation

(3 181) (8 418) (670) (5 882) (338) (2 958) - (21 448)

Operating profit(loss)

65 980 44 876 3 320 8 069 3 404 (42 182) - 83 469

Net financial items (52 124) (18 495) (1 335) (6 853) (131) 46 571 - (32 367)Tax (4 620) (8 979) (767) (4 612) (818) 29 374 - 9 578

Key figures 2012 Assets 295 317 473 051 90 259 298 416 14 858 2 419 779 (2 164 560) 1 427 120Liabilities 187 096 387 883 17 665 230 041 3 595 1 216 000 (1 068 750) 973 530Investments 37 946 5 129 228 11 008 59 - 54 370Investments ex.acquisition

8 842 5 129 228 11 008 59 - 25 266


1 EBITDA is short for Earnings Before Interest, Tax, Depreciation and Amortization, excluding stock write downs and is anon-GAAP measure which management uses to measure operations.

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, trade and other receivables,and cash and cash equivalents.

Segment liabilities comprise operating liabilities. Unallocated liabilities comprise items such as taxation and borrowingsincluding related hedging derivatives.

Investments comprises additions to property, plant and equipment and intangible assets, including additions resulting fromacquisitions through business combinations.

Geographical segment reporting represents external customer sales based on the loaction of the customer.

Note 6 Geographical Segment Information

NOK 1 000

Total operating revenues 2013 2012 Norway 623 879 475 210 Europe ex. Norway 268 718 341 282 Australia 87 503 70 343 America 182 999 169 338 Asia 53 020 72 855 Africa 178 384 152 366 Total 1 394 502 1 281 394

Major customers

Sales to Statoil ASA and its subsidiaries amounted in FY 2013 in total to NOK 209 million. The revenue is mainly listedunder the segment Norway above, but the amount also includes sales to Statoil in Europe, America and Africa.

Non-current assets 2013 2012 Norway 328 608 843 616 Europe ex. Norway 9 018 198 400 Australia 197 152 12 148 America 950 240 297 Asia 230 999 1 815 Total 766 728 1 296 276

NOK 1 000

Note 7 Operating Revenues

Operating revenue comprises: 2013 2012Sale of goods 7 488 4 905Sale of services 1 347 542 1 202 120Total revenue 1 355 030 1 207 025

Profit from sale of fixed assets 5 18Other sales 39 468 74 351Total other operating revenue 39 472 74 370

Total operating revenue 1 394 502 1 281 394


Note 8 Intangible Assets

NOK 1 000

2013 Goodwill Acquired patentsdevelopment

projects

Self-developedpatents

developmentproject

Total

Historical cost 01.01.13 887 825 308 395 325 651 1 521 872 Additions (7 561) 10 501 5 874 8 814 Disposals - (8 154) - (8 154) Disposal discontinued operations (299 258) (93 366) (306 836) (699 460) Conversion variances 40 012 24 190 631 64 833 Historical cost 31.12.13 621 019 241 566 25 320 887 906 Accumulated amortisation 01.01.13 (3 793) 233 726 38 139 268 072 Amortisation of the year - 3 525 2 696 6 221 Disposals amortisation during the year - - - - Disposal discontinued operations 3 793 (73 070) (37 450) (106 727) Conversion variances - 18 721 429 19 150 Amortisation 31.12.13 - 182 902 3 814 186 716 Accumulated impairments 01.01.13 242 341 63 615 91 787 397 743 Impairments/reversals for the year - 3 867 3 867 Disposals amortisation during the year (717) (2 454) (3 171) Disposals discontinued operations (241 316) (17 842) (81 607) (340 765) Conversion variances (308) 5 369 - 5 061 Accumulated impairments 31.12.13 - 48 688 14 047 62 735

Book value 31.12.13 621 020 9 976 7 459 638 455Amortisation rates 2.5 - 5 years 5 years Amortisation method Linear Linear Self developed assets are started amortised when they are fully developed.

2012 Goodwill Acquired patentsdevelopment

projects

Self-developedpatents

developmentprojects

Total

Historical cost 01.01.12 822 167 334 713 277 225 1 434 105Additions 82 668 8 154 53 509 144 331Disposals - (24 725) (4 769) (29 495)Conversion variances (17 010) (9 747) (314) (27 071)Historical cost 31.12.12 887 825 308 395 325 651 1 521 870 Accumulated amortisation 01.01.12 - 247 673 42 845 290 518 Amortisation of the year - 7 388 6 419 13 807 Disposals amortisation during the year - (12 008) (10 880) (22 889) Conversion variances (3 793) (9 327) (245) (13 364)Amortisation 31.12.12 (3 793) 233 726 38 139 268 072Accumulated impairments 01.01.12 240 541 76 332 78 332 395 205 Impairments/reversals for the year 1 800 - 6 743 8 543 Conversion variances - (12 717) 6 711 (6 006)Accumulated impairments 31.12.12 242 341 63 615 91 787 397 742

Book value 31.12.12 649 277 11 054 195 726 856 056Amortisation rates 2.5 - 5 years 5 years Amortisation method Linear Linear


The table below specifies goodwill per acquisition for the Group:

Goodwill AGR DPT Triangle RES Acquired 2004 189 747 - - - Acquired 2005 - 87 468 25 162 - Acquired 2006 - 20 000 - 103 462 Acquired over the year - - - - Disposal during the year (189 747) - - - Conversion variances - - - - Acquisition cost 31.12.13 - 107 468 25 162 103 462 Amortisation for the year - - - - Amortisation 31.12.13 - - Accumulated impairments 01.01.13 189 747 - - - Impairments for the year - - - - Disposals amortisation during the year (189 747) - - - Accumulated impairments 31.12.13 - - -

Book value 01.01.13 - 107 468 25 162 103 462

Book value 31.12.13 - 107 468 25 162 103 462

Goodwill Cleanup Well Peak SeaVation Acquired 2004 9 893 13 558 - - Acquired 2005 - - - - Acquired 2006 - - 241 626 38 683 Acquired 2007 - - (5 241) (6 053) Acquired over the year - - - - Disposal during the year (9 893) (13 558) - (24 267) Conversion variances - - (28 463) (8 363) Acquisition cost 31.12.13 - - 207 922 - Amortisation for the year - - - - Amortisation 31.12.13 - - - - Accumulated impairments 01.01.13 9 893 13 558 - 24 267 Impairments for the year - - - - Disposals amortisation during the year (9 893) (13 558) - (24 267) Accumulated impairments 31.12.13 - - - -

Book value 01.01.13 - - 186 057 -

Book value 31.12.13 - - 207 922 -

Goodwill FJ Brown MarineEngineering

Tracs Steinsvik

Acquired 2007 69 452 - - - Acquired 2008 - 1 800 101 956 - Acquired 2009 - - (12 205) - Acquired 2010 - - (1 076) - Acquired 2012 - - - 24 726 Acquired over the year - - - (7 561) Disposal during the year - (1 800) - - Conversion variances 1 587 - 126 - Acquisition cost 31.12.13 71 039 - 88 801 17 165 Amortisation for the year - - - - Amortisation 31.12.13 - - - - Accumulated impairments 01.01.13 - 1 800 - -


Impairments for the year - - - - Disposals amortisation during the year - (1 800) - - Accumulated impairments 31.12.13 - - - -

Book value 01.01.13 64 999 - 79 462 24 726

Book value 31.12.13 71 039 88 801 17 165

Goodwill ORS Total Acquired 2004 - 213 198 Acquired 2005 - 112 630 Acquired 2006 - 403 771 Acquired 2007 - 58 158 Acquired 2008 - 103 756 Acquired 2009 - (12 205) Acquired 2010 - (1 076) Acquired 2012 57 942 82 668 Acquired over the year - (7 561) Disposal during the year (57 942) (297 207) Conversion variances - (35 113) Acquisition cost 31.12.13 - 621 019 Amortisation for the year - - Amortisation 31.12.13 - - Accumulated impairments 01.01.13 - 239 265 Impairments for the year - - Disposals amortisation during the year - (239 265) Accumulated impairments 31.12.13 - -

Book value 01.01.13 57 942 649 278

Book value 31.12.13 - 621 020

Goodwill is allocated to the group’s cash-generating units (CGUs) identified according to the business segment.

A segment-level summary of the goodwill allocation is presented below.

Goodwill per segment Norway incl.Russia

UnitedKingdom,

Middle East and West Africa

United States Total

As of 31.12.13 253 257 296 723 71 039 621 020 As of 31.12.12 260 818 265 519 64 999 591 336

Goodwill per segment Group-Other PetroleumServices

Drilling Services Field Operations Total

Goodwill as of 31.12.12 - 591 336 57 942 - 649 277 Goodwill as of 31.12.11 1 800 579 827 - - 581 627 Goodwill as of 31.12.10 - 572 065 - 349 822 921 887 Goodwill as of 31.12.09 - 578 628 - 323 221 901 850 Goodwill as of 31.12.08 - 629 904 139 712 311 818 1 081 434 Goodwill as of 31.12.07 - 687 856 213 198 204 516 1 105 570

The key assumptions used for the value-in-use calculations are based on the presumption that management have theflexibility to re-allocate resources between segments. As a result the same assumptions are used for all segments/CGUs andare as follows:


Petroleum ServicesEBITDA-margin1 12.7 % - 16.8 %Growth rate2 2.5 %Discount rate3 12.1 %

1 Budgeted EBITDA-margin. The margin varies in the budget period.2 Weighted average growth rate used to extrapolate cash flows beyond the budget period.3 After-tax discount rate applied to the cash flow projections.

NOK 1 000

Note 9 Fixed Assets

2013 Machinery andoperating

equipment

Total

Historical cost 01.01.13 881 273 881 273 Additions 7 209 7 209 Disposals (5 319) (5 319) Disposals discontinued operations (809 735) (809 735) Conversion variances 8 077 8 077 Historical cost 31.12.13 81 505 81 505 Accumulated deprecation 01.01.13 505 073 505 073 Depreciation of the year 9 379 9 379 Disposals depreciation during the year (3 184) (3 184) Disposals discontinued operations (458 082) (458 082) Conversion variances 5 689 5 689 Accumulated depreciations 31.12.13 58 875 58 875 Accumulated impairments 01.01.13 78 394 78 394 Disposals discontinued operations (70 780) (70 780) Disposals impairment during the year - - Accumulated impairments 31.12.13 7 614 7 614

Book value 31.12.13 15 016 15 016 Depreciation rates 3 - 8 years Depreciation method Linear

Information regarding disposal discontinued operations is disclosed in Note 36 Assets of Disposal Group classified as heldfor Sale and Discontinued operations.

2012 Machinery andoperating

equipment

Total

Historical cost 01.01.12 821 019 821 019 Additions 78 900 78 900 Disposals (15 698) (15 698) Conversion variances (2 948) (2 948) Historical cost 31.12.12 881 273 881 273 Accumulated deprecation 01.01.12 404 257 404 257 Depreciation of the year 89 330 89 330 Disposals depreciation during the year (4 370) (4 370) Conversion variances 15 856 15 856 Accumulated depreciations 31.12.12 505 073 505 073 Accumulated impairments 01.01.12 71 593 71 593


Disposals impairment during the year 6 801 6 801 Accumulated impairments 31.12.12 78 394 78 394

Book value 31.12.12 297 806 297 805 Depreciation rates 3 - 8 years Depreciation method Linear

Company Head Office Owner Equityinterest/votingshare

2013

Equityinterest/votingshare 2012

AGR Australia Pty Ltd Perth - Australia AGR Group Holdings Ltd 100 % 100 % AGR Business Partner AS Fjell - Norway AGR Group ASA - - AGR Canada Inc Houston-USA AGR Group Americas Inc 100 % 100 % AGR CannSeal AS Fjell - Norway AGR Group ASA 95 % 95 % AGR Cleanup AS Fjell - Norway AGR EDS and T&T Holdings AS - 100 % AGR Central Asia AS Oslo - Norway AGR Petroleum Services AS 100 % 100 % AGR Consultancy Services AS Stavanger - Norway AGR Petroleum Services AS 100 % 100 % AGR Consultancy Solutions Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 % AGR Deepwater Technologies Inc Delaware-USA AGR Group ASA - 100 % AGR Drilling Services Canada Inc Houston-USA AGR Drilling Services Holdings AS - 100 % AGR Drilling Services do Brasil Ltda Rio de Janeiro -

Brasil AGR Drilling Services Holdings AS - 100 %

AGR Drilling Services Holdings AS Fjell - Norway AGR EDS and T&T Holdings AS - 83 % AGR Drilling Services Pty Ltd Perth - Australia AGR Drilling Services Holdings AS - 100 % AGR EDS and T&T Holdings AS Fjell - Norway AGR Group ASA - 93 % AGR Energy AS Oslo - Norway AGR Petroleum Services Holdings AS - 100 % AGR F.J Brown Inc Houston-USA AGR Group Americas Inc 100 % 100 % AGR Facilities Solutions AS Oslo - Norway AGR Petroleum Services AS 80 % 80 % AGR Group Americas Inc Houston-USA AGR Petroleum Services Holdings AS 100 % 100 % AGR Group Holdings Ltd Aberdeen - UK AGR Petroleum Services Holdings AS 100 % 100 % AGR Group Mexico Inc Houston-USA AGR Group Americas Inc 100 % 100 % AGR Group Mexico S de R.L de C.V Houston-USA AGR Group Mexico Inc 100 % 100 % AGR Marine Engineering AS Fjell - Norway AGR Group ASA - 100 % AGR Peak Solution Systems Pty Ltd Perth - Australia AGR Group Holdings Ltd - 100 % AGR Petroleum (ME) Ltd Dubai - United Arab

Emirates AGR Group Holdings Ltd 100 % 100 %

AGR Petroleum Services AS Oslo - Norway AGR Petroleum Services Holdings AS 100 % 100 % AGR Petroleum Services Holdings AS Oslo - Norway AGR Group ASA 97 % 97 % AGR Petroleum Services Inc Houston-USA AGR Group Americas Inc 100 % 100 % AGR Reservoir Evaluation ServicesKazakstan Ltd

Aberdeen - UK AGR Petroleum Services AS 100 % 100 %

AGR Seabed Intervention Ltd Aberdeen - UK AGR EDS and T&T Holdings AS - 100 % AGR Set Ltd Aberdeen - UK AGR EDS and T&T Holdings AS - 100 % AGR Solution Systems Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 % AGR Steinsvik AS Stavanger - Norway AGR Petroleum Services Holdings AS 80 % 80 % AGR Subsea AS Fjell - Norway AGR Drilling Services Holdings AS - 100 % AGR Subsea Inc Houston-USA AGR Drilling Services Holdings AS - 100 % AGR Subsea Ltd Aberdeen - UK AGR EDS and T&T Holdings AS - 100 % AGR Well Management Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 % AGR Well Services AS Fjell - Norway AGR EDS and T&T Holdings AS - 100 %

Note 10 Investments in Group Entities and an Associate


Altinex Inc Houston-USA AGR Petroleum Services Holdings AS 100 % 100 % Ocean Riser Systems AS Oslo - Norway AGR Drilling Services Holdings AS - 100 % Teredo AS Oslo - Norway AGR Petroleum Services AS 100 % 100 % Tracs Consult LLC Moscow - Russia Tracs International Consultancy Ltd 100 % 100 % Tracs International Consultancy Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 % Tracs International Training Ltd Aberdeen - UK Tracs International Consultancy Ltd 100 % 100 % Well Design Online AS Oslo - Norway AGR Petroleum Services Holdings AS 56 % -

Investment in an Associate NOK 1 000

AGR Energy AS is a private entity that is not listed on any public exchange. The following table illustrates the summarisedfinancial information of the Group's investement in AGR Energy AS:

The Group has a 44% interest in AGR Energy AS, which is involved in activities in Israel and elsewhere, actingas an Operator with minority stakes in the oilfields. AGR Energy AS was a fully owned subsidiary until August2013 when 56 % of the shares in the company was sold. After the sale AGR Petroleum Services Holdings AS lostcontrol and AGR Energy AS has been deconsolidated. From the transaction date AGR Energy AS has beenaccounted for by using the equity method.

Share of the associate's statement of financial position: 2013 2012 Current assets 1 395 - Non current assets 2 009 - Current liabilities (756) - Non-current liabilities - - Equity 2 648 -

Share of the associate's revenue and profit: 2013 2012Revenue 343 -Loss (4 333) -Carrying amount of the investment 2 648 -

NOK 1 000

Note 11 Inventory

2013 2012

Stocks 123 111 Work in progress - - Finished goods - 23 883 Total inventories 31.12. 123 23 995

All amounts are net of any write-downs for obsolescence. The total accumulated write-down for obsolescence included ininventory is TNOK 5 100 for 2012 and TNOK 0 for 2013.

NOK 1 000

Note 12 Trade Receivables

2013 2012

Trade debtors at nominal value 385 959 530 098 Revenues not invoiced 38 535 80 735 Provisions for bad debt (51 919) (132 518) Trade receivables 31.12. 372 574 478 316


Of the total NOK 132 518 thousand as of 31 December 2012, NOK 118 000 thousand is reclassification from accountspayable to Provision for bad debt regarding amounts collected for third-parties. The corresponding amount per 31December 2013 is NOK 97.700 thousand, which is presented net in Trade receivables. See note 31.

NOK 1 000

Note 13 Aging Trade Debtors at Nominal Value

2013 2012

Receivables not overdue 182 866 287 592 Receivables overdue up to 3 months 129 262 140 716 Receivables overdue more than 3 months 112 365 182 525 Provision (51 919) (132 518) Trade debtors 31.12. 372 574 478 316

Individually impaired Collectively impaired Total Provision 01.01.12 (13 794) - (13 794) Charge for the year (119 477) - (119 477) Utilised - - - Unused amounts reversed 755 - 755Provision 31.12.12 (132 518) - (132 516) Charge for the year 69 038 - 69 038 Utilised - - - Disposals discontinued operations 11 562 - 11 562 Provision 31.12.13 (51 919) - (51 917)

NOK 1 000

Note 14 Other Current Receivables

2013 2012

Other taxes receivables 21 926 38 949 Advanced payments to suppliers 2 881 5 759 Overseas witholding taxes - 2 182 Advanced payments employees 451 1 048 Other prepaid expenses 14 079 17 396 Other current assets 20 488 34 253 Other current receivables 31.12. 59 825 99 588

NOK 1 000

Note 15 Cash and Cash Equivalents

2013 2012

Cash 42 142 Bank deposits 125 064 272 541 Cash and cash equivalents 31.12. 125 106 272 683

Of which is restricted deposits* 1 211 1 599

Unused overdraft facilities 31.12. 85 940 87 000


* Deducted employee tax due within 3 months

The accounting policies for financial instruments have been applied to the items below:

Note 16 Financial Instruments by Category

NOK 1 000

31.12.13 Loans andreceivables

Assets at fairvalue throughthe profit and

loss

Total

Assets as per balance sheet Derivative financial instruments - - - Trade and other receivables 432 400 - 432 400 Other financial assets at fair value 103 - 103 Cash and cash equivalents 125 106 - 125 106 Total 557 608 - 557 608

Liabilities at fairvalue throughthe profit and

loss

Derivatives usedfor hedging

Other financialliabilities

Total

Liabilities as per balance sheet Borrowings 524 642 524 642 Derivative financial instruments - Total - - 524 642 524 642

31.12.12 Loans andreceivables

Assets at fairvalue through the

profit and loss

Total

Assets as per balance sheetDerivative financial instruments - - - Trade and other receivables 577 903 - 577 903Other financial assets at fair value 92 - 92 Cash and cash equivalents 272 683 - 272 683Total 850 678 - 850 678

Liabilities at fairvalue through the

profit and loss

Derivatives usedfor hedging

Other financialliabilities

Total

Liabilities as per balance sheet Borrowings - - 744 646 744 646 Derivative financial instruments (3 617) - - (3 617) Total (3 617) - 744 646 741 029

For all financial instruments included in the tables above fair value corresponds to book value.


Note 17 Share Capital and Shareholder Information

At 31 December 2012 the company had a share capital of TNOK 251 797 distributed in 125 898 308 shares, each with anominal value of NOK 2. At 31 December 2013 the company had a share capital of TNOK 139 051 distributed in 124 152393 shares. All issued shares are fully paid. The company has one share class, and all shares have equal voting and dividendrights.

Prior to the demerger of AGR Group ASA in 2013, the company's own shares were deleted and the share capital washerewith reduced with TNOK 3 492 from TNOK 251 797 to TNOK 248 305. As part of the demerger, the share capital ofAGR Group ASA was reduced with TNOK 109 254 from TNOK 248 305 to TNOK 139 051 by reducing the par value ofeach share with NOK 0.88 from NOK 2 to NOK 1.12.

Shareholders in AGR Group ASA with a minimum of 1 % share of ownership, as well as shares held by executive employeesand board members including shares owned by affiliated individuals and companies, were at 31 December 2013 as follows:

NOK 1 000

Shareholders at 31 December 2013 Number of shares Equity interest Altor Oil Service Invest AS 90 308 128 72.7 % RBC Investor Services Bank 12 695 636 10.2 % Hemaca AS 2 489 759 2.0 % Invesco Perp Eur Small Comp FD 2 388 027 1.9 % Santander Investment S.A. 2 290 066 1.8 % The Northern Trust co. 1 861 821 1.5 % Verdipapirfondet DnB Navigator 1 653 881 1.3 % Verdipapirfondet DnB SMB 1 367 530 1.1 % Total shareholders with equity interest > 1,0 % 115 054 848 92.7 % Total other shareholders 9 097 545 7.3 % Total 124 152 393 100.0 %

Board: Eivind Reiten (indirectly owned via

Mocca Invest AS) 17 679 0.0 %

Total shares owned by board members 17 679 0.0%

Management: Åge Landro (indirectly owned via

Nordstrøm Invest AS) 117 609 0.1 %

Svein Sollund (indirectly owned viaAmaldine AS)

97 165 0.1 %

Tove Magnussen 30 065 0.0 % Total shares owned by the management group 244 839 0.2 %

Shareholder overview: Shareholders in AGR Group ASA with a minimum of 1 % share of ownership, as well as shares heldby executive employees and board members including shares owned by affiliated individuals and companies, were at 31December 2012 as follows:

Shareholders at 31 December 2012 Number of shares Equity interest Altor Oil Service Invest AS 97 659 680 77.6 % RBC Investor Services Bank 7 700 514 6.1 % Hemca AS 3 489 759 2.8 % BNYBE Invesco Perp Eur Small Com 1 832 185 1.5 % Verdipapirfondet DNB Navigator 1 780 974 1.4 % AGR Group ASA 1 745 915 1.4 % Verdipapirfondet DNB SMB 1 367 630 1.1 % Aequitas AS 1 334 092 1.1 %


Total shareholders with equity interest > 1,0 % 116 910 749 92.1 % Total other shareholders 8 987 559 7.1 % Total 125 898 308 100.0 %

Board: Eivind Reiten (indirectly owned via


Tove Magnussen 30 065 0.0 % Total shares owned by board members 47 744 0.0 %

Management: Sverre Skogen (indirectly owned via

Hemaca AS) 3 489 759 2.8 %

Åge Landro (indirectly owned viaNordstrøm Invest AS)

69 930 0.1 %

Total shares owned by the management group 3 559 689 2.8 %

Number ofshares

(thousands)

Ordinary shares Treasury shares Share premium Total

01.01.06 10 510 105 099 - 4 105 103 Share issue 2005 registered in 2006 117 1 173 - 1 173 2 346 Prior to the IPO the the share wassplit in a ratio 1:5

42 509 - - - -

– Proceeds from IPO issued July2006

12 217 24 434 - 530 972 555 406

– Proceeds from shares issuedDecember 2006

3 421 6 842 - 157 335 164 177

31.12.06 68 774 137 548 - 689 484 827 032 Employee share option scheme: – Proceeds from shares issuedDecember 2007

1 582 3 164 - 69 028 72 192

31.12.07 70 356 140 712 - 758 512 899 224 – Proceeds from shares issued June2008

855

1 710 - 32 090 33 800

31.12.08 71 211 142 422 - 790 602 933 024 – Proceeds from shares issuedOctober 2009

54 688 109 375 - 60 041 169 416

– Purchase of treasury shares - - (634) (4 118) (4 752) 31.12.09 125 898 251 797 (634) 846 525 1 097 688 – Proceeds from shares issued - - - - – Purchase of treasury shares - - (2 997) (18 982) (21 979) 31.12.10 125 898 251 797 (3 631) 827 543 1 075 709 – Proceeds from shares issued - - - - – Reduction of share premium - - - (827 543) (827 543) 31.12.11 125 898 251 797 (3 631) - 248 166 – Proceeds from shares issued - - - - - – Sales of treasury shares - - 140 - 140 31.12.12 125 898 251 797 (3 491) - 248 306 – Reduction of trassury shares (1 746) - 3 491 - 3 491 – Demerger - (112 746) - - (112 746) 31.12.13 124 152 139 051 - - 139 051

Note 18 Share Capital and Premium


Note 19 Pensions and Pension Commitments

The Group companies provide various retirement plans in accordance with the local regulations and practice in the countriesin which they operate.

Defined contribution plans require the companies to make agreed contributions to a separate fund when employees haverendered services entitling them to contributions. The companies have no legal or constructive obligations to pay furthercontributions. Some companies make a contribution to multi-employer pension plans included with others. All multi-employer plans are accounted for as defined contribution plans.

Contribution plans

The premium related to the contribution plans are expensed when occurred as operating expenses. In 2013 the total expensefor defined contribution schemes was NOK 9.2 million and in 2012 NOK 7.6 million.

Defined benefit plans are generally based on years of services and final salary levels, offering retirement benefits in additionto what is provides by state pension plans. The Group's defined benefit plan is invested with an insurance company whichmanages the plan assets. The special pension schemes financed through company operations covers 4 employees.

Defined benefit plans

NOK 1 000

Specification of the year’s pension cost 2013 2012

Costs according to defined benefit schemes: Current service cost 665 1 805 Interest cost 567 644 Expected return on plan assets (600) (725) Net actuarial losses (688) 23 Administrative expenses - 145 Pension cost excl. social security tax (56) 1 892 Employers' social security tax 111 268 Pension cost incl.social security tax 55 2 160

Balance sheet specification of net pension commitments 2013 2012 Guaranteed schemes: Accumulated benfit obligation 15 102 15 641 Estimated effect of future wage adjustment 3 149 3 173 Gross pension commitments 18 251 18 814 Pension funds as of 31.12. (16 620) (14 425)Net pension commitments 1 631 4 389 Social security tax 230 553 Estimate devations not recognised in the proft and loss accounts - 3 654 Net pension commitment on the balance sheet 31.12. 1 861 8 596

The movement in the defined benefit obligation over the year is as follows: 2013 2012

Beginning of year 8 596 8 146 Net pension cost 55 2 160 Estimated deviations recognised as Other Comprehensive Income (6 702) - Estimated payment to pension funds including administration costs (88) (1 710) Net pension commitment on the balance sheet 31.12. 1 861 8 596


Actuarial assumptions for the group 2013 2012 Expected return on funds 4.00 % 3.60 % Discount rate 4.00 % 2.30 % Annual salary increase 3.75 % 3.50 % Annual adjustment of the national insurance base amounts 3.50 % 3.25 % Annual adjustment of current pension payments 0.06 % 0.20 % Turnover 2-5 % 2-5 % Expected average remaining servicetime 8 12 Demographic tariff K2013 K2005

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets againstcurrent tax liabilities and when the deferred income taxes relate to the same fiscal authority.

Note 20 Tax

NOK 1 000

2013 2012 Current income tax expense Norway 12 292 4 356 Current income tax expense abroad 14 575 18 892 Adjustment of current income tax of prior years 1 879 (4 156) Changes in deferred tax Norway 30 456 (29 560) Change in deferred tax abroad (924) 889 Impact of change in the tax rate 4 - Income tax expense (from continuing operations) 58 282 (9 579)

Reconciliation of tax payable Tax payable in profit and loss account adjusted for Group contribution 11 450 26 100 Prepaid tax 12 783 (16 983) Credit deduction, international (7 399) (15 463) Tax, international 1 164 5 348 Opening balance, tax from 2012 not paid in 2011 1 040 1 108 Corrections previous years (6 133) (47) Tax payable in balance sheet 12 904 63

Reconciliation of nominal and effective tax rate Pre-tax result 135 428 51 103 Applicable tax with tax rate 28 % 37 920 14 309

Variance, actual and expected income tax expense 20 362 (23 888)

Explanation of why actual tax cost deviates from expected tax cost Tax effect from non-deductible costs 3 710 27 852 Tax effect from non-taxable income (5 815) (19 665) Utilisation of previously unrecognised tax losses (988) - Tax losses for which no deferred income tax asset was recognised - (35 835) Re-measurement of deferred tax - change in the tax rate 1 263 - International tax rate deviates from Norwegian tax rate 12 215 3 231 Charge of deferred tax asset 6 987 - Adjustment of current income tax of prior years 2 990 529 Variance compared to applicable tax rate 20 362 (23 888)

Change in book value of deferred tax Balance sheet value at 01.01. (109 039) (171 381) Currency conversion (1 633) (177)


Charged to income in the period 32 400 62 423 Corrections previous years (548) 34 Tax effect from Group Contribution 7 788 - Acquisition of Subsidiary 2 720 62 Disposal of Drilling Services 5 901 - Balance sheet value 31.12. (62 411) (109 039)

Deferred tax assets as of 31.12. 72 006 110 027 Deferred tax liability as of 31.12. 9 595 988 Balance sheet value (62 411) (109 039)

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related taxbenefit through future taxable profits is probable. The tax losses are connected to previous years tax losses. PetroleumServices division has during the last 3-5 years delivered taxable profits, and based on future expected tax profit deferred taxasset is substantial. Management belive that there is convincing evidence for future uses.

Tax losses in Norway can be offset against future taxable profit, and there is no limit for usage. Deferred tax assets will bebooked when there is convincing evidence for future taxable profit.

Of the total loss carried forward, TNOK 154 749 (2012: TNOK 846 999) TNOK 127 260 (2012: TNOK 339 564) relatesto Norway.

Below is a specification of temporary differences between accounting and tax values, as well as calculation of deferred tax /tax advantage at the end of the financial year.

Deferred tax

Basis for deferred tax 2013 2012 Receivables (2 158) (20 721) Inventory - (4 859) Other current balance sheet items (55 319) (71 403) Amount linked to current balance sheet items (57 477) (96 983) Fixed assets and intangible assets 2 701 (9 179) Long term receivables (360) (24 806) Pensions (1 861) (8 733) Profit and loss account 3 312 (4 698) Loss carried forward (154 749) (846 999) Amount linked to long-term balance sheet items (150 957) (894 415)

Total basis for deferred tax assets (208 434) (991 398)

In Q1 2013 AGR refinanced its Petroleum Services division by placing a NOK 550 million 5 year bond in the market. Thebond agreement was signed in February 2013 and was listed on Oslo Stock Exchange in June 2013. In addition, DNB BankASA provided a NOK 100 million Revolving Credit Facility which purpose is to finance working capital requirements andto issue financial guarantees. The Drilling Services division was refinanced through a 3 year traditional bank loan amountingto NOK 223 million and de-merged from AGR in August 2013.

Note 21 Interest Bearing Debt

Refinancing of AGR

In NOK 1 000

Overview of long-term interest bearing debt 2013 2012 Long-term interest bearing debt 550 000 - Capitalised arrangement fee deducted (25 358) - Total long-term interest bearing debt 524 642 -


The Group has a Revolving Credit Facility (the "RCF") of TNOK 50 000 and an overdraft facility of TNOK 50 000. At 31December 2013 no cash drawings were made under the facilities, however bank guarantees of TNOK 14 943 was drawnunder the RCF. Accordingly the Group had total unused credit facilities of TNOK 85 057. Interest bearing debt is recordedat amortised cost, and the table below specifies the actual repayment schedule. At year end 2013 all interest bearing debt wasdenominated in NOK.

Guaranteed liabilities 2013 2012 Long-term and Short-term interestbearing debt

524 642 747 657

Total guaranteed liabilities 524 642 747 657

Average interest rate NOK loans 8.02 % 4.88 %

Debt amortisation profile 2013 2014 2015 Thereafter Total Revolving and overdraft creditfacilities

- - - - -

Interest bearing debt - - - 524 642 524 642 Total - - - 524 642 524 642

The bond Agreement held by AGR Petroleum Services Holdings AS, entered into with Norsk Tillitsmann (on behalf of thebondholders) and the Revolving Credit Facility Agreement entered into with DNB Bank ASA includes the followingfinancial covenants as per 31 December 2013:

Financial Covenants

(a) Net Interest Bearing Debt (NIBD) to EBITDA ("Gearing ratio")

The Borrower shall ensure that the Group maintains a maximum Gearing Ratio as follows:

Relevant Period ending: Gearing Ratio: 31 March 2013 5.50 30 June 2013 5.25 30 September 2013 5.00 31 December 2013 4.75 31 March 2014 4.75 30 June 2014 4.50 30 September 2014 4.25 31 December 2014 4.00 31 March 2015 3.75 30 June 2015 (and each Relevant Period thereafter) 3.50

In addition, the Borrower shall ensure that the Group maintains an Interest Cover ratio (EBITDA to Net Interest Expense)above 2.0.

According to the bond and the RCF agreements, there are other conditions related to dividends, disposals of assets,substantial change in the nature of business, mergers and further encumbrances.

The Group's long-term debt is secured by pledge in certain assets. AGR Petroleum Services Holdings AS has issued anegative pledge which includes the majority of its subsidiaries. Subsidiaries that are defined as obligors under AGR's loanagreement are jointly and severally liable for the group's debt.


Note 22 Other Current Liabilities

NOK 1 000

2013 2012

Holiday pay and wages due 54 463 82 650 Advances from customers 4 553 17 221 Incurred interest cost 6 785 1 568 Accrued grants received for R&D - 43 389 Other creditors 7 699 5 499 Accrued costs 33 274 37 087 Market value of financial instruments - 3 618 Other current liabilities 6 136 29 349 Current liabilities 112 911 220 382

NOK 1 000

Note 23 Outstanding from Associated Companies

Specification of outstanding from associated companies 2013 2012

Receivables 753 - Payables (889) - Net outstanding from associated companies (136) -

Outstanding balance from AGR Energy AS in which AGR Petroleum Services Holdings AS holds 44 % of the shares.

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weightedaverage number of ordinary shares in issue during the year excluding ordinary shares purchased by the company and held astreasury shares ( Note 18 Share Capital and Premium). There are no dilution effects as the company has no convertible bondor stock option plan.

Note 24 Earnings per Share

NOK 1 000

Basis for calculation of earnings per share 2013 2012

Net result allocated to shareholders from continuing operations 77 146 281 60 682 054 Net result allocated to shareholders including discontinued operations 80 710 935 (126 903 079) Weighted average number of outstanding shares excluding treasury shares 125 198 977 124 130 169

Earnings per share from continuing operations (NOK) 0.62 0.49 Earnings per share including discontinuing operations (NOK) 0.64 (1.02)


Note 25 Wages, Fees, Number of Employees etc.

NOK 1 000

2013 2012

Wages 379 200 300 941 Employers' social security contributions 35 790 36 599 Pension costs 10 982 9 762 Other remunerations 23 621 41 912 Capitalised wages (305) (2 151) Total 449 288 387 062Average number of man-labour years 370 424

Pension costs are described in detail in Note 19 Pensions and Pension Commitments.

Accumulated expenses for wages, pension premiums and other remuneration to managing director, other Group executivesand members of the parent company's board accordingly for 2013 and 2012 were:

Management Directors (MD): Wages Bonus Pensionpremiums

Otherremuneration

Total

Åge Landro - Chief Executive Officer 2 199 536 64 40 2 838Svein Sollund - Chief Financial Officer 2 338 473 65 18 2 893Sjur Talstad - EVP Norway & Russia 3 363 1 716 344 221 5 644Tove Magnussen - SVP HSEQ 1 727 139 73 44 1 983Patrick McKinly - EVP Americas 1 379 235 55 - 1 669Ian Burdis - EVP UK & West Africa 2 259 203 165 - 2 628Bruce Roebuck - EVP Asia Pacific 2 031 46 209 - 2 287Petter Mathisen - VP Software Solutions(01.06.13 - 31.12.13)

642 - 37 13 692

Eivind Reiten - Chairman 450 - - - 450Thomas Nilsson - Board member 200 - - - 200Total 16 590 3 347 1 012 335 21 284

2013

Sverre Skogen, former CEO for the Group resigned from his position in March 2012. In accordance with his employmentcontract he receives salary during his termination period plus twelve months severance pay. In 2013 this amounted to NOK3 298 thousand.

Management Directors (MD): Wages Bonus Pensionpremiums

Otherremuneration

Total

Sverre Skogen - Chief Executive Officer 2 648 745 62 20 3 475Svein Sollund - Chief Financial Officer 2 214 2 628 62 19 4 922Åge Landro - EVP Petroleum Services(01.04.12 - 31.12.12)

781 649 46 5 1 480

Tove Magnussen - SPV HSEQ 1 599 245 69 25 1 938David Hine - EVP Enhanced DrillingSolutions

2 002 422 61 14 2 500

Erling Storaune - EVP Americas 2 089 514 115 1 484 4 202Ian Burdis - EVP UK & Asia Pacific 1 891 402 143 - 2 437Johan Jacob Møller Warmedal - EVPTools & Technology

2 755 375 66 15 3 211

Sjur Talstad - EVP Norway & Russia 3 326 489 63 191 4 070

2012


Eivind Reiten - Chairman 450 - - - 450Thomas Nilsson - Board member 200 - - - 200Total 19 955 6 468 688 1 773 28 884

Bonus disclosed for 2013 is the amount paid in 2013 based on performance achieved in 2012. Bonus disclosed for 2012 isthe amount paid in 2012 based on performance achieved in 2011.

Per 31.12.13 and per 31.12.12 there are no loans or guarantees to the group CEO or to members of the board. No relatedparties to these have loans or guarantees from AGR.

The termination period for the Executive Management is between 3 to 6 months notice. In addition to salary during thetermination period the Executive Management are entitled to 0-12 months of severance payment.

The main principles for AGR management remuneration policy are that executive management shall be offered competitiveremuneration, when salaries, benefits in kind, bonuses and pension arrangements are taken into consideration.

Remuneration policy:

Main principles

As a guideline, compensation in the form of a cash bonus in addition to base salary may be offered to executivemanagement. Such bonuses shall however, be limited to certain percentages of the base salary and to achievement of certainpredetermined objectives. Guidelines for distribution of bonuses shall be determined by the Board of Directors, afterconsulting with the company’s remuneration committee.

Bonuses and other additional benefits

Executive management shall as a general rule be entitled to participate in pension schemes that ensure pension benefits inproportion to their level of salary as employees. The executive management of the company are members of the company’scollective pension scheme.

In respect of severance payments or benefits these will be agreed on an individual basis. Some of the current members of theexecutive management have rights to severance payment, corresponding to 0 to 12 months base salary, if their employmentis terminated by the company. As a guideline severance payments shall be in accordance with the company’s main principles,i.e. that the level of remuneration shall be competitive when all benefits are seen as a whole.

Information concerning the share investment program is in Note 37 Share Investment Program. Share investment program

Auditor's fee The Board has reviewed the level and distribution of fees paid to EY, and considers them to be appropriate.

Specification of auditor's fee excl. VAT 2013 2012 Fees for audit of annual accounts 2 607 2 007 Fees for other attestation services - 18 Fees for tax-related services 638 1 248 Fees for other services* 648 1 170 Total 3 893 4 443

* Fees for other services includes due diligence service and various technical assistance.


Note 26 Provisions

AGR acquired 80 % of the share capital of Steinsvik Co AS in May 2012 for a cash consideration of NOK 27 604thousand. The guaranty amount was NOK 1 500 thousand, and was released in November 2013.

NOK 1 000

2013 2012 Balance

Other provisions 357 771Guaranty amount - 1 500Total provisions 357 2 271

The Group has entered into the following operating lease agreements for tangible assets not recognised in the balance sheet,but expensed as incurred:

Note 27 Leasing Costs

NOK 1 000

2013 2012

Land, buildings and permanent property 29 507 29 508 Apartments 1 277 1 138 Machinery and operating equipment 1 306 679 Total 32 091 31 325

The Group has entered into lease agreements for premises, among others at Straume, Oslo, Trondheim and Stavanger inNorway, Houston in USA, Aberdeen in UK, Perthin Australia, Moscow in Russia and Abu Dhabi in United Arab Emirates.The Group has not entered into non-cancellable operating leases.

NOK 1 000

Note 28 Financial Income and Expences

2013 2012 Interest income 4 699 15 589 Currency gain 166 756 162 637 Other financial income 836 1 014 Unrealised gain/(loss) of financial instruments calculated at fair value* - 6 383 Financial income 172 292 185 623

Interest expense (45 570) (26 352)Currency loss (124 087) (167 293)Other financial expense (17 998) (24 344)Financial expense (187 655) (217 989)

Share of loss of an associate (4 333) -

Net financial items (19 697) (32 366)

*The Group held no Foreign Exchange derivates at year end 2013. Gain on interest rate swap was NOK 6 383 thousand in2012.


Note 29 Financial Market Risk

The Group has financial instruments linked to ordinary activities such as trade debtors, trade creditors and similar. Short-term and medium-term interest rate risk arises from floating interest rates on parts of the company's debt. The Group heldboth interest rate collar swaps and interest rate swaps until Q2 2013, but had no interest rate derivatives at year end 2013.

The Group´s credit risk exposure is considered to be low. The majority of the Group's debtors are publicly listed Norwegianand international oil companies. The Group seeks to obtain financial guarantees from debtors where the credit risk andexposure is considered to be high. In addition, majority of the Group´s receivables are credit insured in order to reduce creditrisk.

A proportion of the Group's turnover is in foreign currencies, primarily USD and GBP. As a result of internationaloperations, the Group is exposed to fluctuations in currency exchange rates.

The group held no FX derivatives at year end 2013, however new FX derivatives contracts were entered into in January2014. The Group is not directly exposed to fluctuations in commodity prices. Below is an outline of the Group's turnover,trade debtors and -creditors converted into NOK at balance sheet date:

NOK 1 000

2013 2012Currency Currency in

1 000 In NOK

1 000 Share % Currency in

1 000 In NOK

1 000 Share %

Total operating revenue: AUD 13 771 78 064 6 % 10 475 63 202 5 % BRL - - 0 % - - 0 % CAD - - 0 % - - 0 % DKK - - 0 % - - 0 % EUR 1 191 9 118 1 % 1 031 7 751 1 % GBP 32 248 295 174 21 % 39 617 364 676 28 % NOK 614 408 614 408 44 % 490 146 490 146 38 % SEK - - 0 % - - 0 % USD 68 080 397 076 28 % 60 552 352 362 27 % Other* - 664 0 % - 3 256 0 % Total 1 394 502 100 % 1 281 394 100 %

Trade receivables: AUD 3 094 16 787 5 % 6 572 37 970 8 % BRL - - 0 % 467 1 269 0 % CAD - - 0 % 283 1 584 0 % DKK - - 0 % - - 0 % EUR (628) (5 247) (1) % (951) (6 980) (1) % GBP (1 073) (10 787) (3) % 15 152 136 301 28 % NOK 147 869 147 869 40 % 132 227 132 227 28 % SEK - - 0 % - - 0 % USD 36 700 223 372 60 % 31 048 172 631 36 % Other* - 581 0 % - 3 313 1 % Total 372 574 100 % 478 315 100 %

Trade payables: AUD 1 494 8 108 5 % 2 504 14 467 3 % BRL - - 0 % 98 265 0 % CAD - - 0 % 448 2 505 1 % DKK - - 0 % - - 0 % EUR 26 222 0 % 664 4 861 1 % GBP 2 696 27 104 18 % 6 496 58 422 13 %


NOK 70 529 70 529 6 % 63 696 63 696 15 % SEK - - 0 % 738 631 0 % USD 7 656 46 575 30 % 52 016 289 446 66 % Other* - 275 0 % - 3 334 1 % Total 152 814 100 % 437 627 100 %

NOK 1 000

Note 30 Related Parties

Other related parties Otherincome

2013 2012 Altor Equity Partners AS (rental of premises) - 184 Total - 184

Key management personnel Purchase of goods / other operating costs 2013 2012

Acatos Consulting AS 750 750 PIR AS - 1 989 Total 750 2 739

Other related parties Purchase of goods / other operating costs 2013 2012

Altor Equity Partners AS 102 968 Altor Equity Partners AB 1 - Total 103 968

Key management personnel Trade payables 2013 2012

G & G Consultans AS - 532 PIR AS - 246 Tøkon AS - 212 Total - 990

All transactions with related parties are carried out at market prices in connection with ordinary business transactions. Thereis not given or received any guarantees related to transactions with related parties in 2013 or 2012. There is not recognisedany provision for doubtful debts related to the amount of outstanding balances, and there is not recognised any expenseduring 2013 or 2012 in respect of bad or doubtful debts due from related parties.

During 2013 AGR Group was in a legal dispute with Hyperdynamics. In accordance with IAS 37.92 the Group does notprovide further information on this dispute in order not to impair the outcome of the proceeding.

Note 31 Contingencies

An invoice and demand for settlement for approximately $5.8 million has been presented to the Group by Awilco Drillingplc (“Awilco), a drilling contractor, in respect of services it claims were performed during January 2012 on a contractbetween the parties., The services were allegedly performed for a customer of the Group, Antrim Energy Inc (‘Antrim’). Thisliability has not yet been accepted pending the outcome of a dispute between the Group and Antrim. The directors, basedon legal advice, understand that the Group has an agreement with Antrim, which, in their opinion, provides the Group withan enforceable indemnification against any costs arising in connection with the claim from Awilco, however Antrim arepresently disputing this.


A claim for approximately $47.3 million has been made against the Group by SCS Corporation in respect of cost over-runsincurred against the pre-estimate of costs for the Sabu-1 well which was completed in 2012. A defence and counterclaim for$22.2 million has been made by the Group against SCS Corporation in respect of amounts outstanding under the contract.The directors are of the opinion that the claim by SCS Corporation can be successfully resisted by the Group.

An invoice and demand for settlement for approximately $10.25 million has been made against the Group by Jasper DrillingPrivate Limited, a service provider, in respect of services it claims were provided under a contract between the parties for theultimate benefit of a customer of the Group, SCS Corporation. This liability has not been accepted pending the outcome ofthe dispute between the Group and SCS Corporation, as well as management’s concerns about the validity of various lineitems being claimed.

AGR Group ASA sold its shares in AGR Field Operations Holdings AS to Oceaneering AS on 20 December 2011. Thisagreement includes regular sales guarantees for such transaction. The guarantee is not secured by pledge. It is the company’sassessment that it is not probable that a cash outflow will be required to settle the guarantee, therefore, no liability for theguarantee has been recognised.

The Group has received grants from the Research Council of Norway in connection with research and developmentsprojects. No terms and conditions apply to these grants. The grants from the Research Council of Norway are recognised inthe balance sheet and are posted as revenue in line with depreciation on the fixed assets to which they are linked.

Note 32 Public Grants

NOK 1 000

2013 2012

Other current liability 01.01. - 30 450 Public grants received during the year 590 (52) Released to the income statement (590) (3 014) Other current liability 31.12. - 27 384

NOK 1 000

Note 33 Financial Assets at Fair Value

Specification of market-based shares: 2013 2012

Acquisition cost shares in Get Energy Inc 101 101 Conversion to market price at 31.12. 2 (8) Market value 31.12. 103 92

Short-term financial investments as at 31 December 2013 and 2012 are accounted for at fair value with unrealised gains andlosses included in the income statement.

Expenses classified as goods and consumables used are directly related to projects, such as project equipment, travellingexpenses, loading etc.

Note 34 Goods and Consumables used

AGR evaluating strategic options

Note 35 Events after the Balance Sheet Date

Following the demerger of AGR Drilling Services (renamed to AGR Enhanced Drilling after the demerger), the Board hasinitiated a strategy review for AGR Petroleum Services which constitutes the majority of the listed AGR Group ASA. AlphaCorporate Finance has been appointed as advisor and will assist in an evaluation of all strategic avenues open to thecompany.


Note 36 Assets of Disposal Group classified as held for Sale and Discontinued operations

AGR Group was demerged 7 August 2013 whereby Drilling Services was de-listed from Oslo Stock Exchange. Up to thecompletion of the demerger, the drilling segment is presented as discontinued operations. The demerger is accounted forusing the merger method. This means that the demerger has not been accounted for as a transaction, but a capital decreasebased on book values, and there are no profit and loss effect of the demerger.

The result from EDS Group AS and its subsidiaries are included in discontinued operations in the income statement for2013.

NOK 1 000

Analysis of the result of discontinued operations 2013 2012 External operating revenues 242 503 528 765 Project and other operating expenses (207 366) (484 306) EBITDA 35 137 44 459 Depreciation and amortisation (45 873) (90 234) Operating profit(loss) (10 736) (45 775) Net financial items 4 774 (40 052) Share of profit of associated companies 3 336 - Operating profit(loss) before tax (2 627) (85 827) Tax 6 192 (101 758) Profit after tax from discontinued operations 3 565 (187 585)

In 2011 AGR introduced co-investment program in AGR Petroleum Services. In May 2011 AGR Group ASA sold 42 939A-shares in its subsidiary PetCo Invest AS to key employees and board members in AGR Group ASA and AGR PetroleumServices Holdings for NOK 102 per share. PetCo Invest AS owns 90 954 shares in AGR Petroleum Services Holdings AS,corresponding to 2.1%. AGR Group ASA is the owner of the remaining 97.9%. In April 2012 Petco Invest AS increased itsownership in AGR Petroleum Services Holdings with 41 532 shares and owns 132 480 shares, corresponding to 3.1% perDecember 2012. AGR Group ASA was the owner of the remaining 96.9 %.

Note 37 Share Investment Program

Share investment program

In May 2013 the co-investment program in AGR Petroleum Services was expanded further through the establishment ofPetCo Invest II AS. AGR Group ASA owned at this time 98 000 A-shares in PetCo Invest II AS. During 2013, 73 114 A-shares were sold to key employees and the chairman of AGR Group ASA for NOK 102 per share. Petco Invest II AS owns184 589 shares in AGR Petroleum Services Holdings AS, corresponding to 4.3% at the end of 2013. AGR Group ASA(92.6%) and PetCo Invest AS (3.1%) own the remaining 95.7% per December 2013.

AGR Group ASA's shareholding in Petco Invest AS and PetCo Invest II AS following the transaction was one controlling B-share respectively. Petco Invest AS and PetCo Invest II AS have been incorporated for the purpose of investing in AGRPetroleum Services Holdings AS.

The price per share in PetCo Invest AS and PetCo Invest II AS was determined based on the estimated fair value of AGRPetroleum Services Holdings AS, using over-the-cycle EV/EBITDA trading multiples in accordance with EVCA guidelines.Accordingly, the transactions have not affected the profit and loss accounts of AGR. In order to increase the investmentsmade by PetCo Invest AS and PetCo Invest II AS, AGR Group ASA has provided loans in the form of seller’s credits with anannual interest rate of 8 %. AGR Group ASA has an option to increase its shareholding in PetCo Invest AS and PetCo InvestII AS by cash payment or set-off against any outstanding amount under the loan agreements.

The co-investment programs within AGR Petroleum Services are governed by the provisions in a shareholders agreement.The shareholders agreement is entered into by and between the holding company, the investment company and theparticipants in the program. Among other things the shareholder agreement will provide for drag-along and tag-alongprovisions for the event that AGR Group ASA should sell its shares in the holding company. The participants cannot sell or


transfer the shares in PetCo Invest AS and PetCo Invest II AS without the consent of AGR. If a participant in the programgives or is given notice of termination of employment before the second anniversary of the program, AGR has an option tobuy the shares at fair value.


Income Statement AGR Group ASAPARENT NOK 1 000

Year ended 31 December

Note 2013 2012

Revenue 9 452 13 092 Other operating revenue 31 550 20 761 Total operating revenue 3,4,18,19 41 002 33 853

Project cost 19 11 004 12 513 Payroll expenses 15 21 066 15 302 Depreciation, amortisation and impairments 8 1 350 1 366 Other operating expenses 5,15,16,19 11 802 23 332

Total operating expenses 45 221 52 513

Operating profit/(loss) (4 219) (18 661)

Financial income 57 375 25 886 Financial expenses 11 352 100 809 Net financial items 17 46 023 (74 923)

Profit/(loss) before income tax 41 804 (93 584)

Income tax expense/(benefit) 11 4 220 (38 098)

Profit/(loss) for the year 37 584 (55 485)

Appropriation of net income and equity transfers Retained earnings 37 584 (55 485) Total appropriation 37 584 (55 485)


Balance Sheet AGR Group ASAPARENT NOK 1 000

As of 31 DecemberNote 2013 2012

Assets Deferred tax assets 11 34 495 46 502 Intangible assets 34 495 46 502

Machinery and operating equipment 8 749 1 994 Tangible fixed assets 749 1 994

Investment in subsidiaries 2 256 919 675 143 Loan to subsidiaries 14 145 163 80 401 Investment in shares 2 689 1 496 Other financial fixed assets 35 891 30 067 Financial fixed assets 440 662 787 107

Total non current assets 475 906 835 603

Trade receivables 18 6 520 1 465 Group receivables 14 20 849 89 822 Other receivables 6 2 410 5 321 Receivables 29 779 96 608

Cash and cash equivalents 7 399 3 511

Current assets 30 178 100 120

Total assets 506 084 935 723


Balance Sheet AGR Group ASAPARENT NOK 1 000

As of 31 DecemberNote 2013 2012

Equity and liabilities Share capital 9 139 051 251 797 Treasury shares 10 - (3 492) Total paid in equity 139 051 248 305

Earned equity 342 034 649 933 Total earned equity 342 034 649 933

Total equity 10 481 084 898 237

Trade payables 18 951 1 817 Public duties payable 991 1 251 Group debt 14 14 833 18 392 Other current liabilities 13 8 224 16 026 Total current liabilities 25 000 37 485

Total liabilities 25 000 37 485

Total equity and liabilities 506 084 935 723

Oslo, 23 April 2014


Statement of Cash Flow AGR Group ASAPARENT NOK 1 000

2013 2012 Year ended 31 December

Ordinary profit/(loss) before taxes 41 804 (93 584) Income tax paid - (15) Impairment of financial assets - 91 744 Gain on sale of subsidiary (36 677) (3 289) Depreciation, amortisation and impairment of tangible assets 1 350 1 366 Change in trade receivables (5 055) 1 220 Change in trade payables (866) (6 709) Change in other accruals (11 341) (47 487) Net cash flow from operational activities (10 785) (56 753)

Cash outflows for additions to equipment (105) (1 564) Cash inflows/outflows from group debtors 652 34 912 Cash inflows from sale of shares in subsidiaries - 5 882 Cash outflows for purchase of shares (3 734) Cash inflows from sale of shares 7 458 2 150 Cash inflows from capital reduction of shares 789 388 Cash inflows from sale of treasury shares - 1 000 Cash outflow from demerger (1 120) - Net cash flow from investment activities 7 673 39 034

Dividend paid - (700 219) Net cash flow from finance activities - (700 219)

Net change in cash and equivalents (3 112) (717 939)

Cash and equivalents at start of period 3 511 721 450

Cash and equivalents at end of period 399 3 511


Notes

Note 1 Accounting Principles

AGR Group ASA and its subsidiaries, is a leading supplier ofservices and technology to the oil and gas offshore industry.The company’s main operations are based in Oslo, with anoffice in Abu Dhabi. The company provides managementservices to subsidiaries of the group in addition to having asales office in Abu Dhabi.

The company is a limited liability company incorporated anddomiciled in Norway. The address of its registered office isKarenslyst allè 4, 0278 Oslo. The consolidated financialstatement is published on www.agr.com. The Company islisted on the Oslo Stock Exchange.

AGR Group was demerged 7 August 2013 whereby DrillingServices was de-listed from Oslo Stock Exchange. Thedemerger is accounted for using the merger method. Thismeans that the demerger has not been accepted for as atransaction, but a capital decrease based on book values, andthere are no profit and loss effect of the demerger.

The demerger was implemented with effect from 1 January2013.

The financial statements have been prepared in accordancewith the Norwegian accounting act and accounting principlesgenerally accepted in Norway (NGAAP). The preparation offinancial statements requires management to makejudgements, estimates and assumptions that affect thereported amounts of revenues, expenses, assets, liabilities, andthe disclosure of contingent liabilities.

The financial year follows the calendar year. Incomestatement items are classified by nature.

Effects of changes in accounting policies and correction ofmaterial errors in previous annual financial statements arerecognised directly in equity. The comparative figures arerestated accordingly.

Changes in accounting policy and disclosures

Subsidiary companies are valued in accordance with the costmethod in the company accounts. The investment iscalculated according to acquisition cost of the shares unless awrite-down has been required. Group contributions areentered as revenue in the same year as allocation in thesubsidiary company is made. If distribution exceeds ratio ofretained earnings for the ownership in the period, the excesspart is accounted for as a repayment of invested capital andrecognised as a reduction of investment in the balance.

Subsidiary companies

Assets meant for permanent ownership or use is classified asnon-current assets. Assets held as a part of the company'sservice cycle and is expected to be realised or used during thecourse of the unit's normal production period are classified ascurrent assets. Receivables are classified as current if they areto be settled within one year. Analogous criteria apply forliabilities.

Classification and valuation of balance sheet items

Non-current assets are valued at historical cost. Tangible fixedassets that deteriorate in value are depreciated on a linearbasis over estimated financial lifespan. Tangible fixed assetsare written down to real value in the event of a permanentdecrease in value. Long-term liabilities in NOK, excludingother provisions, are entered in the balance sheet at nominalvalue at the time they arise. Provisions are discounted if theinterest rate element is material.

Current assets are valued at the lowest of acquisition cost andfair value. Current liabilities are entered at nominal value atthe time they arise.

The company’s business consists primarily of corporateservices to subsidiaries of the group. Services are recognisedin the time of execution. Revenue is recognised when theamount of revenue can be reliably measured, it is probablethat future economic benefits will flow to the entity andwhen specific criteria have been met.

Sales revenue

The company’s business of services related to personnel andequipment hire are recognised based on daily/monthly ratesand actual registered hours. Revenue is recognised when it isprobable that transactions will generate future economicbenefits that will flow to the company and the revenueamount can be reliably estimated. Revenues from the sale ofgoods are recognised in the income statement once deliveryhas taken place, the risk has been transferred and thecompany has established a receivable due by customer.Income is presented without value added tax and after anydiscounts.

Revenues relating to projects are recognised in the incomestatement in line with the project’s progress and when theproject’s results can be reliably estimated. Level of completionis calculated as an incurred cost's percentage of anticipatedtotal cost. For projects expected to generate a loss, the fullestimated loss is recorded as cost immediately.

Accrual in the financial statements is based on comparison ofrevenues and expenses during the period. Unrealised losses

Comparison principle


that are probable and quantifiable, and unconditionalcommitments and orders are expensed in accordance withgenerally accepted accounting principles.

Monetary items in foreign currency are converted accordingto the exchange rate of the balance sheet date. Foreignexchange gains and losses are recognised in the profit and lossaccount and are classified as financial items.

Currency

Contingent liabilities are recognised if there is more than50 % chance that they will have to be settled. Best estimatesare used in calculating the settlement value. Provisions forcontingencies inherent in the product cycle or with theexpected settlement date within one year from the balancesheet date are classified as current liabilities. Other provisionsare classified as provisions for liabilities under long-term debt.

Contingent liabilities and contingent assets

The company has entered into a contribution plan for itsemployees. Contribution plan comprise arrangementswhereby the company makes annual contributions to theemployees’ pension plans, and where the return on thepension plan assets will determine the amount of thepension. The premium related to the contribution plans areexpensed when occurred as operating expenses.

Pensions

Income is classified as extraordinary if they are unusual,irregular and material considered in relation to the company’sbusiness.

Extraordinary income and expenses

Tangible fixed assets are valued at cost less accumulateddepreciation and write-downs. The costs of tangible fixedassets comprise the purchase price, including duties/taxes anddirect acquisition costs linked to making the asset fit for use.

Tangible fixed assets

Depreciation is calculated linearly based on the estimateduseful life. Expenses accrued after the asset has been takeninto use, such as repairs and maintenance, are normallyrecognised in the income statement. In cases where increasedearnings can be demonstrated as a result of repairs/maintenance, the expenditure on this will be recognised inthe balance sheet as additions to property, plant andequipment.

The write-down requirement for fixed assets is assessed ifthere are indications of impairment. If indication ofimpairment is present there are performed an estimate ofdiscounted future cash flows for assets that will continue tobe in use in the company, and an estimate of selling price lesscost of assets that are for sale. If calculation shows a value lessthan the carrying value assets will be write-down to fair value.

Gains and losses on disposals are determined by comparingthe proceeds with the carrying amount and are recognisedwithin other operating revenue or other operating expenses inthe income statement.

Short-term investments (shares classified as current) arevalued at lowest of average acquisition cost and fair value atthe balance sheet date. Dividends and other disbursementsare recognized as other financial income.

Short-term investments

Debtors and other receivables are entered in the balance sheetat nominal value less provision for bad debt. Provision forbad debt is estimated based on individual assessment of thedebtors.

Receivables

Earned, but not invoiced revenues by the percentage ofcompletion, is carried out production which according to acontract are not invoiced at balance sheet date. Completed,not invoiced production is included in the line tradereceivables. For projects where the invoicing exceeds theincome from the completed production, the net amount isincluded in other current liabilities.

Completed, not invoiced/ advances for customers

Cash and cash equivalents are defined as cash and bankdeposit.

Cash and cash equivalents

The company participates in the Group’s cash pool system.The company’s bank accounts included in the cash poolsystem, and balances on these accounts, represent exclusivelyan intercompany balance between the cash pool accountholder and the individual participant. The cash pool will thusautomatically establish credit relationships betweenparticipants and cash pool holder. In the financial statementsall transaction between the cash pool holder and participantsare recognised as intercompany balance.

When there is uncertainty associated with financial statementitem, best estimate is used. Changes in estimates arerecognised in the period in which the estimate is changed.Use of estimates is uncertain and may differ from actualresults.

Best estimate

The cash flow statement presents the accumulated cash flowfor operational, investment and financial activities. Thestatement outlines the effect that each activity has on liquidassets. The cash flow statement has been prepared in line withthe indirect model.

Cash Flow Statement

The cost of tax in the profit and loss account comprises boththe period’s tax payable, and changes in deferred tax.Deferred tax is calculated at a rate of 27% (2013) and 28%

Tax


(2012) based on the temporary differences betweenaccounting and tax values, as well as any loss to be carriedforward at the end of the financial year. Taxable anddeductible

temporary differenced that reverse or may reverse in the sameperiod is offset. Deferred tax assets are recognized when it isprobable that the company will have a sufficient future profitto utilize the tax asset. Tax increasing and tax reducingtemporary differences are disclosed net.


Note 2 Group Entities

Company Head Office Owner Equityinterest/votingshare2013

Equityinterest/votingshare 2012

AGR Australia Pty Ltd Perth - Australia AGR Group Holdings Ltd 100 % 100 %AGR Canada Inc Houston-USA AGR Group Americas Inc 100 % 100 %AGR CannSeal AS Fjell - Norway AGR Group ASA 95 % 95 %AGR Cleanup AS Fjell - Norway AGR EDS and T&T Holdings AS - 100 %AGR Central Asia AS Oslo - Norway AGR Petroleum Services AS 100 % 100 %AGR Consultancy Services AS Stavanger - Norway AGR Petroleum Services AS 100 % 100 %AGR Consultancy Solutions Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 %AGR Deepwater Technologies Inc Delaware-USA AGR Group ASA - 100 %AGR Drilling Services Canada Inc Houston-USA AGR Drilling Services Holdings AS - 100 %AGR Drilling Services do Brasil Ltda Rio de Janeiro -

Brasil AGR Drilling Services Holdings AS - 100 %

AGR Drilling Services Holdings AS Fjell - Norway AGR EDS and T&T Holdings AS - 83 %AGR Drilling Services Pty Ltd Perth - Australia AGR Drilling Services Holdings AS - 100 %AGR EDS and T&T Holdings AS Fjell - Norway AGR Group ASA - 93 %AGR Energy AS Oslo - Norway AGR Petroleum Services Holdings AS - 100 %AGR F.J Brown Inc Houston-USA AGR Group Americas Inc 100 % 100 %AGR Facilities Solutions AS Oslo - Norway AGR Petroleum Services AS 80 % 80 %AGR Group Americas Inc Houston-USA AGR Petroleum Services Holdings AS 100 % 100 %AGR Group Holdings Ltd Aberdeen - UK AGR Petroleum Services Holdings AS 100 % 100 %AGR Group Mexico Inc Houston-USA AGR Group Americas Inc 100 % 100 %AGR Group Mexico S de R.L de C.V Houston-USA AGR Group Mexico Inc 100 % 100 %AGR Marine Engineering AS Fjell - Norway AGR Group ASA - 100 %AGR Peak Solution Systems Pty Ltd Perth - Australia AGR Group Holdings Ltd - 100 %AGR Petroleum (ME) Ltd Dubai - United Arab

Emirates AGR Group Holdings Ltd 100 % 100 %

AGR Petroleum Services AS Oslo - Norway AGR Petroleum Services Holdings AS 100 % 100 %AGR Petroleum Services Holdings AS Oslo - Norway AGR Group ASA 93 % 97 %AGR Petroleum Services Inc Houston-USA AGR Group Americas Inc 100 % 100 %AGR Reservoir Evaluation ServicesKazakstan Ltd

Aberdeen - UK AGR Petroleum Services AS 100 % 100 %

AGR Seabed Intervention Ltd Aberdeen - UK AGR EDS and T&T Holdings AS - 100 %AGR Set Ltd Aberdeen - UK AGR EDS and T&T Holdings AS - 100 %AGR Solution Systems Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 %AGR Steinsvik AS Stavanger - Norway AGR Petroleum Services Holdings AS 80 % 80 %AGR Subsea AS Fjell - Norway AGR Drilling Services Holdings AS - 100 %AGR Subsea Inc Houston-USA AGR Drilling Services Holdings AS - 100 %AGR Subsea Ltd Aberdeen - UK AGR EDS and T&T Holdings AS - 100 %AGR Well Management Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 %AGR Well Services AS Fjell - Norway AGR EDS and T&T Holdings AS - 100 %Altinex Inc Houston-USA AGR Petroleum Services Holdings AS 100 % 100 %Ocean Riser Systems AS Oslo - Norway AGR Drilling Services Holdings AS - 100 %Teredo AS Oslo - Norway AGR Petroleum Services AS 100 % 100 %Tracs Consult LLC Moscow - Russia Tracs International Consultancy Ltd 100 % 100 %Tracs International Consultancy Ltd Aberdeen - UK AGR Group Holdings Ltd 100 % 100 %Tracs International Training Ltd Aberdeen - UK Tracs International Consultancy Ltd 100 % 100 %Well Design Online AS Oslo - Norway AGR Petroleum Services Holdings AS 56 % -


Subsidiary companies owned byAGR Group ASA 2013

Headoffice

Votingshare

Shares Total sharecapital

NOK 1000

Equity NOK 1

000(100 %)

Result NOK 1

000(100 %)

Book value NOK 1

000

AGR Petroleum Services HoldingsAS

Oslo 93 % 4 307 065 8 614 353 837 64 835 256 919

Investment in subsidiaries per31.12

353 837 64 835 256 919

Subsidiary companies owned byAGR Group ASA 2012

Head office Votingshare

Shares Total sharecapitalNOK1 000

EquityNOK 1 000

(100 %)

ResultNOK 1 000

(100 %)

Book value NOK1 000

AGR CannSeal AS Fjell 95 % 10 000 1 000 15 419 (4 163) 23 928AGR Deepwater Technologies Inc Delaware 100 % 100 30 815 28 341 - 11 603AGR EDS and T&T Holdings AS Fjell 93 % 3 864 969 7 730 402 897 (4 103) 378 917AGR Marine Engineering AS Fjell 100 % 1 000 100 (21 971) (6 401) 39AGR Petroleum Services HoldingsAS

Fjell 97 % 4 307 065 8 614 289 030 28 829 260 656

Investment in subsidiaries per31.12

713 715 14 162 675 143

Geographical segment reporting represents external customer sales based on the loaction of the customer.

Note 3 Geographical Segment Information

NOK 1 000

2013 2012Norway 30 251 20 767Europe 943 331Australia 128 -America 198 -Asia 9 483 12 755Total operating revenue 41 002 33 853

NOK 1 000

Note 4 Operating Revenues

2013 2012Sale of services 9 452 13 092Rental of premises 6 910 5 856Other operating revenue 5 263 107Group services 19 377 14 797Total operating revenue 41 002 33 853


Note 5 Other Operating Expenses

NOK 1 000

2013 2012Rent of premises 10 809 13 139Accrual for losses on premises (2 097) (3 595)Consulting fees 3 609 9 984Group services 1 798 1 723Other operating expenses (2 317) 2 081Other operating expenses 11 802 23 332

NOK 1 000

Note 6 Other Current Receivables

2013 2012VAT receivables 264 2 420Other current receivables 698 583Prepaid costs 1 448 2 318Other current receivables 2 410 5 321

NOK 1 000

Note 7 Cash and Cash Equivalents

2013 2012Bank deposits 399 3 511Cash and cash equivalents 399 3 511

Of which is restricted deposits: - -

The company has obtained a guarantee for tax deduction means of NOK 500 thousand.

NOK 1 000

Note 8 Fixed Assets

2013 Machinery andoperatingequipment

Total

Historical cost 01.01 5 323 5 323Additions 105 105Disposals - -Historical cost 31.12 5 428 5 428Accumulated deprecation 01.01. 3 329 3 329Amortisation of the year 1 350 1 350Disposals depreciation during the year - -Accumulated depreciations 31.12. 4 679 4 679

Book value 31.12. 749 749Depreciation rates 3 yearsDepreciation method Linear


2012 Machinery andoperatingequipment

Total

Historical cost 01.01. 1 001 1 001Historical sost 01.01. from merger 2 758 2 758Additions 1 564 1 564Disposals - -Historical cost 31.12.12 5 323 5 323Accumulated deprecation 01.01. 299 299Accumulated deprecation from merger 1 664 1 664Amortisation of the year 1 366 1 366Disposal depreciation during the year - -Accumulated depreciations 31.12. 3 329 3 329

Book value 31.12. 1 994 1 994Depreciation rates 3 yearsDepreciation method Linear

At 31 December 2012 the company had a share capital of TNOK 251 797 distributed in 125 898 308 shares, each with anominal value of NOK 2. At 31 December 2013 the company had a share capital of TNOK 139 051 distributed in 124 152393 shares. All issued shares are fully paid. The company has one share class, and all shares have equal voting and dividendrights.

Note 9 Share Capital and Shareholder Information

Prior to the demerger of AGR Group ASA in 2013, the company's own shares were deleted and the share capital washerewith reduced with TNOK 3 492 from TNOK 251 797 to TNOK 248 305. As part of the demerger, the share capital ofAGR Group ASA was reduced with TNOK 109 254 from TNOK 248 305 to TNOK 139 051 by reducing the par value ofeach share with NOK 0.88 from NOK 2 to NOK 1.12.

Shareholders in AGR Group ASA with a minimum of 1 % share of ownership, as well as shares held by executive employeesand board members including shares owned by affiliated individuals and companies, were at 31 December 2013 as follows:

NOK 1 000

Shareholders at 31 December 2013 Number of shares Equity interestAltor Oil Service Invest AS 90 308 128 72.7 %RBC Investor Services Bank 12 695 636 10.2 %Hemaca AS 2 489 759 2.0 %Invesco Perp Eur Small Comp FD 2 388 027 1.9 %Santander Investment S.A. 2 290 066 1.8 %The Northern Trust co. 1 861 821 1.5 %Verdipapirfondet DnB Navigator 1 653 881 1.3 %Verdipapirfondet DnB SMB 1 367 530 1.1 %Total shareholders with equity interest > 1,0 % 115 054 848 92.7 %Total other shareholders 9 097 545 7.3 %Total 124 152 393 100 %

Board:Eivind Reiten (indirectly owned via


Total shares owned by board members 17 679 0.0%


Management:Åge Landro (indirectly owned via

Nordstrøm Invest AS) 117 609 0.1 %

Svein Sollund (indirectly owned viaAmaldine AS)

97 165 0.1 %

Tove Magnussen 30 065 0.0 %Total shares owned by the management group 244 839 0.2 %

Shareholder overview: Shareholders in AGR Group ASA with a minimum of 1 % share of ownership, as well as shares heldby executive employees and board members including shares owned by affiliated individuals and companies, were at 31December 2012 as follows:

Shareholders at 31 December 2012 Number of shares Equity interestAltor Oil Service Invest AS 97 659 680 77.6 %RBC Investor Services Bank 7 700 514 6.1 %Hemca AS 3 489 759 2.8 %BNYBE Invesco Perp Eur Small Com 1 832 185 1.5 %Verdipapirfondet DNB Navigator 1 780 974 1.4 %AGR Group ASA 1 745 915 1.4 %Verdipapirfondet DNB SMB 1 367 630 1.1 %Aequitas AS 1 334 092 1.1 %Total shareholders with equity interest > 1,0 % 116 910 749 92.9 %Total other shareholders 8 987 559 7.1 %Total 125 898 308 100 %

Board:Eivind Reiten (indirectly owned via


Tove Magnussen 30 065 0.0 %Total shares owned by board members 47 744 0.0 %

Management:Sverre Skogen (indirectly owned via

Hemaca AS) 3 489 759 2.8 %

Åge Landro (indirectly owned viaNordstrøm Invest AS)

69 930 0.1 %

Total shares owned by the management group 3 559 689 2.8 %

NOK 1 000

Note 10 Changes in Equity

2013 Share capital Premiumfunds

Treasuryshares

Total investedcapital

Reserves Total equity

Opening balance 01.01 251 797 - (3 492) 248 305 649 933 898 238 Result for financial year - - - - 37 584 37 584 Demerger/Write down (112 746) - 3 492 (109 254) (345 483) (454 737) Treasury shares - - - - Adjustment to equity (112 746) - 3 492 (109 254) (307 899) (417 153)

Closing balance 31.12. 139 051 - - 139 051 342 034 481 084


2012 Share capital Premiumfunds

Treasuryshares

Total investedcapital

Reserves Total equity

Opening balance 01.01 251 797 - (3 632) 248 165 704 430 952 594Result for financial year - - - - (55 485) (55 485)Treasury shares - - 140 140 860 1 000Dividend - - - - (219) (219)Merger - - - - 348 348Adjustment to equity - - 140 140 (54 497) (54 357)

Closing balance 31.12. 251 797 - (3 492) 248 304 649 933 898 237

Please see Note 9 Share Capital and Shareholder Information above for more information on the capital reduction related tothe demerger.

NOK 1 000

Note 11 Tax

2013 2012Tax payable Norway - -Corrections previous years due to demerger 1 420 -Amendments, deferred tax Norway 10 588 -Tax effect from Group contribution (7 788) (38 098)Income tax expense 4 220 (38 098)

Reconciliation of tax payableTax payable - -Tax payable in balance sheet - -

Reconciliation of tax payablePre-tax result 41 804 (93 584)Expected 28 % tax cost 11 705 (26 203)

Variance, actual and expected tax cost (7 485) (11 895)

Explanation of why actual tax cost deviates from expected tax costTax effect from non-deductible costs 321 27 182Tax effect from non-taxable income (10 504) (1 205)Tax losses for which no deferred income tax asset was recognised - (37 872)Re-measurement of deferred tax - change in the tax rate 1 278 -Corrections previous years due to demerger 1 420 -Variance compared to expected tax cost (7 485) (11 895)

Calculation of tax payable:Pre-tax result 41 804 (93 584)Tax effect from non deductible costs 1 145 97 077Tax effect from non taxable income (37 514) (4 303)Group contribution received 27 815 -Amendments, deferred tax (12 807) (3 145)Loss carried forward (20 443) -Basis for tax calculation - (3 954)

Below is a specification of interim variations between account-related and tax-related values, as well as calculation of deferredtax / tax advantage at the end of the financial year.

Deferred tax


Basis for deferred tax 2013 2012 ChangeFixed assets (901) (228) (673)Provision of contracts - (13 480) 13 480Loss carried forward (126 857) (147 300) 20 443Amount linked to long-term balance sheet items (127 758) (161 008) 33 250

Calculation of deferred tax / tax advantage (35 772) (45 082) 310Re-measurement of deferred tax - change in the tax rate 1 278 - 1 278Total change deferred tax (34 495) (45 082) 10 588Deferred tax entered in balance sheetDeferred tax advantage entered in balance sheet 34 495 46 502 (12 008)

The demerger of AGR Group ASA is implemented with effect from 1 January 2013. Tax losses in AGR Group ASA arecapitalised for the part that will follow the Petroleum Services division in the demerger. This is based on the conversion ratio.In 2012 TNOK 42 664 has been capitalised in AGR Group, due to convincing evidence for future usage.

Losses carried forward 01.01.2013 is divided between AGR Group ASA and EDS Group AS. Of the total TNOK 263 035AGR Group has retained TNOK 147 300.

There is no time limit attached to the application of the loss carried forward.

Joint and severally responsibility:

Note 12 Other Long-Term Liabilities

The company does not have any interest bearing loans, but they are joint and severally responsible for the long term loan forthe Group. The Group has in its agreement with the bank issued a negative pledge, this also applies to the majority of thesubsidiaries in the Group.

NOK 1 000

Note 13 Other Current Liabilities

2013 2012Holiday pay and wages due 7 209 1 250Other incurred costs 1 015 1 295Accrual for losses on premises - 13 480Total current liabilities 8 224 16 026

NOK 1 000

Note 14 Intra Group Balances

Specification of intra group balances 2013 2012

Long term-loan to subsidiaries: AGR CannSeal AS - 80 401AGR Marine Engineering AS - 17 562 AGR Petroleum Services Holdings AS 145 163 - Total long term-loan to subsidiaries 145 163 97 962

Long term-loan to subsidiaries 145 163 97 962 Provision for bad debt - (17 562) Total long term-loan to subsidiaries 145 163 80 401


Interest charge on intra group loans was 6 month LIBOR + 7 % for 2013. For 2012 interest charge was NIBOR + 4.5 %.

Short-term group receivables: 2013 2012 AGR Australia Pty Ltd 128 90 AGR CannSeal AS - 211 AGR Cleanup AS - 454 AGR Consultancy Services AS 206 185 AGR Consultancy Solutions Ltd 334 231 AGR Drilling Services Canada Inc - 14 AGR Drilling Services do Brasil Ltda - 52 AGR Drilling Services Holdings AS - 163 AGR Drilling Services Pty Ltd - 277 AGR EDS and T&T Holdings AS - 3 522 AGR Energy AS - 7 AGR Facilities Solutions AS 21 24 AGR F.J. Brown Inc 191 193 AGR Group Holdings Ltd 2 - AGR Group Americas Inc 7 - AGR Petroleum Services AS 409 466 AGR Petroleum Services Holdings AS 18 941 76 944 AGR Seabed Intervention Ltd - 69 AGR Solution System Ltd 18 11 AGR Subsea AS - 3 188 AGR Subsea Inc - 80 AGR Subsea Ltd - 504 AGR Well Management Ltd 233 330 AGR Well Services AS - 292 ARG Petroleum (ME). Ltd 19 350 Steinsvik & Co. AS 48 79 Tracs Consult LLC - 12 Tracs International Consultancy Ltd 291 2 072 Total short term group receivables 20 849 89 822

Short-term group payables: 2013 2012

AGR CannSeal AS - 995 AGR Cleanup AS - 175 AGR Drilling Services Holdings AS - 1 651 AGR Marine Engineering AS - 39 AGR Petroleum Services AS 101 42 AGR Petroleum Services Holdings AS - 13 AGR Subsea AS - 3 506 AGR Petroleum (ME). Ltd 14 643 11 210 AGR Well Services AS - 15Tracs International Consultancy Ltd 88 746Total short-term group payables 14 833 18 392

The Norwegian companies in the Group are part of a cash pool system. The companies covered by the scheme are jointlyand severally liable for obligations under the scheme. In the list of short-term group receivables the company’s share of thecorporate account is recognised as receivables to AGR Petroleum Services Holdings AS.


Note 15 Wages, Fees, Number of Employees etc.

Accumulated expenses for wages, pension premiums and other remuneration to managing director, other Group executivesand members of the company's board accordingly for 2013 were:

NOK 1 000

2013 2012 Wages 19 133 13 072 Employers' social security contributions 1 829 2 058 Other remunerations 105 172 Other wage costs - - Total 21 066 15 302 Average number of man labour 9 14

The company is obligated to have a pension scheme for its employees, and has entered into a defined contribution plancovering all employees. The pension premium is expensed when occurred as operating expenses. The plan complies withrequirements for pension plans in Norway.


2013 Wages Pensionpremiums

Otherremuneration

Total

Chief Executive Officer 2 735 64 40 2 838

The board Thomas Nilsson 200 - - 200 Eivind Reiten 450 - - 450 Total board 650 - - 650 Total 3 385 64 40 3 488

Sverre Skogen, former CEO for the Group resigned from his position in March 2013. In accordance with his employmentcontract he receives salary during his notice period plus twelve months severance pay. In 2013 this amounted to TNOK 3298.


2012 Wages Pensionpremiums

Otherremuneration

Total

Chief Executive Officer 3 393 62 20 3 475

The board Thomas Nilsson 200 - - 200 Eivind Reiten 450 - - 450 Total board 650 - - 650 Total 4 043 62 20 4 125

Other remuneration mainly consists of electronic communication, car allowance and insurance.

The Group CEO has a bonus agreement that entitles him to up to 40 % of his annual salary based on the group’s profit. In2013 there was paid out a bonus related to the result in 2012 of TNOK 536. In 2012 there was paid out a bonus related tothe result in 2011 of TNOK 745.

Per 31 December 2013 and per 31 December 2012 there are no loans or guarantees to the Group CEO, members of theboard, members of the group management directors, or any related parties of these.


The Group CEO has a 6 month notice period and 6 month severance pay.

Specification of auditor's fee excl. VAT 2013 2012 Fees for audit of annual accounts 287 903 Fees for tax-related and corporate legislation advice - 114 Fees for other attestation services - 18 Fees for other services 268 744 Total 554 1 778

The Company has entered into the following lease agreements for tangible assets not recognised in the balance sheet, butexpensed as incurred.

Note 16 Leasing Costs

NOK 1 000

2013 2012 Land, Buildings and permantent property 10 809 13 139 Machinery and operating equipment - 3 Total 10 809 13 142

The company's lease agreement for premises at Smålonane 12-14 with Sartor Næringspark AS in 2013 was taken over byEDS Group after the demerger.

NOK 1 000

Note 17 Financial Income and Expenses

2013 2012 Interest income from group companies 9 690 7 194 Other interest income 3 045 8 862 Other financial income 7 963 6 541 Gain on sale of subsidiary 36 677 3 289 Total financial income 57 375 25 886 Interest cost from group companies (1 008) (2 347) Depreciation of shares and receivables - (91 744) Other interest expenses (6) (2) Other financial expenses (10 339) (6 716) Total financial expenses (11 352) (100 809) Net financial items 46 023 (74 923)


Note 18 Financial Market Risk

NOK 1 000

2013 2012 Currency Currency NOK Share % Currency NOK Share % Turnover: NOK 30 265 30 265 74 % 20 767 20 767 61 % GBP 93 929 2 % - - - AUD 24 128 0 % - - - USD 1 625 9 681 24 % 2 257 13 086 39 %Total 41 002 100 % 33 853 100 %

Debtors: NOK 4 676 4 676 72 % 1 316 1 316 90 % USD 303 1 844 28 % 27 150 10 % Total 6 520 100 % 1 465 100 %

Creditors: NOK 798 798 84 % 1 701 1 701 94 % USD 25 152 16 % 21 116 6 % Total 951 100 % 1 817 100 %

NOK 1 000

Note 19 Related Parties

Sales of goods/ other operating revenue 2013 2012 Sales to subsidiary 24 881 23 806 Total 24 881 23 806

Purchase of goods/ other operating costs 2013 2012 Acatos Consulting AS 750 750 Altor Equity Partners AB 1 - Altor Equity Partners AS 102 968 PIR AS - 200 Purchase from subsidiary 3 683 3 550 Total 4 536 5 468

AGR Group ASA was not involved in any significant disputes or legal action in 2013 or 2012. As a result, provision forpossible claims has not been made.

Note 20 Contingencies

AGR Group ASA sold its shares in AGR Field Operations Holdings AS to Oceaneering AS on 20 December 2011. Thisagreement includes regular sales guarantees for such transaction. The guarantee is not secured by pledge. It is the company’sassessment that it is most likely that the guarantee not will be settled, the guarantee is therefore not recognised.

Refer to Note 35 Events after the Balance Sheet Date in the Group accounts.

Note 21 Events occurring after date of balance sheet


Note 22 Share Investment Program

In 2011 AGR introduced co-investment program in AGR Petroleum Services. In May 2011 AGR Group ASA sold 42 939A-shares in its subsidiary PetCo Invest AS to key employees and board members in AGR Group ASA and AGR PetroleumServices Holdings for NOK 102 per share. PetCo Invest AS owns 90 954 shares in AGR Petroleum Services Holdings AS,corresponding to 2.1 %. AGR Group ASA is the owner of the remaining 97.9 %. In April 2012 Petco Invest AS increased itsownership in AGR Petroleum Services Holdings with 41 532 shares and owns 132 480 shares, corresponding to 3.1 % perDecember 2012. AGR Group ASA was the owner of the remaining 96.9 %.

In May 2013 the co-investment program in AGR Petroleum Services was expanded further through the establishment ofPetCo Invest II AS. AGR Group ASA owned at this time 98 000 A-shares in PetCo Invest II AS. During 2013, 73 114 A-shares were sold to key employees and the chairman of AGR Group ASA for NOK 102 per share. Petco Invest II AS owns184 589 shares in AGR Petroleum Services Holdings AS, corresponding to 4.3 % at the end of 2013. AGR Group ASA(92.6 %) and PetCo Invest AS (3.1 %) own the remaining 95.7 % per December 2013.

AGR Group ASA's shareholding in Petco Invest AS and PetCo Invest II AS following the transaction was one controlling B-share respectively. Petco Invest AS and PetCo Invest II AS have been incorporated for the purpose of investing in AGRPetroleum Services Holdings AS.

The price per share in PetCo Invest AS and PetCo Invest II AS was determined based on the estimated fair value of AGRPetroleum Services Holdings AS, using over-the-cycle EV/EBITDA trading multiples in accordance with EVCA guidelines.Accordingly, the transactions have not affected the profit and loss accounts of AGR. In order to increase the investmentsmade by PetCo Invest AS and PetCo Invest II AS, AGR Group ASA has provided loans in the form of seller’s credits with anannual interest rate of 8 %. AGR Group ASA has an option to increase its shareholding in PetCo Invest AS and PetCo InvestII AS by cash payment or set-off against any outstanding amount under the loan agreements.

The co-investment programs within AGR Petroleum Services are governed by the provisions in a shareholders agreement.The shareholders agreement is entered into by and between the holding company, the investment company and theparticipants in the program. Among other things the shareholder agreement will provide for drag-along and tag-alongprovisions for the event that AGR Group ASA should sell its shares in the holding company. The participants cannot sell ortransfer the shares in PetCo Invest AS and PetCo Invest II AS without the consent of AGR. If a participant in the programgives or is given notice of termination of employment before the second anniversary of the program, AGR has an option tobuy the shares at fair value.


Auditor's Report


Responsibility StatementWe confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2013 havebeen prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets,liabilities, financial position and profit or loss of the entity and AGR taken as a whole. We also confirm that themanagement report includes a true and fair review of the development and performance of the business and the position ofthe entity and AGR, together with a description of the principal risks and uncertainties facing the entity and AGR.

Oslo, 23 April 2014

AGR.Pioneering Achievements™www.agr.com

AGR Sustainability Report


AGR Sustainability Report

About this Report

This is AGR’s first Sustainability Report. In the future we plan to publish an annual Sustainability Report together with theAGR Annual Report during the second quarter of the subsequent calendar year. This Report covers our performance in2013.

To select the content for inclusion in the 2013 Sustainability Report, we have used the Global Reporting Initiative (GRI)Reporting Principles of materiality, sustainability context, stakeholder inclusiveness and completeness at a self-declared GRIApplicant Level C. The Applicant Level will be assessed annually.

The GRI content index is given in Appendix 1 to the Sustainability Report, giving an overview of AGR reportedperformance indicators.

AGR is an international company, with activities out of the following countries/regions:

• Norway• United Kingdom (UK)• USA• Australia• Russia• United Arab Emirates.

The major activities are out of Norway and UK and these regions are covered in this Report. Our objective is to expand theReport to also include the other regions, covering all AGR activities in the Sustainability Report for 2015. Only companieswhere AGR holds the majority of the shares (> 50%) and by that is in control of the priorities and decisions, will be includedin the Report.

AGR’s main activities are planning and execution of drilling operations, on behalf of our Clients. The impact of drillingoperations is not covered by this Report, although the revenue generated by these activities is included. AGR recommendstechnical and environmental solutions for the projects but is not the final decision maker.

AGR is a service company to the oil and gas industry, owning no assets or production. However, per 1 January 2013, AGRowned an oil company, AGR Energy, with licenses, operatorship and operation in Israel. The majority of this company(56%) was later sold (1 August 2013). In 2013, the AGR Energy operations were limited to 18 days. The AGR Energyactivities are not included in this Report.

Information about our business and financial performance is provided in our 2013 Annual Report, hence the previoussections of this Document. References are given as required.

AGR have not employed an external agency or organisation to audit the 2013 Sustainability Report.

AGR is a service company to the oil and gas industry, our Clients are oil companies and rig owners. AGR (AGR GroupASA) is listed on the Oslo Stock Exchange and the headquarters are in Oslo, Norway.

About AGR

The operational structure is based on regions, in total four, each region headed by an Executive Vice President (EVP) inaddition to the Software Solutions division.

The following AGR Companies (legal entities) are covered by this Report:

• AGR Petroleum Services AS (Norway) (100%)• AGR Consultancy Services AS (Norway) (100%)


• AGR Facilities Solutions AS (Norway) (85%)• AGR Steinsvik AS (80%)• Well Design Online AS (56%)• AGR Well Management Ltd (UK) (100%)• AGR (Group) Holdings Ltd (100%)• AGR Software Solutions Ltd (UK) (100%)• AGR Consultancy Solutions Ltd (UK) (100%)• AGR TRACS International Ltd (UK) (100%)

The AGR ownership in the different entities is given in brackets.

AGR offers services within the following areas:

• Reservoir Management• Well Management• Facilities Solutions• Consultancy Services• Software Solutions• HSEQ Services.

Well Management being the largest service, both with respect to number of personnel (29.4 %) and revenue (37%). In2013, AGR has planned and executed in total 21 wells for 6 different Clients, in 3 countries:

• Norway• Israel• Equatorial New Guinea.

For more information about the different Services, reference is made to the Annual Report and to the AGR web page, www.agr.com.

The AGR Management System is built in accordance with the following international standards:

• ISO 9001:2008 on Quality Management• ISO 14001:2004 on Environment Management• OSHAS 18001:2007 on Safety and Health Management• ISO 26000:2010 on Social Responsibility.

The system is certified (Corporate Certificates) against:

• ISO 9001:2008 on Quality Management (2010) (Norway, UK and AP)• ISO 14001:2004 on Environmental Management (2012) (Norway, UK).

AGR uses Bureau Veritas as its certification body.

AGR services and software products are marketed under thebrand AGR. In addition, some of the Reservoir Managementservices in UK are marketed under the brand AGR TRACS.

In total, AGR has 231 employees in Norway and UK, inaddition using external consultants when required.

There have been no significant changes to AGR or AGR

activities during 2013, other than the sale of AGR Energy as described in Section AGR E&P above. However, AGR Energyis not covered by this Report.


In 2013 AGR received the following awards:

Id Description From Region 1 Gold award in respect of UKCS Supply Chain Code

of Practice SCCoP - Supply Chain Code of Practice UK

2 Compliance test passed with 96% score REC - Recruitment & Employment Confederation UK

Received Awards in 2013

The following groups are considered AGR stakeholder groups:

Stakeholder Engagement

• Shareholders• Creditors• Clients• Contractors• Employees and their families• Authorities.

AGR has regular communication with our stakeholders on different levels throughout the year, reporting on status andprogress on the business, on projects, on performance as relevant. Shareholders are invited to an Annual General Meeting inMay every year.

Employee’s families are ad hoc invited to different social arrangements and given a brief status on AGR activities andperformance.

AGR does not have any regular communication with the Authorities.

Some of the stakeholder groups were involved in defining the AGR scope for our sustainability monitoring and reporting.The stakeholder groups assessed as closest to AGR were selected. In January 2012, a questionnaire was sent out to thefollowing stakeholder groups:

• Shareholders• Creditors• Clients• Contractors• Employees.

The questionnaire was fairly extensive and the same questionnaire was sent to all groups, covering all the different aspectswithin GRI. In total, 84.4% of the persons receiving the questionnaire gave feedback.

Based on the feedback, a materiality assessment was done, summarised in figure below.


The reported performance indicators are from the aspects assessed as the 10 most important as given above. In addition,performance indicators from the aspects ‘Emissions, effluents and waste’ and ‘Energy’ are reported.

The structure of the AGR highest governance body, the Board of Directors, is illustrated in figure below.

Governance, Commitment and Engagement

The Audit Committee reviews drafts of quarterly and annual accounts before these are presented to and approved by theBoard of Directors. In connection with its review of the accounts, the Committee has discussions with Management and theExternal Auditor. One of the Audit Committee’s responsibilities is to ensure that the Group has independent and effectiveExternal Audit procedures. At least once a year, the Committee meets with the Auditors without any members fromManagement present.

The duties of the Nomination Committee are to give recommendations to the General Meeting on election of shareholderelected members, and deputy members, if any, to the Board of Directors. Further, the Nomination Committee shall proposethe remuneration to the members of the Board of Directors. The Nomination Committee shall also give recommendationson election of new members to the Nomination Committee.

Furthermore, a Remuneration Committee has been established, providing advice to the Board on CEO compensation,Executive Compensation and overall guidance on bonus, share awards and remuneration for the employees of AGR.

The Chairman of the Board, Mr. Eivind Reiten, is not an Executive Officer in AGR.

Details on the Board members are given in Section Diversity and Equal Opportunities.

A list of AGR stakeholder groups is given in Section Stakeholder Engagement.

The shareholders are invited to participate and give any recommendations and/or directions to the Board through theAnnual General Meeting. Accordingly, the employees can use the AGR employed Board member for the same.


Performance Indicators

Financial Results

For an overview of the AGR financial results, reference is made to Sections above in the document.

Coverage of the defined benefit plan obligations is described in Note 19 Pensions and Pension Commitments. AGR doesnot receive any financial assistance from any government. An overview of AGR donations, charity contributions andsponsorships is given in Section Donations and Charity Contributions.

AGR does not give any financial or in-kind contributions to political parties, politicians or related institutions, in anycountry.

AGR always strives to hire locally in both regions. However, there is no specific global policy established. In the UK, theCompany needs to document that they have tried to employ locally before they can consider candidates from outside theEU. In both regions, Senior Management is defined as persons with departmental responsibility. The majority of SeniorManagement in both regions is from the local community.

Market Presence

Overall, there is a shortage of qualified personnel within the industry. AGR seeks to explore new ways of finding qualifiedpersonnel. We employ senior personnel who have retired from other companies within the industry (not full-timeemployees). Further, we contribute actively to promote oil and gas studies amongst students at university and secondaryschool.

AGR has established and implemented an Anti-Bribery and Corruption Policy in accordance with the UK Anti-bribery Actfrom 2010. This policy has been presented to all employees and employees confirm reading and understanding the intentionof the Policy by signature.

Corruption


AGR conducted anti-bribery and corruption training for the management teams in 2012, set-up by an international lawfirm.

2013 The total number of business units analysed for risks related to corruption 1 The percentage of business units analysed for risks related to corruption 50% The percentage of total number of management employees who have received anti corruption training (trainingin AGR policies and procedures) during the reporting period

100%

The percentage of total number of non-management employees who have received anti corruption training(training in AGR policies and procedures) during the reporting period

95%

Anti-corruption Training

There are in total 231 employees in AGR in Norway and the UK. Details on the employment are given below.

Employment

Employees and Supervised WorkersTotal Employees Female Male113 46 67

Total Supervised Workers1 0 1

Total Workforce Broken Down By Employees, Supervised Workers and Gender

UK

Associates Consultants11 19

Total Portion of Work Performed by Self Employed Workers or Individuals other than Employees or Supervised Workers

Breakdown of Employees Total Part-Time Female Male 10 6 4

Total Full-Time 113 40 63

Breakdown of Employees by Contract Type and Gender

Total Employees and Supervised WorkersTotal Employees Female Male116 34 82

Total Supervised Workers5 4 1

Total Workforce Broken Down By Employees, Supervised Workers and Gender

Norway

Associates Consultants Contractors0 78 16

Total Portion of Work Performed by Self Employed Workers or Individuals other than Employees or Supervised Workers


Breakdown of Employees Total Part-Time Female Male 4 2 2

Total Full-Time 112 32 80

Breakdown of Employees by Contract Type and Gender

There are no seasonal variations in the AGR employment of personnel.

AGR has a Safety organisation in Norway. The Safety organisation consists of 4 safety areas with a Safety Delegate:

Occupational Health and Safety

• Oslo Office• Stavanger Office• Trondheim Office• Offshore.


A Main Safety Delegate is elected within the Safety delegates. Per date this position is held by the Safety Delegate in theStavanger office.

The AGR Working Environment Committee (WEC) consists of 5 members:

• The Main Safety Delegate• Member elected directly from the employees, per date the Safety Delegate in Oslo• VP HR• SVP HSEQ• Representative from the Health Services provider (no voting).

The WEC has scheduled 4 meetings per year.

2013 The percentage of the employees in Norway and UK represented by the safety organisation and the WEC 51 % The percentage of the employees in Norway represented by the safety organisation and the WEC 100 % The percentage of total workforce in Norway (employees, hired personnel, contractors, consultants, associates)represented by the safety organisation and the WEC

54 %

The Percentage of Employees represented by the Safety Organisation and WEC

AGR monitors and reports HSE statistics on two levels:

• For AGR as a Company• For our Well Management projects.

While the environmental impact from the Well Management projects are not reported, ref. Section About this Report, theHSE statistics from the projects are included below.

Description1 2013 Norway UK

Injury rate (IR) for total workforce (total employees plus supervised workers) by region and gender 0 0

Injury rate for independent contractors working on-site to whom AGR is liable for the generalsafety of the working environment by region and gender

0 0

Occupational diseases rate (ODR) for the total workforce (total employees plus supervised workers)by region and gender

0 0

Occupational diseases rate (ODR) for independent contractors working on-site to whom AGR isliable for the general safety of the working environment, by region and gender

0 0

Lost day rate (LDR) for the total workforce (total employees plus supervised workers) by regionand gender

0 0

Lost day rate (LDR) for independent contractors working on-site to whom AGR is liable for thegeneral safety of the working environment, by region and gender

0 0

Absence rate (AR) for the total workforce (total employees plus supervised workers) by region andgender

2.4 % 0.7 %

Absence rate (ODR) for independent contractors working on-site to whom AGR is liable for thegeneral safety of the working environment, by region and gender

Notregistered

Notregistered

Absolute number of fatalities for the total workforce (total employees plus supervised workers) byregion and gender

0 0

Absolute number of fatalities for independent contractors working on-site to whom AGR is liablefor the general safety of the working environment, by region and gender

0 0

Fatalities broken down by cause n/a n/aThe measures taken to avoid future fatalities Risk

Managementprocesses Focus on

RiskManagement

processesFocus on

HSE Statistics for AGR


continuousimprovements

continuousimprovements

1 Minor personnel injuries (first aid incidents) are not included in the statistics. Lost day starts the first day after the incident.

Description 2013Norway UK

Fatalities 0 0Lost time incidents (LTI) 1 0Restricted Work Case (UK only, not used in Norway) 0 0Medical Treatment Incident (MTI) 0 2Recordable personnel injury incident rate (per million working hours) 0.8 23.71

High Potential Incidents 3 0Acute discharges to sea 5 0Dropped objects (E > 40 Joule) 10 1

HSE Statistics for the Projects

1In 2013, UK had in total 35 days with operation.

AGR has not been subject to fines or non-monetary sanctions for non-compliance with environmental laws and regulations.

AGR has an annual Performance Appraisal Process. Details on this Process are given below.

Training and Education

Region Total percentage employee participation UK 93 % Norway 88 %

Performance Appraisal Participation

The percentage of total employees by gender who received a formal Performance Appraisal and Review during the reportingperiod.

Region Male Female UK 91 % 95 %

Norway 82 % 100 %

Details on Appraisal and Review

Composition of governance bodies and breakdown of employees per employee category according to gender, age group,minority group membership, and other indicators of diversity are given in Tables below.

Diversity and Equal Opportunities

Norway UK % of employees by gender Female: 29.3

Male: 70.7 Female: 40.7

Male: 59.3 % of employees in Minority Groups1) 14.7 6.2 % of employees by age group Below 30: 18.1

Between 30 - 50: 62.1 Above 50: 21.6

Below 30: 32.7 Between 30 - 50: 41.6

Above 50: 25.7 % Minority Groups by gender Female: 21.4

Male: 78.6 Female: 14.3

Male: 85.7

Breakdown of Employees


1) Minority Group:

- Norway: individual that do not have a Norwegian citizenship

- UK: individual that do not have a UK citizenship

The AGR Group ASA Board of Directors consists of six members, out of which five are external.

The Board of Directors consists of 50% (3) male and 50% (3) female members and the age distribution of the members is:

Age NoAge < 30 years 0 30 < Age < 50 years 2 Age > 50 years 4

Age Distribution of Members of the Board of Directors

Based on the definition of Minority Group we have used in this Report[1], one out of six of the Board members represents theMinority Group.

Customer Health and Safety

Customer Health and Safety is only considered relevant for our Well Management projects, and avoiding Health and Safetyimpact to personnel during drilling operations executed by AGR on behalf of our Clients, is first priority.

The AGR service is related to planning of, execution of and reporting of drilling operations on behalf of our Clients. Allprojects are subject to thorough risk assessments to identify, mitigate and control risk to personnel, and we are continuouslyevaluating improvement areas. Hence, 100% of the AGR services where this is relevant are covered by this procedure.

AGR has not had any incidents (0) related to Health and Safety resulting in fines or penalty.

AGR has not had any incidents (0) related to Health and Safety resulting in a warning.


AGR has not had any incidents (0) related to Health and Safety resulting in non-compliance with voluntary codes.

An overview of AGR project HSE statistics is given in Section Occupational Health and Safety.

The AGR direct energy consumption is related to:

Energy

• AGR car, petrol car used for business travels within the Aberdeen area, replaces/limit the use of taxis, in total used269 liters of petrol during 2013.

• Use of natural gas for heating of the Aberdeen office; 21 261units = 237 354 KWh• Power consumption for heating, lighting and operation of equipment (PCs, printers, servers, kitchen machines etc).

Oslo Stavanger Trondheim Aberdeen3 Guildford1 Total power consumption in 2013 (kWh) 251 0722 259 222 26 496 498 633 43 143 Office size (m2) 2 463 1 206 80 1 669.7 475.6 Power consumption kWh per m2 101.9 214.9 331.2 298.6 90.7

Power Consumption in AGR Offices

1AGR team in Guildford moved into a new office 14.01.2013. The reported power consumption is not 100% accurate. 2Estimate based on Q3 and Q4 consumption. Not 100% accurate.3Including gas consumption, ref. above.


Emissions, Effluents and Waste

Emissions from AGR activities are related to:

• Running of offices• Travels by airplane• Company car.

An overview of energy consumption from running the AGR offices is given in Section Energy above. Estimatedcorresponding greenhouse gas (GHG) emissions are given below.

Oslo Stavanger Trondheim Aberdeen Guildford Total power consumption in 2013 (kWh) 251 072 259 222 26 496 261 279 43 143 Greenhouse gas equivalences (metric tons)1 177 183 18.7 184 30.4

Greenhouse Gas Equivalences

1Calculated by use of the US EPA Greenhouse gas equivalence calculator, http://www.epa.gov/cleanenergy/energy-resources/calculator.html#results.

The travel activities are summarised below. This overview includes project related travels as well as travels with an internalrationale, all return flights. AGR has invested in at least one video conference system in each office, to limit the travelactivities to the extent possible. These systems are frequently used, but with a potential for further use.

No of domestictravels

No of travels todestination in

Europe

No of travels todestination outside

Europe Norway 1 143 361 122 UK 370 238 210 Total 1 513 599 332 Greenhouse gas equivalences (metric tons)1,2 269.3 178.5 454.2 Greenhouse gas equivalences (metric tons), total 902.0

3.9 per employee This corresponds to the annual greenhouse

gas emissions from 188 passenger vehicles3. Average emission of GHG per citizen of the

world is 6.5 metric tons4

Summary of AGR Travels

1The following assumptions are made; domestic travels – 500 km; travels to destinations in Europe - 1000 km, travels todestinations outside Europe – 6000 km2Greenhouse gas emission factors from LIPASTO, www. lipasto.vtt.fi 3Calculated by use of the US EPA Greenhouse gas equivalence calculator, http://www.epa.gov/cleanenergy/energy-resources/calculator.html#results4www.klimakalkulatoren.no

In UK and Norway, in the order of 75% of the travels is on behalf of a Client.

The company cars used in Aberdeen consumed in total 269 liters of petrol during 2013. This corresponds to emission of 5.2metric tons of CO2 equivalences.

Effluents from AGR activities are related to normal operation of offices. This is not monitored or quantified.


Waste from AGR activities are related to normal operation of offices. We focus on limit the amount of waste generated andon sorting and recycling of waste. The following fractions are sorted:

• Paper and cardboards• Batteries• Toners• Fluorescent tubes• Glass (UK only)• Aluminum cans (UK only)• Plastics (UK only)• Electrical waste.

The different fractions are delivered through carriers with approved licenses. The amount of the different fractions is notquantified.

AGR has not had any incidents related to the environment resulting in fines or penalty.

For any comments or questions to this report, please contact the AGR SVP HSEQ, Tove Magnussen, [email protected].

Contact Details


Appendix 1 to the Sustainability Report

Application Level Assured by

ProfileDisclosure Disclosure

Level of reporting

Location of disclosure For partially reported disclosures, indicate the part not reported

Reason for omission

1.1 Statement from the most senior decision-maker of the organization. Fully Letter from the CEO1.2 Description of key impacts, risks, and opportunities. Not


Level of reporting


Reason for omission

2.1 Name of the organization. Fully About AGR2.2 Primary brands, products, and/or services. Fully About AGR

2.3Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures. Fully About AGR

2.4 Location of organization's headquarters. Fully About AGR

2.5

Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. Fully About AGR

2.6 Nature of ownership and legal form. Fully About AGR

2.7Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries). Fully About AGR

2.8 Scale of the reporting organization. Fully About AGR2.9 Significant changes during the reporting period regarding size, structure, or ownership. Fully About AGR2.10 Awards received in the reporting period. Fully About AGR


Level of reporting


Reason for omission

3.1 Reporting period (e.g., fiscal/calendar year) for information provided. Fully About this Report3.2 Date of most recent previous report (if any). Fully About this Report3.3 Reporting cycle (annual, biennial, etc.) Fully About this Report3.4 Contact point for questions regarding the report or its contents. Fully Contact Details3.5 Process for defining report content. Fully About this Report

3.6Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance. Fully About this Report

3.7State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope). Fully About this Report

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations. Fully About this Report

3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols. Not

3.10

Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g.,mergers/acquisitions, change of base years/periods, nature of business, measurement methods). Fully About this Report

3.11Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report. Fully About AGR

3.12 Table identifying the location of the Standard Disclosures in the report. Fully Appendix 13.13 Policy and current practice with regard to seeking external assurance for the report. Fully About this Report


Level of reporting


Reason for omission

4.1

Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. Fully


4.2 Indicate whether the Chair of the highest governance body is also an executive officer. FullyGovernance, Commitment and

Engagement

4.3

For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members. Fully Diversity and Equal Opportunites

4.4Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. Fully


4.5

Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance (including social and environmental performance). Not

4.6Processes in place for the highest governance body to ensure conflicts of interest are avoided. Not

4.7

Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity. Not

4.8

Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation. Not

4.9

Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles. Not

4.10Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance. Not

4.11Explanation of whether and how the precautionary approach or principle is addressed by the organization. Not

4.12Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses. Not

4.13

Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic. Not

4.14COMM List of stakeholder groups engaged by the organization. Fully Stakeholder Engagement4.15 Basis for identification and selection of stakeholders with whom to engage. Fully Stakeholder Engagement

4.16Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. Not

4.17COMM

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Not

Explanation for the reason for omission4. Governance, Commitments, and Engagement

3. Report ParametersExplanation for the reason for omission

Explanation for the reason for omission

G3.1 Content Index - Oil & Gas Sector Supplement

STANDARD DISCLOSURES PART I: Profile Disclosures1. Strategy and Analysis


2. Organizational Profile


STANDARD DISCLOSURES PART II: Disclosures on Management Approach (DMAs)

G3.1 OGSS DMAs Disclosure

Level of reporting


Reason for omission


To be reported in

DMA ECEconomic performance NotMarket presence, including local content NotIndirect economic impacts NotReserves Not

DMA ENMaterials Not

EnergyCOMM NotWater NotEcosystem services including biodiversity NotEmissions, effluents and waste NotProducts and services NotCompliance NotTransport NotOverall Not

DMA LAEmployment NotLabor/management relations NotOccupational Health and SafetyCOMM NotTraining and education NotDiversity and equal opportunity NotEqual remuneration for women and men Not

DMA HRInvestment and procurement practices NotNon-discrimination NotFreedom of association and collective bargaining NotChild labor NotPrevention of forced and compulsory labor NotSecurity PracticesCOMM NotIndigenous rightsCOMM NotAssessment NotRemediation Not

DMA SOLocal communitiesCOMM NotCorruptionCOMM Not

Public policy NotAnti-competitive behavior NotCompliance NotEmergency preparedness NotInvoluntary resettlement NotAsset integrity and process safety Not

DMA PRCustomer health and safety NotProduct and service labelling NotMarketing communications NotCustomer privacy NotCompliance NotFossil fuel substitutes Not

STANDARD DISCLOSURES PART III: Performance Indicators

Indicator Disclosure

Level of reporting


Reason for omission


To be reported in

EC1COMM

Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. Fully

Consolidated Income StatementDonations and Charity

Contributions

EC2COMM

Financial implications and other risks and opportunities for the organization's activities due to climate change. Not

EC3 Coverage of the organization's defined benefit plan obligations. FullyPerformance Indicators - Financial

Results

EC4 Significant financial assistance received from government. FullyPerformance Indicators - Financial

Results

EC5Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation. Not

EC6COMM

Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. Not

EC7COMM

Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation. Fully

Performance Indicators - Market Presence

EC8COMM

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. Not

EC9COMM

Understanding and describing significant indirect economic impacts, including the extent of impacts. Not

OG1 Volume and type of estimated proved reserves and production. Not


Level of reporting


Reason for omission


To be reported in

EN1COMM Materials used by weight or volume. NotEN2COMM Percentage of materials used that are recycled input materials. Not

EN3 Direct energy consumption by primary energy source. Fully Performance Indicators - EnergyEN4 Indirect energy consumption by primary source. NotOG2 Total amount invested in renewable energy. NotOG3 Total amount of renewable energy generated by source. NotEN5 Energy saved due to conservation and efficiency improvements. Not

EN6Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives. Not

EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Not

Aspects

Aspects

Aspects

Aspects

Aspects

Economic

Economic performance

Market presence

Indirect economic impacts

Environmental

Materials

Energy

Disclosure on Management Approach PR

Disclosure on Management Approach EC

Disclosure on Management Approach EN

Disclosure on Management Approach LACOMM

Disclosure on Management Approach HR

Disclosure on Management Approach SOAspects


EN8COMM Total water withdrawal by source. Not

EN9COMM Water sources significantly affected by withdrawal of water. NotEN10 Percentage and total volume of water recycled and reused. Not

EN11Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. Not

EN12Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. Not

EN13 Habitats protected or restored. NotEN14COMM Strategies, current actions, and future plans for managing impacts on biodiversity. Not

OG4Number and percentage of significant operating sites in which biodiversity risk has been assessed and monitored. Not

EN15Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk. Not

EN16COMM Total direct and indirect greenhouse gas emissions by weight. FullyPerformance Indicators -

Emissions, effluents and waste

EN17COMM Other relevant indirect greenhouse gas emissions by weight. Not

EN18COMM Initiatives to reduce greenhouse gas emissions and reductions achieved. NotEN19 Emissions of ozone-depleting substances by weight. NotEN20COMM NOx, SOx, and other significant air emissions by type and weight. NotEN21 Total water discharge by quality and destination. NotEN22COMM Total weight of waste by type and disposal method. Not

OG5 Volume of formation or produced water. NotEN23COMM Total number and volume of significant spills. Not

OG6 Volume of flared and vented hydrocarbon. NotOG7 Amount of drilling waste (drill mud and cuttings) and strategies for treatment and disposal. Not

EN24

Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. Not

EN25Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff. Not

EN26COMM

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Not

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. NotOG8 Benzene, Lead and Sulfur content in fuels. Not

EN28Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations. Fully

Perfornance Indicators - Occupational Health and Safety

EN29Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce. Not

EN30 Total environmental protection expenditures and investments by type. Not


Level of reporting


Reason for omission


To be reported in

LA1Total workforce by employment type, employment contract, and region, broken down by gender. Fully

Performance Indicators - Employment

LA2Total number and rate of new employee hires and employee turnover by age group, gender, and region. Not

LA3Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations. Not

LA15 Return to work and retention rates after parental leave, by gender. Not

LA4 Percentage of employees covered by collective bargaining agreements. Not

LA5Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements. Not

LA6

Percentage of total workforce represented in formal joint management-worker health andsafety committees that help monitor and advise on occupational health and safety programs. Fully

Performance Indicators - Occupational Health and Safety

LA7COMM

Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender. Fully

Performance Indicators - Occupational Health and Safety

LA8Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases. Not

LA9 Health and safety topics covered in formal agreements with trade unions. Not

LA10 Average hours of training per year per employee by gender, and by employee category. Not

LA11Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. Not

LA12Percentage of employees receiving regular performance and career development reviews, by gender. Fully

Performance Indicators - Training and Education

LA13

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity. Fully

Performance Indicators - Diversity and Equal Opportunities

LA14Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation. Not


Level of reporting


Reason for omission


To be reported in

HR1

Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening. Not

HR2Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken. Not

HR3Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained. Not

Emissions, effluents and waste

Products and services

Compliance

Transport

Overall

Social: Labor Practices and Decent Work

Employment

Labor/management relations

Occupational health and safety

Training and education

Diversity and equal opportunity

Social: Human Rights

Investment and procurement practices

Equal remuneration for women and men

Water

Biodiversity


HR4 Total number of incidents of discrimination and corrective actions taken. Not

HR5

Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights. Not

HR6Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor. Not

HR7

Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor. Not

HR8COMM

Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations. Not

HR9COMM

Total number of incidents of violations involving rights of indigenous people and actions taken. Not

HR10Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments. Not

OG9Operations where indigenous communities are present or affected by activities and where specific engagement strategies are in place. Not

HR11Number of grievances related to human rights filed, addressed and resolved through formalgrievance mechanisms. Not


Level of reporting


Reason for omission


To be reported in

SO1Percentage of operations with implemented local community engagement, impact assessments, and development programs. Not

SO9COMM Operations with significant potential or actual negative impacts on local communities. Not

SO10COMM

Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities. Not

OG10Number and description of significant disputes with local communities and indigenous peoples. Not

OG11Number of sites that have been decommissioned and sites that are in the process of being decommissioned. Not

SO2 Percentage and total number of business units analyzed for risks related to corruption. FullyPerformance Indicators -

Corruption

SO3 Percentage of employees trained in organization's anti-corruption policies and procedures. FullyPerformance Indicators -

Corruption

SO4 Actions taken in response to incidents of corruption. FullyPerformance Indicators -

Corruption

SO5COMM Public policy positions and participation in public policy development and lobbying. Not

SO6Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country. Fully

Performance Indicators - Financial Results

SO7Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes. Not

SO8COMM

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. Fully

Performance Indicators - Corruption

OG12Operations where involuntary resettlement took place, the number of households resettled in each and how their livelihoods were affected in the process. Not

OG13 Number of process safety events, by business activity. Not


Level of reporting


Reason for omission


To be reported in

PR1

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures. Fully

Performance Indicators - Customer Health and Safety

PR2

Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes. Not

PR3Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements. Not

PR4Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes. Not

PR5Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

PR6Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. Not

PR7

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes. Not

PR8Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. Not

PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services. Not

OG14 Volume of biofuels produced and purchased meeting sustainability criteria. Not

Asset Integrity and Process Safety

Product and service labelling

Marketing communications

Customer privacy

Social: Product Responsibility

Customer health and safety

Child labor

Prevention of forced and compulsory labor

Compliance

Local communities

Biofuels

Security practices

Indigenous rights

Social: Society

Non-discrimination

Freedom of association and collective bargaining

Compliance

Assessment

Remediation

Corruption

Public policy

Anti-competitive behavior

Involuntary resettlement

www.agr.comANNUAL REPORT 2012

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