annual report - agr reports/agr_annualreport_2011.pdf · 2012-10-28 · 4 annual report 2011 letter...

Annual Report 2011

AnnuAl RepoRt 20112

Content

03 KeyFigures

04 Director’sReport

21 CorporateGovernanceReport

25 Board’sStatementofSalaries

28 ConsolidatedIncomeStatement

29 ConsolidatedBalanceSheet

32 ConsolidatedStatementofChangesinEquity

33 ConsolidatedStatementofCashFlow

34 Notes

82 IncomeStatementsAGRGroupASA

83 BalanceSheetAGRGroupASA

85 StatementofCashFlowAGRGroupASA

86 Notes

104 Auditor’sReport

106 ResponsibilityStatement

3AnnuAl RepoRt 2011

03 KeyFigures

04 Director’sReport

21 CorporateGovernanceReport

25 Board’sStatementofSalaries

28 ConsolidatedIncomeStatement

29 ConsolidatedBalanceSheet

32 ConsolidatedStatementofChangesinEquity

33 ConsolidatedStatementofCashFlow

34 Notes

82 IncomeStatementsAGRGroupASA

83 BalanceSheetAGRGroupASA

85 StatementofCashFlowAGRGroupASA

86 Notes

104 Auditor’sReport

106 ResponsibilityStatement

Key FiguresAGRGroupASA-consolidated(FiguresinTNOK)

profit and loss Account 2011 2010

Operatingrevenue 1867914 1445256

EBITDA* 247182 197381

EBIT 140454 74573

Profit(loss)fromcontinuedoperations 17582 (19739)

Balance/liquidity/capital 2011 2010

Equity 1411469 665372

Cashandequivalents 820984 45519

TotalCapital 2790739 2661860

Interest-bearingliabilities 737698 1160945

Key figures per share 2010 2010

Sharecapital 251797 251797

Averagenumberofoutstandingshares 125898308 125898308

Outstandingshares31.12. 125898308 125898308

Dividendpershare(NOK) - -

EBITDApershare(NOK) 1.96 1.57

Equitypershare(NOK) 11.21 5.28

Business segment petroleum

Services Drilling

Services Group elimin. total

Operatingrevenue 1182558 710536 21431 (46610) 1867914

EBITDA 150506 140087 (43410) - 247182

*Earningsbeforeinterest,tax,depreciation,amortizationandassetwrite-down

AnnuAl RepoRt 20114

letter from the Ceo

WehaveconcludedyetanothereventfulyearforAGR.Astheturmoilinthefinancialmarketsslowlyreleaseditsgripontheindustry,welaidthefoundationforthenexterainAGR’sdevelopmentbyfocusingourfutureactivitiesmoredirectlyonthewell.TheyearwasconcludedwiththesuccessfuldivestmentoftheFieldOperationsDivision.IthadcometoastageinitsgrowthandperformancewhereitwasnaturaltolookforotheralternativesthantocontinueinAGR.WewereverypleasedtoconcludetheprocesswithOceaneering,asignificantindustryownercommittedtothecontinuedgrowthanddevelopmentofthebusiness.IamsuretheywillappreciatethehighqualityoftheFieldOperationsmanagementandemployeesandcreatefurthergrowthandvaluetogetherwiththem.

Amorefocusedcompanyhasenabledustoenhanceourwell-relatedtechnologiesandwell-andreservoircompetenceevenfurther.Wehavetwomaingoals;thefirstistomatureourDualGradientTechnology(DGD)beyondthetopholesectionsuchthatthefullwellcanbedrilledsaferandmoreefficient,andthesecondistodevelopandstrengthenourreservoirandwellmanagementteamsto

takeonmoreintegratedchallengesandopportunities.ThetechnologyinitiativeisofftoagoodstartwithcontractsforRepsolandPetronaswithourEC-Drill™configuration,whichallowsforthewellpressuretobeadjustedbyvaryingtheheightofthedrillingfluidcolumninthedrillingriser.ThefirstwelleverfromasemisubmersibletobedrilledwiththistechnologywillbespuddedQ12012.Furthermore,weremainexcitedaboutthedeploymentin2012oftheDGDtechnologyforChevrondesignedtogetherwithAGRandtobeoperatedbyusinultradeepwaters.BoththeseprojectswillbefollowedcloselybytheindustryandwillbecomeimportantreferencesforAGRandtheindustrygoingforward.Weseegreatpotentialforthistechnology.

Lastfallwewereinvitedbyourcustomerstoservetheminthecapacityasoperatorwiththepurposeofbringingourreservoirandwellmanagementteamsevenclosertogetherandcreateevenmorevaluetogether.Wesucceededinbeingselectedforthisroleonseveralexplorationlicenseslastyear,andwewillusethisreferencetopursuesimilaropportunitiesintheregionaswecontinuetodevelopourintegratedservices.

Asthedemandforourservicescontinuestogrowin2012wewillcontinuetohavehealth,safetyandtheenvironment(HSEQ)asourforemostpriority.Wewillcontinuetoworkdiligentlytoattractnewandskilledprofessionals,aswellasmaintainingthegoodspiritandhighenergyinourhardworkingandloyalemployees,whohavepioneeredAGRtowherewearetoday.

TheyearwasconcludedwiththesuccessfuldivestmentoftheFieldOperationsDivision.

Sverre SkogenCEO AGR

Letter from the CEOAGR Group ASA

5AnnuAl RepoRt 2011 5AnnuAl RepoRt 2011

Company overview

AGRGroupASA(AGR)isaleadingsupplierofservicesandtechnologytotheglobaloilandgasindustry.AGR’smainoperationsarebasedatStraume(Bergen)andOslo,withotherofficesaroundtheworldincluding,Stavanger,Trondheim,Aberdeen,Guilford,Houston,Perth,Almaty,Moscow,Dubai,AbuDhabi,TelAvivandKualaLumpur.Thecompanyprovidestechnology,expertiseandservicestoseveraloftheworld’smajoroilandgasfields,withacustomerbasecomprisingseveralsmallandmediumsizedoperators,aswellasanumberofthelargeinternationaloilcompaniesandNOCs.Attheendof2011,AGRhad1137professionals,whereof443permanentemployees,83projectemployees,584contracted-instaffand27associates.TheannualturnoverwasNOK1867million.

Corporate Governance

GoodcorporategovernanceisakeygoaloftheAGRBoardinordertoensurethatitsinvestorsandstakeholderscanbeconfidentthattheactionstakenareinthebestlongterminterestoftheCompany.AGRaimstoachievethebestpossibleprofitability,whilemaintaininganefficientandviableutilisationofthecompany’sresourcesandensuringadherencetoHSE&Qbestpracticestandards.AGRbelievesthatadheringtotheGroup’svalueswillbenefitthecompany’sshareholders,employeesandsocietyingeneral.

Corporate Governance Policy for AGR

ThispolicywasadoptedbytheBoardofDirectorson5November2007andhavethereafterbeenregularlyupdated.ItispredominantlybasedontheguidelinesonCorporateGovernanceof21October2010andupdated20October2011(AnbefalingforEierstyringogSelskapsledelse).

Throughitscompliancewiththepolicythecompanyaimstomaintaintheshareholders’trustinthecompany’sboardandmanagementaswellastheAGR’sreputation.Thepolicylaysdownprinciplesoftransparencyinitscommunicationswithstakeholders,independenceoftheboard,equaltreatmentofshareholders,andcontroltoensurepredictabilityandappropriateriskmanagement.InpursuitoftheCorporateGovernancePolicy,thecompanyhasinplaceacodeonBoardProceedings,aManagementCodeandanInsiderTradingPolicy.

TheBoardofDirectorsalsoelectedaNominationCommitteeattheAnnualGeneralMeetingin2008.

TheBoardandmanagementofarecontinuouslyassessingthecompany’srisksanditsapproachtoethics.TheBoardofDirectorshasevaluatedpotentialconflictsofinterestamongthemembersoftheboardandmanagement,andhasconcludedthattotheknowledgeoftheboardtherewerenosuchincidentsin2011.

TheCompanyhasmonthlyfinancialreportingwhichisanimportanttooltoenablesuitablecontroloftheCompanyandtomonitorprogresstowardstheachievementofitsfinancialgoals.Thisreportingenablesthecompanytobeconfidentthatitisincompliancewithstatutoryandstockexchangereportingrequirements.

InformationabouttheremunerationofCEOandexecutivemanagementin2011canbefoundinnote25intheannualaccounts.

operations

FollowingthesaleofAGRFieldOperationsandattainingoperatorlicensesinIsrael,AGRconsistsofthreemainbusinessareas;services,technologyandoperatorship.TodayAGRischaracterisedbyastrongfocusonproductdevelopmentandacommitmenttoworkwithclientstounderstandandsolvetheirindividualrequirementsrangingfromassmallasprovidingoneconsultanttodevelopinganoperatorship.WhileAGRcontinuestofocusonitsgrowthandearningsperformance,soundandethicalbusinesspracticesareparamount.

Board of Director’s Report 2011AGR Group ASA Comp. reg. no: 986 922 113

“AGRGroupASA(AGR)isaleadingsupplierofservices

andtechnologytotheglobaloilandgasindustry.”

AnnuAl RepoRt 20116

Services AGRGroupASA

Petroleum Services delivers a broad service offering within reservoir evaluations, well planning, well operations and integrated field management to the upstream oil and gas industry. Its core competencies include geology, geophysics, petrophysics, reservoir and petroleum engineering, well construction, drilling management, completion design and installation, field development planning, risk and economics evaluation. The business unit also delivers a broad training portfolio within these topics.

7AnnuAl RepoRt 2011

Sjur TalstadEVP Norway/ Russia

Norway / Russia

TheWellManagementactivityinNorwayhasbeenatasteadyhighlevelduring2011.AGRfinishedthedrillingcampaignonTheBredfordDolphinrigafter4,5yearsofoperationinQ4.AGRpioneeredtherigconsortiummodelwheresevenoperatorsenteredintoarigcontractfortheBredfordDolphinrigin2006.TheBredfordDolphincampaignhasproventhesafetyandefficiencygainofoperatingalongdrillstringformanyoperators.

TheBorglandDolphincampaignstartedoperationsinJune2011andtheriganddrillingperformancehasbeenexcellentthroughout2011.ThisrigcampaignisthesecondrigcampaignforAGRinNorwayrunningWellManagementonarigforseveraloperators.

TheReservoirManagementdivisioninNorwayhadaslowstartinthefirsthalfof2011,butactivityhaspickedupduring2011withhighdemandfromtheindustrygoinginto2012.TheReservoirManagementmarketinRussiahasimprovedcomparedto2010andhasshownastableactivitylevelduring2011.

DemandfordrillingandHSEconsultantshasgrownandthenumberofconsultantshasgrownsteadilyinNorwaythroughout2011.NewfielddevelopmentsbeingsanctionedbyNorwegianoperatorshasalsoresultedinincreasedactivityfortheAGRFacilitiesSolutionsproductoffering.

AnnuAl RepoRt 20118

UK / Asia Pacific

Overallthebusinesshasseenarecoveryinactivityin2011whencomparedwith2010.Theoilandgassectorhasseenayearofgrowthsupportedbyastablehighoilpriceonwhichtobuildupconfidenceforinvestment.WithintheUKitselfhowever,thefiscalandbankingregimeshaverestrictedthepaceofthisgrowth,particularlyamongstthosesmaller,newentrant,companieswholargelyledtheupsurgeinbusinessthroughout2007and2008.FortheWellManagementgroupthebalanceofactivityhasshiftedmoreontointernationalratherthandomesticoperations.

TheAPACregionhasbeenslowtorecoverandactivityhasnotyetrecoveredtopreviouslevels.ThemajoractivityfortheregionhasbeenthesupportofexplorationdrillingactivityforoneclientoperatinginTanzaniaandSenegal.

TheUKregioncontinuedtooperatethemulti-wellcampaignintheFalklandIslandsusingtheOceanGuardiansemi-submersiblerigwhichoriginallystartedwithafourwellprogrammein2010andcontinuedthroughout2011,endinginDecemberafterhavingdrilled16explorationandappraisalwellsforthreeclients.Duringtheyeardetailedwellandlogisticsplanningwasundertakenforasecondfourwellcampaignin2012,thistimeindeepwatertotheSouthoftheFalklandsusingtheLeivErikssontobeconductedonbehalfoftwonewclients.

TheWellManagementbusinessexpandedfurthergeographically,intoWestAfricabysettingupatwowell,deepwateroperationinRepublicofGuineausingtheJasperExplorerdrillship.OperationscommencedinSeptemberandcontinuedtoyearend.

IntheUKitselfafourwellmulti-clientprogrammewassecuredusingtheWilPhoenixsemi-submersiblewhichcommencedoperationsinJune2011andcontinuedtoyearend.

TheUKReservoirManagementdivisionexperiencedaslowstarttotheyearduetoareductioninstudieswork,however,thesecondhalfoftheyearsawastrongrecoverywithhighutilizationofstaffacrossalllocations.Thesecondhalfoftheyearsawareturnfromseveraltraditionalclientsforbothreservoirandtrainingwhohadreducedactivitythroughout2009/10.2011wasthebusiestyeartodateforAGRTRACSTraining,delivering147coursesto29clientson6continents,withBPremainingthelargestclient.Trainingalsowonthreelargemulti-yearcontractsbycompetitivetender:PetroleumDevelopmentOman,BPIraqandBGglobal.InNovemberReservoirManagementcapabilitywasestablishedinthePerthofficetosupportgrowingactivityintheAPACregion.

AGRSolutionsSystemshascontinuedtofocusonsalesanddevelopmentoftheprobabilisticwellplanningtoolP1™whichhasresultedinseveralcontractrenewalsandnewpurchasesfromseveralclients.Alargecomponentofthenewbusinesshasbeenclienttraining.TheP1™suiteofproductshasbeenextendedtoincorporatealivewellprojectcosttrackingmodule.Inadditionamaterialsmanagementtoolhasbeendevelopedwhichcanbeusedeitherstand-aloneorasanintegratedfeatureoftheP1™product.Thistoolhasbeenextensivelyadoptedinternallyandwillbeintroducedtotheexternalmarketin2012.

TheAGRConsultancybusinesshascontinuedtodeliveritstraditionalofferingofdrilling,completionandmaterialsmanagementpersonnelbuthasalsoexpandedoverthecourseoftheyearintoreservoirmanagementpersonnelandstaffrecruitment.Theoperationalactivityhasincreasedcomparedto2010whichhasresultedinatotalof263consultantscontractingthroughthebusinessbyyearendwhichrepresentsasteady5%yearonyeargrowth.

Ian BurdisEVP UK/ Asia Pacific

Services AGRGroupASA

9AnnuAl RepoRt 2011

Americas

TheU.S.officehasgrownitsactivitylevel,maintainingastrong,globalfootprintforitscoreservicesincludingwellmanagement,engineeringandwellsite/client-officebasedconsultancy.Delayedwellprogramspreviouslyplannedfor2011intheshallowshelfGulfofMexicoduetoincreasedgovernmentregulationsfromtheMacondoincidentin2010weremostlyoffsetbyanincreaseinconsultingservicesprovidedtotheU.S.landmarketandotherareas.

During2011,theconsultancymarketforU.S.basedoperatorsinWestAfricamaintaineditsstrength,asdidtheglobaldeepwatermarketingeneral.TheWellManagementbusinesssignificantlyexpandeditsactivitiesintheLatinAmericandeepwatersectorandcontinuedtoprovidedrillingandcompletionengineeringservicesforanevergreencontractsupportinganoperator’shighpressure/hightemperaturedeepandultra-deepexplorationcampaignontheshallowshelfGulfofMexico.

Duringthedrillingcampaignin2011,significantnetpaysofgasandunanticipatedoilsectionshavebeendiscovered.Thecampaign’shighlightsincludetwowellsdrilledtodepthsgreaterthan33,000feetandseveralinthe22,000-33,000feetrange.Thereareon-goingactivitiesonawellplannedtobeoneoftheworld’sdeepestcommercialcompletionsatadepthofnearly30,000feet.TheU.S.WellManagementgroupcontinuestoestablishitselfasthepremierexpertindrillingthedeepest,mostcomplexwellsintheworldpossessingextremepressureandtemperatureregimes.

Erling StorauneEVP Americas

AnnuAl RepoRt 201110

TechnologyAGRGroupASA

Enhanced Drilling Solutions

EnhancedDrillingSolutions’(EDS)cornerstonetechnologiesincludetheCuttingTransportationSystem(CTS™)andRiserlessMudRecoverysystem(RMR™).During2011,AGRcelebrateditswellnumber500withtheuseofRMR™orCTS™.

Bothtechnologiesweredevelopedin-housebyAGR,whichownsallpropertyrightsassociatedwiththetwosystems.TheRMR™encompassesasubseapumptherebyenablingaclosed-loopcirculationsystem.Thesystemimprovesdrillingoperationsbyreducingtheriskandcostofdrillingtop-holesections;italsoreplaces“pump-and-dump”andensureszerodischargetotheenvironment.

During2011,28wellsweredrilledwiththeRMR™fleet.Thetechnologygainedfurtheracceptanceinthemarketandthenumberofframecontractsincreasedsignificantly.Inaddition,theEDScustomerbaseincreasedfrom28to36.

In2011,furtherconceptualstudieswereundertakentoutilizetheRMR™systeminManagedPressureDrillingapplications,whereconventionaldrillingpracticesarenotsufficienttoreachthereservoir.Duringdrillingwith

ariserorconductorpipe,AGR’sEC-Drill™systemcanbeeffectivelyusedtomanagethebottomholepressureofawellinchallengingzoneswhereEC-Drill™willeaseand,insomecasesenable,thedrillingofthewell.ControlledMudPressure(CMP™),isatechnologyformanagingECD(EquivalentCirculatingDensity)effectsincludingwellcontrolareexpectedtobetrialedin2012.Theseenablingtechnologiesarebasedonpatents,licensesandcoretechnology,plusknow-howasaresultoftheprovenRMR™technology.Theyalsorepresentnext-generationsystemsinadditiontotheRMR™.

InBrazil,AGRsuccessfullydeliveredtwoRMR™+EC-Drill™JackUpwellsaspartofacontractwithPetrobras.Inaddition,AGRRMR™technologyenabledtheworldrecordsettingofcasingtogetherwithWoodsideAustraliaincombinationwithCasingWhileDrilling(CwD).

In2011,AGRwasawardedatwowellcontractwithRepsol/PetronasfortheprovisionofManagedPressureDrilling(MPD)services,AGR’sEC-Drill™technology.

ThedevelopmentofRDS™(RiserlessDrillingSystem)continuedin2011.Itenablestheconstructionoftheentirewellwithouttheuseofamarineriser.Itrepresentsastepchangeinriskreduction,inparticularindeepwater.

David HineEVP Enhanced Drilling Solutions

“Cornerstonetechnologiesthatbreakworldrecords,aredevelopedin-housebyAGR”

11AnnuAl RepoRt 2011

Tools & Technology

Tools&Technologiesholdsavarietyoftoolstoassistwithoffshoreandonshoreoperations.

Well SeRviCeS WellServicesprovidesclean-outtoolsusedtoremovedebrisfrominsidethewellbore.ThemainmarketsareinNorwayandSaudiArabia,bothofwhichsawactivitylevelsin2011thatwereonparwith2010.

WellServicesalsooperatestheDynamicDesander(DDS)technology,whichremovessolidsduringwelltestingandwork-overoperations.TheDDScontinuestobeusedonallinitialcleanupsofwellsinSaudiArabia,whereastrictzero-flarepolicyisenforced.ThenumberofoperationaldaysfortheDDSwasinSaudiArabiaduring2011levelwiththatof2010.Thenumberofwellstestedincreased,buteverywellspentfewerdaystestingduetoenhancedwelltestingprocedures.ThebuildingandassemblyofanadditionaltwoDDSswasstartedtowardtheendof2011toprepareforincreasedmarketpenetrationontheNorwegianContinentalShelf,wheretheDDSwillbeusedtoremovesolidsduringclean-upoperationswithCoiledTubing.

SeABeD inteRvention TheSeabedInterventionproductline(previouslycalledTrenching&Excavation)undertakesseabedexcavationandtrenchingtoprepareforsubseapipelinesand–structures,aswellasburial/deburialofsuchstructures.SeabedInterventionexperiencedanunprecedentedactivitylevelduring2011.Themaincontributorwastheseabedlevelingandpre-layingtrenchingoftheOrmenLangefieldforShell.

CAnnSeAl™ CannSeal™isauniquetoolforsealingoffwaterandgasinflowintooilwells.Usingaspecializedresinitcreatesabarrierintheannulusafterthewellhasbeencompleted.Thetoolwasqualifiedforzonalisolationin2010.During2011,furtherdevelopmentofboththeresinandtooltookplacetoaccommodateclients’expressedneeds.Acommercialagreementwasfoundwithoneclienttodevelopa3.3”versionofthetool,therebyextendingthepre-operationalphaseuntil2012.

AGR energy

During2011AGRestablishedAGREnergy.ThiscompanyisOperatorofseverallicensesinIsrael,holding5%ofeachlicense.ThisnewbusinesslineisbringingtogetherseveralofAGR’sareasofexpertiseandenablingAGRtotakeastakeinthelicenseswherethatisrequired.

AGR Field operations

20December2011AGRASAannouncedthatithadclosedatransactionwherebyitsFieldOperationsdivisionwassoldtoOceaneeringASat1.365MNOK.

“Avarietyoftoolstoassistwithoffshoreandonshore

operations”

Johan Møller WarmedalEVP Tools & Technology


Research & development 2011

TechnologyisacorepartofAGR´sbusinessandithasanumberoftechnologiesindevelopment.During2011NOK48millionwasinvestedinresearchanddevelopmentandthisincludessomesignificantprojectsthatwerestillindevelopmentatyearend2011,suchas:

ContRolleD MuD pReSSuRe – CMp™TheCMP™projectisaDemo2000JointIndustryProject.ThepartnersareDemo2000,BG,BP,StatoilandAGR.ThegoaloftheprojectistoenabledualgradientdrillingcapabilitiesbyemployingcurrentAGRpumptechnologyaftertheblowoutpreventer(BOP)andriserhavebeenmountedonthewellhead.During2011,anumberofdrillingproceduresweredeveloped,mostimportantlyproceduresforhandlingformationinfluxes.ThenextphaseoftheCMP™projectis“FieldTrial”,variouscandidatewells/opportunitieswerepursuedin2011.Itisanticipatedthatafieldtrialwillbeundertakenin2012.

eC-DRill™EquivalentCirculatingDensity(ECD)effectsarisefromfluidfrictionallossesinthewellbore.ECDeffectscauseundesirablevariationsinbottomholepressureduringdrilling.TheEC-Drill™conceptsolvestheseproblemsandmovesAGRintothefieldofManagedPressureDrilling(MPD).During2011AGRcompletedFEEDaswellasdetaileddesign,manufactureandtestofafullEC-Drill™systemincludingback-up.Inlate2011thesystemwasshippedforinstallationonthedrillingriginpreparationfora2012spud.

RiSeRleSS DRillinG SySteM - RDS™EnhancedDrillingSolutionsisdevelopingconceptualdesignstoenableitscurrentpumpingtechnologiestoconvergeintoaRiserlessDrillingSystem(RDS™).RDS™eliminatestheneedforacostlymarineriserandtherebymakesitpossibletodrilloffshorewellsatsignificantlylowercost.

puMpinG teChnoloGyToexpandtheoperatingrangeofitscurrentproducts,AGRisdevelopingitsComputationalFluidDynamics(CFD)capabilities.Thisallowsacost-effectiveevaluationofadditionalpumpingtechnologiesandfurtherimprovementsofcurrenttechnologies.

CAnnSeAl™ Astheonlytoolintheworld,CannSeal™canestablishahydraulicsealbehindcasingortubinginanexistingwell,allduringasinglewirelinerun.Extensivedevelopmentandtestingwasperformedduring2011toensurethatallrequirementsforanannularwellbarrieraremetfortheconceivabletemperature-andpressurescenarios:

•Impermeable

•Longtermintegrity

•Noshrinkage

•Ductile–abletowithstandmechanicalmovements

•Resistanttodifferentchemicals

•Wetting,toensurebondingtosteel

Theresultisaclientpaiddevelopmentprojectstartedin2011toexpandtheexistingequipmentportfoliowithtwo3.3”tools.Ourclientsarecommittedtodeployingboththe4.4”andthe3.3”toolsinlivewellsduring2012,thusmaking2012thefirsttrulycommercialyearforCannSeal™.

DynAMiC DeSAnDeRBeingindependentofflowratesandworkingpressure,theDynamicDesanderisuniquelypositionedworldwidetohandletheremovalofsolidsdownto40micronsinsizefrommostconceivablestartup-andworkoverwells,withouteverhavingtohaltproductionorotherwiseaffectit.

During2011,AGRdesignedandproducedthetwofirstgeneration6DynamicDesanders.Theymeetthemoststringentclassificationrequirementsandwillbeputtoworkoncoiledtubingclean-upoperationsontheNorwegianContinentalshelf.Tomeettheincreasingdemandglobally,another3unitsarescheduledtobeproducedin2012.

Expensesrelatedtoresearchanddevelopmentarerecognisedonthebalancesheetaccordingtotheaccountingprinciplesinnote01.

DynamicDesander™-DDS

CannSeal™


2011 Key events

JAnuARy:EnhancedDrillingSolutions(EDS)signeda12-monthcontractwithBP,potentiallyworthNOK110m.

ThecontractwasforEDS’RiserlessMudRecoverysystem(RMR™),whichenablesoperatorstodrilltop-holesmoresafely,quicklyandcleanly.BPusedtheRMR™technologyonitsCaspianSeaoperations.

FeBRuARy:EnhancedDrillingSolutionsandNorskeShellASsignedaletterofintentforacontractworthNOK84m(£9m).TheexcavationandtrenchingtechnologyClayCutterX™waschosenbyShellfortheextensionprojectinthenorthernpartoftheOrmenLangefield.Theworkinvolvedseabedlevelingandpre-laytrenchinginthestiffsoilsofEurope’sthird-largestgasfield.

MARCh:AGR´sMulticurrencyRevolvingCreditFacility,TermloansandGuaranteefacilitiesprovidedbyabanksyndicatecomprisingDnBandNordea,wasrestructuredresultinginanAmendedandRestatedLoanAgreementrelatingtoaMulticurrencyGuarantee,RevolvingCreditandTermLoanFacilitiesAgreementdated26thJune2008.Theloanamortizationstructurewasadjustedandthefinancialcovenantswerereset.AGRFieldOperationswasfinancedseparatelyunderanewloanagreement,resultinginaring-fencedfinancingofthisBusinessUnit.

MAy:StatoilandEnhancedDrillingSolutions(EDS)signedatwoyear,NOK66mcontractfortheRiserlessMudRecoverysystem(RMR™).ThedealwasforrigsontheNorwegianContinentalShelf.Italsoincludedtwooptionalextensionperiodsoftwoyearseachwhich,iftaken,wouldbringtheestimatedtotalvalueofthecontracttoNOK200m($38mUSD).

PetroleumServicesUKenteredintoacontractwithJasperInvestmentsLimited,onbehalfofHyperdynamicsCorporation,foritsdrillship“JasperExplorer”.ThedealrequiredthedrillingofonefirmwellandanoptionwellinoffshoreRepublicofGuineaforHyperdynamics.ThecontractwithJasperalsoprovidedfortheoptiontodeploytheJasperExplorerforanotherfiveoptionwellsinWestAfricanwaters.Theprojectforthefirstwell,includingmobilization,wasworthaboutUS$15million.

June:NorskeShellASextendeditscontractrelatedtotheuseofAGR’sSubseaInterventionontheOrmenLangefield.

ClayCutterX™

RiserlessDrillingSystem-RDS™


noveMBeR:TheIsraelicommissionerforoilandgasannouncedthatagroupofcompaniesincludingAGRwasgrantedsixoilandgasexplorationlicensesoffshoreofIsrael.ThelicensesinquestionarereferredtoasthePelagic-licensesandAGRwasnamedOperator,witha5%ownership.

AGRsignedanagreementwithOceaneeringAS,awhollyownedsubsidiaryofOceaneeringInternationalinc,wherebyOceaneeringacquired100%ofthesharesinAGRFieldOperations.Thepricewassetto1365MNOKonanenterprisevaluebasis,resultinginafinancialgainofMNOK701.Closingtookplace20thDecember2011.The

AGRFieldOperationsdivisionistreatedasDiscontinuedOperationintheaccounts.AtAGR’sAnnualGeneralAssemblyinMay2012potentialdividendsfollowingthesalewillbeconsidered.DeCeMBeR:AGRsignedanagreementwithAdiraEnergywhereAGRfarmedinon5%oftheYitzhaklicenseinIsrael.Inaddition,AGRsignedanagreementwithGinkoOilExplorationLimitedPartnership(heldbyGulliverEnergyLtd.)andZerachOilandGasExplorationLimitedPartnership,whereAGRfarmedinon5%oftheGulliverlicenseinIsrael.Inbothlicenses,AGRwillactasOperator.

Working environment and personnel

AcoreobjectiveofAGRistohaveasafeandhealthyworkingenvironment.WemanageourbusinessinaccordancewiththeOSHAS18001:2004standardandpartsofthecompanyiscertified.Wemonitorourperformancecontinuously,andreportstatustotheExecutiveManagementTeamonaregularbasis.

WehavefunctioningsafetyorganizationsandWorkingEnvironmentCommittees;ensuringemployeeinvolvementinHSErelatedissues.

During2011,theServicespartofthecompanyhadzeroincidentsresultinginabsenceandzeromedicaltreatmentincidents.Hence,thefrequencyoflosttimeinjuriesandaccordinglythefrequencyofpersonnelinjuriespermillionworkinghours(H-value/H2-value)waszero.

Averageillnessrelatedabsenceduring2011was1%correspondingto1553days.Thisissimilarto2010andconsideredverylow.Therearesomevariationsbetweentheregions,Norway4.5%,UK0.7%,AP0.7%,Moscow2.2%andAmericasclosetozero.

AGRhasoperatedfiverigsin2011,includingfacilitationoftherigcontract,projectmanagementandwelloperation,twooutofNorwayandthreeoutofUK.Thefrequencyof

personnelinjuriespermillionworkinghours(H2-value)was10.8,basedonapproximately1.2millionoffshoreworkinghours.Noneoftheincidentswereinjuriesofpermanentcharacter.

TheTechnologypartsofthecompany(EnhancedDrillingSolutionsandTools&Technology)continuedtheSiteManagementSafetyprogramandSafetyBehaviorTrainingprogramfrom2010.

During2011,EDSandTools&Technologyhadonelosttimeinjuryandzeromedicaltreatmentincidents.Thefrequencyofpersonnelinjuriespermillionworkinghours(H/H2-value)was3.4,animprovementfrom2010.In2011therewerereported310HSEimprovementsuggestionscomparedto506in2010.

IllnessrelatedabsenceforEDSandTools&Technologywas2.2%comparedto1.9%in2010,stillconsideredlow.

AGRrunanannual,worldwideengagementsurvey,monitoringemployeesatisfaction,involvementandengagementwithourbusiness.Weusetheresultsofthissurveyforfurtherimprovingourperformance.

Peopleretentionandreducingturnoverwillbefocusareasalsoin2012.

“AcoreobjectiveofAGRistohaveasafeandhealthy

workingenvironment.”Tove MagnussenSVP HSEQ


Gender equality

Asat31December2011theBoardofAGRhad7BoardMembersofwhich3werewomen.

AGRaspirestobeanattractiveemployerforpeoplewithdifferentbackgrounds,regardlessoftheirethnicity,gender,religionorage.Initspolicy,thecompanyhasimplementedconditionstoensureequalopportunitiesinareassuchassalary,promotionandrecruitment.Thecompetenceprincipleisdecisiveinallappointmentprocesses.Inadepartmentwhereonegenderisheavilyunder-represented,thisistakenintoaccountduringtheappointmentprocessifotherqualificationsareotherwiseequal.Inconnectionwiththeyearlysalaryevaluation,attentionisshowntopossibleinequalityregardingaveragelevelofpayformenandwomen.AGRprovidesequalpayforequalworkandrewardsgoodresults.

Environmental Reporting

AllAGRactivitiesthateffecttheenvironmentaremanagedbymeansofwellestablishedsystemsandprocessesinordertoidentifyandeliminateorreduceanynegativeimpact,andtoensure,asaminimum,compliancewithlegislationandregulationssetoutbytheauthorities.Theenvironmentalaspectsofouractivitiesareidentifiedandmanaged.AGRaimstofacilitatethecontinuousenvironmentalimprovementinouroperationsbyadoptingtheprinciplesofISO14001:2007,internationalstandardforenvironmentalmanagement,andpartsoftheAGRbusinessarecertified.Wearerunninginternalcontrolactivitiestoverifycompliance.

Furthermore,manyoftheoperationalactivitiesandproductsofthebusinessarefocusedonprotectingtheenvironment.AsanexampletheRMR™isaproductwhichinadditiontoitsoperationaladvantagesoffersenvironmentalfriendlysolutionstoclients,byallowingzerodischargeofchemicalsandcuttingsindrillingoftopholesections.

enviRonMentAl peRFoRMAnCe SuMMARy 2011

•Energyconsumptionisatanormallevelforourtypeofbusiness

•Wastemanagementisperformedtominimisewasteamounts,andtofacilitateforreuseandrecyclingofgeneratedwaste

•Chemicalsaremanagedtoreduceuseandplanneddischargeofenvironmentallyhazardouschemicals

•Wehad18accidentalspillsfromourrigoperationsduring2011,from4drillingrigs.Wearenotpleasedwiththishighnumber.Outofthe18incidents,1wassignificant;oiltoseaduringwelltestingduetoincompletecombustion

ofproducedoilattheburnerbooms.Wehavehighfocusonlearningfromtheseincidentstopreventrecurrence.

2012 operations

AGR’sBoardofDirectorsemphasizesthatthereisalwaysanelementofuncertaintyrelatedtothedeliveryofbusinessperformanceandforwardlookingprojections.

petRoleuM SeRviCeSGoinginto2012,PetroleumServicesisoperatingseveralrigsandperformingwellplanningforavarietyofclientsinmostoffshorepetroleumprovinces.Thebusinessunitisdeliveringreservoir,consultancyandtrainingtooilcompanies,IOCs,NOCs,authoritiesandfinancialinstitutions.PetroleumServiceswillcontinuetodeliverhighvalueproductstoclientsandbeactiveintherigmarkettoensurefurtherrigcampaignstosupportclients’increaseddrillingactivity.

PetroleumServicesaimstocontinuethegrowthofintegratedservicestoitsclients,deliveringsolutionsandoperationsinallphasesofthefieldfromexplorationtoproduction.

enhAnCeD DRillinG SolutionS (eDS)IntheEnhancedDrillingSolutions’ProductLine,2011sawafurtherpenetrationoftheRMR™market.Activesales&marketingeffortsandaneverincreasingacknowledgementofthisserviceintheindustryisexpectedtoresultinincreasedpresenceintheUK,GulfofMexico,BrazilandAsia.

2012isexpectedtobeabreak-throughyearforotherManagedPressureDrillingandDualGradientDrillingservices.TheseincludeEC-Drill™andCMP™technologiesasdescribedunder“ResearchandDevelopment”.

toolS & teChnoloGyWithintheWellServicesProductLine,theDynamicDesandermovesinto2012withalargerbacklogthanever.TwoDynamicDesandersinparallelwillbeutilizedononecompletecoiledtubingspreadontheNorwegianContinentalShelfthroughouttheyear.InSaudiArabia,theclientwantstoputtheDesanderatworkalsoondrillingoperations,resultinginanexpectedincreaseinactivityintheMiddleEast.

Duetotheexpectedabsenceworldwideofmegaprojectswithinthetrenchingandexcavationmarketin2012,SeabedInterventionwillstrengthentheorganisationandfocusonmanagingmediumsizeprojectsin2012.Equipmentwillbefurtherdevelopedandrefinedtopreparefortheexpectedreturnofverylargeprojectsin2013and2014.


CannSeal™isexpectedtostartcommercialoperationsin2012,asseveralclientsontheNorwegianContinentalShelfhavenamedwellsforthetooltobedeployed.AfurtherexpansionintotheNorthSeaandtheUnitedStatesisexpectedin2012.

AGR eneRGy AGREnergyaimstogrowitsactivities,actingasanOperatorwithminoritystakesintheoilfields.

Board composition

AttheGeneralMeetingheldon27May2011,ChairmanoftheBoardEivindReitenwasreelectedforatwoyearperiod.PerIngeRemmenandFionaWalkerwerereplacedbyCelesteMackie.

InformationconcerningremunerationoftheBoardofDirectors,theChiefExecutiveOfficerandtheAGR’sExecutiveManagementcanbefoundinnote25totheconsolidatedfinancialstatements.ThecompensationfortheAGR’sexternalauditorcanalsobefoundinnote25.

Risk Management and internal Control

Internal control

Effectivecontrolsensurethatthegroupisnotexposedtoavoidablerisk,thatproperaccountingrecordshavebeenmaintained,thatthefinancialinformationusedwithinthebusinessisreliableandthattheconsolidatedaccountspreparationandfinancialreportingprocessescomplywithallrelevantregulatoryreportingrequirements.Thedynamicsofthegroupandtheenvironmentwithinwhichitoperatesarecontinuallyevolvingtogetherwithitsexposuretorisk.Theinternalcontrolsystemisdesignedtomanageratherthaneliminatetheriskofassetsbeingunprotectedandtoguardagainsttheirunauthoriseduseandthefailuretoachievebusinessobjective.Internalcontrolscanonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.

Thedirectorsconfirmthatthereisanongoingprocessforidentifying,evaluatingandmanagingtheriskfaced

bythegroupandtheoperationaleffectivenessoftherelatedcontrols,whichhasbeeninplacefortheyearunderreviewanduptothedateofapprovaloftheannualreportandaccounts.Theyalsoconfirmthattheyhaveregularlyreviewedthesystemofinternalcontrolutilisingthereviewprocesssetoutbelow.

Standard

AGRhasestablishedaFinanceManuallayingouttheroles,responsibilitiesandtimelinesfortheaccountingproceduresincludingguidelinesontheminimumlevelofinternalcontrolthateachofthesubsidiarycompaniesshouldexerciseoverspecifiedprocesses.During2011theinternalcontrolprocesshasbeenformalizedandimplementedwhereallsubsidiariesarecarryingoutaself-assessmentoftheinternalcontrol,andsigningoffonaninternalcontrolquestionnaire.

Theinternalcontrolquestionnaireisstandardizedandsimilarforallsubsidiaries,andincludesquestionsaboutfinancialcontrol,ITsystems,transferpricing,inventory,accountsreceivables,fixedassets,cash,accountspayable,revenuerecognitionandcostaccrualsandsoon.Thequestionnaireisbasedonthegrouppolicy,andprovidesadequatedocumentationthatthepolicyisimplemented.

Allcompaniesprepareannualoperatingplansandbudgets,andbusinessstrategiesarepreparedatregionallevelandapprovedbytheboard.InadditionAGRpreparesfinancialforecastthatarepresentedtotheboardatleasttwotimesperyear.Detailedactualfinancialsegmentinformationispreparedmonthly;performancecomparedtobudgetismonitoredatcompanyandgrouplevel.Inaddition,actualperformanceiscomparedtolatestforecastandprioryearonamonthlybasisincludinganalysisofanysignificantvariances.

Capitalexpenditureandinvestmentdecisionsaretreatedasapartofthebudgetandforecastprocesses.Detailsaboutwhohasrighttoapproveinvestmentsaredescribedinanauthorizationmatrix.Thecashpositionofthegroupismonitoredonadailybasisandvariancesfromexpectedlevelsareinvestigatedthoroughly.

AnimportantfactorinensuringproperfinancialreportingisgoodITcontrols.TherehavebeenmanyITcontrolsinplacetoaccesstheaccountingsystemsfortheyearasawhole,attheyear-endthesecontrolshavebeenfurthertightening-up.

AGRhasestablishedanAuditCommitteewhichoverseestheaccountingprinciples,accrualsetc.TheAuditCommitteehascontinuousdialoguewiththeauditors.

Svein SollundCFO


Results, Cash Flow, investments, Finance and liquidity

TurnoverforAGRincreasedfromNOK1445.3millionin2010toNOK1867.9millionin2011.OperatingprofitforAGRwaspositiveNOK140.4millioncomparedtoNOK74.5millionin2010.Profitforthefinancialyear2011fromcontinuedoperationswaspositiveNOK17.5millioncomparedtonegativeNOK19.7millionin2010.Formoreinformationaboutthebackgroundfortheresults,seetheoperationalsection.

AccumulatedcashflowfromAGR’soperationalactivitieswasNOK70.4million.TotalinvestmentsforAGRwasNOK85.8million(excludingacquisitionofoperations),andwasmainlyrelatedtoRMR™equipment,anddevelopmentprojectssuchasCannSeal™andtheCMP™.

CashandcashequivalentsforAGRon31.12.11wereNOK820.9million.

AGR’stotalinterest-bearingdebtatyearend2011wasNOK737.7million,whichrepresented26.4%ofAGR’stotalassets,comparedwith43.6%atyear-end2010.Byyear-end2011,theshort-terminterest-bearingdebtrepresented89.3%ofthetotalinterest-bearingdebt.AGR’snetinterest-bearingdebtattheendof2011wasnegativeNOK83.2million.

Attheendoftheyear,totalassetsamountedtoNOK2790million,comparedwithNOK2661millionthepreviousyear.Theequitytototalassetsratioat31.12.2011was50%,comparedwith25%at31.12.2010.Thedebttoequityratioper31.12.2010was3.8.

Financial Risk

Financial risk factors

AGR’sactivitiesareexposedtoavarietyoffinancialrisks:marketrisk(includingcurrencyrisk,interestrateriskandpricerisk),creditriskandliquidityrisk.AGR’soverallriskmanagementprogramseekstominimizepotentialadverseeffectsfromfinancialrisksonAGR’sfinancialperformance.AGRusesderivativefinancialinstrumentstohedgecertainriskexposures.

Riskmanagementiscarriedoutbyacentraltreasurydepartment(AGRTreasury)underpoliciesapprovedbytheboardofdirectors.AGRTreasuryidentifies,evaluatesandhedgesfinancialrisksinco-operationwithAGR’soperatingunits.Theboardprovidesafinancialriskmanagementpolicycoveringforeignexchangerisk,interestraterisk,liquidityriskandcreditrisk.

Market risk

(i) FoReiGn exChAnGe RiSKAGRoperatesinternationallyandisexposedtoforeignexchangeriskarisingfromvariouscurrencyexposures,primarilywithrespecttotheU.S.dollar,AustraliandollarandtheUKpound.Foreignexchangeriskarisesfromfuturecommercialtransactions,recognizedassetsandliabilitiesandnetinvestmentsinforeignoperations.

AGRFinancialriskpolicystatesthat12monthforecastednetcurrencyexposureshallbemaximum60millioninNOKequivalents.Positionsarereviewedquarterly.Hedgingisconductedbyapplyingacombinationoflongtermforeigncurrencytermloansandcurrencyderivatives.

(ii) pRiCe RiSKAGRhasverylimitedexposuretoequitysecuritiespriceriskduetoverylimitedinvestmentsheldbyAGRclassifiedontheconsolidatedbalancesheetasfairvaluethroughprofitorloss.

(iii) inteReSt RAte RiSKAGR’sinterestrateriskarisesfromlong-termborrowings.BorrowingsissuedatvariableratesexposeAGRtocashflowinterestraterisk.AGR’spolicyisthatlong-termborrowingsshallbebasedonfloatinginterestrates,howeverinterestratederivativesshallbeappliedinordertoavoidcatastrophiclossesduetointerestratechanges.

AGRmanagesitsinterestrateriskbyapplyingderivativessuchasinterestratecollarswaps,inordertoestablishacaponinterestratesincaseofsignificantincreaseinmarketinterestrates.Inaddition,thegrouphasappliedfloating-to-fixedinterestrateswaps.Suchinterestrateswapshavetheeconomiceffectofconvertingborrowingsfromfloatingratestofixedrates.

At31December2011AGRheld4interestrateswapcontractsand1interestratecollarcontractwithatotalamountofNOK652.8million,whichconstitutes88%ofAGR’sinterestbearingdebt.

“AGRisindirectlyexposedtooilpricechanges.”


Credit risk

TheriskthatcounterpartiesfailtofulfilltheirfinancialobligationsisconsideredlowasAGR’shistoricallossonreceivableshasbeenlow.ThemajorityofAGR’sdebtorsarepubliclylistedNorwegianandinternationaloilcompanies.ThePetroleumServicescustomersconsistofmediumtosmalloilcompanies.Someofthesecustomershavemoderatecreditriskpotential.TheAGRpolicyistoobtainfinancialguaranteesfromdebtorswherethecreditriskandexposureisconsideredtobehigh.Inaddition,theAGRhasputinplacecreditinsurancewhereamajorityofAGR’sreceivablesareinsuredinordertoavoidlosses.Theoverallcreditriskisthusconsideredtobelow.

Liquidity risk

AGRhasrelativelyfew,largecustomers.Delayedpaymentsfromseverallargecustomersatthesametimecouldhaveasignificantimpactonthecompany’sliquiditysituation.AGRmanagementandtheindividualbusinessunitshaveahighfocusonworkingcapitalmanagement,andcontinuouslytakeactionsifcustomersdonotsettletheirobligationstowardsAGRinduetime.AGR’spolicyistoreducetheliquidityriskbyhavingalongtermmulti-currencyloanfacilitycommittedfromrelationshipbanks.AGRshallatanytimehaveunusedcreditsatleastequaltonextquarter’sinterest&installmentrequirementsunderAGR’sloanfacility.

At31December2011AGRhadundrawncommittedcreditlinesamountingtoNOK190million.

parent Company

AGRGroupASAisthelistedparentcompanyanditsmainactivityistoactastheownerofthesharesintheAGR’scompanies.Theoperatingresultin2011wasnegativeNOK48millioncomparedtonegativeNOK19millionin2010.Theoperatingexpenseswerelowerin2010comparedto2011mainlyasaconsequenceofclosingoftheAGREmployeeShareInvestmentProgram(EBC)in2010.

TheprofitfortheyearwasNOK910millioncomparedtonegativeNOK121millionfor2010.IncreaseinprofitismainlyaconsequenceofthesaleofthesubsidiaryAGRFieldOperationsHoldingsAS.

Accumulatedcashflowfromthecompany’soperationswasnegativeNOK19million.ReceivedAGRcontributionsamountedtoNOK1.6million.TotalnetcashflowwasNOK721451million,duetosaleofAGRFieldOperationsHoldingsAS.ThetotalassetswereNOK2394.8millioncomparedtoNOK937.3millionthepreviousyear.Theequitytoasset

ratiowas40%at31.12.2011.OfthetotalequityofNOK952million,sharecapitalaccountsfor26%.FriequityasofDecember2011wasTNOK692355.

Continued operation

AGRhasfinancialcovenantsrelatedtoitsloansandisincompliancewiththeseatQ42011.ThecompanyhaspositivecashflowandsignificantfreeliquidityfollowingthesaleofAGRFieldOperationsandisabletocomplywithitsinterestandamortizationsgoingforward.TheboardhasconsideredthefactorsaboveinrelationtocontinuedoperationsandconcludedthatinaccordancewiththeAccountingAct§3-3a,weconfirmthatthefinancialstatementshavebeenpreparedundertheassumptionofagoingconcern.

ThekeyassumptionsmadeintheimpairmenttestreflecttheBoard’scurrentassessmentofAGR’spotentialtoadapttoandbenefitfromtrendsintheoilservicesindustry.Managementbelievesthattheexpectationsreflectedintheforwardlookingforecastsusedasabasisfortheimpairmentreviews,arereasonable.However,astheimpairmentvaluationsarebasedonforwardlookinginformation,theywillinvolveriskanduncertainty.Formoreinformation,pleaserefertonote03.


Annual Result and AllocationsTheBoardproposesthefollowingallocationsoftheAGR’snetprofitforthefinancialyear:

Retained earnings 754 589 tnoK

non-controlling interests' share of profit for the year 9 330 tnoK

total profit allocated 745 268 tnoK

Theparentcompany’sdistributableequityat31.12.2011was:

Dividend proposed 700 000 tnoK

Retained earnings 210 318 tnoK

Oslo,27April2012

Reynir indahViceChairman

tove MagnussenBoardmember

Celeste MackieBoardmember

eivindReitenChairman

hugo MaurstadBoardmember

Maria tallaksenBoardmember

thomas nilssonBoardmember

Sverre SkogenCEO


The Norwegian accounting act section 3-3b requires the company to annual state its principle and practice of corporate governance. This statement presents a review of AGR’s principles for corporate governance and compliance with the Norwegian Code of Practice for Corporate Governance of 21 October 2010 (Code of Practice), updated code of practice of 20 October 2011, and notes AGR’s actions and where relevant any deviations from each of the requirements. If no deviation is stated then there have been no deviations from the Code of Practice.

Implementation and reporting on corporate governance

TheBoardofDirectorsofAGRGroupASA(“AGR”)originallyadopteditsCorporateGovernancePolicyonthe22May2006andhavetherafterbeenregularlyudated.ThisisavailableonAGR’swebsite(www.agr.com).

AGR’sprinciplesforcorporategovernancedetailanadequatedivisionofthetasksandpositionsofAGR’sowners,theBoardandtheexecutivemanagement.Anadequatedivisionoftasksandpositionsprovidesfortheadoptionandimplementationofobjectivesandstrategies,andtheachievementoftheobjectivesissubjecttoevaluationandisfollowedup.

Furthermore,theprinciplescontributetokeepingthebusinessofAGRunderappropriatesupervision.Anadequatedivisionoftasksandsupervisioncontributestothebestpossiblelongtermprofitability,tothebenefitoftheshareholdersandotherstakeholders.

ThisstatementsetsoutAGR’scompliancewitheachsectionoftheCodeofPractice,andalsonotesany

deviationsfromtheCodeofPracticeandthereasonsforsuchdeviation.

AGRwillnotbeissuinganextensiveAnnualReportin2012.ItisnotalegalrequirementthatAGRissuesuchanannualreportandinstead,AGRisissuingthisstatementofcompliancewiththeCodeofPractice,theDirectorsReportandasummaryofthe2011figurestogetherwiththefullauditedannualaccounts.ThisapproachhasbeentakenasaresultofAGR’sshareholderbase,wherebyAGRhasonemajorshareholderowning78%ofAGR.Withfewerretailinvestorsthisapproachisseenasmorecosteffectiveandenvironmentfriendlywhilststillprovidingallshareholderswithsufficientinformationandreportingasrequiredbythelaw.

TheBoardofAGRhaslaiddownAGR’svaluesandethicalguidelines.ThevaluesofAGRareoutlinedonAGR’swebsite.

Business

AGR’sobjectivesarelaiddowninarticle3oftheArticlesofAssociationwhichreadsasfollows:Theobjective,aslaiddownintheArticles,outlinestheparameterswithinwhichAGRoperates,andofferstheshareholderscertaintywithregardstothetypeofactivitieswhichAGRwillundertake.AGR’smainobjectivesandstrategiesarepresentedonAGR’swebsite.

“TheCompanyisengagedintrade,industry,realestateinvestmentsandrelatedactivities,includingparticipationinothercompanieswithsimilaractivitiesaswellasinvestmentsinrealproperty,securitiesandotherassets”

Equity and dividends

ThebookequityofAGRasof31December2011wasNOK1411millionwhichrepresentsanequityratioof50%.Basedonthecompany’sobjectives,strategiesandriskprofile,AGRconsiderstheequityratioassatisfactory.ItisanobjectiveforAGRtoyieldacompetitiveprofitfromtheshareholders’investment.AGR’sdividendprofileshallatthesametimeensureAGR’sneedforstabilityanddevelopmentinaccordancewithitsobjectivesandstrategies.AGRhasnotdistributedanydividendsthelastyears.

Corporate Governance Report – 2011


Equal treatment of shareholders and transactions with close associates

AGRhasoneclassofshares,andallsharesholdequalvotingrightsinAGR.AGRprioritisesthefurtheranceoftheinterestsoftheshareholders,andequaltreatmentofshareholders.

AGR’sCorporateGovernancePolicyestablishestheguidingprinciplethattheBoardshallactinthebestinterestsofallshareholders.Intotal,thecompanyowns1815845AGRshares.

Intheeventoftransactions,otherthanimmaterialtransactions,betweenAGRandshareholders,Boardmembers,membersoftheexecutivemanagementoranypersonsrelatedtothese,theBoardshallinaccordancewithitspolicies,procurethatthetransactionisbasedonavaluationpreparedbyanindependentthirdparty.Ifrequiredpursuanttosection3-8ofthePublicLimitedCompaniesActandwhentheconsiderationexceeds5%ofAGR’ssharecapital,thetransactionwillbeputtothegeneralmeetingforapproval.

AGR’sCorporateGovernancePolicyestablishesprincipleswhichrequiremembersoftheBoardandtheexecutivemanagementtoreporttotheBoardintheeventthattheyhaveanymaterialinterestinAGR’sagreements.

Freely negotiable shares

AGR’ssharesarelistedontheOsloStockExchangeandarefreelynegotiable.NoformofrestrictiononthenegotiabilityofthesharesisincludedintheArticlesofAssociation.

General meeting

AGRencouragesshareholderstoattendAGR’sgeneralmeetings.AGR’sCorporateGovernancePolicydetails,thatnoticesforgeneralmeetingsshallbedistributednolaterthantwoweeksinadvanceandplacedonitswebsite21daysinadvanceofageneralmeeting.

AGRseekstoensurethatthenoticeofmeetingandaccompanyingmaterialsincludesufficientinformationabouttheitemsontheagenda.Forpracticalpurposesthecompanyincludesinitsnoticestogeneralmeetings

acombinednoticeofattendanceandproxyformwhichtheshareholdersareinvitedtouseforregisteringattendanceandsubmittingproxies.However,theArticlesofAssociationofAGRdoesnotprovidefortheuseofmandatorypriornoticesofattendanceatthegeneralmeetingandallshareholderswhowishtoattendwillbewelcomeattheGeneralMeeting.

AGRensuresthatthoseshareholdersnotabletoattendthegeneralmeetinginpersoncanvoteviaproxyandproxyformsaresuppliedwiththenoticeofmeeting.

ItisAGR’spreferencetohavethemembersoftheBoard,theNominationCommitteeandtheauditorattendthegeneralmeeting.ArepresentativeofAGR’sauditors,E&Y,hasbeenpresentoravailableatallgeneralmeetingsduringthereportingperiod.

Proxyformshavebeensuppliedwithallnoticesofageneralmeeting.InaccordancewiththePublicLimitedCompaniesActshareholdersmayraiseitemsforconsiderationbythemeetingpriortothemeeting,providedthatsuchsuggestionsaresubmittedatleasttwoweekspriortothegeneralmeeting.

ThenoticesofmeetingissuedduringthereportingperiodnotetheaddressoftheAGRwebpageandnotethatcopiesofthenoticesofmeetingandsupportingmaterialsareavailableorreferredtoonthewebsite.AllnoticesissuedsincethisrecommendationwasincludedintheCodeofPracticeclearlystateonwhichwebpagethenoticeandsupportingdocumentsaremadeavailable.

AGRhadacopyofthenoticeofmeetingforallgeneralmeetingsheldduringtheperiodavailableorreferredtoonitswebsiteandthenoticesincludeproxyforms.EachcandidatenominatedforelectionwasdescribedbytheChairmanoftheNominationCommitteeandelectedbyvotingforall,asagroup.AGRdidnotconductavoteoneachcandidateforelection,however,ifthishadbeenrequestedbytheshareholderspresentthenthiswouldhavebeendone.

Nomination committee

PursuanttoAGR’sArticlesofAssociationAGRhasestablishedaNominationCommittee,whichiscomprisedofthreememberselectedbythegeneralmeeting.

TheremunerationofthemembersoftheNominationCommitteewasresolvedattheextraordinarygeneralmeetingofApril2008.Article6ofAGR’sArticlesofAssociationrequiresAGRtoestablishaNominationCommittee

ThefirstNominationCommitteeofAGRwaselectedattheAnnualGeneralMeetingin2007.ThecurrentNomination

“AGR’ssharesarelistedontheOsloStockExchange”


Committeeiscomprisedof3members.TheNominationCommitteedoesnotincludethechiefexecutiveofficernoranymemberoftheexecutiveteam.ThechairmanoftheNominationCommitteeisalsoaboardmember.

TheNominationCommitteeinstructionsstatethatthepurposeofthecommitteeistonominatecandidatesforelectionasBoardmembers,andmakerecommendationsfortheremunerationofthemembersoftheBoard.InthenoticeofmeetingssentduringthereportingperiodtheNominationCommitteesuppliessufficientinformationregardingproposedcandidatesandtheirbackgroundtojustifytherecommendationsmadetoshareholders.

DuringthereportingperiodAGRhasprovidedinformationregardingthemembershipofitsNominationCommitteewiththenoticesofmeetingissuedforthe2011AGM.

TherehasbeennospecificmentionontheCompany’swebsiteorinthenoticesoraccompanyingdocumentationtotheeffectthattheshareholdersmayproposecandidatestotheboardofdirectors.However,thisisacknowledgedintheNominationCommitteeInstructionsandtheNominationCommitteehasapproachedthemajorshareholdersofAGRwhenformulatingitsrecommendations.

Corporate assembly and board of directors: composition and independence

AGRdoesnothaveacorporateassembly.TheBoardofDirectorsiselectedbytheGeneralMeeting.

PursuanttotheCompany’sArticlesofAssociationtheBoardshallbecomprisedofbetween3to9members.

Theexperienceofalltheboardmembersdemonstratesabroadrangeofexperienceamongsttheindividualsontheboard.Theskillsrepresentedincludearangeofgeneralbusinessadministrationskills,financialmarketscompetenceandindustryappropriateoperationalexperience.Inselectingthemembersoftheboard,considerationwasgiventohowtheindividualmemberswouldoperateasacollegiatebody.

AccordingtoAGR’sCorporateGovernancePolicyamajorityofthemembersoftheboardshallbeindependentofAGR’smanagementandmainbusinesspartners.Furthermore,atleasttwoboardmembersshallbeindependentofthe

company’smajorshareholders.Thisisthecasewiththecurrentcompositionoftheboard.

TherearenorepresentativesfromtheexecutivemanagementamongthemembersoftheBoard.

Article5ofAGR’sArticlesofAssociationstatesthatthechairmanshallbeappointedbythegeneralmeeting.

ThetermofofficefortheboardmembersistwoyearspursuanttothePublicLimitedCompaniesAct.

Asummaryoftheexpertiseandcapacityoftheboardmembers,notingwhichmembersareindependenthasbeenplacedonAGR’swebsite.

Directors’shareholdingsarenotedinnote25intheAnnualAccounts.

The work of the Board of Directors

TheBoardhasadoptedandimplementedacoderegulatingboardproceedings.TheguidelinesareevaluatedinconnectionwiththeBoard’sannualreviewofitsownwork.TheBoardpreparesanannualplanforitswork,particularlyfocusingonobjectives,strategiesandimplementation,aswellasanyothertasksdevolvedasaconsequenceoftheBoard’sbyLaws,Regulations,resolutionsofthegeneralmeetingortheStockExchangeRules.

TheBoardassessesonacontinuousbasistheneedforsubcommitteesoftheBoard.

TheBoardestablishedin2008anAuditCommittee,headedbyThomasNilsson.FurthermoreaRemunerationCommitteehasbeenestablished,providingadvicetotheBoardonCEOcompensation,ExecutiveCompensationandoverallguidanceonbonus,shareawardsandremunerationfortheemployeesofAGR.

Risk management and internal Control

AGR’sapproachtoriskmanagementisdescribedintheDirector’sReport.InadditiontomonthlyoperationalreportingtheboardcarriesoutanannualevaluationofAGR’smajorrisks.

Remuneration of the board of Directors

RemunerationoftheBoardisdecidedbythegeneralmeetingandisbelievedtoreflecttheresponsibilities,timecommitmentandcomplexityofthecompany’sactivitiesandexpertiseoftheboardmembers.TheBoard’sremunerationisnotlinkedtoAGR’sperformance.NomemberoftheBoardhasbeengrantedshareoptions.WiththeexceptionofEivindReitenandPerIngeRemmen,noBoardmembersofAGRhavebeenengagedinany

“Theboardrepresentsabroadrangeofskills”

23

AnnuAl RepoRt 2011


specific assignments for AGR or its associated companies in addition to their appointment to the board. The remuneration of the board of directors is detailed in the accounts, which can be viewed on the AGR website.

Remuneration of the Executive Management

The Board has set guidelines for remuneration of the executive management. The guidelines are presented to the General Meeting for an advisory vote. Although advisory, the guidelines will be binding, and thus subject to the general meetings approval, in respect of any remuneration related to shares in the Company. Salary and other remuneration to the CEO are determined by the Board. AGR’s guidelines for remuneration to the executive management are described in the attachment to the AGM notice and therefore appear on AGR’s website and remuneration to the members of the executive management is presented in note 25 in the Annual Accounts. The Executive Management of AGR has the opportunity to be members of AGR’s management share scheme, in which management can buy shares directly in the three business units. Executive Management of AGR is also entitled to bonuses of up to 40% of their salary. The bonus scheme is linked to company performance. AGR does not offer any other form of remuneration to executives other than where expatriate packages may require some additional benefits. AGR does not have a share option scheme.

Information and communications

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

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

AGR’s financial calendar is available on AGR’s website, and provides an overview of the dates of major events. Other information is continuously made available to shareholders via AGR’s website.

AGR ensures through policy and established practice that all information provided to the market or to shareholders is also posted on the AGR website to keep all stakeholders informed of AGR’s activities.

Takeovers

The Board of Directors has established guiding principles for how it will act in the event of a takeover bid. These guiding principles are included in the Corporate Governance Policy. AGR’s Corporate Governance Policy states that the Board shall not carry out measures to prevent a take-over, unless otherwise resolved by the general meeting by no less than a 2/3 supermajority vote.

Auditor

In compliance with the Code of Practice and pursuant to AGR’s Corporate Governance Policy, AGR’s auditor attends Board meetings which deal with the Annual Accounts. The auditor meets annually with the Board for an evaluation of the auditor’s views on the Company’s accounting principles, risk exposures, internal control etc. The Board has met with the 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 auditor for tasks other than the statutory audit. The auditor has been instructed to provide the board with a report annually detailing all the work undertaken by E&Y for AGR in addition to the audit work and to provide confirmation of the auditors continued independence. The remuneration to the auditor is presented in note 25 in the Annual Accounts.

Board’s Statement of Salaries

Main PrinciPleSThe main principles for AGR’s management remuneration policy are that executive management shall be offered competitive compensation, when salaries, benefits in kind, bonuses, share awards and pension arrangements are taken into consideration.

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

reMuneration coMMitteeThe Board has formed a Remuneration Committee to provide advice to the Board on CEO compensation, Executive Compensation and overall guidance on bonus, share awards and remuneration for the employees of AGR. Hugo Maurstad, Reynir Indahl and Maria Tallaksen are the current members of the Committee. No additional compensation is awarded to the Committee members for their participation in the work of the Committee.

BonuSeS and other additional BenefitSAs a guideline, annual bonuses in addition to base salary may be offered to executive management. Such bonuses shall however, be limited to certain percentages of the base salary and to achievement of certain predetermined objectives. Guidelines for distribution of bonuses shall be determined by the Board of Directors. Bonuses to the AGR CEO shall be determined by the Board of Directors, after consulting with the company’s Remuneration committee.

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


Themembersofthecompany’sexecutivemanagementhaveotherordinarybenefitsinkind,suchasfreephone,newspapersandtrademagazinesetc,butdonothaveothermaterialbenefitsinkind.Whereappropriateemployeesworkingunderexpatriateconditionsmayalsoreceiveacarallowance.AsaguidelinecarallowancesshallnotbeofferedtoAGRemployees,andexistingarrangementswillbephasedoutwhentheemploymentcontractsaredueforrenegotiation.

Inrespectofseverancepaymentsthesewillbeagreedonanindividualbasis.Someofthecurrentmembersoftheexecutivemanagementhaverightstoseverancepayment,correspondingfrom6to18monthsbasesalary,iftheiremploymentisterminatedbythecompany.Asaguidelineseverancepaymentsshallbeinaccordance

withthecompany’smainprinciples,i.e.thatthelevelofremunerationshallbecompetitivewhenallbenefitsareseenasawhole.

ShARe RelAteD inCentive SCheMeSAGRdoesnothaveashareoptionschemeforitsemployeesorotherformsofremunerationwhicharelinkedtothesharesinthecompanyorthequotedpriceofthecompany’sshares.Someemployeeshave,however,investeddirectlyinthethreeholdingcompaniesowningAGR’sthreedivisions.

Pleasealsorefertonote25forAGRASA’sannualaccountsfordetailsaboutremunerationoftheexecutivemanagementin2011.


SeaVator™


Consolidated Income Statement

GROUP Figures in TNOK

Year ended 31 December

Continuing operations Note 2011 2010

Revenue 6,7,29 1 832 245 1 397 018

Other operating revenue 6,7,29 35 669 48 238

Total operating revenue 1 867 914 1 445 256

Raw materials and consumables used 34 977 184 677 375

Payroll expenses 19,25 494 916 427 154

Depreciation, amortisation and impairments 8,9,11 106 728 122 808

Other operating expenses 25,27,30 148 632 143 346

Total operating expenses 1 727 460 1 370 683

Operating profit 140 454 74 573

Financial income 28 277 733 298 495

Financial expenses 28 362 549 389 893

Net financial items (84 815) (91 398)

Profit (loss) before income tax 55 639 (16 825)

Income tax expense 20 38 056 2 914

Profit (loss) from continued operations 17 582 (19 739)

Profit after tax from discontinued operations 36 737 016 13 378

Profit (loss) for the year 754 598 (6 361)

Non-controlling interests' share of profit (loss) for the year 9 330 (1 559)

Profit (loss) attributable to equity holders 745 268 (4 802)

Earnings per share from continuing operations (NOK) 0.05 (0.15)

Earnings per share including discontinuing operations (NOK) 6.01 0.04


Consolidated Balance Sheet


As at 31 December

Assets Note 2011 2010

Deferred tax assets 20 176 838 173 291

Other intangibles 4,8 166 757 183 214

Goodwill 4,8 581 627 921 887

Intangible assets 925 222 1 278 392

Machinery and operating equipment 9 345 169 453 868

Tangible fixed assets 345 169 453 868

Investments in associated companies 10 - 256

Long term receivables 40 887 30 841

Financial fixed assets 40 887 31 097

Total non current assets 1 311 278 1 763 357

Inventories 11 20 535 13 266

Trade receivables 12,13,16,29 521 410 727 270

Other receivables 14,16,23 116 437 112 349

Receivables 637 847 839 619

Financial assets at fair value 33 95 93

Assets of disposal group classified as held for sale 36 - 6

Cash and cash equivalents 15,16 820 984 45 519

Current assets 1 479 461 898 503

Total assets 2 790 739 2 661 860


Consolidated Balance Sheet


Equity and liabilities Note 2011 2010

Share capital 17,18 251 797 251 797

Treasury Shares 17,18 (3 631) (3 631)

Share premium fund 17,18 - 827 543

Total paid-in equity 248 166 1 075 709

Retained earnings 1 138 745 (434 157)

Non-controlling interest in equity 24 558 23 820

Total equity 1 411 469 665 372

Pension liabilities 19 8 146 10 830

Deferred tax 20 5 457 13 038

Provisions 26 1 158 7 599

Debt to credit institutions 21 651 067 877 949

Total non-current liabilities 665 828 909 416

Debt to credit institutions 21 77 398 275 175

Trade payables 29 271 822 441 156

Tax payable 20 61 158 45 584

VAT payable and other taxes payable 34 286 60 478

Other current liabilities 22,23 268 778 264 679

Total current liabilities 713 442 1 087 072

Total liabilities 1 379 270 1 996 488

Total equity and liabilities 2 790 739 2 661 860

Oslo, 27.04.2012

Reynir IndahVice Chairman

tove MagnussenBoard member

Celeste MackieBoard member


Hugo MaurstadBoard member

Maria tallaksenBoard member

thomas nilssonBoard member

Sverre SkogenCEO


Comprehensive income

Statement of comprehensive income Twelve months ended 31 December

2011 2010

Profit (loss) for the period 754 598 (6 361)

Other comprehensive income - -

Fair value gains on available-for-sale financial assets, net of tax - -

Cash flow hedges, net of tax - -

Currency translation differences 6 835 35 596

Currency translation differences discontinued operations (27 063) -

Other comprehensive income for the period, net of tax - -

Total comprehensive income for the period 734 370 29 235

Profit attributable to:

- owners of the company 745 268 (4 802)

- non-controlling interest 9 330 (1 559)

Figures in TNOK


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Consolidated statement of cash flowFigures in TNOK

GROUP Year ended 31 December

Note 2011 2010

Operating activities

Profit/(loss) before taxes from continuing operations 55 639 16 444

Ordinary profit/(loss) before taxes from discontinued operations 36 725 197 (138)

Profit before tax 780 836 16 306

Non-cash adjustments to reconcile profit before tax to net cash flows

Depreciation,amortisation and impairment of tangible assets 8,9 106 728 172 045

Loss/(gain) on disposal of discontinued operations 36 (701 197) -

Finance income 28 (277 733) (367 167)

Finance costs 28 362 549 482 821

Other operating income 6,7 (5 026) (7 924)

Share of loss/(profit) from associates 10 - 122

Pension 19 (605) 1 247

Working capital adjustments: *1

Increase in trade and other receivables and prepayments (53 337) (83 481)

Increase in inventory (10 557) (2 592)

Decrease (increase) in trade and other payables (57 583) 205 631

Decrease(increase) in other provisions (63 549) 5 814

80 526 422 822

Interest received 3 116 1 146

Income tax paid (13 201) (48 712)

Net cash flow from operational activities 70 441 375 256

Investing activities

Proceeds from sale of property, plant and equipment and intangible assets - 1 713

Capital expenditure for property, plant and equipment and intangible assets 8,9 (85 804) (112 213)

Purchase of financial instruments (1 542) -

Proceeds from sale of financial instruments 1 224 -

Final earn out payment former acquisition of subsidiary 8 (25 297) -

Net inflow from sale of subsidiary, net of cash disposed *2 986 134 -

Receipt of government grant 32 1 394 2 553

Cash outflows for investments in associated companies 10 - (260)

Net cash flows used in investing activities 876 109 (108 207)

Financing activities

Repayment of borrowings 21 (76 383) (146 821)

Interest paid (78 076) (99 605)

Issuance of shares - (6 749)

Net cash flow from (used) in financing activities (154 459) (253 175)

Net increase in cash and cash equivalents 792 091 13 874

Net foreign exchange differences (737) -

Cash and cash equivalents at start of period 15 29 630 31 645

Cash and cash equivalents at end of period 15 820 984 45 519

*1) Amounts are exclusive discontinued operations. *2) Total inflow from sale is amounted to TNOK 1 030 026, and cash disposed is amounted to TNOK 43 892, net of TNOK 986 134.

Figures in TNOK


note 01 Accounting principles

Fundamental PoliciesAGR Group ASA (‘the Company’) and its subsidiaries (together ‘the Group’), is a leading supplier of services and technology to the oil and gas offshore industry. The group’s main operations are based at Straume (Bergen), with other offices around the world including Stavanger, Oslo, Aberdeen, Houston, Perth, Almaty, Dubai and Kuala Lumpur.

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

The company is a limited liability company incorporated and domiciled in Norway. The address of its registered office is Smålonane 12-14, 5353 Straume.

The Company is listed on the Oslo stock exchange.

The group consolidated financial statements were authorised for issue by the board of directors on 27 April 2012.

Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

The consolidated financial statements of AGR Group ASA have been prepared in accordance with International Financial Reporting Standards as adopted by EU (IFRS) and IFRIC Interpretations.

The Group’s financial statements have been prepared under the historical cost convention, with exception of certain items: Financial assets and financial liabilities (including derivative instruments), which are reflected at fair value through profit or loss.

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

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.

Consolidation principlesa) SubsidiariesSubsidiaries are all entities (including special purpose

entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquisition either at fair value or at the non-controlling interest’s proportionate share of the net assets acquired.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquisition and the acquisition-date fair value of any previous equity interest in the acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquisition in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

(b) Transactions and non-controlling interestsThe group treats transactions with non-controlling interests as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently


accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (c) AssociatesAssociates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. Segment reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions.

The primary reporting segment is business segment and the secondary reporting segment is geographical segment. Segment revenues and costs constitute the group’s operating revenue and operating costs that can be directly classified as activities in the segments. Segment assets and liabilities are balance sheet items that can be directly related to the segment activity. Segment revenue and costs include transactions between the different segments (group-internal transactions). Geographical segment information is presented and is specified if the region’s accumulated external revenues and assets exceed 10 % of total revenue/assets for the regions as a whole. Secondary segment information that fails to satisfy the requirement for specified reporting is presented as other revenues. Transactions between segments are made on arm’s length terms.

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

(b) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at

the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within ‘finance income or expense’. All other foreign exchange gains and losses are presented in the income statement.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.

(c) Group companiesThe results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

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

(2) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

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

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges 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 are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Classification of assets and liabilitiesAssets are classified as current assets when:

• the asset is a part of the unit’s service cycle and is expected to be realised or used during the course of the unit’s normal production period;

• the asset is held for trading purposes and is expected to be realised 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 is expected to be settled during the course of normal production period;

• the liability is kept for trading purposes;

• settlement has been agreed within 12 months after balance sheet date;

• the unit does not have an unconditional right to postpone settlement of the liability until at least 12 months after balance sheet date;

All other liabilities are classified as non-current.

Property, plant and equipmentProperty, plant and equipment, are valued at cost less accumulated depreciation and write-downs. When assets are sold or divested, cost and accumulated depreciation are reversed in the financial statements, and any loss or gain on the disposal is recognised in the income statement. The cost of property, plant and equipment comprises the purchase price, including duties/taxes and direct acquisition costs linked to making the asset fit for use. Expenses accrued after the asset has been taken into use, such as repairs and maintenance, are normally recognised in the income statement. In cases where increased earnings can be demonstrated as a result of repairs/maintenance, the expenditure on this will be recognised in the balance sheet as additions to property, plant and equipment.

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

• Machinery 5-10 years

• Vehicles 3-5 years

• Furniture, fittings and equipment 3-8 years

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

Assets under construction are classified as property, plant and equipment. Assets under construction are not depreciated until the asset has been taken into use.

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

Fair value less expected costs to sell is the amount which can be obtained if the asset is sold to an independent third party, less costs to sell. Recoverable amounts are determined separately for all assets, but – if impossible – recoverable amount is calculated together with the unit to which the asset belongs.

Write-downs which have been recognised in the income statement in previous periods are reversed if there is information to suggest that the write-down no longer exists. However, no reversal is made if the carrying amount is higher than it would have been if normal depreciation had been used.

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

Intangible assets(a) GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination.


(b) Trademarks and licencesSeparately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date. Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks and licences over their estimated useful lives of 15 to 20 years.

(c) Contractual customer relationshipsContractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relations have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship (3-8 years)

(d) Computer softwareAcquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives (3-4 years).

Costs associated with maintaining computer software are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that are probable to generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.

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

(e) Research and developmentExpenses relating to research are recognised in the income statement when they are incurred. Expenses relating to development are recognised in the income statement when they are incurred unless the following criteria are met in full:

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

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

• the intention and ability to complete the intangible asset and sell it or use it in the company’s operations has been demonstrated;

• the intangible asset will generate probable future economic benefits; and

• availability of sufficient technical, financial and other resources for completing the project are present.

When all the above criteria are met, the costs relating to development start to be recognised in the balance sheet. Costs that have been charged as expenses in previous accounting 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 (5-8 years). The recoverable amount of the development costs will be estimated when there is an indication of impairment or that the need for previous periods’ impairment losses no longer exists and should be reversed to the original cost.

(f) Other intangible assetsAcquired technology, licenses and customer relationships are capitalised and carried at cost less accumulated amortisation.Amortisation is calculated using the straight-line method over their estimated useful lives.

Impairment of non-financial assetsAssets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

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

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

Financial assetsThe group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.


(a) Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

(b) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The group’s loans and receivables comprise ‘trade and other receivables’ and cash and cash equivalents in the balance sheet

(c) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss is initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using 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’ category are presented in the income statement.

Impairment of financial assetsThe group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated

future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

• the disappearance of an active market for that financial asset because of financial difficulties; or

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

(i) adverse changes in the payment status of borrowers in the portfolio; (ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

The group first assesses whether objective evidence of impairment exists. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

Derivative financial instruments and hedging activitiesDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently


remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group does not use hedge accounting according to IAS 39, and all financial derivatives are thus posted at fair value where changes in values are accounted for in the income statement.

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

Obsolete inventories have been fully recognised as impairment losses.

Trade receivablesTrade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course 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 presented as noncurrent assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Discounting occurs only if the receivable are significant.

Cash and cash equivalentsCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

The cash and cash equivalent amount in the cash flow statement includes overdraft facilities.

Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax

effects, is included in equity attributable to the company’s equity holders.

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

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Discounting occurs only if the payable are significant

BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

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

Current and deferred income taxThe tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity, respectively

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected 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 the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects 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 the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Employee benefits(a) Pension obligationsGroup companies operate various pension schemes. The schemes are generally funded through payments to insurance companies, determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually

by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

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

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

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(b) Share-based compensationAGR has established a share investment program where the company and the employees invest in the Company’s shares. (For further description of the programme see note 37).

(c) Termination benefitsTermination benefits are payable when employment is terminated by the group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.

(d) Bonus plansThe group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.


ProvisionsProvisions are recognised when, and only when, the company has a present liability (legal or constructive) as a result of events that have taken place, it is probable that a financial outflow will take place as a result of this liability, and that the size of the amount can be estimated reliably. Provisions are reviewed on each balance sheet date and their level reflects the best estimate of the liability. When the effect of time is insignificant, the provisions will be equal to the size of the expense necessary to be free of the liability. When the effect of time is significant, the provisions will be the present value of future payments to cover the liability. Any increase in the provisions due to time is presented as interest costs. Contingent liabilitiesContingent liabilities are defined as:(i) possible obligations resulting from past events whose existence depends on future events;(ii) obligations that are not recognised because it is not probable that they will lead to an outflow of resources; and(iii) obligations that cannot be measured with sufficient reliability.

Contingent liabilities are not recognised in the annual financial statements, apart from contingent liabilities which are acquired through the acquisition of an entity. Significant contingent liabilities are disclosed, with the exception of contingent liabilities where the probability of the liability occurring is remote.

Contingent liabilities acquired upon the purchase of operations are recognised at fair value even if the liability is not probable. The assessment of probability and fair value is subject to constant review. Changes in the fair value are recognised in the income statement.

A contingent asset is not recognised in the annual financial statement unless deemed virtually certain to give rise to an inflow, but are disclosed where it is deemed probable that a benefit will accrue to the Group.

Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the group.

Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue. Similarly, when an agency relationship, the gross inflows of economic benefits include

amounts collected on behalf of the principal and which do not result in increases in equity for the entity. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

The Group’s operations mainly consist of services related to personnel and equipment hire. Consequently, the revenue recognition is based on daily/monthly rates and actual registered hours. Revenue is recognised when it is probable that transactions will generate future economic benefits that will flow to the company and the revenue amount can be reliably estimated. Revenues from the sale of goods are recognised in the income statement once delivery has taken place, the risk has been transferred and the company has established a receivable due by customer.

Revenues relating to projects are recognised in the income statement in line with the project’s progress and when the project’s results can be reliably estimated. Level of completion is calculated as an incurred cost’s percentage of anticipated total cost. For projects expected to generate a loss, the full estimated loss is recorded as cost immediately.

Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

Public grantsGrants received are classified as either income grants or investment grants. Income grants are accounted for together with the income as reduction of the costs to which it relates. Investment grants are posted as a pre-tax figure by recording the asset at gross acquisition cost and the asset is depreciated over its usful life. The grant is treated as deferred income, and is accounted for as an adjustment entry for depreciations in line with the depreciation period.


Other grantsThe Group receives grants from some of its collaborating partners to develop new technology. The grant is treated as deferred income, and is accounted for as an adjustment entry for depreciations in line with the depreciation period.

LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Earnings per shareEarnings per share are calculated by the majority’s share of the result for the period being divided by a time-weighted average of ordinary shares for the period.

Events after date of balance sheet New information on the company’s positions at the balance sheet date is taken into account in the annual financial statements. Events after the balance sheet date that do not affect the company’s position at the balance sheet date but which will affect the company’s position in the future are disclosed if significant.

Cash Flow StatementThe cash flow statement presents the accumulated cash flow for operational, investment and financial activities. The statement outlines the effect each activity has on liquid assets. The cash flow statement has been prepared in line with the indirect model.

Discontinued operations If a significant part of the Group’s operations is divested or a decision has been made to divest it, this business is presented as “Discontinued operations” on a separate line of the income statement and the balance sheet. As a result, all the other figures presented are exclusive of the discontinued operations. The comparative figures in the income statement are restated and presented on a single line with the discontinued operations. Comparative figures in the balance sheet are not correspondingly restated.

Changes in accounting policy and disclosuresIFRSs and IFRICs issued but not yet effectiveIFRS 7 Financial Instruments – Disclosures (amendment)The amendment relates to disclosure requirements for financial assets that are derecognised in their entirety, but where the entity has a continuing involvement. The amendments will assist users in understanding the implications of transfers of financial assets and the potential risks that may remain with the transferor. The amended IFRS 7 is effective for annual periods beginning on or after 1 July 2011. The Group expects to implement the amended IFRS 7 as of 1 January 2012. The amendment

affects disclosure only and has no impact on the Group’s financial position or performance. IFRS 7 Financial Instruments – Disclosures (amendment)The IASB has introduced new disclosure requirements in IFRS 7. These disclosures, which are similar to the new US GAAP requirements, would provide users with information that is useful in (a) evaluating the effect of potential effect of netting arrangements on an entity’s financial position and (b) analysing and comparing financial statements prepared in accordance with IFRSs and US GAAP. The amended IFRS 7 is effective for annual periods beginning on or after 1 January 2013, but the amendment is not yet approved by the EU. The Group expects to implement the amended IFRS 7 as of 1 January 2013. The amendment affects disclosure only and has no impact on the Group’s financial position or performance. IFRS 9 Financial InstrumentsIFRS 9 as issued reflects the first phase of the IASBs work on replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. According to IFRS 9 financial assets with basic loan features shall be measured at amortised cost, unless one opts to measure these assets at fair value. All other financial assets shall be measured at fair value. The classification and measurement of financial liabilities under IFRS 9 is a continuation from IAS 39, with the exception of financial liabilities designated at fair value through profit or loss (fair value option), where change in fair value relating to own credit risk shall be separated and shall be presented in other comprehensive income. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. IFRS 9 is effective for annual periods beginning on or after 1 January 2015, but the standard is not yet approved by the EU. The Group expects to apply IFRS 9 as of 1 January 2015. IFRS 10 Consolidated Financial StatementsIFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation — Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January 2013, but is not yet approved by the EU. The Group expects to apply IFRS 10 as of 1 January 2013. IFRS 11 Joint Arrangements IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary


Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. This standard becomes effective for annual periods beginning on or after 1 January 2013, but is not yet approved by the EU. The Group expects to apply IFRS 11 as of 1 January 2013. IFRS 12 Disclosure of Involvement with Other Entities IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1 January 2013, but is not yet approved by the EU. The Group expects to apply IFRS 12 as of 1 January 2013. IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance. This standard becomes effective for annual periods beginning on or after 1 January 2013, but is not yet approved by the EU. The Group expects to apply IFRS 13 as of 1 January 2013. IAS 1 Financial Statement Presentation (amendment)The amendments to IAS 1 change the grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or ‘recycled’) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has there no impact on the Group’s financial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012, but is not yet approved by the EU. The Group expects to apply the amended IAS 1 as of 1 January 2013. IAS 12 Income Taxes (amendment)The amendments intend to provide a practical solution to a problem relating to investment properties that arises in certain jurisdictions. As a result of the amendments deferred tax on investment property measured at fair value is required to be determined using the rebuttable presumption that the carrying amount of the underlying asset will be recovered through sale (rather than use). The presumption is rebutted if the investment property is depreciable and it is held within a business model whose objective is to consume substantially all of the economic

benefits in the investment property over time, rather than through use. The amendments incorporate SIC 21 Income Taxes – Recovery of Revalued Non-Depreciable Assets into IAS 12. As a result IAS 12 will require that deferred tax arising from a non-depreciable asset measured using the revaluation model in IAS 16 Property, plant and equipment will always be determined on a sale basis. The amended IAS 12 is effective for annual periods beginning on or after 1 January 2012, but the amendment has not yet been approved by the EU. The Group expects to implement the amended IAS 12 as of 1 January 2012. IAS 19 Employee Benefits (amendment) The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The amended standard becomes effective for annual periods beginning on or after 1 January 2013, but has not yet been approved by the EU. The Group expects to implement the amended IAS 19 as of 1 January 2013. IAS 27 Separate Financial Statements (as revised in 2011) As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. IAS 27 as revised in 2011 becomes effective for annual periods beginning on or after 1 January 2013, but the revised standard has not yet been approved by the EU. The Group expects to implement the revised IAS 27 as of 1 January 2013. IAS 28 Investments in Associates and Joint Ventures (as revised in 2011) As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. IAS 28 as revised in 2011 becomes effective for annual periods beginning on or after 1 January 2013, but the revised standard has not yet been approved by the EU. The Group expects to implement the revised IAS 28 as of 1 January 2013. IAS 32 Financial Instruments - Presentation (amendment)The amendments to IAS 32 clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneously. The amended IAS 32 is effective for annual periods beginning on or after 1 January 2014, but the amendment has not yet been approved by the EU. The Group expects to implement the amended IAS 32 as of 1 January 2014.


IFRIC 20 Stripping Costs in the Production Phase of a Surface MineIFRIC 20 is developed by the IFRS Interpretations Committee in order to clarify the requirements for accounting for stripping costs in the production phase of a surface mine. The Interpretation was developed to address issues comprising recognition of production stripping costs as an asset, the initial measurement of the stripping activity asset, and subsequent measurement of the stripping activity asset. IFRIC 20 is effective for annual periods beginning on or after 1 January 2013, but has not yet been approved by the EU. The Group expects to implement IFRIC 20 as of 1 January 2013.

note 02 Financial risk management

Financial risk factorsThe Group’s activities are exposed to a variety of financial risks. Market risks including currency risk, interest rate risk, credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses debt and derivative financial instruments to hedge certain risk exposures. Risk management is carried out by a central treasury department (group treasury) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in co-operation with the group’s operating units. The board provides risk management policies covering specific areas, such as foreign exchange risk, interest rate risk, liquidity risk and credit risk. (a) Market risk(i) Foreign exchange riskThe Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar and GBP. Foreign exchange risk arises from future commercial 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 NOK equivalents. Positions are reviewed quarterly. Hedging is conducted by applying combination of long term foreign currency term loans and currency derivatives. If the NOK currency in 2011 had weakened/strengthened by 10% against the US Dollar with all other variables held constant, EBITDA for the year would have been approximately NOK 8 million higher/lower, mainly as a result of foreign exchange gains/losses on translation of net US Dollar revenues.

If the NOK currency had weakened/strengthened 10% against the GBP with all other variables held constant, EBITDA for the year would have been approximately NOK 6 million lower/higher, mainly as a result of foreign exchange gains/losses on translation of net GBP costs.

(ii) Price riskThe 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 riskAs the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent 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 cash flow interest rate risk. Group policy is that long-term borrowings shall be based on floating interest rates, however interest rate derivatives shall 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 cap on interest rates in case of significant increase in market interest rates. In addition, the group has applied floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.

Based on the risk analysis where a 1% interest rate increase/decrease is applied, the impact of net interest expenses would be negative NOK 3.5 million and positive NOK 2.5 million respectively. At 31 December 2011 the Group held 4 interest rate swap contracts with a total amount of NOK 392 million and 1 interest rate collar swap amounting to NOK 261 million, which in aggregate constitutes approximately 89 % of the Group’s long-term interest bearing debt.

(b) Credit riskCredit risk is managed on group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits 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. The Group’s customers in the division Drilling Services are mainly the large international oil companies with limited to low credit risk potential. The Petroleum Services customers consist of large, medium and small oil companies. Some of these


customers have moderate credit risk potential. The Group seeks 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 are DnB and Nordea where all long- and short term loan facilities are placed. DnB is the main bank for cash management deposits and services. In addition the Group has other local banking relations

in countries where neither DnB nor Nordea offer their services. The table below shows the rating of the Group main cash management bank.

(c) Liquidity riskThe Group has a significant customer portfolio with large, medium and small cap customers. Delayed payments from some of the largest customers at the same time could have a significant impact on the Group’s liquidity situation.

31.12.11 31.12.10

Counterparty RatingOverdraft

facility limit BalanceOverdraft

facility limit Balance

Moody s S&P

DNB Bank ASA Aa3 A+ 70 000 770 116 100 000 16 607


Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, group treasury maintains flexibility in funding by maintaining availability under committed credit lines. At 31 December 2011 the Group had undrawn committed short-term credit lines amounting to NOK 190 million plus cash deposits of NOK 821 million, of which NOK 770 million were deposited with the Group s main bank DNB ASA. Some uncertainty exists with regards to the possibility to set-off the deposit

against loans provided by the same bank. However in case of a financial market distress situation, AGR has the right to make prepayments on term loans. 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 maturity groupings based on the remaining period at the balance sheet to the contractual maturity date.

31.12.11 (TNOK)Less than

1 yearBetween 1

and 2 yearsBetween 2

and 5 years Over 5 Years

Borrowings - DNB (see note 21) 80 647 657 051 - -

Derivative financial instruments (interest rate swaps & collars) 10 000 -

Trade and other payables 540 600 - - -


1 yearBetween 1



Borrowings - DNB (see note 21) 275 175 294 064 591 706 -

Derivative financial instruments (interest rate swaps & collars) - 14 942 -

Trade and other payables 705 835 - - -


1 yearBetween 1



Forward exchange contracts - cash flow hedges - - - -

Forward exchange contracts - held for trading - - - -


1 yearBetween 1



Forward exchange contracts - cash flow hedges 99 - - -

Forward exchange contracts - held for trading - - - -

Figures in TNOK


Figures in TNOK

Capital risk managementThe Group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group s long term target capital structure is an equity ratio of at least 25% which is also reflected in the financial covenants set out in the Group s Credit Facilities Agreement entered into with DNB and Nordea. Please refer to note 21 for details regarding covenants.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to share-holders, return capital to shareholders, issue new shares or sell assets to reduce debt. The proposed level of dividends in 2012 is NOK 700 million, however the final amount of dividend will be decided in the Annual General Meeting in May 2012.

The gearing ratios, defined as net debt to total capital, at 31 December 2011 and 31 December 2010 were as follows:

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

2011 2010

Total borrowings (excluding capitalized arrangement fees) 737 698 1 160 946

Less: cash and cash equivalents (820 984) (45 519)

Net debt (83 286) 1 115 427

Total equity 1 411 469 665 372

Total capital 2 790 739 2 661 860

Gearing ratio -3 % 42 %


note 03 Critical accounting estimates and judgements

The preparation of consolidated financial statements in accordance with IFRSs and applying the chosen accounting policies requires 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 and estimates could result in outcomes that require material adjustment to the carrying amount of the asset or liability affected in future periods. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision 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. Impairment of non-current assetsAGR Group accounts for the impairment of non-current assets in accordance with IAS 36 Impairment of Assets. Under IAS 36 AGR Group are required to assess the conditions that could cause an asset to become impairment at least annually, and to perform a recoverability test for potentially impaired assets held by the entity. Impairment exists when the carrying value of an assets or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less cost to sell and its value to use. Directly observable market prices rarely exist for AGR Groups’ assets, however, fair value may be estimated based on recent observed transactions on comparable assets, bids or other discussions of potential transaction involving the asset, or internal models used by AGR Group for transactions involving the same type of assets. The value in use calculation is based on a discounted cash flow model. The cash flow are derived from budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. Such estimate are subjects to a number of assumptions including the useful lives of assets, 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 that the assumptions are appropriate, such amounts estimated could differ

materially from what will actually occur in the future. Refer to note 9 for disclosure of fixed assets. Impairment of goodwillIn 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 purchase price is included in goodwill. In the business AGR Group operates, fair values of individual assets and liabilities are normally not readily observable in active markets, which require AGR Group to estimate the fair value of acquired assets and liabilities through valuation techniques. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the management to estimate the future cash flows expected to arise from cash-generating units. See discussion above regarding impairment of non-current assets. According to impairment test performed for 2011 and 2010 the recoverable amounts exceed the carrying amount for Petroleum Services. The impairment test of goodwill is not sensitive to an increase of 1 % in 2011 or 2010 in the discount rate, or a 2% decrease in margins in 2011 or 2010 compared to management’s estimates. After impairment charges in 2009 there is no carrying amount in Drilling Services. Refer to note 8 for disclosure of goodwill. Fair value measurement of contingent considerationContingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definitions of a derivate and, thus a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount factor. Refer to note 26 for provisions for business combinations. Capitalised development costsCertain development costs are capitalised when it is probable that a development project will generate future economic benefits and certain criteria, including commercial and technological feasibility, have been met. These costs are then amortised on a systematic basis over their expected useful lives. During the development stage, management must estimate the commercial and technological feasibility of these projects as well as their expected useful lives. Whenever there is an indicator that development costs capitalised for a specific project may be impaired, the


recoverable amount of the asset is estimated. See discussion above regarding impairment of non-current assets. Refer to note 8 for disclosure of capitalised development cost. Trade receivablesCalculation of provision for impairment of trade receivables is based on a number of estimates. Areas including significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or 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 information could lead to significant changes in the recoverable amounts. Refer to note 13 for aging and provision for impairment of trade receivables.

Pension liabilitiesThe fair value of pension liabilities is calculated based on several actuarial and economic assumptions. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. The discount rate and other assumptions are normally reviewed annually when the actuarial calculation is carried out, unless there are significant changes during

the year. Refer to note 19 for disclosure of actuarial assumptions for the group.

Income taxAGR Group calculates income tax expense based on reported income in the different legal entities. Deferred income tax expense is calculated based on the differences between the assets’ carrying value for financial reporting purposes and their respective tax basis that are considered temporary in nature. The total amount of income tax expense and allocation between current and deferred income tax requires management’s interpretation of complex tax laws and regulations in the many tax jurisdictions where AGR Group operates. Valuation of deferred tax assets is dependent on management’s assessment of future recoverability 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 different conclusion regarding recoverability, and such change may affect the result for each reporting period. Tax authorities in different jurisdictions may challenge AGR Group’s calculation of tax payable from prior periods. Such process may lead to changes to prior periods’ taxable income, resulting in changes to income tax expense in the period of change. During the period when tax authorities may challenge the taxable income, management is required to make estimates of the probability and size of possible tax adjustments. Such estimates may change as additional information becomes known. Refer to note 20 disclosure of tax.

note 04 Business combinations

Acquisitions in 2011: There were no acquisitions in the year ended 31 December 2011.

Acquisitions in 2010: There were no acquisitions in the year ended 31 December 2010.

note 05 Segment information

For management purposes, the Group is organised into business units based on its products and services and has from 2011 three reportable segments, as follows:

• Petroleum Services segment, which deliver a broad service offering within reservoir evaluation, well planning, well opera-tions and integrated field management to the upstream oil and gas industry.

• Drilling Services segment develops and supplies market-leading technologies and services for the offshore oil and gas market.

• Group segment consist of corporate administration and special projects such as AGR CannSeal. The Field Operation segment was sold in December 2011.

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


Business areasPetroleum

ServicesDrilling

Services Group Elimin. Total

Profit and Loss Account 2011

External operating revenues 1 169 426 710 330 9 853 (21 694) 1 867 914

Intercompany operating revenues 13 132 206 11 578 (24 916) -

Project expenses/payroll expenses (1 032 052) (570 449) (64 841) 46 610 (1 620 732)

EBITDA1 150 506 140 087 (43 410) - 247 182

Depreciation and amortisation (24 629) (78 585) (3 514) - (106 728)

Operating profit(loss) 125 877 61 502 (46 924) - 140 454

Net financial items (47 690) (29 345) 163 892 (171 672) (84 815)

Tax (33 754) (16 464) 12 161 - (38 056)

Key figures 2011

Assets 2 154 464 738 359 2 417 531 (2 519 615) 2 790 739

Liabilities 2 045 949 385 686 750 920 (1 803 285) 1 379 270

Assets from discontinued operations - -

Liabilities from discontinued operatins - -

Investments 12 039 51 903 21 862 - 85 804

Investments ex.acquisition 12 039 51 903 21 862 - 85 804

Business areas Profit and Loss Account 2010

Petroleum Services

Drilling Services Group Elimin. Total

External operating revenues 1 093 004 341 242 9 767 1 243 1 445 256

Intercompany operating revenues 11 220 13 024 12 146 (36 390) -

Project expenses/payroll expenses (955 043) (288 916) (39 063) 35 147 (1 247 875)

EBITDA1 149 181 65 350 (17 150) - 197 381

Depreciation and amortisation (42 372) (78 331) (2 105) - (122 808)

Operating profit(loss) 106 809 (12 981) (19 255) - 74 573

Net financial items (66 555) (39 412) (108 969) 123 538 (91 398)

Tax (8 141) 4 462 765 - (2 914)

Key figures 2010

Assets 2 091 368 846 309 1 016 809 (1 292 632) 2 661 854

Liabilities 2 030 680 496 288 261 310 (791 790) 1 996 488

Assets from discontinued operations 6 6

Liabilities from discontinued operatins - -

Investments 10 352 42 532 20 835 - 73 719

Investments ex.acquisition 10 352 42 532 20 835 - 73 719

1 EBITDA is short for Earnings Before Interest, Tax, Depreciation and Amortization, excluding stock write downs and is a non-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 borrowings including related hedging derivatives.

Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions resulting from acquisitions through business combinations.

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

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

Figures in TNOK


note 06 Geographical segment information Figures in TNOK

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

note 07 Operating revenues Figures in TNOK

Operating revenues 2011 2010

Norway 771 326 548 026

Europe excl. Norway 387 819 106 210

Australia 95 725 284 413

Asia 187 766 176 699

America 304 139 192 396

Africa 121 138 137 513

Total 1 867 914 1 445 256

AGR does not have transactions with single external customers where revenues amount to more than 10 % of the group’s total revenues.

Non-current assets 2011 2010

Norway 810 552 1 052 692

Europe ex. Norway 202 511 342 562

Australia 36 463 98 156

Asia 1 206 11 234

America 260 546 258 714

Africa - -

Total 1 311 278 1 763 357

Operating revenue comprises: 2011 2010

Sale of goods 65 321 10 769

Sale of services 1 766 924 1 386 249

Total sales revenue 1 832 245 1 397 018

Other sales 35 669 48 239

Total other operating revenue 35 669 48 239

Total operating revenue 1 867 914 1 445 257


note 08 Intangible assets Figures in TNOK

2011 Goodwill

Acquired patents development

projects

Self-developed patents develop-

ment project Total

Historical cost 01.01.11 1 162 427 488 018 260 255 1 910 699

Additions - - 43 209 43 209

Disposals - - 2 072 2 072

Disposal discontinued operations 352 806 152 820 24 145 529 770

Exchange differences 12 546 (485) (22) 12 039

Historical cost 31.12.11 822 167 334 713 277 225 1 434 105

Accumulated amortisation 01.01.11 - 366 106 39 522 405 628

Amortisation of the year - 12 596 10 199 22 795

Disposals amortisation during the year - - 352 352

Disposal discontinued operations - 131 028 6 986 138 014

Conversion variances - - 461 461

Amortisation 31.12.11 - 247 673 42 845 290 518

Accumulated impairments 01.01.11 240 541 76 872 82 558 399 971

Impairments/reversals for the year - - - -

Disposal discontinued operations - 540 4 226 4 766

Conversion variances - - - -


Book value 31.12.11 581 626 10 708 156 048 748 382

Amortisation rates 2.5 - 5 years 5 years

Amortisation method Linear Linear

Self developed assets are started amortized when they are fully developed.

2010 Historical cost 01.01.10 1 142 390 484 275 209 873 1 836 537

Additions - - 60 960 60 960

Disposals 1 076 - 10 420 11 496

Exchange differences 21 113 3 742 (158) 24 698

Historical cost 31.12.10 1 162 427 488 018 260 255 1 910 700

Accumulated amortisation 01.01.10 - 310 258 38 548 348 806

Amortisation of the year - 55 848 11 329 67 177

Disposals amortisation during the year - - 10 241 10 241

Conversion variances - - (114) (114)

Amortisation 31.12.10 - 366 106 39 522 405 628


Impairments for the year - - - -

Conversion variances - - - -


Book value 31.12.10 921 886 45 039 138 174 1 105 101

Amortisation rates 2.5 - 5 years 5 years

Amortisation method Linear Linear


In the specification of self-developed patents and developments projects 102 million of total 156 million in 2011, and 80 million of total 138 million in 2010, are related to a single project named CannSeal. The CannSeal service allows a designer epoxy to be deployed downhole with a patented tool to provide a durable annular seal. The epoxy properties can be tailored to the application to optimize deployment and after hardening to enhance the durability of the seal. The patented tool was qualified for zonal isolation in 2010. During 2011, further development of both the Epoxy and tool took place to accommodate clients’ expressed needs. A commercial agreement was found with one client to develop a 3.3” version of the tool, thereby extending the pre-operational phase until 2012.

The recoverable amount of CannSeal is determined based on a value-in-use calculation. The calculation use cash flow projections based on a conservative financial forecast. Cash flows beyond the five-year period are extrapolated using the estimated growth rates.

The key assumptions used for value-in-use calculations are as follows:

CannSeal

Gross margin 58% - 83%

Growth rate 2.5%

Discount rate *1 19.4%

*1) The impairment test of CannSeal is not sensitive to an increase of 2 % in the discount rate, or an 8 % decrease in margins.

The table below specifies goodwill per acquisition for the Group:

Goodwill DPT Triangle AGR

Acquired 2004 - - 331 878

Acquired 2005 87 468 25 162 -

Acquired 2006 20 000 - -

Acquired over the year - - -

Disposal during the year - - (142 131)

Exchange differences - - -

Acquisition cost 31.12.11 107 468 25 162 189 747

Amortisation for the year - - -

Amortisation 31.12.11 - - -

Accumulated impairments 01.01.11 - - 189 747

Impairments for the year - - -

Accumulated impairments 31.12.11 - - 189 747

Book value 01.01.11 107 468 25 162 142 131

Book value 31.12.11 107 468 25 162 -


Goodwill Cleanup Well TD RES

Acquired 2004 9 893 13 558 - -

Acquired 2005 - - - -

Acquired 2006 - - - 103 462

Acquired over the year - - - -

Disposal diring the year - - - -

Exchange differences - - - -

Acquisition cost 31.12.11 9 893 13 558 - 103 462

Amortisation for the year - - - -

Amortisation 31.12.11 - - - -

Accumulated impairments 01.01.11 9 893 13 558 - -



Book value 01.01.11 - - - 103 462

Book value 31.12.11 - - - 103 462

Goodwill Peak SeaVation Upstream FJ Brown

Acquired 2004 - - - -

Acquired 2005 - - - -

Acquired 2006 241 626 38 683 - -

Acquired 2007 (5 241) (6 053) 169 762 69 452


Disposal during the year - - (210 675) -

Exchange differences (44 668) (5 287) 40 913 686




Accumulated impairments 01.01.11 - 27 343 - -



Book value 01.01.11 187 570 - 205 891 68 295

Book value 31.12.11 191 717 - - 70 138

Goodwill per acquisition for the Group: Cont.



Goodwill Cleanup Well TD RES

Acquired 2004 9 893 13 558 - -

Acquired 2005 - - - -

Acquired 2006 - - - 103 462


Disposal diring the year - - - -

Exchange differences - - - -







Book value 01.01.11 - - - 103 462

Book value 31.12.11 - - - 103 462

Goodwill Peak SeaVation Upstream FJ Brown

Acquired 2004 - - - -

Acquired 2005 - - - -

Acquired 2006 241 626 38 683 - -

Acquired 2007 (5 241) (6 053) 169 762 69 452


Disposal during the year - - (210 675) -

Exchange differences (44 668) (5 287) 40 913 686







Book value 01.01.11 187 570 - 205 891 68 295

Book value 31.12.11 191 717 - - 70 138

Goodwill SafeControl Marine

Engineering Tracs Total

Acquired 2004 - - - 355 329

Acquired 2005 - - - 112 630

Acquired 2006 - - - 403 771

Acquired 2007 - - - 227 920

Acquired 2008 - 1 800 101 956 103 756

Acquired 2009 - - (12 205) (12 205)

Acquired 2010 - - (1 076) (1 076)


Disposal during the year - - - (352 806)

Exchange differences - - (6 795) (15 151)

Acquisition cost 31.12.11 - 1 800 81 880 822 167



Accumulated impairments 01.01.11 - - - 240 541


Accumulated impairments 31.12.11 - - - 240 541

Book value 01.01.11 - 1 800 80 108 921 888

Book value 31.12.11 - 1 800 81 880 581 627

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

Goodwill per segment Group-Other Petroleum

Services Drilling Services Field Operations Total

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

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

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates.


Petroleum Services

EBITDA-margin *1 11.6%-13.6%

Growth rate *2 2.5%

Discount rate *3 11.8%

*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.

The key assumptions used for value-in-use calculations are as follows:

note 09 Fixed assets Figures in TNOK

2011 Machinery and

operating equipment Land, permanent property Total

Historical cost 01.01.11 971 958 194 972 152

Additions 46 418 - 46 418

Disposals 4 454 - 4 454

Disposals discontinued operations 194 203 194 194 397

Conversion variances 1 300 - 1 300

Historical cost 31.12.11 821 019 - 821 019

Accumulated deprecation 01.01.11 435 784 161 435 945

Amortisation of the year 83 934 - 83 934

Disposals deprecation during the year 4 392 - 4 392

Disposals discontinued operations 112 404 161 112 565


Accumulated depreciations 31.12.11 404 256 - 404 256

Accumulated impairments 01.01.11 82 338 - 82 338

Impairments/reversals for the year (6 889) - (6 889)

Disposals discontinued operations 3 856 3 856


Book value 31.12.11 345 169 - 345 169

Depreciation rates 3 - 8 years 20 years/indefinitely

Depreciation method Linear Linear

Information regarding disposal discontinued operations is disclosed in note 36.



2010 Machinery and

operating equipment Land, permanent property Total

Historical cost 01.01.10 925 550 194 925 744

Additions 65 927 - 65 927

Disposals 26 932 - 26 932


Historical cost 31.12.10 971 958 194 972 152

Accumulated depreciation 01.01.10 334 220 150 334 370

Amortisation of the year 112 457 12 112 469

Disposals depreciation during the year 11 098 - 11 098

Conversion variances 206 (1) 205

Accumulated depreciations 31.12.10 435 784 161 435 946


Impairments for the year 218 - 218


Book value 31.12.10 453 836 33 453 868

Depreciation rates 3 - 8 years 20 years/indefinitely

Depreciation method Linear Linear

2010 is corrected for errors in depreciations in 2009 and 2010. The errors are considered to belong to previous years and are recognised directly to equity.


note 10 Group entities and investments in joint ventures and associated companies

Group Equity interest Voting share

Joint Ventures / Associated companies

FPSO Shiraz Pty Ltd 50 % 50 %

Hemla II AS (from 2010) 50 % 50 %

Overview of balance sheet value Hemla II AS FPSO Shiraz Pty Ltd

2010 2010

Share of fair value associate’s identifiable net assets at acquisition -

Excess value recorded as identifiable assets - -

Excess value recognised as goodwill - -

Historical cost 31.12. - -

Share of annual net result - -

Depreciation excess value identifiable assets - -

Depreciation goodwill - -

Share of profit for the year - -

Book value 01.01. 1 780

Additions 260 -

Provision for Impairment (260) (1 524)

Share of profit for the year - -

Book value 31.12. - 256

Excess value goodwill - -

Excess value identifiable assets - -

Excess value not depreciated 31.12. - -

Hemla II AS and FPSO Shiraz Pty Ltd was sold during 2011.

The companies follow the same financial year as the Group. In 2010 the companies had a revenue of TNOK 20 029 and a net result of TNOK (5 622) inclusive provision for impairment. Book value of total assets at 31 December 2010 was TNOK 13 126 and book value of liabilities at 31 December 2010 was TNOK 83 023. Equity accounted for TNOK (656 216).

Figures in TNOK


Subsidiary companies 2011: Head Office Equity interest Voting share

AGR Business Partner AS Fjell - Norway 100 % 100 %

AGR Canada Inc Houston-USA 100 % 100 %

AGR CannSeal AS Fjell - Norway 95 % 95 %

AGR Cleanup AS Fjell - Norway 100 % 100 %

AGR Central Asia AS Oslo - Norway 100 % 100 %

AGR Central Asia AS (Branch) Almaty - Kazakstan 100 % 100 %

AGR Consultancy Services AS Stavanger - Norway 100 % 100 %

AGR Consultancy Solutions Ltd Aberdeen - UK 100 % 100 %

AGR Deepwater Technologies Inc Delaware-USA 100 % 100 %

AGR Drilling Services Canada Inc Houston-USA 100 % 100 %

AGR Drilling Services do Brasil Ltda Rio de Janeiro - Brasil 100 % 100 %

AGR Drilling Services Holdings AS Fjell - Norway 93 % 93 %

AGR Drilling Services Pty Ltd Perth - Australia 100 % 100 %

AGR Energy AS Oslo - Norway 100 % 100 %

AGR F.J Brown Inc Houston-USA 100 % 100 %

AGR Facilities Solutions AS Oslo - Norway 80 % 80 %

AGR Group Abu Dhabi (Branch) Abu Dhabi - UAE 100 % 100 %

AGR Group Americas Inc Houston-USA 100 % 100 %

AGR Group Holdings Ltd Aberdeen - UK 100 % 100 %

AGR Group Mexico Inc Houston-USA 100 % 100 %

AGR Group Mexico S de R.L de C.V Houston-USA 100 % 100 %

AGR Marine Engineering AS Ålesund - Norway 100 % 100 %

AGR Peak Solution Systems Pty Ltd Perth - Australia 100 % 100 %

AGR Petroleum (ME) Ltd Dubai - UAE 100 % 100 %

AGR Petroleum Services AS Oslo - Norway 100 % 100 %

AGR Petroleum Services Holdings AS Fjell - Norway 98 % 98 %

AGR Petroleum Services Inc Houston-USA 100 % 100 %

AGR Reservoir Evaluation Services Kazakstan - (Branch) Almaty - Kazakstan 100 % 100 %

AGR Reservoir Evaluation Services Kazakstan Ltd Aberdeen - UK 100 % 100 %

AGR Solution Systems Ltd Aberdeen - UK 100 % 100 %

AGR Subsea AS Fjell - Norway 100 % 100 %

AGR Subsea Inc Houston-USA 100 % 100 %

AGR Subsea Ltd Aberdeen - UK 100 % 100 %

AGR Well Management Ltd Aberdeen - UK 100 % 100 %

AGR Well Services AS Fjell - Norway 100 % 100 %

Altinex Inc Houston-USA 100 % 100 %

Peak Group Asia Pacific Pty Ltd Perth - Australia 100 % 100 %

Teredo AS Oslo - Norway 100 % 100 %

Tracs Consult LLC Moscow - Russia 100 % 100 %

Tracs International Consultancy Ltd Aberdeen - UK 100 % 100 %

Tracs International Training Ltd Aberdeen - UK 100 % 100 %


Subsidiary companies 2010: Head Office Equity interest Voting share AGR Asia Pacific NZ Ltd New Plymouth - New Zealand 100 % 100 %AGR Asia Pacific Pty Ltd Melbourne - Australia 100 % 100 %AGR Asia Pacific Sdn Bhd Kuala Lumpur - Malaysia 100 % 100 %AGR Business Partner AS Fjell - Norway 100 % 100 %AGR CannSeal AS Fjell - Norway 95 % 95 %AGR Central Asia AS Oslo - Norway 100 % 100 %AGR Central Asia AS (Branch) Almaty - Kazakstan 100 % 100 %AGR Consultancy Services AS Stavanger - Norway 100 % 100 %AGR Deepwater Technologies Inc Delaware-USA 100 % 100 %AGR Drilling Services Canada Inc Houston - USA 100 % 100 %AGR Drilling Services do Brasil Ltda Rio de Janeiro - Brazil 100 % 100 %AGR Drilling Services Holdings AS Fjell - Norway 93 % 93 %AGR Drilling Services Pty Ltd Perth - Australia 100 % 100 %AGR EmiTeam AB Varberg - Sweden 100 % 100 %AGR EmiTeam AS Fjell - Norway 100 % 100 %AGR Facilities Solutions AS Oslo - Norway 100 % 100 %AGR Field Operations Holdings AS Fjell - Norway 95 % 95 %AGR FJ Brown Inc Houston - USA 100 % 100 %AGR Group Abu Dhabi (Branch) Abu Dhabi - UAE 100 % 100 %AGR Group Americas Inc Houston - USA 100 % 100 %AGR Group Brazil Servicos de Petroleo Ltda Rio de Janeiro - Brazil 100 % 100 %AGR Group Canada Inc Houston - USA 100 % 100 %AGR Group Field Operations Inc Houston - USA 100 % 100 %AGR Group Mexico Inc Houston - USA 100 % 100 %AGR Integrity UK Ltd Aberdeen - UK 100 % 100 %AGR Malaysia Sdn Bhd Kuala Lumpur - Malaysia 100 % 100 %AGR Marine Engineering AS Ålesund - Norway 100 % 100 %AGR Oil and Gas Services Pty Ltd Melbourne - Australia 100 % 100 %AGR Peak Consultancy Services Ltd Aberdeen - UK 100 % 100 %AGR Peak Group Asia Pacific Pty Ltd Perth - Australia 100 % 100 %AGR Peak Group Holdings Ltd Aberdeen - UK 100 % 100 %AGR Peak Solutions Systems Ltd Aberdeen - UK 100 % 100 %AGR Peak Solutions Systems Pty Ltd Perth - Australia 100 % 100 %AGR Peak Well Management Ltd Aberdeen - UK 100 % 100 %AGR Peak Well Mangagement M.E. Ltd Dubai - UAE 100 % 100 %AGR Petroleum Services AS Oslo - Norway 100 % 100 %AGR Petroleum Services Holdings AS Fjell - Norway 100 % 100 %AGR Petroleum Services Inc. Houston - USA 100 % 100 %AGR Pipetech AS Fjell - Norway 100 % 100 %AGR Reservoir Evaluation Services Kazakstan - (Branch) Almaty - Kazakstan 100 % 100 %AGR Reservoir Evaluation Services Kazakstan Ltd Aberdeen - UK 100 % 100 %AGR Reservoir Evaluation Services LLP Almaty - Kazakstan 100 % 100 %AGR Subsea AS Fjell - Norway 100 % 100 %AGR Subsea Inc Houston-USA 100 % 100 %AGR Subsea Ltd Aberdeen - UK 100 % 100 %AGR Technology Design Ltd Manchester - UK 100 % 100 %Altinex Inc Houston - USA 100 % 100 %Liquegas Energy Pty Ltd Melbourne - Australia 100 % 100 %Teredo AS Oslo - Norway 100 % 100 %Tracs Consult LLC Moscow - Russia 100 % 100 %Tracs International Consultancy Ltd Aberdeen - UK 100 % 100 %Tracs International Training Ltd Aberdeen - UK 100 % 100 %

note 10 Group entities and investments in joint ventures and associated companies


Inventory

2011 2010

Stocks 1 379 3 558

Work in progress - 123

Finished goods 19 156 9 584

Total inventories 31.12. 20 535 13 266

All amounts are net of any write-downs for obsolescence. The total of write-downs included is TNOK 5 100 in 2011 and TNOK 1 371 in 2010.

Trade receivables

2011 2010

Trade debtors at nominal value 401 497 586 001

Revenues not invoiced 133 688 148 437

Trade receivables from related parties (refer to note 30) 18 18

Provisions for bad debt (13 794) (7 186)

Trade receivables 31.12. 521 410 727 270

Aging trade debtors at nominal value

2011 2010

Receivables not overdue 326 995 439 007

Receivables overdue up to 3 months 162 181 241 213

Receivables overdue more than 3 months 46 027 54 237

Provision (13 794) (7 186)

Trade debtors 31.12. 521 410 727 270

Individually impaired Collectively impaired Total

Provision 01.01.10 (2 977) - (2 977)

Charge for the year (4 432) - (4 432)

Utilised 224 - 224

Unused amounts reversed - - -

Provision 31.12.10 (7 186) - (7 186)

Charge for the year (9 726) - (9 726)

Utilised 252 - 252

Unused amounts reversed 2 865 - 2 865

Provision 31.12.11 (13 794) - (13 794)

note 11 Inventory Figures in TNOK

note 12 Trade receivables Figures in TNOK

note 13 Aging trade debtors at nominal value Figures in TNOK


Other current receivables

2011 2010

Other taxes receivables 68 591 34 523

Advanced payments to suppliers 14 981 33 082

Overseas witholding taxes - 807

Advanced payments employees 1 174 1 709

Other prepaid expenses 7 037 38 640

Receivables from related parties 1 000 -

Other current assets 23 654 3 587

Other current receivables 31.12. 116 437 112 349

Cash and cash equivalents

2011 2010

Cash 4 291 8 437

Bank deposits 816 693 37 082

Cash and cash equivalents 31.12. 820 984 45 519

Of which is restricted deposits* 757 782

Unused overdraft facilities 31.12. 190 000 170 000

*Deducted employee tax due within 3 months

note 14 Other current receivables Figures in TNOK

note 15 Cash and cash equivalents Figures in TNOK


Financial instruments by category

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

31.12.11Loans and

receivables

Assets at fair value through the

profit and loss Total

Assets as per balance sheet

Derivative financial instruments - - -

Trade and other receivables 637 847 - 637 847

Other financial assets at fair value - - -

Cash and cash equivalents 820 984 - 820 984

Total 1 458 831 - 1 458 831

Liabilities at fair value through the profit and loss

Derivatives used for hedging

Other financial liabilities Total

Liabilities as per balance sheet

Borrowings - DNB/Nordea - - 737 698 737 698

Derivative financial instruments (10 000) - - (10 000)

Total (10 000) − 737 698 727 698

31.12.10Loans and

receivables

Assets at fair value through the

profit and loss Total

Assets as per balance sheet

Derivative financial instruments - - -

Trade and other receivables 839 619 - 839 619

Other financial assets at fair value - - -

Cash and cash equivalents 45 519 - 45 519

Total - 885 138 - 885 138

Liabilities at fair value through the profit and loss

Derivatives used for hedging

Other financial liabilities Total

Liabilities as per balance sheet

Borrowings - DNB/Nordea - - 1 160 945 1 160 945

Derivative financial instruments (14 842) - - (14 842)

Total (14 842) - 1 160 945 1 146 103

note 16 Financial instruments by category Figures in TNOK


note 17 Share Capital and Shareholder Information Figures in TNOK

At 31 December 2011 and at 31 December 2010 the company had a share capital of TNOK 251 797 distributed in 125 898 308 shares, each with a nominal value of NOK 2. All issued shares are fully paid. The company has one share class, and all shares have equal voting and dividend rights. During 2010, the company bought 1 498 505 of its own shares in order to comply with obligations under the employees’ incentive scheme. The total amount paid to acquire the shares was TNOK 21 979. The nominal value of the shares is TNOK 2 997 and the premium TNOK 18 982. In total, the company owned 1 815 845 AGR shares per 31 December 2011 and per 31 December 2010. Shareholders in AGR Group ASA with a minimum of 1% share of ownership, as well as shares held by executive employees and board members including shares owned by affiliated individuals and companies, were at 31 December 2011 as follows:

Shareholders 31.12.11 Number of shares Equity interest

Altor Oil Service Invest AS 97 659 680 77.6%

RBC Dexia Investor Services Bank 7 717 390 6.1%

Hemca AS 3 489 759 2.8%

Invesco Perp Eur Small Comp FD 1 832 185 1.5%

AGR Group ASA 1 815 845 1.4%

Verdipapirfondet DNB Navigator 1 632 350 1.3%

DNB SMB 1 407 177 1.1%

Aequitas AS 1 334 092 1.1%

The Northern Trust Co 1 301 595 1.0%

Total shareholders with equity interest > 1.0 % 118 190 073 93.9%

Total other shareholders 7 708 235 6.1%

Total 125 898 308 100 %

Board:

Eivind Reiten (indirectly owned via Mocca Invest AS) 17 679 0.0%

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%

Total shares owned by the management group 3 489 759 2.8%


Shareholder overview: Shareholders in AGR Group ASA with a minimum of 1% share of ownership, as well as shares held by executive employees and board members including shares owned by affiliated individuals and companies, were at 31. December 2010 as follows:

Shareholders 31.12.10 Number of shares Equity interest

Altor Oil Service Invest AS 97 659 680 77.6%

RBC Dexia Investor Services Bank 8 358 096 6.6%

Hemca AS 3 489 759 2.8%

Bank of New York Mellon SA/NV 1 835 687 1.5%

AGR Group ASA 1 815 845 1.4%

DNB SMB 1 454 289 1.2%

The Northern Trust Co 1 384 000 1.1%

Total shareholders with equity interest > 1.0 % 115 997 356 92.1%

Total other shareholders 9 900 952 7.9%

Total 125 898 308 100 %

Board:

Eivind Reiten (indirectly owned via Mocca Invest AS) 17 679 0.0%

Tove Magnussen 30 065 0.0%

Per Inge Remmen (indirectly owned via PIR AS) 4 208 0.0%

Total shares owned by board members 51 952 0.0%

Management:

Sverre Skogen (indirectly owned via Hemaca AS) 3 489 759 2.8%

Total shares owned by the management group 3 489 759 2.8%


note 18 Share capital and premium Figures in TNOK

note 19 Pensions and pension commitments Figures in TNOK

Share capital and premium

Number of shares

(thousands)Ordinary

sharesTreasury

sharesShare

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 was split in a ratio 1:5 42 509 - - - -

– Proceeds from IPO issued July 2006 12 217 24 434 - 530 972 555 406

– Proceeds from shares issued December 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 issued December 2007 1 582 3 164 - 69 028 72 192

31.12.07 70 356 140 712 - 758 512 899 224

– Proceeds from shares issued June 2008 855 1 710 - 32 090 33 800

31.12.08 71 211 142 422 - 790 602 933 024

– Proceeds from shares issued October 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

The Group companies provide various retirement plans in accordance with the local regulations and practice in the countries in which they operate. Contribution plansDefined contribution plans require the companies to make agreed contributions to a separate fund when employees have rendered services entitling them to contributions. The companies have no legal or constructive obligations to pay further contributions. Some companies make a contribution to multi-employer pension plans included in a joint arrangement with others. All multi-employer plans are accounted for as defined contribution plans. The premium related to the contribution plans are expensed when occurred as operating expenses. In 2011 the total expense for defined contribution schemes was MNOK 12.0 and in 2010 MNOK 18.4. Defined benefit plansDefined benefit plans are generally based on years of services and final salary levels, offering retirement benefits in addition to what is provides by state pension plans. The Group’s defined benefit plan is invested with an insurance company which manages the plan assets. The special pension schemes financed through company operations covers 8 employees.


Specification of the year’s pension cost 2011 2010

Costs according to defined benefit schemes:

Current service cost 1 792 1 696

Interest cost 942 941

Expected return on plan assets (1 005) (888)

Net actuarial losses - (129)

Administrative expenses 153 128

Non-reccuring cost regarding amendment of pension plans - 1 659

Pension cost excl. social security tax 1 882 3 407

Employers' social security tax 265 204

Pension cost incl.social security tax 2 147 3 611

Balance sheet specification of net pension commitments 2011 2010

Guaranteed schemes:

Accumulated benfit obligation 19 429 19 401

Estimated effect of future wage adjustment 5 834 6 719

Gross pension commitments 25 263 26 120

Pension funds as of 31.12. (16 413) (17 518)

Net pension commitments 8 850 8 602

Social security tax 1 183 854

Estimate devations not recognised in the proft and loss accounts (1 887) 1 374

Net pension commitment on the balance sheet 31.12. 8 146 10 830

The movement in the defined benefit obligation over the year is as follows: 2011 2010

Beginning of year 10 830 9 583

Net pension cost 2 147 3 611

Estimated payment to pension funds including administration costs (4 832) (2 364)

Net pension commitment on the balance sheet 31.12. 8 146 10 830

Actuarial assumptions for the group 2011 2010

Expected return on funds 4.10% 5.40%

Discount rate 2.60% 4.00%

Annual salary increase 3.50% 4.00%

Annual adjustment of the national insurance base amounts 3.25% 3.75%

Annual adjustment of current pension payments 0.40% 1.30%

Turnover 2-5% 2-5%

Expected average remaining servicetime 12 12

Demographic tariff K2005 K2005


Tax 2011 2010

Tax payable Norway 1 358 (659)

Tax payable abroad 61 807 41 616

Changes in deferred tax Norway (25 627) (12 858)

Change in deferred tax abroad 274 (23 107)

Corrections for previous years 245 (2 078)

Tax on ordinary results 38 056 2 914

Reconciliation of tax payable

Tax payable in profit and loss account 61 215 49 830

Prepaid tax (12 828) -

Credit deduction, international - (5 210)

Tax, international (545) 1 413

Opening balance, tax from 2010 not paid in 2011 13 442 226

Corrections previous years (127) (675)

Tax payable in balance sheet 61 158 45 584

Reconciliation of nominal and effective tax rate

Pre-tax result 55 639 (7 634)

Applicable tax with avarage tax rate 21 835 490

Variance, actual and expected income tax expense 16 222 2 424

Explanation of why actual tax cost deviates from expected tax cost

Tax effect from non-deductible costs 328 863 39 851

Tax effect from non-taxable income (322 515) (33 630)

Tax effect impairments - -

Tax losses for which no deferred income tax asset was recognised 1 439 (3 273)

International tax rate deviates from Norwegian tax rate 6 741 2 883

Corrections previous years 1 695 (3 407)

Variance compared to applicable tax rate 16 222 2 424

Change in book value of deferred tax

Balance sheet value at 01.01. (160 253) (110 426)

Currency conversion (4 857) (11 354)

Charged to income in the period (26 702) (43 543)

Corrections previous years (399) 5 070

Disposal discontinued operation 20 830 -

Balance sheet value (171 381) (160 253)

Deferred tax assets as of 31.12. 176 838 173 291

Deferred tax liability as of 31.12. 5 456 13 038

Balance sheet value (171 381) (160 253)

note 20 Tax Figures in TNOK

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

Deferred income tax assets and liabilities are reversed after more than 12 months. The weighted average applicable tax rate was 20% (2010: 20%).


Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets of TNOK 68 934 (2010: TNOK 66 775) in respect of losses amounting to TNOK 246 193 (2010: TNOK 249 722) that can be carried forward against future taxable income. Of the total loss carried forward, TNOK 663 820 (2010: TNOK 651 696 ) relates to Norway.

Due to tax cost on discontinued operation, see note 36.

Deferred taxBelow 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.

All deferred tax liability and assets will be recovered after more than 12 months.

Basis for deferred tax 2011 2010

Receivables (47 719) (25 388)

Inventory (5 100) -

Other current balance sheet items (4 608) (4 840)

Amount linked to current balance sheet items (57 426) (30 228)

Fixed assets and intangible assets (8 579) 9 427

Long term receivables (999) -

Pensions (8 306) (11 519)

Profit and loss account (67 407) (59 772)

Loss carried forward (693 918) (701 479)

Amount linked to long-term balance sheet items (779 208) (763 343)

Total basis for deferred tax assets (836 634) (793 571)


Guaranteed liabilities 2011 2010

Long-term and Short-term debt to credit institutions 737 698 1 160 945

Total guaranteed liabilities 737 698 1 160 945

Average interest rate NOK loans 6.8% 6.6%

Instalment profile Debt to Credit Institutions 2012 2013 2014 Thereafter Total

Revolving and overdraft credit facilities - - - - -

Long-term loans* 80 647 657 051 - - 737 698

Total 80 647 657 051 - - 737 698

*TNOK 80 647 of term loans is due in 2012 and has been classified as short-term debt

Debt to Credit Institutions

Overview of long-term debt to credit institutions 2011 2010

Long-term debt to credit institutions 657 051 885 771

Capitalised arrangement fee deducted (5 984) (7 822)

Total long-term debt to credit institutions 651 067 877 949

note 21 Debt to Credit Institutions Figures in TNOK

The Group has a Revolving Credit Facility (the “RCF”) of TNOK 120 000 and overdraft facility of TNOK 70 000. At 31 December 2011 there were no drawings under the RCF nor the overdraft facility.

Accordingly the Group had total unused credit facilities of TNOK 190 000. Debt to credit institution is recorded at amortised cost, and the table below specifies the actual repayment schedule.

TNOK 462 977 of the total long-term borrowings is denominated in NOK, TNOK 145 639 is denominated in GBP and the remaining TNOK 129 082 is denominated in USD.


(c) Book equity to total assets:The ratio book equity to total assets of the Group for each period referred to in Column A below shall be greater than the ratio set out in Column B below opposite that period:

Period Ratio Q4 2011 20.60

Q1 2012 23.15

Q2 2012 24.29

Q3 2012 25.00

Q4 2012 25.00

Q1 2013 25.00

Q2 2013 25.00

According to the borrowing agreement with DNB and Nordea, there are other conditions related to capital expenditure, disposals of assets, substantial change in the nature of business, mergers and further encumbrances.

FInAnCIAl CovenAntS

The Credit Facilities Agreement entered into with DNB and Nordea includes the following financial covenants as per 31 December 2011:

(a) Gross Interest Bearing Debt (GIBD) to EBITDA:the ratio of GIBD to EBITDA for each period referred to in Column A below shall not be greater than the ratio set out in Column B below opposite that period:

(b) EBITDA to Gross Cash Interest Expenses (GCIE):the ratio of EBITDA to GCIE for each period referred to in Column A below shall not be greater than the ratio set out in Column B below opposite that period:


Q1 2012 6.62

Q2 2012 6.28

Q3 2012 3.12

Q4 2012 2.95

Q1 2013 2.50

Q2 2013 2.50


Q1 2012 3.18

Q2 2012 3.76

Q3 2012 4.06

Q4 2012 4.36

Q1 2013 5.00

Q2 2013 5.00


Other current liabilities 2011 2010

Holiday pay and wages due 48 621 93 500

Advances from customers 12 790 62 787

Incurred interest cost 1 945 3 504

Accrued grants received for R&D 41 617 36 685

Accrued cost 67 009 15 116

Market value of financial instruments 10 001 14 942

Debt to FieldCo Invest AS 56 719 -

Other creditors 19 854 13 395

Current portion of earn-out - 24 750

Other current liabilities 10 219 -

Current liabilities 268 778 264 679

Specification of outstanding from associated companies 2011 2010

Other receivables - 36 423

Provision - (34 723)

Net outstanding from associated companies - 1 700

note 22 Other current liabilities Figures in TNOK

note 23 Outstanding from associated companies Figures in TNOK

The Group has entered into four interest rate swap agreements:

Start Currency Amount per

31.12.11 Expiration Interest rate Market value

31.12.11

08.06.2007 NOK 20 000 10.12.12 5.27% p.a. (416)

29.10.2008 NOK 194 118 26.06.13 4.38% p.a. (4 253)

15.12.2009 USD 67 942 17.06.13 3.15% p.a. (2 148)

15.12.2009 GBP 109 609 17.06.13 3.20% p.a. (3 026)

Total 391 669 (9 843)

The Group has entered into one interest rate option agreement:

Start Currency Amount per

31.12.11 Expiration Interest rate

cap/floor Market value

31.12.11

02.05.2010 NOK 261 190 05.02.13 6.00% / 2.44% p.a. (457)

Total 261 190 (457)

The group’s long-term debt is secured by pledge. AGR Group ASA has in its involvement with the bank issued a negative pledge which includes the majority of its subsidiaries. Subsidiaries that are defined as obligors under AGR’s loan agreement are jointly and severally liable for the group’s debt.

note 21 Debt to Credit Institutions Figures in TNOK


Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the company and held as treasury shares (note 18). There are no dilution effects as the company has no convertible bond or stock option plan.

Pension costs are described in detail in note 19.Accumulated expenses for wages, pension premiums and other remuneration to managing director, other Group executives and members of the parent company’s board accordingly for 2011 and 2010 were:

2011

Management Directors (MD): Wages Bonus Pension

premiums Other

remuneration Total

Sverre Skogen - Chief Executive Officer 2 538 500 56 22 3 116

Svein Sollund - Chief Financial Officer 2 614 400 55 20 3 090

Tove Magnussen - HSE&Q 1 572 152 66 20 1 810

David Hine - EVP Enhanced Drilling Solutions 1 471 - 58 84 1 614

Erling Storaune - EVP Americas 1 798 - 111 67 1 976

Ian Burdis - EVP UK & Asia Pacific 1 602 - 120 - 1 722

Johan Jacob Møller Warmedal - EVP Tools & Technology 1 720 - 60 68 1 848

Sjur Talstad - EVP Norway & Russia 4 014 457 61 210 4 742

Eivind Reiten - Chairman 450 - - - 450

Thomas Nilsson - Board member 150 - - - 150

Total 17 929 1 509 587 492 20 517

Basis for calculation of earnings per share 2011 2010

Net result allocated to shareholders from continuing operations 8 252 233 (18 042 310)

Net result allocated to shareholders including discontinued operations 745 267 649 (4 802 533)

Weighted average number of outstanding shares excluding treasury shares 124 082 463 124 082 463

Earnings per share from continuing operations (NOK) 0.05 (0.15)

Earnings per share including discontinuing operations (NOK) 6.01 0.04

Wages, fees, number of employees etc. 2011 2010

Wages 408 352 354 894

Employers' social security contributions 48 103 42 849

Pension costs 14 130 14 975

Other remunerations 33 960 19 264

Capitalised wages (9 628) (10 934)

Total 494 916 421 048

Average number of man-labour years 577 444

note 24 Earnings per share Figures in TNOK

note 25 Wages, fees, number of employees etc. Figures in TNOK


2010

Management Directors (MD): Wages Bonus Pension

premiums Other

remuneration Total

Sverre Skogen - Chief Executive Officer 2 311 720 65 50 3 146

Svein Sollund - Chief Financial Officer 3 304 280 60 42 3 686

Tom Arthur Hasler - EVP Drilling Services 01.01.10-31.03.10 807 - 14 110 930

Johan Jacob Møller Warmedal - EVP Drilling Services 15.02.10-31.12.10 1 577 - 56 38 1 672

Sjur Talstad - Chief Executive Officer Petroleum Services 3 624 362 61 235 4 282

Eivind Reiten - Chairman 150 - - - 150

Thomas Nilsson - Board member 150 - - - 150

Per Inge Remmen - Board member 150 - - - 150

Total 12 074 1 362 256 475 14 166


Bonus disclosed for 2011 is the amount paid in 2011 based on performance achieved in 2010. Bonus disclosed for 2010 is the amount paid in 2010 based on performance achieved in 2009. Per 31 December 2011 and per 31 December 2010 there are no loans or guarantees to the group CEO or to members of the board. One member of the Executive management group has been granted a loan of MNOK 1. No related parties to these have loans or guarantees from AGR. The Executive management has between 3 and 12 months’ notice, and their salary is paid during the notice period. The Group CEO and CFO have 12 month severance pay. The Executive Officers for the business units have from 6 - 12 month severance pay in addition to the severance pay for the notice period, with deduction of any other wages received during this period.

ReMuneRAtIon polICy:

Main principles The main principles for AGR management remuneration policy are that executive management shall be offered competitive remuneration, when salaries, benefits in kind, bonuses and pension arrangements are taken into consideration. Bonuses and other additional benefits As a guideline, compensation in the form of a cash bonus in addition to base salary may be offered to executive management. Such bonuses shall however, be limited to certain percentages of the base salary and to achievement of certain predetermined objectives. Guidelines for distribution of bonuses shall be determined by the Board of Directors, after consulting with the company’s remuneration committee.

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

In respect of severance payments or benefits these will be agreed on an individual basis. Some of the current members of the executive management have rights to severance payment, corresponding to 6 to 18 months base salary, if their employment is 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. Share investment program Information concerning the share investment program is in note 37.


Balance

Other provisions 1 157

Total provisions as of 31.12.11 1 157

Earnout 31.12.10

Company Agreement Maximum Balance Due date Company obligated

Tracs TGBP 2 729 TGBP 2 729 24 750 31.01.11AGR Peak Group

Holdings Ltd

Current portion of earn-out (reclassified to current liability) (24 750)

Other provisions 7 599

Total provisions as of 31.12.10 7 599

note 26 Provisions Figures in TNOK

note 27 Leasing costs Figures in TNOK

Auditor’s fee

The Board has reviewed the level and distribution of fees paid to our auditors, and considers them to be appropriate.

Specification of auditor’s fee excl. VAT 2011 2010

Fees for audit of annual accounts 2 602 4 384

Fees for other attestation services 42 208

Fees for tax-related services 1 277 2 281

Fees for other services* 5 385 1 032

Total 9 306 7 905

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

2011 2010

Land, buildings and permanent property 39 291 42 032

Apartments 1 200 1 353

Machinery and operating equipment 8 545 8 762

Total 49 037 52 147

AGR acquired 100% of the outstanding share capital of Tracs International Consultancy Ltd (Tracs) in June 2008 for a cash consideration of TGBP 14 600. The earn out structure has a maximum agreed amount of TGBP 5 400 divided in 3 instalments. The first instalment was paid in September 2009, TGBP 1 000. The condition for full payment is both employment in 30 months and revenue growth. The earn-out was settled and paid in January 2011.

The amount of a provision is the present value of the expenditures expected to be required to settle the obligation. The interest element is charged through profit and loss.

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

The Group has entered into lease agreements for premises, among others at Straume, Oslo and Stavanger, in Norway, Houston in USA, Aberdeen, Perth and Melbourne in Australia, Almaty in Kazakhstan, Moscow in Russia, Baku in Azerbaijan and Abu Dhabi in United Arab Emirates. The Group has not entered into non-cancellable operating leases.

From financial year 2011 AGR appointed Ernst & Young as new auditors for the Group. Fees to Ernst & Young is amounted to 914 TNOK for audit, 758 TNOK for tax related services and 278 TNOK for other services.


2011 2010

Interest income 3 116 1 826

Currency gain 269 678 296 661

Other financial income - 9

Unrealised gain/(loss) of financial instruments calculated at fair value* 4 941 (2 887)

Interest expense (64 070) (76 180)

Currency loss (270 047) (297 471)

Other financial expense (28 433) (13 355)

Total (84 815) (91 398)

note 28 Financial income and expences Figures in TNOK

note 29 Financial market risk Figures in TNOK

* Gain on interest rate swap of TNOK 4 941 in 2011 and loss of TNOK (2 887) in 2010.

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 has entered into interest rate swaps of NOK 392 million and interest rate options of NOK 261 million, all accounted for at fair value in accordance with IAS 39. The Group s credit risk exposure is considered to be low. The majority of the Group’s debtors are publicly listed Norwegian and international oil companies. The Group seeks 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. A proportion of the Group’s turnover is in foreign currencies, primarily USD and GBP. As a result of international operations, the Group is exposed to fluctuations in currency exchange rates. In accordance with the Group’s financial risk policy, some of this exposure is partly hedged with foreign currency debt in USD and GBP, and partly with Foreign Exchange (FX) contracts. At 31 December 2011 debt in USD was NOK 129 million and debt in GBP amounted to NOK 146 million. There were no FX contracts at year end 2011. 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:

Currency Currency

(1000) 2011 TNOK Share % Currency

(1000) 2010 TNOK Share %

Turnover:

AUD 13 206 76 280 4 % 9 556 53 533 4 %

BRL 8 128 27 667 1 % - - 0 %

CAD 2 161 12 295 1 % 2 184 12 799 1 %

EUR 1 738 13 004 1 % 3 286 26 166 2 %

GBP 61 614 551 466 30 % 32 482 303 596 21 %

NOK 723 659 719 321 39 % 588 908 588 908 41 %

SEK - - 0 % - - 0 %

USD 82 841 463 615 25 % 75 720 458 938 32 %

Other* - 4 265 0 % - 1 317 0 %

Total 1 867 913 100 % 1 445 256 100 %


note 30 Related parties Figures in TNOK

Currency Currency

(1000) 2011 TNOK Share % Currency

(1000) 2010 TNOK Share %

Debtors:

AUD 3 706 22 594 4 % 12 748 141 199 19 %

BRL 545 1 748 0 % - - 0 %

CAD 92 541 0 % 140 821 0 %

DKK - - 0 % 739 646 0 %

EUR 695 5 401 1 % 1 155 9 231 1 %

GBP 17 251 159 850 31 % 15 222 139 153 19 %

NOK 102 347 102 347 20 % 343 368 342 520 47 %

SEK - - 0 % 713 621 0 %

USD 31 090 187 046 36 % 15 354 91 933 13 %

Other* - 41 881 8 % - 1 145 0 %

Total 521 409 100 % 727 270 100 %

Creditors:

AUD 2 035 12 405 5 % 3 885 23 152 5 %

BRL 92 294 0 % - - 0 %

CAD 140 826 0 % 151 881 0 %

DKK - - 0 % 29 31 0 %

EUR 623 4 843 2 % 642 5 001 1 %

GBP 13 053 120 998 45 % 13 843 125 537 28 %

MYR 62 116 0 % - - 0 %

NOK 53 754 53 753 20 % 175 393 175 464 40 %

SEK - - 0 % 1 550 6 199 1 %

USD 12 330 74 060 27 % 17 537 102 665 23 %

Other* - 4 526 2 % - 2 227 1 %

Total 271 822 100 % 441 156 100 %

Other income

Key management personnel 2011 2010

K&K Design AS 21 10

Total 21 10

Other income

Other related parties 2011 2010

Altor Equity Partners AS (rental of premises) 2 537 1 942

Total 2 537 1 942


Key management personnel Purchase of goods / other operating costs

2011 2010

Acatos Consulting AS 750 750

Sartor Næringspark AS - 12 341

Altor Equity Partners AB - 10

Altor Equity Partners AS 169 332

BroCo Marin AS - 125

Combiunits AS 576 1 544

Doroty Hasler - 107

G & G Consultans AS 4 546 3 100

Grieg Logistics KS 1 2 717

K&K Design AS 569 60

PIR AS - 400

Racso Ltd 1 750 681

Tøkon AS 3 282 -

Total 11 644 22 165

Key management personnel Trade receivables

2011 2010

K&K Design AS 18 18

Total 18 18

Key management personnel Trade payables

2011 2010

BroCo Marin AS (131) (131)

Combiunits AS 57 227

G & G Consultans AS 233 310

Grieg Logistics KS 1 -

Racso Ltd - 377

Tøkon AS 234 -

Total 394 783

Other related parties Trade payables

2011 2010


Total 32 101

All transactions with related parties are carried out at market prices in connection with ordinary business transactions. There is not given or received any guarantees related to transaction with related parties in 2011 or 2010. There is not recognised any provision for doubtful debts related to the amount of outstanding balances, and there is not recognised any expense during 2011 or 2010 in respect of bad or doubtful debts due from related parties.



2011 2010

Other current liability 01.01. 30 863 29 196

Received during the year 1 394 3 286

Released to the income statement (1 808) (1 618)

Other current liability 31.12. 30 450 30 863

Specification of market-based shares: 2011 2010

Other current liability 01.01. 101 101

Conversion to market price at 31.12. (6) (7)

Other current liability 31.12. 95 93

note 31 Contingencies

note 34 Raw materials and consumables used

note 35 Events after the balance sheet date

note 32 Public grants Figures in TNOK

note 33 Financial assets at fair value Figures in TNOK

The Group is involved in some disputes that is related to the 2011 figures. Provisions for relevant costs have been made, and this based on best estimate. There might be changes in these estimates in 2012, dependent on the outcome of these disputes.

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

The Group has received grants from the Research Council of Norway in connection with research and developments projects. No terms and conditions apply to these grants.

The grants from the Research Council of Norway are recognised in the balance sheet and are posted as revenue in line with depreciation on the fixed assets to which they are linked.

Short-term financial investments as at 31 December 2011 and 2010 are accounted for at fair value with unrealised gains and losses included in the income statement.

Expenses classified as raw materials and consumables used are directly related to projects, such as project equipment, travelling expenses, loading etc.

There are no significant events after year end, except for contracts awarded in the ordinary course of business


Assets of disposal group classified as held for sale: 2011 2010

Patents, research and development - -

Deferred tax asset - -

Land, buildings and other property - -

Investments in associated companies - -

Trade receivables - -

Other receivables - -

Cash and cash equivalents - 6

Total - 6

Liabilities of disposal group classified as held for sale 2011 2010

Trade payables - -

Public charges - -

Other current liabilities - -

Total - -

Liabilities of disposal group classified as held for sale 2011 2010

External operating revenues 1 081 609 1 060 942

Project expenses/payroll expenses (881 483) (869 986)

Other operating expenses (96 112) (84 194)

EBITDA 104 014 106 762

Depreciation and amortisation (52 952) (58 428)

Operating profit(loss) 51 062 48 334

Net financial items (3 424) (24 256)

Share of profit of associated companies - -

Operating profit(loss) before tax 47 638 24 078

Tax (11 819) (9 141)

Profit after tax from discontiuned operations 35 819 14 937

Profit(loss) from sale of discontinued operations 701 197 (1 559)

Profit(loss) for the year from discontinued operation 737 016 13 378

2011 2010

Operating cash-flows - (300)

Investing cash-flows - -

Financing cash-flows - -

Total cash-flows - (300)

note 36 Assets of disposal group classified as held for sale and discontinued operations

The assets and liabilities related to the companies Liquegas Energy Pty Ltd and FPSO Shiraz Pty Ltd (joint venture Company) have been presented as held for sale (2010). The companies were sold as a part of the sales of the Field Operations Holdings division.

AGR Group has closed a sale in 2011 whereby Oceaneering AS acquired AGR’s and FieldCo Invest AS’s 100 % share of AGR Field Operations Holdings AS.

The purchase price for Field Operations, after deducting net debt as of 30 June 2011, was set to TNOK 1 010 600 based on an enterprise value of TNOK 1 365 000.

The results from AGR Field Operations Holdings AS and its subsidiaries are included in discontinued operations in the income statement for 2010 and 2011.

Figures in TNOK


note 37 Share investment program

Share investment programIn 2011 AGR introduced co-investment program in AGR Petroleum Services. In May 2011 AGR Group ASA sold 42 939 A-shares in its subsidiary PetCo Invest AS to key employees and board members in AGR Group ASA and AGR Petroleum Services 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 2010 AGR introduced co-investment programs in AGR Drilling Services and AGR Field Operations. In September 2010 AGR Group ASA sold 73 453 A-shares in its subsidiary FieldCo Invest AS to key employees and board members in AGR Group and AGR Field Operations for NOK 102 per share. FieldCo Invest AS owns 166 812 shares in AGR Field Operations Holdings AS, corresponding to 5.5%. AGR Group ASA is the owner of the remaining 94.5%. Further, in September 2010 AGR Group ASA sold 69 000 A-shares in its subsidiary DrillCo Invest AS to key employees and board members in AGR Group and AGR Drilling Services for NOK 102 per share. DrillCo Invest AS owns 266 683 shares in AGR Drilling Services Holdings AS corresponding to 6.9%. AGR Group ASA is the owner of the remaining 93.1%.

AGR Group ASA’s shareholding in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS following the transaction was one controlling B-share respectively. DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS have been incorporated for the purpose of investing in AGR Drilling Services Holdings AS, AGR Field Operation Holdings AS and AGR Petroleum Services Holdings AS respectively.

The price per share in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS was determined based on the estimated fair value of AGR Drilling Services Holdings AS, AGR Field Operations Holdings AS and AGR Petroleum 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 investments made by DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS, AGR Group ASA has provided loans in the form of seller’s credits with an annual interest rate of 8%. AGR Group ASA has an option to increase its shareholding in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS by cash payment or set-off against any outstanding amount under the loan agreements.

The co-investment programs within AGR Drilling Services, AGR Field Operations and AGR Petroleum Services are governed by the provisions in three separate shareholders agreements. The shareholders agreements are entered into by and between the holding companies, the investment companies and the participants in the program. Among other things the shareholder agreement will provide for drag-along and tag-along provisions for the event that AGR Group ASA should sell its shares in the holding companies. The participants cannot sell or transfer the shares in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS without the consent of AGR. If a participant in the program gives or is given notice of termination of employment before the second anniversary of the program, AGR has an option to buy the shares at fair value.

In December 2011 AGR Group ASA and FieldCo Invest AS sold its shares in AGR Field Operations Holdings AS.


Income statement AGR Group ASA

PARENT Figures in TNOK


Note 2011 2010

Revenue 5 799 925

Other operating revenue 9 978 9 963

Total operating revenue 3, 4, 18, 19 15 778 10 888

Project cost 19 8 885 1 449

Payroll expenses 15 9 358 (3 331)

Depreciation, amortisation and impairments 8 248 52

Other operating expenses 5 ,15, 16, 19 45 517 31 877

Total operating expenses 64 008 30 047

Operating profit/(loss) (48 230) (19 159)

Financial income 972 225 48 578

Financial expenses 20 657 150 711

Net financial items 17 951 568 (102 133)

Profit/(loss) before income tax 903 338 (121 292)

Income tax expense/(benefit) 11 (6 980) (782)

Profit/(loss) for the year 910 318 (120 511)

Appropriation of net income and equity transfers

Dividend proposed 700 000 -

Retained earnings 210 318 (120 511)

Total appropriation 910 318 (120 511)


Balance sheet AGR Group ASA


As at 31 December

Assets Note 2011 2010

Deferred tax assets 11 8 443 1 463

Intangible assets 8 443 1 463

Machinery and operating equipment 8 701 603

Tangible fixed assets 701 603

Investment in subsidiaries 3 751 900 738 780

Loan to subsidiaries 14 561 039 150 686

Investment in shares 500 -

Other financial fixed assets 40 362 29 117

Financial fixed assets 1 353 802 918 583

Total non current assets 1 362 946 920 650

Trade receivables 18 2 670 915

Group receivables 14 297 735 10 217

Other receivables 6 10 074 5 560

Receivables 310 479 16 692

Cash and cash equivalents 7 721 450 -

Current assets 1 031 929 16 693

Total assets 2 394 876 937 342


Balance sheet AGR Group ASA


As at 31 December

Equity and liabilities Note 2011 2010

Share capital 9 251 797 251 797

Treasury Shares (3 632) (3 632)

Share premium fund - 827 544

Total paid in equity 248 165 1 075 709

Earned equity 704 430 (333 433)

Total earned equity 704 430 (333 433)

Total equity 10 952 595 742 276

Trade payables 18 8 465 4 233

Public duties payable 751 488

Group debt 14 655 141 188 618

Other current liabilities 13 77 924 1 726

Dividends payable 700 000 -

Total current liabilities 1 442 281 195 065

Total liabilities 1 442 281 195 065

Total equity and liabilities 2 394 876 937 342

Oslo, 27.04.2012








Sverre SkogenCEO


Statement of Cashflow AGR Group ASA



2011 2010

Ordinary profit/(loss) before taxes 903 338 (121 292)

Adjustment for group contribution entered as financial revenue (1 680) -

Impairment of financial assets (164 470) 136 389

Gain on sale of subsidiary (787 673) -

Depreciation, amortisation and impairment of tangible assets 248 52

Change in trade receivables (1 755) (915)

Change in trade payables 4 232 3 716

Change in other accruals 28 182 (43 916)

Net cash flow from operational activities (19 577) (25 967)

Cash outflows for additions to equipment (346) (653)

Cash inflows/outflows from group debtors (231 349) 432 932

Cash outflows for acquisitions of shares in subsidiaries (4 540) (415 087)

Cash inflows from sale of shares in subsidiaries 977 762 15 840

Cash outflow for purchase of shares (900) -

Cash inflows from sale of shares 400 -

Cash outflows from purchase of treasury shares - (21 979)

Net cash flow from investment activities 741 027 11 052

Net change in cash and equivalents 721 450 (14 915)

Cash and equivalents at start of period - 14 915

Cash and equivalents at end of period 721 450 -


note 01 Accounting principles

AGR Group ASA and its subsidiaries, is a leading supplier of services and technology to the oil and gas offshore industry. The company’s main operations are based at Straume (Bergen), with office in Abu Dhabi. The company provides management services to subsidiaries of the group in addition to have a sale office in Abu Dhabi. The company is a limited liability company incorporated and domiciled in Norway. The address of its registered office is Smålonane 12-14, 5353 Straume. The consolidated financial statement is published on www.agr.com. The Company is listed on the Oslo Stock Exchange. The financial statements have been prepared in accordance with the Norwegian accounting act and accounting principles generally accepted in Norway (NGAAP). The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and the disclosure of contingent liabilities. The financial year follows the calendar year. Income statement items are classified by nature.

Changes in accounting policy and disclosuresEffects of changes in accounting policies and correction of material errors in previous annual financial statements are recognised directly in equity. The comparative figures are restated accordingly.

Subsidiary companiesSubsidiary companies are valued in accordance with the cost method in the company accounts. The investment is calculated according to acquisition cost of the shares unless a write-down has been required. Group contributions are entered as revenue in the same year as allocation in the subsidiary company is made. If distribution exceeds ratio of retained earnings for the ownership in the period, the excess part is accounted for as a repayment of invested capital and recognised as a reduction of investment in the balance.

Classification and valuation of balance sheet items Assets meant for permanent ownership or use is classified as non-current assets. Assets held as a part of the company’s service cycle and is expected to be realised or used during the course of the unit’s normal production period are classified as current assets. Receivables are classified as current if they are to be settled within one year. Analogous criteria apply for liabilities. Non-current assets are valued at historical cost. Tangible fixed assets that deteriorate in value are depreciated on a linear basis over estimated financial lifespan. Tangible

fixed assets are written down to real value in the event of a permanent decrease in value. Long-term liabilities in NOK, excluding other provisions, are entered in the balance sheet at nominal value at the time they arise. Provisions are discounted if the interest rate element is material. Current assets are valued at the lowest of acquisition cost and fair value. Current liabilities are entered at nominal value at the time they arise.

Sales revenue The company’s business consists primarily of corporate services to subsidiaries of the group. Services are recognised in the time of execution. Revenue is recognised when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met. The company’s business of services related to personnel and equipment hire are recognised based on daily/monthly rates and actual registered hours. Revenue is recognised when it is probable that transactions will generate future economic benefits that will flow to the company and the revenue amount can be reliably estimated. Revenues from the sale of goods are recognised in the income statement once delivery has taken place, the risk has been transferred and the company has established a receivable due by customer. Income is presented without value added tax and after any discounts. Revenues relating to projects are recognised in the income statement in line with the project’s progress and when the project’s results can be reliably estimated. Level of completion is calculated as an incurred cost’s percentage of anticipated total cost. For projects expected to generate a loss, the full estimated loss is recorded as cost immediately.

Comparison principleAccrual in the financial statements is based on comparison of revenues and expenses during the period. Unrealised losses that are probable and quantifiable, and unconditional commitments and orders are expensed in accordance with generally accepted accounting principles.

CurrencyMonetary items in foreign currency are converted according to the exchange rate of the balance sheet date. Foreign exchange gains and losses are recognised in the profit and loss account and are classified as financial items.

Contingent liabilities and contingent assetsContingent liabilities are recognised if there is more than 50 % chance that they will have to be settled. Best


estimates are used in calculating the settlement value. Provisions for contingencies inherent in the product cycle or with the expected settlement date within one year from the balance sheet date are classified as current liabilities. Other provisions are classified as provisions for liabilities under long-term debt.

PensionsThe company has entered into a contribution plan for its employees. Contribution plan comprise arrangements whereby the company makes annual contributions to the employees’ pension plans, and where the return on the pension plan assets will determine the amount of the pension. The premium related to the contribution plans are expensed when occurred as operating expenses.

Extraordinary income and expensesIncome is classified as extraordinary if they are unusual, irregular and material considered in relation to the company’s business.

Tangible fixed assetsTangible fixed assets are valued at cost less accumulated depreciation and write-downs. The costs of tangible fixed assets comprise the purchase price, including duties/taxes and direct acquisition costs linked to making the asset fit for use. Depreciation is calculated linearly based on the estimated useful life. Expenses accrued after the asset has been taken into use, such as repairs and maintenance, are normally recognised in the income statement. In cases where increased earnings can be demonstrated as a result of repairs/maintenance, the expenditure on this will be recognised in the balance sheet as additions to property, plant and equipment. The write-down requirement for fixed assets is assessed if there are indications of impairment. If indication of impairment is present there are performed an estimate of discounted future cash flows for assets that will continue to be in use in the company, and an estimate of selling price less cost of assets that are for sale. If calculation shows a value less than the carrying value assets will be write-down to fair value. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other operating revenue or other operating expenses in the income statement.

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

ReceivablesDebtors and other receivables are entered in the balance sheet at nominal value less provision for bad debt. Provision for bad debt is estimated based on individual assessment of the debtors.

Completed, not invoiced/ advances for customers Earned, but not invoiced revenues by the percentage of completion, is carried out production which according to a contract are not invoiced at balance sheet date. Completed, not invoiced production is included in the line trade receivables. For projects where the invoicing exceeds the income from the completed production, the net amount is included in other current liabilities.

Cash and cash equivalentsCash and cash equivalents are defined as cash and bank deposit. The company participate in the Group’s cash pool system. The company’s bank accounts included in the cash pool system, and balances on these accounts, represent exclusively an intercompany balance between the cash pool account holder and the individual participant. The cash pool will thus automatically establish credit relationships between participants and cash pool holder. In the financial statements all transaction between the cash pool holder and participants are recognised as intercompany balance.

Best estimateWhen there is uncertainty associated with financial statement item, best estimate is used. Changes in estimates are recognised in the period in which the estimate is changed. Use of estimates is uncertain and may differ from actual results.

Cash Flow StatementThe cash flow statement presents the accumulated cash flow for operational, investment and financial activities. The statement outlines the effect that each activity has on liquid assets. The cash flow statement has been prepared in line with the indirect model.

TaxThe cost of tax in the profit and loss account comprises both the period’s tax payable, and changes in deferred tax. Deferred tax is calculated at a rate of 28% based on the temporary differences between accounting and tax values, as well as any loss to be carried forward at the end of the financial year. Taxable and deductible temporary differenced that reverse or may reverse in the same period is offset. Deferred tax assets are recognized when it is probable that the company will have a sufficient future profit to utilize the tax asset. Tax increasing and tax reducing temporary differences are disclosed net.


Subsidiary companies 2011: Head Office Equity interest Voting share

AGR Business Partner AS Fjell - Norway 100% 100%

AGR Canada Inc Houston-USA 100% 100%

AGR CannSeal AS Fjell - Norway 95% 95%

AGR Cleanup AS Fjell - Norway 100% 100%

AGR Central Asia AS Oslo - Norway 100% 100%

AGR Central Asia AS (Branch) Almaty - Kazakstan 100% 100%

AGR Consultancy Services AS Stavanger - Norway 100% 100%

AGR Consultancy Solutions Ltd Aberdeen - UK 100% 100%

AGR Deepwater Technologies Inc Delaware-USA 100% 100%

AGR Drilling Services Canada Inc Houston-USA 100% 100%

AGR Drilling Services do Brasil Ltda Rio de Janeiro - Brasil 100% 100%

AGR Drilling Services Holdings AS Fjell - Norway 93% 93%

AGR Drilling Services Pty Ltd Perth - Australia 100% 100%

AGR Energy AS Oslo - Norway 100% 100%

AGR F.J Brown Inc Houston-USA 100% 100%

AGR Facilities Solutions AS Oslo - Norway 80% 80%

AGR Group Abu Dhabi (Branch) Abu Dhabi - UAE 100% 100%

AGR Group Americas Inc Houston-USA 100% 100%

AGR Group Holdings Ltd Aberdeen - UK 100% 100%

AGR Group Mexico Inc Houston-USA 100% 100%

AGR Group Mexico S de R.L de C.V Houston-USA 100% 100%

AGR Marine Engineering AS Ålesund - Norway 100% 100%

AGR Peak Solution Systems Pty Ltd Perth - Australia 100% 100%

AGR Petroleum (ME) Ltd Dubai - UAE 100% 100%

AGR Petroleum Services AS Oslo - Norway 100% 100%

AGR Petroleum Services Holdings AS Fjell - Norway 98% 98%

AGR Petroleum Services Inc Houston-USA 100% 100%

AGR Reservoir Evaluation Services Kazakstan - (Branch) Almaty - Kazakstan 100% 100%

AGR Reservoir Evaluation Services Kazakstan Ltd Aberdeen - UK 100% 100%

AGR Solution Systems Ltd Aberdeen - UK 100% 100%

AGR Subsea AS Fjell - Norway 100% 100%

AGR Subsea Inc Houston-USA 100% 100%

AGR Subsea Ltd Aberdeen - UK 100% 100%

AGR Well Management Ltd Aberdeen - UK 100% 100%

AGR Well Services AS Fjell - Norway 100% 100%

Altinex Inc Houston-USA 100% 100%

Peak Group Asia Pacific Pty Ltd Perth - Australia 100% 100%

Teredo AS Oslo - Norway 100% 100%

Tracs Consult LLC Moscow - Russia 100% 100%

Tracs International Consultancy Ltd Aberdeen - UK 100% 100%

Tracs International Training Ltd Aberdeen - UK 100% 100%

note 02 Group entities


Subsidiary companies owned by AGR Group ASA

Head office

Voting share Shares

Total share capital

31.12.11

Equity 31.12.11

100 %

Result 2011

100 % Book value

31.12.11

AGR Business Partner AS Fjell 100% 100 100 348 1 107 -

AGR CannSeal AS Fjell 95% 10 000 1 000 19 582 (2 990) 23 928

AGR Deepwater Technologies Inc Delaware 100% 100 30 815 30 582 - 11 603

AGR Drilling Services Holdings AS Fjell 93% 3 864 969 7 730 257 284 28 725 453 080

AGR Marine Engineering AS Ålesund 100% 1 000 100 (9 140) (6 136) 39

AGR Petroleum Services Holdings AS Fjell 98% 4 307 065 8 614 260 173 175 150 263 250

Total subsidiary companies 31.12.11 558 828 195 856 751 900


Subsidiary companies 2010 Head Office Equity interest Voting share

AGR Asia Pacific NZ Ltd New Plymouth - New Zealand 100% 100%

AGR Asia Pacific Pty Ltd Melbourne - Australia 100% 100%

AGR Asia Pacific Sdn Bhd Kuala Lumpur - Malaysia 100% 100%







AGR Drilling Services Canada Inc Houston - USA 100% 100%

AGR Drilling Services do Brasil Ltda Rio de Janeiro - Brazil 100% 100%



AGR EmiTeam AB Varberg - Sweden 100% 100%

AGR EmiTeam AS Fjell - Norway 100% 100%


AGR Field Operations Holdings AS Fjell - Norway 95% 95%

AGR FJ Brown Inc Houston - USA 100% 100%


AGR Group Americas Inc Houston - USA 100% 100%

AGR Group Brazil Servicos de Petroleo Ltda Rio de Janeiro - Brazil 100% 100%

AGR Group Canada Inc Houston - USA 100% 100%

AGR Group Field Operations Inc Houston - USA 100% 100%

AGR Group Mexico Inc Houston - USA 100% 100%

AGR Integrity UK Ltd Aberdeen - UK 100% 100%

AGR Malaysia Sdn Bhd Kuala Lumpur - Malaysia 100% 100%


AGR Oil and Gas Services Pty Ltd Melbourne - Australia 100% 100%

AGR Peak Consultancy Services Ltd Aberdeen - UK 100% 100%

AGR Peak Group Asia Pacific Pty Ltd Perth - Australia 100% 100%

AGR Peak Group Holdings Ltd Aberdeen - UK 100% 100%

AGR Peak Solutions Systems Ltd Aberdeen - UK 100% 100%

AGR Peak Solutions Systems Pty Ltd Perth - Australia 100% 100%

AGR Peak Well Management Ltd Aberdeen - UK 100% 100%

AGR Peak Well Mangagement M.E. Ltd Dubai - UAE 100% 100%



AGR Petroleum Services Inc. Houston - USA 100% 100%

AGR Pipetech AS Fjell - Norway 100% 100%

AGR Reservoir Evaluation Services Kazakstan (Branch) Almaty - Kazakstan 100% 100%


AGR Reservoir Evaluation Services LLP Almaty - Kazakstan 100% 100%


note 02 Group entities


Subsidiary companies 2010 Head Office Equity interest Voting share

AGR Asia Pacific NZ Ltd New Plymouth - New Zealand 100% 100%

AGR Asia Pacific Pty Ltd Melbourne - Australia 100% 100%

AGR Asia Pacific Sdn Bhd Kuala Lumpur - Malaysia 100% 100%







AGR Drilling Services Canada Inc Houston - USA 100% 100%

AGR Drilling Services do Brasil Ltda Rio de Janeiro - Brazil 100% 100%



AGR EmiTeam AB Varberg - Sweden 100% 100%

AGR EmiTeam AS Fjell - Norway 100% 100%


AGR Field Operations Holdings AS Fjell - Norway 95% 95%

AGR FJ Brown Inc Houston - USA 100% 100%


AGR Group Americas Inc Houston - USA 100% 100%

AGR Group Brazil Servicos de Petroleo Ltda Rio de Janeiro - Brazil 100% 100%

AGR Group Canada Inc Houston - USA 100% 100%

AGR Group Field Operations Inc Houston - USA 100% 100%

AGR Group Mexico Inc Houston - USA 100% 100%

AGR Integrity UK Ltd Aberdeen - UK 100% 100%

AGR Malaysia Sdn Bhd Kuala Lumpur - Malaysia 100% 100%


AGR Oil and Gas Services Pty Ltd Melbourne - Australia 100% 100%

AGR Peak Consultancy Services Ltd Aberdeen - UK 100% 100%

AGR Peak Group Asia Pacific Pty Ltd Perth - Australia 100% 100%

AGR Peak Group Holdings Ltd Aberdeen - UK 100% 100%

AGR Peak Solutions Systems Ltd Aberdeen - UK 100% 100%

AGR Peak Solutions Systems Pty Ltd Perth - Australia 100% 100%

AGR Peak Well Management Ltd Aberdeen - UK 100% 100%

AGR Peak Well Mangagement M.E. Ltd Dubai - UAE 100% 100%



AGR Petroleum Services Inc. Houston - USA 100% 100%

AGR Pipetech AS Fjell - Norway 100% 100%

AGR Reservoir Evaluation Services Kazakstan (Branch) Almaty - Kazakstan 100% 100%


AGR Reservoir Evaluation Services LLP Almaty - Kazakstan 100% 100%


Subsidiary companies 2010 cont. Head Office Equity interest Voting share

AGR Subsea Inc Houston-USA 100% 100%

AGR Subsea Ltd Aberdeen - UK 100% 100%

AGR Technology Design Ltd Manchester - UK 100% 100%

Altinex Inc Houston - USA 100% 100%

Liquegas Energy Pty Ltd Melbourne - Australia 100% 100%

Teredo AS Oslo - Norway 100% 100%

Tracs Consult LLC Moscow - Russia 100% 100%

Tracs International Consultancy Ltd Aberdeen - UK 100% 100%

Tracs International Training Ltd Aberdeen - UK 100% 100%

During 2010 Turn Key Drilling Inc has merged with FJ Brown and AGR Dpal AS has merged with AGR Drilling Services Holdings AS. Dpt Canada Ltd. is closed down. Equity interest in AGR CannSeal AS, AGR Field Operations Holdings AS and AGR Drilling Services Holdings AS is reduced from 100% in 2009 to respectively 95%, 95% and 93% in 2010. AGR Tunisia AS has changed its name to AGR Facilities Solutions AS.

Subsidiary companies owned by AGR Group ASA

Head office

Voting share Shares

Total share capital

31.12.10

Equity 31.12.10

100 %

Result 2010

100 % Book value

31.12.10

AGR Business Partner AS Fjell 100 % 100 100 450 34 -

AGR CannSeal AS Fjell 95 % 10 000 1 000 22 572 (1 893) 23 928

AGR Deepwater Technology Inc Delaware 100 % 100 30 815 29 779 389 11 603

AGR Drilling Services Holdings AS Fjell 93 % 3 864 969 7 730 228 559 5 740 288 610

AGR Field Operations Holdings AS Fjell 95 % 3 027 966 6 056 153 933 14 222 145 710

AGR Petroleum Services Holdings AS Fjell 100 % 1 8 614 85 023 22 296 268 929

Total subsidiary companies 31.12.11 520 316 40 788 738 780


Geographical segment information presents the location of customer’s part of the company’s turnover

Operating revenues: 2011 2010

Norway 10 802 9 963

Europe 1 259 -

Asia 3 717 925

Total 15 778 10 888

note 03 Geographical segment information Figures in TNOK

note 04 Operating revenues Figures in TNOK

note 06 Other current receivables Figures in TNOK

note 05 Other operating expenses Figures in TNOK

Operating revenue comprises: 2011 2010

Sale of services 5 799 925

Other operatning revenue 956 1 226

Group services 9 022 8 737

Total net sales revenue 15 778 10 888

2011 2010

VAT receivables 7 480 -

Other current receivables 277 263

Prepaid costs 2 316 5 297

Other current receivables 10 074 5 560

2011 2010

Rent of premises 12 806 12 455

Accrual for losses on premises 17 475 -

Consulting fees 5 015 5 166

Group services 8 224 12 273

Other operating expenses 1 997 1 983

Other operating expenses 45 517 31 877


note 08 Fixed assets Figures in TNOK

note 07 Cash and cash equivalents Figures in TNOK

2011 2010

Cash 2 -

Bank deposits 721 448 -

Cash and cash equivalents 721 450 -

Of which is restricted deposits: - -

The company has obtained a guarantee for tax deduction means of TNOK 400.

Machinery and operating equimpent Total

Historical cost 01.01.11 655 655

Additions 346 346

Disposal - -

Historical cost 31.12.11 1 001 1 001

Accumulated depreciation 01.01.11 52 52

Amortisation of the year 248 248

Disposal depreciation during the year - -


Book value 31.12.11 701 701

Depreciation rates 3 years

Depreciation method Linear

Machinery and operating equimpent

Total

Historical cost 01.01.10 - -

Additions 655 655

Disposal - -

Historical cost 31.12.10 655 655

Accumulated depreciation 01.01.10 - -

Amortisation of the year 52 52

Disposal depreciation during the year - -


Book value 31.12.10 603 603

Depreciation rates 3 years

Depreciation method Linear


Shareholders Number of shares Equity interest

Altor Oil Service Invest AS 97 659 680 77.6 %

RBC Dexia Investor Services Bank 7 717 390 6.1 %

Hemca AS 3 489 759 2.8 %

Invesco Perp Eur Small Comp FD 1 832 185 1.5 %

AGR Group ASA 1 815 845 1.4 %

Verdipapirfondet DnB Navigator 1 632 350 1.3 %

DNB SMB 1 407 177 1.1 %

Aequitas AS 1 334 092 1.1 %

The Northern Trust Co 1 301 595 1,0 %

Total shareholders with equity interest > 1,0 % 118 190 073 93.9 %

Total other shareholders 7 708 235 6.1 %

Total 125 898 308 100.0 %

Board:

Eivind Reiten (indirectly owned via Mocca Invest AS) 17 679 0.0 %

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 %

Total shares owned by the management group 3 489 759 2.8 %

Shareholders Number of shares Equity interest

Altor Oil Service Invest AS 97 659 680 77.6 %

RBC Dexia Investor Services Bank 8 358 096 6.6 %

Hemca AS 3 489 759 2.8 %

Bank of New York Mellon SA/NV 1 835 687 1.5 %

AGR Group ASA 1 815 845 1.4 %

DNB SMB 1 454 289 1.2 %

The Northern Trust Co 1 384 000 1.1 %

Total shareholders with equity interest > 1,0 % 115 997 356 92.1 %

Total other shareholders 9 900 952 7.9 %

Total 125 898 308 100.0 %

note 09 Share Capital and Shareholder Information Figures in TNOK

At 31 December 2011 and at 31 December 2010 the company had a share capital of TNOK 251 797 distributed in 125 898 308 shares, each with a nominal value of NOK 2. All issued shares are fully paid. The company has one share class, and all shares have equal voting and dividend rights. During 2010, the company bought 1 498 505 of its own shares in order to comply with obligations under the employees’ incentive scheme. The total amount paid to acquire the shares was TNOK 21 979. The nominal value of the shares is TNOK 2 997 and the premium TNOK 18 982. In total, the company owns 1 815 845 AGR shares per 31 December 2011 and per 31 December 2010. Shareholders in AGR Group ASA with a minimum of 1% share of ownership, as well as shares held by executive employees and board members including shares owned by affiliated individuals and companies, were at 31 December 2011 as follows:

Shareholder overview: Shareholders in AGR Group ASA with a minimum of 1% share of ownership, as well as shares held by executive employees and board members including shares owned by affiliated individuals and companies, were at 31 December 2010 as follows:


Share capital

Premium funds

Treasury Shares

Total invested

capital Reserves Total equity

Opening balance 01.01.11 251 797 827 544 (3 632) 1 075 709 (333 433) 742 276

Result for financial year - - - - 910 318 910 318

Reduction of share premium funds - (827 544) - (827 544) 827 544 -

Treasury shares - - - - - -

Dividend proposed (700 000) (700 000)

Adjustment to equity for 2011 - (827 544) - (827 544) 1 037 862 2 10 318

Closing balance 31.12.11 251 797 - (3 632) 248 165 704 430 952 595

Reduction of premium funds was approved at extraordinary general meeting on 18 November 2011. The amount is in full allocated to reserves.

Share capital

Premium funds

Treasury Shares

Total invested

capital Reserves Total equity

Opening balance 01.01.10 251 797 846 526 (635) 1 097 688 (212 922) 884 766

Result for financial year - - - - (120 511) (120 511)

Treasury shares - (18 982) (2 997) (21 979) - (21 979)

Adjustment to equity for 2010 - (18 982) (2 997) (21 979) (120 511) (142 490)

Closing balance 31.12.10 251 797 827 544 (3 632) 1 075 709 (333 433) 742 276

Board:

Eivind Reiten (indirectly owned via Mocca Invest AS) 17 679 0.0 %

Tove Magnussen 30 065 0.0 %

Per Inge Remmen (indirectly owned via PIR AS ) 4 208 0.0 %

Total shares owned by board members 51 952 0.0 %

Management:

Sverre Skogen (indirectly owned via Hemaca AS) 3 489 759 2.8 %

Total shares owned by the management group 3 489 759 2.8 %

note 10 Changes in equity Figures in TNOK


2011 2010

Tax payable Norway - -

Amendments, deferred tax Norway (6 980) (782)

Income tax expense (6 980) (782)


Tax payable - -

Tax payable of group contribution - -

Tax payable in balance sheet - -


Pre-tax result 903 338 (121 292)

Expected 28% tax cost 252 935 (33 962)

Variance, actual and expected tax cost (259 915) 33 180

Explanation why actual tax cost deviates from expected tax cost:

Tax effect from non-deductible costs 6 685 346

Tax effect from non-taxable income (266 600) (36 023)

Tax effect from unrecognised tax loss carryforwards - 68 857

Variance compared to expected tax cost (259 915) 33 180

Calculation of tax payable: 2011 2010

Pre-tax result 903 338 (121 292)

Tax effect from non-deductible costs from impairment of shares and receivables 23 875 1 237

Non- deductible costs (952 142) (123 071)

Amendments, deferred tax 17 102 (109)

Basis for tax calculation (7 827) (243 236)

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

Basis for deferred tax 2011 2010

Fixed assets 82 109

Provision of contracts (17 075) -

Loss carried forward (259 081) (251 254)

Amount linked to long-term balance sheet items (276 074) (251 145)

Differences that are not included in the calculation of deferred tax 245 919 245 919

Total basis for deferred tax assets (30 155) (5 226)

Calculation of deferred tax / tax advantage

Deferred tax entered in balance sheet - -

Deferred tax advantage entered in balance sheet (8 443) (1 463)

note 11 Tax Figures in TNOK

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


2011 2010

Advances from customers 185 308

Holiday pay and wages due 1 944 876

Other incurred costs 1 600 42

Accrual for losses on premises 17 475 -

Debt to FieldCo Invest AS 56 719 500

Total current liabilities 77 924 1 726

note 12 Other long-term liabilities Figures in TNOK

note 13 Other current liabilities Figures in TNOK

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


Specification of intra group balances 2011 2010

Long term-loan to subsidiaries:

AGR CannSeal AS 80 451 29 325

AGR Field Operations Holdings AS - 38 443

AGR Marine Engineering AS 20 589 -

AGR Petroleum Services Holdings AS 460 000 82 919

Total long term-loan to subsidiaries 561 039 150 685

Long term-loan to subsidiaries 561 039 150 686

Provision for bad debt - -

Total long term-loan to subsidiaries 561 039 150 686

Interest charge on intra group loans is NIBOR + 3.75% for 2011. For 2010 interest charge was NIBOR + 3.88%.

Short-term group receivables: 2011 2010

AGR Asia Pacific Pty Ltd - 882

AGR Asia Pacific Sdn Bhd - 26

AGR Business Partner AS 1 682 -

AGR CannSeal AS - 1 173

AGR Central Asia AS - 2

AGR Consultancy Services AS - 102

AGR Consultancy Solutions Ltd 161 200

AGR Drilling Services Canada Inc - 18

AGR Drilling Services do Brasil Ltda 39 -

AGR Drilling Services Holdings AS 4 -

AGR Drilling Services Pty Ltd 305 102

AGR Emiteam AB - 6

AGR Emiteam AS - 918

AGR F.J. Brown Inc - 172

AGR Field Operations Holdings AS - 433

AGR Marine Engineering AS 8 12

AGR Peak Solution Systems Ltd 17 19

AGR Petroleum Services AS 217 549

AGR Petroleum Services Holdings AS 290 282 -

AGR Pipetech AS - 57

AGR Subsea AS 3 105 3 745

AGR Subsea Inc - 514

AGR Subsea Ltd 821 579

AGR Technology Design Ltd - 61

AGR Well Management Ltd 283 310

ARG Petroleum (ME). Ltd 7 16

Peak Group Asia Pacific Pty Ltd 130 134

Tracs International Consultancy Ltd 672 186

Total short term group receivables 297 735 10 217

note 14 Intra group balances Figures in TNOK


Short-term group paybles: 2011 2010

AGR Business Partner AS 524 6 766

AGR CannSeal AS - 266

AGR Drilling Services Holdings AS - 238

AGR Drilling Services Pty Ltd - 28

AGR Field Operation Holdings AS - 1 583

AGR Group Holdings Ltd 37 -

AGR Marine Engineering AS - 73

AGR Consultancy Solutions Ltd - 40

AGR Petroleum Services AS 56 2

AGR Petroleum Services Holdings AS 642 759 176 539

AGR Pipetech AS - 1 362

AGR Subsea AS - 1 720

AGR Technology Design Ltd - 3

ARG Petroleum (ME). Ltd 11 748 -

Tracs International Consultancy Ltd 18 -

Total short-term group payables 655 141 188 618

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


Accumulated expenses for wages, pension premiums and other remuneration to managing director, other Group executives and members of the company’s board accordingly for 2011 were:

2011 2010

Wages 8 234 7 079

Employers’ social security contributions 948 611

Other remunerations 176 231

Other wage costs - (11 251)

Total 9 358 (3 331)

Average number of man labour 2 2

The company is obligated to have pension scheme for its employees, and have entered into a defined contribution plan covering all employees. The pension premium is expensed when occurred as operating expenses. The plan complies with requirements for pension plans in Norway. AGR Group ASA has in 2009 recognised cost related to the share investment program (EBC) to other wage cost. Accrued expenses related to this program should have been distributed to the individual subsidiaries. This distribution is carried out in 2010 and the cost is reversed in AGR Group ASA in 2010.

Wages Pension

premiums Other

remuneration Total

Chief Executive Officer 3 038 56 22 3 116

The board

Thomas Nilsson 150 - - 150

Eivind Reiten 450 - - 450

Total board 600 - - 600

Total 3 638 56 22 3 716

Other remuneration to managing director, other Group executives and members of the company’s board accordingly for 2010 were:

Wages Pension

premiums Other

remuneration Total

Chief Executive Officer 3 031 65 50 3 146

The board

Per Inge Remmen 150 - - 150

Thomas Nilsson 150 - - 150

Eivind Reiten 150 - - 150

Total board 450 - - 450

Total 3 481 65 50 3 596


Other remuneration mainly consists of electronic communication, car allowance, traveling expenses for the partner and assurance. The Group CEO has a bonus agreement that entitles him to up to 40 % of his annual salary based on the group’s profit. In 2011 there was paid out a bonus related to the result in 2010 of TNOK 500. In 2010 there was paid out a bonus related to the result in 2009 of TNOK 720.

Per 31 December 2011 and per 31 December 2010 there are no loans or guarantees to the Group CEO, members of the board, members of the group management directors, or any related parties of these.

The Group CEO has a 12 month notice period and12 month severance pay, with deduction of any other wages received during this period.


2011 2010

Land, Buildings and permanent property 12 806 12 455

Apartments - -

Machinery and operating equipment 9 32

Total 12 815 12 487

2011 2010

Interest income from group companies 8 253 27 033

Other interest income 3 119 627

Other financial income 8 711 130 448

Reversal of depreciation of shares 164 470 -

Gain on sale of subsidiary 787 673 -

Interest cost from group companies (13 127) (6 520)

Depreciation of shares and receivables - (136 389)

Other interest expense - (1)

Other financial expense (7 530) (117 331)

Total 951 568 (102 133)

note 16 Leasing costs Figures in TNOK

note 17 Financial income and expense Figures in TNOK

Specification of auditor’s fee excl. VAT 2011 2010

Fees for audit of annual accounts 1 021 912

Fees for tax-related and corporate legislation advice 432 156

Fees for other attestation services 42 78

Fees for other services 5 201 418

Total 6 696 1 564

From financial year 2011 AGR Group ASA appointed Ernst & Young as new auditors. Fees to Ernst & Young is amounted to TNOK 434 for audit, TNOK 232 for tax related services and TNOK 278 for other services.

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

The company has entered into lease agreement for premises at Smålonane 12-14 with Sartor Næringspark AS (former AGR Eiendom AS). The premises contract has been transported from Field Operations Holdings AS to AGR Group ASA from January 2010. Annual rental expense for the company is TNOK 12 806. Rental expense is allocated to subsidiaries based on the used area. The agreement with Sartor Næringspark AS runs until 01. October 2016.


2011 2010

Currency Currency NOK Share % Currency NOK Share %

Turnover:

NOK 9 978 9 978 63% 10 186 10 186 94%

USD 948 5 799 37% 120 702 6%

Total 15 778 100% 10 888 100%

Debtors:

NOK 103 103 4% 213 213 23%

USD 424 2 567 96% 120 702 77%

Total 2 670 100% 915 100%

Creditors:

AED 56 92 1% - - 0%

AUD 4 27 0% 1 6 0%

GBP - - 0% 18 160 4%

NOK 8 233 8 233 97% 4 068 4 068 96%

USD 19 113 1% - - 0%

Total 8 465 100% 4 233 100%

Sales of goods/ other operating revenue 2011 2010

Sales to subsidiary 10 076 8 737

Total 10 076 8 737

Purchase of goods/ other operating costs 2011 2010

Acatos Consulting AS 750 750

Sartor Næringspark AS - 12 455

Altor Equity Partners AB - 10


Racso Ltd 1 750 681

Purchase from subsidiary 9 028 12 901

Total 11 697 27 128

Refer to note 30 in the Group accounts.

note 18 Financial market risk Figures in TNOK



Refer to note 35 in the Group accounts.

note 20 Contingencies Figures in TNOK

note 21 Events occurring after date of balance sheet

note 22 Share investment program

Share investment programIn 2011 AGR introduced a co-investment program in AGR Petroleum Services. In May 2011 AGR Group ASA sold 42 939 A-shares in its subsidiary PetCo Invest AS to key employees and board members in AGR Group ASA and AGR Petroleum Services 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 2010 AGR introduced co-investment programs in AGR Drilling Services and AGR Field Operations. In September 2010 AGR Group ASA sold 73 453 A-shares in its subsidiary FieldCo Invest AS to key employees and board members in AGR Group and AGR Field Operations for NOK 102 per share. FieldCo Invest AS owns 166 812 shares in AGR Field Operations Holdings AS, corresponding to 5.5%. AGR Group ASA is the owner of the remaining 94.5%. Further, in September 2010 AGR Group ASA sold 69 000 A-shares in its subsidiary DrillCo Invest AS to key employees and board members in AGR Group and AGR Drilling Services for NOK 102 per share. DrillCo Invest AS owns 266 683 shares in AGR Drilling Services Holdings AS corresponding to 6.9%. AGR Group ASA is the owner of the remaining 93.1%.

AGR Group ASA’s shareholding in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS following the transaction was one controlling B-share respectively. DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS have been incorporated for the purpose of investing in AGR Drilling Services Holdings AS, AGR Field Operation Holdings AS and AGR Petroleum Services Holdings AS respectively.

The price per share in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS was determined based on the estimated fair value of AGR Drilling Services Holdings AS, AGR Field Operations Holdings AS and AGR Petroleum 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 investments made by DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS, AGR Group ASA has provided loans in the form of seller’s credits with an annual interest rate of 8%. AGR Group ASA has an option to increase its shareholding in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest ASby cash payment or set-off against any outstanding amount under the loan agreements.

The co-investment programs within AGR Drilling Services, AGR Field Operations and AGR Petroleum Services are governed by the provisions in two separate shareholders agreements. The shareholders agreements are entered into by and between the holding companies, the investment companies and the participants in the program. Among other things the shareholder agreement will provide for drag-along and tag-along provisions for the event that AGR Group ASA should sell its shares in the holding companies. The participants cannot sell or transfer the shares in DrillCo Invest AS, FieldCo Invest AS and PetCo Invest AS without the consent of AGR. If a participant in the program gives or is given notice of termination of employment before the second anniversary of the program, AGR has an option to buy the shares at fair value.

In December 2011 AGR Group ASA and FieldCo Invest AS sold its shares in AGR Field Operations Holdings AS.

The Group was not involved in any significant disputes or legal action in 2011 or 2010. As a result, provision for possible claims has not been made.

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


Responsibility Statement

We confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2011 have been 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 the management report includes a true and fair review of the development and performance of the business and the position of the entity and AGR, together with a description of the principal risks and uncertainties facing the entity and AGR.

Oslo, 27 April 2012








Sverre SkogenCEO

annual report - agr reports/agr_annualreport_2011.pdf · 2012-10-28 · 4 annual report 2011 letter...

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