First quarter results 2013 - kvaerner.com

First quarter results 20137 May 2013

© 2013 Kværner ASA 1 1st quarter 2013 report

KVÆRNER ASA – FIRST QUARTER RESULTS 2013

HIGHLIGHTS

Nyhamna onshore framework agreement adjusted to NOK 11 billion in total

Option released for full EPC for Hebron project, USD 1.5 billion value to Kvaerner

Awarded contract for construction services for US Steel Corp. in Indiana of USD 67 million

Record high order backlog of NOK 31.6 billion1

SUBSEQUENT EVENTS

Dividend of NOK 0.55 per share approved by the Annual General Meeting

New members to the Board of Directors elected

Woodside announced re-evaluation of Browse LNG development concept

New operating model announced

FINANCIAL HIGHLIGHTS

Operating revenue EBITDA Order backlog1

NOK million NOK million NOK million

1 Including scope of work of incorporated joint ventures.

² Including a net positive effect of NOK 42 million from divestment of EPC Center Houston operations.

2 388

3 000

2 430

2 930 2 907

-

500

1 000

1 500

2 000

2 500

3 000

3 500

Q1 1

2

Q2 1

2

Q3 1

2

Q4 1

2

Q1 1

3

159

85

67

125

10342

-

20

40

60

80

100

120

140

160

180

Q1 1

2

Q2 1

2

Q3 1

2

Q4 1

2

Q1 1

3

10 813

23 01821 788 21 262

31 635

-

5 000

10 000

15 000

20 000

25 000

30 000

35 000

Q1 1

2

Q2 1

2

Q3 1

2

Q4 1

2

Q1 1

3

1092


FINANCIAL KEY FIGURES

¹ EBITDA definition: Earnings before Interest (net financial items), Taxes, Depreciation and Amortisation.

Please refer to note 8 for details related to restated figures for previous periods.

² Including scope of work of incorporated joint ventures.

FINANCIAL REVIEW

Income statement

Operating revenues in the first quarter 2013 amounted to NOK 2 907 million, compared with NOK 2 388 million for first quarter 2012. The increase from last year is mainly due to high activity in the North Sea.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the quarter were NOK 103 million, compared with NOK 159 million in the same period last year. The EBITDA margin for the first quarter 2013 was 3.5 percent, down from 6.7 percent in the corresponding period in 2012.

Net financial expense for the quarter was NOK 21 million, comprising net interest expense of NOK 16 million, and foreign exchange loss of NOK 5 million. Net financial expense for the same period in 2012 was NOK 1 million. The increased net financial expense is due to significantly lower net interest bearing deposits and loans during first quarter 2013 compared to same period last year.

Net result from associated companies and jointly controlled entities presented within financial items was negative NOK 3 million in the first quarter 2013, compared to NOK nil million in equivalent period in 2012.

Profit before tax for the first quarter 2013 was NOK 62 million compared to NOK 142 million for the same period last year.

Total income tax expense in the period was NOK 25 million compared to NOK 50 million for the same quarter previous year. The tax expense reflects an effective tax rate of 40 percent in the quarter compared to 35 percent in corresponding quarter 2012.

Net profit in first quarter 2013 was NOK 37 million compared to NOK 92 million in the corresponding quarter last year. The basic and diluted earnings per share for the first quarter 2013 were NOK 0.14 compared to NOK 0.34 in first quarter 2012.

Cash flow Net cash outflow from operating activities was NOK 357 million in the first quarter 2013, compared to cash outflow of NOK 385 million in the same period last year. Net current operating assets (NCOA) at the end of first quarter was negative NOK 85 million compared to negative NOK 514 million at 31 December 2012. Customer pre-payments² were NOK 208 million at the end of first quarter compared to NOK 143 million at the end of fourth quarter 2012.

The increase in NCOA in first quarter 2013 is mainly due to phasing of projects in the Upstream segment. Net cash outflow from investing activities in first quarter 2013 was NOK 21 million compared to NOK 39 million in the same quarter last year. Capital expenditure in the quarter amounted to NOK 21 million and mainly related to facility upgrades at the Kvaerner Stord yard.

² Invoicing in excess of cost and estimated earnings less amounts billed in advanced but not received (on a project by

project basis).

Amounts in NOK million Q1 2013 Q1 2012

FY 2012

Restated

Total revenue and other income 2 907 2 388 10 748

EBITDA 1) 103 159 479

EBITDA margin 3.5 % 6.7 % 4.5 %

EBIT 87 144 413

Net profit 37 92 237

Basic and diluted earnings per share (NOK) 0.14 0.34 0.88

Order intake 2) 13 725 3 326 22 972

Order backlog 2) 31 635 10 813 21 262

Net current operating assets (85) (717) (514)

Net interest bearing deposits and loans 284 1 642 650


Net cash flow from financing activities was an outflow of NOK 5 million in the quarter compared with NOK nil million in first quarter 2012.

Net decrease in cash and bank deposits during the quarter amounted to NOK 364 million, resulting in cash and bank deposits at the end of the quarter of NOK 705 million. Undrawn, committed long-term credit facilities amounted to NOK 2.5 billion, providing access to capital totalling NOK 3.2 billion.

Balance sheet

Net cash was NOK 284 million at the end of first quarter, compared to NOK 650 million reported at the end of 2012. Net current operating assets (NCOA) were negative NOK 85 million at the end of first quarter, compared to negative NOK 514 million at the end of previous quarter. Equity ratio at 31 March 2013 was 38.1 percent, up from 36.3 percent at year end 2012.

Order intake and backlog

Order intake in first quarter 2013 totalled NOK 13 725 million, including the scope of work of incorporated joint ventures, compared to NOK 3 326 million in first quarter 2012. At 31 March 2013, order backlog, including the scope of work of incorporated joint ventures, amounted to NOK 31 635 million. Approximately 40 percent of the order backlog is for execution in 2013, approximately 35 percent for 2014 and approximately 25 percent for 2015 and later.

The Kvaerner share

Indexed share price development last 12 months

The share price decreased from NOK 16.20 at the end of fourth quarter 2012 to NOK 12.10 at the end of first quarter 2013. The highest traded share price during first quarter was NOK 18.40, the lowest traded share price was NOK 11.90 and the average share price during the quarter was NOK 14.50. The average daily turnover during first quarter was 1 144 101 shares compared to 651 583 shares during fourth quarter 2012. The market capitalisation was NOK 3.25 billion at the end of first quarter 2013 compared to NOK 4.36 billion at the end of fourth quarter 2012. Kværner ASA holds no treasury shares.

70

75

80

85

90

95

100

105

110

115

02

.04

.12

23

.04

.12

14

.05

.12

04

.06

.12

25

.06

.12

16

.07

.12

06

.08

.12

27

.08

.12

17

.09

.12

08

.10

.12

29

.10

.12

19

.11

.12

10

.12

.12

31

.12

.12

21

.01

.13

11

.02

.13

04

.03

.13

25

.03

.13

Kværner ASA Oslo Børs Benchmark Index


OPERATIONAL REVIEW

Health, Safety, Security and Environment (HSSE)

HSSE Status During first quarter 2013 Kvaerner had a total of 12 recordable injuries of which five resulted in Lost Time. During first quarter 2013 Kvaerner had a total of four serious incidents of which one resulted in Lost Time injury. The majority of the incidents were eye, hand and leg related.

Initiatives To increase HSSE performance it has been held a half day HSSE strategy meeting between the Executive Management Team and HSSE managers. The main takeaway after the meeting was the following:

Follow HSSE plans, ensure and visualise progress

Strong compliance to safety rules

Ensure we communicate with employees, partners and subcontractors An HSSE summit will be held in June 2013 to ensure HSSE alignment between Kvaerner, partners and subcontractors.

Segments

The business of Kvaerner is for reporting purposes organised in two reporting segments: Upstream and Downstream & Industrials. The Upstream segment includes the business areas Contractors Norway (previously named North Sea), Jackets, Concrete Solutions and Contractors International (previously named International). The Downstream & Industrials segment comprises the business area Onshore Americas (previously named Engineering & Construction (E&C) Americas).

The Upstream segment1

1 Please refer to note 8 for details related to restated figures for previous periods. The Upstream segment reporting further

includes Kvaerner’s share (proportionate consolidation) of incorporated joint ventures, please refer to segment information on page 12.

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

2007 2008 2009 2010 2011 2012 2013

Sick leave (%) TRIF (per mill manhours) LTIF (per mill manhours)

Amounts in NOK million Q1 2013

Q1 2012

Restated

FY 2012

Restated


EBITDA 131 196 551

EBITDA margin 3.8 % 9.7 % 5.6 %

Net current operating assets (633) (1 373) (1 009)

Order intake 12 805 2 945 21 285

Order backlog 29 844 9 683 20 226

Employees 2 534 2 568 2 515

4.7

3.0

0.8


Operating revenue from the Upstream segment totalled NOK 3 411 million in first quarter 2013, compared to NOK 2 019 million in first quarter 2012. The revenue increase is mainly due to higher activity within Contractors Norway and Concrete Solutions. EBITDA amounted to NOK 131 million, resulting in an EBITDA margin for the quarter of 3.8 percent, compared to NOK 196 million and 9.7 percent in first quarter 2012.

EBITDA in the quarter reflects a project portfolio with a relatively wide margin range with limited contribution from projects awarded early in the market cycle and some projects not yet recognising margin due to below 20 percent completion. The Nordsee Ost offshore wind jacket project still has commercial challenges and the arbitration process is on-going with expected resolution during second half of 2013.

NCOA at the end of first quarter 2013 was negative NOK 633 million, an increase of NOK 376 million during the quarter. The disputed Nordsee Ost project will be tying up working capital until arbitration is resolved.

Order intake of NOK 12 805 million in the quarter, including the scope of work of incorporated joint ventures, mainly reflects adjustment of the Nyhamna onshore framework agreement of NOK 5 billion, option for full EPC for the Hebron project and growth in existing contracts. The order backlog was NOK 29 844 million at the end of first quarter 2013 including the scope of work of incorporated joint ventures.

Operations

Engineering, Procurement and Construction activities for the Hebron GBS project have commenced in Newfoundland and Labrador, Canada, with engineering in St. John's and construction at the Bull Arm fabrication yard. The GBS steel skirt installation is completed and rebar installation in base slab is proceeding according to plan.

In the Jackets business, high activity continues. The next main milestone will be sail away in second quarter for the two Clair Ridge jackets which are in the final assembly phase. The Nordsee Ost project is entering the final execution phase. Fabrication of both the Edvard Grieg and Martin Linge jackets is on-going at the Verdal yard and with subcontractors.

The activity level in the North Sea will be increasing in coming quarters on all three major on-going projects. Assembly activities on the Eldfisk 2/7S project will be the major activity at Stord for the remainder of the year. All major elements are delivered to Stord and final assembly is progressing. The Edvard Grieg topside project is moving forward with detailed design and procurement work as main activities for the next quarter and fabrication started in four different locations mid-April. For the Nyhamna onshore project, detailed engineering manning is increasing and will be at peak towards year end. Main subcontracts for the project have been established.

Market

Kværner still sees an active market and expects new development projects to be awarded over the next years both on the Norwegian Continental Shelf and internationally. However, the competition is fierce both from South East Asia and Europe, and several projects have been awarded to competitors during the last period. In 2013, several FEEDs for new development projects will be executed. These projects are expected to be tendered for in 2014.

Within concrete substructures, there are prospects in Arctic areas like the Kara Sea, Russia, Canada and Alaska. The interest for the Arctic regions is strong and growing, and Kvaerner holds a unique position within this market on a global level. Woodside announced in April that they will review alternative Browse LNG development concepts. Although Kvaerner’s primary focus on the international topside market has been the Browse project, the company has been working on other projects in parallel and sees a significant portfolio of prospects in its target regions.


The Downstream & Industrials segment

The figures above include EPC Center Houston operations, including a net positive EBITDA effect of NOK 42 million following the divestment in third quarter 2012.

Downstream & Industrials had operating revenues of NOK 244 million in first quarter 2013, compared to NOK 496 million in first quarter 2012. The reduction in revenue is both due to sale of EPC Center Houston operations and lower activity. The EBITDA was negative NOK 8 million, giving an EBITDA margin of negative 3.1 percent. EBITDA in the quarter is affected by legal costs on disputed projects and limited results are expected as long as the Longview arbitration process is on-going. As previously communicated, a somewhat lower activity level is expected during first half of 2013 due to delays in contract awards in 2012. The activity is however expected to catch up during the second half of the year.

NCOA at the end of first quarter 2013 were NOK 531 million, a decrease of NOK 65 million during the quarter. The NCOA level is still unusually high as a substantial amount of capital is tied up in the Longview project.

The order backlog increased by NOK 760 million from previous quarter end to NOK 1 799 million at 31 March 2013. The order intake in the quarter of NOK 933 million, includes the contract awarded for construction services for US Steel Corporation Gary Works in Indiana of USD 67 million and full contract value to be reflected in Kvaerner’s accounts related to the contract to build the Garrison Energy Center in Dover, Delaware with Kvaerner’s joint venture partner Parsons Brinckerhoff Inc.

Operations The construction portion of the Calpine Garrison project has begun with mobilisation as from April. Site preparation work will continue for the next few months in conjunction with detailed engineering. The ATI Mill project remains on schedule with all housings installed at the end of March 2013. Kvaerner is performing work on the No. 6 blast furnace in Gary Works, Indiana for US Steel Corporation pursuant to its strategic alliance. Maintenance and small capital projects in the iron and steel sector remain on plan. Market In the Downstream & Industrials segment, new gas fired power plant tender opportunities continue to arrive due to low cost of natural gas and retirement of coal fired plants. A large number of these opportunities are in union labour markets where Kvaerner operates. The major steel producers in North America are continuing with several upgrades in the primary and finishing areas in the near term. However, there are some indications that capital work will be slowed in the near term to pursue acquisitions related to the Marcellus Shale development. Unallocated costs

Unallocated costs, which are net corporate costs not directly attributable to the individual segments, amounted to NOK 20 million in the first quarter 2013, down from NOK 24 million in fourth quarter 2012. It is expected that the recurring level of net corporate costs will be around NOK 80-100 million annually.

SUBSEQUENT EVENTS

Proposed dividend of NOK 0.55 per share approved by the Annual General Meeting

The Annual General Meeting, held on 10 April 2013, approved the proposed dividend of NOK 0.55 per share which was in accordance with the company’s dividend policy. The dividend was paid 24 April 2013.


Full year

2012

Total revenue and other income 244 496 1 887

EBITDA (8) 3 62

EBITDA margin (3.1%) 0.5% 3.3%

Net current operating assets 531 617 596

Order intake 933 381 1 744

Order backlog 1 799 1 130 1 039

Employees 203 376 218


Election of members to the Board of Directors

As proposed by the Nomination Committee, the Annual General Meeting elected the following shareholder elected members for a period not exceeding two years: Leif-Arne Langøy (Chairman), Tore Torvund (Deputy Chairman), Kjell Inge Røkke, Vibeke Hammer Madsen and Live Haukvik Aker.

New operating model and management changes

A new operating model was launched in mid-April. The executive management team will be reshaped and a small corporate management team will be established comprising the functions: finance, business support and legal. The new operating model aims to support focus on project execution, streamline resource utilisation, facilitate new delivery models and improve cost consciousness. As part of the new model, Lars Eide will take on a vital role within Kvaerner and be charged with the task of developing winning strategies for selected future target projects as pursuit manager. Steinar Røgenes has been appointed executive vice president of the business area Contractors Norway (previously named North Sea) and head of the Stord yard.

Lease agreement for new headquarters at Fornebu

On 23 April 2013 Kvaerner signed an agreement with Fornebuporten AS, a related party, for a long term lease for Kvaerner’s new headquarters at Fornebu scheduled for completion in second quarter 2015. The lease contract is for approximately 8 000 square metres at market terms. The term of the agreement is 12 years with options for five plus five years.

PRINCIPAL RISKS AND UNCERTAINTIES

Operational risk is the ability to deliver existing contracts at the agreed time, quality, functionality and cost. Delivering projects and equipment in accordance with the contract terms and the anticipated cost framework represents a substantial risk element, which will be the most significant factor affecting Kvaerner’s financial performance. Results also depend on costs, both Kvaerner’s own and those charged by suppliers, and on interest expenses, exchange rates and customers’ ability to pay. For an overview of major current legal disputes, please see note 6 to the condensed consolidated interim accounts. Kvaerner has established guidelines and systems to manage its exposure in the financial markets. These systems cover currency, interest rate, counterparty and liquidity risks. Kvaerner works systematically with risk management in all its business areas, and has extensive systems and procedures in place. Other relevant risk factors are further described in the annual report for 2012.

OUTLOOK For 2013 Kvaerner expects potential revenues in excess of NOK 15 billion including incorporated joint ventures’ revenue of an estimated NOK 2.5 billion for the year. Secured revenues for the remainder of 2013 is almost NOK 12 billion including incorporated joint ventures. Kvaerner also has secured revenues of more than NOK 11 billion for 2014 and more than NOK 8 billion for 2015 and onwards reflecting a record high order backlog.

For the Upstream segment, early cycle projects with low contribution are putting pressure on the margin and it is uncertain whether the 2013 EBITDA margin will be within the normalised range of 5-10 percent. These projects are being phased out over the next year and gradual recovery is expected as they are replaced by more recent awards. The results for the Downstream & Industrials segment are still expected to be around break-even until the Longview arbitration has been resolved, reflecting that there is still a high degree of uncertainty with regards to legacy projects.

Going forward, Kvaerner’s main focus will be on execution of the current project portfolio and to improve the company’s competitive position in all its market segments. Substantial efforts will be put in to overhead reductions and streamlining of indirect costs, refining the delivery model, improve own yard productivity and to develop a sustainable model for engineering subcontracting.

Oslo, 6 May 2013

The Board of Directors and President & CEO

Kværner ASA


FURTHER INFORMATION

Investor relations: Ingrid Aarsnes, SVP Investor Relations, Kvaerner, Tel: +47 67 59 50 46, Mob: +47 950 38 364

Media: Mariken Holter, SVP Corporate Communications, Kvaerner, Tel: +47 67 52 74 35, Mob: +47 917 87 358.

About Kvaerner: With more than 3 000 HSE-focused and experienced employees, Kvaerner is a specialised provider of engineering, procurement and construction (EPC) services for offshore platforms and onshore plants. Kværner ASA, through its subsidiaries and affiliates ("Kvaerner"), is an international contractor that plans and realises some of the world's most demanding projects as a preferred partner for upstream and downstream oil and gas operators, industrial companies and other engineering and fabrication contractors.

In 2012, the Kvaerner group had consolidated annual revenues of close to NOK 11 billion and the company had an order backlog at 31 December 2012 of more than NOK 21 billion. Kvaerner was publicly listed with the ticker "KVAER" at the Oslo Stock Exchange on 8 July 2011. For further information, please visit www.kvaerner.com.

FINANCIAL CALENDAR 2013 Second quarter results 2013: 16 August 2013 Third quarter results 2013: 25 October 2013

http://www.kvaerner.com/


FINANCIAL STATEMENTS

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT

1) Restated figures for previous periods are reflecting impacts from implementing IAS 19R Employee Benefits. Please refer to

note 8 for details.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


note 8 for details.


FY 2012

Restated 1)


Operating expenses (2 804) (2 229) (10 269)

EBITDA 103 159 479

Depreciation and amortisation (16) (15) (66)

Operating profit 87 144 413

Net financial income/(expense) (21) (1) (39)

Profit from associated companies and jointly controlled entities (3) (0) (7)

Profit before tax 62 142 367

Income tax expense (25) (50) (130)

Net profit 37 92 237

Attributable to:

Equity holders of the parent company - Kværner ASA 37 92 237

Basic and diluted earnings per share (NOK) 0.14 0.34 0.88


FY 2012

Restated 1)

Net profit/(loss) for the period 37 92 237

Items that may be reclassified to profit or loss in subsequent periods:

Cash flow hedges, net of tax

- Fair value adjustment recognised in equity 11 2 (10)

- Reclassified to profit or loss - (2) (6)

Translation differences, foreign operations 66 44 (50)

Items that may be reclassified to profit or loss in subsequent periods 76 45 (65)

Items not to be reclassified to profit or loss in subsequent periods:

Actuarial gains/(losses) on defined benefit pension plans, net of tax - - 43

Items not to be reclassified to profit or loss in subsequent periods - - 43

Total other comprehensive income, net of tax 76 45 (22)

Total comprehensive income 114 137 215

Attributable to

Equity holders of the parent company - Kværner ASA 114 137 215


INTERIM CONDENSED CONSOLIDATED BALANCE SHEET


note 8 for details.

Amounts in NOK million 31.03.2013

31.03.2012

Restated 1)

31.12.2012

Restated 1)

Assets

Non-current assets

Property plant and equipment 626 487 620

Intangible assets 1 160 1 181 1 157

Deferred tax assets 248 126 254

Investments in associates and jointly controlled entities 178 117 106

Interest bearing receivables 50 41 50

Other non-current assets 30 35 31

Total non-current assets 2 293 1 987 2 218

Trade and other receivables 2 965 2 651 2 660

Interest bearing receivables - 20 -

Prepaid company tax 93 184 91

Total cash and bank 705 2 043 1 069

Total current assets 3 763 4 897 3 819

Total assets 6 057 6 884 6 039

Equity and liabilities

Equity

Share capital 91 91 91

Share premium 729 729 729

Retained earnings 1 616 1 851 1 578

Other reserves (127) (138) (204)

Total equity 2 308 2 533 2 195

Non-current liabilities

Interest-bearing loans 471 462 469

Deferred tax liabilities 1 10 1

Employee benefit liabilities 174 219 171

Total non-current liabilities 646 691 641

Current liabilities

Trade and other payables 2 738 2 997 2 837

Tax liabilities 52 292 28

Provisions 312 371 338

Total current liabilities 3 102 3 660 3 203

Total equity and liabilities 6 057 6 884 6 039


INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY


note 8 for details.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


note 8 for details.

Amounts in NOK million

Total paid in

capital

Retained

earnings

Other

reserves Total equity

Equity as of 31 December 2011, as previously reported 820 1 758 (133) 2 445

Impact of implementing IAS 19R, net of tax 1) - - (49) (49)

Equity as of 1 January 2012, restated 820 1 758 (182) 2 396

Profit for the period - 92 - 92

Other comprehensive income - 1 44 45

Total comprehensive income - 93 44 137

Equity as of 31 March 2012, restated 1) 820 1 851 (138) 2 533

Profit for the period 1 April to 31 December 1) - 145 - 145

Other comprehensive income 1) - - (66) (66)

Total comprehensive income - 145 (66) 79

Employee share purchase programme - (5) - (5)

Dividend - (412) - (412)

Equity as of 31 December 2012, restated 1) 820 1 578 (204) 2 195

Profit for the period - 37 - 37

Other comprehensive income - - 76 76

Total comprehensive income - 37 76 114

Equity as of 31 March 2013 820 1 616 (127) 2 308


FY 2012

Restated 1)

EBITDA 103 159 479

Taxes paid (2) (32) (284)

Changes in other operating assets and liabilities (458) (512) (943)

Cash flow from operating activities (357) (385) (748)

Capital expenditure (21) (35) (217)

Proceeds from sale of assets and operations 0 0 111

Cash flow from other investing activities (0) (4) 16

Cash flow from investing activities (21) (39) (91)

Dividends - - (412)

Cash flow from other financing activities (5) 0 (69)

Cash flow from financing activities (5) 0 (481)

Translation adjustments 20 47 (29)

Net increase/(decrease) in cash and bank deposits (364) (376) (1 349)

Cash at the beginning of the period 1 069 2 418 2 418

Cash at the end of the period 705 2 043 1 069


SEGMENT INFORMATION

For segment reporting, effective as from 1 January 2013, management receives financial information that includes activities of jointly controlled entities as if they were proportionately consolidated. Under IFRS as adopted by the European Union, Kvaerner accounts for jointly controlled entities using the equity method, presenting its share of the net results as a component of Other income. The historical segment information has been restated for this change. In addition, the order intake and backlog information for the segment information of the interim report includes Kvaerner’s scope of work for jointly controlled entities accounted for using the equity method.


note 8 for details.

Included in full year 2012 EBITDA is a net positive effect of NOK 42 million from divestment of EPC Center Houston operations.


Q1 2012

Restated 1)

Q1 2013 Q1 2012 Q1 2013

Q1 2012

Restated 1)

Q1 2013 Q1 2012

External revenue and other income 3 394 2 007 244 494 (731) (114) 2 907 2 388

Internal revenue 17 12 - 1 (17) (13) - -

Total revenue and other income 3 411 2 019 244 496 (748) (127) 2 907 2 388

EBITDA 131 196 (8) 3 (20) (39) 103 159

Depreciation and amortisation (15) (13) (2) (2) - (0) (16) (15)

EBIT 116 183 (9) 1 (20) (39) 87 144

Net current operating assets (633) (1 373) 531 617 17 40 (85) (717)

ConsolidatedUpstreamDownstream &

Industrials

Group activities and

eliminations

Upstream

Downstream &

Industrials

Group activities

and eliminations Consolidated


FY 2012

Restated 1)

FY 2012

Restated 1)

FY 2012

Restated 1)

FY 2012

Restated 1)

External revenue 9 747 1 881 (880) 10 748

Internal revenue 72 6 (79) -

Total revenue and other income 9 819 1 887 (959) 10 748

EBITDA 551 62 (134) 479

Depreciation and amortisation (57) (8) (1) (66)

EBIT 495 53 (135) 413

Net current operating assets (1 009) 596 (101) (514)


NOTES

Note 1 General

Kværner ASA (the company) is a company domiciled in Norway. The Kvaerner group consists of Kværner ASA and its subsidiaries.

Note 2 Basis for preparation

Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with the International Financing Reporting Standard ("IFRS") IAS 34 Interim Financial Reporting for interim reporting as adopted by the European Union and additional Norwegian regulations.

Accounting principles

The accounting principles applied in these condensed consolidated interim financial statements are the same as those applied in the Annual accounts 2012, except for the adoption of new standards and interpretations effective as of 1 January 2013. The group has adopted revised IAS 19 Employee Benefits and amendments to IAS 1 Presentation of Financial Statements. Amended IAS 1 affects presentation of comprehensive income only, where items must be split between those that may be reclassified to profit or loss and those which will remain in equity. See note 8 for details related to adoption of revised IAS 19.

The interim financial statements are condensed and do not include all the information required by IFRS for a complete set of financial statements and should be read in conjunction with the full year consolidated financial statements for Kværner ASA. The consolidated financial statements for Kvaerner for the year ended 31 December 2012 are available upon request from the company’s registered office at Drammensveien 264, 0283 Oslo, Norway or at www.kvaerner.com.

The interim financial statements have not been subject to audit. The functional currency of the entities within Kvaerner is determined based on the nature of the economic environment in which it operates. The functional currency and presentation currency of Kværner ASA is NOK. Numbers are rounded to the nearest million, unless otherwise stated. As a result of rounding differences, numbers or percentages may not add up to the total.

The condensed consolidated interim financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of Kvaerner’s management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any subsequent interim period or annual accounts.

Note 3 Judgments, estimates and assumptions

In applying the accounting policies, management makes judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 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.

In preparing these condensed consolidated interim financial statements, significant judgements made by management in applying the group's accounting policies and key sources of uncertainty in the estimates were consistent with those applied for the period ended 31 December 2012.


Note 4 Financial items

Note 5 Share capital and equity

Kværner ASA has 269 000 000 shares issued each with a nominal value of NOK 0.34.

Kvaerner currently has no share-based compensation that results in a dilutive effect on earnings per share. Basic and diluted earnings per share have been calculated based on the following average number of outstanding shares:

Note 6 Contingent events

Given the scope of the group’s worldwide operations, group companies are inevitably involved in legal disputes in the course of their activities. Provisions have been recognised to cover the expected outcome of any disputes and litigation proceedings in accordance with applicable accounting rules. Such provisions will be based on management's best evaluations and estimates of a likely outcome of the dispute and will be subject for review by in-house or external legal advisors. However, the final outcome of such disputes and litigation proceedings will always be subject to uncertainties, and resulting liabilities may exceed recognised provisions. The disputes and litigation proceedings are continuously monitored and reviewed, and recognised provisions are adjusted to reflect management’s best assessment of most recent facts and circumstances. Litigation and arbitration costs are recognised as they occur.

Significant, current disputes

In 2011, arbitration was initiated against Longview and Foster Wheeler North America Corp. related to the Longview project delivered in 2011. In 2012, arbitration related to the on-going Nordsee Ost project was filed. Due to uncertainties related to these events and to avoid prejudicing Kvaerner's position, no estimate of the expected final outcome is disclosed.

Note 7 Related parties

The largest shareholder of Kværner ASA, Aker Kværner Holding as, is controlled by Aker ASA (70 percent) which in turn is controlled by Kjell Inge Røkke and his family through TRG Holding AS and The Resource Group AS. In accordance with IAS 24, all entities controlled by Aker ASA, associated companies and joint ventures of Kvaerner and certain other related parties are reported as related parties to Kvaerner.

Kvaerner believes that all transactions with related parties have been based on arm's length terms. The table below gives an overview of aggregated transactions and balances with related parties.


Q1 2012

Restated

FY 2012

Restated

Net interest income/(expense) (16) (6) (28)

Net foreign exchange gain/(loss) (5) 4 (7)

Other financial items, net (0) (0) (8)

Net financial income/(expense) (21) (1) (39)

NOK thousand Q1 2013 Q1 2012

Full year

2012

Shares issued 269 000 269 000 269 000

Effect of own shares held - - (220)

Average number of outstanding shares 269 000 269 000 268 780

Amounts in NOK million Q1 2013 Q1 2012 FY 2012

Revenue 30 66 158

Operating expenses (37) (3) (107)

Net interest income/(expense) 1 1 2

Interest bearing loans 46 59 44

Trade and other receivables 43 14 7

Trade and other payables 5 1 19


On 23 April 2013 Kvaerner signed an agreement with Fornebuporten AS for a long term lease for Kvaerner’s new headquarters at Fornebu, scheduled for completion in second quarter 2015. The lease contract is for approximately 8 000 square metres at market terms. The term of the agreement is 12 years with options for five plus five years. Fornebuporten AS is owned by Aker ASA, and the lease agreement is therefore a related party transaction.

Note 8 Implementation of revised IAS 19 Employee Benefits

As of 1 January 2013 Kvaerner has adopted the revised IAS 19 Employee Benefits with retrospective application. The revised standard requires immediate recognition of actuarial gains and losses in other comprehensive income and the corridor method can no longer be used. Expected return on plan assets will be calculated using the same interest rate as applied for discounting the pension obligation. In addition, net interest for plan assets and liabilities are recognised within financial items.

Following the revised accounting standard the financial statements for 2012 have been restated as follows (impacted reported lines only):


Q1 2012

Reported

Effect of

restatement

Q1 2012

Restated

FY 2012

Reported

Effect of

restatement

FY 2012

Restated

CONDENSED CONSOLIDATED INCOME STATEMENT

Operating expenses (2 229) - (2 229) (10 275) 6 (10 269)

EBITDA 159 - 159 473 6 479

Net financial income/(expense) (1) - (1) (31) (8) (39)

Profit before tax 142 - 142 369 (2) 367

Income tax expense (50) - (50) (131) 1 (130)

Net profit 92 - 92 238 (1) 237

Basic and diluted earnings per share (NOK) 0.34 - 0.34 0.89 (0.01) 0.88

CONDENSED CONSOLIDATED STATEMENT OF

COMRPREHENSIVE INCOME

Net profit/(loss) for the period 92 - 92 238 (1) 237

Actuarial gains/(losses) on defined benefit pension plans - - - - 43 43

Total other comprehensive income, net of tax 45 - 45 (65) 43 (22)

Total comprehensive income 137 - 137 173 42 215

CONDENSED CONSOLIDATED BALANCE SHEET

Deferred tax assets 107 19 126 251 3 254

Other non-current assets (including pension funds) 47 (13) 35 47 (16) 31

Total assets 6 878 6 6 884 6 052 (13) 6 039

Total equity 2 582 (49) 2 533 2 202 (8) 2 195

Employee benefit liabilities 164 56 219 177 (6) 171

Total equity and liabilities 6 878 6 6 884 6 052 (13) 6 039


Note 9 – Quarterly historical information

1)

Please refer to note 8 for details related to restated figures for previous periods.

Amounts in NOK million Q1 2013 Q4 2012 1)

Q3 2012 1)

Q2 2012 1)

Q1 2012 1)

Q4 2011

Total revenue and other income 2 907 2 930 2 430 3 000 2 388 3 004

Upstream 3 411 3 054 2 191 2 554 2 019 2 176

Downstream & Industrials 244 261 442 689 496 850

EBITDA 103 125 109 85 159 249

Upstream 131 137 100 118 196 287

Downstream & Industrials (8) 7 46 6 3 (15)

EBITDA margin 3.5 % 4.3 % 4.5 % 2.8 % 6.7 % 8.3 %

Upstream 3.8 % 4.5 % 4.6 % 4.6 % 9.7 % 13.2 %

Downstream & Industrials (3.1%) 2.7% 10.4% 0.9% 0.5% (1.8%)

Net profit 37 55 48 42 92 81

Basic and diluted earnings per

share (NOK) 0.14 0.20 0.18 0.15 0.34 0.30

Order intake 6 438 2 444 1 240 15 190 3 197 1 136

Upstream 12 805 1 848 1 296 15 196 2 945 446


Order backlog 24 924 21 262 21 788 23 018 10 813 10 046

Upstream 29 844 20 226 21 433 22 318 9 683 8 758

Downstream & Industrials 1 799 1 039 358 702 1 130 1 287

NCOA (85) (514) (840) (432) (717) (1 235)

Upstream (633) (1 009) (1 401) (1 113) (1 373) (1 837)


Net interest bearing deposits and

loans 284 650 1 253 942 1 642 2 012

First quarter results 2013 - kvaerner.com

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