!KERå+V RNERå!3!bib.kuleuven.be/files/ebib/jaarverslagen/AkerKvaerner_2004.pdf · Amounts in NOK...
Transcript of !KERå+V RNERå!3!bib.kuleuven.be/files/ebib/jaarverslagen/AkerKvaerner_2004.pdf · Amounts in NOK...
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Pro forma EBITDAAmounts in NOK million
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200420032002
Pro forma earnings per shareAmounts in NOK
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Order backlogAmounts in NOK million
Financial calendar 2005
Tuesday 15 February 2005: Preliminary Year-End and 4th Quarter Results 2004
Friday 18 March 2005: Annual General Meeting 2005
Tuesday 26 April 2005: 1st Quarter Results 2005
Thursday 28 July 2005: 2nd Quarter Results 2005
Wednesday 26 October 2005: 3rd Quarter Results 2005
Pro forma key financial figures
Amounts in NOK million 2002 2003 2004
Operating revenues 34 140 31 327 35 553
EBITDA 573 1 003 1 401
Operating profit -395 -97 775
Profit (+) / loss (-) before tax -54 -338 379
Amounts in NOK 2002 2003 2004
Earnings per share 1) 9) -3.33 -6.41 4.20
Cashflow per share 8) 9) -3.13 13.59 29.93
Financial expenses cover 2) 0.08 0.74 2.77
Liquidity ratio 3) 1.26 1.36 1.23
Debt to equity ratio 4) 2.09 1.55 1.26
Return on total capital 5) 3.3 % 0.7 % 9.1 %
Return on equity 6) -9.3 % -17.5 % 12.1 %
Operating profit / Net operating assets 7) -6.1 % -1.8 % 18.0 %
Definitions:1) Profit (+) / loss (-) after tax and minority interests / Average number of shares2) (Operating profit + financial income + depreciation) / Interest expenses3) Current assets / Current liabilities4) (Interest-bearing short-term debt + interest-bearing long-term debt (exclusive subordinated debt)) /
Equity including minority interest5) Profit before interest expenses / Average (debt + equity)6) Profit (+) / loss (-) after tax / Average equity (inc. minority interest)7) Net operating assets is defined in note 78) Net cashflow from operating activities / Average number of shares9) Earnings per share is calculated using the average number of shares outstanding
ContentsAnnual Report 2004
Proforma key financial figures .................... 2
Letter from the President & CEO ............. 5
Board of Directors ................................................... 6
Board of Directors´ report 2004............... 8
Accounts and notes - contents .............. 23
Accounts and notes -
group consolidated.............................................. 24
Accounts and notes -
Parent company ...................................................... 53
Auditor's report......................................................... 60
Quarterly key figures.......................................... 62
Formation of the new group ...................... 64
Corporate governance and
corporate management .................................. 66
Executive management ................................... 67
Shareholder issues............................................... 68
Articles of association...................................... 70
Aker Kvaerner is aiming for providing customers,
shareholders, analysts, employees and society in
general with precise and relevant information about the
company. The objective is to create improved
knowledge and understanding of our business. For this
reason, Aker Kvaerner issues two reports in addition to
the Annual Report 2004: Powered to Perform™ 2005and People and Values 2005.
� The Annual Report 2004 is primarily directed at
shareholders and the financial market, and contains
the Board of Directors’ report, the group’s consolidated
financial statements, shareholder information and the
annual accounts for the parent company Aker
Kværner ASA.
� What we do - Powered to Perform™ 2005 presents Aker
Kvaerner´s core capabilities and selected projects,
technologies, products and solutions. Powered to
Perform™ provides useful information for customers,
shareholders and other stakeholders who seek an in-
depth understanding of Aker Kvaerner’s activities.
� Who we are - People and Values 2005 presents Aker
Kvaerner’s set of core values and leadership principles
and shows how we through our corporate values work to
create value for customers, shareholders, employees
and the society in general. People and Values aims at
providing all our stakeholders with an understanding of
the people in Aker Kvaerner.
The Annual Report 2004 and People and Values 2005
are available in both Norwegian and English, while
Powered to Perform™ 2005 is only available in English.
All reports can be downloaded from the company´s
website, www.akerkvaerner.com.
Aker Kværner ASA is a leading global provider of
engineering and construction services, technology
products and integrated solutions. The business
within Aker Kvaerner comprises several industries,
including Oil & Gas, Refining & Chemicals,
Pharmaceuticals & Biotechnology, Mining & Metals,
Power Generation and Pulp & Paper.
The Aker Kvaerner group consists of a number of
separate legal entities. Aker Kvaerner is used as the
common brand/trademark for most of these entities.
The parent company of the group is Aker Kværner ASA.
Aker Kvaerner has aggregated annual revenues
of approximately NOK 35.6 billion and employs
approximately 21 000 people in more than 30
countries.
This is Aker Kvaerner
Aker Kvaerner engages in an open and continuous
dialogue with the financial market for the purpose of
creating a solid basis for the correct pricing of the
share. The dialogue with the market takes the form
primarily of annual and quarterly reports and
presentations, press releases, meetings with
investors and analysts, participation in conferences
and use of the company’s website.
Executive management actively participates in
dialogue with the market, while daily communication
is handled by the investor relations department.
Important information of significance to investors and
other market players is communicated through the
Oslo Stock Exchange (www.newsweb.no) and the
company’s web pages (www.akerkvaerner.com).
Investor communication
Aker Kvaerner-group
MAIN
SECTORS
SEGMENTS
Maintenance,
Modifications
and Operations
Subsea and
Products &
Technologies
Field
DevelopmentProcess
Pulping
& Power
Other/Corporate
Financial reporting structure
Engineering & ConstructionOil & Gas
5Letter from the President & CEO �
Dear fellow shareholder
2004 was a year to celebrate for the shareholders in Aker Kvaerner. We had a record order
intake and order backlog, EBITDA improved and several improvement programmes have taken
effect to form a solid foundation for the future.
A long-term sustainable financial platform was created as part of the restructuring in April. Long-
term debt was refinanced, new equity was secured and we have a more focused group structure,
without most of the major legacy issues that in the past limited our flexibility and ability to focus on
operations.
• HSE results improved, the Lost Time Incident Frequency per million hours worked was reduced
from 2.0 in 2003 to 1.2 in 2004
• Over the nine-month period from April 2004, when the new Aker Kvaerner was established, to
year-end, some NOK 2.8 billion in value was created for shareholders and lenders through
strong improvement in share and bond prices
• Pro forma EBITDA was NOK 1 401 million, an increase from NOK 1 003 million in 2003
• The order intake was NOK 41.6 billion, an increase from NOK 36.9 billion in 2003
• The order backlog was NOK 35.9 billion at year-end 2004, an increase from NOK 31.5 billion at
year-end 2003
• Many of the new orders represent milestones that position Aker Kvaerner for future assignments
• Client relationships have been strengthened through successful completion of key projects and
by a strong focus on better coordination of business development
• Internal improvement programmes yield progress within project execution, best value sourcing
and risk management
• Feedback from the internal “People Survey 2004” shows that we are moving in the right direction.
The survey also points to areas where we need to further develop the organisation and the
management.
The group has regained strength through internal improvements, in addition to taking advantage of
improving global markets. A stronger focus on selected technologies and services, combined with
a selective approach to bidding for prospective work, have contributed significantly to improved
performance in 2004. These efforts will continue in 2005.
Aker Kvaerner is a global business with activities in more than 30 countries and on all continents.
Increasingly, the group leveraged expertise and resources across business units and geographical
boundaries, and thereby strengthened its competitive position. Going forward, Aker Kvaerner will
continue to develop a common group culture and to achieve synergies.
Aker Kvaerner enjoys the trust of customers, investors, employees and the communities in which
we operate. We recognise the responsibility we have to live up to that trust, in terms of perfor-
mance and the values we have as a foundation for our operations. We will strive to be transparent
and predictable. We aim to create value for our customers, shareholders, employees, business
partners and the society in general.
Inge K. Hansen
President, CEO and shareholder
6 � Board of Directors
Board of Directors
Leif-Arne Langøy
Chairman of the BoardMr. Langøy has been President and CEO of Aker ASA, formerly Aker RGI, since 2003.
He previously served as President and CEO of the Aker Kvaerner Yards group, and prior
to this he was CEO of Aker Brattvaag for 13 years. Mr. Langøy is a graduate from the
Norwegian School of Economics and Business Administration.
Reidar Lund
Vice ChairmanMr. Lund is Chairman of the Board of Prosafe ASA, and holds in addition a number of director-
ships in offshore related enterprises. Mr. Lund was the CEO of Prosafe ASA until 1999. He
previously served as President of Transocean ASA from 1985 to 1997. Mr. Lund is a graduate
from Chalmers University of Technology, Gothenburg.
Helge Midttun
DirectorMr. Midttun has been President and CEO of Fjord Seafood ASA since 2003. Between 2000 and
2002 he was President and CEO of Det Norske Veritas, after holding the same position in
Zenitel/Stento from 1996 to 2000. Mr. Midttun has previously also worked for Schlumberger and
Rieber & Søn. Mr. Midttun is a graduate from the Norwegian School of Economics and
Business Administration.
Bjørn Flatgård
DirectorMr. Flatgård has been President and CEO of Elopak AS since 1996. He previously served as
President and CEO for Nycomed Pharma and Executive Vice President for Hafslund Nycomed
and Nycomed AS. He holds several board positions. Mr. Flatgård is a graduate from the
Norwegian University of Science and Technology and from the Norwegian School of
Management.
Jon Fredrik Baksaas
DirectorMr. Baksaas has been President and CEO of Telenor ASA since 2002. He joined Telenor in 1989
and was appointed Deputy CEO in 1997. Mr. Baksaas previously held positions as Finance
Director, Executive Vice President and CEO of TBK AS. Earlier, he held finance-related positions
in Aker AS, Stolt-Nielsen Seaway and Det Norske Veritas. Mr. Baksaas is a graduate from the
Norwegian School of Economics and Business Administration.
7Board of Directors �
Atle Teigland
Employee representativeMr. Teigland was elected by the employees to the Board of Directors in October
2004. He has served on the board of Aker RGI for several years. Mr. Teigland is a
group union representative for Aker Kvaerner on a full-time basis, and has been
employed by Aker Kvaerner Elektro since 1978. Mr. Teigland is a certified electrician.
Åsmund Knutsen
Employee representativeMr. Knutsen was elected by the employees to the Board of Directors in October
2004. He has held various positions in Aker Kvaerner Engineering & Technology
since 1991, and is now a group union representative for white-collar employees on
a full-time basis. Mr. Knutsen holds a Master of Science in Hydrodynamics.
Eldar Myhre
Employee representativeMr. Myhre has been an employee-elected Board member since 1989. He previously
acted as a local union representative for 13 years, and has since 1996 been a group
union representative. He has been employed by Aker Kvaerner since 1974, and has
been full-time occupied as employee representative since 1983. Mr. Myhre is a
trained plater.
Bernt Harald Kilnes
Employee representative
Mr. Kilnes was elected by the employees to the Board of Directors in 2002. He has
been employed by Aker Verdal since 1989 as Project Procurement Manager, and he
is also on the board of Aker Verdal. Mr. Kilnes is a graduate in Telecommunications
Engineering and Economics and Business Administration.
The Audit Committee in Aker Kværner ASA consists of:• Reidar Lund (chairman)
• Helge Midttun
• Atle Teigland
The Reward Committee in Aker Kværner ASA consists of:• Leif-Arne Langøy (chairman)
• Bjørn Flatgård
• Reidar Lund
8 � Board of Directors’ Report 2004
Aker Kvaerner experienced solid progress in 2004. Pro forma
earnings (EBITDA) grew by 40 per cent compared with pro
forma figures for 2003, confirming Aker Kvaerner’s steady
course towards its stated targets. Main markets developed
positively and several large orders were secured by the group
in 2004, resulting in a record-high order backlog. A strong
focus on health, safety and the environment resulted in a
further reduction in number of accidents. The 2004 results are
reflected in a positive share price development and significant
value creation for shareholders.
The group restructuring in April
2004 and the format of the
Annual Report
The Kvaerner group was restructured in
early 2004, and the new Aker Kvaerner,
with its current board, was established
on 1 April and listed on the Oslo Stock
Exchange on 2 April 2004. The restruc-
turing is further described on pages 64
and 65, and also in note 3 to the conso-
lidated accounts.
The accounts in this annual report
include both the period April through
December 2004, and the pro forma
figures for the full years 2002 to 2004.
All comments in this Board of Directors´
report refer to the full year 2004 unless
explicitly stated differently.
Strengthened order intake, order
backlog and financial position
The total order intake through 2004 was
a record high NOK 41.6 billion, an
increase over NOK 36.9 billion in 2003.
The group’s total order backlog amoun-
ted to a historic high NOK 35.9 billion at
the end of 2004. This is an increase
over the NOK 31.5 billion figure on 31
December 2003.
Earnings before interest, tax, deprecia-
tion and amortisation (EBITDA) for the
period April through December 2004
was NOK 1.1 billion, and order intake
for the same period was NOK 34.3 billion.
Cashflow from operating activities from
April through December 2004 was
NOK 1.5 billion.
The 2004 pro forma accounts report
earnings before interest, tax, deprecia-
tion and amortisation (EBITDA) of NOK
1.4 billion for the Aker Kvaerner group.
This is a 40 per cent increase over NOK
1.0 billion in 2003. Earnings after
depreciation and amortisation, and
before interest and taxes (EBIT) amoun-
ted to NOK 775 million in 2004, compa-
red with NOK -97 million for 2003.
Financial position and cashflow were
strengthened throughout the year. Cash
and bank deposits at the end of
December grew to a comfortable
NOK 3.7 billion, compared with NOK
3.6 billion at the end of 2003. 2004
numbers include repayment of debt of
NOK 560 million. Cashflow from opera-
ting activities was NOK 1.6 billion in
2004, reflecting a NOK 894 million
decrease in net current operating
assets.
Aker Kværner ASA
Board of Directors’
Report 2004
0
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10 000
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25 000
30 000
35 000
40 000
45 000
50 000
200420032002
■ Order intake Order backlog
Order intake /
Order backlog – groupAmounts in NOK million
0
500
1 000
1 500
2 000
200420032002
Pro forma EBITDA – groupAmounts in NOK million
Board of Directors’ Report 2004 � 9
Description of operations
The Aker Kvaerner group is one of the
world’s leading providers of enginee-
ring and construction services to both
large and small industrial facilities off-
shore and onshore. Contracts relating
to the maintenance, modification and
operation of such facilities represent an
important and growing area of operati-
ons. The group also provides advanced
technology products for special purpo-
ses, which may be either stand-alone
or part of an integrated solution. Within
many niches, Aker Kvaerner is the
market leader or one of the top three
suppliers.
The parent company in the group is
Aker Kværner ASA, which is headquar-
tered in Bærum outside Oslo, Norway.
The Aker Kvaerner group consists of
many separate legal entities. “Aker
Kvaerner” is used as the common
brand/trademark for most of these
entities.
The Aker Kvaerner group operates
within three areas:
1) New facilities projects
2) Maintenance, modification and
operations for existing facilities
3) Products and niche technologies.
There are clear synergies between and
among the areas. Typically, new deve-
lopment projects may later lead to
maintenance contracts or future upgra-
des. The specialised products may be
utilised both in development projects
and in the operations phase.
It is Aker Kvaerner’s objective as an
international contractor with a strong
presence in all three core areas to leve-
rage these synergies further. One main
goal is to increase the share of mainte-
nance, modifications, and operations
from the current approximately 40 per
cent of the group’s overall revenues to
about 50 per cent. The increase in ser-
vice-oriented products will further
reduce Aker Kvaerner’s exposure to
cyclical up- and downturns in the market
for new development projects.
The Aker Kvaerner group’s activities
are divided into two main sectors: Oil &
Gas and Engineering & Construction.
Oil & Gas
In 2004, the Oil & Gas sector repre-
sented 65 per cent of the group’s reve-
nues and consisted of three reporting
segments: Field Development, Main-
tenance, Modifications and Operations,
Subsea, Products & Technologies.
Within Oil & Gas, Aker Kvaerner is a
leading global provider of products,
services, and solutions, principally to
the offshore upstream oil and gas
industry. Oil & Gas is involved in each
stage in the life cycle of an offshore oil
and gas field, from initial planning to
removal and decommissioning of the
installations. Oil & Gas provides a wide
range of products, services, and soluti-
ons, including fixed, floating and subsea
0,0
2,5
5,0
7,5
10,0
12,5
15,0
200420032002
Equity ratio – groupPer cent
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
200420032002
Revenues – group
(based upon the location of group operations)
Amounts in NOK million
■ Norway
■ United Kingdom
■ North America
■ Rest of the world
10 � Board of Directors’ Report 2004
production systems; design enginee-
ring, project management and procure-
ment; and offshore drilling and produc-
tion facilities. Oil & Gas is also involved
in the maintenance, modification, ope-
ration, upgrade, and decommissioning
of customers' installations. Oil & Gas
provides after-sales service and sup-
port, including supplying spare parts
and refurbishments to its installed base
of products worldwide.
Aker Kvaerner offers its customers a
complete set of services and a com-
plete value chain throughout the lifecy-
cle of a project. The group’s various oil
and gas activities complement each
other, providing oppor tunities for
enhanced efficiency via cooperation
on both cost reductions and market
activities.
Aker Kvaerner’s Oil & Gas operations
are located in more than 20 countries
with principal activities in Norway, the
United Kingdom, and the United States.
The group has extensive international
activities in the Gulf of Mexico, Atlantic
Canada, Brazil, Western Africa, South-
East Asia, Russia, and the Middle East.
Customers include a number of major
international oil and gas companies,
and the group has operated in the
North Sea region for almost 40 years
Engineering & Construction
In 2004, the Engineering &
Construction (E&C) sector represented
35 per cent of the group’s revenues
and consisted of two reporting seg-
ments: Process and Pulping & Power.
Aker Kvaerner’s E&C businesses focus
on a small number of highly speciali-
sed industries and technologies. The
overall, average market share of those
target markets is currently assessed to
be in the 15-20 per cent range. Several
units hold leading positions within their
markets, for instance the Power unit in
recovery boilers, the Pulping unit in
fiberlines (chemical pulping), AK
Engineering Services in local markets
for maintenance and modification servi-
ces, and the Metals unit with a leading
market share in the copper market.
There are significant market share dif-
ferences among the market segments
and technology areas in which the
group is operating.
26% ■■ Field Development
17% ■ Maintenance, Modifications and Operations
21% ■ Subsea, Products & Technologies
22% ■ Process
13% ■ Pulping & Power
Operating revenues
by segment
28% ■■ Field Development
16% ■ Maintenance, Modifications and Operations
32% ■ Subsea, Products & Technologies
7% ■ Process
17% ■ Pulping & Power
EBITDA by
segment
�Aker Kvaerner offers design, engineering and
construction of process facilities onshore and
offshore, as well as services for the following
maintenance and operations support.
Board of Directors’ Report 2004 � 11
Operating profits for the full
year 2004
Consolidated 2004 revenues amounted
to NOK 35 553 million, which was a 13
per cent increase over NOK 31 327
million in 2003. Earnings in 2004 were
significantly better than in 2003.
EBITDA for 2004 was NOK 1 401 million,
compared with NOK 1 003 million for
2003 - an increase of around 40 per
cent.
The main factors contributing to the
substantial EBITDA increase were a
general market improvement, a strong
focus on improving operational effici-
ency, and the impact of various
change programmes that have been
implemented throughout the Aker
Kvaerner group.
Goodwill amor tisation in the consolida-
ted accounts in 2004 amounted to
NOK 318 million. Goodwill recorded in
the balance sheet has been tested for
impairment by comparing the carrying
amount with the net present value of
future cashflows. The test did not
identify any impairment losses.
Order intake and order backlog
The total order intake for the group in
2004 was a record-high NOK 41.6 bil-
lion, a substantial growth from NOK
36.9 billion in 2003. The group’s total
order backlog amounted to a record-
high NOK 35.9 billion at the end of
2004. This is an increase from NOK
31.5 billion as of 31 December 2003.
Cash deposits and financial
position
Cash and bank deposits at the end of
December 2004 were a comfortable
NOK 3.7 billion after a NOK 560 million
repayment of debt in the last two quar-
ters. The cash position at year-end is
positively impacted by advances from
customers, and will be partly offset by
corresponding outflows in the next
quarters.
At year-end, undrawn committed long-
term bank revolving facilities amounted
to NOK 960 million in the Oil & Gas
business, and short-term revolving faci-
lities of NOK 410 million in the
Engineering & Construction business,
giving ample additional liquidity buffers.
Cashflow from operating activities in
2004 was NOK 1 646 million, reflecting
a NOK 894 million decrease in net cur-
rent operating assets.
The equity ratio on 31 December 2004
was 9.8 per cent. This figure was impac-
ted by accounting effects from currency
fluctuations. The subordinated debt and
equity yielded a combined ratio of 29.1
per cent at the end of December.
Based on the availability of cash and
the favourable financial position, the
accounts have been prepared based
on the assumption of a going concern.
Investments and financing
Net financial items for the full year 2004
amounted to NOK -396 million. Finance
costs in 2004 were impacted by some
The 2004 accounts
31% ■■ Field Development
26% ■ Maintenance, Modifications and Operations
15% ■ Subsea, Products & Technologies
18% ■ Process
9% ■ Pulping & Power
Order backlog
by segment
33% ■■ Field Development
18% ■ Maintenance, Modifications and Operations
19% ■ Subsea, Products & Technologies
20% ■ Process
10% ■ Pulping & Power
Order intake
by segment
�The decommissioning, removal and recycling of
installations at Total’s depleted Frigg field will be
handled by Aker Kvaerner, based on experience
from similar previous projects.
� Board of Directors’ Report 200412
NOK 34 million in currency losses.
These losses are mainly due to exposu-
res not being fully hedged against the
sharp fall in the USD.
Interest-bearing long-term debt amoun-
ted to NOK 2.4 billion at the end of
December 2004. The corresponding
number for 2003 was NOK 3.1 billion.
In addition, the subordinated loan,
which is interest free until the fourth
quarter of 2006, is booked in the
balance sheet at a nominal value of
NOK 3.8 billion.
Net interest-bearing receivables at
year-end 2004 amounted to NOK 1 370
million, an increase from NOK 449 mil-
lion one year ago.
The group’s long-term investments in
2004 amounted to NOK 418 million, in
line with NOK 427 million in 2003.
Net profit
Profit after financial items for 2004 was
NOK 379 million, compared with a loss
of NOK 338 million in 2003. The tax
expense for the full year of NOK 139
million represents 20 per cent of profit
before tax adjusted for non-deductible
goodwill amortisation. Net profit for the
year 2004 was NOK 240 million, and
net profit per share was NOK 4.20.
Reporting segments:
Strong progress
Most business segments improved
results compared with 2003, and all
business segments had a solid order
backlog at the end of 2004. The finan-
cial performance in AK Engineering
Services, which is part of the reporting
segment Process, was an exception.
This unit showed weak results in the
third and fourth quarter of 2004.
Special attention will be given in 2005
to improve performance in this unit.
Field Development
Field Development reported operating
revenues of NOK 9 646 million, an
increase over NOK 8 244 million in
2003. EBITDA for 2004 amounted to
NOK 424 million, a 2.7 times increase
from NOK 158 million last year.
The 2004 order intake was NOK 13 955
million and the year-end order backlog
was NOK 11 565 million, compared
with NOK 8 516 million and NOK 7 701
million in 2003, respectively. A conside-
rable part of Field Development´s order
intake in 2004 was growth from existing
contracts.
In 2003 and 2004, Aker Kvaerner was
awarded contracts worth NOK 7.8 bil-
lion for onshore facilities for Norway’s
Ormen Lange offshore gas develop-
ment project. Hydro is the field’s deve-
lopment-phase operator. Several upco-
ming projects around the world are
considering a field development con-
cept similar to that of Ormen Lange,
with subsea production systems sup-
plying an onshore receiving and pro-
cessing facility.
In December 2004, Sempra Energy
awarded Aker Kvaerner and
Field Development
Amounts in NOK million 2002 2003 2004
Operating revenues 8 998 8 244 9 646
EBITDA 345 158 424
Operating profit before
exceptional items 161 -1 292
Order intake 10 706 8 516 13 955
Order backlog 7 091 7 701 11 565
Net operating assets 739 1 012 641
Number of employees 5 997 5 200 4 566
�Aker Kvaerner is recognised as the market leader
in concrete gravity based substructures for
offshore platforms like these two for the Russian
Sakhalin development.
Board of Directors’ Report 2004 � 13
Ishikawajima-Harima (IHI) a USD 500
million contract for the engineering,
procurement, and construction of the
Cameron LNG (Liquefied Natural Gas)
regasification terminal in the US state
of Louisiana. The award recognises
both Aker Kvaerner’s lead position wit-
hin the oil, gas and LNG regasification
industry, and the partnership with IHI
for excellence in delivering LNG tanks
and terminals.
Maintenance, Modifications and
Operations
Maintenance, Modifications and
Operations (MMO) reported stable
2004 operating revenues of NOK 6 327
million, on par with 2003 operating
revenues of NOK 6 311 million. The
2004 EBITDA amounted to NOK 248
million, which is in line with the EBITDA
for 2003 of NOK 241 million. A special
gain of NOK 30 million from property
sales was recorded in 2003.
Order intake amounted to NOK 7 859
million in 2004, compared with NOK
6 510 million in 2003. Higher order
intake resulted in an 18 per cent incre-
ase in year-end order backlog to NOK
9 765 million, compared with NOK
8 283 million in 2003. The market is
positive and tendering activity is high.
In October 2004, MMO was awarded a
NOK 3.0 billion contract from Total for
engineering, preparation, removal and
disposal of the Frigg field installations.
The contract is a joint venture among
MMO, Field Development, and Subsea,
Products & Technologies. This contract
award recognises Aker Kvaerner’s
competence, technology and facilities
for decommissioning of offshore instal-
lations.
In December 2004, MMO signed a let-
ter of intent with Hydro for modifica-
tion and upgrading of the Oseberg
East platform in the Nor th Sea. The
contract value is estimated at more
than NOK 300 million, and several
Aker Kvaerner companies will be
involved in the project.
Subsea,
Products & Technologies
Operating revenues for Subsea,
Products & Technologies increased to
NOK 7 630 million in 2004 from NOK
6 741 million in 2003. EBITDA was 24
per cent higher for the full year 2004
compared with 2003, amounting to
NOK 495 million and NOK 399 million
respectively. EBITDA in 2003 included a
special gain of NOK 37 million related
to property sale.
The order intake was NOK 8 332 million
and NOK 7 436 million for 2004 and
2003 respectively, representing an
increase in order backlog from NOK
4 897 million to NOK 5 462 million in
2004. The order intake has been strong
in 2004 with a number of small and
mid-size contract awards.
Process
Process had operating revenues of
NOK 8 123 million in 2004, compared
with NOK 7 163 million in 2003. EBITDA
decreased from NOK 129 million in
2003 to NOK 110 million in 2004.
Maintenance, Modifications and Operations
Amounts in NOK million 2002 2003 2004
Operating revenues 6 073 6 311 6 327
EBITDA 127 241 248
Operating profit before
exceptional items 16 132 149
Order intake 7 882 6 510 7 859
Order backlog 8 029 8 283 9 765
Net operating assets 1 831 1 783 1 198
Number of employees 5 683 5 224 4 867
Subsea, Products & Technologies
Amounts in NOK million 2002 2003 2004
Operating revenues 7 485 6 741 7 630
EBITDA 548 399 495
Operating profit before
exceptional items 351 224 324
Order intake 7 442 7 436 8 332
Order backlog 3 965 4 897 5 462
Net operating assets 2 286 1 964 1 846
Number of employees 4 012 3 468 3 411
�Aker Kvaerner is a leader within design,
manufacturing and installation of complete
subsea developments, even for the most
demanding reservoirs.
� Board of Directors’ Report 200414
The NOK 6 667 million order backlog at
year-end 2004 was down from NOK
7 310 million at the end of 2003. The
2004 order intake of NOK 8 465 million,
a decrease from NOK 9 190 million in
2003, remains satisfactory, with a ste-
ady flow of contract awards throughout
the year.
The Process Onshore business benefits
from growth in China and large capital
expenditure projects in Europe and the
Middle East. Chemetics had signifi-
cantly higher activity in 2004 than in
2003. In the United States, the high
new-building activity for power plants
has continued.
The weak performance in AK
Engineering Services is disappointing.
The previous management was repla-
ced in the third quarter of 2004. The
new management is initiating a number
of comprehensive programmes to
reduce costs and focus on the operati-
ons. The programmes are expected to
gradually take effect during the first
half of 2005.
Pulping & Power
In 2004, Pulping & Power reported ope-
rating revenues of NOK 4 815 million,
compared with NOK 3 682 million in
2003. EBITDA increased to NOK 264
million in 2004 from NOK 209 million in
2003. Full year 2004 EBITDA is 26 per
cent higher than in 2003, due to impro-
ved performance in Power. Earnings
from Power and Pulping service mar-
kets continue to grow.
The 2004 order intake of NOK 4 198
million is regarded as satisfactory. The
order backlog at the end of 2004 was
NOK 3 442 million, compared with
NOK 4 178 million one year earlier.
Pulping & Power
Amounts in NOK million 2002 2003 2004
Operating revenues 3 010 3 682 4 815
EBITDA 14 209 264
Operating profit before
exceptional items -57 140 191
Order intake 2 631 6 230 4 198
Order backlog 1 301 4 178 3 442
Net operating assets 319 -116 -543
Number of employees 1 915 1 938 2 005
�Aker Kvaerner is a leader in products and
complete solutions for the pulping and paper
industry, with advanced, environmentally friendly
and cost effective technologies.
Process
Amounts in NOK million 2002 2003 2004
Operating revenues 9 697 7 163 8 123
EBITDA -378 129 110
Operating profit before
exceptional items -503 21 18
Order intake 6 374 9 190 8 465
Order backlog 6 002 7 310 6 667
Net operating assets 1 188 631 916
Number of employees 6 357 5 528 4 896
Board of Directors’ Report 2004 � 15
Aker Kvaerner has continued to imple-
ment a number of measures aimed at
further improving the group’s competiti-
veness and profitability. Focus has
been, and will continue to be, on more
efficient and strengthened risk mana-
gement, and better project execution.
These initiatives were launched in 2002
and have yielded positive results
through 2004, both in financial perfor-
mance and in client satisfaction.
Aker Kvaerner’s deliveries are largely
based on technology and know-how
either held by the individual group units
or licensed from other technology com-
panies. Focus on project execution, risk
management and best value sourcing
continued through 2004 as a group ini-
tiative under the umbrella name Gxx™;
Global Execution Excellence.
Aker Kvaerner has developed a Project
Execution Model (PEM) where the
emphasis is on reliability and quality.
Using the same execution model
throughout the group allows for coope-
ration and sharing of resources, and
also provides a continuous, improved
overview in order to monitor and control
performance and risks. Best practices
from current and previous projects pro-
vide valuable input for the continuous
development of the model.
An important part of the group’s stra-
tegy is to develop a more flexible cost
base, and substantial results have alre-
ady been achieved. Aker Kvaerner has
organised most of its employees who
provide staff and administrative sup-
port functions into internal shared ser-
vices business units. Pooling of sup-
port services has resulted in improved
utilisation of resources and provides a
clearer overview of the cost structure.
The group’s best value engineering
center in Mumbai in India (49 per cent
owned by Aker Kvaerner) was increa-
singly utilised by more business units
and projects, thereby improving Aker
Kvaerner’s competitiveness. The new
low-cost engineering and sourcing
center in China has also played an
important part in securing and execu-
ting new projects.
Risk exposure
The group is engaged in numerous
projects around the world. The financial
outcome of the projects is subject to
uncertainty with the outcome being
contingent upon the contractual terms,
productivity, actual costs and quality.
Comprehensive policies and procedu-
res have been implemented to prevent
the business units from entering into
contracts with unacceptable risk expo-
sures. Furthermore, considerable
resources have been devoted in recent
years to standardise and improve con-
trol and predictability as well as redu-
cing risks and exploit opportunities.
Major projects are subject to reviews at
the completion of the various phases
over the life of a project. The results of
the reviews are periodically consolida-
ted and reported to management at
higher levels. Management reviews are
conducted each month with participa-
tion from group and business area
management to monitor performance
and risk exposures, and to initiate cor-
rective actions when needed.
Technology development
Technology is a key value creator for
Aker Kvaerner and its customers, hel-
ping to drive down costs, improve effici-
ency and product yield. Technology
improvements often contribute to impro-
ved HSE performance. The development
of new technologies is imperative for the
financial and practical realisation of
many projects. Technology is a key diffe-
rentiator for Aker Kvaerner, and the tech-
nical expertise of Aker Kvaerner staff is
a competitive advantage and a key to
reduced risks for Aker Kvaerner and its
customers.
Technology development takes place in
the business units. Aker Kvaerner's
efforts within defined technology deve-
lopment projects amounted in 2004 to
approximately NOK 180 million. This
amount was augmented with some addi-
tional NOK 80 million in funding from
customers and government sources.
The Board is pleased to see an increase
of spending and external funding in
technology development. Further details
about such programs are found in the
paragraph “Customer relations.”
In Oil & Gas, improvements to existing
solutions and development of new tech-
nology for floating production, subsea
technology, concrete-structure solutions,
and selected gas chain technologies
are ongoing. Units in the Subsea,
Products & Technologies reporting seg-
ment are developing solutions to assist
customers achieve increased recovery
from oil and gas fields.
In the E&C sector, new technology for
pulping and power recovery systems is
helping customers produce more with
greater efficiency. In the process and
petrochemical industries, Aker Kvaerner
continues to access world-class tech-
nologies via license and cooperation
agreements. As an example, the ”One
Synergy” methanol/syngas collabora-
tion was formed in December 2004
between Johnson Matthey, Davy
Process Technology, and Aker Kvaerner.
Operational improvements
�The high-tech self-propelled well tractor developed
by Aker Kvaerner can move into the wells and conduct
operations to enhance oil and gas production.
� Board of Directors’ Report 200416
Trust is essential for Aker Kvaerner.
Building trust with the company’s stake-
holders is of fundamental importance,
and can only be achieved over time. A
business aiming to be sustainable must
balance its short-term priorities against
its long-term objectives.
Obviously, it is a priority to adhere to
regional and national rules and regula-
tions. Aker Kvaerner and its employees
will conduct business in a way that will
make people proud to be working with
– or for – Aker Kvaerner.
The group recognises the challenges of
working in a variety of cultures and busi-
ness climates around the world. Aker
Kvaerner updated its group policies in
2004. The policies are based on the
group’s core values guiding business
conduct and operations. Aker Kvaerner
builds trust based on the core values of
Customer drive, Hands-on execution,
HSE mindset, Openness and honesty,
Commercial edge and Developing peo-
ple. These core values supplement our
ethical policy and other policies that act
as guidelines wherever on the globe
business is undertaken.
Health, Safety and
Environment (HSE)
Aker Kvaerner’s HSE mindset, founded
on the belief that all accidents can be
prevented, is the key to the group’s
work on health, safety, and environ-
ment. Aker Kvaerner continuously stri-
ves for zero accidents involving person-
nel, property, or affecting other
resources and assets.
In spite of the strong focus on HSE, the
Board of Directors regrets to inform
that one fatality related to Aker
Kvaerner’s activities occurred in 2004,
and another occurred in January 2005.
In December 2004, while work was
being done related to the Sakhalin pro-
ject in Russia, one of the project’s mini-
vans was hit by an oncoming car and
the driver later died from his injuries. In
January 2005, a worker employed by a
subcontractor was severely injured and
later died while working on the Kristin
FPS project in Norway. Both accidents
are under investigation, and internal
groups are also investigating in coope-
ration with customers.
The HSE Step Change improvement
programme was lunched in 2004. The
“Just Care” theme was introduced to
emphasise the personal element of
HSE, while a group-wide HSE opera-
ting system, HSE training, and focus on
leading indicators, are all elements of
Aker Kvaerner’s systematic efforts to
achieve world-class HSE performance.
The positive trend in lost time incidents
(incidents resulting in absence from
work) continued in 2004. The total num-
ber of such incidents in 2004 was 95,
compared with 133 the previous year.
The lost time incident frequency (the
number of such incidents per one mil-
lion hours worked) in 2004 was 1.2,
substantially reduced from 2.0 in 2003.
These figures include subcontractors
working for Aker Kvaerner.
The corporate citizen
0,0
0,5
1,0
1,5
2,0
2,5
3,0
200420032002
Lost Time Incident FrequencyLTI / million hours
0
1
2
3
4
5
6
200420032002
Sick leaveIn per cent
�Just Care is the common theme for Aker
Kvaerner’s focus to create a culture of personal
HSE commitment and becoming best in class
within this area.
Board of Directors’ Report 2004 � 17
The group-wide sick leave rate decrea-
sed from 4.0 to 2.9 per cent from 2003
to 2004. The trend is positive, although
inherent differences in local laws and
regulations lead to inaccuracies in the
consolidation and comparison of sick
leave rates across different countries.
Aker Kvaerner’s activities have only a
limited direct detrimental effect on the
environment. No major inadvertent
emissions to the environment were
reported in 2004.
Aker Kvaerner seeks to minimise waste
deposits to landfill to ensure proper
and environmentally friendly handling
of residual waste. In 2004, out of a
total of 17 900 tons of waste, 14 300
tons were recycled and 3 600 tons
were deposited in accordance with
regulations.
Energy consumption by the group in
2004 amounted to 241 000 megawatt
hours. Electric power accounted for 64
per cent of the total consumption, while
gas accounted for 24 per cent, and oil
for 11 per cent.
People
At the end of 2004, Aker Kvaerner had
a total of 20 667 employees, 1 581
fewer than at the end of 2003. In addi-
tion to its own employees, Aker
Kvaerner had 5 683 hired agency per-
sonnel at the end of 2004. Approximately
49 per cent of the total workforce
(26 350) worked in Norway, 22 per cent
worked in North America, and 21 per
cent worked in various European Union
countries.
The group continued the systematic
work begun in 2003 on improving its
procedures relating to the international
assignment of personnel. The objective
is to support the group’s global activi-
ties and the exchange of knowledge
between units.
Aker Kvaerner is a knowledge- and
skills-based enterprise. The individual
knowledge and skills of employees and
the group’s ability to combine and
employ such expertise constitute the
foundation for the company’s activities.
As part of the update of the group’s
policies, the group has reinforced a
People Policy which covers the respon-
sibilities of each individual employee
and each manager. The policy also
addresses the responsibility of the
employer in relation to employees.
The People Policy contains guidelines
relating to Aker Kvaerner’s activities,
with a special focus on ethics and
equal opportunity, preservation of
diversity, and open and honest commu-
nication. The policy describes the
employee’s right to enjoy a safe and
secure place of work, prohibiting any
form of harassment. The policy calls for
a healthy balance between work and
private life.
49% ■■ Norway
20% ■ North America
11% ■ EU
10% ■ UK
3% ■ Asia
7% ■ Rest of the world
Employees by
geographical location
22% ■■ Field Development
24% ■ Maintenance, Modifications and Operations
16% ■ Subsea, Products & Technologies
24% ■ Process
10% ■ Pulping & Power
4% ■ Other
Employees
by segment
�The multicultural Aker Kvaerner organisation
works in all continents and encourages diversity
in gender, age and ethnic background.
� Board of Directors’ Report 200418
Equal opportunities
Diversity strengthens the group’s col-
lective capacity. Aker Kvaerner is there-
fore keen to be seen as an attractive
employer for all groups of people,
irrespective of ethnic background,
gender, religion, and age.
Aker Kvaerner’s policy is to pay the
same salary for the same job, irrespec-
tive of gender, ethnic background,
religion, or age. Salaries are defined by
the level of responsibility, job content,
and the employee’s competence/per-
formance.
Aker Kvaerner’s Norwegian workforce
consists of approximately 15 per cent
female and 85 per cent male employ-
ees. Both in Norway and globally, it is
the responsibility of each local busi-
ness unit, where the employer respon-
sibilities reside, to make sure that Aker
Kvaerner’s equal opportunity policy is
followed. The Board of Directors recog-
nises that women are under-represen-
ted in management positions and
encourages a better balance.
In Norway, the group is participating in
an initiative entitled Female Future, set
up by the Norwegian Confederation of
Business and Industry. The programme
focuses primarily on helping Norwegian
companies to increase the percentage
of female managers and board members
by year-end 2005. 14 Aker Kvaerner
employees have participated so far.
Developing people
The People Policy also covers the grou-
p’s principles for attracting and develo-
ping people.
The group has implemented programs
to increase the competence of executi-
ves and other employees. Leadership
development takes place both in general
management disciplines and through
specific courses related to project
management.
The Project Academy was established
in 2004. The Project Academy is a pro-
gram focusing on developing skills in
project management, risk manage-
ment, and global sourcing, and suppor-
ting the implementation of a common
project execution model. In 2005, the
Project Academy will evolve into the
Aker Kvaerner Academy, which will
target corporate focus and ownership
of developing core competences.
Aker Kvaerner executives are assessed
at regular intervals on the basis of
results achieved, with systematic feed-
back from superiors, peers and subor-
dinates - or “360 degree feedback.”
The 360 degree feedback is based
on the group’s values and leadership
approach.
People survey
In 2004, as in 2003, the group carried
out a global people survey. Around
87 percent – or approximately 18 000
employees – responded to the survey.
The responses were closely analysed
and compiled in separate reports for all
individual units and departments.
The survey showed that the majority of
employees have a positive attitude
towards Aker Kvaerner, and that most
units have a good working environment.
The survey’s findings provide the basis
for a number of initiatives for further
improvements that are now being
implemented, both for the group as
a whole and in local units.
European Works Council
The group has established European
Works Council (EWC) in cooperation
with the employees. The EWC provides
a meeting forum where the employees
from the European subsidiaries and
management meet twice a year to
discuss the group's financial position
and business plans.
Incentive plans
A number of executives participate in
salary programmes with variable pay
based on performance. Executives who
meet or exceed agreed targets receive
a competitive remuneration package.
These targets are linked to financial
performance indicators, non-financial
objectives, and alignment with group
values and leadership approach.
Apart from base salary and variable
pay, the executives participate in the
standard pension plan. The compensa-
tion and variable pay programmes for
group executives and leading employees
are described in greater detail in note
16 to the consolidated accounts.
�Aker Kvaerner participates in Female Future, an
industry programme aimed at increasing the
percentage of female managers and board members.
19Board of Directors’ Report 2004 �
Shareholder policy
Aker Kvaerner aims to create value for
shareholders, customers, employees,
and society. A shareholder’s investment
should provide a competitive return
over time in the form of dividend pay-
ments and increasing share value. Aker
Kvaerner aims to serve the financial
market with accurate, impartial, and
relevant information about the company
to ensure that the share price reflects
the underlying values and future pro-
spects.
Dividend policy
The Board of Directors considers that
the dividend on average, over time,
should be approximately 30 per cent of
net profit. Priority will be given over the
next years to strengthening the compa-
ny’s financial position. Dividend pay-
ment will thus be contingent upon the
company exceeding certain financial
targets, an EBITDA in the first half of
2005 of approximately NOK 1 500 mil-
lion on an annualised basis, and an
EBITDA for 2006 as a whole of NOK
1 750 million.
Share price development
Aker Kvaerner was listed on the Oslo
Stock Exchange on 2 April 2004. The
share price increased by 24 per cent
between listing and year-end 2004,
creating value for shareholders of NOK
1.7 billion in the same period. The
share price has further increased from
NOK 161 to NOK 200 from year-end to
17 February 2005.
Ownership structure
Aker Kværner ASA is a listed company
whose shares are traded on the Oslo
Stock Exchange. The company has
issued 55 029 234 shares.
As of 31 December, 2004 Aker
Kværner ASA had 4 072 registered
shareholders. The 20 largest sharehol-
ders owned a total of 78 per cent of
the company’s shares. As of 31
December 2004, the company’s princi-
pal shareholder, Aker ASA, owned a
total of 58 per cent of the shares in
Aker Kværner ASA. Aker ASA reduced
its ownership to 50.01 per cent of the
shares in January 2005.
Corporate governance and
corporate management
Good corporate governance and
management are prerequisites for
building trust. Aker Kvaerner emphasi-
ses the building of trust with its share-
holders, lenders, customers and other
stakeholders. For this reason, it is
important to ensure professional inde-
pendence between the company’s
Board and Management.
A new Norwegian code of practice for
corporate governance was published in
2004. With 2004 being a transition year,
Aker Kvaerner has decided to report
according to the recommendations set
out in the new code of practice, effec-
tive for 2004.
For further information regarding
corporate governance in Aker Kvaerner,
please see page 66.
Shareholder issues
20 � Board of Directors’ Report 2004
In most cases Aker Kvaerner’s contri-
bution to such joint programmes is
based on its technical expertise and
experience. In technology-driven indus-
tries, customer involvement in techno-
logy development is imperative, not
only for funding reasons, but also to
achieve the focus and alignment
necessary to ensure faster commercia-
lisation.
Final pro & contra settlement
with Kvaerner
Aker Kværner ASA and Kværner ASA
have agreed on a post-restructuring
pro & contra settlement which conclu-
des all issues still outstanding after the
demerger in 2004. As part of the settle-
ment, the parties transferred Kvaerner
Metals in Pittsburgh, USA, valued at
NOK 50 million, to Aker Kvaerner in the
fourth quarter 2004.
Also, as announced on 28 December
2004, Aker Kvaerner has acquired the
company Ellayess from Kvaerner. The
Ellayess business, a provider of tempo-
rary personnel has been valued at NOK
284 million. The acquisition transacti-
ons were finalised in 2004, except for a
final cash settlement of NOK 32 million
to be made in early 2005.
The Metals unit in Pittsburgh has clear
synergies with the other Metals busi-
nesses in Aker Kvaerner. Before the
takeover of Ellayess, Aker Kvaerner
was the agency’s single largest client.
Using hired staff from the agency in
peak periods is an important element in
Aker Kvaerner’s strategy to achieve a
more flexible cost base.
New CEO
In March 2004, Mr. Inge K. Hansen was
appointed President & CEO of Aker
Kværner ASA, succeeding Mr. Helge
Lund, who was appointed President &
CEO of the Norwegian oil company
Statoil. Inge K. Hansen, previously
Statoil’s Acting President & CEO, has
extensive industrial and financial expe-
rience on a top management level from
a number of companies.
Implementing IFRS
Aker Kvaerner’s accounts will be pre-
sented in accordance with International
Financial Reporting Standards (IFRS)
from the first quarter of 2005. The diffe-
rences between IFRS and Norwegian
Generally Accepted Accounting
Principles (NGAAP) identified to date
as having a significant effect on the
consolidated financial statements are
described in note 2 to the consolidated
accounts.
Customer relations
Aker Kvaerner emphasises solid and
long-term customer relations. In many
cases, relations date back several
decades. Relations are continuously
being maintained through close inter-
action with customers during follow-up,
servicing, modernisation, and expan-
sion of previously installed plants and
equipment.
Throughout 2004, the group has contin-
ued to work on further strengthening
relations with key customers. There has
been systematic customer follow-up on
many levels, including high-level custo-
mer meetings and customer surveys.
Valuable input from customers ensures
competitiveness and responsiveness to
current and future business needs.
Through the close relationship Aker
Kvaerner has with many customers,
opportunities arise for following existing
customers to new geographic regions,
or establishing new Aker Kvaerner part-
nerships through existing customers.
The benefits of good customer relati-
onships significantly reduce new-custo-
mer and market establishment costs
and risks.
Complementing Aker Kvaerner’s own
technology development, a number of
agreements are in place with custo-
mers for joint development and com-
mercialisation of new solutions. An
example of this is Maritime Well
Service´s tractor technology, used for
maintenance of oil wells. This techno-
logy, developed together with Statoil,
has saved the customer annual costs in
2003 of NOK 500 million, together with
an additional NOK 300 million in increa-
sed revenues due to bringing wells
back on stream faster.
Other matters
21Board of Directors’ Report 2004 �
Key markets
Most of the main markets of Aker
Kvaerner improved through 2004,
and an overall continuous strong
market for most business segments is
expected in 2005. Bidding activity is
already high at the start of the New
Year.
The main geographic markets for Aker
Kvaerner in 2005 will be Norway and
the EU, North and South America, Asia-
Pacific, and Russia. Aker Kvaerner’s
activities in the Middle East are expec-
ted to grow at a moderate rate.
Oil & Gas
Aker Kvaerner’s markets within the oil
and gas industry in Norway are in
general expected to remain positive,
and several long-term contracts stret-
ching through 2005 and beyond form a
strong basis for further growth.
Within the MMO business, several
important long-term contracts were
added to the order backlog in 2004.
There is an increasing number of
offshore installations in operation, and
Aker Kvaerner is one of the leading
suppliers of maintenance, modifications
and operations’ services to the oil and
gas operators in the North Sea. The
strategy is to leverage this expertise
in other regions with similar market
conditions and requirements, primarily
in North America and in selected areas
of the Asia-Pacific.
The MMO business has gradually built
up experience in operations support,
partly from operating installations on
behalf of oil companies. On the AH001
platform offshore Scotland, Aker
Kvaerner was approved as duty holder
for the platform in 2004 in a contract
with Amerada Hess. Aker Kvaerner
regards this as a growing niche where
the company can leverage its special
capabilities. More contracts of similar
nature are expected.
The markets for oil and gas projects in
Russia and in the Caspian region are
expected to develop positively through
2005. Aker Kvaerner will leverage its
experience from the Sakhalin II deve-
lopment at the Russian Pacific coast
and the Ormen Lange subsea to
beach project in Norway.
In February 2005, Aker Kvaerner made
a strategic investments of a substantial
par t of the Finnish contractor RR
Offshore Oy, the majority owner of the
CJSC Astrakhan Korabel yard located
in Astrakhan, Russia. The investment
ensures Aker Kvaerner’s competence
and yard capacity, as well as essential
local content for projects in the region.
Through 2004, Aker Kvaerner contin-
ued to position itself in the growing
market for new LNG terminals both in
the USA and elsewhere by executing
early-phase engineering for several
potential projects. An impor tant break-
through came in late 2004 with the
award of the EPC contract for
Sempra’s Cameron LNG terminal in
Louisiana, USA.
Aker Kvaerner remains one of the
world’s leading contractors for deep-
water floating production platforms,
with leading exper tise on several con-
cepts. Deliveries in 2005 of the Kristin
semi-submersible production platform
(offshore Norway) and the White Rose
FPSO production ship (offshore
Canada) will fur ther strengthen this
position.
The units comprising the Subsea,
Products & Technologies business
experienced a growing interest in the
market towards year-end. Markets are
expected to improve within most
niches in 2005. Subsea experienced
a strong year in 2004 and is well
positioned for 2005.
E&C
Within the EU region, the market for
upgrading and service of various exis-
ting process-related facilities is expec-
ted to remain an important market for
Process, Pulping, and Power, with
somewhat increased activity in several
of the group’s target niches. The group
has also improved its market position in
the growing economies in the Asia-
Pacific. Activities in China now
accounts for more than 5 per cent of
the group’s total revenues, and the
Chinese market will continue to be
important for Aker Kvaerner in 2005.
The markets for new Process- and
Power-related facilities in North America
generally remained stable in 2004.
Moderate growth is expected in 2005.
The Metals segment profited from the
internationally growing market for
metals industry facilities, supported by
increasing commodity prices. Also, a
substantial part of the Process busi-
ness managed from North America is
engaged in projects in the growing
markets in South America and Asia-
Pacific. This trend is expected to
continue in 2005.
Uncertainties and risk
exposures reduced
Although significantly reduced as a
result of the restructuring in April 2004,
Aker Kvaerner’s balance sheet and pro-
ject portfolio contain a number of
uncertainties and risk elements, most
of which are normal for Aker Kvaerner’s
business and industry.
Outlook for 2005
�Aker Kvaerner offers extensive services for
maintenance, modification and operation services,
such as operating the AH 001 platform on behalf
of Amerada Hess.
22 � Board of Directors’ Report 2004
Aker Kvaerner has worked systemati-
cally to establish risk management sys-
tems and procedures, as well as a risk
awareness culture throughout the orga-
nisation. There is a strong focus on
hands-on management from top to bot-
tom of the organisation, where risk is
contained through frequent reviews of
business processes, from the early bid
phase, through evaluation of project
execution and performance, to comple-
tion. All major bids are also processed
through a systematic tool for risk mana-
gement, Aker Kvaerner’s Risk
Dashboard, and are subject to review
and approval of the group´s risk-mana-
gement committee.
Aker Kvaerner has in place policies
and systems to handle risks and expo-
sures in the financial markets, covering
currency, interest, and counterparty
risk. The group operates a centralised
treasury function, which operates as an
internal bank towards all the operating
units. All interest and currency expo-
sure is managed centrally. The group
has established a group finance com-
mittee, with top management as mem-
bers. This committee makes decisions
and recommendations to the Board on
important financial issues.
Uncertainties and contingent events
are explained in greater detail in note
15 to the consolidated accounts.
Financial targets
The 2004 results show that Aker
Kvaerner continues on a steady course
towards its stated financial targets: An
EBITDA in the first half of 2005 of
approximately NOK 1 500 million on an
annualised basis, and an EBITDA for
2006 as a whole of NOK 1 750 million.
Aker Kvaerner intends to use a positive
cash flow to repay debt and strengthen
the balance sheet.
The 2004 profit and loss account for
the parent company Aker Kværner ASA
showed a net loss after tax of NOK 187
million.
Under the terms of the subordinated
loans that fall due in 2011, Aker Kværner
ASA is not permitted to pay dividends
exceeding 50 per cent of profit.
Lysaker, 23 February 2005
Board of Directors of Aker Kværner ASA
Leif-Arne Langøy Reidar Lund Jon Fredrik Baksaas Helge Midttun Bjørn Flatgård
Chairman Vice Chairman
Atle Teigland Åsmund Knutsen Bernt Harald Kilnes Eldar Myhre Inge K. Hansen
President & CEO
Parent company accounts and allocation of profit
The Board of Directors has established
a financial policy stipulating that divi-
dends are not to be paid before the
Aker Kvaerner group has reached its
target of an EBITDA in 2006 in the
amount of NOK 1 750 million. The
Board of Directors proposes to charge
the loss for 2004 to other equity.
The Board of Directors extends its
appreciation to management and
employees for their performance in
2004 and their ability to bring Aker
Kvaerner closer to the company’s
stated targets.
�Aker Kvaerner offers design, engineering and
construction for process facilities with experience
and leading expertise within a number of process
technologies.
23Accounts and notes – Contents �
Group Consolidated
Consolidated profit and loss account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Consolidated statement of cashflow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notes to consolidated accounts
Note 1 Statement of accounting principles . . . . . . . . . . . . . . . . . . . . 27
Note 2 Transition to IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Note 3 Pro forma financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Note 4 Significant transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Note 4.1 Acquisitions and disposals . . . . . . . . . . . . . . . . . . . . 31
Note 4.2 Related party transactions . . . . . . . . . . . . . . . . . . . . 31
Note 5 Shareholders´ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Note 6 Segment information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Note 6.1 Business segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Note 6.2 Geographic segments . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Note 6.3 Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Note 6.4 Order intake / order reserve . . . . . . . . . . . . . . . . . . 36
Note 7 Net operating assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Note 8 Current operating assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Note 9 Current operating liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Note 10 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Note 11 Property, plant & equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Note 12 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Note 13 Goodwill by business segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Note 14 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Note 15 Contingent events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Note 16 Salaries, wages and social security costs . . . . . . . . . . . . . . 42
Note 17 Number of employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Note 18 Pension costs and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Note 19 Net financial items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Note 20 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Note 21 Investments accounted for
under the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Note 22 Net interest-bearing items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Note 23 Interest-bearing long-term receivables. . . . . . . . . . . . . . . . . . 47
Note 24 Long-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Note 25 Borrowings by currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Note 26 Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Note 27 Guarantee liabilities, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Note 28 Financial market exposures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Note 29 Group companies as of 31 December 2004 . . . . . . . . . . 50
Parent company
Parent company profit and loss account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Parent company balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Parent company statement of cashflow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Notes to parent company accounts
Note 1 Statement of accounting principles . . . . . . . . . . . . . . . . . . . . 56
Note 2 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Note 3 Financial items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Note 4 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Note 5 Investments as of 31 December 2004 . . . . . . . . . . . . . . . . . . 57
Note 6 Current operating assets and liabilities . . . . . . . . . . . . . . . . 57
Note 7 Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Note 8 Interest-bearing items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Note 9 Long-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Note 10 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Note 11 RISK-regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Note 12 Contingent events and related parties . . . . . . . . . . . . . . . . . . 58
Accounts and notes
Contents
24 � Consolidated profit and loss account
Accounts Pro forma 1)
Apr. 2004-
Dec. 2004 Amounts in NOK million Note 2004 2003 2002
27 838 Operating revenues 6 35 553 31 327 34 140
16 105 Materials, goods and services 20 147 17 226 18 626
7 460 Salaries, wages and social security costs 16, 18 10 043 10 494 11 641
3 196 Other operating expenses 3 962 2 604 3 300
26 761 Total operating expenses 34 152 30 324 33 567
1 077 Operating profit before depreciation and amortisation 6 1 401 1 003 573
- 234 Depreciation 11 -308 -333 -377
843 Operating profit before amortisation 1 093 670 196
- 229 Goodwill amortisation 12, 13 -318 -315 -320
614 Operating profit / loss before exceptionals 6 775 355 -124
- Exceptional items - -452 -271
614 Operating profit / loss 6 775 -97 -395
- 326 Net financial items 19, 22 - 396 -241 341
288 Profit / loss before tax 6 379 -338 -54
- 114 Tax 14 -139 -10 -127
174 Net profit / loss 240 -348 -181
11 Minority interests 9 5 2
163 Majority share 5 231 -353 -183
55 029 234 Average number of shares 2) 5 55 029 234 55 029 234 55 029 234
2.96 Earnings per share 3) 4.20 -6.41 -3.33
1) 2002, 2003 and 1st quarter 2004 are pro forma, as the Aker Kværner ASA group was formed 1 April 2004 (see note 3).
2) Earnings per share in pro forma periods were calculated using the weighted average number of shares outstanding for the nine month period ending 31
December 2004
3) Majority share of net profit / loss / average number of shares. There was no potentially dilutive securities outstanding.
Consolidated profit and loss account
25Consolidated balance sheet �
Accounts Pro forma
2004 Amounts in NOK million Note 2003 2002
Assets
Fixed assets:
361 Deferred tax assets 7, 14 241 151
4 200 Goodwill and patents 7, 12, 13 4 386 4 637
4 561 Total intangible fixed assets 4 627 4 788
1 403 Property, plant and equipment 7, 11 1 422 1 873
87 Other long-term operating assets 7, 18 106 135
103 Interest-bearing long-term receivables 22, 23 30 60
95 Long-term investments 20, 21 106 107
285 Total other long-term assets 242 302
6 249 Total fixed assets 6 291 6 963
Current assets:
9 828 Current operating assets 7, 8 8 924 8 977
3 703 Cash and bank deposits 22 3 558 3 337
13 531 Total current assets 12 482 12 314
19 780 Total assets 18 773 19 277
Liabilities and shareholders' equity
Equity:
2 084 Capital paid in 5 2 084 2 084
- 197 Other equity 5 - 113 - 191
48 Minority interests 60 60
1 935 Total equity incl. minority interests 6 2 031 1 953
Liabilities:
131 Deferred tax liabilities 7, 14 7 4
474 Other long-term operating liabilities 7, 18 454 561
605 Total long-term liabilities 461 565
3 826 Subordinated debt 24, 25 3 946 3 901
2 435 Interest-bearing long-term debt 22, 24, 25 3 133 3 075
6 261 Total long-term borrowings 7 079 6 976
1 Interest-bearing short-term debt 22 6 1 000
10 978 Current operating liabilities 7, 9, 10, 15 9 196 8 783
10 979 Total current liabilities and short-term borrowings 9 202 9 783
17 845 Total liabilities 16 742 17 324
19 780 Total liabilities and shareholders' equity 18 773 19 277
Consolidated balance sheet
Lysaker, 23 February 2005
Board of Directors of Aker Kværner ASA
Leif-Arne Langøy Reidar Lund Jon Fredrik Baksaas Helge Midttun Bjørn Flatgård
Chairman Vice Chairman
Atle Teigland Åsmund Knutsen Bernt Harald Kilnes Eldar Myhre Inge K. Hansen
President & CEO
26 � Consolidated statement of cashflow
Consolidated statement of cashflow
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million Note 2004 2003 2002
Cashflow from operating activities
279 Profit(+) / loss(-) before tax 370 -338 -54
-93 Tax paid -130 -51 -98
463 Depreciation and amortisation 626 648 697
-2 Profit(-) / loss (+) on disposals / non cash effects 5 -74 -600
99 Interest accrued on subordinated debt 132 132 132
9 Profit(-) / loss(+) from associated companies 5 -10 -
793 Changes in other net operating assets 638 441 -249
1 548 Net cashflow from operating activities 1 646 748 - 172
Cashflow from investing activities
-281 Acquisition of businesses (-) net of net cash acquired (+) 4 -281 - -
-19 Cash sale of businesses -19 - -
-340 Purchase of fixed assets 6, 11 -418 -427 -410
23 Disposal of fixed assets 68 360 314
-42 Changes in other assets -12 59 37
-659 Net cashflow from investing activities -662 -8 -59
Cashflow from financing activities
- Proceeds from long-term loans - - 80
-25 Repayment of short-term loans -46 -757 -381
-560 Repayment of long-term loans 24 -560 - -
-585 Net cashflow from financing activities - 606 -757 -301
-301 Translation adjustments - 233 238 57
3 Net decrease(-) / increase (+) in cash and bank deposits 145 221 - 475
3 700 Cash and bank deposits as at beginning of period 22 3 558 3 337 3 812
3 703 Cash and bank deposits as at 31 December 22 3 703 3 558 3 337
27Statement of Accounting Principles �
Associated companies
Associated companies are undertakings in which the group
holds between 20 and 50 per cent of the voting shares and is in
a position to exercise considerable influence. Associated com-
panies are incorporated in the financial statements using the
equity method of accounting. The group’s investments in asso-
ciates include goodwill identified on acquisition. The group's
share of the results are based on the acquired company's profit
after tax less amortisation of acquisition costs in excess of the
book value of equity. Profits in associated companies are inclu-
ded within the financial income caption in the consolidated
accounts and included in the balance sheet under long-term
investments.
Joint ventures
Joint ventures are those entities over whose activities the group
has joint control, established by contractual agreement. The
consolidated financial statements include the group’s proportio-
nate share of entities assets, liabilities, revenue and expenses.
Valuation and classification principles
Current assets and liabilities
Items in the operating cycle and items falling due within one
year are classified as current assets and liabilities.
Shares
Investments in shares are valued at the lower of the acquisition
cost and the market value.
Contracts
Engineering and construction contract revenues are recognised
using the percentage of completion method, based primarily on
contract cost incurred to date compared to estimated contract
costs. When the final outcome of a contract cannot be reliably
estimated, contract revenue is recognised only to the extent of
costs incurred that are expected to be recoverable. Losses on
contracts are fully recognised when identified. Contract revenues
include variation orders and incentive bonuses are recognised
when their realisation is probable and the amount can be mea-
sured reliably. Disputed amounts are recognised when their
realisation is reasonably certain and can be measured reliably.
Contract costs include costs that relate directly to the specific
contract and costs that are attributable to contract activity in
general and can be allocated to the contract. Costs that cannot
be attributed to contract activity are expensed. Bidding costs are
capitalised when it is probable that the company will be the pre-
ferred bidder. All other bidding costs are written-off as incurred.
Accumulated income is classified as operating income in the
profit and loss account. Contracts in progress are classified as
short-term receivables. Payments by customers are deducted
from the value of contracts under the same contract, or to the
extent they exceed this value, are disclosed as advances from
customers.
Basis of preparation
The accounts of Aker Kvaerner are presented in conformity with
Norwegian legislation and Norwegian generally accepted
accounting principles, including the transaction, accrual,
matching, prudence and congruency principles. In cases of
uncertainty, best estimates are utilised and the effects of hed-
ging are taken into consideration. The accounts are prepared
under consistent principles and in accordance with the going
concern assumption.
Formation of the new group
Kværner ASA formed a new subsidiary, Aker Kværner ASA and
transferred all of its oil and gas and engineering and construc-
tion businesses to the new subsidiary.
All transfers were recorded at the unchanged book amounts.
The accounts presented for 2002, 2003 and first quarter 2004
are prepared on a pro forma basis. The actual accounts for
2004 are presented for the period 1 April 2004 to 31 December
2004.
Consolidation principles
Consolidated companies
The consolidated accounts comprise the company and all the
subsidiaries in which the parent company directly or indirectly
has the ability to control the decision making process. The
results of companies acquired / sold during the year are inclu-
ded from/ to the date of acquisition / sale.
Elimination of intra-group transactions
All material transactions, profits and balances between compa-
nies in the group are eliminated.
Elimination of shares in subsidiaries
Shares in group companies are eliminated in the consolidated
accounts using the purchase method. The difference between
the purchase price of the shares and the book value of the net
assets acquired as at the acquisition date is analysed. Any
excess of the cost of the acquisition over fair value of net identi-
fiable assets is recognised as goodwill. Goodwill is amortised in
the income statement in accordance with the underlying
assumptions in the purchase consideration but with no less than
5 per cent annually.
Translation of foreign subsidiary accounts
Profit and loss accounts of non-Norwegian subsidiaries are
translated to Norwegian kroner (NOK) using the average
exchange rates for the year. The balance sheets of non-
Norwegian subsidiaries are translated to NOK at the year-end
exchange rates. Differences arising from varying rates of
exchange compared to exchange rates at the year-end are
taken to reserves. The same applies to the effect of exchange
rate fluctuations on loans in the subsidiaries' reporting curren-
cies which were raised to hedge the balance sheet value of the
group's investments in the subsidiaries.
Notes to consolidated accounts
Note 1 � Statement of Accounting Principles
28 � Statement of Accounting Principles
Inventories
Raw materials and components are valued at the lower of cost
or net realisable value. Work in progress and finished goods are
valued at the lower of production cost or net realisable value.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
selling expenses.
Provisions
A provision is recognised in the balance sheet when the group
has a current legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic bene-
fits will be required to settle the obligation. Any probable losses
for future work on construction contracts have been expensed
and are classified as accrued costs / provisions in the balance
sheet.
Maintenance
Maintenance costs are expensed as incurred. Upgrading and
replacements of fixed assets are capitalised.
Fixed assets / depreciation
Fixed assets are stated at historical cost net of accumulated
depreciation or at estimated fair value if less than book value
and the decline in book value is not perceived as temporary.
Depreciation is provided on a straight-line basis at rates calcu-
lated to amortise each asset over its expected economic life.
Profits or losses on the disposal of fixed assets in the ordinary
course of business are included in operating profit.
Impairment of long-lived assets
Goodwill and other tangible and intangible fixed assets are eva-
luated for impairment when events or circumstances indicate
that the carrying amounts may not be recoverable. These evalu-
ations are based on a comparison of the asset’s carrying
amount to fair value, which is generally based upon discounted
future cash flows. An asset’s carrying amount is written down to
its value in use amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Accounts receivable and payable in foreign currency
Assets and liabilities in foreign currency are valued at year-end
exchange rates. Customer contracts and subcontractor con-
tracts denominated in foreign currency result in currency risks.
Such risks are normally hedged by entering into forward con-
tracts to sell/purchase corresponding currency amounts. The
hedging instruments are not separately reflected in the
accounts but affect the accounting of the hedged positions.
Leasing
Leasing contracts are classified as financial or operational. A
finance lease is a leasing contract whereby the main risks and
rewards attributable to the ownership of an asset are transfer-
red to the lessee. A finance lease is accounted for as if the
asset is acquired and depreciated over its useful life, while the
lease obligation is accounted for as a long-term interest-bearing
liability.
Research and development costs
Research expenditures and costs associated with the develop-
ment of new products and production processes are recogni-
sed in the income statement as expenses are incurred.
Retirement benefit costs and provision for retirement benefits
Most group companies have retirement benefit plans that give
the employees a right to receive future benefits upon termina-
tion of service (Defined Benefit Plans). The benefits are deter-
mined by a formula based on the number of years of service
and the expected salary upon retirement. The retirement benefit
cost is derived from assumptions including the discount rate,
expected future salary increases and regulations of future
benefits. The effect of changes in assumptions and valuations
are taken into account when they exceed 10 % of the highest of
the gross pension liability and the pension assets. Profit and
loss effects of such changes are recognised over the expected
remaining average working lives of employees.
Some subsidiaries also have defined contribution plans.
Contributions to these plans are expensed as incurred.
Deferred tax
Deferred tax is calculated on timing differences affecting future
taxable profit. Deferred tax on operations is calculated using the
appropriate tax rate as of the balance sheet date. Tax assets
are calculated based on tax-deductible temporary differences
and tax losses carried forward, taking into account the probabi-
lity of sufficient future taxable income becoming available within
the various tax regimes in which the group operates. The tax
cost includes taxes payable and the change in deferred tax lia-
bilities / assets. Deferred tax assets are recognised to the extent
that it is probable that future taxable profits will be available
against which the asset can be utilised.
Segment Reporting
A segment is a distinguishable part of the group that is enga-
ged either in providing products or services (business seg-
ment), or in providing products or services within a particular
economic environment (geographical segment), which is sub-
ject to risks and rewards that are different from those of other
segments.
Exceptional items
Exceptional items comprise
• material gains / losses on sale of businesses,
• material restructuring expenses related to discontinuing busi-
nesses which are identifiable, quantifiable and based on firm
commitnents, and which are not covered by related revenues,
and
• other material special items which are either unusual or not
expected to recur frequently or regularly.
29Notes to consolidated accounts �
The consolidated accounts of Aker Kværner ASA will from 1 January 2005 comply with IFRS, with comparative figures for 2004.
Preliminary determination of the impact of conversion on consolidated group financial statements
Aker Kvaerner’s financial statements have been prepared in accordance with Norwegian legislation and generally accepted
accounting principles in Norway (NGAAP). Although, the Norwegian accounting standards have mainly focused on complying
with international accounting standards (IAS), the implementation of IFRS will bring forward certain significant differences mainly
from recent IFRS-changes. These differences between IFRS and NGAAP identified to date as having a significant effect on the
consolidated financial statements, are summarised below. As the process of transition to IFRS is ongoing, the summary is not
necessarily final.
Reconciliation of equity and profit and loss:
Amounts in NOK million Pro forma
Equity 31. Profit/loss after tax
Effect of transition to IFRS December 2004 Jan. 2004 - Dec. 2004
NGAAP 1 887 240
Pensions A -200 -
Deferred tax asset on pension differences 60 -
Goodwill B 318 318
Subordinated loan C 600 -100
Deferred tax on subordinated loan adjustments -170 28
IFRS 2 495 486
No impacts have been identified for the cash flow statement.
A Pensions – defined benefit plans
The accounting for defined benefit plans is similar under IFRS and N GAAP, although there are certain individual differences with
respect to discount rates and recognition of benefit changes. The main issue relates to the transition. For defined benefit plans it
is permitted to charge all unrecognised losses and gains against equity in the opening balance sheet. Aker Kvaerner will select
this option, and the impact is an increase in the pension liability of approximately NOK 200 million.
B Goodwill
The IFRS requirements with respect to amortisation of goodwill were changed in 2004. Goodwill shall no longer be amortised,
but at least annually be tested for impairment. On transition to IFRS, goodwill is restated to the value at the beginning of 2004
(reversal of 2004 amortisation) and has been subject to testing for impairment. The result is an increase in the goodwill value of
NOK 318 million.
C Subordinated loan
At the time of the refinancing of the Kvaerner Group in 2001-2002, some of the borrowings were converted to a loan with signifi-
cantly changed terms. It was concluded to carry the loan at nominal value in the books.
According to IAS 39 the subject loans shall be measured at fair value at the time of conversion. As of 1 January 2004 Aker
Kvaerner will reduce the book value by NOK 600 million. NOK 600 million will be charged to profit and loss as interest expense
over the period to redemption date in 2011.
D Financial instruments
IFRS has extensive regulations in respect of financial instruments in IAS 32 and 39. This framework has been under continuing
revision, and there are many differences between NGAAP and IFRS. The main consequence for Aker Kvaerner is that IFRS sets
stricter requirements for disclosures and recognition of derivative financial instruments. No material net profit or loss or equity
effect is expected as all derivatives are used for hedging.
IFRS conversion plan
An internal “transition to IFRS” project has been ongoing since 2003. The project will be completed during first quarter 2005 in
time for the first quarter reporting.
Note 2 � Transition to International Financial Reporting Standards (IFRS) (Unaudited)
30 � Notes to consolidated accounts
Pro forma financial statements presented are based on the
assumptions stated below. These pro forma financial state-
ments are provided for informational purposes only and are
not necessarily indicative of actual results that would have
been achieved had the transactions and assumptions des-
cribed below taken place during the periods presented.
Re-capitalisation
The re-capitalisation of the group completed as at 1 April
2004 was based on:
• refinancing the existing senior financial indebtedness of
Aker Kvaerner by (i) a second priority lien notes issue in the
amount of EUR 260 million, (ii) a bank term loan in the
amount of EUR 33 million and (iii) a bank revolving credit
facility in the amount of EUR 117 million.
• the bond- and noteholders under subordinated bullet loan
agreed to a change of debtor from Kværner ASA to Aker
Kværner ASA, subject to the completion of other elements
of the recapitalisation.
• issuance of new shares comprising an aggregate subscrip-
tion amount of approximately NOK 2 billion.
After the re-capitalisation, the group has gross debt of
approximately NOK 7 billion and owners' equity of approxima-
tely NOK 2 billion. The total debt in the pro forma balance
sheets consists of mainly two elements (i) subordinated loan,
and (ii) an intercompany loan which is reduced to NOK 2 979
million by the end of 2003. This equals the amount to be refi-
nanced by the notes issue, the term loan and the revolving
credit.
The pro forma accounts for 2002-2003 reflect these transacti-
ons. The shareholders' equity and financing at 31 December
have been rolled-back from the ending balance as of 31
December 2003 reflecting the effects of the pro forma adjust-
ments.
The results from operations of Aker Maritime’s oil and gas
business, which was acquired in a merger in March 2002,
have been reflected in the pro forma group financial state-
ments as if the merger took place effective 1 January 2002.
The acquisition of Aker Maritime’s oil and gas business was
accounted for as a purchase and acquired assets and liabili-
ties were stated at fair value. Historical information for the Aker
Maritime oil and gas business was derived from unaudited
financial statements for the two-month period ended 28
February 2002. The pro forma adjustments to include the
results from operations for businesses acquired from Aker
Maritime from 1 January 2002 increased pro forma operating
revenues and operating profit after exceptional items by NOK
1 362 million and NOK 23 million in 2002.
Management believes costs reflected in the 2002 pro forma
financial statements approximates those that would be incur-
red if the oil and gas businesses and the engineering and
construction businesses had operated on a stand-alone basis.
In 2003, a further NOK 100 million charge has been allocated
in the pro forma financial statements based on estimated utili-
sation of head office services.
Pro forma adjustments have been made to income tax
expense to reflect estimated expense as if the group had ope-
rated on a stand-alone basis for the periods presented.
Income tax for Norwegian operations has been normalised
based on the statutory rate in Norway of 28%. Income tax
expense for operations outside of Norway is as included in
historical accounts. Income tax expense has also been
adjusted for the effects of pro forma adjustments to the profit
and loss accounts.
Upon completion of the conversion of debt into equity, a loss
has arisen for tax purposes that will be available to offset
future taxable income in Norway. A portion of the potential tax
benefits totalling approximately NOK 320 million has been
included as an asset in the pro forma balance sheet at the
beginning of the pro forma period.
Note 3 � Pro forma financial statements
Kværner ASA established the new Aker Kvaerner group 1 April 2004 and transferred all of its oil and gas and engineering and
construction businesses to the new subsidiary.
The accounts presented for 2002, 2003 and first quarter 2004 are prepared on a pro forma basis. The company’s actual results
for 2004 cover the period 1 April 2004 to 31 December 2004.
Merger with Aker
Maritime`s oil and gas
business 8 March 2002
Aker Kvaerner group
formed 1 April 2004
2002 2003 2004 31.12
Accounts
Pro forma Pro forma Pro forma
31Notes to consolidated accounts �
Note 4 � Significant transactions
4.1 Acquisitions and disposals
Aker Kvaerner group was formed 1 April 2004. The impact of acquisitions and disposals in 2002 and 2003 have been reflected in the pro
forma financial statements for all periods presented. All acquisitions in 2004 have been accounted for in accordance with the acquisition
method.
Acquisitions: Disposals:
2004 2004
Pittsburgh There were no material disposals in 2004
Ellayess
4.2 Related party transactions
The main shareholder Aker ASA is controlled by TRG Holding AS
which is again controlled by Kjell Inge Røkke. All entities controlled
by Kjell Inge Røkke are considered related parties with regard to
the Aker Kvaerner group.
In accordance with recommended accounting practice, information
regarding significant related party transactions, benefits and agree-
ments should be disclosed where such information may assist
users of the financial statements in their understanding of the acti-
vities of the group.
At year-end, the group had NOK 67 million short-term payable to
Kværner ASA, net of interest bearing loans from Aker Kværner E&C
Group AS to Kværner ASA of NOK 45 million (two year loan with
interest rate 6.5 %)
Kvaerner – pro & contra settlement
Aker Kværner ASA and Kværner ASA have agreed on a post-
restructuring pro & contra settlement which concludes all issues
still outstanding after the restructuring in 2004. Aker Kvaerner has
been charged operating expenses and financial expenses in first
quarter as if the new group existed from 1 January 2004. As part of
the settlement, the parties transferred Kvaerner Metals in Pittsburgh
and the company Ellayess from Kvaerner to Aker Kvaerner in the
fourth quarter 2004.
Acquisition of Metals Pittsburgh
31 December 2004 Aker Kvaerner Metals Inc, a wholly owned sub-
sidiary of Aker Kværner ASA purchased the metals division of
Kvaerner US Inc, a wholly-owned subsidiary of Kværner ASA for a
consideration of approximately USD 8.1 million. Goodwill of USD
7.1 million arose from the transaction.
Acquisition of Ellayess
Aker Kværner AS, a subsidiary of Aker Kværner ASA purchased the
Ellayess business from Kvaerner E&C Plc, a wholly-owned subsidi-
ary of Kværner ASA, for a total consideration of NOK 284 million,
subject to certain adjustments e.g. changes in working capital.
Goodwill of NOK 136 million arose from the transaction. NOK 32
million is payable as of 31 December 2004 from Aker Kværner ASA
to Kværner ASA in connection with the acquisition.
Labour services
Kvaerner Oil & Gas Resources Ltd, Kvaerner E&C Resources Ltd
and Kvaerner Shared Resources Ltd, all of which are wholly-owned
subsidiaries of Kværner ASA, have entered into labour service
agreements with subsidiaries of Aker Kværner ASA whereby they
will provide services to the Aker Kvaerner companies. The services
are being provided on arm’s length terms.
Group Services
Aker Kværner ASA has agreed to provide Kværner ASA head office
services, such as accounting and treasury. These services will be
terminated as soon as Kværner ASA has established their own staff
functions.
Properties
Companies in the Aker Kvaerner group use certain properties,
which are formally leased by companies in the Kvaerner group and
vice versa. The parties have entered into lease agreements for such
properties. The terms and conditions of such leases, including
payment, are based on arm’s length principles.
Aker Arctic Technology Inc
Aker Kværner Engineering & Technology AS will invest EUR 1 million
in Aker Artic Technology Inc, which is equivalent to 12,5% of the
share capital. The investment is related to the development of an
ice laboratory and an arctic engineering company. As at 31
December 2004. Aker Kværner Engineering & Technology AS has
invested EUR 200 000. The remaining value has been paid 31
January 2005.
32 � Notes to consolidated accounts
Note 5 � Shareholders` equity
Accounts
Total equity
excl. minority
Amounts in NOK million Number of shares Capital paid in Other equity interests
Equity contributed by Kværner ASA 38 875 388 62 - 62
Share issue 16 153 846 2 100 - 2 100
Issue cost -78 - - 78
1 April 2004 55 029 234 2 084 2 084
Net profit (+) / loss (-) 174 174
Minority interests - 11 - 11
Translation differences 1) - 360 - 360
31 December 2004 2) 55 029 234 2 084 - 197 1 887
1) Aker Kværner ASA and Kværner ASA have agreed on a post-restructuring pro and contra settlement which concludes all outstanding issues after the
restructuring in spring 2004. This has resulted in Aker Kværner absorbing NOK 106 million of translation effects, interest and fees in the first quarter 2004
related to the subordinated loan.
2) In the restructuring the internal transactions were accounted for in the consolidated accounts using unchanged book values whereas in the parent company
the transactions were accounted for using fair values resulting in a higher equity in the parent company accounts, than in the consolidated accounts. For
further information see parent company note 7.
Pro forma
Total equity
excl. minority
Amounts in NOK million Number of shares Capital paid in Other equity interests
1 January 2002 55 029 234 2 084 132 2 216
Net profit (+) / loss (-) - 183 - 183
Minority interests 2 2
Translation differences - 142 - 142
31 December 2002 55 029 234 2 084 - 191 1 893
Net profit (+) / loss (-) - 353 - 353
Minority interests 5 5
Translation differences 426 426
31 December 2003 55 029 234 2 084 - 113 1 971
Net profit (+) / loss (-) 240 240
Minority interests - 9 - 9
Translation differences 1) - 315 - 315
31 December 2004 55 029 234 2 084 - 197 1 887
1) Aker Kværner ASA and Kværner ASA have agreed on a post-restructuring pro and contra settlement which concludes all outstanding issues after the restructu-
ring in spring 2004. This has resulted in Aker Kværner absorbing NOK 106 million of translation effects, interest and fees in the first quarter 2004 related to the
subordinated loan.
33Notes to consolidated accounts �
Note 6 � Segment information
6.1 Business segments
Accounts
For Apr. 2004 - Dec. 2004 Operating EBITDA1) 2) Operating Capital Net Net Net
revenues profit (+) / expenditures short-term long-term operating
loss (-) operating operating assets
Amounts in NOK million assets assets
Field Development (FD) 7 613 330 230 29 - 697 1 338 641
Maintenance, Modifications and Operations (MMO) 4 802 194 120 6 - 86 1 284 1 198
Subsea, Products & Technologies (SPT) 6 017 401 282 135 653 1 193 1 846
Process (PRO) 6 516 83 - 36 23 - 125 1 041 916
Pulping & Power (P&P) 3 667 167 163 50 - 623 80 - 543
Other/Elim - 777 - 98 - 145 97 - 206 280 74
Total before exceptionals 27 838 1 077 614 340 -1 084 5 216 4 132
Tax - - - - - 45 230 185
Total 27 838 1 077 614 340 -1 129 5 446 4 317
Net profit on investments - 13 Investments 95
Net interest and foreign exchange results - 313 Net borrowings - 2 456
Profit before tax 288 Net assets 1 956
Dividends - 21
1) Goodwill per business segment see note 13. Total equity incl. minority interests 1 935
2) Operating profit before depreciation and amortisation.
Pro forma
For 2004 Operating EBITDA1)2) Operating Capital Net Net Net
revenues profit (+) / expenditures short-term long-term operating
loss (-) operating operating assets
Amounts in NOK million assets assets
Field Development (FD) 9 646 424 292 31 - 697 1 338 641
Maintenance, Modifications and Operations (MMO) 6 327 248 149 12 - 86 1 284 1 198
Subsea, Products & Technologies (SPT) 7 630 495 324 162 653 1 193 1 846
Process (PRO) 8 123 110 18 27 - 125 1 041 916
Pulping & Power (P&P) 4 815 264 191 61 - 623 80 - 543
Other/Elim - 988 - 140 - 199 125 - 206 280 74
Total before exceptionals 35 553 1 401 775 418 -1 084 5 216 4 132
Tax - - - - - 45 230 185
Total 35 553 1 401 775 418 -1 129 5 446 4 317
Net profit on investments - 4 Investments 95
Net interest and foreign exchange results - 392 Net borrowings - 2 456
Profit before tax 379 Net assets 1 956
Dividends - 21
1) Goodwill per business segment see note 13. Total equity incl. minority interests 1 935
2) Operating profit before depreciation and amortisation.
34 � Notes to consolidated accounts
Pro forma
For 2003 Operating EBITDA1)2) Operating Capital Net Net Net
revenues profit (+) / expenditures short-term long-term operating
loss (-) operating operating assets
Amounts in NOK million assets assets
Field Development (FD) 8 244 158 - 1 128 - 462 1 474 1 012
Maintenance, Modifications and Operations (MMO) 6 311 241 132 4 396 1 387 1 783
Subsea, Products & Technologies (SPT) 6 741 399 224 185 679 1 285 1 964
Process (PRO) 7 163 129 21 31 - 404 1 035 631
Pulping & Power (P&P) 3 682 209 140 50 - 314 198 - 116
Other/Elim - 814 - 133 - 161 29 - 85 81 - 4
Total before exceptionals 31 327 1 003 355 427 - 190 5 460 5 270
Exceptional items 3) - - - 452 - - - -
Tax - - - - - 82 234 152
Total 31 327 1 003 - 97 427 - 272 5 694 5 422
Net profit on investments - 329 Investments 106
Net interest and foreign exchange results 88 Net borrowings - 3 497
Profit before tax - 338 Net assets 2 031
Dividends -
Total equity incl. minority interests 2 031
1) Goodwill per business segment see note 13.
2) Operating profit before depreciation and amortisation.
3) Exceptional items include the settlements of Equatorial of NOK 330 million in Process, Advance Agro and other disputes in Power of NOK 90 million, a dispute in
Process of NOK 87 million and reversal of the remaining balance (NOK 55 million) of the Karbomont provision. All settlements relate to projects completed prior to
2003. The operations of Karbomont were closed in 2003 and the remaining obligations (environmental etc) were lifted after final site clearance.
For 2002 Operating EBITDA1)2)4) Operating Capital Net Net Net
revenues profit (+) / expenditures short-term long-term operating
loss (-) operating operating assets
Amounts in NOK million assets assets
Field Development (FD) 8 998 345 161 158 - 991 1 730 739
Maintenance, Modifications and Operations (MMO) 6 073 127 16 16 293 1 538 1 831
Subsea, Products & Technologies (SPT) 7 485 548 351 175 934 1 352 2 286
Process (PRO) 9 697 - 378 - 503 16 62 1 126 1 188
Pulping & Power (P&P) 3 010 14 - 57 38 68 251 319
Other/Elim -1 124 - 83 - 92 7 - 134 87 - 47
Total before exceptionals 34 140 573 - 124 410 232 6 084 6 316
Exceptional items 3) - - - 271 - - - -
Tax - - - - - 38 147 109
Total 34 140 573 - 395 410 194 6 231 6 425
Net profit on investments - 342 Investments 107
Net interest and foreign exchange results 683 Net borrowings - 4 579
Profit before tax - 54 Net assets 1 953
Dividends -
Total equity incl. minority interests 1 953
1) Goodwill per business segment see note 13.
2) Operating profit before depreciation and amortisation.
3) NOK 56 million in FD, NOK 6 million in MMO, NOK 5 in SPT and NOK 42 million in Corporate for restructuring, onerous leases and write-downs were expensed
as exceptionals. NOK 118 million in PRO, NOK 38 million in PP and NOK 34 million in Corporate were expensed to cover capacity adjustments, closure of
offices and onerous leases.
4) NOK 292 million of costs related to the Cal Energy, Coastal and polypropylene projects were charged against operating result for the year.
35Notes to consolidated accounts �
6.2 Geographic segments
The tables below are based upon the location of group operations
Accounts
Norway United North Asia/ Rest of Aker Kvaerner
Amounts in NOK million Kingdom America Australia the world group
For Apr. 2004 - Dec. 2004
Total operating revenues 15 476 3 688 5 872 1 704 5 271 32 011
Sales to group companies 2 005 621 628 175 744 4 173
Sales to external customers 1) 13 471 3 067 5 244 1 529 4 527 27 838
Operating profit(+) / loss(-) 368 - 109 30 66 259 614
Profit(+) / loss(-) before tax 157 - 188 - 26 102 243 288
Net operating assets excl tax and dividend 2 163 993 717 399 - 140 4 132
1) Sales from operations in other European countries than Norway and United Kingdom were NOK 3 802 million.
Pro forma
Norway United North Asia/ Rest of Aker Kvaerner
Amounts in NOK million Kingdom America Australia the world group
For 2004
Total operating revenues 19 853 4 624 7 531 2 106 6 892 41 006
Sales to group companies 2 687 705 810 235 1 016 5 453
Sales to external customers 2) 17 166 3 919 6 721 1 871 5 876 35 553
Operating profit(+) / loss(-) 453 - 106 - 8 90 346 775
Profit(+) / loss(-) before tax 193 - 208 - 80 116 358 379
Net operating assets excl tax and dividend 2 163 993 717 399 - 140 4 132
2) Sales from operations in other European countries than Norway and United Kingdom were NOK 4 978 million.
For 2003
Total operating revenues 18 009 4 571 7 119 1 743 5 282 36 724
Sales to group companies 2 941 684 717 218 837 5 397
Sales to external customers 15 068 3 887 6 402 1 525 4 445 31 327
Operating profit(+) / loss(-) 287 - 24 - 511 100 51 - 97
Profit(+) / loss(-) before tax 23 20 - 562 55 126 - 338
Net operating assets excl tax and dividend 3 540 1 182 586 88 - 126 5 270
For 2002
Total operating revenues 16 624 5 393 8 861 2 143 4 949 37 970
Sales to group companies 2 110 671 326 267 456 3 830
Sales to external customers 14 514 4 722 8 535 1 876 4 493 34 140
Operating profit(+) / loss(-) 307 - 192 - 370 137 - 277 - 395
Profit(+) / loss(-) before tax 518 - 120 - 416 16 - 52 - 54
Net operating assets excl tax and dividend 3 795 867 1 363 - 30 321 6 316
36 � Notes to consolidated accounts
6.3 Markets
The table below is based upon customer location
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
Operating revenues:
4 873 Norway 5 541 12 571 12 914
9 560 EU 12 577 6 983 7 504
6 150 North America 7 861 5 190 8 353
1 838 Asia 2 927 3 356 2 186
5 417 Other 6 647 3 227 3 183
27 838 Group total 35 553 31 327 34 140
6.4 Order intake / order reserve (unaudited)Order intake
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
12 613 Field Development (FD) 13 955 8 516 10 706
6 794 Maintenance, Modifications and Operations (MMO) 7 859 6 510 7 882
6 426 Subsea, Products & Technologies (SPT) 8 332 7 436 7 442
6 062 Process (PRO) 8 465 9 190 6 374
3 324 Pulping & Power (P&P) 4 198 6 230 2 631
- 957 Other/ Elim -1 227 -980 -167
34 262 Total 41 582 36 902 34 868
Order reserve
Accounts Pro forma
2004 Amounts in NOK million 2003 2002
11 565 Field Development (FD) 7 701 7 091
9 765 Maintenance, Modifications and Operations (MMO) 8 283 8 029
5 462 Subsea, Products & Technologies (SPT) 4 897 3 965
6 667 Process (PRO) 7 310 6 002
3 442 Pulping & Power (P&P) 4 178 1 301
- 981 Other/ Elim -878 95
35 920 Total 31 491 26 483
Order reserve
In the ordinary course of business, the group enters into delivery commitments prior to commencement of production. The order reserve as
at 31 December 2004 amounted to NOK 35.9 billion. NOK 379 million related to certain major contracts which were not expected to yield
any profit, while expected losses on such contracts have been charged to operations in 2004 based on best estimates. See also contract
information in note 8.
Major projects in progressProject Customer Est. delivery
Oil & Gas
Kristin Semi EPCH Statoil 2005
Ormen Lange MIC Norsk Hydro 2007
LNG Regasification Terminal Sempra Energy 2008
Frigg Decommissioning Total E&P Norge 2008
Ekofisk 2/4M Conoco Phillips 2005
Sakhalin ll Sakhalin Energy Investment Company Ltd 2006
Adriatic LNG Terminal Ras Laffan Liquified Natural Gas Company Ltd 2005
Dalia Total E&P Angola 2007
White Rose Husky Oil Operations Ltd 2005
Kashagan EPF Agip 2007
E&C
Jiang Lin Hainan Changxiang Trading 2005
BDO Facility GACIC 2005
Skoghall Mill Stora Enso 2005
Veracell, Hybex & Recox Veracel Celulose S.A 2005
Hualian Sunshine PTA Phase II Zhejiang Hualian Sunshine 2006
Coal fired Power Plant Hitachi 2007
37Notes to consolidated accounts �
Note 7 � Net operating assets
Accounts Pro forma
2004 Amounts in NOK million Note 2003 2002
9 828 Current operating assets 8 8 924 8 977
-10 912 Current operating liabilities excl payable tax and dividend 9 -9 114 -8 745
-1 084 Net current operating assets excl tax and dividend -190 232
80 Pension prepayment 18 30 9
4 200 Goodwill, etc 12, 13 4 386 4 637
7 Other long-term operating assets 76 126
1 403 Tangible fixed assets 11 1 422 1 873
-440 Pension liability 18 -406 - 521
-34 Other long-term operating liabilities -48 - 40
5 216 Net long-term operating assets excl tax 5 460 6 084
4 132 Net operating assets excl tax and dividend 5 270 6 316
-66 Tax payable and dividend -82 - 38
361 Deferred tax assets 14 241 151
-131 Deferred tax liabilities 14 -7 - 4
4 296 Net operating assets incl tax 5 422 6 425
Note 8 � Current operating assets
Accounts Pro forma
2004 Amounts in NOK million 2003 2002
4 396 Trade debtors 1) 5 072 4 549
1 630 Other receivables 1) 988 1 458
2 788 Amounts recoverable on work in progress 2 043 2 094
548 Advances to suppliers 330 253
9 362 Non interest-bearing short-term receivables 8 433 8 354
415 Raw materials 387 342
51 Finished goods 104 281
9 828 Current operating assets 8 924 8 977
1) Trade debtors includes NOK 81.6 million falling due after one year and NOK 1.6 million of other receivables falling due after one year. The majority of this
amount relates to retained customer payments, due to be released at the end of the appropriate warranty periods.
At 31 December 2004, Aker Kvaerner was engaged in contracts with an estimated total value of NOK 74.7 billion, of which work to a value of
NOK 38.8 billion had already been recognised with accumulated contract cost of NOK 35.1 billion and a gross contract margin of NOK 3.7
billion, leaving a future work load (order reserve) of NOK 35,9 billion. In respect of the work already performed (NOK 38.8 billion), cash of
NOK 36.0 billion has been received, resulting in outstanding amounts recoverable on contracts of NOK 2.8 billion. Receivables where pay-
ment is withheld by customers based on non-fulfilled contract obligations amounted to NOK 19.8 million. Advance payments from custo-
mers, relating to the future work load, amounted to NOK 2.4 billion (see note 9)
Note 9 � Current operating liabilities
Accounts Pro forma
2004 Amounts in NOK million Note 2003 2002
2 465 Trade creditors 2 391 2 362
2 352 Advances from customers 2 750 1 454
3 645 Accrued operating and financial costs 1 973 2 001
631 Provisions 10 832 980
1 819 Other current liabilities 1 168 1 948
10 912 Current operating liabilities excl payable tax and dividend 9 114 8 745
38 � Notes to consolidated accounts
Note 10 � Provisions
Accounts
Contract
Amounts in NOK million losses Warranties Other Provisions
Balance 1 April 2004 258 368 119 745
Charged operations 93 242 58 393
Utilised - 208 -70 - 64 - 342
Released - 29 - 69 - 29 - 127
Translation effects - 8 - 25 - 5 - 38
Balance 31 December 2004 106 446 79 631
See also note 6.1 regarding exceptional items and note 15 Contingent events
Contract losses
Any foreseeable losses on signed construction contracts are expensed. Amounts recoverable on work in progress are written down before a
provision for contract losses is recognised.
Warranties
The provision for warranties relates mainly to the possibility that Aker Kvaerner, based on contractual agreements, needs to do guarantee
work related to products and services delivered to customers. The provision is based on estimates about occurence and cost of work that
needs to be done.
Pro forma
Contract
Amounts in NOK million losses Warranties Other Provisions
Balance 1 January 2004 253 416 163 832
Charged operations 108 261 64 433
Utilised - 218 - 127 - 86 - 431
Released - 33 - 82 - 58 - 173
Translation effects - 4 - 22 - 4 - 30
Balance 31 December 2004 106 446 79 631
Note 11 � Property, plant and equipment
Accounts
Buildings, quay Machinery and Construction
Amounts in NOK million Land works and sites equipment in progress Total
Accumulated value as at 1 April 2004
Historical cost 76 901 3 302 124 4 403
Depreciation - 6 - 486 -2 515 - -3 007
Book value as at 1 April 2004 70 415 787 124 1 396
Additions 2 128 327 -117 340
Disposals (historical cost) - 3 -38 - 239 - - 280
Disposals (accumulated depreciation) 1 4 221 - 226
Depreciation - 1 - 34 - 198 - 1 - 234
Translation differences - 3 - 12 - 28 - 2 - 45
Book value as at 31 December 2004 66 463 870 4 1 403
Of which capitalised leases - - 4 - 4
Assets are written down on a straight-line basis over their expected lives, as follows:
Machinery and equipment 3 - 15 years
Buildings and quay works 3 - 50 years
Houses, sites and land over the life of the lease
Bank borrowings are secured on machinery and equipment for the value of NOK 48 million (see note 26).
39Notes to consolidated accounts � 39
Leasing contracts
Annual rent due to operating lease contracts amounts to :
Amounts in NOK million Properties Other
Contracts due within one year 65 14
Contracts running for one to five years 317 64
Contracts running for more than five years 209 -
Total 591 78
Pro forma
Buildings, quay Machinery and Construction
Amounts in NOK million Land works and sites equipment in progress Total
Accumulated value as at 1 January 2004
Historical cost 75 935 3 240 117 4 367
Depreciation - 6 - 488 -2 451 - -2 945
Book value as at 1 January 2004 69 447 789 117 1 422
Additions (historical cost) 2 128 400 - 112 418
Disposals (historical cost) - 3 -75 - 258 - - 336
Disposals (accumulated depreciation) 1 16 221 - 238
Depreciation - 1 - 44 - 262 - 1 - 308
Translation differences - 2 - 9 - 20 - - 31
Book value as at 31 December 2004 66 463 870 4 1 403
Of which capitalised leases - - 4 - 4
Note 12 � Intangible assets
Accounts
Amounts in NOK million Goodwill etc.
Accumulated value as at 1 April 2004
Historical cost 6 813
Depreciation / amortisation -2 466
Book value as at 1 April 2004 4 347
Additions 193
Depreciation - 229
Translation differences - 111
Book value as at 31 December 2004 4 200
The acquisition of a company is based, inter alia, upon the strategic fit and anticipated profitability of that company, over a long time-scale.
As such it is Aker Kvaerner's policy to amortise the goodwill arising on acquisition over the expected economic life of the acquisition, subject
to a maximum of 20 years.
Research and development costs
No research and development costs were capitalised in 2004. Most of the research & development work in Aker Kvaerner is related to ong-
oing contracts and the costs are expensed as contract costs. Separate research and development costs of approximately NOK 159 million
(of which NOK 23 million were paid by customers) have been expensed during the year because it is not possible to identify and quantify
the future revenues that are directly linked to these costs.
Pro forma
Amounts in NOK million Goodwill etc.
Accumulated value as at 1 January 2004
Historical cost 6 763
Depreciation / amortisation -2 377
Book value as at 1 January 2004 4 386
Additions 193
Depreciation - 318
Translation differences - 61
Book value as at 31 December 2004 4 200
40 � Notes to consolidated accounts
Note 13 � Goodwill by business segment
Amortisation
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million Note 2004 2003 2002
50 Field Development (FD) 67 71 71
70 Maintenance, Modifications and Operations (MMO) 93 95 95
37 Subsea, Products & Technologies (SPT) 61 54 53
48 Process (PRO) 68 50 70
24 Pulping & Power (P&P) 28 45 31
229 Total 12 318 315 320
Book value
Accounts Pro forma
2004 Amounts in NOK million Note 2003 2002
1 030 Field Development (FD) 1 095 1 164
1 378 Maintenance, Modifications and Operations (MMO) 1 471 1 556
666 Subsea, Products & Technologies (SPT) 730 772
758 Process (PRO) 821 870
224 Pulping & Power (P&P) 262 250
136 Other activities 1) - -
4 192 Total 12 4 379 4 612
1) Goodwill of NOK 136 million relates to purchase of Ellayess in December 2004 and was therefore not amortised this year.
Note 14 � Tax
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
Tax payable
3 Norway 4 5 -4
122 Other countries 136 81 121
125 Total tax payable 140 86 117
Deferred tax
68 Norway 78 -7 2
-79 Other countries -79 -69 8
-11 Total deferred tax - 1 -76 10
114 Total tax charge 139 10 127
Accounts Pro forma
2004 Amounts in NOK million 2003 2002
Deferred tax assets
43 Short-term items 86 35
132 Long-term items 2 3
85 Pension liabilities 54 99
101 Loss carried forward 99 14
361 Deferred tax assets 241 151
Deferred tax liabilities
834 Short-term items 187 441
15 Long-term items -72 -46
-718 Loss carried forward -108 -391
131 Deferred tax liabilities 7 4
41Notes to consolidated accounts �
Total tax loss arising in Norway
Amounts in NOK million
Expiring in 2014 4 045
Total tax loss as at 31 December 20041) 4 045
1) NOK 2 295 million of this tax loss is used to offset the deferred tax liability in Norway. The tax effect of a tax loss of NOK 1 750 million is not included in the
balance sheet.
Deferred tax assets and liabilities are offset if they reverse in the same period and belong to the same tax regime.
Aker Kværner AS, a subsidiary of Aker Kværner ASA incurred a tax loss of NOK 2 940 million in respect of the settlement of a liability to
Kværner ASA in 2004. The nominal liability of NOK 2 800 million related shares in Kværner ASA that were used as a consideration in the
merger between Aker Kværner AS and Aker Oil & Gas Holding AS in 2002. There are, however, a number of ongoing discussions with
Norwegian tax authorities and a tax asset of NOK 320 million is recognised due to uncertainties 31 December 2004. Aker Kvaerner also has
a future tax deduction to a subordinated loan that was transferred from Kværner ASA in 2004. The future tax deduction is estimated at NOK
1 000 million based on the exchange rates at the end of 2004. No tax asset has been recognised in respect of this loan.
Reconciliation of Norwegian nominal statutory tax rate to effective tax rate
Pro forma
Amounts in NOK million 2004
Expected income taxes (28 %) of profit before tax and goodwill amortisation 195
Tax effect of prior year adjustments -42
Tax effect of items booked against equity -20
Tax effect of permanent differences -22
Tax effect of differences in tax rates from 28% 18
Other 10
Income tax expense 139
Effective tax rate 20 %
Tax effect of differences -56
Note 15 � Contingent events
Project risks and uncertainties
The group’s operations are to a large extent subject to long
term contracts, some of which are fixed-price, and turnkey
contracts that are awarded on a competitive bidding basis.
Failure to meet schedule or performance guarantees or
increases in contract costs can result in non-recoverable
costs, which could exceed revenues realised from the appli-
cable project. Where a project is identified as loss making,
provisions are made for expected losses. The accounting
treatment is based on the information and advice available.
Inevitably, such circumstances and information may be sub-
ject to change in subsequent periods and thus the eventual
outcome may be better or worse than the assessments made
in preparing up periodical financial reports.
Legal proceedings
With its extensive worldwide operations, companies included
in the group are in the course of their activities involved in
legal disputes. Provisions have been made to cover the
expected outcome of the disputes to the extent negative out-
comes are likely and reliable estimates can be made.
However, the final outcome of these cases will always be
subject to uncertainties and resulting liabilities may exceed
booked provisions.
Holborn
In 2000, Aker Kvaerner Netherlands B.V. and Holborn Europa
Raffinererie GmbH entered into contracts for delivery of a
steam reformer and a unit for removal of sulphur and conver-
sion of aromatics in refinery streams in order to produce ultra
low sulphur and low aromatics diesel in accordance with the
EU Fuel Directives.
Aker Kvaerner Netherlands B.V. has launched legal procee-
dings against Holborn Europa Raffinererie GmbH claiming
payment of outstanding invoices in the amount of approxima-
tely EUR 9.2 million and reimbursement of amounts drawn on
bank guarantees in the amount of approximately EUR 7 mil-
lion. Holborn Europa Raffinererie GmbH has rejected the
claim and raised counter claims of approximately EUR 35 mil-
lion based on alleged defects, delays and acts of gross negli-
gence and/or wilful misconduct in the execution of the project,
In addition, Holborn Europa Raffinererie GmbH has been
granted legal seizure in cash deposits and accounts receivable
in the Netherlands up to a total amount of EUR 10 million.
Aker Kvaerner Netherlands B.V. has rejected the counter
claims from Holborn Europa Raffinererie GmbH. Although
there can be no assurance regarding the outcome, the expec-
tation is that this will not have a material negative impact on
the financial position or results of operations.
Valhall
A subsidiary entered into a contract with BP for the procure-
ment and construction of the jacket for a water injection plat-
form on the Valhall field in the North Sea. The installation was
delayed due to pile refusal, and rectification work was neces-
sary to complete the installation. The jacket was successfully
installed in August 2003. BP has reserved the right to claim
back the additional costs related to rectification work if it is
determined that the pile refusal was caused by circumstances
falling under the group's scope of liability. In addition, BP has
reserved the right to claim penalty payments as a result of
delayed delivery.
42 � Notes to consolidated accounts
Note 16 � Salaries, wages and social security costs
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
5 995 Salaries and wages including holiday allowance 7 984 8 325 9 140
939 Social security tax / National insurance contribution 1 229 1 272 1 271
222 Pension costs 296 329 390
304 Other employee costs 534 568 890
7 460 Salaries, wages and social security costs 10 043 10 494 11 641
Directors' fees
Fees paid to the Board of Directors from 2 April 2004 to 31
December 2004 amounted to NOK 1 392 424. In addition, the
Chairman of Board of Directors' fee (NOK 300 000) was paid
to his employer - Aker ASA. The Chairman of Board of
Directors and current Directors did not receive any other pay-
ments.
President & chief executive officer's and senior
managers' renumeration
The Reward Committee of the Board of Directors
The Reward Committee of the Board of Directors (the Reward
Committee) makes recommendations on the remuneration of
the President and Chief Executive Officer (CEO) for approval
by the Board of Directors. Based on proposal from CEO the
Reward Committee approves remuneration to the members of
the Executive Team and Senior Managers reporting directly to
CEO.
The Reward Committee makes regular assessments of the
CEO’s terms of employment and remuneration and where
appropriate the Reward Committee puts forward proposals for
changes to the Board of Directors. The Reward Committee
also approves changes in remuneration programmes and the
general terms of employment for members of the Executive
Team and Senior Managers. The Reward Committee has three
independent members chosen by and from the Directors.
Basis of remuneration of the President and CEO, the
members of the Executive Team and Senior Managers
The basis of the remuneration of the CEO, members of the
Executive Team and Senior Managers has been developed in
order to create a performance-based system which is founded
on the group’s values and leadership approach. This system
of reward is designed to contribute to good financial results
and increase in shareholder value.
Each executive receives a base salary. In addition, a variable
pay element is awarded. This variable pay is based on the
achievement of financial and personal performance targets,
leadership performance in accordance with the company’s
values and leadership approach and the development of the
company's share price. The CEO does not participate in the
variable pay system.
The CEO, Executives and Senior Managers participate in the
standard pension and insurance schemes, applicable to all
employees. In addition, a total of 8 executives, including the
CEO and the Executive Management Team, have membership
in an executive group life- and disability insurance with a
cover of maximum NOK 4 746 660.
President and CEO’s remuneration
The President and CEO, Inge K. Hansen, was employed 15
March 2004 and his annual base salary is NOK 4 100 000. In
2004, the company paid the CEO salary and allowances
amounting to NOK 2 949 665.
The CEO’s employment agreement can be terminated with six
months’ notice. If the company terminates the employment
with Inge K. Hansen, he is entitled to receive 6 months’ salary
from the expiry of the period of notice. This amount is not
paid if he continues to be employed as President & CEO of
another company in the Aker Kvaerner Group.
Inge K. Hansen is entitled to a retirement pension equivalent
to 66% of a pensionable salary of NOK 2 750 000 with addi-
tion of annual adjustments equivalent to the increase of the
Norwegian base amount. Payments from the company's
standard pension scheme, including state pension and all
other pension benefits (that are not financed through the
CEO's own payments) shall be deducted from the retirement
pension paid by the company. Inge K. Hansen's net pension
costs amounted to NOK 4 739 327 (including company
standard pension scheme and top hat scheme) for 2004.
The company and Inge K. Hansen may mutually require that
the CEO retire when he turns the age of 62. From such retire-
ment until the age of 67, the CEO is entitled to early retire-
ment pension equivalent to 66% of pensionable salary.
Payments from the company's standard pension scheme,
including state pension and all other pension benefits (that are
not financed through the CEO's own payments) shall be
deducted from the early retirement pension paid by the com-
pany. If the company terminates the CEO's employment
before he reaches the age of 62, the CEO is entitled to early
retirement pension according to the above description. Such
payment will start from the day after the expiry of the period of
which the CEO has received severance pay.
The previous CEO, Helge Lund, terminated his employment
with Aker Kvaerner effective from 16 March 2004. He received
from 1 January to 15 August 2004 salary and allowances
amounting to NOK 3 278 274. Helge Lund was covered by the
company’s standard pension scheme for that proportion of his
salary which does not exceed 12 times the Norwegian base
amount. Helge Lund's pension costs amounted to
NOK 20 813 for 2004.
Senior Executives’ remuneration
Executive Vice President Jon Erik Reinhardsen, who is statio-
ned in Houston, received in 2004 net salary and allowances
amounting to USD 195 308 and had his accommodation costs
paid by the company. Jon Erik Reinhardsen’s employment
agreement can be terminated with six months’ notice. If the
43Notes to consolidated accounts �
company terminates the employment, Jon Erik Reinhardsen is
entitled to receive six months’ salary from the expiry of the
period of notice. He is covered by the company’s standard
pension scheme for that proportion of his salary which does
not exceed 12 times the Norwegian base amount, and has a
variable pay programme dependent on the achievement of
defined short-term and long-term results. A variable pay
amounting to USD 115 665 was paid to him in 2004. Prior to
the merger of Aker Maritime and Kvaerner, Jon Erik
Reinhardsen was included in a pension scheme for executives
in Aker Maritime. The scheme was wound up following the
merger and Aker Kvaerner has assumed the responsibility for
the accrued rights in the scheme. According to this scheme,
Jon Erik Reinhardsen has acquired the right to early retire-
ment from age 60 and a pension based on the part of his
salary which exceeds 12 times the Norwegian base amount
from the official retirement age of 67. His historically accrued
rights are per 31 December 2004 equivalent to a capitalised
value of NOK 13 164 835.
Executive Vice President & Chief Financial Officer, Bjørn Erik
Næss, was employed 1 October 2004 and he received
NOK 1 293 032 in salary and allowances in 2004. His employ-
ment agreement can be terminated with six months’ notice. If
the company terminates the employment, he is entitled to
receive six months’ salary from the expiry of the period of
notice. He is covered by the company’s standard pension
scheme for that proportion of his salary which does not
exceed 12 times the Norwegian base amount, and has a
variable pay programme dependent on the achievement of
defined short-term and long-term results.
Executive Vice President Finn Berg Jacobsen received
NOK 2 176 752 in salary and allowances in 2004. His employ-
ment agreement can be terminated with six months’ notice
and he is not entitled to any further salary on leaving the com-
pany. He is covered by the company’s standard pension
scheme for that proportion of his salary which does not
exceed 12 times the Norwegian base amount, and has a
variable pay programme dependent on the achievement of
defined short-term and long-term results. A variable pay
amounting to NOK 1 023 750 was paid to him in 2004.
Executive Vice Presidents and Senior Managers
The Executive Vice Presidents' and the Senior Managers'
remuneration package includes a base salary, standard
employee pension and insurance scheme and a variable pay.
A total of 48 managers were entitled to this remuneration pac-
kage in 2004. The variable pay programme for Executive Vice
Presidents and Senior Managers represents a potential for an
additional variable pay up to the value of 60 per cent of base
salary depending on the achievement of financial targets
(profit and working capital) and personal targets (project tar-
gets, development of commercial solutions, values and lea-
dership approach). The first half of the variable pay is paid
the following year. After a further two years, the following is
paid:
(a) the remaining half of the earned amount, plus interest
(b) a corresponding amount (exclusive of interest) to encourage
executives to maintain their employment in Aker Kvaerner
(c) an amount which corresponds to the sum of (a) and (b)
multiplied by the percentage by which the Aker Kvaerner
share price on 1 January 2007 exceeds a share price of
NOK 127.39.
The employment agreement for Executive Vice Presidents and
Senior Managers can be terminated with six months’ notice. If
the company terminates the employment, six months’ salary is
payable on expiry of the period of notice. Any salary received
from other employers during these six months is deductible.
A separate agreement for Executive Vice Presidents and
Senior Managers in Norway implies that once they reach the
age of 60, salary and working time are gradually reduced until
they reach the retirement age of 67.
Directors' and Senior Management's shareholding
The following number of shares were owned by the Directors and the members of the Senior Management group (and their related parties)
as at 31 December 2004:
Shares
Leif-Arne Langøy, Chairman 10 000
Reidar Lund, Vice Chairman -
Helge Midttun, Director -
Bjørn Flatgård, Director 1 107
Jon Fredrik Baksaas, Director 400
Atle Teigland, Employee representative -
Åsmund Knutsen, Employee representative 201
Eldar Myhre, Employee representative -
Bernt Kilnes, Employee representative -
Inge K. Hansen, President & CEO 7 200
Simen Lieungh, Executive Vice President 14
Mads Andersen, Executive Vice President 479
44 � Notes to consolidated accounts
Note 17 � Number of employees
2004 2003 2002
4 566 Field Development (FD) 5 200 5 997
4 867 Maintenance, Modifications and Operations (MMO) 5 224 5 683
3 411 Subsea, Products & Technologies (SPT) 3 468 4 012
4 896 Process (PRO) 5 528 6 357
2 005 Pulping & Power (P&P) 1 938 1 915
922 Other 1) 890 950
20 667 Total Aker Kvaerner employees 22 248 24 914
5 683 Total agency 2 974 2 645
26 350 Group total 25 222 27 559
10 034 Employees in Norway 10 689 11 011
10 633 Employees in other countries 11 559 13 903
1 122 Total associates 819 820
1) In 2002, Aker Kværner Business Partner AS, Aker Kværner Services AS and Aker Kvaerner Business Partner Ltd were established as service companies to
provide shared services to operating companies. Employees that were previously part of operating businesses were transferred to these companies.
Note 18 � Pension cost and liabilities
Most group companies have retirement benefit plans that give the employees a right to future benefits (defined benefits plans). The number
of employees that are covered by such plans is 9 874 active and 1 993 others.
Normally, retirement benefits are based on the number of years of service and the expected salary upon retirement. Retirement plans are
either organised by independent pension funds, through insurance companies, in collective co-operations or directly by the company.
Contributions to the pension funds are made in accordance with local laws and accounting rules based on standard actuarial assumptions
in the applicable country.
Some foreign subsidiaries have retirement plans where the employer only contributes an agreed amount that is separately administered
(defined contribution plan) or contributes to retirement plans that are co-ordinated with other employers (multi-employer plan).
Net pension cost / return
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
109 Service cost 145 153 200
116 Interest on projected benefit obligation 155 168 178
- 106 Expected return on plan assets - 141 - 138 - 160
14 Net amortisations and deferrals 18 21 14
133 Defined benefit plans 177 204 232
89 Defined contribution plans 119 125 158
222 Net pension cost 296 329 390
45Notes to consolidated accounts �
Status of pension plans reconciled with the balance sheet
Accounts Pro forma
2004 2003 2002
Assets Assets less Assets Assets less Assets Assets less
exceed PBO than PBO exceed PBO than PBO exceed PBO than PBO
(funded) (unfunded) Total Amounts in NOK million (funded) (unfunded) Total (funded) (unfunded) Total
Defined benefit plans:
1 893 492 2 385 Accumulated benefit obligation (ABO) 1 572 434 2 006 1 869 394 2 263
338 42 380 Effect of projected future compensation levels 378 59 437 408 118 526
2 231 534 2 765 Projected benefit obligation (PBO) 1 950 493 2 443 2 277 512 2 789
2 046 - 2 046 Plan assets at fair value 1 843 - 1 843 2 093 - 2 093
- 185 - 534 - 719 Plan assets in excess of (+)/less (-) that PBO - 107 - 493 - 600 - 184 - 512 - 696
265 94 359 Unrecognised net gain (-)/loss (+) 137 87 224 87 97 184
80 - 440 - 360 Net prepaid pension (+)/accrued pension liability (-) 30 - 406 - 376 - 97 - 415 - 512
Assets/liabilities
80 - 80 Pension prepayment 30 - 30 9 - 9
- - 440 - 440 Accrued pension liability - - 406 - 406 -106 - 415 -521
Economic assumptions
6.0 % 6.0 % 6.0 % Discount rate 6.5 % 6.5 % 6.5 % 7.0 % 7.0 % 7.0 %
7.0 % 7.0 % 7.0 % Asset return 7.5 % 7.5 % 7.5 % 8.0 % 8.0 % 8.0 %
3.0 % 3.0 % 3.0 % Salary progression 3.3 % 3.3 % 3.3 % 3.3 % 3.3 % 3.3 %
2.5 % 2.5 % 2.5 % Pension indexation 2.5 % 2.5 % 2.5 % 2.5 % 2.5 % 2.5 %
8.5 % 8.5 % 8.5 % Employee turnover age < 50 years 8.5 % 8.5 % 8.5 % 8.5 % 8.5 % 8.5 %
2.0 % 2.0 % 2.0 % Employee turnover age > 50 years 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %
Note 19 � Net financial items
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
- 14 Profit(+)/loss(-) from associated companies and limited partnerships - 5 10 -
- Profit on sale of associates - 1 - - 6
- 14 Net profit (+)/loss (-) on investments - 6 10 - 6
48 Interest income 55 62 50
-336 Interest expense -411 -401 - 386
- 288 Net interest - 356 - 339 - 336
- 25 Net foreign exchange gain (+) / loss (-) - 34 88 683
- 326 Net financial items -396 -241 341
Note 20 � Investments
Accounts Pro forma
2004 Amounts in NOK million Note 2003 2002
21 Investments in other companies 22 24
74 Investment in associated companies 21 84 83
95 Long-term investments 106 107
46 � Notes to consolidated accounts
Note 21 � Investments accounted for under the equity method
Accounts
Associated companies Book value Currency & Book value
as at 1 Additions / Profit Write- Dividends other as at 31
Amounts in NOK million April 2004 disposals after tax downs received adjustments December 2004
Kvaerner Powergas India Pvt Ltd 54 - 12 - - 7 - 3 56
Simas 12 - - - 12 - - -
Siva Verdal Eiendom 13 - - - - - 13
Other companies 11 3 - 14 - - 5 5
Total 90 3 - 2 - 12 - 7 2 74
Pro forma
Associated companies Book value Currency & Book value
as at 1 Additions / Profit Write- Dividends other as at 31
Amounts in NOK million January 2004 disposals after tax downs received adjustments December 2004
Kvaerner Powergas India Pvt Ltd 44 - 22 - - 7 - 3 56
Simas 12 - - - 12 - - -
Siva Verdal Eiendom 13 - - - - - 13
Other companies 15 3 - 15 - - 2 5
Total 84 3 7 - 12 - 7 - 1 74
The group's interest in its principal associates, were as follows:
Percentage
of voting Percentage Net Profit/
Amounts in NOK million Business office rights held Assets Liabilities Equity Revenues (Loss)
Kvaerner Powergas India Pvt Ltd Mumbai, India 49.00 49.00 175 58 117 153 31
Note 22 � Net interest-bearing items
Accounts Pro forma
2004 Amounts in NOK million Note 2003 2002
3 703 Cash and bank deposits 3 558 3 337
103 Interest-bearing long-term receivables 23 30 60
-1 Interest-bearing short-term borrowings 1) -6 -1 000
-2 435 Interest-bearing long-term borrowings -3 133 -3 075
1 370 Net interest-bearing assets (+)/liabilities (-) 449 - 678
Accounts Pro forma
Apr. 2004-
Dec. 2004 Amounts in NOK million 2004 2003 2002
48 Interest income 55 62 50
-336 Interest expense 2) -411 -401 -386
- 288 Net interest - 356 - 339 - 336
1) All short-term borrowings are due for payment within one year.
2) Includes NOK 132 million in accrued interest on the subordinated debt in 2004, 2003 and 2002.
Group Cash Pool Systems
For the purpose of optimising availability and flexibility of cash within the group, cash-pooling arrangements have been established. Today, the
group has two cash-pooling systems; one system for Aker Kværner ASA (excluding all subsidiaries within oil and gas) and one system for Aker
Kværner AS (oil and gas). The two systems are a result of the refinancing of the group, which took place at the beginning of 2004, and
according to which the cash within the oil and gas entities must be ring-fenced.
Such arrangements are either organised with a bank as a service provider, or as a part of the operation of the internal treasury function. An
important condition for the participants (business units) in such cash pooling arrangements, is that the group as an owner of such pools is
financially viable and able to service its obligations concerning repayment of any net deposits made by business units.
47Notes to consolidated accounts �
Note 23 � Interest-bearing long-term receivables
Accounts Pro forma
2004 Amounts in NOK million 2003 2002
1 Restricted deposits 18 1
17 Loans to employees 10 57
85 Other interest-bearing long-term receivables 1) 2 2
103 Interest-bearing long-term receivables 30 60
1) As described in note 4.2 Aker Kværner E&C Group AS has given Kværner ASA a loan of NOK 45 million.
Note 24 � Long-term borrowings
Original Book Interest Maturity Interest
Loan description currency value value coupon date terms
Aker Kværner ASA
Subordinated debt Non-interest-bearing
ISIN NO 0010128838 NOK 1 119 million 1 119 0.00 % 30.10.11 until 30.10.06 and fixed
ISIN NO 0010128846 USD 338 million 2 040 0.00 % 30.10.11 5.00 % pa thereafter with
ISIN NO 0010128853 EUR 13 million 107 0.00 % 30.10.11 back end fee of up to
US Notes Issue USD 29 million 178 0.00 % 30.10.11 4.44 % of the principal
Accrued interest 382 payable at maturity.
Total subordinated debt 3 826
Aker Kvaerner O&G group
Second priority lien notes EUR 260 million 2 141 8.375 % 15.06.11 Fixed
Senior bank debt - amortising term loan EUR 33 million 242 3.954 % 19.03.09 IBOR + 1,75 %1)
Senior bank debt - revolving credit facility EUR 117 million - - 19.03.09 IBOR + 1,75 %1)
Project loan, Alabama USA USD 8 million 48 8.000 % 01.04.12 Fixed
Total debt in Aker Kvaerner O&G group 2 431
Aker Kværner E&C Group AS
Senior bank debt - revolving credit facility EUR 50 million - - 29.12.05 IBOR + 1,25%
Total debt in Aker Kværner E&C Group AS -
Other long-term loans 4
Total long-term borrowings 6 261
1) The margin applicable to the facilities is decided by a price grid based on the gearing ratio.
Only significant undertakings are disclosed below.
Aker Kværner ASA
Description of subordinated debt
The terms and conditions of the subordinated debt contain certain restrictions and covenants of the group, including but not
limited to (a) a restriction on carrying out a demerger (within the meaning of chapter 14 of the Norwegian Public Limited
Companies Act), (b) a restriction on certain mergers, disposals of operations or assets and changes to the nature of the busi-
ness and (c) a restriction on borrowings.
In addition the company shall not (a) within a calendar year, make a dividend payment to the shareholders that constitutes more
than 50 per cent of accumulated net profits (after taxes) available for distribution (excluding any profits to the extent arising from
(i) disposals of assets other than in the ordinary course of business or (ii) the repurchase of subordinated debt) and (b) reduce
its share capital or equity through a payment to its shareholders, other than under (a).
The debt, excluding the US Note issue, is listed on the Oslo Stock Exchange.
48 � Notes to consolidated accounts
Aker Kvaerner O&G group
Description of senior debt facility
The senior debt is split into two tranches of a) an amortising multicurrency term loan of EUR 33 million and b) a bullet revolving
multicurrency credit of EUR 117 million both with final maturity 19 March 2009. The term loan is amortising with EUR 8,25 million
each year from 2006. The revolving facility is undrawn at year-end 2004. The terms and conditions of the facility contain inter
alia, restrictions incurrence of further indebtedness, restrictions on payment of dividends and disposals, restrictions on trans-
actions with affiliates and restrictions on mergers and acquisitions. Further, there are certain changes of control provisions in the
facilities.
The financial covenants are based on two sets of key financial ratios; a gearing ratio based on total gross debt / EBITDA and an
interest coverage ratio based on EBITDA / interest costs. The financial covenants are measured on a quarterly basis. The margin
applicable to the facility is based on a price grid determined by the gearing ratio.
The facility is secured by pledge of shares in certain Aker Kværner AS direct subsidiaries and a guarantee from Aker Kværner
ASA. This security package is subject to intercreditor arrangements between certain other creditors within the Aker Kvaerner
group.
The financial covenants and description outlined above also applies to other main credit agreements within the O&G group, e.g.
bonding agreements.
Description of second priority lien notes
The terms and conditions of the second priority lien notes is primarily an incumbrance test that the consolidated coverage ratio
(EBITDA / interest expense) shall exceed 2.1 for the first two years of the facility and 2,5 thereafter.
Aker Kværner E&C Group AS
Description of senior debt facility
The 364 day facility is provided under bilateral agreements with two banks and matures 29 December 2005. The facility is
undrawn year end. The terms and conditions of the facility contain restrictions to the Aker Kvaerner E&C group similar to the
senior debt facility in Aker Kvaerner O&G group.
The financial covenants are based on two sets of key financial ratios; a gearing ratio based on total gross debt / EBITDA for Aker
Kværner E&C Group AS and Aker Kværner ASA and an interest coverage ratio based on EBITDA / interest costs for Aker
Kværner E&C Group AS. The financial covenants are measured on a quarterly basis.
The facility is secured by pledge of shares in certain of the E&C group's direct subsidiaries and a guarantee from Aker Kværner
ASA. This security package is subject to intercreditor arrangements between certain other creditors within the Aker Kvaerner group.
Repayments of long-term borrowings:
Amounts in NOK million
Long-term borrowings as at 1 April 2004 7 164
Repayments - 560
New loans / reclassifications -
Sale of companies -
Foreign exchange effects - 442
Interest on subordinated debt 99
Long-term borrowings as at 31 December 2004 6 261
Accrued interest on subordinated debt - 382
Long-term borrowings as at 31 December 2004 5 879
Repayments of long-term loans:
2005 7
2006 67
2007 67
2008 67
2009 67
2010 and later 5 604
Total repayments 5 879
49Notes to consolidated accounts �
Note 25 � Borrowings by currency
In currency In NOK
Amounts in millions Long-term Long-term
NOK 1 237 1 237
USD 457 2 764
EUR 274 2 260
Total (NOK) 6 261
A substantial part of the borrowing in foreign currency is swapped to other currencies by use of short-term currency swaps. This is to
eliminate currency exposure deriving from changes in the currency composition of the working capital, and to hedge equity investments in
foreign currencies. See note 28 (Financial market exposures).
Note 26 � Mortgages
Accounts Pro forma
2004 Amounts in NOK million 2003 2002
48 Long-term mortgage debt 1) 74 17
Which is secured by pledges on assets with the following book values:
48 Machinery and equipment 60 38
- Buildings and quay work 37 -
48 Total value of assets pledged as security 97 38
1) In addition, the loans in Aker Kværner AS and Aker Kværner E&C Group AS are secured as described in note 24.
Note 27 � Guarantee liabilities, etc
Accounts Pro forma
2004 Amounts in NOK million 2003 2002
- Total guarantee liabilities - 110
Note 28 � Financial market exposures
Aker Kvaerner undertakes to manage large construction type contracts for customers. This includes to enter into both sales and purchase
contracts in foreign currencies. All such foreign exchange exposure related to contracts is hedged. Operating units in the group enter into
forward contracts with the central treasury function to sell or buy the relevant currency for delivery at future payment dates. During a year
there are approximately 7 000 such forward contracts of which approximately 1 000 will be outstanding at any time. At the end of 2004 the
operating units of the group had entered into contracts with the central treasury function for the following sale or purchase of foreign curren-
cies to hedge foreign exchange exposure on ongoing construction contracts.
These contracts between the central treasury function and the operating units imply that the corresponding foreign exchange exposure has
been moved from the operating units to the central treasury function. The central treasury function will also assist with new foreign exchange
contracts to move foreign currency payments forward or backwords in time.
50 � Notes to consolidated accounts
Amounts in million Operating companies Operating companies
Currency net sale net purchase
AUD 21
CAD 67
CHF 2
DKK 23
EUR 39
GBP 34
JPY 51
NOK 1 076
NZD 1
SEK 348
SGD 1
USD 377
The forward contracts with the operating units represent foreign exchange exposures for the central treasury function and will be hedged
together with other foreign exchange positions following from deposits from group companies, loans to group companies, external cash
deposits and external borrowings. To hedge such exposures, the central treasury function has entered into the following forward foreign
exchange contracts with external banks.
Amounts in million Group Group
treasury treasury
Currency net sale net purchase
AUD 38
CAD 20
DKK 8
EUR 329
GBP 16
JPY 823
NOK 3984
SEK 1390
SGD 10
USD 69
With the activities referred to above, Aker Kvaerner has hedged its main balance sheet and contractual foreign exchange exposures.
Fluctuations in foreign currencies will consequently only have small profit and loss effects. The instruments in the table above are mainly with
major banks, and are consequently not subject to any significant credit risk.
Unhedged foreign exchange exposures relate mainly to the group's ability to secure new contracts in markets where foreign currencies are
the main economic measure for our customers. Such exposures remain unhedged and can influence future earnings.
As the extenal contracts may be for shorter time periods than the underlying exposure, it is standard practice to roll over forward contracts to
cover future time periods. At the date of roll over of forward contracts it is normal to pay or receive an amount corresponding to the move-
ment in the foreign exchange spot rate from the inception to roll over. This represents a potential liquidity risk, which remains unhedged.
In addition to the issues described above, the central treasury function also has some limited trading mandates, combined with strict stop
loss procedures.
Aker Kvaerner's long term loans are mainly subject to fixed interest rate agreements. Future results are consequently, not significantly
exposed for changes in interest rates. Currently, the group does not hold interest rate derivatives.
Note 29 � Group companies as of 31 December 2004
Company Location Ownership (%)
Aker Kværner ASA Norway
Aker Kværner Business Partner Ltd UK 100
Aker Kværner E&C Group AS Norway 100
Aker Kvaerner E&C Americas Holdings Ltd UK 100
Aker Kvaerner Australia Pty Ltd Australia 100
Aker Kvaerner E&C Americas Ltd UK 100
Aker Kvaerner Canada Inc Canada 100
11259 New foundland Ltd Canada 100
Aker Oil & Gas Technology Canada Canada 100
Chemetics Offshore Services Inc Canada 100
Aker Kvaerner E&C US Inc USA 100
Aker Kvaerner E&C Inc USA 100
Aker Kvaerner Bowen Inc USA 100
Aker Kvaerner Industrial Constructions Inc USA 100
Aker Kvaerner Metals Inc USA 100
Aker Kvaerner Pharma Inc USA 100
Aker Kvaerner Caribe LLP Puerto Rico 99
51Notes to consolidated accounts �
Company Location Ownership (%)
Kvaerner US LLP USA 98
Kvaerner E&C Worldwide Corp USA 100
Aker Kvaerner Chile S.A Chile 100
Aker Kvaerner Business Partner Inc USA 100
Aker Kvaerner Enviropower Inc USA 100
Aker Kvaerner Songer Inc USA 100
Kvaerner Power Inc USA 100
DSI Constructors USA 100
Kvaerner Jaddco US USA 100
Kvaerner Willfab USA 100
Kvaerner Constructors Ltd Canada 100
Kvaerner Peru SA Peru 100
Kvaerner E&C Thailand Thailand 100
Aker Kvaerner E&C Europe Ltd UK 100
Aker Kvaerner Engineering Services Ltd UK 100
Aker Kvaerner Europe BV Netherlands 100
Aker Kvaerner Belgium NV/SA Belgium 100
Aker Kvaerner Germany GmbH Germany 100
Aker Kvaerner Netherlands BV Netherlands 100
Aker Kvaerner Projects Ltd UK 100
AK Gulf Ltd Saudi Arabia 100
Kvaerner Construction Stevanage UK 100
Kvaerner Ireland Ireland 100
Aker Kvaerner Pulp & Paper Holdings Ltd UK 100
Kvaerner do Brasil Ltda Brasil 100
Kvaerner Power OY Finland 100
Enviropower OY Finland 100
Kvaerner Pulping AB Sweden 100
Energus AB Sweden 100
Kamyr AB Sweden 100
Kvaerner Chemetics AB Sweden 100
MC Engenharia Ltda Brasil 100
Linderpatent AB Sweden 100
Kvaerner Kamfab AB Sweden 100
Kvaerner Power AB Sweden 100
Kvaerner Pulping Ges mbH Austria 100
Kvaerner Pulping KK Japan 100
Kvaerner Pulping Pte Ltd Singapore 100
Kvaerner Pulping Pty Ltd South Africa 100
Kvaerner Pulping S.A France 100
Kvaerner Pulping SL Spain 100
Kvaerner Water AB Sweden 100
VEA AB Sweden 100
Aker Kværner O&G Group AS Norway 100
Aker Kværner AS Norway 100
Aker Kværner Business Partner AS Norway 100
Sireko AS Norway 100
Aker Kværner Carbon AS Norway 100
Aker Kværner Contracting AS Norway 100
Aker Kværner Contracting Intermational (Spain) AS Norway 100
Aker Kværner Geo AS Norway 100
Aker Geo Ltd UK 100
Aker Kværner Elektro AS Norway 100
Aker Kværner Power & Automation Systems AS Norway 100
Aker Kværner Industrielt Vedlikehold AS Norway 100
AKIV IPEC Norway 100
Aker Kværner Offshore Partner AS Norway 100
Aker Inspection and Consulting Norway 100
Aker Kværner Consultants AS Norway 100
Aker Møre Montasje AS Norway 100
Aker Offshore Partner Pty Australia 100
Aker Kvaerner Offshore Partner Canada Inc Canada 100
Aker Kvaerner Oil & Gas Brasil Ltda Brasil 79
Aker Kvaerner Oil & Gas Canada Inc Canada 100
Aker Kvaerner Oil & Gas US Inc USA 100
Aker Kvaerner Inc USA 100
Kvaerner Enercon USA 100
Aker Kvaerner Michigan Inc USA 100
Aker Kvaerner Ohio Inc USA 100
Aker Kvaerner Plant Services Group Inc USA 100
Kvaerner Oilfield Products Inc USA 100
Kvaerner Process Services Inc USA 100
Investigation y Evaluation Anbiental SA Panama 100
Kvaerner Process Systems US USA 100
52 � Notes to consolidated accounts
Company Location Ownership (%)
Aker Kværner Oilfield Products Group AS Norway 100
Kværner Oilfield Products AS Norway 100
Kvaerner Oilfield Products Group Ltd UK 100
PT Kvaerner Oilfield Products Indonesia Indonesia 100
Kvaerner Oilfield Products Ltd UK 100
Aker Kværner Operations AS Norway 100
Aker Kvaerner Operations Ltd UK 100
Aker Kværner Process Systems Group AS Norway 100
Ellayess Ltd UK 100
Ellayess BV Netherlands 100
Ellayess Pty Ltd Australia 100
Kværner Process Systems AS Norway 100
Kvaerner Process Systems Asia Pacific Sdn Bhd Malaysia 100
Kvaerner Process Systems Australia Pty Ltd Australia 100
Kvaerner Process Systems SA France 100
Cool Sorption AS Denmark 67
Kvaerner Process Systems Canada Inc Canada 100
Zantec Canada 100
Kvaerner Process Systems Paladon Ltd UK 100
Aker Kværner Services AS Norway 100
Aker Kværner Engineering & Techn. AS Norway 100
KB eDesign AS Norway 100
Kværner Engineering AS Norway 100
Norwegian Contractors AS Norway 100
Aker Marine Contractors AS Norway 60
Aker Marine Contractors Pty Ltd Australia 100
Aker Marine Contractors US Inc USA 100
Aker Maritime US Inc. USA 100
Aker Offshore International Ltd UK 100
Aker Kvaerner Offshore Partner Ltd UK 100
Aker Oil & Gas Ltd UK 100
Aker Stord AS Norway 100
Stord Montasje AS Norway 100
Stord Verft AS Norway 100
Aker Valves Norway 100
Aker Verdal AS Norway 100
Aker Cold Bending AS Norway 100
Aker FDV AS Norway 100
Aker Industributikk AS Norway 100
Aker Rør & Utrustning AS Norway 100
Aker Verdal Eiendom AS Norway 100
Aker Verdal Technology AS Norway 100
Kogas AS Norway 100
Kværner Egersund AS Norway 100
Kværner Eureka AS Norway 100
Kvaerner Holdings Switzerland AG Switzerland 100
Kvaerner E&C Singapore Pte Ltd Singapore 100
Kvaerner Oilfield Products (Services) Pte Ltd Singapore 100
Kvaerner Oil & Gas Australia Pty Ltd Australia 100
Kvaerner International Angola Ltd UK 100
Kvaerner Nigeria Ltd. Nigeria 100
Kvaerner Process Overseas Holding Ltd UK 100
Aker Kvaerner E&C (Shanghai) Co Ltd China 100
Kvaerner Petrominco Malaysia 90
Kvaerner Process Mauritius Mauritius 100
Kvaerner (Thailand) Ltd Thailand 100
PT Kvaerner Indonesia Indonesia 100
Maritime Hydraulics AS Norway 100
Drilltech AS Norway 100
Maritime Hydraulics UK Ltd UK 100
Maritime Promeco AS Norway 100
MH India Pvt India 51
MH Pyramid Inc USA 100
RIG Specialities Inc USA 100
MH Singapore Pte Singapore 100
Woodfield Systems Co Ltd UK 100
Maritime Pusnes AS Norway 100
Maritime Nyland As Norway 100
Porsgrunn Steering Gear AS Norway 100
Pusnes Korea South Korea 80
Pusnes Produksjon AS Norway 100
Maritime Well Service AS Norway 100
Aker Kværner Shared Services AS Norway 100
53Parent company profit and loss account �
Amounts in NOK million Note 2004
Operating revenues 8
Operating expenses 1, 2 106
Operating profit / loss -98
Net interest expense 3 -205
Net foreign exchange gain 3 13
Profit / loss before tax - 290
Tax 4 103
Net profit / loss -187
Parent company profit and loss account
54 � Parent company balance sheet
Amounts in NOK million Note 2004
Assets
Fixed assets:
Deferred tax assets 4 103
Investments in group companies 5 7 831
Total fixed assets 7 934
Current assets:
Interest-bearing short-term receivables from group companies 8 1 340
Current operating assets 6 9
Cash and bank deposits 8 162
Total current assets 1 511
Total assets 9 445
Liabilities and shareholders' equity
Equity:
Capital paid in 7 5 892
Accumulated profit (+)/loss (-) - 187
Total equity 5 705
Liabilities:
Subordinated debt 9 2 700
Total long-term borrowings 2 700
Interest-bearing short-term debt to group companies 8 691
Current operating liabilities 6 349
Total current liabilities and short-term borrowings 1 040
Total liabilities 3 740
Total liabilities and shareholders' equity 9 445
Parent company balance sheet
Lysaker, 23 February 2005
Board of Directors of Aker Kværner ASA
Leif-Arne Langøy Reidar Lund Jon Fredrik Baksaas Helge Midttun Bjørn Flatgård
Chairman Vice Chairman
Atle Teigland Åsmund Knutsen Bernt Harald Kilnes Eldar Myhre Inge K. Hansen
President & CEO
55Parent company statement of cashflow �
Amounts in NOK million 2004
Cashflow from operating activities
Profit(+) / loss(-) before tax - 290
Unrealised exchange gain -80
Accrued interest and discount on subordinated debt 225
Changes in other net operating assets 95
Net cashflow from operating activities - 50
Cashflow from investing activities
Acquisition of businesses - 214
Changes in net interest-bearing short-term receivables - 4 460
Net cashflow from investing activities - 4 674
Cashflow from financing activities
Change in external borrowings 2 800
Proceeds from issue of share capital (incl. share premium) 2 085
Net cashflow from financing activities 4 885
Net decrease (-) / increase (+) in cash and bank deposits 161
Cash and bank deposits as of beginning of period 1
Cash and bank deposits as at 31 December 162
Parent company statement of cashflow
56 � Notes to parent company accounts
Note 1 � Statement of Accounting Principles
Accounting principles described under the group's accounts are applied for Aker Kværner ASA's accounts.
Note 2 � Operating expenses
There are no employees in Aker Kværner ASA. Corporate staff are employed by other Aker Kvaerner companies and costs for their services
as well as other parent company costs are charged to Aker Kværner ASA. For information about directors´ and senior managers´
remuneration and shareholding see the note 16 to the Consolidated Accounts
Fees to KPMG in 2004 for audit related services of the parent company amounted to NOK 2.35 million. Consultancy fees to KPMG for the
parent company were NOK 1.3 million. The fee for audit related services of the Aker Kvaerner Group was NOK 19.8 million. Consultancy
fees for the group amounted to NOK 8.8 million.
Note 3 � Financial items
Amounts in NOK million 2004
Interest income 92
Interest expense -297
Net interest expense -205
Net foreign exchange gain (+) / loss (-) 13
Net financial items -192
Note 4 � Tax
Amounts in NOK million 2004
Net profit (+)/loss (-) -290
Permanent differences -78
Change in timing differences 137
Taxable income - 231
Positive / (Negative) timing differences:
Other current assets - 237
Long-term loans 100
Tax loss carry forward - 231
Total negative timing differences: - 368
Tax asset (28 % of negative timing differences): 103
The tax loss carried forward is assumed to be fully deductible against taxable income in the Norwegian group companies through year 2014.
Notes to parent company accounts
57Notes to parent company accounts �
Note 5 � Investments as at 31 December 2004
Share Number of Book Percentage
Amounts in NOK million Registered office capital shares held value owner- / voting share
Aker Kværner E&C Group AS Norway 1 500 1500 000 2 837 100 %
Aker Kværner Shared Services AS Norway 5 5 100 15 100 %
Aker Kværner O&G Group AS Norway 1 000 1 000 000 4 843 100 %
Aker Kvaerner Business Partner Ltd UK 163 14 000 000 136 100 %
Total shares recorded as investments in group companies 7 831
Investments in subsidiaries are held at the lower of cost and fair value.
Note 6 � Current operating assets and current operating liabilities
Amounts in NOK million 2004
Other receivables 9
Current operating assets 9
Trade creditors – group companies -96
Other current liabilities 1) - 253
Current operating liabilities - 349
Net operating assets / (liabilities) - 340
1) Hereof NOK 245 million is short-term debt in relation to foreign exchange hedging carried out to eliminate exposure due to different currency mixture in the
company's borrowing and lending portfolio.
All current operating assets and liablities are due within one year.
Note 7 � Shareholders` equity
Amounts in NOK million Number of shares Share capital Share premium Other equity Total
1 January 2004
New paid in capital from Kværner ASA 38 875 388 659 3 148 63 3 870
Reduction in par value - - 270 - 730 1 000 -
New paid in capital from share issue 16 153 846 161 1 861 - 2 022
Net profit (+) / loss (-) - - - - 187 - 187
31 December 2004 55 029 234 550 4 279 876 5 705
The share capital of Aker Kværner ASA is divided into 55 029 234
shares with a nominal value of NOK 10. The shares are freely
traded.
Aker Kværner ASA was incorporated on 29 January 2004 with a
share capital of NOK 1 million. In the Extraordinary General Meeting
of the company on 8 March 2004 it was decided to increase the
capital by NOK 1 784 million through transfer of the shares in Aker
Kværner AS from Kværner ASA to Aker Kværner ASA as a contribu-
tion in kind. In the Extraordinary General Meeting of the company on
19 March 2004 it was further decided to increase the capital through
a right issue of minimum NOK 1 900 / maximum NOK 2 100 million.
The capital increase took place through a book building process
with 16 153 846 shares issued at an average price of NOK 130 per
share which resulted in a net capital increase of NOK 2 022 million
after reduction for issue costs of NOK 78 million. In the
Extraordinary General Meeting on 26 March 2004 it was decided to
increase the capital by NOK 1 023 million through a transfer of
receivables on Aker Kværner AS as contribution in kind from
Kværner ASA. In the same General Meeting it was decided to
reduce the capital by transferring NOK 1 000 million to other equity.
In the Extraordinary General Meeting on 1 April 2004 it was decided
to increase the capital by NOK 999 million through converting paya-
bles to Kværner ASA. An additional equity of NOK 63 million was
paid in cash from Kværner ASA to Aker Kværner ASA in order to
meet the equity level stated in the 19 March 2004 prospects. The
additional equity contribution does not give right to any new shares
and is therefore booked as other equity.
The company's largest shareholders are listed on page 69.
The company's financing agreements include certain financial
restrictions with respect to dividend payments. Further information
of this is included in note 24 to the consolidated financial state-
ments.
58 � Notes to parent company accounts
Note 8 � Interest-bearing items
Amounts in NOK million 2004
Cash and bank deposits 162
Interest-bearing short-term receivables from group companies1) 1 340
Interest-bearing short-term borrowings from group companies -691
Interest-bearing long-term borrowings - 2 700
Net interest-bearing assets (+) / liabilities (-) - 1 889
Interest income 92
Interest expense - 297
Net result of financing - 205
1) Interest bearing short-term receivables from group companies include NOK 217 million in loans to Aker Kværner E&C Group AS which will be converted to
equity in February 2005.
For information on the group cash pooling system see note 22 in the Consolidated Accounts.
Note 9 � Long-term borrowings
Amounts in NOK million 2004
Long-term borrowings as at 31 December 2003 -
New loans / reclassifications 2 800
Foreign exchange effects -325
Accrued interest on subordinated debt 225
Long-term borrowings as at 31 December 2004 2 700
Repayments of long-term loans in 2011 2 700
For information on interest rates, covenants and pledges, see note 24 to the Consolidated Accounts. In the parent company accounts the
subordinated loan was transferred from Kværner ASA at market value, while in the group accounts the continuity principle was applied. This
is also reflected in the related interest expenses.
Note 10 � Guarantees
Amounts in NOK million 2004
Parent company guarantees to group companies 1) 39 384
Counter guarantees for bank / surety bonds 4 872
Total 44 256
1) Includes parent company guarantees issued by Kværner ASA on behalf of Aker Kvaerner entities. After the restructuring, these have been counter indemnified
by Aker Kværner ASA. In addition, Aker Kværner has issued counter indemnities in relation to office rental on behalf of various subsidiaries.
59Notes to parent company accounts �
Note 11 � RISK-regulation
The RISK-regulation details the movement in the tax value of shares to Norwegian shareholders, as at 1 January each year they are as
follows (amounts in NOK per share):
Risk per share Number of shares
2005 0.00 55 029 234
The RISK-regulation balance as at 1 January 2005 is estimated.
Note 12 � Contingent events and related parties
For information on this please see notes 4 and 15 to the consolidated accounts
60 � Auditor´s report for 2004
61Auditor´s report for 2004 �
62 � Quarterly key figures
Operating revenues
Amounts in NOK million 1Q03 2Q03 3Q03 4Q03 2003 1Q04 2Q04 3Q04 4Q04 2004
Field Development 2 077 1 908 2 064 2 195 8 244 2 034 2 467 2 414 2 731 9 646
MMO 1 470 1 533 1 547 1 761 6 311 1 525 1 594 1 636 1 572 6 327
Subsea, Products & Technologies 1 514 1 779 1 507 1 941 6 741 1 614 1 779 1 900 2 337 7 630
Process 1 766 1 626 1 637 2 134 7 163 1 607 2 053 2 155 2 308 8 123
Pulping & Power 621 918 892 1 251 3 682 1 148 1 192 1 064 1 411 4 815
Other -209 -201 -188 -216 -814 -213 -228 -248 -299 -988
Total Group 7 239 7 563 7 459 9 066 31 327 7 715 8 857 8 921 10 060 35 553
EBITDA
Amounts in NOK million 1Q03 2Q03 3Q03 4Q03 2003 1Q04 2Q04 3Q04 4Q04 2004
Field Development 22 7 33 96 158 94 94 84 152 424
MMO 70 69 52 50 241 54 57 83 54 248
Subsea, Products & Technologies 94 93 111 101 399 94 102 168 131 495
Process 16 21 45 47 129 50 52 3 5 110
Pulping & Power 34 34 50 91 209 73 69 58 64 264
Other -27 -30 -34 -42 -133 -41 -39 -32 -28 -140
Total Group 209 194 257 343 1 003 324 335 364 378 1 401
EBIT before exceptional items
Amounts in NOK million 1Q03 2Q03 3Q03 4Q03 2003 1Q04 2Q04 3Q04 4Q04 2004
Field Development -15 -35 -5 54 -1 62 60 50 120 292
MMO 44 43 26 19 132 29 33 59 28 149
Subsea, Products & Technologies 55 50 67 52 224 42 61 133 88 324
Process -10 -8 18 21 21 28 33 -20 -23 18
Pulping & Power 17 17 32 74 140 54 51 40 46 191
Other -32 -36 -39 -54 -161 -54 -60 -45 -40 -199
Total Group 59 31 99 166 355 161 178 217 219 775
Quarterly key figures*
63Quarterly key figures �
Order intake
Amounts in NOK million 1Q03 2Q03 3Q03 4Q03 2003 1Q04 2Q04 3Q04 4Q04 2004
Field Development 2 543 1 003 2 406 2 564 8 516 1 343 2 864 5 098 4 650 13 955
MMO 2 289 1 323 1 169 1 729 6 510 1 065 1 039 3 131 2 624 7 859
Subsea, Products & Technologies 1 592 2 809 1 528 1 507 7 436 1 908 2 458 1 645 2 321 8 332
Process 3 143 2 638 1 249 2 160 9 190 2 403 2 581 1 961 1 520 8 465
Pulping & Power 1 099 2 138 1 043 1 950 6 230 874 1 485 932 907 4 198
Other -280 -240 -183 -277 -980 -270 -126 -130 -701 -1 227
Total Group 10 386 9 671 7 212 9 633 36 902 7 323 10 301 12 637 11 321 41 582
Order backlog
Amounts in NOK million 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Field Development 7 777 6 892 7 187 7 701 6 779 7 135 9 859 11 565
MMO 8 871 8 691 8 302 8 283 7 864 7 304 8 758 9 765
Subsea, Products & Technologies 4 038 5 101 5 149 4 897 5 213 5 790 5 543 5 462
Process 7 435 8 460 7 632 7 310 8 194 8 691 7 896 6 667
Pulping & Power 1 977 3 340 3 421 4 178 3 897 4 166 4 064 3 442
Other -819 -915 -893 -878 -842 -644 -558 -981
Total Group 29 279 31 569 30 798 31 491 31 105 32 442 35 562 35 920
* 2003 and 1st quarter 2004 are pro forma, as the Aker Kvaerner group was formed on 1 April 2004.
64 � Formation of the new group
Aker Kvaerner Aker Yards
Aker Kværner
O&G Group AS
Aker
Kværner
E&C Group AS
Other
Kvaerner
The legal structure of the Kvaerner group has in the past been complex, and it has been an objective to simplify and align the
group’s legal and operational structures. In 2004 the Kvaerner group completed an extensive restructuring. The timeline below
illustrates the key dates in the restructuring process.
The restructuring of Kvaerner
The restructuring of Kvaerner commenced with the organisational and legal integration of the oil and gas operations of Aker
Maritime ASA in March 2002, and has since then continued on a global level.
A three-way restructuring of the Kvaerner group was announced on 1 March 2004, resulting in two focused industrial groups,
Aker Kvaerner and Aker Yards, each being leading players within their fields, and one industrial holding company, Kværner ASA.
The main objective of the restructuring process was to create separate entities comprising (i) the Kvaerner group’s core oil &
General
Meeting
approved the
restructuring
Aker Kværner
ASA was listed
on the Oslo
Stock
Exchange
A three-way
restructuring of the
Kvaerner group
announced
Aker Kvaerner
group established
1 19 1 2
March March April April
2004
gas and engineering & construction
businesses and (ii) the shipbuilding
activities of Kværner ASA and Aker
Yards. Following the restructuring, Aker
Kvaerner became the owner of the oil &
gas and engineering & construction
businesses through a 100 per cent
ownership of Aker Kværner O&G
Group AS and Aker Kværner E&C
Group AS.
The restructuring plan was presented
to and approved by the General
Meeting of Kvaerner on 19 March
2004.
Formation of the new group
65Formation of the new group �
Euro50 mill
Revolver
Bonding Facilities
BondingFacilities
Sub Debt
Aker KværnerO&G Group AS
O&G Groupoperating companies
Aker Kværner AS
Aker KværnerE&C Group AS
E&C Groupoperating companies
Aker Kvaerner
Euro 260 mill.Second
Priority LienNotes
Euro 150 mill.Senior SecuredCredit Facility
100% owned100% owned
Guarantee
Guarantee
Guarantee
Guarantee
Guarantee
100% owned100% owned
Aker
Kvaerner
50.01%
Aker
Yards
55.6%
Aker
Seafoods
100%
Aker
Material
Handling
100%
Other
Aker ASAListed
Listed Listed
Aker Kværner ASA was established on
1 April 2004 and successfully listed on
the Oslo Stock Exchange on 2 April
2004. At the time of listing, Kvaerner
was the principal shareholder in Aker
Kvaerner. Following a later process
comprising Kvaerner and Aker, the
publicly listed company Aker ASA
became the principal shareholder of
Aker Kvaerner. As of January 2005,
Aker ASA controls 50.01 per cent of
the shares in Aker Kvaerner.
Refinancing
As part of the restructuring, the senior financial indebtedness of Kvaerner was refinanced in March 2004. The refinancing consi-
sted of (i) a second priority lien notes issue of EUR 260 million (the ‘Notes Issue’) and a EUR 150 million bank facility split into:
(ii) a senior bank term loan of EUR 33 million (the ‘Term Loan’) and (iii) a senior bank revolving credit facility of EUR 117 million
(the ‘Revolving Credit’), all three with Aker Kværner AS as issuer/borrower. In addition, the Aker Kvaerner group’s main bonding
facilities were renegotiated with new agreements being on the same basis as the senior secured credit facility in (ii) and (iii)
above.
As part of the refinancing, the bond- and note holders under Kværner ASA’s subordinated loan (2001/2011) agreed to a change
of borrower from Kværner ASA to Aker Kværner ASA, with minor amendments to the agreements.
At year-end 2004, a EUR 50 million bank revolver was established at Aker Kværner E&C Group AS.
Aker Kværner AS’s obligations under
the new financing and bonding facili-
ties are secured by a guarantee from
Aker Kværner O&G Group AS and
pledge of shares in certain subsidia-
ries of Aker Kværner AS. In addition,
the Term Loan, Revolving Credit and
the bonding facilities are supported by
a guarantee from Aker Kværner ASA,
secured by pledge of shares in Aker
Kværner O&G Group AS and Aker
Kværner E&C Group AS.
The chart illustrates the legal structure
and the financial debt and guarantee
obligations of the group following the
debt restructuring.
66 � Corporate governance and corporate management
Corporate governance and
corporate management
1. Implementation and reporting on corporate
governance
It is the opinion of the Board of Directors that Aker Kvaerner
complies with this section of the Code, except that the Board
has not yet formally approved the comprehensive set of Group
Policies implemented by the management, including ethical
guidelines and values.
2. Business
It is the opinion of the Board of Directors that Aker Kvaerner
complies with this section of the Code. § 3 of the articles of
association of Aker Kværner ASA reads as follows;”The
objectives of the Company are to own or carry out industrial-
and other associated businesses, management of capital and
other functions for the group, and to participate in or acquire
other businesses.”
3. Equity and dividends
It is the Board of Directors view that Aker Kvaerner complies
with this section, except for that the existing mandates to incre-
ase the company’s share capital and to purchase own shares
are not limited to defined purposes and were granted for a time
period of 2 years and 18 months, respectively.
4. Equal treatment of shareholders and transactions
with close associates
It is the opinion of the Board of Directors that Aker Kvaerner
complies with this section of the Code.
5. Freely negotiable shares
The Company complies with this section of the Code.
6. General Meetings
It is the opinion of the Board of Directors that Aker Kvaerner
complies with this section, except that the 2004 annual report
will be sent to the shareholders one week before the annual
general meeting and that it follows from § 9 of the company’s
articles of association that the Chairman of the Board or his
appointee shall preside at the General Meeting.
7. Nomination Committee
The Company complies with this section.
8. Corporate Assembly and Board of Directors:
Composition and independence
It is the opinion of the Board of Directors that Aker
Kvaerner complies with this section to the extent permitted
by Norwegian law.
9. The work of the Board of Directors
It is the opinion of the Board of Directors that the company
in all material respects fulfils this section. The group risk
department conducts control reviews throughout the group.
In addition each business unit conducts self assessment.
The reports are distributed to the Board.
10. Remuneration of the Board of Directors
It is the opinion of the Board of Directors that the company
complies with this section of the Code.
11. Remuneration of the Executive Management
It is the opinion of the Board of Directors that the company
complies with this section of the Code.
12. Information and communications
It is the opinion of the Board of Directors that the company in
all material respects complies with this section of the Code.
However, the Board has not yet established formal written
guidelines for the company’s reporting of financial and other
information or for the company’s contact with shareholders.
13. Take-overs
Aker Kvaerner has not been subject to any take-over bids
in 2004.
14. Auditor
It is the opinion of the Board of Directors that the company
complies in all material respects with this section of the
Code. The Board of Directors has, however, not issued writ-
ten guidelines for the use of the auditor by the company for
services other than audit. The Board of Directors will
consider implementing such guidelines during 2005.
Aker Kvaerner has elected to repor t in accordance with the permanent Norwegian Code of Practice for
Corporate Governance issued 7 December 2004 (hereinafter referred to as the “Code”).
Set out below is the Board’s repor t with respect to corporate governance and the relationship to the Code.
In addition to the repor t set out below, reference is made to the repor t from the Board of Directors.
67Executive management �
Inge K. Hansen, President & CEO
Mr. Hansen has been President & CEO since April 2004. Prior to
this appointment, Mr. Hansen was Acting President & CEO of
Statoil ASA, where he also previously held the position of CFO &
EVP. Mr. Hansen served as Managing Director of Orkla Finans
ASA, and as General Manager of DnB NOR. Mr. Hansen is a gra-
duate from the Norwegian School of Economics and Business
Administration.
Finn Berg Jacobsen, EVP & Chief of Staff
Mr. Berg Jacobsen has been EVP & Chief of Staff since 2002. He
was also Acting CFO between January and October 2004. In 2001
and 2002, Mr. Berg Jacobsen acted as CFO of Kvaerner. Prior to
this, Mr. Berg Jacobsen spent 33 years with Arthur Andersen &
Co., where he served as Country Manager from 1977. In 1994 he
became member of Arthur Andersen’s Worldwide Executive
Committee. Mr. Berg Jacobsen is a graduate from the Norwegian
School of Economics and Business Administration and from
Harvard Business School.
Simen Lieungh, EVP Field Development Europe
Mr. Lieungh has been EVP since 2002. He joined Aker Kvaerner in
1988 and has 17 years of experience with large field development
projects, covering all phases from conceptual studies to comple-
tion and delivery of complete installations. Prior to this, Mr. Lieungh
was Research Scientist with the Norwegian Defense Research
Establishment. Mr. Lieungh is a graduate from the Norwegian
University of Science and Technology.
Raymond Carlsen, EVP Subsea
Mr. Carlsen has been EVP since 2003. Subsea includes the subsidi-
ary Kvaerner Oilfield Products which he has headed since 2002.
Mr. Carlsen has 24 years of broad international management back-
ground. He has been with Aker Kvaerner since 1989, with senior
management assignments in South-East Asia, Europe, and the
United States. Mr. Carlsen is a graduate from Florida Institute of
Technology.
Gary Mandel, EVP Oil, Gas, Process & Energy
Mr. Mandel has over 23 years of experience from the oil and gas
industry, with emphasis on engineering, procurement, construc-
tion, project management, maintenance, and operations for the
power, petrochemical, and hydrocarbon industries. Mr. Mandel
is a graduate from the University of Nuevo Leon, Mexico.
Bjørn Erik Næss, EVP & CFO
Mr. Næss has been EVP & CFO since October 2004. Prior to this
appointment, Mr. Næss was EVP & CFO of Carlsberg Breweries
A/S from 2000, where he also was member of the executive board.
From 1995, Mr. Næss was SVP & CFO of the Orkla group, and
before this he was Divisional Director in Denofa AS. Mr. Næss is a
graduate from the Norwegian School of Economics and Business
Administration.
Jon Erik Reinhardsen, EVP
Mr. Reinhardsen has been EVP since 2002. Prior to this appoint-
ment he was EVP of Aker Maritime ASA for five years. Mr.
Reinhardsen has nine years experience within executive manage-
ment and nine years within senior management from Aker Maritime
ASA, Maritime Group ASA, and Tentech International AS, among
other companies. In addition, he has ten years experience on 50
various boards and committees. Mr. Reinhardsen is a graduate
from the University of Bergen, Norway.
Torleif Gram, EVP MMO Europe
Mr. Gram has been EVP since 2002. Prior to this appointment Mr.
Gram was Managing Director of Aker Offshore Partner AS from
1994 and of Aker Contracting AS from 1991. He joined Aker
Kvaerner in 1976 and has extensive experience from both Aker
Engineering AS and Aker Stord AS where he held various positi-
ons. Mr. Gram is a graduate from the Norwegian University of
Science and Technology.
Mads Andersen, EVP Products & Technologies
Mr. Andersen has been EVP since 2003. Prior to this appointment he
was President of Maritime Well Service from 2002, where he previ-
ously was VP of Operations and Business Development. Mr.
Andersen also held various technical and managerial positions within
oilfield service, consulting, and oil companies. Mr. Andersen is a gra-
duate from Glasgow University.
Jarle Tautra, EVP E&C Europe
Mr. Tautra has been EVP since 2002. Mr. Tautra has 20 years of
experience from offshore-related activities. From 1997, he served
as President of Aker Oil & Gas and as EVP of EPC Norway in Aker
Maritime ASA. Prior to this, Mr. Tautra held various positions in
Norsk Hydro ASA. Mr. Tautra is a graduate from the Norwegian
University of Science and Technology.
Executive management
68 � Shareholder issues
Listing
The company’s shares are listed on
the Oslo Stock Exchange with ticker
AKVER.
Investor relations
Aker Kvaerner wishes to maintain a
good, open dialogue with its sharehol-
ders, analysts and the stock markets
in general. The company makes regu-
lar presentations in impor tant financial
centres in Europe and the USA, as
well as holding meetings with analysts
and investors. Visitors to the compa-
ny’s website can register to receive
news about the company by e-mail.
All the company’s press releases are
available on the website.
Presentations, repor ts, prospectus,
shareholder and dividend policies, the
company’s ar ticles of association,
updated financial calendar and other
information relevant to the financial
market can be downloaded from
www.akerkvaerner.com. Shareholders
can also contact the company’s inves-
tor relations depar tment – the e-mail
address is [email protected].
Receive the next annual report
electronically
Aker Kvaerner wishes to give its share-
holders the oppor tunity to receive the
annual repor t electronically. This requi-
res access to the Norwegian Central
Securities Depositary’s (VPS) investor
services, which is available at
www.vps.no/erappor t.html. At the VPS
site, all investors can get an overview
of securities and transactions registe-
red. In addition, tax assistance and
automatic statements of realisation are
available. Electronical change notifica-
tions are also available (applicable in
Norway only).
RISK adjustment
Norway’s tax regulations require
Norwegian shareholders to adjust their
tax basis cost upwards or downwards
by the so-called RISK amount (the
adjustment for tax purposes of share-
holders’ opening value by the change
in taxed capital) when calculating
taxable gains and losses. (See note 11
in the parent company accounts).
Shares and share capital
The company has 55 029 234 ordinary
shares with a par value of NOK 10
(see note 5 to the consolidated
accounts). On 31 December 2004 the
company had 4 072 shareholders.
A three-way restructuring of the
Kvaerner group was announced on
1 March 2004, resulting in two focused
industrial groups, Aker Kvaerner and
Aker Yards, each being leading players
within their fields, and one industrial
holding company, Kværner ASA. The
main objective of the restructuring
process was to create separate entities
comprising (i) the Kvaerner group’s
core oil & gas and engineering & con-
struction businesses and (ii) the ship-
building activities of Kværner ASA and
Aker Yards. Following the restructuring,
Aker Kvaerner became the owner of
the oil & gas and engineering & con-
struction businesses through a 100 per
cent ownership of Aker Kværner O&G
Group AS and Aker Kværner E&C
Group AS. On 2 April 2004, Aker
Kvaerner was successfully listed on
the Oslo Stock Exchange. As par t of
the restructuring, the existing senior
financial indebtedness of Kvaerner
was refinanced in March 2004. (see
note 3 to the consolidated accounts
and pages 64-65 for fur ther details).
Aker Kvaerner has one class of shares.
Each share carries the right to one
vote. The Aker Kvaerner share increa-
sed in value by 24 per cent from 2
April to 31 December 2004, while the
Oslo Stock Exchange rose by 19.5 per
cent in the same period.
Shareholder issues
69Shareholder issues �
Development of Aker Kværner ASA share price 2004NOK
100
110
120
130
140
150
160
170
180
190
200
Ap
r. 0
4
May.
04
Ju
n.
04
Ju
l. 0
4
Au
g.
04
Se
p.
04
Oc
t. 0
4
Nov.
04
De
c 0
4
Ja
n.
05
Feb.
05
Shareholder Total shares Percentage
Aker ASA 27 520 930 50.01 %
JP Morgan Chase Bank 1 959 449 3.56 %
Morgan Stanley 1 807 889 3.29 %
Enskilda Securities 1 365 166 2.48 %
Skandinaviske Enskilda Banken 1 112 326 2.02 %
Bank of New York 969 531 1.76 %
JP Morgan Chase Bank 888 321 1.61 %
Goldman Sachs Intl. 870 121 1.58 %
Third Avenue Intl. 865 800 1.57 %
Citibank 825 900 1.50 %
JP Morgan Chase Bank 751 473 1.37 %
JP Morgan Chase Bank 666 826 1.21 %
Bank of New York 608 700 1.11 %
State Street Bank 576 102 1.05 %
Morgan Stanley 502 050 0.91 %
JP Morgan Chase Bank 424 000 0.77 %
Mellon Bank AS 375 726 0.68 %
Nordea Bank PLC 323 400 0.59 %
Verdipapirfondet AVA 315 509 0.57 %
Vital Forsikring ASA 298 223 0.54 %
Other 12 001 792 21.82 %
Total 55 029 234 100 %
Aker Kværner ASA’s largest shareholders
According to the Norwegian Registry of Securities, the company’s 20 largest shareholders as of 15 February 2005 were as
follows.
Relative indexed shareprice performance 2004NOK
80
90
100
110
120
130
140
150
160
170
180
Ap
r. 0
4
May.
04
Ju
n.
04
Ju
l. 0
4
Au
g.
04
Se
p.
04
Oc
t. 0
4
Nov.
04
De
c.
04
Ja
n.
05
Feb.
05
■ Aker Kvaerner ■ Oslo SE (OSEBX) Index
■ United States, PHLX, Oil Service Sector Index
70 � Articles of association
Articles of association
§ 1
The Company is a public limited company. The name of the
Company is Aker Kværner ASA.
§ 2
The Company has its registered office in Bærum, Norway.
§ 3
The objectives of the Company are to own or carry out indus-
trial- and other associated businesses, management of capi-
tal and other functions for the Group, and to participate in or
acquire other businesses.
§ 4
The Company’s share capital is NOK 550 292 340, divided
into 55 029 234 shares, each having a par value of NOK 10.
The Company’s shares shall be registered with the Norwegian
Securities Register (Verdipapirsentralen).
§ 5
The Board of Directors consists of 6-10 members of whom
one – third shall be elected by and among the employees of
the companies within the Aker Kvaerner Group. Up to 3 sha-
reholder elected deputy members may be elected annually.
§ 6
The Company shall have a Nomination Committee consisting
of a minimum of 3 members elected by the shareholders at
the General Meeting. The Nomination Committee shall pre-
pare the election of board members. The General Meeting
can set out directives for the work of the Nomination
Committee.
§ 7
The Chairman alone, or two Directors jointly of whom at
least one shall have been elected by the shareholders, shall
have the right to sign on behalf of the Company.
§ 8
The Company shall have only one General Manager.
§ 9
Notice of the General Meeting shall be made by written noti-
fication to all shareholders with a known address giving at
least two (2) weeks notice. The notice of the General
Meeting shall be announced in at least one national new-
spaper as soon as practicable after the notification has
been posted. The company may set a deadline for registra-
tion to the General Meeting, which shall not fall earlier than
five (5) days prior to the General Meeting. The Chairman of
the Board or his appointee shall preside at the General
Meeting. The Annual General Meeting shall consider, and
decide on, the following issues:
a) Approval of the annual accounts and the annual
report, including distribution of dividend.
b) Other matters which, by law or under the Articles of
Association, are the businesses of the General
Meeting.
The General Meeting may be held in Oslo.
Last changed on 1 April 2004
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