ANNUAL REPORT 2016
140Pages

VARD a Fincantieri company

MARINE OPPORTUNITIES CONTENT MARINE OPPORTUNITIES As the world changes, demand for products and services evolves with it. VARD has both contributed and adapted to such changes. We see that also in the future, opportunities will be profoundly connected to the sea that covers two-thirds of our planet. As before, we will take advantage of these opportunities, in close cooperation with ship owners, operators and business partners. VARD’s research and development, innovative design, equipment and solutions, and shipbuilding of the highest quality, contribute to significant improvements in...

BUSINESS REVIEW 04 Testimonials 10 Executive Management Team 12 Shareholding and Corporate Structure 17 Order Book Development 24 The VARD Series 31 Sustainability and Social Responsibility 42 Corporate Governance Report 53 Independent Auditor's Report 58 Consolidated Statement of Financial Position 59 Consolidated Statement of Comprehensive Income 60 Consolidated Statement of Changes in Equity 61 Consolidated Statement of Cash Flows 132 Notice of Annual General Meeting

TESTIMONIALS VARD has delivered a broad range of highly specialized vessels in 2016. Together with our customers we have developed and built state-of-the-art vessels and solutions for the oil and gas industry, fisheries and the aquaculture business. Deep Explorer An offshore subsea and diving support vessel of VARD 3 06 design, delivered from Vard Langsten to TechnipFMC. TechnipFMC is proud to welcome this impressive new ship - Deep Explorer - to our fleet, after a three-year build project. As we continue to innovate and support our clients’ evolving needs, this vessel, which is arguably...

Normand Maximus An offshore subsea construction vessel of VARD 3 19 design, delivered from Vard Brattvaag to Solstad Offshore. We successfully completed and received delivery of Solstad’s largest vessel to-date, Normand Maximus, in 2016. Tapping on VARD’s technical expertise in building highly specialized vessels, Solstad’s newbuilding team along with VARD’s designers and shipbuilders worked hand-inhand to overcome all challenges pertaining to the construction of the advanced vessel, which is capable of installing large-diameter flexible pipes in ultra-deepwater environments. The 180-meter...

CEO LETTER Dear Valued Shareholders, The maritime industry is well accustomed to cyclical changes, which we have experienced innumerable times throughout VARD's long shipbuilding history. Our strength is to adapt to these changes and transform them into new opportunities. Today's downturn in the offshore market is the worst we have experienced in recent times. It is tough to see our loyal customers and close relations struggling, and it is hard for us not having enough work for all our employees and locations. In 2016, each and every day has been a fight to achieve new contracts and...

Dear Shareholders, Since undertaking the role of Chairman at VARD in October 2016, I have had the privilege of gaining deeper understanding of the Group's values and vision, its people and operations. I am respectful of the strengths of the organization, its unique shipbuilding know-how built over generations, and the recognition it receives from some of the most demanding clients in the industry. But I am also mindful of the challenges still ahead of us on the path back to sustainable, profitable growth. 2016 was a year of profound changes for VARD, during which great strides were made to...

Mr. Giuseppe CoroneUa Chairman of the Board and Non-Executive Director Mr. Roy Reite Chief Executive Officer and Executive Director Mr. Vittorio Zane EVP and Executive Director Mr. CoroneUa was appointed chairman of the board and non-executive director of the Company in 2016. He is head of the offshore business unit of FINCANTIERI S.p.A. Experience: Mr. CoroneUa joined Fincantieri in 1990 in the design/engineering department, and moved to the project management department in 1999, becoming project manager for cruise shipbuilding projects in 2001. From 2006, he ted the ship repair...

Mr. Claudio Cisilino Non-Executive Director Mr. Sung Hyon Sok Independent Director Mr. Keen Whye Lee Independent Director Mr. Cisilino was appointed non-executive director of the company in 2016. He is vice president of fincancial planning and control of FINCANTIERI S.p.A. Experience: Mr. Cisilino joined Fincantieri in 2007 in the M&A and business development department and became head of financial controlling in 2009, before assuming his current role in 2011, where he is responsible for the group budgeting and multi-year financial planning activities, cost controlling and capital...

10 EXECUTIVE MANAGEMENT TEAM Mr. Roy Reite Chief Executive Officer and Executive Director Mr. Geir Ingebrigtsen Mr. Stig Bjprkedal EVP and Chief Financial Officer EVP Equipment and Solutions Mr. Vittorio Zane EVP and Executive Director Mr. Reite is the chief executive officer and serves as executive director of VARD. He has served as president of the Company since 2001. Experience: Mr. Reite was yard director at Vard Spviknes from 1999 to 2001, and assumed various positions as project manager, production manager and technical manager from 1990 to 1995. He was also a business consultant...

EXECUTIVE MANAGEMENT TEAM 11 Mr. Knut Ola Tverdal EVP Brazil Mr. Magne O. Bakke EVP and Chief Operating Officer Mr. Magne Haberg EVP Sales and Marketing Mr. Holger Dilling EVP Investor Relations and Business Development Asia Mr. Haberg heads sales and marketing in VARD. In addition, he took on responsibility for the aquaculture business at the end of 2016. Experience: Mr. Haberg first joined VARD as a project manager at Vard Langsten in 2000, and became senior vice president overseeing the sales and marketing department at VARD in 2004. Between 1995 and 2001, Mr. Haberg held several...

12 SHAREHOLDING AND CORPORATE STRUCTURE FINCANTIERI S.p.A. (Italy) Other shareholders [free float] MVN Asset Management Limited Vard Holdings Limited (Singapore) Vard Shipholding Singapore Pte. Ltd. [Singapore] Note: Simplified shareholding structure. Does not include dormant subsidiaries, minority shareholdings and non-core businesses. In case of split ownership within the group, only major shareholders are shown. Shareholding structure as at 10 March 2017. VARD ANNUAL REPORT 2016