Polarcus Limited2013 Annual Report

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04. Key Figures05. Vessel Utilization06. Solid operations in a stormy year08. Letter From The Chairman10. Who We Are11. Corporate Structure12. Polarcus at a Glance14. The Fleet16. RIGHTBAND™18. Board Of Directors20. Executive Management22. Line Management24. Board Of Directors Report36. The Share38. Consolidated Financial Statements84. Parent Company Financial Statements

100. Auditors Report102. Addresses

2013 Annual Report

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Revenue USD 532.2 M

EBITDA USD 211.9 M

EBIT USD 118.1 M

Net profit USD 43.5 M

Key Figures

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Overall utilization for 2013 was 82%

Exclusive Seismic Contract 72%

Multi-Client Seismic Contract 10%

Transit 14%

Yard stay 3%

Standby 1%

Vessel Utilization

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Collaboration arrangement with TPAOFebruaryEnters into an agreement with TPAO for sale of Polarcus Samur and a long-term collaboration arrangement.

New bond issueMaySuccessful placement of new unsecured bond issue of USD 95 million with maturity in June 2018.

Bond buybackAugustAnnounces a purchase of NOK 4 million of the NOK 230 million Bond maturing November 2014.

Collaboration arrangement with IONJulyEnters into a three year agreement with ION Geophysical Corporation to jointly develop, execute, and market 3D marine multi-client projects to E&P companies worldwide.

Solid operation in a stormy year

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MC summer campaignSeptemberCompleted 150 day multi-client campaign in the UK comprising of four RIGHTBAND™ HD projects.

Established a second ‘core’ area on UKCS.

Record breaking operationsSeptemberLargest spread in the companies history, towed by Polarcus Amani, offshore Ireland.

Acquired >15,000 sqkm for Kosmos, offshore Mauritania and Ireland.

Largest proprietary survey in South AmericaNovemberPolarcus Amani commenced phase two of the largest proprietary survey ever recorded in South America.

Lawsuit settlementOctoberEnters into a settlement with WesternGeco concerning the lawsuit filed for alleged patent infringe-ment relating to steering marine seismic streamers and arrays.

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Your company has continued to outperform against a somewhat lackluster year for the seis-mic industry. 2013 was for us one of the best years in our short six year history. We deliv-ered strong financial results, including a 344% increase in net income, and USD 43.5 million of net profit on revenue of USD 532.2 million. 2013 was the first year in our history in which we delivered a net profit in every quarter. We improved our return on capital employed by two percentage points, to 10%. We strengthened our balance sheet by repaying and refinancing bonds to reduce our overall debt burden and we reduced finance expenses by 14% in compari-son to 2012.

“2013 was for us one of the best years in our short six year history.”This performance is a testament to our strate-gic position and capabilities, the discipline of our management systems, and the dedication and expertise of more than 550 Polarcus employees around the world. Importantly, it also reflects the impact of a distinct choice we have made about Polarcus’ business model.

We continue to make investments designed to deliver future returns, to preserve our relative cost advantage and to drive efficiency. For ex-ample, in 2013 we fitted two of our vessels with new deflectors that reduce the drag from the vast seismic array which they are required to tow. This has delivered material improvements in fuel ef-ficiency which will provide significant savings in our largest and most unpredictable cost. It also makes us more competitive, allowing us to tow

a wider spread, covering a larger footprint over the ground with each sail line. We expanded our multi-client project library through responsible in-vestments in sound geologically supported pro-jects, strengthening our position in the UK with a multi-project seismic campaign ahead of future licensing activity. The resultant data has rapidly become the reference data for explorers and we have been complimented by our clients for de-livering some of the highest quality data images ever seen, opening the possibility for new plays and discoveries.

We are committed to growing your company profitably at a sustainable rate. We believe our product and service offerings combined with our competitive costs enable us to compete effec-tively in the high-end 3D seismic business, both in the proprietary and multi-client segments. We have a clear strategy for growth and we see a number of interesting opportunities in a dynam-ic and changing industry. We are confident that your company will grow in strength, becoming more efficient and capable of securing greater market share with each passing year.

We remain truly grateful to you, our sharehold-ers, for your continued support, and to all of our employees for their effort and commitment throughout the year.

Peter RiggChairman

Dear Shareholder,

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Our VisionTo be a pioneer in an industry where the frontiers of seismic exploration are responsibly expanded without harm to our world.

Our MissionOur mission is to deliver superior performance and shareholder value in marine acquisition ser-vices whilst demonstrating leadership in envi-ronmental responsibility. Our core values are the foundation stone for achieving this goal, and we are seeking to build on these values by attracting the best industry talent to join us.

Our ValuesOne of our key strengths is our people. We are recruiting the highest talent into our company, and we are committed to implementing many of the latest industry lessons learned around crew welfare, health, safety, security, and general well-being so that we can protect and retain our workforce.

Responsibility – for our actions, for each other, and for the environment and the world around

Innovation – in business and in operations

Excellence – in delivery for shareholders and clients alike

GoalBy 2015 be the preferred provider of high-end, towed marine seismic solutions from Pole to Pole through geophysical excellence and highly efficient operations with uncompromised safety and minimal environmental footprint, thus creat-ing long term stakeholder value.

StrategyTo achieve the Company’s corporate goal a sev-en point business strategy has been defined comprising the following key elements:

• Geophysical excellence • Highly efficient operations • Uncompromised safety • Minimal environmental footprint • Contract services from Pole to Pole • Multi-client projects from Pole to Pole • Strategic growth

Who We Are

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Company Objects“The objects for which the Company is established are to carry on, undertake, engage or invest, directly or indirectly, by itself or through subsidiaries or part-owned companies, partnerships or other forms of entities, on a worldwide basis, in any commercial activity within the international oil and oil services busi-ness, including oil and gas exploration, production and participation, seismic data services and general offshore energy related business, and whatever else may be considered incidental or conductive there-to, including without limitation the acquisition, construction, equipment, leasing, chartering, operation, agency and manning of any kind of vessels and everything incidental thereto, and the Company shall have full power and authority to carry out any other object not prohibited by the Companies Law of the Cayman Islands (as amended) (the “Law”).”

Polarcus 6 Ltd. Cayman Islands

Polarcus Samur Ltd.

Cayman Islands

Polarcus 2 Ltd. Cayman Islands

Polarcus 1 Ltd. Cayman Islands

Polarcus Selma Ltd.

Cayman Islands “Polarcus Selma”

Polarcus US Inc. USD

Polarcus Egypt Ltd.

Polarcus Do Brasil Ltda.

Polarcus Norway AS Norway

Polarcus MC Ltd. Cayman Islands

Polarcus Multi-Client (CY) Limited

Cyprus

Polarcus UK Limited United Kingdom

Polarcus Seismic Limited

Cayman Islands

Polarcus DMCC Dubai

Polarcus Nadia AS Norway

Polarcus Naila AS Norway

Polarcus Shipholding AS Norway

“Polarcus Nadia” “Polarcus Naila”

Polarcus Alima AS Norway

Polarcus Asima AS

Norway

Polarcus Amani AS

Norway

Polarcus Adira AS Norway

“Polarcus Alima” “Polarcus Amani” “Polarcus Adira” “Polarcus Asima”

70% 1% 30% 99%

Polarcus Limited Cayman Islands

Polarcus Nigeria Limited Nigeria

Ashbert Limited

50% 50%

Polarcus Asia Pacific Pte. Ltd.

Singapore

Corporate Structure

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Our CompanyPolarcus is a pure play marine geophysical com-pany with a pioneering environmental agenda, specializing in high-end towed streamer acquisi-tion from Pole to Pole.

Our unique seismic fleet is at the forefront of maritime and seismic innovation, well positioned to meet the current and future demands of the industry. Our worldwide Contract service capa-bilities encompass conventional 3D surveys, broadband data acquisition, sophisticated wide and multi-azimuth projects, and high density 4D production surveys. To complement these ser-vices we are expanding our global Multi-Client Projects Library with several projects now avail-able for data license in the UK, Norway, and Af-rica. Our operations are global and we aim to be the service provider of choice in areas of high environmental sensitivity including the Arctic Ocean.

The expansion of the industry into frontier and environmentally sensitive sea areas is today driving a much higher level of environmental compliance worldwide as new legislation on emissions to air and water are developed and introduced. Our ultra-modern fleet, investments in “green” technologies within both maritime and seismic, and our commitment to a pioneering en-vironmental agenda will help our clients to work safely and efficiently within these constraints.

Our PeopleOne of our key strengths is our people. We have a well-respected and highly experienced team at Polarcus with extensive knowledge of the seismic industry. We are directly employing of-fice, marine, and seismic personnel who operate under one unified EHSQ (Environment, Health, Safety, and Quality) management system. Our core values of Responsibility, Innovation and Ex-cellence are well established in the Polarcus cul-ture and we value candidates in our recruitment who desire to be part of our efforts to conduct our business in a ‘cleaner and greener’ manner.

Our Unique Environmental OfferingOur vision at Polarcus is to be a pioneer in an in-dustry where the frontiers of seismic exploration are responsibly expanded without harm to our world. This vision is reflected throughout our ser-vice offering and made possible by our commit-ment to be at the leading edge of maritime and technological innovation. Our goal is to provide a world class service to our customers supported by an ambitious and pioneering environmental agenda whereby we seek to minimize our en-vironmental footprint wherever possible through our maritime and seismic technology choices, our survey design and planning, and our oper-ations.

Polarcus at a Glance

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Geophysical Excellence Each survey is unique and requires attention to details at the design stage to ensure success.

Polarcus acquisition geophysicists, both on-shore and offshore, have extensive experience in the evaluation of survey design parameters with respect to a project’s geophysical objectives and operational environment.

They are prepared to work closely with our cli-ents to provide the appropriate acquisition pa-rameters and survey plan that optimizes efficien-cy whilst maintaining a very high level of data quality.

Survey DesignPolarcus’ geophysicists review all technical as-pects of an acquisition design to ensure that proper spatial and temporal sampling are ap-plied for the anticipated imaging and attribute processing. Several suites of software tools are available to model all aspects of the acquisition system; from the generation of the source wave-let to expected propagation paths and effects to overall survey coverage. If potential problems are uncovered, suggestions will be put forward to modify the pertinent survey design parame-ters in order to ensure that the highest quality data is acquired.

Operational ExcellenceOnce a survey design has been finalized, the Polarcus onshore geophysical QC manager ensures that all parameter information is accu-rately transmitted to the crew. The on-board Po-larcus field geophysicists will then take respon-sibility to ensure the survey data is collected as per contract specifications and pertinent se-quence-by-sequence and survey wide QC infor-mation is compiled and published to the project website on a daily basis.

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Polarcus Nadia & Polarcus Naila12 streamer 3D/4D seismic vesselsDelivered in December 2009 and February 2010 respectively, POLARCUS NADIA and POLAR-CUS NAILA are 12 streamer 3D seismic ves-sels built to the ULSTEIN SX124 design. These vessels are capable of towing up to 12 stream-er cables of 8,000m length with a lateral sep-aration of up to 75m, or 10 streamer cables of 8,000m length with a lateral separation of 100m. POLARCUS NADIA and POLARCUS NAILA, whose names derive from the Arabic meaning ‘the beginning, first’ and ‘the acquirer, one who succeeds’ respectively, have an LOA of 88.8m, a draft of 6.6m and a maximum speed of 15 knots, and carry the ICE-C class notation ena-bling them to operate in light ice conditions. The vessels are amongst the most environmentally sound seismic vessels in the market with die-sel-electric propulsion, high specification catalyt-ic convertors, a double hull and advanced bilge water cleaning systems.

Vyacheslav Tikhonov8 streamer Arctic-ready 3D/4D seismic vesselDelivered in August 2011 V. Tikhonov is an Arc-tic-ready 8 streamer 3D vessel built to the UL-STEIN SX133 design and capable of towing both conventional and wide tow spreads, including the Polarcus First Pass™ 3D technique requir-ing lateral streamer separations of 200m. V. Tik-honov has an LOA of 84.2m, a draft of 6.7m and a maximum speed of 17 knots, and carries the high ice class notation, ICE-1A, enabling opera-tions with the utmost safety in the Arctic Ocean.

The Fleet

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Polarcus Asima & Polarcus Alima12 streamer Arctic-ready 3D/4D seismic vesselsDelivered in August 2010 and March 2011 re-spectively, POLARCUS ASIMA and POLAR-CUS ALIMA are both Arctic-ready 12 streamer 3D seismic vessels built to the ULSTEIN SX134 design and capable of towing up to 12 streamer cables of 8,000m length with a lateral separation of 100m. POLARCUS ASIMA and POLARCUS ALIMA, whose names derive from the Arabic meaning ‘protector’ and ‘wise’ respectively, have an LOA of 92.0m, a draft of 7.5m and a maxi-mum speed of 15 knots, and carry the high ice class notation, ICE-1A, enabling them to operate with the utmost safety in the Arctic Ocean. The vessels are also amongst the most environmen-tally sound seismic vessels in the market with diesel-electric propulsion, high specification cat-alytic convertors, a double hull and advanced ballast water treatment / bilge water cleaning systems.

Polarcus Amani & Polarcus Adira12-14 streamer Arctic-ready 3D/4D seismic vesselsDelivered in March and June 2012 respective-ly, POLARCUS AMANI and POLARCUS ADIRA are both 12-14 streamer 3D seismic vessels built to the ULSTEIN SX134 design and are capable of towing up to 14 streamer cables of 8,000m length with a lateral separation of 100m. POLARCUS AMANI and POLARCUS ADIRA, whose names derive from the Arabic meaning ‘aspirations, wishes, desires’ and ‘strong, majes-tic, mighty’ respectively, have an LOA of 92.0m, a draft of 7.5m and a maximum speed of 16 knots, and carry the super-high ice class nota-tion, ICE-1A*, enabling them to operate with the utmost safety in the Arctic Ocean.

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Broadening the frequency content of seismic datasets has recently become an essential technique for improving image quality and attribute extraction. Early solutions were high-ly engineered. Modern holistic solutions such as those offered by Polarcus can now deliver equivalent or better results. At the core of the Polarcus approach is our belief in the intelligent application of geophysical principles, involving each component of the seismic workflow. It is widely recognized today that a high sig-nal-to-noise ratio is the key defining element. Our custom-designed source arrays generate

broadband signals tailored for the specific geological objectives of each project.

Our low noise 2Hz true-solid streamers, deep-towed and recording in the ultra-silent environment created by our X-BOW™ vessel hulls, deliver optimized data with the lowest pos-sible noise content across the entire frequency spectrum.

Other benefits of this low noise environment in-clude extended weather windows for acquisition and an optimized signal-to-noise ratio over the whole desired frequency spectrum, especially at the low end.

RIGHTBAND™

Intelligent project design

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Polarcus has an ongoing data library project centered around the Catcher discovery in UK Block 28. The water depths in the area are rel-atively shallow ranging from about 70m to 85m. The primary targets are also shallow, ranging from about 1.5 to 2.0 sec TWT. In order to adequately image the clastic reservoir target zones, the acquisition required high frequencies and the associated spatial sampling. These requirements were met with a RIGHTBAND™ acquisition configuration.

Near the close of the normal North Sea shoot-ing season in the fall of 2012 a case was made to extend the project area further to the northeast of the main area in order to provide a contiguous 3D dataset for potential clients interested in bidding on blocks in that area in the upcoming license round.

In order to meet that commitment while miti-gating potential exposure to project delays and additional costs during late fall and early winter weather episodes, Polarcus decided to acquire the northern extension with streamers towed at 15m and to leverage the broadband processing of GXT’s WiBand™ technology to normalize the bandwidth of the deep tow data to that of the shallow tow.

The resultant high quality dataset has rapidly es-tablished itself as the industry referance data for this area.

The Catcher Project

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Peter M. RiggChairman of the BoardPeter (born 1948) has an extensive background in investment banking with 21 years’ experience working in Asia and Europe, principally for Credit Suisse First Boston as a Worldwide Managing Director responsible for Asian Equity Capital Markets. Peter is a qualified Solicitor. He is also an independent non-executive Direc-tor of Schroder’s Oriental Income Fund Limited, and of two private equity funds specializing in Asia.Shareholding in Polarcus: 284,880 Independent of the Company and management and independent of major shareholders

Arnstein WigestrandNon-Executive DirectorArnstein (born 1957) is currently an independent adviser and investor. Arnstein has held roles as a Geologist/Geophysicist with Statoil followed by a number of years with Saga Petroleum. He has also worked as an oil service Analyst for a decade for Handels-banken and SEB Enskilda.Independent of the Company and management and independent of major shareholders

Carl-Gustav ZickermanNon-Executive DirectorCarl-Gustav (born 1948) has substantial experience in the seismic industry gained from his involvement in the start-up of Eastern Echo Ltd where he was also a Member of the Board and prior to that, as Director and Partner with SeaBird Exploration Ltd.Shareholding in Polarcus: 40,571,476Representing Zickerman Holding Ltd

Hege SjoNon-Executive DirectorHege (born 1968) is a senior advisor for Hermes Investment Man-agement Ltd. Prior to this she headed Hermes’ European govern-ance and engagement programs and before that held senior roles with the Oslo Bors. Hege is a Non-Executive Director at Wilhelm-sen ASA, Marine Harvest ASA and Norges Bank.Shareholding in Polarcus: 349,880 Independent of the Company and management and independent of major shareholders

Board of Directors

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Tore KarlssonNon-Executive Director, Deputy Chairman of the Board Tore (born 1953) is an independent consultant via MemeTree Ltd, and partner in MoVa AS and GeoPublishing Ltd. Tore has held senior roles within the seismic industry including line management, strategy, marketing and geophysics. He was Chairman of the Board of Eastern Echo Ltd prior to its acquisition by Schlumberger Ltd. Between 2003 and 2008 he was Associate Professor at the Centre for Entrepreneurship at the University of Oslo.Shareholding in Polarcus: 505,814Independent of the Company and management and independent of major shareholders

Karen El-TawilNon-Executive DirectorKaren (born 1961) has substantial experience in the seismic in-dustry. She was most recently VP Business Development for TGS, responsible for investor relations, M&A and corporate marketing. Previously she has managed multi-client sales for TGS, and explo-ration services and multi-client sales for Schlumberger Geco-Prakla Shareholding in Polarcus: 125,000Independent of the Company and management and independent of major shareholders

Thomas KichlerNon-Executive DirectorThomas (born 1961) is a Managing Director of One Equity Part-ner (OEP). Prior to joining OEP he was a Managing Director at Salomon Smith Barney (Citigroup). He also worked at Wasser-stein Perella and at Ernst & Young. He is currently Chairman of the Board at East Balt Bakeries and PeroxyChem LLC (fka FMC Peroxygens), and a director at Expert Global Solutions and Sonne-born Refined Products.Shareholding in Polarcus: 85,666,033Representing OEP Polarcus Holding LLC

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Tom Henrik SundbyChief Financial OfficerTom Henrik (born 1967) has over 20 years financial management and business development experience gained from the consulting services and commodities industries. He started his career with KPMG Norway, first as an auditor and then as a management con-sultant. Tom then joined TINE Norway, a top 25 industrial company in Norway, where he was Head of Controlling department and Head of M&A.

Duncan Eley Chief Operating OfficerDuncan (born 1972) has over 15 years of experience in the seis-mic industry. He worked with WesternGeco for 10 years supporting marine seismic operations in Europe, West Africa and North Amer-ica. He also held positions in technology development and support in WesternGeco prior to joining Polarcus in 2009.

Rolf RønningenChief Executive OfficerRolf (born 1957) has over 30 years of seismic industry experience and has held senior positions at GECO and PGS, most notably as the President of Marine Acquisition at PGS Geophysical AS. Most recently he held the position of CEO of Eastern Echo Ltd.

Carl-Peter ZickermanExecutive VP & Head of Strategic InvestmentsCarl-Peter (born 1972) holds valuable experience in the seismic industry, gained from his prior start-up venture, Eastern Echo Ltd where he held the position of Executive Vice President Business Development. Prior to this he was the Managing Director and founder of GeoBird Ltd., a marine seismic service provider, later sold to SeaBird Exploration Ltd.

Executive Management

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Christian FenwickSenior VP Corp. Mktg & Multi-ClientChristian (born 1960) has over 30 years of industry experience and has held senior positions at Merlin Geophysical, Schlumberger Ge-co-Prakla, Schlumberger Information Solutions, and most recently was the Vice President Multi-Client & Business Development at Eastern Echo Ltd.

Eirin M. InderbergGeneral CounselEirin (born 1968) has over 20 years experience as a lawyer and was formerly General Counsel of Eastern Echo Ltd. Prior to this she worked for the law firm Wikborg Rein & Co. in Oslo and Lon-don, and as a lawyer at the Oslo Stock Exchange.

Paul Lionel HannaSenior VP Human ResourcesPaul (born 1964) has over 25 years of industry experience and has held senior positions in various divisions of the Schlumberg-er group, including Connectivity Services Manager and Career Planning Manager for Schlumberger Information Solutions, Lon-don, UK; Data Services Business Manager for Data Consulting Services, Cairo, Egypt; and Area/Vessel Operations Manager for WesternGeco Gatwick, UK.

Hans-Peter BurlidVP FinanceHans-Peter (born 1980) has over 10 years of experience in the seismic industry and was formerly Senior Manager, Business Development and co-founder of Eastern Echo Ltd. His experience covers business development, finance and accounting. Hans-Pe-ter holds a B.Sc. in Economics and Business Administration from Blekinge Institute of Technology, Sweden.

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Frans van der Velden Senior VP Marine AcquisitionFrans (born 1965) has over 20 years of experience in the seismic industry. He started with Delft Geophysical in data processing before starting his offshore career with WesternGeco. He further worked with WesternGeco supporting marine seismic operations in Europe, Africa and Middle East. He also held positions in Person-nel, EHSQ and land seismic operations. Frans has a Bachelor of Science degree from Utrecht Technical University in The Nether-lands.

Christopher GriffinVP Environment, Health, Safety & QualityChristopher (born 1961) has over 25 years of industry experience both onshore and offshore with Western Geophysical, Horizon Exploration, PGS and, most recently with Eastern Echo Ltd where he held the position of Vice President Environment, Health, Safety & Quality.

Jai PandyaSenior VP Marketing & SalesJai (born 1972) has over 15 years of experience in the seismic industry. He worked with Veritas and CGGV for 12 years in a variety of positions including Offshore Geophysical QC, Onshore Data Processing and supporting marine geophysical operations as a Project Geophysicist. Jai has a Bachelor of Science from the University of Portsmouth, and an MSc in Oceanography from the University of Southampton, UK. In 2010 he joined Polarcus as a Sales Manager and was most recently the Regional Sales Manag-er for Polarcus’ EAME and NSA regions.

Christian FenwickSenior VP Corp. Mktg & Multi-ClientChristian (born 1960) has over 30 years of industry experience and has held senior positions at Merlin Geophysical, Schlumberger Ge-co-Prakla, Schlumberger Information Solutions, and most recently was the Vice President Multi-Client & Business Development at Eastern Echo Ltd.

Line Management

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Magnus ObergVP ITMagnus (born 1970) has over 25 years of experience managing IT systems in large and medium size maritime companies. He joined Polarcus from Eastern Echo where he was VP Information Technology, and prior to that he held several senior management positions within Gulf Agency Company before becoming the Group IT Research & Development Manager based in Dubai.

Erik GodoyEngineering and Technical ManagerErik (born 1960) joined Polarcus in 2010. He has 28 years of industry experience within engineering, manufacturing and tech-nical support hereof 17 years related to the seismic industry. He has previously held different positions with PGS and RXT most recently as Technical Support Manager with RXT. Erik has also held position as Marine Engineer with a renowned naval architect group designing seismic vessels. He was also Partner/Technical Manager with a company developing/manufacturing seismic equip-ment. Erik holds a B.Sc. in Civil Engineering and a B.Sc. in Marine Engineering.

Phil FontanaChief GeophysicistPhil (born 1952) has over 35 years of experience in the field of ma-rine geophysics. During that time he has held several senior level technical positions in marine seismic data acquisition at Western Geophysical, WesternGeco, Veritas DGC, and CGGVeritas. Prior to joining Polarcus in December of 2008, Phil held the position of Geophysical Manager for CGGVeritas’ marine acquisition product line.

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Polarcus (OSE: PLCS) is a pure play marine geophysical company with a pioneering environmental agenda, specializing in high-end towed streamer data acquisition from Pole to Pole. Polarcus operates a fleet of high performance 3D seismic vessels incorporating an innovative design and advanced maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-cli-ent projects worldwide and employs over 500 professionals. The Company’s principal office is in Dubai, United Arab Emirates. For more information, visit www.polarcus.com

1. Key figures and events in 2013• Revenues of USD 532.2 million, up 1% from USD 529.3 million in 2012

• EBITDA of USD 211.9 million, up 11% from USD 190.2 million in 2012

• EBIT of USD 118.1 million, up 29% from USD 91.4 million in 2012

• Net profit of USD 43.5 million, up 344% from USD 9.8 million in 2012

• Net Cash Flow from operating activities of USD 191.3 million, down 7% from USD 205.6 million in 2012

• Sale of Polarcus Samur for USD 133.5 million and securing a long-term agreement for seismic management

• Early repayment of the USD 47 million Tranche 5 of the fleet bank facility loan

• Early repayment of the USD 80 million 12.5% Senior bonds

• Repayment on maturity of USD 35 million 8.5% convertible bonds

• Early settlement repayment of USD 8 million for a finance lease liability

• Renegotiated lower day rates for the finance leases for charter of Polarcus Nadia and Polarcus Naila

• Settlement agreed to purchase a worldwide license relating to streamer steering technology for USD 40 million

• Issue of USD 95 million 8% Senior bonds

Board of Directors Report

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2. Operations and marketsDuring the year Polarcus Limited (the “Com-pany”) delivered significant improvements in technical and operational performance, leading to cost reductions due to improved operational efficiencies. Technical downtime was reduced to less than 3% during the year compared to 5% in 2012. The vessel utilization of 82%, com-prised of 72% utilization on Contract and 10% on Multi-Client activity, was below the Compa-ny’s target utilization and the utilization recorded in the prior year, both 85%.

The Company continued to increase its recogni-tion within the seismic market. This was reflect-ed in repeat business and new clients, including super-majors, as well as surveys performed in new geographical areas during the year. The key to the Company’s improved foothold and track record in the market is that the Company deliv-ered surveys to the highest standards and to the satisfaction of its clients. The Company’s high quality of delivered data has been the outstand-ing feature of feedback from clients.

The Company reduced its fleet size of owned vessels during the year following the sale of Polarcus Samur to Turkish Petroleum Corpora-tion (“TPAO”) in February 2013. As part of the agreement the Company secured a three year collaboration with TPAO for seismic data acqui-sition, management and crewing services for the vessel.

The table below shows the geographical areas of where the Company’s revenues were earned:

Figures in MUSD 2013 2012Europe 121.9 213.2South America 139.5 40.0Africa 112.8 114.7Asia Pacific 155.8 157.2

530.2 525.1

Contract day rates were on average at a high-er level in 2013 than in the previous year. Im-plied day rates earned on contract, excluding reimbursable costs, were 13% higher for 2013 compared to 2012. For the first three quarters of the year the implied day rates were 18% higher than day rates achieved for the same period in 2012. In Q4 2013, however, the achieved day rates fell modestly as a result of a challenging seismic market.

Multi-client

Seismic operations in general are split between contract seismic, where data is acquired exclu-sively for an oil company, and multi-client, where we plan and undertake a survey for our own account, subsequently marketing the final fully processed project data to multiple customers on a non-exclusive license basis. Unlike a con-tract survey, we typically own the acquired data, or are granted exclusive marketing rights for it, for a period of ten or sometimes more years. Multi-client revenues are substantially affect-ed by events such as license rounds, acreage turn-over and farm-ins, new discoveries, and the availability of final data volumes from the data processing centres.

The Company invested USD 55.7 million – of which USD 47.9 million was cash investment – in its multi-client library during the year. At yearend the Company’s multi-client library had a net book value of USD 88.7 million, compared to USD 49.5 million at the end of 2012. Total multi-client revenue recognized in the year was USD 33.7 million and library amortization was USD 16.5 million, compared to multi-client revenue of USD 29.8 million and amortization of USD 15.2 million in 2012.

The Company has a well-regarded data library in the UK North Sea that was expanded in 2013. The second tranche of the 27th UK licensing round that was announced late in the year had a positive effect on multi-client revenue in 2013 and will have a further positive effect in 2014.

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License sales can be expected in conjunction with the current UK 28th License Round that opened 24th January 2014 and will close on 25th April 2014. The first preliminary acreage awards under the UK 28th License Round are expected to be announced in late Q4 2014, potentially trig-gering additional license sales at that time in the form of success fees.

It is in the nature of the early stages of building a data library that the timing of revenues can be unpredictable until a critical mass is in place to enable a smoothing of the revenue stream.

3. Financial reviewThe consolidated financial statements of Polar-cus Limited (the “Group”) are prepared in ac-cordance with International Financial Reporting Standards. A financial review of the Group is provided below.

Revenues

Contract revenue was stable at USD 496.4 mil-lion in 2013 compared to USD 495.3 million in 2012. The sale of Polarcus Samur reduced the fleet size in 2013. This capacity reduction was partly offset by Polarcus Amani and Polarcus Adira being delivered partway through 2012. Net capacity decreased 3% in 2013 compared to 2012. Despite the decrease, contract revenue excluding reimbursables increased 5% to USD 472.7 million in 2013 compared to USD 450.3 million in 2012.

Multi-client revenue increased by 13% to USD 33.8 million in 2013 from USD 29.8 million in 2012. The fleet allocation to multi-client proj-ects increased to 10% in 2013 compared to 9% in 2012. Multi-client cash investment was USD 47.9 million in 2013 compared to USD 37.7 mil-lion in 2012. Multi-client prefunding revenue for the year increased to USD 31.6 million com-pared to USD 14.7 million in 2012, representing prefunding levels of 66% and 39%, respectively.

Other income decreased in 2013 due to lower insurance claims than in 2012.

Operating expenses

Vessel operating expenses fell by 7% to USD 290.3 million in 2013 from USD 312.7 million in 2012. The reduction was mainly driven by low-er reimbursable costs. Excluding reimbursable costs vessel operating expenses decreased by 1% to USD 270.4 million in 2013 compared to USD 273.2 million in 2012.

Gross vessel operating expense capitalized as multi-client increased by 6% to USD 37.9 million in 2013 compared to USD 35.9 million in 2012 as a function of the higher multi-client utilization.

Sales, general and administrative costs in-creased by 14% to USD 30.0 million in 2013 compared to USD 26.4 million in 2012

Depreciation and amortization

Depreciation and amortization increased by 3% to USD 93.8 million in 2013 compared to USD 91.4 million in 2012.

Depreciation amounted to USD 80.2 million in 2013 compared to USD 77.9 million in 2012. The increase is due to depreciation on addition-al streamers and seismic equipment purchased in the year. Amortization of the multi-client data library was USD 16.5 million, or 49% of Multi-Cli-ent revenue, for 2013 compared to USD 15.2 million, or 51%, in 2012.

EBIT increased by 20% to USD 118.1 million compared to USD 98.8 million and EBIT margin increased to 22% in 2013 compared to 19% in 2012, excluding vessel impairment charge.

Finance costs

Finance costs decreased by 14% to USD 80.1 million in 2013 compared to USD 93.4 million in 2012. For 2013 the net interest expense was USD 68.7 million compared to USD 73.6 million in 2012. The Company repaid its USD 35 mil-lion 8.5% convertible bonds in Q3 2013 and its USD 80 million 12.5% senior secured bonds in the first half of the year. Proceeds of the new USD 95 million 8% bonds the Company issued in June 2013 were used partly to fund these re-payments. Subsequent to the sale of Polarcus Samur during the year, the Company repaid in full its total outstanding liability of USD 45 million of Tranche 5 of the Fleet Bank Facility loan.

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Income tax

Income tax for the full year 2013 was USD 0.6 million and for 2012 was USD 1.9 million. The amount recorded in 2013 is an accrual for cor-porate income tax related to projects carried out in the year.

The Norwegian vessel owning subsidiaries are taxed in compliance with the tonnage tax regime for shipping companies in Norway. This scheme entails no tax on profits or tax on dividends from companies within the scheme. The tonnage tax is classified as an operational expense. In addi-tion, the Company is exposed to taxation in sev-eral jurisdictions through mobile employee taxes and withholding taxes, neither of which are clas-sified as income tax. The Company recognizes liabilities for anticipated tax issues based on es-timates of whether it is probable that additional taxes will be due.

Net profit

Net profit was USD 43.5 million in 2013 com-pared to USD 9.8 million in 2012. The Board pro-poses that the net profit is allocated to retained earnings.

Capital expenditure

Capital expenditure on seismic vessels and equipment was USD 55.6 million in 2013 com-pared to USD 351.3 million in 2012. USD 12.0 million of the capital expenditure in 2013 was related to maintenance of seismic and maritime equipment and USD 43.6 million related to up-grades and to new seismic equipment. The total capital expenditure was higher in 2012 as the Company took delivery of Polarcus Amani and Polarcus Adira in the year.

Cash flow and liquidity

Net cash flow from operating activities was USD 191.3 million in 2013 compared to USD 205.6 million in 2012.

In 2013 the net cash inflow from investing ac-tivities was USD 3.2 million compared to a net cash outflow of USD 351.5 million in 2012. In 2013 the Company received proceeds of USD 128.0 million following the sale of Polarcus Sa-

mur while in 2012 the Company made payments totaling USD 321.6 million for purchases of prop-erty, plant and equipment, mainly relating to the delivery of the new vessels Polarcus Amani and Polarcus Adira.

Net cash outflow for financing activities was USD 180.8 million in 2013 compared to a net cash inflow of USD 134.3 million in 2012. During 2013 the Company paid back the USD 35 million and the USD 80 million bonds, as well as the remaining USD 45 million Tranche 5 of the Fleet Bank Facility loan following the sale of Polarcus Samur. New bonds with nominal value USD 95 million were issued in the year. During 2012 the Company drew down on fleet facility loans in or-der to pay for the Polarcus Amani and Polarcus Adira.

Unrestricted cash held at the end of the 2013 was USD 60.0 million, up from USD 43.8 million at the end of 2012. Restricted cash held at the end of the year was USD 20.5 million compared to USD 8.1 million the prior year. The restricted cash relates to loan installment retentions and payment guarantees, mainly related to financing and operating activities.

Assets

Gross assets were USD 1,314.7 million at 31 December 2013 compared to USD 1,372.4 mil-lion at 31 December 2012. Non-current assets increased to USD 1,100.7 million at the end of 2013 compared to USD 1,052.5 million at the end of the prior year.

The main reasons for the increase are expan-sion of the multi-client library to USD 88.7 mil-lion from USD 49.5 million as a result of further work on existing multi-client surveys and new multi-client surveys commenced in the year, and an increase in intangible assets to USD 36.7 million from USD 0.4 million as a result of the settlement agreement to purchase a worldwide steerable streamer license.

Total current assets were USD 213.9 million at 31 December 2013 compared to USD 319.3 mil-lion at 31 December 2012. Included in the bal-ance at the end of 2012 is USD 128.0 million in assets held-for-sale, relating to Polarcus Samur, which was sold to TPAO in 2013.

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Liabilities

Total liabilities were USD 787.1 million at 31 De-cember 2013 compared to USD 891.0 million at 31 December 2012, a reduction of USD 103.9 million following repayment of interest bear-ing debt. During the year the Company made early and full repayments of its USD 47 million Tranche 5 of the fleet bank facility loan and its USD 80 million 12.5% senior bonds, plus made an early settlement repayment of USD 8 mil-lion for a finance lease liability. Additionally, the Company paid in full the USD 35 million 8.5% convertible bonds on maturity in the year and re-negotiated lower day rates for the finance leases for charter of Polarcus Nadia and Polarcus Nai-la. The Company issued a USD 95 million 8% senior bond in the year.

Equity

Equity increased to USD 527.6 million at 31 De-cember 2013 compared to USD 481.4 million at 31 December 2012, mainly as a result of the USD 43.5 million net profit for the year being al-located to retained earnings.

Parent company’s non-consolidated financial statements

The non-consolidated financial statements of Po-larcus Limited are prepared in accordance with International Financial Reporting Standards.

Revenues earned by the Parent company in-creased to USD 76.6 million in 2013 from USD 71.6 million the year before. Operating expenses for the year were USD 77.9 million compared to USD 71.7 million in 2012. Net financial expenses were USD 9.4 million in 2013 compared to USD 15.0 million the year before.

The Parent company recorded a loss of USD 10.6 million in 2013 compared to USD 15.2 mil-lion in 2012. The Board of Directors proposes to allocate the loss for the year to the retained earnings equity reserve.

The Parent Company’s gross assets increased to USD 800.5 million at 31 December 2013 com-pared to USD 752.7 million at 31 December 2012. Total amounts due from subsidiaries to the Parent decreased by USD 14.1 million, while cash balances (restricted and non-restricted) in-creased by USD 15.6 million and trade receiv-

ables increased by USD 25.0 million. Intangible assets increased by USD 36.2 million at 31 De-cember 2013 compared to the prior year due to the purchase of a worldwide streamer license.

The Parent Company’s total liabilities were USD 276.8 million at 31 December 2013 compared to USD 221.1 million at 31 December 2012. The increase is mainly due to the Parent company issuing a USD 95 million 8% senior unsecured bond in the year. The Parent company paid in full the USD 35 million 8.5% convertible bond on maturity in the year.

Going concern

In accordance with Section 3-3 of the Norwegian Accounting Act, the Board of Directors confirm that the financial statements have been pre-pared under the going concern assumption.

4. StrategyThe Company’s vision is to be a pioneer in an industry where the frontiers of seismic explora-tion are responsibly expanded without harm to the world. The Company’s mission is to deliver superior shareholder value in marine acquisition services whilst demonstrating leadership in en-vironmental responsibility. The Company’s goal is to become the preferred provider of high-end towed marine seismic solutions from Pole to Pole through geophysical excellence and highly effi-cient operations with uncompromised safety and a minimal environmental footprint. To achieve the Company’s corporate goal a business strat-egy has been developed which focuses on the themes of geophysical excellence, operational efficiency, uncompromised safety, minimal envi-ronmental footprint, surveys from Pole to Pole and strategic growth.

The Company’s strategy includes operating a fleet of ultra-modern vessels, investments in “green” technologies, its commitment to a pio-neering environmental agenda, and focus on safety at all costs.

Polarcus is the only seismic contractor with DNV acknowledged Arctic/Cold weather operational procedures, and the sole operator of 3D seis-mic vessels with the high-specification ice class notation. The Company’s operations are global and Polarcus aims to be the service provider of

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choice in areas of high environmental sensitivity including the Arctic Ocean. The expansion of the industry into frontier and environmentally sen-sitive sea areas is today driving a much higher level of environmental compliance worldwide as new legislation on emissions to air and water are developed and introduced.

The Company’s worldwide contract service ca-pabilities encompass conventional 3D surveys, broadband data acquisition, sophisticated wide and multi-azimuth projects, and high density 4D production surveys. To complement these services the Company is expanding its global multi-client projects library with several projects now available for data license, underway or soon to commence in the UK, Ireland, Norway, and Africa.

5. Environmental, health, safety and quality (EHSQ)EHSQ is at the core of every decision the Com-pany makes and Polarcus has established pro-cedures and practices to protect the environment and all people involved during the course of our business activities, both onshore and offshore. We believe our EHSQ systems, monitoring and management are among the best in the industry.

On an annual basis, the Company sets EHSQ improvement objectives for its fleet and per-sonnel. The objectives are measured quarterly and apply to all levels of the Company. During 2013 the Company achieved 75% of its EHSQ improvement objectives. Although this is less than the 85% achievement recorded in 2012, the reason for the decrease is that the objectives for 2013 were much higher goals than have ever been set by the Company before.

Polarcus monitors the training needs of all em-ployees relating to EHSQ and implements an ongoing EHSQ training program to all its em-ployees. During 2013 a total of 442 field and 121 office-based employees completed formal EHSQ training, and a total of 519 EHSQ relat-ed training sessions were held. Additionally, a total of 1,187 emergency drills were carried out onboard the vessels. All new employees are re-quired to conduct formal EHSQ training.

The Company’s commitment to the environment has the goal of “Zero Spills” with regard to oil

pollution of the marine environment and includes the commitment to recycle wherever possible, to minimize waste and emissions and to cause minimum negative impact on the environment. The Company recorded zero spills in 2013.

Fleet emission summary

The Company measures emissions of harmful gases from its fleet of vessels. Polarcus is the first and only seismic company in the industry to receive Det Norske Veritas (“DNV”) “Vessel Emissions Qualification Statement” for mea-suring emissions. This qualifies the Company’s emissions reporting methodology and the accu-racy of data, verifying the ability to predict the exhaust emissions footprint for any project as well as provide actual emissions measurements.

Polarcus fleet emissions summary for 2011 to 2013 is as follows:

Figures in emissions per km² 2013 2012 2011

CO2 Emission (t) 2.53 2.42 3.36Total NOx Emission (t) 0.018 0.018 0.022

SOx Emission (t) 0.002 0.002 0.004

Energy efficiency

Polarcus voluntarily participates in DNV’s Tri-ple-E™ rating initiative, an environmental rat-ing scheme for ships based on verification of a ships environmental performance. As part of the rating process, the Company has implemented a ship energy efficiency management plan to target reducing fuel consumption. The Compa-ny measures three energy efficiency operation-al indicators (EEOI) as part of the ship energy efficiency management plan. In 2013 the EEOI seismic acquisition was 5% lower than in 2012 for Polarcus Nadia and Polarcus Naila, whereas on the remaining vessels it was 20% lower than the previous year.

Green Protection Team

Polarcus has established Green Protection Teams (“GPT”) both on its vessels and at its head office in Dubai. The purpose of the GPTs is to review and propose health and safety ini-tiatives to seek ways for overall improvement

29

for the wellbeing of the environment and the employees. During the year the vessel GPT ini-tiatives have included reducing water consump-tion on-board due to switching to eco-friendly shower heads, identification and subsequent reduction of large waste sources, and reducing energy consumption following an evaluation to switch to LED lights. During 2013 the onshore GPT initiatives have included streamlining office recycling, initiating quarterly campaigns focusing on health, safety and environmental awareness, and a clean-up of a local freshwater ecosystem in the UAE.

Health, safety and security

The Polarcus principles for health and safety are embodied in its belief that there should be “Zero Harm” to people and that all injuries are preventable. The Company works to identify and evaluate all potential health and safety risks in its operations, and encourages all employees to focus on the importance of responsibility and accountability for health, safety and security at work and at home.

During the year the Company introduced a new online tool by which all employees, both offshore and onshore, can report any issues or concerns regarding environment, health, and safety is-sues.

In 2013 Polarcus’s performance on the industry recognized reporting EHSQ measures was as follows:

Total Polarcus Employee Exposure Hours: 4,751,337

Restricted work cases 1First Aid Cases 73Medical treatment cases 1Non-conformance, corrective-action, preventive-action

13691

Lost time incidents 3Lost time incidents frequency 0.63True recordable rate frequency 10.5Near Miss 259Improvement Suggestions 5261

Quality

Polarcus is committed to quality in every aspect of its business in delivering Geophysical Excel-lence. The Company aims to deliver high quality services and products to its clients and stake-holders through safe, environmentally aware and efficient operations. Key to delivering quality is the Company’s Quality Management System (“QMS”). The Company systematically reviews and updates its QMS to ensure that it provides quality, remains current, and is always effective and efficient.

6. People and the organizationPolarcus’ headquarter is in Dubai, United Arab Emirates and at the yearend the Company had additional offices in Houston, London, Moscow and Singapore, as well as a representation of-fice in Rio de Janeiro. At 31 December 2013 the Company had 558 employees of over 50 differ-ent nationalities, of which 428 work in the field as seismic and maritime crew onboard the vessels. At the yearend the female proportion of the em-ployees was 32% in the office population and 4% in the field population. Over the calendar year 2013, the average number of days of absence for sickness for the office population was 3 days per employee. Of the current eight members of the Executive Management team, one is female. Of the current seven Directors on the Board, two are female.

Polarcus is committed to being the employer of choice in the marine seismic business and to maintaining a human resource system that is open and fair. Polarcus aims to be a workplace with equal opportunities and has policies to en-sure everyone has the same opportunities and rights and to prevent discrimination due to eth-nicity, national origin, descent, skin colour, sexu-al orientation, language, religion and faith. Polar-cus believes that being a global and sustainable organization requires people with a global mind-set, and a culturally diverse workforce is key to this.

Working time arrangements and salary levels do not depend on gender.

The Company is committed to promoting from within based on proven talent and potential;

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each year there have been significant numbers of promotions of personnel both in the office and field organizations. Polarcus is also committed to promoting gender diversity throughout its business activities; within its office organization, more than 20% of its workforce in professional and operational support positions are female.

7. Financial risksThe financial risks to which the Company’s fi-nancial assets and financial liabilities are ex-posed to are market risk, credit risk and liquidity risk. The market risk the Company is exposed to is the risk that the fair value of future cash flows of its financial instruments – such as the bond loan denominated in NOK and the portion of the Company’s debt that is at variable interest rates – fluctuate because of changes in foreign cur-rency or interest rates. The Company’s exposure to credit risk relates to its financial assets – such as amounts owed by customers and deposits held at banks – and is the risk that the coun-terparty defaults and does not meet its financial obligation to the Company. Liquidity risk is the risk that the Company will not be able to meet its current and future cash flow and collateral requirements without materially affecting nega-tively the Company’s daily operations or overall financial condition.

Currency risk

The majority of the Company’s financial assets and liabilities are denominated in USD, the func-tional currency of the Company.

Figures in MUSD 2013 2012

USD denominated financial assets

163.0 159.6

Foreign currency denominated financial assets

25.4 2.3

Total financial assets 188.4 161.9

USD denominated Financial liabilities

720.5 805.4

Foreign currency denominated financial liabilities

37.1 39.9

Total financial liabilities 757.6 845.3

The Company’s activities are global and the for-eign currency risk related to its operating activi-ties may change from year-to-year depending on the different jurisdictions the Company operates in. In general, the majority of operating revenues and costs are denominated in USD. Approxi-mately 15% in aggregate of the Company’s op-erating costs are in EUR, GBP and NOK.

The exposure of the Company’s financial assets and financial liabilities to changes in foreign ex-change rates due to reasonably possible chang-es in foreign exchange rates against USD, with all other variables held constant, is not material on the Group’s profit before tax.

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s loans and borrowings with floating inter-est rates.

Figures in MUSD 2013 2012Fixed interest rate loans and borrowings

657.6 703.2

Variable interest rate loans and borrowings

61.5 98.0

Total loans and borrowings 719.1 801.2Proportion of loans and bor-rowings at variable interest rates

9% 12%

The exposure of the Company’s loans and bor-rowings at variable interest rates to reasonably possible changes in market interest rates, with all other variables held constant, is not material to the Company’s profit before tax.

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Credit risk

The Company is exposed to credit risk from its operating activities, primarily its accounts receiv-able, accrued revenue and from advance pay-ments made to suppliers, and from its cash and cash equivalents deposited with banks.

Figures in MUSD 2013 2012Accounts receivable 42.4 76.4Accrued revenue* 61.1 20.2Total receivables from cus-tomers

103.5 96.6

Cash and short-term deposits (including restricted)

80.5 51.9

Advance payments to suppli-ers*

0.4 4.3

Total 184.5 152.8*included within ‘Other current assets’ in the con-solidated statement of financial position.

The Company provides its services only to rec-ognized, credit worthy clients who are primarily multinational oil and gas companies, including companies owned in whole or in part by govern-ments. It is the Company’s policy that all custom-ers who wish to trade on credit terms are subject to credit verification procedures.

At 31 December 2013 the Company’s receiv-ables from customers were owed by a total of 14 different customers (2012 – 16 customers) and 3 (2012 – 6) customers owed more than USD 5 million, accounting for 74% (2012 – 84%) of the total receivables from customers.

Liquidity risk

The following table shows the maturity profile of the Company’s financial liabilities based on con-tractual payments. The amounts disclosed in the table are undiscounted cash flows.

Figures in MUSD

Contractual cash payments

< 1 year 199.11 to 2 years 293.22 to 5 years 405.0> 5 years 136.8

Total 1,034.1

The Company’s fleet of seven seismic vessels, multi-client project library and seismic manage-ment services are expected to generate sufficient revenues to support the Company’s operations and service the debts. The Board will continue to monitor closely the Company’s liquidity and cash flow covenants which will gradually be-come more stringent during 2014.

8. Corporate GovernanceThe Company believes that focus on corporate governance is critical to its success and long-term growth. Polarcus is committed to maintain-ing high standards of corporate governance. The governance structure of Polarcus is designed to ensure sound and efficient decision making and to be appropriate to shareholders’ expectations and to the size, business and history of the Po-larcus Group. It also is designed to adhere to the Norwegian Code of Practice for Corporate Governance (the “Code”) at any time applicable, Cayman Islands law and practice and the Mem-orandum and Articles of Association of Polarcus.

A report on Corporate Governance inclusive of internal control in accordance with the Norwe-gian Accounting Act 3-3b and details regarding Polarcus’ compliance with the Code are provid-ed in the document “Corporate Governance Re-port for the year 2013,” available for download from www.polarcus.com.

At the start of 2013 the Board of the Company consisted of four directors. On 29 April 2013 Mr. Arnstein Wigestrand was appointed to the Board. On 13 February 2014 two new directors, Ms. Karen El-Tawil and Mr. Tom Kichler, were appointed to the Board, bringing the total num-ber of directors to seven.

The current Board provides diversified and valu-able expertise and experience to the Company, including seismic expertise and experience rele-vant for the Company’s core business as well as financial and investor related expertise.

The Board held five physical meetings, four phone meetings and executed five written res-olutions in 2013. The attendance of the board meetings in 2013 by the various directors is re-flected in the table below:

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Board MemberNo. of

Physical Meetings

No. of Phone

MeetingsPeter Rigg 5 4Tore Karlsson 5 4

Ali Bin Towaih (re-signed during 2013)

1 -

Carl Gustav Zickerman 5 4Hege Sjo 5 4Arnstein Wigestrand (elected during 2013)

3 3

Board Committees

The Board has established two board commit-tees, (i) a combined corporate governance and remuneration committee, and (ii) an audit com-mittee.

Corporate Governance and Remuneration Committee

The corporate governance and remuneration committee consists of Mr. Tore Karlsson, Mrs. Hege Sjo and Mr. Arnstein Wigestrand. The committee is mandated to regularly review and update the Company’s governance com-mitments and structure and to review propos-als from the executive management on bonus schemes and other benefits as well as general principles for the Group’s salary and allowance program. The proposals and recommendations of the corporate governance and remuneration committee are subject to approval by the Board.

Audit Committee

The audit committee consists of Mrs. Hege Sjo, Mr. Peter Rigg and Mr. Arnstein Wigestrand. The committee is mandated to regularly review the Company’s proposals for quarterly and annual financial statements and various issues related to the statements, review new accounting princi-ples and changes to existing accounting princi-ples, supervise the budget process, review and evaluate the Company’s internal control over financial reporting and on behalf of the Board li-aise with the Company’s auditor. The proposals and recommendations of the audit committee are subject to approval by the Board.

9. Corporate Social Re-sponsibility (CSR)Polarcus has defined its vision and core values as well as a set of commitments for its business operation (the “Commitments”) and this material constitutes the foundation of Polarcus’ CSR.

Polarcus’ vision is:

“to be a pioneer in an industry where the frontiers of seismic exploration are respon-sibly expanded without harm to our world”.

The vision is rooted in the Company’s core val-ues of Responsibility, Commitments and Excel-lence.

The core values are reflected in the Compa-ny’s sixteen overriding commitments within the following areas: (i) environment sustainability, (ii) health, safety and security, and (iii) ethics in business and the respect and promotion of hu-man rights. To ensure compliance with the Po-larcus Commitments, Polarcus has developed procedures, checklists and manuals, which provide the necessary reference, standards and instruction for responsibility in carrying out daily tasks. In accordance with the Company’s requirements, reflecting ISM, ISPS, ISO 9001, ISO 14001, OSHAS 18001 certification require-ments, all Company procedures are reviewed and, where applicable, revised annually.

A report on Polarcus’ Corporate Social Respon-sibility describing Polarcus’ compliance with its Commitments during 2013 is provided in the document “Corporate Social Responsibility for the year 2013,” which can be downloaded from www.polacrus.com. Polarcus is not required to report on CSR in compliance with the Norwegian Accounting Act Section 3-3c.

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10. OutlookAfter a soft start to 2014 following on from the weak market experienced in Q4 2013,the mar-ket has improved with a higher level of tender activity and contract awards. This has resulted in an improved backlog for the Company with somewhat firmer pricing. The Company has announced the following guidance for the year 2014.

The Company expects EBITDA in the range of USD 230-250 million.

Multi-client cash investments are expected to be in the range of USD 55-65 million.

Vessel related capital expenditure is expected to be in the range of USD 55-65 million.

Peter Rigg Chairman

Tore Karlsson Board Member

Carl-Gustav Zickerman Board Member

Hege Sjo Board Member

Arnstein Wigestrand Board Member

Karen El-Tawil Board Member

Thomas Kichler Board Member

Rolf Ronningen CEO

Dubai, 27 March 2014

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35

Share InformationShares in Polarcus are listed on the Oslo Børs un-der the ticker symbol ‘PLCS’. During the year of 2013, a total of 823 million Polarcus shares were traded at a value of NOK 4.2 billion. This means that 160 percent of the total number of shares out-standing in Polarcus were traded during the period and more than 194 thousand share transactions were completed in Polarcus shares. At the end of the year 2013, Polarcus had a market capitaliza-tion of NOK 2.4 billion.

Share CapitalAs of 31 December 2013 the issued share capital of Polarcus amounted to USD 10,144,423.58 di-vided into 507,221,179 shares of par value USD 0.02 each. All shares are of the same class and carry equal rights in all respects and each share carries one vote.

1 ABG SUNDAL COLLIER NORGE ASA 63,514,348 12.5%2 ZICKERMAN HOLDING LTD 40,517,476 8.0%3 SKANDINAVISKA ENSKILDA BANKEN AB 34,273,194 6.8%4 ZICKERMAN GROUP LTD 23,178,081 4.6%5 LOCAL TAPIOLA MUTUAL PENSION INSU 21,600,000 4.3%6 VARMA MUTUAL PENSION INSURANCE 18,648,025 3.7%7 SEB PRIVATE BANK S.A. 17,220,790 3.4%8 EUROCLEAR BANK S.A./N.V. (‘BA’) 16,525,548 3.3%9 VERDIPAPIRFONDET DNB NORGE SELEKTI 15,723,662 3.1%

10 GOLDMAN SACHS & CO EQUITY SEGREGAT 11,161,329 2.2%11 BNP PARIBAS SEC. SERVICES S.C.A 11,000,000 2.2%12 SKANDINAVISKA ENSKILDA BANKEN AB 10,933,317 2.2%13 CLEARSTREAM BANKING S.A. 9,812,604 1.9%14 VERDIPAPIRFONDET DNB SMB 9,481,151 1.9%15 BNP PARIBAS SEC. SERVICES S.C.A 8,497,072 1.7%16 JP MORGAN CLEARING CORP. 7,989,160 1.6%17 J.P. MORGAN CHASE BANK N.A. LONDON 5,500,000 1.1%18 THE BANK OF NEW YORK MELLON 4,848,534 1.0%19 STATE STREET BANK & TRUST CO. 4,534,018 0.9%20 BLKRCK GLBL SMALLCAP FD 4,164,891 0.8%

Top 20 Shareholders 339,123,200 66.9%Other shareholders 168,097,979 33.1%Total 507,221,179 100.0%

Top 20 Shareholders as of 31 Dec 2013

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36

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Polarcus Limited and SubsidiariesConsolidated financial statements For the year ended 31 December 2013

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flow

Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Statements

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Consolidated Statement of Comprehensive Income Year ended (In thousands of USD) Notes 31-Dec-13 31-Dec-12 Revenues Contract revenue 5 496,422 495,338 Multi-client revenue 5 33,748 29,759 Other income 2,075 4,171 Total Revenues 532,245 529,268 Operating expenses Vessel operating expenses 23 (290,313) (312,680) Sales, general and administrative costs 24 (30,045) (26,397) Depreciation and amortization 25 (93,795) (91,398) Impairment of vessels 10 - (7,405) Total Operating expenses (414,153) (437,880) Operating profit 118,092 91,388 Share of profit/(loss) from joint ventures 8 (265) 14 Finance costs 26 (80,100) (93,449) Finance income 27 6,348 10,137 Gain on acquisition of joint venture 8 - 3,602 Profit before tax 44,075 11,692 Income tax expense 28 (609) (1,863) Net profit and total comprehensive income 43,466 9,829 Earnings per share attributable to the equity holders during the period (In USD)

- Basic 29 0.086 0.020 - Diluted 29 0.086 0.020

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Consolidated Statement of Financial Position

(In thousands of USD) Notes 31-Dec-13 31-Dec-12

ASSETS Non-Current Assets Property, plant and equipment 6 972,802 999,825 Multi-client project library 7 88,704 49,499 Investment in joint ventures 8 2,483 2,748 Intangible assets 9 36,739 418 Total Non-Current Assets 1,100,728 1,052,491 Current Assets Assets held-for-sale 10 - 128,003 Other current assets 11 91,017 63,556 Accounts receivable 42,404 76,440 Restricted cash 12 20,471 8,107 Cash and bank 13 60,045 43,828 Total Current Assets 213,937 319,933 TOTAL ASSETS 1,314,665 1,372,424 EQUITY and LIABILITIES Equity Issued share capital 14 10,144 10,144 Share premium 14 501,843 501,827 Other reserves 16 38,533 40,868 Retained earnings/(loss) (22,942) (71,432) Total Equity 527,578 481,407 Non-Current Liabilities Senior bonds 17 93,266 98,267 Convertible bonds 18 109,535 103,800 Long-term finance lease 19 154,333 160,266 Other long-term debt 20 277,262 294,361 Total Non-Current Liabilities 634,397 656,694 Current Liabilities Bond loans current portion 17, 18 37,110 53,495 Long-term finance lease current portion 19 5,897 16,973 Other long-term debt current portion 20 41,656 73,992 Other accruals and payables 21 29,518 45,674 Accounts payable 38,509 44,188 Total Current Liabilities 152,690 234,323 TOTAL EQUITY and LIABILITIES 1,314,665 1,372,424

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Consolidated Statement of Cash Flows Year ended (In thousands of USD) Notes 31-Dec-13 31-Dec-12 Cash flows from operating activities Profit for the period 43,466 9,829 Adjustment for: Depreciation and amortization 25 93,795 91,398 Impairment of vessels 10 - 7,405 Employee share option expense 14 2,689 2,887 Interest expense 26 76,080 80,807 Interest income 27 (204) (388) Effect of currency (gain)/loss (5,306) 4,571 Gain on acquisition of joint-venture 8 - (3,602) Share of (profit)/loss from joint venture 8 265 (14) Working capital adjustments: Decrease/(Increase) in current assets 6,575 (25,898) Increase/(Decrease) in trade and other payables and accruals (26,092) 38,594

Net cash flows from operating activities 191,268 205,590 Cash flows from investing activities Decrease/(Increase) in restricted cash 12 (12,365) 15,577 Payments for property, plant and equipment (50,368) (321,564) Proceeds from sale of assets held-for-sale 10 128,003 - Payments for multi-client project library 7 (47,927) (37,730) Payments to acquire intangible assets 9, 20 (14,130) (186) Investment in joint ventures 8 - (2,800) Acquisition of subsidiary net of cash received 8 - (4,846) Net cash flows (used in)/from investing activities 3,213 (351,549) Cash flows from financing activities Proceeds from the issue of ordinary shares 14 16 38,935 Net proceeds from the issue of senior bonds 17 93,083 - Repayment of bond loans 17, 18 (115,653) (55,000) Net proceeds from loan borrowings 20 - 266,939 Repayment of lease liabilities 19 (17,009) (21,217) Repayment of other long-term debt 20 (75,329) (22,762) Interest paid (58,777) (65,715) Other finance costs paid 26 (7,348) (7,234) Interest received 27 204 388 Net cash flows from/(used in ) financing activities (180,814) 134,335 Effect of foreign currency revaluation on cash 2,550 (1,864) Net increase/(decrease) in cash and cash equivalents 16,217 (13,488) Cash and cash equivalents at the beginning of the period 43,828 57,316

Cash and cash equivalents at the end of the period 60,045 43,828

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Consolidated Statement of Changes in Equity For the year ended 31 December 2013 Number of

Shares Issued Share capital

Share Premium

Other Reserves

Retained Earnings/

(Loss) Total

Equity (In thousands of USD except for number of shares) Balance as of 1 January 2013 507,196,179 10,144 501,827 40,868 (71,432) 481,407 Total comprehensive income for the year - - - 43,466 43,466 Employee share options - - 2,689 - 2,689 Other movements* - - (5,024) 5,024 - Issue of share capital 20 March 2013 at NOK 3.58 (USD 0.62) per share 25,000 1 16 - - 17

Balance as of 31 December 2013 507,221,179 10,144 501,843 38,533 (22,942) 527,578 *Other movements represent the equity component of USD 35 million convertible bonds repaid upon maturity on 30 July 2013 (refer to Note 16 and Note 18.1).

For the year ended 31 December 2012 Number of

Shares Issued Share

capital Share

Premium Other

Reserves Retained

Earnings/ (Loss)

Total Equity (In thousands of USD except for number

of shares) Balance as of 1 January 2012 467,196,179 9,344 463,692 37,980 (81,261) 429,756 Total comprehensive income for the year - - - 9,829 9,829 Employee share options - - 2,888 - 2,888 Issue of share capital 20 March 2012 at NOK 5.80 (USD 1.01) per share 40,000,000 800 39,658 - - 40,458

Transaction costs on issue of shares - (1,523) - - (1,523) Balance as of 31 December 2012 507,196,179 10,144 501,827 40,868 (71,432) 481,407

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Notes to the Consolidated Financial Statements

1 General information The consolidated financial statements of Polarcus Limited (the “Company”) and its subsidiaries (together the “Group”) for the year ended 31 December 2013 were authorized for issue in accordance with a resolution of the Board of Directors on 27 March 2014.

Polarcus Limited is a pure play marine geophysical company with a pioneering environmental agenda, specializing in high-end towed streamer data acquisition from Pole to Pole.

Polarcus Limited is incorporated in the Cayman Islands with its registered office at Walker House, 87 Mary Street, George Town, Grand Cayman, Cayman Islands. The Group has its main administration office in Dubai, United Arab Emirates which is the domicile of the Group.

The Group has seven high end 3D vessels, Polarcus Nadia, Polarcus Naila, Polarcus Asima, Polarcus Alima, Polarcus Amani, Polarcus Adira and Vyacheslav Tikhonov that are currently operational. Polarcus Samur, one of the vessels in the Group’s fleet, was sold to Turkish Petroleum Corporation (“TPAO”) on 11 February 2013. Refer to Note 10 Assets held-for-sale for details.

1.1 Significant transactions and events at a glance including subsequent events On 11 February 2013 the Group completed the sale of Polarcus Samur for USD 133.5 million, less selling costs of USD 5.5 million. Refer to Note 10 Assets held-for-sale for details.

On the same date as the sale of Polarcus Samur, the Group repaid in full its outstanding liability of USD 45 million under Tranche 5 of the Fleet Bank Facility. Refer to Note 20 Other long-term debt for details.

On 13 February 2013, subsequent to the sale of Polarcus Samur, the Group made an early repayment of USD 20 million of the USD 80 million 12.5% senior secured callable bonds. Refer to Note 17 Senior bonds for details.

On 25 March 2013 the Group paid USD 8 million for the full and early settlement of the finance lease liability to Sercel Inc. Refer to Note 19 Long-term finance lease.

On 7 June 2013 the Group issued a new USD 95 million unsecured senior bond bearing an interest rate of 8% per annum and a maturity date of five years. Refer to Note 17 Senior bonds for details.

On 21 June 2013 the Group repaid in full the remaining USD 60 million of the 12.5% senior secured callable bonds. Refer to Note 17 Senior bonds for details.

On 27 June 2013 the Group entered into an addendum to the sale and lease-back financing arrangements dated 30 June 2008 to reduce the lease rates for Polarcus Nadia and Polarcus Naila. Refer to Note 19 Long-term finance lease for details.

On 30 July 2013 the Group repaid in full the USD 35 million 8.5% convertible bonds upon maturity. Refer to Note 18 Convertible bonds for details.

On 14 August 2013 the Group bought back NOK 4 million of the NOK 230 million 14% bond. The repurchased bonds were deleted from the registry on 29 October 2013. Refer to Note 17 Senior bonds.

On 3 October 2013 the Group purchased a worldwide license related to steering technology for marine seismic streamers for a total price of USD 40 million payable in three equal instalments over two years. Refer to Note 9 Intangible assets and Note 20 Other long-term debt for details.

2 Summary of significant accounting policies The principle accounting policies applied in the preparation of these consolidated financial statements are set out below.

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2.1 Basis of preparation These consolidated financial statements have been prepared on a historical cost basis with some exceptions, as detailed in the accounting policies below. The consolidated financial statements are presented in USD and all values are rounded to the nearest thousand (USD 000) except where otherwise indicated.

2.2 Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

2.3 Changes in accounting policies

2.3.1 Current changes in accounting policies and disclosures The accounting policies adopted by the Group are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2013:

IAS 1 Presentation of Financial Statements – Presentation of items in other comprehensive income

IAS 28 Investments in Associates and Joint Ventures – Requirement to use equity method for accounting for investments in joint ventures

IFRS 7 Financial Instruments: Disclosures – Set-off arrangements

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements – Special purpose entities

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

The adoption of the standards and interpretations listed above had no significant impact on the financial performance or position of the Group.

IFRS 11 Joint Arrangements

This standard replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities–Non-monetary Contributions by venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. All entities meeting the definition of a joint venture must be accounted for using the equity method. The standard became effective on 1 January 2013.

The Group applies IFRS 11 retrospectively for its interests in joint ventures from 1 January 2013. IFRS 11 requires the Group to recognize its interests in joint ventures as investments to be accounted for using the equity method. Accordingly, the Group’s investment in Polarcus Nigeria Limited (an entity jointly controlled by the Group) is accounted for using the equity method. All comparative numbers have been restated accordingly. Prior to the application of IFRS 11, the Group used the proportionate consolidation method for its investments in joint ventures. Refer to Note 2.4.2 Interest in joint ventures and Note 8 Investment in joint ventures.

2.3.2 Future changes in accounting policies and disclosures Certain new standards, amendments and interpretations of existing standards have been published that are mandatory for the Group’s accounting period beginning on 1 January 2014 or later periods but which the Group has not early adopted. The new standards, amendments and interpretations relevant for the group are listed below:

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IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the two first phases of IASB’s work on the replacement of IAS 39, which are classification and measurement of financial assets and financial liabilities and hedge accounting. Third and last phase of this project will address amortized cost measurement and impairment of financial assets. The mandatory effective date of IFRS 9 has been removed to allow sufficient time for entities to prepare to apply the new Standard. The IASB have decided that a new date should be decided upon when the entire IFRS 9 project is closer to completion.

The Group will evaluate potential effects of IFRS 9 as soon as the final standard, including all phases, is issued. Annual improvements

The IASBs annual improvement project 2010–2012 and improvement project 2011–2013 includes amendments to a number of standards and will become effective for accounting periods beginning 1 January 2015. There are no amendments that are expected to have any significant impact on the Group’s the financial performance or position.

2.4 Consolidation

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

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value at the acquisition date and the amount of any non-controlling interest in the acquiree. Acquisition costs incurred are expensed and included as sales, general and administrative costs. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in sales, general and administrative costs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as of the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or a liability will be recognized in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

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After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated but considered as an impairment indicator of the asset transferred.

2.4.2 Interest in joint ventures A joint venture is a type of arrangement whereby the ventures have a contractual agreement that establishes joint control over the economic activities of a venture. The arrangement requires unanimous agreement for financial and operating decisions among the ventures.

The Group recognizes its interest in joint ventures using the equity method. Under the equity method, the investment in the joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the joint venture since the acquisition date. The income statement reflects the Group’s share of the results of operations of the joint venture. When there has been a change recognized directly in the equity of the joint venture, the Group recognizes its share of any changes, when applicable, in the statement of changes in equity.

Unrealized gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the Group’s interest in the joint venture.

The Group’s share of profit or loss of a joint venture is shown on the face of the income statement and represents profit or loss after tax and non-controlling interests in the subsidiaries of the joint venture.

The financial statements of the joint venture are prepared for the same reporting period as the Group. The joint venture uses the same accounting policies as the Group.

After application of the equity method, the Group determines whether there is any objective evidence that the investment in the joint venture has impaired. If there is such evidence, the Group compares the recoverable amount of the joint venture to its carrying value in order to assess whether there is an impairment.

Upon loss of significant influence over the joint venture, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in the Group’s income statement.

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2.5 Foreign currency translation

2.5.1 Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in USD, (the presentation currency). The parent and all the subsidiaries have USD as their functional currency.

2.5.2 Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges.

Translation differences on non-monetary financial assets and liabilities such as equity instruments held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss.

2.6 Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group’s activities. Revenue is presented net of discounts, rebates, returns and sales taxes or duty. The Group defers the unearned component of payments received from customers for which the revenue recognition requirements have not been met.

The Group’s revenue recognition policy on different types of revenue is described below:

2.6.1 Sales of Multi-Client projects library Pre-funding

Revenue secured prior to the completion of data processing and receipt of all deliverables of a multi-client project is recognized as pre-funding revenue. In return for the pre-funding, the customer typically gains the ability to direct or influence the project specifications and access data as it is being acquired at discounted prices. The Group recognizes pre-funding revenue as the services are performed on a proportional performance basis provided that other revenue recognition criteria are met. Progress is measured in a manner generally consistent with the physical progress of the project, and revenue is recognized based on the ratio of the project's progress to date.

Late sales

Revenue secured after completion of all data processing and receipt of all deliverables of a multi-client project is recognized as late sales. The Group grants a license to a customer, which entitles the customer to have access to a specifically defined portion of the multi-client project library. The customer's license payment is fixed and determinable and typically is required at the time that the license is granted. The Group recognizes revenue for late sales when the customer executes a valid license agreement and has received the underlying data or has the right to access the licensed portion of the data and collection is reasonably assured.

2.6.2 Proprietary sales/contract sales The Group performs seismic services under contract for a specific customer, whereby the seismic data is owned by that customer. The Group recognizes proprietary/contract revenue as the services are performed on a proportionate performance basis over the term of each contract. Progress is measured in a manner generally consistent with the physical progress of the project, and revenue is recognized based on the ratio of the project's progress to date, provided that all other revenue recognition criteria are satisfied.

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2.6.3 Other services Revenue from other services is recognized as the services are performed, provided all other recognition criteria are satisfied.

2.7 Property, Plant and Equipment Property, Plant and Equipment is recorded at cost less accumulated depreciation and any impairment charge. Cost includes expenditure that is directly attributable to the acquisition, construction or installation of the items, including borrowing costs capitalized according to the Group’s policy which is described further below.

2.7.1 Useful life and depreciation Depreciation is calculated on a straight-line basis over the useful life of the asset once the asset is ready for use. The estimated useful life of major assets is as follows:

Seismic vessels 30 Years

Seismic equipment 3-30 Years

Maritime equipment 5-30 Years

Furniture and fixtures 3-5 Years

Office IT equipment 3-5 Years

Each component of a vessel with a cost significant to the total cost is separately identified and depreciated on

a straight-line basis over that component’s useful life, less residual value. Subsequent expenditures and major renovations and inspections are included in the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred. Drydocking and classification costs for vessels are capitalized and depreciated over the period until the next expected drydocking, normally 30 months. When vessels are acquired or constructed, a proportion of the acquisition cost is capitalized as drydocking and depreciated over the period until next expected drydocking.

The assets’ residual values and useful lives are reviewed at least annually and subsequently adjusted if appropriate. Adjustments, where applicable, are made on a prospective basis. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are presented net in the income statement.

2.7.2 Vessels under construction Vessels under construction are carried at cost, less any impairment loss. Cost includes project related overheads capitalized and for qualifying assets and the borrowing costs capitalized in accordance with the Group’s accounting policy as described below. Depreciation commences when the vessels are ready for their intended use.

2.8 Multi-client projects library The multi-client projects library comprises seismic surveys to be licensed to customers on a non-exclusive basis. All costs directly incurred in acquiring, processing and otherwise completing seismic surveys are capitalized into the multi-client projects library, including transit costs (moving a vessel from one location to another) and borrowing costs, when capitalization criteria are met. A multi-client project is valued at cost less accumulated amortization, or at recoverable amount, if lower. The Group reviews the multi-client projects library for potential impairment at each balance sheet date.

When establishing amortization rates for the multi-client projects library, management bases its views on estimated future sales of each individual project. Sales estimates are adjusted over time in relation to the development of the market. The principle on which the multi-client project is amortized is based on the

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assumption that the cost of the project will be recoverable by future revenue earned from the future sale of the data licenses. The amortization rate is calculated by dividing the net costs (net book value plus expected future costs) of the project by the expected future revenues from sales of the data licenses. Each project is placed into one of the amortization categories with 5% intervals ranging from 40-95%. A project remains in the same amortization category unless subsequent changes to the amount of expected future revenue from a project would result in a different amortization rate becoming appropriate, in which case the project is moved to the relevant category.

The Group also applies a minimum amortization policy. This policy specifies the maximum net book value allowed for a project as a percentage of its original book value at the end of each calendar year following completion. All surveys have a 5-year amortization profile starting in the year after completion, as follows:

Year after survey completion Maximum net book value Year 0 * 100%

Year 1 80% Year 2 60% Year 3 40% Year 4 Year 5

20% 0%

* Year 0 is the calendar year in which the project is completed.

2.9 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the income statement in the period in which the expenditure is incurred.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an impairment indication. The amortization period and method for an intangible asset with a finite useful life are reviewed at least at the end of each year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets is recognized in the income statement under ‘Depreciation and amortisation’.

2.10 Assets held for sale Non-current assets are classified as held-for-sale when their carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets and its sale must be highly probable through management’s commitment to the sale. Such assets are measured at the lower of carrying amount and fair value less costs to sell and are presented separately on the face of the consolidated statement of financial position. Comparative amounts are not restated when an asset is classified as held-for-sale.

2.11 Leases The determination whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset(s) or the arrangement conveys a right to use the asset(s), even if that right is not explicitly specified in an arrangement.

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2.11.1 Group as a lessee Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased asset, are capitalized at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in the income statement.

Leased assets are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and lease term.

Operating lease payments are recognized as an expense in the income statement on a straight line basis over the lease term.

2.11.2 Group as a lessor Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

2.12 Borrowing costs Borrowing costs are recognized as an expense in the period in which they are incurred, except for borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs are capitalized as part of the cost of that asset.

To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is determined as the actual borrowing costs incurred from the borrowing during the period less any investment income on the temporary investment of those borrowings.

To the extent that funds are borrowed generally and used for the purpose of obtaining qualifying assets, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on those assets. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period does not exceed the amount of borrowing costs incurred during that period.

2.13 Transit costs Transit costs are costs related to moving a vessel from one location to another. Transit costs are capitalized when it is probable that future economic inflows from the project(s) to which the vessel transits are sufficient to recover the costs of transit. If the project(s) is not able to recover all of the costs which could be capitalized or deferred, only the costs that are recoverable are capitalized or deferred. The transit costs related to multi-client projects are capitalized as part of the multi-client projects library. Transit costs on exclusive surveys are deferred and charged to expense based upon the percentage of completion of the project.

2.14 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Cash and cash equivalents that are restricted for the Group’s use are disclosed separately in the consolidated balance sheets and are classified as current or non-current depending on the nature of the restrictions.

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2.15 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

2.16 Provisions A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable (i.e. more likely than not) that there is an outflow of resources embodying economic benefits and a reliable estimate can be made of the amount of the obligation.

2.17 Employee benefits

2.17.1 Pension plan The Group has set up a pension scheme for majority of its employees under which the Group on a monthly basis contributes 8% of an employee’s base salary to the pension fund. No mandatory contribution is required from the employees. The amount contributed to the scheme is ring-fenced in favor of the employees through a trust. The vesting period of the fund is 5 years and each applicable employee is enrolled into the scheme at the end of his/her probation period. The employees may contribute own funds to the scheme and the Group will match such contributions with an additional maximum 2%.

For employees who are not enrolled into the above pension scheme, the Group recognizes a provision for pensions payable to the employees based on the contractual obligation between each employee and the Group. The accrued pension liability calculated based on the contractual obligation varies from 21 days to 1 month’s basic salary for each year completed pro rata based on date of joining of each employee.

2.17.2 Bonus plans The Group recognizes a provision for bonuses where bonuses are a contractual obligation or where there is a past practice that has created a constructive obligation.

The Group recognizes a liability and an expense for bonuses prescribed in the employment contracts.

2.17.3 Share-based compensation The Group has different share option plans. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted measured at grant date.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

2.18 Derivative financial instruments and hedging The Group uses derivative financial instruments to reduce risk exposure related to fluctuations in foreign currency rates and interest rates. Such derivative financial instruments are initially recognized in the consolidated balance sheet at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting and any ineffective hedges are taken directly to the income statement.

The Group applies either fair value or cash flow hedge accounting when a transaction meets the specified criteria. To qualify for hedge accounting, the instrument should be designated as a hedge at inception of a hedge relationship. At the time a financial instrument is designated as a hedge, the Group documents the relationship between the hedging instrument and the hedged item. Documentation includes risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. Accordingly, the Group formally assesses, both at the inception of the hedge and on an ongoing basis, whether the hedging derivatives have been “highly effective”

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in offsetting changes in the fair value or cash flows of the hedged item. Hedge accounting will be discontinued when (a) the Group determines that a derivative is not, or has ceased to be, highly effective as a hedge, (b) the derivative expires, or is sold, terminated or exercised, (c) the hedged item matures or is sold or repaid, or (d) a forecast transaction is no longer deemed highly probable.

2.18.1 Fair value hedges The Group applies fair value hedges whilst hedging the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment (except for foreign currency risk).

The change in fair value of the hedging instrument is recognized in the consolidated income statement. The change in fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognized in the consolidated income statement. When an unrecognized firm commitment is designated as a hedged item, the subsequent cumulative change in fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding gain or loss recognized in the consolidated income statement.

2.18.2 Cash flow hedges Cash flow hedging is applied to hedge the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment.

The effective portion of the gain or loss on the hedging instrument is recognized directly in other comprehensive income (OCI), while any ineffective portion is recognized immediately in the consolidated income statement. Amounts recorded in OCI are transferred to the consolidated income statement when the hedged transaction affects profit or loss. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken into OCI are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in OCI are transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognized in OCI remain in OCI until the forecast transaction or firm commitment occurs.

2.19 Financial assets and liabilities Financial assets and liabilities are recognized when the Group becomes party to the contractual obligations of the instrument and are initially recognized at fair value. Financial assets and liabilities are classified as per below.

2.19.1 Financial assets and liabilities measured at fair value in profit or loss This includes the financial assets and liabilities held for trading and financial assets and liabilities measured at fair value upon initial recognition with change in fair value recognized through the consolidated income statement. Subsequent to initial recognition, financial assets and liabilities in this category are measured at fair value at the end of each reporting period with unrealized gains and losses being recognized through profit or loss.

Financial assets and liabilities are classified as held for trading if they are acquired for the purpose of selling in the near future. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains and losses on financial assets held for trading are recognized in profit or loss.

2.19.2 Financial assets and liabilities measured at amortized cost This category is the most relevant for the Group and includes loans and receivables, loans and borrowings, and other non-derivative financial assets and liabilities with fixed or determinable payments that are not quoted in an active market. Financial assets and liabilities in this category are initially recognized at fair value, net of directly attributable transaction costs. After initial measurement financial assets and liabilities in this category

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are subsequently carried at amortized cost using the effective interest rate (EIR) method, less any allowance for impairment. The EIR amortisation is included in finance income for receivables and finance cost for borrowings. Losses arising from impairment of accounts receivable are recognized in operating expenses.

Convertible bonds

Convertible bonds are separated into a debt liability and an equity component based on the terms of the contract.

On issuance of the convertible bonds, the fair value of the debt liability excluding conversion option is measured at the fair value of expected cash flows at inception and is recorded under non-current liabilities in the balance sheet. The debt liability component is amortized to the redemption value over the bond life, accruing interest at the effective rate. The rest of the convertible bond issue proceeds are recorded as equity.

Transaction costs are apportioned between the debt liability and equity components of the convertible bonds based on the allocation of the proceeds of the debt liability and equity components when the instruments are initially recognized.

2.19.3 Financial assets and liabilities measured at fair value through other comprehensive income This category includes financial assets and liabilities that are non-derivatives and are either designated as available-for-sale or not classified in any of the other categories. After initial measurement, financial assets and liabilities in this category are measured at fair value with unrealized gains or losses being recognized in other comprehensive income. When the asset or liability is disposed of, the cumulative gain or loss previously recorded in other comprehensive income is recognized in profit or loss.

The fair values of quoted financial assets and financial liabilities are based on current bid/ask prices. If the market for a financial instrument is not active, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis and option pricing models.

The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity instruments designated as available-for-sale, a significant or prolonged decline in the fair value of the instrument below its cost is considered as an indicator that the instrument is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit and loss – is removed from shareholders’ equity and recognized in profit or loss. Impairment losses recognized in profit and loss on equity instruments are not reversed through the profit or loss.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value through the profit or loss.

2.20 Impairment of non-financial assets At each reporting date, the Group assesses whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash Generating Unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. When the carrying amount of an asset does not yet include all the cash outflows to be incurred before it is ready for use or sale, the estimate of future cash outflows includes an estimate of any further cash outflow that is expected to be incurred before the asset is ready for use or sale.

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2.21 Earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For diluted earnings per share, diluted potential ordinary shares are determined independently for each period presented. When the number of ordinary shares outstanding changes (e.g. share split) the weighted average number of ordinary shares outstanding during all periods presented is adjusted retrospectively.

2.22 Consolidated statement of cash flows The Group’s consolidated statement of cash flows is prepared using the indirect method. Cash flows from operating activities are incorporated as a part of the cash flow statement and the cash flows are divided into operating activities, investing activities and financing activities. In the cash flow statement the net profit is adjusted for non-cash items, for example depreciation and non-cash movements in accounts payable and receivables. Any cash flows that have been recorded as part of the net profit but which are investing or financing in nature are removed from operating cash flows and presented as part of investing or financing cash flows. All amounts presented in both the investing cash flows and financing cash flows sections of the cash flow statement are pure cash flows only.

2.23 Taxation Income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax is provided using the liability method and temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

3 Financial risk

3.1 Financial risk management The Group’s principal financial liabilities are loans and borrowings, and trade and other payables. The main purpose of the loans and borrowings is to finance the Group’s investments in property, plant and equipment, plus provide support for its operations. The Group’s principal financial assets are trade and other receivables, and cash and bank deposits, which are mainly derived directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks and the risk management program focuses on minimizing potential adverse effects on the Group’s financial performance and position. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken.

3.1.1 Financial market risk Financial market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The market price risks that the Group is exposed to are interest rate risk and currency risk.

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Foreign currency risk

The Group’s financial assets and liabilities that are exposed to the risk of changes in foreign exchange rates relates primarily to the following:

(In thousands of USD) 31-Dec-13 31-Dec-12 Financial assets Cash and bank NOK 5,630 380 GBP 1,424 552 EUR 990 667 NGN 2,153 102 Other foreign currencies 586 582 Total cash and bank denominated in foreign currencies 10,783 2,283 Cash and bank denominated in USD 49,262 41,545

Accounts receivable

RUB 14,606 - Total accounts receivable denominated in foreign currencies 14,606 - Accounts receivable denominated in USD 27,798 76,440

Financial liabilities

NOK 37,110 39,922 Total loans and borrowings denominated in foreign currencies 37,110 39,922 Loans and borrowings denominated in USD 681,950 761,232

The accounts receivable balance in RUB in the table above relates to amounts owed from one customer and on extended credit terms.

In addition to the financial assets and liabilities in the above, the Group had some accounts receivable, other current financial assets and accounts payable denominated in foreign currencies at 31 December 2013 and under standard credit terms (where applicable). Due to the short-term nature of these financial assets and liabilities the foreign currency risk is considered low.

The exposure of the Group’s financial assets and financial liabilities to changes in foreign exchange rates due to reasonably possible changes in foreign exchange rates against USD, with all other variables held constant, is not material on the Group’s profit before tax.

The Group’s activities are global and the foreign currency risk related to its operating activities may change from year-to-year depending on the different jurisdictions the Group operates in. In general, the majority of operating revenues and costs are denominated in USD. Approximately 15% in aggregate of the Group’s operating costs are in EUR, GBP and NOK.

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s loans and borrowings with floating interest rates. The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

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(In thousands of USD) 31-Dec-13 31-Dec-12 Total loans and borrowings 719,060 801,154 Loans and borrowings at variable interest rates 61,452 97,992 Proportion of loans and borrowings at variable interest rates 9% 12%

The exposure of the Group’s loans and borrowings at variable interest rates to reasonably possible changes in market interest rates, with all other variables held constant, is not material on the Group’s profit before tax.

The interest rate and maturity of the Group’s loans and borrowings are as follows:

(In thousands of USD) Effective

interest rate Maturity 31-Dec-13 31-Dec-12

14% Senior unsecured bonds (Note 17.2) 16.5% Nov-14 37,110 39,922 2.875% convertible bonds (Note 18.2) 9.1% Apr-16 109,535 103,800 Finance leases (Note 19) 12.2% Q4 2019 160,230 165,901 Fleet bank facility Tranche 1* 8.0% Aug-22 39,656 43,954 Fleet bank facility Tranche 1 – variable* 5.8% Aug-22 18,304 20,389 Fleet bank facility Tranche 2 – variable* 5.3% Mar-23 43,147 47,846 Fleet bank facility Tranche 3* 6.3% Mar-24 97,249 106,456 Fleet bank facility Tranche 4* 6.4% Jun-24 96,873 106,003 Fleet bank facility Tranche 5 – variable* 5.7% Jun-24 - 43,705 8% senior unsecured bonds (Note 17.3) 8.7% Jun-18 93,266 - Liability for patent rights (Note 20.2) 8.0% Oct-15 23,689 - Finance lease for streamers (Note 19) 8.0% Q2 2013 - 11,339 8.5% convertible bonds (Note 18.1) 13.9% Jul-13 - 34,047 12.5% Senior secured bonds (Note 17.1) 14.4% Oct-15 - 77,792 Total interest bearing debt 719,059 801,154

*Refer to Note 20.1 Fleet bank facility.

3.1.2 Credit risk The Group is exposed to credit risk from its operating activities, primarily its accounts receivable, accrued revenue and from advance payments made to suppliers, and from its cash and cash equivalents deposited with banks.

The Group provides its services only to recognized, credit worthy clients who are primarily multinational oil and gas companies, including companies owned in whole or in part by governments. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

At 31 December 2013 the Group’s receivables from customers were owed by a total of 14 different customers (2012 – 16 customers) and 3 (2012 – 6) customers owed more than USD 5 million, accounting for 74% (2012 – 84%) of the total receivables from customers.

For banks and financial institutions, only independently rated parties with a minimum rating of investment grade or higher are accepted by the Group. Credit risk from balances with banks and financial institutions is managed by the Group’s senior management.

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The Group’s maximum exposure to credit risk for the components of the balance sheet is as follows:

(In thousands of USD) 31-Dec-13 31-Dec-12 Receivables from customers Accounts receivable 42,404 76,440 Accrued revenue* 61,110 20,196 Total receivables from customers 103,514 96,636 Cash and short-term deposits 80,516 51,935 Advance payments to suppliers* 445 4,277 Total 184,474 152,847 *included within 'Other current assets' in the consolidated statement of financial position.

3.1.3 Liquidity risk The Group’s objective on liquidity risk management is to maintain sufficient cash and have access to funding through an adequate amount of committed credit facilities. The Group monitors its risk of shortage of funds using a liquidity planning tool and senior management regularly review the forecast of the Group’s liquidity reserve on the basis of expected cash flows.

The following table shows the maturity profile of the Group’s financial liabilities based on contractual payments. The amounts disclosed in the table are undiscounted cash flows. For the convertible bonds it is assumed that no bond holders will exercise their conversion rights.

(In thousands of USD) Less than 1 Year

Between Between Over 5 Years Total 1 - 2

Years 3 - 5

Years Senior bond repayments (Note 17) 37,041 - 95,000 - 132,041 Interest payments on senior bonds 12,786 15,200 11,400 - 39,386 Convertible bond repayments (Note 18) - 125,000 - 125,000 Interest payments on Convertible bonds 3,594 5,391 - - 8,984 Finance lease payments (Note 19) 22,995 46,053 178,911 - 247,959 Other long term debt repayments (Note 20) 41,718 72,920 90,862 121,653 327,154 Interest payments on other long term debt 17,994 28,673 28,806 15,134 90,608 Accounts payable 38,509 - - - 38,509 Trade and Other payables 24,464 - - - 24,464 Total 199,102 293,237 404,978 136,788 1,034,105

The Group’s fleet of seven seismic vessels, multi-client project library and seismic management services are expected to generate revenues to support the Group’s operations and service the debts.

3.2 Capital management For the purpose of the Group’s capital management, capital includes all equity attributable to the equity holders of the parent company. The primary objective of the Group’s capital management is to maximise shareholder value.

In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to its loans and borrowings that define capital structure requirements. The Company is subject to dividend restrictions under certain of its financing arrangements. Due to these dividend restrictions and the current phase of the Group’s growth and activities, the Group will not propose any dividends to the shareholders for the fiscal year 2013.

The covenants of some of the financing arrangements require the Group to maintain minimum absolute levels of equity as well as minimum book equity ratios and a minimum free cash balance. The Group is also subject to rolling covenants regarding multi-client capacity allocation and pre-funding requirements, as well as minimum debt service levels. Senior management monitors the Group’s performance against these covenants on an ongoing basis. Should they foresee a reasonably certain breach of any of the covenants, the Group would ask the financing parties for a temporary relaxation in such covenant requirements and the Group

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believes that the financing parties would accept such requests. In addition to these covenants, the Company is also subject to certain dividend restrictions.

The Group considers both capital and net interest bearing debt as relevant components of funding, and hence, part of its capital management. The Group aims to have funding of a level appropriate to its objectives, strategy and risk profile. The Group monitors its capital structure on the basis of total equity to total assets ratio and at 31 December 2013 the Group had a book equity ratio of 40% (2012 – 35%).

The Group calculates its net interest bearing debt as its total loans and borrowings less free cash and any restricted cash balances relating to loans and borrowings. The Group’s net interest bearing debt at 31 December 2013 was USD 644 million (2012 – USD 750 million).

4 Critical accounting estimates, assumptions and judgments The preparation of the Group’s consolidated financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities in future periods.

Judgments

In the process of applying the Group’s accounting policies, management must sometimes make judgments which may have a significant impact on the amounts recognized in the consolidated financial statements. During the year there were no key judgements made by management that had a significant impact on the financial statements.

Estimates and assumptions

Certain amounts included in or affecting the financial statements and related disclosure must be estimated, requiring the Group to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. A ‘‘critical accounting estimate’’ is one which is both important to the portrayal of the Group’s financial condition and results and requires management’s most difficult, subjective or complex estimates, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Management evaluates such estimates on an ongoing basis, based upon historical results and experience, consultation with experts, trends and other methods considered reasonable in the particular circumstances, as well as forecasts as to how these might change in the future.

The following is a summary of estimates that could have a material effect on the Group’s financial statements.

4.1 Assessment of impairment The Group assesses its property, plant & equipment and intangible assets for possible impairment upon the occurrence of impairment indicators. At the yearend the market capitalization of the Group was below its equity book value, which is an impairment indicator, and so an impairment test was performed. As a result of the impairment tests no impairment was recorded as the recoverable amounts of the assets were higher than their carrying values. The recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use.

The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the forecast and budget for the next five years and do not include significant future investments that will enhance the asset’s performance. The recoverable amount is sensitive to the discount rate used as well as the expected future cash inflows and the growth rate for extrapolation purposes. Estimating future cash flows requires management to make estimates about forecasts of future revenues and costs related to the assets subject to review. These forecasts are uncertain as they require assumptions about demand for Group’s products and services, future market conditions and future technological developments. Significant and unanticipated changes in these assumptions could require a provision for impairment in a future period.

The recoverable amount of the vessels as at 31 December 2013, based on the fair value less costs to sell, was USD 1,091 million, or USD 164 million more than their carrying value. The market values were obtained

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from two independent valuers and the recoverable amount is based on an average of the two valuations. Costs to sell were assumed to be 4.1% of the market value, which is the rate of sales costs incurred in the sale of Polarcus Samur in the year. The recoverable amount of the vessels and seismic equipment, and the streamer steering license as at 31 December 2013, based on a value in use calculation was USD 1,924 million, or USD 896 million more than the carrying values of those assets. The pre-tax discount rate applied to the cash flow projections is 11.47%, which is based on the Group’s WACC. The growth rate used to extrapolate the cash flows is 2% for revenues and vessel operating cost cash flows, and 2.5% for all other cash outflows.

4.2 Depreciation and amortization Depreciation of property, plant and equipment and amortization of intangible assets are based on management’s estimates of the expected useful lives and estimated residual values at the end of an asset’s useful life. These estimates are subject to change based on changes in the market conditions including technological development, changes in the extent or manner of use of an asset and strategic considerations.

4.3 Amortization of the multi-client projects library In determining the annual amortization rates applied to the multi-client projects library, management considers expected future sales and market developments and past experience. The estimates of future sales depend on variables such as political risk, license periods, geographic location, general economic conditions, etc. Changes in these variables may potentially affect the estimated future sales and the amortization rates significantly from year to year.

To the extent that such revenue estimates prove to be higher than actual revenue, for example due to reliance on too optimistic assumptions, the Group’s subsequent operations will reflect lower profitability resulting from increased amortization rates applied to the multi-client projects library in later years, or from the multi-client projects library being subject to minimum amortization and/or impairment.

5 Segment information Effective 1 January 2013 the chief operating decision maker of the Group reviews Proprietary contracts and Multi-client as separate operating segments. As these two segments meet the aggregation criteria as prescribed under IFRS 8 Operating segments, they are combined into one segment called ‘Marine’.

Other business activities of the Group including bareboat charter and management services are reported under ‘Other’. The Group’s general administration overheads are also included under ‘Other’.

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Year ended 31-Dec-2013 Year ended 31-Dec-2012 (In thousands of USD) Marine Other Total Marine Other Total Revenues Proprietary contracts* 454,171 - 454,171 468,579 - 468,579 Multi-client prefunding 31,567 - 31,567 14,704 - 14,704 Multi-client late sales 2,182 - 2,182 15,055 - 15,055 Bare boat charter (Operating lease)* - 25,368 25,368 - 25,070 25,070

Management fees* - 16,883 16,883 - 1,689 1,689 Other income - 2,075 2,075 - 4,171 4,171 Total Revenues 487,919 44,326 532,245 498,338 30,930 529,268 Operating costs (288,801) (31,557) (320,358) (323,212) (15,865) (339,077) EBITDA 199,118 12,769 211,887 175,126 15,065 190,191 Depreciation and amortization (69,051) (8,219) (77,271) (67,952) (8,236) (76,188)

Multi-client amortization (16,524) - (16,524) (15,210) - (15,210) Impairments - - - (7,405) - (7,405) Operating profit (EBIT) 113,542 4,549 118,091 84,559 6,829 91,388 Net financial expense - (74,017) (74,017) - (79,696) (79,696) Profit/(loss) before tax 113,542 (69,467) 44,075 84,559 (72,867) 11,692

*Disclosed as ‘Contract revenue’ in the consolidated statement of comprehensive income.

Year ended 31-Dec-2013 Year ended 31-Dec-2012 (In thousands of USD) Marine Other Total Marine Other Total Total assets 1,195,910 118,755 1,314,665 1,247,454 124,970 1,372,424 Investments in joint ventures 2,483 - 2,483 2,748 - 2,748

Cash investments in long-term assets* 112,425 - 112,425 359,480 - 359,480

*Includes investments in property, plant and equipment, multi-client library and intangible assets.

5.1 Geographic information The Group’s operating revenues earned from external customers worldwide are grouped as per below based on the territory of services provided:

Years ended (In thousands of USD) 31-Dec-13 31-Dec-12 Africa 112,833 114,673 Americas 139,547 40,040 Asia 155,846 157,180 Europe 121,944 213,204 Total revenue 530,170 525,097

At the end of the period reported, the property, plant and equipment were geographically located as per below:

(In thousands of USD) 31-Dec-13 31-Dec-12 Africa 404,200 426,257 Americas 161,261 164,726 Asia 288,419 279,093 Europe 118,921 129,749 Total 972,802 999,825

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The Group had seven vessels in operation during the year ended 31 December 2013 and included in the property, plant and equipment as of 31 December 2013 (8 vessels as of 31 December 2012). These vessels were located in different jurisdictions due to the location of the contracts. Other non-current assets included in the property, plant and equipment are furniture, fixtures and office equipment all of which are located at the Group’s office in Dubai, United Arab Emirates.

5.2 Revenues from key customers During the year ended 31 December 2013 the Group provided its services to 37 different customers worldwide (35 during year 2012). Revenue earned from the largest two of these customers amounted to 25% of the Group’s total operating revenue earned during the year.

Years ended (In thousands of USD) 31-Dec-13 31-Dec-12 Customer 1 71,340 73,575 Customer 2 58,858 66,626 Other customers 399,972 384,896 Total revenue 530,170 525,097

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6 Property, plant and equipment (In thousands of USD)

Seismic vessels and equipment

Office equipment Total

Year ended 31 December 2012 Costs Balance as of 1 January 2012 938,953 2,387 941,339 Additional capital expenditures 351,312 69 351,381 Vessel classified as held–for-sale (146,320) - (146,320) Disposals (6,615) - (6,615) Balance as of 31 December 2012 1,137,329 2,455 1,139,785 Depreciation and impairments Balance as of 1 January 2012 73,205 1,213 74,417 Depreciation for the period 77,396 546 77,942 Impairment on vessel classified as held–for-sale 7,405 - 7,405 Vessel classified as held–for-sale (18,318) - (18,318) Disposals (1,488) - (1,488) Balance as of 31 December 2012 138,200 1,759 139,959 Carrying amounts As of 1 January 2012 865,748 1,174 866,922 As of 31 December 2012 999,129 697 999,825 Carrying amounts held under finance lease as of 31 December 2012 229,078 - 229,078

Pledged assets as of 31 December 2012 966,559 - 966,559 Year ended 31 December 2013 Costs Balance as of 1 January 2013 1,137,329 2,455 1,139,785 Additional capital expenditures 55,921 727 56,648 Disposals (5,041) - (5,041) Balance as of 31 December 2013 1,188,209 3,182 1,191,392 Depreciation and impairments Balance as of 1 January 2013 138,200 1,759 139,959 Depreciation for the period 79,607 570 80,177 Disposals (1,546) - (1,546) Balance as of 31 December 2013 216,262 2,329 218,590 Carrying amounts As of 1 January 2013 999,129 697 999,825 As of 31 December 2013 971,948 854 972,802 Carrying amounts held under finance lease as of 31 December 2013 178,777 - 178,777

Pledged assets as of 31 December 2013 926,925 - 926,925

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7 Multi-client projects library Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Balance at 1 January 49,499 4,211 Cash investments 47,927 37,730 Increase through acquisition of shares in joint venture - 15,407 Capitalized depreciation* 7,803 7,361 Amortization (16,524) (15,210) Balance at 31 December 88,704 49,499

*Refer to Note 25 Depreciation and amortisation.

8 Investment in joint ventures Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Balance at 1 January 2,748 7,453 Cash investments - 2,800 Share of income/(loss) (265) 14 Decrease through acquisition of shares in joint venture - (7,519) Balance at 31 December 2,483 2,748

As of 31 December 2013 the Group had an investment in one joint venture. The investment in joint ventures represent the Group’s 50% equity investment in Polarcus Nigeria Limited (“PNL”), an entity jointly controlled by the Group. The principle place of business of PNL is Nigeria, which is also its country of registration.

Summarised financial information of PNL is as follows:

Year ended 31-Dec-13 31-Dec-12 Non-current assets 5,010 5,000 Cash and cash equivalents 2,316 511 Other current assets 20 5 Total assets 7,345 5,517 Financial current liabilities 2,379 20 Equity 4,967 5,496 Total equity and liabilities 7,345 5,517 Revenues - - Other operating costs (563) (111) Finance costs (138) (2) Finance income 172 10 Total comprehensive income/(loss) (529) (104)

As of 1 January 2012 the Group had a 50% equity investment in Polarcus MC Limited, an entity jointly controlled by the Group and Sabaro Investments Ltd (“Sabaro”). On 15 April 2012 Polarcus Limited acquired Sabaro’s 50% shares in Polarcus MC Ltd for a consideration of USD 5.3 million. The acquisition has been accounted for using the acquisition method. The fair value of the assets acquired on the acquisition date was USD 8.9 million, resulting in an accounting gain of USD 3.6 million that has been recognized in the statement of comprehensive income.

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9 Intangible assets (In thousands of USD) Licenses Other Total Year ended 31 December 2012 Costs Balance as of 1 January 2012 - 1,540 1,540 Additions during the period - 187 187 Balance as of 31 December 2012 - 1,727 1,727 Amortization and impairment losses Balance as of 1 January 2012 - 1,309 1,309 Amortization for the period - - - Balance as of 31 December 2012 - 1,309 1,309 Carrying amounts As of 1 January 2012 - 231 231 As of 31 December 2012 - 418 418

Year ended 31 December 2013

Costs Balance as of 1 January 2013 - 1,727 1,727 Additions during the period 37,411 311 37,723 Balance as of 31 December 2013 37,411 2,038 39,449 Amortization and impairment losses Balance as of 1 January 2013 - 1,309 1,309 Amortization for the period 1,181 220 1,401 Balance as of 31 December 2013 1,181 1,529 2,710 Carrying amounts As of 1 January 2013 - 418 418 As of 31 December 2013 36,230 509 36,739

On 3 October 2013 the Group purchased a worldwide license related to steering technology for marine seismic streamers. The license is amortized over its expected useful lifetime of 8 years. Also refer to Note 20 Other long term debt.

10 Assets held-for-sale On 31 December 2012 the Group entered into a long-term collaboration agreement with TPAO which included the sale of the vessel Polarcus Samur. The sales transaction was completed on 11 February 2013 with net proceeds of 128 million (gross proceeds of USD 133.5 million less USD 5.5 million in transaction costs). The net book value of the vessel and equipment sold were USD 135.4 million. Accordingly, the Group recorded an impairment loss of USD 7.4 million in the year 2012.

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11 Other current assets (In thousands of USD) 31-Dec-13 31-Dec-12 Accrued revenue 61,110 20,196 Advance to employees 1,467 1,237 Withholding taxes receivable 1,153 3,697 Insurance receivables 936 1,925 Advance to suppliers 445 4,277 Deposits 184 179 VAT and other indirect taxes receivable 166 1,999 Total other current financial assets measured at amortized cost 65,461 33,510 Other investments 529 529 Deferred transit costs 7,490 8,073 Prepaid expenses 6,207 6,277 Inventories onboard the vessels 11,330 15,168 Total 91,017 63,556

Other investments, deferred transit costs and prepaid expenses are measured at cost.

Inventories onboard the vessels are measured at the lower of cost and net realisable value and on a FIFO (first in, first out) basis.

12 Restricted cash (In thousands of USD) 31-Dec-13 31-Dec-12 Loan instalment retention accounts 6,405 7,517 Payment guarantee escrow accounts 13,036 - Other short term deposits 1,030 589 Total 20,471 8,107

13 Cash and cash equivalents Cash and cash equivalents include cash-in hand, deposits held at call with banks, and other short-term highly liquid investments.

(In thousands of equivalent USD) 31-Dec-13 31-Dec-12 USD 49,262 41,545 NOK 5,630 380 GBP 1,424 552 EUR 990 667 Other currencies 2,740 684 Total 60,045 43,828

14 Share capital, share options and warrants The Company’s authorized share capital is USD 13,470,000 divided into 673,500,000 shares at par value of USD 0.02 each.

The total issued share capital of the Company as of 31 December 2013 is USD 10,144,424 divided into 507,221,179 shares at par value of USD 0.02. All issued shares have been paid in as of 31 December 2013.

As of 31 December 2012 the Company had issued and paid-in share capital of USD 10,143,924 divided into 507,196,179 shares at par value of USD 0.02.

On 20 March 2013 the Company issued 25,000 new shares at NOK 3.58 (USD 0.62) per share to satisfy the exercise of employee share options.

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(In thousands of USD except for number of shares)

Number of shares

Issued share capital

Share premium Total

Balance as of 1 January 2012 467,196,179 9,344 463,692 473,036 Proceeds from shares issued on 20 March 2012 40,000,000 800 39,658 40,458 Transaction cost of share issue - - (1,523) (1,523) Balance as of 31 December 2012 507,196,179 10,144 501,827 511,971 Proceeds from shares issued on 20 March 2013 25,000 1 16 17 Balance as of 31 December 2013 507,221,179 10,144 501,843 511,988

Assuming full conversion of convertible bond loan and share options, the total number of Shares issued would increase by 101,850,125 Shares.

Dilutive Instrument Number of equivalent shares

Shares associated with convertible debt 80,770,225 Shares associated with the share options 21,079,900 Total 101,850,125

Apart from potential shares that could be issued under the terms of the share option plan or convertible bonds, the board of directors have no restrictions on issuing remaining authorized share capital. The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

14.1 Employee share options In 2008 the Company implemented an employee share option scheme (“2008 plan”) under which a total of 6,250,000 shares could be issued to employees of companies within the Group. The exercise price of options is based on the weighted average price of the shares for the 30 days prior to acceptance of the employment offer. The options vest three years after grant date and can be exercised up to five years after the grant date. The exercise of the options is conditional on the employee completing three years of service (the vesting period) and being an employee of the Group at the exercise date. The options are only available for settlement in equity.

The total fair value of options granted up to 31 December 2013 under the 2008 plan is USD 4.89 million calculated using the Black-Scholes model.

2008 Share option plan Year ended 31-Dec-2013 Year ended 31-Dec-2012

Number WAEP (USD) Number WAEP

(USD) Outstanding at 1 January 5,615,000 1.62 6,065,000 1.63 Expired During the year (3,235,000) - Forfeited during the year (230,000) (450,000) Outstanding as of 31 December 2,150,000 1.09 5,615,000 1.62 Exercisable as of 31 December 1,545,000 1.02 3,920,000 1.87 Exercised during the year 25,000 1.04 - -

The range of exercise prices for options outstanding under the 2008 Scheme as of 31 December 2013 is USD 0.61 – USD 1.41. The weighted average remaining contractual life as of 31 December 2013 is 1.26 years.

In the 2010 annual general meeting, a new employee share option scheme (“2010 plan”) was approved under which a maximum number of 7,500,000 shares could be issued to employees of the Group. The program has a 6-year duration with part exercise possibility at the first, second and third anniversary after the grant of the options. The exercise price for each option was set to the volume weighted average price for which the shares

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have been traded at Oslo Stock Exchange in the period of 30 trading days immediately prior to the date options are granted plus 10% for options exercisable after one year, plus 20% for options exercisable after two years and 30% for options exercisable thereafter. The aggregate number of options granted to a particular employee when multiplied by the volume weighted average trading price 30 days prior to the grant date cannot exceed 150% of the employee’s base salary each year and 300% of base salary in aggregate during the duration of the plan. The options are exercisable upon a change of control event (above 50%).

The total fair value of options granted up to 31 December 2013 under the 2010 plan is USD 3.89 million calculated using the Black-Scholes model.

2010 Share option plan Year ended 31-Dec-2013 Year ended 31-Dec-2012

Number WAEP (NOK) Number WAEP

(NOK) Outstanding at 1 January 6,916,900 7.94 7,500,000 7.91 Forfeited during the year (577,000) (583,100) Outstanding as of 31 December 6,339,900 7.94 6,916,900 7.94 Exercisable as of 31 December 5,656,567 7.68 3,871,267 7.28 Exercised during the year - - -

The range of exercise prices for options outstanding under the 2010 plan as of 31 December 2013 is NOK 6.68 to NOK 10.1 (USD 1.09 – USD 1.65). The weighted average remaining contractual life of options outstanding under this plan as of 31 December 2013 is 1.64 years.

On 26 April 2012 the Board of Directors of the Company approved a new employee share option plan (“2012 plan”) under which a maximum number of 14,000,000 may be granted to employees within the Group. The exercise price of options is based on the weighted average price of the shares for the 30 days prior to the date of award of the options. The options vest three years after grant date and can be exercised up to five years after the grant date. The exercise of the options is conditional on the employee completing three years of service (the vesting period) and being an employee of the Group at the exercise date.

Total fair value of options granted up to 31 December 2013 under the 2012 plan is USD 5.55 million calculated using the Black-Scholes model.

2012 Share option plan Year ended 31-Dec-2013 Year ended 31-Dec-2012

Number WAEP (NOK) Number WAEP

(NOK) Outstanding at 1 January 11,435,000 5.64 - Granted during the year 1,980,000 5.86 11,825,000 5.64 Forfeited during the year (825,000) (390,000) Outstanding as of 31 December 12,590,000 5.67 11,435,000 5.64 Exercisable as of 31 December - - - -

The range of exercise prices for options outstanding under the 2012 plan as of 31 December 2013 is NOK 5.64 to NOK 5.86 (USD 0.92 – USD 0.96). The weighted average remaining contractual life as of 31 December 2013 is 3.48 years.

The fair value of the options under the above three plans are estimated by a tree implementation of the Black Scholes formula for the pricing of equity call options. The inputs to the valuation model includes expected dividend yield for the Company’s shares, expected volatility, risk-free market interest rate and expected life of the options.

The expected life of the options is based on the maturity date and is not necessarily indicative of exercise patterns that may occur. The expected volatility is based on the historical volatility of the share price since the Company’s shares were available for public purchase and reflects the assumption that historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

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For the year ended 31 December 2013 the Group recognized an expense of USD 2.69 million for employee share options (USD 2.89 million during year 2012).

15 Other financial assets and liabilities

15.1 Financial assets and liabilities at fair value and amortized cost Financial assets measured at amortized cost are as follows:

(in thousands of USD) 31-Dec-13 31-Dec-12 Accounts receivables 42,404 76,440 Other current financial assets (Note 11) 65,461 33,510 Total assets measured at amortized cost 107,865 109,950

Financial liabilities measured at amortized cost are as follows:

(in thousands of USD) 31-Dec-13 31-Dec-12 Bond loans 2.875% Convertible Bond (Note 18.2) 109,535 103,800 8% Senior Unsecured Bonds (Note 17.3) 93,266 - 14% Senior Unsecured Bond (Note 17.2) 37,110 39,922 12.5% Senior Secured Bonds (Note 17.1) - 77,792 8.5% Convertible Bonds (Note 18.1) - 34,047 Total bond loans 239,911 255,562 Other long-term debt Fleet bank facility - Tranche 1 (Note 20.1) 57,960 64,344 Fleet bank facility - Tranche 2 (Note 20.1) 43,147 47,846 Fleet bank facility - Tranche 3 (Note 20.1) 97,249 106,456 Fleet bank facility - Tranche 4 (Note 20.1) 96,873 106,003 Fleet bank facility - Tranche 5 (Note 20.1) - 43,705 Liability for license purchase (Note 20.2) 23,689 - Total other long-term debt 318,918 368,353 Other financial liabilities Finance lease liabilities (Note 19) 160,230 177,239 Accounts payable 38,509 44,188 Total other financial liabilities 198,740 221,428 Total financial liabilities measured at amortized cost 757,569 845,343

Also refer to Note 3.1.3 Liquidity risk.

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15.2 Fair values 31-Dec-13 31-Dec-12

(in thousands of USD) Carrying Amount Fair value Carrying

Amount Fair value

Financial assets Cash and deposits 80,516 80,516 51,935 51,935 Accounts receivable 42,404 42,404 76,440 76,440 Other current financial assets 65,461 65,461 33,510 33,510 Total 188,381 188,381 161,885 161,885 Financial liabilities Accounts payable 38,509 38,509 44,188 44,188 2.875% Convertible bonds 109,535 122,500 103,800 130,625 14% Senior unsecured bonds 37,110 39,912 39,922 44,385 8% Senior unsecured bonds 93,266 91,200 - - 12.5% Senior secured bonds - - 77,792 85,400 8.5% Convertible bonds - - 34,047 35,221 Other long-term debt 318,918 310,712 368,353 368,353 Finance lease liabilities 160,230 160,230 177,239 177,239 Total 757,568 763,063 845,343 885,412

Cash and deposits, accounts receivables and payables, and other current financial assets approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair values of senior and convertible bonds are measured at a rate prescribed by The Norwegian Securities Dealers Association based upon the secondary market prices of the respective securities.

The finance leases were renegotiated on 27 June 2013 at rates that are considered to reflect market values. There has been no significant change in market rates for similar debt in the subsequent period to 31 December 2013 and so the carrying amounts of the finance leases approximate their carrying values.

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

15.3 Financial guarantees The Group has a USD 10 million guarantee facility from DNB Bank under which the bank issues payment and performance guarantees on behalf of the Group in relation to the Group’s operating activities. As of 31 December 2013 the total value of guarantees issued under this facility is USD 6.8 million and the average remaining lifetime of the guarantees is four months.

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16 Other reserves (In thousands of USD) 31-Dec-13 31-Dec-12 Balance as of 01 January 40,868 37,980 Employee share options (Note 14.1) 2,689 2,888 Other movements (5,024) - Balance at the yearend 38,533 40,868

Other movements represent the equity component of USD 35 million convertible bonds repaid upon maturity on 30 July 2013. Refer to Note 18.1 USD 35 million 8.5% bonds.

17 Senior bonds

17.1 USD 80 million 12.5% bonds On 27 October 2010, the Group issued 800 senior secured callable bonds at par value USD 100,000 per bond, total USD 80 million, with coupon interest of 12.5% per annum. The net proceeds after deducting transaction costs were USD 76.6 million. The bonds were used to part-finance the construction of the vessel Polarcus Alima.

On 13 February 2013 on the same date as the sale of the vessel Polarcus Samur, the Group made an early repayment of USD 20 million and USD 0.7 million in accumulated accrued interest thereon. An early redemption premium of USD 1.2 million was paid at the same date. On 21 June 2013 the Group repaid in full the remaining USD 60 million of the bonds and USD 1.1 million accumulated accrued interest thereon. An early redemption premium of USD 3.6 million was also paid at the same date.

Years ended Accumulated from inception

(In thousands of USD) 31-Dec-13 31-Dec-12 31-Dec-13 31-Dec-12 Balance at 1 January / on issue 77,792 77,190 76,579 76,579 Finance cost – amortization of issue costs 2,208 602 3,421 1,213 Finance cost – interest charge 5,458 10,000 25,458 20,000 Interest paid (5,458) (10,000) (25,458) (20,000) Principal repayment made (80,000) - (80,000) - Balance at the yearend - 77,792 - 77,792

17.2 NOK 230 million 14% bonds On 27 October 2011, the Group issued 460 senior unsecured bonds at par value NOK 500,000 per bond, total NOK 230 million (USD 40.6 million), with coupon interest of 14% per annum. The net proceeds after deducting transaction costs was USD 38.8 million (NOK 219.9 million). Interest is payable semi-annually in arrears on 14 May and 14 November. The bonds mature three years from the date of issue.

On 14 August 2013 the Group bought back NOK 4 million of the bonds. Transaction costs of the buyback were USD 0.1 million and the repurchased bonds were deleted from the registry on 29 October 2013. The remaining bonds totalling NOK 226 million will mature for repayment on 14 November 2014. As maturity is less than one year from the balance sheet date the bond liability is presented as a current liability in the Group’s consolidated statement of financial position as of 31 December 2013.

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Years ended Accumulated from inception (In thousands of USD) 31-Dec-13 31-Dec-12 31-Dec-13 31-Dec-12 Balance at 1 January / on issue 39,922 36,709 38,817 38,817 Unpaid accrued interest at 1 January 353 457 - - Issue costs amortized 596 506 1,142 546 Finance cost - interest charge 5,473 5,515 11,445 5,972 Actual interest paid (5,439) (5,619) (11,058) (5,619) Buyback (653) - (653) - Unrealized foreign exchange (gain)/loss (2,755) 2,707 (2,196) 559 Unpaid accrued interest (Note 21) (387) (353) (387) (353) Balance at 31 December 37,110 39,922 37,110 39,922

17.3 USD 95 million 8% bonds On 7 June 2013 the Group issued 475 senior unsecured bonds at par value USD 200,000 per bond, total USD 95 million, with coupon interest of 8% per annum. The net proceeds after deducting transactions costs were USD 93.1 million. Interest for these bonds is payable semi-annually in arrears on 7 June and 7 December each year. The bonds mature five years from the date of issue.

USD 60 million of the net proceeds of these bonds was used to repay the 12.5% senior secured bonds (refer to Note 17.1). The remaining proceeds were used to repay the liability under the 8.5% convertible bonds (USD 35 million) at their maturity on 30 July 2013 (refer to Note 18 Convertible bonds).

Years ended Accumulated from inception (In thousands of USD) 31-Dec-13 31-Dec-12 31-Dec-13 31-Dec-12 Balance at 1 January / on issue 93,083 93,083 Issue costs amortized 184 - 184 - Interest payable accrued 4,433 - 4,433 - Actual interest paid (3,800) - (3,800) - Unpaid accrued interest (Note 21) (633) - (633) - Balance at the yearend 93,266 - 93,266 -

The carrying value of the senior bond financial liabilities in the Group’s consolidated statement of financial position are as per below:

(In thousands of USD) 31-Dec-13 31-Dec-12 12.5% Senior secured callable bonds - 77,792 14% Senior unsecured bonds 37,110 39,922 8% Senior unsecured bonds 93,266 - Balance at the yearend 130,376 117,714 Of which: Current liability portion (amounts due for payment within one year) 37,110 19,447 Non-current liability 93,266 98,267

18 Convertible bonds

18.1 USD 35 million 8.5% bonds On 30 July 2008, the Group issued 350 subordinated unsecured callable convertible bonds at a par value USD 100,000 per bond, total USD 35 million, with coupon interest of 8.5% per annum. The Group repaid the bonds in full on their maturity on 30 July 2013.

The bond holders had options to convert the bonds to a total of 10,802,470 shares in the Company at a conversion price of USD 3.24 per share. None of the bond holders exercised the conversion option.

On issue of the bonds in 2008 the Group recognised the bonds using split accounting, whereby both a financial liability and an equity component were recognized. The equity component of USD 5 million was recognized

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within equity as ‘Other reserves’. Upon maturity and full repayment of the bond liability, the USD 5 million equity component was reclassified within equity and transferred to ‘Retained earnings.’

Years ended Accumulated from inception (In thousands of USD) 31-Dec-13 31-Dec-12 31-Dec-13 31-Dec-12 Balance of liability at 1 January / on issue 34,047 32,567 28,751 28,751 Unpaid accrued interest at 1 January 1,240 1,240 - - Issue costs and equity portion amortized 953 1,480 6,249 5,296 Finance cost - interest charge 1,735 1,735 14,875 13,140 Actual interest paid (2,975) (2,975) (14,875) (11,900) Unpaid accrued interest - - - 1,240 Principal repayment made (35,000) - (35,000) - Balance at 31 December - 34,047 - 36,527

18.2 USD 125 million 2.875% bonds On 27 April 2011, the Group issued 1,250 senior secured convertible bonds at par value USD 100,000 per bond, total USD 125 million, with coupon interest of 2.875% per annum. The net proceeds after deducing transaction costs were USD 121.9 million. The interest is payable semi-annually in arrears on 27 April and 27 October each year. The bonds mature five years from issue date and the bondholders have the right to convert the bonds into a total of 80,770,225 shares at a conversion price of USD 1.54 per share. The conversion price is subject to adjustment upon certain changes of the Group’s share capital and in case of mergers and de-mergers.

On issue of the bonds in 2011, the Group recognised the bonds using split accounting, whereby the net proceeds were split between a financial liability of USD 95.3 million and an equity component of USD 26.6 million. The equity component is recognized within equity as ‘Other reserves’.

Years ended Accumulated from inception (In thousands of USD) 31-Dec-13 31-Dec-12 31-Dec-13 31-Dec-12 Balance at 1 January / on issue 103,800 98,542 95,271 95,271 Unpaid accrued interest at 1 January 599 599 - - Issue costs and equity portion amortized 5,734 5,258 14,264 8,529 Interest payable accrued 3,594 3,594 9,584 5,990 Actual interest paid (3,594) (3,594) (8,985) (5,391) Unpaid accrued interest (Note 21) (599) (599) (599) (599) Balance at 31 December 109,535 103,800 109,535 103,800

The carrying value of the convertible bonds financial liabilities in the Group’s consolidated statement of financial position are as per below:

(In thousands of USD) 31-Dec-13 31-Dec-12 USD 35 million 8.5% convertible bonds - 34,047 USD 125 million 2.875% convertible bonds 109,535 103,800 Total 109,535 137,847 Of which: Current liability portion (amounts due for payment within one year) - 34,047 Non-current liability 109,535 103,800

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19 Long-term finance lease The vessels Polarcus Nadia and Polarcus Naila are subject to a sale and leaseback arrangement entered into with GSH2 Seismic Carrier I AS (the ‘Lessor’), whereby the vessels were sold by the Group to the Lessor for a sum of USD 180 million (USD 90 million per vessel) and immediately leased back by the Group for a minimum period of ten years from the delivery dates of the vessels from the shipyard. The sale price was paid to the Group in instalments throughout the vessel construction period. Polarcus Nadia and Polarcus Naila were delivered on 15 December 2009 and 15 February 2010 respectively. The day rate per vessel for the duration of the charter was initially set at USD 35,000, payable monthly in arrears.

On 27 June 2013 an addendum to the sale and leaseback agreement was signed, whereby the charter day rates were reduced. Following the addendum the day rate per vessel was reduced to USD 32,650 for a period of three months commencing on 1 July 2013 for Polarcus Nadia and from 1 August 2013 for Polarcus Naila. Thereafter, the rate is further reduced to USD 31,500 for a period of four years and USD 34,500 for the remainder of the charter hire periods.

The Group has call options to repurchase the vessels at set prices on the 7th, 8th, 9th and 10th anniversary of the vessel delivery dates.

At the start of the year 2013 the Group had ongoing lease arrangements with Sercel Inc, Houston for the lease of certain marine acquisition equipment (the “Streamer systems”). Streamer systems with a cost of USD 59.1 million were leased under this arrangement. The Group made a full and early settlement of the outstanding liability under the lease arrangement for streamer systems on 25 March 2013.

(In thousands of USD) Year ended 31-Dec-13

Lease of Polarcus Nadia

Lease of Polarcus Naila

Lease of Streamers Total

Balance of liability at 1 January 82,838 83,063 11,339 177,239 Additions - - - - Principal payments (2,841) (2,829) (11,339) (17,009) Finance cost - interest charge 9,395 9,516 144 19,056 Actual interest paid (9,395) (9,516) (144) (19,056) Balance at 31 December 79,996 80,234 - 160,230 Of which: Current liability portion 2,962 2,935 - 5,897 Non-current liability 77,035 77,299 - 154,333

(In thousands of USD) Year ended 31-Dec-12

Lease of Polarcus Nadia

Lease of Polarcus Naila

Lease of Streamers Total

Balance of liability at 1 January 85,352 85,552 24,641 195,545 Additions - - 2,912 2,912 Principal payments (2,515) (2,489) (16,214) (21,217) Finance cost - interest charge 10,295 10,321 1,287 21,904 Actual interest paid (10,295) (10,321) (1,287) (21,904) Balance at 31 December 82,838 83,063 11,339 177,240 Of which: Current liability portion 2,832 2,803 11,339 16,973 Non-current liability 80,006 80,260 - 160,266

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The future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

(In thousands of USD) 31-Dec-13 31-Dec-12

Minimum payments

Present value of

payments Minimum payments

Present value of

payments Within one year 22,995 20,744 37,195 34,113 After one year but not more than five years 224,964 139,487 127,820 68,940 More than five years - - 130,195 74,187 Total minimum lease payments 247,958 160,230 295,210 177,240 Less amounts representing finance charges (87,727) - (117,970) - Present value of minimum lease payments 160,230 160,230 177,240 177,240

20 Other long-term debt

20.1 Fleet bank facility In October 2011, the Group entered into a loan facility (the “Fleet Bank Facility”) of USD 410 million with DNB and DVB Bank SE, Nordic Branch, together with Garanti-instituttet for Eksportkreditt (GIEK) and Eksportfinans ASA. This facility was drawn in five different tranches, partly financing five of the Group’s vessels: Tranche 1 - Polarcus Asima (USD 80 million), Tranche 2 - Polarcus Alima (USD 55 million), Tranche 3 - Polarcus Amani (USD 114 million), Tranche 4 - Polarcus Adira (USD 114 million) and Tranche 5 - Polarcus Samur (USD 47 million).

On 11 February 2013 subsequent to the sale of Polarcus Samur, the Group made a full repayment of the balance outstanding under Tranche 5 of the Fleet bank facility (USD 45.04 million) and interest accrued thereon (USD 0.36 million) together with an early settlement fee of USD 2.23 million.

All tranches have a repayment profile over 12 years from the date of drawdown of the individual tranche. The interest rate on Tranche 2 is floating, and on Tranches 3 and 4 the interest rate is fixed. Tranche 1 is split into two elements: a USD 55 million portion with fixed interest rate and the remaining USD 25 million at floating interest rate.

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Balance as at 1 January 368,353 121,413 Unpaid accrued interest at 1 January 1,757 2,131 Net receipts from the facility - 266,939 Arrangement fees amortized 2,205 2,763 Principal repayments (75,329) (22,762) Finance costs-Interest charge 17,749 14,910 Interest paid during the year (18,008) (15,283) Unpaid accrued interest (Refer to Note 21) (1,498) (1,757) Balance at the yearend 295,229 368,353

20.2 Other interest bearing debt On 3 October 2013 the Group entered into an agreement to purchase a worldwide license related to steering technology for marine seismic streamers for a total purchase price of USD 40 million, payable in three equal instalments over two years. The first instalment of USD 13 million was paid upon signing the agreement and the remaining instalments fall due in October 2014 and October 2015. The discounted value of the remaining liability under this arrangement was recorded as ‘Other long-term debt’ using the effective interest method at a discount rate of 8%. Also refer to Note 9 Intangible assets.

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The outstanding liability under the above arrangement is as follows:

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Balance as of 1 January / at the inception 36,926 - Arrangement fees amortized 97 - Principal repayments (13,333) - Finance costs-Interest charge 476 - Unpaid accrued interest (Note 21) (476) - Balance at the yearend 23,689 -

The carrying value of above two arrangements are disclosed as ‘Other long-term debt’ in the Group’s consolidated statement of financial position, further split into current and non-current liabilities as follows:

(In thousands of USD) 31-Dec-13 31-Dec-12 Current liability portion (amounts due within one year)

Fleet bank facility 30,287 73,992 Liability for patent rights 11,368 -

Total current liability portion 41,656 73,992 Non-current liability portion

Fleet bank facility 264,942 294,361 Liability for patent rights 12,321 -

Total non-current liability portion 277,262 294,361 Total liability

Fleet bank facility 295,229 368,353 Liability for patent rights 23,689 -

Total liability 318,918 368,353

21 Other accruals and payables (In thousands of USD) 31-Dec-13 31-Dec-12 Employee related accruals and payables 12,076 10,877 Accrued vessel operating expenses 6,855 6,981 Accrued taxes payable 4,636 11,982 Accrued interest 3,592 5,615 Deferred revenue 1,243 6,769 Accrued miscellaneous expenses 1,115 3,450 Total 29,518 45,674

21.1 Employee related accruals and payables (In thousands of USD) 31-Dec-13 31-Dec-12 Accrued salaries 4,649 3,957 Accrued bonuses 7,102 6,626 Accrued pension (refer to Note 24.1) 218 186 Unused balance of crew welfare fund 107 108 Total 12,076 10,877

22 Operating lease - Group as lessor The Group has entered into a commercial lease for hire out of one of its vessels, Vyacheslav Tikhonov. The lease is non-cancellable for the five years commencing from 18 August 2011. The lessee has a purchase option that becomes exercisable on the third and each subsequent anniversary of the commencing date.

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The future minimum rental receivables (undiscounted) under non-cancellable operating leases at 31 December are as follows:

(In thousands of USD) 31-Dec-13 31-Dec-12 Within one year 25,368 25,368 After one year but not more than five years 41,353 66,720 Total 66,720 92,088

23 Vessel operating expenses (In thousands of USD) 31-Dec-13 31-Dec-12 Crew salaries and other benefits 74,993 70,681 Other vessel operating expenses 253,252 277,888 Capitalized to multi-client project library (37,932) (35,889) Total 290,313 312,680

24 Sales, general and administrative costs Sales, general and administrative costs consist of the following:

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Salaries and other employee benefits 17,039 14,726 Other general and administrative expenses 13,006 11,671 Total 30,045 26,397

24.1 Salaries and other employee benefits Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Salaries and bonus 81,524 74,238 Social security costs 562 535 Pension costs 3,927 3,354 Other benefits 13,817 12,188 Crew travel related costs 9,620 10,279 Crew salaries and benefits included in Vessel operating expenses (74,993) (70,681) Other employees' costs allocated to Vessel operating expenses (17,417) (13,977) Project related personnel costs capitalized - (1,210) Total 17,039 14,726

The Group offers a fixed base salary to all employees. Some employees are also provided with a housing allowance and car allowance dependent upon their location of employment and grade.

The Group has an element of variable compensation through a performance-related bonus scheme. Based on overall performance of the Group against certain pre-defined metrics together with performance against individual and team-specific goals, the employees can benefit from a variable compensation in the range of 8% to 60% of annual base salary, dependent upon the employee’s grade.

All employees of the Group are offered a comprehensive employee health protection plan.

The Group has implemented a share option program for key employees whose performance will have a significant positive impact on the overall success of the Company. For more details about the share option program Refer to Note 14.1 Employee share options.

The Group has set up a pension savings scheme for the majority of its employees under which the Group on a monthly basis contributes 8% of an employee’s base salary to the pension savings fund. No mandatory contribution is required from the employees. The amount contributed to the scheme is ring-fenced in favour of the employees through a trust. The vesting period of the fund is 5 years and each applicable employee is

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enrolled into the scheme at the end of his or her probation period. The employees may contribute their own funds to the scheme and the Group will match such contributions up to an additional maximum 2%. During the year ended 31 December 2013 the Group paid USD 3.71 million (2012 – USD 3.64 million) to the pension scheme.

For employees who are not enrolled into the above pension scheme, the Group recognizes a provision for pension payable based on the contractual obligation between each employee and the Group. The accrued pension liability calculated based on the contractual obligation varies from 21 days to 1 month’s basic salary for each year completed pro rata based on date of joining of each employee. As of 31 December 2013 the Group has recognized a liability of USD 0.22 million towards such pension payable (USD 0.18 million as of 31 December 2012).

24.2 Remuneration of the auditors Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Audit fees 266 242 Audit related services 95 86 Tax advisory services 114 64 Total 475 392

25 Depreciation and amortization Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Depreciation of seismic vessels and equipment 79,607 77,396 Depreciation of office equipment 570 546 Amortization of multi-client data library 16,524 15,210 Amortization of other intangible assets 1,401 480 Loss on disposal of onboard equipment 3,495 5,127 Depreciation capitalized to multi-client library (7,803) (7,361) Total 93,795 91,398

26 Finance costs Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Interest expense on senior bonds 16,783 20,714 Interest expense on convertible bonds 12,017 13,306 Interest expense on lease arrangements 19,056 21,904 Interest expense on other long-term debt 20,876 17,664 Other interest expenses 5 34 Total interest expenses 68,737 73,622 Other finance costs 7,343 7,234 Realized currency exchange loss 1,864 4,733 Unrealized currency exchange loss 2,157 7,860 Total 80,100 93,449

Other finance costs paid during the year ended 31 December 2013 include USD 4.8 million fees on early repayment of the 12.5% senior secured bonds and USD 2.2 million early repayment fees relating to Tranche 5 of the Fleet bank facility. Also refer to Note 17 Senior bonds and Note 20 Other long-term debt.

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27 Finance income Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Interest income from deposit with banks 204 388 Realized exchange gain 1,818 3,814 Unrealized exchange gain 4,327 5,886 Changes in fair value of financial instruments - 48 Total 6,348 10,137

The realized currency gain represents the effect of foreign currency payments made and the unrealized currency gain represents the effect of revaluation of foreign currency financial assets and liabilities.

28 Income tax expense The Group’s major components of income tax expense are as follows:

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Current income tax: Current income tax charge 1,596 1863 Adjustments in respect of income tax of previous years (987) - Income tax expense 609 1,863

No tax expense is included in other comprehensive income or directly in equity.

The Group’s income tax payable is as follows:

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Income tax liability at 1 January 1,587 24 Income tax expense for the year 1,596 1,863 Adjustments in respect of income tax of previous years (987) - Income tax paid during the year (600) (300) Income tax liability at 31 December 1,596 1,587

Income tax payable is included within ‘Other accruals and payables’ in the consolidated statement of financial position.

The Group conducts business in a number of jurisdictions and whether or not income tax is due may depend on a number of different variables, including, but not limited to, the existence of tax treaties, the number of days an entity is present in a jurisdiction in total over the fiscal year (as opposed to the duration of a particular survey), changes to and interpretations of tax regulations. Income tax liabilities are recorded based on the Group’s best estimates about such variables.

The Group’s effective tax rate is sensitive to the geographic mix of earnings.

Effective tax rate:

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Accounting profit before tax 44,075 11,692 Income tax expense 609 1,863 Effective income tax rate 1.38% 15.9%

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Tax on the Group’s profit before tax differs from the amount that would have been recognized if the corporation tax rate applicable in the Cayman Islands of 0% had been used. The following is a reconciliation of the profit before tax to the income tax expense:

Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Profit before tax 44,075 11,692 Tax expense at Cayman Isles corporation tax rate 0% - - Recognized income tax expense 609 1,863 Difference 609 1,863

Taxable in foreign countries 1,596 1863 Adjustments for previous years (relates to foreign countries) (987) - Difference 609 1,863

The Group has no assets or liabilities with associated deferred taxes. The Group has no recognised deferred tax assets or liabilities. The Group has tax losses carried forward of USD 3.7 million in the USA, AUD 13.2 million in Australia and NOK 137.3 million in Norway. No deferred tax assets relating to these tax losses have been recognized due to the uncertainty of the timing and amount of tax losses that will be utilized in the future.

The Group conducts business in a number of different tax jurisdictions and income tax expenses recognized by the Group are dependent upon the tax rules and regulations of the jurisdictions where the income was earned. Income tax rates imposed by the taxing authorities in which the Group has operated in during the year 2013 vary from 0% to 36% (2012 – 0% to 31.8%).

In a number of jurisdictions in which the Group operates, the Group’s operating activities are not subject to profit taxes (i.e. income tax). Instead, the jurisdiction typically charges other forms of tax, such as withholding taxes on revenues or tonnage tax. Such forms of tax are not profit taxes and, therefore, are not recorded as income tax expenses.

Withholding taxes on revenues are recognized by the Group either net of revenue or as vessel operating costs in the income statement, dependent upon whether the Group is acting as principle or agent for the taxation jurisdiction.

The Norwegian vessel owning subsidiaries are taxed in compliance with the tonnage tax regime for shipping companies in Norway. This scheme entails no tax on profits or tax on dividends from companies within the scheme. Tonnage tax paid under the tonnage tax regime is classified as an operational expense. Net finance income for companies taxed under the tonnage tax regime is adjusted in accordance with the regime regulations and taxed at a rate of 27%.

The Group’s income tax, withholding taxes (WHT) and tonnage tax expenses, based on the location of the tax jurisdiction the amounts are charged are as follows:

Year ended 31-Dec-2013 Year ended 31-Dec-2012 (In thousands of

USD) Income

tax WHT* Tonnage tax** Total Income

tax WHT* Tonnage tax** Total

Africa - 6,571 - 6,571 - 3,141 - 3,141 Americas - - - - 268 - - 268 Asia - (807) - (807) - 771 - 771 Europe 609 - 7 616 1595 - 5 1,600 Total 609 5,764 7 6,380 1,863 3,912 5 5,780

*Recorded net of revenues or as Vessel operating expenses in the consolidated income statement. ** Recorded as Vessel operating expenses in the consolidated income statement.

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29 Earnings per share

29.1 Basic Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares issued during the period.

Year ended (In USD) 31-Dec-13 31-Dec-12 Profit attributable to equity holders of the Company 43,466,051 9,829,024 Weighted average number of ordinary shares issued 507,215,837 498,562,299 Basic earnings per share 0.086 0.020

29.2 Diluted The Company has no potential shares outstanding at the yearend dates that has a dilutive effect on the earnings per share. The share options that have been granted to selected employees as of the end of reporting period (refer to Note 14.1) and the convertible bonds giving the bond holders a right to convert the bonds to equity shares (refer to Note 18) have an anti-dilutive effect for the periods reported.

30 Related parties

30.1 Subsidiaries This set of consolidated financial statements includes the financial statements of Polarcus Limited and the following subsidiaries:

Name of the subsidiary Country of Incorporation

Equity interest as of 31-Dec-2013

Equity interest as of 31-Dec-2012

Polarcus DMCC UAE 100% 100% Polarcus Adira AS Norway 100% 100% Polarcus Alima AS Norway 100% 100% Polarcus Amani AS Norway 100% 100% Polarcus Asima AS Norway 100% 100% Polarcus Nadia AS Norway 100% 100% Polarcus Naila AS Norway 100% 100% Polarcus Norway AS Norway 100% 100% Polarcus Samur AS Norway - 100% Polarcus Shipholding AS Norway 100% 100% Polarcus 1 Ltd. Cayman Islands 100% 100% Polarcus 2 Ltd. Cayman Islands 100% 100% Polarcus 6 Ltd. Cayman Islands 100% 100% Polarcus MC Ltd Cayman Islands 100% 100% Polarcus Samur Ltd. Cayman Islands 100% 100% Polarcus Seismic Limited Cayman Islands 100% 100% Polarcus Selma Ltd. Cayman Islands 100% 100% Polarcus do Brasil Ltda Brazil 100% 100% Polarcus Egypt Limited Egypt 100% 100% Polarcus UK Limited UK 100% 100% Polarcus US Inc. USA 100% 100% Polarcus Multi-Client (CY) Ltd. Cyprus 100% 100% Polarcus Asia Pacific Pte. Ltd Singapore 100% - Polarcus Nigeria Limited* Nigeria 50% 50%

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*The Company’s investment in Polarcus Nigeria Limited is accounted for as a joint venture using the equity method. Refer to Note 2.4.2 Interest in joint ventures and Note 8 Investment in joint ventures.

30.2 Transactions with related parties The Group had no major transactions with related parties during the year ended 31 December 2013.

On 15 April 2012 the Group acquired Sabaro’s shares in Polarcus MC Ltd for a consideration of USD 5.32 million, which equals a 15% p.a. return on Sabaro’s investment. Mr. Erik Henriksen, who acted as an advisor to Sabaro, was a member of the Board of Directors of the Group until 10 October 2012. Also refer to Note 8 Investment in joint ventures.

30.3 Transactions with joint ventures Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Management services provided to PNL 165 - Receivable from PNL for management services 165 - Other short-term receivables from PNL to the Group 2,154 -

30.4 Key management compensation The salaries and other benefits of the key management personnel for the periods reported are shown below:

(In thousands of USD)

Paid in year 2013 Benefits paid to pension

plan

Share options

expensed Fixed Salary Bonus Other

benefits

Total paid

salary and

benefits Rolf Ronningen Chief Executive Officer 497 235 133 864 41 107 Tom Henrik Sundby Chief Financial Officer 337 145 134 616 28 79 Carl Peter Zickerman EVP & Head of Strategic Investment 445 189 184 818 36 84 Other members of executive management (5 employees) 1,429 490 828 2,747 138 414 2,708 1,059 1,279 5,045 242 684 (In thousands of USD)

Paid in year 2012 Benefits paid to pension

plan

Share options

expensed Fixed Salary Bonus Other

benefits

Total paid

salary and

benefits Rolf Ronningen Chief Executive Officer 432 - 126 558 35 158 Tom Henrik Sundby Chief Financial Officer 315 - 121 436 25 99 Carl Peter Zickerman EVP & Head of Strategic Investment 416 - 177 592 33 117 Other members of executive management (8 employees) 1,836 - 1,109 2,945 163 722 2,999 - 1,532 4,531 256 1,096

The members of the key management team have entered into agreements with the Group related to severance payment upon the Group’s termination of their employment. Such compensation is limited to three months’ base salary, with the exception of the CEO who is entitled to 18 months of base salary and benefits and the right to maintain granted share options and the CFO and General Counsel who each have been granted 12 months of base salary and benefits and the right to maintain granted share options.

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30.5 Board remuneration The total remuneration paid by the Company to its Board of Directors was as follows:

(In thousands of USD)

Director since Director until Paid for the year 2013

Paid for the year 2012

Peter M. Rigg, Chairman 20-Jun-08 - 120 106 Hege Sjo 20-Jun-08 - 62 63 Tore Karlsson 20-Jun-08 - 61 54 Arnstein Wigestrand 29-Apr-13 - 38 - Carl-Gustav Zickerman 17-Dec-07 - - - Katherine J. Hall 20-Jun-08 26-Apr-12 - 16 Jogeir Romestrand 12-Sep-09 26-Apr-12 - 14 Erik Henriksen 24-Nov-11 10-Oct-12 - - Tom Kichler 15-Jan-14 - - - Karen El-Tawil 15-Jan-14 - - - Total 281 253

31 Authorization of financial statements The consolidated financial statements for the year ended 31 December 2013 were authorized for issue in accordance with a resolution of the directors on 27 March 2014.

Peter Rigg Chairman

Tore Karlsson Board Member

Carl-Gustav Zickerman Board Member

Hege Sjo Board Member

Arnstein Wigestrand Board Member

Karen El-Tawil Board Member

Thomas Kichler Board Member

Rolf Ronningen CEO

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83

Polarcus LimitedParent company financial statements For the year ended 31 December 2013

Statement of Comprehensive Income

Statement of Financial Position

Statement of Cash Flows

Statement of Changes in Equity

Notes to the Financial Statements

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Statement of Comprehensive Income (Unconsolidated Parent Company)

1 January – 31 December (In thousands of USD) Notes 2013 2012 Revenues Operating revenues 2 76,245 71,465 Other income 397 128 Total revenues 76,642 71,593 Operating expenses Cost of sales 10 (56,773) (52,165) Sales, general and administrative costs 11 (9,689) (8,787) Depreciation and amortization 12 (11,414) (10,779) Total Operating expenses (77,876) (71,731) Operating loss (1,234) (138) Financial expenses Finance costs 13 (34,544) (36,745) Finance income 14 25,160 21,715 Net financial expenses (9,384) (15,030) Loss for the period before tax (10,618) (15,168) Income tax expense - - Loss for the period/Comprehensive loss after tax (10,618) (15,168)

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Statement of Financial Position (Unconsolidated Parent Company)

(In thousands of USD) Notes 31-Dec-13 31-Dec-12 ASSETS Non-current assets Property, plant and equipment 3 44,859 47,333 Intangible assets 4 36,230 - Investment in subsidiaries 5 17,670 13,885 Investment in joint ventures 1 2,800 2,800 Long-term loan to subsidiaries 15 331,510 422,559 Total non-current assets 433,069 486,577 Current assets Short-term loan to subsidiaries 15 166,515 85,121 Receivable from subsidiaries 15 104,579 124,976 Other current assets 195 567 Accounts Receivable 15 71,570 46,521 Restricted cash 13,036 - Cash and bank 11,540 8,931 Total current assets 367,435 266,116 TOTAL ASSETS 800,504 752,693 EQUITY and LIABILITIES Equity Issued share capital 1 10,144 10,144 Share Premium 1 501,843 501,827 Other reserves 1 38,533 40,868 Retained earnings/(loss) (26,822) (21,228) Total equity 523,699 531,612 Non-current liabilities Senior bonds 1, 6 93,266 39,922 Convertible bonds 1, 6 109,535 103,800 Other long-term debt 7 12,321 - Total non-current liabilities 215,122 143,722 Current liabilities Bond loans current portion 1, 6 37,110 34,047 Long-term finance lease current portion 8 - 11,339 Other long-term debt current portion 7 11,368 - Other accruals and payables 9 11,154 10,254 Payable to subsidiaries 15 - 19,478 Accounts payable 2,053 2,240 Total Current Liabilities 61,684 77,358 TOTAL EQUITY and LIABILITIES 800,504 752,693

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Statement of Cash Flows (Unconsolidated Parent Company)

1 January – 31 December (In thousands of USD) Notes 2013 2012 Cash flows from operating activities Loss for the period (10,618) (15,168) Adjustment for: Depreciation and amortization 12 11,414 10,779 Stock options compensation provision 2,576 2,830 (Gain) loss on revaluation of senior bond liability (2,756) 2,707 Interest expense 13 33,371 31,893 Interest income 14 (21,167) (16,902) Working capital adjustments: Decrease/(Increase) in current assets (24,677) (24,391) Increase/(Decrease) in trade and other payables and accruals 809 154 Net cash flows used in operating activities (11,047) (8,098) Cash flows from investing activities Decrease/(Increase) in restricted cash (13,036) 16,133 Payments for property, plant and equipment (8,940) (1,361) Payments for intangible assets (12,638) - Investment in subsidiaries (3,785) (7,500) Decrease/(increase) in intercompany receivables 10,686 23,620 Net cash flows (used in) from investing activities (27,714) 30,892 Cash flows from financing activities Proceeds from the issue of ordinary shares 16 38,935 Proceeds from the issuance of senior bonds 93,083 - Repayment of bond loans (35,653) (55,000) Repayment of lease liabilities 8 (11,339) (16,214) Interest paid (25,904) (27,027) Interest income 21,167 16,902 Net cash flows from (used in) financing activities 41,370 (42,403) Net increase/(decrease) in cash and cash equivalents 2,609 (19,609) Cash and cash equivalents at the beginning of the period 8,931 28,540 Cash and cash equivalents at the end of the period 11,540 8,931

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Statement of Changes in Equity (Unconsolidated Parent Company)

For the year ended 31 December 2013

Number of Shares

Issued Share capital

Share Premium

Other Reserves

Retained Earnings/ (Loss)

Total Equity (In thousands of USD except for

number of shares) Balance as of 1 January 2013 507,196,179 10,144 501,827 40,868 (21,228) 531,612 Total comprehensive loss for the year - - - (10,618) (10,618)

Employee share options - - 2,689 - 2,689 Other movements* - - (5,024) 5,024 - Issue of share capital 20 March 2013 at NOK 3.58 (USD 0.02) per share 25,000 1 16 - - 16

Balance as of 31 December 2013 507,221,179 10,144 501,843 38,533 (26,822) 523,699 *Other movements represent the equity component of USD 35 million convertible bonds repaid upon maturity on 30 July 2013. For the year ended 31 December 2012

Number of Shares

Issued Share capital

Share Premium

Other Reserves

Retained Earnings/ (Loss)

Total Equity (In thousands of USD except for

number of shares) Balance as of 1 January 2012 467,196,179 9,344 463,692 37,980 (6,060) 504,957 Total comprehensive loss for the year - - - (15,168) (15,168)

Employee share options - - 2,888 - 2,888 Issue of share capital - - 20 March 2012 at NOK 5.80 (USD 1.01) per share 40,000,000 800 39,658 - - 40,458

Transactions costs on issue of shares - (1,523) - - (1,523)

Balance as of 31 December 2012 507,196,179 10,144 501,827 40,868 (21,228) 531,612

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Notes to the financial statements (Unconsolidated Parent Company)

1 General information and summary of significant accounting principles Polarcus Limited (the “Company”) is a holding company. In addition to owning the subsidiaries, the Company conducts a part of the external debt financing of the Group and provides loans to other Group companies. The Company owns in-sea equipment and licenses related to and rents it to other Group companies. The Company also employs offshore personnel who work onboard the vessels owned by other Polarcus Group companies.

The Company’s accounting principles are consistent with the accounting principles of the Group, as described in Note 2 of the Group’s consolidated financial statements for the year ended 31 December 2013. Note disclosures for the Company that are similar to the information available in the consolidated financial statements are not repeated in these financial statements. This relates in particular to the notes in the consolidated financial statements on Share capital and share premium (both Note 14), Other reserves (Note 16), Senior bonds (Note 17), Convertible bonds (Note 18) and Investments in joint ventures (Note 8).

Shares in the subsidiaries, investment in joint ventures and receivables from and loans provided to the subsidiaries are evaluated at the lower of cost and fair value. When the value of estimated future cash flows is lower than the carrying value of the investment in the subsidiaries and joint ventures, the Company recognizes impairment charges on investments in subsidiaries and joint ventures. If and when estimated recoverable amounts increase, impairment charges are reversed. There is no fixed plan for repayment of long-term intercompany receivables.

2 Revenues The Company’s revenues are earned mainly from leasing out seismic equipment and provision of offshore employees’ services to other Group companies.

Years ended (In thousands of USD) 31-Dec-13 31-Dec-12 Crewing services provided to Group companies 62,592 56,520 In-sea equipment leased to Group companies 13,653 14,628 Miscellaneous income - 317 Total 76,245 71,465

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3 Property, plant and equipment (In thousands of USD)

In-sea equipment

Year ended 31 December 2012 Costs Balance as of 1 January 2012 69,409 Additional capital expenditures 1,360 Disposals (1,955) Balance as of 31 December 2012 68,814 Depreciation and impairment losses Balance as of 1 January 2012 12,658 Depreciation for the period 9,248 Disposals (425) Balance as of 31 December 2012 21,481 Carrying amounts As of 1 January 2012 56,751 As of 31 December 2012 47,333 Carrying amounts held under finance leases as of 31 December 2012 14,787 Year ended 31 December 2013 Costs Balance as of 1 January 2013 68,814 Additional capital expenditures 7,201 Disposals (1,728) Balance as of 31 December 2013 74,287 Depreciation and impairment losses Balance as of 1 January 2013 21,481 Depreciation for the period 8,475 Disposals (528) Balance as of 31 December 2013 29,428 Carrying amounts As of 1 January 2013 47,333 As of 31 December 2013 44,859 Carrying amounts held under finance leases as of 31 December 2013 -

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4 Intangible assets On 3 October 2013 the Company purchased a worldwide license related to steering technology for marine seismic streamers. The license is amortized over its expected useful lifetime of 8 years. Also refer to Note 7 Other long term debt.

(In thousands of USD) Licenses Year ended 31 December 2013 Costs Balance as of 1 January 2013 - Additions during the period 37,411 Balance as of 31 December 2013 37,411 Amortization and impairment losses Balance as of 1 January 2013 - Amortization for the period 1,181 Balance as of 31 December 2013 1,181 Carrying amounts As of 1 January 2013 - As of 31 December 2013 36,230

5 Investment in subsidiaries (In thousands of USD) 31-Dec-13 31-Dec-12 Unquoted equity shares at cost 20,470 16,685

The Company’s direct investment in different subsidiaries as of 31 December 2013 is as follows:

(In thousands of USD)

Name of the Subsidiary Country of Incorporation

Equity interest

Investment at cost

Investment at cost

as of as of as of 31-Dec-13* 31-Dec-13 31-Dec-12

Polarcus DMCC UAE 100% 54 54 Polarcus 1 Ltd Cayman Islands 100% - - Polarcus 2 Ltd Cayman Islands 100% - - Polarcus Samur Limited Cayman Islands 100% - - Polarcus Selma Limited Cayman Islands 100% 3,649 3,649 Polarcus MC Limited Cayman Islands 100% 9,400 9,400 Polarcus 6 Ltd Cayman Islands 100% 760 760 Polarcus Seismic Limited Cayman Islands 100% - - Polarcus UK Limited UK 100% - - Polarcus Norway AS Norway 100% 3,807 22 Polarcus Multi-Client (CY) Ltd Cyprus 100% - - Polarcus Asia Pacific Pte. Ltd Singapore 100% - - Total 17,670 13,885

* Voting rights are equivalent to shareholding for all companies.

Polarcus Asia Pacific Pte. Ltd was incorporated during year 2013.

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The Company is the ultimate parent company for the subsidiaries of directly owned subsidiaries. The non-direct subsidiaries as of 31 December 2013 is as per below;

Name of the subsidiary Country of incorporation Equity interest as of 31-Dec-2013

Equity interest as of 31-Dec-2012

Polarcus Adira AS Norway 100% 100% Polarcus Alima AS Norway 100% 100% Polarcus Amani AS Norway 100% 100% Polarcus Asima AS Norway 100% 100% Polarcus Nadia AS Norway 100% 100% Polarcus Naila AS Norway 100% 100% Polarcus Samur AS* Norway - 100% Polarcus Shipholding AS Norway 100% 100% Polarcus do Brasil Ltda Brazil 100% 100% Polarcus Egypt Limited Egypt 100% 100% Polarcus US Inc. USA 100% 100%

*Polarcus Samur AS was liquidated on 18 December 2013.

For details of transactions and balances with subsidiaries see Note 15 Related parties.

6 Other financial assets and liabilities Financial liabilities measured at amortized cost are as per below;

(in thousands of USD) 31-Dec-13 31-Dec-12 14% Senior unsecured bond (Note 17.2 in the consolidated financial statements) 37,110 39,922 8% senior unsecured bonds (Note 17.3 in the consolidated financial statements) 93,266 - 2.875% Convertible bonds (Note 18.2 in the consolidated financial statements) 109,535 103,800 8.5% Convertible bonds (Note 18.1 in the consolidated financial statements) - 34,047 Liability for license purchase (Note 7 Other long-term debt) 23,689 - Finance lease liabilities (Note 8 Long-term finance lease) - 11,339 Accounts payable 2,053 2,240 Total financial liabilities measured at amortized cost 265,652 191,348

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6.1 Fair values

31-Dec-13 31-Dec-12

(in thousands of USD) Carrying Amount Fair value Carrying

Amount Fair value

Financial assets Cash and deposits 24,576 24,576 8,931 8,931 Accounts receivables 71,570 71,570 46,521 46,521 Receivable from subsidiaries 104,579 104,579 124,976 124,976 Long-term loan to subsidiaries 331,510 331,510 422,559 422,559 Short-term loan to subsidiaries 166,515 166,515 85,121 85,121 Total 698,750 698,750 688,108 688,108 Financial liabilities 2.875% Convertible bonds 109,535 122,500 103,800 130,625 14% Senior unsecured bonds 37,110 39,912 39,922 44,385 8% senior unsecured bonds 93,266 91,200 - - 8.5% Convertible bonds - - 34,047 35,221 Other long-term debt 23,689 23,689 - - Finance lease liabilities - - 11,339 11,339 Payable to subsidiaries - - 19,478 19,478 Accounts payable 2,053 2,053 2,240 2,240 Total 265,652 279,353 210,827 243,288

Cash and deposits, accounts receivables and payable, and short-term payables, receivables and loans to subsidiaries approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of long-term loans from subsidiaries approximate their carrying amounts as the interest rates charged on the loans are at floating rates based on the prevailing market rate.

The fair values of senior and convertible bonds are measured at a rate prescribed by The Norwegian Securities Dealers Association based upon the secondary market prices of the respective securities.

The fair value of other long-term debt approximates their carrying amounts as there have been no significant changes in the market rates for similar debt financing between the date of securing the debt financing and the yearend.

Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

7 Other long-term debt On 3 October 2013, the Company entered into an agreement to purchase a worldwide license related to steering technology for marine seismic streamers for a total purchase price of USD 40 million, payable in three equal instalments over two years. The first instalment of USD 13 million was paid upon signing of the agreement and the remaining instalments fall due in October 2014 and October 2015. The discounted value of the remaining liability under this arrangement was recorded as ‘Other long-term debt’ using the effective interest method at a discount rate of 8%. Also refer to Note 4 Intangible assets.

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Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Balance as of 1 January / at the inception 36,926 - Arrangement fees amortized 97 - Principal repayments (13,333) - Finance costs-Interest charge 476 - Unpaid accrued interest (476) - Balance at the yearend 23,689 - Due within 12 months from the yearend 11,368 -

8 Long-term finance lease At the start of the year 2013 the Company had ongoing lease arrangements with Sercel Inc, Houston for the lease of certain marine acquisition equipment (the “Streamer systems”). Streamer systems with a cost of USD 59.1 million were leased under this arrangement. The Company made a full and early settlement of the outstanding liability under the lease arrangement for streamer systems on 25 March 2013.

Years ended (In thousands of USD) 31-Dec-13 31-Dec-12

Lease of Streamers

Lease of Streamers

Balance of liability at 1 January 11,339 24,641 Additions - 2,912 Principal payments (11,339) (16,214) Finance cost - interest charge 144 1,287 Actual interest paid (144) (1,287) Balance at 31 December - 11,339

9 Other accruals and payables (In thousands of USD) 31-Dec-13 31-Dec-12 Employee related accruals and payable 8,692 8,063 Accrued interest 2,095 2,191 Accrued taxes payable 293 - Accrued miscellaneous expenses 74 - Total 11,154 10,254

9.1 Employee related accruals and payable (In thousands of USD) 31-Dec-13 31-Dec-12 Accrued salaries 4,370 3,904 Accrued bonuses 4,269 4,095 Accrued pension 52 64 Total 8,692 8,063

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10 Cost of sales Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Employee salaries and other benefits 54,434 49,814 Other operational expenses 2,339 2,351 Total 56,773 52,165

11 Sales, general and administrative costs Years ended (In thousands of USD) 31-Dec-13 31-Dec-12 Salaries and other employee benefits 5,755 4,715 Other general and administrative expenses 3,934 4,072 Total 9,689 8,787

11.1 Salaries and other employee benefits Years ended

(In thousands of USD) 31-Dec-13 31-Dec-12 Salaries and bonus 49,772 45,415 Social security costs 453 350 Pension costs 2,584 2,338 Other benefits 5,718 4,446 Crew travel related costs 1,661 1,980 Employee salaries and benefits included in cost of sales (refer to Note: 10) (54,434) (49,814) Total 5,755 4,715

The Company offers a fixed base salary to all employees. The Company has an element of variable compensation through a performance-related bonus scheme. Based on overall performance of the Company against certain pre-defined metrics together with performance against individual and team-specific goals, the employees can benefit from a variable compensation in the range of 8% to 60% of annual base salary where the bonus level depends upon the employee’s grade.

All employees of the Company are offered a comprehensive employee health protection plan.

The Company has implemented a share option program for key employees whose performance will have a significant positive impact on the overall success of the Company. Please find more details about the share option program in Note 14.1 Employee share options in the consolidated financial statements.

The Company has set up a pension scheme for the majority of its employees under which the Company, on a monthly basis, contributes 8% of an employee’s base salary to the pension fund. No mandatory contribution is required from the employees. The amount contributed to the scheme is ring-fenced in favor of the employees through a trust. The vesting period of the fund is 5 years and each applicable employee is enrolled into the scheme at the end of his/her probation period. The employees may contribute funds to the scheme and the Company will match such contributions with an additional maximum 2%. During the year ended 31 December 2013 the Company has contributed USD 2.47 million to the pension scheme, full amount of which is expensed as employee benefits. Contributions made to the pension scheme during year 2012 were USD 2.68 million.

For employees who are not enrolled into the above pension scheme, the Company recognizes a provision for pensions payable to the employees based on the contractual obligation between each employee and the Company. The accrued pension liability calculated based on the contractual obligation varies from 21 days to 1 month’s basic salary for each year completed pro rata based on date of joining of each employee. As of 31 December 2013 the Company has recognized a liability of USD 0.05 million towards such pension payable. Liability recognized as of 31 December 2012 was 0.06 million.

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12 Depreciation and amortization Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Depreciation of seismic equipment 9,034 9,249 Amortization of patents 1,181 - Disposal of seismic equipment 1,200 1,530 Total 11,414 10,779

13 Finance costs Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Interest expenses on senior bonds 10,687 10,112 Interest expenses on convertible bonds 12,017 13,307 Interest expenses on lease arrangements 144 1,288 Interest expenses on other long-term debt 572 - Intercompany loan written off (Note 15.3) 9,637 - Other finance costs 315 7,234 Realized currency exchange loss 136 238 Unrealized currency exchange loss 1,036 4,566 Total 34,544 36,745

14 Finance income Year ended (In thousands of USD) 31-Dec-13 31-Dec-12 Interest income from loans to subsidiaries 21,112 16,813 Interest income from deposit with banks 55 89 Realized exchange gain 118 85 Unrealized exchange gain 3,876 4,680 Changes in fair value of financial instruments - 48 Total 25,160 21,715

15 Related parties

15.1 Receivable from subsidiaries (In thousands of USD) 31-Dec-13 31-Dec-12 Polarcus DMCC 67,902 96,969 Polarcus UK Limited 6,466 470 Polarcus Naila AS 4,984 367 Polarcus Nadia AS 4,425 3,777 Polarcus Alima AS 3,653 - Polarcus 2 Ltd 3,581 3,575 Polarcus Amani AS 2,901 1,998 Polarcus US Inc. 2,646 1,753 Polarcus Samur Ltd 2,218 30 Polarcus Seismic Limited 1,657 - Polarcus Multi-Client (CY) Ltd 1,171 504 Polarcus Adira AS 1,134 13,015 Receivables from other subsidiaries (total of 9 subsidiaries) 1,842 2,518 Total 104,579 124,976

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The above receivables are mainly for vendor payments made by the Company on behalf of its subsidiaries which are receivable within 12 months from the reporting date.

15.2 Accounts receivable (In thousands of USD) 31-Dec-13 31-Dec-12 Polarcus DMCC 17,624 4,240 Polarcus Naila AS 13,667 6,146 Polarcus Amani AS 7,658 2,144 Polarcus UK Limited 7,630 5,440 Polarcus Nadia AS 6,033 4,523 Polarcus Alima AS 5,411 325 Polarcus Asima AS 4,106 5,245 Polarcus Seismic Ltd 3,645 3,022 Polarcus Adira AS 2,521 2,361 Polarcus Shipholding AS 1,886 3,025 Polarcus Selma Ltd. 1,382 951 Polarcus Norway AS 7 - Polarcus Samur Ltd. - 3,600 Polarcus US Inc. - 2,202 Polarcus Samur AS - 3,298 Total 71,570 46,521

The above accounts receivables are outstanding balances towards the crewing services provided and in-sea equipment leased out by the Company to other Group companies. Also refer to Note 2 Revenues.

15.3 Loans to subsidiaries (In thousands of USD) 31-Dec-13 31-Dec-12 Long term loans Polarcus Selma Ltd (interest at LIBOR+4%) 125,827 125,827 Polarcus Asima AS (interest at LIBOR+4%) 71,500 71,500 Polarcus Adira As (interest at LIBOR+4%) 54,183 54,183 Polarcus Amani As (interest at LIBOR+4%) 49,770 49,770 Polarcus Alima AS (interest at LIBOR+4%) 30,230 30,230 Polarcus Samur As (interest at LIBOR+4%) - 91,049 Total long term loans 331,510 422,559 Short term loans Polarcus Alima AS (interest at LIBOR+4%) 72,394 - Polarcus UK Limited (short term, interest free) 52,200 50,200 Polarcus Nadia AS (interest at LIBOR+4%) 26,060 26,060 Polarcus Shipholding AS (interest at LIBOR+4%) 7,000 - Polarcus Naila AS (interest at LIBOR+4%) 6,142 6,142 Polarcus Samur Ltd (interest free) 2,719 2,719 Total short term loans 166,515 85,121 Total loans to subsidiaries 498,025 507,680

*During the year ended 31 December 2013 the Company received USD 81.4 million from Polarcus Samur AS towards part settlement of USD 91 million loan that was outstanding at the beginning of the year. The remaining unrecoverable balance of USD 9.6 million was written off and is included under ‘Finance costs’ in the Company’s statement of comprehensive income. Also refer to Note 13 Finance costs.

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15.4 Payable to subsidiaries (In thousands of USD) 31-Dec-13 31-Dec-12 Payable to subsidiaries included in Accounts payable 730 339 Other current payables to subsidiaries - 19,478 Total 730 19,817

15.5 Transactions with subsidiaries The Company earns its revenues from leasing seismic equipment and providing offshore employee services to its subsidiaries. See Note 2 Revenues for information regarding revenues earned from the subsidiaries.

16 Authorization of financial statement The unconsolidated financial statements of the parent company Polarcus Limited for the year ended 31 December 2013 were authorized for issue in accordance with a resolution of the directors on 27 March 2014.

Peter Rigg Chairman

Tore Karlsson Board Member

Carl-Gustav Zickerman Board Member

Hege Sjo Board Member

Arnstein Wigestrand Board Member

Karen El-Tawil Board Member

Thomas Kichler Board Member

Rolf Ronningen CEO

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Statement pursuant to Section 5-5 of the Securities Trading Act We confirm that, to the best of our knowledge, the separate financial statements for the parent company and the consolidated financial statements for the Group for the year ended 31 December 2013 have been prepared in accordance with IFRS and give a true and fair view of the Company’s and the Group’s assets, liabilities, financial position and results of operations, and the that Board of Director’s report gives a true and fair review of the development, performance and financial position of the Company and the Group and includes a description of the principal risks and uncertainties that they face.

Dubai, 27 March 2014

The Board of Directors of Polarcus Limited

Peter Rigg Chairman

Tore Karlsson Board Member

Carl-Gustav Zickerman Board Member

Hege Sjo Board Member

Arnstein Wigestrand Board Member

Karen El-Tawil Board Member

Thomas Kichler Board Member

Rolf Ronningen CEO

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Statsautoriserte revisorerErnst & Young AS

Dronning Eufemias gate 6, NO-0191 OsloOslo Atrium, P.O.Box 20, NO-0051 Oslo

Foretaksregisteret: NO 976 389 387 MVATlf: +47 24 00 24 00Fax: +47 24 00 24 01www.ey.noMedlemmer av Den norske revisorforening

To the Annual Shareholders’ Meeting ofPolarcus Limited

AUDITOR’S REPORTWe have audited the accompanying financial statements of Polarcus Limited, comprising the financialstatements of the Parent Company and the Group. The financial statements of the Parent Company and theGroup comprise the statements of financial position as of 31 December 2013, the statements ofcomprehensive income, cash flows and changes in equity for the year then ended, and a summary ofsignificant accounting policies and other explanatory information.

The Board of Directors’ and Chief Executive Officer’s Responsibility for the Financial StatementsThe Board of Directors and Chief Executive Officer are responsible for the preparation and fair presentationof these financial statements in accordance with International Financial Reporting Standards, and for suchinternal control as the Directors and Chief Executive Officer determine is necessary to enable the preparationof financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with the International Standards on Auditing. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.

OpinionIn our opinion, the financial statements of Polarcus Limited present fairly, in all material respects, the financialposition of the Parent Company and the Group as of 31 December 2013, and their financial performance andtheir cash flows for the year then ended in accordance with International Financial Reporting Standards.

Oslo, 31 March 2014ERNST & YOUNG AS

Anders GøbelState Authorised Public Accountant (Norway)

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Polarcus LimitedReg. No: WK 201867Registered Address: c/o Intertrust Corporate Servic-es (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman IslandsCorrespondence Address:c/o Polarcus DMCCPO Box 283373, DubaiUnited Arab Emirates

Polarcus 1 LtdReg. No: WK 204062Registered Address: c/o Intertrust Corporate Servic-es (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus 2 LtdReg No: WK 203939Registered Address: c/o Intertrust Corporate Servic-es (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus Samur LtdReg. No: WK 204064Registered Address: c/o Intertrust Corporate Ser-vices (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus Selma LtdReg. No: WK 204020Registered Address: c/o Intertrust Corporate Servic-es (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus MC LtdReg. No: WK 204065Registered Address: c/o Intertrust Corporate Servic-es (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus 6 Ltd Reg. No: WK 203972Registered Address: c/o Intertrust Corporate Ser-vices (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus DMCCReg. No: DMCC 1143Registered Address:Almas Tower, Level 32Jumeirah Lakes TowersDubaiUnited Arab Emirates

Polarcus Seismic LimitedReg. No: WK 213496Registered Address: c/o Intertrust Corporate Servic-es (Cayman) Limited190 Elgin Avenue, George TownGrand Cayman, KY1-9005Cayman Islands

Polarcus UK LtdReg. No: 7068161Registered Address: St. James House13 Kensington SquareLondon W8 5HDU.K.

Addresses

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Polarcus Egypt LtdReg. No: 41735 CairoRegistered Address: 7 Al-Athary Mahmoud Akoush StreetArd El-Golf, Nasr City AwalCairo, Egypt

Polarcus do Brasil LtdaReg. No: 11.428.425/0001-12 MatrizRegistered Address: Av Nilo Peçanha, 50 – group 2817, Centro, Rio de Janeiro, Brasil

Polarcus Nadia ASReg. No: 994 063 901Registered Address: c/o Wikborg, Rein & CoKronprinsesse Märthas pl. 1, 0160 OsloNorway

Polarcus Naila ASReg. No: 995 097 893Registered Address: c/o Wikborg, Rein & CoKronprinsesse Märthas pl. 1, 0160 OsloNorway

Polarcus Shipholding ASReg. No: 995 542 846Registered Address: c/o Wikborg, Rein & CoKronprinsesse Märthas pl. 1, 0160 OsloNorway

Polarcus Multi-Client (CY) LtdReg. No: HE 267816Registered Address: c/o Ernst & YoungSpyrou Kyprianou, 27, Ernst & Young House, P.C. 4001, Limassol, Cyprus

Polarcus Alima ASReg. No: 995 963 426Registered Address: c/o Wikborg, Rein & CoKronprinsesse Märthas pl. 1, 0160 OsloNorway

Polarcus Norway ASReg. No: 996 798 305Registered Address: c/o Wikborg, Rein & CoKronprinsesse Märthas pl. 1, 0160 OsloNorway

Polarcus US Inc.EIN No: 80-0716980Registered Address: c/o Capitol Services Inc615 South DuPont Highway, Dover, Kent CountyDelaware 19901USA

Polarcus Amani ASReg. No: 998 025 966Registered Address:c/o RSM Hasner Kjelstrup & Wiggen ASFilipstad Brygge 10252 Oslo Norway

Polarcus Asima ASReg. No: 998 025 877Registered Address:c/o RSM Hasner Kjelstrup & Wiggen ASFilipstad Brygge 10252 Oslo Norway

Polarcus Adira ASReg. No: 998 026 016Registered Address:c/o RSM Hasner Kjelstrup & Wiggen ASFilipstad Brygge 10252 Oslo Norway

Polarcus Nigeria LimitedReg. No: 1024288Registered Address:196B Awolowo RoadIkoyi, LagosNigeria

Polarcus Asia Pacific Pte. Ltd.Reg. No: 201322670ZRegistered Address:1 Fullerton Road#02-01 One FullertonSingapore 049213

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Polarcus Limited 2013 Annual Report