Polarcus 2008 Annual Report by Polarcus

08 Annual Report

Content

4. Responsibility, Innovation, Excellence 6. First year of Polarcus 8. Letter from the Chairman: Turning heads 9. Letter from the CEO: No average achievement

10. Polarcusâ&#x20AC;&#x2122; distinctive offering 24. Corporate governance commitments 12. EXPLORE GREEN 30. Board of Directors 14. New building projects 32. Board of Directors Report 16. Polarcus innovative fleet 36. Consolidated financial 18. Executive management statements 22. The Polarcus Shares 41. Notes

67. Auditors report 69. Addresses

Po-lar-cus n.

(pō-lăr’kus)

[from the Latin polus, pole and arcus, bow, a curved structure.] Polarcus is a pure play marine geophysical company with a pioneering environmental agenda, specializing in highend towed streamer acquisition from pole to pole. The vision is to become a pioneer in an industry whereby the frontiers of seismic exploration are responsibly expanded without harm to the world.

With an initial fleet operation of four high-end 12 streamer 3D vessels and two multipurpose wide-tow 6 streamer 3D / Source vessels, the Company is initially focusing it’s marketing efforts in the “contract market” and will later also develop a strategy to enter into the “non exclusive” or “multi client” market.

The Company is building six ultra-modern 3D seismic research vessels which will operate worldwide providing best-in-class marine seismic services to the oil and gas industry.

The Company will also place a special focus on the Arctic in keeping with the Company’s strategy to responsibly pursue frontier opportunities, seeking contracts for operations within this region.

Responsibility Innovation Excellence

Vision

Strategy

The Company’s vision is “to be a pioneer in an industry where the frontiers of seismic exploration are responsibly expanded without harm to our world”.

To achieve the Company’s corporate goal a seven point business strategy has been defined comprising the following key elements:

Core values

++ Pioneering the environmental agenda.

In support of the above vision, the Company has identified a set of ‘core values’ which define the Company’s ethos and the way Polarcus’ management, employees and contractors are expected to perform within the business.

++ Operate at least 6 ultra-modern seismic vessels by end 2010.

++ Recruit, develop and retain highest caliber industry professionals.

++ Enhance service offerings through key alliances and partnerships.

++ Responsibility – for their actions, for each other, and for the environment and the world around.

++ Maximize operational efficiency.

++ Innovation – in business and in operations.

++ Optimize financing and sales structures.

++ Excellence – in delivery for shareholders and clients

++ Apply a risk management approach to all decision

alike.

making processes.

Goal

2008 4

January

February

March

April

May

Steel cutting for Polarcus Naila

June 8th

Steel cutting for Polarcus Nadia

May 18th

Signing of shipbuilding contract with Drydocks World - Dubai for vessel 1-4.

April 28th

Signing of shipbuilding contract with Drydocks World - Dubai for vessel 5 & 6.

June

June 15th

The Company’s corporate goal is “by 2012 to be the most environmentally responsible towed marine seismic supplier, with a strong focus on risk management, specializing in the high end 3D market and the Polar Regions whilst achieving long term shareholder value”.

London, UK Europe office 1 April 2009

Houston, USA North & South America Office

Dubai, UAE Polarcus HQ

Polarcus Limited Cayman Islands

Hull 71 Polarcus Asima Hull 72 Polarcus Alima

Steel cutting for Polarcus Samur

July

August

Keel laying for Polarcus Naila

Keel laying for Polarcus Nadia

September

Steel cutting for Polarcus Asima

October

Steel cutting for Polarcus Selma

November

December 18th

Polarcus 6 Cayman Islands

Hull 70 Polarcus Selma

December 15th

Polarcus 5 Cayman Islands

Hull 69 Polarcus Samur

November 2nd

Polarcus 4 Cayman Islands

Polarcus Seismic Limited Cayman Islands

October 20th

Polarcus 3 Cayman Islands

Polarcus DMCC Dubai

Hull 67 Polarcus Naila

September 14st

Polarcus 2 Cayman Islands

Hull 66 Polarcus Nadia

September 1st

Polarcus 1 Cayman Islands

Steel cutting for Polarcus Alima

December

First year of Polarcus

Polarcus has signed shipbuilding contracts for six vessels with Drydocks World – Dubai and corresponding vessel design and equipment agreements with Ulstein Design AS. Construction of the first vessel commenced in Dubai on the 18 May 2008 with the steel cutting for “Polarcus Nadia”. By 18 December 2008 construction of all 6 vessels had commenced. The Polarcus vessels are all ultra-modern seismic research vessels built to the ULSTEIN SX124, SX133, and SX134 designs. These vessels combine the latest developments in maritime technology with the most advanced seismic systems commercially available. The vessels have been designed for the most challenging offshore projects and operating conditions. Two rounds of financing have been undertaken during 2008, resulting in USD 212 million of equity financing and USD 330 million of debt like financing. Trades in the Company’s shares have since 8 July 2008 been registered on the Norwegian OTC list which is an information system for unlisted shares, administrated by the Norwegian Securities Dealers Association. The Polarcus shares are traded under the symbol PLCS. The Company had as of 31 December 2008 recruited 56 full time employees of which 44 are based in Dubai, UAE, 1 in Houston, USA and 11 field engineers. The 2008 recruitment focus secured the Company executive management team together with other key office-based positions and the site team necessary to oversee and support the new build program. On 10 November 2008 Polarcus announced a deferred payment arrangement with Drydocks World - Dubai LLC in relation to vessels 4, 5 & 6. Under the terms of this arrangement certain payment installments due under the original shipbuilding contracts are deferred from the scheduled milestone payment dates to the contractual delivery dates of the vessels. The total value of the deferred installments amounts to USD 99 million. An interest rate of LIBOR + 3 percent will apply on each deferred installment from the time and on the terms such installment would have been paid under the original shipbuilding contracts to the time of actual payment.

++ Signed

shipbuilding contracts for 6 ultra-modern seismic research vessels with Drydocks World – Dubai LLC

++ Two

rounds of financing have been undertaken resulting in USD 542 million of financing

++ Polarcus

shares available in the Norwegian OTC system since 8 July 2008.

++ Construction

of all 6 vessels had commenced by 18 December 2008.

++ 56

people employed during the year 2008.

++ Deferred

payment arrangement in relation to vessels 4, 5 & 6 at a total value of USD 99 million secured.

Turning heads Letter from the Chairman

Dear Polarcus shareholders, Polarcus has turned a few heads in the first year! We set out with the revolutionary idea of building a seismic company that could combine operational and geophysical excellence with a strong ethos of corporate responsibility for the world around us, and at the same time challenging others in our industry to follow suit. We also aspired to build a company with a positive environment where employees would feel respected and excited to come to work every day, motivated by a realization that they could make a real difference. We believe that in our first year we have indeed come a long way in building the necessary foundations for that vision and we continue to live by our ‘core values’: responsible people drive innovative performance which generates excellence for all. This is in fact exactly what took place in 2008 as we launched the company and commenced construction of six ultra-modern 3D seismic research vessels with their unique and characteristic design features.

Following our focus on innovation and excellence, our financial results were also impressive in the context of a very challenging year in the financial markets. During 2008, we managed to raise USD 542 million to finance our ongoing construction. Further financing will be required during 2009. As we enter our second year, we remain committed to our vision to responsibly expand the frontiers of seismic exploration without harm to our world. We also remain dedicated to delivering excellence in everything we do.

le ss “t he futu re of Pol a rcu s will be n o g“ re m a rk a ble th a n ou r beg in ni n

At the heart of our company is our conviction that the seismic business is fundamentally one of customer service. As such, our people work hard to exceed expectations in everything they do. Our job is to ‘‘get it right’’ every step of the way, from the construction of the vessels overseen by our skilled project team at Drydocks World - Dubai, to an efficient sales process and the successful execution of the job by our operations teams. Not surprisingly, our company promotes an ethic of leadership in all that we do based on the following five leadership principles: Treat Your People Right, Communicate with Your Team, Inspire Greatness in Others, Encourage Initiative & Innovation and Do the Right Thing. Our culture will be vital to our success in taking care of our employees and customers. As we continue to grow we will further sharpen our focus on strengthening the company culture, as we work to keep the feel of our company small yet highly responsive to our customers’ needs. We are determined to become better as we become bigger.

We know that we cannot take our accomplishments for granted. We will continue to do all that has made us successful in the past while remaining focused on meeting our milestone targets for 2009 and delivering results that will ensure our future success. After all, ours is not just a story about 2008; it’s a story about delivering real value each and every day, for a long time to come. Our aim is to exceed the extraordinary standards we have set so that the future of Polarcus will be no less remarkable than our beginning. We believe we can keep turning heads in our industry for many years to come. On behalf of our dedicated Polarcus employees, we thank you for your continued interest in and support of Polarcus. Sincerely Peter M. Rigg Chairman

No average achievement Letter from the CEO

Dear Polarcus shareholders, In 2008 we have met, if not exceeded the majority of our year end objectives that we set ourselves when we first launched Polarcus. Our year end targets for recruitment, marketing and sales, and overall company development have all been achieved. We have successfully undertaken two rounds of financing, resulting in USD 212 million of equity financing and USD 330 million of debt financing. Our vessel build schedule is progressing efficiently, with construction on all six vessels now well underway. Only vessels 3 and 4 are behind our guided schedule, by two months, due to delays in the production of drawings attributable in part to the new design of these two unique vessels. Construction on vessels 5 and 6 however was able to start ahead of time. This has been no average achievement as we set our ambitions high and came to the market with an aggressive plan to build, launch and operate six sophisticated marine seismic vessels in less than 30 months. It has been made possible to great extent by the caliber and commitment of the people we have recruited over the course of the year.

tion Sentinel® solid streamers and the Orca™ navigation system. We have as a result established important differentiation in our service offering that is already attracting considerable attention from prospective clients. As part of our original business plan we developed a clear road map and applied a risk management approach to our decision making that has enabled us to remain firmly on course throughout this crucial first year. We are already seeing the benefits of that foresight as we navigate our way through the changing and potentially challenging market environment we are currently witnessing.

“we a re on tra ck to rea liz e ou r co rporat e g oa l”

Our vision and core values have proved a strong magnet for those who share our ideals and believe that Polarcus can bring something new to the seismic industry; that we can be a pioneer of responsible exploration. This at a time when recruitment in the industry was especially challenging as a consequence of the exceptionally tight personnel market in the first half of the year. As a result we have now in place a very strong and highly respected management team that will enable us to move successfully to the next phase of the company’s development and assure Polarcus’ strong competitiveness in the high-end 3D seismic market. We recognize the importance of innovation and excellence at Polarcus. From the outset we have placed great emphasis on making the right maritime and seismic technology choices. Our vessels all incorporate the ULSTEIN X-BOW® inverted bow design alongside many other advanced maritime features that will place our fleet firmly at the forefront of maritime innovation. Our seismic technology choices include many of the best-in-class systems currently available from leading companies such as ODIM, Sercel and ION, as well as the latest genera-

As we enter 2009, we are experiencing strong market interest in Polarcus’ value proposition and we give highest priority to reach our corporate goal. We are also encouraged by the response we have received from potential investors during the current challenging market conditions and we are through various avenues working relentlessly to raise the remaining funding required for 2009. We believe that the underlying industry fundamentals remain solid and we see encouraging indications today that our sector will experience a soft landing, evidenced in part by the fact that several major national and international oil companies are maintaining, and even in some cases increasing, their upstream E&P budgets. These are exciting times for Polarcus and we are eager to commence operations. By the end of 2009 we will be on our way to becoming a world class geophysical company, with two high-end 12 streamer 3D vessels in operation, a professional and experienced support organization, and some 200+ employees. We thank our shareholders for the trust they have placed in us and we will continue to do our utmost to preserve that trust as we work rigorously to fully finance the Company and count down to the launch of Polarcus Nadia, derived from the Arabic name meaning ‘the beginning, first’, in the third quarter of 2009. Sincerely Rolf Ronningen CEO

Polarcus’ distinctive offering

Polarcus is a pure play marine geophysical company with a pioneering environmental agenda, specializing in high-end towed streamer acquisition from pole to pole. The Polarcus fleet will be at the forefront of maritime and seismic innovation from launch, well positioned to meet the current and future demands of the industry. Service capabilities will encompass conventional 3D surveys, sophisticated wide and multi-azimuth projects, high density 4D production surveys, and marine seismic operations in areas of environmental sensitivity ranging from the tropics to the Arctic, the latter being an area currently receiving significant attention from the major international oil companies. Polarcus will be the sole operator in 2010 of 3D seismic vessels of less than 20 years hull age with the high ice class notation, ICE-1A, providing a unique competitive advantage for Arctic operations. The expansion of the industry into frontier and environmentally sensitive regions of the world is also expected to drive a much higher level of environmental compliance worldwide as new legislation on emissions to air and water come into effect. Polarcus has placed a major emphasis from start-up on “green” investments, both for its seismic systems and its maritime technologies in order to meet these challenges. Polarcus’ pioneering environmental agenda will help to mitigate some of the environmental issues that have traditionally affected vessel utilization and enable operations to expand responsibly into new frontier regions. Design features such as the DP2 dynamic positioning system, double hull, low sulfur fuels, selective catalytic reduction (SCR) catalysts, bilge water cleaning and ballast water treatment systems, and the CLEAN DESIGN class notation will reduce the vessels environmental footprint and potentially enable access to environmentally sensitive areas where some or all of the advanced design features above could be a requirement for entry. Considerable attention has been placed on marketing and sales efforts in order to secure backlog in the “contract market” for the first vessel by early Q2 2009. Projected areas for initial operations are the Atlantic margins, the Mediterranean, and the North Sea, all of which are areas with consistent high activity. The Com-

pany has placed a special focus on the Arctic in line with the strategy to responsibly pursue frontier opportunities, seeking opportunities for operations within this region from 2010 onwards. Other regional markets such as the Gulf of Mexico, Brazil, and the Eastern US seaboard are also being researched to identify opportunities for contracts of a duration that makes it economically viable to penetrate these markets early. The Company intends to develop a ‘back yard’ market around the Gulf countries to establish it as the preferred supplier for projects that may arise close to the Dubai office. A strategy is also being developed to enable Polarcus to enter into the “multi-client” market once the operations deliver solid cash flow. Operating in both markets provides more flexibility for vessel scheduling as well as generating steady income in all phases of the seismic life cycle. Rather than develop an in-house processing capability Polarcus will focus on establishing a relationship with a reputable and non-aligned processing company in order to offer a ‘full service’ operation to clients. This will ensure the management team can commit its undivided attention to the development of the towed marine seismic business. Polarcus has in March 2009 entered into a 4 year agreement with the leading global non-aligned data processing company, GX Technology Corporation, under which GX Technology will provide seismic data quality control and data processing services onboard the Polarcus vessels, and advanced onshore seismic data processing capacity and services at one of their global Data Processing Centers as and when such services are part of the scope of surveys awarded to or required by the Company. Polarcus has employed a well respected and highly experienced management team from within the seismic industry and will directly employ office, marine and seismic personnel who will be operating under one unified EHS&Q (Environment, Health, Safety, and Quality) management system strengthening its objective of becoming the responsible leader in safe, clean, and efficient marine seismic data acquisition. The Company in July 2008 became a core member of the International Association of Geophysical Contractors (IAGC) and the CEO was elected to the IAGC Board of Directors in September 2008. The IAGC maintains several programs relating to environmental matters and the Company plans to become an active participant in the various committees and sub-committees relating to these.

Polarcus Nadia

EXPLORE GREEN

A pioneering environmental agenda. It is controversial and urgent. Debate and discussion carry forth from classrooms to boardrooms, from TV’s to radios and even to ships at sea. This emotional topic, of course, consists of the joint challenges of climate change and sustainable development with the primary question being; how are we going to address this? We believe the answer is “the world needs global solutions”. This means nations, NGO’s, individuals and the business world working together as a team. The seismic industry should not be exempt even though it is a part of the oil and gas business which is perceived so often as being on the dark side of the environmental debate. In reality, fossil fuels will have a place alongside clean energy sources for many decades so our industry has a key stewardship role to play in making every effort to operate in an environmentally responsible manner. There have been some in our industry who maintained a business strategy that allowed them to operate with little concern for environmental responsibility and sustainable development. After all, it was fossil fuels, the dark side; they didn’t sell to the public and didn’t see a profit in operating green. At Polarcus, a high-end marine seismic company launched in 2008, we approach this from the perspective of individual citizens seeking global solutions and recognize that we must be willing to accept economic costs now in order to avoid negative future consequences of inaction. We are well aware that we have a significant

opportunity within the maritime sphere of our industry to perform our work cleaner and greener. Our goal is to rise up and meet this challenge head on. In launching Polarcus we are building an environmentally responsible company that we envision as being a model for others. Our beliefs are embedded in our corporate values of respect, innovation and excellence, and are apparent throughout the corporate lifecycle from the design of our seismic fleet, through their operation, to their eventual recycling. Our corporate values are the foundation for what we call “our pioneering environmental agenda”. To be a pioneer we lead by example. Leading by example means, we know where we start from and how we’ll compare alongside our peers. We are pursuing an Emission Index for COx, NOx and SOx in our vessel build program. The principal uses an Emission Indexing algorithm to measure our environmental footprint. The goal is to minimize that footprint whilst simultaneously maximizing vessel efficiencies. The Emission Indexing is being conducted on the global marine seismic fleet by Ulstein International and Det Norske Veritas AS. This will establish benchmarks for existing vessels as well as new builds. It is our intention to share this data with the industry as it is only together that a timely, effective and pragmatic global solution can be found for the pollution and greenhouse gas challenges.

The resultant data will provide clients with the ability to objectively evaluate the sector and select an environmentally responsible contractor, furthermore challenging us all to innovate and move towards a cycle of continuous improvement.

carbon offset matching plan with our clients and suppliers, to offset the carbon footprint generated during our operations. The offsets would be used to support sustainable development in areas of extreme need, allowing us to give something back to the global community.

Whilst building the company nearly every aspect of our vessel design and technology selection has come under the green focus. In designing the fleet we recognized the importance of reducing atmospheric emissions from our vessels. We investigated Selective Catalytic Reduction Catalysts and through installation of these units we realized an investment in our future.

Small initial steps perhaps. But by increasing participation, promoting awareness, investing in green technologies and leading by example we hope to inspire others in our sector to become part of the global solution.

Similarly, by utilizing the latest systems for bilge and ballast water treatment we reduce, if not eliminate the number of contaminants and non-native species being released into our oceans, a lesser debated but equally important area of concern. In parallel to the engineering initiatives, we are continuously seeking other ways to address the green agenda. For instance we measure the carbon footprint of our office, including business seminars held elsewhere. Employees calculate the carbon footprint of primary cars and residences, with the carbon offsets paid for personally by the senior managers and by the company for all other employees. Another idea under consideration is a

The above article by Peter Zickerman, EVP Polarcus, was published in the March 2009 issue of PennWellâ&#x20AC;&#x2122;s Offshore ÂŽ magazine

NB69 10% Overall construction

NB66 51% Overall construction 98% Steel cut 94% Steel constructed

NB67 44% Overall construction 98% Steel cut 88% Steel constructed Operation Q4 2009 Keel laying 20 Oct 2008 Steel cutting 08 Jun 2008

NB70 7% Overall construction 23% Steel cut 15% Steel constructed Operation Q2 2010 Keel laying 22 Feb 2009 Steel cutting 02 Nov 2008

Operation Q3 2009 Keel laying 14 Sep 2008 Steel cutting 18 May 2008

31% Steel cut 18% Steel constructed Operation Q1 2010 Keel laying 31 Jan 2009 Steel cutting 1 Sep 2008

NB71 6% Overall construction 44% Steel cut 18% Steel constructed Operation Q1 2010 Steel cutting 15 Dec 2008

NB72 2% Overall construction 26% Steel cut 8% Steel constructed Operation Q2 2010 Steel cutting 18 Dec 2008

As of March 2009

Polarcus innovative fleet

The Polarcus fleet has been designed to meet the industry’s current and future needs, including the latest operational techniques such as wide and multi-azimuth seismic. The fleet is also well positioned for industry expansion into new frontier regions that demand the latest in both maritime and seismic technology, and environmental safeguards. The Polarcus fleet comprises 3 different vessel designs from Ulstein Design AS, each incorporating the innovative ULSTEIN X-BOW® hull that provides for a smoother and more fuel efficient passage through water. The Company has applied rigorous EHS&Q criteria in the design of the vessels to account for extreme temperature exposures, tough sea conditions, maximized transit speeds and optimized seismic handling. The vessels are designed in accordance with the Det Norske Veritas (DNV) Dynamic Positioning class 2 notation (DYNPOS-AUTR) that will allow for continued safe steerage of the vessel in case of an engine failure, especially important for operations in areas with infrastructure hazards such as producing oilfields. The vessels are amongst the most environmentally sound seismic vessels in the market, designed with exhaust catalysts for all main engine exhaust lines in order to reduce the emissions of NOx, HC, soot and sound. These designs supersede any international requirements currently in force and are in accordance to DNV’s latest rules for CLEAN DESIGN class. There are no fuel tanks adjacent to the vessels external hull, to mitigate potential exposure to the environment, and the adopted bilge water cleaning system will reduce contaminants to <5 ppm compared to typical shipping levels of 15 ppm or greater. The ULSTEIN SX133 and SX134 vessel designs also have a high ice class classification, ICE-1A, and an advanced ballast water treatment system to remove invasive species. All six vessels are designed for crew comfort and safety, with gymnasium, sauna, individual offices, conference room, training room and high grade interiors of Scandinavian standards for cabins and recreational areas. The COMF-V(3) class notation for reduced noise and vibration levels will provide a quieter, safer work environment for the crew and an improved life of machinery and equipment.

Polarcus Nadia & Polarcus Naila Launching in 2009 “Polarcus Nadia” and “Polarcus Naila” are 12 streamer 3D vessels built to the ULSTEIN SX124 design. These vessels are capable of towing up to 12 streamer cables of 8,000m length with a lateral separation of up to 75m, or 10 streamer cables of 8,000m length with a lateral separation of 100m. They 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 enabling them to operate safely in light ice conditions.

Polarcus Samur & Polarcus Selma Launching in 2010 “Polarcus Samur” and “Polarcus Selma” are multipurpose vessels built to the ULSTEIN SX133 design for both 6 streamer 3D seismic and for wide azimuth source operations. These vessels are capable of towing up to 6 streamer cables of 8,000m length with a lateral separation of up to 160m. They have an LOA of 84.2m, a draft of 6.0m and a maximum speed of 18 knots, and carry the high ice class notation, ICE-1A, enabling them to operate safely in the Arctic Ocean.

Polarcus Asima & Polarcus Alima Launching in 2010 “Polarcus Asima” and “Polarcus Alima” are 12 streamer 3D vessels built to the ULSTEIN SX134 design. These vessels will be capable of towing up to 12 streamer cables of 8,000m length with a lateral separation of 100m. They have an LOA of 92.0m, a draft of 7.5m and a maximum speed of 15 knots, and carry the high ice class notation, ICE-1A, enabling them to operate safely in the Arctic Ocean.

ULSTEIN SX124

ULSTEIN SX133

ULSTEIN SX134

Executive management With combined relevant seismic, marine and geophysical industry experience of over 215 years, the Executive Management team at Polarcus is not only a leader in this industry, but well-equipped to pursue the core focuses of

the company: innovation and excellence. The Executive Management team embodies the Polarcus culture and promotes an ethic of leadership and environmental responsibility dedicated to achieving all company goals.

Rolf Rønningen

Tom Henrik Sundby

Rolf (born 1957) has over 28 years of seismic industry experience and has held senior positions at GECO, PGS and most recently was CEO of Eastern Echo Ltd. His experience covers both technical and operational management of towed streamer seismic vessels. Rolf holds a B.Sc. in Computer Sciences from the Kongsberg Ingeniørhøgskole in Norway.

Tom Henrik (born 1967) has over 15 years financial management and business development experience, with management positions in KPMG before joining TINE Norway as Head of Controlling department and Head of M&A. Most recently he was Managing Director of TINE UK Limited. Tom Henrik holds a Bachelor of Management and Economics from the Norwegian School of Management.

Chief Executive Officer

Shareholding in Polarcus: 1,000,000 Warrants: 750,000 Stock options: 580,000

Chief Financial Officer

Shareholding in Polarcus: 350,000 Warrants: 350,000 Stock options: 380,000

Carl-Peter Zickerman

Executive Vice President & Head of Strategic Investments Carl-Peter (born 1972) holds valuable experience in the seismic industry, gained from his prior start-up venture, Eastern Echo Ltd. Prior to this he founded GeoBird Ltd. His experience covers both maritime and seismic operations, including vessel conversions and newbuilds. Carl-Peter holds a B.Sc. in Marine Engineering from Kalmar Maritime College, Sweden. Carl-Peter is a Member of the Board of Polarcus Ltd. Shareholding in Polarcus: 32,086,117 Warrants: 15,000,000 Stock options: 380,000

Eirin M. Inderberg

Paul Lionel Hanna

Christian Fenwick

Eirin (born 1968) has over 13 years experience as a lawyer, initially for the law firm Wikborg Rein & Co. in Oslo and London; as a lawyer at the Oslo Stock Exchange, and most recently as General Counsel of Eastern Echo Ltd. Her expertise includes Norwegian securities law, company law, and ship financing. Eirin holds a law degree from the University of Oslo, Norway and a BA in Business Administration and Economics from the California Lutheran University, USA.

Senior Vice President Human Resources

Senior Vice President Business Development & Multi Client

Paul (born 1964) has over 22 years of industry experience and has held senior positions in various divisions of the Schlumberger group. His experience includes the technical, personnel and operational management of marine seismic vessels. Paul holds a MA in Engineering from the University of Cambridge, UK and a Ph.D. in Geodesy from the University of Nottingham, UK.

Christian (born 1960) has over 26 years of industry experience and has held senior positions at Merlin Geophysical, Schlumberger Geco-Prakla, Schlumberger Information Solutions, and Eastern Echo Ltd. His experience covers business development, marketing, sales, operations, and project management. Christian holds a B.Sc. in Geology from the University of Durham and a professional certification in project management.

General Counsel

Shareholding in Polarcus: 1,000,000 Warrants: 1,000,000 Stock options: 380,000

Shareholding in Polarcus: 1,000,000 Warrants: 750,000 Stock options: 380,000

Shareholding in Polarcus: 600,000 Warrants: 450,000 Stock options: 380,000

Executive management

Svein Johnny Naley

Jeff Corkhill

Trygve Reksten

Senior Vice President Technology

Senior Vice President Operations

Senior Vice President Contract Sales

Svein Johnny (born 1965) has over 15 years of industry experience and has held senior positions at PGS, Reservoir Exploration Technology (RXT), and most recently at Eastern Echo Ltd. where he was responsible for the companyâ&#x20AC;&#x2122;s fleet new build project. Svein Johnny is a Maritime Engineer, specializing in mechanical/ electro-automation. His expertise includes project management of vessel new builds and conversions, seismic and maritime support, and operations management.

Jeff (born 1960) has over 26 years of industry experience, including time in the field, and has held several senior positions at Schlumberger WesternGeco, Caspian Geophysical and AGO. Jeff was also VP Operations for WesternGeco Marine Electromagnetic Services. His experience covers operations management, marine sales, marketing, and region management, including eight years in the field. Jeff holds a HNC Electronics degree from C.C.A.T. in the UK.

Trygve (born 1963) has over 17 years of industry experience and has held several management positions at PGS and Eastern Echo Ltd. His experience covers onboard technical roles, operations, sales, business development, procurement and market analysis. Trygve holds a B.Sc. in Electrical Engineering and Electronics from the University of Manchester, a degree in Political Science from the University of Oslo, and a Masters of Management degree from BI Norwegian School of Management.

Shareholding in Polarcus: 550,000 Warrants: 450,000 Stock options: 380,000

Shareholding in Polarcus: 250,000 Warrants: 250,000 Stock options: 380,000

Shareholding in Polarcus: 400,000 Warrants: 400,000 Stock options: 380,000

Christopher Griffin

Vice President Environment, Health, Safety & Quality Christopher (born 1961) has over 23 years of industry experience both onshore and offshore with Western Geophysical, Horizon Exploration, PGS and Eastern Echo Ltd. His experience covers both onshore operations and project management, including 12 years in the field and 6 years in EHS&Q Management. Christopher holds a B.Sc. in Business Management from Louisiana, USA along with professional certification in Health and Safety, Lead Auditing and Accident Investigation. Shareholding in Polarcus: 880,000 Warrants: 750,000 Stock options: 330,000

Magnus Oberg Vice President IT

Magnus (born 1970) has over 20 years of IT experience working in 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 AgencyCompany before becoming the Group IT Research & Development Manager based in Dubai. His expertise includes networking, security, and high-availability infrastructure solutions utilizing the latest in virtualization and storage technologies. Shareholding in Polarcus: 500,000 Warrants: 500,000 Stock options: 330,000

The Polarcus Shares

The Company has one class of shares which carry equal rights in all respects and each Share carries one vote at the Company’s general meeting.

Name

Holding

Drydocks World Llc

75,000,000

36.84%

Polarcus’ issued share capital is USD 2,035,718.55 divided into 203,571,855 shares each with a nominal value of USD 0.01, all fully paid and issued. The shares are in registered form and are registered with the Norwegian Central Securities Depository (“VPS”) register with ISIN KYG7153K1085.

Zickerman Holding Ltd

54,132,295

26.59%

Zickerman Group Ltd

32,086,117

15.76%

Euroclear Bank S.A.

8,591,300

4.22%

Ulstein Shipping AS

5,000,000

2.46%

Vitgu Shipping AS

3,000,000

1.47%

Marty Zickerman-Quinn

2,857,143

1.40%

Bjarte Henry Bruheim

2,000,000

0.98%

Dnb Nor Navigator

1,880,272

0.92%

Clearstream Banking S.A. 1,491,000

0.73%

Jpmorgan Chase Bank

1,490,000

0.73%

Rolf Rønningen

1,000,000

0.49%

Seami Invest Limited

1,000,000

0.49%

Trades in the Polarcus’ shares have been registered in the OTC system since 8 July 2008 under the symbol PLCS.

Christopher Joseph Griffin 750,000

0.37%

Paul Lionel Hanna

750,000

0.37%

Hans-Peter Burlid

750,000

0.37%

David John Pryer

750,000

0.37%

Dnb Nor Smb

661,359

0.32%

Hønefoss Invest AS

616,000

0.30%

Christian Fenwick

600,000

0.29%

Top 20 Shareholders

194,405,486

95.50%

Others

9,166,369

4.50%

Total

203,571,855

100%

As of 31 December 2008

Polarcus Nadia

Corporate governance commitments On 4 February 2009 the Board of Directors of Polarcus adopted a set of corporate governance commitments. The commitments are founded on the recommendations of the Norwegian Corporate Governance Code (the “Code”), as applicable at all times. A summary of the commitments is provided below. Polarcus Articles of Association, Corporate Governance Document and Terms of Reference for the Board of Directors, the Board committees, the chairman and deputy chairman of the Board are available on the Polarcus web site, www.polarcus.com.

Recommendation 3: Equity and Dividends

Recommendation 1: Implementation and reporting on Corporate Governance

Polarcus is committed to maximizing the shareholder value, hereunder declaring dividend to the shareholders from its profit. Polarcus is under certain of its financing arrangements subject to dividend restrictions. Due to these dividend restrictions and the current phase of the Company, Polarcus does not envisage any declaration of dividend to the shareholders for the fiscal year 2008.

Polarcus believes that focus on corporate governance is critical to its success and long-term growth. Polarcus is committed to maintaining high standards of corporate governance. The governance structure of Polarcus is designed to be appropriate to shareholders’ expectations, the size, business and the recent history of the Polarcus Group and adheres to the Norwegian Code of Practice for Corporate Governance (the “Code”), Cayman Islands law and practice and the Memorandum and Articles of Association of Polarcus. The Company will comply with good corporate governance through the establishment of a comprehensive and efficient framework of commitments, procedures, checklists and audits thereof and the promotion of a responsible corporate culture throughout the Polarcus Group. The Board of Directors will annually review, evaluate, explain and report on the Company’s compliance or non-compliance of the individual corporate governance commitments and the applicable corporate governance recommendations of the Code, such report to be included in each annual report of the Company. The Company’s vision and core values are presented on page 4 of this annual report. The “core values” of the Company are implemented through its commitments and procedures. The essential commitments are posted on the Company’s web site.

Recommendation 2: Business The goals and strategies of Polarcus are presented on page 4 of this annual report. The Company’s business is clearly defined in the Articles (last amended 19 May 2008) clause 3: “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 in-

ternational oil and oil services business, 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 thereto, 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 is committed to have an equity capital at a level appropriate to its objectives, strategy and risk profile.

The Board of Directors has the authority to distribute any authorized but not yet issued or reserved shares, currently amounting to 283,610,062 shares of USD 0.01 par value. The purposes for which the issued share capital may be increased is left for the Board of Directors to decide. Polarcus will when asking the general meeting for an increase of its authorised share capital ensure that the purposes for which the share capital may be increased is clearly defined. In accordance with its Articles, Polarcus may only acquire its own shares if and in so far as approved by the general meeting through an ordinary resolution, such mandate to be for a specific number of shares and for a specific period of time. The Board of Directors will ensure that any request to the general meeting for a mandate to acquire any of the Company’s own shares shall be limited in time to the following annual general meeting. The Company does not currently hold any mandate to acquire own shares.

Recommendation 4: Equal treatment of shareholders and transactions with close associates Polarcus has one class of shares. Polarcus is committed to equal treatment of all shareholders. The Articles of Polarcus do not prescribe any pre-emption rights for shareholders of the Company. In the event that the Company consider it to be in the best interest of shareholders or necessary to perform a share offering, the Company is committed to limiting the level of dilution. The Company will in connection with a share issue carefully consider the purpose and need for new equity, the urgency of such equity, the strategic positioning between the Company and the new shareholders the offering is directed towards, the offer price, the financial market conditions and the need for compensating existing shareholders.

Should the Company find it beneficial to shareholders that Polarcus performs a stock repurchase, the Company will adapt and follow best practice procedures. Polarcus has developed procedures to handle potential conflicts of interest. The executive management of the Company and each director has a duty to notify the CEO and the Board of Directors respectively if it becomes known to any of them that he or she or a related party has any direct or indirect interest in a not immaterial transaction to be entered into by the Company. Any director with such interest shall refrain from voting in respect of such transaction. The executive management shall also inform the Company of any financial interest each of them might have in any other company. In the event of a non-material transaction between the Company and a shareholder or shareholders, directors, members of executive management or close associates of any such parties, the Board shall arrange for a valuation from an independent third party unless the Board of Directors decides to ask the general meeting to resolve on the matter.

information on the matters to be discussed with sufficient details and content to enable the shareholders to form a view on all matters to be considered at the meeting, any recommendation of a nomination committee and, where applicable, proposal for resolutions;

++ If necessary, the method and deadline for sharehold-

ers to give notice of their intention to attend and vote at the meeting, such notice to be given either by letter, e-mail or fax and the deadline to be earliest the day before the date of the meeting;

++ A form of instrument of proxy that may be used at

the shareholders’ discretion, guidelines for completing the proxy and information on who the shareholder can appoint as proxy;

++ At which address an instrument of proxy shall be

deposited either in original or in copy by fax or e-mail latest at the time the meeting starts;

++ To whom any proposals or comments to the notice, the agenda for the meeting and any proposal for resolutions can be directed;

Recommendation 5: Freely negotiable shares

++ The web-pages on which the notice and the support-

The Company’s Articles provide that upon listing of the shares at a regulated investment market, the shares shall be freely transferable. Prior to such listing, a transfer of shares is subject to a consent from the Board of Directors.

Participation in a general meeting The Company will ensure that as many shareholders as possible may exercise their rights as shareholders by participating in a general meeting and that the general meeting works as an effective forum for the views of the shareholders, hereunder by implementation of the following measures:

The Board of Directors has not since the shares were listed on the Norwegian OTC in July 2008, enforced the Articles’ consent provision. The majority of the Company’s shares are subject to a shareholder agreement. The agreement restricts the transfer of shares covered by the agreement until six vessels have been completed at Drydocks World Dubai LLC, expected to be Q2 2010. After this time the shares will be freely transferable. The Company believes it is important to maintain this agreement until all vessels have been delivered in order for the Company to reach a phase in its development where the real values are more correctly reflected in the share price. The shares not subject to the shareholder agreement do not carry any transfer restrictions.

Recommendation 6: General Meetings Notice of GM In accordance with its Articles, the Company will procure distribution of the notice of an annual general meeting to the shareholders at least 14 days in advance of the meeting and the notice of an extraordinary general meeting at least 7 days in advance of the meeting. The Company will distribute the notice to all individual shareholders with known address. The notice of a general meeting shall always include:

++ Date, time and place of the general meeting; ++ The agenda, a description of or supplemental

ing documents, including the form of instrument of proxy are made available.

++ If at all required, the deadline for shareholders to

give notice of their intention to attend the meeting shall be fixed to earliest the day before the date of the meeting. Normally there will be no requirement for a shareholder to notify its attendance at the general meeting in advance of the meeting;

++ Any shareholder who cannot attend the meeting in

person shall be able to vote by proxy either by granting proxy to the chairman of the Board of Directors or to an individual appointed by the shareholder on each matter to be considered at the meeting. The notice of the general meeting will specify at which address the instrument of proxy shall be deposited and that the proxy must be deposited no later than the time for holding the meeting. The chairman of the general meeting may in any event at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited.

++ The chairman of the meeting shall invite the share-

holders to participate in discussions of the different issues at the general meeting.

The general meeting shall vote separately on each candidate nominated for election to the Board of Directors. The members of the Board of Directors, the CEO, the CFO and the company secretary shall be present at any general meeting. Furthermore, the members of the nomination committee will be present at the annual general meeting. The auditor shall be present at each general meeting where such presence is practical or necessary due to the nature of the business to be transacted at the meeting.

Proceedings at general meetings In order for a general meeting to proceed, shareholders representing not less than 10% of voting rights of the Company must be represented either in person or by proxy. For practical reasons as well as cost considerations, the chairman of the Board of Directors will chair the general meeting, provided the chairman of the Board of Directors at any time elected is independent of any major shareholder of the Company. If the chairman of the Board of Directors is prevented from meeting or unable or unwilling to act as chairman of the general meeting, the other members of the Board of Directors present shall elect one of their number to be chairman of the meeting and if possible one member that is independent of any major shareholder of the Company. If no member of the Board of Directors is willing or able to act as chairman, the shareholders present at the meeting shall by ordinary resolution choose one of their number to be the chairman of the meeting. Announcement of documents related to GM The Company shall post the following documents related to a general meeting on its web site:

++ The notice of a general meeting and supplemental

information on the matters to be considered, including any recommendation of a nomination committee, and proposals for resolutions to be considered, if possible at least 21 days in advance of the meeting;

++ Form of instrument of proxy; ++ To whom any proposals or comments to the notice, the agenda for the meeting and any proposal for resolutions can be directed;

++ Minutes from the general meeting latest three days after the date of the general meeting.

Recommendation 7: Nomination Committee The Board will establish a nomination committee prior to the election of board members on the annual general meeting in 2010. The nomination committee will be responsible for evaluating and recommending candidates for members of the Board of Directors as well as proposing remuneration for the Board of Directors. The committee’s proposal will be presented in the notice for the general meeting. The Board of Directors will appoint one of its independent members to appoint the committee. This elected member will in turn appoint two individuals among the 20 at that time largest shareholders. No shareholder that is part of the executive management team may be part of the nomination committee and at least one member must be independent of the Board of Directors. The members of the nomination committee are elected for a period of two years. The names of the members of the nomination committee will be posted on the Polarcus web site, www.polarcus.com.

Recommendation 8: Board of Directors: Composition and independence Pursuant to the Articles, the Board of Directors may consist of 2 to 10 directors. The current Board of Directors are presented on pages 32 and 33 of the annual report. They were all elected in 2007 or 2008. The members of the Board of Directors and the chairman of the Board of Directors shall be elected by the annual general meeting by ordinary resolution. Each director shall serve for a term of two years which expires at the conclusion of the annual general meeting in the year in which the period of office expires. A director is eligible for re-election after the two-year period. The Board of Directors shall together have qualities, experience and expertise that the Company needs in order for it to develop into a recognised provider of geophysical seismic services world-wide including, but not limited to, geophysical seismic expertise, corporate, financial and investor relation experience and experience within investment banking. The directors shall furthermore have the ability to work efficiently as a team and have sufficient capacity to carry out his/her duties. The Board of Directors shall attend to the common interest of all shareholders and operate independently of any special interests and have a balanced combination of directors representing major shareholders and directors that are independent of any shareholder or shareholder groups. Under no circumstance shall the independent directors count less than two directors. The Company will furthermore ensure that the majority of the directors are independent of the Company’s executive management and material business contacts. The composition of the current Board of Directors complies with the Company’s corporate governance commitments. The Company feels the Board of Directors reserves sufficient time to carry out their duties as directors in Polarcus. None of the directors holds such a number of board positions in other companies that such other positions would compromise the time needed to act as directors in Polarcus. Mr. Carl-Peter Zickerman is part of the Company’s executive management, serving as EVP & Head of Strategic Investment. Mr. Zickerman is furthermore one of the major shareholders and a founding shareholder of the Company. The Board of Directors finds it advantageous that he holds office as director as well as attending to critical strategic processes on a daily basis. The directors are encouraged to and all current Directors own shares in the Company. No director shall be entitled to options in their capacity as director.

Recommendation 9: The work of the Board of Directors The Board of Directors has issued separate terms of reference documents that in detail set outs the authorities, responsibilities and duties of the Board of Directors, the chairman, the deputy chairman, a director, the company secretary, board committees as well as the CEO. The terms of reference are available on the Polarcus web site, www.polarcus.com. The Board of Directors and

each director shall comply and carry out its responsibilities in accordance with at any time applicable instructions and guidelines. The Board of Directors shall regularly consider the appointment of board committees in order to enhance and ensure independent and efficient preparation and consideration of matters. Only directors independent of the executive management team can be members of such committees. A description of the current corporate governance committee and remuneration committee and their mandate are included on page 34 of this annual report. The Board of Directors has established a plan for its work for 2009 and has carried out an evaluation of its performance and expertise for 2008. The Board of Directors has held 2 physical meetings, 3 phone meetings and executed 20 written resolutions in 2008.

Recommendation 10: Risk management and internal control Good risk management and quality processes are at the core of the Company’s business. The Company will ensure sound internal control of its business and compliance with all relevant laws, regulations, and market requirements i.a. through its company management system. The management system contains Polarcus commitments (policy statements), Company manuals, corporate identity and ethical commitments, risk control, 3rd party management and contingency planning. The commitments, manuals and planning documents are supported by procedures. The procedures shall provide the necessary reference, standards and instruction for responsibly carrying out the daily tasks of the Group, in many situations aided by checklist that shall ensure that the task is carried out as prescribed in the procedure. Polarcus will annually carry out an internal audit in accordance with detailed audit procedures and the annual audit plan in order to ensure sufficient regular monitoring and review of the Group’s management system, including suppliers and sub-contractors. The result of such audits shall be presented and considered by the Board of Directors. External and internal audits will take place throughout the year. As part of the company management system and culture, the employees are required to report near-misses, incidents and non-conformances. Compliance with all aspects of the Polarcus management system shall be one element measured for each employee under the performance based bonus scheme implemented by the Group. As a measure to assist in the internal control of the Group, the executive management is required to report to the Board of Directors regularly on (i) safety, (ii) financial reporting, including conformation of categories of budget and financial accounts, the status and compliance with covenants in loan agreements/sale-leaseback transactions, vessels CAPEX and currency exposure, (iii) vessels construction progress, (iv) status of recruitment

and (v) sales/marketing measures. The executive management and each department of the Group shall regularly identify the risk and possible mitigation measures of the Group and the respective department. The result of the reviews shall at least annually be presented to the Board of Directors for discussion and consideration. Polarcus management follow up its financial status on a daily basis leading into a formal monthly management report including critical factors relating to covenants, cash flow and other key figures. The quarterly financial statements are presented and approved by the Board with a detailed comparison to budget. The complete internal control system is in the process of being developed, but critical control procedures have been put in place.

Recommendation 11: Remuneration of the board of directors The remuneration of the Board of Directors shall reflect the Board of Directors’s responsibility, expertise, time commitment and the complexity of the Company’s activities from year to year. The remuneration shall not be linked to the Company’s performance. The Company is currently in a work-intensive phase and requires considerable input and assistance from its directors. The detail of the proposal for annual remuneration of the Board of Directors is presented in Note 27.4 to the Consolidated Financial Statement on page 65 of this annual report. No additional remuneration has been paid to any director. Committee work is not eligible for additional pay. The Company will not establish options scheme for its directors. However, Mr. Carl-Peter Zickerman own options in the Company in his capacity as a member of the executive management. All directors, directly or indirectly own shares in the Company. As a general principle, the directors or the director’s companies shall not take on specific assignments for the Company. If a director’s particular expertise is needed by the Company for a period of time, the framework of such assignment as well as the remuneration shall in advance be approved by the Board of Directors.

Recommendation 12: Remuneration of the executive management The remuneration committee shall annually review, and propose to the Board of Directors the updated guidelines for the remuneration and benefits package of the members of the executive management, including the CEO. The remuneration committee shall when preparing the guidelines take into account the location of the management, the level of remuneration normal within the business of the Group, the phase of the Group’s business and special characteristics of the different persons within the executive management. The guidelines shall include a summary of the characteristics of employee option schemes and bonus schemes applicable to the Group. The guidelines shall be communicated to the annual general meeting for information. Information on the remuneration of the executive management and the general principles behind the various elements are presented on page 65 of this annual report. No bonuses have been granted to the employees for 2008.

Proposals for employee option schemes and arrangements to award shares to employees shall be approved in advance by a general meeting. The current employee options scheme of the Company has been approved by the general meeting of the Company. The scheme was designed to align employees with shareholder value creation and to attract competent persons in the recruitment phase to a wide range of positions within the Group and to retain employees until the Group is well into its operational phase. The exercise price under the scheme is fixed to the average share price in the 30-days period prior to an employee accepting an offer for employment and the options may be exercised in full after three years of employment. There is no requirement for a minimum period of ownership of the shares. The Company deviates somewhat from the recommendations of the Code, but the characteristics of the scheme are considered beneficial in the current phase of the Company.

include which actions the Board of Directors has to take or refrain from taking. Under the guidelines, the Board of Directors shall not exercise mandates or pass any resolutions with the intention of obstructing the take-over bid unless this is approved by a general meeting following announcement of such bid.

Recommendation 13: and communications

The Board of Directors shall request and accommodate that the auditor can participates in board meetings that deal with annual accounts. The auditor shall in such meetings review any material changes in the Company’s accounting principles, comment on any material estimated accounting figures and report on all material matters on which there has been disagreement between the auditor and the executive management of the Company. The Board of Directors shall in combination with such review meet with the auditor without the presence of the CEO or any other member of the executive management.

Information

The reporting of financial and other information from the Company shall be based on openness and equal treatment of all participants in the securities market. The Company will comply with detailed reporting requirements applicable for companies whose shares are traded at the Norwegian OTC list. The Company will during the first period of 2009 establish complete investor relations and external communication procedures. Legal disclosure obligations and regulations for financial reporting will be strictly followed. All information sent to the shareholders or the market shall simultaneously be published on the Company’s web site. The Company provides certain progress information to Drydocks World LLC under its shareholder agreement which could compromise the requirement for equal treatment of the shareholders. The Company will strive to give the information to the total market as soon as practically possible. The Company does not see that its disclosure duties to Drydocks World LLC creates substantial disadvantages for the other shareholders as Drydocks World LLC and the other parties to the shareholder agreement under any circumstances are restricted from trading in the shares and as such cannot take benefit of the information received. The Company shall in the beginning of each year publish a calendar setting out the announcement of financial reports, the date of the annual general meeting and other major events. The financial calendar for 2009 is presented on the Polarcus web site, www.polarcus.com.

Recommendation 14: Take-overs The Company will establish detailed guidelines for how the Board of Directors and executive management shall act in the event of a take-over bid. Such guidelines will reflect the applicable laws and the Code, describe the various phases of a take-over process, include procedures to ensure that sufficient information and time are made available to the shareholders of the Company to evaluate the offer of such takeover, as well as guidelines for the Board of Directors’ evaluation of the offer and collection of independent price valuation. The principles will give guidance to when a general meeting should be called and

Any transaction that is in effect a disposal of Company’s activities shall be decided by a general meeting.

Recommendation 15: Auditor The Company has appointed Ernst & Young AS, Oslo, Norway as its auditors. The Company shall annually request an audit plan from the auditor concerning the audit of the Company’s consolidated financial statements.

The auditor shall at least once a year discuss the Company’s internal control procedures with the Board of Directors, including identified weaknesses and proposals for improvement. The Company will establish guidelines as to when it is acceptable to use the Company’s auditor for services other than the audit. This in order to ensure the auditor’s continued independence. The executive management shall furthermore carefully evaluate, when instructing consultants, whether any of such consultants can be linked to the auditor and therefore put the independence of the auditor at risk. The Company has during 2008 received tax advice from the auditors. The Company is confident that these services have not compromised the independency of the auditor and has received a written confirmation from auditor on its status of independence. The Board of Directors shall request to receive annual written confirmation from the auditor that the auditor continues to satisfy the requirements for independence. The auditor shall provide the Board of Directors with a summary of all services in addition to the audit work that have been undertaken by the Company. The Board of Directors shall report the remuneration paid to the auditor at the AGM, including details of the fee paid for audit work and any fees paid for other specific assignments. Proposal for remuneration to the auditor for services rendered during 2008 is presented in Note 27.5 to the Consolidated Financial Statement on page 65 of this annual report.

Board of Directors The Board of Directors of Polarcus Limited is composed of 2 directors from Drydocks World, 1 director each from Zickerman Group Ltd. and Zickerman Holding Ltd, representing the founding shareholders, and 5 independent directors. All members of the BoD are experts in their specific areas of industry and have the qualities, experience and expertise required to develop Polarcus into a stock-listed company and a recognized provider of geophysical seismic services worldwide. Independence and integrity are emphasized in all matters concerning Polarcus, so ensuring the successful development and implementation of Polarcus Limitedâ&#x20AC;&#x2122;s business plan.

Peter M. Rigg

Chairman of the Board Peter (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 Director of Shroderâ&#x20AC;&#x2122;s Oriental Income Fund Limited, and of two Asian private equity funds. Shareholding in Polarcus: 250,000 shares Independent of the Company and management and independent of major shareholders

Geoff Taylor

Non-Executive Director Geoff (born 1953) has held the position of Chief Executive Officer of Drydocks World LLC since 2004. He is also a member of the Board of Drydocks World LLC, Dubai World LLC and EZ World LLC. Shareholding in Polarcus: 600,000 shares Independent of the Company and management but representing Drydocks World LLC

Carl-Gustav Zickerman Non-Executive Director

Carl-Gustav (born 1948) has substantial experience in the seismic industry gained from his involvement in the startup of Eastern Echo Ltd. and prior to that, as Director and Partner with SeaBird Exploration Ltd. Shareholding in Polarcus: 52,961,232 shares Representing Zickerman Holding Ltd

Alan Locker

Non-Executive Director Alan (born 1952) has extensive technical experience, with his most recent position being Chief Technical Officer at Drydocks World LLC, and prior senior positions at Dubai Ports Authority and Eurotunnel Services Ltd. He holds an Engineering degree from the UK. Shareholding in Polarcus: 250,000 shares Independent of the Company and management

Carl-Peter Zickerman Executive Director

Carl-Peter (born 1972) holds valuable experience in the seismic industry, gained from his prior start-up ventures, Eastern Echo Ltd, and GeoBird Ltd.At present he is working in the capacity of Executive Vice President & Head of Strategic Investments at Polarcus. Shareholding in Polarcus: 32,086,117 shares Part of the Executive Management team of the Company and representing Zickerman Group Ltd

Kitty Hall

Non-Executive Director Kitty (born 1956) has over 30 years experience within the geophysics industry and is currently Chief Executive of ARKeX Ltd, UK, where she is also the founding shareholder. Kitty was a Board Member of Eastern Echo Ltd. Shareholding in Polarcus: 500,000 shares Independent of the Company and management and independent of major shareholders

Tore Karlsson

Dr. Rosli Khan

Tore (born 1953) is an independent consultant and partner/founder in Memetree Ltd, UK, MoVa AS, Norway and GeoPublishing Ltd. He has an MSc. in Geophysics and is an Associate Professor at the Centre for Entrepreneurship at the University of Oslo. He was Chairman of the Board of Eastern Echo Ltd prior to its acquisition by Schlumberger Ltd in 2007.

Dr. Rosli (born 1958) joined Drydocks World LLC in 2007 as Business Development Director, based in Dubai. Prior to this he worked as a high-level maritime and infrastructure consultant for over 16 years. He holds an MSc. in Transport Planning and a PhD in Transport Economics from Cranfield Univeristy, UK. Dr. Rosli is also a Member of the Chartered Institute of Logisitics and Transportation, UK.

Non-Executive Director

Shareholding in Polarcus: 550,000 shares Independent of the Company and management and independent of major shareholders

Non-Executive Director

Shareholding in Polarcus: 200,000 shares Independent of the Company and management but representing Drydocks World LLC.

Hege Sjo

Non-Executive Director Hege (born 1968) is currently consulting for Hermes Investment Management Ltd., London; prior to which she was employed there in the capacity of Manager for European Governance and Engagement. Hege is the author of “Investor Relations in Practice” and holds a business degree from Stirling University, Scotland and a postgraduate degree in Corporate Finance from the Norwegian School of Economics. Hege serves as an alternate member of StatoilHydro’s corporate assembly. Shareholding in Polarcus: 200,000 shares Independent of the Company and management and independent of major shareholders

Board of Directors report

Polarcus is a pure play marine geophysical company with a pioneering environmental agenda, specializing in high-end towed streamer acquisition from pole to pole. The Company is currently building six ultra-modern 3D seismic research vessels which will operate worldwide providing best-in-class marine seismic services to the oil and gas industry. The Company is initially focusing the marketing efforts in the contract market and will later enter into the multi-client market.

1. Key developments 2008 ++ Launched the company. ++ Signed shipbuilding contracts with Drydocks World

- Dubai LLC for the construction of six seismic vessels. All six Polarcus vessels incorporate the innovative ULSTEIN X-BOW® hull design and will enable the company to operate worldwide providing high-end 3D and 4D towed marine seismic services to the oil and gas industry. The vessels will be delivered between Q3 2009 and Q2 2010.

++ Secured financing of USD 542 million comprising eq-

uity of USD 212 million and debt of USD 330 million.

++ Arranged deferred payment with Drydocks World Dubai LLC of USD 99 million.

++ Appointed nine directors to the Board. All directors

together bring diverse skills and extensive experience to the Board in financial, legal and industry matters. Four of the directors are independent of the majority shareholders of the company.

++ Keel laying for the first two Polarcus vessels ++ Established a sales and marketing office in North

America by appointment of a VP Marketing, North & South America

++ Registered its shares on the Norwegian OTC list (“NOTC List”) with ticker PLCS.

2. Financial results for 2008 The Group will not have operating income until the first vessel becomes operational in Q3 2009. The annual financial statement reflects the progress of construction projects through the period. The vessels under construction are capitalized at cost amounting to USD 180,080,689 as at 31 December 2008. The capital expenditure is according to budget. Total financing se-

cured in 2008 totaled USD 542 million. Total loss for 2008 was USD 2,388,211. The Group will need further financing during October 2009. The board confirms that the 2008 financial statements have been prepared based on the assumption of going concern.

3. Outlook Although oil demand has fallen sharply in the past two quarters due to the global recession, Polarcus believes that the underlying industry fundamentals remain solid due to the continuing need for the oil companies to replace reserves and address declining production rates in maturing fields. This is further supported through various announcements that both national and international oil companies are maintaining, or in some cases increasing, their E&P budgets for 2009. As global economies begin to recover, oil demand can be reasonably expected to follow suit and to continue to grow over time fuelled by the global growth in population and improving standards of living, especially across India and China. In the seismic industry and after witnessing weakening day rates through the first quarter of 2009, Polarcus is seeing encouraging indications that the sector will experience a soft landing in H2 2009 and begin to recover in H1 2010, led by the high-end 3D seismic acquisition sector.

4. Risk 4.1. Financial Risks Access to financial funding The Company is dependent on obtaining additional financing in order to fully fund the completion of the vessels. Further, the Company may require additional capital in the future due to unforeseen liabilities and for general working capital purposes. Future contract awards and credit risks The income of the Company will be dependent on contract awards and there are no guarantees that the financial position of the contract parties will be sufficient to adhere to the obligations under the contracts with the Company

4.2. Market Risks Variability of operating results The Company’s revenue may vary from month to month

and year on year due to changes in oil companies exploration and production spending. There is no guarantee that Polarcus will be able to secure contracts at profitable rates. In addition, the Company may experience significant off-hires between charters. Supply and Demand risks Demand for offshore geophysical services depends on the demand / supply balance for oil and gas and on the investments by oil and gas companies in exploration and development projects. Low demand or oversupply of oil and gas can lead to reduced capital expenditures by oil and gas companies that in turn may reduce the demand for the Company’s products and services. Other factors that may reduce the demand for the Company’s products and services include but are not limited to, fluctuations in productions levels and disappointing exploration results.

4.3. Risk factors particular to the vessels construction project Dependence on timely access and delivery The construction of the Company’s vessels is dependent on timely access to yard slots and delivery of long lead items and design drawings. Delays in any one or more of these areas may significantly impact the overall vessel build schedule resulting in, but not limited to, cost overruns and delivery delays. Dependence on sub-contractors The Company is dependent on the ability of sub-contractors to provide key seismic equipment which meets the specifications, quality standards and delivery schedules of the Company. Failure to meet these requirements may have a material adverse impact on the Company’s operating results and financial position.

5. Health, safety and security Polarcus ensures that the highest priority is placed on all identified health, safety and security issues by utilizing a strong risk based approach to our decision making processes. From commencement of the Company, Polarcus logged exposure hours for all Polarcus employees in addition to contractor personnel working at the Dubai Shipyard on Polarcus projects. Polarcus experienced zero lost time incidents (LTI’s) giving a lost time incident frequency (LTIF) of 0. Through the same period Polarcus had zero recordable incidents giving a total recordable case frequency (TRCF) of 0.

During 2008, Polarcus has made significant progress towards producing an innovative, risk based Management System that is the basis for future certification under ISM, ISPS, ISO 9001, 14001 and OHSAS 18001. The modular based system provides a fast, efficient and user friendly approach towards accessing information, reporting, investigation, experience transfer, action tracking, document management and review. The system is planned for roll out and certification during 2009.

6. Environment The Company is pursuing an Emission Index for COx, NOx and SOx in the vessel build program. The principal uses an Emission Indexing algorithm to measure the environmental footprint. The goal is to minimize that footprint whilst simultaneously maximizing vessel efficiencies. The Emission Indexing is being conducted on the global marine seismic fleet by Ulstein International and Det Norske Veritas AS. This will establish benchmarks for existing vessels as well as new builds. It is the Company’s intention to share this data with the industry as it is only together that a timely, effective and pragmatic global solution can be found for the pollution and greenhouse gas challenges. The resultant data will provide customers with the ability to objectively evaluate the sector and select an environmentally responsible contractor, Whilst building the Company nearly every aspect of vessel design and technology selection has come under the green focus. In designing the fleet the Company recognized the importance of reducing atmospheric emissions from the vessels. The Company investigated Selective Catalytic Reduction Catalysts and through installation of these units Polarcus will realize an investment in our future. Similarly, by utilizing the latest systems for bilge and ballast water treatment the Company will reduce, if not eliminate, the number of contaminants and non-native species being released into our oceans, a lesser debated but equally important area of concern. In parallel to the engineering initiatives, Polarcus is continuously seeking other ways to address the green agenda. For instance the Company measures the carbon footprint of the office, including business seminars held elsewhere. Employees calculate the carbon footprint of primary cars and residences, with the carbon offsets paid for personally by the senior managers and by the company for all other employees. Another idea under consideration by Polarcus is a carbon offset matching plan with clients

Dubai 31 March 2008, Board of directors

and suppliers, to offset the carbon footprint generated during operations. The offsets would be used to support sustainable development in areas of extreme need, allowing the Company to give something back to the global community. Polarcus experienced zero pollutants to ground during 2008 and waste is managed in accordance with national and international standards and disposed of according to these standards. Polarcusâ&#x20AC;&#x2122; environmental management system is based on ISO 14001 in preparation for certification during 2009.

Peter Rigg

Geoffrey Taylor

7. Employees As of year end 2008, Polarcus had 56 full time employees of which 44 are based in Dubai, UAE, 1 in Houston, USA and 11 field based employees. The 2008 recruitment focus secured the Company executive management team together with other key office based positions and the site team necessary to oversee and support the newbuild program. The Company is committed to being the employer of choice in the marine seismic business and has developed a comprehensive compensation and benefits package to attract and retain the best experts worldwide. The Company is committed to maintain a human resource system that is open and fair. All employees are treated equally regardless of ethnic background, gender, religion, age or disability.

8. Board committees Currently the board of directors has established two board committees, a corporate governance committee and a remuneration committee. Directors are not paid any extra remuneration for committee work. The corporate governance committee consists of Mr. Alan Locker, Mrs. Hege Sjo and Mrs. Kitty Hall and was appointed on 30 July 2008 with a mandate of developing a framework for the Companyâ&#x20AC;&#x2122;s corporate governance commitments and to regularly review and update the Companyâ&#x20AC;&#x2122;s governance commitments and structure. The remuneration committee consists of Mr. Alan Locker, Mrs. Hege Sjo, Mrs. Kitty Hall and Mr. Tore Karlsson and was appointed on 30 July 2008 with a mandate to review proposals from the executive management on bonus schemes and other benefits as well as general principles for salary and allowance increases.

Carl-Gustav Zickerman

Alan Locker

Carl-Peter Zickerman

Kitty Hall Tore Karlsson

Hege Sjo

Dr. Rosli Khan

Consolidated financial statements for the year ending 31 December 2008

37. Consolidated Income Statement 38. Consolidated Balance Sheet 39. Consolidated Cash Flow Statement 40. Consolidated Statement of Changes in Equity 41. Notes to the Consolidated Financial Statements

Consolidated Income Statement (In USD)

Notes

Revenues Salaries and G&A Salaries and other employee benefits Office rent and other general expenses Legal and consulting Business promotion Travel expenses Depreciation Operating Loss Financial Expenses Finance costs Finance income Net Financial Expenses Profit/(loss) for the period before Tax Income tax expense Profit/(loss) for the period

Year ended 31-Dec-08 -

23 24

Loss per share for loss attributable to the equity holders during the period - Basic 26 - Diluted 26

(8,045,202) (1,407,907) (714,197) (417,908) (558,329) (88,067) (11,231,610)

(5,074,641) 13,918,040 8,843,399 (2,388,211) (2,388,211)

(0.018) (0.060)

Consolidated Balance sheet (In USD) ASSETS Non-Current Assets Property, plant and equipment Vessels under construction Intangible assets Restricted cash - long-term Total Non-Current Assets Current Assets Prepaid expenses Advance to employees Deposits Restricted cash - short-term Cash and bank Total Current Assets

Notes

31-Dec-08

6 7 8 11

1,064,629 180,080,689 584,172 735,696 182,465,186

9 10

420,340 386,297 36,675 83,582,779 105,253,909 189,680,000

11 12

TOTAL ASSETS

372,145,186

EQUITY and LIABILITIES Equity Issued share capital Share premium Other reserves Retained loss Total Equity Non Current Liabilities 13% Senior secured bonds 8.5% Convertible bonds Liability for warrants Employee pension accrual Total Non Current Liabilities Current Liabilities Interest payable Employee accruals and payables Other accrued expenses Accounts payable Other payables Total Current Liabilities TOTAL EQUITY and LIABILITIES

13 13 15

2,035,719 188,641,420 1,314,832 (2,388,211) 189,603,760

14, 17 14, 18 13 16

53,191,115 29,131,763 10,934,452 27,666 93,284,996

4,708,551 295,850 125,892 83,997,403 128,734 89,256,430

372,145,186

Consolidated Cash Flow Statement (In USD) Cash flows from operating activities Loss for the period before tax Adjustment for: Depreciation Changes in fair value of financial instruments Stock options compensation provision Interest income Working capital adjustments: Increase in current assets Increase in trade and other payables and accruals Net cash flows from operating activities Cash flows from investing activities Increase in restricted cash Purchases of property, plant and equipment Payments to acquire intangible assets Interest income Net cash flows used in investing activities Cash flows from financing activities Proceeds from the issue of ordinary shares Transaction costs of issue of shares 13% Senior secured bond net proceeds 8.5% Convertible bond net proceeds Interest income Net cash flows from financing activities Hedged loss on revaluation of restricted cash (other reserves) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

31-Dec-08 (2,388,211) 88,067 (7,781,936) 879,888 (2,070,318) (843,312) 1,403,677 (10,712,145) (84,318,475) (93,123,792) (584,172) 268 081 (177,758,358) 211,971,855 (2,578,328) 53,075,000 33,775,000 2,070,318 298,313,845 (4,589,433) 105,253,909 105,253,909

Consolidated Statement of Changes in Equity

(in USD) 17 December 2007 at USD 1.00 per share Balance at 1 January 2008 Net loss on cash flow hedge Net income and expense for the year directly recognised in equity Loss for the period

Number of Shares 1 1

Issued Share capital

Share Premium

Other Reserves

Retained Loss

1 1 (4,589,433)

0.01 0.01 -

0.99 0.99 -

(4,589,433)

(2,388,211)

(4,589,433)

(2,388,211)

(6,977,644)

49,999,999 3,786,855 85,000,000 20,000,000 2,785,000 42,000,000

500,000 37,869 85,000,000 20,000,000 27,850 420,000 -

49,499,999 3,748,986 84,150,000 19,800,000 2,757,150 49,980,000 (2,578,328) (18,716,388) -

5,024,377 879,888

49,999,999 3,786,855 85,000,000 20,000,000 2,785,000 50,400,000 (2,578,328) (18,716,388) 5,024,377 879,888

203,571,855

2,035,719

188,641,420

1,314,832

(2,388,211)

189,603,760

Total income and expense for the year

Total Equity

(4,589,433)

Issue of share capital 9 February 2008 at USD 1.00 per share 18 March 2008 at USD 1.00 per share 19 May 2008 at USD 1.00 per share 21 May 2008 at USD 1.00 per share 29 June 2008 at USD 1.00 per share 2 July 2008 at USD 1.20 per share Transaction costs on issue of shares Issue of warrants to shareholders Issue of convertible bonds Employee stock options provision Balance as at 31 December 2008

The accompanying notes are an integral part of the financial statements.

Notes to the consolidated financial statements

General Information

The consolidated financial statements of Polarcus Limited (the “Company”) and its subsidiaries (together the “Group”) for the year ended 31 December 2008 were authorized for issue in accordance with a resolution of the directors on 31 March 2009. 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 was incorporated on 17 December 2007 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 had no activities in 2007 apart from the issue of one share for USD 0.01, hence no financial statements were prepared for 2007. The Group is building six ultra-modern seismic vessels at Drydocks World Dubai LLC (“DWD”) of the XBOW type from Ulstein Design AS. Vessels 1 and 2 are scheduled to be in operation by Q3 and Q4 2009, respectively. The construction of these vessels is progressing well and the vessels are expected to be delivered within guided dates. A potential delay of two months beyond the guided delivery dates is expected for vessels 3 and 4 due to delays in production of drawings. The situation is continuously monitored and the Company, together with Ulstein Design AS and DWD, is working hard in order to avoid further delays and potentially recoup some of the time already lost. The building progress of vessels 5 and 6 is ahead of schedule. The current expected operational dates for these vessels are therefore well within previously guided dates. 1.1 Financing The Group is, pursuant to the contracts with DWD and other vendors, committed to building six new vessels at a total cost of approximately USD 849 million, taking into consideration hedging of payment obligations in NOK. In addition, the Group estimates to spend approximately USD 50 million on general and administrative expenses related to the construction projects. The total expenditure is estimated at USD 899 million excluding the cost of financing. As of 31 December 2008, the Group has arranged total financing of USD 542 million, as per below: Equity Senior secured bond Convertible bond Sale & lease back (on first two vessels) Vendor financing on seismic equipment

USD 212 million USD 55 million USD 35 million USD 180 million USD 60 million

A deferred payment arrangement has been entered into with DWD in relation to vessels 4 to 6, “Polarcus Selma”, “Polarcus Asima” and “Polarcus Alima”. Under this arrangement certain payment installments due under the original ship building contracts for these vessels will be deferred from the scheduled milestone payment dates to the contractual delivery dates of the vessel. The total value of the deferred installments amounts to USD 99 million. The interest rate is LIBOR+3 per cent. Accordingly, additional financial resources of approximately USD 407 million are required. The Group expects to generate further financing from various sources, including equity and debt financing, and through operation of the vessels.

1.2 The going concern assumption These consolidated financial statements are presented based on the going concern assumption under International Financial Reporting Standards. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, the amounts and classification of liabilities, or any other adjustments that might result should the Company be unable to continue as a going concern. As reflected in 1.1 above, the Group has secured about sixty percent of the total financing requirement for the construction project. Furthermore the Group has been able to reduce the estimated project cost in USD by USD 27 million vs. budget due to favorable exchange rates. As a result further financing will be required during October 2009 to meet the Groupâ&#x20AC;&#x2122;s payment obligations. The deferred payment arrangement with DWD referred to in note 1.1 and the realised foreign exchange gains vs. budget referred to above provides flexibility in timing to secure the remaining project funding. The Company is pursuing a number of alternatives in respect of this additional funding. Consequently, the management believes that the going concern assumption is valid.

Summary of Significant Accounting Policies

The principle accounting policies applied in the preparation of these consolidated financial statements are set out below. 2.1 Basis of preparation These consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value and financial liabilities measured at amortised cost. The consolidated financial statements are presented in USD and all values are stated in whole dollars unless otherwise specified. 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 Future changes in accounting policies The Company has early adopted all standards and interpretations listed below where early adoption before December 31, 2008 is allowed. However, this early adoption has not had any impact on the preparation of the financial statements. Reference

Description

IFRS 2

Amendment to IFRS 2, Share-Based Payment

IFRS 3R

Business Combinations (Revised)

IFRS 8

Operating Segments

IAS 23

Borrowing Costs

IAS 27A

Consolidated and Separate Financial Statements (Amended)

IAS 32

Amendments to IAS 32 Financial instruments: Presentation

IAS 39

Amendments to IAS 32 Financial Instruments: Recognition and Measurement â&#x20AC;&#x201C; Eligible Hedged items

IFRIC 13

Customer Loyalty Programs

IFRIC 16

Hedges of a Net Investment in a Foreign Operation

IFRIC 17

Distributions of Non-Cash Assets to Owners

The Group has not applied the following applicable IFRS and IFRIC provisions which have been issued but are not yet effective: •

2.4

IAS 1 Presentation of Financial Statements (Amended)

The revised standard (to be applied from the year beginning January 1, 2009) separates non-owner and owner changes in equity. The statement of changes in equity will only include details of transactions with owners. All non-owner transactions are presented on a single line. In addition the standard introduces a statement of comprehensive income presenting income and expenses of nonowner transactions either as addition to the income statement or as a separate statement of comprehensive income. This will change the presentation of the Group’s financial statements. 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 fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. 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 recognised directly in the income statement. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered as an impairment indicator of the asset transferred. 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 presentational currency). The parent and all subsidiaries have the 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 recognised 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 recognised in profit or loss as part of the fair value gain or loss. 2.6 Revenue recognition Revenue is recognised 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, excluding discounts, rebates, and sales taxes or duty. The Company defers the unearned component of payments received from customers for which the revenue recognition requirements have not been met.

2.7 Property, Plant and Equipment Property, Plant and Equipment primarily consist of furniture, fixtures and IT equipment. All assets are stated at cost less accumulated depreciation and impairment charges. Cost includes expenditure that is directly attributable to the acquisition, construction or installation of the items, including financing costs. 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: Furniture and fixtures Vehicles IT equipment Seismic equipment Maritime equipment Vessels

5 Years 4 Years 5 Years 3-30 Years 5-30 Years 30 Years

Each component of the vessels, with a cost significant to the total cost, is separately identified and depreciated on a straight-line basis over that componentâ&#x20AC;&#x2122;s economic life. Day-to-day maintenance costs are charged to the income statement during the financial period in which they are incurred. The cost of major renovations and periodic maintenance of vessels is capitalised and depreciated over the useful lifetime of the parts replaced. The useful lifetime of regular vessel docking expenses will normally be the period until next docking. Maintenance and classification costs for vessels are capitalized and charged to expenses over the period up to the next occasion when maintenance is carried out, normally 30 months. Accrued maintenance and repairs, including periodic maintenance and class surveys for seismic vessels, are expensed as incurred. When vessels are acquired or constructed a proportion of the acquisition cost is capitalized as periodic maintenance. The assetsâ&#x20AC;&#x2122; residual values and useful lives are reviewed and adjusted if appropriate at least every balance sheet date. 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

Installments on new building contracts are capitalised as vessels under construction as certain milestones are reached. The acquisition cost reported is the sum of such installments plus direct and financing costs incurred during the construction period. 2.8 Leases The determination whether an arrangement is or contains a lease is based on the substance of the arrangement at the inception date and whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. 2.8.1 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 capitalised 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 recognised 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 recognised as an expense in the income statement on a straight line basis over the lease term.

2.9 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement or capitalised in accordance with the accounting policy for borrowing costs as mentioned below, over the period of the borrowings using the effective interest method. Interest payable on borrowings is classified as a current liability unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 2.9.1 Convertible Bonds

Convertible bond loans 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 amortised 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 recognised. 2.10 Borrowing Costs Borrowing costs are recognised 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 capitalised 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 capitalisation is determined by applying a capitalisation rate to the expenditures on those assets. The capitalisation 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 capitalised during a period does not exceed the amount of borrowing costs incurred during that period. 2.11 Intangible assets Costs associated with developing or maintaining computer software programs are recognised as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Computer software development costs recognised as assets are amortised over their estimated useful lives once the individual asset is available for use (not exceeding three years). Computer software not yet available for use is tested annually for impairment.

2.12 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. For the purpose of the cash flow statements changes in restricted cash are disclosed as part of the “Investing activities”. 2.13 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. 2.14 Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 2.15 Provisions A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that there is an outflow of resources embodying economic benefits. 2.16 Employee Benefits 2.16.1 Pension Plan

The Group recognises a provision for pensions payable to the employees based on one month’s basic salary for each year completed pro rata based on date of joining of each employee. 2.16.2 Bonus Plans

The Group recognises 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 recognises a liability and an expense for bonuses prescribed in employment contracts. 2.16.3 Share-based compensation

The Group has an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised 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. 2.17 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 recognised in the consolidated balance sheet at fair value on the date on which a derivative contract is entered into and are subsequently remeasured 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” in offsetting changes in the fair value or cash flows of the hedged item. Hedge accounting will be discontinued when (a) the Company 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. 2.17.1 Fair value hedges

The Group applies fair value hedges whilst hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised 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 unrecognised 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. 2.17.2 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 recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment. The effective portion of the gain or loss on the hedging instrument is recognized directly in equity, while any ineffective portion is recognized immediately in the consolidated income statement. Amounts recorded to equity 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 equity 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 recognised in equity 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 recognised in equity remain in equity until the forecast transaction or firm commitment occurs. 2.18 Impairment of non-financial assets The Group assesses at each reporting date 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 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 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. This is the case for the vessels under construction. 2.19 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.

Financial risk management

3.1 Financial Risk Factors The Group is through its activities exposed to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s activities under the vessels construction program expose it to currency risk and liquidity risk. The Group’s overall risk management program focus on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The management is in the process of developing a comprehensive finance policy. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, use of non-derivative financial instruments, and investment of excess liquidity. 3.1.1 Market Risk Foreign Exchange Risk

The Group’s costs are primarily in USD and the revenues are expected to be in USD. Long term financing is in USD. The company’s shares are traded in NOK. The NOK trading price is affected by the underlying activities of the Group which are primarily denominated in USD. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Norwegian Kroner (“NOK”) and Euro (“EUR”). Foreign exchange risk arises from future committed commercial transactions related to the vessels construction program and recognised assets and liabilities. To manage the Group’s foreign exchange risk arising from future commercial transactions, primarily the NOK commitments under the vessel construction program, the Group maintains NOK cash accounts to cover a major part of these future commitments. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency, which is USD. The fair value of warrants to shareholders and options to employees is determined using models which incorporate the NOK share price and therefore changes in the NOK/USD market exchange rate will impact the fair value. At 31 December 2008 the Group had hedged 15% of its foreign currency capital commitments for which firm commitments existed at the reporting date. The following table demonstrates the sensitivity to a reasonably possible change in the EUR and NOK exchange rates, with all other variables held constant, of the Group’s loss before tax (due to changes in the fair value of monetary assets and liabilities) and the Group’s equity (due to changes in the fair value of cash flow hedges): 31-Dec-08

Change in exchange rate

Effect on profit before tax

Effect on equity

EUR NOK

+10% +10%

(458,188) (1,197,230) (1,655,418)

(2,571,336) (2,571,336)

EUR NOK

-10% -10%

560,007 1,463,281 2,023,288

3,142,744 3,142,744

Price risk

The Group is exposed to its own equity price risk because the fair value of warrants to shareholders and options to employees is determined using models which incorporate the entity’s share price. The susceptibility of the value of warrants to a possible change in the Company’s share price (the management best range of estimates) is disclosed in Note 4. The Group is exposed to price risk regarding the seismic services it will deliver. The Company’s pricing strategy may vary from period to period based on the competitive market situation. The Company may have to adjust the price of its services based on the competition. Cash flow and fair value interest rate risk

The Group has significant interest-bearing assets which results in the Group’s income and operating cash flows being dependent on changes in market interest rates. The interest bearing assets with variable interest rates expose the Group to cash flow interest rate risk. Interest earned and received on these balances fluctuates with changes in market interest rates. During the period, the Group’s financial assets at variable rates were denominated in USD and NOK. The interest rate and maturity analysis of the Group’s borrowings as per the reporting date are shown in the table below:

Current Accounts payable – deferred payments for vessel 4 to DWD* Accounts payable – deferred payments for vessel 5 to DWD* Accounts payable – deferred payments for vessel 6 to DWD* Non-current 13% Senior Secured Bonds (refer to Note:16) 8.5% Convertible Bond (refer to Note:17)

Effective interest rate (%)

Maturity

LIBOR +3.00 LIBOR +3.00 LIBOR +3.00

01 December 2009 01 February 2010 01 April 2010

10,935,199 11,817,915 11,817,915 34,571,029

14.49 13.39

30 July 2013 30 July 2013

53,191,115 29,131,763 82,322,878

2008 (USD)

* Regular trade payables are presented in the balance sheet under current assets in accordance with IAS 1 but the amounts listed in the table above are not payable until the delivery of the vessels to which they relate. Shifts in the market interest rates will impact the fair value of the warrants to shareholders and options to employees and hence impact the Group’s income statement. The susceptibility of the value of warrants to a possible shift in interest rates (the management’s best range of estimates) is disclosed in Note 4. 3.1.2 Credit Risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with a minimum rating of investment grade or higher are accepted by the Group. The Group’s maximum exposure to credit risk for the components of the balance sheet at 31 December 2008 is shown in the table below: (in USD) Financial assets Non-current restricted cash Cash and short-term deposits

31-Dec-08 735,696 188,873,363 189,609,059

3.1.3 Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and having availability of funding through an adequate amount of committed credit facilities. Management constantly manages the forecast of the group’s liquidity reserve on the basis of expected cash flows. Due to a significant new building program the group will have to obtain additional funding. The table below analyses the Group’s financial liabilities broken into different maturity groups based on the remaining period from the balance sheet date to the date of contractual maturity. The amounts disclosed in the table are the contractual undiscounted cash flows.

At 31 December 2008 (cash out flows) Bond Borrowings Interest payment on borrowings Trade and Other payables

Less than 1 Year

Between 1 - 2 Years

Between 2 - 5 Years

10,125,000 49,426,374 59,551,374

10,125,000 34,571,029 44,696,029

90,000,000 30,375,000 120,375,000

Over 5 Years

Total -

90,000,000 50,625,000 83,997,403 224,622,403

The bond borrowings – senior secured loan of USD 55 million and convertible loan of USD 35 million mature on 30 July 2013. Delivery of the first two vessels is scheduled for September and October 2009, respectively. The next four vessels will be delivered in the first half of 2010. The vessels are expected to generate sufficient revenues to support the Group’s operations and service of debts. 3.2 Capital Risk Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to maximize the shareholder value and maintain an optimal capital structure, to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may (i) adjust the amount of dividends paid to shareholders, (ii) return capital to shareholders, (iii) issue new shares or (iv) sell assets to reduce debt. The Company is subject to dividend restrictions under certain of its financing arrangements. Due to these dividend restrictions and the current phase of the Company, Polarcus does not envisage any declaration of dividend to the shareholders for the fiscal year 2008. The Group aims to issue new equity and obtain adequate long term financing to finance its ongoing new build program and operating activities. Polarcus aims to have an equity capital at a level appropriate to its objectives, strategy and risk profile. As of 31 December 2008 the Group has a book equity ratio of 51%.

Critical accounting estimates and judgments

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 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 judgments, 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 which estimates and judgments could have a material effect on the accounts. 4.1

Critical accounting estimates and assumptions

4.1.1 Impairment

The Group assesses long-lived assets for possible impairment upon the occurrence of indicators. Events that can trigger assessments for possible impairments include, but are not limited to (a) significant decreases in the market value of an asset, (b) significant changes in the extent or manner of use of an asset, and (c) a physical change in the asset. Estimating undiscounted future cash flows requires the management to make judgments about long-term forecasts of future revenues and costs related to the assets subject to review. These forecasts are uncertain as they require assumptions about demand for our 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. Given the nature of these evaluations and their application to specific assets and specific times, the management cannot reasonably quantify the impact of changes in these assumptions. 4.1.2 Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. Management uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date. The primary assumptions used in the valuations are interest rates, share price, expected life of instruments, volatility and likelihood of certain events happening. The employee stock option was priced using a Black Scholes formula for equity options. For the simulation of â&#x20AC;&#x153;Change of Controlâ&#x20AC;?, the event was drawn from a uniform distribution in the simulations. Financial instruments carried at fair value include warrants issued to founding share holders. Assumptions used in the calculations of fair value of the financial instrument that are more sensitive are the following: -

Market price of the Companyâ&#x20AC;&#x2122;s shares (warrants) Volatility of the share price (warrants) Probability of change of control event (warrants)

4.1.3 Warrants

The Group has issued 42,500,000 warrants where the strike price might vary dependent upon circumstances outside of the control of the Group. The warrants are classified as a liability and measured at fair value through profit or loss. No cash outflows will arise in relation to the warrants. As at 31 December 2008, the value of the warrants was calculated to be USD 10.9 million using 57 % volatility and a share price of USD 0.57 (NOK 4 at USD exchange rate of 7.02). The table below presents a calculation of the sensitivities related to the valuation of warrants. The table shows increase / decrease in fair value of warrants based on 10% change (plus or minus) in volatility, share price and market interest rate. The fair value of the warrants, and consequently the liability relating to the change of control clause, is strongly dependent on the value and the volatility in the shares. Volatility used at 31.12.2008 Warrant liability (USD million) % increase/decrease in warrant liability

Effect of -10%

+10%

57% 10.9

8.9

-18%

19%

Share Price used at 31.12.2008

Effect of -10%

+10%

$0.57 10.9

9.8

12.2

-10%

12%

Interest Rate used at 31.12.2008

Effect of -10%

+10%

2.30% 10.9

10.8

11.04

-1%

4.2 Critical accounting judgments in applying the entityâ&#x20AC;&#x2122;s accounting policies In the process of applying the Companyâ&#x20AC;&#x2122;s accounting policies, management has made the following judgment, apart from those involving estimations, which has the most significant effect on the amounts recognized in the financial statements: 4.2.1 Leases

For leasing arrangements, significant management judgment is required in order to determine whether the lease arrangement should be considered an operating or finance lease.

Segment Information

The Group is currently in a pre-commercial phase focusing on building seismic vessels and an organisation. These activities are conducted and monitored within the Group as one business segment, thus in accordance with IFRS 8, no further segment information has been disclosed in these consolidated financial statements.

Property, plant and equipment

Furniture and fixtures

Office IT Equipment

Office Equipment under construction

528,697 -

482,372 -

141,627 -

1,152,696 -

528,697

482,372

141,627

1,152,696

40,798 -

47,269 -

88,067 -

At 31 December 2008 Carrying amounts At 1 January 2008

40,798

47,269

88,067

At 31 December 2008

487,899

435,103

141,627

1,064,629

(in USD) Costs Balance at 1 January 2008 Additions Disposals At 31 December 2008 Depreciation and impairment losses Balance at 1 January 2008 Depreciation for the period Disposals

Total

Vessels under construction

The vessels under construction are capitalised at cost amounting to USD 180 million as of 31 December 2008. The cost element includes payments related to the construction of six vessels in Dubai and down payments for securing delivery slots for certain equipment for two optional vessels. The total value of vessels under construction is made as follows; Vessel Number Vessel Name Vessel Type

Polarcus Nadia

Polarcus Naila

Polarcus Samur

Polarcus Selma

Polarcus Asima

SX 124

SX 133

SX 134

Polarcus (Option-1) (Option-2) Alima SX 134

Values in USD Vessel and 40,740,234 33,383,201 22,499,488 22,567,065 23,848,635 23,844,531 Equipment Project Overheads 261,610 261,610 156,966 156,966 261,610 261,610 Borrowing costs WIP value per Vessel

Total

SX 134

3,449,719

3,449,719 173,782,592

1,360,372

745,974

4,937,725

41,001,844 33,644,811 25,483,653 23,338,786 24,860,042 24,852,115

3,449,719

2,827,199

614,755

749,797

3,449,719 180,080,689

See Note 23 Finance costs and Note 24 Finance income for details of the capitalized borrowing costs. Vessel 3, Polarcus Samur is pledged as a security for the senior secured bond loan and interest accrued thereon. (Also refer to Note 16 ‘Senior secured bonds’). Vessel 1 and 2 are subject to a sale lease-back financing arrangement as described in Note 18 ‘Sale Lease back arrangement’. Commitments outstanding under vessel construction contracts as of 31 December 2008 are as per below; Vessel Number Vessel Name Vessel Type In USD

Polarcus Nadia

Polarcus Naila

Polarcus Samur

Polarcus Selma

Polarcus Asima

Polarcus Alima

SX 124

SX 133

SX 134

67,084,493 72,734,552 74,119,046 73,511,663 76,679,751 76,340,733

(Option-1) (Option-2) SX 134 11,421,867

Total

SX 134 10,701,339 462,593,443

The above values of commitments are calculated using the foreign currency exchange rates prevailing on 31 December 2008. All of these commitments are due within two years from the reporting date.

Intangible assets

(in USD) Additions at cost during the year Net book value at 31 December 2008

31-Dec-08 584,172 584,172

Intangible assets comprise the ERP system and an industry specific application, which the Group is developing through external software developers. The useful lives of these assets are considered to be finite and will be amortised over three years once the assets are available for use.

Prepaid Expenses 31-Dec-08 182,186 137,744 100,410 420,340

(in USD) Prepaid rent Prepaid other expenses Prepaid insurance

10 Advance to Employees 31-Dec-08 501,702 (115,405) 386,297

(in USD) Employee House Rent Advance Employee expense reimbursements payable

11 Restricted cash 11.1 Short Term Short term restricted cash represents the interest earning cash deposits in; -

Letter of credit escrow account to secure payment to a supplier in NOK. The balance of such deposit as of 31 December 2008 is NOK 199 million (USD 28.3 million). Escrow account for temporary deposit of senior secured bond loan proceeds. Balance of such deposit including the interest earned as of 31 December 2008 is USD 55.3 million.

11.2 Long Term Long term restricted cash represents the cash margin deposits for bank guarantees in place, for securing residence visa for Polarcus employees in Dubai. The amount of such deposit made as of 31 December 2008 is United Arab Emirates Dirham (“AED”) 2.7 million (USD 0.74 million).

12 Cash and Bank Cash and cash equivalents include cash-in hand, deposits held at call with banks, other short-term highly liquid investments. The Group’s cash and cash equivalents are denominated in the following currencies at 31 December 2008;

AED USD EUR NOK GBP

Currency 287,331 86,950,982 3,575,274 92,612,696 10,421

USD 78,249 86,950,982 5,040,064 13,169,525 15,089 105,253,909

13 Share capital and share premium The total issued share capital as of 31 December 2008 is USD 2,035,718.55 divided into 203,571,855 shares at a par value of USD 0.01. All issued shares have been paid in as of 31 December 2008.

Number of shares Proceeds from shares issued Transaction cost of share issue Warrants to founding shareholders Total as at 31 December 2008

203,571,855 203,571,855

Issued share capital (USD) 2,035,719 2,035,719

Share premium (USD) 209,936,136 (2,578,328) (18,716,388) 188,641,420

Total (USD) 211,971,855 (2,578,328) (18,716,388) 190,677,139

The Companyâ&#x20AC;&#x2122;s authorised share capital is USD 5,637,868.55 divided into 563,786,855 shares of par value USD 0.01. Apart from potential shares that could be issued under the terms of the share warrants, stock option plan or convertible bonds, the board of directors have no restrictions on issuing remaining authorised 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. During the period from date of incorporation to 31 December 2008, Polarcus Limited had the following issues of shares that are fully paid:

Date 17-Dec-07 9-Feb-08 18-Mar-08 19-May-08 21-May-08 29-Jun-08 2-Jul-08

Details Incorporation Private placement to initial shareholders Private placement to initial shareholders Private placement to initial shareholders Private placement to initial shareholders Private placement Polarcus and DWD employees and Polarcus BOD Private placement initial shareholders

Change in number of shares 1

Change in issued share capital (USD) 0.01

Number of shares following change 1

Subscription price per share (USD) 1.00

Nominal value (USD) 0.01

Share capital following increase (USD) 0.01

49,999,999

500,000

50,000,000

1.00

0.01

500,000

3,786,855

37,869

53,786,855

1.00

0.01

537,869

85,000,000

850,000

138,786,855

1.00

0.01

1,387,869

20,000,000

200,000

158,786,855

1.00

0.01

1,587,869

2,785,000

27,850

161,571,855

1.00

0.01

1,615,719

42,000,000

420,000

203,571,855

1.20

0.01

2,035,719

13.1 Warrants On 14 March 2008 the Group issued 42,500,000 warrants to the founding share holders, each giving the right to subscribe for one new ordinary share. The warrants are exercisable at a price of USD 0.01 on or before 31 December 2012 and can only be exercised if all of the following conditions are met; -

Delivery of all six seismic vessels on or before 1 April 2011; Effective employment of all six vessels; and The shares of the Company being traded on an internationally recognized marketplace or stock exchange at a volume weighted average price per share of at least NOK 11.00 (or equivalent) for more than 30 trading days.

In the event of a change of control of the Company prior to the warrant expiration date, the shareholders may, regardless of whether or not the previous conditions are met, exercise the warrants at a price per share of; -

NOK 5.50 if the shares trade at an average price of less than NOK 11.00 for the 10 consecutive business days following such change of control or if the validity period of the offer is less than 10 trading days. USD 0.01 if the shares trade at an average share price of above NOK 11.00 for the 10 consecutive business days following such change in control.

As of 31 December 2008 no warrants have been exercised. The warrants have been determined to be a liability because they fail to meet the requirements of fixed amount of cash or fixed amount of its own shares as required by IAS 32. Consequently, the fair value of the warrants at the issue date of USD 18.7 million has been recorded as a distribution to shareholders directly in equity. Subsequent to issuance, the liability is recorded at fairvalue at each balance sheet date and the resulting change in fair value is recognized in the income statement within changes in fair value of financial instruments â&#x20AC;&#x201C; net. In the period from issue date to 31 December 2008, a gain of USD 7.8 million has been recorded. The fair value of warrants granted on 14 March 2008 and at each subsequent balance sheet dates were determined using a model consistent with the Black-Scholes valuation model and assuming that all warrants will be exercised. 13.2 Share Options The Group has granted share options to executive management and other selected employees. As of 31 December 2008 the Group has issued 7,710,000 options. The exercise price of options is based on the weighted average price of the shares for the 30 days prior to acceptance of employment offer. The options cliff vest three years after grant date and can be exercised up to five years after the grant date. The exercise of options is conditional to 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. As of 31 December 2008 none of the options were exercisable. The fair value of options granted is determined using the Black-Scholes valuation model. The total fair value of options granted up to 31 December 2008 is USD 3.94 million, assuming all options will be exercised. For the period ended 31 December 2008, the Group has expensed USD 0.88 million towards stock options granted as employee compensation. The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year; Stock option plan

Number

Granted during the year 2008 Outstanding at 31 December 2008 Exercisable as at 31 December 2008

7,710,000 7,710,000 -

WAEP (USD) 1.00 1.00 -

The weighted average remaining contractual life for the share options outstanding at 31 December 2008 is 4.45 years. The range of exercise prices for options outstanding at the end of the year was USD 0.68 â&#x20AC;&#x201C; USD 1.30.

The following table lists the inputs to the models used for the share option plan for the year ended 31 December 2008: Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of option (years) Weighted average share price

31-Dec-08 40.00 2.50 5.00 1.05

The value of the option is estimated by a tree implementation of the Black Scholes formula for the pricing of equity call 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 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.

14 Other financial assets and liabilities Financial liabilities at fair value through profit or loss: (in USD) Liability for warrants (refer to Note:13) Total liabilities at fair value through profit and loss Financial liabilities at fair value through profit or loss Net gain or loss on financial liabilities at fair value through profit or loss

31-Dec-08 10,934,452 10,934,452 7,781,936 7,781,936

Financial liabilities measured at amortised cost: (in USD) 13% Senior Secured Bonds (refer to Note:17) 8.5% Convertible Bonds (refer to Note:18) Total financial liabilities measured at amortised cost

31-Dec-08 53,191,115 29,131,763 82,322,878

14.1 Fair values The carrying amounts and fair value of the Groupâ&#x20AC;&#x2122;s financial instruments as carried in the financial statements are as per below;

(in USD) Financial assets Cash and deposits Other financial assets Financial liabilities Accounts payable Liability for warrants 13% Senior secured bonds 8.5% Convertible bonds Other financial liabilities

Carrying Amount 31-Dec-08

Fair value 31-Dec-08

189,572,384 843,312 190,415,696

83,997,403 10,934,452 53,191,115 29,131,763 5,286,693 182,541,426

83,997,403 10,934,452 36,025,000 21,437,500 5,286,693 157,681,048

Cash and deposits, accounts payable, other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair values of senior secured 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. 14.2 Cash flow hedges The Group holds cash in foreign currency to hedge against capital commitment costs for future purchases of equipment related to the construction of the vessels. The cash flow hedges of the expected future purchases in the course of 2009 and 2010 were assessed to be highly effective. (in USD) Fair value of Cash flow hedge Net unrealized loss recognised in equity in respect of cash flow hedge

31-Dec-08 Assets 28,284,698 4,589,433

15 Other Reserves (in USD) Issue of convertible bonds - fair value of equity component (refer to Note:18) Employee stock options provision (refer to Note:13) Gain/(Loss) on Cash flow hedge

31-Dec-08 5,024,377 879,888 (4,589,433) 1,314,832

16 Pension A provision has been made towards the pension payable to employees based on management’s policy under consideration. The pension is calculated based on one month basic salary for each year completed and pro rata based on date of joining of each employee. During the year some employees made use of the option granted by management of taking out their accrued pension payment early.

17 Senior secured Bonds On 30 July 2008, the Group issued 550 senior secured callable bonds at par value of USD 100,000 each totaling USD 55 million, bearing 13% interest per annum. The net proceeds of the issue are to be employed to part-finance the construction of the vessel NB 69 “Polarcus Samur” through the vessel owning company Polarcus 3. The interest is payable semi-annually in arrears on 30 January and 30 July each year. The bonds will mature five years from the date of issue at their nominal value. The bonds including accrued interest and expenses are secured by the vessel to be owned by Polarcus 3, a 100% owned subsidiary of Polarcus Limited. During the vessel construction phase, the loan is secured with a pledge of the shares in Polarcus 3, on-demand upstream guarantee from Polarcus 3, floating charges concerning all equipment related to the vessel ‘Polarcus Samur’ and any intra-group loans, assignment of the shipbuilding contract and the major equipment contracts, the refund guarantees granted and to be granted under the shipbuilding contract and a pledge over the bank account in which all funds at any time not disbursed under the loan are credited. .From the delivery date of the vessel, the loan will be secured by a first priority mortgage on the vessel, an assignment of insurances related to the vessel, the pledge of shares in Polarcus 3 as well as the up-stream guarantee form Polarcus 3. Drawing of funds from the loan is subject to evidence that capital subordinated to the loan in an amount equal to or larger than the amount released from the loan, from time to time, has been or is employed in accordance with the purpose of the loan. On the date of issue, net proceeds of USD 53,075,000 have been booked under non-current liabilities. Issue costs amortised up to 31 December 2008 are USD 116,115. Total interest payable accrued for the same period amounts to USD 2,979,167. As of 31 December 2008 the Group complies with the covenants set out in the loan agreement.

18 Convertible Bonds On 30 July 2008 the Group issued 350 subordinated unsecured callable convertible bonds at a par value of USD 100,000 each totaling USD 35 million, bearing 8.5% interest per annum. The interest is payable semiannually in arrears on 30 January and 30 July each year. The bonds mature five years from issue date at their nominal value of USD 35 million or can be converted into a total of 21,604,940 shares at the holders’ option at a conversion price of USD 1.62 per share. The conversion price is subject to adjustment upon certain changes of the Company’s share capital and in case of mergers and de-mergers.. In the event the Company has not listed its shares at the Oslo Axess or another regulated marketplace by 30 September 2009, each bondholder shall have the right to require the Company to redeem the loan on 31 October 2009 at 108% plus accrued interest. The convertible bond has been accounted for in separate components – the value of the liability component has been recognised at its fair value and the remaining part as equity. In measuring fair value of the liability component a supposed market rate (estimated to be 13%) for a similar debt without a conversion right has been used in discounting the cash flow under the loan agreement. The supposed market rate was chosen based on valuations of the interest rate for a non-convertible bond at the date of drawing the loan. There will be no re-measuring of the fair value of the liability component.

At issue date the following amounts were recognised for the convertible bond in the financial statements: Fair Value of liability component Fair Value of equity component

USD 28,750,623 USD 5,024,377 USD 33,775,000

The difference between the funds received and the total amount shown above as recognised on issue is due to the issue costs associated with the issue of the bonds. At 31 December 2008, amortisation of issue cost added to the liability component amounted to USD 381,140. Total interest payable accrued for the same period is USD 1,239,584.

19 Sale and Lease-back arrangement The Group has on 30 June 2008 entered into a sale and lease-back financing arrangement for its first two vessels, Polarcus Nadia and Polarcus Naila. The total cash inflow from this arrangement will be USD 180 million (i.e. USD 90 million per vessel). Under the terms of this arrangement, GSH 2 Seismic Carrier I AS (the ‘lessor’) has agreed to purchase the vessels (excluding the seismic streamer package) at a price of USD 90 million each upon the delivery of vessels from the shipyard. Immediately upon such transfer of ownership, the Group (as a ‘charterer’) will lease back the vessels from the lessor at a fixed daily charter rate, payable monthly in arrears throughout the duration of the charter period. The Group as a charterer has the option to purchase the vessels from the lessor each year after three years from the date of delivery. The charter period shall commence on the delivery date and shall (subject to the Group’s purchase option as per above) continue until the date falling a minimum of 10 years from the delivery date. The purchase price of USD 90 million per vessel will be paid by the lessor to the Group in installments throughout the vessel construction period, subject to the agreed payment schedule and conditions attached thereto. The above arrangement falls under the category of finance lease as described under IAS 17. (Also refer to note 2.6 on ‘Leases’). As of 31 December 2008, no amount has been recognised in the consolidated financial statements in relation to the sale and lease-back arrangement. The Group has not received any installments of purchase price from the lessor as of 31 December 2008.

20 Interest Payable Interest payable under current liabilities includes; (in USD) Interest accrued on senior secured bonds (refer to Note:17) Interest accrued on convertible bonds (refer to Note:18) Interest accrued on deferred payments to the shipyard Total

31-Dec-08 2,979,167 1,239,584 489,800 4,708,551

Interest charged and accrued on the convertible and senior secured bonds is calculated using the amortised cost method. The total interest charged in the year is the same as the amount accrued at the end of the reporting period. The net interest charge arising on the bonds less the interest income from investment of bond proceeds was capitalized as vessels under construction (see Note 7 Vessels under construction).

21 Accounts payable (in USD) Payable to vendors related to the vessels under construction Payable to other vendors

31-Dec-08 83,171,868 825,535 83,997,403

Included within amounts payable to vendors related to the vessels under construction are installments totaling USD 34,571,029 that are not due for payment until more than one year from 31 December 2008.

22 Salaries and other employee benefits The Company offers a fixed base salary to all employees. Employees are also provided with a housing allowance and car allowance based on their location of employment and grades. In addition to the fixed salary package the Company offers 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. Employee can benefit from a variable compensation in the range of 8% to 50% of base salary depending upon the employeeâ&#x20AC;&#x2122;s grade. In addition all employees are offered a comprehensive employee health protection plan. In 2008, no performance-related bonuses were paid to Company employees. 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 program in note 13.2 Share options. The Company will launch a pension plan in 2009 which will be contributory for both employee and employer. The Company contribution is set to one monthâ&#x20AC;&#x2122;s base salary and will be expensed as incurred. The Company pension contributions accrued for 2008 were paid out to eligible employees in December 2008. Salaries and other benefits for the year ended 31 December 2008 are comprised of the following; (in USD) Salaries Board Remuneration Loyalty Bonus (accrual) Other Employee benefits Pension Stock Options expense (refer to Note:13) Less; Project related personnel cost capitalised Total

31-Dec-08 3,936,689 275,000 180,930 3,367,401 318,705 879,888 (913,411) 8,045,202

23 Finance costs (in USD) Interest accrued on senior secured bond Interest accrued on convertible bond Interest accrued on deferred payments to the shipyard Interest expenses capitalised to vessels under construction Net interest expenses Realised currency exchange loss Unrealised currency exchange loss Total finance costs

31-Dec-08 3,095,280 1,620,725 489,801 (5,205,806) 1,280,881 3,793,760 5,074,641

The realised currency gain or loss represents the effect of foreign currency payments made and the unrealised currency gain or loss represents the effect of revaluation of foreign currency financial assets other than those treated as cash flow hedging instruments. For more information regarding capitalized interest costs refer to Note 2.8 ‘Borrowing costs’ and Note 7 ‘Vessels under construction’.

24 Finance income Net interest income represents the following; (in USD) Interest income from deposits with banks Interest income offset against capitalised interest expenses Total interest income Realised exchange gain Unrealised exchange gain Financial liabilities measured at fair value through profit and loss

31-Dec-08 2,338,399 (268,081) 2,070,318 2,789,042 1,276,744 7,781,936 13,918,040

The changes in fair value of financial instruments comprise the gain on revaluation of fair value of liabilities on warrants issued. Please also refer to notes on warrants in Note 13 Share Capital and share premium.

25 Income Taxes Since the Group’s main operations are in the Cayman Islands and United Arab Emirates, it is not liable to pay any taxes on its income. No deferred or current tax assets or liabilities have been recognised in these consolidated financial statements.

26 Earnings per Share 26.1 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. Profit attributable to equity holders of the Company Weighted average number of ordinary shares issued Basic earnings per share

(2,388,211) 135,200,577 (0.018)

26.2 Diluted 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. Loss attributable to equity holders of the Company Gain related to warrants issued Net loss attributable to potential equity holders of the Company Weighted average number of ordinary shares issued Share with dilutive effect for warrants issued Weighted average number of diluted ordinary shares Diluted earnings per share

(2,388,211) (7,781,936) (10,170,147) 135,200,577 33,583,601 168,784,178 (0.060)

The share options that have been granted to selected employees as at the end of reporting period (see Note 13) and the convertible bonds giving the bond holders a right to convert the bonds to equity shares (see Note 18) have not been included in the calculation of diluted EPS as they have an anti-dilutive effect for the reporting period. There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

27 Related-party transactions 27.1 Subsidiaries This set of consolidated financial statements includes the financial statements of Polarcus Limited and the subsidiaries listed in following table;

Name of the Subsidiary

Country of Incorporation

Polarcus DMCC Polarcus 1 Polarcus 2 Polarcus 3 Polarcus 4 Polarcus 5 Polarcus 6 Polarcus Seismic Limited

UAE Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands Cayman Islands

Equity interest as at 31-Dec-2008 100% 100% 100% 100% 100% 100% 100% 100%

27.2 Transactions with related parties DWD holds 36.85% of the paid-in share capital of the Company as of 31 December 2008. Below is a summary of major transactions between DWD and the Group during the period ended 31 December 2008; (in USD) Payments made in the year under ship building contracts Amount due at the end of reporting period under accounts payables: - within 12 months period from 31 December 2008 - after 12 months period from 31 December 2008 Accrued finance cost at the end of reporting period on deferred payments

31-Dec-08 8,839,806 40,703,581 34,571,029 75,274,610 489,801

Zickerman Holding Limited holds 26.07% of paid in share capital of the Company as of 31 December 2008. Zickerman Holding Limited is fully owned by Carl-Gustav Zickerman, Board member of the Company. Following is a summary of transactions between Zickerman Holding Limited and the Group during the period ended 31 December 2008; (in USD) Cash advances from Zickerman Holding for project related vendor payments Shares allotted to Zickerman Holding settled against above advances Foreign Exchange loss on allotment of shares Payments made by the Group on behalf of Zickerman Holding Balance due from Zickerman Holding as of 31 December 2008

31-Dec-08 30,721,363 (30,900,738) 179,375 5,254 5,254

The above balance due to the Group is free of any interest charges. Zickerman Group Limited holds 15.76% of paid share capital of the Company as of 31 December 2008. Zickerman Group Limited is fully owned by Carl Peter Zickerman, Board member and Executive Vice President of the Company. Following is a summary of transactions between Zickerman Holding Limited and the Group during the period ended 31 December 2008; (in USD) Cash advances from Zickerman Group for project related vendor payments Shares allotted to Zickerman Holding settled against above advances Foreign Exchange loss on allotment of shares Balance due to Zickerman Holding as of 31 December 2008 The above balance due by the Group is free of any interest charges.

31-Dec-08 18,785,409 (19,086,102) 434,680 133,987

27.3 Key management compensation The actual salaries and other benefits paid to key management personnel for the period ended 31 December 2008 are shown in the table below; (in USD) Date of Joining Rolf RĂ¸nningen Tom Henrik Sundby Carl Peter Zickerman Eirin M. Inderberg Paul Lionel Hanna Svein Johnny Naley Christian D.G. Fenwick Trygve Reksten Jeff Corkhill Christopher Griffin Magnus Oberg

Chief Executive Officer Chief Financial Officer Executive Vice President General Counsel SVP Human Resources SVP Technology SVP Business Development SVP Sales SVP Operations VP EHS&Q VP IT

1-Apr-08 15-Sep-08 1-Apr-08 1-Apr-08 1-Jun-08 16-Apr-08 1-Apr-08 1-Apr-08 1-Apr-08 1-Apr-08 1-Apr-08

Salary 299,997 87,500 297,000 187,497 120,000 177,081 187,497 157,500 187,500 135,000 93,750 1,930,322

Housing allowance

Car allowance

Sign on Bonus

Pension

Stock Options (Accrual)

67,500 26,250 63,000 60,000 39,000 55,250 58,500 58,500 58,500 52,500 55,500 594,500

13,500 5,250 13,500 13,500 9,000 12,750 13,500 13,500 13,500 13,500 13,500 135,000

47,459 54,059 161,710 21,221 105,881 49,246 6,204 31,653 5,427 11,630 494,490

25,114 7,397 24,863 15,696 11,726 14,840 15,696 13,185 15,696 11,301 7,848 163,362

75,025 33,067 49,154 49,154 48,082 46,473 49,154 49,154 49,154 42,687 42,687 533,791

27.4 Board remuneration The annual remuneration to the Board members as well as payments made for the period ended 31 December 2008 is shown below; (in USD) Director since Peter M. Rigg, Chairman Carl-Gustav Zickerman Carl Peter Zickerman Geoffrey Taylor Dr. Rosli Khan Alan Locker Hege Sjo Katherine J. Hall Tore Karlsson

20-Jun-08 17-Dec-07 9-Feb-08 19-May-08 19-May-08 20-Jun-08 20-Jun-08 20-Jun-08 20-Jun-08

Annual remuneration

Paid up to 31-Dec-2008

100,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 460,000

50,000 45,000 37,500 26,250 26,250 22,500 22,500 22,500 22,500 275,000

27.5 Remuneration to the auditors The total remuneration paid by the Company to its auditors during the period ended 31 December 2008 is shown below; (in USD) Audit fees Tax advisory services Other consultancy services

31-Dec-08 23,657 6,846 75,467 105,970

28 Commitments and contingencies The Group has entered into a rental agreement for its office premise in Dubai, UAE. The annual rental cost for the office premise is USD 509,888. In accordance with IFRS these rental agreements are determined as operational leases and consequently all rental cost is expensed when incurred. 31-Dec-08

(in USD) Lease payments under operational lease of premises Not later than one year

509,888 509,888

Other than the lease commitments shown above and the capital commitments described under Note 7 Vessels under construction the Group has no other commitments or contingencies to note.

29 Authorisation of financial statements The consolidated financial statements for the year ended 31 December 2008 were authorized for issue in accordance with a resolution of the directors on 31 March 2009.

Peter Rigg, Chairman

Carl-Peter Zickerman

Geoff Taylor

Hege Sjo

Rosli Khan

Kitty Hall

Alan Locker

Tore Karlsson

Carl-Gustav Zickerman

Polarcus Limited Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands Vessel owning companies

Sales company

Administrative offices

Polarcus 1

Polarcus Seismic LTD

Polarcus DMCC

Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands

Saba 1, Level 34 Jumeirah Lakes Towers P.O.Box 283373, Dubai, U.A.E.

Polarcus 2

Polarcus America

Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands

1510 Eldridge Parkway Suite #110-169 Houston, TX 77077 USA

Polarcus 3 Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands

Polarcus 4 Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands

Polarcus 5 Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands

Polarcus 6 Walker House, 67 Mary Street George Town, Grand Cayman KYI – 9001 Cayman Islands

Notes

Contact address Polarcus Limited C/O Polarcus DMCC Saba 1, Level 34 Jumeirah Lakes Towers P.O.Box 283373, Dubai, U.A.E. www.polarcus.com